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Lords Chamber

Volume 590: debated on Thursday 18 June 1998

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House Of Lords

Thursday, 18th June 1998.

The House met at three of the clock ( Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Southwell.): The LORD CHANCELLOR on the Woolsack.

Methodist Central Hall, Westminster

Whether good relations between Church and state depend on the central organisations of the main Christian denominations being located together in Westminster.

My Lords, no. The geographic location of these bodies has no bearing on their relationship with the state.

My Lords, I am grateful to my noble friend for his reply. Nevertheless, I wonder whether he shares my disappointment to hear that it is proposed to move the headquarters of the Methodist Church from Westminster Central Hall to Marylebone Road. Does he agree that, alongside Westminster Abbey and Westminster Cathedral, Westminster Central Hall serves as a symbol of the Free Church witness at the heart of the nation? It would be a tragedy if that were put at risk, particularly because of its unique pastoral ministry to the Palace of Westminster which, in my view, should not be under valued.

My Lords, Pererin 'rwyf mewn anial dir, which, being translated for the ungodly, or those who cannot speak Welsh, if the two are not the same, means, "I am a pilgrim in a desert land", but Marylebone Road is not all that far away in the desert, surely.

My Lords, with the much acclaimed and welcome elevation to the peerage of the Reverend Dr. Kathleen Richardson, who is currently the Moderator of the Free Church Federal Council and also one of the presidents of the Churches Together in England, does the Minister agree that the representation of someone who is a former president of the Methodist Conference can only enhance Church-state relationships in the future?

My Lords, I absolutely agree. She is a person of enormous worth, virtue and talent; and of course your Lordships' House will be enlivened and assisted by her presence.

My Lords, surely good communications depend on good relationships between people, particularly in these days of IT, and not on geographical location.

My Lords, that is what I said earlier. I think that even in Marylebone Road there are telephones.

My Lords, having attended many services officially on behalf of Westminster Council in the Methodist Central Hall, I would regret any change in that regard. Does the noble Lord think that the proposed move is in any way connected with press reports that the serving of liquor is to be allowed at functions there? Are the Methodists moving because they feel they cannot stay in a building where that happens, or is it because the cost of the building has become far too great?

My Lords, as far as I am aware, no final decision has been made by the appropriate body as to whether they are going to move or not. Whether it is because alcohol is going to be served, I do not know. The decision really is a matter for the internal governance of an organisation which is, and ought to be, wholly free of state control or even ministerial comment.

My Lords, does my noble friend agree that there is nothing wrong with serving liquor? After all, at Cana the water was turned into wine.

Developing Countries: Unsustainable Debt

3.4 p.m.

What actions they have taken to reduce developing countries' unsustainable debt following the G8 summit in Birmingham.

My Lords, following the Birmingham summit, the Prime Minister has written to the managing director of the International Monetary Fund and the president of the World Bank to ask them to take forward the proposals discussed there. The Chancellor of the Exchequer has invited Church Leaders and heads of non-governmental organisations to a second Downing Street seminar on debt. This week UK officials have been discussing debt relief for a number of developing countries in the Paris Club.

My Lords, will the noble Lord give an indication of what went on at the meeting on 2nd/3rd June concerning the debt situation in Rwanda at which Britain was going to raise the issue of reducing unsustainable debt for a country which has very little ability to repay those loans?

My Lords, Rwanda is one of the countries to which urgent attention has been and is being given. As the noble Lord knows, the HIPC initiative has been in operation for some time now. The impact of the Birmingham summit was the speedy and determined implementation of debt relief to more countries under the HIPC initiative. The intention is that all poor countries should have begun the process of securing debt relief by the year 2000. I accept that the conditions in Rwanda make a very strong case for that country.

My Lords, I recognise the considerable contribution Her Majesty's Government have made to moving forward the debt reduction plans. But does my noble friend agree that, as long as the United Kingdom remains 14th among the 21 major aid donors in the level of its aid, we are on rather shaky ground when we seek to persuade other countries to increase their debt relief, as they are always in a position to say that they make a major contribution through increased official development assistance?

My Lords, I think that both are necessary. It is necessary for us to pay our share in the aid programme. Indeed, the Secretary of State for International Development is working particularly hard in that area. But at the same time the contribution of all of us to debt relief under the HIPC initiative and in pursuance of the Naples Agreement ought not to be put on one side.

My Lords, does the noble Lord agree that the unsustainability of these loans would suggest that in the past many of them were blown rather than properly invested? What will be done to make certain that future aid will be properly invested so that it can be properly sustained?

My Lords, that is the thrust of the HIPC initiative and why progress on it has, for some people, been too slow. The intention of relief of debt for the heavily indebted countries is that they should qualify for this relief only when they have shown that they have a sustainable programme of economic reform in compliance with the requirements of the International Monetary Fund.

My Lords, on the evidence of the current progress of the Heavily Indebted Poorer Countries initiative, there are only four countries that will have full debt relief by the year 2000; namely, Bolivia, Guyana, Mozambique and Uganda. Does the Minister agree that this shows woeful complacency on behalf of the G8 with regard to the cause of international debt relief? Are the Government willing to set a shining example to the other creditor countries by cancelling all UK aid and export credit debt by the year 2000 for the benefit of the world situation?

My Lords, in response to an earlier question I acknowledged that there is concern about the slow progress of the HIPC initiative. It is not quite as bad as the right reverend Prelate said. Burkina Faso and Cêote d'Ivoire can be added to the list that he mentioned, but I would not expect him to be satisfied with that. There are major problems for us in deciding unilaterally to forgive our debts, not least the fact that we are far from being the largest creditor country. If we were to forgive our debts unilaterally, that would relieve the pressure on other creditors. The money would go to the governments rather than to those most in need in the countries concerned. It is not quite as simple as some very well meaning people seem to believe.

My Lords, does the noble Lord agree that one of the problems with debt relief is that it tends to penalise the responsible in favour of the irresponsible?

My Lords, I believe that that is what I said in response to the question about the HIPC initiative. If debt relief is to be effective, it has to go to those countries which have their economies under control and which can demonstrate that the benefits of debt relief will go to those most in need in those countries. To that extent I agree with the noble Earl.

My Lords, I know parts of Africa very well. Does the Minister agree that we owe those countries quite a lot and that they are in great trouble? Having to pay back debts to other countries is like having a noose around their neck. They want to pay back. Some of the African countries are in a disastrous state and people are starving. Does the Minister agree that some of the wealthier countries should give those countries more money?

My Lords, of course all of us agree with the sentiments expressed by the noble Baroness. I do not know whether it is of any consolation to her to know that at the Paris Club meeting this week, to which I have referred, it was agreed that Senegal can be added to the countries which will get enough debt relief to reduce them to the debt sustainability level of the Naples Agreement, which is 67 per cent. We hope that other countries in Africa and elsewhere will be added to that list.

My Lords, would the noble Lord inform the House how plans for a proposed millennium bond are progressing?

My Lords, I am afraid that the noble Baroness has caught me out. I shall have to write to her.

My Lords, does the Minister agree that it is precisely his language and that of others about getting the economies of the countries concerned under control which lies at the root of the difficulty? For a country such as Rwanda the decisions that it would have to take in order to get its economy under control would be deeply damaging. Is he aware that it is for that reason that that country and others find themselves quite unable to qualify for the HIPC and other initiatives?

My Lords, that is quite correct and why I put the issues of aid and debt relief side by side rather than falling for the temptation of mixing them up. It is quite clear that Rwanda is in particular need of huge levels of aid—and not in the form of loans, which would create debt.

My Lords, I appreciate the steps that the Government have already taken this week, but is the Minister aware that the media have talked about differences among the heads of G8, with Germany being particularly unto-operative? Can the noble Lord inform us of the extent of the support which he is getting for debt relief from other countries in G8?

My Lords, I believe the noble Viscount will understand if I prefer not to criticise foreign governments at this Dispatch Box. I have made it clear that this country has been taking a lead. The Prime Minister and the Chancellor of the Exchequer have personally sought to press matters forward faster than they have been progressing. Logically, that implies that there are those who are less enthusiastic, but I would prefer not to name them.

Takeovers: Eu Proposals

3.15 p.m.

What progress they are making in their negotiations with the European Commission over the latter's proposals for a directive on takeovers.

My Lords, the Commission presented a revised proposal for a directive to the Council in November last year which took into account amendments proposed by the European Parliament. Since then there has been one meeting at Council level which took place last December under the presidency of Luxembourg. At that meeting all member states made clear that the proposal was still being examined and consequently the views expressed were preliminary ones. There have been no meetings under the presidency of the United Kingdom to discuss the directive.

My Lords, I thank the noble Lord for that reply which, I suppose, is as optimistic as he can make it. Since the directive, as drafted, would, among other things, introduce tactical litigation into our excellent system of mergers and acquisitions, does the noble Lord agree that this is yet another example where introspective legislation from Brussels is potentially very damaging to our wider commercial interests? Furthermore, is it not very misguided, even by the standards of the European Commission, to plan a directive of this kind when the various European regimes are so different from our own and from each other and where, for example, bearer shares are common and hostile bids are a rarity?

My Lords, as I implied in my Answer, it is very clear that many of the member states still have objections to the way in which the Commission has put forward this directive, very much taking the point made by the noble Lord that very different circumstances apply to takeover regimes in each country. The objective of protecting shareholders under any takeover regime is important, and that is at the heart of the directive. It is too soon to speculate as to whether all member states are happy with the way in which the directive is currently couched. We should wait for the next stage.

My Lords, does my noble friend agree that the UK takeover code system in the City of London has been operating well and, indeed, progressively better over the past 30 years? Does he further agree that it has served the shareholders of this country extremely well? It has avoided litigation which can lead to delays in what may be desirable in terms of changes in company structure. Does my noble friend agree with me that it is not necessary for there to be a legalised system operating in each country of the European Union just because such may be desirable in some member countries and not in others?

My Lords, I agree with everything that my noble friend has said. I believe that our non-statutory basis has been extremely successful for both shareholders and companies. If we wish to progress to a situation where it would be as easy for our companies to take over European-based companies we shall need to find some common causes. Currently, I believe that it is fair to say that our national system is the envy of all other member states. We are trying to arrive at a system whereby our own companies wishing to make takeovers in Europe will benefit from the same kind of regime. I agree that it would be best if it were non-statutory, but let us see what we can achieve.

My Lords, is the Minister aware of any proposal to bring forward this matter under the Austrian presidency?

My Lords, does my noble friend agree that our system, such as it is, takes insufficient account of the interests of employees and that it should be improved in that direction before it can become an example to anyone else?

My Lords, there has probably always been some misunderstanding about how the interests of employees can be taken into account. Two current directives take account of employees' interests in change of ownership situations and run parallel to the proposed statute. It has always been clear, but misunderstood, that consultation with employees is possible under the existing takeover code. Issues that arise relate to secrecy and the protection of existing shareholders' rights in the run-up to a bid. Our own system does not in any way prevent consultation with employees.

My Lords, does my noble friend recall that Sub-Committee E of the Select Committee on the European Communities considered the matter deeply and that its recommendations were accepted by the previous government? Has there been any substantial change in policy since 1st May last year? If so, perhaps my noble friend could tell us about it.

My Lords, I am not fully aware that the previous government developed a policy on this matter. However, to the extent that we are studying the existing legislation, we are still to be convinced that any directive will improve this country's non-statutory basis for dealing with takeovers. Until we are convinced that that could be improved, we see no reason to move away from our current highly effective and successful system.

My Lords, would the noble Lord the Minister confirm to the House that the Commission intends to bring in any directive under single market legislation, which will therefore be subject to the dreaded qualified majority vote in Brussels? Would he further agree that this might be one of several cases which might provide a good test as to whether the Government's charm offensive is working in Brussels?

My Lords, I do not think that this is exactly a matter of charm, although charm is always helpful. Indeed, I find that in most negotiations the aggressive stance is usually not appropriate when I am with my European colleagues. I have no doubt that a little charm would not be unhelpful, but the debate is really about the substance of the matter. We are still far from getting to the substance of the matter because we do not know what other member states will put on the table when, as the noble Lord, Lord Geddes, predicted, the Austrians raise this question at the next Council, as I am sure that they will. We must wait and see the positions of all other member states. However, I am sure that we shall adopt our usual charming stance.

My Lords, when the noble Lord exercises his undoubted charm, can he tell us whether or not this matter can be dealt with by qualified majority voting?

Yes, my Lords, this matter will be dealt with by qualified majority voting.

Bosnia And Kosovo: British Forces Costs

3.22 p.m.

Whether the continuing cost of participation of British forces in Bosnia and of potential operations in Kosovo will be borne by the Treasury contingency reserve.

My Lords, the plans underlying the 1998–99 defence budget did not assume that it would cover short-term operations such as British forces' participation in operations in Bosnia, or potential costs in Kosovo. Where these cannot be accommodated within the budget, such costs have in the past been the subject of a claim on the reserve.

My Lords, I cannot really thank the noble Lord for that Answer because it is not really an Answer to the Question. The noble Baroness, Lady Symons of Vernham Dean, assured the House last November that until June 1998 those costs would be paid for by the Treasury foreign policy budget. Will that continue until June 1998?

My Lords, nothing in my Answer is inconsistent with what my noble friend Lady Symons said. In recent years, where unprogrammed operational costs could not be accommodated in the defence budget it has been the practice to seek access to the reserve. My noble friend Lady Symons would have been aware of that. Those arrangements are currently under review and are being considered in the context of the strategic defence review.

Business

3.24 p.m.

My Lords, at a convenient moment after 3.30 p.m. today, my noble friend Lord Clinton-Davis will, with the leave of the House, repeat a Statement that is to be made in another place on the national minimum wage. 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. Peers who speak at length do so at the expense of others.

Business Of The House: Northern Ireland (Sentences) Bill

My Lords, while I am on my feet, perhaps I may take this opportunity to refer to a matter which was raised in your Lordships' House this time last week. A number of noble Lords expressed concern that the Second Reading of the Northern Ireland (Sentences) Bill was provisionally scheduled for Thursday 25th June. I am pleased to say that, following discussions through the usual channels, the Second Reading of that Bill will, assuming that it arrives in good order from the Commons this week as anticipated, now take place on Monday 29th June. I should like to express my appreciation to all those who co-operated in arranging that change of business.

My Lords, I should like to express appreciation on behalf of the 12 or so Peers from Northern Ireland who would like to be present at their place of duty in Northern Ireland on that day. We are grateful to the noble Lord the Government Chief Whip and his colleagues for meeting our wishes. In return, I think that I can undertake that we, on our part, will abstain from the ancient Irish tradition of voting early and voting often.

My Lords, on behalf of these Benches, perhaps I may express our thanks for the appreciation which the noble Lord the Government Chief Whip has shown to the usual channels. It has come up with the correct result. Will the noble Lord confirm that the Opposition have agreed to reduce the normal time intervals on that Bill so that it can be passed successfully before the Summer Recess? In view of that fact—and because most Members of the House who take an interest in the matter will be expecting the normal intervals to be observed—could the noble Lord possibly give us some advance notice of the dates for the Committee, Report, and Third Reading stages? In view of the offer that we have made, will the noble Lord confirm that he will not seek to rush the House in its deliberations and that he will allow plenty of time, not only for the noble Lord, Lord Molyneaux, and his friends on the Cross-Benches, but also for Peers on all sides of the House to be able to express themselves fully on what is clearly a very important subject?

Yes, my Lords. I am glad to be able to say that, with the change of date, there will be the normal time interval between First Reading and Second Reading. I fully appreciate the co-operation that has been shown in reducing the normal time intervals. It might help your Lordships to know that the Committee day for that Bill is provisionally Monday 6th July. As always, we shall allow plenty of time for debate on that Bill, as on all the other Bills that we are considering.

Pensions (Amendment) Bill Hl

My Lords, I beg to introduce a Bill to require the Secretary of State to report annually on service pensions, war pensions, and war widows' pensions. I beg to move that this Bill be now read a first time.

Moved, That the Bill be now read a first time.—( Lord Morris of Manchester.)

On Question, Bill read a first time, and to be printed.

Scotland Bill

3.28 p.m.

Second Reading debate resumed.

My Lords, it gives me great pleasure to open the second day of the debate on the Second Reading of the Scotland Bill. Yesterday we had a wide variety of interesting contributions to this debate. I am sure that we shall hear many more today.

Much has been said about the constitutional architecture; the position of Scotland in the Union; the relationships between the devolved parliament and administration and their counterparts in London; relations with Europe; and the financial arrangements for the parliament. These are all important issues which must be debated properly.

But the parliament is not just about the dry bones of these arrangements the details of which will be known only to those in close contact with it. The real heart of the matter is what the parliament will mean for the very people of Scotland who decided that it should come into being.

The Bill gives the Scottish parliament the power to make laws for Scotland. Substantial scope to do so will be devolved to Edinburgh as a result of the Bill. The Bill sets out clearly and in necessary detail the powers to be reserved to Westminster. The fact that anything that is not listed in the Bill as reserved will be devolved to Edinburgh means that a very wide range of responsibilities will be transferred.

The powers to be devolved are in fields which are crucial to Scotland's economic and social well-being: health, education and training, local government, social work and housing, economic development and transport, law and home affairs, environment, and agriculture, forestry and fishing. These are all issues that have an effect on the everyday life of Scotland.

It is particularly inspiring that for the first time in 300 years legislators elected solely by voters living in Scotland will have the power to pursue a distinctive Scottish agenda which meets the needs and aspirations of the Scottish people. There will be an opportunity that is simply not available at Westminster to devote significant amounts of time to debate and legislate on Scottish issues which have been neglected for many years. For example, I expect that land reform—so badly needed for so long—will be among the top priorities for the Scottish parliament.

Some of the doom and gloom speeches made yesterday which adopted phrases such as "despondency close to despair" at the prospect of doomsday scenarios I found to be both depressing and unrealistic. It was strange to hear some noble Lords speak as if the contents of the Bill had appeared out of nowhere; as if the Scottish Constitutional Convention had not worked hard and long for some six years to produce its blueprint for a Parliament; as if the Government's White Paper had not been debated in both Houses of this Parliament before a referendum in which the people of Scotland had said a resounding "Yes" to the two questions put to them.

From the Front Bench opposite the noble Lord, Lord Mackay of Ardbrecknish, very correctly and properly accepted the decision of the people and said that the only thing to do was to try to make the parliament work. However, other speakers yesterday appeared to believe that the whole idea of a Scottish parliament was a bad one—one noble Lord even said that it was a rotten idea—and that whatever the people had said or thought, it would all end in tears. I regard such an attitude as rather arrogant and patronising, especially when it comes from noble Lords whose party's views were decisively rejected by the people of Scotland.

The Scottish Constitutional Convention drew on the experience of political parties and Scottish civic society—organisations large and small—and the Churches and trade unions to build a vision of a better Scotland. I take great personal pleasure as the current co-chair of the convention in seeing the results of their years of work coming to fruition in legislation.

The Scottish parliament will be closer to the people of Scotland, not just geographically but in the way it operates. It will be for the parliament itself to decide its working methods, but I expect the parliament and the executive which will be accountable to it to have their collective ears firmly to the ground. Listening as well as acting will be a very high priority.

I am particularly pleased that the constitutional convention recognised that a unicameral legislature can offer the possibility of a new, more inclusive style of politics. When the word "unicameral" is used in this House many noble Lords appear to be able only to conjure up a picture of another place as it now stands alone without a second chamber. I know of no unicameral legislature in the world that is structured just like the British House of Commons. I can speak from first-hand experience of the unicameral parliaments of the Nordic countries. Norway, Sweden, Finland, Denmark and Iceland are recognised throughout the world as successful, healthy and well-functioning democracies. All of them have unicameral parliaments. They organise in different ways. My noble friend Lord Hughes indicated yesterday the mechanism by which Norway met its requirements and how its unicameral Storting divided for certain legislative purposes. There are many different ways to ensure adequate scrutiny, revision and checks and balances. The Nordic parliaments demonstrate how much arrangements can improve openness and provide for penetrating scrutiny of the executive.

We are determined to learn from the experience of others and ensure that proposals for legislation are thoroughly and openly examined from their early stages. I should like to quote some independent research into single chamber parliaments conducted recently by the Constitution Unit of the School of Public Policy at University College London. Noble Lords will find this report in the Library among the papers for the Consultative Steering Group established by my right honourable friend the Secretary of State for Scotland and chaired by my honourable friend the Minister of State for Devolution, Mr. Henry McLeish. The authors of the report state:
"Parliaments need to be designed to ensure they are a constant, credible and legitimate check on government … well designed unicameral systems can produce good government".
They add,
"The [Scotland] Bill should result in a Parliament which will serve Scotland well in the same vein as the Swedish Riksdag or the Danish Folketing".
The members of the Scottish parliament will be close to the people they represent. Because of the voting system that we are putting in place they will also be a fair reflection of opinion in the country. In a relatively small country it will be possible for ideas, proposals and even draft Bills to be debated openly, sensibly and constructively. I have seen this happen in Nordic countries. It can and will happen in Scotland. I am quite sure that when making decisions the parliament will want to experiment with new ways of consultation and pre-legislative scrutiny. The work being carried out by the Consultative Steering Group will give the parliament a flying start in determining its procedures.

The Consultative Steering Group already seeks to involve Scottish civic society through its consultation on how the parliament should work. It is one of the largest consultation exercises undertaken in Scotland for some time. The views of groups and individuals will be considered by the CSG in presenting its recommendations later this year.

In closing, I look ahead a few years. I hope to see a parliament that is about openness, accountability and accessibility, in which the people of Scotland can play a real part in shaping their future and not be dismayed or put off by exclusivity, mystique and seeming irrelevance. I say that this is my hope for it is not in my gift to deliver this. That responsibility falls squarely on the politicians of Scotland and above all on the people of Scotland who showed their willingness to take on that responsibility last September.

It is right that this House scrutinises the Scotland Bill properly, but in looking at the detail we must remember what should now be an agreed vision, as all political parties in this House are committed to make the Scottish parliament a success. Let us work together to ensure that we have a scheme that recognises the benefits of diversity within the Union. We in this House have a responsibility to give Scotland the Bill that it so clearly wants for the parliament it so clearly wants. I hope and trust that we shall deliver.

3.40 p.m.

My Lords, the Scotland Bill is the third Bill that the Government have introduced in their radical constitutional agenda which is, in its intentions if not its dimensions, of Cromwellian scope. Before considering the Bill, I should like to put it in context.

The first great change we see in our constitution is the shift from representative government to government by referendum. We have already had a referendum for Wales, Scotland and London, and we are promised one on proportional representation. It is significant that there will be no referendum for England or for the way England governs itself. Those amount to a break with the great tradition of representative government that our country has had over several centuries.

The second great change is the shift from government by legislators to government by judges. That has been most dramatically exhibited in the passage of the Human Rights Bill soon to become law. We now have introduced into our constitution a convention whose interpretation by our judges is capable of striking down every single Act of Parliament on the statute book. It is true they cannot do so simply by their decision; but by making a declaration of incompatibility they can in effect compel the legislators to make that change.

The third great shift is in the fragmentation of the Executive: from the Crown in London to the executives in Scotland, Wales, and—to continue a previous tradition—in Northern Ireland. A legislative fragmentation will go with that.

Finally, anticipated at the centre although not yet necessarily planned for the next election, is proportional representation. I spent a certain amount of my life in the European Parliament. I had the opportunity of watching at close quarters proportional representation systems at work. Whatever their merits, they are not recipes for decisive government. On the contrary, they seem to me more often than not to produce equivocation.

If one adds all those factors together, one will see that in our nation there will be a great decentralisation of power. What is lacking in the face of these centrifugal forces is something that will bind the whole thing together. I see no evidence of that in the Government's programme.

That is why I find it almost risible that, whereas in the United Kingdom the doctrine of parliamentary sovereignty is now fast ebbing away, in the Scotland Bill it is the primary constitutional assertion.

Clause 27(7) states:
"This section does not affect the power of the Parliament of the United Kingdom to make laws for Scotland".
So much for the division between reserved powers and delegated powers, my Lords. In Clause 95, on supplementary powers, one can see a Henry VIII clause par excellence. It states:
"Subordinate legislation may make such provision as the person making the legislation considers necessary or expedient in consequence of any provision made by or under any Act of the Scottish Parliament".

I have come to the conclusion that the Government are playing some kind of joke on us. In what I took to be the Claim of Right, 1989, and the sentiment of the subsequent constitutional convention, I understood the Scots to be acting as a nation, agreeing to remain within the United Kingdom, and agreeing that certain reserve powers should be exercised from London. I believed that was the sentiment behind the referendum decision in Scotland many months ago.

Even if I am wrong on that, all the Government have to do is to look back to our nation's experience in Northern Ireland to see how foolish Clause 27 is. As I am sure the parliamentary draftsman knows, the Government of Ireland Act contained Section 75 which was, in terms, precisely the same as Clause 27. Two years after that section was enacted, Sir James Craig, perfectly within the powers of the Act, decided to change the electoral system of local government from proportional representation to first-past-the-post. The Lord Lieutenant, who had the power under Section 12 of the Act to do so, delayed the measure. He was faced by the Northern Ireland Government with the threat of resignation. Against that threat he gave in; and since that moment, until the great events of the early 1970s, this Parliament never sought to legislate for devolved matters in Northern Ireland. Indeed, it was always a tradition in another place that no Questions were to be asked about the Northern Ireland Government in those areas which were clearly delegated.

If that is how we behaved towards Northern Ireland—whose Parliament was set up, not to distance Ulster from London, but to make sure that it was never distanced any further from London—how can the measure have any relevance to the kind of relationship that we shall have with Scotland? Before the Government go any further, I urge them to think carefully about Clause 27(7) and its relationship with Clause 95.

Other parts of the Bill are equally likely to cause offence. One is the differential treatment of the question of human rights. As I have recounted, under the Human Rights Bill if a judge in England or Wales considers that a statute contravenes the Convention on Human Rights the statute is not struck down: there is simply a declaration of incompatibility. But Clause 28 of the Scotland Bill treats human rights in a quite different way.

In Scotland, if a statute contravenes the Convention on Human Rights there will be no declaration of incompatibility. That statute will simply be struck down. Why should the Scottish parliament be a second-class citizen in respect of human rights? Why should Scottish citizens not have the same treatment as the rest of the country? It is likely that as the jurisprudence develops there will be different rules about the same clauses in the convention, bearing down upon statutes of a similar character. That is not desirable.

It is clear from even a glancing acquaintanceship with the Scotland Bill that the judges are to play a very important role in patrolling the constitutional boundaries—though, heaven knows, one can see that they are likely to have their work cut out after even a quick look at Schedule 5, whose definition of reserve powers runs into no less than 19 pages.

The final arbiter of all these matters is to be the Judicial Committee of the Privy Council. I believe that that is the right decision. However, I listened with great interest to the outstanding speech delivered to your Lordships last night by the noble and learned Lord, Lord Hope of Craighead. He rightly mentioned that there were insufficient judges in Scotland who were Privy Counsellors. He went on to say that he hoped that the Government would do something about that.

He also touched on, by implication rather than directly, the composition of the Privy Council when it is making decisions about the borders between what the Scottish parliament and the Westminster Parliament can do. I understand the reasons why that is of concern. However, I believe that it would be disastrous if we got into the habit of determining the composition of the Judicial Committee of the Privy Council according to the origin of its members. Once we do that we will distinguish between Judicial Committee decisions made by three Scots as opposed to two Englishmen and vice versa. Once we get into that kind of game the decisions of the committee will become discredited. Once its decisions become discredited the Bill will be ashes. Therefore, I urge the Government to think very carefully and to take seriously the question of deciding who should sit in the Privy Council.

I have one more theme to touch on before I sit down, although I realise that I have already spoken for 12 minutes which, in terms of the number of noble Lords who wish to speak, is unusually long. It is the relationship of the Bill to the constitution of the rest of the United Kingdom. It was Dicey who in the 1880s memorably said in his book on home rule in Ireland that what was being considered was not the dissolution of the firm but a change in its articles of association. Here we are not just creating a new constitution for Scotland; we are creating a new constitution for the United Kingdom. What the Bill does to the rest of the United Kingdom is just as important as what the Bill does to Scotland.

That is where I find the Bill rather thin. In my submission, it is essential that the Government come forward with decisions on a range of issues connected with the number of Scottish Members of Parliament who sit in the United Kingdom Parliament; their effect on the political balance of power in another place; the scope of the responsibilities of the Secretary of State for Scotland in the Cabinet; a range of questions in relation to the financial powers of the United Kingdom Parliament in Scotland; and the powers of the Scottish parliament to modify those powers. All those issues will begin to emerge once the Scotland Bill becomes an Act and operational. If we have not found solutions to those problems which are fair to all sides the system will have imperfect foundations. What will build on those imperfect foundations will be deep resentments; resentments which will ultimately break this settlement.

The late Lord Birkenhead, when he was Mr. F.E. Smith speaking in another place in 1911, said that between union and separation there is no middle course. I hope that in this case he is wrong and it must be our responsibility to do everything we can—

My Lords, is the noble Lord aware that the remark of Lord Birkenhead was identical to one that was made on the Union of the Crowns in 1603, which was wrong?

My Lords, I was not aware of that, but I could not have been corrected by a more noble Lord. Sadly, Mr. F.E. Smith was right in relation to Ireland. In the 1990s and in the millennium to come, it is our task to prove wrong the sentiment which he expressed then, and which reflected a previous observation made so many centuries ago. But we will do so only if we take these issues and others that your Lordships have raised with the utmost seriousness.

The National Minimum Wage

3.57 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 President of the Board of Trade on the national minimum wage. The Statement is as follows:

"Today the Government publish the report of the Low Pay Commission and spell out how, in our response to that report, we will begin to end the scandal of poverty pay.

"In the labour market we inherited just over a year ago, many workers received such excessively low rates of pay that they were driven to work long hours simply to make ends meet. We all know the examples: a homeworker paid as little as 35 pence an hour; a cleaner £1.30 an hour; or a security guard £2.35 an hour—and bring your own dog!

"In addition, such low levels of pay mean that taxpayers provide massive sums of income subsidy and businesses, large and small, striving to compete, as Britain must, on quality and value for money, see their position undermined not by fair competition, but by cutthroat cowboys. And with the lack of any fair and basic minimum standards at work, the gap between real hourly earnings of the lowest and highest paid almost doubled in the past 20 years.

"This was the outcome of the strategy of the previous Government; that Britain aimed to be merely the cheapest rather than the best, no longer the workshop of the world, but the sweatshop of western Europe.

"This Government believe in decent standards as a spur to competing sustainably on quality, to tackle social exclusion and to make work pay.

"We have already made substantial progress. The working families tax credit will guarantee an income of at least £180 per week for families working full-time. No family with weekly earnings of less than £220 will pay tax. The reform of national insurance contributions will reduce barriers to work. The New Deal will help the young and the long-term unemployed to move from welfare to work; and the Fairness at Work White Paper and the work of the Social Exclusion Unit are all part of the wider strategy to reshape Britain.

"The national minimum wage is a key element in this range of policies. It will help create a better rewarded and more committed workforce, itself a force for driving up standards and helping competitiveness. Experience elsewhere shows too the likelihood that staff turnover will be reduced and investment in training encouraged, which itself improves productivity.

"We were determined from the outset that the national minimum wage must be introduced sensibly and in accordance with prevailing economic conditions. That is why we set up the Low Pay Commission, with George Bain in the chair, after only 90 days.

"The commissioners were publicly recruited following Nolan principles, and drawn from among employers, employees and independents, each serving in an individual capacity. Their work is impressive. I would like to pay tribute to George Bain and the other commissioners who have done a quite remarkable job.

"As well as studying 500 written submissions, they took oral evidence from a wide range of organisations, and held over 200 meetings throughout the United Kingdom. They heard from large and small employers, trade unions, individual employees including homeworkers, and a range of other interested organisations.

"I wholeheartedly commend their immense hard work, energy and willingness to give so freely of their time for this important task. As we made clear in our evidence to the Low Pay Commission, the government are particularly concerned to ensure that our national minimum wage should be set at a level which avoided the risk of adverse effects on employment, inflation and the PSBR.

"We have been particularly mindful of the need to protect the position of young people. It is in our view essential that we avoid reducing the relative attractiveness to young people of staying on in education and training, and to avoid discouraging employers from providing training for those in work. These concerns have guided our judgment on the decisions in response to the commission's recommendations.

"The Government welcome the report and support all of the commission's key recommendations, subject to consultation on some of the practical details. In particular we accept a main rate of £3.60 per hour before deductions with effect from April 1999. When combined with the working families tax credit and other benefits, for a one-earner couple with two children, this means an effective wage of more than £7 per hour. We accept that all those aged 16 to 17 or on formal apprenticeships should be exempt, and we also accept the proposal to institute a development rate. The commission proposes that that minimum rate should apply at £3.20 to all 18 to 20 year-olds, and to all workers starting a new job with a new employer and receiving accredited training.

"We are however at a critical point in the economic cycle. The Government are determined to proceed with all due caution with the introduction of that rate, especially for the crucial group of those aged 18 to 21.

"We have therefore decided, for this group, to phase it in two stages, with an initial transitional rate of £3.00 from April 1999, which will increase to £3.20 in June 2000. However, we are asking the commission to review the position of 21 year-olds again in 1999, following the implementation of the £3.00 transitional rate, and then to provide a further report on whether, in the light of experience to that date, they reconfirm their advice that 21 year-olds could safely be covered by the main adult rate. I am pleased also to announce that we shall also be asking the commission to continue its work monitoring and evaluating the introduction and impact of the minimum wage.

"Introducing the minimum wage at the levels I have announced today will help some 2 million workers escape from poverty pay without adverse effects on jobs or inflation. These will include: 1.4 million women, over 1.3 million part-time workers, some 200,000 young people, around 110,000 homeworkers, approximately 175,000 lone parents who work, and some 130,000 ethnic minority workers.

"The remaining Low Pay Commission recommendations deal with such technical matters as the composition and reference period for calculating the minimum wage, the handling of benefits in kind and its application to homeworkers and pieceworkers.

"We have fully and carefully considered these recommendations and accept them in principle, subject to consultation on the practicalities and detail of their implementation when formulating the regulations implementing the national minimum wage.

"Both Houses will have an opportunity to discuss all the matters on which the commission have made recommendations when we lay draft regulations in Parliament following that consultation.

"In order to assist right honourable and honourable Members I shall place in the Vote Office a paper setting out the Low Pay Commission's recommendations as well as details of where further consultation is required.

"Today marks a further milestone in implementing this Government's manifesto commitments. The introduction of the national minimum wage would never have taken place under a Conservative administration. From the outset the Government's approach to the minimum wage has been that it must be approached in an atmosphere and a framework of partnership. The Low Pay Commission has shown that that approach was the right one. It is clear from its work that there is now an overwhelming welcome for the principle of the minimum wage. Among the few people out of step appear to be the party opposite. I challenge it today on behalf of the 2 million people benefiting from these proposals, to say whether it will, if returned to office, seek to reverse the steps we take today.

"The minimum wage, along with our other policies, such as the working families tax credit, will help remove the worst cases of exploitation in the workplace, cases which have no place in a modern Britain.

"I commend the report to the House."

My Lords, that concludes the Statement.

4.6 p.m.

My Lords, I thank the Minister for repeating this very important Statement. Is he aware that, although at long last we welcome the official Statement from the Government, it has been massively leaked for weeks, apart from copies apparently being privately available to the trade unions ahead of Parliament? Unlike others, I have not had the chance to read this 285-page report in the half hour that was available before entering the Chamber.

Is the Minister aware that we welcome the fact that the Government have agreed a lower sum for the young, one of the vulnerable groups that will suffer most from this ill-conceived doctrinaire concept? The Minister claims that the New Deal will help the young move from welfare to work. Can the Minister say how that will happen? He is absolutely right; we would not have introduced the Bill, although we most certainly agree with the minimum income.

Up to this very minute Parliament has been legislating about a pig in a poke. The National Minimum Wage Bill has passed all of its stages in the other place without honourable Members knowing for certain what the national minimum wage will be. Here we have gone two-thirds through the Committee stage, which is a very abbreviated stage considering the number of unknowns and the number of blank cheques that the Government are asking us to sign, but only now are we being told some of the details. We did have a leaked figure, with counter leaks from within an apparently divided Cabinet that a sort of Dutch auction is going on, with the Chancellor of the Exchequer trying to bid the figure down as if he were in some kind of oriental bazaar. There is more that we need to know.

Mr. Rodney Bickerstaffe, the Secretary General of UNISON, said in a television interview last Sunday that there was a lot of pressure by the Treasury on the Low Pay Commission to keep the national minimum wage down. Can the Minister say what pressure was brought to bear by the DTI on the Low Pay Commission with regard to other aspects of its deliberations? To what extent did the different Government departments interfere with the supposedly independent and impartial inquiry? Why were the terms of reference of the Low Pay Commission circumscribed by the Secretary of State and Clause 5 of the Bill, which has not yet become an Act, to produce a pre-determined result? If, as the Minister stated, the commissioners were widely recruited, why was there no representative of genuine small businesses?

Why, if the commission had been so minded, was it not able to recommend different figures for different areas, sectors of employment, different size undertakings, different ages over 26—for example, senior citizens—or different trades or occupations?

On Second Reading, I asked why the President of the Board of Trade had expressly forbidden the Low Pay Commission to take regionality into account. May we please have an answer now? Despite using the American minimum wage as their model, which provides many exemptions for small businesses, why will the Government not give the same exemption to our own small businesses?

The Minister has said that this measure will help about 1.4 million women. If the American experience is anything to go by, why would the American equal pay Act 1963 have given exemptions to business with an annual turnover of less than 500,000 dollars? Is he aware that tables on page 104 of that report show that a national minimum wage of the order proposed by the Government would add almost 2 per cent. to the wage bill of Britain's agriculture and up to 5 per cent. in the cleaning industry? Do the Government agree that it is small businesses which are currently providing the greater number of new jobs, while big businesses are still shedding them?

Although the Government must be tired of being reminded of the Deputy Prime Minister's frank admission that,

"any silly fool knows that the national minimum wage would result in job losses",

perhaps they will tell us whether they agree with the noble Lord, Lord Haskell, who as recently as 18th May at col. 1277 agreed that if an employer had to pay more in wages he would shed labour.

Do the Government agree with Professor Bain, the Chairman of the Low Pay Commission, who told The Times on 3rd June 1997 that he would be,

"surprised if there were not some job losses, but the question is whether those jobs would be better lost anyway"?

Do the Government agree with what he appears to have been saying: that job losses would be a price well worth paying? Can the Minister say whether there is any truth in the report in the Mail on Sunday last Sunday that Professor Bain has warned that he might resign if the recommendations of the Low Pay Commission are not accepted?

Do the Government agree with the analysis which appeared in The Times on 17th June by Christine Buckley who also repeated the adverse effects on employment of the national minimum wage, especially on young employees? Do they agree with that same analysis which repeated my warning on Second Reading; namely, that it would have an adverse effect on the Government's Welfare to Work programme? Will the Minister say whether that is the advice that the Treasury has given to the Chancellor?

Do the Government agree with the CBI, which forecast that the national minimum wage,

"could result in rising prices, business closures and unemployment"?

That is despite the fact that the CBI is now reported as saying that it could live with the figure of £3.60.

Do the Government agree that the CBI does not speak for my village store or everybody's local newsagent which are the sort of business that will be hit hardest by a national minimum wage of £3.60? Will the Government be publishing the minutes and rationale of the deliberations of the Low Pay Commission in fixing the figure? We are very curious to know how it could arrive at a figure of £3.60 when in the USA, where the average wage is far higher than in the UK, it is five dollars 15 cents which is merely about £3.15.

What is the Government's attitude to the threat by Mr. Monks that the unions will jump free (whatever that means) from the so-called partnership with the employers and government if the LPC's recommendations are watered down? Is the Chancellor not worried about that? Will the Government introduce fresh legislation to deal with any political strikes threatened by UNISON at its current conference if its demands for different levels of the national minimum wage are not met?

Do the Government agree that this latest interest rate increase, the sixth in 13 months, was due to the fears of the Bank of England's Monetary Policy Committee about the increasing size of wage settlements? What assessment does the Minister have of the impact on wage inflation of the introduction of the national minimum wage?

Do the Government agree with the widely held view, as reported in The Times that:

"A 5.25% pay award by Marks and Spencer was an important factor in the decision"?

Marks & Spencer is generally regarded as a model employer. Does the Minister agree that it was bound to have taken the forthcoming national minimum wage into account and would have ensured that it maintained its pay differentials with other employers?

Do the Government agree with the noble Lord, Lord Healey, who once said in the other place that the minimum wage was something on which the unions will build differentials? How will that help the Chancellor to secure the wage restraint he is calling for? How will the national minimum wage increase productivity and employment, and help to bring down interest rates which are at a damagingly high level?

The Minister said that when we were in government, we aimed to be the cheapest rather than the best. I utterly reject that. I am proud to have been part of a government who made sure that we secured one of the lowest unemployment rates in the world. We were very keen to try to maintain that.

My Lords, is the noble Baroness aware of the edict in the Companion that points out that short points and questions about what is contained in the Statement is all that is allowed when a Statement has been made? We seem to be having a tirade of prepared points of view which have almost no relationship whatever to the Statement.

My Lords, that is absolutely not so. That does not apply to Front Bench speakers and I advise my noble friend to carry on directly.

My Lords, I thank my noble friend for that advice. I must tell him that I intended to do that anyway.

Is it not true that the leaks from Cabinet about the disagreement between the Treasury and the DTI are because the Chancellor wants a rate which will be less inflationary and which will lose fewer jobs? I commend him for that. Does that not look as though at least he agreed with our objections that it would have been inflationary and would cause the loss of jobs? If the recommendation of the Low Pay Commission was not to be accepted, why did the Chancellor not set the rate himself? Is it because, like the matter of interest rate rises being hived off to the Bank of England, this Government wish to hive off their responsibilities to make unpleasant decisions to someone else so that they can say, "not my fault, guy", or in this case, "not my fault, comrades"?

4.17 p.m.

My Lords, I share the noble Baroness's welcome for the Statement. That is the only thing that she said with which I agree. When the Minister responds, I should be grateful if he would correct a point which he made at the end of the Statement when he indicated that the Opposition were against the proposals put forward. I hope that he will make it clear that he was looking opposite him and not obliquely to the Liberal Democrats, because, as he well knows, we stand four-square behind the Government in this regard. We believe that the slave rate wages which have been paid in many sectors of British industry are a scandal. That matter should have been rectified long ago and we entirely support the Government's determination to do that.

I admire the noble Baroness's ability, from a half hour study of the Statement, to produce 43, or perhaps 45, detailed questions on it. In fact, we should admire her skill in turning the speech which she and her colleagues made both on Second Reading and in Committee into that many questions. Of course, we have heard it all before.

The first point I make is that from reading the report, it is clear that the basic minimum wage has been fixed at a point at which the maximum advantage will accrue to the lowly paid with the least effect on jobs. When people have an opportunity to look at the detailed report, they will see that it demonstrates quite clearly that anything over £3.60 or £3.70 per hour starts to have a more significant effect on jobs than the recommended rate. It is demonstrated in the summary of recommendations at paragraph 23 that at the proposed level the national minimum wage will increase the nation's wage bill by a little over 0.5 per cent.

Our party does not wish to be critical of the Government in accepting that fundamental recommendation. Clearly, from what we read in the papers, we understand that there is significant opposition to the rate from sectors of the trade union movement. I await to hear with interest whether the Minister is prepared to comment on that. But having read the report, that seems to be a sensible figure for the Low Pay Commission to have recommended and for the Government to have adopted.

Clearly the significant issue that we ought to spend a little time on and ask the Minister to comment upon is the question of young workers. During the course of studying the Bill in this House, we considered long and hard whether the appropriate cut-off point was 26 years of age, which was the original suggestion by the Government, 21, 18 or indeed 16 years of age. Although there is disagreement between the Low Pay Commission and the Government, we are now moving towards an acceptance on the government side of a two-tier rate. But now is not the time to go into that aspect of the debate. However, when looking at the overall impact of not having the standard minimum rate for all young people, it would be worth while if the Government were to indicate whether they have looked into, and costed, the issue of housing benefit as regards not paying young people the full rate. I assume that that is a relevant factor for the Chancellor of the Exchequer in making his recommendations.

Perhaps I may now indicate where we part company with the Government. Rarely do I want to take a point that the Conservatives have taken because they often have a tendency to look at form rather than substance. However, I have two concerns about the way the Bill and these proposals have been dealt with. First, we have seen a most extraordinary series of events through newspaper reports relating to the fact that the rate and the proposals have been well known for at least a month, despite the fact that there has been no government statement to that effect. It is well known and has been well reported that there is a significant row in the Government over whether the recommendation of the Low Pay Commission should or should not be accepted. Secondly, having at last had the Statement, we find, contrary to every expectation held since the Low Pay Commission was established, that the Government are now saying that they basically agree with the proposals of the commission except in one very critical area where they have decided they will not adopt the recommendation. That is obviously significant.

We know that the Treasury normally likes to control all pay, but this is a classic example of the Treasury trying to pay the dog and bark itself. No one who has been involved in the proceedings on the Bill would ever have expected the Government simply to take the very detailed work of the Low Pay Commission and say, "We like that aspect of it. We like it overall, but we don't particularly want to accept one very key recommendation".

I do not want to say anything further at this stage on that point. However, it leads me to my final point. As the Minister will know, we argued strongly during the course of the Bill for the need to give the Low Pay Commission a much more permanent status. Quite honestly, we have been somewhat surprised in our discussions with the Government and in the debate which has ensued as to why they have not been prepared to make such a commitment. Can the Minister confirm that when we come to review the progress of the National Minimum Wage Bill we will now enshrine into the legislation the permanent status of the Low Pay Commission? There is a clear recommendation in the report that it would like to review exactly what is happening in two years' time. There is a demand in the context of the debate that has followed that that should happen. Otherwise, we are fearful that the sort of rather unseemly political row which has featured in our newspaper reports over the past few weeks will happen every year or every two years when such recommendations are put forward again.

I should like to press the Minister on that point. Is it now quite categoric that the Government will give permanent status to the Low Pay Commission and, dare I say it, in future, unlike this time, adopt its recommendations?

4.24 p.m.

My Lords, I should like to thank the noble Baroness, Lady Miller, for the nice remarks she made about the Statement and about the whole policy of the national minimum wage of which I know she has always been a most active supporter. Indeed, she made that clear during the Committee stage of the Bill. I also thank the noble Lord, Lord Razzall, who I know is very much an adherent of the principle of the national minimum wage. Although we have differences, I believe that they are relatively minor when placed against the backcloth that here we have, for the very first time in this country, something which ought to have been introduced years ago; namely, a national minimum wage.

I turn, first, to the allegation of leaks, which I do not believe is of dramatic importance. To say the least, it is a little irksome for this Government to be lectured about leaks when, in the case of the previous government, it seemed to me that theirs was the only vessel in the world to leak from the top. There has been much speculation in press reports and in the media in that respect; indeed, I do not deny that fact. But four weeks from receipt of a document dealing with an innovative policy is not a very long time for the Government to take to consider all the implications involved. Of course discussions take place in Cabinet where different points of view are expressed. I thought that had also happened in previous governments, but perhaps I was wrong. It is possible that they were all in unison about the disaster that they were imposing upon us.

I turn now to the dire effects of this as suggested by the noble Baroness. I accept the noble Baroness has not yet had time to read the report, but when she does so she will see that they are expressly refuted by the Low Pay Commission. The commission considered in great detail a vast amount of evidence to which I have already referred. As regards the terribly serious impact on small businesses, job losses and all the other adverse speculations in which the noble Baroness indulged, I should point out to the House that the report of the Low Pay Commission has not confirmed any such prospects. I respectfully suggest that the commission considered the matter in rather more detail than the noble Baroness, the shadow Secretary of State or, indeed, the Conservative Party has done. No one has conducted an assessment of the position in such detail. Therefore, to predict all these dire effects is to dramatise the whole situation out of all proportion for a rather simple party political point.

We also had the allegation that there was pressure from the Treasury and the DTI to interfere with the conclusions of the Low Pay Commission. There is not a shred of evidence to suggest that; indeed, I vehemently deny it. The House would be here until next Christmas if I were to attempt to reply to all the points raised by the noble Baroness. It is as well to have all that on the record, but it could all be significantly reduced to one sentence: the Tory Party does not accept the minimum wage. All the rest is verbiage.

The noble Baroness referred to the fact that there was no representative of small businesses on the commission. That reflects a complete misunderstanding of the nature of the Low Pay Commission: there were no representatives of any interests. Those concerned were there because they are people with expertise covering a very wide field. Therefore, they contributed not as delegates or representatives but as individuals using their own personal experience. The remit was set by the Government, and I did not think that there was too much complaint about the way in which we did so. I believe that the remit was a perfectly reasonable way of setting out the issues for consideration. The Low Pay Commission did a very good job in dealing with all the factors involved.

My noble friend Lord Haskel was brought to book, but I could not quite understand why. He is sitting here calmly and is not in the least upset by the attack upon him. I understand that the matter he dealt with did not concern wages but rather investment. He does not accept the view that—

My Lords, I thank the noble Lord for giving way. I certainly would not dream of mentioning anything that I did not believe the noble Lord, Lord Haskel, had said. That is not the kind of thing I would do. However, I refer the Minister to col. 1277 of the Official Report, which I have already mentioned. I refer to a question from the noble Lord, Lord Waddington, at Question Time, who asked,

"Is the noble Lord saying that if an employer has to pay more in wages, he will shed labour and go for new technology, thus being able to operate with fewer employees"?—[Official Report, 18/5/98; col. 1277.]
The noble Lord, Lord Haskel, replied, again at col. 1277,
"I am afraid that that is the way of business today. Increased productivity often means more investment and fewer people".

My Lords, I do not wish to get involved in this debate because it is taking up time. My noble friend Lord Haskel replied to the question asked by the noble Lord, Lord Waddington. That is plain from what the noble Baroness has just read out.

It has been asked whether George Bain will resign. I heard him speak this morning and I did not detect a hint of any resignation being tendered. Of course he would have preferred the Government to have accepted the recommendations in full. It has also been asked why we should bother with the Low Pay Commission at all when the Government are dictated to by my right honourable friend the Chancellor of the Exchequer. I have read stories which claim that certain Members of the Government are opposed to a rate of £3.60. That is not true but that was speculated. I have read all kinds of stories. The only area of difference between the noble Lord, Lord Razzall, and myself relates to young people. I shall discuss that in a moment.

I ask the following rhetorical question. If the Government had simply set up the Low Pay Commission and then accepted all its findings in their entirety without question, I have no doubt that the noble Baroness would have asked whether the Government did not have a view of their own. Weeks ago I stated from this Dispatch Box that we value the work of the Low Pay Commission, but it is for the Government to make up their mind on the evidence. That is a perfectly feasible action on the part of the Government.

It is difficult to respond to all of the questions that have been asked. I shall try to respond to those I have not dealt with, although I have dealt with many of them. As regards small firms, there is no evidence at all that small firms' organisations seem to be discomfited by the evidence before us. I turn now to the points made by the noble Lord, Lord Razzall. I welcome his support. On the question of the rate, we take the view that £3.60 is a sensible rate and that it will not have an adverse effect on jobs in any significant degree. Of course, job gains and job losses occur for many reasons. I cannot reply to the question of the noble Lord on housing benefit as I do not have the figures before me. I shall try to obtain the information and write to him.

As regards young workers, the Low Pay Commission itself states that they are a separate case. The Government have always recognised this is a difficult case and a finely balanced one. The Low Pay Commission's report stated that the concentration of young people in the lowest decile of earnings might lead to the conclusion that the age of 21 or 22 would be an appropriate cut-off point. There is reflected the finely balanced nature of the argument.

I look forward to the discussions that we shall have on this report. I hope that the discussions will be sensible and based upon the real matters at stake, rather than simple Conservative Party prejudice.

My Lords, in assessing the significance of the Statement that my noble friend has repeated, I hope he can help not just myself but also the House in answering two questions. First, he mentioned the figure of 2 million low-paid employees who would benefit from the introduction of the new rate, of whom I think he said 1.4 million were women. Are these people additional to those whom we anticipate will benefit from the working families tax credit, or are they largely subsumed in that group, which, incidentally is to receive a more generous benefit than the new rate for the low paid? Secondly, in considering the relationship between the minimum wage and the working families tax credit, does not the latter have the unanswerable advantage that because the sum of money making up the pay is contributed by the state rather than by the employer there is no threat whatever to jobs?

My Lords, I am grateful to my noble friend Lord Shore. My understanding is that the figures I have quoted stand by themselves. However, I may be wrong and I shall certainly look into the matter. As regards my noble friend's second point, I consider that the issues are complementary rather than mutually exclusive. I am grateful to my noble friend for raising the issue. I shall certainly look further into it.

My Lords, the noble Baroness, Lady Miller, mentioned the current American minimum wage of 5.15 dollars. Is my noble friend the Minister aware that the International Herald Tribune reported in February that President Clinton and the Democrat leadership in Congress announced that their party will run in the mid-term election in November with a plank in their platform of a 6.15 dollar minimum wage? The OECD estimates that in 1997 the purchasing power parity of the pound was almost exactly 1.50 dollars. Thus 6.15 dollars is approximately equivalent to £4.10. Does he not agree that the American President and his party are comfortable with a minimum wage some 50p higher than our proposed minimum wage?

My Lords, the alliance with the Clintons is a strong one. The American experience, like that of other countries, is, of course, different. This is the first time we have introduced the national minimum wage. I am sure the House will be grateful to my noble friend Lord Acton for giving us this information.

My Lords, in view of the business which has unfortunately been interrupted by this Statement, what is implied by the word "national" in national minimum wage? What is the nation to which it applies?

My Lords, if the noble Lord had paid more attention to the debate to which he has just referred he would be aware that we are talking about the United Kingdom, which includes Scotland.

My Lords, I have two questions. First, what makes Her Majesty's Government think that younger workers are charged less for their lodgings, their food, their clothes and their fares? Is this measure not discriminating unfairly against these young workers?

Secondly, is there not a danger that unscrupulous employers will be tempted—I go no further than "tempted"—to take on school-leavers until they reach the age of 20 or 21, then get rid of the lot and start again with another batch of school-leavers? I know that there are certain protections in relation to unfair dismissal through the work of employment tribunals. I merely wish to be sure that tribunals will not be overloaded with work if the situation is abused by unscrupulous employers.

My Lords, I hope that will not be the case. Effective enforcement is important. That is a matter to which the Government will return when we have consulted and drawn up the regulations which will be laid before the House in due course. It is absolutely right to speak of effective enforcement. I do not want to help my noble friend put ideas into the minds of the unscrupulous as to how they might react to this situation. I do not in fact believe that the points she has raised will have an overriding or overall effect.

The reason for taking the steps that we have in relation to younger people is simply that, on balance, we have to operate somewhat cautiously in the first period of the national minimum wage. We do not want to deny young people an effective ability to obtain good jobs. We have other programmes in place designed to achieve precisely that. It is not a question of discrimination; it is a question of examining the evidence and balancing the situation. That we have done. A review will take place on at least a part of our proposals within a very short time.

My Lords, in giving a general welcome to the Statement, for the benefit of the party physically on my left, will the Minister list the other major industrial countries that do not have a minimum wage? I do not believe that that will detain him until Christmas.

On the question of a lower rate for the young, is the Minister aware of the work done by the National Association of Citizens Advice Bureaux and by Shelter, arguing the grave likelihood that welfare-to-work will break down because the young cannot find affordable rented accommodation? Does he accept the general principle of equal pay for equal work? Is the Minister aware that if 16 and 17 year-olds have no entitlement to benefit, they may now be compelled to take jobs on which they cannot live? Does he believe that to be right?

My Lords, the list would be a very short one indeed. I thank the noble Earl for raising that point. There are different experiences, and some countries apply different practices for young people.

We are aware of the situation, as indeed is the Low Pay Commission, which entered a caveat. We will certainly take account of the representations referred to by the noble Earl. On the basis of present evidence, we do not share the draconian fears that he has expressed. No doubt he will wish to raise the issue in more detail later.

My Lords, perhaps I may remind the House that the seeds of the national minimum wage were first sown in 1986, the very same year that the Conservative Government started to dismantle the wages councils, which were set up by Winston Churchill in the early part of this century. It is absolutely clear that those sitting on the Conservative Benches are totally opposed to a national minimum wage. What are not so clear, and indeed are rather confusing, are the arguments that they marshal in support of their opposition. It seems that they do not address the objectives of this Government or the realism of the situation.

The Government have two worthy objectives. One is to try to get as many people as possible into employment. The other is to ensure minimum standards of a civilised nature for those who are most vulnerable in our society. When addressing those objectives, there has to be some degree of proportion and balance. If the minimum wage is levelled too much towards adults, on the one hand large numbers of adults can be unemployed and young people will find employment—

My Lords, perhaps I may remind my noble friend of the words of the Chief Whip asking Back-Benchers to limit their remarks to questions and factual clarification.

My Lords, I shall therefore terminate my remarks and pose a question. Given that less than 10 per cent. of the British working population will be covered by the national minimum wage—2 million people, 1.4 million of them women, out of a total working population of 22 million—does the Minister feel that any self-respecting employer will be in any way damaged or in opposition to the national minimum wage?

My Lords, to respond to my noble friend's last point, many employers have already taken advantage of the fact that the climate in industry is changing, and they are themselves changing. Many are paying in excess of the recommended national minimum wage.

My noble friend is right in drawing attention to the history of the abolition of the wages councils—an example of Conservative amnesia. The great thing about the Conservative Party is that it does have balance—its members have a chip on both shoulders.

My Lords, remembering, as I do, the sets of figures with which I was furnished by my officials at the DTI as to the number of jobs that would be lost at different levels as a result of a national minimum wage, with what figures has the Minister been supplied by his officials at the DTI indicating the numbers of jobs that will be lost given the level of minimum wage that has now been decided by the Government?

My Lords, I rely on the evidence provided for, and accepted by, the Low Pay Commission.

My Lords, I welcome the Statement by my noble friend the Minister. It brings us into line with many of the other western European countries, and indeed America, by establishing a national minimum wage, which already exists in those other countries. I congratulate the Government on persisting in establishing the principle of a minimum wage. Does the Minister feel, as I do, that the establishment of that principle will in the future provide a means of getting rid of poverty pay in this country?

Yes, my Lords, that is one of the reasons that I have already adduced. Achieving better conditions in Britain's workplaces is critical in terms of achieving a more involved and committed workforce, and a workforce that is treated decently and with dignity. That is effectively what this is all about.

My Lords, I do not know what the precise cut-off age will be for young people being paid less than older people. Will the Minister accept that, as the noble Baroness, Lady Jeger, does not seem to recognise, if I employed a labour force I should not expect to pay more experienced people the same as young people who had just started in the job?

My Lords, that has been one of the arguments in the finely balanced discussion that has taken place. I note that the noble Lord is not saying that he disapproves of the idea of a national minimum wage. He merely refers to an element of it. That is the point made by my right honourable friend in the Statement.

My Lords, will my noble friend monitor the situation to see where jobs will be saved as a result of the introduction of the national minimum wage? Will it not mean that the responsible employer who pays decent wages will not find himself in unfair competition with an employer who may prosper mightily while paying starvation wages to his workers, who as a consequence have to be subsidised by the state?

My Lords, my noble friend is right, that is why many employers have supported the concept of the national minimum wage. It is the old argument about the level playing field. People who are carrying on a decent job of employing workers on a civilised basis do not want to be cut down by cowboys displaying the kind of tactics of which presumably the Conservative Party approves.

I have already said that the position is to be monitored by the Low Pay Commission and I am glad that that is the case. The point was made by the noble Lord, Lord Razzall, in the debate that we had. I hope that he is satisfied with that response.

My Lords, will my noble friend confirm that at £3.60 per hour we are talking about a weekly wage of just under £137? That is little enough and I feel sure that all noble Lords sitting here would find great difficulty living on it.

I wish to ask two questions. First, will the minimum wage be increased year by year? Secondly, will it be increased in relation to the retail prices index or in relation to wage movements, or a mixture of both? Finally, perhaps I may ask him whether the 20p difference between £3 and £3.20 for young people will have any effect on employment. I doubt it.

My Lords, as to the last point, my noble friend is entitled to entertain his doubts about the situation. The proof of the pudding will be in the eating. That is why it is important. All the other points he raised relate to that and that the Low Pay Commission should monitor the situation. That will be done. Therefore it will also impact on the mechanism to be deployed as to whether there should be increases.

I entirely agree with the point made by my noble friend that few noble Lords would wish to live on the minimum wage. However, it is a floor; it is not something which will apply in all cases of employment. We hope not. But at least it is right for the first time to have that floor so that the lowest paid—the most vulnerable—can be protected.

My Lords, does the Minister agree that the real danger of a minimum wage—and I support it—lies not in London and the south east of England where job opportunities are considerable, but in parts of England like the north and the west country, where the real test will be whether job opportunities will continue or whether employers will no longer be able to afford to employ workers and so start reducing the labour force?

My Lords, with respect, I do not believe that the noble Lord is right about that. There are places in the regions that suffer a serious impact from low wages. Even in parts of the country where we expect people to be well rewarded, that is not always the case. That is why we do not accept the regional argument which has been well and eloquently argued in this place in Committee by the noble Lord's party.

My Lords, can the Minister furnish us with the list of countries which do not have a minimum wage? In answer to the question from the noble Earl, Lord Russell, he said that the list was short.

My Lords, the Minister referred a few moments ago to the national minimum wage being a floor. Does he agree that there is a danger that those who do not accept the concept of the national minimum wage—and I am talking about employers—will view it as a national maximum wage? For that reason, does he agree that the need to be a member of a trade union at this time is as great as it has ever been?

My Lords, yes. I happen to be a trade unionist myself, so I agree with the point. My noble friend is well known as having an excellent background in that regard, and I can understand his articulation of the point.

Scotland Bill

4.53 p.m.

Second Reading debate resumed.

My Lords, I shall make a short, rather schizophrenic speech. I very much welcome a Scottish parliament, but at the same time I cannot help having doubts and apprehensions. I believe passionately in devolution. The more power that can be transferred to the regions and away from central government the better. Scotland is much more than a region, it is a country with a long and independent history, with its own legal and educational system. It has long deserved a parliament of its own.

Never was that more apparent than during the Thatcher years when many of us living north of the Border felt that we had become a colony, governed by a remote foreign power that emanated from somewhere in the home counties. We feel more comfortable today, but that is because the whole of Great Britain is now largely governed by Scots.

It is partly because I feel that the Scots should be playing their part in governing Great Britain rather than just Scotland that my feelings towards a Scottish parliament are mixed. For example, to which body should an ambitious young Scottish politician aspire—Edinburgh or Westminster? I am also apprehensive because, like many on the Conservative Benches, I fear a Scottish parliament could be the stepping stone to Scottish independence. Like every noble Lord who has so far spoken in the debate, I can see nothing but disadvantages in an independent Scotland. England and Scotland are greatly strengthened by their marriage to each other. A divorce would weaken both.

I know that one of the Government's intentions in establishing a Scottish parliament is to strengthen the Union, not to weaken it. It is desperately important that this turns out to be the case. Yet, as several noble Lords from the Conservative Benches have already pointed out, polls in Scotland suggest that the prospect of a parliament has increased Scottish enthusiasm for an independent Scotland rather than calming it down. Let us hope that this is only a transitory frustration, a protest against the early disappointments of the Blair administration or the result of World Cup fever. We certainly want to distance ourselves from the English football fans, for example!

I am also disturbed when many friends and colleagues, Scottish and English—and not predominantly Conservative—talk as if Scotland were already in the process of becoming an independent country. They speak as if there were an unstoppable inevitability about it, that it is only a question of time. Is that the way the establishment of a Scottish parliament is being perceived out there? It is important that we—and I mean people like me in particular—do not get talked into feeling that way too.

I also have a more personal historic reason for feeling ambivalent about a Scottish parliament. My ancestor, the first Earl of Glasgow, was one of the architects of the Union of the Parliaments in 1707. He was treasurer depute and a Privy Counsellor in the last Scottish Parliament. Like the merchants of Glasgow, whose interests he came to represent, he believed that the Union was essential for Scotland's economic survival. We sometimes forget that Scotland was close to war with England at the turn of the 18th century, particularly over the issue of England's refusal to let Scotland trade with its colonies. That made life almost impossible for the monarch, William of Orange and later Queen Anne, who was head of state of both countries. I cannot help but envisage similar difficulties for our monarch in the future, if we were to separate again: disputes over ownership of North Sea oil, for example.

The first Earl of Glasgow is vilified by Scottish Nationalists as the man who got hold of a large sum of money from the court of Queen Anne and proceeded to bribe Scottish MPs, particularly opportunist Jacobites, to vote for the Union against their natural instincts. It is probably true that the Act of Union would never have passed through the Scottish Parliament without a little greasing of the wheels. However, we in our family have never accepted the charge that he was guilty of such shenanigans. Even if he was, it seems to me that there is nothing intrinsically wicked in offering bribes to further a good cause. It is those who accept the bribes who need to look to their consciences.

Whatever nationalists may say now, there is no doubt that the Union benefited Scotland as well as Britain. Certainly, the merchants, the traders, the middle classes, thrived under the Union and I do not think that they can even blame the Highland clearances on the Union, just because the Duke of Sutherland happened to be an Englishman.

While I cannot get rid of apprehensions, I tell myself that the majority of Scots are sensible people; that they do not really want an independent Scotland. We are certainly not the kamikaze pilots that some Conservatives patronisingly predict us to be. We are a tolerant, practical, friendly, inventive people. In relation to the size of our population, we have had more influence in the world than any other race, with the possible exception of the Jews. We have had to put up with a lot of English arrogance and insensitivity over the years. But we tolerate it because we realise that they do not know any better.

Surely we are too sensible to be hoodwinked into edging towards an independent Scotland. All we want is what we have always wanted; that is, the right to decide things in Scotland that affect Scotland. If that is what we are to get—that is clearly the Government's intention—then the re-establishment of a Scottish parliament will be the best thing to happen since the first Earl of Glasgow and his cronies had it abolished in 1707.

But we must work hard at the Bill to get it right. At present there are several areas relating to reserve powers at Westminster that will be controversial and could provide ammunition for the nationalists. The Bill is a leap in the dark. It is beset by dangers. But if we all have the will to make it work, we will make it work. And it will serve ultimately to strengthen and not to weaken the United Kingdom.

5 p.m.

My Lords, sadly, I could not be here yesterday. However, I took the opportunity this morning to read most of the speeches of your Lordships, and very impressive was the reading.

I had a general impression that, given the fact that under the referendum the Scots wanted, to a degree, to go their own way, yesterday's speeches were all constructive and helpful. I was struck by the fact that some of the business leaders in particular were worried by the problems that may arise when the Scotland Bill goes through. One or two other important points were made, such as the relationship of Scotland with the European Union, the point made by the noble Duke, the Duke of Montrose, as to how the £500 million outwith the block grant for agriculture and so forth will fit in, and the question of who will decide and organise it if there is to be a referendum. However, I must not make up a resume of yesterday or give a winding-up speech; rather, I must keep to my own brief that, above all, this Bill must safeguard the Union. We should all look at it with that constantly in mind.

The Act of 1707 sowed the seeds of the greatest empire ever known in the world. To an important extent, that was due to the Scots. They did perhaps more than anyone else in a military way, in their readiness to govern and go abroad to set up businesses there. On the political side, as noble Lords will be aware, many of the best Prime Ministers came from Scotland.

To a degree all that will change because many Scots will now devote their attention to building up Scotland within the framework of the United Kingdom. The question of how to divide the block grant will be difficult. We must cover the issues of education, health, social services, transport and various economic developments. I wonder whether the dream of a canal from the Atlantic to the North Sea will be one of them? It is clear that a formidable task faces the Scottish parliament. I am only comforted by the fact that the Scottish Office is such a good machine and will help us all from an administrative point of view.

Constitutional changes are hugely difficult and will need the greatest understanding, patience and good will, not only on the part of England and Scotland, but also we must not forget Wales and Northern Ireland. When embarking upon a project for the building of a new Union—a new Great Britain—and the relationship of the parliaments, we are facing a unique situation, though there are the examples of the Läander and so forth in Europe. We must make no mistake: this will be a difficult task. It is of significance that, not only are we to undergo constitutional changes in Scotland, but that it is taking place against the background of constitutional change in Europe.

We are all going to be kept pretty busy. I have puzzled much over the issue of the European currency and EMU. I only say to those who have the responsibility that they must not drag their feet too much. We must always remember what happened when the Treaty of Rome came about to our disadvantage and not as we would have liked to see it.

Recently I became aware and indeed was shocked at the hatred some of the Scots feel for all things English. I wonder why? The poll tax may have had a part to play when we were the guinea-pigs, or situations such as when Rosyth lost the battle for submarine bases to Plymouth. Clearly that was a decision taken for political rather than economic reasons. I have no doubt that the Scots in central Scotland remember that and resent it to this day.

But that is all in the past. What matters is the future. The Scotland Bill must ensure that such things never happen again. It will take time and patience, as I said. But let all parties combine if there is a serious threat from the blandishments of the Scottish National Party for independence. The history of the Union shows that that would be a tragic mistake and we must never forget the part that Scotland played.

Clause 5 and its reservations are the key to the Bill. It is important that the Government realise that we are all trying to help and that they listen to the points being made, not only by the Opposition but by all the speakers on the Bill. They must understand the basis of their comments, take notice of them and improve the Bill by so doing. It is only in the spirit of "We have to get it to work" that the Scotland Bill will succeed, and we must all work together to ensure that this happens.

5.10 p.m.

My Lords, at this stage of the debate, on the second day, I will try to find some new ground in commenting on the role of the Bill. My noble friends have already pointed out the unsolved problems, especially in the contribution by my noble friend Lord Lang of Monkton yesterday, which I thought was outstanding. I will also refer to developments in Scotland in the past few weeks, well after the Bill left the other place.

This House has had little opportunity until now to discuss the Government's proposals. The White Paper was published only about five days before a debate, on the day before Parliament went into the long Summer Recess last year. The debate was on the Welsh White Paper as well. The Scottish White Paper would not be recognised as a White Paper by statesmen and parliamentarians of the past. It was a glossy brochure. It contained colour portraits of the Prime Minister and the Secretary of State for Scotland, but was very short on substance. It could be described as a spin doctor's prospectus.

Scottish Conservatives will now be working to make the proposed new parliament function as smoothly as possible. That is a laudable intention. However, they will find it uphill work. Some of us have given warnings about the pitfalls and problems for many years. The Government are already bumping into some of them. Three weeks ago an opinion poll in Scotland showed the Scottish National Party—the SNP—to be 9 per cent. ahead of the other parties. Twelve days ago, in another poll, on independence for Scotland, 52 per cent. were found to be in favour and 41 per cent. against. This appears to have taken the Labour leadership by surprise. But why? They were warned many times.

The right honourable gentleman the Secretary of State, Mr. Dewar, has turned on the SNP with bitter criticism, having accepted them as allies in the referendum campaign last summer. The Secretary of State has been joined by the Minister for the Armed Forces, Dr. John Reid, who was quoted in the Scotsman newspaper on 25th May as saying, in a powerful speech in Edinburgh:
"The SNP will use the parliament as a battering ram to break up Britain … The Nationalists' agenda for the new parliament will be shaped by confrontation politics with the UK parliament".
I do not disagree with Dr. Reid, but why has the Labour Party waited until now to say this? The situation was the same and the SNP policies were the same a year ago. Similar wording appeared in a joint statement by the Prime Minister and the leader of the Liberal Democrats. That stated on 11th June, only a week ago, that Labour and Liberal Democrats,
"firmly reject those parties who see devolution as a stepping stone to the break-up of the United Kingdom".
We were giving warnings a year ago, and before that, but the Labour Party either refused to listen or let the spin doctors take over to get the result they wanted in September's referendum. The SNP has never made any secret of its ultimate objective in Scotland—that Scotland should leave the United Kingdom. It wants the new parliament to be thoroughly unstable and to be at loggerheads with Westminster.

We seem to be moving into a era of constitution changing by referendum. Referendums are still new in this country. I took an active part in the very first two—the 1975 one on Europe and the 1979 one on the Scotland Act. In both, there was no shortage of information, including the solid text of an Act of Parliament in the second. Before the Bill for the 1978 Act was introduced, opinion polls in Scotland were showing that about 60 per cent. of the population were in favour of what was then the vague concept of devolution. A referendum then would have reflected that 60 per cent. in favour. The referendum was, sensibly and correctly, held later, in 1979, when the tangible and substantial Scotland Act was available for all to see and examine. Then only 33 per cent. of the electorate in Scotland gave support to those proposals.

Last September, in the referendum held before clear plans or legislation had been produced, some 60 per cent. of the electorate voted in favour of the principle of devolution. The Times newspaper, in its leading article on 28th May on the referendums in Scotland and Wales, stated:
"Pre-legislative referendums are invitations to buy pigs in pokes".
I add my own comment that government by vague concept referendum is not good government.

Referendums on abstract ideas can be misleading. Few members of the public feel like voting against a principle like devolution, any more than they would vote against freedom or virtue. In Scotland, the electorate may, before long, be expected to vote in a referendum on another attractive sounding concept—independence. The latest opinion poll indicates a majority in Scotland now in favour of 52 per cent. No general framework or agreed principles on conducting referendums have yet been formulated. If in the United Kingdom we continue to use this new electoral device—several more are now in prospect—there should be some basic arrangements to ensure that they are orderly, well understood and efficiently administered. Otherwise we shall be changing the constitution by a new method—the random referendum.

The Scottish electorate, as previous speakers pointed out, are sensible and canny, but they must have the facts and the consequences of a high sounding principle like independence fully before them so that they can make judgments that are based on those facts. It seems almost inevitable that a referendum will be held in Scotland before long on independence. If held today it seems that a majority would be in favour of it. So much for what was described as "the settled will" of the Scottish electorate, which supported something quite different—namely, devolution—a few months ago. That is unsettling.

I suspect that "Cool Britannia" is already losing some of her sang-froid as her domain becomes seriously threatened with a major amputation; and there will be no question of a "Cool Caledonia" while Scotland is undergoing severe internal surgery. I foresee much muddle and confusion ahead. The test of who is proved to have been accurate in forecasts in this debate will be in two to three years' time—what actually happens. I shall seek to raise the subject then for review.

The Bill aims to transfer to the proposed new parliament those functions which are already entirely devolved administratively to the Scottish Office and the Crown Office of the Lord Advocate. Most of these have been devolved for 60 years or more; for example, home affairs, health, education, housing, roads and local government. The advantage of this dividing line is that it already exists. There will he difficulties in drawing that line precisely, as there have been at times in the present system. An attribute of the present United Kingdom Cabinet system is that Ministers and officials can get together and iron out such matters concerning the precise division of functions in doubtful areas as they arise.

We are informed by the present Government that concordats are to be reached in the new set-up between Edinburgh and Westminster. Concordats are most unlikely to replace effectively the present Cabinet systems especially if the SNP is involved, as is likely because of the system of proportional representation which will produce coalitions in the executive.

I gave two illustrations in our debate on 30th July of how the present system works well. Briefly, they were that 27 years ago, during my term of four years as Secretary of State for Scotland, there was direct co-ordination with my noble friend Lady Thatcher, then responsible for education south of the Border, on two initiatives that I was taking on schools in Scotland. The second was co-ordination with the late Lord Joseph on my Scottish Bill to reorganise the National Health Service in Scotland in a different way from that to be adopted a year later in England and Wales.

I am reminded of that time, and I commend to the Government and your Lordships the speeches of the noble and learned Lords, Lord Hope and Lord McCluskey, yesterday and in particular their criticism of the proposals for appointing and dismissing judges. I appointed several judges while I was Secretary of State, but always in the closest consultation with the Lord Advocate of the day. I hope the noble and learned Lord, Lord Hardie, the present Lord Advocate, when he winds up tonight, will undertake to address these matters in full.

While the functions and subjects now within the domain of the Scottish Office are to be devolved, there are some subjects and services, closely affecting individuals and families in Scotland, which will continue, as now, to be administered from departments in London. I refer in particular to employment and social security. They are administered by United Kingdom or Great Britain departments now, and that means jobs, pensions and benefits. Many families in Scotland will be surprised when they find that these personal, almost daily, contacts with government will not come under the Scottish parliament or be dealt with by its new members.

A Scottish Office function for many years which is accordingly to be devolved is supervision of local government and its powers to raise money. There is concern in Scottish businesses that business rates will be increased. There is also general concern that the parliament could force council taxes to be increased, so widely increasing taxes as a whole.

Apparently there has been a change of attitude within the Government on expression of views by business, industry and financial institutions. Mr. Henry McLeish, a Minister in the Scottish Office, was reported last month as urging the business community to make full and vocal comments on the proposed parliament. He said, "They must speak out on these issues". What a contrast with the treatment of Sir Bruce Patullo last year during the referendum campaign. He questioned the skeleton proposals for varying income tax, the subject of one of the two propositions. Sir Bruce, then Governor of the Bank of Scotland, knows as much about finance and taxation as anyone in Scotland. His points have proved to be correct and relevant, but he was publicly told to shut up, stick to his banking and not to interfere in politics. Many of us thought that he was treated disgracefully, as finance and taxes were to be voted on in one of the propositions. The only excuse that can be made is that the spin doctors, determined to do anything to win the referendum, would stop at nothing.

I mentioned earlier the Minister for the Armed Forces, Dr. Reid, with many of whose reported views I agree both on the integrity of the United Kingdom and defence matters. I am in an age group that meant that I was already in uniform at the outbreak World War II. In the Army I was commanding a body of officers and soldiers for three years in a Scottish TA infantry division. My recollections are continually refreshed because I am still asked to lecture on those times at staff colleges or on battlefields abroad about three times a year. I am doing that again next month at a two-day conference at the new Joint Services Staff College at Bracknell.

In the Army there was immense strength in the unity of our country. Our Scottish division was, during one period of operations, alongside, or handing over, to the 53rd Welsh Division and the 43rd Wessex. We were determined not to let them down or to fail to give them the greatest support possible. There was also friendly rivalry between us within our complete commitment to defeat the enemy and Hitler.

Another strength emerged unexpectedly when we had crippling casualties. In at least two offensives our division lost more than half of our combat units, killed and wounded, inside a week. Replacements had to be provided rapidly from miscellaneous regiments and corps. Many were not Scots and to their great surprise were joining Scottish units. Within a short time, and certainly after the next major battle, they were all pulling together as a team.

We hope never to have a world war again. In very testing times, nonetheless, the United Kingdom proved to be a powerful entity. At question time on these lecturing occasions I am often asked to what extent patriotism motivated our troops when having to advance under intense fire or to defend a position against superior numbers and weapons. My answers include what I have just said. Noble Lords will understand why I personally feel particularly depressed at any prospect of Britain breaking up.

The one proposition that all speakers so far on all sides of the House have agreed is that Scotland leaving the United Kingdom would be a tragedy for all concerned. Our differences lie in assessing the degree of risk involved in the proposals now before us.

5.26 p.m.

My Lords, it is an honour to take part in this debate. Noble Lords may be surprised to hear that the noble Lord, Lord Campbell of Croy, was Secretary of State when I was a student. I regard it as an honour to follow him and his contribution. However, while I may be slightly more kindly disposed towards him and his views now than I was some 25 or more years ago, I was slightly disappointed by his contribution. He began by saying that as this was the second day of the debate, he hoped to say something different. I regret to say that, with the exception of his war-time reminiscences, he really gave us much of what is called in some parts of Scotland kail rehet. It was largely about the referendum and the dangers of independence. I shall return to both of those topics, if I may.

While I am expressing my disappointment, perhaps I may refer to the fact that my noble friend Lord Ewing of Kirkford is not participating in the debate. I think that that is a shame, although I understand my noble friend's reasons. He has made a massive contribution over many years to getting us to our current position with this Scotland Bill. I hope that my noble friend will make a suitable contribution in Committee. I am sure that he will.

I regard participating in this debate as an honour. Although it may sound like hyperbole, I believe that whenever your Lordships' House votes we are in a sense making history and I believe that in a very real sense this Bill is history in the making. It has had a long and tortuous road to travel before getting to the current position. Even within my lifetime, many attempts have been made to frame a Scotland Bill which would produce a parliament for Scotland. That idea began seriously to gain ground when the Claim of Right was signed in 1989. I am one of those who was in the privileged position of being able to sign it. My noble friends Lord Ewing of Kirkford, Lord Hogg of Cumbernauld and Lord Hughes of Woodside are other Members of your Lordships' House who signed that Claim of Right in 1989.

Perhaps I may refer now to the contribution of the noble Lord, Lord Kingsland, which I enjoyed. As a new Member of your Lordships' House, I was advised that the noble Lord was one of those Peers to whom I should be sure to listen. In that respect, the information that I received as a new Member was accurate. I enjoyed the noble Lord's contribution. I enjoyed both his delivery and the sources from which he drew. Of course, I did not agree with much of what he said, but he made some pertinent points, many of which I am sure will be revisited in Committee. Having referred to the Claim of Right, the noble Lord charted the moves towards this Bill. He referred to referendums, saying that we have moved away from representative government to government by referendum. I would argue that a referendum is about as representative a way as there is of finding out the opinion of the people of the country as a whole, whether that country is the United Kingdom or Scotland. I do not regard referendums as in any way weakening the democracy of this House and the other place. In fact, I think that they complement it.

My Lords, is the noble Lord aware that Hitler's power was based entirely on plebiscites?

My Lords, that is a rather unfortunate analogy. In any case, that example is not entirely accurate because I seem to remember that Hitler was elected to power (by some system) in the 1930s. I do not think that that example serves the noble Earl's argument.

My argument is that referendums—I refuse to say "referenda"—are a useful source of enhancing democracy. By definition, the political parties approach a general election with a manifesto. There is no way in which you can pick and choose certain items within a manifesto. You either vote for the party or you do not. That is a blunt-instrument approach—and necessarily so. It is important that in their manifestos political parties are prepared to say, "We will give you a vote on this or that issue", as the Labour Party fairly and democratically did. A referendum gives political parties the opportunity to argue their case in a much more detailed and focused fashion than could ever be possible in a general election debate. That is a very positive aspect of referendums.

I believe that referendums are appropriate specifically for constitutional issues. That is why the referendums on Scotland, Wales and Northern Ireland, and that which is forthcoming on our voting system, are particularly apposite. If we are going to change major aspects of our constitution, I believe that it is far better to do so via a referendum than a general election for a long time. I have very much wanted to see us reach the present position.

Perhaps I may now deal with a question which is difficult to handle. It has been raised by many noble Lords both yesterday and today. I refer to the question of whether the creation of Scotland's parliament will lead inexorably to an independent Scotland, the break-up of the Union and the rise to power of the Scottish National Party. I see no reason to assume that it will.

I recall that yesterday the noble Lord, Lord Mackay of Ardbrecknish, seemed to be full of doom and gloom about the fact that already, within months of the referendum, the SNP is in a much more powerful position in the polls in Scotland than has ever been the case hitherto. That is, indeed, true. However, one should not read simply the top line of such polls because one gets a slightly different message if one goes beneath the surface and asks what people's voting intentions were when they voted for the SNP or indicated a preference for independence.

I believe that when the parliament beds in, people in Scotland will come to see that it serves their needs well within the Union and that there is no need to break away and to try to seek independence. However, if there ever was a referendum on independence for Scotland I would argue vigorously against it. I do not think that that is the right way to move. I do not think that it would be good for the people of Scotland. It would certainly not be good for Scotland's economy. I would argue against it.

However, I am prepared to put my faith and trust in the people of Scotland to weigh up the issues if they are put to them fairly and openly and to arrive at the decision that they collectively believe to be in the best interests of Scotland and the people who live there. Of course, not everyone who lives in Scotland is a Scot—and that is a great strength. I am prepared to put that to the test.

One reason I am so enthusiastic about the parliament is that I believe that when the people of Scotland see that decisions are being made much closer to them and that they have a parliament that is more responsive, accountable and accessible—that is a crucial factor—they will warm to the different ways of doing things within a decentralised governmental structure. I prefer the word "decentralisation" to "devolution" not least because nobody seems to know how to pronounce the latter. I think that "decentralisation" is a much more accurate term.

The noble Lord, Lord Kingsland, referred to the "great decentralisation of Britain". I welcome that. We are moving within the United Kingdom towards decentralised government having for almost 20 years had a government who were increasingly centralised, and who made us one of the most centralised states in the European Union. That swims against the tide of what has been happening in many other countries, which is unfortunate. In government, we have begun to reverse that trend—and that is a very good thing.

I accept that different parts of the United Kingdom are moving ahead with decentralisation at different speeds. Scotland will take a fairly major leap, with Wales and Northern Ireland making rather more modest leaps. That is not necessarily a major problem. Perhaps I may refer to what happened in Spain in the post-Franco period. Many of the regions that are now autonomous did not gain autonomy until some considerable time after 1975. However, the Spanish constitution was able to accommodate them and to develop with them. I am not drawing an analogy between the United Kingdom now and Spain in the post-1975 period, but I am saying that different regions do not have to move forward with one pace as one decentralises government. Of course, that creates problems and the sort of anomalies to which the noble Lord, Lord Steel of Aikwood, referred yesterday. Although those problems are not necessarily insuperable, they must be dealt with sensitively.

Looking 10 or 15 years into the future—I hope that it may not take as long as that—I should like to see decentralisation brought to England. By that, I do not mean an English parliament. If they are being slightly cynical, many Scots would say that England has had a parliament for many years, and still does. I want to see the decentralisation of power within England to the various regions. London is starting that process. I should like to think that within 10 or 15 years that process will be complete and there will be regional assemblies, or whatever the people in the regions want to call them, and that those assemblies will have broadly the same sort of powers as the Scottish parliament is at the moment scheduled to have. I do not see that as anything other than a strength. It would mirror developments in other major European Union countries, and I believe that it would strengthen and enhance our democracy. I look forward to going into these issues in greater detail in Committee.

I have referred briefly to the question which the noble Lord, Lord Steel of Aikwood, raised yesterday when he said that there is no answer to the West Lothian question. I accept that. If there was an answer to the West Lothian question, we would have found it at some stage in the past 20 years since Mr. Dalyell first raised it. Although I do not think that he did Scotland a service, it was nevertheless important that that issue was brought into the open and answered. My answer, such as it is—having said that there is no answer!—is that it is a transitional problem. It is not a long-term problem. The matter will be resolved when decentralisation within the United Kingdom is finally complete. Yes, we have to deal with that anomaly in the interim, but we should be capable of doing that in a mature, changing and modernising democracy. I look forward to revisiting that and many other issues such as the concordats, the relationship with Europe and the financing of the parliament in the weeks to come.

5.40 p.m.

My Lords, the noble Lord, Lord Watson of Invergowrie, has made an interesting but rather controversial speech, but I do not doubt his sincerity. Although he did not expressly say so, perhaps one should infer from his remarks that he wants the sovereignty of the United Kingdom to be retained. I am glad to see the noble Lord nodding. When he said that government by referendum was the nearest that anyone could get to finding out what people wanted, I was reminded of a remark made by Sir Winston Churchill. He said that democracy worked badly but that one could not have any other system. When one considers government by referendum one must always ensure that a referendum has only an advisory effect. Admittedly, on this occasion the result of the referendum in Scotland was pretty decisive. I agree with my noble friends who have said that we must accept the degree of devolution such as is proposed in the Bill.

In my time I have won 10 general elections. Although I always tried to arouse the interests of voters as much as I could, as did the opposing candidates, I gained the impression that they were thankful when the election was over because they were pretty indecisive in making up their minds about very general matters. Let us be cautious about the noble Lord's reference to government by referendum.

As I was born in Kent, am a member of the English Bar and represented Huntingdonshire for many years, noble Lords may wonder why I am involved in this debate. I am more than half Scottish. My father was a Scotsman and my mother partly so. My late wife was the daughter of a Scotsman. We have a family property in Galloway, where the local Member of Parliament was my noble friend Lord Lang of Monckton, who made such a formidable speech yesterday which is deserving of a great deal of attention. Twice since the war Galloway has had a Scottish nationalist MP, and it has one now. I do not believe that they at any rate should be taken too seriously.

My involvement in this matter does not end there. In 1971 I was appointed to the Kilbrandon Commission. That was the Royal Commission on the Constitution which considered devolution. I am the only member of that commission speaking in this debate. There are not many survivors of that commission. I disagreed with its main proposals for Scottish devolution. I was alone in recommending that Scotland should have only a deliberative assembly, with the very limited legislative power to consider the Committee stage of Bills which had had their Second Reading in Westminster and which would go back to Westminster for Report stage. It would also have had power to consider, but not finalise the decision upon, statutory instruments. They appeared to me to be two very good links with the Westminster Parliament and to provide a degree of decentralisation. I was not in favour of a Scottish executive.

When the Scotland Act of 1978 was considered in another place I took part in the debates there. I believe that the Act was constructed and drafted in a better way than this Bill. However, in view of the referendum result, we must support this Bill with a degree of parliamentary and executive devolution, even though the Scots might have produced a different verdict in the referendum had the Bill been passed before it was held and if the various views expressed on this Bill had been made known to them. For example, yesterday the noble Lord, Lord Dean of Beswick, made a most powerful speech, which pointed out the financial difficulties that would arise in Scotland with devolution.

I do not wish to anticipate the Committee stage in any detail. However, I should draw attention to the two most important provisions of the Bill. I refer to the provisions that deal with the legislative competence of the Scottish parliament and the functions of the Scottish executive. I shall say a brief word about each. As to legislative competence, this is described in Clauses 28 and 29 and in Schedules 4, 5 and 6. Those contain 27 pages of detail. That will require many hours of scrutiny at Committee stage. By contrast, the Scotland Act 1978, which had broadly the same purpose as this Bill, dealt with this vital matter much more succinctly in one-and-a-quarter smaller pages. The functions of the Scottish executive are dealt with in Clauses 48 to 54. They are perhaps unavoidably complicated. One must not complain too much about that. But the 1978 Act did it more simply and in a way which the Government should consider.

I should like to add a word about the European Union. My noble friend Lord Mackay of Ardbrecknish raised some very important questions about the effect of Clause 49 on Clause 53. He was right to point out that even in countries that had federal constitutions (as several European countries have, which thankfully we shall not have under this Bill) only the central government are represented on the Council of Ministers and only the officials of central governments are able to carry out negotiations behind the scenes. If Scottish Ministers want some influence in Europe, as one must assume they do from what has been said and what is contained in those two clauses of the Bill, they must do so by getting the Secretary of State for Scotland to raise the matter with those members of the Cabinet of the United Kingdom who have responsibilities in Europe. I refer not only to the Foreign Secretary but to the Minister of State for Agriculture, Fisheries and Food, and the President of the Board of Trade, who also has some responsibility and from time to time has appeared at the Council of Ministers. One must be careful to avoid conflict between the Scottish executive and the Cabinet of the UK on these very important external matters and other external matters.

As to internal matters, from time to time there is bound to be conflict between the Chancellor of the Exchequer and the Scottish executive. Goodness me, every week in the newspapers there is a report of a conflict between the Chancellor of the Exchequer, who happens to be a Scot, and other members of the Cabinet. One dreads to think how that failure to agree will manifest itself when there is a separate Scottish executive with financial interests which conflict with the Exchequer of the United Kingdom. The noble Lord, Lord Dean of Beswick, alerted us to the financial conflict which is bound to arise with the Scottish parliament and executive crying out for more money. Poor old England!

In conclusion, I wish to mention two legal matters of some constitutional significance. First, as my noble friend Lord Kingsland said, the Government are right to have the Judicial Committee of the Privy Council to scrutinise Bills to see whether they are valid; that is, within the powers granted under the Bill when it becomes an Act. That arises when there is doubt about the legislative competence. It is right to have the Privy Council doing that rather than our distinguished and learned Law Lords. Most of our Law Lords are English. Normally only two are Scots. Although they would do the work perfectly, we must avoid what might appear to be a conflict when they have a duty to overrule a proposal. The noble and learned Lord, Lord Hope of Craighead, was right when he said yesterday that more Scottish judges need to be appointed to the Privy Council so that there may be a wider choice and a greater Scottish influence when the Privy Council has to decide these matters.

Secondly, I am glad to see the noble and learned Lord the Lord Advocate—for whom we have all developed a great respect—sitting on the Front Bench. He will wind up the debate. He is given considerable extra responsibilities under the Bill. I earnestly hope that they will not result in his having to abandon any of the important work which he does in your Lordships' House and which has been undertaken by Lords Advocate since 1969 in this House. Indeed, the Committee on the Preparation of Legislation, of which I was chairman, drew attention to the importance of having the Lord Advocate advising not only on Scottish legislation but in a general way in your Lordships' House. It is important that his responsibilities here should not be diminished by the Bill.

5.52 p.m.

My Lords, it is a privilege to follow my noble friend Lord Renton who has such knowledge of constitutional matters.

I have been listening to and reading all the debates in another place. It is obvious that many transitional problems will have to be faced over the next few years by the Scottish Office. It is up to us to correct as many errors and anomalies in the Bill as we can. I have to accept the referendum. But, like my noble friend Lord Campbell of Croy, I feel most strongly that it should have been held after the legislation was completed, and not before. I note with interest the result of the referendum. In Dumfries and Galloway—represented for many years by my noble friend Lord Lang, who made an excellent speech yesterday, and myself—it was a much closer call of 60:40. It was the only mainland region to vote against taxation. There was a similar trend in the Borders, with a much lower majority answering "yes" to each question. That shows the difficulties that we anticipate, being so near to the England/Scotland Border.

The referendum is now behind us and the Bill before us. It is up to us to improve the Bill and make it workable. I shall enthusiastically support the Conservative candidates for the Scottish parliament to ensure that Scotland has the best chance to remain within the United Kingdom. As many noble Lords have pointed out, the Government have run into all sorts of trouble. Labour thought that it would trump the Scottish National Party. It believed, too, that there would be a substantial majority in the parliament. It now looks as though it will be lucky to have a majority. Emotion and opinion polls can be dangerous, in particular if translated into a referendum.

Many speakers have stressed the fear of independence. Labour must realise that it is playing with fire over the next few years. My noble friend Lady Young spoke yesterday about the English backlash. That inevitably means in the long run the possibility of a move towards a federal state. That is something I do not want to see. There would be far too much bureaucracy within the current United Kingdom.

The Bill came late to this House. The Third Reading in another place was a month ago. I do not know why the government business managers have taken so long to bring the Bill to this Chamber. The delay, if any, has been with them rather than with the Opposition. The Committee in another place took place to an agreed timetable. However, many issues were not discussed, and more importantly, many questions were not answered. The noble and learned Lord the Lord Advocate is not now here: he has had a pained expression throughout some of the debates. The Minister has done much negative head nodding at the same time. That does not indicate the likelihood of a sympathetic reception of our forthcoming amendments.

However, we must not be criticised for carrying out our proper scrutiny when delay has been the Government's responsibility. I note that it is already building up in the media that the Bill will be delayed by your Lordships. That is not true. I am glad to hear from the Leader of the House that we shall have time to discuss the Bill in some detail.

I have some concern about the parliament itself. The problem of having only one chamber was raised by my noble friends Lord Lang and Lord Strathclyde yesterday. The noble Baroness, Lady Ramsay, spoke about it in her remarks earlier today. But this Chamber does a fine job of tidying up legislation. The fact that that opportunity will not be available in Scotland causes me a great deal of concern. I am also concerned about the exact role of the Secretary of State—perhaps it will emerge in Committee or today—his position in the Cabinet, his relationship with the Scottish parliament, and the importance that will have to the interrelationship between the government of the day at Westminster and the Scottish parliament.

The central belt will inevitably ensure that there will be a substantial number of socialist Members of the Scottish Parliament, given that the SNP, Labour and Liberal Members are basically all socialists at heart. I look with some degree of horror—this was emphasised in another place on Tuesday—at the standard of some Labour local councils in Scotland and the intolerable delay of the Secretary of State in calling them to order. We must expect something very much better from the Scottish parliament after it is elected. We want efficiency, vision and talent in the Scottish parliament. I am glad that the noble Lord, Lord Sewel, is a candidate; which will add to the possibility. But it is interesting to note how few current Labour Members of Parliament are standing. They would prefer a safe, easy life in Westminster, with constituency work carried out by the first and second class Scottish members of the Scottish parliament.

Nearly all Members who have spoken in the debate have highlighted the West Lothian question. The Bill cannot leave this House without some form of resolution. We cannot say, "It does not matter. It will resolve itself'. It is an issue which has to be resolved. I hope that it will be taken seriously by the Government, and that they will not adopt their current attitude of simply walking away from the issue. At the same time it would be wrong if the Bill left this House without detailed debate on the future number of Scottish Members of Parliament at Westminster. I do not believe that it can be put off to the election after next, or to the one after that. It must be done at the next election. If we make a decision now, there is plenty of time for the Boundary Commission to resolve the issue of how to reduce the membership to 58 Members of Parliament at Westminster. We must follow that issue closely.

We must also examine the reserved and devolved powers because some of the anomalies are extraordinary, particularly that on abortion. Apparently, the Scottish parliament will be able to discuss the death penalty or euthanasia, but not abortion. I found that an astonishing decision by the Government. There was a big debate in the other place and perhaps there was a misunderstanding over the whipping; most Labour Members thought that they were on a Government Whip, but it appeared that as it was a moral issue there was a free vote. The decision might have been different had they known that before they entered the Division Lobbies. I hope that we can resolve this important issue and because of that misunderstanding give the other place another chance to debate it.

Last night I followed the detailed arguments put forward by my noble friends Lord Lindsay and Lord Strathclyde relative to agriculture and fishing. I have represented the United Kingdom Government in Luxembourg and Brussels in fishing and agricultural debates and in the councils. We cannot leave the matter to a concordat, which seems to be a loosely worded agreement, to cover the question of where Scottish Ministers will be in relation to UK Ministers when we come to argue the case in Europe. That matter must be resolved before the Bill leaves this House.

I am pleased that at least we have Clause 100 which resolves the problems of the Border Esk and Tweed. For many years, I fought and argued over the friction on the Border Esk. The river mouth is in England, but 90 per cent. of the river is in Scotland. It came under the jurisdiction of the North-West Water Authority or the National Rivers Authority. I am grateful that that will now be carried further.

Finally, I wish to deal with the issue of taxation. We in Dumfries and Galloway, and those on the Scottish Borders, are concerned about the problems of where one lives, where one works and where one will be taxed. The game seems to be full of anomalies. A Scot working in England and travelling daily will be taxed in Scotland. If he works in England for the whole week and goes home at the weekends he will still be taxed in Scotland. If he lives in England and works in Scotland he will not be taxed there at all. There will be an immense problem for local employers on either side of the Border as regards the taxation system which will apply.

I have mentioned only a few of the anomalies, but there are many that we must resolve over the next few weeks. We have much to improve and much to elucidate in the Bill in order to achieve the future of Scotland within the United Kingdom.

6.3 p.m.

My Lords, noble Lords will be well aware that I am not a Scot. My connection with Scotland is in both senses of the word purely "academic". For that reason I have no particular personal concern with whether Scotland is well or ill governed. Therefore, I came to listen to the Second Reading of this Bill with an absolutely open mind. I must say that most of the speech of the noble Lord, Lord Sewel, almost convinced me that there was a much stronger case than I had thought for Scottish devolution.

Then, as so often is the case when one thinks one has seen the light, something happened. The noble Lord, Lord Sewel, having listed all the other intentions of the Government towards the constitution, went on to say:

"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 modem world. We want to build a system of government which people can access easily, feel part of and take part in".—[Official Report, 17/6/98: co1.1574.]

I do not for a moment believe that those words were written by the noble Lord, Lord Sewel. Obviously, someone who has held a professorship at a major Scottish university would never use the word "access" as a verb; nor would he indulge in the high-flown guff which characterises new Labour. We must assume that that paragraph did not appear in his original speech and was received by fax or pigeon post from Millbank Tower, having been composed by Mr. Alistair Campbell or someone of that kind.

My Lords, I am enormously grateful to the noble Lord, Lord Beloff, for trying to get me off that particular hook, but I have to own up to the fact that I wrote it.

My Lords, I suppose that keeping bad company does in the end affect one! Therefore, in the light of the 30 or 40 speeches that I have heard or read, I must reconsider the issues on which we are embarked. It was pointed out by the noble Lord, Lord Strathclyde, yesterday evening that the Labour Benches did not fill up with enthusiasts for this Bill. On the other hand, then and subsequently there has been no lack of Peers to fill the Liberal Democrat Benches. Indeed, we got more of a flavour for what the Bill is about from the Liberal Democrats than we did from members of the Labour Party. That is not surprising because after years in the wilderness there was a real prospect, give or take a few extra seats from PR, that the Liberal Democrats will provide some Ministers. There will actually be loaves and fishes for them after so long.

On the other hand, I cannot say that their arguments were very impressive. The noble Lord, Lord Steel, must live in a world of total fantasy if he believes that the experiences of Spain or Germany are relevant to what we are doing. He indicated that in recent months he had, no doubt with great pleasure, travelled backwards and forwards to Barcelona. To compare Catalonia and its undoubted important place in Spain with Scotland is as far fetched as comparing the climate of Barcelona with that of Edinburgh. If, on the other hand, the noble Lord, Lord Steel, had spent more time in the Basque provinces he might have found that even devolution is not always a cure for everything.

There is a tendency on the part of the Liberal Democrats—and the noble Lord, Lord Watson, is at one with them—to think in terms of geography rather than history. I believe that under the national curriculum one cannot study both, so that is their choice. I should have thought that in debating devolution for Scotland the first thing to consider is how the Union came about and why.

We heard notable misrepresentation, not for the first time in this House, from the noble Earl, Lord Mar and Kellie. I am sorry that he is not in his place, but his speech is available for us all to read. What happened was indeed part of a European process: the creation out of the scattered authorities, principalities, counties, kingdoms, states and cities, of the beginnings of the modern state. Often this was, as in our case, the prelude to dynastic union. The Union of the Crowns in the beginning of the 17th century led, because of the repercussions of religious and political movements in both countries, to a considerable degree of interaction between their politics. Nevertheless they remained separate countries. It is no exaggeration to say that they remained separate nations.

I questioned the noble Lord, Lord Clinton-Davis, about the national minimum wage because I did not know to what nation the adjective "national" referred. He said that it would apply to Scotland. What is the nation? Is it a nation that embraces the English, the Scots and presumably the Welsh, or, as I would like to think, a United Kingdom which provides a constitution under which all three nations exist?

At the end of the 17th century there was a considerable problem for Scotland which was largely the product of English legislation. The exclusion of Scotland from the advantages of being within the Navigation Acts and the failure of the one major Scottish attempt to create a Scottish colonial empire was the impetus which led so many of the Scottish elite—and whether a few were bribed to go along is of no consequence—to think that they would be better off within that economic and imperial structure. At the same time, England, involved in the beginnings of its second Hundred Years War against France, was worried lest Scotland might prove to be a jumping off point for a French invasion. So there was a bargain: "You give us military security and we give you political, economic and commercial opportunities".

Most people would probably agree that the bargain worked. The noble Earl, Lord Perth, and other noble Lords have stated that the Scots took a very full part in the creation of the British Empire, in the manning of it and in the expansion of British commerce, industry and beliefs throughout much of the globe.

Therefore it is not surprising that for quite a long period, in spite of the differences within Scotland which were exploited in the two Jacobite rebellions, the issue was dormant. Then, towards the end of the 19th century, as nations became more self-conscious—and this applies to Ireland and Wales as much as to Scotland—people began to think that they should take greater charge of their own affairs because the original union was an imperfect one in the sense that Scotland retained very important aspects of its national being, its ecclesiastical establishment and its educational system. It began to be anomalous, as more legislation was required in the 19th century for that to be done in a Parliament in which the Scots themselves were necessarily a minority.

However, people were dominated by the greater problem presented by Ireland. The noble Lord, Lord Steel, referred to Gladstone. As a former Gladstone Professor I am very sensitive about the way in which Mr. Gladstone is brought into debate. My impression is that Gladstone was never a great enthusiast for Scottish home rule. He seems to have been much less interested in rebellious Scots than the revolting Bulgars, but he made one very important contribution which the noble Lord, Lord Steel, might like to note. The noble Lord, Lord Steel, said that there is no answer to the West Lothian question. He is wrong: Gladstone had an answer. In the first Home Rule Bill for Ireland Gladstone suggested that Irish MPs should cease to sit at Westminster altogether. He referred to the fact that there were a lot of fish around Ireland and that they would like to make sure that they got it.

In the second Home Rule Bill he changed his mind and suggested that Irish MPs should sit at Westminster as well as in Dublin and that they should only take part in debates and decisions which concerned the Empire, foreign affairs or defence—the external field. We no longer have an Empire for the Scottish MPs to participate in running, but there are external considerations of defence and perhaps commerce and relations with the European Union which might suggest that we could look to Gladstone for a solution to that problem.

These issues and many others will no doubt be discussed as we proceed through the Bill. On the European theme I feel that sometimes in Scotland—and this applies more to the Scottish Nationalists than to the other parties—there is an assumption that it is for them to tell Europe how to treat them. If Scotland were to adopt the path of independence, as some of my noble friends feel is possible, they would not automatically become part of the European Union; they would have to join the queue somewhere between Slovakia and Cyprus. As we were told yesterday, that queue will be waiting around for a very long time.

If, as we all hope, Scotland remains part of the United Kingdom, clearly there must be some way in which Scottish Ministers can take part in delegations to consider issues in which Scotland has a particular reference. There should be far more detail in that part of the Bill.

We have a lot of work before us. I am told that it is the policy of my party to accept the decision of the Scots in their referendum, on democratic grounds. It is up to us to make it work. It reminds me of what Adam said to Eve after they were expelled from Paradise: "Of course, old girl, it was all your fault but we are going to make it work".

My Lords, before the noble Lord finally sits down, he told us at the beginning that he was approaching this matter with an open mind. Perhaps I may tell him that we are all mightily relieved that he did not approach it with a closed mind.

6.20 p.m.

My Lords, it is always fascinating for me to follow my noble friend Lord Beloff who made such a fascinating speech. However, my knowledge of history is nothing like as good as his.

I come right back to the present. Although we are informed in the preamble to the Scotland Bill that there will be no increase in overall public expenditure as a result of setting up the Scottish parliament, it will be an extra tier of government which is bound to be expensive. The estimated cost of establishing the Scottish parliament is about £55 million and the costs of the staff, MSPs' salaries and accommodation are expected to be a moderate £30 million.

It is estimated that about 200 staff will be required for the parliament. They will not be civil servants. Therefore, I wonder about their contracts of employment. Yet the Scottish executive will inherit responsibilities for the staff of the Scottish Office and other departments for which the Secretary of State for Scotland is currently responsible. Some increase in staff will be required over and above current staff numbers to deal with the new responsibilities currently falling to the Cabinet Office and to Her Majesty's Treasury. Yet in Schedule 5, most matters seem to be reserved matters.

The noble Lord, Lord Dean of Beswick, explained the expense involved to the people of Scotland even better than I can in his very good speech last evening at about 9.45 p.m. Whatever else may be said and done, it is not for us in this House to object to this Bill because it was voted for by a large majority in Scotland. Yet I am certain that many amendments and improvements will be required.

Equally, I feel that it should be recorded at this stage that the costs involved in setting up and running this parliament will come out of the Exchequer block grant to Scotland. That surely means that there will be less money for education, welfare, housing and so on because of the parliamentary costs. I fear also that before long, we in Scotland will lose our very important Cabinet representative—the Secretary of State for Scotland.

From my years as a Member of this House, I am convinced that the Treasury, guided by the Chancellor of the Exchequer, should be the only body to hold this country's purse strings. There are some good economic local authorities, health boards and so on. But equally, there are some that are inefficient and poorly managed. I know of a health board in Scotland which has managed to become overdrawn by £2 million. Unfortunately, it is extremely easy for any person or business to get into debt. But with present interest rates, it is extremely difficult to get out of it.

I am not satisfied that there is sufficient control and guidance in the Bill as drafted to help the parliament to budget for and manage carefully its affairs, particularly in its early life.

6.24 p.m.

My Lords, I believe that this Bill will lead to the break-up of the United Kingdom. That is sad and it perhaps would not be the case had the Bill been better thought out.

We must all accept the results of the referendum, but we have a government for whom message is all and content is subordinate. Future referendums might just as well ask the question, "Do you want to feel better?". I am sure that if we had had a referendum in Scotland which said, "Do you like being governed from Westminster?", the answer would have been an overwhelming "No". I am equally sure that if the referendum had asked, "Do you like being governed at all?" the answer would probably again have been an overwhelming "No". That is often the nature of politics in Scotland.

I must declare an interest. I have a house on the Isle of Jura in Argyll which I regard as home. In my lifetime, I have been represented by two Conservative MPs, one of them my noble friend Lord Mackay of Ardbrecknish, a Scottish National Party MP, and now a Liberal Democrat MP. Thankfully, I have never been represented by an MP from the government side but who knows what may happen in another election?

I should like to look at three particular areas in the Bill—the muddled relationship there will be between the two parliaments and between Whitehall and the Scottish Office and the muddle over which responsibilities will be reserved and which will not.

The Government have fudged the West Lothian question. The SNP has announced that its six MPs will stand for the Scottish parliament. I do not know the view of the Labour Party or the Liberal Democrat Party. But Scotland will have a multitude of MPs. We shall have Euro MPs, Euro MPs who may be in the Scottish parliament, Westminster MPs, Westminster MPs who also sit in Scotland, Scottish MPs who represent a constituency and those who do not. Some will be very busy and some will have hardly anything to do. Some will have constituencies and some will not.

The electorate will be greatly affected by that. The people will be unclear as to whom they should go to for help and representation. They will be affected badly by the very concern which the government sought to address; namely, that devolution seeks to avoid people feeling disenfranchised. People will end up in that very situation. Taxes will be a problem if all the promises are to be kept. The only way to raise money after a 3p tax increase, which will raise £450 million, is through local taxes. That will not satisfy all the aspirations that there are at present in Scotland. I am sure, encouraged by the Scottish National Party, we shall find in Scotland a huge increase in rates. Tourism will be affected. Home owners will be penalised, especially holiday home owners. Indeed, a tourist tax has been proposed by Labour politicians in Scotland.

The White Paper stated that if the level of self-financed expenditure by Scottish local authorities rose steeply, the Treasury could then cut the block grant to Scotland. However, there is nothing explicit on the face of the Bill which provides for that. The only potential reference is in Clause 61 which provides for the Secretary of State to make annual payments into the Scottish Consolidated Fund. However, there is no indication as to the base-level, annual changes or frequency of those payments. Given the potential for finance to be the prime area of conflict between the Scottish parliament and Westminster, there is surely a need to specify the level of revenue which the Scottish parliament and local authorities can raise independently and by what means.

We have the situation where quangos will be split and put back together again. It is proposed that there will be "reserved matters", cross-border public bodies, devolved matters and Scottish public bodies. We are told that government departments will have a relationship based on "consultation, consent and co-operation". That is a recipe for confusion. I have never yet come across one government department which has agreed with any other, let alone in a situation where one would be from Scotland and the other from England.

I turn now to a specific area. The Labour Government want to control and keep a hold on broadcasting. I should have thought that this was an obvious candidate for Scottish control and the Scottish parliament. After all, broadcasting in Scotland is largely separate. Scotland has its own ITV regions, its own radio areas; and, indeed, the BBC is different in Scotland. Interestingly enough, Scotland has media empires which would never be allowed in England. The Mirror Group, which is the owner of the Daily Record and the Sunday Mail, also owns 20 per cent. of Scottish Media. Indeed, Scottish Media, publishes the Glasgow Herald, the Evening Times as well as owing STV and Grampian Television—a hold over Scotland which even surpasses Mr. Murdoch's hold over the media in this country.

The Scottish parliament as proposed will take over responsibility for the Scottish Arts Council and for Scottish Screen. But broadcasting, which is both an art form in its own right as well as being a major commissioner of the arts, is to be regarded as a purely UK matter. Could not some of the frequencies, whether or not they be national, be used more effectively for purposes more specific to Scottish needs, in co-operation with the ITC and the Radio Authority?

If we are to have a Scottish parliament, it ought to be able to deal with those regulatory issues. Under the Government's current proposals, if a Scot wants to start a Gaelic local television or radio station, permission will have to come from London. That does not seem to me to make any sense at all. We shall have to consider such issues very carefully in Committee. I shall certainly be putting forward some amendments. If we are to have a Scottish parliament, we on this side of the House want to make it work. I believe that broadcasting issues are something upon which the Scottish parliament should have a view.

Is there anything good in the Bill? I believe that it will destroy the base of power of the Labour Party in Scotland. I would rather not see that happen because, if it does, it could also mean the break-up of the Union. That would be a terrible price to pay. As my noble friend Lord Campbell of Croy said, further fundamental change is inevitable. The Scottish National Party would try to force through another referendum on independence. Faced with these proposals, it is the only logical position to take. I am concerned that this Bill will produce a parliament that does not work; that will fail to satisfy the aspirations of the Scots; and that, in many areas, will be resented by the English.

It could have been a better Bill, but the Government have neither properly acknowledged the West Lothian question nor offered any solutions. We face the danger of a federal United Kingdom. However, we have to deal with the Bill as it appears before us. We must seek to ensure that we attempt to improve the legislation as it goes through this House. We must also ensure that the Government address the serious issues which so far have not been given their proper due.

6.33 p.m.

My Lords, I am not sure whether this is an interest, but I shall declare it in any event: I am most hopeful of being on the list for my party for the Highland region. I am, possibly, a little optimistic, but I hope to get into the Scottish parliament through that list. Batting, as it were, in 48th position out of 68, I shall not for a moment pretend that it is possible to deliver much in the way of an original thought or contribution. Therefore, perhaps I may confine my remarks to one rather personal observation and three specific points, which I shall raise at a later stage in the Bill's proceedings but which I should broadly like to mention tonight.

However, before I do so, I should like to say that, however many speakers we may have heard both today and yesterday, the quality of all of them has been very high. Indeed, I have enjoyed all of the interventions which I have either heard in the Chamber or which I have read in the Hansard report. We began with the noble Lord, Lord Sewel, who made an excellent exposition of the Bill's intentions. It seems to me that we have had marvellous moments of irony throughout the debate. One of them is the fact that, in this Government so dominated by ethnic Scots, it is an ethnic Englishman who introduces the Scotland Bill into your Lordships' House. Not for one moment do I doubt the commitment of the noble Lord, Lord Sewel, to Scotland. I know from personal exchanges with him that he is highly committed to the passage of the Bill and its objectives. Nevertheless, it is one of those nice little ironies that has arisen.

The noble Lord, Lord Mackay of Ardbrecknish, made his usual spirited canter through the subject. I noted that he has become a convert. That is wonderful. But, as my noble friend Lord Steel said, some convert! Nevertheless, it is nice to have the noble Lord on our side. I thought that my noble friend Lord Steel made a very constructive intervention, especially with regard to his experiences in Catalonia. Here I disagree with the noble Lord, Lord Beloff. As a Liberal Democrat, I always enjoy being teased by the noble Lord. However, as he said himself, he is firmly rooted in history and I like to look forward to the future. So I do not really mind what he says.

There is another contribution to the debate that I feel I should mention; namely, that of the noble Lord, Lord Monro of Langholm, who let slip—that is the only way of putting it—that he could not tell the difference between a Liberal Democrat and a socialist. I find that quite extraordinary, because it is a pretty obvious and fundamental difference. I am sorry that the noble Lord is not in his place at present and I realise that now is not the time to discuss such matters. However, any time the noble Lord would like to discuss them, I am at his entire disposal.

When I returned home last night I sat down and reflected on what had been said in the debate and on what I might have to say today. While sitting there, I happened to look up at the wall and noticed two A4 portrait photographs. One of them was of my father and the other of my grandfather. As I looked at them I realised—and this, perhaps, is yet another moment of irony—that here was a true dynasty of people who believed wholly and totally in home rule. My grandfather has already been mentioned by my noble kinswoman Lady Linklater of Butterstone. Indeed, she quoted from a speech that he made in another place in 1932, parts of which I quoted in this House on 3rd July 1996 when we debated the constitution. He made a major contribution to the cause of promoting home rule for Scotland.

The portrait of my father is a wonderful photograph, which was taken about five years ago. It shows him looking relaxed and smiling as only he could. One of the major contributions that he made in your Lordships' House was his intervention in the proceedings on the Local Government etc. (Scotland) Act 1994 when he fought hard and long, but unfortunately without success, to prevent the creation of the unitary council in Inverness. Here I should like to refer to the speech made by the noble Lord, Lord Lang of Monkton. I do so because my father fought long and hard with him. During the debate yesterday the noble Lord said:

"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".—[Official Report, 17/6/98; col. 1604.]

I have the greatest respect for the noble Lord, Lord Lang. I have respect for his ability, for his intelligence and for his integrity. I certainly respect his conviction. However, I totally disagree—even violently—with the whole tone of the noble Lord's intervention. I should like to refresh his memory. That part of his speech that I have just read to the House comes from someone who was a member of a government who were described to me earlier today as having been the most centralising governmental force since the Tudors.

I also remind the noble Lord that in centralising to Inverness all of the Highlands of Scotland, he created something which has been a complete disaster for Caithness, Sutherland, and the outer areas. However, it has worked for Inverness, as everyone said it would. All of the prophecies which my father made in your Lordships' House at the time of the passage of that

legislation have come to pass. While I have great respect for the noble Lord, Lord Lang, I have seen how faulty his judgment is. I assume that his judgment in this case is equally faulty.

As I said, I feel as if my father and my grandfather are sitting on my shoulders as I address the question of home rule. It was they who toiled and did all the work but it is I who will enjoy the fruits of their labour. It is perhaps another irony that at the very moment when this hereditary dynasty of home rulers is to be extinguished—which I wholly support—what we all fought for should come to pass. But, more importantly, perhaps I was dipped in the font of home rule at birth. I am a "home ruler" by conviction. I wish to remind your Lordships of what I said in the debate of 3rd July 1996 because I believe that I expressed the matter then as well as I can. I said,

"The majority of people in the country, if the discussions that I have had are anything to go by, seem to be largely apathetic towards all forms of government, both local and national, and have the feeling that they have little or no say in how they are governed. In short, the average person regards the process of government at all levels as failing to take account of their views and aspirations … it is frustrating in that most citizens feel less and less able to participate, which has fostered a growing feeling of them and us—them who govern and us who suffer".—[Official Report, 3/7/96; col. 1529.]

I went on to explain how home rule is the beginning of the solution to that problem. Therefore I wholeheartedly welcome with open arms the thrust of this Bill. As I said, I am a "home ruler" by conviction.

I also said in that debate,

"This great Parliament has been described as the mother of Parliaments. Mothers give birth. Let this great Parliament give birth to a child in Scotland. It will be as all children—ill-disciplined, gawky and awkward—but as it grows to adulthood it will become a worthy child, dutiful, respectful and honoured".—[Official Report, 3/7/96; col. 1531.]

We have the midwives on the Government Front Bench in the noble Lord, Lord Sewel, the noble and learned Lord, Lord Hardie, and the noble Baroness, Lady Ramsay of Cartvale. I wish them every success in bringing this baby out of the womb and into the world.

There are three specific points I wish to touch on. The first concerns Schedule 1 to the Bill which establishes constituencies. A theme I have mentioned in your Lordships' House on many occasions when talking of government, is the need to ensure that in areas of sparse population we look to geography and community as the guiding forces for constituencies and for local government as opposed to the number of people. I note that Orkney and Shetland—probably for those very reasons—are to be split into two constituencies. However, other constituencies which also cover large areas of land and are extremely difficult to get around, such as Caithness, Sutherland and Easter Ross, remain as one. When we discuss this matter in Committee I shall want to probe the Government's thinking on this matter and consider the possibility of reflecting on the size of constituencies.

My second point also relates to constituencies. I refer to a situation that worries me as it is a kind of catch-22 situation. Schedule 1 sets out the constituencies for the purposes of this Bill, but Clause 81 provides for changes to constituencies, applying the population formula for England to the new constituencies in the parliament in Scotland. The catch-22 seems to be that because we have representation now in Scotland we shall need less in England, and therefore the constituencies will be enlarged. But that in turn will reduce the number of MPs who will sit in Scotland. That is a complex clause and I may have misinterpreted it. If I have, that is marvellous.

The third point that concerns me relates to Clause 74 and tax-varying powers. We have the ability to raise or to reduce the basic rate by up to three percentage points. I am totally in favour of that. If we raise the tax by three percentage points because we wish to spend more money for whatever reason, we shall receive the complete Scottish block grant and our 3 per cent. But if on the other hand we decide that we would like to save for a rainy day, or we would like to be a little more generous to our citizens, and we reduce the tax by 1p, 2p or 3p, the only effect of that will be to return the money straight back to the central Treasury. That appears to me to guarantee that the tax will only ever be varied up rather than down. There is absolutely no point whatsoever in varying the tax down. When we discuss that matter in Committee, I shall wish to probe the Government's thinking in that regard.

I have spoken of my passion for home rule in Scotland. I have listened to the concerns of many noble Lords on the Conservative Benches. They are right to have some concerns. Any new venture is bound to be difficult. However, I approach this measure with a great sense of joy because I believe that Scotland is about to be liberated in the best possible way. For the first time since the Act of Union we shall become genuine, full members of the Union. We shall be able to take our place alongside England as equal partners with it. I believe this Bill will strengthen the Union. I have a great vision of Scotland free of shackles, able to do what it wishes to do and contributing fully to the Union. I believe that this Bill is a great step in that direction.

6.46 p.m.

My Lords, this is an excellent Bill which is full of dreams for the future. Those dreams may, in the not too distant future, be turned into reality. I am grateful to noble Lords for their speeches this evening. The noble Lord, Lord Beloff, made a brilliant speech, although he had to admit that he was not a Scot. I do not think there was anything Scottish about his speech.

With my name it seems that I should take the opportunity to say a few words tonight. My words will be few as the hour is late. Although I am a quarter Scottish from my mother's side, the name "Borve" comes from the Outer Hebrides. There is a Borve on Skye, on Harris and on Lewis, which is halfway to Newfoundland. I want to state categorically—I hope no one will gainsay me—that there is no more beautiful place in the world than parts of Scotland. The people can be obstinate and they can be dour, but they can also be the most hospitable of hosts. My late husband and I fought the 1945 election in a constituency in the Outer Hebrides. The election was called when he was on leave. How thankful I am that he was not successful because in that day and age we seemed to spend our time in rowing boats going from one island to another, trying to secure the votes of the few people there. There were more sheep than people.

In my view, this Bill is tragic and, as far as I can make out, is not wanted by those who have had time to read it. It is tragic and unnecessary because for 300 years we have stood the test of time in a severe and changing world. The Government had to bring the Bill forward, as a result of—in my view very unwisely—including a promise in their manifesto that they would hold a referendum on this subject. Any of us who have been in politics in this country and who have been asked a question about the referendum by those involved know very well that nobody ever tells the truth; they very rarely say what they feel. We cannot go by a referendum.

Wales was made the subject of a referendum, and it is outstanding that the people of England were not given that assurance. Knowing the people of Scotland fairly well, I know that financial affairs will loom large in their thoughts and calculations when voting in the parliament. It was therefore interesting to read in yesterday's Hansard the report of the Minister's excellent speech (col. 1571), and his references to Clauses 61 to 68.

Much is made in the Bill of the judiciary, but more is made of the financial situation. That situation will be geared to the people of Scotland. However, from the results of the referendum and from other comments, they seem to think that we in England will match the enormous amount of money that we have given to the Scots in the past. I do not believe that that will come about. I believe that they will be asked to raise income through a tax of 3p, which will bring in £400 million, as and when they want to do so.

The judiciary is to have more members. They will certainly be required to administer what is looked upon as efficient and forward thinking. We are lucky to have the Lord Advocate in this House. He will have to create more judges, and that will be very welcome in Scotland. The Bill will need to be discussed clause by clause, until we in this Parliament are satisfied that it is the best that we can do for the country and for the people of Scotland.

I fought in the war with the Scottish, the Welsh, the Africans and the Australians. Like other noble Lords who work in this House, I fought for the "United" Kingdom. Long may she remain so.

6.53 p.m.

My Lords, I imagine other noble Lords will agree with me that the opportunity to be anywhere near the noble Baroness, Lady Macleod, whether socially or in the Chamber is in itself a privilege. I wish to take this opportunity of saying how much we all enormously appreciate the example that she sets of personal courage and charm beyond normal human expectation.

In the referendum I voted "Yes" to the first question and "No" to the second. I should have preferred a deliberative assembly. However, we have to take what we have been given. My belief was and has remained that a far better solution to Scottish aspirations, and to the problem of bringing Scottish local opinion to the notice of those who govern, would have been to re-vamp and upgrade the Convention of Scottish Local Authorities (COSLA). In my view that body is much nearer to the people than any MSP can ever be. It has tried and proven procedures which have worked over the years, and its members know all the snags.

The Holyrood parliament has yet to adopt its procedures after the Scottish Secretary has had a bevy of intellectuals, businessmen and others comb through the procedures of almost every constitution in the world to see what is both "modern" and "democratic".

When the Scottish parliament starts, it is vital that it is, and is seen to be, workable and workmanlike, and that its procedures are so effective that it can reach a common voice without an appalling amount of ordinary Scottish wrangling. Most noble Lords who live and work, or whose head offices and activities are, in Scotland will share my opinion, as they will if they have ever been exposed to sitting on the Scottish Grand Committee in the other place. That is a dour, hellish experience. One has to listen to fellow countrymen nitpicking on minor points of procedure for the sake of holding matters up.

My first fear is that the Scottish parliament will find that its procedures have not been seriously laid down in advance, that they have not been carefully thought out and worked out, as have our procedures here at Westminster through 500 years of experience. There will be new procedures of utterly diverse origin and they may very well not work at all. If that is so, and if the Holyrood parliament is seen to be in any way woolly or inconclusive, it will wreak enormous damage. That is one of several anxieties that I have.

The Bill before the House contains no procedure for a chamber for scrutiny. I was much taken by the suggestion put yesterday by the noble Lord, Lord Hughes, that in Scotland we might well adopt the Norwegian system whereby a number of MPs, or deputies, elect among themselves a body which is, as it were, corralled off and later treated as a senate with revising powers. When there is a clash between the two, they all vote together. I was interested to learn in the remarkable opening speech of the noble Baroness that the Norwegian procedure is common to several of the Scandinavian countries. I was unaware of that. It is an example of which we should take heed when the procedures of the Holyrood parliament are worked out and codified.

A second feature of this Bill alarms me. I refer to the fact that the constitutional requirement that the House of Commons should contain no fewer than 71 Scottish MPs is to be repealed. That is a disaster. At the end of the day the major things are still to be done here at Westminster; they will not be done in Edinburgh at any time.

That brings me to a nightmare that has haunted me of late. My nightmare is on two counts. The Holyrood parliament may well prove ineffective if it is a quarrelsome, argumentative assembly of people who argue half of the time about procedure, as has been the miserable experience of the Scottish Grand Committee. If the Holyrood parliament is even remotely like that, it will be a discredit and a disservice to all of us. It will never achieve any real business.

So there are two factors that concern me. There is to be no revising chamber under the Bill that is before us, and no procedure settled in advance, let alone based on the procedures of the former Scottish Estates or indeed on the experience of Westminster. To base procedures on what happens in America or anywhere else is quite extraordinarily irrelevant. There is no separation of powers here, and the American constitution is based on that. That constitution, though democratic, is no real guide to the kind of procedures that will be useful and worth while at Holyrood.

My fear about the Scottish parliament is not so much that it will be disruptive of the UK—and I shall come back to that in a moment—but that it will not be strong enough to do its job. We recently learnt that the Department of Trade and Industry in Whitehall had decided that Dounreay should be closed down.

Dounreay has been a terrific social success, establishing a great research establishment on the north coast of Scotland in what was almost a desert, with nothing but heather and sheep. It has made a vast difference to Scotland as a whole; it has brought bright and enterprising British people from all over the British Isles to work there. Very soon they fell in love—who wouldn't?—with the gorgeous girls of Caithness; they married and they brought up a new race of children in the north of Scotland, all thanks to Dounreay. For Whitehall to close that down is to close down a social experiment which has been of enormous benefit not only to Scotland but to Great Britain as a whole.

I have a second anxiety: that the Scottish parliament may not be strong enough to fight the Treasury should the Chancellor of the Exchequer proceed with plans which he has already announced heavily to tax the offshore industry. That industry was developed in the North Sea, based largely on Aberdeen, thanks to the work of Sir Maitland Mackie, the brother of the noble Lord, Lord Mackie of Benshie. The offshore industry has not only brought between 20,000 and 30,000 jobs to Scotland but it has developed all kinds of new technologies for deep sea drilling.

Now that the North Sea province is coming to an end, as all extractive industry does sooner or later, a new province is opening up in the Atlantic. Gas and oil are believed to exist 1,000 or 2,000 feet below the seabed in the Atlantic, beneath about 1,000 feet of stormy Atlantic sea. To drill down and explore those areas, let alone to develop them, will require an enormous assemblage of technology and economic resources. It will require some of the multinationals that we regard as big and independent to be as pygmies joining together to develop this enormous new frontier.

My fear is that if the Scottish parliament is not strong and effective enough to stand up to Whitehall, then punitive taxation of the offshore industry may well come about, and that would be a second big disaster looming. It is up to the Scottish parliament to fight both those dangers.

I said that I had a nightmare and it is in those two areas: that the Scottish parliament may not be strong or effective enough.

My Lords, is it permitted for an Irishman to interfere in a Scottish debate? I have six Scottish grandchildren and I suppose that that gives me the qualification. Can the noble Earl throw any light on whether he wants the parliament to become stronger and stronger? If so, does he want it in the end to become an independent parliament?

My Lords, I apologise to the noble Earl if I did not hear him clearly because I am pretty deaf. What I heard was a question as to whether I wanted the Scottish parliament to be strong. Yes, I do. I want it to be able to stand up to Whitehall and fight for Scotland.

My fear is that the Bill before us does not give us a strong enough Scottish parliament. I am afraid that I can see it dissolving into nitpicking wrangles on procedure instead of doing the real job that needs to be done. That is to fight for Scottish industry both at Dounreay and with the offshore industries. Both those need defending against the depredations of Whitehall.

There is much more that I could say if I could read my notes, which are illegible anyway. I could go on for longer, but I have only one or two more comments to make now. We have been talking throughout the debate about the United Kingdom. I am glad that the Bill is grammatically correct in referring to the "kingdoms", plural, of Scotland and England. Here we are in the United Kingdoms, not the United Kingdom, singular. I like to think of the grouping that we have hitherto called the UK as the gathering of the British peoples—Scottish, English, Welsh and Irish. I hope that in that context the Scottish parliament will prove strong and vigorous enough to defend Scottish interests and resist the ever greedy depredations of Whitehall.

There is more that one could say, but I have taken 12 minutes, which is too long. I am grateful to your Lordships for bearing with me thus far.

7.6 p.m.

7.6 p.m.

My Lords, my position in the speakers' list presents a challenge, but I do not even pretend that I will be able to avoid repetition. It is inevitable that I shall trespass on ground already covered by others of your Lordships. What I hope to do is to develop a little further some of the themes that have been advanced so far—notably the powerful contributions of my noble friend Lord Lang of Monkton and the noble and learned Lord, Lord Hope of Craighead.

The Secretary of State for Wales argues that devolution is a process and not an event. I do not dispute that. Respective referendums in Scotland and Wales have set this process in train. They have let the genie out of the bottle. I find it slightly ironic, therefore, that both the Bill before us today and the Government of Wales Bill have been and are promoted as the means to deliver a new and improved constitutional settlement for the UK, that they will reinforce the Union. By inference, they have been promoted and are drafted as single events and not processes.

Where does this leave the idea of the settled will of the Scottish people? This is a concept to which the Government, to my mind a little desperately, attach great importance. I can understand the political imperative of so doing, particularly in the face of recent polls north of the Border. But it is an absurd oxymoron. How can a will, if it is to be free, electorally or otherwise, let alone as part of the process, be settled?

Clearly there is a contradiction here. Of course, it is true that Scotland has voted for its own parliament and for tax-varying powers. I neither question nor dispute that. But to interpret that vote as unswerving and permanent acquiescence to either the proposals espoused in the Bill or the maintenance of the Union stretches credulity. Electorates are much more subtle and fluid than that.

Perhaps, therefore, the noble and learned Lord the Lord Advocate will be able, when he winds up tonight, to advise the House which of those two contradictory versions of the Government's devolutionary agenda is the more accurate. Is the establishment of the Scottish parliament a single event or part of a much wider and deeper process?

Whatever the noble and learned Lord's answer in due course, it is necessary, in so far as we can, to test the Bill against the litmus paper of its capacity to deliver a lasting constitutional settlement. My thinking on this is coloured by what I consider to be three virtues—there will be some of your Lordships who see them as vices—of our existing constitution: continuity, stability and an absence of compulsion. Does the Bill entrench those virtues within the new constitutional landscape?

I turn first to the absence of compulsion. There exists the paradox of this Government espousing the cause of greater democratisation; of giving more power to the people at the same time as taking ever greater powers to the Executive here at Westminster. It is smoke and mirrors. This Bill, like many in the Session, is part and parcel of that process. Despite rhetoric to the contrary, the Scottish people will be increasingly bound to and compelled by the party political system. The electoral and parliamentary arrangements proposed in the Bill, especially the Government's obsession with the closed list, value the political party over any proper principles of representation. They have much more to do with strengthening the power of the political élite than with delivering genuine decision-making into the hands of the individual voter.

In that context many noble Lords have already expressed concern that the Scottish parliament is to be denied a second chamber. I leave aside the grave implications that that could have for the principle of the separation of powers. Rather, like my noble friend Lord Strathclyde last night, I am intrigued that this Bill, of all Bills in this Session, has inspired such lack of interest from the Government Back-Benches. Is it really to be supposed that the Bill is so perfectly drafted that all noble Lords opposite stand four square behind its every dot and comma? Or can we suspect that pagers have been vibrating furiously with the dictum of, "Say whatever you want, as long as you do not criticise party policy"?

The relative silence from the Government Back-Benches is, to my mind, an eloquent expression of the sort of critical analysis—if ever a Bill required critical analysis it is this one—to which this Administration wish to subject legislative proposals not only in Edinburgh by a unicameral Scottish parliament, but also here in Westminster by the Prime Minister's recomposed super-quango. Is that really the level to which the absence of compulsion in our constitutional framework should be reduced? That said, I note that the noble Lord, Lord Desai—for whom I have great respect and admiration—follows me on the speakers' list. I invite, and genuinely hope, that he at least will prove me wrong in this.

What of continuity and stability? First, devolution is a process and not an event. Of itself that does not imply either continuity or stability. More than that, as other noble Lords commented, there are many areas—funding, concordats, Europe and so forth—where we can have legitimate concerns as to how stable and continuous any settlement delivered by the Bill will be.

We must also consider the issue of sovereignty. In that I endorse the contribution of the noble and learned Lord, Lord Hope of Craighead. I am in full agreement with the simple reality outlined by the noble and learned Lord that parliamentary sovereignty will be retained here at Westminster. But it would be both wrong and naive to fail to recognise the huge expectations that the Government's devolutionary agenda released. Scottish desire for real legislative, administrative and executive power for a measurable degree of autonomy and sovereignty is genuine and incontrovertible. But the Bill does not and cannot satisfy that desire. Again, it is smoke and mirrors. Worse, it retains the most important levers of control of both devolved and reserved competence, particularly control of finance and European matters, within the hands of the Executive here at Westminster. That is a control which, to an extent, will be exercised unconstrained by parliamentary scrutiny either in Edinburgh or here at Westminster. That is not a recipe for continuity and stability, nor indeed for good governance. No, as Scottish resentment over mock expectations and unsatisfied desires gathers pace, what will flow quite naturally from it is constitutional mayhem and political chaos. The double mandate will spread the fire of that resentment throughout the United Kingdom.

I do not wish to be misunderstood in this; I am not anti-devolutionist. I repeat that I believe that the Scottish desire is both genuine and incontrovertible. I have no doubt that your Lordships' House will do its utmost to improve the Bill, and I hope that the Government will be receptive to attempts so to do. But I sincerely fear that the Bill as it stands has about it the worst of all worlds. It does not, in fact, deliver meaningful devolution. It does not, in fact, deliver a credible constitutional settlement that Scotland, within the United Kingdom, can take forward into the next century.

Scotland will of course have its parliament; there is no doubt about that. Our duty in the coming weeks is to do what we can to make it work.

I return to where I started. The genie has been let out of the bottle. There must be a real fear that even the wisest counsel and expertise of your Lordships' House may prove insufficient, as we scrutinise the Bill, to recork that bottle.

7.16 p.m.

My Lords, I thank the noble Earl, Lord Northesk, for the kind words that he said about me and I hope that I can live up to his expectations. Let me begin by saying that, like the noble Lord, Lord Beloff, I am not a Scotsman; I am an academic. Therefore all I can do is be an academic. I cannot claim a grandmother anywhere on Scottish soil.

This is part of a collection of Bills and moves to which the Labour Government are committed, to modernise—I have no problem with that word—the constitution of the United Kingdom. I should have preferred all those Bills to have come together in a single framework and we could then have seen the interconnections which exist between them. But I will start as someone with a good colonial education in India by saying that that is not the British way and I shall therefore have to live with this piecemeal approach to constitutional reform.

Let me say this—I shall not spend too much time on it: we forget that this Parliament has made many constitutional changes in the past, especially while the British Empire was in existence, and many constitutions have been discussed. For reasons into which I need not go, I happened to be reading recently one of the longest Bills that this Parliament ever debated; that is, the Government of India Bill 1935.

That Bill was preceded by a statutory commission report, round table conferences, and a report from a joint Select Committee of both Houses of Parliament. It was an extremely long Bill which went into considerable detail about the constitution of India. The discussion on the Bill occupied 4,000 pages of Hansard. We are doing something equally important, but in a much shorter time; so we must be careful. But we are doing something monumental and we may perhaps benefit later by a joint committee report, if we can get hold of one. Important issues are being discussed to which we are not being exposed in sufficient depth.

Many noble Lords have said that there is probably no choice between Union and separation; either we have this or we have what the Scottish nationalists want. Members of the party opposite seem confused about that. They want either more powers for the Scottish parliament—for example, in European matters—or they want fewer powers. Either way, they believe that it will lead to independence. They should make up their minds as to what precisely they want the Scottish parliament to do.

The difficulty is patent. The United Kingdom has a multi-national quality which is unitary in its structure. We are devolving power but we are not creating a federation. That is a very peculiar thing. There is a step between the present union and Scottish independence, but we are not going to go in that direction. We have chosen to devolve power. However, in devolving power there are considerable risks because there will be a symmetry between Westminster and whatever assembly or parliament we create. As the noble and learned Lord, Lord Hope of Craighead, pointed out in a masterly speech yesterday, the symmetry is embodied in Clause 27(7), by which the Scottish parliament will be subject to the constitutional sovereignty of the United Kingdom Parliament. Unless that distinction is carefully followed through in some of the reserved powers and devolved powers that we create and unless we think of all kinds of possible disastrous scenarios and prevent them now, there may be trouble ahead.

I am especially concerned about the fiscal side. As usually happens in these matters, nothing much is said on the face of the Bill. There is talk about a consolidated fund being created with the Secretary of State putting in money or whatever he likes to do. We are given to understand that the Barnett formula will be continued, but as an administrative arrangement and not as a constitutional or legal arrangement.

Many noble Lords who have experience in these matters have already pointed out that Scotland gets more money than the Barnett formula stipulates. Therefore, at the beginning we face the problem that the amount of money Scotland gets is not as provided in the Barnett formula but is something else. But right now it is subject not to an administrative arrangement but to a political arrangement, which is whatever the party in power wants to do about Scotland and however rigorous or weak Scottish Ministers are. Given that that is currently the situation, it would be right for us to think through how we can incorporate as much of that as we can in legislation rather than leave it to administrative detail. I say that because a sovereign parliament can change its mind. If the next Parliament decides to cut 25 per cent. off the Barnett formula, nothing in the Bill can prevent it. That would lead to a terrible and frustrating quarrel.

I think we ought to understand for ourselves what we want to do. We want to do the best by Scotland. We want to create a parliament which will be beneficial to the Scottish people because that is what they want. We do not want to be mean as a Parliament; we want to be generous. If we want to be generous, we ought to state in a schedule to the Bill that future Westminster Governments may not touch the money other than to a very small extent. Unless we do that, there will be trouble ahead. Money will be central to this thing. As the noble Lord, Lord Nickson, pointed out, any delusions about Scotland's oil wealth and so on will be pretty well disappointed. Money will become a major ground for quarrel. It is not desirable that we pass an Act which will create room for such a quarrel.

My next point concerns Schedule 5, which is quite a long schedule. Very little is said there about the reserved power of taxation. It mentions only taxes and excise duties. Far too much fuss has been made about the variable rate of basic income tax. The party opposite has done a great deal of damage in this country by focusing all of its attention on income tax and the basic rate of income tax as if there are no other taxes to worry about. A great fuss is made about 3p in the pound, but I do not think that 3p in the pound matters very much. As the two previous Chancellors and the present Chancellor have shown, there are a thousand ways of raising taxation other than by going through income tax. But we ought to be clear in our mind whether we want the Scottish parliament to be able to create new taxes which are not income taxes. I could easily invent some taxes if someone asked me to.

I know very little about the real world but let us suppose that oil is carried in large lorries and a tax of £2 per lorry is put on any load that goes from the wellhead to outside Scotland. That would be very simple. One could also have an hotel tax or a restaurant tax. My noble and learned friend on the Front Bench will probably tell me that that is not allowed, but I should like an assurance from him as to what is or what is not allowed. Will the Scottish parliament be able to innovate in the area of taxation?

The Kilbrandon Commission was mentioned by the noble Lord, Lord Renton. It went into this issue and suggested various committees of the Exchequer which would give rulings about the powers of taxation of different jurisdictions. That is especially important if we are in a single market and a single currency region. It might be that a tax imposed in Scotland on Scottish residents would distort competition in the United Kingdom. There could be all kinds of problems. I should like an assurance from my noble friend that the Government have thought about this and that such quarrels will not arise or that they will be duly decided upon by either by the Privy Council or by a committee of the Exchequer.

Perhaps I may make one or two points which go beyond fiscal matters. I agree with the noble Lord, Lord Beloff, that there are a variety of ways of solving the West Lothian question. I do not think one should say that there is not a solution. If there were a federation there would be a straightforward solution. The difficulty arises because we do not want to go to a federal solution; we want to create a half-way house of devolution. It would be perfectly permissible for us to say that only on certain topics of United Kingdom interest would the Scottish MPs be allowed to vote and that they should go away when other matters relevant to English interests are being discussed. In that way the Westminster Parliament minus the Scottish MPs would become the parliament of England and Wales. That is very straightforward. The Scottish MPs could go and work in their constituencies or whatever it is that people do. I do not think that the West Lothian question is as insurmountable an obstacle as people say. It can be if people want to make it so, but I believe it can be solved if people wish it to be solved.

Perhaps I may refer to the second chamber problem. Yesterday, my noble friend Lord Hughes referred to the Norwegian Parliament.

My Lords, I entirely agree with what the noble Lord says. However, the whole point is that there is no desire on the part of the Government to make any attempt to solve the West Lothian question. Their choice is purely to ignore it.

My Lords, I know as much about the Government's intentions as the noble Earl knows. But I am sure that, after my speech, the Government will be enlightened.

My noble friend Lord Hughes referred to the interesting Norwegian case. I believe that the way of electing the Scottish parliament offers a very natural solution to that problem. I suggest that the 73 directly elected MPs can always constitute the lower chamber and that the 56 elected at the second round or through some slightly dubious procedure, can constitute the upper house. It can be the scrutiny committee. Within a single chamber we have a natural division. We respect the will of the people, and the directly elected MPs with constituencies and those who come from lists of various kinds can act as the upper chamber. I do not believe that any of these problems are insurmountable. As the noble Earl, Lord Northesk said, it is a process and not an event. There is a lot of mileage to go yet. If there is the goodwill and we work hard on the issues, we can minimise possible problems and perhaps even make the Bill better than it is now. If we do that I am sure that it will be a great success.

7.31 p.m.

My Lords, as a number of your Lordships have implied, there are certain aspects of devolution which have hardly ever been contentious. First, there is the concept of non-parliamentary devolution such as the Scottish Office, its functions and the development of its role. Secondly, even the notion of parliamentary devolution has hardly been disputed. Critics have not objected to this notion itself. They have not necessarily denied that an Edinburgh parliament would deal much more efficiently than Westminster with a majority of matters affecting Scotland. Instead, concerns have correctly focused on the complications which arise as soon as there is both a parliament in Edinburgh and at Westminster. The challenge and context has always been how to institute and progress an Edinburgh parliament without upsetting the stability and integrity of the United Kingdom.

As your Lordships have recalled, before this present Bill several previous drafts have already sought to address these difficulties and to present a stable formula for Scottish devolution within the United Kingdom. The drafts include proposals put forward during the Heath Government by the committee chaired by the late Lord Home of the Hirsel. They also comprise measures which formed the Scotland Act 1978 when the noble Lord, Lord Callaghan, was Prime Minister.

While the contents of the present Bill are different from those drafts in the 1970s, many of the fears and anxieties then are broadly similar to those expressed now. In the debate yesterday and today a number of your Lordships have cautioned that friction and resentment between Westminster and Holyrood could develop not least from financial arrangements currently proposed and from the consequences of a changed role for Scottish Westminster MPs.

Among other issues your Lordships have referred in particular to proposals in the Bill for elections, to financial consequences relating to the Barnett formula and regarding reserved and non-reserved powers to current anomalies in the Bill affecting Scottish representation at Brussels, and proposals for Scottish agriculture and fisheries. My noble friend Lord Mackay of Ardbrecknish urged the House to examine these issues very carefully in Committee. That we shall certainly do. Clearly, the more thoroughly we succeed in that task, the better able to work in practice will become the provisions of the Bill.

From many of the Bill's provisions we can already surely take heart. Ranging as they do from pre-legislative scrutiny to post-legislative judicial challenge, they present a number of sensible checks and balances. A proper parliamentary committee structure can also be inferred from the parliament's membership of 129. Not least, if votes cast in the country can be fairly represented in parliament, is there some real prospect of political balance and consensus and of parliamentary control over the executive?

Recently I have tried to find out as much as I can about the workings of various regional and national unicameral parliaments comparable to Holyrood in size and for some of their functions. My conclusion is that arrangements for Holyrood compare favourably with those which work best elsewhere. Provided that in Committee we deal with the aspects already referred to, then the parliament can hope to start out on a sure footing.

The noble Lord, Lord Hughes, also said that he had made comparative studies. In particular he referred to the Norwegian parliament, the Storting. He advised that the first thing we must do is to find out how well the single chamber of parliament works. However, he suggested that after a year or so, Holyrood might well wish to introduce an element of bicameralism.

If, at a later date, Holyrood wanted to do that, then the enabling power for that option, even though it might never be used, should probably appear in this Bill. When the Minister replies, can he say whether he agrees that a new clause should be introduced in Committee to achieve that purpose?

I am particularly pleased that it is the noble Lord, Lord Hughes, who puts forward that idea. I nearly always find myself in agreement with him. My father used to tell me how much respect he always had for the noble Lord and for his opinions.

A new clause inserted in Committee could also assist a related purpose. Holyrood may well not need an element of bicameralism at all. However, through time, in discharging certain of its own duties and functions, it might want to involve other elected representatives from Scottish constituencies, including Scottish Westminster MPs and Scottish Euro MPs. Perhaps the Minister can also comment on this related aspect when he replies.

Another feature of the Scottish parliament is not only its developing role in Brussels and in the European Union, but also how it comes to relate to other regional and national parliaments of the 40 states which now comprise the Council of Europe.

If one is a parliamentarian seeking to progress various initiatives in any national or regional parliament, very often one's chances of success will be considerably enhanced by a knowledge of how other parliamentarians in other states have proceeded with similar issues in similar circumstances. Such information, useful to parliamentarians, can already be accessed through the Internet, as your Lordships are well aware. That process can be assisted further in Strasbourg by the Council of Europe parliament where I have the honour to serve.

If the Holyrood parliament can already hope to exert a healthy measure of influence over the Executive, use of the parliamentary Internet can further assist the success of the initiatives of its parliamentarians. Paradoxically, in terms of the wider Europe there is all the more scope for regions and their parliaments to set examples of best practice with matters such as business, employment, education, young people and social policy.

Evidence of best practice is often at its clearest when presented on a smaller scale and where initiated by parliamentarians rather than by members of the Executive. That evidence is also often at its most effective when demonstrated on a smaller scale in the form of partnership between the Government or public bodies and voluntary bodies.

One of the keys to the success of Holyrood must be the flexibility of practice and provision affecting its relationship with Westminster. It must adjust to circumstances and, through time, in consultation with Westminster, modify its functions as required. At the outset no doubt its task is a daunting one. Yet within the United Kingdom and Europe it can set a fine example. For Scotland and all its communities it must help to bring harmony and stability.

7.38 p.m.

My Lords, I do not see the noble Earl, Lord Erroll, in his place so I am afraid that noble Lords cannot put off listening to me any longer. I live and work in Scotland and I am proud to be a Scot. I never had a problem reconciling fierce patriotism with staunch support for the Union. When, 20 years ago, we completed our marathon debates on the 1978 Bill, I did not believe that I would be cantering around the course again. Perhaps that is because I am not a politician. It is perhaps surprising that I am not when I have to own up to the Machiavelli of Scottish politics—best known as Patrick Master of Gray—as a forebear.

Following yesterday's references to ancestors by my noble friend the Duke of Montrose and by the noble Earl, Lord Buchan, I might offer as the earliest example of a Gray political action the day, in 1297, when, from the Borders, father rode south to join Edward and son rode north to join Bruce.

We have debated the devolution possibilities for many years. A pre-emptive strike has ended that general debate and we must now, like it or not, focus on the future that this Bill ushers in. I have confessed to political innocence and so I can say with ease that the Bill demands scrutiny which transcends party politics. I recognise the vox populi but, unlike my noble friend Lord Mackay of Ardbrecknish, do not have to say in consequence that I am a convert, albeit reluctant, to devolution; I am not. I do not like what is proposed, nor do I believe that it will advance the interests or prosperity of Scotland, England or the Union.

We are being asked to conduct an experiment which cannot later be set aside after trial and error. It is all very well hoping that this will disarm proponents of separatism, but that is not good enough—only certainty would suffice. Some noble Lords have suggested that this plays into the hands of separatists. It may well prove so; I hope not. That is the kernel of concern for those who value the Union. Let us face it: there are those who will use and abuse the proposed system in pursuit of separatism, even if not all Scottish Nationalists favour a total break.

If we fail to improve this Bill, there will be much scope for mischief. What are some of the areas of particular opportunity for mischief? I suggest that the list includes Edinburgh versus Westminster, in the most general sense; Edinburgh versus Westminster on those occasions when there may be complete political divergence between the two legislatures; Edinburgh versus the local authorities; and the Central Belt versus the Highlands, Islands and other rural areas. I suggest that there will be a diminished voice in Europe in the fashion described so illuminatingly by my noble kinsman Lord Lindsay yesterday. It was suggested yesterday that the city versus country problem would be catered for by the electoral system. I do not think that that will be so in reality. Industry, commerce and dense population have too much muscle. Anyone who lives in rural Argyll, once over-lorded by Strathclyde Region, will know that.

When we come to consider the detail, we cannot—nay, we must not—ignore other proposed constitutional reforms and possible changes; nor changes to the European scene. To consider this Bill in isolation will not do, but it is frustrating to be able only in part to guess at interaction with other constitutional changes. It is no use throwing a pebble into a pond to produce intended ripples if someone else steps up and throws in another. There are murky, indistinct areas in the Bill. The less the clarity, the greater the scope for discord. The 1978 Bill said too much. I suggest that perhaps this Bill says too little.

Speaking 55th in this debate—correction: 54th—it is hard to avoid repetition. I shall confine myself to emphasising just a few of the points made. I choose to highlight the following. I refer first to the future of the Secretary of State for Scotland. By convention, the Bill refers only to "the Secretary of State". Does that, perhaps inadvertently, allow for the introduction later of a minister with different, wider responsibilities than purely those for Scotland?

Secondly, I choose to highlight the matter of concordats. We need to know much more, and I believe that we are to be given more information. Presently, the concordats are like a collection of cobwebs, barely discernible for want of illumination—and they sound pretty cobwebby to me.

Thirdly, I look at local government finance. Anyone who listened to the masterly speech of my noble friend Lord Nickson will appreciate how finance is likely to impede the parliament from delivering the electorate's expectations. Local authority finance will be affected. We need to protect local authorities and their financial position.

Fourthly, I refer to the unicameral nature of the parliament. I was encouraged yesterday by the speech of the noble Lord, Lord Hughes, to which the noble Baroness, Lady Ramsay of Cartvale, and others have referred this afternoon. Nonetheless, I should like to see something about that on the face of the Bill. The amount of work and the committees to be manned will place a considerable strain on members of the Scottish parliament.

Fifthly and lastly, I refer to the electoral system. I am sorry, but I find it unconvincing. I hold that it would have been far better to let parliament decide on the electoral system to be adopted—that is, this Parliament, not the one to be. I hope that there may be scope for amendment.

Our debates in 1978 were an experience I much enjoyed for all the hard work involved. The stamina and courteous handling of debates by the noble Lord, Lord Kirkhill, and the noble and learned Lord, Lord McCluskey, were exemplary. Speaking yesterday the noble Lord, Lord Kirkhill, kindly referred to my part 20 years ago. I have looked up a couple of the matters over which he and I locked horns in those days. With some smugness I noted that the authors of the Bill before us have adopted the "reporting of proceedings" clause which I daringly and successfully pressed at Third Reading in this House and which survived the Commons.

Another matter that I looked at is not reproduced in this Bill. This puzzles me. The 1978 Bill included provision for the Secretary of State to advance or postpone a Scottish election. That provision was there to protect United Kingdom interests and, for instance, to deal with any potential clash of electoral dates. There is a scheme, running through several clauses and schedules, covering the holding of elections and their organisation, but only a Minister of the Scottish parliament is given the power of postponement. But the Secretary of State has been written out of the whole matter except in respect of the initial election. I understand that that will not be imported even via the representation of the people legislation. The devil is always in the detail, and it is certainly in vires. As to that, one matter puzzles me. Why on earth does Clause

31 allow the legislature to overrule its own presiding officer on vires when the ultimate decision remains elsewhere?

In conclusion, there are other ways of expanding and improving existing devolution mechanisms. As I observed last time round, we are being asked to stitch some strange new cloth onto our old constitutional garment that threatens the consequences that that simile suggests. I hope that I am wrong.

7.51 p.m.

My Lords, it is always a privilege to follow my noble friend Lord Gray, who speaks with such eloquence and knowledge. There is no doubt that the people of Scotland want devolution, and there is little doubt that they will get it. Sadly, when the people of Scotland voted for devolution they did not know all of the dangers and implications for the unity of the kingdoms that might result from devolution. The voters were carried away by the thought of having more control over their affairs and dealing with the remoteness of Whitehall. Unfortunately, this came about because the Government acted with too much haste over devolution. They simply had not thought it through properly. It is only now that they are beginning to realise some of the pitfalls that may lie ahead, the worst being areas of potential conflict between Parliament in London and parliament in Edinburgh.

The Scottish Office, with areas devolved administratively, has served Scotland extremely well, in spite of the fact that at times the credit for some of its notable successes has been snatched by one of the Whitehall ministries because the department has failed to blow its own trumpet loud enough. Today Scotland is flourishing, with the notable exception of the agricultural industry, which is in dire straits.

I turn to the future and this Bill. Having gone so far down the devolution road, it is up to all of us to see that it works for the benefit of Scotland and the United Kingdom. How are we to make devolution work? Areas of potential conflict between parliament in Edinburgh and London must as far as possible be eliminated. There is little doubt that failure of devolution will lead to the next experiment, separation, which is something that the Government and practically every Member of this House deplore. To assume that a conflict will not arise is to bury one's head in the sand. Each time there is conflict it will give a boost to Scottish nationalism. Once that happens, the survival of the United Kingdom is at stake because the Scottish National Party will see its chance to go for separation.

There are many areas of potential conflict that have already been mentioned by other noble Lords. All of those areas must be scrutinised during the passage of this Bill. It is not just a question of conflict. It is almost certain that there will be frustration in the Edinburgh parliament. It will be able to discuss almost anything it likes but its power to act will be limited by matters reserved to Westminster. This frustration will be made worse if different parties are in power in Edinburgh and Westminster. Make no mistake: Scottish devolution will concern England as well as Scotland. The present dormant nationalism in England may well rear its head in future.

My advice to the Government in devolving power to Scotland is "Ca'canny", as is said in Scotland. They should think through all of the implications and get the Bill right; otherwise, the United Kingdom will be the victim of their mistakes. The strength of Scotland and England lies in unity. If that unity is broken both will suffer. Like many other noble Lords, from 1939 to 1945 I fought for the United Kingdom, not just for Scotland. Today, given the chance the Scottish nationalists will break up the Union. They must be stopped.

It is the duty of your Lordships' House to improve this Bill so that it does not lead to the break up of the Union. To achieve this improvement co-operation between the Government and noble Lords on all sides of the House will be required in considering amendments to the Bill. The various stages of the Bill must not be rushed. It is of paramount importance to get it right. The revision of a Bill of great constitutional importance is something at which your Lordships' House excels. To make devolution work the Government will need all the help they can get. The Government may find that even some hereditary Peers can offer considerable assistance. Above all, with their large majority in another place the Government must not steamroller this Bill on to the statute book. To do that will lead to disaster not only for Scotland but also for England. The Government will never be forgiven if devolution for Scotland fails and is replaced by separation.

7.58 p.m.

My Lords, it is a remarkable coincidence that I have the privilege to follow one of my noble kinsmen. Our families go back a long way in the history of Scotland. For more than 200 years they were intermarried, and for many of those years my family were known as Forbes-Sempills.

This has been a long debate. I should like to adopt a slightly different tack. Noble Lords may be interested to hear the results of a snap poll which I prepared following yesterday's debate. I categorised the 36 speakers in three ways. The doom and gloom merchants made up some 28 per cent. of the contributions; the Doubting Toms made up 42 per cent. (which after today's performance is now closer to 50 per cent.); and the proponents and supporters of the Bill made up another 28 per cent. Noble Lords may draw their own conclusions, but I suggest to the Government that there are many hours of debate ahead.

In a further analysis of the sample, I observed one underlying concern, repeated many times—the threat to the Union. I shall therefore address my remarks to that one issue and draw some observations that I have also made on the Bill's progress to date.

It is my contention that the Union is like most long established marriages: it has become tired; it has hit some serious problems; it is fraught with frustration; and the net result is that we have arrived where we are today. England and Scotland have come a long way. It is unfortunate that the senior partner took the junior partner for granted. However, the promise of a change of responsibility has provided a new impetus which will, it is to be hoped, create a rejuvenation in this long-standing relationship.

I support the intention and good will behind the Bill. The key is to look forward and to take the initiative. Stagnation or the status quo is no longer an option. I see two clear tasks ahead. One is to ensure that the Bill is amended and strengthened in order that it can achieve the objectives of its designers. There are many anomalies. Let us not forget that it has already received a substantial amount of interest and investigation in another place, where a total of 860 amendments were tabled, of which 297 amendments were made.

The contributions made in this Second Reading have highlighted some crucial areas of concern, most notably referred to by the noble and learned Lords, Lord Hope of Craighead and Lord McCluskey. They referred to the issue of the Bill's ability to withstand the scrutiny of the judiciary. That seems to me critical. If the Bill is to endure—it is the objective of all—it will require serious discussion.

The second objective is to address the issue of public perception regarding devolution and its role in the future of Britain. It is a myth that the man in the street understands what is at stake. That myth was well illustrated in yesterday's leader in The Times. I shall quote part of it. The article states:

"The SNP has been further helped by the seductive illusions which Scottish opposition politicians fostered during the years of Conservative rule. The myth was nurtured that Scots were a nobler people than the devil-take-the-hindmost individualists south of the border who voted Tory. Expectations among Scots of what a Labour Government should do were allowed to exceed those of English voters: now traditional supporters in Scotland appear more disillusioned than their comrades south of the border. The SNP has made of these old ideological comfort-blankets a tartan banner under which dissidents may rally".

The leader added what I maintain is the key towards regaining the initiative:

"A sustained critical assault … from a position of economic honesty will see the SNP, like Labour in 1992, fall apart under fire"—

a point that was made clearly yesterday by the noble Lord, Lord Nickson.

I have also followed the progress of this Bill ever since I first read the White Paper. It is one of the most important constitutional documents to have been produced this century. I have been staggered by the limited interest shown in its contents, not just in the public domain but here in Parliament. Noble Lords may not be surprised by my following observations which I made during the Bill's progress through another place. I witnessed six different Sessions and read most of what was said in Hansard. At no time did I see more than 30 to 40 MPs in the Chamber. That is less than 5 per cent. of the elected representatives of the kingdom. Of the 30 to 40 MPs, approximately a quarter to a third came from the Opposition Benches. That implies that they came from English constituencies. That leaves a total of some 20 elsewhere in the Chamber. That is less than one third of all the Scottish MPs.

More interestingly, it was the same hard core every time. I have no doubt that their knowledge of the Bill is excellent, but as for the others, "I hae me doots". I should have thought that on a Bill of this magnitude, at least a keynote address should have been made by the Prime Minister. As it was, the Bill was guided through the House by the Secretary of State and two of his ministerial colleagues, supported by a core of colourful Back-Benchers, some of whom must be nursing deep grievances having failed to be selected by their party for the very parliament for which they have fought so hard.

I may be naïve, but I found it disturbing. I see it as a true democratic deficit. I cannot stress enough the importance of widening this debate throughout the United Kingdom. Too little knowledge can be dangerous, especially if misinterpreted. I suspect that that is where the SNP is gaining substantial ground. The concern I have was well expressed by the noble Baroness, Lady Young, in her powerful contribution in which she highlighted the growing dissent among the English.

Much has been said, and nearly all of it has been recorded. Apart from Hansard, there have been the House of Commons research papers, guidelines to the Bill have been placed in the Library and there have been regular correspondence and editorials in the Scotsman and the Glasgow Herald. Unfortunately, those newspapers have a combined daily circulation of under 200,000; and most of that is in Scotland. The contents and implications of the Bill are therefore known to only a minority. If the Bill is to endure and the Union is to survive, I suggest that a more positive attitude is required in promoting the strength and benefits of the Union to all the citizens of Britain, with special emphasis on the Scots.

I conclude by drawing a sporting analogy. This time last year the British Lions won a test series against the Springboks, the current world rugby champions. The results of the current tours in the southern hemisphere by the individual home nations are, to put it politely, woeful. I do not deny that each country is capable of achieving great success. And while I should love to see my own country win this current World Cup, I should be equally pleased to see England repeat its success of 1966.

8.8 p.m.

My Lords, at the Second Reading of the Government of Wales Bill I argued that the Bill was inappropriately titled and that a more appropriate title might be Government of the United Kingdom (Creation of a National Assembly for Wales) Bill. That criticism applies with even greater force to this Bill. It is of course a Scotland Bill, but, more appropriately—we need to remember this all the time—it is a Government of the United Kingdom (Creation of a Scottish Parliament) Bill.

I accept that such amendment is not necessary. It would indeed be tautologous. The Bill would not be debated in this House if it were not a United Kingdom Bill. However, the capacity for misrepresentation which appears to happen because of those deficiencies of title in the far-flung parts of our country causes some concern to me.

We have had an interesting debate. I am almost the 60th speaker and there are more to go, so I shall be no longer than I must. We have heard a great deal of history. We have heard about the deficiencies in 1707 when the Act of Union was put in place and about the deficiencies of some of the individuals concerned. We have gone even further back in history. Perhaps I may say as one who is here by right of surprise as opposed to right of heritage, I find a debate of this nature wonderful because it gives one an enormous sense of continuity and unity.

I suggest that the seeds of this Bill are more recent than those far off times. I suggest that the seeds of the Bill grew because of the philosophy of the corporate state. I can trace that back effectively in my mind to the Second World War when the United Kingdom had to be turned into a war machine so as to achieve a desperate victory. In order to do that, the reins of power were extended in a dramatic way over all walks of life. Although after the war they were in some ways relaxed, they were never wholly relaxed. Such authority was too tempting to give up.

During the 50-year period since that dreadful time one could watch the reins of power, which were largely financial, being exercised initially to mould the country. Latterly, what I can only call "the spurs of authority" were applied to fit society into a procrustean bed—all society.

We should not deny that that process was successful. During that time the country enjoyed economic growth. Of course there were ups and downs. I make no party points because governments of both political philosophies had control at various times. At the same time, educational standards were rising. Despite all our criticisms today, the situation is better than it used to be. Political and philosophical ambitions were rising, too. I have always argued that one of the great forces which needs to be recognised in society is the desire of people to take to themselves as great a political control of their immediate affairs as can reasonably be achieved.

Now the dam has burst. As regards this Bill, I say to the noble Baroness, Lady Ramsay of Cartvale—and my comment takes nothing away from the integrity and aciduity of the Scottish Constitutional Convention—that the convention was invited to consider only the problem of Scotland. The tragedy is that the Labour Party became committed to the conclusions of that conference before it had fulfilled its proper role in considering the implications for the whole of the United Kingdom. That is the situation that we are in today. This is the second major constitutional reform Bill; we have had the Welsh Bill.

We shall have a third Bill, that for Northern Ireland, which will be different yet again. The Irish situation is different because that body will come into being with a community attempting to heal the wounds of division, whereas the danger with the Wales and Scotland Bills is that they will widen the divisions rather than heal them.

Devolution is a process and not an event. When the three Bills have been completed we will have an unbalanced United Kingdom and our Celtic brethren will have an open and perceived parliamentary representational advantage. The process will have to continue until that deficiency is answered. I am not sure whether I know what the answer is, but the only answer I have seen to the West Lothian question which is satisfactory and will stand the test of time involves an English parliament and a federal United Kingdom, with all the revolutionary change that that implies for Parliament as we know it today. I have seen no other alternative. This Government will have to answer that pressure in one way or another, or be left in a backwater by the floodtide that is unleashed without thought for the consequences.

I cannot let such a situation pass without mentioning the financial arrangements. Much has been made of the Barnett formula. The noble Lord with great goodwill enjoys a distinction that is perhaps unreasonable in the context of funding for the Scottish parliament and the Welsh assembly. The Barnett formula is a fairly simple way of dealing with increases in the initial blocks of expenditure. It is with those initial blocks that we should be concerned.

More than that, we heard yesterday from the noble Lord, Lord Lang of Monkton, that when he was Secretary of State for Scotland he was all too aware of the Barnett formula, which was originally intended to narrow the gap between expenditure in Scotland and England. He was concerned to find his way over, round or under that formula or, perhaps more importantly, to get one across the Chancellor of the Exchequer to the advantage of Scotland. He and his predecessors have been notably successful in that. It will be more difficult in future. One of the outcomes of the Bill will be that the spotlight will be on the Scottish block all the time and its disparities with England will come under severe question.

Perhaps they are best illustrated in this way. Much has been made of the figure of expenditure per head in Scotland as opposed to England. The figure of £777 which was stated yesterday—I have forgotten by whom—is the figure by which the Scottish expenditure per head exceeds the United Kingdom average. The United Kingdom average includes an even higher Irish figure and a slightly lower Welsh figure. The difference between the Scottish figure and the English figure is not £777 but £941. The last figure I saw for GDP per head in Scotland was 98 per cent. for the national average, which is on the medium line. There are numerous English regions where the GDP per head is much lower than that. The lowest figure that I have seen is 86 per cent. but that is neither here nor there.

The people of those English regions will find it increasingly difficult to justify spending those excess sums on Scotland when their own situation is not so fortunate. That will be the motive force which will drive the need for an English settlement.

All of that said, surprisingly I am a devolutionist, with all the problems devolution brings, because I believe that the corporate state with which we marched for 50 years has been a cul-de-sac, and I am glad that we are at last breaking out of it.

8.21 p.m.

My Lords, I apologise for having to leave the Chamber before the end of the debate. Some time ago I agreed to attend a dinner on Waterloo night to commemorate my ancestor General Hussey Vivian, who commanded a brigade in that battle. I should also like to thank my noble friend Lord Lyell for agreeing to change places with me to enable me to arrive not too late for the dinner.

I speak as someone who has lived most of his days in Scotland. Most of the organisations and institutions with which I have been involved have been linked with the south but they have their own economy. Some of them, like the Royal British Legion Scotland and the Scottish Arts Council have constitutions that are separate to their English counterparts. Their Scottish identity helps to give them a sense of individuality and a pride in their country. Most of us are proud of the United Kingdom and it is important for unity between Scotland and the rest of the United Kingdom that that pride is not impaired.

This is a unique moment in the history of our country and we must make the most of it so that the challenges we face are dealt with successfully. If they are not, there could be serious divisions which would be detrimental to the whole kingdom.

It is important to be precise about the financial arrangements and safeguards between London and Edinburgh in order to minimise the risk of conflict. It is important to maintain the block grant according to a mutually agreed formula. There must be close consultation between the Scottish executive and the Treasury about financial agreement, but it should not rely on the European Union for funds and must reflect a strong Scottish economy.

At moments of economic difficulty effective remedies have to be found to support particular areas. If they are not supported there will be bitterness. There are difficulties in the Borders region due to the slump in the textile industry. The Scottish Office is working closely with Scottish Borders Enterprise to find ways and means of channelling money to boost failing businesses and to halt redundancies. Looking ahead, there is a need to be clear about tax-raising powers because at times of recession lowered incomes will cause erosion of the tax base and lead to loss of jobs.

The system of the block grant must be reliable and there should be an agreed formula in the Bill. Many institutions depend on their share of it, and their share will be decided by the Scottish executive and by the UK Government. They will be competing for resources with authorities for housing, education and local government. There is a danger that the needs of one institution may suffer because of the needs of another. Availability of regular income is important for those running an institution.

I should like to emphasise the particular need of the National Galleries of Scotland of which I was for some years a trustee. In the Bill there is no mention of this important institution. Ideally, it should be reserved. At the very least its name should be written into the Bill. It is largely dependent on the block grant for funds. If the Scottish Parliament were to deprive them of their share, the effects would be serious. They are already under-funded. Continuing interest in the galleries on behalf of the Scottish parliament is essential. I am not encouraged by the fact that no Member of the Government has so far put a foot in the door of the galleries since the election.

The present level of the purchasing grant is extremely low—about £700,000—which has to cover the needs of all three galleries plus a fourth, the Dean Gallery, which is due to open.

Looking ahead, much will depend on the quality and expertise of the Scottish parliament. I hope that there will be a spirit of unity and co-operation. I support the words of the noble Lord, Lord Steel, about political accountability, which were echoed by the noble Baroness, Lady Linklater of Butterstone. The avoidance of disruption on party political lines would reduce the conflict between old and new Labour. All political parties in Scotland should avoid party politics for a while so that affairs can be debated in an atmosphere of harmony. As my noble friend Lord Monro of Langholm stated, the majority of members will come from the Central belt. It is from there that the members of my regiment, the Scots Dragoon Guards are largely recruited. They are entirely lacking in class prejudice and, like members of the Royal British Legion for Scotland, are proud of the United Kingdom. They would be supporters of the Scottish parliament on a non-party political basis.

As the Minister pointed out, the success of the Bill will depend upon consensus and consensus will be achieved only by the removal of class prejudice which lies deep in the minds of many people in Scotland. For that reason the cultivation of co-operation rather than division is essential.

8.29 p.m.

My Lords, as I have said before, I am a devout devolutionist and a sincere unionist. I have been a very small voice in the Scottish Conservative Party advocating the setting up of a Scottish parliament and devolution. I feel if we had followed up Sir Edward Heath's 1974 Perth declaration we would not have the problems we face today. Now we are racing into a hotch-potch situation, with each of the four countries who make up our country being offered differing degrees of devolution which must not be allowed to break up the United Kingdom. We would have had long ago a parliament in Scotland which would have been the beginning of a federal Britain, a Britain where the Union was strong and yet the people of Scotland, England, Ireland and Wales would have seen decisions affecting them being taken in their own parliaments. It is a fact that the Scots—and I am proud to be one—are all nationalistic in their outlook. It is a fact that we are very proud of our ancestry, the Kilt and our celtic blood.

But, equally, few Scots really understood the consequences of what they were voting for in the referendum. How could they? Even we in Parliament did not understand because we had not seen the Bill at that stage. They voted with their hearts—the Braveheart phenomena—and not with their heads. They voted with their spirits and their political aspirations to get rid of the Tory Party in Scotland—a party that had, as they saw it, ruled them for 18 long years from their English base in the English shires, when since 1955 they had consistently voted for another party. However, to their discredit, as they failed to get the facts across, the Tory Party of Scotland was and still is based in Edinburgh, Scotland and not in England. It is the British Labour Party that has its roots in London and now the Scots are beginning to realise this.

We have seen a tide of nationalism sweep over the country as the Scots nation sees the start of a political independence from England. We must stop that tide and make our compatriots realise that political independence must not lead to complete separation. The parliament we are debating here must have the strengths to show the people that they have all the independence they need with this political power base in Edinburgh.

That brings me to my first real point. This parliament must succeed for if it does not it will surely lead to the break up of the UK. It is a dangerous route we go down if we do not give it our total support. We should therefore get rid of this independence issue once and for all. The SNP has indicated it will call for this in the first session of parliament if it has a majority, and it is beginning to look as if that might happen. But how can the Parliament work properly with the threat of it being only a half-way house or being for a trial period?

My local seat has always been a Labour seat. In fact, it has been such a strong Labour seat for years and years that there was no other party in sight. But a by-election last month saw the return of an SNP councillor, with the added insult for the local Labour party of seeing its candidate coming a very poor and distant third behind the Tory candidate, who was very pleasantly surprised by her second place, and only just in front of the Liberal, who, for the record, was an even worse fourth.

I believe that many Scots vote SNP not because they believe in independence but as a protest, as I have already said, to the two supposedly English-based parties. If the Parliament is to be on trial by the SNP it will not get a chance to prove what it can do when it works properly. It needs to work for at least 10 years to prove itself to the Scottish people.

Totally contrary to what my noble friend Lord Kinnoull said yesterday and what the noble Lord, Lord Watson of Invergowrie, said today, I believe that we should have immediately, before we even start, a referendum on whether there should be independence or separation. I am absolutely sure that we should get the right vote. The Scots would vote overwhelmingly for their continuation within the United Kingdom. We could then carry the message forward that this parliament might have its blips in its relationship with Westminster but that they could be sorted out sensibly if there was not the dreadful spectre of separation there—a sort of sword of Damocles—hanging over the heads at all times of all parliamentarians and the parliament itself, as everyone would know that we, the people of Scotland, want to remain a part of Great Britain and want the parliament to work within that remit. That referendum would prove that.

We must, though, never take away what we have offered and are now in the process of giving to the Scots. We receive 20 per cent. more funding per head from central funds than any other part of the UK for our basic services. If we have this differential removed and it is perceived that London is trying to squeeze the Scots of what they see as their fair share, public opinion could and will change in such a way that the SNP could use it for its political gain. Even if there is the same party in power in both Scotland and England, that is a key point of potential confrontational problems. But what will it be like if we had different parties in control in Edinburgh and Westminster and the paymaster—Westminster—wants to cap the parliament because it feels it is not spending money in the way the mother Parliament sees it should? We have seen the chaos that attitude causes at local government level when it gives local councillors carte blanche to blame everyone but themselves for the subsequent cuts in services and jobs that result from these cuts.

Fourthly, we must not cut the number of MPs to Westminster after devolution to answer the impossible-to-answer West Lothian question as again it could be taken as a sign of anti-Scottishness by Westminster. We should make a decision on the correct procedure of voting in both parliaments and the numbers who will represent Scotland now as this Bill goes through this House. It is no good our MSPs having a loud voice in Edinburgh while our MPs in Westminster are political eunuchs with the ability to speak with no more than a whimper here in Westminster, and, most importantly, we must protect the voice and seat in the Cabinet that Scotland enjoys today.

The fifth problem is the tax-raising powers. Are we genuinely to believe that Scots employees will be happy to be paying 3 per cent. more tax than their English, Irish or Welsh fellow workers—or to put it another way will they accept less pay for doing the same job as their fellow workers in other parts of the kingdom? Of course they will not, so that will mean union pressure on businesses to pick up the tab and that means pressure to move the business to more profitable parts of the UK because these days profit is the essential word for most companies to satisfy the stock market and the bank manager.

We already pay more in taxes in Scotland than England as council tax is greater—on average £100 more for domestic rates and a lot more for business rates despite the supposed uniform business rate. The average Scot will not stand for much more just for the pleasure of living in their beautiful and friendly country. What is to stop the Treasury from reducing the Scottish grant if the parliament decides to use its tax-raising powers? There are many other problems to do with taxation and to which other noble Lords have referred which we must confront.

The sixth and final problem I wish to raise today is that if Westminster seeks to override laws passed by the Scottish parliament it would simply bring closer the day when Scotland is tempted to go its own way.

The UK is a multinational state made up of four countries with diversity of culture, beliefs and language. The relationships within it are being changed by this Bill. I am not frightened by that, but I am frightened that we could, instead of creating a new strengthened constitutional position, create a monster that destroys the country that has so dominated world affairs for many years and do it at a time when the world trend is to join together—big is becoming more beautiful. We must resist by all means the temptation for the Scot to throw this trend to one side for the sake of nationalism.

Scotland has 59 per cent. of the land mass of the UK but only 10.6 per cent. of the population. But it is a volatile population, especially when it comes to dealing with the "Auld enemy", the English, who are distrusted by so many Scots even today when we have lived in peace and harmony for so many years.

As a unionist I believe we must stand or fall together financially, politically and morally. I have therefore always believed in the idea that if any area of the UK needs help, it should receive it. As a devolutionist I pray now that we will, during this Bill's passage through your Lordships' House, do everything in our power to give this parliament the chance to succeed and to allow the political aspirations of the Scots people to be satisfied within the context of this great United Kingdom of ours.

We can only be assured of the total success of this enterprise if we deal positively with these six problem areas which I have mentioned and which have been mentioned by other noble Lords during the course of the debate.

8.36 p.m.

My Lords, in rising to make my small contribution to the debate, I wish to thank my noble friend Lord Sewel for starting the debate in such a masterful yet succinct way. I compliment also the noble Lord, Lord Mackay of Ardbrecknish, on the dextrous way that he handled his party's conversion to acceptance of the new Scottish parliament from its original outright condemnation. I only hope that he can persuade his Back Benchers not to indulge in wrecking tactics.

I aim to say a few words about how we came to the point where we are now and where we might be going. I shall then say something about the scrutiny of legislation. First, I shall say a few personal words which arise from the fact that the Judicial Committee of the Privy Council will be called into action to determine various matters within the Bill. The first Lord Monkswell, my ancestor, was instrumental in setting up the Judicial Committee of the Privy Council and was one of its founding members. It is interesting to reflect also that that committee was set up to deal with a backlog of cases from the colonies which needed to be dealt with. Over the subsequent years, the colonies have fallen away and it is nice to think that we are finding a new role for that committee.

The extensive remarks which I was going to utter about the lead-up to the commitment to a Scottish parliament can be cut very short because, as a number of noble Lords, mainly from the Conservative Back Benches, have already said, the Conservative administration by centralising the state and emasculating local government over the past 18 years, caused the demand for a Scottish parliament to become overwhelming. The imposition of the poll tax only added fuel to that fire.

However, I sincerely hope that the establishment of the Scottish parliament and the devolution programme for Wales and Northern Ireland, the proposals for London, and the development of the English regional assemblies, will be seen as an exciting start towards the fashioning of a new constitutional settlement for the next century rather than as recreating the narrow nationalism which was out of date 300 years ago.

In future I hope that in a rejuvenated House of Lords we will hear the leaders of those new devolved administrations, rather than the hereditary absentee landlords who have very little relevance to the modern world. I hope that the people's representatives elected to the European Parliament will also have ex officio seats in the new House of Lords, alongside captains of industry and commerce.

I was interested in the remarks made by my noble friend Lord Hogg of Cumbernauld who pointed out that the Scottish trades union movement and the Church of Scotland were the two largest "mass membership" organisations in Scotland. I hope that senior members of those organisations will also have seats in the future House of Lords. If we do not weaken in our resolve to fashion a new constitution fit for the new millennium, we shall have an exciting time.

I move from the big picture to a smaller but no less important one. Adequate scrutiny of legislation is fundamentally important. It is best summed up by the phrase, "legislate in haste and repent at leisure". A number of noble Lords have suggested the need for a second chamber. I am not convinced that it is the answer in this case. If we look at the way in which the Westminster parliament operates, we can see that there are two opportunities to amend legislation as it passes through the House of Commons and three in the House of Lords. Those stages are separated to allow for mature reflection.

However, in local government, major changes, which are, in some ways, equivalent to legislation, are discussed by a sub-committee of a main committee, followed by the main committee, and the policy and resources committee, and finally by the full council. That provides an opportunity for amendment at each stage with time delays being built into the process. My noble friend Lord Hughes also mentioned how the Norwegian Storting, or its parliament, organises its affairs. Three principles derive from those examples: first, there needs to be more than one occasion upon

which legislation can be amended. Secondly, there should be time delays between the different stages of consideration; and, thirdly, different groups of people should be involved in at least two of those stages.

I shall end with a philosophical question: should we, the UK parliament, in setting up these new devolved administrations, hedge them around with rules that we think are important, or do we allow the elected representatives of the people—in this case of Scotland—to do their own thing? I do not know the answer to that conundrum, but I am sure that we shall spend many hours in Committee, on Report, and indeed, on Third Reading discussing such important issues.

8.43 p.m.

My Lords, I rise to speak this evening with some diffidence after so many excellent, witty and commendable speeches; and, indeed, comments—I might even call them asides—from my noble friend Lord Onslow yesterday. He made some particularly good cracks during the Minister's opening remarks. When I look around the Chamber, I believe that I am one of the few who sat through many debates here, virtually on the same Benches, when my noble friend Lord Campbell of Croy was giving as good as he got and in fact even better. Indeed, he has not lost much punch since those days of 1978 and 1979 when we discussed—surprise, surprise!—the same subject; namely, the Scotland Bill.

However, we are here again tonight. Thanks to my noble friend the Opposition Chief Whip, I hope that I speak as a strong Member. My noble friend Lord Glenarthur will follow me as the tail-end Charlie of the club, to stir things up before my noble neighbour Lord Mackie, who is not here at present, speaks. When one goes along to put one's name down to speak in the Whips' office there is usually a four letter word to be seen—"wind". However, I have been told that, no, in that case it is "wynd". I am sorry that my noble friend is not here now. In any event, I shall attempt to wrap up my short thoughts on the massive Bill before us. Indeed, it is probably one of the more important Bills of this Parliament.

Noble Lords will be aware that at the end of July 1997 we discussed the White Paper. I found a copy of the report of the proceedings. I am afraid that in the course of the remarks that were made then I made one or two naughty cracks at the noble Baroness, Lady Ramsay of Cartvale, about "gender balance". I should, first, say that it was a particular pleasure for me to hear the noble Baroness speak today in a major debate with such fluency. I congratulate the noble Baroness on the style with which she delivered her speech. Indeed, I look forward to hearing from her in the future. The noble Baroness has made a very swift—and I hope deserved—transition to her position, far quicker than some of us on these Benches. She has learned quickly and I congratulate her.

I should like to stress now something that I should have stressed in July 1997. In my county of Angus we do not necessarily need too many lessons in gender balance. The provost, who in fact is the chairman and convener of the council, is a lady. We have three deputy lieutenants who are ladies, one of whom is my noble friend and neighbour Lady Carnegy. Indeed, the councillor for the Glens who represented my noble neighbour Lord Mackie was a doughty lady. You do not get them much more couthy in the Glens of Angus. There was and still is a very good balance in the county of Angus.

The noble Baroness gave us a lovely gem which I shall treasure for the next few years. Indeed, it may be relevant to the mass ranks of the government supporters. She mentioned two words, an "agreed vision". If the noble Baroness and the noble and learned Lord sitting beside her care to look around them they will realise that that "agreed vision" is one floor up looking at a 56-inch screen. Indeed, I believe that is where many of them will be lurking. Those two words will be used by many enthusiasts who are not present in the Chamber tonight. I have in mind the noble Lords, Lord Ewing, Lord Watson of Invergowie, Lord Kirkhill and especially the noble Lord Hughes of Woodside, because that "agreed vision" will be a term that will be much used, as is the case with the gentleman with the whistle who runs around—and it was the noble Lord, Lord Sempill, who referred to rugby—with his "agreed vision" as he gives another penalty against Scotland or the team that we support. It is indeed something that I shall treasure.

The main thrust of my comments in July 1997 referred to Chapter 7 of the White Paper. Indeed, I hope to do the same tonight, but I shall also refer to Part 1V of the Bill. However, I shall just skate over them this evening. The noble Lord, Lord Sewel, in his opening remarks yesterday mentioned what I believe is technically called the Scottish variable rate. I think that that will be the technical term as regards tax-raising powers. However, yesterday, at col. 1572 of Hansard, the noble Lord seemed to depart a little from that theme. For many years we have been hearing about the Scottish Constitutional Convention, with suggestions that there should be power for the parliament to raise or lower taxes of up to 3p in the pound on the standard rate on that band of income. According to some arithmetic, we are told that that would give rise to a sum not unadjacent to £450 million.

Last July I tabled a Question. The cunning noble Lord, Lord Sewel—if I may call him that in the nicest way—opened the debate but left the winding-up to the noble Lord, Lord Williams of Mostyn, who accused me of being Machiavellian. I wonder whether noble Lords have read col. 1572 of Hansard, because in yesterday's speech, which I presume the noble Lord filled in himself, he mentioned that he understood that the figure involved would be £400 million. Perhaps the noble Lord or someone else may be able to explain to me how the figure of £450 million, or 3 per cent., came about. I am afraid I have not followed the history of the Scottish Constitutional Convention, but if someone could explain that to me over the course of the proceedings on the Bill it will certainly assist me considerably.

In July 1997 when we were discussing the White Paper I referred to Chapter 7, which is broadly set out in Part 1V of the legislation now before us. Noble Lords may be aware that I spent five very interesting years purportedly being in charge of the Department of Agriculture in Northern Ireland. After I had had quite a stressful meeting with Members of Parliament who had come over or others, I always had some indication of the success or otherwise of the meeting by the biscuits that accompanied my coffee. If they were chocolate, I knew that the meeting had been good; but if they were ordinary biscuits—well, I shall leave it there.

I should like to congratulate my noble friend and neighbour Lady Carnegy, my noble friend Lady Strange and my noble friends Lord Sanderson, Lord Monro and Lord Rotherwick on perhaps joining the chocolate biscuit club in that it seems that all of them have alluded in some way to the brief which I have also received from the chartered accountants of Scotland. They seem to have it pretty well right.

Last July I referred to paragraph 16 of Chapter 7 of the White Paper. At Committee stage I shall have plenty to say and to ask and to learn. I hope that much will be clarified for me. The honourable Member for Linlithgow and my own Member of Parliament, the honourable Member for Tayside North, have had plenty to say about the complications and difficulties for employers as regards the PAYE system. I refer to Clause 71 and the term of residence. The chartered accountants of Scotland have commented on this matter. It is a fairly formidable body.

Paragraphs 17, 18 and 19 of the White Paper are particularly relevant in this regard. I wonder whether the bulk of United Kingdom employers realise that Part IV of the Bill will affect each and every one of them if they have an employee who will be a Scottish taxpayer. That will result in a pretty hefty extra expense for those employers. I refer to paragraph 19 of Chapter 7 of the White Paper on costs. I have discussed these costs with a leading expert tax accountant from a firm in Glasgow. He used the dreadful term "a joke". I put it more tactfully and say that the figures do not appear to me to have the customary Scottish accuracy of Mr. Stephen Hendry, Mr. Jockie Wilson, let alone Mr. Craig Brown's heroes.

At this stage I should declare my interest. I live in Scotland and I am a member of the chartered accountants of Scotland. I am extremely proud to be a member of that institute. I believe that the noble Earl who is to speak later in the debate is a member of a sister institute. I remember that the vice-chancellor of Heriot-Watt University said 35 years ago when I was a student there, "You chartered accountants think of yourselves as queen bees or kings of the universe".

My Lords, we who are fellows of the Institute of Chartered Accountants of England and Wales always regarded fellows of the Scottish institute as far superior and more qualified beings.

My Lords, flattery will get my noble friend everywhere. The vice-chancellor said that we were given four extra marks for writing "incorporated in 1854". It must have been that that got me through the exams! The noble and learned Lord, Lord Hope, expressed some astonishment that I was just an accountant. I am extremely pleased to have that qualification. I started my apprenticeship in October 1962. I spent most of the Saturdays that October doing extra work as I had expressed a view that the symbol of the chartered accountants in Scotland was a vulture with the motto "Vigilance". For that I was punished with four extra Saturdays of work. The motto is quaere verum, which I understand translates as "Seek the truth". It is with that sentiment that I pose my questions tonight and look forward to discussing Part IV in Committee. Is there a possibility of arranging a meeting for the chartered accountants with the Minister during the course of the Bill to try to save time in your Lordships' House as we could discuss problems outside the Chamber? These problems have been alluded to by my noble friends on these Benches. I believe they would have been alluded to by the noble Lord, Lord Milne, who sits on the Cross Benches. He is another member of the chartered accountants of Scotland.

Over the past year I have made several visits to the services with the All-Party Defence Study Group. I have visited all three services, including the Royal Marines. On each visit I was asked by servicemen and women whether they would be liable to pay the tartan tax if they served in Scotland. They had read about the additional 3p rate. I replied with an instant volley, rather like a Wimbledon tennis player. I said, "Yes". I do not know whether I am right about that. That is an example of the guidance we shall seek during the course of the Committee stage.

I hope I am correct in thinking that this Scottish variable rate will not come into force until the next Parliament. Clause 70(6) refers to the year 2000–01. It seems that there is at least a year in which we can discuss these problems. The PAYE system is complicated enough, but the self-assessment for individual taxpayers will be more complicated still. I note that my noble and learned friend Lord Mackay of Drumadoon is on the Front Bench. Recently he asked me to assist him in filling in the little sheets that we collect from the Printed Paper Office. I assure him that that is child's play compared with some of the complications that will arise with PAYE.

As I said, I look forward to discussing Part IV in Committee. I hope that above all we shall not scare investors or people who will bring jobs to Scotland. I hope that the Government will keep the tax-raising powers as simple as possible. The chartered accountants have some thoughts on this matter which I hope they can express in the next month or two. I hope that the Scottish parliament and the Cabinet will be successful with this Bill, but they will have a hard and difficult road ahead and hard choices to make. I refer to an Italian proverb, "Between the doing and the saying—word and deed—there is half an ocean". Many expectations have been raised. However, we shall have some problems as regards finances.

This morning I received a telephone call from that valuable organ of the press, the Sunday Post. I was asked whether I could tell them how many hereditary Peers there were in Scotland. I do not know why they rang me. They should have consulted the noble Lady, Lady Saltoun. Perhaps they had read col. 1601 of the Official Report of yesterday and read of the noble Lady referring to the Wolf of Badenoch and thought I might not savage them quite as badly as the noble Lady. I was able to assure them that out of the total membership of the Scottish Peers' Association it appears there are 84 hereditary Peers. On a rough count this evening, 35 out of 68 noble Lords are Peers of succession. I believe that shows there is sufficient talent and interest in the Bill before us tonight. I hope that we shall continue to discuss it in a constructive spirit. I apologise for having spoken for 15 minutes. I promise that I shall speak more briefly when we discuss Clause 71. I thank your Lordships for your attention.

8.58 p.m.

My Lords, inevitably I shall reinforce views expressed elsewhere in this debate. As a Scot, living in Scotland, and having been a Minister in the Scottish Office, it is almost inevitable that I should feel strongly, and frankly not a little worried, about this Bill and about what has led up to it.

My concerns are many, but let me dwell on what I believe are the key themes. First, despite the Labour Party's election manifesto and the popular wish—which I understand, even if I do not agree with it—for devolution in Scotland, as evidenced by the referendum I share fully and without any reservation the concerns expressed by my noble friend Lord Kingsland about government by referenda. To that extent I do not share the view of my noble friend Lord Rowallan about a further referendum, for the reason so admirably expressed by my noble friend Lord Kingsland earlier. As the Bill makes clear, and as this debate has shown, the issues involved in devolution are immensely complex. They are not fully understood by the experts, let alone by the man in the street, as was remarked by the noble Lord, Lord Sempill, and my noble friend Lord Rowallan. The man in the street expresses a rather loose wish for Scottish devolution, not really knowing what is involved, and cannot reasonably be expected to appreciate the pitfalls it introduces as highlighted in this debate.

I accept that we now have a Bill before the House. We must work as hard as we can to make it an operable Bill. I hope the Government will accept that the very broad range of concerns expressed in the debate require thorough examination. The debate has indicated how strongly opinions are held. Those of us who have anxieties will be diligent in pursuing them in order to achieve a better Bill.

I now turn to the constitutional aspects. A measure that has stood the test of time, as has the Act of Union, should not be casually tampered with or put in peril, as this Bill inevitably risks. It leaves a mass of issues wholly unresolved, from the West Lothian question to what might happen as Scottish nationalism grows, feeding on the provisions introduced by this Bill, with the threat of separation one day growing ever more real. I wonder whether the Government ever imagined, as they embarked upon their proposals for devolution, that this might happen, and that what I regard as the frightening cries for greater independence, leading to separation, would have grown so fast. But they were warned. I bet they are uncomfortable with what has happened.

Like others, I believe that what has led to all this is a rather vague popular wish, a search for an increased national identity. But that identity is already very real. It is a kind of unattainable, simplistic and unrealistic grab for some glamorous ideal, swelled by popular emotion rather than well-judged practical thought.

And what of the economic realities to which it may lead? Yesterday, my noble friend Lord Nickson said it with admirable clarity: the sums just do not add up. The Scottish people are not only being conned; I very much fear that they are in danger of conning themselves.

I was particularly struck by the speech of the noble and learned Lord, Lord Hope of Craighead, on the legal aspects of sovereignty, whether parliamentary or constitutional. What a tangle potentially lies there for us to unscramble over the next few months. These issues will need very thorough scrutiny.

Finally, I turn to the unicameral nature of the Scottish parliament. After 22 years in this House I am bound to say that I am wholly unclear as to how first-rate Scottish legislation can be achieved without some form of revising chamber. I disagree fundamentally with the proposition of the noble Lord, Lord Monkswell. Primary legislation in the Westminster Parliament would be in the most appalling mess were it not for the scrutiny, in principle and in detail, which this House gives to it. Yet the Scots are to be denied that. I know, because I handled the Bill at the time, that the Scots grumbled about the Abolition of Domestic Rates (Etc.) (Scotland) Bill—the poll tax legislation. How much more they would have grumbled had it not been for the work of your Lordships and the number of concessions that were achieved during the progress of that Bill in this House to make it marginally better than others felt it might have been. It is our duty as a revising chamber to find ways of tackling this difficult problem, of making the legislative body that is to be set up a wholly effective body.

I accept, of course, the results of the referendum, but with more than a little sadness. I realise that we now have to work with the grain of public opinion. The Bill as it stands does not resolve some very difficult and contentious issues. Indeed, it creates many more of them. To that extent it is a rather frightening experiment, one of a series of doubtful constitutional experiments, and one that will require an enormous degree of detailed work to make it even half safe—as my noble friend Lord Forbes said, safe for England as well as Scotland, but most particularly for the Union.

9.5 p.m.

My Lords, I am pleased to have the opportunity to speak on this significant and important Bill—even though I am number 64 on the list of speakers. Nonetheless, noble Lords will be glad to hear that I have some new points to make. I therefore crave the indulgence of the House.

The Secretary of State for Scotland, Donald Dewar, when introducing the Second Reading of this Bill in another place said:

"It is part of the most far-reaching programme of constitutional reform that the country has seen for well over a century".—[Official Report, Commons, 12/1/98; col.19.]

I entirely agree with the Secretary of State. In fact, "far-reaching" is, if anything, an understatement. Before I come to the body of my speech, I wish to comment on the speech made by my noble friend Lord Lang of Monkton. I do not know whether it is in order for a mere hewer of wood and drawer of water in the rhetorical vineyard such as myself to congratulate a speaker. However, my noble friend's speech was one of unalloyed brilliance. The first part, and the only part I intend to address, was an eloquent exposition of everything that Scotland receives from the present system. My noble friend was absolutely right in everything that he said. It was absolutely valid. However, a third fact is that the Scots do not want to know.

The reasons why they do not want to know are very interesting, and might indeed have been avoidable—if only the Labour Party had not, in a reckless and cynical way, fanned the fires of nationalism in order to preserve their seats in Scotland; if only—this is not an entirely facetious point—Mel Gibson had chosen to make a film called "Lionheart" about Richard I rather than one called "Braveheart" about William Wallace; if only, and I hope my party will not perceive me as being disloyal if I say this, the poll tax had not been introduced in Scotland at the time and in the manner that it was. But all those things happened. There has been a sea-change in public opinion in Scotland, as confirmed by the referendum. There is no putting the clock back.

Given that there will shortly be a Scottish parliament in Edinburgh, I now propose to address what my noble friend Lady Young—who is not in her place—described yesterday as the English dimension. The overall context of which I should like to make noble Lords aware—and again, so far as I know, it has not been mentioned in this debate—is that, according to the DTI in a survey published conveniently in last Thursday's Financial Times, if one can categorise Scotland as a region, it is the second most prosperous region in the United Kingdom, second only to the south-east.

By comparison, my own region of Yorkshire and the Humber, where I have recently been selected to stand for my party in the European elections next year, is on that basis 10 per cent. poorer per capita than Scotland. I should say that, despite my forthcoming candidacy, like the noble Lord, Lord Dean, I am merely presenting my views as I see them.

Stating the facts which I am about to draw to the attention of the House, will probably be characterised as inciting an English backlash. But stating facts does not constitute incitement. On the contrary, the facts speak for themselves. They need no rhetorical spin from me or anyone else. I shall cite three facts which are unfair to England, one of which has already been mentioned in this debate.

The first unfair fact is the gross over-representation of Scotland at Westminster. Under the Government's proposals, this gross over-representation of Scotland will still exist at the time of the next general election, even though there will then long have been a fully fledged Scottish parliament in Edinburgh. Should the general election be close, those extra Scottish MPs will determine which party forms the government. That is obviously unfair on English electors.

There is also the familiar West Lothian question, which I am sure we all understand. However, as I said in my earlier intervention, it is a problem which the Government have made not the faintest attempt to solve in their proposals.

At the risk of imposing on the goodwill of the House, because the matter is important, I intend to say something about regional selective assistance grants. Regional selective assistance grants are payments financed by the UK taxpayer, paid directly to companies as an inducement to them to locate or relocate in a given region. In the past 10 years, almost £3 billion sterling has been paid in grants directly to companies under that programme. Of that huge sum, 57 per cent. has gone to companies locating or relocating in Scotland and Wales. If one excludes the grant paid to Wales from the calculation, 44 per cent. has gone to Scotland alone. The effect of this is that people living in Yorkshire and the Humber who only have nine-tenths of the wealth of people living in Scotland—

My Lords, I shall come to the end of my point, if I may. People living in Yorkshire and the Humber are paying for grants which induce companies to locate to Scotland rather than to their region or, worse still, paying to induce companies in Yorkshire to relocate away.

My Lords, I am finally grateful to the noble Earl. Perhaps I may point out that that was one of the significant achievements of his noble friend Lord Lang.

My Lords, my noble friend is a noble friend, but the noble Lord must think of something new. I was not part of my noble friend's administration, I was not part of the previous administration nor was I even a candidate for my party at any time in the past 18 years. So the noble Lord will have to use that point on someone else: it is not valid so far as I am concerned.

It has always been difficult for a fair-minded person to justify the privileges for Scottish residents, even when there is a wholly integrated United Kingdom such as we shall have had until this Bill becomes law. However, the setting up of a Scottish parliament with material powers amounts to a new constitutional settlement. The privileged position of Scottish residents, of which I have given just three examples, becomes impossible to justify.

I want to address particularly the Government's stated intention to leave the Scottish block and the Barnett formula unchanged. As I said earlier, someone living in England receives 23 per cent. less public expenditure than the same person would receive if he were living in Scotland. To put that in money terms—confirmed by other noble Lords in the course of the debate—in the fiscal year ending 1996 an extra £871 per head of identifiable public expenditure was spent on the residents of Scotland as compared with those of England.

It was in that context that I was interested to read of the contribution of the noble Lord, Lord Barnett, in this House on 9th June. I remember the noble Lord as a distinguished Member of Parliament for another Greater Manchester constituency when I last stood for my party, also in a Greater Manchester constituency, in a general election 24 years ago. That is why I do not take seriously interventions such as that produced by the noble Lord, Lord Sewel.

The noble Lord, Lord Barnett, said then,
"I am not unhappy to have my name associated with something which for a long time has been relatively rational and intelligent. But today it is long overdue for reform".—[Official Report, 9/6/98; col. 906.]
Once the noble Lord, Lord Barnett, himself had said that, I was agog to hear the response of the noble and learned Lord, Lord Falconer, from the Government Front Bench. Earlier today I contacted the office of the noble and learned Lord, Lord Falconer, to warn him that I would be quoting him tonight in this debate.

The noble and learned Lord said,
"We have no plans for a fundamental review of the … Barnett formula rules".
I characterise that as a dismal and unacceptable response to the historic and insightful comment of my fellow chartered accountant the noble Lord, Lord Barnett. The reason that the noble and learned Lord, Lord Falconer, gave was,
"That formula has been in operation for nearly 20 years and it has been accepted and used by successive govemments".—[col. 919.]
I know that there are many hereditary Peers in this House—indeed, I am one myself—but the notion that just because something has been in operation for 20 years is sufficient justification for it to continue unreformed is singularly unconvincing, even in this House. I can assure noble Lords opposite that that line of reasoning will certainly not convince the electorate of Yorkshire and the Humber, and indeed other English regions.

I had expected the noble and learned Lord, Lord Falconer—that celebrated legal luminary catapulted on to the Front Bench—to produce a more substantive and convincing line of reasoning to justify the Government's point blank refusal to reform the Scottish block and the Barnett formula in the context of Scottish devolution.

As the noble Lord, Lord Dean, pointed out yesterday, the current UK Treasury team features a Scottish Economic Secretary, a Scottish Chief Secretary and a Scottish Chancellor, all of whom also represent Scottish constituencies. That is not a reassuring line-up from an English point of view. As a member of a profession—as my noble friend Lord Lyell pointed out—and like many other Members of the House who are also members of a profession, I recognise there is a clear and potential conflict of interest.

My noble friend Lord Lang said in his speech that there will be a demand to move away from the Barnett formula to a needs-based system. I should like to make that demand to the Government now. So as to take away any suspicion of partiality and bias in the Treasury, I propose that the Government announce forthwith that there is to be an assessment of needs and from henceforth public expenditure shall be allocated entirely on the basis of need and not on the present basis of the Scottish block and the Barnett formula.

In conclusion, when the Secretary of State described the Bill in another place as "far-reaching", he was absolutely correct; it is indeed far-reaching. In fact, it is so far-reaching that it makes the present privileged position of residents of Scotland in logic untenable and, in practice, unsustainable. Should the Bill become law in anything like its present form, the Government will have to make substantial compensating changes to the benefit of England and the English regions. Should they fail to do so, they will be aiding and abetting the break-up of the United Kingdom, not for the reasons given by other noble Lords in the debate, but because that is what England will then want. I say that very much in sorrow and not at all in anger.

9.20 p.m.

My Lords, it is a rare honour to be the last of 65 speakers in such an important debate, and I know it is an honour which carries with it the duty to be brief.

Like the noble Earl, Lord Glasgow, I find myself somewhat schizophrenic about this Bill. With a Scottish father and a Sassenach mother I was brought up in the wilderness of Rannoch but sent to school in England. I spend most of my time in London, but only feel at home in Scotland. Perhaps for these reasons, and because I abhor the Treaty of Rome and what it is doing to Europe, I have in theory no objection to a devolved Scottish parliament, and no difficulty either with a completely independent Scotland, provided that the Scottish people do not become disadvantaged and embittered by those changes. After all, one can hardly hold the view that the Treaty of Rome, with its explosive commitment to the premature union of the peoples of Europe, is wrong for the nations of Europe and in the same breath insist that Scotland must stay in the Union with England if her people no longer want to do so.

Of course, that dilemma makes the Government somewhat schizophrenic too. As one character, they pay the European Union billions of pounds annually to absorb the sovereignty of the United Kingdom into its venomous bosom. As the other character, they protest that their plans for Scotland must not lead to the break up of the United Kingdom.

At this point, and in order to save time, I hope that my noble friends Lord Lang of Monkton and Lord Nickson will not mind if I single them out from many excellent speeches made by your Lordships over the past two days and associate myself with their remarks made yesterday. I agree with my noble friend Lord Lang that the genie of full independence is well and truly out of the bottle. I also agree with the analysis of my noble friend Lord Nickson that the future is likely to prove more expensive for the people of Scotland, and of course much more expensive under full independence than under the devolution foreseen by this Bill.

Here I would underline a point eloquently made by my noble friend Lord Beloff today, to the effect that the people of Scotland are mistaken if they believe that the European Union will come to their financial aid. EU enlargement is almost certainly a pipe dream, because adequate reform of the common agricultural policy does not appear to be achievable, and Scotland will be well back in the queue of Eastern European applicants even if enlargement does occur. Of course it is true that Brussels would love to see the break-up of the United Kingdom and to absorb Scotland as one of its subservient regions, but it is difficult to see how this can happen in practice, unless, of course, Scotland becomes a net contributor to the EU budget, which I submit is also unlikely.

So, I am reluctantly forced to conclude that this Bill is not good for the people of Scotland, however much some 40 per cent. of them may have hoped it was when they voted in the referendum last September. When its financial and political implications come home to them, most of them will feel deceived and angry and will want to draw back. For some of them, the fervour of full independence will carry them forward, in spite of the financial cost. I fear there will then be deep division among the people of Scotland, and I can only pray that it does not lead to violence.

It is a pity that among the 68 speakers in this debate not one has spoken or will speak on behalf of the Scottish National Party. If there had been such a representative, I submit that noble Lords on the Government Benches would be less likely to dismiss my fears as groundless.

9.23 p.m.

My Lords, I have listened and borne all I have heard with, if not equanimity, then at least in silence. I have enjoyed the debate and I have been very interested in the ancestors of the many hereditary Peers who have spoken and what they did or did not do. I thought that I would check up on my own forbears. There was a George Mackie who was a direct forbear. He was a farmer of Foreside of St. Fergus near Peterhead. I daresay that he was very interested in what was going on. But I believe that he would have been more interested in improving the bare land there and in securing a living for his family. In any event, he did not have any say.

The great difference today is that in this Bill we restore the parliament that was taken away. The people of Scotland have been consulted extremely well. I have no objection to a referendum if the questions are fair, and I thought that they were. Many referendums are, of course, loaded, but in this case I believe that the referendum on Scotland was fair. There was plenty of opportunity for both sides to put over their points of view. I believe that the result was a true reflection of how the Scottish people thought.

We have had a good debate and we have had a long debate. The first Opposition speaker was my long-time friend, but not a political friend, the noble Lord, Lord Mackay of Ardbrecknish. He promised to ensure that every clause was examined in an impartial manner. It was splendid to hear him say that, although I found it hard to be wholly convinced that he meant it. A little later on the noble Lord, Lord Lang, made a powerful speech. I thought it was a sad and bitter speech. Perhaps he was feeling the loss of Eden as much as Adam and Eve did when they walked out of the Garden. But whether he actually lived in a Garden of Eden and acted with the knowledge and skill that has been attributed to him and other Tory Secretaries of State, I beg leave to doubt. There are plenty of examples where the organisation of the Secretary of State and his department has not worked particularly well. One has only to consider agriculture and one or two other matters—the poll tax has been mentioned ad nauseam— to see that there are snags as great as any that are likely to be incurred under the new system.

From then on I was very disappointed that the Tory Party generally followed a line that this Bill was introduced hurriedly; that it was horrible and ill thought out; that the Government were away with the fairies and so on; that the Tory Party was filled with despair because this legislation will lead to the break up of the Union; and that the rise of the Scottish National Party was without doubt entirely due to them.

Today the Tories in this House have done the SNP more good than anyone for a very long time. It is not true that the SNP has waved the banner of its great success. We have seen these surges before. I believe as strongly in the United Kingdom as any Tory here. I have lived my life in it. I hope to live on in the United Kingdom. But we have to get over this foolish tendency and fight against it in the way that the Canadian electorate is fighting against the Quebecois, and with some effect, instead of moaning that all is lost. However, all has been lost under the Tories—all the seats that the nationalists gained from the Tories. Here is a lesson that needs to be learnt.

There were honourable exceptions. My old opponent from Caithness and Sutherland was one of them. He spoke of what could be done by the Scottish people and their own parliament if they really went to town on it. Quite a few Tories have revealed some sense of there being a great adventure before us which might—they even went as far as to say "might"—do the Scottish people some good.

I turn now to the speeches by the other side of the House. I am not sucking up to the Government—

No, but I thought that the speeches from the Government side of the House were sensible. The noble Lords, Lord Kirkhill and Lord Hughes, put up sensible suggestions about the troubles that we will encounter with this Bill and talked about how one can examine legislation properly in a unicameral situation. We did not hear much about that from the Conservatives. All that we heard were moans about Tam Dalyell and the what-not, what-not—

Ah, the West Lothian question! It is perfectly soluble. Worse problems have been solved very easily. Here in this House, we have a majority of hereditary Peers, with prejudiced views. Some of those noble Lords are brilliant; others are not so clever. They are mostly Tories. They follow the Salisbury convention quite happily. That is a solution to a problem that is potentially far more difficult than the West Lothian question. So, as I have said, there are solutions. The noble Lord, Lord Hughes, quoted the Norwegian solution. I am certain that there are other solutions that could apply without any great trouble or difficulty.

People appear to be terrified that the parliament in Scotland will upset the status quo. It will, to a degree. However, everybody talks—we have had examples from all sides—of the success of the Scotsman abroad and the Scotsman in the south—and of what a splendid fellow he is. There does not appear to be any good reason why he should not be a sensible fellow at home if matters are properly put to him. I have no doubt that the Liberal Democrats, the most sensible of all the parties, will gain many more seats in the election than the 10 per cent. with which we are credited. We always do—mainly because of the excellence of the candidates. However, I have been heartened by the number of independents and people who would not normally consider that they have the time to be a Westminster MP who want to stand for election to the Scottish parliament. I refer to able people who are at the height of their professions. I know that I have referred to this previously, but I ask noble Lords to consider the quality of the local Members of the Stormont parliament as regards administration and ability, if not fairness to minorities. Their ability was certainly infinitely greater than is found at Westminster. Good people will be attracted to the creation of a centre of power.

Of course, there will be snags, but I trust that we shall be able to iron out many of them if we approach the matter with goodwill and not with the sense of resentment which I feel that many good people who sit on the Tory Benches in this House are bringing to bear on this issue.

If the Government will listen—I hope that they will listen; indeed, I wish that they would listen now to what I am about to say—I advise them that it is most important to note what was said by the noble and learned Lords, Lord Hope of Craighead and Lord McCluskey, who put so well the legal points that are so important to liberty and to the good governance of Scotland. I hope that we shall be able to discuss those points and to make something of them.

I have spoken for 10 minutes and can see that I shall not get the same close attention for much longer. If we all play our part and we and the Tories go at it and get our supporters out, this parliament has a simple task. They can either make it or muck it. It will be their fault if they muck it.

9.35 p.m.

My Lords, at the conclusion of the Bill's passage through another place the Secretary of State for Scotland remarked on the number of people who had spoken to him since the referendum along the following lines: "I voted 'No' in the referendum to both questions, but I am as determined as you to make the Scottish parliament a success". I cannot claim to be one of those to whom the Secretary of State has spoken. His political difficulties may be increasing by the week but they have not driven him to seek my advice; nor do I expect that situation to change in the weeks ahead. However, without any reservation I wish to be regarded as someone who is determined that the Scottish parliament should be successful not only as an institution in its own right in Scotland but as one that plays an effective role in the continuing success of the United Kingdom as it moves into and through the next century.

During the extensive debate that we have enjoyed over the past two days a number of noble Lords, including many of my noble friends, have expressed serious reservations as to whether the setting up of a Scottish parliament will ferment rather than dissipate the forces that seek to break up the Union and bring independence to Scotland. They have done so in a variety of ways. With the greatest respect to my noble friend Lord Dartmouth, they have done so with varying degrees of passion. All of these views are very genuinely held. Many are expressed by those who speak from years of experience of public life and in the field of politics. In particular, I refer to the very eloquent and carefully thought out speeches of my noble friends Lord Lang of Monkton and Lord Gray of Contin.

I understand why those concerns are expressed. I respect those who hold those views and I can well understand the reasons. Equally, I respect the views of those who speak without reservation in support of devolution. The very eloquent speech that we heard tonight form the noble Viscount, Lord Thurso, who traced his family's support for devolution, was impressive and clearly genuinely felt. Equally, last night the noble Lord, Lord Kirkhill, reminisced with affection about his involvement in the previous devolution Bill. Noble Lords could not have failed to be impressed by the genuineness of the views that he held. I hope that those who have promoted devolution over the years will also learn to respect the views of others who have reservations about the project, because if together we address the provisions of this Bill over the next few months that is the best way to ensure that it goes forward in the best possible form.

I believe that after the manifesto commitment, the election and the referendum one crucial question remains unanswered: what will happen if the Scottish parliament is not a success? The answer to that question is obvious. Unless the parliament is a success there can be little doubt that nationalism will flourish. If the Scottish parliament is set up and fails it is difficult to see on what basis the people of Scotland will not vote for independence, which many in Scotland do not wish for and many in the United Kingdom do not wish for either.

For that reason, I very much hope that, whatever their perspective before the election and the referendum, noble Lords on all sides of this House will apply their talents and efforts to a searching yet constructive revisal of a Bill which on more than one occasion the Secretary of State for Scotland has publicly acknowledged to be a difficult measure to draft and one that merits the closest attention of Members of your Lordships' House.

I hope that in that debate we shall hear somewhat more from the active supporters of devolution than we may have heard over the past couple of months. I noted in particular what was said by the noble Lord, Lord Watson, earlier today: that the noble Lord, Lord Ewing, had not taken part in the debate. There are others who fall into that category, although none has played as distinguished a role as the noble Lord, Lord Ewing. If it is important that those who have doubts about devolution constructively criticise the Bill, it is equally important that those who actively support it do so as well. With respect, that seems the best approach to revising the detail that lies ahead of us.

I welcome and pay tribute to what was said yesterday by the noble Lord, Lord Sewel, when he addressed, in what I took to be an utterly genuine way, a few words of encouragement to members of the official Opposition. In turn I look forward to a constructive response from the noble Lord and his colleagues, the noble and learned Lord the Lord Advocate and others in addressing the issues that lie ahead. I and my colleagues on this Front Bench are more than happy to meet with them at any time to discuss in fuller detail than may be possible in debate the concerns we have about the terms of the Bill. Equally, it is important that the main issues are debated on the Floor of this Chamber so that drafting can be improved and to ensure that those who have to construe the Bill's provisions in the years ahead will be aware of the problem areas, the Government's policy and what the statute is intended to say.

Before I go further, it is right that I pay tribute to the skill of the draftsmen who prepared the Bill. The Bill's provisions are in most instances clear and succinctly drawn. It is a matter on which I have commented before. The Scotland Bill is some 40 pages shorter than the Government of Wales Bill which bestows on the assembly much fewer and less complicated powers than will be available to the Scottish parliament and the Scottish executive. The impression on reading the Bill is that the setting up of a parliament is a comparatively straightforward exercise; and that in no small measure is due to the skill of the draftsmen. In particular, that same skill has been deployed—I use the words advisedly—to slightly more devious means. There are, as one expects in a Bill of this complexity, certain important clauses that seek to address what I might describe as flash points, where there might be conflict between Whitehall on the one hand and the Scottish executive on the other—between this Parliament on the one hand and Holyrood on the other.

I know that the draftsmen and the Ministers will expect us to explore those clauses in great detail, to expose to public view the policy that lies behind them and to provide assistance to the parliamentarians in Edinburgh and to the courts on the practical implications that will flow from what lies ahead.

I turn to some of the important constitutional issues. First, it is essential to understand the central role the courts will play in the devolution settlement—a role of supervising the activities of the Scottish parliament and the Scottish executive. That duty will fall primarily on the courts and tribunals of Scotland and the Judicial Committee of the Privy Council. But it is a role that will be played by the courts of England, Wales and Northern Ireland. The extent and nature of that jurisdiction were at the forefront of the two excellent speeches we heard yesterday from the noble and learned Lords, Lord Hope of Craighead and Lord McCluskey. I shall turn in a moment to what they said about the need for the independence of the judiciary following devolution. But at this stage perhaps I may deal with the role that the courts are to be given.

I believe that the role of the courts should be confined to what is strictly necessary. When the referendum took place, those who voted in favour of the setting up of a parliament were aware from reading the White Paper that some issues as to the legal competency of the actings of the parliament and of the Scottish executive might end up being resolved in a court of law.

Notwithstanding what they may have read in that White Paper, I believe that when the same voters have elected members of the Scottish parliament, and when the Scottish executive has been appointed, the voters will look to the members of the parliament and the executive to take and to be answerable for decisions on devolved matters. They will not anticipate, nor do I believe will they welcome, the regular involvement of the courts in such matters, whether such involvement arises as an attempt to interfere with the proceedings of the parliament or in some way to quash the executive action on the part of the executive.

The Bill's provisions as currently framed offer a considerable scope to litigants to seek to involve the courts in what we have until now regarded as political issues. They confer on the courts significant powers over the deliberations of the Scottish parliament which are not available to the courts in relation to the exercise of this Parliament's responsibilities.

There is a discretionary element in certain of the powers that the courts are being given, the exercise of which may involve the consideration of highly political issues. I and others believe that these powers could draw the judiciary into fierce conflict with the Scottish parliament and the Scottish executive not out of any wish on the part of the courts to be so involved but as an unavoidable consequence of cases brought before them. For those reasons, it is important to scrutinise with great care the provisions in the Bill relating to the role of the courts. They do not wish any greater powers than are necessary; and, arguably more importantly, I do not believe that the general population wish them either.

The second area to which I turn is the role of the Law Officers. On this issue my comments can be somewhat briefer. When we debated the White Paper which was published last summer, I drew attention to a concern which was held in many quarters about the Government's decision to devolve the role of the Lord Advocate. I suggested that the Government might like to consult further on that matter and I look forward to hearing in Committee what further consideration has been given to that.

However, if contrary to my views, the role of the Lord Advocate is to be devolved, his powers must be carefully defined. In the Bill his independent role as public prosecutor has been recognised and I fully welcome that. But I question whether it is sensible that the Lord Advocate shall be a full member of the Scottish executive, able to exercise the statutory functions of other members of the Scottish executive in a way in which would not be competent for a Law Officer of the United Kingdom Government to proceed.

One of the Lord Advocate's roles will be to give the Scottish executive legal advice. Is it sensible that he should be a member of the executive body to which he will be giving such advice? Is it sensible that he, rather than the first Minister, should be given the discretionary and politically sensitive role of exercising the powers under Clause 33 to refer Bills to the Judicial Committee to determine whether they lie within the legislative competence of the Parliament? Whether they do lie within that competence is clearly a legal issue. The decision whether to take the matter before the Judicial Committee could be one of the highest political sensitivity. When he exercises that role, will he be acting in the public interest, as the Lord Advocate has traditionally done in many cases over the years, or will he be acting in his capacity as a member of the Scottish executive? Is the public interest and the interest of the Scottish executive synonymous? Those matters must be urgently and fully explored.

The same observations apply to the role of the Advocate General. He will be a Member of the United Kingdom Parliament. He will have certain discretionary powers and we will wish to explore the circumstances under which he should be authorised to exercise them.

I now turn to another topic which received scant consideration when the Bill was in another place: the terms of Clauses 33 and 54 of the Bill which give the Secretary of State power to intervene and overrule by order the acting or failure to act of the Scottish parliament or the Scottish executive. These powers will be available to any Secretary of State, not just the Secretary of State for Scotland. The Bill proposes that the Secretary of State can intervene even when the parliament and the executive are acting within the bounds of their competence; in other words there is no suggestion that they have acted ultra vires.

In certain circumstances any Secretary of State will be able to order the Scottish executive to make subordinate legislation. He will even be able to insist upon the Scottish executive introducing a Bill to the Scottish parliament. It is not difficult to imagine the political controversy that might arise if the Scottish executive were directed to introduce a Bill to the parliament that it did not wish parliament to enact. In such circumstances it is not difficult to understand why some have described these provisions as similar to those enjoyed by a colonial governor.

Standing the supremacy of this parliament, as explicitly recognised in Clause 27(7) of the Bill—unnecessarily so, as the noble and learned Lord, Lord Hope, pointed out last night—it is difficult to understand why such powers are being included in a Bill setting up what has been correctly described as a "mature parliament for a mature people". This is a good example of where the skill of the draftsman has arrived at a superficially attractive solution to a very serious area of political conflict.

I believe that when the parliament and the executive are acting within the limits of their statutory competence they should not be subject to interference in such a way as would play straight into the hands of those who seek to see the Scottish parliament as a stepping stone to independence. The power of a Secretary of State to intervene in such circumstances should be limited to where the parliament or the executive is acting contrary to international treaty obligations and even then the power should be exercised by making an application to the court for a ruling on what is essentially a legal issue.

The noble and learned Lords, Lord Hope and Lord McCluskey, last night dealt with the issue of the appointment of judges and the provisions for the removal of judges in Scotland. Judges in Scotland, whether they be judges of the Court of Session or sheriffs, will continue to exercise civil jurisdictions that cover reserved and devolved matters. The same applies to High Court judges who sit in the High Court of Justiciary and the sheriffs in connection with criminal matters. In certain instances they may be required to adjudicate in legal cases between the United Kingdom Government and the Scottish executive. In those circumstances there is great force in the argument that we heard yesterday about the need for their independence to he fully protected.

I suggest this House might consider it prudent to require resolution of at least one House of this Parliament, in addition to a resolution of the Scottish parliament, before any judge could be removed from office. Those noble Lords who have studied the Bill in great detail will appreciate that there is nothing novel in suggesting that an order should be subject to the approval of both parliaments. Certain of the order-making powers fall into that category.

The noble and learned Lord, Lord McCluskey, indicated that he might not be present in Committee when these matters are debated. I will make every effort to ensure that they are fully debated. I look forward to his announcement of his retirement from the Bench and his active return to politics. If he does not follow that route he could take up the role of trade union leader for the judges, one that he deployed with great skill and eloquence yesterday.

Other matters I shall touch on briefly, the first of which is the relationship between this Bill and the Human Rights Bill. That is a matter which the noble and learned Lord the Lord Advocate will recall that I raised during our debates on the Human Rights Bill. As I understand it, the Government acknowledge that some amendments to the Scotland Bill will be required and I look forward to those being brought forward as soon as possible.

I turn next to the future role of the Scottish Law Commission. One thing which has struck me throughout the debate is the number of noble Lords who have commented on the consequence of there being only one chamber in the proposed parliament. One possible, albeit not complete, solution to the problems which that might create would be to place upon the Scottish parliament an obligation to consult formally the Scottish Law Commission as one of the mandatory stages of the consideration of any public Bill.

I should say to the noble Baroness, Lady Ramsay, who suggested earlier that a unicameral legislature offers a new and more inclusive style of politics, as a more than casual observer of the political scene in Scotland over the past few months I have not been struck by the great success which that new inclusive form of politics is acquiring. Indeed, some of the political invective which has been flowing between members of her party and members of the SNP is of a nature to which my former colleague, Michael Forsyth, could only have aspired.

To be more serious, I was much struck by the suggestion which the noble Lord, Lord Desai, made as to how we might address the absence of two chambers. I suggest to the House that that is a matter which should be explored in greater detail during later stages of the Bill, as should the number of Henry VIII clauses which are to be found in the Bill.

I cannot conclude without making some mention of the points raised by my noble friend Lord Lyell about the assistance which he apparently gave me in filling out entries in squares on the white forms. I have no recollection of that assistance, although it is much required. I doubt whether this is a Bill to which we can bring forward amendments to ensure that the numbers that we put in the boxes are somewhat larger than they are at the moment.

It falls to the noble and learned Lord the Lord Advocate to make the final speech in what is undoubtedly an historic debate. It is singularly appropriate that the current holder of that historic office should have the opportunity to do so. Since the Union of the Parliaments, the Lord Advocate has been charged with a very important public role in the affairs of Scotland in representing Scotland in the UK Parliament and, in more recent years, being a very active Member of your Lordships' House.

I should not wish him to reminisce in detail about the origins and history of his office, but were he to do so it would be discovered that the office which I formerly had the honour to hold and which he now holds predates many of the historical anecdotes to which we have been treated over the past couple of days.

Equally, none of your Lordships would expect the noble and learned Lord the Lord Advocate to reply in detail to all the points that have been raised during the debate. It would be quite impractical to do so. However, I hope that he will join with the noble Lord, Lord Sewel, in assuring your Lordships that in Committee he and his colleagues will engage with noble Lords on all sides of the House in a very serious, honest and full discussion of the many issues which lie ahead.

I am sure that if they do so, we shall, as the noble Lord, Lord Kirkhill, and the noble and learned Lord, Lord McCluskey, said, if we are around in 20 years' time, look back with considerable affection and pride at having taken part in debates on the most historic of Bills.

9.58 p.m.

My Lords, in comparison with most noble Lords who have spoken in this debate in the course of the past two days, I am a novice both in terms of membership of this House and of political experience. Noble Lords will understand that, as holder of my present office, I feel particularly privileged to be involved in this important Bill at this important stage in the history of Scotland. I hope the noble Lord, Lord Beloff, will not be too critical of the language that I use, far less the content of my speech.

We have had a useful and constructive debate over the past two days. This Bill must be one of the most important which this House has debated in recent years. I am pleased to see that the House recognises the desire of the Scottish people, expressed so forcefully on llth September, for the creation of a Scottish parliament with tax-varying powers. During the various stages of our deliberations on the Bill, I trust that we shall not lose sight of that fact.

This is a truly momentous day for Scotland and indeed, as so many noble Lords have said, for the United Kingdom as a whole. Like all noble Lords who have spoken, I am committed to a United Kingdom as much as I am committed to a Scotland with appropriate status within the Union. At the end of the debate, I am confident that this House will approve in principle the Government's plans to establish a Scottish parliament. We shall thus be paving the way for one of the most significant shifts in the British constitution in decades.

I share the confidence of many noble Lords who have spoken—a confidence which was encapsulated in what I respectfully suggest was an outstanding contribution from the noble Viscount, Lord Thurso. Like the noble Viscount, I do not see this Bill as a means for separation, resulting in the fragmentation or disintegration of the Union as was feared—unreasonably in my submission—by some noble Lords opposite. Like the noble Viscount, I see this Bill rather as a means of strengthening Scotland's role within the Union and, thereby, strengthening the Union itself. As my noble friend Lady Ramsay of Cartvale said, we should all co-operate. I confirm that it will be my intention and that of my noble friends on this side of the House to co-operate with noble Lords at all stages of the Bill. We should all co-operate and work towards ensuring that we have a scheme which recognises and achieves the benefits of diversity within the Union.

Many important issues have been raised in the course of our debate. I should like to spend a little time dealing with some of them from the Government's point of view. As the noble and learned Lord, Lord Mackay of Drumadoon, observed, it would be impossible for me to do justice to all the points raised by noble Lords. However, I can confirm that I and my colleagues are content to meet any noble Lord and to correspond with any noble Lord at any time—indeed, we would prefer to do so in advance of the Committee stage—in the hope of allaying fears and in order to focus upon the real issues which must be addressed and addressed properly during the various stages of the Bill.

Before dealing with particular points which have been raised by noble Lords opposite, I should like briefly to consider some aspects of devolution which are close to my own heart, and that of many noble Lords present today; namely, the Scottish courts and legal system and the position of the Law Officers.

As has been observed, the Lord Advocate and the Solicitor-General for Scotland will become members of the Scottish executive. I can reassure noble Lords that I do not intend to go into the long history of the distinguished office that I hold because time does not permit me to do so. However, the positions of Lord Advocate and Solicitor-General are ancient offices and they pre-date the Union. They are at the very heart of the Scottish legal system. The Bill will ensure that they continue to operate effectively in the Scottish context, including provision for the participation of these Law Officers in proceedings of the Scottish parliament. I do not share the concerns of the noble and learned Lord, Lord Mackay of Drumadoon, about the Law Officers being part of the Scottish executive. However, I am sure that we shall have the opportunity to debate that matter in more detail at later stages of the Bill.

The wide-ranging nature of the devolutionary settlement proposed by the Government makes it sensible to include the Lord Advocate as part of that process. We believe that it is crucial for the proper government of Scotland that the independence of the office of Lord Advocate is fully recognised. The Bill therefore confirms the independence of the Lord Advocate and preserves his position as public prosecutor.

I refer to another point raised by the noble and learned Lord, Lord Mackay of Drumadoon. I do not share his concern about the power of the Lord Advocate conferred by this Bill to refer Bills independently of the executive if the Lord Advocate considers that they are ultra vires. In the exercise of that function the Lord Advocate is acting as a Law Officer, and Law Officers do not act other than in an independent fashion at present. They act independently of the Government. They give independent advice. If they think at any stage that a Minister is about to transgress the proper boundaries of activity, it is the function of the Law Officer to pull back the Minister and to advise him or her accordingly. For the Lord Advocate to have the power to intervene and to refer a Bill independently of the executive is consistent with the actions of the Law Officer.

The Lord Advocate and the Solicitor-General for Scotland will be the Law Officers of the devolved Scottish administration. They will continue to prosecute crime independently and in the public interest. But the United Kingdom Government will continue to require advice on Scots law. For this reason the Bill creates a new ministerial office of Advocate General for Scotland. I hope this provides reassurance to the noble Lord, Lord Gray of Contin, who asked whether the Lord Advocate or the Advocate General would be regarded as holding the more senior post. If I may say so, and as I hope has been clearly explained, the question is, with respect, misconceived. The Lord Advocate and Advocate General will fulfil quite distinct and separate roles. The Lord Advocate will continue to be the senior Law Officer to the devolved Scottish administration. The Advocate General will be the Law Officer of the United Kingdom Government on matters relating to Scottish law.

Devolution of the Scottish courts and legal system will mean that responsibility for this fundamental part of the Scottish constitution will lie where it rightly belongs. The first minister will have the same role as the Secretary of State for Scotland has at present relating to the appointment of Scottish judges, sheriffs principal and sheriffs. We have benefited from substantial and thoughtful contributions on the relationship between the Parliament and the judiciary from the noble and learned Lords, Lord Hope of Craighead and Lord McCluskey, in their impressive contributions last night. They have signalled that this House will be asked to look very carefully during Committee stage at the parts of the Bill which deal particularly with the issue of judicial independence. I look forward to that debate.

The noble and learned Lord, Lord Hope, spoke eloquently about the need for judicial independence. He described the new role for the courts envisaged in this Bill. He was perhaps unduly modest about the role the courts already play in relation to European legislation. However, as he rightly said, this Bill and the Human Rights Bill mean that devolution and human rights issues will be raised in the courts. But it is important to recall that for devolution issues the final decision will rest with the Judicial Committee of the Privy Council.

Both the noble and learned Lords, Lord Hope and Lord McCluskey, mentioned in particular Clause 89 and the provisions contained there relating to the appointment and removal of judges. We have already introduced a number of amendments relating to this clause into the Bill in response to concerns raised by the senior judiciary in Scotland. But we will of course look carefully at any further detailed suggestions which are made during the Committee stage. The noble and learned Lord, Lord McCluskey, expressed particular concern that a government could easily command the two-thirds majority required for the removal of a judge. I have to say that I do not think even the current Government would regard such a hurdle as an easy one to overcome.

The noble Baroness, Lady Macleod of Borve, who has unfortunately had to leave due to illness, indicated that, as Lord Advocate, I should be required to appoint more judges. The number of judges required to ensure the proper administration of justice in Scotland is constantly kept under review. I can assure the noble Baroness and the House that that will continue after devolution.

There is one final point that I should like to make on this theme this evening. I should not like noble Lords to leave this debate with the impression that anything in the Bill detracts from the Lord Advocate's present role in advising on the appointment of judges, as seemed to be suggested by the noble and learned Lord, Lord McCluskey. It is proposed that, where the Secretary of State consults the Lord Advocate in relation to such appointments under existing arrangements, those arrangements will be continued by the first minister. We believe that the arrangements in the Bill strike an appropriate balance to ensure a judicial system which is at once independent and accountable.

Perhaps I may deal with the point raised by the noble and learned Lord, Lord McCluskey, and by the noble Lord, Lord Kingsland, in a most powerful and impressive contribution to the debate. At present, there are eight Scottish judges who would be able to consider cases. However, as the noble Lord, Lord Kingsland, indicated, it would be wrong to suggest that judges would be selected to represent national interest. What matters is not their country of origin, but to have a sound legal decision from the most senior and authoritative source. That was why we widened the pool from the Lords of Appeal in Ordinary.

The Scottish parliament will also provide an opportunity which is simply not available at Westminster to devote significant amounts of time to debate and to legislate on aspects of Scottish private law which may not have been given sufficient attention in recent years. For example, I believe that the Scottish parliament will wish to bring forward a more extensive programme of law reform based on the valuable work of the Scottish Law Commission. I am sure that the noble and learned Lord, Lord Mackay, will be reassured to know that it is intended that the Scottish Law Commission should have as important—if not more important—a role to play after devolution. I believe that that will help to promote consistency in Scots law in years to come.

I now turn to other issues raised in the debate. The issue of Europe was raised by a number of noble Lords. I trust that noble Lords will forgive me if I do not mention them all by name. That would take up valuable time in what has already been a very long debate. In that regard, the noble Earl, Lord Lindsay, and other noble Lords spoke from practical experience as former Ministers. They were concerned that, after devolution, Scottish Ministers will not have the right to attend EU Councils. Noble Lords will recognise that Scottish Ministers do not have such a right at present. Even in matters such as fisheries and agriculture, Scottish Office Ministers attend the relevant Councils at present only by agreement with the Minister of State for Agriculture, Fisheries and Food, who is the lead Minister. It is not correct to suggest that Scottish Office Ministers currently have an automatic right to attend Councils of their own volition. After devolution the situation will be essentially the same. There will be discussion between the UK Government and the Scottish executive to reach agreement on which Ministers should speak to represent the UK. It is inconceivable that a UK Minister would ignore or phase out Scottish Ministers on major devolved issues.

The noble Earl also raised the question as to whether a Scottish Minister could act on his or her own as a representative on behalf of the United Kingdom Government. The simple answer is yes, because in terms of Schedule 5 to the Bill such a Minister would be able to assist the UK Minister. Of course, a Scottish Minister in those circumstances would be speaking on behalf of the United Kingdom on the basis of a policy which has been agreed in advance.

I turn to the Barnett formula, about which many noble Lords have spoken, and the funding arrangements for a Scottish parliament. In particular, the Barnett formula loomed large in many contributions from noble Lords. It is, I think, important to put on record the limited nature of the Barnett formula. Scotland has a historic baseline and all that the Barnett formula does is to calculate, on a population basis, an appropriate Scottish share of any changes in comparable Whitehall programmes. It is important also to make the point that this arrangement has worked very well and to the general satisfaction of all sides for 20 years, serving to reduce enormously the scale of annual head-to-heads between the Scottish Office and the Treasury. Yes, there have been annual discussions and disputes, but they have ultimately been at the margins of any settlement. The great bulk of the Scottish budget has been sorted out each year largely automatically and without dispute.

Perhaps I may deal with the point raised by my noble friend Lord Desai. It is not necessary or appropriate to incorporate the Barnett formula into the legislation. The formula has never had such a formal status and the support of successive governments for the formula suggests that legislation is unnecessary. In any event, legislation would not bind future governments to maintaining it, as the UK Government are sovereign. They could change such a provision if they wished. Furthermore, we propose to build on and improve the arrangement: first, by publishing the rules which will apply each year, making the details of the Scottish settlement a matter of public record; secondly, as announced by my right honourable friend the Chancellor of the Exchequer last w