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Lords Chamber

Volume 730: debated on Tuesday 6 September 2011

House of Lords

Tuesday, 6 September 2011.

Prayers—read by the Lord Bishop of Wakefield.

Public Expenditure: Deficit Reduction

Question

Asked By

To ask Her Majesty’s Government how much public expenditure has changed in the Chancellor of the Exchequer’s deficit reduction plans through the use of the flexibility built into his plans.

My Lords, the Government’s fiscal mandate targets a cyclically adjusted aggregate to allow some fiscal flexibility at a time of economic uncertainty and to allow the automatic stabilisers to operate in full. Automatic stabilisers are those features of the tax and spending regime, such as unemployment benefits, that vary with the economic cycle and so act to stabilise the economy. The forecast for total managed expenditure by 2014-15 increased from £737.5 billion in Budget 2010 to £743.6 billion in Budget 2011.

The noble Lord forgot to mention that he apologised recently for having denied that the Chancellor had said in terms that he had flexibility built into his plan. I assume that he is now admitting, despite all the figures that he has just given us, that that is the case. Therefore, should the Chancellor not be using that flexibility in the current economic circumstances? He said recently:

“The break-up of the euro would be economically disastrous, including for Britain”.

That seems all too likely at the moment. Given the lack of growth in the United States and Europe, is this not a good time to use that flexibility, rather than all that stuff that he does not believe in himself?

I do not know to which “he” the noble Lord is referring, whether it is me or my right honourable friend the Chancellor, but we all believe in it and we are sticking to it. However, as I have explained, the cyclically adjusted nature of the mandate which the Chancellor has set means that, in times of economic uncertainty, factors such as varying levels of employment and inflation feed through so that the economy benefits, for example, from increased social security benefits and we do not in some slavish way have to cut back on other expenditure. The flexibility is there for very good reasons and it is operating.

My Lords, could I ask my noble friend perhaps a rather simpler question? Despite the dreadful headlines in today’s newspapers, to what extent does the Chancellor of the Exchequer feel that he is on course in deficit reduction?

My Lords, I remind noble Lords, lest they forget it, that we have introduced an independent Office for Budget Responsibility so that we can no longer keep fiddling the numbers and restating the cycle like the previous Government did. The Office for Budget Responsibility’s latest numbers, produced at the Budget, confirmed that we are on track to meet the Chancellor’s fiscal mandate on the rolling five-year period.

My Lords, does the Minister really believe that the automatic stabilisers will do the trick? Is it not a mark of leadership to be able to admit that you have got it wrong? Is it not now time for the Chancellor and the Prime Minister to acknowledge that their strategy of drastically reducing public expenditure cannot enable the UK economy to revive when there is no sign anywhere else on the skyline of demand for what the UK economy is able to offer?

I am not quite sure who should admit what they got wrong, but the former Chancellor, Alistair Darling, made a complete mea culpa when he said, “We got it totally wrong, raising national insurance and putting a tax on jobs”. He said that there was no credible economic policy at the last election, which is why Labour lost.

We have introduced a policy that is on track to get the economy growing. It is the underpinning of the economy by a clear fiscal plan on which we can build. The Chancellor and the Prime Minister are working very hard on the growth of the economy, which is founded on the stabilisation of the deficit that we inherited.

My Lords, there is time for both noble Lords. Perhaps we can hear from the noble Lord on the Cross Benches and then from my noble friend Lord Newby.

My Lords, the Minister talks about growth; we hear about the Chancellor sticking to his plans; but we also hear a clamour for Plan B. What is going on around the world is unprecedented; with the EU and the American debt crises there is so much uncertainty. By raising taxes the consumer is absolutely squeezed. As for perception and reality, there is a perception of cutting even though the cutting is not taking place as much as we all think. We all know that public debt was far too high under the previous Government. What are the Government going to do to generate growth?

To generate growth the Government are, first—in answer to the charge on tax—lowering tax in critical areas, such as corporation tax, by increasing the tax allowances for those starting new businesses through, for example, the EIS scheme. We are insisting on a much cheaper and simpler planning system than the one which has been holding back business investment in this country for the past 50 years. We are also significantly increasing the number of apprenticeships—by 250,000 places compared to the previous Government’s plans over the spending review period. I could go on but we need time for other questions. We are working fundamentally on the growth agenda.

My Lords, does the Minister agree that one of the keys to growth will be increased expenditure on infrastructure? It does not bring growth of itself but in the short term it brings many more jobs. When do the Government intend to bring forward the legislation to introduce the green investment bank, and when does the Minister expect that bank to make its first loans?

I completely agree with my noble friend that capital and infrastructure expenditure is one of the keys to growth, which is why we were able in the spending review last year to increase the plans that we inherited—to increase, I say again, the spending plans that we inherited from the previous Government —by up to £2.3 billion a year. That is an additional £8.5 billion on capital expenditure in the review period. I therefore agree with my noble friend. As for the green investment bank, it is on course to start the first phase of operation in April 2012. Legislation will be brought forward as soon as the state aid approvals have been forthcoming from Brussels.

My Lords, the Minister referred to the predictions and forecasts of the OBR but those were produced nearly six months ago and forecasted 1.7 per cent growth at that stage. Ever since, everyone else’s predictions have been somewhat lower. In circumstances where the American economy is clearly in difficulty and we have crisis in Europe, are the Government going to continue to pursue a strategy which will take us headlong into recession, with the price being paid by middle England and low-income families if that occurs?

It has never been on such a strategy, and therefore there is no question of it continuing on such a strategy.

Transparency International: Corruption Perceptions Index

Question

Asked By

To ask Her Majesty’s Government what is their reaction to Transparency International’s 2010 Corruption Perceptions Index.

My Lords, the Government are committed to transparency, accountability and stamping out corruption across the board. I note that the UK has slipped down the corruption perceptions index. However, I am confident that recent legislation, such as the Bribery Act, together with our active enforcement record, will improve the UK’s position over the coming year.

My Lords, given our relatively low position in terms of public perception of corruption—we are 12th within the European Union and 20th within the world—how can the Government redouble their efforts to ensure that we satisfy all aspects of the UN Convention against Corruption? Secondly, would the Minister look at some aspects of what I call low-level corruption in this country, such as the failure to observe proper appointment procedures in jobs, and so forth, to help to improve our position over the coming years and fight against the social immobility that is sometimes the cause of our failure to prosper economically?

My Lords, on that last point, which is slightly wide of the Question but nevertheless very relevant, the noble Lord, Lord Harrison, will have noted that my right honourable friend the Deputy Prime Minister recently initiated a public debate on this very problem of social mobility or immobility. I sometimes think that if we had had the social immobility that we have today I might not have got very far out of Blackpool.

On the broader issue, I understand the concerns about the perceptions, but it is a perception index that covered a period when there was a good deal of coverage of public life in this country—the problems with parliamentary expenses, et cetera. The Bribery Act and the actions taken by the Government to sharpen up the pursuit of corruption and economic crime will feed through into that index. Indeed, the OECD Secretary-General described the Bribery Act as reflecting the best international practice and praised the UK for being an active enforcer of bribery offences.

My Lords, Transparency International UK, of which I am a member, published in June this year a document called Corruption in the United Kingdom. It concluded that corruption is a greater problem than has been recognised and is being recognised by Governments. Have the present Government considered that document and have they got the Serious Fraud Office adequately into the picture?

Yes, my Lords, we have studied the document, and we keep close contact with Transparency International, which does a very effective job of keeping these matters before the public and before Governments. However, in this country there are two dangers. One is to say, “Oh, we don’t need to do anything because we are actually the ones who obey all the laws and it’s all the others who are corrupt”, and the other is to believe that we are somehow burdened down with corruption. Both extremes are wrong. There is corruption in this country, as in all countries, but it is not left untouched. As I say, the Bribery Act is in place, and my noble friend referred to the SFO, which is now playing an important part in the new structure of crime prevention set up by the Home Secretary. In consultation with law officers and other relevant colleagues, the Home Secretary is currently considering options for delivering the Government’s commitment to improve capability to tackle economic crime. The work of the Serious Fraud Office will play a key part in that strategy.

My Lords, I am delighted that the Minister is praising the Bribery Act and using it in defence of the present position. He will of course recognise that it was an Act passed under a Labour Government, with support from all over the House. The worry is that it was not implemented until 1 July this year. My first question is why it took so long to implement and my second, bearing in mind that it has only been in force since 1 July, is whether there are any messages from the trenches. Is it working, or not?

Of course it was, and all parts of the House can take credit for the fact that the Bribery Act was put on the statute book. The reason for the pause was for consultation and education, so that the Act was seen for what it is—a very useful piece of anti-corruption legislation. When we first came into office, there were lots of rumours going round that if you took a client out for a drink, for example, you would be charged under the Bribery Act, and various bodies, eager to make an honest penny, were offering consultancies to companies on how to avoid these various traps and pitfalls. So in consultation with the CBI, small business and organisations across the board, we worked very hard on guidance, which we published. The message from the trenches is that the Bribery Act is in place, it is effective, and if anybody is worried about its implications, the key thing to do is not to bribe.

Cohabiting: Law Commission Report

Question

Asked By

To ask Her Majesty’s Government whether they will introduce legislation to enable qualifying cohabitants to apply for financial relief on the breakdown of their relationship, as recommended by the 2007 Law Commission report on cohabiting.

My Lords, while declaring an interest as a barrister undertaking some family work, I beg leave to ask the Question standing in my name on the Order Paper.

My Lords, as has been confirmed in a Written Ministerial Statement, the Government do not intend to take forward the Law Commission’s recommendations for reform of the cohabitation law in this parliamentary term.

My Lords, I thank the Minister for that Answer, although I confess it was disappointing. Does he nevertheless agree that it is unjust, as the slightly wider Bill of the noble Lord, Lord Lester, recognised some time ago, that cohabitants who separate, no matter how long they have lived together and even if they have children, cannot in England apply to the courts for financial relief to compensate for careers abandoned, time spent looking after children or contributions to their cohabitants’ success, and if so, is it not surely now time to implement the Law Commission’s sensible and limited scheme, which would not undermine marriage or civil partnership and which has been widely applauded by the judiciary and the family professions?

My Lords, first, I pay tribute to the Law Commission for its work, not just on this matter but in general. I am a very firm supporter of the Law Commission and the work it does, and I know that this House has played an important role in bringing Law Commission recommendations into law. However, the Government have decided not to implement the Law Commission’s scheme in this parliamentary term, because major changes to family legal aid are being implemented next year, and further reforms of the family justice system are also on the horizon following the final report of the family justice review, which will be published in October. We do not believe it would be sensible to seek to implement further changes in the law governing cohabiting couples during this period.

My Lords, I put these points to the Minister on the basis of the hundreds of letters I have had from members of the public after lecturing on this subject, which go along these lines. First, people live together precisely because they do not want to be married and have that law applied to them, and they would see a cohabitation law as a sort of forced marriage—some of them said that they would fail to commit, or fail to stay, if the law were changed. Secondly, the financial relief law is so bad, so uncertain and so expensive that the assets of the couple would be eaten up and in the end the only beneficiaries, given that there will be no legal aid, might be the lawyers.

My Lords, I think that intervention suggests that it is right for the Government in this case to err on the side of prudence.

My Lords, would not the most sensible, the cheapest and the most effective way be for the cohabitants concerned to marry?

Does the Minister agree that where a man leaves his common-law wife with children, it is quite wrong that the state should have to come to the rescue without any possibility of getting the man to pay? When he and his colleagues reconsider this matter, as I hope they will, will they have regard to the experiment in Scotland and the recent legislation in Ireland where, under the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010, some perfectly sensible solutions have been included in the Republic as well as in Scotland?

My Lords, when the previous Administration opposed my noble friend’s Private Member’s Bill on this they said that they were going to wait for research on the Scottish experience. We have looked at some of the preliminary outcomes of that research without seeing anything conclusive to persuade us to move more quickly on this issue. My noble friend makes the point, however, as do the Law Commission and many others, that there are confusions and injustices as the law stands. We have not ruled out the Law Commission’s recommendations for all time; we have simply decided that we are not going to do that during this Parliament.

My Lords, can the Minister give us a little more detail about why the Government did not find the Scottish research persuasive? Can he also say what the basis of any new review would be if the Government were not minded to take into account the very detailed work that the Law Commission was asked to undertake—it has now taken that into account—and why the Government think that the separation of the two issues is possible?

First, the previous Administration did not proceed on this issue when they had the power to do so, although my noble friend Lord Lester had raised it. The Scottish scheme is different in various respects to the proposals for England and Wales made by the Law Commission, and the report on the Scottish scheme, which is only preliminary, acknowledged that its findings necessarily provide only an early-days impression at a time when there is relatively little reported case law under the 2000 Act, with judges and practitioners still feeling their way. The conclusion in the report is that the evidence to date in Scotland means that a similar scheme in England and Wales is unlikely to place significant additional demands on the courts system. The main message to concentrate on is that a significant period of change is due in the family justice system, which we are using to consider legislation in general. We have taken the Scottish research on board, but it is, as I say, rather narrow, very early and not enough to persuade us that we should implement the Law Commission’s recommendations now.

My Lords, the noble Lord, Lord Tebbit, will be glad to know that the Church of England supports marriage. It is promoting weddings through expanding the choice of churches available to couples and through its weddings project. In our earlier submission to the Law Commission, we recognised that the welfare of children and the hardship and vulnerability of people whose relationships are not based on marriage ought to be addressed through legal rights. We stand by that, but could we be reassured that the Government will continue to promote the institution of marriage?

One goes out on to very thin ice. I am not sure that it is for a Government to promote marriage any more than it is for them to promote any other forms of relationship.

They say that Elizabeth Taylor was in favour of marriage, because she got married eight times. I understand where the right reverend Prelate is coming from. Of course, the Government try to create the framework within which the relationship of marriage is sustained. These issues are, frankly, intensely personal, and I do not think one should try to give a government or a ministerial answer to them. We live our lives, and we should get on with doing so.

Public Disorder: Social Networking Sites

Question

Asked By

To ask Her Majesty’s Government what steps they intend to take concerning the use of social networking sites during periods of civil unrest.

Following the recent riots, the Home Secretary held a constructive meeting with ACPO, the police and representatives from the social media industry. Companies have made clear their commitment to removing illegal content and, when appropriate, closing accounts, whether at the request of the police or because of a tip-off from others. It was agreed to step up co-operation to ensure that these processes are working effectively. The Government are committed to a free and open internet, and we are not seeking additional powers to close down social media networks.

My Lords, I thank the Minister for her Answer. Can she confirm that the police are not, then, seeking powers to disable Twitter, for example, when they deem it necessary? Would she agree that there is an important balance to be struck between, on the one hand, catching and prosecuting those who use social media for anything illegal, whether incitement to loot or child pornography or any other illegal purpose, and, on the other hand, a wholesale surveillance and censoring operation that should remain totally unacceptable in this country? Can she assure me that the striking of that balance will be an open and accountable process rather than one decided behind closed doors by the owners of social media networks, the police and the Home Secretary?

I can reassure my noble friend. She will be aware that the police and other investigatory agencies are required to comply with the Regulation of Investigatory Powers Act 2000 and other legislation which seeks to bring that balance. It is not the case that they can do things unilaterally without being held to account.

My Lords, the Prime Minister said in the other place on 11 August,

“so we are working with the police, the intelligence services and industry to look at whether it would be right to stop people communicating via these websites and services when we know they are plotting violence, disorder and criminality”.—[Official Report, Commons, 11/8/11; col. 1053.]

On 25 August, the Deputy Prime Minister told the Daily Telegraph:

“I’ll tell you what is not going to happen – there is not going to be a Chinese or Iranian-style black-out of social media. And let’s not forget that during the riots, social media was very helpful to lots of people in finding out what was going on and in bringing communities together”.

Which of these two statements now represents Government policy?

My Lords, as always, the Prime Minister and the Deputy Prime Minister are as one. There is nothing incompatible in those statements. The Prime Minister did not say we wanted to close down networks; he said we would work with the police, industry and others to look at what would be right to do in order to prevent criminality. Anything that is a crime offline is also a crime online, and the companies that we have been consulting have made very clear their commitment to removing illegal content—something which I am sure the Deputy Prime Minister is very pleased to hear.

Bearing in mind the advantage to our side in listening to radio transmissions by the enemy during the last war, what is the Government’s distinction between hacking, which is illegal, and listening in to subversive communications during riots?

I am a little young to remember exactly what happened during the last world war; I came in immediately after it, so I cannot comment exactly on the law that applied at that time. However, I can tell my noble friend that we in this country have clear legislation, with which both the police and the investigatory services are required to comply, that sets the important balance between the protection of the national interest and the protection of the public in terms of the way in which criminality may affect them and the right to a free society. It is for that reason that we are not seeking to close down networks.

My Lords, there is a difference between these sorts of networks, which are very open so that anyone can get on to them and listen in, and the other sorts of networks that we are talking about. It would be madness for us not to have our agencies—the police and others—looking at these areas. Could the Minister let us know that the Government have a clear policy on exactly how that is to be done? It is not breaking RIPA-type laws when you listen in to Twitter or something similar. Many of us listen in to Twitter and Facebook, and that does not break any laws. We need a mechanism whereby the police and other agencies can use the information on these networks to protect the public. Is there clarity about exactly what can be done?

We believe that there is a need for more training in police forces, and ACPO is taking the lead on this. For example, some police forces around the country use information from Twitter and other such networks more effectively than others, often because they have one or two individuals who themselves are hi-tech, have very good access and can use intelligence from the information that they glean from those networks. Through ACPO, we are seeking to improve that around the country. There is nothing illegal about that; it is something that we believe the police could use to better effect, and that training is an important part of it.

Terrorism Prevention and Investigation Measures Bill

First Reading

The Bill was brought from the Commons, read a first time and ordered to be printed.

Equality Act 2010 (Specific Duties) Regulations 2011

Motion to Approve

Moved By

That the draft Regulations laid before the House on 27 June be approved.

Relevant document: 26th Report from the Joint Committee on Statutory Instruments.

My Lords, I am delighted to be leading this debate and to have the opportunity to explain the Government’s policy regarding the specific duties regulations.

I will first say a little about the equality duty, which these specific duties support. On 5 April this year, the Government brought into force the new public sector equality duty contained in Section 149 of the Equality Act 2010. The duty requires public bodies and those discharging public functions to have due regard to the need to eliminate discrimination and other conduct prohibited by the Act, advance equality of opportunity and foster good relations between people who share a relevant protected characteristic and those who do not share it. The relevant protected characteristics are age, race, sex, disability, gender reassignment, pregnancy and maternity, religion or belief, and sexual orientation, and, in relation to eliminating unlawful discrimination and harassment, marriage and civil partnership.

The objective behind the new equality duty, like the previous race, disability and gender equality duties, is to ensure that consideration of equality forms part of the day-to-day decision-making and operational delivery of public bodies. However, the new duty is considerably stronger than those previous duties. As well as extending to all nine protected characteristics, it also sets out in primary legislation for the first time what considering the need to advance equality of opportunity involves. Section 149(3) of the Equality Act 2010 makes clear that in particular it involves considering the need to remove or minimise disadvantages suffered by people who share particular protected characteristics, to take steps to meet their particular needs, and to encourage people who share particular protected characteristics to get involved in public life and other activities where their participation is disproportionately low.

This new strengthened equality duty will be supported by specific duties set out in regulations which we are discussing today. The purpose of the specific duties is to help public bodies carry out the equality duty more effectively. This is a very important point and I want to emphasise it strongly. The equality duty itself, set out in primary legislation, is the key provision. That is already in place, and, as I have explained, it is stronger and broader than the previous duties. The specific duties do not extend, restrict or change the equality duty in any way. They are simply designed to help public bodies to perform the equality duty better as was the intention behind the specific duties which supported the previous race, disability and gender equality duties.

However, having commenced the new stronger equality duty, the Government are putting forward a radical new approach for supporting specific duties. In the past, public bodies tended to get bogged down in detailed, bureaucratic, process-driven requirements such as producing vast equality impact assessments that ticked a box but had no impact on the decisions taken. Our approach is different. We want public bodies to focus on delivering real progress on equality and to be transparent about that so that the public can hold them to account. It is a fundamental shift from bureaucratic accountability for filling in the right forms to democratic accountability for delivering equality improvements for service users. The specific duties that we are proposing, instead of focusing on processes, require public bodies listed in the regulations to publish information to demonstrate their compliance with the equality duty and to set themselves equality objectives. The requirement to publish information to demonstrate compliance with the equality duty is a strong requirement. Compliance with the equality duty is an objective matter, determined by the courts. While there is flexibility in the regulations, each public body must publish information to demonstrate that it is complying with the equality duty. If it does not, the Equality and Human Rights Commission can issue a compliance notice which is also enforceable through the courts.

Case law on the previous duties, which is still relevant, provides useful guidance as to what is required to comply with the equality duty. In brief, public bodies must ensure that they have the right information to hand about equality issues to make informed choices and decisions and to ensure that this is rigorously considered before and at the time decisions are taken. Case law has also made clear that in some cases it will be necessary to consult relevant parties likely to be affected by a decision, such as local disability groups and women's groups. In order to demonstrate their compliance with the equality duty, public bodies will generally need to publish information about what they have concluded will be the effect of their activities on people with different protected characteristics and the information they considered in making their decisions, including those they have consulted and involved.

The regulations give public bodies flexibility to publish the information that they believe best demonstrates their compliance with the equality duty and which is most useful to their staff and service users in holding them to account for their performance on equality. This means that public bodies will be able to publish the information that is right for their particular circumstances. What is right for a small school will be different from what is right for the Department for Education.

We have two stipulations. First, public bodies must include information relating to people who share a relevant protected characteristic who are affected by their policies and practices—their service users. For example, we would expect a local authority to have considered how its provision of social housing affects women who have been victims of domestic violence, or disabled people who have particular access requirements. We would expect the local authority to publish information on this, and to explain how it considered it and whether it took action as a result. Secondly, public bodies with 150 or more staff must publish this information in relation to their employees. For example, we would expect a government department to have considered how its policies affect employees with different protected characteristics, and to publish information such as its gender pay gap and the proportions of staff at different levels who are disabled or from ethnic minorities.

We will ensure that there is sector-specific guidance from the Government and the Equality and Human Rights Commission to help different types of public body think through what sort of information they should publish. All public bodies listed in Schedule 1 to the regulations must publish this information by no later than 31 January 2012 and at least annually thereafter. Schools listed in Schedule 2 to the regulations must do the same, but by 6 April 2012 and at least annually thereafter. The additional time for schools—a full term—is to help them prepare and implement the new requirements in compliance with the preparation timescales for any regulations on schools recommended by the Merits Committee.

Turning to the specific duty to set equality objectives, each public body listed in the two schedules to the regulations must prepare and publish one or more specific and measurable equality objective. They are required to publish these objectives by no later than 6 April 2012 and at least every four years thereafter.

My Lords, if my noble friend will allow me to finish, he will see that this is exactly what we are doing.

The objectives set out should clearly illustrate the real equality improvements that the public body intends to deliver over the course of the business cycle. They should focus on the key inequalities that the body is in a position to affect, as highlighted in its published information, and identify achievable, measurable improvements. For example, if a local authority’s data show that very few older people access a service from which they might benefit, the authority might set an objective to increase the rate of take-up by a certain percentage within a specified period, to ensure that such services genuinely advance equality of opportunity for all. This requirement to publish equality objectives will help to ensure that the public and the voluntary and community sector organisations understand the key inequalities that public bodies are focusing on tackling and can track progress against these. The Government are commissioning the production of a toolkit to help voluntary and community sector organisations to use transparency delivered by the equality duty to hold public bodies to account for their performance on equality.

The regulations require public bodies, with the sole exception of schools, to publish information in advance of setting their equality objectives. This is to help to ensure that the public and voluntary and community sector organisations have the opportunity to consider the data that will inform the equality objectives that public bodies set themselves. This is a key element of the Government’s policy: to ensure that public bodies are transparent and accountable to the people they serve for delivering real equality improvements that will give people fair chances. I commend these regulations to the House.

Amendment to the Motion

Moved by

As an amendment to the above Motion, to insert at the end “but that this House regrets that the Regulations seem likely to reinforce the failure of equality law to take proper account of freedom of religion and conscience; and notes that the Regulations appear to burden further the public sector with unnecessary bureaucracy and target-setting and will in effect promote equality of outcomes rather than equality of opportunity.”

My Lords, in speaking to the amendment in my name, I should make plain what I think is known to most people in the House: I am not a born rebel. The object of the exercise this afternoon is not to ask the House to vote down these regulations. It is an opportunity for all of us to express any concerns that we have about the development of what is loosely called the equality agenda.

None of us wants unfairness and injustice. However, these regulations are not really about unfairness and injustice. They are about the new bureaucratic burden to be placed on local authorities and public authorities, which are already overburdened with red tape, to push forward an equality agenda that has often produced unfairness rather than fairness and injustice rather than justice.

I have the greatest respect for the noble Lord, Lord Low of Dalston, but I have to say that his amendment to the Government’s Motion, with its references to equality analyses, reports on engagement with affected groups, annual reports, et cetera, serves only to highlight the morass into which we would have sunk up to our elbows had we been required to approve regulations in line with what was originally proposed. As it is, I suppose I can thank the Government for planning to have us sink only up to our knees, although I think that is bad enough.

The regulations are, of course, entirely irrelevant to the enormous problems that the country is now facing except for the sad fact that, as the equality agenda has been pushed forward by people with the best intentions, the established values, moral codes stressing the importance of the traditional family, with a man and wife sharing responsibility for the upbringing of children, and the very institution of marriage—as unfortunately was made plain today during Questions—have all been neglected and sometimes almost derided. We have seen some of the consequences of that recently.

I believe that the Government should not have spent the last few months cooking up new regulations. They should have spent the time, first, trying to find a way to mitigate some of the more baleful consequences of the equality agenda, and, secondly, looking for ways to stop public authorities practising gross unfairness in the name of equality law. Noble Lords may remember the following instances: the woman threatened with the sack for being unwilling to perform civil partnership ceremonies even though she had worked for the council before civil partnerships were even invented; the nurse suspended for offering to pray for a patient’s recovery; the five year-old girl reprimanded for discussing her faith at school, and her mother, a worker at the school, investigated for professional misconduct because she asked for her friends’ prayers in the matter; the BA employee sent home without pay for wearing a silver cross; the council worker in Wandsworth sacked for suggesting to a terminally ill woman that she should seek help from God; Camden Council almost unbelievably saying that a Roman Catholic group had no right to advertise a meeting with the slogan, “Climate change is a Christian issue”. I am thinking of religious charities which have been finding it harder and harder to get local authority funding, with Brighton and Hove Council withdrawing funding from a residential care home because those running it refused to ask the elderly residents every three months about their sexual orientation. I am thinking of the five Catholic adoption agencies forced to close because of their unwillingness to place children with same-sex couples, although there are very many adoption agencies specifically catering for gay couples and the society’s objections could have been accommodated with no harm to anybody at all.

It is not just people like myself who are outraged by this determination to treat unfairly people who wish to do no more than observe a moral code that, only a few years ago, was accepted as a valid guide to behaviour by the vast majority of people. Even the Equality and Human Rights Commission has complained that the courts and public bodies have failed to recognise that people prevented from expressing their beliefs have suffered discrimination and has said that something ought to be done about it.

Now let us get back to the particulars of the regulations. Noble Lords will be aware that plenty of local authorities already enjoy collecting useless statistics. On 27 August, the papers reported that when people want to borrow a book in Islington, they are asked if they are transgender; in Brent, they are asked whether they are schizophrenic; and in Leicestershire, they are asked whether they are HIV. Is it not strange that while Eric Pickles says that this nonsense has to stop, the Home Secretary is insisting that all local authorities should behave exactly like Islington—because that is exactly what she is doing through the regulations? Is the world going completely mad?

Look at what public authorities will have to do under the regulations. They will have to collect information about people in the community and in their workforce who are disabled, gay, about to change their sex, et cetera, and then demonstrate to the world how they intend to eliminate discrimination against such people. It is hard to see how they can do that except by counting the number of their clients and the number of their employees sharing each of the relevant protected characteristics and, when they find that they do not have enough clients or employees sharing each relevant protected characteristic, setting out to recruit a few more clients or employees to fit into one of the protected groups. How else could they demonstrate, as the regulations require, that they are indeed eliminating discrimination?

The Government say that compliance with the regulations will not cost much—certainly not as much as complying with the current three separate duties with regard to disability, race and sex. Of course, that is complete nonsense because Section 149 extends the coverage of the duty massively to age, sexual orientation, religion or belief, pregnancy, maternity and gender reassignment. More importantly, the Government are careful not to say what will be the total cost of the regulations for more than 27,000 public bodies. It will be enormous. How on earth do the Government reconcile that with their declared intention to cut back on bureaucracy—a point made by my noble friend? How does it fit in with the Prime Minister's red tape challenge, and how can it be squared with his bold declaration that it is about time that we encouraged greater responsibility in society and that that means that we have to trust people and give them the freedom to do the right thing rather than to regulate them? Almost every utterance of the Minister and almost every word of the regulations contradict what I was told after the election was one of the principal aims of this Government.

The regulations will do nothing to ensure that people who do not fit into the neat categories prescribed in equality law have their rights protected. There is nothing to ensure, for instance, that people with religious convictions are allowed to live by them without harassment or worse. Why should it be so difficult to protect such people? If in the darkest days of the war we could allow people the right to conscientious objection, why is it thought necessary to compel those who have deeply held convictions against gay adoption, for instance, to conform or else?

I have great admiration for the Minister. The Government are privileged to have her in their ranks.

I thank my noble friend for allowing me to say a few words. I very much follow what he is saying and I know that we will vote on the issue. Where I am a bit lost is that I do not know how any of us could change the equality law so that it takes proper account of freedom of religion and conscience. His idea is very good, but how would he do it if he was in charge?

I was making the very point that my noble friend touched upon. If at a time of war you can make exceptions for people who have deeply felt religious convictions, why the Dickens can you not do it in peacetime? It is absolutely absurd to say that because you have equality law there must be no exceptions in any case whatever, although by granting such exceptions you will cause no hardship to anyone. That is the whole point about the Catholic adoption societies. How completely cruel it was to say that those societies could not continue in existence when everyone knows perfectly well that if gay couples want to adopt there are 101 other places to which they can go. That is the answer to my noble friend.

I must conclude. I can give my noble friend no comfort. The relevant sections of the Equality Act permit the making of regulations. I must remind noble friends that they do not require regulations to be made telling local authorities how to observe the law. These particular regulations are fit for the dustbin. It would be beneficial for the House today to make the Government sit up and think and to expresses its view with the simple message along the lines that I have suggested; the dustbin is the place for these particular regulations. I beg to move.

My Lords, I, too, ask the Government to undertake a rethink but from a slightly different perspective from the one that has just been laid out by the noble Lord, Lord Waddington. The notion of equality duties goes back to the Race Relations Act, the Sex Discrimination Act and the Disability Discrimination Acts, all of which have been widely recognised in your Lordships’ House to have conferred real benefits on the groups with whom they deal and on the community in general. They were supported by specific equality duties that required the production and implementation of equality schemes, including the publication of equality information and plans to improve performance in relation to equality. They also contained requirements concerning equality impact assessments and, depending on the Act, to set equality objectives and involve or consult affected groups in the development of schemes or in relation to impact assessments.

The Equality Act 2010 introduced a single public sector equality duty whereby public bodies are under a general duty to have due regard to—to paraphrase—the need to eliminate discrimination, advance equality of opportunity and foster good relations between people who share a protected characteristic and those who do not. In January, after much consultation, draft regulations were published that rationalised the system of specific duties. It was proposed that public bodies should be under a duty to publish details of engagement undertaken with affected groups when determining policies and equality objectives, equality analyses undertaken in reaching policy decisions and information considered when undertaking such analysis. While there was some disappointment at the disappearance of the requirement to produce equality schemes, these proposals addressed concerns identified by both groups working to further equality and public authorities, and were generally welcomed as representing a reasonable balance between regulating to reinforce the general equality duty and placing undue burdens on public authorities.

Now, however, in the regulations we have before us today, all but two of these requirements have gone. It is proposed only that the general duty is supported by specific duties to publish at least one specific and measurable equality objective every four years, and publish information annually to demonstrate compliance with the general equality duty. In other words, the duties to publish details of engagement undertaken when determining policies, engagement undertaken when determining equality objectives, equality analyses undertaken in reaching policy decisions, and information considered when undertaking such analyses, are removed completely. It is hard to understand the reason for the Government’s change of heart, unless it is deregulation for deregulation’s sake regardless of the merits of the regulations in question, for not only the advocates of equality legislation but a significant number of public authorities have expressed their support for strong specific duties as providing a useful framework for helping public authorities comply with their duties under the Equality Act.

This change of direction also comes at a very late stage, after guidance has already been issued by the Equality and Human Rights Commission, reflecting what were assumed to be the Government’s final thoughts on the specific duties regulations. There is now an inevitable gap between the coming into force of the general duty on 5 April and the implementation of the specific duties after an extended period of consultation on them. Public bodies will still be subject to the general duty, and the absence of the specific duties can only create uncertainty as to how they should go about meeting their obligations. According to these regulations, the great majority of public bodies must publish information to demonstrate their compliance with their general duty by 31 January next. That does not give a lot of time. Will the Minister tell us how the Government propose to get over that difficulty? “Make the best of a bad job” is what I suspect she will say. “Admit it’s a shambles” if she is honest. What sort of Government is this? No better than the last lot, if you ask me.

I have a lot of sympathy with what the noble Lord, Lord Waddington, has had to say. I am no more in favour than anyone else of making public authorities jump through the hoops of political correctness that he has excoriated so comprehensively, but these regulations are really not fit for purpose—indeed, for the Government’s own purpose. The specific duties spell out the implications of the general duty and help authorities to understand what is required of them. This helps to protect them against legal challenge. As these regulations stand, the specific duties do not reflect the extent of the obligations imposed by the general duty, and will therefore fail in their main purpose of achieving better performance of the general duty. The Government’s principal motivation seems to be the minimising of duties, and not the maximising of benefits—of improved equality of opportunity. This is a vital prerequisite for realising, for instance, the Government’s ambition to get more disabled people into work, and is surely not something to be reining back on at a time when a sense of alienation and social exclusion are disfiguring our society and erupting in social unrest.

This is not just special pleading. There is a wealth of research to show that the specific duties as traditionally conceived have been widely welcomed as having a beneficial impact. There is too much to summarise adequately here, but to give a flavour: in some Disability Rights Commission research, interviewees indicated that disability equality had assumed greater priority in their departments, and reported improvements in the involvement of disabled people, evidence of disability equality, and of meeting wider organisational objectives. Some research in 2007 found that equality issues were accorded higher priority and were increasingly mainstreamed. Practitioners were said to be particularly enthusiastic about the impact of the public sector duty in encouraging consultation and the ongoing involvement of disabled people.

The Government’s own Equalities Office commissioned research to identify which aspects of the specific duties were believed to be effective. It concluded that the specific equality duties were widely accepted, with the majority of authorities across all sectors viewing the requirements of data collection, planning, involvement and impact assessment as effective. Of 174 respondents, more than half rated the specific duties very effective or effective, leading to positive outcomes.

The Equality and Human Rights Commission has also commissioned research to identify the elements of the specific duties that were most effective in achieving change. Equality schemes and equality impact assessments were said to provide a framework and focus for action. While some participants felt that in some cases implementing the specific duties might be perceived as overly bureaucratic, nevertheless the research states that the vast majority were clear that implementing the specific duties has been fundamental in improving services.

In some other research commissioned by the EHRC, 77 per cent of schools said that their work to meet the disability equality duty had a positive, measurable impact on disabled pupils. This is the only research to have investigated the impact of the Secretary of State’s specific duty to report on disability across each sector. It was found to have created a significant shift in central government’s understanding of and response to disability equality.

“Not only has it raised the awareness of key issues across departments”,

the report says,

“but it has also helped to clarify the importance of integrating and mainstreaming the agenda in all central government activities”.

Perhaps I may say a word about what is still in and what is left out. The policy review leading up to these regulations suggests that all but two requirements—to publish information and to set equality objectives—can be eliminated on the ground that compliance with the general duty presumes the other requirements. It is clear that the general duty cannot be met without assessing the impact of policies on equality or involving those affected at an early stage in policy-making, and this is certainly the way in which the courts have interpreted it. However, this overlooks the role that the specific duties play in providing public bodies with a framework which, if they work within it, provides vital guidance on how to comply with the general duty.

That is particularly true of the requirement to involve or engage with those affected by action on equality. In the case of disability, public bodies have benefited greatly from such involvement, which has helped them to ensure that the policies they put in place and the services they provide reflect the real needs and experiences of disabled people. In their analysis of responses to the consultation—more than 60 per cent of them from public authorities—the Government acknowledge that, despite the fact that no questions on engagement were raised in the consultation, around a third of respondents raised a concern about the lack of any requirement for public authorities to engage with or involve relevant groups. Nor is it possible to rely on guidance within the codes of practice. As the EHRC has said:

“Where the regulations fail to impose specific obligations, the Codes of Practice cannot do so. The Codes must elaborate on the requirements of the legislation, not add to those requirements”.

The requirement to publish at least one equality objective every four years is particularly risible. This runs the risk that authorities will think that setting just one equality objective every four years discharges their duty with regard to equality. It is extremely unlikely that a public body could satisfy all the three elements of the general duty while taking such a minimalist approach. The regulations should make it clear that the objectives that a public body selects must be across the full scope of the duty. Stripped-down regulations will encourage only minimum compliance, not best practice, especially at a time of economic stringency.

There is some consolation in the fact that the Government have undertaken to carry out a review of these regulations after two years. However, I would welcome the Minister’s assurance that the review will be broad in scope, assessing the extent to which the specific duties have supported better performance of the equality duty in general and not just those aspects covered by the narrow specific duties that we have in these regulations. Will the Government use the review to assess whether there has been progress from the situation that obtained under the old regime of specific duties or whether things have slipped back, and whether they will strengthen the regulations if it is found that things have slipped back? Also, will the review assess how far public bodies have been engaging with those affected by their decisions in the absence of a specific requirement to do so?

Finally, I would welcome a clarification from the Minister of the process that will be adopted for the conduct of the review. Will it be informed by the experience of those most affected as to how effective the duties have proved to be as a means of holding public bodies to account? This would seem to be essential, given that the Government’s stated intention in designing the regulations in the way that they have is to achieve greater accountability on the part of public authorities.

My Lords, I congratulate my noble friend Lord Waddington on moving this amendment and on the moderate and thoughtful manner in which he moved it, giving examples of situations widely ridiculed at the time. It is not a fatal amendment. I wish that it was. I would like to get rid of the regulations.

I am going to clarify my position on the issue in the form of a confession. Some 40 years ago in the other place I was the sponsor of two separate pieces of anti-discrimination legislation. However, it was made clear at the time that these were not in favour of positive discrimination, which is a very different matter. I therefore oppose the regulations on a number of specific grounds. The objective of the regulations is absolutely right if the intention is to prevent victimisation, but it is not right because it is not about equality. It is about inequality of opportunity because it requires a protective element for some but not for others who may in fact be best suited for the job. They are not to be considered equally. They are to be considered after the protected characteristic groups. These groups are very wide and very varied, giving special protection to a wide and varied group. That is positive discrimination, which is neither fair nor equal in regulations stemming from what is the so-called Equality Act.

I emphasise my support for the stated object, that anybody should be given a chance, whatever protected characteristic they may have, as long as they can do the job better than or at least as well as other applicants who do not comply with these characteristics. There is always a chance that some bright young body might claim to have one of these characteristics in order to be considered for the job more favourably. This would only enhance the unfairness. We can only imagine how much these requirements are going to cost local authorities and their ratepayers to enact. How much additional staff will be needed? What burdens will be placed on staff who are already there? How are they to represent their reasons for not employing an able applicant who does not meet the requirements in the regulations but is after all the best person for the job?

The regulations under the Equality Act’s Explanatory Memorandum 10/4 states that this new version, presented to your Lordships’ House today, initiates various savings compared with the previous regulations of up to £205 million over 10 years. That would probably be the cost over the same period of the adoption of the amendment of the noble Lord, Lord Low, if it was accepted. All of us care about the fairness with which people are treated and given jobs and about human rights, but then we look at the Equality and Human Rights Commission, which cost £70 million to set up, was recently condemned by the National Audit Office for not presenting its accounts in an acceptable manner and recently squandered more than £800,000 on a website that did not work. Is this the sort of pattern we wish to impose on local authorities? Again, I emphasise that no one wants to condone unfair discrimination in any walk of life. However, I am not at all sure that these regulations will not lead to discrimination that is more unfair than the very discrimination they seek to prevent.

I am grateful to the noble Lord, Lord Waddington, for tabling this amendment and for the work he has done in this area for many years now. I join him in expressing deep concern about what has happened to those five Catholic adoption agencies. The previous Government and this Government are well aware that voluntary adoption agencies have the best outcomes for children. They provide the best stability and the longer term support for those children and their families to see that those children do well. It is a matter of very great regret that those five agencies have closed. Will the Minister assure me that the guidance makes clear that the principles in the Children Act 1989 and the Children Act 2004 are paramount, that the interests of the child are paramount and that where it is considered that it is in the best interests of children not to be placed with same-sex couples, agencies can do so? I believe it is a perfectly tenable position. I have worked in this House on child welfare for 12 years now and, in my view, it is not generally in the child’s best interests to be placed in that situation. I may be wrong in that view, but there are many professionals who share it. It is not proven that it is safe or in the best interests of children to place them in such settings. I think Professor Golombok—I hope I have her name correctly—has done the most work in this area, but she looks only to the age of 18 and the sample of families examined is quite small. I should be most grateful to the Minister if she could assure me that the guidance will be clear about the paramountcy of the welfare of children, about agencies’ ability to decide where that interest lies and that we will not be seeing a repeat of what happened with those five Catholic adoption agencies.

My Lords, I should declare a couple of interests before I say anything. First, I was the architect of a Private Member's Bill on equality that went through this House and became a kind of model for what came later. Secondly, I am counsel to the National Secular Society in the intervention in the pending Strasbourg proceedings and, therefore, will not say anything about the cases that have been placed before the European Court of Human Rights. Thirdly, I am so old that I can remember listening for the past 40 years to the arguments I heard just now basically attacking equality legislation root and branch and suggesting it should be consigned to the dustbin.

The most useful way in which I can assist the House is to begin by explaining a bit more about the framework within which this debate takes place as that might throw some light on what we are talking about. The previous Government, with all-party support—I commend the noble Baroness, Lady Royall, in particular for having led the Government at the time on this issue in this House—were responsible for introducing Section 149 of the Equality Act, which is the public sector equality duty. That duty was already in our law in relation to gender, ethnicity and disability, but it was strengthened in important respects by the previous Government with support from all three main parties right across the House. The duty requires every public authority in the exercise of its functions to have due regard to three things: first, to eliminate discrimination, harassment, victimisation and other conduct which is prohibited; secondly, to advance equality of opportunity between people who share a relevant protected characteristic and those who do not; and, thirdly, to foster good relations between people who share a relevant protected characteristic and others.

The duty covers various grounds, including religion or belief. I assume that even the staunchest opponents of the legislation are pleased that discrimination on grounds of religion and belief is covered. I say with all respect that it has nothing to do with positive discrimination, which is dealt with in a limited form by a completely different provision. It imposes a general public sector duty. There are particular problems about the way in which the duty treats religion and belief in the same way as the other protected characteristics. Some would argue, and I would be one of them, that religion is too strongly protected in the legislation, but we really need not go into that today.

The Explanatory Notes on the Equality Act make it clear that a whole range of religions, including Catholicism, Protestantism, Liberal Judaism, Orthodox Judaism and various forms of Islam, are to be looked at individually and separately if there is an allegation of discrimination. That is the framework. The power being exercised under the regulations is to give better governance in complying with that general duty. Complaints about the Act itself were settled by the previous Parliament when it enacted the legislation.

Where I part company with the noble Lord, Lord Low, with whom I hate ever to disagree, is in believing that his amendment—I have already had the advantage of speaking to him about it—is a real example of overregulation of the worst kind. The best way in which I can illustrate that is by giving just one example, that of religion. Under the general duty, every public authority has to have due regard to the three things that I mentioned. The first thing that an authority has to do under the law is to identify within its area various religious, irreligious, non-religious and atheistic groups. Then it has to decide whether something needs to be done in order to tackle inequality, discrimination and so on with regard to those groups. The regulations strip down the core needs to ensure compliance with the general duty in a well targeted and sensible way. They state that each public authority must publish information to demonstrate its compliance with the Section 149 duty, which is quite right and entirely sensible. They further state that the information has to include information relating to persons who share a relevant protected characteristic, which they define—perfectly sensible. The third thing that the authority must do is prepare and publish one or more objectives that it thinks will achieve the things that I have already mentioned. Again, that is perfectly sensible. Then they say that the objective must be “specific and measurable” —again entirely sensible.

The amendment of the noble Lord, Lord Low, would add that each public authority in the country must,

“publish information on equality analyses they have undertaken … set objectives designed to facilitate compliance with the General Equality Duty … publish information about the engagement they have had with affected groups when developing these objectives and … report annually on progress towards meeting these objectives”.

I do not wish to be unmannerly in saying that it reads a bit Soviet—

I should be most grateful if my noble friend would tell the House exactly what the general duty is and how it differs from the duty in Section 149.

The general duty is in Section 149 and I have already said what it covers. I obviously did not do it very well, but that is where the general duty is. I was trying to explain that these extra obligations, on every public authority, really are an example, in my view, of overregulation. The noble Lord, Lord Waddington—who does not like the legislation, and has always made that absolutely clear, with the reasons given again and again in previous debates—rightly says that he is against overregulation. He referred to the Red Tape Challenge. The Minister will correct me if I am wrong but my understanding is that the Red Tape Challenge, which asked the public what they thought about the regulation under the Equality Act, disclosed that about 95 per cent of respondents expressed overwhelming support for the scheme that he dislikes so much, and the remaining 5 per cent included some who wanted it to go further. If one takes any regard of public consultation, that is a vote of confidence in the scheme, however much the noble Lord, Lord Waddington, and those around him may dislike it. One is entitled to take account of that since the Government did so. I am totally opposed to overregulation, and I want just to give one example of what worries me when a body such as the Equality and Human Rights Commission has responsibility for monitoring.

In my professional capacity I was consulted by the Commission for Racial Equality about a scheme involving Crossrail. The question was whether digging a large hole in the ground in a particular part of London would be directly or indirectly racially discriminatory against people of Bangladeshi origin, and therefore whether the whole scheme might have to be stopped as a result. It seemed to me, if I may say so, a strange thing to ask me to advise on, but that is what happens in life. I then called for the race equality impact assessments that would have been made and were relevant to this under the previous legislation. I discovered that there were 100 pages from the Department of Transport, separate submissions by each of the three London boroughs affected, a separate submission by the Mayor of London and a separate one from Transport for London. One had this bulky mountain of paper, none of which had ever been read by the monitoring agency, in a cupboard that no one had ever opened. That seemed to me to be an example of creating paper mountains through overregulation of a completely pointless kind.

When I was constructing my own Private Member’s Bill it was impressed on me by people from Northern Ireland who had great experience in monitoring that one must go for targeted monitoring by a body that is capable of doing the job. I do not think that the Equality and Human Rights Commission at the moment is capable of doing the job. It requires a great deal of professional expertise which is lacking and is very difficult to do. I therefore welcome the fact that the Government have sensibly produced specific duties that are capable of being carried out and have said that we will treat it as an experiment for two years, at the end of which we will suck it and see whether we need more or less regulation. That seems entirely desirable. Therefore, I could not possibly support the noble Lord, Lord Low, if he were to divide the House, which I hope he will not.

As for the amendment proposed by the noble Lord, Lord Waddington, when the Equality Bill was going through Parliament, as the Explanatory Notes make clear, the right to freedom of religion was specifically taken into account, as was freedom of conscience. My view is that there is nothing whatever in that Act, or in the way it has been interpreted by the courts or, in my judgment, in Strasbourg, that infringes on freedom of religion or freedom of conscience. I do not refer to the way in which it has been interpreted by the Daily Mail or in stupid reactions by ignorant people, or others. There are cases pending in Strasbourg.

Is the noble Lord concerned for one moment with the way in which it has been interpreted by public authorities? That is the point.

I am deeply concerned about that. As the noble Lord, Lord Low, said, I am deeply concerned about ridiculous political correctness, with the rubbish about how you must not mention Christmas or Christmas lights, and so on. The same is true of the Human Rights Act; day after day, you read ridiculous examples that do not represent the law of the land. All that I am talking about is the law of the land, not misinterpretations of the law of the land; there is nothing wrong with the law of the land as it stands, but there is everything wrong with mischievous misinterpretations outside or sheer ignorance. But we are not here to pass judgment on the basis of ignorance or anything of that kind; we are here to approve some sensible regulations, narrowly and clearly targeted to carry out the general duty, which was passed by the previous Government with the support of all parties. Therefore, I hope that we can do so soon.

My Lords, I apologise to my noble friend the Minister for not asking her this question before she sat down in order that her officials would have time to prepare the answer. What is the cost of all this, not just in some gross sum of money but in terms of how many care assistants employed by local authorities will have to be made redundant to finance it? I have a feeling that there would be a greater contribution to human happiness and to the benefit of disabled and elderly people, who are protected categories, were the care assistants to be kept in work and these regulations to be junked. No doubt the figures will be provided before the end of this debate, with the customary efficiency of our Civil Service.

I remember when the Equality Bill was brought before this House at Second Reading and the spokesman for my party—we were then in opposition—started her speech with the words, “We on these Benches support this Bill”, and was greeted with something of a pantomime chorus behind her, crying, “Oh no we don’t!”.

Let me make it very clear that I do not like this Act. Of course, there are elements of it that are very helpful, not least the consolidation of much of the previous legislation concerning disability. It brings it all together, and that is very helpful. So I would not just repeal it like that—I would want to keep some parts of it. Unfortunately, primary legislation that is itself misconceived spawns very bad and misconceived secondary legislation. That is what we are now facing.

The whole of this is misconceived, in my opinion, because of its confusion of equality and sameness, and its frequent confusion between rights and entitlements—one day, I hope we might have a debate in this House entirely on the matter of the distinction which should be drawn between rights and entitlements—and that of course is leaving out its failure to understand that on many occasions, and in many ways, effective and efficient administration, which is in the interest of all of us, even the protected categories in this Act, should have priority over the duties set out in Section 149(1) of the Act.

However, we look at the Act now as it is. My noble friend Lord Waddington gave some of the examples of the way in which the Act has spawned action by Government and local government which is profoundly harmful, not least, as has been referred to, in the matter of adoption societies, and the discrimination against some religions. Not all religions, of course: it would be a bold local authority that would discriminate against, let us say, the Islamic religion. That would be a step too far; but of course Christians are easy meat, as we see day by day.

Is the noble Lord, Lord Tebbit, aware that it would be unlawful to discriminate against any particular religion under the Act that he slights?

Yes indeed, but I hope that the noble Lord, Lord Lester, does not deny the truth of what my noble friend Lord Waddington said, and the way in which he described the discrimination which is brought against people who believe in a particular religion, that is, the Christian religion. No doubt the noble Lord, Lord Lester, would probably want to have a group of original Mormons on a committee in a local authority which was considering matters of divorce, or marriage, or something of that sort. The point is that once we start trying to get down into these details, instead of relying upon the decent conduct of decent people, elected to office democratically in local authorities and responsible to their electorates, we find ourselves in a morass; indeed, not merely a morass, but an expensive and a contradictory morass. I think that we need to look at all this again, preferably with a basic reform of the Act. I know that that is not on offer right now. However, as my noble friend Lord Waddington was saying, the Act does not require that these regulations be placed before us, and it does not require that they should be passed. I think that it would be a very great benefit to mankind in general if they were not and, in particular, I think it would be of a very great benefit if the amendment of my noble friend Lord Waddington were to be accepted this evening as a warning shot across the bows of this Government. In the words of the noble Lord, Lord Lester, it does not seem that this Government are much better than their predecessor.

My Lords, this debate has reached the point where the comments I wanted to make would be repetitious, so I shall be very brief in supporting the Motion of the noble Lord, Lord Waddington. The noble Lord has given this House the opportunity today to make its views known on a number of issues which have been highlighted and which have been mentioned again. I am not concerned with the legal interpretations of things, because that is not what the people outside this House are on about: they are concerned about the drift in our society that seems to favour one group against another. As I say, there have been long explanations by the movers of the two Motions. However, I compliment the noble Lord, Lord Waddington, on the comprehensive way in which he put the view not just of Members of this House but of countless thousands—probably millions—of ordinary folk in this country who think some things are wrong. He has illustrated some of them today and many other Members can find examples of such things leading us into difficulties.

We have this one world. We have a freedom of expression. I know that the noble Lord, Lord Waddington, is just as keen on freedom of religion and conscience in other parts of the world, as I have had the privilege of working with him on a number of occasions. All I can say today is that we have the opportunity, thanks to his Motion, to say, “We have gone far enough; let the Government understand that we are not prepared, as a nation, to let this thing drift on and on”. I hope that if the noble Lord, Lord Waddington, divides this House, he will appreciate my support in following him through the Lobbies.

My Lords, the purpose today is to consider some reasoned opinions as to what should be done in a highly distraught situation. It has not been substantially debated as yet but it is time that we gave it time. I hope today not to divide but to consider what has been said. I am grateful to my noble friend, with whom I do not totally agree, and to the noble Lord, Lord Lester—with whom I seldom agree, but we disagree in amity—for what he has said, with which I do not agree at all for two reasons.

First, this is a question of religious freedom, putting it simply—the concept of it and the implementation of it. There are, inevitably, such matters as adoption agencies but it is wider than that and it applies to all religions. We are still a member of the EU, and those member states with written constitutions defend in them exactly the type of religious freedoms which we are discussing. Because they are defended in that way in those constitutions, they are not within the remit of any of the EU courts. We do not have a constitution and if we want to get out of the trap there is actually only one way, which has not yet been considered. That is why I am so grateful to my noble friend.

If we have a constitution Bill which makes the appropriate provision akin to those of others in the Union and it is approved by our Supreme Court—which now is, in effect, a constitutional court—we are home. Nobody has considered that but if you do not do it that way, you cannot do it at all. It is no use saying, “Oh, we will make statutes. We will do this, we will do that”. This was explained perfectly clearly. I took up the point with my noble friend Lord Pilkington after the debate, in our usual conversations which we had in a little room not far from here. He said, “Well, I had better find out a bit about this. I had a brilliant pupil who is now at the Bar—somebody called Armitage. I am going to ask him to send me an opinion”. I had never met Armitage. In fact he is a brilliant man, a first rate-lawyer, totally objective, and not in any way involved in politics. He wrote an opinion and I am talking to the effect of his opinion, which was my opinion too. My noble friend gave me a copy of the opinion and I am afraid I have lost it, but it is very important that it should be found, and perhaps Armitage could provide a copy.

This one short point has never been taken and never been understood. Unless you get a constitutional position, our courts will have to accept that they cannot be excluded from the European laws—putting it broadly—with which we are bound at the moment.

That was also in a sense explained by the noble Lord, Lord Sacks, in his article in the Times after the debate, in which the right reverend Prelate the Bishop of Winchester took one view, and the right reverend Prelate the Bishop of Oxford took the other view, and my noble friend Lord Waddington was concerned.

My Lords, I do hesitate to interrupt the noble Lord, but there are a number of people I know want to speak, and if he could wind up it would help the House in its deliberations. I do apologise to the noble Lord for raising it in this way.

I have to say I could not quite hear what my noble friend was saying. If I have done anything wrong, I apologise. Should I shut up?

I have, save for one point. This question of freedom of religion was raised as an amendment to the Human Rights Act, and it was supported by the right reverend Prelate the Bishop of London, another noble Lord and Lord Jakobovits. Within a very short time it was opposed by the noble Lord, Lord Lester, and the noble and learned Lord the Lord Chancellor, and withdrawn because of a message from Lambeth House indicating that it thought it could make some appropriate arrangement. Well, it was never done, and that remains at the base of this problem. Of course, if the amendment had been accepted, we would not be in this position and could have taken steps then.

My Lords, it was not my intention to participate in this debate. However, as a result of listening to the comments of many noble Lords, I am driven to say a few things. Recently we had riots on the streets of Britain, and as a result there has been a lot of heart-searching about why people participate in this exercise—some for criminal reasons, some for other reasons. No one really knows why, and there will be some investigation into that. However, it strikes me that the pendulum of secularism and political correctness has swung too far. Consequently, we need to bring it back a bit. The way in which that can be done is by instilling more Christian standards and morality in our society.

These regulations discriminate against religious bodies, as has been said by the noble Lord, Lord Waddington. People who wear necklaces with a cross on, as I do, will be discriminated against, and that is wrong; people are entitled to have religious freedom and should not be discriminated against for that. I shall support the amendment of the noble Lord, Lord Waddington, today if he puts it to a vote.

My Lords, my noble friend Lord Waddington’s amendment would not prevent the passing of these regulations. It is an amendment that regrets a certain result from the present situation; that is all. That is well expressed in a press release that the Equalities and Human Rights Commission issued on 11 August. It applied for leave to intervene in the cases to which the noble Lord, Lord Lester, referred. It said then:

“If given leave to intervene, the Commission will argue that the way existing human rights and equality law has been interpreted by judges is insufficient to protect freedom of religion or belief”.

The commission has withdrawn that as a result of representations made to it, which does not entirely increase my confidence in its independence, but that is what it said originally. That is really what my noble friend’s amendment expresses; it seeks not to change what the regulations are proposing but simply to express a concern that may be taken into account in whatever emerges in future.

My Lords, I rise to express concern about the draft regulations being moved by the Minister, to speak against the amendment moved by the noble Lord, Lord Waddington, and to support the amendment tabled by the noble Lord, Lord Low of Dalston.

I say to the noble Lord, Lord Waddington, that I speak as someone who is proudly married—for 31 years today—but who strongly supports the Equality Act and the regulations that flow from it. I am proud of the Act and of the fact that those on all Benches in this House supported it when it was a Bill in this House.

The duties that we are discussing today are critical in delivering the public sector equality duty that is enshrined in the Equality Act 2010 to provide better all-round services to the community and all its diverse members. The purpose of the duties was explained carefully by the noble Lord, Lord Lester. Contrary to the views expressed by the noble Lord, Lord Waddington, and others, I believe that as a result of three rounds of consultation the duties appear to have been watered down and therefore fail to deliver the main objective to ensure the better performance of the general duty by public bodies. It is difficult to understand how a single objective can enable a public authority to meet the range of its equality duties, and I would be grateful if the Minister could explain this point more fully.

As noble Lords will recall, the Equality Act 2010 brought together existing equalities legislation, with its specific equality duties, and added additional equalities-specific protected characteristics, as the Minister explained. Concern was expressed at the time that the new duties would be less robust, and I think this is precisely what has happened. The regulations before us are a step back from the level of specific equality duties that public authorities are currently used to under provisions on race, gender and disabilities. Yet there is evidence that the existing specific duties, which are more specific than those that we are being asked to approve today, have been useful in assisting public bodies to make progress with equality. The noble Lord, Lord Low, has given tangible examples of the ways in which specific equality duties are being used to improve outcomes, both for disabled people and school pupils, and as we have heard, positive outcomes for pupils include better access to facilities, feeling valued, developing higher aspirations, and narrowing gaps in performance and participation in sport.

In the wake of the disturbances this August, I suggest that these outcomes have become more, rather than less, important. The purpose of specific duties is to give proper guidance to public bodies whose main job is often not about equality but rather about healthcare, education, recreation, et cetera, but all these bodies want to improve the delivery of their services in a way that has equal outcomes for all. I must say to the noble Lord that I am not saying sameness for all, but equal outcomes, which is a very different thing. Despite the Minister’s assurances—

My Lords, it was the noble Baroness’s Government who decreed that the upper ranks of the Civil Service should be representative of the community that it serves. I take it from the way she nods that that is her view. Surely we do not want 15 per cent of near illiterates and 10 per cent of near innumerates in the higher ranks of the Civil Service? Should we not have a more subtle way of deciding these things than passing over able candidates in favour of less able ones, for the first time since the 19th century?

My Lords, I do not think that the Act suggested that people should be appointed if they are not properly qualified, or that the best person for the job should not have it. The Act said that there should be equal opportunities, so that whether you are black, white, disabled, yellow, orange, gay, lesbian, or heterosexual, you should have equality of opportunity, and the best—

My Lords, the Act refers specifically to protected definitions of people. The very word “protected” means that they are going to be treated more equally than others.

No, my Lords. It defines certain disadvantages, but it does not mean to say that some people are more equal than others. We are not in an Animal Farm situation. We are saying that every individual has their intrinsic worth as a human being, and that they should be treated in an equal manner and given equality of opportunity. That is what I believe we are all—or most of us—agreed upon in this Chamber.

My Lords, the word “protected” simply means those protected against discrimination in those categories. However, it seems to me that the noble Baroness was giving a very narrow interpretation, which may be why she agrees with the noble Lord, Lord Low. May I try to say what I think the regulations mean? Regulation 3 says that each public authority,

“must prepare and publish one or more objectives it thinks it should achieve to do any of the things mentioned in paragraphs (a) to (c)”,

but that does not mean, in my judgment—no doubt the Minister will want to respond to this—that if they publish only one objective, that is sufficient.

With the greatest respect, the noble Lord is doing more than making an intervention; he is making another speech.

I do not think I know the difference, since I am asking a question. The question that I am asking, if I may be permitted to do so, is whether the Minister—

I am so sorry. I meant to ask whether the noble Baroness, looking at the wording, accepts that there would be a judicial review, or something worse, if one were simply to do what she suggests.

My Lords, these are questions for the Minister. I am just putting my views as the spokesperson for the Opposition. I go back to what I was going to say, about transparency. The Government rightly stress the need for transparency and accountability. However, it is difficult to understand how these can be enhanced when the public and public sector employees will not be able to compare the equality performance of similar bodies because the information will not always relate to the same issues or be measured in a standard way. Access to data is crucial, but it is difficult to interpret those data if they are not given in a standard way. Therefore, it will be more difficult for public authorities and those they serve to discover and understand what good practice is. There is a possibility that there will be a new postcode lottery. The Government have failed to provide clarity with these regulations. It could well be that the burden on public bodies will increase in some way. As the Council for Disabled Children says in its excellent briefing,

“the requirements should be clear to all public bodies who are required to comply with the specific duties. This purpose is better served by making these requirements explicit in the Regulations rather than leaving public bodies open to challenge because ‘implicit’ requirements have not been made clear to them”.

I have to say that I fundamentally disagree with the amendment tabled by the noble Lord, Lord Waddington, in relation both to freedom of religion and conscience and to burdens and bureaucracy. I must also disagree with the noble Lord, Lord Campbell of Alloway, who is in many ways my noble friend. During the passage of the Equality Bill we debated these issues long and hard and they were subject, as he rightly said, to amendments. The noble Lord, Lord Waddington, was wrong when he made the arguments at that time and he is wrong now. I am grateful to the noble Lord, Lord Lester, for pointing out the difference between the law of the land, which I believe is correct, and mischievous misinterpretations of that law, of which there are undoubtedly many. While I respect that around this Chamber we have different views, I am concerned that perhaps some of the voices opposite are those of the modern Conservative Party. I know that some on my Benches will disagree with me on that.

When we debated the Equality Bill, there was wide agreement on all Benches that the Bill—now the Act—was the right way to address discrimination and advance equality of opportunity in our tolerant British society. I believe that that is still the case. The noble Lord, Lord Waddington, says that specific regulations would be a burden on the public sector. However, I remind him that good regulations serve an important purpose. In this case it is to ensure that systematic inequalities can be challenged so that all members of our society can live and flourish without discrimination. The noble Lord dismisses the importance of equality of outcomes, whereas I suggest that outcomes and opportunity are equally important.

The noble Lord, Lord Low, is right to stress the need for the general equality duty to produce tangible and positive outcomes. I fear that the regulations have been weakened to such an extent that the outcomes will be neither tangible nor positive. In the other place, the Minister made a commitment to review the duties in two years’ time. That is very welcome, but I ask the Minister to confirm that such a review will take place and to provide further information about a timetable for it. How will the evidence be gathered? Will the review be based on progress towards the aims set out in the general duty, rather than simply on the aspects covered by the specific duties, and will it be public? I also ask the noble Baroness for a clear commitment that the specific duties will be amended if the review reveals that public bodies have not made sufficient progress in eliminating discrimination and advancing equality of opportunity.

The equality duty should be one of the most effective ways of combating institutional discrimination and putting the public sector at the forefront of efforts to secure equality. Contrary to what the noble Lord, Lord Waddington, said, in this seemingly fractured society I believe that issues relating to equality and discrimination have assumed greater importance and that regulations to define the specific duties are vital to delivering the general equality duty. As I said earlier, I would be very happy to support the noble Lord, Lord Low, should he wish to vote on his amendment.

My Lords, I will deal with the points raised by my noble friend Lord Waddington and the noble Lord, Lord Low, separately, but I will begin by dealing with my noble friend’s amendment. I recognise that he speaks with passion and that he has been consistent in his arguments. I stand here as somebody who may not be absolutely in tune with everything on the subject of equality, but I do know the outcomes of discrimination and inequality. I think, therefore, that what we are doing here today is helping to address those issues. While there may be Members among my noble friends behind me who think that we have gone too far, I say to them: ask the people who do not have access to those opportunities and you may get responses that are difficult to take if you have never had to undergo such discrimination yourselves.

My noble friend has made clear his concerns about the issue of religious freedom.

In her description of access, has the Minister taken into account the fact that the Government’s own cuts in legal aid will prevent people with those protected characteristics from enforcing their rights? They represent a savage onslaught on protected characteristics and access to justice.

My Lords, I will continue with my notes. My noble friend has made clear his concerns about the issue of religious freedom and its relationship with equality law. The Government are committed to striking a fair balance between religious freedom of expression and the rights of people not to be discriminated against whether at work or at school and when buying goods or using services. A fair balance is what the Equality Act 2010, and the legislation it replaced, achieves. I know that my noble friends and others would agree with that. The Act provides protection from discrimination because of religion or belief. It is drafted carefully to ensure that people are protected from being discriminated against but different treatment is permitted where this is justified—for example, because it is necessary to protect religious freedom of expression.

In addition, in service delivery, non-commercial religious organisations are permitted to restrict the provision of services because of religion or belief, or because of sexual orientation in some circumstances, but discrimination because of sexual orientation is not permitted when a religious organisation is providing services on behalf of a public authority. Where a policy or practice has an adverse effect on people of a particular religion, it is permitted only where it can be objectively justified. As you can see, the legislation has been framed carefully to ensure that religious organisations can act in line with their doctrine while ensuring that people are protected from being subjected to discrimination and harassment because of their sex or sexual orientation, for example. However, for commercial businesses the position is different. In practice, this means that someone who runs a business or provides a service to the public can of course hold and express their religious beliefs, whatever those may be. However, the right to manifest religion or belief may properly be limited in certain circumstances, including where it interferes with the rights of others. The Government are clear that these measures strike a fair balance between religious freedom of expression and the rights of people not to be discriminated against. Thus the Equality Act 2010 delivers a level playing field rather than a hierarchy of rights.

The equality duty covers the protected characteristic of religion or belief. This is only right. Had it not been included, there would have been a hierarchy of discrimination whereby discrimination and disadvantage suffered because of religious beliefs would effectively have been deemed less important than discrimination and disadvantage because of gender or race, for example. Indeed, it would have been more complex than that, as Jews and Sikhs would have been covered—as they are covered by the race aspect of the duty—but Christians, Muslims and Humanists would not.

Indeed, the equality duty now covers all the protected characteristics and provides the legal framework for considering how decisions affect all groups and, where necessary, how different needs can be balanced. The specific duties which we are discussing today will help to ensure that public bodies do that balancing correctly.

It is the custom in parliamentary debates for Ministers to respond to debates. Does the noble Baroness intend to reply to the debate and individual points made by Members?

If the noble Lord were patient he would know that the points I am making relate to the points raised, and I will also directly reply to points raised by noble Lords.

The specific duties we are discussing today will ensure that public duties do that balancing correctly. They will open up the decision-making and performance of public bodies to scrutiny. If people think that their religious freedoms and beliefs are being overlooked by public bodies, or that people of their religion are being treated unfairly, they will be able to look at the equality information that public bodies will be required to publish and to hold them to account. They will also be able to question a public body if they feel that the organisation is inappropriately advancing the interest of one religious group over another. Relevant data will be in the public domain for them to check.

On the issue of costs, it is simply not the case that the regulations will unnecessarily burden the public sector. On the contrary, they are designed to help public bodies comply with the equality duty and, by harmonising the three previous equality duties on race, gender and disability into a single duty and making the new single equality duty less bureaucratic and more straightforward to comply with, we are delivering long-term savings for the public sector. We estimate that the compared costs of complying with the previous duties and with the new single equality duty and the new specific duties will result in a net benefit to the public sector of £11 million in year one and about £19 million a year from year two onwards. That will deliver public services which are better tailored to the different needs of service users, which is what the equality duty is designed to do. We will also save public bodies money in the long run.

Perhaps I may interrupt my noble friend for a moment as one who intended to make a speech but was unable to do so because the noble Baroness got up too quickly. Does my noble friend agree that it is in fact impossible to have equality between people? You can have equalities of opportunity for people to use, but you cannot possibly say that two people are equal.

My noble friend is right, but it is about ensuring that there are those equalities of opportunity. That is what the regulations lay out.

My noble friend Lord Waddington asked about adoption agencies and the fact that some have had to close. I think the noble Earl, Lord Listowel, also mentioned that. Let me be clear that the Equality Act (Sexual Orientation) Regulations 2007 and the Equality Act which replaces them did not and do not mean that faith-based adoption agencies must close. Nor do they mean that those agencies cannot restrict their services of recruiting and assessing prospective adopters to people who are Catholic. They just mean that those agencies must not refuse their services to prospective adopters just because they are lesbian, gay or bisexual. It is an important principle that publicly funded services should be provided to people irrespective of their sexual orientation.

I could not quite understand what the Minister just said. Could she rephrase it, because it was not clear to me?

The noble Earl may read Hansard tomorrow.

In response to my noble friend Lord Tebbit, I declare an interest as a person who has a business in the care sector. The specific duties will ensure that those receiving publicly funded services are responded to through those services more appropriately to their requirements. The duties do not create discrimination; they will enhance the services that people receive.

My noble friend waxed almost lyrical on the even-handedness of the regulations in relation to religious discrimination. Will local authorities be required to report on whether schools serving meals to Christian children can serve halal meat covertly without the parents of those children being told?

My Lords, my noble friend asks a question that I may not be able to respond to straight away. I assume that it would be up to the school and the school’s policy to inform parents of what they are doing in activities including school meals.

The noble Lord, Lord Low, has pressed the Government to replace these regulations with the draft published in January. I must stress from the outset that I wholly share the noble Lord’s wish that the equality duty should produce tangible, positive equality improvements for people who experience discrimination and disadvantage. His record on pressing for such improvements for disabled people is to be respected and admired, and I can assure him that we seek to achieve the same ends. We differ only on the best means of achieving them.

As I explained at the beginning of this debate, the equality duty set out in the Equality Act 2010 is a stronger and broader duty than the previous equality duties on race, disability and gender. By providing a clear explanation of what it means to have due regard to the need to advance equality of opportunity and foster good relations, the new equality duty is designed to focus the attention of public bodies on the aims they need to consider when carrying out all their functions.

In addition, in respect of disability, the equality duty also makes clear that consideration of the need to advance equality of opportunity for disabled people includes considering the need to take steps to account for their disabilities. This important and helpful clarification was the result of an amendment put forward by the noble Baroness, Lady Campbell. Noble Lords should be assured that the equality duty will be an effective lever for delivering equality improvements for those who still regrettably experience discrimination and disadvantage.

On the detail of the concerns that the noble Lord expressed, the January draft regulations were not implemented so we cannot know exactly what effect they would have had. The regulations that the Government now propose are the right approach and will help public bodies perform the equality duty better. There was a full public consultation on an earlier draft of the specific duties last year and a further public engagement exercise on them earlier this year. The Government are grateful for the many responses they received and have carefully considered them. Plainly the regulations—

I am very grateful to the noble Baroness. Was not the simple point made by my noble friend Lord Low that, in relation to disability—which he took simply as an example—the regulations that are now proposed go less far than the existing specific duties which, he says, are working well? He says that is the evidence. Is that not a good reason to vote for his motion?

No, my Lords. In continuing with this, the noble and learned Lord will see that we are trying to lay out a better informed basis for the duty, for public authorities to respond to their own local needs. It is not about central diktats that impose duties that have to be responded to regardless, but about being able to take into account what is needed by those public bodies in their particular areas. Once the noble Lord, Lord Low, has heard what I have to say, he will probably feel satisfied that we have addressed his concerns in what we are proposing.

Some equality groups would have liked us to have set very prescriptive specific duties, particularly regarding what needs to be published.

I apologise. My noble friend assumes that our courts will not exclude matters of religious freedom but accept and adjudicate on them. I presume she accepts that, contrary to what I suggested.

If my noble friend allows me to continue he will be satisfied with what I am proposing.

The regulations before noble Lords now require public bodies to publish information to demonstrate that they are complying with the duty but give them freedom and flexibility to do that in the way that makes sense for their particular circumstances. That is the best possible outcome. The key to our approach is to move to democratic accountability through transparency. If service users and local groups do not see the information they need in order to see how their public bodies are performing on equality, they will rightly press for information to be published. And if the information shows insufficient progress, they will press public bodies to do better.

As I have said, we are commissioning the production of a toolkit which will help voluntary and community organisations to use the equality duty to hold public bodies to account for their performance on equality. In contrast, the January draft regulations were too prescriptive. Every meeting a public body had would have had to be logged and the minutes published, and public bodies would have had to publish information which was not helpful to the public in holding them to account, simply because they had looked at it. Smaller local authorities, in particular, were concerned that complying with those earlier proposals would have been too onerous. The Government have listened to those views, and share their concerns. The guidance will make clear what information public bodies should consider publishing. Crucially, the regulations provide flexibility, so that public bodies can develop approaches which fit with their particular circumstances. What is right for a small school will not be the same as what is right for a large Department of State, and this balance is right.

Before I conclude, I will respond to one or two points raised by noble Lords. The noble Lord, Lord Low, and others, have asked about the reviewing of the regulations. We will take note of the review of the regulations and consider how they have impacted and whether the public bodies have posed challenging objectives themselves—if not, we will have to address those as they come along. The review will include a major survey of public bodies and representatives of the different types of organisations, it will speak to the voluntary sector and the community sectors and it will also work from information from the Equality and Human Rights Commission.

The noble Lord, Lord Lester, comprehensively outlined what this Government are trying to do. I think that across the three major parties there is general agreement that we need to go forward by ensuring that public bodies are accountable, that they are able to show that they are taking due regard of the processes of ensuring that all protected characteristics are included in the forward planning of public bodies and the services they offer. In conclusion, I feel confident that the draft regulations will enable the public to hold public bodies to account for their performance on equality. This will be the real driver for delivering equality improvements and helping us achieve a society which is fairer and provides equal chances for everyone. I hope that the noble Lord, Lord Low, feels assured by my remarks.

My Lords, we have had a very good debate, and I would like to thank all those who have taken part. I will not detain the House for long. I am sorry to pick on the noble Lord, Lord Lester, but in his contribution, he very neatly illustrated all that is wrong with the present situation. His line was perfectly simple: “There is nothing wrong with the law, so there is no need for us to register our concern about abuses, as the noble Lord, Lord Waddington, wants to do in his amendment, and there is absolutely no need to register our concern, let alone do anything about the abuses”. The noble Lord, Lord Lester, can live quite comfortably with the injustices, but I have to tell your Lordships that I cannot. When the adoption societies were forced to close, that was in accordance with the law. It was a gross injustice. The noble Lord, Lord Lester, can live with it; I cannot. When Brighton and Hove City Council withdrew funding for a care home because it did not like the owners of the home refusing to ask people about their sexual preferences, that was a gross abuse of power. The noble Lord, Lord Lester, can live with that sort of abuse of power; I cannot. When people are sent home from work because they want to wear a cross to signify their religion, I think that that is a gross abuse of power. The noble Lord, Lord Lester, can live with it; I cannot. We have an opportunity this afternoon to show that we have not taken leave of our senses. We are concerned about these abuses. We want to make it plain to people—

I am going to finish now. We want to make it plain to people that there is real concern throughout the whole country. We stand for fair, not unfair, behaviour. Let us make that plain this afternoon by voting for my amendment. I am happy to press it now and I ask noble Lords throughout the Chamber to join me in the Division Lobby.

Amendment to the Motion

Moved by

As an amendment to the Motion in the name of the noble Baroness, Lady Verma, to insert at the end “but that this House regrets that the Government have seriously weakened the Regulations, making it more difficult to hold public bodies to account; and calls on the Government to withdraw the Regulations and re-lay the earlier version published in January which required public bodies to publish information on equality analyses they have undertaken, to set objectives designed to facilitate compliance with the General Equality Duty and publish information about the engagement they have had with affected groups when developing these objectives, and to report annually on progress towards meeting these objectives, all of which is critical to ensuring that the General Equality Duty produces tangible and positive outcomes.”

My Lords, what we have witnessed this afternoon is nothing more nor less than a backlash against equality legislation—certainly in the debate if not in the vote. It was a slightly hysterical, indeed apocalyptic, backlash from people who, as the noble Lord, Lord Lester, said, are basically against equality legislation. As I made clear when moving my Motion, I hold no brief for the excesses of zealots or the ignorant; my Motion seeks merely to underline those elements of equality legislation which have been found to have value in helping public authorities better to understand the needs of historically disenfranchised sections of the community and which the Government embraced scarcely more than six months ago.

The noble Lord, Lord Lester, has dubbed my Motion as leading to overregulation, although I hope that he might on reflection withdraw the charge of it being the “worst kind” of overregulation. We must all have the greatest possible respect for the noble Lord, Lord Lester, who basically invented equality legislation—so it is all his fault, really. We can debate the detail of regulation, and I say with respect that it may be more appropriate to some strands of equality legislation than others. I drew attention to the value of equality analysis and engagement with affected groups—the noble Lord, Lord Lester, might disagree about that; there is room to differ over those—but surely no one could suppose that a duty which is capable of being interpreted as a requirement to set only one equality objective every four years is appropriate guidance to give on how to go about implementing the general equality duty across the piece. I do not see how anybody could suppose that that was unduly burdensome regulation.

Although it has at times been a slightly ill-tempered debate and precious few noble Lords have spoken on my side of the argument, I am grateful to all those who have contributed. However, I persist in believing that my Motion gives expression to the point of view of those who espouse a more moderate and practical approach to advancing equality. I propose to test the opinion of the House in the confident expectation of discovering that the strength of liberal opinion in it remains greater than has appeared in the debate.

Motion agreed.

Scotland Bill

Second Reading

Moved By

My Lords, as your Lordships’ House’s Constitution Committee said,

“The Scotland Bill is a measure of clear constitutional significance”.

Indeed, this Bill will strengthen Scotland’s position within the United Kingdom by further empowering the Scottish Parliament and making it more accountable to the Scottish people. I do not think that I have said anything controversial.

The Minister had said something very important: this Bill is a matter of clear constitutional significance, not just to Scotland but to the whole of the United Kingdom. Does he not think that it is a disgrace that we are starting to discuss the Bill at 5.35 pm, and that we are only going to have half a day for the Bill, when in 1998 the Scotland Bill had two days at Second Reading? Is that not outrageous, and are the Government Whips not culpable in relation to that?

My Lords, when the business was laid and agreed by the usual channels—I am delighted that the noble Lord, Lord Bassam, is here, and will be able to confirm that it was—it was not of course known how many speakers there would be. There are, I think, three dozen speakers on the Scotland Bill today. We did not know that when the business was agreed, but it was agreed. It is the normal way of things that when there is divisible business, that business comes first. Again, that was agreed by the usual channels for the convenience of the House. We have just seen this afternoon how convenient it is for the House, because in the two earlier Divisions just short of 400 Members went through the Lobbies. Clearly, it would not have been convenient for those Members to stay here until late this evening.

Three dozen people have put their names down to speak. It is not unusual for a Second Reading to go beyond the normal 10 pm deadline, and, as I say, it has been agreed by the usual channels. I think we would be better to get on with it, as otherwise it will get later still.

I support what the noble Lord, Lord Foulkes, has said. By the way, Second Readings are divisible, but the tradition is that we do not divide the House on Second Readings. This is an important piece of legislation, and I am afraid that this situation is not really for the convenience of those of us who care deeply about the legislation. If everyone took the 15 minutes which the Companion allows, I would have to wait until 2.30 am to hear the views of the only woman Secretary of State for Scotland, who is number 33 on the list. This is a scandalous way in which to treat Members of this House, and important constitutional business.

My Lords, I, too, support what has been said. I have a strong view about this, because I regard it as an important issue for the United Kingdom. It is very important that we do all that we can to preserve the union. I think that, if we deal with Bills like this in this way—at this moment as far as I can see we are likely to go on beyond midnight—it cannot be desirable for the House. I have to say to the government business managers that it is not good business management to end up in this situation. They have brought people back for two extra weeks as well as bringing the House back a week early, and yet we will still be dealing with this probably after midnight.

I hear what the noble Lord says, but there are a lot of people here anxious to speak. There are in fact three dozen such people. Some have come from Scotland—perhaps on the train or the aeroplane—specifically to speak. Therefore, it would be inconvenient if we did not continue. Everything we do in this place is important. I do not think that we should be looking at this in pecking-order terms. We do know that it is convention—just as the noble Lord, Lord Forsyth, said about voting convention—that we first have what is perceived as divisible business. The usual channels agreed this; it may have been some time ago, but it was agreed, and so I think we should proceed.

My Lords, forgive me for intervening, but would it not be much more sensible, for a Bill of this constitutional importance, to deal with half of it today, and half on Friday? Then we can all do it properly.

My Lords, I only venture into this to say that I think that the Government are wise at all times to be flexible in their approach. Although I am part of the usual channels, I must say I did predict at the time that this would not be an easy passage for the Bill. I go no further than that, because I do not want to undermine the effectiveness of the workings of the usual channels. However, I think that noble Lords agree that these are points that are very well made to the House, and they have validity.

My Lords, both sides of the usual channels have no doubt heard the points that have been made. I reiterate the point that this is a Bill of constitutional importance, and I think that it is important that we now make progress to debate it. Given the quality of the speakers—as is the case in of all your Lordships’ House’s debates—I think that, looking down the list of former Secretaries of State, former law officers, former Members of the Scottish Parliament, former junior Ministers in the Scottish and Scotland Offices, we are clearly going to have a well-informed debate, and one that is worthy of the importance of this Bill. I believe that the Bill will strengthen Scotland’s position in the United Kingdom, it will empower the Scottish Parliament, and it will make that Parliament more accountable to the Scottish people. It delivers on our coalition agreement to implement the recommendations of the Calman commission. It is in fact the biggest transfer of fiscal responsibility within the United Kingdom since the Act of Union in 1707, and delivers the first major change to the workings of the Scottish Parliament and Scottish Ministers since that Parliament was established in 1999.

For its first decade and more, the Scottish Parliament has been accountable to the Scottish people for the money it spends. We believe the time is now right to make it accountable for the money it raises—one of the fundamental changes that this Bill will bring about. Many noble Lords present will remember, and indeed took part in, the debates on the Scotland Bill in 1998 in one House or the other. They will recall, however, as any look at the record shows, the significant scrutiny that this House afforded to the Scotland Bill at that time. I notice the noble Lord, Lord Sewel, allowing himself a small chuckle. With all due respect to all the others who took part, he did much of the heavy lifting on that Bill and deserves credit for that. I have no doubt that those who served in scrutinising the 1998 Bill, and indeed many other noble Lords, will afford the current Bill the same level of examination to ensure that it too delivers the new powers that will benefit Scotland.

I believe that the Scottish Parliament has been a success and is here to stay. Indeed, that was the first conclusion of the Calman commission. The Scottish Constitutional Convention, of which I and other noble Lords were members, built up the case for the 1998 Act and set the country on the path towards creating a Scottish Parliament, which is now an important part of Scottish life. Decisions are now taken closer to the people they affect. Decisions on housing, education and hospitals are made in Scotland, for the good of the Scottish people by a Parliament that they have elected to serve them. Devolution in Scotland has delivered notable policy initiatives: free personal care; a Scottish Drug Enforcement Agency; long-overdue land reform; proportional representation for local government elections; a smoking ban in public places, which paved the way for a similar measure in other parts of the United Kingdom. In what seems a relatively short period, devolution has become central to the way in which we work. Many of us in this Chamber have worked either for or with devolution and the Parliament in Scotland.

The Calman commission was established to review the settlement in light of experience and to recommend changes to enable the Scottish Parliament to serve the people of Scotland better. Improving the financial accountability of the Scottish Parliament was an important part of the commission’s remit, which was agreed by the Scottish Parliament and endorsed by the then United Kingdom Government. Membership of the commission included representatives from the three main United Kingdom political parties and from local government, experts in Scots law, business, education, community organisations and the trade unions. I must tell noble Lords that when, in 2008, I agreed to sit on the commission for the Liberal Democrats I was not anticipating that, three years later, I would be the Minister charged with taking the recommendations through the House—not that it would have had any influence on recommendations that I agreed to.

We wish to thank the chair of the commission, Professor Sir Kenneth Calman, the other commissioners and Professor Anton Muscatelli and the independent expert group on finance, which supported the commission in the work that it did. It was work invaluable to the future of devolution and I particularly look forward to the contributions of my fellow commissioners today, the noble and learned Lord, Lord Boyd, the noble Lords, Lord Elder and Lord Selkirk, and the noble Earl, Lord Lindsay, who brought their wealth of experience and understanding to the commission. The Scotland Bill has enjoyed widespread support across the political spectrum. Consensus on its purpose and direction has been the order of the day. This Government are delivering the next chapter in Scottish devolution and remain committed to doing so, with the support of the three main United Kingdom-wide parties. It is on the basis of cross-party consensus that the Bill has been taken forward, alongside a commitment to consider suggestions from others, including the Scottish Government, as we proceed.

Those of us who campaigned for devolution wanted more decisions taken in Scotland by a Scottish Parliament but we also wanted to retain many of the benefits, to both Scotland and the United Kingdom, which come from remaining part of our United Kingdom. The devolution settlement was about getting that balance right. Of course, there will always be those who think that the Scottish Parliament should be responsible for everything and there are those who think that devolution has already gone too far. However, by and large, we have managed to maintain consensus while bringing forward a strong set of improvements to the original settlement. The fact that the Calman commission was not inundated with representations to make fundamental changes to the division between devolved and reserved matters is, I believe, testimony to the judgment of the architects of the 1998 Act.

We will strengthen devolution by providing new powers to the Holyrood Parliament. In 1997, the Scottish public voted for a Parliament that could change the rate of tax within a limited margin. That power has never been used. In fact, the current Scottish Government who, as we know, are forever calling for new powers actually allowed this tax power to lapse last year. The United Kingdom Government do not want to see Holyrood lose its fiscal powers, rather the opposite. The financial powers contained in the Bill are, as I have indicated, the largest transfer of financial powers out of London since the United Kingdom was created. The Parliament will become accountable for raising more than a third of the money it spends.

The Bill will create a Scottish rate of income tax by cutting 10p from every income tax rate, reducing the Scottish block grant in proportion and obliging the Scottish Parliament to set a new rate to meet its spending plans. It will allow Scottish Ministers to borrow up to £500 million for current spending and up to £2.2 billion in capital spending. In the light of a request from the Scottish Parliament, we will make part of that capital investment available in pre-payments for approved projects by 2012.

The Bill abolishes the variable rate of income tax—the 3p rate, which was approved by a referendum of the Scottish people—so it is taking away a specific power approved by referendum. Why do the Government not think it necessary to have a referendum, given that they are going to introduce a further power that goes beyond the 3p they are abolishing and which was approved by the people in a referendum?

The answer to that is that we have absolutely moved forward; the Scottish Parliament has been established and it is very clear that what we are proposing has commanded widespread consensus within Scotland. It was not only the product of a commission that took extensive evidence. It has been supported by the three UK-wide political parties and by the representatives of the Scottish people in the Scottish Parliament, as I will indicate later, by 121 votes to three. There is a broad consensus for that in Scotland and, with the honourable exception of my noble friend, I have not really heard any clamour for a referendum on the specific tax powers involved in this Bill.

As I indicated, it will also devolve landfill tax, stamp duty and the power to create new taxes. The Bill will phase in these powers up to 2016. It will provide a whole new set of policy levers that will be at the disposal of the Scottish Government elected in that year. In his David Hume Institute address last week, my colleague the Secretary of State set out some possibilities that would be open to future Scottish Ministers. With their new tax powers, the Scottish Government could stimulate the construction sector and boost the housing market by cutting stamp duty by, for example, 5 per cent at a cost of £25 million to the Scottish budget, or ensure that Scotland competes to be the greenest country in Europe by proposing innovative new green taxes, offset by other tax cuts, to ensure that Scotland moves the tax burden from people to pollution. They could use the new Scottish income tax to raise investment in public services higher than is the case in other parts of the United Kingdom, or do just the opposite—cutting the rate to attract bright and ambitious people to Scotland and reduce the brain drain from within.

Those are all options. We are providing the power; it will be up to the Scottish Parliament, elected by the people of Scotland, as to how those options are exercised. However, the Command Paper published in November alongside the Bill stated that for every penny by which one increases income tax, the yield will be around £450 million—or 1.7 per cent of the present Scottish budget. That gives a flavour of the considerable powers that this Bill provides to Scottish Ministers. This is a big shift to the financing of public services in Scotland. It will deliver real financial accountability, as more than a third of current spending will be funded by taxes determined and raised in Scotland. It will give the Scottish Parliament a real stake in Scottish economic performance, as a significant proportion of the budget for public services in Scotland will come directly from taxes set and raised in Scotland. Stability to the Scottish budget will continue to be provided by continuing block grant from the United Kingdom Government.

Delivering the Donald Dewar lecture in 2003, my noble friend Lord Steel of Aikwood said:

“No self respecting Parliament should expect to exist permanently on 100% handouts determined by another Parliament, nor should it be responsible for massive public expenditure without any responsibility for raising revenue in a manner accountable to the electorate”.

I believe that this Bill addresses that critique. The Calman commission also concluded that the original divide, as I have indicated, between devolved and reserved policy powers was broadly right. The Bill therefore does not seek radically to alter the boundary but instead updates the balance between reserved and devolved powers in specific areas, as recommended by the commission. We are devolving the power to set the national speed limit and the drink drive limit, to regulate air weapons. Recognising that this is a two-way street, where a consistent approach across the United Kingdom is required, we will legislate at a United Kingdom level, specifically over the winding up of companies and the regulation of healthcare professionals, as provided for by the Bill.

The functioning of the Scottish Parliament itself will be improved by measures in this Bill. The Parliament will be able to elect additional deputy presiding officers, it will have greater discretion to set its own Members’ interests regime, and there will be greater flexibility about the makeup of the Scottish Parliamentary Corporate Body. Closer working relationships between UK and Scottish Ministers will be required. Scottish Ministers have a role in the appointment of a Scottish member of the BBC Trust, and a Scottish Crown Estate commissioner.

The Bill also provides for some largely technical and relatively uncontroversial updates to improve the Scotland Act and help devolution to operate more effectively. Improving devolution for Scotland is an ongoing process, and while constitutional legislation is rare, the Scotland Bill provides an opportunity to make some amendments. In my role as Advocate-General, I am responsible for providing advice on Scots legal issues to the United Kingdom Government, and I therefore thought it right to take the opportunity to review the existing Scotland Act. There are a number of technical measures in the Bill.

I also took the opportunity to revisit an area of the Scotland Act which was raised with the Calman commission by the judiciary, but on which the commission made no recommendation. I established an expert group under Sir David Edward to consider the way in which acts or failures to act of the Lord Advocate that are incompatible with Community law and convention rights are dealt with. Clause 17 of the Bill implements the findings of that expert group and simplifies process, with human rights and European Union law issues being referred to the Supreme Court.

The Bill represents a large and historic change for Scotland, and therefore deserves proper scrutiny, which I am sure this House will give it. Alongside the scrutiny it received in the other place, the Scottish Parliament has examined and debated the Bill, and the Scottish Affairs Committee at Westminster provided a rigorous analysis of the Bill’s provisions.

Your Lordships’ House’s Constitution Committee has noted that the Bill is of clear constitutional significance, but also said that there were no issues of constitutional concern in the Bill. I noted that the Committee welcomed the extensive deliberation which preceded introduction of the Bill. Those of us who are veterans of the PVSC Bill and the Fixed-term Parliaments Bill will be very pleased with that particular commendation from the Constitution Committee. The Delegated Powers and Regulatory Reform Committee also noted no issues in the Bill.

The Government welcome all these reports, and thank those who have worked to consider this Bill. While the Calman commission’s balance and evidence process is the basis for the Bill, the Government have made it clear that we have never ruled out sensible and similarly evidenced suggestions for change. We have listened to recommendations made by the Scottish Parliament and the House of Commons Scottish Affairs Committee, and to advice from other stakeholders, and while we believe that the Scotland Bill package provides the right balance of powers for tomorrow’s Scottish Parliament, we nevertheless have made some amendments to the Bill, and the supporting non-legislative package.

These will give Scottish Ministers greater flexibility to exercise their new powers effectively; for example, by bringing forward to 2011 pre-payments—a form of cash advance to allow work on the Forth replacement crossing to begin. The Government have listened to other recommendations and tweaked the finance and non-finance aspects of the Bill and its accompanying package.

We continue to believe that the package set out in this Bill and the associated Command Paper will strengthen Scottish Devolution and Scotland’s place within the United Kingdom. It provides strong financial accountability to the Scottish Parliament, and the right balance of additional powers. It provides the Scottish Government and Scottish Parliament with new tools to deliver policies in Scotland to respond to new challenges.

The other place debated the Bill over three days in Committee on the Floor of the House. Committee days in this House subject to the Motion later, will take place as a Committee of the Whole House. It is right that legislation of such constitutional significance gains the level of scrutiny it deserves, and that no one is excluded from the process. The whole essence of the Bill has been about inclusion. All parties were invited to be involved in the Calman process, just as they were in the Constitutional Convention. Those parties and those people who accepted the offer have therefore had the biggest hand in shaping these, and therefore the future of devolution.

There is, of course, a relationship with another place, a place much affected by the provisions of this Bill, and that is the Scottish Parliament. As I have indicated, the previous Scottish Parliament overwhelmingly approved the Bill, with 121 MSPs voting for the legislative consent measure in support, three voting against, and one abstaining. The three main UK-wide parties, together with the party which currently forms the Scottish Government, voted in support of the Bill. I think we can say that the Scottish Parliament believes in the Scotland Bill.

A new Parliament with a new focus was elected on 5 May, and as we are all well aware, it represented a landmark change in Scottish politics. This new Scottish Parliament will consider the Bill again, and we will consider sensible recommendations for the Bill made in time for this House’s final amending stage. We will get the chance to consider any recommendations which come from the Scottish Parliament, and the Government will continue to work with the Scottish Parliament’s Scotland Bill Committee, which is considering amendments to the Bill. My right honourable friends the Secretary of State and the Parliamentary Under-Secretary of State will give evidence to the Committee on Thursday of this week.

The noble Lord, Lord Sewel, who is with us today, has given his name to a convention that Westminster would not normally legislate with regard to devolved matters on Scotland without the consent of the Scottish Parliament. This convention has been developed and embodies the respect that this Parliament has for the Scottish Parliament. In keeping with the spirit of the convention, the Government will continue to work closely with the Scottish Parliament Committee reviewing the Bill, and we will look to maintain the support of the Scottish Parliament for the Bill.

As is well known, the Scottish Government have expressed their desire to see additions made. We will look at these further proposals and set them against three tests: that the Scottish Government provides detailed proposals to strengthen the Bill; that the proposals maintain the cross-party consensus that has been worked up and developed; and that any such proposals are beneficial to Scotland, without being prejudicial to the rest of the United Kingdom as a whole. I will of course keep the House appropriately informed of any developments in discussions with the Scottish Government, which will operate under a banner of mutual respect.

I have no doubt that in the course of the next few hours, many noble Lords will wish to debate not only the detailed provisions of the Bill, but also wider constitutional issues of importance to which this Bill is related. Of course, as I have indicated, the political landscape has changed since the Bill was introduced into the other place. Most obviously, the Scottish Government have claimed their election success as a mandate for a referendum on independence.

The Scottish Government have still got a lot of explaining to do when it comes to their main objective of separating Scotland from the rest of the United Kingdom. They do not want to provide any detail on how or when they will conduct a referendum. Nor do they want to explain in any greater detail, to date, what they mean by independence. The people of Scotland deserve to be told, and we will keep pressure on them to provide the facts to the people of Scotland. The Government, along with other noble Lords, believe that Scotland’s future is a future within the United Kingdom.

The Scotland Bill is a vehicle for upgrading Scotland’s devolution settlement. It is a Bill founded on evidence. It is a Bill with a clear purpose and clear principles: to strengthen devolution within the United Kingdom and to make the Scottish Parliament financially accountable. It fixes some things that have not quite worked; it makes the Parliament and the Government of Scotland more responsible for money they raise; and it allows the Scottish Parliament itself to run more effectively. Crucially, it will leave the Scottish Parliament with more powers than it had before; mature powers for a maturing Parliament.

The package strengthens the United Kingdom, by providing a settlement with financial responsibility, but it maintains the key elements of risk and benefit sharing that help the United Kingdom as a whole to perform effectively on the world stage and deliver fairly for all people. Stronger devolution which works for Scotland works for the United Kingdom, and I believe strengthens the United Kingdom for years to come. I commend this Bill to the House. I beg to move.

My Lords, we welcome this Bill in principle. Of course, it has been Labour, both in government and in opposition, which has been consistently in favour of devolution. It was the Labour Government who took the initiative in setting up the cross-party Calman commission, on whose work the Bill draws.

We must, however, recognise that the Calman commission produced its report in 2009. Many matters of significance for Scotland have occurred since the report. I will seek to look at a number of issues which have arisen in debate in Scotland that are not as yet found in the Bill. I accept immediately that not every new issue should be reflected in the Bill, but where an issue has emerged of constitutional importance, it should not be lost sight of. One does not anticipate that Scotland Bills will be a frequent occurrence, nor will opportunities arise often to correct constitutional difficulties.

First, perhaps I should say that at a time when economic growth in Scotland is hardly vibrant and unemployment threatens many in Scotland as well as in the rest of the United Kingdom, a focus on purely constitutional issues may seem to many to be at best a skewed priority. True, the Bill contains borrowing powers that could be useful if properly applied at this point in the economic cycle, but the welcome that such powers might receive will be muted if they are not put in place quickly.

I think that I understood the Minister to say that the borrowing powers may come into place in 2012. We certainly have called for them to be advanced to that year, and the Scotland Bill Committee and Scottish Affairs Committee reports both recommend that those powers be brought forward. We would welcome the Government bringing them forward to 2012. It would be useful for people in Scotland to know exactly when in 2012 the Government accept that capital borrowing powers will become available.

One should also observe the attention given to demands for new expanded powers, all claimed to be essential to the regeneration of the Scottish economy. This has led to scant scrutiny of the use of existing powers. The Scottish Government already have a wide portfolio of powers to contribute to economic growth. Their use, their non-use and the ostensible priorities might perhaps be subject to greater assessment and accountability.

I turn to the issue that the noble Lord, Lord Forsyth, has already referred to: a referendum on the question of the separation of Scotland from the United Kingdom, a subject that has engaged substantial debate in Scotland over a number of years. Since this year’s Scottish Parliament election, the issue of a referendum has come very much to the fore. Although there is scant evidence of public demand for such a referendum, the SNP Administration have committed themselves to this at some unspecified point before 2015. While we see no public demand for such a referendum, the issue will not simply vanish, given the SNP’s apparent commitment to it.

The prior constitutional question of law regarding any referendum is by what legal process such a referendum can be held lawful. To put it more acutely, can the Scottish Parliament lawfully put in place its own referendum on separation, set its own timing and questions and possibly ignore the obligations of Scotland to the rest of the United Kingdom? The question of lawfulness is inevitable, as in the Scotland Act 1998 the intention of Parliament was, unsurprisingly, not to put in place a mechanism for decisions on separation but solely to establish devolution in Scotland within the United Kingdom. It would have been remarkable if such a dramatic power to break the union by way of referendum had been included in the 1998 Act. After all, Section 29 of the Act provides that any reserved matter is outside the competence of the Scottish Parliament. Schedule 5(1) states:

“The following aspects of the constitution are reserved matters, that is … the Union of the Kingdoms of Scotland and England”.

Various ingenious attempts thus far to imagine some kind of power to hold a referendum—for example, “It’s just an opinion poll, not a referendum; it’s only advisory”—may at least be unlikely to survive a challenge in court. And no doubt they would be challenged, either by the law officers, the Presiding Officer of the Scottish Parliament or indeed by any concerned citizens or group of citizens. The question for the Government may become whether they should create a proper statutory power in the Bill for, say, a one-off referendum or whether they would countenance a unilateral, potentially unlawful declaration by the Scottish Parliament of its own power to run its own referendum, whenever. That would hardly be the chosen route of any Government committed to the rule of law. It would set a precedent with the most remarkable consequences for the UK. In any event, it would remain vulnerable to third-party challenge with potentially hugely embarrassing results. I encourage the noble and learned Lord the Advocate-General to pursue this issue with his ministerial colleagues, perhaps before he is obliged to consider it as one of his statutory duties in his separate role as law officer. To waver accelerates tension on this issue. I accept that there are many political arguments for the Scottish Parliament to run its own referendum, but the rule of law does not yield to political convenience.

I move on to another constitutional issue: the Supreme Court. This has come to prominence recently because of certain criminal cases in which the role of the Supreme Court has been challenged. Contention has arisen regarding cases involving criminal matters due to some recent cases where an appeal has been made to the Supreme Court on human rights points from the Criminal Court of Appeal in Scotland. In those high-profile cases, the Supreme Court has overturned the Court of Appeal decisions. This has precipitated much debate, not least because of wholly inappropriate criticism of the Supreme Court by the First Minister and the Justice Minister in Scotland.

This Opposition agree that the UK Supreme Court should retain its sole role in determining human rights and European treaty issues. Section 17 of the Bill, however, seems to create a number of obstacles to the speedy testing of compatibility issues. We will want to scrutinise these closely in Committee. One concern is that where Scottish procedures contain an incompatibility, some such obstacle may simply defer and hence magnify the difficult consequences of any finding of incompatibility. The Minister will of course be acquainted with the problems that arose over the slopping-out cases in Scotland and the way in which delay can magnify problems. The Scotland Act 1998 permits a challenge to be made at any stage, thereby potentially avoiding the entire criminal process being run through, where there is an incompatibility discoverable by early challenge.

Another concern is that, in respect of the certification of leave to appeal, Scottish devolution issues will be subject to an obstacle that does not apply to either Welsh or Northern Irish appeals on devolution issues. This seems to be creating an anomaly, and I look forward to hearing the explanation for it.

The apparent fortifying of the position of the Lord Advocate in that regard will also require scrutiny. It is presumably not the intention of the Government to erode the access to justice by persons prosecuted in Scotland. As a member of the legal profession, the Minister will be aware of the considerable disquiet that the Bill has caused in the profession in this area.

The Minister is also one of the many law officers required to look at Scottish arrangements. I move on now to look at the question of Scottish law officers. One of the notable constitutional features of the Scotland Act 1998 was the substantial role given to law officers in Scotland—namely, the Lord Advocate and the Solicitor-General. As part of the Government in Scotland, they are Ministers and bound by collective responsibility. The Lord Advocate—this is the unusual feature—is also the head of the system of criminal prosecution and may in fact lead any prosecution in court, make decisions directly on any part of any prosecution and make the decision on what plea in any prosecution may be accepted. These are wide-ranging responsibilities for a Minister, as I think this Minister would accept, and are increasingly seen as powers that do not belong as part of the responsibility of Ministers.

Having been appointed myself in the past to the position of Solicitor-General in Scotland, I was immediately struck by the tension between the roles of politically appointed Minister and prosecutor. It appeared that there had been no assessment of why Scotland did not have the equivalent of a Director of Public Prosecutions appointed by an open and objective process. When the Minister was Justice Minister in Scotland, he described the role of the Lord Advocate as both prosecutor and Minister as anomalous, and he was right. He would remain right if he were still of that view today.

Over the past decade, law officers have increasingly eschewed involvement in political issues. First the Solicitor-General, then the Lord Advocate, and now both law officers, have been drawn from the Civil Service staff of the prosecution service, a de facto if not de jure Director of Public Prosecutions. Given the awareness of the anomaly in having prosecuting Ministers and the desire on their part to avoid political association and political responsibility, this Scotland Bill is surely an opportunity to remove the anomaly.

The issue also contains within it the risk of yet further human rights challenges to the conduct of prosecution in Scotland, which has been somewhat embattled of late. The Government might consider modernisation of the position. This is not merely a desirable adjustment. It raises profound issues as to the constitutional position of the Scottish prosecution system.

Another feature of the constitutional arrangements under the Scotland Act I wish to look at is the position of the Auditor-General, who examines the economy, efficiency and effectiveness of Scottish Ministers discharging their functions. In the light of the trend to give greater financial powers and responsibilities to Scottish Ministers, the Auditor-General is likely to have, and certainly should have, a role of greater importance in scrutinising ministerial expenditures. A clearer, more transparent view of the Auditor-General’s responsibilities might be helpful. It is hardly good government where the auditor is powerless to act when he is aware of proposed unlawful or wasteful actions, involving expenditure of public money. We suggest that this is an area which calls for clarification of powers and we may look at this more closely in Committee.

I move on to taxation. Part of the statutory purpose of the Bill is to create greater financial responsibility and accountability in Scottish Governments. The Bill sets out a Scottish rate of income tax. One understands and welcomes the purpose, but we will wish to examine in Committee the scheme of taxation proposed. One notes, for example, the provision that envisages the Scottish rate of income tax being set each year by resolution of the Scottish Parliament. In a sense one is familiar with such a process in annual UK Finance Bills. But one is also familiar with the potential for disruption to business and to the economy more generally where substantial shifts in taxation occur.

Some questions arise. What consequences do the Government foresee from this transfer of fiscal power to the Scottish Parliament? What costs to business will result? What greater administrative burden will the transfer impose on business in Scotland? Is the tax base in Scotland sufficiently resilient to absorb the use of income tax for the budgetary purpose envisaged? What problems do the Government foresee in respect of the residence definitions, and the checking of days spent in Scotland by those who may work or reside in more than one part of the United Kingdom? We consider scrutiny of these issues in Committee to be necessary.

In conclusion, I repeat the welcome that we gave to the principles guiding the Bill. However, it should be clear that we consider that this Bill should not miss out the areas where the experience of more than 10 years of devolution shows a need for constitutional clarification, at least. We look forward to examining the Bill and its various amendments in Committee.

My Lords, I declare an interest, and not a patrimonial one. The First Minister of Scotland asked me and three distinguished lawyers to look into the relationship between the Supreme Court and the Scottish criminal courts. That of course followed the somewhat acrimonious debate which the noble and learned Lord, Lord Davidson, has just mentioned. The review group’s report will be published in a few weeks, perhaps less, and I hope that the Government will take notice of what we recommend.

However, when addressing your Lordships, I speak entirely for myself and not on behalf of my review group. I had intended to speak for between 20 and 25 minutes with plenty of forensic flourishes, as your Lordships would expect from an aged lawyer, but over coffee the noble Lord, Lord Hughes of Woodside, persuaded me that four or five would go down very well. Despite being a lawyer—bearing in mind that I am an unpaid lawyer of course—I shall try to be as brief as I can, and I shall concentrate on the one issue on which I can claim a degree of expertise. However, Clause 17 is a matter that will need to be looked at very carefully when we come to Committee, as both previous speakers have intimated.

Judicial decisions on human rights issues that have aroused public debate over the years have included the right to slop out, mentioned by the noble and learned Lord; the right of prisoners to vote; and, going back some years, the duty of the British Government to pay compensation to IRA hooligans, and their relatives, who had sought to murder a large number of people in Gibraltar. These decisions follow a kind of pattern from the court in Strasbourg, but ever since the Human Rights Act came into force in 1999, these decisions have been taken in this country. It is our own domestic courts that apply the human rights law in our domestic circumstances and in particular in Scottish criminal trials. Some of the decisions in those cases mentioned have caused enormous problems for the Scottish prosecution system.

The jurisdiction of the Judicial Committee of the Privy Council, created in 1998, has now been passed to the Supreme Court, which has taken some of the more recent decisions. As has been said, the debate about the Supreme Court was couched in offensive and unparliamentary language, and I totally and utterly deplore that. However, I shall confine myself to the merits of this particular clause, Clause 17. As has also been said, we are not just legislating about a case or two, an insult or two, or a judge or two. We are legislating about a system that will probably endure for decades, so let us please concentrate on the principles and let us try to get it right this time.

The decision to create a right of appeal from the High Court in criminal cases, for the first time since 1701, was enacted in the Scotland Act 1998. The system that was set up was inserted into that Act as if it were a necessary by-product of devolution. In my view, that was clearly a mistake. The creation of a non-Scottish court with final say on the interpretation of the European Convention on Human Rights listed in the Human Rights Act 1998 for the Scottish criminal courts was necessary, but had nothing to do with devolution. I accept that there was a need, flowing from the new devolution system, to have a United Kingdom supreme court with a jurisdiction relating to the vires question: that is, the possibility that the Scottish legislature and Executive might exceed the limited and well-defined powers that were conferred and devolved to them under the Scotland Act.

We talked about this question of vires in 1978, when I had the privilege of helping to conduct the 1978 Bill through this House, and we reached certain views then about the need for the Judicial Committee of the Privy Council to look into these matters, which have nothing to do with human rights. As a consequence of devolution—I emphasise these words—there was no need to give the Supreme Court or its predecessor any right whatever to be involved in criminal cases except in relation to vires, and possibly in relation to defining the law.

Therefore, while I accept fully that legal disputes regarding vires must go to the Supreme Court and must be appealable to the Supreme Court—I have no quarrel with that because these are truly devolution issues—the decision to make the European Convention on Human Rights part of our domestic law was entirely separate from the matter of devolution and should not have been dealt with in the Scotland Act at all. It was an accident that it was, and probably came about because during the passage of the Bill it became plain that it was not going to come into force the same day as the Human Rights Act. A temporary expedient was invented and it went into the Bill without proper scrutiny of any kind.

The Human Rights Act 1998 imposed duties on all public authorities to act in accordance with the human rights in the convention. However, the public authorities included such people as the Attorney-General, the Director of Public Prosecutions, the police and the Lord Advocate, whether or not they were devolved persons. The Attorney-General was plainly not devolved, and nor was the DPP, but the duty was imposed on them, too. The acts of the Lord Advocate, in exercising what are properly called his retained functions—the functions, mentioned by the noble and learned Lord, of being in charge of prosecution and investigating deaths in Scotland—are, as they have always been, functions of a very special character. The Lord Advocate shares no responsibility with his fellow Ministers for his or her decisions in relation to these matters. There is no collective responsibility either way.

Therefore, it was constitutionally inept to do what was done by the Scotland Act 1998—to ask the courts to treat the acts of the Lord Advocate in exercising his retained functions as though they raised devolution issues. That was precisely what the Act did. I borrow from the expert report of Sir David Edward, which was mentioned by the noble and learned Lord the Advocate-General. I think the noble and learned Lord, Lord Boyd of Duncansby, was a member of that group. It got it absolutely right; it was constitutionally inept to do what was done. Sadly, however, I fear that what is now contained in Clause 17 is also constitutionally inept and seriously flawed. That is a matter on which I shall not detain your Lordships in any detail this evening. We can look at it in detail in Committee.

Let me just hit the main points. First, the new section still focuses on the acts of the Lord Advocate. There can be happenings, events and circumstances in the course of a typical trial that cause a breach of someone’s human rights. However, they can be nothing to do with the acts of the Lord Advocate. They may be in spite of the acts of the Lord Advocate. The committee that I sit on could offer some examples of that. Not every incompatible act that happens in a criminal trial is an act of the Lord Advocate. It might be an act of the police, the Prison Service or the court itself. As far as I know, the Bill provides no route whereby breaches of human rights in criminal proceedings by persons other than the Lord Advocate can be brought to the attention of the criminal courts. That is a serious lapse.

I must also ask why it was necessary to give the Supreme Court extremely wide powers, as the proposed new section does in Clause 17. They are listed in new Section 98A(9). All that is necessary is for that court to define the convention law applicable, define the right, say whether there has been a violation and send the case back to the High Court of Justiciary to allow it to do what it has been doing since 1701 and apply the law to the facts and circumstances of the case in hand. In other words, that method of proceeding would enable the historical independence of the Scottish criminal justice system to be preserved.

There is also a question, which I shall not go into in any detail, about the procedure that is to follow this change. At the moment it is a rather complicated procedure. It is very messy, with lots of paper. It looks as though the new section will result in just a change of paper; otherwise it will be equally messy and equally likely to cause the delay that the noble and learned Lord mentioned.

I also touch on certification. No criminal case can go to the Supreme Court on a human rights issue in England, Wales and Northern Ireland unless the “local” apex court grants a certificate to say that a point of law of general public importance has been raised. Curiously enough, although the High Court of Justiciary has been the apex court for Scotland for centuries, the Scotland Act, in seeking to devolve power to Scotland, not only created a right of appeal for the first time in nearly 300 years but did not give the High Court of Justiciary the same right as is enjoyed in England, Wales and Northern Ireland. Why the court in Scotland should not be trusted to rule on this matter, I do not profess to understand.

In conclusion, the correct approach to this whole matter is to identify the true role of the Supreme Court in light of the Human Rights Act. The expert group, with whose conclusions—but not the consequences in the Bill—I agree, recommended that the legislation should,

“make explicit, and put beyond doubt, the nature and limits of the jurisdiction of the Supreme Court in relation to criminal proceedings … in Scotland”.

It goes on to say that the new,

“statutory formulation should be such as to concentrate attention on the compatibility with Convention rights of the criminal proceedings as a whole”.

Therefore, my final point is that I agree with this approach, which Clause 17 fails to adopt. The words “as a whole” are key to the matter. Respect for the historical role of the high court in Scotland is an abiding principle that should be observed unless there is some powerful reason to depart from it. I hope that in the course of these debates we can persuade the noble and learned Lord the Advocate-General to persuade his colleagues that this approach should be adopted. I certainly hope to return to this matter in Committee.

My Lords, it is a pleasure to follow the noble and learned Lord. I very much agree with what he said about the intemperate nature of the attacks that were made on the judges by the First Minister of Scotland. All I can say is that when I was Secretary of State, I made the odd intemperate attack—on the noble and learned Lord, actually—but had I done what the First Minister did, I am sure I would have been sacked the next day. I hope that lessons have been learnt from that.

I hope I shall not damage the position of the noble and learned Lord, Lord Davidson, by saying that his speech was absolutely excellent and that I agreed with many of his points. I shall come to that. However, because of the ridiculous position in which we find ourselves, I shall concentrate, for reasons of time, on Part 3 of the Bill, which is concerned with taxation. My noble and learned friend has said that this will bring accountability to the Scottish Parliament.

I am sorry that the noble Lord, Lord Robertson of Port Ellen, is not here. I have great affection for the debates that we had about devolution. I was opposed to it; he was in favour. He told me that devolution would kill nationalism stone dead. I have to say that the Bill looks curiously out of time. The world has moved on. We all know what the genesis of the Calman commission was. Wendy Alexander quite sensibly suggested that we should cut the Gordian knot and have a referendum on independence once and for all—that we should take the nationalists at their word. Unfortunately, she was not supported by the Prime Minister, so the three unionist parties got together and set up Calman in the hope that it would halt the nationalist bandwagon. That has not quite worked out. We now have a nationalist Administration without, it seems, any check or balance on it. The architecture of the electoral system under the Scotland Act, which was to prevent any party gaining dominance, has failed. We now have a nationalist Administration determined to use all the resources of the Scottish Office to break up the United Kingdom and pretending that it is in favour of an immediate referendum.

When my noble and learned friend says that the income tax powers will bring accountability, I very much doubt it. I give noble Lords a tale of woe as an example: the poll tax. We introduced the poll tax; it did not work out terribly well for us. The argument was that it would bring accountability to local government. The problem was that the proportion of the revenue that was raised, as with the rating system, was small. Therefore, to get a relatively small increase in resources there had to be a huge increase in the level of poll tax. That was the fundamental flaw. The idea of accountability is the same as the case that the Minister makes for income tax. I noticed that in his speech he said that a penny on income tax would raise £450 million.

Let us be clear about this: we are not talking here about the 3p variable rate on the basic rate of income tax. The Bill abolishes that, even though it was agreed by the Scottish people in a referendum, as I indicated earlier. We are talking about introducing, for the first time, a Scottish income tax that will apply at the basic, intermediate and top levels. The Minister said that £450 million was 1.7 per cent of the Scottish Budget. On my calculations, if we take £450 million as the product of that, a 5p increase in the Scottish income tax rate would give you an 8.5 per cent increase in the Budget, so to get 8.5 per cent more money you would have to increase the basic rate of income tax by a quarter.

The stoppages in most people’s pay packets would go up by a quarter in order to increase the Budget by less than 10 per cent. That is disastrous in an environment that has changed, where there is a huge deficit and where the Scottish Parliament was given a year off by the Chancellor and it did not make the necessary deficit reductions. To bring this measure in now seems extraordinary because the income tax proposals suffer from the same gearing problems that applied to the poll tax, the rating system and now to the council tax.

Here, the Government and those who support these proposals have a problem. On the council tax, I think our policy is to freeze it. On the one hand we argue that the Scottish Parliament must have the right to put up taxes in order to have accountability, but in local government this does not apply. We have a new policy that where the council tax is to be increased by more than the rate of inflation, there has to be a referendum of the local people to approve it. I ask my noble and learned friend why that does not apply to the local income tax. Why is there not going to be a referendum first of all on the principle of having this? My noble and learned friend says that there is a consensus in Scotland and that everyone agrees with this. I wager that if you stop three people in the streets of Edinburgh and tell them that a Bill is going through Parliament that could put their income tax up by a quarter in order to increase expenditure by less than 10 per cent—or, in this case, maintain expenditure—

First, I point out to my noble friend that it was in the manifestos of three parties at the last UK general election and endorsed. It is not intended that these powers will be made available next year in the midst of a recession. My noble friend must remember that the power to put tax up is also the power to bring tax down. Therefore, the question he is putting to the three people in Edinburgh is wrong on so many points.

My noble and learned friend has been here too long if he thinks that the electorate reads the manifestos of the political parties and bases its votes on that. As for the point that the power could be used to bring tax down, the Government are asking the Scottish Parliament to find deficit reduction expenditure of about £3 billion. On my calculations based on his figures, that would amount to a 7p increase in the rate of tax just on deficit reduction. While we are on the subject of Calman, my noble and learned friend says that it is not being implemented now, so that is all right because it will be not in his term of office but in 2016; someone else will have to explain the consequences of this policy.

My noble and learned friend says that the deficit will have been dealt with by then. He cannot have it both ways. He has told us that there is a great consensus for Calman. Calman says that we should move to a needs-based system of funding for the Scottish Budget. Furthermore, from the work of Professor Bell and others we know that that would result now in a reduction of £4.5 billion in the Scottish Budget, which is a lot to find in income tax. That is the Government’s policy for the longer term, so we are going to have to have a higher rate of income tax in order to stay exactly where we are. I do not think that this has been thought through.

There are very few things that I agree on with the First Minister, Alex Salmond, but when he says that you cannot run an economy on a narrow tax base like income tax and that you need to have wider tax powers, he is correct. I am against having wider tax powers for the reasons that I will give shortly. I say to my noble and learned friend—and I will table some amendments in Committee—that he should consider whether it might not be right to have a referendum before these proposals on income tax can be implemented and, certainly in line with our policy on local government, to have a referendum if the Scottish Parliament chooses to set a rate of income tax that is higher than it is for the rest of the United Kingdom.

There is another aspect of taxation in this Bill that absolutely terrifies me; it gives the Scottish Parliament the power to invent new taxes altogether with no reference to anyone—not to the voters or to anything else. My noble and learned friend is shaking his head. Am I wrong about that? If they decide to introduce a local income tax, which is their declared policy, as I thought on these Benches—I am not sure what the coalition Government’s position is on local income tax, but the Conservative Party has always been opposed to local income tax because we would have all the problems that we have just been hearing—we could be faced not only with having the highest rate of income tax in the United Kingdom but with having a local income tax on top of that. I see that my noble and learned friend is reading the Bill. I hope he realises that the Bill actually provides for the creation of new taxes. It specifies particular taxes in respect of land and landfill.

On top of all that, we have powers of borrowing, which are described as positive—and here I did disagree with the noble and learned Lord, Lord Davidson. I think that the Scottish Government must be the only Government legislating on the planet that thinks that now, with a huge financial crisis and huge economic problems, is the moment to have higher taxes and higher borrowing. That is what this Bill provides for. When my noble and learned friend says that the powers might be used to cut taxes and cut borrowing, what planet is he living on? I do not know a single serious politician looking at the Scottish Budget, at the problems and at all these goodies that the nationalists have provided—such as free prescriptions, free healthcare and free transport, all of which are desirable but none of which are affordable—who could believe that the result of these powers would not be that Scotland would become the most highly taxed part of the United Kingdom. As the noble and learned Lord said, at the moment Scotland is suffering the worst rate of growth and the biggest threat to employment in the public sector because of the size of the public sector. It just seems plain daft to do this.

Having dealt with taxation, I turn to the issue of referenda. I see that the Bill has sections on elections, on presiding officers, on deputies, on the Supreme Court, on Members’ interests and even on Antarctica. I am delighted to see that Antarctica is not going to be in the province of the Scottish Parliament, having spent my Christmas there. Every corner of the world is covered except vires on referenda, which is the central issue in politics today in Scotland.

Why have the Government not taken the opportunity to clarify the point made by the noble and learned Lord, Lord Davidson? It is perfectly clear to me, from reading the previous Scotland Bill, and as the noble and learned Lord pointed out, that the Scottish Parliament does not have the power to run a binding referendum on the issue of independence for Scotland. The Scottish Parliament now has a majority of Members who are committed to doing so. We know that there is going to be a referendum. How can it be in anyone’s interests not to ensure that that referendum is held on a proper basis with a proper campaign and with proper notice? Why on earth are the Government dealing with every other issue, including the name of the Government, but not dealing with the central issue, in my view, and providing the machinery for a referendum on independence? Of course, I am a bit of an extremist on some of these subjects, so I would prefer the Bill to say that the referendum is to be in October next year, because I think that it is deeply damaging to have this uncertainty.

A fixed-term referendum, as my noble friend says. Of course, I have always been a person who has sought out consensus, and I see no objection to putting the machinery in place. Then the First Minister can decide whether or not to use it. In my opinion, he will be absolutely terrified to use that machinery because he knows that he will lose. Then we can get on to discussing the real business in Scotland, which is how we are going to deal with the reduction in the public sector, the creation of jobs and the protection of services. To be fair to my noble and learned friend, the May election was a surprise, so the Government may not have thought of this and there is still time for him to come forward with amendments that reflect the new political reality.

I have one other point about my reading of the Bill that may interest your Lordships. The Bill is ludicrous because of its income tax powers. It creates non-doms within the United Kingdom. I thought, “Am I a Scottish taxpayer or not?”. There are conditions A, B and C, which are a hugely complicated set of proposals. The Bill states that if you have a property in Scotland and a property in London, which I have, you have to count up the number of days for which you stay in each property to decide whether you are a Scottish taxpayer. Then I read another bit that states that if you are a Member of the House of Commons, a Member of the Scottish Parliament or an MEP, whatever the number of days you are automatically up for the Scottish income tax. There is no mention of the House of Lords, so the good news is that Members of the House of Lords will be able to become non-doms if they spend more time in London than in Scotland. Who writes this stuff? Are we all to be counting our days? Wait for it. The Bill also states that the Scottish rate of income tax will not apply to you in respect of dividend or savings income, so the good news is that Scotland will be a great place to retire, because if you have only dividend and savings income you will not pay the tax. If you want to set up, grow or expand a business, go to England. What sort of message is that to send to people who are concerned about our economy in Scotland?

I understand the politics of the Bill, but why are we giving the Scottish Parliament the power to have a different speed limit from that in England, or a different level for drink-driving? What is life going to be like in the Borders? You cross a bridge and suddenly you are illegal. Are you allowed two drinks or one drink? I am no great Euro fanatic, but if anything, I would say that we should have a common European view on speed limits and drink-drive limits if for no other reason than that everyone would know what they are. The idea that we should change it in Scotland and have something different in England only adds to bureaucracy and confusion and is being done for political reasons. I do not know anyone in Scotland who says, “We really ought to be able to decide our own speed limits, and it is an absolute scandal that we have to be stuck with what is being decided by Westminster as to the number of drinks that we can have in the pub before we go off in a car”.

In conclusion, I am not really very happy with the legislation. I am not happy that we have had no time to discuss it. I look forward to an extended and interesting Committee.

My Lords, I suppose that the starting phrase should be, “Follow that!”. In any debate on the constitutional position of Scotland, my starting point is what is best for the people of Scotland and what is best for Scotland—not what is best for the coalition Government, the Labour Party or even the union, but what is best for Scotland and the people of Scotland—whether it is best to be inside or outside the United Kingdom or, indeed, the European Union.

For me, devolution for Scotland, and for Wales and Northern Ireland within the modern partnership of nations that is the United Kingdom, is indeed the best arrangement for Scotland and for the people of Scotland. That is why in my very first vote I cast a yes vote in the 1979 referendum that the noble and learned Lord, Lord McCluskey, mentioned earlier. That is why I campaigned through the 1980s and 1990s and was involved in the convention that the Minister mentioned in his introductory remarks, and why I stood for the Parliament and had the pleasure of serving with my noble and learned friend—I call him my friend even though he sits on that side of the House—as First Minister and Deputy First Minister in that Parliament.

Do I believe that the Scottish Parliament has done everything right in the 12 years since 1999? No, of course not; no Parliament does everything right. Do I believe that the Scottish Government or all First Ministers have done everything right? No, of course not. All Governments and First and Deputy First Ministers will make mistakes from time to time. But is Scotland a stronger and a better place? I would argue that, yes, it is. Did we survive and indeed build on the electronics manufacturing meltdown in the late 1990s to ensure that our economy's growth rate matched that of the UK by 2007? Yes we did. Did we reverse the brain drain that the Minister mentioned in his introductory remarks and increase Scotland's population after years of decline? Yes we did, through policies pursued in the Scottish Government and the Scottish Parliament. Did we lead the rest of the UK in the smoking ban? Yes we did. Did we reform Scotland's land laws and criminal justice service? Yes we did.

Devolution has made Scotland a stronger and better place, but after 12 years it is right to review the settlement agreed by referendum and by this Parliament back in the late 1990s. Was Calman the right way to do that? I think, on balance, yes. I am not a great fan of committees of the great and the good or of trying to seek consensus for the sake of consensus, but on the issue of the constitutional position of Scotland within the United Kingdom I think that the attempt to find consensus and the way in which that was done was broadly the right approach. Do I believe that the proposals have merit? Yes. Initially, I was not convinced by the report of the Calman commission, but over time I have become persuaded that most of the proposals have merit. Are they perfect? Of course not, but I do not believe that perfection should ever be the enemy of progress, as has been said by others more eminent than me.

Do I believe that the Bill deserves scrutiny? Yes, I do, but I also believe that it will ultimately deserve support. It contains proposals that are both radical and reasonable. I will come to the radical ones in a second. Although some of the initial proposals may irk the noble Lord, Lord Forsyth, I believe that, subject to the scrutiny that we need to give them, they will ultimately be supported by this House and Parliament. I am sure that they will lead to sensible decision-making in Scotland and therefore deserve a fair wind.

On finance and taxation powers, the original tax power was conceived at a different time and in a different economic climate. Like the electoral system, it was part of a settlement designed to secure the progress of devolution. The power to increase income tax by plus or minus 3p in the pound has never been used. That is partly because the parties who would have used it lacked the courage to do so. The nationalists lost an election in 1999 because they proposed to use it by increasing income tax and never made that proposal again. I would argue that one reason why the Scottish Conservatives have been in the doldrums since then has been that they have never been brave enough to propose to reduce income tax in the Scottish Parliament. That power has now become redundant because the political parties in Scotland have never felt that it was an appropriate use of the powers of the Parliament.

One of the reasons it has not been used is because, when I was Secretary of State, the budget was about £14 billion. It is now about £30 billion. That was a period when there were vast amounts of money coming in. We are now in a period when the opposite is happening.

I was just coming to the issue of the increase in the budget. In the mean time, the budget has increased from about £10 billion when I was the first Finance Minister to about £30 billion. A broad consensus has developed in Scotland over that time that there is not enough responsibility for spending in the Scottish Parliament and the Scottish Government and that there is a need to change taxation powers—the way that the Scottish Parliament receives finance and that the Scottish Government raises finance—to ensure greater accountability of decision-making.

I was not initially convinced by the proposal in the Calman commission but I have become convinced that it could indeed be workable and improve the governance of Scotland. As the noble Lord, Lord Forsyth, has just said, it is wrong to argue that the Scottish Parliament, perhaps alone among legislative parliaments in the world, is not fit to set taxes. As long as a parliament is held accountable for its decisions, it should be free to set some taxes. That opportunity in the Scottish Parliament would lead to more responsible decision-making than has perhaps been exhibited at some times over the last 12 years.

This power is also fundamentally different from the imposition of the poll tax back in the late 1980s. The difference is that income tax is income related whereas the biggest problem with the poll tax was not its gearing—although that was an issue—but the fact that it was correctly perceived to be unrelated to income and provoked a reaction and civil unrest across the country.

We should test the proposal here. The noble Lord, Lord Forsyth, made some important points about the need to test the detail. In my view, the principle is right. The Scottish Finance Minister having to set a budget every year and make a decision to raise taxes would enhance accountability and responsibility in the devolved settlement. However, since the Calman proposals have come forward—

I agree with almost everything that the noble Lord, Lord Forsyth, said—which must be a first. On this point, I am inclined to agree with my noble friend the former First Minister. The reason that the 3p was originally introduced, in about 1980, into our plans for devolution was precisely in order to meet the requirement that a parliament—or an assembly, as it was then called—should not be able to spend endlessly without any obligation to raise its own tax, in answer to the electorate. The reality is that in all of the prior period since the formation of the Scottish Parliament, and precisely because there has been an increasing budget, there was no obligation in practice for it to do that. We may be in a different position now and the question is simply whether we should have a parliament that is allowed to spend tens of billions of pounds but has no obligation whatever to raise any of it or to answer to the electorate for raising that tax.

I thank the noble Lord, Lord Reid, for that point. It reinforces the argument I am making.

The context in which the Bill is now in front of Parliament has changed since the Scottish election result in May. I would argue that a referendum on Scottish independence is now almost certainly going to happen—I suspect in around late 2014. The next three or four years will be very uncertain for those who want to invest in Scotland as well as for the people of Scotland more generally. At the moment, one side has the absolute power to shape the terms on which that referendum will take place. Unfortunately, it is also true that only one side is even in the park playing in this match.

The Scottish football team had another disaster at the weekend. We have learned in Scotland regularly to take an approach after these games of, “We were robbed”. We are in grave danger here of having a referendum campaign in which, afterwards, potentially a majority of the Scottish population suddenly realise that something has happened and feel, “We were robbed”. It will not be good enough for the mainstream political parties in the UK and other organisations to adopt that “We were robbed” approach afterwards. To use a wider analogy than Scottish football, we cannot give the pacemaker so much of a lead that we end up having too much to do on the last lap in the referendum campaign that will take place between now and, I suspect, 2014.

I believe absolutely that the best future for Scotland is as part of a partnership of nations that is the United Kingdom—not some 1950s Britishness that is part of our honourable and respected past but a modern, 21st century arrangement that is modern, multicultural, multinational and has a different vision for the United Kingdom and for Scotland itself. Some decisions are right to be made at the United Kingdom level and some are right to be made in Scotland. There is a fundamental choice between that vision and that of independence for Scotland. That is a once-in-a-lifetime choice and, perhaps even at this stage in the century, a once-in-a-century choice. It should not be taken lightly.

Scots deserve a full debate on this, in which both cases are positively put and clearly explained and the result is a clear resolution of the debate once and for all in our lifetimes. Those who support the alternative vision to that of the nationalists are in grave danger of sleep-walking into an irreversible decision. It is incumbent on political leaders, the business community and the civic Scotland that supported devolution 15 years ago to rise to this challenge by coming together to put forward a positive vision—not a fear of the alternative—of where Scotland can be in the 21st century. If we do that, we can make a decisive decision about that future that leads to a more prosperous and successful Scotland with devolution inside the United Kingdom and not the dramatic implication that would come from a decision to go independent.

My Lords, as the first Member of your Lordships’ House contributing to this debate who has not held a ministerial office peculiar to Scotland, perhaps I may be forgiven for beginning by raising a question on the impact of the Bill in the wider constitutional context of the United Kingdom. If the Bill is to be a success it has to face up to the needs of balancing equitable distribution of our resources with devolved autonomy. The Calman commission did not attempt to do that. I defer to the five members of the commission present in the House today but it dealt with Scotland. In the very changed political circumstances that we face today, we cannot simply confine our discussions to those issues.

The financial austerity that we currently face in this country puts pressures on our constitutional arrangements which could lead to a fissiparous consequence—one certainly never considered likely when Calman sat and even less likely when the Scotland Act 1998 was considered. It follows that we must consider not only whether Scotland is being fairly treated with respect to other constituent parts of the United Kingdom such as Wales or Northern Ireland but also focus on what the consequence of the specific measures in the Bill—I do not intend to go into them in detail today because we shall have a plenitude of opportunities in Committee and on Report—will be upon the sense of well-being of our citizens. That is something rather different from the sense that they are masters of their own destiny. Both are requirements.

The consideration of the matters in the Bill is also enlightened by reference to another commission which has not so far been referred to in the debate. I refer to the Holtham commission on Wales. There are differences of approach in the report of that commission which should be considered in the context of what we are doing for Scotland. One of the reports from the House of Lords Select Committee on the Barnett formula stated:

“On every funding decision the Treasury is judge in its own cause”.

I have to ask whether anything in the Bill really alters that. We need to recognise that in this carving up of the resources of the country the Treasury voice is strong. In the intergovernmental arrangements I hope that the Scottish voice will be strengthened and also that the voices of other parts of the country will be heard in these deliberations as well as the voices of other devolved governments.

There are some matters to which the Bill, as I have read it, does not refer although I am not yet a master of it. For example, the Treasury controls the year-end flexibility of expenditure. Is that a satisfactory arrangement? The limitations of revenue-raising which will flow from the Bill will be substantially reduced upon the present situation. That is welcome. However, I am bound to say that in the current circumstances I have a strong inclination to agree with my noble friend Lord Forsyth about the likely way that this power will have to be used. It is hard to believe that in the austere circumstances in which we live—it is optimistic to believe that in five years’ time we will have completely resolved our current economic problems and that circumstances will have changed—we can foresee cuts in public spending.

It is somewhat surprising that the opportunity has not been seized to go for a system which distributes the central government grants more fairly. The Holtham committee in Wales and our own House of Lords Select Committee on the Barnett formula both indicated that that could be done without enormous difficulty. Without addressing that—and of course it has been deliberately excluded from the discussions—we are not looking at the economic situation of our United Kingdom in the round and we will create growing discontent with which I think it will be hard to battle. I am not suggesting that the Bill should have in it a formula in place of the Barnett formula, but I am suggesting that serious consideration should be given to the many views that have been expressed in academic circles, such as those of Iain McLean and a number of other very careful voices, as to how this should be tackled. Postponement will not cure the growing sense of injustice.

The extension of fiscal autonomy, which the Calman report recommends, does not go even half as far as we see in a number of other federal countries. Australia, which is one of the more centralised federal systems, has up to 55 per cent of its spending raised by devolved governments, so we are not actually doing something which is profoundly revolutionary when viewed in a global context. Other federal countries have even higher proportions of locally raised expenditure. But if we are going to do that we have to accept the consequences of the lower tax base of certain parts of our country and we must come up with equitable solutions to these problems if we are not going to a see a deepening of disquiet and discontent in the poorer parts of our United Kingdom.

There are many other matters that are worthy of deep consideration, but I will confine myself to what I think is intended to be the central issue of the Bill. I refer to the economic balance and the change in the direction of responsibility. My noble friend Lord Forsyth had a number of very good points to make about the sense of responsibility and the limits that the Bill has imposed on the process. I hope that in the time which will now elapse before we get down to considering these things in detail we will look at these measures in the context of the circumstances in which we are considering them, which are very different from those circumstances on which the Calman commission reported.

My Lords, I should perhaps begin by declaring an interest, or rather a lack of interest, in that I was invited, and declined, to serve as a member of the Calman commission. I have no regrets about that.

The first thing to be said about this Bill is that it is an admission of failure. It will solve nothing and it will endanger everything. Its arrival underlines vividly the shortcomings and the dangers that were always intrinsic in the other Scotland Bill of over a dozen years ago. Then we were presented with what the late Donald Dewar claimed to represent “the settled will” of the Scottish people. It was to herald a new age for Scotland. And now we have before us another Scotland Bill. Another Secretary of State hails it as the settled will of the Scottish people, and another new dawn beckons.

My Lords, I was present when we debated that Bill in this House, and my heart bled for Scotland, as I warned then that it was a Bill that I believed would break the back of Britain. I derive no satisfaction from seeing that prediction heading towards fruition. It is sometimes more painful to be proved right than to be proved wrong, but I believe that the new Bill represents one more fracture in that inexorable process. The “settled will” is looking distinctly unsettled.

Now, of course, the settled will has become an ongoing process, and an accelerating one. Does the Labour Party still believe that devolution will “kill separatism stone dead”? Surely not. Has it brought Scotland peace, plenty and contentment, even from the cornucopia of Mr Brown’s borrowings and Lord Barnett’s formula? Before the Act the Scottish National Party had almost no Westminster MPs and only a sprinkling of Scottish local councillors. Now, through the Scottish Parliament, it has overall control in Scotland.

One looks in vain for provisions in the Bill that might actually improve Scottish government, popguns and penguins notwithstanding. But the Bill will not work, firstly, because its powers will fall into the hands of the Scottish National Party, whose core objective is the opposite of this Government’s. To pander to the nationalists has the same effect as paying Danegeld. Even as we debate this Bill, they seek to double their demands. The Bill offers them the chance to raise income tax, but they now want corporation tax as well, and capital gains tax, and excise duties, and fuel duty, and quarrying, and mining, and air travel, and, for good measure, the Crown Estate’s Scottish revenues. We can be sure of one thing: they do not want to control all of these taxes in order to reduce them. My noble friend Lord Forsyth made that point in his very telling speech on the tax issues.

But yet another burden looms. Over the past decade, United Kingdom public spending, which determines the level of the Scottish block grant, has grown faster than Scottish income, which of course determines the revenue from income tax. UK public spending, of which Scotland has received its share and more, has grown by 94 per cent in 10 years, but Scottish income by only 48 per cent. Therefore, when the new Scottish income tax replaces part of the block grant, it seems that it will have to be raised above the United Kingdom rate for Scottish public spending just to stand still.

I accept, of course, that the Bill attempts to address the accountability issue—the worst shortcoming of the 1998 Act. Just as in the eurozone monetary union cannot work without fiscal union, so with devolution responsibility for spending is untenable without responsibility for taxation. However, here, too, the Bill will not work because, although it proposes to increase to 35 per cent the proportion of expenditure raised by the Scottish Parliament, the remaining 65 per cent will still come from the Treasury’s block grant, so the Scottish Parliament will still be able to blame Westminster for starving it of funds and freedom. It raises another problem, touched on by my noble friend, which is that of gearing. Anyone familiar with local government knows that, where the bulk of its budget comes from central government and that amount does not increase, the whole burden of any spending increase must fall on the local tax base—so with Scottish income tax. With the 35:65 split between Scottish tax and block grant, if the Parliament wanted to increase spending by, say, 5 per cent, Scottish income tax would need to increase for that reason alone by 15 per cent.

The Bill will not work above all because Scotland’s weakened economic base cannot support the spendthrift policies of its Government. When the Barnett bonus of some £4.5 billion starts to disappear in the shake-out of the new tax arrangements, the burden will get heavier and it will fall on a small tax base. We have fewer than 2.4 million individual taxpayers in Scotland—less than half the population. A large proportion of them are either employed by or dependent upon the public sector, where substantial cut-backs are inevitable in response to the deficit and debt crisis. Therefore, an even bigger burden will fall on the beleaguered private sector, yet that is where the only hope for future economic growth is to be found; that is where the spirit of enterprise lies. Enterprise is not a gift of government; it resides in people, not parliaments, and the more Parliament taxes it, the less it can succeed. That spirit has had little chance to prosper over the past 12 years while Scotland has languished under the cloud of what one might now call “Saltire socialism”. In 2009, Scotland, with 170,000 more public sector jobs in just 10 years, was deemed in one survey to be the most state-dependent country in the world after Cuba and Iraq. Presumably they could not get hold of the figures for North Korea.

If income tax is levied in Scotland at a higher rate than in the rest of the UK, as it would have to be, targeting our brightest and most successful entrepreneurs, I foresee, as surely everybody can, a flight of capital, a flight of jobs and a flight of people, and it would be the brightest and the best who would go first. Already the uncertainty alone about Scotland’s future is a major cause of concern to the business community.

So I say again: this Bill will solve nothing and endanger everything. It builds on failure. It offers help and encouragement to those who would destroy the United Kingdom. It will create fiscal confusion and grievance. In seeking to rectify the worst shortcoming of the Scotland Act—its lack of accountability—it will go far enough to alienate Scottish taxpayers but not far enough to enforce accountability, and it will bring with it an accumulation of painful and unforeseen financial consequences. The Germans have a word for it: Schlimmbesserung—an improvement that makes things worse.

I sympathise with my right honourable and noble friends in their dilemma. They inherited an Act that set Scotland on an ineluctable downward path towards separation. They cannot reverse it, but how can they try to slow it down and hope that it may come to rest short of complete break-up? If they do too little, the lack of accountability continues; too much, and the downward slide continues.

To conclude, I suggest that what is urgently needed is an injection of realism into this debate. What Scotland needs now is a dose of “tough love”. The Government —by which I mean the UK Government—should withdraw this Bill and place it on hold in the light of the change of government in Scotland and the determination of the governing party there to use it to advance its separatist ends. They—the UK Government —should hold the independence referendum with which the First Minister of Scotland is toying, and they should hold it soon to remove uncertainty. Before that, they should spell out in complete and unqualified detail precisely what independence would really mean for the people of Scotland.

I do not believe that deep down most of my fellow Scots want to break away, but they quite enjoy having a nationalist Government to fight their corner within the United Kingdom. However, the danger is that step by step we pass the tipping point and, before we realise it, the union is lost. So let us have it all out now: no more pandering, no more fudging. I say to my noble and learned friend: lay it on the line now and let us clear the air.

My Lords, here we are again. It seems like only yesterday that we were discussing the Scotland Bill. Over the intervening years, the cast of characters has changed in this Chamber, and I think we can say that it has been enriched, particularly by the noble and learned Lord the Minister, the noble Lord, Lord Forsyth, and my noble friend Lord McConnell. The one sad bit is that I think we all miss the contributions, which we learnt to love and appreciate, made by the late Lord Mackay of Ardbrecknish. His is a voice that will not be heard this time around, unfortunately.

I wish the Minister the best of good fortune in guiding the Bill through your Lordships’ House. I make it clear that I broadly support the Bill, although I hope that we do not spend quite as much time in Committee this time as we did in 1998. I thought that I understood the 1999 Act pretty well inside out but it had passed me by that we had devolved Antarctica. Whether it meant that we could send the noble Lord, Lord Forsyth, on internal exile to Antarctica, I do not know, but at least it is some relief that we have re-reserved it.

There is one thing that I do not understand in the Government’s approach to this legislation. This is undoubtedly a constitutional Bill, as the Minister made clear from the very beginning, so the question arises as to why the Government have sought legislative consent Motions from the Scottish Parliament. The position does not seem to be totally clear because the Secretary of State for Scotland was quoted the other week as saying that the Government would push on with these proposals, even if the Scottish Parliament came out against them. Why have a legislative consent Motion if you are going to do that? Are the Government going to use the “not normally” qualification in the Sewel convention? It would have been a lot better if the Government had said that this is a constitutional Bill and, because of that, it is a reserved matter, although of course the opportunity is there for the Scottish Parliament to express its views and to be involved in the consultation. However, I think that the approach taken by the Government so far is a bit messy.

As many noble Lords have discussed, the Bill has to be set in the wider political context of the debate about the relationship between Scotland and the rest of the United Kingdom, and indeed about the future of the union itself. I do not take the somewhat depressing view put forward by the noble Lord, Lord Lang. There is almost an element of political unreality in discussing this matter in your Lordships’ House, where all the parties represented support the union—with one personal exception. The party that presently forms the Government of Scotland is committed, hook, line and sinker to the destruction of the union and we have to recognise that in the way that we approach and understand the terms in this Bill.

In 1998—I am sorry to keep on harping on about this—I said on one occasion that I was a devolutionist because I was a unionist. That is still my position. I think that the union is of fundamental importance to us all. The union celebrates diversity rather than imposing a stifling uniformity. Having lived in England, Scotland and Wales, I find that it is that sort of union and diversity, that mixture, that creates something rather special about the United Kingdom. It ought to be nurtured, celebrated and preserved.

Why are we dealing with a Scotland Bill a dozen years or so after the original one? Clearly it is sensible to take stock, to see how things have worked out, and to make some common-sense adjustments. I think that that is absolutely right now that the settlement has had time to work and some shortcomings—the very few shortcomings in the original Act—have been identified. Part of the pressure for additional powers has come from those who have argued that devolution is a process rather than an event. Within the United Kingdom as a whole, I hope that it is a process, but whether they want real regional government in England is up to the English to take forward at some stage. In Scotland those who have argued for the process rather than event case have done a disservice to devolution. Where is the process likely to lead? Is it not almost perverse to set in train a line of thinking that makes a major concession to your principal opponents, who want to destroy the union in the first place?

A major disappointment about political debate in Scotland since devolution has been that very few voices have argued the alternative case, that devolution gives Scotland the best of both worlds: the ability to devise Scottish solutions to Scottish problems set against Scottish priorities, while at the same time ensuring that Scotland enjoys the social and economic security of being part of a larger state, together with the greater political influence that that brings. Nowhere is that more the case than in Scotland’s relationship with the European Union, where, because qualified majority voting is the normal system of EU decision-making, it is infinitely preferable to be part of a large member state with a lot of votes than of a small member state with few votes.

There are a couple of areas in the Bill where the Government ought to have seized the opportunity to clarify things. This is particularly the case with vires, which has been mentioned already. In Schedule 5, nuclear energy, for example, is reserved, apart from two exceptions.

The noble Lord mentioned qualified majority voting as being the norm, but I am sure that he would agree that an application by an independent Scotland for membership of the European Union, which it would have to make, would need unanimity.

Treaties do—a treaty change would require unanimity. In terms of the normal day-to-day policy-making of the EU, it is now virtually all qualified majority voting.

Can I get back to nuclear energy? Nuclear energy is essentially reserved, but the Scottish Parliament—the Scottish Government—is opposed to it, wanting to use, I suspect, their planning powers to prevent it. The issue is whether the use of the planning powers would pass the purpose test on vires which is in the Act. If there is doubt about that, surely this is the opportunity to make it absolutely clear where responsibility for nuclear energy lies. That is a big issue that we are going to have face up to in this country in the very near future.

The second area—the obvious one—is to do with the calling of a referendum on independence. As the Minister knows, that specific issue was a matter for debate both in the other place and here during the passage of the 1998 Bill. Perhaps I may read two quotations. One follows a question that was asked by the then Mr Michael Ancram of Donald Dewar particularly on this point. The Secretary of State replied:

“It is clear that constitutional change—the political bones of the parliamentary system and any alteration to that system—is a reserved matter. That would obviously include any change or any preparations for change. … If one assumes that that is a way of changing the constitution, no, it is not in the power of the Scottish Parliament to change the constitutional arrangements ... A referendum that purported to pave the way for something that was ultra vires is itself ultra vires”.—[Official Report, Commons, 12/05/98; col. 257.]

Those were the words of Donald Dewar. In this House, the Minister in charge of the Bill was also questioned on this issue. There was a specific amendment put down. In arguing that any act about the continuation of the union would be beyond the competence of the Scottish Parliament and therefore not lawful, the Minister said:

“Perhaps I may go through the three steps that lead to that conclusion. First, the parliament cannot legislate if the provision relates to a reserved matter. That is Clause 28(2)(c). Secondly, the Union of the Kingdoms of Scotland and England is a reserved matter by virtue of paragraph 1(b) of Part I of Schedule 5. Finally, legislation for a referendum on independence would be legislation about whether the Union should be maintained and would therefore relate to the reserved matter of the Union, and so be beyond the competence of the parliament. That is brought in by the purpose test [on vires]”.—[Official Report, 21/07/98; col. 854-55.]

Do the Government still hold to that position or not? If they do not, they must in all fairness, honesty and transparency amend the Bill so that it deals with and faces up to the issue.

On the increase of non-financial powers, which are of mind-blowing importance, I welcome them. There is no fundamental change in them, which is perhaps because the original Act was quite good. The noble Lord, Lord Forsyth, has previously spotted the question of the poor guy who lives in England, drinks in England, but drives through Scotland to get there. At the beginning and the end of the journey, he is perfectly lawful, but for the five miles or so that he drives through Scotland, he is committing a crime. I am sure that this is not beyond the powers of the Government to sort out.

The real substance of this Bill is the financial powers. That is the real guts of the whole thing. I welcome the intent of those clauses. I believe that the one major mistake we made in 1998 was failing to ensure that the Parliament was financially accountable to the people of Scotland. That omission has meant that the crucial political decision of striking a balance between expenditure and taxation has been missing, and that has led to at least a rhetoric of irresponsibility. By giving this power, that is closed off, and I thoroughly support it.

However, I do not believe in fiscal autonomy, not least because devolution provides a structure through which the resources of the whole of the United Kingdom can be redistributed so that more wealthy and prosperous nations and regions of the UK can assist the less wealthy. That, at heart, is the social democratic argument for devolution.

As for the powers of the Scottish Parliament to create new taxes but only with the approval of the Parliament of the United Kingdom—a point which the noble Lord, Lord Forsyth, may have skipped over when reading the Bill—the issue is how that is going to be done. Will it be done by primary legislation? Will that approval be given by primary legislation, by resolution or by order? That has to be specified in the legislation.

I hesitate to interrupt—I have said too much already tonight—but, just on that point, if we cannot bring ourselves to deal with the vires, does the noble Lord seriously think that we are going to bring ourselves to contradict them if they introduce a new tax?

I think that it would depend on what the tax was. If it was a tax on left-handed people, I would happily vote against it. When it comes to taxation, nothing is ever simple—as the noble Lord, Lord Forsyth, knows. It is important to catch the right people and avoid creating the potential for someone finishing up being a territorial taxpayer in two jurisdictions. I am not quite sure that the Bill has that bit right. I remember long and interesting discussions on lorry drivers sleeping in their cabs at night north or south of Gretna and the great importance that that would have on whether they were a taxpayer. How anybody knew whether they were going to sleep north or south of Gretna, I never dared try to find out.

I have all that debate—it is in vol. 593 —here with me. After I have been able to speak in this debate—perhaps in the morning—the noble Lord might be able to read that in Hansard. However, he is absolutely right. I shall never forget all the efforts that he made—it is all here. Alas, I was before him getting vol. 593.

I thank the noble Lord very much for that intervention.

Perhaps I may focus on one last thing. The really big difference is now that Scottish public expenditure will be financed by a combination of tax raised in Scotland and grant given to Scotland by the United Kingdom Parliament. Everything about Scottish income tax is defined and specified in the Bill, but the Bill is silent on grant, and that is still going to be the largest source of income for the Scottish Parliament. I think that that is a lopsided arrangement that really is unsustainable. We have got to the stage now where the grant element ought to be defined in legislation as well as the tax element.

I have spoken much too long. I think that this is a good Bill. It builds on the original Bill without fundamentally disturbing it, and I welcome it wholeheartedly. However, I think that we are going to spend quite a bit of time in Committee.

My Lords, the late Donald Dewar once observed that devolution is not an event but a process. I very much agree with that, and I believe that we should look at this Bill as the second.

This phrase that it is a process rather than an event is attributed to Donald Dewar. I spent some time trying to trace the source of that comment, but I could not find any occasion when Donald Dewar said it. It was said ad nauseam by the then Secretary of State for Wales, for very good reasons, if you looked at what Welsh devolution was.

That has lengthened my speech already, before I finished my first half-sentence. Anyway, it was attributed to him, but the point is that it is true, and I regard this Bill as the second stage of the process of devolution, the 1998 Act being the first stage. It may not be the last stage; there may be a third or even, possibly, a fourth stage to come. I do not think we should be frightened of that. The truth is that we are wrestling all the time with the basic problem that we cannot have a proper federal constitution in this country because one component part is larger than the other three put together. That has been the difficulty with which Governments have had to wrestle, so we end up with what I have always called lopsided federalism.

When he opened, the Minister used a quotation from my Donald Dewar lecture in 2003 when I said that no self-respecting Parliament could exist permanently on the basis of a grant from another Parliament. I believe that is true, and although the speech of the noble Lord, Lord Forsyth, was very entertaining, he did not address that problem. This Bill at least attempts to do so. After I said that, people in my own party came to me and said, “You’ve made this pronouncement. We agree with it. Will you now chair a commission to work out what we do about it?”. I was very reluctant to do that because I tried to follow the precedent of Speakers of the House of the Commons and not engage in party-political activity. However, I regarded it as a constitutional issue, and so I said I would chair the commission, provided that there were people other than the usual party enthusiasts appointed to it. I was greatly assisted by my noble friend Lord Vallance, who had then just retired as chairman of British Telecom and is a former director of the Royal Bank of Scotland, and my right honourable friend Chris Huhne, with all his economic expertise.

We came up with what became known as the Steel commission report, which was subsequently the substance of our evidence to the Calman commission. The one difference between the two—this has been commented on by many in the Liberal Democrat ranks—is that our commission recommended a far wider sweep of tax-raising powers than is in this Bill or was recommended by the Calman commission. The noble Lord, Lord Forsyth, put his finger on it when he talked about the possibility of having a wider net of tax-raising powers rather than focusing simply on income tax. The fact is that the Calman commission was the product of a consensus agreement between the three parties taking part in it, and the Bill is the result of a consensus agreement. I have always believed that when it comes to constitutional reform, you cannot expect any one party to dictate how exactly it should proceed. If constitutional reform is going to succeed properly, it has to be on the basis of a broad range of consensus. I therefore find myself in support of the principles of the Bill in its tax-raising powers, although clearly in Committee we can have much more discussion along the lines that we have heard already.

I was very interested in the speech by the noble and learned Lord, Lord Davidson, and the noble and learned Lord, Lord McCluskey, about the fallout from the remarks by not just the First Minister but also by the Minister of Justice in Scotland about the Supreme Court decision on a human rights case. It seemed to me that they were quite paranoid about the court being in London and would be quite happy for cases to go to Strasbourg, which is a most bizarre position for them to adopt. I was incensed by the language used and the insult to prominent members of the Scottish judiciary who serve on the Supreme Court. I thought it was quite intolerable, and that is why I resigned as an adviser to the First Minister on the ministerial code of conduct. As I said to him in a letter at the time, I did so because if now that they had a majority that was how they were going to behave, there would be more and more complaints against Ministers, and I did not want to spend my time refereeing them. I do not regret that decision. However, the issue that they raised in the debate today was echoed by another Donald Dewar lecturer—namely, Elish Angiolini, the immediate past Lord Advocate—whose lecture I went and listened to. She devoted the latter part of her speech to this issue and clearly was not satisfied that we have yet solved the question of how we treat our engagement with the Humans Rights Act with the new Supreme Court. We should return in Committee to the points made by the noble and learned Lord, Lord Davidson, and the noble Lord, Lord McCluskey, and treat them very seriously. I welcome what they said.

One minor point which I am pleased to see in the Bill, in Clause 4, is about the Presiding Officers in the Scottish Parliament. It is a direct result of the evidence which I gave to the Calman commission. We had the embarrassing situation in 2002 where, despite juggling hospital appointments with the Easter Recess, I had to take two weeks off from the Scottish Parliament for treatment for prostate cancer. My two deputies had a simply terrible time trying to cope with not just chairing the Parliament, because that is only part of the function, but chairing the committees, the Parliamentary Bureau and the corporate body. They had also to entertain the legions of visitors that we had, because the Foreign Office took it into its head to tell every visiting dignitary coming to this country, “You must go to Scotland and see this thing which has come to pass”. We had constantly to give lunches and dinners to visiting people. My two colleagues told me that they were run absolutely ragged during that fortnight. It was intolerable that the Parliament had no power to appoint a third deputy even for a temporary period. I am delighted that that minor flaw has been put right in the Bill before us.

I share the surprise of others who have spoken that the Bill is silent on the question of holding a referendum. Again to be fair to the Government, I point out that the election of the SNP Government in May came subsequently to the Calman commission’s deliberations and the drafting of the Bill. We should be quite open about that. The Bill has come to us; we shall have to deal with it in Committee; and we should look at that question. There is a real danger that Scotland will find itself sleepwalking into independence unless we tackle the matter. As others have said—the noble Lord, Lord Sewel, was right—this is quite plainly and clearly a reserved matter for the Westminster Government. It is not a question of the SNP Government saying, “Well, we’re elected, therefore we can have a non-binding referendum which we devise—and we organise, by the way, not the Electoral Commission”. That would be intolerable. We should make it quite clear in this Bill that, granted that the SNP has its majority and a mandate to hold a referendum, ensuring that it is done in a proper way is a matter for this Parliament. The Bill has to come to us late, but we have the responsibility to send it back to the Commons for further deliberation.

My right honourable friend the Secretary of State has asked some very pertinent questions of the SNP about what it means by independence, and I hope that we will in due course get answers to them. My heart sinks at the thought that we will have three years of debate and uncertainty about independence or not, with a permanent collective whinge from the Scottish Government that everything that goes well in Scotland is due to their magnificent government and everything that goes wrong is due entirely to Westminster. It is not a situation that we should allow to fester for three years.

The basic question which the SNP has to address is whether people in this country really want a situation where Scots people living and working in London are living and working in a foreign country, and English people living and working in Scotland are living and working in a foreign country. That is what independence means and we should not hesitate to say so.

I also believe that there is a common misunderstanding about the history of how the union came about. It is frequently said, “Oh, well, it was all bribery and corruption that the Scottish Parliament was abolished and people were against the union”. They were not against the union. In 1704, three years before the treaty was signed, Fletcher of Saltoun said that he was in favour of the union,

“to do away with bloody and destructive wars”.

The fact was that there was a perfectly good defence and foreign policy case for the union, just as there was an economic case following the collapse of the Darien scheme and the ridiculous notion that we in Scotland should compete with England in colonial adventures following that disaster.

When there were discussions between the two Parliaments in 1706, although the word “federal” may not have been used—it perhaps did not exist in those days—the discussion was of federal type constitution. When it became clear that the English representatives would not accept that, and that it had to be an incorporating union or nothing, that was the point at which there were riots in the streets of Glasgow and Edinburgh. The truth is that the abolition of the Scottish Parliament was never accepted by the Scottish people. We saw that—although there were other factors as well—in 1715, 1745, through the 19th century, through the early part of the 20th century, the campaigns in the Labour Party, the Liberal Home Rule Bills and the covenant campaign of 1950 which attracted millions of signatures. The abolition of the Scottish Parliament was never accepted. The 1998 Act put right something that was done wrong in 1707. But that is a quite different argument from talking about going back to pre-1707 years and having a completely independent state north of the border.

This Bill is simply a fine-tuning of the 1998 provisions. So long as we treat it like that, it should deserve our support and go through to success.

My Lords, I rise with a good deal of apprehension as the first non-Scot to speak and one of three non-Scots altogether on the speakers list, but, as several noble Lords have said, the Bill raises some very important general issues. I also venture to take comfort from the fact that I once wrote a book on Keir Hardie, who I am absolutely certain would have been in favour of this Bill—so, I may say, would Ramsay MacDonald, but he is perhaps not so cherished a figure on these Benches.

We have had many constitutional Bills from the Government that have been piecemeal, open to objection and coloured in many cases by partisanship. This Bill is different and much better for it. It is better for two reasons: first, it seems organically connected with previous constitutional legislation, particularly the fact of Scottish devolution; and, secondly, unlike the previous measures, it follows careful, evidence-based examination resulting from the Labour Government’s setting-up of the Calman commission and the consensual atmosphere in which its report was considered. The Bill, as we know, was carried unopposed through the House of Commons.

The Calman commission established an unanswerable and Unquestionable case for accountability: that an elected assembly should have not only political accountability but fiscal accountability. Many centuries ago, not quite as far back as the Act of Union, the American revolutionaries called for no taxation without representation. The corollary—it applies to Scotland as well as to Wales, which I shall mention later—is that there should be no representation without taxation. The reverse is also true: a proper democratic assembly should have its own resources and be accountable for them, not just for the money that it spends but for the money it raises. It should not be dependent, as the Minister said quite rightly, on handouts from others in the form of the block grant. Without that, the Scottish Government, or any government, are lacking in legitimacy and credibility.

I welcome the main thrust of the Bill—the Scottish Parliament will have the power to generate about a third of its revenues and the block grant will be adjusted accordingly. As noble Lords have pointed out, this will be done almost entirely through a Scottish income tax, within limits. The other taxes mentioned are really minor ones; income tax is the nub of the case. It will of course produce problems. Some have been mentioned—I think excessively so—about the yield that income tax would produce and the calculations. Cannot a democratic government be allowed to form their own judgment on these matters rather than people sitting in Westminster telling them how they are bound to get things wrong? As a Welsh-speaking Welshman I find that attitude really deplorable.

However, there is another point: income tax will be defined here in Westminster—the same tax rates and tax bands will apply. The Scottish Parliament will therefore have to accept the definitions and concept of income tax as sent down by a controlling Westminster Parliament, which leaves the possibility of conflict. This contrasts very much with the Holtham commission for Wales which, as the noble Lord, Lord Maclennan, rightly mentioned, went further and suggested that the Welsh Assembly should be empowered not just in having a Welsh income tax but in setting its own rates and deciding its own idea of progressivity. This is something that perhaps might be considered a shortcoming here. The Holtham commission also suggested other taxes, including corporation tax, but Calman decided, probably correctly, that that was too complicated.

In general, I support the principle of the Bill. It is a good, democratic principle. It enhances the practice and the spirit of devolution and gives the Scottish Government powers and tools to do the job. It has greater borrowing powers than previously proposed. I also support the greater legislative powers being given to the Scottish Parliament but I notice on the question of air guns that it is little guns that it will have power on and not big guns. The big guns perhaps symbolically will remain in the control of Westminster. It makes devolution more credible and more coherent and does so by also ensuring that the union will be preserved. I was very glad that the Labour Party supported the Bill in the Commons and, subject to serious amendment, I understand from my Front Bench that we are going to support it here. It is a good thing. Among other things it takes the Labour Party back to its early democratic principles—the principles of Keir Hardie and George Lansbury and the ILP and the founding fathers of the party. In my opinion that is where the Labour Party, as a socialist party, ought to be.

There are two other questions—one about Wales and one about England. What indeed about Wales? I am aware that my noble friend Lord Wigley is going to speak later so he will perhaps or perhaps not echo what I say. The lesser treatment consistently handed out to Wales stands out very vividly from the devolution process. It was highlighted by the referendum only a few months ago when only then did Wales get an approximation of full legislation authority. There should certainly be a Calman commission for Wales and, if I understood the Minister correctly in his announcement last July, I gather that is broadly what we are going to have. I was very pleased to hear the Government announce that they would produce an inquiry. This inquiry will find that much of the work has been done for it by the Holtham commission. It was an excellent commission. It shredded the Barnett formula as unfit for purpose. It spelt out a clear way in which Welsh funding could be indentified in the overall funding process. It spelt out a way in which Welsh needs could be defined. It asked, as I mentioned, for Wales to have control of its own tax bands, rates and exemptions and to determine its own policy in taxation. All these might or might not be accepted, but as they say, a lot of the heavy lifting has been done by Holtham and should ease the commission the Government have in mind. Otherwise, Welsh devolution has always been a hesitant process. Wales has lagged behind. It lagged behind Scotland 80 years in getting a Secretary of State. It lagged behind in devolution. It is now advancing. The Welsh Government can do their work only with proper fiscal tools including the power to introduce new taxation and the borrowing power to finance capital expenditure. I hope we are going to have a Holtham-style agenda for Wales. I would be grateful if the Minister could tell us what progress is being made in setting up the inquiry he announced.

Finally, what about England? England, as the noble Lord, Lord Steel, said, is the largest partner. Calman sought a solution within the United Kingdom. It wanted to preserve our increasingly confederal union state and very much so do I. Problems are likely to arise between Scotland and England—about tax rates, about the extent to which the Scottish Assembly can borrow as it wishes and, perhaps, about something which was alluded to earlier: the definition of Scotland’s share of the block grant and how that will be arrived at. All these are presently determined by decision-making in London. Whether one likes it or not there is a Government of a very different stripe in Edinburgh that may well take a different view. England will be even more displeased by the Barnett formula. It is manifestly unfair to Wales. It gives the English regions too little, particularly at a time of extreme economic difficulty, and it gives Scotland too much. Whenever the issue of the Barnett formula is raised by anyone in Edinburgh, to quote the title of a famous song, there is “The Sound of Silence” and the sound of silence echoes through the realm. Holtham has dismantled the ideas behind the Barnett formula and it seems to me wrong—I hope that we can look at this in terms of an amendment—that the finances of a self-governing Scotland should be examined while the really inequitable Barnett formula is left undisturbed.

As we have heard from other noble Lords, the authorship of this cryptic phrase has been disputed—devolution is indeed a process. It is an ongoing process; it does not obviously have an end any more than any other political process has one. There is no period when, like Fukuyama, you say that history has stopped. It has not stopped over devolution. There are many sources of possible conflict that will arise as the process of Scottish devolution unfolds. Some have already emerged; for example, over university fees and the very wrong attitude taken in Scotland there. I hope we will help along the process of devolution by allowing a clear analysis and definition of what tax powers are to be devolved and what are not. There should be a much clearer division of resources than perhaps this Bill presently allows for. Otherwise, while the Bill is full of admirable intentions, it may lead, I fear, to perhaps a more disunited kingdom.

My Lords, it gives me great pleasure to follow the noble Lord, Lord Morgan, who is a very distinguished historian. He is right to remind us of the powerful call, “No representation without taxation”, and as a historian he will remember that the American colonists particularly had the request of “no taxation without representation”. Both requests are very powerful.

It is customary for Peers to mention past interests before speaking, and in my case I have two. While several of us have served in three parliamentary Chambers, only four members of the coalition in this Chamber have been elected to the Scottish Parliament. Three of them, including the Minister taking this Bill, the noble and learned Lord, Lord Wallace of Tankerness, are Liberal Democrats, but for some reason, which I am sure must have involved a great deal of good fortune, I happen to be the only Conservative in this Chamber to have served for eight years in the Scottish Parliament. The other past interest is that I served on the Calman commission, with other members of this House, including the Minister and the noble Earl, Lord Lindsay, from the Conservative Benches. Along with Labour Members and many others, after more than a year of hard work, we produced a report which was unanimous, and the legislation we are considering is based on those conclusions.

In the 1998 devolution referendum, some 74 per cent of voters in Scotland were in favour of establishing a Scottish Parliament, and the Conservative Party, rightly in my view, decided that it would be wrong to act as disgruntled bystanders on the sidelines and instead that it should participate fully in the democratic process, with a view to making the new institution work successfully in the best interests of Scotland and the union. The noble Lord, Lord Sewel, rightly in my view, said that it was right after a number of years to review the devolution Act and to suggest adjustments. The noble Lord, Lord Steel, said that he regarded this as a second stage. If I may say so, in 10 years’ time there may well be another review and another stage, and that would not be unnatural, given the fact that we are discussing the terms of a voluntary partnership.

When the Calman commission reviewed the devolution legislation and received evidence, the responses were overwhelmingly to the effect that the Scottish Parliament had been a success and indeed a majority of those giving evidence believed that it should have more powers. This brings me to the principles that underlie this entire subject, these being accountability and equity. The Secretary of State for Scotland said:

“The Bill is not about transferring power for power’s sake; it is about creating accountability”.—[Official Report, Commons, 21/6/11; col. 282.]

I have to make my own position very clear on this principle of accountability. I am strongly in favour of it. If the Scottish Parliament is given additional tax-raising and borrowing powers, it is a fallacy to believe that these would necessarily be used irresponsibly, for a very simple reason. All Governments wish to be re-elected, and no Scottish Administration will be returned to power if they force up taxation to an intolerable extent or cut essential services far more than is acceptable to the electorate. Finding the most appropriate level between levying taxation and funding public services will always be a matter of balance and judgment. The devolved Parliament should be allowed to reach such conclusions and put them before the electorate.

The Scotland Bill does not make any specific changes to the method by which grant is allocated by Westminster to the devolved Governments, but I would like to refer to the calls by the noble Lord, Lord Barnett, for his long-standing population-based formula to be replaced by one based on need. The noble Lord, Lord Morgan, referred to the importance of this subject. The position of the coalition Government, as I understand it, is that the top priority is to tackle the deficit and to stabilise the public finances. There is of course no consensus on the needs indicators that would have to be chosen if the formula was ever to be replaced. My own position is that until the legislation we are considering is enacted and is operational, the Government should stay their hand over changing the formula. The Bill we are debating will give the Scottish Parliament the new powers and flexibility it would need if Barnett was to be changed with far-reaching subsequent effects on the block grant.

The executive summary of the Calman commission report made this statement:

“Until such time as a proper assessment of relative spending need across the UK is carried out, the Barnett formula should continue to be used as the basis for calculating the proportionately reduced block grant”.

I mentioned that a needs assessment would be contentious. I can only say that if the results of that assessment reduced the Scottish block grant significantly this would give rise to a third principle. There should be the possibility of substitution if there is to be reduction. In other words, if several billions of pounds were to be chopped off the block grant overnight, the Scottish Parliament would need to have the necessary flexibility to be able to find the most appropriate balance between funding services and levying taxation. This Bill will help to meet that point and makes the Parliament more accountable for the level of a substantial portion of its tax and spending. Indeed, I would contend that if there were to be a reduction in the Scottish block grant without the possibility of substitution, which this Bill will allow, there would be an adverse reaction and friction in Scotland, which could inflict lasting damage on the union.

The question that those who oppose a measure of financial autonomy for the Scottish Parliament have to answer is, “Why are the Scottish people unfit to be allowed a measure of financial responsibility?” I believe that their duly elected representatives should be allowed more discretion to frame their own fiscal policy. They should be allowed to raise more of their own funding as well as to engage in expenditure. While the centuries-old ties that bind the Scots to their more numerous southern neighbours may have been loosened somewhat in recent years, it must be emphasised that the Scots people have shown no appetite for breaking them completely, but they have consistently expressed a desire for their Parliament to have more power.

One of the great benefits of the union is that it replaced centuries of warfare across the border with a sustained era of peaceful development, notwithstanding the odd Jacobite rebellion. In the case of my own family, I am descended from both the Douglases and the Percys, who used to kill each other in very considerable numbers. It always struck me that this was not the best way to settle disputes and, fortunately, the Act of Union 1707 consigned such hostilities to the dim and distant past. In fact, with my father being a Douglas and my mother a Percy, it could be argued that I am a product of the union.

I intend when the time comes to commend to Scottish voters the case for the continuity of the United Kingdom. I take absolutely the point of the noble Lord, Lord Steel, that there must be a straight question on whether or not the people of Scotland want independence, and not a slanted question. I would wish to campaign in the strongest and most positive terms when the planned referendum is held. I do not believe that passionate support for the union is in any way incompatible with backing for giving the Scottish Parliament increased powers, especially over financial matters.

In conclusion, I would like to commend to the House the splendid words of Scotland’s national poet, Robert Burns, when he wrote his famous poem, The Dumfries Volunteers. His words were as follows:

“Be Britain still to Britain true,

Amang ourselves united;

For never but by British hands

Maun British wrangs be righted”.

Just to reassure the House, Robert Burns was by no means a dangerous revolutionary but was indeed one who understood the importance of fiscal responsibility. Just in case anyone may wonder, he was in fact by profession a tax collector and exciseman, who believed in the rule of law.

This legislation delivers an important coalition commitment. It will increase the responsibility and accountability of Scottish legislators and allow the devolved Parliament to come of age.

My Lords, this Bill is the second major constitutional change for Scottish devolution that this House has considered. It is natural that those of us who were closely involved with the first Scotland Bill, the Scotland Act 1998, have many memories of that Bill revived by this one, as the noble Lord, Lord Sewel, indicated. It is perhaps difficult for those who were in neither House of the UK Parliament at that time to appreciate the enormous sense of excitement, and of making history, which so many of us felt. Having heard the noble Lord, Lord Lang, I do not say that all of us felt it, but certainly the vast majority of us felt it.

As one of the three government Front-Benchers who took that Bill through this House, along with the noble Lord, Lord Sewel, and the noble and learned Lord, Lord Hardie, then Lord Advocate, I remember what a marathon that Bill was: 10 days of Committee, and many sessions late into the night, and two days for Second Reading. I have vivid memories of how nervous I was as a comparative newcomer to have to open the second day of a major Second Reading debate. Those of us involved all felt it was a great privilege because, for most Scots of my student generation, a Scottish Parliament was something we had wanted all our adult lives, and although we all believed the words of the late John Smith—I think they were the words of the late John Smith—that it was,

“the settled will of the Scottish people”,

we had had to fight hard to win the national referendum held immediately after the 1997 general election.

None of us has witnessed, either before or since, the joyful scenes when the Bill finally passed in this House, and Scottish Labour MPs flooded into this end of the building in a wave of euphoria. We were aware of course even then, in the midst of the euphoria, that this was no permanent or perfect template and that it would require revisiting once the Parliament was up and running. So it was absolutely right for the Scottish Labour group in Holyrood, with the agreement of the Scottish Liberal Democrats and the Scottish Conservatives —but not, of course, the SNP—to set up the Calman commission in 2008 to review the provisions of the Scotland Act 1998 in the light of experience, and, as was said,

“to recommend any changes to the present constitutional arrangements that would enable the Scottish Parliament to serve the people of Scotland better, that would improve the financial accountability of the Scottish Parliament and that would continue to secure the position of Scotland within the United Kingdom”.

It is natural that, after some 10 years, experience would reveal the requirement for some such change, even though the contents of the White Paper preceding the 1998 Bill had been prepared from unprecedented wide consultations and debate throughout Scottish civic society, over some eight years, by the Scottish Constitutional Convention. I should declare an interest here as one of the final two co-chairs of that body, along with the noble Lord, Lord Steel of Aikwood.

Although there might not be the same degree of excitement and sense of history about this Bill, I have to say that, in so far as it contains much of what the Calman commission recommended, it is to be welcomed. The Calman commission acted in the best Scottish traditions of wide consultation throughout civic society as practised by the Scottish Constitutional Convention.

Specific points in the Bill can be considered at the appropriate later stages of the Bill. I want—very briefly in view of the long list of speakers and the time—to lay down a marker about two subjects that are not included in this Bill, although much discussed in connection with it; indeed, both were the subjects of amendments and debate in the other place.

The first point is corporation tax. In considering a different rate of corporation tax for Scotland, one cannot but be worried about the consequences for the UK as a whole. I agree entirely with the views summed up succinctly by the Chair of the Scottish Affairs Select Committee in another place, when he said that,

“beggar-my-neighbour politics on corporation tax is not helpful. The risk of driving that divide between England and Scotland by achieving a marginal gain in corporation tax revenue in the short term is not worth the candle”.—[Official Report, Commons, 21/6/11; col. 269.]

The Calman commission did consider and reject a different rate of corporation tax for Scotland, and in my opinion was completely correct in doing so.

The second point is the Barnett formula. I have heard many times in this House the views of my noble friend Lord Barnett, for whom I have the greatest affection and respect but with whom on this particular topic I do not entirely agree. In any case, whatever one thinks about the future of the Barnett formula, I think it correct that it should not be considered in this Bill. As the Minister in another place said:

“The current formula is an administrative procedure and does not appear in legislation”.—[Official Report, Commons, 21/6/11; col. 229.]

He then pointed out very clearly that it was a mechanism for allocating funding across all four countries of the UK, which would make it quite inappropriate to legislate in this Bill for Scotland in isolation.

Finally, we should be careful about this Bill. We should not of course do too little in it, but I think we should be very wary of trying to do too much. It should not, as they say, be used as a Christmas tree. In so far as this Bill satisfies the recommendations of the Calman commission, I welcome it and wish it well. I look forward to more detailed discussion on some particular aspects in the future stages of the Bill.

My Lords, I hope it will not be considered impertinent of me to contribute briefly to this debate. I do not come from Scotland, and I do not speak on behalf of the SNP, although my party, Plaid Cymru, and the SNP are Celtic cousins, and both aspire to the maximum level of self-government for their two countries and a new relationship between the nations of these islands. What happens in Scotland, however, does matter to Wales. It has a direct bearing on other parts of these islands, but particularly on Wales, because our constitutional aspirations have developed side by side with Scotland over the past 50 years. There is some irony in the fact that the debate to empower the Scottish Parliament further is taking place now, just as we in Wales thought we were catching up, after the referendum in March that gave us primary law-making powers.

While Wales and Scotland are two different countries with their own different needs and aspirations, there is undoubtedly a mindset in Wales that says, “If it is good enough in Scotland, it is good enough for Wales too”. I think that the Government appreciate that dynamic to some extent. Large parts of this Bill have grown from the Calman commission and the Government announced in July the intention to have a Calman-type committee in Wales. However, I suggest very strongly that the work of the Holtham committee, which several speakers have mentioned tonight, should be the basis of the report and that Gerry Holtham himself should be involved in the work to save duplicating what has already been done.

My point is that issues arising in this Bill, such as the borrowing and tax-varying powers of the Scottish Parliament, will inevitably also arise in a Welsh context. There are other matters which MPs sought to add to the Bill in the debates in another place earlier this year, such as the need to review the Barnett formula and the pressure for Scotland's Parliament to have the right to vary corporation tax, which mirror similar arguments now being heard in Wales and, I believe, in Northern Ireland. I believe there is a feeling today that the Treasury is prevaricating on the question of corporation tax. The issue of year-end flexibility has also been mentioned, which again has a bearing in Wales and, I believe, in Northern Ireland and needs to be resolved.

What this Bill reflects, to my mind, is an adhoc piecemeal approach that has been taken by successive Governments at Westminster to the issue of devolving power to Scotland, Wales and Northern Ireland and, indeed, the failure to address the consequences here in England—either in terms of greater regional government or where devolution has left England's legislative capacity in matters such as health, education or housing, which are devolved to Scotland, Wales and Northern Ireland. In the 19th century, there was much talk in this Chamber of the Irish question. Dare I suggest that there is now a need to address the English question? I noted that the noble Lord, Lord Sewel, touched on this earlier.

Because of the lack of any overall vision, what we are seeing in this measure and in others is a salami-type concession that this power or that function may be devolved but with no framework to ensure balanced devolution or any idea of what is the ultimate destination. Indeed, many of my friends in Scotland, while accepting the provisions of the Bill as far as they go, feel that it has already largely been superseded by events—a number of noble Lords have touched on that this evening.

The May elections in Scotland represented a political earthquake and a wake-up call which Westminster will ignore at its peril. It also sent a message that this Bill goes nowhere near addressing the political agenda as it is rapidly developing in Scotland. I see that an opinion poll in Scotland reported yesterday that if a referendum were held now, 39 per cent of respondents would vote for independence and 38 per cent against it. Whether that is a stable ongoing position only time can tell, but this week we have also heard a call for a new, centre-right political party in Scotland because the London-centric Conservative Party is widely seen as not serving Scotland's needs. Might I suggest that against the background of May's election, Alex Salmond's triumphs and the recent opinion polls, some are seeing the UK in its present form as not serving Scotland's needs? Before the Bill even reached this Chamber it has largely been overtaken by events, as the noble and learned Lord, Lord Wallace, recognised in opening the debate.

On 25 June, the First Minister of Scotland, Alex Salmond, called for a more ambitious borrowing framework, fit for the long-term needs of Scotland and particularly for the Scottish Government’s borrowing capability of up to 2 per cent of their annual resources, with capital borrowing being capped at 20 per cent of annual government resources. Furthermore, this demand has the unanimous backing of Scotland's Parliament, as shown in the Committee that reported on the Bill in March. There are further calls for strengthening Scotland's voice in Europe, with statutory rights for Scottish Ministers to be part of the UK delegations attending European Union meetings such as the Fisheries Council. There are feelings in Wales, and, I suspect, in Northern Ireland, particularly on matters that are unique to those two countries.

There has also been a call by the Scottish Government for this Bill to be enhanced to include the transfer of broadcasting to Scotland, including public service broadcasting institutions and future licence fee arrangements. These are all demands that could be widely echoed in Wales, particularly against the background of the disgraceful way in which DCMS treated the Welsh fourth channel, S4C, earlier this year. My point is that the time will come—perhaps it has already come —when sticking Elastoplast over the growing divergence of aspirations in these islands will just not work.

In an address to the Ditchley Foundation on 9 July, the former Prime Minister, Sir John Major, made a radical proposal which I believe the Government would do well to study. He called for the devolution of almost everything to Scotland except defence, foreign affairs, broad economic policy and the monarchy. That approach is surely more commendable than a piecemeal, grudging, reluctant approach.

That, of course, is not what the Scottish National Party wants. It wants an independent, separate state established as Scotland. It is not really interested, although it may demand it, in more powers for a Scottish Parliament.

I appreciate that that is the position of the SNP. I do not think it has been in any way coy about it. I do not believe it has ever shied away from making it quite clear that independence is its objective. One may or may not agree with that, but that is its position.

The fact is, however, that it never tells us exactly what it means by the term “independence”.

Let me make it clear that if I used the term “independence”, I would not use it in the way that UKIP uses it—wanting to pull out of Europe and believing that you cannot be independent without being a state with a wall around it. I believe there has to be co-operation between independent countries and within frameworks such as the European Union. Indeed, there has to be co-operation within these islands, but that relationship may be a new relationship.

The reason I was pointing out the speech made by Sir John Major was that it should be relevant to the parties opposite. It should be relevant that their former Prime Minister made a far-reaching proposal that may well be relevant in the context of what the noble Lord, Lord Lang, spoke about earlier in this debate, and this should be considered.

The noble Lord has put a lot of emphasis on the membership of the European Union, but does he recognise that an independent Scotland would have to apply for membership in the European Union? It would have to take its place in the queue, it would require unanimity, and it would almost certainly be blocked by countries such as Spain and others. What he is proposing is not attainable in a realistic timetable.

I am very familiar with the arguments about Spain fearing what will happen in Catalonia and the Basque country. If those two national groups within Spain do move towards independence, Spain itself will face that question, but that is a matter for Spain. It is a matter for the European Union whether it would prefer to see a Scotland outside the European Union in those terms.

I certainly would not want to see Wales outside the European Union, but I believe that there has to be a change in the relationships within these islands that respects our ambitions to take every decision that we can for ourselves, whether in Scotland or in Wales, while working together and having an effective voice at other levels where decisions are taken that cannot be taken within our two countries.

This approach is surely a force that the Government need to address, and the consequent agenda is currently being neglected. First, there is a need to ensure balanced, symmetric devolution throughout these islands, especially to Wales and Northern Ireland. Secondly, and crucially, there is a need to address the unspoken cry of, “What happens to England?” and indeed, how Westminster institutions—including this Chamber—can be re-engineered to help address an agenda whose force is not yet being heard but whose consequences cannot be avoided.

My Lords, given the plethora of criticisms of this Bill, and of suggested amendments—I have one or two more to suggest—I must say it is very fortuitous, and the Minister must be very glad, that it is going to be at least three months before we get to the Committee stage. May I make a helpful suggestion to the coalition Government, which is not something I often do? They might consider some government amendments to take account of some of the very good suggestions—some of them detailed, some not controversial, and not necessarily political—that have been made during the course of this Second Reading. They should look at Hansard very carefully and consider that, as it would help our debate and discussions at Committee stage.

Last Saturday, I was with about 50,000 other Scots at Hampden, and about 1,000 Czechs, and I cheered with them when Kenny Miller and Darren Fletcher scored. I even joined in the singing of “Flower of Scotland”—fortunately, not many people heard me—with all its words about sending proud Edward’s army home to think again, but that did not mean that all of us there wanted to see Scottish secession. Patriotism, or pride in one’s own country, does not mean that you want to see the break-up of the United Kingdom. When we come to consider these decisions, all of us in Scotland will be using our heads, not our hearts, to make that decision.

I see colleagues here—I was going to say from all parties, but there are not many Tories although there are Liberal Democrats and Labour Members—who campaigned for devolution again and again. We have got the campaign medals from 1979 and 1997. In the battle for devolution, it was not just the Tories who were posted missing. The SNP was missing also—not missing in action, just plain missing. At the time, fundamentalism ruled within the SNP. Rightly, in my view, it saw independence and devolution as two totally different concepts. I say that to the noble Lord, Lord Lang, because I do not accept his pessimism; we have to look at this carefully, turn things round and fight for the cause that we believe in.

Now, though, that fundamentalism has been put to one side and we have Salmond’s opportunism taking over, trying to get independence by stealth and taking advantage of step-by-step devolution. That is why I hope that the noble Lords, Lord Steel and Lord Selkirk, who say that there are to be third and fourth stages, are wrong. They are playing into Salmond’s hands. He wants, having had three or four steps, to think that there will then be just one more little step to independence, and that is where the danger lies. This is a nonsense; that would be the biggest step of all, crossing the Rubicon once and for all. It would be a major step that could not be gone back on. As others have said, it would mean the splitting up of the United Kingdom.

The UK has been the most successful economic union over a long period anywhere in the world. Our flexible constitution means that what we now have with this variable geometry, this quasi-federalism, this phased federalism, has been possible. I say to my friend, the noble Lord, Lord Steel, that it is a nonsense to say that federalism, which I support—unfortunately, the Liberal Democrats seem to have abandoned it—is impossible because of the size of England. They just assert that without any argument or justification. There would be nothing wrong with having an English Parliament dealing with devolved affairs, as Scotland, Wales and Northern Ireland do, and having this federal Parliament dealing with the reserved areas. That would not impinge on Scotland, Wales or Northern Ireland. It would be perfectly logical and it is the one stable solution that we should be moving towards in the longer term; otherwise, the only two stable solutions are centralised government, which we have left behind, or independence for each of the units.

Secession would be a disaster, as I say, but we should avoid saying that Scots could not govern an independent Scotland. Of course they could; it is entirely possible. Many Scots have governed the United Kingdom one way or another as well as other parts of the world in colonial days—it was not the English but the Scots who did most of the colonisation—so we should not argue that. Scots could govern a separate Scotland effectively; that is not the question. The question is whether we are better off in or out of the United Kingdom.

As others have said, and this bears constant repetition, the uncertainty that is being perpetrated by the Scottish Government is harming Scotland. Linda Urquhart, the chairman of CBI Scotland, spelt it out the other day. Others have said to me that people do not want to invest in Scotland. The UK Government will think twice about putting, let us say, the green bank or some other development in Scotland because of the uncertainty regarding the future of Scotland within the United Kingdom.

As my noble and learned friend Lord Davidson of Glen Cova said, in what I thought was a brilliantly constructed speech full of crucially important points, and as others have confirmed, constitutional issues are a UK Parliament competence. It is our responsibility, and it is about time that we took that responsibility. This is why I am proposing to table an amendment for consideration in Committee—I know others have thought about this and perhaps we should discuss it—that the UK Government organise a referendum as quickly as possible to end the uncertainty. We should also choose the wording of the question, which is very important; look at the wording in the Herald opinion poll to find out why that had the result it did. The wording should be: “Do you want Scotland to remain part of the United Kingdom—yes or no?” We would campaign for the yes side.

The timing of the election should also be our decision. We should not concede that the Scottish Government should run the referendum; we should not leave it to Salmond’s trickery. It would be a loaded question, and the timing would be his timing to make sure he got the best possible result. If a referendum is inevitable, as people seem to assume, it is for us here in the United Kingdom Parliament to take responsibility for it.

I have a few additional points to make. Notwithstanding my noble friend Lady Ramsay’s plea that we do not use this Bill as a Christmas tree, I want to suggest that there are one or two things that we should consider adding to it. For example—I have started to consider an amendment for this as well—both the Scottish Constitutional Convention and the Arbuthnott report suggested that we should review the electoral system for the Scottish Parliament. It is crazy. I got elected to the Scottish Parliament without any campaigning at all. I campaigned not to get elected: I campaigned for constituency members to be elected. I did not spend a penny on the campaign, and I got elected. It is a crazy, crazy system. Regional list MSPs and constituency MSPs just do not go together.

As someone said earlier on, the electoral system was supposed to prevent any party getting an overall majority. Well, it clearly does not do that. It is weighted against Glasgow, Edinburgh and the central belt in favour of the rural areas where the SNP has its stronghold, and that is why the party has done so well. It is a distorted system and it needs to be reviewed. Now, of course, we will be accused of calling to review it because of the outcome of the last election. We should have done it before—I accept that—but why bother about what we are going to be accused of when we will be accused of these sorts of things anyway? We should take up this recommendation and review it.

I have also started drafting an amendment to prohibit the Scottish Government from charging huge fees for students coming to Scotland from England, Wales and Northern Ireland. It is a disgrace, an absolute disgrace, that Edinburgh University is to charge these students £9,000—that is £36,000 in fees for a four-year course—whereas students from Poland, Lithuania and other parts of the European Union will get in for nothing. Which students will be able to afford to come to Scottish universities from England? Maybe the old Etonians and old Harrovians will get in, but ordinary students will not be able to do so. That is not that only reason for an amendment. The current arrangement is discriminatory and unfair and, with no disrespect to Christmas trees, we should take the opportunity to legislate on this.

In conclusion, we federalists, devolutionists and unionists—but not separatists—should take the initiative once more, as many of us did when we set up the Scottish Parliament. Like the noble Lord, Lord Forsyth, I have a few more amendments up my sleeve. I am looking forward with great relish to the Committee stage of this Bill.

My Lords, I never thought that in this House I should have to agree with almost every word that the noble Lord, Lord Foulkes, said. However, that was one of the most interesting speeches that I have ever heard him make; I agree with just about every word.

I understand why we are being asked to pass this Bill into law as a result of the unionist party’s Calman commission. It is a good idea that we should do it. We should, wherever possible, have taxation with representation. Accountability matters in these affairs. However, like my noble friend Lord Forsyth, I am worried about tax rates. Everyone who pays income tax in Scotland must be worried when we know that only 2.3 million people in Scotland pay income tax. However, I agree with the Secretary of State for Scotland, who says about this Bill: this far and no further. The reason for that is that there are many things that should be in place before going any further. Can the law be implemented fairly? Do we know for certain that HMRC can cope with the implementation? Most important of all, what is to be the future position of Scotland as a nation?

As someone who has been involved in business in Scotland all my life, I believe that we must have confidence in the future of Scotland, particularly if we are to invest. To have a possible independence referendum hanging over us for any length of time is very damaging to business. I am not at all surprised to see it resulting in decisions in Scotland being delayed. I see from official figures published in July that Scottish GDP increased by only 0.1 per cent in the first three months of this year, compared to 0.5 per cent across the UK in the same period. Scotland avoided another recession, defined as two successive quarters of falling GDP, only narrowly after the economy contracted by 0.5 per cent at the end of 2010. Over the past year, Britain’s economy has grown by 2 per cent, compared to 1.3 per cent in Scotland. Surely these comparisons do nothing to give confidence to those of us in the business community in Scotland.

This Parliament has the ultimate responsibility for the well-being of the whole United Kingdom, as has been so well put by the noble and learned Lord, Lord Davidson. The parties represented in this Chamber all believe in the future of the United Kingdom, yet the SNP Government have said that they will hold a referendum at the time of their choosing—no doubt with their own question or questions on the ballot paper. I ask my noble friends on the Front Bench whether we, as the sovereign body, should not be taking a more proactive role in this whole business before we go further down this devolution path. In other words, the test of this legislation for unionists such as me is whether the passing of the Bill helps or hinders the unionist cause.

The problems confronting the union are now huge and must be put right if it is to survive. What is to be done about the Barnett formula and the clear need for change? What is to be done about Scottish MPs voting in the other place on matters in which they have no say in their own constituencies? If any noble Lord wants to read an interesting book, they might like Off Message by Bob Marshall-Andrews. On page 167 he makes his views about that very clear. I am sure many of his colleagues feel the same when things that are debated in the other place—matters that are of no concern to Scotland—get pushed through by the votes of Scottish Members of Parliament.

Then there is the recent example—here I come to what the noble Lord, Lord Foulkes, said—which, as a Scot and a unionist, I find hard to bear. Why must we have students from England, Wales and Northern Ireland paying student fees at Scottish universities, and—pardon the pun—European students and locals getting off scot free? This can only divide rather than unite, and I believe that this sovereign Parliament should ensure, by altering the devolution legislation, that matters such as these are put right. After all, this Parliament has given power to the regions, and it is in Parliament’s hands to alter those powers if we think that they are being flouted. Indeed, the chairman of the Scottish CBI said,

“constitution is a reserved matter”.

It must always remain so.

I believe that we are nearing the crossroads for the United Kingdom remaining united, and I hope and trust that the Benches opposite, with such high representation in the other place from Scotland, realise that the ice is getting very thin as a result of a lopsided arrangement, which is indeed the Scotland Act. Other countries have proper devolution on a federal model, but this is not the case at the moment in the United Kingdom. I say in the strongest terms possible that our Government must look urgently at this matter of the Scottish referendum. There is no doubt that Scottish business will suffer as long as that uncertainty remains.

As far as the Bill is concerned, can we have an assurance that no further powers in relation to corporation tax—here I agree with the noble Baroness, Lady Ramsay—will be taken until a referendum in Scotland has been held? The Northern Ireland situation is totally different. I know what they are thinking about there. There is no chance that the people of Northern Ireland seek to separate from the United Kingdom, unlike what the Scottish National Party intends to try to do in Scotland.

In preparation for this debate, I came across an article in the Times of 15 October 2008 with the heading:

“Scottish Dependence—The case for independence was never strong”.

It was written at the time of the spectacular collapse of the two big Scottish banks. Some of it bears repeating now as this House considers the wider implications of this Bill. It says:

“The credit crunch has already claimed some significant victims. The credibility of Scottish independence is next”.

It goes on to explain the case for independence based on North Sea oil reserves, saying that the case now for the small nations, such as Ireland, Norway and Iceland, looks very flimsy. It goes on to say that, given the Scottish banks’ situation, an independent Scotland would now be,

“negotiating a rescue package with a foreign central bank”.

The article continues:

“It is difficult to argue that the Union is a shackle when, in a strange echo of the generous Barnett formula, a great deal of taxpayers' money is heading from South to North”.

That was written in 2008.

I finish with what is said at the end of this article, because it is very relevant:

“The First Minister”—

that is, Mr Salmond—

“is, of course, playing a very long game indeed. He has a strategy of inevitable gradualness in which independence is secured in 2017 after a spell of sound SNP government and a Scotland-denying period of Unionist Conservative rule from London”.

The article concludes with the sentence:

“The Union that has served them for three centuries may be the only asset in Scotland that has not depreciated sharply”,

over the last two weeks of the banking crisis. Those were very difficult days in 2008, but it is interesting that the leading article in the Times should make such comments about 2017—a date that is now much closer.

I hope all sides of the House will appreciate that we cannot allow the First Minister of Scotland to make all the running when the future of the union is at stake. We should use the opportunity of this Bill to start flexing our muscles and fighting back.

My Lords, it was a privilege to serve along with other Members of this House as a member of the Calman commission, and it is pleasing to see its recommendations in legislation before this House, so it will come as no surprise to learn that I support the Bill. In fact, there were two reports from the Calman commission. The first, in December 2008, looked at the broad principles and, as no one else has referred to it, if noble Lords will bear with me I shall consider some of the issues from that report. We attempted to put together principles that would guide the work of the commission and to set out the issues and context for the final conclusions. We asked: what do we understand the union to be? First and foremost it is a political union, a constitutional monarchy that has over 300 years evolved, as the commission stated,

“common political and constitutional values and institutions, which form the bedrock of our liberties”.

We share on these islands a profound commitment to democracy and the rule of law. We have a common citizenship that includes a commitment to human rights and their safeguarding for all our citizens. An integral part of the Scotland Act is the embedding of the European Convention on Human Rights within it.

I am genuinely pleased to see the noble and learned Lord, Lord McCluskey, in his place. He and I have had our differences of opinion, but I recognise his commitment and the contribution he has made not only to Scots law but to this House. I read the debates on the 1978 Bill, which formed a substantial contribution to the 1998 Act. No doubt we will debate the Supreme Court, but I recognise a degree of common approach from the group of the noble and learned Lord, Lord McCluskey, and that of Sir David Edward. I served as a member of the Advocate-General’s expert group. For my part, I think that Clause 17 is about right, but we will no doubt debate that in Committee. I will certainly approach it with an open mind.

Scotland benefits from being part of a state whose overall influence may have waned as the Empire has diminished and is now challenged by new emerging states, but we remain a part of a United Kingdom with a permanent seat on the UN Security Council, a permanent seat on the G8/G20 and a commitment to membership of the European Union. Scotland's influence would be substantially diminished if that union were to go.

We also recognise that the union is an economic one. Sometimes we forget that there were substantial economic reasons for Scotland to join the union in the first place: the establishment of a common currency and a customs union. As the commission stated, we have,

“a deeply integrated economic Union”,

with a,

“well-integrated single market in goods, services, labour, capital and knowledge”,

with common institutions that support the structure within which the market operates: the Bank of England, the FSA, HMRC, the Treasury, and so on. Although the commission did not highlight this, there are other parts of the regulatory framework, for example Ofgem in the electricity market.

The commission was united in stating that that single market and the framework and institutions necessary to sustain it should remain. The irony is that we now have a Scottish Government who wish to secede from the union, with all the advantages that it brings, only to embed Scotland even more deeply in another Union—one that would, over time, require Scotland to adopt a different currency from the rest of the UK and in which it would have less influence.

The United Kingdom is also a cultural union. We speak with substantially the same language. There are substantial ties of family and kinship. We belong to cultural, social, professional, scientific and business institutions that operate across the United Kingdom, albeit ones that often appear to have a Scottish face within Scotland. We share a common history. Together we forged an industrial revolution, built an empire and struggled to provide a better future, securing rights for workers and providing a free health service, education and social welfare. We fought two world wars together and have taken part in many more—some ill-advised and wrong, some heroic and right. In all of that, Scotland has made a contribution to the common history well in excess of its size relative to the rest of the United Kingdom.

In recent decades, we have seen new immigrants to Britain. These have contributed substantially to the cultural diversity of these islands and the multiple identities which Britain holds within it. For all the tensions that that sometimes brings, Britain remains a fundamentally tolerant society. The commission recognised that, as it did the cultural institutions, for example the place of the BBC as a public broadcaster—much criticised at times, sometimes flawed. While some change was necessary to ensure a distinct Scottish influence, fundamentally we did not wish to see the break-up of that institution.

There is also a social union. We share assumptions about the provision of social benefits. We sometimes disagree about how these should be delivered. Despite growing diversity in education and health, we remain across these islands committed to free education—at least up until secondary level—and free healthcare at the point of delivery.

I am sorry that these parts of the first report did not perhaps get the attention that they deserve. Together, these factors are substantial arguments in favour of a United Kingdom. The debate thus far has become somewhat sterile. On the one side, we now have the SNP talking of a mixture of independence-lite or devolution-max without any great attempt to define what it means by that and promises to lull us into a sense of false security that not much would happen were a divorce to take place. On the other side, the language has not always been wholly helpful. We have talked incessantly about separation or secession. It is right to warn people of the dangers of secession but we cannot frighten people into supporting a United Kingdom. Until we start talking the language of inspiration and aspiration, we will continue to lose the argument. I hope that, whatever else we do, we start to talk that kind of language and give people a sense of purpose as to why Scotland should remain part of the United Kingdom.

On the issues of financial accountability, I do not intend to dwell long on the details but certain principles were fundamental to our approach. We were given the remit of addressing the issue of improving financial accountability of the Scottish Parliament. We were greatly helped by the independent expert group led by Professor Anton Muscatelli, which began by setting out a series of principles that would guide its work. The commission itself then refined six of those principles into three broad areas.

First, on equity, does a funding system allow levels of funding and hence a distribution of public services generally accepted as fair? Secondly, on efficiency, in both economic and administrative senses, does it impede the efficiency of the system? Thirdly, on accountability, does the devolved body have the autonomy to make spending and taxation decisions for which the electorate can hold it accountable? All of these in my submission are important principles. But there is a balancing act. No solution is ideal, and they will always be traded off, one for the other. We will no doubt debate whether the commission in its recommendation came up with the right mix. I believe it is broadly right because it produces an element of accountability that is not now present, but we will no doubt debate that.

My noble and learned friend Lord Davidson raised the issue of the position of the Lord Advocate, and the suggestion that we should be looking at separating out the role of the Lord Advocate as head of the system of prosecutions from the other functions that he has, perhaps with the appointment of a Director of Public Prosecutions. This of course is not a new idea; it has been around for some time. The role of the Lord Advocate has evolved greatly over the centuries; it is an office that goes back at least until the 15th century. At one time the Lord Advocate effectively ruled Scotland; in the days of Dundas his powers were immense. Sadly, by the time I came into office they had somewhat diminished. But the role of the Lord Advocate did change with devolution, because the spotlight was very much more on the law officers.

I remember when my noble and learned friend Lord Hardie was Lord Advocate—he sat in this House—and I recall in particular a question on search warrants. There had been a number of instances in Scotland where search warrants had been granted by justices of the peace with important pieces missing, and the result was that they were ineffective, and questions were asked about that. The only place where he could be asked questions about them was in this House. That was a pretty ineffective way of holding the Lord Advocate to account, because he was removed from Scotland, and of course this is a House in which only a small minority of Members would have a particular interest in such matters. Suddenly, when we became law officers in the Scottish Parliament, there were 129 MSPs, all of whom had large mailbags full of substantial complaints about the prosecution system. It was, at times, pretty uncomfortable. The noble and learned Lord, Lord McCluskey, helped that process at times, if I may say so, with quite proper concern about, for example, the death of Surjit Singh Chhokar, which he will no doubt recollect. There were other instances, too, where it became extremely uncomfortable to have to answer questions about the prosecution system. When the noble Lord, Lord Steel, who is not in his place, was Presiding Officer, I remember being called to the Scottish Parliament to answer an emergency question on a prosecution matter.

Whatever happens in the future, I believe that that accountability is actually good, although it is uncomfortable. The fact is that I was able, as Lord Advocate, to take through the most far-reaching and profound changes in the prosecution system in Scotland, I have to say with the great help and assistance of the noble and learned Lord the Advocate-General, and more particularly perhaps with the First Minister of the time, my noble friend Lord McConnell. I would not have been able to do that were it not for the accountability that was brought by the Scottish Parliament to those proceedings.

I do not shy away from looking at these issues, but I have to say to my noble and learned friend that my own view is that this is more properly a matter for the Scottish Parliament initially to debate, and for us, the United Kingdom Parliament, to engage with it. That is where the impetus should come from for such a debate, not from the Chamber of this House.

The Scotland Act 1998 was a substantial achievement. The Scottish Parliament got extensive powers. The Canadian provinces have substantially less power in relation to criminal justice than the Scottish Parliament, and that is just one area where the Scottish Parliament has competence. It was, I believe, a considerable achievement but, as the noble and learned Lord said, one of the commission’s conclusions was that devolution had been a success. It had worked for the people of Scotland, it gave people greater access to those who made the decisions and it increased accountability. I believe that the changes in this Bill will strengthen the devolution settlement, make Parliament more accountable for its decisions and strengthen the union.

My Lords, I have no difficulty in welcoming this mild and tame devolution Bill. It is worth recognising its introduction at this time as a Liberal Democrat achievement in government. The Bill makes some progress towards greater self-government but is unlikely to be the last word on the subject. I expect that it will be amended by addition, rather than by deletion.

I am interested in what this Parliament recognises as the desirable endgame. The strength of desire in Scotland for self-government is considerable—maybe up to 75 per cent. Many of that 75 per cent are still cool to the traditional 19th century nation state concept but they definitely want greater political autonomy—just within a British state, and why should they not do so?

This United Kingdom, from 1603, could be restructured to suit the democratic will. After all, it was in 1707 and 1999. That further restructuring can be done by legislation alone and without the endless international legal agreement processes which formal separation leads to and requires. What I am referring to may be called home rule and it includes a Scottish Treasury. This is probably what the Scottish negotiators wanted in 1706, although they certainly did not get it.

It is probably instructive to look at Denmark’s Home Rule Act 1948, and I thank those in the Library for their help. This granted sufficient autonomy to Greenland and the Faroe Islands to make their own decisions, even about foreign policy. Greater Denmark is therefore primarily a defence union. Greenland, after all, decided to leave the European Union with compensation for damage done to its fishery, and the Faroe Islands decided not to join the European Union. I know that this Parliament does not like examples of good practice from abroad but I believe that this example of home rule is relevant and, what is more, it has been happening for the past 60 years quite near by. Conversely, it has to be said that this Parliament has recently acted in favour of promoting democracy in Iraq, Afghanistan and, one hopes, Libya. Full democracy is desired in Scotland. Could it be that this Parliament is resisting such a development?

It is quite helpful to have a constitutional referendum in 2015 in the background to the Bill. I believe that it would clearly be sensible to legislate for this by amending the Bill, rather than just relying on the electoral mandate won in the summer. The outcome of such a referendum will be determined, in part, by the response of this Parliament to the request for additional powers. A favourable response is likely to lead to something akin to home rule—that is, a British solution. A negative response will enhance the vote for formal separation. Jealousies and personal insecurities among parliamentarians need to be suppressed during the passage of the Bill.

In conclusion, the Bill is a mild response to the growing need for self-government in Scotland. It is too mild and further legislation will be required quite soon. Noble Lords should be quite relaxed about this. Robert Burns derided the Scottish negotiators of 1706, but the Parcel of Rogues did quite a good job. While the parliament was lost, the Scottish state was not smashed. I can understand how Queen Anne and the Earl of Godolphin wanted control of just one parliament. This was a problem of regal personal rule. Now of course Governments are derived from democratic election. The process of re-establishing the Scottish state has been running for the last 150 years. It should be met by accommodation rather than intransigence.

My Lords, I will be particularly brief. I am not as erudite as many of those who have spoken so far, but I have some knowledge of and involvement in the historical and political events that have been outlined. I find it irresistible to take part not to settle a few scores but perhaps remember a few things.

There has been a lot of mention, particularly by the noble Earl, Lord Mar and Kellie, of the 1706 negotiators and of the reasons for the negotiations for the Act of Union. The one that he has not mentioned is that many people feel—though not all historians agree, and here we start to wander down highways and byways—that the real reason was the existence of someone called James Francis Edward Stuart, the Jacobite King James VIII and III. That was why the English Parliament wanted control of Scotland— the Scottish Parliament had the right to pick a separate monarch. The fear among the English and a lot of the Scots was that the Jacobite King James would be brought back from St-Germain-en-Laye. So there is a wee bit of history there as well that I do not agree with.

Going on to more serious matters, I want to comment briefly on why we are here at this time of night, on the stage that we are at and on the speakers list. I would like to echo what the noble Lord, Lord Forsyth of Drumleen, said about the positioning of the noble Baroness, Lady Liddell of Coatdyke, in the batting order—an absolute disgrace upon the former Secretary of State for Scotland to be put in that position. I do not know who makes up that list, but that was a bad, bad, bad mistake and I hope that there is some acknowledgement of that. I really think that it was pretty poor. Naturally, as a Labour and Co-op Peer and a member of the Front Bench I support the Bill.

Listening to a lot of the comments about the make-up of the Bill, it is coming across to me that yet again it is a rushed one. We have a rushed process. We started this Second Reading debate at 5.45 pm and are going to finish around 1 am. I do not think that is right. I also think it is bad politics for the Government because in Scotland it will, wrongly, be seen as Scotland being shoved to the back and put into the early hours of the morning because who cares about Scotland? It was not because of this side of the usual channels. It was the Government. Let us be clear: it is the Government who put business on, not us. It is typical of the situation we are in at the moment where they are mishandling every Bill. What is coming across quite clearly to me is a level of incompetence. I do not know whether they are getting tired, whether they have been around too long or whether they are just trying to do too much, but the Government’s timetable is in a mess, and they are trying to compensate for that by rushing things through here, and it is showing up. I think this Bill will be scrutinised very thoroughly now that we have seen what I think is a level of incompetence in bringing the Bill forward. I think that is pretty poor.

The noble and learned Lord, Lord Wallace of Tankerness, mentioned the Scottish convention that started the process of getting a united front for a Scottish Assembly and a Scottish Parliament. I am not point-scoring or settling any scores or anything like that but, once again, it brings to mind how when the Liberals get to the top table, they always seem to look after themselves very well. Out of those arrangements the Liberals got two seats for Orkney and Shetland, for instance, and, quite frankly, the Labour Administration at the time could not wait to get into bed with them, metaphorically, and form a coalition, so they always do well. Conservative colleagues in this House would do well to observe the Liberals very carefully and make sure that their back pockets are not picked before they go.

What we are getting is something rushed and incompetent. At the risk of ruining his reputation, the contribution by the noble Lord, Lord Forsyth of Drumlean, was a tour de force by exposing and putting to question the tax issues and all the other matters. They might not be right, but they certainly sounded very credible to me. They are going to be meaty issues for the Committee process. I promise not to call him Comrade Forsyth—that might perhaps be going too far—but he was certainly the best speaker tonight as far as I am concerned.

It is about time somebody paid tribute to the nation of England. It is a bigger nation by far and financially supports Scotland, Northern Ireland and Wales. It is about time there was more recognition of that. I do not recognise this mass force in Scotland that wants separation. I just do not see it, but real separation will come if this Government allow the SNP to foster division, resentment and bitterness against England, English people will get fed up with it and will say, “If you want to go, off you go then”. That is a bigger danger than perhaps folk think. We have this infamous phrase that devolution is the settled will of the Scottish people. As soon as we got devolution, the people who wanted to go further kept coming back looking for more. They describe it as a process. With due respect to them, I do not think that they are being dishonest, but it is dishonest to say that it is an ongoing process because what they are really saying is, “We are going somewhere, we don’t know where it is, we can’t tell you anything about it, but we are going on anyway”. That is wrong. There should be clear statements about where we are in Scotland and in any devolved area, and it should be done by consensus.

I hesitate to have a go—to cross swords rather, as I had better use the proper language—at the noble Lord, Lord Steel of Aikwood, especially when he is not in his place, but he made a very profound statement that I 100 per cent agree with, which is that no constitutional change should take place unless there is consensus. That was not the case with the Parliamentary Voting System and Constituencies Bill which went through this place and altered the constitution. Lasting damage will be done by that. The referendum must obviously be discussed very thoroughly in Committee. We cannot have Scotland and Scottish business subjected to years of uncertainty. Whatever the ultimate decision, I look forward to the Committee stage where we can try harder to get some answers out of the Government.

My Lords, I pick up the danger referred to by the noble Lord, Lord McAvoy, of the way that the pushing back of our debate to so late in the day will play out outside this building. It has been very interesting to see how each noble Lord has given his perspective on the history of the devolution Act and on the relationship between Scotland and England. Short of the struggles that have occurred over Ireland, the relationship between Scotland and England has been one of the most well known and contentious areas of our national life. Throughout our history, each side has won some and lost some. Certainly, in the first 500 years before the Act of Union, my family was quite heavily involved in every scrap that came up and at least six members died either in battle or by execution at the hands of rival factions—and that is without going into family squabbles, mentioned by the noble Lord, Lord Selkirk. To be a leader in Scotland was not always found to be a very cushy ride.

It is a well recognised fact that there can be nothing bloodier than a civil war. We do not need to look beyond the current situation in Libya to see this being fulfilled as we speak. As with Fletcher of Saltoun, mentioned by the noble Lord, Lord Steel of Aikwood, this might have weighed on the mind of my ancestor, the 4th Marquis of Montrose, when, as President of the Council in the Scottish Parliament, he sent the commissioners to negotiate the Act of Union. As the noble Lord, Lord McAvoy, said, the Scots at that point were regarded in England as potential troublemakers. However, considering the state of the Scottish economy at that time, it has always seemed to me remarkable what sort of a settlement they were able to achieve. The Scottish historian Tom Devine points out in his recent book:

“Far from being a junior partner of England, Scotland played its distinct and … often larger part in building British influence and prosperity. In finance, engineering, commerce, medicine, education, the military, etc, it was at the heart of British global expansion, in good causes of human development, and in bad ones like the West Indies slave plantations”.

Even today, the areas of co-operation and distinctness that the Scots laid down have proved a useful foundation for the modern approach to devolution.

This issue of devolution, and even home rule, has been raised in the forum of politics periodically during the past 100 years. On occasions in years following the Irish Home Rule Act when the topic came up in relation to Scotland, my grandfather's name was frequently associated with it. In 1932, a letter which he had sent to the Times, in which he expressed the view that nobody denied the great benefits which Scotland had obtained from the Act of Union, was quoted in the other place in the debate on the Address at col. 243 on 24 November. As far back as 1926, slightly presupposing the line taken by the noble Lord, Lord Steel of Aikwood, he wrote in the Glasgow Herald:

“I cannot believe that for all time coming Scottish affairs will continue to be settled by Englishmen sitting in London”.

His campaign was for devolution to a Scottish Parliament, but not for separation or independence. I am sure that he would have regarded it as a great step forward that we are now marking the first 10 years of the Scottish Parliament.

Major issues in the Bill have been dealt with by many other noble Lords. Perhaps I may raise a small but fundamental one: we are now the third legislative Chamber to have been given the opportunity to scrutinise it. It was obviously a major task of the Calman commission to look at mechanisms for strengthening relations between the Parliaments, and it is interesting to see the Government’s response as contained in their Command Paper. However, there is one question about its progress which I should like to put to the Minister—it was raised also by the noble Lord, Lord Sewel. What is the place of the Sewel convention in all this? How are these conventions established and who gets to interpret what they contain?

During the past 10 years, I have been a keen watcher of the use of this convention and the very essential channel that it has provided between the two legislatures. There are proposals in the Command Paper to have it strengthened. My question is quite well illustrated by the Explanatory Notes. Line 6 of paragraph 8 states:

“The Sewel Convention provides that Westminster will not normally legislate with regard to devolved matters in Scotland without the consent of the Scottish Parliament”.

I have always taken it to refer to matters that are devolved. However, the paragraph begins with the words:

“At introduction, this Bill contains provisions that trigger the Sewel Convention”.

Maybe some of it does, but by way of illustrating its argument, it advances Clauses 11 and 24, which relate respectively to the Firearms Act 1968 and the Road Traffic Act 1988. In the Scotland Act 1998 and up until now both of these were reserved matters under Schedule 5.

In my recollection, the use of the Sewel convention was to obtain the consent of the Scottish Parliament when modifications were needed to devolved legislation. A recent exercise which comes to mind was the Marine and Coastal Access Act 2009 where Scottish inshore waters were already devolved and the application of the Food and Environment Protection Act 1985 under Scottish jurisdiction was already devolved but the Bill had to encompass all these and therefore the Sewel convention was very appropriate.

This Bill has been subject to consideration by the Scottish Parliament and in its final form it appears it will be subject to its consideration again. It is not my purpose to question whether it was a good idea to see what the Scottish Parliament thought of it. However, to consider the holding of that consultation to be part of the Sewel convention seems to me to constitute rather a new precedent that should not be entered into just by default. If what we are considering is a necessary political adjustment and perhaps the handing over of entirely new powers, perhaps it should be subject to a rather different form of negotiation. Perhaps it is something new that we require, even a Wallace convention. The handing over of entirely new matters that were not previously devolved is a more serious matter than simply making adjustments.

I see that the establishment, and we touched on this earlier, of who will be regarded as a Scottish taxpayer is now said to be already laid down in relation to the previous tax-raising powers of the Scottish Parliament. At least it is reassuring to know that HMRC are looking at it again in the light of the situation in which we find ourselves. Will the Minister bring these findings to the House before we complete Committee stage? They will be very relevant to how we regard the approach on this matter.

The question of how the Treasury will be able to tell the actual size of what is termed “the equivalent sum”—to be removed from the block grant to match the removal of 10p off all levels of income tax from individuals designated as Scots—throws up an enormous list of allowance and adjustments. My noble friend Lord Selkirk of Douglas in a debate on the Barnett formula used the comparison of Lord Palmerston’s explanation of Europe’s understanding of the Schleswig-Holstein issue. We are now winding the whole financial settlement up several more levels and I can only wish the Minister well in his attempts.

My Lords, I start by declaring a minor interest as a member of the Calman commission which led to this Bill. It will come as no surprise when I say that, as a result of that, I enthusiastically support this Bill. That does not mean to say I will not participate in Committee, nor that I shall not seek amendments, but it does mean that I fundamentally and enthusiastically support what this Bill is trying to do. A huge number of points have already been made and, judging from the length of the speakers list, a huge number of points are going to be made this evening so I will limit myself to three brief points: about the economic commission; about the financial recommendations in which I was heavily involved; and, finally, about a referendum.

The Calman commission made a very comprehensive study of the legislative powers which had been devolved in the 1998 Act and it reviewed very carefully whether there should be further changes. Further changes have been proposed but it is a measure of the strength of the original legislation that very few were suggested. The settlement, in most important matters, has stood the test of time.

The Calman commission was a good process and I regret that the SNP chose to stand aloof from it and to make passing remarks from the sidelines. The SNP should have made the effort to participate. We wanted the parties who were involved in it to look after the best interests of the good governance of Scotland for the people of Scotland. The SNP, I fear, wanted to reserve its position for independence irrespective of the consequences of that for the people of Scotland. I regret that.

The point about the financial settlement proposal is that the Scottish Government will have to set a rate for tax and will then either benefit from the additional taxes if the economy prospers or face a reduced income if the economy does less well. The budget will, to an extent, be tied into the success of the economy, and that is an important change. Some of the ease with which London is blamed when things go wrong will be passed back to Scotland properly. Had we known back in 1997, 1998 or 1999, when devising the original scheme, that the tax-varying power was not going to be used, then we would either not have put it in or, I believe, sought just the kind of arrangement that the Bill proposes. But it was intended to be used, and that is why it was a separate question in the referendum.

Some of the additional taxes proposed to be devolved on the financial side in Calman were, to be honest, put in at the last minute to get the total tax take up to a higher percentage. They were never central to the scheme. I hope that the Minister will not mind me pointing out that, as he was responsible for putting them in at the last minute by and large to get the total tax take up to a certain percentage, it is not without irony that the Government have taken some of them out since. They were never central to the scheme, because the central part of the financial settlement was always what was happening on income tax. That is a very important step, which is still absolutely at the heart of the Bill.

I would like to say a few words about a referendum. For whatever reason, back in the 1970s and in 1997, we held a referendum on the main question of setting up the Parliament, and in 1997 on a separate question on giving it financial powers. Had we known that those powers would never be used, I am not sure that we would have felt the need to have a referendum. However, having created that precedent, I think it is impossible not to have a referendum on proposals which contain new powers on tax which will have to be used in setting a tax rate. Therefore, there should be a referendum, and the only question to be resolved is whether it should a question on the SNP proposals as well. I think that it should be. I note that the noble and learned Lord the Advocate-General referred to Pujol a few days ago. I would not like Scotland to get caught in the trap of a supposedly nationalist Government always asking for more from the centre but never being prepared to ask the fundamental question themselves. I regret that, for whatever reason, the other place did not seek to introduce such a question. It might, however, be appropriate for this House, at least in the first instance, to give it the chance to reconsider the matter in due course.

Too often these days, discussion about devolution as against independence is caught in the past. No one is suggesting a return to the pre-Scottish Parliament days. One of the changes of the last five years, which I at least am grateful for, is that we have heard precious little of late from the First Minister about the arc of prosperity that he was so keen to join—Iceland and Ireland being his role models only five years ago. In a referendum, what the present Scottish Government want would have to be defined. To take just one matter of some importance, in the current financial climate, the central banking function would not surely be taken on by a new independent Scottish central bank, so it would have to be decided whether it was going to be the Bank of England or the European Central Bank in Frankfurt. I have to say that, if nothing else, that would smoke out what I fear many nationalists actually are, which is not so much pro-Scottish as anti-English—and that I deplore.

There are many things still to discuss in the Bill, although as I say I fundamentally support it, and I look forward to the further stages.