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Lords Chamber

Volume 736: debated on Wednesday 28 March 2012

House of Lords

Wednesday, 28 March 2012.

Prayers—read by the Lord Bishop of Ripon and Leeds.

Water: National Grid


Asked By

To ask Her Majesty’s Government what plans they have to facilitate the establishment of a national water grid.

My Lords, our water White Paper set out the challenge of ensuring resilient and sustainable water resources in the face of increasing pressure from climate change and population growth. We need to use existing water resources more efficiently, develop new sources and build connectivity across the network. Water companies are already joining up sources of supply to build resilience. We are working closely with Ofwat and the Environment Agency to encourage further connectivity and to promote bulk water trading.

My Lords, by 5 April over half the country will be subject to drought orders. I know that the Minister understands the gravity of the situation but perhaps I may press him further. Will he and his departmental colleagues, as a matter of priority, bring forward a national plan—whether it is called a network or a grid, I really do not mind—so that for the future all parts of the country have an adequate water supply?

As my noble friend is aware, much has already been done by water companies to improve interconnectivity. My noble friend asked about a plan. We are encouraging water companies to include provision for better interconnectivity in the next price review round, which is due to complete in 2014. This is potentially much more cost-effective than creating a national grid and it will help to address the problem of imbalances in water availability across the country. We need Ofwat to get the incentives right so that water trading is economically attractive for water companies.

My Lords, I welcome the statement made by the noble Lord a few hours ago in this Chamber, when he indicated that any proposals to secure additional water supplies from Wales would go ahead only with the agreement of the National Assembly as water is a devolved matter. That being so, will he also confirm that there will be a Barnett consequential for the expenditure undertaken as a result of the Bill passed last night that would be relevant to Wales?

The noble Lord made a valuable contribution to last night’s debate. The point I was making concerned the construction of new reservoir capacity, rather than taking water from existing reservoirs, and I think I should make that clear. I am not fully briefed on how the Barnett formula might apply in respect of the Bill which this House passed last night and any arrangements that might be made with Wales, so I cannot help the noble Lord on that point. However, I shall write to him if he will allow me to do so.

My Lords, is not one of the more obvious benefits of our EU membership the fact that we have been forced to spend at least £65,000 million, or £65 billion, on three EU water purification directives when there was nothing wrong with our water before? No one was getting tummy ache. Would not that sum now be useful for infrastructure and supply?

No, I cannot accept the noble Lord’s premise. The Government owe it to all consumers to make sure that the water is of the highest standards and there can be no derogation from that obligation. The noble Lord is quite right that infrastructure costs money, but the water companies can be incentivised to provide just that.

My Lords, what importance do the Government give to some of the work being undertaken at, for example, the University of Leeds on the development of water-free washing machines and at other institutions on water-free lavatories? Is not the effort on finding ways of using much less water worthy of a great deal of investment?

My noble friend makes a very good point, indicating that water efficiency is one of the key strategies which it is in all our interests to pursue, particularly at this time when drought threatens a good deal of the country. That and water capture and storage are strategies which individuals and businesses can undertake for themselves.

Does the Minister recall that the last time the noble Lord, Lord Pearson of Rannoch, invented a statistic regarding the water directive—in this case, £65 billion—he got his arithmetic wrong, as he subsequently acknowledged, by a factor of 1,000? Does the Minister think that the same is likely to apply on this occasion?

I cannot possibly comment on the accuracy of the mathematics of the noble Lord, Lord Pearson. He has placed a figure before the House and, of course, is accountable for what he has suggested, but I cannot comment on it.

Will the noble Lord tell us whether progress has been made on the things that we can change now rather than the things that will take 20, 30 or 40 years? For example, what progress has been made on stopping the leaks, and what proportion of water is actually lost through leakage every year?

My Lords, as part of the Government’s drought summit, water companies are committed to reducing water losses and increasing leakage detection. It is important to say that leakage cannot be eliminated altogether. Even new pipes can leak, but water companies have leakage targets to move them to a sustainable, economic level of leakage. Leakage has fallen by nearly 40 per cent since the mid-1990s and is expected to fall by a further 3 per cent in the next three years.

My Lords, what progress is being made on the proposal to build a new large reservoir in the Abingdon area—I think that it is in Oxfordshire?

I know nothing of that proposal so I am not in a position to answer the noble Lord’s question. Reservoir capacity is important, of course, but even more important is the opportunity to connect up existing river resources and water resources so that they are available across water companies. That is the point that I wanted to make in response to my noble friend’s Question.

My Lords, we pipe and store gas and oil around the country, so why not water? The Roman aqueducts did it 2,000 years ago. The Minister previously cited the difficulty in getting water uphill. Quite so, and no doubt the £30 billion or so cost of establishing a grid is also an issue. Why cannot we use wind turbines to push the water uphill? Is not the provision of water a far greater and essential benefit to one and all, rather than getting a few people to Birmingham a few minutes earlier? We should get our priorities right.

My Lords, it is possible to achieve both but it is not possible to make water flow uphill as my noble friend rightly points out. I would use the analogy that the amount of money that my noble friend is prepared to spend to put petrol in the tank of his motor car is a great deal more than he would be prepared to pay to fill his bath with water. Some of the difficulty comes from the fact that we as a country do not recognise the importance of water and value it enough.

Japanese Knotweed


Asked By

To ask Her Majesty’s Government what progress they have made in eliminating Japanese knotweed from the United Kingdom.

My Lords, we are working towards sustainable natural control of Japanese knotweed. The controlled release of the highly specialist psyllid, Aphalara itadori, is progressing well and we are nearly two years into the release phase. If successful, the psyllid should restrict the growth of Japanese knotweed, slow its capacity to spread as vigorously and enhance the effectiveness of other management effort. I regret to say that it will not eradicate this invasive plant altogether.

My Lords, perhaps in my perseverance in asking this Question over 25 years, we are actually getting somewhere. The psyllid is quite a success but are there other ways of ridding ourselves of this extremely invasive and destructive weed?

I would like to thank my noble friend for her persistence, which I think rivals the Japanese knotweed in its vigour and eradicability. Research is going on into a leaf spot fungus, which also has the capacity specifically—this is the key to biological control—to attack Japanese knotweed. Defra and the devolved Administrations are also supporting catchment scale control work on Japanese knotweed in several areas across the country.

My Lords, while waiting for this new panacea to have effect, does the Minister agree that Japanese knotweed is pretty lethal stuff and that there are virtually no powers to deal with it if one sees it in adjoining gardens or houses? Short of having to take civil action, which is pretty cumbersome—especially given the legal aid Bill—should we not have better enforcement powers? People do not know about it, and not all police forces have wildlife officers, so why not give local authorities the power to deal with it?

The noble Lord makes a very important point. Japanese knotweed is a pest and it is extremely difficult to eliminate. However, I remind the noble Lord that this House guards jealously the right of entry. I remember many debates on that issue and I am not sure that this House would be particularly happy to have people’s gardens invaded by enforcement officers in the way that he suggests.

My Lords, when I read this excellent Question of the noble Baroness, Lady Sharples, I wondered whether it was code for the knotweed growth regulation that was debilitating our economy.

As my noble friend will know, Defra has been extremely vigorous in responding to the red tape challenge. Indeed, the red tape regulatory reduction targets of this Government are being vigorously enforced. Unfortunately, we do not have a psyllid that we can apply to them.

My Lords, I am very pleased to hear of the progress on the introduction of the psyllid, which passed its scientific trials on my watch when I was a Defra Minister two years ago. I was persuaded, as I am sure the whole House will be, at how threatening the plant is. Network Rail’s permanent way, embankments and the lines themselves are threatened by knotweed and it has to deal with it at immense cost. Householders in Broxbourne, the borough in which I live, lost their £300,000 home the other day because the weed had infested their land. We cannot take this lightly. The noble Lord is right that we place a great deal of hope on the psyllid but we certainly need to make progress on its employment.

The noble Lord is absolutely right to remind us of the continuity of government. It was helpful to be able to take up where the noble Lord left off. He was right to point out that this is a serious matter, particularly for those people who find their properties affected. That is why the Government are investing a considerable amount of money in the area. The cost to the economy is £166 million per annum, which is a sizeable sum. That is why we consider it a priority to find effective control.

My Lords, is my noble friend confident that other invasive species will not be permitted to come to this country? Clearly this has been a very long-term problem and we need to make sure that we do not allow in such species in the first place.

My noble friend is absolutely right. One of the hazards of climate change is that we may find exotic plant and animal pests coming to this country. Defra is constantly on watch; Fera, our science agency, gives us advice; and we monitor plant imports with the express purpose of trying to make sure that we do not allow such an accident to happen again.

My Lords, on the saga of this weed, is Defra or any other organisation working on a solution to find an insect or animal that can destroy the weed by simply eating it?

That is exactly how the psyllid works. It is a mite-sized fly or beetle-type insect that has the capacity to suck the sap out of Japanese knotweed. This has proved to be a very effective treatment. It is a biological control; the psyllid is knotweed-specific and does not destroy other plants. This is why we are particularly pleased with the outcome of the trials that were conducted, and why we see it as the most effective way of controlling the pest.

Universities: Fees


Asked By

To ask Her Majesty’s Government whether they will ensure that students who are resident in England, Wales or Northern Ireland and attend Scottish universities will pay the same fees as those living in other European Union member states.

My Lords, as I set out on Report on the Scotland Bill on Monday, higher education is devolved across the United Kingdom. This means that all areas of the UK have made different decisions regarding the funding of higher education. Any change to the devolution settlement would risk a key principle of devolution: that the devolved Administrations have the freedom to set devolved policies as they see fit.

My Lords, I thank my noble and learned friend for that very disappointing reply. Should the Government not get together with the Scottish Government and end the scandalous discrimination against students from England, Wales and Northern Ireland, who have to pay up to £36,000 to go to a Scottish university, where Scottish, Italian and French students can go for free, and where anyone else in the European Union can also go for free? Meanwhile, under the Barnett formula, people from the rest of the United Kingdom are funding a grant for Scotland that works out at about 20 per cent more per head than is spent in England. This is not sustainable; it is unfair to our young people; it is bad for the union; and should the Government not do something about it?

My Lords, I recognise the sensitivity of the issue—and the tenacity with which my noble friend pursued it in Committee and on Report. It is totally in character that he should continue to do so. As I indicated, fees are only one part of the question. Different student support arrangements are in place in different parts of the United Kingdom. Support for English students, including English students studying in Scotland, is more generous than for Scottish students studying in Scotland. The universities in Scotland have also made generous bursary arrangements for English students wishing to study at Scottish universities. It was suggested on Monday that there should be pan-UK discussions on the matter. I indicated then that I would relay that to the Department for Business, Innovation and Skills. That proposal has been relayed. However, I do not wish to raise unrealistic expectations. It might be useful for Administrations in all parts of the United Kingdom to come together and discuss the issue.

My Lords, why are university vice-chancellors thought to be so passive in this matter? We were told the other evening that they had no alternative, and that the lawyers had explained this to them. We were told that they could not revise their financial calculations. University vice-chancellors are supposed to be chief executive officers capable of responding quickly to sudden changes. Why can they not act to remedy an obvious injustice that stains the good name of their universities?

My Lords, it was not the university vice-chancellors but the Scottish Government to whom legal advice was given about the limitations with regard to European Union law. The noble Lord asked about vice-chancellors. I received a letter from Steve Chapman, the principal and vice-chancellor of Heriot-Watt University, urging me to resist my noble friend’s amendments. That shows that universities in Scotland have been responsive. He wrote that universities had put in place arrangements that meant that English students were not disadvantaged if they chose to study in Scotland instead of England, including the availability of bursaries and other forms of financial assistance at a level that was at least as high as that offered by English universities.

My Lords, in the past the same EU anomaly applied to Wales. The Welsh Government have subsidised Welsh students studying in Wales, as well as EU students. Now they plan also to subsidise Welsh students studying in England. Is it the view of the Government that this would place an obligation on the Welsh Government also to subsidise EU students in England?

My Lords, I recollect a similar situation arising in Scotland. I cannot indicate that the UK Government have considered the position with regard to Wales. When I visited the University of Glamorgan last summer, I got my ear bent on the university student funding issue. However, as I indicated in my Answer to my noble friend, there would be merit in all the United Kingdom Administrations responsible for higher education getting around a table, teasing out some of the issues and learning from each other.

My Lords, I have always regarded the noble and learned Lord as a very fair man. He is in the very difficult position of having to justify the manifest unfairness towards English, Welsh and Northern Irish students. I welcome the initiative in seeking to reopen discussions with the Department for Business, Innovation and Skills. Will he also look at anti-discrimination legislation, because this is a clear case of discrimination against students from these three parts of the United Kingdom, and at the end of the day rich students will still be able to come to Scotland while those with humbler means will find it even more difficult?

My Lords, I cannot accept the proposition of the noble Baroness. As I indicated, the support arrangements available for students domiciled in England apply whether they are studying in England or at a Scottish university. Scottish universities have put in place generous bursary arrangements to help students coming from England and other parts of the United Kingdom. Students from England, whether they are studying in Scotland or England, will not have to pay off any of their loan until they are earning at least £21,000. That should not deter students from poorer backgrounds from coming to Scotland.

My Lords, is it not the case that the Scottish Government are forcing the Scottish Funding Council to cut funding by more than £100 million over the next four years, thereby jeopardising the student experience and the teaching quality of the universities? Surely the Scotland Office as well as BIS should engage with this so that we can play fair by students not just in Scotland but in the whole of the United Kingdom?

My Lords, the position with which the Scottish Government were faced, once this Parliament had agreed a position on student fees and funding support in England, was that they could not risk Scotland becoming the cheapest option for students from the rest of the United Kingdom. Doing nothing would have created an unparalleled level of competition for places at Scottish universities, and there was a concern that this would squeeze out Scottish students from Scottish universities. As I indicated in debate and in answer to this Question, these are serious issues, and I do not minimise the strength of feeling among noble Lords. However, with European Union law on one side and the principle of devolution on the other, we must try to find a course—but I will not raise expectations of something that may be very difficult indeed.

Education: Languages


Asked By

To ask Her Majesty’s Government what is their response to the Language Trends survey 2011, published on 14 March 2012.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I declare an interest as chair of the All-Party Group on Modern Languages.

My Lords, the Government welcome the finding of the language trends survey that in the past year there has been a 15 per cent increase in state schools now teaching languages to the majority of their GCSE pupils. We believe this shows that the English baccalaureate is starting to have a positive impact on take-up. We are considering the expert panel’s recommendations for the national curriculum review and will be announcing our plans shortly. This will be followed by a period of public consultation.

My Lords, I agree that the Government deserve to be congratulated on the boost to modern languages as a result of the EBacc. It is also a welcome finding of the survey that significantly more schools with the highest levels of social deprivation are making these improvements. However, does the Minister agree that it is of serious concern that as many as 46 per cent of state schools still say they have no intention of improving their language provision as a result of the EBacc? Does he agree that this points to the need to accept the recommendation of the expert panel and avoid repeating the mistakes of 2004, by restoring modern languages to the compulsory part of the curriculum at key stage 4?

My Lords, as I have said, we are considering the recommendations of the expert panel, which, as the noble Baroness says, were very clear. We will set out our response to that. The sharp uptake after a number of years of decline is encouraging. Given that it has happened in such a short time, there are grounds to hope that the process will go further. I understand the points that she makes and we will take them into account as we ponder our response to the expert panel.

My Lords, given the decline in language provision at independent schools—the reason for which is, I am told, dissatisfaction with the assessment of GCSEs and A-levels—would the Minister research this further in his conversations with that sector, to see why a past rich source of language scholars is in decline?

It is still the case that, for its size, the independent sector provides a disproportionate number of young people who go on to study modern languages. That is something that in broader terms one would want to do something about, to increase the uptake in the maintained sector. That is why these figures are encouraging. I am aware that concerns have been expressed over controlled assessment, grading and rigour at GCSE and A-level. Those are issues that Ofqual is leading on and looking at. I agree with the noble Lord that it is something we very much need to keep an eye on.

My Lords, when this House rather reluctantly agreed to the dropping of the modern foreign language commitment from the national curriculum in 2003, it was because the Minister at the time, the noble Baroness, Lady Ashton, agreed that a systematic programme of teaching languages to primary school pupils would be put in place. Will the Minister tell us what happened to this commitment to primary school pupils and how far are they systematically being taught languages?

Part of the answer to that will become clear in our response to the expert panel, which makes recommendations about whether teaching modern foreign languages should be statutory at primary school as well. That will become clear in due course. The last time research was carried out into the teaching of modern foreign languages at primary school, more than 90 per cent of primary schools were doing it. We have a challenge in getting specialist teachers of modern foreign languages into primary schools, and that is something we are seeking to address in looking at teacher training and teacher supply.

My Lords, I declare an interest as a chairman and adviser to many exporters, who will always benefit from a more competitive, globalised UK economy. Does the Minister agree that if we do not start selling around the world even more than we do today, especially in developing and emerging markets, this country will not generate the wealth, tax and jobs that 21st century Britain will need? One of the best ways of closing a sale is to talk to the would-be purchaser in their language. The way to do that is to put pressure on those in state education not to learn what I presume we all did at school at their age—French and German—but Spanish and Chinese. With English, they are the languages of the 21st century. I hope that the Minister agrees with me that the sooner we get Spanish and Chinese Mandarin into state education, the more competitive this nation will become.

I very much agree with the noble Lord. Spanish is one subject that has been growing. French and German have been most sharply declining in numbers and Spanish has been growing. Chinese is small, but growing. One of the initiatives that my right honourable friend the Secretary of State took when he visited China last year was an agreement with the Chinese Government to have 1,000 Chinese language teachers training over here in our system. I agree with him that it is extremely important from the business point of view, but it is also extremely important from a cultural educational point of view as well.

My Lords, could the Minister tell us what the Government are doing to encourage greater use of ICT for language teaching via social networking—

Online Safety Bill [HL]

First Reading

A Bill to make provision about the promotion of online safety; to require internet service providers and mobile phone operators to provide a service that excludes pornographic images; and to require electronic device manufacturers to provide a means of filtering content.

The Bill was introduced by Baroness Howe of Idlicote, read a first time and ordered to be printed.

Trusts (Capital and Income) Bill [HL]

Motion to Refer to Second Reading Committee

Moved By

My Lords, I have to admit that this is a trifle contrived, because it relates to a future Bill, rather than the Bill in question. However, noble Lords will be aware that it has been announced that the Joint Committee report on Lords Reform will be published on 23 April. Will the Leader of the House join me in deploring the leaks, of which there have already been two in the past three days? I will be writing to the noble Lord the Leader of the House today to request that a Statement be made on the Joint Committee report on 23 April, and to suggest that we have a debate on the joint report, preferably before Prorogation.

My Lords, contrived or not, I know that this is an issue of great interest to the House. The noble Lord, Lord Richard, who is chairman of the Joint Committee of both Houses, is in his place today. Whether or not there have been leaks—inspired or not—I deplore all leaks, by the Government or anyone else. However, it is a matter for the chairman and the committee itself; it is not a matter for me. I do not know whether it is true—I am sure that it is—that, as the noble Baroness said, it will be published on 23 April. The original date for the committee to finish its work was yesterday and I hope it might be able to publish a little sooner than 23 April, but maybe that will be subject to confirmation. I look forward to receiving a letter from the noble Baroness. I must say—I am speaking without any particular brief on this—it is hard to see how we can have a government Statement on the same day as the publication of a great report that has been nine months in gestation and on which 26 Members of Parliament and of this House, including Cross-Benchers and a bishop, sat, but I will see what can be done over the next couple of weeks.

The original date of publication was to be 16 April. That is what the committee accepted, and that was my view. I took the view very strongly that the report should not be published unless and until this House was sitting. It would be quite wrong to publish the report when the House of Commons was sitting and the House of Lords was not. The Government then chose to change the date from 16 April, so that we have an extra week’s holiday and come back on 23 April. In those circumstances, the committee decided, and I totally agreed with it, that the publication date should be 23 April not 16 April.

My Lords, I appreciate that this is not a matter for the Leader of the House directly, but the report on the BBC this morning of the leak suggesting that 12 bishops will be retained also contained the information that the Government would be content to accept that. That suggests that people in the Government are talking about the report, which would be very damaging because it gives the impression that the Government and the committee are working hand-in-hand when, of course, the committee is completely independent. If my noble friend is saying that we cannot have a Statement because the Government could not respond, surely it is inappropriate for people to be briefing the BBC in these terms.

My Lords, nobody could doubt the integrity of the noble Lord, Lord Richard, but it would reassure the House if he were able to indicate that no copies of this report will be distributed to anyone before the embargo date and that no member of the committee will be in possession of the report. As a former chairman of a Select Committee, I know that that is not normal practice, and I hope it will be the case here. I think everybody in this House will applaud the decision made by the noble Lord, Lord Richard, about 23 April and will endorse the Leader of the Opposition’s request that this report be debated as soon as is reasonably possible, ideally before Prorogation.

My Lords, the question of a debate is nothing to do with me, although I have views about when it should take place. As to the question asked by the noble Lord, Lord Cormack, no copies of the report will be distributed before 23 April.

I press a question that I should have thought was the most reasonable and fair question that could ever be put to a Leader who is answerable to the whole House and not just for the Government. The debate must surely take place before the Queen’s Speech. I cannot understand why the Deputy Leader seems to think it is quite out of order. This House of Lords, faced with a Bill and a report on a Bill that is essentially about the abolition of this institution, is unable even to discuss it before it is finalised. The noble Lord, Lord McNally, has stronger views on this than the Leader. Perhaps he can answer for himself rather than simply parroting Mr Clegg’s Bill to the House. I cannot think of any other institution—a university, a factory or a school—where, if it were being closed, the people who work day in, day out in that organisation would be told by the management, “Sorry folks, you can’t discuss it”.

My Lords, I think that a number of the matters that were raised are not matters for me but for the committee. The noble Lord, Lord Richard, has explained what he is doing and has answered my noble friend Lord Cormack. As for my noble friend Lord Forsyth, I heard the same BBC report, but I assumed that the BBC had read the White Paper and the draft Bill in which it is suggested as one of the options that there should be 12 bishops. They were published last July, so the BBC has taken a bit of time to catch up. As far as I am aware, there is no collusion between the Government, civil servants and the committee, which is why I dare say that I was surprised that the date of publication would not be until 23 April.

When the report is published, I hope that we will be given some time to read it. I think the committee would be surprised. On past occasions the Government have been accused of moving with haste by deciding to have a debate within days and not giving the House an opportunity to read a report. I think we should read the report.

A final point before the noble Baroness, Lady Farrington, leaps to her feet, which I can see she is keen to do, and I say this as a government Minister: I do not think there is any doubt in the Government or anywhere else about what the views of this House are on a potential Bill on reform of this House. I do not think there is any doubt here or in another place. It is utterly clear to me and, indeed, to my noble friend Lord McNally and, for the avoidance of doubt, there is not a cigarette paper of difference between me and my noble friend the Deputy Leader of the House of Lords.

My Lords, the noble Lord the Leader of the House misunderstood what was said on the BBC this morning. It was said that the Joint Committee of both Houses is recommending and that the Government accept the recommendation. Given the huge amount of work that the Joint Committee has done, surely it would be logical for the Leader of the House to agree that there should be time to consider the recommendations before the publication of a Bill, which may be amended because of the recommendations, is announced in the Queen’s Speech. That leads inexorably to a view that the report ought to be debated widely prior to Prorogation.

My Lords, if the report is to be published on 23 April and the Leader of the House tells us that we should have time to read and consider it, can we be assured that the House will meet during the week beginning 30 April for four days, or does the Leader of the House have something else in mind for that week?

My Lords, I cannot think what that would be. The noble Baroness, Lady Farrington, went back to the BBC report. Let me say this for the record: the Government have not seen the report. No member of the Government has seen it, and no civil servant has seen it. The Government have no view as to the recommendations on the bishops or anybody else, other than those that were listed in the draft Bill or the White Paper. There is no collusion between the Joint Committee of both Houses and the Government in any shape or form. The noble Lord, Lord Richard, can nod in agreement, and I am sure he will. When the report is published, it will be as much of a surprise to me as to my colleagues in government. Apart from anything else, I am very much looking forward to it.

I assure the House that over the next few months there will be plenty of opportunities to debate and discuss the future of this House at considerable length in many different fora. All those matters will be taken seriously. I did not hear my noble friend Lord Forsyth, but I am sure it was a quip that I would not necessarily have been able to respond to very quickly. I can assure noble Lords that there will be a debate before the Bill is published. I will, of course, work with the usual channels on when that will be.

I shall finish with this point. I do not wish to pre-empt the Queen’s Speech, but it has been known for some time that the Government intend to legislate in this area. The Joint Committee may well say, “Under no circumstances should you do this”. It may say, “You should do this, but here are some things you may wish to consider”. I have no idea. The Government will wish to take that into account, and will do so after the publication of the report.

My Lords, is not the question of how many sitting days we have before Prorogation rather relevant to this? Presumably the noble Lord knows on how many days the House will sit in the week beginning 30 April. Am I right that we do not know, or does everybody know?

My Lords, it really does depend on the progress of business on the date of Prorogation. We will be taking a view on that shortly. On the question of when the House will sit, by not sitting in the week of 16 April we are saving the taxpayer £500,000. That is quite a considerable amount of money. As I have said, there will be plenty of opportunities to debate the committee report and the whole subject of Lords reform on many occasions in the months ahead.

Motion agreed.

Trusts (Capital and Income) Bill [HL]

Motion to Resolve

Moved By

That it is expedient that if the Trusts (Capital and Income) Bill [HL]:

(a) has not completed all its stages by the end of this session of Parliament, and

(b) is reintroduced in the next session of Parliament,

the new bill shall, notwithstanding the provisions of Standing Order 46 (No two stages of a Bill to be taken on one day), be taken pro forma through all the stages completed in this session.

Motion agreed.

Public Bodies (Abolition of Courts Boards) Order 2012

Motion to Refer to Grand Committee

Moved By

Motion agreed.

Statistics and Registration Service Act 2007 (Disclosure of Social Security and Revenue Information) Regulations 2012

Motion to Approve

Moved By

That the draft regulations laid before the House on 27 February be approved.

Relevant documents: 42nd Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 20 March

Motion agreed.

Scotland Bill

Report (2nd Day)

Relevant document: 17th Report from the Constitution Committee

Amendment 2

Moved by

2: Before Clause 10, insert the following new Clause—

“Referendum about Scottish independence: further provision

(1) Any referendum held in pursuance of the provisions of section 30 of the Scotland Act 1998 shall not take place until nine months after every Secretary of State has laid before both Houses of Parliament a paper prepared by their department setting out the implications of an independent Scotland—

(a) to that department and its executive agencies,(b) for that department’s policies, and(c) for that department’s planned expenditure.(2) Any referendum held in pursuance of the provisions of section 30 of the Scotland Act 1998 shall be administered by the Electoral Commission with a single question relating to the future position of Scotland in the United Kingdom.”

My Lords, I remind colleagues to leave the Chamber peacefully and quietly on this last day of sitting so that my noble friend Lord Forsyth may move his amendment.

My Lords, I am surprised that there is not more interest in this important piece of legislation. This amendment is very straightforward. If my noble and learned friend is not able to accept it, I hope that at least he will be able to give an undertaking that the substance of it will be adopted by the Government.

It is perfectly apparent that the Government do not intend to use the Scotland Bill to provide for the forthcoming referendum on independence. As my noble and learned friend has made clear, the preferred procedure is to use a Section 30 order, but subject to the important conditions that such a referendum taken forward by the Scottish Parliament would be regulated and run by the Electoral Commission, and that there should be a single question.

This amendment is concerned with what happens in the run-up to the referendum. I take it that if my noble and learned friend is not successful in persuading the Scottish Government of the need to move forward on a Section 30 basis, they will bring forward a Bill in the next Session of Parliament to provide for a referendum. No doubt the date of that referendum would be decided at that point.

It is important that we have an informed debate within the United Kingdom as a whole and Scotland in particular. So far the debate has all been about process, about who is going to set the question and what the question should be. This is an important question. It concerns the future of the United Kingdom as a whole, and will have an immense impact on people in ways that many people, including myself, have not even thought of.

This amendment asks the Government for a clear undertaking that every single government department will set out in a Green Paper, in objective—not political—terms, what the consequences of independence would be and what issues would need to be addressed. There are large-scale issues that are obvious, such as what would happen to our nuclear deterrent given that the Scottish Government are opposed to nuclear material being on Scottish soil, and the costs and employment consequences of that. There are also issues about public sector pensions as Scotland, because of its long tradition of public service, has a disproportionately large number of people involved in public service.

In the field of banking and finance, the Treasury should indicate what would happen to organisations like the Royal Bank of Scotland; for example, how could it possibly meet its requirements for raising capital in an independent Scotland? What would happen on the currency? What would happen on the role of the Bank of England? How would we avoid a Greece-like situation?

In the Department of Energy and Climate Change, what would happen in respect of the interconnectors and how would the so-called green policy of being entirely dependent on renewables work in an independent Scotland? It might be cheaper for England to buy its electricity from France, which is generated by nuclear, than from Scotland, where the whole business model for the Scottish Government’s green agenda depends on being able to add to the bills of English, Welsh and Northern Irish consumers.

Those are some examples; I could go on but I have no desire to spin out the debate today because I know people are anxious that we should conclude these proceedings as speedily as possible. But if we leave it to campaigners and politicians to exchange perhaps not entirely well informed arguments, the public will tire and the very serious consequences of the disintegration of the United Kingdom, of the balkanisation of Britain, will be lost sight of.

If I were in my noble and learned friend’s place, I would say, “I am not sure that it is necessary to put this in the Bill”. I accept that, but we should have an undertaking that every government department and its executive agencies will set out the implications for their policies and planned expenditure, so that people go into this with their eyes wide open, and the separatists who advocate breaking up Britain have to explain how they would address these issues. At the moment, people are going round saying that it is up to us to make a positive case for the United Kingdom. I reject that. It is up to those who propose change to explain how they will maintain the benefits that we all enjoy as part of the United Kingdom, wherever we live and whatever our political convictions.

Does my noble friend agree that this is absolutely crucial for those who are not Scottish as well as for the Scottish? Many in England feel that they need to understand exactly what the consequences are and unfortunately up to now they have had no such opportunity, which is why his amendment is so important.

I am most grateful to my noble friend for that intervention. I look at this from a Scottish perspective and I should have given more emphasis to that. He is absolutely right. This will have huge implications for people in England as well as Scotland. I find it very difficult to see how we could keep our role and influence in the United Nations, for example, if the United Kingdom was broken up. I think our country would be seen to be greatly diminished internationally. I do not quite know how it would work, given that the Scottish nationalists are opposed to our membership of NATO. Most countries are queuing up to try to get in to NATO, but this lot want to leave NATO. What is the position of our armed services, whose dedication fills everyone in the country with admiration?

Of course, my noble friend Lord Deben is more enthusiastic about the European Union than I have been and he is right from a sedentary position to ask, “What about the EU?”. Would Scotland as an independent nation be able to join the EU? If it was not able to join the EU, what would the consequences be? If it was able to join, presumably it would not benefit from the opt-out which we enjoy on the euro. Therefore, what would happen in terms of the implications for our currency, for cross-border movement and the rest? These issues are hugely important. This is not a dodgy dossier exercise or about getting government departments to make political statements one way or the other. It is simply about listing the issues which would arise so that those involved, on whichever side of the debate, can address the issues instead of being involved in a kind of Brigadoon debate which is characterised north of the border.

My Lords, perhaps I may gently suggest that my noble friend Lord Forsyth finishes his words of wisdom before anyone else interrupts because it interrupts the flow of what he is saying.

I am most grateful that I have a fan here, although the interventions that have been made were very pertinent. I beg to move.

I intervene briefly to suggest that the perceived impartiality of such a series of reports might be improved if it was handled by the equivalent of a Calman 2 commission, preferably of economists of sufficient stature that they would put their own reputation for impartiality above any party advantage. Ideally—I hope that I am not being unduly starry-eyed about this—if the membership of such a committee could be agreed with the Scottish Government, there would be no come-back. I agree that that looks pie in the sky, but there are economists, including economists of a nationalist tendency, who would not put their own reputations on the line by being seen patently to lie about the consequences of certain things. I simply suggest that the equivalent of Calman 2 might be a useful prerequisite for any debate on any amendment. I wonder whether the noble Lord agrees with that.

I think that the noble Lord intervened before I sat down. I do agree with that. The next inquiry of the Economic Affairs Committee of this House, of which I am a member, as the noble Lord will be aware, will be into the economic impact of independence on the United Kingdom as a whole. I agree that many economists can contribute to that in an informed and objective way. I think that the committee will produce some very interesting material as a result.

In addition to economic and legal aspects—many different opinions have been expressed publicly by members of the Scottish Government and the United Kingdom Government—I wonder whether the noble Lord has considered legal matters such as the right of Scotland or the ability of Scotland, if independent, to join the European Union or to retain the pound and matters of that kind. Does he think it is advisable that, in addition to a committee of experts such as the noble Lord, Lord Gordon of Strathblane, has mentioned, there should be from this House a committee including lawyers and experts who can offer independent advice on such questions?

My Lords, I assume that my noble friend had serious reservations about the terms of Section 30 being agreed with the First Minister. After all, in recent press comments, the First Minister has said, “Will you please leave this all to us in Scotland and we will organise the referendum as we want it?”. I send good wishes to those from the Government who will carry out these vital negotiations but the questions that have to be settled are so important. I support my noble friend in saying that, if we do not get what we want on the question or any of the other important issues, we must have a chance to deal with it at Westminster.

I know that my noble and learned friend when he comes to reply will say, “Oh, but this amendment is not for the face of the Bill”, which I accept. But I believe that he has to give us some sort of undertaking that the very matters which my noble friend Lord Forsyth has raised in this amendment are dealt with and that we will get full and frank discussion of what is involved in this whole exercise.

My Lords, I should like to expand slightly on what the noble Lord, Lord Sanderson, and my noble friend Lord Gordon have said. I am greatly reassured to hear from the noble Lord, Lord Forsyth, that the Economic Affairs Committee of this House will consider the issues around the economics of independence. I have one suggestion to make for the Green Paper proposed by the noble Lord, Lord Forsyth, and that is to look at the impact on employment of the proposal for an independent Scotland—in other words, that Scotland should secede from the union.

In the 1970s, a very effective campaign was run in Scotland led by the Scottish TUC, the CBI and the Scottish Council for Development and Industry for the dispersal of Civil Service jobs. A few weeks ago I tabled a Question for Written Answer asking how many Civil Service jobs in Scotland relate to reserved departments—in other words, United Kingdom departments as distinct from Scottish departments. There are 31,000 jobs in reserved departments. There is no question that these jobs will disappear. No sovereign state offshores significant Civil Service jobs. We do not have any British Civil Service jobs in the Republic of Ireland, in Jersey or in any of the other realms and areas close to our shores. It is inconceivable that we would have a situation where these Civil Service jobs would remain in Scotland.

If I was a Member of Parliament for places such as the north or the south-west of England and I saw the prospect of these Civil Service jobs becoming available, I would be crying out for them. There are jobs at every level, from limited skill at entry level to real leadership jobs with real salaries. Even on a random guesstimate of the multiplier of these jobs, on a multiplier of three, in the wider economy we are talking about something approaching 100,000 jobs directly consequential on the cessation of Scotland from the United Kingdom.

Some jobs will carry a higher multiplier because they are, for example, in science and technology; in the Ministry of Defence, both uniform and civilian; or they have a long supply chain in Scotland. We need to know what the outcome of that is likely to be for the Scottish economy. Like other noble Lords, I do not expect the noble and learned Lord to accept that this amendment should go in the Bill but I hope that there is already within government at least a Cabinet committee looking at these issues. The economic issue is perhaps the simplest. Once we go on to welfare matters, we are into a degree of complexity that will give us sore heads for a long time.

I urge the noble and learned Lord when he replies to the amendment in the name of the noble Lord, Lord Forsyth, to take into account the crying need for dispassionate information about the true consequences. Let us take a decision based on fact and not on rhetoric.

My Lords, I support the objective of my noble friend Lord Forsyth. I believe that the Scottish people need to be presented with much more detailed information about the consequences of separation than are likely to be provided by the popular press or the media. The reality is that the last time we had a referendum on constitutional reform, on AV, the media noticed the issue for no more than two weeks before the vote took place. Although the issue of voting systems is nothing like as significant as that with which we are now faced, which could lead to the break-up of Britain, I do not have any expectation that the depth of analysis that would be available to most people in the popular media would be anything like sufficient to assist the formation of a carefully cast vote. Although it may not be appropriate to put this directly into the Bill, it seems to me that the Government are best placed to analyse the consequences for government departments. Although there is an issue of whether that is the most independent way, the factual description of what would flow can be done. I would go further and say that there is a need for independence not only for a factual explanation of what is feasibly anticipated for Scotland, but the required consideration of alternatives for the whole of the United Kingdom.

That process would require considerable, objective debate, as the noble Lord, Lord Gordon, said. I am not certain that the alternative would best be discussed or presented by the Government at this stage. To have that debate, properly informed, is imperative if we are not going to blunder into a constitutional catastrophe, not just for Scotland but for the whole of the United Kingdom.

I support what my noble friend Lord Forsyth has said about information. In the United Kingdom we are woefully short on information as to the consequences of this potentially tragic leap that we are encouraged to take. I was disappointed in Committee by the lack of response from my noble and learned friend on these matters. I raised some of them, such as the UK’s membership of Europe and what Scotland’s position would be, and what the position of our seat as a permanent representative on the Security Council of the United Nations would be. What currency will Scotland use? It cannot be allowed to use a single currency with the rest of the United Kingdom because single currencies without a single Government do not work. Will Scotland accede to or be refined as an existing member of the EU? The EU is clear on that: if you are a new member, you have to have the euro. Does that mean that, in Scotland, they will have to have the euro? Without this sort of information, we are not going to be able to have a sensible debate on this.

The noble and learned Lord, Lord McCluskey, raised the legal point. In Committee, I reminded Members of the number of treaties and obligations that had to be renegotiated with the break-up of Czechoslovakia. That ran into tens of thousands. A huge number of commitments will have to be renegotiated or adjusted. We need to know what they are going to be.

I agree with my noble friend Lord Sanderson of Bowden on his scepticism over the Section 30 order. We cannot alter this Bill. It has been agreed behind closed doors and is subject to a legislative consent Motion. My noble and learned friend Lord Wallace of Tankerness was very clear about this when I raised it on the first day of Report, when I asked what happens if we have an amendment at Third Reading. He said, “Well, Holyrood will have something to say about that”. So we will not be able to alter the Bill, and we will not be able to alter a Section 30 notice. Again, it will be agreed behind closed doors and presented as a fait accompli.

In addition to giving support to my noble friend Lord Forsyth, I ask my noble and learned friend Lord Wallace two questions. In the Section 30 notice, does he envisage that the referendum would have to take place by a set date? If the Section 30 notice allows for a referendum but there is no fixed date by which it must be held, we will go into limbo. If it is not held by that fixed date, the United Kingdom Government will have to legislate for a referendum to settle this matter.

Secondly, my noble and learned friend likened the United Kingdom to a club. If a member wants to leave, they should be allowed to leave the club without any of the others having any say in the matter. My amendment on the rest of the UK having a say in what Scotland decided was not acceptable to him. Will he therefore confirm that, in the Section 30 notice, he will allow parts of Scotland also to leave the proposed club of an independent Scotland? It comes back to my point about Orkney and Shetland, but it might be the Western Isles or somewhere else. There cannot be one rule for the United Kingdom and another for those in Scotland.

My Lords, my noble friend Lord Forsyth has done the House a service in raising this issue this morning, but I am deeply pleased that he is not going to press the amendment, because it is seriously defective. The idea that we should wait until nine months after the last government department has produced a Green Paper on this subject fills me with dread. I am in favour of a referendum as soon as possible. This would have the effect of delaying it indefinitely—indeed, possibly beyond the date that even Mr Salmond hopes to achieve. I know that the noble Lord is not going to press it, so I will not—

The point of the nine months was that I would like this information to be brought forward as soon as possible. Nine months seemed a reasonable period in which people could have an informed campaign. The Green Papers might be published, but you then need that information to be used as part of the campaign and for people to absorb it. It requires some time.

I do not dispute that. I am querying the length of time that it would take for each UK government department to produce its Green Paper. That is my point.

The nine months starts after that. I hope that my noble friend is not going to press his amendment.

In the second section, it is of course the case that the single question should relate to the future of Scotland in, or out of, the United Kingdom. You cannot assume that it would be in the United Kingdom.

Leaving that to one side, the kind of information that we would need is what the effect would be, to take one example, on the financial situation in Scotland if it were independent. There seem to be three options: Scotland is in the eurozone, which used to be SNP policy; or it is dependent on the Bank of England, in which case it is not proper independence; or else we have a Scottish currency like the old Irish punt. These options need to be spelt out. That is the kind of information for which my noble friend is pressing, and I hope that when my noble and learned friend comes to reply he will be able to give us some indication of the kind of work that is going on on these issues.

My Lords, I, too, welcome the general thrust of the amendment of the noble Lord, Lord Forsyth, in so far as it encourages the preparation and dissemination of objective and credible information about the effects of separation on all aspects of public policy and, by implication, the benefits of the union to the people of Scotland. I resist the temptation to add to the growing list of areas of public policy for which this momentous decision will have potentially detrimental implications. The noble Lord, Lord Forsyth, listed a significant and impressive number of them, which were then augmented by the intervention of my noble and learned friend Lord McCluskey and, indeed, by my noble friend Lady Liddell.

My own view is that there is hardly any area of public policy in Scotland that will not be affected in some way by the decision, should the people of Scotland decide to separate from the rest of the United Kingdom, which I am confident—and certainly sincerely hope— they will not. It is inarguable that this is the most important decision that the people of Scotland will ever, collectively, have to make. It cannot be made unless it is informed by facts: not assertions, not massaged statistics, but facts. On the analogy that if you want to leave a club you can leave it but, if you want to stay and change the rules, then everyone who is still a member of the club has a view, the rest of the people of the United Kingdom are also entitled to know what the facts are.

I agree with the general thrust of the debate and the implication of the noble Lord’s opening remarks that the Bill is not the appropriate place for this debate. Whether or not the points that the noble Lord, Lord Steel, made in relation to delay and the wording are correct, I do not think we will try to impose this amendment into the Bill. That is the right thing to do. If there is to be no statutory obligation on Secretaries of State to provide the necessary information to inform this debate then, at the very least, there needs to be a clear undertaking from the Government that they will place an obligation on Secretaries of State to put that information in the public domain. They should draw on the broader debate that is taking place here about what mechanism or mechanisms should be deployed or created in order to disseminate this information and to give it the stamp of credibility and objectivity that will be necessary to inform the debate.

I would be concerned if there were to be a proliferation of initiatives. I accept that it is entirely appropriate and correct that the Select Committee on Economic Affairs, of which the noble Lord, Lord Forsyth, is a member, should address its attention to this important decision. It is at the heart of political life in the United Kingdom at the moment and there would be no better work for the committee to do. I expect that in the other place the Select Committee on Scottish Affairs will carry out similar work and that other organisations, such as academic institutions, will wish to address themselves to this work in the coming period.

In Scotland, a well resourced institution which can bring together this work and give it a genuine stamp of credible objectivity is necessary. Many people in the professions in Scotland—including the legal profession, academics, economists, people who have served in the Armed Forces, people who understand and have made significant contributions to international affairs over the years, many of whom sit in this House—could make a contribution to the debate.

Those of us who are trying to put together the infrastructure that will inform the debate in Scotland ought to apply our minds to the creation of a genuinely credible and independent institution operating out of Scotland—perhaps an academic institution—which could be a receptacle in which all the information could be deposited, verified independently and disseminated. We should clearly invite the nationalists to contribute to that discussion so that what comes out of it has that stamp of credibility and objectivity, and not the taint of a political objective.

My Lords, I welcome the debate and the amendment moved by my noble friend. Although he has indicated that the amendment might not be appropriate for the Bill, the way in which he has moved it and the issues he has raised have clearly won widespread support across the House. I certainly recognise the spirit in which he moved it and I endorse the points that he has made. He said that it is time to get on with the informed debate rather than debate the process, and I warm to that because there is a host of important issues that need to be analysed.

It is worth bearing in mind that the Scottish National Party has been pushing for a referendum to be held for many years, and it has repeatedly been asked to set out what it means by an independent Scotland. As my noble friend said, the onus is on it to set out what it means by independence. Individuals, businesses and civic Scotland have been calling for urgent clarification of what independence would mean for their livelihoods, for their workplace and for their families.

In September last year my right honourable friend the Secretary of State for Scotland asked the Scottish Government just six of the many questions that need answering, and these have been echoed in your Lordships’ House today. How would membership of international organisations, including the European Union, be assured? What will Scotland’s defence posture and the configuration of Scotland’s Armed Forces be? How many billions would Scotland inherit in pension liabilities? Who would pay for future pensions? What regulation would be applied to Scottish banks and financial services and who would enforce it? Which currency would Scotland adopt, and how could entry and influence be guaranteed? Lastly, how much would independence cost—what is the bottom line?

Noble Lords also raised other questions. The noble Lord, Lord McCluskey, asked about the legal implications of independence. The noble Baroness, Lady Liddell of Coatdyke, in raising an important point, reminded us of the number of UK civil servants working for UK departments in Scotland—there are considerably more than the number working for the Scottish Government—and asked what their position would be in an independent Scotland. These questions clearly need answering. There is an obligation on the Scottish Government and the Scottish National Party to provide answers.

Although it is accepted that a statutory obligation on, for example, the Department for Education, the Ministry of Justice or an executive agency to come forward with a Green Paper may not be the way forward, I say to my noble friend and the House that I am confident that all departments will be engaged in setting out the positive case for the union and, by implication, what the other side of the coin would be. We are seized of these important issues.

On a previous occasion my noble friend Lord Forsyth raised the issue—as a number of noble Lords did today—of an independent body to examine some of these matters, and in the other place the right honourable Jack Straw has put forward a similar idea. The proposal has its attractions, as the noble Lord, Lord Browne, indicated. I suspect that the proposal would not pass the test if it came from the Government as it might be seen as not being objective. The noble Lord, Lord Gordon of Strathblane, suggested that a Calman Part 2-type body might be appropriate. Although I can see the attraction of that, I would remind your Lordships that the Scottish National Party did not engage with Calman Part 1. As the noble Lord, Lord Browne, said, for us to have the status of providing objectivity we would have to bring in all the parties. It might not be a matter for the Government, but it might be a matter for those of us who wish to see an informed debate outside government to consider how this might be done in an effective way.

My noble friend made the point that the Scottish Government have an obligation to bring forward their proposals for independence. They have had months to answer the questions put by my right honourable friend the Secretary of State, and yet they still delay in telling the Scottish people what their proposals for independence are. It is important that they should be straight about the implications of independence and what it would cost.

If a Section 30 order were used to give the Scottish Parliament the power to legislate for a referendum on independence, my noble friend’s amendment would have the effect of requiring that it should be solely on the question of independence and be administered by the Electoral Commission. As set out in our consultation, and as emphasised during the debate on the subject in Committee, it is our view that any referendum should have a single, straightforward question on independence and should be overseen by the Electoral Commission.

Section 10 of the Political Parties, Elections and Referendums Act 2000 allows the Electoral Commission to give assistance to various bodies, including the Scottish Government and the Scottish Parliament. This means that the Electoral Commission could provide advice and assistance to the Scottish Government now about the independence referendum should they so request. However, the Government do not want to rely on this general duty. It is important that the Electoral Commission should be required to consider and report on any referendum question about independence. It is not necessary to make an amendment to the Bill to achieve that. A Section 30 order devolving the power to the Scottish Parliament to legislate for a referendum could clarify this power by requiring that the referendum was on a single question, held in accordance with the PPERA framework and overseen by the Electoral Commission.

My noble friend Lord Caithness asked about the date. The consultation paper that the United Kingdom Government issued back in January has a draft of a possible Section 30 order in which there is provision for a referendum to take place by a certain date. The date is left blank, and clearly that would be a matter for negotiation. He also asked about the position in respect of places that are very close to me, such as Orkney and Shetland. This was discussed in Committee in an amendment that my noble friend facilitated, and he raised important points about implications. I am not going to repeat arguments from Committee, but there are clearly many issues that would have to be considered about the implications for independence. However, I do not think that a Section 30 order would lend itself to dealing specifically with different parts of Scotland should they vote in different ways.

Your Lordships’ House has made very clear what it wishes to see in these matters, and the importance of people—

My noble and learned friend has indicated his firm view, which I am sure is shared by the House, that the Scottish Government should answer some of the questions that have been raised in this debate. Does he also accept—I presume that he does—that it is for the Government of the United Kingdom to put forward their views about what are the issues at risk? It is not necessary to answer all the questions, but they should at least make that clear. We cannot have any confidence that the Scottish Government will do that.

The very fact that my right honourable friend the Secretary of State posed these questions shows that the UK Government are seized of what the key questions are, as raised by your Lordships in debate. I will certainly ensure that colleagues right across the Government are aware of the kind of issues that have been raised in this debate. There is no doubt that the United Kingdom Government want to keep the United Kingdom together. We believe that this is the best option not only for Scotland but for the United Kingdom. It goes without saying that we want to ensure that there is a debate that is as informed as possible and that the case for Scotland continuing to be a part of the United Kingdom is made as forcefully as possible. Points raised by your Lordships today will certainly inform the arguments that are put forward in the referendum debate. I share the view of my noble friend that the sooner we get on with the substance of the debate and move on from process the better it will be.

My Lords, can my noble and learned friend inform the House whether he has had an invitation from the Scottish Government to give evidence to the committee that they have set up to look at the economic consequences of independence?

My Lords, further to the point made by the noble Lord, Lord Maclennan, I would say that the debate in Scotland is currently at a high temperature and needs to be lowered so that people can digest the information. If one looks at the Calman report, as I have done, and at the reports of the Scottish Affairs Select Committee in the House of Commons—which has had a plethora of witnesses—one will find many profound issues raised which have not yet reached the public level. It is important, and incumbent on the UK Government, to ensure that that information is put out to the public, for example in the form of a consultation paper. The UK Government need to engage. There cannot be a passive stance to this. I would leave the Minister with those thoughts as he progresses with the Bill.

My Lords, I do not think that the United Kingdom Government will be passive on an issue as important and fundamental as this one; I can assure the noble Lord of that. I share his view—I would say this, wouldn’t I?—on the Calman commission, and not only in regard to specific recommendations on devolved and reserved boundaries and financial powers. Both in the interim report published in December 2008 and in the final report, parts of which were referred to by the noble and learned Lord, Lord Boyd, on Second Reading, there are some very good arguments about the importance of our economic, social and political union. I commend these reports to Members of the House. They make a very good case for our union.

My Lords, I may have missed it, but I did not hear the noble and learned Lord, in his list of areas that will need dispassionate and honest analysis, mention a share of the national debt, much of which, of course, has been caused by expenditure in Scotland.

My Lords, I did not mention that, but it is a pertinent point. Some academic bodies have produced reviews on it.

My Lords, we have had a very interesting debate. I know that my noble friend Lord Shrewsbury has waited patiently to move his amendment and I am sure that he would appreciate it if I did not say very much. So I will not, other than to make one point to my noble and learned friend.

I thank my noble and learned friend for the response, which is very encouraging. However, for once he was a little more aggressive than I am, when he said that he wanted government departments to make the positive case for the union. That is not what this amendment is about—I do not want government departments to make the positive case for the union, I want them to set out, objectively, what issues should be tackled. I do want Secretaries of State and Ministers to make the positive case for the union and hope that my noble and learned friend might ensure that the Prime Minister—who has said that he will fight to defend the United Kingdom to the last breath of his body, I think—is aware of the strength of feeling in this House that government departments should do this. This is not something that can wait until after the Summer Recess. They should be doing it now. One by one, these departments should be setting out what the issues are. It would be completely disastrous, and actually quite wrong, if we were to allow government departments to step into the area where they were involved in advocacy as opposed to providing information. That would undermine the whole nature of the debate. There are plenty of advocates for the union—what we need are the facts. The First Minister is very fond of quoting Burns:

“But Facts are chiels that winna ding”.

I beg to withdraw the amendment.

Amendment 2 withdrawn.

Clause 11 : Air weapons

Amendment 3

Moved by

3: Clause 11, page 9, line 6, at end insert—

“( ) If a system of Visitors Permits is introduced, holders of a firearm certificate or a shot gun certificate issued elsewhere in the UK shall not be required to obtain a Scottish Visitors Permit in respect of air weapons.”

My Lords, the purpose of this amendment is to highlight some of the complications and probable costs that will arise if the Scottish Government insist on visitors permits for air guns.

Clause 11 seeks to devolve to the Scottish Parliament the power to control low-powered air guns, while leaving control of other classes of firearm—including the more powerful air guns—with the Westminster Parliament. Even at this late stage there is no clear idea on what form of control, if any, the Scottish Government will seek to impose, except that some form of licensing for air guns features in much of the comment. I declare my interest as I have done in numerous debates before.

I have no intention to revisit the areas covered during earlier debates on this clause, but there are matters that your Lordships might consider before approval is given to the clause. The question of cost-effectiveness is one of the more important. There are currently some half a million air gun owners in Scotland, although it seems unlikely that every one of them will apply for a licence. Some will decide that they will no longer follow the various forms of sport that now involve air guns, while some will simply keep the air guns they have, taking advantage of the fact that the authorities have no way of identifying those who currently own them. It seems safe to assume that those who misuse air guns will fall into the latter category.

The Gun Trade Association calculates that about 300,000 people will take up licences in the first instance. It is also conservatively estimated that the simplest form of licence would involve not less than two hours of police time. One learns from the Association of Chief Police Officers in England and Wales that the total cost of a firearms licensing officer, including overheads, is £27.40 per hour, so that the total cost of licensing in the first year will be about £16.4 million, based on the simplest possible system. Any added complexities to the licensing system will increase that large sum of money.

There will also be considerable set-up costs, including the adoption of new computer systems or the modification of existing systems, other back-office necessities, equipment to test the muzzle energy of air guns and more. There will be a need for consultation between Ministers and officials representing several government departments including the Home Office and Ministry of Justice, the two chief police officers’ organisations and police at practical levels to ensure that differing systems can work side by side. The costs will be very considerable.

The fee charged for the licence will reduce the cost to the public purse, but ACPO has calculated that, presently, fees recover only 27 per cent of the cost of running the firearms department. The fees for firearm and shot-gun certificates are under review, but will still fall short of the cost to the licensing authority. Any attempt to treat air gun licences differently in the matter of fees might create an actionable bias by discrimination against air gun users as distinct from users of other firearms. Enforcement costs, though difficult to establish at this time, will be substantial. At least three hours of an inquiry officer’s time will be required to produce the initial report with statements, and the cost of that will be about £82. An expert witness will be required to establish that the air gun has a muzzle energy in excess of 1 joule, about 0.74 foot pounds, but not in excess of 12 foot pounds for an air gun or air rifle or 6 foot pounds for an air pistol, et cetera, which will also cost about £82.

Reference to a senior police officer or a prosecutor may result in offering the defendant some form of warning. If the defendant agrees to accept the warning and surrender his air gun there will still be a cost of disposing of the case and of the air gun. The cost of that process must double the charges already calculated, resulting in a very rough estimate of total costs of about £400 in a case where no prosecution is involved. If the matter is brought to trial, the costs of a court will be very high, probably in the order of £1,000 when all costs, including overheads, are calculated. I assume that defence costs might run to a similar figure.

There is a further cost that cannot be calculated in that any legislation will create additional criminals, in this case mostly young men whose offence is mere possession but who will carry a conviction for a firearms offence for a number of years in most cases, and for the rest of their lives in matters such as obtaining firearm or shot-gun certificates. Costs will also fall elsewhere. Police in England and Wales may well incur substantial costs in making inquiries for a Scottish force that has received an application for a visitor’s air gun licence, for a visitor’s licence scheme must inevitably be provided. Those many shooters from England who visit Scotland each year and contribute much to the economy often take their families with them and may well wish to provide air guns for the younger members to shoot under supervision. When receiving an application for a visitor’s permit, Scottish police may ask English police in the applicant’s home area to undertake some inquiries. There is a cost involved there but, with the information available, this element cannot be costed. There also seems likely to be added costs for dealers outside Scotland who may supply air guns to those in Scotland and could be required to notify transactions. Once again, this element cannot be costed with the information available.

In Scotland, the number of recorded offences involving air guns has fallen significantly, by 42 per cent over the last decade. In England and Wales, over the same period and with the same legislation, air gun offences fell 66 per cent. The vast majority of air gun offences are concerned with criminal damage, usually in public places and primarily involving young people. The Westminster Parliament has been far from idle in this area. Section 19 of the Firearms Act 1968, still the principal Act on firearms, created various restrictions which were easily evaded by the ill disposed and were often very difficult for the police to enforce. Following more recent changes to the legislation, the law now provides a simple and easily understood offence. Air gun owners can understand the law and the police find it easy to enforce. The police have a power of arrest and may seize the air gun. All the evidence suggests that the massive reduction in air gun offences is attributable in large measure to this simple, enforceable legislation.

Further measures were imposed by the Violent Crime Reduction Act 2006, under which sales or transfers of air guns by way of trade or business were restricted to persons registered as firearm dealers, who must now keep records of transactions. It also provided that sales must be face to face and not by direct mail. The age at which air guns or air gun ammunition may be purchased or acquired has been raised to 18 years so that a single age is applied to all firearms following an EU directive on firearms using combustible propellants.

Finally, the Crime and Security Act 2010 amended the 1968 Act to make it an offence to keep an air gun in a manner that will allow a person under 18 to have access to it. Home Office advice about the levels of security required to meet this duty has been proportionate and reasonable.

I list these measures so that your Lordships can be sure that the UK Government keep the problem of air gun misuse under constant review and seek to improve on the already quite remarkable reduction of air gun misuse throughout Great Britain. In doing so the UK Government have tried to impose restrictions that are effective but proportionate and which take account of the legitimate activities of at least 4 million legitimate air gun users in Great Britain—I believe that the figure is closer to 6 million. It is the view of interested parties, researchers and the Gun Trade Association that these measures have not unduly impinged on legitimate air gun users but have made a very significant impact on rates of air gun misuse. There is no evidence to suggest that a costly licensing system will have a significant effect on air gun misuse, but it seems clear that vigorous enforcement of much simplified laws can have a marked effect.

In conclusion, for a British firearm or shotgun certificate holder, it is already established that he or she is fit person to possess firearms, including air weapons. Therefore no further authority is currently required to travel with an air gun in Great Britain. For a citizen of another EU member state, the application to the police for a British visitors permit currently includes the requirement to present a copy of their European firearms pass, showing the firearms that they wish to bring into Great Britain. Should the Scots require an EU visitor to apply for an air gun visitors permit, the EU citizen will not be able to comply. The EFP does not list air guns owned and new EU legislation would be required to change the EFP. If new EU legislation was introduced, new legislation would also be required in the UK.

What I have described demonstrates that the Scots have not thoroughly thought through many of the procedures that will be required if a regulation of air weapons passes into law. Nor have the substantial costs which will inevitably fall on the public purse in England and Wales been worked out. I beg to move.

My Lords, I support my noble friend in his amendment and in doing so declare my interest as executive director of the Countryside Alliance. My noble friend has highlighted the complexities and consequent costs if the Scottish Government insisted on visitor permits for air guns from those from other parts of the United Kingdom. This reasonable amendment seeks to protect legitimate users across the country from potentially undue and disproportionate bureaucracy. Should we really be asking the police in England, Wales and Northern Ireland to spend resources and time in dealing with visitor permits for Scotland? I ask my noble and learned friend to reflect on these matters and I hope that sense will prevail.

I support my noble friend in his amendment, which is very reasonable and quite restrained. I suspect that my noble and learned friend will say that the provision simply provides a power for the Scottish Parliament and that it is a matter for the Scottish Parliament, but that is a less than responsible position to take. We all remember the genesis of this proposal and its inclusion in the Scotland Bill; it arose because of some very tragic events in Scotland. But as is often the case, the conclusion is that something must be done—and this is something being done without the consequences being thought through, which can add enormously to the bureaucracy and difficulties.

My noble friend Lord Shrewsbury has given us a glimpse of the enormous difficulties that could be created for the police in taking them away from their vital duties in pursuit of serious crime. Air guns are not subject to numbering in the way that shotguns and other firearms are, apart from those that are very powerful. One Member of this House, who had an association with the special services, briefed me that they could actually be extremely powerful weapons. But for the vast majority of people using air guns as part of their leisure activity, they are not numbered, and there are very real difficulties with that. It seems a little perverse to argue—if my noble and learned friend is to make this argument—that we are just giving the Scottish Parliament a power and do not need to worry too much about how it is implemented, because that is for the Scottish Parliament, when that will have enormous implications for people in the rest of the United Kingdom and, indeed, the rest of the European Union. I very much hope that my noble and learned friend will at least take this away and think about the very important arguments that have been made, with a view to perhaps coming forward with some practical proposals at a later stage.

My Lords, if I might follow my noble friend Lord Forsyth, he said that the reply that our noble and learned friend was going to give was that all of this would just provide a power for the Scottish Parliament. That is true, but it has cost implications for the police forces in England, Wales and Northern Ireland. If my noble and learned friend cannot accept this amendment, would it not therefore be in order for the other police forces that are put to extra cost by the Scottish police, in seeking information about firearms, to charge for the cost of their time?

My Lords, perhaps this would be an opportunity for me to refer to the anomaly—some would call it the absurdity—of the present requirement for a sound moderator, or silencer, to be treated as a separate weapon and be separately registered on a firearms certificate. After all, the silencer is only a tin can which is screwed on the end of the rifle. When the Government are looking into this area in collaboration with the Scottish Government, I suggest that this would be an opportunity to remove that requirement.

First, my Lords, I thank the noble Earl for his great courtesy in writing to me extensively on this issue to introduce the arguments that he intended to make in support of his amendment. I was in the privileged position of having almost all of the points that he made in advance of his addressing your Lordships’ House, so I thank him for that. Unfortunately, despite his great courtesy to me, I cannot find myself being in a position of supporting his amendment. I am sure that he will appreciate why since, in Committee, I argued for even greater devolution of responsibility over air weapons to the Scottish Parliament. It would be entirely perverse and inconsistent for me now to support the restriction on the exercise of the limited devolved powers that the Scottish Parliament is going to receive, having made that consistent and coherent point before.

I do not accept the dismissal by the noble Lord, Lord Forsyth, of this argument as not being sufficient justification, because to restrict the power that one devolves in this fashion undermines devolution. I do this for two reasons. First, if we agree to devolve this power to the Scottish Parliament, we should trust that Parliament with this power. Secondly, I see no reason to believe that the Scottish Parliament would not be persuaded by the arguments that the noble Earl has made about the potentially unintended consequences of an onerous regulatory process. I am sure that, in consultation, it will be capable of regulating in a way that deals with the issue at the heart of the noble Earl’s amendment, although not at the heart of his broader argument about implications.

I do not propose to repeat all the reasons why the people of Scotland are so exercised about the misuse of air weapons, and why there is a public demand for some form of regulation. I and the noble Lord, Lord Forsyth, have spoken about those before. I congratulate the noble Earl on giving us, in the official record of our debate, a repository of the success of restrictions imposed on air weapons and the obvious effect that sensible regulation has had on their misuse. It would be utterly ungracious of me to point out that I do not remember the Gun Trade Association arguing for these restrictions, and I remember being persuaded on some occasions by lobbying from that area that these restrictions would not work, and would merely cost a lot of money unnecessarily. However, that does not alter the fact that at some stage these arguments may prove to be true, even if they did not in relation to those restrictions.

I congratulate the noble Earl on at least being honest and willing enough to say, from the perspective and interest that he has, that regulation of this nature can be positive and can have a beneficial effect and that if it perhaps has a cost, and if that cost is saving lives or injuries, then it is a cost that society may be prepared to bear.

For the reasons I have given, I am unable to support the noble Earl’s amendment but I congratulate him on his contribution to the debate today, and on providing a quarry of argument which I am sure will inform the Scottish Parliament’s exercise of the powers that I hope it will be given.

My Lords, I thank my noble friend Lord Shrewsbury for again giving the House the opportunity to discuss these matters. His amendment seeks to ensure that if, following devolution of the regulation of air weapons anticipated by this clause, the Scottish Government were to introduce a system of visitor permits for air weapons, holders of firearms or shot-gun certificates issued in other parts of the United Kingdom would not be required to obtain such a permit in order to use air weapons in Scotland. As has been said, in devolving the regulation of air weapons, the Government are acting on a recommendation of the Calman commission, and we believe that the regulation of air weapons is best controlled locally. My noble friend Lord Shrewsbury has made a very well reasoned case and, as has been noted, he indicated that where sensible and proportionate restriction or regulation of air weapons has been used, it has been done so to some effect. Nevertheless, it is our view, as indicated earlier and in the Bill, that this issue is better decided by the Scottish Parliament.

I do not think that this is a small point. I say to my noble friend Lord Forsyth that the nature of devolution is that a power is devolved, and it is then up to the devolved body to determine how it wishes to exercise that power, obviously within the constraints of the law—and, taking into account some of the very pertinent points made by my noble friends Lord Shrewsbury and Lord Gardiner of Kimble, when that body comes to make policy conclusions. Not the least of these is the cost effectiveness. My noble friend has focused on the cost implications of establishing and enforcing a licensing regime, and I recognise the points that he has made so clearly. These will be matters for the Scottish Parliament and Scottish Government to take into account. We hear them regularly talking about the restrictions and restraints on their funding, but the block grant will have to fund any measures that they take. This will obviously be one of the considerations that they have, obliged as they will be to put forward with any accompanying Bill a memorandum on its cost implications.

As I know my noble friend is aware, the Scottish Government have set up a Scottish firearms consultative panel, and I understand that the director of the Gun Trade Association, an organisation of which my noble friend is the honorary president, sits on that panel. The panel is currently considering, if there is to be devolution of this power, how best to implement any proposals for regulating air weapons. The panel will consider cross-border issues. Indeed, I understand that there was a meeting on Monday at which cross-border were on the agenda. If this amendment were included in the Bill, it would fetter the Scottish Government’s and Scottish Parliament’s discretion as to how they might go about the task of regulating air weapons following devolution and would second guess the ongoing work of the Scottish firearms consultative panel. However, as I have indicated, the arguments put forward by my noble friend are very persuasively articulated. I am sure that the Scottish Government will be open to representations made to them when they are shaping any legislative proposals.

My noble friend Lord Caithness raised the possible costs that would feed through into other parts of the United Kingdom. Those will of course depend on the actual nature of the policy that is put in place. I see the noble Lord, Lord Empey, in his place. He will no doubt correct me if I get this wrong, but perhaps it is worth bearing in mind that, as I understand it, air weapons are controlled in Northern Ireland and any person wishing to go there from Great Britain with an air weapon must apply for a certificate of approval. There is a special form available on the website, which needs to be submitted via a sponsor about six weeks in advance of any visit, but there is no fee. However, a visitor to Northern Ireland from outwith Great Britain requires a visitor’s permit, the point being that air weapons are already devolved to Northern Ireland. I have always believed that one of the strengths of devolution ought to be a willingness to look at experience in other parts of the United Kingdom where policies have been taken forward. Indeed, there is a policy already in place regarding the regulation of air weapons. I hope that what happens in Northern Ireland will be looked at by the consultative panel.

The point raised by the noble Lord, Lord Pearson of Rannoch, goes beyond this amendment and indeed the Bill, but I will ensure that it is passed on to the relevant part of the Home Office. I think he will accept that we are not devolving silencers, although some might think that that is an idea.

As I indicated in Committee, the Scottish Government must consult appropriately before they propose any new legislation on this matter and they must make available their estimate of the costs. While the Scottish Parliament will be the final arbiter of matters relating to the regulation of air weapons following devolution, I am sure that in bringing forward proposals the Scottish Government would benefit from listening to the arguments raised by interested parties. The ongoing work of the Scottish firearms consultative panel is evidence that this engagement is already underway.

I thank my noble friend Lord Shrewsbury for allowing us to examine the arguments surrounding this issue, but I nevertheless urge him to withdraw the amendment.

My Lords, I am most grateful to all those who have taken part in this short debate and especially to my noble and learned friend Lord Wallace. I listened carefully to what he said, I know exactly where he is coming from and I could have written his speech for him last night. All I know is that the whole issue of devolving legislative power on air weapons to the Scottish Parliament is fraught with problems, as I have explained. The problems are both of an operational aspect and with regard to the potential substantial costs involved. Those issues will take a lot of answering. The whole thing is unworkable, it will take an awful lot of working out and it will probably not be. I reserve the right to stand here in a few years’ time and do a wonderful and famous “I told you so”. I shall have to be extremely careful next time I go across the border to go fishing in Scotland because I think I am a marked man. In the light of my noble and learned friend’s comments, I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Clause 12 : Insolvency

Amendment 4

Moved by

4: Clause 12, leave out Clause 12

Amendment 4 agreed.

Schedule 2 : Insolvency

Amendment 5

Moved by

5: Schedule 2, leave out Schedule 2

Amendment 5 agreed.

Amendment 6 had been retabled as Amendment 24A.

Clause 13 : Regulation of the health professions

Amendment 7

Moved by

7: Clause 13, leave out Clause 13

Amendment 7 agreed.

Amendment 8 had been retabled as Amendment 1A.

Clause 21 : Scottish Crown Estate Commissioner

Amendment 9

Moved by

9: Clause 21, page 14, line 8, leave out “Scottish Crown Estate Commissioner” and insert “Crown Estate Commissioner with special responsibility for Scotland”

My Lords, I shall speak also to Amendment 10, which is almost identical. Noble Lords will no doubt remember that in Committee we had considerable discussion about the phrase “Scottish Crown Commissioner”. There was a little problem. If he were called the Scottish Crown Commissioner, he would not have been able to take part in anything concerning England, Wales or Northern Ireland. This was not thought desirable. We discussed the matter for a bit and then I had an idea—I suggested the phrase “Commissioner with special responsibility for Scotland”. To my amazement, this appeared to find favour with the noble and learned Lord, so I put it down as an amendment for Report stage. I beg to move.

My Lords, we have been singularly unsuccessful in getting my noble and learned friend to accept any amendments so far in the long consideration of the Bill, but here is one that he cannot possibly refuse to accept. He is surely not going to argue on the basis of syntax that he could not accept the noble Lady’s very sensible common-sense amendment, which I have great pleasure in supporting.

My Lords, it is not merely a matter of syntax—it is what the Crown Estate Commissioners represent. They represent a single body with jurisdiction over the Crown Estate in each of the four constituents of the United Kingdom. It is clear that the amendment would cure the problem and recognise that responsibility. I therefore have no hesitation in supporting it.

My Lords, noble Lords will remember that in Committee I spoke to an amendment in my name and in the names of my noble and learned friends proposing the amendment of the title in the Bill to the simple title of “Crown Estate Commissioner for Scotland”. That did not find favour with the Government—particularly, as I recollect, with the Advocate-General for Scotland—but in the course of the debate it became clear that the Committee was of one view: the least attractive title for the Crown Estate Commissioner was the one that was in the Bill.

The noble Lady, as she has told the House, spontaneously came up with this proposal in the course of the debate, and it appeared to find favour with the government Benches—at least, they were more inclined to respond positively to it than they were to the proposal that had emanated from the opposition Benches. My own view is that there is a distinction between the proposal that I put forward and the one that the noble Lady put forward, but it is in the category of a distinction with little difference. But I understand why the Government may be more inclined to respond positively to something that comes from the Cross Benches. In those circumstances, as Members of the House will see, my noble and learned friends and I have appended our names to the noble Lady’s amendment. I support it for all the reasons that she articulated then and which have been debated at some length. Therefore, I do not think that we need to go into them again.

I was not convinced by the noble and learned Lord’s defence of the title “Scottish Crown Estate Commissioner” but I was convinced by his defence of the process of selection that I had also sought to amend. I have repeated that amendment by laying Amendment 11, but for the purposes of forward planning I advise that when it comes to the appropriate time I will not be moving it.

My Lords, Amendments 9 and 10, tabled by the noble Lady, Lady Saltoun of Abernathy, and supported by the noble Lord, Lord Browne, and his colleagues, would change the name of the Scottish Crown Estate Commissioner to the Crown Estate Commissioner with special responsibility for Scotland. As the noble Lady indicated in moving her amendments, she made that suggestion in the Committee stage debate. I indicated at the time that I found the suggestion helpful and committed to reflecting further on the proposal.

I confirm that the Government’s original name included in the Bill was taken from the commission’s own proposals and discussed with the Crown Estate. However, the Government are happy to accept the proposal from the noble Lady. As indicated by the noble and learned Lord, Lord Cameron of Lochbroom, we believe that the revised name—it is not a question of whether it came from the Cross Benches rather than the Opposition—will properly reflect the role that that commissioner will play. That role will not be exclusively for Scotland; indeed, contributions to our debate in Committee from people with experience, such as the noble Lord, Lord Curry, indicated the value of having commissioners who would have responsibilities across the United Kingdom. We are therefore wiling to accept Amendments 9 and 10. As the noble Lord, Lord Browne, has indicated that he does not intend to move Amendment 11, the mode of appointment would seem to be acknowledged and accepted.

My Lords, I have been in this House for 32 years and this is only the second time that I have had an amendment accepted. I am delighted.

Amendment 9 agreed.

Amendment 10

Moved by

10: Clause 21, page 14, line 13, leave out “Scottish Crown Estate Commissioner” and insert “Crown Estate Commissioner with special responsibility for Scotland”

Amendment 10 agreed.

Amendment 11 not moved.

Clause 24 : Speed limits

Amendment 12

Moved by

12: Clause 24, page 16, line 23, after “of” insert “all classes of”

I beg to move Amendment 12 standing in my name. I do not intend to move or speak to Amendment 13. This is a very straightforward amendment. I hope that I have caught the Minister on a roll and that he might feel able to accept my amendment. I am tempted to get my noble friend Lady Saltoun to move all my amendments. She speaks very briefly and the Minister says yes. Perhaps there is much to be learnt from that.

We discussed this issue in Committee and I will not go over all the arguments but essentially the Bill devolves control of speed limits to the Scottish Parliament, so we will have different speed limits north and south of the border, or the prospect of that happening. I think that is absolutely ridiculous, but given that that has been agreed by the Calman commission, and is stated in the report and in the Bill, and given that it was a manifesto commitment to implement the Calman proposals, I will not argue against the principle of the Scottish Parliament having the power to set speed limits. However, if you are going to do something like that, you need to do it properly. The Bill gives the Scottish Parliament the power to decide speed limits for motor cars but not for caravans or HGVs. It is a nonsense to have the Department for Transport responsible for some speed limits in respect of some categories of vehicle while the Scottish Parliament is limited to others. My amendment may not be perfectly drafted but the sense is clear, which is that if we are to have the Scottish Parliament taking responsibility for speed limits, it should do so for every class of vehicle and not for particular classes of vehicle.

I know that my noble and learned friend Lord Wallace and my right honourable friend the Secretary of State have been in discussions with the Department for Transport. I know that it is not always easy to get agreement on these matters but I very much hope that my noble and learned friend’s well known skills in advocacy will enable him to accept this amendment if for no other reason than that it makes for good legislation and for clarity on the statute book, which is very much required. It is rather ironic that I should put forward an amendment which seeks to give more power to the Scottish Parliament. I beg to move.

I am very interested in this issue, on which I spoke in Committee. However, I am still rather puzzled as to what the Scottish Parliament will gain from this aspect of devolution because, as far as I can see, it already has powers to introduce any speed limit that it wishes on any road. As I drive along roads in Glasgow and out in the country, I come across speed limits that are set at 40 miles an hour and 50 miles an hour. Therefore, I hope that the Minister will indicate why this aspect of devolution is required.

My Lords, I support the noble Lord’s amendment. My reading of the Calman commission report is that it made no distinction between the types of vehicles that should be included in this aspect of devolution. I believe that this amendment supports the Calman recommendation and that the power should be devolved in full, as was recommended by that commission. I agree with the noble Lord, Lord Forsyth, that the omission of HGVs would create confusion on Scottish roads, should there be an unnecessary change of speed limits.

When this issue was raised in Committee, I think the Minister said that the distinction arose as a consequence of the development of signage, which was deeply convincing. However, he also wisely indicated that it would be proper for him to take the issue away and reflect on it. Therefore, the signposts are clear. The House’s position is well signposted for the noble and learned Lord. I hope that he has followed the direction of those signposts and has persuaded his colleagues in the Department for Transport that this is a common-sense proposal. I will resist the temptation to speak to Amendment 13, which I would have supported had the noble Lord spoken to it. As he did not, it is not appropriate for me to speak to it.

My Lords, my noble friend tabled amendments on this matter in Committee and I recall some very interesting debates on them. The Government have included powers in the Bill to allow Scottish Ministers to determine the national speed limit on roads in Scotland. I say to my noble friend the Duke of Montrose that the amendment seeks to ensure that the measure applies to motorways and dual carriageways, which have national speed limits at the moment. There is a power to make regulations to specify traffic signs to indicate that limit. The powers currently set out in the Bill are limited to cars, motor cycles and vans under 3.5 tonnes. The Government drafted the provision in this way as there is already a single clear sign that denotes the national speed limit for cars, motor cycles and vans under 3.5 tonnes. The Bill will allow Scottish Ministers to create a new sign and educate people on its meaning for any change to the national speed limit in Scotland.

As I highlighted in Committee, for different vehicles, including HGVs and caravans, either separate signage would be required, or the speed limit for these classes of vehicles would remain unsigned as now, but people would need to be aware that different speed limits could exist across Great Britain for these types of vehicles.

However, we have listened carefully to the arguments presented by my noble friend and by other noble Lords, including the noble Lord, Lord Browne, on the Benches opposite. I commend my noble friend and others for pursuing this issue. I think it is fair to say that those of us who served on the Calman commission were not made aware of the distinctions or of the importance of signage. We may consider that my noble friend’s amendment would give fuller substance to what was originally proposed. Together with the case made by the Scottish Parliament and the Scottish Government for the Bill to provide for devolution of the regulation-making powers for setting the national speed limit for all classes of vehicles, we have decided to accept Amendment 12 tabled by my noble friend, so clearly he has managed to get me while I am on a roll. However, in accepting the spirit and the principle of the amendment, I must make it clear that it will require redrafting to ensure that the measure applies to all roads and not just special roads. Therefore, we will bring forward an amendment at Third Reading which addresses the technical issues and gives full substance to the amendment which my noble friend has tabled. I thank him for his persistence in this matter. I hope he welcomes the fact that it has had a positive outcome. I note that he does not intend to move Amendment 13. Therefore, I shall not speak to it.

I thank my noble and learned friend for accepting the amendment. I also thank the Secretary of State for Scotland for doing battle with the Department for Transport and delivering this outcome. I think that The House Magazine has counted the number of words that I have spoken during the passage of this Bill. It is a supreme irony that the only change I have achieved so far is to increase the powers of the Scottish Parliament and to deliver more of what is in the Calman report, but such is the nature of politics. As I say, I am most grateful to my noble and learned friend. I am sure that what is proposed makes sense. I am also grateful to the noble Lord, Lord Browne, and his colleagues for their support on this matter. I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Amendment 13 not moved.

Clause 26 : Implementation of international obligations

Amendment 14

Moved by

14: Clause 26, leave out Clause 26

Amendment 14 agreed.

Consideration on Report adjourned until 1.30 pm.

Arrangement of Business


My Lords, it may be for the convenience of the House to know that the Report stage of the Scotland Bill will resume immediately after the conclusion of the two orders in the name of my noble friend Lord De Mauley.

Employment Tribunals Act 1996 (Tribunal Composition) Order 2012

Motion to Approve

Moved By

That the draft order laid before the House on 6 February be approved.

Relevant document: 41st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 19 March.

My Lords, this first order permits but does not oblige judges to sit alone rather than, as at present, with two lay members on unfair dismissal cases. It is part of the wider package of reforms. It is not a silver bullet, standing on its own, but neither is it a risk to the just handling and disposal of cases.

As I said in Grand Committee, when we debated these orders on Monday last week, the order seeks to replace prescription with flexibility, and helps to secure value for money. It will allow employment judges to sit alone in unfair dismissal cases before an employment tribunal. It will provide discretion for judges to decide whether to sit with lay members, where appropriate. The criteria against which such decisions must be made are set out in primary legislation. It has been tried and tested for years in relation to other types of case to which it already applies.

Many of your Lordships here today were also present in Grand Committee last week. Noble Lords who then opposed the measure did not argue against flexibility for its own sake. Indeed, it is difficult to see how flexibility per se could be easily argued against in this context. Instead, some noble Lords, and some who debated the matter in the other place, seemed to distrust the motives underlying this reform. The perception seemed to be that this is the thin end of the wedge. Fairness, independence and justice must not be compromised. However, proportionality is key to all those concepts, and the Government have a duty to ensure that value is secured.

The safeguard of judicial discretion is real. As noble Lords themselves cited in Grand Committee, academic research demonstrates that employment judges value the input of lay members. Judges tell us that too. We have good evidence therefore—something noble Lords were rightly keen on drawing out in Grand Committee—to explain why we think panels will continue to sit where they are appropriate, and where they will add value. That is as it should be. There is also evidence of support for the proposal. Some, such as the British Chambers of Commerce, say that we should go further and abolish lay members altogether. Some say that we should row back and drop even this order. Some think we have got the balance right. We have considered the numbers, considered the substance of the arguments put, and made sure that we have listened carefully to all parties with an interest. Our conclusion is clear, and I am confident that it is right.

The Government value the role of employment judges, just as the Government value the role of lay members. Each group brings significant expertise and experience to the system. Judges are well placed to make decisions about how best to manage a case to hearing, including about how and where the respective expertise and experience is best deployed, and with what value. Employment judges are trained in active case-management techniques and to deal with cases in the unique fora of employment tribunals. The safeguards are real. The objective of securing value for money is important.

The purpose of the second order, the Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012, is to extend the qualifying period for unfair dismissal from one to two years for individuals beginning work on after 6 April this year. It also extends in the same way the minimum period an employee must have been with the employer before being entitled to request a written statement of reasons for dismissing. The purpose of the statement of reasons is essentially one of evidence when making a claim for unfair dismissal. It is therefore closely linked to the right to claim unfair dismissal and it is logical that the qualifying period for both is kept consistent.

The Government are committed to reviewing all aspects of employment law over the course of the current Parliament. We are doing this because we are serious about rebalancing the economy, supporting job creation and achieving strong, sustainable growth. We want new and growing businesses to thrive and feel confident about taking on more staff.

The legal framework of employment law today is quite different from that which obtained when unfair dismissal rights were first introduced in 1971—by a Conservative Government. In 2012, employees additionally have a wide range of day-one rights: the right not to be discriminated against; the right not to be dismissed for asserting a statutory right, such as asking to be paid the minimum wage; and the right not to be dismissed for making a protected disclosure, otherwise known as blowing the whistle.

The change we seek to make will not affect any of those day-one rights, but it will reduce the fears that many employers have—until a few years ago, I was one of them—that a minor procedural slip-up might land them with a tribunal claim. As the British Chambers of Commerce has noted, a single claim can wipe out a whole year’s profits for a small business. That is a burden that many small businesses are simply unable to bear. The British Chambers of Commerce also reported—this is particularly shocking—that 48 per cent of larger firms have been threatened with an employment tribunal claim in the past three years.

This change will have a relatively small impact on employment tribunal claims and individuals who might seek to bring a claim. We have made a conservative estimate that the increase in the qualifying period will bring about only a 4 per cent reduction in unfair dismissal claims. Furthermore, we have not taken account of the fact that employers will not be under such pressure to let employees go, as my noble friend Lord Razzall pointed out in our debate in Grand Committee on Monday of last week. They will have the extra time to give them a chance, to coach them and to train them. Also, as set out in the impact assessment, we estimate that more than half of unfair dismissal claims currently made by those with one to two years’ service are part of multiple claims, so we would expect them still to go ahead under one or more other jurisdictions.

The Government are taking other measures that will help employers and employees to resolve disputes outside the tribunal system. I am sure that many noble Lords will agree that this is most often preferable for all parties. We are increasing the role of ACAS in conciliating disputes before a claim is made. We are piloting a scheme to boost access to mediation among small businesses in Cambridge and Greater Manchester, and we will be considering how we can deal more quickly with straightforward employment tribunal claims.

Looking back over the history of unfair dismissal rights, a two-year qualifying period has existed for most of the past 30 years, so it is hardly an unprecedented measure, but it is one that we, and large numbers of businesses, believe will make a positive difference to employer confidence.

As I said, our top priority is to achieve strong, sustainable and balanced growth. We are tackling youth unemployment by ensuring that more and higher-quality apprenticeships are available. We are taking steps on issues such as tax, planning rules and access to finance to boost enterprise. Critically, we have a credible plan to reduce the deficit and tackle the UK’s debts, as set out in the Budget.

The extension of the qualifying period must be seen in the following contexts: the greater employment rights that individuals now enjoy; the Government’s measures to encourage early dispute resolution; and our focus on growth and business confidence.

The Government’s view that employers’ confidence and their perceptions of employment law will be improved by this measure is based not on anecdote but on the views of the businesses that responded to the public consultation and the thousands of businesses surveyed by the British Chambers of Commerce—

My Lords, perhaps the noble Lord will allow me to make my case. There will be plenty of opportunity for him to speak later.

The Government’s view that employers’ confidence and their perceptions of employment law will be improved by this measure is based not on anecdote but on the views of those businesses that responded to the public consultation and the thousands of businesses surveyed by the British Chambers of Commerce, the Institute of Directors and the CBI. During the consultation, the CBI expressed the view that,

“the extension of the qualifying period will have a positive impact on marginal hiring decisions, particularly in smaller firms”.

That accords with my own experience as an employer in an IT company, which I ran for six years. I cannot emphasise enough how much time is needed for training and assessing people. I can categorically say that a year is not enough in every case, and it is a view that the Government share. There is a credible body of opinion that employers will have greater confidence to recruit as a result of this measure. I assure noble Lords that the Government will do everything practicable to monitor and assess the impact of increasing the qualifying period.

As set out in the impact assessment, we are committed to a post-implementation review of the Resolving Workplace Disputes policy package, including this measure, in 2016. The amendment laid by the noble Lord, Lord Young, calls for a review after 18 months. With respect, this will be too soon to be able to make an assessment of the policy’s effect, not least because the qualifying period will be two years and will apply only to those starting a new job from 6 April. No employee will therefore have reached the end of their qualifying period in 18 months’ time.

While respecting and preserving the important employment rights that have been established over the years, we must give proper weight to those currently outside the labour market: the school leaver looking for the first job, the long-term unemployed striving to get back into work, and the person who was let go during the first year of employment because the employer was unsure whether they would come up to scratch. These are the real beneficiaries of this order, and I commend the orders to your Lordships.

Amendment to the Motion

Moved by

As an amendment to the above Motion, at the end to insert “but that this House regrets that the order will risk the reduction of justice and fairness at employment tribunals, is opposed by both trades unions and employers’ organisations, and risks increasing costs through a greater number of appeals; believes that having an employer and employee representative on employment tribunals remains the right way to ensure a fair and just decision and process for claimants; and calls on the Government to place a report into the effect of the changes before Parliament 18 months after the approval of the order”.

My Lords, I thank the Minister for his contribution, although that does not mean that I agree with it. I also thank him for the speed with which he responded in writing to the questions that had been raised but, again, I do not necessarily thank him for the content. I do not feel that he helped to clarify or justify the Government’s proposals, and that is why we have put down these amendments to the two orders.

The noble Lord, Lord De Mauley, said that people felt the introduction of lay members was motivated by further proposals. I do not think that you can really blame people for that, given that the Government have indicated that there are likely to be further movements in employment law. Even if you were not of a suspicious nature, the Beecroft report being delivered to No. 10 might at least have caused your antennae to wave about a bit in anxiety. Therefore, my question to the Minister is: can we expect more in this vein, with the view being taken that if only we lift these restrictions, somehow that will open the floodgates to employment and that the restrictions are the barriers that are really holding back SMEs or even large firms? We believe that that is a false analysis predicated on entirely the wrong views.

On the question of lay members, why do we believe that they ought to be a key part of the process? I do not intend to go through all the reasons as we had a full and frank debate in Grand Committee. When industrial—now employment—tribunals were first formed, the whole idea was that there would be a different approach and a different style. Along with that came lay members. What do they bring? They bring real knowledge and understanding of industrial situations. That is not to say that judges do not, but they do not have the same perspective. Will the proposal alter fundamentally the nature of unfair dismissal claims? We believe that it will. We believe that lay members play a fundamental and important role in the proceedings.

The noble Lord, Lord De Mauley, told me that the safeguards are there and are real. I listened carefully and the only safeguard that I could see was that it would be a judicial decision. That does not strike me as a real safeguard. I will not use the word “whim” but it depends on a view that lay members are not necessary in a significant number of cases. It must be significant or we would not be going down that road. If we are talking about preserving the nature of employment tribunals in which the views of people who have real experience in a wide range of industries and occupations, lay members play a vital role in ensuring that those views are taken into account and that the perspective of cases receives the widest possible analysis. Will it cost a bit more? Inevitably, it will, but we believe that it is justified in the circumstances.

On the second Motion, on the question of the length of unfair dismissal, it is true that there has been a history of different periods. We have gone from two years, to one year, to six months. Is the Government’s proposal justified? We do not believe that it is. Although it has fluctuated over a significant period, there is no evidence to show that it has had a direct effect on employment levels. That is why I said at the outset that it is predicated on the wrong analysis. Since the qualifying period was reduced from two years to one in 1999, more than 1.75 million jobs have been created in the UK, so it does not seem to be a barrier or impediment. The Minister quoted the chamber of commerce. Similarly, I could say that, interestingly, the SME Business Barometer survey asked 500 SMEs about the main obstacle to success. Top of the poll as the biggest obstacle was the state of the economy, with obtaining finance next. Just 6 per cent of respondents listed regulation as the main obstacle to growth.

In the correspondence that I received from the Minister, even he struggled to demonstrate that the unfair dismissal claims were the root cause of the problem. First, they cannot be disentangled. We cannot disentangle employment tribunal claims from the multiple claims; the Minister admitted that in the correspondence. We do not believe that the proposals are evidence-based.

I will quote again from the Chartered Institute of Personnel and Development. Surely it has some credibility when it states:

“Making it easier to dismiss staff without due cause is far more likely to harm the prospects of UK plc by fostering crude and out-dated attitudes to employment relationships that will put employees off from ‘going the extra mile’. Unproductive and disengaged workers will cost firms far more than the threat of tribunals”.

I believe that the institute is right about that.

If we want to give employers helpful advice, some things that the Minister suggested were right, such as more use of ACAS and mediation. However, the key for employers is how they treat their employees. We never suggested that training would be finished in a year; we are talking about continual learning in today’s workplaces. We are saying that the first year of employment is a long enough period to assess a new employee if the employer is making sure that they are being mentored and are responding to their training programmes. Are we really saying that at the end of that period an employer cannot assess whether an individual is going in the right direction and will make a worthwhile contribution to the organisation? My experience tells me that a year is a significant period of time.

This would signal the wrong route to employers. If we extend the unfair dismissal period, we will be trying to convince ourselves—without any evidence—that this will make employers take on more people. Of course we want employment to increase, but the way to encourage this is to ensure that we create the right economic conditions. I cannot resist saying to the noble Lord, Lord De Mauley, that while the focus is definitely on reducing the deficit—and I welcome the increase in apprenticeships—we still have not seen the growth that was predicted, the forecasts for which have been significantly reduced.

My final reason for moving the Motion was that I read the letter in reply to the noble and learned Lord, Lord Scott of Foscote, who made the reasonable request that an employee should be entitled to be given a reason for dismissal before they were dismissed. Unless the noble and learned Lord is more easily pleased than I am, he will be disappointed with the final paragraph, in which the noble Lord, Lord De Mauley, stated that the Government consider that requiring employers to give a written reason before giving notice would be an additional administrative complexity for them and would increase their costs. Does that send the right signal to employers about how to treat employees? Surely it is totally the wrong advice to give them. If they are handling their employees in a proper, structured way, and if they have the right HR procedures, they should have nothing to fear from an employment tribunal. On these grounds, I beg to move.

My Lords, I support my noble friend’s Motions. We had a wide-ranging debate on both these orders in Grand Committee. I opposed both, and I still do. Both orders undermine the employment rights that many people have fought for over the years. The first deals with the qualifying period and the right of workers to receive a reason for dismissal. The second provides for the removal of lay members from industrial tribunals that deal with cases of unfair dismissal. As noble Lords indicated in our previous debate, this has been opposed not only by the TUC and the CBI but by the Engineering Employers Federation and Citizens Advice.

Those who supported the Government in our previous debate did so, as I understand it, because they believed that if employers did not have to comply with employment laws, they would be able to employ more people. I doubt that. I oppose the orders for a different reason: I believe that, in a civilised community, the worker has rights which must be observed. An overriding one must be the right to continued employment unless there are very good reasons for this not to be maintained. Is it right that employees should simply be regarded as disposable? The loss of employment is often a disaster; not only for the employee but for his or her family. Many may face a decline in living standards and perhaps years spent on benefits. The trauma is even worse when the decision is felt to be unfair and if there is little alternative work available.

I agree that conciliation or mediation should be tried rather than immediate reference to a tribunal, but this is attempted nowadays and may not always work out. The opportunity to go to a tribunal should exist if such procedures do not provide an acceptable solution. The presence of lay representatives from both sides of industry or commerce, in addition to a judge who presides, produces an informal—and informed —atmosphere, conducive to a fair hearing by litigants. Most organisations familiar with our present arrangements, including many judges themselves, are supportive of the involvement of lay representatives.

The Government want to change the arrangements for hearing unfair dismissals so that the litigant will appear before a judge sitting alone. In other words, there will be a more legal set-up but no access to legal aid, since this is being removed by legislation recently before our House. There is no doubt that the Government believe there have been too many tribunal cases and that there will be fewer under their new proposals—and no doubt fewer successful cases. This is grossly unfair. There is no more important area of life than the work that most people do. Without it, life changes dramatically, not only for the individual concerned, but the family which he or she has to support. The loss, if unfair, should be compensated. The least the Government can do is examine how these changes impact upon people, which is what is proposed by my noble friend’s Motions. I hope the Government will accept them. If they are interested in fairness and justice, they can really do no other.

My Lords, I would also like to support the amendment proposed by my noble friend on the Front Bench. The two SIs before us today are shabby. They are retrograde and in opposition to models of procedure and rights that have been with us for many years. I do not think that the Minister who argued the case for the statutory instruments today made a better case than he did in Grand Committee. An odd thing that he said today in support of the statutory instrument dealing with unfair dismissal was that, because workers now have certain rights that they did not have 30 years ago, such as those in relation to discrimination, it is reasonable that the qualifying period for claiming unfair dismissal should be extended to two years.

He indicated that there are rights of discrimination—sex and racial discrimination—that did not exist 20 or 30 years ago. That is true. How on earth can that justify greater rights for the employer to dismiss without due cause or indicating what the reasons are? Someone not fitting in or being surplus to requirements would not be an adequate reason if the unfair dismissal qualifying period was available.

The noble Lord on the Labour Front Bench and my noble friend Lady Turner have indicated reasons why we doubt the desirability of changing the composition of the tribunals, so that the judge or chairman—the legally qualified person—can, at his discretion alone, determine that the composition should do without lay members in future.

As my noble friend Lady Turner has indicated, the tradition of lay members has in practice brought tremendous value to tribunals through the experience of the employer representative on one hand and the worker representative on the other. My recollection is that the procedure of joint decision-making that we have had in employment tribunals came in with the Lloyd George settlement of national insurance cases as far back as 1911. It has been perceived by employers and employees not just as a fair but as a reasonable and useful decision-making set-up that is better than a set-up where the judge sits alone. Now it is thought that the judge should determine whether he should sit alone or should have lay members sitting with him. That would be retrograde, and I see no merit in it.

As for the qualifying period, it simply means that for a much longer period—up to two years—the employer has no need to produce any valid, useful or good reason for dismissal; it will be justified. In a situation of joblessness across the market for young and older people, that is most unhelpful, which is why I think this is so retrograde.

I also think these SIs are retrograde for another reason. This is not the last word from the Government. They have threatened that a charge should be made before anyone can make a claim before an employment tribunal. That would be a serious diminution in employment rights to claim a legal entitlement—namely, a claim before the employment tribunal. The Minister has not today given any indication of whether that will appear this year, next year or at some other time, but that it is there in the background is surely something that he cannot deny.

My Lords, the question we have to ask ourselves is whether in any way the one-year qualifying period is a barrier to hiring. That is an essential part of what is before us today. We can all agree that small businesses face significant challenges, a weak economic environment and difficulties in accessing credit. At the heart of this discussion is youth unemployment, which is a huge difficulty right across Europe. Almost all European countries are suffering from very high levels. Small businesses—acorn businesses—being able to hire people, young people in particular, must be an ambition for all us who want to see the economy do well.

We have all had representations from a range of organisations. The thing is to encourage employers to make that leap and take on additional staff. Among those representations there was something from the British Chambers of Commerce that I thought was particularly interesting and instructive. It was about issues facing sole traders—those who have not yet taken on additional employees. It says:

“In the UK, over 3.6 million individuals are classed as ‘enterprises with no employees’. Not all of these people want or have the potential to expand their business and become an employer, but some do. The key questions are how many of these companies are interested in employing people, how we can identify them and how we can encourage them to take the huge leap needed to become an employer.

The first action must be to reduce the size of the leap required. Throughout our survey work, individuals said they would prefer to use freelancers to assist them rather than take on employees. So, in many cases, it is not a question of whether there is enough demand out there for the business to sustain another worker. The issue is whether the individual wishes to take on the obligations and risks inherent in employing their first staff member”.

All of us who have been involved in small businesses or tried to build up businesses know that that is a very pertinent question.

If we look at the main concerns of businesses in the current environment, pension requirements, dismissal rules and sickness absence feature very strongly. The British Chambers of Commerce says:

“The second biggest barrier is the dismissal process, and it is interesting that it is seen as a significant or total barrier by more than double the respondents that feel that way about the recruitment process. 27% of businesspeople believe that dismissal is a significant or total barrier to recruiting a first employee”.

This is an important point. We must make sure that in a civilised society there is just and fair redress against bad employers. However, I believe that the extension to two years would be welcome to the business community as part of restoring business confidence—something we all aspire to.

I will touch on the issue of tribunals. We already have a precedent for the arrangements that have been set out by the Minister. Judicial discretion prevails; there is no automatic mandate for the exclusion of lay panel members and there is no clear evidence that suggests a judge cannot satisfactorily deal with unfair dismissal claims. This would send out a small but significant message to businesses that have been calling for the change that is before us today.

Coming back to the original point, our major challenge is not only to keep people in employment where possible but to encourage employers or even those sole traders to add to their workforce. Having hired and trained many people in my professional career, I know that one year is often an insufficient time in which to come to that final judgment. I therefore support the proposals put forward by my noble friend today.

My Lords, perhaps I might say a word or two about the second Motion moved by the noble Lord, in particular the statement of reasons.

I was astonished to learn from the noble Lord, Lord De Mauley, who took the time to come and explain the position to me, that the statement of reasons was only an adjunct to the introduction of a right to claim for unfair dismissal. It was thought desirable to have a statement of reasons so that the employee subject to the dismissal would know what the reasons were and could have some record on which he could base his opinion as to whether he should bring a claim for unfair dismissal.

I had supposed, maybe naively, that it would be regarded as good management practice for employers to give reasons for dismissal, particularly to young employees, for whom this had perhaps been a first job, and those who had previously been long-term unemployed. With those reasons, they could modify their behaviour if they were lucky enough to obtain alternative employment, or they could go into some other occupation if they thought that there was some insuperable barrier to their success in the job from which they had been dismissed.

The noble Lord explained to me that the introduction of a one-year period before the right to reasons for dismissal arose was tied to the one-year period that was the condition for being able to bring a claim for unfair dismissal. The two ran together. He explained that if the condition for bringing a claim for unfair dismissal was to be raised from one year to two years, so too the right to have reasons for dismissal should be raised from one year to two years.

I find myself in some difficulty in accepting that the right to reasons for dismissal should be tied in that way to a claim for unfair dismissal. I should have supposed that it would be good management practice and, moreover, a matter of common courtesy for an employer to inform an employee why they were being dismissed. The notion is that a young person could be taken on as an employee, perhaps in his or her first job, and after six months—that is the position now but 18 months would be the position if these statutory instruments come into effect—be dismissed without being given any reason whatever for the dismissal. It is astonishing that that could be regarded as acceptable management practice.

Acceptable management practice would be to provide reasons to an employee who was being dismissed, particularly if it were a young person or a person who had been long-term unemployed and was working his or her way back into employment habits. I respectfully disagree with the part of the Motion that attacks the proposition that the time period for getting a statement of reasons for dismissal should be raised to two years. I would want greater justification than has yet been offered for requiring a two-year period before a statement of reasons for dismissal can be obtained. It should, as I repeat—I am afraid that I have repeated it more than once—be regarded as good management practice for an employer to tell an employee being dismissed why he or she is suffering that fate. For those reasons, I support the second amendment.

My Lords, I support my noble friend’s amendments, if only because the Government’s policy seems to be based on a myth; namely, that in this country our labour market is more regulated than those of our successful competitors. It is a myth comparable with that of the compensation culture, which has been used to justify some of the changes under the Legal Aid, Sentencing and Punishment of Offenders Bill, which limped through the House last night at the end of its Third Reading.

I want to comment briefly on two aspects of the Motions. First, on the composition of tribunals, the Explanatory Memorandum to the statutory instrument records:

“The Government accepted that some unfair dismissal cases can be ‘fact heavy’ and that the input of lay members can be beneficial. But evidence and consultation responses (including from some judges and some lawyers/law firms, and in particular from business) suggested that for those cases which revolve essentially around questions of fact rather than any complex legal point, Employment Judges are competent to deal with an assessment of the evidence against established legal tests and criteria without the need for lay members”.

The inference to be drawn from that note is that there are cases in which there are complex legal points. In those circumstances, how do the Minister and the Government justify taking out of the scope of legal aid and advice, employment law tout court, which is essentially the position except in relation to discrimination cases? It is clear that there are a proportion of cases in which legal points arise; hence, the justification for the change that the Government propose. However, they do not balance that by allowing legal aid and advice to those appearing as complainants in those cases.

Secondly, I wish to touch on the point made by my noble friend Lord Borrie and the noble and learned Lord, Lord Scott, about the statement of reasons. I sympathise very much with the noble and learned Lord and feel that a statement of reasons for dismissal should be given at whatever point an employee is dismissed but for an additional reason, apart from those advanced by him. If you are dismissed and have to seek another job, it would be helpful to be able to demonstrate that your dismissal was not related to any inadequacy or misconduct on your part, if such were the case, but, for example, arose because there was insufficient demand for continued employment in the firm in question or for some reason not related to the person being dismissed.

The Government’s proposals mean that, for the first two years of employment, no one will have the benefit of such clearance to demonstrate to another employer that he is in other respects perfectly fit to be employed, subject to the employer’s own requirements. Particularly in the conditions of the present labour market, that is something to be deplored. For those reasons, in addition, I strongly support the amendments in the name of my noble friend.

My Lords, I support both amendments, but I will concentrate my remarks on the second. In one sense, I apologise to the Minister for repeating some points that I made in the Moses Room. However, I find that his response—in the Moses Room, here today and in correspondence—does not address the issue that I raised. He claims that he is not basing the assertion that the raising of the threshold will increase the propensity to employ on anecdotal evidence. Yet he does not adduce any statistical evidence. The crude evidence is that the last time the threshold was lower, there was an increase in the propensity of employers to employ. That can be dismissed on the basis that it was part of the business cycle, but I am sure that the noble Lord’s department has statisticians who could take out that effect. We have, as the Minister proudly claimed, had some provision on unfair dismissal for 41 years, introduced in the 1971 Act to which those of us who were in trade unions at the time were, in general, opposed. However, the Government of the day thought that some balance was needed in terms of the attack on trade unions that that represented and individual employee rights. Therefore, they rightly inserted the right to claim against unfair dismissal.

Since 1971, either the threshold or the scope of that right has changed five or six times. There are therefore clear points where a change in the legislation could be related to the change in employment patterns. The Minister and his colleagues have failed completely to adduce any of that evidence and present it here today. Instead, they continue to rely on anecdotal evidence. When we were in the Moses Room, I put this down to listening too much to the saloon bars of the Home Counties; we may since have learnt that it may have been raised in the private dining room of No. 10. Either way, it is not statistical evidence. It is anecdotal and it is not proven that that is how employers actually behave. Until the Government prove that, they have not got to base 1 for justifying the macroeconomic effects of these changes.

For Joe Public sitting on the Clapham Omnibus, it is a pretty counterfactual argument to say that the best way of creating jobs is to allow employers to sack people more easily. Some economics is counterfactual, I agree, but without statistical evidence, it is difficult to argue in favour of these changes. That evidence has never been there. In the mid-1990s, there was the famous case of Seymour-Smith and Perez, which went all the way up to the European Court, about indirect discrimination in terms of the higher threshold. I am not arguing that case now, but I am saying that in the course of it, every court at every level, from the High Court right up to the European Court of Justice, accepted that the Government had not proven that, whether or not this was indirect discrimination, there was a bigger good in that more employment had resulted from an upward movement of the threshold. The Court of Appeal said that,

“nothing in the evidence, either factual or opinion … obliges … us to draw the inference that the increase in the threshold period has led to an increase in employment opportunities”.

That was the case 17 years ago. In the intervening 17 years nobody has proven to my satisfaction that the connection is there. The evidence was not there then and it is not there now.

There is a wider context to this, too, as my noble friend Lord Borrie has indicated. This may be the first of many changes in employment law that the Government are bringing forward, and their intention is probably to do so under statutory instruments. I appreciate that it is the convention of the House that we do not vote against statutory instruments, and we are not doing so today. I have a slightly different view, because in the list of government defeats under the previous Government, the first two were against me, so I do not have quite the same compunction as other colleagues. However, if a central tenet of primary legislation is undermined by a series of statutory instruments as the beginning of this series suggests it will be—3 million people taken out of the protection that primary legislation allows—and that continues, we have to look at the way in which the Government are using statutory instruments. I say no more on that.

The other, wider, point, as my noble friend Lord Beecham said, is that we are talking about a vulnerable subset of the population—people who have been employed for a relatively short time, most of whom, regrettably, do not have the protection of trade unions—which is excluded from the basic right not to be unfairly dismissed. This is part and parcel of other legislation which the Ministry of Justice rather than BIS is bringing forward. We have excluded from access to legal aid not only issues of employment but of housing, social security, industrial injuries, for the most part, and industrial diseases—all of which disproportionately affect the most vulnerable elements of our society.

In his opening the remarks, the Minister said that it is vital that the justice system is fair, independent and must not be compromised. I agree—but if you cannot get before a court or a tribunal in the first place, however good and balanced the court and tribunal systems may be, you are being discriminated against. The combination of taking away employee rights in this legislation and taking away access to legal aid in the Bill we regrettably passed last night is a severe restriction of the access to justice.

I fear that those of us who hoped for a relatively liberal Secretary of State at the Ministry of Justice, and a very liberal Minister in this House from that department, will be disappointed. The Ministers’ epitaphs will be that they excluded significant sections of the most discriminated against population from access to justice. That is a bad epitaph for both the parties opposite. I hope that this legislation will not be an additional contribution to that negative effect.

The difficulty with making changes through statutory instruments is that they convey the impression that the changes being made are minor and of a technical nature. However, these changes are not technical and they are certainly not minor. As the noble Lord, Lord Whitty, said, 3 million people will be taken out of the scope of unfair dismissal legislation and protection. That is a major change which will have a major impact on the British labour market.

Why is this happening? The justification from the Government is that it will aid job creation. Have any employers said, “If you make that change, we will take on more people”? Have they given any undertakings or promises? Of course they have not. This is all in the impressionistic world and it is a matter of conjecture whether anything will change. I do not believe that it will have anything other than the most marginal effect on employers—and I know a lot of employers—but it will have more than a marginal effect on those 3 million workers, or at least some of them. In most jobs—there may be exceptional ones—you do not need more than a year to check whether or not a person is suitable. Probation periods are rarely longer than one year.

Nor is an employer likely to be found guilty of unfair dismissal if a worker does not first achieve and then maintain the required standards of competence or behaviour. Provided that a warning is given, the employer will not make the minor procedural mistakes that the Minister warned about in his moving remarks. I do not mean “moving” in an emotional sense—I wish to make that clear—but in moving the Motion. Bad employers are being given carte blanche for an extra year and the effect will be a rise in insecurity and grave injustice.

Cutting the role of lay members is not a minor issue—this is a step towards a tribunal becoming a full court, with a judge on his own. That will be a daunting prospect for many applicants, which is softened at the moment by the fact there are lay people with some understanding of their world of work. That is not a criticism of judges, for whom I have a lot of time generally, but we will miss a tremendous amount of experience in tribunal hearings because of this change.

As others have said, these may be the first two steps in implementing some of the ideas that are circling around the Beecroft report. We have not seen the report yet, but this venture capitalist has been let loose like a bull in a china shop in the delicate field of employment law. I ask the Minister for an assurance that if any changes are to be made in the future in employment law, they will not be smuggled in through the statutory instrument route but will be a matter for primary legislation so they can have a proper debate and proper exposure in this House.

I was a lay member of industrial tribunals, as they were then called, in the 1970s and 1980s and was also chair of ACAS for seven years until 2007. I have said before that I am not sentimental about employment tribunals, as they represent a breakdown in employment relations. The vast majority of applications to employment tribunals are withdrawn or settled through ACAS. The test of these statutory instruments should be whether they are objectively justified, and whether they will create jobs and encourage good employment relations.

On the objective justification, the Minister was kind enough to send a copy of one of the letters that he has sent around, in which he wrote that although the recent increasing trend in single claims being accepted does appear to have halted, it is difficult to establish a clear trend over the most recent quarters. Indeed—so why make policy on the hoof?

When I arrived at ACAS, I found 15,000 applications for equal pay in a room. They had been sitting there for a year and could not be conciliated as they were test cases that had to be handled differently. The Minister has said in a letter that multiple claims are processed and judicially managed together—so the claims that there has been a huge increase in applications is very misleading, as I think the Minister himself accepted in correspondence.

It is important to remember that employment tribunals are not judicial courts involving an applicant versus the state. They are there to hear disputes between employee and employer. Of course they take account of facts and take due process into consideration, but they also take account of the employment relationship. This is why the role of the lay member is so important. I was unhappy when the regulations were changed to allow employment judges to sit alone in cases involving notice periods, holiday pay and other slightly technical issues. I thought it was the thin end of the wedge then, but at least there was some intellectual cohesion to the proposal, as applicants used to find themselves caught between two different processes and facing long delays before they received their lawful payments.

The issue of claims for unfair dismissal is not slightly technical. I was struck by the number of times that the paperwork I would receive for a case made the decision seem cut and dried but at the actual hearing a very different picture would emerge. It will be a very detrimental step indeed for the role of lay members to be further diminished. Increasing the eligibility period for putting claims to an employment tribunal from one to two years will do nothing to improve employment relations or the morale of employees. I speak as a fellow of the Chartered Institute of Personnel and Development; good management and good training are the answers here.

I appreciate that this is regarded as a small business problem. When I was chair of ACAS, the organisation spent a large proportion of its time on improving advice and guidance to small businesses to help to keep them out of trouble. It is perfectly possible to have adequate employment procedures on one side of A4 paper. Dare I say that too many with a financial interest insist on gold-plating employment procedures? We should concentrate on the world of work as an engine for growth, with well trained and motivated staff and good management. These measures are unworthy of any Government in the 21st century, and it makes me sad that this is being debated in the same week as the funeral of Lord Wedderburn.

My Lords, I declare an interest, as I chair and advise many businesses that will benefit in one way or another from the outcome of the implementation, or not, of this statutory instrument.

Listening this afternoon I am left with the impression that, if ever the other place or the general public want to know about the value of this place, it can be found in the marvellous depth of expertise and experience that I sit here and look at today. I do not agree with many noble Lords, but I acknowledge their experience and that they have done it. I hope that as we go home for Easter we could take that thought with us—that there are very few legislatures in the world that could debate a subject such as this one with the experience that I see all around me today.

Of course, there are many reasons why this nation can be attractive to inward investment. There are the factors of economic stability, growth, access to skilled labour, a competitive tax regime—and, I beg of this Government, better and more value and not price-based government procurement. But at the end of the day it is true to say that a flexible labour market, by perception as well as reality, is one reason why we are attractive. I think that the noble Lord, Lord Beecham, was saying that it is a myth that we do not have a flexible labour market, although I may have misunderstood him. We have one of the most flexible labour markets, if not the most flexible, in the European Union. That is why Tata continues to create jobs here before it creates them anywhere else and one reason why GlaxoSmithKline announced that fabulous news just the other day.

I say to the noble Lord, Lord Whitty, that I do not think that I could be identified with the saloon bars of the Home Counties, a place where a crèche is something that two Range Rovers have. I come from the home of the real Range Rover—Birmingham. One reason why Tata is investing in another 1,000 to 1,500 jobs in my hometown, building that product, is because that company knows that it is in the home of a flexible labour market. That company runs, as do so many other sophisticated and large inward investors, by skilling and investing in its people, and it will hardly benefit at all from extending from one year to two years. But the very fact that we have that rule will be one of the bricks in the perception that we are attractive. There is no running away from it—when I go around the world, that is one of the reasons cited. But it is not on that scale that we will target job growth in this nation, if we are to get out of the economic mess. That will happen through small business, getting micro-businesses to take the plunge and employ one person for the first time, and getting a firm that employs five to employ six or one that employs 20 to employ 21. They are the route out of this—the private sector creating jobs—and we have to do everything that we can to ensure that they get all the encouragement they can to do so. Why on earth we have a national insurance contribution from employers for small businesses when they are not making money is beyond me. At the same time, we have to, first, make it factually easier for them to do it and, secondly, ensure that they do not feel that they will be subjected to all the debilitating problems—as they see it—with an employment tribunal if they take someone on.

The noble Lord, Lord Young of Norwood Green, said at the end of his remarks that no business has anything to fear if it complies with regulation. I remind him that they have a lot to fear; it is called the spurious claim, where somebody leaves employ and has a crack at an employment tribunal to get damages for unfair dismissal. It happens a lot, and it never actually comes anywhere because these people are bought off. It is no use people saying, “At the end of the day, that is a small price to pay”. In economic boom times, it may be because, yes, people then take labour on more readily. Yet when we are really under the cosh in this country it is a real inhibitor. People say, “I’m not going to take somebody on, because in the next year or 18 months they’re just going to leave and then do me for constructive dismissal. I’m not going there; I won’t do it”. It happens all the time, and I hear it all the time.

Many of the noble Baronesses and noble Lords who have spoken come from a noble cause of championing labour. I ask them, just for a few moments, to leave their ideology at the door and think more not of those who are in work but of those who are out of work. In the European Union we have a history of regulating and championing those in work, but we are looking at serious, long-term sustained unemployment, especially of the young, throughout the whole European Union because no one is bothering about getting those who are out of work into work. If we really care about that, we have to go to town on ensuring that small businesses take the chance.

I notice that so many unions fight so often on the subject of pensions. When an employer closes a pension scheme to new entrants, they fight while their members are fine, but say that they are doing it for people who are currently not in that scheme. If you care that much for those who are out of work in that situation, why not do the same now? The noble Lord, Lord Monks, said that no one has written an undertaking saying, “You do this and I’ll take on more work”. Let us throw the glove down to small businesses. Let us champion it and say, “Come on, we’ve done our bit—you do yours”.

The amendment speaks of “justice and fairness”. In supporting this statutory instrument, I absolutely agree with the noble and learned Lord, Lord Scott of Foscote; it is despicable if anybody is ever dismissed and does not get a letter from the employer saying why. The other side of that should be concern if they do not want it, because often an employer can write, “Actually, I fired you because you’re rubbish”. There is nothing wrong with that. Perhaps if they knew they were going to get that letter, employees might behave and go to work a little differently along the line. As the amendment speaks of “justice and fairness”, I end by asking: fairness to whom? Yes, it is fairness to a business because it is not going to have so much time, resource, effort and lawyers’ fees going towards fighting so many claims, which occasion after year one at the moment. Yes, it is fairness to the wealth creation of the nation but, at the end of the day, that generates tax which pays for a lot of schools and hospitals. More than anything else, it is fair to the unemployed because it is just one more chance of getting them into the world of work. I support the Motion.

My Lords, I will not repeat what I said last week in Committee but I want to emphasise one point, although I shall not do so as eloquently as the noble Lord, Lord Jones, has just done. Jobs do not exist automatically. In the small and medium-sized businesses with which I have been concerned they need to be created and people need to take risks in order to create them, borrowing money and so on and putting their own money on the line. Obviously they hope that that will be successful—sometimes it is, sometimes not—but they need to be creative. As I say, jobs do not exist automatically and a tribunal cannot decide who does them in every case. This measure will make it just that bit easier for employers to create the sort of new jobs in small and medium-sized businesses that the noble Lord, Lord Jones, was talking about, and will make it more likely that they will do so. We need these jobs and less bureaucracy.

On the question of reasons, which the noble and learned Lord, Lord Scott, mentioned, I entirely accept what he said about good management practice but this is not just a question of good management practice; it is a legal requirement to produce a legal document that could form the basis of legal proceedings in the tribunal and so on. It is different from good management practice, with which I would concur, to say that there must be a legal duty to produce a legal document. That is the difference, and that is why this measure goes along with the extension of the amount of time in the statutory instrument. For those reasons, I support the statutory instruments as they stand and would not accept the amendments.

My Lords, my involvement with employment tribunals is recorded in the register of interests. Issues of fair or unfair dismissal are at the heart of workplace relationships. The first-tier employment tribunal is in effect an industrial court where evidence is assessed and decisions made on what is fair and reasonable conduct. It was intended that those decisions would be rooted in the industrial context and business realities.

That is why lay members were introduced and why they should be retained in the hearing of unfair dismissal cases. The presence of lay members brings to the employment tribunal system both legitimacy from the view of the claimant, and a significant component of knowledge of social relationships at the workplace acquired through observation and participation. Employment tribunal decisions that are made jointly by a panel of people who pool legal and other knowledge and experience are better for that range of skills. This is particularly important when, as has been said, one considers that unfair dismissal claims are often questions of fact rather than complex legal points.

The Government argue that allowing judges to sit alone on unfair dismissal cases will bring cost reductions and efficiencies. Removing lay members’ automatic presence from unfair dismissal cases will save around £140,000, together with perhaps a further £500,000 as a result of needing to recruit fewer lay members—a most modest saving when one considers the challenge being posed to the industrial jury concept when dealing with unfair dismissals. As for inefficiency, the timetabling of cases is as much driven by the availability of judges as it is by lay members.

The Government argue that employment tribunal judges are highly competent, which I fully endorse—of course they are, but that is not the issue. What is important is that the legitimacy and benefit of a tripartite industrial court system in unfair dismissal cases remain. That is important for a series of reasons. In unfair dismissal cases people often feel very hurt and upset and the dismissal may be a life-changing experience, whatever the merits of their case. The employment tribunal must decide the reason for the dismissal and whether the employer acted reasonably in treating that reason as sufficient for dismissal. Where a tripartite tribunal finds against a claimant, that is a powerful message: the lay and the legal are of a common view. However, they have had their day at the tribunal, and that tripartite tribunal has expressed a view. Where that decision is taken by a judge sitting alone, the claimant may well feel more minded to pursue an appeal. I believe that legitimacy in the industrial context will be perceived to be less valid without that tripartite system.

The judges will be allowed to decide whether a case requires the input of lay members, but no doubt there will be an expectation that those instances are kept to a minimum. A claimant will be able to request of the judge that their claim is heard by a full panel. However, anybody who has experience of employment tribunals will know that an unrepresented vulnerable claimant will not have either the competence or the confidence to argue such a case. As many noble Lords have said, there are further changes to come on employment rights. The Government may well introduce no-fault dismissals, make it easier to make redundancies and introduce other changes in the belief that making it easier to fire people will be a significant driver of economic growth. However, I think that these cumulative changes will come as a shock to many people and their families as they begin to experience their impact. Against that background, to weaken the strength of the tripartite industrial court on such a fact-sensitive issue as unfair dismissal strikes me as not only rash but undesirable given that the financial saving would be of such modest proportions and that the majority of those who expressed a view defended the retention of the tripartite system.

The Government’s proposals seek to achieve a reduction in employment tribunal cases through earlier resolution of disputes, which is very good if it can be achieved. However, this suggests that those cases which do reach the tribunal are likely to involve strong feelings and contested views, which again supports the continuation of the tripartite panel.

I accept that flexibility in the deployment of labour at work is clearly desirable in a rapidly changing world where products, technology and markets are changing all the time. It is desirable to have a national industrial culture where positive change is embraced rather than resisted, but achieving that does not require such stripping away of protections against unfair dismissal or decent treatment in a redundancy situation. This instrument makes it easier for all companies, irrespective of size—the very big as well as the micro—to hire then fire, with little reciprocal responsibility, in the belief that this will drive growth and improve economic performance. However, such a labour market will reduce incentives on the part of the employer to invest in and train the workforce. There is a systemic problem in significant parts of UK industry whereby employers do not invest in training, excluding health and safety, which directly contributes to the skills challenge and the lower levels of UK labour productivity—levels that are declining in relative terms and causing us increasing concern. Numerous studies, commissions and data sources confirm this view.

An aggressive reduction in employment rights—as many have said, I fear that there are more to come—simply encourages the attitude that labour is a resource that can be easily disposed of and does not merit training investment, and that skills shortages can be addressed simply by paying the prevailing labour market price or operating at a sub-optimal level. Tackling that issue is a bigger challenge to the economic performance of the UK than measures unsupported by evidence that deny 3 million people statutory protection, or hoping that undermining the industrial court will somehow deliver an economic transformation. Getting employers not to take a short-term attitude to labour that such changes will deliver, but to give a commitment to training, is the bigger economic challenge.

My Lords, we have had an extremely interesting discussion, which was virtually a repetition of our debate in Grand Committee. I remain with the fear I expressed during that debate that this issue has become far too polarised. On the one hand, the proponents of the statutory instrument suggest that it will lead to a significant increase in employment, particularly in the SME sector. On the other hand, after listening to a lot of the remarks on the Labour side, one would think that one was returning to the days of the Tolpuddle martyrs. I worry about this polarisation because this is a relatively modest instrument.

As the noble Lord, Lord Whitty, indicated, I know that a lot of the evidence here is anecdotal. I now see that the noble Lord has extended his saloon-bar anecdotes beyond just Hertfordshire to the whole of the Home Counties. The evidence is not only anecdotal but based on the experience of many noble Lords who sit on boards of directors and are involved with SMEs. The evidence is therefore not entirely anecdotal, but I take the point.

This is a very modest alteration if you look at the number of people who, when the restriction was one year, actually made a claim for unfair dismissal when they were dismissed between year one and year two. There does not seem to be any significant indication that such people will lose their rights as a result of this legislation.

The point I really want to make, which I made in Grand Committee—and I am glad that one or two noble Lords on the Labour side have taken this up—is that we are in the middle of a significant internal argument around the suggestions in certain quarters that virtually all employment protection should be scrapped. This is a very serious matter. Conversely, a number of people, certainly on the coalition side, have been arguing that we need improvements in employment protection, particularly in what are described as family-friendly rights on maternity, paternity and other such issues. I hope that this will appeal to the Labour side of your Lordships’ House. If we are going to get the improvements we want in those family-friendly rights, and if we are to beat off the damaging proposals that seem to be coming from Mr Beecroft and ensure that they are not implemented, passing this modest instrument seems to be a small price to pay.

My Lords, this is not a time-limited debate, but I suggest that we hear from the noble Lord, Lord Lea of Crondall, and then the Minister.

My Lords, I have three points. First, perhaps I may pick up on the points made by the noble Lord, Lord Razzall, if I have his attention. He made what I would call a Sudetenland remark—the one made by Neville Chamberlain about “peace in our time”. If only that were so. Does he want a guarantee, a white piece of paper in his pocket that he can wave, promising that there will be no more legislation if this order is passed? Well, we shall see.

I also congratulate the noble Lord, Lord Jones of Birmingham. His joke about crèches is the worst joke I have heard in the House in the 12 years that I have been here.

My first substantive remark is about the evidence base. In Committee, I pointed out that the evidence paper presented to us as part of the background material did not give evidence as you would normally understand that term—that it was clear what would happen if you moved from one year to two years; instead, it was evidence about perception. It is probably worth repeating that the Minister said that perception is as powerful, if not more powerful, than evidence.

Today, having been given the challenge that if you have a problem of perception, your job should be to counter perception by evidence—to change the perception by talking to people—the noble Lord said, “Exactly. That is what we are trying to do”, which caused an intake of breath on these Benches. The Minister has reinforced that today by saying, “I want to meet the challenge that there is evidence of perception”. I am sure he has evidence of perception—that becomes a circular argument—but there is still no evidence.

My second remark is that noble Lords repeated three or four times the Americanism about how many people we should let go. I do not think I am alone in finding that American usage distasteful. I deplore the idea that these people want to be let go. Do they come up and say, “Please let me go”, to which the answer is, “All right, I will let you go”? They are being sacked, they are being dismissed, they are being thrown out, they are being put on the scrapheap. That is the language. I have never heard in a pub in Burton upon Trent anyone saying, “I think they’ll let me go”, when they mean that they are going to be dismissed. Does the Minister appreciate that that is not the industrial language in this country?

Finally, I echo the remarks of my noble friend Lord Whitty, supported and reinforced by my noble friend Lord Monks. If legislation through statutory instrument as deep-cutting as this goes on and on, one is cutting the legs off primary legislation. We have a growing problem in the role of the House of Lords—second only, perhaps, to the Money Bill question. We are seeing more and more statutory instruments which are not playing around with minor detail of the primary legislation but, bit by bit, salami-wise, cutting the legs off primary legislation. Does the Minister think that we can go on taking 3 million, another 3 million and another 3 million out of the scope of primary legislation without making nonsense of the conventions about the use of secondary legislation?

My Lords, perhaps I may start by agreeing with the noble Lord, Lord Jones of Birmingham, most strongly about the quality and value of debate in your Lordships’ House. Today is no exception. We have had a good debate today, as indeed we had a good and full debate in Grand Committee on Monday last week, in which nine noble Lords from the opposition Benches participated, as did two from the Cross Benches and four from the coalition, as well as me.

Many of the questions and issues raised today were debated when we discussed the orders on that occasion, and my answers have not changed much since then. I am also well aware that noble Lords on all sides want to get on with the next business, so I hope that they will forgive me if I focus on the key issues.

The words flexibility and discussion have been deployed liberally throughout our debates, particularly by noble Lords on my side of your Lordships’ House, and my noble friend Lord Risby used those words today. Those concepts are at the heart of what the first order, the tribunal composition order, is about. The amendment of the noble Lord, Lord Young, suggests that the order will reduce the justice and fairness of employment tribunals and risk increasing costs through a greater number of appeals. These concerns are unfounded. I explained in this debate and in Grand Committee last week why they are unfounded but perhaps I may repeat what I said.

This order provides flexibility; judicial discretion will prevail. The decision to sit with a full panel, where appropriate, can be exercised by the judge at any point in the process and the parties can request a full panel at any stage. There is no evidence that judges sitting alone in the various other jurisdictions in the past has led to more appeals. However, Her Majesty’s Courts and Tribunals Service will be monitoring the impacts of this change through its regular management information collation systems and a full post-implementation review of the complete package of tribunal-focused reforms is planned for 2016. The employment tribunals system is something of which we should all be proud—it serves an important role in society. However, that does not mean that it should not evolve and search for further efficiencies and improvements. The noble Lord, Lord Young of Norwood Green, said that his side believes it is the thin end of the wedge and he asked whether I blame him for thinking that. He and the noble Baroness, Lady Turner, also suggested that lone judges will fundamentally shift the balance of the tribunal. I restate that we have no plans to extend the ambit of the order. It does what we proposed at the consultation and there are no further proposals regarding composition. Tribunals are different from courts. Lay members, where they add value, are one factor, but the specialist expertise of employment judges in employment law and in handling tribunal users is another. Flexibility is better than prescription and judges are experts.

The noble Baroness, Lady Turner, raised the question of legal aid, linking it to the removal of lay members, and the noble Lord, Lord Beecham, also referred to it. Legal aid will continue to be available in respect of unlawful discrimination. Advice is available from ACAS and is usually available from trade unions. With the introduction of early conciliation, parties will have free access to the opportunity to resolve disputes without the need to lodge an employment tribunal claim.

The noble Baroness, Lady Drake, said that the savings are not huge. Predicting what the savings will be across the more than 10,000 unfair dismissal hearings that take place each year is a speculative process, given the need for judges to exercise discretion and assess what cases might require full panels. The savings conservatively estimated in our impact assessment might not be considered significant but, as a Government, we must take all measures to ensure that taxpayers’ money is used to best effect.

The unfair dismissal and statement of reasons for dismissal order, which extends the qualification period for dismissal from one to two years, demonstrates the Government’s determination to provide the right environment for businesses to grow. We are facing the toughest of economic circumstances and we need the private sector to hire staff and generate growth. Employers tell us that to do that they must have enough time to get the working relationship right without undue fear of an employment tribunal. They must feel confident to recruit. By extending the qualification period to two years, we are removing one of the barriers which employers tell us can make them reluctant to take on new staff.

The amendment of the noble Lord, Lord Young, suggests that this measure will have little or no effect on employment, but the businesses that responded to our consultation and large numbers of employers surveyed by the British Chambers of Commerce, the Institute of Directors and the CBI tell us that it will. It is not, as the noble Lord’s amendment suggests, a measure that will diminish the range of employment rights that employees enjoy. Without the shadow of an unfair dismissal claim hanging over them, businesses—particularly smaller ones—will have more confidence to hire. They will feel secure in the knowledge that there is enough time to make sure that they have the right person for the job. It will send a signal to businesses that we will back them when they take the risk of taking someone on without taking away important protections for individuals, such as the right not be discriminated against.

Nor is this order, as some noble Lords fear, a substitute for the use of good management practice. The problem of poor leadership and management skills is one that the previous Government acknowledged they faced. Like them, this Government are committed to improving capability in this area through the Leadership and Management Advisory Service and Business Coaching for Growth. But, as has been said, not every individual will be suitable for every job, no matter how skilled the manager.

I know that the noble Lord, Lord Young, believes that employees should always get a written reason for their dismissal. However, the purpose of the statement of reasons is not to provide employees with a document that can be used as a reference or which could be useful to prospective future employers; it is essentially one of evidence when making a claim for unfair dismissal. It is, therefore, very closely linked to the right to claim unfair dismissal and it is logical that the qualifying period for both is kept consistent. I will return to that in a moment.

The amendments to the Motions tabled by the noble Lord, Lord Young, both call for a report to be placed before Parliament in 18 months’ time. I explained in my opening speech that no employee will have reached the end of the qualifying period by then, so such a report might not be very helpful. However, I can make the commitment today that the Government will report any interim conclusions on extending the qualifying period ahead of the planned post-implementation review in 2016. That means that an indication of the measure’s effect could be made available to noble Lords in late 2014 or early 2015.

I said that I would return to the issue of the statement of reasons which was raised by, among others, the noble Lord, Lord Young, and the noble and learned Lord, Lord Scott of Foscote. The purpose of the statement of reasons is essentially, as I said, one of evidence when making a claim for unfair dismissal. It is therefore closely linked to the right to claim unfair dismissal, and it is logical that the qualifying period for both is kept consistent. I agree with the noble and learned Lord, Lord Scott, that it would be good management practice, and indeed common courtesy, to provide an explanation in writing of why a person is being made redundant. I very strongly agree with that. However, we are not, with great respect, legislating for good management practice. As my noble friend Lord Cope said, this is about a statutory right to a written statement of reasons, the purpose of which is connected closely—as I have said several times—to the right to bring a claim.

A different point—I think that the noble Lord, Lord Beecham, raised it—is that the statement of reasons might be linked to a reference to a new employer. That is not the purpose of the statement of reasons. It is a very formal document and, in my experience, is not likely to be terribly helpful to an employee as a reference. It will simply include reasons why the person was dismissed. If I were an employer I would want rather more—and, dare I say it, rather more positive—information. References are also not regulated by government, and, speaking for myself, I do not think that they should be. The individual is of course able to ask for a reference and—I say to the noble and learned Lord, Lord Scott—it is good management practice that they should be.

The objective of the qualifying period is to provide sufficient time for both parties to get the working relationship right. A benefit of extending the qualifying period is to give the employee two years to prove that he is up to the job, and any subsequent employer a two-year period to confirm that the employee is right for his new job. A further relevant point is that day-one rights currently operate effectively without a written statement in the first year of employment, and there is no reason to suppose that a longer period would change this.

The noble Lords, Lord Young and Lord Whitty, asked for quantitative evidence of the effect on employment of our proposals. I felt that I had given some qualitative evidence in Grand Committee, whether or not noble Lords accepted it. In addition to the service I have already quoted from, perhaps I may make the following point from a British Chambers of Commerce workforce survey. It states:

“Firms looking to grow their staffing levels by more than 50 percent are more likely to see dismissal rules as extremely burdensome, than those looking to stay the same or downsize”.

On the issue of quantitative evidence, I made it clear that we do not see this as a panacea for job creation, or believe that it will create an overnight sea change in employers’ attitudes to recruitment. It is difficult quickly to isolate the impact and evaluate it with certainty. However, as I said to the noble Lord, Lord Young, we will monitor factors such as the number of employment tribunal claims for unfair dismissal, any changes to employees’ length of service, and business perceptions of unfair dismissal regulations, including how they affect business decisions—and, as I also said, we will report on the interim conclusions.

The noble Lord, Lord Whitty, referred to the fact that 1.75 million jobs were created after the qualifying period was reduced in 1999. Of course, a huge range of factors affect levels of employment, and the economic circumstances of 1999 were rather different from those of today. The evidence from business stakeholders is that the change will improve their confidence to recruit.

The noble Baroness, Lady Turner, asked in empirical terms how it could be acceptable to dismiss someone unfairly at any time. Since the introduction of unfair dismissal legislation in 1971, all Governments have accepted the principle that employers must take time to establish a working relationship and decide whether an employee is suitable. We estimate that there will be only a 4 per cent reduction in unfair dismissal claims, so the direct impact on individuals will be limited. We should not forget that many of the potential claims would be settled out of court or decided in favour of the employer. However, those cases would still have a cost to the employer.

The noble Baroness, Lady Donaghy, spoke about the need for better management. The noble Baroness, Lady Drake, referred to an aspect of this. I agree with them and spoke about this earlier. That is why we are refocusing the Leadership and Management Advisory Service, set up by the previous Government—I give them full credit for that—to emphasise coaching and mentoring for management, and rapid access to trusted sources of specialist advice and support and to business and knowledge networks. We accept that we must do better and we are addressing this. We want to go further. We are working with a wide range of organisations, including ACAS, to ensure that information and practical help such as mentoring is available to management to improve capability.

On changes to employment law, the noble Lord, Lord Young, asked if we could expect to see more in this vein—I think that those were his words. The department is leading a cross-government review that will last the length of the Parliament into all aspects of employment-related law. Adrian Beecroft has contributed to that review. The aim is to make it easier for business to take on staff and give it the confidence to do so, without compromising fairness for employees. We set out an ambitious programme of reforms as part of the employment law review that began in the summer of 2010.

The orders have been consulted on publicly, affirmed in another place and debated at some length in your Lordships’ House, both in Grand Committee last week and today. They will have a positive impact on businesses, on the economy and—as the noble Lord, Lord Jones, said so eloquently—on those who would otherwise be out of work. Together with the wider package in which they sit, they will help make a difference by improving the efficiency of the system while maintaining a level of service to the users who rely on it to deliver justice. I commend the orders to the House.

My Lords, I thank the Minister for his extensive reply. I will keep my remarks very brief. I see that I am getting support for that intent. It is not because I think that the issues are unimportant, but because my noble friends did ample justice to the reasons for both amendments to the Motions.

I will pick up a couple of points. The noble Lord, Lord Jones, invited us to leave ideology at the door. I like to think that we did in this debate, and that there were sincerely held views on both sides. All of us in the Chamber care passionately about youth unemployment. That is why the previous Government spent so much time rebuilding the apprenticeship programme, which was practically at death’s door.

Because we hold a different view on these issues, that does not mean that we do not care—we do care, passionately. However, the noble Lord is being over-optimistic if he believes that this measure, described by the noble Lord, Lord Razzall, as “modest”—again I must part company with him there—will somehow ensure that we do not have, in his view, any spurious claims. I still firmly believe that if you really want employers to protect themselves, the way is to have proper personnel procedures and not imagine that somehow they can deal with this at the 11th hour.

Because of the time, I am going to telescope my remarks to a large extent. I welcome one point by the noble Lord, Lord De Mauley. I do not know whether he called it a “review” or a “report” in a two-year period approximately, but I welcome it, even though we are totally opposed to these changes. As for the composition of the tribunals, we believe that this is a profound change in their nature. I am not going to test the opinion of the House on the first amendment to the Motion, not because we see this issue as less important, but mainly in the interest of time; it is for that reason alone. We are still fundamentally concerned about it; we are still not reassured by any means when the noble Lord tells us that there will be more to come. We believe that this will again diminish rights. However, for the reasons I gave, I beg leave to withdraw the amendment.

Amendment to the Motion withdrawn.

Motion agreed.

Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order 2012

Motion to Approve

Moved By

That the draft order laid before the House on 6 February be approved.

Relevant document: 41st Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 19 March.

Amendment to the Motion

Moved by

As an amendment to the above motion, at the end to insert “but that this House regrets that the Order will unnecessarily diminish the employment rights of employees, will have little or no effect on employers’ likelihood of taking on new staff, encourages the use of dismissals in place of good management practice, and is opposed by trades unions; believes that employees should always get a written reason for their dismissal; and calls on the Government to place a report into the effect of the changes before Parliament, 18 months after the approval of the Order”.

My Lords, I will again be brief because we have explored the arguments in great detail and I have partially covered them in my previous contribution. I will refer to one aspect, in relation to the contributions of the noble and learned Lord, Lord Scott, on reasons for unfair dismissal. I listened carefully to what the Minister said, and I must admit that, again, this is totally the wrong signal to give employers—that this will somehow be used as a legal document. It is but a small and necessary example of good management practice and something that ought to be an employee right. They should understand why they have been dismissed. If that means that employers have to think long and hard about how they treated an employee, I would hope that that process takes place before, rather than when they produce this letter. That would improve both management and employee rights.

Given the importance of what we believe to be a fundamental change—which, as some of my noble friends have said, would be more proper in primary legislation than a statutory instrument—I wish, for those reasons as well those previously expressed, to test the opinion of the House.

Motion agreed.

Scotland Bill

Report (2nd Day) (Continued)

Relevant document: 17th Report from the Constitution Committee.

Moved by

I beg to move that this Bill be now further considered on Report. In moving this Motion, I am conscious that at earlier stages in the passage of the Bill, Members of your Lordships’ House have been anxious about the progress towards a legislative consent Motion. On Monday, I indicated that the Scotland Bill Committee would meet this week—I thought that it would be today but I understand that it was yesterday—to discuss the legislative consent Motion and the agreement reached between the Governments on the Scotland Bill.

I can advise the House that the committee met yesterday. It debated and agreed a short report, which was published earlier today, on the draft legislative consent Motion, which had been put forward by the Scottish Government. That report concludes with the following words:

“All of the Committee notes the contents of the Legislative Consent Memorandum and a majority recommends that the Parliament gives its consent to the legislative consent motion”.

Only the Green Party member of the committee has chosen not to make a recommendation.

It is now clear that we have agreement between the Governments on this Bill and a clear recommendation to the Scottish Parliament to vote in support of the Bill from both the Scottish Government and the committee established by the Scottish Parliament to review the Bill. That report having been published earlier today, I thought it was important to bring it to the attention of the House.

I hope that the House will forgive me if I take 90 seconds to say something about my personal attendance, or non-attendance, for Part 4 of the Bill today. Each time I have come to the House, the proceedings of the Scotland Bill have been delayed—today, by more than three hours; on Monday by longer than that; and, at Second Reading, by even more. Unfortunately, that means that I, for personal and domestic reasons, am unable to remain until Part 4 is reached. It will be at a time when I have to go for personal reasons.

However, perhaps I may say that I am deeply indebted to the Advocate-General for the way in which he has responded to the amendments proposed in relation to the Supreme Court. The end result is something with which even I could agree to the extent of about 98 per cent. In due course, I shall write to him with a couple of technical points that are perhaps worthy of consideration. I hope that we can proceed on the basis that the Advocate-General is now advocating in Part 4. I am indebted to him and his staff for all the courtesy shown to me in the course of these proceedings. I thank your Lordships for allowing me this indulgence.

Motion agreed.

Clause 27 : Taxation: introductory

I should tell your Lordships that if Amendment 15 is agreed to I cannot call Amendment 16 for reasons of pre-emption.

Amendment 15

Moved by

15: Clause 27, page 19, line 34, leave out from beginning to end of line 24 on page 20

My Lords, the noble Lord, Lord Browne, can probably rest easy as far as Amendment 16 is concerned. We have been around this course a number of times. I find it very difficult to understand, especially given the announcement just made by my noble and learned friend. He has just told us that there is a recommendation for legislative consent. We have heard repeatedly during the course of the deliberations on this Bill that it implements the recommendations of the Calman commission. Nowhere does the Calman report suggest that there should be an open-ended power to create new taxes of any kind, to be introduced by order in both Houses.

I have two objections to that. First, the taxes which are intended to be given to the Scottish Parliament, like the aggregates tax—we have a later amendment on that, which I do not propose to move because I know that the Government will say, “We are not ready to do that”—are not in the Bill. We have this open-ended power. My objection to this open-ended power is constitutional. It cannot be right that we have an order-making power for the imposition of taxes through the House of Commons and the House of Lords. I know that the Minister will say, “Oh, but this will be discussed in the Scottish Parliament”. This is the sovereign Parliament and the House of Commons is the sovereign body. Its history is one of voting means of supply. To create a procedure that enables taxes to be imposed without going through the requisite finance Bill and Committee stages in the House of Commons is a huge step which is in no way justified by the manifesto commitment or by anything that the Calman commission said.

I urge my noble friend to think again about this. It is an enormous change to our constitutional processes. I cannot think of any example where it has been possible to impose a tax by Order in Council. The very early history, with the arguments over ship money and everything else—I do want to repeat arguments that I used in Committee—was about this very principle. It is a dangerous precedent to create. One of the things that worries me about this Government and the previous Government is that there does not seem to be an understanding that we have no written constitution in our country. Our constitution, in so far as it exists, exists in the procedures and conventions of the House of Commons and of this place. To ride roughshod over them in this way for the sake of convenience is a very retrograde step, which has certainly not sprung from any commitments or recommendations that have been made externally. I can see how it is for the convenience of Ministers and the Executive, but it is utterly wrong in principle. Even at this stage, I ask my noble friend to think again and find some other method of achieving his objectives which does not ride across the very nature and existence of our parliamentary procedures. I beg to move.

My Lords, I support the amendment of my noble friend Lord Forsyth. Like him, I am concerned about the constitutional aspect of it. Here is part of a structure to set out a tax-levying power within the Scotland Bill which represents an abrogation by the United Kingdom Government of their obligation to promote financial stability, efficiency and good government across the whole of the United Kingdom.

Of course, it is one thing to devolve a tax-raising power to a specific area, as is contained in the Bill; I have my own views about that, which I will say a little about in this context. However, it is also the duty of the United Kingdom Government to ensure that the policies which they espouse and the priorities that they hold for the good financial and economic government of the kingdom should be as capable of implementation in Scotland as in the rest of the United Kingdom. The capacity of any Government of any complexion to fulfil other, broader financial and economic obligations against the background of the impact of the tax provisions specifically contained in the Bill is seriously jeopardised.

I see the whole Bill as a Trojan horse. I think that the commission and those who prepared the Bill and brought it forward were, perhaps, not fully aware of the potential damaging impact on the Scottish economy. It will create major challenges. I raised a couple earlier in the passage of the Bill, at Second Reading and again in Committee. The first is the situation affecting the tax base. The Scottish tax base will be smaller and weaker than the tax base on which provision for Scottish expenditure is currently based. Scotland’s economy has a higher proportion of company failures and a lower proportion of company formation. It has a smaller and weaker entrepreneurial class. It has a higher proportion of public sector employment. All these points have been made already, but they have to be made again because they feed into this problem of lower growth and expansion and a weakening private sector. However, it is on that weakening and small private sector, relative to the rest of the United Kingdom, that the impost of the 10 per cent tax rises will fall.

The study to which I referred earlier showed that the United Kingdom public expenditure base had expanded by 94 per cent in the previous 10 years, while the Scottish tax base, which will form the basis of this 10 per cent tax, had expanded by only 48 per cent. That may not be continued at the present time when the Government’s public expenditure programme is much more disciplined, but what will happen in a future Parliament, in future circumstances, when the economy nationally—by which I mean across the United Kingdom and, indeed, in the world at large—is expanding and once more on an efficient growth track? That is when the divergence will reappear. At that stage, of course, if Scotland were separate from the United Kingdom, the added burdens of dependency on a volatile oil price and reducing oil production, which are now generally agreed to be likely for the next few years, would come to bear.

The 10 per cent tax rate would have to take a massive degree of strain. This is where the gearing feature comes into it, just as we have seen with local government taxation where the bulk of funding comes from the United Kingdom Exchequer and only a small proportion is raised locally by local councils. So, if a local council wants to make a 2 per cent increase in spending, it would have to increase taxation by a multiple of that, perhaps a large multiple.

I remember the referendum that took place in Quebec about 10 years ago. When I was in Toronto last year, it was pointed out to me that, although the referendum to separate Quebec from the rest of Canada failed, the economy of Quebec went into a grey, dismal period from which it has not yet emerged. I was even told that the Bank of Montreal had moved its headquarters to Toronto in Ontario. That is an example of the kind of problem that we may face.

We talk about the importance of inward investment but, against this kind of background, in the future we will have to talk about the loss of existing companies from Scotland—outward investment. Where will the major Scottish companies choose to locate against the background of the economic troubles that will develop within Scotland? Where will the Royal Bank of Scotland choose to locate? Where will Standard Life go? These companies have 95 per cent or 98 per cent of their business outside Scotland, and they will be thinking very carefully about their future taxation residence.

Corporation tax, which the Scottish Administration at present claim they want to reduce, is already coming down very sharply. It is 24 per cent now and there is a plan to reduce it further. If the Scottish economy in a separate Scotland were to try not only to keep up with but to exceed that, it would find that the Laffer curve does not work as efficiently as might be hoped in an economy that is otherwise deeply strained, and that it faced a race to the bottom. It would be extremely difficult and very serious.

The danger there is that, against the background of this Bill and these tax provisions within it, people in Scotland would demand further taxation concessions, and so one more step down what we used to call the slippery slope but is now called the continuing process of devolution would take place. It is not devolution that is a continuing process—it is separation. The salami slicing of Scotland’s place as an equal partner in the United Kingdom is taking place.

The Government should give an answer as to why, against that background, they have put these tax provisions in the Bill without contemplating the effect they will have in reality. I have not had an answer to the questions I raised earlier; my noble friend Lord Forsyth also raised them. I see that we are privileged to have my noble friend Lord Sassoon from the Treasury in his place. I hope that he may be able to enlighten us or, if nothing else, admit that there is a problem and say, “We accept it and we regret it but we have abrogated our position as Her Majesty’s Treasury for the United Kingdom”. I support the amendment.

My Lords, I do not want to repeat what I said in Committee on this. Although I am sure there is much force in some of the points made by the noble Lord, Lord Lang, they are no doubt points that the Scottish Parliament would have in mind, were it minded to exercise the power that this clause would confer upon it. I do not agree with the noble Lord, Lord Forsyth of Drumlean, that there is some constitutional impropriety. I do not understand his constitutional argument.

The constitutional principle in regard to taxation is that those paying the tax—those on whom it will be levied—should have voted for it. I see no constitutional objection to the Scottish Parliament having the power to levy another tax, given that only Scots or people resident in Scotland will be paying it. As I said before, I see no difficulty about them having the power to vary an existing tax, for example the rate of VAT. I do not see a constitutional principle there. I referred in Committee to the example of differential sales taxes across the United States of America. There are many taxes that are different between states.

I conclude my remarks by saying that I see a lot of sense in the amendment we will come to in a moment, which suggests a procedure and safeguards that could be built into the system, which I could support. I also understand the economic arguments that the noble Lord, Lord Lang, advanced and it is very important that they should be in the minds of the Scottish Parliament when it chooses whether to exercise the power conferred on it here, but I cannot see the constitutional principle. I do not follow the ship money argument.

It is very straightforward. We are talking about devolution here, not about establishing a federal system. As someone said, although I cannot remember who, power devolved is power retained. The ability to create a completely new tax—a window tax, or whatever—has to reside with the other place down the Corridor. Within our constitution, in order to create a new tax, you have to have a finance Bill. It used to have to be on the Floor of the House of Commons when it came to Committee, and there is a set of procedures that needs to be followed. It is completely different from devolving the power to set a rate of tax, which this Bill purports to do and is the commitment made in the manifesto.

My constitutional problem is that that ability of the House of Commons to discuss, through a long-standing procedure, the imposition of taxation is being undermined because all that it requires now is an Order in Council, which by convention cannot be voted on in this House and cannot be amended. That is no basis upon which to create new taxes on the people. It is the nature of the procedure that is the constitutional outrage as far as I am concerned, not the nature of giving the Scottish Parliament the ability to raise a particular tax.

My Lords, I will just try to clarify the position here, which might be helpful to this ongoing debate. This is a very important point. We should be clear that we are talking about a power to devolve taxes, which is a constitutional provision that it is perfectly proper for Parliament, including this House, to have a role in. That is quite separate from the creation of the new tax, which will be the responsibility—if it is given it under the provisions of this Bill—of the Scottish Parliament. I suggest to my noble friend that it is misleading to say that somehow we are driving through the creation of new taxes via some improper provision of this Bill. The clauses we are talking about seek to devolve a tax, a power that is retained by this Parliament and around which there will be all sorts of safeguards, as we will come on to. There will be a joint assessment by the Government here and in Scotland before such proposals come forward. But the creation of the new tax will be for the Scottish Parliament and will go through a proper, full parliamentary process of that Parliament.

Forgive me, but that does not appear to be exactly what the Bill says. It may be helpful for those who follow our proceedings, but do not go into the detail of the Bill and the Explanatory Notes and all the rest of it, if I read out briefly what the Bill says and then put some questions to the Minister.

The part of the Bill that the noble Lord, Lord Forsyth, is attempting to remove is new Section 80B of the 1998 Act on the power to add new devolved taxes. It states:

“Her Majesty”,

who of course acts under the advice of Ministers, so it is not her fault,

“may by Order in Council amend this Part so as to … specify, as an additional devolved tax, a tax of any description … or … make any other modifications of the provisions relating to devolved taxes which She considers necessary or expedient”.

I repeat a question put to the Minister by the noble Lord, Lord Forsyth. Can he think of anywhere else where a new tax or taxes can be imposed on our people by Order in Council without their informed consent? Have they given that consent and, if not, how will they do so? Are the Government really suggesting that this process will take place without going through your Lordships’ House or the House of Commons? Are we not even to have the affirmative or negative procedure? We need to clarify this matter because, from what I know of it so far, this is going too far for our democracy.

With all due respect to the Minister, he should not keep popping up and down. We are at the Report stage of the Bill and people should speak only once. I understand the pressure on him to intervene after what the noble Lord has just said, but this feels more like a Committee stage than a Report stage to me.

My clear understanding is that as the Minister I have the privilege of being able to speak multiple times at the Report stage, unlike other noble Lords. I simply thought that it might be useful to intervene again now to answer this question before it is raised yet again and to help to shorten the debate.

A tax cannot be applied simply by Order in Council, as the noble Lord seeks to suggest and as I think my noble friend suggested. First, in answer to the specific point made by the noble Lord, Lord Pearson of Rannoch, it is an Order in Council subject to an affirmative procedure. That Order in Council simply devolves the responsibility and gives space to the Scottish Government and Parliament to decide how to fill that space with a new tax of their construction. It will be up to the Scottish Parliament. The Bill allows the Scottish Parliament to pass legislation in a Bill for a new tax in Scotland. Of course, the Scottish Government will have to give full consideration to the impact of the new tax, as they propose it, just as there will need to be an assessment—we will discuss it later—before the power under the clause is devolved.

My Lords, I have immense respect for the noble Lord, Lord Forsyth of Drumlean. I listen carefully to what he says, and I have heard this argument from him on a number of occasions and respect it entirely. I have listened carefully, too, to the arguments put forward by the noble Lord, Lord Lang of Monkton. I thought that his contribution ranged much wider than the actual provision that we are considering, but he made some very important points, which are worthy of being recorded. The noble Lord, Lord Kerr of Kinlochard, rose to debate some of them and made a helpful contribution. The noble Lord, Lord Pearson of Rannoch, read in short—and with respect to him, slightly misleadingly—a part of the Bill to make another point. I hope noble Lords will forgive me, but we have debated these provisions in some detail in different ways. I had my say both at Second Reading and in Committee, and that is all recorded. If people want to know what my views are for supporting this provision and its maintenance in the Bill, they can read them at length.

However, in response to the point made by the noble Lord, Lord Pearson of Rannoch, it can sometimes be deeply misleading to read in short a piece of legislation. I am not intending to read it at length, but the operational way of this Bill is to amend other legislation. I think that the answer to his point—the Minister will be able to correct me when he comes again to the Dispatch Box if I am wrong—lies in the fact that the active verb in the piece that he read to us is to “specify” a tax, not to impose a tax. The answer lies in the words that the noble Lord, Lord Pearson, chose. That, put another way, is the point that the Minister was making to him.

In any event, whether or not this provision generates deep and interesting constitutional issues, we know that where this constitutional imperative resides—in the other place—they have already approved this devolution. The Bill has come to us with their approval. It may be that we can say, with some merit, that they did not pay a lot of regard to this clause. It was a differently numbered clause at the time. However, they will certainly pay a lot of regard to it when it goes back to them, and it will not become law if they do not approve it. The responsibilities that they hold in terms of our constitution, they hold. If they choose to devolve them and encourage us within this Parliament to support that, I do not think it is our privilege to prevent them doing so.

For clarification, we also need to look at the genesis of this provision. It is not entirely true to say that Calman was silent on this point. The Calman commission recommended:

“The Scottish Parliament should be given a power to legislate with the agreement of the UK Parliament to introduce specified new taxes that apply across Scotland”.

The noble Lord, Lord Forsyth of Drumlean, who is comprehensively knowledgeable about Calman and this Bill, and has proven that time and again, will see that this provision goes significantly further than the Calman recommendation. However, it is not true that there is no reference in Calman to the devolution of taxation or the creation of a power of this nature to assist future devolution. There is consideration of it in some detail in the report. The arguments for and against are there, and there was a clear recommendation, but I accept that it has been taken further.

As I said in Committee when this issue was debated at great length, the deletion of this provision would leave the Bill significantly reduced, not only in its constitutional significance but in its significance for the people of Scotland. I am not interested in achieving that objective. Our position is that we support the inclusion of this provision, provided that certain checks are in place. That is why rather than seeking to support the deletion of this provision we have tabled Amendment 16, to which I will speak at greater length in the next group, and which we believe would allay much of the concern over the breadth of this provision, were it to be accepted in some form. This of course all depends on the House’s position in relation to this amendment. I accept that the debate on my amendments is dependent on the decision that the House makes in relation to this amendment. However, I was given a certain assurance by the noble Lord, Lord Forsyth, in his introductory remarks that I need not worry about that, so I will now sit down and prepare to argue the next amendment.

Before the noble Lord sits down, and with the leave of the House, neither he nor the Minister has answered my main question on this matter: have the people of Scotland given their informed consent to this provision? If they have not done so, will they be invited to do so, perhaps with the provision being specifically flagged up in any eventual referendum?

I might just respond on this point and leave the Minister to deal with the matter if he thinks I have not dealt with it adequately. My response to the noble Lord, Lord Pearson, is that I think I answered his question by pointing out where he was misreading the provision that he himself chose. He now asks another question and I am happy to answer it.

Scotland is a representative democracy, just as the rest of the United Kingdom is. It has two levels of parliamentary democracy: the Scottish Parliament and the UK Parliament. The Scottish Parliament, which speaks for the people of Scotland, and all parties overwhelmingly approve of the provision. I have no doubt that we will see that in the second legislative consent Motion, which I am confident will be passed unanimously by the Scottish Parliament.

Perhaps the noble Lord will allow me to finish answering one question before he poses another one. I am asked where the democratic support for this comes from. It comes in the unanimously expressed will of the Scottish Parliament. The noble Lord, Lord Pearson, may not think that sufficient, but I can tell that the people of Scotland think it is.

I do not mean this in a cheeky way, but my recollection is that when we discussed this at an earlier stage the noble Lord indicated that he had not appreciated that these powers were quite so wide-ranging. If he, with all his brilliance and his close study of the Bill, did not realise that, surely the noble Lord, Lord Pearson, is right in suspecting that the people of Scotland might not know that these powers were being provided, or indeed the people of England, Wales or Northern Ireland who could be affected by them?

The combination of cheek and flattery is so appealing that I can barely resist it. The noble Lord’s recollection of what I said when we discussed these provisions before is not my recollection, but the Official Report will have recorded it. I think that I said it was not fully appreciated how significant these provisions were—not by me; I thought that I had helped those who had not fully appreciated that, but maybe this was a process of education in which I was a pupil, not the educator.

In any event, I am not suggesting that the significance of this important provision of the Bill is widely known and appreciated by the people of Scotland, whatever that phrase means, but I was asked a different question by the noble Lord, Lord Pearson—where the constitutional democratic support lay for this from the people of Scotland. The noble Lord, Lord Forsyth, will recall that I referred to a representative democracy; I did not suggest that all the people of Scotland understood this.