House of Lords
Monday, 22 February 2016
Prayers—read by the Lord Bishop of Worcester.
Death of a Member: Lord Avebury
Retirement of a Member: Baroness Linklater of Butterstone
My Lords, I notify the House of the retirement with effect from 12 February of the noble Baroness, Lady Linklater of Butterstone, pursuant to Section 1 of the House of Lords Reform Act 2014. On behalf of the House, I thank her for her much-valued service to the House.
Health: Adult Psychiatric Care
My Lords, the Government very much welcome this report and are considering its recommendations. We have asked NHS England to reduce out-of-area treatments and eliminate their inappropriate use. NHS England published its independent Mental Health Taskforce report last week, backed by a £1 billion investment announced in January. NHS England will develop standards on access to mental health treatment.
My Lords, I thank the Minister for that reply, and I am delighted to see the commitment to parity of esteem between mental and physical health and to the funding allocated last week. Parity of esteem means equal standards for people with mental and physical conditions. The report recommends that requiring people to travel long distances to be treated should be phased out within 18 months, and there is evidence as to why that is a good target; and yet the Government have indicated in their response to the task force that it would take four years to phase it out. Will the Minister explain why that is and say whether there is scope for the Government to reconsider the timing?
My Lords, I reiterate my thanks to the noble Lord for his excellent report: it is 134 pages and reads very well and very quickly. It is obviously highly unsatisfactory that so many people have to travel long distances to get in-patient care. The noble Lord’s report shows that, in one month—in September, I think—500 people had to travel more than 50 kilometres to get to in-patient care. It is a priority for the Government and we are considering the noble Lord’s recommendations. I cannot give a commitment that we can reduce the four years to 18 months now. I can only repeat that we fully understand the importance of addressing this issue.
My Lords, the noble Lord’s report rightly points to the need to improve both in-patient care and alternative treatment in the community. Given that, as the report says, the cost of one adult acute bed is the same as that of treating 44 people at home, will the Government say what plans they have at this early stage to increase financial incentives to encourage commissioners to get the right balance of provision?
My Lords, if we can improve home treatment and crisis resolution at home it will free up in-patient beds and solve the other problem as well, as people will have to travel less far. That is absolutely critical. I cannot tell the noble Baroness today what NHS England is proposing to do with financial incentives, but I can reiterate that treating more people outside hospital, at home, is a priority for the Government.
My Lords, does the Minister realise that there are real problems in many regions? I chair a charity which deals with the most vulnerable—people with complex needs. We have evidence that the number of people whose mental health needs have increased has risen significantly over the past five years, and yet three centres in Tyneside—both residential and day care—which deal with the mentally ill are closing this year. How will we meet those people’s needs in such circumstances?
My Lords, reading the noble Lord’s report, I was struck that he said in the foreword that he went through times when he was very depressed and times when he was deeply impressed. In a way, that sums up the mental health system—it is fragmented, and there is a high level of variation. We provide fantastic care in one place but terrible care for somebody else, and very often it is not related to cost. I do not know about the particular instances that the noble Baroness has referred to, but I can fully understand that in certain areas it is much worse than in others.
My Lords, I declare my health interests. I, too, welcome the excellent report and recommendations by the noble Lord, Lord Crisp, and his commission, and also the report and recommendations of the Mental Health Taskforce published last week. I would be grateful for clarification from the Minister on the financial commitments that the Government have made on the crucial implementation of the recommendations of both reports. In particular, can he confirm that the announcement of £1 billion each year for mental health services begins in financial year 2016-17; that, for the next four years, that £1 billion will be additional to the £1.5 billion investment in child mental health services which has already been announced; and, finally, whether this £1 billion annually is additional money or part of the £8 billion which has already been announced and allocated to NHS England for all health services?
No, it is not very simple, or at least it is not simple to me; but then I perhaps have a smaller brain than the noble Lord opposite. It is certainly additional to the £1.5 billion for children and young people. I cannot tell the noble Lord now, without fear of making a mistake, whether it will be £1 billion every year from 2016-17 to 2021. It is certainly £1 billion in 2021. If it is all right, I will write to the noble Lord to confirm and clarify that.
My Lords, that is a very hard question to answer. The talking therapies, for example, seem to be effective in about 50% of the cases, and whether they are effective is clearly a clinical decision. As for other standards, we tend to rely, as the noble Baroness will know, on proxies such as waiting times and the four-hour standard, which the noble Lord recommended in his report. We are considering the introduction of a four-hour waiting-time standard for people suffering from psychotic problems, in the same way as we have for physical health.
My Lords, I am not aware that we have had any discussions in the Scotland Office. However, there is no doubt that in Scotland they are approaching quality improvement extremely effectively. I had a recent meeting with people who have been involved in that, so I can assure the noble Lord that, at that level, if we can learn things from what they are doing in Scotland, we will do so.
My Lords, will the Minister give an undertaking that the very good system of encouraging treatment at home is not at the expense of families where children are the primary carers? When children are trying to cope with someone in very difficult circumstances they are often alone for long periods and are unable to cope with a mother or father whose behaviour can even be frightening.
My Lords, the noble Baroness raises an important point. So much of this comes down to judgment, and so much of that judgment is judged with hindsight. We put a huge onus on clinicians and people working in health and social care to make the right judgments on where to treat people. In normal circumstances, where people can be treated at home rather than in an in-patient setting, that will be best; but there will be exceptional circumstances such as those that the noble Baroness mentioned, where it may not be.
Universities: Freedom of Speech
My Lords, the principles of academic freedom and freedom of speech at universities are enshrined in statute. Universities have a clear and unambiguous duty to ensure that legal and lawful views can be heard but, equally, can be robustly challenged and debated. We will continue to support fully those universities which show clear and strong leadership in doing this.
Since your Lordships debated this issue last November, incidents of intolerance and violence have continued on our campuses. For example, the silencing of a female Muslim reformer at Goldsmiths; smashed glass, fire alarms set off and the police called at King’s College London to stop an Israeli peace activist from speaking; Peter Tatchell at Canterbury and other examples. Will the Minister speak to the vice-chancellors at Universities UK to ensure that the law on freedom of speech is upheld and to ask whether the international reputation of our universities is being damaged? To what does she attribute the stifling of intellectual freedom in our universities now?
The noble Baroness is absolutely right. There is clear guidance to universities about their responsibilities to ensure free and open debate on campus and we will give full support to university leaderships to ensure that legitimate and open debate within the law can take place. It is concerning that we have seen a number of incidents, as the noble Baroness said. Part of the beauty of going to university is the ability to debate, to have your views challenged and to challenge others. We must continue to support all universities in making sure that all students continue to have that opportunity.
My Lords, do the Government agree that criticism and debate about our religions should be part of freedom of speech at our universities, and indeed elsewhere, but that the lawful line is crossed when adherents to those religions are insulted for their beliefs? Is it not that that becomes incitement?
Universities are uniquely placed to provide intellectual and robust challenge to narratives and they must continue to do this. Of course, students and academics have the right to protest peacefully but this cannot lead to intimidation, harassment or the silencing of those they disagree with. That must be stopped.
My Lords, if a proposed speech is known to be unlawful I would understand any appropriate restrictions, but would not succumbing to mob rule to deny freedom of expression be wholly contrary to the ethos and purpose of a university? I speak as a former chancellor of a university.
I entirely agree with the sentiments of the noble and learned Lord. Unfortunately, it has seemed at times that student unions have taken a somewhat inconsistent approach to freedom of speech—actively inviting speakers who promote intolerance but banning and silencing others. As I have said, the Government are supporting university leaderships to make sure that we preserve freedom of speech. It is hugely important and allows students the opportunity to challenge and debate ideas, which is part of the whole purpose of going to university.
My Lords, now is not the time for confessions but I would observe that as an undergraduate, I saw things in very black and white terms. I do not now, despite what might be suggested by my attire. I would have loved to have been rebuked by Parliament as an undergraduate. Does the Minister agree that in intervening in situations such as these, we run the risk of being counterproductive?
Universities are autonomous bodies. As I have already said, students and academics have the right to protest peacefully, and we cannot quash freedom of speech. That is why, as I said, we will be supporting universities and making sure that legitimate, lawful debate can take place, that people have their views heard and that views that people may find offensive are robustly challenged.
What dialogue have the Government had with universities to support freedom of speech, while implementing the guidance that university events should be cancelled unless the authorities are entirely convinced that the risk that views could draw people into terrorism can be fully mitigated?
We have ongoing discussions with universities. All universities submitted the first self-assessment form following the introduction of the Prevent statutory duty in January, and this will be followed in the spring by detailed assessments of their policies and procedures.
My Lords, debate should always be conducted in courteous terms but does the Minister agree that words such as “antisemitism” and “Islamophobia” and those relating to any other type of religious phobia should not be used as shields to stifle legitimate debate?
As I said, we absolutely want to support students and universities in ensuring that legitimate, lawful debate and the challenging of ideas happens in our universities. That is a tenet of our higher education system that we are proud of and want to continue. This Government will carry on supporting universities and students who want to continue to participate in such debate.
In order for me to assist the House, the Member seeking to ask a question has to try to get in. However, I think that the House wants to hear from the noble Baroness, Lady O’Neill.
There is a good, strong relationship between vice-chancellors and students in many universities. Indeed, as Louise Richardson, vice-chancellor of Oxford University, has said, students must learn to engage with ideas that they find objectionable and be more willing to debate with opponents to try to change their minds. Statements like that from vice-chancellors, encouraging students and making clear the need to debate and argue about ideas, are very positive.
Agriculture: Dairy Farmers
My Lords, increased global milk production, along with the Russian trade embargo and weaker demand in China, has resulted in surplus stocks and downward pressure on worldwide prices. This has had a significant impact on British farmers. Average incomes are expected to fall to £46,000 in 2015-16, although there are considerable variations. Some farmers have sought to offset low prices by producing more. Lower prices for feed, fertiliser and fuel have also helped to reduce farmers’ costs.
Will my noble friend agree to review the remit of the Groceries Code Adjudicator to end the gross imbalance between small, often family, dairy farmers and huge processors, many of which are seeking to consolidate, and put an end to the retail price war that is damaging the future of the family dairy farmer?
My Lords, I should declare an interest in that I come from a long-standing dairy farming family. I therefore clearly have considerable sympathy with the plight of dairy farmers. The Groceries Code Adjudicator has no powers over prices. However, we are looking at a number of issues in relation to suppliers and processors to see whether there are ways in which we can make improvements. I am pleased that a number of supermarkets—I encourage other chains to do so—see that they have a responsibility to the domestic dairy industry.
My Lords, in declaring my interest as noted in the register, may I press the Minister on this issue? He is aware, is he not, that family dairy farms have their backs against the wall? The prices they are getting are not only less than the full price of production but less than the marginal price of production, and hundreds will be going out of business. Will the Government please take this seriously and do something about it?
My Lords, I assure the noble Lord that the Government are very concerned about this. Indeed, other Ministers and I have been discussing the matter only today. There are a number of things that government can and are doing. We want to promote more exports; we believe that the export of our dairy products is tremendously important, and more British cheese is going abroad. We think that the Middle East and China are very important markets, and we have trade counsellors in Beijing precisely to encourage exports. A lot is going on, but I am very mindful of what the noble Lord has said.
My Lords, the Minister said that the Groceries Code Adjudicator cannot adjudicate on prices, and that is the case at the moment. But is not the problem that the Groceries Code Adjudicator does not have sufficient power? I know that a review is going on into her power, but could the Minister clarify whether expanding the power of the Groceries Code Adjudicator is being considered, so that she can intervene in what is clearly an unfair system where people in that sector are being exploited by big business?
My Lords, clearly we will be looking at all things. However, the truth is that we are not in a position to start setting prices; that is market driven. We have global overproduction at the moment, and that is the plain economics of it. But we are going to look at all these things and we want to see whether there are ways in which the dairy farmer can be assisted. We think that the dairy farming industry should be more joined up, so that there is strength in its negotiations. Clearly, we want to make sure that supermarkets understand that it is very important to sustain the domestic dairy industry.
My Lords, does the Minister agree that it really is quite ridiculous that the price of a bottle of milk is often less than the price of a bottle of water, bearing in mind the real difficulties that our dairy farmers are now suffering? Will he, as he has already referred to, put real pressure on the retailers and supermarkets to see what they can do to help this industry that is in such dire straits?
My Lords, I understand what my noble friend has said. Indeed, quite a number of retailers have introduced schemes to help farmers: for instance, Morrisons Milk for Farmers cheddar, where an additional 34p per 350 grams goes to farmers; Aldi championing British quality; and Waitrose highlighting British sourcing. A number of retailers are doing more, and we want to ensure that, across the piece, there is more support like that.
My Lords, we certainly see the need for mixed farms. The most important thing is that animal husbandry and animal welfare are at their best whatever size of farming unit it is. SoI would not say that large units are bad and small units are good. The important thing is that there are high animal welfare standards across the piece.
My Lords, will the Minister undertake to look at the policy of Booths supermarkets in the north of England, which have deliberately set out a policy to help dairy farmers? Booths supermarkets package their milk so that customers know that they are giving appropriate support to local dairy producers. Will the Minister investigate that and compliment them?
I would be delighted to compliment all those retailers that are taking their responsibilities seriously. What the noble Baroness has said is that it is very important that we improve our labelling. It is very important people know that, when they buy British produce, it is not British-processed produce but produce that is grown in this country.
My Lords, may I follow up that comment? The work undertaken by retailers is beginning to have an effect, but part of the problem— I hope that my noble friend will be able to tell us a little more about this—is that only half of that milk ends up as liquid milk. Most of it ends up as processed milk. The difficulty is the amount that we can actually use, so export, which the Minister spoke about, is key. The price that retailers pay is in some ways better than the bulk commodity price; it is the bulk commodity price that is the real problem.
My Lords, I am grateful to my noble friend. A lot of retailers are paying 20p or 30p a litre. She is absolutely right to say that one way in which we can help to address the problem is to become much more resilient and much more export focused. We have brilliant produce in this country and we need to export more of it. That is what the Government are working on.
Housing: New Build
My Lords, housing starts in England in the 12 months to the end of September 2015 totalled 137,490, with completions increasing by 17% over the same period. Under this Government, housing starts and new housing construction output are at their highest annual levels since 2007.
I am grateful to my noble friend for that reply. Has she seen the latest review by the National House Building Council, which shows a welcome increase of some 75% in new homes registered over the past six years, but says that there is a very substantial gap between supply and demand? Can she give any assurances that, as the industry recovers and responds to the many initiatives taken by the Government to increase supply, progress will not be impeded, as it has been in the past, by shortages of skilled labour or building materials?
My noble friend raises the important issue for the housing industry of both brickies and bricks. The Government have been very mindful of that: the DCLG and BIS are working with the Construction Leadership Council to review what skills the industry needs. The research that my noble friend mentions shows that more than 100,000 new jobs were created in England in the past year. We want to go further than that and encourage people who want to go into the industry to be able to do so, in line with our other ambition of creating 3 million apprentices by 2020.
My Lords, is the Minister aware that, on the Government’s own estimate, household formation is increasing by 200,000 every year, and that 137,000 starts in 2015 do not even meet that requirement, never mind dealing with the current housing crisis, which will require around 300,000 homes to be built over the next few years? Does she regard 137,000 starts as a good start in meeting the Government’s objective of 1 million new homes in this Parliament?
My Lords, I do regard it as a good start. As the noble Lord says, we are committed to 1 million new homes by 2021. That is why the Government have put in such a huge amount of money and doubled the budget for housebuilding over this Parliament to £20 billion, which will include all types of tenure and build.
Would the Minister care to comment on the fact that, only a mile from here, there is plenty of building going on in Battersea—1.52 million? There is no problem at all—not a land problem or any other problem. So why is there such an imbalance between that phenomenon and affordable housing for everybody else?
The noble Lord raises the important issue of supply. It is in meeting demand needs and increasing supply that we will start to even out house prices and make them more affordable for younger people—the demographic who have suffered the most from being unable to access the housing market.
My Lords, the Minister referred to apprenticeships as one way of dealing with the skills shortage. May I encourage her to do a little joined-up government and talk to the Ministry of Justice about the training programmes that we have in our prison estate at the moment that deal with the building trade? As we all know, having a job at the end of a prison sentence is the best guarantee against reoffending. Perhaps the Government could talk to some of the big housebuilders about how they could join in with the training programmes in our prisons.
I thank the noble Baroness for that sensible suggestion. She is absolutely right: the best measure against reoffending once leaving the criminal justice system is to go into a job—to get one’s life back on track. I will certainly follow up her suggestion.
My Lords, the Government are giving with one hand and taking away with another when it comes to skills training. It is all right for the Minister to suggest that all these apprenticeships will be created, but that depends on the companies and organisations being prepared to create them. On the other hand, the Government are slashing support to further education colleges, which are the basis of the skills for a great deal of construction. What does the Minister have to say about that contradiction?
Would the Minister care to have another go at answering the question asked by my noble friend Lord Lea? The demand in London is not coming from London itself but very substantially from overseas. The supply is meeting that demand and not the very real demand from Londoners themselves. Does she not agree that the Government really need to address that problem?
Andrey Lugovoy and Dmitri Kovtun Freezing Order 2016
Proceeds of Crime Act 2002 (Investigations: Code of Practice) (England and Wales and Northern Ireland) Order 2016
Proceeds of Crime Act 2002 (Cash Searches: Code of Practice) Order 2016
Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) (England and Wales) (No. 2) Order 2016
Proceeds of Crime Act 2002 (Search, Seizure and Detention of Property: Code of Practice) (Northern Ireland) Order 2016
Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors: Code of Practice) (England and Wales and Northern Ireland) Order 2016
Motions to Approve
To move that the Orders laid before the House on 16 and 17 December 2015 and 25 January be approved.
Relevant documents: 14th and 16th Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on Wednesday 10 February.
Committee (3rd Day)
Relevant documents: 6th Report from the Constitution Committee, 15th Report from the Delegated Powers Committee
My Lords, in light of the amendment to the Motion tabled by my noble friend Lord Forsyth, I want to set out the reasons why we should consider Parts 2 and 3 of the Bill today. I start from the proposition that there is a consensus in this House that wants to see the Bill reach the statute book and the fiscal framework to be agreed, and why should that not be the case? The Bill implements not only the manifesto commitments of the Conservative Party, but the commitments made by the Labour and Liberal Democrat parties as well. Indeed, as my noble friend so rightly reminded us on referendum night, the unionist parties must deliver on the commitments that they made.
Like my noble friend, I understand that the first step in strengthening bonds of trust in Scotland is to keep your promises and to be seen to keep them. The Government want to see a Scottish Parliament that is more financially responsible and accountable than it is today, and to meet the overwhelming desire of the majority of people in Scotland for a Scottish Parliament with more powers within the United Kingdom. I therefore ask the House to consider carefully whether agreeing to this amendment will help or hinder the passage of the Bill in the process of achieving an agreed fiscal framework that is fair to Scotland and to the UK as a whole. I submit to your Lordships that it would not help. Indeed, it would put both in considerable jeopardy. The fiscal framework negotiations are at a sensitive and critical point. There have been intensive discussions between the UK and Scottish Governments throughout last week. These have continued over the weekend and today. Significant progress has been made and, while nothing is ever certain, a deal now seems within reach. Both Governments are very conscious of pressing timetables for both this Parliament and the Scottish Parliament to scrutinise the fiscal framework before the Bill reaches the final amending stages in this House, and to enable the Scottish Parliament to consider a legislative consent Motion.
My noble friend Lord Forsyth is fond of angling analogies. He has suggested that this is a fishy business and the UK Government are being played by the SNP because it has no intention of ever doing a deal. If my noble friend is right, and I do not think that he is, then the effect of his Motion is to let the SNP off the hook. Why? Because it will become clear to the Scottish Government that in legislative terms—I hope I am not stretching the angling analogy too far—we are running out of line. I therefore ask the House not to let the amendment frustrate what must surely be our priority today: to do all we can to support the achievement of a successful outcome.
I understand, of course, the frustration and that discussions are protracted. I am sure noble Lords will understand that this is a challenging negotiation and it is important to do the right deal. The UK Government cannot be pressured to sign a deal at any cost to meet a parliamentary deadline. I believe it is possible to consider in Committee today, and on their own terms, the merits of parts 2 and 3 of the Bill, and to discuss in detail the outcomes the fiscal framework is intended to achieve. This will help to identify issues we can return to on Report, and I assure the House that there will be ample opportunity on Report to scrutinise the fiscal framework if it can be agreed by then. There is no shortage of information on these issues to inform our debate, whether it is independent analysis or information provided to the House by the Treasury.
I also understand noble Lords’ frustrations at the confidentiality of the process. However, I do not believe that conducting negotiations in public is conducive to reaching a deal. All that happens is that each party paints itself into a corner, making it more difficult for compromise to be reached. Once the fiscal framework is agreed, the Government are committed to providing Parliament with every opportunity to scrutinise it. In particular, any changes to borrowing and fiscal institutions will require legislation and debate.
While I accept that Smith is a substantial devolution package, I note, finally, that it is not without precedent to consider devolution provisions without all the details being available. The last Scotland Bill—a significant devolution package—was considered and agreed by the House before the block grant adjustment mechanism was agreed. I therefore ask my noble friend not to press his amendment and to help secure the passage of this important Bill and a successful outcome for fiscal framework negotiations. I beg to move.
Amendment to the Motion
As an amendment to the motion that the House do now again resolve itself into a Committee upon the Bill, to leave out from “House” to the end and insert “declines to consider parts 2 and 3 of the Bill further in Committee until the updated fiscal framework proposed in Scotland in the United Kingdom: An enduring settlement (Cm 8990) has been published, as recommended by the Constitution and Economic Affairs Committees in a letter to the Parliamentary Under-Secretary of State, Lord Dunlop, on 28 January.”
My Lords, I am grateful to the House for giving me the opportunity to move the amendment. I am particularly grateful to my noble friend the Chief Whip for persuading the House to consider the Scotland Bill in an order that meant we looked at parts 2 and 3, concerned with taxation and welfare, last. I am not so grateful to my noble friend for suggesting, on the whip, that my Motion was a fatal amendment. It is not a fatal amendment. All it seeks to do is to implement the advice of both the Constitution Committee and the Economic Affairs Committee that we should not go on to discuss the Committee stage until we have the fiscal framework. It would be fatal only if my noble friend the Chief Whip thought that we would never ever agree the fiscal framework. As my noble friend the Minister is indicating that agreement is imminent, I do not see why he is so concerned about delaying the Committee stage by a few days. I have to say to him in the gentlest terms, since he used the fishing analogy, that it looks to me very much like a sturgeon is playing him like a salmon.
From the very day he was appointed, I have rather unkindly been asking the Minister if he could give an absolute guarantee that the Bill would not be broughtbefore this House for consideration until the fiscal framework was agreed. He said that he hoped that would be the case because he expected it to be agreed by the end of the Summer Recess. We were then told that it would be in November; then, it was going to be in January; and most recently it was going to be on St Valentine’s Day—but there he was, sat at a table for two on his own, with no sign of the First Minister turning up to deliver the fiscal framework.
This is not a minor matter that is just concerned with Scotland; it affects every part of the United Kingdom, and the authority of this House and its ability to conduct its business. My noble friend says that he expects the fiscal framework to be agreed shortly. That is like Billy Bunter’s postal order, which is always coming tomorrow. What is the reason for the delay? It is because it has dawned on the nationalists that if you move from a system in which a grant through the Barnett formula is 20% higher per head than in England, to a system where you rely on an income tax base that is not 20% higher than in England, you end up with a very big gap in funding. They have suddenly realised that what they have been asking for is going to result in Scotland having less money and higher taxes. The Government, having committed themselves through the Smith commission—the noble Lord, Lord Smith, is not in his place—which did not even consider these details, now find that the Scottish Government are saying, “Hang on a second, we are going to lose out”, and as a result these negotiations have been going on to try to square the circle.
The fiscal framework sounds like a technical matter, but perhaps I may gently chide my noble friend. The chairmen of the Constitution Committee and the Economic Affairs Committee wrote to him on behalf of both their committees on 28 January, which is unprecedented. That letter was copied to all Front-Benchers and the Chief Whips. It was not circulated to other Members of the House, which is disappointing, but it was posted on the committees’ websites. That letter, signed by the noble Lords, Lord Hollick and Lord Lang, a former Secretary of State, stated:
“The Economic Affairs and Constitution Committees continue to believe that the House should not consider in Committee the financial aspects of the Bill until the fiscal framework is published”.
My noble friend has not even replied to that letter; as of Friday, the committees had not had a response. I really do think that the Government have to explain why they are choosing to ignore advice—advice which has been on the record since November.
Perhaps I may detain the House a little by taking some of the points that were made by the Economic Affairs Committee, of which I am a member. The report is called, significantly, A Fracturing Union? and it states:
“The implications of the Scotland Bill 2015 cannot be understood without reference to the fiscal framework and vice versa. Despite this the Scotland Bill has gone through the House of Commons without MPs having any details of a revised fiscal framework …The Bill should not progress to Committee Stage until the fiscal framework is published”.
It goes on:
“The regime for funding devolved services is perceived by many as unfair: in 2014/15 identifiable expenditure per head was £8,638 in England, £10,374 per head in Scotland, £9,904 per head in Wales, and £11,106 per head in Northern Ireland. In the absence of any mechanism to promote fairness based on need, a sense of grievance will persist. The UK Government claims to be seeking an enduring settlement. This will not succeed if the new arrangements take as their starting point the existing inequity and contain no provision to adjust the system over time to make it fairer and to keep it fairer … The fiscal framework will set out how the Scottish block grant should be adjusted to account for Scotland retaining nearly all of its income tax receipts”.
The report goes on to explain the different methods which are available to do that, saying:
“Whichever method is chosen could have a large impact on the size of the Scottish block grant: a witness told us that the existing method for doing this under the Scotland Act 2012 would lead to an ‘intolerable’ reduction”.
The House is entitled to know what is being proposed and to debate that in the context of the United Kingdom as a whole.
On borrowing, the report says:
“The fiscal framework would grant Scotland additional borrowing powers. These should be subject to clear limits”.
What are the limits? We know not. The report says:
“The Smith Commission suggested there should be no detriment as a result of UK Government or Scottish Government policy decisions post-devolution. Such a principle is unworkable in practice and a recipe for continuing conflict”.
I have repeatedly asked Ministers and those who are advocating the no-detriment principle, including the noble Lord, Lord Smith, what the no-detriment principle means. From that Dispatch Box Ministers have said, “We don’t know”. The Minister has said, when I have spoken to him, “It is all part of the negotiation”. We are entitled to know the impact of these things.
The Constitution Committee said:
“Our report on the Draft Clauses noted that there were ‘key considerations around the fiscal framework that should be addressed by the Government before these proposals are implemented, and explained to Parliament when a bill is introduced’. These matters, on the face of the Bill, remain unaddressed. Parliament has been asked to vote on devolution of taxation powers and welfare spending powers without a full picture of the implications of these for future central funding of the devolved administrations, of how the block grant will be adjusted to take account of the newly devolved fiscal powers, or of the processes by which funding arrangements will be worked out”.
“In the absence of any information about the fiscal framework, it will be impossible for the House to assess whether or not the Bill will cause detriment to all or part of the United Kingdom”.
I have to say to my noble friend: it is just unacceptable that we should be asked to do this without having that information. Noble Lords can imagine how surprised I was, having seen that information and having seen the work of the committees, to read in the Scottish edition of the Times on 15 February:
“A senior Treasury insider said, ‘If the model that we are recommending had been in place in 1999, Scotland would have benefitted to the tune of £6.6 billion’”.
It is better than Barnett by £6.6 billion. In other words, what is being proposed in secret goes over and above Barnett by £6.6 billion. I do not know whether that is the Government’s position. I certainly do not think that it will go down too well in Wales or in the north of England. Indeed, I can make an argument, on the other side, that Scotland might lose out and that someone living in Scotland might end up paying higher taxes to see a lower standard of public services. This is central to the Bill and it is a disgrace that the Bill is being rushed through in this way without proper consideration.
I understand the politics. My noble friend and the noble Lord on the opposition Bench are terrified that they will be blamed by the SNP for not delivering the Scotland Bill. If my noble friend feels that he cannot accept my Motion, perhaps he might accept an amendment saying that the Act should not commence until we have the fiscal framework and it has been approved by both Houses of Parliament. If, in his reply, he would give an undertaking to do that, that would be a compromise. It is not an ideal. He says he may well get the statement later this week and we may well consider it on Report, in which case, that is fantastic, but both Houses of Parliament should have an opportunity to do that.
I have a final point. I do not know why the Secretary of State for Scotland is not involved in these negotiations. I do not know why Ministers responsible for welfare have not been involved in these negotiations. The Chief Secretary to the Treasury, Mr Greg Hands, not confirming the amount but saying that Scotland would be better off than it was under Barnett under what he was proposing, went on to say, in a letter which my noble friend circulated, very helpfully, at 1 pm today, that he accepts that what is being proposed goes far further than the Smith commission proposals. So, if we are prepared to depart from the Smith commission proposals by making them better, it rather cuts a hole in the argument that we have to implement to the letter what was proposed by Smith. I beg to move.
My Lords, I support the amendment proposed by the noble Lord, Lord Forsyth. I can be brief because he has covered many of the arguments. I wish to make it clear that in my view and, I think, the view of many, the important thing is that this Bill does not concern simply Scotland but the United Kingdom, and in particular the taxpayers in Great Britain. That is why the noble Lord mentioned Wales and, of course, the north of England.
The general view is that Scotland has for many years been subsidised by taxpayers in the rest of Great Britain. That view is inconvertible and I think that the Treasury strongly supports that opinion. Whether that subsidy has been justified is a different question that I will not go into at this stage. The underlying issue is not the interpretation of a word such as “detriment”, which does not mean too much, although, if you ask the people of Wales, they will tell you that they recognise it when they see it arising from this Bill. The real underlying issue is whether taxpayers in the rest of the United Kingdom, and certainly in the rest of Great Britain, should continue to subsidise the Scots and, if so, at what level and on what basis. The issue underlying that is whether it is time for this House to face up to the weaknesses of the Barnett formula and begin to ask whether it is proper to make need the sound basis for supplying tax money to different regions of the United Kingdom.
We have waited for the fiscal framework since May 2015, when the Bill was introduced in the House of Commons. I agree with the noble Lord, Lord Forsyth, that we cannot do our job without the fiscal framework. However, my one reservation about the amendment is that I fear it would let the SNP off the hook because the truth of the matter is that it cannot live with devo-max on any basis other than an improved subsidy; and, if it cannot live with devo-max, it certainly cannot live with independence. Therefore, the argument on this matter is very important because it reveals the basic weakness of the Scottish National Party’s position. I hesitate to give it an excuse for blaming us and condemning us in the usual terms as being unelected et cetera. Therefore, I invite your Lordships to support this measure but I hope that, ultimately, the noble Lord will withdraw the amendment.
My Lords, the point that the noble and learned Lord, Lord McCluskey, made at the end of his brief speech seems to me to support the position that the Minister is urging us to adopt. The last thing we want is to be seen to be delaying the progress of the Bill through Parliament. As I listened to the noble Lord, Lord Forsyth, what occurred to me was the lack of clarity over how today’s debate will be affected by the absence of the fiscal framework. The Bill proceeds in stages, of course. We are looking today at the Committee stage and the fine wording and tuning of the various clauses in Parts 2 and 3. For the moment, I do not see how the wording of those clauses will be affected by the fiscal framework. At a later stage, the noble Lord may propose that we should not allow these clauses to go forward in the Bill. However, that could be done on Report; it does not have to be done today. If, as the Minister said, there is a prospect of the fiscal framework being agreed tomorrow so that we have it before us on Report, I do not see why the points made by the noble Lord, Lord Forsyth, cannot be examined at that stage, too, or, as a last resort, at Third Reading. Given the nature of today’s debate, I respectfully suggest that the balance of advantage is to proceed to maintain the parliamentary timetable, which is crucial if we are to do our job of supporting the Smith commission.
My Lords, I wish to make it clear from the start that the Labour Party will not support the amendment in the name of the noble Lord, Lord Forsyth of Drumlean. The facts of life are that the future of the United Kingdom is at stake, and while I certainly would not accuse the noble Lord of exaggeration, it is becoming clear that with his oratorical skills—I do not think anyone in the Chamber can match him, although some Members on my side are a match for him in maintaining a position—he seems to be succeeding in creating an atmosphere of crisis. With all due respect, he has taken a drama and made a crisis out of it. I do not say that he exaggerates, as that would be unfair and untrue, but a sense of calm, reason and responsibility has to pervade this Chamber. We are speaking about the future of Scotland and of this United Kingdom.
The Minister has made the point that there is a precedent because the last Scotland Act proceeded to implement matters with the detail being discussed later. Quite frankly, apart from the procedures of this House, the practical effect of the noble Lord’s amendment to the Motion being passed would be to kill off the negotiations and the chance of reaching a successful conclusion to these important discussions. I believe that this amendment has been devised to kill off the Scotland Bill, the fiscal framework procedure and the progress being made in Scotland.
I can understand why the noble Lord makes that point, but the nation and country of Scotland is awaiting the results of these negotiations. Whether the noble Lord likes it or not—and I certainly do not—passing the amendment would send this message to Scotland: “Westminster’s not agreeing. Westminster’s kidding you on. Westminster’s conning you. They don’t mean it and here they are obstructing Scotland yet again”.
All my amendment does is say that we should not proceed with the Committee stage until we have the fiscal framework. It does not say that we should not proceed with the Bill or should not pass it. If the noble Lord’s argument is right, why would it not have been interpreted in the same way when we decided to delay consideration of Parts 2 and 3 until today?
The noble Lord will have to accept that I do not agree with him on this, and I do not think he will agree with what I am about to say. The arrangements are designed to facilitate the passage of the Bill and the fiscal framework discussions. Quite frankly, I do not believe that that is the noble Lord’s intention; I believe it is his intention to kill off the discussions.
The atmosphere in Scotland is one of mistrust. I try not to make political points, but the result of the 2015 general election was, I maintain, a direct result of the Prime Minister’s triumphalist press conference in Downing Street the morning after the referendum when he sent the message, “English votes for English laws”, and hostility towards those who had voted yes. There was a sea change in Scotland, where all Labour Party seats were wiped out with the exception of one. We were seen to be conniving and in collusion with a Conservative Prime Minister.
On the other side of the coin, we have got the SNP, with its grievance culture, which is determined to attack Westminster and cast doubt on Westminster’s good intentions—unfairly, because I believe that the intentions here for Scotland are good on both sides of the House. I also think that there was an element of scare story when the noble Lord mentioned that I, the Labour Party and the Conservative Party were terrified of Scots. Terrified of my own people? I respect their desire. I respect their wishes—it is our job to facilitate them—and I believe that that is also the position of the House of Lords.
From the Cross Benches, the noble and learned Lord made it plain that the fiscal framework can still be discussed on Report. This is not a panic measure. This is not ifs, buts or maybes. This is the calmness for which this House is renowned. There will be plenty of opportunity if we can get these discussions to a conclusion. Certainly the indications give hope that we can get the conclusions.
The time to discuss the fiscal framework will be when public announcements are made. With all due respect to the noble Lord, Lord Hamilton, we can discuss it until we are red or blue in the face. We are not discussing anything that is there in front of us. This House must be allowed to get on with facilitating the Bill, facilitating the people of Scotland getting the Bill, guarding—
Does the noble Lord accept that he is making the Scottish people sound really stupid, whereas in actual fact they are highly intelligent and perfectly capable of following the argument of the noble Lord, Lord Forsyth? I suspect that they would support him because they may get a proper deal in the end.
The noble Lord, Lord Pearson of Rannoch, is absolutely right. The Scottish people are too intelligent to be fooled. That is why they will never vote for UKIP. I do not like making political points when the future of the country is at stake, but there we are.
Cheap? I have been called worse. I take the point of view that we must be allowed to get on with this. I urge the Labour Party, and I am sure that everybody in this House urges both negotiating teams, to come to a conclusion. It is hard; it is difficult. However, we should not underestimate the task that that team is facing, nor should we underestimate the task that the Government are facing in getting this Bill through. We on the Labour side of the House believe that this Bill must go through. This amendment is a distraction. It is not quite right in the threats that it makes. We should get on with the Bill as quickly as we can.
Before the noble Lord sits down, does he agree that it would be sensible at least to respond to what my noble friend Lord Forsyth has suggested in urging the Minister to consider and bring forth a sunrise clause, to ensure that at least we can go through this process in the knowledge that this Bill will not pass until this framework is published and considered by your Lordships?
With due respect to the noble Baroness, that would send the message to Scotland from this House, from Westminster, that I have been arguing against for the last five or six minutes. That would be interpreted as Westminster reneging on its commitment to Scotland. I do not accept that argument but that is the argument that would win the day because in my opinion—the noble Baroness will have to take my word for it—that is the mood of Scotland in listening to Westminster.
It may assist the noble Lord if he were to remind those who seem to mistrust this House that the Smith commission comprised purely Scottish representatives. It is therefore wrong to say that our Prime Minister was in any way not supportive of the Scottish coming out of this with a fair deal. We have all accepted this process thus far. By having a commission—whose results we have all accepted—to decide the future of our overall relationship, but in which only Scotland was represented and not the rest of the United Kingdom, we have made a huge step forward in trying to show Scotland that we care about its future.
The noble Baroness has not addressed my response that the mood in Scotland is such that, correctly or incorrectly, that sort of behaviour would be seen as Westminster tricks or deviousness. That is how it would be seen and there would be a massive reaction against it. This is a massive development for this United Kingdom of ours, in dangerous times when we need to keep a cool head. I may take stick for this elsewhere, but there we go. We have confidence in the capacity of the Scottish Government and the United Kingdom Government to come forward with an arrangement that will guarantee the future of this country.
My Lords, I hesitate to enter this debate, especially as it has been going on for a long time and I have always opposed Scottish devolution. I accept what has happened, that changes have to be made and that we have to move forward. However, the noble Lord, Lord Forsyth, makes an interesting point and if he forces a Division, I shall certainly support him in the Lobby.
As this debate has proceeded today, I have become more and more alarmed. We must choose our words very carefully. When my noble friend Lord McAvoy says that the Bill must go through, that is not the same as saying that, “This Bill must proceed”. We need an absolute guarantee that the Bill will not reach the statute book until the fiscal agreement has been reached; otherwise it will face opposition at every stage. Anyone who raises a question is accused of deliberately trying to stop the Bill going through and to stop the Scottish people getting their own way. Nothing could be further from the truth. We want to see a lasting settlement that will avoid the procedure whereby it seems that, almost every five minutes, the Scottish National Party demands greater concessions which it is given and which it accepts and hails as a great victory. The next day it says, “We have been sold down the river again”. If the debate on the future of Scotland is to be proceeded with solely on the basis of the attitude that the Scottish National Party takes, we are doomed to disaster.
This House and this Parliament have a responsibility, and we should proceed on that basis. When the Minister gets to his feet, he should at least give a categorical assurance that, if we reach Report and still do not have a fiscal agreement, that Report stage will not proceed until the agreement is reached. If he cannot go that far, he should at least go so far as to say that the Bill will not go on the statute book until that agreement is reached and agreed by Parliament.
My Lords, I thank the noble Lord, Lord Forsyth, for enabling us to have this debate on the sorry state of the timetabling for this important constitutional matter. I want to make just three points.
The first concerns precedent. The Bill is the first of a series of devolutions in the UK and obviously precedential in its financial settlement. It is also precedential in terms of all the Bill’s contents. I hope that the one thing where it is not precedential is in the extraordinary process which has led to us being in this debate today. Your Lordships’ House is justly proud of its ability to scrutinise legislation, to bring to bear its considerable powers of analysis to improve that legislation and to test the thinking behind every provision within it. That scrutiny process is multi-layered and the Committee stage is an extremely important layer of it, and I would strongly resist the giving-up of it. The scrutiny process has been honed, through centuries, to the effective peak that there is today.
We aim to produce legislation that will stand the test of time. This Bill is likely to last a very long time, so we need to proceed carefully. I hope that the House will agree with me that, in a constitutional matter such as this, it is especially important that the full spectrum of the House’s abilities are employed, given that it is a new settlement within the United Kingdom and will definitely be precedential on the other devolution settlements under consideration.
I turn to the fiscal framework itself. Quite rightly, the two negotiating parties are not providing a running commentary. I know of no reason to believe that the parties are not negotiating on an entirely bona fide basis, so there can be no blame on the part of one party or another for the slow speed of progress. But slow it has been; and what commentary there has been in the press has emphasised the complexity of the issues. Indeed, that is emphasised in the report of the Economic Affairs Committee. Does the Minister agree that that complexity means there is all the more reason that the full, multi-layered scrutiny process, both in Westminster and Holyrood, is allowed to take place?
Finally, I ask the Minister: what is the tearing hurry? All the parties to the Smith agreement have been treating it as a matter of utmost good faith that they will get to an agreement. For those involved it is an instance of that British maxim, dictum meum pactum. During the Committee stage so far—and I have been present for almost every minute—all the amendments and the debate, from all sides of the House, have been entirely consistent with the Smith commission agreement. Indeed, the only bit in the Bill that seems to be potentially inconsistent is the Henry VIII clause which we will debate later today. We will learn more about that, I am sure. There is a great certainty in this House that the Bill will be enacted, and enacted on a basis that is consistent with the Smith commission agreement. I therefore believe it would be far better in the long term for the citizens of Scotland and the United Kingdom to afford the Bill proper scrutiny, both here and in Holyrood. If that means that it passes into law in May, not March, then so be it.
My Lords, I, too, share many of the concerns raised by the noble Lord, Lord Forsyth. We have reached a point where the House is being asked to approve that certain taxes and welfare measures should be devolved, but nothing is being said about the framework in which they are to be operated. I do not accept the proposition put forward by the noble Lord, Lord Hope, that we can divorce the two, nor do I accept that the precedent of the previous Scotland Act of leaving certain details to be settled after this stage is appropriate. What is at stake are billions and billions of pounds and the distribution of those between the different parts of the United Kingdom.
We have been told nothing about two vitally important elements of the fiscal agreement: the method for adjusting the Barnett formula to take account of the new distribution of taxes and the regime for borrowing and debt. We know that there is a dispute over two different methods of adjusting the block grant. Noble Lords will be pleased to know that I am not going to attempt to explain those now, but no Minister in this House or the other place has attempted to explain what the two approaches are and the merits of each. Despite that, and contrary to the assurances given, the completion of Committee stage has been scheduled to proceed. It is extraordinary that a major change in constitutional arrangements, both political and financial, is being sought without either House having a chance to see the detail of what is proposed or, importantly, to take a view on its effectiveness or fairness. It has been pointed out that this is not simply a bilateral matter between Scottish and UK Ministers: it has implications for the whole country.
The other place may be content to allow all this to glide by unremarked, but I believe that this House has higher standards. It has always prided itself on ensuring that matters of constitutional significance are properly scrutinised. At the moment, that is not happening.
If an agreement is reached in the next few days, even though it has been a case of “Mañana, mañana” so far, the Government need quickly to come up with a process that allows the Bill to be scrutinised before final assent is given to it. For example, if this is effectively delayed until Report, will the rules of Report be modified to adopt the rules of Committee—for example, with noble Lords being able to speak a second time? That has been done before, I think in the case of a financial services Bill. Alternatively, a separate consent Motion could be provided, which is something that the Holyrood Parliament itself intends. Something needs to be done because it is not acceptable to allow the Bill to be finalised and matters of this importance to be sorted out thereafter.
My Lords, I should mention first that I was an MSP for the first eight years of the Scottish Parliament. I want to make a series of small points. The first is that an agreement between the Government and the devolved Scots Administration should not be beyond the wit of humankind, even in difficult circumstances. I hope that the Minister will keep negotiating and that his efforts will be rewarded with success.
I thought that the noble Lord, Lord Forsyth of Drumlean, not only made a persuasive case but made a particularly important point when he suggested that an amendment could be made saying that the Act must not commence until the fiscal framework was in place. My understanding is that the Bill cannot be implemented in the absence of an agreement as it requires a consent Motion in the Scottish Parliament. Without an agreement, no consent Motion will be passed. I hope that the Minister will look very carefully at my noble friend’s proposal.
My proposal was that the Act should not commence until this House and the House of Commons had approved the fiscal framework. My noble friend is right that the only parliament that is going to be able to consider this Bill in the context of the fiscal framework is the Scottish Parliament, and that seems a bit odd to me.
My noble friend’s suggestion does not seem to have the disadvantages of the amendment, which I will come to in a moment, and I hope that it will be looked at sympathetically in some form because it could be an important step forward.
There is of course frustration in the Scottish Parliament about this. The convener of the Devolution Committee, Bruce Crawford MSP, recently stated there would be “a substantial impact” on the ability of the Scottish Parliament to go through the process of proper scrutiny. Obviously he was referring to what he regarded as unreasonable delays. He expects the teams from Holyrood and Westminster to appear before his committee tomorrow to give a full explanation of their position on a fiscal framework, whatever the circumstances. There is a strong group of 15 Tory MSPs in the Scottish Parliament. To the best of my knowledge they want the Bill to proceed, and they are the third largest group.
My concern is based on two factors. This could become a major issue in the forthcoming elections to the Scottish Parliament on 5 May. If there is no agreement, the Scottish electorate will most certainly want to know who to blame. If the Bill fails because the Scottish Government shrink from accountability then the SNP will have to take responsibility, but if the Bill fails because the noble Lord’s amendment delays it unreasonably then this House and unionist parties could become a lightning conductor for criticism.
My most important reservation is that the amendment could lead to a serious weakening of the United Kingdom. Noble Lords may wonder what the Scots really want. I think that the answer is given in three ways: in opinion polls, in the referendum and in the recent general election. My interpretation of the referendum was that there is a decisive majority in Scotland for the United Kingdom. That means that the Scots will want to keep the UK intact, which should be remembered and never forgotten. My interpretation of the general election results in Scotland was that it was a clear indication that a large majority of the Scottish people wish to have a Scottish Parliament with increased powers and responsibilities, and within a reasonable timescale. I do not wish this House to do anything that would give the SNP a major propaganda coup during an election because I am a passionate supporter of the United Kingdom.
There are three difficulties with the amendment. First, it could be used to prevent the promises made by the Prime Minister and other party leaders being fulfilled. That could easily enrage the Scottish electorate on the basis that promises should be kept. The second difficulty is that the timing is not totally convenient because the Scottish election campaign will pick up on this and it could become a major issue. The third and most important consideration is that the United Kingdom probably stands a very much better chance of long-term survival if we do not unreasonably delay this Bill. In short, it is the kind of amendment that could trigger the law of unintended consequences.
Finally, I had the privilege of working under my noble friend Lord Forsyth in the Scottish Office. I have no hesitation in saying that he was a very strong, powerful and highly effective Secretary of State, frequently coming up with extremely interesting and exciting new ideas. I will mention one of them as an example. He wished the Stone of Destiny to be returned to Scotland and he got his way: that was a tremendous achievement. The Stone of Destiny was put in a “Stonemobile”, and there was a terrific reception in Edinburgh Castle. Of course, the Scots were not going to be satisfied merely with a stone: they wanted more. I recall a story that when the Stone of Destiny was originally pinched from Westminster Abbey by some youngsters of a nationalist disposition, and the police were searching for it, a Scotsman from the back of beyond telephoned the police and said that he knew who the thief was. The police officer went round to see him and took out his notebook, and the old man said, “It was King Edward I”.
As I have said before, finding a really satisfactory way forward in this area is very much like walking a tightrope. The noble Lord, Lord Smith of Kelvin, put it very well when he said:
“The new powers set out in the Scotland Bill will lead to a transformation of the powers held by Holyrood and it would be a terrible shame if they were to fall away at this late stage”.
My noble friend Lord Forsyth of Drumlean has put forward an amendment that might be entirely logical, but the potential disadvantages, in my view, outweigh other considerations. Above all, we at all times have to keep in mind the essential need to protect, maintain and sustain the United Kingdom.
If the House will allow me to make a brief observation about the process, I will not detain it much longer. I believe that this Bill should proceed today to the clauses. It is a balanced judgment: the noble and learned Lord, Lord Hope, made a very valid point in saying that the amendments on the Order Paper would not have been meaningfully impacted upon even if there had been an agreement. However, the question is whether there would have been amendments in light of the agreement if it had been made in a timely manner. That means that the Minister needs to give a bit more information when he winds up this short debate on the amount of scrutiny that is going to be afforded to the fiscal agreement, not only in this House but in another place. Half a day of Report stage might not, I venture, be sufficient.
To paraphrase many whom I have heard over the past 24 hours, we need to progress with a heavy heart, because we are in unfortunate circumstances. They are unfortunate because there has been considerable press coverage, even though the Minister had said that this was a negotiation in private. However, the circumstances of these negotiations go far beyond the previous legislation to which he referred. The adjustment of the block grant will now require a permanent and significant constitutional mechanism given the very large extent of the powers that will be transferred to the Scottish Parliament, and it requires considerable scrutiny. Later on we will debate the adjustment, not only for fiscal powers but for welfare powers, and its financial implications. For the first time, the Scottish Government will have current revenue borrowing powers, which, similarly, are part of the negotiations. Most important, however, is that these discussions are pertinent not just to Scotland—the implications will be much wider for the constitutional arrangements we have across the whole of the United Kingdom.
It is a pleasure to follow the noble Lord, Lord Selkirk, who in the Scottish Parliament we always referred to simply as “Lord James”. I was a Member of the Scottish Parliament with him and a member for five years of the Finance Committee, and I know that there is considerable pressure on its processes as well. I will avoid the obvious political ramifications of this, given the imminence of the Scottish Parliament elections. We need to set aside the politics of this, and I commend the noble Lord for doing so when he comes to this House. I will offer only one bit of advice to the noble Lord—I know that he does not need it, as he is more experienced than I am. To negotiate in private with the SNP is rather different from negotiating in private with any other political party across the United Kingdom. Therefore, when he says that he wishes to conduct all of this in private I respect his view, but privacy was not entirely clear in the letter from the First Minister of Scotland when she sought to define the principle of no detriment. There has been scant information from the UK Government as to its view of this. Finally, given that we will now use forward projections, and the significance of these for population, tax revenue forecasts, and so on, simply to rely upon Treasury forecasts and often competing Scottish Government forecasts does not bode well for future adjustments and negotiations.
Therefore, all we have had so far has been in the public domain, whether it has been briefings from the Treasury to newspapers rather than factual information presented to Parliament, or the positioning of the Scottish Government rather than information they have presented to the Scottish Parliament. We may all agree with the concept of fairness to taxpayers but we need to know the details of how it has been defined by each side. The lack of civil society contributions and academic review draws my attention to the fact that we cannot conduct such discussions like this again in the future. The time is absolutely right for a UK independent fiscal commission, given that there are significant implications for Wales, the cities and local authorities, which we are debating in Parliament. For the Government, if it is not Edward I’s contribution, it should be “go home and think again” on some of these issues with regard to reviewing our constitutional frameworks.
I hope that when the Minister winds up he will give more information about the scrutiny that this will be afforded. The Chief Secretary to the Treasury told the Scottish Affairs Committee that he could foresee a situation in the Commons where there would be a day’s debate and the fiscal agreement would be referred to a Select Committee. Will the Minister indicate whether that is still the Government’s intention and what level of scrutiny we will have? When, as I hope, we proceed with this stage today, we need to make sure that the fiscal agreement, with its significant implications for the long term, is afforded proper parliamentary scrutiny.
My Lords, we should be coming to a conclusion, so I do not wish to detain your Lordships for long. However, I remark that my noble friend Lord Selkirk, in a wonderfully elegant and skilful speech, invited your Lordships, not unreasonably, to delay the Bill. What gives my noble friend Lord Forsyth’s amendment weight and reason is the joint letter from the two chairmen of the two senior committees of this House, which has scarcely been addressed in this debate at all. They have both said, after considerable deliberation, that it would not be proper or wise for us to proceed until we have the fiscal framework before us. We therefore have to find some means of doing that—if possible keeping within the timetable, which is an unreasonable one. It was not unreasonable to start with but it has become so because of the extraordinary foot-dragging of the seeking of the agreement itself. That is not our fault.
It is also important to remember that we are here for a purpose. It is the reasonable purpose of seeing that the legislation we pass is fit for purpose and does not handicap unnecessarily or unfairly any part of the United Kingdom. From what I have heard this afternoon I understand that that is something we cannot fairly do until we have the framework.
What other devices are there to achieve this compromise of timing? I am sure it is already in my noble friend the Chief Whip’s mind but there is, of course, the device of recommitting clauses that have been taken in Committee at a later stage when circumstances change. I remind the noble and learned Lord, Lord Hope—I hope I have got my procedure right—that the clause stand part procedure is in Committee and therefore there are no opportunities to suddenly excise a clause that has already been voted in. It is asking to decide the same issue twice in opposite senses. Therefore the idea of a recommital which gets round that decision seems a reasonable one. I put that to your Lordships as well as my noble friend Lord Forsyth’s plan B, as it were, which also has its merits, but I think they are less good because there would be less chance to do anything with this Bill once it is on the statute book.
My Lords, all of this emphasises the need for more open government. We have very limited information on the fiscal framework negotiations and neither Government have won plaudits for transparency and openness. From the UK Government there has been little more than, “We met. Good progress was made,” and possibly, occasionally, an overview of the agenda. I quote from the meeting held as recently as last Friday. This is supposed to be us coming to the end of the negotiations:
“MINISTERIAL MEETING ON SCOTTISH GOVERNMENT’S FISCAL FRAMEWORK – 19 FEBRUARY 2016”—
the title takes up more space than the minute of the meeting, which states:
“The Rt Hon Greg Hands MP, Chief Secretary to the Treasury and John Swinney, Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy met in London today. They had a useful further discussion on Scotland’s fiscal framework. The discussion made progress in a number of areas. The two governments have not yet been able to reach an overall agreement”.
This is the sort of information that we as parliamentarians are being asked to rely on. The UK Government appear to believe that this is the best way to conduct these intergovernmental negotiations. I suspect that a major reason for this is the Treasury, which has a long track record of secrecy in all matters and doubtless feels that this has served its purposes well over the decades. The annual Budget negotiations with spending departments is probably the best example of this. By default we accept that the Treasury tends to be secretive, but I do not believe that this makes for good government. The more open we can be, the better. People should be encouraged to get more involved in politics and helped to understand government and the issues facing Governments. Too much is still done behind closed doors. This is a very big issue for the future of Scotland and the United Kingdom. So far everything has been done behind closed doors.
There is another dimension to this beyond the issue of secrecy. At both UK and Scottish levels we have been asked to, “Trust us, we’re the Government”. Governments, however, can be trusted only so far and Governments are ultimately answerable to the people and to the parliaments. Their powers are not, and must not be, unfettered. There can be real advantages to openness, particularly when they are dealing with, and are answerable to, the parliaments.
However much we may wish to support the passage of this Bill, there will come a point when we have to say that we need to see the fiscal framework, at least in its final draft form. This week we are reaching that final point with the Bill. We are supposed to move on from the Committee stage today to Report on Wednesday, but the negotiations between the Scottish and UK Governments are still to be concluded. Indeed, it is widely reported in the media that there is still a dispute. As parliamentarians in this Chamber, we have not been told the detail of this dispute but it is certainly all about the detail of the formula to be used, or indeed which formula is to be used, to calculate the funds to come to Scotland once the new tax-raising powers have been introduced. Surely there is bitter irony in negotiating this with an SNP Government, because with independence there is no formula and no safety net. The situation as we all understand it is that all that is swept aside: goodbye Barnett, goodbye population weighting and goodbye all forms of protection.
It seems inconceivable that we can proceed to complete Parliament’s consideration of the Bill without much greater openness and clarity on this issue and on the fiscal framework and all its clauses in general. Ideally, the terms of a final agreement need to be revealed to us. However, failing that and accepting that the UK Government cannot force a final agreement, we need to see the full draft of the fiscal framework identifying the area, or areas, of dispute and explaining the different proposals of the two Governments. Without that, the progress of the Bill is in serious danger of grinding to a halt, so I am very sympathetic to the view of the noble Lord, Lord Forsyth.
My noble and learned friend Lord Wallace of Tankerness has suggested, for example, that we might be able to pass the Bill subject to a commencement order, which would require a legislative consent Motion from the Scottish Parliament. The noble Lord, Lord Forsyth, has suggested another possible approach today in the event that we cannot reach a final, agreed position on the fiscal framework. All these arguments carry considerable force and a lot of work needs to be done on this in the coming hours. However, all of us know that stopping the Bill now, and stopping it in the House of Lords, would have huge practical and symbolic consequences, which could threaten the delivery of the extra powers promised to Scotland ahead of the Scottish Parliament elections in May. There would be the most profound political consequences. So, as we have listened carefully to the noble Lord, Lord Forsyth, we should listen carefully to the Minister’s response.
If that is the case, we must flush the SNP out on this, and we must be transparent and open about the progress that has been made and what is being offered by the UK Government in terms of the fiscal framework. The UK Government must be prepared to defend their position as fair and reasonable.
Whatever the result today, I believe that the arguments for greater openness and transparency on the fiscal framework will apply with even greater force when we reach Report. That will be the critical stage for the future success of the Bill.
My Lords, the Economic Affairs Committee, which I chair, and the Constitution Committee both concluded after extensive inquiry that, in the absence of any information about the fiscal framework, it will be impossible for the House to assess whether the Bill will cause detriment to all or part of the United Kingdom. As the noble Lord, Lord Forsyth, pointed out, we are talking about billions of pounds which could move between the rest of the United Kingdom and Scotland, so this is no small matter.
I think the Government have accepted the logic of that position, which is why we are taking Parts 2 and 3 out of order in today’s Committee. In his opening remarks, the Minister said that there will be ample opportunity on Report to scrutinise the fiscal framework. If, as he has hinted and as newspapers have reported, the fiscal framework is to be published in the next few days, would he agree that ample scrutiny can take place only if the procedural rules of Committee stage are applied to Report stage? Will the Minister confirm that he and his noble friend the Chief Whip will press for that?
My Lords, I have a great deal of sympathy with the remarks made by many Members of this House on the importance of the fiscal framework. It is no exaggeration to say that, without it, this entire legislation will fall apart—it is the most important part of the Smith settlement. It is deeply regrettable, therefore, that here we are at the parliamentary equivalent of the 11th hour and we still do not know what it is or what is in it.
Although I have some sympathy with those who are involved in negotiations, I have to say that as a non-Conservative and non-nationalist, I am not altogether sure that I am happy about the prospects for my country—either Scotland or the United Kingdom—being determined by two sets of negotiators, one of which wants to break up the United Kingdom and the other of which, the Conservative Party, has made a series of wrong calls since 19 September 2014. Talking of which, I must declare an interest in that I am still the chairman of Better Together, which is in the course of being wound up but has not been quite yet. As I said, I have a great deal of sympathy with what is being said, but it would be a mistake for this House to be seen to delay or block matters today. I hope that when the Minister comes to reply, he will give an absolute undertaking that the House will have the fiscal framework by Report, which must be imminent.
This is not just a matter for the Scottish Government and the UK Government. There will be many people outside in different parts of the UK who will have comments to make because this will determine not just how much tax is raised but how the balance is to be achieved between different parts of the United Kingdom and how adjustments are to be made, not just this year but in five years’ time. It would be very difficult to see to whose credit it was, or whose fault it was, that the tax take went up or down from that expected. This will determine who is paying for the welfare measures that are being devolved and, if no adjustments are made to them, who bears the cost of that. Also, it will determine the amount of borrowing and on whose account the borrowing is done. Is it on the part of the Scottish Government? Is it on the part of the UK Government? Is it temporary? What are the constraints? These are massive considerations. I heard what the noble Lord, Lord Stephen, said about the Treasury, but the Treasury is not always as curmudgeonly as he might suggest and sometimes has the nation’s best interests at heart—at least it did for a period in the past.
It is important that we get these things right. We cannot overestimate the importance of the fiscal framework, which is why I hope that the Minister, with whom I had the pleasure of working very closely over the last few years and who is, I am quite sure, not the villain of the piece, gives us an undertaking that we will have the fiscal framework.
I struggle to see how it is going to work. If we do not get it right, we could simply be storing up problems for the future and providing rich and fertile ground for those who seek out grudges and grievances as a way of life to feed on for many years to come. I do not want to see that happen, but I am very conscious that discussions are taking place not in the spirit of good will because, at the end of the day, these are two parties with opposing objectives. This is important, and I urge the House not to block the measure at this stage, especially if the Minister can give the undertaking that I think most of us want.
My Lords, I wish to intervene very briefly. We are indebted today to my noble friend Lord Forsyth for bringing this before the House. As a former chairman of the Economic Affairs Select Committee, a current member of the Constitution Committee and a former Chief Secretary to the Treasury, like the noble Lord, Lord Darling, with whose comments I very much agree, I would like to stress the absolute importance of this House being able to discuss the fiscal framework in some form or another, and its huge implications for the future of both Scotland and the rest of the United Kingdom, before the legislation is finally implemented. I support those who are making the point that, once the fiscal framework is published, we must have the opportunity to discuss it thoroughly before we can go further.
My Lords, I want to briefly support my noble friend Lord Darling and, indeed, endorse the point made by the noble Lord, Lord MacGregor. It arises, in a way, out of a question that he put to me when I was giving evidence to the Constitution Committee. It is this: we have allowed tax devolution to leave the station without any clear idea of what the destination is.
I am an enthusiastic devolutionist. As Secretary of State for Wales, I brought in the Government of Wales Act 2006, and I was instrumental in helping to win the 1997 Welsh referendum—albeit very narrowly; it was a hard fight. My concern is one that I do not see being addressed in the Bill, certainly not until we have the fiscal framework, at least, before us to scrutinise. It is this: 40% of the wealth of the United Kingdom is generated in London and the south-east. So what happens if parts of the UK—across the UK, not just in Wales and Scotland but in the north-east of England, Cornwall, and other parts of England that are not as wealthy as the south-east and London—are offloaded from the ability to benefit from redistribution, and the fairness involved in that redistribution?
The Government’s present ideology seems to be, “You have the powers to raise your own taxes, and it’s on your heads”. And if that particular part of the UK, be it Northern Ireland, Wales or Scotland, cannot raise what it previously raised, that is tough. I do not think that is a future for the United Kingdom that will command the support of all the nations and citizens of Britain and Northern Ireland. Therefore, although I cannot support the amendment of the noble Lord, Lord Forsyth, I want to leave on the record a severe reservation about where this is all leading.
My Lords, I would like to say a word or two about the fiscal framework, which I agree is fundamental. The difficulty of it cannot be underestimated. This is a situation in which an authority has a grant-making power, and a power to raise taxes in order to raise the money for that grant—but at the same time, it is making a grant to a body that has a power to raise taxes itself. We have had this problem in the United Kingdom for a long time in relation to local authorities. Nobody needs to be told that every year local authorities have difficulty in accepting what central Government allocate to them. The Scottish Government have had that problem too, with refusing to allow local authorities to use their tax-raising powers under the community charge.
This is a very difficult situation, and I am not at all confident that it is possible to arrange things in a way that will work for all time in this fiscal framework. There is an element of prophecy involved, as we can see from what has been said about the need to take account of how the Scottish population is ageing; of course I am very much part of that factor myself, and I am very conscious of it. The important thing is that there are various powers, and it is difficult to see that they could be effectively regulated for all time coming. I know of no country in the world that has a very satisfactory arrangement for local government. Germany, for example, has inter-state relationships, and relationships between the states and the federation. The United States has problems of that kind too. We have before us the same sort of problem, in a different context. This is a very difficult thing to do—and I do not believe that the powers can be granted without knowledge of what that power arrangement is going to be, if it is possible to reach it.
On the other hand, as the noble and learned Lord, Lord McCluskey, said, it would be a mistake for us to use the power of this House to get the Bill in place before the deadline for the parliamentary elections in Scotland. If we were to do that, I think it would be regarded as something that the House of Lords had done to destroy the vow.
I thank all noble Lords who have taken part in the debate for their contributions. Before I address some of the points that have been raised, may I first make a correction? It came as something of a surprise to me to hear that I had not responded to the noble Lords, Lord Lang and Lord Hollick. I certainly signed lots of letters and I understand that those were sent off in early February, and copied to the leaders and Chief Whips of the main political parties and the Convener of the Cross-Bench Peers.
I apologise to my noble friend if that is the case, but I asked the Clerk to the Economic Affairs Committee if we had received a reply to the letter from the two chairmen and was told last week that we had not. Certainly, it has not been circulated to committee members.
Well, it was certainly signed off by me, and my understanding was that the letters had gone off, but we will check that.
We want to secure the passage of the Bill and reach agreement on the fiscal framework. We can all agree that we want the focus at the Holyrood election to be on how the powers in the Bill are used. A number of noble Lords said that this House’s holding up consideration of the Bill would hinder the outcome that we all want and put the Bill’s timetable at unnecessary risk.
A number of noble Lords, including my noble friend, raised substantive points about the fiscal framework. One strong reason for proceeding today into Committee is so that we can have a debate and consider these matters in more detail. I very much agree with the noble and learned Lord, Lord Hope, that Report gives us an opportunity to consider these matters further. I was particularly interested in the suggestion by the noble Lord, Lord Hollick, which was also made by the noble Lord, Lord Turnbull, about using Committee rules at Report. I undertake to ask my noble friend the Chief Whip, who has been listening very closely to this debate, to speak to the usual channels to see if using Committee rules at Report can be agreed.
The Government are working flat out to get a fiscal framework agreement. As I said in my opening speech, there has been intensive discussion, which continues today. I remain optimistic that a deal can be reached soon. But today is not the day to speculate about what happens if we do not reach agreement and what options we might have to consider in that scenario. I therefore ask my noble friend not to press his amendment.
My Lords, was that it? We have had a splendid debate with a lot of suggestions. I think there was a consensus that we could not put this Bill on to the statute book without having discussed the fiscal framework. It is interesting that former judges such as the noble and learned Lords, Lord Hope, Lord McCluskey and Lord Mackay of Clashfern, are advising us on the politics of the situation in Scotland and I am arguing about the constitutional implications. I feel that my expertise is more limited than theirs on both counts.
Of course, I understand why the noble Lord, Lord McAvoy, feels that if we were to delay consideration of the Bill, the SNP would complain that unelected Peers were interfering in the democratic decisions of the Scottish people and the Prime Minister’s vow—which, incidentally, was the Daily Record’s vow—had not been delivered. The noble Lord questioned my motives and said that I wanted to kill the Bill. I understand that the Bill will go on to the statute book; that will happen. But I want a stable, lasting framework that will end this business of the nationalists pretending that Scotland gets a bad deal out of the union and, at the same time, the other parts of the United Kingdom to feel that they are treated fairly. That is the objective, and the fiscal framework goes to the heart of that. Far be it from me to give advice to the Labour Party, but perhaps it should stop running away in Scotland and confront the nationalists for what they are and on what they say.
My noble friend said that the fiscal framework may be agreed before Report. The noble Lord, Lord Darling, for whom I have considerable admiration and respect, suggested that perhaps we might consider it on Report, but Report is the day after tomorrow is it not? Is the fiscal framework going to be agreed tomorrow? If so, perhaps it might have been sensible to delay Committee until Wednesday and then we could have had Committee with the fiscal framework. If my noble friend is right that the fiscal framework is imminent, clearly, it would be silly to delay Committee today and to accept my amendment—I am still speaking in favour of it, by the way—I can see that.
However, it was then suggested by the noble Lord, Lord Turnbull, and others, that perhaps we could change the rules. It is perfectly open to me or any other Member of the House to bring forward a Motion on Report to say that we should recommit the Bill to Committee. Therefore, there is no reason for me to press my amendment today if, indeed, we are going to get the fiscal framework on Report. If we are not, and if the view of the House is that the Bill ought not to reach the statute book without an opportunity for the House of Commons particularly, as well as ourselves, to consider the fiscal framework, then it is open to my noble friend to accept an amendment in Committee today. There are several amendments—I have one of them—stating that there should be a sunrise clause whereby the Bill will not come into effect until the fiscal framework has been agreed by both Houses of Parliament.
The noble Lord, Lord McAvoy, thinks that that would provoke hysteria in Scotland. I do not see why. The Bill will get on the statute book and they will get what they want. If it does not get on the statute book, it will be because of the intransigence of the SNP in agreeing the fiscal framework. One of the most important speeches was made by the noble Lord, Lord Stephen, who talked about the importance of transparency. We have also had speeches from a former Chancellor of the Exchequer, a former Permanent Secretary to the Treasury, a former Cabinet Secretary—they are both the same person—and all have advocated that we look at this issue.
I have to say to my noble friend—my father used to sell second-hand cars so this is no aspersion on second-hand car salesmen—that trying to approve the Bill without the fiscal framework is like buying a shiny car and not being allowed to look at or start the engine. It simply will not do. My noble friend heard voices from every quarter of the House—from those who are ardently pro-devolution, those who are against devolution or have been, those who predicted we would get into this mess, and others who thought it might not end like this—and the general view is that the House should not be asked to send the Bill for Royal Assent unless the fiscal framework has been debated and agreed. I hope the Government will give further consideration to this matter and take account not just of the widely expressed views in the House, but of the detailed reports from both committees. I beg leave to withdrawn my amendment to the Motion.
Amendment to the Motion withdrawn.
Clauses 13 to 18 agreed.
Schedule 1 agreed.
My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:
“Mr Speaker, I would like to make a Statement on the agreement reached in Brussels last week, but first let me say a word about the migration crisis which was also discussed at the European Council. We agreed that we needed to press ahead with strengthening the EU’s external borders to ensure that non-refugees are returned promptly and to back the new mission to disrupt the criminal gangs working between Greece and Turkey who are putting so many people’s lives at risk. I made clear that Britain will continue to contribute, and will step up our contribution, in all these areas.
Turning to Britain’s place in Europe, I have spent the last nine months setting out the four areas where we need reform and meeting all 27 other EU Heads of State and government to reach an agreement that delivers concrete reforms in all four areas. Let me take each in turn.
First, British jobs and British business depend on being able to trade with Europe on a level playing field, so we wanted new protections for our economy to safeguard the pound, to promote our industries—including our financial services industries—to protect British taxpayers from the costs of problems in the eurozone and to ensure that we have a full say over the rules of the single market while remaining outside the eurozone. We got all those things. We have not just permanently protected the pound and our right to keep it but have ensured that we cannot be discriminated against.
Responsibility for supervising the financial stability of the UK will always remain in the hands of the Bank of England. We have ensured that British taxpayers will never be made to bail out countries in the eurozone. We have made sure that the eurozone cannot act as a bloc to undermine the integrity of the free trade single market, and we have guaranteed that British business will never face any discrimination for being outside the eurozone. For example, our financial services firms—our number one services export employing over 1 million people—can never be forced to relocate inside the eurozone if they want to undertake complex trades in euros just because they are based in the UK.
These protections are not just set out in a legally binding agreement; all 28 member states were also clear that the treaties would be changed to incorporate the protections for the UK as an economy that is inside the EU but outside the eurozone. We also agreed a new mechanism to enable non-eurozone countries to raise issues of concern, and we won the battle to ensure that this could be triggered by one country alone. Of course, none of these protections would be available if we were to leave the EU.
Secondly, we wanted commitments to make Europe more competitive, creating jobs and making British families more financially secure, and again we got them. Europe will complete the single market in key areas that will really help Britain: in services, making it easier for thousands of UK service-based companies like IT firms to trade in Europe; in capital, so that UK start-ups can access more sources of finance for their businesses, and in energy, allowing new suppliers into our energy market, meaning lower energy bills for families across the country.
We have secured commitments to complete trade and investment agreements with the fastest-growing and most dynamic economies around the world, including the USA, Japan and China, as well as our Commonwealth allies, India, New Zealand and Australia. These deals could add billions of pounds and thousands of jobs to our economy every year, and, of course, they build on the deals we already have with 53 countries around the world through which Britain has benefited from the negotiating muscle that comes from being part of the world’s largest trading bloc.
Country after country have said to me that of course they could sign trade deals with Britain, but they have also said that their priority would be trade deals with the EU. By their nature, these EU deals would be bigger and better, and a deal with Britain would not even be possible until we had settled our position outside the EU. So for those Members who care about signing new trade deals outside the EU, we would be looking at years and years of delay.
Last but by no means least on competitiveness, one of the biggest frustrations for British business is the red tape and bureaucracy, so we agreed that there will now be targets to cut the total burden of EU regulation on business. This builds on the progress we have already made, with the Commission already cutting the number of new initiatives by 80%, and it means that the cost of EU red tape will be going down, not up. Of course, if we were to leave the EU but ultimately achieve a deal with full access to the single market, like Norway, we would still be subject to all the EU’s regulations when selling into Europe, but with no say over the rules. As the former Europe spokesman for the Norwegian Conservative Party said:
‘If you want to run Europe, you must be in Europe. If you want to be run by Europe, feel free to join Norway in the European Economic Area’.
Thirdly, we wanted to reduce the very high level of migration from within the EU by preventing the abuse of free movement and preventing our welfare system acting as a magnet for people to come to our country. After the hard work of the Home Secretary we have secured new powers against criminals from other countries, including powers to stop them coming here in the first place and powers to deport them if they are already here. We agreed longer re-entry bans for fraudsters and people who collude in sham marriages and an end to the frankly ridiculous situation where EU nationals can avoid British immigration rules when bringing their families from outside the EU.
This agreement broke new ground, with the European Council agreeing to reverse decisions from the European Court of Justice. We have also secured a breakthrough agreement for Britain to reduce the unnatural draw that our benefits system exerts across Europe. We have already made sure that EU migrants cannot claim the new unemployment benefit, universal credit, while looking for work. Those coming from the EU who have not found work within six months can now be required to leave. At this Council we agreed that EU migrants working in Britain can be prevented from sending child benefit home at UK rates. This will apply first to new claimants and then to existing claimants from the start of 2020. We also established a new emergency brake so that EU migrants will have to wait four years until they have full access to our benefits.
People said it was impossible to achieve real change in this area and that a four-year restriction on benefits was completely out of the question, yet that is what we have done. Once activated, the emergency brake will be in place for seven years. So if it begins next year, it will still be operating in 2024 and there will be people who will not be getting full benefits until 2028. All along we have said that people should not be able to come here and get access to our benefits system straightaway—no more something for nothing—and that is what we have achieved.
I am sure that the discussion about welfare and immigration will be intense, but let me just make this point. No country outside the EU has agreed full access to the single market without accepting paying in to the EU and accepting free movement. In addition, our new safeguards lapse if we vote to leave the EU, so we might end up with free movement but without these new protections.
The fourth area where we wanted to make significant changes was to protect our country from further European political integration and to increase powers for our national Parliament. Ever since we joined, Europe has been on the path to something called ever-closer union. It means a political union. We have never liked it, we never wanted it, and now Britain will be permanently and legally excluded from it. The text says that the treaties will be changed to make clear that, and I quote,
‘the Treaty references to ever closer union do not apply to the United Kingdom’.
So, as a result of this negotiation, Britain can never be part of a European superstate.
The Council also agreed that ever-closer union, which has been referred to in previous judgments from the European Court of Justice, does not offer a legal basis for extending the scope of any provision of the treaties or of EU secondary legislation. People used to talk about a multi-speed Europe. Now we have a clear agreement that not only are different countries able to travel at different speeds but they are ultimately able to head to different destinations too. I would argue that that is a fundamental change in the way this organisation works.
We have also strengthened the role of this House and all national Parliaments. We have already passed a referendum Act to make sure that no powers can be handed to Brussels without the explicit consent of the British people in a referendum. Now, if Brussels comes up with legislation we do not want, we can get together with other parliaments and block it with a red card. We have a new mechanism finally to enforce the principle that, as far as possible, powers should sit here in Westminster, not in Brussels. So every year the EU now has to go through the powers it exercises and work out which are no longer needed and should be returned to nation states.
In recent years we have also seen attempts to bypass our opt-out on justice and home affairs by bringing forward legislation under a different label—for example, attempts to interfere with the way the UK authorities handle fraud were made under the guise of EU budget legislation. The agreements at last week’s Council ensure that this can never happen again.
The reforms we have secured will be legally binding in international law and will be deposited as a treaty at the UN. They cannot be unpicked without the agreement of Britain and every other EU country. As I have said, all 28 member states were also clear that the treaties would be changed to incorporate the protections for the UK as an economy outside the eurozone, and our permanent exclusion from ever-closer union.
Our special status means that Britain can have the best of both worlds. We will be in the parts of Europe that work for us, influencing the decisions that affect us, in the driving seat of the world’s biggest single market and with the ability to take action to keep our people safe, but we will be out of the parts of Europe that do not work for us: out of the euro, out of the eurozone bailouts, out of the passport-free, no-borders Schengen area, and permanently and legally protected from ever being part of an ever-closer union.
Of course, there is still more to do. I am the first to say that there are still many ways in which this organisation needs to improve, and the task of reforming Europe does not end with last week’s agreement. But with the special status this settlement gives us, I believe the time has come to fulfil another vital commitment this Government made, and that is to hold a referendum. So, I am today commencing the process set out under our referendum Act to propose that the British people decide our future in Europe through an in/out referendum on Thursday 23 June. The Foreign Secretary has laid in both Houses a report setting out the new settlement that the Government have negotiated. This fulfils the duty to publish information set out in Section 6 of the European Union Referendum Act 2015. As the Cabinet agreed on Saturday, the Government’s position will be to recommend that Britain remains in this reformed European Union.
This is a vital decision for the future of our country. We should also be clear that it is a final decision. An idea has been put forward that if the country votes to leave we could have a second renegotiation and perhaps another referendum. I will not dwell on the irony that some people who want to vote to leave apparently want to use a leave vote to remain. But such an approach also ignores more profound points about democracy, diplomacy and legality. This is a straight democratic decision—staying in or leaving—and no Government can ignore that. Having a second renegotiation followed by a second referendum is not on the ballot paper. For a Prime Minister to ignore the express will of the British people to leave the EU would not just be wrong, it would be undemocratic. On the diplomacy, the idea that other European countries would be ready to start a second negotiation is for the birds. Many are under pressure for what they have already agreed. Then there is the legality—I want to spell out this point carefully for the House because it is important. If the British people vote to leave, there is only one way to bring that about, and that is to trigger Article 50 of the treaties and begin the process of exit. The British people would rightly expect that that should start straightaway.
Let me be absolutely clear how this works: it triggers a two-year time period to negotiate the arrangements for exit. At the end of this period if no agreement is in place, then exit is automatic unless every one of the 27 other EU member states agrees to a delay. We should be clear that this process is not an invitation to rejoin; it is a process for leaving. Sadly, I have known a number of couples who have begun divorce proceedings, but I do not know any who have begun divorce proceedings in order to renew their marriage vows.
I want to explain what would happen if that deal to leave was not done within two years. Our current access to the single market would cease immediately after two years were up, and our current trade agreements with 53 countries around the world would lapse. This cannot be described as anything other than risk, uncertainty and a leap in the dark that could hurt working people in our country for years to come. This is not some theoretical question; this is a real decision about people’s lives. When it comes to people’s jobs, it is simply not enough to say that it will be all right on the night and we will work it out. In the weeks to come we need properly to face up to the economic consequences of a choice to leave.
I believe Britain will be stronger, safer and better off by remaining in a reformed European Union: stronger because we can play a leading role in one of the world’s largest organisations from within, helping to make the big decisions on trade and security that determine our future; safer because we can work with our European partners to fight cross-border crime and terrorism; and better off because British businesses will have full access to the free-trade single market, bringing jobs, investment and lower prices.
There will be much debate about sovereignty—and rightly so. To me what matters most is the power to get things done for our people, for our country, and for our future. Leaving the EU may briefly make us feel more sovereign, but would it actually give us more power, more influence and a greater ability to get things done? No. If we leave the EU, will we have the power to stop our businesses being discriminated against? No. Will we have the power to insist that European countries share with us their border information so we know what terrorists and criminals are doing in Europe? No, we will not. Will we have more influence over the decisions that affect the prosperity and security of British families? No, we will not. We are a great country and whatever choice we make we will still be great, but I believe the choice is between being an even greater Britain inside a reformed EU and a great leap into the unknown. The challenges facing the West today are genuinely threatening: Putin’s aggression in the east; Islamist extremism to the south. In my view this is no time to divide the West. When faced with challenges to our way of life, our values and our freedoms, this is a time for strength in numbers.
I end by saying this: I am not standing for re-election; I have no other agenda than what is best for our country; I am standing here today telling you what I think. My responsibility as Prime Minister is to speak plainly about what I believe is right for our country, and that is what I will do every day for the next four months. I commend this Statement to the House”.
My Lords, that concludes the Statement.
My Lords, I thank the noble Baroness for repeating today’s Statement, which is hugely significant for the future of our country and its place in the world. I am also grateful to the Chief Whip for allowing some additional time for Back-Bench contributions and questions.
Clearly, anyone could be forgiven for thinking that the UK’s relationship with the EU was the only issue discussed at the European Council over the weekend. I am grateful that, in the Statement she repeated today, the noble Baroness made it clear that other issues were also debated. It must be immensely frustrating for other countries that issues such as migration, Syria and Libya have not received the same degree of interest as our referendum has. Perhaps that makes a profound point, because those are obviously issues where European and international co-operation are absolutely vital and crucial.
On our role within the EU, the Prime Minister is clearly relieved that a deal has been done and that he has been able to announce the date for the referendum, although at times over the weekend it was all looking slightly dodgy. We were told that, following the completion of negotiations, there would be an English breakfast on Friday morning where the deal would be finalised and then the PM would travel back for a Cabinet meeting in the evening. However, as that breakfast became brunch, brunch became lunch, and lunch became dinner, it was clear that there were still a few sticking points. When we saw Angela Merkel rushing out for a bag of chips as sustenance we knew there was still some way to go. Perhaps the Prime Minister thought that he could starve them into submission. Finally the deal was announced—not exactly what he had asked for but, as any experienced negotiator will confirm, that is the nature of negotiations. The deal had significant changes that certainly cannot be dismissed as unimportant, although some have tried. Then, for the first time since 1982 during the Falklands crisis, the Cabinet met on a Saturday.
There is an historical connection here, in that it was Harold Wilson, the first and until now the only Prime Minister to hold a referendum on the European issue, who is said to have once remarked:
“A week is a long time in politics”,
though his referendum campaign lasted just half the time of ours. If a week is a long time, the next four months of campaigning are going to seem like an absolute eternity. There will be discussions and deliberations and, as leaflet after leaflet extolling the views of one campaign or another is handed out and posted through letterboxes, recycling bins are going to be full to overflowing.
I predict some excellent debates and factually based communications that will inform and enlighten. I also predict nonsense, scaremongering and bad temper. We shall also have some moments of pure theatre. The “will he/won’t he” performance of Boris Johnson’s announcement last night was clearly designed to create the maximum spectacle and drama, and he succeeded in that. He was obviously aware of the deliberate impact that that would have on the Prime Minister.
However, for most of us this issue has to be more than just about personalities and theatrics. It has to be about more than who can shout the loudest or get the most celebrities signed up to their campaign. It is more—so much more—than Mr Cameron’s deal. Support for that view has come from surprising sources. It was almost incredible to hear Chris Grayling yesterday morning on the radio saying that it was a relief rather than difficult to declare his opposition because he, like many others, had made up his mind weeks ago, but had done the right thing and let the Prime Minister continue his negotiations. The right thing? Whatever the Prime Minister returned with was never going to get the support of the very people—his Cabinet and his party—he was trying to please. When, on 2 February, we had that previous Statement I expressed our view that too much of the Prime Minister’s negotiating position had been targeted at his own internal party problems, whereas the only objective must always be the national interest and the key issues that impact on people’s everyday lives.
I am not suggesting that the deal is not helpful. People will have their own views. However, there are so many other issues that are crucial to the UK and to Europe on which we should be taking a lead. We should be exerting our influence and trying to create the kind of EU in which we can take great pride. The Labour Party and the trade unions played a strong role in ensuring that issues such as employment rights, guaranteed paid holidays, paid maternity leave and protection for agency workers were kept out of any renegotiation. Those rights are far too important to be lost or weakened.
The same applies to consumer and environmental protections that have a real and tangible impact on many if not all of us. That includes the cutting of data roaming costs for mobiles and for using the internet, the improvement of air passengers’ rights, clean beaches and bathing water—good for our well-being and a boost to local economies—and how we deal with and dispose of waste. Thanks to EU legislation, on those kind of issues we all benefit. Indeed, given that the air quality here in London and other parts of the UK continues to fall short of EU clean air standards, it would clearly have been more beneficial to the public health of our fellow citizens if the Government had engaged more proactively on this front.
I watched with incredulity yesterday as Iain Duncan Smith claimed that we would be safer out of the EU, as being part of it increased the threat of Paris-style terrorist attacks. Is this the same Iain Duncan Smith who supported the Government’s proposals to opt out of EU measures to deal with crime and policing, including terrorism, and then found out, along with the rest of his party, that they had to opt back in to everything because it actually worked? It worked because it made us safer.
For so long, Brexit campaigners have been telling us that EU citizens travel to the UK in order to get benefits. Then, when the Prime Minister reaches an agreement to cut these, the argument shifts to being that it will not make any difference. You cannot have both sides of the argument at the same time. As this campaign progresses, let us have the kind of debate that can make us proud as a country and as a Parliament. Let us try to recapture some of that vision and promise that was in the hearts and minds of those who first conceived that a way to peace and prosperity was a Europe—which was then divided and devastated by two wars—that would work together with common principles and values for the benefit of all citizens. Let us have a debate of vision and of facts. We should recall that in 1961, our application for membership was vetoed because it was felt that we would be too dominant and powerful through our relationship with the Commonwealth and the US. Yet today we maintain those strong and special relationships alongside our membership of the EU.
None of us would claim that the EU was perfect. We all recognise where it has been weak and where change is needed. But would it not benefit this country if we could again be seen as a powerful figure on the European stage—a powerful country that would take a lead within an EU that works better for working people, strengthens businesses small and large, and brings ongoing and better reform? Why should we not seek to build human rights, employment rights, consumer and environmental protections into future Europe-wide trade treaties? Taking on workers from other countries should never be used as an excuse to drive down wages or disadvantage local workers. Rather than merely seeking greater control for ourselves, why should we not seek to stop the pressure from Brussels to deregulate and sell off public services? That is a matter for national Governments. Why are we not pressing across the EU for a more humanitarian and strategic response to the thousands of refugees seeking asylum, with far too many losing their lives in the process?
Whatever the outcome of the referendum on 23 June, the EU is still going to exist just 21 miles from the shores of Dover and across the border in the Republic of Ireland. That is a fact of life. If we vote to leave, we will still have to manage that reality while our businesses, large and small, that want to trade within the EU will still have to abide by its regulations, which the United Kingdom will have no part in making. During this referendum we will hear a lot of talk about sovereignty, independence and what it means to be a nation state in the ever-changing world of the 21st century. We have already heard quite a bit about patriotism. I so hope that neither side in this debate will seek to claim ownership of patriotism or denigrate anyone else’s.
As I said earlier, and I am sure that I speak for many Members of your Lordships’ House, I hope that the debate will be more informative and enlightening than it is misleading and ill tempered. However, my plea is deeper than that. Already today, we have heard the news that the pound is falling in value, partly from the uncertainty of Brexit and partly because of a Government who are now seen as divided and preoccupied. This makes the need for a constructive, positive debate not just important but absolutely essential. Four months is a long time. The Government must not be so preoccupied with this debate that they lose focus on other issues. The debate has to be about the future of the UK and not that of the Conservative Party, as entertaining as that may be, because this is not about entertainment. This is a huge decision that faces each and every one of us. In the Statement which the noble Baroness repeated, there was the comment that this is not just a theoretical question but a real decision about people’s lives. We entirely concur with that statement.
The British people deserve a proper debate ahead of 23 June. My party has set out its position clearly and with conviction. We look forward to making the case for a stronger, open and confident Britain remaining as an engaged, challenging and leading member of the EU.
My Lords, I, too, thank the noble Baroness the Leader of the House for repeating the Prime Minister’s Statement. At the outset, I declare my registered interest as a member of the board of Britain Stronger in Europe. I say gently to the noble Baroness, Lady Smith of Basildon, that twice in her remarks she talked about four months being a long time. A number of us in your Lordships’ House who are veterans of three and a half years on the Scottish referendum would think four months a relative relief.
Those of us on these Benches very much welcome the Prime Minister’s successful renegotiations in Europe last week. The hard work that he put in, not only last week but in the weeks leading up to it, was very evident and it is fair to say that what he came away with exceeded many people’s initial expectations. We also welcome the willingness of other EU member states to work with the United Kingdom to reach this compromise. That demonstrates the degree of good will towards the United Kingdom from other EU Governments, and their commitment to maintaining British membership. I was delighted yesterday to hear the Prime Minister setting out, at long last, the strategic case for the United Kingdom continuing its membership of the European Union. It was very welcome, too, that the Prime Minister took the opportunity in his Statement to knock on the head the fanciful idea that, in the event of an out vote, there could be a second renegotiation and a second referendum.
The referendum vote in June will be of the utmost significance. It will settle not only Britain’s relations with Europe, but our place in the world. We very much believe that the United Kingdom will derive strength from being seen as a team player and engaged in international affairs. It is an illusion of sovereignty to suggest that, if we come out, we will somehow get sovereignty back. Liberal Democrats are firmly committed to the United Kingdom’s place in the European Union. We are united in our belief that the United Kingdom is better when it is united with our colleagues in Europe. In an uncertain world of challenges and threats, I also believe that Europe is better and stronger for having the United Kingdom in it as a member state.
We have spoken from these Benches on a number of occasions about how we will use the campaign to speak about the positive case for Britain remaining within the EU. In the EU, Britain can thrive. Together, we will be a stronger and more prosperous nation, securing jobs and creating opportunity for our children and grandchildren. We have created together the world’s largest free trade area, we have delivered peace, and we have given the British people the opportunity to live, work and travel freely. History shows that Britain is better when it is united with our European partners. Together, we are stronger in the fight against the global problems that do not stop at borders. We can combat international crime, fight climate change, and together provide hope and opportunity for the future.
It is worth reflecting for a moment on the creation of the European Union and its lasting legacy. After decades of brutal conflict on the continent, European nations came together in co-operation. To this day, neighbours and allies support each other in what remains the world’s most successful project in peace. We remain stronger together in continuing the fight against terrorists who despise our liberal and modern way of life. Will the noble Baroness the Leader of the House take the opportunity to repudiate the alarmist comments made by her colleague, the Secretary of State for Work and Pensions, when he said that remaining in the EU exposes Britain to a Paris-style terrorist attack? Does she agree that it is only by working in co-operation with our international friends and neighbours that we can combat such threats to our security?
Britain is already stronger and better off trading and working with Europe. We are part of the world’s largest single market, allowing British businesses to grow and prosper. Our people have more opportunities to work, travel and learn than ever before. Staying in the EU gives our children and grandchildren greater prospects, and the best chance to succeed. Does the noble Baroness share my concerns, therefore, at the dramatic fall in sterling today—referred to by the noble Baroness, Lady Smith—which we believe was driven in great part by fear of Brexit? Does she agree that the threat of leaving the EU is already costing British businesses and that it would be much worse for British exporters if we were to withdraw from the world’s biggest single market? Can the noble Baroness indicate when we will get the Government’s report on EU membership under Section 7 of the European Referendum Act that Parliament passed towards the end of last year?
This country’s place in the world depends on our getting on well with our neighbours, who share our values and interests. Does the noble Baroness the Leader of the House agree that this referendum is about the kind of country we want to leave to our children and grandchildren, and about how we think of ourselves as a country? Does she agree that issues such as climate change and the natural environment are better tackled when we come together to think about the world we want to leave to future generations?
There has been speculation about a statement or an initiative on sovereignty, which was lacking from the Prime Minister’s Statement today. Before going down that particular road—it may just have been a ruse to try to bring Boris on board—will the noble Baroness reflect that in fact further piecemeal constitutional meddling of that kind may end up with consequences more damaging than the ones they seek to resolve? Will she give the House an indication of the Government’s thinking on that?
Finally, will the noble Baroness confirm that this is, indeed, a once-in-a-generation decision and that there is only one opportunity to show that the United Kingdom is not a country that is isolated and sidelined but one that is open, outward-facing and proud of its place in the international community, and that an out vote means taking the United Kingdom back and an in vote means taking the United Kingdom forward?
My Lords, I am grateful to the noble Baroness, Lady Smith, and the noble and learned Lord, Lord Wallace of Tankerness, for their remarks and their support for what the Prime Minister has negotiated in Europe this weekend.
I shall start by reflecting on the significance of the events at the end of last week. On Friday my right honourable friend the Prime Minister did something that many people had predicted was not possible: he delivered a legally binding, irreversible renegotiation of our relationship with the European Union. In doing so he secured a new settlement, carving out a special status for this country that gives us the best of both worlds and means that we remain in the parts of Europe that work for us—the noble Lords have talked about some of them—around making sure that we are stronger and safer. That most definitely includes security: although we retain our responsibility to national security, we benefit from the co-operation of our partners in Europe in terms of protecting ourselves from terrorism. Through his renegotiation my right honourable friend has secured terms that mean we will be better off because of increasing competitiveness and the securing of the completion of the single market. He has also made sure that we stay out of the parts that are not in our best interests and have frustrated us for too long.
Having secured all that, we now need to get on with our other commitment to deliver to the British people the opportunity that they have long waited for to have their say on whether Britain should remain in or leave the European Union. The noble Baroness made reference to four months and the time between now and the referendum taking place. I note what the noble and learned Lord said about the length of time of the Scottish referendum campaign. I say to noble Lords that the reason why it is four months is that we are reflecting the proper processes and steps that it was agreed in the European Union Referendum Act should take place between now and the referendum happening. That process has started today: the statutory instrument confirming the date has been laid. That will be debated in both Houses and is subject to an affirmative resolution. Today we have also published the White Paper, which meets one of the requirements of the referendum Act regarding the other information that we as a Government are required to produce. That will happen, in line with the Bill, 10 weeks before the referendum takes place. So that is all in train.
With regard to other points raised by the noble Lords, I say to the noble Baroness, who talked about wanting to see the UK remaining a powerful figure within Europe as a result of the referendum, that I agree with her. We are a powerful player in Europe now and that is what we want to remain. She made the point that the European Union would continue to exist even if the United Kingdom voted to leave. She is absolutely right: if this country decided to come out, the European Union would still be there. As my right honourable friend the Prime Minister said when he was being interviewed yesterday, one of my Cabinet colleagues said on Saturday when we were discussing his renegotiation, “This utopia might sound fantastic but I bet that when you got there, there would still be a European Union”. It is a place that will exist because other people would be members of it even if we were not.
The noble Baroness said it would be important that between now and the referendum taking place the Government continued to govern, and that there are other matters of greater importance to the people of this country. I agree with her about that; we have important business to conduct and will continue to do so.
The noble and learned Lord made reference to the effect on the currency markets. In my view, such an effect between now and the referendum taking place would be about uncertainty: we are now in a state where there is a debate going on and there is some uncertainty about the result of that referendum. What I, the Prime Minister and the Government are arguing is that, by voting to remain in the European Union, we would provide certainty for the future of this country. If this country decides to leave the European Union, it would create a long period of uncertainty.
As to the noble and learned Lord’s question about the sovereignty of Parliament, we have already, in the last few years, protected the sovereignty of this Parliament by passing that Act in 2011, which means that never again can any Prime Minister give away powers to the European Union without coming back to this country and giving the people a say. The very fact that we are having a referendum later this year, in June, is also an act of sovereignty. It also means that the people of this country are in charge of their own destiny. I very much believe and hope that the result of the referendum will see that we remain strong and secure in our future, having the best of both worlds, which means being part of a reformed Europe, but also being in charge of our own destiny and taking advantage of the changes that the Prime Minister has been able to negotiate.
My Lords, we are now into an extended period of 40 minutes, which reflects the importance of the Statement made by my noble friend the Leader of the House. We will make the most of that time if noble Lords, with a little bit of self-discipline, restrict themselves to short questions. On top of that, we will be able to go around the House in our usual way.
My Lords, now that the negotiations conducted by the Prime Minister can be subject to intense scrutiny and analysis, does my noble friend agree that it is very important that all possible alternative arrangements with the European Union be subject to an equivalent degree of scrutiny and analysis? Is it not the case that, as even many of us who are long-standing critics of the EU have to recognise, there would be a basic choice between leaving the single market in order to escape its requirements, freedom of movement and regulations, and staying in the single market with those same requirements and regulations? Would that not represent a loss of sovereignty rather than the recovery of sovereignty?
My Lords, I do not think the House will be surprised to hear me say that I very much agree with my noble friend. He is absolutely right: anybody campaigning for Britain to leave the European Union will have to spell out what that means and what they are suggesting the people of this country would be voting for. They need to be specific about the model that is being proposed. If it is a model like Norway, they need to explain to the people of this country that there is no cost-free alternative; that is important for people to understand. There is not another way in which there is no disadvantage. It is quite possible for the United Kingdom to survive and prosper outside of the European Union, but we believe that Britain would remain stronger in the EU, and it is for others to make their case as to what “leave” means.
My Lords, does the Leader of the House agree that it is neither pessimistic nor defeatist for us to argue for the United Kingdom to remain in the European Union? It is total commitment to advancing and upholding the stability, security and well-being of our beloved country. It is practical patriotism instead of the risk-riddled leap into the unknown of leaving. Will she therefore dismiss the glib and duplicitous suggestion that voting to leave will somehow compel the European Union to amenably accommodate the economic preferences of the United Kingdom outside the EU? Being pro having cake and pro eating it is an infantile desire, not an adult reality. I hope she will agree that the choice is in or out, not “in, out, shake it all about” and then rashly hope that something helpful will turn up for a country that has abandoned all rights, influence and power by leaving the EU.
I certainly agree with the noble Lord that voting to remain in the European Union is very much a patriotic decision. If we cast our vote in that way, we are recognising the power and influence we wield as our country in that European Union, and that we will have both the benefit of being in that Union and—because of what has been renegotiated—greater control of our destiny than we have been able to have up to now. The noble Lord is absolutely right about voting to leave. To vote to leave means to leave, and that will be it: it is about being either in or out.
My Lords, in my view the agreement reached by the Prime Minister is both substantive and valuable and I thank him for the efforts he made to achieve that. Can the noble Baroness perhaps cast some light on the views of the Mayor of London, who appears to think that if we vote to remain, that will be a green light for federalism? If that is so, why are all the federalist leader-writers on the continent rending their garments because of the agreement reached last week? Could he perhaps be wrong and, while we are at it, could he just understand that the motto of the European Union is not “E pluribus unum” but “United in diversity”?
I think I will leave the noble Lord to get into a battle about Latin with somebody else—I hope he will forgive me, but I will not engage in that. However, I am very grateful to him for recognising that what the Prime Minister achieved in Brussels was substantive and valuable. He is quite right about the reaction in Europe to what the Prime Minister has achieved. Unfortunately, I have only recently been given some quotes so I will not try to read them out, but clearly, the other leaders in Europe have been able to explain to their people that the UK has got itself a new status in Europe, with new terms. They have also acknowledged that, with the exception of the specific carve-out for the United Kingdom on ever closer union, the changes the Prime Minister has negotiated are to the benefit of Europe as a whole—this is not just about a benefit for the UK—and have acknowledged just how hard the Prime Minister pressed them during these negotiations. The noble Baroness referred to the scenes in Europe. I argue that they demonstrated just how difficult it was for the Prime Minister to get this better deal for the UK. On that basis, we can have every confidence in it.
My Lords, I am delighted that the Prime Minister has shifted to making the big, positive, patriotic case for our membership of the European Union; it is perhaps a pity that he has not been making that case over the last decade. Perhaps I may ask the noble Baroness, with a slight note of concern, how the Government will avoid the adverse consequences of what I might call the “be careful what you wish for” aspects. One is the special status she just talked about, which is in some respects a semi-detached status. How will we make sure that the UK truly is in the lead on EU policy areas such as security and climate change, where we want to be fully engaged? Secondly, although the red card is unlikely ever to be used, there is a danger that it could be used by national parliaments ganging up against the liberalisation of services in the single market in a protectionist way that would not be in our favour. Lastly, on the sovereignty angle—my noble and learned friend Lord Wallace referred to a constitutional court—if the UK Supreme Court becomes a constitutional court that can override Parliament, how will that increase British parliamentary sovereignty domestically?
The noble Baroness covered a lot of ground and she will forgive me for not dealing with all those points, in order to allow other noble Lords to get in. She suggested that the Prime Minister is only now making the positive case for Britain’s membership of the European Union; I disagree. It is also very important for us to acknowledge that there has been a great deal of frustration among the people of this country about the way Europe has operated for a long time. They have been frustrated at not getting the opportunity to have a referendum. The Prime Minister is being so positive about what he is putting forward to the United Kingdom because he has addressed people’s concerns through his renegotiation and is giving them the opportunity finally to have their say. That is an essential and important part of the message that we need to deliver.
On the noble Baroness’s other points, what is important about ever-closer union and what the Prime Minister was seeking to address in his renegotiation is that we now have the power—which we never had before—not to be involved in things we do not think are in Britain’s interests.
Does my noble friend agree that, however one regards the details of the deal, there can be no doubt that our right honourable friend the Prime Minister has opened up huge new opportunities for the reform of Europe as a whole? As we have reached this point, will she encourage her colleagues in government from now on to put maximum brainpower, energy and imagination into working with the other peoples of Europe to achieve the fundamental reforms the European Union desperately needs in the face of its present crises, and for which most of the people of Europe are yearning?
My noble friend makes an important point which the Prime Minister, I and others in government are very conscious of. He is quite right, and as I think I said to him when I repeated the previous Statement, this is not the end but the start of a process of reform. We want Europe to work in the best interests of all its peoples. It started reforming. It started changing. It started reducing some of the regulation and burdens that we know are not in people’s interests, but more needs to be done and we will very much support that.
Does the Minister agree that, important as the economic arguments are—and I am sure they will take pride of place in the coming months—we must not lose sight of the political and security arguments? Europe is facing challenges in the east from President Putin and in the Mediterranean area and Syria, and there are security problems between the nation states of Europe trying to unite to face those threats, so can she make sure that those arguments are heard? They are profoundly important to the stability of this country and of Europe.
I very much agree with the noble Lord. One of the advantages of being in Europe—and for us to make clear to the people of this country—is that we have led the way in some of the action that has been taken in the last few years to make sure that we are more secure, whether it is issuing sanctions against Putin or increasing the co-operation between member states on sharing information to defeat terrorism. That is a very good and powerful reason for us to remain in the European Union and an argument that we must continue to make.
My Lords, I declare an interest as the present chairman of Vote Leave. Is it not clear that the trivial and inconsequential changes that the Prime Minister has secured—subject to legal challenge, of course—fall far, far short of the fundamental, far-reaching reform which three years ago in his Bloomberg speech he said was necessary? Is it not clear that the referendum on 23 June will be about not whether we wish to remain in a reformed European Union but whether we wish to remain in an unreformed European Union, which, alas, it has proved itself to be? However, there is one thing that I welcome. In his Statement the Prime Minister has admitted—I think for the first time but, if not, it is the first time that I can recall—that the purpose of the European Union is to create full-blooded political union. That is clear in the Statement. However, he says that we shall not be part of it. Maybe we will not be but we will still be shackled to it and will have a quasi-colonial status—that is the closest parallel that I can think of. Is it not the case that the referendum on 23 June will be about whether we wish to be a self-governing, independent democracy?
As my noble friend knows, it always pains me to have to disagree with him, but I disagree in particular with his description of what the Prime Minister secured through his renegotiation in Europe. To describe it as trivial and inconsequential is just not accurate. My noble friend is right in that the Prime Minister acknowledges that the European Union is about political union, but he has secured that we are not a part of that—it is in a legally binding document. It is very clear that we are carved out of it. Furthermore—this point has not had much of an airing—not only do we have a United Kingdom carve-out but the document says:
“The references in the Treaties and their preambles to the process of creating an ever closer union among the peoples of Europe do not offer a legal basis for extending the scope of any provision of the Treaties or of EU secondary legislation”.
That is an instruction to the European Court of Justice and it will apply not just to us but to everybody else who is a member of the European Union and does not want to be part of a political union.
My Lords, I declare an interest as a board member of Britain Stronger In Europe. Does the noble Baroness agree that there is an overwhelming economic case for us to remain as a member of the European Union? Nowhere is that more the case than in Wales. Over recent years we have seen international companies from Japan, the United States and elsewhere locating there to sell to the European Union. Leaving the Union would destabilise that relationship and undermine our economy.
Yes, I agree with the noble Lord. We have to acknowledge the foreign investment that comes into this country and into Wales, a lot of which is from European Union countries. We benefit tremendously from our trade as part of that single market, and we would put that very severely at risk if we were to leave.
My noble friend has just talked about a legally binding document protecting our interests. How do the Government then deal with the question of the acquis communautaire and the fact that the so-called watertight legislative protection of our rights in the past has never survived challenges in the court? These matters have to be addressed if some credibility is to be given to this so-called legally binding document.
In the interests of time and the fact that many people want to get in, I shall say to my noble friend Lord Spicer what I said to my noble friend Lord Lawson. The Prime Minister has secured, for the first time ever, a return of powers to a nation state. That has never happened before. He has secured that and we can now take advantage of it—something that we have never been able to do before.
My Lords, last week at the Munich security conference the United States Secretary of State, John Kerry, expressed the hope of having a strong United Kingdom within a strong European Union. In the opinion of the noble Baroness, why should the United States attach such significance to our continuing membership of the EU?
It does so because it sees how influential we are in the European Union. It sees that we not only have an impact on the very important international and global issues of the day but bring a lot to what happens in the rest of the European Union. That is why the US wants us to stay.
I speak as a former European Commissioner. It is absolutely essential that we remain in the European Union, expressing our point of view and being able to judge whether something that has been put forward is in our interests. We can say what we like there. To say that we have no influence—an argument advanced by the noble Lord, Lord Lawson—is absurd. I speak from experience. You have to go through all the institutions of the European Union, not only the Commission, and eventually you end up with a compromise. That is not a dirty word. In my view, it is absolutely essential that 28 countries should perform like that and come to a reasonable decision. To experiment in the way put forward by those who oppose remaining in the EU would be absolutely absurd. In my view, membership of the Union is essential and we should have no doubt about that. We do have a voice.
It is important not only that we make the strong case for membership of the European Union that the noble Lord has outlined, but that we stress that we are confident in making that case because of the reforms that the Prime Minister has been able to secure. We must not underestimate people’s frustration with the European Union, and we were not happy with the status quo.
My Lords, first, perhaps I may just build on what the noble Lord, Lord Campbell, said. Should not the Prime Minister make more of the fact that it means a lot to countries dealing with the United Kingdom that we are part of the European Union? Countries such as India see the UK as a gateway to Europe and I do not think that enough is made of that. Secondly, perhaps I may build on what the noble Lord, Lord Howell, said. The Prime Minister talks about the best of both worlds. You can be a Eurosceptic, as I think I am—I hate the way that the European Parliament works and the fact that it has to go to Strasbourg every month, and I hate the gravy train, the waste of money and the fact that nobody I am aware of knows who their MEP is—and still believe that it is the lesser of two evils, rather than the best of both worlds. Does the Minister agree that it is probably better to stay in the European Union because it is the best of both worlds and the lesser of two evils?
Or you might say, “Better the devil you know”. Basically, I agree with the noble Lord: you do not have to be a raging Euro-enthusiast and to have been so for donkey’s years to support staying in the European Union. As I said to the noble Lord, Lord Kinnock, this is patriotic. We believe very much in the power and sovereignty of the United Kingdom, and we believe that by being in Europe we can have, as the Prime Minister described it, the best of both worlds. As to the point of the noble Lord, Lord Bilimoria, about making more of the way in which we are a gateway to the rest of Europe, I agree with him, and the Prime Minister is already making that case. We have four months to go and he will keep making that case. I hope that the noble Lord and others will help us in that task.
Does the Minister recall an interview given some time ago by Jacques Delors in the German newspaper Handelsblatt in which he said this:
“If the British cannot support the trend towards more integration in Europe, we can nevertheless remain friends, but on a different basis. I could imagine a form such as a European economic area or a free-trade agreement”?
Does not that show, without prejudging it, that there is an alternative available, or was Delors just completely wrong?
My noble friend is right to say that there is an alternative—of course there is an alternative. That is why there are two choices for the British people: to leave or to remain. The alternative—and it may be something like the Norway model—is not inconceivable, but it would not be without cost and is not something that we should walk blindly into without recognising that it brings with it its own disadvantages. We have to be clear what the alternative is. That is what the next few weeks and months will have to be about in this debate: if there is an alternative, what is it?
My Lords, can I follow up on the particular point that has just been raised and the excellent point that was raised by my noble friend Lord Hain? Since the Minister and I are on exactly the same side—enthusiastically, and for the first time ever, I think—can I ask her a favour? Will she go back to the Cabinet and say, “Let us find some way of requiring these people who are against the present arrangement to put forward their alternatives so that we can examine them in detail”? They need to be required to do that so we can see clearly what the alternative is. If the Cabinet can come up with some kind of arrangement for that, I will give it and the Minister three cheers.
It is for those who want to campaign to leave to come up with their arguments and the case for that. It is not for me, on the opposite side of the argument, to try to find a mechanism for them to do so; that is their responsibility. We will go through the process of formally designating the leave campaign and, as part of that process, I imagine that the respective group that is successful will be the one that the Electoral Commission feels has covered all the requirements set out for it.
My Lords, I am sure the Leader of the House will agree with me that the most important thing in the next four months will be to put the arguments—all the arguments—as fairly as possible before the British people. All the Front Benches in this House are for staying in and all the Front Benches in the House of Commons are for staying in. This afternoon, the Prime Minister confirmed that he is going to use the whole power of the Civil Service to campaign to stay in. Does the Leader of the House think that that is entirely fair and right, and should it be of some concern to our House?
On the last point that my noble friend makes, the Government have adopted a position and are not neutral on this. We are arguing to remain in a reformed European Union because we believe that that is in the best interests of the people of this country. But, ultimately, it is for them to decide. Like the noble Lord, Lord Foulkes, my noble friend is right to say that the people who would advance leaving have to make their case and be clear in their arguments. To be honest, the inclusion in the campaigns of some very significant figures—potentially from this House and from the other place; I do not know how everybody is going to vote—means that there will be a serious debate over the next few weeks. I think that that is a good thing.
My Lords, it would be entirely appropriate for the Government to make the case which they support for remaining in the European Union with all the strength at their command. The case for remaining within the European Union does not stand or fall by the details of the deal that the Prime Minister negotiated in Brussels at the weekend. Nevertheless, it is very clear from the Prime Minister’s Statement, which the noble Baroness the Leader of the House has repeated for us, that the deal tends much more to the substantial and significant, as was depicted by my noble friend Lord Hannay, rather than the trivial and inconsequential, as portrayed by the noble Lord, Lord Lawson. However, it is probably fair to say that the balance of the media comment and their portrayal of the deal has tended towards the trivial and inconsequential. Given that, will the Minister provide an assurance that the Government will spare no effort to get across to the British people the substantial and significant progress that the Prime Minister has made in persuading the European Union to accommodate the British position and that it does not remain within the Westminster bubble, as we have heard it described this afternoon?
I certainly think that the Government have a responsibility to be clear about what they are advancing and to communicate that directly to the people. But I also think that the media play an important part in our democratic process. Noble Lords have been arguing about other people making their case, and it is important as well that, through the media, people get to hear the arguments for and against. I would never stand at this Dispatch Box and criticise the work of the UK media.
My Lords, the noble Baroness the Leader of the House will be well aware that there is no doubt whatever that the people of our nation are safer in terms of terrorism and serious organised crime because we are part of the EU. We lead Europol and have the European arrest warrant and all sorts of things. At the grand strategic level of defence, there is no doubt that NATO is most important to us. However, does the noble Baroness agree that Europe is very important to our nation? We have twice saved its bacon in the last 100 years and there is no doubt that, at the moment, there are huge threats. If we left the EU, I think there would be a certain flakiness within it. Does the noble Baroness agree? This is a very bad moment for that to happen. Europe needs us and, if it becomes flaky, the risks from people like Putin and the southern flank would be huge. We need to bear these things in mind.
My Lords, will the Minister tell us how this pathetic deal is in any way the fundamental reform of the EU itself that we were promised? For instance, can she tell us how it has reduced the hugely undemocratic powers of the Luxembourg court and the European Commission? The Prime Minister tries to frighten us by talking about leaving the European Union as being a leap in the dark that will, for example, lose us our present access to the single market. Does the Minister accept that Europe sells us very much more than we sell them, that we have 3 million jobs exporting to them but they have 4.5 million jobs exporting to us, and that we are in fact their largest client? Does she accept that they need our free trade very much more than we need theirs? Can she tell us why that trade will not continue, because they will come running after us to have it?
No, I am afraid I do not agree with the noble Lord’s description of who benefits most, Europe or us, from the relationship. I shall not take up time rattling through all the statistics, but I say this to the noble Lord: in the end, it is about what is of greater benefit to all of us—to the UK and to the rest of Europe. As a trading bloc, we all benefit from the UK being in the European Union. It is not just about how we benefit in this country—although we do. As for the noble Lord’s questions about sovereignty, I refer him to what I said to my noble friend Lord Lawson. I really do disagree with what he says about that.
My Lords, is not the greatest achievement of the European Union, to which we have belonged since the 1970s, the fact that we have had 70 years of peace? After the two world wars Britain was financially at a loss. We lost our empire and we lost our ability to spend, and this is the whole purpose of the European Union being saved. If we left the European Union we would destabilise it, and that might lead to a break-up.
The noble Lord certainly puts a clear case for the European Union and for our remaining in it. Much as I agree with what he has said, there is something that cannot be repeated often enough, particularly for those who are undecided—and we must always remember that a lot of people are unsure of which way to vote. So although the noble Lord is right, we also need to emphasise that the European Union does not work quite as we want it to in all areas. That is why we have been renegotiating the terms, and we are now confident enough to advocate staying in.
My Lords, I declare an interest as a supporter of Vote Leave. Does my noble friend agree with me—she probably does not—that the real threat we face, and the huge frightening leap in the dark, would be if we now remained in Europe? Europe has seen that Britain is a bit of a paper tiger. A few years ago we were saying that we wanted fundamental and far-reaching reform. Then we asked for very little, and I am afraid we settled for a lot less. When Europe comes to implement the next treaty change and the Five Presidents’ Report, and as it heads for being an ever-tighter federalist superstate, will we not be ignored, mocked, sidelined and completely stitched up?
As my noble friend predicted, I do not agree with him. One area that I would point to in order to illustrate my disagreement is what the Prime Minister secured around economic governance. Again, I do not think that it has been properly understood yet how significant the protections that he has secured are—not just for our currency, but for the City of London and our financial services. I assure my noble friend that the other member states, and particularly the French President, were in no way shy about fighting hard to prevent us getting what we wanted, but we secured a good deal for Britain in the end.
Will the Minister convey to the Prime Minister the relief that we on this side of the House feel—indeed, our sincere congratulations—that he is beginning to put such an unequivocal and clear case for our membership of the European Union? Will she urge him, in the months that lie ahead, to put that case to the whole country, including Labour supporters and people of no party affiliation, and not just to conduct a desperate internal debate inside the Conservative Party?
I can certainly reassure the noble Lord that the Prime Minister will do exactly what he has just outlined. This is not about the Conservative Party; it is about the future of the United Kingdom. What we are doing here is what we believe is in the best interests of the people of this country.
My Lords, if the country votes out on 23 June, should not the first action the Government take be to repeal the European Communities Act 1972? That would enable negotiations to take place under Article 50. Secondly, is the Minister aware that earlier this month the original six leaders of the EEC came out and said that it was absolutely essential for Europe to proceed to ever-closer union, including fiscal union? In those circumstances, if Britain is not to be in that particular club, will we stop talking about being at the heart of Europe?
As I have already explained, what the Prime Minister has secured on ever-closer union means is that we, the United Kingdom, can be a member of the European Union in a way that properly reflects what we want from being a member. As the Prime Minister said in his Statement, we never wanted to be part of a political union, and now we have a legally binding agreement, which will be amended in the treaties, to show that we will not be part of an ever-closer union even if other members of the EU decide that is what they want.
My Lords, we are rightly told that Britain’s future is as a global trading nation. But often, on trade missions abroad, one would find that other EU member states such as Germany and France had been there before us. So will the Minister confirm that membership of the European Union is not an obstacle to fulfilling those ambitions, and that we should not use our membership as an excuse for failing to tackle problems in our own performance?
My noble friend makes an important point. I very much agree with him that we have a responsibility always to get the best for Britain, whether we are acting independently and unilaterally or as part of the European Union, and we should never use the European Union as an excuse for our own inefficiencies or inadequacies.
Committee (3rd Day) (Continued)
Amendment 74 not moved.
Clause 19 agreed.
75: After Clause 19, insert the following new Clause—
“Non-budget expenditure and the Scottish Consolidated Fund: further provisions
Before the end of the first month of each financial year, the Secretary of State must lay before Parliament a full record, including minutes of meetings and Ministerial correspondence, of discussions between the Secretary of State, the Treasury and Scottish Ministers relating to the non-budget expenditure to be voted by Parliament authorising the payment of grants to the Scottish Consolidated Fund for that financial year.”
My Lords, Amendment 75 provides for the process leading to annual settlement between the Treasury and Scottish Ministers of the block grant to Scotland, to the Scottish Consolidated Fund. In tabling the amendment, we focus on transparency and accountability.
I will also speak to Amendment 75A, in the names of the noble Lords, Lord Kerr and Lord Turnbull, on borrowing powers. They may already be in place for all we know and I would like the Minister to enlighten us on that.
Amendment 79F in the name of the noble and learned Lord, Lord McCluskey, seeks the publication of the fiscal framework within 30 days of the Act being passed, if not before. Amendment 79G would expand the role of the Scottish Fiscal Commission, which is welcome, and Amendment 76 in the name of the noble and learned Lord, Lord Wallace, establishes the commission as per the recommendation by the Scottish Affairs Select Committee and the need to review the fiscal framework at least every five years. For that, we need a timetable and we ask: why is a review needed?
The Joint Exchequer Committee, chaired by the Chief Secretary to the Treasury, Greg Hands, has met 10 times already. It has been clouded in secrecy and we have heard already this afternoon about the need to lift the veil on that, particularly on the area of the sticking points. Up to this weekend, there was a daily, unattributed briefing from the Scottish Government, which was largely negative and unspecific in tone, but nothing from the UK Government, for which they should be commended. But that highlights the problem raised by the Economic Affairs Committee, which is that nobody knows what is going on. We need a deal securing Barnett because the powers that are being given to the Scottish Parliament are too important to walk away from. If I have one message for the Minister, it is that we cannot down tools at the moment.
We have had artificial deadlines, the latest being Valentine’s Day, or 14 February. This side is telling the Minister to negotiate right up to the end—to 23 March if need be. The powers that the Scottish Parliament will receive are without parallel elsewhere. Keep in mind that the Scotland Act 2012 devolved income tax, stamp duty, land tax and landfill tax, established Revenue Scotland and provided the Scottish Parliament with borrowing powers. Smith has now added income tax, with unrestricted power to set rates and thresholds for tax on non-savings and non-dividend incomes. There is also the receipt of the first 10% of the standard rate of VAT. If the Scottish Government grow the economy, the extra revenue coming from that will be for the Scottish Government and Scottish people alone, and we must not forget the aggregates levy and the airport duty tax.
The income tax that has been devolved is £11 billion. The VAT generated will be, as I mentioned earlier, for the Scottish economy alone, so Smith will result in the amount of revenue that the Scottish Parliament is responsible for being raised to double the amount that it has at the moment, from £8 billion to £16 billion, with an extra £5 billion in VAT revenue. Together, those revenues will account for more than half of the Scottish Government’s annual budget and around 40% of all revenue raised in Scotland.
The question that is still pertinent for the Joint Exchequer Committee is: how do we adjust the block grant to take account of the devolution of tax and spend powers? The Scottish Affairs Committee’s report, which was excellent, stated that Smith’s unanswered question, which we all agree with, was how to index the adjustment to the block grant so that the principle of no detriment and taxpayer fairness is satisfied. That question is unanswered at the moment.
Amendment 75 has to be seen in such a context, where transparency and accountability should be the primary considerations. On transparency and accountability, borrowing is extremely important, as was mentioned in the amendment of the noble Lord, Lord Kerr. Dr Angus Armstrong said in his evidence to the Scottish Affairs Committee that the question of Scottish borrowing powers is perhaps the most important in the whole debate. In that regard, we support the amendment of the noble Lord, Lord Kerr.
Let us remind ourselves of the capital borrowing powers, which are currently £200 million per year with a £500 million cumulative ceiling. It would be helpful, as the Scottish Affairs Committee recommended, if a prudential capital borrowing regime were introduced and put on a statutory basis. We are mindful that the Scottish Government can borrow from the UK Government, the National Loans Fund and commercial lenders, and can issue their own government bonds. That is important as the bedrock because the National Loans Fund allows the Scottish Government to borrow on very favourable terms. If the Scottish Government can find even more favourable terms, they can go there, but the bedrock is the National Loans Fund. Again, the Scottish Affairs Committee asked for a specific limit on current capital borrowing to be set and for the criteria on which that limit is based to be published. We agree with those recommendations completely.
The amendment in the name of the noble and learned Lord, Lord Wallace of Tankerness, asks for the establishment of a commission, which is another recommendation of the Scottish Affairs Committee. Therein, the need for transparency and independence is essential. We thought a number of weeks ago that the Scottish Government were going along with that line of independence when the Finance Committee under the chairmanship of its convener, SNP member Mr Gibson, said,
“we are strongly of the view that not only should the Scottish Fiscal Commission be independent, but it is vital that it is perceived to be independent. That is why we are calling for the Bill to be amended to strengthen the Commission’s role and to give it responsibility for producing the official forecasts”.
Only a month later in the Scottish Parliament, the Scottish Government reversed their view on that issue and Mr Gibson did not fulfil that cross-party recommendation from the Finance Committee. The need for a Scottish fiscal commission to be given responsibility for setting the finance and the forecast that the Scottish Government budget is based on is hugely important. We ask the Minister to look at that issue again.
We should remind ourselves of today’s report from the Treasury Committee in the House of Commons, which secured, under a freedom of information request, emails from the Treasury to the Office for Budget Responsibility. There is a perception that the Government were leaning on the OBR to ensure that the wording in the terminology was changed to favour Her Majesty’s Treasury. I made that point a number of weeks ago in this Chamber when the Chancellor of the Exchequer found £30 billion behind the sofa and the OBR came up with that particular figure. I said then that it was important for Robert Chote and the OBR to underline its independence. If trust in the statistics is questioned at all, trust in the whole of government also crumbles. What applies for the Treasury must apply for the Scottish Parliament, and when we are starting afresh with the Scottish Parliament, the need to underline that independence is really crucial.
Amendment 79G, tabled by the noble and learned Lord, Lord McCluskey, is also crucial because it asks for the independent scrutiny of the public finances. That recommendation by the noble and learned Lord was preceded by an article he wrote in the Herald a number of weeks ago, for which I commend him. It was an excellent article. From what we have heard today and from what the noble and learned Lord, Lord McCluskey, has proposed, it is clear that the scrutiny that we are giving the Bill is happening only in this House; it is not happening elsewhere. Therefore, the article by the noble and learned Lord, Lord McCluskey, and the amendments have to be taken very seriously.
The Minister presented us with the letter from the Chief Secretary to the Treasury, Greg Hands, at 1 pm today. I commend the Government and the Chief Secretary for that letter, but we were rather disappointed to receive so late in the day such a detailed letter, which we have had insufficient time to scrutinise. We welcome the fact that it tackles the thorny issue of Scotland’s population growth and possible disadvantage to Scotland’s revenues if its population grows more slowly than in the rest of the United Kingdom. However, the population in Scotland will grow more slowly than in the rest of the United Kingdom because—and the historian, the noble Lord, Lord Forsyth, can correct me here—it has been doing so since the very date of the Act of Union, and it will continue to do so. That needs to be looked at and therefore we commend the Government for doing so.
I refer to paragraphs 13, 14 and 15 in the letter, which tackle this issue. Paragraph 14 is very clear that, using the Scottish Government’s own forecast, Scotland would benefit from around £4.5 billion of growth in taxes from the rest of the United Kingdom in the next decade alone if the proposal that the Chief Secretary to the Treasury put to the Deputy First Minister were accepted. Paragraph 14 also states that if the Scottish Government grow the economy then Scotland will keep those revenues. Paragraph 15 states that the proposals offer a fair deal for taxpayers in Scotland; they are fair for taxpayers in the rest of the United Kingdom; and, to use a Clydeside expression, they are built to last. If that is the case, the only thing missing is the Scottish Government’s response. Why are they not agreeing that proposition? I ask for the veil to be lifted a little today. Regarding paragraph 15, given the short notice and the cursory examination we have had of it, it is important that the Minister responds to this.
Logic dictates that we need everything to be cleared up today, and that was argued very skilfully by the noble Lord, Lord Forsyth. However, in this area logic is not everything. There is political reality, and the political reality is that we must encourage this process in every way possible. That is why the Labour Party has bent over backwards to be helpful to the Government over the past few months and, even today, will provide no impediment or give any hint that it will delay or obstruct the Bill. We have a fractured union. That was expressed in the report by the Select Committee on Economic Affairs, very skilfully chaired by my noble friend Lord Hollick. Therefore, we do not wish to add even one iota to any further cleavage in that area.
The UK in its present form is not an old state, but it is a state comprising ancient nations. We have to be very sensitive to that. I mentioned political reality. An article in the Daily Record last Friday by a good friend of mine, Professor Jim Gallagher, looked at the second aspect of no detriment—namely, taxpayer fairness—but the headline for the article was “sleight of Hands”, obviously a play on the name of the Chief Secretary to the Treasury. Hopefully, that gives Members an insight that there is a grievance mentality, and it is something we must be very sensitive of. In particular, as an unelected Chamber we must do everything to be positive. That is why, in moving Amendment 75 and supporting other amendments, we hope that the Minister makes progress. As the noble Lord, Lord Forsyth, said, if that progress is to be made before Report then we would welcome the information being put in the public domain as soon as possible. In that spirit, I beg to move.
I rise to speak to Amendment 75A. I was in meetings in Glasgow this morning and came in during the earlier debate on the amendment to the Motion in the name of the noble Lord, Lord Forsyth of Drumlean. I heard his rousing peroration; I agreed with it. Had I been in the Chamber in time, I would have wished to speak in support of it. I agree with his “sunrise” Amendment 79H, which I guess he will speak to in a moment.
Mine is a much more mundane matter. My amendment concerns borrowing limits. I find that one of the difficulties of handling the Bill in the absence of the fiscal framework is not so much dealing with what is in the Bill as understanding why things are not in it. I do not know why no provision or regime for borrowing is set out. That is why my amendment proposes the principles for such a regime. It is a key element of the Smith commission report that there should be enhanced borrowing powers for the Scottish Government, and I agree with that. The core of Smith is paragraph 95, where the fiscal framework is discussed. The most crucial element for me, apart from indexation, is the borrowing limits—how is borrowing to be done?
We discussed this in the Economic Affairs Committee, and the report of the noble Lord, Lord Hollick, brings out that the committee did not believe that anybody would believe a no bail-outs rule. The committee firmly believes that it is necessary to be seen to stand behind Scottish borrowing. Scottish borrowing will be cheaper. It is clear to all that the United Kingdom Government stand behind it. The clearest way of spelling that out is to have a provision on borrowing in the Bill. I do not argue that we should set out specific limits in the Bill—that, clearly, is a matter for subordinate legislation, as my amendment suggests. However, it seems clear that we must set out the two categories of borrowing in the Bill, that they will be subject to ceilings, and that these will be negotiated and agreed in consultation with the Scottish Government but will be set by Her Majesty’s Treasury. That seems practical and commonsensical. It makes for cheaper borrowing for Scotland, which is, of course, also cheaper for the United Kingdom, since the United Kingdom will stand behind the borrowing.
If the borrowing is properly conducted, it will be as part of the United Kingdom’s programme. It will get slots in the programme if the United Kingdom wishes to issue bonds. I have no idea how big the increases needed are and what the current limits on Scotland’s borrowing powers are, and the Smith commission does not help a great deal on that. It states that,
“to reflect the additional economic risks, including volatility of tax revenues, that the Scottish Government will have to manage when further financial responsibilities are devolved”—
I agree with that—
“Scotland’s fiscal framework should provide sufficient, additional borrowing powers to ensure budgetary stability and provide safeguards to smooth Scottish public spending in the event of economic shocks, consistent with a sustainable overall UK fiscal framework”.
That is clearly true, but it does not help to define what “sufficient” means. I do not know whether this is a matter of controversy in the current fiscal framework talks, but I think we should be told. Is it agreed that there should be ceilings on Scottish borrowing? Is it agreed that that level should be set by the United Kingdom Government in consultation with the Scots? Has that level been set; that is, has it been agreed?
This is talking about current borrowing, but I must say that I think there will be the need for a considerable increase. My view is that “sufficient” is going to be quite a lot more than the Scots now have, although it is inconceivable that it would be sufficient to deal with ensuring “budgetary stability” and providing,
“safeguards to smooth Scottish public spending in the event of economic shocks”.
Let us remember that the oil price on Scottish referendum day was $115 a barrel. That is quite an economic shock, and borrowing in the markets is not a credible way of dealing with it. However, there is a common-sense case for a large increase because of the seasonality of tax income and the need to smooth over the year. That element is clear, but there could be controversy about what the level is, in which case I think we should be told because transparency does matter.
The second kind of borrowing, also covered in my amendment, is borrowing to support capital investment consistent with the sustainable overall UK fiscal framework. I agree that that makes sense. There will be public investment which should be financed by the markets, but I do not know whether that is controversial for Her Majesty’s Treasury. I do not know whether the UK Government buy that bit of Smith, or whether there has been a discussion about how much. I do not know whether this is one of the reasons for the hold-up on the fiscal framework, and I think we should be told.
I wonder whether the noble Lord could help me. When he talks about setting a limit on borrowing, are we starting with a new baseline or is it assumed that the existing level of debt has part of it somehow imputed to the Scottish Government, so that we then start from that baseline?
I hope that the noble Lord, Lord Dunlop, knows, but I do not think that any of the rest of us knows what this means in the Smith report. Alas, the noble Lord, Lord Smith of Kelvin, is not here today to tell us.
It could be argued that there is no need to have any of this in the Bill, and I would like to hear from the Government whether that is their view. After all, they could have brought forward a Bill which said nothing about borrowing, despite the fact that it was a key part of paragraph 95 of the Smith report covering the fiscal framework. If it is their argument that there is no need to say anything about borrowing, I want to know why. As I said at the start, I believe that borrowing will be cheaper for Scotland and therefore better for the United Kingdom and Scotland if it is clear beyond doubt that the United Kingdom stands behind it. If it does, it is then clear that the United Kingdom has the right and the duty to set limits on that borrowing. I repeat that those limits should not be in the Bill. They should be set by affirmative resolution of both Houses, but the provision to require that should be in the Bill, and that is why I have tabled Amendment 75A.
My Lords, I shall speak to Amendment 76. The points made by the noble Lord, Lord Kerr of Kinlochard, beg questions which I am sure the Minister will seek to answer in terms of the Government’s understanding of how the Scottish Parliament’s borrowing powers will operate after the passage of this Bill. The Scotland Act 2012 also contained borrowing provisions and I would be interested to know what the dynamic between them is and how they will fit together. This is an important part of the overall arrangement because specific borrowing limits might not necessarily appropriately appear in statute. It is therefore important that the Committee be made aware of what is in the Government’s mind.
The amendment I have tabled with my noble friend Lord Stephen seeks a review of the fiscal framework. We tabled it some time ago, perhaps even before the Scottish Affairs Committee came up with a similar recommendation. That was done on the basis that, by the time we reached it and could debate it, the fiscal framework would have been published. Noble Lords will remember that even at Second Reading there was much concern about the fact that we did not have any detail on the fiscal framework. There is a recognition that however much work goes into this—I do not dispute the good will that the Minister has indicated on a number of occasions—there is a possibility, I put it no stronger than that, that it might not actually be perfect. It therefore makes sense that somewhere down the line there should be a review of how the fiscal framework is operating. We say that it should be given at least four years to run, but not much longer. We also propose that this should not be done by one Parliament or the other. In fact—although it is probably quite a novelty, we should not be scared of that—it should be reviewed by a committee that involves Members of the Scottish Parliament and of both Houses of the United Kingdom Parliament. A report should be published with recommendations that are submitted to both Houses of the UK Parliament and the Scottish Parliament. Quite simply, this tries to ensure that once the fiscal framework has had an opportunity to operate, a better judgment can then be made of how well it is living up to expectations.
I do not want to repeat all the points made earlier by my noble friend Lord Stephen in the debate on the amendment to the Motion moved by the noble Lord, Lord Forsyth, but it is absolutely right to talk about transparency. For example, the First Minister of Scotland released a letter to the press in which she set out the Scottish Government’s view of the no detriment principle, but we do not have a clue about the United Kingdom Government’s view. Anyone who knows the workings of the Scottish Government and the Scottish National Party knows that they are very adept at this. They will get in first so that their definition of no detriment suddenly becomes the currency. The United Kingdom Government will then try to come up with a different definition, but they will be told that they are selling out, and because the Scottish Government got in first and have defined the terms of the debate, that puts everyone else on the back foot. That is why we have been arguing both privately and in the Chamber with Ministers that we need far more information and that the Government need to be much more transparent—not necessarily about the nitty-gritty, small-print detail of where they are at any particular moment but about what they understand by the no detriment principle, for example.
An amendment in this group from the noble and learned Lord, Lord McCluskey, also provides for the fiscal framework by way of a Scottish fiscal commission, modelled on the Office for Budget Responsibility. It is a very worthwhile idea, which the Scottish Parliament has been looking at. However, it falls short of the independence of the OBR that we would like to see, although the noble and learned Lord does seek to address that. Indeed, paragraph 16 of the letter we received at lunchtime today from Mr Greg Hands, the Chief Secretary to the Treasury, to Pete Wishart MP, the chair of the Scottish Affairs Committee, indicates that, “All elements of the fiscal framework are being discussed with the Scottish Government, including the important recommendation of the Scottish Affairs Committee that there is a clear consensus that forecasting should be done by a body independent of Government. We agree with the conclusions of the Finance Committee of the Scottish Parliament and recommend that an enhanced Scottish Fiscal Commission be made responsible for forecasting in Scotland”. Perhaps the Minister would care to elaborate on that and how he sees it developing.
As we move forward on fiscal arrangements for Scotland, Wales and Northern Ireland and on fairness for the whole United Kingdom—including England and its cities and regions—what we probably ultimately need, which is beyond the scope of this Bill, is an independent body, akin to those operating in other federal countries such as Canada and Australia, which tries to take an objective view of how resources should be fairly shared among the constituent parts. I admit that we are not quite at a federal position yet—it is what my party aspires to—but even before we get there, there is a very strong case for an independent body that would be able to examine such issues.
It may be beyond the scope of the Bill, but it would be good to think that some thought is being given within government to how these longer-term issues may be addressed. Although we are focusing on Scotland and the rest of the United Kingdom and that particular fiscal framework, there is no doubt that, whatever is agreed and whatever position is reached, there will be implications for Wales, Northern Ireland and the cities and regions of England. The sooner we start examining how we can get a more independent body that will try to ensure fairness between all the constituent parts of the United Kingdom, the better. In the mean time, a review of whatever the present negotiations produces four or five years after it becomes operative is surely a very modest proposal.
My Lords, I shall speak to Amendments 79F and 79G. I have in my hands substantial notes. They were designed to enable me to present an elegant speech full of witticisms, insights and—though I did not realise I needed the permission of the noble Lord, Lord Forsyth—even some political comments. I took part in 1978, from the Front Bench, then occupied by a Government of a different hue, in the first Scotland Bill. I have had a long and lasting interest in these matters. Since I prepared this speech on 13 January much has happened. The field which I hoped to plough has become a dustbowl—so many people have walked through it, including in these debates today.
I shall try to keep my comments short, in light of the well-developed arguments, but clearly the fiscal framework has not been resolved. People have alleged that that is because of the complications. I do not believe that for one second. The civil servants involved are highly skilled and competent and have resolved all the complications. The difficulty is that there is a chasm between the UK Government and the Scottish Government in relation to a simple matter: how much? How much is the UK taxpayer going to have to provide to win the approval of the Scottish Government and, secondarily—the point raised by the noble Lord, Lord Kerr—in relation to borrowing powers? That is also very important.
As has been pointed out, the Smith commission report recorded that the representatives of five Scottish Holyrood parties had agreed the devolution of certain powers. Very well. It also said, at paragraph 95:
“Barnett Formula: the block grant from the UK Government to Scotland will continue to be determined via the operation of the Barnett Formula”.
That is not entirely surprising, considering the make-up of the Smith commission. Turkeys do not vote for Christmas. The members were voting for a continuation of the Barnett formula. The report also contained what was plainly a compromise, namely the so-called no-detriment principle in two manifestations, the first of which is vaguely comprehensible and the second of which is certainly not.
The Scottish representatives on the commission—and they were all Scots—were voting in favour because the Barnett formula was plainly very favourable to Scotland and everyone was afraid of the needs test. In fact, noble Lords who have read John Swinney’s evidence to the committee of this House on the Barnett formula in 2009 will know that that committee tried to pin him down on that. He would not answer, but simply kept repeating, “We want full fiscal autonomy”.
Yes—that was, of course, part of the purpose of the article I wrote for the Herald, which the noble Lord, Lord McFall, was good enough to refer to.
Plainly, the Scottish Government were perfectly entitled to try to secure the most favourable deal they could. It was they who created this timetable that we are being asked to stick to. The timetable was to enable them to go to the electorate in May and present themselves as having achieved a great victory. They created the timetable and we are all supposed to bow to it. I just wonder about that. In relation to the rush to get it through, it also puzzles me that John Swinney is so anxious to get his hands on extra tax powers because, when the Labour Party in Scotland proposed an extra penny on income tax, he replied, “Over my dead body”. Now, we would not wish any harm to the Deputy First Minister, but he has obviously no intention of exercising these tax powers, so what is the rush? It is all to do with the electoral process of the Scottish Government.
Even the devolution of a minor thing, such as the introduction of air passenger duty, could turn out to be worth nothing because, as was pointed out very widely at an earlier stage of the passage of the Bill, Newcastle Airport is going to suffer considerable detriment if all the Scots in the north of England flock to Prestwick, Glasgow, Edinburgh or even further north to take advantage of reduced prices. They are going to suffer a detriment and that detriment is going to have to be met by whom? By the Scottish taxpayer. In other words, the Scottish taxpayer is going to have to find the money to send to Newcastle that has been saved by whom? By the airlines. It is bizarre. The whole thing is slightly mad.
If I remember correctly, the Chancellor of the Exchequer appeared before the Treasury Committee in January 2015 and, asked about the no-detriment principle for Newcastle and Manchester airports, said it did not apply to them. He pointed to the fact that in the previous year Newcastle Airport had increased its traffic by 12% and Manchester Airport had increased its traffic by 3%, so there was no problem whatever. So we are all in the dark yet.
I fully accept what the noble Lord says; however I argue that there is room for argument as to whether there is a detriment to Newcastle. I just do not know. The Select Committee on Economic Affairs said, as has been quoted already by the noble Lord, Lord Forsyth:
“We agree … that the second no detriment principle is unworkable. It is a recipe for future disagreement”.
The only problem is the word “future”. It is a recipe for constant disagreement, including future disagreement.
My Amendment 79F includes the provision that the new fiscal framework should be published in full. That is very important. The noble Lord, Lord McFall, mentioned that we have to face political reality: I would not challenge his judgment on that, but I add something else. We also have to face the truth—not just the truth but the whole truth—in relation to the fiscal agreement. We need to know the background and I am sure that if it is not published in full, as it should be, then various means can be found, whether in debate here, by means of questions or by freedom of information requests, to discover the full background. What were the people bargaining about? What was the cause of the delay? My guess is that the cause of the delay was what I suggested before—namely, that they could not agree on amounts of money, so the complications are not real complications but deep disagreements.
As I mentioned in the article to which the noble Lord was kind enough to refer, lying behind these discussions and the problem for the Scottish Government is the following. If the present discussions about the fiscal framework reveal, as I suspect they will, that Scotland needs a substantial subsidy from the taxpayers in the rest of the UK—or at least in the rest of Great Britain—that is a demonstration that Scotland cannot exist without such a subsidy. Therefore, the economic case for independence, which was so bizarre in the original White Paper by the Scottish Government, disappears. In other words, we now know, because of the discussions going on—although we do not know the detail—that the economic base in Scotland is such that the tax yield will be very disappointing. The Barnett formula would, of course, disappear on independence and the oil bonanza confidently predicted at the time of the referendum campaign will continue to prove to be a mirage.
As I say, events have perhaps rather overtaken this amendment but it is time that the Scottish electorate were told the whole truth about the Barnett formula. That is part of this amendment. I have read with great care, and more than once, the proceedings of the Lords committee on the Barnett formula. It was a very powerful committee and the questioning was extremely good. The witnesses who gave evidence were of the highest quality and the lesson of that has to be that if we want to move to a just and fair system, we ought to move to one which is not based on a formula that was never invented for the long term but rather as a device to get through a problem existing in the midst of an economic crisis. We should move to a system based on need in terms of welfare and other things. It is time we were told the truth about that. That is the purpose of the second part of this amendment—proposed new subsection (2).
Detriment is said to be a principle in the Smith commission report. I am afraid that I do not recognise it as a principle. The principle that underlies public expenditure should in my view be the question of need. Public expenditure in different regions should be determined largely in relation to need. It is not a straightforward matter and I need not discuss the difficulties involved in that; we are all well aware of them. Therefore, the information that I seek is to give people the truth. The truth is more important than the political reality.
I can deal briefly with the other matter relating to Amendment 79G. The noble Lord, Lord McFall, has already referred to this and I simply adopt what he said. It is vital in Scotland that we have independent scrutiny of, and reports on, economic forecasts. One of the problems with the referendum campaign was that the government White Paper had some very dodgy statistics and forecasts and the Opposition did not question it sufficiently. In a sense, the Government got away with what they said. We need an independent body. I have suggested the model of the Office for Budget Responsibility. It is not ideal but it is the best model that we have. I deal with the question of independence in the way set out in the amendment. I do not pretend that this is an ideal way to amend the Bill, but the ideas here are such that the draftsmen could with ease convert this into a workable amendment.
The Smith commission talked repeatedly about strengthening the Scottish Parliament. One of its principles was strengthening the Scottish devolution settlement and the Scottish Parliament within the UK, including parliaments’ levels of financial accountability. The commission referred repeatedly to independence. I need not quote all the relevant paragraphs. As the noble Lord, Lord McFall, pointed out, the Bill which was before the Scottish Parliament—the Scottish Fiscal Commission Bill—contains a clause which states:
“In performing its functions, the Commission is not subject to the direction or control of any member of the Scottish Government”.
However, the Bill declines to give the commission responsibility for providing independent assessments and forecasts for the Scottish economy. So if they are not made by an independent commission, who makes them? The Scottish Government make them.
Kenny Gibson was cited, but it is worth doing so again. He was the SNP chairman who expressed the unanimous view of the committee:
“We are strongly of the view that not only should the Scottish Fiscal Commission be independent, but it is vital that it is perceived to be independent. That is why we are calling for the Bill to be amended to strengthen the Commission’s role”.
Those who want to read the detail of this will find it in an article in the Scotsman of 11 February by Bill Jamieson. When the vote came, the SNP people voted down that proposal by four votes to three. Bill Jamieson’s article in the Scotsman drew attention to North Korea. I think the SNP is more like a North Korean drill squad: if a commander says, “Do a backward somersault”, the words are hardly out of his mouth before they are back on their feet, having done a backward somersault. It is a classic example of the exercise of this rigid discipline within the SNP. If we do not have an independent fiscal commission, we are in trouble.
We have had enough talk of dodgy dossiers and I have had enough of reading out my notes. I hope that I shall move these amendments in due course.