Skip to main content

Scotland Bill

Volume 592: debated on Thursday 30 July 1998

The text on this page has been created from Hansard archive content, it may contain typographical errors.

8.30 p.m.

House again in Committee on Clause 61.

Page 27, line 6, at end insert—

("( ) No payment shall be made under subsection (2) unless the Secretary of State is satisfied that appropriate rules have been made under section 66(1) for each of the purposes described in that provision.").

The noble Lord said: In moving this amendment, I wish to speak also to Amendment No. 275C.

These amendments refer to Clause 61, which deals with the Scottish Consolidated Fund. We have moved away from the discussion of how it will be arrived at—the actual total—and are moving into what should be done with it. As the Bill says, the Secretary of State will make payments into the fund out of money provided by Parliament. Amendment No. 275B makes clear that no payment should be made unless the Secretary of State is satisfied that all the proprieties in Clause 66(1) are in place.

These proprieties are that proper accounts should be kept, that the Auditor General for Scotland should ensure that the funds are being properly spent on proper purposes, and all the like things that go with proper financial control. We will come to that in greater detail later. By the nature of things we have come to it before the main portion of this matter, which comes in Clause 66.

I am suggesting that the Secretary of State should be satisfied that all these proprieties are in place. Why the Secretary of State? Because he is the man who is handing out the money. He is the man or woman who is part of the Government which will raise the money, so he has some responsibility for its spending. By that I mean not how it is spent but that it is spent properly; that proper accounts are kept and that it is looked after properly.

Amendment No. 275C states that no payment should be made by the Secretary of State unless he has a report on the expenditure proposals. This is necessary not so that he can control them or double guess them, but so that he can lay a report before Parliament prior to Parliament voting the supply. At present, I think that the detailed supply estimates that go to the Scottish Office cover some 10 Votes and 73 line items.

We have to accept that the other place will have to continue to vote supply. They will, I assume, be able to ask questions about that vote. We cannot ask the other place to just vote £14 billion and ask no questions about how it is being spent or whether it is being properly spent. We cannot expect the House of Commons and its Public Accounts Committee simply to rubber stamp the sums that are being sent to Scotland. There has to be an accountability for the money. I suggest that it must remain with those who raise the money. They must therefore have some detail.

As the Bill is drafted, the Secretary of State is just about a postman. He picks up £14 billion from the Treasury and passes it on to the Scottish executive. Amendment No. 275B would hold the Secretary of State to account if there were no proper accounting or auditing rules. I am not interested in whether or not it has made a decision to spend more on health or less on education, or whatever decisions they take about money. I am concerned about the accounting procedures and the auditing rules. The House of Commons needs this information in order to judge; it can only get it from the Secretary of State; and he can only get it from the Scottish parliament.

These two amendments are suggested ways by which we might link the Scottish parliament and executive into the House of Commons and into the monitoring that the House of Commons does, through the Comptroller and Auditor General and the Public Accounts Committee, of the amount of money spent. Although I will try other methods, the only person available to make sure that the proper accounting and auditing procedures are in place to satisfy the House of Commons before it dishes out £14 billion, is the Secretary of State. I beg to move.

Amendment No. 275B is designed to ensure that the Secretary of State is satisfied that appropriate arrangements are in place for accounts and audit matters before he makes any payments to the Scottish Consolidated Fund.

I agree—particularly as a former member of the Accounts Commission for Scotland—that it is important for the parliament to legislate to put in place its rules for accounts and audit as early as possible, but it must be for the parliament to decide for itself what the proper arrangements should be, subject to the requirements in Clause 66. It would not be appropriate for the Secretary of State to decide whether these arrangements are proper.

As well as that, it is also important that there is a smooth transfer of audit responsibility from the current arrangements for the Scottish Office to the new arrangements provided by the parliament. That will be all the more essential as there is to be a transfer of functions during the course of a financial year.

The transitional provisions that the Government will bring forward under the Bill will deal with this important point and set out rules for the transitional period until the parliament has put in place its own legislation under Clause 66, which it is required to do. We expect this to be in place for the financial year beginning 1st April 2000, but if it is not the transitional arrangements will continue. With this reassurance, I hope the noble Lords will withdraw this amendment.

Turning to Amendment No. 275C, this suggests that the other place should receive a report of the spending proposals of the executive before it votes the supply for the grant the Secretary of State will make to the Scottish Consolidated Fund.

The amendment is very specific. It states:
"The Scottish Executive has submitted to the Secretary of State a report containing particulars of the expenditure proposals to which the payment relates".
So it is asking for the fine details of the Scottish executive budget. That would amount to the UK Parliament being asked to approve the Scottish parliament's spending proposals. That is at oddsfundamentally—with the whole essence of devolution. The allocation of resources, within the overall budget, is quite clearly a matter for the parliament. Indeed, it is also a matter for the parliament whether or not to vary the amount of that budget, upwards or downwards, using its own tax raising power.

The UK Parliament will continue to have a strong locus in that it will grant, by the normal means of approving Estimates, the sums to be paid by the Secretary of State into the Scottish Consolidated Fund. There are also provisions in relation to the accounting and auditing arrangements of such sums paid to the Scottish Consolidated Fund. Under Clause 62, rules will have to be made by or under an Act of the Scottish parliament in relation to payments out of the Scottish Consolidated Fund; and under Clause 66 in relation to accounting and auditing arrangements. It is right and proper that these matters should be for the Scottish parliament itself. Indeed, I believe that to accept the noble Lord's amendments would provide a recipe for ongoing friction between the two parliaments as well as cutting across one of the key features of devolution—that the Scottish parliament makes its own decisions in relation to devolved matters.

The noble Lord assumed that the other place could ask questions when it came to voting supply for the Scottish parliament. The theoretical position is clear. The answer is yes. However, the proceedings are purely formal in a way and I think that the convention will quickly develop that it would not be appropriate for the other place to question the details of the budget of the Scottish parliament. If we were to get into the position of detailed questioning in relation to the granting of supply, we would get very much into second guessing, which would be a recipe for friction and conflict between the two parliaments.

I hope I have said enough on the first amendment to indicate that there is a safeguard in the transitional arrangements which will be required to ensure proper auditing and scrutiny of accounts and that those transitional arrangements will remain in force until proper arrangements are put in place by the Scottish parliament. On that basis, I hope that the noble Lord will feel able to withdraw the amendment.

A point comes to my mind which the Minister may like to straighten out now. Does the Bill allow the United Kingdom Parliament to withhold supply from the Scottish parliament?

At the extreme edge of theoretical possibility, the answer must be yes. But I cannot imagine a situation where that would even begin to come into the realm of practical politics.

That means that the devolution scheme is based on good will.

I understand the points that the Minister has made to me. It is something of a dilemma but it is a quite difficult dilemma to resolve. The other place will be raising the money and voting the supply, but someone else will be spending it. In the other place Back-Bench Members can, by using various methods, raise questions when they vote supply. Normally, the debates are of a fairly general nature. Members, in the usual way that the other place works, take part in a raffle to see who should be allowed to speak. They can speak about any matter, as long as it falls within the broad aspects of whatever government spending is being voted.

I am in some difficulty when it comes to accepting the Minister's point that these matters will not be raised in the other place. I think that they may be raised. My problem is that I am not entirely sure how the Treasury—it would probably be the Treasury—would answer unless it had some information. I equally see the problem that one could be led into the accusation of double guessing the parliament. I am not in the business of doing that. I am just concerned about the tie-up between the parliament which raises the money and the other parliament which spends it.

I am pleased to hear from the Minister that the Government will make transitional rules about accounting and auditing and that those rules will continue in existence until the parliament substitutes them with its own rules. We shall come later to how the parliament will do that and who must agree the rules that it makes. That brings me back to the problem, which is a real one, of the difference between those who raise the money and those who spend the money. However, I am pleased to hear about the transitional arrangements. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[ Amendment No. 275C not moved.]

8.45 p.m.

Page 27, line 11, leave out subsections (5) to (7).

The noble Lord said: This is very much a probing amendment. I am suggesting in my amendment that subsections (5) to (7) of Clause 61 are left out, but I do so more as a means of asking what they mean. Subsection (5) states:

"The Treasury may, after consulting with Scottish Ministers, by order designate receipts of any description specified in the order which are payable into the Fund".

Where will the receipts come from? Are these receipts other than the block grant? I am going to have some trouble not calling it the block grant despite the fact that I am supposed to say departmental expenditure limits. I think that I shall go on calling it the block grant for the remainder of the proceedings on the Bill. Presumably, this will involve receipts other than the block grant which will go into the Scottish consolidated fund. I wonder what is envisaged there.

Will it be the proceeds of privatisation, if I may whisper that to the Government? Will it be the proceeds of the privatisation of the air traffic control service, which I gather the Government are going to privatise? There is a Scottish part to that service. Will the consolidated fund get a share of the privatisation proceeds of the air traffic control service? What about the Tote? Some of the Tote shops are in Scotland. A percentage from the privatisation proceeds of the Tote might have to be paid. I really wonder what is envisaged. What might be paid in other than the extra 3p? If that is it, then that is the answer. But, from the way the provision is drafted, it does not sound like the extra 3p. I should like to know what is envisaged there.

In subsection (5) we have Scottish Ministers paying into the fund and in subsection (6) Scottish Ministers may be paying to the Secretary of State—back to the UK Government—the money from certain designated receipts. What do the Government envisage there? What money would the Scottish consolidated fund and the Scottish executive be collecting that they would then need to remit to the Parliament at Westminster? I am a little puzzled. I am sure that there are perfectly good explanations and I look forward to hearing them. I beg to move.

This amendment would have the effect of overturning the provisions in Clause 61 which deal with certain receipts payable to the Scottish consolidated fund. Under these provisions receipts designated by the Treasury are to be paid to the Secretary of State and on to the UK Consolidated Fund. These provisions provide for the continuation of the current position.

At the moment certain receipts are surrendered annually by the Scottish Office to the UK Consolidated Fund. I am advised that the receipts affected consist primarily of court fines and interest payments; mainly from NHS trusts. One of the key principles of the devolution settlement is that the financial framework should be based on existing block arrangements. As these receipts do not add to the Scottish Office's budget at the moment, they should not add to the parliament's in future. The provisions in question merely provide a statutory framework for surrender.

The noble Lord, Lord Mackay of Ardbrecknish, asked about the Tote and the air traffic control service. The answer is no. Neither of those comes under devolved headings. I hope that my explanation was sufficient. I ask the noble Lord to withdraw his amendment.

May I ask a very stupid question? I thought that court fines went to the local authority. Are we talking about the High Court as opposed to the sheriff courts?

Perhaps I may assist. District court fines would go to the Consolidated Fund although a proportion is retained by the local authority for administrative purposes under an arrangement with the Treasury. Sheriff court fines and High Court fines all go to the Consolidated Fund.

I am grateful to the noble Baroness, Lady Ramsay of Cartvale, for explaining to me the provisions of subsections (6) and (7) on court funds and interest from NHS trusts. I am not entirely sure what that means, but I accept it in good faith. I understand that they are not part of the Scottish Office budget at the moment; they are transferred to the UK Consolidated Fund. I can follow that. I am not sure, however, whether the noble Baroness gave me any examples about subsection (5) on designated receipts which, if I read the provisions correctly, would go into the fund and stay there. Perhaps I am not reading it correctly. Perhaps those receipts go into the fund and then, under subsection (6), are paid out. Is that what is meant? I believe that it may well be, and if that is what is meant by the provisions, I am satisfied. If it is not what is meant, perhaps somebody will write to me.

The answer is yes. That is what is meant. However, if by any chance I am not correct, I shall immediately write to the noble Lord to correct what I have said.

I am most impressed by the confidence of the noble Baroness and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 61 agreed to.

Clause 62 [ Payments out of the Fund]:

Page 27, leave out lines 32 and 33.

The noble Lord said: Amendments Nos. 275E and 275F are probing amendments. I understand from Clause 62(2)(a) that the purposes are,

"meeting expenditure of the Scottish Administration".

However, I should like an explanation of paragraph (b) on lines 32 and 33.

Amendment No. 275F is perhaps a little more than a probing amendment because it enshrines the concept of a balanced budget. It states that the Scottish parliament will not be able to pay out any more in any year than it receives. I could wax fairly eloquently about the need to ensure that the Scottish parliament balances its budget. I suspect that I shall be told that I need not worry because elsewhere in the Bill are provisions which mean that the Scottish parliament could not go out of balance by more than the £500 million which it is allowed to borrow. I should be grateful for a quick explanation of what sort of mechanism will be put in place by the UK Parliament, which, after all, will have to pick up the tab, to make sure that the Scottish parliament will not go out of balance and go very much into the red.

My obvious fear is that, having seen what has happened in some parts of Scotland, I am not entirely convinced that we can be utterly confident that those elected will be responsible with the money that they receive from this Parliament. I believe that this Parliament should have at least some oversight. I must not use the word "oversight" because it suggests the nanny state and the Government Benches, I am happy to say, no longer believe in the nanny state. I do not want to be able to double-guess the Scottish parliament, but I believe that we should include in the Bill some provisions to ensure that we do not have to oversee the parliament. The Bill needs provisions to prevent the budget going badly into deficit and which will ensure that that parliament will not expect this other place to pick up the bill. That is why I have tabled Amendment No. 275F. I beg to move Amendment No. 275E.

Amendment No. 275E has the effect of deleting Clause 62(2)(b) which allows sums to be paid out of the Scottish Consolidated Fund to meet expenditure payable out of that fund under any enactment, including the Bill. If we were to accept the amendment, we would find ourselves in the strange position such that expenditure in relation to a whole myriad of activities, which would rightly fall due to the Scottish Consolidated Fund, would not be competent since they would not be caught by the other provisions of Clause 62 relating to expenditure of the Scottish administration and sums charged on the fund. Clearly, that would not be acceptable. It would, for example, rule out expenditure of such bodies as the Scottish parliamentary corporate body, the expenditure of which is payable out of the Scottish Consolidated Fund by virtue of Clause 27.

It would also mean that the salaries and allowances of members of the parliament could not be paid unless the parliament made them a statutory charge on the Scottish Consolidated Fund or provided for them to be paid by the Scottish Ministers. None of those functions can properly be described as expenditure of the Scottish administration and would therefore not he included under the provisions of Clause 62(2)(a).

Moreover, the parliament would be unable to vote money directly to the Auditor General for Scotland and his office but could only arrange for him to be paid by the administration or for his expenses to be a charge on the fund. That, of course, would undermine his independence. On reflection, it can be seen that we would be heading quickly for a rather chaotic situation if we went down that route.

Turning to Amendment No. 275F, the effect of this amendment would be to require the Scottish parliament to ensure that sums it proposes should be paid out of the Scottish Consolidated Fund in any financial year do not exceed the sums expected to be paid into that fund for the same financial year.

First, the Scottish parliament could not effectively budget to live outwith its means since, as the noble Lord observed, the Scottish executive will have no borrowing powers on its own account other than the short-term borrowing provided for in Clause 63; nor can the parliament grant the executive further borrowing powers—subsection (4) ensures that. Thus, it would simply not have the cash to finance a budget it could not afford. Moveover—this is a bit of a sting in the tail—even the short-term borrowing is repayable under such terms as the Treasury may determine; and this includes the timescale for repayment.

The noble Lord hinted about the possibility of the Scottish parliament acting almost deliberately irresponsibly and setting itself on a collision course with the UK Parliament over its budget. I genuinely believe that that possibility is remote. We have no reason to believe the parliament will act in anything but a mature and responsible manner. With devolution comes responsibility and freedom to determine its own affairs. If the parliament were determined to act in such a way as to break the devolution settlement, this amendment would not prevent it from doing so.

There are a number of ways for the devolution settlement to be broken if that is the wish of an immature and irresponsible parliament which is set on a collision course. It would be impracticable to legislate for all of those opportunities. Again, I do not believe that we have any grounds for believing that the parliament will act irresponsibly in such matters. In the unlikely event that the Scottish parliament did propose to budget outwith its means, that would become apparent since its expenditure proposals would be in the public domain. It would be clear that that was the course of action upon which the parliament was intent. That would undoubtedly create a political crisis. However, in those circumstances, the UK Parliament could legislate for a remedy.

The other more practical objection to the noble Lord's amendment is that if its provisions were to be applied the Scottish parliament would be unable to carry forward unspent balances. That would, in turn, mean that it would be unable to enjoy the sort of end-year flexibility arrangements which government departments normally have. In some ways, those arrangements are to be encouraged to ensure the more effective and efficient use of resources. On the basis of that explanation, I hope that the noble Lord feels assured and able to withdraw his amendment.

On Amendment No. 275F, I understand the noble Lord's point about the importance of the parliament and the government being able to carry forward unspent balances rather than having what I have always considered to be the rather silly practice of spending money as if there was no tomorrow just because it is March.

If I were a member of another political party which shall remain nameless but which is not represented in your Lordships' House, I might be attracted by the idea of spending more money than I received in order to underline the point that I was not getting enough. I am impressed by the confidence of the noble Lord that that will not happen. Given the opinion polls, I do not share his confidence. But his suggestion that if that happened the United Kingdom Parliament could take very quick steps to legislate to put an end to it fills me with a degree of confidence. Therefore, when the Committee comes to Amendment No. 275F I shall seek leave to withdraw it.

I turn to Amendment No. 275E. I now understand what Amendment No. 275B means. Obviously, I did not think about it for long enough. The attraction of seeing how many people would stand for this parliament if there was no power to pay them almost tempts me to call a Division. However, as I do not believe that the noble Lord, Lord Sewel, even if he were not a Minister, the noble Lord, Lord Steel of Aikwood, and perhaps my noble friends Lord Selkirk of Douglas and Lord Sempill, to name but four or five, would join me in the Lobby, I shall resist the temptation and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[ Amendment No. 275F not moved.]

Clause 62 agreed to.

Clause 63 [ Borrowing by the Scottish Ministers, etc.]:

9 p.m.

Page 27, line 36, at beginning insert ("Subject to the approval of the Chancellor of the Exchequer,").

The noble Lord said: This is a short matter. I regret that the noble and learned Lord, Lord Simon of Glaisdale, is not present because he would have applauded the Minister on the drafting of this Bill. I have suggested the wording,

"Subject to the approval of the Chancellor of the Exchequer, the Scottish Ministers may borrow from the Secretary of State any sums required".

In Amendment No. 275H I suggest that "Treasury" should replace "Secretary of State". Interestingly enough, in the Government of Wales Bill when a

proposal was made to delete references to the Treasury and the Chancellor of the Exchequer the noble and learned Lord, Lord Falconer of Thoroton, the former Solicitor-General—he has now gone on to be the great enforcer—vigorously defended these words and the drafting practice. It was said that every time one saw the word "loans" it had to be with the permission of the Treasury. It was said to be a long-held drafting tradition and it was absolutely essential. He put up a very serious defence. The noble Lord, Lord Simon of Glaisdale, believed that the words were quite unnecessary, but his noble and learned friend was not prepared to agree with him. The Government refused to budge. I simply ask that if this is good enough for the Welsh why is it not good enough for the Scots, or is this a change in drafting procedure since the introduction of the Government of Wales Bill?

I have been asked to reply to this amendment in view of the fact that my noble and learned friend the former Solicitor-General dealt with the equivalent Welsh provision. Amendment No. 275G would require the Scottish Ministers to seek the approval of the Chancellor of the Exchequer in relation to sums borrowed by the Secretary of State. Amendments Nos. 275H and 275J would mean that the lender under the short-term borrowing power would be the Treasury rather than the Secretary of State. Under this clause all borrowing is subject to the provisions of Clause 64. This explicitly states that the Treasury may issue to the Secretary of State out of the National Loans Fund the sums required by him for making loans to the Scottish Ministers under Clause 63. I am advised by our draftsman that this is the usual formulation for National Loans Fund lending provisions of this kind and acknowledges in an appropriate way the Treasury's role in controlling access to that fund.

Clause 63(3) was referred to by my noble friend Lord Sewel in his previous answer. That provides that borrowing is to be repaid to the Secretary of State on terms determined by the Treasury. This includes such matters as timescale, methods of repayment and the rate of interest. I am satisfied that these provisions provide the Treasury with robust powers in relation to such short-term borrowing under Clause 63. I ask the noble Lord to withdraw his amendment for the reasons that I have given. As I have explained previously, I do not believe that comparisons between this and the Government of Wales Bill are necessarily apt.

They may not be apt but clearly the same dead hand of the Treasury is in both of them. I had thought for one moment that Scottish Ministers and the Secretary of State had escaped, but as the noble and learned Lord the Lord Advocate has pointed out, the Treasury is still there. I am not sure whether I am relieved by that. In any event the noble and learned Lord, Lord Simon of Glaisdale, will be disappointed to learn that the phrase "the Treasury" still figures in legislation wherever loans appear, even if as in this case it figures in another clause. I am grateful to the noble and learned Lord for that explanation and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[ Amendments Nos. 275H and 275J not moved.]

Clause 63 agreed to.

Clause 64 [ Lending by the Secretary of State]:

Page 28, line 14, leave out ("increased").

The noble Lord said: Clause 64 allows the Secretary of State to borrow for the parliament up to £500 million. Under subsection (3) we see that,

"The Secretary of State may by order made with the consent of the"—

I am happy to see—

"Treasury substitute for the amount (or substituted amount)"—

I am never sure what the words in brackets mean but I am not asking about that—

"specified in subsection (2) such increased amount as may be specified in the order".

I have suggested the deletion of the word "increased" so that it simply reads,

"such amount as may be specified in the order".

I do that because it is possible that the Secretary of State may decide to cap this amount at a lesser figure than £500 million, especially once the parliament is up and running. I appreciate that this is something the parliament will need to get off the ground before the whole system comes into play. I believe it would be wiser to leave out the word "increased" to allow for decrease or increase. My amendment would allow both possibilities. I do not say that there must not be an increase, but that the Secretary of State has to be able to decrease it as well as to increase it.

I was very interested in the equivalent Welsh Bill, when I put down an amendment in similar terms and was told that this limit was for emergency purposes and that it would not ever be likely to be decreased. I am therefore intrigued as to the answer we may now receive.

This is the one occasion on which I would certainly adopt the position on the Welsh Bill. The ceiling is indeed for emergencies; the £500 million specified is intended to be an upper limit. We would expect the borrowing to be well within that limit for the majority of the time. Clause 64(3) enables that amount to be increased, but only with the agreement of the House of Commons, should it be necessary to meet special unforeseen circumstances.

To put this in context, £500 million represents a small proportion of the parliament's likely budget. I am advised that it represents approximately two weeks' money and is fairly modest in comparison with other similar arrangements. For example, the equivalent figure for the Scottish water authorities is £3 billion.

With that explanation, I would invite the noble Lord to withdraw the amendment.

Unless my arithmetic is very askew this evening, I find £500 million to be a significant portion of £14 billion. I certainly would not reject an offer of £500 million. It is a considerable sum of money with respect to the parliament.

I will not argue about that, however. I still think it might be better if the position were open so that "decrease" could go as well as "increase"; but I am content with the explanation. I understand why the money may be needed. In the eventuality of something very serious happening in Scotland, a lot of money might be needed in order to deal with an emergency, and this would be one way to do it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 64 agreed to.

Clause 65 [ Borrowing by public bodies]:

Page 28, line 24, leave out from ("sterling") to end of line 25.

The noble Lord said: My amendment is grouped with an amendment tabled by the noble Lord, Lord Sewel, and it will be interesting to hear what he has to say. My amendment is simply a probe. The subsection says,

"A body established under any enactment shall not, in pursuance of a power conferred by virtue of an Act of the Scottish Parliament, borrow money in a currency other than sterling except with the consent of the Scottish Ministers given with the approval of the Treasury".

I suppose I will be told that there is a double armlock on this; but I wonder in what circumstances the Government envisage, even with the consent of Scottish Ministers and the approval of the Treasury, that the parliament might be borrowing in a currency other than sterling.

I find it hard to believe that the parliament will be borrowing from abroad. I find it even harder to believe that the parliament will be indulging in a bit of currency speculation. I would not have thought it was the best idea for the Scottish parliament to start borrowing from overseas banks, given the experiences of the Western Isles with BCCI. I wonder why the Government feel it necessary therefore to include this proviso which seems to allow the parliament, in very tightly constrained circumstances, to borrow any money other than sterling?

May I ask a question which puzzles me about the language of the clause, and indeed some other clauses? It says that a member of the Scottish executive "may borrow money". Is it not only the Scottish Ministers as a collective, the Scottish executive as a whole, that can authorise lending or borrowing money? It rather reads as if an individual Minister could go off and do something rather odd—subject of course, as always, to the consent of the Treasury.

Amendment No. 275L would prohibit non-sterling borrowing by public bodies completely. That is too inflexible. While we do not expect any great demand for this facility, it is nevertheless necessary to allow such borrowing should it be required.

But, given that non-sterling borrowing can have macro-economic consequences, it is only right and proper for any bodies that wish to take advantage of such borrowing first to obtain the consent of Scottish Ministers, who in turn must seek the approval of the Treasury. As noble Lords will know, macro-economic concerns are reserved matters.

The noble Baroness, Lady Carnegy, has spotted it! It is not beyond the bounds of possibility that in advance of any decision by the United Kingdom to join the single European currency, some public body might want to borrow from a European Union institution, and any such borrowing may be available only in euros. That would be possible with the approval as the Bill is presently framed. That is the gem that is hidden away there. I hope that the noble Lord can accept it.

9.15 p.m.

My noble friend and neighbour Lady Carnegy raised the point about euros. I thought the Minister's reply was good and gave flexibility for what a properly run council might wish to do. However, assuming that the euro, or the currency being borrowed, was not at a fixed exchange rate against sterling, if the council did well and perhaps made a profit on exchange, would the payments in euros, deutschmarks or perhaps dollars affect the limit? I presume that there are overall limits. Would there be a question against the limits, which are expressed in sterling?

Maybe. It is worth clarifying. I shall write to the noble Lord.

This borrowing is extremely limited. I imagine that with the euro the issue would arise only in the run-up to entry into the euro, when one would have effectively a fixed exchange rate. It is subject to the double armlock indicated by the noble Lord, Lord Mackay of Ardbrecknish, of approval by Scottish Ministers and the Treasury.

It may be helpful if I speak to government Amendment No. 275M. This inserts a new subsection in Clause 65 making it clear that the reference to "enactment" includes the Bill and subordinate legislation made under it. It is a purely technical amendment to ensure consistency in references to "enactments" throughout the Bill.

I am grateful to the Minister for that answer. My noble friend Lady Carnegy may have provided him with a better answer than he had originally. But I am still not convinced. If we ever decide to join the euro, there will have to be an Act of Parliament. One of the clauses will state something like, "In every other previous enactment where it says `sterling' read 'euros'". The provision will not be nearly as simple as that because the lawyers will have got at it to make it more complicated. Therefore I do not think it necessary to have this little omission.

For clarification, I am envisaging the period immediately prior to joining, where there most likely will be a great deal of trading in and borrowing of euros in this country. On that basis, I agree that there would be a period where there would not be an Act of Parliament stating, "For euros read sterling", but effectively one would have a fixed exchange rate between the two.

I suspect that if we were to decide to join the euro within some specified timetable, we would need an Act of Parliament almost immediately to change everything. It would be more than just this legislation which would be influenced in that way.

However, I am not prepared to argue about that. I am grateful to the Minister. I strongly suspect that the approval of the Treasury will never be given to the Scottish parliament to undertake a little currency speculation. If it does, I might obtain the answer as to which receipts must be paid into the Consolidated Fund and promptly paid back to the Treasury.

I am content with Amendment No. 275M. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Page 28, line 25, at end insert—

("( ) In this section "enactment" includes an enactment comprised in or made under this Act.").

On Question, amendment agreed to.

Clause 65, as amended, agreed to.

After Clause 65, insert the following new clause—