SCOTLAND BILL

HL Deb 12 June 1978 vol 393 cc11-100

2.58 p.m.

Further considered on Report.

Clause 36 [Power to move rejection of certain Assembly Bills]:

The SOLICTOR-GENERAL for SCOTLAND (Lord McCluskey) moved Amendment No. 99: Page 17, line 30, after ("a") insert ("reasoned").

The noble and learned Lord said: My Lords, this Amendment would provide that when the Secretary of State proposes to override an Assembly Bill he must set out his reasons for doing so in the statement which is required to be laid before Parliament. Your Lordships will recall that during the Committee stage debate on this clause (which was then Clause 35) an Amendment was moved by noble Lords opposite requiring the Secretary of State, in exercising this override power in relation to an Assembly Bill, to detail the amendments necessary to cure the defects which had led him to use that power. The objective was to ensure that the Secretary of State should identify the particular points which had led him to reject the Bill, thereby making it easier for the Assembly to meet points of objection. In debate I said that I thought the Amendment was inappropriate because this clause (now Clause 36) was concerned with policy override, and it was not the detailed drafting of the Bill that would be objectionable, but the policy underlying the Bill. I undertook to consider whether the clause could be amended in order to meet the Opposition's general point, and the present Amendment is the result.

Accordingly, as we see it, the statement will set out the points of objection in general terms, and then it will be for the Assembly to consider what action to take. It could, for example, drop the Bill, or drop parts of it, or try to meet the objections by amendment. In the Government's view, it would not be appropriate for Westminster to tell the Assembly in detail what action to take, much less to spell out the Amendents necessary to cure the defects as seen by Westminster in the Assembly Bill. I hope that the Government have met the substance of what noble Lords opposite had in mind, and I beg to move this Amendment, No. 99.

Viscount COLVILLE of CULROSS: My Lords, the Government have certainly met my objective in moving this Amendment, and I think that all that is now necessary is to make sure—and we cannot do that in this House—that the standing orders which eventually emerge for the guidance of the Assembly will allow a Bill to be taken back if a policy override should occur, so that the Assembly can then consider exactly what the noble and learned Lord has just been talking about and how they may, as it were, get back into the fold; and whatever the machinery may be will be a matter for them to deliberate upon and decide in due course. It seems to me that the noble and learned Lord and I are entirely at one on this, and all I have to do is to thank him for putting down this Amendment.

On Question, Amendment agreed to.

3.1 p.m.

Lord McCLUSKEY moved Amendment No. 100: Page 18, line 7, leave out subsection (4).

The noble and learned Lord said: My Lords, your Lordships will recall that this was discussed when we discussed Amendment No. 46. In Amendment No. 46 we made an amendment to Clause 19 to meet a point which was raised by the noble and learned. Viscount, Lord Dilhorne, in Committee; and the Amendment to Clause 19 now makes Clause 19 provide that if the Secretary of State is proposing to override an Assembly Bill on policy grounds under Clause 36, he shall not make reference to the Judicial Committee on vires grounds. This is a drafting change, not a new provision, and it follows from making it that we should now delete subsection (4) of Clause 36. I beg to move.

On Question, Amendment agreed to.

Clause 37 [Power to prevent or require action]:

Lord McCLUSKEY moved Amendment No. 101:

Page 18, leave out lines 17 to 19 and insert— ("(b) that any action capable of being so taken is not proposed to be taken and that failure to take it would or might affect a reserved matter, whether directly or indirectly;").

The noble and learned Lord said: My Lords, during the Committee stage the noble Lord, Lord Drumalbyn, moved a drafting Amendment to what was then Clause 36(1)(b) but which is now Clause 37. The Amendment was not accepted at that time because I felt that, although there was substance in what the noble Lord was saying, I ought to consult the draftsman. I felt unhappy about it, and I agreed to look at it. We have now looked at the drafting of the paragraph to see whether it could be clarified, and the present Amendment is the result.

With this Amendment the Government consider that it can be made clear that Clause 37(1) provides, as was always intended, that the Secretary of State can, subject to the public interest, override action which would have a detrimental effect on a reserved matter within the meaning of the clause and require action when failure to take it would have a detrimental effect on a reserved matter. The essence in both cases is prevention of a detrimental effect. I am very grateful to the noble Lord, Lord Drumalbyn, for his vigilance and help, and I hope that he is satisfied that the wording is better than it was. I beg to move.

Lord DRUMALBYN

My Lords, I am very grateful to the noble and learned Lord. It was not so much vigilance on my part as sheer incomprehension as to what the draftsman intended. I am glad this has been put right, and I am grateful.

On Question, Amendment agreed to.

3.4 p.m.

Lord McCLUSKEY moved Amendment No. 102: Page 19, line 8, leave out ("each") and insert ("either").

The noble and learned Lord said: My Lords, I hope the House is noticing how accommodating the Government are being at this stage. I now move on to an Amendment of a slightly different character. This is Amendment No. 102, and it is intended to clear up what we see as a technical defect resulting from the group of Opposition Amendments which were made during the Committee stage to Clauses 36 to 38. Your Lordships will recall that the effect of these Amendments was to delete the provision whereby the House of Commons could confirm their Resolution with regard to an override order albeit that it had not been approved by a Resolution in this House. Clause 37 provides that the Secretary of State may issue a direction to prevent or require action by the Executive. Clause 38 enables the Secretary of State to revoke a subordinate Instrument by order. Clauses 37(6) and 38(5) provide that the Instruments shall not have effect unless approved before the end of 28 days by both Houses, and that they shall lapse after 28 days have expired if both Houses are opposed.

This is the defect, then: if either House can block a direction or an order at the end of the 28-day period, it is illogical to require the opposition of both Houses before the direction or order can lapse within that 28-day period. The Amendments rectify the flaw by providing that while the direction or order shall cease to have effect unless approved by the end of 28 days by both Houses, it shall lapse before 28 days have expired as soon as one House opposes it. I am sure your Lordships will find that much easier to understand by reading it than from listening to it. I beg to move.

Viscount COLVILLE of CULROSS

My Lords, as the main principle has been conceded by the Government here, all I really have to do, I think, is to welcome this Amendment. Perhaps the other way of saying what the noble and learned Lord has said is that it merely restores the situation to normal.

Lord DRUMALBYN

My Lords, perhaps I may make one comment on this because I think it points in a direction in which some of us in Procedure are thinking it desirable to go. It would surely be unfortunate if either House prevented the other House from considering these matters. It follows, therefore, that there has to be a very close liaison between the two Houses in working out how this is to be considered. I wonder whether the noble and learned Lord would pass this on, for what it is worth, to the authorities, both here and in another place.

Lord McCLUSKEY

I shall certainly do that because, of course, I recognise the force of the point that some such consultation, in order to avoid a result whereby only one House considered the matter, is absolutely essential. I am glad that that suggestion is on the record, and may be duly considered and note taken of it.

On Question, Amendment agreed to.

Clause 38 [Power to revoke subordinate instruments]:

Lord McCLUSKEY moved Amendment No. 103: Page 20, line 4, leave out ("each") and insert ("either").

The noble and learned Lord said: My Lords, this is an Amendment of exactly the same character and to the same effect as the previous one. I beg to move.

On Question, Amendment agreed to.

3.8 p.m.

Viscount COLVILLE of CULROSS moved Amendment No. 104: Page 20, line 10, leave out subsection (7).

The noble Viscount said: My Lords, some time in the middle of the night a few weeks ago I regaled the Committee with a speech about hybrid Instruments and the effect of your Lordships' Standing Orders 216 and 216A. I do not propose to do so again, because I have had a letter from the noble and learned Lord which led me to suppose that if I put this Amendment down on Report there might be some chance of the Government accepting that in this Bill we should not have a universal exclusion of all possibility of petitioning against hybrid Instruments. If that is the intention of the Government, I am very grateful. I should have thought that the opportunities for the Secretary of State to make hybrid Instruments under these procedures were going to be few and far between. Nevertheless, that does not mean to say that I do not appreciate what the Government have done in meeting us on this: and, with the ardent hope that we shall have to say no more, I beg to move.

Lord McCLUSKEY

My Lords, I should explain that subsection (7) was included because the Government wished to avoid the possibility of an override order being frustrated for a long time by the application of Standing Orders 216 and 216A of your Lordships' House. But this was a case where we considered the matter again in the light of the Committee debate; we were persuaded by the noble Viscount and by the general tenor of the debate; and we have come to the conclusion that we can live with this deletion. I so intimated to the noble Viscount, and the Government are perfectly content to accept the deletion of this subsection. Accordingly, we would accept this Amendment.

On Question, Amendment agreed to.

Clause 39 [Industrial and economic guidelines]:

3.10 p.m.

Lord DRUMALBYN moved Amendment No. 104A: Page 20, line 20, after ("1975") insert ("which are referred to in Schedules 10 and 11 to this Act as matters within powers of the Scottish Executive").

The noble Lord said: My Lords, something tells me that perhaps with this Amendment we have come to the end of the concessions. The purpose of this Amendment is twofold: clarification and explanation. We had an extensive debate and we are grateful to the noble Lord, Lord Kirkhill (who seems to be disappearing for the moment from the Chamber) for explaining fully the issues involved in the handling of economic matters in Scotland with special reference to the Scottish Development Agency. I am bound to say—and I hope that neither the noble Lord nor anybody else will take offence—that the drafting here leaves much to be desired. Here we have in Clause 39 provision for the Secretary of State to prepare guidelines in relation to the promotion, financing, establishment, carrying on, growth, reorganisation, modernisation or development of industry or industrial undertakings". That looks a very broad provision indeed.

Of course, it is only when you get on to Clause 61 and to Schedules 10 and 11 that you find what that is all about. Therefore the first point of this Amendment would be to alert the reader at that stage, rather than later on, to what is involved—certainly, as far as the Scottish Development Agency Act is concerned. There is another point and an important one. It was argued at an earlier stage that there was a balance here between what was being handed over and what was being retained. One of the matters which was retained was the provision in relation to selective financial assistance which is contained in Section 5 of the Scottish Development Agency Act.

If noble Lords will look at the Mar' shalled List, they will find that the balance referred to by the noble Lord, the Minister of State, now seems to have been adversely affected by an Amendment put down in the name of the noble and learned Lord who sits on the Woolsack. The Amendment is No. 155, an innocent-looking Amendment which says, typical of this part of the Bill: leave out ("3(1), 7 and 9") and insert ("3 to 5 and 7 to 9"). This appears to be an important Amendment and I hope that the noble and learned Lord will be able to explain its exact purport. If it relates only to grants made in the course of the operation of the industrial estates functions of the Scottish Development Agency, I do not think that there would be much objection to it; but if it extends to the investment, the industrial investment or the investment bank functions of the Scottish Development Agency, then I think that that would be quite a different matter. Those functions, as I understand it, are to be financed out of loans. I quite understand that any loans that are projected, so to speak, will be taken into account from the point of view of the calculations of the payment into the Scottish Consolidated Fund: but there is a ceiling under the loans that can be given under the Scottish Development Agency Act which is £200 million and which can be raised by order to £300 million.

One must consider what is likely to happen in the case of these guildelines. It is rather extraordinary, in view of the remarks of the noble Lord, Lord Kirkhill. He said that the guidelines will in practice delineate the boundaries of the executive discretion to be available to the Scottish Administration and are matters of great political sensitivity. These are matters of great political sensitivity. Indeed, they are; because, on the one hand, no doubt Scotland will be expecting to get rather more out of devolution than they have been getting in the past; whereas some of my noble friends seem to be determined that they shall not get any more and that this will he an annual battle that will go on. I completely sympathise with the Government in wanting to be even-handed in this matter, to make certain that payments of this kind are made in accordance with the needs of different parts of the country. We in Scotland always maintain that the needs of Scotland are as great as, if not greater than, those of any part of the country; but this is where the political sensitivity arises.

The rate at which that loan is drawn down, therefore, is very important indeed. At the moment, it is not being drawn down at a very fast rate; but all the indications in the last report of the Scottish Development Agency are that it will go on being drawn down at an increasing rate and that the £300 million is not likely to last more than five years. When the guidelines— which, undoubtedly, will relate to this sort of subject, the rate of expenditure permissible in the year in prospect—are being considered they will, after they have been drafted, be the subject of an order. I have not put down an Amendment on this but I should like to think that the Government would consider this again; but it is perhaps unfortunate that it is going to be an order subject only to annulment in Parliament. I should have thought that in a matter of great political sensitivity it would be highly desirable to have the Affirmative Resolution procedure for an order of that description.

My Lords, that will not be the end of it. This matter will not, in any case, be within the terms of reference of the Assembly; but Members of the Assembly will receive it; and I should be surprised if the contents of the order were not debated, year by year, to form, so to speak, the industrial budget of the Scottish Assembly.

Lord McCLUSKEY

My Lords, if the noble Lord will allow me to say so, I wonder whether, perhaps, while addressing his remarks partly to Amendment No. 155, he has not misconstrued the line 6 Amendment on page 72; because what we are concerned with on page 72 of the Bill in line 6 are certain paragraphs of Schedule 2 to the Act and not the sections themselves. It may be that the matter affected by the Amendment is much narrower and of a more technical compass than the matters to which the noble Lord is referring. Amendment No. 155 to which he referred affects line 6 on page 72 of the print of the Bill and, as we see, that refers to certain paragraphs in Schedule 2 and not to the sections of the Act. I am sorry to intervene; but it may be that the noble Lord has misread this. If he has, it may be as well to leave these matters until we reach Amendment No. 155.

Lord DRUMALBYN

My Lords, that may be so, but I was casting my remarks a little more widely because we are here dealing with the whole question of the guidelines. What it amounts to is this. As I say, whatever is done in the guidelines is going to be regarded as a matter of great importance in Scotland. I for one remain firmly of the opinion that it is a mistake to separate from the Secretary of State his economic function in respect of the Scottish Development Agency investment functions. If one has to decide between the convenience of the Scottish Development Agency in having to deal only with the Scottish Secretary—and, so to speak, from that point of view, the unity of the Scottish Development Agency policy—and the unity of the United Kingdom to which we all attach so much importance so far as economic policy is concerned, I would infinitely rather give preference to the unity of the United Kingdom.

I should like to remind your Lordships once again that the Government's original plan was to divide the functions of the Scottish Development Agency between the Secretary of State and the Scottish Secretary so far as supervision was concerned, the Secretary of State remaining responsible for the investment side and the Scottish Secretary dealing with the industrial estates side. That was changed and I suspect that it was mainly because it was felt to be a mistake to let the Scottish Development Agency deal with two Ministers, one in Scotland and one—as it seemed to be regarded—at Whitehall or Westminster.

The importance of this Amendment is that it is highly desirable at this stage to alert the reader and anyone who makes reference to these matters. One looks up such matters in the index and then finds the particular section that relates to guidelines. Then one finds that the subjects of the guidelines are far more restricted than they appear to be from reading this particular subsection and subsection 1(a) of Clause 39. The purpose of my Amendment was first of all to obtain an explanation and to make certain that this does not in fact go beyond the powers specified in Schedules 10 and 11 as being conferred upon the Scottish Executive; and, secondly, to make certain that the balance referred to by the Minister of State with particular reference to Sections 5 and 7 of the Industry Act is not affected. That is to say that, wherever it is a question of selecting financial assistance, this will remain with the Secretary of State and will not be devolved. One of the reasons why this is important is that it should be financially entirely separate from the Scottish Consolidated Fund. I beg to move.

Lord McCLUSKEY

My Lords, the noble Lord, for reasons which he has explained, has gone a little wider than the Amendment would have led one to suppose he might do. As I understand the purpose of this particular Amendment, it is to alert the reader, as the noble Lord put it, and to make sure that the powers are restricted to those defined in the Bill. The Government's view is that this particular Amendment is unnecessary, and because it is unnecessary it is better that it should not be there just in case it should mislead and in relation to other parts of the Bill give rise to uncertainty where none need exist.

Under Clause 21(1), executive powers transfer to a Scottish Secretary only if they relate to devolved matters and are exercisable in or as regards Scotland. Under Clause 61, a devolved matter in relation to the powers and duties of a Scottish Secretary must fall into one of the three categories mentioned in that clause. That is to say, it must be included in Schedule 10 or 11 (as the noble Lord's Amendment also provides) or must be one in relation to which powers are directly conferred on a Scottish Secretary by some other provision of the Bill.

The powers of a Scottish Secretary mentioned in Clause 39(1)(a) are, by definition, powers relating to devolved matters. A Scottish Secretary can have no powers under the Scottish Development Agency Act which are not devolved to him by the Bill—and it is those which will be subject to guideline controls. Paragraph (a) does not create any additional powers. Therefore, the Government consider that the words proposed to be inserted would serve no legal purpose and would not make any difference to the meaning of the Statute. They could possibly lead to confusion in relation to other provisions of the Bill because this wording, if the Amendment were accepted, would be rather different to the choice of wording used to deal with allied problems in the Bill. I ask the noble Lord to reconsider whether, simply for the purpose he has mentioned, it is desirable to put in wording which might cause difficulty elsewhere.

Lord DRUMALBYN

My Lords, plainly one would not want to put in a merely cosmetic Amendment, especially if it itself had a blemish. Therefore, I do not propose to pursue this Amendment. Life would have been made much easier for those of us working on this Bill, and also much easier for those who are going to work with the Bill afterwards, if we had had something of the order of a Keeling Schedule on the Scottish Development Agency, setting out exactly which powers were devolved in relation to the industrial estates functions and which were devolved in relation to the investment bank functions of the Scottish Development Agency.

The reason why there has not been a very great deal of talk from others on this series of Amendments is simply because of the great difficulty of knowing what one is talking about. Because of my previous experience in the Scottish Office and the Board of Trade, I naturally wanted to ferret this out for myself. It took quite a bit of ferreting out and I do not think that it is right. I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 45 [Payments into Scottish Consolidated Fund out of moneys provided by Parliament]:

3.28 p.m.

Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 104B:

Page 23, line 27, at end insert ("together with—

1. (a) a calculation setting out a comparison of the proposed resources per capita for the year in question which would he available as a result of the approval of the draft order for expenditure by the Scottish Executive for purposes falling within devolved matters, with the resources per capita provided for that year for such purposes in England and Wales;
2. (b) a calculation setting out a comparison for the latest financial year for which figures 23 are available of expenditure per capita by the Scottish Executive and by Parliament on individual devolved matters and expenditure per capita on equivalent matters in England and Wales;
3. (c) a statement of anticipated expenditure per capita by the Scottish Executive and by Parliament on individual devolved matters arising under any statutory obligation existing at the time of the approval of the draft order;
4. (d) a statement of comparative needs and standards relating to the expenditure per capita on individual devolved matters in Scotland and on equivalent matters in England and Wales;
5. (e) a statement of the details of any formula or formulae involved in the determination of payments under subsection (1) of this section.").

The noble Lord said: My Lords, we discussed this point in Committee and we return to it now in slightly different form. At that time, I said that the drafting might possibly need amendment, and it still remains true that I am perfectly prepared to be told that the drafting of this Amendment could be improved. What we are dealing with here is, in the shorthand that these debates have developed, what has been called the "English backlash" issue.

The importance of it cannot be overrated. The question of how the block grant is negotiated is, as the noble Lord, Lord Vaizey, said in our Committee debate, at the core of the Bill. The 1977 White Paper made it clear that it was estimated at that time that the block grant would cover something like 70 per cent. of the expenditure for which the Assembly would be responsible. So it is not a minor issue by any standards.

What has happened in the past, as we said at the Committee stage, is that Scotland has tended to keep quiet about the fact that the per capita expenditure in Scotland was higher than it was in England. I am almost tempted to use an expression which has been introduced to me for the first time in these debates and say that they have reserved themselves by silence. At any rate, knowing that they have been relatively specially favoured because they have had relatively special need, they have tended to keep quiet—but it is important to underline the word "relatively". I think this has generally been accepted throughout the country; but the question arises with the coming of the Assembly, is it going to be so easily accepted by England as it has been in the past? During our debate on the Committee stage the Government made great play of the unreliability of per capita expenditure statistics, particularly if these are taken on their own, and indeed a number of noble Lords, particularly noble Lords behind me, were at pains to emphasise that they felt that these comparisons should be published not only for England but for England broken down into some of the regions, because then it was pointed out that global statistics for England could be misleading because they covered a good deal of regional variation.

I do not dispute that per capita figures are dangerous; indeed I cited a debate which has been going on for many years in bandying about statistics when we talk of figures of defence expenditure. Sometimes we talk about percentage of GHP and sometimes about per capita expenditure. But the Bill itself mentions "a statement of the considerations"— those are the words in the Bill. This is a good deal less specific than some of the suggestions put forward in the 1977 White Paper, where the Government talked about the possibility of having an advisory body and spoke of a promising approach relating the total of devolved expenditure in Scotland to comparable expenditure elsewhere in the country on the basis of relative need and expressing it as a percentage of comparable expenditure in the country as a whole.

The noble Lord, Lord Vaizey, also pointed out that there was an implication that the Treasury had some kind of formula which they worked on in allocating funds to Scotland, and one of the purposes of this Amendment is to ask whether we could please be let into the secret of what this formula is. Indeed the noble Lord, Lord Vaizey, said in column 311 that it was "Slightly irresponsible" to pass legislation on such a major issue without saying on what basis some of these considerations were going to be taken. That is the purpose of paragraph (e) in our Amendment. The noble Lord, Lord Kirkhill, responded to the suggestion of my noble friend Lord Drumalbyn that perhaps we might have a schedule of the kind of considerations which were used, by saying, in column 306, that he would think about it; and he was still thinking about it in columns 312 and 313. I thought this might give us an opportunity of asking what the results of his considerations were, because I suggested at the Committee stage that this expression would not have been put in the Bill unless somebody had some fairly clear idea of the sort of considerations which were likely to be used.

Perhaps I can summarise what I am saying in this way: if we think that per capita figures are misleading on their own, what other comparisons do the Government want to suggest? Secondly, is there a Treasury formula or formulae, and, if so, what is it or what are they? Thirdly, do the Government still envisage an independent advisory body, as was referred to in the 1977 White Paper? If so, what will be its terms of reference, to whom will it report and who will pay for it? The purpose of this Amendment is to produce answers to some of these questions. I beg to move.

3.35 p.m.

Lord VAIZEY

My Lords, I think this is an important Amendment and it gives the opportunity for the House to hear what the Minister has to say on a subject which will be of great interest throughout the Kingdom. If I may briefly give my own views on what the noble Lord on the Opposition Front Bench has just said, I think, as the Government Front Bench quite rightly said during the course of the Committee Stage, that per capita comparisons are of course misleading. Simple comparison, say, of the average temperature in Dorset with the average temperature in Sutherland on a given day is misleading as to the state of the weather; nevertheless it does give some indication as to whether it was generally hotter or colder in one county or the other. So the fact that comparisons are capable of misuse is not in itself an overwhelming argument against their production. They are in fact produced and are used regularly by academic and Government economists in order to determine whether or not expenditure, not only in the United Kingdom but also throughout the European Community, is on a level basis. I have no doubt that these figures will be presented and developed as the process of devolution in turn continues to develop. Secondly, the noble Lord referred to the question of the formula by which expendi- ture is now allocated to the Scottish Office. Quite clearly there is such a formula, and certainly it must be adjusted from time to time and also tempered by political considerations; otherwise there would be no point in having a Cabinet.

I think myself that it is a useful view that this formula should appear in the Act of Parliament, at least in broad outline, so that we are aware of the broad considerations which the officials and the Ministers concerned are using in determining the allocation of funds. In general it seems to me wiser for more knowledge to be available for public discussion of this matter of vital importance than for it to be done behind closed doors. I would remind your Lordships that in successive Home Rule Bills for Ireland formulae were included in the Bills put forward for consideration by both Houses, so it is not entirely a new principle. And of course we can always refer back to the Goschen formula which has a long and honourable history.

I am very much attracted by the idea of an advisory committee which the Government put forward in the 1977 White Paper. I can see why they might be suspicious of such a committee, because it might tend to take from the Secretary of State the jurisdiction which quite properly is ultimately his. Nevertheless I should be most interested to hear what the noble Lord on the Front Bench has to say about this interesting Amendment. I think it comes fairly near to the heart of the matter with which in fact the debate about devolution is ultimately concerned—whether or not Scotland is getting a fair deal, whether it has had a rough deal in the past and whether it is perhaps being relatively comfortably dealt with at the moment compared with the rest of the Kingdom.

Lord LEATHERLAND

My Lords, I hope that the Government will find it possible to satisfy Scotland that they are going to get a fair deal, because there is nothing worse than a discontented Scotsman. There has been an admission from the Opposition Front Bench that the per capita public expenditure in Scotland is higher than it is in England. By a remarkable coincidence I have in my hand an official document which sets out public expenditure per head per year, as applied to England, on the one hand, and to Scotland, on the other. It seems to me that at present Scotland is getting a very fair deal, if not something in excess of a fair deal. For example, in education and libraries, science and the arts, public expenditure per person per year is £176 in Scotland and £149 in England. For health and personal social services, the Scots get £155 and the English £129. For housing, the Scots get £113 and the English £87. For roads and transport, the Scots get £55 and the English £22. The total public expenditure per head for Scotland and England respectively for those services I have mentioned, with a few others, is £948 and £754. So it seems to me that Scotland is doing very, very well at present. It also seems to me that my noble friend should be able to satisfy the Scots without promising them any further big grants in the future.

Lord DRUMALBYN

My Lords, could the noble Lord say what year he was talking about?

Lord LEATHERLAND

Yes, my Lords. This is what the official authorities call "the latest available year"—that is, the year ended April last year.

Lord STRATHCLYDE

My Lords, I am very grateful to the noble Lord for giving us those figures. I have long maintained that that is the situation, and the people who call themselves Scottish Nationalists have denied it. They have maintained that the English did themselves well on money collected from Scotland. That is utterly untrue and indeed has been for a very long time—I think since the 1880s, when one Lord Goschen produced a formula.

3.43 p.m.

The MINISTER of STATE, SCOTTSH OFFICE (Lord Kirkhill)

My Lords, in the light of the lengthy discussion that we had on this subject in Committee, it will come as no surprise to noble Lords when I tell them that the Government are not disposed to agree to this Amendment. I hasten to add that this is not because of an unwillingness on our part to consider the proposals on their merits; it is because we have done so and found them to contain defects both of principle and practice. Consequently, we must advise your Lordships against them.

The main reason is that the 1977 White Paper, to which the noble Lord, Lord Strathcona and Mount Royal, referred—entitled Devolution: Financing the Devolved Services—explained, that spending on devolved matters is met from a number of other sources also: principally from local rates, borrowing for capital investment by local authorities and public corporations and the internal resources of public corporations themselves. The primary figure to fix is the total of devolved expenditure. We hope to do this, as your Lordships know, by a formula, but it will not be built up from a series of agreements as to spending on individual devolved matters.

Any meaningful comparisons on a per capita basis would have to relate to this total of devolved expenditure and not just to the block grant component of it, and still less to individual devolved matters. But just how meaningful can such per capita comparisons be? Doubts were expressed as to their validity at the time of our last debate by the noble Lord, Lord Vaizey, and the noble Lord, Lord Mackie of Benshie; and the noble Earl, Lord Perth, made his doubts known at the time. The noble Lord, Lord Strathcona, expressed at least a doubt at column 314 of Hansard on 3rd May, 1978.

Such comparisons can take no account of differences in proportions as between school children and old people, of sparsity of population, of differing degrees of urban deprivation and so on. They are oblivious of the appraisal of needs which must underlie any equitable distribution of resources. They suggest unfairnesses, without providing a basis to judge whether or not they exist. Once the total of devolved public expenditure has been fixed, its breakdown into component parts will in practice be very dependent on the wishes of the devolved Administration as to the shares of public expenditure to be put at the disposal of local authorities, public corporations and the devolved Administration itself. In the case of the first two, the breakdown will depend on what contribution is to be expected from local rates and from the internal resources of corporations and on how the expenditure totals will be divided between current expenditure and capital expenditure to be met by loans.

The exact way in which all this is best handled cannot be decided yet because it will depend partly on the domestic arrangements of the devolved Administration; but it is likely that the base-line of the statement to accompany the block fund order will be the forecasts of total expenditure on devolved matters included in the Government's public expenditure White Paper for the forthcoming year, with less firm figures for succeeding years.

Also there may well be, for purposes of comparison, the latest forecast of devolved expenditure for the current year and the out-turn for the previous year. It may be possible to break down some, at least, of these figures into their components; that is, local authority spending, public corporation spending and devolved Administration spending. However, we would not expect the statement to contain particulars as to how the devolved Administration intend to spend the block fund itself, since that will be a matter on which it will be answerable only to the Assembly. However, I have no doubt that the Assembly will want to know the intention of the Scottish Executive and that detailed forecasts will, therefore, be published in Scotland and will thus become general knowledge.

What information can sensibly be included in the statutory statement required under Clause 42(2) will depend on the working of the procedures I have described and on further arrangements that we can make only when the Scottish Administration is there to make them with. Within that general scope, the Government of the day will have to provide whatever the House of Commons of the day requires from it. That will depend on the changing issues of political concern, on changes in the availability of statistics and the methods of their presentation and, if we set up the independent advisory body to which reference was made at Committee stage and again by the noble Lord, Lord Strathcona, today, on the advice that we get from the advisory body. I hope I have said enough to your Lordships to make clear why the requirement to present supporting information is in the Government's view best left to the general terms of the present clause.

Perhaps I may now just explain why the Government, even if they were sympathetic to the general approach of the Amendment—and I have indicated that they are not—could not agree to anything resembling what we have before us. I have already touched on a number of problems. First, paragraph (a) deals with a comparison of expenditure by the Scottish Executive for purposes falling within devolved matters; that is, say, two-thirds of devolved expenditure, compared with resources provided for these matters in England and Wales, which is, presumably three-thirds of the expenditure.

I shall not weary the House by analysing the whole Amendment but, as a further illustration of the problems which mentioned, I shall refer only to paragraph (b). Paragraph (b) calls for per head comparisons between expenditure by the Scottish Executive and by Parliament on individual devolved matters. But Parliament does not spend at all on matters devolved or not devolved, and, if it is the Government that are being referred to, they will not spend at all on individual devolved matters. Moreover, what the House of Commons will be approving is a total sum, with no regard as to how it will be spent as between individual devolved matters, and breakdowns of expenditure on that basis—which, I am advised, is an incredibly detailed one and quite impracticable—would not be relevant to the judgment which the House of Commons has to make. As an example, what possible sense could be made of per capita spending on, say, coast protection, marine works, deer, ancient monuments or crofting? Those are examples which I offer to noble Lords for their consideration.

The noble Lord, Lord Strathcona and Mount Royal, posed one or two specific questions to me as he drew his remarks to their conclusion, and may I first make reference to the advisory body. As to whether or not we intend to set up such a body, I should advise the noble Lord that the advisory body is to be independent of the Government, and the arrangements for appointing and funding it will be the subject of discussion with the devolved Administration. As to the question of a Treasury formula, I am advised that there is no Treasury secret weapon for settling Scotland's share of public expenditure. Scotland's share is settled on an assessment of needs and will continue to be so settled. Over the last five years, Scottish per capita expenditure on geographically identifiable matters has varied between 126 and 133 per cent. In the Government's view, that does not suggest any rigid special formula.

I have attempted to explain— albeit at some length, but I think that was necessary to clear the Government's position in this case—why the Government have to resist the Amendment proposed by the noble Lord, Lord Strathcona and Mount Royal.

Lord ROBBINS

My Lords, I found very cogent many of the considerations adduced by the noble Lord who has just sat down. I certainly think that some of the information requested in the Amendment, which comes from the Opposition Front Bench, would be extremely difficult to get and to explain. The noble Lord himself has gone into the matter at some length, and with that part of his observations I would have no quarrel. But I wonder very much whether, in his concluding remarks, he did not tend to elide the emergence of a problem which necessarily presents itself, if devolution is to take place.

I think that men of good sense on both sides of the House will probably agree that the arrangements whereby monies are parcelled out between different parts of the United Kingdom are, in present circumstance, better left to the detailed consideration of the Administration and the Government. But once devolution has come into being, Parliament will be advised to make an explicit grant, and the grounds for that explicit grant will certainly be the subject of debate. Despite all that I have admitted as regards the difficulty of obtaining detailed figures, I submit that it is a matter of public interest that there should be devised and made public some series, or set of series, which in their continuity from year to year can provide an objective indication of the way in which policy is going. This does not seem to me to be at all a Party matter. It seems to me to be a matter which emerges inevitably from the logic of the fact of devolution, if it comes into being.

3.57 p.m.

Baroness ELLIOT of HARWOOD

My Lords, I would only add a very brief word. I have listened with great interest to what the noble Lord on the Government Front Bench has said. Anybody who has had anything to do with local government knows that finance is the most crucial of all matters, and it is very easy for people who will not have to find the cash to promise things. So far as I can make out, the Assembly will have a considerable block grant, and, as someone who has operated in local government in Scotland for many years, I know full well that we get very generous treatment from United Kingdom grants. But I entirely agree with my noble friend Lord Strathclyde, that it is not known by the general public, certainly not in England, how generously the Scots have been treated for a very long time. So it is very important that in the new set-up there shall be some simple way of telling the public where ail this money comes from and how it comes, what it represents and what they are supposed to do with it.

It may well be that it is not possible to go into as many details as this Amendment suggests. Probably, the noble Lord, Lord Robbins, whose economic knowledge is unrivalled in this House, was quite right when he said that there are certain things which one cannot do. But I am sure that there are certain things which one can do and, listening to the noble Lord, what worried me was that I could not make out exactly what was to be the method to tell those people, both of Scotland and of England, how these grants are to be assessed and how they are to be known. Admittedly, their distribution will be, to a very large extent, in the hands of the Assembly, but the Members of the Assembly must still know how much money they will have to spend. It may well be that it is not possible to put so detailed an Amendment into this Bill, but somehow or other the public must know and understand. Because of the way that the Bill is drafted, I do not think that they can.

One of the troubles about this Bill—and there are many of them—is that it is so difficult for the public to understand what it all means. It would be a good idea if the Government could look at these problems with the eye of somebody who is going to try to make the Bill as simple as possible for the public in Scotland to understand. I am quite certain that the public in Scotland will not understand the Bill as it is drafted. If it were possible for something to be put into the Bill along the lines of the Amendment moved by the noble Lord, Lord Strathcona and Mount Royal, which made it possible for the public to understand how much money they are getting and how much better off, in some ways, they are with the block grant than the English taxpayer or ratepayer, it would be very useful and healthy. If the noble Lord cannot accept the Amendment, I think that at least he ought to have a look at it to see whether or not something else can be put into the Bill to make it understandable to the ordinary taxpayer and ratepayer in Scotland.

Lord HYLTON

My Lords, an important but perhaps rather crude comparison might be drawn between the amount each year of the block grant for Scotland and the amount which flows into the United Kingdom Treasury from Scottish revenue.

4.2 p.m.

The Earl of PERTH

My Lords, my name was mentioned by the noble Lord, Lord Kirkhill, in relation to the discussion on this subject during the Committee stage. At that time I was certainly of the opinion that it might not be very wise to go into too much detail or to try to spell out exactly what form any statement should take which set out the considerations which led the Government of the day to put forward a figure for the block grant. If noble Lords will look at Clause 45, it says quite specifically that, together with the order for payments to the Assembly: …there shall be laid before that House…a statement of the considerations leading to the determinations to be made by the order". In other words, there will be such a statement and the extent to which we have discussed it, during both the Committee stage and now, is, I think, helpful to the Government. However, I feel that if that statement were to be along the lines of the Amendment moved by the noble Lord, Lord Strathcona and Mount Royal, paragraphs (a), (b) and (c) of which are all questions of statistics, the trouble about statistics, as noble Lords know, is that they can be interpreted in such a way as to mean anything. The noble Lord, Lord Leatherland, gave us a very good example of that.

I am not saying that the noble Lord's statistics are right or wrong, but having heard them one is bound to say, "Oh, well, the Scots have done very well". It may be that they have done very well in certain respects and that they have not done so well in others. I feel that statistics alone, as set out in paragraphs (a), (b) and (c) and which are the "guts" of this Amendment, are not in themselves—I was going to say sufficient; indeed, they may be positively misleading. On the other hand, paragraph (d)—a statement of comparative needs and standards—is very different, for it is really the same as that which we find in Clause 45.

To a degree, my noble friend Lord Robbins went along with what was said by the noble Lord, Lord Kirkhill, and I go along with it, too. However, my noble friend said—and very rightly so—that over the years one would hope that a chain of statements would lead to a comprehension and an understanding of what was the general line of policy. I feel sure that that would develop after a few years, and that it is right that it should; but so far as I am concerned I feel, as I felt during the Committee stage, that while it is very valuable to have had these discussions, the Amendments, as listed today, would not, for the reasons which I have given, be suitable.

Lord HOME of the HIRSEL

My Lords, I find myself in very close agreement with the noble Lord, Lord Robbins, and with my noble friend Lady Elliot of Harwood. Until now, Scotland has done so well out of the United Kingdom grant that there has been every reason to keep quiet about it, but as there will be an Assembly these matters will have to become public. I think that the noble Lord, Lord Kirkhill, half accepted this. However, when it comes to the point I hope the Government will make available as much information on these matters as they possibly can, both to the people of Scotland and to the people of England.

I am not sure about this Amendment. If it were to be put into the Bill it would become a rule. If there is to be an Assembly, what we really want is guidance all the time in future years from the Government as to the amount of money that is raised in England and Scotland and, by and large, what it is spent upon. This will have to become public property, so I hope that the Government will be sympathetic to the idea which lies behind this Amendment, even if they cannot agree to include it as it stands in the Bill.

4.7 p.m.

Lord DRUMALBYN

My Lords, may I reflect a little upon this point. The 11/80th formula arose I think, at the end of the 19th century. Probably it was not unconnected with the establishment about 10 years previously of the office of Secretary for Scotland. Government at that time was very much in the form of boards, and a the Scottish Administration became more independent, probably some kind of formula became necessary. Obviously the formula could not be applied with absolute flexibility, and gradually it was departed from.

I remember very well that I mentioned the formula in an Estimates debate on roads which we used to have in the House of Commons at one time, and that I was greatly taken to task on the grounds that the mileage of roads proportionate to population was very much higher in Scotland than it was in England and that their upkeep was very much heavier. There was an interesting feature about that debate. It took place at the time that a separate Scottish roads division was set up. Before then it had been part of the Ministry of Transport. My noble friend Lord Molson, who was Parliamentary Under-Secretary at the time, said, " You won't gain from this in Scotland; you will lose. You have been very generously treated, and you will find that the proportion will go down". And so it did. The proportion of expenditure on roads in Scotland compared with the total proportion of roads expenditure fell after Scotland obtained her own separate roads administration.

Whether or not there is a lesson to be learned from this I do not know, but it seems to me that we are now moving into a situation where a formula will have to be devised as the norm. If one looks at the figures of expenditure for the year 1975–76, which I believe appear at column 6890 in Devolution: Financing the Devolved Services, one finds that if one takes away trade and industry, agriculture, fisheries, forestry, food and the nationalised industries, the rest of the proportions fall into a quite narrow band—a range between 9.4 and 11.8, 11.8 representing housing, which is the highest proportion of total national expenditure in Scotland. Far and away the greatest deviation occurs in trade, industry and employment because of the relatively heavy unemployment in Scotland and the difficulty of attracting industry to Scotland compared with elsewhere. That was way ahead—19.9 per cent. as compared with an average of 11 per cent. of total identifiable public expenditure.

These are the kind of considerations that arise and I do not see that an overall figure is at all meaningful. One might have to develop particular formulae to deal with particular cases, otherwise, in a situation which may not be changing very rapidly on the social side, one might be apt to get wrangles and disagreements which were quite unnecessary. I feel that the suggestion made by the noble Lord, Lord Kirkhill, for a joint committee is an inevitable one. There was one for Northern Ireland and I should have thought there was bound to be one for Scotland. I sympathise very much with my noble friend's objectives in this Amendment but I doubt whether, as the noble Lord, Lord Kirkhill, has said, it would really prove to be practicable. However, one must think in terms of formulae over a period if one is going to avoid perpetual accusations coming from Scotland that Scotland is not getting what it is entitled to in terms of need. It is a difficult situation, but at some point or another I think we have to decide what, over a period of years, Scotland is going to require in terms of need, and stick to it.

Lord STRATHCONA and MOUNT ROYAL

My Lords, I think we have had quite an interesting discussion but I am bound to say that I found the noble Lord's brief negative, vague and evasive and I was left with the impression that the Government simply had not thought what they meant when they put this clause into the Bill. I thought it was very fair when my noble friend Lady Elliot of Harwood said that at least they ought to put in something. I fully accept that it is easy to attack this Amendment. I took the precaution of saying so when I introduced it, because I realised that. However, I was disappointed that the noble Lord concentrated on the negative side by pointing out all the difficulties with the Amendment. It is perfectly fair to do that provided he is prepared to offer us something to put in its place.

Clearly, because of the defects of this Amendment it is not appropriate to press it at this moment. If I heard it aright and I deduced correctly, the noble Lord said one quite specific thing—indeed, it was about the only specific thing that I got from him during the course of this debate. He said that he envisaged that an advisory body would be set up. He then quickly dodged down behind the sandbags again without saying anything further about the nature of the body, who was to pay for it or anything else apart from the fact that it was to be independent. That would more or less go without saying and that was a point made by my noble friend Lord Drumalbyn. We did get one other piece of negative information, in that the noble Lord, Lord Vaizey, was told that there is no Treasury formula. The noble Lord used a happy phrase which escapes me at the moment, but at any rate we discovered that there is not one. I suppose that was useful in its way.

I found myself going in a curious circular argument when we started to try to work out how this is to be done. The noble Lord commenced by saying, "Once the amount has been agreed". Surely the whole point is how the amount is to be agreed. It seems to me that he starts with the answer and then works back to try to see how he is to justify it. He talks about the Government's forecasts of total expenditure without saying how those forecasts have been arrived at, on what consideration and what kind of levels were envisaged when those forecasts were finally produced. Indeed, there was a moment when I received the impression that the noble Lord was saying, "Well, I will tell you what we are going to do: we are going to decide the overall amount of money that is to be spent in Scotland and then we shall decide who is to be responsible for spending which bits of it. If you are lucky we shall give you a bit extra; but, let us face it, the overall figure is fixed right from the beginning". I honestly do not think that that is what people envisage. When we speak about negotiations about the block grant, surely we cannot start with a set answer and then commence dividing up the cash.

I got the impression that the majority of noble Lords felt that the Government were being a little coy here and that they would have liked to see, not necessarily written into the Bill, at least some kind of assurances given by the Government as to what they had in mind. Really we have extracted remarkably little from the Government so far. As usual, the matter was neatly summed up by that politician who has had quite a lot of experience of the matter, my noble friend Lord Home of the Hirsel, who said, "We are seeking some guidance from the Government". I have been seeking to provoke the Government into giving some guidance, but thus far I do not seem to have been very successful. Does the noble Lord wish to intervene?

Lord KIRKHILL

My Lords, with the leave of the House. I do not wish to enter a Committee phase, as it were, but I thought that I had given a clear indication that the Government hoped to set up an advisory body and that that body will have to show very clearly the type of information and the basis upon which the various allocations and formulae are agreed. We cannot be more specific at this stage because we should need to talk about this with the Scottish Administration, once it is set up. That is the principal difficulty facing the Government at this time. It is the reason why I can agree with the noble Lord, Lord Robbins, but not be more positive about it at this time. Whilst I can agree with what the noble Earl, Lord Perth, said and indeed with what the noble Lord, Lord Home, said, I cannot be more specific at the moment.

Lord STRATHCONA and MOUNT ROYAL

My Lords, I know that the noble Lord is doing his best to help us. I can only say that he is keeping his powder quite astonishingly dry, so far as I can see. I do not see any reason to prolong this argument today. I had hoped that the noble Lord would end by saying that he would put on his thinking cap and see whether he could not come up with something productive, even as late as the Third Reading. However, it is quite clear that we are not going to get that. I do not absolutely promise that we shall not have to do his thinking for him, but for the present I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

4.19 p.m.

Lord VAIZEY moved Amendment No. 105A:

Page 23, line 27, at end insert — ("(3) At the request of the Scottish Executive in pursuance of a resolution by the Assembly the Treasury shall in so far as is consistent with Community obligations and other criteria laid down by the Secretary of State cause the rate of any tax or taxes broadly based and general throughout Scotland to be raised or lowered as required by the Scottish Executive, provided that the net amount by which the revenue is so changed does not exceed 15 per cent. of the amount transferred under subsection (1) of this section; and the Secretary of State shall thereafter by Order cause a sum equivalent to the net balance raised to he transferred to the Scottish Consolidated Fund in addition to the sums transferred under subsection (1) of this section, or, as the case may be, a sum equivalent to the amount by which revenue from Scotland has been reduced to be withheld from subsequent transfers to the Scottish Consolidated Fund.").

The noble Lord said: My Lords, in tabling this Amendment it was not my intention to add to the difficulties of the Government because my admiration for the stamina of the noble and learned Lord, Lord McCluskey, and the noble Lord, Lord Kirkhill, and indeed the courtesy and efficiency with which they have dealt with the Amendments has been remarkable and I should like to thank them.

I want to revert for a moment to the last Amendment simply because it is germane to what I have to say on this Amendment. I thought that the answer given by the noble Lord, Lord Kirkhill, was helpful to a considerable degree. It is clear that a number of points to which we have been seeking answers will be met, but I think the prepared briefs make the position rather like a lawyer who brings a charge against a man that he has murdered his wife with an axe and also adds to it, in case that does not stand, that he has blunted the axe as well. If he cannot get him on one thing, he will get him on another. Some of the arguments adduced are really very minor indeed, compared with the importance of the matters which are under discussion.

In the Amendment, which is designed basically to give the Assembly powers to impose taxes on the one hand or to relieve the burden of taxation on the other, we are entering a matter which I think is of great significance and importance. It is a matter that was raised in another place, it was raised here at Second Reading and we have had a substantial discussion on it at Committee stage: it is the principle that the Assembly should have powers to levy taxes, which is supported by the Liberal Party and also, I now find, supported by the Government, both in their White Paper and as recently as in the speech made by the noble and learned Lord on the Woolsack in the Second Reading of the Wales Bill. He said that in principle Her Majesty's Government were in favour of giving tax raising powers both to the Scottish Assembly and to the Welsh body but that they had unfortunately been unable to think how to do so.

So we are not discussing a matter of principle, in my view, which is dividing the great Parties of the State, or dividing Members of your Lordships' House one from another; we are debating practicalities. We are indeed in this Bill introducing a completely new constitutional principle, which is representation without taxation, and I imagine that we shall eventually have a Boston tea party in reverse, presumably when people sit in one of the harbours in Scotland throwing tea bags back into the ships. The suggestions by the experts about the powers of taxation that might be given to the Scottish Administration and to the Assembly were put forward in a paper of quite remarkable feebleness, and the feebleness was not because those who drafted it were particularly feeble-minded, but quite clearly because they wanted to get the answer No, as I think the noble Lord, Lord Home of the Hirsel, said in the Committee stage.

The principle on which the Bill is drawn up is perfectly clear; it is that the present powers administered by the Scottish Office will, to some degree, be handed over to the Edinburgh Assembly, but no powers held by any other Government Department will be handed over if the Government Department can help it, and that applies obviously particularly to the Treasury and the agencies associated with it, and since the power of taxation is clearly one of these it is unlikely that that Department would have agreed that it should find a means of handing over this power.

Before I explain the contents of the Amendment to your Lordships, there are two difficulties here which affect me. First, I shall listen with great care to the answer which the noble Lord on the Front Bench gives to the Amendment because I think it is very important indeed.I have no doubt whatever that if and when the Assembly is set up, within a limited period of time-

I would guess five years-an amending Bill will be introduced into the Westminster Parliament to give these powers to the Assembly. It is quite inconceivable that the Assembly can have any length of life without having taxation powers. That is a general point, and I think it is very important that the House should address itself seriously to this matter.

The second difficulty is that there is quite clearly a constitutional difficulty in any Amendment moved in your Lordships' House dealing with financial powers concerning the Parliament Act and our relationships with another place. It may well be that, if your Lordships carried this Amendment and it were added to the Bill in this House, on its return to the other place it would be certified that it was an invasion of the powers of the other place and in that case a debate could not take place in the other place —I am sorry to have a sentence so illconstructed that I have used the word "place" about fifteen times, but at least I did not use the word "situation". In that case, one of the purposes of moving this Amendment would have been frustrated, because one of the things I want to be considered in the House of Commons is precisely this point, and it seems to me this an opportunity to have this point considered by them in detail.

In the Amendment moved by the noble Lord, Lord Harmar-Nicholls, at Committee stage, as well as the kitchen sink and the blunt axe kind of arguments being adduced—those ridiculous remarks being made about the Scots perhaps raising the rate of income tax to 83 per cent. or whatever it was—the argument was put forward that the Assembly would have the power to increase taxes but not reduce them. I have sought to meet this in this Amendment by giving them the power to reduce as well as increase. Secondly, quite clearly the powers have to be consistent with our obligations under our membership of the European Community, and also there has to be a general power exercised by the Treasury and the Secretary of State. Broadly speaking, what one has in mind is that taxes which are general throughout Scotland, which are broadly based—one has in mind things such as taxes on alcohol and on tobacco which are important revenue raisers—might well be used as a means of giving additional revenue to the Assembly, or alternatively letting the Assembly have things a little cheaper in Scotland, if they so wish.

This is, of course, a perfectly common feature of all federal constitutions. Anyone who has ever driven across the border from Maryland to Pennsylvania knows that as you drive across the price of cigarettes changes, the price of drink changes. If you take a train across Canada and get to the boundary of a particular Province the drink is whisked from your table; it is restored to you as you leave the drier shores of Manitoba. It is really not beyond the wit of man, as we know from all the federal countries in the world, to have taxation powers divided between the federal government and the local governments and for the rates of taxation to vary quite substantially. Of course, problems are raised. Cars are stopped as they cross from Pennsylvania toMaryland because the cars are full of cigarettes; the cigarettes are taken out by policemen and a case is brought. Nevertheless, these differences are inherent in any process of meaningful devolution, because what you mean by giving people devolution is that the standards of service and the costs of service will vary from area to area. If that is not the case then there is not any point in having devolution. My Lords, having said that, I should like to move this Amendment and see what the House thinks about it.

4.27 p.m.

Lord WILSON of LANGSIDE

My Lords, in supporting this Amendment I would say that I wholly share the admiration which the noble Lord, Lord Vaizey, expressed for the stamina, the ability and the other qualities of the noble and learned Lord, Lord McCluskey, and the noble Lord, Lord Kirkhill. I only hope I live to see the day when these undoubted talents will be devoted to a more worthy cause. I confess to one reservation in putting my name to this Amendment, and that reservation derives, of course, from my belief that this Bill is incurable, that it has certain fundamental and fatal defects which will remain after all your Lordships' deliberations and those of the other place are over. This, of course, must be a matter of judgment, but it is a judgment which I gather is shared by many of your Lordships, if not indeed by a majority of your Lordships, as by many in the other place.

Nevertheless, I support this Amendment because, of course, without tax-raising powers this devolution Bill is an altogether empty thing; it is a sham. And it is because it is an empty thing and a sham in that state that everyone with eyes to see, everyone who is not politically myopic, has become conscious of this, and this has contributed to some extent to the ever-growing cynicism and unhealthy public unease at the way in which we conduct our political affairs. If it remains an empty thing it will contribute in the future to further disappointment and discontent.

As I understand it, all Governments are very largely concerned, are they not, with raising and spending revenue? Surely to deny the Assembly the former is to invite its irresponsibility in the latter. That is remarkable for a Government whose principal spokesman on the Bill in this House has been much concerned to urge upon us a sense of responsibility and who has, indeed, been a little critical of the sense of responsibility in the other place. However, on the merits of this Amendment, I cannot add to what the noble Lord, Lord Vaizey, has said. He has added much wisdom, if I may respectfully say so, to this matter which lies so much at the heart of this measure. I commend the Amendment to your Lordships.

Lord HOME of the HIRSEL

My Lords, naturally I associate myself with the comments of the two noble Lords who have just spoken when they referred to the qualities shown by the Ministers responsible on the Government Bench for the conduct of the Bill, although they will not misunderstand me if I say that as a Scotsman I shall reserve my final judgment for Third Reading. However, since 1968, when I sat as a member on a Committee which studied these matters which have been the subject of so much debate in your Lordships' House in recent weeks, I have been convinced that should there be an elected Assembly for Scotland it could not live indefinitely on moneys raised by other people.

Therefore, it follows that the Assembly must, at least in my view, be able to raise some revenue for purposes which are judged by that Assembly to be in the national interest of Scotland. Moreover, unless the Government and those responsible for this Bill can find such a scheme, then we are indeed inviting friction because there will always be agitation in the Assembly to get more and more money from the United Kingdom Exchequer. It may be that some people I know, and some of your Lordships, feel that the Assembly, given the right to tax, would act irresponsibly. I do not believe that to be so. No one wants to be taxed. Constituents are a wonderful deterrent against pushing taxation too far. Nor would any Scotsman, I suggest, want to penalise Scotland by adding to taxation to a point where, for example, industrialists seeking to place a factory would choose England rather than Scotland. I think that the Assembly can safely be given powers to tax.

Now, for the first time in these Parliamentary proceedings, someone has had the temerity to put on paper the shape which such a tax might assume. I think that the noble Lord, Lord Vaizey, and those who support his Amendment, have been ingenious. He has defined the margins within which a tax would be bearable and acceptable. If the Government have a better idea, now they have at least the chance to put it forward and we have the chance to hear it in this House or, if not in this House, there is the chance for another place to study it. In my view nothing could be worse, as the noble Lord himself has expressed, than that, after a few years and after the maximum agitation, Parliament should then have to pass an amending Bill granting the right to tax. If we are to do it. at least let us do it now.

There cannot be any great objection to the Amendment. As the noble Lord, Lord Vaizey, has said, this happens in all federations. Therefore, I should have thought that the noble Lord has done us a service today in putting on paper a form of tax. It may not be the right one, although I happen to think that it would work pretty well. Therefore, the onus is now on the Government to tell us whether they have yet found any way of meeting the point which so many noble Lords have made in the course of this debate. However, unless they can do so, I feel bound to repeat what I said on Second Reading: unless they can find a way in which the Assembly can raise some revenue—not too much, but some—then I think that the whole experiment for an Assembly for Scotland will fail.

4.36 p.m.

The Earl of PERTH

My Lords, the debate so far has been very interesting, but I also feel that what happened in Committee when I moved Clause 60, which was accepted by your Lordships, has been ignored by those who have spoken. Clause 60 specifically gave powers for the Assembly to put forward proposals to the Houses of Parliament for raising money. When that Amendment was carried the noble Lord, Lord Hughes, objected to it on the grounds that it talked only about raising money and not about reducing taxation perhaps pro rata. If it is interpreted only in that sense I should go along with what he said. However, when I moved the Amendment I did not have it in mind as only raising taxes and not reducing them. I visualised that it might well have been that the Assembly decided, for good reasons, just as has been outlined by the noble Lord, Lord Vaizey, that it wanted to increase taxes in certain respects and it would so tell Parliament. However, at the same time it would make it, as I see it, contingent on their being able, if they wished, to reduce taxation in other respects. In other words, I believe that Clause 60 covers the main thinking which is behind the Amendment of the noble Lord, Lord Vaizey.

Let me put forward an example. If, which I think is not at present the case, forestry was devolved again, and if the Assembly wished to encourage forestry in Scotland then it might well say: "We should like to make additional grants for forestry in Scotland, but on the other hand we must raise some money and we should do that by, for example, penalising development on prime land for building purposes". Thus we would get a sort of quid pro quo which might be to the general advantage of Scotland, the Assembly and Parliament.

I have mentioned Clause 60 because in my view, if your Lordships consider that clause, it will be found that it broadly covers the ground mentioned in the Amendment of the noble Lord, Lord Vaizey. Having said that, it is useful to have perhaps a little more detail spelt out about the sort of thing that might happen. However, I should not have thought that it is wise to go as far as that detail, because even then it does not, in fact, become specific in any respect, and I well understand why: one cannot be specific at present. Therefore, I think that it is a very good thing that we debate this matter again, but I should suggest that Clause 60 in practice covers in the most general terms the point about the need to raise revenue. Moreover, I think that it has the advantage that when it goes to the other place it would probably not be considered to be a reserved matter and therefore not able to be discussed.

4.39 p.m.

Lord WIGG

My Lords, I shall trouble the House for only a few minutes. There are aspects of this matter that cause me a great deal of worry. I share the view of the noble and learned Lord, Lord Wilson of Langside, that whatever one may do to the Bill it is still a bad Bill. When it reaches the Statute Book and comes to be applied the results will, in my judgment, be quite disastrous.

The discussions that we are having today upon this Amendment are, to some extent, academic. They are dealing with a situation in the future. The noble and learned Lord, Lord Wilson of Langside, made the point that if, when this measure is on the Statute Book, a new Assembly lacks access to sources of raising revenue, it will become an empty shell. I entirely agree with that. However, during my time as a Member of another place I have seen the effect of proposals, which were impractical, resulting in long delays before the steps that ought to be taken—often quite simple steps—were placed on the Statute Book.

I do not need to tell your Lordships that I know very little about Scottish financial measures. However,I have three granddaughters, all of whom have Scottish accents and who live in Scotland; they have learned the technique of all young ladies, including my daughters, because when occasionally they telephone me I can always answer, "How much?" Apart from that financial interest, I have no knowledge at all.

I want to invite your Lordships' attention to a practical problem, although it may well be that in doing so I am straining your Lordships' kindness at this point; however, I do not know where else to raise it. In Scotland the law regarding racecourses is different from the law in England, and that applies—and it is topical at present—to football grounds and sports grounds generally. The law is linked with what is called the "contractor's principle" and rates are raised upon the capital assets employed and not upon the revenue. It happens that this is the start of a seven-year period when there is a rating reassessment. For a moment I want to invite your Lordships' attention to Ayr, a fine racecourse and the equal of any racecourse in the United Kingdom; I think that Haydock would make fair comparison. Under the contractor's principle the rateable value for Ayr as from 1st April this year will jump from £7,450 to £67,400, which is a crippling charge and will ultimately render Ayr non-viable. Of course, the law ought to be altered in relation to all sports grounds in Scotland and they should be put on the same basis as those in England.

The fact that this measure is being considered seems to me to rule out any possibility of the law in Scotland being altered. Therefore, the question is this. What will happen to the five racecourses in Scotland; what will happen to the football grounds in Scotland, which have to undertake great measures of reconstruction? They will be placed in a very adverse position, with no possibility of the law being altered. One could say, of course, that if eventually there is a Scottish Assembly and it has powers to raise revenue, this is one of the things that it will do. I take leave to doubt that. In a later Amendment I shall argue that particularly in relation to racing one must look at the problem from the point of view of the United Kingdom as a whole. I am saying that one cannot isolate the sporting activities in Scotland from those of the rest of these Islands. Therefore, if one imposes a rateable value of £67,000 at Ayr and its rates are of the order of £40,000 a year, whereas at Haydock they are only £7,000, then the balances are altered very unevenly, and this of course affects all sporting the activities of the Scottish people.

The noble Earl, Lord Perth, raised the matter of forestry. This is a very important subject; it is very important to the livelihood and well being of the Scottish people. However, I suggest that the Scots as a whole—although this may not be the case at the moment—will be more interested in football, greyhound racing and racing and in what effect this will have on them, because that is part of the make-up of their daily lives. Therefore, I invite your Lordships' attention to this problem because I raise it as a practical problem which faces the racecourses and football grounds of Scotland as of this moment in the current financial year. I believe, that in fact, we have the cart before the horse. The practical problems should have been dealt with, but I understand and sympathise with a Government, which is up to their eyes in complex political problems, tending to say "We shall leave this"—as they leave many other things— "We will wait and see how this works".

If we wait to see how it works, I very much doubt whether Ayr, or indeed many of the football grounds in Scotland, will be able to undertake the measures of reconstruction that they should. For that reason, although I support the noble Lord, Lord Vaizey, and the noble and learned Lord, Lord Wilson of Langside, I hope that the Government will—not necessarily this afternoon-find some means of giving attention to this problem, which, even if they measure it in terms of votes, may have more votes in it, rather than worry about the points raised by the noble Earl, Lord Perth.

4.45 p.m.

Baroness WARD of NORTH TYNESIDE

My Lords, this, of course, is a Bill about Scotland. I have been present nearly every day that the Bill has been discussed. It seems to me that no one has asked what will happen to England. I want Scotland to have the best, the most effective and helpful government possible. On the other hand, I was not particularly elected to look after or help to look after Scotland; I have to try to look after my part of the world. Of course, that area is very near to Scotland; I have always represented seats just the other side of the Border, and I have done so to the best of my ability.

However, I am beginning to get very worried when in all the discussions—some for and some against, some with good ideas and some with ridiculous ideas, as many Members have said—no one has said what effect the Bill will have on England, should it ever get on the Statute Book. Various of my noble friends have said that they want more money for industry in Scotland; so do we in the North of England want more money for industry—very much more. Therefore I thought that I should say something now. I do not like this Bill at all. I have no intention of voting for it on Third Reading, because I do not really think that anybody is going to consider what effect the Bill will have on England, and in particular on my part of the world. I do not like it and I shall vote against the Third Reading. If I get fed up with all the arguments I shall not even stay until nearly 11 o'clock tonight.

Lord TANLAW

My Lords, I shall make some attempt to revert to Amendment No. 105A in the name of the noble Lord, Lord Vaizey. We, on these Benches, believe that this Amendment should not be lightly brushed aside. There are some very interesting points in it which, in spite of all the discussions that we have had on the Bill so far, have not really been touched on. However, I would just hope that the noble Lord, Lord Vaizey, is considering in his Amendment only indirect taxation. So far as I can see, there can be absolutely no way in which one could make any distinction in income tax once one crossed the Border. Therefore, presumably the noble Lord is referring to indirect taxation and an opportunity for the Assembly to make a differential. My words are based on this. This is the principle about which we made speeches—no representation without taxation, or at least the right to tax; and in this case, reduced tax is something that we can support.

However, I am slightly worried by the support that the noble Lord, Lord Vaizey, gets from the noble and learned Lord, Lord Wilson of Langside, and the noble Lord, Lord Wigg, which, in my view, is only a wrecking support. If I understand them correctly, they wish to support Amendment 105A only because it might try to wreck the Bill. I feel that this is perhaps not the way to assess this Amendment, which is technical, and I believe has been extremely well drafted, so far as it goes.

The only other question I have is whether the noble Lord, Lord Vaizey, has considered the cost of tax collection. I believe that when he refers to the net amount of tax by which revenue is so changed", the words of the Amendment do not mean "net after the cost of taxatio", because this will increase the overheads of the Assembly, however small or simple the tax may be. On the other hand, I believe that Her Majesty's Government and the noble and learned Lord should look at the possibilities of this Amendment—saving money for the United Kingdom taxpayer from the block grant, and in fact going some distance to rectify the per capita imbalance, which was discussed on the previous Amendment. Although this was explained, I think this Amendment could in some ways rectify this imbalance, or operate as a formula for rectifying it. If the noble Lord, Lord Vaizey, can clarify the one or two points that we have raised, we shall see what will happen.

4.51 p.m.

Lord ROBBINS

My Lords, I agree with those speakers who have said that the noble Lord, Lord Vaizey, has raised an absolutely fundamental point. I certainly agree with Lord Vaizey in principle. I gather that he was supported not only by his co-signatories to the Amendment but by no less an authority than the noble Lord, Lord Home of the Hirsel, that representation without taxation is an empty gift. It will be a fundamental defect of this Bill if it goes forward without making some sort of provision for the Assembly to raise money, or to vary certain rates which are agreed to be suitable for variation.

I cannot believe that we are out of order in discussing this fundamental question. It may be that Lord Vaizey's numerical suggestion would be resented in the other place, but surely we have not been reduced to the position of being precluded from discussing one of the most fundamental constitutional innovations in this century. Therefore I must declare myself to be in principle entirely in favour of the thought which lies behind this Amendment.

I would concede that the matter is difficult in the context of this particular constitutional innovation. The noble Lord, Lord Vaizey, referred with great force to the ease with which these things are managed in straightforward preparations. He gave vivid illustrations of the variation of certain taxes between certain States of the Union. If we were discussing a federal constitution for the United Kingdom, then there might be differences of opinion on detail, but I do not think that there would be any difficulties of a large kind.

We are not discussing federation: we are discussing what I am bound to confess to your Lordships seems to me to be an extremely draughty halfway house. The problem of dividing financial powers in the devolution proposed seems to me to be an extremely difficult one. I agree with what was said from the Liberal Benches, that so far as direct taxation is concerned —income tax, capital transfer tax, and so on—obvious difficulties arise at once. Trusts could be formed in other parts of the United Kingdom. The ingenuity of tax advisers would certainly not be unequal to the job of getting round that one. Therefore, Lord Vaizey's suggestion must essentially be concerned with indirect taxation, and prima facie that restriction certainly makes it much more plausible.

However, here is the difficulty: under present financial practice (and I am not condemning present financial practice) the tax instrument even as regards indirect taxation is used for more than one purpose —for more than one financial purpose, quite apart from matters of the ethics of certain kinds of consumption, and so on. There is an institution in our apparatus of indirect taxation which is called a regulator, whereby the Government of the day—and my remarks apply indifferently to one Government or another—attempt to influence the pace of aggregate growth or the pace of inflation, or maybe the pace of deflation, by overall variation. It would therefore seem to me that under our present constitution it would be extremely difficult for the Government of the United Kingdom to leave an entirely free hand as regards even indirect taxation.

Of course, all that difficulty would disappear if we were discussing something which was more federal in appearance; something which operated under a written constitution whereby, if necessary, there could be appeal to the high Judiciary to discover whether a local variation of a particular tax was, or was not, within the constitution. I find it extremely difficult, at short notice, in the halfway house which the noble and learned Lord and his colleagues have so eloquently been defending, to think out ways to realise this division of powers. But I conclude by saying that I honestly think that it is up to the Government to give more thought to this matter, because if all powers of raising or lowering taxation are denied to the Scottish Assembly, nothing, in my opinion, can be more certain than this as a recipe for disunion.

Earl FERRERS

My Lords, I agree with the noble Lord, Lord Robbins, that this is a fundamental point; and particularly do I agree with his last remarks, when he said that if this problem is not resolved there could be trouble. I am sure we all look forward to the reply of the noble and learned Lord, Lord McCluskey. Many deserved words of congratulation have been expressed to Lord McCluskey for what he and his colleagues here achieved, but one fundamental word of commiseration was left out. I understand that it is the noble and learned Lord's birthday—

Several noble Lords: Hear, hear!

Earl FERRERS

—and I wish him many happy returns, but I commiserate with him at the fact that he is obliged to spend his birthday considering this Bill. I had always thought I had at least 10 years advantage over the noble and learned Lord, but I discover that I have only four days, and then four days the wrong way, and that is the only way in which I shall ever be superior to him.

The noble Lord, Lord Vaizey, has sought to meet an important point by the Amendment. It is not just that if Scotland wants an Assembly on its own, let the Scots pay for it. It is not the frivolous argument, "Let their own Assembly tax them". Nor is it simply a question of saying, "Let us give the Assembly power to tax if, after all, we are devolving powers". The real oint—these are my personal views—goes far deeper than that and was expressed by Lord Vaizey on Second Reading, when he said that every time the Assembly builds or does something the Assembly will be praised, and every time the Assembly does not build or does not do something it will be Westminster that is blamed. That is the fundamental objection which the Amendment seeks to meet. That situation, where the Assembly has the power to spend and does not have the power to raise money, could lead to confrontation, and it is the avoidance of confrontation which should be at the heart of all our consideration whatever our views on the Bill.

I am not an advocate of taxation, but if one devolves powers to the Assembly and if one makes them responsible for domestic issues but then one restricts the money available, there is likely to be trouble. The amount of money available is bound to be restricted—simply because there is never enough to go round—and that restriction will be bound to be put on by Westminster, and therefore it will be Westminster which will be blamed when anything the Assembly wishes to do but cannot do is not done.

My noble friend Lord Home of the Hirsel was right to say that the Assembly would be careful not to over-tax because if over-taxing resulted in industry being driven away, that would have a deleterious effect on Scotland. The inference behind his remarks was that the electorate was a good bridle on the Assembly because people would not tolerate being taxed too much. I sympathise with my noble friend's view, but I am not sure that our experience in the United Kingdom as a whole would lead one to support it. When we seem to be over-taxed very greatly everybody complains like mad, but that does not seem to have a particularly curtailing effect on Chancellors of the Exchequer.

The Amendment seeks to meet a difficulty which the Government have themselves recognised but to which they have been unable to find an appropriate answer. In their White Paper Devolution; the Financing of Devolved Services, the Government said that if the devolved Administration wished to have available a limited supplementary tax power and were ready to meet its administrative cost, the Government would certainly be willing to consider sympathetically any such proposals. The Amendment does not, therefore, run contrary to the Government's wish. It is an attempt to provide something on paper which as yet the Government have not been able to produce, and it is something which others might like the opportunity to discuss. I do not believe it conflicts with the proposal of the noble Earl, Lord Perth—it was an Amendment but it now forms a proposed new clause—because Clause 60 says that if the Assembly wishes to make proposals that power should be conferred on the Assembly, they may communicate such proposals to the Secretary of State. That is a far wider issue than the specific one which the Amendment seeks to put right, and I do not see that it is conflicting, nor would it be superseding.

5.6 p.m.

Lord KALDOR

My Lords, I apologise for not being present at the earlier phases of the discussion; I have only just arrived from my usual abode, which is not London. It is to me a matter of great importance that if the Assembly has devolved powers to do things, it must have the power to raise taxation to satisfy the aims and objectives which the people of Scotland, through their duly elected representatives, wish achieved.

A good analogy would be the difference between the amount of regional aid that is given by the Government to various areas, called development areas, out of general taxation, and the amount of regional aid we could expect to receive for example from the European Economic Community. We can agree that if we were left with only the regional support that is given to Britain from their own resources by the European Community —which resources are of course strictly limited by the contributions which various Member Governments of the Community make available for this purpose—whichever Government were in power in this country would regard such limits on economic aid to necessitous regions as grossly inadequate and would wish them to be supplemented.

I could carry that further and say that the incidence of unemployment may be higher in Scotland than in the United Kingdom as a whole. In fact, generally speaking, it has been higher for most of this century. While the Government at Westminster do a great deal, through their general economic and fiscal policies to alleviate unemployment and in addition do a great deal to give specific support to the so-called special or development areas, I can quite see that the Government at Westminster might not give such a high priority to reducing unemployment in Scotland or to finding employment for the people born and educated in Scotland within the area of Scotland, rather than in the rest of the United Kingdom, and in that event conflict might arise.

In my opinion it would be absolutely legitimate for the Scottish Assembly to say, "We should be prepared to subsidise employment in Scotland out of taxes which are clearly and unequivocally levied on the inhabitants of Scotland and not on the rest of the United Kingdom". It may be said that there are certain forms of taxation the ultimate incidence of which one cannot be very clear on, but that if taxes are levied in Scotland it may affect interests in the rest of the United Kingdom, or possibly in the rest of the world. That is possible, and, therefore, one ought to have certain safeguards as to the forms of taxation. I am not trying to develop this theme here; it would be most improper to do so in this context.

I should like to support the Amendment, but to me it does not seem quite to meet the essence of the problem, just as the draft clauses of the Bill before us do not meet it, because they do not go far enough. I would not know exactly what form this power should take, and what safeguards should be embodied, and so I am not suggesting anything in concrete terms. I wish to say merely that in general I would very much support the idea that the Scottish people should be able to tax themselves for the sake of their own economic development, rather more than the British people as a whole tax themselves for the sake of the development of Britain as a whole.

5.11 p.m.

Lord McCLUSKEY

My Lords, first, I wish to thank noble Lords who have complimented us on our way of conducting the Bill. I find this to be very kind particularly as today is my birthday—a fact to which the noble Earl has drawn attention. Now I wish to turn to the substance of the points that have been raised in the debate. We have discussed the matter of taxation on a number of previous occasions. As the noble Lord, Lord Vaizey, said, the matter was discussed in another place fairly fully. It was discussed during the Second Reading debate here, and we had two discussions at the Committee stage. One of them proceeded upon the Amendment moved by the noble Earl, Lord Perth, when he succeeded in introducing into the Bill a new clause, which is now Clause 60. The other discussion was at about the same time, when we discussed the Amendment standing in the name of the noble Lord, Lord Harmar-Nicholls, which was rather similar in wording to this Amendment.

Before I look at the details of the Amendment, I want to deal with one or two particular points that have arisen in the debate. The noble and learned Lord, Lord Wilson of Langside, talked about the question of responsibility, and it was suggested by him, and, I think, by others, that if the Assembly lacked a revenue-raising power, that would lead to irresponsibility in spending. I can understand that complaint, but I suggest that the matter is not quite so simple as those who made this point suggested. The Assembly will be a body in receipt of a grant, and there are many other examples of bodies, though on a different scale, which receive their finance in the form of a grant. No such body is responsible for raising the money which it then is able to dispose of, but I do not think that it would be generally suggested that such bodies are irresponsible in the spending of their resources.

In practice there is bound to be much competition within the Scottish Assembly, and within the various interests reflected in that elected body, for the resources which are at the disposal of the Administration; and the sponsors of the various competing interests; both inside and outside the Assembly, will certainly be scrutinising with great care the spending of money on fields in which they are less interested, apparently at the expense of the fields in which they would like more money to be spent. That would ensure a degree of scrutiny and, in my view, a degree of responsibility which those who have made this criticism have not properly recognised. There is perhaps more merit in Clause 60 than in the present Amendment, for the reasons that I shall go into in some detail, but it may be that, as the noble Earl, Lord Perth, has suggested, Clause 60 does not raise the same constitutional problems as might be raised by the rather detailed terms of this clause.

My noble friend Lord Wigg referred specifically to the matter of race courses. Of course rating will be a devolved matter, and it will be for the Scottish Executive to exercise existing ministerial powers, and for the Assembly to legislate on the details of the rating system—but the details only. I think that the rest of my noble friend's concerns are not really matters that are vitally related to the terms of the Amendment.

I take seriously what has been said here by the sponsors and supporters of the Amendment, and I will not brush it aside. I hope that the noble Lord, Lord Tanlaw, will not think that I am brushing it aside. However, there is a very important point to be made, which is as follows. The noble Lord rather thought—and I think the noble Lord, Lord Robbins, thought likewise—that the Amendment was largely concerned with indirect taxation. We looked at this matter in connection with the Amendment moved by the noble Lord, Lord Harmar-Nicholls, at the Committee stage, and I think that it is quite plain that in relation to the block fund which the Assembly would be likely to receive, and which would be of the order of £2,000 million, any sum which could be raised additionally by way of indirect taxation would be quite negligible. We do not see that the figures referred to in the Amendment are figures related to revenue from indirect taxation, but rather are related to direct taxation.

As I explained on the previous occasion, there are EEC restrictions on, for example, varying value added tax in Scotland as distinct from the rest of the United Kingdom. So one cannot use value added tax. When one discards that and other taxes for the same and similar reasons, one finds that the amount of money available from imposing a surcharge upon indirect taxation is quite miniscule in the context of a block grant of about £1,870 million, which is the figure based on the year 1975–76. Accordingly, as I pointed out at the Committee stage, I believe that we are talking here, substantially, of an increase in—or, if one looks at the details of the Amendment, a decrease in—the amount that is raised by income tax, and really by no other tax, to give any substantial sum.

Before I look at the detail of the Amendment and criticise it, I want to refer to the fact that the noble Earl, Lord Ferrers—and I think other noble Lords, too—spoke of the possibility that the lack of taxing powers would lead to confrontation and conflict between the Assembly on the one hand, and the Government at Westminster on the other, upon the basis, I suppose, that having no power to raise its own money, the Assembly would be constantly asking for more from the Government, which would lead to conflict.

However, if the Scottish Administration had taxing powers, and brought these into play so as to vary the level of income tax and to increase income tax in Scotland, would it not therefore have to justify that upon the basis that it was forced to do so because of the niggardly attitude of those at Westminster? Thus, the possibilities of conflict and confrontation would be just as large. That is one of the difficulties of giving the Scottish Administration the power to raise any substantial sum by way of additional taxation.

I now turn to the Amendment itself and to its precise terms. I believe that the Amendment incorporates all the objections to which I drew attention when we discussed this matter in Committee, on Thursday, 4th May last. It has certain features similar to those of the Amendment in May, at Committee stage, which I accept and which I can only regard as wholly praiseworthy. But basically—and this is the fundamental criticism of the Amendment—it rests upon a fallacy. The fallacy is that there exists in Scotland, or in the United Kingdom, a choice of taxes—to use the wording of the Amendment, …taxes broadly based and general throughout Scotland…". The Amendment rests upon the fallacy that there exists this choice on which it would be practicable to apply a surcharge.

The Amendment envisages a supplement with total proceeds of up to 15 per cent. of the block fund. Let us take the block fund as being roughly of the order of £2,000 million. Thus a figure of £300 million may be raised under the Amendment. The limit in the previous Amendment (which was spoken to by the noble Lord, Lord Harmar-Nicholls) was 10 per cent. So upon this basis one is looking for a possible raising in Scotland by surcharge upon a restricted number of taxes, of up to about £300 million. It is plain—and I demonstrated it with great clarity, I believe, last time, with detailed figures—that that would involve an increase in income tax, and a very substantial increase in income tax, even if other taxes were also to be increased at the same time. Estimates made of the proceeds of the principal taxes in Scotland in 1975–76 suggest that £280 million—that is, 15 per cent. of the block grant figure for that year—would have represented over 20 per cent. of the proceeds of income tax, and this is a massive variation for which to provide.

The Government have already set out, in the White Paper referred to, the objections which they see to the various supplementary taxes; and they are not objections taken as a matter of distaste by the Government, but real difficulty in relation to the cost of collecting the relatively small revenues, the difficulties with Community regulations and the like. But we have always made it clear, both in debate and in the White Paper and elsewhere, that the Government are willing to consider sympathetically any specific proposals for a limited supplementary tax—and I emphasise the word "supplementary" because the basis of financing must be the block grant, having regard to the fundamental decision which the Government have taken and which I do not think anyone has been able cogently to demonstrate is wrong. The Government take their stand on this ground and consider it wrong to imply, as the Amendment seems to us to do, that the very real problem of tax powers for the Assembly can be, as it were, ingeniously drafted out of existence. We admire the ingenuity and we have no criticism of the drafting; it makes the problem disappear. The problem nonetheless survives the ingenuity of those who move this Amendment.

This Amendment, to look at it in slightly more detail, does not merely attract all the objections which I sought to formulate on the last occasion: it attracts other and new objections, and it does this by providing—and I invite your Lordships' attention to its wording—that the Assembly should be able to resolve that United Kingdom taxes in Scotland are to be lower than taxes elsewhere in the United Kingdom. It is one thing to suggest that, in addition to contributing on a common basis to the United Kingdom pool of taxation and benefiting from this pool on a common basis of relative needs for public expenditure, the Scottish Assembly should be able to raise limited additional revenue of their own for special expenditure for which the block grant could not be expected to cater. It is quite another to suggest that the Assembly should be able to vary the incidence of United Kingdom taxes to the extent of 15 per cent. of the block fund. The Government do not consider that a power to vary United Kingdom taxes on the initiative of the Assembly is really compatible with the concept of economic unity.

Let me develop a point which I believe is very important in relation to the new piece of drafting in this Amendment—the power to lower taxes. It is surely clear to the House that the sums to be paid over to the Scottish Consolidated Fund will represent the view reached by Parliament, after discussion with the Scottish Administration, of what can be properly and fairly allocated to meet what are seen to be Scotland's needs. I am not suggesting that the sums to be paid over will in fact enable Scotland's needs to be met, but a view will be taken of availability of resources and of what are these needs. Of course, the resources will always be somewhat smaller than the needs. But if Parliament is then to decide that this is the sum—£2,000 million, or whatever it may be—to meet Scotland's needs for a particular year, can the Scots then come along the very next week, as this Amendment would empower them to do, and say to the United Kingdom, "Kindly reduce our United Kingdom taxes by 15 per cent., by £300 million?" Because that is what the Amendment would allow them to do; and, of course, to reduce the income tax burden by something of the order of 20 per cent. As I read the Amendment, that seems to be possible. In other words, this Amendment would allow the Assembly to come forward, make such a proposal and really destroy at one fell swoop the whole basis upon which this Assembly is to be financed.

Under the Amendment, again, the Treasury would appear to be given no option but to raise or lower the rates of tax in Scotland if required to do so by the Scottish Executive in pursuance of a resolution by the Assembly. The only qualifications (apart from amount) are that the change in rates must be consistent with Community obligations and with the criteria to be laid down by the Secretary of State. He is given an ultimate and very considerable power. But no indication is given of what these criteria might be, or how they should be settled. This certainly seems to us to be a very loose way to deal with problems of this kind; and we believe that the proper place for provisions about United Kingdom taxes applying in a substantial part of the United Kingdom is in primary legislation at Westminster, and not by this kind of means.

This objection in principle, powerful though we believe it to be, is not the only objection to empowering the Scottish Executive to require the lowering of taxes. The proposition for the lowering of taxes carries with it the same liability to the charge of a bogus prospectus as the proposition for raising them. Just as it is wrong to suggest that options for additional taxation are lying around waiting to be picked up, as I said on the last occasion, in the back of someone's mind or in some cupboard, it is equally wrong to suggest that the resources available to the Scottish Administration are going to be so great in relation to their real needs that they will be able to produce painless spending reductions and pass on sizeable savings to Scottish taxpayers. So it is in my submission not politically real to suggest that the Scottish administration, having, as I have said, reached agreement each year as to what their needs are and what the block fund therefore has to be, can then turn round and say that their spending proposals are in fact not related to those needs but are only 85 or 90 per cent. of them, and thus the Scottish taxpayers are to be given a kind of taxation bonus.

Taxpayers elsewhere in the United Kingdom, as a number of noble Lords pointed out, have in the past been ready to finance identifiable public expenditure in Scotland at a higher rate than in England because these rates were seen to represent Scottish needs. Indeed, over the last years—I think these figures have been referred to—the Scottish rate per head has varied between 133 and 126 per cent. of the rate South of the Border. There is no reason to expect any sudden transformation in Scotland's relative needs, but is it reasonable to assume that taxpayers generally would be content to make available to Scotland a block fund of the size likely to be needed if higher expenditure per head in Scotland was to be coupled with lower rates of tax in Scotland? It is difficult to think of anything better calculated than that to cause ill-feeling South of the Border, and to cause ordinary people to wonder about whether the Union should continue.

I believe the Government have always made clear that they would like to see a power for limited supplementary taxation. The Government have looked in vain for a tax that is suitable. They did, as your Lordships recall, propose one in the original White Paper—that was a surcharge upon the local rates—and that was greeted with a blast of criticism from all directions, including Members of your Lordships' House. The Government's position, which I believe to be honest and straightforward and which does not attempt to hide the problem, is: Let the Assembly be formed and let it consider these matters. If the Assembly can produce a tax which meets the criteria which we share with the movers of this Amendment, then it should be possible to come back to that. It may be five years, as the noble Lord, Lord Vaizey, has said; it may be longer. We just do not know; but that is surely the honest and respectable way to do it. Let us start with the Assembly, with the block grant. Let us then see if they can come forward with a proposal which would enable them to raise revenue—a power which we should like to see them have. Then, if it can be done, let the United Kingdom Parliament legislate to do it.

Lord HARMAR-NICHOLLS

My Lords, I hang on to one sentence in the noble and learned Lord's reply. He said, in effect, that the idea behind this Amendment will not be brushed aside by the Government. I hope that the suggestion contained in his last words about letting it wait for five years to see what the Assembly might do is not the only thing that the Government have in mind. I would suggest that, if they are not desirous of brushing aside the idea behind this, then before we get to Third Reading, and in the light of the discussions we had at Committee stage plus the discussions we are having now on Report stage, the Government really ought to make an effort to put something into this Bill so that, when it goes to another place, there can be a hook on which to hang a discussion there. That will give the Government extra time to find the sort of thing that might meet the point. Unless we have some Amendment which will provide this hook, it will not give the other place the chance to combine in trying to find the sort of answer that the noble and learned Lord had in mind—if it can be found.

Lord McCLUSKEY

My Lords, I wonder why the noble Lord, Lord Harmar-Nicholls, does not regard Clause 60 as a suitable hook.

Lord HARMAR-NICHOLLS

My Lords, I do not, for the very reason that I think the noble Earl and the noble and learned Lord himself have given. It is not precise enough. Clause 60 is good, but it envisages some sort of delay. If you read Clause 60, there is no question of it being in the Bill when it becomes an Act. Indeed, it is very likely the hook that the noble and learned Lord had in mind when he said that after the Assembly had been in being for five years, maybe it would want to do something about it. I take it that it would be on the basis of Clause 60 that the Assembly would attempt to do something about it. I would suggest to the noble and learned Lord that that is perhaps a bit too late. If you allow the Assembly to be formed and if it is out of conflict that the answer to this is found, then I believe the damage may well be done. If the Assembly, in its early days, has to appear to battle for something, it could be that the things that some of us fear—fears, certainly, that I have that this Bill is full of conflict—will be proved all too early to be a fact.

The noble and learned Lord, supported, I think, by my noble friend Lord Home of the Hirsel, suggested that if this Amendment or something like it were accepted there would not be any irresponsible spending, because Governments do not like to apply taxes. I think that that is true. That is an argument for an Amendment which gives them the power to raise taxes. If they have the power to raise taxes, then they must accept the odium that goes with raising taxes. I think that it is that odium that would bring about more responsibility in the way that they would want to make themselves popular with the electors in Scotland. My fear is not that they would be irresponsible; my fear is that they would give the impression of wishing to spend something, if they are under no obligation to raise the money that they have to spend and, therefore, earn the odium. I suggest that it is almost certain to happen. We have seen it happen in local government and all other authorities where they work on a block grant—and they are only human.

I have no doubt that the Members elected to the Scottish Assembly will go through all the same gimmickry in order to show how kindly they are and how popular they want to be. People will go through that anywhere where there are members elected. I maintain that what is likely to happen is that they will say: "The block grant is not enough; it does not enable us to give you the hospitals that we would like to give you or the sort of education we would like to give you and that it is our wish to give you—and it is Westminster which is preventing this. They will not give us enough money." The Assembly will say "We ought to get more money; otherwise we shall not be able to give you what you want and what we, your elected representatives, wish to give you."

If they have the power to raise taxes up to a certain limit in order to get money to provide whatever they wish to give, there is always the answer: "If you think it is as good as that, if you think that the Scottish people want it, there is no real problem about your raising the taxes. People would be prepared to pay the taxes in order to get this desirable thing that you have talked about." So long as they have not got that power, then, as elected representatives—and when you are elected, when you have the vote in mind, it is amazing how generous you can be with somebody else's money—they will put forward all sorts of presentations as to what they would like to do and what would be desirable; and there will not be the possibility of having the brake put on of somebody being able to say, "If you want to do it, do it! You have certain taxation powers in order to get it done."

I believe that the irresponsibility is likely to arise not from giving them the taxation power but from not giving them the taxation power. That is the practical answer and it goes alongside the strong point made by the noble Lord, Lord Vaizey, when he said that representation without taxation, as a principle, is a bad thing. If you add to that principle the practical point that I am trying to emphasise to your Lordships, one can see that there is every advantage in giving them the power. You are meeting the principle to some extent and you are giving them the power which will stop this irresponsibility.

I know that the noble Earl, Lord Perth, sometimes chastises me when he thinks I am giving the impression that the standard of government exercised by the Scottish Assembly will be below the level of anywhere else. But, no, I think it will be the same. The standard of Government when you give power to people and they have to get votes to retain the power, is suspect all down the line. That is the strength of this House. You must never be elected to this place. I differ front my noble friend Lord Home and Lord Carrington on that. Never be elected! You can never be impartial when you are elected because you are always wondering how the popular vote may be affected. Also, never be paid! The minute you get paid a reasonable figure you must justify the pay. The great impartiality and, therefore, the strength of this House springs from the fact that it is non-elected and not paid and the Members of this House are able to bring their skills to it with impartiality. That will not be the case with the Assembly. They are going to pay themselves and they are going to be elected and, therefore, will have all the frailties that are known to those who have gone through elections.

What may happen—and I know that the noble Earl, Lord Perth, will accept it in the way it is intended on this occasion—is that you will have people elected to the Assembly and, on one occasion or another, they may have a majority who are prepared to twist the tail; and if they spend more of the block grant on, say, education instead of allocating sufficient for health or hospitals and other things which are within their power, then they can be left literally without money, having spent it on one aspect of their powers. This will make it essential for them to get more money to meet another aspect that has perhaps been almost deliberately neglected. I believe that that is a possibility that we must keep in mind if irresponsible groupings eventually get that sort of power. It would weaken the risk of that happening if they had this limited power to raise taxes. I think it would meet the principle and it would meet the practical considerations.

However, perhaps the most damning thing that the noble and learned Lord said about the whole Bill was when he turned over the coin and said that if you gave the Assembly power to raise taxes and it did so, then raising the taxes would make it unpopular and it would say, "We would not have to do it but for the Westminster Government." He said that that would cause the conflict. If, on whichever side of the coin you look—be it on our side, who want to give the Assembly the power because we say that if it does not get it, there will be conflict; or be it on the noble and learned Lord's side—does it not emphasise what a dangerous Bill this is as a whole that there does not seem to be an answer to one of the most fundamental questions that the whole Bill raises? This is an aspect outside this particular Amendment that we must keep in mind while examining the Bill.

On balance, I feel that to give them the power to raise taxes in order to remove from them the opportunity of saying that it is somebody else stopping desirable things being done is likely to produce less conflict. But you cannot remove conflict from this Bill. At one stage or another you are going to get it. On this particular aspect of it, I think that giving the Assembly power to raise taxes is likely to reduce the risk of conflict on this particular issue. That is why I am hanging on to that one sentence that the noble and learned Lord used: that the idea will not be brushed aside by the Government. I hope that they will produce something that will give another place a chance to have a further look at this, so as to see whether they can find the words or some system to add to Clause 60 brought in by the noble Earl, and can do it so that we have not got to wait for the five years envisaged by the noble and learned Lord. If it has to be brought in after the Assembly has been in existence for five years, it will be brought in only as a consequence of conflict. Once the issue has been soured by conflict it is very much more difficult to get back to something like an equilibrium.

I do not know how the noble Lord, Lord Vaizey, is going to deal with this Amendment. I accept very much the argument of the noble and learned Lord on the reduction of taxation. That was put in as a cosmetic. I do not think anybody thought there was a chance of the Government reducing it. The argument that the noble and learned Lord used on that is absolutely sound: the idea of reducing taxation when they were still getting a £2,000 million block grant would cause the noble Baroness, Lady Ward of North Tyneside, to jump over the roof if her part of the world had to pay their part of this grant when taxation was being reduced. I accept absolutely what the noble and learned Lord said. With that removed from it, I hope that the noble and learned Lord will try to find some way before Third Reading of inserting something which will give his colleagues in another place an opportunity of facing up to the lesser of the conflicts. While one will not remove them one can get a lesser one, and that is what we should aim at.

5.42 p.m.

Lord LEATHERLAND

My Lords, I shall be very brief indeed. I must confess that I was rather amused when I heard the noble Lord, Lord Harmar-Nicholls, say that these Scotsmen would not indulge in any irresponsible spending. That seems to be a truism; it seems to be in accordance with ancient custom. But I think that Clause 60 completely meets the situation. Let me read it: If the Assembly decides", that is, Home Rule for Scotland, if I may put it in rough terms— that it wishes to make proposals that power should be conferred on the Assembly to raise by taxation monies to be paid into the Scottish Consolidated Fund, they may communicate such proposals to the Secretary of State who shall lay such proposals before both Houses of Parliament". "…who shall lay such proposals before both Houses of Parliament", if the Scottish Assembly decides that it wants to increase its own taxation. I think that the emphasis is on the right two places there: First of all, if the Assembly decides; secondly, if both Houses of Parliament agree. That gives Scotland the right to apply for increased taxation if it so wishes, and it enables the House of Commons, with its overall responsibility for taxation in the United Kingdom, to say whether or not taxation in Scotland should be increased.

That is everything I want to say, except, if one can visualise a situation where the Scottish Assembly were to bring about a considerable reduction in taxation, to look at the problem which will be raised by migration, emigration from England to Scotland. On the other hand, if the Scottish Assembly were to increase taxation over and above the level which is levied for the United Kingdom as a whole, consider the hordes who will be crossing the Border, coming south and crowding our already overcrowded cities. Speaking seriously, Clause 60 completely meets the situation.

5.44 p.m.

Lord VAIZEY

My Lords, this debate must be unique: instead of having six Lords of Appeal speaking we have had three professors of economics—and for once all on the same side. I must say that the birthday of the noble and learned Lord on the Front Benches is a noble and honourable day in this House. The professors of economics would probably give him an alpha in jurisprudence and advocacy but, I am inclined to think, a gamma or perhaps a gamma-plus in political economy. The point about bodies already having the power to spend without the power to tax is not, if the noble Lord, Lord Harmar-Nicholls, thinks about it, a valid one. It is perfectly true that the area health authority where I live, which includes Charing Cross Hospital, has the power to spend money but not the power to tax. However, the area health authority for the Charing Cross Hospital area is appointed and not elected. That is a fundamental difference. People who are elected naturally will expect to influence the amount of money spent.

Secondly, it is quite clear that by the use of a reductio ad absurdum one can make any proposals sound absurd. To suggest that my Amendment implies that there will be a rise of 20p in the pound in income tax in Scotland, not parallel to that in England and Wales, was an argument that the noble Lord produced in the Committee stage. I thought that it was so embarrassing on his lips that I chose at that stage not to reply to it. I think it is so self-evidently silly that I will not reply to it at this stage, because clearly one is concerned with the agreement in principle between us that the power to tax should be given to the Assembly. There is no difference in principle at all between the noble and learned Lord who sits on the Front Bench and myself in this respect. The only difficulty is that he cannot think of any taxes that can be increased. Therefore, if he agrees in principle, again as a matter of simple logic, in practice there must be some tax or other that can be increased.

Lord KALDOR

My Lords, the Amendment, as drafted, introduces a spurious symmetry by speaking of raising or lowering taxes. It is one thing to say that the Assembly should have a power to raise taxes in order to meet specific expenditure in Scotland; but if it is a question of power to lower taxes, surely it ought to make corresponding savings to the United Kingdom Government and couple the proposal with a reduction of specific expenditure which is a burden of the United Kingdom Exchequer. Otherwise it would be totally irresponsible.

Lord VAIZEY

My Lords, I am grateful to the noble Lord for that intervention. I am glad to say that when I learned economics at his feet I learned it properly, and I think that the last three lines of my Amendment deal specifically with that point. I was coming on to a point which the noble Lord, Lord Kaldor, taught 30 years ago at Cambridge; namely, that the notion of economic unity in the United Kingdom is perfectly consonant with the fact that the present levels of taxation throughout the United Kingdom, properly considered, at the moment vary from area to area. For example, if one lives in Scotland one is in an area which at the moment is subject to the beneficial provisions of the availability of grants, because one lives in an area of economic development. This puts one in a favourable position vis-à-vis people who live in Greater London. Unless one considers taxation and expenditure together, the notion of considering economic unity is a highly abstract one and, if I may say so, it is the way in which lawyers think about it and not the way in which people concerned with public expenditure and raising revenue do so.

I am impressed that two men of such vast experience have spoken in this debate. The noble Lord, Lord Home of the Hirsel, spoke in support of the notion that the creation of an Assembly of this power without the power to levy taxes is a recipe for difficulty. The noble Lord, Lord Robbins, pointed out that this halfway house between our present unitary State and federalism is one which is going to be a temporary transit camp, a kind of refugee camp on the road to dissolution. It is for that reason alone that I drafted this Amendment and supported Amendments moved in Committee stage.

If I may deal with the question of direct and indirect taxation which the noble Lord, Lord Tanlaw, raised, may I say that I had in mind principally indirect taxation: for example, the power to levy a hotel tax. Scotland is a very important tourist country. The Swiss Cantons have differential hotel taxes. I had in mind the power to vary the drink tax and the tobacco tax. Again, these are examples drawn directly from the United States which is not an unsuccessfully administered country; its cost of living taxation are lower than those here.

I would not rule out the possibility of variation in direct taxation. The unity of the island of Ireland economically has not been substantially affected by the existence of an independent Government in the Republic which has differential powers with respect to direct taxation. Having reflected on this matter, the balance of the argument lies with the people who have put down this Amendment. I am inclined to think that, in view of the weight of those who have spoken in its support, it is likely that if the House were to divide it would be carried.

I then come to the statement, which did move me, of the noble and learned Lord on the Front Bench which covered the question of conflict with the other place. This is a very serious matter, and that brings me to the whole question of Clause 60, the Amendment to which was carried by the noble Earl, Lord Perth, at the Committee stage. Personally I do not think that Clause 60 is an adequate substitute for the Amendment. Nevertheless I think that this Amendment carries with it the possibility of conflict between this House and another place which I should not like to see arise from an Amendment moved by a Cross-Bencher, moreover one who is generally sympathetic to the way in which this Government has handled this matter. With your Lordships' permission, I beg leave to withdraw this Amendment.

Amendment, by leave, withdrawn.

Clause 49 [Limitation of capital expenditure financed by borrowing]:

5.52 p.m.

Lord KIRKHILL moved Amendments Nos. 106 and 107: Page 25, line 29, leave out ("the British Waterways Board or") Page 25, line 29, leave out line 36.

The noble Lord said: My Lords, if it would be for the convenience of your Lordships, I propose to take Amendments Nos. 106 and 107 together. These two Amendments are consequential on the deletion of "inland waterways" from Group 15 in Part I of Schedule 10. They remove the British Waterways Board from the group of bodies whose borrowing requirements must be accommodated within the annual limit to be laid down under Clause 49. The bringing forward of these Amendments is consequential on the Amendment of Group 15 in Committee, carried, of course, against the Government's advice. They are brought forward without prejudice to the attitude which the Government may think it right to adopt on the matter of inland waterways when the Bill returns to another place. I beg to move.

On Question, Amendments agreed to.

Clause 51 [Scottish Comptroller and Auditor General]:

Lord KIRKHILL moved Amendment No. 107A: Page 27, line 2, after ("Scottish") insert (",Welsh").

The noble Lord said: My Lords, subsection (4) of Clause 51 as it stands disqualifies the Scottish Comptroller and Auditor General from membership of the House of Commons, the Scottish Assembly and the Northern Ireland Assembly. This Amendment extends the disqualification to membership of the Welsh Assembly also.

Lord MONSON

My Lords, is it not constitutionally dubious to take it for granted that Parliament is automatically going to follow a predicted course of action? After all, there is no such thing at the moment as a Welsh Assembly—it is even farther away than the Scottish Assembly—nor, incidentally, is there any Northern Ireland Assembly, which is also mentioned in the same subsection on page 27. Suppose that this noble House were to decline to give a Third Reading to the Wales Bill, which it has every right to do, what then?

Lord KIRKHILL

My Lords, I can respond to this extent: That my advice is that it is competent for me to lay this Amendment before your Lordships' House, and I do so.

Earl FERRERS

My Lords, I wonder whether the noble Lord would be kind enough to look at this point again, because the same thoughts are going through my mind as were expressed by the noble Lord, Lord Monson. I think the answer would be to insert the words "any Scottish or Welsh Assembly" as opposed to "the Scottish or Welsh Assembly". I do not see how you can possibly say that there is a Welsh Assembly when there may well not be. If the noble Lord would consider on Third Reading inserting the word "any", that would solve the problem.

Lord KIRKHILL

My Lords, with the leave of the House, I am further advised that it is permissible to refer to bodies in a Bill which has had a Second Reading in the second House, as this one has.

On Question, Amendment agreed to.

Clause 55 [Accounts Committee]:

Lord GRAY moved mendment No. 108: Page 28, line 18, at beginning insert ("The members of").

The noble Lord said: My Lords, this Amendment concerns Clause No. 55. The point is quite a simple one. We have now moved from the raising of revenue to the accounting for revenue received. Clause 51 has appointed a Scottish Comptroller and Auditor General. In Clause 54 the Scottish Secretaries are required to furnish him with accounts of the monies for which they are responsible. Clause 55 reads: The Assembly shall appoint an Accounts Committee, which shall examine and report to the Assembly…". Subsection (2) provides: The Accounts Committee may include one but shall not include more than one person who is a Scottish Secretary or an assistant to a Scottish Secretary". My points are two. First, is it the Government's intention that the Accounts Committee referred to in subsection (1) shall consist entirely and solely of Members of the Assembly or is that not their intention? If it is their intention that it should include only members of the Assembly, would it not be better to say so in the Bill? It is possible that the noble Lord, Lord Kirkhill, will refer to exchanges between himself and me on Thursday night at about half-past ten o'clock in relation to committees in general, when he said that where the Assembly was appointing a committee it was safe to assume that it meant a committee of members of the Assembly. I entirely agree with him about that. I note that in the Wales Bill, page 8, Clause 17(3), in a rather wordy clause where the word "Assembly" is used three times they take the trouble to say: shall consist of such number of members of the Assembly as the Assembly may determine". I think there might be the same doubt here. I beg to move.

Lord KIRKHILL

My Lords, speaking, as I should not do, in a personal capacity just before I open my remarks, I have not yet quite got to the Wales Bill myself. However, I am going to disappoint the noble Lord, Lord Gray, by re-running the same comment as I made to him last Thursday night. In the Government's view the Amendment is unnecessary as its purpose is met by the Bill as it stands. I am advised that in the case of any Statute there is a presumption that unless express provision is made to the contrary, members of a committee or sub-committee must be members of the parent body. The clause as drafted accordingly ensures that all Members of the Assembly Accounts Committee shall be members of the Assembly, as does Clause 27 in relation to the appointment of committees generally to deal with devolved matters. Had the contrary been intended it would have been necessary to provide explicitly that persons who were not members of the Assembly could be appointed members of the committee.

I am also bound to say that in the Government's view it would be unwise to accept this and the following Amendment. To do so would raise doubts as to the interpretation of other statutory provisions relating to committees where no explicit requirement is made as to membership of a parent body. An example of that type of difficulty is that the Amendment to Clause 55 as presently proposed would immediately cast doubt on the right interpretation to be placed on Clause 27—a clause we have already passed by. That, in brief, is the Government's position.

Lord GRAY

My Lords, I am grateful to the noble Lord, Lord Kirkhill for that explanation. I certainly should not want to disturb other Statutes. I thank him for furthering my education in this matter and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

[Amendment No. 109 not moved.]

Clause 60 [Proposals for powers to raise moneys]:

The Earl of PERTH moved Amendment No. 111: Page 30, line 5, leave out ("they") and insert ("it").

The noble Earl said: My Lords, the background is simply that I made a grammatical mistake in the clause. I think it was the noble Lord, Lord Shinwell, who pointed out that collective nouns could be either singular or plural. The noble Lord, Lord Campbell of Croy, made the same point. I had committed the crime of using the singular in one place and the plural in another place. If my Amendment is accepted, I shall be able to pass my exam without having to go back to school again!

On Question, Amendment agreed to.

Schedule 10 [Matters within legislative competence of Assembly, and within powers of Scottish Executive]:

6.1 p.m.

The Earl of PERTH moved Amendment No. 111B: Page 53, line 9, after ("Libraries") insert ("(including access to the block giant, special purchase grants and the National Land Fund)").

The noble Earl said: My Lords, I am afraid this will be a longer speech than I made just a moment ago. I should like to make two preliminary points. One is that I must declare an interest in that I am a trustee of the National Library of Scotland. The second point is that, with the permission of your Lordships, I will talk in a general way not only about my Amendment but also about that of the noble Earl, Lord Haig. I ask to be allowed to do this not because I want to speak specifically about his Amendment but because the whole of the trouble involved here has arisen from a happening during the Committee stage. That arose from his Amendment but it covered the two Amendments we are considering now.

Lord CAMPBELL of CROY

My Lords, I wonder whether the noble Earl would kindly give way. I think it is inevitable that in our discussion of this Amendment, which is very similar to the next Amendment, we should be talking of common ground. But as it is Report stage and we can speak only once on each Amendment, I think it would give us greater flexibility if we could take them separately.

The Earl of PERTH

My Lords, I entirely agree with that and perhaps, if it is not out of order, I might make the point that, if your Lordships gave us leave at some time, we might want to "bend the rules" about Report stage, bearing in mind that the whole of this trouble has arisen because of a mistake made at the Committee stage. However, perhaps I need not elaborate further on that at this moment.

At the time we were considering the Amendment by the noble Earl, Lord Haig, the noble Baroness, Lady Stedman, stated quite clearly, not once but several times during the debate, that special purchase grants would he available for the libraries, the museums and the galleries. At this moment I w ill quote only one example of what took place in our Committee stage debate. At column 805 of Hansard, on 9th May 1978, the noble Baroness, Lady Stedman, said this: The noble Lord, Lord Campbell, made the point about special purchase grants. Extraordinary action by the Treasury will continue to be available, as now, and allocations can still be made to the galleries, and so on, of Scotland. I hope that this assurance clears up the point". In her statement, she made it crystal clear that there were to be three sources of funds for the libraries and for the museums and the galleries: that is to say, the block grant; the special grant, about which the whole of this trouble has arisen, and the National Land Fund. Since the Committee stage, however, the noble Earl, Lord Haig, has received a letter which goes back on this undertaking and says specifically that the noble Baroness was incorrect when she said what is quoted in column 812 of Hansard of 9th May 1978. The letter says: I was incorrect in stating that if any special extraordinary circumstances should arise in which extra money needs quickly to be made available to save a very valuable work of art, then the Scottish Administration can come to the Treasury to make their case". Let me say at this stage—and I say this with all the conviction and strength in my power—that I in no way blame the noble Baroness for what has happened. Nor do I in any way—and I know that I speak for all your Lordships on this—doubt her good faith. I could not do that. I am in no way criticising her. I am, however, criticising the brief which led her to say what she did in her letter.

I can think of only two possible explanations. One is that the Scottish Office prepared the brief and did not clear it with the Treasury and that the Treasury afterwards said, "Oh no, that won't do", or, alternatively, that the Government themselves changed their minds. It does not matter which explanation is the right one because it comes to the same thing; the House was misled at Committee stage, and this is a lamentable affair.

What do we do now? So far as my Amendment is concerned, concerning the National Libraries, I ask that we pass the Amendment which allows us to have recourse for the libraries to the special grants as well as to the block grant and the National Land Fund. That would have been the position we thought we were in at the Committee stage. I only hope that the Government are reviewing this matter and, having heard the arguments deployed, will give way on this point.

So far, so good—or so bad. But, my Lords, this is not the end of the unhappy affair for, having now turned down in the letter recourse to the Treasury for special grants, the letter goes on to say this: The above-mentioned arrangements are, of course, without prejudice to the freedom of action by the Government to make funds available in any case it thinks fit for any purchase, whatever the circumstances". If that is not the case of a door being ajar (which in the earlier part of the letter I had been told was closed) to make special representations to the Treasury, I do not know what is.

I am frankly appalled at the muddle in which we find ourselves, and it confirms my fears that no one, and certainly no ordinary person, be they connected with a museum or gallery or simply a person interested in saving works of art, can have any idea of how the present system works or of how it will work in the future for Scotland. Therefore, for the reasons I have given, I very much hope that the Government will reconsider their position and agree that, both for the libraries and for the museums and galleries, we can have recourse to the Treasury for special grants. As we are back, in a sense, at Committee stage I hope it will be accepted that if somebody does, for very good reasons, feel bound to ask leave of the House to come back again, this may be permitted.

Lord CAMPBELL of CROY

My Lords, as the noble Earl, Lord Perth, has mentioned, it has come to light since the Committee stage that the Government inadvertently misinformed your Lordships during the Committee stage, on the subject of special purchase grants. It is important that this should be corrected now in your Lordships' House, because it was in Hansard and was widely reported in the Press. As I indicated earlier, when the noble Earl kindly gave way to me, the same error applies to the immediately following Amendment in the name of my noble friend Lord Haig. The noble Earl, Lord Perth, is concerned with libraries and his Amendment applies to them. As I see it, my noble friend's Amendment covers libraries, but also applies to museums and galleries. So that there may be a difficulty about accepting both Amendments, if the House decides to take a decision on them. But perhaps I may come to that at the end of my speech, because when I have spoken I intend to suggest how the House might proceed because of that problem.

The Earl of PERTH

My Lords, I think that they are quite different. My Amendment includes access, whereas the Amendment of the noble Earl, Lord Haig, is to exclude. In other words, I am allowing that things shall be included, while he is asking that they should be excluded.

Lord CAMPBELL of CROY

My Lords, there is, none the less, a contradiction, because it would be a curiously worded Act of Parliament which said "Libraries, including special purchase grants", if another Amendment took out special purchase grants for libraries. But there may be an additional point concerning the National Land Fund, which is in the noble Earl's Amendment. My own impression—and no doubt the Government have looked at this carefully, with their draftsmen—is that my noble friend's Amendment will also cover what the noble Earl, Lord Perth, wants to do in his Amendment. But it would be difficult to pass both of them, as they are at present worded.

The main point is that we accepted what was said to us in complete good faith about special purchase grants. This had been raised by my noble friend Lord Haig when he moved the Amendment in Committee stage, and it is a matter which I particularly spoke on when I followed him in the debate. As Secretary of State for Scotland, I had been concerned with applying to the Treasury for money additional to the annual purchase grant quota, in order to purchase for Scotland some very special and expensive works of art, which today, if your Lordships go to Edinburgh, you will find are showpieces in the galleries and museums.

The noble Baroness said that the special purchase grants will continue, because they are not mentioned, the principle of the Bill being that something is reserved by silence. That is where the difficulty has arisen in the Bill. We then said "Right, we now understand that the special purchase grants will continue, and in the kind of situation where the Secretary of State decides that a Domenichino should be bought for the Scottish National Gallery—because it is something which would be very special in that comprehensive collection, where there is at present a gap—if there is agreement in the Government, the Treasury will then allocate a special purchase grant, with, of course, a limit to the amount which the agents of the Secretary of State can bid". We were told that, and the Government's assurance was that the present system would continue.

Indeed, when my noble friend Lord Haig wound up, he said: We have had a very interesting debate on this Amendment and I am very grateful to the noble Baroness, Lady Stedman, for her helpful reply, particularly about additional special grants, regarding which the noble Lord, Lord Campbell of Croy, made a plea. I am most grateful for the assurance that we have been given on that point".—[Official Report, 9/5/78; col. 814.] It was perhaps the most important matter that arose in that debate. The situation has now completely changed, because those of us who took part in the debate received letters, which the noble Baroness was very courteous in sending to us; but that was just the four or five Peers who took part in the debate. To my mind, the new information, which now contradicts what the Government said on that occasion, greatly alters the situation.

My noble friend Lord Haig will no doubt say more when we come to his Amendment, but the point which is now being corrected refers to libraries in this Amendment, as well as to museums and galleries, which are also dealt with in my noble friend's Amendment. I suggest that when the debate on the Amendment of the noble Earl, Lord Perth, is concluded, we might proceed to the Amendment of my noble friend Lord Haig, because I believe—and the Government may confirm this—that it covers everything in the noble Earl's Amendment. If it does not, then what I suggest is that there might be an opportunity on Third Reading to do any tidying up. But having examined the Amendments myself, I should prefer to pass my noble friend's Amendment, which deals with special purchase grants, and purchase grants for libraries, museums and galleries, and is not simply limited to libraries. I think that it also covers the National Land Fund.

6.17 p.m.

Baroness STEDMAN

My Lords, with the leave of the House, I think that perhaps I go so far with the noble Lord, Lord Campbell of Croy. The Amendment proposed by the noble Earl, Lord Perth, and the one proposed by the noble Earl, Lord Haig, are so interrelated, that perhaps we can bear that fact in mind and have a general discussion on them and then take a decision on the two Amendments separately, at the end. Otherwise, I shall bore the House tremendously by giving something like the same reply to both Amendments, because the same facts apply. This might be simpler, but I am in the hands of the House.

Lord CAMPBELL of CROY

My Lords, whatever happens, we have to take the Amendment of the noble Earl, Lord Perth, before the other, and if we were to divide, or if the Government accepted the Amendment of the noble Earl, Lord Perth, that would make the second Amendment much more difficult to accept. It may be that the House will accept what the noble Earl, Lord Perth, has suggested, which is that some of us might be able to speak two or three times, which we would not have been able to do. I see the Deputy Chief Whip disapproving of that. But we have a right to speak once on each of these Amendments, so that perhaps my noble friend Lord Haig should speak now in this debate, because it is the same main subject, and should reserve his opportunity to move his Amendment later, so that he can speak briefly on that again, without going over the same ground.

Lord STRABOLGI

My Lords, since the noble Lord referred to me, perhaps I may remind your Lordships that the mover of an Amendment has the right to speak twice.

Lord CAMPBELL of CROY

Yes, my Lords. We have accepted that all the way through, but it was he who made the suggestion. When I talk about speaking once, I am referring to all those Members who do not have their names to Amendments and are not in a position, therefore, to wind-up.

Earl HAIG

My Lords, at the Committee stage of the Bill, I moved an Amendment to reserve money spent on purchase grants to museums and galleries. My view was that the task of preserving our artistic heritage for posterity was a major one, and that we should be very careful how we were using our resources which, in certain events, might be inadequate. My belief was that to include all purchase grants in the block grant to the Assembly would be wrong. However, in view of the assurances given by the noble Baroness, Lady Stedman, that the special grants for important work would still be channelled direct from the Treasury and apportioned to galleries, with expert advice from the Standing Commission, my noble friend Lord Campbell of Croy, and other Members of the Committee, took the view that since the lion's share of the purchase funds would be administered on a United Kingdom basis, the lesser annual grants might be devolved. This compromise did not have my support at the time, since I felt it was questionable how certain it would be that the Assembly would be able to allocate the large amounts needed, both annually and in special grant form, when other more materialistic needs in Scotland might have to be taken care of. As a past trustee of the National Galleries of Scotland, I can see that to separate annual purchase grants from special purchase grants would be difficult to operate in a fair manner.

The approach to the affairs of the National Galleries is from two directions. The first aspect has to do with the availability of works to students and others who want to learn about and enjoy their artistic heritage. The second aspect has to do with the purchase of pictures to enlarge collections, to fill gaps, and, where necessary, to purchase works which hitherto have been on loan. In our last debate on this subject the noble Baroness, Lady Stedman, stated that the purchase of pictures: cannot logically be regarded as separate from the other activities of the galleries". With the greatest respect to the noble Baroness, I would say that the acquisition of pictures has always been to a large extent independent of the administrative functions of the galleries. In fact, administratively speaking, the two functions—purchasing on the one hand and the administration of galleries on the other—are already conducted through separate departments. The cost of presentation and education and of salaries is subject to scrutiny by the Civil Service Department. The other function, involving the annual purchase grants, is subject to the recommendations of the Standing Commission on Museums and Galleries, and the Civil Service Department are not consulted at all.

The special grants and the annual grants are, in fact, linked together. One is considered as a necessary addition to the other, to be given in special circumstances. All purchase grants are linked with the taxation system. I think in our last debate the noble Lord, Lord Robbins, suspected that the future affairs of the National Galleries of Scotland might cause the noble Lord, Lord Donaldson, a headache. I must confess that the whole question of taxation causes me—and, no doubt, other noble Lords—a headache for a considerable part of the time. Certainly mine aches at the thought of the millions of pounds needed to preserve our heritage. Many lawyers and trustees will have their eyes on this Bill, not least to see how it affects the acceptance of works of art in payment of capital transfer tax. The noble Lord, Lord Robbins, in his speech referred indirectly to the Sutherland Collection which is on loan and housed in our recently enlarged gallery in Edinburgh. The noble Lord said: If they were not kept there I would say that it would he a disaster not only for Scotland, but for the United Kingdom of Britain". Before leaving the subject of purchase grants, perhaps I should mention that in the recent past all purchase grants have been devoted by the National Galleries of Scotland to the purchase of national heritage calibre works rather than to works which might be considered to be gap fillers in the collection. This is due to the critical period in which we live. It does not apply, for special reasons, to the National Gallery of Modern Art or to the National Portrait Gallery, where they still continue to allocate some of their money to pictures which will fill the gaps.

Perhaps I may refer to the letter, to which my noble friend Lord Perth has referred, from the noble Baroness, Lady Stedman, in which she has withdrawn her assurances on behalf of the Government, made during our last debate. On that occasion, as has been said, the noble Baroness assured us that special grants would continue to be paid direct from the Treasury and would not be devolved. The noble Baroness has now put matters in a different light and I have had no alternative but to put down another Amendment to give the Members of your Lordships' House another chance to review the situation in the light of her letter.

I must thank the noble Baroness for what she has written. If there were any misleading element on her part, I absolutely understand that it was not at all intentional and I agree with and support everything that the noble Earl has said. Noble Lords will remember that it was her assurance that galleries would have access to "extraordinary money for extraordinary purposes" which carried so much weight in the last debate. In her letter the noble Baroness explained that her remarks had referred to the National Land Fund rather than to special purchase funds and that access would still be possible to the Fund in cases of special and urgent need.

I understand that the findings of the special Sub-Committee on the Future of the National Land Fund are due to be published this week. It may well be that the National Land Fund may be phased out and the money moved elsewhere. Possibly, so far as Scotland is concerned, money for special art purchases will go through the block grant. The noble Baroness has mentioned in her letter that the Government would be free to make funds available in certain places and that works appropriated through the help of the National Land Fund would be allocated, in appropriate circumstances, to institutions in Scotland. My concern is whether there will be enough money available to pay for the retention of works of art—for example, some of the works now on loan from the noble Duke, the Duke of Sutherland, in Edinburgh, should they be put on the market, and whether there might he a danger of their leaving Scotland, either for London or for America. Perhaps when the noble Baroness comes to reply she could give us some information about the future of the National Land Fund.

Before I sit down, perhaps I may mention a remark I overheard while visiting the Cézanne Exhibition in Paris last week. An Englishman, admiring one of the last great portraits of the gardener Vallier, said to his companion how important it was for this painting to be available to the public rather than remain in a private collection. Perhaps he did not realise that the painting actually belonged to the National Galley of Washington; and, indeed, the majority of paintings in that wonderful exhibition had travelled over from America. Perhaps I might also mention the fact that the reproduction on the cover of the exhibition catalogue was of our Edinburgh Mont Saint Victoire.

The point of my story is to warn of the increasing erosion of works of art across the Atlantic. It is vital that we maintain a proper defence system, and the best way, in my view, is for taxes raised by the Treasury to be channelled by the Treasury, with expert advice, direct to the bodies who have the responsibility for maintaining our heritage.

6.28 p.m.

Lord ROBBINS

My Lords, I should like to begin by echoing the remarks made by all previous speakers regarding the statement made by the noble Baroness, Lady Stedman, and the letter which followed it. No one who heard the noble Baroness in previous debates could possibly entertain the notion for a moment that she was intending to mislead the House. No one reading her letter, which she was so kind as to circulate, could fail to realise that some mysterious change has taken place. I shall not follow the noble Earl, Lord Perth, in speculating as to the source of this mystery. However, it is a matter of grave perplexity, and those of us who have had the business of administering gallery or library funds in the past must, I think, be a little disquieted by the obvious change of mind and the suspicions regarding the change of mind which must inevitably accompany it. But enough of that.

To the outside world, the anxiety which some of us display in this respect must be itself a matter of considerable amazement. If one considers in the abstract the principles relating to some reasonable devolution scheme on the planet Saturn, let us suppose, what could at first blush seem more reasonable than that among the subjects devolved should be the care of libraries, museums and galleries? I am sure that, stated in the abstract, that is a proposition which would seem to be good sense to those—I will not call them the unenlightened, but to those who have not had the responsibility for this particular kind of administration here and now in the United Kingdom.

What is at stake here? I speak with some diffidence as regards the libraries. I have had a good deal to do with libraries in the course of my life and I suspect what I am going to say is true there, at any rate so far as the world famous libraries are concerned. But I speak with absolute certainty as regards the affairs of national galleries. I was associated with the National Gallery in London for 21 years and I know the National Gallery of Scotland very well indeed since at one time I had business connections in Edinburgh which caused me to visit Edinburgh once a month; and I would usually sneak away from my business affairs to go and look at the masterpieces in that precious collection.

What distinguishes the concrete case with which Her Majesty's Government are confronted in this particular connection, from the abstract position which I have already stated, is this: What is at stake are objects of immense financial value. In the present situation of world markets they are at a degree of peril which until a. year—or is it two years?—ago, on the death of a certain American millionaire, had never existed to the same extent before. Now that the affairs of the late Mr. Getty are being cleared up, it is obvious that whatever distribution is made among his various associates, there will remain as a residue in the hands of the trustees or curators of the comparitively small Getty museum North of Los Angeles, a capital sum, the interest on which will enable these people to outbid every other single national gallery in the world. That is a situation from which there is no escape by assigning the business of saving these treasures to the Scottish National Assembly and the limited sums that it will have at its disposal.

Of the precious objects which still remain in private hands in the United Kingdom I cannot say how many books there are whose order of importance is of the degree that I am contemplating. But if the Getty fund were available when the—what shall I say?—35 or 45 internationally top works of art which are in private hands in this country come on the market, it would only he within the competence of the Government of the United Kingdom to save them. These are the brute facts of the situation and I hesitate to think that representatives of a Government under whose Labour predecessors' auspices there was instituted a Ministry of Fine Arts, which has done so much to ease the position of those responsible for safeguarding the national heritage, can put their heads in the sand, confronted with this enormous danger and shrug it off by saying "Well, this can be a matter for the Scottish Assembly", and conjecturally perhaps for the Land Fund, whatever happens to it in the future, unless it is substantially enlarged.

After all, if I understand correctly the letter of the noble Baroness, the noble Lord, Lord Campbell of Croy, would not have been able to apply for a special grant for Scotland in respect of the Domenichino. That was not in lieu of death duties; it was a purchase from the Dulwich Gallery. I think I have said enough. In conclusion, I simply say that, were the few remaining masterpieces of art, archaeological remains and literary production still remaining in private hands to migrate on a large scale to other countries, from the cultural point of view it would be a disaster, the magnitude of which it would be very difficult to exaggerate.

The Earl of SELKIRK

My Lords, the noble Lord, Lord Robbins, has spoken of the peril and I have no doubt it is very real. The Bill as it is structured devolves the subject but gives no direct, clear method by which an essential element of that devolved subject can properly be handled. There is no assurance of the division between annual administration and grants which those who speak with authority, such as the noble Earl, Lord Perth, and the noble Earl, Lord Haig, have said is essential and I should have thought that the experience of any one in galleries shows that it is essential.

I have no doubt that some reference to special grants must come into the Bill in one form or another. The Bill is quite silent on this point. It merely devolves the subject and leaves the rest open. Two methods have been suggested, one by the noble Earl, Lord Perth, and one by the noble Earl, Lord Haig. The method of the block grant has the advantage of getting the Assembly behind the request. This is obviously in many ways an advantage, which I do not misunderstand. But I have to recognise how strongly the Assembly will demand some form of block grant. We must in fairness remember that block grants once made are at the free disposition of the Assembly.

I do not want to cast any slurs, but this is the way the Bill has been constructed and it is something one obviously has to look at and take into calculation. There is obviously a conflict in this field between what I might describe as the immediate needs, on the one hand and eternal values, on the other. This is a conflict which any democratic Assembly obviously has to face up to. We in many ways, through the National Commission for Museums and Galleries, have been very successful in doing so. But it is not an easy course to pursue, and I think we could not lightheartedly enter into an idea which does not recognise that there is this conflict, and that it will be always there.

The other method is the exclusion of the purchase grant altogether and placing the responsibility for the grants where the money is, in other words with the Treasury. I am not quite certain, taking the long and the short, which is the best way. I am a little inclined to think that the exclusion of these subjects, keeping them quite separate from the maintenance of the galleries and the arts, is probably the surest way, and I am inclined to think that to put the responsibility clearly where money is available, which is, of course, through the National Commission for Museums and Galleries, the Treasury, is the correct place. I would only say this. I am sure we ought to put in something which will ensure that there is clear access to the source where special grants can be obtained. I think this House would he failing in its duty if it did not put in one method or the other.

Baroness STEDMAN

My Lords, before I begin to reply to the Amendments, may I acknowledge the very generous way in which noble Lords from all parts of the House have received my letter explaining the misunderstanding and the way I came to misinform the House on the last occasion. I will try to do better this time. It is the Government's intention that the responsibility for the Scottish National Museums and Galleries and the National Library of Scotland should lie with the devolved Administration as part of its responsibility for education and arts in Scotland. The intention is that the devolved Administration should have control over all aspects of those institutions, including both their normal purchase grants-in-aid and any special purchase grants which the institutions may seek. In our view, it would be inappropriate for the Scottish Administration to be responsible for the overall development of the national institutions in Scotland, including their organisation, salaries and staffing, provision of accommodation and maintenance of buildings and their contents, and yet have no responsibility for the provision of funds for the purchase by the institutions of objects for their collections.

I am sure the argument cannot be—and I do not accept it—that the Scottish Administration will be any less conscious of the importance of purchase grants and of cultural and artistic matters generally than are the Government here at Westminster. The Scottish Administration will have very wide responsibility for the arts. It will obviously wish to draw up priorities and to develop coherent policies across very broad subject areas; that is what devolution is all about. On the practical level, it just does not make sense to give the Scottish Administration full responsibility for funding the national museums and galleries but to preclude them from all responsibility for funding purchases for those collections—as if the building could be separated from the objects to go in it. This will not make for good administration, nor will it make for good government.

On the cultural level, it would be less than generous, and in my view gratuitously insulting, to suggest that the devolved Administrtion will neglect the importance of building up the national collections and preserving the Scottish heritage. I would have thought that the reverse is much more likely to be the case.

The Amendment of the noble Earl, Lord Perth, in so far as it devolves "access to the block grant and special purchase grants", is, in our view, unnecessary. Both the annual and special purchase grants are to be devolved and their cost will be met from the Scottish Consolidated Fund—the "block fund". It is perhaps not generally appreciated how large this fund will be. Based on the 1975–76 data, the White Paper on Devolution: Financing the Devolved Services, stated in Table 3 that the block fund would amount to £1,871 million. It will clearly be greater in money terms by the time the devolved Administration takes office. So if special circumstances arise and the devolved Administration considers that additional funds should be made available to a particular Scottish national institution to enable it to secure a particular object or collection of outstanding importance, it ought to be within the Administration's capacity to make whatever special purchase grants it considers necessary and to be able to do it quickly, with that amount of money in the block fund.

It is also important to say that these arrangements are, of course, without prejudice to the Government's freedom of action to make funds available, or to make purchases, in any case that they think fit for any purpose, whatever the circumstances. If the Government go ahead and buy some special object or picture or book which they think would be better housed in one of the Scottish institutions, then I am sure that is what they will do.

The case made by the noble Earl, Lord Haig, for reserving purchase grants is based on the premise that these grants are linked to the taxation system, which will be outside the jurisdiction of the devolved Administration. While I agree that taxation policy may affect the number of important objects coming on to the market, I do not think it follows that decisions on the level of purchase grants necessary to secure a reasonable proportion of these objects for the national institutions need be taken by the same authority which decides the taxation policy. There is no reason why the devolved Administration should not take whatever steps seem to it to be appropriate to deal with any new situation that may arise from a change in taxation policy.

I feel that the intention underlying both Amendments in so far as they relate to the National Land Fund is the same, although the method of achieving the aim is different; it is to ensure that after devolution purchases made with money from the fund would be allocated, as now, to institutions in Scotland. I can confirm that that is the position that the Bill achieves as it stands. The National Land Fund itself is to be reserved as part of national finance and taxation, and if the fund continues to be administered broadly as at present then works of art acquired through the operation of the fund will be continued to be allocated in appropriate circumstances to institutions in Scotland as they have been in the past. So in this respect we believe Lord Haig's Amendment is unnecessary.

Lord Perth's Amendment would have the effect, perhaps unintentionally, of devolving to the Assembly legislative control over the operation of the fund in Scotland. This is totally unacceptable. But if the noble Earl's purpose is to ensure that the national institutions will continue to be eligible for works acquired through the fund, as I have explained, the Bill as it stands does not in any way prevent this. I know that there are very serious worries in the minds of noble Lords from Scotland, particularly about the possible future of the Sutherland Collection. It is quite obvious that if by some calamity it suddenly all came on to the market together then there would be considerable problems for both the Scottish Administration and, I should have thought, for the Government of the day as well. However, even in circumstances such as death, some of these treasures might very well be taken in lieu of death duty and remain in the Scottish institutions. In other cases the block grant might be sufficient to buy some of the major ones.

If there is a real, desperate urge, but no money available, to buy any special part of this collection—if it ever came on to the market—or something similar then presumably the same procedure would take place as takes place now. There would be a public appeal issued and perhaps the Government here at Westminster, after representations from the Secretary of State, could make a similar amount of money available if the rest were raised by private subscription. That sort of thing is possible with or without the Bill.

The noble Earl, Lord Haig, was kind enough to give me notice that he planned to raise the question of the National Land Fund and the fact that we were awaiting the report which we now understand will be with us very shortly. However, the Government are still awaiting that report. Obviously we cannot say what is in it, because we do not know what is in it at present, and we do not know what procedures it will ill recommend about the acceptance of property in lieu of tax. It is possible that there may have to be changes in the operation of the Fund following the consideration of the report and whether the recommendations are accepted. However, at this stage it is obviously too soon to comment on that.

It has been a little worrying discussing the two Amendments together although the task has been made easier because they cover the same area. As we see it, the two Amendments operate quite separately. If both are carried, then the words in the first Amendment would qualify only libraries and the words in the second Amendment would certainly cover art galleries and, possibly, museums. As we see it, if only the second one is carried, then it would completely exclude from the legislative and executive competence of the Scottish Assembly the matter of purchase funds for libraries, art galleries and museums: these would all revert to the funds in Britain. Therefore, we think that there are problems with both of the Amendments. The Government's advice is that the Bill enables the Assembly to do what it wants to to. It ought to have enough money in its block fund to be able to make its special purchases and to make them quickly so that works of art are not lost to the country.

The Earl of PERTH

My Lords, I am afraid that we have got ourselves into a rather complicated situation. I can only say that the Amendment which I tabled and that which the noble Earl, Lord Haig, tabled are both due to the muddle which was made by the Government during the Committee stage. We were given very short notice and tabled them at the end of last week.

With that background, let me make clear the situation as regards my Amendment. So far as the Libraries are concerned, they are perfectly ready ordinarily to be looking to the block grant to provide them with their funds for book purchases. However, we also want to be able to look directly to the Government for special purchase grants and for access to the National Land Fund. As I understand it, the Amendment which I have tabled at present does not give effect to that, partly because instead of a comma I should have inserted a full stop to make it clear that libraries are separate from museums and galleries. That being the case, I think that to avoid confusion it would probably be best for me not to press my Amendment this evening. However, I put your Lordships on notice that on Third Reading I shall want to table an Amendment which isolates the libraries from the museums and galleries as regards access to the block grant, but allows them access to the special purchase grants and to the National Land Fund.

It is all very well for the noble Baroness, Lady Stedman, to say that the block grant will be some £2 billion and therefore there is lots of room for a special purchase grant. I should remind your Lordships that the Government's budget is 20 or 30 times larger and yet, when it came to the question of saving Mentmore and its treasures, they could not even agree to £200,000 a year for five years. How can the noble Baroness say that special purchase grants can come out of the £2 billion when the Government cannot do that when their budget is so many times larger? Therefore, it is essential that the libraries as well as the museums and galleries should have access to special purchase grants—that is what it is all about—and should not rely on the block grant. It may very well be £2 billion, but that is nothing compared with the total funds which are available for these purposes.

Therefore, I shall not press my Amendment this evening. However, the Amendment of the noble Earl, Lord Haig, is another matter. If that Amendment is pressed and carried, then I hope that it is sufficient for me to say that when we come to Third Reading I shall introduce an Amendment to make one difference between the museums, galleries and the libraries—namely, that the libraries shall have access to the block fund and then afterwards to the others. I hope that that is acceptable to your Lordships.

The LORD CHANCELLOR (Lord Elwyn-Jones)

My Lords, is it your Lordships' pleasure that Amendment No. 111B be withdrawn, which I understand to be the intention of the noble Earl, Lord Perth?

The Earl of PERTH

My Lords, yes, that is my intention.

Amendment, by leave, withdrawn.

6.57 p.m.

Earl HAIG moved Amendment No. 111C: Page 53, line 9, after ("galleries") insert ("(excluding purchase funds which comprise annual purchase grants, special grants and access to the National Land Fund)").

The noble Earl said: My Lords, I suppose that a comma has never caused so much difficulty to your Lordships. I have been amazed at the ingenuity of certain noble Lords in enabling us to overcome this problem. However, we have overcome the problem and I now feel that I have said enough in the two speeches that I have made and I do not want to say any more. It is now my pleasure and honour to move Amendment No. 111C.

Lord CAMPBELL of CROY

My Lords, I wish to speak briefly on this Amendment which arises from the mistake which the Government had written to several of us about. I do not expect the noble Baroness, Lady Stedman, to repeat those comments which she made regarding the Amendment of the noble Earl, Lord Perth, which also apply to this Amendment.

The noble Lord, Lord Robbins, has rightly pointed to the need to buy outstanding works of art when they are needed as central parts of collections in Scotland. Also, noble Lords have spoken of the need to stop their departure abroad. We believe that this must be done on a national scale and that there is a need for co-ordination at national level. The fact that we are now being told the opposite about special purchase grants from what we were told during the Committee stage is disquieting and raises doubts about the whole way in which reserved matters are identified in the Bill by silence. We were told that because special purchase grants were not mentioned in the Bill we could assume that they were reserved.

My sympathy goes to the noble and learned Lord, Lord McCluskey, because it was he who explained this to us. Now we can no longer be sure about it. We were told that they were reserved because they were not mentioned. However, we must ask how many more subjects there may be which we have not been able to raise because they have not come to mind, but which, if we went into them, we might find were not mentioned but were not, in fact, reserved.

I am glad that the noble Earl, Lord Perth, withdrew his Amendment because it referred to libraries alone; as a result of the drafting that he has mentioned it would have been difficult for this Amendment of my noble friend, which refers not only to libraries but to museums and galleries. But the point is that if this Amendment is passed by your Lordships, the block grant will still be available for the administration of libraries, museums and galleries. It is simply the purchase of acquisitions which is dealt with.

I realise that in the case of libraries the purchase of books happens the whole time, whereas the purchase of works of art and objects of art by museums and galleries is probably less frequent. So there is a difference there, but I believe that my noble friend Lord Haig should now press his Amendment and, if it is successful, any drafting gloss that is necessary for libraries can, as the noble Earl said, be done on Third Reading. However, I certainly think that another place should be given the opportunity to consider this important matter.

Lord MORRIS

My Lords, I rise to support my noble friend Lord Campbell of Croy. He has made a point of fundamental importance, as did my noble friend Lord Selkirk. It is the point of construction legislation by silence. It is a very long-established principle in English law, which goes back nearly 300 years that when construing a statute there is a presumption that the legislature does not intend any alteration in the existing law except that which it expressly declares. That was established in 1708 in the Court of Common Pleas in the case of Arthur v.Bokenham where Thomas, Lord Trevor, Chief Justice, said: The general rule in exposition of all Acts of Parliament is this, that in all doubtful matters, and where the expression is in general terms, they are to receive such a construction as may be agreeable to the rules of common law, in cases of that nature; for statutes are not presumed to make any alteration in the common law, further or otherwise than the Act does expressly declare; therefore, in all general matters the law presumes the Act did not intend to make any alteration; for if Parliament had had that design, they would have expressed it in the Act.". That illustrates the fundamental necessity for having some sort of Amendment in this way. That principle was reiterated much nearer our time, in 1952, by Lord Justice Devlin, who stated in the case of the National Assistance Board v.Wilkinson: It is a well-established principle of construction that a statute is not to be taken as effecting a fundamental alteration in the general law unless it uses words that point unmistakably to that conclusion.".

Viscount THURSO

My Lords, I wonder whether the noble Baroness, Lady Stedman, can help us. It seems to me that there are two reasons why noble Lords are worried about the way in which the Assembly is to be charged with the responsibility of purchasing for Scottish galleries. One is that they are worried that there may not be the will and the understanding to run the galleries properly or to give the support to the galleries that the galleries deserve. Frankly, this is a worry which I do not share. I think that an Assembly based in Edinburgh will have the will and the understanding to support the galleries which exist in Scotland.

However, the other worry is that they may not have the wherewithal. I am not quite clear about how the funds get to the Assembly. We are told that there is a very large block grant and that somewhere hidden in this block grant is a sum of money which, in normal circumstances, would be sufficient to allow the Assembly to purchase important works of art, if that became suddenly necessary. What is not clear to me is whether this would be enough in one year to do the sort of thing that might arise, or whether over a period of, shall we say, five or 10 years enough money will have come through in a series of block grants to build up a fund.

Indeed, it is not clear to me whether it would be within the powers of the Assembly to establish some sort of purchase fund. After all, when a Scotsman plays a tune on the bagpipes, before he actually plays a note he has to blow air into the bag. In this case if the Assembly is to have sufficient funds to meet the kind of thing about which we have been hearing, it seems to me that the bag has to be inflated to the size at which it will be capable of playing any notes that may be necessary or, indeed, any cadence which may be necessary.

Therefore, I should very much like to know whether the noble Baroness thinks that the Assembly will have powers to accumulate funds from the block grant without having the block grant diminished because it has not used them in a given year. I should also like to know whether, in her opinion, the amount available in the first year of the Assembly's life is likely to be enough to meet any emergency that might arise in the first year. I think that I have said enough to make the problem clear, but it is a worry and one which obviously lies behind some of the remarks made by noble Lords.

Baroness STEDMAN

My Lords, with the leave of the House, may I say that it will be for the Assembly to decide how it uses the funds at its disposal. If it thinks that the best way of doing this and of securing something for the future is to establish a purchase grant, it is for the Assembly to take the decision to establish its purchase fund. If it wants to build it up and is able to build it up over a period of years, all the better.

I can see the problem and what lies in the minds of the Scottish Peers present—for instance, if the whole of the Sutherland collection were to come on to the market at once. But we cannot legislate in case that should happen. That is something which we should all have to face and put our minds to very quickly if there was not enough money, if all these valuable things came on to the market at once and we did not want to lose them. However, on the straight question asked by the noble Viscount, the answer is: Yes, the Assembly can decide to set up a purchase fund, and, yes, they can build it up over the years.

The Marquess of LINLITHGOW

My Lords, I did not mean to intervene, but I have listened very carefully to the debate both in Committee and during this stage. I have been asking myself the questions which we have all been asking ourselves—namely, as it stands will the Bill make it easier for the Scottish galleries, museums and libraries to retain and augment their possessions? Is not the position to be altered, or, in fact, will it be made more difficult? From what I have heard—and nothing would give me more pleasure than to uncouch my lance and rush to the rescue of the noble Baroness—I do not think that she has satisfied the House. As far as I am concerned, what I have been listening to so carefully has, I fear, now persuaded me that this Amendment must be supported. I believe that in spite of all that has been said, owing to the Bill the Scottish galleries, museums and libraries are in greater danger of losing their possessions than they were before. Therefore, unless I hear something to the contrary, I must support the Amendment.

Lord BROWN

My Lords, I find myself unable to remain silent. I did not want to prolong this debate. However, I have always been amazed at the amount of time that this House is prepared to give to debates on works of art et cetera. No doubt what I am about to say will brand me as a Philistine in the eyes of many. I do not mind if it does. I imagine that if my noble friend rose and said that the Government were prepared to set up some special fund of £300 million or £400 million it would be very satisfactory to most noble Lords in this House; but it would be highly unsatisfactory to about 99.5 per cent. of the citizens of this country. When I hear the noble Lord, Lord Robbins, talking about the possibility of Paul Getty's fund buying up some Scottish treasures, saying that this would be a national disaster, I think that he has used grossly exaggerated language, and that the priority given to the value of these matters is much too high.

Lord ROBBINS

My Lords, I used the words "national cultural disaster".

Lord BROWN

My Lords, it is still "national disaster", whether you add "cultural" or not. If we sounded out opinion in this country on the values we are putting on these things, the amount of time we are prepared to give them and the priority we give to this business of buying up works of art which the citizens do not know exist and many of which have never been on exhibition at all, I think we should be surprised. We shall find ourselves getting into a position where we have to compete with the gigantic offers being made largely by Americans owing to the tax laws that they operate, which allow museums and art galleries to get huge funds at their disposal.

We cannot go on like this. We shall have to lose some of these works of art, rather than divert sums of money which are necessary for other social priorities to this business of saving these works of art. I understand that many of the people in this House have grown up with treasured works of art in their family homes and I have not, but I understand the value that they put on these things. However, we have to keep a perspective on these matters, and, listening to this debate, I think that there has been an over-emphasis of a particular aspect of this Bill.

Earl HAIG

My Lords, in view of the uncertainty over this issue and in view of the words expressed, I am strongly of the view that I should press this Amendment. It is not just because of the major problems that the noble Baroness has raised—and others have talked about the Sutherland collection—but the ordinary annual problems. The fact is that art, as the noble Lord who has just spoken said, is not number one priority in the minds of the people. It may well be that if money is given to the block grant, there could be money which should go to the galleries given to other needs. That is my main reason for moving this Amendment.

Resolved in the affirmative, and Amendment agreed to accordingly.

Lord STRABOLGI

My Lords, I beg to move that the further consideration on Report be adjourned during pleasure until twenty minutes past eight o'clock.

[The Sitting was suspended from 7.20 p.m. until 8.20 p.m.]

7.12 p.m.

On Question, Whether the said Amendment (111C) shall be agreed to?

Their Lordships divided: Contents, 74; Not-Contents, 46.

CONTENTS
Ampthill, L.	Elton, L.	Mottistone, L.
Avon, E.	Emmet of Amberley, B.	Mountgarret, V.
Balerno, L.	Ferrers, E.	Norwich, V.
Balfour of Inchrye, L.	Fortescue, E.	O'Neill of the Maine, L.
Belstead, L.	Glenkinglas, L.	Onslow, E.
Birdwood, L.	Greenway, L.	Perth,E.
Bridgeman, V.	Grimthorpe, L.	Rankeillour, L.
Burton, L.	Haig, E.	Rathcreedan, L.
Campbell of Croy, L.	Home of the Hirsel, L.	Reigate, L.
Carr of Hadley, L.	Hylton, L.	Robbins, L.
Carrington, L.	Hylton-Foster, B.	Romney, E.
Cathcart, E.	Inglewood, L.	Ruthven of Freeland, Ly.
Cockfield, L.	Killearn, L.	Sandford, L.
Colville of Culross, V.	Kilmany, L.	Sandys, L.
Cottesloe, L.	Kinnoull, E.	Seear, B.
Craigavon, V.	Kinross, L.	Selkirk, E.
Croft, L.	Lauderdale, E.	Strathclyde, L.
Cullen of Ashbourne, L.	Linlithgow, M.	Swinton, E.
de Clifford, L.	Long, V.	Trevethin and Oaksey, L.
Denham, L. [Teller]	Lyell, L. [Teller]	Vickers, B.
Digby, L.	Manton, L.	Vivian, L.
Dundee, E.	Margadale, L.	Ward of North Tyneside, B.
Ellenborough, L.	Massereene and Ferrard, V.	Wilson of Langside, L.
Elles, B.	Minto, E.	Young, B.
Elliot of Harwood, B.	Morris, L.

NOT-CONTENTS
Aylestone, L.	Gregson, L.	Sainsbury, L.
Bacon,B.	Hale, L.	Samuel, V.
Balogh, L.	Hanworth, V.	Shepherd, L.
Birk,B.	Harris of Greenwich, L.	Stedman, B.
Boston of Faversham, L.	Henderson, L.	Stewart of Alvechurch, B.
Brown, L.	Houghton of Sowerby, L.	Strabolgi, L.
Collison, L.	Janner, L.	Tanlaw, L.
Crook, L.	Kaldor, L.	Taylor of Mansfield, L.
Davies of Leek, L.	Kirkhill, L.	Thomas of Monifieth, L.
Davies of Penrhys, L.	Llewelyn-Davies of Hastoe, B.	Thurso, V.
Diamond, L.	Lovell-Davis, L.	Wallace of Coslany, L.
Elwyn-Jones, L. (L. Chancellor.)	McCluskey, L.	Wedderburn of Charlton, L.
Fisher of Camden, L.	Northfield, L.	Wells-Pestell, L. [Teller]
Gaitskell, B.	Oram, L.	Winterbottom, L. [Teller]
Gordon-Walker, L.	Peart, L. (L. Privy Seal)	Wynne-Jones, L.
Goronwy-Roberts, L.

Moved accordingly, and, on Question, Motion agreed to.