HC Deb 14 February 1978 vol 944 cc301-51

'When laying a draft order before the House of Commons under section 44(2) of this Act the Secretary of State shall also lay before the House a calculation setting out a comparison of the proposed resources per capita which would be available as a result of the approval of the draft order for expenditure by the Scottish Executive for purposes falling within devolved matters in the year in question, with the resources per capita provided for that year for such purposes in England and Wales.'.—[Mr. Brittan.]

Brought up, and read the First time.

6.30 p.m.

Mr. Brittan

I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker

With this we may take the following:

Amendment (a) to the proposed clause, at end insert 'comparable expenditures within Scotland and England and Wales, respectively, of non-devolved services and a calculation of the oil revenues available to the Treasury and National Oil Account arising from the Scottish sector of the North Sea, such revenues comprising royalties, petroleum revenue tax, corporation tax and expected profits from the Scottish operations of the British National Oil Corporation'. New Clause 3—(Financial considerations affecting orders under section 44(2))— 'In deciding on the draft order to be laid before the House under section 44(2) of this Act the Secretary of State shall have regard to the need to ensure that in each financial year the resources per capita available for expenditure by the Scottish Executive for purposes falling within devolved matters shall not be less than the resources per capita provided for that year for the same purposes in England and Wales.' Amendment No. 43, Clause 44, in page 22, line 28, at end insert— 'Provided that in deciding on the draft order to be laid before the House he shall have regard to the need to ensure that in each financial year the resources per capita available for expenditure by the Scottish Executive for purposes falling within devolved matters shall be not less than the resources per capita provided for that year for such purposes in England and Wales'. Amendment No. 44, Clause 44, in page 22, line 33, at end insert— 'and a calculation setting out a comparison of the proposed resources per capita for the year in question which would be 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.'

Mr. Brittan

We on this side of the House have consistently argued—

Mr. Deputy Speaker

Order. Will right hon. Members who do not desire to hear New Clause 2 being debated kindly withdraw quietly?

Mr. Brittan

As I was saying, Mr. Deputy Speaker, we on this side of the House have consistently argued that the basic objection to the Scotland Bill as a whole is that it is likely to lead to conflict and to create problems for which it provides no solution. One of the major areas of conflict lies in the financial arrangements set up by the Bill to create an Assembly financed only by a block grant, which creates a structure that is unstable from its inception.

It is a scandal that in Committee we had no opportunity to debate the bulk of the financial arrangements, and in particular the clause dealing with the block grant, which is the sole source of revenue of an assured kind, for the Scottish Assembly and the Scottish Executive. It is to ensure that the House should at least have some limited opportunity to discuss this vital matter that we have tabled these new clauses and amendments. They are designed to ensure that in considering the block grant, when it comes before the House in due course, the House should at least have before it some small part of the essential information needed to consider the adequacy or otherwise of the Government's proposals for the size of the block grant.

If these new clauses and amendments—and they are really alternatives—are made part of the Bill they will not render satisfactory a wholly unsatisfactory financial system, but at least in debating these new clauses, and if we pass them, we shall be forcing ourselves to face the realities of the Government's proposed financial arrangements for the Scottish Assembly and the Scottish Executive.

The unsatisfactory nature of those proposals has been widely accepted and commented on, and, in view of subsequent developments, perhaps it is right that I should quote, as the most succinct statement of the inadequate nature of the Government's arrangements for the financing of the Scottish Assembly and the Scottish Executive, the words used by the Leader of the Liberal Party in the House on 13th December 1976. He said: To have representation without taxation, and to have the block grant principle decided at Westminster, is a recipe for conflict."—[Official Report, 13th December 1976; Vol. 922, c. 1020.] That was the view of the Leader of the Liberal Party on 13th December 1976, and it seems to me that, although his view may have changed, the correct analysis of the situation in that remark remains a correct one with which we wholeheartedly agree.

To remedy the deficiencies of the financing of the operations of the Scottish Assembly and the Scottish Executive by a block grant various alternatives have been put forward and have been considered by this House. In particular, a lengthy debate took place, one of the few on the financial provisions, on a scheme for a measure of taxation power to be granted to the Assembly. It was put forward by the hon. Member for Berwick and East Lothian (Mr. Mackintosh). That scheme was overwhelmingly rejected by the House.

The Government, in one of their later White Papers, analysed the various alternative forms of tax which the Assembly could be given power to raise and put forward what they regarded as insuperable obstacles and objections to any of those forms of taxation. The Government have left the matter somewhat in the air, saying that in principle they have no objection to the Scottish Assembly having a revenue-raising power, but that they have not been able to devise a satisfactory form of such power and will listen, as and when the Assembly is created, to any suggestions put forward by the Assembly itself.

That seems to us to be a negation of responsibility, in the sense that, if the Government are really closing the door on taxation powers, they should do so in a cleaner and more forthright way. To say "We shall listen to proposals", giving the impression of open-mindedness, when the White Paper that analysed all the proposals put forward rejects them all, is, perhaps, a less candid approach.

In any event, at the moment we are left with the block grant. It is right that the House should consider the matter on the basis that the block grant is the sole method of financing the Assembly and the Executive. What is the disadvantage and the difficulty over the block grant system that lead many of us to regard it as being one of the major disadvantages of the Bill and one of the major areas of potential conflict if an Assembly were to be created?

The position as we see it is that in the first year of operation of the block grant system there is a viable method of deciding the size of the grant without acute political controversy, because it is possible to compare the expenditure on devolved services in the previous year when the Scottish Assembly was not in existence; to look at that and derive from it a fair figure for the first year of the Assembly's operations, taking into account any major developments that may have taken place on the economic or social side of the policy, and updating that figure based on the adjustment made the previous year for the needs of Scotland.

When we come to the second, third and fourth year of the operation of the block grant system the disadvantages and difficulties and the potentiality for conflict become very much greater. What is the system we are operating? By definition it is one in which, within the total of the block grant, the Assembly and Executive have the power to decide how to apportion the allocation of resources according to their own adjustments and priorities. They may decide to spend more on schools and less on hospitals. They may decide to spend more on a particular type of hospital and less on another type. When that happens the situation at the end of the year will inevitably be, if the Assembly has exercised the discretion vested in it, that there will be disparities between Scotland and the United Kingdom as a whole, and disparities between Scotland and England.

Inevitably, when the block grant comes to be renegotiated there will be clarion cries in Scotland saying, for example, according to the way in which the discretion has been exercised, that the standard of nursery education in Scotland has fallen way behind that in England, that the provision of mental health care has fallen way behind, or whatever it is that the Assembly may have decided to spend less money on. There will be demands to the effect that, in calculating the block grant for the coming year, the position should be altered and more money provided to take account of those services where standards have fallen below the standards set in England.

If that happens, I suggest that the answer that will come from those at the negotiating table on the United Kingdom side, to the effect that such disparities have been caused because the Scottish Assembly has chosen to spend its money on other things, whereby it is providing higher levels and standards than in England, would not prove acceptable to those in Scotland who will be anxious above all to put forward a case that any inadequacies are based upon the meanness of the United Kingdom Treasury, of the United Kingdom Parliament. Such voices will say that the only way to ensure that Scotland has a fair share of what it is entitled to is either to give it taxing powers or to make it independent. Those voices will be greatly assisted by the argument, which will be readily available, that more should be provided for the block grant, relying on those services where standards have fallen below those in England because of the deliberate decision of the Assembly not to accord priorities in those directions.

Mr. Russell Johnston

In presenting his argument the hon. Gentleman is assuming that the negotiations on the block grant will be annual. Will he take into account in further presenting his argument the fact that the Government have already said that they are favourably disposed to the possibility of negotiating the block grant over a period of time equivalent to the life of the Assembly—in other words, four years?

6.45 p.m.

Mr. Brittan

I was about to make that point. I shall be taking it into account.

The position I have described is one in which the Scottish National Party and those who will seek to foment dissent and discord between Scotland and the United Kingdom as a whole will be provided in the negotiations for the block grant with a golden opportunity to do so, an opportunity which they simply could not fail to use to good effect. That is the disadvantage of the block grant system.

When that state of affairs arises there will also be arguments raised from the English side of the negotiations, arguments which we deeply regret having to contemplate but which will most certainly be raised. At the moment the position is that the per capita expenditure on devolved services within Scotland is far higher than the comparable expenditure in Wales and in England. In an answer given to my hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor) the last available figures demonstrating the position, according to the Chancellor, were as follows: £360 per head for Scotland, £320 per head for Wales and £280 per head for England. This is a discrepancy amounting to 25 per cent. to 30 per cent. in total; or, put another way, £500 million more is spent on Scotland than, on a per capita basis, one would have expected.

As long as we have a United Kingdom Government operating through a United Kingdom Parliament with the allocation of resources on the basis of need as assessed by a single Government and approved by a single United Kingdom Parliament, not only are such discrepancies acceptable; they are thoroughly defensible and perfectly desirable. This is because the people of the United Kingdom as a whole are anxious and ready to give money to the various parts of the United Kingdom, to which those parts are properly entitled on the basis of need. Once we set up a separate Scottish Assembly and a separate Scottish Executive in which there is a different Government negotiating with the United Kingdom Government for the allocation of resources it is asking rather more of humanity than can reasonably be expected to believe that those in England will fail to notice what, up to now, they may not have noticed—namely, the greater expenditure per head on Scotland.

It is also asking too much to imagine that there will not be many voices in England that will be raised saying "This is unfair. Why should we give the Scots more per head?". People will ask this particularly since, as will undoubtedly be the case, the Scottish Executive and the Assembly will be arguing for still more sums because of the lower standards in some areas which, by their policies, they will have created.

There will be conflict at both ends. There will be conflict within Scotland because of the clamant call for greater amounts of money from England to take account of the fact that the Scottish Assembly has exercised the powers granted to it. There will be conflict also because of the clamour from England, because, with England facing a Scottish Government making claims for Scotland, it will inevitably sit up and take note of the fact that greater sums per head have been spent in the past in Scotland than in England and Wales.

I do not make reference, and neither do the new clauses or the amendments, to comparisons with Northern Ireland, because it seems to me that Northern Ireland is in a separate and special situation now, particularly as we do not know whether the constitutional structure at present operating will continue to do so, or for how long.

We recognise that, and would not wish in this argument to involve any improper and false assumptions about the future of Northern Ireland. We do so not in any sense failing to recognise the special needs of Northern Ireland.

The comparison between Scotland and the United Kingdom will inevitably be made. We say that, if that comparison is to be made, it should at least be written into the system that when the House of Commons considers the block grant the comparable expenditure between Scotland and the United Kingdom ought to be written in as a formula. That is why we have referred to the calculation setting out a comparison of the proposed resources that would be available as a result of the approval of the draft block grant order compared with the resources provided for the comparable year for England and Wales.

This is in no sense, I hasten to add, an expression of a desire on our part to reduce the money available to Scotland. It is a recognition of the fact that, if we are going along this path, it is necessary for the House to know what it is doing, and to be presented in a succinct form with the facts that are relevant; of which this provision forms a part, although not the whole.

This negotiation, whether we like it or not, will be extremely tricky. It was described in an earlier White Paper as a tricky one. Paragraph 100 of the 1975 White Paper states: No neat formula could be devised to produce fair shares for Scotland and for England, Wales and Northern Ireland) in varying circumstances from year to year. The task involves judgments of great complexity and political sensitivity. If we are asking for judgments of that kind to be made in the context of a Scottish Assembly and Executive, which will inevitably be driven to clamour for more, it becomes clear why we regard this aspect of the Bill as a major source of conflict.

There is no neat formula, but the Government have made certain suggestions. It is interesting that none of those suggestions referred to by the hon. Member for Inverness (Mr. Johnston) is to be found in the Bill.

One of the suggestions was that provision should be made for the block grant to be assessed over a four-year period and not annually. I can understand why that does not appear in the Bill, because there are other problems posed by that, and which are not answered. What happens if the Westminster Government want to reduce public expenditure altogether? If the Conservative Party is in power that is certainly possible. A Labour Government might want to increase public expenditure. Are there to be supplementary block grants or reductions in the block grant? Is the Scottish Assembly to pay the money back?

If the money were fixed over a four-year period the complications and difficulties would be even greater. We in this House know all too well how difficult it is to assess the financial prospects for a 12-month period. To do it for a 48-month period is asking a lot. It sits nicely in a White Paper as something to tempt successfully the hon. Member for Inverness and his right hon. and hon. Friends, to wean them away from the more clear-cut view expressed in the quotation that I have read. It reads nicely there, but even this Government were sufficiently cautious and wise not to go so far as to incorporate a four-year period in the Bill.

Nor did they incorporate other little lollipops held out in the last White Paper, such as the suggestion that there should be objective criteria assessed by a board. That certainly could be provided for in the Bill, but there is no reference to any board looking at the matter to establish objective criteria. No doubt, the Government came to the conclusion that quite enough bureaucracy and bureaucrats were established by the Bill without adding a board to look at financial resources.

There was also a tempting reference to a formula for the percentage of the total money spent on similar services in England. That was regarded as a possibility. There is no reference to that in the Bill either. There is nothing in the Bill. Clause 44, the block grant clause, is extraordinarily naked. Yet if we had not initiated this debate we should have not only a naked clause but a nonexistent debate. The Government organised the guillotine in such a way that the whole block grant procedure was not to be debated.

The new clause or the amendment—in whichever form it is to be—will not solve the problem. The problem is not soluble in the context of this misguided scheme of devolution, but it is necessary and salutary for the House at least to recognise that the subject that we have shied away from up to now, understandably enough, namely, the disparity in the provision per capita between Scotland and the United Kingdom as a whole, will inevitably loom large once this system is set up. The House might as well recognise it, and be given the bare facts relating to it when and if the block grant ever comes to be divided.

There is the dual area of conflict—on the one hand, Scotland's inevitably being driven to ask for more, and representing itself as coming to the Treasury and finding a mean Treasury depressing services in Scotland; and on the other hand, the people of England being increasingly resentful of Scotland's getting more per capita than England or Wales. This is the picture that arises from this scheme. It is not a pretty one. It gives ample support for our belief that the Bill is redolent of conflict, and nowhere more so than in its financial provisions.

Several Hon. Members


Mr. Deputy Speaker (Sir Myer Galpern)

Oh, well. Sir David Renton.

Sir David Renton (Huntingdonshire)

Accustomed though I am to reluctance, I can assure you, Mr. Deputy Speaker, that it is a great privilege to have caught your eye! I support without hesitation both the new clauses of my hon. Friend the Member for Cleveland and Whitby (Mr. Brittan). In a discussion during the Committee stage, initiated, if I remember rightly, by the hon. Member for West Lothian (Mr. Dalyell), about the way in which Scotland might fare financially if we had devolution, I drew attention to the contrast between the present circumstances, in which we vote hundreds of millions of pounds for the benefit of Scotland—we gladly do so, with the minimum of protest—and the situation which will arise if the Bill becomes law.

My hon. Friend the Member for Cleveland and Whitby has underlined that point and has given some figures in support of his argument. However, there are a couple of statistics which we both used in a previous debate of which I shall remind the House. The needs of Scotland are so much greater than those of England and Wales taken together that we grant to Scotland 22 per cent. more expenditure per head than we grant for England and Wales.

On the other side of the account, Scottish resources are 11 per cent. per head less than those of England and Wales. But the Government of the day, whether Labour or Conservative, have no hesitation in asking the House of Commons as a whole to make up the difference. The taxpayers of England, especially, are called upon generously to help Scotland under the present system, which has lasted for so long. But it will not be the same, as my hon. Friend has pointed out, if this Bill is passed and we have devolution.

7.0 p.m.

The two new clauses, together with Amendment No. 43, would do much to overcome the disadvantage from which Scotland would suffer if we had devolution. We are glad to see the Secretary of State here. We do not see him very often. He has left the responsibility to a relatively inexperienced Minister of State, who has had a difficult time and has done his best without having sufficient authority to take all the decisions that need to be taken by a Minister in charge of a Bill. I hope that we shall hear from the Secretary of State that he welcomes with open arms the principle of the two clauses. Whether he accepts the drafting is immaterial. That can be attended to at a later stage.

It is surely right to supplement Clause 44 by New Clause 2, which merely provides for the House some of the information that would undoubtedly be needed before we decided whether or not to approve a block grant proposed by the Government of the day. That simply is information with regard to resources per capita and comparing the position with regard to Scotland and the position with regard to England and Wales.

New Clause 3 is perhaps even more important. It goes further and places a specific obligation upon the Government when working out the block grants and before laying a draft order before the House. The clause ensures that Scotland be as well treated in getting the resources required to pay for its needs in devolved matters as England and Wales are. I must fairly point out—my hon. Friend did not try to conceal this—that we do not go so far as to say that needs shall be treated in the same way. We are anxious to ensure that Scotland is treated no worse in the matter of resources than are the people of England and Wales. That is as far as we think we need go after devolution. It is a modest enough suggestion, and I should have thought a welcome one.

With those few brief words of support, I hope that the Government will heed what my hon. Friend has said. I hope that the Minister will consider that our new clauses have been put forward with a view to improving the Bill, in the right kind of spirit and in the hope of protecting the interests of the people of Scotland, in the unfortunate event of the Bill ever being implemented.

Mr. Henderson

The hon. Member for Cleveland and Whitby (Mr. Brittan) will be surprised to hear that on two counts I agree with some of his comments in moving his new clause. First—and I shall try to quote the hon. Gentleman accurately; I know that he will correct me if I have his words out of context—he believed that the financial arrangements are likely to be the main source of conflict, and he lamented that there had been inadequate time to discuss the financial arrangements at an earlier stage.

Mr. Brittan

I would say, not "the main" but "a main" source of conflict.

Mr. Henderson

Perhaps we can agree on the words "an important source of conflict".

Secondly, the hon. Gentleman believed that much more adequate information should be available if we were to consider the financial arrangements as proposed in the Bill. That point, on which I agreed with the hon. Gentleman, was echoed by his right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton).

It will be no surprise to the hon. Gentleman and his right hon. and learned Friend to learn that it is here that I part company with them. I have never heard such pathetic arguments to try to persuade us that Scotland is a poor country, dependent on English charity in order to survive. Any Scotsman will justly feel enraged when he reads about this in the Press, as he will tomorrow.

Of course, it is possible to prove a case of this kind if only selective statistics are used. The hon. Gentleman was careful not to refer to the amendment to his new clause in the name of my right hon. Friend the Member for Western Isles (Mr. Stewart), myself and some of my hon. Friends. What we say in the amendment is that if we are to have figures, we should be sure that we have all the figures. It may be true that in certain services which tends to be among the ones devolved there is a greater amount paid to Scotland per capita. There are other services for which what returns to Scotland is much less.

For example, only about 6 per cent. of defence spending is done in Scotland. That is very much of a shortfall compared with our proper per capita entitlement. If we are to consider the expenditure, let us have a breakdown of all the expenditure of the United Kingdom and see which part goes to Scotland and which does not.

Mr. Brittan

Is the hon. Gentleman seriously suggesting that where defence expenditure takes place should be decided on the basis of whether it is in Scotland, England or Wales rather than on the basis of the defence needs of the United Kingdom?

Mr. Henderson

I hope that the hon. Gentleman is not trying to argue that there is no economic benefit to any area from defence expenditure, particularly procurement expenditure. I hope that he is not suggesting that, for example, the expenditure on Concorde, of which the Scottish taxpayer has paid a substantial part, should be totally ignored if we are to make comparisons of Government expenditure as between Scotland and other parts of the United Kingdom.

Mr. Peter Viggers (Gosport)

Will the hon. Gentleman take into account that 6,000 jobs are being moved to Glasgow as a result of the Hardman Report? They are to be placed there between 1981–82 and 1985–86. This is a considerable loss to certain parts of the United Kingdom, including my constituency.

Mr. Henderson

I regret any inconvenience or distress caused to the hon. Gentleman's constituency, but let us be frank. For years there has been a shortfall in Civil Service jobs in Scotland compared with other parts of the United Kingdom. The jobs of which the hon. Gentleman spoke have not yet moved. It is all very well saying that they will move in 1981, 1985 or perhaps 1984. I do not know when it will be. They have not moved yet. We have learnt enough in Scotland to know that promises from this place can rapidly be torn up as soon as it is felt that the situation has changed.

Mr. Alexander Fletcher (Edinburgh, North)


Mr. Henderson

I must continue. I have been quite good at giving way, and we are not conducting a chat show.

I have been saying that if we are to deal with expenditure we should have a breakdown of all expenditure as between what goes to Scotland and what does not. I hope that the hon. Member for Edinburgh, North (Mr. Fletcher), who is a chartered accountant, will accept that if we are to have all expenditure broken down, we should have all income broken down as well. The hon. Member for Cleveland and Whitby spoke of £500 million more being spent on Scotland per capita than Scotland deserved—than it deserved by virtue of the size of its population.

Mr. Brittan

That is an important qualification. If the hon. Gentleman is making even the slightest attempt to be fair, it should not be necessary for him to add that after what he originally said.

Mr. Henderson

I can understand the hon. Gentleman's sensitivity about this matter. What he has said will appear in the Scottish Press, and he may be shopping his friends in the Scottish Conservative Party with the suggestion that the Scots are being subsidised from here. Is anyone disputing that the implications of the speeches of the hon. Member for Cleveland and Whitby and the right hon. and learned Member for Huntingdonshire are that the Scots are being subsidised from here?

Sir David Renton

They are at the moment.

Mr. Henderson

The right hon. and learned Gentleman says that at the moment the Scots are being subsidised and this is something that will lead to difficulties in the future.

I put to the hon. Member for Cleveland and Whitby and his hon. Friends that Scotland is a very much wealthier country than they are leading us to believe. The problem at the moment is that Scotland is being separated from her resources at a time when the United Kingdom is, at it were, on a lift going steadily downwards from fourth position in the world in the 1950s to eighteenth, and is still going down. Countries of comparable size with Scotland, such as Sweden, Norway and Switzerland, are climbing up, while Scotland is being pulled down. The people of Scotland do not take very kindly to views that they are being subsidised from here or, indeed, from any other places.

Scotland is a country with great resources. The very distinguished United Kingdom Ambassador to the United States of America, when he was the economics correspondent of The Times, referred on 4th December 1975 to sentimental Englishmen who like myself would be sorry to see Scotland leave Great Britain but who cannot also deny that it would be greatly to Scotland's advantage to do so. Hon. Members must realise that the myth that Scotland is a poor country has been exploded. The Scottish people no longer believe it and are no longer interested in it. Of significance in the debate are the low-key threats which are being made by English Conservatives. They are saying, in effect, "You are having your devolution but you had better watch out, because we shall cut off the petty cash going to your Assembly." That is what is being said in the course of the debate. If Scotland is such a burden on this place as is being made out, why have not the English given us independence and let us go home to look after our own affairs?

The argument put forward by the Conservative Front Bench on this issue is a mendacious one. They will not look at all the figures. They will look only at certain figures. They will not look at the total income and total expenditure. If this is the English backlash, even in the civilised tones of the hon. Member for Cleveland and Whitby, I assure him that I am not shivering with fright or anything else. Scotland will face that, and if hon. Members wished to have a recipe for conflict it would be to vote for the new clause.

7.15 p.m.

Mr. Russell Johnston

I will come in a moment to some of the remarks made by the hon. Member for Aberdeenshire, East (Mr. Henderson), but I want first to refer to some of the things that the hon. Member for Cleveland and Whitby (Mr. Brittan) said. I agree with him that we on this Bench were in favour of and sought to have introduced a revenue-raising system. That is incontestable and true. I would, however, say to him that we still believe that in gaining the agreement to a thorough consideration of the idea of a fixed formula for a block grant over a period of years, very considerable progress has been made.

The reason that we argued in favour of extending the block grant was to give the Assembly some freedom of action, some real discretion, in its spending priorities. I assure the hon. Gentleman that, as all the commentators in Scotland realise, if there is an annual haggle it means essentially that it will be very difficult, in a situation in which the Assembly is dealing with rolling programmes in any event, to do anything which would not be very closely supervised by the Treasury. It would mean setting up a system which would have built into it the capacity of the Treasury to defeat the very object of the exercise, which was to give the Assembly some freedom of action. We still believe that the possibiilty of friction would be exacerbated by an annual haggle. That is contrary to what the hon. Gentleman has been saying in regard to his new clause, and also contrary to New Clause 3.

I agree that it would be difficult to draw up a formula. Any formula would, in fact, be the consequence of a political negotiation, and it would not be possible to write it into legislation. I suppose that something could have been written into legislation about the independent board which the Government intend should be established and which I believe could provide some objective information, but this is, again, a political attempt. The setting up of such a board could, in a sense, cast doubt on the objectivity of the Treasury and the statistics produced by it. As appeared from the White Paper what was envisaged was an additional means of gaining the confidence of both sides in the negotiations and trying as far as possible to remove causes of friction. The new clause would not, I think, help that.

Mr. Brittan

Will the hon. Gentleman say whether, looked at from his angle, there is any reason why both the board and the four-year provision should not be put into the Bill, if the Government were serious? There is absolutely no reason why an independent board should not be set up by statute. Most independent bodies of that kind are set up by statute. As for the four-year provision, although the quantity cannot be set up, there is no reason why the fact that it should be done on a four-year basis should not be in the Bill. Perhaps the hon. Gentleman is disappointed that the Government have not put it in the Bill. If not, perhaps he will explain why he feels that it should not be in the Bill.

Mr. Johnston

I point out to the hon. Gentleman, with respect, that we have Budgets annually in this House.

Mr. Alexander Fletcher

No; we have a financial year. We have four Budgets a year.

Mr. Johnston

It is not possible in statutes to commit sums of money ahead in that fashion. For the rate support grant a formula is agreed upon and is followed over a number of years. It is not possible, according to the information that I have received, to write that particular theme into a statute. I agree with the hon. Member for Cleveland and Whitby that it would be possible to have legislation—indeed, it might be necessary—to set up a board in the future, as has been postulated, but I think that it was part of the view of the Government, from which we did not in any way dissent, that this was something which should be discussed with the Assembly when it is established. I do not think that is a reason for pouring cold water over it.

Mr. Eldon Griffiths (Bury St. Edmunds)

The hon. Gentleman alluded to the rate support grant. He will know that the elements within the rate support grant are set out in the statute—the needs element, the domestic element, and so on. Why is it not possible within the Bill to indicate, for the benefit of that political process—which will, of course, need to determine the amounts—the principles by which these needs shall be determined? That is easily done with the rate support grant. There is no reason why it should not be done in the Bill. It would give a much more equitable guide to those who have to make the decision.

Mr. Johnston

If the hon. Gentleman thinks that it is easily done in the rate support grant he must be one of the few people in the whole of the United Kingdom who does. Rate support grant formulae are among the most recondite in recorded human history.

Mr. Eldon Griffiths

The hon. Gentleman has misunderstood. He does me a slight injustice, because I have been in Government and have been responsible or the rate support grant negotiations. I fully recognise their complexity. But there is nothing complicated about the principles. The principles are set out in a statute and indicate—if the hon. Gentleman wishes to know—that there shall be a needs element, a resources element and a domestic element. That gives some principles by which Ministers and local authorities are guided. Although the actual sums depend on political judgments, this could at least be imported into the Bill.

Mr. Johnston

I would not necessarily deny that that is so. That brings me to the next—perhaps what I regard as being the most important—part of what I have to say. In such negotiations these elements to which the hon. Gentleman referred will obviously be the main considerations. That is the way the Government will have to operate in that situation. It will be quite inevitable that needs will be a major element in making a determination. I do not see how in the circumstances of the continuance of the union—which is what we are talking about—that it should change in any way.

That is what I find disturbing about the approach in the new amendments put down by the Conservative Front Bench. If New Clause 3 were taken into account, and New Clause 2 to an extent, clearly the approach to need as being the basis of this determination would change. That is a divisive approach which is mirrored in the amendment in the name of the right hon. Member for Western Isles (Mr. Stewart) and his colleagues in the SNP.

Both New Clause 3 and New Clause 2 are founded on the strange political thesis that the disparities in expenditure between England and Scotland or between the English regions and Scotland, vis-à-vis per capita expenditure on devolved services in Scotland, England and Wales, although the English regions are not mentioned in the new clauses, will be looked at differently after devolution.

The argument is that, when the Scottish Assembly is set up, the English regions will become more agitated about them. The other thesis is that devolution will produce bad government and that bad government in turn will produce a demand for more money.

The hon. Member for Cleveland and Whitby looks hesitant about that, but he said—I took down his words—that the Assembly will ask for more money to deal with the lower standards which by its policies it will have created.

Mr. Brittan

That is an unfair summary. I assure the hon. Gentleman that that was a summary of a point that I had made earlier, which was that if the Assembly exercised its discretion at all it would have to spend more money on some things and less on others. The effect of that, therefore, is that in some areas—say housing, for example—standards will be better and there will be no complaint. But there will be other areas where, precisely because money has been distributed according to a different sense of priorities, standards will fall. It is not a question of being inefficient or incompetent, but rather that deliberate decisions will be made that will lead to disparities which previously did not exist.

Mr. Johnston

I understand what the hon. Gentleman says. I have no intention of trying to portray his argument unfairly. He is saying that the Assembly might determine to spend a greater proportion of money on housing rather than on health, to take up a point mentioned in Committee by the hon. Member for West Lothian (Mr. Dalyell). But that will only appear over a period of four, five, six, seven or eight years. In a devolutionary situation where an Assembly exists this will be subject to the Scottish electorate who, after all, will be electing the people responsible for making those decisions of priority. I do not think that represents a criticism of devolution per se.

Mr. Dalyell

I was speaking in the context of suggesting that if more money was spent on housing a lot of people in Scotland would then complain that the health services were of a different standard, from those in the rest of the United Kingdom, and should therefore be brought up to the same standard.

Mr. Johnston

With respect, the people to whom they would have to complain would be the people in the Edinburgh Assembly—the people in the Royal High School as now is—who will be responsible for having made that decision. It would not be the responsibility of the English, or of the House of Commons, or of the United Kingdom or anybody else. It would be the responsibility of the Assembly in Edinburgh.

However, it is not so much that argument that I find the most unpleasant part of the way these things get discussed. It is the emphasis that is being placed by the official Opposition upon the fact that much more significance henceforth will be attached to per capita expenditure in England as against Scotland. That is the other side of the argument which I find most reprehensible.

The argument which the SNP has produced and sloganised is "Do you prefer to be a rich Scotland or a poor Britain?" Not only in the context of the United Kingdom, but also in the context of Europe, I find that a quite unacceptable approach to politics. I do not believe that we in the United Kingdom, Scotland or any other part of the Community should look at things in that way.

I do not believe that the Scottish electorate will look at things in that way come the existence of an Assembly. I think they will be much more enlightened and fairer in their approach and will continue the general needs element basis which has been a foundation of most policies with regard to economic and regional matters operated by both Labour and Conservative Governments.

Mr. Iain Sproat (Aberdeen, South)

The hon. Gentleman said it was fanciful on our part to say that the regions of England would start complaining about Scotland getting more expenditure if an Assembly were set up and we were still to get our 25 per cent. per capita more. I think that is quite wrong. We do not even have to look in the crystal ball. It is happening already. The regions of England are already complaining.

The hon. Member for Wallsend (Mr. Garrett) is present. Why? Because he knows that his part of England is being unfairly treated per capita compared with the treatment that Scotland gets. That is why the hon. Gentleman is not supporting the Bill. He is nodding. It is happening already and it will happen even more when the Assembly is actually set up.

As has been said, people will then realise even more sharply how the regions of England are being done down at the expense of parts of Scotland where, for example, unemployment is not so high.

Mr. Johnston

The regions of England are not being done down at the expense of parts of Scotland. Far from it. I know that the hon. Member for Wallsend (Mr. Garrett) is a fair-minded man and I am sure that he would not contend that that was so. He knows as well as I do—as well as you do, Mr. Speaker—that successive Governments of the United Kingdom, in the dispersal of resources, have taken into account the needs element throughout the United Kingdom. In the devolved context we are talking only about the devolved services. We are not talking about economic measures at all. The hon. Member for Cleveland and Whitby dealt somewhat superficially with the point made by the hon. Member for Aberdeenshire, East about defence. Defence, of course, has an economic element. If one had to start looking at every single item of expenditure involved in running our society defence is certainly a part of that calculation as is how much is spent in Scotland, Wales or any other part of the United Kingdom—

Mrs. Jill Knight (Birmingham, Edgbaston)


Mr. Johnston

I shall give way in just a moment. Before the hon. Lady intervenes I think it important that she gets over her period of excitement.

What I regret most about the tail-end of the discussion on this Bill is that we should be moving towards a comparison of expenditures of all kinds simply on the basis of what the figure is rather than on the reason why we are spending that money, which is important.

Mrs. Knight

I assure the hon. Gentleman that it is not excitement which is worrying me so much as mystification. Does he believe that devolution, the setting up of the Assembly and the other matters that we are discussing have not a very real connection with finance which, because of this Bill, is being spent in a specific area? Does not he accept that there is a real connnection between finance and what we are discussing in the Bill?

Mr. Johnston

Of course, there is a connection between finance and what we are discussing in the Bill. But, as I understand it, the basic argument for devolution is that the administration of affairs in Scotland would be conducted more effectively, more responsibly and more sensitively and that the very effective but not very well controlled bureaucracy in St. Andrew's House would be subject to more effective democratic control than is the case at the moment. That is the important argument, and that is the argument of which we should not lose sight.

7.30 p.m.

Mr. Eldon Griffiths

I have considerable affection for the hon. Member for Inverness (Mr. Johnston). I remember how, when he first came to the House, he used to wear the kilt and he had a knife in his stocking. I am sorry that he does not do that any more, because the colour has gone from the Liberal Bench. Tonight, perhaps he was tired, but his speech was more like the twirling of the kilt than the cutting of the knife. With respect to him, I do not think that he cut a very graceful picture as he tried to get out of his difficulties, the Liberal Party having given certain undertakings which it now manifestly has failed to achieve—[Interruption.] The Liberal Party—[Interruption]—wanted to achieve—

Mr. Deputy Speaker

Order. We do not want sedentary interventions.

Mr. Griffiths

Let us have it, by all means.

Mrs. Winifred Ewing (Moray and Nairn)

Will the hon. Member for Bury St. Edmunds (Mr. Griffiths) concede that it is not quite dignified to attack the national dress of the people of Scotland?

Mr. Griffiths

I was far from attacking it. I was regretting its absence. The hon. Member for Inverness made a most colourful sight as he sat in his national dress on the Liberal Bench.

My understanding was that the Liberal Party had virtually promised to obtain from the Government some revenue-raising powers for the Scottish Assembly. It has not succeeded, and I can understand why the hon. Member for Inverness feels some slight sense of embarrassment. He is a decent man, and he is good enough to be embarrassed when his party fails to achieve what is has undertaken to achieve.

However, if the Government have decided to go in for a three-year or four-year period for the setting of the budget, it may be that the hon. Member for Inverness is in possession of some secret which the Government have yet to divulge to the House. It may be that the Minister will tell the House that the Government have decided on a three-year or four-year arrangement, though I rather doubt it because I do not believe that the Chancellor of the Exchequer would agree to that sort of hypothecating of the revenue in advance. I do not think that Treasury Ministers concerned with managing the money supply or the demand of the economy would be willing to let go, three or four years in advance, expenditures of the kind which will fall to be met in these devolved sectors. But if that is the case and the Government have agreed to go for some period of time of that kind, I hope that the Minister will tell us now. It is important. The hon. Member for Inverness seemed to suggest that he was privy to the Government having decided to do that.

Mr. Russell Johnston

I said simply that the Government had said—it was published in the White Paper and repeated by the Minister of State at the Dispatch Box—that if the Assembly, once established, wished to have a fixed-term period, the Government would regard that sympathetically and be willing to see that it was done.

Sir David Renton

Before my hon. Friend the Member for Bury St. Edmunds (Mr. Eldon Griffiths) replies to that intervention, will he also consider, bearing in mind the pace of inflation that is still continuing and may not be contained for several years, whether it would not be a grave disadvantage to the Scottish people that a block grant should be fixed even for two years, much less three or four years?

Mr. Griffiths

My right hon. and learned Friend is quite right. Judging by the way matters have gone in recent years, I doubt whether that would be safe for even two months. Rate support grant increase orders have had to be made, and there have been occasions when Ministers have had to come back to the House for new subventions for some of our publicly owned industries at a rate which suggests to me that any three-year or four-year rolling programme would be a very bad bargain.

I am obliged to the hon. Member for Inverness for his clarification of what he said. But at least he suggested that there was good reason to believe that the Government would accept a three-year or four-year basis for setting the block grant of the Assembly. For many reasons, it would be desirable if they could do that. But for all practical reasons, including inflation but above all including the management of the economy, I find it impossible to believe that this House or any Government would be willing to let go of that degree of control over the overall management of the United Kingdom economy.

Therefore, we are driven back to the position that it will be an annual event not very different in practice from the rate support grant negotiations, although the sums of money in the devolved areas of Scotland will not be, I trust, anywhere near as great as those which are dispensed by Ministers in the local government rate support grant negotiations. My figures may be out of date, but they run into many billions of pounds. I hope that we are not talking about figures of that magnitude with regard to the annual block grant for the Scottish Assembly. It may be a sum such as £3 billion but, by comparison with the rate support grant negotiations, we are talking of a comparatively modest affair.

The hon. Member for Inverness suggested that it was quite impracticable to set out on the face of the Bill the method by which the block grant should be calculated. I am not sure that he is right, and I hope that the Minister will tell the House what method is to be used. It cannot just be a political negotiation, with Ministers sitting on one side of the table and representatives of the Scottish Executive sitting on the other side advised by their civil servants, and coughing up a number. There has to be a set of principles by which the block grant will be calculated.

If the hon. Member for Inverness consults the various statutes, he will discover that from time to time Parliament has set out plainly how these large sums of money should be calculated. I have in mind, for example, the Local Government Act, of which my right hon. Friend the Member for Crosby (Mr. Page) and I are rather proud—it is nothing of which we need be ashamed. That provides that the aggregate amount of rate support grant for any year shall be divided into three elements, to be known respectively as the needs element, the domestic element and the resources element. It is indispensable for those who have to negotiate these very large sums to have some equitable principles applying across the whole nation and being generally understood. In Scotland we shall find that the argument is between the two major elements of the rate support grant negotiations—needs on the one hand and resources on the other.

Assuming, that this Bill becomes an Act, we want to get it right. On the one hand there will he in front of the negotiators the cry that Scotland's needs are great. There will be the usual arguments about long distances for transport and the relative poverty of rural areas. On the other hand there will be the advice of United Kingdom civil servants that Scottish resources are very much greater than before because of the oil. The ping-pong match will be between those who cry for the needs of Scotland and those who say "Ah yes, but look at the resources." A balance between needs and resources will have to be struck.

Since this is the only debate that we shall have on the budget and the manner of calculating the budget for Scottish devolved subjects for the future, it is incumbent upon the Government to tell us how they will resolve the dilemma of needs and resources.

I listened carefully to the speech of the hon. Member for Aberdeenshire, East (Mr. Henderson). He sounded rather like a popular song I once heard on Broadway called "Poor Little Rich Girl". I cannot make out whether he was saying that Scotland is rich and that the English have no right to patronise it by talking about subsidies, or that Scotland is really poor and needs greater help. He seemed to me to be wanting it both ways. He seemed to be saying that Scotland must keep all the oil because it is so poor but that it has so much oil that it is richer than England and should not give some back to this country.

Mr. Henderson

I very much regret that the hon. Member for Bury St. Edmunds (Mr. Griffiths) seems to be confused. I would not wish him to go home in such a state of mind. We say that Scotland is wealthy and has resources, and we want its resources for ourselves in order to run our own economy and decide our own priorities.

Mr. Griffiths

The hon. Member is still in the situation of the poor little rich girl. He is claiming that Scotland was so denied in the past that it should selfishly hold all its oil at home. I cannot believe that that is what he is really saying.

The hon. Member seemed to suggest that the proper way of allocating the resources of this country should be by "divvying" up expenditure on the basis of population, regardless of whether it is appropriate in terms of equity and justice to spend those resources in such a way. He was suggesting that Scotland should have a bit of the Concorde programme and defence projects, worked out not in terms of the needs of the nation but in terms of giving Scotland, Wales, East Anglia and so on a bit each. That is madness. That is not the way that the British Government can allocate resources.

Mr. Henderson

I am sure that the hon. Member does not wish to misrepresent me. I said that if we were to have a division of expenditure on devolved subjects as the Opposition Front Bench are requesting, let us have a figure for everything including non-devolved services so that we know where we are spending money.

7.45 p.m.

Mr. Griffiths

I have some sympathy with the hon. Member, but it all comes down to the point that we need more information. That information which he is seeking in New Clause No. 3 would be very appropriate if it were possible to obtain it. The proposition that he puts forward—namely that public expenditure should be "divvied" up on a basis of regions or counties of the United Kingdom—is absurd.

When I lived in the United States there was in the Senate what was called the "pork barrel". If Maryland got something, California had to have something as well. It was a matter of working things out behind closed doors in the Senate. We do not want "pork barrel" politics in this country. That is not something from which the Scottish National Party will get any advantage at the polls.

I am glad that my hon. Friend the Member for Cleveland and Whitby (Mr. Brittan) recited the chequered history of the Government's wrestling match with the block grant. I do not pretend to have read or understood all the options rehearsed in the White Paper. I remember that when we were dealing with local government we wondered whether, once reorganised, it could be given greater revenue powers. We looked at petrol tax and the possibility of selling planning permission and so on, but we come to the conclusion that none of these suggestions was very attractive. The Government have rehearsed the possible ways in which revenue raising powers could be given to the Scottish Assembly and have found them all impractical, inequitable or politically unattractive.

What do we have instead? We simply have a block grant based on no known criteria. This is bound to be a recipe for conflict between the Scots and the English.

The point has been made that in the first year it will be possible to make a pretty good fist of the block grant. We shall be able to look at what was spent in the previous year and add a little for inflation and new legislation that has been passed which compels expenditure. However, as the years go by, in say four or five years, there will inevitably be a great divergence between the expenditure pattern of the Scottish Assembly on devolved services and the expenditure pattern in the rest of the country. If that were not so, there would be no point in having a separate Scottish Assembly or Executive, because it is their task to decide priorities. Therefore, it is inevitable, over a period of years, that when the Scots decide their own domestic expenditure, some services will improve and others will deteriorate, comparatively speaking. It may be a case of up schools and down hospitals or up roads and down social services. Whatever the priorities, these will diverge from the expenditure patterns in the rest of the country. What happens then?

Inevitably whenever the Scottish services show an improvement above the standards prevailing in the United Kingdom as a whole, the English will ask questions why they, with lower educational standards, for example, should pay through the nose to finance an increasing gap between the standards of education in Scotland and England. As a matter of practical politics there is no way that hon. Members, if they seek accurately to represent their constituents, could fail to notice that.

Let us examine the other side of the coin. Let us look at the position in which for one reason or another, because the Scottish Assembly moves some of its fixed resources in one direction, other services deteriorate in comparison with English levels. In those circumstances, where the Scots fall behind by their own decisions, inevitably our friends in the SNP, the Scottish Press and elsewhere will select the areas in which Scotland's standards have fallen below those in England. The inevitable result will be to blame not the Scottish Assembly but the United Kingdom Parliament.

Where the Scottish services by their own devolved decisions reach higher standards, the English will resent it; and where the Scottish standards are lower than those in England, the Scots will resent it. However, there is bound to be an enormous collision between Westminster and Scotland. This, I am sorry to say, is exactly what the SNP Members want.

Mr. Russell Johnston

First, it is not inevitable that there would be a divergence, nor if there is no divergence is that an argument against devolution. One can perfectly well have the two different parts of the United Kingdom more effectively governed separately than together, without their necessarily following policies that are widely divergent.

Mr. Griffiths

The hon. Gentleman's philosophy, that all is for the best in the best of all possible worlds, is the philosophy of his party. He and his Liberal colleagues always hope that things will turn out right in the end. Unfortunately, they do not. If the Scottish Assembly is not to have a different order of priorities among the devolved subjects than that deployed in the United Kingdom Parliament, there is no point in having a Scottish Assembly with that kind of power. It would simply be a talking shop, a symbol, a meaningless body which is there as an ornament.

It is inevitable and right within the context of this Bill that a Scottish Assembly will insist on doing some things differently. If it did not, there would be no point in having it. If it changes the pattern of expenditure, there will be a new divergence between Scotland and England, and within that divergence lie the seeds of conflict.

Since this is the only debate we are likely to have on the structure and principles by which Scottish budgets are to be determined, I hope that the Minister will come clean with the House and say how he visualises the structure of the block grant, which is the Scottish budget. On what principles is the budget to be created? What will be the method of achieving a measure of equity in public expenditure between the English and the Scots? Will the Minister examine our argument and say why it is not inevitable that the seeds of conflict will be sown in the discrepancy built by this clause?

Mr. Sproat

The House is grateful to my hon. Friend the Member for Cleveland and Whitby (Mr. Brittan) for tabling this clause and for arguing it cogently. It gives us the chance to discuss, almost for the first time, the budget and financial provisions of the Scottish Assembly—a matter that lies at the heart of the Bill.

It is incredible that we should now, on Report, be discussing this matter for the first time. Surely there can never have been a Bill which has reached this stage and three-quarters of which has never been discussed in Committee. Surely that has never happened before, and it is shocking for it to happen on a Bill of this magnitude and importance. However, my hon. Friend has given us the opportunity to rectify that appalling omission.

My hon. Friend has put us in his debt because once again his speech has demonstrated to the House something that becomes clearer the more we debate it. The closer we examine the Bill, the more we see that new problems arise. At every stage the Bill creates problems which have never existed before. Having created those problems, the Bill offers no solution. Therefore, we are left in a far worse situation. In considering the financial implications of the Scottish Assembly, we have come across one more such monster.

The hon. Member for Inverness (Mr. Johnston) always makes a lucid speech. Unfortunately, his lucidity is a positive disadvantage when he has nothing to say, because it is clear that his arguments are empty.

The hon. Gentleman put before us two propositions relating to the amount of money which is allocated to the Scottish Assembly and how that sum will be decided. He said that it would be either an annual grant or a grant on a three or four-year basis. That is a problem we do not face at present, because we do not have a Scottish Assembly. However, we then face a new problem, namely, how to give a direct grant to such an Assembly. The two solutions advanced, either an annual decision or a three or four-yearly decision will not work because if there is an annual grant there will be an annual haggle.

We all know what will happen. The Scottish Prime Minister—as, alas, he will come to be called—will say "Scotland is not getting enough out of this". He will go down to No. 10 Downing Street, will refuse to speak to the Chancellor of the Exchequer, and Scottish television cameras will be outside, including reporters from The Scotsman. The message will go out that Scotland is being done down and robbed. Therefore, the annual negotiations will turn into an annual fight. That is not a satisfactory solution.

The other solution put forward by the hon. Gentleman is a four-yearly block grant. Even that suggestion is impossible, because, in view of the rate of inflation, there is no way in which one can budget four years ahead. We know that the Chancellor of the Exchequer—and I am not criticising him on this point—has already felt it necessary to bring in 12 Budgets, even within his short period of office. If a British Chancellor has to introduce 12 Budgets to deal with the British economy, how can we propose that the Scottish economy should be dealt with by one budget every four years?

Mr. Russell Johnston

There could be a fixed formula on a percentage basis relating to expenditure on devolved services in the United Kingdom.

Mr. Sproat

There could indeed, and that is a third option in the fixed formula. I shall come to that matter in more detail in a moment. I beg the hon. Member not to disguise from himself the fact that Scotland will receive per capita only the same amount given to England for its housing needs. That would not be accepted in Scotland. It would be said "Nitshill deserves more than X, Y or Z area in Great Britain". That is right. There is no way of fixing a formula to operate over a four-year period. That is unthinkable.

8.0 p.m.

It does not operate at the moment. That is why we have annual rate support grant negotiations. If it does not work for those negotiations, why should it work over a four-year period? We are creating a new problem—how to finance the Assembly—and no solution has been put before us. Once again, conflict between Scotland and England, leading to the great risk of a break-up of the United Kingdom, jumps inevitably out of the Bill. That is what many of my hon. Friends fear, and our fears are confirmed in every clause and amendment.

Another cause of conflict arises out of the cogent speech of my hon. Friend the Member for Cleveland and Whitby and, particularly, the proposals in New Clause No. 3. If the block grant is to remain at a level that is roughly equivalent to the present level of 25 per cent. to 30 per cent. per capita higher than in England, that will not be accepted in England.

My hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight), who is sitting beside me, will not accept that. The hon. Member for Wallsend (Mr. Garrett) came in to listen to the debate because he will not accept that for the North-East. The hon. Member for Liverpool, Walton (Mr. Heffer) has pointed out time and again that unemployment in Liverpool is worse than it is in Glasgow. If we institutionalise the unfairness in the distribution of resources, we shall build up conflict.

If we retain the 25 per cent. per capita extra that Scotland receives, we shall cause deep resentment in East Anglia, the North-West, the North-East, the South-West and all those areas of England which are worse off than Scotland in terms of unemployment or wage levels. In East Anglia, the average weekly wage is about £5 less than in Scotland. Why should a 25 per cent. excess for Scotland be accepted in England? It will not be accepted.

Mrs. Knight

Will my hon. Friend also consider the fact that there is a specific area in which the shortage of cash in England is making itself grievously felt? I refer to the National Health Service and to the fact that babies and kidney patients are dying because we do not have enough money. Will my hon. Friend give weight to that in what he is saying?

Mr. Sproat

My hon. Friend reinforces my argument with a very good example. At present, people in all parts of the United Kingdom are prepared, if not to accept, at least to see how the situation that my hon. Friend has described can arise because we in this House together decide these matters. If that position changed and Scotland were put in a temporary financial advantage over other parts of the United Kingdom, resentment would be aroused in England. In the same way, if the grant to Scotland were cut, resentment would be aroused there.

That is one of my fears. If Scotland continues to get 25 per cent. more, the majority of hon. Members, who do not represent Scottish seats, will say that they do not see why Scotland, as opposed to areas of need in Scotland, should get that 25 per cent. more. They will say that the grant should be reduced and, since the majority of hon. Members do not come from Scotland, the grant will be reduced. The ironic paradox of the Bill is that Scotland will be financially worse off in the not too distant future, if the Bill goes through, because the approximately £500 million a year extra which it receives now above what is justified by its input to the Treasury will disappear.

Once again, conflict will arise. If Scotland gets the 25 per cent. extra, there will be bitter resentment in England. If it does not get the 25 per cent. extra, the people of Scotland will feel resentment.

My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) said that the negotiations might be like those that we have for the rate support grant. The great difference is that into the negotiations for the Assembly grant will be injected elements of nationalist emotion and hysteria which will make them quite different from the rate support grant negotiations, difficult as they are. Any negotiations between the United Kingdom Treasury and the Scottish Assembly will have this explosive nationalist element in them and our fear is that ultimately this may blow apart these two parts of the United Kingdom.

The SNP spokesman did not make a great deal of North Sea oil, though I thought that I heard the hon. Member for Dundee, East (Mr. Wilson) muttering "Scotland's oil" under his breath at one stage. We did not hear much about it being Shetland's oil or the rights of poor little Shetland. The SNP Members are anxious to talk about Scotland's oil when it suits them, but they forget that 60 per cent. of the oil is off the coast of Shetland and they deny Shetland the rights that they wish to arrogate to Scotland. It is typical of the hypocrisy and double dealing of the SNP that they wish to arrogate to themselves that which they are not prepared to give to others.

Mr. Gordon Wilson

Shetland's interest is in the poundage received on barrels of oil landed at Sullom Voe. The oil that lies off the coast belongs to the State in terms of international rules.

Mr. Sproat

I shall not be tempted to follow the hon. Gentleman down that path, though I remember his hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Reid) saying that international rules would prevent Shetland from getting the oil and that an independent Scotland would see that Shetland did not get its own way. The hypocrisy of the SNP vis-à-vis Shetland is clear in the statements of the hon. Member for Clackmannan and East Stirlingshire and in the shabby, squalid loiterings of SNP Members in the Lobby the other night. We need say no more to prove the double standards that they employ.

Apart from the fact that Shetland has 60 per cent. of the oil, it will run out in 25 years anyway. The idea that one could build the Scottish economy on a commodity that will not be there in less than a generation is a fallacy that needs to be exposed.

Mr. Gordon Wilson

Will the hon. Gentleman give way?

Mr. Sproat

No, I must move on.

Mr. Wilson

The hon. Gentleman is scared.

Mr. Sproat

I am not scared—

Mr. Deputy Speaker

Order. If the hon. Member for Aberdeen, South (Mr. Sproat) addressed the Chair, he would find a little less difficulty.

Mr. Sproat

I apologise, Sir Myer. On Report one tends to address one's remarks to the person with whose contribution one is particularly concerned.

Mr. Deputy Speaker

That is not a convention of the House. There is no reason to do that on Report.

Mr. Sproat

I am flattered that you wish to hear more closely what I have to say, Sir Myer. I should like to put to the SNP, through you—

Mr. Deputy Speaker

Order. I have heard enough of this "Sir Myer". My wife will be wondering where I am. Please call me "Mr. Deputy Speaker".

Mr. Sproat

No one has done more to distinguish that title than yourself, Mr. Deputy Speaker.

We heard rantings from the SNP earlier about the wealth of Scotland, but apart from mentioning North Sea oil, which will last for only 25 years and belongs to the United Kingdom anyway, they have not said what that wealth consists of. We know that almost every lump of coal in Scotland that is dug out of the ground is dug out at a loss. If we want to put it in this way, it is dug out on the backs of English miners. Where is the wealth there? We know that almost every mile of railway line in Scotland runs at a loss. Where is the wealth there?

The Scottish National Party talks about wealth, but when it has a chance to spell out to the House exactly what that wealth consists of, it conspicuously fails to tell us. In fact, it cannot tell us because, whatever virtues Scotland may possess, and it is possessed of many, its virtues at present do not include those of substantial material resources. That is what Scotland does not have. We have many other qualities and commodities, but not those resources. The SNP cannot maintain that Scotland is rich in that way. I hope that the hon. Member for Dundee, East will seek to remedy the remarks of his hon. Friend the Member for Aberdeenshire, East (Mr. Henderson), who is conspicuously absent from the Chamber.

I conclude by referring to New Clause No. 3. If anything, the clause is too generous to Scotland. My hon. Friends are proposing that per capita expenditure in Scotland should never be less than in England. That is precisely the worst sort of fallacy into which we are falling, led by the SNP. The House should never allocate expenditure only on the basis of geography. Allocation should be based on need.

My hon. Friend the Member for Cleveland and Whitby is being too generous in saying that Scottish expenditure should never be less than in England. However, I hope that the day will soon come when it needs to be less, when housing in Glasgow, for example, is immensely superior to that in Manchester and does not need extra help, or when the roads to Aberdeen are so wonderfully straight and traffic free that we do not need more miles of motorway in Scotland per capital than in England.

In other words, what we want is justice. We do not want special pleading for Scotland any more than East Anglia or the South-West of England want special pleading. We want justice for each part of the United Kingdom. If Scotland's needs are greater, Scotland should get the resources. If its needs are less, it should not get the resources. That is the basis on which the House should operate.

My only criticism of my hon. Friend the Member for Cleveland and Whitby is that he is perhaps being too generous. However, that must be a small criticism when he has done the House a great service by giving it the chance once more to discuss the financial matters of the Scottish Assembly.

The Secretary of State for Scotland (Mr. Bruce Millan)

New Clause 2 would oblige the Secretary of State when laying an order under Clause 44 also to lay before the House a calculation of the per capita expenditure on devolved services in Scotland compared with a similar per capita expenditure on those services in England and Wales. It is that rather narrow aspect that we are discussing. Basically, we are dealing with a narrow, additional piece of information that the House is being recommended to oblige the Secretary of State to supply when the Bill has become an Act and an order is being laid under what will be Section 44.

The new clause has enabled the House to discuss some of the wider issues that arise from the block fund system. I do not complain about that. Nevertheless, I do not think that the House expects me to go over the arguments that we had at an earlier stage about independent revenue-raising powers for the Scottish Assembly. That is an issue that we have dealt with before.

8.15 p.m.

For the purposes of the debate we must assume that the block fund is in operation. We are considering the mechanisms that the Government and the Assembly, and the Scottish Executive on behalf of the Assembly, will build up to allow the various necessary negotiations to take place in as meaningful a way as possible.

I make the simple point, which no one has yet mentioned in the debate, that there is an obligation under Clause 44(2), as it stands, that the Secretary of State, in laying the order for the block fund, shall also lay a statement of the considerations leading to the determinations to be made by the order. If I might mention a parallel, we are under an obligation to do something similar to that which we do for rate support grant orders.

The order itself is a fairly incomprehensible document, but accompanying the rate support grant order there is a White Paper or statement by the Government that explains the economic background to the order, the way in which the expenditure for the following year has been calculated and the basis on which the rate support grant is being paid. I do not want to draw too close a parallel between the rate support grant order and what will happen under the Bill as regards the block fund, but we are dealing with something similar in the sense that as well as the order itself, which will no doubt have the necessary figures in it but may not be terribly enlightening, there will be a statement, for which provision is already made in the Bill.

In discussing the new clause we are dealing with an additional piece of information, apparently, something that is additional to the statement of the considerations that the Secretary of State will already be obliged to lay before the House under Clause 44(2). I do not think that it is sensible to draft the Bill to lay an obligation to provide a specific piece of information when a good deal more additional information will be necessary for the House in any event.

If a Secretary of State were to take it that he was discharging his obligation under Clause 44(2) merely by laying before the House the sort of calculation that is provided for in the new clause, I think that the House would justly be offended. It would take the view that that was not an adequate basis on which to judge the block fund order that the House was being asked to approve. The sort of information that is provided for in the new clause is only a small part of the information that I believe the House will wish to have when it deals with block funds under Clause 44.

The information that is sought in the clause can easily be obtained at present. For example, there is an answer in Hansard of 2nd December 1977 at column 458 dealing with public expenditure on devolved services in Scotland compared with similar expenditure on such services in the rest of the United Kingdom. Hon. Members are able to table a simple Question and receive an answer.

The answer to which I have referred is not precise to the last penny, or even to the last pound. That is because at present there is a certain grey area in the calculations. However, any hon. Member can obtain that sort of information. Hon. Members are already able to obtain the information that is provided for in the new clause for the post-devolution situation by the simple process of tabling a Question.

If I recommend to the House that it should not single out this one piece of information as meriting special mention in a special clause, it is not because I believe that the information is necessarily irrelevant to consideration of the block fund. Some hon. Members may think that it is extremely relevant. If I make that recommendation, it is not because I believe that a Secretary of State would wish in any way to prevent that information from being made available to the House. I take the view that he would be bound to make it available if he were asked to do so. Regardless of whether he puts it in the order, the covering White Paper, or whatever form the statement takes, if the House wanted the information, it would be bound to be able to obtain it. Far from a Secretary of State wishing to prevent the House from having this information, he will be under an obligation, and the House will put him under an obligation, to provide not only that information but a good deal of additional information.

It would be misleading, for that reason—I hope that the House will accept this argument—to single out this piece of information as being of such special significance that it must specifically be written into the Bill when none of the other matters that the House will in due course expect to have before it will be particularised in the Bill as it stands. However, all the information is already comprehended in the wording of Clause 44(2).

I accept that the House will require a good deal of information. I refer hon. Members to the White Paper, "Devolution: Financing the Devolved Services", published in July 1977. I particularly refer hon. Members to what was said in Part III of that White Paper. We accept the need to collect a certain amount of data not available at present in quite the form that the House will wish subsequently to have it. Paragraph 71 of that White Paper refers to collecting objective information on needs and standards of public services in all four countries of the United Kingdom. First, there is the question of needs. Per capita expenditure by itself can be extremely misleading. It does not take account of the relative needs of different parts of the United Kingdom. For example, expenditure on health is very much affected by the percentage of the population who are under the age of five and the percentage who are above the age of 65, and particularly above the age of 70. That kind of information is relevant—some of it is collected even now for purposes of rate support grant—in deciding the relative needs of different parts of the United Kingdom.

Standards of public services are more difficult operations to carry out. But the Treasury, in conjunction with other Government Departments, is trying to collect as much information as possible in an intelligible and coherent form in preparation for the block fund negotiations that the Government will have to carry out with the Scottish Executive. That is provided for in paragraph 71 of the White Paper.

That information will have to be made available to the House in some way. Whether it is done by way of a statement under Clause 44 or in some other way, I think that the House will be entitled to have as much information as possible about needs and standards of public services.

We have gone further than that in the White Paper. We have suggested that it would assist not only the Government and the Scottish Executive but also the House to judge the adequacy or otherwise of the block fund if we were to establish an independent advisory body to look at and make an appraisal of the information and that its advice would be available both to the Government and to the Scottish Executive. That is provided for in paragraph 72 of the White Paper.

Mr. Brittan

But not in the Bill.

Mr. Millan

I shall be coming to that matter. There is a reason why it is not provided for in the Bill. I shall deal with the rate support grant parallel on this issue as well. We believe that we should consult the devolved Administration before setting up such an independent advisory body. It would not be sensible—incidentally, this is not the effect of the new clause—to write this into the Bill or, as it were, to take a unilateral decision to set up this independent advisory body except in consultation with the devolved Administration. Unless the independent body had the confidence not only of the devolved Administration but also of the United Kingdom Government, far from helping to provide some kind of appraisal upon which the inevitable negotiations, which will have a large political element, could take place, it would be an irritant. It would look to the devolved Administration as if it were some kind of device on the part of the United Kingdom Government to produce an answer which was satisfactory to the Government and detrimental to the devolved Administration. It is important, if the House takes seriously the question of eliminating sources of friction, to have some kind of independent advisory body. However, that can be done only with the co-operation of and in consultation with the devolved Administration. For that simple reason we have not written it into the Bill.

I should like to deal with one other matter that has featured in the debate—the question of a formula. The paragraphs in the White Paper on this matter—essentially paragraph 76—were put in because there was discussion and criticism of the Government's proposals on finance and it was suggested that the devolved Administration—I am now thinking of Wales as well as of Scotland—would have not only no certainty about its finances over a period but no particular way of judging what its finances were likely to be over a period ahead. Therefore, it was felt that, as the Government here, through the public expenditure surveys and the White Papers on public expenditure, try to look ahead for a period of years, it was essential to give the devolved Administration the opportunity to look ahead for a period of years and to find a way of allowing it to do that with a certain amount of confidence that its planning for the future would not be completely falsified by events.

This is a difficult exercise. If the proposition in paragraph 76 relating to the formula basis will not be acceptable to the House in due course and if the devolved Administration does not think that it is a sensible way of proceeding, the formula approach will not be work- able. But I believe that in practice both the Government and the devolved Administration will find it useful at least to explore the possibility of the formula approach. That is all that we are saying. However, it cannot sensibly be done by writing it into the Bill. There is no sensible way in which we could in practical terms incorporate a formula into the Bill. We think that this would be a sensible way to proceed, but that, before doing so, we must have discussions with the devolved Administration. Again, for that reason, this proposal should not be written into the Bill.

8.30 p.m.

In the debate attention was drawn to the fact that when dealing with the rate support grant—I do not think that these parallels are necessarily the right ones to draw, but I accept that there is some validity in them—certain matters were written into the legislation regarding the needs element, the resources element, the domestic element and so on. Those matters were written into legislation when local authorities were consulted about what should be written into the legislation. Before there were such bodies as local authorities, the House did not produce a Local Government Act with all these complicated matters written into it. These matters are written into our legislation not only because the Government and the House of Commons find them sensible but because the local authorities find the principles sensible. That is an entirely different situation from writing provisions into the Bill before the devolved Administration has been established.

The rate support grant principles are written into legislation but the amounts are worked out outside the basic legislation. There is a certain amount of regulation-making power in the legislation, but the rate support grants are negotiated between the Ministers and the local authority associations on an annual basis.

Hon. Members have said that they will require a good deal of information about the basis on which the block fund is calculated. I agree with them. But I do not believe that we should write into the Bill any particular calculation about per capita expenditure. That would not help the House to make an appraisal of the adequacy, justice and fairness of the block fund that the Secretary of State will ultimately produce in a draft order. It would be misleading to do that.

Anyone who wants information will be able to get it easily. It might be part of the order. If it is not, it will be obtained easily. If the House finds it convenient to have that information in the statement I am sure that the Minister will include it.

It would not be sensible to put New Clause 3 into the Bill. It adds nothing to what we have already. It simply says that what we pay to Scotland should be no less proportionately than what is spent in England and Wales on similar services. In practical terms it would do no harm but it is inconceivable that the block fund would go below that level. I think that it will be considerably above that level.

I turn to the SNP amendment. Members of that party are entitled to say that once one thing is written into a Bill other things should also be written into it. This demonstrates the logic and common sense of not writing anything too specific into the Bill. I do not accept that there is a Scottish sector of the North Sea from which oil revenues should go to the Scottish Executive. I do not accept the basic terms of the amendment. However, I have some sympathy with Members of the SNP because they are saying to the Opposition Front Bench, "If you write one thing in, we want to write in something else". It is not sensible to write anything into the Bill additional to that which is provided by Clause 44(2).

When the Assembly is operating and the block fund orders are coming before the House, if hon. Members feel that there is any information that is being denied them, there will be no difficulty in their obtaining that information, whether or not that is specifically written into the Bill.

For all these reasons I recommend that we do not write these matters into the Bill but that we rest on the general arrangement and the general willingness of any Government to provide the maximum information to the House.

Mr. Dalyell

I have not spoken in the debate because instinct told me that I would do better to wait until the Secretary of State had spoken. I am glad that I did. He made an extremely interesting speech, and I have certain questions to put to him.

If I heard him right, my right hon. Friend said that he rejected New Clause 3 because what Scotland would get would be considerably above the formula arrived at by that new clause. If I am wrong, he will correct me.

New Clause 3 reads: In deciding on the draft order to be laid before the House under section 44(2) of this Act the Secretary of State shall have regard to the need to ensure that in each financial year the resources per capita available for expenditure by the Scottish Executive for purposes falling within devolved matters shall not be less than the resources per capita provided for that year for the same purposes in England and Wales. My right hon. Friend said that the Scottish allocation would be "considerably above the formula". The formula suggested by the hon. Member for Cleveland and Whitby (Mr. Brittan) is on a per capita basis, and this raises a basic issue. Under a devolved Assembly, for how much longer are we Scots to be allowed to get more than our share? This is a substantial issue.

Under an Assembly, one of the facts of life will be that people from the other regions of the United Kingdom will be watching like hawks, in a way that they have never done before, to see precisely how much the Scots receive. It is just no good the Secretary of State saying that he expects it will be "considerably above". On what basis shall we get considerably above our per capita share and expect once again, over a long period, to get the best of all possible worlds?

We come back to a basic difficulty. I am sorry that the Chancellor of the Exchequer has left the Chamber. My right hon. Friend the Secretary of State referred to a discussion in the Treasury. I think that this is the first that the House has heard of a Treasury examination to determine the size of the block grant. Had the Chancellor of the Exchequer been present I should have put to him, as the Member of Parliament for Leeds, East, a blunt question: for how long will he tolerate a per capita allocation to Edinburgh or any other Scottish constituency or industrial area that is higher than that provided for Leeds?

Until the Bill was introduced it was possible that these things were accepted as the basis of regional policy, but for how much longer will the present situation be accepted? The Secretary of State's speech let many cats out of some bags and confirmed the worst fears and basic objections that many of us have had to this legislation.

My right hon. Friend referred to some kind of independent advisory body. I have heard virtually every speech during 35 days of debate on this Bill and the previous Bill. I do not know whether I shall be corrected when I say that this is the first time that I have heard of the existence of this independent advisory body.

Mr. Millan

It is in the White Paper.

Mr. Dalyell

I thought it was a new independent advisory body. I stand corrected.

There are some issues that arise from the discussion on the rate support grant. One is the increasing worry of heavyweight local authority councillors in Scotland—I have in mind Charles Snedden, chairman of the finance committee of Central Region, Ronald Young, and others—who have to deal with finance on a regional basis. They are expressing irritation at having to deal with not only a Scottish Assembly but the United Kingdom Treasury. They are irritated at having to deal with two organisations, whereas before there was only one.

That is the view of those who have to deal with this matter. The issue arose during my right hon. Friend's speech, and I leave the matter with a question to him: am I wrong in my first remarks that the fact that there will be considerably more per capita for Scotland is a reason for rejecting New Clause 3? If I am wrong about that, doubtless my right hon. Friend will tell me.

Mr. Alexander Fletcher

I am sure that the Government Front Bench will again be grateful to the hon. Member for West Lothian (Mr. Dalyell) for intervening in this debate. He is the only Labour Member on the Back Benches to have taken part in debating what we consider to be an extremely important matter. The point that he makes is one which we drew from the Secretary of State's remarks a few minutes ago.

The Secretary of State said, in connection with New Clause No. 3, that Scotland would continue to be given a greater proportion of public expenditure per capita on devolved services than England and Wales. I hope that he will make it clear that that was not an off-the-cuff commitment but represented the considered view of the Cabinet and is something about which he is prepared to make a formal commitment.

Mr. Dalyell

If it is the considered view of the Cabinet, how long does the hon. Member suggest that such a considered view will endure?

Mr. Fletcher

I was about to come to that point. It would be a little more viable if the House could know whether that was an off-the-cuff remark by the Secretary of State or whether he has the authority of the Cabinet to make such a comment.

In a typically strong speech, my hon. Friend the Member for Aberdeen, South (Mr. Sproat) asked a particularly important question about the SNP contribution to the debate. The hon. Member for Aberdeenshire, East (Mr. Henderson) has tried to impress the House by talking about the wealth that exists in Scotland. My hon. Friend the Member for Aberdeen, South asked where that wealth was. There was no specific reply to that question, just the usual generalities one receives all the time from the SNP Bench, or that part of the Bench temporarily occupied by the SNP.

I draw the attention of the House to the debates in the Committee when claims were made by the SNP, particularly by the hon. Member for Perth and East Perthshire (Mr. Crawford), regarding the financial institutions in Scotland which he suggested were very much owned by Scots and were part of the Scottish scene. The institutions mentioned in the debate—I challenged the hon. Member at the time—were the Bank of Scotland, the Royal Bank of Scotland and General Accident.

I asked the hon. Member for Perth and East Perthshire on what basis he referred to those as Scottish institutions. Again, he evaded the question. Since then I have taken the trouble to write to the General Accident insurance company, the Bank of Scotland and the Royal Bank of Scotland to confirm the point that was obvious to us at the time, namely, that these three institutions are owned by shareholders throughout the United Kingdom, the majority of whom are in England. That might have been known to most hon. Members as a simple fact, but not, apparently, to the hon. Member for Perth and East Perthshire. If we look at Scottish public companies generally from giants such as DCL and J.&P. Coats down to the more modest companies, we find that the bulk of the shareholders, and therefore of the wealth, reside in other parts of the United Kingdom than Scotland.

Money is at the root of all evil, and certainly it is at the root of those things which are superficially attractive. The superficial attraction of the Bill, to some people in Scotland at least, is that they think that they would be better off in economic and financial terms if the Bill were implemented. The new clause makes it necessary for the Secretary of State, in presenting the block grant to the House, to inform Parliament of comparative expenditure between Scotland, on the one hand, and England and Wales on the other. This provision in included to try to get some reality into the debate and into the negotiations and the debates that may take place concerning the block grant.

It is clear that no contribution to this or previous debates has informed the House or the people of Scotland how Scotland would be better off financially or how its economic prospects would be improved if the Bill were implemented.

8.45 p.m.

My hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor), speaking in the debate on 10th January this year, reported at column 1599 of Hansard, made remarks that were repeated this evening by my hon. Friend the Member for Cleveland and Whitby (Mr. Brittan) regarding the advantage of 25 per cent. or 30 per cent. in per capita terms that Scotland enjoys at present and has enjoyed for some years in respect of devolved expenditure.

It has also been pointed out that the Assembly's taxation powers are a form of indirect taxation whereby the block grant could be denied, at least in part, to local authorities as part of their expenditure on essential services, thereby forcing them to increase rates. This adds up, in our opinion, to a totally unsatisfactory financial provision in the Bill.

As many of my hon. Friends have said, during this debate and in previous debates, this is a natural source of division and discontent. It is an obvious advantage to those whose main aim—indeed, whose sole aim—is the break-up of the United Kingdom. The SNP amendment pleads for oil revenue to be taken into account in calculating the financial position of Scotland as part of the United Kingdom. It ignores other people's rights in relation to North Sea oil, not least the rights of the Shetland Islands, where two-thirds of North Sea oil will be landed and therefore two-thirds of the wealth accruing to the United Kingdom will be looked after.

I sometimes think, listening to the debates over many years, listening to Labour Members and in relatively recent years SNP Members, that the Labour Party and the SNP deserve each other. For many years the Labour Party has preached the politics of envy. Now we have to listen to SNP Members preaching the policy of greed. They deserve each other; but Scotland deserves better.

We should ask the SNP, with all its claims about North Sea oil, how much Scottish money has been directly invested in the North Sea. That is one of the embarrassing facts and figures that the SNP is not keen to supply on any of these occasions.

Mr. Gordon Wilson

I cannot understand why the hon. Gentleman is talking about the injection of Scottish money, as he knows that quite a lot of the money that has been injected is American money or multinational money. The share of resources that will go to the United Kingdom, which his Government, if there is ever another Conservative Government, would propose to spend, is a taxation share. That taxation share would be equally available to a Scottish or United Kingdom Government, or, indeed, if some hon. Members have their way, an EEC Government.

Mr. Fletcher

I was trying to say earlier, when talking about the Bank of Scotland, the Royal Bank of Scotland and General Accident in Scotland, that ownership and possession of such institutions was closely connected with shareholders' investment. I am trying to suggest now, with regard to North Sea oil and the claims of the SNP, that there should be some connection between the investment and the funds that have been used to exploit North Sea oil, if one is to make the sort of comparisons that are made there.

The hon. Member for Aberdeenshire, East, went much further, as he always does, when he complained that expenditure comparisons were selective. He then proceeded to mention only one omission—that of defence. The only fault that he could find in the expenditure comparisons was that there was no allocation of defence expenditure on a per capita basis throughout the United Kingdom.

The hon. Gentleman should remember that Scotland benefits to a considerable extent through United Kingdom defence expenditure at present. He should remember also that the SNP policies would throw out all the existing defence bases in Scotland, particularly the nuclear bases at Rosyth and Gareloch. Therefore, the SNP's attitude to defence is, like everything else, an extremely flexible and dishonest approach to the whole policy. It is an attitude and policy that would reduce employment in Scotland and make hardly any contribution to the nation's wealth. The loss could never be replaced by any toy army, navy or air force that the hon. Gentleman might propose.

The hon. Member for Inverness (Mr. Johnston) talked about the English regions noticing Scotland's expenditure advantages. Why should they not notice them? Why should the hon. Gentleman be surprised, particularly if Scottish hon. Members such as he ridicule and despise the present system, which works unmistakably to Scotland's advantage? I am sure that he would not wish to deny that it does. Listening to the hon. Gentleman's contribution to the debate and his talk about satisfactory methods, his statement that anything that is good now might be continued, made me wonder what all the fuss was about and why the hon. Gentleman can think that supporting the Bill such as this is worth while, that it will in any way benefit his constituents.

It is typical of all the debates we have had that nobody speaks for the Bill, that nobody presents any advantages of the Bill. The Government Front Bench tries to answer the more detailed and technical points, but its enthusiasm for the Bill is just about as low as that in any other part of the House—and, indeed, in any part of Scotland, despite the inaccurate opinion poll findings in the Press earlier this week. The real opinion poll will be the referendum, which will say precisely the oposite to that poll.

The point is that Scotland is being misled, particularly by the sort of financial talk we have heard tonight, and by the financial provisions and the packaging built around them in presenting the Bill in Scotland. It is presented very differently in Scotland from the way in which it is presented in this House. That is an obstacle that some of us may have to overcome in the referendum. We have plenty of time.

The House can no longer dodge the issue. The Bill is almost totally opposed by hon. Members. We cannot much longer continue with the House refusing to give an honest lead to the people, with hon. Members continuing to speak passionately against the Bill and yet to vote for it.

The Secretary of State said, referring particularly to New Clause 2, that the information was already available and could be found elsewhere or presented from other sources. I do not quibble with that. But what we consider important is that the information should be part of the specific considerations at the time the block grant is debated. That is why we think the information has a special significance, along with the other facts and figures that may be provided during those debates.

The right hon. Gentleman also spoke of a search for a way to plan ahead financially. He talked about the formula approach. He will excuse our scepticism, in view of the constant changes in United Kingdom expenditure plans throughout the fiscal year. Clearly the formula plan, the four-year planning system, was put in as a sop to the Liberals and has no prospect of being at all successful.

We are trying to introduce some realism, not into this debate but into future block grant debates, so that there shall be no pretence that anything extra, anything in addition to what is made available financially to Scotland today, will be made available to Scotland simply because the very expensive apparatus of a Scottish Assembly has been set up. I do not think that the Secretary of State can deny that. I do not think that he would even try to deny it. That is why we think the whole business really is a piece of nonsense. That is why in these debates we have tried to clarify the position.

Mr. Dalyell

As the hon. Gentleman has concluded, may I remind my right hon. Friend the Secretary of State that I asked him some questions which I think he wanted to answer.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

The hon. Gentleman may address the House only with leave.

Mr. Millan

I wanted to find out whether we had finished the debate so that I could ask the leave of the House to reply to the specific questions on New Clause 3.

What I said was that on the basis of the needs of Scotland, as I understand them at the moment and as I believe they will be for at least a number of years ahead, I think it inconceivable that the block fund should not be higher per capita than the equivalent expenditure on devolved services for England and Wales. That is the situation at the moment, and I believe that will continue. Therefore, New Clause 3, whatever its intention, would not be a protection for Scotland.

Mr. Brittan

Having enabled the House to ventilate the issues raised by the block grant in a way which was not possible as a result of the guillotine imposed by the Government on the Committee stage, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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