HC Deb 31 July 1997 vol 299 cc456-69

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Betts.]

3.39 pm
The Secretary of State for Scotland (Mr. Donald Dewar)


Hon. Members

Where are they?

Mr. Dewar

That is a good question. Where are they? The right hon. Member for Bromley and Chislehurst (Mr. Forth) will recognise that we do not have to ask that question about Scottish Conservative Members or ask fake questions about annunciator screens to make the point that, apart from a few refugees in England, there are no Scottish Conservative Members. Perhaps that will concentrate his mind a little on the seriousness of his party's plight and the difficulties that the Conservatives face in Scotland without a single Member of Parliament.

We published the White Paper "Scotland's Parliament" last week. I was a little overwhelmed by the strength of the welcome that it received. It is widely recognised that it is not just another document produced by The Stationery Office. There are inevitably many White Papers, but this is the first on Scotland that anyone can remember which has sold and continues to sell as fast as it can be printed. I do not like airs and graces and I am not a great hand at pomposity, although I occasionally try to rise to the occasion. I can say only that people are fascinated by their own history and want to be part of it. There is a genuine feeling that history is in the making in Scotland and in the House, where the authority lies for giving devolution a fair wind.

The White Paper is not a theoretical text. Rather, it is intended to be a profoundly practical document, setting out what the Scottish Parliament will be like once it is in being and explaining the steps by which it will be established. It is a clear statement of what the Government intend to do, and our aim has been to make the detail of our proposals as accessible as possible. In that sense, I hope that we have succeeded. We want as many people as possible in Scotland to understand what the Scottish Parliament can add to their quality of life. We want them to be in possession of the facts and familiar with the arguments, so that on 11 September they will be in a good position to make what can fairly be described as an historic choice.

The House will accept that it is important to see the Government's commitment to a Scottish Parliament as not simply a commitment to Scotland, but an essential part of our wider commitment to modernising the constitution of the United Kingdom. If people are apathetic about government—and I fear that it is often the case—and sometimes even cynical, it is because the institutions of government have lost touch with the people they serve. In general political terms, we believe that there is a pressing priority to do something about that. We want to change that atmosphere and that perception. We want to modernise the constitution of the United Kingdom and make it fit the 21st century.

In previous exchanges in the House, I have stressed that we propose devolution and reform within the United Kingdom. Let me take the opportunity to do so once again. We accept that sovereignty within a devolved system lies with the United Kingdom Parliament. That sovereignty can be exercised in a number of different ways. The choice that we are asking Parliament to make is to pass some of its practical day-to-day power to a directly elected Scottish Parliament representing the people of Scotland. I recognise that, of course, that cannot be done without the consent of a majority of Members of this Parliament, representing every part of the country. It is my job not only to convince Scotland that the proposal is right, but to carry my hon. Friends and hon. Members from all parties in that cause.

I turn to the case for a Scottish Parliament, a Welsh Assembly and a strategic authority and elected mayor for London. I should say in passing that I greatly welcome the meeting of minds among Opposition Members on the question of an elected mayor for London. It is always a little difficult when one has been attacking something with great fury and one's new leader comes along and announces that he is in favour of it. I know that Opposition Members will adapt bravely to that. On this occasion, I think that the Leader of the Opposition is in the right.

All the changes are aimed at fundamentally involving people in decisions that matter to them. There is already government in Scotland; some people would say, a lot. My Department has nearly 12,000 civil servants. They do a good job, but we believe that the structure within which they operate could be more effective and could more effectively and directly reflect Scottish opinion. There is a great range of quangos, great and small, delivering different services and functions in almost every area of Scottish life. What is needed, and what we shall deliver, is a more effective democratic framework, connecting all those various institutions to the people of Scotland.

The case for a Scottish Parliament is at the heart of such a process. It will strengthen democratic control, increase accountability, and above all bring decision making out of the shadows. As no doubt many hon. Members know—and I am learning—government works in ever-increasing mysterious ways. Discovering that is part of my daily life at the moment. There is a good deal to be said for bringing government closer to the people and ensuring that they are aware of exactly what it is about.

Mr. Ian Bruce (South Dorset)

Will the Secretary of State give way?

Mr. Dewar

It is very early. The hon. Gentleman is very persistent; this is his chance.

Mr. Bruce

I am grateful to the right hon. Gentleman. He is always courteous. I should like to ask a genuine question—I am trying not to be party political.

The Secretary of State will know that, in generating regulation and law in the European Union, we try to bring things together, so that one can trade across countries, and laws are similar. Why is it right now to say to a Scottish Parliament, "Please, go off in a different direction"? After all, that is the whole purpose of having a separate Parliament. In this place, we tend to legislate for England, for Wales and for Scotland, but the legislation is basically the same. Although I would like changes, surely a Scottish Parliament is the wrong way of going about it.

Mr. Dewar

I am genuinely glad that the hon. Gentleman has deserted partisan politics to ask a genuine question, and I think that he probably needs the answer. We have legislated for England, Wales and Scotland in this House in the past, but I ought to stress that, if the hon. Gentleman looks at the laws, he will see that they are not necessarily the same.

Mr. Bruce

They come together.

Mr. Dewar:

No, there is no necessary convergence built in, either. Of course, there are many areas—and many areas in the legislation that we propose in the White Paper—where we leave matters on a United Kingdom basis because we believe that that is right. There are, for example, important level playing fields for commerce and industry, and for a whole range of issues such as company law reform, labour legislation and monopolies and mergers—there is a mass of them—but in many other areas, such as housing, education and a raft of structural facets of life, there is a very distinct tradition in Scotland. The institutional framework within which Scots live is distinct and different. The whole point about the Union was that it was a coming together of nations in one partnership, but that distinction was maintained by the preservation of Scottish legislation.

I agree with the hon. Member for South Dorset (Mr. Bruce) that, in any particular area or for any proposal, there is not necessarily a virtue in being different for the sake of being different, but there are many areas in which it is right that the law should recognise the different and continuing traditions, attitudes and cultures that we have in the northern part of the United Kingdom. Putting those under direct democratic control in Scotland is the point of the whole exercise.

If the hon. Gentleman is saying that he wants to snuff out—that is a bad expression to use, because it suggests sudden change—that difference, gently and over time, he and I are fundamentally opposed. I believe that differences enrich cultural societies and nation states, even though they remain as one. I do not want to see those differences, as a matter of policy, eroded and elided. I do not glory in those differences—that is a little too jingoistic—but they are a positive advantage to the whole country. It is right that we should recognise the separate traditions in the structures of the United Kingdom, and that is one of the principal reasons why I started—many years ago—to support a form of devolution.

Mr. Tam Dalyell (Linlithgow)

Perhaps this is a convenient moment to put to my right hon. Friend a question that bothers the Law Society of Scotland. How will the devolution of criminal law and procedure, in paragraph 2.4 of the White Paper, dovetail with the reservation to the United Kingdom of drugs, firearms, road traffic, immigration law, the activities of the security services in the detection of crime, and offences under the Companies Acts, in paragraph 3.3? I understand that my right hon. Friend has been given notice of the question by the Law Society of Scotland.

Mr. Dewar

I am glad that the hon. Gentleman has drawn that question to my attention—[HON. MEMBERS: "Hon. Friend."' He is indeed a friend of many years' standing. No doubt the Law Society will be glad that he raised the question, although I suspect that it knows the answer.

Certain parts of our criminal law have always been legislated for on a United Kingdom basis. It is generally accepted in the House—certainly by me, even if not by the nationalists, for reasons that we all understand—that, for example, there would be obvious disadvantages if the classification of dangerous drugs differed between Scotland and England. That would complicate the work of the enforcement agencies, whether Customs and Excise, the Crown Prosecution Service or the police. The classification of dangerous drugs has, sensibly, been done on a United Kingdom basis, but the essence of criminal law in Scotland, which is an important aspect of our different approach, will be devolved.

That cannot be a great puzzle to my hon. Friend, because he knows that that is the situation at the moment. The misuse of drugs is covered by UK legislation, but much of the criminal law is Scottish legislation. That is a distinction that has worked well in the past, and it is now being more completely recognised through being reflected in the institutional structure as well as in the body of the law.

Mr. Bernard Jenkin (North Essex)

Given that we have had a single, unitary Parliament in the United Kingdom for the past 300 years and the rich and separate legal tradition in Scotland has prospered, has not the right hon. Gentleman talked himself out of the need for a separate Parliament in Scotland? [Interruption.] He may be appealing only to the jeering nationalists and some of the extremists on the Labour Benches, such as the hon. Member for Dundee, East (Mr. McAllion), who want a Scottish Parliament somehow to insulate Scotland from the consequences of being part of the United Kingdom.

Mr. Dewar

No one, so far as I know, has been jeering in the debate today—as yet. I know a jeering Scot Nat when I hear one and I fear that the hon. Gentleman has led a sheltered life. We have heard only a friendly and supportive muttering so far.

The hon. Gentleman's point need not detain us very long. He is right to say that Scots law has survived—I welcome that—but that does not mean that we should not continue to improve the structure and adapt our systems to play to our strengths. We in Scotland see our distinctive law as one of our strengths. So does Westminster, because no one, not even the hon. Member for South Dorset, has suggested that separate Scottish legislation should be abolished. Therefore, devolution is right institutionally.

The case for a Scottish Parliament is that it can ensure that whatever is done by the Government best suits Scotland's needs. That is an optimistic statement, and the hon. Member for North Essex (Mr. Jenkin) is entitled to suggest that the Scottish Parliament, like every other Parliament, will make mistakes. However, any mistakes will at least be our own and we can kick each other and not the hon. Gentleman, which may be a relief to him.

Mr. Dominic Grieve (Beaconsfield)

I appreciate the proposal's importance to Scotland, but it must be put in a United Kingdom context, and the right hon. Gentleman has been doing so. He talked with feeling—I understand this—about Scotland's cultural need for decisions that are acceptable in Scotland to be taken, and a devolved Parliament will help to do that. However, the scheme envisages the retention at Westminster of 58 Scottish Members of Parliament, who will be able to vote on matters of purely English concern thereafter, and their views might not be in accord with those of the majority of English Members representing their constituents.

I am sorry to raise this central issue so early in the debate, but as the Secretary of State touched on it so positively in the Scottish context, I should be interested to have his answer in an English and United Kingdom context.

Mr. Dewar

I hope that my whole speech will answer that, in a sense. The hon. Gentleman must not try to second-guess the boundary commissioners and write purely speculative—I fear that it is speculation touched with malice—figures into the record. I appreciate why he has done it, but I deplore it.

I want a fair and balanced package. I accept entirely that people must look at the balance, weigh all the advantages and disadvantages, and make up their mind which side of the balance they are on. There are substantial advantages for the United Kingdom as a whole. I stress again—this may become something of a gramophone record as the months unfold—that, if devolution is to go ahead, it must be approved by a majority of Members from United Kingdom constituencies, irrespective of political colour. A sovereign Parliament should be able to look at the government of this country—at what many people would call, to use a cliché, the democratic deficit—and wish to move to right it. That seems to be what this is about.

Sir Robert Smith (West Aberdeenshire and Kincardine)


Mr. Dewar

I apologise to the hon. Gentleman, who is twitching on the edge of his seat, but I want to make a little progress.

This is a strong, good and stable settlement for the United Kingdom. It can be compared with the Scotland Act 1978, which reached the statute book but ultimately was not implemented. The House will realise that the law-making powers that would go to a Scottish Parliament in this version are much stronger and wider in range, and reflect in part the growth of Scottish Office responsibilities over the past 20 years. They also reflect the fact that, unlike the 1978 proposals, we shall devolve the whole range of Scottish Office functions, with one or two prescribed and limited exceptions, to the Scottish Parliament and the Scottish Executive.

Furthermore, we propose to give the Scottish Parliament some additional responsibilities. For example, the Lord Advocate's functions were not included in the devolved powers in the previous Bill. There will be financial assistance for industry, subject to sensible arrangements to ensure level playing fields in areas where that is important throughout the United Kingdom. This time we also propose to devolve forestry and responsibility for commercial ports and inland waterways.

It is difficult for me, with my lengthy perspective—I think that that means that I have been here for a long time—to remember that, in the 1978 package, universities and higher education were not devolved functions. Nor were agriculture and fisheries or economic development. This is a much more rational, tidy and stable division of responsibilities between Westminster and the Scottish Parliament. That is an important virtue, and I commend it to the House.

Mr. James Paice (South-East Cambridgeshire)

The Secretary of State mentioned forestry. The White Paper states, in the list of items to be devolved: the Secretary of State for Scotland's functions, including his power of direction over the Forestry Commission, will be transferred to the Scottish Executive". I understand that the Secretary of State currently has total powers over the Forestry Commission for the whole of the United Kingdom. Simply passing control to the Scottish Executive would therefore pass to it the "power of direction" over English and Welsh forests.

Mr. Dewar

I am genuinely glad that the hon. Gentleman raised that, as it is an important and quite sensitive area. He has misunderstood the position of the Secretary of State for Scotland. I must make it clear, for the sake of my relationships with my colleagues in the Cabinet, that the Scottish Office is the lead Ministry, but the Ministry of Agriculture, Fisheries and Food and the Welsh Office have joint responsibility. We are very careful. Ministers in the previous Government will agree that we go to great trouble to move in unison and to agree policy decisions.

Obviously, there will be a new factor—devolution—and there will have to be discussions about the Forestry Commission itself and how it responds to the challenge. Those discussions are already under way, as a preliminary against the devolution proposals making progress. We are quite confident that those discussions, which are taking place in a very constructive mood, will come up with internal solutions for the new situation. I can assure the hon. Gentleman that, in forestry matters, my writ does not run south of the border, other than in terms of being the lead Minister of the consortium of interested Ministers. That is the position.

Mr. Ian Bruce

Will the Secretary of State give way on that point?

Mr. Dewar

No, I am very sorry. I am not trying to be difficult, but it is already 4 o'clock and I feel that I have hardly got started. Now there is a threat for all hon. Members.

Mr. Bruce

On a point of order, Madam Speaker. I do not want to be difficult, but the right hon. Gentleman appears to be—

Madam Speaker

That is obviously a point of frustration and not a point of order. The hon. Gentleman is seeking to catch my eye in the debate. I have a number of hon. Members who will not be called if we continually get interventions and bogus points of order during speeches.

Mr. Dewar

I am grateful, Madam Speaker. I should be delighted if the hon. Gentleman wrote to me, and if he does not like my answer, it will give a much—

Madam Speaker

The hon. Gentleman may raise the matter if he seeks to catch my eye.

Mr. Dewar

Indeed he may, Madam Speaker, and I hope to be here—Oh well, no. [Laughter.] That might be going too far.

A second and crucial difference from 1978—I shall telescope this—is that we have moved to define the reserved rather than the devolved powers, to ensure maximum clarity and stability. Anyone looking at the 1978 Act would see a somewhat grudging document, which would have required frequent updating. There would have been a greater danger—I put it no higher than that—of arguments over vires. We wished to minimise the difficulties of interpretation and to allow for maximum flexibility in future. We have done so.

My third point is that the Secretary of State for Scotland will not have what is sometimes called the governor-general role, which was at the heart of the 1978 Act and was put upon the shoulders of the Secretary of State. The Scottish Parliament and Scottish Executive will have their own direct relationships with the Crown, rather than using the Secretary of State as an intermediary. Legislation passed by the Scottish Parliament will not need to go to the Secretary of State for consideration and approval before it is passed to the Queen for Royal Assent. It is important that we do not have such overriding decisions. It would have sullied the atmosphere and made for great difficulties. I am glad about that particular extension.

Mr. Charles Kennedy (Ross, Skye and Inverness, West)

I am grateful to the Secretary of State for giving way on this extremely important point, and I very much agree with his analysis. In the contrast that he is drawing between the current proposals and those of the late 1970s, he has been sensible enough to recognise the inevitable reduction in the number of Scottish Members of Parliament going to Westminster. When one considers this bold and imaginative White Paper in that respect, it is de facto the case that the office of Secretary of State effectively becomes redundant. If this reaches a successful conclusion, does he anticipate being the last holder of the office of Secretary of State, not just in its present form, but as a meaningful office of state at Cabinet level?

Mr. Dewar

That office certainly will change in character quite radically, because of the 12,000 civil servants and the range of legislative responsibilities passed to the Scottish Parliament. There will, in my view, still be a need for liaison. In the important areas of foreign affairs, defence, economic affairs in particular and fiscal affairs, there will still be a need for a Scottish voice in the Administration of the day, in United Kingdom terms. I do not share the hon. Gentleman's absolutist view on that matter, although I accept that it is something in which his party has believed for a very long time.

What is certain is that the Secretary of State will not have what I referred to as a governor-general role. To be fair, if one looks back to 1978, the White Paper made the point that it was expected that the Secretary of State could object to and block a Scottish Parliament Bill on the basis that he did not agree with it as a matter of policy. There was then a considerable outcry, and that was diluted in section 38 to the circumstances in which it would or might affect a reserved matter and was not in the public interest. But the override was there in a way that would have made for great difficulties in interpretation. The clarity of the new settlement is important.

I very much doubt whether my old friend who was Secretary of State at that time saw himself in a governor-general role, but certainly he was driven out of it by popular outcry. Some hon. Members may remember that, on one occasion, the late George Brown, on being introduced to someone who had just become a governor-general, established conversationally that he had a hat with plumes and, as he left, said in a friendly way that he hoped that his feathers would fall out. I think that that is what happened to the governor-general role way back then, and we have finally buried the matter.

Dr. Liam Fox (Woodspring)


Mr. Dewar

Oh, a Front-Bench spokesman.

Dr. Fox

The Secretary of State has been quite good at following the point through in the debate, but how does he envisage the role of the Secretary of State developing if there is a Scottish Parliament of one colour in Edinburgh and a United Kingdom Parliament of a different political colour in London?

Mr. Dewar

The Secretary of State might be a little busier and his job might be a little more difficult, but that perhaps underlines the need for it. I met a Member of Parliament the other day—I make no complaint because he had not been following the argument—who thought that the Secretary of State would be in the Scottish Parliament, reflecting its political colour. The Secretary of State is a member of the United Kingdom Government and, clearly, his role will be to consider Scotland and Scotland's needs according to the beliefs and opinions of that Government, reflecting them in the counsels of that Government. We could argue about the detail, but the position is perfectly clear.

I want to push on to one or two other quick points, because I might outstay my welcome. The Scottish Parliament and the Scottish Executive—I mention this particularly because I recognise that it is a matter of great controversy; rather more controversy than I expected—will obviously have a role and will be closely involved in European decision making and will have a presence in Brussels. The White Paper uses the words: The closest possible working relationships and involvement", and involvement of the Scottish Executive as directly and fully as possible in the Government's decision making on European Union matters is what is on offer.

To end all doubts, I make it clear that I accept that of course the Scottish Executive representative will want to try to influence and take part in that matter. But at the end of the day, the United Kingdom is the member state and a common United Kingdom position will have to be evolved, and everyone will have a duty to try to advance that position in negotiations with other member states.

Miss Anne McIntosh (Vale of York)

That raises an interesting point of constitutional law. The United Kingdom is responsible for negotiating its obligations as a member state, but the Scottish Parliament would have to implement them, which might lead to difficulties. Has the Secretary of State considered any potential constitutional difficulties in that relationship?

Mr. Dewar

Sotto voce he says, "Everyone else has," but that may be optimistic. However, I have and my colleagues have. I accept that the hon. Lady, who I think is still a Member of the European Parliament for a southern English seat, although she represents a northern English parliamentary seat in the House, raises a perfectly legitimate point. If she looks at the White Paper, as I am sure she will have and will have just missed this, she will see that it takes great care to lay a duty on the Scottish Parliament to implement European law and directives. The reason for that—she is absolutely right—is that, if it refused to do so, the penalty for non-compliance would fall upon the United Kingdom Government as a member state, and that would be demonstrably unfair. That is why, as is the mark of the White Paper, we have tried to face up to these difficulties and to write in the necessary machinery.

Mr. Alex Salmond (Banff and Buchan)

The Secretary of State is undoubtedly correct to say that member states have certain rights and entitlements in the European structure of decision making, which are not given to non-member states or, indeed, regions of member states. However, the White Paper envisages Scottish Parliament representatives leading the UK delegation on specific matters. What does he expect those matters to be? How often does he think that a Scottish Parliament representative will lead the UK delegation?

Mr. Dewar

I would not speculate about that, although there are precedents where Scottish Office Ministers have regulated parts of discussions and, occasionally, spoken in debates as members of the UK delegation. It is difficult to predict or to play the numbers game. I know that the hon. Gentleman is interested in the numbers game. He predicted confidently the number of seats that his party would win at the election. He was wrong. I make no complaint about that, but it is a dangerous game. If he looks at the White Paper, he will see that a strong and robust role is proposed for Scottish Executive representatives as part of the UK delegation.

I am afraid that I do not often go to Europe these days to visit the Commission or to go to Brussels. I am aware—as the hon. Member for Vale of York (Miss McIntosh) will be—of the active role played by many constitutional structures below nation state level, such as the German Milder, the Spanish autonomous provinces and the Italian provinces. There are a lot of them, and they all work extremely effectively on behalf of the areas that they represent. There is a real and positive virtue from a Scottish point of view, in having the Scottish Parliament involved at that level.

Mrs. Margaret Ewing (Moray)

What would happen if the Scottish Parliament decided to comply with EU directives where the United Kingdom had applied for derogation? That is very important for many Scottish industries.

Mr. Dewar

That is ingenious. I would want to write to the hon. Lady about that. [Interruption.] Well, this is a serious debate. I do not know whether that is possible. I can think of precedents, but I would want to check them. I think it is possible to have derogation for an area within a member state, but before I say something that could be quoted against me—quite fairly—I should like to check.

It is important that we recognise the virtue of fiscal powers in a situation such as this. In tiers of government—whether it is local or central Government—there are powers to vary the revenue, and that seems right for the Scottish Parliament. We were influenced in this by the Conservative party's attacks on the "constitutional irresponsibility" of a body that did not have such powers, at least on the margins. I say that, because I ought to make it clear that the powers we are suggesting are comparatively modest, as against the block-and-formula arrangements for allocating on an agreed basis the resources of the United Kingdom to Scotland. I accept that that is an interesting and testing process.

We have added to the process the right to reduce or increase income tax at the basic rate by up to 3p in the pound, producing a levy at current terms of a maximum of about £450 million. That seems to me to be right, because it asks the Scottish Parliament to face real financial choices and makes it, in a sense, more directly accountable to the people it represents. The important point is that we are trusting the people of Scotland to make choices on their own behalf. After all, Scots elected to the UK Parliament and to local government are trusted in that way, and the new Parliament should be as well.

We have built in two specific safeguards with which the House will be familiar. First, income from savings and dividends will not be affected by the tax-varying powers. We were influenced heavily in reaching that decision by the need to have a level playing field for the financial services industry in Scotland, which is particularly important in insurance and pensions. Secondly, if the Parliament's power to raise the £450 million—which will be index-linked to preserve its real value—were eroded at some hypothetical future date by changes in the United Kingdom tax structure, an alternative base with the same sort of impact in terms of distribution would be provided by the Treasury.

It is important to recognise that the power may be used to deal with some special project or difficulty. I do not expect that it would simply be added to the blockand-formula sum that is negotiated as a continuously available additional revenue support. I believe that that would constitute a misuse of the power—although, of course, it would be a matter for the Scottish Parliament. The power must be seen in the context of the United Kingdom direct taxation system as a whole. Moreover, I am advised by the Treasury that, of those who currently pay tax in Scotland, 29 per cent. would not have been affected if it had applied this year. That 29 per cent. consists of those with the lowest incomes in the tax system.

Mr. Gerald Howarth (Aldershot)

While the Secretary of State is on the subject of the tax-raising powers and the revenue of £450 million, will he explain something in the White Paper? Paragraph 7.13 states: It is of course possible that future changes to the UK income tax structure might reduce the value of the product of the Scottish Parliament's tax-varying power. In these circumstances, the Parliament's ability to raise or forgo up to £450 million through the tax system will be preserved. Does that mean that, if taxation in the United Kingdom—led by a Conservative Government—went down, the Scottish Parliament would still be able to levy £450 million on the Scottish people, which could well represent more than 3p in the pound?

Mr. Dewar

It would not represent more than 3p in the pound. I can imagine the hon. Gentleman attacking me with some vim and vigour on the ground that, at some stage, the basic rate might contract and become so narrow that no significant revenue could be raised. He produced his question as if it were a trick question that I was trying to avoid, but, in fact, I have spent quite a bit of the last few minutes referring to the possibility, and explaining why we had built the machinery into the system. If the hon. Gentleman thinks about it, he will probably see that it is fair and reasonable.

Mr. Dalyell

Mine is not a trick question. Yesterday in the House, I asked: If the tax produces only £250 million, what happens then?"—[Official Report, 30 July 1997; Vol. 299, c. 374.] As was explained by the accountants Ernst and Young, the £450 million figure given by the Treasury was calculated on the basis of earned income and saved income. As I understand that we are dealing only with earned income, the amount could be very much less than £450 million. Will there not be a problem in making good the shortfall?

Mr. Dewar

I know that my hon. Friend has been talking to Ernst and—[HON. MEMBERS: "Young."] Ernst and Young—a small accountancy firm that has an office in Glasgow.

Since my hon. Friend first raised the point, I have checked the figures again. The exemption of savings income is almost de minimis. It does not raise very much, but an alternative arrangement would greatly complicate the system and cause the difficulties in relation to the financial services industry to which I have already referred. I am assured by the Inland Revenue that, on the basis of the 1997–98 figures, it is satisfied that £450 million would be the proper figure. I am talking about the use of the power at its maximum. There is a tendency to assume that it will always be used at its maximum, but that is not necessarily true. Indeed, the power may not be used at all in any given year.

I believe that our White Paper tackles many tough issues. We have tried to face up to some of the fundamental criticisms of the 1978 package. I have been talking about the powers, but other issues have prompted controversy and difficulty over the years. One, obviously, is the electoral system.

Saturday was a rather unusual day for me. I left Glasgow at about 11 am after some engagements, and returned to Glasgow at 9 pm via Stornoway and Kirkwall. That was almost certainly the only day in my life when I shall do that. I did it because it is important to recognise that Scotland is a different community with many facets. In 1979, the voting patterns in the referendum were different.

I was glad of the opportunity to go to the Western Isles and Orkney to discuss some of the problems with the people there. I was able to tell them that the proportional voting system that we advocate should mean that all strands of opinion will be fairly represented, not just in the north-east and in the highlands but in the central belt, where minority opinion has sometimes found it difficult to make a breakthrough. That is controversial in terms of my party and its short-term interests, but with a new start, it is right to tackle the issue. We did not shirk tackling it.

The reasoning that I have outlined also applies to Westminster representation, although I do not wish to expand on that. When the restriction, which has artificially boosted the number of Scottish Members above the population ratio, is removed, the boundary commission will look at the matter. That examination will be subject to the geographical and community tie arguments, which are currently part of the statutory criteria.

We have also tackled the problem of consent, which was again mentioned a few days ago by Conservative Members. I understand the force of the statement that we cannot say why people vote in general elections. Right, let us face that and have a referendum. We shall have a hard-working and perhaps an occasionally nervous summer, but the issue will be settled and a decisive yes on both counts will enable us to go forward with authority and added impetus.

Mr. Jonathan Sayeed (Mid-Bedfordshire)

Will the right hon. Gentleman give way?

Mr. Dewar

Perhaps the hon. Gentleman will let me finish this point.

I should like to draw attention—I almost said "pay tribute", but that could get me into trouble throughout the House—to the interview with the Leader of the Opposition on "The World This Weekend" on 27 July, in which the right hon. Gentleman dealt significantly with the issue. At times the interview was somewhat confused, but I imply no criticism, because I have great sympathy for people who find themselves at the wrong end of an issue that has been made awkward by what has been said with great virulence for months or years.

The tone of the interview was important. Speaking about the people of Scotland and Wales, the right hon. Gentleman said: If they vote for it in the referendum then they will get a Scottish Parliament and a Welsh Assembly and we will have to respect that for the future … if it's clearly stated we will listen to it. If the public approve that idea in the referendum then we are not going to be able to say and we might want to say … we can get rid of these things in a few years time". That is an important decision by the Leader of the Opposition. He says that he will give some stability to the system and a fair run. I do not suggest that that is set in concrete and that it can never be altered or improved.

I and, I think, many Scottish voters were worried that the issue could become a political punchball and that, if the Conservatives were elected on a national swing in four or five years, they would, as a matter of prejudiced policy, simply dismantle the Parliament on the basis of the evidence of the moment. The Leader of the Opposition has laid that fear to rest. In a way, he is giving enormous legitimacy to the referendum by saying that, if people vote yes, the Opposition, and presumably a Conservative Government elected under his leadership, will recognise that that must be worked with.

We are all interested in making Britain's constitutional machinery a success, and the Conservatives will play their part in that. That is the right approach by the Opposition, although my saying that may not encourage Opposition Members. The important statement by the Leader of the Opposition underlines the opportunity that the referendum provides. If we take it cleanly and it results in a reasonable or a handsome majority, we shall have a fair chance to make a success of the proposals.

Mr. Sayeed

My right hon. Friend the Leader of the Opposition spoke about the opinion of the Scottish people being "clearly stated"; the Secretary of State repeated those words. If about 40 per cent. of an artificially deflated electorate in Scotland vote and there is a 60:40 majority, it means that only 24 per cent. of those who are eligible to vote will have voted for a major constitutional change. Is that enough, given that it will do much damage to the Union?

Mr. Dewar

I am sorry that the hon. Gentleman is still fighting that battle. The result on the day will have to be judged by the House and by individual Members. It is a matter not simply of turnout, but of turnout balanced against the majority, or otherwise, that is achieved. Both factors have to be taken into account. The majority of the Labour party fought hard against franchises in 1978. I was there; I arrived in the middle of those arguments. We should not rig ballots in that way.

Although the right hon. Member for Devizes (Mr. Ancram) and his colleagues made some fairly fierce speeches on the matter, to his credit, when it came to the bit, none of the threshold amendments was pushed to a vote—

Mr. Michael Ancram (Devizes)

We were not allowed to.

Mr. Dewar

In the House of Lords, where there are some Conservatives, who might even listen to the right hon. Gentleman—he may even have connections there, when I come to think of it—the relevant amendments were not pushed to a vote. He should take my praise, because I was just about to congratulate him on his common sense in not doing so in this place. The ingenious and no doubt agile arithmetic that the hon. Member for Mid-Bedfordshire (Mr. Sayeed) has produced is not going to be relevant, but we shall all make the judgment, when the result comes, and I hope that we shall not end up in that argument and situation.

Mr. Grieve

Will the Secretary of State give way?

Mr. Dewar

With all respect, I have taken many points of information.

Madam Speaker


Mr. Dewar

I am obliged. That is clearly the appropriate phrase, but I do not regret taking those interventions, because I recognise that there is genuine interest and a genuine debate to be had.

Everything depends on the election, on the votes in that referendum and, ultimately, of course—if we get through that hoop—on the Scottish Parliament performing well and serving the people of the United Kingdom, particularly the people of Scotland, well. If the Scottish Parliament proves effective and popular in practice, its future will be secure. What has been said by Opposition Members has underlined that point, and I welcome it.

This settlement balances the interests of Scotland and of the United Kingdom, and it will strengthen and benefit both. I have genuinely learned much from the debates. It is important to debate these issues and I look forward to taking part in many more debates, if the legislation, as I hope, is introduced.

I even learned something from the House of Lords yesterday. My acquaintance the Earl of Mar and Kellie intends to stand for the Scottish Parliament, and quite right, too—he is a Liberal and a social worker and the two are not incompatible. I had not come across Lord Sempill before—I asked my office and found out that he used to be the Master of Sempill. I did not know that it was a place: I obviously do not know my Scotland. He also announced from the Cross Benches that he hoped to stand, although in what interest he did not say. I welcome that level of interest. He said: The opportunity to help develop a better society for the people of Scotland and build a stronger Union is there to be had. If we let tradition freeze our minds, new ideas cannot be cultivated."—[Official Report, House of Lords, 30 July 1997; Vol. 582, c. 201.] We may say that they are not the most elegant of words, but I am delighted to quote them; they are perhaps from an unlikely ally. It is an opportunity in that sense.

If we look at the White Paper, the absence of override powers, the way in which we have sculpted the legislation, defining the reserved and not the devolved areas of policy, the fairer electoral system, the opportunities in Europe within the United Kingdom framework, the fixed powers as buttressed and defined and the strengthening of democratic controls, we are looking at a very good package, modernised and improved compared with that of 1978 and that of the Scottish Constitutional Convention—a different package for a different day and the right package for the right time.

It will be a grown-up Parliament with grown-up duties. We must reject the idea that, in some way, the electorate of Scotland or their elected representatives cannot be trusted to do a good and responsible job. Too often, when it is boiled down, that is the essence of the argument from Conservative Members. Scottish politics will be a drear and dreich prospect if we pass up this opportunity. It is a time for hope and optimism. I hope that my colleagues in Scotland, the people of Scotland, my political friends and allies and people far beyond that will make sure that we do not miss this opportunity.

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