SCOTLAND BILL

HL Deb 25 April 1978 vol 390 cc1739-95

8.45 p.m.

House again in Committee.

Clause 36 [Power to prevent or require action]:

Lord DRUMALBYN moved Amendment No. 138:

Page 17, line 23, leave out from ("indirectly") to end of line 24 and insert (" unless any action capable of being so taken is taken; ").

The noble Lord said

This is really a drafting Amendment because I suggest that, on this occasion, the drafting leaves something to be desired. My Amendment relates to subsection (1)(b). At present, the subsection reads as follows: If it appears to the Secretary of State—… (b) that any reserved matter would or might be affected directly or indirectly by any action capable of being so taken; then, if it appears to him desirable in the public interest to use his powers under this subsection, he may direct that the proposed action shall not be taken"— that is, in subsection (1)(a)— or, as the case may be, that the action capable of being taken shall be taken ". Have we all understood that? Who is to take the action? There is no indication whatsoever. As this is drawn, it says: if it appears to the Secretary of State— … (b) that any reserved matter would or might be affected directly or indirectly by any action capable of being so taken;"— that is taken by a Scottish Secretary— I take it, or by or on behalf of a Scottish Secretary. 1 had to read this subsection again and again before I could make any sense of it at all. I do not think that it is right. As I understand it, this is the counterpart, from the point of view of the Scottish Executive, to the clause which we dealt with just before we had a brief recess and which dealt with the legislation side.

Perhaps I may indicate to your Lordships what I think the clause means. I think it means that, if the Secretary of State thinks that the Scottish Secretary is about to do something which is within his competence, but which would or might affect a reserved matter directly or indirectly, the Secretary of State may direct him not to do it. Then, not only must the Scottish Secretary comply, hut, if one reads on through the clause, no other Scottish Secretary must do that thing either, unless the Secretary of State changes his mind and gives the Scottish Secretary another direction varying or revoking the first direction. Then it goes on and says that if the Secretary of State thinks that there is something that a Scottish Secretary could do to help him in his responsibilities for reserved matters, he can direct the Scottish Secretary to do it. That, as I understand it, is what this very complicated clause means.

My Amendment is perfectly simple and greatly clarifies the issue. By inserting my Amendment, the provision would simply read: If it appears to the Secretary of State— … (b)that any reserved matter would or might be affected directly or indirectly unless any action capable of being so taken "— that is, taken by a Scottish Secretary— is taken". I should have thought that that clarified the situation and avoided some difficulties that could arise in identifying what is meant by "any action". The phrase, "any action" goes very wide indeed. One does not cure that by referring to "the action" at the end. This is a piece of drafting that lawyers may understand, but I do not think that the ordinary person would. However, with my Amendment they certainly would. I beg to move.

Lord McCLUSKEY

I think that the noble Lord is absolutely right in his understanding of the clause; but by tabling this Amendment and by what he has said lie has raised a doubt in my mind whether the clause is drafted to achieve precisely what it is that he described and what we had in mind. For that reason, I should like to reconsider its drafting, as he invited me to. I am reluctant to accept the Amendment precisely as it stands, as I hope he will understand, because this is a matter upon which I ou^ght to consult the draftsman. However, at the moment my inclination is that he is right and that we ought to meet him. But, with his permission, I should like to speak to the draftsman about this. On that basis, perhaps he might withdraw the Amendment.

Lord WILSON of LANGSIDE

Before the Amendment is withdrawn it would be helpful if some explanation could be given of the purposes of this clause, which has somewhat puzzled me, although the noble and learned Lord may prefer to leave this to a later stage. What are the problems which the Government foresee as being necessary to meet, and to the meeting of which this clause is directed? It might be helpful to the Committee if we could be given some explanation.

Lord McCLUSKEY

If the Committee would like an explanation, I think that the proper context for it would be in relation to the clause stand part debate.

Lord WILSON of LANGSIDE

Yes, indeed.

Lord DRUMALBYN

I am grateful to the noble and learned Lord for what he has said. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

8.53 p.m.

Viscount COLVILLE of CULROSS moved Amendment No. 139: Page 17, line 38, after (" may ") insert (" subject to subsection (7) of this section ").

The noble Viscount said

This Amendment goes with Amendment No. 142, and it might not he inconvenient if we discussed with it also Amendments No. 146 and 147 on Clause 37 because the points, which I intend to be points of principle, and, indeed of exploration, were all dealt with together. If I may, I shall try to set the framework because in so doing the very first thing that the noble and learned Lord, Lord McCluskey, will be able to do is to tell me that I have totally misunderstood the whole thing and he will put me right.

As I understand it, when one deals with primary legislation there are two stages of possible intervention by the Secretary of State. The first is that we have pre-Assent scrutiny under Clause 19 for consideration, first of all, whether the Bill is within the powers and, secondly, whether there is any incompatibility with Government-orientated EEC obligations or other international obligations. That is the first thing that happens with primary legislation. Then, if the Bill has not been tripped up on those grounds, under Clause 35 there is still the opportunity, after it has passed and before it is submitted for the assent of Her Majesty in Council, for it to be vetoed on the other grounds that we were discussing, which are really policy grounds under Clause 35. That is why, as I understand it, there is no reference in Clause 35 to international obligations, whether they are European or whether they relate to any other country of the world; that has already been dealt with under Clause 19.

When it comes to executive action, which is what Clause 36 is about, and very much in the same way when it comes to subordinate instruments under Clause 37, we do not have that dichotomy of control in the Bill, but rather the two processes are rolled together. Instead of there being a two-stage inquiry, first, as to powers and, second, as to policy, we have the whole thing wrapped up together all in the same clause.

The purpose of Amendment No. 139, and so on, is really to probe again the situation that was raised earlier on Clause 19 by one of my earlier Amendments. I appreciate that in the terminology of Amendment No. 142, which I adopted because that was what was in the Bill, it does not draw particular attention to directly applicable European legislation. That is really what I am about. 1 think I conceded on Clause 19 that where it was a matter for the Government to decide as a matter of executive action whether or not they would legislate so as to bring the United Kingdom into line with a requirement that had come from the Commission or Europe in one form or another, then it was right that it should be a political decision whether or not to object to Scottish legislation, Scottish executive action, Scottish subordinate instruments and so on, if they ran foul of the requirement.

However, I think that by this time the noble and learned Lord has been apprised of my intention, which is not so much to probe that, which I can understand, but to see how it works in the case of directly applicable European legislation. What will happen? What will the Secretary of State in London do if he sees either the Scottish Secretary about to take an action which he knows is incompatible—or, indeed, which he perhaps thinks is incompatible—with an obligation which is directly applicable to each and every citizen of Scotland in so far as it is relevant to them? Alternatively, what will he do if there are incompatibilities in the terms of a Statutory Instrument, which I should think the Secretary of State was bound to have seen in draft—on account of the consultation process, minute by minute, that we heard about before the dinner hour?

At present he simply vetoes the thing in the same way as he vetoes the obligation, the action or the instrument that is incompatible with the Government-orientated obligation. But that does not seem to me to be in the least suitable for an executiveaction or a subordinate instrument which will infringe a directly applicable European Community right. The Bill simply does not provide for this, and I think it ought to. I hesitate to go back over anything that I said on Clause 19, but if we have a case where the Secretary of State knows very well that there is a conflict of this sort, I would prefer that the matter should be nipped in the bud before it ever comes into effect, and, therefore, before it ever impinges upon the life of any individual, rather than as it is left at the moment, where the individual has to take expensive action in the courts afterwards to put it right. I would suggest that that is not cheap!

I know that quite junior courts can refer these matters to the European Court of Justice. Nevertheless, the requirement in the European Communities Act is really only that a court of final jurisdiction should so refer them, and it could go all the way up the hierarchy of the courts—if it was a criminal matter obviously it would go no further than the Court of Session, but if it was a civil matter it could go as far as this House sitting judicially—before it could be sent to Europe. At least, that is probably what would happen. That is a very expensive process to impose upon the individual, as one or other of the parties in the end would pay the costs and, of course, there are the costs of going to Europe as well.

I put down these Amendments, imperfectly drafted though I have no doubt I will be told they are, really in order to explore this because I think that if the matter was referred—and that is my suggestion in these Amendments—by the Secretary of State rather in the same way that I believe lie could refer under Clause 19 (if it means what the noble and learned Lord said it meant) both directly applicable conflicts and Government-orientated conflicts, we ought to have powers (and of course they are discretionary powers) for the Secretary of State to take the initiative and, in exactly the same way, refer the thing to the Judicial Committee.

I expect we shall be told that this would be slow and cumbersome and that it does not fit in very well with the 28 days period. I have here tried to fit in the concept of Parliament having 28 days in which to decide with the decision of the Judicial Committee, and I have made the 28 days start running only when the Judicial Committee has made its decision. But if we are going to be thoughtful about this, I believe we ought to have a compatible arrangement, a comprehensive arrangement, and one which fits all the activities of the Scottish Assembly, and the Scottish Ministers, executives and Secretaries, so that, in the case of Clauses 36 and 37 activities, we do not have the burden falling upon the individual citizen whereas in the case of primary legislation it would fall upon the Secretary of State and the public purse. It is a tentative matter, but I do not believe that it has been discussed anywhere else. and I think it could be important. I very much look forward to hearing what the noble and learned Lord has to say about it. I beg to move.

9.2 p.m.

Lord McCLUSKEY

When we last discussed the related matter in the earlier discussion to which the noble Viscount referred, it became plain that we were thinking primarily in terms of obligations which fell upon the Member State, and the noble Viscount was thinking primarily in terms of the directly applicable obligations. When this failure, as it were, to meet the lack of a consensus in idem on the point was disclosed in the course of these discussions, I undertook to look at the matter again. I confess that 1 have not yet had time to come to any definite conclusion. Of course the noble Viscount is quite right in thinking that if one carries something into the earlier provisions of the Bill, one has to carry it through here as well. Therefore, I think we are largely in sympathy with his aim in this matter. I have undertaken to look at the matter. cannot go any further at the moment.

There may well be a distinction between primary legislation on the one hand and the kind of thing we are talking about in Clause 36, and for that matter in Clause 37, on the other. What is not absolutely clear—and this again was a point I mentioned in relation to Article 177 of the Treaty when the noble and learned Lord, Lord Diplock, intervened at one stage—is that there is a justiciable issue here. But that again is a matter which I have to look at in the light of the comments last time and in the light of what has been said tonight.

I think that the noble Viscount is right in saying that the matter can be resolved by the ordinary courts. if in fact the Community legislates so as to create an obligation upon the citizen being an obligation which is directly applicable whether it is in a Directive or a Regulation, and the citizen finds that the Scottish Executive has taken action which runs counter to his Community directly applicable obligation, then he can take this quandary to the courts and the courts will resolve it presumably in favour of the Community obligation.

The noble Viscount is right in saying that that might be expensive, and it may be that the better course is that it should be picked up at an earlier stage if it can be identified and picked up. So I think it would make consistent sense only if I were to say that while looking at the whole matter of Community obligations as raised on the earlier occasion I were to look at this matter as well. If it can be accepted on that basis, I would express my thanks to the noble Viscount for raising it again and drawing attention to wider applications than we discussed on the earlier occasion. I will take it away on that basis.

Lord DRUMALBYN

May I say a word on this as I have had to deal with quite a number of EEC regulations and Directives. 1 wonder whether in most cases it will be rather easier than this. Most of us will have in mind certain regulations about equipment to be fixed on a freight vehicle, for example. Supposing the Scottish Secretary was proposing to legislate that there should be quite a different arrangement which would preclude that kind of instrument, then surely it would be quite simple for the Secretary of State to direct him not to proceed with that action. Conversely, it might be necessary to require him to proceed with the action that the Community was requiring in its Directive or its regulation. I should have thought that this was the common way in which this kind of matter would arise. When I raised it, this is what I thought the clause was intended to convey.

Lord McCLUSKEY

Perhaps 1 should have drawn the Committee's attention to Clause 60(3) which appears on page 29 of the Bill: If it appears to a Minister of the Crown— (a)that the implementation of a Community obligation et cetera, requires the exercise of any power to make a subordinate instrument; and (b)that the power could be exercised by a Scottish Secretary; but (c)that it is desirable that it should be exercised by a Minister of the Crown, he may exercise the power…". That may have some bearing on the matter, although perhaps only a marginal bearing in relation to what is directly applicable.

Viscount COLVILLE of CULROSS

I should think that it has a bearing, but a fairly indirect one when one is making certain that one has the terms of Clauses 36 and 37 right. Certainly it ought to be knitted into the pattern and made consistent with anything we may do. My noble friend has given one example about the tachographs. If, when we come back to discuss these matters we can think of examples of areas of legislation or action or whatever that everybody agrees could be a forum for the sort of problems we are considering, it would be easier to direct our minds to the whole issue, rather than trying to do so in a complete vacuum.

A possible example occurred to me. wondered whether under Schedule 101 admit 1 may be wrong about this—when we have Group 7 control of pollution, we might get the position of a Scottish factory owner with effluent being subjected to controls by Scottish legislation which may be stricter than that imposed by Europe on all his competitors in the rest of Europe. That sort of area of devolved power might give rise to an occasion of this sort. If that were a good example, we could easily discuss on that basis primary and subordinate legislation as well as Executive action covering the whole field. I give that example only for the noble and learned Lord's consideration so that when we return to this matter we have something concrete to consider, and I do not ask him to comment on it now.

Lord McCLUSKEY

The example which the noble Viscount just gave might not be one, because it is difficult to see the incompatibility there. The tachograph instanced by the noble Lord, Lord Drumalbyn, may not be one either, because my impression at the moment is that it would not he covered by "devolved matters". Accordingly, what we lack, if I am right on both those points, is an instance where it really matters. Perhaps the noble Viscount and his noble friends will think of an instance which is real and, if they do, no doubt they will let me know, and we shall he doing precisely the same.

Viscount COLVILLE of CULROSS

The one thing 1 would have expected is that, if this legislation is to last for any length of time, an example will occur. It is no use our supposing that there is nothing in the devolved matters which will never give rise to a conflict of this sort, and we must make certain that whatever machinery we set up is equipped to deal with this sort of problem. I tend to agree with the noble and learned Lord about the tachograph, and if he says I am wrong in my pollution example, then we must talk about it, but for the moment I am entirely happy with the answer he gave. I look forward to his further consideration of the matter and I will do my best to give it the same treatment. 1 beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

9.12 p.m.

Viscount COLVILLE of CULROSS moved Amendment No. 140:

Page 17, line 42, leave out from ("Scotland") to end of line 43 and insert— ("or (b) concerns any other part of the United Kingdom (whether or not it also concerns Scotland); but in either case").

The noble Viscount said

I move this Amendment only to make sure that I heard the noble and learned Lord, Lord McCluskey, alright when he said that when looking at Amendment No. 253 he would also be taking into account the question of the definition of "legislative competence" as it affects the powers of the Scottish Secretaries under Clause 36 as well as the power to make subordinate Instruments under Clause 37. I do not think there is any doubt about Clause 37; the subordinate Instruments would be bound to be made under competent Assembly Acts and if they were to have incidental provisions which strayed across the Border that must be all right within the terms of Schedule 2(8).

What I am not certain about is whether there is any similar implication in relation to the powers of a Scottish Secretary to act executively. The direct connection between the competence as set out in Schedule 2 and executive powers—which could come under the provision we were discussing about prerogative and other executive powers being devolved, which is Clause 20(3)—does not look to me as though identical terms of reference are provided so far as powers are concerned. This would be particularly strange when one has a definition of reserved matters which is common both to the Executive action under Clause 36, and to the subordinate Instruments under Clause 37. On the face of them they ought to mean the same. but for the reasons I have suggested I am by no means sure that they are.

This is a very complicated point, and I am certainly not asking the noble and learned Lord to make any definitive answer about it tonight. I add this only because I believe it is another dimension to his consideration that he has, I think, promised in relation to both these clauses and paragraph 8 of Schedule 2. I hope that I make myself plain to the noble and learned Lord, and I am certainly not trying to be obstructive in any way. I think merely that there is an unexplored area here, certainly one in which I have not succeeded in getting to the end. I beg to move.

Lord McCLUSKEY

First, I affirm that in my view the noble Viscount is being entirely constructive. There may well be another dimension here, though I am not sure that there is, and this perhaps is the least strong of the cases. But I think that it would be logical to say that as we have started off down this particular road—and it is right that we should do so and as we have done so in consequence of the matter being discussed here in any detail for the first time, we should go to the end of the road. In a sense Clause 36 is the extreme case at the far end, so let us look at that as well. I apologise to the Committee if I cannot appear more definite. Sometimes when I am definite I am criticised for being definite but negative, but here I am being indefinite but mildly positive. I hope that that can be accepted.

Viscount COLVILLE of CULROSS

I am certainly not going to criticise the noble and learned Lord in any way at all. He is being totally constructive. If the matter is off the end of the road and has fallen over the cliff, we need to do something about the definition of reserved matters in Clause 36, because it is no use having a common definition with Clause 37. A different one would be needed. I do not think I very much mind for the moment whether or not in the end this situation allows a Scottish Secretary to take executive actions which cross the Border. If I knew whether or not the Government intended that he should take such actions, I would then apply my mind to that, but at the moment I cannot detect which way it is. It may be that he ought to be tied down to act in Scotland alone, and I think we would be prepared to accept that, but the matter must be made clear, and the noble and learned Lord has now said that he will do that. I am grateful to him, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

9.16 p.m.

Viscount COLVILLE of CULROSS moved Amendment No. 141: Page 18, line 8, at end insert (" and shall be judicittlly noticed.").

The noble Viscount said

Here is a truly arcane matter, but it is not my fault that I have had to raise it. This is due to something which is already in the Bill. Actions by the Executive tend to have an effect upon the individual. They are also matters which, in the terms of the Bill, it appears to me the Government may he expecting law officers to take before the courts. I am not sure about that. One sees in subsection (5) that A direction under this section shall be binding on every Scottish Secretary ". Thus I would tend to suppose that the renegade Scottish Secretary who refused to be bound could, at the very least, be taken by the Lord Advocate perhaps to the Court of Session for whatever is the correct Scottish legal remedy to make him do what he was told. I believe that that would be an implication which it is not unreasonable to draw. It also seems to me not improbable that if a Scottish Secretary, having been directed under this clause, and having purported to ignore that direction, has imposed a licence fee, or whatever it was, upon the unfortunate citizen, despite the direction not to do so, then the individual in question would, I suppose, refuse to pay, and would defend his refusal when taken to court by the Scottish Secretary, or otherwise brought to book in some form.

My difficulty about this is that I do not know how one gets the direction before the courts. It may be that this problem does not arise in Scotland, though I doubt that. It must be remembered that in the Bill the direction under this clause is said to be binding on every Scottish Secretary, but nobody says anything about. judicial notice. But in Clause 17 a much more important matter is discussed; namely, the legal status of a Scottish Assembly Act itself. Of the two matters, if it was a question of getting them before the courts, I should have thought that if one did not say anything at all, it would be very much easier to get a Scottish Assembly Act before the courts so that the courts would recognise it as being a valid Act of the Scottish Assembly. But we find in the Bill that it is the Scottish Assembly Act that is judicially noticed, so that the courts can take account of it, hut not the direction on the Secretary.

That casts doubt in my mind upon the admissibility of the direction of the Secretary of State on the Scottish Secretary when it comes to litigation. If there is any doubt about admissibility, how on earth does the individual prove it? The Lord Advocate could probably do so because I expect that he can produce the original of the direction, but I should be very much surprised if anybody can tell me that the individual citizen could produce the original direction; and with that juxtaposition I would strongly suspect that we ought to say something about it in terms in the Bill. I beg to move.

Lord McCLUSKEY

The noble Viscount has referred to Clause 17(5). I think we discussed that earlier, when I had the assistance of the noble and learned Lord, Lord Hailsham, in my answer. That was intended to put Assembly Acts on the same footing as Acts of Parliament so far as recognition by the courts is concerned, so that Assembly Acts do not need to be proved to be Acts before they are recognised by the courts. The idea behind Amendment No. 141, as explained by the noble Viscount, appears to be to ensure that a direction will prove itself in legal proceedings. Our view there is that this is not a precaution which it is necessary or appropriate to take. I can very briefly say, of Acts themselves, that judicial notice is taken of every Act passed after 1850. That is because of Section 9 of the Interpretation Act 1889. Indeed, judicial notice may be taken of other matters as well: for example, up to a point, anyway, some international law. Outside the purely legal field, judicial notice is taken of ministerial seals under paragraph 5 of Schedule I to the Ministers of the Crown Act 1975.

But to prove a ministerial letter—and that is what the Amendment is about, because that is the form this direction would take—is quite different. The enactments constituting particular Departments invariably provide that documents signed or executed by a Secretary to the Department or by a person authorised by the Minister to act in that behalf shall be received in evidence and be deemed to be made or issued without further proof unless the contrary is shown. A direction letter can be protected to this extent and should not, despite its importance, be accorded any other status. The provision on which the Scottish Office rely is Section 1 of the Reorganisation of Offices (Scotland) Act 1939, which is Chapter 20 of 2 and 3 George VI.

Perhaps I might say just a word on the general matter which was raised by the noble Viscount. The Government are not intending to make directions of this kind free from judicial review; but, in answer to the specific instance which was taken by the noble Viscount, he envisaged proceedings in the Court of Session by the Secretary of State against the Scottish Secretary. Our view of that is that they could not take legal proceedings against one another of the kind he has in mind because they are both agents of the Crown. Accordingly, one would not envisage proceedings of that kind. In any event, leaving aside the fact that they are both agents of the Crown, given that the Scottish Secretary is, in this context, an agent of the Crown, there could be no coercive remedy against him because of the Crown Proceedings Act. So, at the most, if someone other than the Secretary of State were able to bring proceedings it would presumably be what we in Scotland call an action of declarator. It would not in fact compel him to do anything: it would merely be the court making a declaration about what the legal position is, and then, of course, it is hardly conceivable that the Secretary, the court having declared his position, would not act in accordance with it. So we do not think that this particular Amendment is necessary, but it may be that the noble Viscount would like to consider my answer and at the moment not press this Amendment.

Lord HAILSHAM of SAINT MARYLEBONE

I think the noble and learned Lord is probably right about this, but I think it is something about which it is desirable to be absolutely certain. Prima facie, I can conceive of litigation between a subject and a Scottish Secretary, brought by a Scottish Secretary in order to enforce actions by himself under what purport to be the provisions of this Act. In such circumstances, the action of the Scottish Secretary might be impugned by the subject in the course of that litigation, whether it was one way or the other.

In that case, the subject ought to be in a position to prove the direction of the Secretary of State which was rendering the Scottish Secretary's authority ineffective. He ought to be told in the legal textbooks exactly what he has to do to prove it. I suspect that the noble and learned Lord will have the answer because it must be familiar ground in the law of Scotland. What the law of Scotland says about the Secretary of State's directions given under a Statute I do not know, because the law of evidence in Scotland is not identical with the law of evidence in England. But it is a point which can arise and it is a point which ought to be rendered certain.

Lord McCLUSKEY

I believe that the noble and learned Lord will find the answer to the instance that he has given, which I am convinced is a real one, where the subject wants to found upon the Secretary of State's direction, in Section 1 of the 1939 Act which I quoted.

Viscount COLVILLE of CULROSS

That has produced the sort of answer which I had hoped for. All that we wanted was to make sure that the subject could get at the direction in a form in which it would be acceptable to the court. My noble and learned friend has elaborated on this and the noble and learned Lord opposite has given an answer. I shall look up this Act, with which I am not totally familiar, and shall consider it. It would be very surprising indeed if the noble and learned Lord was not right. In the circumstances, I am happy to beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

9.26p.m.

Earl FERRERS Moved Amendment No. 331: Page 18, line 13, leave out from ("Parliament") ("and") in line 14.

The noble Earl said: This Amendment and the one which follows are both consequential upon Amendment No. 330 which we approved earlier this evening. I beg to move.

On Question, Amendment agreed to.

Earl FERRERS moved Amendment No. 332: Page 18, line 15, leave out ("the House of Commons") and insert ("each House of Parliament").

On Question, Amendment agreed to. [Amendment No. 142 not moved.]

On Question, Whether Clause 36, as amended, shall stand part of the Bill?

Lord CAMPBELL of CROY

I shall be brief. The point I want to register is similar to the point made on Clause 35. We had a debate on Clause 35, the noble and learned Lord, Lord McCluskey, has already replied and what he said then will probably apply to what I am going to say now. This clause gives the Westminster Government powers to over-ride actions by the new Scottish Executive and, again, I would draw attention to the wording which is vague and very wide. It reads, If it appears to the Secretary of State for Scotland that it is desirable in the public interest". So it is not only a matter of opinion on the part of the Secretary of State but it is also a matter of judgment as to what may or may not be in the public interest.

As I understand the Government's view, they foresee that this clause will seldom be used apart, perhaps, from where Community or international obligations are concerned under subsection (2), because it may be that, there action may be necessary because of inadvertence on occasions. But the wording again raises the risk of conflict and collision as on Clause 35. The provisions are such that they will no doubt be kept continually, under consultation, as the noble and learned Lord has said with regard to Clause 35; but I think that occasions will arise where there will he conflict and this wording does not really meet the case.

Lord HAILSHAM of SAINT MARYLEBONE

I think there was a paint which the noble and learned Lord, Lord Wilson of Langside, was desiring to raise.

Lord WILSON of LANGSIDE

I am grateful. I hoped we might have some explanation in general terms about the purpose of this clause. I was wondering whether, for example, it might have any bearing on the various committees about which we heard last night on such matters as Outspan oranges, foreign policy and defence.

I was wondering, for example, if any action taken by these committees might be open to action in terms of this clause. I would be inclined to doubt it, but as several noble Lords wish to give consideration to the question of the operation of these mysterious committees about which we have heard, it will be helpful to know whether it might in any circumstances be conceivable that the powers under this clause could be used to control these bodies, if anything they did were done on behalf of a Scottish Secretary, and if anything they did would or might affect a reserved matter. I should certainly have thought that if committees of this extraordinary description were really envisaged—and the noble Lord, Lord Wigg, referred to them when he was speaking earlier—it is difficult to conceive that they would not do things which might affect a reserved matter.

Lord McCLUSKEY

If I may seek to answer the noble and learned Lord, Lord Wilson of Langside, it is true that statutory bodies are born naked. They have no powers other than those that Statute confers upon them. The committees envisaged under the earlier clauses of this Bill are not even statutory bodies; they are simply committees. They have no powers at all. The word used in connection with them is "functions". It is used in the general sense. They have no powers, no duties, at all. Therefore they are not the bodies that we have in mind when we come to Clause 36. In Clause 36 we are really talking about the exercise by a Scottish Secretary of powers of the kind that he has under the Bill, being powers which are referred to in Clause 59(3). I hope that that answers the point made by the noble and learned Lord.

The noble Lord, Lord Campbell of Croy, said that the clause was very vague and wide. We have been over this particular course before, and he acknowledged that. I simply have to say that, as the noble and learned Lord, Lord Hailsham of Saint Marylebone, pointed out, the matter is basically subjective here. It is a matter of political judgment for the Secretary of State and that is true of this clause as it was of others. I agreed with him that the Government's view here is that this kind of power will seldom be used. Indeed, as I said earlier in another instance, the number of concrete examples one can identify when one goes on a trawl through the possibilities are few. I must confess that I have deep sympathy with the point made by the noble Lord, Lord Mackie of Benshie, that here is machinery which we all hope will rust through disuse. But, none the less, the Government feel that it is proper to have it.

Lord CAMPBELL of CROY

I hope that the noble and learned Lord is right, but I suspect that when we reach Schedule 10 we shall have found quite a lot of fish in the trawl.

Clause 36, as amended, agreed to.

Clause 37 [Power to revoke subordinate instruments.]:

[Amendments Nos. 143 to 146 not moved.]

9.35 p.m.

Earl FERRERS moved Amendments Nos. 333 to 335: Page 19, line 1, leave out from ("Parliament") to ("or") in line 4. line 12, leave out from ("Parliament") to ("and") in line 13. line 14, leave out ("the House of Commons") and insert ("each House of Parliament").

The noble Earl said: I beg to move Amendment No. 333 which is consequantial on Amendment No. 330 which we passed earlier. With your Lordships' permission, I would also beg leave to move Amendments Nos. 333, 334 and 335 en bloc.

On Question, Amendments agreed to.

[Amendment No. 147 not moved.]

Viscount COLVILLE of CULROSS moved Amendment No. 148:

Page 19, line 21, leave out subsection (7).

The noble Viscount said

Those people who are able to decipher mysteries tell me that subsection (7) of Clause 37 is an attempt to do away with the procedure of this House, as laid down in Standing Orders Nos. 216 and 216A of the Private Bills Standing Orders of the House in relation to hybrid Instruments. If there was a subject which was likely to arouse the passions of the Committee at this time of the evening, that seems to me to be one of the first contenders I can think of. Nevertheless, I am afraid it is something which I consider to be of some importance and which needs to be discussed by the Committee. I may say that it is a peculiarly House of Lords matter, since it is only in this House and not in another place that any remedy is given to the individual subject to come to Parliament to deal with the way in which a hybrid Statutory Instrument affects his own affairs in a particular way. Therefore it is particularly apt that this Committee of your Lordships' House should discuss it.

A hybrid Instrument—and I hope I have got this right—is the same sort of animal as a hybrid Bill. I think I may justifiably be allowed to say that by this time I have discovered a certain amount about hybrid Bills. Hybrid Instruments are probably smaller animals, but they raise the same issues, in that, whereas they purport to have a general effect, their terms are such that they can, and indeed may, be construed to bear particularly and discriminatorily upon an individual.

In those circumstances, your Lordships have devised over the years a complicated system whereby the individual may come to complain, and indeed, having got through a positive croquet lawn of hoops, if he succeeds and hits the post at the end he comes in front of a Select Committee, which will then consider his Petition. The "croquet lawn" is set out in Standing Order No. 216, and I may say that the various stages of the consideration of a Petition on a hybrid Instrument are very far from four. The noble and learned Lord will find this matter on page 92, and page 93 has more of it, together with pages 94 and 95. If the noble and learned Lord has not looked at it before, he has a big treat coming.

Lord McCLUSKEY

The noble Viscount should be less trusting. If he consults his noble friend Lord Campbell of Croy, he will find that he and I have been over this ground many times in connection with the recent Local Government (Scotland) Bill.

Viscount COLVILLE of CULROSS

That had not escaped my notice. I have been looking up the winged words in the Official Report—but not, I think, in quite the same context as we have here. All I was saying was, when I had stopped teasing the noble and learned Lord, that he will recognise at once that the whole process of screening a Petition is a very careful one, and it certainly makes sure that there does not come forward for a decision by this House any Petition which lacks merit. Even when it does come before this House, if it gets through to that stage, there is still the opportunity, as I believe happened in the HoffinanRoche case, that, although it has merit and has passed through all these procedures, nevertheless the House itself decides on the individual case not to send it to a Select Committee.

So it is certainly no formal matter, and the occasions when hybrid Instruments get on a Petition to a Select Committee are comparatively rare. I think it is necessary to say that, so I would not suggest that, in tampering with the Bill as it now stands, I am likely to unleash a deluge of petitions and Select Committees upon your Lordships.

There have been a number of occasions, and not only the Local Government Act-I am not sure whether it is still current—that have given rise to arguments about this point. It goes back over a period of time and, indeed, I see that it was the Party to which I belong which first started this, on, I think, the Local Government Act 1972 for England. Although it was my noble friend Lord Sandford who moved that Amendment, I moved the next one. I did not understand it when I read it in Hansard, but I suppose that I understood it at the time, and it has been used by both Parties since.

In fact, there are now two ways in which it is handled. First, there can be a straight exclusion of hybrid Instrument procedure and this, I think, has happened three times. 1 have tried to find out what happened. On one occasion it was debated. On the second occasion, which was the Water Act 1973, it was for some reason not debated at all, and so the criteria which had been adduced by the Government for making this alteration in our Standing Orders were never tested or explained. In the third case, it occurred on a Money Bill which for obvious reasons was not discussed at all in this House. So I have only some fairly general principles upon which to go.

Before I seek to ask what the principles are and how they apply in this case, I must ask for the noble and learned Lord's help to see whether I can identify what kind of animal it is that this hybrid Instrument might be, because it is not by any means easy to do. First, if one starts at the beginning of Clause 37 we have an instrument made by a Scottish Secretary. Of course, it is not that Instrument which is liable to be the hybrid instrument, because that is not an instrument which, in itself, would ever come before this Parliament at all. For all I know, the Assembly's standing orders may have some equivalent of our Private Bill Standing Order 216, in which case you might be able to do something about it before the Assembly or one of its committees.

But that is not the case that we have to deal with in subsection (7) of this clause. What we have is a United Kingdom order made by the Secretary of State, which proposes that the Scottish Statutory Instrument should not be approved. If that is the kind of order that we are dealing with—I believe that it is— it is very difficult indeed to say, in the generality of the way in which this clause is drafted, what the Instrument might be about. It might be about almost anything. There is no telling in what form or in what context the hybridity may arise. Therefore, one cannot say, as one can in the case of the individual instances where this has been done before, that, for instance, it would be a matter of urgency, or it would be a matter which was so incredibly boring that nobody could possibly wish to take the point—such as who were to be the members of the Water Authority, or something of that kind—or that any of the other criteria that I have been able to find could possibly be said at this stage to apply.

One simply does not know. All that one does know is that here is envisaged a subordinate instrument order, made by the Secretary of State, which is, in itself, bound to be, for the purposes of this hypothesis, hybrid in some form or another. In what way it is hybrid, it is impossible to forecast, and, in whatever way it may turn out to be hybrid, in no circumstances is anybody to petition against it. That is a fairly tall order.

When we have ruled this out altogether on previous occasions, there has been, as I have said, only one occasion which I have been able to find when it was explained. It related to the orders dividing non-metropolitan counties into districts under the Local Government Act 1972. So far as I could detect the criteria in the fairly short discussion, there were two. First, it was most likely that the orders for all of the metropolitan counties would be made at the same time. If they were all comprised there would be no room for hybridity because only one of them would be treated in a special way. Nevertheless, it was possible that there might have to be a residual order that dealt with just one metropolitan district, in which case I can quite easily see that one might say that it was being dealt with in a discriminatory fashion as opposed to the way in which all of the other metropolitan districts had been dealt with. So I can see that there could be a case of hybridity there, but it was being suggested that it was very unlikely to occur because of the fact that it was probably going to be done all in one order. This is one criterion that is not likely to occur. I hope that that is right.

The second criterion that I can see in that particular debate is that before any order of this kind had been made the Boundary Commission would have had a look at it in any event and, after the necessary investigations, would have reported on how it should be done; so the matter would already have been discussed. Knowing the way in which the Boundary Commission works, it would have been open to the various contender authorities to put their points, probably in public at the kind of hearing or meeting which one has under Boundary Commission type of reviews where everybody can have a say.

That is another criterion whereby people might perhaps say, "No, don't come back to the House of Lords. You really ought to have exhausted your remedies in the inquiry before the Boundary Commission". In fact, that is a point which is made in Standing Order No. 216. One of the reasons why a petitioner may not get through all of the hoops is because the Hybrid Instruments Committee inquires whether the petitioner may have failed to avail himself of opportunities to have matters complained of properly inquired into. That would seem to me to be the same point.

I pause there in midstream to make just one other point. The other thing that has happened is that there has been invented, starting off with my noble friend Lord Campbell of Croy on the Petroleum and Submarine Pipelines Bill, a kind of truncated procedure whereby, in cases of urgency, there can be a speeded up petition and a speeded up procedure; and if it does not get through in 28 days that is too bad, and the whole process falls. 1 mention that point only to make perfectly certain that the noble and learned Lord realises that I know about it, and also to remind the Committee of what I am sure they themselves already know very well. That is not being suggested here. We are having a complete exclusion, not the truncated version.

With that preamble, I want to ask the noble and learned Lord this question: First, in so far as I have attempted to isolate from discussions on past occasions what are the criteria that have led this House to abandon the hybrid Instrument procedure, have I got those right? If there are more criteria in other debates when we have decided to do this, could the noble and learned Lord tell me what they are? And when we have identified the full range of criteria, will he tell us how they are to be applied to the situation under subsection (7) particularly as, whatever the criteria may be, it is totally impossible to tell whether any Statutory Instrument could or could not fall within them, since there is no way whatever of knowing what the Statutory Instrument will consist of?

I truly believe that there is a conundrum here. I think that the power to petition against a Hybrid Instrument is a matter of substantial value to the subject. I have read with interest what my noble and learned friend Lord Dilhorne has said in the past on this. His emphasis has been on the protection of the individual which only your Lordships afford to the indivi dual at this stage of a Statutory Instrument's process. It is something that I truly believe is an important safeguard which we should not abandon and, in particular, I am quite certain that we should not abandon it unless there is a really good reason for doing so. I am bound to say that unless the noble and learned Lord can provide me with a good deal of information which my own researches and imagination have wholly failed to provide, I cannot see what justification there can be in this Bill. I beg to move.

Lord McCLUSKEY

I hope the Committee will find that my explanation is at least as clear as that of the noble Viscount, Lord Colville of Culross. If one looks at subsection (7) one sees, as the noble Viscount has made clear, that the Bill is envisaging that in certain circumstances there may be a departure from provisions contained in Standing Orders, being provisions which arc designed to protect private right. He is quite right in saying that such a departure is important and that a step of this kind should not be taken lightly, because the effect is to take away certain provisional petitioning rights of individuals in cases where, were they not taken away by Statute, they would be exercisable. It does not follow, of course, that there will be many such cases. Once again this is an instance where our view is that override orders which take advantage of this provision would be rare, and override orders made under Clause 37 and potentially falling within the scope of the Standing Order will be rarer still. However rare they may be, as the noble Viscount has outlined, the principle is one of some importance.

I believe the noble Viscount found difficulty in relation to the matter with which we may be concerned. But I think the correct answer is that if we look at Clause 37(1) we find that there are two instruments there: one is referred to in line 19, the instrument made by a Scottish Secretary, and the other one, under the title "order" is the one referred to in line 25. So the Secretary of State makes an order and its effect is to revoke the Scottish Secretary's Instrument. I believe that the order of the Secretary of State takes its character from the Instrument which it revokes, because if the Scottish Secretary makes an Instrument which is, in the ordinary meaning of the word, "hybrid"—if I dare use the word "ordinary" as the epithet, and if one gives a normal meaning to the word "hybrid"—and the Instrument made by the Secretary of State is hybrid in that sense, then necessarily the order which revokes it is itself of a hybrid character.

Viscount COLVILLE of CULROSS

I do not think that necessarily follows, because if the Scottish Instrument is hybrid it may be that the hybridity is cured by the Secretary of State's order revoking it. Therefore it does not follow that the Secretary of State's order is in its turn hybrid.

Lord McCLUSKEY

I accept that it may he, but it may not be.

Viscount COLVILLE of CULROSS

That is so.

Lord McCLUSKEY

So I am wrong to say that it necessarily takes its character; but it can be infected with hybridity, and that would be a serious condition.

Viscount COLVILLE of CULROSS

Serious indeed.

Lord McCLUSKEY

So I think my central proposition is still sound, that if in fact the order made by the Secretary of State is an order to which subsection (7) would apply, it would be so by virtue of its having been contaminated by the hybridity in the Instrument made by the Scottish Secretary. I hope that gives some content to the point about which the noble Viscount asked.

Viscount COLVILLE of CULROSS

I think the other possibility, if I may speculate wildly, is that the Scottish Instrument was made in order to cure a situation which would otherwise be hybrid and the United Kingdom Order by revoking it recreates the hybridity.

Lord McCLUSKEY

If the noble Viscount speculates wildly I shall ruminate fiercely, but I do not think I have anything to add to what I said in relation to how the order acquires its character which brings it within the ambit of subsection (7). Let us suppose, then, that we are within the ambit of subsection (7) in the way I have indicated; then, given the other contents of Clause 37, of public interest and matters of that kind, and the effect upon a reserved matter, I think the noble Viscount would acknowledge that, once you have got into the ambit of Clause 37, you have the potentiality of a question arising which is both urgent and important and has the public interest which I mention—in fact, it has to have that before it comes into Clause 37 at all. So the public interest is then involved and the issue cannot properly be described as a purely local issue affecting only Scotland or a part of Scotland.

Again, I indicate that I do not believe override proceedings under Clause 37 for revocation of subordinate Instruments will he set in motion lightly hut, when they are, because of the impact upon reserved matters and because of the public interest which I mentioned, they should, in our view be treated as a matter within the control of Parliament. The matter should be subject to a vote on the Floor of the House because of the public interest, and that should be the end of it. Of course, both the House and the Government will bear in mind that private interests might be involved, but this is not a matter, because of that public dimension, on which it would be appropriate to allow the usual petitioning procedure to operate.

I do not think that there is any exact parallel to this; at least I do not know of any. I was not aware of the water provision referred to in 1973 that the noble Viscount discovered in his scholarly examination of this matter. Certainly, the one which I was involved in before, which the noble Lord, Lord Campbell of Croy, and 1 looked at on several occasions in the course of the passage of the Local Government (Scotland) Bill last year, was rather different; it was a cousin to the present example, but that was a truncated procedure and I agree that it is different, although there is a relationship.

In other words, one is always saying, at the end of the day, that, given that there are perfectly good reasons why we have Standing Orders like Standing Order No. 216 for protecting private interests but that, in some instances, the public interest may require modification or indeed total derogation from the ordinary procedures, we must look at the particular circumstances. I hope that the explanation I have offered in relation to how the order may acquire its character will satisfy the noble Viscount that such circumstances may arise, and that that will satisfy him as to the desirability of subsection (7).

9.58 p.m.

Lord HAILSHAM of SAINT MARYLEBONE

I wonder whether I may say a word about this. I am bound to admit that this discussion has been carried on at an intellectual level somewhat above my head, but there is a point which now arises out of the noble and learned Lord's reply to my noble friend and which I think is within my compass. I would like to explain exactly what it is. I was originally in considerable doubt as to whether either my noble friend's Amendment or the subsection itself were necessary, and I should like to explain first of all what my doubts were.

I, like the noble and learned Lord, had come to the conclusion, before the more refined point was put to him by my noble friend, that the only way in which an order under this clause could be hybrid was by infection; that is to say, the original Instrument created by the Scottish Secretary would be hybrid, and, therefore, the order revoking it by the Secretary of State would be infected with the original hybridity of the Instrument made by the Scottish Secretary. I wondered how that could be so. This is the reason why I had that doubt. The order made by the Secretary of State revoking the offending Instrument by the Scottish Secretary would ex hypothesi be restoring the legal status quo, because it is the offending Instrument created by the Scottish Secretary which alters the status quo, and the order made by the Secretary of State revokes it.

Therefore, the order made by the Secretary of State restores the original status quo before it was interfered with by the Instrument. Ex hypothesi, this was my doubt. Lx hypothesi the legal status quo cannot itself be hybrid. This is not a possible conception in Parliamentary law. The law, as it stands, cannot be hybrid. Only an alteration in the law can be infected by hybridity. Therefore, I thought that Clause 7 was unnecessary because it seeks to bypass a hybridity which cannot take place. My noble friend's Amendment omitting it is equally unnecessary because subsection (7) deals with a situation that cannot possibly happen.

The one point of agreement between the noble and learned Lord and my noble friend is that I am wrong about those doubts that there is a real danger of hybridity in the order of the Secretary of State revoking an Instrument by the Scottish Secretary. It was starting from that common ground that the noble and learned Lord proceeded to defend subsection (7).

However, it was at this stage that began to think that there was something in what my noble friend was saying, because I cannot for the life of me see why the mere fact of public interest and urgency should deprive the subject in this case, and this case only, of the rights which he would otherwise be able to invoke by reason of hybridity. In other words, if the noble and learned Lord is right in saying that the rights inherent in hybridity ought not to exist in this case, I cannot see why they should exist in any other. But if Parliament, for very good reasons, over the centuries has given the subject a right in cases of hybridity which he is able to invoke, even though the public interest is urgent, I cannot see why an exception should be made in this case. That is where the answer of the noble and learned Lord failed to satisfy me.

Lord McCLUSKEY

It seems that should not have spoken—

Viscount COLVILLE of CULROSS

But the noble and learned Lord still has feet!

Lord McCLUSKEY

That is the trouble. I recently read a book by the noble and learned Lord entitled The Dilemma of Democracy. In the chapters the noble Lord allocated various cheers for different things: two cheers for collective bargaining and one cheer for the incomes policy. I am not sure how many he would award for hybridity. Perhaps very few. I have found ill my six or seven, or 46 or 47, days in the course of the Committee stage of this Bill, that it has been an educative process. I have been educated out of my mind, to use a colloqualism. I think that the wise thing for me to do, rather than to accept the Amendment because I do not know where it would take me, would be to say that I will take no further interest in this matter other than to pass it on to those who understand these matters. In due course, I hope to stand at this Dispatch Box and read out a convincing answer.

Viscount COLVILLE of CULROSS

We shall await that day. I agree with my noble and learned friend Lord Hailsham that that answer was not such. There is no reason given at the moment by the Government for this. Certainly, if there is no convincing reason given—all joking apart—I do not think that this is justifiable, if we cannot have the kind of specific cases on which it has been argued before and accepted by the House. There is no way in which one can be specific about this. If one cannot be specific, the case must fall. I hope that the noble and learned Lord will come back at the subsequent stage merely to remove the subsection. In order to give him an opportunity to do so, I beg leave to withdraw this Amendment.

Amendment, by leave, withdrawn.

10.5 p.m.

On Question, Whether Clause 37 shall stand part of the Bill?

The Earl of ONSLOW

May I ask the noble and learned Lord, Lord McCluskey, to help me on this? The first part of Clause 37(1)(a) refers to an instrument made by a Scottish Secretary. Earlier the noble and learned Lord was talking about naked statutes being conferred, or something was produced by statute and the powers were naked, or something along those lines. I should like to ask the noble and learned Lord how these Scottish Instruments are made by the Scottish Secretary? How are they going to be made? What checks and balances will there be on them? Who is going to make sure that the standing orders of the Scottish Assembly on Scottish Instruments are actually fair, right and above board?

The question of hybridity comes in yet again and if the noble Viscount, Lord Colville, and the noble and learned Lord, Lord Hailsham, tend to be frightened of treading upon hybridity I confess that I am totally terrified about it. I will make one tiny effort. If we do have a question of hybridity or the personal rights of the subject being offended by a Scottish instrument or by the Scottish Assembly, how are these rights going to be protected and how are we going to make sure that this process of making Instruments is legally and morally and ethically sound?

Lord McCLUSKEY

If I might seek to answer these questions, first of all the Instruments referred to in Clause 37, which are made by the Scottish Secretary, I presume will be made under Standing Orders of the Assembly. That is the first point. The second point: who will ensure that they will be fair and above board? Once again, unless one supposes that the role of Parliament is to nursemaid the Assembly into producing standing orders which in the judgment of this Parliament are fair, then the control over the fairness lies with the Assembly itself. The Assembly itself looks at the draft standing orders. It may model its own draft standing orders upon the direction it receives from the Secretary of State under Clause 7(1), but ultimately the control as to fairness and to ensure that the standing orders are fair and above board comes from the political control within the Assembly itself.

As to hybridity, again this is not a matter which this Bill seeks to determine in relation to the Instruments made by and which may be made by a Scottish Secretary. As the noble Viscount mentioned when he spoke to this Amendment, he would contemplate that hybridity would be a matter that would be dealt with within the standing orders of the Assembly itself. I would hope so. He reminds us it might be. One would hope that they would have to deal with it. After all, the kind of problem which has produced Standing Orders here for hybrid Instruments is the same kind of problem as will exist in Scotland in relation to similar matters, and one would expect that the Scottish Assembly will bring not only robust political maturity but even a little humility to bear. It can model itself on Standing Orders which have stood the test of time and examination in this Parliament. They will model themselves on that and produce appropriate Standing Orders to cover this kind of question. I hope that is a satisfactory answer to the noble Earl.

The Earl of ONSLOW

It satisfies me a little, but let us take ourselves back to Sinn Fein and the 1919 Election.

Lord MACKIE of BENSHIE

May I suggest that if the keen legal brains of the noble Viscount, Lord Colville of Culross, and the noble and learned Lord, Lord McCluskey, have already admitted that they need to take these matters away for further study, then the same might be said, or more might be said, in the case of the noble Earl, Lord Onslow, and his own equipment!

Lord HAILSHAM of SAINT MARYLEBONE

Do not be put down, my dear friend!

The Earl of ONSLOW

After naked statutes and the noble Lord's equipment, I should like to say that I am not really addressing my mind totally to hybridity. I am trying to assume, and I am not casting aspersions. However, politics is a hot business and people become cross and angry with each other, and it is possible-1 am not saying that it will happen—that totally unsatisfactory Standing Orders could be produced on the question of Statutory Instruments. Let us assume, again, for the sake of argument, that a rather nasty collection of Scot Nats. come to power. I am not saying that it will happen, but it is possible. What check is there? That is all that I am asking.

Lord McCLUSKEY

Perhaps the noble Earl will allow me to say that we have already spent literally hours discussing the kind of question that he has raised tonight. No doubt he has not yet had an opportunity to study the Official Report but we discussed this matter in relation first, to Clause 3 and then to Clause 7. There is a whole fasciculus of clauses—if your Lordships will forgive me, at this time of night, for using that legal expression--commencing with Clause 23 and going right through to Clause 28. Therefore, we discussed these matters repeatedly and to the immense satisfaction of all who were present. I am sure that if the noble Earl cares to read what was said on those occasions he would find the answers not only to the questions that he has asked but to many other questions.

Lord HAILSHAM of SAINT MARYLEBONE

As a matter of fact, I think that I am partly responsible for my noble friend's intervention because it arose out of a question he asked me and to which I was unable to give a rational answer. However, I think that I understood the question more when it was put to me privately in my ear than when it was put across the Floor to the noble and learned Lord. I should like to put it in the following way because I think that the noble and learned Lord could be forgiven for not understanding the same point as I understood from the question which was put to me. Quite clearly, subsection (1) of this clause implies that a Scottish Secretary can make subordinate legislation of one sort or another by Instrument. What my noble friend asked me, and what I was unable to give an immediate answer to—which 1 think prompted this question—was, where is the power to make subordinate legislation to be found in the Bill? The Scottish Legislative Assembly has certain powers of legislation. Does that inherently carry with it the right to confer upon one of its officers the right to make subordinate legislation? I think that that was what my noble friend was asking, and it is my fault that I was unable to give him an immediate answer.

Lord McCLUSKEY

It is no doubt my fault for not recognising that that was the question. The answer appears on page 79 of the Bill where, in Schedule 16, under the reference to the Statutory Instruments Act 1946, we see that there are certain Amendments carried by virtue of Clause 78(2). Indeed, this takes the matter a little further than I signified in relation to my rather tired answer about Standing Orders because, of course, it says—and I shall simply read one of the new subsections of the Statutory Instruments Act added by this Schedule: In relation to a Statutory Instrument required to be laid before the Scottish Assembly the foregoing provisions of this section"? that is to say, Section 4 of the Statutory Instruments Act 1946— shall have effect as if for any reference to Parliament or to each House of Parliament there were substituted a reference to the Scottish Assembly ". I have obviously satisfied the noble and learned Lord, Lord Hailsham of Saint Marylebone, who is looking very satisfied; I hope that through him I have satisfied the noble Earl, Lord Onslow, whose question was interpreted to me through the noble and learned Lord.

Clause 37, as amended, agreed to.

Clause 38[Industrial and economic guidelines]:

10.16 p.m.

The Earl of PERTH moved Amendment No. 336:

Page 19, line 29, after ("Treasury") insert ("and after consultation with the First Secretary").

The noble Earl said

I could wish for several reasons that this clause was being considered early in the day rather than late at night. One is that the attendance in the Committee on what, I think, is one of the most important clauses is naturally rather smaller than it would be earlier in the day. When 1 look round I see a rather meagre attendance on the Labour Benches; ditto on the Cross-Benches; the Liberals, as one might expect, arc somewhere in the middle and the Conservative attendance is very good.

Several noble Lords

Hear, hear!

The Earl of PERTH

Be that as it may, we have up to now today discussed things which are entirely negative—that is, Clause 35, dealing with power to move the rejection of certain Assembly Bills; Clause 36, dealing with power to prevent or require action; and Clause 37, dealing with power to revoke subordinate instruments.

Now we are coming to something which is quite different and which potentially provides a constructive and very important role for the Assembly to play. Indeed, I would go further and say that, if this question of the economic functions of the Assembly had been handled properly by Parliament in days past, we might never have had any need for an Assembly. It is a fact that over the years in Scotland we have again and again had the feeling that our economic development and our economic problems were not being properly considered by Parliament. This has led to a very strong movement in Scotland to rectify the situation and has encouraged not only the growth of the Scottish National Party but also a general feeling that we must have an Assembly to do the sort of things that have not been done in Whitehall.

I shall not elaborate further on this because it is something which I have touched on again and again. Indeed, I spoke about it during the Second Reading debate. Many other noble Lords have made the same point and have had the same feelings. However, I think that this clause becomes even more important because, as your Lordships know, oil—which is one of the key resources today and which has in some degree supported the economy of Scotland—will not last for ever. In 10 or 20 years' time, I can see the same sort of thing happening in Scotland as happened before when shipbuilding, steel-making and heavy engineering left Scotland and when the coal ran out. As a result, we were faced with all sorts of economic problems.

How can that best be remedied? I should have hoped that the Assembly would have had more powers than it is being given to take the action which is necessary now rather than waiting until later. However, let us look at what we have. We have the Scottish Development Agency; we have the Highlands and Islands Development Board; and we have the local authorities in relation to economic development. All these will come under the powers of the Assembly. With the help of the Assembly one may hope that they really will make a good job of it.

But it is not as easy as that, because what happens under this Bill?—the Secretary of State shall, with the approval of the Treasury, prepare guidelines on all these matters. The Secretary of State will not have consulted, as things stand now, with the Assembly in any way before he has prepared the guidelines. Far worse, he has to have the approval of the Treasury. I should have thought that really the Treasury has enough when it controls the purse-strings, without needing to approve the guidelines set out by the Secretary of State.

I should indeed have liked to move an Amendment which was wider and excluded the approval of the Treasury, but I have been told by others who are wiser than I am on these matters that this is a necessary sentence to include in the clause and that the Treasury always has the last word. Be that as it may, I feel that for these guidelines to be formulated by the Secretary of State in what I would call a vacuum—that is to say, without any reference to the Assembly at all—must be wrong.

A noble Lord with whom I consulted before I put down this Amendment made a point which I take seriously, as indeed I take all the points he makes; namely, that if, as my Amendment suggests, the First Secretary of the Assembly has first to be consulted, then it may mean that things are delayed and that the Assembly cannot get down to the business of trying to work with the Scottish Development Agency or the Highlands and Islands Development Board from the start. I thought seriously of making an Amendment to my Amendment which would say that after the Assembly had been set up, then it would be for the Secretary of State in subsequent guidelines to consult with the First Secretary.

I thought, after reflection, that it was better to delay the guidelines coming into effect, or indeed being promulgated, until the Assembly had met and until the First Secretary was established and could be consulted, because to me if you set out guidelines without the chance anyhow of the First Secretary saying something about them, then you are going to have deep resentment on the part of the Assembly when it finds out what the guidelines may be. So I have put down my Amendment which says: The Secretary of State shall with the approval of the Treasury and after consultation with the First Secretary prepare guidelines". In other words, I am asking that before the guidelines are promulgated we wait until the Assembly has been established, until the First Secretary has been chosen, and then the Secretary of State can consult with him—consult; he has not got to take what he says—and has a chance to know how the Assembly feels on these vitally important matters.

The only other thing I would say at this moment is tnat I hope that the noble Lord who is to teply will give us some guidance on the thinking of the Government at the present time on these guidelines. Therefore, my Amendment has a dual purpose: first, to suggest that it is really something on which the Assembly should be given a chance via its First Secretary to take a part in drawing things up; secondly, it is a probing Amendment to find just what the Government have in mind when they talk about "guidelines". I hope that that is clear enough as an introduction, and I beg to move.

10.25 p.m.

Lord DRUMALBYN

Before we can consider this matter rationally we must know from the Minister what the guidelines will be about. I hope he will deal with the subject so as to show the broad aims of the guidelines, bearing in mind that under Schedule 10(2) the Act relating to the Scottish Development Agency is not included, apart from references to a long series of matters which are quite difficult to decipher. My understanding is that the provision means, in effect, that those subjects which deal with the environment —the building of premises, the acquisition of land and so on—fall under the Scottish Assembly, while the actual economic development is retained by the Secretary of State, and no doubt to some extent by the Secretary of State for Industry through the National Enterprise Board. The Highlands and Islands present a very curious case because they are lett out entirely. That comes in Schedule 10 where it says: The Highlands and Islands Development (Scotland) Acts 1965 and 1968 … Not included". Section 8 of that legislation says, however: In accordance with arrangements approved by the Secretary of State and the Treasury, the Board shall have power to give financial assistance by way of grants or loans … to any person I take it that the guidelines will establish a Scottish Secretary as agent for the Secretary of State, otherwise I cannot see how guidelines can be given as to the exercise of power by a Scottish Secretary under an Act which does not come under the Assembly with respect to the functions of the Highlands and Islands Development Board; it seems that it can be done only in an agency capacity. I hope the Minister will tell us about that. The other matters are more straightforward, concerning the limits of expenditure, the mechanics of providing loans and so on.

The most important point to remember in economic development is that it has two sides. The first is the encouragement and development of employment and the second is the encouragement of industry. To that extent, the more the powers can be put into one agency the better. If industry must go through a great many different sources for its grants, loans, permissions, certificates and the rest, that is a handicap, particularly when enterprise comes, as it so often does to Scotland, from abroad. I hope, therefore, that in the guidelines that point will be borne in mind. We look forward to hearing from the Minister, and let us not be in any doubt about the great importance of this clause.

Lord MACKIE of BENSHIE

I thought that the noble Lord, Lord Drumalbyn, was perhaps wanting to hear what the noble Lord had to say before he made his points, but as he has laid them out very clearly I should like to make my own, and my Party's, position on this miserable clause perfectly clear. This is a supreme example of what I was talking about earlier, regarding the need to appreciate the fears of certain people about an Assembly. The noble Earl, Lord Perth, has done a great service in bringing forward this Amendment, if only so that we can express our fears and our displeasure as to this clause which 1 accept only because it probably is necessary so that we can get the Bill through at all. But really it is quite ludicrous that we should have a phrase like this: … as to the exercise by a Scottish Secretary of the powers under the Scottish Development Agency Act 1975 with respect to … the promotion, financing, establishment, carrying on, growth, reorganisation, modernisation or development of industry or industrial undertakings;". How the devil can any organisation promote industry when every single thing that it does is the subject of guidelines from the Treasury? The Treasury is a marvellous body for laying down the conditions, and making people economical, and that kind of thing, but it is not a body to guide the development of industry. The Government ought to have taken the example of the protection of industry carried on by the Oslo Parliament in the successful years since the war. During that period they were about eight times —I would not stick rigidly to that figure —as successful as we were in Scotland in developing industry.

The reason for that was that they had a small, tightly-run Government Department which knew what it was doing, and which was able to deal directly with industrialists and to offer them, within the confines of the money supplied from this country, admittedly, a personal service which was of tremendous advantage to the Province. The same is true of the Highlands and Islands Development Acts. and their function as related to economic development is also to be subject to guidelines, which has not been the case in the past.

The noble Lord, Lord Campbell of Croy, talked about ill-disposed people who wanted to alter the future, to advance from the position laid down by this Bill with regard to the Scottish Assembly. That includes me because, although I am not ill-intentioned, I certainly want to see the kind of condition we have been talking about altered in the future when confidence is established.

I hope that the noble Lord, Lord Kirkhill, will be able to satisfy us on these points—though I am perfectly sure that he cannot because in itself this is an unfortunate clause which will not promote the advancement of industry, but will in fact hamper it. However, I hope that it will establish confidence among people in the rest of the United Kingdom that a Scottish Assembly will not harm them, although it can do considerable good to Scotland.

The Earl of SELKIRK

I agree with my noble friend Lord Perth that this is an extremely important clause. Since Second Reading, I have tried to persuade the Government to clarify for what the Assembly, Convention, or whatever you call it, really is responsible. Like my noble friend Lord Drumalbyn, I have sought to understand what on earth the Scottish Development Agency has to do with the Scottish Executive, and it is confusing beyond belief. I do not know what the guidelines are to be.

I should like to give one or two examples of what I have in mind. The Highlands and Islands Development (Scotland) Act is not included in Part III of Schedule 10. I thought that, if it was not included in Part III, it had nothing to do with the matter; but then one finds that it turns up in Schedule 7. What the connection is between Part Ill of Schedule 10 and Schedule 7, I do not know. In Schedule 7 there is, apparently, a reference to three sections of that Act, which have some bearing on the matter in question, though what bearing I do not know. In these sections the Act refers to directions and advice to be given to the Highlands and Islands Development Board, and it deals with the duties of the Board. Presumably a report is made, and there is also something to do with the acquisition and disposal of land.

Then there is the Scottish Development Agency, also not included in Part III of Schedule 10 except for 14 mysterious items, as my noble friend said, which apparently are included: financial assistance, compulsory acquisition, reconstruction of premises, managing sites, developing environment and derelict land, and, finally, it can do anything to discharge its functions. Then we come to another one in Schedule 10 which is also not included in Part III of Schedule 10. That turns up in Schedule 5 and in Schedule 7. In one case it deals with the comprehensive acquisition of land and in the other case with the disposal of land.

What is really intended? Can we really chuck this sort of stuff at the benighted Scots and expect them to understand what on earth it is about? I know that the Secretary of State can give guidelines and can ask for Parliament's assurance on it, but what is it? Are they going to have little executive powers under one or two sections from each of these two or three Acts? What is it? Can we see the guidelines? Why not state in Parliament what their responsibilities are? Is it not really grossly unfair to the Assembly to leave them an utterly vague statement of this kind which really means nothing to anybody? I ask that of the noble Lord, though he probably will not answer it tonight; but may we say that we really would like to have an answer. I know these matters are not easy, but perhaps we can have some answer, because I think it is very unfair not to say what their responsibilities are.

The Earl of LAUDERDALE

I should like to support my noble friend Lord Selkirk on this. As a matter of fact, this seemingly simple clause goes to the heart of the dilemma of the Bill. On the one hand, the cry in Scotland is for a better economy; on the other hand, the United Kingdom says that you cannot have fiscal, tax and other advantages that would be disruptive to the United Kingdom, and the only way to establish such would be behind a Customs wall, which means separation. So the Bill comes down on the side of a horrible sort of hybrid compromise. We know that, fundamentally, no amount of incentives to industry are as important as the level of inflation, the control of the money supply and the banking system, which is the economic case for United Kingdom coherency. Having said that, we therefore get the attempt to try to compromise some regional advantages to Scotland within a unitary economic system, and hence this extraordinary guideline business.

I should like to support very much what my noble friend Lord Selkirk has said in asking for some indication as to the kind of guidelines that are to be given. Can we know what the Government's thinking is, if not tonight then the next time the Committee meets? For example, there are questions about the location of industry and regional development which are to some extent questions of financial and other fiscal incentives, coupled with questions relating to the development of the infrastructure. Will it be possible? Will the guidelines make it possible for Scotland to offer differential incentives to incoming industry? We realise no tax differential is possible unless or until the Assembly has taxation powers, but, meantime, will the guidelines make it possible for differential incentives to be offered to industry?

Furthermore, will it be possible to widen the definition of industry? Up to now it has been manufacturing industry. What about service industry, what about commercial enterprise, what about office development, what about the improvement of communications? These are all matters which are very germane to the economic health of Scotland, on the one hand, and, on the other, the ability to develop a neglected region of the country within the structure of a coherent unitary economic system. They are matters which are very relevant to the various sub-headings of this clause and the related Schedule; and I think we are entitled to have some idea as to the sort of guidelines, relevant to the points I have mentioned, which will be forthcoming and, indeed, as to what is the Government's thinking.

At present we are invited to say: "There shall be guidelines!". You might say, "There shall be fresh air; there shall be whisky galore; there shall be all sorts of things!". Seriously, let us know what the Government have in mind. We are not trying to be negative; and, certainly, when the noble Lord, Lord Kirkhill, is on the Front Bench preparing to reply, he elicits from me a sympathetic approach rather than the somewhat abrasive approach elicited from me by the noble and learned Lord, Lord McCluskey. I am not trying to "needle" him or to be awkward or to put negative questions. But I think we are entitled to some sort of indication of the Government's thinking and intentions.

10.41 p.m.

Lord KIR KHILL

It has become evident from all that has been said thus far in relation to this Amendment that noble Lords would appreciate a very clear, and I hope concise, expression of the Government thinking on this very important matter. I think that the noble Earl, Lord Perth, in placing this Amendment before the Committee has done all of us a signal service. I will attempt—but I must crave the indulgence of noble Lords on this—to express the Government's view. This occasions my reading at some length; I apologise beforehand for so doing, but I think that it is necessary, in so far as it is possible, to dot the i's and cross the t's. This is what has been asked of me. Whether or not it will enable the noble Lord, Lord Mackie of Benshie, subsequently to feel less or more disappointed or of a comparatively happier disposition, the next ten minutes will show.

This is the first of a number of Amendments, as the Committee will realise, relating to industrial and economic guidelines. I think that they apply in three broad areas: the Scottish Development Agency, the Highlands and Islands Development Board, and in the more general area of the disposal of premises or land for industrial purposes. It has been made perfectly clear on many occasions that the Government intend to retain responsibility for regional and industrial policy. But it has also been made clear that, in the Government's view, it is entirely appropriate that the Scottish Administration should become responsible for certain functions of the Scottish Development Agency and the Highlands and Islands Development Board which are purely Scottish bodies with an important role to play in aspects of Scottish life extending beyond matters of regional and industrial policy. To cater for this, the Government have provided arrangements in the Bill under which the administration of these bodies by the Scottish Administration will be subject to guidelines. This is the point at which we begin to discuss these matters.

The aim of the guidelines is to avoid unfair distortions of competition by ensuring that assistance to industries is provided on comparable terms throughout Great Britain, having regard to the different needs and problems of different parts. They will also prevent the bidding up of assistance to firms which could lead to demands for retaliation from other parts of the country and erosion of the Government's policies and also, potentially, to difficulties with the European Commission.

The way in which the guidelines will work is that they will be transmitted from the Government to the Scottish Administration, and subsection (4) of Clause 38 obliges the Scottish Administration to use its powers to give directions, approvals, et cetera, to the Scottish Development Agency and the 1-1IDB and, in relation to the disposal of premises, to those bodies and also to local authorities and new town development corporations in such a way as to give effect to the guidelines.

The implementation of the guidelines and the enforcement of the resulting directions are thus devolved but the Government will have reserved powers to ensure that the guidelines are observed. In particular, Clause 36(1) empowers the Secretary of State to direct the Scottish Administration to use their powers to secure compliance of the guidelines. Subsection (5) of Clause 38 provides that the guidelines must either be contained in an order of the Secretary of State or determined under that order. This means, I am advised, that the main guidelines will be published in the Statutory Instrument, but that there is also some flexibility to permit more detailed material, for example material concerning minimum interest rates which must reflect changing commercial rates, to be altered from time to time without the need for an amending Statutory Instrument each time. The orders will be subject to the Negative Resolution procedure under subsection (6) of Clause 38.

I think that it would be helpful towards a better understanding of the purposes of the guidelines if I sought to explain how they are intended to affect the three different areas in which they apply. Indeed, noble Lords have asked me to do that. First, the Scottish Development Agency. Section 2(2) of the Scottish Development Agency Act 1975 sets out the Agency's functions. The first three functions in that enactment are to be covered by guidelines under subsection 1(a) of the clause. These functions are: (a) providing or assisting in the provision of finance to persons carrying on or intending to carry on industrial undertakings; (b) carrying on, or establishing and carrying on, whether by themselves or jointly with any other person, industrial undertakings; (c) otherwise promoting or assisting the establishment, growth, reorganisation, modernisation or development of industry or any undertaking in an industry ". If these functions were carried out in such a way as to provide assistance to industry on more generous terms than those available elsewhere, it would undermine the Government's regional policies and adversely affect industry in other parts of the country. The guidelines will ensure that this does not happen. The wording of the subsection covers these three functions in the constituting enactment. Reports on these "guideline" functions are to be sent to the Secretary of State as well as to the Scottish Administration and will be laid before Parliament as well as the Assembly. This is the effect of paragraph 47 of Schedule 16 and it will enable Parliament to monitor the effect of the guidelines.

It is intended that the guidelines should oblige the Scottish Administration to require the SDA to continue to operate in a commercial manner and hence to invest in viable projects which are expected to provide a reasonable commercial return over a period. It will, however, be able to take a longer term view than private sources of finance. The guidelines will therefore cover such matters as: target rates of return; minimum interest rates on loans made by the Agency; and circumstances in which the Agency may make grants.

In addition, the guidelines will provide for the observance by the Agency of proper standards of commercial behaviour —for example, avoiding giving any unfair advantage to companies in which they have an interest in competition with other companies. The Scottish Development Agency is already working to similar conditions to these and, in England, the National Enterprise Board is required to observe guidelines on similar lines.

The powers under Section 5 of the Scottish Development Agency Act, which permit the Secretary of State to direct the Agency to exercise his powers of selective financial assistance under Section 7 of the Industry Act 1972, are excluded from groups in Schedules 10 and 11 and are not, therefore, within the legislative competence of the Scottish Assembly or the executive powers of the Scottish Executive. No guidelines are, therefore, needed for this reserved matter. The environmental and derelict land functions of the Agency are fully devolved in Group 6 (Land use and development) of Schedule 10 to the Bill. Guidelines are not necessary because the exercise of these functions could not be used unfairly to distort competition or to bid up incentives to industry.

As regards the Highlands and Islands Development Board, the Scottish Administration will be responsible for both the economic and social development functions of the Highlands and Islands Development Board. "Economic development" is not, in general, a devolved matter under Schedules 10 and 11, and subsection (1)(b) of Clause 38 provides that guidelines will be made relating to these functions of the Board, but not to its social development activities. The guidelines will serve the same broad purpose as those for the Scottish Development Agency in subsection (1)(a). They are designed to ensure that there can be no conflict between the economic development activities of the Board, for which the Scottish Administration will be responsible, and the Government's national economic policies for the whole of Great Britain.

The procedures for these guidelines are the same as those for the Scottish Development Agency, and reports on the "guideline" functions of the Board will be sent to the Secretary of State as well as to a Scottish Secretary: this is provided for in paragraph 18 of Schedule 16. The Board has wide powers to give selective assistance to industry, to make investments, and to carry on businesses, and the guidelines will, therefore, cover matters such as criteria for considering applications for financial assistance for industrial and commercial enterprises, overall limits of assistance in individual cases, whether by grant or by loan, and terms of loans.

The third area for the guidelines is the disposal of premises or other land for industrial purposes. The guidelines relating to disposal of premises or other land for industrial purposes will nave the same aim as other industrial and economic guidelines: to prevent unfair competition and bidding up of industrial assistance. If public bodies in Scotland with powers to dispose of industrial property were permitted to do so on terms involving a greater degree of financial assistance than was available to industry in comparable other parts of Great Britain, this would constitute a significant new regional incentive. Such an arrangement could undercut the Government's regional policies and lead to irresistible pressure for similar measures elsewhere. The aim of the guidelines will be to secure broad comparability of disposal terms throughout Great Britain.

The disposal guidelines will apply to all public bodies capable of exercising this land disposal function. Subsection (2) of Clause 38 lists these bodies. They at present cover local authorities and the new town development corporations in addition to the Scottish Development Agency and the Highlands and Islands Development Board. The enactments concerned are listed in Schedule 7. Subsection (3) of the clause ensures that if the Scottish Assembly equips other bodies with equivalent land disposal functions the Secretary of State will have powers to extend the guidelines to the exercise of the Administration's powers in relation to these bodies.

If I may turn now to Amendment No. 336 in the name of the noble Earl, Lord Perth, what I have said will' I hope, have made it clear that the provisions of Clause 38, as they stand, are an essential feature of the arrangements for the future administration of the industrial functions of the Scottish Development Agency, the economic development functions of the Highlands and Islands Development Board and the industrial land functions of various other public bodies.

I have explained in some detail the kind of matters to be covered in the guidelines, and this will, I think, have served to demonstrate that there is no room for effective consultation between the Government and the Scottish Executive about the essential contents of the guidelines, as distinct from points of detail.

As a matter of practice, it would be very strange indeed if the Government did not consult the Scottish Administration, which at that stage would be a "shadow" Administration still to assume its full executive powers in the course of preparation of guidelines, and again later before any changes were made to them. The Government expect that regular consultations will take place at the appropriate level on all matters of common interest, initiated by themselves or by the Scottish Administration, as appropriate. The Government have already announced their intention to propose arrangements for consultations of a more formal kind. This assurance which I give to your Lordships may, in part at least, reassure the noble Earl, Lord Perth, and the noble Lord, Lord Mackie of Benshie.

If I may elaborate, in his Statement in another place on 26th July 1977, which was repeated by my noble and learned friend the Lord Chancellor in your Lordships' House, the Lord President of the Council said: Additionally, on the establishment of the new administrations, it is the Government's intention to seek their agreement to the establishment of Joint Councils for Scotland and for Wales, on which representatives of the Government and the new administrations could consult as necessary on matters of common concern. These would provide a valuable means of ensuring continuing co-operation and consultation."— [Official Report, Commons, 26/7/77; col. 315.1 The Government consider that the arrangements for consultation should rest on this non-statutory basis. it is not practicable to specify all the circumstances in which consultation will be desirable, or even essential, for the working of devolution. To pick out certain instances could only throw doubt on the importance of consultation in others, and could provide scope for challenge as to the propriety of action taken by Ministers in particular cases, by encouraging arguments as to whether or not contacts which had taken place amounted to statutory consultation.

The inclusion of a statutory consultation requirement in Clause 38 would be a cause of particular embarrassment, if it resulted in the impression that the intention was that the guidelines should be, in effect, agreed between the Government and the Scottish Administration. The guidelines will, in practice, delineate the boundaries of the executive discretion to be available to the Scottish Administration on matters of great political sensitivity. The form of the guidelines, and the manner in which they operate, will be closely watched by those concerned with industrial development in the English regions and other counties of the United Kingdom. It should, therefore, be clear, without scope for misunderstanding, that they are in a statutory sense the responsibility of the Government and Parliament and of no one else.

The Government are therefore unable to accept the noble Earl's Amendment, because of the difficulties which it could raise in the context of consultations on many other important matters, and because of the particular importance of making it clear to people throughout the United Kingdom that the guidelines are entirely the responsibility of the Government and Parliament, acting in the interests of the United Kingdom as a whole and taking into account the interests of all its parts.

That is a rather extended reply. I think that it is as complete a reply as I can give at this stage. But there were a number of specific points put to me before I rose to speak. May I say, first, to the noble Lord, Lord Drumalbyn, in an attempt to be as helpful as I can at this stage, that the economic functions of the Scottish Development Agency are devolved executively in Schedule 11. In regard to the Highlands and Islands Development Board, the powers are devolved executively in Schedule 11, Group D. The reference to Schedule 10 concerns legislative corm petence. That is to be found at page 58. This means that the Assembly will have no power to alter the existing legislation on the Highlands and Islands Development Board.

The noble Earl, Lord Selkirk, asked me two specific points. The key Schedules defining devolved matters are Schedules 10 and 11. The other references to the HIDB and the SDA Acts in this Schedule are incidental and do not relate to what is and what is not devolved. The HIDB are listed in Schedule 7 because, under Schedule 11, all existing executive powers are devolved. These include the powers of Ministers to approve in certain circumstances the terms on which land is disposed of, and enactments conferring such powers are listed in Schedule 7. t apologise again to the Committee for being somewhat lengthy—perhaps more verbose than is my wont but your Lordships wanted, I thought and felt, the Government's thinking to be clearly on the record.

Lord STRATHCONA and MOUNT ROYAL

May I intervene for one moment at this juncture. The noble Lord was certainly not lying when he said that he had made an extended reply. Obviously this is a very complicated matter. It would even have taxed the powers of comprehension of all our legal friends, most of whom have had the sense to go home. May I make a suggestion, therefore, to the Government: that this evening we should not attempt to take the clause stand part debate on this clause, which would give a chance to those noble Lords who are interested in this complicated and important subject to read the noble Lord's extended reply and then come back to him with points which are still unresolved at a later date. We have time to go through the Amendments all the same.

Lord KIRKHILL

I am always willing to accept what appears to be a perfectly reasonable suggestion, and of course I quite agree with that suggestion.

11.3 p.m.

Lord MACKIE of BENSHIE

I should like to make one or two comments. First, I am reminded that I should declare an interest before the noble Earl, Lord Selkirk, puts me in the "cooler" for six months. I am the chairman of a firm in the far North of Scotland—Caithness Glass—which has the HIDB as a minority shareholder. The HIDB have loaned us some money which we have repaid, and this year I am happy to say that we are paying them 15 per cent. on the money which they have invested in ordinary shares --which miracle has not, I understand, happened in the case of any of the other companies in the Highlands in which they have invested. I say this not only to declare an interest but also to declare some knowledge. I was perturbed by the guidelines, and I am well aware of the political sensitivity or jealousy, to use another word, which this subject invokes.

If we are to lay down substantially, I think the noble Lord said, the same guidelines for the HIDB as regards conditions of loan as we are for the SDA, then it will be wrong. We have to vary those conditions in the case of the Highlands and Islands. I can tell the noble Lord from my own experience that it is infinitely more difficult to develop a factory in Wick than it is to develop one in Perth. Again I have to declare an interest. We hope to rent a factory from the SDA in Perth as well.

The levelling out of the inducements allowed to be given throughout the United Kingdom must be wrong. I hope that the Government will consider doing something about this, or at least that they will be able to vary somewhat the inducements as between the different areas. I should have thought that the suggestion made by the noble Earl, Lord Perth, about the total amount of money allowed for different areas was surely fair. If one region is able to offer certain inducements as against another, then it is open to another region to vary its inducements in the same way.

However, when you come to attract to an area this essential thing, which is first-class young managers, there is a whole degree of different inducements which will bring them there. The most important thing you can do in starting a new business anywhere is to get the right man to run it, otherwise all the other things matter not at all. I know perfectly well from my experience in the Highlands that we have had very good men wanting to come to Wick, for example; they bring up their wives and they run a mile when they see the place. Others may like it, but it is twice as difficult and there are more factors to be overcome in trying to get good people into an area which is remote from their normal environment, however beautiful it may he. They also have a large amount of extra expense.

For this reason alone, I think the standard guidelines must be wrong. I hope the noble Lord will be able to tell us that the guidelines will not be that standard that one cannot vary; for example, conditions between areas of the Highlands and areas close to a good aerodrome beside Edinburgh. What I fear is that what the noble Lord has told us so far merely confirms my fears that these guidelines will be a grave hindrance to the development of industry in Scotland.

Lord BROWN

I should like to make a small contribution through some knowledge of the working of the 1972 Industry Act. When I heard the proposers of the Amendment and those who followed, I thought to myself, "My goodness, this argument sounds right and if there is a Division I may have to vote against the Government on it"; but when I heard my noble friend's reply from the Front Bench it awoke in my mind certain views which I should like to put before your Lordships, and especially the noble Lord, Lord Mackie of Benshie. It may not be known to him that every one of the schemes to help industry under the 1972 Industry Act has to be approved by the EEC. As a member of a Party which has always been keen for us to continue membership of the EEC, the noble Lord must know that the EEC is hell-bent on equalising conditions throughout the countries which are members. That is for a good reason.

Lord MACKIE of BENSHIE

The EEC has special schemes for areas of social deprivation.

Lord BROWN

That is so, and I have no doubt that the result of the EEC recognising such areas of deprivation would feed through to the Scottish Development Agency, and so on. I do not think that is really a main point of argument. The point is that, unless one gets some equalisation of incentive from the members of the Common Market and, at the same time, from the Scottish Assembly, there will be an increase of the present activity where great international investment projects are, as the saying goes, "internationally mobile". That is the position which exists at the moment, and one country after another offers to these international companies increasingly large incentives out of the taxpayers' pocket to try to induce them to come and invest their money in a particular country.

We are putting international corporations into a situation where they cannot resist the temptation, when they have a large extra plant to build, to tout countries to see where they can get the biggest boost from the taxpayers' resources. It seems to me to be quite clear that, regrettable as it may be that the Scottish Assembly will not have the degree of discretion over the way in which they use such monies as are made available to them, to create a situation in Scotland which is directly contrary to the principles which the Commission are trying, rather unsuccessfully, to follow, and which would be contrary to the principles of the giving of aid to companies in England, would be regarded by everybody South of the Border as the most grossly unfair thing which one could possibly imagine; and in the long run it would not help Scotland.

I agree it is true that the Ulster Administration had these powers and, as a Scot with connections in the West of Scotland, I was made well aware of it at times by the fact that competing incentives offered by the Ulster Government which could not be offered in Scotland attracted investments out of Scotland into Northern Ireland. The noble Lord is probably aware of this. We cannot go on with this competition with taxpayers' funds for ever. I found the arguments used by my noble friend very convincing, and if there were to be a Division f would certainly vote with my Party.

11.10 p.m.

Lord DRUMALBYN

Before my noble friend withdraws his Amendment, as I expect he is going to do, may I say something to the noble Lord, Lord Brown? I remember very well the Highlands and Islands Development Board Act being introduced in 1964. It started in this House. The whole purpose of it was to give differential incentives to the Highlands and Islands. This remains so. If it can be done for Northern Ireland, it can be done for any section of the United Kingdom. I am only saying this because I am not sure the noble Lord will be here at the start of discussion when we next reassemble. I should like to study very carefully what the noble Lord, Lord Kirkhill, has said, and I should like to intervene again on the Question that the clause stand part.

The Duke of ATHOLL

The more this goes on the more convinced I become that it will be a disaster if this Bill goes through. I would ask the noble Lord one quick question. What is to prevent the Scottish Secretary and the Scottish Assembly setting up another body which can make grants to attract industries to Scotland? So far as I can see, these guidelines apply only to the SDA and the Highlands and Islands Development Board and to the sale of industrial land. I imagine somewhere in the Bill is a prohibition on them setting up what might be called a Scottish Economic Development Council, or something like that, for the purpose of getting round this particular clause. I myself have no objection to this clause.

Lord KIRKHILL

There is no prohibition in the Bill at that point. The Scottish Assembly will be determining its policies in many directions once it assembles.

Lord BURTON

Could I ask the noble Lord one question? He may have explained it, but I did not catch it. On page 58 at Schedule 10 it would appear to insinuate that nothing in relation to the Highlands and Islands Development Board is delegated, so the Highlands and Islands Development Acts 1965 and 1968 are not included in the matters delegated. I may have got it wrong.

The Earl of SELKIRK

I should like to thank the noble Lord for revealing as much as he has from behind the dark curtain of which we are still substantially ignorant. There is rather a euphemism in the word, "guidelines"; it should be directions and powers. That is really what it is. It is giving clear-cut instructions as to what he is to do and what powers he shall have. I take it this money, which will be from the block grant, will be included when this comes to be considered, and I take it the Highlands and Islands Board and the Scottish Development Agency will be responsible to two bodies, the Secretary of State and the Executive. I wonder whether we could not be told which of the powers it is proposed to give. I looked at Schedule 7, and it mentions several clauses, but really it is utterly obscure. Even if you arc giving the Executive powers in those clauses, what is intended? Are we going to be told a little more. I think it is desirable that we should be told. I am not underestimating our gratitude to the noble Lord for telling us as much as he has; I feel much wiser than I was two minutes ago. But I wonder whether we can be told a little more of what is intended.

Lord KIRKHILL

Might I say quickly, in reply to the noble Earl, that I should have thought that that was perhaps as comprehensive a statement as this House has heard from a Government Minister for a long time. I am reluctant to say that I am going to tell the noble Lord anything more, when I say to Lord Burton that I did reply to the point that he made. I replied earlier to the point made by Me noble Earl, Lord Selkirk. If he will look at the Official Report tomorrow, he will see that that point was covered. May I make one point more before I resume my seat, I hope finally. The guidelines for the HIDB will not necessarily be the same as the guidelines for the Scottish Development Agency. That is a point worth making.

The Earl of PERTH

I am grateful to all the noble Lords who have taken part in this debate on the Amendment, because it is a very important Amendment, as we have all heard. I am also grateful to the noble Lord, Lord Kirkhill, for giving us such a full explanation of what are the proposed guidelines. The more I heard of them the more I became depressed, and the more I felt, with the noble Earl, Lord Selkirk, that they are not guidelines at all. They are instructions. They are orders to the Secretary of State, the First Secretary, or the Secretaries of the Assembly.

There are powers of enforcement and powers to insist that this, that, or the other thing may be done. As I understand it, there is really very little power left to the Assembly or to a Secretary to do what they think is right for the development of the economy of Scotland. The noble Lord made great play with the fact that there must not be unfair distortions; there must not be bidding up. If you do one thing for Scotland, then that might be true; that might be fair, the one thing being an equalisation of transport costs throughout the country. But you seem to be totally unaware of this fact.

The Highlands and Islands Development Board and most of Scotland are greatly handicapped by the enormous differences in costs. "Oh, but we must not bid up. We must not be unfair to the rest of the country". If I had to say who was unfair, I would say that the Government over the past years have been wholly unfair to Scotland in relation to such matters as subsidies and the building of the motorways, all to the benefit of the other parts of the country, and not to Scotland. This to me is the position and yet it is said: "We must not be unfair; we must not distort". That is not being realistic on what it is all about.

The noble Lord, Lord Brown, said that we must conform with what the EEC is up to. If I recall rightly, the EEC is only too ready at one time or another to encourage those areas which are handicapped for one reason or another. We all know that in the middle of Italy, or Southern Italy, they give every encouragement to remedy distortion and unfairness. But that is not really unfair or distorted. It is perfectly proper, given the handicaps under which they operate.

I am really deeply distressed at, as I think, the misleading features of this clause. We are told that they are guidelines. We were hoping that the Scottish Development Agency could carry out promotion, financing, establishment, growth, reorganisation, modernisation or development of industry, or industrial undertakings. That all reads very well, but we must not do it if it is going to give us any compensation for our handicaps elsewhere. I think that this clause, as it stands, is misleading. It will give great disappointment to those who believe that the Government were trying to do something to set up an Assembly which will help Scotland in its economic reconstruction.

I come back to my Amendment. I would say this: on the question of not allowing consultation, I think that the noble Lord said that it would be embarrassing. I hope that it will be embarrassing. Why would that be embarrassing? Because the Government could not face up to criticism. I think he gives the excuse that we cannot consult with the First Secretary or with the Assembly because it would be embarrassing. It is really one of the weakest arguments I have ever heard. Having spoken with considerable feeling about this, I do not propose at this late hour to move my Amendment to a Division, more particularly as the noble Lord, Lord Strathcona and Mount Royal, made what seemed to me to be an eminently constructive suggestion; namely, that we should consider this later when the Question comes up, Whether the clause shall stand part of the Bill.

So far as I am concerned, in the next day or so I shall try to study what has been said by the noble Lord, Lord Kirkhill, but I doubt that I am going to find anything to be satisfactory. While we may not be able to go further on it during this Committee stage, I certainly have it in mind, in the light of what I have heard tonight, to move something different at Report stage. I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Lord STRABOLGI

I beg to move that the House do now resume.

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

House resumed.