Lords Sitting of 3 May 1978

Preamble
The House met at a quarter-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Guildford

LORD HOWIE OF TROON
William Howie, Esquire, having been created Baron Howie of Troon, of Troon in the District of Kyle and Carrick, for life—Was, in his robes, introduced between the Lord Kirkhill and the Lord Peart, and made the solemn Affirmation.
BARONESS DAVID
Nora Ratcliffe David, having been created Baroness David, of Romsey in the City of Cambridge, for life—Was, in her robes, introduced between the Baroness Llewelyn-Davies of Hastoe and the Lord Ashby.

SOUTHEND PROBATION PROJECT
2.42 p.m.
Lord BEAUMONT of WHITLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps are being taken to ensure that the work done in the Southend probation project for the rehabilitation of persistent sexual offenders is not wasted.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, I understand that this small-scale experiment involved two offenders and was undertaken by a single officer over a six-month period. The method consisted partly of medical treatment with a libido-suppressing drug, and partly of group therapy. Conclusions could not be drawn from such a limited project, and
172
I am informed that when the officer moved to another area the responsible chief probation officer decided not to devote further effort to it.
Lord BEAUMONT of WHITLEY: My Lords, while thanking the Minister for that Answer, may I ask whether it is true that one of the main reasons for the project not being continued was not that it had proved in any way unsatisfactory—because, as the Minister says, there have not yet been sufficient results—but that there was a shortage of available staff? If worthwhile experiments like this—and I believe that this is worth while—are carried out, is it not worth the while of the Government to keep an eye on what is going on in order to ensure that such experiments can be fully followed up?
Lord HARRIS of GREENWICH: My Lords, resources have been made available to the Probation Service over the past two or three years for a number of projects of an experimental character, and, in particular, of course, for the extension of community service. However, so far as this project is concerned, I understand that it was not regarded as especially desirable to devote efforts to this particular task. The probation officers in the area had plenty of other things to do and the chief probation officer, of course, decides about these matters; they are not matters for the Home Office.
Lord LEATHERLAND: My Lords, is my noble friend aware that in France during the First World War there was a strong belief in the minds of the soldiers that their morning tea had been doped with bromide, the intention being to make them less attracted to the civilian population in the neighbourhood?

OSMOND REPORT
2.44 p.m.
Lord INGLEWOOD: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will give the date of the first irregularities listed in the Osmond Report on the conduct of the late chief

173
constable of Lancashire, and the date of the first effective action by the Lancashire police authority in regard thereto.
Lord HARRIS of GREENWICH: My Lords, the earliest specific incident mentioned in the Osmond Report occurred in February 1970, when Mr. Parr was deputy chief constable. The allegations against Mr. Parr were brought to the notice of the Home Office in July 1976 and notified by the Home Office to the Lancashire police authority in August. Sir Douglas Osmond was appointed by the police authority to carry out an investigation on 1st September 1976: they received his report in December 1976. As the noble Lord will be aware, my right honourable friend the Home Secretary recently announced in another place that there are to be further and wider police inquiries into allegations of corruption in Blackpool.
Lord INGLEWOOD: My Lords, while I thank the noble Lord for that frank and very disturbing reply, does he not agree that a time lag of nearly six years gives grounds for concern that the system of checks and balances between the Home Office, the police authorities and chief constables for the control of police forces has broken down, at least in Lancashire? Can he say whether the police authority was in fact ignorant of what was going on and therefore was out of touch, or whether the authority knew certain things, but did nothing about them, in which case it was negligent?
Lord HARRIS of GREENWICH: My Lords, I obviously cannot speak on behalf of the police authority in a matter of this sort. All I can say is that, in July 1976, a sergeant of the Lancashire Constabulary made representations to Her Majesty's Inspectorate of Constabulary and that within one month this matter had been referred by the Home Office to the Lancashire Police Authority, with the consequences which I have outlined.

OVERSEAS PENSIONS OF EXPATRIATE OFFICERS
2.46 p.m.
Lord GRIDLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they will be able to announce completion of the takeover of overseas pensions of expatriate officers from former dependent territories.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, my right h onourable friend the Minister for Overseas Development hopes that the takeover of overseas pensions will be substantially completed by the end of this year. Arrangements have been completed for 24 out of the 39 countries concerned. I will circulate a detailed list in the Official Report. Formal agreements have been concluded with Antigua, Guyana and Malaysia.
Following is the detailed list referred to:

Countries for which arrangements have been completed:

Sudan

Fiji

Gambia

Malta

Burma

Ghana

Lesotho

Seychelles

Dominica

Botswana

Mauritius

Tanzania

Swaziland

Sierra Leone

Grenada

Jamaica

St. Lucia

Solomon Islands

St. Vincent

Gilbert Islands

Malawi

Kenya

St. Kitts

Singapore

Expatriate pensions not vet taken over:

Antigua

Guyana

Malaysia

Barbados

Cyprus

East African Community

India

Nigeria

Pakistan

Peoples Democratic Republic of Yemen

Somali Democratic Republic

Sri Lanka

Trinidad

Uganda

Zambia

Lord GRIDLEY: My Lords, while thanking the noble Baroness for that Answer, may I ask whether she considers the situation entirely satisfactory? Are the Government aware that, in pursuance of a policy laid down by them seven years ago to take over responsibility for these pensions, to date only 17,000 have actually been taken over and 25,000 remain to be taken over? Will the noble Baroness give me an assurance and some information as regards the plans which the Government might implement to expedite that situation and to complete the taking over of the remaining 25,000 pensions?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I am afraid that nothing in life is entirely satisfactory. Her Majesty's Government are well aware of the very noble efforts that the noble Lord has made on behalf of the overseas pensioners. We are very grateful to him indeed for the trouble he has taken. I can give him an assurance that every possible means of expediting the takeover is being taken and will continue to be taken.
Baroness GAITSKELL: My Lords, I should like to ask the Chief Whip whether her remarks apply to the British who have lived in Rhodesia for some years, because I have recently received an appeal from a man about this particular aspect of pensions.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, the Question which was tabled by the noble Lord, Lord Gridley, was not to do with Rhodesia. The situation is extremely complicated in that country, but I will gladly talk to the noble Baroness or write to her about it.
Lord ORAM: My Lords, can my noble friend say whether the transfer of responsibility for the payment of these pensions brings to an end an anomaly—namely, that in aid statistics pensions paid to superannuated colonial servants now living in the United Kingdom still counted as aid to the overseas country in which they formerly served? I hope that that situation will be brought to an end. If my noble friend is not in a position to answer, will she include the information in the note which she promised to circulate in the Official Report in answer to the noble Lord, Lord Gridley?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, if not on this occasion, certainly on a later one.
Lord GRIDLEY: My Lords, I should like to put one final question to the noble Baroness. If the difficulties overseas are administrative—and to a certain extent I have sympathy for the Government as regards that—has not the time now come when it might be considered appropriate to bring this question up at ministerial level (that is to say, from Minister in this country to Minister in the independent country) and in that way try to get some assistance towards expediting the situation?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, of course. When my right honourable friend the Minister for Overseas Development goes abroad she, personally, always deals with this if there is a difficulty in the country in question. I can give the noble Lord that particular assurance. As I think the noble Lord appreciates, there are legislative difficulties which are very real in some countries. However, wherever we can, we try to help them and we keep in constant touch with the High Commissions.
Lord BOWDEN: My Lords, can my noble friend tell me whether these pensions will be properly indexed, as they should be?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, yes.

GOVERNMENT BODIES: PAYMENT OF MEMBERS
2.51 p.m.
Baroness SHARPLES: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will provide an up-to-date list of all Government and quasi-Government boards, indicating how many chairmen and other members are paid from public funds.
The LORD PRIVY SEAL (Lord Peart): My Lords, the Directory of Paid Public Appointments, first published in 1976, lists the Government bodies of which chairmen or any of the members are paid from public funds. The Civil Service Department is at present preparing, in consultation with appointing Departments, a revised edition of the Directory which will be published later this year.
Baroness SHARPLES: My Lords, I thank the noble Lord the Leader of the House, for that reply. Please can he tell us the ratio of men to women appointed to these boards?
Lord PEART: My Lords, I cannot give that information. Appointments are made only on ability. There is no sex differentiation in that sense.
Lord BALFOUR of INCHRYE: My Lords, can the Government add to the list the figure of total cost to public funds of these various bodies?
Lord PEART: My Lords, I do not have the figure. I shall certainly look at that to see whether we can assess it. However, it would be a very complicated task and expensive to compile.
Lord BALFOUR of INCHRYE: My Lords, I only want a total figure.
Lord PEART: My Lords, I shall try to obtain it.
Lord AVEBURY: My Lords, since the date when the list was last published, can the noble Lord say whether the number of these appointments has increased or diminished? Assuming that it is the former, does it not frequently happen that, when the purposes for which these organisations were first established cease to apply, instead of being dissolved, they find something else to do?—as was the case with the Location of Offices Bureau, which was set up to move jobs out of London but which is now moving them back in.
Lord PEART: My Lords, I think that the noble Lord will accept that it is important to have this information. The Directory is a very useful document, and I recommend the noble Lord on the Liberal Benches to read it very carefully. We hope that the new edition will be published during the Summer Recess; it will contain a great deal of valuable information.
Lord ORR-EWING: My Lords, will the noble Lord also consider publishing the cost of administration? In a body such as the Equal Opportunities Commission, the cost of administration has steadily risen as a percentage of the total outgoings. For the assistance of research students, will he put an asterisk against those names who are not known Labour supporters?
Lord PEART: My Lords, I do not think that the noble Lord is his usual self today; he is getting rather finicky. Let us wait and see what the Directory looks like. In fact, I shall try to have a copy sent to him, even though it may cost something!
Lord ANNAN: My Lords, can the noble Lord the Leader of the House say whether, in fact, a review is to be undertaken of the amounts of pay given to such chairmen and member; of committees? Will he not agree that the time has come to review some of these emoluments, in view of the fact that they have not been changed for years and that chairmen of many important concerns, although nominally called part-time, sometimes work full-time in the sense that their week-ends are very often not their own?
Lord PEART: My Lords, I accept what the noble Lord has said. The Top Salaries Review Board covers part of this and it will be reporting very soon.

DINNER
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, may I remind the House that dinners will be available this evening and tomorrow evening.

ADOPTION (SCOTLAND) BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg to introduce a Bill to consolidate the e lactments relating to adoption in Scotland with Amendments to give effect to recommendations of the Scottish Law Co remission. My Lords, I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1ª—(The Lord Chancellor.)
On Question, Bill read 1ª, and to be printed.

SCOTLAND BILL
2.55 p.m.
The LORD CHANCELLOR: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do now again resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD NUGENT OF GUILDFORD in the Chair.]
Clause 38 [Industrial and economic guidelines]:
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 149:
Page 20, line 19, leave out subsection (4).
The noble Lord said: In this clause we are dealing with the industrial and economic guidelines. Subsection (4) says:
"A Scottish Secretary shall exercise the powers with respect to which guidelines are prepared under this section so as to give effect to the guidelines".
The purpose of Amendment No. 149 is to leave out that subsection and to substitute the three subsections set out in Amendment No. 151 in the Marshalled List. This Amendment was designed to cover the contingency that the guidelines are not complied with by the Scottish Secretary. The noble Lord, Lord Kirkhill, told your Lordships on Tuesday night—and I see him in his place now—that the Bill already deals with that Dntingency in Clause 36, which empowers the Secretary of State to direct a Scottish Secretary not to do something which he proposes to do or to do something that he was not intending to do, if the Secretary of State thinks that it would be in the public interest to give such a direction. However, he can do so only if the action he wants taken or not taken, as the case may be, would or might affect a reserved matter.
Therefore, I pose this question: Is the Minister who will reply satisfied that any action at variance with the guidelines, or going beyond the guidelines, would necessarily affect a reserved matter? if not, there is obviously a loophole in the subsection. Secondly, what would happen if there were a difference of opinion on the interpretation of the guidelines? Thirdly, what would happen if the Scottish Secretary, disregarding the guidelines, committed the Scottish Executive before any directive was given to him not to do so? There are bound to be marginal cases in the provision of industrial assistance and it seems to me that a Scottish Secretary may easily misinterpret the directives or the guidelines and in consequence do something which the Secretary of State will consider to be outwith the powers of the Scottish Secretary.
The noble Lord may well say that all this means that, if there is any shadow of doubt whether some action which a Scottish Secretary may intend to take falls within the guidelines, he will have to refer to the Secretary of State and obtain his consent. I am not at all certain how willing Scottish Secretaries will be to be constantly on the doorstep of the Secretary of State. But at any rate Amendment No. 151 makes the position quite clear because the Secretary of State is there enabled to give a directive if, in his opinion, the Scottish Secretary acts beyond the guidelines. If the Scottish Secretary has already taken the action in question, the Secretary of State may give him a directive and, under the subsection, that is subject to annulment by either House of Parliament.
What I am anxious to find out is what sort of control is to be exercised here. If there is a difference of opinion between the Scottish Secretary and the Secretary of State how is this to be resolved? It is all very well to say that the Scottish Secretary can just give a directive or a direction. What happens if the direction is disregarded? Is the Secretary of State going to invite the First Secretary to dismiss the Scottish Secretary? If the First Secretary is of the same opinion as the Scottish Secretary, what then? It seems to me that the Amendment that I have put down at least gives a clearer idea of the way the matter should work. As I have often said before, it is valuable to have as much as possible in the same section where it is dealing with the same set of circumstances. I beg to move.
3.1 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): I wonder whether it would be helpful to your Lordships' Committee if I explained the Government's position as I see it, and our view of Lord Drumalbyn's Amendments which, I readily agree, are pertinent and should occasion us thought. He himself has explained that Amendments Nos. 149 and 151 are intended to provide a better procedure for enforcing guidelines. But in the Government's view the procedure already provided in the Bill is entirely adequate. I was saying, I think late on Tuesday night, and I feel I must repeat it again this afternoon, that Clause 38(4) requires a Scottish

181
Secretary to give effect to the guidelines, and if he does not do so the Secretary of State will be able to direct him to do so under the general reserve power in Clause 36.
The noble Lord, Lord Drumalbyn, poses the question to me that if the Scottish Secretary does not choose to obey a directive, what then? My reply is that I do not see the adversarial difficulties which the noble Lord, Lord Drumalbyn, envisages. I see instead an alternative scenario. I think that the Scottish Secretary will engage in dialogue with the Secretary of State for the day. May I give an example of the present position as the Scottish Office deals with local authority rate support grant? There are a series of meetings, and the local authority representatives meet with the Secretary of State of the day, or his representatives. One cannot always say that total accord prevails but neither, on the other hand, could one say that an adversarial difficulty sustains in any permanent way. In my view, the inherent authority of a Secretary of State will certainly be a very important factor in that kind of on-going relationship.
Might I explain how the Government see the position regarding Amendments Nos. 149 and 151. We think that they are less suitable for two reasons. First, the proposed new subsection (7) of Clause 38, which recasts the duty of a Scottish Secretary in relation to the guidelines, uses the expression "conform with" rather than "give effect to" as in the current subsection (4), which of course is deleted by Amendment No. 149. The words "give effect to" were carefully chosen. They reflect the fact that the guidelines will not be given by the Secretary of State direct to the SDA, or the HIDB, but to the Scottish Secretary. It will then be necessary for the Scottish Secretary to translate these guidelines into directions to the bodies concerned. A positive action by the Scottish Secretary is therefore required and, in the Government's view, this is better expressed by the words "give effect to" than the more passive words, "conform with". The words "give effect to" are also in common usage in other legislation—including, for instance, Section 4 of the Scottish Development Agency Act, which relates to the existing arrangements for giving directions to the Scottish Development Agency.
182
The second reason why Lord Drumalbyn's Amendment seems to us to be less suitable is that the procedure in the new subsections (7) and (8) for directions by the Secretary of State to enforce the guidelines is less satisfactory than the procedure provided by Clause 36. Directions under Clause 36 are, like those proposed in the Amendment, subject to an Affirmative Resolution procedure. But Clause 36 arrangements are subject, one might say, to an expedited procedure whicii enables the Secretary of State to act immediately, if necessary before the directions are approved; the direction would t yen lapse after 28 days if not approved by Parliament. The Government think that this is important because enforcement often requires rapid action and could be thwarted by the procedure under Anendment No. 151, which we really have touched upon at this time.
I think I might just re-emphasise the point that I mentioned at the outset of my remarks. I do not foresee the real difficulties and differences of opinion emerging in the way that the noble Lord, Lord Drumalbyn, does, but I can say to the noble Lord that the view of the Government and Parliament will prevail in that sort of extreme situation. I suppose that if one carries Lord Drumalbyn's point to the ultimate, as I think he himself did in one sense, then presumably Westminster would legislate.
Lord DRUMALBYN: I think that perhaps the noble Lord will have realised that my Amendment was drafted before I was aware that Clause 36 was intended to apply to these circumstances. The only point that he has not answered is, what happens if there was not merely a case of the Secretary of State proposing to take action but of his already having taken action which is at variance with the wishes of the Secretary of State or at variance with the guidelines? Can the noble Lord answer that point?
Lord KIRKHILL: I can readily conceive of that type of situation occasionally occurring. I do not think there is any point in denying that this is at least a possibility. I believe that the Secretary of State would ask the Scottish Secretary to reconsider a position which le had adopted which was at variance with a direction. I think that that is all I can say at this stage.
3.9 p.m.
Lord MACKIE of BENSHIE: I am pleased that the noble Lord the Minister has said that the term will be "conform with" instead of "give effect to", which appears to me to give a little latitude. I hope that the Government do not intend to lay down the guidelines for the Scottish Secretary so tightly that he will be unable to vary the total amount of money—which, I accept, should be in conformity with the rest of the United Kingdom—even to suit local conditions. I hope the guidelines will not be so tightly drawn as to allow no room for Scottish initiative.
Lord KIRKHILL: I should mention a point to which I perhaps did not give sufficient emphasis, having read the Official Report, last Tuesday evening. The present guidelines are in the Library and noble Lords might find it interesting to read them; one is not envisaging any substantial departure from the present area of guidelines.
Lord DRUMALBYN: Can the Minister confirm that the guidelines about which he is talking are the guidelines given at the present time by the Secretary of State to the Scottish Development Agency? If so, why should it be for the Scottish Secretary to interpret those guidelines—the guidelines which he will receive and which the noble Lord says will be very much along the same lines—into the form of directions? If the Scottish Development Agency is already receiving these guidelines direct, why cannot the Scottish Secretary simply pass them on?
Lord KIRKHILL: Because the intervening factor is the whole question of devolution. From the Government there is the view that the devolved Assembly must be encouraged to assume its responsibilities and the Scottish Secretary will be in a relationship with the Scottish Development Agency.
Baroness ELLIOT of HARWOOD: If the guidelines are to be drawn up by the Secretary of State and the administration of the guidelines will be by the Secretary in Edinburgh, what will happen if they belong to different Parties? Supposing one is a Conservative and the other a Socialist and they do not agree at all about the guidelines; what will happen
184
then? Who will have the authority? I presume it will be the United Kingdom Secretary of State. It will not work if the Secretary in Edinburgh is not prepared to carry out what the Secretary in Whitehall says.
Lord KIRKHILL: The Secretary of State has the last word. I do not mean this in any unkind sense, but we have been over this ground substantially. There is a question of policy at stake here and that question is this: do we draw up everything so tightly that the Assembly operates at the end of an apron string, or do we say to the Assembly, " You are a responsible elected body. Carry out your responsibilities in an informed manner "? The policy choice at this point in my view, but particularly in the Government's view, lies in the second area.
Lord SHINWELL: I am rather puzzled by the argument that my noble friend Lord Kirkhill is using, because it seems that this whole matter can be considered only in relation to the general body of guidelines referred to in the whole provision, and those guidelines cover a great deal of ground. Indeed, I am surprised to find so many points covered by them; I refer to Clause 38, and the Amendment is in relation to that.
I am glad to see the noble Lord, Lord Drumalbyn, nodding in agreement. That being so, let us consider what the functions of the Scottish Secretary are likely to be, whether on matters of industrial development, the provision of funds for the Highlands or any other part of Scotland and a variety of other items which I need not relate because they are mentioned in the Bill. What will happen if the Scottish Secretary wants to take action and discovers that he can take it only under the aegis of the Secretary of State? And what are the functions of the Assembly to be? I regret having to use the term, but it seems that the Secretary of the Scottish Assembly will be a stooge for the Secretary of State; he must not move an inch without the consent and endorsement of the Secretary of State. On Second Reading, I said that one defect in the Bill was that it did not clearly define what the functions of the Scottish Assembly were to be, and I have not since had an answer to that question.

185
As we proceed I discover that the functions are very much in the clouds; there is a good deal of crystal gazing about this.
I see my noble and learned friend Lord McCluskey shaking his head in disagreement; he had better be careful lest his head falls off if he shakes it too much. Apart from that, I am not overwhelmed by the learned gentlemen who sit on the Front Bench, with the exception of course of my noble and learned friend the Lord Chancellor.
Lord BROWN: May I—
Lord SHINWELL: I am not quite finished; indeed, I have only just started. I have been off for a few days and have not been able to pay attention to what has been going on in these debates, but I suspect that a great many defects in the Bill have been illuminated during those debates. It is time we had a clear answer to the question of what the Secretary of the Scottish Assembly will be allowed to do. I could not express it more simply and with greater clarity than that. Is it necessary for me to repeat the question? I simply want to know what this gentleman will be allowed to do on behalf of the people of Scotland in matters relating predominantly to industrial development, the disposal or acquisition of industrial premises and so on.
The Scottish Assembly might take a decision to provide more new factories for the purposes of expansion, a very desirable project indeed; but along may come the Secretary of State and say, "You cannot do that". The Assembly Secretary will ask, "Why not?" and the answer will be, "Because you have no right to do it". He may respond by asking, "In that case why did you create this Assembly and why did you go through all the procedure in connection with this Bill?" He would obviously ask many questions and, frankly, I cannot imagine anybody in Scotland—knowing how independent and forthright the Scottish people are and how determined they are to take their own line whenever they think it necessary—being prepared to take on the job.
On the other hand, it may have been settled by now and perhaps we could be given some information about that.
186
Perhaps Lord Kirkhill, who deals in this House with Scottish matters, is to be promoted. If so, he has my sympathy because he will have a terrible job—I almost said a hell of a job, but I must not use that language in your Lordships' Committee, so I withdraw the remark immediately. I want it to be established as clearly as possible what the functions of this gentleman are to be. Will he be harassed and embarrassed and pushed around? If so, I hope nobody in Scotland will take the job on.
Lord KIRKHILL: My noble friend Lord Shinwell asks a specific and direct question, but before I reply I hasten to assure him that I am neither being promoted nor as of this moment demoted, although perhaps as the Bill goes on demotion is a distinct possibility. I can tell him that a wide range of devolved matters will be the responsibility of the Scottish Secretary, and I would direct my noble friend's attention to Schedule 10, which refers to legislative matters which will be devolved, and to Schedules 10 and 11, which refer to Executive matters which will be devolved.
3.20 p.m.
Lord HARMAR-NICHOLLS: What bothers me about replies from the Government Front Bench to these points is that when we get to the crunch, to where the real problem is clear, they write it off with an airy phrase that "we have been over this ground before". It is true that we have been over this ground before, but we have had no answer. The problem that we have been over is still unresolved. It bothers me that when we come to specific items like this, the reply is that we have been over the matter before, and that because we have discussed it an answer has been found, and all is well. That simply is not true on this particular issue.
There is another point which I find very worrying, and this has been my fear right from Second Reading. When my noble friend wants to write into the Bill a provision which can be understood, and which would have to be adhered to because it can be understood, the noble Lord speaking for the Government then says, "No, we do not want to do it as specifically as that. We want to rely on constructive dialogue." I have a note of the term "constructive dialogue" as used by the

187
noble Lord. That is all very well if one can be certain that the people who will have the dialogue will each want to be constructive. But I have produced sufficient evidence so far, as have many of my noble friends, to show that there are many people in this scenario who have made it clear that they do not want to be constructive. They do not want this plan to be the ultimate; to some extent they do not want it to be a success.
I recall the supposedly amusing story about the chap in the Midlands pub. He said, " I am going home now, and if my supper isn't ready there'll be hell to pay, and if it is ready I shan't bloody eat it." If we get people approaching this problem with which we are now concerned in that spirit—and I assure your Lordships that this possibility is abroad; they are not trying to hide it; they make their feelings perfectly clear—then it is Parliament's duty, in anticipation of that possibility, to be as specific as it can be in order to remove the reliance upon a constructive dialogue, which is not likely to be possible. Instead, Parliament should spell it out in the beginning so that people will know where they stand.
It is because of those risks that the guidelines must be fairly specific. This may well help the Secretary of State and the Scottish Secretaries because they would then be administering a provision which Parliament had put into the Bill. They would not have to withstand the charge that they as persons were being difficult. If the guidelines were fairly specific it would also get over the problem in which, if there was a nationalist majority or a socialist majority in the Assembly, and a Conservative Prime Minister at Number 10, it would be said that one person or another was being ideological about what he wanted to do, instead of being impartial and objective. It is because all those matters I have mentioned are very real risks that I believe we must be more specific than the Government want to be, judging from the impression given by the noble Lord.
I expect that the noble Lord, Lord Brown, is to speak in a minute. The other day he was speaking on what he thought people in industry do when faced with the kind of dilemma I have just described. I think that the noble Lord, Lord Brown,
188
will confirm, when he speaks, that in industry when one insures against fire one does not insure expecting fire but because there is a possibility that it will break out and one wants to be covered. I assure the noble Lord on the Government Front Bench that there is a real risk that fire will break out, and I urge him to arrange all the protection he can by way of getting himself insured against the bigger explosion that will flow from it.
Lord MACKIE of BENSHIE: I should like to ask the Minister to pay close attention to the noble Lord, Lord Harmar-Nicholls, because there is no one who knows more about the spirit and the mechanics of obstruction than he does.
Lord BROWN: With great respect, I think we are making a bit of a meal of this. I am a member of the Industrial Development Advisory Board, which is a statutory body which advises the Secretary of State for Industry under the 1972 Industry Act. So I have a little insight into the operation of that Act. Much of the money which we are talking about, which will come within the aegis of the Scottish Assembly when it is set up, will come through that Act. At the moment there is a Scottish Advisory Committee helping the Secretary of State for Industry under the Industry Act and it operates on guidelines, as do other regional advisory bodies and the Industrial Development Advisory Board. Am I not right in assuming that the real intention of all that appears in this Bill, with reference to the money which will arise under the 1972 Industry Act, is to maintain the existing guidelines as they have been operated for two or three years now, and simply transfer the authority that at present rests in the Secretary of State for Industry vis-à-vis Scotland to the Secretary of State for Scotland?
Parliamentary draftsmen have to spell this matter out at enormous length; we know that it is necessary. The full meaning of what is said is simply to put the Secretary of State for Scotland in the same role as that occupied at present by the Secretary of State for Industry, and for the moment, at any rate, the guidelines will be exactly as they have been for the past two years. If we want to see what is likely to happen in Scotland we had better have a look at current practice.

189
That seems to me to be the full intention of these clauses, and I think that the debate is being excessively complex.
Baroness ELLIOT of HARWOOD: I should like to interrupt here. I perfectly understand what the noble Lord, Lord Brown, has said. The present situation is perfectly simple. There is one United Kingdom Government, there is one Department, and there is one Minister for Industry (or whichever Minister is giving the guidelines), and there is one company, or one industrial situation, being governed by one Parliament. But what we are talking about here is quite different. We are talking about two authorities. The difficulty lies in how to reconcile what is happening in Whitehall with what is happening in Edinburgh, when there is a different set-up, with a Parliament on the one hand and an Assembly on the other, and different people dealing with the matter. Today the situation can be handled easily. For years I have operated things in Scotland with directions mostly from St. Andrew's House, not from anywhere else. That is quite easy because there is only one authority. Now we are talking about two, and this is the complication.
Lord KIRKHILL: I do not know whether the noble Lord, Lord Campbell of Croy, wishes to take part in the debate, but as it appears to me that we are discussing the question of guidelines in considerable depth, I should, for the record, say to my noble friend Lord Brown that, while he is quite correct in saying that guidelines meantime exist—and I have been saying that earlier this afternoon—I do not think that it is absolutely correct to say to the Committee that the guidelines presently in force can be seen as comparable to those which exist in relation to, for instance, the Industry Act. I think it is probably necessary to be clear about that at this stage, in case we have confusion on the point. I should say that the Scottish Development Agency is not now, and will not be after devolution, in the business of giving selective financial assistance to industry under the terms of Section 7 of the Industry Act 1972. This is a matter for the Government, and it is now, and will continue after devolution to be, administered in Scotland by my right honourable friend the Sec-
190
retary of State for Scotland. I thought it worthwhile to say that at this stage.
3.29 p.m.
Lord CAMPBELL of CROY: This has been an interesting debate. I take issue with the noble Lord, Lord Kirkhill, if he did at one point say that we had been over this ground before. It could have been only a part of what we have been discussing. We have not been over the question of guidelines before, for the simple reason that late on our last Committee day—at 10.40 p.m., which is comparatively late for this Committee—the noble Lord, Lord Kirkhill, gave a long and very carefully considered statement (which he told us was such) on the guidelines, and what the Government's views were as to the form these guidelines would take and how they would operate. Today, in his first or second intervention, I think he said that with the Scottish Development Agency (the SDA) the guidelines could be expected to be very similar to the present guidelines. That again was an interesting piece of new information, and I am sure that all those who were going to take part in today's debate have studied—as the noble Lord encouraged us to do—exactly the words he used in his statement last Tuesday.
I took part in the various stages of the Bill which set up the Scottish Development Agency and I remember our talking about its guidelines. Since then its guidelines have appeared and are available and can be seen in the Library. We now know that that is the sort of guidelines which, under this Bill, the Secretary of State for Scotland would issue in relation to that Agency. The statement which the noble Lord made on Tuesday evening was not only new, in as much as it was the first time, because of the effect of the guillotine in another place, that the Government had an opportunity of stating its opposition under this clause, but we had also been waiting for it. We had been wondering how the Government were proposing, in the way in which they are suggesting that devolution should take place, to reconcile the unity and the central control of the economy of the United Kingdom, efficiency, devolving certain decisions to the new Executive and at the same time maintaining fair competition with full allowance for regional incentives and industrial development.

191
The formula which the noble Lord has given to us shows that there will not be very much difference so far as the SDA is concerned, and in his statement in column 1782 of Tuesday evening he stated—and it confirms what those of us who have been trying to interpret the Bill have thought—that in any case the Secretary of State is going to have powers of direction, because he said that Clause 36(1) empowers—
"the Secretary of State to direct the Scottish Administration to use their powers to secure compliance of the guidelines".
So if there is going to be a serious argument the guidelines are going to amount to a direction from the Secretary of State.
All this arises because of the attempt to divide responsibility, and where the SDA is concerned—I shall give one example—it is going to be the Assembly and its Executive who are going to be able to appoint the members of the SDA; but it is the Secretary of State who, through these guidelines, which are tantamount to directives, is going to say what will happen. It is that kind of extraordinary division of responsibility for the SDA which is bound to cause confusion. It will certainly be very difficult for members of the public in Scotland to understand, and I believe it will also be difficult for those who are trying to operate this Bill to understand.
More and more am I coming to the conclusion that a great many people, and not only on this side of the House, will be somewhat relieved if this Bill never has to be carried out, because they can come forward and say to the people of Scotland, "We made an effort, we put forward some proposals, but the fact is that the proposals are almost unworkable and certainly extremely confusing, and they might not be understood by the man in the street". There could be relief in many parts of your Lordships' Committee if the Bill in this form did not survive the referendum and never had to be carried out.
The noble Lord, Lord Brown, made a very good point. He pointed out that the system of the advisory boards, of which he is a member, is a simple, straightforward one. That, as the noble Lord, Lord Kirkhill, said when he followed, does not apply to what the SDA does;
192
that is, giving advice to the Secretary of State for Industry on certain kinds of assistance to firms. I would point out that in fact the Secretary of State has not always accepted the advice. There have been some notable occasions when Secretaries of State have gone ahead—I think in almost every case disastrously, with grants and loans, against the advice of the advisory board. Not only does the Secretary of State not have to follow the advice given by the board; he does not even have to give reasons. We understand the reason for that; it is because of the confidentiality of companies' financial situations and so on.
The root of this trouble is the way in which the Government are proposing to divide responsibilities in this system of devolution. It is not just a matter of decentralisation. If it were just decentralisation that would be different. It is devolving to a new legislative body, and at the same time having two Executives, and it is the confusion between what the two Executives are supposed to do, which is apparent not only in your Lordships' Committee now, when we are trying to interpret this clause, but I am sure would in practice cause not only confusion but clashes between the new Executive and the Assembly on the one hand, and the Westminster Parliament and the Government of the United Kingdom on the other. I return to what I said, that everything we are discussing under Clause 38 is subject to Clause 36, so that the overriding powers of the Secretary of State appear to mean that he will not only give guidelines but will enforce them.
3.36 p.m.
Lord KIRKHILL: I seem to have said something which I did not think I had said—and that is not a remark which I am fond of making. When I was speaking earlier of the fact that we had been over this ground before, I certainly did not mean to suggest that we had thought at any great length on the question of guidelines. It was really an attempt to pick up the point on the question of whether we shall tie up the Assembly absolutely tightly at each point or whether it will have a very loose operating rein. It was at that point that I used the phrase, so I should just like to re-emphasise that at this stage.

193
I think we have strayed significantly from guidelines in the course of our debate. Although I spoke at length the other evening, it might be helpful to the Committee if very quickly I pinpointed again the functions of the SDA. These functions are split broadly into three groups. In the first group there is the factor of environmental and factory building functions. These include the powers to provide sites and premises for industry and to develop and improve the environment, the power to rehabilitate derelict land and the power to acquire and dispose of land.
In the second group there are the industrial investment functions of the Agency. In the third group we have powers to give selective financial assistance to industry as the agent of the Secretary of State under his direction, and I would refer the Committee to Section 5 of the Scottish Development Agency Act 1975. In fact, this power has not been used so far. In addition, the Agency has certain powers in relation to statutory undertakers and Crown lands. While I do not want again to expand these points, as I thought I dealt with them in depth last week, I think it is perhaps useful to remind your Lordships' Committee that these are the broad functions of the Scottish Development Agency.
Lord O'NEILL of the MAINE: I wonder whether someone who has had a little experience of devolution might say a word or two on this important matter of industrial development. When some people have suggested that there would be great difficulties if you had a Party of one colour in power in London and a Party of another colour in power in Edinburgh, might I say that when 13 years of Tory rule was coming to an end I must admit that, having had a very pleasant relationship with the noble Lord, Lord Home of the Hirsel, I was worried about the future. But, for the record, might I say that when the Labour Party came to power I had nothing but the greatest co-operation, particularly from the noble Lord, Lord George-Brown, in the Department of Economic Affairs. Unemployment knows no Party differences. I forecast that, when the Assembly comes into being in Edinburgh, the Party in power in London, be it Labour, Conservative or Liberal, will be falling over itself to try to deal with
194
unemployment in Scotland; and, if it does not, it will suffer.
So might I very briefly plead with your Lordships? It could be argued that we should have no Assembly in Scotland at all; but, if we are going to have an Assembly, then for heaven's sake give it some power to do some good for Scotland. It should not be cribbed, cabined and confined: it should be given an opportunity to succeed. I remember so well, when the British Industrial Development Office was set uh in New York with a Scottish chairman and a Northern Ireland vice-chairman, the marvellous work it did in attracting American industries to Scotland and Northern Ireland, and indeed to other parts of the United Kingdom. This Bill must be made to work, and I do so hope that we shall not dispute over too mar y details, because the whole essence of the British character is to make something work. I feel sure that this will happen, and I am merely saying these words because I have had this experience and I know that, when it comes to the point, all British people will want to try to deal with unemployment—and this is what we are in effect talking about today.
Lord SHINWELL: The noble Lord, Lord O'Neill of the Maine, has pinpointed the whole issue, and it is that, i' there is to be a Scottish Assembly, it must be vested with power. That is what I understand the noble Lord to have said. But how can we argue that in the context of the Bill or of the clause which is now under review? How can we argue that the Scottish Assembly, when created, will be vested with power if, first, guidelines are to be prepared by the Secretary of State and, secondly, the guidelines can be operated satisfactorily only within the decision of the Secretary of State, which may be in conflict with the views of the people in Scotland and which, therefore, the Secretary of the Scottish Assembly will have no power to operate? Is that not the position? I agree that, if there is to be a Scottish Assembly, it should be vested with power. The question which I ventured to pose—perhaps I did not pose it with the clarity required, but I am now posing it—is: If there is to be a Scottish Assembly, is it going to be vested with power or is it going to operate under the direction, generally speaking, of the Secretary of State?
Lord HARMAR-NICHOLLS: I come back because I think the contribution made by my noble friend Lord O'Neill is possibly the most dangerous we have had, because it is the most effective. It was reasonable, it was based upon practical experience of a devolved Parliament and it carried with it all the weight that goes with those two attributes. But would remind your Lordships and my noble friend, too, that I do not think we are living in the same world that existed when my noble friend was the Prime Minister of Ulster, and I think we must take into account the fact that it is a different world. My noble friend put on the record how he found that he was able to work just as amicably and just as effectively with a Labour Government as he had previously worked with a Conservative Government, who were more in line with his thinking. I understand that; but I wonder if my noble friend could now say, bearing in mind the people who are seeking power in Ulster, the views that they have expressed and the outlook that they have today, which is there and seems to be growing, that they would be able to work with the same amicable, constructive and objective outlook as he found when he was there.
I do not believe we ought to approach this vital Bill on the basis that it is in 1945 or 1950, or even 1960. We are producing this Bill in 1978, when a variety of extremist, dangerous, distorted outlooks are abroad. I believe that, in the light of the situation for which we are now legislating—we must take into account, of course, my noble friend's experience, but we must also take into account the fact that it is a different era, in different times—and in order to avoid the kind of conflicts which can grow, we have got to write into this Bill so far as we can, if we are to have it, something which will avoid the conflict which will come from people on the spot making decisions which may be in conflict with the views of the people in charge at a particular time.
Lord DRUMALBYN: This Amendment has gone a very long way beyond what I had intended. I should like to make only two remarks at this point. The first is that I hope we get a First Secretary of Scotland of the calibre of my noble friend Lord O'Neill of the Maine. I think things will go very much
196
better if we do. The second is that I think the rest of the debate can easily be left to the Question, Whether the clause shall stand part? There are matters which will arise, obviously, on that, because I regard this as the central economic clause in the whole Bill. It is the only one in which you can gather together, as the noble Lord, Lord Kirkhill, has already done in one speech, all the various economic elements affecting devolution. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
3.46 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 150:
Page 20, line 23, at end insert (" and the Secretary of State shall not appoint the Scottish Secretaries until such an order or such orders have been made in relation to the exercise by a Scottish Secretary of the powers referred to in subsection (1)(a), (b) and (c) of this section ").
The noble Lord said: This is an Amendment which I can move with speed and brevity. It is simply to the effect that at the end of line 23 there should be inserted the words:
"and the Secretary of State shall not appoint the Scottish Secretaries until such an order or such orders have been made in relation to the exercise by a Scottish Secretary of the powers referred to in subsection (1)(a), (b) and (c) of this section".
This seems to me mere common sense. The fact that guidelines are already in existence gives me every confidence that it will in fact happen that the guidelines will be available before the Scottish Secretaries are appointed, and the only question is whether it is a good thing to put it into the Bill. I beg to move.
Lord KIRKHILL: The Government think that this Amendment, moved by the noble Lord, Lord Drumalbyn, is a rather extreme remedy. It would indeed be quite unworkable, as Scottish Secretaries will need to be appointed in the run-in period following the elections and before the actual transfer of executive powers takes place, including the powers in relation to the HIDB and the SDA which are set out in Schedule 11. Moreover, it would not be sensible to pick out guidelines among all the various preparatory steps which have to be taken before devolution can be implemented effectively as a statutory prerequisite to appointing Scottish Secretaries. The Government may well find it desirable—indeed, that

197
is not a strong enough assertion: the Government would find it desirable—to have some consultation with the shadow Scottish Administration before final details of the guidelines are established. But I give the noble Lord, Lord Drumalbyn, this assurance, and I think the Government fully accept this position: that there will be absolutely no danger of an initial period during which Scottish Secretaries are able to act unfettered by guidelines. I give that formal assurance to your Lordships' Committee.
Lord DRUMALBYN: I regard the noble Lord's answer as highly satisfactory, because it at least implies that there will be consultation with the Scottish Executive before the guidelines are actually given. If that is so, that is all to the good. I had envisaged a situation where the same guidelines would be handed out as are handed out to other parts of the Kingdom on similar matters, but if there is going to be a possibility of consultation and modification, and not mere explanation to the Secretaries of State of what their job is going to be, that is fine. But I see the noble Lord is not so sure.
Lord KIRKHILL: I do not wish in any way to mislead your Lordships' Committee; nor would I wish the noble Lord, Lord Drumalbyn, perhaps to take the wrong nuance from my remarks. Quite a lot of work has already been done on the guidelines, and I believe—indeed, I affirm—that there will be consultation. I am not prepared to state that that would necessarily lead to modification. It will certainly lead to explanation, but I do not think that I would wish to go further than that at this point.
Lord DRUMALBYN: This was obviously a probing Amendment. I find the noble Lord's explanation reasonably satisfactory, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 151 not moved.]
3.50 p.m.
On Question, Whether Clause 38 shall stand part of the Bill?
Lord DRUMALBYN: As I have said, I regard this as the central economic
198
clause and I think one must make some observations on it. May I start by referring to what the noble Lord, Lord Kirkhill, said on Tuesday night. He said:
"If these functions,"—
and he was referring to the functions of the Scottish Development Agency—
"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 tle country. The guidelines will ensure that this does not happen. The wording of the subsection covers these three functions in the constituting enactment".
The observation that I should like to make on that is that it seems to close the door to any sort of special treatment for Scotland. I would not deny that, as one of the main objectives of this Bill is to maintain the essential economic
unity of the country, giving the Scottish Executive discretion within the same rules as apply to the rest of the country—always excepting Northern Ireland—seems perfectly reasonable. But the fact remains that many Scots, whether in favour of devolution or not, strongly believe that Scotland needs special treatment, even to hold her place in the economy of the United Kingdom. That means developing new industries, regenerating old ones and so forth.
In that regard, what the noble Lord, Lord Kirkhill, said on Tuesday night will act as something of a cold douche upon the economic aspirations of Scotland. I do not think that the Scottish people understand the close constraints that are to be laid on them and, at this stage, perhaps, I may say to the noble Lord, Lord Shinwell, that on this whole question of the guidelines—this whole question of the Scottish Development Agency—it is entirely outside the capacity of the Assembly to legislate or even, I imagine, to make statutory orders and instruments. What we are talking about here are guidelines to be given by the Secretary of State to the Scottish Secretary. There may, because of the structure of this clause, be different Scottish Secretaries for different guidelines to, let us say, the Scottish Executive.
There are a number of special points that one ought to ask about in connection with those guidelines. I wonder whether the noble Lord will tell us how

199
the distribution of industry policies will be administered so far as Scotland is concerned. Can the noble Lord give an assurance that the Departments of Trade and Industry in London will continue to encourage industries to open up or to expand in Scotland with at least no less encouragement than is given them to go to the disadvantaged and depressed parts of England? I take it that the Departments of Trade and Industry will still be in charge of the distribution of industry even though they will work through the Secretary of State so far as Scotland is concerned.
The advantage of having a Scottish Secretary at all to deal with Scottish industrial problems is that he will, we hope, be able to give the matter his undivided attention without having to respond to three-line Whips at Westminster and attend Committees in Whitehall; but there are difficulties in transferring powers from the Secretary of State to a Scottish Secretary without making the Scottish Secretary responsible to the Assembly in the exercise of those powers. He becomes, as it were, the independent agent of the Secretary of State. The Assembly has no legislative power over the Scottish Development Agency or over the Highlands and Islands Development Board, if I understand the matter correctly. If I interpret the Bill aright, the Assembly cannot even approve orders made by the Scottish Secretary in regard to those bodies.
What influence will the Scottish Secretary have, then, over the Scottish Development Agency? The Scottish Development Agency sets itself the task of uplifting and regenerating Scottish industry. It is worth recording from its last year's report—the present year is not yet available—that, in the year just ended, the agency was expecting to spend or to commit some £15 million on investment, £22 million on factory sites and buildings and £14 million on land renewal. The Scottish Development Agency is essentially a hived-off agency of Government dealing with the promotion of industry and the provision of factories and services for industry as well as urban and land renewal. It is not subject to the day-to-day control of Parliament. It inherited the work of the Scottish Industrial Estates Corporation and developed it further. It now
200
acquires sites and builds both advance and bespoke factories, modernises, and sometimes subdivides, existing premises and acts as the building agency of the Highlands and Islands Development Board. It is expected to maintain rentals in line with rentals in other parts of the United Kingdom. But its report says that it is now empowered, at its own discretion, to grant rent-free periods of up to two years to new tenants. It appears also that longer periods of up to five years may now be granted with the approval of the Secretary of State.
Perhaps I may ask whether it is the Secretary of State or the Scottish Secretary who is to give this approval for further rent-free periods to tenants of the Scottish Development Agency in the future. It seems that the functions of the Scottish Development Agency (which used to be functions of the Scottish Industrial Estates Corporation) are devolved functions which are conferred on the Assembly under Schedule 10, Part III. Whether this means that it will come under the day-to-day scrutiny of the Assembly, I do not know. I take it that that will be for the Assembly to decide.
Then there are the functions transferred to the Scottish Executive under Paragraph 7 of Schedule 11. These manifestly include the appointment of the members of the Scottish Development Agency and the other powers listed under that paragraph. Schedule 11, I should mention, deals with matters within the powers of the Scottish Executive but not within the legislative powers of the Assembly. There are, in addition, the activities of the National Enterprise Board and the distribution of industry activities. No doubt all these will impinge upon the Scottish Development Agency. I am not certain that the Scottish Development Agency is going to be happy with the amount of guidance that is going to come to it from various quarters.
One conception, I take it, of the Scottish Development Agency was that it would act more or less as an independent body exercising its own judgment—as an investment bank, if you like, and a development and construction agency. I found it so difficult to construe Schedule 11, Paragraph 7 that I have put down Amendments Nos. 269 to 277 inclusive in order to get an explanation of them. If the

201
noble Lord cares to let me have a copy of his "Notes on the clauses" or otherwise help me in this way, it will certainly save a good deal of time. For example, I do not intend to go through all the 11 linears of paragraph 7 on page 69, but let me quote one of them as an example. Linear (iii) says:
"the powers under section 2(7) so far as exercisable in relation to the functions specified in section 2(2)(a) to (c)"
I will pass by Section 2(7). The point I am making here is that the Bill itself is exceedingly difficult to construe. The various provisions are divided up in a most strange manner and it is difficult to see how the Bill will operate in any particular circumstances. Presumably the relevant Scottish Secretary will take the place of the Secretary of State in authorising drafts—that was the matter I was referring to. But, if your Lordships will look at paragraph 47 of Schedule 16, you will find that the Scottish Development Agency does not have to submit its annual report to the relevant Scottish Secretary in pursuit of Section 5, which contains the power to give selective financial assistance. That seems to me wholly wrong. Admittedly, the Scottish Development Agency has not got control of this—does the noble Lord wish to intervene?
Lord KIRKHILL: No, I do not think so, because the noble Lord is just coming on to that point: Section 5 stands reserved.
Lord DRUMALBYN: But how is the Scottish Secretary or, for that matter, the Assembly to have a supervisory role over the Scottish Development Agency in its entirety? It must do so: how is it to reach appropriate decisions if it does not even know what special financial assistance is being given from other quarters?
This is the sort of thing one finds so extraordinary—there is no cohesion in the whole thing. That brings me back to Clause 22(3) and the powers to be exercised by both the Secretary of State and the Scottish Secretary. On some matters under the Scottish Development Act, the Secretary of State alone is to exercise power—that is on selective financial assistance and promoting industrial democracy—and other matters are stated to be within the powers of the Scottish Executive. There is, for example, the power to make
202
grants or loans; but these powers can be exercised both by the Secretary of State and by the Scottish Secretary—or is the Secretary of State going to deprive himself of the powers by way of the guidelines and transfer them entirely to the Scottish Executive? Perhaps the Minister will tell us that.
What about the money to finance these activities? The guidelines no doubt will have a good deal to say about that as well as imposing limits. Will the Scottish Industrial Estates side of the Scottish Development Agency continue to be financed by a separate Vote in the Estimates, like the corresponding English and Welsh bodies, or will it be financed through the Assembly?
Section 12 provides for the Secretary of State to determine, with the approval of the Treasury, the financial duties of the Agency and different determinations may be made in relation to different functions and activities of the Agency. Is that still to he done by the Secretary of State or will it be done by the Scottish Secretary with the approval of the Treasury? The whole thing is a most extraordinary muddle. Will it be the Assembly which will decide how quickly the £200 million, which is the present limit on borrowing, is to be drawn down?— that again relates to the Scottish Development Agency. If more is needed, it will certainly have to be voted by Parliament before it can be increased to £300 million.
Amid all this confusion and division, do the Government really think this is going to work? This is the reason why I am speaking at this time, because we are talking here about guidelines coming from one direction, but there are guidelines coming from other directions and there is overlapping of functions. One thing is quite certain: an extra tier is being inserted in the echelons of Government and it is very difficult to see exactly what that extra tier is going to do.
I shall say just two things about the Highlands and Islands Development Board provisions. The provisions are relatively simple because the activities of the Board are restricted and the population that it covers is relatively small. I would only emphasise once more that it is quite unreasonable that the financial assistance which section 8 of the Act empowers the

203
Board to give in accordance with arrangements approved by the Secretary of State and the Treasury should be on the same scale— if there is a scale— as that which applies in other parts of the United Kingdom. That was not what the Highlands and Islands Development Board was set up for. It was specifically set up in order to enable it to get preferential treatment.
Perhaps the noble Lord can tell us what the guidelines now are in respect of the Highlands and Islands Development Board. It would he a pity if the purpose of the Highlands and Islands Development (Scotland) Act was frustrated. That purpose was undoubtedly to secure special treatment for the Highlands and Islands. I hope that these remarks of mine give some indication of how difficult. It is, in a clause which merely deals with giving guidelines, to bring together—and it is the only opportunity in the Bill to bring them together—the economic impact of this Bill on the Scottish Assembly, the Scottish Executive and Scotland itself.
4.5 p.m.
Lord VAIZEY: I have listened with great care to the Front Bench and to the Opposition throughout this Bill. I have always thought that this clause and Clause 40 are central to the Bill, because it seems to me this is likely to be the real area of dispute if the Assembly is set up. There may well be debates between the lawyers as to whether or not one can appeal to this, that or the other court; but I should have thought that for the ordinary citizen that is going to be rather esoteric. This area really represents the central question, because undoubtedly the pressure for some form of home rule for Scotland has had a great deal to do with the pressure for some resettlement of the economic condition of Scotland, and Clauses 38 and 40 deal specifically with the economic situation.
I agree with the noble Lord who has just spoken that Clause 38 is central, and I should have thought that Clause 40 was equally central. If I may speak with due reference and respect, I think that in Clause 38 the Government have probably got it right. But I say so with a certain amount of hesitation because if this is to be the beginning, as one supposes it is,
204
of a whole series of Bills which are likely to come before Parliament dealing with the devolution of various parts of the Kingdom and with the resettlement of our Consitutution, I suspect that we may be on the beginning of a slope which is a little dangerous.
The reason I say that—and if I am here when Clause 40 is discussed I shall have a similar remark to pass then—is that I am slightly alarmed by the fact that the guidelines, as I understand it, are going to be drawn up in very general terms. They are subject to some forms of resolution in the other place and in this Chamber, and we all know what that means: this is to be largely drawn up within the Civil Service, to be settled entirely within the Whitehall machine as to the economic development of Scotland.
I would ask your Lordships to consider this position. There are going to be three major sets of elections in Scotland: one will be for the European Parliament, whatever that may do; the second will be for Westminster, and the third for Edinburgh. It is quite clear that Edinburgh is concerned with health, housing, planning and education, except for the universities. Therefore the only job which is of domestic interest that the MPs elected from Scotland will have to do in Westminster will be concerned with the economic powers of Westminster with respect to Scotland and the rest of the United Kingdom.
The trouble with this clause is that it leaves the matter rather fuzzy, because some of these powers are within the power of the Executive and the Executive is not answerable to the Assembly. That is the first area of fuzziness where one can imagine there will be conflict between the Assembly Members and the Members of Parliament from Scotland in the other place. Secondly, these powers will be exercised quite largely "privately", if I may say so; that is to say, they will be within the authority of the Civil Service and the Treasury. In other words, the economic powers with respect to Scotland which the Scottish people are very agitated about and which are the basis for the demand for this sort of home rule, will in fact fall between two stools. The Scottish MPs will not be able to question adequately in another place; and the

205
Members of the Assembly will not be adequately empowered to question within the Assembly.
One listens with great respect to the extraordinary brilliance of the noble Lord on the Front Bench, but, if I may say so, he made a mistake early on when he said that the Assembly could discuss what it liked. I listened with great interest at that stage, because Clause 38 is precisely the area where the Assembly will have Motion after Motion put down, certainly by the minority Party, the Scottish National Party, and occasionally by the majority Party, about the extraordinarily bad economic conditions of Scotland, which will have to be redressed by the other place exercising its powers under the Constitution, which, quite rightly, this Bill leaves in the hands of the other place. This seems to me to be a built-in recipe for conflict.
There are two possible solutions. One is to give economic powers to the
Assembly, to which I should be opposed. The other is to draw these lines much more clearly, in such a way that the Scottish Assembly cannot discuss issues of this kind. I think that Clause 38 gets it right, which is why I, a non-Scot, am venturing to speak at this stage, almost without any qualifications whatsoever, when, so far as I can discover, everyone who has already spoken has been of impeccable Scottish origin. Nevertheless, I see that this will be the cause of immense practical difficulty throughout the next 10 or 15 years, once the Assembly comes into existence. The ordinary electors in Scotland—the ordinary businessmen and trade unionists will not know whether to go to their Assembly man or to their Member of Parliament, to complain about the problems which are faced in Scotland.
I shall have roughly the same kind of point to make in respect of Clause 40, which raises similar difficulties. But I honestly feel that, in this area, the Government would be right—if they chose to amend this Bill in any respect whatsoever—to draw the line somewhat tighter, rather than more widely. Moreover, so far as I know, the term "guidelines" is a new one in an Act of Parliament, certainly in a major constitutional Act of Parliament, and the Government ought to be a little more specific and the procedure
206
should be more formal, if we are to get this right and avoid conflict in the future.
Baroness WARD of NORTH TYNESIDE: I feel, as a very ordinary English woman, that I really ought not to be taking part in this debate, but I certainly want this devolution Bill to be as helpful and as satisfactory as it can be to the Scots. My noble friend seemed to be moving an Amendment, about which I did not understand a word because I could not hear what he said. He went on talking and talking, and I came to the conclusion that, as an English woman, I had better get up and say something.
I quite agree about the difficulties of unemployment, both in Scotland and also in my own part of the world, the North-East coast. But if it is true that what we are discussing is giving extra money to Scotland and perhaps depriving my part of the world of help—I think that one of the noble Lords on the Front Bench opposite said that this might be so —then I certainly would not support that. We in this House must try to De as fair as possible about the terrible unemployment situation, both in Scotland and in my part of the world. But when my noble friend introduced this very complicated Amendment he said, so far as I could understand it, that Scotland wanted preferential treatment. I am not in favour of that. I want fair treatment for Scotland and for my part of the world, as well as for England as a whole.
It is very worrying when an English Member, like myself, has to rely on Conservatives speaking from safe Conservative seats, with no real unemployment. I could not possibly let Scotland get preferential treatment without anybody speaking up for my part of the world. I may be quite wrong but, to me, what we are discussing is absolutely unbelievable. I want to know specifically, before anything happens to my noble friend's difficult Amendment, whether the Minister who is to reply will give an assistance that economic assistance shall not go to Scotland, to the disadvantage of my part of the world. I certainly would not stand for that.
Thank goodness, I have never had anything to do with local government! I have always been on the political side in another place. But I want to know quite directly

207
from the Minister whether the Government are to give more money to Scotland—to the Assembly, to Edinburgh or whatever it may be in Scotland—to the disadvantage of Northumberland or Durham, because if that is intended I shall get up and make a row, and, believe me, when I start to make a row I can make a real row.
So I just want to know quite specifically from the Minister, who I think said that if one of these Amendments was passed it would be to the disadvantage of some other areas, and to have it in black and white in Hansard, that my part of the world will not have money taken away from it so that it can be handed over to Scotland. I do not think I should go on, because I am probably getting in a frightful muddle. But I always want to stand up for my part of the world, and that is what I am doing now.
4.18 p.m.
Lord WIGG: I have the greatest sympathy with the noble Baroness in fighting for her part of the world, because, in my own time, I have done a bit of fighting for my part of the world. My part of the world is the West Midlands and it has suffered from the same grievous unemployment as her part of the world, and I regret to say that it is still suffering. But, of course, when she says that she wants help for her part of the world, regardless of the consequences to anyone else's part of the world, then I part company, if I may be forgiven for saying so, because the truth of the matter, whether we like it or not—and I emphasise, "whether we like it or not"—is that the United Kingdom, economically and politically, is one or it is nothing.
That is my basic objection to this Bill. I regard it as a piece of political nonsense devised by Sir Harold Wilson, and, later on, by the present Prime Minister, in order to cover up a political difficulty, which may even have passed—that is a possibility here—of the Labour Party being put to rout in Scotland, which would make any possibility of a majority in the other place impossible. I am by nature an optimist, and I thought this morning, when I listened to the local government results in Scotland, that I might come down here to find that there was no meeting this afternoon, because the Government had decided
208
to take away this piece of nonsense and strangle it. But pending that, I am going to do my best to play my part in bringing it to a nullity. It cannot be improved. It is a piece of political nonsense and it cannot be expressed better than in this clause.
If one accepts for the moment part of my argument—that the United Kingdom economy has to be looked at as a whole rather than tampered with seriatim on a local basis—then one must take into account a little economic history. Mine is not very deep, having been learned in my adult years as best I could from my own reading, helped by WEA tutors. As I see it, this country's economic decline started just over 100 years ago when, without our noticing it, the United States passed us in the struggle for markets and productive capacity. It was perfectly clear by the end of the 19th century that not only had we been passed by the United States but that we had also been passed by Germany. That process has continued. It has been halted temporarily by periods of prosperity during wars and immediately after those wars, but the inexorable decline has gone on and on, measure it where you like: shipbuilding, the arms race, boot production, textiles.
Therefore we are brought face to face with the ultimate economic reality. Either we can become once again a pastoral country—which is what awaits us if we follow the advice of our friends who have taken us into the Common Market with our hands tied behind our backs, because that has always been the endeavour of our Continental friends—or we can start to rebuild our industries, not in historic terms but in terms that make common sense. Indeed, we must produce goods for markets that can absorb those goods. If we, however, concentrate, under pressure from the noble Baroness and her friends, on building ships, those ships will be tied up from the day that they are launched. They will fetch half the price that they cost to build.
I could give examples of industry after industry. The reason why our economy has not expanded and why productivity has not increased is because often we are producing the wrong things; and often we are producing the right things by out-of-date methods. In order to get it right, we must build up new industries,

209
and they can be built up only behind a tariff wall. That is the plain issue which faces this country. If we do not face up to that issue, then, as sure as night follows day, we shall face economic bankruptcy. That bankruptcy might express itself either militarily, which is a distinct possibility, or diplomatically—perhaps that is slightly more " odds on "—or through economic decline, which will result in increasing unemployment, with all the inevitable political instability that that must bring. The noble Baroness knows just as well as I do that a permanent force of unemployed people, particularly young people and especially the young immigrants in this country, will ultimately lead to economic instability.
This Bill does nothing to tackle that problem. Instead it lays down guidelines to be discussed between the Secretary of State for Scotland and the Treasury. It is a contest between Mr. Millan on the one hand and Mr. Healey on the other.I wish that I were so sure of the winner as I am of the winner of the One Thousand Guineas tomorrow. If I were, I should be a lot richer! as I say, the contest lies between Mr. Millan on the one hand and Mr. Healey on the other. Indeed, if the personalities concerned were not as they are, there is another factor. This clause is a typical British clause. It has been designed by the Civil Service. What the Civil Service mandarins want is quite simple: the more you pretend to give away power, the more you make absolutely sure that that power is held even tighter in the hands of the Permanent Secretaries. That is what this clause is about.
So far as the guidelines to be laid down are concerned, not the slightest indication has been given of the form that they are to take. Economic planning is not even a starter. We are going to leave it to the higgling of the market. And what form will that take? Again I come back to the noble Baroness. She is absolutely right; her instinct is fundamentally sound. If Scotland is to be helped—I am not thinking of cash handouts—and the pressures for this Bill, as my noble friend has said, stem from the fact that Scotland wants to be helped because of the gravity of her economic situation, then—I will not say inevitably but the possibility exists that the consequences of that help being given will be found on the North-East Coast, in Liverpool and in the West Midlands.
210
Unless those issues are faced up to on a national basis, then I believe that this Bill will become even more disruptive than I thought it would in the first instance.
Therefore on every occasion that she can I hope the noble Baroness will join me in hamstringing this Bill. If she and I were eventually to be Tellers in a Division and were to put paid for ever to the clause, I should be highly delighted.
4.28 p.m.
The Earl of PERTH: I agree very much with what the noble Lords, Lord Drumalbyn and Lord Vaizey, and others who have spoken, have said on the Question that the clause stand part. for it is a clause of enormous importance. I think I am right in saying that in the original Scottish and Welsh Bill, the Scottish Development Agency and the Highlands and Islands Development Board did not form part of the powers of the Scottish Assembly. When that Bill was defeated, considerable pressures developed for the Scottish Assembly to have economic powers, and the sequel was Clause 38. However, we all know that Clause 38, which gives certain economic opportunities to the Assembly, is subject to guidelines laid down by the Secretary of State with the approval of the Treasury.
In the discussion last Tuesday on an Amendment which I moved late in the day, in which I asked that the words "after consultation with the First Secretary" should he inserted, the noble Lord, Lord Kirkhill, gave an extremely full explanation of the content of the guidelines. I am grateful to the noble Lord, and I know that all Members of the Committee will also be grateful to him, for that explanation. The noble Lord made great play on the point—and this, in a sense, takes up what was said by the noble Lord, Lord Wigg, and the noble Baroness, Lady Ward of North Tyneside—that the guidelines should be fair vis-à-vis the rest of the United Kingdom. The noble Lord went on to say that the aim of the guidelines was:
…to avoid unfair distortions of competition by ensuring that assistance to industries is provided on comparable terms throughout Great Britain, …".—[Official Report; 25/4/78, col. 1782.]
That sounds both reasonable and right, but it is very easy to use words. Our view of fairness, particularly having

211
regard to what has happened over the last few years, is very different, when we look at it through Scottish eyes, from just the question of whether or not money is being granted to a particular industry.
Let me give noble Lords one or two examples. I will quote three examples of what I have in mind. I could quote 33 examples but time does not allow. Quite often I go from my home to St. Andrew's —not, I am afraid, to play golf but to the university. As I pass the town of Cupar, on my right I see some very large buildings which are more or less derelict. I recall that those buildings were the sugar beet factories of Scotland. What happened? Some five years or so ago the British Sugar Corporation decided that they wanted to close that factory. It was not very profitable for them because, although it had been doing better, it was operating under some handicap. More important, they realised that if they took the quota for the sugar to the English factories it would be a profitable operation for them. So the decision was taken that they would close the factory.
At that moment various Scottish farmers and Scottish industrialists got together and said, "We will make a bid for this factory. We will go on with the job, providing we can have some sugar quota". The British Sugar Corporation—and it really should now be called the English Sugar Corporation—said, "Oh, no. We have a monopoly of the sugar beet in this country granted to us by the Westminster Parliament". So it is out now so far as we in Scotland are concerned. We did not feel it was fair and we realised that the measures had been decided by the Westminster Parliament. That could hardly be called a comparable basis throughout Great Britain.
To give another example, that of forestry, here—like many other noble Lords—I have an interest to declare. Your Lordships will all know that one of Scotland's great potential assets is the land which is available for forestry, and with the development of that asset of course goes great employment. Since the end of the war we have been making slow but steady progress in building up forestry in Scotland. About five years ago, thanks to certain tax concessions and subsidies, it looked as though there was going to be
212
a great spurt in the plantings in Scotland. What happened? We did not reckon with the Treasury. The Treasury said, "Oh, look! By doing this you can get certain advantages for future generations, so you must stop it". What did they do? They produced a Paper—I have forgotten whether it was a White Paper or a Green Paper—pointing out how all this forestry was not an economic thing, whether for the Forestry Commission or for others.
Shortly after that we had a debate in this House and in fact it was shown that the whole thing was nonsense; that between the time when the report was written and the time when we held the debate the price of timber had risen and all the economic calculations—and here I go along with the noble Lord, Lord Wigg—the civil servants had done all the sums wrong and the whole process was a nonsense. But the damage had been done; that is to say, the confidence of those engaged in forestry was shaken. Subsidies were reduced and the tax concessions were done away with.
What was the sequel to that? Forestry dropped by some 50 per cent. or 60 per cent. in the next two years of planting and millions and millions of trees which were almost all in Scottish nurseries had to be destroyed. Now there have been some second thoughts on this and forestry is beginning to develop again. That was just another case, and this time it was more the Treasury than the Westminster Parliament which did grievous harm to a natural asset of Scotland. We did not think that was treating us fairly; we did not think that was comparable treatment for the industries of the country.
I think it is important that people should understand these things, and my last example is this. When I go up from Edinburgh to the North I come to the Forth Bridge and there I pay a toll, and every lorry pays a toll, and it is a considerable toll. It is 50p per lorry, so that hundreds of thousands of pounds go into the Exchequer, I suppose, in the last analysis for the benefit of one and all; but it is quite a handicap for Scottish industry to have to carry. Is the position the same, for example, in London? No; what happens in London and the London industry?
Lord KIRK HILL: I regret intervening, which I would not normally do, but I

213
think the noble Earl has to accept that there are five estuarial crossings in England where tolls have to be paid.
The Earl of PERTH: I know that there is one in Liverpool and I know that there is one in the South-West, but both of those make my point; namely, what happens to London industry?—which is perhaps where the votes are. Far from having to pay tolls of any kind they get enormous subsidies of tens of millions of pounds from the Government, be they Conservative or Labour, to help them. Is that comparable treatment throughout the United Kingdom?
A noble Lord: Has the noble Earl forgotten the Dartford Tunnel which has quite a considerable toll?
The Earl of PERTH: There may be one exception, but the point I am making is generally right: that tens of millions of pounds go to London subsidies whereas the outskirts of the country, if I may put it in that way, have to pay for I know not what.
Viscount MASSEREENE and FERRARD: I think I am right in saying that per capita the people in Scotland get more from the British Exchequer than the people in England. I do not think the noble Earl is being quite fair.
The Earl of PERTH: That may well be the case, but I am speaking of industry and employment. I am not speaking about the handicaps that we have at a distance on health or education or anything else. That may well be right, but after all South-East England and other parts are much more prosperous and do not have the kind of unemployment that I am speaking about in Scotland.
Having given those examples, as some of your Lordships will know I moved an Amendment that the guidelines should be only after consultations with the First Secretary of the Assembly. As I have already said, the noble Lord, Lord Kirkhill, went into great detail about what the guidelines should be, but he used these words. Having explained what the guidelines were, he said:
"This will, I think, demonstrate that there is no room for effective consultation between the Government and the Scottish Executive about the essential contents of the guidelines".
214
Those were his words; that is, that there is no room for effective consultation between the Government and the Scottish Executive about the contents of the guidelines. Having given the examples, I really think that, as an example of how the Government view this, it is tragic. What is the Assembly? A mere creature under those conditions, a puppet of the Secretary of State for Scotland and of the Treasury, and I have shown you how disastrous that can be.
It is quite true that the noble Lord, Lord Kirkhill, went on to qualify what he had said in some degree by saying that in practice there might be some forms of consultation but the words as they stand were, "No room for effective consultation". During the debate today on the Amendment moved by the noble Lord, Lord Drumalbyn, we have heard various qualifications, or something which might give us a little more hope in this regard. The noble Lord, Lord O'Neill of the Maine, told us of his experience in Northern Ireland, but I also agree that there is a considerable degree of muddle about it. On the one hand, people say that they want it tougher, and they include the noble Lord, Lord Wigg, the noble Lord, Lord Vaizey, and the noble Lord, Lord Harmar-Nicholls. They want to put us in a strait-jacket. Others are more understanding, and perhaps the Government, although they have said what they have, may be feeling a little more ready to accept consultation. I hope so.
However, I feel I must say to one and all of your Lordships that this clause is vital, and I believe that the fate of the Assembly depends on how this clause operates. If the Assembly is to have virtually no say in how the Scottish Development Agency and the Highlands and Islands Development Board are to operate, ther I see the day when the Assembly will fight by all means in its power, and I think quite rightly, to achieve something of economic power in those areas. If, on the other hand, it turns out in practice that there is consultation between the Assembly and the Westminster Parliament, which is the Secretary of State for Scotland and the Treasury, and that the Assembly, the Scottish Development Agency and the Highlands and Islands Development Board are allowed their head within reason, then I hope it will be another story.
4.42 p.m.
Lord HARMAR-NICHOLLS: Every speech that is made on each of the clauses confirms the point that the noble Lord, Lord Wigg, and I myself on occasions, have tried to make, that this Bill just does not seem to be on. But I think one ought to treat it as a debate. It was very interesting to listen to the noble Earl, Lord Perth, and he chose three examples to make his point; he said he could have produced 33. The other 30 would have had to have a better base than the three he chose, if he does not mind me saying so. He spoke, first, about the derelict sugar beet factory on his way through St. Andrew's, and he suggested that was because Scotland had had a raw deal. But during that period the sugar beets were being restricted in England too. I had the unenviable task of having to negotiate, through the other place, the Commonwealth Sugar Agreement, whereby as a nation we were committed to a certain quota of sugar from the sugar producing parts of the world. Everybody wanted to do it. But as a result of honouring the obligation we entered into with the Commonwealth sugar producers we had to restrict our sugar beet production, and all producers had to suffer.
The reason I take issue with the noble Earl is that he was suggesting that vis-é-vis the Scotland Bill some way ought to be found which would exclude Scotland from the problems of the United Kingdom policy on Commonwealth sugar. If they had been the only ones who had suffered, his example would have had point, but in implementing a policy which was considered the right one overall, in the interests of our general United Kingdom and Commonwealth policy, both sides of the Border had to make their contribution.
Lord MACKIE of BENSHIE: I do not want to prolong this debate, but there is a slight difference. When you talk about a 100 per cent. cut of all the sugar beet production in Scotland as against a cut of a few per cent. in England, it is an entirely different matter.
Lord HARMAR-NICHOLLS: I know the noble Lord, Lord Mackie, does not want to extend the debate; indeed he accepted this Bill so completely that he would have liked no debate at all; he would have liked it on the Statute Book
216
as it was printed, and we see, from the compliments paid to it, what a mistake that would have been. But dealing with the very sound evidence which the noble Earl, Lord Perth, was producing, if it could not be questioned, then it ought to be taken into account. What I am saying —and sugar beet is only one example—is that they had to suffer, if suffer is the word, no more than the English sugar beet factories had to suffer.
Lord HUGHES: If I may intervene, the noble Lord is ignoring the point made by the noble Lord, Lord Mackie of Benshie, that in England sugar beet was reduced, in Scotland it was eliminated.
Lord HARMAR-NICHOLLS: But the point I am trying to make is that, if you give power to the Sugar Beet Corporation —or indeed to the development organisation we are considering setting up now—you give them instructions to deal with it economically and on sound economic grounds. You do not say, "You can do it and make it part of a social service". In eliminating whichever ones they did eliminate, whether in Scotland or in England, they were eliminating the ones which kept them within the bounds of their remit. When that happens both sides are bound to suffer. I am not at all deviating from the sorrow expressed by the noble Earl, Lord Perth, but I am saying that he is giving the impression that when this Bill has passed such things as sugar beet legislation will exclude the pain from Scotland. That cannot be done. That would cause unnecessary dissatisfaction when it was discovered, and there you would get the conflict that some of us have tried to warn your Lordships against. Could I take the second example?
The Earl of PERTH: I should like to deal with the first example, because the noble Lord really does not take the point, although it is made by Lord Mackie and Lord Hughes. The fact of the matter was that the quota was taken away from Scotland and added to the British factories.
Lord HARMAR-NICHOLLS: But the noble Earl will not take my point. I do not deny that in proportion it could be that Scotland gave up a greater amount than pro rata England did.
The Earl of PERTH: They were giving up the whole amount, entirely.
Lord HARMAR-NICHOLLS: But if the noble Earl will try to take my point, in order to make a decision which is uneconomic the noble Earl is asking that legislation should be brought in which will allow, under the guise of it being industrial help, a social service contribution to be given, in this case to Scotland. I should like them to have it. I am merely saying that if, against the economic argument, because it happens to be the major part of the Scottish sugar beet, or indeed the whole of it, you are asking them to make an uneconomic decision, you will not sell that to the English. That was the point made by my noble friend Lady Ward. She said, "I do not mind you being fair on economic grounds, but if you do it on social service grounds I shall want it for my part, too".
It is exactly the same with forestry, of which the noble Earl gave us an example. It was not only Scottish forestry that suffered from the stupid decision the Labour Government made; it was the whole United Kingdom, everybody had to suffer. If the noble Earl is suggesting that under this Bill in some magical way we shall be able to answer the problem for Scotland without creating the conflict that my noble friend Lady Ward spoke about, then I believe he is approaching this the wrong way. The whole of my arguments are not to put Scotland in a strait-jacket, as was suggested by the noble Earl and by the noble Lord, Lord Mackie. I am arguing that in toto this Bill is no good for Scotland. This Bill, as is written, will be dangerous for Scotland. This Bill, as it has been presented to us, will create the conflict that ought not to exist. That is the whole point.
I hope the noble Earl, if he is not prepared to pay heed to the evidence we give, because sometimes some of us talk too much, will pay heed to the evidence he got from the noble Lord, Lord Vaizey, on his own side of the House, who comes here with the reputation of being something of an economist who ought to be listened to. If being on different sides of the House weakens our arguments, I hope that argument will be taken into account. Through the mouth of an economist, whose standing is very high indeed, were
218
presented the precise arguments my noble friend Lady Ward and indeed the noble Lord, Lord Wigg, are trying to present. It is not strait-jacketing Scotland; it is not being anti-Scottish. This Bill will not work. I hope, as regards this particular clause, the noble Lord has had enough evidence from all parts of the House that by the time we get to Report some thought will have been given to how it will eventually figure in the final Bill, if indeed we are to have one.
Lord BURTON: I think one of the most relevant points was made by the noble Lord, Lord Shinwell, that this clause and the Schedules confuse him. He was referred to Schedule 10, but I can find no mention of the Scottish Development Agency, nor the Highlands and Islands Development Board, in Part I of Schedule 10. If you go to Part III, there is specific exclusion of the Highlands and Islands Development (Scotland) Acts 1965 and 1968, which were the Acts setting up the Board. In another place, there was an Amendment seeking to insert a new group, to include industrial promotion, in Part I of Schedule 10. So it appears that there was confusion there as well.
My noble friend Lord Campbell of Croy has emphasised the difficulty. My noble friend Lord Drumalbyn appears to have mastered the Government's intentions, but I think he most undoubtedly found them very faulty. The noble Lord, Lord Kirkhill, has battled to clarify the matter. Even if he was not previously aware of the fact, he must now fully realise how complicated is the drafting of this Bill. Surely the Government must take a long and searching look at these important matters and come back to us on Report with some major Amendments.
4.51 p.m.
Lord GLENKINGLAS: I wish to mention only one or two matters. I do not think that this is the right moment to discuss the whole of the distribution of industry, although I have had a good deal to do with it. I beg my noble friends Lord Harmar-Nicholls and Lady Ward to remember that it is absolutely impossible in political terms ever to do more justice to the more difficult parts of the country if one goes on the principle of the law of equal misery or absolute fairness, or whatever other name we like to

219
give it. The fact of the matter is that over a very large number of years the economy has become overheated almost entirely as a result of the pressure of employment in the South-East. When that happens, more and more labour is sucked down and more and more problems arise on Tyneside and in Scotland.
Having promised that I would not go into those matters in depth, I would say just this. If a Scottish Assembly does arrive, and if the Government are able to clear up in their minds—which they are obviously having a good deal of difficulty in doing in the clause that we are discussing —what the Assembly can and cannot do, there is only one fact of which I am absolutely certain. The Assembly will debate, and will debate very fiercely, the whole subject of the Scottish Highlands and Islands Development Board, the SDA and everything else. Nothing that the Secretary of State for Scotland says in the guidelines will stop them doing that.
The Earl of ONSLOW: There is one comment I should like to make on what the noble Earl, Lord Perth, said. He complained that a lorry carrying, say, either £1,600 worth of wheat or £20,000 worth of cigarettes, must pay 50p to cross a bridge. The Scots cannot have it both ways. They cannot complain that vehicles using bridges must pay tolls, and still then receive a greater percentage of the gross national product per head than do the English. This w ill produce an English backlash. I never want to see that. The Scots cannot have it both ways. They cannot be dog-in-the-manger on one side of the Border, expect the English to pay the bill, and not expect the English to get cross and, finally, to say: "Go away with it".
Lord WIGG: I shall not keep the Committee for more than a moment. However, I cannot let this pass. One has been charged, first of all, with wanting to put the economy into a straitjacket; and, finally, that one is tied to a gospel of equal misery. Nothing could be further from the truth. The question is one of simple arithmetic. The sum total of the parts cannot exceed the sum of the whole. It seems to me inevitably that that should be recognised as a political reality. If, therefore, as a result of this Bill, we
220
dangle in front of Scotland the idea that generating political pressure will solve economic problems—that we may give to A without taking it away from B—that seems to me not only dishonest but a recipe for utter political disaster.
I agree absolutely with the noble Lord, Lord Harmer-Nicholls. This is a political "conning" operation, not only of England. We are used to it, and to coming through it; but the Scots are not. It is a "Conning" operation as far as Scotland is concerned. The Government cannot deliver the goods, because it is impossible to deliver them. I would add something else. Lord Harmar-Nicholls said that if we gave to Scotland there would be a reaction in the noble Baroness's area. But that is not all. This is a recipe for disruption. If, in actual fact, we give to Scotland and we have to take away from the North-East, the pressures will not stop in the North-East. The North-East will want to take it from Wales; Wales will want to take it from Merseyside. So we go on.
The whole concept to which the British people have responded for the past 300 years is this. Face them with a disaster, never mind how grievous, and they have never run away from the consequences. If you like, they have muddled through. But this will set A against B, and B against Z. That is my reason—not because I want a political straitjacket, not because I am pleading for economic planning, although I happen to believe in it, not because I want to hear that we shall all be miserable together, but because the Government are putting on the Statute Book a piece of political chicanery which I am absolutely certain will not work.
4.57 p.m.
Lord KIRKHILL: I think I may say with complete confidence, and without disagreement, that this has indeed been a wide-ranging debate this afternoon. I should like to say at the outset to my noble friend Lord Vaizey that he should pay serious heed to the remarks of the noble Lord, Lord Glenkinglas, because there is little doubt that the Scottish Assembly will discuss almost anything. I think that I have made that point before now from this Dispatch Box. It should be emphasised, however, that the Scottish Assembly cannot legislate upon

221
everything. However, it will certainly discuss that which it chooses to discuss; there can be little doubt about that.
I also say to Lord Vaizey that it is worth keeping in mind that the Scottish Development Agency at the present moment does operate under a form of guidelines. Those guidelines were formulated after considerable debate in the other place, particularly when the honourable friends of noble Lords opposite made many pertinent points which the Government at the time accepted. There is that background to the discussion on the guidelines which it is as well to make clear.
As it is almost 5 o'clock I do not think that I need to particularise on every political nuance that has emerged in the past couple of hours. Certainly one point has emerged clearly. I thought that I had rather long-windedly—as I admitted at the time, but with as much clarity as I thought I could comprehend—indicated Government thinking as to the detail of the guidelines and the function of the Scottish Development Agency. I agree with the point made by many noble Lords, that in many regards this is the point of economic teeth, as it will relate to the Scottish Assembly.
I suggested earlier this afternoon that there were three broad functions for the Scottish Development Agency. I did not expand on those functions at the time. I spoke about them last week. But it is obviously correct for me yet again at least to direct your Lordships' attention to the three broad functions—but not at elaborate length. The first group is environmental and factory-building functions. This will interest the noble Lord, Lord Burton. I agree with him. It is even more confusing for me than for the noble Lord. I agree with him that it is indeed a complicated Bill. However, I would direct the noble Lord, Lord Burton, first of all to Group I. We might say that these are the environmental and factory building functions. They will be devolved both executively and legislatively. That is the crucial point for your Lordships to understand.
This is achieved by the inclusion of the matters of town and country planning, industrial sites arid improvement of derelict land contained in Group 6 in Part I of Schedule 10. It brings these
222
matters within the legislative competence of the Scottish Assembly and the powers of the Scottish Executive. Thus the Scottish Assembly, as I have said, can legislate to alter these functions in any way that it thinks fit and the Scottish Secretary will exercise the powers presently exercised by the Secretary of State in relation to the SDA's functions in this group. The Scottish Secretary will also be able to give directions to the SDA in relation to these functions.
The second group, the industrial investment functions, are not devolved by any of the groups in Part I of Schedule 10 and are not mentioned in the entry against the Scottish Development Agency Act 1975 in Part III of Schedule 10. I direct your Lordships' attention to pages 65 and 67. However, of course, they do feature in Schedule 11. Again, I fully understand the difficulty of the noble Lord, Lord Drumalbyn, and I shall give synpathetic consideration to his suggestion that I might pass across to him Notes on Clauses which might help the noble Lord to wend his way through the tortuous labyrinth of Schedule 11. I am not in any way minded to think that that is an impossible suggestion.
The Schedule transfers an executive competence only. Paragraph 7 of Group D of Schedule 11 enumerates the powers in the 1975 Act which are to be devolved to the Executive. Those include Section I which deals with the constitution and membership of the Agency. As the noble Lord, Lord Campbell of Croy, indicated earlier, it means in practice that the power to appoint all the Members will pass to a Scottish Secretary.
Among other powers in the 1975 Act to be devolved are the powers to give specific and general directions to the Agency in relation to its industrial investment functions—that is, Section 4; the powers to determine financial duties for the Agency in relation to those functions —Section 12; the power to approve certain acquisitions of share capital by the Agency—Section 14; and the powers in relation to the financing of the Agency and control of its borrowing powers in Schedule 2 to the 1975 Act so far as it relates to the industrial investment functions of the Agency. Those powers are not—and I must repeat "not"—within the legislative competence of the Assembly.
Lord VAIZEY: I should like to raise one matter because I am trying to help the Committee to understand what my noble friend is saying. If this is within the Executive power of the Scottish Assembly, am I right in saying that if one were a Member of the Assembly one could ask a question of the Secretary, but one could not propose a change? Is not that precisely what we are trying to get at? It is precisely where the feeling of impotence will affect the Members of the Assembly. On the whole, I am sympathetic and shall support the Government if there is a Division on this particular issue, but it seems to me that the Minister ought to try to explain a little further—I am sure that he will do so a little later in his speech—why there is this division between the Executive and the legislative powers.
Lord KIRKHILL: For one moment I was hoping to conclude my speech quickly from this point on. As I see it, it is a question as to where we draw the line. My view is that because there must be fairness as between all sections of the United Kingdom economy—a point which the noble Baroness, Lady Ward of North Tyneside, made much of, and I think properly so— it seems to me absolutely correct that environmental factors stand totally devolved within the legislative competence of the Assembly. The area of industrial function stands within the Executive competence of the Assembly, but not within the legislative competence of the Assembly. The noble Lord, Lord Vaizey, is correct in that interpretation. He may think that that is the wrong point at which to draw the line but I can only say that that is the line at which the Government stand at this time.
The third group stand reserved. These relate to the ability of the Secretary of State to provide selective financial assistance. Part I of Schedule 10 is explicitly omitted from devolution by the entries against the SDA Act in Part III of Schedule 10 and, of course, those matters do not appear in Schedule 11. That means that the Agency will continue to be responsible to the Secretary of State for the exercise of these powers.
The noble Lord, Lord Drumalbyn, who opened the debate on the Question, Whether the clause shall stand part? put to me a number of specific questions. As
224
I understood them, and there were several, the first question concerned the relationship between the Secretary of State for Scotland, on the one hand, and the Secretaries of State for Trade and Industry, on the other. I can certainly affirm that they will not be affected by devolution.
Lord DRUMALBYN: I was mainly asking whether the Distribution of Industry Act would continue to work no less favourably for Scotland in the future as it has in the past.
Lord KIRKHILL: Obviously, in the light of what the noble Lord has said I had misunderstood the point of his question. I think that that is a reasonable assertion which can be made from the Dispatch Box. It is certainly intended that the Act will operate in an equable manner in the future, as it has in the past.
The noble Lord, Lord Drumalbyn, asked me a specific question as regards the situation anent rent free periods. Approval will be given by the Scottish Secretary within the guidelines which will ensure, as I have been trying to emphasise this afternoon, fair play with other regions of the United Kingdom, but will be appropriate to Scottish conditions. As far as guidance to the Scottish Development Agency is concerned, the guidance really comes only from one quarter, the Scottish Secretary; and that point was also raised by the noble Lord, Lord Drumalbyn. The main concern for regional and industrial policies will remain with the Secretary of State. The guidelines will be a part of the Secretary of State's range of measures for carrying out his policies and they will relate only to the limited range of matters within the industrial economic area to be dealt with by the public bodies which are mentioned within the clause. I suggest that there is no reason to suppose that after devolution the Secretary of State will become indifferent to Scottish unemployment. In my view, it is not a political reality that he will in any way seek to impose rigid and inflexible conditions—something which he does not do at the moment. I could not foresee that as a political possibility.
The noble Lord, Lord Drumalbyn, also asked from whence will the money to finance the SDA's activities emerge. Of course, the monies will come from the Scottish Consolidated and Scottish Loans

225
Funds. The amount will be decided by the Scottish Administration. I have taken on board his suggestion that I might think about Votes on clauses as regards Schedule 11. I could point out to the noble Lord, Lord Drumalbyn, and to other noble Lords who are interested, that guidelines as far as I know, as they relate to the HIDB, can be seen. It is not a question of a closed area.
I can only say in conclusion that the Government may not have the package in Clause 38 exactly right. Does any Government ever quite achieve perfection? However, in view of all that has been said in a very useful debate, it is worth keeping in mind a point to which I frequently return—the Scottish Assembly must be as unfettered as possible to take its own mature decisions. In my view, the political realities of the Scottish scene, as they stand today, will ensure that those who are elected to the Scottish Assembly will behave in a responsible political fashion and that whoever is the Secretary of State for Scotland for the day will be a man charged with supporting the economic regeneration of that country.
The Earl of SELKIRK: I should like to ask one question before the noble Lord sits down. If he looks at Part III of Schedule 10 he will see under the Scottish Development Agency Act a long list of matters which presumably are included—that is to say they are excepted from being not included. I cannot conceive that they really are subject to amendment in the Assembly. In other words, it seems to me that these are powers which the Executive has and I do not understand why they are not in Schedule 11. I simply cannot believe that we shall have the Scottish Development Agency Act amended in little bits—paragraph by paragraph. I find that very hard to believe. Therefore, I do not know why it does not come under Schedule 11.
The noble Lord then said, in regard to the powers which are set out under paragraph 7 of Schedule 11, that the Scottish Secretary is responsible to the Secretary of State. Did I understand the noble Lord correctly? Is the Scottish Secretary not responsible to the Assembly? If what the noble Lord said is so, it reverses the whole situation. When a Scottish Secretary takes powers under, say, Section 1 of the Scottish Development Agency Act
226
is he responsible to the Secretary of State or to the Assembly? This is a fundamental matter the answer to which we must know.
Lord KIRKHILL: As to the first matter which the noble Earl has raised with me, he must read that part of Schedule 10 with Group 6 on page 48 and then consider those two with Schedule 11. I think that that reply is as helpful as I can be in a quick, off-the-cuff reply. As to the second part of his remarks, he heard me quite correctly.
Clause 38 agreed to.
Schedule 7 agreed to.
5.12 p.m.
Lord HARMAR-NICHOLLS Lord HARMAR-NICHOLLS moved Amendment No. 360:
Before Clause 39, insert the following new clause:
National Pay Policy
(". In exercising his powers, a Scottish Secretary shall be bound by such considerations of national pay policy as may be specifically brought to his attention by a Minister of the Crown.").
The noble Lord said: There is no question of pushing this new clause to a vote this evening, whatever views noble Lords may take of the argument. However, I want to pose a question, and later on, during the process of developing the Bill, we can decide what to do with it. This new clause standing in my name and that of my noble friend Lord Morris, is almost identical to Clause 40 which appeared in the original Government Bill dealing with both Scotland and Wales. The only difference between what the Government then included and what is in my new clause is that the original Bill said:
"In exercising his powers, a Scottish Secretary shall pay regard to national pay policy".
My clause, instead of merely paying regard, says that a Scottish Secretary shall be bound by national pay policy. This clause was thrown out from the original Bill without any debate, so I should be interested to hear from the noble and learned Lord, Lord McCluskey, why it was included in the first place—what were the reasons for removing it later? As I see the situation, it looks as though the original decision to include it was a very wise one.
We all know from experience over recent years that one of the touchiest problems in the economic life of this country is concerned with pay policy. Whether or not one agrees that a Government ought to have a pay policy, no one doubts that it is a very touchy subject which brings with it all sorts of disruptions if it is not considered to be right, in particular by the trade unions or by breakaway members of trade unions. If such a clause was important enough to be included in the first place, why have the Government made no attempt to restore it on this occasion? Indeed, why was the corresponding clause removed from the Wales Bill—which I presume we shall discuss eventually—without even a fight?
Naturally, I have looked into the possible reasons in order to avoid wasting your Lordships' time. It may be that the Government consider that Clause 36(1) is broad enough and strong enough to meet the case of an Assembly ignoring a national pay policy. Clause 36 says that if any action proposed to be taken might affect a reserved matter, and if the Secretary of State thinks that it is against public interest, he may direct that it is not taken. It may well be that the noble and learned Lord, Lord McCluskey, will say that in the Government's view that is a strong enough protection against the sort of problem that could arise if, on a pay policy matter, Scotland tries to do something contrary to what is happening in the rest of the United Kingdom.
I do not think that Clause 36(1) will cover that. That subsection merely seems to cover a situation where any proposed action is seen to be against an EEC decision or against an international agreement that is laid down. However, the loose wording of Clause 36(1) does not seem to cover a pay policy alone. Furthermore, it does not appear that the Schedule, which purports to spell out these matters, does that either. It does not specifically reserve all matters which would cover pay policy.
For example, education is a devolved subject. If we give the Assembly power on educational matters, we could presume that that means it has power to decide what it pays its teachers, that it has the power to decide the sort of wage rates and salaries generally in education in order
228
to meet what it considers to be its educational needs. Therefore, teachers' salaries are not specifically exempt from the devolved power. If, as a result of a pay policy in the United Kingdom as a whole, there was a restriction on teachers' salaries, what sort of a problem would we have if Scotland has the power, through its Assembly and Executive Council, not to adhere to the same pay policy as England and Wales? That is a conflict which would bring many problems. If a pay policy was the right one, the very existence of the special dispensation given to Scotland may affect the pay policy working at all. Therefore, we should like it spelled out a little more clearly in words than at the moment Clause 36(1) or (2) seem to do.
However, on broader issues, bearing in mind all that has been opened up, we see very many more problems arising. For example, if the Scottish Assembly was anxious to attract more firemen, nurses or, as I have said, teachers, and in order to do so it decided to pay them more, presumably that could infringe any pay policy that happened to be in force in the United Kingdom. However, if any conflict arose, where would the fight take place? Would such people be objecting to the Assembly not giving them the extra money, which they had satisfied the Assembly they should have; or would they be fighting Whitehall, who were directing the national pay policy and trying to stop this happening? Unless this is spelled out more clearly, we shall be building into this vital and explosive subject of a pay policy either dissatisfaction with the Assembly, which would result in conflict, or dissatisfaction with Parliament, which has kept the reserved powers concerning finance generally.
The problem here is quite enormous. It is inherent in a Bill such as this, which either gives away too much or gives away much too little. If the Assembly is not obliged to conform with national pay policy, then it will drive a coach and horses through any pay policy that may exist in the United Kingdom. If it is obliged to conform, then there is a lack of freedom of action, which will mean that you are going to have friction because the Westminster Parliament will be denying the Assembly things which it thinks it ought to have.
What do the Government think about it all? Is the truth—and it looks this way

229
unless the noble and learned Lord can dispel it—that the Government want Scotland to conform to a pay policy (I imagine they would, otherwise it would wreck it) or that they will ignore answering the question I am now putting because there is not an answer? That is the question that applies to so many clauses in this Bill.
As regards this matter, they have put the clause in and taken it out; and it looks as though they cannot make up their mind as to the answer because they do not know the answer. I do not believe that a Bill should be presented when there is that sort of conflict. On the face of it, it would seem that a national pay policy would not be affected in a Bill which is as detailed as this one. But if you have given a loophole whereby one part of the United Kingdom will be able to break away from a national policy laid down by a Westminster Government, or force the Westminster Government into a position where they have to appear to go against the elected Assembly representing Scotland there again we have the conflict.
Having got that on the record, which is merely a repeat of what one has said so often up to now, the question I am really putting to the noble and learned Lord is, why have the Government not tried to restore this clause when they put it in in the first place? What are their reasons for thinking that it was a good thing to remove it, and to rely upon what I think is a very weak Clause 36(1) and (2), and to say that the point is covered thereby? I beg to move.
5.22 p.m.
Lord BROWN: May I make a short comment on the form of argument which the noble Lord, Lord Harmar-Nicholls, has used, and which, indeed, has frequently been used in the earlier debate on the Question, That Clause 38 stand part? Really, what people are tending to say is that devolution is not possible.
Lord HARMAR-NICHOLLS: Yes.
Lord BROWN: This means that no federal state can exist appropriately anywhere in the world. This is what people are saying; that you cannot devolve. That is a piece of nonsense.
Lord HARMAR-NICHOLLS: May I answer that?
Lord BROWN: No, let me make my point. The noble Lord can rise in a moment. What he is saying is that relations between this country and the EEC are nonsense, because there are overriding rules which we in this country have to observe. The authority of this country is now exercised within guidelines, or directives, and other legislative instruments agreed by the EEC, in the same way as the Scottish Assembly will exercise a certain authority within the policies, legislation, guidelines, call them what you like, set up by the United Kingdom Parliament.
We all know that these are difficult matters, and to set out all the fine points as to where decisions shall be made and where they shall not is excessively difficult. But devolution is something that we are going to have to face in this country. Ours happens to be the largest population in the world today which is centrally governed. Perhaps noble Lords have not appreciated that point. France comes next, but of course France has a great deal of devolution through its Executive that we have not got. Germany is federal; Canada is federal; the United States is federal; Australia is federal; Italy has gone federal. We cannot carry on with a growing population with all authority and power being exercised from the centre. We have to work out how to devolve authority. The arguments being used are intended to show that it is impossible. Well, it is not impossible. It has been done elsewhere, aid it will have to be done in this country.
Viscount MASSEREENE and FERRARD: Scottish devolution is not creating a federal state; it is something quite different.
Lord HARMAR-NICHOLLS: If the noble Lord's remarks were addressed to what I have said, may I say that I have not said, and none of my noble friends has said, that devolution is not possible? What I am saying is that if devolution is possible this Bill is not the way to devolve. What we are saying is that, even if devolution is possible—and it may well be for the reason that the noble Lord gave—this particular Bill is not the way to do it,

231
because it carries with it more conflict than it brings about settlement, whether the result be federation or otherwise.
I do not think that our arguments ought to be presented on the basis that one is a dog in the manger wanting to kill the whole of the Bill. What we said on Second Reading (and it is a principle on which I still stand) is that much more thought must be given to it; there must be a meeting of all the Parties. That is what my right honourable friend in another place, Mr. Francis Pym, undertook to do; to call all the interested people together in order to give more thought to the sort of Bill which will be presented and which might be able to make a devolved Parliament possible.
This is not such a Bill, and I do not think that the criticisms of this Bill ought to be lost behind a smoke-screen of suggestions that we are saying that on no account can there ever be any sort of devolution of authority, or even a step towards federation. This is the Bill that we are discussing. This is what is in front of us, and this is what ought to be put into the dustbin, although, for the purpose of getting it to an end, we are suggesting improvements that might possibly be made in order to make it slightly less dangerous than it is in its present state.
5.25 p.m.
Lord VAIZEY: I happen not to support Lord Harmar-Nicholls's Amendment, but I think I follow the gist of his argument. May I say with respect to my noble friend Lord Brown that I think he has got it wrong. The fact that a man of Lord Brown's great intelligence and experience has got it wrong suggests that other Scottish people may get it wrong. First of all, this is not the largest unitary state in the world. There is China, and there is the Russian Soviet Republic inside the USSR, both of which are much bigger than the United Kingdom.
Secondly, the result of this Bill is not federalism. That is the whole point. If it were federalism then of course it would be perfectly easy to conceive of a way in which a Bill could be devised to make the division clear. The Government have got a Bill which is as complex
232
as this precisely because this is not federalism. If I may interpolate, I think I mentioned in the debate on Clause 38 stand part that I thought Clause 40 was also crucial, but I meant to say Clause 44, which is certainly the one which is very important.
The question to which Lord Harmar-Nicholls has addressed the minds of the Committee is where the line is drawn. I absolutely agreed with Lord Harmar-Nicholls; I thought all the instances which the noble Earl, Lord Perth, drew to the attention of the Committee made his own case far worse. It is certainly true that the United Kingdom has spent more per head on the Scots than it has on the English. Therefore, if they are going for Home Rule, they have to go for Home Rule on their own resources and they will be a jolly sight worse off than they are now if that is the line they want to follow. The argument for Home Rule has largely been—and I have read most of the literature on this which has been put before the Scottish people and most of the arguments—on the grounds of the economic powers that are to be devolved to Edinburgh. It is quite clear that the economic powers are not going to be devolved to Edinburgh.
What worries me is that so much of the argument in the Assembly will be about economic power. This is why I was alarmed early on in the Bill when the noble Lord on the Front Bench conceded so much of the right of the Assembly to debate what it liked. I am assured by my Scottish friends that you cannot stop Scottish people discussing anything. At the parochial church council they will get up and talk about this, that and the other. But the alarming thing is that, in what is a legislative Assembly which will inevitably become called a Parliament, they will be discussing matters over which they have no authority whatsoever.
The Government have drawn the line very carefully, and on the whole I agree absolutely with their choice of where to draw the line. It has been done extremely skilfully. But they have left this residual situation in which the Assembly can argue but it cannot legislate. This is a recipe for a great dissatisfaction. There is a feeling of impotence and alarm which, in periods of economic difficulty, will cause a strain between Scotland and the rest of

233
the United Kingdom. If this became a model for the other devolution Bills which I agree with the noble Lord, Lord Brown, will follow—at least we hope they will follow, for example, for various areas of England—then it is alarming. I am sorry to delay the Committee by discussing this, but these are the crucial economic clauses and it is worth while the Committee taking a little time to think whether or not, after calm consideration, it agrees with the Government. On the whole, I agree with the Government—I am persuaded by their argument and I agree that the Bill has been carefully and skilfully drawn—but I echo the warning of the noble Lord, Lord Harmar-Nicholls, that it is in this area that difficulties will arise.
Lord MORRIS: I was delighted to see the noble Lords, Lord Brown and Lord Vaizey, taking part in this debate. That there are now four Back-Bench Socialist noble Lords contributing in Committee to Conservative Amendments to the Scotland Bill shows clearly the immense enthusiasm noble Lords opposite have for the Bill and how well they support their lonely colleagues on the Front Bench.
I speak to support the Amendment which stands in the name of my noble friend Lord Harmar-Nicholls and myself. It was patent that it was the Government's original intention that Scotland should be bound to head a national pay policy, presumably because the Government then, as now, are of the opinion that the United Kingdom is one nation. It is clear to me that without this clause the Scottish Assembly could blandly ignore consideration of national pay policies in devolved matters. The resentment that would be caused if the Scottish Executive could settle an industrial dispute in terms more favourable than for those affected in England, Wales and Northern Ireland would be considerable and would prove to be yet another wedge driven between Edinburgh and Westminster; more division, more resentment and more acrimony.
In the absence of this clause, the Government might consider that they could rely on the provisions of Clause 36(1) and (2), as mentioned by Lord Harmar-Nicholls, which empower the Secretary of State to intervene if the Assembly resolves some-
234
thing to the national detriment. Imagine, should Westminster act ex post facto, the outcry from those celebrating a wage award in excess of the national guidelines. Like Lord Harmar-Nicholls, I ask the Minister why the Government have failed to restore this clause and have also taken the corresponding clause out of the Wales Bill, again without debate. Without this clause, the Bill would patently be divisive and I beg the Minister to consider the matter with care and precision.
The Earl of ONSLOW: I totally agree with what my noble friends Lord Harmar—Nicholls and Lord Morris said about the necessity for this clause or something like it to be put in the Bill, but now, like Cassandra, one must utter another word of warning. It gives the Scottish Assembly a chance to say, "The Scottish economy is doing all right because we have all this oil"—which is what the Scottish Nationalists have been talking about; that it is Scottish oil and they have it all—"We cannot settle this industrial dispute. We know you have a very good case, but it is the chaps in Westminster who are stopping us" That is an argument against it, or it goes to underline yet again the dissension, quarrelling and unhappiness that this particular form of devolution will produce. We are either giving too much or we are not giving enough.
5.34 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): I hope the Committee will forgive me if I do not follow the example of my seniors and make a Second Reading speech but, rather, address myself to the matters about which I have been asked by the noble Lord, Lord Harmar-Nicholls. When the Scotland Bill first appeared, it contained the clause in approximately the words he quoted—I do not think he was pretending to accuracy—but the words were "to have regard". That derived from paragraph 161 of the original White Paper of November 1975, where such a clause was foreshadowed, but of course it was never intended—and the original Bill did not contain a provision to carry out any such intention—that the Secretary of State or Westminster should be able to direct the Scottish Secretary to conform. The new clause moved by

235
Lord Harmar-Nicholls is really a world away from that original clause. It has this advantage, however, that it makes the fundamental point here that either you have a statutory policy or you have one which rests on consent. I think that that is the fundamental difference, and the rewording of the clause by Lord Harmar-Nicholls makes that point clear.
I will look briefly at the history of this matter. The clause appeared in the Bill in the words I have indicated. It was defeated by 161 votes to 160 in Committee in another place—the circumstances of that are not such that I should go into them deeply—and the Government took the view that the clause, while desirable as an indication to the Scottish Secretaries about how they might exercise their powers, was not essential. Indeed, it was not couched in words which would enable Westminster to direct the Scottish Secretaries to do this or not to do that. Accordingly, on the view that it was not essential and on the view that the other place in Committee had decided by a majority that the clause should not be restored, the Government accepted that position. Indeed, that was the position in relation to the Wales Bill as well; it was decided that the Wales Bill should not be different from the Scotland Bill in that regard.
Lord Harmar-Nicholls referred in his remarks to Clause 36 but I think he really had in mind Clause 36(1) rather than Clause 36(2), and the wording of that makes it clear:
"If it appears to the Secretary of State … that any action proposed to be taken by or on behalf of a Scottish Secretary would or might affect a reserved matter"
—then he can step in and stop that action. Pay policy is not a devolved matter and, because of the structure of the Bill, those matters which are not devolved are reserved, and of course within the context of these clauses, particularly Clause 36, there is some definition of what is meant by "reserved matter" for the purposes of the exercise of these override powers. Thus, if the conditions which require to be fulfilled in. Clause 36 were met, then the Secretary of State could step in and use the powers which that clause confers on him.
If there is to be a statutory policy in relation to incomes—and neither of the
236
major Parties espouses such a policy—that would have to be brought in by Westminster; it would not be brought in in this form and apply only to Scotland. I should make it clear that Lord Harmar-Nicholls was quite right in saying that the Scottish Secretary has responsibilities in relation to pay, and he gave an example about education. He is right of course that the Scottish Secretary has control over teachers' pay and, accordingly, it is at least possible that teachers' pay may come to differ in Scotland from teachers' pay in England. In fact, it does so at the present time without causing any great harm.
Lord VAIZEY: It differs because the structure of the teaching force in Scotland differs from the teaching force in England and Wales. Nevertheless, we are all subject to the guidelines laid down by the Government and of course they may at any time become statutory should the economic situation deteriorate. With respect to the Minister, I think he is being a little reckless in saying this could not cause difficulties because if the economic powers remain with Westminster, views with respect to wages are bound to be the responsibility of Westminster. If so and if a settlement is reached in Scotland and then has to be overridden, the precise difficulties which have been drawn to the attention of the Committee will arise, and that is a serious problem about which the Government should think more.
Lord McCLUSKEY: I hope I was not reckless. I was merely confirming that powers existed under Clause 36; I had not yet come to the possibility that they might be exercised. In relation to the general matter, as I said, both the major Parties have rejected any statutory approach to pay policy and the present Government have accepted a pay policy which rests on consent, and I think the Committee would agree that that policy has been seen to be successful since 1975.
When one compares the failure of a statutory policy with the success of a voluntary policy, one sees that it is perhaps an object lesson in how these matters work. If there was to be pay restraint on some future occasion, and pressure had to be brought upon Scottish Secretaries to follow the same lines as were being followed elsewhere, that,

237
again, would have to rest upon their consent. In my submission, there is no good reason to suppose that the Scottish Executive, as an elected body open to the scrutiny of public opinion in Scotland, and to the scrutiny of the Scottish electorate, would act to ignore such a basis of consent.
Apart from that, a great many people in Scotland—certainly the majority, one would have thought—will, after devolution, still look to have their pay and conditions of employment determined by agreement nationally in both the public and private sectors. I would also remind the Committee that on a previous occasion when we looked at, I think, Clause 22, we saw, in relation to that clause and Schedule 4, that the second column of Schedule 4 includes a number of entries relating to where the consent of a Minister is required for terms and conditions of service; for example, in regard to the National Health Service.
Clause 62 makes officers and servants of Scottish Secretaries civil servants in the ordinary way, and their terms and conditions will continue to be agreed nationally. Local authority employees will remain in the employment of their authorities. At the present time the Government have no statutory control over the pay policy of local authorities, but the pay policy has been observed by local authorities—not all of them of the same political persuasion as the Government. One has no reason to suppose that that would be any different under a Scottish Assembly.
I invite your Lordships to look at the terms of the Amendment. I know that the noble Lord is not proposing that the Amendment be included in the Bill. But to return to a point I made earlier, if your Lordships look at the terms of the Amendment you will see that they throw into relief the point that either there is a voluntary policy or a statutory policy. There cannot be a statutory policy which applies only to Scotland. Accordingly, the policy must rest upon the basis of consent. That is what the Bill allows for, and in my submission the Bill should stand as it is.
5.43 p.m.
Lord HARMAR-NICHOLLS: I wish to take up one point arising from what the noble and learned Lord has said.
238
One has to concede at once that if there is never a statutory wages policy, the protection that I want to include would not need to be used. But that is rather like saying that because one has not had a fire so far, there is no need to have insurance. In the past all Parties have tried a statutory policy, and who is to say that such a policy will not return at some time in the future? I am not in favour of it, as I understand the general economic thinking at the moment, but since this is a possibility which may arise, I do not see that we ought to do other than try to protect ourselves against any ill-effects which may arise from it if it occurs.
With regard to the matter in question being turned down in another place, I think that the impression which the noble and learned Lord gave was perhaps not completely accurate. The proposal was lost by one vote. It did net involve turning down the necessity for a clause such as this. It was a question of whether the phrase should be "pay regard", or "be bound by". Some of my honourable friends who think as I do wanted the phrase that I have here—" shall be bound by"—as the Amendment showed. I think that their proposal came under the guillotine, like others, and it was turned down on the narrow issue of whether—am I wrong on that? Does the noble and learned Lord wish to intervene?
Lord McCLUSKEY: With respect, I should correct the noble Lord. First, when I spoke earlier, I gave the actual figures. The voting was 161 to 160, from which one might readily deduce that the majority was one. Secondly, the Amendments to which the noble Lord refers, put down by his honourable friends, were not in fact reached, and the clause was defeated on clause stand part.
Lord HARMAR-NICHOLLS: But it was the old story; it was not debated as a separate item—not to the extent that we are doing it today. Having listened to the explanation of the noble and learned Lord, I hope that he will give some thought to whether Clause 36(l) and (2) really do give the powers for the provision to cover the whole of the United Kingdom without causing conflict. I thought that the point made by the noble Lard, Lord

239
Vaizey, was very sound, and it ought to be taken into account by Report stage, or even later.
Lord McCLUSKEY: Before the noble Lord withdraws the Amendment, I should like to try to make clear a point which obviously I have not got across. If in fact a statutory incomes policy were to be introduced in circumstances which we do not foresee, and he does not foresee, (though we must allow for the possibility) that would be in a non-devolved area. The Statute which introduced such a statutory wages policy would contain provisions which would make that policy bite both in Scotland and in relation to the employees of bodies for whom the Scottish Secretary was responsible. So there is no difficulty about that. One does not have to provide in this Bill that if a United Kingdom Statute on pay policy is passed, it shall be binding upon a Scottish Secretary. That is not necessary.
Lord HARMAR-NICHOLLS: I take the noble and learned Lord's view on that, but as I read them, neither Schedule 10 nor Clause 36 (1) and (2), give the complete clearance which he has suggested. Complete clearance is given on European and international matters, but I do not think that the complete clearance that he has suggested is given on home policies, such as a statutory incomes policy, which does not affect either the European Community or international affairs. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 39 [Minister's consent to terms and conditions of service of certain persons]:
On Question, Whether Clause 39 shall stand part of the Bill?
5.46 p.m.
The Earl of SELKIRK: I should like to draw attention to the use in this clause of the phrase "a Minister of the Crown". The clause says that:
"A Minister of the Crown may from time to time by notice given to a Scottish Secretary …".
As I read this, when a Minister of the Crown gives notice to a Scottish Secretary
240
that action is complete. There is no qualification of any kind. From that moment the Scottish Secretary is entitled to act as if this were an authoritative notice.
The position of a Minister of the Crown is extremely vague. All the noble Lords and noble Baronesses on the Front Bench opposite are Ministers of the Crown. If your Lordships look at the Ministerial and other Salaries Act 1975, you will see that the Prime Minister has authority to create —I think I am right in saying—171 Ministers of the Crown. They are the chaps who form the Government, to put it in the bluntest language. In this case one is referring to the Secretary of State for Health and Social Security; here Mr. Ennals is the man concerned. This provision is complete in itself, and if a Scottish Secretary receives a notice from any Minister of the Crown that would be adequate authority for him to act.
Secondly, I do not think that the use of this term in a Whitehall context would cause any bother. I say this because all the Whitehall Departments are very jealous of their frontiers, and if anyone stepped over a departmental frontier immediately there would be a row. Therefore, I do not think that using this phrase in a Whitehall context would matter. In this case, however, the matter does not relate to Whitehall, but to an Assembly in Edinburgh. Therefore, it would be quite possible for an error to arise as to whether the person giving the notice had in fact proper authority to do so.
Finally, I should like to say that this is by way of being a constitutional document. Can the Government not make it as simple and as straightforward as possible? The use of the term "Minister of the Crown" in this context is pure "Whitehallese". It is a term which is understood in Whitehall, but would not be understood in an Assembly elsewhere. I do not ask for an answer on this point at the moment as it will arise on another occasion, but in this clause the vagueness of the term is particularly obvious, and so I venture to draw it to the attention of the Government. But I do not press the matter at all or ask for an answer.
Clause 39 agreed to.
Schedule 8 [Terms and Conditions of Service—Descriptions of Persons Referred to in Section 39]:
The DEPUTY CHAIRMAN of COMMITTEES (Lord Jacques): I have to point out to the Committee that if Amendment No. 361 is agreed to, I cannot call Amendment No. 153.
5.50 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 361:
Page 47, line 5, leave out ("Medical or dental practitioners").
The noble Lord said: In moving this Amendment I think the one which has just been referred to, No. 153, in the name of my noble friend Lord Selkirk, might be discussed at the same time. The clause we have just been discussing, Clause No. 39, and Schedule 8 go together. One effect is that within the categories of person described in Schedule 8—and they are all connected with health or hospitals—the Assembly and its Executive can be given a free hand to decide on the salaries, pay and conditions of service without needing the consent of the Secretary of State for Scotland or another central Government Minister. After what my noble friend has just been saying about the ambiguity of the term "Minister of the Crown" I shall not describe the authority as more than that.
My Amendment seeks to delete medical and dental practitioners from this effect, that is to say, medical and dental practitioners working under contract with the health authorities in Scotland. At this stage we are not dealing with that part of the Bill to devolve some of the health services to the Scottish Executive and the Assembly—we come to that later in Schedule 10. This debate is limited to responsibility for pay and conditions of service. My reason for raising this question—and I am sure that the Government are aware of this—is that the representatives of the doctors, surgeons and dentists in the United Kingdom as a whole are very worried about these matters being determined separately in Scotland and South of the Border. They believe that it would be unsettling if salaries and conditions of service became different in Scotland from those South of the Border and no doubt, depending in which direction the difference was, it might be considered by the practitioners on one side of the Border that the
242
result was unfair. Whether the salaries and conditions appear to be better or worse in Scotland it could lead to doctors, surgeons and dentists being attracted to move South or North.
The British Medical Association as a whole would prefer the remuneration and conditions of service to continue to be settled on a United Kingdom basis through the review body, and the BMA Scottish office in Edinburgh are firmly of this view and are opposed to including medical and dental practitioners as proposed in the Bill. They are not concerned with the political arguments about devolution or constitutional matters which we have spent so much time discussing in Committee. Their comments are directed only towards keeping what they think are sensible working arrangements for their professions, and in this way efficient health services and the best possible medical care for patients and for the country. I am satisfied that the BMA are not concerned with the actual question of devolution, whether it is a good or a bad thing and how it should be done. All they are concerned with on this point is that medical care and the professions will suffer if it is not a reserved subject.
I would just remind your Lordships that the review body was set up after the report in 1960 of the Royal Commission the Pay of the Medical Professions, and as a result the machinery has worked smoothly. On the dental side, the Dental Rates Study Group which was set up fixes a scale of fees every year in accordance with the recommendations of the review body. The professions cannot see any advantage in devolving this. They cannot see any advantage to the Scottish Executive or the Assembly, which will have quite enough to do in other directions, and all they see is the danger of differences arising which could be prejudicial to their professions. Therefore, I move this Amendment and hope that the Government will agree to it.
Baroness ELLIOT of HARWOOD: I should like to support this Amendment because when local government committees advertise for any of the medical professions they get responses from different parts of the United Kingdom, not necessarily just Scotland, and the qualifications which are asked for are identical. There is no question of getting anybody less well trained if they are taken from

243
another part of the United Kingdom rather than Scotland. It would be a great mistake if this matter, which is so obviously a United Kingdom matter, were devolved. I agree with the noble Lord that it is nothing to do with anything political; it is wholly practical. These are standards set up on a United Kingdom basis, and those who have got the qualifications according to those standards might come from any part of the United Kingdom. They should be free to go to any part of the United Kingdom, if they want to, when a health authority wants to engage a doctor or a dentist. I hope very much that the Government will see the wisdom of this Amendment and will accept it.
5.57 p.m.
Lord COLWYN: I also should like to support the Amendment moved by the noble Lord, Lord Campbell of Croy. Health matters must be considered from the professional rather than the political point of view. The Scotland Bill must be tailored to the day-to-day running of the National Health Service. If this Amendment is not accepted I envisage the setting up of a separate health committee from the Scottish Assembly which would be yet another tier of administration in a service that is already over-administered. At present Scotland is effectively devolved, with a Health Act and a Scottish Home Health Department which is responsible for administration and for its own financial allocation.
The reasons for supporting the Amendment moved by the noble Lord, Lord Campbell of Croy, stem, as he said, from the acceptance of the Royal Commission's report in 1960. As a result, the review body was set up on a United Kingdom basis, and its recommendations refer to all practitioners in the United Kingdom, whichever country they practice in. Following acceptance of this review body the Dental Rates Study Group was set up. It fixes fees on an annual basis for the ensuing year. Apart from difficulties in 1976 and this year, due to the financil problems, the system works well and my colleagues and I wish it to continue, and that is also the view in Scotland.
I feel that in a devolved situation it would be wrong that the Scottish Secretary
244
might be able to act on terms of service without the consent of a Minister of the Crown. As a result the terms might be different in Scotland from those in other parts of the United Kingdom, although the review body may have made recommendations and the Dental Rates Study Group already set a scale for people providing the same service in different parts of the country.
I also suspect that the block grant to Scotland from Westminster may be restricted when compared with its present size. It also may be further reduced by a Scottish Assembly giving a smaller amount to the Scottish National Health Service. I notice that the control of drugs is not to be devolved, nor is the university staff who effectively man the greater part of the Scottish National Health Service. For this reason, I would ask the Government to leave matters as they stand at the moment.
Viscount THURSO: I am afraid I take a view totally opposite to that of the noble Lord, Lord Campbell of Croy. It is perfectly possible, by legislation, to make everybody's salary scale the same, but it is totally impossible to make all their conditions the same. The thing is that in Scotland there has always been a tradition of a different system in particular for the different conditions in the Highlands and Islands; and in many other parts of Scotland, too, the conditions are totally different from those in other parts of the United Kingdom. It is only sensible, if we consider it sensible for Scotland to have an Assembly and to control its own domestic affairs in relation to the other things that affect people in their daily lives, for it also to be able to control matters which are important to their health. It should be able to offer doctors conditions of employment that will suit the conditions in which the doctors will have to work, and, indeed, suit the diseases and conditions of the sort with which the doctors and dentists will have to compete.
It is a well-known fact that dental caries, for instance, has a totally different impact in Scotland from the way in which it impinges upon the population of other parts of the United Kingdom. That might be blamed on eating too many sweets or it might be blamed on the Scottish high tea, but fact is that the incidence is

245
different, and it may well be that the needs of the service are different in this connection. It may be due to the soft water that forms the public water supply in Glasgow. This may also be why there is a different incidence of heart disease in Scotland, and so on.
One could go on for ever talking about these things, but the fact is that there are differences. These differences have to be overcome, and, in overcoming them, it is only sensible that the people who live within the area and who have close knowledge of the local conditions should be those who make the arrangements that provide the conditions under which the doctors and the dentists will serve. Therefore, I take a view totally opposite to that taken in the Amendment here proposed.
Lord HOME of the HIRSEL: I could give a very easy answer to the noble Viscount, Lord Thurso, about soft water and how to change that for the benefit of people's health; but of course there can be a case for small differences as between the Highlands of Scotland and, let us say, the South of England. I do not think anybody would argue about that; but I am quite sure that the doctors and the dental profession are right to be worried about the possibility of a marked difference between the salaries and conditions of the services as between England and Scotland as a whole. That could really create some very unfortunate distortions; and I think the consumers—the patients—ought to be anxious, too. The case is so plain that I have no more to add, but I hope the Government will consider the Amendment moved by my noble friend.
Lord FLETCHER: I am not particularly interested in the merits or otherwise of this Amendment, and I rise merely for the purpose of drawing attention to a matter which I ought perhaps to have raised during the previous debate, and it is this. Schedule 8, an Amendment to which we are considering, is, as I understand it, governed by Clause 39 of the Bill, and the Bill provides, as we heard just now, that a Minister of the Crown may give notice to the Scottish Secretary. We have had some discussion as to what is meant by a Minister of the Crown, and in that context, I rise merely to observe that, if your Lordships will look at
246
Clause 77, where there is an attempt to define "Minister of the Crown", your Lordships will see that it provides that,
"Minister of the Crown' includes the Treasury".
That seems to me a very odd provision to make in a constitutional Bill of this importance, and I want to give notice that I hope that, when we come to consider Clause 77 of the Bill, we shall have some explanation from the Government as to why the Treasury is, for the first time, as I understand it, elevated to the position of a Minister of the Crown.
Lord PLATT: I really was not going to join in the discussion, but as one of the few medical men at present in the Committee perhaps I ought to say something. I think the case has been so admirably put by the noble Lord, Lord Campbell of Croy, and other speakers that I hope the Government will be willing to accept this Amendment, which seems to me such a very sensible one.
As to the noble Viscount, Lord Thurso, and his objections to the Amendment, with respect, I do not think that they hold water, or that Scotland's water comes into it. You see, you could devolve the coal mining districts of Yorkshire, could you not, because the conditions under which doctors work there are considerably different from those in, for instance, Bournemouth. The Review Body has been set up to take all these things into account, and if there should be some particular reason why, for instance, it is almost impossible to attract doctors to some part of Scotland, England or Wales, and if the review body, in its wisdom, felt that some special reward should be offered to people prepared to serve in those districts, it could recommend it and the Government could accept it. Unless as I say, we are going to devolve every district and county in Britain, I see no force in the argument.
Lord BALERNO: I wish most strongly to support my noble friend Lord Campbell of Croy, and I should like to draw your Lordships' attention to the fact that it is very strongly felt among the medical and dental practitioners in Scotland that they should not, as the Bill at present suggests, be separated out into a different service. I have one other point to make, and I am not going to go over the arguments which have been made, which are

247
already convincing. The one other point is that the universities are not being devolved, and the medical profession in Scotland looks towards the universities where it has been trained, it goes back to them for guidance and it is virtually part of the corpus of the universities. Therefore, if the universities and the medical schools are not devolved, neither should the doctors or the dentists be devolved.
6.8 p.m.
Baroness STEDMAN: May I say at the outset that we are aware of the concern of the BMA; we are aware, as the noble Lord, Lord Colwyn, has reminded us today, of the concern of the dentists about this particular provision; and we share the concern of the mover of this Amendment, Lord Campbell of Croy, to retain some similarity in terms and conditions of service for the medical professions throughout the whole of the United Kingdom. We wish to do nothing which will weaken the unity of the professions or discourage mobility within them. It is the consent provision in Schedule 4 which we have to look at, and that should be viewed for what it is: the maintenance of a control by the Government of terms and conditions of service in Scotland as in the rest of the United Kingdom, to be exercised in the interests of the health professions throughout the United Kingdom.
However, some flexibility could prove desirable; for example, over matters which do not directly affect pay (that is, different aspects of conditions of service) but which nevertheless have a relationship to the terms of service; and also to meet the special needs of health provision and to fix the pay of those small groups which are not covered by negotiated agreements—and these are more likely to be the ancillary workers than the professionals. Any waivers which are likely to be given under Clause 39 can be withdrawn or modified by notice in the light of the experience of their effect. It is not intended that the power to waive consent should lead to substantial differences North and South of the Border. There would be clear disadvantages in that for all concerned—for the Government, for the Scottish administration, for the medical professions and, not least of all, for the patients.
It is necessary now to give some inducement payments to doctors. For example,
248
they have the same terms and conditions as other general practitioners except that they are in receipt of special payments for practising in the remote areas, where it is more difficult to get doctors. My understanding is that there are about 76 practices in Scotland at the moment in receipt of such payments and also a few practices in England and Wales. I believe they are probably about 10 in total. There are also a large number of doctors who need living accommodation or surgery provision in the more remote areas and many of these premises have been provided throughout the Highlands and Islands in recent years. They are normally rented by the doctors in practice from the appropriate health board who provided the premises. At present, because most practices have now been established we not see more than a few new premises of this type being required in any year. The Review Body will still be able to continue to operate as at present, and doubtless the Scottish Executive will be associated with the discussions following the review body's recommendations. So far as Lord Colwyn's suggestion about the block grant is concerned, there is no suggestion anywhere—I have heard of no suggestion—that it should be restricted in any way. I think I can give him that assurance.
It is Clauses 20 and 21 which confer the executive power of the devolved matters on to the Scottish Executive and Clause 59 which defines the devolved matters. These matters embrace the powers to fix the pay and pensions of groups of employees in the devolved fields either by identification of existing powers or because devolution of any matter includes all aspects of that matter, including the pay and pensions of persons concerned with it. Therefore, Group 1 of Schedule 10 (Health) carries with it the ability to fix the pay and pensions and related conditions of the people employed or under contract in this field. The Government feel that there should be some curb on the ability of the Scottish Administration to deal with pay in the field of health since it is important—and we recognise this—to retain the similarity in terms and conditions of service of doctors and others throughout the whole of the United Kingdom.
We want to do nothing which will weaken the unity of the profession or act as a bar to the mobility of employment, so the consent provision should be

249
viewed as a necessary constraint to be exercised in the interests of the health professions throughout the United Kingdom. We believe this is a necessary power which we should have in the Bill but we believe also that we have the safeguards in that, if it is not being properly used, the waiver will be able to be withdrawn by the Government here.
Lord CAMPBELL of CROY: I am grateful to the other noble Lords who have taken part in this debate. My noble friend Lord Colwyn is himself a practising dentist; and I only hope that some of his patients have not suffered pain because of his arrangements to be here. The noble Lord, Lord Platt, too, spoke as a distinguished member of the medical profession. The noble Baroness, in replying, referred to other parts of the Bill that I know about; but what is worrying in subsection (3) of this clause is that there are the words
"notwithstanding anything in this Act".
That means that the consent can be given in such a way that, whatever else is in this Bill when it is passed, the question of salaries and terms of service for doctors, surgeons and dentists could be handled by the new Scottish Executive and Assembly separately from the central system which now exists.
The noble Viscount, Lord Thurso, raised a matter which I do not argue with at all; that is to say, there are different conditions for doctors working in different parts of the country. But that appears to be well looked after by the present system and taken into account. I think that there are probably more similarities between moorland and mountain areas in
Wales and Scotland than between the highlands of Scotland and its central urban areas. These differences of circumstances in which doctors and dentists practise are apparently well taken into account in the present system based upon the Review Body.
The noble Baroness said that it is the aim of the Government to try to achieve similarity still and that the review body would continue. But the fears of the medical professions are that, none the less, as drafted in this Bill, consent could be given so that their salaries and conditions of service were dealt with quite separately in Scotland. That is clearly written into the Bill. It is not just a question of undoing the work of the Royal Commission. Its report in 1960 led to the present situation, which is accepted and satisfactory. It means that the confidence in the system which has been built up around the Review Body as a result of the work of that Royal Commission would crumble. I believe, having attained this situation where there are no longer arguments of a major kind about the pay of doctors and dentists and it is working properly, that it is almost vandalism now to upset it. I feel very strongly about this, and the Government do not appear to be prepared to accept it. Therefore, I would ask my noble friends, and all Members of the Committee who agree with me, not to withdraw the Amendment.
6.16 p.m.
On Question, Whether the said Amendment (No. 361) shall be agreed to?
Their Lordships divided: Contents, 109; Not-Contents, 62.

CONTENTS

Alport, L.

Cork and Orrery, E.

Gridley, L.

Amory, V.

Craigavon, V.

Haig, E.

Auckland, L.

Craigmyle, L.

Hemphill, L.

Balerno, L.

Crawford and Balcarres, E.

Hertford, M.

Belstead, L.

Cromartie, E.

Home of the Hirsel, L.

Birdwood, L.

Cullen of Ashbourne, L.

Hylton-Foster, B.

Bradford, E.

Daventry, V.

Inglewood, L.

Bridgeman, V.

Dormer, L.

Killearn, L.

Burton, L.

Drumalbyn, L.

Kilmany, L.

Caccia, L.

Dundee, E.

Kimberley, E.

Campbell of Croy, L.

Ellenborough, L.

Kinloss, Ly.

Carr of Hadley, L.

Elles, B.

Kinnoull, E.

Carrington, L.

Elliot of Harwood, B.

Kinross, L.

Cathcart, E.

Faithfull, B.

Linlithgow, M.

Chesham, L.

Fortescue, E.

Long, V.

Clifford of Chudleigh, L.

Gisborough, L.

Lucas of Chilworth, L.

Cockfield, L.

Glenkinglas, L.

Luke, L.

Colwyn, L.

Gray, L.

Lyell, L.

McFadzean, L.

Perth, E.

Stuart of Findhorn, V.

Mancroft, L.

Platt, L.

Sudeley, L.

Margadale, L.

Rawlinson of Ewell, L.

Swansea, L.

Masham of Ilton, B.

Redesdale, L.

Swinfen, L.

Massereene and Ferrard, V.

Reigate, L.

Tenby, V.

Merrivale, L.

Rochdale, V.

Teviot, L.

Middleton, L.

Ruthen of Freeland, Ly.

Thurlow, L.

Mills, V.

St. Davids, V.

Torphichen, L.

Minto, E.

Saint Oswald, L.

Tranmire, L.

Monck, V.

Sandford, L.

Trenchard, V.

Monk Bretton, L.

Sandys, L. [Teller.]

Vernon, L.

Morris, L.

Selkirk, E.

Vickers, B.

Mottistone, L.

Sempill, Ly.

Vivian, L.

Mowbray and Stourton, L. [Teller.]

Skelmersdale, L.

Wakefield of Kendal, L.

Southwark, Bp.

Ward of North Tyneside, B.

Newall, L.

Stamp, L.

Wilson of Langside, L.

Northchurch, B.

Strathclyde, L.

Wise, L.

O'Hagan, L.

Strathcona and Mount Royal, L.

Young, B.

Onslow, E.

Strathspey, L.

NOT-CONTENTS

Aberdeen and Temair, M.

Hanworth, V.

Ponsonby of Shulbrede, L.

Allen of Abbeydale, L.

Henderson, L.

Rhodes, L.

Aylestone, L.

Houghton of Sowerby, L.

Shackleton, L.

Beaumont of Whitley, L.

Jacques, L.

Shepherd, L.

Blyton, L.

Janner, L.

Shinwell, L.

Brockway, L.

Kilmarnock, L.

Snow, L.

Brown, L.

Kirkhill, L.

Stedman, B.

Champion, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Strabolgi, L.

Chitnis, L.

Tanlaw, L.

Crook, L.

Lloyd of Hampstead, L.

Taylor of Gryfe, L.

Davies of Penrhys, L.

Lloyd of Kilgerran, L.

Taylor of Mansfield, L.

Douglas of Barloch, L.

Longford, E.

Thurso, V.

Elwyn-Jones, L. (L. Chancellor.)

McCluskey, L.

Vaizey, L.

Fisher of Camden, L.

McGregor of Durris, L.

Wade, L.

Foot, L.

McNair, L.

Wall, L.

Glenamara, L.

Maelor, L.

Wallace of Coslany, L.

Gordon-Walker, L.

Murray of Gravesend, L.

Walston, L.

Goronwy-Roberts, L.

Noel-Baker, L.

Wells-Pestell, L.

Hale, L.

Oram, L.

Willis, L.

Hall, V.

Paget of Northampton, L.

Wilson of Radcliffe, L.

Hampton, L.

Peart, L. (L Privy Seal.)

Winterbottom, L. [Teller.]

Wynne-Jones, L.

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

Resolved in the affirmative, and Amendment agreed to accordingly.
6.25 p.m.
[Amendments Nos. 153 to 155 not moved.]
Schedule 8 agreed to.
Clause 40 agreed to.
Clause 41 [Payments out of Scottish Consolidated Fund]:
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 229:
>Page 21, line 21, leave out ("Act of Parliament or").
The noble Earl said: Clause 47 deals with payments out of the Scottish Consolidated Fund. The Scottish Comptroller and Auditor General may permit payments or credits to be drawn from it under three headings: a Scottish Assembly
252
Act, an order made by the Scottish Secretary or an Act of Parliament. I am asking here: Why is an Act of Parliament included under these headings as one of the grounds on which the Scottish Comptroller and Auditor General can allow payments to be made? I take it that these are specific payments for specific purposes by an Act passed at Westminster, and I presume they include a large number of things such as salaries, housing subsidies, National Health Service payments and, probably, education.
As I understand it the payments made under an Act of Parliament will be completely controlled by the terms of that Act. That means, in effect, that there will be no discretion whatever by the Assembly as to how that payment shall be used. In other words, this is simply taking the Scottish Executive to be something a little like the Paymaster-General;

253
that is to say, he is a figurehead to whom payments are made for a variety of purposes. I want to make that quite clear, because we have been told sometimes that the Scottish Executive can do what they like with the money they are given. I thought that was the position and that the Scottish Secretary, with a Scottish Assembly Act would be the sole source from which money could be given from the block grant or indeed from the rates grant. I take it that it is not so. Would the noble Lord then confirm that in fact through the Scottish Secretary quite substantial monies will be paid over which he has no discretion and for which the conditions of payment are entirely laid down by Westminster? If that is not the case, then I think the words" Act of Parliament" should be taken out of Clause 41(2)(a). I beg to move.
Lord KIRKHILL: The noble Earl, in his usual most friendly manner, frequently assures me that I am less than helpful to him, but in an attempt to remedy the implied criticism (although very kindly uttered on all occasions) I can tell the noble Earl that on the Government's side we can appreciate the reasoning behind the Amendment. On the face of it, it is unreasonable that the Scottish Consolidated Fund should be burdened with expenditure arising from Acts passed by the United Kingdom Parliament. However, so far as existing United Kingdom Acts of Parliament are concerned, the clauses as presently drafted, I am advised, simply ensure that certain expenditures on devolved matters which fall on the United Kingdom Consolidated Fund will, after devolution, fall on the Scottish Consolidated Fund. Examples are the salary of the Commissioner of the Health Service in Scotland and certain sums relating to Civil Service pensions. The effect of the Amendment would be for such payments, after devolution, to continue to fall on the United Kingdom Consolidated Fund and I think your Lordships would agree with me if I make the point that that seems insupportable as a proposition.
So far as future Acts of Parliament are concerned—I realise the noble Earl did not touch on this point, but perhaps it is relevant to bring it to your Lordships' attention—any imposition of direct charges on the Scottish Consolidated Fund would have to be provided for in the Act con-
254
cerned, and Parliament would be required to take a view on the provisions in question. The Amendment would not prevent Parliament from framing such legislative proposals if it thought fit to do so. I think that is as full an explanation as I can give of the Government's position on the noble Earl's Amendment.
The Earl of SELKIRK: I take it, then, that over parts of the block grant the Assembly will have no discretion at all. Clause 44 refers to a statement of the considerations leading to the determination of the block grant. Will those considerations say quite clearly over which part of the block grant the Scottish Assembly has no discretion whatever? I wonder whether that is in mind. Perhaps the noble Lord will give his views on that. But it seems to me that it makes the block grant rather empty, if the Scottish Assembly has no say whatever about the way in which that money is expended.
Lord KIRKHILL: Perhaps an element of confusion has arisen—purely on my side, I hasten to add. I shook my head as the noble Earl was speaking. But, clearly, I misunderstood the middle part of his remarks, because he then went on to ask me whether or not discretion would attend the Scottish Assembly when it considered the whole question of support grant. Undoubtedly, discretion will attend the Scottish Assembly at this point and, when the block grant is linked to the question of rate support grant and so on, long discussion and much dialogue will ensue. There can be no doubt about that.
The Earl of SELKIRK: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 41 agreed to.
Clauses 42 and 43 agreed to.
Clause 44 [Payments into Scottish Consolidated Fund out of moneys provided by Parliament]:
6.34 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 156:
Page 22, line 25, leave out ("from time to time") and insert ("every four years").
The noble Lord said: We are now moving into the purely financial section

255
of the Bill and, at first sight, this Amendment may appear to be rather a narrow one. We are suggesting that we should take out the words, "from time to time" and insert "every four years". May I start by saying that this is purely a probing Amendment, and its terms have been taken from the White Paper Devolution: Financing the Devolved Services, of July 1977, where it was suggested that the allocation, the argument or the settling of the level of the block grant might reasonably go with the Assembly elections.
I should first like to ask the Government whether that is still their thinking. In any case, it seems to me that the expression "from time to time" is one of the most gloriously vague ones that we have had, and if we cannot be more specific it might be just as well to leave the words out altogether. But that is not the principal point that I am trying to make. In the White Paper, the Government went into some detail as to what they had in mind in July 1977, and our purpose is to try to entice them into letting us into their thinking a little more; how they think the arguments about the block grant might be expected to work.
I do not think that very many of these arguments are great issues of principle. However, I suppose it is fair to say that it is difficult to distinguish in this context between matters of principle and matters of practice; but I am mainly taking purely practical points here. I can see that when one starts to find out how this will work in practice, one may find oneself getting back to issues of principle. I suppose it is fair to say that this is not a unique situation, and it has been known to happen once or twice earlier on in this Bill. But I am not in any way attempting to make a Second Reading speech. I think it is generally agreed that to have an annual hassle has certain disadvantages. I have already explained why the time of four years has been chosen; simply because it was the one tentatively put forward by the Government in their White Paper. Whatever happens, it seems to me to be rather important that we should not end up with some kind of hiatus at the end of the period that we choose.
I have had no experience of local government, but I think that many noble
256
Lords are aware of the ridiculous situations which sometimes arise, when local authorities are very busy trying to spend like mad in the last few weeks before the financial year comes to an end. Most of us have also had experience of the moments when local authorities completely run out of money. Not so long ago, there was a classic example in what was then called the County of Argyll, which could not issue fire certificates for hotels because it had run out of money with which to buy paper on which to print the certificates. That is a slightly extreme example, but many of us know that there are moments when either money runs short or there is a scramble to spend. Either way, it is a ridiculous situation which we do not want to perpetuate on a larger scale as between Westminster and the Scottish Assembly.
Certainly, I should have thought that, as regards capital spending—and I do not think there is very much distinction in the Bill between money allocated for capital purposes and money allocated for what one might call revenue purposes—it is extremely important to have some kind of rolling programme. I recall that this is a point which the noble Lord, Lord Goodman, used to make about Arts Council grants; that it is hopelessly unsatisfactory not to know for some fairly continuous period ahead what level of grant one can expect, and it is very important to be sure that the variations are not too sudden and unexpected.
If you work this through a little further, it is clearly important that the Assembly should have credibility with anybody with whom it will be dealing as a customer; for example, a contractor. If it is entering into a long-term project which might take some years, and there are to be progress payments spread over some years, it is important that everybody should have confidence that the Assembly will have the money to pay year by year, and that it will not suddenly be chopped. Any firm entering into a contract with the Government has to accept the fact that unfortunately Government contracts can be made meaningless by the power of Governments to abrogate contracts if they so please. Happily this is not something which very often happens. However, one can envisage the possibility of the Assembly committing itself to a line

257
of capital expenditure and the Westminster Government then declining to continue to assist it in financing that line of expenditure. I am not suggesting that the Westminster Government would necessarily pick on a particular project, but they might say, "If you go on doing what you are doing and spending money in the way that you are, we shall not wish to continue to make it possible for you to do that, and we shall do our best to reduce the grant".
There is a further aspect. If money is spent in one year on, say, building a hospital, it is quite possible that one is then committing oneself to an annual expenditure in order to look after the place and run it thereafter. Therefore, the distinction between capital expenditure in one year and what then becomes a revenue outgoing in a subsequent year frequently is not all that clear. We are also moving into the dangerous situation, which has been alluded to so often, of Governments of different complexions being in office on each side of the Border. There could be a Socialist Government in Edinburgh and a Tory Government in the United Kingdom, and that Tory Government might wish to starve the Socialist Government. Tories are very generous chaps. Nevertheless, it could happen that they would wish to limit the activities of a Socialist Government in Edinburgh. In the opposite situation, there could be a Tory Government in Edinburgh and a Socialist Government in the United Kingdom. The Tory Government in Edinburgh would have no incentive to save because they would feel that any savings that they made would only make life easier for their opponents at Westminster. This would end up as a formula for profligacy, which I am sure would be totally unlikely to appeal to any Tory Government.
The White Paper of November 1975 postulated an annual bargaining session and spoke of information gathering without further defining exactly what organisation was envisaged for that purpose. The White Paper foresaw conflict as early as November 1975 by rather naively prefacing one of its paragraphs with the words, "With understanding". That was a very nice, hopeful idea, but I think that it would be unwise of us to legislate on the assumption that we can always rely on there being perfect understanding
258
between the Government at Westminster and the Assembly in Scotland. So the Government have agreed, under pressure, to amend the system to cover a longer period.
The Government recognise the possibilities of argument in their White Paper of July 1977. In paragraph 2 they put forward the suggestion, and here I quote from page 15:
"of an independent advisory body which would collect such information and advise the Government and the devolved Administrations on its implications".
May I ask whether that is still the Government's plan? And if it is, would they like to tell us a little more about the kind of organisation they envisage and how it will operate?
I said that this was a question of practice rather than principle, and so it is. Really it comes better under the subsequent Amendment to make the point that, although it has been said that the block grant does not give to the Assembly any tax-raising powers, there is a slightly complicated way—and I might as well mention it now because it is relevant to the consideration of how the block grant is fixed—in which, in effect, the Assembly could find itself with a tax-raising power.
It would work something like this. Perhaps I ought to put it in the form of a question. Am I right in thinking that local authorities in Scotland will draw their rate support grants from the Assembly? I believe that I am right. And if I am correct, it postulates that in practice the Assembly could say to local authorities, "We are very sorry, but we cannot give you the kind of money which you need and hope to receive and that we all accept that you need. What, therefore, you will have to do is to go out and raise additional money, perhaps by increasing the rates". In a rather convoluted way, then, may I suggest that we are possibly giving a tax-raising power to the Assembly. This is an example of the kind of unhappiness that is created by the Bill, and it is very difficult to see how we are going to get away from it.
Having strayed slightly into the next Amendment, may I come back for a moment to the matter of the time-scale. If we adopt a four-year time-scale, bringing the negotiation of the block grant into phase with the Assembly elections—in passing, one ought to consider what happens if there is a special Assembly

259
election, but I suppose that will not matter because the regular four-year cycle would continue and the extra Assembly election would not affect that problem—will create, I foresee, two further slight problems. Is there not a danger that Westminster might exert undue pressure upon the Scottish electorate during the Scottish Assembly elections by saying, "If you want us to be helpful about the kind of block grant we are going to give you when you get the new Assembly, you had better vote in the way that we should like to see you vote"?
A variant of the same idea is the situation in which people say, "Westminster does not much like the complexion of the new Government which has appeared in the Assembly. Look at what they have done to the block grant! Just out of pique they have chopped it". Alternatively they could say, "Westminster is delighted with the complexion of the new Assembly and they are going to give it a whacking great handout". This would not be a very happy situation, and one can see it being used as a lever of a rather improper kind in the Assembly elections.
The other point I wish to make is that possibly a four-year fixing of the block grant might be unduly restrictive upon the central Government's flexibility and speed of reaction. The noble and learned Lord will probably tell us that this is taken care of in the White Paper, again in paragraph 76, where it is suggested that the way in which the block grant would be fixed would in any case be in relation to the overall rate of expenditure in the United Kingdom as a whole. Therefore, if it were decided to have a major cutback, this would work through the system and automatically engulf the block grant as well. If I am right, that is perhaps not a very major objection. Nevertheless, I think that it is an objection. In moving this Amendment, therefore, I should be very interested to hear the comments which the Government have to make on some of the points I have raised. I beg to move.
6.50 p.m.
Lord SHINWELL: I must confess to some surprise that the noble Lord, Lord Strathcona and Mount Royal, should
260
have taken the trouble and occupied so much time to discuss such a minor Amendment. I should have thought that by a close examination of the clause he would have discovered practically all he wanted to know. I entirely agree with him that the words "from time to time" are not altogether desirable. They are not up to the standard of literacy that one expects from those responsible for drafting Amendments, or even drafting the provisions of this Bill. But, on the other hand, to suggest that money should not be provided except in periods of four years would be to put a brake on the activities of the Assembly and I am quite sure that was not his intention.
Lord McCLUSKEY: I wonder whether my noble friend would allow me to say that I heard the noble Lord, Lord Strathcona and Mount Royal, say that this was simply a probing Amendment. Of course, although the wording of the Amendment suggests it, the noble Lord does not suggest that there should be a payment only every four years. I am quite prepared to deal with the questions that I was asked.
Lord SHINWELL: I accept the implied rebuke, but I understand that it is part of the tradition of this House, so long as democracy remains in this country, that one should be permitted to express one's opinions. It does not always satisfy those who sit, either temporarily or permanently, on the Front Bench, but we will let that pass. Except that I shall recall it on some future occasion and perhaps indulge in a little retaliation. In the meantime I just wanted to say, having heard the noble Lord, Lord Strathcona and Mount Royal, posing a number of questions, that I think that asking for a four-year lapse is asking a little too much. All I intended to do was to suggest that all that he requires could be met by excluding the words "from time to time" and letting the clause read as follows, if I may be permitted—with the consent of my noble and learned friend—to mention the matter:
"The Secretary of State shall make out of monies provided by Parliament payments into the Scottish Consolidated Fund of such sums as he may determine by order made with the consent of the Treasury".
That is all that is required. That would serve the purposes of the Scottish Assembly

261
it would serve the purpose of the noble Lord, Lord Strathcona and Mount Royal, and it would make it unnecessary to indulge in much probing. Of course it may well he that my noble and learned friend intended to indulge in those observations himself. Perhaps I have anticipated him. To suggest that such a thing might happen is perhaps going a bit too far, and I say it with my characteristic modesty. We will leave it at that. I suggest that the words "from time to time" are undesirable and do not sound well in a Bill of this character.
This Bill contains many defects in vocabulary, in purposes and in many of its provisions, but this Amendment is certainly unnecessary. On the other hand, I believe that all that is required is provided in the language that I have used and is contained in the clause and that all we have to do is to accept it and then I think we should all be quite satisfied. I understand the time is coming when we may indulge in gastronomic exercise instead of indulging in this unnecessary debate.
Viscount MASSEREENE and FERRARD: I completely agree with the noble Lord, Lord Shinwell, that the words "from time to time" seem to be completely unnecessary and I suggest that they should be left out. I also thought that my noble friend was suggesting that the Scottish Secretary should pay the Consolidated Fund only every four years. I was amazed at that because I wondered how on earth the Scottish Secretary of State could know, when the first Assembly was elected, how much money would be needed for four years. He would have to be a clairvoyant. We do not want to get into the situation which sometimes happens with the Road Fund, where the county councils are allocated so much every year and then find that they cannot spend it all and they look round desperately for corners to cut in order to spend the money so that they do not get less next year.
Lord MIDDLETON: The trouble is that there is no satisfactory method whereby Parliament can provide the money for a Scottish Assembly to perform the functions given it in this Bill. The reasons behind the Government's preference for an expenditure-based system for
262
financing and their rejection of a revenue-based system are set out in the White Paper. On the other hand, a system as in the Bill, whereby the devolved services are to be financed by block grants and handed over by Parliament from time to time (whatever that may mean), and whereby the Assembly has no money-raising powers of its own, is bound to lead to trouble of one kind or another.
I fear the divisive effect of a periodical wrangle in Parliament over the size of the block grant, because not only will that remind the English taxpayers that a sizeable proportion of any grant will come out of their pockets but it will also be only too easy for Members of the Scottish Assembly to whip up a feeling of injustice among their Scottish electors by blaming an English majority in Parliament for not providing large enough grants to finance the devolved services which are intended to make life better for the Scots. I hope it will not be an annual wrangle, but I really do believe that this would be putting too much of a strain on the unity of the United Kingdom.
6.58 p.m.
Lord McCLUSKEY: Until my noble friend Lord Shinwell spoke after I intervened I had not appreciated that dinner was so near, otherwise I would not, by intervening, have tempted him to go on even longer than he had intended. Turning to this particular matter and accepting the Amendment on the basis which was put forward by the noble Lord, Lord Strathcona and Mount Royal, if I may first take the words "from time to time" they are well precedented and I have been furnished with examples in 1965 and 1975. Of course, in the context of Clause 44 as one sees it they relate to payment and surely it is not too extraordinary, in order to emphasise the periodicity of the payment, to use the words "the Secretary of State shall from time to time make payments". So I would defend them in the context in which they appear in Clause 44.
Turning to the wider issues, the Government explained in the White Paper which has been referred to, Devolution: Financing the Devolved Services, their reasons for preferring an expenditure-based system to a revenue-based system for financing the devolved administration in Scotland.

263
Under such a system all United Kingdom revenues continue to be pooled and are then allocated to different parts of the United Kingdom in accordance with relative needs. I want to emphasise this matter of relative needs because that goes to the heart of the whole thing and when the noble Lord, Lord Strathcona and Mount Royal, talks about the Westminster Administration punishing or rewarding the voters of Scotland because of the way they have voted in electing Members to the Assembly, I think he is ignoring the fact that the whole basis of the system is that an assessment is made of relative needs.
When he asks me, are the Government still thinking in terms of some independent body of the kind that was foreshadowed in paragraph 72 of the same White Paper, yes, the Government are thinking of that. I do not take the matter any further because, of course, this is a matter which ought properly to be discussed with the Scottish Assembly and Executive when the Executive is formed. We ought to discuss with them what form such a body should take, what its range of interests should be, what kind of staffing it should have and so on and so forth. So that is left over, but it is still very much in the mind of the Government that that system should be followed.
There is one other matter I might mention arising out of what the noble Lord, Lord Strathcona, said. He spoke of rolling programmes and the possibility that money might be surplus at the end of a period of time or that money might be short. Of course, so far as surplus monies are concerned the Government at Westminster have no concern with that. They assess what the block grant ought to be in terms of what the needs are, and will have no regard to the fact that there may, over a particular period of time, for accidental or deliberate reasons, have been some kind of surplus. So far as shortages are concerned, of course, the Government at Westminster will play no part whatsoever in determining the allocation of the block fund between the different votes, as it were, on which the Scottish Secretaries will have to pay out money, the different services that have to be financed out of the block grant. That is not a matter for the Government at Westminster at all. Of course, there
264
is the possibility, under Clause 46, of short-term borrowing if the situation arose where they could not afford to print the paper, such as the noble Lord, Lord Strathcona, mentioned.
In relation to the general point, that there are opportunities for confrontation and disputes, one acknowledges that, and both the White Papers, the one referred to and the one of November 1975, acknowledged that. For reasons which were explained in the latter White Paper, the Government do not regard dispute as inevitable. The White Paper put forward three ways in which, in the Government's view, the working of the arrangements might be facilitated. By their nature we think that none of these proposals is suitable for incorporation in the Bill itself, for the same reason that I gave, that they are all dependent on the outcome of discussions with the devolved Administration in due course.
May I turn to the proposal which lies behind this Amendment, the proposal that there should be possibly a formula under which devolved expenditure, expenditure on devolved matters in Scotland, would be settled for a period of four years ahead as a percentage of comparable expenditure in the country as a whole. The Amendment—even accepting it on the basis put forward by the noble Lord, Lord Strathcona appears to derive from a misreading of the discussion which he will find in paragraphs 74 to 78 of that White Paper. The White Paper proposals concern a means of settling total public expenditure on devolved services, and that comprises rate-borne expenditure and capital expenditure met by borrowing as well as block fund expenditure. So all these elements go into the total public expenditure on devolved services. Whether block fund expenditure could also be fixed by a formula is a different issue, and that would have to be pursued perhaps with the Scottish Administration.
The type of formula envisaged in these paragraphs in the White Paper would, moreover, not fix an amount of money but merely a relationship between the total expenditure on the devolved services and comparable expenditure in the country as a whole; that is to say, the Government and the Scottish Administration would agree that for a coming period of years the total of public expenditure for devolved

265
purposes each year would be X per cent. of the corresponding total elsewhere, whatever that total elsewhere might actually be. The Scottish total for each year as a sum would fall to be fixed separately each year by the operation of the formula, and the block fund component within it would he fixed separately each year by the House of Commons.
Lord STRATHCONA and MOUNT ROYAL: May I interrupt the noble and learned Lord, because I am not finding this terribly easy to follow? Is he suggesting that there will be certain sorts of expenditure which are not devolved but on which the Assembly will have a view, that they will be items of expenditure to be met by Westminster which they will discuss with the Assembly; then there will be a separate listing of those, and they will be added back to the block grant, and it is that final figure which is the one which we are talking about here?
Lord McCLUSKEY: The short answer to that is, No. What I am suggesting is that the block grant is only one part of the public expenditure which is being discussed in paragraphs 74 to 78 of the White Paper. What is under discussion in the White Paper is the total public expenditure on devolved services; that includes the block grant; it also includes borrowings; it also includes rate-borne expenditure in Scotland, because the block grant is only one part of that. I think perhaps this emerges more clearly from the discussion of the matter in the December 1975 White Paper, where there is a very full discussion of these particular matters.
As I say, the total of public expenditure on devolved matters, to try and answer it in another way, also involves other forms of expenditure. They are capital expenditure of local authorities and other public bodies which is met by borrowing; secondly, current expenditure of local authorities net of grant which has to be met by the levying of local rates; and, thirdly, of course, there is expenditure on devolved services which is met from the internal resources of public corporations. An example that comes to mind is a public corporation like MacBrayne's, who have an income, and of course that money falls to be spent; it is not in the block grant and it is additional to the block grant. So the block fund is only
266
part of the money to be spent on devolved services in Scotland.
If I may go back to the questions I was asked, in so far as I have not already dealt with them, the noble Lord, Lord Strathcona, referred to the words "with understanding" which appeared in paragraph 105 of the White Paper of July 1977. I hope there will be understanding, but the White Paper was not as naive as he would have had us believe, because what was said was:
"With understanding on both sides agreement should usually be reached".
It went on:
"If agreement is not reached the matter will have to be settled by the Government, answerable to Parliament".
That is one of the reasons why one has to have proper representation of Scottish Members of Parliament at Westminster, so that the Government may be answerable to them as well as to the other Members on matters of this kind. The noble Lord also referred to tax-raising matters. I wonder if he would agree with me that perhaps we should look at that when we come to the appropriate Amendments. I think I have endeavoured to answer all the questions I have been asked.
The Earl of SELKIRK: Might I ask the noble and learned Lord one question. He has emphasised relative need, but he seems to have made no provision for supplementary estimates. Every year one or other of the Departments at Westminster demands a supplementary estimate. This is not necessarily due to excess expenditure. It may well be due to the fact that work is completed more quickly and therefore has to be paid for—materials and wages. I wonder whether the Government have in mind any consideration for that. That will inevitably arise, and I wonder how in the Government's mind it is proposed that that should be dealt with.
Lord McCLUSKEY: I am delighted to answer that. The wording of Clause 44, in our view, allows the payment of supplementary sums. Looking at Clause 44 we see:
"The Secretary of State shall from time to time make…payments into the Scottish Consolidated Fund".
He is entitled to make such payments as are approved in the way envisaged in the

267
Bill. So, as we see it, what will happen will be that there will be negotiation on the block fund, whether it takes place once every 12 months or every 4 years, or whatever period may be agreed between Westminster and the Executive, but the payments that may be made are covered by Clause 44. If circumstances arise in which it is desired to make supplementary payments, they may be made under Clause 44.
Lord STRATHCONA and MOUNT ROYAL: The noble and learned Lord is being extremely enlightening and helpful. I do not know that I understood exactly what he told us, but I shall read it with great interest tomorrow morning in Hansard.
It is with some trepidation that I allow MacBrayne's to come between me and my dinner, since I am highly dependent upon that noble company, as the noble and learned Lord probably knows. However, I should like to ask him one further question. I quite see that there is the income side of MacBrayne's. To take MacBrayne's, or any other organisation of that sort which has to be subsidised and which therefore requires some money to be put into it somewhere, I had imagined that the Assembly, if it were responsible for something like MacBrayne's, would, when it came to ask for its block grants each year, produce a list of items on which it thought it would have to spend money, and would end up by saying "So you see, Westminster Treasury, we shall require X millions". I should have expected them simply to say, "MacBrayne, deficit".
If I understood the noble and learned Lord correctly, he said that he wanted to see both sides of the balance sheet. He will want to see the income from MacBrayne. That will be part of the fact-finding activity that will go on. This is where I got into some difficulty about the whole area that was going to be covered. If we are simply talking about totting up the various items which will cost money, that is what I imagine the process would look like. Now he has apparently led us into saying, "No, we shall go further and talk about the various forms of income which the Assembly will have as well". Clearly, in Scotland as a whole, there will be income to the Govern
268
ment, from rates, for example. There will be income from Government-controlled services. I fully appreciate that. It may well be that I have not listened carefully enough to what the noble and learned Lord said, in which case I apologise.
The other matter as regards which I wished to draw him on slightly was this. I accept that he is not going to write into the Bill how often the block grant negotiations will take place. But I did understand him to suggest that he would imagine that this was normally an annual function like any other Treasury Department negotiation, or was he going to say that it would literally be like any Treasury matter which crops up from time to time, as it says in the Bill?
Lord McCLUSKEY: If I heard the noble Lord, Lord Strathcona and Mount Royal, correctly on the last point, the timing of these matters will be resolved after negotiations with the Scottish Administration. It may be that it would start off as a 12-month negotiation. It may be that experience would demonstrate that that was far too frequent. But these are matters for discussion.
In relation to the first point raised by the noble Lord, I should like to refer him to paragraph 111 of the November 1975 White Paper, Command Paper 6348, where there is some reference to other sources of finance. However, I hope that he has not been misled by any reference I have made to MacBrayne's. I think that he will find upon consideration of what I have said and of the passages in the White Paper dealing with other sources of finance, that what I said is correct.
Lord STRATHCONA and MOUNT ROYAL: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord WALLACE of COSLANY: My Lords, I beg to move that this House do now resume.
House resumed.

CONSUMER SAFETY BILL
Brought from the Commons; read 1ª, and to be printed.

MEDICINES (RADIOACTIVE SUBSTANCES) ORDER 1978
7.14 p.m.
Lord WELLS-PESTELL Lord WELLS-PESTELL rose to move, That the draft Medicines (Radioactive Substances) Order 1978, laid before the House on 11th April, be approved. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. In the wake of Mr. Justice Parker's Inquiry into the proposed processing of nuclear waste at Windscale it is perhaps appropriate that I should ask your Lordships to consider this draft Statutory Instrument. Like most nuclear matters the subject is somewhat technical and complex, and I must ask your Lordships' forbearance for going into some necessary detail.
Let me be perfectly frank. This order is extremely difficult to understand. I would not presume to feel that I have mastered it in its entirety. The order is one of three Statutory Instruments required to implement Article 5(a) of Directive 76/579/Euratom adopted by the Council of the European Communities on 1st June 1976. I shall return to the other two Instruments at a later stage.
The Euratom Directive lays down the revised basic safety standards for the health protection of the general public and workers against the dangers of ionising radiation. Most of the Directive is concerned with the reporting and authorisation of he production, processing use and disposal of radioactive substances, the limitation of radiation doses to exposed workers and other persons, and measure for the medical surveillance of radiation workers and the protection of the health of the population. Member States of the European Community, including the United Kingdom, are required to put into effect the necessary measures to conform to the relevant parts of the Directive within two years; that is, by the middle of this year. In so far as legislative action to implement the rest of the Directive is necessary, this will he introduced in due course by the appropriate
270
Departments of State, but my concern in respect of the present order is solely with Article 5(a) of the Directive.
Article 5(a) reads as follows:
"Apart from the prohibitions provided for by national law, and irrespective of the degree of danger involved, a system of prior authorisation must be applied in respect of:
a. the administration of radioactive substances to persons for the purposes of diagnosis, treatment or research".
We are thus concerned with the use of radioactive substances for medical, including medical research, purposes. That is what Article 5(a) is all about—medical, including medical research purposes.
The present system, as many of your Lordships may well he aware, is that there is already a voluntary system of application for approval to undertake the administration of radioactive substances, mainly for research purposes, which was originally set up by the Medical Research Council and is now operated by the Department of Health and Social Security on the advice of its Isotope Advisory Panel. It is not at present obligatory for practitioners either to seek approval or advice, or if it is sought, to act upon it.
If I may come to the proposed regulations, since a voluntary system of approval is insufficient to implement the provisions of Article 5(a) of the Directive, it is necessary to introduce an obligatory system. After careful consideration and discussion with appropriate professional organisations we propose to follow the customary course by, as far as possible, making use of powers which are already available under existing legislation.
Section 60 of the Medicines Act 1968 enables regulations to be made prohibiting the administration and the sale and supply of specified medicinal products or classes of such products, except by registered doctors or dentists holding a certificate issued for the purpose of Section 60. Such regulations, which are subject to Negative Resolution in both Houses of Parliament, will therefore be laid before this House in the near future. I am now dealing with the order; the regulations exile later. They are the second of the three associated Instruments to which I have referred.
As the text of these regulations refers to the order which is now before your Lordships, it is not yet possible formally

271
to lay the regulations which, as I said a moment ago, will be made under Section 60 of the Medicines Act, in this House but draft copies of them are available for consultation in your Lordships' House. I think that it is right to draw your Lordships' attention to these draft regulations as their existence is the main reason for the introduction of the order which is now before the House.
I should like to turn to the necessity for the present order. We have been at some pains to try to make it understandable for me, if not for your Lordships. The reasons for this order are somewhat involved. I shall therefore tabulate them in order to be of some assistance to the House: 1. The Euratom Directive requires radioactive substances which are administered to be subject to prior authorisation; 2. The Medicines Act which is being used to provide such authorisation applies to "medicinal products"; 3. Not all the radioactive substances which are to be authorised are "medicinal products" within the meaning of the Medicines Act; 4. Section 104(1) of the Medicines Act allows specified provisions of the Act to apply to substances or articles which are not medicinal products; 5. The present order specifies those substances and articles and the provisions of the Act to which they are to be subject.
I turn to the specified provisions of the Articles which I shall take under four separate headings. The specified provisions of the Act are principally those contained in Section 60 under which the regulations, to which I have already referred, are to be made. The specified articles or substances are as follows: First, appliances which already contain or are to contain a radioactive substance and are designed to he placed in the human body or body cavities; secondly, applicators which already contain or are to contain a radioactive substance and are designed to be placed on the surface of the human body.
Then, thirdly, apparatus used for the diagnostic technique known as "neutron activation analysis". This technique is used to determine the elements making up parts of the body. The elements are exposed to neutrons generated by a machine and so become radioactive and emit gamma rays. These rays are measured and thus make it possible to identify
272
the elements emitting them. Since the technique requires the exposure of the body to the emission of neutrons from apparatus, the definition of "administration" in the Medicines Act has to be extended by Article 2(2) of the order to include this particular process. Fourthly and lastly, radioactive substances used for research rather than diagnostic or therapeutic purposes.
Your Lordships will note that teletherapy sources, particle accelerators and X-ray apparatus are not included in the Schedule to the order and consequently will not come within the scope of the regulations. The main reason for this is that we interpret Article 5(a) to refer to radioactive substances which can be retained within the body either biologically or mechanically, and thus to exclude radiation from machines where the radiation ceases as soon as the machine is stopped or turned off.
I should perhaps for completeness mention to your Lordships that the third of the Statutory Instruments is an order made by the Health Ministers under Section 4 of the Medicines Act 1968. The order provides for the establishment of a Committee on Radiation from Radioactive Medicinal Products to provide advice on the radiation aspects of medicinal products to the licensing authority responsible for granting product and manufacturers' licences under other provisions laid down in the Medicines Act 1968. The order does not have to be laid before this House, but a copy is available in the Library should your Lordships wish to examine it.
I should like to recap for a moment because I think that the matter may be becoming rather confusing. The present order is the matter before your Lordships which will require your Lordships' approval. The order will require regulations to be made. They will be made under Section 60 of the Medicines Act —which already provides the machinery to allow regulations to be prepared—and they will be subject to the Negative Resolution procedure. I have already said that the third of the Statutory Instruments dealing with the Committee on Radiation from Radioactive Medicinal Products does not have to be laid before your Lordships' House. However, as I have said, a copy is available in the Library.
In view of the seriousness of this matter I should like to say something about the consultations which have taken place. I shall deal with the matter in a general way, but I shall be specific if I am asked. I should like to assure your Lordships that this order and the other two associated Instruments have been the subject of widespread consultation with the Medicines Commission, and all the professional organisations and institutions representing the dental and medical practitioners and other scientists who are likely to be affected both within and outside the National Health Service. This consultation has been continuing since the Directive was issued and has included the circulation of the draft documents on two occasions. Indeed, the submission of the documents for Parliamentary approval has been delayed in order to take account of further recent representations made to my Department. We now consider that the draft order is in a form which is acceptable to the main professions and organisations who will be affected by it, and will intrude as little as possible into the freedom of clinical practice, while at the same time fulfilling the United Kingdom's obligations under the Euratom Directive.
Your Lordships may wish to know the timetable proposed by Health Ministers for the implementation of the provisions in this order and the regulations to which I have referred. The present order will be made as soon as the necessary Resolutions have been passed by both Houses, and it is expected to come into effect in July of this year. The regulations will be made at the same time as the order and, once approved, will require all medical and dental practitioners wishing to administer radioactive medicinal products—including the items covered by the present order—after 1st January 1979 to hold a certificate authorising them to do so.
I do not think that I can say anything more that is likely to be useful. I have tried to set matters out in as much detail as possible. I commend the draft Medicines (Radioactive Substances) Order to your Lordships for approval.
Lord DAVIES of LEEK: My Lords, before my noble friend sits down I should like to ask him one question. I did not hear him mention veterinary surgeons.
274
The use of radioactive isotopes, is extending. Does the order include veterinary surgeons?
Lord WELLS-PESTELL: My Lords, my understanding is that the order deals only with doctors and dentists.
Lord DAVIES of LEEK: My Lords, radioactive isotopes are now also used in the treatment of animal health.
Lord WELLS-PESTELL: My Lords, there are other ways in which they can be brought in, but they are not involved in this particular order.
Moved, That the draft Medicines (Radioactive Substances) Order 1978, laid before the House on 11th April, be approved.—(Lord Wells-Pestell)
7.32 p.m.
Lord SANDYS: My Lords, the House will be grateful to the noble Lord, Lord Wells-Pestell, for explaining this very complicated order, which will have the object of completing the United Kingdom's obligation under the Euratom Treaty. I am not surprised that the noble Lord, Lord Davies of Leek, had a number of questions to ask prior to the noble Lord, Lord Wells-Pestell, sitting down because the order gives rise to a great number of inquiries. However, first, naturally, as we have been told, the order requires regulations to be made under Section 60 of the Medicines Act. The more detailed matters will come forward in these regulations. This follows upon a voluntary system which has been in operation for some years. It must be a matter of pride to us all that one very prominent hospital—the Hammersmith Hospital—has been using radioactive isotopes for medical therapeutic reasons for more than 25 years. Of course, that has been subject to an existing system of control.
The necessity for the present order we know, but there is one matter about which I should like to ask the Government—that is, whether the consultation has been concluded with the Health and Safety Executive Committee in regard to the question of the regulations. I hope that as the draft order has been stated to be acceptable to the professional bodies involved. we may have Government confirmation that, among the other bodies

275
concerned, the Health and Safety Executive Committee has been fully consulted. It is, of course, a matter of considerable concern to Departments other than the Department of Health. As the noble Lord rightly pointed out, the inquiry at Windscale has given rise to great public anxiety on this whole matter, about which I hope the Government will be able to reassure us in the reply which we now await.
The Marquess of LINLITHGOW: My Lords, I should like to ask a simple question because the complications of this are way over my head. The very last sentence of the noble Lord, Lord Wells-Pestell, was that under the new regulations the users of these various complicated chemical compounds will require a certificate. There is a great deal of paper around nowadays. Can the noble Lord assure us that the ability to obtain a certificate and the actual obtaining of it will be simplified as much as possible? —because at the moment, from hearing what the noble Lord said, one does not know how a certificate is obtained and where it is to be obtained. Perhaps the Minister can assure us on that basis.
Lord WYNNE-JONES: My Lords, there is one question which I should like to put to my noble friend—namely, whether the societies which are concerned with the exact definition, and not simply with the ultimate purpose of something, have been consulted. Have the Chemical Society and the Royal Institute of Chemistry been consulted? There is an expression here which I cannot believe any chemist would accept: that is, "radioactive substance" means:
"any substance that contains one or more radionuclides".
The definition of a "substance" in chemistry is absolutely precise; there is no ambiguity about it at all. It does not mean a mixture; it means one substance, a chemical compound. To use the word "substance" in any order, any Act of Parliament or in any other way, I would submit is an abuse of language. Here it is suggested that any mixture of radionuclides can be called a "substance". But chemically that is absolutely unacceptable. I hope that when the Government introduce any order, they take the advice of those who are competent in this
276
field. It is perfectly true that medical societies are competent to advise as to doses of radioactive materials, but they are not competent to decide whether any particular material is a "substance". This is something which is clearly a matter of definition. The definition is that a "substance" is something which is made of one or more chemical elements and has a defined chemical constitution; otherwise it is not a chemical substance.
Therefore, I should like to ask my noble friend whether the advice of competent chemical authorities—among which I would include the Chemical Society and the Royal Institute of Chemistry—has been taken in this matter. If it has not, I would suggest that the word "substance" be replaced by the word "material".
7.39 p.m.
Lord WELLS-PESTELL: My Lords, first, I should like to attempt to answer the question put to me by the noble Lord, Lord Sandys. Consultation has extended over the widest area I have yet met, something like 51 organisations, including the Medicines Commission, the Isotope Advisory Panel, the British Medical Association, The Standing Medical Advisory Committee, the Medical Research Council, the five Royal Colleges which would he involved, 13 other professional bodies—I shall not go through them all, but they include the Association of Clinical Biochemists, the College of Radiographers, and so on—five of the leading pharmaceutical organisations, the Dental Association and the dental radiologists making another two, and then exactly 20 other bodies, including the Health and Safety Executive.
Lord SANDYS: My Lords, I wonder whether it would be for the benefit of the House, and also the public at large, if the Government were willing to publish the full list in Hansard? It might enable the noble Lord, Lord Wynne-Jones, to know a little more about where the Government had directed their consultations.
Lord WELLS-PESTELL: My Lords, like any other Minister, I am always in the hands of your Lordships' House. If this is the wish of your Lordships then of course we shall see that it is implemented. I do not know that I can satisfy

277
my noble friend Lord Wynne-Jones about the particular professional association to which he referred, but he will be able to see the organisations that we have consulted.
I have to say that we have no jurisdiction or control over the terminology. This is laid down in the Directive of Euratom, and this is something we have to accept and cannot do anything about. It is not a very satisfactory answer to him, but that is the situation. With regard to forms, we do not like them any more than the people to whom we have to distribute them. It makes a lot of work for Government Departments. We are anxious to see that the most simple form is available. We have to send out things to doctors and dentists in the ordinary way and we do not envisage that this is going to be a major job either for them or for us. We are very conscious of the fact that we do not really want to add more forms unless it is absolutely essential.
7.43 p.m.
Lord O'HAGAN: My Lords, before the noble Lord finally sits down, may I say that I understand that his answer to his noble friend Lord Wynne-Jones, who is an acknowledged authority on chemistry, was that the fault lay not in Her Majesty's Government's order now before the House but in the parent legislation, as it were, that was coming from the EEC. Therefore, as it was something that flowed from Community legislation, nothing could be done about it in the order now before your Lordships, or by Her Majesty's Government, because the time had gone. Would the noble Lord be prepared to say that, if this Instrument we are now discussing is part and parcel of a defective Directive which has been agreed in the Council of Ministers, the Government will do something about correcting that Directive itself?
If it is wrong for us—and I am no authority on the chemistry in question; I have the massive intellectual resources demonstrated by an O-level in biology—could it not be taken up by the Government with our partners in the Community and the Commission be asked to bring in a new Directive using the correct terminology? I am not trying to be awkward, I can assure the noble Lord; I am simply saying that, if that is where the fault lies, let us get it right at the Community level.
Lord WELLS-PESTELL: My Lords, I do not know to what extent it is of great significance. I have the experience of my noble friend behind me who is undoubtedly well qualified in this field, and r think that most people know his reputation. This is a matter that I would obviously take back and look into, but if we take some action in the matter I do not know to what extent it will affect the timetable of this order. It has to be brought in within two years. We have only a comparatively short space of time, until about July, and then it has to become effective in January. I do not know to what extent it will threaten the order itself.
I should hope that your Lordships would feel that you could accept the order because the order itself is important. It is going to do an important task. It is going to control things that I think every one of us would agree need to be controlled. If you can accept it on that basis I shall certainly see whether an inquiry could be made into the validity of doing something about the terminology.
Lord WYNNE-JONES: My Lords, before my noble friend sits down, may I ask him whether it is possible for an inquiry on this matter to be made of competent chemical authorities? I agree with him entirely that it is highly undesirable to hold up any order of this sort, and I would not for one moment propose that. However, I feel that it is a pity if we use wrong terminology because this may have repercussions in the future.
Lord WELLS-PESTELL: I can only give the assurance that I have already given; that is, that I shall certainly take it back and discuss it with my rigat honourable friend to see whether there is something of very great significance in this. However, I am anxious that the order, which is an important one, should not be held up.
Lord WALLACE of COSLANY: My Lords, I beg to move that the House do now adjourn during pleasure until 8.15 p.m.
[Sitting suspended from 7.45 p.m. until 8.15 p.m.]

SCOTLAND BILL
House again in Committee on Clause 44.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 298:
Page 22, line 27, after ("sums") insert (", including grants under section 63 below.").
The noble Earl said: We continue to deal with what are called the financial provisions of the Bill. This part of the measure was not examined at all by the other place. We are therefore entitled to ask for as much information as possible on how the financial side of these proposals is to be handled. I should like to know, first, why the rate support grant, which is in Clause 63, is not in the financial part of the Bill but among the miscellaneous provisions. Surely this is closely connected with the other financial provisions, and indeed is an integral and vital part of them?
I am wondering, too, why it is not dealt with on the same basis as what we have previously been discussing as the block grant. In fact, does the rate support grant form part of the block grant? If so, what part? I note that the rate support grant is made under certain local government provisions—the 1966 Act and the 1975 Act. That seems to be dealt with in an entirely different way, and, so far as I can see, is not covered by the rather slender conditions which are provided for in Clause 44.
In that clause the block grant has to be accompanied by a statement of the considerations which have led the Secretary of State to set the block grant at that figure. There is no such provision in Clause 63. There is no provision as to whether the Secretary of State states the considerations; and there is no suggestion, as it stands, that it should be subject to an order in the other place. It would seem important that these should be taken together. I suppose the rate support grant is about £1 billion—I am not certain of the figure—and I daresay it represents a substantial percentage of the block grant. Why are they not taken together and what are the considerations involved in their having to be taken separately?
There is a further question in this connection. Admittedly, there are differ-
280
ent considerations applying to both, except that the funds must be provided by Parliament; yet they both—certainly the rate support grant—will inevitably cover a substantial number of reserved subjects. As can be seen from Schedule 15, there is a list of reserved subjects—the reserved functions of local authorities and other bodies—and they are all covered by the rate support grant. Many of the 25 or so subjects are in fact reserved functions, yet they will be paid for by the Scottish Secretary, and presumably after a discussion in the Assembly. How is it proposed that that should work? Is it to be handled entirely separately? I presume that it will be an annual grant. We do not yet know whether the block grant will be annual, but I must assume that the local authorities will need to have their rate support every year. It seems to me integral to Parliament that they should know that funds are being made available to the Scottish Assembly under both headings.
I take it that the rate support grant will be paid into the Scottish Consolidated Fund, and that those in charge of the fund will then be responsible for disbursing it. What discretion, if any, will there be in the allocation of those funds? Many of these functions are extremely important. The first on the list in Schedule 15 is "police (including police houses)", and there are a number of others which I need not go into here. All these have to be supplied, so far as I know, by the Scottish Secretary. I suppose that they will be allocated for different purposes. The Scottish Secretary will have to make his case to the Treasury on behalf of the local authorities on exactly what payments are to be made, and he will have to justify the requests for the amount required.
Why is this matter not included in the financial provisions? It is one of the most important financial aspects of the Bill, and is an integral part of the financial arrangements which are to be made. Is this matter intended to be dealt with together with the block grant, or are these two items to be dealt with separately? If they are to be dealt with separately, can we please be told how the rate support is to be dealt with, if it is not equally well to be dealt with under Clause 44, which seems to me the right place to deal with it. I beg to move.
8.22 p.m.
Lord KIRKHILL: I want to respond initially to the first and principal question put by the noble Earl. He is asking—perhaps I might paraphrase—why is Clause 63 where it is? The answer to that is that rate support grant is not part of the arrangements for funding the Scottish Administration through the block fund. It arises as part of the spending of the block fund. It is thus a miscellaneous matter arising from the devolved matter in Group 5 of Part I of Schedule 10.
But the block fund will include provision for the payment of rate support grant, and it will be open to the Scottish Administration to decide to give financial assistance to local authorities from some future date in some other way than through the medium of the present rate support grant system. But certainly to begin with they will have to operate the present system. However, no matter how they decide to do it, the need to give subvention to local authorities' current expenditure will continue to be a major consideration in the determination of the block fund. Your Lordships will know about this because the matter has been discussed on a previous Amendment when the discussion at one point ranged between my noble and learned friend Lord McCluskey and the noble Lord, Lord Strathcona and Mount Royal.
The total of devolved public expenditure, and the amount of the block fund will be negotiated between the United Kingdom Government and the Scottish Administration. The method of determining the block fund will have to be discussed and agreed with the Administration, but it may be possible to devise a formula approach to this also. It is the Government's intention that the consultations with the Scottish Administration will take place on a virtually continuous basis, and not as a series of disconnected, highly political confrontations.
With regard to expenditure by local authorities on reserved functions, as my right honourable friend the Secretary of State for Scotland said in another place, there are certain functions—and the noble Earl has just touched upon this—listed in Schedule 15 which will remain with the United Kingdom Government, but which will have to be financially supported in the same way as they are supported at present.
282
The rate support grant is of course a general, and not a specific, gra it. Once the grant is paid, individual local authorities are free to use it in any way they wish. This is the essence of the grant and something to which local authorities rightly attach considerable importance.
Support for the reserved services, therefore, in common with that for devolved services, must come from the general support given through the rate support grant system. Since reserved functions as a whole amount to rather less than 10 per cent. of total local authority expenditure —and most of it is on police and traffic wardens, as the noble Earl has just mentioned—the Government consider it unlikely that any significant differences will arise with the Scottish Administration, or the Convention of Scottish Local Authorities, over the allowance to be made for reserved functions when the rate support grant is fixed.
Finally, there is the provision in Clause 63(2) which obliges a Scottish Secretary to have regard to such considerations affecting reserved functions as the Secretary of State for Scotland brings to his notice after consultation with local authority associations. I hope that that answers the points put to me by the noble Earl.
The Earl of SELKIRK: In that case the noble Lord should accept my Amendment. That is the simple answer to this. I am concerned that it is made clear that the rate support grant is included. I, in my ignorance, reading the Bill, seeing two separate paragraphs in totally different parts of the Bill, imagined that they were not connected. I cannot see why what I propose should not be included. It would make the Bill clearer, simpler and comprehensible. It would not injure the Government, or anybody. I am all for comprehensibility in Acts of Parliament. There is another point on which I should like to press the noble Lord. He says that there is no specific grant at all. This is a radical change, because there have been specific grants—
Lord KIRKHILL: Perhaps I expressed myself in a less clear manner than I intended. I was suggesting to the noble Earl that the rate support grant is not a specific grant. It never has been. It is a general grant. That is the point I was trying to make.
The Earl of SELKIRK: With great respect, is that true? Certain items in the rate support grant are specific. I always understood, subject to correction, that police grant was specific. There are one or two others with which I am not familiar. Is the noble Lord saying that this is a general grant covering devolved and reserved subjects, and that the Assembly, and indeed the local authorities, are perfectly free to spend as much or as little as they like? Is that really the position? If it is, it undermines the whole concept of reserved and devolved subjects in local government.
Lord KIRKHILL: The present position is that rate support grant is a general grant. Within the calculation authorities are thereafter free to determine their own priorities. That is the present position, and it certainly will be the position as the Assembly gets under way, no matter what may happen in the end.
Lord HARMAR-NICHOLLS: Does the grant go direct to the local authorities, or does it go through the Assembly or the Executive?
Lord KIRKHILL: I am sorry; I do not quite understand the point the noble Lord is making.
Lord HARMAR-NICHOLLS: Does the rate support grant go direct to whoever is to spend it, or does it go through the machinery of the Assembly?
Lord KIRKHILL: It will go through the machinery of the Assembly to the local authorities concerned.
Lord HARMAR-NICHOLLS: So the more the local authority gets, the less the Assembly gets on the block grant? Is that really what the noble Lord is saying?
Lord KIRKHILL: The Assembly will be discussing with local authorities the extent of rate support grant, as, for instance, at the present moment the Secretary of State so discusses with local authorities.
Lord CAMPBELL of CROY: I might be able to help overcome a misunderstanding which I think may have arisen between my noble friend Lord Selkirk and the noble Lord. As the noble Lord said, once the local authorities have
284
received the rate support grant, they are able to allocate it between different services. But the process of calculation of the grant is such that the Government go into protracted negotiations in Scotland —through the Scottish Office—with the local authority representatives (now the Convention which represents them all) and they work out very carefully exactly how much they are to spend on education and their other services as the justification for the resulting figure that is determined. In practice, it is not easy for them to depart greatly from the allocation because that has been the basis of the negotiation which has arrived at the total sum. I hope I have been able to assist what appears to me to have been a misunderstanding.
Lord KIRKHILL: I can understand what the noble Lord, Lord Campbell of Croy, from his vast experience is saying, and can only re-emphasise that no change is being proposed; it is a continuance of an ongoing process.
Baroness ELLIOT of HARWOOD: May I ask the noble Lord a question? I remember over very many years of my life in local government having meetings of all the committees in about January or February and putting in the amounts we wanted from the general fund. That went to the Scottish Office for negotiation. It took three or four months in order to get what one wanted. I cannot believe that that will take place without any relation to what is required. It must take place.
The real point is, will it be with the Assembly or with the Secretary of State? If it is to take place with the Secretary of State it remains very much the same sort of thing that has been done for years and years. If it is to be with the Assembly, and then in the end has to be approved by the Secretary of State, we are inserting another tier of people who have to be involved, which, in my opinion, is quite unnecessary. The noble Lord keeps saying that this is a grant with which one can do anything. Frankly, it is nothing of the kind. It is a grant that one gets because one has put up what one hopes are extremely good schemes. One then gets the money for them. One cannot get a large sum of money without going into every detail of every single committee.
Lord KIRKHILL: In response to the noble Baroness, Lady Elliot, as she will know, the present position is that the Secretary of State for Scotland negotiates in a number of different consultations with the Convention of Scottish Local Authorities in determining the extent of rate support grant. When a Scottish Assembly gets under way, it is envisaged that the rate support will be part of the devolved consideration, and of course the new Scottish Administration will be involved in that type of discussion. There can be no question of the discussion ceasing.
Baroness ELLIOT of HARWOOD: The money will still come from Westminster.
Lord KIRKHILL: The Secretary of State will make arrangements under Clause 44.
Lord DRUMALBYN: The answer to my noble friend Lord Selkirk is, I venture to suggest, that Clause 44 in general is just an enabling clause conferring power upon the Secretary of State, with the consent of the Treasury, to make payments. How those payments are made up is as may be determined by order made with the consent of the Treasury. It is a normal empowering provision which is always necessary if the Treasury is to make payments.
Lord KIRKHILL: I agree with what the noble Lord, Lord Drumalbyn, has said. In my reply to the noble Earl I was attempting to explain how I saw the thing working. This was my attempt to open the door, as it were, to indicate how it works at the moment and how it will work.
Lord MACKIE of BENSHIE: Is the Minister saying that the Secretary of State will negotiate the block grant with the Treasury and that the Assembly will not negotiate with the Treasury for the block grant? Is it that negotiations will be done with the Secretary of State?
Lord KIRKHILL: I do not understand the difficulty expressed by the noble Lord, Lord Mackie of Benshie. I thought I had explained the position fairly and clearly. Can he elaborate his point to me?
Lord MACKIE of BENSHIE: I should have thought that the Assembly itself should have some say in the negotiations over a period, taking into account the historical condition of Scotland and the amount of money that has been paid in the past, the burden they will have to bear in the future and the per capita situation in the rest of the United Kingdom. This must be a subject of negotiation in which the Government of Scotland will be involved for the block grant. The whole purpose of the block grant was that, after reasonable negotiation, responsibility would be borne by the Assembly for the amount of money. I misunderstood the Minister if he said that these negotiations would be carried out by the Secretary of State.
Lord KIRKHILL: I cannot recall my exact phraseology of a few moments ago but there can be no question but that the Scottish Executive will be very much involved in these negotiations. There can be no question of setting the Executive on one side. I hope I did not convey that impression and, if I did so, of course I withdraw.
Lord HARMAR-NICHOLLS: This does not clear away the problem. My noble friend Lord Selkirk has clarified my mind in saying that the rate support grant has got to come out of the block grant.
Lord McCLUSKEY: The mover of the Amendment has failed to grasp the fact that sums are paid out of the Scottish Consolidated Fund. The noble Lord, Lord Drumalbyn, stated it correctly when he said that sums are paid into the Scottish Consolidated Fund and sums are paid out of the Scottish Consolidated Fund, but when they go into the Fund they lose their identity and just become part of the Fund.
Lord HARMAR - NICHOLLS: Although they eventually lose their identity, at the point of going in, one is a grant and the other is a rate support grant. I have had a little experience of this. I remember that, when I was head of a local authority, we used to have de-rating of industry. We used to have the rate support grant to cover the de-rating of industry because industry was a very important rate-producer in the

287
area with which I was involved. But one did that direct with the Treasury. Now I gather—and the noble Lord, Lord Mackie of Benshie, seemed to bring this out—that, whereas the rate support grant used to come direct from the Treasury, it now comes through the Assembly, and that the amount that they have to pass on as the support grant will affect the amount of the block grant with which they are left. This is the point of conflict which I should like to be clear on. If for some special reason the Assembly want to keep a bigger part of the general grant for its purposes it could well be tougher on the local authorities. My noble friend may look bewildered. I am bewildered by the whole shooting-match, but, having now set out to try to understand it—and he must not get irritated with me—I should like to know whether the local authority, as well as having to satisfy the Treasury on the block grant, will have to satisfy a possibly avaricious Assembly. I should like to have an answer.
Lord KIRKHILL: May I direct the noble Lord's thoughts along these lines? At the present time, Central Government can alter the percentage of the rate support grant. If a policy decision so to do is taken, this will of course throw an additional burden upon the local authorities if they wish to maintain the present level of services. They will have the alternative of cutting back or raising rates. In exactly the same way, the Scottish Executive will have that area of choice. Before I resume my seat I may say that the nogotiations we have been talking about earlier are clearly—and this is mostly directed to the noble Lord, Lord Mackie—between the United Kingdom Government, which, in practical terms, means the Secretary of State for Scotland and the Treasury, and the Scottish Administration. If I in any way obfuscated that issue earlier, I hope that sets the record clear.
The Earl of SELKIRK: I am grateful for such information as we have had. May I try to summarise it? I am not greatly impressed with this argument about "at the present time", because we are, after all, examining a wholly new situation. If I understand the noble Lord, Lord Kirkhill, correctly, the block grant is the
288
sole source of funds for the Scottish Consolidated Fund—is that right?—and it covers all the expenditure for which they will be responsible in the health services, in housing and in education. Is this correct? I am not clear whether or not it is correct. This money is received into the Consolidated Fund, and, as has been said, the identity is lost. What are not lost are the items of expenditure which have been submitted to justify it. They are not lost; they are still there. Does the noble Lord want to say something?
Lord KIRKHILL: Again to try to be helpful, I revert in one sense to an earlier point, but it also takes in the later point which the noble Earl is making. There are specific grants.
The Earl of SELKIRK: There are specific grants?
Lord KIRKHILL: Yes, but I did not say that there were not specific grants. I said that the rate support grant was not a specific grant, but that it was a general grant; and that is a statement of fact. But there are specific grants, and certain services—the police, as an example, and housing to a certain extent—enjoy support in that way. But the rate support grant is general, providing assistance for a whole range of services, which includes leisure, recreation, roads, transport and so on. It is for each local authority to decide the services upon which the rate support grant should be spent. This is a point I made earlier, and I can only re-emphasise it. The block fund will contain an element which takes account of the need to pay rate support grant to local authorities, and it will be for the devolved Administration to decide, after consultation, as I was saying earlier, with the Convention of Scottish Local Authorities, how the rate support grant should be distributed between the authorities. I honestly cannot add anything to that. That is the picture as I know it.
8.43 p.m.
Lord HARMAR-NICHOLLS: I wonder whether the noble Lord could explain this to me. Is it going to be a way —and I am not putting this politically; I just want to know—of giving a side-door authority to raise rates, which are, to me, the same as taxes? If it is that the rate

289
support grant that they get coming through the Assembly is not as much as it would be if they had it as it goes now, that would mean that the local authorities would have to raise their rates in order to make up for what they were not getting now that it was coming through the Assembly. Is that a possibility? Because if that is so, then I reckon that ought to be made clear so that the people who are eventually to be asked to vote on the referendum will know what they are voting for. If it is that they are told that they are not voting for an increase in rates or an increase in taxes, whereas the way it is being administered means that they are, I think they are entitled to know, if that is what the situation is going to be.
Lord KIRKHILL: I responded to exactly the same point, which the noble Lord made earlier, as explicitly as could. I cannot add anything to that which I said just moments ago.
Lord MACKIE of BENSHIE: Perhaps I could say that the noble Lord, Lord Harmar-Nicholls, has been one of the most subjected Members of Parliament in history to the closeness of the electoral system; and if he was lucky enough to be a Scotsman instead of a poor East Anglian, and if he was in the Assembly and backed a Party which put up the rates, then he would not last in any shape or form as long as he lasted in the other place, and no one should know that better than he himself.
The Earl of SELKIRK: We have elicited a new and important fact, and that is specific grants, which I thought were always there. I must make the point that this was specifically denied—and, I may say, from both Front Benches —and it just was not true. There are specific grants.
Lord KIRKHILL: With respect, I did not deny that there were specific grants. I said that the rate support grant was a general grant. That is a statement of fact.
The Earl of SELKIRK: We have been told that there are specific grants. I wonder whether we could be told in due course what specific grants there are. I say that for this reason. We are told that, in theory, both the Assembly and the local authority have complete discretion.
290
In practice, they have not. That seems to he the result. Would the noble Lord agree to this Amendment, because it makes it quite clear that this is the sole source of finance? I think it is desirable that it should be made clear. I see no reason why this should not be done, and I should have thought that it would help to make it clear that this is where all the money will come from. Can the noble Lord see any objection to this course being taken? I think it would make it much clearer to anyone reading this Bill.
Lord DRUMALBYN: Before the noble Lord answers, may I ask a question which may help to clarify this, at any rate for the future if not now? In Clause 44(2) provision is made for orders to be laid before the House of Commons. Presumably, such an order has to be meaningful to the House of Commons; and, that being so, presumably it will be broken down to some extent, and itemised. Presumably, also, the order may cover several sums to be paid—let us say, so much on such-and-such a date, which I believe is the practice already in some cases. Would this not help, if the global amount was itemised and there was then set out so many payments each month, each quarter or whatever it may be? This would cover all the payments, as I understand it, which are going to be made into the Scottish Consolidated Fund. Would this not help to make the matter clear for the future, even if it is difficult to make it clear for the present?
Lord KIRKHILL: That is a helpful elucidation of how I see the situation evolving. I am not in any disagreement with that indication.
The Earl of PERTH: I have listened to all of this, and I must confess that I remain extremely confused. I should like to suggest that perhaps it is possible for us to read the whole of this debate quietly at our leisure, and perhaps come back to it again on Clause 63, because they are related and they have been part of the same discussion all the way through. Then, if there arises, after looking through it again, something that we wart to raise at that time, we can do so. If, then, the sequel to that exercise is that the point made in the Amendment of my noble friend Lord Selkirk is a good one, we can move it again at Report stage.
The Earl of SELKIRK: I must say that the noble Lord has given no answer whatsoever as to why this should not be clarified in this Bill. I think it is quite clear. What is intended is not all that clear. This, I think I am right in saying, is intended to be the sole source of money for the Scottish Consolidated Fund. Am I correct in that? If I am, then I think it should be made clear that that is the case, and that there is not a separate thing called the rate support fund.
I should like the noble Lord to think about this. It is really rather important that we should eludicate this point, because it was never reached in the other place. I think the people concerned are entitled to know as fully as possible how this money which is going to be provided by the Westminster Parliament is intended to be used by the Government. The manner in which it is handled here is in many ways very loose, very untidy, and all that can be said is, "We have done this in the past". I am not interested in the past. This is a new system of government; it should be as fully explained as it can be, and I do not think the Government are trying very hard. Will the noble Lord think about this and try to elucidate this just a trifle further?
Lord KIRKHILL: My difficulty is that it appears to me that the noble Earl's Amendment is somewhat unnecessary, because the rate support grant will fall, as he has been saying, to be paid out of the Scottish Consolidated Fund. It follows that it will be one of the purposes to be financed from the block fund. Does that not seem reasonably straightforward?
The Earl of SELKIRK: No.
Baroness ELLIOT of HARWOOD: I think the noble Lord does not understand how obscure what he is saying really is to us. While none of us on this side, I dare say, may be exceedingly intelligent, yet all of us have had great experience in local government. We know what we are saying when we are thinking about getting money, spending money, putting in estimates and all sorts of things like that. Believe me, this is just one complete muddle. Will noble Lords opposite be prepared to take it back and to look at it?—they can tell those who draft it that we are all stupid on this side and do not
292
understand. If you do not think we are stupid—and I hope you do not—then I may say that we are trying to do something to make it perfectly clear to the public, to Members of Parliament, and which does not alter it in any way. We are not altering anything; we are only saying to noble Lords opposite that you must put into the Bill words which are clear, understandable and cover everything. If you do that and think about it again—fine! We will leave it. Otherwise at Report stage I shall urge my noble friend Lord Selkirk to bring this question up again and vote on it.
Lord MACKIE of BENSHIE: Is it not a fact that the rate support grant will be paid out of the Consolidated Fund but that the non-devolved rate support grant, such as the police, will be paid direct to the local authorities? Is that correct?
Lord KIRKHILL: That is something that I think I have got to consider carefully before making an off-the-cuff reply. I must be frank and say that I will want to look at that. I shall certainly think about it and let the noble Lord have my observations.
Lord VAIZEY: I do not quite see what the difficulty is. It arises, surely, from the fact that the Bill establishes a new consolidated fund which is the Scottish Consolidated Fund. The money is voted by the other place and will be paid into the Scottish Consolidated Fund on the authority of the Secretary of State for Scotland. The Consolidated Fund in Scotland will, in turn, pay rate support grant to the local authorities in Scotland which hitherto has been paid out of the United Kingdom Consolidated Fund. I cannot see the difficulty, except that the same words are used in two separate bits of the Bill to mean different things. I should have thought that the substantive issues comes up on a subsequent Amendment.
I do not find this obscure. It is clear that the intention of the Bill is that virtually the only source of revenue for the Scottish Executive to spend will be through this grant from Parliament. It may be that odd things will be passed in the United Kingdom Parliament by subsequent legislation which gives them, say, the revenue from dog licences; but

293
it is quite clear this Bill's intention is that the whole of the money spent by the Scottish Executive on the authority of the Assembly is to be in this block vote by Westminster. The central issue is on a subsequent Amendment: whether this is a correct principle or not. It is not whether they have used the same language in Clauses 44 and 63, with great respect to the other side. I am sympathetic towards them; for I am convinced that muddles will exist in a Bill of this complexity but I did not think that this was an overpoweringly difficult muddle.
The Earl of PERTH: It is all very well for the noble Lord, Lord Vaizey, to say that this is clear. I am not on the other side; I am a Cross-Bencher. To me, it is not clear. I cannot understand why, if what he says is correct, we cannot include the words used by the noble Earl, Lord Selkirk. Then we get a question raised by Lord Mackie and Lord Kirkhill cannot answer it, and the confusion then becomes greater to me. I think that we ought to be allowed to look at this again, to relate it to Clause 63, and when considering that clause, if the need arises, to debate it further and, as the noble Baroness, Lady Elliot, has said, if we are not satisfied at that time we can always move an Amendment at Report stage. To me, it is not as easy as Lord Vaizey says it is; but I am only a Cross-Bencher.
Lord MOTTISTONE: I wonder whether the noble Lord, Lord Kirkhill, will let us all into the secret. He said that he will tell Lord Mackie the answer to his question. It might be as well if we all knew the answer to that question. Perhaps somehow he will convey it to us all and not just to Lord Mackie.
Lord STRATHCONA and MOUNT ROYAL: I got into a certain amount of trouble on this problem before dinner. When I get into the macro-economics of the various funds I sometimes try to bring it down to the domestic level. I do not know whether this is a good analogy or not or whether it will create more confusion. Is the Consolidated Fund a kind of housekeeping account? And is the husband—Westminster—going to agree to pay a certain monthly allowance into the housekeeping fund? But, in addition, the lodger is also paying some rent and out of
294
that the wife is paying various outgoings. But every now and again she comes along and says, "I need something special—a washing machine". The husband says, "Here is £150 for the washing machine." She may be cunning and get it for £125, but she does not have to account for the difference. The fact is that the special thing is negotiated in that way.
I think that the problem we are in is a purely factual one: of what is put into the fund, how it is negotiated, what is going to go in and, then, how it is disbursed again. I think of it in this way in order to clarify for me the way it is topped up and paid out. I hope that my analogy may be a fair one.
Lord KIRKHILL: I do not know whether the analogy helps noble Lords. I do not know if it helps me. Perhaps I am now beginning to become more confused than usual. I should point out that the noble Lord, Lord Campbell of Croy, very fairly described the practical workings of the situation as it is at present. Certainly, I cannot see that the Bill will change the practical workings of this sort of situation except that some of the principals will alter—and I mean by "principals" not principles but persons.
Lord CAMPBELL of CROY: As I have been mentioned, I must say that all I did was at one point to try tc assist by reminding your Lordships of how the rateable grant total amount was negotiated. I did not get on to the question of specific grants. I thought that my noble friend said that something was mid about specific grants from both Front Benches, but I realise that he said "Benchers". I know that the police and other services are paid by specific grants. It was not for me to deal with that, but for the Government. I was reminding your Lordships of how the negotiations for the total sum take place between the Government and the representatives of the local authorities and that because they then have to make pretty accurate estimates of what the expenditure is going to be under different headings, they carrot later depart very far from the expenditure that they foresaw under those heads. I cannot try to explain this Bill. I am still trying to learn from what the Government are saying how these various clauses interact with one another. I think that Lord

295
Vaizey has put it in a very simple form; but, for that very reason, I cannot see why my noble friend's Amendment cannot be accepted.
Lord KIRKHILL: If, at some personal risk, I can return to the question of specific grants, I am able to affirm that these may be paid for devolved services or for non-devolved services; and to let each one know (as I was requested to do) that the former will be paid by the Scottish Administration and the latter will continue to be paid by the Government.
Lord HARMAR-NICHOLLS: I thought I had got it reasonably straight. Is the position this? I will use an analogy. At this minute, the arts do not get their grant direct from the Government in the United Kingdom. What we have done (and, I think, sensibly) is to set up an Arts Council and we have said that all the money that the Exchequer is going to give for any kind of art—painting, theatre, museums—will go to the Arts Council. The Arts Council will decide, from the global sum of, say, £40 million, what goes to the various branches. That, I gather, is how the rate support grant and the block grant will be dealt with.
The point that I am making is that if, until now, instead of it having to go through the equivalent of the Arts Council, the various sections have it direct, it is going to mean that there is a different procedure so far as they are concerned. If the sieve that it goes through—in this case the Assembly—is tough (for reasons outside Party reasons) they will be forced to put up their own rates. Is my analogy of the Arts Council grant the right one, or is the housekeeping analogy of my noble friend better? I do not know.
Lord KIRKHILL: I would not like to opine about either analogy, but I would re-emphasise the point I made earlier to the noble Lord, Lord Harmar-Nicholls. If he will think of the present position, we could, for example, be in a period of crisis. Then the Government of the day might seek to adjust the percentage rate support grant. This, in turn, as I tried to explain earlier, would mean that the local authorities concerned
296
got less. If they want to retain services as they are then the rates would be higher than they otherwise would be. On the other hand, they might cut services. I do not think I can say anything more about it.
The Earl of SELKIRK: May I make two points about this? It is quite clear from Section 63 that all rate support grant is made from the Scottish Consolidated Fund, and that includes the police. That must include a lot of reserved subjects. I did try to elucidate that and I have failed. May I just say now to the noble Lord, Lord Vaizey, that if Section 63 had followed 44 I would agree, but there are 20 sections in between and I wanted to be quite clear whether they were connected or disconnected. I do not think that is altogether unreasonable. I will not press your Lordships any more on this. May I hope that the noble Lord will look at this again and try to help stupid people who find it so hard to understand what this Bill means?
Lord KIRKHILL: Before the noble Earl resumes his seat, I must say just this. At no time have I ever suggested, surely, that anyone was in any way stupid—
The Earl of SELKIRK: No.
Lord KIRKHILL: At no point did I ever make such a base assertion. I always look at what your Lordships say, if only as a means of self-protection and self-preservation. I am not in a position at this stage to accept the noble Earl's Amendment.
The Earl of SELKIRK: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.2 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 157:
Page 22, line 33, at end insert ("and a calculation setting out a comparison of the proposed resources per capita for the year in question which would be available as a result of the approval of the draft order for expenditure by the Scottish Executive for purposes falling within devolved matters, with the resources per capita provided for that year for such purposes in England and Wales.").
The noble Lord said: After what we have just been through, it is with some trepidation that I rise to move an Amendment which contains the word "calculation"! However, what we are doing here is something which is not only fairly simply but fairly self-evident. Subsection (2) speaks of a statement of the considerations leading to the determinations to be made by the order; and all we are really doing here is spelling out what might be considered to be one of the considerations.
This, again, is based on the July 1977 White Paper, which suggested that this might be a reasonable approach to arriving at these kinds of figures. Also, I think that to some extent this Amendment addresses itself to a problem raised earlier by my noble friend Lady Ward, although it does not go quite so far as to suggest that the comparative figures should be spelled out on a region by region basis.
I think that what we have to recognise here is that Scotland is currently getting something like £120 per capita for every £100 spent in the United Kingdom as a whole, and perhaps I might make the Party point that I believe it has gone as high as 30 per cent. extra in the halcyon days of Tory Governments! However, I understand that at the present time it is something of the order of 20 per cent. higher. Against this, the average rate of tax paid by taxpayers in Scotland is something like £50 per head lower than in England. I have also seen a calculation which suggests that there is an overall budget deficit in Scotland of the order of £400 million. I do not know whether any of those figures are anywhere near correct, but I believe them to be in the right general area.
We talked earlier about allocating expenditure according to need. I could say "Amen" to that. It is clearly a sensible way to go about it. Here you are a country with a sparse population, with difficult communications, with a bad reputation, at any rate, for their weather, which I sometimes think is perhaps not wholly undeserved, and with considerable areas of less-than-satisfactory land. In other words, this is a country with certain natural disadvantages as compared with England. I think all of us feel that it is totally reasonable for this to be
298
recognised and for extra payments to be made in respect of it.
The fact is that these payments are currently being made and, on the whole, people in the United Kingdom accept that we have to make special arrangements to help the Scottish electricity supply, the Scottish roads, the difficulties of Scottish education, and so on. We are always fearful of the possibilities of the English backlash and it seems sensible, at least—and this is alluded to in the White Paper—to try to make some attempt to get at some of the facts and spell them out. It may be said that this is not the sort of thing one should put into an Act of Parliament. Nevertheless, I think it gives us the excuse to ask the Government whether they think this is a proper way to approach arriving at what is clearly going to be, in any case, a difficult negotiation. I beg to move Amendment No. 157.
9.7 p.m.
Lord MIDDLETON: It is so essential to try to maintain the unity of the United Kingdom that we should, I am sure, look at any means, however unsatisfactory, that can reduce the divisive effect of Clause 44, to which I referred earlier this evening. The White Paper on expenditure suggests—and it has been suggested also by Ministers in another place—that after devolution the Government intend to explore with the devolved Administration the scope for an independent body and for a formula under which devolved expenditure will be settled.
It is not just the devolved Administration that should be consulted. The size of the block grant affects every region in England. At present the Scots are receiving per head of population 20 or 25 per cent—whatever it may be—more in identifiable public expenditure than the English. I agree with my noble friend Lord Strathcona that this disproportionate allocation is accepted in England at present.
As the noble and learned Lord, Lord McCluskey, reminded us earlier this evening, the system of public expenditure based upon need is well established and the poorer English regions, having similar problems of unemployment, dereliction, decaying industries and so on, benefit in the same way as do the Scots. I do not think that these regions are at present

299
resentful of the Scots. They accept the differential system administered from the centre by what appears to be a reasonably fair process, and where there is no undue political pressure from north of the Border.
After devolution, the share-out as between England and Scotland will be high-lighted every time the block grants come before Parliament. There will inevitably be great political pressure from Scotland and this may well build up strong resistance in England. It is essential that Parliament should be fully informed as to the relative level of expenditure per head in England and in Scotland, and, if it is seen in Parliament that the Scots are to remain in relatively the same advantageous position, then I believe that this will be, as now, perfectly acceptable in England. If, however, there were to be Scottish demands for an increased amount, relatively, of expenditure per head, then the figures provided would show whether this was fair or whether it was greedy.
One is tempted to go further than this Amendment—this possibility has been referred to earlier this evening—by legislating that figures should be provided for Parliament showing the breakdown of expenditure per head on the devolved services, as between all the English regions. I suppose that you would define them by reference to the boundaries of the present Economic Planning Councils. It would then probably be found that the more disadvantaged regions of England, such as those of the North and the North-West, were being treated as well as, if not better than, Scotland, and that might go a long way towards curbing any feeling that they, having many of the problems of Scotland, and very often in a more acute form, were being treated relatively worse.
This might mitigate the divisive effect of the periodical dispute as between the North of England and Scotland, but it would also raise problems as between the English regions and for that reason I prefer this Amendment and I support it. A vague promise, to consult a Scottish Assembly about how to allocate public expenditure throughout the United Kingdom, takes no account of the legitimate concern of the English regions, and does nothing to mitigate the possible divisive effect of Clause 44. I very much
300
hope that the Government will accept this Amendment, in view of their desire to provide a Bill that will strengthen and not weaken the United Kingdom.
Lord TANLAW: I wonder whether the noble Lord, Lord Strathcona, could help me on a point. Can he explain whether, if his Amendment is successful, the Scots will get more than the Goschen formula, or approximately 11/18ths of the national Consolidated Fund, or less? I am afraid that I am not very clear.
Lord STRATHCONA and MOUNT ROYAL: I am in some difficulties, because I am not familiar with the Goschen formula, which I do not think we use any more.
9.11 p.m.
Lord VAIZEY: I must confess that I think this Amendment comes fairly near to the heart of the Bill. It is rather interesting that we had bevies of law Lords (if "bevies" is the right word to use about a collectivity of law Lords) speaking about the rather abstruse problems of which court people should appeal to. Presumably it will be quite a large item in Scotland. But Clause 44 and this Amendment are likely to be the central point of debate every year about the position of Scotland in expenditure terms, which is really what the Bill is all about.
The noble Lord, Lord Strathcona, was perfectly correct. Since Dr. McCrone first did these calculations about 20 years ago it has been well known that the expenditure per capita on the services in Scotland is higher than it is in England. This is partly because, on average, the Scots are poorer than the English, but it is also because the level of public services, despite what the noble Earl on the Cross-Benches would aver, is generally rather higher in Scotland than in the rest of the United Kingdom, as various indices show.
The trouble with this Amendment is that it refers only to one possible index of the way in which the clause will operate, and I should have thought that the real defect of the clause—to which I shall want to speak when we debate, Whether the clause shall stand part of the Bill?—is the absence of any formula, such as the Goshen formula, from the Bill. As I

301
understand it, this is to be left to a periodic haggle between the Scottish Executive and the United Kingdom Government, which will be a continuing source of irritation.
If I may just spell out why I am slightly dubious about what the noble Lord, Lord Strathcona, has suggested—though I think it is an important point and one which bears close consideration—if you think back in more general terms about the Bill, what it is really doing is what we all like to do; that is, to have our cake and eat it, too. What the people of Scotland want is parity of services with England, and by "parity" they mean slightly better; that is to say, if you fall down and break your leg in Inverness or in Southend, there will be a free hospital for you to go to. The basic principle is that your children should be at schools which are roughly equal. That is the reason why the Government have not given power to the Scottish Assembly to levy taxes and why, broadly speaking, they have not given to the Scottish Assembly power to do very much.
The Government have not allowed any real power over the economy to be given to the Assembly. However, the Government have allowed power to the Scottish Assembly to vary expenditure between housing, health and education. Those are the three principal subjects which are devolved. It follows therefore that if the Scottish Assembly says, "We will build an extra new hospital in Glasgow", they will not be spending so much on education as they would have spent if the United Kingdom Government had built their hospital. That is the necessary corollary. Therefore the Amendment moved by the noble Lord, Lord Strathcona, will not show the net effect on each service. It will show only the total volume of expenditure which is directed towards Scotland divided by the population of Scotland.
This is not a very good index of the level of services provided. Therefore it will not give the noble Lord, Lord Strathcona and Mount Royal, the information that he wants. For example, if the Scots had twice as many children per head as the English, the expenditure on education in Scotland would be much larger. Therefore the whole basis of comparison would not have much statistical validity.
302
I shall listen with great interest to what the noble Lord has to say in reply to the points which have been made on his Amendment. If I had more courage and more familiarity with the practices of your Lordships' House, I should have moved a series of Amendments designed to draw attention to the absence of any formula on taxation. These clauses were not very much debated in the other place, and the general level of debate so far has been pretty low; yet this is the area where there will undoubtedly be an annual fight of a very substantial kind.
9.16 p.m.
Lord MACKIE of BENSHIE: I am afraid that I cannot allow a number of points which have been made by the noble Lord, Lord Vaizey, go by without comment. This is a very useful probing Amendment. Of course it is not necessary for any Government to publish the facts and say how much more is being paid to one section than to another, and the reasons why. Nobody has mentioned the reasons why. I am surprised that the noble Lord, Lord Vaizey, who I understand is an economist of enormous distinction, did not go a little further into the reasons for the higher expenditure in Scotland.
The fact is that round about 1900 the income per head in Scotland was higher than in England and, far from paying £50 a year less in income tax, the Scots were earning higher incomes. At that time, and even before that time, there was a large migration of able Englishmen into Scotland to work in those industries which were founded on coal and steel but which have since largely died out. May I also mention that during two world wars the heavy industries of Central Scotland received an artificial fillip which deprived them of the chance to develop the new industries which brought enormous prosperity to the Midlands of England.
We have the situation in Scotland that services are much more expensive to maintain. Nobody who wants an Assembly has ever denied that there is more coming into the kitty in Scotland than is being received in the form of taxes. The reasons for this state of affairs are perfectly plain. We cannot say that we have had union with England and unitary power for 270 years and that

303
now we have a situation in Scotland where income per head is less while expenditure on public services is much more and then be told, "If you want a devolved Parliament you must pay for exactly what you have. You will receive exactly what you pay for and nothing more". It would be reasonable to say this after 30 years of devolution. Then the Scots could take the blame for their own mistakes. In the meantime, while I agree entirely with the noble Lord, Lord Strathcona and Mount Royal, that the per capita entitlement or grants to various regions should be set out for the information of all concerned, I believe that the regions in Scotland which have the highest need should also have a per capita grant.
The Earl of PERTH: I find it difficult to understand why just this one Amendment is made to the clause and why it is said to be a special factor. There are any number of other factors involved. All of us know the degree of unemployment in Scotland which has to be set against the degree of unemployment, if not in England then in the Regions. We have seen the figures. My worry is that statistics are enormously misleading. This may be one factor, but when I read the Bill I find that Clause 44(2) says:
"a statement of the considerations leading to the determinations to be made by the order".
I should have thought that the whole was very much better than the part. All I see in this Amendment is the choosing of just one small part. Both the noble Lord, Lord Vaizey, and the noble Lord, Lord Mackie of Benshie, have made the point that there are other considerations. Surely those are covered by the Bill as it stands. If we focus on just this one calculation, it may do more harm than good.
Lord DRUMALBYN: May I make a short observation? I merely want to ask a question. So far as the acceptability of the statement being made before Parliament is concerned, a very great deal would depend upon the detail of that statement. I would agree with my noble friend Lord Middleton—and I think the noble Lord, Lord Vaizey, also made the point—that if one starkly compared the figures per capita in Scotland with the
304
figures per capita in England one would be throwing into relief something that some English people might wish to be thrown into relief in order to reduce the wrath of Scotland. If, on the other hand, one added in the various regions of England which were much more comparable to Scotland one might be accused of being selective.
Therefore, it seems to me that if one did this at all one would be bound to show the complete picture for the United Kingdom and indeed it might be a very good opportunity to do so; it might become one of the major debates of the year on this subject in another place. But we should have to know in advance the kind of detail that the Government at present have in mind in regard to the statement of the considerations leading to the determinations to be made by the order. If the noble Lord would give us some inkling about that it would go a long way towards satisfying us at the present time.
Baroness WARD of NORTH TYNESIDE: I should like to support this Amendment. I do not know whether it is absolutely the best Amendment that we could get, but I am grateful to the two Members of my own Front Bench who have decided to table it. I think it is a move in the right direction and I never like to lose an opportunity of supporting something which at any rate is on the right road. Quite a number of noble Lords may be in favour of the Amendment but think that perhaps it is not the best wording; however that does not prevent us from accepting the Amendment and if, before the Report stage, we can improve the wording, so much the better. It goes a little way towards helping something that I mind very much about; namely, that in the region which I represented in the other place, and other regions where there is high unemployment, we shall have a chance of getting support.
I wish to make only one observation. When I first was elected to another place in 1931, 84 per cent. of the employable population in my constituency were unemployed, and I spent a great many years trying to bring special industry to my part of the country. Very few areas had such high unemployment. So I am grateful for this Amendment and I hope that we shall divide on it. I do not mind

305
whether we win or lose but a Division is very important so that people who read Hansard can see that at any rate some members of my own Party—of my own Front Bench—realise the problems of high unemployment that my area and others have to deal with.
9.24 p.m.
Lord KIRKHILL: A similar Amendment to this was debated in the other place and my right honourable friend the Secretary of State for Scotland said, among other things,
"It would be misleading … to single out this piece of information as being of such special significance that it must specifically be written into the Bill when none of the other matters that the House will in due course expect to have before it will be particularised in the Bill as it stands. However, all the information is already comprehended in the wording of Clause 44(2)".
And, of course, at that point the noble Lord, Lord Drumalbyn, asked me whether I could give him greater detail as to the kind of information which would be included in the draft.
I cannot as of now give him a detailed reply, but I will undertake to think about the point he has made because I think it is an important point; I recognise that. I will reflect upon it and, if I can help him in this, then I shall arrange for that to be done, either by my speaking of this on a future occasion or by some other method. It may be that I am not able at this stage to give him the details, but I will examine the point because I think it is a useful point he has made and one to which I should certainly respond.
Lord DRUMALBYN: May I intervene before the noble Lord leaves that. It would not, of course, be unknown to have a schedule or an appendix indicating the kind of considerations that would be taken into account without purporting to be in any way comprehensive.
Lord KIRKHILL: I think my difficulty, to be absolutely frank about it, is that it is difficult exactly to bring this into a detailed format, because this matter is going to stand before the other place and be examined there in detail. I should be surprised if they were to pass an order there, which they must do, unless they had closely examined the details underpinning that order. That is really my difficulty. I do not want to go too far in relation to a
306
matter which will stand very clearly before the other place. But I am going to turn over in my mind what the noble Lord has said about that.
For the reasons that I have been quoting, which my Secretary of State enunciated in the other place relative to a debate of a very similar character, the Government do not consider that it would be appropriate to single out per head comparisons as an essential element in the information the House of Commons will require in order to judge the reasonableness of a block fund order. The Bill already provides, as we have been saying, for a statement of considerations, and as the block fund order requires an Affirmative Resolution honourable Members in the other place will be able to ensure that they are provided, as I have just been saying, with such information as they consider relevant to the decision the House will have to reach.
As the noble Lord, Lord Strathcona, was saying, indeed as the noble Lord, Lord Vaizey, mentioned, and indeed as the noble Lord, Lord Middleton, averred, it is certainly the case that for many years public expenditure per head in Scotland—and, I might add, also in Wales, and even more so in Northern Ireland—has been much higher than in England as a whole, and this situation may be expected to continue for a number of years at least. This is because it is the British practice to allocate expenditure where it is most needed.
The noble Lord, Lord Mackie of Benshie, touched on some historical factors, and I agree with what he said about that matter. In addition, one can talk about larger numbers relatively of children and old people, sparsity of population over wide areas, as the noble Lord, Lord Strathcona, mentioned, severe urban problems in the older industrial areas and so on. I think these are self-evident. Scotland's higher public spending per head arises from the operation of such demographic, historical and geographical causes. It is not a matter of principle, and to lay exclusive stress on per head comparisons is, in the Government's view, misleading. It is also potentially divisive since it focuses attention on a manner of expressing expenditure which fails to reveal the differing relative needs to which the figures relate. Noble Lords have mentioned this themselves.

307
In any case, comparisons of expenditure per head in Scotland and in England as a whole are largely meaningless because of differences within the two countries, and particularly within England. Detailed figures for individual regions are not available, but we might perhaps look forward in the future, as Lord Drumalbyn was suggesting, to debate in the other place if it becomes a standard annual practice to publish comparisons. But differences between them might well turn out to be as great as, or greater than, those between the two countries taken as a whole, The Government have adopted an expenditure-based system of finance for the devolved services. Such a system requires the continued pooling of all the resources of the United Kingdom and their allocation to different parts in accordance with their relative needs for public expenditure.
The Government believe that the right approach in these matters is that set out in the White Paper, which is gradually to improve methods of establishing comparative standards and needs so that public expenditure allocations can be determined in a more fully informed way. The Government hope that, as methods are improved, the character of the information that it will be practicable to make available to Parliament, and which Parliament will expect to be provided, will change also. If an independent advisory body is established—that, as noble Lords will remember, is discussed in the White Paper—its reports may be particularly relevant and helpful to the other place in the judgments it will have to make. It is for those reasons that the Government would have difficulty in accepting the Amendment to which the noble Lord, Lord Strathcona and Mount Royal, has spoken.
9.32 p.m.
Earl FERRERS: This is an important part of the Bill, as it determines how much money is being given by the United Kingdom Parliament to the Scottish Assembly. The noble Lord, Lord Kirkhill, said he did not think that this Amendment would be necessary because its contents appeared in Clause 44(2). However, he then said that he was not certain exactly what Clause 42(2) would provide in the way of information.
308
The noble Earl, Lord Perth, said that too many statistics would be confusing. I agree. Presumably, what will be put in the order is the fact that so much money was allocated for the purposes of education, or for the purposes of health, even though the Scottish Assembly might not use it that way once it had the money. The lump sums which will be put on the order will be relatively meaningless unless they are reflected against an item. If the draft order is to say, for instance, that £42 million have been allocated for this and £36 million for that, it will be relatively meaningless unless it is either related to population, or per head, or per local authority. It must be related to something. I should have thought that, as a simple statistic, this could have been understood by the people if it was related per capita.
We all know that people in Scotland receive more per capita, for all the reasons explained. No one would object to that. I should have thought that there would be some people who would like to know how much more per capita Scotland is getting than England.
The noble Lord, Lord Mackie of Benshie, said that Scotland had had a difficult time because two World Wars had knocked about its heavy industry, and that the Scots had not been able to refurbish their industry as they have in central England. That is true. However, industry in the North of England was also hammered. Scotland will, on the noble Lord, Lord Mackie's basis, be receiving a larger proportion per capita because it was hammered about during the war, whereas the North of England, which will be receiving a less amount per capita, was equally hammered about during the war. The noble and learned Lord, Lord McCluskey, shakes his head. If I am wrong about that, I should be grateful to know. It seems to me that we must have some kind of comparison. If it is not done on a per capita basis then there should be something else.
Lord KIRKHILL: The Government, for reasons that I have just explained, do not think that the per capita explanation is the best that could be encompassed within whatever order is eventually discussed in the other place. The Government are convinced that the other place will want considerable detail and, as we

309
have been talking about the advisory body, we are hopeful that we shall be able to draw comparisons over a wider range. That was the point that I was trying to emphasise. The Government are not anxious to isolate on its own, as it were, the per capita comparison.
Earl FERRERS: Will the noble Lord give us some indication as to what types of comparison the Government have in mind? He says that they will not use the per capita comparison and that there will be a wider basis of comparison. I do not want to push the noble Lord or make it difficult for him, but, on the other hand, this matter is important. After all, this is new legislation that we are discussing. It is all very fine for the noble Lord to say, "Well, the House of Commons will want a certain amount of information". We are suggesting that it should be a little more specific than that and that we should know that certain information will certainly be available, even if other information which is not written into the Bill may be available later on.
Lord MACKIE of BENSHIE: Before the noble Lord, Lord Kirkhill, replies may I state our position for the record. I entirely agree with the noble Earl, Lord Ferrers, that any other disadvantaged area such as Tyneside, which has exactly the same record of having to expand its old industries during time of war, should be on a similar basis—not per capita but per need of the area. We should like to make that perfectly clear.
Baroness WARD of NORTH TYNESIDE: I should like to raise one matter because it must be stated. Part of the problem of the mining industry on Tyneside is that that area, with the exception of one or two big collieries, has nearly used up all of its coal because it is a very old coal field. The Northumberland and Durham coal fields were almost the oldest coal fields to be developed. I have followed the argument with very great interest, but it should be on record that we are faced with a declining mining area because we have worked most of our coal. I think that that matter should also be taken into consideration.
Lord VAIZEY: What my noble friend Lord Kirkhill has said is so reasonable, and what he has quoted the Secretary of
310
State as saying in the other place sounds so reasonable, that one can do little but agree with him, except in one respect. I gathered that my noble friend quoted the Secretary of State and I think that the Secretary of State made a rather excessive claim. It is perfectly true, as I think all noble Lords who have spoken so far have said, that comparisons on a per capita basis are misleading. However, they are comparisons and in my view it would be unfair to say that they were meaningless. They should, of course, be taken into account with other data and we are perfectly well aware of that.
It is perfectly true that if we take the average of Scottish expenditure and compare it with the average of English expenditure—the Minister quoted the Secretary of State in this regard—it is perhaps not so meaningful. The differences within England, say between the North-West and South-West, may be even greater than the differences between the average of England and the average of Scotland. We are not proposing in this Bill to give devolved governments to South-West or North-West England; we are proposing to give devolved government to Scotland.
In my view the noble Earl, Lord Ferrers, put his finger centrally on the point. We know that the money which is now given to the Secretary of State for Scotland to spend is determined, broadly speaking, by a formula which exists in the Treasury. That formula will be the same as applies to similar services in England plus a bit more because Scottish political weight is higher in the House of Commons than elsewhere, and also its needs are greater. It depends which side of the fence one is which kind of argument one finds more attractive, but that undoubtedly is the way it is done.
Assuming that the Bill becomes an Act and is put into operation and approved by the referendum, then as we depart from the bench mark, assuming the Assembly does its job, the differentiation of services offered as between England, on the one hand, and Scotland, on the other, will grow—that is to say, there will be marked differences. If there are not going to be marked differences, what is the point of the Bill? It will just be a question of people sitting in Edinburgh saying, "Let's keep everything exactly the same as it is in England", which would be a pointless

311
exercise. As we get further away from the bench mark of parity of services, which is broadly speaking the present bench mark, we have no formula for the allocation of money to the Secretary of State for the Secretary of State to allocate to the Scottish Assembly. That is the point that I am trying to make.
One could perfectly well say that it will be spelled out under the second part of the clause, but it does not say how it will be spelled out. I should have thought—there was some debate on this in another place, but it was not a very effective debate—that it was slightly irresponsible of Parliament to pass legislation of this importance for one of the major nations of the United Kingdom without saying on what basis the money which this subsidiary Parliament will get will be determined. That is the point which the noble Earl, Lord Ferrers, was making. I do not find it wholly convincing to say that this might be discussed by some hypothetical advisory body which might be set up if all goes well.
Lord KIRKHILL: Perhaps I might respond to the noble Earl, Lord Ferrers, and indeed to my noble friend Lord Vaizey, because I completely failed to satisfy them both. I cannot go much beyond my earlier comments. What the order will contain will be determined by the Government of the day as a result of whatever considerations Members in the other place decide upon, pursued by the questions which undoubtedly will be asked there and will obviously be raised in your Lordships' House, as noble Lords will be fully entitled to do. I cannot be more specific about the actual detail at this stage, and I shall not prevaricate and say that I can.
Lord MORRIS: As I understand it, this Amendment attempts to entrench an admirable practice which was started in the Government White Paper entitled, Devolution—Financing the Devolved Services, where there is a very excellent table which expresses the identifiable public expenditure for 1975–76 on a per capita basis across England, Scotland, Wales and Northern Ireland, and the United Kingdom, expressed as a percentage of the whole of the United Kingdom over 12 separate heads. It is absolutely
312
marvellous. I cannot understand why the noble Lord, Lord Kirkhill, is so churlish about not continuing this admirable practice in the future.
Lord KIRKHILL: I do apologise to the noble Lord; but I failed to catch the latter part of his remark. Would he care to repeat it?
Lord MORRIS: I was wondering why the noble Lord is so reluctant to continue with this splendid practice, as is set out in this White Paper of July 1977.
Lord KIRKHILL: There is, I think, a question of the determination which the other place may make about a matter of this kind, which at this stage at least precludes me from going further.
Earl FERRERS: I certainly do not wish to continue this debate for much longer. However, I should like to make one point which is, I think, of cardinal importance, The noble Lord, Lord Kirkhill, has said that he cannot go any further or give us any more information. We appreciate his difficulty, but he will also appreciate our concern that here we are dealing with a Bill and when we ask the Government what is intended and anticipated—and this has happened several times in the past —we are always told, "We do not know; we shall have to see what happens". We had this only the other night, when I believe we discussed standing orders, when we were told, "Leave it; it will be all right." I hope that the Government spokesmen will be able to address their minds more specifically to some of these points. I really think that when something of huge importance like this comes through Parliament—and financial powers have not been greatly discussed in another place—we should be able to have some answers as to what the Government intend.
Lord KIRKHILL: Before the noble Earl, Lord Ferrers, resumes his seat, perhaps I might point out that in response to matters put to me earlier by the noble Lord, Lord Drumalbyn, I said that I would turn over in my mind that which he had put to me, which was on the same issue as this. I do not know whether I can come back to the noble Lord with specifics, but I have said that I shall look at the point. It may be that I am

313
inhibited from going further, but I have said that I will look at it.
9.44 p.m.
Lord STRATHCONA and MOUNT ROYAL: The noble Lord, Lord Kirkhill, has tried very hard to help us. I had the impression that he was not being quite so helpful at the end as he was at the beginning, which I thought was rather a sinister sign. This, of course, is a flushing out Amendment. I am very grateful to those noble Lords who have spoken and who have supported us on it. I am afraid that I am going to disappoint my noble friend Lady Ward by not pressing this Amendment, although I am bound to say that her proposed technique of pressing it and saying to the noble Lord, Lord Kirkhill, "You think up a better one" is rather an attractive idea.
The noble Lord, Lord Vaizey, immediately understood the underlying purpose behind what I freely admit is a slightly inadequate Amendment, and, as the noble Earl, Lord Perth, said, why single out this single statistic? I think that the noble Lord, Lord Drumalbyn, had it absolutely right; what we are talking about is a matter of presentation and acceptability when it comes to getting the order through the other place. I suppose in a sense that the Government could say, "You leave our public relations to us because we know very well how to handle them". But we are trying to suggest to them that many of us would feel happier if the Government convinced us that they had done their homework.
Knowing that the noble Lord, Lord Kirkhill, has nothing else whatever to address his mind to in the next couple of weeks except this matter, I am hopeful that he may conceivably be able to suggest some kind of a Schedule. I think it was the noble Lord, Lord Drumalbyn, who
314
said that it is perfectly common practice to list the kind of relevant considerations which might be put into a Schedule. I think I understand, even if I do not condone, the evasiveness of the noble Lord who is anxious not, as they say in the West Country, to convict himself. He is not going to commit himself to doing something that he might find embarrassing.
Anybody who has ever participated in defence debates gets a little nervous about the per capita argument, which we have pursued exhaustively in this House. It is used as a justification of our splendid efforts in defence. The percentage GNP argument is the argument that is used; the per capita argument is the rather devastating one when you try to justify this country's defence effort.
I merely say this to indicate, as the noble Lord, Lord Vaizey, was saying, that one statistic taken on its own can be dangerous and positively misleading. However, the Government have laid themselves open. They have said in the Bill that a statement of considerations will be produced, and all we really have been saying to them is, "Is it not about time that you satisfied us by going a little further and saying what sort of considerations you had in mind when you wrote that down? If you did not have any considerations in mind, then you should not have said it in the first place."
Having said that, I think I should let us all off the hook for this evening and see what we can do at a later stage. I invite the noble Lord to produce a Government Amendment, which I can assure him we shall accept with alacrity. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.48 p.m.
Lord HARMAR-NICHOLLS Lord HARMAR-NICHOLLS moved Amendment No. 362:
Page 22, line 33, at end insert—
("(3) At the request of the Scottish Executive in pursuance of a resolution by the Assembly, the Chancellor of the Exchequer shall in so far as is consistent with Community obligations and other criteria laid down by the Secretary of State cause the rate of any tax or taxes broadly based and general throughout Scotland to be raised by up to but not more than 25 per cent. of the rate obtaining elsewhere in the United Kingdom, provided that the total amount so raised be not more than 10 per cent. of the amount transferred under subsection (1) of this section; and the Secretary of State shall thereafter by order cause a sum equivalent to the net balance raised to be transferred to the Scottish Consolidated Fund in addition to those sums transferred under subsection (1) of the section.")
The noble Lord said: This Amendment takes us into a completely new line of country compared with the discussions we have had so far today. So far all the Amendments have been on matters of detail, and intricate matters of detail too. I do not think that the Government Front Bench have really understood what they have been saying, and I do not think that our Front Bench and certainly the Back-Benchers have altogether understood what has been said to them. But there it is. The type of Amendment that they have had to deal with has caused that sort of problem. I know that the noble Lord, Lord Mackie of Benshie, understood both sides with absolute ease, and that the Bill to him is superb, and we need not bother much about it.
My line of country is facing up to something which is not in the Bill yet; but if we are going to have the Bill—and I do not want the Bill; my position is perfectly clear—there ought to be something completely new. We ought to have that meeting of all sides to see whether we can start from something more workable and more acceptable than this Bill can be. If we are to have this Bill, I really come down on the side of what Lord Vaizey has been saying from the first. Indeed, I think we both put this point of view forward on Second Reading. What he has said, and what I think is the fact, is that for this Bill to be of any use at all to minimise the conflicts that will arise—it will certainly not eliminate them—we have to give financial powers to the Assembly.
The Amendment is in anticipation of what, if the Bill is passed, I believe is inevitable. It is designed to limit what they can do with the powers which they will eventually get—that is, unless the Bill can be killed. My Amendment says, in effect, that when the time comes for them to have these powers they shall be restricted to being able to raise extra taxes to the tune of no more than 10 per cent. of the block grant. They would be limited on extra taxes to no more than £190 million—10 per cent. of the total sum—and it goes on to say that no one item—they might use several items to get that 10 per cent., including perhaps additional petrol or cigarette tax—shall cost more than 25 per cent. more in Scotland than it does in England. That, in a nutshell, is what my Amendment seeks to achieve.
Am I right in anticipating the possibility of these financial powers having to be given? I believe that there is ample evidence to show that we should prepare in anticipation of that happening. In the 1975 White Paper, the Government said:
"Some powers for the devolved Administration to levy additional taxation would give them greater freedom and give them a useful degree of discretion".
They have shown that they attach some importance to that by giving the proposed surcharge powers on the Scottish rates. That was their 1975 White Paper, and in the 1977 White Paper they said in paragraph 23:
"As was made clear in the November 1975 White Paper, the Government would see no difficulty in principle, and certain advantages in practice, if the devolved Administrations were to have power to raise limited additional revenue to supplement the block funds".
The Earl of PERTH: From which Command Paper was the noble Lord quoting?
Lord HARMAR-NICHOLLS: I quoted from Financing the Devolved Services, Cmnd. 6890 of 1977. They made it perfectly clear there that they anticipated and welcomed it, and therefore we should be silly to ignore that. Indeed, speaking on Second Reading on 14th December, the Secretary of State for Scotland set out eight criteria against which any supplementary tax would have to be judged. He said that the tax—anticipating this tax which will have to come—must

317
be operable as a marginal supplement capable of being turned on and off as needed; it must be cheap to collect in relation to the revenue to be raised; it should fall on Scotland and Wales only and not be paid directly or indirectly by English tax-payers; conversely, it should not permit evasion by a change of business location; it must be compatible with European Community requirements; it must be broadly based and not restricted to special groups; and it should not significantly affect the management of the United Kingdom economy.
Those were all clear anticipations of what, if we accept this Bill or anything like it, will be inevitable. Those being the facts as I see them—my Amendment is not tilting at windmills but is a very clear anticipation—I suggest that when they get these powers there should be a restriction to the effect that they can increase any individual item of tax by up to 25 per cent. and that the total must not be more than 10 per cent. of the total block grant.
In addition to what was anticipated in those Government publications, we must bear in mind the view expressed by Scottish Nationalists, who, despite the local government elections of a couple of days ago, are still a force to be reckoned with and who intend to go on fighting. I cannot put out of my mind that Margaret Bain, the Nationalist MP for Dunbartonshire East, said in the debates on this Bill in another place that the Nationalists stood for full independence within the Commonwealth, that she did not join the SNP to work for devolution, that she had to use a British passport but that she looked forward to the day when she had a Scottish one.
In the Commons all the Amendments put down were attempts by the Scottish Nationalists, and some Members of the Government Party, to give Scotland not just the trappings of reality, but all the powers of being an economic sovereign State. That is the situation as it exists, and it is right that we should recognise that, if the Bill eventually goes through in anything like its present form; they will be driving wedges into it and eventually getting everything.
I have to argue, or appear to argue, against what I said in the past. The
318
block grant will not work. The block grant will bring with it so many of the conflicts to which I have referred in the past that the lesser of evils will be to give them power to raise their own taxation. The reason the block grant will not work is that it is based on a notional sum and on what are notional needs, and bears no relation to the real hard facts of living today. For example, they are constrained within the block grant as to what they can spend. So the reality is this. If the Assembly decided to spend more on education, they are restricted within the bounds of their own block grant. If they spend more on education, it could only be at the expense of having less to spend on housing or on health. Then there would be the situation where the Scottish Assembly were justifying their extra expenditure on education and blaming Whitehall because they had no money left to spend on vital housing and health matters which would be very much in the minds of the ordinary citizens of Scotland.
The only other alternative— and this is what will happen unless we give them powers to raise some extra taxation—is that they will ask for the block grant to be increased again and again. We have just been discussing the per capita situation in which at present the people of Scotland are receiving about £360 per head, as against £280 per head that goes from the Exchequer to the British people. When one realises that one can see that nothing but aggravation could flow from not replacing the block grant with some form of tax arrangement.
The Government know this. There are two circles that must be squared, and so far the Government have shied away from both of them. But the Bill cannot become an Act until the Government have faced up to squaring the circles. The first is the West Lothian situation. The situation must be so arranged that if Scottish Assembly Members are to prevent British Members of Parliament from talking about the devolved matters, then they must have less membership in the Westminster Parliament, or they must be restricted to talking only on matters that have not been devolved. That is the first circle that has to be squared. It must be done, otherwise the Bill will not become an Act.

319
The other circle which has to be squared involves the question of where the money is to come from to meet the needs. Which is most likely—extra block grants which cannot be given without causing conflict, or giving powers to raise taxation? The Government know this, because they have said this in many of their publications, but they do not know how to administer their tax powers if they get them. They have examined all of them. They have said, "We cannot have income tax because it is too expensive to collect, and it would need another 2,000 staff to administer it". The 2,000 staff would be based upon Scotland, and for every extra tax official there has to be an extra person on the bureaucratic side of industry itself which makes the employment possibilities that much worse. So they cannot use income tax.
They cannot use VAT. To try to use VAT to get the extra money would be illegal under EEC regulations. There must not be a higher rate in Scotland than in the rest of Britain, otherwise there would be an infringement of our European commitments. They cannot have a general sales tax for the same reason. They thought of a rate supplement, but the local authorities will not have it. All these things go to show that this circle which has to be squared is not capable of being squared, on the admission of the Government themselves.
So I believe that we have now got to anticipate that, sooner rather than later, if this Bill or anything like it is to become an Act, they are going to have powers to levy taxes. At this stage, and so that it can be clearly understood on all sides, I believe that my Amendment, which limits the amount of extra tax they can implant in the interests of both Scotland and England and indeed in the interests of the unity of the United Kingdom, ought to be written into the Bill now. I hope that some indication will come from the Government Front Bench that they are prepared to consider this. Without the squaring of this one of the two vital circles this is a nonsense and it will not work. The conflict which I have foreshadowed in almost every speech I have made will be almost certain. The possible effects of this Amendment will not be to remove the conflict, but it might possibly minimise the
320
effect of some of it. It is in the confidence that that will bring forward something like a favourable response from the Government Front Bench that I move the Amendment.
Viscount MASSEREENE and FERRARD: What my noble friend behind me is saying perhaps I might say in a shorter way than he has. He is saying that if this Amendment is written into the Bill, and if the people of Scotland understand the Bill—which, with due respect, I very much doubt—then of course in the referendum they will vote against it. I would not particularly worry about that eventuality. I should be quite happy if that happened. But as a property owner in Scotland I would view with great trepidation the idea of having to pay 25 per cent. more tax than the tax which is broadly based throughout England. Having said that, I will say no more. I do not think this Amendment is practical, but I would not object if the Scottish people threw this Bill out when the referendum comes before them.
10.2 p.m.
Lord VAIZEY: I find this an ingenious and attractive Amendment and I think it deserves serious consideration. The noble Lord, Lord Harmar-Nicholls, drew attention to the fact that the Government in their White Papers asked for ideas on this subject and their mind is certainly not closed on the subject. I agree with the noble Lord, Lord Harmar-Nicholls, and, as I said on Second Reading, I am convinced that if it is not included in this Bill it will be included in an amending Bill which will come before Parliament. I have thought that this was the central issue on which devolution stands or falls.
Having said that, I should like to reassure the Committee that this is the last speech that I shall make at the Committee stage because after this we leave the vexed subject of finance. It is rather amazing that there are only two clauses dealing with finance in a Bill of this length which is mainly about finance. Although I am not a Scotsman, I feel obliged to speak to this Amendment. There are few Professors of Economics in your Lordships' House, and as I am the only one under 50, at this time of night

321
I think it is my duty to stand up and say that my profession ought to inform your Lordships what they think about this issue. Among the enormous volume of stuff which came out in the preparation for the Bill there was a not very good discussion paper on taxation which included a number of highly controversial statements like the one the noble Lord, Lord Harmar-Nicholls, has referred to, on the cost of collecting income tax in Scotland. It seemed perfectly preposterous. It was put forward as though no one had ever suggested before that income tax could be collected by any other body than the present body which collects it.
In 1922 when the 26 Southern Irish counties became virtually independent, all the powers were transferred overnight to the Southern Irish Parliament, and as far as I know the collection of taxes went on as usual without any relation whatsoever to the number of tax collectors in the Southern Irish State. So I do not think this is beyond the realm of practicality, which was really the ground upon which it was declined to put these clauses into the Bill as it was presented to another place.
Without wearying your Lordships, I hope, perhaps I may briefly take your Lordships through the certain stages in the argument which I think persuade me that the Amendment moved by the noble Lord, Lord Harmar-Nicholls, not only deserves serious consideration but might be acceptable to the Government. The problem, as we said earlier on when debating other Amendments, is that at the moment we have parity of services in the United Kingdom. That is the principle upon which we have hitherto operated, though it is slightly tilted in favour of Scotland, for reasons which we fully understand. The basis upon which the revenue is allocated to Scotland for expenditure is quite clearly spelt out within the Treasury. The amount which will be given to the Assembly is also perfectly clear: it is the amount which now appears on the Scottish Vote minus the expenditure on the powers which are reserved to the Secretary of State for Scotland. That is perfectly simple; so that what you have is the present sum—say £1,000 million—minus, let us say, £200 million which is set aside to the
322
Secretary of State for himself or herself to spend direct. That is perfectly sensible.
However, there is no reason to suppose that any amount of tax which is collected in Scotland will meet this sum. There is no reason that one can think of in logic why the amount of taxes pad by the Scots should equal the amount of money which is spent by the devolved Assembly. That is the crucial problem of logic which faces the Government. So the Government have got out of this, as they have perfectly candidly explained throughout the whole debate, by saying, "That is very simple; we shall therefore give no taxation powers at all to the Assembly". Quite candidly, I think that not only is this highly conducive to irresponsibility in the Assembly, in the pure sense of the word—this is representation without taxation, which is exactly the reverse of the American revolutionary position—but, secondly, that it is, as the noble Lord, Lord Harmar-Nicholls, has said throughout, the major basis upon which there will be conflict between, on the one hand, the English and Welsh representatives in the Parliament of Westminster, and, on the other, the Scottish representatives. The conflict is absolutely inherently built in.
Therefore, it seems to me that one will either have to have an Amendment which is not before the Committee—that is to say, an Amendment spelling out the actual allocation of money according to a formula which could be alterable only by an Act of Parliament; in other words, it would be a big business to get it changed, which would remove it from practical politics as an annual debate or, alternatively, one will have to put some brake on the Assembly by giving them taxing powers. It will be a brake because they will then get the unpopularity for spending extra money on the services which they tell the electors they are going to provide them with if they are fortunate enough to be elected; but unless we put on some brake of that kind we shall be in exactly the position which the noble Lord, Lord Harmar-Nicholls, has mentioned, which is that the excellence of the Scottish educational service will be attributed to Edinburgh and the poorness (if that is the case) of the Scottish health service will be blamed on Westminster.

323
Therefore, for reasons along these lines, which is the way that the whole reasoning in the White Papers has gone, I find myself driven to the conclusion that an Amendment of this kind ought to find some sort of favour among your Lordships tonight, or at least perhaps at Report stage.
Lord MOTTISTONE: Perhaps I may intervene at this point to say that I very much agree with the noble Lord, Lord Vaizey. It seems to me somewhat unusual that we in Westminster—perhaps not ourselves, but our friends in another place--should have taxation powers, and that rates are raised by all the local authorities, yet here we have a body of people who are in the middle, in a sort of way, who have not got that authority. I do not hold any brief for this particular Amendment, but it seems to me that, as the noble Lord, Lord Vaizey, has been saying, it is something which will come, and perhaps it would be wise of the Government to anticipate the wish to exercise this authority and to give rather greater care to devising some means by which powers of taxation could be given to the Assembly. The noble Lord, Lord Vaizey, said, as far as I could gather, that the South of Ireland happily went on taxing regardless of what the United Kingdom Government said. I think that it would be most undesirable if the Scottish Assembly, after perhaps a year or two, were to take the bit in its teeth and say, "We will jolly well do not only taxing but some other thing against the Act", as it then might be. How are we going to discipline them? Are we to withhold the block grant? We should have to be very careful about that.
When we come to a point which could be a fundamental issue of this nature, we in the United Kingdom Parliament would be wise to anticipate the issue rather than to try to sweep it under the carpet. I should have thought that the Government could usefully consider this as something to which they perhaps might have a better solution than that of my noble friend; but something which gave the authority for taxation to what is to be a Parliament which will think itself superior to local government, observing that local government has a method of taxation of its own.
10.12 p.m.
Lord MORRIS: I must persuade Lord Vaizey not to go—he suggested that he might do so—because the financial clauses do not finish at this stage; they go on from Clause 40 to Clause 58. They are very important and I should be sad if he were to go. It is very important to stress that in the House of Commons, the 19 financial clauses, with Schedule 9, were allotted only a single day under the timetable. The only discussion on them was in respect of two Amendments to Clause 40. There was no "Stand part" Motion on any financial clause at all, or in respect of Schedule 9.
Since no "Stand part" Motion was put on Clause 40, let alone on this clause (Clause 44) the Minister in another place was able to confine his response to the narrow matter raised by the first Amendment and in criticising details of the second. Before he allowed himself to consider any of the fundamental matters raised, the guillotine cut him short in mid-sentence after the words:
"an exercise in an on-going Government decentralisation of power".
This was an unhappy phrase, but one that reflects the Government's evasiveness generally on a financial problem no one has been able to solve—not least the White Paper of July 1977. Thus, the arguments in another place about the financial provisions have gone not an inch further than they were under the July 1977 White Paper. The question of how to provide the essential independent tax-raising powers for the Assembly is entirely unsolved. The Commons were loud in their denunciation of this. Mr. Tarn Dalyell said in column 1681 of the Commons Hansard:
"I think that the House of Commons is not carrying out"—
Lord MOTTISTONE: I have a feeling that there is a Rule of the House by which individual Members of another place cannot be quoted by name for the speeches that they may make in that place.
Several noble Lords: Hear, hear!
Lord MORRIS: I must aplogise for that. I was not aware of it. I have heard

325
several noble Lords quoting names before. I thought this was the practice.
A noble Lord: Paraphrase!
Earl FERRERS: A noble Lord is entitled to quote a Minister of another place or to paraphrase a Member.
Lord HARMAR-NICHOLLS: If we could not quote Enoch Powell, Mr. David Steel and one or two other people, there would be no speeches to make, I think!
Lord MORRIS: There should be no question, in my opinion, of the necessity for independently-raised revenue if the Assembly is set up. The failure of both White Papers of 1975 and 1977 to acknowledge the sine qua non nature of the principle merely reflects the equal failure to find an answer. The Secretary of State for Scotland is known to be deeply unhappy about it. Indeed, speaking to an international meeting of economists in Edinburgh last year, he said:
"I frankly admit the Government are not satisfied with the block grant system we have arrived at".
The 1977 White Paper, Financing Devolved Services, saw no difficulty in principle and certain advantages in practice if the devolved Administration was to have the power to raise additional revenue. It was seeking a tax which would make it easier for the devolved Administration to vary the level of public expenditure in the devolved services, and to make it accountable to the electorate for raising the revenue concerned.
All this acknowledges the worries that were at least openly admitted in the anodyne paragraph, No. 69, of the same White Paper, that the financial arrangements could be a lasting cause of argument and disagreement and they could threaten political stability.
By proposing this method and this amount of legislative devolution, and without giving to the Assembly even the financial accountability of a local authority to its own electors, the Government have posed an impossible problem, to which they have no solution, while admitting that one must be found. If Scotland is to have tax-raising powers, clearly the
326
extra tax burden should fall on the beneficiaries of the extra expenditure resulting —the more so since Scotland is already receiving per head a much greater proportion of national expenditure than the average. The Government have accepted the need for separate tax-raising powers beyond the block grant. The White Paper of 1974 proposed a rate surcharge, as your Lordships may recall. but that was too unpopular, making the regions the tax collectors; and anyway the unfairness of the rating system is certainly questioned.
The powers, then, exist in principle; the problem is only about method—which problem has stymied everybody. However, since the necessity for those powers is regarded by most people as paramount if there is to be a stable Assembly at all, the least that must be done is to place on record, through provisions in the Bill, what those powers are to be. It would be entirely improper to offer in a referendum a Bill which necessitates the transfer of a tax-raising power, accepted in principle by the Government, but which by admission conceals what lies in store for Scottish taxpayers. There is also some constitutional impropriety in the Government's offering discussions to future devolved administrations about tax matters which have received no Parliamentary sanction.
There is the strongest argument, moral as well as political, for providing in the Bill for some form of devolution of some tax-raising power, with due limits as to amount and the sources. Indeed, only this afternoon the noble Lord, Lord Kirkhill, said, while speaking on another Amendment, that the Assembly should not be fettered or tied to the apron strings of Westminster. This Amendment would loosen the bow and allow the Assembly a measure of financial accountability and responsibility.
10.19 p.m.
Lord WILSON of LANGSIDE: I am bound to say that I am much impressed by the arguments which have been presented to your Lordships on this Amendment by those noble Lords who have spoken in favour of it, particularly the noble Lords, Lord Harmar-Nicholls and Lord Vaizey. I am bound to confess that beyond that I do not think I can add in this particular area to the collective

327
wisdom of your Lordships. Indeed, as we approach the financial clauses of this regrettable Bill, I had anticipated a certain amount of confusion in my own celebration. I have some difficulty with my own financial arrangements and I never imagine I could make a substantial contribution to the arrangements of my own country in this particular area.
However, the state of confusion to which I have been reduced by some of the answers which we have had from the Government Front Bench this evening is of a rich and rare quality which has surpassed my wildest expectations. I rise mainly for one purpose; that is, to ask the noble Lord, Lord Vaizey, as I think the noble Lord, Lord Morris, has done already, not to leave us just yet, because he is very helpful to a simple, humble lawyer like myself. Furthermore, I am able to understand him, whatever may be my difficulties with those who occupy the Government Front Bench.
Lord DRUMALBYN: I wonder whether I could put a slightly different point of view. I listened with fascination to the noble Lord, Lord Vaizey, but what he seemed to me to be saying was that, if you stand for election, you make certain promises of improvements. But, mark you, those who are standing for election in other Parliaments may be promising similar improvements at the same time, so that these may cancel out. But what, so far as I can see, is being suggested is that if you are standing for the Assembly in Scotland, and your Party makes certain promises which involve expenditure, you have at the same time to say, "Of course, this will cost money, and if you agree to this we shall go to the Chancellor of the Exchequer, not the Assembly, and ask him to put a tax on Scotland, in order to cover the expenditure that I am suggesting". This is what is called an economic model and it is a political non-starter.
We all understand that this is a crucial question, but surely, for the time being, we have to maintain the main resolve, which is to maintain the unity of the United Kingdom. That means, in general terms, taxation unity, unless and until you can suggest particular taxes for Scotland—or for any part of the country, if it comes to that. But to propose that now, at this stage, would be an error.
328
I agree that, from the point of view of those who want to do their best to ensure that the referendum goes against the Bill, it is a very good idea to say, "Of course it will cost you extra, and, what is more, there will be a differential tax in Scotland compared with the taxation in England and Wales". That will mean that people tend to go away from Scotland; the per capita contribution will be reduced, more people will go away from Scotland and so on. I do not think that that makes sense at the present stage.
I feel that the Government's offer to listen to proposals should be considered first. As we all know, proposals of this kind take a long time to examine, and after the Government have accepted that a certain tax can be imposed, it generally takes quite a long time before it can come into effect. So this is surely a long way off at the present time. The noble Lord, Lord Vaizey, shakes his head and wants to fix it right away. I accept the logic of what he says, but the practicality of it I would heartily deny.
Lord HARMAR-NICHOLLS: Before my noble friend sits down, did he say that, if we genuinely think that what is likely to flow from this Bill is extra taxes, we ought not to let the people know before we have the referendum? I should have thought that common decency, apart from good sense, would insist that if you think that there is a reasonable chance—and there is more than that—that this will happen, it ought to be said in advance so that people know what they are doing.
The argument that my noble friend used, saying that this may be a long time ahead, was very much in line with what was said by my noble and learned friend Lord Hailsham of Saint Marylebone. When I was speaking about dynamite my noble and learned friend said that dynamite has a long fuse. However, the length of the fuse on dynamite does not alter the fact that dynamite can be damaging. I should like my noble friend to make it quite clear that he is not suggesting that those of us who think that this might happen do not have a duty, much more than a sense of decency, to put it on record so that people know what they are voting for.
Lord DRUMALBYN: My noble friend has asked me a question which I shall answer right away by saying that I do not think that additional expenditure in Scotland is necessarily required. One cannot envisage this immediately. If one continues to treat the United Kingdom as a whole and to make rate support grants and so on in relation to the need of the separate parts of the United Kingdom, whether they are in Scotland or in other parts of the United Kingdom, I do not see that there is an urgent necessity for taxation. I see the political argument about responsibility for one's actions and promises when one stands for Parliament, but I think that we must wait a little to see whether any such steps to curb wild and extravagant promises that are postulated by people who stand for the Assembly in Scotland are realised in any way.
Lord MACKIE of BENSHIE: Is not the noble Lord, Lord Harmar-Nicholls, failing in his duty? Apparently he wants to point out to the Scottish people during the referendum every single possible factor which may arise from this Bill. In this Amendment he should also postulate the fact that the Assembly may be so competent that it will be able to reduce expenditure and be able to ask the United Kingdom tax authority to reduce income tax by 10 per cent. The noble Lord would need to do that; it is quite a possibility. If the noble Lord would like me to do so, I could give to him many other fairy stories which he could postulate for the Scottish people. However, I do not want to provoke him any further, in case he goes on even longer.
Lord VAIZEY: The reason why I was rather rudely shaking my head, if I may answer the point made by the noble Lord, Lord Drumalbyn, was because I thought that the Amendments were seeking, with the support of the arguments which the Government have brought out in their White Paper, to avoid an annual wrangle. That is the central question. An example which I might give to the noble Lord is that council house rents in Scotland are, as we know, phenomenally low. If the Scots wish to improve their health service—and goodness knows! the health service has deteriorated throughout the whole of the United Kingdom since
330
the so-called reform in 1974—and if they say that they want a better health service, which would be a perfectly reasonable thing for anybody to say, under the Bill the only way that they could pay for it would be by putting up council house rents.
Nobody in his senses would stand for the Assembly and say, "I am standing on the basis of switching expenditure from housing to hospital services". That is what the Government want him to say, but he will not say it. What he will say is that he will come to Westminster and say that he wants to change the formula. The Bill says that the formula may be changed every year, with reasons. That is precisely the point on which the row will take place.
Lord HYLTON: I should have thought that an annual wrangle was completely unavoidable, whether or not one has the Amendment. This is borne out by what has gone on in Canada for a very long time between the Federal Government and the Provinces.
Lord DRUMALBYN: There has been an annual wrangle so far as Northern Ireland is concerned for a great number of years. I admit that this argument is a little tendentious because there are special circumstances affecting Northern Ireland. I take entirely the point which the noble Lord has made about the lowness of council house rents in Scotland. He will know very well that this is an historical fact, dating from before the First World War, and that it ought to have been remedied many years ago.
Lord O'NEILL of the MAINE: If I understood the noble Lord, Lord Drumalbyn, correctly he said that there had been an annual wrangle about the finances of Northern Ireland for many years. Certainly at the time of Northern Ireland devolution, as opposed to the present system, there was no annual wrangle whatsoever. I was Minister of Finance for seven years and I should like the noble Lord to know that I had the friendliest relations with the British Treasury. There was no annual wrangle whatsoever.
Lord DRUMALBYN: I accept that entirely, but the words, "annual wrangle"

331
were used for discussions on finance, and that was the sense in which I was using the term.
10.30 p.m.
Lord McCLUSKEY: The problem may be in the use of words. Some people might describe what we have been having for the last hour or two as a wrangle, but I would not dream of using such a term. I thought I understood the purpose of this Amendment until I heard the noble Lord, Lord Vaizey, say that the purpose of it was to avoid an annual wrangle and the noble Lord, Lord Harmar-Nicholls, shook his head in agreement. That astonished me because I understood that the purpose of this Amendment was to reflect the conclusions which the Government had set forth in the White Paper of 1977 and to put them in the form of words into the Bill. Furthermore, I thought the clear purpose of the Amendment was to try to pave the way to providing a tax-raising power supplementary to the fundamental financing which was by means of the block fund. If I have misunderstood him, I ought to sit down in case I confuse further the noble and learned Lord, Lord Wilson of Langside, who is apparently already confused.
Lord WILSON of LANGSIDE: The noble and learned Lord has confused me a little because I would have thought that if the noble Lord, Lord Harmar-Nicholls, was shaking his head he was expressing disagreement and not agreement.
Lord HARMAR-NICHOLLS: The noble and learned Lord has described the position perfectly, except that he did not listen to the whole of my speech and I do not blame him for that. What I said was that if what was anticipated did not happen then there would be applications for an increased block grant. So the sword that I was trying to describe to the noble and learned Lord is two-edged: if you do not do what I anticipate and allow for it, you have one problem; if you do it, then you have another.
Lord McCLUSKEY: I have a well-calibrated ear; I only hear the parts that I want to hear. Having said that and having looked carefully at the Amend-
332
ment, we would certainly use the same word as was used by the noble Lord, Lord Vaizey: it is an ingenious Amendment and what the proposers have done is to produce a form of words which reflects many of the conclusions which the Government have themselves reached on this question of devolved tax powers; and in particular the wording here incorporates several features which the Government have repeatedly stressed are important. First, the devolved tax would not be a primary source of revenue but a supplementary source of revenue—supplementary to a block fund provided as outlined in the Bill—and a devolved Administration would decide when the supplement was to be charged. That is a good feature.
Secondly, the total to be raised in this fashion would be limited in the way prescribed clearly in the Amendment. Thirdly, the tax would be an addition to a tax raised nationally and would have to be broadly based and general throughout Scotland. Fourthly, the additional administrative costs would fall on the Scottish Administration. These are not the only features and I should mention others to make it quite clear. There would have to be a resolution in the Assembly, asking the Chancellor to apply a supplement of up to 25 per cent. to certain taxes. I mention that because one of the features of a tax, if there is to be a tax, is that it must be politically possible. I think one has to set that aspect of the matter against political possibility. There has to be a decision by the Secretary of State as to whether this resolution was acceptable in the light of Community obligations and other criteria to be laid down by him; and then there must be a transfer of the net balance, after meeting administrative costs, to the Scottish Administration.
I hope I have understood the bones of the Amendment and properly described them. On analysis, it appears to us that the reference to Community obligations would certainly rule out a surcharge on value added tax. What we should be left with as broadly-based taxes would be income tax, corporation tax and the local rates, although it seems rather doubtful whether the noble Lords in whose names this Amendment stands had the third of these in mind. Did they really suppose that it would be the local rates which

333
would be surcharged in this way? And do they, in fact, therefore intend that the Assembly should be able to demand a 25 per cent. surcharge on income tax or corporation tax or the rates? I am going to ask the noble Lord, Lord Harmar-Nicholls, which tax he has in mind; perhaps he will address himself to that when he comes to reply.
The Amendment puts a ceiling on the amount of extra tax to be raised. In total, it must not be more than 10 per cent. of the block fund and the increase in any tax must not be more than 25 per cent. of the rate otherwise obtaining. I must give some figures to make the position clear. It is estimated—and one sees this in the White Paper, Table 3—that, in 1975–76, 10 per cent. of the block fund would have been about £187 million, and estimates have been obtained of the proceeds of the principal taxes in Scotland in that year. £187 million would have represented about 14½ per cent. of the proceeds of income tax, about 45½ per cent. of the proceeds of local rates, and about 134 per cent. of the proceeds of corporation tax. In effect, therefore, the Amendment is really talking about a surcharge on income tax alone, or perhaps in combination with substantial surcharges on some other tax or taxes.
Under the Amendment, the final decisions as to what extra rates of tax should be imposed on people in Scotland would rest with two Ministers, the Secretary of State and the Chancellor, and they could under the Amendment, without any further need for legislation approved by the people's representatives in Parliament, impose an increase of over 14 per cent. in the rates of income tax in Scotland. I should have thought that an odd conclusion for the noble Lord to drive us to, for he belongs to a Party which constantly says it wants to reduce income tax, yet here is a proposal which effectively means that it can be raised by 14 per cent. without scrutiny by the Westminster Parliament.
Surely the noble Lord, Lord Drumalbyn, is right—and I hope I do not embarrass him by constantly welcoming his positive contribution to these debates—in saying that this kind of provision has got to be looked at in detail in primary legislation at Westminster, and not by the kind of route that would be taken if one followed the Amendment. It is the Government's
334
view that such primary legislation would have to be put through Westminster after the most careful consultation with the Scottish Administration.
I do not seek to conceal the fact that this is a problem which has worried the Government from the start, and all the published documents have shown the Government's concern, have shown that the Government would have liked to produce a solution and have not been able to produce a solution which they can put into the Bill. I do not run away from that, and I could not, seeing what appears in the various White Papers. But I do implore noble Lords who have spoken, if they are not familiar with the two White Papers, to look at them very carefully, and in particular to look at the White Paper published in 1977, where, as I think I mentioned in my wind-up speech at Second Reading, the arguments about taxation are set forth with great clarity. The noble Lord, Lord Harmar-Nicholls, has got to produce an answer to those arguments if he is to persuade us that this kind of Amendment is worth putting into the Bill.
In the White Paper, having reviewed all the possibilities in what I believe is convincing detail, the relevant factors are all set out. The Government decided:
"On balance, and taking into account the general practicability and likely public acceptability of each tax method examined, the disadvantages outweigh the advantages".
That was said after a careful examination of the pros and cons of each of the individual taxes. The Government have not changed their conclusion on that, and indeed since the publication of the White Paper, along with the evidence on which it was based, there has been very little serious challenge as to its wisdom, as to its analysis, or as to its conclusion. The Government's conclusion was indeed supported by a very large and broadly based majority in a Division in the other place.
As I say, we have attempted to face this problem over a period of years, for we believe that, in this matter, as indeed in all other matters, honesty is the best policy. We have sought to make it clear that we are ready to accept and agree to a supplementary tax if an acceptable basis can be found. We have set out the difficulties. If an acceptable basis

335
can be found, we hope to agree it with the Scottish Administration and come to Parliament with a view to legislation to give tax powers. At the moment they are prohibited by Schedule 2, paragraph 4.
In conclusion, I submit that this is a reasonable and honest position for the Government to adopt. I would respectfully suggest that it is more straightforward than the position adopted in the Amendment, because the Amendment implies that there is available somewhere a choice of broadly-based taxes which are general throughout Scotland and about which the Assembly and the Ministers need only make up their minds. We all know that this is not so. The White Paper demonstrated that it is not so.
As I sought to demonstrate, the Amendment, in practice, relates to a major surcharge on income tax, which is not politically possible. The Government, having stated their views so clearly in the White Paper, could not now credibly accept an Amendment based on an assumption as to the range of options—an assumption that they have shown to be, and now believe to be, mistaken. The Government believe that the only proper and honest course is to hold back these matters for discussion with the Scottish Administration, once it is there. Then, if the tax powers are to be devolved, it would be made clear what these powers are to be and what constraints must be applied in their use. Then we shall not deceive ourselves simply by thinking that we have solved the problem by using the form of words to restate it—a form of words which implies that the difficulties, which are real, do not exist.
The ingenuity which lies behind this Amendment is the ingenuity of the conjuror. The blandness of the assumptions disarms the critics. But the assumptions are there. If I may, I should like to ask Lord Harmar-Nicholls, through the Committee, what does he have in mind? What tax will fulfil all these assumptions and be politically possible? If he will answer that question, he will do me a great service.
Lord HARMAR-NICHOLLS: It is common form, and a tactic as old as the hills, for a Government, who have not got an answer to a question that they
336
know is there, to ask somebody else what his answer would be. This is an occasion where the noble and learned Lord has been completely honest. He made it perfectly clear that this is a vital problem. It is a vital weakness in the Bill. The Government have no answer to it. That is what he made perfectly clear. He said, "We have looked at all sorts of alternatives and we cannot find an answer". Therefore I have achieved what I wanted in putting down this Amendment.
I wanted to disclose that this is a phoney Bill—a Bill with no real base—because the one outstanding question from which all the problems will flow is incapable of being answered. The Government have made that perfectly clear. Of course I do not know which particular taxes would have to be put on to meet the words in my Amendment. I said that when I proposed the Amendment. That is what the Assembly would have to do, if there is an answer. The whole purpose of the Amendment—the whole purpose of my argument, a purpose confirmed by the words of the noble and learned Lord himself—is that this is a fundamental weakness in the Bill to which there is no answer.
If there is a conjuror in this House, it is the Government because the impression they are giving is "Pass the Bill. We know that this fundamental question has not been answered, but once the Bill becomes legislation, once it is an Act, and all the powers are there, we shall produce a rabbit out of a hat"—just like Dick Barton makes the change and says, "That will solve the problem". It is a cheating conjuror's trick. This Bill depends at the end of the day upon a referendum decision by ordinary people who can be cheated by sleight of hand. It is not a Government's job to do that. I believe that, before this Bill is put in the form of a question at a referendum, this question must be answered, not by those who, like me, oppose the Bill, but by people who are foisting this Bill to try to make it an Act which people must support.
I think that the point has been made. I hope that, in all the other debates that we have both in Committee and on Report, this sleight of hand by the Government, this conjuror's trick of theirs, which they try to hide by calling somebody else the

337
conjuror, will be seen. I hope that many people, who, to begin with, may have had some sympathy as regards solving the Scottish problem by this Bill, will see that they are taking on more trouble than they thought they had in the first place. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 44 shall stand part of the Bill?
10.46 p.m.
Lord MACKIE of BENSHIE: I shall not detain your Lordships for long, but I should like to say that the question of taxation is one which has exercised my collegues and I, and obviously the Government, greatly. It is perfectly true that anybody who draws his money in the form of a grant, tends to blame the giver of the grant for any shortage which he may occasion himself. That is really why we support the fact of a formula being used to determine the grant and to determine it over a period, because at least in those circumstances we shall not have an annual wrangle with the Treasury over particular projects. In other words, the responsibility will lie with the Assembly within the regions defined by the block grant, and it is possible to do a great deal within that. It is true that in modern administration it is very difficult to move expenditure beyond about 2 per cent.—in fact that is extremely good. However, 2 per cent. on £2,000 million is, of course, £20 million a year. We think that the Assembly will be able to exercise responsibility and very much so for the first four years.
The Assembly has a tremendous amount to do in settling down, arranging its procedures and as regards the devolved subjects of immense importance to Scotland, such as health and education, to mention just two. In that respect we are perfectly certain that the first four years will be enormously important. The Government have said in the White Paper that they will consider any suggestion that the Assembly may make as regards taxation after that. Therefore, by and large, I am sure that it is for the health of the Assembly and the future of Scotland that the block grant system is adopted, at least for the first four years until a great deal of experience is gained.
Clause 44 agreed to.
[Amendment No. 363 not moved.]
Clause 45 agreed to.
Clause 46 [Short term borrowing by Scottish Executive]:
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 158:
Page 23, line 15, after ("may") insert ("with the consent of the Treasury.")
The noble Lord said: Amendment No. 158 and the following two Amendments are simple probing Amendments. Therefore, I beg to move Amendment No. 158 on behalf of my two noble friends and suggest that Amendments Nos. 159 and 160 be discussed at the same time. We have not probed Clause 45 with Amendments or spoken on the Question, Whether the clause shall stand part?
The Amendments enable us to ask the Government to give us, if they can, briefly the thinking behind these two clauses on loans. Clause 4:5 provides what one would expect for a Bill where large sums of money are to be advanced, in this case to the Scottish Loans Fund. The consent of the Treasury is required at various stages and the provision at the end of the clause states that an order has to be passed by the Affirmative Resolution procedure.
However, as regards Clause 46, we have drawn attention to the fact that the consent of the Treasury is not required at all and that the procedure for an order to be made is the Negative Resolution procedure. Our other Amendment is simply to discover why the Government have chosen £75 million; what has prompted them to consider that to be the limit? Clause 46, to which these Amendments apply, is for the short-term borrowing—overdrafts, and so on. Clause 45, which is clearly for larger sums of money, is for times which are not stated. It simply says:
"… such times and with interest at such rates as may be determined by the Treasury".
Therefore, I should be grateful if the noble Lord could give us an explanation why the terms of the short-term borrowing clause are so different and what prompted the Government to choose £75 million as the maximum. I beg to move.
Lord KIRKHILL: As noble Lords will know—and, indeed, as the noble Lord, Lord Campbell of Croy, has been pointing out to us—Clause 46 empowers the Scottish Administration to borrow short-term in order to cover temporary deficits on the Scottish Consolidated and Loans Funds. The power will always be used as a last resort, because it will clearly be in the financial interests of the Administration to fund its expenditure to the greatest extent possible without recourse to borrowing, which entails payment of interest. The very nature of the power implies that the need to use it will arise suddenly and fortuitously. In these circumstances it would be impracticable to require the Administration to obtain the consent of the Treasury before borrowing, as the Amendment proposes.
I hope that your Lordships will agree—and I refer to Amendment No. 158 when I speak of the Amendment proposed—that, as I have explained, it will be in the financial interests of the devolved Administration to use the powers as little as possible because of the fact that there is an absolute limit on the amount of borrowing. Finally, because of the practical difficulties upon which I have touched, it would be difficult to accept the Amendment. I know that it is a probing Amendment and that it is linked to Amendment No. 159.
The noble Lord, Lord Campbell of Croy, asked me why the Government have chosen the figure of £75 million. That figure represents the best estimate which the Government can make of the sum which might be involved in the cash flow in the Scottish Consolidated Fund over about 10 working days. Therefore, we can say no more than that it is a rough yardstick. The clause provides for the amount to be increased by order made by the Secretary of State. However, the important point is that the flexibility in managing cash flows given to the Scottish Administration by Clause 46 must not be frustrated by having an unduly low limit laid down. As I have just said with regard to Amendment No. 158, it is self-evident that it is in the Administration's own financial interests to keep its borrowing to a minimum. That is the reasoning behind the £75 million.
I do not think that I can add anything on Amendment No. 160. I do not think that the clause needs strengthening because
340
I do not think that the Administration would act in a profligate manner. As I have said, it certainly would not be in its own financial interests so to do, and I should have thought that that was an excellent constraint on any profligate tendencies it may have.
Lord CAMPBELL of CROY: It would seem to boil down to a question of the magnitude of the sums involved. Much larger sums will be involved in Clause 45, and presumably that was why the Affirmative Resolution procedure was to be used there and not in Clause 46. I am grateful to the noble Lord for his explanation of the Government's thinking and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 159 and 160 not moved.]
Clause 46 agreed to.
Clauses 47 to 49 agreed to.
10.55 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 326:
Before Clause 50, insert the following new clause:
Scottish National Lotteries
("(1) Sections 1 and 2 of the Lotteries and Amusements Act 1976 shall not apply to any lottery promoted under an Act of the Scottish Assembly, the proceeds of which are or are to be paid into the Scottish Consolidated Fund and used to finance or help to finance any project or activity falling within the devolved matters mentioned in the following subsection.
(2) The matters referred to in subsection (1) above are—

(a) the prevention, treatment and alleviation of disease or illness;

(b) education, the arts, crafts, cultural and recreative activities;

(c) development of tourism;

(d) charities other than those whose purposes include the matters contained in paragraphs (a) to (c) of this subsection.

(3) Nothing in this Act shall prevent the sale, offering for sale or despatch to persons, whether within or outside Scotland, of any tickets or chances in any such lottery as is referred to in subsection (1) above.
(4) Sections 35 to 37 above shall not apply to any Bill passed by the Assembly under this section.
(5) In determining what payments are, with the consent of the Treasury, to be paid into the Scottish Consolidated Fund out of moneys provided by Parliament under section 44 above or into the Scottish Loans Fund under section 45 above, the Secretary of State shall take no account of any funds raised under this section.")
The noble Lord said: This is a joyful little Amendment. The Government have invited suggestions for Scotland raising additional revenue for herself, and this Amendment indicates one possible way; namely, by Scottish national lotteries. Lotteries, I know, are included as a devolved matter under Group 21 (Miscellaneous) in Schedule 10, although I rather suspect that it is included there for the Assembly to regulate rather than to run.
I am only too well aware that not all Scots or, for that matter, all English or Welsh folk look favourably on lotteries, however good the causes they are to serve may be. That was not considered as sufficient reason for rejecting the idea of premium bonds. I know the bonds are repayable and the private gains incidental, but the gains on lotteries for charities are also incidental to the sustaining of the charities. Admittedly, the contributions to lotteries are not repayable, but neither are taxes which are supposed to be exacted mainly in aid of good causes.
To ensure that the lotteries under the Amendment are devoted to good causes, we have picked out—my noble friend Lord Glenkinglas is not here—appropriate devolved matters from Schedule 10, in particular from Group 1 (Health), Group 3 (Education), which includes the arts, sports, libraries, museums and art galleries, and we have picked out charities from Group 21, including all charities whether or not included in Groups I and 3. This definition would cover charities related to Group 2 (Social welfare). The money raised could be used to finance, or to help to finance, any project or activity covered by any of these groups. We put in development of tourism because of its importance to remoter and poorer areas, although we would not mind much if it were omitted as not being of the same character as charities in Groups 1 and 3. We put it there mainly because Scotland has found it particularly difficult to get enough money to support the tourist industry in the past.
There are, of course, other countries which run lotteries for all sorts of purposes—for hospitals, even for air forces, and other necessities of life. Subsection (3) follows as closely as possible the Lotteries and Amusements Act. It would, of course, he impossible to stop lottery
342
tickets or advertising material about the lotteries from being sent by post outside Scotland, and across the Border, if it comes to that. Of course people in England would not wish them to be stopped, I am sure. If they did the reputation for being mean would quickly cross the Border too. Still less would Parliament want to exercise the powers conferred in Clauses 35, 36 and 37 to prevent Bills and Statutory Instruments establishing lotteries in Scotland, as otherwise they might be able to do on the flimsy and inadequate ground that a reserved matter might be affected. That is the purpose of subsection (4).
Finally, the whole purpose of finding a means of raising additional revenue to meet Scotland's needs would be defeated if the Treasury were to treat the revenue from Scottish national lotteries as the Department of Health and Social Security treats income above a certain level earned by pensioners up to the age of 70. Hence we see subsection (5). Obviously there would be no point in raising this revenue unless it was considered as additional to the revenue put into the Consolidated Fund by the Secretary of State with the consent of the Treasury. I put this forward as an idea, I hope a wholesome one, which should commend itself to Parliament. However, I daresay that if Parliament does not like it now, the Assembly can consider the matter for itself later on.
Lord MOTTISTONE: I support my noble friend's initiative in this matter. If there are any objections in Scotland to lotteries in any form, the fact that he proposes it should be as the result of an Act of the Scottish Assembly would give the Scots an opportunity to debate it among themselves before it came into being. In my view, my noble friend's proposal should be entirely applauded and I hope the Government will give it great support.
Viscount THURSO: This is an entirely excellent and refreshing idea which is meant to be, and I believe is, helpful. It is interesting to note that nearly all the objects for which these lotteries might be held are already the recipients of funds from smaller lotteries, raffles and so on, throughout Scotland. Obviously, if these

343
facets of Scottish life are to be helped by the Assembly, it would be perfectly appropriate that they should be helped by a well-run lottery, and in any event that would give some muscle to the Assembly which it will not receive from the Consolidated Fund. My noble friends on these Benches would certainly back this excellent suggestion, and we hope the Government will consider it.
Viscount MASSEREENE and FERRARD: While I, too, support my noble friend's suggestion, I should have thought it would be allowed under the Bill as drafted. Surely such matters would be covered by Schedule 10, Groups 21 and 26, so making the Amendment—which, as I say, is excellent and has my support—unnecessary. Apart perhaps from the Elders of the Kirk, I cannot imagine anybody objecting to the Amendment.
The Earl of PERTH: I also support the Amendment and congratulate the noble Lords in whose names it stands for coming up with an idea which the Government have been seeking; namely, a means—not necessarily by lotteries—of raising revenue by the Assembly. The Amendment has two important features. The first is that it is an entirely voluntary affair; those who do not approve of lotteries—and I know that applies to many people as a matter of principle—need not take part. The second is that these lotteries would be used for admirable purposes, mostly, as the noble Viscount, Lord Thurso, pointed out, for charities which can already be helped in a small way.
It is worth recalling the extraordinary success that Ireland has had in relation to its hospitals by this means; it has been one of the great success stories of the Irish hospitals and I do not see why, if the Assembly so agreed, we should not follow the same pattern in Scotland. Because it is subject to the approval of the Assembly, it is only permissive, and to that extent I fully back it.
Baroness STEDMAN: I am sure the Amendment is meant to be helpful and I acknowledge the support the noble Lord, Lord Drumalbyn, has had for it tonight; but the inclusion of the entry of betting, gaming and lotteries in Group 21 under the miscellaneous head confers a very wide competence on the Assembly to
344
legislate in the matter of lotteries. As the Bill stands, the Assembly could pass legislation providing for the establishment of a Scottish national lottery, either with the limited purposes specified in the new clause, or with any others (within devolved matters) which the legislation itself chose to specify.
Lotteries are a form of activity on which very strong views are held by public opinion. The Government take the view that if the Assembly (on the Motion either of the Scottish Administration, or of a Back-Bencher) chose to legislate on the subject, it is desirable that they should have the maximum discretion as to the contents of that legislation. They should, for example, be free to modify, or to apply, Sections I and 2 of the 1976 Act, to the extent they considered expedient. They should also have maximum freedom to apply, as they saw fit, the proceeds of any lottery to be conducted by the Scottish Administration, or by a body set up for the purpose. Parliament should not appear to be dictating to the Assembly what view they are to take on such matters.
Subsections (1) and (2) of the new clause proposed by the noble Lord, Lord Drumalbyn, we think are not only unnecessarily but probably also undesirably restrictive to the Scottish Assembly. In effect, they derogate from the competence conferred by the Bill as it stands at present. The Government see no reason why these restrictions should be imposed: such restrictions as those limiting the purposes for which proceeds can be applied. Why should we rule out the application of proceeds to, for example, the purchase or upkeep of ancient monuments and historic buildings (in Group 19), or the provision of facilities for public enjoyment of the countryside (under Group 9)? Why should we specify in the Bill that they can use their money only for these certain objects?
Subsection (3) seeks to enable the sale of tickets outside Scotland if a Scottish national lottery is set up. Here again, the provision is unnecessary. There is nothing in the Bill at all to prevent a Scottish Assembly Act from enabling people outside Scotland to participate in a Scottish lottery. The voluntary participation of people outside Scotland would not alter the fact one iota that the legislation

345
related to the setting up and regulation of a lottery would be conducted within Scotland.
Subsection (4) relates not to the content of the application of Assembly legislation but to the exercise in relation to it of the Secretary of State's intervention powers under Clauses 35 to 37. The intention seems to he to prevent the Secretary of State from moving the rejection of the Assembly's Lotteries Bill (under Clause 35), from directing action to be taken or not to be taken under it (under Clause 36), or from revoking any subordinate Instrument made under it (in Clause 37).
It is difficult to understand why Assembly legislation on lotteries should be regarded as of such a unique character that it alone should be exempt from any ministerial intervention. Such intervention is possible only if the Bill, executive action or subordinate Instrument, would, or might, affect a reserved matter, and if the intervention is considered desirable in the public interest. It may be thought unlikely that such circumstances would arise in the context of Assembly legislation on lotteries. But if they did, why should the Government be, exceptionally, prevented from taking action to protect the reserved interest? From the Government's point of view, this constraint must be unacceptable.
Subsection (5) provides that no account should be taken by the Secretary of State of the proceeds of a Scottish national lottery when he came to determine payments into the Scottish Consolidated and Loans Funds. In other words, such proceeds would be treated similarly to the proceeds of a supplementary tax, such as the Government have expressed readiness to consider providing for if the Scottish Administration so wish. In principle, this is not unreasonable. But it makes little sense to make statutory provision on the matter. The amounts to be paid into the two funds, and the manner in which they are to be determined, are entirely discretionary. The Bill in no way indicates what factors the Secretary of State is to take into account. It cannot, therefore, with any effectiveness specify a factor which he is not to take into account. I am sure that the Amendment was intended to be helpful to the Scottish Assembly, but in view of what I have said about the very wide competence conferred
346
upon the Assembly by the Bill, as it stands at the moment, and in view of the difficulties created by the later subsections, I hope that the noble Lord might care to consider the matter, and withdraw his Amendment.
Lord DRUMALBYN: I should like to thank the noble Baroness for considering each of the subsections of the Amendment one by one. When I saw lotteries down in Group 21 of Schedule 10, I thought this meant the regulation of, and legislation about, lotteries; but of course I cannot see into the minds of those who devise these things. I accept that it is intended to cover any kind of lottery over which the Assembly has jurisdiction. Had I realised that, it might have led me not to pursue the matter in the first place. It is quite a surprise to me that the reason for rejecting this Amendment is that it is too restrictive. I shall have to go a little further next time.
As for subsections (4) and (5), it seemed to me that if one is to raise money especially in Scotland by the Assembly, this is something over which the Secretary of State should not have any jurisdiction. I am not sure that I agree with the noble Baroness that this is of so unique a character as to warrant excluding intervention by the Secretary of State. It happens to be the only Amendment of this kind that has come along, and if it is the first one to exclude intervention by the Secretary of State, of course it is unique until the next one comes along. I do not really see that that provides any objection to having at least one provision which is left to Scotland alone. As to the argument that this is a matter which should be left to the Assembly to legislate on, as this is within the power of the Assembly I am bound to confess that I must find that a valid argument, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRABOLGI: I think this is really a good moment to halt the Committee, and I beg to move that the House do now resume.
House resumed.