HL Deb 03 May 1978 vol 391 cc178-268

2.55 p.m.


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.


Clause 38 [Industrial and economic guidelines]:

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.


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 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.

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.


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?


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.


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.


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.


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?


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.


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 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.


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.


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. 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.


May I—


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. 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.


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.


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 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, 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.


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.


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. That seems to me to be the full intention of these clauses, and I think that the debate is being excessively complex.


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.


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- retary of State for Scotland. I thought it worthwhile to say that at this stage.

3.29 p.m.


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.

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; 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.


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.

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 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.


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?


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.


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 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 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.


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 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.


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.


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.


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?


As I have said, I regard this as the central economic 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 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 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 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?


No, I do not think so, because the noble Lord is just coming on to that point: Section 5 stands reserved.


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 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 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.


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, 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 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 should be more formal, if we are to get this right and avoid conflict in the future.


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 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.


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 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, 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. 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 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 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?


I regret intervening, which I would not normally do, but I 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.


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". 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.


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.


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.


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 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.


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.


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.


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.


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 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.


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.


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 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".


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 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.


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 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 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.


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.


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 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.


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.


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 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 is he responsible to the Secretary of State or to the Assembly? This is a fundamental matter the answer to which we must know.


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 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 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 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.


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.




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.


May I answer that?


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.


Scottish devolution is not creating a federal state; it is something quite different.


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, 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.


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 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 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.


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- 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.


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 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 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.


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.


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, 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.


I wish to take up one point arising from what the noble and learned Lord has said. 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?


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.


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 Vaizey, was very sound, and it ought to be taken into account by Report stage, or even later.


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.


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 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]:


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 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 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.


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 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.


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 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 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.


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 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.


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.


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 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, 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 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.


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.

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.
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 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 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; 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.


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- 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.


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 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 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 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 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 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 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.


I must confess to some surprise that the noble Lord, Lord Strathcona and Mount Royal, should 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.


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.


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 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.


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.


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 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.


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. 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 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 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.


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?


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 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.


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 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.


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 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?


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.


I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.


My Lords, I beg to move that this House do now resume.

House resumed.