§ House again in Committee on Clause 44.
§
The Earl of SELKIRK moved Amendment No. 298:
Page 22, line 27, after ("sums") insert (", including grants under section 63 below.").
§ The noble Earl said: We continue to deal with what are called the financial provisions of the Bill. This part of the measure was not examined at all by the other place. We are therefore entitled to ask for as much information as possible on how the financial side of these proposals is to be handled. I should like to know, first, why the rate support grant, which is in Clause 63, is not in the financial part of the Bill but among the miscellaneous provisions. Surely this is closely connected with the other financial provisions, and indeed is an integral and vital part of them?
§ I am wondering, too, why it is not dealt with on the same basis as what we have previously been discussing as the block grant. In fact, does the rate support grant form part of the block grant? If so, what part? I note that the rate support grant is made under certain local government provisions—the 1966 Act and the 1975 Act. That seems to be dealt with in an entirely different way, and, so far as I can see, is not covered by the rather slender conditions which are provided for in Clause 44.
§ In that clause the block grant has to be accompanied by a statement of the considerations which have led the Secretary of State to set the block grant at that figure. There is no such provision in Clause 63. There is no provision as to whether the Secretary of State states the considerations; and there is no suggestion, as it stands, that it should be subject to an order in the other place. It would seem important that these should be taken together. I suppose the rate support grant is about £1 billion—I am not certain of the figure—and I daresay it represents a substantial percentage of the block grant. Why are they not taken together and what are the considerations involved in their having to be taken separately?
§ There is a further question in this connection. Admittedly, there are differ- 280 ent considerations applying to both, except that the funds must be provided by Parliament; yet they both—certainly the rate support grant—will inevitably cover a substantial number of reserved subjects. As can be seen from Schedule 15, there is a list of reserved subjects—the reserved functions of local authorities and other bodies—and they are all covered by the rate support grant. Many of the 25 or so subjects are in fact reserved functions, yet they will be paid for by the Scottish Secretary, and presumably after a discussion in the Assembly. How is it proposed that that should work? Is it to be handled entirely separately? I presume that it will be an annual grant. We do not yet know whether the block grant will be annual, but I must assume that the local authorities will need to have their rate support every year. It seems to me integral to Parliament that they should know that funds are being made available to the Scottish Assembly under both headings.
§ I take it that the rate support grant will be paid into the Scottish Consolidated Fund, and that those in charge of the fund will then be responsible for disbursing it. What discretion, if any, will there be in the allocation of those funds? Many of these functions are extremely important. The first on the list in Schedule 15 is "police (including police houses)", and there are a number of others which I need not go into here. All these have to be supplied, so far as I know, by the Scottish Secretary. I suppose that they will be allocated for different purposes. The Scottish Secretary will have to make his case to the Treasury on behalf of the local authorities on exactly what payments are to be made, and he will have to justify the requests for the amount required.
§ Why is this matter not included in the financial provisions? It is one of the most important financial aspects of the Bill, and is an integral part of the financial arrangements which are to be made. Is this matter intended to be dealt with together with the block grant, or are these two items to be dealt with separately? If they are to be dealt with separately, can we please be told how the rate support is to be dealt with, if it is not equally well to be dealt with under Clause 44, which seems to me the right place to deal with it. I beg to move.
281§ 8.22 p.m.
§ Lord KIRKHILLI want to respond initially to the first and principal question put by the noble Earl. He is asking—perhaps I might paraphrase—why is Clause 63 where it is? The answer to that is that rate support grant is not part of the arrangements for funding the Scottish Administration through the block fund. It arises as part of the spending of the block fund. It is thus a miscellaneous matter arising from the devolved matter in Group 5 of Part I of Schedule 10.
But the block fund will include provision for the payment of rate support grant, and it will be open to the Scottish Administration to decide to give financial assistance to local authorities from some future date in some other way than through the medium of the present rate support grant system. But certainly to begin with they will have to operate the present system. However, no matter how they decide to do it, the need to give subvention to local authorities' current expenditure will continue to be a major consideration in the determination of the block fund. Your Lordships will know about this because the matter has been discussed on a previous Amendment when the discussion at one point ranged between my noble and learned friend Lord McCluskey and the noble Lord, Lord Strathcona and Mount Royal.
The total of devolved public expenditure, and the amount of the block fund will be negotiated between the United Kingdom Government and the Scottish Administration. The method of determining the block fund will have to be discussed and agreed with the Administration, but it may be possible to devise a formula approach to this also. It is the Government's intention that the consultations with the Scottish Administration will take place on a virtually continuous basis, and not as a series of disconnected, highly political confrontations.
With regard to expenditure by local authorities on reserved functions, as my right honourable friend the Secretary of State for Scotland said in another place, there are certain functions—and the noble Earl has just touched upon this—listed in Schedule 15 which will remain with the United Kingdom Government, but which will have to be financially supported in the same way as they are supported at present. 282 The rate support grant is of course a general, and not a specific, gra it. Once the grant is paid, individual local authorities are free to use it in any way they wish. This is the essence of the grant and something to which local authorities rightly attach considerable importance.
Support for the reserved services, therefore, in common with that for devolved services, must come from the general support given through the rate support grant system. Since reserved functions as a whole amount to rather less than 10 per cent. of total local authority expenditure —and most of it is on police and traffic wardens, as the noble Earl has just mentioned—the Government consider it unlikely that any significant differences will arise with the Scottish Administration, or the Convention of Scottish Local Authorities, over the allowance to be made for reserved functions when the rate support grant is fixed.
Finally, there is the provision in Clause 63(2) which obliges a Scottish Secretary to have regard to such considerations affecting reserved functions as the Secretary of State for Scotland brings to his notice after consultation with local authority associations. I hope that that answers the points put to me by the noble Earl.
The Earl of SELKIRKIn that case the noble Lord should accept my Amendment. That is the simple answer to this. I am concerned that it is made clear that the rate support grant is included. I, in my ignorance, reading the Bill, seeing two separate paragraphs in totally different parts of the Bill, imagined that they were not connected. I cannot see why what I propose should not be included. It would make the Bill clearer, simpler and comprehensible. It would not injure the Government, or anybody. I am all for comprehensibility in Acts of Parliament. There is another point on which I should like to press the noble Lord. He says that there is no specific grant at all. This is a radical change, because there have been specific grants—
§ Lord KIRKHILLPerhaps I expressed myself in a less clear manner than I intended. I was suggesting to the noble Earl that the rate support grant is not a specific grant. It never has been. It is a general grant. That is the point I was trying to make.
The Earl of SELKIRKWith great respect, is that true? Certain items in the rate support grant are specific. I always understood, subject to correction, that police grant was specific. There are one or two others with which I am not familiar. Is the noble Lord saying that this is a general grant covering devolved and reserved subjects, and that the Assembly, and indeed the local authorities, are perfectly free to spend as much or as little as they like? Is that really the position? If it is, it undermines the whole concept of reserved and devolved subjects in local government.
§ Lord KIRKHILLThe present position is that rate support grant is a general grant. Within the calculation authorities are thereafter free to determine their own priorities. That is the present position, and it certainly will be the position as the Assembly gets under way, no matter what may happen in the end.
§ Lord HARMAR-NICHOLLSDoes the grant go direct to the local authorities, or does it go through the Assembly or the Executive?
§ Lord KIRKHILLI am sorry; I do not quite understand the point the noble Lord is making.
§ Lord HARMAR-NICHOLLSDoes the rate support grant go direct to whoever is to spend it, or does it go through the machinery of the Assembly?
§ Lord KIRKHILLIt will go through the machinery of the Assembly to the local authorities concerned.
§ Lord HARMAR-NICHOLLSSo the more the local authority gets, the less the Assembly gets on the block grant? Is that really what the noble Lord is saying?
§ Lord KIRKHILLThe Assembly will be discussing with local authorities the extent of rate support grant, as, for instance, at the present moment the Secretary of State so discusses with local authorities.
Lord CAMPBELL of CROYI might be able to help overcome a misunderstanding which I think may have arisen between my noble friend Lord Selkirk and the noble Lord. As the noble Lord said, once the local authorities have 284 received the rate support grant, they are able to allocate it between different services. But the process of calculation of the grant is such that the Government go into protracted negotiations in Scotland —through the Scottish Office—with the local authority representatives (now the Convention which represents them all) and they work out very carefully exactly how much they are to spend on education and their other services as the justification for the resulting figure that is determined. In practice, it is not easy for them to depart greatly from the allocation because that has been the basis of the negotiation which has arrived at the total sum. I hope I have been able to assist what appears to me to have been a misunderstanding.
§ Lord KIRKHILLI can understand what the noble Lord, Lord Campbell of Croy, from his vast experience is saying, and can only re-emphasise that no change is being proposed; it is a continuance of an ongoing process.
§ Baroness ELLIOT of HARWOODMay I ask the noble Lord a question? I remember over very many years of my life in local government having meetings of all the committees in about January or February and putting in the amounts we wanted from the general fund. That went to the Scottish Office for negotiation. It took three or four months in order to get what one wanted. I cannot believe that that will take place without any relation to what is required. It must take place.
The real point is, will it be with the Assembly or with the Secretary of State? If it is to take place with the Secretary of State it remains very much the same sort of thing that has been done for years and years. If it is to be with the Assembly, and then in the end has to be approved by the Secretary of State, we are inserting another tier of people who have to be involved, which, in my opinion, is quite unnecessary. The noble Lord keeps saying that this is a grant with which one can do anything. Frankly, it is nothing of the kind. It is a grant that one gets because one has put up what one hopes are extremely good schemes. One then gets the money for them. One cannot get a large sum of money without going into every detail of every single committee.
§ Lord KIRKHILLIn response to the noble Baroness, Lady Elliot, as she will know, the present position is that the Secretary of State for Scotland negotiates in a number of different consultations with the Convention of Scottish Local Authorities in determining the extent of rate support grant. When a Scottish Assembly gets under way, it is envisaged that the rate support will be part of the devolved consideration, and of course the new Scottish Administration will be involved in that type of discussion. There can be no question of the discussion ceasing.
§ Baroness ELLIOT of HARWOODThe money will still come from Westminster.
§ Lord KIRKHILLThe Secretary of State will make arrangements under Clause 44.
§ Lord DRUMALBYNThe answer to my noble friend Lord Selkirk is, I venture to suggest, that Clause 44 in general is just an enabling clause conferring power upon the Secretary of State, with the consent of the Treasury, to make payments. How those payments are made up is as may be determined by order made with the consent of the Treasury. It is a normal empowering provision which is always necessary if the Treasury is to make payments.
§ Lord KIRKHILLI agree with what the noble Lord, Lord Drumalbyn, has said. In my reply to the noble Earl I was attempting to explain how I saw the thing working. This was my attempt to open the door, as it were, to indicate how it works at the moment and how it will work.
§ Lord MACKIE of BENSHIEIs the Minister saying that the Secretary of State will negotiate the block grant with the Treasury and that the Assembly will not negotiate with the Treasury for the block grant? Is it that negotiations will be done with the Secretary of State?
§ Lord KIRKHILLI do not understand the difficulty expressed by the noble Lord, Lord Mackie of Benshie. I thought I had explained the position fairly and clearly. Can he elaborate his point to me?
§ Lord MACKIE of BENSHIEI should have thought that the Assembly itself should have some say in the negotiations over a period, taking into account the historical condition of Scotland and the amount of money that has been paid in the past, the burden they will have to bear in the future and the per capita situation in the rest of the United Kingdom. This must be a subject of negotiation in which the Government of Scotland will be involved for the block grant. The whole purpose of the block grant was that, after reasonable negotiation, responsibility would be borne by the Assembly for the amount of money. I misunderstood the Minister if he said that these negotiations would be carried out by the Secretary of State.
§ Lord KIRKHILLI cannot recall my exact phraseology of a few moments ago but there can be no question but that the Scottish Executive will be very much involved in these negotiations. There can be no question of setting the Executive on one side. I hope I did not convey that impression and, if I did so, of course I withdraw.
§ Lord HARMAR-NICHOLLSThis does not clear away the problem. My noble friend Lord Selkirk has clarified my mind in saying that the rate support grant has got to come out of the block grant.
§ Lord McCLUSKEYThe mover of the Amendment has failed to grasp the fact that sums are paid out of the Scottish Consolidated Fund. The noble Lord, Lord Drumalbyn, stated it correctly when he said that sums are paid into the Scottish Consolidated Fund and sums are paid out of the Scottish Consolidated Fund, but when they go into the Fund they lose their identity and just become part of the Fund.
§ Lord HARMAR - NICHOLLSAlthough they eventually lose their identity, at the point of going in, one is a grant and the other is a rate support grant. I have had a little experience of this. I remember that, when I was head of a local authority, we used to have de-rating of industry. We used to have the rate support grant to cover the de-rating of industry because industry was a very important rate-producer in the 287 area with which I was involved. But one did that direct with the Treasury. Now I gather—and the noble Lord, Lord Mackie of Benshie, seemed to bring this out—that, whereas the rate support grant used to come direct from the Treasury, it now comes through the Assembly, and that the amount that they have to pass on as the support grant will affect the amount of the block grant with which they are left. This is the point of conflict which I should like to be clear on. If for some special reason the Assembly want to keep a bigger part of the general grant for its purposes it could well be tougher on the local authorities. My noble friend may look bewildered. I am bewildered by the whole shooting-match, but, having now set out to try to understand it—and he must not get irritated with me—I should like to know whether the local authority, as well as having to satisfy the Treasury on the block grant, will have to satisfy a possibly avaricious Assembly. I should like to have an answer.
§ Lord KIRKHILLMay I direct the noble Lord's thoughts along these lines? At the present time, Central Government can alter the percentage of the rate support grant. If a policy decision so to do is taken, this will of course throw an additional burden upon the local authorities if they wish to maintain the present level of services. They will have the alternative of cutting back or raising rates. In exactly the same way, the Scottish Executive will have that area of choice. Before I resume my seat I may say that the nogotiations we have been talking about earlier are clearly—and this is mostly directed to the noble Lord, Lord Mackie—between the United Kingdom Government, which, in practical terms, means the Secretary of State for Scotland and the Treasury, and the Scottish Administration. If I in any way obfuscated that issue earlier, I hope that sets the record clear.
The Earl of SELKIRKI am grateful for such information as we have had. May I try to summarise it? I am not greatly impressed with this argument about "at the present time", because we are, after all, examining a wholly new situation. If I understand the noble Lord, Lord Kirkhill, correctly, the block grant is the 288 sole source of funds for the Scottish Consolidated Fund—is that right?—and it covers all the expenditure for which they will be responsible in the health services, in housing and in education. Is this correct? I am not clear whether or not it is correct. This money is received into the Consolidated Fund, and, as has been said, the identity is lost. What are not lost are the items of expenditure which have been submitted to justify it. They are not lost; they are still there. Does the noble Lord want to say something?
§ Lord KIRKHILLAgain to try to be helpful, I revert in one sense to an earlier point, but it also takes in the later point which the noble Earl is making. There are specific grants.
§ Lord KIRKHILLYes, but I did not say that there were not specific grants. I said that the rate support grant was not a specific grant, but that it was a general grant; and that is a statement of fact. But there are specific grants, and certain services—the police, as an example, and housing to a certain extent—enjoy support in that way. But the rate support grant is general, providing assistance for a whole range of services, which includes leisure, recreation, roads, transport and so on. It is for each local authority to decide the services upon which the rate support grant should be spent. This is a point I made earlier, and I can only re-emphasise it. The block fund will contain an element which takes account of the need to pay rate support grant to local authorities, and it will be for the devolved Administration to decide, after consultation, as I was saying earlier, with the Convention of Scottish Local Authorities, how the rate support grant should be distributed between the authorities. I honestly cannot add anything to that. That is the picture as I know it.
§ 8.43 p.m.
§ Lord HARMAR-NICHOLLSI wonder whether the noble Lord could explain this to me. Is it going to be a way —and I am not putting this politically; I just want to know—of giving a side-door authority to raise rates, which are, to me, the same as taxes? If it is that the rate 289 support grant that they get coming through the Assembly is not as much as it would be if they had it as it goes now, that would mean that the local authorities would have to raise their rates in order to make up for what they were not getting now that it was coming through the Assembly. Is that a possibility? Because if that is so, then I reckon that ought to be made clear so that the people who are eventually to be asked to vote on the referendum will know what they are voting for. If it is that they are told that they are not voting for an increase in rates or an increase in taxes, whereas the way it is being administered means that they are, I think they are entitled to know, if that is what the situation is going to be.
§ Lord KIRKHILLI responded to exactly the same point, which the noble Lord made earlier, as explicitly as could. I cannot add anything to that which I said just moments ago.
§ Lord MACKIE of BENSHIEPerhaps I could say that the noble Lord, Lord Harmar-Nicholls, has been one of the most subjected Members of Parliament in history to the closeness of the electoral system; and if he was lucky enough to be a Scotsman instead of a poor East Anglian, and if he was in the Assembly and backed a Party which put up the rates, then he would not last in any shape or form as long as he lasted in the other place, and no one should know that better than he himself.
The Earl of SELKIRKWe have elicited a new and important fact, and that is specific grants, which I thought were always there. I must make the point that this was specifically denied—and, I may say, from both Front Benches —and it just was not true. There are specific grants.
§ Lord KIRKHILLWith respect, I did not deny that there were specific grants. I said that the rate support grant was a general grant. That is a statement of fact.
The Earl of SELKIRKWe have been told that there are specific grants. I wonder whether we could be told in due course what specific grants there are. I say that for this reason. We are told that, in theory, both the Assembly and the local authority have complete discretion. 290 In practice, they have not. That seems to he the result. Would the noble Lord agree to this Amendment, because it makes it quite clear that this is the sole source of finance? I think it is desirable that it should be made clear. I see no reason why this should not be done, and I should have thought that it would help to make it clear that this is where all the money will come from. Can the noble Lord see any objection to this course being taken? I think it would make it much clearer to anyone reading this Bill.
§ Lord DRUMALBYNBefore the noble Lord answers, may I ask a question which may help to clarify this, at any rate for the future if not now? In Clause 44(2) provision is made for orders to be laid before the House of Commons. Presumably, such an order has to be meaningful to the House of Commons; and, that being so, presumably it will be broken down to some extent, and itemised. Presumably, also, the order may cover several sums to be paid—let us say, so much on such-and-such a date, which I believe is the practice already in some cases. Would this not help, if the global amount was itemised and there was then set out so many payments each month, each quarter or whatever it may be? This would cover all the payments, as I understand it, which are going to be made into the Scottish Consolidated Fund. Would this not help to make the matter clear for the future, even if it is difficult to make it clear for the present?
§ Lord KIRKHILLThat is a helpful elucidation of how I see the situation evolving. I am not in any disagreement with that indication.
§ The Earl of PERTHI have listened to all of this, and I must confess that I remain extremely confused. I should like to suggest that perhaps it is possible for us to read the whole of this debate quietly at our leisure, and perhaps come back to it again on Clause 63, because they are related and they have been part of the same discussion all the way through. Then, if there arises, after looking through it again, something that we wart to raise at that time, we can do so. If, then, the sequel to that exercise is that the point made in the Amendment of my noble friend Lord Selkirk is a good one, we can move it again at Report stage.
The Earl of SELKIRKI must say that the noble Lord has given no answer whatsoever as to why this should not be clarified in this Bill. I think it is quite clear. What is intended is not all that clear. This, I think I am right in saying, is intended to be the sole source of money for the Scottish Consolidated Fund. Am I correct in that? If I am, then I think it should be made clear that that is the case, and that there is not a separate thing called the rate support fund.
I should like the noble Lord to think about this. It is really rather important that we should eludicate this point, because it was never reached in the other place. I think the people concerned are entitled to know as fully as possible how this money which is going to be provided by the Westminster Parliament is intended to be used by the Government. The manner in which it is handled here is in many ways very loose, very untidy, and all that can be said is, "We have done this in the past". I am not interested in the past. This is a new system of government; it should be as fully explained as it can be, and I do not think the Government are trying very hard. Will the noble Lord think about this and try to elucidate this just a trifle further?
§ Lord KIRKHILLMy difficulty is that it appears to me that the noble Earl's Amendment is somewhat unnecessary, because the rate support grant will fall, as he has been saying, to be paid out of the Scottish Consolidated Fund. It follows that it will be one of the purposes to be financed from the block fund. Does that not seem reasonably straightforward?
§ Baroness ELLIOT of HARWOODI think the noble Lord does not understand how obscure what he is saying really is to us. While none of us on this side, I dare say, may be exceedingly intelligent, yet all of us have had great experience in local government. We know what we are saying when we are thinking about getting money, spending money, putting in estimates and all sorts of things like that. Believe me, this is just one complete muddle. Will noble Lords opposite be prepared to take it back and to look at it?—they can tell those who draft it that we are all stupid on this side and do not 292 understand. If you do not think we are stupid—and I hope you do not—then I may say that we are trying to do something to make it perfectly clear to the public, to Members of Parliament, and which does not alter it in any way. We are not altering anything; we are only saying to noble Lords opposite that you must put into the Bill words which are clear, understandable and cover everything. If you do that and think about it again—fine! We will leave it. Otherwise at Report stage I shall urge my noble friend Lord Selkirk to bring this question up again and vote on it.
§ Lord MACKIE of BENSHIEIs it not a fact that the rate support grant will be paid out of the Consolidated Fund but that the non-devolved rate support grant, such as the police, will be paid direct to the local authorities? Is that correct?
§ Lord KIRKHILLThat is something that I think I have got to consider carefully before making an off-the-cuff reply. I must be frank and say that I will want to look at that. I shall certainly think about it and let the noble Lord have my observations.
§ Lord VAIZEYI do not quite see what the difficulty is. It arises, surely, from the fact that the Bill establishes a new consolidated fund which is the Scottish Consolidated Fund. The money is voted by the other place and will be paid into the Scottish Consolidated Fund on the authority of the Secretary of State for Scotland. The Consolidated Fund in Scotland will, in turn, pay rate support grant to the local authorities in Scotland which hitherto has been paid out of the United Kingdom Consolidated Fund. I cannot see the difficulty, except that the same words are used in two separate bits of the Bill to mean different things. I should have thought that the substantive issues comes up on a subsequent Amendment.
I do not find this obscure. It is clear that the intention of the Bill is that virtually the only source of revenue for the Scottish Executive to spend will be through this grant from Parliament. It may be that odd things will be passed in the United Kingdom Parliament by subsequent legislation which gives them, say, the revenue from dog licences; but 293 it is quite clear this Bill's intention is that the whole of the money spent by the Scottish Executive on the authority of the Assembly is to be in this block vote by Westminster. The central issue is on a subsequent Amendment: whether this is a correct principle or not. It is not whether they have used the same language in Clauses 44 and 63, with great respect to the other side. I am sympathetic towards them; for I am convinced that muddles will exist in a Bill of this complexity but I did not think that this was an overpoweringly difficult muddle.
§ The Earl of PERTHIt is all very well for the noble Lord, Lord Vaizey, to say that this is clear. I am not on the other side; I am a Cross-Bencher. To me, it is not clear. I cannot understand why, if what he says is correct, we cannot include the words used by the noble Earl, Lord Selkirk. Then we get a question raised by Lord Mackie and Lord Kirkhill cannot answer it, and the confusion then becomes greater to me. I think that we ought to be allowed to look at this again, to relate it to Clause 63, and when considering that clause, if the need arises, to debate it further and, as the noble Baroness, Lady Elliot, has said, if we are not satisfied at that time we can always move an Amendment at Report stage. To me, it is not as easy as Lord Vaizey says it is; but I am only a Cross-Bencher.
§ Lord MOTTISTONEI wonder whether the noble Lord, Lord Kirkhill, will let us all into the secret. He said that he will tell Lord Mackie the answer to his question. It might be as well if we all knew the answer to that question. Perhaps somehow he will convey it to us all and not just to Lord Mackie.
§ Lord STRATHCONA and MOUNT ROYALI got into a certain amount of trouble on this problem before dinner. When I get into the macro-economics of the various funds I sometimes try to bring it down to the domestic level. I do not know whether this is a good analogy or not or whether it will create more confusion. Is the Consolidated Fund a kind of housekeeping account? And is the husband—Westminster—going to agree to pay a certain monthly allowance into the housekeeping fund? But, in addition, the lodger is also paying some rent and out of 294 that the wife is paying various outgoings. But every now and again she comes along and says, "I need something special—a washing machine". The husband says, "Here is £150 for the washing machine." She may be cunning and get it for £125, but she does not have to account for the difference. The fact is that the special thing is negotiated in that way.
I think that the problem we are in is a purely factual one: of what is put into the fund, how it is negotiated, what is going to go in and, then, how it is disbursed again. I think of it in this way in order to clarify for me the way it is topped up and paid out. I hope that my analogy may be a fair one.
§ Lord KIRKHILLI do not know whether the analogy helps noble Lords. I do not know if it helps me. Perhaps I am now beginning to become more confused than usual. I should point out that the noble Lord, Lord Campbell of Croy, very fairly described the practical workings of the situation as it is at present. Certainly, I cannot see that the Bill will change the practical workings of this sort of situation except that some of the principals will alter—and I mean by "principals" not principles but persons.
Lord CAMPBELL of CROYAs I have been mentioned, I must say that all I did was at one point to try tc assist by reminding your Lordships of how the rateable grant total amount was negotiated. I did not get on to the question of specific grants. I thought that my noble friend said that something was mid about specific grants from both Front Benches, but I realise that he said "Benchers". I know that the police and other services are paid by specific grants. It was not for me to deal with that, but for the Government. I was reminding your Lordships of how the negotiations for the total sum take place between the Government and the representatives of the local authorities and that because they then have to make pretty accurate estimates of what the expenditure is going to be under different headings, they carrot later depart very far from the expenditure that they foresaw under those heads. I cannot try to explain this Bill. I am still trying to learn from what the Government are saying how these various clauses interact with one another. I think that Lord 295 Vaizey has put it in a very simple form; but, for that very reason, I cannot see why my noble friend's Amendment cannot be accepted.
§ Lord KIRKHILLIf, at some personal risk, I can return to the question of specific grants, I am able to affirm that these may be paid for devolved services or for non-devolved services; and to let each one know (as I was requested to do) that the former will be paid by the Scottish Administration and the latter will continue to be paid by the Government.
§ Lord HARMAR-NICHOLLSI thought I had got it reasonably straight. Is the position this? I will use an analogy. At this minute, the arts do not get their grant direct from the Government in the United Kingdom. What we have done (and, I think, sensibly) is to set up an Arts Council and we have said that all the money that the Exchequer is going to give for any kind of art—painting, theatre, museums—will go to the Arts Council. The Arts Council will decide, from the global sum of, say, £40 million, what goes to the various branches. That, I gather, is how the rate support grant and the block grant will be dealt with.
The point that I am making is that if, until now, instead of it having to go through the equivalent of the Arts Council, the various sections have it direct, it is going to mean that there is a different procedure so far as they are concerned. If the sieve that it goes through—in this case the Assembly—is tough (for reasons outside Party reasons) they will be forced to put up their own rates. Is my analogy of the Arts Council grant the right one, or is the housekeeping analogy of my noble friend better? I do not know.
§ Lord KIRKHILLI would not like to opine about either analogy, but I would re-emphasise the point I made earlier to the noble Lord, Lord Harmar-Nicholls. If he will think of the present position, we could, for example, be in a period of crisis. Then the Government of the day might seek to adjust the percentage rate support grant. This, in turn, as I tried to explain earlier, would mean that the local authorities concerned 296 got less. If they want to retain services as they are then the rates would be higher than they otherwise would be. On the other hand, they might cut services. I do not think I can say anything more about it.
The Earl of SELKIRKMay I make two points about this? It is quite clear from Section 63 that all rate support grant is made from the Scottish Consolidated Fund, and that includes the police. That must include a lot of reserved subjects. I did try to elucidate that and I have failed. May I just say now to the noble Lord, Lord Vaizey, that if Section 63 had followed 44 I would agree, but there are 20 sections in between and I wanted to be quite clear whether they were connected or disconnected. I do not think that is altogether unreasonable. I will not press your Lordships any more on this. May I hope that the noble Lord will look at this again and try to help stupid people who find it so hard to understand what this Bill means?
§ Lord KIRKHILLBefore the noble Earl resumes his seat, I must say just this. At no time have I ever suggested, surely, that anyone was in any way stupid—
§ Lord KIRKHILLAt no point did I ever make such a base assertion. I always look at what your Lordships say, if only as a means of self-protection and self-preservation. I am not in a position at this stage to accept the noble Earl's Amendment.
§ Amendment, by leave, withdrawn.
§ 9.2 p.m.
§
Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 157:
Page 22, line 33, at end insert ("and a calculation setting out a comparison of the proposed resources per capita for the year in question which would be available as a result of the approval of the draft order for expenditure by the Scottish Executive for purposes falling within devolved matters, with the resources per capita provided for that year for such purposes in England and Wales.").
§ The noble Lord said: After what we have just been through, it is with some trepidation that I rise to move an Amendment which contains the word "calculation"! However, what we are doing here is something which is not only fairly simply but fairly self-evident. Subsection (2) speaks of a statement of the considerations leading to the determinations to be made by the order; and all we are really doing here is spelling out what might be considered to be one of the considerations.
§ This, again, is based on the July 1977 White Paper, which suggested that this might be a reasonable approach to arriving at these kinds of figures. Also, I think that to some extent this Amendment addresses itself to a problem raised earlier by my noble friend Lady Ward, although it does not go quite so far as to suggest that the comparative figures should be spelled out on a region by region basis.
§ I think that what we have to recognise here is that Scotland is currently getting something like £120 per capita for every £100 spent in the United Kingdom as a whole, and perhaps I might make the Party point that I believe it has gone as high as 30 per cent. extra in the halcyon days of Tory Governments! However, I understand that at the present time it is something of the order of 20 per cent. higher. Against this, the average rate of tax paid by taxpayers in Scotland is something like £50 per head lower than in England. I have also seen a calculation which suggests that there is an overall budget deficit in Scotland of the order of £400 million. I do not know whether any of those figures are anywhere near correct, but I believe them to be in the right general area.
§ We talked earlier about allocating expenditure according to need. I could say "Amen" to that. It is clearly a sensible way to go about it. Here you are a country with a sparse population, with difficult communications, with a bad reputation, at any rate, for their weather, which I sometimes think is perhaps not wholly undeserved, and with considerable areas of less-than-satisfactory land. In other words, this is a country with certain natural disadvantages as compared with England. I think all of us feel that it is totally reasonable for this to be 298 recognised and for extra payments to be made in respect of it.
§ The fact is that these payments are currently being made and, on the whole, people in the United Kingdom accept that we have to make special arrangements to help the Scottish electricity supply, the Scottish roads, the difficulties of Scottish education, and so on. We are always fearful of the possibilities of the English backlash and it seems sensible, at least—and this is alluded to in the White Paper—to try to make some attempt to get at some of the facts and spell them out. It may be said that this is not the sort of thing one should put into an Act of Parliament. Nevertheless, I think it gives us the excuse to ask the Government whether they think this is a proper way to approach arriving at what is clearly going to be, in any case, a difficult negotiation. I beg to move Amendment No. 157.
§ 9.7 p.m.
§ Lord MIDDLETONIt is so essential to try to maintain the unity of the United Kingdom that we should, I am sure, look at any means, however unsatisfactory, that can reduce the divisive effect of Clause 44, to which I referred earlier this evening. The White Paper on expenditure suggests—and it has been suggested also by Ministers in another place—that after devolution the Government intend to explore with the devolved Administration the scope for an independent body and for a formula under which devolved expenditure will be settled.
It is not just the devolved Administration that should be consulted. The size of the block grant affects every region in England. At present the Scots are receiving per head of population 20 or 25 per cent—whatever it may be—more in identifiable public expenditure than the English. I agree with my noble friend Lord Strathcona that this disproportionate allocation is accepted in England at present.
As the noble and learned Lord, Lord McCluskey, reminded us earlier this evening, the system of public expenditure based upon need is well established and the poorer English regions, having similar problems of unemployment, dereliction, decaying industries and so on, benefit in the same way as do the Scots. I do not think that these regions are at present 299 resentful of the Scots. They accept the differential system administered from the centre by what appears to be a reasonably fair process, and where there is no undue political pressure from north of the Border.
After devolution, the share-out as between England and Scotland will be high-lighted every time the block grants come before Parliament. There will inevitably be great political pressure from Scotland and this may well build up strong resistance in England. It is essential that Parliament should be fully informed as to the relative level of expenditure per head in England and in Scotland, and, if it is seen in Parliament that the Scots are to remain in relatively the same advantageous position, then I believe that this will be, as now, perfectly acceptable in England. If, however, there were to be Scottish demands for an increased amount, relatively, of expenditure per head, then the figures provided would show whether this was fair or whether it was greedy.
One is tempted to go further than this Amendment—this possibility has been referred to earlier this evening—by legislating that figures should be provided for Parliament showing the breakdown of expenditure per head on the devolved services, as between all the English regions. I suppose that you would define them by reference to the boundaries of the present Economic Planning Councils. It would then probably be found that the more disadvantaged regions of England, such as those of the North and the North-West, were being treated as well as, if not better than, Scotland, and that might go a long way towards curbing any feeling that they, having many of the problems of Scotland, and very often in a more acute form, were being treated relatively worse.
This might mitigate the divisive effect of the periodical dispute as between the North of England and Scotland, but it would also raise problems as between the English regions and for that reason I prefer this Amendment and I support it. A vague promise, to consult a Scottish Assembly about how to allocate public expenditure throughout the United Kingdom, takes no account of the legitimate concern of the English regions, and does nothing to mitigate the possible divisive effect of Clause 44. I very much 300 hope that the Government will accept this Amendment, in view of their desire to provide a Bill that will strengthen and not weaken the United Kingdom.
§ Lord TANLAWI wonder whether the noble Lord, Lord Strathcona, could help me on a point. Can he explain whether, if his Amendment is successful, the Scots will get more than the Goschen formula, or approximately 11/18ths of the national Consolidated Fund, or less? I am afraid that I am not very clear.
§ Lord STRATHCONA and MOUNT ROYALI am in some difficulties, because I am not familiar with the Goschen formula, which I do not think we use any more.
§ 9.11 p.m.
§ Lord VAIZEYI must confess that I think this Amendment comes fairly near to the heart of the Bill. It is rather interesting that we had bevies of law Lords (if "bevies" is the right word to use about a collectivity of law Lords) speaking about the rather abstruse problems of which court people should appeal to. Presumably it will be quite a large item in Scotland. But Clause 44 and this Amendment are likely to be the central point of debate every year about the position of Scotland in expenditure terms, which is really what the Bill is all about.
The noble Lord, Lord Strathcona, was perfectly correct. Since Dr. McCrone first did these calculations about 20 years ago it has been well known that the expenditure per capita on the services in Scotland is higher than it is in England. This is partly because, on average, the Scots are poorer than the English, but it is also because the level of public services, despite what the noble Earl on the Cross-Benches would aver, is generally rather higher in Scotland than in the rest of the United Kingdom, as various indices show.
The trouble with this Amendment is that it refers only to one possible index of the way in which the clause will operate, and I should have thought that the real defect of the clause—to which I shall want to speak when we debate, Whether the clause shall stand part of the Bill?—is the absence of any formula, such as the Goshen formula, from the Bill. As I 301 understand it, this is to be left to a periodic haggle between the Scottish Executive and the United Kingdom Government, which will be a continuing source of irritation.
If I may just spell out why I am slightly dubious about what the noble Lord, Lord Strathcona, has suggested—though I think it is an important point and one which bears close consideration—if you think back in more general terms about the Bill, what it is really doing is what we all like to do; that is, to have our cake and eat it, too. What the people of Scotland want is parity of services with England, and by "parity" they mean slightly better; that is to say, if you fall down and break your leg in Inverness or in Southend, there will be a free hospital for you to go to. The basic principle is that your children should be at schools which are roughly equal. That is the reason why the Government have not given power to the Scottish Assembly to levy taxes and why, broadly speaking, they have not given to the Scottish Assembly power to do very much.
The Government have not allowed any real power over the economy to be given to the Assembly. However, the Government have allowed power to the Scottish Assembly to vary expenditure between housing, health and education. Those are the three principal subjects which are devolved. It follows therefore that if the Scottish Assembly says, "We will build an extra new hospital in Glasgow", they will not be spending so much on education as they would have spent if the United Kingdom Government had built their hospital. That is the necessary corollary. Therefore the Amendment moved by the noble Lord, Lord Strathcona, will not show the net effect on each service. It will show only the total volume of expenditure which is directed towards Scotland divided by the population of Scotland.
This is not a very good index of the level of services provided. Therefore it will not give the noble Lord, Lord Strathcona and Mount Royal, the information that he wants. For example, if the Scots had twice as many children per head as the English, the expenditure on education in Scotland would be much larger. Therefore the whole basis of comparison would not have much statistical validity.
302 I shall listen with great interest to what the noble Lord has to say in reply to the points which have been made on his Amendment. If I had more courage and more familiarity with the practices of your Lordships' House, I should have moved a series of Amendments designed to draw attention to the absence of any formula on taxation. These clauses were not very much debated in the other place, and the general level of debate so far has been pretty low; yet this is the area where there will undoubtedly be an annual fight of a very substantial kind.
§ 9.16 p.m.
§ Lord MACKIE of BENSHIEI am afraid that I cannot allow a number of points which have been made by the noble Lord, Lord Vaizey, go by without comment. This is a very useful probing Amendment. Of course it is not necessary for any Government to publish the facts and say how much more is being paid to one section than to another, and the reasons why. Nobody has mentioned the reasons why. I am surprised that the noble Lord, Lord Vaizey, who I understand is an economist of enormous distinction, did not go a little further into the reasons for the higher expenditure in Scotland.
The fact is that round about 1900 the income per head in Scotland was higher than in England and, far from paying £50 a year less in income tax, the Scots were earning higher incomes. At that time, and even before that time, there was a large migration of able Englishmen into Scotland to work in those industries which were founded on coal and steel but which have since largely died out. May I also mention that during two world wars the heavy industries of Central Scotland received an artificial fillip which deprived them of the chance to develop the new industries which brought enormous prosperity to the Midlands of England.
We have the situation in Scotland that services are much more expensive to maintain. Nobody who wants an Assembly has ever denied that there is more coming into the kitty in Scotland than is being received in the form of taxes. The reasons for this state of affairs are perfectly plain. We cannot say that we have had union with England and unitary power for 270 years and that 303 now we have a situation in Scotland where income per head is less while expenditure on public services is much more and then be told, "If you want a devolved Parliament you must pay for exactly what you have. You will receive exactly what you pay for and nothing more". It would be reasonable to say this after 30 years of devolution. Then the Scots could take the blame for their own mistakes. In the meantime, while I agree entirely with the noble Lord, Lord Strathcona and Mount Royal, that the per capita entitlement or grants to various regions should be set out for the information of all concerned, I believe that the regions in Scotland which have the highest need should also have a per capita grant.
§ The Earl of PERTHI find it difficult to understand why just this one Amendment is made to the clause and why it is said to be a special factor. There are any number of other factors involved. All of us know the degree of unemployment in Scotland which has to be set against the degree of unemployment, if not in England then in the Regions. We have seen the figures. My worry is that statistics are enormously misleading. This may be one factor, but when I read the Bill I find that Clause 44(2) says:
a statement of the considerations leading to the determinations to be made by the order".I should have thought that the whole was very much better than the part. All I see in this Amendment is the choosing of just one small part. Both the noble Lord, Lord Vaizey, and the noble Lord, Lord Mackie of Benshie, have made the point that there are other considerations. Surely those are covered by the Bill as it stands. If we focus on just this one calculation, it may do more harm than good.
§ Lord DRUMALBYNMay I make a short observation? I merely want to ask a question. So far as the acceptability of the statement being made before Parliament is concerned, a very great deal would depend upon the detail of that statement. I would agree with my noble friend Lord Middleton—and I think the noble Lord, Lord Vaizey, also made the point—that if one starkly compared the figures per capita in Scotland with the 304 figures per capita in England one would be throwing into relief something that some English people might wish to be thrown into relief in order to reduce the wrath of Scotland. If, on the other hand, one added in the various regions of England which were much more comparable to Scotland one might be accused of being selective.
Therefore, it seems to me that if one did this at all one would be bound to show the complete picture for the United Kingdom and indeed it might be a very good opportunity to do so; it might become one of the major debates of the year on this subject in another place. But we should have to know in advance the kind of detail that the Government at present have in mind in regard to the statement of the considerations leading to the determinations to be made by the order. If the noble Lord would give us some inkling about that it would go a long way towards satisfying us at the present time.
Baroness WARD of NORTH TYNESIDEI should like to support this Amendment. I do not know whether it is absolutely the best Amendment that we could get, but I am grateful to the two Members of my own Front Bench who have decided to table it. I think it is a move in the right direction and I never like to lose an opportunity of supporting something which at any rate is on the right road. Quite a number of noble Lords may be in favour of the Amendment but think that perhaps it is not the best wording; however that does not prevent us from accepting the Amendment and if, before the Report stage, we can improve the wording, so much the better. It goes a little way towards helping something that I mind very much about; namely, that in the region which I represented in the other place, and other regions where there is high unemployment, we shall have a chance of getting support.
I wish to make only one observation. When I first was elected to another place in 1931, 84 per cent. of the employable population in my constituency were unemployed, and I spent a great many years trying to bring special industry to my part of the country. Very few areas had such high unemployment. So I am grateful for this Amendment and I hope that we shall divide on it. I do not mind 305 whether we win or lose but a Division is very important so that people who read Hansard can see that at any rate some members of my own Party—of my own Front Bench—realise the problems of high unemployment that my area and others have to deal with.
§ 9.24 p.m.
§ Lord KIRKHILLA similar Amendment to this was debated in the other place and my right honourable friend the Secretary of State for Scotland said, among other things,
It would be misleading … to single out this piece of information as being of such special significance that it must specifically be written into the Bill when none of the other matters that the House will in due course expect to have before it will be particularised in the Bill as it stands. However, all the information is already comprehended in the wording of Clause 44(2)".And, of course, at that point the noble Lord, Lord Drumalbyn, asked me whether I could give him greater detail as to the kind of information which would be included in the draft.I cannot as of now give him a detailed reply, but I will undertake to think about the point he has made because I think it is an important point; I recognise that. I will reflect upon it and, if I can help him in this, then I shall arrange for that to be done, either by my speaking of this on a future occasion or by some other method. It may be that I am not able at this stage to give him the details, but I will examine the point because I think it is a useful point he has made and one to which I should certainly respond.
§ Lord DRUMALBYNMay I intervene before the noble Lord leaves that. It would not, of course, be unknown to have a schedule or an appendix indicating the kind of considerations that would be taken into account without purporting to be in any way comprehensive.
§ Lord KIRKHILLI think my difficulty, to be absolutely frank about it, is that it is difficult exactly to bring this into a detailed format, because this matter is going to stand before the other place and be examined there in detail. I should be surprised if they were to pass an order there, which they must do, unless they had closely examined the details underpinning that order. That is really my difficulty. I do not want to go too far in relation to a 306 matter which will stand very clearly before the other place. But I am going to turn over in my mind what the noble Lord has said about that.
For the reasons that I have been quoting, which my Secretary of State enunciated in the other place relative to a debate of a very similar character, the Government do not consider that it would be appropriate to single out per head comparisons as an essential element in the information the House of Commons will require in order to judge the reasonableness of a block fund order. The Bill already provides, as we have been saying, for a statement of considerations, and as the block fund order requires an Affirmative Resolution honourable Members in the other place will be able to ensure that they are provided, as I have just been saying, with such information as they consider relevant to the decision the House will have to reach.
As the noble Lord, Lord Strathcona, was saying, indeed as the noble Lord, Lord Vaizey, mentioned, and indeed as the noble Lord, Lord Middleton, averred, it is certainly the case that for many years public expenditure per head in Scotland—and, I might add, also in Wales, and even more so in Northern Ireland—has been much higher than in England as a whole, and this situation may be expected to continue for a number of years at least. This is because it is the British practice to allocate expenditure where it is most needed.
The noble Lord, Lord Mackie of Benshie, touched on some historical factors, and I agree with what he said about that matter. In addition, one can talk about larger numbers relatively of children and old people, sparsity of population over wide areas, as the noble Lord, Lord Strathcona, mentioned, severe urban problems in the older industrial areas and so on. I think these are self-evident. Scotland's higher public spending per head arises from the operation of such demographic, historical and geographical causes. It is not a matter of principle, and to lay exclusive stress on per head comparisons is, in the Government's view, misleading. It is also potentially divisive since it focuses attention on a manner of expressing expenditure which fails to reveal the differing relative needs to which the figures relate. Noble Lords have mentioned this themselves.
307 In any case, comparisons of expenditure per head in Scotland and in England as a whole are largely meaningless because of differences within the two countries, and particularly within England. Detailed figures for individual regions are not available, but we might perhaps look forward in the future, as Lord Drumalbyn was suggesting, to debate in the other place if it becomes a standard annual practice to publish comparisons. But differences between them might well turn out to be as great as, or greater than, those between the two countries taken as a whole, The Government have adopted an expenditure-based system of finance for the devolved services. Such a system requires the continued pooling of all the resources of the United Kingdom and their allocation to different parts in accordance with their relative needs for public expenditure.
The Government believe that the right approach in these matters is that set out in the White Paper, which is gradually to improve methods of establishing comparative standards and needs so that public expenditure allocations can be determined in a more fully informed way. The Government hope that, as methods are improved, the character of the information that it will be practicable to make available to Parliament, and which Parliament will expect to be provided, will change also. If an independent advisory body is established—that, as noble Lords will remember, is discussed in the White Paper—its reports may be particularly relevant and helpful to the other place in the judgments it will have to make. It is for those reasons that the Government would have difficulty in accepting the Amendment to which the noble Lord, Lord Strathcona and Mount Royal, has spoken.
§ 9.32 p.m.
Earl FERRERSThis is an important part of the Bill, as it determines how much money is being given by the United Kingdom Parliament to the Scottish Assembly. The noble Lord, Lord Kirkhill, said he did not think that this Amendment would be necessary because its contents appeared in Clause 44(2). However, he then said that he was not certain exactly what Clause 42(2) would provide in the way of information.
308 The noble Earl, Lord Perth, said that too many statistics would be confusing. I agree. Presumably, what will be put in the order is the fact that so much money was allocated for the purposes of education, or for the purposes of health, even though the Scottish Assembly might not use it that way once it had the money. The lump sums which will be put on the order will be relatively meaningless unless they are reflected against an item. If the draft order is to say, for instance, that £42 million have been allocated for this and £36 million for that, it will be relatively meaningless unless it is either related to population, or per head, or per local authority. It must be related to something. I should have thought that, as a simple statistic, this could have been understood by the people if it was related per capita.
We all know that people in Scotland receive more per capita, for all the reasons explained. No one would object to that. I should have thought that there would be some people who would like to know how much more per capita Scotland is getting than England.
The noble Lord, Lord Mackie of Benshie, said that Scotland had had a difficult time because two World Wars had knocked about its heavy industry, and that the Scots had not been able to refurbish their industry as they have in central England. That is true. However, industry in the North of England was also hammered. Scotland will, on the noble Lord, Lord Mackie's basis, be receiving a larger proportion per capita because it was hammered about during the war, whereas the North of England, which will be receiving a less amount per capita, was equally hammered about during the war. The noble and learned Lord, Lord McCluskey, shakes his head. If I am wrong about that, I should be grateful to know. It seems to me that we must have some kind of comparison. If it is not done on a per capita basis then there should be something else.
§ Lord KIRKHILLThe Government, for reasons that I have just explained, do not think that the per capita explanation is the best that could be encompassed within whatever order is eventually discussed in the other place. The Government are convinced that the other place will want considerable detail and, as we 309 have been talking about the advisory body, we are hopeful that we shall be able to draw comparisons over a wider range. That was the point that I was trying to emphasise. The Government are not anxious to isolate on its own, as it were, the per capita comparison.
Earl FERRERSWill the noble Lord give us some indication as to what types of comparison the Government have in mind? He says that they will not use the per capita comparison and that there will be a wider basis of comparison. I do not want to push the noble Lord or make it difficult for him, but, on the other hand, this matter is important. After all, this is new legislation that we are discussing. It is all very fine for the noble Lord to say, "Well, the House of Commons will want a certain amount of information". We are suggesting that it should be a little more specific than that and that we should know that certain information will certainly be available, even if other information which is not written into the Bill may be available later on.
§ Lord MACKIE of BENSHIEBefore the noble Lord, Lord Kirkhill, replies may I state our position for the record. I entirely agree with the noble Earl, Lord Ferrers, that any other disadvantaged area such as Tyneside, which has exactly the same record of having to expand its old industries during time of war, should be on a similar basis—not per capita but per need of the area. We should like to make that perfectly clear.
Baroness WARD of NORTH TYNESIDEI should like to raise one matter because it must be stated. Part of the problem of the mining industry on Tyneside is that that area, with the exception of one or two big collieries, has nearly used up all of its coal because it is a very old coal field. The Northumberland and Durham coal fields were almost the oldest coal fields to be developed. I have followed the argument with very great interest, but it should be on record that we are faced with a declining mining area because we have worked most of our coal. I think that that matter should also be taken into consideration.
§ Lord VAIZEYWhat my noble friend Lord Kirkhill has said is so reasonable, and what he has quoted the Secretary of 310 State as saying in the other place sounds so reasonable, that one can do little but agree with him, except in one respect. I gathered that my noble friend quoted the Secretary of State and I think that the Secretary of State made a rather excessive claim. It is perfectly true, as I think all noble Lords who have spoken so far have said, that comparisons on a per capita basis are misleading. However, they are comparisons and in my view it would be unfair to say that they were meaningless. They should, of course, be taken into account with other data and we are perfectly well aware of that.
It is perfectly true that if we take the average of Scottish expenditure and compare it with the average of English expenditure—the Minister quoted the Secretary of State in this regard—it is perhaps not so meaningful. The differences within England, say between the North-West and South-West, may be even greater than the differences between the average of England and the average of Scotland. We are not proposing in this Bill to give devolved governments to South-West or North-West England; we are proposing to give devolved government to Scotland.
In my view the noble Earl, Lord Ferrers, put his finger centrally on the point. We know that the money which is now given to the Secretary of State for Scotland to spend is determined, broadly speaking, by a formula which exists in the Treasury. That formula will be the same as applies to similar services in England plus a bit more because Scottish political weight is higher in the House of Commons than elsewhere, and also its needs are greater. It depends which side of the fence one is which kind of argument one finds more attractive, but that undoubtedly is the way it is done.
Assuming that the Bill becomes an Act and is put into operation and approved by the referendum, then as we depart from the bench mark, assuming the Assembly does its job, the differentiation of services offered as between England, on the one hand, and Scotland, on the other, will grow—that is to say, there will be marked differences. If there are not going to be marked differences, what is the point of the Bill? It will just be a question of people sitting in Edinburgh saying, "Let's keep everything exactly the same as it is in England", which would be a pointless 311 exercise. As we get further away from the bench mark of parity of services, which is broadly speaking the present bench mark, we have no formula for the allocation of money to the Secretary of State for the Secretary of State to allocate to the Scottish Assembly. That is the point that I am trying to make.
One could perfectly well say that it will be spelled out under the second part of the clause, but it does not say how it will be spelled out. I should have thought—there was some debate on this in another place, but it was not a very effective debate—that it was slightly irresponsible of Parliament to pass legislation of this importance for one of the major nations of the United Kingdom without saying on what basis the money which this subsidiary Parliament will get will be determined. That is the point which the noble Earl, Lord Ferrers, was making. I do not find it wholly convincing to say that this might be discussed by some hypothetical advisory body which might be set up if all goes well.
§ Lord KIRKHILLPerhaps I might respond to the noble Earl, Lord Ferrers, and indeed to my noble friend Lord Vaizey, because I completely failed to satisfy them both. I cannot go much beyond my earlier comments. What the order will contain will be determined by the Government of the day as a result of whatever considerations Members in the other place decide upon, pursued by the questions which undoubtedly will be asked there and will obviously be raised in your Lordships' House, as noble Lords will be fully entitled to do. I cannot be more specific about the actual detail at this stage, and I shall not prevaricate and say that I can.
Lord MORRISAs I understand it, this Amendment attempts to entrench an admirable practice which was started in the Government White Paper entitled, Devolution—Financing the Devolved Services, where there is a very excellent table which expresses the identifiable public expenditure for 1975–76 on a per capita basis across England, Scotland, Wales and Northern Ireland, and the United Kingdom, expressed as a percentage of the whole of the United Kingdom over 12 separate heads. It is absolutely 312 marvellous. I cannot understand why the noble Lord, Lord Kirkhill, is so churlish about not continuing this admirable practice in the future.
§ Lord KIRKHILLI do apologise to the noble Lord; but I failed to catch the latter part of his remark. Would he care to repeat it?
Lord MORRISI was wondering why the noble Lord is so reluctant to continue with this splendid practice, as is set out in this White Paper of July 1977.
§ Lord KIRKHILLThere is, I think, a question of the determination which the other place may make about a matter of this kind, which at this stage at least precludes me from going further.
Earl FERRERSI certainly do not wish to continue this debate for much longer. However, I should like to make one point which is, I think, of cardinal importance, The noble Lord, Lord Kirkhill, has said that he cannot go any further or give us any more information. We appreciate his difficulty, but he will also appreciate our concern that here we are dealing with a Bill and when we ask the Government what is intended and anticipated—and this has happened several times in the past —we are always told, "We do not know; we shall have to see what happens". We had this only the other night, when I believe we discussed standing orders, when we were told, "Leave it; it will be all right." I hope that the Government spokesmen will be able to address their minds more specifically to some of these points. I really think that when something of huge importance like this comes through Parliament—and financial powers have not been greatly discussed in another place—we should be able to have some answers as to what the Government intend.
§ Lord KIRKHILLBefore the noble Earl, Lord Ferrers, resumes his seat, perhaps I might point out that in response to matters put to me earlier by the noble Lord, Lord Drumalbyn, I said that I would turn over in my mind that which he had put to me, which was on the same issue as this. I do not know whether I can come back to the noble Lord with specifics, but I have said that I shall look at the point. It may be that I am 313 inhibited from going further, but I have said that I will look at it.
§ 9.44 p.m.
§ Lord STRATHCONA and MOUNT ROYALThe noble Lord, Lord Kirkhill, has tried very hard to help us. I had the impression that he was not being quite so helpful at the end as he was at the beginning, which I thought was rather a sinister sign. This, of course, is a flushing out Amendment. I am very grateful to those noble Lords who have spoken and who have supported us on it. I am afraid that I am going to disappoint my noble friend Lady Ward by not pressing this Amendment, although I am bound to say that her proposed technique of pressing it and saying to the noble Lord, Lord Kirkhill, "You think up a better one" is rather an attractive idea.
The noble Lord, Lord Vaizey, immediately understood the underlying purpose behind what I freely admit is a slightly inadequate Amendment, and, as the noble Earl, Lord Perth, said, why single out this single statistic? I think that the noble Lord, Lord Drumalbyn, had it absolutely right; what we are talking about is a matter of presentation and acceptability when it comes to getting the order through the other place. I suppose in a sense that the Government could say, "You leave our public relations to us because we know very well how to handle them". But we are trying to suggest to them that many of us would feel happier if the Government convinced us that they had done their homework.
Knowing that the noble Lord, Lord Kirkhill, has nothing else whatever to address his mind to in the next couple of weeks except this matter, I am hopeful that he may conceivably be able to suggest some kind of a Schedule. I think it was the noble Lord, Lord Drumalbyn, who 314 said that it is perfectly common practice to list the kind of relevant considerations which might be put into a Schedule. I think I understand, even if I do not condone, the evasiveness of the noble Lord who is anxious not, as they say in the West Country, to convict himself. He is not going to commit himself to doing something that he might find embarrassing.
Anybody who has ever participated in defence debates gets a little nervous about the per capita argument, which we have pursued exhaustively in this House. It is used as a justification of our splendid efforts in defence. The percentage GNP argument is the argument that is used; the per capita argument is the rather devastating one when you try to justify this country's defence effort.
I merely say this to indicate, as the noble Lord, Lord Vaizey, was saying, that one statistic taken on its own can be dangerous and positively misleading. However, the Government have laid themselves open. They have said in the Bill that a statement of considerations will be produced, and all we really have been saying to them is, "Is it not about time that you satisfied us by going a little further and saying what sort of considerations you had in mind when you wrote that down? If you did not have any considerations in mind, then you should not have said it in the first place."
Having said that, I think I should let us all off the hook for this evening and see what we can do at a later stage. I invite the noble Lord to produce a Government Amendment, which I can assure him we shall accept with alacrity. In the meantime, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
315§ 9.48 p.m.
§ Lord HARMAR-NICHOLLS moved Amendment No. 362:
§
Page 22, line 33, at end insert—
("(3) At the request of the Scottish Executive in pursuance of a resolution by the Assembly, the Chancellor of the Exchequer shall in so far as is consistent with Community obligations and other criteria laid down by the Secretary of State cause the rate of any tax or taxes broadly based and general throughout Scotland to be raised by up to but not more than 25 per cent. of the rate obtaining elsewhere in the United Kingdom, provided that the total amount so raised be not more than 10 per cent. of the amount transferred under subsection (1) of this section; and the Secretary of State shall thereafter by order cause a sum equivalent to the net balance raised to be transferred to the Scottish Consolidated Fund in addition to those sums transferred under subsection (1) of the section.")
§ The noble Lord said: This Amendment takes us into a completely new line of country compared with the discussions we have had so far today. So far all the Amendments have been on matters of detail, and intricate matters of detail too. I do not think that the Government Front Bench have really understood what they have been saying, and I do not think that our Front Bench and certainly the Back-Benchers have altogether understood what has been said to them. But there it is. The type of Amendment that they have had to deal with has caused that sort of problem. I know that the noble Lord, Lord Mackie of Benshie, understood both sides with absolute ease, and that the Bill to him is superb, and we need not bother much about it.
§ My line of country is facing up to something which is not in the Bill yet; but if we are going to have the Bill—and I do not want the Bill; my position is perfectly clear—there ought to be something completely new. We ought to have that meeting of all sides to see whether we can start from something more workable and more acceptable than this Bill can be. If we are to have this Bill, I really come down on the side of what Lord Vaizey has been saying from the first. Indeed, I think we both put this point of view forward on Second Reading. What he has said, and what I think is the fact, is that for this Bill to be of any use at all to minimise the conflicts that will arise—it will certainly not eliminate them—we have to give financial powers to the Assembly.
316§ The Amendment is in anticipation of what, if the Bill is passed, I believe is inevitable. It is designed to limit what they can do with the powers which they will eventually get—that is, unless the Bill can be killed. My Amendment says, in effect, that when the time comes for them to have these powers they shall be restricted to being able to raise extra taxes to the tune of no more than 10 per cent. of the block grant. They would be limited on extra taxes to no more than £190 million—10 per cent. of the total sum—and it goes on to say that no one item—they might use several items to get that 10 per cent., including perhaps additional petrol or cigarette tax—shall cost more than 25 per cent. more in Scotland than it does in England. That, in a nutshell, is what my Amendment seeks to achieve.
§
Am I right in anticipating the possibility of these financial powers having to be given? I believe that there is ample evidence to show that we should prepare in anticipation of that happening. In the 1975 White Paper, the Government said:
Some powers for the devolved Administration to levy additional taxation would give them greater freedom and give them a useful degree of discretion".
They have shown that they attach some importance to that by giving the proposed surcharge powers on the Scottish rates. That was their 1975 White Paper, and in the 1977 White Paper they said in paragraph 23:
As was made clear in the November 1975 White Paper, the Government would see no difficulty in principle, and certain advantages in practice, if the devolved Administrations were to have power to raise limited additional revenue to supplement the block funds".
§ The Earl of PERTHFrom which Command Paper was the noble Lord quoting?
§ Lord HARMAR-NICHOLLSI quoted from Financing the Devolved Services, Cmnd. 6890 of 1977. They made it perfectly clear there that they anticipated and welcomed it, and therefore we should be silly to ignore that. Indeed, speaking on Second Reading on 14th December, the Secretary of State for Scotland set out eight criteria against which any supplementary tax would have to be judged. He said that the tax—anticipating this tax which will have to come—must 317 be operable as a marginal supplement capable of being turned on and off as needed; it must be cheap to collect in relation to the revenue to be raised; it should fall on Scotland and Wales only and not be paid directly or indirectly by English tax-payers; conversely, it should not permit evasion by a change of business location; it must be compatible with European Community requirements; it must be broadly based and not restricted to special groups; and it should not significantly affect the management of the United Kingdom economy.
Those were all clear anticipations of what, if we accept this Bill or anything like it, will be inevitable. Those being the facts as I see them—my Amendment is not tilting at windmills but is a very clear anticipation—I suggest that when they get these powers there should be a restriction to the effect that they can increase any individual item of tax by up to 25 per cent. and that the total must not be more than 10 per cent. of the total block grant.
In addition to what was anticipated in those Government publications, we must bear in mind the view expressed by Scottish Nationalists, who, despite the local government elections of a couple of days ago, are still a force to be reckoned with and who intend to go on fighting. I cannot put out of my mind that Margaret Bain, the Nationalist MP for Dunbartonshire East, said in the debates on this Bill in another place that the Nationalists stood for full independence within the Commonwealth, that she did not join the SNP to work for devolution, that she had to use a British passport but that she looked forward to the day when she had a Scottish one.
In the Commons all the Amendments put down were attempts by the Scottish Nationalists, and some Members of the Government Party, to give Scotland not just the trappings of reality, but all the powers of being an economic sovereign State. That is the situation as it exists, and it is right that we should recognise that, if the Bill eventually goes through in anything like its present form; they will be driving wedges into it and eventually getting everything.
I have to argue, or appear to argue, against what I said in the past. The 318 block grant will not work. The block grant will bring with it so many of the conflicts to which I have referred in the past that the lesser of evils will be to give them power to raise their own taxation. The reason the block grant will not work is that it is based on a notional sum and on what are notional needs, and bears no relation to the real hard facts of living today. For example, they are constrained within the block grant as to what they can spend. So the reality is this. If the Assembly decided to spend more on education, they are restricted within the bounds of their own block grant. If they spend more on education, it could only be at the expense of having less to spend on housing or on health. Then there would be the situation where the Scottish Assembly were justifying their extra expenditure on education and blaming Whitehall because they had no money left to spend on vital housing and health matters which would be very much in the minds of the ordinary citizens of Scotland.
The only other alternative— and this is what will happen unless we give them powers to raise some extra taxation—is that they will ask for the block grant to be increased again and again. We have just been discussing the per capita situation in which at present the people of Scotland are receiving about £360 per head, as against £280 per head that goes from the Exchequer to the British people. When one realises that one can see that nothing but aggravation could flow from not replacing the block grant with some form of tax arrangement.
The Government know this. There are two circles that must be squared, and so far the Government have shied away from both of them. But the Bill cannot become an Act until the Government have faced up to squaring the circles. The first is the West Lothian situation. The situation must be so arranged that if Scottish Assembly Members are to prevent British Members of Parliament from talking about the devolved matters, then they must have less membership in the Westminster Parliament, or they must be restricted to talking only on matters that have not been devolved. That is the first circle that has to be squared. It must be done, otherwise the Bill will not become an Act.
319 The other circle which has to be squared involves the question of where the money is to come from to meet the needs. Which is most likely—extra block grants which cannot be given without causing conflict, or giving powers to raise taxation? The Government know this, because they have said this in many of their publications, but they do not know how to administer their tax powers if they get them. They have examined all of them. They have said, "We cannot have income tax because it is too expensive to collect, and it would need another 2,000 staff to administer it". The 2,000 staff would be based upon Scotland, and for every extra tax official there has to be an extra person on the bureaucratic side of industry itself which makes the employment possibilities that much worse. So they cannot use income tax.
They cannot use VAT. To try to use VAT to get the extra money would be illegal under EEC regulations. There must not be a higher rate in Scotland than in the rest of Britain, otherwise there would be an infringement of our European commitments. They cannot have a general sales tax for the same reason. They thought of a rate supplement, but the local authorities will not have it. All these things go to show that this circle which has to be squared is not capable of being squared, on the admission of the Government themselves.
So I believe that we have now got to anticipate that, sooner rather than later, if this Bill or anything like it is to become an Act, they are going to have powers to levy taxes. At this stage, and so that it can be clearly understood on all sides, I believe that my Amendment, which limits the amount of extra tax they can implant in the interests of both Scotland and England and indeed in the interests of the unity of the United Kingdom, ought to be written into the Bill now. I hope that some indication will come from the Government Front Bench that they are prepared to consider this. Without the squaring of this one of the two vital circles this is a nonsense and it will not work. The conflict which I have foreshadowed in almost every speech I have made will be almost certain. The possible effects of this Amendment will not be to remove the conflict, but it might possibly minimise the 320 effect of some of it. It is in the confidence that that will bring forward something like a favourable response from the Government Front Bench that I move the Amendment.
§ Viscount MASSEREENE and FERRARDWhat my noble friend behind me is saying perhaps I might say in a shorter way than he has. He is saying that if this Amendment is written into the Bill, and if the people of Scotland understand the Bill—which, with due respect, I very much doubt—then of course in the referendum they will vote against it. I would not particularly worry about that eventuality. I should be quite happy if that happened. But as a property owner in Scotland I would view with great trepidation the idea of having to pay 25 per cent. more tax than the tax which is broadly based throughout England. Having said that, I will say no more. I do not think this Amendment is practical, but I would not object if the Scottish people threw this Bill out when the referendum comes before them.
§ 10.2 p.m.
§ Lord VAIZEYI find this an ingenious and attractive Amendment and I think it deserves serious consideration. The noble Lord, Lord Harmar-Nicholls, drew attention to the fact that the Government in their White Papers asked for ideas on this subject and their mind is certainly not closed on the subject. I agree with the noble Lord, Lord Harmar-Nicholls, and, as I said on Second Reading, I am convinced that if it is not included in this Bill it will be included in an amending Bill which will come before Parliament. I have thought that this was the central issue on which devolution stands or falls.
Having said that, I should like to reassure the Committee that this is the last speech that I shall make at the Committee stage because after this we leave the vexed subject of finance. It is rather amazing that there are only two clauses dealing with finance in a Bill of this length which is mainly about finance. Although I am not a Scotsman, I feel obliged to speak to this Amendment. There are few Professors of Economics in your Lordships' House, and as I am the only one under 50, at this time of night 321 I think it is my duty to stand up and say that my profession ought to inform your Lordships what they think about this issue. Among the enormous volume of stuff which came out in the preparation for the Bill there was a not very good discussion paper on taxation which included a number of highly controversial statements like the one the noble Lord, Lord Harmar-Nicholls, has referred to, on the cost of collecting income tax in Scotland. It seemed perfectly preposterous. It was put forward as though no one had ever suggested before that income tax could be collected by any other body than the present body which collects it.
In 1922 when the 26 Southern Irish counties became virtually independent, all the powers were transferred overnight to the Southern Irish Parliament, and as far as I know the collection of taxes went on as usual without any relation whatsoever to the number of tax collectors in the Southern Irish State. So I do not think this is beyond the realm of practicality, which was really the ground upon which it was declined to put these clauses into the Bill as it was presented to another place.
Without wearying your Lordships, I hope, perhaps I may briefly take your Lordships through the certain stages in the argument which I think persuade me that the Amendment moved by the noble Lord, Lord Harmar-Nicholls, not only deserves serious consideration but might be acceptable to the Government. The problem, as we said earlier on when debating other Amendments, is that at the moment we have parity of services in the United Kingdom. That is the principle upon which we have hitherto operated, though it is slightly tilted in favour of Scotland, for reasons which we fully understand. The basis upon which the revenue is allocated to Scotland for expenditure is quite clearly spelt out within the Treasury. The amount which will be given to the Assembly is also perfectly clear: it is the amount which now appears on the Scottish Vote minus the expenditure on the powers which are reserved to the Secretary of State for Scotland. That is perfectly simple; so that what you have is the present sum—say £1,000 million—minus, let us say, £200 million which is set aside to the 322 Secretary of State for himself or herself to spend direct. That is perfectly sensible.
However, there is no reason to suppose that any amount of tax which is collected in Scotland will meet this sum. There is no reason that one can think of in logic why the amount of taxes pad by the Scots should equal the amount of money which is spent by the devolved Assembly. That is the crucial problem of logic which faces the Government. So the Government have got out of this, as they have perfectly candidly explained throughout the whole debate, by saying, "That is very simple; we shall therefore give no taxation powers at all to the Assembly". Quite candidly, I think that not only is this highly conducive to irresponsibility in the Assembly, in the pure sense of the word—this is representation without taxation, which is exactly the reverse of the American revolutionary position—but, secondly, that it is, as the noble Lord, Lord Harmar-Nicholls, has said throughout, the major basis upon which there will be conflict between, on the one hand, the English and Welsh representatives in the Parliament of Westminster, and, on the other, the Scottish representatives. The conflict is absolutely inherently built in.
Therefore, it seems to me that one will either have to have an Amendment which is not before the Committee—that is to say, an Amendment spelling out the actual allocation of money according to a formula which could be alterable only by an Act of Parliament; in other words, it would be a big business to get it changed, which would remove it from practical politics as an annual debate or, alternatively, one will have to put some brake on the Assembly by giving them taxing powers. It will be a brake because they will then get the unpopularity for spending extra money on the services which they tell the electors they are going to provide them with if they are fortunate enough to be elected; but unless we put on some brake of that kind we shall be in exactly the position which the noble Lord, Lord Harmar-Nicholls, has mentioned, which is that the excellence of the Scottish educational service will be attributed to Edinburgh and the poorness (if that is the case) of the Scottish health service will be blamed on Westminster.
323 Therefore, for reasons along these lines, which is the way that the whole reasoning in the White Papers has gone, I find myself driven to the conclusion that an Amendment of this kind ought to find some sort of favour among your Lordships tonight, or at least perhaps at Report stage.
§ Lord MOTTISTONEPerhaps I may intervene at this point to say that I very much agree with the noble Lord, Lord Vaizey. It seems to me somewhat unusual that we in Westminster—perhaps not ourselves, but our friends in another place--should have taxation powers, and that rates are raised by all the local authorities, yet here we have a body of people who are in the middle, in a sort of way, who have not got that authority. I do not hold any brief for this particular Amendment, but it seems to me that, as the noble Lord, Lord Vaizey, has been saying, it is something which will come, and perhaps it would be wise of the Government to anticipate the wish to exercise this authority and to give rather greater care to devising some means by which powers of taxation could be given to the Assembly. The noble Lord, Lord Vaizey, said, as far as I could gather, that the South of Ireland happily went on taxing regardless of what the United Kingdom Government said. I think that it would be most undesirable if the Scottish Assembly, after perhaps a year or two, were to take the bit in its teeth and say, "We will jolly well do not only taxing but some other thing against the Act", as it then might be. How are we going to discipline them? Are we to withhold the block grant? We should have to be very careful about that.
When we come to a point which could be a fundamental issue of this nature, we in the United Kingdom Parliament would be wise to anticipate the issue rather than to try to sweep it under the carpet. I should have thought that the Government could usefully consider this as something to which they perhaps might have a better solution than that of my noble friend; but something which gave the authority for taxation to what is to be a Parliament which will think itself superior to local government, observing that local government has a method of taxation of its own.
§ 10.12 p.m.
Lord MORRISI must persuade Lord Vaizey not to go—he suggested that he might do so—because the financial clauses do not finish at this stage; they go on from Clause 40 to Clause 58. They are very important and I should be sad if he were to go. It is very important to stress that in the House of Commons, the 19 financial clauses, with Schedule 9, were allotted only a single day under the timetable. The only discussion on them was in respect of two Amendments to Clause 40. There was no "Stand part" Motion on any financial clause at all, or in respect of Schedule 9.
Since no "Stand part" Motion was put on Clause 40, let alone on this clause (Clause 44) the Minister in another place was able to confine his response to the narrow matter raised by the first Amendment and in criticising details of the second. Before he allowed himself to consider any of the fundamental matters raised, the guillotine cut him short in mid-sentence after the words:
an exercise in an on-going Government decentralisation of power".This was an unhappy phrase, but one that reflects the Government's evasiveness generally on a financial problem no one has been able to solve—not least the White Paper of July 1977. Thus, the arguments in another place about the financial provisions have gone not an inch further than they were under the July 1977 White Paper. The question of how to provide the essential independent tax-raising powers for the Assembly is entirely unsolved. The Commons were loud in their denunciation of this. Mr. Tarn Dalyell said in column 1681 of the Commons Hansard:I think that the House of Commons is not carrying out"—
§ Lord MOTTISTONEI have a feeling that there is a Rule of the House by which individual Members of another place cannot be quoted by name for the speeches that they may make in that place.
Several noble Lords: Hear, hear!
Lord MORRISI must aplogise for that. I was not aware of it. I have heard 325 several noble Lords quoting names before. I thought this was the practice.
§ A noble Lord: Paraphrase!
Earl FERRERSA noble Lord is entitled to quote a Minister of another place or to paraphrase a Member.
§ Lord HARMAR-NICHOLLSIf we could not quote Enoch Powell, Mr. David Steel and one or two other people, there would be no speeches to make, I think!
Lord MORRISThere should be no question, in my opinion, of the necessity for independently-raised revenue if the Assembly is set up. The failure of both White Papers of 1975 and 1977 to acknowledge the sine qua non nature of the principle merely reflects the equal failure to find an answer. The Secretary of State for Scotland is known to be deeply unhappy about it. Indeed, speaking to an international meeting of economists in Edinburgh last year, he said:
I frankly admit the Government are not satisfied with the block grant system we have arrived at".The 1977 White Paper, Financing Devolved Services, saw no difficulty in principle and certain advantages in practice if the devolved Administration was to have the power to raise additional revenue. It was seeking a tax which would make it easier for the devolved Administration to vary the level of public expenditure in the devolved services, and to make it accountable to the electorate for raising the revenue concerned.All this acknowledges the worries that were at least openly admitted in the anodyne paragraph, No. 69, of the same White Paper, that the financial arrangements could be a lasting cause of argument and disagreement and they could threaten political stability.
By proposing this method and this amount of legislative devolution, and without giving to the Assembly even the financial accountability of a local authority to its own electors, the Government have posed an impossible problem, to which they have no solution, while admitting that one must be found. If Scotland is to have tax-raising powers, clearly the 326 extra tax burden should fall on the beneficiaries of the extra expenditure resulting —the more so since Scotland is already receiving per head a much greater proportion of national expenditure than the average. The Government have accepted the need for separate tax-raising powers beyond the block grant. The White Paper of 1974 proposed a rate surcharge, as your Lordships may recall. but that was too unpopular, making the regions the tax collectors; and anyway the unfairness of the rating system is certainly questioned.
The powers, then, exist in principle; the problem is only about method—which problem has stymied everybody. However, since the necessity for those powers is regarded by most people as paramount if there is to be a stable Assembly at all, the least that must be done is to place on record, through provisions in the Bill, what those powers are to be. It would be entirely improper to offer in a referendum a Bill which necessitates the transfer of a tax-raising power, accepted in principle by the Government, but which by admission conceals what lies in store for Scottish taxpayers. There is also some constitutional impropriety in the Government's offering discussions to future devolved administrations about tax matters which have received no Parliamentary sanction.
There is the strongest argument, moral as well as political, for providing in the Bill for some form of devolution of some tax-raising power, with due limits as to amount and the sources. Indeed, only this afternoon the noble Lord, Lord Kirkhill, said, while speaking on another Amendment, that the Assembly should not be fettered or tied to the apron strings of Westminster. This Amendment would loosen the bow and allow the Assembly a measure of financial accountability and responsibility.
§ 10.19 p.m.
§ Lord WILSON of LANGSIDEI am bound to say that I am much impressed by the arguments which have been presented to your Lordships on this Amendment by those noble Lords who have spoken in favour of it, particularly the noble Lords, Lord Harmar-Nicholls and Lord Vaizey. I am bound to confess that beyond that I do not think I can add in this particular area to the collective 327 wisdom of your Lordships. Indeed, as we approach the financial clauses of this regrettable Bill, I had anticipated a certain amount of confusion in my own celebration. I have some difficulty with my own financial arrangements and I never imagine I could make a substantial contribution to the arrangements of my own country in this particular area.
However, the state of confusion to which I have been reduced by some of the answers which we have had from the Government Front Bench this evening is of a rich and rare quality which has surpassed my wildest expectations. I rise mainly for one purpose; that is, to ask the noble Lord, Lord Vaizey, as I think the noble Lord, Lord Morris, has done already, not to leave us just yet, because he is very helpful to a simple, humble lawyer like myself. Furthermore, I am able to understand him, whatever may be my difficulties with those who occupy the Government Front Bench.
§ Lord DRUMALBYNI wonder whether I could put a slightly different point of view. I listened with fascination to the noble Lord, Lord Vaizey, but what he seemed to me to be saying was that, if you stand for election, you make certain promises of improvements. But, mark you, those who are standing for election in other Parliaments may be promising similar improvements at the same time, so that these may cancel out. But what, so far as I can see, is being suggested is that if you are standing for the Assembly in Scotland, and your Party makes certain promises which involve expenditure, you have at the same time to say, "Of course, this will cost money, and if you agree to this we shall go to the Chancellor of the Exchequer, not the Assembly, and ask him to put a tax on Scotland, in order to cover the expenditure that I am suggesting". This is what is called an economic model and it is a political non-starter.
We all understand that this is a crucial question, but surely, for the time being, we have to maintain the main resolve, which is to maintain the unity of the United Kingdom. That means, in general terms, taxation unity, unless and until you can suggest particular taxes for Scotland—or for any part of the country, if it comes to that. But to propose that now, at this stage, would be an error.
328 I agree that, from the point of view of those who want to do their best to ensure that the referendum goes against the Bill, it is a very good idea to say, "Of course it will cost you extra, and, what is more, there will be a differential tax in Scotland compared with the taxation in England and Wales". That will mean that people tend to go away from Scotland; the per capita contribution will be reduced, more people will go away from Scotland and so on. I do not think that that makes sense at the present stage.
I feel that the Government's offer to listen to proposals should be considered first. As we all know, proposals of this kind take a long time to examine, and after the Government have accepted that a certain tax can be imposed, it generally takes quite a long time before it can come into effect. So this is surely a long way off at the present time. The noble Lord, Lord Vaizey, shakes his head and wants to fix it right away. I accept the logic of what he says, but the practicality of it I would heartily deny.
§ Lord HARMAR-NICHOLLSBefore my noble friend sits down, did he say that, if we genuinely think that what is likely to flow from this Bill is extra taxes, we ought not to let the people know before we have the referendum? I should have thought that common decency, apart from good sense, would insist that if you think that there is a reasonable chance—and there is more than that—that this will happen, it ought to be said in advance so that people know what they are doing.
The argument that my noble friend used, saying that this may be a long time ahead, was very much in line with what was said by my noble and learned friend Lord Hailsham of Saint Marylebone. When I was speaking about dynamite my noble and learned friend said that dynamite has a long fuse. However, the length of the fuse on dynamite does not alter the fact that dynamite can be damaging. I should like my noble friend to make it quite clear that he is not suggesting that those of us who think that this might happen do not have a duty, much more than a sense of decency, to put it on record so that people know what they are voting for.
§ Lord DRUMALBYNMy noble friend has asked me a question which I shall answer right away by saying that I do not think that additional expenditure in Scotland is necessarily required. One cannot envisage this immediately. If one continues to treat the United Kingdom as a whole and to make rate support grants and so on in relation to the need of the separate parts of the United Kingdom, whether they are in Scotland or in other parts of the United Kingdom, I do not see that there is an urgent necessity for taxation. I see the political argument about responsibility for one's actions and promises when one stands for Parliament, but I think that we must wait a little to see whether any such steps to curb wild and extravagant promises that are postulated by people who stand for the Assembly in Scotland are realised in any way.
§ Lord MACKIE of BENSHIEIs not the noble Lord, Lord Harmar-Nicholls, failing in his duty? Apparently he wants to point out to the Scottish people during the referendum every single possible factor which may arise from this Bill. In this Amendment he should also postulate the fact that the Assembly may be so competent that it will be able to reduce expenditure and be able to ask the United Kingdom tax authority to reduce income tax by 10 per cent. The noble Lord would need to do that; it is quite a possibility. If the noble Lord would like me to do so, I could give to him many other fairy stories which he could postulate for the Scottish people. However, I do not want to provoke him any further, in case he goes on even longer.
§ Lord VAIZEYThe reason why I was rather rudely shaking my head, if I may answer the point made by the noble Lord, Lord Drumalbyn, was because I thought that the Amendments were seeking, with the support of the arguments which the Government have brought out in their White Paper, to avoid an annual wrangle. That is the central question. An example which I might give to the noble Lord is that council house rents in Scotland are, as we know, phenomenally low. If the Scots wish to improve their health service—and goodness knows! the health service has deteriorated throughout the whole of the United Kingdom since 330 the so-called reform in 1974—and if they say that they want a better health service, which would be a perfectly reasonable thing for anybody to say, under the Bill the only way that they could pay for it would be by putting up council house rents.
Nobody in his senses would stand for the Assembly and say, "I am standing on the basis of switching expenditure from housing to hospital services". That is what the Government want him to say, but he will not say it. What he will say is that he will come to Westminster and say that he wants to change the formula. The Bill says that the formula may be changed every year, with reasons. That is precisely the point on which the row will take place.
§ Lord HYLTONI should have thought that an annual wrangle was completely unavoidable, whether or not one has the Amendment. This is borne out by what has gone on in Canada for a very long time between the Federal Government and the Provinces.
§ Lord DRUMALBYNThere has been an annual wrangle so far as Northern Ireland is concerned for a great number of years. I admit that this argument is a little tendentious because there are special circumstances affecting Northern Ireland. I take entirely the point which the noble Lord has made about the lowness of council house rents in Scotland. He will know very well that this is an historical fact, dating from before the First World War, and that it ought to have been remedied many years ago.
§ Lord O'NEILL of the MAINEIf I understood the noble Lord, Lord Drumalbyn, correctly he said that there had been an annual wrangle about the finances of Northern Ireland for many years. Certainly at the time of Northern Ireland devolution, as opposed to the present system, there was no annual wrangle whatsoever. I was Minister of Finance for seven years and I should like the noble Lord to know that I had the friendliest relations with the British Treasury. There was no annual wrangle whatsoever.
§ Lord DRUMALBYNI accept that entirely, but the words, "annual wrangle" 331 were used for discussions on finance, and that was the sense in which I was using the term.
§ 10.30 p.m.
§ Lord McCLUSKEYThe problem may be in the use of words. Some people might describe what we have been having for the last hour or two as a wrangle, but I would not dream of using such a term. I thought I understood the purpose of this Amendment until I heard the noble Lord, Lord Vaizey, say that the purpose of it was to avoid an annual wrangle and the noble Lord, Lord Harmar-Nicholls, shook his head in agreement. That astonished me because I understood that the purpose of this Amendment was to reflect the conclusions which the Government had set forth in the White Paper of 1977 and to put them in the form of words into the Bill. Furthermore, I thought the clear purpose of the Amendment was to try to pave the way to providing a tax-raising power supplementary to the fundamental financing which was by means of the block fund. If I have misunderstood him, I ought to sit down in case I confuse further the noble and learned Lord, Lord Wilson of Langside, who is apparently already confused.
§ Lord WILSON of LANGSIDEThe noble and learned Lord has confused me a little because I would have thought that if the noble Lord, Lord Harmar-Nicholls, was shaking his head he was expressing disagreement and not agreement.
§ Lord HARMAR-NICHOLLSThe noble and learned Lord has described the position perfectly, except that he did not listen to the whole of my speech and I do not blame him for that. What I said was that if what was anticipated did not happen then there would be applications for an increased block grant. So the sword that I was trying to describe to the noble and learned Lord is two-edged: if you do not do what I anticipate and allow for it, you have one problem; if you do it, then you have another.
§ Lord McCLUSKEYI have a well-calibrated ear; I only hear the parts that I want to hear. Having said that and having looked carefully at the Amend- 332 ment, we would certainly use the same word as was used by the noble Lord, Lord Vaizey: it is an ingenious Amendment and what the proposers have done is to produce a form of words which reflects many of the conclusions which the Government have themselves reached on this question of devolved tax powers; and in particular the wording here incorporates several features which the Government have repeatedly stressed are important. First, the devolved tax would not be a primary source of revenue but a supplementary source of revenue—supplementary to a block fund provided as outlined in the Bill—and a devolved Administration would decide when the supplement was to be charged. That is a good feature.
Secondly, the total to be raised in this fashion would be limited in the way prescribed clearly in the Amendment. Thirdly, the tax would be an addition to a tax raised nationally and would have to be broadly based and general throughout Scotland. Fourthly, the additional administrative costs would fall on the Scottish Administration. These are not the only features and I should mention others to make it quite clear. There would have to be a resolution in the Assembly, asking the Chancellor to apply a supplement of up to 25 per cent. to certain taxes. I mention that because one of the features of a tax, if there is to be a tax, is that it must be politically possible. I think one has to set that aspect of the matter against political possibility. There has to be a decision by the Secretary of State as to whether this resolution was acceptable in the light of Community obligations and other criteria to be laid down by him; and then there must be a transfer of the net balance, after meeting administrative costs, to the Scottish Administration.
I hope I have understood the bones of the Amendment and properly described them. On analysis, it appears to us that the reference to Community obligations would certainly rule out a surcharge on value added tax. What we should be left with as broadly-based taxes would be income tax, corporation tax and the local rates, although it seems rather doubtful whether the noble Lords in whose names this Amendment stands had the third of these in mind. Did they really suppose that it would be the local rates which 333 would be surcharged in this way? And do they, in fact, therefore intend that the Assembly should be able to demand a 25 per cent. surcharge on income tax or corporation tax or the rates? I am going to ask the noble Lord, Lord Harmar-Nicholls, which tax he has in mind; perhaps he will address himself to that when he comes to reply.
The Amendment puts a ceiling on the amount of extra tax to be raised. In total, it must not be more than 10 per cent. of the block fund and the increase in any tax must not be more than 25 per cent. of the rate otherwise obtaining. I must give some figures to make the position clear. It is estimated—and one sees this in the White Paper, Table 3—that, in 1975–76, 10 per cent. of the block fund would have been about £187 million, and estimates have been obtained of the proceeds of the principal taxes in Scotland in that year. £187 million would have represented about 14½ per cent. of the proceeds of income tax, about 45½ per cent. of the proceeds of local rates, and about 134 per cent. of the proceeds of corporation tax. In effect, therefore, the Amendment is really talking about a surcharge on income tax alone, or perhaps in combination with substantial surcharges on some other tax or taxes.
Under the Amendment, the final decisions as to what extra rates of tax should be imposed on people in Scotland would rest with two Ministers, the Secretary of State and the Chancellor, and they could under the Amendment, without any further need for legislation approved by the people's representatives in Parliament, impose an increase of over 14 per cent. in the rates of income tax in Scotland. I should have thought that an odd conclusion for the noble Lord to drive us to, for he belongs to a Party which constantly says it wants to reduce income tax, yet here is a proposal which effectively means that it can be raised by 14 per cent. without scrutiny by the Westminster Parliament.
Surely the noble Lord, Lord Drumalbyn, is right—and I hope I do not embarrass him by constantly welcoming his positive contribution to these debates—in saying that this kind of provision has got to be looked at in detail in primary legislation at Westminster, and not by the kind of route that would be taken if one followed the Amendment. It is the Government's 334 view that such primary legislation would have to be put through Westminster after the most careful consultation with the Scottish Administration.
I do not seek to conceal the fact that this is a problem which has worried the Government from the start, and all the published documents have shown the Government's concern, have shown that the Government would have liked to produce a solution and have not been able to produce a solution which they can put into the Bill. I do not run away from that, and I could not, seeing what appears in the various White Papers. But I do implore noble Lords who have spoken, if they are not familiar with the two White Papers, to look at them very carefully, and in particular to look at the White Paper published in 1977, where, as I think I mentioned in my wind-up speech at Second Reading, the arguments about taxation are set forth with great clarity. The noble Lord, Lord Harmar-Nicholls, has got to produce an answer to those arguments if he is to persuade us that this kind of Amendment is worth putting into the Bill.
In the White Paper, having reviewed all the possibilities in what I believe is convincing detail, the relevant factors are all set out. The Government decided:
On balance, and taking into account the general practicability and likely public acceptability of each tax method examined, the disadvantages outweigh the advantages".That was said after a careful examination of the pros and cons of each of the individual taxes. The Government have not changed their conclusion on that, and indeed since the publication of the White Paper, along with the evidence on which it was based, there has been very little serious challenge as to its wisdom, as to its analysis, or as to its conclusion. The Government's conclusion was indeed supported by a very large and broadly based majority in a Division in the other place.As I say, we have attempted to face this problem over a period of years, for we believe that, in this matter, as indeed in all other matters, honesty is the best policy. We have sought to make it clear that we are ready to accept and agree to a supplementary tax if an acceptable basis can be found. We have set out the difficulties. If an acceptable basis 335 can be found, we hope to agree it with the Scottish Administration and come to Parliament with a view to legislation to give tax powers. At the moment they are prohibited by Schedule 2, paragraph 4.
In conclusion, I submit that this is a reasonable and honest position for the Government to adopt. I would respectfully suggest that it is more straightforward than the position adopted in the Amendment, because the Amendment implies that there is available somewhere a choice of broadly-based taxes which are general throughout Scotland and about which the Assembly and the Ministers need only make up their minds. We all know that this is not so. The White Paper demonstrated that it is not so.
As I sought to demonstrate, the Amendment, in practice, relates to a major surcharge on income tax, which is not politically possible. The Government, having stated their views so clearly in the White Paper, could not now credibly accept an Amendment based on an assumption as to the range of options—an assumption that they have shown to be, and now believe to be, mistaken. The Government believe that the only proper and honest course is to hold back these matters for discussion with the Scottish Administration, once it is there. Then, if the tax powers are to be devolved, it would be made clear what these powers are to be and what constraints must be applied in their use. Then we shall not deceive ourselves simply by thinking that we have solved the problem by using the form of words to restate it—a form of words which implies that the difficulties, which are real, do not exist.
The ingenuity which lies behind this Amendment is the ingenuity of the conjuror. The blandness of the assumptions disarms the critics. But the assumptions are there. If I may, I should like to ask Lord Harmar-Nicholls, through the Committee, what does he have in mind? What tax will fulfil all these assumptions and be politically possible? If he will answer that question, he will do me a great service.
§ Lord HARMAR-NICHOLLSIt is common form, and a tactic as old as the hills, for a Government, who have not got an answer to a question that they 336 know is there, to ask somebody else what his answer would be. This is an occasion where the noble and learned Lord has been completely honest. He made it perfectly clear that this is a vital problem. It is a vital weakness in the Bill. The Government have no answer to it. That is what he made perfectly clear. He said, "We have looked at all sorts of alternatives and we cannot find an answer". Therefore I have achieved what I wanted in putting down this Amendment.
I wanted to disclose that this is a phoney Bill—a Bill with no real base—because the one outstanding question from which all the problems will flow is incapable of being answered. The Government have made that perfectly clear. Of course I do not know which particular taxes would have to be put on to meet the words in my Amendment. I said that when I proposed the Amendment. That is what the Assembly would have to do, if there is an answer. The whole purpose of the Amendment—the whole purpose of my argument, a purpose confirmed by the words of the noble and learned Lord himself—is that this is a fundamental weakness in the Bill to which there is no answer.
If there is a conjuror in this House, it is the Government because the impression they are giving is "Pass the Bill. We know that this fundamental question has not been answered, but once the Bill becomes legislation, once it is an Act, and all the powers are there, we shall produce a rabbit out of a hat"—just like Dick Barton makes the change and says, "That will solve the problem". It is a cheating conjuror's trick. This Bill depends at the end of the day upon a referendum decision by ordinary people who can be cheated by sleight of hand. It is not a Government's job to do that. I believe that, before this Bill is put in the form of a question at a referendum, this question must be answered, not by those who, like me, oppose the Bill, but by people who are foisting this Bill to try to make it an Act which people must support.
I think that the point has been made. I hope that, in all the other debates that we have both in Committee and on Report, this sleight of hand by the Government, this conjuror's trick of theirs, which they try to hide by calling somebody else the 337 conjuror, will be seen. I hope that many people, who, to begin with, may have had some sympathy as regards solving the Scottish problem by this Bill, will see that they are taking on more trouble than they thought they had in the first place. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ On Question, Whether Clause 44 shall stand part of the Bill?
§ 10.46 p.m.
§ Lord MACKIE of BENSHIEI shall not detain your Lordships for long, but I should like to say that the question of taxation is one which has exercised my collegues and I, and obviously the Government, greatly. It is perfectly true that anybody who draws his money in the form of a grant, tends to blame the giver of the grant for any shortage which he may occasion himself. That is really why we support the fact of a formula being used to determine the grant and to determine it over a period, because at least in those circumstances we shall not have an annual wrangle with the Treasury over particular projects. In other words, the responsibility will lie with the Assembly within the regions defined by the block grant, and it is possible to do a great deal within that. It is true that in modern administration it is very difficult to move expenditure beyond about 2 per cent.—in fact that is extremely good. However, 2 per cent. on £2,000 million is, of course, £20 million a year. We think that the Assembly will be able to exercise responsibility and very much so for the first four years.
The Assembly has a tremendous amount to do in settling down, arranging its procedures and as regards the devolved subjects of immense importance to Scotland, such as health and education, to mention just two. In that respect we are perfectly certain that the first four years will be enormously important. The Government have said in the White Paper that they will consider any suggestion that the Assembly may make as regards taxation after that. Therefore, by and large, I am sure that it is for the health of the Assembly and the future of Scotland that the block grant system is adopted, at least for the first four years until a great deal of experience is gained.
§ Clause 44 agreed to.
§ [Amendment No. 363 not moved.]
§ Clause 45 agreed to.
§ Clause 46 [Short term borrowing by Scottish Executive]:
§
Lord CAMPBELL of CROY moved Amendment No. 158:
Page 23, line 15, after ("may") insert ("with the consent of the Treasury.")
§ The noble Lord said: Amendment No. 158 and the following two Amendments are simple probing Amendments. Therefore, I beg to move Amendment No. 158 on behalf of my two noble friends and suggest that Amendments Nos. 159 and 160 be discussed at the same time. We have not probed Clause 45 with Amendments or spoken on the Question, Whether the clause shall stand part?
§ The Amendments enable us to ask the Government to give us, if they can, briefly the thinking behind these two clauses on loans. Clause 4:5 provides what one would expect for a Bill where large sums of money are to be advanced, in this case to the Scottish Loans Fund. The consent of the Treasury is required at various stages and the provision at the end of the clause states that an order has to be passed by the Affirmative Resolution procedure.
§
However, as regards Clause 46, we have drawn attention to the fact that the consent of the Treasury is not required at all and that the procedure for an order to be made is the Negative Resolution procedure. Our other Amendment is simply to discover why the Government have chosen £75 million; what has prompted them to consider that to be the limit? Clause 46, to which these Amendments apply, is for the short-term borrowing—overdrafts, and so on. Clause 45, which is clearly for larger sums of money, is for times which are not stated. It simply says:
… such times and with interest at such rates as may be determined by the Treasury".
Therefore, I should be grateful if the noble Lord could give us an explanation why the terms of the short-term borrowing clause are so different and what prompted the Government to choose £75 million as the maximum. I beg to move.
§ Lord KIRKHILLAs noble Lords will know—and, indeed, as the noble Lord, Lord Campbell of Croy, has been pointing out to us—Clause 46 empowers the Scottish Administration to borrow short-term in order to cover temporary deficits on the Scottish Consolidated and Loans Funds. The power will always be used as a last resort, because it will clearly be in the financial interests of the Administration to fund its expenditure to the greatest extent possible without recourse to borrowing, which entails payment of interest. The very nature of the power implies that the need to use it will arise suddenly and fortuitously. In these circumstances it would be impracticable to require the Administration to obtain the consent of the Treasury before borrowing, as the Amendment proposes.
I hope that your Lordships will agree—and I refer to Amendment No. 158 when I speak of the Amendment proposed—that, as I have explained, it will be in the financial interests of the devolved Administration to use the powers as little as possible because of the fact that there is an absolute limit on the amount of borrowing. Finally, because of the practical difficulties upon which I have touched, it would be difficult to accept the Amendment. I know that it is a probing Amendment and that it is linked to Amendment No. 159.
The noble Lord, Lord Campbell of Croy, asked me why the Government have chosen the figure of £75 million. That figure represents the best estimate which the Government can make of the sum which might be involved in the cash flow in the Scottish Consolidated Fund over about 10 working days. Therefore, we can say no more than that it is a rough yardstick. The clause provides for the amount to be increased by order made by the Secretary of State. However, the important point is that the flexibility in managing cash flows given to the Scottish Administration by Clause 46 must not be frustrated by having an unduly low limit laid down. As I have just said with regard to Amendment No. 158, it is self-evident that it is in the Administration's own financial interests to keep its borrowing to a minimum. That is the reasoning behind the £75 million.
I do not think that I can add anything on Amendment No. 160. I do not think that the clause needs strengthening because 340 I do not think that the Administration would act in a profligate manner. As I have said, it certainly would not be in its own financial interests so to do, and I should have thought that that was an excellent constraint on any profligate tendencies it may have.
Lord CAMPBELL of CROYIt would seem to boil down to a question of the magnitude of the sums involved. Much larger sums will be involved in Clause 45, and presumably that was why the Affirmative Resolution procedure was to be used there and not in Clause 46. I am grateful to the noble Lord for his explanation of the Government's thinking and I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 159 and 160 not moved.]
§ Clause 46 agreed to.
§ Clauses 47 to 49 agreed to.
§ 10.55 p.m.
§
Lord DRUMALBYN moved Amendment No. 326:
Before Clause 50, insert the following new clause:
§ Scottish National Lotteries
§ ("(1) Sections 1 and 2 of the Lotteries and Amusements Act 1976 shall not apply to any lottery promoted under an Act of the Scottish Assembly, the proceeds of which are or are to be paid into the Scottish Consolidated Fund and used to finance or help to finance any project or activity falling within the devolved matters mentioned in the following subsection.
§ (2) The matters referred to in subsection (1) above are—
- (a) the prevention, treatment and alleviation of disease or illness;
- (b) education, the arts, crafts, cultural and recreative activities;
- (c) development of tourism;
- (d) charities other than those whose purposes include the matters contained in paragraphs (a) to (c) of this subsection.
§ (3) Nothing in this Act shall prevent the sale, offering for sale or despatch to persons, whether within or outside Scotland, of any tickets or chances in any such lottery as is referred to in subsection (1) above.
§ (4) Sections 35 to 37 above shall not apply to any Bill passed by the Assembly under this section.
§ (5) In determining what payments are, with the consent of the Treasury, to be paid into the Scottish Consolidated Fund out of moneys provided by Parliament under section 44 above or into the Scottish Loans Fund under section 45 above, the Secretary of State shall take no account of any funds raised under this section.")
341§ The noble Lord said: This is a joyful little Amendment. The Government have invited suggestions for Scotland raising additional revenue for herself, and this Amendment indicates one possible way; namely, by Scottish national lotteries. Lotteries, I know, are included as a devolved matter under Group 21 (Miscellaneous) in Schedule 10, although I rather suspect that it is included there for the Assembly to regulate rather than to run.
§ I am only too well aware that not all Scots or, for that matter, all English or Welsh folk look favourably on lotteries, however good the causes they are to serve may be. That was not considered as sufficient reason for rejecting the idea of premium bonds. I know the bonds are repayable and the private gains incidental, but the gains on lotteries for charities are also incidental to the sustaining of the charities. Admittedly, the contributions to lotteries are not repayable, but neither are taxes which are supposed to be exacted mainly in aid of good causes.
§ To ensure that the lotteries under the Amendment are devoted to good causes, we have picked out—my noble friend Lord Glenkinglas is not here—appropriate devolved matters from Schedule 10, in particular from Group 1 (Health), Group 3 (Education), which includes the arts, sports, libraries, museums and art galleries, and we have picked out charities from Group 21, including all charities whether or not included in Groups I and 3. This definition would cover charities related to Group 2 (Social welfare). The money raised could be used to finance, or to help to finance, any project or activity covered by any of these groups. We put in development of tourism because of its importance to remoter and poorer areas, although we would not mind much if it were omitted as not being of the same character as charities in Groups 1 and 3. We put it there mainly because Scotland has found it particularly difficult to get enough money to support the tourist industry in the past.
§ There are, of course, other countries which run lotteries for all sorts of purposes—for hospitals, even for air forces, and other necessities of life. Subsection (3) follows as closely as possible the Lotteries and Amusements Act. It would, of course, he impossible to stop lottery 342 tickets or advertising material about the lotteries from being sent by post outside Scotland, and across the Border, if it comes to that. Of course people in England would not wish them to be stopped, I am sure. If they did the reputation for being mean would quickly cross the Border too. Still less would Parliament want to exercise the powers conferred in Clauses 35, 36 and 37 to prevent Bills and Statutory Instruments establishing lotteries in Scotland, as otherwise they might be able to do on the flimsy and inadequate ground that a reserved matter might be affected. That is the purpose of subsection (4).
§ Finally, the whole purpose of finding a means of raising additional revenue to meet Scotland's needs would be defeated if the Treasury were to treat the revenue from Scottish national lotteries as the Department of Health and Social Security treats income above a certain level earned by pensioners up to the age of 70. Hence we see subsection (5). Obviously there would be no point in raising this revenue unless it was considered as additional to the revenue put into the Consolidated Fund by the Secretary of State with the consent of the Treasury. I put this forward as an idea, I hope a wholesome one, which should commend itself to Parliament. However, I daresay that if Parliament does not like it now, the Assembly can consider the matter for itself later on.
§ Lord MOTTISTONEI support my noble friend's initiative in this matter. If there are any objections in Scotland to lotteries in any form, the fact that he proposes it should be as the result of an Act of the Scottish Assembly would give the Scots an opportunity to debate it among themselves before it came into being. In my view, my noble friend's proposal should be entirely applauded and I hope the Government will give it great support.
§ Viscount THURSOThis is an entirely excellent and refreshing idea which is meant to be, and I believe is, helpful. It is interesting to note that nearly all the objects for which these lotteries might be held are already the recipients of funds from smaller lotteries, raffles and so on, throughout Scotland. Obviously, if these 343 facets of Scottish life are to be helped by the Assembly, it would be perfectly appropriate that they should be helped by a well-run lottery, and in any event that would give some muscle to the Assembly which it will not receive from the Consolidated Fund. My noble friends on these Benches would certainly back this excellent suggestion, and we hope the Government will consider it.
§ Viscount MASSEREENE and FERRARDWhile I, too, support my noble friend's suggestion, I should have thought it would be allowed under the Bill as drafted. Surely such matters would be covered by Schedule 10, Groups 21 and 26, so making the Amendment—which, as I say, is excellent and has my support—unnecessary. Apart perhaps from the Elders of the Kirk, I cannot imagine anybody objecting to the Amendment.
§ The Earl of PERTHI also support the Amendment and congratulate the noble Lords in whose names it stands for coming up with an idea which the Government have been seeking; namely, a means—not necessarily by lotteries—of raising revenue by the Assembly. The Amendment has two important features. The first is that it is an entirely voluntary affair; those who do not approve of lotteries—and I know that applies to many people as a matter of principle—need not take part. The second is that these lotteries would be used for admirable purposes, mostly, as the noble Viscount, Lord Thurso, pointed out, for charities which can already be helped in a small way.
It is worth recalling the extraordinary success that Ireland has had in relation to its hospitals by this means; it has been one of the great success stories of the Irish hospitals and I do not see why, if the Assembly so agreed, we should not follow the same pattern in Scotland. Because it is subject to the approval of the Assembly, it is only permissive, and to that extent I fully back it.
§ Baroness STEDMANI am sure the Amendment is meant to be helpful and I acknowledge the support the noble Lord, Lord Drumalbyn, has had for it tonight; but the inclusion of the entry of betting, gaming and lotteries in Group 21 under the miscellaneous head confers a very wide competence on the Assembly to 344 legislate in the matter of lotteries. As the Bill stands, the Assembly could pass legislation providing for the establishment of a Scottish national lottery, either with the limited purposes specified in the new clause, or with any others (within devolved matters) which the legislation itself chose to specify.
Lotteries are a form of activity on which very strong views are held by public opinion. The Government take the view that if the Assembly (on the Motion either of the Scottish Administration, or of a Back-Bencher) chose to legislate on the subject, it is desirable that they should have the maximum discretion as to the contents of that legislation. They should, for example, be free to modify, or to apply, Sections I and 2 of the 1976 Act, to the extent they considered expedient. They should also have maximum freedom to apply, as they saw fit, the proceeds of any lottery to be conducted by the Scottish Administration, or by a body set up for the purpose. Parliament should not appear to be dictating to the Assembly what view they are to take on such matters.
Subsections (1) and (2) of the new clause proposed by the noble Lord, Lord Drumalbyn, we think are not only unnecessarily but probably also undesirably restrictive to the Scottish Assembly. In effect, they derogate from the competence conferred by the Bill as it stands at present. The Government see no reason why these restrictions should be imposed: such restrictions as those limiting the purposes for which proceeds can be applied. Why should we rule out the application of proceeds to, for example, the purchase or upkeep of ancient monuments and historic buildings (in Group 19), or the provision of facilities for public enjoyment of the countryside (under Group 9)? Why should we specify in the Bill that they can use their money only for these certain objects?
Subsection (3) seeks to enable the sale of tickets outside Scotland if a Scottish national lottery is set up. Here again, the provision is unnecessary. There is nothing in the Bill at all to prevent a Scottish Assembly Act from enabling people outside Scotland to participate in a Scottish lottery. The voluntary participation of people outside Scotland would not alter the fact one iota that the legislation 345 related to the setting up and regulation of a lottery would be conducted within Scotland.
Subsection (4) relates not to the content of the application of Assembly legislation but to the exercise in relation to it of the Secretary of State's intervention powers under Clauses 35 to 37. The intention seems to he to prevent the Secretary of State from moving the rejection of the Assembly's Lotteries Bill (under Clause 35), from directing action to be taken or not to be taken under it (under Clause 36), or from revoking any subordinate Instrument made under it (in Clause 37).
It is difficult to understand why Assembly legislation on lotteries should be regarded as of such a unique character that it alone should be exempt from any ministerial intervention. Such intervention is possible only if the Bill, executive action or subordinate Instrument, would, or might, affect a reserved matter, and if the intervention is considered desirable in the public interest. It may be thought unlikely that such circumstances would arise in the context of Assembly legislation on lotteries. But if they did, why should the Government be, exceptionally, prevented from taking action to protect the reserved interest? From the Government's point of view, this constraint must be unacceptable.
Subsection (5) provides that no account should be taken by the Secretary of State of the proceeds of a Scottish national lottery when he came to determine payments into the Scottish Consolidated and Loans Funds. In other words, such proceeds would be treated similarly to the proceeds of a supplementary tax, such as the Government have expressed readiness to consider providing for if the Scottish Administration so wish. In principle, this is not unreasonable. But it makes little sense to make statutory provision on the matter. The amounts to be paid into the two funds, and the manner in which they are to be determined, are entirely discretionary. The Bill in no way indicates what factors the Secretary of State is to take into account. It cannot, therefore, with any effectiveness specify a factor which he is not to take into account. I am sure that the Amendment was intended to be helpful to the Scottish Assembly, but in view of what I have said about the very wide competence conferred 346 upon the Assembly by the Bill, as it stands at the moment, and in view of the difficulties created by the later subsections, I hope that the noble Lord might care to consider the matter, and withdraw his Amendment.
§ Lord DRUMALBYNI should like to thank the noble Baroness for considering each of the subsections of the Amendment one by one. When I saw lotteries down in Group 21 of Schedule 10, I thought this meant the regulation of, and legislation about, lotteries; but of course I cannot see into the minds of those who devise these things. I accept that it is intended to cover any kind of lottery over which the Assembly has jurisdiction. Had I realised that, it might have led me not to pursue the matter in the first place. It is quite a surprise to me that the reason for rejecting this Amendment is that it is too restrictive. I shall have to go a little further next time.
As for subsections (4) and (5), it seemed to me that if one is to raise money especially in Scotland by the Assembly, this is something over which the Secretary of State should not have any jurisdiction. I am not sure that I agree with the noble Baroness that this is of so unique a character as to warrant excluding intervention by the Secretary of State. It happens to be the only Amendment of this kind that has come along, and if it is the first one to exclude intervention by the Secretary of State, of course it is unique until the next one comes along. I do not really see that that provides any objection to having at least one provision which is left to Scotland alone. As to the argument that this is a matter which should be left to the Assembly to legislate on, as this is within the power of the Assembly I am bound to confess that I must find that a valid argument, and I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Lord STRABOLGII think this is really a good moment to halt the Committee, and I beg to move that the House do now resume.
§ House resumed.