SCOTLAND BILL

HL Deb 04 May 1978 vol 391 cc367-440

3.44 p.m.

The LORD CHANCELLOR (Lord Elwyn-Jones)

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.—(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 50 [Scottish Comptroller and Auditor General]:

Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 161:

Page 26, line 4, leave out from ("Majesty") to end of line 6 and insert ("on resolutions to that effect passed by both Houses of Parliament.")

The noble Lord said: I suggest it would be for the convenience of the Committee to discuss at the same time Amendments Nos. 162, 163, 164, 165 and 166. We now move, I think with not too many backward glances at some of the complications of the financial provisions of the Bill, into a matter of administration. The Amendment questions the apparently rather anomalous arrangement whereby Her Majesty appoints the Scottish Comptroller and Auditor General and yet a completely different procedure exists for sacking him. When we say that Her Majesty appoints the Auditor General, presumably that is on the advice of the Secretary of State for Scotland.

It is curious that as the Bill is drafted the Assembly, in a rather indirect way, appears to have the right to sack the person who is appointed as a watchdog over it. Perhaps this is the right moment to call attention to the rather curious language that is used and the indefinite implication: … may be removed … if the … Secretary of State be requested to recommend …". That, I take it, implies that the Secretary of State need not necessarily accede to the request. If so, what criteria will he use in deciding whether or not to accede to the request? The danger, it seems, is that if we allow the Assembly to have a right to remove the Auditor General, they could if they were in what one might call a bloody-minded mood go on removing successive Auditors General until they found some suitable cringeing toady who could be made to be totally ineffective. Bearing in mind the Amendments which are being discussed with this one, it would seem that the Assembly could effectively refuse to remunerate the Auditor General, which I presume comes to very much the same thing as sacking him, as it is unlikely that he would be willing to serve for nothing.

What we are asking here is whether we wish to give the Assembly an invitation to attack and an excuse for obstruction if they feel in an obstructive mood, and if the Queen makes the appointment would it not be more appropriate for Her Majesty to continue to enjoy the right to remove the Auditor General in the same way? I hope the noble and learned Lord, Lord McCluskey, will not criticise the drafting of the Amendment. If he agrees with the underlying thought, we would not necessarily wish to stick to the drafting; it is designed merely to give us an excuse to discuss the underlying principle.

The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)

I accept that it is convenient to discuss at the same time Amendments Nos. 162, 163, 164, 165 and 166 because they all appear to raise the same issue, and I will come later to the precise questions I have been asked. Before doing that, I must say in general that when I hear the noble Lord, Lord Strathcona and Mount Royal, speaking from the Front Bench of the official Opposition and talking about the Members of the Assembly sacking one Comptroller after another in order ultimately to get some cringeing toady who will be totally ineffective, I wonder whether the noble Lord really comes from the same part of the world as I do.

What kind of headhunters does he imagine inhabit the woods north of Potters Bar? I cannot say too often, though obviously I cannot say it often enough for the noble Lord, that Scotland is a civilised country with a long tradition of democracy and responsibility. When it comes to auditing—and I see the noble Lord, Lord Lyell, sitting opposite me, smiling or grimacing; I cannot be sure which—I am well aware of the fact that Scotland has a great tradition in relation to auditing and accounting. I find the whole scenario here very astonishing, and it is very difficult to follow the noble Lord in his imaginings before the Committee this afternoon.

To turn to more serious matters, I should say that the Amendments confuse the responsibility for the control of devolved spending by seeking to convert the Scottish Comptroller and Auditor General into an officer of Parliament, because the effect of the Amendments taken together is that he can be removed from office only upon Resolutions of both Houses of this Parliament; in other words, not by the Assembly.

The Scottish Comptroller's independence of the Scottish Administration of the day is symbolised by the fact (as we see in Clause 50(2)) that he is appointed by Her Majesty, and that his remuneration is charged directly on the Scottish Consolidated Fund, just as the salary of the United Kingdom Comptroller is charged directly on the Consolidated Fund here. But the Scottish Comptroller stands in a close relationship with the Scottish Assembly. In our view, it is important that he should be seen to be the Scottish Assembly's man, and not Parliament's man. His remit—let us be quite clear about this—extends only to devolved spending. He has no responsibilities whatsoever in relation to what I might call United Kingdom spending. He reports on devolved spending to the Assembly, and he will have to work with the Assembly Accounts Committee, which is provided for in Clause 54, which we shall reach shortly. Of course, it is essential for him to hold the confidence of, first, that Committee, and secondly, of the Assembly as a whole.

Any provisions such as those contained in these Amendments, which enable Parliament—to which the Scottish Comptroller is not responsible for the exercise of his functions—to block his removal from office against the wishes of a majority in the Assembly would, if applied in practice, inevitably destroy the Comptroller's authority and weaken the opera- tion of the audit and accounting arrangements provided for in Clauses 50 to 55.

Let me make this quite clear: there would be no point in including an Amendment of this kind, and substituting this kind of procedure, dependent upon Resolutions of both Houses of Parliament, unless it was intended that, from time to time, the will of the Assembly should be resisted. One may think it an astonishing proposition that the two Houses of Parliament, who really know nothing about the accounting arrangements in relation to devolved moneys, should have the sole responsibility for deciding whether or not he shall be removed from office.

Accordingly, arrangements of the kind contemplated by these Amendments, treating the Comptroller as, in effect, an officer of the House of Commons, would similarly be bound to damage the relationship of confidence between the Comptroller and the Assembly and that basis of confidence is surely a necessary basis for the effective operation of the system provided in these clauses of the Bill.

I ought to mention what the system is. The audit and accounting arrangements in the Bill depend on giving responsibility to the Assembly to exercise, through its Accounts Committee, a close scrutiny of the financial dealings of the Scottish Administration, and the interest of Parliament and the United Kingdom taxpayer, as the provider of the block fund, lies in the development of a strong Back-bench watchdog in the Assembly, and in encouraging the Assembly to carry out its scrutiny functions in a mature, responsible, and self-confident way.

By contrast, all these Amendments would derogate from the Assembly's responsibility by making the Scottish Comptroller a Parliament man. It is to the Assembly that the Scottish Administration is, in practice, responsible for its continuing existence, and only the Assembly, therefore, can ensure that it is held to account for its actions. In our view, it makes sense to make the Scottish Comptroller and Auditor General answerable to the Assembly in respect of the accounting and audit arrangements.

To answer the first question that I was asked, I should say that the Auditor is appointed by the Queen upon the recommendation of the Secretary of State. That would doubtless be after consultation with the Administration. When it comes to removal, the arrangements contained in the Bill are modelled exactly on those for the appointment and dismissal of the Comptroller and Auditor General for the United Kingdom. But as the Assembly does not have direct access to the Queen, a Petition for removal must be channelled through the Secretary of State. That is the usual type of provision for access to Her Majesty by, or on behalf of, the Scottish Assembly or Executive.

Whether or not the Secretary of State accedes—in other words, whether the word "may" gives him a measure of discretion—is, I believe, largely a hypothetical issue. He would certainly be reluctant to refuse to pass a Petition of this kind if it was clear that the Comptroller and Auditor General had lost the confidence of the Assembly. Indeed, if the Comptroller and Auditor General in Scotland had lost the confidence of the Assembly so much that it had resolved he should be removed from office, surely it would be almost a formality that he would be removed. I think that that answers the questions that I have been asked, and that it describes the general position. So, unless one is to take a very different view of the nature of the entire arrangements, the Amendment should not be accepted.

Lord LYELL

The noble and learned Lord has drawn second blood. First, he mentioned that cringeing toadies may have been suggested as candidates for the role of Comptroller and Auditor General over the Assembly. Then he wondered what kind of persons inhabited the great city of Edinburgh, or might fill this role of Auditor. He said that the Scottish people were indeed civilised, and he then said that we were not head-hunters—the noble and learned Lord looked in my direction. I regretfully must wonder whether the noble and learned Lord had not followed in my footsteps, when I used to study under the noble Lord, Lord Blake (who is not here). When I had finished giving my essay, the noble Lord used to say, "Yes, you've done a great deal of work, but you don't really seem to have answered the question." The question which has been in my mind, and which I believe is behind Amendment No. 161, is: To whom is this Auditor General responsible? The noble and learned Lord may not be under a misapprehension here, but the Committee and other laymen, and non-accountants and non-auditors, may be. From what the noble and learned Lord has said, it seems to me that the Auditor General will be nothing more than a glorified accountant, since he will merely look at the accounts which are drawn up by the First Secretary. He will not do what I submit an auditor should do; namely, to vet and to check the accounts.

The noble and learned Lord seemed to think that it would be inconceivable and unreasonable that an Auditor General should come into conflict with the Assembly. There is an analogy here in the normal commercial and company law, in which it is quite often regarded as healthy that an auditor should come into conflict with those who are responsible for drawing up the accounts. We must remember that the auditor of a limited company, and, I think, the auditors of public bodies, are responsible not necessarily to those who draw up the accounts. To whom does the noble and learned Lord believe the Auditor General is responsible? Is the Auditor General responsible merely to the Assembly, or is he responsible to the Accounts Committee of the Assembly? Alternatively, is he responsible to the Secretary of State? This is the confusion in my mind, and, I suggest, in the minds of several Members of the Committee: and certainly the point seems to be in the mind of my noble friend Lord Strathcona and Mount Royal.

I was deeply worried that, while the clause includes all kinds of paragraphs which give various indications of how the task of the Auditor General may be facilitated, there does not appear to be a short, sharp definition of the duties of the Auditor General. I might have been able to grasp this from analogy of what the Comptroller and Auditor General might do in Parliament, but I would not necessarily believe that the duties of the Auditor General in Parliament should be analogous to those relating to the proposed Assembly. It is for that reason that I wonder whether the noble and learned Lord follows my reasoning and that which lies behind the Amendment, as well as what is in the mind of my noble friend Lord Strathcona and Mount Royal.

Lord MACKIE of BENSHIE

I think that my noble neighbour knows a great deal about accounting, but I believe that he is slightly missing the point about responsibility. I have always understood that the people's representatives were elected to look after the people's interests, including those of their purse. If an Assembly is elected, it must be responsible ultimately for the proper spending of the money. Obviously, it has to appoint an auditor who will set the matter out in the proper form and giving the proper criticism but the ultimate responsibility must lie with the elected representatives of the people.

Lord LYELL

It seems that my noble neighbour Lord Mackie has once again misinterpreted the rôle of an auditor. He said—and I think I quote him accurately"The Auditor shall set out the accounts". As I understand it, and I think my noble neighbour will find that when he checks his accounts, an auditor may in theory and, in many rôles in present-day life, may indeed in practice set out accounts, but that is not his duty as an auditor. The duty of the Auditor is to check the veracity of the accounts and to see that the accounts are properly drawn up. Not only must he ensure that they are correctly drawn up, but he must check that the figures shown in the accounts are indeed correct and that nothing has been missed out nor any figures given that are in any way unrepresentative so far as that is possible.

It is not that the Auditor will just draw up accounts in a cosy relationship with the Assembly. The Auditor will be there as a watchdog. That is the role which I, and I think many others, would like to see. I take the point which the noble and learned Lord has made that the Assembly will in general be responsible, but I would submit that it is a misnomer to have an auditor if he is just going to set out some accounts which will then be checked over or looked at by the Accounts Committee. The Auditor is the watchdog and it is he who will have the teeth.

Lord McCLUSKEY

I wonder whether the noble Lord, Lord Lyell, has read Clause 53. If he has not I would invite him to do so. Clause 53 provides that, For each financial year … accounts shall be prepared by Scottish Secretaries". It is clear therefore that the preparation of accounts is done by them. Let me read the words in Clause 53(2), which I am sure are clear enough: The accounts prepared under subsection (1) above shall be sent to the Scottish Comptroller and Auditor General not later than the end of November following the end of the financial year to which they relate; and he shall examine, certify and report on the accounts and lay copies of them, together with his report, before the Assembly". If that does not answer the question raised by the noble Lord, Lord Lyell, on the next page of the Bill, then I do not know what will. I cannot improve on that wording, which everyone must understand.

The noble Lord asks me about removal from office and the question of responsibility. The Auditor is responsible in a unique way—perhaps I should not say unique—the position of the Comptroller and Auditor General in the United Kingdom is unique, and the position of the Scottish Comptroller in Scotland is the exact analogue of that. He is appointed by Her Majesty on the recommendation of the Secretary of State. Politically, one could not envisage that the Secretary of State would not make such a recommendation without consultation with the Assembly. That is his appointment.

When it comes to removal, that is provided for under Clause 50(3). There are two ways in which he may be removed from office: first, this can be done at his own request. He asks to be removed from office and is relieved of office by Her Majesty. Secondly, he may be removed from office by the Secretary of State following upon a resolution of the Assembly. Again, I do not need to do anything other than point to the terms of the Bill itself. If that does not answer the question raised by the noble Lord, Lord Lyell, perhaps he will tell me and I shall come back to it.

Lord LYELL

Probably I have ridden my personal hobby-horse far enough today—I hear noises of assent behind me. The noble and learned Lord has answered half the question with his reference to Clause 53(2). It outlines some of the duties of the Auditor, but he might also have other duties. I should like to leave the matter there.

Lord McCLUSKEY

The noble Lord may like to leave the matter there, but I do not. I should like to know what part of his question I have left unanswered?

Lord WILSON of LANGSIDE

I have in mind Clause 50(5) and I wonder whether the noble and learned Lord can tell the Committee what impact, if any, the Government anticipate these arrangements having on the Department of the United Kingdom Comptroller and Auditor General?

Lord McCLUSKEY

I am not at all sure what the noble and learned Lord wants me to say. I presume that in the Department of the United Kingdom Comptroller and Auditor General there are some Scots who suffer from a longing for their native heath, and that, given the opportunity and the salaries to attract them back to their native heath, they will take it. In that sense, there might be an impact. I cannot think of any other kind of impact.

Lord WILSON of LANGSIDE

I did have in mind the possibility that it would have some impact on the career structure of people at present in the Department. I should have thought that the Government would have had regard to this in the preparatory work which they have no doubt carried out for this measure.

Lord McCLUSKEY

We are coming shortly to an Amendment standing in the name of my noble friend Lord Ponsonby of Shulbrede upon which we shall discuss the general position of the Civil Service, but I think the question raised by the noble and learned Lord is answered by looking at Clause 62 of the Bill, which states that: Service as an officer or servant of … the Scottish Comptroller and Auditor General shall be service in the home civil service of the state", and, as we know, there are many civil servants who in pursuance of their own advancement in their careers quite properly move from one department to another. This is just another department to which some people may move.

Earl FERRERS

I should be glad if the noble and learned Lord would clarify one point. I understand that if the Assembly wishes the Comptroller and Auditor General to be removed it can request the Secretary of State to request Her Majesty to remove him. What happens if the Assembly makes this request? The word used is "resolve" which is a fairly stout word. They "resolve" that the Comptroller and Auditor General shall be removed. Is the Secretary of State obliged to act on that resolution or does he have discretion? Suppose the Secretary of State does not wish to operate on that, is he obliged to?

Lord McCLUSKEY

I wonder whether the noble Earl will look at the wording of the Bill. It reads: The Scottish Comptroller and Auditor General … may be removed from office by Her Majesty". It would be quite improper to put in a statute such words as, "The Scottish Comptroller and Auditor General shall be removed from office by Her Majesty on a resolution of the Assembly." That is the reason for that wording. The Auditor is answerable to the Assembly, subject to the uniqueness of his position as I have described it, and it would be unthinkable for him not to be removed upon a resolution of the Assembly. The reason for the word "may" is evident from the fact that he holds the appointment uniquely from Her Majesty.

Earl FERRERS

I thought that the word "may" was the appropriate word to use in allowing Her Majesty discretion. I did not know that it was to allow the Secretary of State discretion. I gather from what the noble and learned Lord said that that is so and that, after a resolution is passed, the Secretary of State will have discretion as to whether or not to advise Her Majesty to act upon the resolution.

Lord McCLUSKEY

I explained that the intervention of the Secretary of State fits in with the general scheme of the Bill, which is that there is no direct access to Her Majesty by the Assembly or the Scottish Executive; so whenever there is need for access that access is always routed through the Secretary of State. If you look at the construction of Clause 50(3)(b) you will see that the word "may" relates to Her Majesty, and that is very proper. As far as the Secretary of State is concerned the construction of that conditional clause is that, if the Assembly resolves that the Secretary of State be requested to recommend the removal to Her Majesty", Her Majesty may remove.

Earl FERRERS

I do not wish to prolong this discussion unduly; I am afraid I must explain myself very badly. The question which I put to the noble and learned Lord is this: The Assembly passes a resolution saying that it has no confidence and it, the Assembly, would like the Comptroller and Auditor General to be removed. Does that resolution compel, as it were, the Secretary of State to request Her Majesty, or does the Secretary of State have discretion whether or not to act upon that resolution?

Lord McCLUSKEY

I think I am right in saying—and if I am wrong I shall seek an opportunity to correct myself before we leave these clauses—that on a proper construction of this clause the Secretary of State simply has to convey the request to Her Majesty.

Lord HUGHES

If it should prove, on examination, that it is not absolutely clear that the Secretary of State is merely a channel in this matter, and that he will do what the Assembly asks, it would be possible to re-word the clause, without impinging on the "may" for Her Majesty, by inserting a "must" for the Secretary of State. I would not wish this to be done unless it was absolutely necessary, because I am quite certain that what my noble and learned friend has said is what is going to take place. If the Assembly were to resolve to have the Comptroller and Auditor General removed, it would be most unlikely that any Secretary of State would wish to take upon himself the difficult task of refusing to do so. But one could not say it was totally impossible that that situation would arise; and if it is the intention that the Secretary of State should not have such a discretion and it is possible to put it in the Bill—this is on the assumption that the Bill gives him a discretion at the moment, which is really not desired—then I would suggest to my noble and learned friend that he should look at it from that point of view.

Lord McCLUSKEY

I am indebted to my noble friend for that suggestion; but I understand that these clauses are all modelled upon the position of the United Kingdom Comptroller and Auditor General, and I shall be surprised if I do not find that the wording here is justified on that basis. If I do not, I shall return and tell your Lordships.

Lord MACKIE of BENSHIE

Can the Minister tell the Committee when the last Auditor General was removed by this method in the United Kingdom?

Lord McCLUSKEY

It may even have been before the start of the debate this afternoon, which is quite a long time ago.

Lord STRATHCONA and MOUNT ROYAL

I am grateful to the noble and learned Lord. I had no intention of trespassing upon his patience, as we have in fact done in this matter. I did not realise we were going to stir up the auditors, who appear to be almost as formidable and perhaps as long-winded as the lawyers when they get going. But I am grateful to the noble and learned Lord for clarifying the concept and the function of the Auditor General, about which I think some of us may have been in some doubt. It seems—and it sounds rather rude to say it—that what we have ended up by saying is that the Secretary of State is a mere messenger boy here. I was very grateful for the support of the noble Lord, Lord Hughes, because this was something which we wanted to bring out when I originally moved this Amendment. If that is the intention, I am all for saying so; and I am not necessarily tremendously impressed by any precedent which the noble and learned Lord might be able to rake up, because we have not had an Assembly before.

I am not totally convinced of the logic of the noble and learned Lord's argument, however, because he said that the matter of removal was almost a formality; and one ends up by feeling that if it is logic that the Queen shall appoint the Auditor General, then it would equally be logical for the Queen to remove him. To put it another way, if the Assembly is to have the right to remove the Auditor General, why, then, does the Assembly not have the right to appoint him? The original reason why we raised this point at all is that it did not seem logical to have a different way of doing the two parts of the same exercise. But I really do not think we want to make a great deal of this, and unless the noble and learned Lord wishes to say anything further I am quite happy to withdraw this Amendment.

Amendment, by leave, withdrawn.

4.15 p.m.

Lord TANLAW moved Amendments Nos. 364 and 365:

Page 26, line 10, leave out ("may") and insert ("shall")

Page 26,line 11, after ("officers") insert (",certified accountants")

The noble Lord said: With the leave of the Committee, I think it would be helpful if my Amendments Nos. 364 and 365 were considered at the same time. These are two probing Amendments, in an attempt to try to open up a short discussion on the constitution and operation of the Scottish Auditor General's office. They are prompted, really, by what was reported in column 1689 of the Commons Hansard, where complaints were made in another place that this matter did not get a proper airing; and I think this may be a suitable opportunity, very briefly, to remedy that.

If I may take up a point made by the noble and learned Lord, he said that most of the institutions in the Scottish Bill are really extensions of existing institutions or systems of government in the United Kingdom; and as he rightly said, the Auditor General's office is one of them. It is my contention that when we have problems with this Bill it is not necessarily the case that the Bill is wrong, but possibly that the institution may be wrong, or not entirely right, in the first place. It is my view that the Auditor General's office and system of accounting—and I am on record in your Lordships' House for complaining about this in another context —is not entirely perfect. In these Amendments it is my concern to get some reassurances from Her Majesty's Government that the Scottish Auditor General's office will be, if anything, somewhat stronger and more informative than I believe it to be in relation to the accounts of the United Kingdom.

The reason why I have taken out the word "may" and inserted the word "shall", and have asked that the Auditor General's office should include certified accountants—and, for the want of a better description, this phrase would cover qualified accountants, chartered accountants or accountancy experts—is because, as some noble Lords will recall, during the inquiry into the Crown Agents' affairs there were certain criticisms of the Auditor General's Department for an apparent lack of qualified personnel. Therefore, when I saw that in the Bill there was no particular mention of certified accountants or qualified accountants, I set down these two Amendments in order to ask the Government whether they could give me an assurance that there were going to be plenty of accountancy skills in the Auditor General's office. Another point which occurred to me, again from the Fay Committee's Report, was that it would appear that the Auditor General's office—and I stand to be corrected here—was unable to carry out its own internal audit in order to investigate the Crown Agents' affairs. I do not think that is a satisfactory situation if it is true, and what I should like to ask the Government is whether the Scottish Auditor General's Department or office will be capable and competent to carry out an internal audit of its own affairs. This second Amendment is really to ask whether it is capable of doing so.

I should also be interested to know—and I believe it to be relevant—how many certified accountants are at present employed by the United Kingdom Auditor General's Department, which has control over, I think, about £70 billion of taxpayers' money, and how many certified accountants will be employed by the Scottish Auditor General's Office. Simply by having these questions answered I hope to be reassured that Her Majesty's Government have got things better—I say "better" advisedly—than what I believe to be the existing set-up in the Auditor General's office for dealing with the accounts of the United Kingdom. Therefore, without saying any more, I beg to move these two Amendments.

Baroness STEDMAN

I am grateful to the noble Lord for the clear way in which he has expounded the meaning behind his two Amendments. It is customary in legislation to empower holders of statutory offices to appoint supporting staff rather that to oblige them to do so. Other examples arise in the Scotland Bill. In Clause 20(9) a Scottish Secretary "may" appoint such officers and servants as he thinks tit. In Clause 29(2) the Clerk of the Assembly "may" appoint officers and servants of the Assembly. There is no distinction of purpose between these provisions and Clause 50(5) and the Government consider the customary enabling formula to be the appropriate one in the case of the Scottish Comptroller. The wording used in Clause 50(5) is, in fact, the same as that used in Section 8(1) of the Exchequer and Audit Department Act 1921 in relation to the United Kingdom Comptroller and Auditor General.

The noble Lord asked whether I could give any information about the number of qualified people employed in the United Kingdom Department. That I cannot do off the cuff, but if the information is readily available I will write to the noble Lord before we get to the next stage of the Bill. We do not see that there is any need to insist that the Scottish Comptroller must appoint staff. The duties imposed on the holder of this office by the Bill are such that they could not be fulfilled single-handed. It is necessary to provide that the numbers should be approved by the Scottish Administration because the costs of the Scottish Comptroller's department will fall on the block fund. But it would be fanciful to suggest that the Scottish Administration would starve him of staff. If they tried to do so, they could find difficulty in obtaining the credits they require from him in order to obtain payments from the Scottish Consolidated and Loans Funds. Any undue restrictions placed on audit staff would certainly be drawn attention to by the Assembly's Accounts Committee in its reports to the Assembly, as provided for in Clause 54, which must be published as provided for in Clause 55.

On the question of what staff the Comptroller will appoint, the noble Lord, Lord Tanlaw, is justifiably anxious to ensure that there will be an appropriate complement of qualified accountants. But there are other types of experts (for example, in the computer field) who will also be needed and, as further specialisms develop in the future, doubtless other categories will emerge. It is not for the Bill to say how the Scottish Comptroller's staff is to be made up any more than Parliament has dictated to the United Kingdom Comptroller whom and how many he should employ. We must take as a starting-off point that the Scottish Comptroller will be a highly responsible senior officer and that his performance of his duties will he closely watched by the Assembly's Accounts Committee.

Under Clause 62 the Comptroller's staff will be members of the United Kingdom Civil Service, to be recruited under the national Civil Service regulations. There will be scope, if those concerned wish to take advantage of it, for common recruitment and common training alongside the staff of the United Kingdom Comptroller. The United Kingdom Comptroller will still require to maintain staff in Scotland to deal with Government Departments there (including the Scottish Office), and there may well be scope for interchange of staff and for sharing of some common facilities. These are all matters of detailed staff arrangements and management, however, depending on agreement not only of the United Kingdom and Scottish Comptrollers but also of their staffs. They are not matters on which the Government should express a definitive view, and, therefore, not matters for the Bill. On the question as to how the Fay Report was not allowed to intervene in the Crown Agents, at the moment that is something on which I cannot intervene since the Crown Agents are now sub judice.

Lord VAIZEY

There is a difficulty which the noble Baroness raises when she refers to the staff of the United Kingdom Comptroller and Auditor General and the Scottish Auditor General working side by side. Hitherto this has been one career service. Now, supposing that the Assembly appoints its own people—and I think the noble and learned Lord, Lord McCluskey, referred to the Scottish Comptroller and Auditor General being the Assembly's own man—I cannot see the logic behind the creation of a separate career structure for a group of people who are going to be working hand in hand. One group will be working for the United Kingdom chap and the other group for the Scottish fellow. Presumably, as they move up the ladder, they will be weaving in and out. If there is any meaning in this clause in giving the Assembly power—as does the subsequent clause—to determine the salaries, I cannot see the argument against it being one service at the present time. Can the noble Baroness elucidate?

Baroness STEDMAN

It is going to be one service. It is one home Civil Service. When we come to Clause 62 we shall be having a long debate on the Amendment of my noble friend Lord Ponsonby as to whether there should be a separate Scottish Civil Service. At this point in time, the Bill envisages one public service. They will be able to transfer between branches as they can now. They will be able in some cases, we hope, perhaps to combine what they are doing and to share some of the facilities. This is something which the Scottish Administration must sort out and it is not something which we ought to be writing into the Bill.

Lord TANLAW

I must thank the noble Baroness for the helpful and quite detailed reply she gave to the questions I asked. I had hoped perhaps, in view of the report, the name of which escapes me, about a certain deficiency in the Auditor General's office, that this might have been an opportunity to rectify any future criticism that the Scottish Auditor General's Department could incur. I accept what the noble Baroness has said and, in view of her remarks, I beg leave to withdraw both Amendments Nos. 364 and 365.

Amendments, by leave, withdrawn.

4.27 p.m.

Lord TANLAW moved Amendment No. 366:

Page 26, line 17, after ("on") insert ("audited").

The noble Lord said: With the leave of the Committee, I should like to move Amendment No. 366 and, at the same time, speak to Amendments Nos. 367, 368 and 369. This, again, is a series of probing Amendments. At the outset, I may say that the fact that I have put them down is possibly due to my not being an accountant. The Consolidated Fund account for the United Kingdom, the entire United Kingdom fund (covering £70 billion of taxpayers' money) appears on two printed sheets containing about 18 entries. At the end of those accounts the Auditor General does not certify that —and this is where I could be accused of being naive—"This is a true and fair view of the financial picture", as is usually the case with any accounts in the world of commerce.

The question that I would ask is this: Are these accounts? I mean by this that they are of no help to me or to someone who has had experience in the commercial world. As a means of interpreting how the money has been spent, they are of no commercial use. This could be dangerous, particularly in the Scottish Assembly, where they have a block fund for which the Assemblymen have to account as good stewards. They must spend it as cautiously as only Scotsmen know how; they must make every penny count to the benefit of their constituents and of Scotland as a whole. If this kind of presentation is all they are going to get—and I hope the noble Baroness will put me right on this —in my view that is not good enough for Scotsmen. It might be good enough for Englishmen or for the Government at Westminster; but we have the opportunity here to ask the Government to have more open accountability in terms of the Scottish nation.

There is another tendency which perhaps the noble Baroness can confirm, for I may have got it wrong. As Government, inevitably, take a greater interest in commercial entities in the private sector, so do the Government's accounts become less revealing. On the other hand, those companies and entities in the private sector must by law become more and more committed for information, form filling and so on. What is worrying is that, with the Scottish Assembly there are a number of (for want of a better phrase) "hybrid entities"—commercial entities which have capital partly from the private sector and partly from the public sector.

Again, from the viewpoint of an accountant, this needs rather sophisticated techniques if in fact a true and fair picture of entities such as the Scottish Development Agency, its investments and so on, are to be interpreted by ordinary Assemblymen who may not necessarily be very good at figures. They will have to speak out and be responsible for these figures, while the Auditor General is in the role, taking up the point that was made by the noble Lord, Lord Lyell, as an auditor to a commercial company, who is responsible to the shareholders and not to the directors. In the same way, the Auditor General is responsible to the Assembly and to the people of Scotland, and not to the Executive.

I think there is an opportunity in this Bill to improve the existing system of audit. I am not entirely convinced that the Auditor General set-up is the best that can be devised, and this Bill gives us an opportunity to improve on it. Perhaps the noble Baroness will reassure me on these factors, and particularly as regards the form the accounts will take. Are they to be a form of accounts? In my Amendment I have used the word "audited" simply because it is a word which I and most people are familiar with, at any rate those who have had any connection with business, from a sweetie shop to a steel mill. If they are in that form, I think the Assemblymen will be able to follow them. If they are in the form of the Consolidated Fund account that we have here—these flimsy bits of paper which the Auditor General does not seem to sign; and which I do not understand them, I do not think the Assemblymen will understand them either when it comes to the very difficult job of having to explain to their constituents how they have spent their money or how the Executive has spent their money. I hope the noble Baroness will be able to help me here.

I should like to add one brief point concerning the Accounts Committee, the "watch dog" to which the noble and learned Lord referred. Again my remarks about the Assemblymen should apply equally to the comprehension of the "watch dogs" on the Accounts Committee in Scotland. This again is perhaps giving us an opportunity to improve on our existing system. In my view, the Public Accounts Committee is the most important committee in Parliament, and its work is perhaps more important than any other which comes to mind. In regard to Scotland I think we could improve the system of working here. Could we not include among the members of the "watch dog" committee those who are not necessarily involved in the Assembly but who have outside business experience, who could possibly give some very good and sensible advice, especially in the areas which are part public sector and part private and commercial? I think there is going to be a lot of difficulty in finding out what is going on in them and there will be dangers, unless there is clear comprehension on the part of the Assemblymen and of the Accounts Committee, that large sums of money may be mismanaged or mislaid, simply due to having accounts which, in my view, are not readily understandable by those who are not accountants.

I hope the noble Baroness will see these Amendments as an attempt to be constructive and not as an attempt to throw shots at the Government, the Auditor General's office or the Public Accounts Committee. I hope it may be an attempt to improve the existing system under which our country is run today and on which I have many reservations.

4.34 p.m.

Lord HUGHES

In the interesting speech which we have just heard from the noble Lord, Lord Tanlaw, he ranged very wide of this Amendment by wanting to simplify the accounts. He went into the duties of the Comptroller and Auditor General, but the Amendments he has put forward have nothing to do with the Comptroller and Auditor General. They are Amendments to subsections (6) and (7), which relate to the situation when there may not be a Comptroller and Auditor General, or when for some reason he is unable to carry out his function. These two parts relate to the authority given to someone else to do the job.

When my noble and learned friend, in replying to the previous Amendments and to the point made by the noble Lord, Lord Lyell, about an auditor, drew attention to Clause 53(2), and particularly referred to the words: he shall examine, certify and report on the accounts …", that seemed to me to be a perfectly straightforward statement of the ordinary duties of an auditor. There would have been no doubt about it at all if instead of the word "examine" there appeared the word "audit". But I do not think there is the slightest doubt that the wording in the Bill as it stands means exactly that.

The same thing will apply in the circumstances of the section which the noble Lord, Lord Tanlaw, is seeking to amend. But it raises in my mind the question as to why the word "examine" has been omitted in subsection (7), because in Clause 53(2) the Comptroller and Auditor General is to … examine, certify and report on the accounts …", and in his absence the authorised person is merely to "certify and report". I am quite certain it does not mean that there is anything different.

This is probably just a drafting error, but obviously the same set of circumstances are to apply. I think it is quite clear that in both circumstances a complete audit of the accounts is being carried out and the certification of them will be carried out and they will be reported. Therefore, while the noble Lord, Lord Tanlaw, may have a point about simplifying the accounts so that the ordinary Member of the Assembly will be able to understand them, I would doubt very much whether, with the complicated nature of public expenditure these days, it would be within the wit of any accountant to put them forward in a way in which the ordinary Member of the Assembly could understand them.

Lord TANLAW

If I might just answer that last point of the noble Lord, Lord Hughes, I did not mean to give the impression that I wanted the accounts over-simplified. I merely made the point that I am used to looking at audited accounts, and the Consolidated Fund accounts for the United Kingdom are the only ones I have managed to find. Presumably the Scottish Assembly Consolidated Fund accounts will look rather similar, although of course I stand to be corrected on that. In my view, these are not accounts and they are not very informative. The point I wished to make was that if the presentation is in the form of audited accounts, I can understand it. I did not wish the accounts to be oversimplified.

Lord TAYLOR of GRYFE

Would the noble Lord not agree that the Consolidated Fund account to which he referred is a synopsis of the spending of the Government, and that is broken down in detail and is available for examination by Members of Parliament? If you take the Scottish Development Agency, which may be incorporated in the Consolidated Fund account—that is the two-page document which has been referred to—you can make reference to the accounts of the Scottish Development Agency and the account of their stewardship, as you can with other Government Departments, if you want to make the detailed examination that is now being sought. This bill in no way inhibits that examination.

4.40 p.m.

Lord SHINWELL

On the assumption that this is a serious Amendment and not a probing exercise, I beg to offer a few observations, or rather a number of questions, if I have the permission of my noble and learned friend the Solicitor-General for Scotland. I was struck by a remark, which he made earlier on in the course of this very interesting, but somewhat technical, debate, that many Scots who had left the native heath would probably return, the incentive being salaries on a somewhat higher scale than they had been accustomed to on this side of the Border. I was very much struck by that. But I was struck even more by the wide-ranging observations of the noble Lord, Lord Tanlaw, and I want to ask a simple question. I think that it is always better to ask simple questions that are not technical, even if one gets technical replies. My question is this: What is all this going to cost? Let me just run over the list. We start off with a Scottish Comptroller and Auditor General. That is two of them.

Lord HUGHES

No, that is one.

Lord SHINWELL

It is not a Siamese twin, is it? Then he may appoint officers and servants. There was a suggestion that it ought to be mandatory and not a matter of discretion. So we can assume that quite a number of others will be appointed; and the noble Lord, Lord Tanlaw, quite properly asked that one of them should be a certified accountant. For Heaven's sake! let us be very careful indeed if we are indulging in expenditure in Scotland. We must avoid anything in the nature of corruption. So we must have the right people on the job. Anyway, there will be quite a number of others. Then Clause 51 states: There shall be paid to the Scottish Comptroller and Auditor General such salary as the Assembly may from time to time determine". How much it is to be, we have no idea at all. There has been a great deal of talk about these people. There will be quite an assembly of people in this Assembly, or on the perimeter of the Assembly, looking after the finances, holding the purse, if the money is provided by Westminster. That is where the money has to come from, and Westminster can provide it only if the taxpayers are willing to cough up. But I suspect that many of them will not want to cough up too much, to enable the Scots to play around with the finances of the United Kingdom—and, apparently, they will be permitted to do that. Nothing at all has been said about that.

My noble and learned friend the Solicitor-General has argued at great length—I will not say that he was verbose, because that might sound offensive and the last thing I want to do is to be offensive to him, in spite of what he said about me last night. I almost had a sleepless night after being rebuked by such a legal luminary, all the way from Edinburgh. Your Lordships know what Edinburgh folk are like. When you have lived in Glasgow you do not have much time for Edinburgh folk, but you have to tolerate them. But I am digressing a little, although a little digression will not do us any harm. This place is very dull and it needs livening up.

I want to put a simple question and I want a simple answer. A simple question should evoke a simple answer, straight from the horse's mouth. What is all this going to cost, or have the Government not thought this out at all? Have they just said "Let us have an Assembly, and let us have a Scottish Comptroller who is an Auditor General, too"—or whatever it may be—"a certified accountant and a whole string of people, very important people, very efficient people, looking after the finances associated with the Consolidated Fund", because it will all come out of the Consolidated Fund, as is the case with United Kingdom finances. On how much it is going to cost, there has been not a word. Nobody, has asked any questions about it and certainly, so far as I know, nothing about it appears in the Bill. The Solicitor-General shakes his head, as if to suggest that there is something in the Bill about the actual amounts that are to be expended.

I know that in the Bill there are references to payments that are to be made for this and that, and, naturally, those payments have to be made, as has expenditure for salaries, administration and so on. But I have not yet discovered what it will cost for the Assembly to meet somewhere. I saw in the Press that it could cost £3 million or £4 million for this institution. I do not know where that money is coming from. Anyhow, I think that we ought to have some answer to the question. It is all right 10 indulge in these technical, complicated observations, but we ought to know something about what it will cost.

I do not know whether my noble friend Lady Stedman is to reply. If she is, I do not know where she will get her information from. I had better correct myself. I said earlier on that I want an answer straight from the horse's mouth. I withdraw that, but I will not say what occurs to me. I shall leave it at that. I am quite serious about this. The noble Lord, Lord Tanlaw, provoked me into asking this question, because he ranged so widely over the whole scenario—

Lord TANLAW

The noble Lord has, quite rightly, raised a point about the cost. But in the Explanatory Memorandum to the Bill, there is a paragraph which shows that the Auditor General's department and all the civil servants for the Assembly will cost approximately £6½ million.

Lord SHINWELL

My Lords, if there are provisions in this measure to appoint people to undertake certain tasks associated with finance, then we are obviously entitled to ask what it will cost. I do not ask for details about salaries. That would be asking too much, and I would not expect them to be given accurately. But I ask for some indication of what this will cost the taxpayers. I am speaking of United Kingdom people, in particular, although to some extent of Scottish people. I want to know what it will cost. and if I do not get an answer to this question I shall have to find some Amendment which will enable me to go into the Division Lobby against the Government, and that may be very serious for the Government.

I want to make an apology for my interventions. The reason why I am intervening so often is not that I am knowledgeable on this subject—far from it. It is because I am indulging in a little practice in speaking, in readiness for the next General Election. I have been receiving innumerable invitations from all over the place, asking whether I would be ready at the next Election to go and speak on behalf of candidates and so on, and I have to be ready for that. In fact, I am doing my Front Bench friends, even the Solicitor-General, a favour. I go out to speak and try to keep them in office. I am doing them a favour, for which they ought to be grateful. But I am indulging in a little practice, so that I am ready for the fray. That is my reason for intervening so frequently. I return to the original simple question. What is this going to cost?

4.49 p.m.

Lord MACKIE of BENSHIE

The noble, venerable and somewhat mischievous Lord Shinwell has raised a very serious point, and it is that point which my noble friend Lord Tanlaw was taking up in trying to get modern standards of accounting into Government Departments. I think that in 1976–77 the Government wanted to save money, but their saving was so successful that they underspent by, I think, some £3 billion. The reason why they had to save money was that the year before they overspent in the country as a whole by some very much larger figure.

I happen to know, for example—the noble Lord, Lord Tanlaw, has great experience of a wide variety of business—that in many companies they can now budget for inflation. In many cases their end of year accounts are coming out extremely accurately. These budgeting techniques are new and are constantly being improved. I do not say that in every case they work perfectly, but the degree of accuracy which is being arrived at in business firms, large and small, as a result of this new budgeting technique, which requires very good accounts and very good accounting so that the information one works on for the future is accurate, is surprising. I believe that the spirit behind my noble friend's Amendment is one which we need to take into account, since it might greatly assist in telling us beforehand exactly what Government proposals in various forms are going to cost.

Lord LEATHERLAND

One of the things that I decided to do early in life was to dedicate myself to keeping my noble friend Lord Shinwell apprised of the facts of any situation. Therefore I do so on this occasion. My noble friend said that we do not have the slightest idea what this Bill will cost. If my noble friend will turn to page vi of the Explanatory Memorandum to this Bill, he will find set out there the details of the cost. For example, we read that about £3¼ million will be required for reconstructing and equipping the former Royal High School and parts of St. Andrew's House for the use of the Scottish Assembly. That includes £650,000 for acquiring the Royal High School buildings and £1,350,000 on works already authorised. I am going into great detail because my noble friend wants it; he does not want rough and ready figures.

Then we read that about £1 million will be spent on the reconstruction and equipment of office accommodation. The additional annual running costs will be about £6¾ million in respect of the salaries and related costs of Members of the Scottish Assembly and Executive—it sounds as though they are going to do pretty well; much better than your Lordships—and about £6¼ million in respect of additional civil servants in Scotland. Then it goes on to say, and I ask my noble friend to pay attention to this as he stressed during his speech that he wanted to know how much the Scottish Comptroller and Auditor General and his staff would cost, that the £6¼ million includes the staff of the Scottish Comptroller and Auditor General and related costs, including accommodation costs. It even includes the cost of the offices in which they shall work and the chairs upon which they shall sit. Finally, we read that the cost of the referendum will be broadly £2 million. All the questions which my noble friend asked with regard to finance and costs are adequately answered in the passages to which I have referred your Lordships.

Lord SHINWELL

I am very grateful to my noble friend for drawing my attention to these details. I have some acquaintance, as has my noble friend, with estimates provided by Governments or civil servants and I should be very reluctant to accept all of the estimates which my noble friend has read out. It will cost a great deal more than that. Taking everything into account, it is a large sum of money which will be expended. May I ask my noble friend whether any mention is made of the Members of the Scottish Assembly?

Lord LEATHERLAND

Yes, I drew my noble friend's attention to that. If he will look three-quarters of the way down page vi he will see that about £,61 million will be spent annually in respect of the salaries and related costs of Members of the Scottish Assembly and Executive. I interposed in parenthesis that it looked as though they were going to do pretty well—in fact, very much better than Members of your Lordships' House.

4.55 p.m.

Baroness STEDMAN

I am quite sure that when he moved his Amendments the noble Lord, Lord Tanlaw, did not expect to have quite such an entertaining or interesting debate. The noble Lord said that he was not an accountant. May I say to him that when I came to your Lordships' House I was put on one of the European. Scrutiny Committees. The first job that we had to do was to decide how balance sheets and accounts, which were completely foreign to me, were drawn up. I am afraid that I have to tell him that this still did not make me an accountant, so I can assure the noble Lord that that makes two of us who are trying to make the best of this Bill!

Under Clause 53(2), the Scottish Comptroller and Auditor General has a duty to "examine, certify and report on" the accounts of the Scottish Administration. This is what we understand as the process of audit. The word "audit" is regularly used in Statute as a verb or as a noun to cover all the stages in that process. An account has not been audited until the whole process has been completed. Where the accounts which are referred to in a provision of the Bill have been through the whole process, it is unnecessary to refer to them as "audited" accounts. Where they have not been through the whole process, it is wrong to refer to them as "audited" accounts. Therefore the case for the insertion of the term "audited", as proposed by each of these Amendments, will have to be looked at separately in each provision concerned.

Lord TANLAW

May I ask the noble Baroness whether that includes the words, "This is a true and fair view", and so on, which an auditor normally appends to accounts?

Baroness STEDMAN

Yes, that covers the same point. If I may deal with the noble Lord's first Amendment, Amendment No. 366 to Clause 57, that relates to the delegation of authority by the Scottish Comptroller to a member of his staff to certify and report on accounts. The certifying and reporting concerned forms part of the process of audit, but it is wrong to refer to the accounts as being audited until these tasks have been completed.

Turning to the next Amendment, Amendment No. 367—this is the Amendment to Clause 53(1)(a)—we think that this also is wrong. The accounts referred to are those prepared by Scottish Secretaries for sending to the Scottish Comptroller and Auditor General. By definition, therefore, as I explained earlier they also are not audited accounts in the strict sense of the word. Turning to Amendment No. 368, the accounts referred to in Clause 54(1) are accounts which have been examined, certified and reported on by the Scottish Comptroller and Auditor General and laid by him before the Assembly. By definition, therefore, these are audited accounts, and to describe them as such is not necessary.

On the last Amendment, Amendment No. 369 to Clause 55, that refers to the publication of the accounts referred to in Clauses 53 and 54. By the time these reach the Assembly for publication they must have been audited, so again it is not necessary to describe them as such. It all sounds very complicated, but when the noble Lord has had an opportunity to read Hansard it will all fall into place.

Regarding the noble Lord's Amendments and also the comments made by the noble Lord, Lord Mackie of Benshie, about trying to modernise the accounting procedure, if it is the intention of these Amendments to try to modernise that procedure, that is not their effect so far as this Bill is concerned. It is essential that the Socttish Administration's financial arrangements and those of central Government, upon which the Scottish Administration will be wholly dependent for funds, should be of the same general nature.

The arrangements are laid down in Clauses 50 to 55 and they are modelled on the Westminster arrangements. Under Clause 53, each Scottish Secretary must keep the accounts for his department and the Scottish Secretary responsible for finance must keep accounts for payments into and out of the Scottish Consolidated and Loans Funds. The accounts must be sent not later than the end of November following the end of the financial year concerned—that is, within a period of eight months—to the Scottish Comptroller and Auditor General, who will then examine, certify and report on them; or, to put it more simply, he will audit them. The accounts themselves and the audit reports are then to be laid before the Assembly. In turn they must be examined and reported on by the Assembly's Accounts Committee. The accounts themselves and the reports by the Scottish Comptroller and Auditor General and by the Assembly's Accounts Committee must all be published, as provided for in Clause 55. Therefore, public opinion will be able to monitor the operation of these arrangements.

If we want any radical reorganisation of Government accounting and auditing procedures, it has to begin here at Westminster and not with the Scottish Assembly and therefore not in this Bill. Any radical reorganisation that we considered in the future needed to take place at Westminster could, if necessary, be carried through to the Scottish Administration's auditing arrangements by the Westminster legislation. So if we decide to modernise the whole of our accounting system in the future we still do not need to do it under this Bill as it stands at the moment.

My noble friend Lord Shinwell asked questions about the cost. I am grateful to my noble friend Lord Leatherland for reading out in detail what it says in the Financial Memorandum and I do not think I need weary the Committee by going into it again. However, I should like to remind my noble friend that the Accounts Committee is a Back-Bench Committee of the Assembly and therefore we cannot include outsiders on it, though there is nothing at all to prevent that Back-Bench Committee from engaging expert help from outside if they think that is necessary. The exact form of accounts to be adopted under devolution is a matter for the Scottish administration and for the Assembly, dependent, inter alia, on the organisation of the administra- tion of its Departments and these domestic matters really must be left to Scotland and the Scottish Assembly to decide. We do not think the noble Lord has achieved quite what he set out to achieve in the Amendment in the way of modernisation of accounts and I hope that in the light of my explanation he will accept that this Amendment and those following are not necessary.

Lord MACKIE of BENSHIE

I should like the noble Baroness to explain an apparent contradiction. I thought she said that any modernisation of accounts in Scotland would have to follow modernisation in England and then she went on later to say what I very much more approved of, that when the Assembly was set up it could in fact modernise its accounts.

Baroness STEDMAN

I think that either I have been misunderstood or else I did not phrase my words as well as I could have done. I said that any radical reorganisation of Government accounting and auditing procedures—because one flows from the other—would have to begin at Westminster and not with the Scottish Assembly, but that, if there was any radical reorganisation of accounting methods here at Westminster, it could if necessary be carried through to the Scottish administration's auditing arrangements by Westminster legislation. At the same time, so far as the Scottish Assembly is concerned, it is a matter for its Public Accounts Committee, the Assembly and its Auditor General and Comptroller to decide how its Finance Department shall be run and how the accounts shall be presented in the light of what Departments it is decided to have within the Scottish Assembly. I hope that makes it clearer.

Lord TANLAW

We have had a most interesting discussion on what is usually thought of as a rather boring and technical subject, namely accounts. I also think that we have filled the gap that was left in another place by having at least a fuller discussion of these clauses. I thank the noble Baroness for the very detailed reply which she gave to each individual Amendment that I tabled. I did not realise that there were quite so many meanings of the term "audit" until she made her reply. I think she has answered the letter of my question if not exactly the spirit.

I am slightly depressed that the Scottish Assembly will have to soldier on until eventually one day the accounting systems and investigations in to the accounting systems of the Auditor General's Department and the Public Accounts Committee grind into the 20th century down here in Westminster, but possibly with a little pressure here and a little pressure there we may bring that day further forward.

Finally, I should like to come back to something which has been said throughout this debate—that is, that the control of expenditure of the block fund has been identified as possibly the main source of contention in virtually every clause that we have discussed in this Bill. I hope we can be assured that the Assembly, which we have now been told will have excellent and audited accounts will also have a system of budgetary forecasting and discounted cash flows on capital projects that will assist the Assembly to reduce this area of contention which has been raised in various other parts of the Bill. I hope that in that way it will defuse some of the so-called "dynamite" that some noble Lords think is contained in this Bill. I should also like to think that it might give a lead to Whitehall, although we know now that it cannot do so. Nevertheless, we hope for something better in the future and in the meantime I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 50 shall stand part of the Bill?

Lord McCLUSKEY

When I was speaking earlier, I said that if I found I had said anything that required to be corrected I would do so at the earliest opportunity. It has been suggested to me that, under Clause 50(3), the Secretary of State is not wholly deprived of all discretion because, for example, there might be circumstances in which the Assembly would resolve, perhaps late at night and when there was a very small attendance. Of course one would expect that the Assembly, acting under Standing Orders, would make provision to the effect that a resolution of such importance as one to remove the Scottish Comptroller and Auditor General would require a certain notice and possibly a certain majority or quorum of the Assembly. I feel it right to draw the attention of the Committee to that possibility.

Lord LYELL

I should like to ask one question about drafting on which I am sure the noble and learned Lord will be able to help me. At the foot of page 25, at line 41, the last three words in subsection (2) are "during good behaviour": do those three words mean what I think they mean—namely, while the Auditor General is performing the tasks that he ought to perform?

Lord McCLUSKEY

I should not want to attempt an authoritative exposition of those words. I think they are fairly familiar words and I suppose that they introduce the whole notion of culpa, which is the concept which would be applied to the behaviour of people like judges. If I can offer any better explanation I will write to the noble Lord about it.

On Question, Clause 50 agreed to.

Clauses 51 to 53 agreed to.

[Amendments Nos. 162, 163, 164, 165, 166 and 367 not moved.]

Clause 54 [Accounts Committee]:

5.8 p.m.

Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 167:

Page 27, line 21, at end insert ("of at least five members").

The noble Lord said: The equivalent of the Public Accounts Committee has already been referred to several times in the course of our debates this afternoon and Clause 54 provides for the appointment of the Scottish equivalent. I think it was the noble Lord, Lord Tanlaw, who said it was perhaps the most important thing, and I would not disagree with that. As the Bill stands, my understanding is that the Public Accounts Committee—which is the shorthand I shall use, if the Committee will forgive me—could in fact consist of one person, and that one person could be a Member of the Scottish Executive. That is not a very reasonable situation and this Amendment suggests that the Public Accounts Committee should consist of at least five people. Obviously, one can pull any number out of the air.

Having said that, I am slightly surprised to find the Bill having this clause in it at all, in view of the comments that were made frequently by the Government on Clauses 24 and 26, when the answer we were so often given was that they thought it right to leave the Assembly to make its own standing orders and to run its own affairs. Here we are saying not "may appoint an Accounts Committee" but "shall appoint an Accounts Committee". All we are really saying in this Amendment is that if we are going to have a clause saying that they shall have a Public Accounts Committee we had better go all the way and say that it must consist of a reasonable number of people; indeed, I think one ought to go further still, and say that it should have a reasonable political balance within it. So the purpose of this Amendment is either to persuade the Government to be explicit about how the Public Accounts Committee should be created or to take the clause out altogether and leave it to the Assembly. I beg to move.

Baroness STEDMAN

In general the Bill, in Clause 26, leaves it to the Assembly to decide what committees to appoint and to make provision in standing orders as it sees fit as to their constitution and terms of reference. But quite exceptionally the Bill makes express provision for the Accounts Committee, to which not more than one Scottish Secretary or assistant may be appointed, and it places a duty on the Assembly to publish its reports. This is because the Government regard it as of primary constitutional importance to establish a strong Back-Bench watchdog on the model of the Westminster Public Accounts Committee. They will work closely with the Scottish Comptroller and Auditor General, and this committee will be able to make the audit arrangements fully effective and to secure a proper accountability of the Executive to the Assembly. The effectiveness of the arrangements is of concern not only to the Scottish electorate; it also safeguards the interests of the United Kingdom taxpayer who has to finance the block fund under Clause 44.

What the Amendment seeks to do is to add to the status of the Accounts Committee, and the Government are sympathetic to that purpose behind the Amendment. But I am advised that it is not quite as straightforward as it might appear. If we lay down a minimum size for the membership of the committee without making provision for a smaller number to form a quorum, then the minimum size might also be regarded as the quorum. The number five contained in the Amendment might be reasonable as a quorum but is, in the Government's view, too small for the whale committee to do the job that we expect it to do, having regard to the desirability of ensuring that there is, as the noble Lord suggested, a reasonable and balanced representation of Back-Bench opinion and interests, and the possibility that this Accounts Committee may wish to establish sub-committees dealing with particular fields. If, on the other hand, we were to require a minimum of, say, 10 or 12 members, that in itself would be too large for a quorum.

We could, no doubt, lay down a minimum size and a quorum, but if we did that I think we would find ourselves drawn gradually further into devising detailed rules of procedure for the committee in order to make our requirements fully effective, and that again would not do. We really must leave it to the Assembly to make their own sensible domestic arrangements of this kind. I have to say to the noble Lord that much as we sympathise with his objective I would hope that he would not press the Amendment. What I will do is consider it with the officials, to see whether there is any sensible way round the difficulties I have mentioned; but I must say that we have given a lot of thought to it and I do not hold out very much hope of being able to find a way. I am happy to take it back for further consideration.

Lord LYELL

I should like to thank the noble Baroness for her very clear exposition. She has cleared up one point that had arisen in my mind, particularly in respect to what the noble and learned Lord had to expound to me on the previous clause, Clause 53(2). If the noble and learned Lord and the noble Baroness would direct their attention to Clause 54(1), they will find that the Accounts Committee is going to perform two out of the three functions that the Auditor General is going to perform. The only thing the Accounts Committee are not going to do is to certify the accounts.

It seems to me that the functions which are going to be carried out by the Accounts Committee are very close to, if not in fact, a practical audit. Indeed, I think the noble Baroness explained this. In the course of her remarks earlier she explained that the Accounts Committee is going to consist of Back-Benchers who might need, I think she said, expert help. Would I be right in thinking that it is the Government's intention that the Comptroller and Auditor General will be allowed to provide this expert help and interpretation, which has been so well expressed and explained by the noble Lord, Lord Tanlaw? I think the noble Baroness and I would agree that Back-Benchers would require assistance in interpreting something like the consolidated accounts, or indeed the normal commercial accounts.

Baroness STEDMAN

It will be up to the Accounts Committee to make their case to the Scottish Assembly that they need this extra outside help, and for the Assembly to decide whether or not to give it to them. They can ask for it and the Scottish Assembly can provide it for them.

Lord STRATHCONA and MOUNT ROYAL

I must thank the noble Baroness for being at least entirely sympathetic, even if she admits much of the same difficulty as we were labouring under when we drew up this Amendment. It occurs to me that we might be able to devise some form of words which would incorporate the concept of having a representative of each Party, provided there was a certain minimum number of representatives of that Party in the Assembly. But there is no reason to waste the time of the Committee any further this evening. I am grateful to the noble Baroness for what she has said, and perhaps we can get together and see whether we can think of something suitable to put in at Report stage. I think it is quite a serious point once we agree that we are going to put in anything at all about the Public Accounts Committee. With that, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

[Amendment No. 368 not moved.]

Clause 55 agreed to.

Clauses 56 and 57 agreed to.

Schedule 9 agreed to.

Clause 58 agreed to.

5.18 p.m.

The Earl of PERTH moved Amendment No. 337:

After Clause 58, insert the following new clause:

Proposals for powers to raise moneys ("If the Assembly decides that it wishes to make proposals that power should be conferred on the Assembly to raise by taxation moneys to he paid into the Scottish Consolidated Fund, they may communicate such proposals to the Secretary of State who shall lay such proposals before both Houses of Parliament.").

The noble Earl said: Last night, we discussed the question of the Assembly having taxing powers. Indeed, it was the noble Lord, Lord Harmar-Nicholls, and the noble Lord, Lord Morris, who moved an Amendment to that end. I rather think that their Amendment was designed with a particular purpose, which was to frighten the potential voters in Scotland by implying that if they had an elected Assembly they might face very much heavier taxes than would otherwise be the case. That is certainly not the purpose of my Amendment.

What was interesting in the debate on their Amendment was that there was general agreement, I think on all sides of the Committee, that the Assembly should have additional taxing powers if it could find a relatively harmless way of achieving this. So far as the Government are concerned, the very last paragraph of Cmnd. Paper 6890, says quite specifically that, if the devolved administrations wish to have available a limited supplementary tax power, and are ready to meet its administrative costs, the Government would certainly be willing sympathetically to consider any such proposals. I think I am right in saying that the noble and learned Lord, Lord McCluskey, confirmed at some time during the evening that that was the Government's view.

The Amendment, as moved, did not go through, for reasons which I have already indicated. Then the noble Lord, Lord Drumalbyn, had a shot at trying to find a relatively painless way of giving the Assembly some additional revenues. He moved an Amendment about the holding of lotteries. Again, there was support for this idea from all sides of the House. I think it might well have been carried as an Amendment if it had been necessary, but it was pointed out by the Government that it was already inherent in the powers as laid down by the Bill. Therefore, that Amendment was withdrawn.

I come to the Amendment that I move today. Before I go into detail on it, I would make the point that, at present, as the Bill stands, the subordinate local authorities have a taxing power, whereas the Assembly, which is, after all, their master, has none. That is, if I may say so, an absurd situation. I felt it would be appropriate that there should be a permissive Amendment which would allow the Assembly, if it decided in its wisdom that it would like in one way or another to raise money additional to what comes from the block grant, to do so. In the Amendment, I go on to say—the noble Earl, Lord Cromartie, who supports me, will perhaps elaborate on the point—that the proposals, if any, that are put forward by the Assembly, have to come before both Houses of Parliament. In other words, they must approve it.

Recalling all the expressions of last night's debate, including the willingness to accept something like this if a way could be found, I hope that the Government will feel that this Amendment is acceptable. My hope is, third time lucky. I beg to move.

5.22 p.m.

The Earl of CROMARTIE

I should like to support the noble Earl, Lord Perth, on this Amendment, which we both put down. Last night at a late hour and at some length we considered a long and somewhat involved Amendment aimed at giving the Assembly money-raising powers. This Amendment is shorter and has the benefit of simplicity. It would give to the Assembly the right, if it so desired, as the noble Earl, Lord Perth, said, to raise money with certain safeguards. Without this power the Assembly could well become just another tier of local government. This is a form of government. Some think it might go further. However, if it is without the power to raise money it could become a farce. It is right and proper that the Assembly and the Scottish nation should be able to raise money under certain safeguards. I beg to move.

Lord HOME of the HIRSEL

I apologise to the Minister that I could not be here last night. I shall only repeat in shorthand the conviction that I expressed on the Second Reading of this Bill; that is, that unless the Scottish Assembly can raise some revenue of its own it will be ineffective. Therefore we must find away to help it raise revenue. The Government, in the Command Paper which my noble friend Lord Perth has just quoted, seemed to agree. But they say that they cannot find a tax which they can recommend. At some time I should like to know about some of the researches that have been made. If we look at the German experience and the kind of local taxes that are levied by the German Länder, for example, I find it difficult to believe that we should not find a tax which is both appropriate and adaptable to the kinds of conditions that we foresee in Scotland. That may have been done. If so, at some time I should like to know. For the moment, if we cannot find a particular tax, if the Government are unable to do so, and if there is nothing provided in the Bill, it seems to me that the Amendment moved by my noble friends is the best that we can do in the circumstances. I hope that the Government will, therefore, look upon it favourably.

Lord CAMPBELL of CROY

The Government have indicated their attitude in the debates on this subject so far, including that of last night. The noble and learned Lord, Lord McCluskey, made it clear that they agreed with the sentiments in this Amendment; that is, that they would like the new Assembly to have tax-raising responsibilities, and that it should have the duty of raising some of the money it will spend. My noble friend Lord Home of the Hirsel pointed out that the Assembly is likely to be ineffective if it does not have such powers. I would go further and say there is a danger that a body with no responsibility for taxation or rates might always be complaining that it was not receiving enough from Westminster. This would not conduce to the stability of the new system. Even local government councils in Scotland, as in England and Wales, have to raise revenue by rates, which is their form of taxation. This places a financial responsibility firmly upon them. Those who elect them examine carefully how the money that they raise is spent.

What the Government have said so far by indicating their attitude—it was clear from the 1975 and 1977 White Papers—is that they cannot find the answer. They know there is a gap here, but they have not been able to find the appropriate form of tax which this new body would be able to raise. The Government have indeed gone further and invited suggestions from any quarter. My noble friends Lord Harmar-Nicholls and Lord Morris, in their Amendment which we discussed yesterday evening, made an ingenious attempt to meet the requirements which the Government had outlined as a tax-raising power.

This Amendment would allow the new Assembly, if it came up with a possible scheme, at least to have it considered by Westminster. I am sure that we all agree with the noble Earl, Lord Perth, and my noble friend Lord Cromartie that that is a reasonable suggestion. I am afraid that it still does not provide the answer which the Government are seeking. It does not provide an answer for the Committee. It would mean that there was nothing in the Bill to fill this important gap. But at least it would he better than nothing. I am sure that it would be harmless from the Government's point of view. I see the noble Lord, Lord Vaizey, wanting to intervene.

Lord VAIZEY

I had intended to speak.

Lord CAMPBELL of CROY

I shall stop very soon, I am glad to tell the Committee. I need add only one small drafting point. The Amendment would need a little revision. I pointed this out to the noble Earl, but it does not seem to have been carried through into the Seventh Marshalled List. The Assembly is dealt with in the singular in the first three lines, but then suddenly becomes plural later on. That is not happy drafting of a provision that will go into a Statute. However, that is a minor point. If the proposed words are not acceptable as they stand simply because of that defect, I am sure that other words which carry out the purpose may be found quite easily. I hope that the Government will view this Amendment sympathetically.

Viscount THURSO

Anyone who wishes well to the Assembly or to devolution for Scotland must realise that ultimately the Assembly must be able to raise revenue and spend revenue or it will never truly be even as important as a regional authority or a district local authority. Obviously at this time when we are establishing the Assembly there is a natural reluctance to impose upon the taxpayer and the ratepayer who is, after all, the same person, further imposts that he has to pay for further expense. However, as we have been discussing the shape which the Assembly will take, the jobs which it will do and the future shape of government within Scotland, it has been made clear on various sides that it is hoped that the Assembly will trim, slim and make more effective local government within Scotland. If it succeeds in doing that, it will create savings of moneys which the taxpayer-ratepayer has to pay in order to have services carried out. Within that sphere in the future there will surely he areas where money can be raised.

It is only right that we should make it clear now when we are setting up the Assembly that we must recognise that in future the Assembly must have powers to raise money by some method and that we expect it, by savings which it will make in the way in which it organises local government and other administration within Scotland, to be able to justify the raising of funds for the extension of services within Scotland, and therefore the right ultimately to raise revenue by some form of taxation.

Lord VAIZEY

I am sorry that I interrupted the noble Lord, Lord Campbell of Croy. I saw the noble Baroness, Lady Stedman, move on the Front Bench and thought that she was about to make a quick reply before the debate continued. The noble Viscount, Lord Thurso, has made a very important point, although it is somewhat paradoxical that a measure designed to slim down the government of Scotland and democratise it should set out to create 1,000 extra civil servants in order to get that slimming down and democracy going. I am thinking of the figure to which my noble friend Lord Shinwell referred in his speech.

I should like to ask two questions of the Front Bench. The first concerns precisely the point which the noble Viscount has raised. Let us suppose that in considering the future of the government of Scotland and the future of the regional councils of Scotland, the Assembly decides that large parts of the functions of the regional authorities could properly be brought to itself—in other words, the Assemblymen could do it better. I should think that, if, for example, regional government came about in England and we had some kind of council for East Anglia, it may well be that the council for East Anglia would take to itself the powers which are now exercised by the county councils of Suffolk, Norfolk and Cambridgeshire. So, it is a perfectly reasonable and possible prospect and, after all, there are only 5 million Scots.

If such a decision were taken—and as I read the Bill it is within the powers of the Assembly to make that decision—will it carry with it the power to finance itself by the surcharge on the rates which is a power which the regional councils have at present? That is the first question. If the power is not in the Bill, then I should have thought that it was important that at some later stage it should be inserted.

Secondly, I should like to refer to the broader question which was raised by the noble Lord, Lord Home of the Hirsel, and which, of course, refers to the extended debate we had last night. Indeed, I thought that it was a most important and interesting debate. Personally I was very much persuaded by the arguments put forward by the noble and learned Lord, Lord McCluskey, about the difficulties of raising additional taxation in Scotland, although I must say that it came somewhat paradoxically from a member of a Party whose National Executive and the TUC are in favour of higher public expenditure and presumably must therefore be in favour of higher taxation at some stage. However, he asked a serious and important question; namely, which taxes would the Scots wish to see increased? He pointed out that there were only two or three major taxes—for example, income tax. We are not allowed to raise value added tax because of the rules of the Common Market. Therefore, the number of taxes which could be affected is comparatively small.

I thought about this question for a long time. I think that I have consulted every distinguished public finance expert in Scotland who has also thought about it. I must confess that a change of this kind would require such a radical alteration to the Bill that we should require, in fact, a completely new Bill. If we had a completely new Bill which gave adequate tax powers to Scotland, it could only be done by hypothecating the yield of some of the major United Kingdom taxes; that is, it could be done by giving to the Scottish Assembly the power to levy major taxes, not just the power to add a penny on the income tax, but to take, for example, the greater part of the income tax. That is very important because in a Federal State the traditional way in which the federal Government finance themselves is by Customs and Excise duties while the income taxes and so on are levied at a lower level, For example, the States in Australia used to exercise this power and also the States of the United States. The Common Market is financed through a customs levy.

However, that particular avenue is closed to the United Kingdom by our Accession to the Treaty of Rome. I conclude, therefore, that if we really were serious in wishing to give taxation powers to the Assembly—and I argued several times last night in favour of giving taxation powers to the Assembly if we possibly could—we would have to follow the line of reasoning which the noble and learned Lord, Lord Hailsham of Saint Marylebone, has advanced several times in the course of these debates. In other words we would have to go much more deeply into the Constitution of the United Kingdom and set about wholehearted federalism which, of course, is something which was recommended by a substantial number of people who sat on the Royal Commission on the Constitution; namely, the Kilbrandon Commission, whose report is the basis for large parts of the Bill.

Lord HOME of the HIRSEL

wonder whether we have accepted a little too easily that some local taxes would run counter to the European regulations. If, for example, one looks at the German Ländes system there are quite a lot of local taxes which cannot, by definition, of course, run counter to the EEC rules. I wonder whether that has been examined as it should have been?

Lord VAIZEY

I fully concede the points which the noble Lord, Lord Home of the Hirsel, has made. Personally, I thought, and I said yesterday, that the paper which was produced by the Government as a basis for discussion—I do not think that the noble and learned Lord, Lord McCluskey, was a member of the Government that introduced that paper —and which asked rather rhetorically what taxes could be raised, did not really ask the question hard enough. To be candid I think that the question was asked in a form which expected the answer, No. Therefore, I was not very impressed with that particular State paper. Nevertheless, I was fairly persuaded by the argument which the Government produced last night in this series of rather interesting debates that it would require a major shift in the basic Constitution of the United Kingdom. The only answer then would be to withdraw this Bill—and the Bill may be withdrawn if it is defeated by the referendum—and then to come back with a completely different Bill.

I should like to say a word about the clauses which relate to the Comptroller and Auditor General. I cannot, for the life of me, see why, if the Bill gives to Edinburgh powers which are now exercised by Westminster, 1,000 extra men and women must be hired to supervise the transfer of some powers which are perfectly well being exercised already, so far as we know, by the 71 Scottish MPs down the passage in the Scottish Grand Committee. That is why—in the argument about the Scottish Comptroller and Auditor-General—I was asking myself, "Who is stealing the money now? What evidence have we that the accounts are not properly kept as present? Why do we need extra accountants and extra experts?", and so on. This whole question of where the money will come from to pay these extra people, and of the extra functions which the Assembly might arrogate to itself, goes right to the heart of this particular form of devolution which has been chosen by the Government.

5.40 p.m.

Lord HUGHES

This Amendment puts me in a great deal of difficulty. At the very outset I made it plain to my noble friends that there were two aspects of the Bill about which I was unhappy. One was the method of election, and I had an opportunity to express my view on that by voting for the Amendments which were moved by, among others, the noble Earl, Lord Perth. The other was finance. I cannot believe that at the end of the day an Assembly can be a perfectly satisfactory body if it does not have some control over finance.

One possibility that I saw was that the Assembly may, quite properly, legislate within the powers which are devolved to it; it would not seek to go out of its way to be awkward, but it would do what it believes to be a proper job and would be accepted to be doing a proper job. Yet, when it reaches the end of the financial year it may find that its legislation is costing more than has been allocated to it from Westminster. In that situation either one of two things must happen. Either Westminster will make more money available, or Westminster will say that the Assembly must cut its coat according to the cloth. Either way is unacceptable to one side or the other.

The remedy is obviously one which is not capable of being included in this Bill. I entirely agree with what my noble and learned friend said last night and with what the noble Lord, Lord Vaizey, has repeated today. It would, in fact, mean a major reconstruction of the financial sections of the Bill, which is obviously quite impossible for anyone, other than a skilled draftsman, to attempt. It would mean so many Amendments throughout the Bill that it is beyond the possibility of amendment in your Lordships' Committee.

However, having accepted—if the Assembly is to be completely successful —that there should be the possibility of a tax-raising power in the Assembly, I cannot bring myself to accept the situation which this Amendment would create, which is that the Assembly's taxing powers are limited to having taxation at the same level as applies in England and Wales.(and remember, it has to accept all the taxation levels imposed by the United Kingdom Government); or having all that taxation plus something else.

A satisfactory taxation policy for the Assembly ought to envisage the possibility that taxation in Scotland should be lower than it is in England. This Amendment only affords the possibility of making it higher. I am quite certain that that would not be a popular prospect in Scotland at any time, and certainly not at the present time. As it is impossible within the Bill to make provision for taxation being lower than it is in the rest of the United Kingdom, I cannot bring myself to support an Amendment which would create the possibility of the imposition in Scotland of taxation at higher levels.

Lord McCLUSKEY

As several noble Lords have said, we had a debate on this matter last night. In fact, we had a very full debate which lasted about an hour; having regard to the conciseness with which noble Lords are able to put their points, in our terms, within the context of this Bill, that is rather a long debate. There were some 10 or 11 speakers and all the points were covered. I think that it would be impertinent of me to make the same or a similar speech today as I made last night, although, of course, what I said last night is not yet available in print to your Lordships because of the lateness of the hour at which I spoke.

However, a number of points have been raised today to which I should reply. First, the noble Lord, Lord Home of the Hirsel, asked me specifically whether we have looked at other systems. Indeed we have. We have looked very carefully at the systems obtaining in the United States, in Canada, in Italy, in Sweden and in Germany. As I think the noble Lord may know, in Germany the position is that the Federal Government raises the taxes and there is a distribution of some portion of them to the Ländes in accordance with an agreement which obtains between the Federation and the individual States. Therefore, we have made very careful examinations.

I was, in fact, a member of the Government when these papers were drawn up. The noble Lord, Lord Vaizey, seems to think that I entered the Government only when I entered this House. In fact, I entered the Government in March 1974. I can assure the noble Lord that this matter was before those Ministers who had to consider the Assembly Bill from a very early date and they have been deeply concerned. Indeed, at an early stage when they received the kind of answer which I offered to the Committee last night several Ministers, including myself, said that it would not do and that we must have a better answer than that. I am now satisfied that, for the reasons which are given with great clarity in the White Paper, Devolution—Financing the Devolved Services, there is currently no better answer available than the one I gave last night. We do not rule out the possibility of some suitable tax-raising power, but I want to draw a distinction, which I sought to draw last night and it is right to remind the Committee of it.

One side of the coin is that the Assembly can be given the power to raise all the taxes which are necessary to finance all the services over which it has control. That is a revenue-based system for financing the devolved services in Scotland. That system is rejected by the Government, for reasons which appealed also to the Royal Commission, sitting under Lord Kilbrandon, and for reasons which were set out in the White Paper in November 1975 and in the later White Paper to which I have referred.

The other side of the coin is the side which I believe most other noble Lords who have spoken would support, and that is a supplementary tax-raising power. However, that has the serious defect to which my noble friend Lord Hughes has just drawn attention; namely, that it is a very unattractive prospect to say, "You have the power to raise taxes but no power to diminish them"; because ultimately the Scots are saying "Why should we pay up to, say, 14 per cent. extra on the income tax"—which was the figure which I calculated for the benefit of the Committee last night—"when the ultimate result will only be to reduce the amount of the block grant?"

Therefore, although there is a conundrum here, it is one that will not be solved as easily as the movers of this Amendment seem to suppose. This Amendment suffers from the same weakness as the Amendment moved by the noble Lord, Lord Harmar-Nicholls, when he addressed himself to it last night. It is that it makes an assumption that there is lying somewhere—perhaps in the back of a cupboard or in the back of someone's mind—a tax which fits all the requirements and all that is required is that men of goodwill go into the cupboard or look in the backs of their minds and come forward with such a tax. We are satisfied that at the moment no such tax exists. It may well be that if the whole system of rating is reconsidered and changed and some form of local income tax introduced, that may be a candidate on to which the Scottish Assembly might wish to fasten. But I believe—and I said this in other terms last night—that it would be idle to include in the Bill a provision which makes an assumption which is not warranted by the facts.

I do not want to go into these matters again in terms that I used last night, so perhaps I could turn again to the specific questions that I have been asked. The noble Lord, Lord Vaizey, asked me whether there is a power to surcharge the rates. Noble Lords will recall that in the White Paper of November 1975 the Government proposed that. Although there were other criticisms of the White Paper, that was perhaps the one that was most anguished. The Government decided not to do that. If the noble Lord will look at paragraph 4 of Schedule 2 to the Bill he will see that there is no such power.

Lord VAIZEY

I did not ask quite that question, I was fully aware of what the noble and learned Lord has just said; I asked a different question. If the Assembly dissolves the regional councils of Scotland and arrogates to itself the powers to be the Regional Council for Scotland, could it then have the taxing powers which are at present given to the Regional Council? With great respect, that is not the same point as the noble and learned Lord has answered.

Lord McCLUSKEY

I believe that the answer to that question is the same, and it resides in the same part of the Bill. Perhaps I should refer to it. I am looking at Schedule 2, paragraph 4, on page 42, which makes it clear in sub-paragraph (1): A provision is not within the legislative competence of the Assembly if it would impose, alter or abolish any tax". That is the tax point at the moment. Sub-paragraph (2): This paragraph does not prevent a provision from being within the legislative competence of the Assembly if its effect is only— (a) to alter a rate levied at the passing of this Act without substantially changing its character". I draw attention to those words, "without substantially changing its character". The character of a local rate is that it is local, and if it becomes a rate that applies throughout Scotland that would appear to be an alteration in its character. Therefore, I would rest upon the wording of paragraph 4 of Schedule 2 and answer the noble Lord in that way.

Some mention has been made of withdrawing the Bill and trying to rewrite the provisions. The Government have no intention of doing that. The Government do not believe that by withdrawing the Bill and going hack to look at these financial provisions they can solve this problem in a way that they have rot found before now. No solution has been found to this problem. That is regrettable, but it is believed that in the light of how the Assembly works it may be possible, in the light of developments such as I have mentioned, to look at this matter again in consultation with the Assembly, and the Bill does not exclude that possibility.

At the end of the day, when one introduces legislation which is going to affect rates of tax on this level, surely that must be done through the Westminster Parliament and done by proper consultation and not, as this Amendment would suggest, by the Assembly making a proposal which the Secretary of State is bound then to lay before both Houses of Parliament, because that is the wording: the Secretary of State who shall lay such proposals before both Houses of Parliament". I hope that that, in addition to what I said at a late hour last night. would satisfy the Committee, and I would invite the noble Earl not to press this Amendment.

The Earl of ONSLOW

Can the noble and learned Lord clear up something in my mind for me? When this Assembly comes into being, will it have the power to create a local authority in a single tier? If it does, then what happens to the district rates? I can quite conceive that I am probably in a muddle, but I hope the noble and learned Lord will get me out of it.

Lord McCLUSKEY

Perhaps I can get myself out of it in this way: we are going to discuss the reform of local government in relation to a later Amendment. I think that the Committee would accept that it would be more appropriate to address ourselves to the question then, and perhaps be easier to give an accurate answer if we postponed it to that particular time.

5.53 p.m.

The Earl of PERTH

First of all, I thank all those who have supported the Amendment in the names of my noble friend Lord Cromartie and myself. Secondly, if we decide to press the Amendment, I assure the noble Lord, Lord Campbell of Croy, that the drafting error, which I thought had been corrected and has not, will be corrected at Report stage. I shall not take much of your Lordships' time. The fact remains that at the present time in this Bill there is no power for the Assembly to make suggestions on how it would like to raise taxes. The noble Lord, Lord Hughes, said, "It is no good because it is just a tax to raise and not to lower". Surely if the Assembly decided, in their wisdom, that they wanted to take over some of the powers of the local authorities, and in doing that they created a considerable economy, then it would be open to them at that time to say, "Well, the economies we have made for that purpose, perhaps in a slightly different form we will use for other purposes". So I think at the present time there is the inherent possibility of lowering as well as increasing.

Lord HUGHES

Would the noble Earl allow me to intervene? I should say that it would not be a prospect which would be pleasing to the people of Scotland that the Assembly should be taking

CONTENTS
Aberdeen and Temair, M.	Chesham, L.	De La Warr, E.
Amherst of Hackney, L.	Cockfield, L.	Drogheda, E.
Balerno, L,	Coleraine, L.	Drumalbyn, L.
Beaumont of Whitley, L.	Colville of Culross, V.	Ebbisham, L.
Belstead, L.	Cork and Orrery, E.	Elles, B.
Campbell of Croy, L.	Craigavon, V.	Emmet of Amberley, B
Carr of Hadley, L.	Cromartie, E. [Teller.]	Exeter, M.
Carrington, L.	de Clifford, L.	Falkland, V.

over some of the local authority powers. The criticism of the existing local government structure that is made is not at district level; it is at regional level. The criticism is that local government has become too remote. If a change is to be made by the Assembly, I am quite certain that it is much more likely to be on the basis of conferring all local powers on a unitary type of authority. Therefore, there is not the slightest prospect of the Assembly taking over local government powers and then seeking to finance these by something other than rates. If I thought that there was the slightest possibility of an Assembly going in that direction, which I would consider to be a most retrograde step, I should be tempted even at this late stage to vote against the Bill.

The Earl of PERTH

I think that the noble Lord misunderstood me. What I had in mind was that in any re-formation of local government the regions might disappear, and that that could create certain savings. As the noble and learned Lord, Lord McCluskey, said, this is a matter which is going to be debated later today, and therefore we shall not go into that at this time.

I remain unhappy that there is no mention in the Bill of the Assembly having powers at any time, even with the approval of Parliament, for taxation. As I understand it, the answer given by the Government at the present time is, "Because we have not been able to think of a tax, therefore there cannot be one. But at a later date we could look at it again." I do not feel that that is good enough. I feel that I would wish to press the Amendment, and I hope that I shall have full support in my endeavours.

5.57 p.m.

On Question, Whether the said Amendment (No. 337) shall be agreed to?

Their Lordships divided: Content, 77; Non-Contents, 76.

Ferrers, E.	Morris, L.	Spens, L.
Gainford, L.	Mottistone, L.	Stamp, L.
Greenway, L.	Mowbray and Stourton, L.	Strathclyde, L.
Haig, E.	Northchurch, B.	Strathcona and Mount Royal, L.
Home of the Hirsel, L.	O'Hagan, L.	Strathspey, L.
Hylton-Foster, B.	Onslow, E.	Terrington, L.
Kemsley, V.	Orr-Ewing, L.	Teviot, L.
Killearn, L.	Penrhyn, L.	Thurlow, L.
Kinloss, Ly.	Perth, E. [Teller]	Tranmire, L.
Kinross, L.	Phillips, B.	Trenchard, V.
Linlithgow, M.	Rankeillour, L.	Vaizey, L.
Loudoun, C.	Rawlinson of Ewell, L.	Vernon, L.
Lyell, L.	Redesdale, L.	Vickers, B.
McFadzean, L.	Reigate, L.	Vivian, L.
Mancroft, L.	Romney, E.	Wakefield of Kendal, L.
Mansfield, E.	Sandford, L.	Ward of North Tyneside, B.
Meston, L.	Sandys, L.	Wilson of Langside, L.
Monk Bretton, L.	Sempill, Ly.

NOT-CONTENTS
Ailesbury, M.	Goronwy-Roberts, L.	Noel-Baker, L.
Ardwick, L.	Greenwood of Rossendale, L.	Northfield, L.
Atholl, D.	Gregson, L.	Oram, L.
Aylestone, L.	Hale, L.	Pannell, L.
Birk, B.	Hall, V.	Peart, L. (L. Privy Seal)
Blyton, L.	Hanworth, V.	Ponsonby of Shulbrede, L.
Boston of Faversham, L.	Harris of Greenwich, L.	Ritchie-Calder, L.
Bowden, L.	Hawke, L.	Rochdale, V.
Brimelow, L.	Henderson, L.	Sainsbury, L.
Brockway, L.	Hughes, L.	Shepherd, L.
Burton, L.	Jacobson, L.	Shinwell, L.
Champion, L.	Jacques, L.	Skelmersdale, L.
Collison, L.	Janner, L.	Snow, L.
Cooper of Stockton Heath, L.	Kagan, L.	Stedman, B.
Crook, L.	Kaldor, L.	Stewart of Alvechurch, B.
Cudlipp, L.	Kirkhill, L.	Stone, L.
Davies of Leek, L.	Llewelyn-Davies of Hastoe, B.	Strabolgi, L. [Teller]
Diamond, L.	Lloyd of Hampstead, L.	Taylor of Mansfield, L.
Douglas of Barloch, L.	Lockwood, B.	Torphichen, L.
Dowding, L.	Lovell-Davis, L.	Wallace of Coslany, L.
Dulverton, L.	McCarthy, L.	Wells-Pestell, L. [Teller]
Elwyn-Jones, L. (L. Chancellor.)	McCluskey, L.	Wigg, L.
Fisher of Camden, L.	McGregor of Durris, L.	Winterbottom, L.
Gaitskell, B.	Monson, L.	Wootton of Abinger, B.
Gardiner, L.	Morris of Borth-y-Gest, L.	Wynne-Jones, L.
Gordon-Walker, L.	Murray of Gravesend, L.

Resolved in the affimative, and Amendment agreed to accordingly.

Clause 59 [Devolved matters]:

6.5 p.m.

The Earl of SELKIRK moved Amendment No. 370:

Page 29, line 16, at end insert ("a").

The noble Earl said: We are now entering the area of the Bill which deals with the division between matters which are devolved and those which are not. It is probably far and away the most difficult part of the Bill to understand and I have tabled the Amendment to try to get some picture of what is in the Government's mind, in the hope that we can make this provision clearer.

There are at least three ways in which one can divide powers by devolution. The first is to state that certain subjects will be retained by the Westminster Government and the rest will be devolved. The second is to do it the other way round and devolve certain subjects and say the rest will remain with the Westminster Government. Those are the easier ways of doing it, but the Government have chosen the third way: they have tried to define both the subjects to be devolved and the subjects to be reserved. That is the most difficult way of doing it and, while they may have good reason for doing it that way, it makes the position very difficult to understand. Indeed, two noble and learned Lords who belong to the Judicial Committee have said that they regard this as among the most difficult drafting they have seen. I tried last night to obtain an explanation regarding the Scottish Development Agency in Part III of Schedule 10, but I was immediately referred hack to Part I; I was, so to speak, going round the mulberry bush. Certainly I find it most difficult.

There are two forms of devolution here. One is statutory devolution, which comes in Schedule 10, and the other, in Schedule 11, is purely Executive devolution, and the two are quite separate. I am seeking by the Amendment primarily to discover whether it is really necessary to have Part III of Schedule 10 at all because it increases enormously the difficulty of understanding the provision. The Minister described it as "fine tuning", but it is so fine that nobody, even with a microscope, can understand what it means. It is exceedingly difficult.

What does it mean if a measure is not referred to in Part 111 of the Schedule? Does it mean that it is reserved? And why are some Bills in and some not in? The Schedule refers to "matters". If it is a matter which is covered by a Bill which is not included, does that of itself prevent the Assembly from legislating on that subject, or does it only mean that the structure of the Bill itself cannot be amended ? It is important to know whether the measure is sacred in itself or whether a similar subject or subject matter under the same heading may be dealt with. After all, these Statutes are going to be amended; they are not permanent, and many other subjects may be raised.

There are a number of matters which are extremely difficult to understand. Let us take, for example, town and country planning. Why is that not completely included? Obviously, this is a matter with which the Assembly will have to deal. In so far as the Secretary of State wants to keep powers they are all perfectly preserved under Schedule 14. That provides for his powers to be retained. I cannot see why the whole of the remainder of town and country planning is not a devolved subject. The same applies to local government. We have been talking about local government, and we will be talking about it again later. Why is the whole of that subject net devolved? I should have thought that that is a matter which would be the clear responsibility of the Assembly.

I should like to take a third example, that of the Scottish Development Agency. I find it very difficult to believe that the Westminster Government want the Scottish Development Agency to be amended by the Assembly; but it can be in certain particulars, though, frankly, I do not quite see how this is done. The Assembly would be given certain powers, and I should have thought that those powers should be transferred to Schedule 11.

I do not intend to ask the noble Lord to answer my questions in detail. I do not want detailed answers, but rather, so far as possible, a picture of what is intended by these very detailed clauses. The difficulty of distinguishing where the responsibility lies will be enormously complicated. Are the clauses subject, in Part III, to Part I, or is Part I subject to Part III? I know that this is a very complicated matter, and I am grateful for the assistance the noble and learned Lord has given me, but I hope that at a later stage these matters can be elucidated a little further.

This is a Bill which must be understood net only by distinguished lawyers but the people in the street, and by the members of the Assembly. As it stands at present, it is frightfully difficult to understand, and people will not know where the responsibility lies. I tried to bring this point out in my Second Reading speech. It is the essence of democracy that we know where responsibility lies, that we know whom we can hold responsible for failures of Government.

I do not wish to argue this matter. I ask only that the noble and learned Lord tells us a little more of what is the intention, and says whether the matter can be simplified. Frankly, I should have thought that, in view of the powers which the Government hold—I have forgotten at the moment under which clauses—it is unnecessary to have these detailed matters. Perhaps some of the matters can be transferred to Schedule 11, and the remainder can be covered by the overriding powers which remain with the Westminster Parliament. That would greatly simplify the Bill. Such a move may mean some slight amendment elsewhere, but then the position would be less formidable and less intimidating for those who would have to read the Bill in future. I beg to move.

6.13 p.m.

Lord McCLUSKEY

The noble Earl, Lord Selkirk, has made his concern about these matters plain from the beginning. As he has acknowledged, I offered him last night—and I think he received today—a copy of the substantial, and somewhat indigestible, script which I might have read out as being a critique of his Amendment. However, I do not think the Committee wants me to spend a long time reading out what is a highly technical defence of these provisions and a criticism of the Amendment. At the risk of falling flat on my face, I shall take the opportunity to try to explain why the matter is put in the way it is in Schedule 10 and, if I can, what Schedule 10 achieves.

First, it is important to answer the noble Earl's question as to whether this proposal is necessary at all; whether the complication which is demonstrable from Part HI of Schedule 10 is necessary? The first point I seek to make is that there is a compelling administrative necessity for Part III of Schedule 10. Those of your Lordships who have studied the Bill, or have a copy before you, will know that Part III is the part which refers to a vast number of enactments—commonly particular sections of particular Acts. Many detailed functions and responsibilities are set out in existing Statutes, and these Statutes—many of them referred to here—were not drafted in the knowledge that there would be devolution. No doubt had that been known, they would have been drafted differently. In coming to the matter, we have had to accept the Statute Book as it is.

It is important that those who are called upon to exercise the powers contained in existing Statutes should know with as much precision and certainty as possible, to whom they are responsible, and what their powers are: in other words, are the powers devolved or not? That is particularly true in the case where there is some financial responsibility. So we are not starting, as in some Colonial or Commonwealth cases, with a relatively clean, uncomplicated sheet. We are starting with a highly complex jungle of statutory provisions, which already interlock.

I looked this morning at the Renton Committee Report (Cmnd. 6053), with which some Members of the Committee will be familiar. I should like to refer to two passages of the report which will illustrate the truth of what I am saying about the complexity of the existing statutory provisions. On page 5 it is stated that, During the seven centuries since the enactment of the earliest statute (1235)"— that is a reference to England, incidentally— recorded in Statutes of the Realm, many thousands of statutes (i.e., public as distinct from private Acts) have been enacted; despite repeals and consolidation, 3,480 ' public general Acts of Parliament ' were still in force in whole or in part at the beginning of 1974". On page 35 it is stated that, A prodigious mass of statute law is enacted each year by Parliament". Reference is then given to the number of pages added to the Statute Book in each decade, and the figures show that in 1965 the "live" Statute Book (that is, the Statute Book in force) then consisted of 33,000 pages of current law, parts of it dating back 700 years.

There is a well-known story of an Irishman being asked, "How do you get to Wexford from here? "He replies, "Well, I wouldn't start from here."However, we have to start from where we are. That is where we start from. We come to that situation, and we then have to endeavour to make clear for administrative purposes—and they are essential administrative purposes—what is devolved and what is not devolved. Without Part III, I do not believe that we can achieve the position which is administratively essential.

I now want to look at Schedule 10, and I will try to put the matter as briefly as I properly can. I have already addressed the Committee on this matter at some length at at earlier stage. The essential point is this: What is devolved under the Bill is "matters". The clause upon which everything hangs is Clause 59. If your Lordships look at Clause 59, you will see that it has two subsections which are relevant here. The first is subsection (2), which is on page 29. It reads: In relation to the legislative competence of the Assembly, a devolved matter is one which is included in the Groups in Part I of Schedule 10 to this Act". As the noble Earl, Lord Selkirk, made clear, we are talking here about what the Assembly can legislate on. So we see that a devolved matter is one which is included in the groups in Part I.

Subsection (3) is also relevant because a Scottish Secretary has powers and duties in relation to a devolved matter, but in that context a devolved matter is, according to the subsection, (a) any matter included in the Groups in Part I of Schedule 10". So, in other words, he has responsibilities in relation to the same matters which are devolved for legislative purposes. The subsection also states, in paragraph (b), that a devolved matter is, any matter with respect to which powers within the Groups in Schedule 11 to this Act are exercisable…". Paragraph (c) of the subsection contains a further provision which does not concern us here.

Schedule 10 then defines and specifies the matters which are devolved for both the purposes of legislation by the Assembly and actions by the Scottish Secretaries. Therefore the definition of a devolved matter is contained in Schedule 10. May I invite your Lordships' attention to that at the foot of page 47. There are three concepts involved here: There is first of all the concept of a group; secondly, the concept of a matter; and thirdly the concept of a subject. The groups which can be seen on pages 48, 49, and 50 are purely for convenience purposes. There is no technical significance about the fact that a subject is listed under one group or under another. Obviously there are possibilities for redistributing subjects among the various groups.

What is essential are the concepts of subject and of matter. I invite your Lordships' attention to page 47, line 31 of which reads: Subject to paragraphs (a) and (b) below, a matter is included in the Groups in this Part of the Schedule if, and only if, it falls within the subjects listed in them". So we start off with subjects, and the subjects embrace matters, and it is the matters which are devolved. Paragraph (a) reads: the matters specified in Part II of this Schedule are not included in those groups". In other words, this is the derogation from the devolution that would appear on the face of Part I.

Then we come to the clue to the meaning of Part III, where enactments are set out: any question whether, or how far, the matters dealt with in the enactments listed in the first column of Part III of this Schedule are included in those Groups is to be determined in accordance with the second column of that Part". These words in (b) are important and they relate to the words in line 31, Subject to paragraph (b) below and the word "but" in line 33. Over the page, we find these groups which have no technical significance, and listed under the groups are a number of subjects. If a matter falls properly within one of these subjects, it is a devolved matter.

When one comes to Part II, which appears on page 50 and subsequent pages, one finds that certain matters are subtracted from Part I. For example, although health is the description of a group, and there are certain subjects listed under that group, descriptions are mentioned—for example, "Prevention, treatment and alleviation of disease or illness"—one finds that, although the matters properly falling under that head are included in the groups and are therefore devolved matters, paragraph I of Part H on page 50 makes it clear that, Control of drugs, medicinal products, biological substances and food are not devolved matters. I do not want to take up a lot of time with other illustrations, but it would be possible to do so in relation to different subjects and groups.

We come to Part III, to which I referred on a previous occasion by saying that it did the fine tuning. Part III, which appears first on page 53, indicates that a number of these 3,800 statutes which we find on the Statute Book are listed on the left-hand side, and there is a general heading: Whether, or how far, matters dealt with are included in the Groups". Those words derive their strength from the preliminary part of Part I. One finds particular statutes which have a bearing on subjects which constitute the groups and therefore upon devolved matters, and the right-hand column endeavours to make clear precisely what is or is not included in the groups and is therefore among the devolved matters.

The noble Earl asked a specific question: is it really necessary to have Part III? Something of this kind is really necessary because, without having something of the character of Part III, the boundaries between what is and what is not devolved cannot be drawn with sufficient precision to make it clear to those who have to decide which side of the boundary their responsibility lies.

I was also asked: supposing a Bill or part of a Bill is not referred to, is it reserved or not? Again, the clue to that matter is the concept of a devolved matter. If a particular statute or enactment is referred to, what is the matter contained in the enactment? Is it included in the groups or not? That can be found from reading the right-hand column in Schedule 10 Part III. Another question was: can a Bill be legislated upon if it is not included? Of course the legislative competence of the Assembly depends upon whether or not the matter is devolved. If an enactment is not mentioned in Part HI, then one can forget about the enactment. The question is whether the matter is devolved. If the matter is devolved it can be legislated upon, and the Act of Parliament can be repealed. If the enactment is referred to in Part III it will be found in the right-hand column. If the whole enactment appears there with the words "not included", then plainly the subject matter of that Bill is outwith legislative competence and one could not repeal the Act because it would not be within legislative competence. That is a very complicated explanation. I hope it is correct. It is as simple as I can make it without distortion and I hope that the noble Earl will feel it has taken him some way along the road in answer to his question.

Lord MOTTISTONE

The noble and learned Lord has helped us greatly, but, observing the beginning of Schedule 10, which reads, if, and only if, [a matter] falls within the subjects listed in [the groups] and the fact that, in the Bill itself, it says that the groups include the devolved matters, it seems surprising that it is necessary to have Part II. If the devolved matters are only those referred to in Part I, everything else would seem to be excluded.

Lord McCLUSKEY

If you consider Part I and take the example that I gave a moment ago of "prevention, treatment and alleviation of disease or illness", that would, unless there was some qualification of that, almost certainly carry to the Assembly legislative competence in relation to medicinal products. If the policy decision is not to give the Assembly such legislative competence, we have to find a way to derogate from that devolution. May I give another example which makes the point equally clear. Take Group 22: among the matters involved are, Courts, including juries. Court jurisdiction and procedure". The derogations from that appear on page 51 and over the page we find that, Judges of the High Court of Justiciary and the Court of Session, the Chairman and members of the Scottish Land Court, sheriffs principal, temporary sheriffs principal, sheriffs and temporary sheriffs are excluded from Group 22 by paragraph 15 of Part II of Schedule 10. I think the noble Lord, Lord Mottistone, is acknowledging that I have answered that question, but perhaps it is right, seeing that he has drawn attention to the words "if, and only if" appearing in line 32 on page 47, I should again draw attention to the words which precede it; namely, Subject to paragraphs (a) and (b) below, a matter is included in the Groups …if, and only if, it falls within the subjects listed in them; but—…". The word "but" is important, and the phrase preceded by the word "Subject" is also very important.

Lord MOTTISTONE

May I ask another question, please, if the noble and learned Lord will forgive me? These two lists cannot be comprehensive of all matters that the Scots will want to do. If there is a subject which is not comprehended by either Part I or Part II, can it be assumed that that is devolved, or not?

Lord McCLUSKEY

If I had stuck to my notes I would have answered that question, but I will do so now. The important matter to note is that if a matter is not included in Part I of Schedule 10 it is not a devolved matter. In other words, there is reservation by silence. For example, you will find no mention of nuclear weapons in this Bill, so you may assume that they are not devolved. Defence is not devolved and foreign policy is not devolved. One does not have to specify. It can be done, of course: one can list devolved matters and one can list reserved matters, but that is not the policy of the Bill. Within the context of various clauses the notion of a reserved matter is used for a limited purpose. One finds that, for example, in Clauses 35, 36 and 37.

6.32 p.m.

Lord HUGHES

Perhaps I might take this opportunity to ask to have on the record a question which I have already put to my noble friend Lord Kirkhill and to which, in correspondence, I have had a reply. As my noble and learned friend knows, I am involved in another look at things legal in which the question of jurisdiction on divorce matters will inevitably come up. One of the points which are regularly being put forward is the possibility of divorce being dealt with in the sheriff court. The Part II to which my noble and learned friend referred has, in the matters not included—I am referring now to paragraph 16(c) at the bottom of page 51—the jurisdiction of the Court of Session over "any question of status, right or obligation"; I will not read on.

The answer, as I have been given it, is that within that it will be impossible to take divorce away from the Court of Session and give it to the sheriff court, but it would be possible to add to the jurisdiction of the sheriff court by making it possible for divorce to be dealt with. So the Assembly, by legislation, could create concurrent power, but it could not take away the power from one court and transfer it to another, though it could add it. Am I putting the matter correctly? Is this the position which the Bill makes possible?

Lord McCLUSKEY

I shall shortly answer that either "Yes" or "No", but let me work towards the answer. The courts are devolved. W'e see that in the group to which I have referred in Part I. My noble friend has referred to paragraph 16(c), but, of course, that is qualified by words over the page, in lines 4, 5 and 6 on page 52, where the wording is as follows: The matters above do not extend to the continued existence of the privative nature of any jurisdiction…". The significance of those words is that at the moment the Court of Session has exclusive jurisdiction over actions concerning status. That is a privitive jurisdiction; it excludes the jurisdiction of other courts. These words have the effect that the privitive jurisdiction of the Court of Session is not protected. In other words, as my noble friend suggested, the answer is, Yes, the Assembly can legislate to allow divorce in the sheriff court, but they cannot take away from the Court of Session the right to entertain actions concerning status, including actions of divorce.

Lord HUGHES

I am grateful to my noble and learned friend for that answer.

Lord DRUMALBYN

May I make a point which is perhaps important for the understanding of the Bill by people who are interested in reading it? If one looks at the groups, one finds that up to Group 7 the numbers of the groups exactly correspond with the matters not included in the groups in Part II. After that, apparently, that system broke down; they could not go on with that very easily, because they wanted to keep the numbers running straight through. Would it not have been easier, and could it not still be done, to have had the matters not included in the groups numbered in accordance with the groups? And, if there is nothing which is not included in the groups, then there will be no similar reference in Part II. I hope the noble and learned Lord sees what I mean.

Lord McCLUSKEY

Yes, I do.

Lord DRUMALBYN

I should have thought it was possible to follow this right through with the groups and then to add at the end those matters which are referred to in Part II which are not included in the groups at all. Could that be considered?

Lord McCLUSKEY

That is not really possible. There is no planned correspondence between the groups in Part I and the paragraphs in Part II. I agree with the noble Lord that it would appear, if you look at it, that paragraph 1 of Part II is related to Group 1 in part I, but it is not necessarily so. For example, if you take the first item in paragraph 1 of Part II on page 50 it is the control of drugs. That is excluded, but it is not excluded only from Group 1, which relates to health; it is also excluded from Group 26, which relates to crime. One can do that many times over; but, really, what it comes to is this, that each of the matters specified in Part II of the Schedule is taken out of devolution, no matter under what head you might get it in under Part I. There are various things that could come under different groups in Part I because of the construction of this, and they have got to be excluded. For example, if you simply relate paragraph 1 to Group 1, you suddenly find that it is not excluded from devolution under Group 26. So it does not work the way that the noble Lord, Lord Drumalbyn, suggested. En other words, it cannot be done.

Lord BURTON

May I thank the noble Lord for that excellent description? This is a problem which I tried to get answered last week and again yesterday, when we were referring to the Highlands Development Board. He has to a large extent answered it, but there is still a little complication because, though it was clearly pointed out that the Highlands Development Board was devolved, it plainly says on page 58 that the Act setting up the Highlands Development Board is not included. This really does cause enormous confusion. Would it be possible, in Part III of the Bill, to specify which Acts are included? I think that would clear the situation a great deal. They have put in all the Acts which are only part included and some of the ones which are not included, and if we actually specified the ones which were included it might help.

Lord McCLUSKEY

I was not here when that was said, although I am sure I was here when the noble Lord thought it was said, because I do not think it was said that the Highlands and Islands Development Board was devolved. What is devolved is matters. Of course, where there are existing agencies, whether it is the Scottish Development Agency, the Highlands and Islands Development Board or the like, there are provisions in the Bill about giving directions or guidelines, and that kind of thing, but you do not devolve the Highlands and Islands Development Board; you devolve matters. I am talking at the moment about Schedule 10.

6.40 p.m.

Lord POLWARTH

I hesitate as a layman to plunge into this legal thicket, but I feel bound to add a word in support of my noble friend Lord Selkirk. One of the leading industrial companies in Britain with which I have a connection has taken this Bill extremely seriously and has set up a working party, including its leading corporate legal staff, to go into the implications of it for the company. They had a number of specific minor points, but the main point made by them here—and this, as I say, included people well-versed in corporate industrial law—was the question of the complexity and confusion of the layout of the Schedules.

To quote only some of the points: the Act in Schedule 10 lists chronologically rather than by subject—salmon fisheries, anatomy, and goodness knows what—all following on without any logical sequence. Surely some way could be found of grouping them by subject. They are copiously laced with double negatives. For example, page 61, line 4, says: The Development of Tourism Act 1969.…Not included, except that the matters dealt with otherwise than in …section 1(2); sections 7 to 16;… Schedule 1… are included". And they point out that both Schedule 10 and Schedule 11 have beers laid out in such a way as to require an excessive amount of work to discover their effects. We have created a jungle through which the layman—and in this case, the lawyer—will have great difficulty in blazing his trail. They point out that a reader wanting to study in detail the effects of the Bill on the problems of road transport will have to go through at least six separate stages moving from Schedule to Schedule and to other Acts and back again; and they wonder whether there is not some possibe solution to simplifying this. Not being a lawyer, I do not know whether this is feasible. They suggest that it might be possible to combine Schedule 10, Part I with Part 11 so that the exclusions and limitations could be seen, looking at them together. They wonder whether Schedule 10, Part III and Schedule 1I could be combined in tabular form, listed by subject matter showing which sections are reserved, which devolved to the Assembly and which to the Executive only.

I do not know whether that is possible. It would be longer, undoubtedly, but I think that the main point is this: These provisions are for the benefit of the ordinary people of Scotland and those who do their business there. Even if it is impossible—and I admired the noble and learned Lord's explanation of why it was impossible, even if I did not understand it all—could the Government undertake, in the event of this Bill being enacted, that the Government will publish some vade mecum as to the combined effects of these Schedules on devolved matters so that they may be more easily comprehended than is the case with many of your Lordships today.

Baroness ELLIOT of HARWOOD

I should like to add one word on much the same lines as my noble friend Lord Polwarth. I should like to congratulate the noble and learned Lord very much on the extraordinarily skilful manner in which he tried to decipher some of the indigestible information which is contained in all these Schedules. This is really what depresses one so much about this Bill: that the thing is really not workable. I cannot think how many civil servants must have sat around reading all these Acts and deciding which came under the jurisdiction of the Assembly and which could not be devolved. It is fantastic the care and so on that has been given to this particular thing; but it really does make it quite impossible, I think, to know how to proceed.

If one were a Member of the Assembly or a member of a local authority and wanted to try to bring forward something which one thought would be an improvement in Scotland, one can imagine the amount of people that one would have to consult—among others, no doubt, a number of lawyers. This is art absolute bonanza for the lawyers. I do not mind. I am all for people being employed as much as possible. We all know that employing lawyers is rather a slow process and also very often expensive. It may be that their advice is worth all the money that we pay them. I expect it is. I am not running down the lawyers. The fact is that it is expensive. If one is going to try to take any action under these three Schedules, the very start of it would be almost impossible.

If I were in the Assembly, or had been still in local government, I cannot think of the depression that I would feel if I were trying to involve myself in some legislation which was partly devolved, partly not devolved and in which all these different enactments and matters that cannot be enacted are listed very carefully here. It is a perfect maze through which I cannot believe that anybody could find their way. Certainly, no ordinary person could possibly do so. You would require to be either someone in a Civil Service office or a civil servant or a lawyer before you begin to understand the thing at all.

I think that we are going to go through the Schedules very carefully in this Committee so that I am not going to make a comment on individual matters since they will all come up when we discuss Schedule 10 and the various pages that follow and the three clauses which the noble and learned Lord so carefully described to us. But I think this is going to be quite impossible. I cannot believe that the Government feel happy about it. I cannot believe that somebody should not take the whole thing back, think it all out again and try to make it simpler.

The groupings that my noble friend suggested are certainly a very good idea. Other Members of the Committee have suggested other groupings; while some divisions seem to me to be really very odd. For instance, I read that the National Library of Scotland has power to recommend to Her Majesty the appointment of the members of the board of trustees, but is not included in the devolved subjects. Why bother to have a provision that the appointment of the board of trustees should be devolved? The National Library of Scotland, like any other national library, wants to have the widest territorial basis possible and a wide number of interesting and brilliant people to choose from. I do not say that the board of trustees might not be well chosen by a devolved Assembly or treated as a devolved matter; but why bother about it? It only adds to the complexity. Either devolve the whole National Library of Scotland—which, I think, would be a great mistake—or leave it in one section. I picked that out at random. It merely struck me when I was looking through the Bill just now.

Surely, it is possible to simplify this. If you do not do so, in my opinion it will be such a tangle and such a problem and so difficult to legislate or to find out what the legislation means that, apart from a glorious method of employing vast quantities of civil servants and a good many lawyers, the ordinary person is going to be completely flummoxed. I hope that the noble and learned Lord will realise that this is quite an impossible arrangement and that it should be looked at very carefully again.

Lord BURTON

May I add to what my noble friend Lady Elliot has said? I think she is absolutely correct. It seems to me that the problem is that Part I is too wide-ranging. Let us take housing. It could cover a multitude of sins. All sorts, every time, is very wide-ranging. The only way one has of defining whether an Act was in or was not in, one would have thought, would be in Part III. The question I put to the noble and learned Lord, which I do not think he answered, was: Is it not possible to put in Part III those Acts which are actually devolved?

Lord McCLUSKEY

I would remind the noble Lord that we start with thousands of Acts which may have a bearing on matters which are or are not devolved. It must be remembered that we have already been through clauses that make it clear that the Assembly has within its legislative competence the power to repeal an Act of Parliament. Therefore you cannot start off by saying: "We devolve the subject matter within this Act of Parliament", because that leads to complications as the years go by. The Assembly repeals Acts of Parliament, but it has to keep a kind of glossary of all the repealed Acts so that someone can go through the Scotland Act to the repealed Act of Parliament to find out what the subject matter was that was devolved. The devolution is done by specification of subjects and matters contained within them in Part I of Schedule 10.

The Bill is being criticised for being complicated; the noble Baroness, Lady Elliot, has just made a criticism of that kind. I must say that that criticism is misconceived. This is complicated, but to say that it is unduly complicated is, in my submission, unsound. If you want to look at complicated Statutes, look at the Income Tax Acts, look at the Taxes Management Acts. I have several copies of these. I get one set per year in my official capacity and I read them avidly. They go to some five volumes in the edition which I have received, which has no annotations at all. They are immensely complicated, and they are immensely complicated because, in a sophisticated and complex society like ours, when you try to apply the laws you do not just write the Ten Commandments: you have to write complicated Statutes. When the noble Baroness says to me: "We must simplify", I would say to her that the price of simplification is uncertainty, and what we achieve in the Statutes in the way we draw them is reasonable certainty.

Of course, you have to go to someone for advice as to what the Statute means; but you have to go to a plumber for advice if you have leaks in your house, and you have to go to an accountant for advice on tax matters. That is the nature of our society. But to suggest that this Statute is unduly complicated is, in my submission, a misunderstanding in the context of others. Is it really more complicated than the annual Finance Act? I would think not.

The noble Lord, Lord Polwarth, mentioned the possible combination of Parts I and II. I answered that when replying to the noble Lord, Lord Drumalbyn, and I would rest on the reasons I gave there. He asked whether the Government would publish a vade mecum. No doubt someone will, but I think it will be found that the ordinary member of the public, who figures so much in our debates, is not going to be desperately interested in all the provisions of Part III of Schedule 10. By and large, the provisions concern the responsibilities of those who have functions to perform and legislation to introduce into the Assembly in Scotland. In so far as it concerns business, I have no doubt they will have to take advice as to how they are affected by these provisions; but I do not think that is a different exercise in character from the kind of advice they have to take about the ordinary Statutes, whether on tax matters, on transport or on anything else which goes through this Parliament at the rate of some 18,000 pages per decade at the present time.

Baroness ELLIOT of HARWOOD

May I just say to the noble and learned Lord that of course we all know the Budget is extremely complicated and we do have to get advice, mostly from accountants, as to how the Budget is going to affect us. We know that: it has been going on and it is getting worse. What is so sad about this Bill is that you are turning something which is, on the whole fairly simple—that is, the relationship between the ordinary voter or ratepayer in Scotland —into such a complication that you are going to do with this Bill what is already being done, I admit, by the Chancellor of the Exchequer.

I do not want to add to the complications attending the ordinary citizen. I want the wretched ordinary citizen not to have to meet complications over every single thing he has to handle in his ordinary life. I admit that the complications of the Chancellor of the Exchequer are appalling, and I am not suggesting that is something that we like: we do not. But honestly, if you are going to add all these things to the ordinary subjects of life which we can already deal with quite happily and well with the Scottish Office within the United Kingdom situation, you are simply adding a hundred more complications and, to me, that is very sad indeed.

Lord POLWARTH

May I ask one further point of the noble and learned Lord? Is there in fact any reason why the Acts in Schedule 10 could not be listed by subject or group rather than chronologically? I have not got the Wales Bill with me, but I am told that they are listed by subject in that Bill. Certainly in Schedule 11, where there are references to Acts these are listed in groups. Would it not be possible to do this without making more difficulties?

Lord McCLUSKEY

The chronological order was chosen because, in the view of the draftsmen, that simplified matters. If you know that there are provisions in a Statute which concern your business—let us say, for example, the Transport Act, or whatever it may he—then it is very easy to find out. You know what the Act is; you go straight to the table and you go down until you come to the relevant date, and if you find no entry, fine. If you find an entry there, then you consult the enactment or the parts of it that are referred to. It is really not such a difficult exercise when you come to do it. I do not really think there is anything I can usefully add at this time.

6.58 p.m.

Lord HARMAR-NICHOLLS

Listening to the exchange, I think that the noble and learned Lord has given an answer that was plausible as far as it affected my noble friend Lady Elliot; she only claimed to be a layman. But the point that the noble and learned Lord neglected to take into account was this: my noble friend Lord Polwarth told the Committee that this organisation, which is a formidable one, had had the expert advice of their legal advisers, who are not unaccustomed to interpreting legislation. I accept at once that the noble and learned Lord is right in saying that no legislation can be simple. It is always intricate and, to the layman, seems unnecessarily intricate. But of necessity, no simple legislation will ever work, as he said.

But what is his answer to the legal advisers? The answer he has just given is that the Parliamentary draftsmen have said that to deal with it chronologically is the best way, in their view. When Parliamentary draftsmen have passed it on, they have finished with it; but the people who gave advice to the Committee, through the mouth of my noble friend, are the ones who normally have to take this and deal with it when it has to be worked out as to how it affects individuals. He has told the Committee, passing on the advice of his legal advisers, that this is more intricate than is normal. He has told us that his advisers, who will have to work it, said that this is even more difficult than one normally expects legislation to be.

With that sort of evidence in front of the noble and learned Lord, surely he can say—not because of the laymen members who are merely making a layman's contribution, but in answering those who were quoted by my noble friend—that the Government will look at it? Their advice in operating this is rather more important than that of the Parliamentary draftsmen, who have finished with it once it becomes an Act.

Lord McCLUSKEY

The noble Lord used the word "plausible", and I am sorry that he did so. I was not trying to be plausible; I was trying to be helpful—

Lord HARMAR-NICHOLLS

It makes better sense.

Lord McCLUSKEY

Well, I do not know if it is better sense; but I think he misconstrues the character of the problem. It must be remembered that what we are defining in Section 10 is, in the first place, legislative competence. If the Scottish Assembly does nothing, the law in relation to health, which is devolved, or in relation to nuclear weapons, which is not, remains the same. When the Assembly has a mind to change the law about health, in so far as it is competent to do so, because of the provisions of Schedule 10 taken as a whole, then it sets about introducing a Bill and passing it. At that stage, the question of the true meaning of Schedule 10 arises, because it is that Schedule which defines the legislative competence of the Assembly. This Bill does not change the law in relation to health; it changes the legislative competence. It is not Westminster which will be legislating in future about health in Scotland; it is the Scottish Assembly.

When it comes to the other aspect of the matter—what we have been calling, as a form of shorthand, executive devolution—and the business friends of the noble Lord, Lord Polwarth, find that a Scottish Secretary is seeking to act in a particular way, it is at that point that they ask, "Has he the power to do that?" It is at that point that the question arises, but it arises narrowly in relation to his Act or his subordinate Instrument. So that the ordinary man in the street does not have to carry a copy of the Scotland Act in his pocket, for fear that he breaks the law. The law is as it is contained at the moment in the United Kingdom Statute and in the common law of Scotland, for people in Scotland, and that is the way it remains, until the Legislature in Scotland seeks to alter it.

Lord WILSON of LANGSIDE

I share the admiration of the Committee for the explanation of this Schedule which the noble and learned Lord gave us. But I think that he did himself less than justice when, in reply to the noble Baroness, he drew an analogy between these constitutional arrangements and the complexities of our Finance Acts and similar measures. I share the concern of the legal advisers of the noble Lord, Lord Polwarth. The matter can be simplified and an attempt was made to simplify it in another place, but the Amendments to that end were rejected.

There are a number of ways in which it could be done. If it had been desired to devolve those matters presently within the jurisdiction of the Secretary of State for Scotland, that could have been provided for without any of this kind of complexity and I should have thought that it would not be beyond the wit of man to do that. After all, this has not the complexity of the Finance Act. This is something which is a constitutional measure, in which there should be clarity. What startles me is that this is much more complicated than the Treaty of Rome, and I think that we should try again.

Lord McCLUSKEY

If I may say so to the Committee, the noble and learned Lord is concealing the issue here, because, first, if you devolve to Scotland all the matters for which the Secretary of State for Scotland is responsible, it is a totally different kind of devolution from the devolution contained in this Bill. Secondly, instead of people being able to find, by looking at this Bill when it is on the Statute Book, what is the extent of devolution, they have then to start, in 1981, 1991 or the year 2010, to ask themselves what were the powers of the Secretary of State for Scotland in 1978, and they will be found scattered over a dozen, 20, 30 or even hundreds of Statutes. Accordingly, what the noble and learned Lord calls "simplification" is really a concealment of the problem. What we have done is to face up to the problem and, if it has the appearance of complication, it is at least honest.

Earl FERRERS

I wonder whether I may ask the noble and learned Lord one question. I agree with a number of people who have said that his exposition has been quite admirable, particularly without any notes to go by. If I may say so with respect, it is quite extraordinary how he has mastered this problem and explained it. Indeed, I also admire the fact that he has almost persuaded one that it is really quite simple. I am bound to say that I find the whole matter wildly complicated, but that need surprise nobody.

What I should like to ask is this. He emphasised once that what this made perfectly clear was that it was matters which were devolved, and Schedule 10 refers to the various Acts and the sections of the Acts which are, and which are not, devolved. But I wonder whether I may draw the noble and learned Lord's attention to page 65, which refers to the Control of Pollution Act. If the noble and learned Lord would like to take a little time to consider this, I shall be happy for him to do so. But after referring to the Act the Schedule states: The following matters are not included— (a) those dealt with in section 21, except in so far as they relate to the production of heat from waste". Presumably you can say that Section 1 is not devolved, or Section 23(2) is not devolved. But how can you say that a certain section is devolved, unless it happens to refer to something such as the production of heat, and yet it is devolved as regards every other production? It seems to me that that is a complication to which the noble and learned Lord might like to address his mind, because it is not, as I see it, a straight devolution or not of sections of Acts. It is apparently the devolution of sections of Acts, as to how they relate to certain processes which the Act covers. I should have thought that, even under the noble and learned Lord's interpretation, that makes it not quite so simple.

Lord McCLUSKEY

I hope that this is the last time that I will speak to your Lordships on this matter. But to take that example, I do not have the Act before me and I do not carry its provisions in my mind. However, in column 2 the wording is, again, the right wording. It is matters that are not included, and the matters that are not included are the matters dealt with in Section 21. If you look at Section 21, you will find that it covers certain matters, and there is an exception, for policy reasons, in relation to the production of heat from waste. But I am sure that your Lordships do not want any more heat from me, so I now sit down.

The MARQUESS of LINLITHGOW

I am very sorry to get the noble and learned Lord up again, but may I make what I consider to be a helpful and simple suggestion? I apologise if it has been suggested before, but I was outside when the debate started. When I was trying to understand this Bill, I found myself bewildered by reading through Schedule 10 and the various groups, and I then thought that, happily, the matters not included in Part II will naturally bear the same number as the groups. But they do not. I now understand that the point has been made. But could the numbers of the groups not be printed against the items?

Lord McCLUSKEY

I think that those who were unfortunate enough to be in the Chamber when I addressed myself to this matter will have heard the explanation, and the noble Marquess will find it in the Official Report. I think that this is not the time to repeat it.

The Earl of SELKIRK

I did not intend to develop such a wide-ranging discussion on this matter, but it reveals a very deep anxiety and I am not in the least surprised. We were all filled with admiration of the manner in which the noble and learned Lord dealt with it, and I shall not tempt him to come again into the fray. But I am bound to say that I was sorry he compared this Bill to the income tax system, which at least does not have any certainly about it, and I think that we might have tried a little harder in our efforts. We shall be examining a number of these matters later on, and, at the moment, I shall content myself with begging leave to withdraw this Amendment.

Amendment, by leave, withdrawn.

[Amendment No. 371 not moved.]

Clause 59 agreed to.

Lord STRABOLGI

I beg to move that the House do now resume.

House resumed.