Scotland: Alternative Forms of Government

HL Deb 04 July 1995 vol 565 cc1003-65

3.4 p.m.

Lady Saltoun of Abernethy rose to call attention to the alternatives canvassed for the government of Scotland and to their effect on the future of the United Kingdom; and to move for Papers.

The noble Lady said: My Lords, the menu for the future government of Scotland offers three main choices: first, the present system; secondly, a devolved parliament for all domestic matters within the Union; and, thirdly, outright independence. For nearly 300 years the present system has not served Scotland badly, although there is always room for improvement. Productivity is high; the standard of living has risen dramatically in the past 20 years, and I would be pushed to recognise the country I know in some of the descriptions of her peddled by the advocates of change which suggest a third world country, sunk in grinding poverty under a repressive regime. But the grass on the other side of the fence has always traditionally looked greener.

It is perhaps not surprising that there has been a great resurgence of enthusiasm in Scotland for the concepts of either a devolved parliament within the United Kingdom or for Scotland leaving the Union and becoming once again a separate country. For the past 16 years she has been governed by a Conservative Government, despite having elected a majority of Labour MPs to Parliament. Recent suggestions on the part of the Government that Northern Ireland should have its own assembly have inevitably fuelled the demand for a Scottish parliament. In 1989 the Scottish Constitutional Convention was born in order to formulate proposals for one. It consists of Liberal Democrat and Labour MPs, MEPs, regional and district councillors, and representatives of the trade unions, the Churches and sundry other organisations.

Eventually, it recommended a directly elected parliament responsible for all functions except defence, foreign affairs, central economic and fiscal affairs and social security policy.

That parliament would initially consist of 112 members, 72 being elected on the first-past-the-post system from the present Westminster constituencies; plus 40 additional members elected from party lists, five being allocated to each Euro-constituency, in order to bring the party representation more into line with the proportion of votes cast for the various parties in each of those constituencies. Thereafter, an electoral commission would be set up to refine the system and the number of MPs would be increased. A more equal gender balance than obtains at Westminster would be aimed at. Initially, the number of MPs at Westminster would remain at 72, but this number might later be reduced to 55 or 60.

The government of Scotland would be financed by the allocation of all Scottish income tax and all Scottish VAT to the Scottish parliament. Equalisation would continue to be based on needs assessment, starting from the present Barnett formula basis. The Scottish parliament would have the power to vary the income tax rate by up to 3p in the pound for those residing in Scotland. Local government would he financed by a local income tax.

The Scottish parliament would establish a representative office in Brussels to put, clearly and directly, Scottish interests to the European Commission. Scotland would also have representation, through the Scottish parliament, on United Kingdom ministerial delegations to the Council of Ministers.

The vexed West Lothian question would ultimately be solved by giving Northern Ireland, Wales and England, or regions of England, their own parliaments with similar powers, and turning the Westminster Parliament into a federal parliament with a reformed House of Lords. Pending that solution, Scottish MPs at Westminster would continue to vote on English domestic matters, just as the Members of the Stormont Parliament used to do. What seems the obvious solution, that they should simply not be allowed to vote on the domestic affairs of the other three countries, was not considered practical because, for instance, a government with a slender majority might not be able to get their English domestic legislation through in another place without the Scottish vote. There would be no devolved second chamber. It would be a single chamber parliament.

That is a brief resumé of the proposals of the Scottish Constitutional Convention to date. A number of questions pose themselves. Why should social security not be devolved? Surely that is a domestic matter. Is there any reason to suppose that Labour and the Liberal Democrats, who had some difficulty in coming to an agreement (with a dissenting minority) about the initial voting system, would ever agree about the permanent system? The Liberal Democrats want a proportional system which reflects the considerable number of voters who vote for them, but do not see their views reflected in the number of Liberal Democrat MPs elected, whereas Labour favour a first-past-the-post system, which gives them more parliamentary seats than their proportion of the total vote would entitle them to.

They do not agree about the way in which the question of gender balance should be tackled either, Labour wishing to make the 50:50 balance mandatory, regardless of the quality of the MPs on offer, while the Liberal Democrats were opposed to positive discrimination. I am not quite sure whether that disagreement has been resolved permanently, but the Constitutional Convention agreed in its October 1994 report to a number of measures designed to make membership of parliament easier for women, combined with a target of, say, a 40 per cent.-plus representation of women and what it describes as a "fair" representation of ethnic minorities within five years of the setting up of the parliament.

Fifty-five or 60 MPs seems an excessive number to continue to represent Scotland at Westminster once so much has been devolved to a Scottish Parliament and would be a source of expense. Perhaps that is to fight for the equalisation payment, which would certainly be at serious risk, for why should the English, Welsh and Irish Members of Parliament agree to subsidise expenditure over which they had no control? With the best will in the world, they would be unlikely to do so, for their voters would not thank them for it.

Turning to the equalisation payment, which bridges the gap between the revenue raised by taxation and the amount of government expenditure in Scotland and which amounted to some £7 billion or £8 billion in 1992–93, if it were to cease, how would the gap be bridged? Three pence on income tax would not even look at it. One penny on income tax raises about £150 million in Scotland—and your Lordships can all do simple arithmetic or little sums on pocket calculators. I wonder whether such costings as have been done take account of the additional cost of 112, and ultimately considerably more, MPs, their salaries, expenses and the cost of administering the Scottish parliament. How will that be paid for other than by raising income tax at once? Surely taxation in Scotland would be higher than elsewhere in the United Kingdom—at any rate until the proposed federal scheme was in place when government would cost more in all regions.

A local income tax was proposed at a time when the poll tax was in place. Is it still envisaged that that will take the place of the community charge?

Has the European Commission in Brussels been consulted about the opening of a Scottish representative office there, and would it be prepared to co-operate with it?

Regarding the "West Lothian" question and the federal solution which the convention proposes to impose upon the United Kingdom, do the English "regions" want their own parliaments? Are they prepared to pay higher taxes for them? What would those "regions" be? Surely they would be quite artificial—and can anything as artificial as they would be have any cohesion? How would the regional boundaries be worked out? Why should the English have a federal system imposed on them to suit the convenience of the Scots?

A report published recently by the Institute of Public Policy Research rejects the federal solution and suggests that Scottish MPs should not be able to vote on English domestic legislation, however inconvenient to the government of the day. What would be the position of Scots Peers in the House of Lords? How could the Secretary of State continue to exist when his job had been taken over by the Scottish parliament? What therefore, if any, representation would Scotland have in the Cabinet? Is the Treaty of Union to be amended—or what? Those are just a few of the questions which remain unanswered.

Anyone reading the Scottish National Party's blueprint for an independent Scotland, as set out in its last election manifesto, might be forgiven for thinking that they had happened upon a recipe for Utopia. Everything is going to be perfect for everyone in the best of all possible worlds with guaranteed fundamental rights and liberties for everyone; the outlawing of discrimination on grounds of sex, race, colour, religion, personal beliefs, status or sexual orientation; economic and social rights guaranteed, covering working conditions, retirement pensions, housing, health services, and education; freedom of information except where necessary in the public interest; the right of the Scottish people to sovereignty over their territory and natural resources, recognising the rights and obligations of European Community membership which shall he subject to confirmation by a referendum; the right of Scottish citizenship to all Scottish residents and persons born in Scotland and such others as the parliament of Scotland may prescribe; single chamber government, elected every four years by proportional representation; the head of state to remain the Queen and her successors in a limited and constitutional monarchy until such time as the people of Scotland decide otherwise; supreme judicial power to be vested in the Court of Session and the High Court of the Justiciary, the independence of the justiciary to be guaranteed; the right to vote for all over the age of 16 and provision for the holding of referenda. It is heady stuff.

Along with that manifesto, we have to take Recovery in Scotland—Make it happen now! which details all the wonderful things which the government of an independent Scotland will do to regenerate the economy, create wealth and jobs, build houses, educate children, abolish poverty and improve social security and health care.

Recovery in Scotland has at least been costed, although the costings may be rather optimistic in some cases. For instance, a lot of additional healthcare is to be financed by raising the duty on cigarettes by 19 pence per packet of 20. I suspect that an increase of anything like that magnitude would be self-defeating, because so many people would give up smoking that nothing like the £100 million which the increase was designed to bring in would actually be forthcoming.

The national insurance contribution ceiling is to be abolished, so that (and I have upgraded the figures to today's rates) anyone earning more than £22,880 a year will contribute at the rate of 10 pence in the pound on all their earned income over that figure. Since they will not, as I understand it, receive increased benefits or a pension commensurate with the extra contribution paid, this amounts to an income tax increase of 10 pence in the pound on all earned income in excess of £22,880. Now £22,880 is not a particularly princely salary. It is the kind of salary earned by lower to middle management, which amounts to quite a large number of people, and their pockets are going to be hit—and pretty hard.

What has not been costed is running Scotland as it is run at present, with the additional expense of an independent parliament, cabinet and ministers, and foreign service, without the equalisation grant. As far as I can make out, the deficit is to be made up in two ways: first, by withdrawal from NATO and the Trident programme and the removal of the Polaris nuclear weapons fleet. The savings from this will be invested in health, housing, education and jobs, but at the same time we shall have strong conventional defence forces, and the cost of those is not mentioned. Secondly, we shall have the benefit of all the North Sea oil revenues from north of the latitude 55 degrees 50, and the combination of those and the savings on defence will plug the gap. In its 1992 budget, the Scottish National Party forecast oil revenues of £9.6 billion over the four years from 1991–92 to 1994–95. After three of those four years, only £3.6 billion has been raised, with only £1.6 billion forecast this year, leaving the small matter of a £4.4 billion shortfall; and in the long term, oil and gas are hound to be diminishing assets.

Many other questions pose themselves. For instance, we are to have a referendum to decide whether to remain in the European Community, but what certainty have we that an independent Scotland is going to he accepted as a member of the Community, or, if she is, what voting rights would she have, and what voting rights would the rump of the United Kingdom have? What about the United Nations Organisation? What about the G7?

An amicable treaty is to be negotiated with the remainder of the UK, giving Scotland the lion's share of what are now the United Kingdom oil revenues. What makes the nationalists think that the rest of the United Kingdom will be prepared to agree to that, let alone do so amicably?

With the equivalent of 10 pence on the income tax for any employee earning over £22,880, and swingeing increases in road fund tax, petrol, wine and cigarette duty, apart from any other additional taxes which have not been mentioned, is there any reason to suppose.that many business and professional people would not leave Scotland if it were possible for them to do so?

What other categories of person than those resident or born in Scotland is it envisaged will have Scottish nationality? What about the very many Scots born or resident south of the Border who at present are still Scots? How will this affect, for example, their right to own property in Scotland? What about Orkney and Shetland? They have never been very enthusiastic about becoming part of an independent Scotland and may wish to remain with the rump of the United Kingdom. Some in those islands might wish to become part of Norway, as they once were. What are the long-term prospects of the Queen continuing as Head of State? The Scottish Nationalists always used to be republican. Has this leopard really changed its spots?

Those are just a few of the questions which remain unanswered. What is certain is that the uncertainty as to the future which the possibility of devolution or independence has created is not helpful to the expansion or stability of industry. Let us take note of the effect of the prospect of independence on the economy of Quebec: a flight of capital; an exodus from Montreal of corporate headquarters; and a freeze on investment. Any increase in industrial costs which might result from independence would be very damaging indeed, especially to exports, and would lead to firms with bases in England or international firms withdrawing from Scotland.

As regards the devolution proposals of the Scottish Constitutional Convention, many questions relating to taxation, cost and the relationship with Westminster have not been answered. Unless they were to be satisfactorily resolved it would not work, and if a devolved parliament were established and did not work, the result would he an increased demand for independence. The convention sees its proposals as a formula which would save the United Kingdom. If all the four countries comprising the United Kingdom were happy with the federal option and the additional cost of it, and if all the national governments had no tax-raising powers so that no part of the United Kingdom would be more highly taxed than another, it might work. Then there would be the great bonus to the Westminster Parliament of a huge reduction in the volume of legislation and consequently more acceptable hours and working conditions. I should have some sympathy with that concept; I believe that many of us would. As they stand, the constitutional convention's proposals fill me with foreboding. On 8th June the chairman of the Scottish National Party said: Most people recognise that once Scotland starts down the road of constitutional advance, we are unlikely to move backwards".

I fear that he is right.

I do not think that the level of support for political parties promising devolution or independence in their manifestos at a general election should be taken as support for devolution or independence because there are too many other factors influencing the way people vote at general elections. I believe it has also happened that people who voted for the Scottish National Party in an election were horrified later to learn that they had voted for the break-up of the United Kingdom. They thought that they had voted for a devolved parliament. Before any legislation were brought before Parliament all the questions that I have asked and many others would need to be answered satisfactorily, detailed proposals would need to be published, their probable effects considered and a referendum held. If federalism were involved that would need to be done not only in Scotland but throughout the United Kingdom.

I look forward to a very interesting debate and, I hope, to hear answers to some of my questions. I beg to move for Papers.

3.24 p.m.

Lord Campbell of Croy

My Lords, I thank the noble Lady, Lady Saltoun, for the clear and effective way in which she has introduced the debate. It is on proposals for devolution and therefore I shall not speak on independence for Scotland—that is, the break up of the United Kingdom, which is the aim of the Scottish National Party—although one (devolution) could lead to the other if an unstable system, not carefully thought out, were created.

Proposals for Scotland must also be considered together with their effects on the rest of the United Kingdom. For 40 years or so the idea of Scotland in a federal system in the UK has attracted some support, in particular from the Liberal Democrat Party. If that were for the four parts of the United Kingdom it would be top heavy, England having 10 times the population of any of the other three parts. England would dominate and the United Kingdom could not be a balanced federal country.

It has therefore been proposed that England should be divided into seven or eight regions. That ran into immediate difficulties. I understand that most residents in England do not wish to be split in this way, with regional assemblies artificially created. And why should they be forced to do so? However, most favour more decentralisation, but not through another elected layer of government. The Labour Party's present proposals, as I understand them, would divide England into regions, presumably aiming for some similarity and balance with a parliament in Scotland. However, similarity is obscure because there is doubt about the nature and functions of the regional assemblies.

As recently as last January, a Labour document entitled Renewing Democracy, Rebuilding Communities stated: We should provide for an elected authority for each English region". However, on 5th March the Leader of the Opposition was reported in Scotland on Sunday as saying: We are not committed to regional assemblies in England". There have been other conflicting and inconsistent statements. What does the Labour Party propose for England? I hope that we shall hear today from the Opposition Front Bench.

Decentralisation would be favoured by a majority of people in the streets of Manchester or Newcastle if they were questioned by those conducting opinion polls. In Scotland the question put by such people was different. It was: "Do you favour a Scottish assembly?". For some 30 years, about 70 per cent. of the answers were yes. An assembly has been identified with decentralisation and more decisions being taken locally. In Scotland, an assembly and decentralisation have appeared to be synonymous. However, when a particular scheme for an assembly is formulated, wholesale disagreement breaks out; for example, on the extent of its powers and functions, whether it should raise taxes, how it should be elected and whether it should take over some local authority functions.

The Labour Government of 1974–79 experienced that. The assembly in the Scotland Act 1978 was to take over less than half of the functions of the Secretary of State, who would have remained with the Scottish Office. The assembly was to have an executive, so there would have been two executive bodies operating in Scotland causing confusion and creating an arena for conflict. The assembly would not have had tax raising powers. Grants were to be allocated from central government and it could be predicted that there would be continual complaints that they were not enough.

Another serious flaw in the Scotland Act was that the West Lothian question had not been solved. Perhaps I should remind your Lordships that Scottish MPs at Westminster would have continued to vote on English legislation on subjects which the new assembly would have dealt with in Scotland. The other side of the West Lothian question was: why should they be deprived of the role of legislating on those subjects affecting their Scottish constituencies because assemblymen were dealing with those subjects in Edinburgh?

Although a clumsy system for voting at Westminster was inserted in Section 66 of the 1978 Act, that did not solve the problem. I remind your Lordships that it applied only to Second Readings in another place and prescribed a 14-day period for second thoughts. It was not surprising in the referendum upon that Act that there was only a very small majority in favour of it. The number was well below the required threshold of 40 per cent. Labour Government Cabinet Ministers must have been relieved because to put that Act into effect would have been a nightmare as all the faults and confusion about the new assembly were exposed.

It took four years for that government to produce and put the legislation through Parliament. There are reports now that the present Shadow Cabinet is proposing legislation in the first year of a Parliament, if it wins an election and forms a government. Can that be correct? Four years were needed for a half-baked Scottish Bill in the 1970s. What preparation and consultation does the Labour Party think necessary now for legislation which will apparently also affect England and Wales?

In this debate, each of us is allowed only a limited time and I shall describe very briefly earlier events. The Labour Government proposed a Royal Commission on the constitution of the United Kingdom which was appointed in April 1969. It took four-and-a-half years and reported only four months before the general election was called in 1974 and a change of government occurred. The first chairman of that Royal Commission, the late Lord Crowther, who died soon afterwards in office, told me, as I was Secretary of State for Scotland in 1970, that he hoped that the report would be made within two years of the commission's appointment.

During 1970–73, I had hoped to issue a consultation document on the Home constitutional committee's proposals—anodyne proposals as they were. I was told that the new chairman, the late Lord Kilbrandon, and several members of the commission would resign were I to pre-empt their conclusions by doing so. When the commission reported, there was little time to consider and consult before a Labour Government followed.

The Kilbrandon Royal Commission report suggested that if a Scottish assembly were created, the number of Scottish MPs at Westminster should be reduced so that representation in proportion to population would be the same as in England. That would have brought the present 72 down to fewer than 60 Members. If there were to be a Scottish parliament, would that number be reduced further as in Northern Ireland when there was a parliament there before 1971? The electorate in the constituencies there were deliberately made larger than the average United Kingdom electorates.

There has been massive administrative devolution in Scotland which is not known or understood everywhere. Several ministries in Whitehall do not have functions in Scotland; for example, the departments dealing with health, environment and education. The departments of the Scottish Office are their equivalents in Scotland.

I have never been negative on the question of arrangements for supervising the administration of the Scottish Office. For example, 33 years ago, when I was Scottish Whip in another place, I offered proposals within government to make changes in the composition of the Scottish Grand Committee and in its scope, procedures and methods, including holding meetings in Scotland. Later, the Scotsman newspaper published a series of articles by me setting out those proposals. I am happy to say today—and agreeably surprised—that all those proposals have now been adopted and are incorporated in the Scottish system working now in the House of Commons.

In any move to create an assembly in Scotland, one factor must be that it is a stable, workable system. If it is not, it will play into the hands of separatists. I urge the opposition parties or any others contemplating constitutional change in relation to the position of Scotland in the United Kingdom to proceed with the greatest care and caution.

3.35 p.m.

Lord Carmichael of Kelvingrove

My Lords, I am sure the whole House will wish to thank the noble Lady, Lady Saltoun, for tabling this Motion. I was rather surprised to see that it referred to, the alternatives canvassed for the government of Scotland because I believe that there is only one alternative; that is, devolution. I thank the noble Lady for raising the matter and in particular for the first part of her speech in which she addressed the problems—and there is no doubt they will arise—in evolving a devolved system of government.

I should like to speak fairly briefly on the whole question of what the Government are trying to do. I believe that they are trying to mix up devolution and independence. In the debate in the Scottish Grand Committee of the other place on 17th May, there was, I believe, a quite deliberate attempt to confuse the minds of people and to concentrate only on the question of independence. I agree very largely with what the noble Lady said about total independence.

Some voices cry for an independent Scotland having no direct links with the other parts and countries of the United Kingdom. But all surveys and, much more importantly, election results over the years have shown clearly that although the desire for some form of home rule—however that is defined—is very strong indeed, the demand for complete independence is much weaker.

Let us take the example of the recent by-election in Perth and Kinross. A System 3 poll found that 52 per cent. of those voting Scottish Nationalist rejected the whole idea of independence. In that regard, I disagree with the noble Lady, Lady Saltoun, who said that the people who voted Scottish Nationalist did not know what they were voting for. It is clear from that poll that the 52 per cent. who voted Scottish Nationalist and did not agree with independence were simply making an anti-Conservative vote. They considered that to be the best way in which to keep the Conservatives from holding the seat. One must assume that the Scottish National Party will need to hold more than 30 seats in Scotland or receive a very substantial vote before we can accept its claim that the Scottish people want total independence.

I was closely involved in the earlier referendum. I was extremely annoyed with the Member in another place, George Cunningham, who proposed the figure of 40 per cent. It was an almost mischievous proposal to require a 40 per cent. vote—not of those voting but of the entire Scottish electorate—before the devolution proposals which we were putting forward could be accepted.

Noble Lords may recall that at that time the noble Lord, Lord Home, who was and still is held in great respect by most people in Scotland, said definitely, "Do not vote for these proposals. If we form a government, we shall put forward proper proposals for the proper government of Scotland." That was one of the reasons for the large number of abstentions. Noble Lords may recall that 33 per cent. were in favour, 33 per cent. were against and 33 per cent. abstained. I should not have supported any devolution proposals made on that rather shaky basis.

In the course of today's debate, our arguments must focus on devolution and away from separatism. I do not believe for a moment that most Scottish people believe that the total separation of Scotland from the rest of the UK is a possible proposition. I do not believe that it will come to that.

However, if there is a Scottish assembly, which I do want—I expect to hear at some point during today's debate that devolution is the ultimate road, the slippery slope, to independence—and the Scottish people feel their feet and decide democratically and very positively that they want independence, then, much as I deplore it and believe it to be quite wrong in a modern world, who should say that they should not have it if they democratically decide for it, knowing all the pitfalls? I do not see why we should not go forward. But it will not come to that.

Despite the strong sentiments that all of us in Scotland feel for our country, its history and its traditions, we are far too logical a people to pretend to ourselves that the break-up of the United Kingdom could be anything other than a disbenefit to the whole of the UK. Therefore, let us rid ourselves of the dangerous illusion that a totally separate Scotland would be viable or would be workable without having a relationship with the rest of the United Kingdom. The reality is that the Scottish people want much more say in their own affairs. But they have only shown real support for the SNP at by-elections.

One of my honourable friends in the other place, the Member for Dundee East, Mr. John McAllion, has examined the election results since 1979. They are interesting figures. Since that date 288 parliamentary seats have been contested in Scotland. The SNP has won 10 of them; that means that it has actually lost 278. Yet there is no doubting the fact that the SNP makes a good deal of noise and that it attracts a certain amount of attention in Scotland. However, I believe that it is a tension caused by frustration because Scotland does not have the power that it really should have. Last year the SNP poll gave the party 32 per cent., a record. However, in the election for unitary authorities in April—in other words, a real election when we were speaking about hard facts and real people were being elected—its vote dropped to 26 per cent.

Noble Lords may feel that I am spending too much time on the question of independence. However, I believe it to be necessary because it is a hindrance to the consideration of the real democratic deficit which we suffer in Scotland. It is easier for the Government to encourage us to chase that will-o'-the-wisp than to accept the obvious fact; namely, that the people of Scotland have elected 49 Labour Members and 10 Liberal Democrats who prominently stood for the policy of devolution.

In a letter to my honourable friend, the Member for Hamilton, the Secretary of State wrote: If the SNP were to secure a majority of Scottish seats at a General Election, then Parliament would have to give consideration to the position of Scotland within the United Kingdom. Following this consideration, it might then be appropriate for discussion to take place which could lead to the electorate of Scotland being consulted in a Referendum". That "majority" of seats is 37 seats that the Secretary of State says the Scottish Nationalists must get. The people who want devolution are 49 Labour MPs plus nine Liberal Democrats. That is 58 Scottish MPs. Yet we are not given the possibility of having a referendum or anything other than an attempt to smother the whole idea of Scottish independence.

The Secretary of State has been putting out some statements—easily knocked down—to try to avoid the debate about real democratic government for Scotland. Devolution is the only item on the Scottish agenda. I should like to emphasise that fact. I am sorry that the noble Lady who, I thought, started her speech so well, went on, as I said, to chase a will-o'-the-wisp.

I wish to quote briefly from a leader in the Financial Times of Friday, January 13th of this year which talked about devolution. It said: Devolution has a respectable enough international pedigree. Every other large state within the EU has regional government in some form; and while devolved or federal government is not a panacea for inter-regional tension—witness Canada"— and, of course, the Quebec question about which we have spoken and about which we are all aware— it can help to reduce it. The sustained determination of a large majority of Scots to secure greater autonomy will have to be answered at some stage. Failure to do so could be more dangerous to the union than Labour's relatively modest proposals for devolution. A devolved Parliament would give Scotland one level of Government more than England and Wales, but the number of executive tiers already varies across the UK". The leader concluded: Such an outcome would have rough edges. So does every workable constitution. Labour must show that it is ready to tackle such anomalies. It also needs to think hard about the desirability of instituting regions in England—a dubious policy which could jeopardise the whole endeavour. Yet Mr. Major's inflexibility on these issues is not an adequate answer to the tensions within the UK". Of course, I do not know, but we may not have Mr. Major. I am unaware as to how things are going in another place. However, I believe that we cannot dodge the idea that devolution is firmly on the agenda of the Scottish people.

3.45 p.m.

The Earl of Perth

My Lords, we are all greatly indebted to the noble Lady, Lady Saltoun, for raising the issue today. Indeed, the following two speeches were very impressive: namely, that of the noble Lord, Lord Campbell of Croy, who has great experience in such matters as he was, once upon a time, Secretary of State for Scotland, and therefore knows a great deal about the subject; and also that of the noble Lord, Lord Carmichael. However, it is quite clear from listening to those speeches that many questions are raised to which no one has put forward satisfactory answers. I am not surprised at that because devolution is a most difficult issue.

Perhaps I may start by saying that I am all for the Union. But, having said that, I am equally for the Scots being able to run their own affairs. The problem is how to marry the two concepts. Without endangering the Union, how can we have the Scots saying more and, indeed, deciding on how they want to run their own internal affairs?

Let us go back for a moment to the early days; namely, the time of the Act of Union. The people of Scotland did not want that Act, but those in power, with a suitably sugared pill, let it go through or, in fact, promoted it. For 300 years we have seen the outcome. There have been hiccups: there was the 1715 uprising and there was the one in 1745 which was brutally suppressed. However, after all of that, we had the age of Enlightenment in Scotland when we really did go forward in a great way. Whether it was on philosophy, on economics, on the Industrial Revolution and, above all, whether it was on literature, we showed the great contribution that we could make to the whole of the country's well-being. I stress, "the whole of the country's well-being". Let us also look abroad at, for example, the work of our missionaries and our military. We were a very important element in the Empire.

However, over that latter period the Empire was in decline. That inevitably made people restless. The Scots in particular were more and more anxious to run their own affairs. The first breakthrough, after pressure, came in 1885 when a Secretary for Scotland was announced. Then, to follow what happened afterwards, we had the Secretary of State for Scotland and a Scottish Office, but its evolution was always within—and rightly so—the Union. The Scottish Office power with its block grant grew enormously. Indeed today there are over 5,000 people in the Scottish Office. That is about a third of what one finds in Brussels. Perhaps that makes your Lordships think!

What are we to do? How are we to control that Scottish Office? Of course Ministers and Secretaries of State do their best to consult but they consult the good and the wise whom they know. They do not consult the people and that is our trouble; namely, that the people of Scotland feel—and rightly so—that they do not have a say in how they are to be governed. We have seen the result of that in recent elections when, over the past few years, the Conservatives have only had a fraction of the vote but they have decided what is to be done. People do not like that. They do not like a sort of "nanny knows best" rule. I am quite clear myself that we must get away from that and that we must give the people of Scotland a real say in the running of the country.

Many of the matters are already decided and therefore we do not have to worry too much about them. We take it for granted that health, education and everything except social security, foreign affairs and defence will he taken care of in Scotland. Social security, foreign affairs and defence are matters for Whitehall and its Parliament. But how are we to ensure that the Scottish people have a say in their affairs? I am quite clear that the solution which we tried in 1979 was in general right; namely, that there should be a Scottish assembly. The referendum failed for various reasons which have already been explained by the noble Lord, Lord Carmichael, but that was bad luck. The noble Lord, Lord Home, very reasonably said that he was for devolution but that he did not like the Bill. The problem is to find the right Bill. We must make another attempt.

What do I suggest? My next point may have shades of the comments made by the noble Lord, Lord Campbell of Croy. I suggest that we have another Royal Commission because this question is so vitally important to all of us: not only to the people of Scotland but also to the rest of the Union. That Royal Commission should be given an impossible task. If one gives it an impossible task it often succeeds. I have in mind that it should be asked to report within, let us say, 18 months or two years. Much of the work has been done for it by the Scottish Constitutional Convention. The questions in a sense are quite obvious. What is the relationship between a Secretary of State for Scotland and a convenor—I suspect that is what we would call him—of the assembly? What would be their respective powers? How would the voters elect the assembly? Would it be by indirect voting or should we have direct voting? I can think of a multitude of similar questions. However, I do not propose to suggest any answers, otherwise why set up a Royal Commission?

We have heard speakers in this debate say that this is an issue which is of the greatest importance for the whole of the country. It will not go away. If we do not do something now, as I have tried to demonstrate, this matter may well arise in a shape that none of us in this House would like. I have particularly in mind the idea of independence, although I must say, knowing the Scots, I suspect they are much too wise to go along with such an idea. I beg the Government to consider once again setting up a Royal Commission. I ask them to remember the history of evolution over the past 100 years. They must in the end find a solution which satisfies the Scottish people. As I say, let us be given an answer in 18 months, which allows time for some kind of legislation to he introduced by a new government of whatever colour; otherwise I fear, lest Scotland and the Union explode.

3.55 p.m.

Lord Gray of Contin

My Lords, I join with others of your Lordships' House in thanking the noble Lady, Lady Saltoun, for giving us this opportunity to discuss what is an important subject for Scotland. I also congratulate the noble Lady on launching the debate in such grand style and on giving us such a wide-ranging speech. My only criticism of it is that she said so many things I wanted to say which I must now cut out.

I also enjoyed hearing what the noble Earl, Lord Perth, had to say, although I have some doubts about setting up yet another Royal Commission. In the honourable game of rugby, when a full-back gets in real trouble he kicks for touch. I think that the Secretary of State of whatever government happened to be in power would be accused of kicking for touch if he set up yet another Royal Commission on this subject.

I am a convinced Unionist, a position reached after an initial period of open-mindedness on the subject, followed by a brief sympathy during the late '60s and early '70s for a Scottish assembly of some sort, and my ultimate abandonment of the whole concept in the belief, which I still hold, that there can he no middle way. The alternative to Unionism is separatism, and any intermediate position can only lead ultimately to an independent Scotland. I can see no benefit whatsoever for Scotland in independence, and there are positive disadvantages, as I see it, in the sort of makeshift parliament presently on offer. I see nothing which is not available and attainable through the United Kingdom Parliament.

I do not propose to dwell on the many flaws in the Labour Party policy document A Parliament for Scotland other than to suggest that those proposals have been conceived for all the wrong reasons. They will create a further tier of taxation in Scotland; they will ensure constant friction between Edinburgh and Westminster; they will create aspirations which they will be unable to gratify; they will establish a monster with an insatiable appetite for money, aided and abetted by a membership which will blame Westminster for every defect and imperfection it may encounter in the day to day administration of Scottish government.

This situation will benefit only nationalism. The Scottish National Party need only sit back and wait. All its hopes will be fulfilled, and I predict that if Labour were to win the next election and legislate on the basis of the proposals at present before us, Scotland will be independent within a decade. The frustrations and the bickerings will make that certain and nearly 300 years of one of the greatest unions in history will be shattered. Proposals designed to counter nationalism will serve only to fuel the very fires they seek to quell.

Furthermore, the proposals have other serious consequences for Scotland. The West Lothian question is no nearer to being resolved, and it is inconceivable that the United Kingdom Parliament would continue to accept 72 Scottish Members representing Scottish constituencies to carry out only half or less of their present workload, presumably for the same remuneration, not to mention their ability to vote on English and Welsh matters, while the United Kingdom Parliament would lose the opportunity of voting on Scottish Bills. It seems to me that, after a great deal of argument, Scotland might finish up with something like 58 Members instead of 72. The position and authority of the Secretary of State for Scotland would be diluted substantially in Cabinet. All those factors would be to the great disadvantage of Scotland.

The truth of the matter is that Scotland has very little to gain and much to lose from the creation of a parliament in Edinburgh. The unpopularity of the Conservatives and the popularity of Labour for the time being in Scotland has little or nothing to do with the parties' attitudes to Scottish devolution. Instead of promising to legislate for a Scottish parliament in its first year of government, I suggest that Labour would be very much better employed promising a multi-option referendum within the first year. The Times of 11th January 1995, quoted Mr. Tony Blair on the question of a referendum on European matters as saying: Where important constitutional arrangements are at stake the people must have their say". From the point of view of the people of Scotland, I should have thought that these proposals are vitally important. They concern a constitutional change and there should be an opportunity for the people of Scotland to have their say on the question. I should like to see a referendum that set out three options: the Labour proposals as presented; independence; or the status quo.

It is incumbent on those who seek major constitutional change to spell out in detail the pros and cons of the legislation. The Scottish people should have the full facts explained in detail—the benefits and the disadvantages. Such a major constitutional issue should be separated from the many policies on which a general election is fought, and a proper referendum campaign should be allowed. My assessment has always been that devolution is a media fascination and comes fairly well down the priority list of policies at a general election with most Scots.

There are precedents. We have had four separate referendums on constitutional matters, and the results have not always been predictable. My noble friend Lord Campbell of Croy pointed out that in previous referendums pollsters had frequently assessed support as being somewhere in the region of 75 per cent. However, in the 1979 referendum on devolution, despite opinion poll forecasts suggesting that 80 per cent. of Scots were in favour of a devolved parliament, less than a third of the population voted in favour.

If at the end of such a thorough and in-depth examination of the issues, separate from the distractions of a general election, the people of Scotland selected the route they wish to follow for their future there should be no recriminations. In my view, to proceed without such precautions would be wrong, dangerous and close to treacherous.

4.4 p.m.

The Earl of Mar and Kellie

My Lords, perhaps I may also begin by congratulating my noble kinsman Lady Saltoun of Abernethy for having the wisdom and persistence to introduce this debate about the future government of Scotland. It is a most urgent subject in Scotland.

A historical approach is essential to my thinking and relevant to today's situation. In 1603 James VI, King of Scots, succeeded to the throne of England and became executive head of both autonomous states in parallel. He successfully worked with both the English Parliament and the Scottish Parliament. He understood above all that good government of Scotland was direct Scottish government. His successors as kings and queens of Scots understood progressively less about the importance of separate government within their united kingdoms. By the end of the 17th century the misunderstood roles of the twin governments led to confusion, especially as the two countries had adopted different foreign and economic policies.

The debate about the merits of moving to a united and hence international parliament was fought out by those gurus of the time, Andrew Fletcher of Saltoun and John Erskine, Earl of Mar and Principal Secretary. The two usually agreed, but not about this subject. Fletcher of Saltoun said: The Scots deserve no pity if they voluntarily surrender their united and separate interests to the mercy of a united parliament, where the English have so vast a majority. This will be the issue of that darling plea, of being one and not two; it will be turned upon the Scots with a vengeance; and their 45 Scots members may dance around to all eternity, in a trap of their own making". Fletcher of Saltoun was right about the merry dance, but Mar signed the Union in 1707. He subsequently led a rebellion against it in 1715, a clear assessment of how the Union was not working out. He commented at the time: I was as keen to break it as I was to make it". Today the majority of the Scottish people consistently vote for parties which promote different foreign and economic policies from those chosen by the vast majority of English voters. Scotland prefers a more communal and democratic approach to the economy and a more internationalist approach in foreign affairs. Meanwhile England prefers a more individualist and nationalist approach. I am very worried by the rise of English nationalism as expressed in the anti-European movement.

Throughout my comparatively short lifetime the party opposite has never held a majority of seats in Scotland, yet we have endured 33 years of minority government in the past 46 years. That democratic deficit, characterised by the 49 Labour seats and the 11 Conservative seats held at present out of a total of 72, points the way forward. Scotland should return to autonomous government within the united kingdoms. As a small nation the Scots would find their place in the world as the 26th economic nation. Only in that way will the Scots be able to eliminate the democratic deficit.

Other devolutionary measures would not lead to a true picture of the political choice of the Scots, for as long as some voters choose to vote SNP, which is a broad pressure group cum political party, we shall not be able to achieve a democratically accurate government for Scotland. That may also be true of the Scottish Conservative and Unionist Party, which will then be able to promote Conservative policies for Scotland rather than devoting its energies to defending the Union as it is currently organised. That process will also be assisted by the adoption of proportional representation.

My second reservation over devolutionary measures is that there seems to be little demand for regional government in some parts of England. I fear that that would create an unbalanced tier of government which I believe would lead to endless argument, as has been mentioned by other noble Lords.

This renegotiation of the Union should be entered into willingly and co-operatively. The treaty of 1707 was a freely negotiated settlement voted for by the Scottish Parliament, which adjourned itself for as long as the treaty held. It is a trial marriage. The future treaty must also be freely negotiated. Those negotiations must be conducted in stark contrast to the debate and negotiations in the early part of this century over devolution in Ireland. The intransigence of the British Government led to a war of independence, a truce at the request of the British Government, a grudging and inadequate treaty in 1921, and a brief civil war in the newly established Irish Free State.

The move to the autonomous government of Scotland must be the result of the intellectual decision of the Scottish people. There is no need for violent action to back this claim. I have been saddened by the repeated assertions of visiting Conservative politicians that there is not enough bitterness yet to merit devolution or constitutional change and that the Scots would be better off as minority players in a united parliament situation. This playing of the regrettable "no corpses, no referendum" card sounds a little like the negotiating stance over Ireland in 1921.

On the economic front, I freely acknowledge that initially Scotland would be less well off after splitting with a G7 country. The Scots must weigh up the benefit of subsidy against that of democracy. The challenge that I throw down is that the conversion to small national status would unleash the latent Scottish economic potential and creativity which is being stifled by being the northern and distant branch of British enterprises. Ireland's success within the European Union points the way; and the Irish started off on a much shakier economic footing.

Scotland would definitely wish to maintain its seat in the European Union. As the treaty of 1707 was between equal partners, who is to say that it would not be Scotland which maintains the former British seat?

I conclude my contribution to the debate by confirming that Scotland's future lies in solving the democratic deficit and making its own way into the global economy. This Brito-sceptic position bears no malice towards England, Wales or Northern Ireland. There would be an open European Union border with no barbed wire. I sincerely hope that when the new treaty is being drawn up the negotiations are entered into generously and benevolently by statesmen who can see that our countries have a fine co-operative future ahead. The music will then have stopped for Fletcher of Saltoun's merry dance. The possibility of a British Isles Federation, including Ireland, will have become increasingly attractive. That will be the ultimate evolution for our island peoples.

4.14 p.m.

Lord Sanderson of Bowden

My Lords, I, too, should like to pay tribute to the noble Lady, Lady Saltoun of Abernethy, for bringing forward this subject for debate today. I believe that your Lordships' House is a very suitable place to debate calmly and rationally these important issues on a subject that naturally raises the emotions of those of us who care deeply for the future of Scotland within the United Kingdom. I say "within the United Kingdom"; I was interested to hear what the previous speaker said about, presumably, a separate Scotland.

I state at the outset that I do not personally favour a Scottish assembly, not through any doctrinaire view but because I believe that constitutional change can end up in disaster for the very people that it is intended to help. I realise that perhaps my perception is not shared by a very large number of my fellow Scots, but I trust that my views can be considered alongside those who take a different view.

My concern is that in any constitutional change—particularly legislative change—the whole process has to be fair, and be seen to be fair, by all those affected. That is particularly necessary where the nations of Scotland and indeed Wales are numerically so much smaller than their English neighbour. In short, it is essential that no political party or group plays fast and loose with the constitutional base on which the United Kingdom is founded.

The reasons for the desire for a devolved assembly in Scotland, and perhaps in Wales, (although I cannot speak for Wales) are not difficult to find: bringing government nearer to the people; devolving power and law-making from the centre; satisfying the inbuilt nationalism which is in all of us in Scotland—in Scotland's case those feelings are fostered by a period of government by a party whose political strength lies elsewhere—and an aversion to the man from Whitehall who always seems to know best. That is quite apart from anything that might happen on the football pitch or rugby field.

First, I believe that if a law-making assembly is to be long lasting and answerable to the electorate, it must have tax-raising powers. Representation without taxation is not a good democratic recipe.

Secondly, it is difficult to circumscribe the law-making powers of any assembly. Where the United Kingdom and the assembly government in power sing from the same hymn sheet, all can be well and good. But if the opposite were the case—remember, my Lords, that we are considering law-making bodies—that would be totally different from the tensions which can and do exist between local government and national Government.

Thirdly—and in my view this is fundamental to any change—what is offered to the Scots and the Welsh must be offered in equal measure to the English. It is no answer to say that the English do not demand change, therefore they need not have it. Their interests should not be ignored, because if we ignore them we do so at our peril. I do not believe that a federal solution can be introduced into the United Kingdom gradually. For devolved government to work it must give each citizen, or the citizen's representative, as nearly as possible equal treatment under the law.

That brings me to my real fear for any lopsided proposals for change. Is it fair and reasonable to expect English Members of Parliament to condone the practice of Scottish MPs at Westminster voting on matters which, by their very nature, are devolved to their own assembly? If regional assemblies, exactly akin to their Scottish and Welsh counterparts, are not proposed then binding arrangements would have to be in place to satisfy the Members representing English constituencies. Will that not lead to first-class and second-class citizens as MPs; or, if not, an undoubted reduction in the power, number and influence of MPs from areas with devolved assemblies? Is that what Scotland and Wales really want—a diminution of their power and influence at the United Kingdom Government level? If this matter is not attended to, there will, I believe, be chaos in another place in the first Session after the Scottish and Welsh assemblies are set up.

Other questions arise which need to be addressed, the most important of which is electoral representation at Westminster as a result of the creation of assemblies; the future arrangements concerning the Callaghan formula for Scottish bloc finance upheld by successive governments; and the role of the Secretary of State for Scotland, who under any such scheme could sit in Cabinet as a Minister without portfolio.

I leave your Lordships with one last thought. No responsible government can be, or is likely to be, popular throughout their tenure of office. That is perfectly clear in history. Labour and Conservative Administrations have suffered equally in this regard.

Looking ahead to a scenario where perhaps a Labour Party, given its strength in the central belt of Scotland, controls a Scottish assembly, and (as is bound to happen at some stage) offends the feelings of the people—that is easily done—what then? Will the protest vote emerge to push the Scottish nation towards a separate Scottish state? The noble Lord, Lord Carmichael of Kelvingrove, does not think so. Alternatively, will the Unionist parties win through? Whichever way, it is a very considerable risk for the people of Scotland.

I hear the siren voices of Scottish businessmen being discounted by supporters of a Scottish assembly. I accept that the arrival of a Scottish assembly is unlikely to bring about immediate change—although it is a great risk. But the scenario which I have just painted will, I believe, bring with it an avalanche of change if there is even a threat of going down the road towards a separate Scotland.

As I said at the beginning of my speech, your Lordships' House is a forum for rational debate. As a businessman and a Scot who has worked all my life in Scotland, I believe in creating the climate where risk and reward can flourish. Scotland, in the industrial sense, is making sustained and steady progress. By inching in a well-meaning way towards a separate state, politicians could do long-term damage to our industrial and commercial future. I urge caution on all those who propose change.

Lord Mackie of Benshie

My Lords, before the noble Lord sits down, can he assure us that under PR the Conservatives would have their proper representation in Scotland so that the disasters that he envisages need not occur?

Lord Sanderson of Bowden

My Lords, I thank the noble Lord for his question. I know his views on proportional representation. What concerns me far more is what happens in the Palace of Westminster at the time of the proposals being put forward, without equal treatment being given to those who live in England.

4.21 p.m.

Lord Elis-Thomas

My Lords, I have a slight degree of trepidation at being the first non-Scottish Member of your Lordships' House to intervene in the debate. I do so at the kind invitation of the noble Lady, Lady Saltoun, and I am grateful to her, as a colleague on the Cross-Benches, for proposing the debate.

I have been fascinated by the range of the historical discussion we have had so far. We have ranged back to the roots of the union between England, Wales, Scotland and Ireland. We have also ranged heavily through devolution. There are two separate Welsh and Scottish pronunciations of that word; one rhymes with "revolution", the other apparently does not. We have ranged from the devolution debates of the 1960s and 1970s through to a great concern about a separatist future.

Speaking as a post-nationalist of strong conviction, I wish to argue that there can be no separatism anywhere any more. Neither can there be pure nationalism which is not also negative. However, there can be degrees of power relations between various centres of powers. That, I believe, is what the debate should be about. If we are calling attention to alternatives for the governance of Scotland, we are at the same time looking at the structures which will influence the rest of the United Kingdom, indeed the rest of Europe. We are no longer in the age of the construction of nation states. Whether we like it or not—and I have the impression that many Members of the House do not like it—we are not in the time of the construction of a nation state, but in a time of its deconstruction. The argument which is still going on in another place is very much about that subject and the relationship between the British state and the European Union. That is part of the European context of our debate. That is why I say that we are no longer about separatism or borders; we are no longer debating economic independence. We should be debating how we set out the relationships between partners.

Therefore, when we argue about the relationship between Scotland, Wales, England or Northern Ireland and the United Kingdom, we should not be positing the question of the United Kingdom and separatism as if they were two alternatives. None of my colleagues in the Government of Catalonia would posit the issue in that way. They have no difficulty. Jordi Pujol, as the Minister President of Catalonia, a Christian Democrat of long standing, would have no difficulty in reconciling the unity of the Spanish crown with the autonomy of Catalonia.

Similarly, the time is coming when unionists in the United Kingdom who have a serious commitment to the Crown in Parliament, as the constitutional structure of the kingdom, should also address themselves to the question that the United Kingdom is not necessarily a unitary state. With respect, that seems to me to be at the root of much of the confusion in the debate. One can have a United Kingdom. If I dare to speak on behalf of the Principality of Wales, one can feel oneself part of the United Kingdom without at the same time taking the view that it should be run by a Secretary of State, appointed by the Prime Minister of the day, to govern the country in the style of the previous Secretary of State for Wales. I am not talking about the present caretaker, but about his predecessor.

So one can imagine a situation where, within a United Kingdom, there can be elected and devolved levels of government which share power in a federal structure, as is the situation in the Spanish and the Belgian kingdoms. Your Lordships' House might have a view about the Belgian state which has recently gone through a major constitutional transformation. It has emerged with what? A crisis? With a major political upheaval? No: with the same kind of government in terms of party balance as it had before. I suggest that it is possible to imagine a similar translation within the United Kingdom. It is possible to envisage the development of gradual federalism within the kingdom without undermining either the Crown itself or the traditional institutions of British society which we share in common.

Therefore, as we look to the future and the 21st century of the principalities, nations and regions of these islands, we need to have a far more forward-looking and, dare I say it, European continental philosophical approach in terms of political structures. We need to return, as this House has always done, to the major constitutional issues that were debated at the turn of the 19th century and debated again in the 1960s and 1970s when Members of this noble House made such an important contribution. We have already heard of Lord Crowther and Lord Kilbrandon, and we need to return to those attempts to consider the issue rationally and dispassionately.

I was interested in the proposal of my colleague on the Cross-Benches, the noble Earl, Lord Perth, that we should have another constitutional convention or commission to consider the issue. It seems to me that that might not be the appropriate solution. However, if, after the next general election to the other place, there is a clear majority in the Principality of Wales and the nation of Scotland for proposals of a devolutionary nature, it might be appropriate for all parties sharing those views—whether or not in government—to sit around a table. It might be at a Speaker's Conference or some other constitutional venue that they should discuss future developments. Thus all the parties within those areas that might be devolved could feel that they had a share in the change. I would not want Conservatives and unionists in Scotland or Wales to feel that they were in any way excluded from a process of change, if that is what the peoples of those two nations decide after an election.

That brings me finally and appropriately to the question of England. I have a deep concern for the well-being of all colleagues in England. As a historic nation, we have enjoyed open borders with England for over a thousand years. Indeed, we no longer have an Act of Union because, by Schedule 2 to the Welsh Language Act 1993, the legislation which incorporated Wales into this realm of England henceforth and evermore was deleted from the statute book as lapsed legislation. The basis of the union between Wales and England is now current and modern legislation. Therefore, it is quite easily reformed. It does not even require another treaty.

Looking at the future of England, I do not see how the argument that one partner is bigger than the other somehow denies the basis of the relationship. Historically, the growth of the English nation and its becoming intertwined with the British state may have been a negative force in the life and culture of England itself. I believe that when the people of England—those in its regions and of its ethnic and cultural diversity—realise the potential of being a free partner in the European Union, then those will be positive days for England itself. We may see less Euro-scepticism about than has been the case in recent weeks and months.

England is a medium-sized European nation. Its historical role as the determining and strong nation within the British state probably even now prevents it from being a wholehearted partner in a European union of nations and regions. Therefore, I believe that it has always been the historic role of Welsh and Scottish nationalists to assist in the liberation of England.

4.30 p.m.

Baroness Carnegy of Lour

My Lords, I want to speak about a more detailed matter than has just been dealt with by the previous speaker. In an article last week in The Times entitled "Labour's Better Way", Mr. Tony Blair gave his justification for some of the recently announced U-turns in policy which he hopes that the Labour Party is about to execute. In that article he spoke about reversal of his policy for parts of the National Health Service and for schools in England and Wales. It seems that, having consulted the customers, the Labour Party has decided that many of the Conservative Government's new arrangements which the Labour Party has bitterly opposed through the years are in fact working well and should not be changed.

I want to suggest to the noble Lord, Lord Carmichael, who opened the debate for the Labour Benches, and the noble Lord, Lord Ewing, who will wind up for them, that there is an urgent need for the Labour Party to extend such pragmatic realism to its thinking about its policy for the governance of Scotland. From the speech of the noble Lord, Lord Carmichael, given from the Labour Front Bench, one would not have known that his party had any detailed policy at all but merely that it favours devolution and feels that it will be the solution to the fear that Scotland might go independent.

In fact, I should have thought that to reverse policy on the plans for a Scottish parliament would not be easy for Mr. Blair. On his visits to Scotland, he has in person repeatedly and explicitly promised the people of Scotland that, if elected, a Labour Government would legislate in their first year for a legislative and tax-raising body covering a very large area of responsibility. He has promised that. That general prospect—most people do not think too much about the details—played a large part in Labour's success in the recent European and local government elections in Scotland. Negative equity in housing is an issue in only very small parts of Scotland. The economy is succeeding above the UK average in Scotland. I believe that the feel-good factor has to do with the issue of the Scottish parliament.

The trouble is that, attractive though the general idea may seem to be in Scotland, from what we know so far from the small print the scheme not only would not work but would lead to such tension between Scotland and the rest of the UK that possibly sooner rather than later the Union would simply disintegrate. It seems to me that, quite apart from the much discussed problems of which members of which parliament would vote on which matters, and the like, the financial arrangements alone, as so far indicated, would cause disastrous conflict.

Last November, speaking to local government councillors, Mr. George Robertson, Tony Blair's principal spokesman on Scotland, stated that the funding would be on the lines proposed by the Scottish Constitutional Convention, whose proposals were explained very clearly by the noble Lady, Lady Saltoun, and whose joint chairman, the noble Lord, Lord Ewing, will reply to this debate on behalf of the Labour Party. The Scottish parliament, we are told, would have assigned to it all the income tax and VAT raised in Scotland. That would be supplemented by a grant to make up any shortfall in current levels of funding for Scotland and the parliament would then be able to increase or cut Scottish tax by the equivalent of 3p on the standard rate. That means—the point has not yet been made—that in effect the level of the basic rate of income tax in Scotland would depend on the size of the parliament's grant from Westminster. So, inevitably, if the Scots parliament raised the basic rate from, say, 25p to 28p in the pound, that would justifiably be blamed by Scots on too small a Westminster grant; and if the Scots' basic rate was reduced from 25p to 22p, that would be seen in the rest of the United Kingdom as the result of too high a Westminster grant.

How would the Westminster grant be fixed, anyway? Scotland has 8.8 per cent. of the population of the United Kingdom. It contributes only 8.3 per cent. of United Kingdom revenue from the four main taxes. But it secures, I believe for justifiable reasons, 10.3 per cent. of public spending. How would the rest of the United Kingdom see that 10.3 per cent. of public spending if the Scots parliament chose to lower Scots' tax by 3p?

Whatever else it is or will become, the Labour Party is a party which values the Union. It tells us that the parliament will be designed to strengthen that Union. I respectfully suggest that the parliament as so far proposed, far from strengthening the Union, would in fact destroy it. Doubtless, that is why the Scottish National Party separatists are thinking of supporting the Labour Party's legislation, if and when it ever comes to Parliament.

In the article in The Times that I mentioned, Mr. Blair wrote: The debate in the late '90s has to move beyond structures to outcomes". I myself am not so sure as some of my political colleagues who have just spoken that we can in fact do without some change of structure for the governance of Scotland beyond the ideas already under way for greater use of the Scottish Grand Committee and the Scottish Standing Committee system. But it must be change which will strengthen the Union and not weaken it.

Scotland's sense of nationhood is strong. It still does not see that sense adequately reflected in Parliament. That does not mean that people want to be a separate nation. Perhaps the recently announced independent constitutional unit, which nobody has yet mentioned, to be chaired by the director of the Hamlyn Foundation and financed by charity will have helpful ideas. I do not know. At least it is looking at the right problem.

I hope that my own party will continue to develop its thinking. In the meantime, I hope that the Labour Party, for the moment in the person of the noble Lord, Lord Ewing, when he speaks, can give us some assurance that it is looking at plans which are different from those that it has so far advocated and that it realises that the outcome of the structural change that it seems to have in mind could be disastrous for the Union.

4.39 p.m.

Lord Cooke of Islandreagh

My Lords, I too wish to thank the noble Lady, Lady Saltoun, for bringing forward this debate today. It is important and timely and I particularly note the second half of the Motion, and to their effect on the future of the United Kingdom". I believe that to be important. However, I rise with some trepidation fearing that I may be struck down because I do not have the Scottish credentials of those noble Lords who have already spoken. I am merely a near neighbour from across the 12 miles of the Irish Sea.

I have an interest in the debate because I am a committed Unionist who would oppose any weakening of the Union. I have been glad to note that almost all noble Lords who have spoken have been strongly in favour of the Union. However, I wonder whether concern and thought for the Union is so widespread in the world outside. Since this Motion appeared on the Order Paper, I have been asking people what they think about the Union and often received a reply such as, "I don't mind if the Scots go off on their own"; but usually the consequences have not been thought out and after some discussion the remark is withdrawn. It is worrying that the importance and value of the Union does not seem to be generally understood.

As a native of Northern Ireland I can well understand why the Scots have been discussing a whole range of alternatives. In their view their interests and needs have not been taken into account by a Government that is based in London and appearing to think only of London and the Home Counties. Exactly the same feelings are widespread in Northern Ireland where we have an even greater democratic deficit. I believe damage has been done in the past 12 or 14 years by the increasing centralisation and concentration of government in London. To those living several hundred miles from London it often seemed that decisions had been made and action taken for reasons of political doctrine and little or no account taken of the possibility that a particular policy may not be appropriate to all regions. Representations and reasoned objections seldom have any effect. It is no wonder that a wide range of alternatives have been discussed. I do not find it surprising that Conservative Party support in Scotland has almost disappeared.

However, the future of the United Kingdom and the steps taken in Scotland are so important that it would be dangerous if they were taken in any way for party reasons. I listened with interest to the suggestion from my noble friend Lord Perth that in some way we might have another Royal Commission, though I can understand the possible difficulties in that regard.

The thought of a regional parliament terrifies me. I can see it leading to all sorts of problems. I do not think much better of a regional assembly. It will lead to bickering, arguments and lusting after further powers. It does not seem to me to be impossible, by the parties working together, to devolve two regions to work on what they can best do locally. The principle of subsidiarity is treated with disdain because of its European context, but it should be applied to Scotland and the outer regions. It should not be beyond the wit of man to arrange a practical system for devolved government that can be dealt with locally.

Unless those matters are thought through and appropriate action taken in the near future, we shall see growing support for unreasonable action or even unilateral declaration of independence by Scotland. I hope and trust that that does not come about and that all politicians who care about the Union will come together to find a solution for what is a real and urgent problem; a solution that will strengthen the Union rather than lead to its destruction.

4.44 p.m.

Viscount Weir

My Lords, first, I apologise for any discourtesy to other speakers if I do not stay for the whole of the debate; I am temporarily incapacitated and cannot sit for any length of time.

We should all be grateful to the noble Lady, Lady Saltoun, for the opportunity she has given us today to discuss the future of Scottish constitutional affairs. The whole issue is inextricably linked with the national identity of Scots and Scotland and the future of the Union itself. On the first of those I make no bones about my position. I was born a Scot; I live and work there; and therefore, like so many of my countrymen, I consider myself as Scottish first and British second.

Equally, on the issue of the Union, I speak as a Unionist who supports Conservative policies rather than as a Conservative. Indeed, I greatly regret the changes made in the 1960s under which my party in Scotland ceased to be styled as plain and simple Unionist, or Scottish Unionist. I believe that we would fare far better electorally if we now returned to our original and proper description.

My definition of a Unionist is one who believes that the maintenance of the Union is the great political concept which is overwhelmingly more important than any of the lesser political issues that divide parties. There have always been two perversely different sides to the Scots, or perhaps there are even two different types of Scot. There are the progressive Scots who looked on the United Kingdom, and often the world, as giving them the wider opportunities that a small country would have denied them. In industry, finance,12 commerce, science, medicine, war, philosophy and politics, the Scots have made contributions quite disproportionate to their numbers, and a great many of them achieved such things, not after permanently leaving their homeland, but while remaining firmly based in Scotland.

It was the native and constructive energy of the Scots which was released by the Union and which for centuries now has benefited both parties to that great bargain. However, I am afraid that there is another side to the Scots which is something of a querulous, parochial and complaining one—we all suffer from that at times. Right now I fear it is that side of our character which is in the ascendant.

There is today much general discontent in the UK as a whole with the performance of the Government. In Scotland that discontent is conveniently, if somewhat irrationally, magnified because the main seat of government is in London. Just as Britons often find it useful to blame Brussels for many of their perceived woes, so perhaps the Scots today, in their moments of discontent, blame what they perceive as an English Government because it is English. The Scottish Nationalists of course have nurtured that unconstructive reaction with the sound bites which pass for their policy.

In all of that the benefits of the Union are simply taken for granted, and we Scots should just remind ourselves clearly what some of those are. There is the wider opportunity the Union provides; there is the disproportionate share of national revenue which Scotland enjoys—naturally the SNP denies that that particular advantage exists but its studies on the subject do not stand up even to superficial analysis compared to the financial reality which is strongly beneficial to Scotland.

In domestic political terms, Scotland benefits from the Union through disproportionate representation at Westminster—and, incidentally, no party normally benefits more from that than does Labour. In international political terms, the Union also benefits Scotland as its interests are backed by the weight of the United Kingdom as a whole. Such are some of the advantages of the Union to Scotland. Perhaps they are taken for granted simply because they have existed for so long and have become such integral parts of the structure of Scotland. It is because I believe that devolution will strain the bonds of the Union and ultimately even destroy them that I am so strongly opposed to it.

Consider for a moment just what strains devolution in the form proposed will cause: the West Lothian question, with which your Lordships are all familiar, is not effectively addressed by these proposals; over-representation at Westminster is not addressed; the proposals for tax-raising powers can be condemned twice over—first, because of the public focus they will inevitably bring on Scotland's disproportionate share of national revenue and the likely practical result of that, and secondly because they will adversely affect Scots financially. They will add to the costs of Scottish industry and to the cost of simply being a Scot. Worst of all is the situation which will arise if there are governments of quite different political persuasions in Westminster and in Edinburgh.

Of course the simplistic will argue that there are successful politically devolved states all over the world. But most of them started that way—like Switzerland and the United States—and none of them that I can recollect consciously and successfully turned itself into such a form of government.

There are plenty more lesser issues which time prevents me rehearsing but which would give every divisive opportunity for rancour and disagreement. I would only mention the proposal to have, compulsorily, a large number of ladies in the proposed assembly. Some people will rightly think that this proposal is condescending to ladies. Others, I am afraid, will simply recall John Knox's phrase "the monstrous regiment of women". The SNP will make it their destructive business to exploit these opportunities, since to them the assembly is but a stepping-stone to the dissolution of the Union as we know it. The media, for whom good news seldom counts today as news at all, will hardly pour oil on such troubled waters.

Finally, I ask whether Scots really want devolution. Of course the opinion polls say that they do, and so do those who go on about such matters as "a widely perceived democratic deficit". But I remind your Lordships that when the referendum campaign started in 1978, the majority for devolution in the opinion polls was exactly the same as it is today; and yet in the end the vote was almost exactly evenly divided. Moreover, without exception, the opinion polls always show that devolution is very low in the list of concerns of the Scottish public.

Perhaps the true situation is that a majority of Scots have some vague sympathy today for the idea of an assembly, but the low place they seem to give it in their political priorities simply indicates their lack of conviction or enthusiasm, just as it confirms how totally unsound it is to use the result of a general election, where presumably people actually vote for their political priorities, as a mandate by proxy for constitutional change of this magnitude.

After all, the populist instinct of most lemmings, prompted perhaps by their love of sea-bathing, leads them to jump off cliffs, but that is no good reason for responsible political leaders to invite them to do so, or even give them the opportunity. I do not know where it leaves you all, my Lords. It leaves me, as a Scot, with a deep sense of foreboding and with the fear of constitutional convulsion and even the destruction of the Union in which Scotland's distinct identity and spirit have been preserved, and on which its prosperity and success have been built, if we plunge into such murky waters.

4.54 p.m.

Lord Taylor of Gryfe

My Lords, we are indebted to two Members of this House for the debate today. One is the noble Lady, Lady Saltoun, whose interesting and perceptive introduction was much appreciated by noble Lords on all Benches. We are indebted, too, to the noble Lord, Lord Ewing of Kirkford, who has to wind up the proceedings for the Opposition today, because for two years he shared the chairmanship of the convention which has been the basis of the new policy document of the Labour Party, but not only of the Labour Party because it has been widely welcomed among the Scottish people.

My only criticism of the convention at the time was that, although it invited all organisations in Scotland to contribute to its deliberations, somehow or other it omitted the Scottish Peers Association, as a result of which they do not feature in the convention's plans for a unicameral parliament in Scotland. I somewhat regret the fact that while I am a Peer in this House it will be impossible for me in future to make any contribution whatever on the questions of housing, health, education, rural transport and so on. I shall be able to do that down here in England, but I shall have no voice whatever on those matters as they affect Scotland. Perhaps the noble Lord, Lord Ewing, will respond to that minor criticism when he comes to wind up.

During the previous discussions on this matter and on the original referendum on the subject I, along with the noble Viscount, Lord Weir, campaigned against a Scottish assembly. There was a very active committee at that time, of which I was a member. I have since changed my mind on the matter. I support the Labour Party document on this subject for several reasons. First, it is obvious that around 80 per cent. of the people of Scotland want an assembly. Some—a minority—want complete independence but about 80 per cent. of the people have declared in favour of a Scottish assembly.

A great deal has been said about preserving the Union. The noble Viscount, Lord Weir, has painted a picture of decline and a slippery slope towards complete independence. I tell the House that if we do not respond to the wishes of the Scottish people for an assembly the descent into the demand for complete independence will grow and will not diminish. The people of Scotland will feel that they have a right to their own assembly. But if they are told that they cannot have it and that the English Parliament has decided that they cannot have it, the reaction will be towards more extreme demands for independence than are involved in the document which the noble Lord, Lord Ewing, produced.

That is one reason. This demand cannot be resisted. As a democrat I feel that we must respect that demand. I must say, too, that one of the unfortunate things about my fellow Scots who have contributed to the debate is their lack of trust in the good sense of the Scottish people to resist complete independence. I have trust in the Scottish people in that they want to preserve the Union, as I want to preserve the Union. I am quite sure that the disadvantages of complete independence will be readily apparent to the very sober and sensible fellow Scots with whom I live.

The other interesting thing that made me change my mind on this matter is the complete decline of the democratic process in Scotland. When I was a very young member of the Glasgow City Council we had complete control over housing, health and education. They were all locally controlled and in the hands of people who had responsibility for administering these matters. Today in Scotland all these functions have been transferred to non-elected quangos. There has been a tremendous growth of centralisation of government. People have lost power over the things that affect them in their daily lives. The suggestion of the Labour Party for a Scottish assembly is simply to bring back power to the people. It is a demand that must be met.

One thing that encourages me about the proposals of the Labour Party is its acceptance of a degree of proportional representation. I am sure that that commends itself to the noble Lord, Lord Mackie, and the Liberal Benches. Initially, I was afraid that a new Scottish assembly under the old voting arrangements would simply be Strathclyde Council Mark II, but I am now satisfied that, because we shall have proportional representation, we shall have better and more democratic representation and greater diversity in the deliberations of that assembly.

Many people have said that, if we move towards the assembly, somehow that will seriously affect the economy. I do not believe that that is so. Some people have said, "You will not get the same degree of inward investment". Southern Ireland does not do too badly in terms of inward investment. It is a much smaller country with a greater degree of independence than Scotland. Inward investment is attracted by skilled labour and the kind of environment in which people can have their work and their being. I do not believe that the creation of the assembly would necessarily have any serious impact on inward investment.

The problem of centralisation of government and power is an international problem. Some countries have been able to do very well in decentralising without necessarily disturbing the state as a whole. I have family who live in Switzerland. There a great deal of power is decentralised into the cantons. I look at the power and the exercise of influence of the German Lander which not only has a great deal of power in conducting its own affairs, but has representation in Brussels to ensure that its regional interests are taken care of.

So I believe that decentralisation proposals put forward by the convention of the noble Lord, Lord Ewing, will not in any sense destroy the Union. They will not in any sense cause us to rush down the path of Scottish nationalism. Therefore, I commend very much the proposals which will be further outlined by the noble Lord, Lord Ewing.

We are glad to see the noble Baroness, Lady Carnegy, back in her place today. She was a little unfair about the Labour Party not giving details of its proposals. I am sure that the noble Lord, Lord Ewing, in winding up, will tell her a little more about that.

There are several questions still outstanding. As has been indicated, the West Lothian question has not been completely dealt with, including the number of MPs and so on. These are matters that can be worked out at a later stage. From these Benches we are simply saying that the voice of the people of Scotland is demanding some degree of devolution. I completely agree with the noble Lord, Lord Campbell of Croy, that it is a major constitutional change and that we must proceed with some degree of care and caution.

Baroness Carnegy of Lour

My Lords, before the noble Lord sits down, does he not agree with the noble Viscount, Lord Weir, that the figure of 80 per cent. in the poll as the number of people in favour of a Scottish assembly is the same as it was the last time round, and that the votes in the referendum showed that less one-third of the electorate voted for the Bill, which is why it fell in the end?

Lord Taylor of Gryfe

My Lords, this is a time-limited debate and I shall not intrude on someone else's time. As I recall, at the last referendum, the pro-assembly group failed to gain 40 per cent. of the electors. I suggest that if a referendum was held now, the result would be somewhat different.

5.5 p.m.

The Viscount of Oxfuird

My Lords, I too would like to thank the noble Lady, Lady Saltoun of Abernethy, for giving us the opportunity to debate this important subject and to consider the implications and the possible alternatives that are being canvassed for the future government of Scotland.

The noble Lady has often spoken in the past in your Lordships' House on this subject. I particularly recall the contribution that she made to the debate initiated by the late Lord Morton of Shuna on 13th January 1988 which appeared in Hansard at col. 1246. She described the Union as, a marriage of convenience between a rather arrogant and sometimes rather cruel man, possessed of large and rich estates, and a neighbouring lady, with a beautiful but impoverished estate, of great pride and a slightly prickly temperament".

The American, John Dickinson, coined the immortal words in his Liberty Song, By uniting we stand, by dividing we fall". How very true those words are today when we come to consider our own United Kingdom and in particular the position of Scotland within that United Kingdom. The importance of our union must be viewed in an historical context if we are to understand the very real benefits that it has brought to all of the parties to that union. Professor Sir George Clark's book in the Oxford History of England series highlights this. In it he describes the work of the commission which was established by the Parliaments of Scotland and England, which led to the achievement of the Union in 1707. I quote, The Commission worked with real good will. On both sides they included men of the highest legal and political ability and they did their work well. A failure of intelligence or temper might easily have made it extremely difficult; but in sittings which lasted only three months, in the middle of the all absorbing business of war, they completed and signed their treaty". I hope that the same spirit of goodwill can guide us all in the months and years ahead when it seems that the whole question of devolution will be coming again to the top of our agendas.

Trevelyan, in his History of England, stresses the immense benefits that the Union brought to both Scotland and England in the 18th century. Scotland gained free trade with a huge English domestic market and with the overseas markets of the emerging British Empire, and England gained free access to the best educated and most actively minded people in Europe.

It is upon the economic benefits accruing from the Union, right up to the present that I should like to concentrate my remarks this afternoon. That does not mean that I am not sensitive to the very real dangers that a bungled devolution might mean for our Union, but merely that I believe that the tangible problems that would be created by trying to implement such a devolution have been very adequately covered by other noble Lords this afternoon.

Speaking in 1988, my noble friend Lord Home of the Hirsel, said in Edinburgh, With Scotland in unity with England, the United Kingdom in unity with Europe and Europe in unity with the Atlantic Community, there can be no threat to our increasing wealth". I ask your Lordships to concentrate your minds on the positive economic benefits of our Union and not to be seduced by the theoreticians who seek the Holy Grail of misguided nationalism.

Summing up a debate on this subject in 1989, my noble friend Lord Sanderson of Bowden emphasised how important economic success is to the very lifeblood of Scotland. A similar point was made strongly last week in the Scottish newspaper, the Herald, on 28th June, and I am grateful to my noble friend Lord Goold, who had hoped to speak in this debate, for bringing it to my attention. I quote: Labour's approach to devolution could seriously affect inward investment in Scotland and lead to major companies transferring their headquarters south of the Border, the Director-General of the Institute of Directors warned yesterday. He said Scottish businesses such as Scottish and Newcastle, Morrison Construction Group, Standard Life and Scottish Widows were very closely integrated with the rest of the UK and their ability to create and maintain wealth depended on this. But devolution could result in them moving their headquarters South of the Border. The impact would not be immediate. Clearly if you have made an investment of £60 million, you are going to stay with that. But over a long period, you would see a gradual drain of investment away from Scotland. After all why have your main base in Scotland when the tax regime is more favourable in England?

Let us not forget that Scotland has been a major beneficiary of inward investment, particularly in the manufacturing of electronic components and equipment in the so-called "Silicon Glen". Labour's approach to devolution would certainly put that benefit at risk.

The facts are clear. In 1990, net capital investment by foreign-owned manufacturing firms in Scotland totalled £423 million, one-third of total UK manufacturing investment. With 1.5 per cent. of Europe's population, Scotland produces 11 per cent. of Europe's semi-conductors, 35 per cent. of personal computers, 50 per cent. of automated banking machines and nearly 60 per cent. of workstations. Those are impressive figures, which we should not put at risk.

Lord Taylor of Gryfe

My Lords, I am sorry to interrupt the noble Viscount in a time-limited debate, but can he say how it is possible for Southern Ireland to have an equally impressive record of inward investment with its limited population and with an independent parliament, as compared with Scotland? Why would companies move out of Scotland just because it has a Scottish Assembly? It is nonsense.

The Viscount of Oxfuird

My Lords, I suggest that the noble Lord reads in Hansard the rest of my contribution.

I was delighted to read in the April edition of Engineering magazine, a respected business periodical for the engineering sector, a piece under the heading, "Celtic Revival". I shall quote: A previous slump in the output index of Scottish mechanical engineering halted by the end of last year. The latest Scottish Business Survey published at the start of this year, suggests that this is the long awaited turning point for the industry. Of the firms taking part in the survey some 43 per cent. expressed some business optimism. It is a situation broadly supported by the Fraser of Allander Institute of the University of Strathclyde, which has been examining the mechanical engineering sector. In a recent report, the Institute noted that the engineering industry had, by necessity, become increasingly sophisticated and specialised sover the years in order to survive".

There is now clear evidence that a turning point in the Scottish industrial economy has been achieved after years of painstaking hard work. I believe that Scotland is poised to share with the whole United Kingdom the benefits of an economic upturn which has already begun.

I beg your Lordships not to throw away those benefits by imposing upon Scotland an ill-conceived and motley hybrid of constitutional changes which will provide no tangible gains, but merely provide a tinker's charter for muddle and obfuscation.

Scotland is potentially one of the wealthiest parts of our kingdom. The Scots are brimming over with energy, with creativity, with a love of learning and with a willingness to adapt. As a United Kingdom we are greater than the sum of our parts. I urge your Lordships not to meddle but to preserve the status quo.

I conclude with the reminder of my noble friend Lord Younger in his article in the House Magazine of March this year, when he wrote: Our greatest achievement is, I believe, to have joined with England and Wales to create Great Britain, without losing our individuality in the process. This track record bodes well for our fortunes in the 21st Century when we will have much leadership to contribute to Great Britain and the wider world". If it isn't broken, for heaven's sake don't let's try to fix it.

5 15 p.m.

Baroness Elles

My Lords, this debate, which is of crucial importance both to this House and to the United Kingdom as a whole, has been admirably introduced by the noble Lady, Lady Saltoun of Abernethy, both with clarity and balance. I should like to join others in thanking her, in particular for her approach. She did not lay down rules; she asked questions. I believe that many Members of your Lordships' House, including myself, are searching for answers to the same questions. I have not yet heard satisfactory solutions. Like other noble Lords, I declare my passionate devotion to the Union although I believe that I am the only Member of your Lordships' House to speak who happens to have a 100 per cent. English father. I am therefore taking part in the debate as an English citizen of this country. I share the determination of noble Lords from Scotland to retain the Union which is the United Kingdom.

The Opposition have declared their intention to establish a parliament in Scotland. As that would raise issues already touched on by previous speakers, I shall not discuss it. It is, however, worth recalling that recent detailed figures published by the Treasury show that England pays more income tax per capita at £1,165 compared with Scotland's £1,050, with Scotland receiving £3,976 per capita to England's £3,263. Nobody complains about that. However, we must question whether the rest of the United Kingdom would be willing to continue that financial imbalance.

We must remember the cost of setting up a parliament in Scotland and the fact that it would be an expensive body to run, paying salaries commensurate with Members' tasks. I wonder whether the Scots realise when they vote for the party opposite that it will be an expensive business for them, to say nothing of the costs of running elections almost every year for one body or another. It is evident that the party opposite realises that there may well be a financial deficit since one of its first propositions is that a Scottish parliament would have the right to raise taxes. The hidden costs for Scotland could harm the competitive edge that it has succeeded in gaining in recent years through the skills and abilities to which my noble friends Lord Weir and Lord Oxfuird referred. That would be a loss not only for Scotland, but for the United Kingdom as a whole.

While it is the desire of the party opposite to gain popularity in order to form a government at the next election—at almost any price, it would seem, including that of risking the future of the United Kingdom—it might bear in mind that voting is not the preferred activity of Scots, nor of the populations of most democratic countries. When the party opposite talks about the "democratic deficit" with a sad voice, it is worth recording the fact that 25 per cent. of Scots did not vote at the last general election in 1992; that only 38.2 per cent. voted at the European parliamentary elections in 1994; and only 44 per cent. at the local elections in 1995. I do not see where the passionate desire for mending the democratic deficit is evident. Indeed, when the votes are counted, there is no guarantee that the majority would he held by Labour, as I am sure noble Lords opposite recognise. To set up a parliament is one thing, but to set up a parliament in which the Labour Party would or could be in a minority seems nothing short of incredible.

In considering the future of Scotland it is natural to look at the aspirations of the different political parties as set out in their party manifestos and in their leaders' speeches. Attention should be drawn specifically to the SNP manifesto published before the 1992 general election and also to the manifesto for the European parliamentary elections held in June 1994 as well as the policy statements made in the recent Perth and Kinross by-election. Its 1992 election programme headed, "Independence in Europe. Make it happen now" states: Meanwhile—as confirmed by eminent legal opinion"— it does not say whose— as a successor state to the United Kingdom, Scotland continues to be part of the European Community". And in the EP elections manifesto for June 1994: an independent Scotland will not need to apply for EU membership—all that will be required is a change in our status within the Community from powerless province to independent member state … Scotland will continue as a member of the European Union". Apart from the complete misconception that Scotland is a powerless province when it is represented, as part of the UK, as one of the four leading players in the EU and has been a major beneficiary in terms of financial aid as a result, it would become a small country among many and among the four or five other small countries which obviously need the support of major countries to be heard. With the increase in the use of qualified majority voting, as supported by the Labour Party, and the right of veto which could disappear with a Labour government, which is one of the strengths of a small country, Scotland's voice would be hardly a whisper, if heard at all. It is also to be questioned whether the Scots, should they be so ill advised as to vote for independence, would surely want then to decide whether they wished to join the EU. That would be a further political hurdle.

I would like briefly to comment on the deception of the Scottish people into believing that they would cast off their centuries old membership of the UK and immediately remain as members of the EU as an independent state. That worries me greatly. There is no legal certainty whatever that this would be so. All eminent legal opinion—I am sure that my noble and learned friend will agree that it is only an opinion—is subject to alternative views. I do not pretend to know the answer but nor does anyone else at the present time.

Perhaps I may mention three major queries. First, can the Treaty of Union of 1707 be abrogated when it is not possible to return to the status quo ante? Surely, the answer is no, since there is no longer a Scottish parliament nor a Scottish kingdom; nor is there an English parliament or a kingdom of England. Both were joined by mutual agreement to form a United Kingdom and a United Kingdom Parliament.

Secondly, the question of the succession of states is a very complex subject—I would not dare to enter into it—but there is no assurance in international law that if Scotland were to secede from the UK it could automatically remain or even become a member of the EU with all the obligations and rights set out in the EEC Treaty. That is an international treaty binding the member states which ratified it. Thirdly, all the member states would have to agree to the membership of a new state if only to agree the budgetary contribution, the weighted voting, number of MEPs and so forth. These matters could take up to five years to negotiate, in accordance with present accession demands. In the meantime, would the financial aid flowing through to Scotland because of UK negotiations continue to flow?

There is no precedent in the EU for such a situation. It could be resolved eventually, possibly, by united political will, including the UK's, but it cannot be dismissed by the SNP in such a facile way. It is doubtful, for instance, whether countries such as Belgium or Spain, which have territorial issues, would be willing to support such a move. Even Greenland, which some years ago wanted to leave the EC, did not secede from Denmark but remains part of the Kingdom of Denmark, a full member of the EC. That took about two years to negotiate.

These are fundamental questions which arise despite the claims of the SNP. As I said, there is no legal certainty of automatic membership of the EU. The Scottish people are being deceived if they are being told that that is the truth. They do not deserve to be cheated. Those of us who have a special affection for, and close links with, Scotland through family and other relationships—and there are thousands of us throughout the southern part of the kingdom—would certainly do everything possible to ensure that those close links are retained under the concept that we all are and will remain citizens of the United Kingdom of Great Britain and Northern Ireland. If that relationship were to be changed both Britain and Scotland would be the losers.

5.25 p.m.

The Earl of Buchan

My Lords, I too congratulate the noble Lady, Lady Saltoun, on initiating the debate and on her comprehensive speech which fitted neatly into her allotted 20 minutes. I hope that the noble Lady will not mind if I draw attention to one of her charming Christian names, the rightly Scots Flora. That is no secret; it appears in any good reference book. If by the end of the evening some wonder whether she might not also adopt the name Pandora, so be it. This particular constitutional box is one which some, I know, strongly feel should be kept nailed shut.

I am bound to say that I find it extraordinarily difficult to square the circle of Scotland's position vis-a-vis England in the United Kingdom, even having listened to the speeches of your Lordships. Three aspects of that were mentioned by the noble Lady. The first was the existing position of the Union; the second was the Labour Party's proposals and the third was the Scottish Nationalists' proposal. The noble Baroness, Lady Elles, referred to people who do not vote. If they are linked with the "don't knows" and "don't cares", that would be the other side of the square.

As regards my own position, perhaps I may slightly divert the discussion. Some noble Lords may be aware that Isabella Countess of Buchan crowned King Robert the Bruce in 1306. That was a double first for Scotland: the first crowning of a Scottish king, and the first such crowning by a woman. Noble Lords who watched a recent programme of "Mastermind" will share my wife's indignation on hearing a wrong answer to the question: who crowned Bruce? Some other countess was given the credit. Watch out Magnus Magnusson, we shall be after you with Bruce's broken Bannockburn axe!

On the subject of trying to keep an open mind, some noble Lords may remember the Moderator's advice to a Member of your Lordships' House many years ago when he was asked, "How shall I find out what a Scotsman thinks?". The answer was, "Consult the writings of Robert Burns first and if they are no good find a precedent". Robert Burns was born shortly after the Young Pretender's unsuccessful effort to reclaim the Crown of the United Kingdom; let it be noted, not only of Scotland. Unfortunately, Robert Burns does not give us much help.

The search for a precedent has been more fruitful in that the sixth Earl of Buchan was a member of the Scottish Estates at the time of the Union. What did he do and what would have qualified him to be a founder patron of the Cross-Benches in your Lordships' House? First, he denounced the proposals in the estates because he said that they would interfere with the rights of Scottish Peers in the new parliament. For that he was punished by losing his offices under the Crown, which was, presumably, an early case of "not being one of us". Nothing has changed much in 275 years, therefore!

Subsequently, being a strong supporter of the Hanoverian succession, he came back into favour. This mention of the Scottish Estates at the time of the Union leads to an interesting question. If Scotland were independent, who might sit in the Scottish parliament before elections had taken place assuming, as some do, that the last Scottish Estates was adjourned only in 1707? On a reconvening of the Estates, I believe that I, as a direct descendant, could claim my ancestor's seat. No doubt other noble Lords whose families were wise enough to collect UK Peerages in the intervening period would be in the same position. I would have the right to sit in both the Scottish and English Parliaments at the same time. Therefore, on the same day I might vote in Edinburgh to declare war on England, to cries of "Remember Bannockburn"; rush back to London on the shuttle and vote in your Lordships' House to decline the challenge, to shouts of "Don't forget Flodden". That is fanciful nonsense.

However, that is nothing to the nonsenses and horrors of wrenching apart Scotland and England without proper, careful thought. In that regard, I must support the proposal made by the noble Earl, Lord Perth, however imperfect it may be, that a Royal Commission should be appointed to consider the whole matter.

Like many other noble Lords, in the Labour Party's proposals I am quite unable to understand the relationship which is to exist between members of the Scottish assembly and Members of this Parliament. But I certainly understand the words of Mr. Robertson in the Scottish Grand Committee who said: The fact is that separatism will not happen. The people of Scotland do not want it and have not voted for it. It is not desirable or sensible; it is unsellable … Separatism is the constitutional option which dares not speak its name".—[Official Report, Commons, Scottish Grand Committee, 17/5/95; col. 10.] With regard to the Scottish National Party, it is impossible not to detect a change in sentiment from 20 years ago, at least in my part of the world. I support the plea made by the noble Lord, Lord Taylor, for some action. It is impossible also not to respect the sincerity of Mr. Salmond, the leader of the Scottish National Party, although I wish that he would rename his constituency from Banff and Buchan to Banff and Buchan-who-does-not-always-agree-with-him.

On the subject of North Sea oil, never mind the old oil, what about the new deep seawater oilfields? It would be wrong for the Scottish Nationalists to claim those for Scotland. I believe that they belong to the Imperial and Royal Kingdom of Orkney and Shetland which is bound by treaty to England and Norway.

One final matter which is not directly connected with this question is that when I was perusing the parliamentary debates, I looked at some of the debates which were held at the time of the Union. My eye was diverted to a problem which the parliament of the day was having with the press. Plus ca change, my Lords, because a Motion was introduced saying: That the great liberty taken in printing and publishing false, scandalous, and impious Libels, creates division among her majesty's subjects, tends to the disturbance of the public peace, to the encrease of immorality, prophaneness, and irreligion, and is highly prejudicial to her majesty, and her government". We have all heard that recently but let us consider the proposal to put that right. It was: That all Printing-Presses be registered with the names of the owners, and their places of abode". It must have seemed such a good idea at the time and a fat lot of good that has done us.

I should like to quote to your Lordships from the speech of Queen Anne who had what I believe is the last word on this matter when she addressed your Lordships' House in January 1707. She said: My Lords and Gentlemen; You have now an opportunity before you, of putting the last hand to a happy Union of the two kingdoms, which I hope will be a lasting blessing to the whole island, a great addition to its wealth and power, and a firm security to the protestant religion.—The advantages which will accrue to us all from an Union, are so apparent, that I will add no more". There it is, my Lords.

5.35 p.m.

The Earl of Balfour

My Lords, I am very proud to he a citizen of Great Britain. I shall do all I can to uphold the treaty of the union of the parliaments of 1707 because I am convinced that this United Kingdom is well represented and governed by this Parliament at Westminster. Between the union of the crowns in 1603 and 1707, Scotland had its own parliament but it lacked the political power to enable Scotland to become economically sound. Many Scots moved to London and gained posts of great influence in commercial and political circles.

After 1707, the number of Scots moving south increased vastly. Countless Scots have settled in England over the past 300 years. They have fought alongside the English in every part of the world. In trade and commerce, they have excelled. We have had half a dozen Scottish Prime Ministers this century. There are Burns clubs in almost every town and village in the land. Although rugby matches at Twickenham and Murrayfield may still be hard fought, the ties between the two countries are now virtually indissoluble.

I have no wish to see Scotland's strong representation in this Parliament at Westminster weakened in any way by we Scots having some form of devolved parliament of our own. This Parliament represents a total population of 58 million, out of which Scotland's population is only 5 million or 8.5 per cent. And yet we are extremely well represented. We have our own Secretary of State for Scotland who is always a Cabinet Minister. We have 72 Members of Parliament and a very good representation in your Lordships' House, including our own Lord Advocate. The average parliamentary seat in the United Kingdom represents 89,000 people. In Scotland, the average MP represents only 69,400 people. Therefore, again, at present Scotland is well represented.

Also in proportion to our population, we receive a very good allocation by way of Exchequer grants. I have heard arguments that North Sea oil and gas belongs to Scotland. It does not. It belongs to the individual companies which have developed it. All those companies have bought the right to search for and exploit that oil and gas under a government licence.

If there is to be a criticism of this Parliament, it is for the lack of support over the years for the very valuable export trade of whisky and beer from Scotland. The Scotch Whisky Act 1988, piloted through this House by my noble friend Lady Carnegy, was basically a support from the European Parliament in guaranteeing that Scotch can only be the product of Scotland. I ask the Government to remember that in our cold climate we need whisky as an anti-freeze.

I believe also that in Scotland we have suffered from far too many of our industries being heavy industries; for example, shipbuilding and steelmaking. We could make money out of ships that were no more than 16,000 tonnes, but we could never compete in the building of ships of 100,000 tonnes.

Ravenscraig steel mills should never have been built in Scotland because, basically, one requires three products to make steel: iron ore, limestone and coking coal, all of which had to be imported to Scotland and the iron ore from overseas. It is only in the Durham area that we have enough coking coal and limestone.

Besides the drinks industry, one of the success stories of Scotland is our development in electronics and computer ware which, with our high standards of education, we should always be able to achieve.

I shall do all in my power to preserve our Scottish legal system, which I consider in many ways to be superior to that of any other country. Equally, I am convinced that our mental health care, our education standards and our children's reporter system arc very good. However, if we had our own parliament which relied on the small population of Scotland for its own finances, I very much doubt that we would ever have the necessary finance from taxes to maintain those high standards. Finally, I thank the noble Lady, Lady Saltoun, for initiating today's debate.

5.42 p.m.

The Earl of Lindsey and Abingdon

My Lords, I should begin by stating that, contrary to what the first part of my title may suggest, I am in fact three-quarters English and only one-quarter Scottish. However, I have lived in Scotland for the past 16 years, as well as at other times during my life. I, too, am most grateful to the noble Lady, Lady Saltoun, for initiating the debate.

The purpose of my speaking today is not to get too involved with the arguments regarding what sort of alternative government Scotland should adopt. I prefer to leave that to others of your Lordships who have far greater knowledge of the constitutional consequences that might arise. My aim today is to try to give an assessment of someone like myself looking from Scotland towards the Palace of Westminster and at the Government in London and to offer some reasons why things have gone against the present Government and the Conservative Party; but which, in my opinion, could also result in the demise of a future Labour Government and party in Scotland in the long term if they adopt their present devolution policies.

The Conservative Party in Scotland has declined during the past 15 years for two main reasons; first, that it is looked upon as an English parliamentary party—a point raised by my noble friend Lord Weir—and has not really made any effort to rectify that by also giving it a truly Scottish dimension. Secondly, it has also tended to use Scotland as an experimental ground for new legislation, the most famous of which was the community charge or poll tax. However, a plus mark has been earned for the abolition of two-tier regional and district councils and reverting back to a single local government authority next April.

Devolution as proposed by the Labour Party would only bring back yet another layer of government which, in the long term, would lead to conflict with the United Kingdom Government and calls for more powers, ending in complete independence. The 3 per cent. tax raising proposal would have a devastating effect on inward investment, regardless of what some noble Lords have said. In the part of Scotland in which I live, which is south of Glasgow, I have seen over the past 15 years a remarkable transition from old, traditional and out-dated heavy industry and coal mining to the new high technology industries.

In conclusion, I make no secret of my wholehearted support for the Union, with the possible further extension of powers to the Scottish Grand Committee, with purely Scottish legislation being taken, if possible, on the floor of the Old High School in Edinburgh. As long as the main portfolios such as foreign affairs, defence and the Treasury remain in the hands of a UK government, that should go some way to overcoming the West Lothian Question and satisfying a Scottish identity within the Union.

I have no idea where your Lordships' House would stand in any proposed changes to the constitutional situation in Scotland. However, I have always been a believer in the old Scottish representation system that we had before life peerages came in and the Scottish system was amended. In spite of my hereditary position, I would support some form of representative peerage for the whole of the United Kingdom. I think that that would be a rather more gentle way of reforming your Lordships' House.

5.47 p.m.

Lord Ellenborough

My Lords, as one who played a part, albeit a small one, in the debates on devolution in your Lordships' House in the late 1970s, I must say that I find it almost beyond belief that the Labour Party, if it were to get the chance, would wish again to get sucked into the devolutionary quagmire which submerged it once and which will, undoubtedly, submerge it again.

The noble Lady, Lady Saltoun, has indeed done a great service in highlighting the great dangers to the unity of Great Britain that exist today. Certainly, as a committed Unionist, I fear greatly for the continued state of the Union. We hear much grandiose talk about Britain's role in the world as we approach the millennium, but the question is: will there be a United Kingdom of Great Britain and Northern Ireland a decade from now, or merely perhaps a Disunited Kingdom of several little regions submerged, for good measure, into Europe?

As one of the relatively few English speakers in today's debate, I find it a little difficult to discuss Scotland in isolation. There are dangers from what is happening in Europe, events in Northern Ireland and, of course, the proposals for devolution of one kind or another for Scotland and Wales; and, indeed, for the English regions. As to Europe, an increasing number of people are worried as to whether the Government—any government—will take a firm enough stand at next year's Inter-Governmental Conference.

Of course, there is little point in taking a firm stand on Europe if the Union itself is to collapse and disintegrate from within. In Northern Ireland, the Government are preparing the way for a devolved assembly, and a greater say by Dublin in Northern Ireland affairs. A Labour Government will propose a Scottish parliament with full legislative powers, a Welsh assembly, and an assortment of mini-parliaments and assemblies for trumped-up regions of England.

I appreciate that there is a case for an assembly in Northern Ireland for historical reasons, because of the deep sectarian divide and the different aspirations of the two communities which make it quite different from Scotland—not least that a part of the minority community in Northern Ireland may wish to join a foreign republic. Nevertheless I must emphasise that the proposal for an assembly in Northern Ireland makes the Government vulnerable to charges of inconsistency and sits uncomfortably with their pledges to preserve the status quo in the rest of the UK. That was seized upon and exploited by Opposition parties in the recent Perth by-election.

If the Government's credibility is not to be undermined in the future, the Government had better get their act together in this respect as it is a difficult argument to get across on the doorstep; otherwise there is a danger that the Government, perhaps unfairly, will be perceived as part-time Unionists—staunch Unionists for Scotland but perhaps not quite so staunch Unionists for Northern Ireland. Any lack of conviction about the Government's attitude towards Unionists in Northern Ireland bodes ill for Unionists in the rest of the UK.

As a Unionist I have no doubt at all that a separate parliament for Scotland and an assembly for Wales would be an unmitigated disaster and lead to constant friction between Westminster and Edinburgh. The SNP would have all to play for and would agitate and engineer a confrontation. There might quite possibly be a cross-party consensus that would develop in Edinburgh over aspects of economic policies placing an intolerable strain on the relationship between London and Edinburgh. It would, as other noble Lords have said, he no more than a halfway house that would eventually, I am afraid, lead to an independent Scotland. There can be no doubt that an end to the Union which has evolved and worked so well for nearly three centuries would be utterly tragic. It would weaken Scotland and weaken England, as together in the UK we are of course far greater than the individual parts.

Of course not all is right. It is no good being too rigidly Unionist. In practice successive governments have not always tended to give British affairs a sufficiently Scottish or Welsh dimension as well as an English one. Sometimes Westminster is too insensitive. If there were time, one could give examples. Certainly it would he helpful, when my noble and learned friend replies to the debate, if he could report on further progress on the proposals in the document, Scotland in the Union, towards updating the working of the Union.

In the meantime the issue of devolution will rumble on as it has for decades. The recent Perth by-election was a pretty dreadful result for the Government, but we should recall the result of other by-elections in the past, such as the Hamilton by-election in 1967 when a Labour majority of 17,000 was overturned by the SNP. Alarm bells rang everywhere and instant devolution was the rage.

I emphasise that if a referendum—there certainly should be a referendum if it came to it—was to be held on the single issue of devolution for Scotland and Wales, the result could quite well be broadly similar to the one held in 1979 when over 67 per cent. of the Scottish electorate voted no or failed to vote yes and a vast majority in Wales voted no, despite opinion polls at the time which showed that there was likely to be a contrary result. Why should this be so? It would be because supporters of devolution always concentrate on benefits but a referendum would bring home clearly the disadvantages, the costs and the adverse effects—considerably reduced Scottish representation at Westminster. As it became clear that the plans for an assembly or parliament would lead to swingeing tax increases, frighten investment and destroy jobs, public enthusiasm would wane, as on previous occasions. It should he stressed that once there is sovereign control over affairs, that means a sovereign duty to pay the bills.

One thing is sure: a combination of over-representation at Westminster, with Scottish MPs at Westminster voting on English matters and English (and Scottish MPs) at Westminster unable to vote on Scottish matters, and England still subsidising expenditure by a Scottish parliament over which there was no control would be a recipe for disaster. That would be an unequal distribution of power, and to paraphrase one of Churchill's famous remarks, would be something, up with which the English will not put". It would, of course, cause an explosion and it could indeed spell the end of the Union.

I have indirectly referred to the West Lothian question; it is almost obligatory to say something about it. I shall simply say that it would be difficult to change a unitary nation into a federal one, but the only answer would be the ultimate absurdity of all regions being given exactly the same powers. Nothing less would do. The East Midland region would require to have its Prime Minister just as Scotland would have its Prime Minister, and its own limited tax-raising powers just as Scotland. The same would apply to the West Midland region and so on. The whole thing is so absurd that sometimes one wonders whether Scottish devolution is so ill thought out and so flawed that it is perhaps no more than a wicked ploy by the present leader of the Labour Party so that, in the event of his becoming Prime Minister, he could get rid of some of his more unpalatable colleagues and send them packing from Westminster to Edinburgh.

I would say therefore that the best form of government for Scotland is the present one but it is most important that the Government emphasise more strongly and with greater clarity what they have already done in implementing proposals for updating the Union, and what other measures they have for recognising the Scottish dimension in our affairs.

5.57 p.m

Lord Tanlaw

My Lords, I am sure we are all most grateful to my noble friend Lady Saltoun for bringing before us this most important issue and allowing us the opportunity to debate it today. I do not intend to take up my full 10 minutes because I wish to raise one question only: it has not been touched on before today but has been touched on on other occasions. It concerns the time standard.

In a devolved or decentralised United Kingdom, who will be responsible for the time standard? Will it be Westminster—I put in a plea for Westminster—or will it be the devolved administrations? I only ask this because this is, unfortunately, an area where the noble Lady and myself may disagree on the wisdom of whether Scotland harmonises with Central European Time or remains with the status quo as it is today. That is not the point I am trying to make. What I am trying to say is that I think the matter of the time standard in this country should be decided long before we reach the constitutional and legal complexities of devolution, when there is a severe danger that we may find that those of us who live in Scotland will be on Scottish standard time and there may even be Welsh standard time. There is a real danger here that political considerations may be put way in front of longitude or latitude, or indeed common sense. I make a plea that this subject should not be forgotten. It has not been mentioned today and I am not aware that it has been raised in relation to any of the constitutional matters that have been discussed in such depth, either behind closed doors or in open conference.

I should also like to know what is the position of Her Majesty's Government in relation to the implementation of Single/Double Summer Time. It appears that the attempt of the noble Viscount, Lord Mountgarret, to get a Bill through your Lordships' House affecting only England and Wales was simply another delaying measure by the Government to prevent them having to come to a decision on the issue before the next general election. What is the position of the opposition parties? There has been no pressure by them to bring this matter further forward than it was in 1989, when the last statistics that we have before us were produced.

I have raised this question, as have other noble Lords, but we are getting no replies. People are looking in the other direction and saying that there are other more important matters to be dealt with in the Palace of Westminster. We are prepared to discuss devolution and the constitutional reform of your Lordships' House, yet we overlook one of the basic issues affecting our lives—namely, the time of day. I should like to know from noble Lords in opposition who are going to promote devolution whether the subject is included in their programme. I should be interested to know which department in a devolved government based in Edinburgh would be responsible for the time standard.

All the evidence shows that a small minority of Scottish hill farmers, the Scottish construction industry and men working on high ladders in Northern latitudes seem to have tremendous pull with the Government in influencing their decision for us not to go ahead and harmonise with Central European Time. It is. an absurdity that this situation is allowed to continue. Those who have to do business and the travelling public are inconvenienced. What is the point in getting a train to Paris which takes three hours when our clocks say that it takes four hours? Those are matters that have been discussed on other occasions.

It is not to the benefit of Scotland to be on a separate time. Many noble Lords have talked about inward investment. Have they considered that the turnover of business in Charlotte Square could be increased by another 20 per cent. if our time was linked to Central European Time? Apparently in Scotland we live in another world. As I have said before, it is a "Brigadoon" situation.

I would like noble Lords on both sides of the House to get together in a committee. If they are prepared to look at devolution, will they please pay attention to the time standard and come to some decision so that businessmen will know where they stand? Can we please have some more statistics? If there are that many hill farmers—and Scottish hill farmers would have another hour in bed—and a large number of people in Scotland who feel strongly, then perhaps we can have more statistics. Such information is not available to the Scottish Civil Law Office, which apparently is responsible for this subject in Scotland. I bet not many noble Lords knew that. I had to find that out in a rather roundabout way.

There has been a lot of talk. Other noble Lords have talked about referendums. When other questions of great constitutional significance are considered, for goodness sake let us take the opportunity to consider the question of time and get it out of the way before we get involved with devolution.

This is a matter which will continue to come up. If there is no referendum and the question has not been put properly to the people, we shall make a bad decision on the British time standard simply because political considerations will take priority. In that case, the decision is bound to be wrong.

I ask merely that in all the consultations and committees and in all the manifestos that will be produced before the next general election, some clear indication—much clearer than we have at present—will be given as to where the Opposition parties stand and where the Government stand. They have avoided the subject like a raging bull; they turn the other way and run like mad whenever the subject comes up. Let us have some real commitment. Businessmen, whose support all the parties want, need to know what is their policy.

That is my only contribution to the debate. I am grateful to my noble friend for allowing me to make it once again.

6.5 p.m.

Viscount Hood

My Lords, a century ago a parliament for Ireland was the great political issue of the day, the composition of the parliament and its powers being essentially those which are now contained in the Labour Party's proposals for Scotland. There were many differences between the Irish situation and that of Scotland, but the main issue then, as now, was what was to be the Irish representation in Westminster and what powers was it to have.

It was first proposed that there should be no representation. However, it rapidly came to be realised that that would inevitably lead to separation. It was then suggested that the Irish membership of the House of Commons should vote on certain subjects, the so-called Imperial subjects—foreign affairs, defence and trade. However, that was recognised as being an impossible distinction. Gladstone concluded that the distinction could not be drawn as it passed the wit of man. How much more true that must be now with our involvement with the European Union.

As an Englishman I am aware of the periods when the majority of the Government in the House of Commons has been much less than the Scottish representation. That was eminently true in the Parliaments of 1974 and 1976. While all authority lies at Westminster that is unobjectionable, but it becomes objectionable when a Scottish parliament has been created.

Gladstone said in relation to Ireland: I will never be a party to allowing the Irish to manage their own affairs in Dublin and at the same time come over here and manage British affairs. Such an arrangement would not be a Bill to grant self government to Ireland, but one to remove self government from England. It would create a subordinate Parliament indeed, but it would he the one in Westminster, and not that in Dublin". If one substitutes "Edinburgh" for "Dublin" and "Scottish" for "Irish" that statement is relevant to the present problem.

I view with great concern the concept of a Scottish parliament. If there were to be a federal parliament in Westminster that would have some logic. However, as an Englishman I do not believe that there is any demand for breaking up this country into Cumbrias and Wessexes. The English do not want that. So we are left with the problem of the West Lothian issue.

I fear—and I recall my noble friend Lord Gray of Contin saying the same—that if there is devolution as now proposed it will inevitably lead sooner or later, and maybe sooner, to separation of the country and the destruction of the Union. That would be a tragedy for England, but it would be a disaster for Scotland.

There have been many speeches about the economic effects of independence for Scotland. I should like to touch on two aspects. One relates to oil. As your Lordships will recall, the ownership of oil in the North Sea is regulated by a treaty, which is about 30 years old, between the riparian powers dividing on the map the areas between the riparian countries. Those treaties were made by their governments and ratified by their parliaments. They will continue irrespective of what might be done in terms of devolution for Scotland. In those treaties, there was no concept that any one of the riparian powers would be divided. Since those treaties, there have been innumerable long-term agreements between all the major oil companies of the world and the United Kingdom to which the Government of the United Kingdom—not a government in Scotland—is party. In a proper world, those cannot be altered. No doubt by negotiation in the financial circumstances of a separation, they would be one of the factors; but that is very different from assuming that the oil from the North Sea would immediately appertain to territorial Scotland.

My other point relates to the European Community. My noble friend Lady Elles has already spoken on it. In great detail she raised the doubts about whether Scotland would be admitted as a member of the European Union. We all know that admission is by unanimous vote. We all know that every negotiation has been long. But there would certainly be a gap. Numerous important industries in Scotland, owned by foreign companies, enjoy the many benefits of Scotland but they require the membership of the European Union if they are to continue manufacturing there. They would have hastily to withdraw if that were not the case.

I follow what so many other speakers have said. I hope that the aspirations of Scotland, with which I have the utmost sympathy, can be achieved without constitutional change because constitutional change will lead to trouble.

6.12 p.m.

Lord Belhaven and Stenton

My Lords, after listening to about 90 per cent. of this debate, it occurs to me that the British Constitution and your Lordships' House are still the wonder of much of the world. Only last week I showed a Polish lady from the Polish Sejm around this Parliament. She observed to me that she liked the House of Lords better. People come here to see how we manage our affairs because we have the reputation of being the best managed country in the world. We have had that reputation for some 200 to 300 years, almost since the Union between Scotland and England.

Like other noble Lords, I am grateful to the noble Lady, Lady Saltoun, for introducing the debate. Her speech is a classic; I shall read it with great interest. She has obviously gone to a great deal of trouble to elicit her facts. Her descriptions of devolution and Scottish independence made my hair stand on end and made me rather glad that as a Scot I am at present resident in England.

In the year 1707 a predecessor of mine in the Belhaven title, the second Lord Belhaven, was a prominent opponent of the Union with England in the last Scottish Parliament. He made a speech which was widely reported in Scotland, and distributed in broadsheets around the streets. I believe that it caused a bit of rioting too. I have read the speech many times and have often wondered whether he really said the words attributed to him. The speech was flowery and very emotional—I would not dare to make such a speech in your Lordships' House today. However, I shall quote the most famous sentence. Addressing the Lord Chancellor, as was customary in the Scottish Parliament in those days, he said: Above all, my Lords, I think I see our ancient mother Caledonia, like Caesar, sitting in the midst of our senate, ruefully looking round about her, covering herself with her Royal garment, attending the fatal blow, and breathing out her last with an 'Et tu quoque mi fili!'". As a Scot who has been in exile for the past 12 years, I recently visited Scotland. I did not think that after nearly 300 years of Union our ancient mother Caledonia was doing too badly. I thought that she was doing rather better than when I left in the early 1980s.

So what is the problem? If one takes Scotland as a political entity—and it still is a nation—it is somewhat unfair that she should have been governed for the past many years by the party which managed to poll only 24 per cent. of the vote. That is more than the Liberal Democrats, but still not enough possibly to justify being a government. On the other hand, we might say that southern England would be unfairly treated by a Labour Government. But southern England is not a political entity or a nation—we do not know where it starts or finishes; Watford, or somewhere—in the sense that Scotland is.

However, it appears as though the majority in Scotland now want a Scottish parliament. But I wonder whether those people have faced up to what that means. We have heard much about it today, in particular from the noble Lady, Lady Saltoun. If Scotland is to govern her own internal affairs, with her own Parliament, her MPs in Westminster will certainly have no moral right to vote on English internal affairs. We have heard that previously. But what happens if we have a Labour majority in the other place which depends on the Scottish vote? In what position does that put the people of England?

We have already had raised the question of over-representation of England. I shall not pursue it. That would have to cease and the Labour Party would lose an important part of its Scottish power base. I suppose that the party opposite has considered that situation. However, the Labour Party imagines that by one means or another it will overcome the problem and have its cake and eat it. For a short time, perhaps it will. But the Labour Party must know that the situation will not last. No amount of fiddling about with English regions will solve the West Lothian question. The party must know that. So why does it persist in its present policy?

I have to say that some time ago, in the late 1940s and 1950s, when my father and others founded a movement called the Scottish covenant and achieved one million votes for home rule, the Labour Government were absolutely opposed to the idea. But the Labour Party has changed its mind on that, as it has on many other things. It is afraid of the SNP and wants to steal its thunder. However, the solution which the Labour Party and the Liberal Democrats propose is, in my view, half baked and will not work. As I see it, the only logical policies on this subject in Scotland are those of the Conservative Party and the SNP: either independence, with all that it entails—and, as we have heard today, it entails a great deal—or things as they are, with all that that entails. I do not see that there is any half-way house; and I think that the parties opposite are deluding the Scottish people and themselves by suggesting that there is one.

I suggest that we could have a referendum on Scottish independence. It would be a clear choice and people could make up their own minds. Let us have that, as we should have a referendum on Maastricht—another treaty of union which may have more far-reaching consequences than its proponents are at present prepared to admit.

The parties opposite, with certain honourable exceptions (that does not mean that others are dishonourable), are enthusiastic about Maastricht. Indeed, in the debates on the Treaty of Maastricht two years ago, the Front Benches seemed to be interchangeable. Her Majesty's Government could have spared themselves quite a lot of trouble if they had called on the Opposition to answer even half of the amendments.

I would seem to be digressing but I am not. If the parties opposite are serious about regional assemblies, and about being at the heart of Europe at the same time with more power for the European Parliament and Commission, why should any of us waste our time coming here, and waste the taxpayers' money? The Palace of Westminster would be ideal as a museum. To use a fashionable phrase, the place would be cost effective. It is not so now because people are paid who sit in another place, we are paid expenses, and so on.

I would urge that we have no more nonsense about Scottish parliaments in the UK. I believe that it is nonsense. Let the Scottish people decide what they want— independence or the Union—and do not encourage them to imagine that they can have their cake and eat it.

Incidentally, I do not believe that the comparison with southern Ireland by the noble Lord, Lord Taylor, is apt. southern Ireland has been a massive beneficiary of EC subventions and subsidies and I do not believe that there is a parallel with Scotland.

Finally, it seems to me that Scotland already has a good deal of devolution. It would be perfectly practicable to give it more by returning powers to local government which have recently been eroded. Attention was drawn to that point by the noble Lord, Lord Taylor. Scotland has its own legal system, education system and its own established and self-governing Church. There is an abiding patriotism among Scots of all persuasions which the Union with England has not affected one little bit. More devolution except at local government level will mean a Scottish parliament. In my opinion, sooner or later a Scottish parliament will lead to independence. I do not see any middle way .

6.20 p.m

Lord Lyell

My Lords, I wish to thank my noble friend Lady Saltoun for her great speech and for giving us the opportunity today to speak. Noble Lords may recall the 1992 general election. I do for one reason. It was then that the French television station, Antenne 2, brought a team to Kirriemuir. My noble neighbour Lord Mackie seems excited. It was not to film the cattle or the Kirrie show that it came, but to interview me about the general election in Scotland. It is no coincidence that the team is across the road on the lawn today, not far from your Lordships' House. I was able to stress to the excellent team from another part of Europe that it seemed to me that that general election and political scene in Scotland had four items on offer.

The first item was independence. The noble Lady made an excellent speech about that. With accountants and young men of figures, it seems to me that some of the arguments advanced for independence in Scotland are based on the calculation of 2 + 2 = 5—an outburst of joy and a vast boost in economic activity in Scotland. Bluntly, I do not believe it. For an independent nation, we merely have to look to south-west of Scotland at a proud, free and independent nation of 3½million people—it has been mentioned three times by the noble Lord, Lord Taylor of Gryfe—and that is the Republic of Ireland. The noble Lord was quite harsh on three of my colleagues, and I hope that he will be able to restrain himself and not interrupt because my time is limited. He will have heard Mr. Tony O'Reilly, a famous Irish wing-threequarter who went on to become a world man of business and headed the Heinz corporation. What did Mr. O'Reilly have to say as recently as last week? It was quite time that the United Kingdom Government raised taxes on business. Where? In Northern Ireland, so that taxes would be in step with those in the south of Ireland. Fascinating. Thus the tax regime on business would be the same throughout the United Kingdom.

That is one element of the great success that might have been evident in the Republic of Ireland, but it shows that the United Kingdom and Scotland are still in the lead.

My noble friend Lady Saltoun spelt out excellently her sums in the economics of independence. The point on the Republic of Ireland being a major beneficiary in the European scene was raised by my noble friend Lord Belhaven and Stenton. I am reminded of my activities across the water in Northern Ireland and the cry of many farmers, "Act fast while grants last". That is the motto of some nations who are looking for inward investment.

The second item that was and still is on offer in Scottish politics is devolution— what I call the Labour option. I was fascinated to hear the noble Lord, Lord Carmichael, and look forward even more to hearing the noble Lord, Lord Ewing, to see whether there is unity in the Labour Party. The West Lothian question is still with us. The parallel has been proposed with the Northern Ireland Members of Parliament before 1971, but it is not strictly relevant since the numbers were very different from those with a devolved Scottish Parliament.

The third option that was evident during the 1992 general election was the Liberal Democrat option of a federal system. I wonder whether it would be a serious problem to many of us in Scotland as long as it was acceptable throughout the United Kingdom. The trouble is that people, particularly the Liberal Democrats, know that regional assemblies on the lines of, for example, the federal German system are not popular and are not high on the list of demands for England and Wales. The noble Lord, Lord Taylor of Gryfe, also knows that parallels are to be seen in Switzerland; but perhaps we will not go too far down that road. He will know of the problems with the referenda on the Alpen Initiative.

The fourth option which was and still is on offer as regards politics and the constitutional position in Scotland is the Conservative option: leave well alone; "it ain't broke, don't fix it", but you can certainly improve it. On Sunday at a party meeting in my area of Scotland it was mentioned to me that the Conservatives have, according to the polls, 11 per cent. of the support of the electorate in Scotland. That is most interesting; but I wonder where, on the basis of the same polls, devolution stands in the priorities of all those who expressed dislike or hatred of the Conservative Government. The point was well made by my noble friend Lord Gray of Contin.

Whenever I watch television or listen to the radio in Scotland, I hear the same arguments, the same quotes and the same views, the same happy word lines as I have been hearing over the past 20 years. I am reminded of the former Member for Berwick and East Lothian, the late John Mackintosh. Twenty years ago in another place he spoke of a devolved system for Scotland and whether it would improve government. A young colleague to whom he was speaking gazed up at the sky and said that he had no idea. It seems to me that we have not advanced much in the past 20 years. Any noble Lords who come north of the Border and turn on the television or radio will hear that devolution is the number one item on the agenda.

I was happy when the noble Earl, Lord Perth, recited, "nanny knows best". He was referring to the man in Whitehall; but to any of us who turn on the television or radio in Scotland, it seems that nanny—the media—tells us that it knows best and that constitutional reform will bring about exactly what I suggested: 2 + 2 =5—an outburst of joy. I hear, "It won't go away". As a cynical accountant, I wonder why, with both Radio Scotland and BBC television in Scotland, instead of being told what is coming, we are continually asked, "Please watch BBC Scotland or listen to the radio". That makes me, as an accountant, mildly suspicious. I ask why they are doing it. Is it anything to do with the enormous boost in satellite television that I see around Scotland?

Looking around the Chamber today, I see that there are still the Angus five; it was six when my noble friend Lord Strathmore was here earlier. My noble friend and neighbour Lady Carnegy made a notable speech, and we are lucky to have my noble and learned friend Lord Fraser to reply at the end of the debate. There is also my noble neighbour Lord Mackie. Many of your Lordships will not know that my noble friend Lady Elles is a former Angus resident, she used to go there 26 or 27 years ago, so she speaks with considerable experience of what we want in Scotland. My noble friend Lady Carnegy used three figures which are particularly relevant: 8.8 per cent. of the population of the United Kingdom is in Scotland. The taxpayers of Scotland contribute 8.3 per cent. of the tax. We draw out 10.3 per cent. I have two words to say: "Hush, hush!". Do not disturb the status quo; we have a new single tier of government; please let it settle down. But with all the improvements that we might make, let us not disturb the Carnegy formula.

Lord Mackie of Benshie

My Lords, I too must thank the noble Lady for initiating this debate. I sympathise with her greatly in that the first time she tried to hold this debate a former Prime Minister died and it was cancelled. I am afraid that on this occasion the hordes of pressmen outside this palace and inside it are not waiting for news of the debate on Scottish devolution. Nevertheless, it is important and has generated a large response from the opposite Benches.

The noble Lady said that there were three possibilities: devolution, separation and the status quo. She proceeded to give a fair account of devolution and separation and went on to demolish them with savage argument. I suspect that when she rises to reply, she will come down in favour of the status quo.

We have heard much about the status quo and how splendid it is. The Secretary of State has immense power in the Cabinet and there are 5,000 civil servants in Scotland. I must say that we have admirable Ministers. They are representative of an older and more pleasant breed of Tory than the Thatcherite ones. They are amiable indeed. The noble and learned Lord, Lord Fraser, on the Bench opposite is one of them. There is the admirable Sir Hector Monro, and the Secretary of State is a very nice man, as is Lord James Douglas-Hamilton. They fight for Scotland. But whom do they fight? They fight their colleagues in England.

Occasionally they lose. Indeed, we have in the Chamber another good former Minister, the noble Lord, Lord Sanderson of Bowden, who also protects the status quo.

However, they failed to stop the imposition of the poll tax first on Scotland. They have so far been reasonably successful in stopping the privatisation of the Forestry Commission, which every landlord in Scotland who grows trees knows to be an absolute nonsense. They have succeeded in fighting off the Thatcherites enough not immediately to privatise water in Scotland. So I suppose that one could say that they do a good job. But they have no mandate at all. Why they object to PR, I do not know. That would give reasonable representation in Scotland of the Tory point of view. There ought to be representatives of the Tory point of view, although they would not be in much of a majority, if at all. I do not believe that the evidence shows that the people of Scotland are satisfied with a system that refuses any real democratic representation because it is settled by the situation in the country as a whole, though only narrowly.

Let me say at once that I am a unionist to the extent that I believe in a United Kingdom. I believe that the United Kingdom has worked reasonably well. Certainly Scotland benefited from the extension of trade after the union of the parliaments. The tobacco trade in Glasgow, for instance, built Glasgow to a large extent. I suppose that the benefits of union have been considerable. Whether a better arrangement could have been reached or we could have had the benefits without the snags is another question.

Of course we need an equalisation fund. Scotland comprises a third of the whole area of the United Kingdom. It is nonsense to expect it to maintain the same decent services throughout Scotland without an equalisation fund. That we accept. Indeed, we must do. I cannot believe that anyone who wants to preserve the United Kingdom would deny to Scotland that advantage, if indeed there is a Scottish parliament for Scottish affairs.

Many people have said that there is no future in a devolved parliament for Scottish affairs. They have said, with varying degrees of intensity, that it would lead inevitably to an independent Scotland. With respect, that is rubbish. I can think of no case in which granting of reasonable independence in a federal system has led to separation. For example, the situation in Ireland was quite clear. There was no feeling that Britain would give them any independence. It was not on offer. The result was that eventually there was a rebellion and a completely separate nation. The situation in Slovakia was interesting in that there was no genuine devolution of power there and they made the foolish decision to separate. It was not a case of refusing power or local power. So that argument must go by the board.

Southern Ireland, which was the example of the noble Lord, Lord Taylor, was not apt to the situation. It is of course independent. But the situation in Northern Ireland—in Ulster—when they had a parliament in Stormont is extremely interesting.

Many years ago, just after the war, I went to Northern Ireland and did a tour. I was struck by the fact that the contact between the Government, the university and the officials was very tight. They understood perfectly the problems of the Province. For example, long before this country had thought of silage and giving grants for the construction of silos, they were on to it there because of Professor Morrison and his close contact with the Government. There are many other examples in agriculture, and certainly in transport. They had an excellent transport system—again, because of the fact that in a small tightly knit community they knew what was going on and had the power to act. The other item which stands out was its attraction of industry. There they were doing things that we only started to do with Locate in Scotland in the early 1980s. They looked after people who wanted to locate in a proper way because they knew of its great importance to the Province. That is the kind of example to which we need to look.

Certainly the whole point about Stormont was that it broke down because of the appalling neglect of minorities and human rights. No one would defend Stormont on that ground. But on technical efficiency, the attraction of industry and all the things that noble Lords opposite say would disappear under a devolved parliament, they were doing very well at that time, until the whole system broke down owing ultimately to the lack of a democratic attitude to minorities.

So there is no question. We can dispose of the argument that devolution of power inevitably leads to separation. I cannot think of examples and I do not believe that the noble Viscount, Lord Hood, will think of any either. The advantages are plain to see. The fact that there is a centre of genuine power in Scotland leads to many advantages. It leads to people staying in Scotland and to Scottish initiatives. What we need now in Scotland, since the Empire has disappeared—every one of us can give examples of relations who have gone to make their money planting tea or, if they were graduates, to join the Indian Civil Service and so on; all that has gone—is to retain our native energy there.

The arguments about tax are complicated by the fact that many companies have their headquarters outside Scotland. It is very difficult, although examples have been used and guesses made to try to say exactly what is the tax position.

I agree that the macro-economic factors must stay within the United Kingdom, and indeed within Europe. The essence of the matter is whether a Scottish parliament, with a democratic background, could produce the sort of people who would make Scotland a better place to live—more prosperous. I believe it could. When one looked at the people elected to Parliament and one looked at Northern Ireland, it was found that the people with real power and ability stayed at home and those who came to Westminster were not of the same quality as the people who stood for the local parliament. I believe that that would happen in Scotland.

The West Lothian question can be settled. Everyone talks about it. Enormous harm has been done by Tam Dalyell in producing a phrase which everyone knows, but nobody quite understands how to overcome the problem. In my view it can be overcome quite simply, even without regional government, by restricting the voting powers of Scottish MPs to the affairs of the nation. I know that the Labour Party does not like that idea; it wonders about the Scottish element in its majority. But it must learn that if it does not have a majority in England, it will need to adjust its policies to the wishes of the people of England; that is what democracy is all about. That is what I should like to see applied in Scotland.

The Motion of the noble Lady is interesting, but the first alternative of a devolved parliament is the right one for Scotland.

Lord Sanderson of Bowden

My Lords, before the noble Lord sits down perhaps I can ask him something. I believe he came in on my speech. Can he say whether he is in favour of identical powers being devolved to the regions of England, as I thought was his party's policy?

Lord Mackie of Benshie

My Lords, it is extremely unfair to attach party policy to one. In our party policy we say that the regions of England will need to want it.

6.42 p.m.

Lord Ewing of Kirkford

My Lords, I join with all those who contributed to this debate in a word of thanks to the noble Lady, Lady Saltoun, for initiating what is a very important debate, though I agree with the noble Lord, Lord Mackie of Benshie, that the press—the media—are hardly waiting on every word that has dropped from your Lordships' mouths this afternoon. Somehow or other I have the feeling that there is something else—I do not know what—taking up their attention this evening!

This issue has been on the Scottish political agenda for a long time. Those Members of your Lordships' House who argue that it is not at the top of the list of priorities of the people of Scotland may be astonished to find that I agree with them. When one talks to the people of Scotland, one finds that at the top of their list of priorities are housing problems, education, schools, the difficulty in making ends meet, their mortgage repayments and their negative equity.

I agree with all that, but it is only an excuse for not doing something about devolution rather than a reason. The most dangerous thing your Lordships' House can do is to lull itself into a false sense of security that because this subject is not at the top of the list of priorities we ought not to do something about it. If we wait to the last minute, until it comes to the top—as surely it will—and then try to deal with it, we shall only produce panic measures. That is why I value the opportunity provided to us today by the noble Lady, Lady Saltoun, in this debate.

The matter has been on the agenda for a long time and I have been involved with it for 25 years. During that 25 years I have been joined by some interesting people. The noble and learned Lord, Lord Fraser, was an enthusiastic devolutionist at one time during that 25-year period; the noble Lord, Lord Younger of Prestwick, wisely absented himself from our debate today; a good feast of one's own words always gives one indigestion, and he was certainly right not to take that risk. Malcolm Rifkind, the Defence Secretary, was another supporter. At one time one could not get into the discussion room to discuss devolution for Scottish Conservatives.

I can give your Lordships one of the reasons why. In the 1974 Conservative Party manifesto—on which John Major himself stood—it was said, We want to give the people in Scotland the opportunity to decide their own spending priorities". That is a noble ideal and one that I am sad that the Conservative Party departed from for, in my view, purely party political reasons. But I want to deal with the substantive points raised in the debate and unfortunately I shall be addressing some points raised by noble Lords in their absence and I apologise for that.

First, both the noble Baronesses, Lady Carnegy and Lady Elles, raised the question of grants to Scotland at the present time; the per capita grants. It is almost as though the only criteria used to calculate expenditure is "per capita"; per head of population. Noble Lords know perfectly well that that is not the only criterion. For example, Scotland has one-third of the land mass of Great Britain; it has much larger rural communities; it has more rural schools per head of the population than England or Wales, and rural schools are much more expensive to run than large city schools.

A whole host of other criteria have to be used when deciding how expenditure should be distributed. The basis is not purely on the 8.5 per cent. of the population and the 8 per cent. contribution in tax. A whole host of criteria should be used and I want if I may to lay that issue to rest. There is no question of an incoming Labour Government abolishing equalisation. In any case only a Labour Government will give the people of Scotland a devolved parliament.

The West Lothian Question is another substantive point raised by many noble Lords who have contributed to the debate. The West Lothian Question has been conceded in principle by the present Government. Built into the framework document dealing with Northern Ireland is a specific pledge that the Northern Irish MPs can come to Westminster and vote on English and Scottish matters. It is not good enough to say that they are small in number compared with the number of MPs coming from Scotland; it is the principle that is at issue. The principle has been conceded. The noble Lord who mentioned the Irish scene and said that it stripped the Government of some of their credibility had a point, because the argument on the West Lothian Question has now been conceded in principle in the framework document for Northern Ireland.

I turn quickly to the whole question of inward investment. For a number of years I regarded the way in which that debate was conducted, particularly by those—I say this with respect—who do not want any change in Scotland, as the politics of fear. Those who do not want change say that, if we go down this road of devolution, it will, first, lead to separation and, secondly, denude Scotland of inward investment. Neither of those things is true.

Let me put on record a strange phenomenon in regard to the Scottish National Party. Those who have addressed their comments to the SNP this afternoon have been addressing the wrong audience. There is nobody—but nobody—in your Lordships' House who has fought the SNP on its separatist policies more fiercely than I have, and those comments were addressed to the wrong audience. But the SNP's popularity has not risen or fallen in line with the rise or fall in the popularity of the Labour Party in Scotland; it has risen or fallen in line with the rise or fall in the popularity of the Conservative Party.

There is evidence of that. In 1979, when the outgoing Labour Government, in which I was a Minister, were heavily defeated in a general election, the SNP lost 10 of its 11 seats in Scotland. Three months after the referendum had failed to produce the 40 per cent. under the George Cunningham amendment, the SNP lost 10 of its 11 seats. The four seats which the SNP holds in Scotland at the present time are four Conservative seats. The SNP's popularity rises and falls in line with the fall and rise of the popularity of the Conservative Party, and the Conservative Party will have to come to terms with that. On inward investment, it simply cannot be shown that Scotland will suffer in inward investment terms if we have our own parliament.

Perhaps I may leave your Lordships with one or two facts. The noble Lord, Lord Younger, who will read this for himself, is chairman of the Royal Bank of Scotland. I saw with interest the comment from a document which the noble Lord, Lord Younger, had produced. I think it passing strange that the chairman of the Royal Bank of Scotland should say such things about the Scottish economy when the Royal Bank itself invests in the quasi-autonomous regions of Spain. It is not afraid of devolution in Spain, but it is afraid of it in Scotland. What kind of Scotsman is that? United Distillers has investments and joint ventures in the quasi-autonomous regions of Spain, to which the noble Lord, Lord Elis-Thomas, referred. British Steel disinvested in Scotland, a part of the Union. Where did British Steel invest? In the quasi-autonomous regions of Spain. Marks & Spencer, which is well-known for investing in devolved regions, has also invested in those quasi-autonomous regions in Spain. It simply cannot be shown in any economic evidence that devolved parts of a country suffer from a lack of inward investment purely and simply because they have their own parliament, and it will not happen in Scotland either.

The proposals coming from the Scottish Constitutional Convention, of which I am proud to have been the joint chairman and still am—with Sir David Steel—are well worked out. The noble Earl, Lord Perth, suggested that we ought to have a Royal Commission. I have to say to your Lordships that if there is any suggestion that a Royal Commission should he appointed, the people of Scotland will throw up their hands in horror and say, "Not again. We have been through this time and again. The time is not now for talking. The time is now for acting".

These proposals for an assembly are well thought out. There will be 112 members. It will not be a carbon copy or a mirror image of the Westminster Parliament. It will have pre-legislative committees. I accept—I argued this when the proposals were formulated—that Orkney and the Shetland Islands are just as remote from Edinburgh as they are from London. Indeed, in the last devolution Bill Orkney and the Shetland Islands were opted out in Clause 83 because of the referendum that they themselves had had. In order to avoid this question of remoteness, the pre-legislative committees is where the legislation will be discussed as it is being drafted and not after it has been drafted. The maximum degree of agreement can thereby be reached before the legislation comes to the Floor of the House. The pre-legislative committees will be a valuable asset of the democratic process in the Scottish parliament.

I wish to make two final points. The noble Lord, Lord Elis-Thomas, pleaded for all parties to get together. It is a plea that I have often made myself. The reason that the Conservative Party in Scotland is not in the Scottish Constitutional Convention discussing the issues with us is that it will not join. It does not want to discuss or consider the possibility of change—and from its point of view I understand that. If I thought for a single minute that anything I was doing was endangering the Union, I would stop tomorrow. But I do not believe that for a minute. Indeed, I believe that the process I am following will strengthen the Union.

The Government will not admit that they have lost the argument with the Labour Party, that they have lost the argument with the Liberal Democrat Party and that they have lost the argument with a lot of the communities in Scotland. They have lost the argument with the people of Scotland. That is the most dangerous thing that faces Scotland and the United Kingdom. In order to respond to the argument they have lost, there can be no shadow of doubt that the creation of a Scottish parliament is the answer.

Baroness Carnegy of Lour

My Lords, before the noble Lord sits down, he has made a very interesting speech. But can he answer the question I specifically asked him? Does his party still intend to allow the Scottish parliament, should it ever be created, to vary tax by 3p, up or down?

Lord Ewing of Kirkford

My Lords, in the last Scottish devolution Bill—the noble Lord, Lord Pym, who was with us at the beginning of the debate, shadowed the late John Smith and myself on the Bill in another place—the great criticism coming from the Conservative Opposition was that the Bill lacked teeth—it had no tax raising powers. Having tax raising powers in the present proposals is actually our response to that Conservative Party criticism.

6.57 p.m.

The Minister of State, Scottish Office (Lord Fraser of Carmyllie)

My Lords, it falls to me to wind up this extremely interesting and positive debate. Like other noble Lords, I congratulate the noble Lady, Lady Saltoun, on introducing it and on setting out so fully the important questions that have to be addressed. In congratulating her and thanking all those who have contributed to the debate, perhaps I may particularly single out the noble Lords, Lord Elis-Thomas and Lord Cooke. They have no cause to apologise for participating in a debate that is to do with the governance of Scotland. Those of us who are Scottish and Unionist appreciate all too clearly that others within the United Kingdom have a very real right to participate in a debate on the government of Scotland because any changes can affect them just as much. I regret that I have to tell the noble Lord, Lord Tanlaw, that I cannot tell him immediately what might be the proposals in a devolved assembly to deal with the issue of the time standard.

It is now some 16 years since the Scotland Act 1978 was repealed. In this detailed matter of constitutional change—important as it is—we are no further forward. For that reason it has been useful to have this debate. I do not often quote the words of Mr. Alex Salmond, but, as the noble Lord, Lord Ewing, will recall, he absolutely floored his colleague George Robertson when he asked him repeatedly in the course of a televised debate, "Where is the Bill, George?" There is no detailed set of proposals. I understood that the noble Lord, Lord Ewing, was in charge of the bringing together of the detailed proposals. But it would also appear that Mr. George Robertson was to set those out. Your Lordships will be aware that were a Labour Government to be returned, it would be a central pillar of their first Session in Parliament that there should be a Scotland Bill, and that the matter should be settled within the first year. But, above all, there is no resolution of the West Lothian question, and there is no analysis of the financial arrangements and problems that would follow from such a change.

With a typically intellectually rigorous approach, the noble Lord, Lord Ewing, in the course of the debate on the Local Government etc. (Scotland) Bill on 28th June last year, had this to say when the West Lothian question was raised: The situation now is different. A Labour government intend to establish regional assemblies as well as a Scottish Parliament and a Parliament for Wales. So the West Lothian question will not arise. There is now an answer to the question which I freely admit did not exist in 1978. I wish that it had existed, but it did not".—[Official Report, 28/6/94; col. 668.] That is a perfectly intellectually sound approach to take. But what do we now have from the leader of his party? An expression that there is an anomaly there but the more he has looked at the issue in England, he has appreciated that there is absolutely no desire on the part of any of the English to have regional assemblies which would have to have, if the West Lothian question is to be answered, precisely the same powers that a Scottish Parliament would have. That would mean, for instance, that the great English common law would be fragmented so that those who lived in Wales, Liverpool, Bristol and Newcastle would, as is the case in the United States of America, be subjected to different criminal laws. I have yet to find a single English person who believes that that is a desirable outcome of constitutional change.

Lord Ewing of Kirkford

My Lords, I am very grateful to the noble and learned Lord for giving way, and I apologise for asking him to do so. The answer that I gave to the question on 28th June 1994 was an absolutely brilliant one. But there is an even better answer now provided by Her Majesty's Government in their framework document on Northern Ireland. It has taken the Minister to 4th July 1995 to respond. We have an even better answer now and that is why I used that better answer today. Wait until next year!

Lord Fraser of Carmyllie

My Lords, Northern Ireland is a delicate and difficult situation. We want to see what comes out of the discussions that are going on at the moment. The noble Lord can rest assured that I have been using that quotation by him the length and breadth of England. Lest he feels that I shall forget about him, I promise him that in the next year I shall continue to rely on his useful and honest answer. Even George Robertson admits that there was an anomaly. He said that it was a "temporary" anomaly. What is not clear to me is that if he regards it as temporary, what is it that he proposes to do to eliminate that in the longer term?

Apart from the West Lothian question, which has not begun to be settled, there has been no proper examination of the implications of this particular form of constitutional change being promoted by the Labour Party, to look to see what is the financial framework under which the new arrangements would operate.

As in all government, finance has to be at the heart of the debate. The proposals of the Labour Party will stand or fall very largely on the quality and durability of the financial arrangements. I say very clearly and deliberately that their present proposals fail any test of durability by a wide margin.

The present system that determines expenditure for Scotland is a block and a formula with which many noble Lords will be familiar. Over most of his programme the Secretary of State receives a proportion of the changes to comparable programmes agreed for England; but then he has full discretion within his block to allocate his total resources to meet the needs of Scotland. He remains the Secretary of State and a key member of the Cabinet team—and never more keen than today !—and, secondly, the freedom which he has is important to allocate his resources to meet Scotland's needs.

What that means is that while the changes in aggregate expenditure in Scotland reflect the overall strategy of the United Kingdom Government, their distribution is determined for Scotland by the Secretary of State. If a new system is to be proposed, we have to ask what benefits it would bring beyond the very substantial benefits which we already have.

So far as it can be identified, in Scotland in 1992–93, the total expenditure by Government was something like £27 billion. The total revenues coming out of Scotland were something like £19 billion. As noble Lords opposite will appreciate—because they will have heard it frequently—the Scottish National Party would plead their alibi at this stage and say, "Look at the great resources we would get from North Sea oil". Let us not get into an international league dispute about this. For the sake of this argument let us assume that the totality of the revenue to come from the North Sea is to be given to Scotland. In that same year it amounted to something like £1.2 billion to £1.3 billion. So there would he a budget deficit for Scotland, even with the totality of the North Sea oil revenue, of something like £6 billion to £7 billion. That is half of the Scottish Office's present budget.

We are told that the parliament will have at its disposal the proceeds of value added tax and income tax in Scotland. That is nothing more than a cosmetic exercise since on current estimates those two components would add up to just one-third of the total of identifiable public expenditure in Scotland. Massive top-up funding would be needed to bridge the gap to produce a total which will require negotiation with the United Kingdom Treasury and for mechanisms to be put in place to determine such matters. All in all, a Scottish parliament's income would be determined almost totally by the decisions of the Westminster Parliament.

My noble friend Lady Carnegy raised this point. We are told that the Scottish parliament would have powers to vary the income tax paid in Scotland by 3p over the English rate. Let us put that in proportion. As the Health Minister in Scotland, I spend over £4 billion a year. That 3p would raise only something like £450 million. It would be equivalent to only about 3 per cent. of the present total of the Scottish Office budget.

My noble friend's question was a good one. It is an open secret in Scotland that there is a paper now circulating before the Scottish executive of the Labour Party which indicates that that particular proposal should be abandoned. I do not know the author of that paper, but I am aware that there is a Mr. Jim Stevens on the Scottish executive. When it was suggested that this Scottish parliament might vary income tax downwards, he had this to say as regards the equalisation payment coming from England: It beggars belief that English MPs would approve subsidies aimed at allowing Scots to allow tax rates to be lower than those for their own constituents". It really is a fanciful proposition to believe that any such arrangement could ever be introduced.

The figures I have given should be compared with the additional identifiable expenditure per head in Scotland over and above the UK average. At present that is worth an extra £3.1 billion. An increase of 3p in the pound would therefore raise something like one-seventh of the money needed to keep Scotland's additional identifiable expenditure where it is today.

I am not suggesting that that adjustment should be made. It is right and part of the benefits of the Union that, where it is needed, expenditure is used. That is the position in Scotland. But to believe that this 3p would be sufficient to make the adjustment is complete and utter fiction. The proposed financial arrangements for a Scottish parliament are both superficial and potentially damaging.

There is one issue that has been constant as we have debated this matter over the years in Scotland. That is that there should be no reduction in the number of MPs. Is there then some constitutionally sacred feature about the number of MPs in Scotland? I believe that the answer to that is quickly given. No, of course there is not. The only reason why the Labour Party would want to keep the number of MPs in Scotland at 72 rather than reducing them to 56 or possibly even as low as 44, is not because they believe that it will achieve the better governance of Scotland, but because they want to secure a majority within the Westminster Parliament. That is the basis for that approach; it has nothing to do with constitutional propriety.

A particular proposal from the noble Lord, Lord Mackie, in answer to the suggestion that we could have some arrangements under which Scottish MPs did not vote on matters relating exclusively to England would, if he cares to reflect on it for a moment, bring about the extraordinarily curious effect that there would be potentially two governments within the Westminster Parliament at any time. There would be one dealing with matters for England alone. For example, there would be no Secretary of State for the Environment within a Labour Government: a Conservative politician would head up that department. That is clearly nonsense. What worries me is that, if England begins to appreciate that what is behind those proposals for constitutional change is a cynical manipulation to hold one party in power, any strain on the Union will be brought about by just that.

Of course, the federalist arrangements which operate in some very mature democracies are perfectly acceptable. It is a sound way to run a country, as we know from the United States, Canada and Germany. Indeed, the examples are endless. However, as I have already said, so far as I am aware there is no desire in England to break up the Union into regional parts. That point has been well made during the debate.

I also query whether there is anything worth while in seeking to draw parallels with other federal countries. After all, if a Scottish parliament were to be established, it would want to legislate on the criminal law of Scotland because our criminal legal system is distinctive. That is not the case in Germany, which is proud of having a single code. Bavaria would no more think of trying to change the criminal law than of doing anything else like that. It is a distinctive part of the arrangements there. I observe in passing our dislike of national police forces. Can any noble Lord tell me a federal country that does not have a national police force?

A particular parallel has been drawn with Spain. The noble Lord, Lord Ewing, referred to that, as did a number of Liberal Democrat Peers. It surprises me that the Spanish system is in fashion at the moment. That may be because there is some idea that you can blur the edges by moving gradually towards a form of federalism. However, I wonder how keen those who live in the United Kingdom would be if they fully appreciated that, in the 10 years since the federal structure was introduced in Spain, there has been an increase of some 300,000 civil servants. I doubt whether those who believe that the advantage of self-government in Scotland is that it would be simpler and less bureaucratic would be much persuaded by that parallel. Indeed, the parallel becomes even weaker when one considers the tax-raising powers of various parts of Spain away from central government.

The noble Lord, Lord Carmichael, accused my right honourable friend the Secretary of State for Scotland of blurring the edges between separatism and devolution. The noble Lord, Lord Ewing, said that he has fought separatism as hard as anybody. The noble Lord might find that a few people wish to challenge him for that particular role. I detest separatism and believe it to be entirely wrong. I do not seek to confuse separatism and devolution, but it is important to point out that the particular problems that are spelt out in relation to the financial arrangements (given that there would be a massive deficit) would be even greater with separatism because there would then be no question of an equalisation formula between Scotland and the rest of the United Kingdom. I am confident that if we were to go down that route there would be serious job losses in Scotland. The noble Lord, Lord Taylor, seemed to disagree with that point, but if the noble Lord were to go round Edinburgh again—I know that he knows it well—I am sure that he would find that insurance companies there which do 80 per cent. of their business this side of the Border would, if there were any question of separation, do as happened in Canada—they would quietly and stealthily move their head offices from Scotland to England, just as Canadian companies moved from Quebec to Ontario.

I propose to leave the issue of separatism with one final point. Although my noble friends Lord Sanderson, Lord Weir and Lord Gray have referred to the matter, I have yet to hear of any significant proportion of people working in any single sector of the Scottish economy who would advocate that their part of the Scottish economy would do that much better if the countries were separate.

I am sure that it will not surprise your Lordships if I conclude on the line that the Union should be maintained because it has been particularly good for Scotland. As my noble friend Lord Balfour pointed out, it offered us access to job markets and resources and that helped us to improve. It has also brought us a political and financial stability that we had not enjoyed previously. We do not operate within an absolutely static constitution. There are opportunities within it to improve. I believe that our recent White Paper Scotland in the Union— a Partnership for Good spelt out a number of proposals which have improved government in Scotland. I am certainly prepared to acknowledge the contribution that was made by my noble friend Lord Campbell of Croy before we put that White Paper together.

Tomorrow evening we shall be dealing with the Children (Scotland) Bill on Report. The progress of that Bill has followed a unique set of arrangements. Perhaps I may briefly take your Lordships through them. The Bill received its Second Reading after a Scottish Grand Committee sitting in Edinburgh. Before that Committee, evidence was taken from interested bodies not only in Edinburgh, but also in Glasgow. The Bill then went to a Special Scottish Standing Committee. It has now been before your Lordships' House and I think that it is generally agreed that we had a useful, constructive and even-tempered discussion of it in a Committee of the Whole House off the Floor of the House.

Other arrangements are now in place which are equally successful. Recently, for the first time as a Minister in your Lordships' House, I went before the Scottish Grand Committee to make a Statement and to answer questions. All 72 MPs from Scotland can attend the Scottish Grand Committee if they wish. We envisage that in the autumn the committee will meet in Aberdeen to debate Scottish affairs. There is no reason why the Scottish Grand Committee should not meet in Inverness—or in many other places in Scotland.

I believe that such positive changes, which do not put strains on the Union and which are not damaging to the supremacy of this United Kingdom Parliament, are indeed appropriate. As both the Prime Minister and the Secretary of State for Scotland have said, we would be perfectly prepared to look further at any other changes that might be made, subject to one clear proviso: we simply are not prepared to countenance anything that would put at risk the Union between Scotland and England.

Lord Mackie of Benshie

My Lords, the Minister is detailing some sensible arrangements, but he has not addressed the fact that, although the Secretary of State has the power, he says, to spend money, I do not doubt that the Treasury has the control. The fact is that the Government, represented by the Secretary of State and his Ministers, represent a very small minority of the electorate of Scotland. That is the essential issue.

Lord Fraser of Carmyllie

My Lords, I do not think that that has put the Labour Party off being the Government of the United Kingdom when it could not command a majority in England. I suspect that the Liberal Party would not have been averse to that arrangement either if it found that it did not have a majority in a particular part of the United Kingdom. I acknowledge that we are clearly in a minority in Scotland. I should like to be in the majority in Scotland. The noble Earl, Lord Mar and Kellie, is wrong because during his lifetime we were in the majority in Scotland in terms of both the number of seats and the popular vote. We believe it to be appropriate that the Government are formed of the party which commands the majority in the House of Commons for the whole of the United Kingdom.

It would be wholly wrong if, as a matter of short-term expediency, we were to introduce constitutional changes in order to meet short-term problems that arose from time to time: in other words, they have not proved to be positions of such long standing that they are irreversible. On a political note, I am confident that we shall do very well in Scotland, in particular after the settling of the Conservative Party's internal affairs only this afternoon.

I am delighted to have had an opportunity to contribute to the debate. I say to the noble Earl, Lord Perth, that I have my doubts about going to a Royal Commission again. It would not be a matter merely of kicking the ball into touch, as was said by the noble Lord, Lord Gray. It would be a matter of trying to kick it over the grandstand and well into the next century. I also doubt whether there is much to be said for the desirability of a referendum, other than in the context of putting to the people a specific proposal when the advantages and disadvantages can be clearly argued.

I conclude by saying that most Scottish schoolboys know that in 1320 the Scottish barons wrote to the Pope demanding that their independence be preserved. That is now known as the Declaration of Arbroath. What is less well known is that the Pope had the courtesy to reply. He replied from Avignon in the same year. Pope John XXII had this to say: Wherefore we ask, advise and exhort all of you, in the Lord Jesus Christ, that you take into the most careful consideration the countless dangers and the losses of lives and goods which have been caused by the strife of the said king and Robert in time past and which, it is to be feared, will arise likewise from it in future unless it be bound up by union and concord; that you turn your minds to the profit of this unity and peace". As a Presbyterian Scot, I am delighted to invoke the Pope in my pursuit of the goal of a union between Scotland and England.

7.21 p.m.

Lady Saltoun of Abernethy

My Lords, thanks to the admirable brevity with which so many noble Lords have spoken and to the absence of the noble Lord, Lord Beloff, which I very much regret, I could now bore your Lordships for the best part of 40 minutes. But there is no need to look troubled; I shall refrain.

We have heard many interesting contributions. I shall not comment on any individual speech because that would take too long. We still need answers to many of the questions that I posed. That was emphasised by many of the speeches, although in some cases we have had several answers—all different. There is much work to be done.

It only remains for me to thank all noble Lords for their admirable speeches and for their kind remarks about my opening speech. Some have spoken at considerable personal inconvenience and at shorter notice than I should have liked. I am most grateful to all noble Lords. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.