Referendums (Scotland and Wales) Bill

HL Deb 21 July 1997 vol 581 cc1197-227

3.7 p.m.

Report received.

Clause 1 [Referendum in Scotland]:

The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel) moved Amendment No. 1: Page 1, line 5, leave out ("Her Majesty may by Order in Council") and insert ("the Secretary of State may by order").

The noble Lord said: My Lords, in moving Amendment No. 1 I wish to speak also to Amendments Nos. 8, 10, 13, 14, 19, 21, 24 and 27. I gave an undertaking at Committee stage on 3rd July that the Government would bring forward suitable amendments on Report to incorporate the material from the draft Orders in Council into the Bill. I am pleased to present these amendments to the House. In the interests of clarity we shall debate the new schedule and the amendments to it later. The amendments before us now pave the way for the new schedule incorporating the Orders in Council. This is the first stage of a two-stage process.

In Committee the noble Lord, Lord Mackay of Ardbrecknish, made a convincing argument that we should not detain your Lordships' House and another place into August simply to debate the draft Orders in Council. We were content to take that step in the interests of everyone. However, I should point out that our original approach was perfectly acceptable technically and procedurally. The Delegated Powers Scrutiny Committee was of the view that the detailed conduct of the referendums could be dealt with perfectly well by Order in Council. However, in the interests of time we bring forward these amendments today.

It may be of assistance if I outline the purpose of our amendments. Amendment No. 1 allows the Secretary of State to specify the date of the referendum by order. This replaces the procedure whereby the date is specified in the Order in Council. Amendment No. 13 requires the order to be made by statutory instrument.

Amendment No. 8 replaces the provision of Clause 3(2), which allowed the Orders in Council to specify a cut-off date for alterations to the register of electors. The cut-off date is to be 10 days before the date of the referendum.

Amendment No. 10 requires the counting officer to conduct the count in accordance with part of the new schedule, in addition to any direction issued by the chief counting officer. This covers arrangements for appointment of observers, attendance at the count and certification of the result.

Amendments Nos. 14, 19, 21 and 24 have similar effect for Wales. We will come to the main amendment, the new schedule, later. For the moment, I commend these amendments as an essential preparatory step. I beg to move.

Lord Mackay of Ardbrecknish

My Lords, I am grateful to the Minister for introducing the amendment, and for taking on board the suggestions I made at Committee stage. Perhaps that negates some of the more hysterical comments we have heard about the Upper House having no business to examine legislation and make its views known. We made our views known at Committee stage. The Government accepted them, and here we are with the results. I am glad that it was a convincing argument. The noble Lord was kind enough not to point out that it was a brief argument and to draw the conclusion that the shorter the argument the more chance I have of success. I am not entirely convinced. I believe that my chance of success was hugely enhanced by the fact that the proposal I made meant that this House and another place would not have to sit until 8th August and could rise at the end of next week.

Perhaps I may ask a few questions of the Minister. My first point relates to the statutory instrument under which the Secretary of State makes the order. I presume that it is by negative procedure; otherwise the device that I have chosen so that we shall not sit into August would not work. We would have to sit in order to go through the affirmative procedure. That was the problem with the route which the Government had originally set out.

The second point is more serious in many ways. I refer to Amendments Nos. 8 and 19. When I put down the amendment to the Bill at Committee stage, I chose a rather longer time period than 11 days. I decided to make the beginning of August the cut-off point. I did so because the constituency in which I live in Glasgow has had some controversy over the question of late additions to the register during the election held on 1st May. As I understand it, those controversial points have not yet been resolved. I do not wish to go into the detail because the matter is the subject of police inquiries. No doubt a report will go, if it has not already gone, to the noble and learned Lord the Lord Advocate, who I see sitting on the Government Bench. However, I believe that a little longer is needed for the authorities to make sure that the corrections and additions to the register are justified.

The issue may well go wider than just the referendum. Parliament may well have to consider the issue after we hear the results of the investigations at Govan. My recollection is that the procedure whereby people can register long after 10th October is of fairly recent date. The period for checking the register was towards the end of a year. Those dates are long gone. As I understand it, one can register in any month of the year if one were a qualifying elector on 10th October previously. That is what caused the difficulty in the constituency of Glasgow Govan. I hope that the Minister is right in choosing 11 days ending with the date of the referendum and that we do not have controversy about additions to the register during the month of August, with people claiming that they were in residence on 10th October last.

I invite the noble Lord to tell me whether there are any checks. I fear that he will tell me that there are none. Therefore, perhaps he will agree with me that it is a matter to which we should return in greater detail at a future date when we examine the Representation of the People Act.

Lord Sewel

My Lords, perhaps I may deal briefly with the points raised by the noble Lord. I think that I can give him the assurance that the order will be subject to the negative procedure. Therefore I believe that we can all go away safely.

I have some sympathy with the general point made about the 11 days. However, I heard arguments from the Benches opposite at an earlier stage that people should be allowed to register up until the last moment. I believe that that would have created havoc as regards proper regulation of the referendum.

On all the points covered by the amendments—they will incorporate the orders into the Bill—we have very much leant on the advice that we received from the electoral officers. We have to rest on their judgment and advice at this stage.

On Question, amendment agreed to.

3.15 p.m.

Lord Mackay of Ardbrecknish moved Amendment No. 2: Page 1, line 5, at end insert (", but not less than eight weeks after publication of the White Paper detailing the Government's proposals,").

The noble Lord said: My Lords, in moving Amendment No. 2, I speak also to Amendment No. 3. Both amendments deal with the question which exercised the Committee about the dates of the White Paper and the referendum. At Committee stage, noble Lords will remember that the dates were treated as somewhat of a state secret by the party opposite. We made it clear at Committee stage that we expected those dates to be made available before the Bill completed its parliamentary stages. I am glad to see that in at least one regard the Government have heeded what we said at Committee stage, and that we now know the two dates.

It would have been perhaps more mannerly to your Lordships' House if the Government had announced these matters today in response to the two amendments. Instead the announcements were made in answer to two Parliamentary Questions last week. I believe that the Government could have announced them today as a way of showing that they appreciated the debates at Committee stage and of indicating that it is a two-Chamber Parliament and not simply a one-chamber Parliament.

It is welcome that we have something close to eight weeks as regards publication of the White Paper. Noble Lords will recall that the noble Lord, Lord Williams of Mostyn, envisaged six weeks, give or take a week one way or the other. I was grateful for that assurance. As I understand it, seven weeks will be allowed now between publication of the White Paper and the Scottish referendum. There will be eight weeks between the publication of the Welsh White Paper and the Welsh referendum. That is a matter to which I shall return in a few moments.

The purpose of the two amendments today would have been to tease out the dates from the Government. If they had not allowed a reasonable time, I would have invited noble Lords to indicate their displeasure at the whole matter being rushed. I am still not convinced that the time available is sufficient. It might be sufficient at any other time of the year, in the later autumn or the spring. But I believe that when four of the seven weeks are in August, the period is less than satisfactory.

Many matters will have to be discussed during the seven weeks of the referendum campaign. Indeed, some matters are still coming to the surface. Last week we heard the amazing revelation that—after 18 years—the Labour Party thought that the Royal High School room set aside for the assembly of parliament was unsuitable. So goodness knows what else will emerge during the referendum campaign about which we shall have to think long and hard.

For example, has a deal been done between the Scottish National Party and the Government on the powers of the parliament, so that it will be able to vote Scotland into independence without coming to the Westminster Parliament? Press reports state that the Government have done that deal in order to have the support of the Scottish National Party for the referendum campaign.

Some noble Lords will remember that I suggested in Committee that the support of the Scottish Nationalists in the referendum campaign was very much a two-edged sword for the Government. On the assumption that they won, I said I could assure the Government that the Scottish National Party would claim that they had won only because the majority of the "Yes, yes" votes cast were actually cast for independence. How that could be a stable basis for proceeding with devolution, I failed to see.

However, the Government are clearly very concerned about the turnout and the result of the referendum—to such an extent that they want to try to ensure that the Scottish National Party are on board and are campaigning "Yes, yes" to devolution despite the fact that they believe in devolution no more than I do but actually believe in separatism just as firmly as I believe in the continued existence of the Union with one Parliament.

It is amazing that, at this late stage, the Government appear to be prepared to include in their White Paper (if the reports are true) the possibility that the Scottish parliament will be able to decide, by itself, without coming to Westminster, that Scotland can set itself up as an independent country. The proposal is that there is no so-called glass ceiling on the powers of the Scottish parliament. If I were a member of the Scottish National Party, I should certainly be celebrating today if the Government have given a secret undertaking to the SNP that they will allow powers to be given to the Scottish parliament which, some time in the future, will allow that parliament, without any reference to Westminster, to vote itself an independent parliament. I do not see in any way how that could be considered to be strengthening the Union.

All those matters will have to be discussed. Many people are on holiday in August—the Glasgow Fair started this weekend. But, frankly, those sorts of holidays have long since passed into history and holidays are spread over a much wider period. Anybody who was in Glasgow this morning would have seen that the city was a good deal busier than it would have been 20 or 30 years ago, when almost everybody went on holiday in the same fortnight. I know of no one in Glasgow who is actually on holiday this fortnight. A few are on holiday today; a few were on holiday on Friday at Troon; but I do not know anybody who has gone away during "fair fortnight". That has passed out of people's normal practice; people take staggered holidays. Anyone who goes to Glasgow airport over the next four weeks will see that holiday flights out and in are just as busy as they are this weekend and as they were last weekend. So it is a holiday period in Scotland. I have lived there all my life and I know. The schools are on holiday until the middle of August, and the private schools for slightly longer. All those who are not tied to school holidays will tend to take their holidays after the schools return, for reasons which I am sure the House appreciates.

I simply do not believe that the proposed period of time is long enough. It is better than I feared it would be when I thought that the referendum would be held on 4th September and that we should not see the White Paper until the end of July or in August. So we have made some slight progress in this place in regard to the length of time.

Perhaps the most significant part of the answers last week was that, instead of saying as they ought to have done that the Scottish and Welsh referendums would be held on 11th September, the Government announced that the Welsh referendum would be held on 18th September, despite the fact that the Bill as it now stands has the referendums on the same day.

I do not normally get into a state of righteous indignation. However, to say, before we had reached Report or Third Reading, that the Government will overturn the decision of this House is disgraceful.

Before the Liberal Democrats start smiling weakly at me and the Benches opposite start jeering, perhaps I ought to remind the House of what happened in this place on 30th July 1980 in similar circumstances. Your Lordships decided an amendment to the Housing Bill by 109 votes to 74 (a larger majority than for the amendment two weeks ago in Committee reducing the two-day referendum to one day). An announcement was made in the House of Commons that the Government of the day intended to overturn the decision of this House even before the Report stage. The indignation started from no less a person than Lady Birk, who was an esteemed Member of this place and of the party opposite. Asking that the House be adjourned during pleasure, just after three o'clock in the afternoon, she said about the Bill and the decision made: The Bill has not yet been passed, and yet we have this behaviour on the part of the Government in another place which is an absolute insult to this House". She went on to say: But how are we, as a House, as one of the legislative Chambers of this country, to be able to proceed when we are treated in this way?".—[Col. 8791 Lord Byers, Leader of the Liberals at that time, said: all quarters of the House will regard this as a Parliamentary outrage of the first order". Lord Shinwell, then still in fine form, said in the course of his intervention: It is all very well lambasting and criticising us [the House of Lords], running us down and saying nasty things about us, and it is all right for some sections of the press and media to supplement those opinions of us, but we are an independent institution?' Are we or are we not?".—[Official Report, 30/7/80: cols. 879–82.] That is a question that we could easily ask today. Lord Shinwell went a little further than I would have gone and talked about abolishing the other place! My noble friend, the then Leader, Lord Soames, had some difficulty in resisting the onslaught of the then Opposition and their friends on the Liberal Benches. The issue was put to a vote; namely, that the Sitting should be suspended. Indeed, your Lordships voted for that. The House was adjourned during pleasure. No time limit was placed on the "pleasure"; the Lord Chancellor, on the Woolsack, said that he would return shortly, and if that did not meet with everybody's satisfaction the House could adjourn again and this time place a time on the adjournment.

That sounds a humorous exchange, but the point is this. Quite clearly, when the party opposite were in Opposition and we did this to them in 1980, they thought, and stated very bluntly, that it was an affront to this House and to Parliament. They were joined in that view by the Liberals.

I do not intend to ask that the House be adjourned during pleasure. As my noble friend the Shadow Leader said, the Government did not do that again. I do not want that. I agreed that we should make progress with the Bill, and I want to do just that. However, I want to say very firmly to the Government that they could have announced to this House today the date of the White Paper and the referendum. That would have been the right thing to do in response to the amendments we tabled in Committee and the amendments we withdrew. They should also have kept whatever decision they were going to take about the one-day versus two-day referendum until your Lordships had completed consideration of the Bill, just as their distinguished colleagues insisted in 1980 that the then government should have done with regard to a defeat on the Housing Bill.

I do not think it is a very satisfactory position. I am sorry that the noble Lords, Lord Sewel and Lord Williams of Mostyn, are put in the position of appearing to ignore your Lordships' House, because I am sure that that is not their intent. Perhaps they might say very firmly to their colleagues that this is not the way to achieve good relations in your Lordships' House; that this is not the way to proceed with good government in a two-Chamber Parliament; and that in future the Government should resist the temptation to jump the gun on announcements of this nature and should certainly refrain from announcing that they will overturn defeats that they have suffered in this House before the Bill has completed its passage here.

I remember that on the defeats I suffered I certainly did not indicate what would happen before the Bill returned to the other place and the matter was decided there. If I may say so, my defeats were a good deal more significant than the defeat I inflicted upon the Government three weeks ago, although one would not think so from the absolutely hysterical outburst we had from the Prime Minister in Downing Street. I beg to move.

3.30 p.m.

Baroness Carnegy of Lour

My Lords, it seems to me that what the Government have done in announcing the date of the Welsh referendum in the way they have is an affront to the other place as well as to your Lordships' House. How are the Government to know that their Back-Benchers will help them to have a majority on that amendment? How are they to know that those in the other place will think that the people of Wales deserve better than to have to have their referendum on the same day? Is it better than having to wait for their referendum that they will not be able to make up their minds on the same day? It seems an extraordinary thing to do.

Surely the announcement of the date should wait until the other place has decided what it wants to do. In addition, if the Bill is returned to this House, this House could decide to stand by its amendment. The Government should wait for that. The whole referendum could then be held up for more than a year. This is a very odd way to behave and, I suggest, a new example of extraordinary arrogance on the part of the Government.

I support the amendment because eight weeks seems to be the minimum time to enable people to consider this matter. I have discussed the matter with a number of people who are either on holiday now or will be going on holiday soon and they feel that the time allowed is very short. To give satisfaction to the voters in a referendum and to achieve a satisfactory result, this length of time is essential. This is a very good amendment.

Lord Thomas of Gresford

My Lords, the noble Lord, Lord Mackay of Ardbrecknish, is entirely wrong when he suggests to your Lordships that we On these Benches are smiling weakly at the different dates for the two referendums; we are smiling broadly. We are smiling broadly because it is the fulfilment of an agreement made on 5th March 1997 prior to the election and very widely publicised in Wales. That agreement said that: Both Parties [the Liberal Democrats and the Labour Party] agree that a short time should be allowed to lapse after the Scottish referendum in order to ensure the debate in Wales, with its distinctive form of devolution, is not overshadowed by the process in Scotland". We subscribed to that agreement; we hold the Labour Party to their part of the agreement and we expect the Members of Parliament in the other place who were elected on that platform to reverse the decision taken in your Lordships' House. We say that the choice should be before the Welsh people when they are fully informed and have had the opportunity for mature consideration of all the issues which arise in this referendum.

Lady Saltoun of Abernethy

My Lords, I support the amendment, although I would prefer that it went further. I would rather have a 12-week period elapse between the publication of the White Papers and the date of the referendums or referenda—I do not know what they should be called; my Latin is a little rusty.

This is a much more important matter than a general election. This referendum concerns a grave constitutional change which may well affect the future of the United Kingdom. That is more than can be said for any general election. At Committee stage the Government compared the time that would be allowed to elapse between the publication of the White Paper and the date of the referendum to the length of time which must be allowed to elapse between the announcement of the date of the general election and that election taking place, which I believe is three weeks.

I have gone back to 1900 and have ascertained that no general election since then has ever taken place in the month of August and I do not think that any have taken place in the month of September. If my memory serves me correctly, I think that the earliest date of an election in the autumn was about 24th October. Why is that? It is because people are away on holiday and do not have an opportunity to read the papers describing what is on offer and to make up their minds. Why are we being pressed on this occasion to have a referendum in the middle of the month of September? What is all the hurry about? Can the Government give me a straight answer, please?

Baroness Ramsay of Cartvale

My Lords, perhaps I could begin by answering the last question: it is partly because it was a manifesto commitment that we should have the referendums by the autumn.

I have to congratulate the noble Lord, Lord Mackay of Ardbrecknish, on managing to speak at such length and with so many different flights of fancy; I had difficulty seeing that they had anything to do with the amendment. They included a great flight of speculation about the Scottish National Party and an invitation to us to go into psychoanalysis on the motivation of people who would vote "yes". It seemed to me that the noble Lord was inviting us to reject or repel voters who would vote for the "yes, yes" campaign because we might not approve of their motivation. That is a novel way of running any kind of election or referendum.

A lot has been said about why the Government did not wait until today to announce dates for the White Papers. I understood the Benches opposite to have been demanding on previous occasions that the Government should announce the dates as soon as possible—like the day before they were speaking. Then, when the dates are announced, people say that the Government should have waited until this afternoon to announce them. I do not see the logic of that.

I quite accept from the noble Lord, Lord Mackay of Ardbrecknish, that the old days of the industrial fortnights in Scotland, when the whole of Edinburgh, Glasgow and Aberdeen closed down, may have gone. But there is still a preponderance of Scottish holiday-taking earlier than in England because of the school holidays as well as the light nights and so on. It means that the balance in Scotland is more toward July, with life getting back to normal when the schools go back in August.

The noble Lord, Lord Mackay, cannot have it both ways. He cannot say on the one hand that everything has been changed and everyone staggers their holiday and at the same time seem to imply that the whole of Scotland is on holiday for all of August. That is not the Scotland I know.

So, if everyone is not on holiday for the whole of that time, it is quite possible to have a campaign when a fair proportion of the people are there for most of August. I do believe that we should get back to basics, if I dare use those words. By that, I mean that we should focus on the amendments. I understand that there will be a period of eight weeks in Wales and seven weeks in Scotland between the White Papers and the referendums. The amendment mentions eight weeks. The only difference is one week in Scotland. I cannot understand what all the fuss is about and why the amendment was moved in the first place.

Lord Forbes

My Lords, I support the amendment. Eight weeks is an absolute minimum when such an important constitutional issue is to be considered, especially during the holiday time.

Lord Parry

My Lords, the Opposition well might like to take into account the fact that, since polls have been taken on the attitude of the Welsh people, the numbers have been doubling. The latest poll conducted over the weekend showed that the ratio was two to one in favour of the assembly proposals. If the period extends for 10 weeks, we might wipe out the opposition, as we did in the election.

Viscount Weir

My Lords, I am a Glaswegian and I am on holiday during the fair holiday at this very moment; that is, if one can describe being in your Lordships' House as being on holiday.

Let me return to the point about timing. The true reason and explanation of why the Government will not give a decent interval between the White Paper and the vote must be perfectly plain. Despite what we have just heard about the opinion polls being apparently two-to-one, yes-to-no, at the moment, they were, I remind your Lordships, two-to-one, yes-to-no, at the beginning of the referendum campaign in 1979.

The Government have learned their lesson from that campaign, which effectively lasted for three months. They noted that the more the Scots saw of devolution, the less they liked it. The "yes" vote shrank and the "no" vote increased inexorably in the opinion polls as the campaign went on until it was virtually a dead heat on the day. So the reason why a truncated campaign period is being foisted upon us is only too obvious.

Lord Harris of Greenwich

My Lords, it is always a pleasure to listen to the noble Lord, Lord Mackay of Ardbrecknish, making a fascinating series of Second Reading speeches on each of the amendments that he puts before us. We have had a re-run of one of the glittering Second Reading speeches that he made during Committee stage.

I understand that the argument is that it is entirely wrong for a government to indicate immediately that they do not propose to accept an amendment carried in the House of Lords. I was a little surprised to hear that argument. Those of us who had the pleasure of dealing with Home Office Bills when Mr. Michael Howard was Home Secretary became used to being told within 30 minutes that the Government would in no circumstances whatsoever accept the amendment. Therefore, I suggest to the noble Lord, Lord Mackay, that he might take an interest in the attitude of some of his Home Office colleagues in the late administration.

Baroness Blatch

My Lords, I am grateful to the noble Lord for giving way. Does he not agree that we never pre-empted the outcome of what the other place would do in any vote? As the Minister responsible, I may have indicated that we would invite the other place to consider overturning a measure but no public statements were made which implied or pre-empted the outcome of a vote in the other place.

Lord Harris of Greenwich

My Lords, the deputy Government Chief Whip and I spent many happy hours debating issues with the noble Baroness. I believe that both of us could recall with the greatest clarity what was said on Mr. Howard's behalf every time that he lost a vote in this Chamber. He lost quite a substantial number of votes in this House, I am glad to say. But I hope that the House will now move on a little more briskly.

Viscount Cranborne

My Lords, if the noble Lord—

Noble Lords

Order!

Lord Harris of Greenwich

There is no order involved. I shall gladly give way in a moment. I always do. I simply say that it would be a good idea if we moved rather more rapidly through the amendments; all the more so because the noble Viscount, Lord Cranborne, last week expressed his concern about the fact that we appear to have an overloaded legislative programme. One of the reasons why we are proceeding so slowly on this Bill, which has precisely six clauses, is the never-ending series of Second Reading speeches to which we are subjected. I note that the noble Viscount, Lord Cranborne, wishes to intervene.

Viscount Cranborne

My Lords, I am extremely grateful to the noble Lord and sorry that I even presumed to interrupt him in full flight. But I could not help wondering whether the noble Lord felt that the defeats that he rightly recalled that he and those whom he and his party adulate so greatly on the other side—the present Government Front Benches—inflicted were any more valid than the defeats which occasionally have been inflicted on the present Government since the general election.

Lord Harris of Greenwich

My Lords, the difference between the defeats in the lifetime of the previous government and those in the very brief lifetime of this Government is, as noble Lords know, that the Conservative Party in this House has three times more representatives than the Labour and Liberal Democrat parties put together. Therefore, when they were defeated in this House, it demonstrated that they could not even obtain the support of their own colleagues.

Lord Sewel

My Lords, we have sat through the usual contribution from the noble Lord, Lord Mackay of Ardbrecknish, which was a wide-ranging, fascinating, colourful and predominantly irrelevant speech—perhaps more detached from relevancy than it was from reality, judging from parts of his speech, which I understand he obtained from a certain newspaper circulating in Scotland.

Let us look at what the amendment refers to rather than at cooked-up deals that are supposed to have been going on somewhere hither or thither. The amendment concerns the date of the referendum. Amendment No. 2 is intended to ensure that there are at least eight weeks between publication of the White Papers, which will be debated in both Houses, and the referendums in Scotland and Wales. As we heard, the purpose is to provide sufficient time for the people in Scotland and Wales adequately to examine the proposals contained in the White Paper before being asked to vote on them. Amendment No. 3 would prevent the referendums being held earlier than 18th September 1997.

We have already announced that we intend to publish the White Paper on the Scottish Parliament on Thursday of this week. We have also announced our intention to hold the Scottish referendum on 11th September. That provides a gap of seven weeks between publication of the White Paper and the referendum.

Is it seriously being argued by noble Lords opposite that the whole basis of democratic decision-making will come tumbling down because we have decided on seven weeks rather than eight weeks? Is it being suggested that somehow the people of Scotland can reach a mature, considered decision in a period of eight weeks but cannot make any reasonable, informed decision on the basis of seven weeks' consideration? That is absolute rot What we have seen today is pure opportunistic oppositionalism for the sake of it. It is nothing more and nothing less.

In Committee noble Lords opposite suggested a gap of six weeks. That is what they were arguing for. Moving the specific amendment, the noble Lord, Lord Crickhowell, said, This amendment merely seeks to ensure that there will he adequate time, and that sufficient detail will be contained to enable the electorate to take an informed decision".—[Official Report, 3/7/97; col. 391.] The noble Lord was arguing for six weeks. We listened to him; we heard him; we have given the matter consideration. We are saying seven weeks. Of course, noble Lords opposite are upping the ante to eight weeks. How long does this dutch auction in reverse go on for?

I should also say that we intend to publish the White Paper for Wales tomorrow—Tuesday, 22nd July—and to hold the referendum on 18th September. That will give eight weeks between publication and the referendum. Your Lordships will also note that what I said confirms the Government's intention to seek to overturn in another place the amendment passed in this House requiring the referendums to be held on the same day.

We have had a lot of huff and puff, a lot of bluster about the way the Government announced their intention. We have been accused of pre-empting the decision of Parliament—something that Mr. Howard never did. I must have been listening to a completely different radio programme. Let us go back and see what words have been used to date. The authoritative words on the issue are contained in the Answer given by the Government to the Question of my noble friend Lord Merlyn-Rees. He asked Her Majesty's Government, on 17th July, when they expected to announce the date of the referendum to establish a Welsh assembly. My noble friend Lord Williams of Mostyn replied. The accusation is pre-empting; that is what we are accused of. My noble friend said: Subject to the approval of a Motion in another place, to disagree with the amendment on dates of referendums inserted into the Referendums (Scotland and Wales) Bill in this House, the agreement of this House and subject to Royal Assent, the referendum in Wales will he held on 18 September 1997".—[Official Report, 17/7/97: WA130.] The words "subject to" are used so many times in that sentence that it is preposterous to say that we are pre-empting the decision of this House or the other place. We are not. We are going forward quite properly.

The point was made by the noble Lady, Lady Saltoun, that never could she remember an election being held in August or September. I hesitate to raise the historic point, but if my memory serves me correctly the 1945 election was held in July. In Scotland that was a much greater holiday month, and it still is. The 1945 election was a decisive victory; the referendum will be a decisive victory.

Lord Mackay of Ardbrecknish

My Lords, it seems that I am not alone in making a Second Reading speech. The noble Lord, Lord Sewel, was making a good job of one towards the end. I am grateful to all noble Lords who have spoken. I am always amazed how many people can be drawn to the surface, especially from the Liberal Democrat Benches, when I cast my fly. Would that salmon were so obliging during August or any other month for that matter.

I was delighted that the noble Lord, Lord Harris, graced us with a Second Reading speech. He suggested we get on with it. I suggest to him that for the rest of the afternoon he goes to the Library and studies some of the Committee and Report stages of Bills that I debated from the Dispatch Box and asks himself the question whether Members then sitting on this side of the Chamber were getting on with it. Were they introducing new material? I suggest that he studies in particular the contributions of his noble friend Lord Russell who was a frequent participator in my debates. I always attempted to respond to his questions, whether or not they were germane to the amendment. That is the way your Lordships proceed.

Perhaps we are now seeing new rules as the House has changed position. I hope that the Government do not think that and that they believe it right and well within the rules to raise issues which come up on a day-to-day basis against the amendments that are in front of us. I should have thought that this morning's press reports were perfectly legitimate matters for me to raise. I am sorry that the noble Lord, Lord Harris, thinks otherwise.

I was not, as the noble Lord, Lord Thomas of Gresford, implied, arguing again the case for two days as against one day. I was simply pointing out—by quoting, for example, Lord Byers, Lady Birk and Lord Shinwell—that when the Conservative government did something similar there was a great deal of indignation from the then Labour Opposition Benches and the Liberal Democrat Benches. I am not entirely sure whether I should call them the "still opposition" Liberal Democrats". Perhaps not.

I was not arguing about one or two days and I do not disagree with the other place's right to reverse our position. I am simply saying that in 1980 the noble Lord's colleagues and the Labour Party made a great deal of fuss about a Conservative government making a statement in the other place that they intended to overturn the amendment. I was referring to that fact and the making of the statement in the other place last week. That is why I drew your Lordships' attention to the events of 1980.

I notice that no noble Lord who has sought to defend the position responded to my references to 1980. That is perhaps because your Lordships realise that the point made then was a legitimate point against government and the point I am making today is also a legitimate point against government.

The noble Lady, Lady Saltoun, mentioned the fact that we have not, by and large, had general elections in August and September, and that is right. It seems to me therefore that it would be better if the referendums were not held in holiday months. I know the noble Baroness, Lady Ramsay, has not lived in Scotland for some years. I can assure her that the position I portrayed is right; that is, that holidays are much more scattered. Indeed, the number of people who do not have children is increasing—either because they have all grown up or they do not yet have them—and they are taking their holidays well into August and September. That is greatly to the benefit of the tourist season but I shall cause a row with the Liberal Democrat Benches if I go into that.

The noble Lord, Lord Parry, smiles. It reminds me of his intervention when he said that in his view the Welsh referendum result prospect is becoming better by the day. Why then, if noble Lords are so confident, have two separate days? But that is the argument we have already resolved.

I am glad about seven weeks. I am sorry to hear that the Government intend to overturn the amendment passed in your Lordships' House that the referendums for Wales and Scotland should be held on the same day. The arguments given, to put it mildly, were weak, indeed, very weak. They deserved to be beaten, and the decision of this House merits being endorsed by the other place. I am not sure that that will happen. The imperative put forward by the noble Lord, Lord Thomas of Gresford, in Committee will be the one that rules; in other words, the only way to get a yes result, if that is possible at all in Wales, is to hold the referendum a week after the one held in Scotland. It will be the price of this little bit of gerrymandering if it does not work like that.

I am delighted that we are having seven and eight weeks. I would prefer the vote not to take place in August; that is a serious problem for all the campaigners. The noble Baroness, Lady Ramsay of Cartvale, will find, in trying to campaign for the yes vote, that many people are away in August and that many of those at home in rural Scotland will be too busy dealing with tourists who take their holidays in August to bother with referendums.

However, we have made some progress in your Lordships' House. We have ensured that the White Paper is published before Third Reading. That was not certain before the Report stage. We also ensured before Report stage that we knew the date of the referendums. With those two small thank your to the Government, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 3 not moved.]

4 p.m.

Lord Mackay of Ardbrecknish moved Amendment No. 4: Page I, line 6, after ("and") insert ("income").

The noble Lord said: My Lords, at the Committee stage of the Bill we discussed the question of what taxation-varying powers the Scottish Parliament might have and what relevance that would have to the question which is to be put to the Scottish public. I was not in the least convinced by the arguments put forward by Ministers on this subject.

The puzzle is quite simply put. The Scottish Constitutional Convention's final document made it perfectly clear that the limited powers would be to vary the basic rate of income tax. It said: The parliament will be financed on a stable, long-term basis. This objective will be attained by basing the financial settlement for the parliament upon a continuation of the principle of equalisation of expenditure within the UK; upon autonomy for the parliament in respect of its expenditure; and upon the limited power of the parliament to vary the basic rate of income tax. That position has been in all the speeches and publications I have read from the Labour Party except, I suspect, in the manifesto, which, as your Lordships know, is my nightly reading to ensure I do not infringe against this holy text, if I may call it that. There, the limited financial powers were just to vary revenue. They were not about income tax.

I looked at statements made by the Secretary of State for Scotland, Mr. Donald Dewar, who said on BBC Radio Scotland, as reported in the Scotsman, that there was no retreat. At the time there were some question marks over whether or not the tax-varying powers would be allowed or whether people in, for example, the Treasury had decided there were fundamental defects surrounding that. Mr. Dewar added, when he had said that the Scottish Parliament would have a very substantial budget: We think it should be able to vary that budget if the needs of Scotland and electoral opinion makes that sensible".

He went on to say: There is no retreat. We hold to Our commitments and we will deliver. The parliament will have the power to vary income tax around the basic rate—the defined financial powers promised in the manifesto".

In a long article in the Financial Times of 11th June, Mr. Henry McLeish, the Minister responsible for devolution, made it clear that it was income tax-raising powers they were discussing.

It is difficult to pick out a particular quotation because almost every paragraph shows and underlines the fact that they are suggesting to the Scottish people that they are referring to income tax-raising powers and, of course, income tax-lowering powers. I should not keep saying "raising" because there is the potential to lower them, though, as your Lordships know, I managed to drag out from the Government—they were very reluctant to answer—what would happen if income tax were lowered by, say, 3p. in the pound. The answer I received was that the Treasury would drop the block grant to Scotland by £450 million. Given the way the current Government, local authorities and so on are always telling us how under-funded everything is in Scotland, I find it hard to believe that they would welcome £450 million being removed from their budget. But that is what will happen if they decide to reduce taxes. If they decide to increase them by 3p. in the pound they will have £450 million more to spend. I imagine that there will be a whole queue of people saying where they want the money spent.

All these quotations—from the article I referred to concerning Mr. McLeish, the quotation from Mr. Dewar and the quotation from the constitutional convention—make it clear that they are talking about income tax. My question again—I did not receive a suitable answer at Committee stage—is why not put "income" on the face of the Bill. It is a very small amendment; very, very small indeed. It simply means that I and my fellow Scots will look at a question which says, "I agree that a Scottish Parliament should have income tax-varying powers" or "I do not agree that a Scottish Parliament should have income tax-varying powers".

I know I should not be suspicious of the party opposite but I am afraid that the habits of a lifetime cannot be set aside easily. I am suspicious. I do not see any difficulty with adding the word "income". It makes clear on the face of the Bill and on the face of the ballot paper what Mr. Dewar has said, what Mr. McLeish has said and what the Scottish Constitutional Convention has said. So why do we not have a clear question? Why is the word left out?

The suspicious part of me says that it is left out because at some time in the future this Scottish Parliament may want to vary other taxes. The Government could then go back to this ballot paper and say, "The Scottish people agreed that the Scottish Parliament should have tax-varying powers. It did not specify income tax-varying powers". They may say—we shall come to it later—that the White Paper will say "income tax-varying powers". But that is not on the face of these questions either. The Government are not committed to sticking to the White Paper. Why is the word "income" not on the face of the Bill? Why are the promises which Ministers are making and the constitutional convention made about income tax being the tax that is to be varied not on the face of the Bill?

The noble Lord, Lord Sewel, will have to work very hard, unless he accepts my amendment, to convince me and, I suspect, a fair number of my fellow Scots that the wide-ranging nature of this question is so that it will be open-ended; so that it will not tie a future Scottish parliament to income tax only, so that it will be able to look at value-added tax, excise duty and perhaps airport tax, and at all kinds of other taxes that are in the power of the Exchequer.

If the noble Lord does not accept my amendment, I can only conclude that the only reason why he will not accept it is in order to give this parliament, if it comes into being, a much more open-ended arrangement on taxation. I have little doubt that, for a year or two, if it happens, income tax is what will be varied, but then they will find that 3p. in the pound does not add up to much—£450 million in expenditure of £14 billion or £15 billion. Then they will say, "But we were not committed. No, you did not sign up, oh great Scottish public, just to income tax-varying. You signed up only to tax-varying. So perhaps we shall just vary a little more. We shall vary the other taxes". I hope that the noble Lord can set my suspicious mind at rest. However, short of accepting the amendment, I have to say to him that my suspicious mind will remain. I beg to move.

Lord Desai

My Lords, I am puzzled by this amendment. If you have the general statement "tax-varying powers" then any specific tax is included. Therefore, an income tax-varying power is covered by tax-varying powers in general. As an economist I have never understood the fuss people make about income tax. Why is there this great fuss about income tax? One can raise all kinds of taxes. The income tax bogey was raised by the noble Lord's colleague in another place when he was Secretary of State for Scotland. He went on calling it a "tartan tax". For a while he was worried about raising tax. Now, the penny has dropped that the tax could be reduced. What would be wrong if an airport tax were to be varied by the Scottish Parliament? If it were the wish of the Scottish people to give the Scottish Parliament tax-varying powers, so be it. It should be for the people to decide. The people of Scotland should be given a lot of choice. They should decide whether they want tax-raising powers for the parliament and then whoever is in charge in Scotland will decide which particular tax will be used because the circumstances may vary. Therefore, the broader interpretation is better than the narrower one.

Lord Renton

My Lords, although a short amendment it is a very important one. Until we have the White Paper we have no idea what the legislative powers of a Scottish parliament may be. We have no idea what taxes it may be able to impose. They may include import taxes, excise duties, entertainment duties—all kinds of things. Surely, the main intention is that the parliament should have the power to vary income tax. If that is the main intention it should be stated in the question to be put to the people and in the Bill.

My noble friend Lord Mackay of Ardbrecknish has made out a very strong case indeed whether or not we have an idea of the content of the White Paper. Frankly, until we do know its content it is very difficult to exercise a judgment which is of sufficient interest to the Scottish people and which offers sufficient protection for them. I hope that we press the amendment.

Lord Stanley of Alderley

My Lords, I intervene in this matter on the Welsh side although the amendment deals only with the Scottish side. My noble friend Lord Renton has taken the words out of my mouth. It is the problem of the vagueness on which we are being asked to try to decide. The Bill is enormously vague about what the Welsh assembly may or may not do. We hope that in the White Paper tomorrow we shall discover a little more. However, as I understand it, it may not contain what we get at the end of this legislation. The amendment illustrates exactly our situation. I live the whole time in Wales; there are many who do not. I want to know exactly what I am voting for. And the more we know that is precise, the more I will be prepared to vote for, or maybe against, a Welsh assembly.

Lord Peston

My Lords, I believe that the noble Lord, Lord Mackay of Ardbrecknish, will get the chance to speak a second time and therefore I address him in the hope that he can clarify his position. First, can the noble Lord tell me whether his party's position is still that it opposes devolution? Secondly, if there is devolution, is it his party's view that the Scottish parliament should not have any tax-raising powers? And, thirdly, if there is to be devolution and there are to be tax-raising powers, does his party believe that those powers should be limited to income tax? In other words, the noble Lord has three positions, one following from the other. That is the only way in which I can make sense of the Opposition's position.

I remember raising this matter when we were in Opposition and the question of the tartan tax arose. If the Scots are to have their own parliament, is it not rational that they should be able to make up their minds about what to do when they have that devolved parliament? It seems to me not only logical, but a matter of Scots' pride, that if devolution goes ahead, the Scots themselves make up their own minds. That is why I am slightly lost by the noble Lord's position.

The noble Lord may well be right that if there is to be a tax the correct one for the Scottish parliament to impose is income tax. But that is not to be decided at the referendum. I apologise to the noble Lord, Lord Stanley, because I assume that we are discussing Wales as well, which I always forget when these issues arise. I am given to understand that the Welsh will not have tax raising powers, so we are not discussing Wales. If I were a Welshman I would probably want to have tax raising powers as well. I would be very proud if I were a Welshman. However, that is all irrelevant. Noble Lords opposite are well aware that I have no influence on any of these matters. Surely the central issue is: why not let the Scots trust themselves to do what they want? In that sense, surely this amendment is irrelevant.

4.15 p.m.

Lord Mackie of Benshie

My Lords, the position taken by the noble Lord, Lord Mackay, is entirely logical because he does not believe that the Scottish people have any judgment whatever. They threw out every Tory MP and therefore they must be wrong.

Baroness Carnegy of Lour

My Lords, it is not a question of what people on this side of the House think should be the tax-raising power for the Scottish parliament; it is about what the Government have confirmed over and over again as their intention, which is that tax-raising or tax-lowering should be on income tax. The Government have said that and they have ruled out everything else. I say that to the noble Lords, Lord Peston and Lord Desai. The noble Lord, Lord Desai, made the case for me as far as I am concerned because my suspicion is that the Government do not want the people of Scotland to vote for tax-raising powers. They want to scare them into thinking that the tax-raising power could be not only income tax but might be additionally VAT or a sales tax. There is a whole range of things which could be affected. People are extremely alarmed at that prospect.

The Scottish people need to know what precisely the tax raising power is to be. They will only understand it properly if it is on the ballot paper. That is a very serious point. Not everyone will study the summary of the White Paper that will be circulated; very few will study the White Paper itself. People want to know how the parliament is going to affect them before they vote in a consultative referendum.

The Minister said in Committee that we should concentrate on two simple principles; namely, whether a Scottish parliament is wanted and whether it should have tax-raising powers. It is only reasonable that people should know the form that that tax-raising power will take—income tax or all the other things. Noble Lords opposite who do not live in Scotland understandably have not followed everything the Government have said up to date. There is a wide range of options whereby the Scottish people can pay for their parliament. To make the matter simple, it should be put on the ballot paper. That is not a difficult thing for the Government to do unless they want people to vote against tax-raising powers.

The Earl of Perth

My Lords, I was very glad to add my name in support of the amendment of the noble Lord, Lord Mackay. I recall at Committee stage many of us tried to clarify what was meant by tax-varying powers. We were not very successful. But when one reads the report of those discussions, the noble Lord, Lord Sewel, very helpfully indicated that if the tax-raising powers were three pence in the pound on income tax, that would yield £450 million. Incidentally, £450 million is a very large amount of money per head of population. It is £100 for each man, woman and child. The Scottish people should be made aware of that.

It may be that the White Paper will reveal all and that in a sense the amendment is unnecessary. We may find that the White Paper gives the clues we want. If that is not the case then I believe that the Scottish voters have the right to know just what is intended. It is all very well to say, "You must trust them in due time." They should know now what is meant.

That brings me to my second point. We need to clarify what all this is about, particularly when it comes to the tax-varying powers. Will the people realise that that may seriously endanger the economy in the sense that new businesses may well look to locate elsewhere. They may say, "If Scotland has tax-varying powers, we shall not know where we stand, so let's look elsewhere. Let's go to Wales or to England; we must be careful about coming to Scotland because we do not know its form of taxation". It would be helpful if those who want the Scottish parliament to have tax-varying powers could explain whether they are limiting those powers to income tax or whether they will affect VAT or any other tax.

I plead for postponement on this question. I know that in a sense I am making a Second Reading speech, but this is an absolutely vital matter for both Houses, for the Union and for its three constituent parts. So, if we hammer away once or twice—or perhaps three times—and repeat ourselves, I hope that noble Lords will forgive me and others for that. This issue is so important. Indeed, I cannot think of any other issue that is likely to come before us in the next Parliament which begins to compare with the possibility of the break-up of the Union by our getting this wrong as opposed to our getting it right.

I come now to why I plead for postponement. We do not know how the relationship between Westminster and the Scottish parliament will come out. We know that the Scottish parliament will have an opportunity to divide the block grant, which may be as much £15 billion. That is a huge responsibility with which suddenly to be confronted. It will take a long time to work it out in practice. But that is not all. In the early stages, all of the issues of which your Lordships are well aware, such as the West Lothian question and that of the exact relationship between the two parliaments, will come to the fore. Really and truly, the Scottish parliament will be fully occupied in its first session. Therefore, I plead that we agree that there should be a "No" vote on the second question on the basis that it is open to the Scottish parliament and to Westminster, if they find that there is a need for a taxing power, to introduce it in, say, the second or third Scottish parliament. What's the hurry?

My family motto happens to be "Gang warily". Noble Lords may say that that is rather a pawky motto, but I believe that in this case postponement is what is called for. Let us wait on this vital issue because if the provisions are accepted as they stand, it will be the beginning of the break-up of the Union—of that there can be no doubt—because as we all know, the power of the purse is what counts. If we ask the people of Scotland this second question and if we get the answer "Yes", which I deeply hope that we shall not, I can see many quarrels lying ahead of us. Indeed, the English may for a time—perhaps for the first time—say, "What's all this about? We have been very successful together. Over the past 300 years we have built up an empire such as has never been seen before in the history of the world and the Scots made a huge contribution to that". Are we to put all that in danger?

As it stands, the amendment to a degree limits and makes the position more easily understood by the people of Scotland. I do not want to say that the question will be more palatable to those who might say "Yes". I hope that they will not, but I believe that our amendment is just what is needed from all angles. Even so, I plead that we do not have any tax-varying powers in the first parliament, but that we look at the question again in the future.

Lord Boardman

My Lords, the tax-varying powers which have been put forward by the Government have always been presented, as my noble friend said when moving the amendment, as relating to income tax. The burden of that—or it might be the benefit—falls primarily on the people of Scotland. Much as we may like or dislike it, it is not of major concern to us as much as might be the case if there were a variation of other taxes. If we assume that other taxes can be varied under the Bill, let us consider what might happen if the Scottish parliament were able to reduce excise duty. Lorries would troop over the Scottish border in massive numbers, as happens on boats to France. Other taxes could also be varied. The impact on other parts of the United Kingdom could be severe. It is important that the power should be confined to income tax, as my noble friend suggested.

Lord Ewing of Kirkford

My Lords, I rise to speak briefly and hope to avoid falling into the trap of making a Second Reading speech such as we have heard during our discussion of this amendment. I say at once that I agree with the noble Lord, Lord Mackay of Ardbrecknish, on the position of the Scottish Constitutional Convention. What the convention has talked about is income tax. I agree with the noble Lord on the position of Donald Dewar, the Secretary of State for Scotland, who has made it clear time and time again that what the Government are talking about is income tax. I agree with the position of the junior Minister in the Scottish Office, Henry McLeish, in his article in the Financial Times that what the Government are talking about is income tax.

Where I part company with the noble Lord, Lord Mackay, is that when I am told something I innocently believe it. I do not have the kind of suspicious mind that the noble Lord has. My position on this is quite clear: this is not a matter for the referendum, but for the primary legislation when it comes before both Houses of Parliament following the outcome of the referendum on the one hand and following the consultation on the White Paper on the other hand.

Let me pose this question to the noble Lord, Lord Mackay. My noble friend Lord Peston has already asked him three or four questions, but perhaps I may add one. Why pick out taxation to appear in a definitive form on the ballot paper at the referendum? Why not ask the people of Scotland, "Are you in favour of a Scottish parliament with 190 Members?" Why not ask the people of Scotland, "Are you in favour of a Scottish parliament elected by proportional representation?" Why not ask the people of Scotland, "Are you in favour of a Scottish parliament that does not follow slavishly the Westminster role model and where we can have pre-legislative committees?" Why pick out the one issue of taxation?

Before the noble Lord, Lord Mackay, answers those questions, I shall answer them for him because my answer will be much more accurate than his. The answer is that the scare stories were started running by Sir Bruce Pattullo, the governor of the Bank of Scotland. In this debate noble Lords opposite are deliberately attempting to set that scare running so that if they cannot frustrate a "Yes, yes" vote, they will seek to obtain a "Yes, no" vote. That is what this is all about and in his honest moments the noble Lord, Lord Mackay, will confess that that is the true position.

There is no valid reason why one issue only—in this case, taxation—should be selected for presentation to the people of Scotland in order, as is claimed from the other side of your Lordships' House, to make the question more definitive. This is clearly a matter for the principal legislation. It is not a matter for the referendum. If it were a matter for the referendum, this question should not stand alone. We should ask those other questions about 190 Members, proportional representation and pre-legislative committees. There is no good reason for selecting this issue, except that it is a good frightener, and that is what it will be used for during the whole of the referendum campaign.

4.30 p.m.

Lord Campbell of Croy

My Lords, I am pleased to be following the noble Lord, Lord Ewing, because I want to assist the noble Lord, Lord Peston. The noble Lord pointed out that the constitutional convention, of which he was co-chairman until he resigned on whether there should be a second proposition on taxation, recommended that it should be income tax only and that it could be varied up and down by 3p in the pound.

As far as I know, the Government confirmed that. What we have heard since is that the Government intend that the varying powers should affect income tax. If that is the case, it should be written into the Bill, as my noble friend Lord Mackay suggested. He will undoubtedly reply in full to the noble Lord, Lord Peston.

There is another point. I am not making a Second Reading speech, because I did so on Second Reading. I do not deal with Sir Bruce Pattullo's points about income tax, and the problem of dealing only with 3p on income tax where dividends and so on are concerned. We are not dealing with questions; they are propositions in the Bill, unlike previous referendums in this country. From all we understand, it was the Prime Minister, when he was Leader of the Opposition, who insisted that there should be a second proposition on tax varying powers in the referendum in Scotland.

Media rumours in Scotland now are that the Chancellor of the Exchequer will find that restricting, because he apparently has ideas about changing the income tax bands. If he does what one thinks that he has in mind, it would mean that the amount of money raised in Scotland—if the tax varying powers meant an increase—would be less than the sum that has been spoken about. There are problems, even if the matter is restricted to income tax.

The Earl of Balfour

My Lords, one of the most unpleasant taxes we have ever had was the selective employment tax which we had a few years ago. Whatever taxes are agreed, they should be specified. It should be made plain to the Scots people that the Parliament at Westminster will continue to have the final say.

Lord Monson

My Lords, the Government are right to resist the amendment. What is the point of Scotland having its own parliament unless it is to be given as many powers overall as, let us say, Delaware or Rhode Island. The voters of Delaware and Rhode Island can opt for a sales tax or a tax on alcohol or tobacco which is 2 per cent. to 3 per cent. higher or, possibly, lower than those prevailing in New Jersey and Massachusetts. I agree with the noble Lord, Lord Desai. Why should not the people of Scotland be given the same options if—it is a big if—they choose to vote for them?

Lord Dixon-Smith

My Lords, perhaps another Englishman might be rash enough to intervene in the debate. I have just two points to make. The first, in answer to the noble Lord, Lord Ewing, is that I have always understood that the prime argument for devolution in Scotland—in principle I have no difficulty with that as a proposition—has always been that it will strengthen the unity of the UK. That then is something that we must consider.

In all my public life, the one factor that has mattered and counted has been money. It was the Government's decision when in opposition to have that question on the ballot paper. It is the Government's decision and not anyone else's. It is relevant. This is not a Second Reading speech; it is very much a Committee stage speech, because I am trying to answer points that have been made. If the assurances that we have from people such as Mr. Dewar and others that this is an income tax matter—I accept that it is a matter for the devolution Bill proper when we come to it—stand, that is fine. The difficulty is that the noble Lords, Lord Peston, Lord Desai and Lord Mackie, have raised an issue which is potentially divisive to the unity of the UK if one has a large number of varied tax rates across the whole spectrum.

It is one thing to quote experiences in the USA when one is dealing with one nation which has within it separate states with populations which are far larger than that of the whole of the UK, and distances that run in thousands of miles where we are accustomed to running in hundreds, but we are dealing with a small nation state. I have no difficulty with the proposition, if the proposition is income tax. If that is what it is going to be, I do not understand why there should be any difficulty in amending the question on the ballot paper. If that is what it is going to be, it would be simple to accept the point here and now and have it. It is noble Lords opposite who have raised the suspicions of ordinary people like me that it might mean something else.

Lord Rees

My Lords, it is true that we have had some speeches that have verged on Second Reading speeches this afternoon and during the two days in Committee. The reason for that is not difficult to find. It is because the Government have approached this important piece of constitutional legislation from the wrong end. We are going to ask the residents of Scotland and Wales to approve of something which has not been carefully sifted and thought out in the UK legislature.

I appreciate that there has been a Scottish convention. However, not being a resident of Scotland I confess that I have not followed its debates as closely as perhaps I should have done. We have not had the advantage of a convention in Wales, and so perhaps the matter has not been sifted out as carefully there as it may have been in Scotland. Whether or not it has been sifted out in Scotland, some important issues appear to have escaped the Government's attention, and have not been offered to us for debate.

It is said, "Leave it to the good sense of the Scots". That is an attractive proposition to someone who had a Scots mother even though he is resident in Wales and not in Scotland. Then I paused to think. Let us consider whether the question of taxation is of supreme importance. As a general proposition, of course it is because it is the basis of so much of our legislation and so many of our debates in both Houses of Parliament. More than that, the Government have chosen to single out taxation as being a matter of supreme importance, to be approved or disapproved by the residents of Scotland, because, after all, it is in the schedule to the Bill.

If one asks, "Why not leave this to the Scots to decide if and when they have their own parliament?" the answer is that the Government say that they want a view from the residents of Scotland. We are bound to think a little bit about these matters. Unfortunately, we cannot escape doing so now, because the noble Lord, Lord Sewel, has told us that we must press forward with this matter and that the view of the residents of Scotland must be taken in September before the main devolution legislation has even been printed. Indeed, I believe that supreme pressure has been brought to bear on the noble Lord, Lord Sewel, who until today has treated our interventions with courtesy and almost with reason. He has been a little offensive, if he will allow me to say so, but I realise that he has been under intense pressure, as have his colleagues in Cabinet. He is having to defend the indefensible, which, as I found in government, is sometimes a difficult operation.

Let us return to the issue before us. Yes, we want to know the questions which will be asked of the residents of Scotland. The questions relate to taxation and the scope of the powers which may be conferred on a Scottish parliament. After all, we know nothing about the Bill which will be introduced—that is, if a Bill is to be introduced, and we must not anticipate the outcome of the referendums—and we will not see the White Paper until later this week. We will want to know the degree to which the Government will pay attention to the no doubt cogent points which will be made during the debate on the White Paper before we rise for the Summer Recess. Of course we must focus on that particular question.

The noble Lord, Lord Ewing, said that he was a trusting person. That is an admirable characteristic and we must all try to take at face value even our opponents across the Chamber. However, if all that is to be proposed in the White Paper and in any subsequent legislation relates to varying the powers to raise or to lower income tax, why not accept this simple amendment? On the other hand, the Government may wish to reserve their position to see exactly how things are taken north of the Border, or to see the problems which will no doubt be turned up by the Inland Revenue. My heart bleeds for the Chancellor of the Exchequer—it does not often do so—who must try to reconcile the propositions with the general framework of direct taxation in this country. Having once had the privilege of receiving advice while appearing in the other place on matters of taxation, I appreciate the kind of detail and well-thought-out advice which are no doubt being tendered to Treasury Ministers by the Inland Revenue.

If the matter is as simple as noble Lords opposite would have us believe and there is nothing more than marginal adjustments to income tax—although, as has emerged in the debate, the technical difficulties of that will be considerable—they should accept the amendment. If the matter is not so simple, we are right in ventilating the points today. We shall expect to consider the matter closely when we read the White Paper. We shall have to return to it on the Second Reading of the proposed legislation, and we must go back to substantive legislation if a proper devolution Bill is introduced.

Finally, this is not a matter only for our friends north of the Border. As was pointed out by my noble friend Lord Boardman and others, if we go a little further, and even if there are major adjustments to income tax north of the Border, that may have a considerable effect on residents south of the Border and in Wales. We operate in one economic entity. Our taxation system, which has been developed over a century but not always to our satisfaction, is highly complex. Once we start raking about into that structure there will be many side effects and I doubt whether the noble Lord, Lord Sewel, and his colleagues have yet bothered to think them through.

4.45 p.m.

Lord Sewel

My Lords, the amendment is intended to clarify the nature of the tax-varying powers of a Scottish parliament, upon which the Scottish electorate will be invited to vote at a referendum. Its purpose is to change the references to tax-varying powers so that it refers specifically to income tax. In my contribution, I shall set myself two tasks. The first is to try to deal with as many of the points—some well made—as possible. The second is slightly more difficult; it is to remove the suspicions which lurk in the deeply suspicious mind of the noble Lord, Lord Mackay of Ardbrecknish. I do not wish to speculate upon whether that cast of mind is the product of his being a Minister for so long in the previous administration.

As regards my first task, I ask noble Lords to listen to what I say because the noble Lord, Lord Renton, and others raised the spectre of a whole series of taxes being introduced, raised or changed; for instance, excise duty and sales tax. I ask your Lordships to reflect on the fact that what has been said throughout the discussion in Scotland, the debate in the other place and the debate in this House has centred specifically and solely on income tax—

Lord Renton

My Lords, if that is so, why not state it in the Bill?

Lord Sewel

My Lords, I shall come to that point later. It will be stated in the devolution Bill, but I shall come to the reason why it is not stated in this Bill. First, I wish to make it clear that we have said throughout that the powers to vary tax will relate to income tax. I do not believe that noble Lords opposite will be able to come forward with any contrary quotation from members of the Government. I am happy to repeat that and I hope that it clarifies the situation definitively.

Furthermore, that power will be to vary the basic rate of income tax set by the UK Parliament by up to 3p. That is an important constraint and an important factor. Liability for the varied tax rate will be determined by residence in Scotland. That is a second important factor. If that power were used, the resources available to the Scottish parliament would increase or decrease accordingly, as pointed out by the noble Lord, Lord Mackay of Ardbrecknish. I do not believe that there has ever been any secret about that.

Noble Lords opposite propose that the fact that the tax is income tax should be reflected in the Bill and I understand some of the arguments and intentions behind the amendment. However, not only is it unnecessary, but such an amendment, while appearing to offer precision and clarity, would actually deceive. The inclusion of the words "income tax" does not explain the Government's proposals in sufficient detail. The Government's proposals are limited to varying income tax by up to 3p. That is a variation of income tax paid by people in Scotland. If that range of explanation is not in the question, the statement "varying income tax" is a complete distortion. It removes two of the fundamentally important constraints around which the power to vary income tax is based.

We have adopted an approach which was well explained by my noble friend Lord Ewing. It is based on limiting the questions to the two matters of principle: "Do you want a Scottish parliament?"; "Do you want that parliament to have tax-varying powers?". We decided to adopt that approach for the reasons which my noble friend Lord Ewing identified.

Once we move away from principle into detail, we are not presenting the electorate with a question on the ballot paper; we are presenting it with an essay. It would go on and on, spelling out the precise detail of the composition and powers of the proposed Scottish parliament. It would spell out the precise limitations and reservations on tax varying. As I said in Committee, there would be a ballot paper which looks more like the ballot paper used in elections in the United States of America which go on and on. That is not the way forward. We must have simple, clear propositions of principle.

Let us return to the point made by the noble Lord, Lord Mackay of Ardbrecknish, that somehow lurking in the political undergrowth of Scotland or this Government—not that this Government have a political undergrowth—there is some deeply worked-out, conceived plot that at a certain time in the future we shall hold up a piece of paper which says, "Ah, the Scottish electorate voted for tax-varying powers. Okay boys, we will extend them. We will give them a whole raft of different tax-varying powers".

The way to deal with that particular question is to look at the ballot paper because the ballot paper, as contained in the schedule, refers specifically to the Government's proposals which are the proposals upon which the electorate, in the referendum, is being invited to vote. The Government's proposals in the White Paper will spell out their proposals in relation to income tax and the limitation to 3p. That is what the Government's proposals are all about. That is why it is unnecessary to have a spurious degree of detail in the question. But more important, that alleged detail will deceive and lead to imprecision and lack of clarity.

The way forward is to stick to the two propositions of principle. Assuming a positive outcome in the referendum, the details of how such a power will operate will be contained in the main devolution legislation.

Details about the tax-varying powers, the 3 pence in the pound variation and how it will operate, will be embedded obviously and necessarily in the main legislation. Therefore, there is no need for spurious amendments at this stage. On reflection, I hope that the noble Lord will withdraw the amendment.

Lord Mackay of Ardbrecknish

My Lords, the longer the noble Lord, Lord Sewel, went on, the less I thought that my amendment was spurious. Indeed, as the debate went on, it became clear that the amendment is far from spurious.

Half way through, the noble Lord, Lord Ewing of Kirkford, intervened and asked me why I should select only taxation for a special position in the referendum. I have not chosen the questions for the referendum; I have not chosen a referendum; I have not even chosen that policy. That is the Government's policy and those are the Government's questions. They are not my questions at all.

I do not believe that there is a particularly compelling reason for having a second question. If the first question encompasses the whole of the White Paper, it seems to me that we do not need a second question.

The noble Lord, Lord Ewing of Kirkford, knows more about the referendum issue than most of your Lordships. I was intrigued by what I thought was his attempt to rewrite history. He said that the reason for the second question is because of some scare story by Sir Bruce Pattullo, the Governor of the Bank of Scotland, about the damage in relation to varying or increasing income tax.

Lord Ewing of Kirkford

My Lords, just before the noble Lord winds down his misleading path, perhaps I may clarify matters. The point that I was making was in relation not to the second question at all but in relation to the noble Lord's amendment. He latched on to Bruce Pattullo's coat-tails and I was hoping to prise him off them before he goes any further down that road.

Lord Mackay of Ardbrecknish

My Lords, I am always glad of enlightenment and an indication that my understanding was not correct. I shall read the noble Lord's speech with some interest because I was sure that he was referring to the general question. But if he says it was only about my small addition to the general question, that saves the noble Lord being reminded that the voile face on having a referendum was performed by the Labour party in June 1996 and brought about the resignation of the noble Lord, Lord Ewing, from the joint convenorship or chairmanship of the Scottish Constitutional Convention. However, I should say to the noble Lord that I did not devise my amendment with Sir Bruce Pattullo's speech in mind, but that is an added argument to my case for looking specifically at what those tax-varying powers should be.

The noble Lord, Lord Sewel, should have listened—and I hope did listen—carefully to two of his noble friends and one noble Lord on the Cross-Benches who put forward the proposition, which is sensible in its own argument, that if tax-varying powers are given to a Parliament, why should that be limited to income tax? The noble Lord, Lord Monson, from the Cross Benches pointed out correctly that in Delaware and Rhode Island it is possible to do a good deal more than that; and asked why the Scottish Parliament should be any different.

The noble Lords, Lord Desai and Lord Peston, both distinguished economists, put forward an argument which, if this parliament comes about, the people in it will hear from Scottish economists, although none will hope to be as distinguished as the noble Lords, Lord Desai and Lord Peston, especially the noble Lord, Lord Desai. He had some interesting views on the economic policy of his own party when it was in opposition and very positive views on the economic policy of the then government. However, I shall be rebuked for straying from the narrow point in relation to the questions in the referendum.

The noble Lord, Lord Desai, rightly drew to the attention of the House the question as to whether this parliament should be tied down as to the kind of tax it is permitted to raise. He put forward the proposition that the broader the tax-raising base, the better. I believe that I have heard the noble Lord, Lord Desai, on that subject on a number of occasions in the UK context and I am not surprised that he made it in this context.

I assure the noble Lord, Lord Peston, that I still oppose devolution. I hope that the parliament does not have tax-raising powers because I believe, like Sir Bruce Pattullo, that it would be damaging to the Scottish economy and that it would put up taxes in Scotland. Frankly, I do not believe for a moment that the parliament would ever put the taxes down because I read the Scottish press and I see a litany of the words "under-funded" this and "under-funded" that and so on. Therefore, I believe that those of us who live in Scotland will have to face an increasing tax burden.

The noble Lord, Lord Peston, pointed out that the correct tax to raise may not be income tax. To some extent, the noble Lord, Lord Peston, and his noble friend Lord Desai have let the cat out of the bag and are endorsing my argument that if you have a parliament with tax raising powers, there may well be an argument that that should include a lot more than the variation of income tax. Therefore, I do not believe that the noble Lord, Lord Sewel, was helped in that regard by the interventions of his two noble friends. Nevertheless, what they said should carry a lot of weight when it comes to the general proposition as to why that question is drawn so broadly when the noble Lord, Lord Sewel, is so determined in his contributions both today and in Committee to define it very narrowly.

In Committee he said that the only tax varying powers that the Government have in mind for a Scottish Parliament relate to income tax, and that it would be confined to 3p in the pound. He seems to be worried that the insertion of the word "income" would still make it too broadly based. Therefore, I have devised another amendment and, if the noble Lord indicates that he would accept the amendment on Third Reading, I shall happily withdraw my amendment this afternoon and bring forward a different amendment on Third Reading. The question would then read: I agree that a Scottish Parliament should have the power to vary the basic rate of income tax upwards or downwards by up to 3p in the pound". That is not dissimilar from the amendment tabled by the noble and learned Lord, Lord Simon of Glaisdale, who unfortunately cannot be here today but who indicated that had he been here, he would have been keen to discuss those issues. I grant your Lordships the fact that that amendment would add a few words, but it would not add significantly more words to the question than appear in the Welsh question, where, of course, the words are doubled because they are set out in both English and Welsh. So the Minister's argument is not a very good one. I had hoped that the noble Lord would indicate his willingness to accept that amendment on Third Reading, but, unfortunately, I see that he is not willing to do so.

I return, therefore, to my main point. I do not see why the words "income tax" should not be clear to the electorate in Scotland, myself included. It should be clear that people are voting for or against income tax being varied, and only income tax. Indeed, that could make a huge difference to the votes of people who do not pay income tax and who may be happy to vote for increasing income tax, but who would not be happy to vote for an increase in excise duty or VAT.

I am trying to be helpful to the Government in helping them honour their election pledges. They are having some difficulty in Scotland because everyone thought that there would be no tolls on Skye Bridge after the new dawn had come on 2nd May; but there are still tolls on that bridge. Moreover, no one thought that there would be any private prisons, but there are to be such prisons. I return again to the manifesto—I have almost reached the stage where I can remember it off by heart because I am so often reminded of it—which refers to law-making powers, including defined and limited financial powers to vary revenue". As the question stands, I submit that it is very widely defined and that it certainly is not limited. It is not limited as to the scope of the kind of tax which may be imposed. I suggest that my word added to the question would improve the definition and the limitation of that financial power. It would, therefore, help the party opposite to fulfil their manifesto commitments. In that spirit, I should like to test the opinion of the House.

5.2 p.m.

On Question, Whether the said amendment (No. 4) shall be agreed to?

Their Lordships divided: Contents, 149; Not-Contents, 132.

Division No. 2
CONTENTS
Addison, V.	Lindsay, E.
Anelay of St.Johns, B.	Lindsey and Abingdon, E.
Astor of Hever, L.	Mackay of Ardbrecknish, L
Beloff, L.	Macleod of Borve, B.
Biddulph, L.	Marlesford, L.
Braine of Wheatley, L.	Massereene and Ferrard, V.
Brentford, V.	Monson, L.
Campbell of Alloway, L.	Monteagle of Brandon, L.
Carnegy of Lour, B.	Northesk, E.
Carnock, L.	Palmer, L.
Chesham, L. [Teller.]	Park of Monmouth, B.
Clanwilliam, E.	Pearson of Rannoch, L.
Clark of Kempston, L.	Platt of Writtle, B.
Cox, B.	Rees, L.
Craig of Radley, L.	Renton, L.
Crickhowell, L.	Renton of Mount Harry, L.
Darcy de Knayth, B.	Saltoun of Abernethy, Ly.
Dean of Harptree, L.	Savile, L.
Dixon-Smith, L.	Seccombe, B.
Erroll, E.	Sempill, L.
Forbes, L,	Shaw of Northstead, L.
Glenarthur, L.	Strathclyde, L. [Teller.]
Gray, L.	Swinfen, L.
Hamilton of Dalzell, L.	Taylor of Warwick, L.
Harrowby, E.	Thomas of Gwydir, L.
Hertford, M.	Trenchard, V.
Holderness, L.	Tugendhat, L.
HolmPatrick, L.	Vivian, L.
Howell of Guildford, L.	Waddington, L.
Jenkin of Roding, L.	Wade of Chorlton, L.
Kenilworth, L.	Weatherill, L.
Lawrence, L.	Wedgwood, L.
Leigh, L.	Wharton, B.

NOT-CONTENTS
Addington, L.	Evans of Parkside, L.
Archer of Sandwell, L.	Ewing of Kirkford, L.
Ashley of Stoke, L.	Falconer of Thoroton, L.
Barnett, L.	Falkender, B.
Berkeley, L.	Falkland, V.
Blackstone, B.	Farrington of Ribbleton, B
Blease, L.	Gallacher, L.
Bledisloe, V.	Gilbert, L.
Blyth, L.	Gladwin of Clee, L.
Borrie, L.	Graham of Edmonton, L.
Brooks of Tremorfa, L.	Gregson, L.
Callaghan of Cardiff, L.	Grenfell, L.
Calverley, L.	Grey, E.
Carlisle, E.	Hamwee, B.
Carmichael of Kelvingrove, L.	Hanworth, V.
Carter, L.[Teller.]	Hardie, L.
Chandos, V.	Harris of Greenwich, L.
Clinton-Davis, L.	Haskel, L.
Cocks of Hartcliffe, L.	Hayman, B.
Dahrendorf, L.	Hilton of Eggardon, B.
David, B.	Hollis of Heigham, B.
Dean of Beswick, L.	Holme of Cheltenham, L.
Dean of Thornton-le-Fylde, B.	Hooson, L.
Desai, L.	Howell, L.
Dixon, L.	Hoyle, L.
Donoughue, L.	Hughes, L.
Dormand of Easington, L.	Irvine of Lairg, L. [Lord Chancellor.]
Eatwell.L.

Jay of Paddington, B.	Peston, L.
Jeger, B.	Plant of Highfield, L.
Jenkins of Hillhead, L.	Ponsonby of Shulbrede, L.
Jenkins of Putney, L.	Prys-Davies, L.
Judd, L.	Ramsay of Cartvale, B.
Kennet, L.	Rea, L.
Kilbracken, L.	Robson of Kiddington, B.
Kirkwood, L.	Rochester, L.
Lester of Herne Hill, L.	Rodgers of Quarry Bank, L.
Lestor of Eccles, B.	Russell, E.
Lockwood, B.	St. Davids, V.
Lofthouse of Pontefract, L.	Sefton of Garston, L.
Longford, E.	Sewel, L.
Lovell-Davis, L.	Shepherd, L.
McCarthy, L.	Simon of Highbury, L.
McIntosh of Haringey, L. [Teller.]	Skelmersdale, L.
Mackie of Benshie, L.	Strabolgi, L.
McNally, L.	Symons of Vernham Dean, B
Mallalieu, B.	Taylor of Blackburn, L.
Mar and Kellie, E.	Taylor of Gryfe, L.
Mason of Barnsley, L.	Thomas of Gresford, L.
Merlyn-Rees, L.	Thomas of Walliswood, B.
Milner of Leeds, L.	Thomson of Monifieth, L.
Mishcon, L.	Thurso, V.
Molloy, L.	Tordoff, L.
Monkswell, L.	Turner of Camden, B.
Morris of Castle Morris, L.	Wedderburn of Charlton, L.
Murray of Epping Forest, L.	Whitty, L.
Ogmore, L.	Williams of Elvel, L.
Parry, L.	Williams of Mostyn, L.
Paul, L.	Winston, L.
Perry of Walton, L.	Young of Dartington, L.

Resolved in the negative, and amendment disagreed to accordingly.

Resolved in the affirmative, and amendment agreed to accordingly.