Devolution in Scotland and Wales

HL Deb 30 July 1997 vol 582 cc185-278

3.30 p.m.

The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel) rose to move, That this House take note of the Government's proposals for devolution in Scotland and in Wales, as set out in the White Papers Scotland's Parliament(Cm 3658) and A Voice for Wales—the Government's proposals for a Welsh Assembly(Cm 3718).

The noble Lord said: My Lords, the publication of the two White Papers and today's debate mark the second stage in the process of establishing devolved government in Scotland and Wales. Our proposals are part of a wider package to revitalise and modernise our democracy throughout the United Kingdom. Increasingly there has been a recognition that people are comfortable and confident with the idea that decisions which more directly impact on their daily lives and the lives of their communities are best made at a local level, below that of the national government. In the recent past while so many countries have developed forms of regional government, in the United Kingdom we have become an increasingly centralised state—the people feel removed and detached from the process of government, government itself becomes more incapable of responding to local priorities and local values, there is a lack of identity with and confidence in our political structures.

I appreciate that some Members of your Lordships' House are sincerely of the view that devolution poses a threat to the Union—that it is somehow the first step on the slippery slope to separation. If I believed that I would oppose devolution with as much vigour as I now support it. Surely all the evidence is that it is the withholding of power, and a failure to recognise regional identities and aspirations, that cause states to fragment. We have just to look around this building to see the evidence of that.

I have said on a number of occasions in your Lordships' House that I am firmly of the view that devolution is the means of strengthening the Union. As someone who was born and brought up in England, pursued part of my education in Wales and has lived most of my life in Scotland—I value the Union. But the enduring value of the Union is its diversity. What we are doing is to establish structures of government that not only recognise that diversity but encourage it to flourish.

I have said that our proposals are about revitalising democracy. We want to revitalise democracy in Scotland and Wales. We want a new politics—a more inclusive, consensual politics. That is why we have devised an electoral system that will ensure the fair representation of different points of view. That is why we place great emphasis on a strong committee system and ideas like pre-legislative scrutiny.

While many of us enjoy the theatre of this House and of Parliament generally, we must recognise that many of our fellow citizens are deterred from making a contribution to public life by the adversarial and confrontational style of our politics. We want to change that. We want a parliament and an assembly in which a much wider range of people will wish to participate. And I say quite frankly that that is going to be a challenge to the political parties and their selection processes, but we need it. The two countries—the UK—need a change in their approach to politics. It needs a more inclusive legislature.

I do not intend to repeat all the details of our proposals in my opening remarks. That ground was well covered in the Statements last week, and in any case many noble Lords will have read the White Papers—some no doubt in fine detail! I should instead like to make some general comments and to pick up in general terms some of the key issues which were raised in this House last week and subsequently in the press.

Since we are debating both White Papers today, let me explain first why our proposals for Scotland and Wales differ. The Government were elected several weeks ago on a manifesto to modernise the constitution of the UK and to put devolution at the heart of that programme of reform. But we were clear while in opposition and remain clear in government that it would not be right to force every part of the UK into a common mould. As I said, the great value of the UK is its diversity, and our structures of government should recognise that.

We believe that each part of the UK and each region of England should be offered a scheme tailored to its needs and which takes account of its unique history and circumstances. Scotland and Wales differ in many respects. So, we believe, do the wishes of the people in the two countries. We are thus offering Wales and Scotland measures that are appropriate to their own circumstances and aspirations. It will be for the people of Wales and Scotland to decide on our proposals in the September referendums, subject, of course, to the referendums Bill receiving Royal Assent tomorrow. We shall see then whether we have interpreted their wishes correctly.

There has been a great deal of reflection since the publication of the White Papers on the whole question of sovereignty, particularly in Scotland. That is clearly an important subject but I believe that some of the reaction has been a little over-excited. People appear to have been looking rather too closely for some hidden meaning. I can assure noble Lords that there is none. The position is in fact quite straightforward. Since we are proposing devolution rather than separatism, Westminster will remain sovereign, but the Government are proposing that sovereignty should be exercised in a new way—in a devolved way.

If the referendums result in votes in favour of our proposals, and the legislation is enacted, the people of Scotland and Wales will be given the opportunity to have a bigger say in their own affairs. If the parliament and the assembly prove effective and popular I do not believe that a future UK Government would seek to force through changes to the terms of the settlement, still less to abolish them. Indeed, the remarks by the Leader of the Opposition last weekend suggest that even opponents of devolution now accept that endorsement of our proposals in the referendums will represent a moral entrenchment much more effective than any attempt at statutory entrenchment.

There has been a great deal of comment, some of it misinformed or alarmist, about the tax-varying powers we are proposing for the Scottish parliament. Let me—I hope for the last time—put the record straight. What we are proposing is that the Scottish parliament will have the power to increase or decrease the basic rate of income tax set by the UK Parliament by a maximum of 3p. This would currently allow the parliament to levy or reduce income tax in Scotland by up to around £450 million, which is about 3 per cent. of the Scottish Office budget.

That may sound a small proportion, but the power will be an enormously important counterpart to the parliament's law-making powers. It means that the Scottish parliament will have to make real financial choices. Does it increase income tax, decrease it or keep it the same? Or, put another way, does it increase public expenditure in Scotland, decrease it or make no change? It is because the Scottish parliament will have to address those questions alongside its legislative proposals that it will be more directly accountable to the people it serves.

We decided that the power should be limited to varying income tax because there was no practical alternative. All the other options presented serious difficulties. And our proposal strikes a balance. On the one hand, the power needs to be sufficient to make a difference; on the other, it must not put Scotland's people and Scotland's industry at an unfair disadvantage compared with the rest of the United Kingdom. I am convinced that we have got that balance right.

We have also built two specific safeguards into the system. First, any Scottish tax variation will not affect income from savings and dividends. Secondly, if the Scottish parliament's power to raise £450 million—index-linked to preserve its real value—were eroded by future changes to the UK tax structure, its ability to raise or forgo this sum through the tax system would be preserved. But we have made it clear that if or when such conditions did arise we would expect the £450 million to be levied or reduced in broadly the same way as our current proposals for 3p, on the basic rate.

The White Paper made it clear, by ruling out other tax options, that the power would remain restricted to income tax. There is no hidden agenda; just the delivery of our manifesto commitment to give the Scottish parliament a defined and limited tax-varying power. That is precisely what our proposals achieve.

There have been a number of questions about our proposals for giving the Scottish parliament and the Welsh assembly a say in European Union affairs. The Scottish executive and parliament and the Welsh assembly will have important roles in relation to European Union issues. Both will have the fullest and most direct possible involvement in policy formation within the United Kingdom. The Scottish and Welsh voices must be heard in relevant negotiations on policy at all levels, up to and including the Council of Ministers, including the scope to speak directly on behalf of the UK in those negotiations. Both Scotland and Wales will gain from an input to the position of one of the European Union's largest and, under this Government, most influential member states. The United Kingdom gains from the more thoroughly considered and debated nature of that input compared to the present.

If the Scottish executive is to participate as fully as the Government believe it should in EU matters, we propose that Scottish executive Ministers should attend relevant Council of Ministers' meetings in Brussels. The Secretary of State for Wales will attend relevant meetings on the same basis. Policy is planned in the UK but settled in Brussels in negotiation with our European partners. Without involvement in Brussels, Scotland and Wales would be absent from what can be the most important part of the process. We will safeguard that.

We intend that Scottish executive Ministers and the Secretary of State for Wales will have a role to play in the UK team at relevant meetings of the Council of Ministers, working within the UK lead Minister's dispositions of the team to secure the best outcome for the United Kingdom in negotiations. This could involve being able to speak for the UK in appropriate cases. In addition, where appropriate on devolved matters, executive members of the Welsh assembly may make their separate contribution within the UK delegation, as agreed by the lead UK Minister. There is no constitutional problem here, as some have claimed. Whoever speaks does so to an agreed UK line. The UK lead Minister is accountable to this Parliament for that line. I must remind some Members opposite that when we talk about the UK Parliament post-devolution we are talking exactly about that: a Parliament which is still the Parliament of the United Kingdom, not the parliament of England.

It is self-evident that the Scottish executive is accountable to the Scottish parliament for whatever it has agreed to. The assembly will want separate reassurance on its implication for Wales.

The Scottish executive will also have a representative office in Brussels, unless for some reason it unexpectedly decides otherwise. The Welsh assembly will be free to decide on its own arrangements. This is already the norm for regions within the European Union. It is a recognition that there is much more business transacted in Brussels than the formal core which is dealt with in the Council of Ministers and, prior to that, through COREPER. Separate offices for Scotland and Wales would not cut across the work of UKREP, to which Scotland and Wales will contribute staff just as they do now. What is proposed is not, as some parts of the press have luridly described it, a Scottish embassy in Brussels. As with many other regional governments, detached offices with a team of civil servants can act as a convenient link between the Scottish executive, the Welsh assembly and the many relevant interests in Brussels which will be part of that regional network of influence and policy. That is not, in essence, very different from the team of civil servants which the Scottish executive is likely to have based in London for day-to-day liaison.

I would like to turn in more detail to the Welsh Office proposals. In Wales, a £7,000 million budget for public services is decided by the Secretary of State without responsibility to or debate in an elected Welsh forum. The exercise of these decisions in accordance with the priorities of London and not of Wales has led to a widespread dissatisfaction with the political process.

The immense power and influence of unelected quango boards has caused a groundswell of resentment at a system which over the years has taken powers away from democratically elected tiers of government, both local and central. There is widespread agreement that too much control has been vested in an administrative state with tenuous links to the needs and preferences of the people of Wales.

There are those in Wales who are impatient that we have not been seen to move further to tackle the shortcomings of quango government. The White Paper highlights the action we propose to take before the assembly is set up: notably, by merging the three overlapping economic development agencies; reducing the number of training and enterprise councils and NHS trusts; and absorbing Tai Cymru into the Welsh Office. And when the assembly is established, two special health authorities will be abolished and their functions transferred. These proposals have had a warm and widespread welcome.

Less noticed has been the wide-ranging power that we are proposing to give the assembly over the remaining quangos. Our starting principle is that the structure of the public agencies which deliver services in Wales should, with few exceptions, be determined by the elected representatives of the people of Wales. The assembly is therefore to have the power, first, to absorb functions from quangos; secondly, to delegate functions from quangos to elected local authorities; and, thirdly, to restructure, merge or abolish quangos.

That power will apply to six of the remaining executive quangos and to 18 of the 19 advisory quangos. The assembly will also have the power, if it chooses, to transfer functions to itself from the health authorities; for instance, commissioning key health services on an all-Wales basis. For all the remaining bodies, the assembly will bring to bear an open and democratically accountable control over appointments, strategic direction and funding. The Government do not want to pre-empt the assembly's decisions on how it should use these powers. That is the nature of devolved government.

This radical approach will restore a much needed public confidence to the exercise of many valuable and indispensable functions. It spearheads the way for a new look at the accountability of public bodies across the UK.

In the period since the White Papers were published last week, the public debate and scrutiny of our proposals have begun. We are heartened and encouraged by the reaction they have received. I believe they respond to the spirit of the times—they meet the aspirations of the people of Scotland and Wales and enjoy the support of the broad swathe of Scottish and Welsh opinion.

I believe that our proposals for Scotland and Wales are realistic, practical and firmly in line with a great deal of thinking throughout Europe and elsewhere about the relationships between the seat of national government and the regions. The aim of our proposals for devolution is to give the people in the constituent parts of the UK and the regions of England the opportunity to exercise more power over their affairs. That is why we are proposing that it should have more substantial powers over more areas of policy than was envisaged in 1978. Devolution will not be a panacea for either Scotland or Wales. The parliament and the assembly will certainly not solve every problem overnight. But we believe that devolution will bring significant benefits for both countries, and in so doing will strengthen the United Kingdom as we move into the 21st century.

These proposals are designed to establish a new structure of government for Scotland and Wales—firmly within the United Kingdom but giving people more say over their own affairs. I believe that our proposals lay the basis for a stable and enduring settlement for Scotland and Wales and also for the United Kingdom. They are designed to strengthen every part of the Union—I believe that they will.

The Earl of Onslow

My Lords, before the noble Lord sits down, I ask him how it is that he can mention Scotland and Wales and say nothing about England, which represents more than 85 per cent. of the United Kingdom. He has said nothing about how these measures will affect us. This has been a long, involved Scottish and Welsh special pleading session. If the Government are not careful, the English will get cross and that will be disastrous for the United Kingdom.

Lord Sewel

My Lords, I am tempted to observe that the noble Earl did not actually hear what I said. I mentioned the United Kingdom quite a lot. Secondly, I mentioned England on several occasions when Ipointed out that the process of devolution does not stop at Scotland and Wales. It goes on to deal with the regions of England. That is essential to our argument.

Moved, That this House take note of the Government's proposals for devolution in Scotland and in Wales, as set out in the White Papers Scotland's Parliament (Cm 3658) and A Voice for Wales—the Government's proposals for a Welsh Assembly (Cm 3718).—(Lord Sewel.)

3.54p.m.

Lord Mackay of Ardbrecknish

My Lords, this is a very important debate and a serious one as it relates to the future of our country. I am very sorry that we could not have it over two days—one for Wales and one for Scotland. I intend to be brief in order to set a good example to those who follow. But nobody should take my brevity as a sign that I have in any way weakened my resolve that these White Papers represent dismal reading for those of us who believe in the Union.

I start today where I finished my remarks after the Statement. What do these White Papers do for the Union? That is my litmus test. The Welsh White Paper describes the Welsh assembly as firmly embedded in the United Kingdom. In the Scottish White Paper, the Secretary of State, Donald Dewar, says in the foreword: Scotland will remain firmly part of the United Kingdom". In his Statement he described the proposals as giving strength to the enduring partnership of the United Kingdom.

I said to your Lordships then, "I hae ma doots". Those doubts are reinforced in Scotland and Wales by the news that the Scottish National Party and Plaid Cymru are to campaign vigorously for "Yes" votes. Therefore, the separatist lion is to lie down with the Unionist lamb. So Alex Salmond, the leader of the SNP, will be asking me to vote "Yes, yes" in order to destroy the Union. The Secretary of State, Donald Dewar, and his friends, want me to vote "Yes, yes" to strengthen the Union. One of them is wrong. They both cannot be right.

Interestingly, a recent poll in Scotland shows that only 17 per cent. believe that a Scottish parliament will lead to stronger ties with the rest of the United Kingdom. Almost double that number—33 per cent.—believe that it will lead to the break-up of the United Kingdom. I wish that I could believe Donald Dewar; I wish that I was part of the 17 per cent.; but try as I might, I remain part of the 33 per cent. I see the White Papers not as cement in the bricks of our 300 year-old Union but as a demolition team ready to tear it apart.

Even as we speak, the other place is throwing out your Lordships' proposed change to the second question in the Scottish referendum. Rather than ask, "I agree that a Scottish parliament should have income tax-varying powers", later today that question will be simplified to say simply, "I agree that a Scottish Parliament should have tax-varying powers". Today and on previous occasions I have found the arguments of the noble Lord, Lord Sewel, on that issue thin in the extreme.

Now that I have studied the White Paper I know why the Government do not want to specify income tax and also why they are so reticent about explaining their reasons. In paragraph 7.13 we see the beginnings of the explanation. We have always discussed plus or minus 3p. in the pound, although, to be honest, most of us believed that it would inevitably be plus 3p. in the pound. But that is not the whole story because it is actually plus or minus £450 million. That £450 million is to be preserved. It is to be index-linked in order to preserve it.

The noble Lord managed to get round that, at least to his own satisfaction—certainly not to mine. I ask him again what will happen if the 3p. in the pound does not raise £450 million. What tax is to be imposed or raised to make up any difference? It cannot be within the 3p. in the pound, which I believe the noble Lord mentioned in his speech, because that will not raise £450 million. Where is the extra to come from? How will the shortfall be met? What tax will be raised? I expect an answer today; not in writing, but today.

If we move on to paragraph 7.26, we see the completion of the reason for not specifying income tax. Dealing with the parliament's powers over local government finance, it says: The Scottish Parliament will be responsible for determining the form of local taxation, both domestic and non-domestic". It adds: It will be for the Scottish Parliament to decide whether to retain the power to set the non-domestic rate poundage … or to devolve that responsibility to local councils". It says also: It will therefore be able to alter the form of the council tax, or replace it if it so decides". It is no wonder that the Government want the parliament to have tax-varying powers. Non-domestic rates will be decided either by the parliament or by the local authority. There is a tax-varying power. Business better be warned.

Council tax payers had better be warned as well for not only could council tax be raised or varied—I use the more elegant expression favoured by the Government—but it could be replaced or added to, perhaps by a local income tax so beloved of their partners, the Liberal Democrats. It may take the form of a local sales tax. Yes, they are tax-varying powers indeed.

I have reached the conclusion that the Government are absolutely right to throw out your Lordships' amendment to the Bill. It would be totally wrong and dishonest to ask us to agree or disagree about income tax-varying powers because that clearly is not the plan. It is much wider. We see in the White Paper why the Government were determined in Committee and on Report to keep income tax out of the question. If we vote for tax-varying powers, we will be voting for a much wider variation than just plus or minus 3p. on income tax. Business and individuals in Scotland will have no protection against other tax increases from the Scottish parliament, or via it from local authorities. Such frankness by the Government, although probably unintended, is at least to be welcomed. Those of us who will vote on the issue now know exactly from the White Paper why we are being asked to keep the question general.

I turn briefly to Europe, and especially to agriculture and the fisheries. I am afraid that today the noble Lord, Lord Sewel, has, again, failed to persuade me as to how the system will work. In paragraph 5.4, the White Paper clearly says that the agreed "UK line" will have to be adhered to by the Scottish executive. I posed some questions on the matter and tried to engage the Minister in debate, but he singularly did not want to engage in it. I am not surprised. I was not impressed by his previous answers on fisheries, and I am not impressed today.

However, I shall try again. This time I should like to talk about the beef ban. There is a view that, to lift the ban, we should start with Northern Ireland, given the protections which are in place in the Province. The Scottish NFU is, I understand, fiercely opposed to such a move. Let us assume that, notwithstanding this opposition, the UK Government decide to make progress in the negotiations and have the ban lifted in Northern Ireland as the first step. How comfortable would the noble Lord be if he were responsible for agriculture on the Scottish executive? Presumably he would have resisted the policy in the confidential discussions, but he would need to adhere to it; and, indeed, defend it in the Scottish parliament, in the Scottish press, and to the Scottish NFU.

A few moments' thought is all that is needed to see the total impossibility of this scenario. The proposals in the White Paper on these relationships are simply not of the real world. Given the overwhelming European aspect on agriculture and the fisheries policy, I offer the noble Lord some free advice. Before we come to deal with the Bill, the noble Lord should decide to leave agriculture and fisheries with the Secretary of State for Scotland; that is to say, firmly within the UK Government and Parliament and firmly within collective Cabinet responsibility. Otherwise, the interests of Scottish farmers and Scottish fishermen will be sidelined in the forums and in the policy-making decisions which matter most to them.

There is much more that concerns me in the White Papers. However, I rest my case on the two policy issues I have mentioned; namely, finance and Europe. At the heart of my worries are the points I made right at the start concerning the litmus test: does this enhance and maintain our Union? The White Papers show me red; indeed, deep, deep red for danger. As I said when the Statement was repeated in this House, this is a bleak day for our 300 year-old Union. Nothing I have seen since that day has convinced me otherwise.

4.3 p.m.

Lord Steel of Aikwood

My Lords, we are all grateful to the noble Lord, Lord Mackay, for his example of brevity. I shall try to follow that part of his example, if no other part. I shall deal only with the Scottish White Paper, as my noble friend Lord Thomas of Gresford will deal later with the Welsh White Paper.

Listening to the noble Lord, Lord Mackay, yet again I have to say that I agree with the comment made by one of my honourable friends in another place that the Scottish Tory Party must have the flattest learning curve in history. They do not seem to have learnt a thing from their total wipe-out at the general election. Indeed, we are still having the same old views trotted forward as though they had a massive endorsement from the people three months ago. Clearly they have no such endorsement.

I believe that the Scottish White Paper and the proposals before us represent in four particular areas a substantial improvement on the proposals brought forward by the previous government and put to the Scottish people in 1978–79. In the first place—and I well remember taking part in the referendum campaign at that time—there were complaints that the creation of a Scottish parliament, or Scottish assembly as it was then called because it did not have the same powers, would represent a third tier of government. Since then local government has been reduced to one tier and, therefore, there will not be three tiers of government; indeed, there will be only two. So that argument has been removed.

I turn now to the second argument that has been removed. With the creation of a proportional representation system as outlined in the White Paper, the legitimate fear in many parts of Scotland in the outlying areas, including my own, was that the Scottish parliament would be dominated by an artificial Labour majority from the central belt. That argument was used in the last referendum but is now gone. It is a welcome improvement.

The third improvement is one to which the noble Lord, Lord Mackay, takes such objection; namely the taxation powers. I should like to be quite frank on the matter. The fact that the powers of raising or lowering income tax are specifically mentioned is necessary because income tax is a UK responsibility. However, in that respect, I do agree with the noble Lord, Lord Mackay, that there are other areas involved. Indeed, when is a tax not a tax? The answer is when it is a charge. Of course the Scottish parliament will have power to levy other charges or taxes as it so wishes.

Let us suppose, for example, that the people of Scotland decided—or the politicians in Scotland decided—that there should be a dog registration scheme. It is quite within their competence to do so and they will be quite entitled to levy a charge for it. The noble Lord might call it a tax, but why should they not do so? Other dafter proposals have been raised before, such as a hotel bed tax. But again, although I would not agree with it, it is certainly within the competence of a Scottish parliament. I believe that the responsibility of a Scottish parliament to be able to deal with its own finances is a major improvement in this particular scheme.

Fourth—and perhaps even more important, although not so easy to understand—is the fact that the powers of the Westminster Parliament will be specifically reserved in the legislation that will come before the House, rather than the other way around. To put it bluntly, the Scottish parliament can do whatever it likes as long as it does not trespass on those issues specifically set out in the legislation which are reserved for this Parliament. I also believe that to be a great advance.

I believe that the proposals in the White Paper are to he warmly welcomed. I wonder whether the noble Lord, Lord Mackay, or any of his colleagues have read the paper that I have with me entitled, To Make the Parliament of Scotland, a Model for Democracy, which was published a few years ago. The authors were Bernard Crick and David Millar. It is a most valuable paper and runs to well over 50 pages. Perhaps I may read just two short extracts to your Lordships. On page 2 the authors say: A new and a national Parliament has an historic opportunity to innovate, not merely to create and adopt procedures more effective and more responsive to public opinion than those at Westminster, but to show Westminster and other centres of power that new ways are needed, can work and are better". On page 3 the authors also say: The tradition-bound procedures of the Westminster Parliament and its excessively confrontational nature are sufficient enough reason for Scotland's Parliament to make a clean break with Westminster's procedures. Scotland's Parliament need not suffer from excessive executive control and party domination in what is likely to remain, quite apart from the consequences of a new electoral system, a multi-party system". All I can say to noble Lords on the Conservative Benches is that a great deal of thought and work have gone into the proposals behind the White Paper since the Scottish Constitutional Convention published its original proposals some years ago. The fact that the Conservative Party has not been part of that process is entirely its fault. Indeed, the fact that its members are raising such questions proves that they have not thought the matter through. For example, the paper to which I referred dealt specifically with the increased influence that the German Länder have had on German federal policy in Europe. Therefore, why should we think all the time that Westminster will suppress Scottish views on Europe when the lesson from the past, with the European acceptance of the role of such governments in Germany, is that it is those Länder governments who have influenced federal policy. I do not think that the issue should always be seen as one way round.

Another issue has been raised by noble Lords on the Benches beside me; namely, that the SNP will support the proposals. The SNP took no part in the constitutional convention and has had no hand in the drafting of these proposals. It has been entirely negative about them. It has a completely different objective; namely, a separate independent Scotland. There is no public support in Scotland for that proposition. Indeed I venture to suggest that a great many of the 20 per cent. or so who voted SNP at the previous election will be perfectly happy with the proposals that are before your Lordships' House at the present time. It is only a tiny minority even of those who support the SNP who want a separate army, navy and air force and all the other things that go with a separate state.

I firmly believe, contrary to the noble Lord, Lord Mackay, but with equal vehemence, that these proposals represent a security for the future of the United Kingdom with decentralised government rather than the continuation of a long held grievance in Scotland that our affairs are not being properly considered. If the SNP supports these proposals for the wrong reason, that is something we shall have to bear with our customary fortitude. It is not something which need trouble us unduly.

I said that I would not speak for long. I wish to raise one other issue regarding the new procedures of the parliament which I mentioned in relation to the Statement the other day. The White Paper refers to a search for a building. I again warn the Government that people in Scotland, although enthusiastic about these proposals, will count the pennies. They will not want grandiose schemes for a new parliament building involving vast expense if that can be avoided. I hope that the Minister will respond to this point at the conclusion of the debate because I have mentioned it before. Is the search for a building to include the Royal High School in Edinburgh which has already been paid for by the taxpayer and converted to a parliamentary building? I know its limitations as I have been inside it many times. Is it technically and financially possible to consider the option of using the Old St. Andrew's House as parliamentary offices and providing a tunnel between the two, as is common in many parliaments in the world, notably in the United States? Those who have been there will have seen the quick transit system in place there. I believe that would be a cheaper option and one that should be pursued.

I conclude with a quotation from one of my most distinguished deceased constituents, Sir Walter Scott. In his novel The Heart of Midlothian he put the following words into the mouth of one of his characters: When we had a king and a chancellor and parliament—men o'our ain, we could aye peeble them wi' stones when they werena guid bairns. But naebody's nails can reach the length o' Lunnon". It is to put that right that we are approving this White Paper today.

4.12 p.m.

Lord Rodger of Earlsferry

My Lords, I, too, shall be brief. That is not because I regard these as other than important proposals. They are important not only for Scotland generally; they are also of particular importance for the Scottish legal system which is my particular concern. I shall therefore confine myself to making three short points which are interconnected.

The first and basic point arises from the obvious fact that what the Government are embarked upon is a programme of major constitutional reform. They admit that; it is the whole essence of their policy. In particular what is envisaged is a new Scottish parliament and a new Scottish executive. Those bodies will be new and therefore will not be bound by, or affected automatically by, the many unwritten arrangements and conventions which operate in many areas of our affairs at present. Those arrangements and conventions are not related purely to minor matters. On the contrary many are related to matters of great importance. Unless the conventions or something similar are reproduced in substance under any new arrangements in Scotland after devolution, certain crucial safeguards will be lost.

To put the matter shortly, any devolution legislation which follows a successful referendum outcome will require to spell out certain matters which are in effect taken for granted at present. I give two examples. The first of these—which is related to my second point—concerns the independence of the judiciary. I do not think that anyone in your Lordships' House would dispute that the independence of the judiciary is vital for the protection of the liberty and rights of citizens. It will remain of crucial importance after devolution. At present it depends on a combination of factors relating to such matters as the appointment of members of the judiciary, their salaries and the security of tenure of the judges. These matters work in a subtle way. It appears to me that no government of the United Kingdom can be indifferent to the maintenance of the proper standard of independence of the judiciary in Scotland after devolution because, as has been stressed, we shall remain very much a part of the United Kingdom. These arrangements are matters which depend, in large measure, on arrangements and conventions which are not written down. They should be addressed as regards any devolution legislation which is brought before Parliament.

The second and not unrelated matter concerns the independence of the office of Lord Advocate. As many of your Lordships will know, he is the head of the prosecution system in Scotland. Paragraph 4.8 of the White Paper relating to Scotland states that the independence of the Lord Advocate will be maintained. However, that is mentioned rather en passant. Again, I stress that this is not a matter which can be left to chance. In my view it is something for which specific provision should be made in any legislation which is brought forward. At present it rests on well established convention. The Government will recall that the convention became firmly established precisely because of an attempt by the first Labour Government to interfere with the prosecution discretion of the then Attorney-General. These temptations have arisen in the past and may arise again. Rather than leave the matter—if it should arise—to be sorted out in some sort of scramble, in my view the legislation should deal with that important matter at the outset.

I conclude by saying that the Government should recognise the nature of the exercise in which they are engaged. They are proposing major constitutional changes; they therefore require to consider carefully the full implications including those for established conventions which may seem unobtrusive but which are nonetheless important. The values and the standards which those conventions ensure at the moment should be carried over into any solution for devolution after the referendum.

4.18 p.m.

The Duke of Montrose

My Lords, I thank your Lordships for the opportunity to speak on this occasion. I quote from Hansard, My Lords, as I have never before interrupted the proceeding of the house by any of my scruples or objections, I hope now to be heard with that candour which your lordships are accustomed to show to those who do not speak from the confidence of greater knowledge than that of other men, but from the consciousness of less. Whose intention is to obtain, from the superior abilities and long experience of those who are engaged in the administration of affairs, such information as may free their minds from scruples … and are desirous like me to give their votes with honesty on every question before us". Those are in fact the words of the second member of my family to sit in your Lordships' House, in 1744, and this was after a lengthy wrangle which, probably to everyone's astonishment, had issued in the House sitting in silence. It was the thorny issue of the payment of Hanoverian troops stationed in the country at that time.

Your Lordships will be well aware that it is now the 290th anniversary of Scottish participation at Westminster and it is a great privilege to be the eighth member of my family in direct succession to have had a place in this House.

I cannot help but declare an interest in the subject of the White Paper as a Scot brought up in Scotland, but also from a family whose history has encompassed all sides of this argument. The first Duke of Montrose was one of the commissioners who negotiated the treaty between the two countries. That gave the Scots the right to enter as free traders into a mercantilist economy and thereby have access to some of the plum markets of the world. In our current frame of mind, it may seem unfortunate that it entailed monetary union. This had been avoided for about 100 years since the union of the Crowns. But then, unlike the present day, the Scottish economy had suffered from various disasters and that must have made that part of the decision that much easier.

Not so long ago, I had a grandfather who in 1936 espoused the cause of devolved legislature and more democratic supervision of Scottish bureaucracy. Noble Lords can imagine what popularity that gained him at that point in time. However, the proposals in the White Paper are certainly more radical than most we have seen recently. The noble and learned Lord, Lord Rodger of Earlsferry, put more eloquently my next point: that with the numbers of areas left unexplained in the Bill, it appears to be a giant leap across a chasm. At this distance it may seem that the grass is very much greener on the other side. But I suppose it is possible to consider that, this country having granted new constitutions to lands around the globe, it thinks of itself as in fine athletic training for jumping chasms. But let us be sure that consideration is given to all of its implications.

In that respect I do not have to go beyond the experience of my own family in what was formerly Rhodesia to consider another aspect of this process. I gather from reports of the recent SNP conference in Perth that in saying this I shall not be putting ideas into some people's minds. But once one has a subordinate legislature which does not see things in the way of its central government, it is very easy for frustrations to build up to the point where it feels justified in announcing a unilateral declaration of independence. Not having a separate military force, that might be a little harder to envisage for the Scots, but it can be easy for members to convince themselves that it is the patriotic thing to do.

The area that gives me most cause for concern, and one with which the Minister is directly involved, is agriculture. The schemes for financial assistance to Scottish agriculture apparently amount to about £400 million. Under the White Paper, from all that I can find out, only the agri-environment measures would be of consequence within the reckoning of the block grant and come under the direct authority of the Scottish parliament. If that is the only Scottish body with a responsibility in these matters, it means that about £395 million of the support coming into Scotland will be the result of a decision-making process which will be subject to very little influence from Scottish views. At the present time, in the person of my noble friend there is a deputy UK Minister, and even, in the Secretary of State, a Cabinet Minister, with responsibility for putting the Scottish view in Whitehall. As pointed out by my noble friend Lord Mackay of Ardbrecknish, the BSE crisis and the reform of the common agricultural policy will not be the last area where Scottish views may differ from those of the Ministry of Agriculture. Will there not be a need for some member of the UK Government, like the Secretary of State, to have responsibility for making representations either, with UK agreement, in Brussels or within the UK Cabinet? Anything less would seem like a severe lessening of Scotland's influence in this field.

That in itself touches on an area where we are left with a great deal of conjecture. What will be the relationship between the new First Minister and the Secretary of State—something which from the start will demand an immense amount of understanding and good will? One might almost say it is a situation demanding more "goodheart" and a little less "braveheart".

Like the ancestor to whom I referred at the beginning of my remarks, I look forward to obtaining information from my attendance in your Lordships' House. At this point I cannot say what effect it will have on my scruples, but I hope that there are fields of my experience in which I can usefully contribute.

4.25 p.m.

Lord Sempill

My Lords, it is a great honour on behalf of the whole House to congratulate the noble Duke, the Duke of Montrose, on his thought-provoking and outstanding maiden speech. His credentials for speaking in the debate are impeccable. He touched upon some of them. I should like to recall a few more. There is, after all, a connection with my own family. His early predecessor, the Earl of Montrose, and the first Lord Sempill went out with the King and died at Flodden. More notable perhaps was the first Marquess of Montrose who fought on behalf of the Royalists what is considered by Scottish historians to be one of the greatest campaigns of all times. Unfortunately, he fell foul of the system and in 1650 was sentenced to be hanged, drawn and quartered (I am afraid to say to the noble Duke) by the then Scottish Parliament. I am pleased to say, however, that his great grandson, the fourth Marquess, to whom the noble Duke referred, as Lord President of the Council of Scotland was the prime instigator in creating the Union.

The family have had a substantial involvement in British politics. The third and fourth Dukes were both MPs for English constituencies. On the Scottish side, the fifth and sixth Dukes were both high commissioners of the Church. The noble Duke mentioned his father who played a substantial role in Rhodesia. I am only too pleased to say that the noble Duke's role in Scottish agricultural affairs has been greatly appreciated. Therefore I am sure that the whole House will hope that we shall hear from him often, especially in the sphere of agriculture where he has served Scotland with distinction.

I am a great believer in the maxim "keep it simple". Therefore I have to congratulate the Government on their White Paper. It is well laid out and easy to read. Unfortunately, its simplicity opens it up to close scrutiny and a multitude of questions. When I look back to the hours of debate spent in this House on the six-clause referendum Bill, I strongly recommend that noble Lords planning to take part in the devolution Bill use the Summer Recess to build up their strength. I suspect that running marathons without preparation would be less exhausting.

The risks of devolution have been well aired and will continue to make most of the headlines. I wish to express my concern regarding paragraph 4.15 of the White Paper and the reality of differing views between the Scottish executive and the UK Government on the legislative powers of the Scottish parliament. That there will be procedures for identifying and resolving any such difficulties is admirable; but to assume that they will be resolved "quickly and amicably" is, to quote the leader in the Sunday Times, "to tempt fate". A future clash between a Tory-controlled United Kingdom and an anti-Tory Edinburgh parliament is not inconceivable especially when Scotland will have fewer MPs after devolution.

The article observes that much will depend on the quality of those elected to administer a £14 billion budget and suggests that the parliament's fiscal management could easily become unstuck, especially in regard to its ability or lack of ability to control local authority spending. It is therefore with some relief that I note the intention in Chapter 6 of the White Paper to, establish an independent committee to study how to build the most effective relations between the Scottish Parliament and Scottish Executive and a strong and effective local government". I would therefore be grateful if the Minister could enlighten me as to when that committee is to be established and, more importantly, who will sit on it. The chapter goes on to say that the parliament will, have the power to set the framework within which local government operates and to legislate to make changes to the powers, boundaries and functions of local authorities". That sounds most promising, especially in regard to certain local authorities whose style of management seems certain to clash with an executive desirous of establishing a strong and effective leadership. It is to this area, namely the role of the parliament in its relationship with local government, that I strongly recommend that those who draw up the Bill should pay particular attention.

Perhaps I may take this opportunity to ask the Minister to comment on an interesting observation made by William Rees-Mogg in the same edition of the Sunday Times under the title, See Democracy die in a hail of ballots". He first of all points out that while both White Papers explain the proposed electoral system in Annex C, the lack of greater detail provided in the Welsh paper makes the Scottish electoral system almost impossible to understand. He goes on to point out that, the power of nominating list members greatly strengthens party managers". In Wales there will be 40 constituency members and 20 list members. In Scotland, there will be 73 constituency members and 56 list members. In Wales, however, the list members account for only 33 per cent. of the assembly. But in Scotland they will account for 43 per cent. of the parliament. What is the logic behind that? If nothing else, it shows a lack of consistency on the important issue of constitutional reform.

Finally, while I have very strong reservations on the outcome of devolution, I, for one, will take the opportunity to seek election for the Scottish parliament. There will be substantial challenges. The opportunity to help develop a better society for the people of Scotland and build a stronger Union is there to be had.

It is time to be positive and to look forward. Perhaps I may leave your Lordships with this thought: nothing grows in ice. If we let tradition freeze our minds, new ideas cannot be cultivated.

4.32 p.m.

Lord Campbell of Croy

My Lords, in the short time available to me I must be very selective in my comments. Twenty-one years ago there was a two-day debate in this House on devolution for Scotland and Wales. I remember it well, since I wound up the debate from the Opposition Front Bench. I have trodden this ground before and am familiar with some of the pitfalls and minefields that beset the task of trying to establish an elected body for Scotland within the United Kingdom. Three years later the resulting scheme collapsed because there was not enough support for it in Scotland. If anyone cares to look up that debate, it will be seen that inquiring minds on all sides of the House were seeking positively a way in which devolution could safely and enduringly be carried out.

The Kilbrandon Royal Commission had published its report just over two years earlier, after four and a half years of consultation and deliberation. The gist of its recommendations for Scotland was that an assembly might be practicable, but that the number of Scottish MPs would have to be considerably reduced following the precedent in Northern Ireland in the early 1920s.

Many parliamentarians of all parties, and others outside Parliament, were not at all sure that the loss of those MPs was worth it, in return for an additional layer of expensive politicians. That consideration is relevant also today, since the White Paper announces a review of the number of Scottish MPs at Westminster.

After that debate, the Labour Government grappled vigorously and manfully with the very difficult process of establishing a Scottish assembly—with White Papers, a Bill withdrawn and various other setbacks. It proved a very complex and herculean task. At this stage last time, in 1976 and 1977, opinion polls in Scotland regularly showed 60 per cent. or more in favour of the idea. However, the post-legislation referendum produced only 33 per cent. in favour of the particular scheme on offer. The polls have been showing much the same degree of support now—around 60 per cent.—for devolution, or decentralisation, which is always a popular concept.

The White Paper on Scotland confirms previous reports that virtually all the present functions of the Secretary of State for Scotland are to be transferred to the executive of the proposed Scottish parliament. The existing Scottish Office departments dealing with home affairs, health, education, housing, roads, agriculture and fisheries and the other subjects already devolved administratively to Scotland would presumably start serving new masters. The staff of civil servants would still be employed by the United Kingdom Government. My first question is therefore: will the civil servants concerned by given a choice as to whether to remain in those departments or to transfer to other parts of the United Kingdom service after reasonable intervals?

After the massive transfer of the present responsibilities of the Scottish Office, what is to happen to the Secretary of State? He is to be left with very few of his previous functions. Paragraph 4.12 of the White Paper states that once the new parliament is in being, he will be concerned with promoting communication between the Scottish Parliament and Executive and between the UK Parliament and Government on matters of mutual interest". That is hardly a full-time job! He is also to represent Scottish interests in reserved areas. Reserved areas include, as expected, defence, foreign policy, Treasury control of the fiscal, economic and monetary system and transport safety. Other reserved areas are where government departments at present administer the whole of Great Britain, in particular employment and social security matters, including the Benefits Agency. These would be retained by their relevant departments in London. The subjects involved—jobs and social security eligibility for payments—are matters of close personal concern for many individuals and families.

Some explanation is needed in relation to the role of the Secretary of State when he has become simply a "communications" Minister, as described in the White Paper, but is still in the Cabinet. Is it realistic to suppose that he can be regarded as communicating for the Scottish First Minister and his Scottish Ministers when he has no responsibilities himself for the subjects in question?

Perhaps I may illustrate the point from my own experience. When I was Secretary of State for Scotland in the early 1970s, it was part of my job to co-ordinate policies and new initiatives with the Ministers responsible for the same subjects in England and Wales. I started two or three new schemes in Scotland on education. Before adopting them, I discussed them fully, and all the implications for the United Kingdom, with the Minister responsible for education in England and Wales, then my noble friend Lady Thatcher. Possible difficulties were foreseen and usually ironed out. I find it difficult to visualise a Secretary of State for Education in England placing much value on discussions with the messenger, the liaison officer, rather than the Minister responsible for education in Scotland. My noble friend Lady Thatcher would certainly have expected to deal directly with the First Minister, or at least the Minister in the Scottish executive responsible for education. I did not serve in a Cabinet with the noble Lord, Lord Glenamara, since we were on opposite sides in the other place. However, I have no doubt that he, too, when he was Secretary of State for Education, would have expected to deal direct with the Education Minister for Scotland.

To give another example, in 1971 I carried out a reorganisation of the National Health Service in Scotland, with a substantial Bill going through Parliament. That was a year before the Bill was introduced for the reorganisation in England and Wales. Naturally, I had discussions, again outside Cabinet, with the then Secretary of State for Health for England and Wales, the late Lord Joseph (who was then Sir Keith Joseph), before my Bill was finally drafted. The new "messenger" Secretary of State for Scotland would not be able to carry out that role effectively because he would have no executive authority for education or health.

I turn to law and justice and page 5 of the White Paper. Would the Scottish Parliament have the power to bring back the death penalty in Scotland? I see nothing in the White Paper to clarify that point.

With regard to judicial appointments, page 5 of the White Paper indicates that, except for the two most senior judges, the Scottish executive would make these appointments and could vary the terms of the appointments. At present, all Court of Session judges are appointed by the Queen. Any changes raise questions on the independence of the judiciary. I add that point to the excellent points raised by the noble and learned Lord, Lord Rodger of Earlsferry.

Let me ask another question. Is the right of appeal from the Court of Session in Edinburgh to the House of Lords to be reserved to the United Kingdom Parliament, or would the Scottish parliament have a new part in that?

There is a question which I have put in the past and now put again: will the signing of warrants to authorise telephone tapping be reserved? That cannot now be delegated by the Secretary of State for Scotland to other Scottish Office Ministers.

With regard to business, finance and industry, I trust that the Government have observed the apprehension of the Scottish commercial world over paragraph 7.26, which proposes that the Scottish parliament could pass responsibility for non-domestic rates to local councils. It was hoped that that was past history after the painful experiences of the past.

There is an important statement on tax on page 24. Savings and dividend income will not be subject to the varying powers. The electorate in Scotland will wish to know what that entails when considering how to vote on Proposition 2 in September. What will be classified as savings? For example, do they include all personal bank accounts? Will interest from them be exempted? What else will be exempted? The term "savings" can mean different things to many in the population. In exempting dividend income, the Government avoid exasperating complications. That is understandable. Nonetheless, do the Government realise that that could lead to strange anomalies. Recipients of dividend income are usually reasonably well off. They will not be charged the additional 3p if tax is varied upwards. By contrast, someone whose income comes only from his pay packet will not enjoy that exemption. Is that what the Government intend?

Paragraph 7.19 estimates the cost for employers in Scotland in setting up a special system for collecting PAYE as no less than £50 million.

Let me put my last question, which is rather lighthearted. Is the report correct that the Scottish White Paper is nearly twice the price of the Welsh White Paper because it contains colour portrait photographs of the Prime Minister and the Secretary of State for Scotland'?

4.44 p.m.

Baroness Ramsay of Cartvale

My Lords, I believe that the plans for a Scottish parliament outlined in the White Paper will give Scotland a strong and effective parliament and provide for a stable constitutional settlement for the future. The proposals recognise Scotland's distinct identity, as well as the strong links that bind Scotland into the United Kingdom. Indeed, they will give added strength to the partnership of the United Kingdom, while modernising our constitution.

It is the modernisation which provides a sense of excitement to that historic document. When I said in my speech in the debate on the humble Address that I shared the excitement of the people of Scotland at the coming of a Scottish parliament, noble Lords opposite seemed to find that strange. Can anyone doubt, after the launch of the White Paper, that there is indeed a sense of excitement in the air about this long anticipated move for change, for which people in Scotland have waited so long.

It is a point of particular satisfaction—I declare an interest as co-chair of the Scottish Constitutional Convention—that the Government's proposals have built upon the plans of the convention (and in some respects, indeed, have developed them further) to provide a parliament that is based on new, forward-looking concepts of democratic parliamentary practices that are right for the new millennium. That is true in many respects. But in view of the length of the list of speakers, I intend to deal with only one or two of them today—the ones which are of particular interest to me.

First, with regard to Europe, the White Paper goes further than the proposals of the Scottish Constitutional Convention, which proposed that Scotland's parliament should be represented in UK ministerial delegations and, when appropriate, should take the lead in discussions on matters of particular concern to Scotland. The convention also proposed that the parliament should choose representatives to the Committee of the Regions and to the Economic and Social Committee and that it should establish a representative office in Brussels. All those recommendations are included in the White Paper. In addition, it is proposed that the parliament should scrutinise EU legislative proposals, which will allow in-depth assessment of EU proposals and ensure that Scotland's interests are properly reflected.

The White Paper also gives the Scottish executive the responsibility to implement and enforce EU obligations which concern devolved matters. That will ensure that EU legislation can be accommodated in Scottish law and to Scottish circumstances.

All those proposals would build on the arrangements currently in operation involving the Scottish Office in UK negotiations. The formal negotiations between member states is one aspect of activity in the EU. Another is the fact, as the White Paper states, that influence within the EU begins well before the process of formal negotiation begins and operates through many more channels than the formal Community and intergovernmental processes. For example, UKREP will continue to perform, one could say, its ambassadorial role in Brussels to the European institutions for the whole of the UK. The Scottish executive representative office will complement that work, in assisting Scotland's direct relationships in Brussels. As the White Paper states, it is the norm for regional governments within the European Union to have representative offices in Brussels.

The aim of all the proposals concerning Europe is, in the words of the White Paper: to allow Scotland within the UK to develop its role in the European Union". That is an aim which I heartily endorse.

Of particular interest and concern to me, as indeed it was to the convention, is that women should be fully involved in every way and at every level in the political life of Scotland. The Labour Party agreed with the convention's aim that there should be equal representation of women in Scottish politics, where, both locally and nationally, as in so many other countries, women have been under-represented. The Labour Party is committed to the principle of equal numbers of women and men in the Scottish parliament and has signed an electoral agreement with the Liberal Democrats to try to achieve that. That pledge will be honoured so far as those two parties are concerned and I hope that other parties will follow suit.

That would lead to a gender balance unprecedented in British government and most importantly will help to lead the way to a new political culture. And this crucially important aspect of the Parliament—the potential for a new political culture—is, if I may say so, in danger of being overlooked, if one can judge from the tenor of the debate on the referendums Bill.

The Scottish parliament, not least because of the voting system by which it will be elected, will have to operate on more consensual and less adversarial lines and its methods of work will have to be different from traditional Westminster practices. It will have to be more family friendly in its operation and it will have to have an extensive committee structure. There will be more time for an agenda of issues which affect the lives of people and their families directly and in which women, as well as men, will have an immediate stake and interest.

The Scottish parliament will have an opportunity to make Scotland a better place for women, through its responsibilities for health, housing, education, transport, social work, crime prevention and a whole raft of other subjects of particular concern to women. All of that in the new parliament favours many more women being able to participate fully in its work and being attracted to enter it.

The White Paper makes it clear that we hope that 50:50 representation will be achieved in the parliament. Experience in other countries shows that a critical mass of women politicians is a potent force for change. I have to say, with the greatest of respect, that this is not the easiest place in the world to rouse enthusiasm for equal numbers of women to be the norm at all levels of our political life.

But the Scottish parliament, with its opportunity to respond to the needs of a society of our time, has the potential to bring government closer to the people, to restore the damaged image of politics and politicians and to open a new chapter of Scottish politics reflecting the geographical diversity of Scotland, the spread of its political values (including the Conservative Party) and the inclusion of all the people of Scotland—2.5 million of whom are women. That is exciting, and that is the future.

4.53 p.m.

Lord Crickhowell

My Lords, the most vivid image produced by a Labour Member of Parliament in last week's debate in another place was of St. Run, his white gown flowing, brandishing his manifesto above his head, striding across the Severn Bridge backed by a host of English Members of Parliament taking the English to Wales to tell the Welsh what is good for us. Worse, he is hoping that the Scots, given their vote seven days earlier, will be an effective part of this attempt to twist the arms of the reluctant Welsh.

Wales being got at in this way is a Wales on a fast-rising tide of prosperity and confidence. To quote the Secretary of State, "some of the communities served by the Welsh Development Agency are now among the most prosperous in the United Kingdom". That is not a statement that anyone could have made with decency 18 years ago. The plan, against that background, is that we should have 60 assembly persons-60, for a population of under 3 million—spending £100 million or so over the next four years which could have been spent on health and education.

We have just heard an interesting speech about the contribution made by women. My wife, who makes a fairly robust contribution to public affairs in Wales, is sympathetic to this Government. On hearing that there were to be 60 assembly members, she said very pungently indeed, "What, 60 for 2.75 million people? What nonsense!" Incidentally, the assembly, sitting on the top of local government, is hardly going to strengthen the local involvement of people where they want it most—in local authorities—despite the protestations of the Government's White Paper.

Mr. Alan Williams in another place, in the context of the alleged need for quango reform, inquired pointedly why the Secretary of State did not go ahead and do it himself. There would then be no need for a permanent 60-member assembly. In a remarkable speech he inquired why, if all these growing important responsibilities being transferred in Wales could not be dealt with without an assembly, were English Ministers failing in their duties to the people of England. The way in which people have been governed and administered has been pretty well the same throughout the United Kingdom. It is an interesting point as to why it is so essential in Wales when apparently nothing of this kind is being proposed in England and we are doing the whole business bit by bit in a piecemeal fashion.

In another remarkable speech Mr. Denzil Davies said that he feared for Wales. I fear for Britain. As he pointed out, the referendum was lost in 1979 because the Welsh people feared for Wales and for Britain and did not think that what was on offer was worth the risk. It is still the position that what is being planned is a move away from British institutions. The nationalists believe that they can escape the English and become a European nation. But, as Mr. Davies pointed out, the unbundling of the British state which is planned will not just mean that Wales will be loosened from England; but that England will be loosened from Wales, and to an even greater extent the same will be true of Scotland. This is a Bill that affects the whole of the United Kingdom and will affect it profoundly.

What will the English do when they recognise that fact and recognise the scale of the subsidies passing from England to Scotland and Wales? Mr. Davies, a former Treasury Minister, surprised me by putting the figure in Wales at between £5 billion and £6 billion each year. What will the people do at a time when Scottish and Welsh Members of Parliament, powerless to influence domestic policy in their own countries, come to have what may well prove to be a decisive influence on deciding what it should be in England? I have sat through many painful debates in Cabinet about the validity of what is now known as the Barnett formula. Those debates were carried out in the privacy of a British Cabinet. Apparently the debate in future is to be carried out in public between the Government at Westminster, the Treasury in Whitehall and frustrated assemblies in Scotland and Wales. I am certain that it will be a much rougher affair and the Secretaries of State will not be happy men or women. I doubt also that the outcome will be as favourable for the people of Scotland and Wales as those private exchanges were in the past.

Despite the protestations of the White Paper, the Goschen-Barnett formulas will not survive for long. Also, as in Scotland so in Wales, it will be impossible to justify the continuing existence of 38 MPs in addition to 60 assembly members. MPs will be castrated of their powers and influence over just those matters that most interest their constituents. However, they will not be so badly maimed or weakened as the Secretaries of State.

Yesterday the noble Lord, Lord Hooson, chided the Conservative Party for not having created the Welsh Office or the Welsh Development Agency. But those institutions have been well used by Conservative Secretaries of State to considerable effect for the benefit of Wales. Incidentally, when the noble Lord, Lord Sewel—I am sorry that he is no longer in his place—talked about the block grant being distributed from Westminster, he showed his total ignorance of the way in which these things are actually managed. I know that I was given a remarkable degree of discretion by my noble friend Lady Thatcher when she was Prime Minister to use the money as I and the Welsh Office thought was desirable for the people of Wales. Those decisions were taken in Wales.

Mr. Ted Rowlands stated in the Commons: one of the great success stories of the past 20 years—led by the office and by the nature of the budget—has been the Secretary of State's role in attracting inward investment. He has been a pivotal force in delivering investment into Wales—double the average for the rest of the country-.—[Official Report, Commons. 25/7/97: col. 1168.] Mr. Rowlands is right, and I am proud of what I and my successors have achieved in that respect during 18 of those 20 years.

Since 1983, when I gave the Welsh Development Agency responsibility for inward investment, approaching 1,700 new and expansion projects have been attracted to Wales, bringing a total investment of more than £11 billion. Those projects have created and safeguarded directly more than 160,000 jobs and many more jobs indirectly through associated economic growth. I and my successors were not embarrassed to use and adapt instruments presented to us by our Labour predecessors. Labour and Conservative Governments can take credit for this immense achievement. The long years of depression that afflicted generations in Wales have been ended. There is a new confidence in Wales.

It is mad folly to destroy the very instruments responsible for that achievement and to gamble recklessly with the future of Wales and the future of Britain. What was true in 1979 is even more true today. Then the instruments were untested and unproven. Today they have been proved to work. I believe it vitally important that every effort should be made over the coming weeks to preserve them.

5.2 p.m.

Lord Monson

My Lords, there are surprisingly few English names on the Speakers' List this afternoon, which is perhaps rather shortsighted of the English. I speak as an Englishman, albeit as one with a small amount of Welsh and indeed French blood, but also as a subject of Her Majesty the Queen and as a citizen of the United Kingdom of Great Britain and Northern Ireland, who believes that it would be a tragedy if the bonds between us all were gradually loosened as an unintended consequence of the measures proposed.

I start by putting a question—my least important question—to the Government from a hardheaded English perspective. Will the English taxpayer have to contribute, directly or indirectly, to the considerable costs of setting up and running the Welsh assembly and the Scottish parliament? Reading the Scottish White Paper, it appears that the Scots will probably pay in full for their parliament. But the Welsh White Paper is more ambiguous. Can we have an assurance on that score?

Next, the question of privilege. It does not look as if Welsh assemblymen and assembly women will have the benefit of parliamentary privilege. But if the arrangements for Scotland are similar to those in 1978, Scots parliamentarians will. Will Scots parliamentarians be able to criticise only their fellow Scots with impunity; or will they, in the course, naturally, of their parliamentary duties, be able to say things about individuals in Cornwall, Warwickshire, Essex, the Isle of Wight, Carmarthen and Carrickfergus which might be deemed slanderous if repeated outside the four walls of the Scottish parliament? I know that the Government are looking into the whole question of parliamentary privilege, but I doubt whether their findings will be made known before the Scottish and Welsh legislation is completed.

Next, we come to the West Lothian question, which is not answered in any way by the proposed reduction in the number of Scottish seats at Westminster to 58 or thereabouts. That should have happened many years ago anyway. A few days ago the noble Lord, Lord Merlyn-Rees, defended the Government's position by citing the position of Stormont when that assembly was in being and was supported in his analogy by the noble Lord, Lord Sewel. What they both forgot was this. As a quid pro quo for running most of their internal affairs, the people of Ulster were allocated only 68 or 69 per cent. of the seats at Westminster which would have been due to them on a population basis. Applied to Scotland, that would give the Scots only 39 or 40 seats in the House of Commons. It is one possible and partial solution but far from the best. Would it not be better to keep the 58 Members of Parliament but introduce a strict rule in the House of Commons barring the Scots, and where applicable the Welsh, Members from voting on purely English matters? The Speaker would obviously have to decide to which legislation this applied and to which it did not.

Next, the geographically extreme parts of Scotland: in the south, the Borders, and in the north, the Orkneys and Shetlands, whose inhabitants are traditionally suspicious of mainland Scotland. Last time they voted against Edinburgh rule. It is claimed that they will vote differently this time round. But if they do not, what then?

Next, the proposed voting system, incorporating additional members on a party list. I have no objection to PR as such for these bodies but the additional member system, imported, I think, from Germany, a country which can do no wrong in the eyes of most of the centre-Left, is a bad idea. It is a bad idea because, first, it gives too much power to party bosses at the expense of individualists like, for example, Mr. Tam Dalyell; and secondly, because it creates two classes of member: the first with constituency obligations and the second without any real constituency obligations. But given that this is the chosen system, my question is this: will the first-class members, so to speak, be paid substantially more than the others to compensate them for their burdensome constituency duties; and if not, why not?

Finally, I turn to the possible long-term unintended consequences of these proposals. A few days ago I pointed out, and was supported by the noble Lords, Lord Desai and Lord Peston, that states like Delaware and Rhode Island have considerably more powers than a nation like Scotland would have under the present proposals. The noble Lord, Lord Dixon-Smith—I am sorry he is not in his place—suggested that that was an invalid comparison since the United States is so very much larger than the United Kingdom. But consider eight contiguous states in the American north east: Vermont, New Hampshire, Massachusetts, Connecticut, New York, New Jersey, Delaware, Maryland plus Washington DC. Together, they cover 97,000 square miles—almost identical to the United Kingdom's 94,000 square miles. Their population is smaller, at 43 million compared with 56 million, but that is unimportant. They form a most efficient and prosperous economic unit, yet their powers of independent law-making could not be more comprehensive.

Most obvious to someone on this side of the Atlantic—some states retain the death penalty; others have abolished it. The retentionist states, moreover, can choose the preferred method of execution. Each state can set minimum ages for marriage, sexual intercourse, obtaining a driving licence and buying a bottle of beer—the last hurdle being the most difficult one to surmount. They have different abortion laws, which is germane to the Scottish argument. They have different firearms laws. Indeed, within each state some cities have stricter firearms laws than others. (It is notable that the states with the strictest laws have the most gun crime.) There are different speed limits, different seat-belt laws, different priorities at road intersections and different rules on the use of dipped headlights, side lights and so on. There are different laws on field sports. Most states permit falconry, for instance, but one or two ban it. And of course they can set different sales taxes, state income taxes and taxes on tobacco, alcohol and so on, though competition ensures that these differences are never too great. Yet despite all these variations they function extremely successfully as an economic unit.

The Scottish nationalists and, more importantly, the much larger number of latent Scottish nationalists are not fools. More and more frequently as time goes on they are going to compare the limited powers granted to the Scottish parliament with the very much greater powers possessed by, for example, Delaware, with 13 per cent. of the population and only 6.5 per cent. of the land area, and ask perfectly logically why Scotland cannot have at least the same powers as Delaware given that no economic disadvantages are likely to ensue based on the North Atlantic experience; indeed, the reverse might be the case. This question will soon evolve into more and more strident demands, matched by increasing resentment in England and, possibly even in Wales, which is all too likely to lead to the eventual break-up of the kingdom.

5.10 p.m.

Viscount Weir

My Lords, first may I apologise? I cannot stay for much more of the debate as I recently had an operation on my leg and I cannot manage to sit for very long, even on your Lordships' normally comfortable Benches.

I wish to raise two matters regarding publication and presentation of the Scottish White Paper. The distribution was completely inadequate. In Glasgow last Thursday it was virtually impossible to obtain a copy. Far too few were printed. As the outlets supplying the public had received many advance requests, the Scottish Office ought to have known that demand would be heavy, even at the rather excessive price of £6.50. Incidentally, my noble friend Lord Campbell of Croy failed to mention, when talking about this matter, that the beautiful photograph of Mr. Dewar actually showed him smiling.

The second matter is much more serious. Last Thursday night the Secretary of State hosted, in the historic national setting of Edinburgh Castle, what I can only describe as a triumphalist shindig launching the White Paper. The event was widely publicised. I quite understand that in the ordinary course of events Ministers are perfectly entitled to launch government policy initiatives or White Papers in that sort of way. But this is not an ordinary event or an ordinary White Paper. The White Paper is an integral part of a process in which we Scots are going to be asked to vote. Despite its uncontroversial title, the White Paper is, in tone and content, no more and no less than the manifesto setting out the Government's own chosen devolution policy.

The entertainment in Edinburgh Castle was therefore a manifesto launch party given by a Cabinet Minister at the start of a political campaign. At the end of it the Scots will vote. If we were having a general election, surely taxpayers could not be asked to pay for such an event. So it is both ugly and improper that they should in this case. I have therefore written to the Secretary of the Cabinet to ask his views as I am informed that he is the authority on these matters.

As to the White Paper overall, I am a staunch Unionist. I was a founder and vice-chairman of the "Scotland says 'No'" campaign in 1979. So it is hardly surprising that I oppose the principles the White Paper advocates. I shall campaign against it and I shall certainly vote "no" twice. I shall do so because what I care about most deeply is Scotland's long-term well-being. I know that in time, whatever Mr. Dewar's view may be to the contrary, that these proposals cannot possibly strengthen the Union but only undermine it to Scotland's ultimate and great disadvantage. I know, moreover, that those of us who oppose devolution on the grounds of our sincere devotion to Scotland's true interests, will be caricatured during the referendum campaign as somehow the unpatriotic and undemocratic Anglophiles. That is what happened last time and it will happen again. But that is a small and easily tolerable price to pay for being right.

On the details of the Bill, I shall touch on only a couple of matters. The first is the politically awkward point that the number of Scottish MPs at Westminster may eventually be reviewed. The matter was handled in a style of media management that is becoming all too familiar. To no surprise it was leaked in advance so as to temper the reaction—clever stuff, no doubt. My only comment is that although 15 per cent. fewer Scottish MPs may make it 15 per cent. easier to answer the West Lothian question, you still do not answer it.

As regards tax, I could not understand why the Government so resisted our amendment on Report to limit tax-varying powers clearly and specifically to income tax. However, like my noble friend Lord Mackay of Ardbrecknish, when I read the proposals on local taxation on page 25 of the White Paper I began to see the reason. As far as I can understand them, the proposals seem to offer very wide scope to change the local tax structure and to tax us in all sorts of ways of which we cannot know as yet.

The authors of the White Paper kindly added that a Scottish parliament would clearly need to consult business before making any changes. I remember the bad old Labour days when Scottish business rates were far higher than those in England and a fat lot of good consultation ever did us in industry at that time.

One of the Scottish Ministers, Mr. McLeish, was quoted in Saturday's Scotsman to the effect that he was attracted to the prospect of a tax-varying power which would inject something like £450 million which a careful parliament would want to spend on Scottish priorities. I shudder to think what a less than careful Scottish parliament would wish to do. He was also reported as saying that the good thing about the settlement was that it had made people sit up about what the parliament would mean. I dare say it will have done just that as far as possible future taxes, both local and national, in Scotland are concerned.

The matter that bothers me most derives from the simple and well-proven proposition that legislators like to legislate. I fear that we must look forward to the prospect of a plethora of legislation and legislative change from a Scottish parliament, and I suspect that some of it will not be done on merit but just to show that Scotland is different. It is not a prospect I relish at all; nor, I suspect, does Scotland's man in the street.

As noble Lords will have gathered, I dislike these proposals in principle.

Lord Mackie of Benshie

My Lords, does the noble Viscount believe that the Scottish people will put up with that sort of treatment? They have a remedy because they can put out the Government if they do not like it.

Viscount Weir

My Lords, thank you very much. As noble Lords will have gathered, I dislike these proposals in principle. They raise as many questions as they answer—or more. But there is not the time today to go into even a few of the problems. To sum it all up, perhaps I may remark that, to my own great regret, what this paper simply does is to replace the nine of diamonds as the curse of Scotland.

5.18 p.m.

Lord Prys-Davies

My Lords, I welcome the Welsh White Paper and I shall support it in the referendum campaign. It delivers what the Labour Party promised in its manifesto. I believe that the Welsh Secretary of State, his ministerial colleagues and officials at the Welsh Office who have produced the White Paper are to be congratulated on it. The Government are to be congratulated on bringing it forward so early in the present Parliament.

It is obvious, of course, that the proposed Welsh assembly is not as powerful as the proposed Scottish parliament. Yet let nobody underestimate its significance. Setting up an elected Welsh assembly is a crucial step forward in the history of Wales. As has been pointed out by my noble friend Lord Sewel and others, it should bring significant benefits to Wales. I should like briefly to summarise four in particular.

First, a directly elected assembly will bring a new impetus to Welsh life and provide a focus for democratic action in Wales.

Secondly, it will extend democratic control over widespread responsibilities for the government of Wales and will work, in the words of the White Paper, "to promote and foster" local government in line with the European charter on local self-government. I understand that the Welsh local authorities are satisfied with the role of an assembly, as set out in the White Paper.

The third significant benefit of the assembly is that it will provide a permanent forum for the Welsh nation to determine its priorities in the devolved areas and to fashion policies suited to Welsh needs within the discretion allowed by primary legislation.

The fourth significant value of an assembly is that it has at least the potential to give Wales a stronger voice within the increasingly important European Union. Those are the benefits as I see them.

I turn now to a few areas of the White Paper upon which I would welcome more information, clarification or explanation. I refer first to the Welsh block. It seems that the assembly leader and the leader of the assembly's finance committee will not have direct access to the Treasury in negotiating the Welsh block. The Welsh assembly may not be content with such an arrangement. Moreover, it seems that the Secretary of State will deduct from the Welsh block a sum to be determined by him (not necessarily in agreement with the assembly) in respect of the running of his own department and that the remainder will be handed to the assembly. The point is very obvious: the assembly may wish to have a voice in determining the split. I hope that those points, and their implications, will be borne in mind when preparing the Bill.

Secondly, since about 46 per cent. of the block fund is accounted for by local authority expenditure and about one-third by the NHS, what body is to secure the external audit of that expenditure? It seems to me that that could not appropriately be undertaken by the assembly itself. It should be carried out by an external body. To my mind—the fault may well be mine—paragraph 4.37 is somewhat unclear as to the role of the Audit Commission. That leads me to another question. In the event of friction between the assembly and a sponsored body, how will that issue be resolved? Is it a matter that should be spelled out in the Bill or are the sponsored bodies to rely on judicial review?

My next question is about the important area of delegated legislation. The Welsh Office has in very recent years been making greater use of order-making powers, but it is worth making the point that we are moving into a new dimension in which a far greater range of independent work and thought is going to be needed if the assembly is to be able to pursue within the framework of primary legislation different policies from those which the central government pursues in England. Some years' experience of the Joint Committee on Statutory Instruments suggests that time must be given to pre-legislation consultation, but the timetable is often tight. It is envisaged in paragraph 3.40 of the White Paper that there will be close consultations between assembly officials and their counterparts involved in policy-making at Whitehall on the timing and content of secondary legislation. Moreover, we are told that the basis for those consultations will be set out in concordats. It is important that a draft of the concordats should be available when the Bill is published so that we may have ample opportunity to digest them.

There is a further point. If there is a dispute between the Government and the assembly on the content of a draft assembly order, how will it be resolved? It would appear that the White Paper may be offering two different routes: the speedy settlement procedure under paragraph 3.32 and the procedure under paragraph 3.43. It is important that the Bill deals clearly with the mechanism for resolving any friction. It would be helpful if the Minister could explain the details of the speedy procedure.

My last question relates to the European dimension. I recognise that relations with the EU will remain the responsibility of the UK Government. Even so, I cannot help wondering whether enough has been proposed to give Wales a clearer and stronger voice within the EU. I shall read carefully what my noble friend Lord Sewel said when opening the debate; nevertheless, I should be heartened if the Government would consider during the summer months whether the proposals could be added to in the light of the paper Wales in Europe which has been published by the Institute of Welsh Affairs.

I end where I began by welcoming the White Paper. The Welsh White Paper is a middle solution between the status quo and the Scottish parliament. I believe that it will satisfy majority opinion in Wales. If Wales wants to face the future with confidence, it must build its future around the assembly. I hope and believe that the Welsh electorate will give Parliament the authority to implement the provisions of the White Paper.

5.26 p.m.

Baroness Carnegy of Lour

My Lords, I shall concentrate, if I may, on the Scottish White Paper. Given the Labour Party's manifesto commitment and the Government's inheritance of what came out of the Scottish Constitutional Convention, the White Paper seems to me to be a competent document, describing clearly and concisely (admittedly with a few omissions and awkwardnesses) the arrangements that the Government have in mind.

I should like to make one main point and to illustrate it a little. The issue for the referendum voters in Scotland is whether the attractiveness, potential advantage and satisfaction for them of electing and maintaining a complete additional parliament is worth the cost—the cost in terms of the disadvantage which it is likely to bring to Scotland and any damage that it might do to the current system of co-operation which makes all parts of the United Kingdom good places in which to live.

The anticipated advantages of the price to be paid are much clearer now that the White Paper has been published. It is very important at this juncture that the Scots should understand and weigh the issue properly in the balance and that they do not simply close their eyes and agree to back the proposed scheme just because it has been long promised and is assumed to be inevitable.

North of the Border, the attractions of the White Paper are not hard to see. People would undoubtedly get a lot of satisfaction from taking part in elections to the new parliament, knowing for the first time that it was they, and only they, who were deciding who would be in charge of the Scottish Office. They would enjoy the focus that the parliament would provide and being able to follow on television and in the press what the people they had elected were up to, their debates and their decisions. People in Scotland would follow that a lot more easily than is possible for them with the Westminster Parliament, where what is UK business, what is England and Wales business and what is Scottish business is often a lot less clear than it should be.

Another plus is that such great change will create comparatively limited departmental upheaval. I do not believe that noble Lords south of the Border realise that in the main the areas of government to be devolved to the Scots parliament are almost precisely those already devolved to the Scottish Office. It is also attractive that within the constraints of its budget the Scots parliament will have very wide freedom to choose its spending priorities. People need to know of those advantages. I believe that most appreciate them but not all. There are other advantage which need to be made plain to them.

They must also understand the down-side. I refer not simply to the added cost of the parliament building, its staff, its elected members and other activities, but to the likely effect in many areas of Scottish life on incomes, businesses, jobs, good relations within the United Kingdom, Scots influence at Westminster and the workability and quality of Scots legislation.

For example, almost every day the Scottish media give three cheers to the Secretary of State for gaining Cabinet approval to the continuation of the present Scottish Office block grant and formula system as the main way of funding the Scots parliament. Chapter 7 and Annex B of the White Paper reveal, as noble Lords who have been in government already know—certainly I did not know—that the all-important block grant is calculated mainly not on the needs of Scotland but on a negotiated figure of the needs per head of population of England and Wales. That figure is then added to by a percentage to allow for the additional needs in Scotland. Somewhat ominously for Scotland, paragraph 7.7 on page 22 makes plain that the extra Scottish percentage is liable to revision at any time. Scots need to understand that, especially as the new transparency of funding mechanisms will make the English MPs a little more observant than they were before.

We also need to understand in Scotland the likely combined effect on business and jobs of the freedom of the Scots parliament to increase income tax and to control or not control non-domestic rates. These matters were discussed very eloquently by my noble friend Lord Weir. Those freedoms, added to the minimum wage, will be a treble whammy for Scottish jobs if the Scots parliament does not realise the implications of disregarding them. Scots who do not want the break-up of the United Kingdom—more than four out of five do not—need to realise that, although the White Paper limits the areas in which the Scots parliament can legislate, it allows it to discuss anything and apparently to promote a referendum on anything. No wonder the nationalists rejoice. The scope for stirring up trouble within the United Kingdom seems to be endless, which is very worrying. It may be that when we come to legislate we need to consider that point. Scots must also realise the implications of their reduced influence at Westminster, where the most important decisions will still be made.

The Boundary Commission review of constituencies will reduce the number of Scots MPs. In addition, it is unlikely that English MPs at Westminster, given the new arrangements, will stand for Scots MPs occupying the influential positions that they occupy at present. At the moment, the Chancellor of the Exchequer, the Chief Secretary, the Economic Secretary, the Foreign and Defence Secretaries and the Minister of Transport all represent Scots constituencies. With the Secretary of State for Scotland, that means that there are six Members representing Scots constituencies in the Cabinet. I suggest that such influence in the United Kingdom is unlikely to apply to the Scots parliament. I believe that Scots should understand that.

The Dearing report has only just been published. It is too soon to say what will be the effect of the Scots parliament on the universities. The White Paper is good news in that it recognises the need to keep the funding of university research via research councils at Westminster. That is wise, and that is what the universities' and lecturers' unions want. I am sure that they are already grateful to the Government for that.

I should like to ask the Minister—I gave the Scottish Office Minister notice of my question—about student support. Arrangements for that matter in Scotland will be devolved. It is possible, say, that at a future date the Scots parliament will decide that Scots students must contribute only £500 to their tuition fees, whereas England and Wales students must contribute £1,000. Should that happen, who would make up the missing £500 to universities in England and Wales to which Scots students might go? How would Scots university funding be affected?

Before they vote in the referendum Scots must be able to weigh the balance of advantage and disadvantage of this White Paper. I hope that the Government will make that balance plain. If they do not there may be much dissatisfaction not just in Scotland but across the United Kingdom in years to come, and everyone will know whose fault it is.

5.37 p.m.

Lord Elis-Thomas

My Lords, we are all in danger of repeating ourselves on this issue. At the risk of doing so, I repeat that these White Papers are not about the end of the United Kingdom either now or in the years to come. That argument has been rehearsed again today. I hope that once the referendums have been held and there is a "Yes" vote that particular argument will come to an end.

Sometimes I feel that I have been repeating myself for the past 18 years. If I have been doing that so has the noble Lord, Lord Crickhowell. Today not only did he repeat himself but he repeated all of the tired arguments of very old Labour in another place. I did not believe that I would live to see the day when the noble Lord, Lord Crickhowell, would embellish his speeches with the collective thoughts of Mr. Alan Williams, Mr. Denzil Davies and Mr. Ted Rowlands.

My noble friend Lord Prys-Davies never repeats himself. He has yet again posed sharp questions for Ministers on the detailed content of the White Paper. He is able to do so because this is a sharp and intelligent White Paper. I pay tribute to the Welsh Office Ministers. I never thought that I would live to see the conversion of the Ron Davies that I knew and loved 25 years ago into the St. Ron whom I now worship and follow everywhere. To progress from boyo politician to national leader is a tremendous achievement, and I salute him in all seriousness. One makes light of these matters, but when there is a "Yes" vote his achievement will go down in the history of Wales.

My text for today is paragraph 3.3 of the White Paper, which refers to the national assembly for Wales—as I shall now describe it following yesterday's debate—in the following terms: [It] will complete the chain of democratic accountability running all the way from the community council through unitary local authorities and Westminster on to the European Union". That is a point which I understand noble Lords opposite who are believers in a sovereign unitary state have difficulty in following. In my view that is not an adequate description of how the UK functions. Their ideal model of a state is replicated nowhere in the world, as far as I can see. Indeed, all members of the EU have a regional structure. The leading exception, of course, is the Grand Duchy of Luxembourg.

Lord Sewel

My Lords, it does.

Lord Elis-Thomas

My Lords, I am sorry, it does. I stand corrected. The Grand Duchy of Luxembourg does have a regional structure. If the Grand Duchy of Luxembourg has a regional structure surely the UK—see how I can adapt my arguments—of Great Britain and Northern Ireland should have one.

It is significant that there is a correlation between devo-sceptics and Euro-sceptics in our debate. The assembly for Wales, when it is established, will have laid on it the responsibilities as set out in the White Paper. It will debate all issues of concern to Wales. It will of course have due regard and respect for equal opportunities, equal status for the languages, and for sustainable development. I am certain that—if I may so refer to him in this context—my friend the Prince of Wales will find time in his busy, active diary, supporter of green policies that he is, to open the Welsh assembly for us, contrary to what is said in this morning's Guardian.

The assembly's functions are important in the field of the economy. Again, I congratulate the Welsh Office on its intention to establish a new economic powerhouse—the expanded WDA, so ably led by Mr. David Rowe-Beddoe. It is the envy of inward investment generators worldwide. It is an example of the way devolution can work. It is a devolved executive arm of the Welsh Office. It was given further autonomy by the noble Lord, Lord Crickhowell. It was thus able to be more effective. The arguments of the noble Lord, Lord Crickhowell, that devolution somehow will damage inward investment are proved to be fallacious by the very results of his giving devolved power to the WDA on inward investment, which he did so successfully when he was Secretary of State.

I wish also to pay tribute to the Development Board for Rural Wales which has served my former constituency of Merioneth extremely well since 1976. The bringing together of the rural expertise of the development board and the expertise of the Land Authority, again led so ably by Sir Geoffrey Inkin, and the WDA, will provide a team for economic development which will be at least as successful in the future as the WDA has been in the past.

I also welcome—here I declare an interest as chair of the Welsh Language Board—the announcement in the White Paper of the proposal to transfer the unelected bodies into the assembly. It may be unusual for people to wish their own demise. I do not wish my own demise. I do not wish the demise of the activity of the body which I chair, but I wish to see that body open and democratically accountable. We try to be so. At our last board meeting we decided to open our doors to the public. I hope that other public bodies will feel able to do the same. We have done that because these are new times in Wales and we anticipate being made accountable, in whatever form, to the new assembly.

Finally, I welcome the extremely important duties and powers of the assembly in relation to Europe. I congratulate the Government. They have gone much further than I ever thought that they would. I do not mean further in the direction of European membership for an independent Wales, in case Conservatives try to bring up that issue. They have gone further in building up the regional partnerships within the UK as part of the EU, because that is what they are talking about.

We are talking about an assembly which will be able to have equivalent scrutiny powers to the powers that we have in the European Communities Committee of the House, upon which I am privileged to serve. The assembly will have relations with the UK delegation in Brussels. It will have charge of structural funds, and, through the Secretary of State, it will be able to represent the interests of Wales in the Council of Ministers, and as I understand from what my noble friend Lord Sewel said earlier, the executive of the assembly itself will be able to participate in an observer capacity in some of its discussions.

It is an admirable way of operating. It will bring to the UK presence in the EU the regional depth which other member states already have. In particular, it will strengthen the work of the Wales European Centre. The direct election of members of the Committee for the Regions from among assembly members in Cardiff will again strengthen the profile of Wales as a European region alongside all the other regions about which we hear so often, not least, of course, Catalonia and the German Länder. Most of all, the assembly will provide the focus for activity and debate. It will be a focus for the new inclusive politics about which we have heard so clearly from our Secretary of State, Ron Davies, and my noble friend Lord Sewel today.

I make one final plea—I am afraid again repeating myself—to the Conservative Party. It is the only party in Wales or the UK which is distancing itself from the whole issue. It is choosing to stand aside. It is taking a negative attitude. Mr. William Hague, whom again I regard as a friend, following his time as our governor-general when he was in the Welsh Office, has already signalled that things may change. He will accept the verdict of the people in a referendum. That is a little inconsistent and disingenuous. If the Conservative Party is prepared to accept the verdict of the people in a referendum now, it should accept that the arguments for a Welsh assembly and a Scottish parliament are a legitimate part of its own political history as well. Members of the Conservative Party in this House who have espoused devolutionary views in the past will know what I am talking about.

5.47 p.m.

Lord Renton

My Lords, the noble Lord, Lord Elis-Thomas, will forgive me if I do not follow up his speech, except to say that I am afraid that I disagree with most of it. I shall confine myself to the Scottish devolution problem. Devolution for Scotland needs to be considered from a broad constitutional point of view as well as from a purely Scottish point of view. In the broad context, we need to remember that owing to an immense increase in travel facilities and communications there has been a tendency throughout the world, especially in this century, for communities to become less isolated and less inward looking and to co-operate more and more with an ever wider range of neighbouring communities, and indeed to become part of them. The gradual formation of the UK over several centuries is for us of course the best and most important example of that.

I come now to Scotland. In Scotland we now have three tiers of democratic government which work well. In the first tier we have districts, many of which replace the old counties, and we have city councils. In the second tier we have regions which are big. There are only seven of them in Scotland.

Lord Campbell of Croy

My Lords, they no longer exist.

Lord Sewel

My Lords, perhaps I may be of some assistance. Two years ago the Government reorganised local government in Scotland. We no longer have districts or regions. We have unitary authorities. So a system of Westminster, a Scottish parliament and local authorities is the three-tier system which the noble Lord advocates.

Lord Renton

My Lords, I thank my noble friend Lord Campbell of Croy and the noble Lord, Lord Sewel, for bringing me up to date. I tried to refresh my memory by looking at a recent map, which obviously was not up to date. I should have remembered that because I spend a lot of my time in Scotland.

In any event, we have a system of local and central government in Scotland which works well. The Scottish Office has a fine reputation for understanding the people's needs and for representing them efficiently and effectively at Westminster. In some respects, according to the White Paper, it will continue to do so after devolution.

I thank the noble Lord, Lord Sewel, for sending to me a copy of a letter which he sent yesterday to my noble friend Lord Mackay of Ardbrecknish. He stresses the point by stating: The UK Parliament is and will remain sovereign in all matters". He goes on to say: However, if it approves the Government's proposals it will be choosing to exercise that sovereignty by devolving legislative responsibility to the Scottish Parliament"— and he added the words, which I underlined— without diminishing its own powers". But how can one have devolution from the centre without some diminishing of the powers that were exercised at the centre? That seems to me to be like having one's cake and eating it.

I suggest that the present system works well. Nobody can say that the government of Scotland is remote. The people already have democratic government locally and centrally. Indeed, when I am in Scotland I often feel that they believe they have it on their doorsteps. I say that if change is not necessary it is necessary not to change.

I was tempted to go into the question of the conflict which arises between the responsibility of the Secretary of State and of the United Kingdom Government in European Union matters when the Scottish parliament and executive are to have some responsibilities. However, there appears to be a complicated conflict which we should not overlook.

I conclude on a more general and perhaps higher note. I remind your Lordships of the great influence which Scots have had in the United Kingdom, but especially in England, since the Act of Union. To a great extent, they helped to build the British Empire and the Commonwealth. Scots have undoubtedly had great influence in our Westminster Parliament. In the 70 years between 1894 and 1964, we had seven Scottish Prime Ministers. They covered a period of 25 years out of the 70 years. As regards Lord Chancellors, the record is even more impressive. Admittedly, a longer period is covered, but since 1801, 10 Lord Chancellors have been Scotsmen. Nine of them came from the English Bar, the only one from the Scottish Bar being my noble and learned friend Lord Mackay of Clashfern, who had a long spell as Lord Chancellor. Between them, those 10 Lord Chancellors covered 56 of the almost 200 years since 1801.

The truth is that the Scots have had the best of both worlds and I should like to see them continue to have it. I am the son of a Scottish doctor who wisely followed Dr. Johnson's advice, which was, "The finest prospect a Scotsman ever sees is the high road to England". My father was a doctor who practised in Kent. The other and wider world has given to the Scottish people the advantage of being British and of exercising power, influence and authority beyond their native land. I fear that devolution will tend to keep them in their native land and cause them to lose some of that advantage. Let us hope that Scottish voters will see where their interests lie!

5.55 p.m.

Lord Mackie of Benshie

My Lords, I do not intend to speak for long because everything has been said. However, it is a pity that all those Scottish Lord Chancellors, Prime Ministers and Peers did not stay at home and build a better Scotland. I hope that that will happen—

The Earl of Onslow

What are you doing?

Lord Mackie of Benshie

My Lords, we try. I am very pleased with the Government. The Tories keep saying that the Liberal Democrats are in the pockets of the Government, but we are delighted with the Government. They are promoting a policy that we have been advocating for 50 years, not for 20 years. The White Paper is much better than I thought it would be. The Government have gone a long way and of course I am pleased with them. When I am pleased with them I shall say so and when I am displeased with them I shall say so, but at the moment they are doing exactly what we in the Scottish Liberal Democrat Party have rightly wanted for years.

Many proposals in the White Paper strike me as good. I was pleased to see in particular that Scottish investment and enterprise would come under the Scottish parliament. That is vital. The noble Lord, Lord Elis-Thomas, said that devolvement to Wales of the investment policy had been splendid. However, the people who showed us the way were those in the Stormont Parliament 45 years ago. If someone then expressed an interest in building a factory in Scotland we had to tell them that there may be someone who dealt with it. But Stormont had set up a body which encouraged investors, showed them around and did everything to bring them into Northern Ireland. We did so much later, but Stormont was a devolved parliament doing a good job for the country. We shall need that in the future.

As regards agriculture, the split between the Westminster and Scottish parliaments can work perfectly well. However, a great deal of investment and work must go directly into Scottish agriculture in order to promote excellent products. We are entering an extremely tough time. Every party in this country is advocating a free market, which will need organisation if ever anything did. A good example is the Dutch who, from the most unhealthy part of Europe lying below sea level and as a result of good organisation, have managed to sell Dutch seed potatoes far better than we have sold Scots seed potatoes. That is an example of what a Scottish devolved parliament close to the people could do. I am looking forward to it being a major factor in the development of Scotland.

Finally, I hear the Tory Party carping about the proposal and prophesying death, destruction and the break-up of the United Kingdom. The noble Lord, Lord Mackay of Ardbrecknish, said that terrible things would be imposed on the Scottish people. I make the point that I made to the noble Viscount, Lord Weir, that if the Scottish people are foolish enough to elect people who act against their interests they will deserve all they get. However, they may have the power to elect good people. I was delighted to hear the noble Lord, Lord Sempill, say that he will stand. I hope that he will stand as an opponent, but if he is not elected he can slip his name on a list somewhere else. The proposal represents a chance for good people to go into the Scottish parliament and do a great deal of good for Scotland and its people. They will not need to go to England, but they can go if they wish. It is a nice place, with nice people, but the Scots should have a chance to stay at home and make a good job of Scotland.

6 p.m.

Lord Rees

My Lords, the noble Lord, Lord Sewel, opened the debate in his usual apparently rational and courteous way by saying that the Government are adopting a non-adversarial approach towards this great constitutional question. He may have persuaded himself of that, but he will have to do a much harder sell to noble Lords on these Benches and to the country outside. I say that because we remember, and shall go on remembering, how the Government guillotined in the Commons the Bill which we have just debated and so prevented any full and rational examination of it. They left it to us to debate it properly. By one of those ironies of political life, while we are debating in a courteous and rational way the principles of devolution, the other place is probably brushing aside the well constructed, justified amendments which were carried. I believe that there were only three on this occasion.

Let us tell noble Lords on the Benches opposite that if they believe that the Welsh people will be persuaded by the specious arguments which the Government adduced to support having the referendums in Wales and Scotland on different dates, they must under-estimate the perspicacity and intelligence of my fellow countrymen. For various reasons they may have the ear of the noble Lord. Lord Elis-Thomas, whose charming speech I so much appreciated. I assure the noble Lord that the Conservative Party—and I am proud to call myself a Welsh Unionist—is certainly not standing apart from the debate. Indeed, if I am given an opportunity I shall be very happy to involve myself in that debate west of Offa's Dyke. We feel that it is right and proper that we should consider seriously what are the advantages not only to Wales and Scotland but also to the United Kingdom as a whole, and even to England, if the noble Lord will allow me to say so, before we commit ourselves to becoming involved in what seems to us at first blush—and after all, we have had only a week or so to consider the proposals and we have not heard any very full details in defence of them from any government Minister—the voyage of discovery on which the Government wish to embark this country.

In the time available, the House will be relieved to know that I shall confine myself to Wales. However, there is so much to discuss about the Scottish White Paper. I was interested to find that the Welsh White Paper is twice as long but half as expensive as the Scottish White Paper. But, of course, half of the Welsh White Paper is in Welsh. It is interesting that the Scottish White Paper is only in English and not in Gaelic as well. The Government may wish to reflect on that. The noble Lord, Lord Sewel, is obviously bilingual and would no doubt love to address his fellow countrymen north of the Border in Gaelic. But let us leave that aside.

The White Paper, attractively printed and voluminous as it is, is long on political cliché but very short on serious analysis of the real underlying political problems. The noble Lord, Lord Elis-Thomas, is one noble Lord, detached from the cares of government, who has perhaps most persuasively advanced the arguments which he feels apply for its adaption in Wales. The White Paper is entitled A Voice for Wales. That says a little bit about the White Paper. My fellow countrymen are known for their fluency. They are perhaps not appreciated for it but they are known for it. They have four tiers of government inside the Principality in which to exercise their oratorical talents. Do they really need a fifth? That is worth pondering. Of course we are all products of elective democracy but there comes a time when one must stop debating and actually get down to action.

Let us look at what action will be available and let us look also at the structure of a devolved government for Wales. First, there is the Secretary of State himself. In advance, I offer my profound sympathy to anyone who is offered that office because he will not be answerable for the Welsh assembly. However, whether or not that is formally the case, he will be bound to be answerable to it because he is going to sit there. He will no doubt be compelled to defend the Government's position on a whole range of delicate questions like the amount of the block grant and such matters. But he will also be answerable to the Parliament at Westminster. He will sit uneasily in the Cabinet. I suspect that he will be loved and admired by nobody. Perhaps that is the wish of the Labour Party. Perhaps it wants an emasculated Secretary of State for Wales; so be it.

Let us come on to the MPs who currently have the privilege of representing Welsh constituencies. They will have noticed that the future of the Welsh Grand Committee is clouded in obscurity and not yet decided. It will be one of the oddities of this solution, if it is adopted by Parliament, that Welsh MPs NNW be able to comment on a range of sectors of government in England but disabled from so doing in Wales because they will be a matter for debate in the Welsh assembly.

One could elaborate on the very delicate position in which Welsh MPs will find themselves. I do not believe that their voice will be enhanced. No one has had the temerity to talk about the west Glamorganshire question or anything like that. Perhaps we should ask the honourable gentleman from the other place, Mr. Dalyell, to come along and apply his keen, analytical talents to the position of Welsh Members, whether they are over-represented, and how they should be treated. I suspect that the pressures will grow, if this assembly really takes off, to limit the number of Welsh MPs or to limit their scope for intervention in debates in the other place. Therefore, if they think carefully about it, I do not believe that they will appreciate what is proposed.

Let us turn to the assembly members themselves. They have no power to raise taxes but they are responsible for funding local authorities, although central government will still retain the power to cap local authority budgets. That will not be a very enviable role. As regards their executive powers, their entry into power will be preceded by a massacre of quangos. I do not know whether that will really assist Wales. Noble Lords from both sides of the House have paid unstinting tribute to the Welsh Development Agency. I do not believe that its power and effectiveness will be enhanced by rolling it into one massive overall quango.

I turn now to relations with Europe. It is readily admitted that there will be no place for members of the assembly in a Council of Ministers. But, graciously, officials answerable to the assembly may be offered places at UKREP in Brussels. Yes, there will be some influence. As regards ambassadors for Wales, I do not believe that they will be given that kind of credit. There may be quantity but I suspect that there will not be quality. There may be some influence but there will be no powerful voice in Europe.

In short, I believe that the proposals in regard to Wales will result in a multiplication of debate, of officials and of cost. They will create a breeding ground for friction between Westminster and Cardiff and will prove a positive discouragement to foreign investment in Wales. They will damage and not strengthen the United Kingdom and Wales. That is why, if the noble Lord, Lord Elis-Thomas, will forgive me, I will go on about the slippery slope and I continue to consider the relationship between Wales and the United Kingdom as a whole because that is one of the fundamental questions which deserves much more serious consideration than has been given to it by the White Paper.

The United Kingdom has for something over 400 years, perhaps slightly longer bearing in mind the identity of the leader of my party in this House, been a successful political entity. Indeed, I believe that we can go back to Henry VII who brought numerous bright, intelligent and thrusting young Welshmen, like his ancestors, to this side of Offa's Dyke. If we go on to consider the Union of the Crown, the number of penniless Scotsmen who came down to marry English heiresses and acquire English and Welsh properties was considerable. Therefore, let us not hear that Scotland and Wales, and Scotsmen and Welshmen, have not benefited from the Union of the Crown and the Union of the kingdom.

The United Kingdom has acted as a player on the world stage providing scope both at home and abroad for the energy and talents of inhabitants from whatever part of these islands. I hope that the residents of Wales and Scotland—not the Welsh and Scots, because, again, one must recognise that there are a huge number of Welshmen and Scotsmen who live south of the Border and east of Offa's Dyke—who are the only people entitled to participate in the referendums, and ultimately Parliament itself, will put aside these ill-thought out proposals so that we can concentrate on the real problems of these islands which call for solution.

6.11 p.m.

Lady Saltoun of Abernethy

My Lords, the highest praise that I can give to the White Paper is that it is very well laid out, clear, and easy to read and understand. The noble Lord, Lord Peston, told us during the Committee stage of the referendums Bill that even the thickest of us would be able to understand it. Well, he was right. I warmly congratulate all those responsible for producing it. The content is another matter. I think that it is a better scheme than that on offer in the 1970s, but I am very sad that we have come to this point, for I think that we are in a heads you lose and tails you do not win situation. If this does not work—and I am very much afraid that it will not—it will lead to the break-up of the United Kingdom; but, if we do nothing, I believe that that will also lead to the break-up of the United Kingdom. I only hope that I am wrong.

I turn now to some points of detail. As the noble Lord, Lord Monson, said, the West Lothian question has still been mainly ignored. Reduction in the number of MPs at Westminster, although very necessary, is no answer to it. Leaving it to the House of Commons to consider future arrangements for Scottish business is only a partial answer. I fear that the only real answer lies in a federal system, where the devolved powers would be identical for all parts of the UK. Did I detect a glimmer of hope that the Government are beginning to realise this?

We have been told that the Scottish Parliament is to be up and running by the year 2000. We are now at the end of July 1997, only two years and five months away from the year 2000. We are told in paragraph 10.6 of the White Paper that the Old Royal High School, which we had always assumed would be the parliament, may not be suitable and that a new parliament may have to be built. I have read in press reports, although it may not be true, that a worldwide competition may be held for the design. A new site may have to be acquired and planning consent obtained before building can begin—or, can Secretaries of State override planning authorities? If the Government think that they are going to have a new building of any more permanence and dignity than a pre-fab or a conglomeration of portacabins ready in the time available, in straight Scots parlance, they must be daft.

Perhaps I may refresh your Lordships' memories about the building of this beautiful palace. The old Palace of Westminster was destroyed by fire in 1834. The competition for the design of its replacement was announced on 24th August 1835, and the closing date was 1st December of that year. Barry's winning entry was number 64 out of 97. No estimates had been asked for. The foundation stone was eventually laid on 27th April 1840. The Lords moved into this gorgeous Chamber in 1874, and the Commons into theirs, which had had to be rebuilt because they did not like it, in 1850. That took 12 to 15 years.

I am sure that nothing so elaborate is contemplated for Scotland, but 129 MSPs will all want an office each and room for their secretaries, so it would have to be a sizeable building. I cannot for the life of me see how anything suitable could possibly be ready in the time available.

Surely the only sensible thing to do is to use the High School and the offices across the road, with modifications, at least to start with and then see how it goes. If it is not satisfactory, then is the time to consider a new building. Apart from anything else—such as, the cost—experience in the High School would point to the pitfalls to be avoided in the design of a new building.

If we are to have a new building, let it at least be a dignified building in dressed stone, in traditional style, designed by a firm of Scottish architects experienced in that kind of work, not some construction of glass and steel designed by some foreigner wanting to make a statement and gain publicity. Moreover, let it be in the centre of Edinburgh, near the railway station, not away in Leith, although I have to say that one of the arguments I have heard against the Leith site—namely, that it would be undignified because it is adjacent to Safeways—is quite ridiculous. I wish this palace were adjacent to Safeways, and I expect quite a number of your Lordships do too.

I liked the suggestion in a letter to the Scotsman last Friday, from one Mr. H. L. Smith, that the Monument on the top of Calton Hill should be expanded with a kind of Parthenon-style building to provide a great debating chamber, linked by lifts and tunnels to the Old Royal High School and St. Andrew's House. That is the kind of suggestion that should be listened to.

I have a few short questions for the Minister regarding other matters. The first concerns the liability to pay what, for the want of a better phrase, I shall call the tartan tax. What would be the position of the Secretary of State for Scotland or the Scottish Law Officer to the Government of the United Kingdom—what a mouthful!—or, indeed, any Scottish MPs at Westminster, who may well spend more time in London than in Scotland and therefore might be able honestly to claim that their principal residence is not in Scotland but in England? Would they, or would they not, be liable to pay that tax?

My next question concerns cost. We are told that the Scottish parliament will cost £20 million to £30 million a year to run. What we have not been told is what the salaries and allowances of the MSPs will be. We are also told in the White Paper that there will be a "First Minister" and a "team of Scottish Ministers". How many Ministers is it anticipated that that team will consist of, and what will their and the First Minister's salaries be? Indeed, what will the salaries of the MSPs be? I foresee a possible problem because, if those salaries should be less than those of Westminster MPs, there will be a definite disincentive for candidates to stand for the Scottish parliament as opposed to the Westminster Parliament.

6.18 p.m.

Lord Hamilton of Dalzell

My Lords, I, too, should like to talk about Scotland. I expect that what I have to say about Scotland applies equally to Wales, and perhaps more so. The proposition for Wales, with no power to tax on offer, seems to me to be a very expensive garden fence over which, at best, the Welsh will be able to indulge their predilection for conversation but, at worst, might have some fearful battles, as my noble friends Lord Crickhowell and Lord Rees, pointed out.

A view of events is frequently moulded by a family's history, even if it no longer includes a direct interest. Mine is one of an ancient Scottish ancestry which came to an end in Scotland when my great-uncle died in 1951 and the Dalzell Estate was compulsorily purchased by the borough of Motherwell. Until the early 19th century we owned three estates in Scotland, but two of them had to be sold following the failure of the socialist experiments of Robert Owen which were aimed at resolving the terrible unemployment which followed the Napoleonic wars.

My three times great-grandfather was a serious minded man who felt that something should be done to alleviate the plight of the men who had saved Britain and Europe from Napoleon. He became a friend of Owen and financed an experiment of his own, modelled on Owen's. It has always been an object lesson to me that his good intentions should already have come to a dismal end by 1826 and that human nature should have proved so conclusively that socialism as an ideal was doomed to failure.

Nearly 200 years later this lesson has now been learnt from Soviet Russia even to the inner enclaves of the Labour Party but not, it seems, in Scotland. The noble Lord, Lord Steel, talked about flat learning curves. I wonder why that might be. Is it because we have created a dependency culture through the massive subsidies that are received?

Leaving Scotland was a difficult decision for my father. I now thank my lucky stars that he did. I do not want to have to pay for a new Scottish experiment. However, I still have a feeling of empathy with my Scottish roots and sympathy for the Scottish people. I do not believe that the Westminster Government have in the past behaved with great sensibility towards them. The coincidences which led to the poll tax being introduced first in Scotland, followed by the reorganisation of the local authorities which happened there but hardly at all in England, helped fuel the impression that it was a good idea to try political changes on the dog, so to speak, in Scotland before feeding them to the English. It is in that vein that I ask myself why, when ostensibly the purpose of the referendum on devolution is designed to ask the Scottish and Welsh what they would like, the Government are so determined to campaign and manipulate it so that the answer is yes.

I appreciate that there is some hubris coming from my compatriots with their lowland accents, who so nearly brought British industry to its knees in the 1970s. At long last they have regained political power. They doubtless hope that it will never be taken away again, at least not in Scotland. However, that view does not seem to me to coincide with what we are given to believe is new Labour. Are we to have a division between new Labour in England and old Labour in Scotland? The answer is probably yes, but I cannot see that that would be an object worth striving for. The demands of old Labour cannot be met by the Treasury.

If you want to find the answer to this question, I believe you should look carefully at the financial arrangements for the new Scottish parliament. It appears to me that the devolution proposed for Scotland, with its limited powers to tax and spend, bears a considerable similarity to the proposals governing the introduction of the single currency in Europe with all its political disadvantages. There, ostensible powers to tax and spend are to be strictly governed by budgetary limits to be reinforced by a stability pact which would levy fines on a miscreant European government.

Paragraphs 7.22 to 7.28 in the Scottish White Paper lay out the means by which most of the freedom to tax and spend will be controlled by budgetary limits set by Westminster, to be enforced by fines. I point out that this is the total of tax. I do not deny the statement of my noble friend Lord Mackay that the method of raising the tax may change. The fines will be the withdrawal of what are, in effect, convergence funds provided by UK taxpayers. Paragraph 7.22 states, The Government's objective is to establish clear lines of accountability for local government spending and taxation. Its aim is a system in which fiscal self-discipline is reinforced … by the obligation on the Scottish Parliament to absorb any costs for UK taxpayers flowing from decisions on local government finance". That covers the block grant which will diminish in response to any deviations.

Paragraph 7.23 includes central government support for local authority expenditure in the new block grant. Paragraph 7.24 states, The remainder of local authority self-financed expenditure, which consists largely of council tax revenue will, as at present, fall outwith the Scottish Parliament's assigned budget … The Scottish Parliament will have the powers to control local authority current expenditure, through capping or other means". However, after all that, paragraph 7.24 continues, If growth relative to England were excessive and were such as to threaten targets set for public expenditure as part of the … UK economy"— let us suppose a deficit of 3 per cent. of GDP— and the Scottish Parliament nevertheless chose not to exercise its powers, it would be open to the UK Government to take the excess into account in considering the level of their support for expenditure in Scotland"— in effect, the fines. The measure is therefore open to the same criticisms as are levied at the single currency. You can have only one Minister of finance and the political independence which is left when there is no budgetary autonomy is largely illusory. It covers only how a limited amount of money can be raised and spent rather than how much.

The sort of Labour government which seem likely to be elected in Scotland may well have a penchant for high taxation and high spending. They will be restricted in that ambition to the £450 million yield from their 3p. latitude in income tax. Once spent, that will be that.

Many noble Lords have pointed out that there is a strong possibility that once a Scottish parliament is elected it will want to have more power over its own affairs, leading to the break-up of the United Kingdom. I agree with that. It is no different from what I suspect would be the reaction of all the British people if they chose to share their sovereignty with Europe in this way.

It is extremely frustrating for a government to be defeated for reasons which they ascribe to someone else—ask any Conservative councillor. However, the most difficult problem arises when the electorate, having exercised their democratic right to change their government, find that it makes no difference to their situation. The new government may have insufficient powers to raise income to fulfil their electoral mandate. I watch with interest the scene in France following the election there. The danger is that M. Jospin's abandonment of his election pledges will lead to political instability.

Scotland is being devolved on the European model. It is being offered subsidiarity to the United Kingdom Government by giving it a measure of sovereignty rather than having a measure taken away. Poor old Scotland. I reckon that the dog will surely die. My message to the Scots is that it seems unlikely that either this House or the Conservative Party can save you from the fate which is coming your way. But take heed; you may be induced to believe by Mr. Alex Salmond that there is more money available in the European Community than there is in the United Kingdom. However, the Germans, ravaged by a series of what might be called asymmetric shocks from eastern Europe, are getting tired of being the paymasters. Ask yourselves, who will succeed them and before you fall into this trap for goodness sake vote no in the coming referendum.

6.27 p.m.

Baroness Smith of Gilmorehill

My Lords, it is with a special sense of pride and a feeling of the completion of a task that I speak in this debate to welcome the White Paper, Scotland's Parliament.

There was real excitement last Thursday in Edinburgh when the White Paper was published and the feeling in Scotland over the weekend was entirely positive. I know that there is a great deal of work still to be done and I am keen to play a part in that process. However, by 11th September I both hope and expect that we shall be able to say that a piece of unfinished business is well on its way to completion. There is an almost tangible feeling of expectation in the air which means that this time Scotland will not stand back from the challenge.

The scheme which the White Paper represents goes further than the scheme which was in place in the 1970s. It has been improved and modernised for the next millennium. I never thought that the old scheme should be reintroduced, regardless of what had happened since. The previous proposal was right for the time; this one is right for now, and for the future.

I wish to take a few minutes to talk about the essence of the case for devolution which has been argued about for so long in Scotland. Administrative functions have long been devolved to the Scottish Office. They cover all the matters which most affect the lives of the people of Scotland—health, education, housing, local government, the environment, and much more. The issue has been that the degree of democratic accountability which could be provided by this House and the other place was no longer adequate.

What has been so long lacking is a direct democratic control over those Scottish Office functions so that the resources can be managed in a way which more closely reflects the wishes of the Scottish electorate. This White Paper recognises the strength of feeling in Scotland over many years. Sometimes I feel there is a limited understanding down here in London of the feelings north of the Border. Insensitivity on a grand scale has been shown by the former government, and the sense of alienation felt by the Scots was not just against the government of the day but more generally aimed at the process of government itself. That is potentially very damaging.

In the interests of the democratic process, this proposal is therefore very important indeed. And it will also demonstrate that what the Scots really want is a greater and proper degree of independence within the United Kingdom. I have no doubt that this is the best way to develop and strengthen the government of the UK and is not the first step on some mythical slippery slope.

The proposals recognise Scotland's distinct identity and the strong ties that bind us with the other nations of the UK. These plans will modernise our constitution and give added strength to the partnership of the United Kingdom. A Scottish parliament will give Scotland a new sense of self-confidence and self-esteem. The Government are to be congratulated on the White Paper, which meets these aspirations. It completes the task set by the Government's manifesto and I believe that it should command the support of the whole House.

6.31 p.m.

Lord Fraser of Carmyllie

My Lords, I regret that I have to say to the noble Lord, Lord Sewel, that I regarded his opening of the debate as a most inadequate explanation and elaboration of what is contained in the White Paper. We have only one day in your Lordships' House not only to consider the White Paper for Scotland but also the White Paper for Wales. More significantly, we have no other parliamentary opportunity before the referendum to consider any of the detail or to ask any further question about it. I am surprised that the noble Lord has given no regard to the myriad queries which have arisen from the White Paper for Scotland since that first uncritical triumphalist fest at Edinburgh Castle last Thursday. It simply will not do to describe the reactions of all those who have asked questions about what is contained in the White Paper as hysterical. Many of us who disapprove of the White Paper bow to no one in our belief in the distinctiveness either of the Scottish legal system or the Scottish education system. We shall not be silenced. We shall not be told that it is not our right to ask questions about them.

In launching the White Paper for Scotland last week—my noble friend Lord Mackay of Ardbrecknish spotted the point as well—the Secretary of State for Scotland said in a ringing conclusion that this renewal would strengthen the United Kingdom. May I put the point to the Government in what is personally a rather painful way? Fewer people in Scotland believe that to be true than voted for the Conservative Party at the last election. Something less than 17 per cent. of Scotland believe that that will be the outcome. What troubles me is that those people in Scotland have recognised what the Secretary of State has not recognized: that there is an inherent instability in the arrangements he has put forward; and that the Government have caused that instability by exciting contradictory expectations.

Paragraph 4.2 states: The UK Parliament is and will remain sovereign in all matters". I entirely agree with that expression of constitutional thought. It is classic Diceyan analysis. I believe that it is correct; and indeed I support it. The difficulty is that the White Paper is said to be based on what is contained in the workings of the Scottish Constitutional Convention. The trouble is that time and again, with a rather garbled understanding of what Lord President Cooper said in the famous McCormick case in 1953, the constitutional convention has said that that is not where sovereignty lies: it is in some inchoate way invested in the people of Scotland.

It is not simply the Scottish Constitutional Convention that has taken a completely different attitude. In his maiden speech on the Second Reading of the referendums Bill, the noble Lord, Lord Steel of Aikwood, said: Lord Cooper, in his celebrated 1953 court judgment, was quite specific about it. lie said: 'The principle of the unlimited sovereignty of Parliament"— as expressed in the White Paper— is a distinctively English principle which has no counterpart in Scottish constitutional law"'. The noble Lord continued: It is important that that is understood".—[Official Report, 17/6/97; col. 1124.] Perhaps I may say this to him. There is one group in this country which has certainly not understood that; and that is the Government.

We then look to see what that exciting of different contradictory expectations will lead to: where it will lead to tensions being exacerbated and not relieved. As regards chapter 3, some seem to consider that the proposal that those matters be reserved constitutes a satisfactory solution. Let me test the issue briefly in this way. Let us set aside the points of conflict that are likely to emerge over issues which as yet we cannot precisely predict if the parliament is to be established in Scotland. However, let us test it against some of the contemporary political issues in Scotland.

I well recollect while in Government the keenness of anxiety, in particular among those who live in the north of Scotland, when some Whitehall departments suggested that we should have summer-time and double summer-time. I wonder whether those who live in Orkney and the Shetlands in the north of Scotland realise that the question of summer-time and double summer-time will be exclusively reserved for the UK Parliament. Do those Scots also appreciate that while solicitors will be within the remit of the Scottish parliament, astonishingly estate agents and insolvency practitioners will rest within the jurisdiction of this Parliament?

I might wish for those things to happen, but I am concerned that this instability is built into the system. I do not see that the situation has been resolved in a way which relieves that pressure.

The last of my examples—perhaps I may take some credit for it—relates to the Misuse of Drugs Act 1971 and any legislative change affecting the Act. That matter is to be reserved for the United Kingdom Parliament. After raising that point in debate with the noble and learned Lord the Lord Advocate, I am delighted to note that it will remain here. Drugs found in the north-west of Scotland are often destined for London, and drugs seized at Dover are often destined for Glasgow; so we want a united approach on that great social evil of our time. But if it is to be reserved for the UK Parliament, I invite your Lordships to reflect on this. Let us imagine, as happens from time to time, that we have a weekend of drug deaths in Glasgow. The local MSP goes to Edinburgh and says, "We must do something about this. We cannot allow this to continue in its present form". Let us imagine that he is told by the presiding officer, or whatever he will be called, that nothing can be done about the legislative position because that is a matter for this Parliament. It leaves in place some real points of conflict.

I turn to the position of the "third man". Unable to resolve the arrangements that are presently in place for the Scottish Law Officers, in contra-distinction to the 1978 scheme the Lord Advocate and the Solicitor General are to go to the Scottish parliament. In the most byzantine of conclusions, the only way in which the matter is resolved is by putting in place a third man, a new Scottish Law Officer. That seems an unworkable solution, undermining the position of the Lord Advocate of Scotland, who, as the Faculty of Advocates so rightly states, is effectively the cornerstone of our distinctive legal system.

With my innate sense of indolence, it is a job that I would dearly like to occupy. I cannot see what that officer would have to do other than to provide himself as a luncheon companion for an under-employed Secretary of State who had just completed his most important annual task: determining who was to be on his guest list for the visit of the Moderator of the General Assembly.

It is said in the history of the office of the Lord Advocate that at one time he occupied a small, dark room somewhere in the Home Office. I fear that that is the room to which this third man will eventually be sent. It is, in short, a second-class solution for what I believe to be a first-class legal system. It will reduce the proud, independent legal system of Scotland to nothing more than a regional variation.

Finally, I turn briefly to the matter of taxation. I wish to pose a number of questions to the Minister who will reply. I hasten to say that I do not expect him to give me answers to them, because I believe I know the answer to all of them—it is yes. However, I shall pose them; if I am wrong, I should be grateful if he would arrange for someone to write and correct me.

To turn first to paragraph 7.26, which my noble friend Lord Mackay of Ardbrecknish correctly identified as dealing with the key issue in relation to taxation, am I correct in saying that a parliament would have power to impose a local income tax without a 3p. limit, or indeed without any limit at all? Secondly, would it have power to abolish the unified business rate entirely and return the levying of non-domestic rates to individual local authorities. Thirdly, would it have power in accordance with former Labour Party policy to remove the exemption from rating of agricultural land and buildings? Fourthly would it be entirely open to a Scottish Parliament to institute a rating arrangement for Moss Morran, St. Fergus, Flotta and Sullom Voe, which would be a system entirely different to that covering either Teesside or Bacton? If I am wrong in my belief that the answer to all those questions is an unequivocal yes, I look forward to an early response from the Scottish Office.

The noble Lord, Lord Steel, said that it was no bad thing that a parliament should have powers to tax. That may be an argument, but the Government have been remarkably coy in telling people just how extensive that tax-raising power might be. I hope that now, after Mr. Henry McLeish has been open about the matter that he looks forward to spending the 3p. on income tax, at least we shall enjoy rather more open debate. If nothing else comes out of the two days' debate here and in the House of Commons, I trust that the people of Scotland will realise that what is proposed for them in terms of taxation is not at most a further 3p. on income tax but the prospect of almost infinite variation of the taxation that might be put upon them.

6.44 p.m.

The Earl of Buchan

My Lords, I shall attempt to be brief, bearing in mind that the noble Lord, Lord Mackie of Benshie, holds the record up to now of four minutes. As the twenty-third speaker in a debate in this learned Chamber, it is difficult to think of anything new to say. However, one of the advantages of speaking in this position is that other noble Lords have made points that one can pick up. I am sorry to see that the noble Lord, Lord Steel of Aikwood, is not in his seat. I should like to take him to task on a point that he made about the remarks of the noble Lord, Lord Mackay of Ardbrecknish, whose defence of the United Kingdom is certainly not a dishonourable course. I imagine that many noble Lords and noble Baronesses will be extremely worried about the "breaking up of the United Kingdom" aspect of the legislation. So it is a perfectly fair point to raise.

Had the noble Duke, the Duke of Montrose, been in his place I should have congratulated him on his maiden speech. I should have pointed out to him that he is one of five Members present and speaking in the debate whose ancestors sat in the last Scottish Parliament. They are: myself, the noble Lord, Lord Sempill, the noble Lady, Lady Saltoun of Abernethy, and the noble Earl, Lord Lauderdale. For my part, I would confine all these proposals to the waste-paper basket straight away, whether or not they cost £6.50. In my opinion the proper course is simply to re-prorogue the 1707 Parliament and offer to those whose direct descendants still exist a seat in that parliament. However, I accept that that course is not likely to be followed.

To put a serious point to the Minister, what is the hurry in relation to this legislation? Why has it to be rushed through in August 1997? Surely Scotland will not disappear. The Scots will still be here in November. Even if a canal were built from Carlisle to Newcastle, Scotland is most unlikely to float away. Those who legislate in a hurry repent at leisure. The repentance is likely to be on the subject of the United Kingdom.

Will the Minister say a little more about a Scottish parliament's relations with the common market? I believe that the United Kingdom will speak with a louder and more powerful voice than Scotland, Wales and England separately.

The noble Baroness, Lady Carnegy of Lour, passed a few comments on the influence of the Scots. She made a very good point about the number of Scots in the Cabinet. As noble Lords will know, three of the great offices of state are held by Scots. The Secretary of State for Scotland is a Scot; the Defence Secretary is a Scot; and the Transport Minister is a Scot. So far as the Treasury is concerned, we are most unlikely to hear an English voice in the Treasury now, because two of the junior Ministers in the Treasury are also Scots. Surely this will represent the high tide of Scottish power in United Kingdom history for ever. Why the Scots, who have the real power now, should wish to throw it away for the illusion of power in a small, independent country, I am completely at a loss to know. No doubt the Minister will provide a brief answer to that point.

I support the noble Lord, Lord Renton, in his "cake" argument. Perhaps the Minister will say a little more about how "less" can be "more" at the same time.

This time I support the noble Lord, Lord Steel of Aikwood, who is still not in his place, on the matter of the building of the new legislative chamber or whatever it is to be called. Noble Lords will share my view that Edinburgh is one of the most beautiful cities in the world; it is the Athens of the north. The thought that it might be desecrated by, as the noble Lady, Lady Saltoun of Abernethy, suggested, some trendy, useless, slick building for the chamber horrifies one. I note that Cardiff has escaped that approach with its opera house, although it looks as though the Victoria and Albert Museum will be landed with it.

Finally, I wish to ask the Minister a small question of detail. The document headed "Price of Scotland's Freedom" lists the number of individuals who were alleged in 1707 not to have been poorer as a result of the Act of Union going through. Who should correspond to the gentleman who is described as, "the messenger that brought the treaty of union to London"? That gentlemen was paid £60. Perhaps a modern equivalent would be Alex Salmond, the Member in another place for Banff and Buchan, the man without whose actions this whole Pandora's Box would never have been opened.

6.50 p.m.

Lord Mackay of Drumadoon

My Lords, I begin my contribution by saying a few words about the future role of the Lord Advocate, a subject touched upon already by the noble and learned Lord, Lord Rodger of Earlsferry, and my noble and learned friend Lord Fraser of Carmyllie.

As the White Paper makes clear, over the past 250 years the Lord Advocate, as a Law Officer of the Crown, has played a significant role in the government of Scotland and thereby the government of the United Kingdom. In recent years the Lord Advocate's influence has extended far beyond his departmental responsibilities by virtue of the fact that he sits on various Cabinet committees and is privy to the vast volume of correspondence that goes around Whitehall every day. The Lord Advocate's role as independent public prosecutor and his role as constitutional and legal adviser on Scottish affairs to the United Kingdom Government are very important. He also plays a very major role in the formation of policy and the planning and approval of legislation prior to its being brought before Parliament.

In addition, the Lord Advocate and the Solicitor-General for Scotland, as Law Officers, play their part in providing Law Officers' opinion to the Government. One of the conventions of your Lordships' House and indeed of another place is that neither the existence nor the contents of Law Officers' opinion are made known. But the practice is that on most matters, unless they are peculiarly Scottish or English points of law, an opinion is prepared by at least one English Law Officer and one Scottish Law Officer. Such joint opinions are prepared on a very regular basis. Many deal with the compatibility of secondary and primary legislation with European Union treaty obligations and the European Convention on Human Rights.

Over the years, the Lord Advocate has represented the Crown, not only in the Scottish courts but before the Appellate Committee of your Lordships' House and in the courts in Luxembourg and Strasbourg. On many occasions the Lord Advocate has represented the Government at international meetings and conferences the length and breadth of the world. Therefore, there is much force in what the Faculty of Advocates recently said in a memorandum it submitted to the Secretary of State for Scotland; namely, that the Lord Advocate, is an effective guardian of the [Scottish] legal system. who provides an authoritative voice for Scotland and Scots law in London. Europe and beyond". I regret to say that within the various branches of the Scottish legal profession there is growing concern that, if the devolution proposals proceed, the Government may have chosen the wrong option for the future role of the Lord Advocate. That concern is shared by those who support devolution, those who oppose it, and those who take a neutral stance, as I anticipate the Faculty of Advocates and the Law Society of Scotland will do when they come to respond in detail to the proposals set out in the White Paper.

Let me briefly indicate why I have some concern that the proposal set out in paragraph 4.8 of the White Paper may not be the right way forward. I fully accept that any Scottish executive would require the services of law officers to provide it with advice on legal matters and to represent its interests in the courts. One anticipates that, despite the consensus politics that have been talked about, there will be occasions when the Scottish executive requires to be represented in court in legal disputes with UK government departments and other public authorities, such as local authorities.

I accept the need for such legal advice and legal representation. But it is by no means obvious that the duties should be carried out by the Lord Advocate and the Solicitor-General for Scotland. The White Paper suggests that that is appropriate because the Lord Advocate's responsibilities for the investigation and prosecution of crime are to be devolved. I find that a somewhat strange comment. The Lord Advocate has always been the public prosecutor in Scotland. He, his Crown Counsel and the procurators fiscal appointed by him have traditionally investigated criminal activity in Scotland, sudden deaths and the like. He alone has been responsible for the prosecution of crime in Scotland. The situation is different from that which applies in England where other public bodies, such as Customs and Excise and the Health and Safety Executive, have a role to play. So I do not regard his duties as being devolved. I have always taken the view that they have been based in Scotland; he is a master of the investigative procedure and a master of the prosecution.

It is proposed that his independent department, the Crown Office, should come within the ambit of the Scottish Office; that it should cease to have a separate budget, as it has at the moment; and that it should be paid out of the funds which the Scottish Office receives from London or from any tax that may be raised. I have a concern that that might serve to challenge the very important independence of the Lord Advocate, about which the noble and learned Lord, Lord Rodger of Earlsferry, spoke earlier.

In the same way that the Crown Prosecution Service in England comes within the ministerial responsibility of the Attorney-General, I believe that the prosecution of crime in Scotland should come within the auspices of an independent department under the ministerial responsibility of the Lord Advocate.

There is a danger of such interference. The noble and learned Lord, Lord Rodger, talked about an historical example of it. I regret to say that more recently in England I have detected some signs of the possible interference of the Home Office, in respect of the Crown Prosecution Service, in setting out the approach that the prosecution should take to issues of whether or not there is a sufficiency of evidence to proceed and whether there are sufficient prospects of conviction; and, in another example, whether it is the rule that prosecutors should give reasons to victims as to why a prosecution has been taken, has not been taken or has been departed from if one has begun. It is very important that the public prosecutor is entirely independent. I believe that that independence would be reinforced if his department were separate from any political department.

But it is not just the question of structural independence which is important. The Lord Advocate, his Crown Counsel and procurators fiscal prosecute in the public interest. The public interest is not just limited to devolved matters or to the residents of Scotland. It requires to take account of much wider considerations, not least because, as my noble and learned friend Lord Fraser mentioned, matters such as the misuse of drugs, firearms, health and safety at work regulations and road traffic matters are not to be devolved. Therefore, many of the charges which will be prosecuted in Scotland will be for contraventions of legislation passed by this House and another place on previous occasions and to be passed on future occasions.

It is important that the Lord Advocate should remain a member of the United Kingdom Government so that he can play a full role in the formulation of the policy leading to such legislation and play a full part in the debates as a government Minister in the promotion of such legislation. No doubt arrangements can be made either through the Solicitor-General for Scotland or by some other means to ensure that he co-operates fully with any parliament in Edinburgh and with any Scottish executive and, very importantly, with other agencies involved in the criminal justice system. The White Paper proposes that if the Lord Advocate and the Solicitor-General are not members of the Scottish parliament, they should have the right to take part in debates. That may be possible for a new parliamentary body; it certainly would not be possible for your Lordships' House and another place.

Mention has been made of a third man. That has been humorously referred to in Scotland since the White Paper was published. Whether it is a cricketing analogy of someone who stands on the boundary and occasionally answers a question he may be asked or whether it is a more shady character who frequents the darker aspects of the corridors of power I am not sure. What is quite clear is that to try to create a new officer to fulfil the role in Whitehall and Westminster, in your Lordships' House and in another place, that has been fulfilled by Lords Advocate over the years, would be an extremely difficult exercise.

I am concerned that unless that role is fulfilled then in an ironical way Scots law will suffer. People frequently say that one of the reasons for having an independent devolved parliament for Scotland is that Scotland has its separate legal system. One of the ironies of devolution may be that because so much of the law which will apply in Scotland will still be passed by this Parliament unless the Scottish legal voice is fully heard and understood, there is a danger of our legal system becoming more Anglicised than some criticise it for already.

I hope therefore that when the Minister replies he will undertake at least to discuss with his ministerial colleagues the possibility of giving further consideration to the future role of the Lord Advocate and undertake to consider the possibility of a public discussion with all branches of the legal profession—the Senators of the College of Justice, the sheriffs and others involved—to see whether any productive way forward is possible.

In conclusion, perhaps I can ask the Minister a few questions about the proposal to refer to the Judicial Committee disputes on the question of vires. While I fully understand what will happen if a dispute arises before legislation is passed, I am slightly unclear what will he the position if a dispute arises during the course of a court action, whether it be criminal or civil proceedings. If such a dispute arises in front of a Senator in the Court of Session or a sheriff in a sheriff court, is it proposed that there and then the matter should be referred to the Judicial Committee for decision or some form of ruling? Or is the proposed way forward that the judge should decide the issue and that there should be some right of appeal thereafter?

Another issue that arises is why the Judicial Committee should be limited to serving Lords of Appeal in Ordinary. Is there not a case for extending the committee to any Privy Counsellor who has held or who holds high judicial office in the United Kingdom? That provision would allow the noble and learned Lords, Lord Roger, Lord Bingham of Cornhill, and others similarly qualified to sit in an appropriate case.

What would be the position if rights of appeal in civil cases to the Appellate Committee of your Lordships' House were abolished? Would there still be Scottish Lords of Appeal in Ordinary? Can there be any guarantee or is any guarantee offered that there will always be members of that committee who are qualified, trained and experienced in the practice of the law of Scotland? Those are troubling questions; they are serious questions. It may be that the answers cannot be given tonight but I hope that they will be given before the devolution referendum takes place.

7.5 p.m.

The Earl of Lauderdale

My Lords, as a Scot who has travelled pretty widely, I come to this debate focusing on Scotland. I have to say that I was born and reared abroad. Singapore? Hong Kong? No; Staffordshire. Where was I schooled? Paris? Vienna? Berlin? No; Sussex and Oxford. I still say "abroad" and alas I have come through it all "without a Scots tongue in ma heid"; that I regret.

I wish to say what a pleasure it was to hear the noble Baroness, Lady Smith of Gilmorehill. I regret that she is no longer in her place. I have never heard her speak before and felt that she spoke with grace and dignity. Of course, we remember her late husband and the part he played in getting this idea off the ground. It was a great pleasure to listen to the gracious way in which the noble Baroness addressed the House. I wish I could agree with everything that she said; unfortunately, I cannot.

This all has to make sense in terms of a realistic comprehension of Britain's role both in history and again in the modern world, not least the fact that we poured out our blood and treasure when standing alone for the free world in World War II. Or, on the other hand, perhaps this is just the prelude to an escapist scuttle from the role and destiny of our people?

Andrew Neil, editor-in-chief of the Scotsman newspaper, wrote on 25th July, Why I, as a Scot, am sad today". He focused on two points. First, a gross diminution of Scots influence at Westminster through cutting the number of Scots MPs, and the role of the Scottish Secretary of State "withering on the bough", as he put it—the withering, that is, of his influence in the Cabinet. Mr Neil cited paragraph 4.5 on page 13 of the White Paper with its claim that without their own parliament the Scots could no longer claim their current "over-representation" at Westminster but should be willing to accept a cut of about a dozen from the present number of 72 MPs. Such influence as we might be allowed to retain would be confined to defence, foreign affairs and UK economic policy. But we have to face gigantic contradictions which run right through the White Paper.

How can Scotland genuinely take part in management of the UK economy when fiscal power is to be split between the Whitehall Exchequer and the Scottish "Executive", with its power to alter levies north of the Border. How again could Scotland expect to provide Britain's Prime Minister, Britain's Foreign Secretary and Britain's Chancellor of the Exchequer? I am happy they are all Scots.

The White Paper and the Government's Statement on it are bestrewn with pledges about retaining the Union, keeping the United Kingdom together and so forth. But there is little examination of the UK itself. That was well summarised, if my memory is correct, by the noble Earl, Lord Russell, in a recent letter to the Independent. I apologise to him in his absence for not warning him beforehand that I intended to quote him. I hope I get the quote right. He said, in effect, that the Union of the Crowns in 1603 had been a grouping of sovereign states with, and under, an accepted top figurehead or symbol—something analogous perhaps to the Commission's place in the current European Union of sovereign states.

Personally, I would rather, in the political world of today, find a new term for "the United Kingdom". To that end I appeal to the imagery of the Great Seal of the Realm which calls the Head of the Commonwealth "Prince (in Latin princeps) of the Gathering of the Peoples". Such a term—albeit in Latin—established in the Great Seal makes me prefer to describe the UK as "the gathering of the British peoples".

The noble Earl, Lord Russell, argued—I hope that I am not misquoting him—that the proper way to change it all would be by negotiating a really new and modern Treaty of Union. It is idle to deny, as the White Paper keeps trying to do, that there is nothing explicit or implicit to threaten the UK as such. But if a bitter quarrel about tax or levies on oil and gas revenues from the Continental Shelf did not set off an explosion of volcanic proportions, then white is black and black is white. Such is the kind of quarrel that is almost inevitable sooner or later between the Scottish Executive and the London Treasury.

Worse still, the small print includes provision for the UK auditor's office finally to decide which fiscal costs and figures are relevant to the calculation of the longstanding English subsidy to public expenditure per head in Scotland as against the much lower figure for the English. In that regard the White Paper scheme ties and binds the Scots with gilded cords whose decorative tassels have cunningly hidden the power of an iron stranglehold.

Another contradiction lies in the reservation to Westminster's Parliament—and hence to the UK as a whole—of the power of decision on foreign policy. This is stated just when the present arrangements mean that Scottish or Welsh soldiers serving in UK forces abroad are to be denied a vote in the referendums. Still another contradiction lies in the proposal that Scotland should have a representative office in Brussels with access to the Commission, almost within yards of the offices of the long-established UKREP—the official office representing Britain's interests in Brussels. Just when the European Union's top centralists are pressing for a unified defence strategy to replace the current ad hoc arrangements with NATO, the White Paper asserts that Scotland's input to UK foreign and defence policy should not be at the heart of Whitehall, where decisions must be made, but initially in the frontline itself—like Scottish and Welsh troops now serving in the several British squadrons in Bosnia but denied a vote in the forthcoming referendums.

A politically more serious and more practical way to go about this whole proposition would surely have involved twin resorts: examining how the Treaty of Union could be renegotiated to suit today's conditions; and an equally serious response to the widespread public dream of a Scottish parliament, something with which I have long sympathised. This could and should have been done by examining what for years has been working so well, the Convention of Scottish Local Authorities (CoSLA).

The convention meets in plenary session each year but has yet to find a permanent home. It is condemned to shuffle around from Glasgow to Edinburgh and then to Perth, Aberdeen, Dundee, Inverness and so on, like a travelling circus. It should long ago have been decently housed in the High School building opposite the Scottish Office in Edinburgh where at least it could have had regular annual sessions and all the publicity that would naturally attend a Scotland-wide assembly.

The remit of CoSLA excludes such extraneous matters as debates on NATO, foreign affairs and the UK economy, let alone any other areas such as defence, the Western European Union and the eastward expansion of NATO. These are all areas which the White Paper excludes from the Scottish parliament and which are already excluded from CoSLA's remit. Such issues—with the bogus litany of refrains about holding the Union together—have been dragged in as a sop to all who see in this White Paper project all the signs of the dynamic of revengeful and narrow nationalism burrowing away. It may at the moment be unpopular in Scotland. At any rate the SNP did not attract a great many votes in the last election. However, it is there, it is bitter and it would be idle to pretend that it does not have at least emotional links with those who some of us in other parts of Scotland refer to as the Glasgow Irish.

All this is much in the English mind just now. But as the first year of the new Labour administration unfolds—with the Wales referendum artlessly slotted in for just a little while after the anticipated Scottish "Yes"—much will become blurred and misunderstood once the public's imagination is caught up, for instance, in the election of London's new mayor—quite soon now, it seems. For this means a new focus of political pressure and expression being brought into being. The scale of the vote for London's mayor will be at least 5 million electors—more than all the Scots and Welsh electors put together.

I have one final point. Surely HM Stationery Office does not have to adorn the White Paper with a right mockery of the Scottish national flag, the Saltire. Here is one more irritating example of bureaucratic condescension. Enough is enough. The Saltire is a white St. Andrew's cross on a sky-blue background—not just a rather messy, big, brown smudge.

7.15 p.m.

Lord Kirkhill

My Lords, I rise to support, in general terms at least, the contents of the two White Papers. I shall confine my remarks to the White Paper proposing a Scottish parliament. It meets with my approval because I have long supported that principle. The present Government are to be commended for, as the noble Lord, Lord Mackie of Benshie, has said on more than one occasion, proposals which in essence are fairly generous.

I seek to make a contribution to the debate because the noble and learned Lord, Lord McCluskey, and I sat on the Front Bench 19 years ago repelling all boarders to the good ship "The Scotland Bill" of 1978. A considerable amount of ammunition came from the other side of the Chamber, but both of us could say, although the noble and learned Lord is not in his place at the moment, that we succeeded after about 16 Committee days in repelling a good deal of the gunfire, some of it emanating from the noble Lord, Lord Campbell of Croy, who I see has just resumed his seat.

The Bill outlined in the White Paper will be a better Bill than the Bill which we debated in the House some 20 years ago. The main reason why it will be a better Bill is that the reserve powers will be clearly delineated and the other powers, which in the meantime are under the aegis of the Scottish Office, will stand devolved. In one sense that will mean less time spent in debate in your Lordships' House. During the proceedings on the previous Bill we became bogged down in points of quite extraneous detail because of the need carefully to define each of the devolved functions. This time round I think the issues will be a little easier to understand and a little easier to debate. I think it is a better Bill for that reason.

I spent some years as a Minister of State in the Scottish Office. At that time there were some 10,500 civil servants in Edinburgh and 60 in Dover House. The six-man ministerial team was in Westminster for about four days a week. We used sometimes to get in touch with the civil servants in Scotland by means of a remote control chamber on the top of Dover House. That, in itself, in administrative terms was an unsatisfactory way in which to deal with major matters which required ministerial assent and ministerial decision. The devolving of powers from the Scottish Office to the parliament is greatly to be commended. It is also worth keeping in mind that at present Scotland, with a separate legal system, is probably the only country which does not have a legislature. That difference will be resolved as a result of the Bill.

I also believe that the instigation of proportional representation will go a long way to prevent criticism in areas outwith the central belt of Scotland about the over-domination of what, after all, are 4 million Scots living in that belt and a million Scots living elsewhere. The first-past-the-post system certainly weighs heavily on the west central belt as matters stand. I believe that the proportional representative system which is now being considered goes a long way to help what is a major problem in that regard.

I also believe that the previous Act gave the then Secretary of State for Scotland too much of a nanny power. He had to interfere at far too many points. He had to be consulted on too frequent occasions. That in itself caused much upset north of the Border. That has been eliminated this time, and in my view that also goes a long way to making this a mature Bill created for mature people living in what I hope will be a mature democracy, as here.

The two points of criticism I make are these. Like the noble Lord, Lord Steel, I am unhappy at the idea of vast sums of money for a new parliament building. I believe that the existing parliament building is adequate and that the old Scottish Office can certainly house the staff which are needed. One does not need to build a tunnel because one can build a walkway overhead. There is one on the other side of Leith Walk anyway at the moment. In essence, I do not believe that there is a huge problem. I believe that the Government are being too triumphalist at that point.

The other point that causes me concern is that, as matters stand, one is moving towards a unicameral system of government north of the Border. There is not a revisory power. I worry a little about that. I would like to consider that point rather more. That having been said, my welcome is warm and I believe that the Government's proposals should be commended by all.

7.22 p.m.

Lord Clifford of Chudleigh

My Lords, Oscar Wilde accompanied an apprentice orator to his first speech. When the young man sat down after his address he looked at Wilde and asked, "Have I spoken for too long?". Wilde looked up and said, "No, it just sounded as if you did". I shall not disappoint noble Lords.

Should September's referendum results approve of a devolved parliament for Scotland and a devolved assembly for Wales—unless I misunderstood the Government's resolve in the White Paper relating to devolution—these two aforementioned states will be able to negotiate independently over their position and their feelings towards, for example, the common fisheries policy.

The leader of the Scottish National Party will demand, obviously, a major executive role in the proposed Scottish parliament. He has already stated that his party is committed to renegotiate the common fisheries policy in favour of Scottish fishermen. He will not forget, of course, that the 1989 United Nations Convention removed the 200-mile fishing limit around fish-abundant Rockall but failed to recognise that Rockall is within 200 miles of St. Kilda, the westernmost fishing port in Scotland.

Nor will the proposed Scottish parliament forget that it will have to finance the Scottish Fisheries Protection Squadron; boats formerly financed by Whitehall. Should Scotland "go independent" perhaps Her Majesty's Government will specifically designate Royal Navy ships to look after the fishing interests in the South West of England.

I say "of England", for surely the independent status of the Welsh would encourage them to claim their right to protect their fishermen. Should this be so, should power be so devolved, and should Scotland and Wales argue successfully for their independent status within the European Union, the Government would be at risk of trade discrimination against fishermen just across the Bristol Channel—the fishermen of the South West of England and the men and women of Devon and Cornwall. I am sure that they would like to take their case to the European Court at Luxembourg.

Although today's publicity in the media concerning the Welsh assembly may cause a rethink, leading to more and greater powers being given, what would stop a future Welsh assembly from permitting the internationally-recognised sport of competition pistol shooting being carried out in Wales? What could be better for the Welsh economy, the Welsh tourist industry and the Welsh employment problem? The people in the South West of England will be watching this devolution game with interest—and the elected Members in the other place should remember that Bristol is not the South West; the South West may start there, but it goes all the way to the Scilly Isles.

7.26 p.m.

Lord Gisborough

My Lords, the White Paper seems to assume that agreement will be reached between the Scots and the British Parliament and the Secretary of State on all matters. It is news to me that even members of the Labour Party can always agree. It is even less likely that a future Conservative Government will always be able to find a middle ground with the Scots. When that clash comes, the Scots will undoubtedly say that as elected members they have the right to override Westminster and, failing that, will want independence.

Disagreement could come on a number of matters, most likely unforeseeable at present. The single currency could be the spark that breaks Scotland and England. It could be defence and the stationing of nuclear vessels or the rules on abortion. The friction with Wales will come when they find themselves powerless to stop legislation passed by the next Tory Government and they discover that they are no more than a talking shop. The North Welsh, from where my family comes, anyhow believe that Cardiff will be as remote from them as London.

Where the assemblies disagree with the reforms at Westminster they will be able to drag their feet, while blaming Westminster for the failures from the lack of those reforms. The new assemblies will inevitably trespass on matters that the local councils see as their patch. Just as the district councils resented the counties and took their powers, so will the district councils sooner or later demand the powers given to the assembly to be devolved to them.

One obvious bone of contention will be the oil. Scotland will very soon be demanding a greater share of the oil revenues from its seas and that must lead to friction. In 1979 to 1995 Scotland had a £27 billion surplus over the United Kingdom, largely owing to oil. How long before they claim that for themselves? But is Scotland in surplus or deficit in the United Kingdom? That seems a matter of how statistics are interpreted.

The Government and Revenue in Scotland document by the Treasury suggests that in 1994–95 England subsidised Scottish residents by £23 billion. That is per capita 10.5 per cent. of UK revenue, compared with 8 per cent. of the population. But whatever the figures, they can be proved to go either way; for sure the Scots will use the statistics to prove that they are the losers.

But when the Scots have their independence, and if those figures are right, why should England continue to subsidise them with their 25 per cent. per capita advantage over the English? Should not the piper play some of the tune? What is odd is that while the European Union is attempting to federate Europe and bring down all barriers and nationality, the United Kingdom is breaking itself up into more national states. Perhaps in 100 years or so from now we shall become another Yugoslavia.

If an independent Scotland is to be a success, it is vital that the assembly should somehow be able to attract highly qualified and experienced members rather than a morass of political councillors with little value other than the colour of their politics, as too often happens in local government.

Too often, authorities spend too long pontificating on matters over which they have little control or responsibility and the busiest and most competent of their members are sickened, until all that are left to run the authority are those who are unemployed, often unemployable and of no proven ability. In time, the most able refuse even to get involved in local government at all. It would be a shame for Scotland if the most able were to be driven out by the least able. I sincerely hope that the rules of the assembly will be designed to attract and keep as Members the most able people of Scotland.

The assumption that elected representatives are always the best is sad. Over and over again, it is the quangos and appointed bodies, made up of people of the greatest proven calibre, which have achieved the most. A good example is the Teesside Development Corporation and the Welsh Development Agency. They have been able to achieve enormous results with the funds awarded. Had those funds gone to an elected council, many councillors admit that they would still be arguing over how they should be spent.

It is like your Lordships' House, which some commentators say far surpasses the other place in the quality of debate—and so it should, with the wealth of talent of which it is composed, but it would never be so if the House were to be elected.

What of the future? It will not be long before Scotland answers directly to Brussels alongside England, and the UK would be broken up. How long before Scotland and Wales demand their own embassies?

Paradoxically, while the Scots want independence, they have no qualms about not only disregarding what the English may think, but of ruling us with an almost unacceptably high proportion of Scots in our present Government. Until now it has not mattered, but it will be quite unacceptable for the Scots to rule both their country and ours. English people have no interest in forcing their opinions over Scotland, but likewise they do not expect Scotland to force its opinions onto England, as the Scots will be able to do.

In a MORI poll 68 per cent. of the English said that they saw no reason why Scotland should not have its own assembly, but that is very different from saying that they would want the Scots to control England. It is totally unacceptable that Scottish Members of Parliament in London, even if their numbers are reduced, should have any say in English affairs on those matters which in Scotland are devolved to their assembly. At the very least, there should be a convention that Scottish Members do not vote on any of those same matters affecting England. To put it another way, if Scotland demands independence, so should England. If, and as soon as, Scotland decides on independence, there should be a referendum in England to decide ours.

Robin Cook has said that devolution is the battering ram with which he will knock down the centralist state. Do we really want different systems of government in every different part of the country? If so, and if Scotland and Wales have home rule, are other parts of the country to have the same? I have no doubt that the ideas on education, for example, that are held by Members from West Yorkshire will vary from those held by Members in the south of England. Are both to have what they want? After all, it is said that if the Home Counties opted out of the UK, like Scotland, they would form the 11th most powerful economic country on the planet. If not for the Home Counties, there should at least be a voice for England.

7.33 p.m.

Lord Nickson

My Lords, like the Minister I spent my boyhood in North Wales, but I have worked in industry in Scotland for over 40 years and although certainly past my sell-by date, I still do. Therefore, I should like to confine my remarks purely to the effects on Scottish industry and business which I see arising from the proposals for tax-raising powers.

I believe that the position of Scottish industry is very much more favourable than has been the case for a long time. In a rather old-fashioned way, I believe that that is due to a number of factors. I refer first to the sensible partnership between government, local authorities, the private sector and the quangos. I refer secondly to the fact that responsibility for industry was devolved to the Scottish Office a long time ago.

I am a little nervous about my credentials on either these Benches or the Benches opposite, because the first quango on which I served was the Scottish Investment Advisory Board. I say that because I was appointed by the late Eric Heffer and at a time when Tony Wedgwood Benn was President of the Board of Trade—and I do not think that either of them could quite be classified as "New Labour". However, I was extremely proud to be the last chairman of the Scottish Development Agency and to be the first chairman of Scottish Enterprise. I was very proud also of the successful transition between those organisations.

From that background, I should like to concentrate on only two paragraphs of the Scottish White Paper. Paragraph 7.12 states quite explicitly why the Government rejected the idea of a different corporation tax: because it would be an unreasonable burden on Scottish industry.

A number of noble Lords on this side of the House have expressed their concern about paragraph 7.26 and about the effects of a possible change to the non-domestic rates. I should like to explain what I think may happen and what I suspect will be the views of Scottish business when it is consulted. The first burden is perhaps not an enormous one. I refer to the £50 million which is to be imposed by the establishment of a new PAYE system for income tax purposes, and to the ongoing cost of £15 million. Perhaps Scottish businesses could absorb that, but if an additional 3p. income tax rate were to be imposed (amounting to, let us say, £450 million), it does not require much imagination to see who would bear that cost. It would not be those people who are taxed; it would be their employers—and the reason is extremely simple. Can you see a trade union negotiating national rates either side of the Border and accepting that people one side of the Border are very much worse off net than people on the other side of the Border? Can you see a small business in Carlisle and Dumfries ensuring that its employees are taxed, if they are on average earnings, some £6 per week differently or, for middle managers, perhaps £1,000 per year differently? What of the problems for companies which want to move people around between Scotland and England, as we all do? They will have to say, "I am very sorry, but you will have to go to Scotland because that is where your job will be but you will be £1,000 worse off'. I see great problems and I suspect that most of that £450 million will fall as a non-competitive additional cost on Scottish business.

Another spectre lurks in paragraph 7.26 and I earnestly urge the Government to think it through and to consider where the responsibility lies. My noble friends Lord Weir and Lord Mackay of Ardbrecknish have already touched on this, as have other noble Lords. Perhaps I may remind the House of what happened before we had the uniform business rate. I should like to quote four examples to which I have referred previously in this House in a debate on the economy. They are very simple. I refer first to the element of rates if you lay your head on a pillow in a four-star hotel in Edinburgh. Before the introduction of the uniform business rate, you paid £3.50 in rates on your hotel bill for the privilege of doing so. At a similar hotel in London, the rateable element was £1.

If you brewed a barrel of beer—I was partly responsible for so doing in Fountainbridge—the rateable value for that barrel of beer was eight times what it cost to brew a barrel of beer in Burton-on-Trent from a brewer who shall be nameless.

Let us compare the costs of Jenners department store in Edinburgh with those of a department store which is fairly frequently in the news nowadays, Harrods. If Jenners rates were £1 million, that would represent 4 per cent. of its total cost base, yet it is one-eighth the size of Harrods which paid the same rates. There is a big complex at Grangemouth comprising BP and ICI. Before rating was revised it represented 40 per cent. of the total rateable value of the old central region. I remind my noble friend Lord Renton that in those days we did have regions. One last example which has already been quoted is the effect on big oil companies.

I believe that the aspirations and the appetite for public expenditure, and the demonstration that the Scottish parliament is working and local authorities are given the opportunity to do the things that they want, will prove almost unanswerable if the parliament has the power to impose additional tax through non-domestic rates. I plead with and urge the Government to think again when they have these conversations and not to abandon the uniform business rate, just as they have said that that would be an unreasonable burden on industry for the same reason as corporation tax.

That is the only point that I wish to make, except to say that I slightly regret I am no longer chairman of the Senior Salaries Review Body and therefore do not have the opportunity to fix the rate for MSPs.

7.41 p.m.

The Earl of Mar and Kellie

My Lords, thirteen and a half months after he took up his new job as Secretary for Scotland the Earl of Mar wrote to Queen Anne on 14th June 1708 thus: I think myself obleidged in duety to lett you Majestie know that so farr as I understand, the inclinations and temper of the generality of this country is still as dissatisfied with the Union as ever, and mightily sowr'd". Today we are at last addressing that dissatisfaction. This morning I read a brief analysis of the White Paper for a Scottish parliament in an article in The Times by Simon Jenkins. The article focused on a directly elected mayor for London. I should like to take each of his seven sentences and make comments about the issues raised in each. Mr. Jenkins begins: Scotland is to have restored to it a domestic autonomy that honours the concept of a consenting 'union', in place of crude colonial rule from London". I like his use of the word "restored" for it reflects accurately Scotland's sovereign heritage. "Domestic autonomy" accurately describes the semi self-government that is longed for and is in line with the Scottish negotiating position in April 1706. A "consenting Union" is what it should have been for the past 290 years rather than the pretence of Scotland being a unitary state. "Colonial rule" is what happens at present, even under a Labour government. The opportunity for measures to be imposed in Scotland against the wishes of the Scottish representatives is symptomatic of this. Home rule or domestic autonomy will resolve the cruder issues of colonial rule. At the same time, I persist in the belief that a union with England is worth pursuing, and that is an incentive to get the relationship to work on more equal terms. The imposition of an incorporating union into the treaty negotiations in 1706 was overbearing and also incompetent. The retention of pre-Union institutions and the subsequent creation of new Scottish institutions has to be the evidence.

Mr. Jenkins goes on to say: The Scottish assembly will enjoy what is termed 'general competence'". Of course, the use of the word "assembly" is wrong for the proposal constitutes a parliament, especially if it has the power of supply. The Scottish parliament will take control of most aspects of Scottish domestic life. It is a pity that moral issues such as abortion have been reserved to Westminster. That was not the case between 1967 and 1990. Only from 1990 was there a single United Kingdom Act.

Mr. Jenkins goes on: Statutes will set out not the powers of the Scottish assembly, but those remaining with the London Parliament". The White Paper rightly takes the approach of the Government of Ireland Act 1920 and sets out to identify the powers reserved to Westminster. Although that approach to the reservation of powers is sound, there are bound to be overlaps. I am glad to read that the Judicial Committee of the Privy Council will be tasked with the resolution of any disputes between the Scottish parliament and the British Parliament.

Next, Mr. Jenkins says: Scottish voters will be treated as mature". At last the Scottish electorate will be entrusted with much of their future governance. This is the mark of a sovereign people. Historians will record that for a brief period of 290 years since the ice melted 10,000 years ago, the people of Scotland were deprived of their domestic sovereignty. The actions of the Scottish commissioners in 1706 earned them a sour rebuke by the patriot Andrew Fletcher of Saltoun. When the Union with England Act was touched with the Sceptre on 25th March 1707 Fletcher insisted on leaving Scotland, remarking bitterly: It is only fit for the slaves who sold it". I go back to the words of Mr. Jenkins: A country the size of Denmark or New Zealand will be free to tax itself'. Clearly, that depends on the outcome of the second question. The White Paper allows the Scottish parliament to decrease or increase the budget by up to £450 million. An increase has straightforward consequences. The Treasury will increase the Scottish block grant by the appropriate amount, less the administrative costs of collection. However, a decrease has more complicated consequences. The UK Treasury will pay over the Scottish block grant, less the appropriate amount and less the administrative cost, but the full benefit of the tax reduction will not go to the people of Scotland. There will be a reduction in taxation but, should the tax take go up as forecast by the more right-wing think tanks, the UK Treasury will benefit rather than the Scottish parliament.

Next, Mr. Jenkins says: There will be a price: fewer Scots MPs and the likely attrition of English subsidies". I have no problem with a reduction in the number of Scots MPs at Westminster so long as that is aimed at equalising the representation ratio to that of England. Scotland has every right to a full say over the powers to be reserved to the British Parliament. The West Lothian question will pale into insignificance when English devolution is introduced. However, to start with I accept that it will be a symptom of asymmetric devolution. As to the issue of which way the subsidies flow, I believe that the jury is still out. Only with a federal solution will one have conclusive proof.

Finally, Mr. Jenkins says: But that is for the Scots to choose, a choice the Tories denied them". I believe that the Scottish electorate is more than ready for this advance towards its destiny. While musing on past resistance to Scottish home rule by various political parties, I conclude that the real issue is one of electoral advantage: for Labour, perhaps a substantial block of votes to help with its past problems in England; for the Conservatives, the existing set-up has allowed them to rule Scotland without a real mandate.

Following the example of the noble Lord, Lord Sempill, I also take this opportunity to announce my potential candidacy for the Scottish parliament.

Noble Lords

Hear, hear!

The Earl of Mar and Kellie

My Lords, that may depress others. I thank my noble friends for their support. I am pleased with the White Paper and Mr. Jenkins's analysis. I commend it to the people of Scotland.

7.50 p.m.

Lord Gray

My Lords, the historical references introduced by the noble Earl are always interesting. I shall not, however, follow his arguments. I have never been a politician. I sit here, but I am not sure whether the Conservative Whips look upon me as a cross to bear or a mixed blessing. I choose to preface my remarks in that way to make it clear that my opposition to the Scottish White Paper proposals is the product of debate between my heart and my mind.

Like my noble friend Lord Campbell of Croy and the noble Lord, Lord Kirkhill, I have cantered around the devolution course in this House before. The three of us are probably the only people who spoke on a similar occasion who are speaking tonight. The noble Lord, Lord Kirkhill, was kind enough to come and say to me, "I am sorry that I didn't notice that you were sitting there, or I should have mentioned you". It is probably just as well that he did not, because I might have reminded him that on more than one occasion we induced him to shoot himself in the foot.

Lord Kirkhill

My Lords, on many occasions!

Lord Gray

My Lords, I oppose devolution. I opposed devolution then. That does not mean that I have approached the present scheme with a closed mind. That would be foolish. The few minutes for which I can reasonably detain the House at this hour dictate that I select from the many items which demand scrutiny and which have been referred to during the course of the debate. I choose to fasten on finance. At the end of the day, money (revenue and expenditure) is the core issue and the motor which will keep the wheels of the Scottish parliament turning.

Like my noble friend Lord Mackay of Ardbrecknish, the wording of the second referendum question troubles me. As the noble Lord, Lord Sewel, who is not in his place at the moment—

Lord Sewel

My Lords, yes he is.

Lord Gray

My Lords, the noble Lord said yesterday that the Government intend to overturn my noble friend's amendments which inserted the word "income" into the second referendum question. I make no apology for returning to the subject nor for reinforcing what has been said about it in this debate. Since it was an open secret that the Government proposed only an income tax-varying power, it was initially puzzling that they opposed the suggestion that the second referendum question should include the word "income". Was it obdurately obstinate resistance for resistance's sake on the part of the noble Lord, Lord Sewel, or was it something else?

I detect a more likely motive. If one sets the alternative wordings side by side, one recognises immediately that the version which omits the word "income" opens the door to other tax-varying powers. If such are introduced later, and Scots protest, the retort will be, "You voted for them". I cannot quote exactly the noble Lord, Lord Mackie of Benshie, but the gist of what he said was that if the Scots were foolish enough to elect people who would impose extra tax on them it would be their own fault. It is not just a question of extra tax that we are talking about, it is the variation of tax, where the burden will fall, what effect there will be on the block grant, and what implications there will be for economic management.

In addition, we have to contemplate what is set out in paragraph 5 of Chapter 6 of the White Paper, which deals with local government. It clearly opens the door to tax variation by proxy and perhaps to the creation of new taxes. I do not need to spell them out. Noble Lords will have got my point.

My noble friend Lord Hamilton of Dalzell drew our attention to paragraphs 7.22 and 7.28. I think I have said all that is necessary on that subject. There are others which worry me, but I shall have to neglect them tonight.

I should like to ask one question which concerns the proposed scheme for proportional representation. In view of the number of additional members, to which the attention of the House was drawn earlier, what will happen if there is a significant number of independents? How on earth do such disparate characters achieve a list? What will happen?

I have properly used up as much time as I should. I do not know whether the noble Earl, Lord Buchan, missed me off his list of Peers in the last Scots parliament, but it may interest the House to know that whether or not one of my forebears sat at that moment, two were qualified to do so—a father-in-law and a son-in-law. That was an unusual situation. Perhaps that is why they stayed away.

It might behove us to remember that we are not talking about the creation of a parliament, we are talking about the creation of a government. A very worrying aspect must be the potential for quarrelling, for mischief and for divisiveness between a government in Westminster and a government in Edinburgh. If one looks at the whole scene, at the triangle of local government, the Edinburgh government and the Westminster government into which one then chucks the European element, that is a worrying scenario. I am sad that England does not yet seem to have woken up to what these proposals portend. There are representatives in Parliament who should speak up for them and their interests. That is all I think that I can reasonably say tonight.

8 p.m.

The Earl of Onslow

My Lords, I congratulate the noble Duke, the Duke of Montrose, on his excellent maiden speech. It may explain why your Lordships' House has a continual place in the affections of the nation. One member of his family was executed for being a little too pally with Charles II after the Battle of Dunbar and was forced to be executed by the Covenanters. An even closer relation tended to support Ian Smith. Therefore, one cannot exactly say that the Montrose family has been the loyalest of subjects to the Crown during all those years. However, it would be impossible not to welcome such a good speaker.

Cromwell imposed the first union of England with Scotland. That union prospered. In 1660 it was abolished with the Restoration. In 1686 the Scots wanted a union but the English would not have it. In 1689 William III managed to reach agreement with the Covenanters and banished the prospect of the episcopalianism of Bishops in Scotland and therefore the Church problem went away. Again, a few years later, the Scots wanted a union with England. But they did not get it because the English said they were too poor. The reason they asked for it was that the Scottish Parliament refused to vote supply to William III saying that he was not doing what it wanted him to do. William III said, "I couldn't care a fig about the Scottish Parliament because it gets lots of money from the English Parliament". Therefore, he paid no attention to the Scottish Parliament.

Finally, in 1707 the Act of Union was passed, a magic Act of Union. It produced a grandeur in Scotland. It made two and two make five. There was the Edinburgh Enlightenment, Hume, Locke, Adam Smith, Carlisle and even Macaulay. We know how Macaulay was such fun, because when he was aged five his aunt said to him, "Young Thomas Babington, how is your toothache?", to which he said, "Madam, the agony is somewhat abated." Why someone did not kick his little bottom after that, I do not know! However, as I am sure your Lordships know, he went on to create the Indian penal code which has stayed with us to this day.

Those people from Scotland were great intellects and they thrived in the Union. The pathetic thing about the people who are proposing devolution today is that they are inward looking and are complaining, "We Scots do this and we Scots do that." There does not seem to be a grandeur of vision which previously existed in Scotland.

There is reason to complain about the overcentralisation of British government. That is true without any shadow of a doubt. Before the abolition of the business rate—and here I totally disagree with my noble friend Lord Nickson—the local authorities produced between 50 per cent. and 65 per cent. of their own revenue. In Scotland it is less than that. The local authorities are rigidly controlled in everything they do and in any money they can raise. On top of that, they are capped. Of course, local people feel aggrieved about that. I do not deny that the blame is to be laid solely at the door of Conservative governments. The previous Conservative government were the most centralising government there has been. I submit that that caused the argument and plea for devolution.

If one is going to devolve one should do it properly and allow the Scots to raise any tax they like. Then they will say, "Yes, we are responsible for corporation tax, local business rates and the rates of VAT. That is up to us." One then reduces the block grant to a minimum in order to cover defence and foreign affairs and there can be no friction between England and Scotland.

Let us consider the fact that England represents 85 per cent. of the Union. As regards the 3p variation either side of the income tax norm, let us assume that a Scottish parliament wants to put up the rate of income tax by 3p. It will say that it is doing so because of those mean so-and-sos at Westminster. It will say, "They will not give us enough of our Scottish money and we need to spend more." That is in spite of the fact that spending on the Scottish National Health Service is 12.5 per cent. higher per head than it is in England. A complaint will follow as night follows day.

In the light of the extra 12.5 per cent. that is spent on the Scottish National Health Service, let us assume that the Scots say, "Right, we are going to reduce income tax by 3p in the pound." In that event the English will get cross and say, "Why should we go on paying more money to the Scots who then can live off us even more?" If that is not a recipe for a disaster I do not know what is. The devolution is half baked. Either you do it properly and give everything away or you go down to local authority level and keep the Union. The Union has made two and two make five, and that is what has been so magic about it.

The idea that in a devolved Scotland the English will accept a Member of Parliament for Edinburgh saying, "No, you can't have a Salisbury bypass", while he can say nothing about what happens on the A.9 between Lockerbie and the Border is crazy. The English will get cross and that will ruin the Union.

Do we really believe that the English or the Union will accept seven out of 21 Cabinet Ministers from Scottish constituencies? Do we believe that the English will accept in our Cabinet Scottish Members of Parliament when England represents 85 per cent. of the Union? Of course they will not. This is the one way to ensure that the Scots will not have Ramsay MacDonald or Alec Home and the Welsh will not have Lloyd George.

I accept that Sir Robert Peel sat for Trim when he was Home Secretary. That was only because it was in the Protestant interest. The moment Irish Members of Parliament failed to be part of the British Parliament and acted only as an Irish lobby they were marginalised with all the terrible consequences that occurred. As night follows day, that is what will happen to a devolved Parliament. It happened to the Ulster Parliament; Stormont.

Finally, I have checked with someone cleverer than I that devolution of criminal justice to Scotland will allow the Scots to re-impose the death penalty. However, because of the politically correct feminist lobby, they will not be allowed to touch abortion. I find that sad if not amusing.

The present administration are in the process of turning this country's constitution upside down. It is producing one form of government for Scotland, one form of government for Wales and one form of government for Northern Ireland. All will be different. Suddenly, England will be piled higgledy-piggledy in the middle. Then, for fun, the Government will have an elected mayor of London who will be different from the Lord Mayor of Chester, or wherever. That cannot be a sensible approach to constitutional affairs.

The Government also say, "We do not like the idea of quangos in Wales or Scotland. However, we love the idea of Members of these Benches sitting on quangos. We want to appoint everybody here". If that is not a quango, I do not know what a quango is.

The Government are in danger of turning the United Kingdom into a hotch-potch of a Holy Roman Empire, without the assistance of Richelieu, Joseph II and the Papacy, all of whom made Germany ungovernable. They are doing it for themselves without any outside help whatever.

8.10 p.m.

Lord Taylor of Gryfe

My Lords, I have always been agnostic on the subject of devolution. I campaigned against it on the last occasion and I have never felt that it was the first priority of a Labour Government in their first year of office to effect this legislation because it affects only 10 per cent. of the population of the United Kingdom and a whole host of important legislative measures are being held up until we get this through.

But having said that, I must admire the commitment of the Prime Minister and the present administration, who promised that there would be Scottish and Welsh devolution Bills in the first year of office. If there is one thing that this Government have done, they have fulfilled their promises. That is refreshing in British politics.

The White Paper addresses a problem which is really an international problem. Someone said in the Economist this week that the nation state has become too small for big problems and too big for small problems. That is the issue at which we are looking. We have a highly centralised nation state. Now we must adjust the constitution to make sure that there is a greater decentralisation and a more effective democracy.

The White Paper addresses that problem. As regards the House of Lords, I have always been impressed by the persuasive speeches of the noble Lord, Lord Mackay of Ardbrecknish. But he has really lost the battle. We shall have a referendum and the "Yes" vote will carry. Anyone who knows Scottish politics will accept that. The Labour Party, the Lib Dems and the Scottish Nationalists all support the "Yes" vote. I attended the General Assembly of the Church of Scotland this year and the Church and Nation Committee recommended to the assembly without dissent that there should be a "Yes, yes" vote. I do not know what is the theological justification for that decision but, nevertheless, it expresses a Scottish view. I notice that the Scottish convention, of which my noble friend Lady Ramsay is vice-chairman and which worked hard on this subject, is presided over by an Anglican priest. Therefore, we have the Church of Scotland, an Anglican priest, the Lib Dems and the Scot Nats all in favour of a "Yes" vote, and that is what will happen.

It is the duty of the House of Lords to make sure that that constitutional revolution gives birth to a good, effective and sensible parliament. In the spirit which has been expressed from the Front Bench of consensus politics, I hope that my noble friend Lord Sewel and his colleagues will accept a good deal of the criticism and advice which have been offered in the course of today's debate.

The West Lothian question has not been solved. The mere fact that the noble Lord, Lord Sempill, and the noble Earl, Lord Mar and Kellie, are both to stand for the Scottish parliament is a good sign. I congratulate them both. But it is totally indefensible on the part of Scottish MPs to assume that they can carry on with 72 MPs. There may be a possible reduction (without commitment) to 57. But that will not take effect immediately and not before the next election. It will be subject to review by the Boundary Commission. It is the job of politicians to make political decisions; it is the job of the Boundary Commission to draw maps. Therefore, there should be a firm commitment on the part of Scottish MPs that they accept the logic of reducing the number of MPs in the House of Commons.

There has been a good debate on tax-raising powers. That must be clarified. Like the noble Lord, Lord Nickson, I have fought hard in this House and elsewhere for the equalisation of Scottish business rating because we have always been at a disadvantage in the rating system. Therefore, we must see to it that the tax-raising powers which are now to be given to the new Parliament will not in any way impede Scottish industrial development and investment.

There are one or two other issues which must be faced. In the enthusiasm of my friends who support devolution and in the excitement and emotion of this great change, I should warn them not to claim too much for a Scottish parliament. If one looks at the spending departments, as regards the spending department for health I notice that Sam Galbraith, the Scottish Health Minister, said the other day: A Scottish parliament would be a gateway to a healthier future". In one of the documents of the convention it said that we could have the greatest health service in Europe. Health service expansion and efficiency depend not only on good organisation but on money. I notice that the secretary of UNISON in Scotland welcomed that statement on the part of Sam Galbraith.

Those issues must be faced. Those in favour of a Scottish parliament should not claim too much. The Transport Secretary said the other day: The totality of the Scottish executive's powers will enable them to implement a fully integrated transport strategy". Again, that is a high spending department. Again the relationship between the present contractors and railways must be defined by the new Scottish assembly. A Scottish integrated transport system cannot be invented without an acceptance of the existing commitments and the role of the regulator.

As regards education, assuming that the Dearing proposals affecting university education are approved before the implementation of the Scottish parliament, will the Minister tell us just what are the implications for the Scottish parliament of the Dearing Committee and the expenditure involved in higher education'? Will the Scottish assembly be able to withdraw from Dearing or will it have to implement the proposals?

Those are important issues which must be faced in the areas of transport and health. I should like to comment on the fact that for some reason or other abortion is not to be devolved. I should have thought that abortion was part of the provision of a general health service. But apparently it is not to be. I wonder what will be the powers of the parliament in relation to euthanasia, now that we have solved the problem of abortion.

Those problems must be faced. Do not let us expect too much from this highly dramatic change. It is an important change about which there are divided views. One side believes that it is the end of the United Kingdom and the other side believes that it will strengthen it. I hope that the latter is true and that there will be a basis of consensus politics and not confrontational politics in the new assembly. I wish it well.

8.20 p.m.

Lord Rowallan

My Lords, this is probably the first time since I joined the House that my speech will have been so eagerly anticipated, as I am last speaker on the list before the concluding speeches.

The noble Lady, Lady Saltoun, said in this debate that we cannot stand still. I said that last night. In the constitutional reforms that we are making at present, there is no possibility of standing still. We have to go somewhere: we must move on, the reason being that, to a very great degree, the Scots people have felt for the past 18 years that they have been returning a Labour government, while Britain as a whole has been returning a Conservative one. As a true Scot, I have been delighted to see a Conservative government returned, the Scots people have not. That is the basic difference between the devolution of 1978–79 and devolution today and the likely outcome of the referendum vote. The Scottish people really want a change; they want more involvement in their own affairs.

However, the White Paper is frightening. It is not frightening in what it tells us, because it is very well written and easy to understand, but it is frightening in what it does not say. It mentions that Scottish representation in Westminster will be reviewed. By whom, by how much and when? It does not say. That is left to the imagination of someone else later on. It says that a suitable site for the parliament will be found. Again, by whom and when? Perhaps I may suggest that far more beneficial than the lovely millennium dome that we are to have in London would be a millennium parliament in Edinburgh. That would be a very good project for the millennium, and the present Government could feel that they had made an enormous contribution to the whole of Britain.

There is to be no upper house, as has already been mentioned by the noble Lord, Lord Kirkhill. It is very dangerous to allow any parliament to come into existence and not have a brake on its powers; indeed, that is something that should always be considered most carefully.

Moreover, we are told that it will be up to the House of Commons to consider its future arrangements for Scottish business. Again, we have another situation where something might or might not happen. We do not know. We are being asked to vote in a referendum and we do not know exactly what the House of Commons will say because it has not been spelt out for us.

We are told that it will cost £5 a head to run, plus £5 to set up a parliament building. Only £5 per head to fund 200 staff—129 Members of the Scottish parliament and the running of a parliament building? I do not think so. I believe that it will end up costing a good deal more. That is why the question of the tax-varying power becomes so important.

A very interesting point was raised by the noble Lord, Lord Monson, about the two categories of Member of Parliament in the Scottish parliament—the one who has his constituency to look after and the one who has nothing to look after but his own self-interest, or that of his party because he will have been elected by proportional representation. Can we really pay those people the same rate? Moreover, will we get the same calibre of person for both positions? It is an interesting conundrum about which I had not even thought until today's debate started.

We are also to create a "First Minister". What a ghastly title! It is a terrible name. Surely we could come up with something a little better. Indeed, it stinks somehow of a banana republic. It really is a dreadful idea. We are also to ruin completely the eminent position of the Secretary of State for Scotland, who has a very good place in the Cabinet. It strikes me that he will become a political eunuch, which is not a very good situation to be in. We are told that he will be in a position where he can promote communications between the Scottish parliament and the Scottish executive and between the UK Parliament and government. He will also be likely to meet with the Scottish executive. However, he cannot meet the Scottish parliament to discuss Scottish matters. He will be in a very difficult situation.

So much has already been said on the tax-raising powers that I shall make just one comment and leave the matter there. On the one hand, the White Paper says that it is inappropriate to vary taxes other than income tax as this would place an unreasonable burden on companies operating in Scotland. It also says that tax will be collected by the Inland Revenue, with PAYE costing employers £10 to £20 per employee for a small firm or £5 for a large firm. Again, businesses in Scotland will be used as unpaid tax collectors, as is already the case with VAT. However, they will now have to collect not only the new PAYE they will also have to pay for the privilege of establishing the new system.

The noble Lord, Lord Nickson, very succinctly suggested that perhaps it would not actually be collected through PAYE because—and I believe that he made a good point here—the unions and the employees will not settle for being paid 1p, 2p, or 3p less than their counterparts in England, in Ireland or in Wales. He is absolutely right; they will not. So who will end up paying for it? Of course, it will be the good old employer again. If we want to encourage employment in this country, as I am sure the Government do, is that the right way to go about it? They should seriously consider the matter.

Under the federal system, which I have promoted again and again in this House until I have almost become a bore on the subject, that would not happen; indeed, we would all have the same system. Everyone would be paying the same tax rate and everyone would be receiving the same. However, that is not so. We are getting this hotch-potch where Ireland has its little parliament, Scotland will have its parliament with tax-raising powers, which Ireland does not have, and Wales will just have an assembly. I dare, rather rudely, to call the latter a talking shop; indeed, Wales will have nothing else, while England will have nothing at all except for the mother Parliament in London. The situation can only lead to problems.

I am delighted that at long last the noble Earl, Lord Mar and Kellie, has finally realised that this is a liberal policy. Indeed, one member of the Liberal Party on those Benches has finally said, "federalism". I cannot understand why they have been so quiet about this. Is it because they are desperate to get to those other Benches, or what? There is something peculiar about the fact that they have kept so quiet on the subject. The federal system is the only way forward.

I am so frightened about the situation. The constitutional changes that we propose to make are so enormous that, if we are not very careful, we could end up with the complete breakup of the UK. I do not want that to happen; neither do the Government. However, it could happen because we cannot go back. Indeed, once we have given these powers to Scotland, we cannot say, "Whoops, terribly sorry, we made a mistake. We want to go on to something different". That just would not work.

Under this proposal the Scottish people and Scottish businesses will pay more than the rest of the country. Why is Scotland to have a parliament with tax-raising powers and Wales only an assembly? What is the difference? In his opening remarks, the noble Lord, Lord Sewel, told us that it was because of the diversity of cultural beliefs—hence two different assemblies. I very much respect the Minister but I am sorry to say that that is an absolute load of cobblers. Of course we have different ideas, but there is no reason why one should have a talking shop and the other a parliament with tax-raising powers. We are human beings all together. We are all members and, indeed, proud to be members of the British nation. Why are we putting Scottish people and Scottish businesses at such an unfair advantage? I do not understand it.

Finally, I turn to the relationship between the Scottish parliament and local councils. I believe that that could become very fraught as the parliament tries to cap excessive spending. We know that that has happened in the past in that far distant place—London—where such spending has tended to occur. However, the new parliamentarians will be in a very different position because if they increase taxes to pay for the extravagances of local authorities, the full electorate, especially in areas where the local authorities behave with due decorum, will be rather upset. On the other hand, if they do not raise taxes and they cap councils to stop such wanton extravagances, they will also get into trouble. My noble and learned friend Lord Fraser introduced an interesting point regarding the reserve functions and mentioned especially insolvency. Of course, Scots law is very different in that respect. It seems to be peculiar that that power is reserved.

I have two further points to make. The noble Baroness, Lady Ramsay, spoke at length about how keen she was on the Scottish parliament because of the women's rights that it will give. I say may the best person, of whatever sex, win. Why have we suddenly decided in this life that we must have equality for women, equality for colour and equality for religion to such an extent? Of course there must not be bias against anyone, but surely we should work towards establishing a free country where people can do what they want. I say may the best person win. All we are doing at the moment with this emphasis on equality is creating inequality because now the position has gone too far the other way. We have almost reached the opposite end of the spectrum.

The noble Baroness also said that with responsible government one does not have to increase powers to pay for vast local authority expenditure. I am sorry to say that Glasgow Council has just allocated a £225,000 budget to one councillor to produce pamphlets to promote gay rights and women's rights. I find it quite extraordinary that women's rights and gay rights should be allocated such a vast amount of money to enable posters to be put up to persuade us that being gay is perfectly acceptable. What is wrong with being heterosexual? Why does money have to be spent to promote these rather peculiar notions?

I say again that we must be careful about where we go from here. If we make a mistake we cannot alter it. I plead with your Lordships again to think carefully before we take these last steps. Federalism is the way forward. We cannot stand still but we must not go forward and then come back two steps which would cause even more chaos than there is at present.

8.31 p.m.

Lord Lyell

My Lords, I apologise to the House that because of the organisation of various duties of your Lordships' House I was unable to be in my place when I was due to speak earlier. Therefore I am afraid I have deprived my noble friend Lord Rowallan of the post that I always love to occupy, that of tail end Charlie. However, tonight I am happy to occupy that position again.

I speak tonight with a tinge of sadness—I shall concentrate my remarks on Chapter 7 of the White Paper—as three days ago your Lordships lost a good and noble friend, Lord Goold, who was the archetype of a Scottish accountant from Glasgow. He taught me a great deal. If there is one body of people in Scotland who have shaped and influenced my life more than any other it is the chartered accountants of Scotland. I pay tribute to them and to Lord Goold this evening.

I am delighted that the Minister is back in the Chamber. He may have one or two comments to make to the Celtic fringe. The noble Lord, Lord Sewel, points to his noble friend. I shall address one or two points to the Minister later in my remarks.

Chapter 7 of the White Paper concerns financial arrangements. Paragraph 7.1 is charming. It states, by means of a defined but limited power to vary income tax". I paid considerable attention to the opening remarks of the Minister. I congratulate him on saying "We shall be clear" only five times. That is quite a record. Whenever a Minister says that he will be perfectly clear, I know that we are about to get a re-run of "Yes, Minister". However, as I said, the Minister only used the expression five times. My noble friend Lord Mackay knows that I keep a fairly close score of such things. I am afraid that I was not able to award the Minister a half century tonight. I should be interested to know whether anyone can tell me who will define this power. Will it be the United Kingdom Parliament through the UK tax system, the Inland Revenue? Or will it be defined by the Scottish parliament? As regards limits, will those be applied by the United Kingdom through the Inland Revenue, or by the Scottish parliament?

Paragraph 7.2 concerns objectives. They are broad but that is fair enough. Paragraph 7.5 concerns the assigned budget. We have heard much about the Barnett formula. I hope only that that can be preserved. Enthusiasm has been expressed for devolution. I refer to events such as those witnessed on Thursday night at Edinburgh Castle. Either this is one of the greatest events that has ever occurred and therefore the accompanying tax powers of this institution will be widened, or there will be no major change in the tax arrangements, as I think the Minister would wish, in which case one has to ask how that will be squared with all the celebrations and dancing that have apparently been taking place in Edinburgh? In Kirriemuir, on Saturday, all was peaceful. One would not have known that anything unusual was happening. The people there were quite sober. I shall not regale your Lordships with what happened when the noble Lord, Lord Mackie, took a dive in the air and was incapacitated. It was rather cruel to mention that.

I refer to paragraph 7.11 and tax varying powers. Perhaps the. noble Lord, Lord Williams of Mostyn, can assist me. He will see that paragraph 7.12 states that income tax, is broadly based and easy to administer". The very next sentence states that, Income tax is relatively simple and easy to understand". I say "Ho, ho" to that. Of course, it is easy to collect. Can the Minister possibly explain to me in simple words—perhaps he will give me an alpha for clarity—why there are those two sentences in paragraph 7.12?

An organ of the Scottish press which will be known to all Angus Peers, The Courier, had as its headline on Friday, 25th July: Dewar's devolution tax bombshell". The newspaper referred to a controversial proposal which would cause a complete reprint of paragraph 7.13. On Saturday—surprise, surprise—there was half a page of script with the Secretary of State supposedly replying to that controversial proposal. The speech reflected virtually word for word what the noble Lord, Lord Sewel, has said. I should be grateful if the noble Lord, Lord Williams of Mostyn, could explain that to me because I think that our mutual friend, Mr. Neville Southall, in all his glory would not be able to.

The first sentence of paragraph 7.13 is as clear as a bell. I do not wish to saddle the noble Lord, Lord Williams, with the performance of the Scottish Constitutional Convention, let alone with the acrobatics that occurred in the summer of 1996. I had thought that the noble Lord, Lord Sewel, might reply to this debate. Noble Lords may have read the interview with the noble Lord in one of the Scottish broadsheets. No one could accuse him of acrobatics as regards the Scottish Constitutional Convention.

Paragraph 7.13 states that it is possible that the tax rate could be varied. It adds that the parliament's, ability to raise … £450m through the tax system will be preserved". I want to find out about the tax system because 3p. on the basic rate will amount, apparently, to £450 million. However, if that is narrowed, one will not raise £450 million. Where is that money to come from through the tax system? The Secretary of State did not answer that question. Haply, the noble Lord, Lord Sewel, will not answer it. I look to the noble Lord, Lord Williams of Mostyn, and to Mr. Neville Southall.

Paragraph 7.15 states: Savings and dividend income under current arrangements". What on earth does that mean? Do "current arrangements" refer to what we have now or to what may be proposed by the Scottish parliament? If the Government mean that savings and dividend income will not be liable to this tax, one does not need the words "under current arrangements". The following sentence is as clear as a bell; namely, that we do not want distortions. That is fine but I still do not understand the significance of the words "under current arrangements". I should be grateful for guidance on that now or in the future.

Paragraph 7.16 concerns residence. I am only a simple accountant but I understand that we are looking at differences of residence in Scotland and in England within one United Kingdom tax structure. I shall not go into the concept of taking a sleeper and deciding whether at midnight one is south of Carlisle or whether one is in Scotland. We can do so when we come to the Bill. I look forward to great fun. The noble Lord, Lord Williams, may think that "residence" is simple. I find it hard.

Paragraph 7.19 refers to additional costs for employers. My noble friend Lord Nickson pointed out that some of the mathematics are difficult. Paragraph 7.19 states: An employer with 5 Scottish resident employees, (most cases in practice) would typically face setting-up costs in the range 00— £100". Later it states that a larger company will spend only £5 per employee. However, in most cases £20 will be spent per employee setting up the system to satisfy the tax-raising power. That is a minimum figure. On top there will be many other aspects, including what the Inland Revenue will have to do. That is enough from me on the tax system. Others have dealt with local government expenditure and the rest.

I conclude by wondering whether the noble Lord, Lord Sempill, and the noble Earl, Lord Mar and Kellie, thought hard before declaring with enormous enthusiasm that they wish to stand for this putative Scottish parliament. I paid particular attention to, and took pleasure in listening to, the noble Baroness, Lady Ramsay of Cartvale. The noble Baroness used the phrase—it is beginning to trickle through to me, a simple man from Angus—gender balance. It goes down big in Glen Clova, Kirriemuir and, above all, at Station Park on Saturdays. It is very good and wonderful. But I look forward to my noble colleagues putting their names forward and being told, "Tough luck, lads. In this constituency it is women only. On the list it is women only." Do your Lordships really think that those two noble colleagues in your Lordships' House—first, there will be naughty, wicked guidance—will become a gender bender, a transvestite, or, far worse, really go the whole hog of a sex change in order to join the Scottish parliament? Not even I would consider it. I believe that we are on to a dangerous thing. Before those noble Lords leap with enthusiasm towards the Royal High School, they might ponder what gender balance involves.

I am sorry that when I sat in a slightly warmer place than now, I mildly barracked my noble neighbour Lord Mackie of Benshie, when he said that all good Scots should remain in Scotland, by asking what he was doing here. In all seriousness, my noble neighbour's contributions throughout his career in your Lordships' House prove that there is enormous merit in Kirriemuir and Angus, and in Scots coming to your Lordships' House. If my noble friend went through a sex change, or whatever, and stood for the Scottish parliament, your Lordships' House, Parliament and public life in this country would be much the poorer. I apologise, but I believe that these points should be made.

Perhaps the noble Lord, Lord Williams, or someone, will in due course help me regarding paragraph 7.13 and the doings of Mr. Neville Southall.

8.42 p.m.

Lord Thomas of Gresford

My Lords, I do not propose to follow the remarks of the noble Lord, Lord Lyell.

First, from these Benches, I congratulate the noble Duke, the Duke of Montrose, on his thoughtful and amusing speech. We hope that we hear a great deal more from him. The noble Earl, Lord Onslow, referred to his family's connection. The noble Duke will know that the McThomas clan of Glenshee came out with Montrose in 1650 and were scattered to the four winds at Dunbar. Whether a branch made it to North Wales is a matter of hot dispute with my wife whenever I put on my McThomas kilt which clashes with her tartan.

Your Lordships are familiar with the painting opposite the Bishop's Bar depicting the Marquess of Salisbury speaking. He was addressing this House on 8th September 1893. Liberals would argue that the defeat of the Government of Ireland Bill yet again paved the way for further unrest in Ireland, the Easter Rebellion of 1916 and ultimately the creation of the Irish Free State in 1922—certainly a break-up of the United Kingdom. What, as he leans on the Dispatch Box, was Lord Salisbury saying? In his peroration, he quoted Macaulay: The repeal of the Union we regard as fatal to the Empire and we will never consent to it … never, though another Bonaparte should pitch camp in sight of Dover Castle, never till all has been staked and lost, never till the four quarters of the world have been convulsed with the last struggle of the great English people for their place among the nations". Having quoted Macaulay, Lord Salisbury then concluded: I read that as the motto which I hope the Unionist Party will adopt … if you allow this atrocious, this mean, this treacherous revolution to pass, you will be untrue to the duty which has descended to you from your splendid ancestry, you will be untrue to your highest traditions, you will be untrue to the trust that has been bequeathed to you from the past, you will be untrue to the Empire of England". The Liberal Government were defeated by 419 votes to 41 on that occasion and the Tory Peers were greeted outside the House by crowds singing "Rule Britannia" and letting off fireworks. How times have changed. Today the crowds of young cosmopolitan people who sit in the Gallery or who crowd outside this House are more likely to be singing the Beethoven European anthem.

I suppose that most of us were in school somewhere around the halfway point between 1893 and today. Those who were educated in English schools imbibed imperial values with their school milk. In Wales, Empire Day was quietly forgotten. It is not surprising that noble Lords from Wales and Scotland who were educated in England cling to the concept not so much of conservatism as of unionism. Of the 20 noble Lords who have spoken today against this White Paper, it is interesting to note that, while all of them have contributed of course to their localities and to public life in many ways, in their formative years 11 of the 20 went to a well-known school not far from Windsor. That may be a remarkably good advertisement for Eton, but it does not say much when we are told what is happening in Wales or Scotland. It indicates that at a formative time in their lives they received that kind of education.

We know the Ulster Unionist cry of "No Surrender". Salisbury called it the "no nonsense policy" towards Ireland. He underestimated the Irish. In 1886, in addressing the National Union of the Conservative Party, he declared that the Hottentots, Indians, Greeks, Russians and Irish were unfitted for self-government. He declared that only the Teutonic races were so fitted. It might be thought that the Unionist credo is now just a little out of date, if not thoroughly discredited. But in 1997 the Conservative Party manifesto said that only a Conservative Government will stand up for the Union and oppose a Welsh assembly. A Welsh assembly will begin the process of unravelling the Union and could lead to the break-up of the United Kingdom.

In the debate today the noble Lord, Lord Rees, has declared himself to be a Welsh Unionist. The noble Lord, Lord Mackay, asked: what does the referendum do for the Union?

Many sensible and thinking Conservatives both in Wales and Scotland have rejected already the Unionist concept, notably in Wales, the noble Viscount, Lord St. Davids, and a former long-serving Minister of State, Sir Wyn Roberts.

There are still some antediluvian Labour Members of Parliament in another place who, having won their seats on the promise of a Welsh assembly, now argue against it. Your Lordships may think that the honourable thing is for them to resign and fight a by-election as independents. Those who were elected on that platform should realise that the prestige of their Government and the credibility of their Prime Minister rely upon the delivery of this first major piece of constitutional reform.

What is the emotional drive that elevates the United Kingdom above all else? The noble Lord, Lord Rees, referred to the invasion of the Tudors. In 1536 the formal extension to Welsh people of the rights and privileges of English people was a major reforming step from which Welsh people benefited. Wales, although it had been conquered by Edward I, was not looked upon as part of the realm of England. Its old constitution had been destroyed; the importation of arms was prohibited; offenders were dragged from Wales into England for trial in the English language; the Welsh were prevented from using fairs and markets; they were not even allowed to enter the walled cities and castles that had been planted among them in Wales. It did not make for good government. That was the context in which a Welsh-speaking Tudor king, Henry VIII, passed an Act for laws and justice to be administered in Wales in like form as in England.

The preamble to that Act stated: because that in that same Country, Principality and Dominion, divers Rights Usages Laws and Customs be far discrepant from the Laws and Customs of this Realm and also because that the People in the same Dominion have and do daily use a speech nothing like, ne consonant to the natural Mother Tongue used within this Realm, some rude and ignorant people have made a Distinction and Diversity between the King's subjects of this Realm and his Subjects of the said Dominion and Principality of Wales whereby great Discord Variance Debate Division Murmur and Sedition hath grown between his said Subjects". It sounds rather like the proceedings in this House from time to time. By that Act, Wales was annexed to England, and Welsh people had the right to enjoy the freedoms, liberties, rights, privileges and laws as other subjects of the King.

In a tribute to timely constitutional reform, Edmund Burke, referring to parallels between Wales and America, commented that, From that moment in Wales, as by a charm, the tumults subsided; obedience was restored; peace order and civilisation followed in the train of liberty—When the day-star of the English constitution had arisen in their hearts, all was harmony within and without". Would that that harmony had continued. But history moves on. Things change.

The noble Lord, Lord Rees, said that the White Paper was long on cliché but short on analysis. In the past 25 years, the contraction of the Welsh economy and the erosion of the Welsh language and the Welsh way of life have led to a call for new and sensible constitutional arrangements. There was first administrative devolution, followed by an attempt in 1978 to set up a Welsh assembly.

In the Second Reading debate in 1978, the Conservative spokesman, the noble Lord, Lord Cullen of Ashbourne, outlined to the House what was then the policy of the Conservative Opposition towards Wales. It was that the structure of administrative devolution should be enhanced by the extension of the role of the nominated Welsh council. The noble Lord said: We believe that by introducing an elected element into this Council from Local Government, we would create a much more independent and worthwhile forum for Welsh opinion". Of course, that never happened over 18 years. The Welsh council was abolished. The Secretary of State for Wales exercised the powers of a colonial governor.

The noble Lord, Lord Crickhowell, told the House today that the noble Baroness, Lady Thatcher, gave him complete discretion as to how he should spend the resources that were put his way. The number of quangos proliferated to the point where the appointed members exceeded the number of elected councillors—there were 1,400 members of quangos in Wales, as opposed to 1,273 elected councils. There were in later years, as was commented on, a disproportionate number of Conservative supporters among those quango appointees.

In no other part of the United Kingdom is such a high proportion of public expenditure authorised by non-elected bodies as in Wales. Two-hundred quangos control a budget of £2 billion, one-third of Welsh Office spending and equal to the amount spent by local authorities throughout the Principality.

That problem, that lack of democratic control over the way in which money was spent in Wales, was exacerbated by the appointment of English Members of Parliament as Secretaries of State for Wales—perhaps the latter two on their way to greater things. Since Conservative representation was reduced in 1992 to only six out of the 38 seats, the Select Committee and the Welsh Grand Committee were supplemented by English Members of Parliament whose knowledge of Wales was by definition limited. At the same time the number of Conservative councillors elected in Wales dwindled as the party in Wales was voted out of power.

That perceived lack of democratic control, the perception that the Conservative Party controlled Wales through quangos, was the reason that the Conservative Party was rejected in the recent election in Wales as a force in the House of Commons. If there should ever be a Conservative Government again, it is unthinkable that the same control through non-elected representatives could ever be re-introduced.

There is a remarkable consensus in Wales among all the political parties as to the way to proceed. There is little quarrelling. There is a grandeur of vision. The development of indigenous industry; the improvement of communications; the reform of agricultural policies; the development of a positive relationship between Wales and the institutions of the European Union; the development of the Welsh language and its culture; education and skills training; a responsive health service—there is much for the proposed assembly to consider.

My plea to the opponents of these proposals is to think why they oppose sensible devolution as proposed in the White Paper. I shall not go into the details. The noble Lord, Lord Elis-Thomas, outlined my view of the White Paper. They are modernising proposals. As the noble Baroness, Lady Ramsay, said, they create excitement. The noble Baroness, Lady Smith, talked of the tangible feeling of expectation in Wales, as in Scotland.

As the noble Lord, Lord Sewel, said in opening the debate, it is the withholding of power that causes fragmentation. That is the lesson to be learnt from that debate in 1893 which your Lordships can see portrayed outside the Bishop's Bar. I support this White Paper.

8.57 p.m.

Lord Lucas

My Lords, I am not sure that that was the most inspiring speech that I have heard this evening. That prize probably goes to the noble Lord, Lord Mackie of Benshie, for his soliloquy on the Potato Marketing Board. However, I must not allow myself to become adversarial. I am sure that the noble Lord, Lord Sewel, would get upset if I did so.

I therefore begin by thanking the noble Lord, Lord Williams of Mostyn, most warmly for his extensive and well-phrased letter which he took such trouble to get to me yesterday, answering points that I made when we debated the Statement on the White Paper.

The noble Lord, Lord Sewel, opened his remarks with a plea for inclusiveness and non-adversarial politics. If that is a course that the Government intend to pursue, there may be some changes that they should make in the way that they are proceeding. The noble Lord portrayed the two White Papers as part of a wider plan. But what wider plan? They are not letting us in on the secret. As several of my noble friends said, what if these two elements of the wider plan do not fit in with what is eventually proposed for England? What if the English do not want to fit in with this plan but would prefer something different? Why are we being presented with a bit of it? Why are this Government following the course of action that they criticised so much? As my noble friend Lord Hamilton of Dalzell said, they are "trying it on the dog" in terms of trying it out on Scotland to see whether it works there; then they will apply the proposals to England—

Lord Sewel

What about the poll tax?

Lord Lucas

It would also help if, when we reach the Committee stage, noble Lords opposite would give a little attention to trying to answer the questions that they are asked rather than trying to avoid them. That might be seen to be part of an inclusive, non-adversarial style of politics. I do not see how that phrase fits in with the reversing of our perfectly sensible and correct amendment on holding referendums on the same day. That is an out and out piece of political gerrymandering. That takes the biscuit. How they justify that in terms of their new style of politics is beyond belief.

But I shall offer them an opportunity to show how they believe in their new philosophy. Should the referendums succeed and should the following Bills come to the statute book, as is clear from much that has been said today, there is a great deal of detail to get right. There are also some very important principles to get right in the Bills that will come before us. We shall have a great deal of time—free time, I might almost say—in the first couple of months of our return after the Recess. Would not it be sensible to bring at least one of those Bills before this House first, allowing us a long and sensible time to give proper consideration to it, rather than asking us to rush through long nights in what will be, I hope, the hot summer of 1998?

Perhaps I ought to establish my credentials for speaking on these subjects. I share with the noble Earl, Lord Mar and Kellie, the distinction of having been attainted in 1715. I did not spot any other noble Lord who spoke having that badge of courage on them. Being on the losing side is a very honourable state and both of us are getting used to it. The first Lady Lucas also had the distinction of marrying into a family which had lived in Wales for 250 years. The Welsh were extremely glad to see the back of them, but that is another story.

Three things worry me about the White Paper for Wales, on which I shall concentrate: the lost voice of Wales; the effect on the county councils in Wales; and, as has been said by many noble Lords, the effect on the United Kingdom. Claims are made that the proposals will give Wales a better voice in Europe. But let us look at what is happening in terms of Members of the European Parliament coming from Wales.

They are now to be nominated by a list system, by parties, and are not to be the individual choice of the people of Wales. The systems which are offered for the Welsh to have an influence in the councils of Europe are to be at one remove. Now the Welsh people have a Minister who can go and speak on their behalf. In the future they are merely to be able to speak to people who will go and speak on their behalf.

The Secretary of State is reduced in office to a message boy. One of the few points on which I find myself in agreement with the Liberal Front Bench is that the Secretary of State will occupy a totally redundant post and cannot usefully perform any function because he will be seen to belong neither to the British Cabinet nor to the Welsh assembly. Neither side will trust him.

If the Welsh want to have a voice in Europe, surely they should follow their own distinguished example of the Welsh choir. If a group of people sing together, they can make an impression. If, at the end of the comprehensive reforms of the noble Lord. Lord Sewel, there are 12 different regions all singing different songs in solo and discord, one has nothing. It would be much better in terms of influencing Europe if we could find ways of working together and all find ways of promoting what the Welsh want, putting the power of Britain behind them rather than having Wales left singing on its own and left a weakling in a very large continent.

In government, the Secretary of State will become a figure of no influence in the British Government. My noble friend Lord Campbell of Croy outlined the difficulties and the noble Lord, Lord Prys-Davies, raised some very pertinent questions on that subject. In Parliament, what will become of the Welsh Grand Committee? There was no meeting on the Budget and no meeting on the White Paper. What is intended for that committee? The Liberal Democrat Party, in a non-adversarial act of singular inclusiveness, voted that there should be no Conservative representation on the Welsh Grand Committee. What is to become of MPs who will sit for Wales and Scotland? They will be unable to speak for their own native land and able to speak only on British matters or indeed English matters? What will be their status? How will they see themselves? Will they see themselves as the voice of Wales? No, because they cannot speak on Wales. Their influence will go. They will be seen by the English as aliens and enemies. The present system in which they have influence—indeed, in the case of Scotland an enormously disproportionate influence—will go. The voices of Wales and of Scotland in government and Parliament will be stilled.

Turning to county councils, what will be the relationship between the Welsh Assembly and county councils? It is quite clear that the Welsh assembly will not be a particularly powerful body. There is no significant power being devolved to it from Westminster. It will have to follow the Bills that we pass. It will have to create—I hope that the noble Lord, Lord Williams of Mostyn, will confirm this—secondary legislation in line with that required of it by the primary legislation that we pass. If that body wants to obtain power, the only place from which it can obtain it will be county councils. Indeed, if I read the White Paper aright, it will be given very considerable power of compulsion over those county councils. It will hold the finances; it will be able to twist their budgets in whatever way it feels necessary in order to get their compliance with whatever it wishes them to do; and it will be able to obtain finance in very considerable sums by restricting the amount of central grant which flows to them, making them raise the difference in council tax, or, if the system changes, from the business rate. On a very small scale, it is a parallel of what my noble friend Lord Nickson outlined so dramatically as lying in prospect for the Scots.

If the Welsh assembly is not to have that predatory role with local authorities, what is it to do? It will just be a talking shop, spending £100 million between now and its next election to no great function or benefit for the Welsh and depriving them of their voice in wider counsels, turning them inwards and leaving them nothing of what we have come to think of as a very great contribution by a small nation to our union.

Turning last to the question of the Union and to the instability which this proposal, coming on its own and not as part of the "greater package" of the noble Lord, Lord Sewel, will create for our Union. There is a worm in the apple that we are offered by the Government. The worm—if the noble Lord, Lord Elis-Thomas, will pardon me—is Plaid Cymru; and its wish for independence for Wales and for severance from the Union. If we are to resist that, if that is not to rot the apple that the Government put in front of us, we must make sure that what we are creating will be stable. We must realise how bruised the English will feel at the end of the process which will end with the creation of the Scottish parliament and the Welsh assembly. My noble friend Lord Onslow succinctly illustrated the state of tenderness in which he finds himself, and I am sure that that is something which will spread.

We must be sure that the assembly is not created in such a way that people are rewarded for being disputatious by creating disagreements between the Welsh and the English. There must be defined powers. It is not at all clear how powers will be divided between the assembly and Westminster. It is not even clear how and in what form the Welsh will be allowed to create secondary legislation. It is not clear, though it is clearer, in the Scots White Paper how that will be done. There is a long list of reserve powers. When one runs through the first half, they seem logical enough. But when one reaches the second half there is an extraordinary mish-mash of bits and pieces over which there will surely be endless arguments as to whether they should be reserved. How can one rank the defence of the nation on one side, which clearly ought to be reserved, and things like regulation of estate agents and abortion on the other? It is not a clear definition with which we have been provided. It is something that will be a continuous source of argument.

We will need strong systems of dispute resolution. The noble Lord, Lord Prys-Davies, and my noble and learned friend Lord Fraser of Carmyllie were particularly trenchant on that. It is not clear from the White Paper how they will work. It is not at all clear whether the Government have any conception of how they could work. If disputes arise, they must be defused and dealt with fairly and quickly.

We must have systems where the voices of the assembly and the parliament can be heard directly by those they wish to hear them. It is no good their having to use the Secretary of State or other Ministers as postboys for their opinions. They will not believe that their opinions are being delivered correctly and they will be in constant dispute with the British Parliament as to what has been achieved and why what they wanted has not been achieved. We need mechanisms where their voice can be heard directly where it counts in government and indeed in Europe. They have not even been sketched out by the Government. For instance, it would be interesting to know whether it is part of the Government's proposals for this House that, in its revised and eventual reformed state, it will include representatives of the assembly and of the parliament, and that that is the way in which the Government intend the voices of those bodies to be heard in Westminster. It is part of inclusiveness that the Government should tell us those things and not keep them secret to themselves.

The White Paper leaves far too many questions unanswered and far too many doubts in reasonable hearts as to what the assembly is for and what the Welsh face if they agree to it. I hope that they will choose to reject it on the basis of the sad consequences for the Union and for Wales if this rather sketchy proposal goes wrong in a way that seems likely.

9.11 p.m.

The Parliamentary Under-Secretary of State Home Office (Lord Williams of Mostyn)

My Lords, I am grateful for the speeches and contributions made by all your Lordships this evening. Perhaps I may mention three: namely, the notable maiden speech of the noble Duke, the Duke of Montrose; the particular contribution made by the noble and learned Lord, Lord Rodger of Earlsferry, since he was last with us, having been translated, it is a pleasure to see him again with his informed contribution; and, finally, for reasons which are too obvious to need underscoring, the noble Baroness, Lady Smith of Gilmorehill. In a real sense this is a culmination of a legacy of which we all know the progenitor. The only "Mac" who has not spoken this evening seems to me to be Machiavelli, though I did detect a second cousin twice removed in the questioning of the noble Lord, Lord Lyell.

These are extremely important matters. I am obliged to the noble Lord, Lord Lucas, for the way in which he approaches this matter. I promised to write to him and it is nice that we are able to remain on decent, courteous terms, even though we hold different views. I am most grateful to him. There has been an enormous number of speeches this evening. There is something about Welsh and Scottish devolution. There were 37 speeches: two were made by myself and my noble friend Lord Sewel, which makes a total of 35 other contributions. I cannot conceivably, in the next 19 minutes, mention every noble Lord who spoke or deal with every point that was put.

The noble and learned Lord, Lord Mackay of Drumadoon, raised a specific question about the fact that there ought to be continuing debate and discussion through the summer. I welcome that. If on any occasion he wishes to write to me about a specific matter—or to my noble friend Lord Sewel if it seems more appropriate in the Scottish context—we are more than happy to provide him with information of the sort that he requires. I detected a similar approach in the speech of the noble and learned Lord, Lord Fraser of Carmyllie. They are important questions. There is no point in treating them as a political football and I hope to avoid that. I shall deal with as many points this evening as I can but I am not being discourteous if I cannot deal with all of them.

Our approach is this—and I hope I am responding to the tone of your Lordships' speeches. First, these White Papers are a staging point on a longer journey. Secondly, that journey is undertaken to honour our specific, clear manifesto commitments. Thirdly, we believe—I know that many of your Lordships disagree—that the new and distinct methods of governing Scotland and Wales respectively will be a distinct and clear improvement on present arrangements. Most important and fundamentally, that improvement and the embedding of these new arrangements in our constitutional structure will strengthen and maintain the Union.

The noble Lord, Lord Mackay of Ardbrecknish, asked the question quite plainly, as he always does: what is in it for the Union? My answer is this—diversity, development, accommodation for changed times and changed requirements and therefore, within a United Kingdom which is diverse, we offer new solutions for new times. That is what is in it for the Union. I can say two things positively and affirmatively. If this were to be, in my mind at least, the beginning of the fragmentation of a union which remains great, I would have no part in it. I say specifically in answer to the noble and learned Lords who have legal experience, not least the noble and learned Lord, Lord Rodger, that if this had anything to do with an attack on judicial independence in Scotland, neither the Lord Advocate nor I would have anything to do with the proposals. I hope your Lordships will accept those assurances. They are meant to be absolute.

There are areas in which honourable men may honourably disagree. I impugn the motives of none, nor do I question the sincerity of any who have spoken. What I do say is that we have diametrically opposed views about the future constitutional arrangements for England, Scotland and Wales. I hope that we shall be open to argument. We shall not always agree. I hope that we shall be willing to consider constructive suggestions and look kindly on real improvements to a scheme which I recognise is a developing scheme. But in the end it is plain: we propose to hold firm and stand fast on the general thrust of our proposals.

The noble Lord, Lord Lucas, took up the phrase, which had been offered to him earlier, that this was like trying it on the dog first. It is not. I know that it was meant lightly but I believe that people in Scotland and people I know in Wales do not regard this as an experiment to see whether the dog would be sick. Yet the dog has been sick these many past years. It has been sick of overcentralisation. I agree with the noble Earl, Lord Onslow, on that point. It has been sick of having a voice which has not been heard. And it has been sick of devolved administrative matters which have not been the subject of devolved democratic control. That is important.

The point that my noble friend Lord Sewel made—that this is part of a new constitutional arrangement—is plain. The Government have said quite clearly that we are looking for a new elected mayor and a strategic authority in London. We are looking for new rights for our citizens by the incorporation of the European Convention. We are looking for legislation on freedom of information and a referendum on the voting system for electing Members of another place. That is part only of the pattern to which my noble friend Lord Sewel referred.

I think it is fair to say that few of the criticisms that we have heard today are new. That is inevitable because we have thrashed over these affairs over many hours. Some may not want power decentralised to democratically elected bodies. Some do not want government to be more open as it is convenient for governments to be secretive and to keep their own counsel. Some do not want the reform of Parliament or indeed of your Lordships' House. Some do not want individual rights to be increased. On those matters we must be content that we shall never agree.

The noble Lord, Lord Crickhowell, referred to Lady Crickhowell saying that 60 members was too great a number for a country the size of Wales. As he mentioned that, there floated through my mind the question to which I offer my own answer. How many members are there of the House of Lords? Is it 1,300 or 1,400? I cannot quite remember. If one is to look at reform, one needs to look at it over the whole spectrum.

The present Leader of Her Majesty's Opposition announced last weekend that a future Conservative government, if there were to be one, would not abolish a Welsh assembly or a Scottish parliament. I am not putting this as a partisan point because I welcome his change of view.

Noble Lords

No!

Lord Williams of Mostyn

My Lords, if it was not a change of view, I must have misread regularly over the past nine months. But if it was not a change of view, in this spirit of conciliatory inclusiveness which the noble Lord, Lord Mackay, and I share, I welcome the reaffirmation of the Conservative Party's stance. I do believe that it will be a genuine benefit to the assembly in Wales and to the parliament in Scotland if the Conservative Party—if the referendums go our way—fully involves itself in the elections for the parliament and the assembly and is successful in having candidates elected.

We want variety. We do not wish to have the monolithic control of any single party, which is bad for democracy in principle and it has been proved bad in theory in large parts of our country, whatever controlling group has been in charge perhaps in a particular local government area, although I would not of course wish to pick Westminster as against South Wales. I do not dispute that it was true in South Wales. I spent about seven years of my life prosecuting corrupt local councillors who were originally Labour and when they were defeated by the ratepayers, next year it was the ratepayers as well. It is not a good idea to have too great a control in a single party. It is bad. I do not need to dissent from that because I shall carry on saying it until my dying day, however tedious it may be.

In our view, the establishment of the assembly and the parliament will not break up the United Kingdom. We believe that it will strengthen it because it will give moral validity and political purpose to the different workings of the Union. After all, defence, foreign affairs, national security, immigration controls, macro-economic policy and social security are all to be dealt with on the United Kingdom level. In negotiations between member states, as my noble friend Lord Sewel said, there is to be a single voice for the whole of the United Kingdom.

It is true that if one wants to be Lord Faintheart of Doom, of course one can find difficulties and one can say, as people did, that civilisation as we knew it would come to an end if women got the vote. Some people still complain about the passage of the great Reform Act of 1832. In any constitutional arrangements there are bound to be some anomalies. I believe that our task and duty are to reduce the anomalies and work towards a common purpose if, and only if, the people of Scotland have said that they wish for their own parliament and the people of Wales have said that they want their assembly.

Let us look for a second or two at the experience in Europe. Regional governments of various sorts have not led to the break-up of states in Europe; quite the reverse.

A number of your Lordships said that the cost of the establishment and the running of the assembly and the parliament is too high a price to pay. I profoundly disagree. I refuse to accept that democracy is to be acceptable only if it is free. It will cost money to run an elected assembly of 60 salaried members—more than for three Welsh Office Ministers—and more to run a Scottish parliament of 129 members than to pay the salaries, modest though they are, of six Scottish Office Ministers. I hear the noble Lord, Lord Sewel, saying "Very true" behind me. I shall not intrude into private grief about what opposition spokesmen are paid, since I bore it long enough myself.

These sums are in the round quite significant: in the sum, they are not. It will be about £6 per head in the Welsh assembly and it will be spending £2,400 per head. The question is this to the people of Scotland: do you wish to pay this price? The question will be the same to the people of Wales. If they do, then they will know, but if they do not, we shall know the verdict of the people and ultimately that of the history of our time.

We believe that Scottish MPs have a full part to play in the Westminster parliament. A number of your Lordships have pointed out how many Scots there are in the Cabinet at the moment. That is true because Scotland is a talented as well as a disputatious nation, not dissimilar in many ways to the Welsh nation. But I dimly remember the names of Lang, Rifkind and Forsyth. Were they not Scottish Members for Scottish seats in the Cabinet? I would not wish to see any form of disqualificatory writ run against people simply because they have the infinite benefit of coming from Scotland. Indeed, I cast my eye across to my noble colleagues opposite. Quite a few of them seem to be from Scotland one way or another, do they not? Much of the higher judiciary in this country is Scottish originally. The rest seem to be South African now, but many of the judiciary are Scottish. Those were amusing points, but perhaps they were not at the significant heart of this constitutional disputation.

The Secretaries of State are not simply to be postboys. Their functions will diminish and I pay every credit to Donald Dewar and Ron Davies for that. I believe that they are unique as politicians in Cabinet posts who willingly wish to see their personal powers reduce. Why? The noble Lord, Lord Elis-Thomas, is right. It is because Ron Davies in particular has come to a view, as has Donald Dewar, who has laboured in the vineyard for so long, that personal political advantage for the moment is not a determinant of all political action. All credit to them, even if one disagrees with their conclusions.

The Secretaries of State will have important functions to perform in our constitution. We are not proposing to give the Secretary of State for Scotland general powers of override on a day-to-day basis. We believe that that would conflict with our approach generally to the parliament in Edinburgh, which will be a mature parliament, as noble Lords have said.

The Secretary of State for Wales will not be travelling up and down on the InterCity from Cardiff to Paddington and back. He will be Wales's voice in Government. The Westminster Parliament will continue to pass primary legislation for Wales. It is right that the Secretary of State should be able to influence that. It is right that he should be able to argue financial considerations in respect of Wales. It is right that the Secretary of State for Scotland should be able to do the same in respect of Scotland. I see no difficulties here, except the painful realisation that present arrangements may not be set in stone for all time.

The Secretaries of State will also be contributing to policy-making at the UK level on reserved matters, such as defence, macro-economic policy, social security and national security. All of those matters are to be handled in common for the whole of the United Kingdom. It is right, suitable, proper and appropriate that the two Secretaries of State should take part in that.

Given good will, a reflective imagination and the triumph of nerve that are required for all these things, I do not believe that there is any reason why the Scottish executive, the Welsh assembly and the United Kingdom Government cannot work together. If one believes that nothing can be done, so be it. However, because we believe in our fellow citizens and in the desire for prudent evolutionary change, we believe that these arrangements can work well.

I agree entirely that if there are second-rate members, we shall have a second-rate assembly. That is why we want to give proper power in Scotland. That power will be greater than that which is to be given to Wales, but we are still giving a significant raft of powers to Wales. We are giving the power to spend, to examine, to check and to account for £7 billion of public money in a country which has—I say this in parenthesis—been successful economically. I reiterate the tribute that I genuinely pay to the noble Lord, Lord Crickhowell. But economic advance is not the sole criterion on which we determine political success. It is extremely important, particularly if otherwise someone would have been unemployed or in an unskilled job, but it is not the only determinant. It is not the only benchmark. I believe that the significant benchmarks are found in questions such as: do we know what our political representatives are doing? Are they our masters or our servants? Can we question them? Can we make them accountable for what is, after all, our power and our money?

I have already written to the noble Lord, Lord Lucas. I realise that the time available to me is limited and that I should be attempting to keep to a speech of 20 minutes according to the indication given earlier by the Chief Whip—

Lord Mackay of Ardbrecknish

My Lords, I am grateful to the noble Lord for giving way, but I am not sure whether he is going to deal with any of the questions that a number of us have asked, so I wonder whether he will try to answer my question on paragraph 7.13 of the Scottish White Paper which related to the £450 million plus or minus.

Lord Williams of Mostyn

My Lords, I was about to come to that point. It seems to me that I should try to deal with the more important questions, and I readily recognise that this is one of them. Before I begin, however, I want to put the record straight about the headline in today's Guardian which was repeated rather less boldly in the Western Mail. I regard it as a monstrous intrusion into Royal Family matters which has nothing properly to do with this political debate. I should put on record the press statement released by the Palace this morning at 11.55: The Guardian story is nonsense. The wording of the White Paper on this issue"— the Welsh White Paper— means precisely what it says and The Queen was kept informed throughout its preparation. Far from The Queen not wanting to open the Welsh Assembly, it would he very much part of her constitutional role to do so". I regard that story as a distinctly low blow and look for a prompt apology.

The noble Lord, Lord Mackay of Ardbrecknish, asked me a distinct question about taxation, to which I now turn. I believe that this matter is related to the question about domestic and non-domestic taxation. If it is convenient I shall deal with them together. The Scottish parliament will have full responsibility for the form and level of local domestic and non-domestic taxation, including non-domestic rates. The noble Lord also raised this question and I deal also with that. There will be practical constraints—for instance, the cost of collection—on the scope for new taxes but the Scottish parliament will be able to come to its own conclusions.

The Earl of Lauderdale

My Lords, can the noble Lord deal with possible disagreements between London and Scotland on revenues from the Continental Shelf?

Lord Williams of Mostyn

My Lords, no. That is a matter for the United Kingdom, not Scotland.

I am just looking for my note on the question asked by the noble Lord, Lord Mackay of Ardbrecknish. Things being as they are, I marked it carefully and then put it on one side. The note says "Very important. Must be replied to". I have just written that on the note. The current estimate of the Inland Revenue is that an increase of 3p. in the basic rate of income tax for Scotland will raise £450 million. That has already been said several times. If there were future changes to the UK income tax structure which eroded the Scottish parliament's ability to vary tax by this amount, steps would be taken to preserve the £450 million. Those steps would impact only on income tax, not on any other form of tax, and would be the object of and subject to discussion between the Scottish parliament and the United Kingdom Parliament.

A number of other questions were put. The noble Lord, Lord Monson, asked whether members would he paid differently if they were additional or first-past-the-post. The answer is that they would not.

The noble Lord, Lord Gray, asked about independents. They can stand as first-past-the-post candidates in the usual way, as they can here. As to his specific point relating to the additional member list, there is no reason why independents cannot form their own list if they so wish. That is a matter for them and for their own internal political arrangements. There is no reason why people should not be flexible if they want to make things work; if they do not they can do nothing at all, sit at home on their hands and get nowhere at all.

The subject of abortion was raised. We have proposed to reserve abortion and certain other health issues that are presently dealt with in a common UK framework.

In particular, a number of noble Lords raised a question as to the role of the Lord Advocate. I shall not specify them because my time is running out. I join with the approach that has been put. We want to give very full consideration to that matter. I agree that it is not simply a political question. It is, as I think the noble and learned Lord, Lord Fraser, said, much more subtle than that. It is bound into the constitutional and judicial fabric of Scotland, not just the historical fabric. I join them all in hoping that we can debate these matters fully, and, if it is more appropriate, consult fully on those matters. That may be more fruitful as a way ahead in the weeks and months to come.

The noble and learned Lord, Lord Mackay of Drumadoon, asked a related question about the Judicial Committee. It will not always necessarily be possible for one or both of the Scottish Law Lords to sit on the committee. One hopes that that would be the practical experience. It will not be provided for in the statute because we believe such an arrangement is best left to the good judgment of the senior presiding judge at the time.

There was a question about how much MSPs would be paid. I did not answer that question before two noble Lords cheerfully offered themselves to serve in that capacity. Paragraph 9.3 of the White Paper says that the Senior Salaries Review Body will produce recommendations on that. That is probably best done in that arm's length way.

The number of Ministers will be for the first Minister to decide, subject to parliament voting the necessary funds. Minister's salaries will be determined by the Scottish parliament, as was proposed in the 1978 Act.

There was a question about parliamentary privilege, again, I believe, from the noble Lord, Lord Monson. It is intended that parliamentary privilege in the usual way—that is, in the defamation context—would be available to members of the Scottish parliament and the Welsh assembly.

The noble Lord, Lord Campbell of Croy, asked about telephone tapping orders. They will be reserved matters because they fall within the ambit of national security. I imagine that your Lordships would think that to be a prudent course.

Lord Campbell of Croy

My Lords, I am most grateful to the Minister for giving way. Will he give an answer to my question about capital punishment: whether that could be dealt with separately in Scotland?

Lord Williams of Mostyn

My Lords, that was the question I was hoping to side step. On my present reading of matters, subject, of course, as lawyers always say, to correction, even when they are not paid for their advice, the answer is yes. If I am mistaken I shall write to the noble Lord to correct that.

The noble Lord, Lord Sempill, asked when the independent committee on Scottish local government would be formed. We intend to consult shortly on the remit of the independent committee which will study ways of building effective relationships. There was a question about the difference in value between the Scottish White Paper and the Welsh White Paper. I think that I had better leave that one alone. You get two for the price of one in Wales, of course. I am afraid that I did rather tease the noble Lord, Lord Lucas, by offering him the Welsh version and not owning up to him that the English version was at the back of the Welsh version. I think that I had better leave that alone.

The noble Lord, Lord Campbell of Croy, asked a serious question about the position of civil servants. I am being urged by my Chief Whip to sit down. Being obedient, I shall, and this may be the last question with which I can deal. The proposal is to maintain a unified home Civil Service. Opportunities for interchange between government departments will continue. Terms and conditions will be protected. The expectation is that staff will transfer to the Scottish executive since that is where the opportunities in their particular present areas of expertise will remain. I have done my best in the limited time—

Baroness Carnegy of Lour

My Lords, I did give notice of my question.

Lord Williams of Mostyn

My Lords, I can answer immediately with an apology. The noble Baroness, as always, was courteous enough to ask a specific question which related to the Dearing proposals. I meant to deal with it, because she asked me or my colleague and noble friend Lord Sewel to do so. The question was, and I think that I paraphrase fairly: assuming that the Westminster Government came to the conclusion that the contribution per student should be £1,000 a head, could the Scottish parliament come to a different conclusion; that it should be £500 a head? The answer is yes. The shortfall would have to be made up by Scottish parliamentary funds. I apologise once more, especially as the noble Baroness was good enough to be so courteous as to forewarn me.

Baroness Carnegy of Lour

My Lords, I know that we all want to go home, but I asked who would make up the funds for the English universities. The Scottish universities have great anxiety about that. If the Minister could clarify that now or by letter I should be grateful.

Lord Williams of Mostyn

My Lords, I shall do that, and I am obliged.

On Question, Motion agreed to.