POWER TO CHANGE TITLES

HL Deb 28 October 1998 vol 593 cc2037-72

(" . The Parliament may change any of the titles listed below to titles it considers more appropriate—

1. (a) Presiding Officer;
2. (b) Deputy Presiding Officer;
3. (c) Clerk of the Parliament;
4. (d) First Minister;
5. (e) Scottish Executive;
6. (f) Scottish Minister;
7. (g) junior Scottish Minister.").

The noble Lord said: My Lords, in view of the paucity of the Government's previous answers, I am sorely tempted. However, given the lateness of the hour I shall not move the amendment.

[Amendment No. 143 not moved.]

Clause 47 [The Civil Service]:

Lord Sewel moved Amendment No. 144:

Page 21, line 29, after ("the") insert ("Scottish Consolidated").

The noble Lord said: My Lords, this is a technical amendment to make it clear that payments made by Scottish Ministers to the Minister for the Civil Service under Clause 47(7) are to be charged on the Scottish Consolidated Fund. These payments are made in respect of the provision of pensions, allowances and gratuities for staff of the Scottish administration under the Principal Civil Service Pension Scheme. These schemes will continue to be administered by the Minister for the Civil Service.

As drafted, Clause 47(8) refers to the payments being charged on "the Fund", and it should be clear from a reference in subsection (5) that the relevant fund is indeed the Scottish Consolidated Fund as opposed to the Consolidated Fund—the amendment simply ensures that there can be no doubt. I beg to move.

On Question, amendment agreed to.

Clause 48 [Exercise of Functions]:

Lord Sewel moved Amendment No. 144A:

Page 22, line 11, leave out ("including this Act").

The noble Lord said: My Lords, this is a group of minor and technical amendments which clarify the meaning of "enactment" as used in the Scotland Bill. Until now we have proceeded on the basis of a general rule that references to the term "enactment" in the Bill would not include the Scotland Act itself or subordinate legislation made under it, and a number of amendments were made in Committee on the basis of that approach. We have now reconsidered the position and concluded that it would be simpler and more economical of drafting for the rule to be that references to "enactment" will include the Scotland Act and subordinate legislation under it, with exceptions in cases where this would be inappropriate. These amendments are to take account of that revised approach. I beg to move.

On Question, amendment agreed to.

Clause 49 [General transfer of functions]:

Baroness Ramsay of Cartvale moved Amendment No. 144B:

Page 22, line 18, leave out ("including") and insert— ("() other").

The noble Baroness said: My Lords, this amendment is a technical change to the wording of Clause 49 to ensure that any functions conferred on a Minister of the Crown by a prerogative instrument such as a Royal Charter or warrant are transferred to the Scottish Ministers where they meet the other criteria for transfer. As I said, this is a technical change; however, I shall be happy to expand on my remarks if noble Lords wish to have any further information. I beg to move.

On Question, amendment agreed to.

Baroness Ramsay of Cartvale moved Amendment No. 144C:

Page 22, line 25, leave out ("and").

The noble Baroness said: My Lords, Amendments Nos. 144C and 144D are minor and technical amendments. Clause 49 transfers to the Scottish ministers certain statutory functions which are conferred by "pre-commencement" enactments. Government Amendment No. 144D simply adds to the definition of a pre-commencement enactment in Clause 49(3) so that it includes subordinate legislation made under Clause 99 to the extent that that states that it is to be treated as a pre-commencement enactment. This will ensure that ministerial functions which are split using the Clause 99 power will transfer to the Scottish ministers where they are exercisable within devolved competence.

Amendment No. 144C is a minor drafting amendment which is consequential upon Amendment No. 144D. I commend them to the House.

On Question, amendment agreed to.

Baroness Ramsay of Cartvale moved Amendment No. 144D:

Page 22, line 27, at end insert— ("() subordinate legislation under section 99, to the extent that the legislation states that it is to be treated as a pre-commencement enactment").

On Question, amendment agreed to.

Clause 50 [Devolved competence]:

Lord Sewel moved Amendment No. 145:

Page 22, line 42, leave out subsection (4).

On Question, amendment agreed to.

Clause 51 [Functions exercisable with agreement]:

Baroness Ramsay of Cartvale moved Amendment No. 145A:

Page 23, line 4, leave out ("not apply") and insert ("cease to have effect in relation").

The noble Baroness said: My Lords, this is a technical amendment so that the wording of Clause 51(1) is consistent with wording used elsewhere in the Bill, in particular Clause 111(2), which provides that certain provisions about the Consolidated Fund cease to have effect. I will expand on it if any noble Lord wishes. If not, I commend the amendment to the House.

On Question, amendment agreed to.

Clause 52 [Shared powers]:

Lord Sewel moved Amendment No. 145B:

Page 23, line 10, leave out from beginning to ("under") and insert—

("(1) Despite the transfer by virtue of section 49 of any function").

The noble Lord said: My Lords, with permission I shall take Amendments Nos. 145B, 145D and 206A together. Amendments Nos. 145B and 145D are technical amendments to Clause 52. They make it clear that the Scottish ministers will be able to exercise the powers concerned only to the extent that they are transferred to them under Clause 49 and ensure that it is not only the powers that are shared with the Scottish ministers but also any ancillary duties. They also add an order-making power to Clause 52, enabling further functions to be exercisable concurrently.

Amendment No. 206A makes it clear that the order-making power introduced by Amendment No. 145D is subject to type G procedure. That means that any such order is subject to procedure at Westminster only.

The amendments introduce sensible flexibility and I commend them to the House. I beg to move.

On Question, amendment agreed to.

Lord Sewel moved Amendment No. 145C:

Page 23, line 22, at end insert— ("()sections 2, 11(3) and 12(4) of the Employment and Training Act 1973 (power to make arrangements for employment and training etc. and to make certain payments),").

The noble Lord said: This amendment to Clause 52 is part of a package of amendments relating to training for employment and job search and support to ensure that the former is devolved and the latter is reserved. I expect to table the other amendments which will be amendments to Schedule 5 in time for the later days of Report. I hope that we shall have an opportunity to look at the other elements of that package when we come to debate those further amendments, but I would like to describe the main elements of it to your Lordships at this stage so that noble Lords are able to consider the context in which I support the amendment to Clause 52.

However, it may be sufficient to indicate that the thrust of these amendments is to ensure that training for employment is devolved and job search is reserved. On that basis, I beg to move.

On Question, amendment agreed to.

Lord Sewel moved Amendment No. 145D:

Page 23, leave out lines 27 and 28 and insert ("the function shall be exercisable by a Minister of the Crown as well as by the Scottish Ministers.

(2) Despite the transfer of any other function by virtue of section 49, the function shall, if subordinate legislation so provides, be exercisable (or be exercisable so far as the legislation provides) by a Minister of the Crown as well as by the Scottish Ministers.

(3) Subordinate legislation under subsection (2) may not be made so as to come into force at any time after the function in question has become exercisable by the Scottish Ministers.").

On Question, amendment agreed to.

Lord Sewel moved Amendment No. 145E:

Page 23, line 28, at end insert—

("(4) Any power referred to in section 49(2)(a) to establish, maintain or abolish a body, office or office-holder having functions which include both—

1. (a) functions which are exercisable in or as regards Scotland and do not relate to reserved matters, and
2. (b) other functions,

shall, despite that section, be exercisable jointly by the Minister of the Crown and the Scottish Ministers.

(5) In subsection (4), "office-holder" includes employee or other post-holder.").

The noble Lord said: My Lords, I beg to move Amendment No. 145E and speak also to Amendment No. 173B. Amendment No. 145E is a technical amendment. It simply enables the Scottish Ministers and UK Ministers to act jointly to establish, maintain or abolish a body, office or office-holder with functions which cross the reserved devolved boundary, notwithstanding the transfer of powers to Scottish Ministers by Clause 49. This is an entirely straightforward amendment which complements the provisions in Clauses 84 to 86 for cross-border public authorities.

Amendment No. 173B is consequential upon Amendment No. 145E. It adds the power introduced by Clause 52(4) to the list of provisions in Clause 85 which may be modified by Order in Council.

On Question, amendment agreed to.

Clause 53 [Community law and Convention rights]:

Lord Hardie moved Amendment No. 145F:

Page 23, line 36, at end insert—

("(3) Subsection (2) does not apply to an act of the Lord Advocate—

1. (a) in prosecuting any offence, or
2. (b) in his capacity as head of the systems of criminal prosecution and investigation of deaths in Scotland,

which, because of subsection (2) of section 6 of the Human Rights Act 1998, is not unlawful under subsection (1) of that section.").

The noble and learned Lord said: My Lords, in moving Amendment No.145F I should like to speak also to Amendment No.230A. This is part of the package of technical amendments to ensure that the relationship between the Scotland Bill and the Human Rights Bill works properly. Noble Lords agreed to the earlier part of the package on the penultimate day of Committee. The earlier amendments ensured consistency between the Bills on title and interest, definitions and commencement provisions. These amendments deal with the position of the Lord Advocate. Amendment No. 145F ensures that the Lord Advocate is able to rely on the protection afforded by Clause 6(2) of the Human Rights Bill when he is prosecuting an offence or acting in his capacity as head of the systems of criminal prosecution and investigation of deaths.

Clause 6 of the Human Rights Bill provides that it is unlawful for a public authority which would include the Lord Advocate to act in a way that is incompatible with a convention right. Clause 6(2) provides that it is not unlawful if the act of the public authority was because it could not have acted differently as a result of primary legislation or the public authority was acting to give effect to provisions made under primary legislation. This is intended to protect a public authority where a Westminster Act required it to breach a convention right.

The amendment ensures that this protection is also afforded to the Lord Advocate where it is alleged that he has breached Clause 53(2) of the Scotland Bill which requires him to act compatibly with the convention rights. This ensures that the Lord Advocate could prosecute an offence contained in a UK Act even if it were in contravention of a convention right. Without the amendment the offence could be prosecuted by the Crown Prosecution Service in England but not by the Lord Advocate. The amendment also allows him to act in his capacity as head of the systems of criminal prosecution and investigation of deaths in Scotland if he is acting as required by a provision of the UK Act. Without the amendment disapplying Clause 53(2) he could not act in this way.

Amendment No. 230A is a consequential amendment that adds Clause 53(3) to Clause 121(2) which makes provision as to what happens to those provisions of the Scotland Bill which refer to the Human Rights Bill if they are commenced before the Human Rights Bill. It provides that they are to have effect as they will have effect when the Human Rights Bill is in force. I beg to move.

Lord Mackay of Drumadoon

My Lords, I can well understand why this amendment has been tabled. For the reasons given by the noble and learned Lord, the amendment seeks to make the provisions of this Bill compatible with those of the Human Rights Bill. But I find it slightly surprising that it is contemplated that the Lord Advocate would ever consciously act in the knowledge that by so doing he would contravene the convention rights of either an accused person or somebody affected by the discharge of his role in investigating sudden deaths in Scotland. I find that difficult to reconcile with the position explained by the noble and learned Lord during the Human Rights Bill: that he was happy to accept that his decisions as public prosecutor would be reviewable against convention rights.

It would assist me if the noble and learned Lord could give some practical examples of primary legislation which are prima facie in breach of convention rights which would require the Lord Advocate to act in a way contrary to or incompatible with convention rights. It might persuade me that it was in the public interest that this Parliament should give him statutory authority to proceed in the way provided in the amendment. As at present advised, having regard to the fact that the Lord Advocate has a discretion, I find it difficult to believe that any prosecution would be mounted if it were known in advance that convention rights were to be breached in some way by taking the prosecution to a conclusion.

Lord Hardie

My Lords, as the noble and learned Lord is aware from his own experience, the question of whether or not to prosecute is always one of balance. One has to weigh up various factors.

What is being contemplated—I am not sure that I can think of a specific example—is United Kingdom legislation which creates an offence but which itself was contrary to the convention. As the noble and learned Lord will be aware, that could be a conscious decision of this Parliament: to decide to pass legislation in contravention. As long as it was declared to Parliament, that would be a possibility. If an offence were created across the United Kingdom under a UK statute it would be appropriate that one of the considerations for the Lord Advocate would be whether he or she wished to prosecute in Scotland for that offence. Just as the Crown Prosecution Service in England could prosecute, it would be invidious if the Lord Advocate were precluded from prosecuting for the statutory offence under the United Kingdom Act simply because it contravened the convention right.

At this stage, I am unable to think of specific examples. Perhaps I may give consideration to that, and if I can think of a specific example I shall write to the noble and learned Lord and put a copy in the Library.

Lord Hope of Craighead

My Lords, will the noble and learned Lord explain what is meant by "in prosecuting"? Am I right to understand that the purpose of the amendment is to deal with decisions as to whether or not to prosecute, and not with the manner in which a prosecution is conducted? The distinction may be important in considering the rights of a person who is brought before the court. I think that the court would feel more comfortable if it were still open to challenge the manner in which an accused person were dealt with, bearing in mind the importance that the convention attaches to the right to a fair trial.

Lord Hardie

My Lords, I agree entirely with the noble and learned Lord that that is the position. I sought to explain to the noble and learned Lord, Lord Mackay of Drumadoon, that a UK Act may create an offence. The decision to prosecute in that situation may infringe a human right; that would be a factor. I would not contemplate the conduct of the prosecution being contrary to human rights—in other words, depriving an accused of legal representation, or anything of that kind. That is not what is being contemplated.

On Question, amendment agreed to.

Clause 54 [Power to prevent or require action]:

[Amendment No. 146 not moved.]

Lord Mackay of Drumadoon moved Amendment No. 146A:

Page 23, line 39, leave out from ("may") to end of line 40 and insert ("apply to the appropriate court for a declarator or declaration to that effect.").

The noble and learned Lord said: My Lords, I debated this amendment in Committee on 30th July at col. 1624 and I need not go over the matter in great detail. I confess that the relatively short argument I advanced then is the one to which I adhere now.

The purpose of the amendment is that if the Secretary of State is of the view that the Scottish executive has acted or refused to act in a way which gives rise to a measure of incompatibility with either international obligations or the interest of national security and defence he should have two options. The first is to go to the court and seek a declarator to that effect directed against the Scottish executive. The alternative is to exercise an order-making power and to take action at his own hand.

The problem with the clause as presently drafted is that it gives to the Secretary of State power to direct the Scottish executive along the lines set out in the clause. In particular, he can direct them to take action which, one sees from subsection (3), can include making, confirming or approving subordinate legislation and introducing a Bill to the Scottish parliament.

I believe that if a Secretary of State were ever to make such an order and direct the Scottish executive, in all probability of a different political party, either to make subordinate legislation or to introduce a Bill to parliament that would provoke a political crisis of major significance. He should have two alternatives. One is to go to court for a ruling. Then it is up to the Scottish executive to decide what to do in the light of such a ruling. Alternatively, he should take action at his own hand, make his own order, which will be subject to judicial review in the courts if he exceeds the powers given under Clause 54. I beg to move.

Lord Hardie

My Lords, in speaking to this amendment I shall speak also to Amendments Nos. 146B, 146C and 146E. These repeat amendments were tabled at Committee. I do not wish to repeat the detail of the debate which we had then. There would of course be attractions in provisions which enabled compliance by the Scottish ministers with international obligations to be enforced through the courts. But, as I explained previously, the domestic courts do not generally take cognisance of international obligations. That is why we have the limited powers of intervention in Clauses 33 and 54 for those international obligations which do not form part of our domestic law.

As noble Lords are aware, the Government regard these powers as essential back-stops; they are there as powers of last resort. One of the checks and balances on their use is the fact that the Secretary of State's use of the powers would be subject to judicial review. The question in the case of Clause 54(1) and (2) would be whether he had reasonable grounds for his belief that action is incompatible with an international obligation, or necessary to ensure compliance, or whether he otherwise acted unreasonably in making the order.

As my noble friend explained earlier in connection with Amendment No. 146D, the order made by the Secretary of State must state his reasons for making it. It would be for the courts to judge whether that or any other evidence indicates that he has behaved unreasonably in making the order. They may well want to consider the nature of the international obligation concerned, but they would not be being asked to make a judgment about the compatibility of action by the Scottish ministers with the obligation.

Turning to Amendment No. 146C, I find it hard to see that a significant distinction of principle can be made between such a power for the Secretary of State to direct the Scottish executive to take action and that in Clause 54(2) which allows him to step in and take the action himself. It still seems to us that the second approach is more consistent with the devolution of responsibility to the Scottish ministers. I would argue also that it would be more conducive to agreement.

While we are considering Clause 54, I should take the opportunity to put on record my response to a point which the noble and learned Lord, Lord Fraser of Carmyllie, raised in correspondence with me during the Recess. The point was whether Clause 54(1) and (2) would enable the Secretary of State to direct the Lord Advocate to take, or not to take, action in his role in relation to prosecutions and fatal accident inquiries.

As noble Lords will be aware, the Bill contains a number of provisions which are designed to maintain the independence of the Lord Advocate as the public prosecutor and head of the system of deaths investigation in Scotland. In particular, Clause 45(2) provides that any decision of the Lord Advocate in his capacity as head of the systems of criminal prosecution and investigation of deaths in Scotland shall continue to be taken by him independently of any other person.

There is no express provision about the relationship between this clause and Clause 54. However, it is certainly not the intention behind Clause 54 to compromise the independence of the Lord Advocate in either of those roles. Indeed, we do not consider that it could ever be appropriate for the Secretary of State to use his powers of intervention in that way.

I trust that your Lordships will agree that in the light of those explanations, the powers of the Secretary of State under Clause 54 are entirely appropriate.

Amendment No. 146E seeks to protect members of the executive from being subject to orders for specific performance. I would remind your Lordships that Scottish ministers will be part of the Crown and will be protected by the provisions of the Crown Proceedings Act 1947, which at present ensures that the Crown cannot be subject to such orders. Instead, all that the courts can do is to issue a declarator. Therefore, in our view, the amendment is not necessary.

Lord Mackay of Drumadoon

My Lords, inevitably, perhaps, when we return to issues which were debated before, the views expressed on previous occasions no more persuade one side than they do the other. I take the point about Amendment No. 146E, but as regards the other amendments, I seek to test the opinion of the House.

11.27 p.m.

On Question, Whether the said amendment (No. 146A) shall be agreed to?

Their Lordships divided: Contents, 21; Not-Contents, 69.

Division No. 4
CONTENTS
Annaly, L.	Henley, L.
Attlee, E.	HolmPatrick, L.
Blatch, B.	Kingsland, L.
Byford, B.	Kintore, E.
Chesham, L.	Mackay of Ardbrecknish, L.
	Mackay of Drumadoon, L.
Courtown, E. [Teller.]	Montrose, D.
Cranborne, V.	Northesk, E.
Dixon-Smith, L.	Rowallan, L.
Ellenborough, L.	Selkirk of Douglas, L.
Fraser of Carmyllie, L.	Strathclyde, L. [Teller.]

NOT-CONTENTS
Acton, L.	Islwyn, L.
Ahmed, L.	Jay of Paddington, B. [Lord Privy Seal.]
Alli, L.
Amos, B.	Judd, L.
Archer of Sandwell, L.	Kennedy of The Shaws, B.
Bach, L.	Lockwood, B.
Bassam of Brighton, L.	Macdonald of Tradeston, L.
Berkeley, L.	McIntosh of Haringey, L. [Teller.]
Burlison, L.	Mackenzie of Framwellgate, L.
Carlisle, E.	Mackie of Benshie, L.
Carmichael of Kelvingrove, L.	Mar and Kellie, E.
Carter, L. [Teller.]	Monkswell, L.
Chandos, V.	Monson, L.
Clarke of Hampstead, L.	Nicol, B.
Cocks of Hartcliffe, L.	Pitkeathley, B.
Crawley, B.	Plant of Highfield, L.
Davies of Coity, L.	Ponsonby of Shulbrede, L.
Davies of Oldham, L.	Puttnam, L.
Dean of Thornton-le-Fylde, B.	Ramsay of Cartvale, B.
Desai, L.	Rea, L.
Donoughue, L.	Rendell of Babergh, B.
Evans of Parkside, L.	Sawyer, L.
Falconer of Thoroton, L.	Sewel, L.
Farrington of Ribbleton, B.	Simon, V.
Gordon of Strathblane, L.	Smith of Gilmorehill, B.
Goudie, B.	Steel of Aikwood, L.
Graham of Edmonton, L.	Symons of Vernham Dean, B.
Grenfell, L.	Thurso, V.
Hardie, L.	Tomlinson, L.
Hardy of Wath, L.	Tordoff, L.
Harris of Haringey, L.	Turner of Camden, B.
Hogg of Cumbernauld, L.	Uddin, B.
Hoyle, L.	Whitty, L.
Hughes of Woodside, L.	Winston, L.
Hunt of Kings Heath, L.	Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

11.35 p.m.

[Amendments Nos. 146B to 146E not moved.]

Clause 60 [Scottish Consolidated Fund]:

Lord Dixon-Smith moved Amendment No. 147:

Page 26, line 9, at end insert—

("() When making payments under subsection (2), the Secretary of State shall, in order to determine the relationship between the annual total of payments made into the Scottish Consolidated Fund and the annual total of payments made in England to provide the equivalent services, have regard to the Revenue Support Grant formula in force for the time being to determine Government funding for individual local authorities in England.").

The noble Lord said: My Lords, when the House debated Clause 60 I was in company with a number of other noble Lords who had some concerns about this particular clause and the future of the funding of the Scottish parliament and how it was to be dealt with by the English Parliament. The Minister can feel quite pleased that his advocacy has clearly persuaded everybody else that the debate is not worth continuing, but I regret to say that nothing that he said at Committee stage has eliminated my concern.

It is worth reminding ourselves of what we are talking about. We are not talking about the Barnett formula, which is a method for distributing increases or decreases in government expenditure to Scotland. It is as simple as that. But it is worth reminding ourselves of one point and that is that the noble Lord, Lord Barnett, when he introduced that formula, was of the view that over time it would lead to expenditure in Scotland converging with expenditure in England.

The noble Lord, Lord Lang of Monkton, showed why that has not happened. He is a former Secretary of State for Scotland. He quite clearly indicated the success of a series of former Secretaries of State in their negotiations both in Cabinet and with the Treasury on behalf of Scotland. As a result of their work expenditure in Scotland continued to diverge from the average for the United Kingdom. In fact, the divergence is widening.

That leaves me with a question in the back of my mind as to what the Scottish block is and what is to happen to it in future. Is it to be the block as we see it today, simply uprated for inflation? If it is not to be that, how are changes to it to be arrived at? The Bill is singularly quiet on the subject. It is simply not satisfactory that this matter should be set in stone. For instance, how are we to deal with the consequences of either demographic or economic change, particularly, as has been mooted by my noble friend Lord Mackay of Ardbrecknish on the Front Bench, as there is a possibility of there not being a Secretary of State for Scotland?

In Clause 60 the Bill states that the Secretary of State will, from time to time, make payments to the Scottish Consolidated Fund. Presumably, if there is not a Secretary of State for Scotland the mechanism which will be on the face of the Bill will be invalid. There is then no mechanism to make payments. In his response I hope that the Minister will address that particular point.

But more than that, if there is a possibility that the Bill works in that way, does it place a constraint on the Prime Minister if, at some future point, he decides that the office of Secretary of State for Scotland is no longer appropriate and that the work can be passed on by a Minister of State, but he is constrained by the financial mechanism on the face of the Bill? We have heard so much caution from Government Ministers about getting things on the face of the Bill that might tie them down in the future.

We need to be much more open about this. For a Government who profess openness there is a singular lack of information. I cannot call it opacity because there is nothing to be opaque about: there is simply nothing. I do not find that satisfactory.

In Committee I proposed a fairly simple rudimentary formula which might have dealt with the way in which the Scottish grant might be calculated in the future. In rejecting it, the Minister made a perfectly valid point about the particular problem of the morbidity of the Scottish population. I defer to his expert knowledge of that. It is not something that I have taken to heart, although I have now taken to heart what the noble Lord said. So, I have looked for a more appropriate mechanism. More importantly, it is one that is already in use and accepted and approved by government—although I suppose it is only true to say that it is cordially disliked by those to whom it is applied. The revenue support grant formulae which are used to distribute government funds to local authorities are cordially disliked by all local authorities. That cordial dislike probably means that the formulae are fair!

When I asked to see the distribution formulae, I was offered a book well over an inch thick. I did not think it appropriate to introduce that at this hour so I have left it behind. However, as the Minister referred to morbidity, it is perhaps worth mentioning the sorts of factor that are involved in the revenue support grant calculations because the RSG bears closely on the demography of an area, taking into account the number of over-75s, pensioners and the disabled, as well as ethnic background, housing type and the number of single-parent families and educationally handicapped—and so on and so forth. It also covers matters such as miles of road, sparsity, drainage problems and sea defences. It is a widely used formula—and one that could usefully be used not to set the exact sum of the Scottish block but to determine the relationship between expenditure in Scotland and in England.

We shall have a big problem in this area in the future unless something is put on the face of the Bill. Governments in the future will have great difficulty in explaining how they are going to adjust the Scottish block—either to the other place where it will be of particular concern or to the Scottish parliament or to both. I suspect that it will be to both. It is in an attempt to reduce that problem that I have tabled this amendment. I beg to move.

Lord Sewel

My Lords, I appreciate that Amendment No. 147 is another attempt by the noble Lord, Lord Dixon-Smith, to introduce into the Bill a statutory formula based on relative need. However, as I explained in Committee, under current funding arrangements, relative need across the spectrum of government spending in Scotland is already built into public expenditure baselines. This ensures that relative need is properly captured.

As the noble Lord indicated, what the Barnett formula does is, on top of these needs-based baselines, to offer a means of determining, relatively painlessly, what the Scottish Office share of any changes to comparable public spending programmes should be. This part of the process is not needs-based. The Barnett formula is based purely on relative population numbers.

This arrangement is tried and tested; it is familiar to those who need to know about it; it has delivered fair settlements for Scotland for two decades; and it offers the prospect of continuity and stability for the new devolved administration at a time of enormous change.

Against that background, I am not at all persuaded that the noble Lord's amendment takes us forward at all. Indeed, I am bound to say that it is flawed in its conception. The fact is that a comparison of relative need in a local authority context and in a national context is a comparison of apples and oranges because national governments and local authorities do different things and have different functions. So what is an appropriate formula for one is almost definitionally not an appropriate formula for the other. It is likely that an assessment of relative needs for national governments will be carried out differently from the way we measure relative needs for local government. Local government has a completely different taxation system which is taken into account in the calculation of RSG. That will not be relevant to the relationship between the UK Government and the Scottish administration.

The noble Lord, Lord Dixon-Smith, raised two specific points, if I heard him correctly. First, he asked whether the whole payment into the Scottish Consolidated Fund would be invalid if there was no formula for determining it. That is not the case. The Bill empowers the Secretary of State to make payments into the fund of such amounts as he may determine. There is no requirement in the Bill to use a formula. We have indicated that we will stick with the Barnett formula, which has done the job in the past to the relative satisfaction of everybody concerned.

The other point that the noble Lord, Lord Dixon-Smith, made was whether the whole thing would come to a grinding halt if a Prime Minister of the day decided not to have a Secretary of State for Scotland. The convention is that when reference is made to a Secretary of State in an Act, the powers can be employed by any Secretary of State. It is not tied to a specific Secretary of State.

I admire the ingenuity of the noble Lord, Lord Dixon-Smith, in continuing to worry at this problem and coming up with alternative means of ensuring that the allocation of funds to the Scottish parliament will be on a needs basis. It is inappropriate to look at an RSG formula. You start off at the wrong place and finish up at the wrong destination. You start off at the wrong place simply because the services and functions of local authorities are very different from the services and functions of a national government such as the Scottish executive will be.

I will have to disappoint the noble Lord again. The Government cannot accept his amendments and I trust that he will withdraw them.

11.45 p.m.

Lord Dixon-Smith

My Lords, I thank the Minister for his explanation. His explanation sounds like something that I used to hear from my father on occasions: "My boy, we have always done things this way. That is the way we are going to do them. That is enough". That may be enough, but I am not sure it is appropriate. I will need to consider carefully what the Minister has said. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 61 [Payments out of the Fund]:

Lord Sewel moved Amendment No. 147A:

Page 26, leave out line 36.

On Question, amendment agreed to.

Clause 62 [Borrowing by the Scottish Ministers etc.]:

Lord Sewel moved Amendment No. 147B:

Page 27, line 9, leave out ("an") and insert ("any other").

On Question, amendment agreed to.

Clause 64 [Borrowing by statutory bodies]:

Lord Sewel moved Amendment No. 147C:

Page 27, line 29, leave out subsection (3).

On Question, amendment agreed to.

Clause 65 [Auditor General for Scotland]:

Lord Mackay of Ardbrecknish had given notice of his intention to move Amendment No. 148:

Page 27, line 35, leave out from ("resolves") to end of line 37.

The noble Lord said: My Lords, I heard sufficient words from Ministers on Amendment No. 132 about qualified majorities. I shall not pursue this one and I will not move it.

[Amendment No. 148 not moved.]

Lord Sewel moved Amendment No. 149:

Page 27, line 37, at end insert—

("() The validity of any act of the Auditor General for Scotland is not affected by any defect in his nomination by the Parliament.").

On Question, amendment agreed to.

Clause 66 [Financial control, accounts and audit]:

Lord Mackay of Ardbrecknish moved Amendment No. 150:

Page 28, line 44, at end insert—

("() In particular, Scottish legislation under subsection (1) shall provide for—

1. (a) accounts prepared under paragraphs (a) and (b) of that subsection to comply with any directions from time to time given by the Comptroller and Auditor General as to the form of the accounts, the information to be provided in them and the general practices and principles to be observed in their preparation, and
2. (b) the designation of accounting officers accountable to the Parliament for the expenditure to which the accounts relate and the specification of their responsibilities.

() The Scottish legislation referred to in subsection (1) shall make provision that, if the Comptroller and Auditor General so directs, the provisions referred to in subsection (1) and the functions under subsection (2) shall, to such extent and with such modifications as the direction concerned may provide, apply to any body established by an enactment and specified in the direction, in relation to which it is within the legislative competence of the Parliament to make such provision.").

The noble Lord said: My Lords, this amendment deals with the whole question of the supervision of the accounts of the Scottish parliament and the role of the Scottish parliament and the other place in dealing with the accounts. As your Lordships know, the other place has the Public Accounts Committee and there is also the Comptroller and Auditor General. The accounts prepared by government are scrutinised by the Comptroller and Auditor General, who reports to the Public Accounts Committee, which hears evidence and grills Ministers and is of very considerable importance in the other place.

It appears that in future the money sent by the other place to the Scottish parliament will not be subject to the scrutiny of the Comptroller and Auditor General and will not be subject to the scrutiny of the Public Accounts Committee. However, in the Bill it is perfectly clear that the Scottish parliament will appoint an auditor who will have most, if not all, of the powers of the Comptroller and Auditor General. Indeed, it allows for the possibility of this scrutiny by the Scottish parliament, or a committee thereof, of the accounts of the parliament.

In Committee on 30th July I proposed an amendment which required that the procedures of the Scottish parliament should be subject to directions given from time to time by the Treasury. The Government chided me for believing in the nanny state as far as concerns the Scottish parliament—I think that is a fair shorthand of what I was accused of doing—and said that it was wrong that the Treasury should have a role in this. I have decided to return to the issue. I accept that it may be wrong that the Treasury has a role, but I am still not entirely convinced that the other place should not have some role, not so much in the detail but in making sure that the auditor in the Scottish parliament and the arrangements in the Scottish parliament give the scrutiny to the financial affairs of the government that they ought to receive.

I am sure that the parliament will set up a perfectly proper system and that there will be no problem, but I think that there is a case to be argued that either the Public Accounts Committee of the other place or the Comptroller and Auditor General should be able to say to the Scottish parliament or to the auditor in Scotland, "That is not quite right. I would rather you did it in this way because, after all, the money you are checking is the money which, up to now, I have checked". That is certainly true. Money spent by the Scottish Office has been subject to the supervision of the Comptroller and Auditor General and investigation by the Public Accounts Committee. These powers are to be moved to the Scottish parliament—that is right and proper—but I do think that there is an argument for saying that either the Public Accounts Committee or, as in my amendment, the Comptroller and Auditor General ought to at least have a back-stop power to be able to give directions about the form of the accounts, the information provided in them and the general practice and principles if it is deemed necessary.

I hope that this is not too much of a nanny, but I come back to the point that this money is being voted by the Members of the other place. They are responsible for raising the money in taxation. I think that there ought to be some back-stop provision for the accounting and control procedures in the other place to be satisfied that what the Scottish parliament is setting up is right. I have therefore put forward this amendment—it is very much changed from the amendment I put forward in Committee—as an effort to try to find a way out of what I believe is a dilemma in the responsibility for money raised by the other place. I beg to move.

Baroness Ramsay of Cartvale

My Lords, I appreciate the points that the noble Lord, Lord Mackay of Ardbrecknish, has made in presenting the amendment. I am familiar with his thinking from what he said in Committee. As we see it, the noble Lord's current amendment contains three separate themes. I think it might be helpful, therefore, if I were to deal with each of those themes in turn.

First, the amendment proposes that Scottish legislation will provide that the Comptroller and Auditor General should be given the power to direct the form and, in effect, supervise the preparation of the accounts of the Scottish executive and other persons receiving money directly from the Scottish Consolidated Fund. We do not believe that that would be appropriate.

It will be the right and privilege—indeed, the duty—of the Scottish parliament to hold the Scottish executive to account. That is one of its primary roles. It must, therefore, be for the parliament to decide the detail of how the executive should account to it. Clause 66 is not intended to be exhaustive. It sets out a framework for the accounting by the executive to the parliament. The parliament itself will legislate on the detail, including the form of the accounts and the standards to be applied or how they are to be prescribed. As the noble Lord knows, we have set up a committee of financial and other experts—the Financial Issues Advisory Group—to advise the incoming parliament and executive on these matters. That group will be making proposals on the content of the annual accounts of the executive.

The accounts will be audited by the Auditor General for Scotland or auditors appointed by him. The auditors will be independent of direction both of the executive and of members of the parliament. They will be bound by their own professional standards and by those laid down by such as the Auditing Practices Board. Of course, the auditors' reports must be published.

Secondly, the amendment proposes that Scottish legislation must provide for the designation of accounting officers. We find this part of the amendment a little difficult to understand, as Clause 66(1)(e) does precisely that. It does not use the term "accounting officers"; but that is exactly what it means.

This particular provision serves two important functions. First, it gives the parliament direct access to officials on the detail of the executive's actions in undertaking expenditure. It also gives those officials a standing separate from that of their ministers—a useful safeguard for the parliament in the checks and balances required in operating any such system.

Thirdly, the amendment deals with the position of other bodies; that is, bodies not receiving money directly from the Scottish Consolidated Fund. If any body receives money directly from the fund, Clause 66(1) and (2) already apply. Moreover, Clause 66(4) already makes it clear that the parliament can make further provision for ensuring the accountability of others receiving sums derived from the Scottish Consolidated Fund. The bodies to which this amendment would apply are those which will be funded, or partly funded, by the Scottish ministers. That would include such bodies as local authorities, health service bodies, non-departmental bodies set up under statute and further education colleges.

We believe that there may be some misunderstanding here. The existing legislation under which these bodies operate will remain in force. That includes the accounting and auditing provisions of that legislation, save that Scottish bodies currently audited by the Comptroller and Auditor General will in future be audited by the Auditor General for Scotland. In view of those explanations, I hope that the noble Lord will find it possible to withdraw his amendment.

Midnight

Lord Mackay of Ardbrecknish

My Lords, I am grateful to the noble Baroness for those comments. I certainly think that as regards the final part of my amendment she has probably said sufficient to allay my concerns. Indeed, I think the same is true as regards paragraph (b) of my amendment, although those people who are much more involved in this kind of work than I will probably want to cast an eye over what she said. I understand and appreciate her arguments in as far as I have followed them.

I am still just a little unsure, however, about how the spending of public money will be overseen by an auditor or by the Public Accounts Committee. I refer to the £14 billion of expenditure which will go from the other place—it is the House of Commons not the Treasury which votes supply—to the Scottish parliament and the Scottish executive. I come back to the point that this large tranche of money will, I suspect, be the only tranche of money which the House of Commons will vote upon but will not oversee. That is what bothers me. I do not particularly want the House of Commons to do the checking, but I want it, through the Public Accounts Committee or the Comptroller and Auditor General, to have some locus in making sure that the systems set up by the Scottish parliament are adequate.

However, I can see that I shall not make any progress on that, but it is a problem and I rather fear that at some time in the future the other place might get "stroppy" about it and someone might ask, "Why have we absolutely no way—through the Public Accounts Committee or the Comptroller and Auditor General—of ensuring that the £14 billion is properly spent?" In some ways I am trying to take out an insurance policy against that day, but I accept that it is perhaps rather late in the day to be taking out insurance policies in these matters. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Speaker (Baroness Turner of Camden)

My Lords, I must inform the House that in the second Division this evening the number who voted Content was 38 and not 37 as announced.

Lord Sewel moved Amendment No. 150A: Page 29, leave out lines 4 and 5.

On Question, amendment agreed to.

Lord Sewel moved Amendment No. 150B: Page 29, line 9, leave out from ("any") to end of line and insert ("other").

On Question, amendment agreed to.

Lord Sewel moved Amendment No. 150C: Page 29, line 19, at end insert ("and "other legislation" means provision made by any other enactment").

On Question, amendment agreed to.

Lord Rowallan moved Amendment No. 151: Before Clause 69, insert the following new clause—

("POWER TO IMPOSE LEVY

POWER TO IMPOSE LEVY ON SCOTTISH TAXPAYERS

.—(1) The Parliament shall have the power to impose on persons resident in Scotland a levy of up to three pence in the pound on those persons' income, net of income tax.

(2) A person is resident in Scotland within the meaning of subsection (1) if he owns or rents his primary dwelling place in Scotland.

(3) The Parliament shall only exercise the power referred to in subsection (1) if it passes a resolution to that effect.

(4) The Secretary of State may by order make further provision about the levy.

(5) An order under subsection (4) shall not be made unless a draft of the order has been laid before both Houses of Parliament and approved by resolution of each House.").

The noble Lord said: My Lords, this is a probing amendment, along with Amendments Nos. 152, 153,155 to 159 and 231. I realise that I am going right into the Holy Grail here in this amendment and that I risk the wrath of those who drew up the White Paper, the referendum and the Scottish Constitutional Convention. I am sure also that the noble Baroness, Lady Ramsay of Cartvale, and the noble Lord, Lord Steel of Aikwood, are both looking at me with astonishment. However, I want to probe the Government on several problems that have arisen.

The first problem as I see it concerns residency. We have heard the story of English based lorry drivers who will be deemed to be Scottish taxpayers, whereas Scottish lorry drivers may not. We have heard about people who use the Stranraer ferry who spend more nights in Scotland than in Northern Ireland even though they live in Northern Ireland.

Raising money through the income tax system would also cause problems. Those working for a firm which has one factory in England and another in Scotland will receive different sums of money. The trade unions will become upset about that. At the end of the day it will probably be the Scottish employer who will pay for it.

In Committee, the noble Lord, Lord Sanderson of Bowden, referred to the idea of a levy. I wondered how sensible or silly an idea it was. It amounts to tax gathering rather than tax collection. Approximately 50 per cent. of Scottish voters are taxpayers. We have been told that that would approximate to an average payment from each taxpayer of £200, with a maximum of £600.

If every one of the 4.2 million voters paid, and £430 million was to be raised, each taxpayer would pay just over £100. Thus accountability would be assured. I must admit that I have always been slightly against people having a vote on other people paying taxes when they do not pay themselves.

This is a probing amendment. I have not thought through the method of raising the levy. However, I seek an opinion from the Government as to why they went down the income tax route rather than proposing a general levy. It seems to have caused a large number of problems which are becoming manifest as we progress through the Bill. I look forward to the Minister's reply. I beg to move.

Lord Sewel

My Lords, I ask the noble Lord, Lord Rowallan, to show a degree of patience. He raised the problem of residency and lorry drivers. He merely has to wait until the next set of amendments and I shall reveal all—or nearly all.

I also urge on him a degree of caution. He is advancing the argument that one should not have a vote without paying a degree of tax. I merely ask him to cast his mind back to the poll tax. That was the argument behind that little experiment, and look how that ended in tears. So I would dissuade the noble Lord from developing that argument too far.

I freely recognise that this set of amendments is an attempt by the noble Lord, not so much to reach the Holy Grail but dare I say it, to cut through the Gordian knot of complexity surrounding the Bill's tax varying powers. The attempt is superficially attractive—one short clause to replace seven clauses. No doubt it has its attractions. However, I must advise noble Lords that the provision in Amendment No. 151 serves only to gloss over the inevitable complexities of any tax system. Many questions are left, not so much unanswered but even unasked, in the amendments tabled by the noble Lord. They are certainly not in any sense "magicked away".

The flaw in the noble Lord's proposal is that it leaves almost all of the inevitable detail that would be required if the proposed levy was to work to an order-making power. There is a place for order-making powers in tax law, but the amendment moves the balance much too far towards secondary legislation.

It is no use arguing that there would be little need for more detail. Where, for example, is there a provision defining what income should be included in the calculation of liability? Where does the amendment state how long a levy resolution will last? Where does it state what increments the levy should be set in? Where is anything said about Scottish residents who move during the period of assessment for the levy? What, indeed, is that period of assessment? And so on, and so on.

These are details which cannot be swept under the carpet. Nor are there details such as how a levy could possibly be based upon income net of income tax when a proper assessment of income tax liability is often not finalised until after the end of the year in which the relevant income is earned. That is a fundamental problem with the approach that the noble Lord offers us. Nor are there details as to how the Scottish parliament would assess an individual's income. It cannot be assumed that Inland Revenue records could be piggy-backed. These records are protected by strong confidentiality rules, and rightly so. The Scottish parliament might therefore be obliged to create an entirely new structure for running what would in effect be a parallel Scottish income tax system. No provision is made either about the collection of the levy or implementation of the PAYE system for this purpose or for the creation of compliance and enforcement arrangements.

I could go on, but I think I may have made the point. All those issues are covered either directly in Part IV of the Bill or elsewhere in the income tax Acts of which Clauses 69 to 76 will form a part. None is covered in what the noble Lord offers us. His clause is short only because, I am afraid, a heck of a lot is missing from it and it would have to be found in some way and put in it. I do not think this is the way out of the problem that he sees.

As I have said on many occasions, we have always worked on the basis that it would be an income tax-varying power, a constrained and limited income tax-varying power. That is understood now. Everyone is working on that basis and it would be of no service to disturb that approach and try to replace it with the kind of provision that the noble Lord wishes. So I hope that with the memory of the poll tax in his mind, he will turn away from this attraction.

Lord Rowallan

My Lords, as I indicated at the beginning of my comments, this is purely a probing amendment. I am well aware of the pieces that were missing from the legislation, but it is difficult to write a whole new raft of ideas in a short time.

I am grateful to the Minister for his detailed reply. I was fairly certain that that was the view he would take, but I thought it was worthwhile exploring the subject, if nothing else. I do not necessarily believe in it myself, but it was an option because we seem to be getting into an almighty hole over income tax and residence.

I am interested to hear the Minister say that he is about to give us a way out of it, and I look forward to it enormously. Bearing that in mind, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 69 [Power to fix basic rate for Scottish taxpayers]:

[Amendment No.152 not moved.]

Clause 70 [Supplemental provision with respect to resolutions]:

[Amendment No. 153 not moved.]

Clause 71 [Scottish taxpayers]:

Lord Sewel moved Amendment No. 153A: Page 32, line 19, leave out ("beginning or").

The noble Lord said: My Lords, when we addressed the issue of the definition of a Scottish taxpayer at Committee stage, I gave an undertaking to look again at the drafting of Clause 71 and to meet representatives of the Law Society of Scotland, the CBI and the Institute of Chartered Accountants in Scotland. I have been able to hold those meetings.

First, I had a useful meeting on 21st October with the three bodies concerned. We discussed in particular the proposals for basing the definition of a Scottish taxpayer on the concept of residence, the substance of an amendment earlier supported by the Law Society. It was discussed at the Committee stage and has now reappeared as Amendment No. 154. However, I think that amendment may represent an earlier stage in the thinking of the Law Society from which it has now moved on.

While there were a number of differing views around the table, there was a recognition that applying the concept of residence in this context could give rise to some serious anomalies. I think particularly of the problem of, when we use ordinary residence, what happens when someone moves during the course of the tax year. We finish with the possibility of someone being both a Scottish taxpayer and an English taxpayer for the entire tax year, which is not a condition devoutly to he wished upon many.

There was, however, general acceptance that most of the difficult cases that had been identified could be removed or substantially diminished if the Government amended the definition of what was effectively a day spent in Scotland and thus eliminated the double counting that could arise under the current provision in Clause 71(4)(a). That now provides that a person is regarded as having spent a day in Scotland only if he is in Scotland at the beginning or end of that day. It was pointed out by a number of noble Lords at that stage that the famous lorry driver could qualify as a Scottish taxpayer on the basis of spending 92 non-consecutive nights in Scotland. I offered the view that that was a difficult position to sustain, particularly if regard was had to the future development of regional government, perhaps with tax-varying powers throughout the United Kingdom. One could theoretically end up as a variable taxpayer in three different areas, which would again not be a very comfortable position in which to find oneself.

The Government discussed the matter and sought a solution. We did not seek to maintain the position in the Bill. We have listened and have tabled Amendments No.153A and 153B which we believe precisely address the problem. They have the effect of ensuring that if a person is in Scotland at midnight he will only ever clock up one day spent in Scotland. This means that, assuming a person spends the whole year in the United Kingdom, he will have to spend 183 nights in Scotland before qualifying as a Scottish taxpayer. We believe that that is a very simple solution to a problem which has become too complex.

The three organisations whom I met were content with the amendments on the basis that they substantially addressed their concerns about Clause 71. I hope that noble Lords will also receive them in similar fashion and agree with them. I also hope your Lordships will accept that the discussion with the professional bodies has moved us somewhat from the position proposed by Amendment No.154. That amendment would create rather than resolve anomalies. I hope that in light of what I have said the noble Lord is able to withdraw his amendment.

12.15 a.m.

Lord Selkirk of Douglas

My Lords, I thank the Minister for coming so far to meet the concerns raised by the CBI, the Law Society of Scotland and the Institute of Chartered Accountants, who are working very much at the coalface of tax law. They commend the Government for responding positively to the points that have been raised. It would be useful if the Minister could make clear that the definition of Scottish taxpayers would not be interpreted by the Inland Revenue as including travellers from England who merely wished to stay overnight in Scotland. On a related and connected subject, I thank the Minister for his letter of 27th October on the subject of charities. I am a trustee of a charity. I should be glad if the Minister could confirm that charities in Scotland would not have to pay more tax than charities in England. Furthermore, can he expose for consultation the orders that will carry this policy into effect under Clause 75(2)?

Lord Hughes of Woodside

My Lords, given the time I shall not detain the House for long. This appears to be the only amendment that provides me with an opportunity to make the following point. Some noble Lords may recall that in July there was a lengthy debate about the unified business rate. I referred to the Aberdeen Chamber of Commerce and said that not all its members were entirely in favour of the rate. I have since had a letter from Mr. Derek Marnock, the chief executive, to say that he does not recognise the views I attributed to certain members of the chamber of commerce as being the official policy of the chamber of commerce. In the 27 years I was in another place I always had extremely good relations with the chamber of commerce. I never wittingly or unwittingly misrepresent their views. I replied to Mr. Derek Marnock that, although I was satisfied that some members of the chamber of commerce were not entirely thrilled with the unified business rate—indeed, in his letter to me he goes some way towards meeting that point—I would take the earliest opportunity to make it clear that the official policy of the chamber of commerce in Aberdeen is that it has made the maintenance of the UBR one of the principal requirements for the Scottish parliament. I am happy to make it clear that that is the official view of the chamber of commerce in Aberdeen. If it is felt that in any way I misrepresented it, I apologise. It was not my intention to do so.

Lord Mackay of Ardbrecknish

My Lords, my amendment, Amendment No. 154, is grouped with the amendment. As the Minister rightly supposes, the amendment has been on the Marshalled List for some time and has been overtaken by his amendments.

Before I turn to these amendments, perhaps I may say that the Aberdeen Chamber of Commerce sent me a copy of the correspondence. I am sure that it will be pleased that the noble Lord, Lord Hughes of Woodside, has put its view on the record. It is also nice that the noble Lord has contributed. He has the honour of being the first person on the Government Back Benches who has shown any interest in this important Bill throughout the day. If my memory serves me aright, there was only a brief intervention from the noble Lord, Lord Desai, during the first day of Report. I was about to say that the Liberal Democrats have been quite active. Perhaps the noble Lord, Lord Steel, wishes to intervene.

Lord Steel of Aikwood

My Lords, the noble Lord is being a little unfair. He is forgetting the contribution of the noble Lord, Lord Hogg, earlier in the proceedings.

Lord Mackay of Ardbrecknish

My Lords, I cannot remember the contribution of the noble Lord, Lord Hogg. Perhaps it was on the first day of Report—or perhaps in Committee.

Noble Lords

Today!

Lord Mackay of Ardbrecknish

My Lords, it must have been when I was not present and the lawyers were having a go. My welcome to the noble Lord, Lord Hughes, is therefore not as fulsome as it would have been if he had been the first to contribute. I am glad to see that two Back-Bench Labour Members have decided that it is an important issue.

Lord Steel of Aikwood

My Lords, I am tempted to say that if the noble Lord came more often he would not make these mistakes.

Lord Mackay of Ardbrecknish

My Lords, if I came more often I might be tempted to make longer speeches!

I am grateful to the Minister for his undertaking in Committee that he would consider the matter of residence; and for his assurance that he would meet the three groups, which he did. Like them, I am satisfied that the difficulty we all appreciated in the initial definitions of residency have now been dealt with by the Government. I think that it is unlikely that anyone will be caught who is not to all intents and purposes resident in Scotland simply by staying overnight in Scotland for 183 days when a day is defined as just the end of the day. I hope that if that happens the Inland Revenue will be able to use its discretion.

I do not wish to go into the "if's and "but"s. However, I can foresee that an individual might be caught. I refer to people such as the stewardesses on the first flight down from Scotland in the morning who stay overnight in Scotland in order to be on that plane. It is not a plane I take often. They might run up 183 days. No one has come forward with an example of someone who might be in that category and whom we would not want to be caught as a Scottish taxpayer. I am fairly content that 183 days more than meets the objections we put forward at Committee stage.

Again, I am grateful to the Government for listening to the arguments put forward and for responding. I welcome Amendment No. 153A.

Lord Sewel

My Lords, with the leave of the House, perhaps I may respond to the points raised by the noble Lord, Lord Selkirk of Douglas, about the 183 nights. Travellers would have to clock up 183 nights in Scotland. I believe that spending so many nights in Scotland is a clear demonstration of strong affection towards Scotland. I should have thought that such people would be more than happy to be classified to be Scottish taxpayers.

Secondly, I confirm that the Bill has no effect on the tax liabilities of charities. I also confirm that any orders provided for in the Bill will first be the subject of consultation. I hope that the noble Lord is satisfied.

On Question, amendment agreed to.

Lord Sewel moved Amendment No. 153B: Page 32, line 21, leave out ("elsewhere in the United Kingdom at the beginning or") and insert ("in the United Kingdom at the").

On Question, amendment agreed to.

[Amendments Nos. 154 and 155 not moved.]

Clause 72 [Changes to income tax structure]:

[Amendment No. 156 not moved.]

Clause 73 [Accounting for additional Scottish tax]:

[Amendment No. 157 not moved.]

Clause 74 [Effect of tax reduction for Scottish taxpayers]:

[Amendment No. 158 not moved.]

Clause 75 [Supplemental powers to modify enactments]:

[Amendment No. 159 not moved.]

Lord Mackay of Ardbrecknish moved Amendment No. 159A: After Clause 75, insert the following new clause—

INCOME TAX RELIEF

(" .—(1) Income tax relief at the United Kingdom basic rate will continue to be applied to personal pensions and free standing additional voluntary contributions.

(2) Where the Scottish Parliament passes a resolution to vary the basic rate of income tax in Scotland, the different sums in tax relief between the United Kingdom basic rate of tax and the Scottish varied rate of tax will be assessed direct on the individual taxpayer and collected direct from, or paid to, the individual taxpayer by the Board of Inland Revenue.").

The noble Lord said: My Lords, it is late to try to get one's mind around a complicated argument. I do not suppose that the new clause is properly drafted by any manner of means. It is tabled more by way of a probe to see where the Government's thinking lies with regard to income tax relief as applied to personal pensions and free-standing additional voluntary contributions.

The pensions industry in Scotland and throughout the United Kingdom is concerned about the impact which the Scottish variable rate might have on its ability to deliver personal pensions and free-standing additional voluntary contributions in an economic way. Currently, tax relief is given in such premiums at the UK basic rate. But, of course, if that were to change because the Scottish parliament introduced a Scottish variable rate, the Scottish basic rate would be different from the basic rate applied to people in England, Wales and Northern Ireland.

To date, the addresses and so forth of policyholders are not of huge importance from year to year. Most regular premiums for such accounts are received directly from bank accounts. A variety of figures has been bandied about as to the cost to the pensions industry of setting up systems to deal with this problem and keep it up to date. The Inland Revenue has made certain suggestions and the pensions industry has estimated costs to the industry of anything from £50 million and £125 million to operate the new system. Of course, that cost must be borne by policyholders. Companies would pass it on. That would be difficult, but it would be doubly difficult for the pension companies to pass that cost on to policyholders in England and Wales, because it has nothing to do with them. Therefore, the whole burden might have to be carried by policyholders in Scotland, which would add significantly to the costs of running their personal pensions or their free-standing additional voluntary schemes.

That is the problem, but there are two possible solutions. The first is to allow the basic rate relief on pensions at the UK level and do not involve SVR. The other is to allow the basic rate on the premiums and allow policyholders to obtain relief for the SVR via their self-assessment forms. It is true to say that not everybody fills in self-assessment forms so that is not much of a solution. However, I put that forward because it was one of the initial suggestions.

We know that the Government are aware of this problem and, indeed, in a letter to the CBI in Scotland, the Chancellor of the Exchequer indicated that. The CBI wrote to the Chancellor on 28th July and received a reply on 1st October which, even by Treasury standards, is a fairly slow response time. In view of the length of the letter and the fact that it did not say very much, it could have been written the day after it was received.

However it said: My officials are actively looking at keeping any additional compliance burden on pension providers to the minimum necessary and I agree that the forum you suggest for exploring these matters is the appropriate one. You will appreciate that any final decision on the way forward must have due regard to the Government's priorities more generally. I cannot, therefore, give you a commitment that the most favoured option of the insurance industry will be accommodated. However, it is right that every viable option is explored". That is Treasury-speak for saying, "Yes, we think something should be done but we are not sure what it should be". I wonder whether the Government have made any further progress. It is on that basis that I put forward this amendment which would opt for one of the solutions in the first part.

I do not believe that the second option is feasible. For those people who do not fill in self-assessment forms, the matter could be dealt with by their income tax returns. However, I believe that my first proposal is better. Income tax relief would be just at the United Kingdom basic rate and the complications of the Scottish variable rate would therefore not come into the matter. It may be rough justice, but it seems to me better than imposing on the pension industry and ultimately on policyholders a considerable additional expense of having to keep a database on where every one of their policyholders is a taxpayer within the United Kingdom. I hope that that explanation is clear and brief, even at this time of night. I beg to move.

12.30 a.m.

Lord Sewel

My Lords, I should say first that the issue which Amendment No. 159A is intended to tackle is one with which I am already fairly familiar. I had a detailed and useful discussion about it when I met representatives of CBI Scotland, the Institute of Chartered Accountants in Scotland and the Law Society of Scotland on 21st October. I can probably do no better, in replying to the noble Lord, than to report to the House the outcome of those discussions.

The representative bodies expressed the concern of pension providers that if they were required to claim different levels of basic rate tax relief in respect of personal pensions and FSAVCs and, for this purpose, had to identify which of their customers were Scottish taxpayers, they would face compliance costs of upwards of £50 million. They argued that those costs would have to be passed on to their customers and that that might lead to some products being removed from the market.

I made it clear in response to those concerns that the Government recognise the potential problem; that we had not reached any final conclusion about the best way of dealing with it; and that we were still very much in the process of consulting the industry about possible ways forward. I made it clear that the Government's aim was to minimise compliance costs wherever possible and that the objective of the current consultation with the industry was to identify a range of possible options and the totality of the cost of each and then to consider further which represented the best way of proceeding.

This is a matter for secondary legislation rather than the Bill, and that is accepted by the professional bodies. It is one among a range of issues on which the Inland Revenue is currently consulting before making appropriate regulations. That seems to be an entirely sensible way to proceed, given the complexity of the issue.

I recognise the various options raised by the noble Lord, Lord Mackay of Ardbrecknish. They are among the range of options being considered. It would seem to me that it is not beyond the wit of man to find a system where the two data sets of Scottish taxpayers and pension holders could start talking together, and then something akin to an automatic or passive claim could be made. However, I am not in possession of sufficient detailed knowledge to come to a conclusion on that, but would hope that it would be one of the options that will at least be explored.

As I indicated, we are taking this seriously. We are consulting the practitioners most directly concerned with the issue and are committed to working with them to identify an appropriate solution to the problem. On that basis, I hope the noble Lord has heard enough to enable him to withdraw his amendment.

Lord Mackay of Ardbrecknish

My Lords, I had hoped to have rounded up a fairly successful day in hearing news that the Government had managed to come to a solution to this problem, as they have to a few others we discussed. However, this is a difficult issue and I do not pretend for a moment that it will be easy for the Government to resolve it.

I perhaps missed out one other point that concerns the industry; that is, that whatever the solution is it will incur some costs. Will the industry need to put into place that system immediately the Scottish parliament is up and running, or could it wait until the parliament decided whether or not to use the variable rate? It may be that the parliament may decide never to use the variable rate and it would be daft if the industry had to go to a great deal of trouble and expense, even if it were minimised, if it were never needed. Perhaps that is something the Minister can also reflect on in his deliberations.

As I understand it, the Labour Party is committed now to saying that it will not increase the tax, because other parties certainly are. The only party that wants to increase the tax is the Liberal Democrat Party, in order to do good works as it sees it. But if I were advising the pensions industry I would tell it not to worry too much about that. It is an important issue for the pensions industry, and that aspect ought to be borne in mind by the Minister. It is not just a question of finding a solution; it is also a question of asking whether the industry needs to do something about this immediately the parliament starts, or whether it can wait until parliament decides it wants to use the SVR.

I am grateful to the Minister for his thoughts on the matter. I hope, though not with much faith, that we will have a solution by the time we reach Third Reading so that this matter may be put to bed. The Minister indicates that that is doubtful and I appreciate that. However, I have assurances that efforts have been made to find a solution which will be to the satisfaction both of the Treasury and of the pensions industry. Mindful of the fact that the Government keep telling us of the importance of pensions, despite the £5 billion hike they have put on pensions under ACT—I could not resist that—they will attempt to find ways to help the industry if they have to change their systems in order to accommodate different types of taxpayers within the United Kingdom. On that basis, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 78 [Limits on salaries of members of the Parliament]:

Lord Mackay of Ardbrecknish moved Amendment No. 160: Page 36, line 39, leave out ("ensure that") and insert ("make provision for").

The noble Lord said: My Lords, this amendment relates to Clause 78, which deals with a situation in which an individual is a Member of the Scottish parliament, the House of Commons and of the European Parliament. It lays down, in the usual prescriptive manner, what should be done; namely, that the salary ought to be reduced.

At Committee stage I had a rather unsatisfactory exchange with the Government Front Bench. The clause says that the salary should be reduced by a particular proportion. I could not get any kind of ball park figure as to what proportion the Government might have in mind. It could be 1 per cent., and in my view that would obey entirely this clause in the Bill. It could also be 99 per cent., and that would also entirely obey Clause 78. The Government must have some idea about what they mean in this context.

However, having had lectures about not being prescriptive, I decided simply to redraft the clause by removing the prescriptions and saying that Parliament shall make provision, that the amount of salary payable to a member of the Parliament is in accordance with section 77", if any salary is payable to him because he is a Member of the other place or the European Parliament and leave it like that. It should be left to the good sense of the parliament. Even at this time of night it is an amendment that should appeal to the Government. I say to them that they ought not to be prescriptive. They should trust the parliament's good sense to treat this matter properly, seriously and sensibly. I look forward to the acceptance of this amendment by the noble Baroness, Lady Ramsay of Cartvale, who, to date, has not accepted any of my bright ideas. I beg to move.

Baroness Ramsay of Cartvale

My Lords, I think that we are all in agreement that there should be something on the face of this Bill which deals with the prospect of a member of the Scottish parliament being in receipt of an additional salary as a Member of either the other place or the European Parliament. But the difference we have is how this is achieved. The obvious way to deal with it is to reduce or abate the salary received as a member of the Scottish parliament. Clause 78 ensures that this will happen.

I appreciate the concerns raised by the noble Lord, Lord Mackay of Ardbrecknish, and other noble Lords at Committee stage who consider that this issue should be left entirely to the parliament. However, in this instance we disagree. We believe that the public will expect us to ensure that some action is taken to reduce salaries when a member is claiming a salary from another parliament. The level of any reduction, however, should be for the parliament to determine and this is precisely what this clause provides. In response to Amendment No. 162 proposed by the noble Lord we consider that Clause 78, as it is drafted, goes a long way to allowing the parliament freedom to decide what reductions there should be in the salary of those members who have a dual role.

The level of reductions to salaries is not fixed. We believe that the parliament will be responsible enough to the electorate to set appropriate levels and what we have provided in Clause 78(2) gives considerable discretion to the parliament to decide what reduction there should be.

Under this clause there is nothing preventing the parliament, as the noble Lord, Lord Mackay of Ardbrecknish, pointed out, from deciding that an MSP's salary could be reduced by as much as 99 per cent. or as little as 1 per cent. This will entirely be a matter for the parliament to determine, but we consider it is helpful to provide it with a framework.

Dual membership is more likely to be an issue during the early days of the parliament. Therefore, in order to have some provision in place from day one, the Secretary of State has commissioned the Senior Salaries Review Body to consider what an appropriate level of abatement should be until such time as the parliament can consider this issue. It is hoped that thereafter the parliament will continue to take independent advice on salary abatements.

In view of this explanation I hope that the noble Lord will withdraw his amendment.

Lord Mackay of Ardbrecknish

My Lords, it seems to me that as the Senior Salaries Review Body is to report to the Government about the initial decisions, which can only be taken by the Government because the Scottish parliament is not up and running, then surely the latter can take advice from that body when the parliament is in existence. The noble Baroness has not in the least convinced me that the Government need to have a prescription in the clause, which is drawn as vaguely as she has admitted. In truth, it does not specify anything. I think that I could make out an argument that 99.999 per cent. was "a proportion". That does not stand up.

It would be much simpler to do what I have suggested. Clause 78 would then signal clearly to the parliament that it had to deal with this matter. It could ask the Senior Salaries Review Body what to do and that would be it. We would not have this vague provision about "a particular proportion" in subsection (2). That is what annoys me above all. If there were a third subsection stating that the particular proportion should be not more than such-and-such and not less than such-and-such—in other words, outlining the parameters—I would have some sympathy with it, but when the provisions are this vague, I believe that my suggestion is far better. It leaves the matter entirely at the discretion of the parliament. In the interests of not being prescriptive, I wish to seek the opinion of the House.

12.45 a.m.

On Question, Whether the said amendment (No. 160) shall be agreed to?

Their Lordships divided: Contents, 15; Not-Contents, 53.

Division No. 5
CONTENTS
Attlee, E.	Mackay of Drumadoon, L.
Byford, B.	Mackie of Benshie, L.
Carlisle, E.	Mar and Kellie, E.
Chesham, L.	Montrose, D.
Dixon-Smith, L.	Rowallan, L.
Ellenborough, L.	Selkirk of Douglas, L.
Mackay of Ardbrecknish, L. [Teller.]	Steel of Aikwood, L.
	Strathclyde, L. [Teller.]

NOT-CONTENTS
Acton, L.	Hoyle, L.
Ahmed, L.	Hughes of Woodside, L.
Alli, L.	Hunt of Kings Heath, L.
Amos, B.	Jay of Paddington, B. [Lord Privy Seal.]
Bach, L.
Berkeley, L.	Judd, L.
Carmichael of Kelvingrove, L.	Macdonald of Tradeston, L.
Carter, L. [Teller.]	McIntosh of Haringey, L.
Chandos, V.	[Teller.]
Clarke of Hampstead, L.	Mackenzie of Framwellgate, L.
Cocks of Hartcliffe, L.	Monkswell, L.
Crawley, B.	Nicol, B.
Davies of Coity, L.	Pitkeathley, B.
Davies of Oldham, L.	Plant of Highfield, L.
Dean of Thornton-le-Fylde, B.	Ponsonby of Shulbrede, L.
Desai, L.	Puttnam, L.
Donoughue, L.	Ramsay of Cartvale, B.
	Rea, L.
Falconer of Thoroton, L.	Rendell of Babergh, B.
Farrington of Ribbleton, B.	Sawyer, L.
Gordon of Strathblane, L.	Sewel, L.
Goudie, B.	Smith of Gilmorehill, B.
Graham of Edmonton, L.	Symons of Vernham Dean, B.
Grenfell, L.	Tomlinson, L.
Hardie, L.	Uddin, B.
Hardy of Wath, L.	Whitty, L.
Harris of Haringey, L.	Winston, L.
Hogg of Cumbernauld, L.	Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

12.54 a.m.

[Amendments Nos. 161 and 162 not moved.]

Clause 82 [Scottish representation at Westminster]:

Lord Rowallan moved Amendment No. 163: Page 38, line 23, at end insert— ("() In rule 1(1) (Great Britain not to have substantially more or less than 613 constituencies), after "Britain" there is inserted "for the purposes of elections to the House of Commons".").

The noble Lord said: My Lords, I had supposed that this grouping would have been included in the grouping of my earlier amendment. The Scotland Bill omits the Parliamentary Constituencies Act 1986. These amendments ensure that the conditions of that Act still apply in Scotland but not for England for election to Westminster. This is an important clause and I know that my noble friend Lord Mackay of Ardbrecknish will be speaking to it at length in a moment. The noble Viscount, Lord Thurso, put the Liberal amendment on the issue earlier and it has now been pushed through to the other place. It was won on a Division. I hope that these amendments will add to the strength of that amendment as it is considered in the other place. I beg to move.

The Earl of Mar and Kellie

My Lords, perhaps I may speak to my amendment, Amendment No. 173, which, slightly surprisingly, has been grouped with those of the noble Lord, Lord Rowallan.

I am opposing the inclusion of this clause as a procedural device to allow further discussion of the issue of the Scottish representation in this House after devolution. I was not allowed to table an amendment—that is, a new clause—to this effect. Had I been allowed to do so, I would have tabled it thus: "New clause. After Clause 82: (1) At least 10 per cent. of the Peers shall be domiciled in Scotland (2) These Peers shall have a duty, among others, to scrutinise the Scottish and Scots law elements of UK legislation which are reserved to the UK Parliament". In the margin alongside would have been the words "Working Peers from Scotland".

My purpose in all this is to establish a minimum quota of working Peers who are domiciled in Scotland. I should like to start by offering two definitions. The first is that of "Working Peers". By this I mean active participant Members of the House. I see the future need for effective categorising of Peers either as working Peers or as honorary Peers. The second definition is that of the word "domiciled". This is a Scots law concept relating to a person's primary residence. I see qualification by domicile as being an insurance that the Peer is subject to Scots law on a day-to-day basis.

The historical background to this issue lies in Articles 22 and 23 of the Treaty of Union 1706 and the two Acts which ratify that treaty. In 1706 there were 26 bishops and 180 Peers of England. The Peerage of Scotland then numbered 160. The population of the two countries was then in a ratio of five to one. The Peerage of Scotland was somewhat humiliated by its restriction to 16 representative Peers. They formed a group comprising 7 per cent. of this House. I would add the distinction that the process of election as a representative Peer did create a forerunner of my demand for categorisation as working Peers. Clearly, a representative Peer would only have sought the position to take an active part in the House, and of course failure to perform would have led to rejection at the next election.

Since 1963 the whole Peerage of Scotland has been admitted to this House. Their attendance to Scottish and UK matters has been, and continues to be, substantial. At the Committee stage, while opposing the Motion that Clause 82 stand part of the Bill, I complained that, of 104 Life Peers created since May 1997, only 11 were domiciled in Scotland. While that may appear to conform to my 10 per cent. requirement, I am not satisfied that we have any guarantees that these Peers will attend regularly and scrutinise Scottish legislation. Therefore, we cannot see them as 11 working Peers.

I believe that we need a guarantee to be built into the Bill to ensure that there is an adequate quota of working Peers from Scotland. The need for this will become ever more urgent in view of the imminent departure of the peerage of Scotland, and of other Scots with hereditary peerages of Great Britain and the United Kingdom.

I believe that there are about 40 life Peers who are domiciled in Scotland. That number is inadequate, for two reasons: first, that 40 is less than 10 per cent. of the 600 proposed for the reformed House; and, secondly, that the 40 life Peers who I have just mentioned are by no means all in my "working Peers" category. The success of the devolution project and the future success of the United Kingdom as a multicultural and multinational state both depend, among other things, on the confidence of the people of Scotland in the future composition of both Houses of the UK Parliament.

1 a.m.

Lord Sewel

My Lords, I should like, first, to deal with the amendments tabled by the noble Lord, Lord Rowallan. With these amendments the noble Lord is attempting to ensure that there will be at least 71 seats in the Scottish parliament. I have to say that I do not think it would be appropriate to amend Clause 82 in this way.

Last week, your Lordships amended the Bill to provide that the Boundary Commission should carry out a separate review of the Scottish parliamentary constituencies. We are, of course, considering the implications of those amendments. We do not think that it would be appropriate at this stage to seek to address the issue of the constituencies of the Scottish parliament by the further amendments proposed. I hope, therefore, that the noble Lord will feel able to withdraw his amendment.

I turn now to Amendment No. 173. I listened with very great interest to what the noble Earl said when proposing this amendment. However, the only difficultly was that I could not recognise the connection between what he said and what the amendment would achieve. The amendment seeks to achieve the simple deletion of Clause 82. As presently framed, the clause would, among other things, remove the rule that Scotland should have no fewer than 71 constituencies. Indeed, that instruction to the Boundary Commission would be removed, together with other aspects of the nature of the Scottish representation at Westminster in relation to the House of Commons.

In moving his amendment which would delete all those provisions, the noble Earl talked exclusively about the composition of this House. Basically, I could not follow the line of argument. I give way to the noble Earl.

The Earl of Mar and Kellie

My Lords, I am grateful to the Minister for giving way. I said at the beginning of my remarks that I had felt forced to adopt this as a procedural device in order to encourage the discussion which we are now having. I did not in fact want to delete Clause 82; but I did want to discuss the representation of Scotland in this House.

Lord Sewel

My Lords, as usual, the noble Earl has made a distinctive contribution to our proceedings. Indeed, he has brought to our attention for the second time the importance that he attaches to the composition of this House. However, I regret to say that there is nothing in the Bill that enables that issue to be addressed. I hope, therefore, that both the noble Earl and the noble Lord will feel able to withdraw their amendments.

Lord Rowallan

My Lords, I thank the Minister very much for that reply. I totally accept that, while such matters are being considered in the other place, it would be inappropriate for us to discuss them. Therefore, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 164 and 165 not moved.]

The Deputy Speaker (Lord Chesham)

My Lords, I believe that I should inform the House that if Amendment No. 166 is agreed to I cannot call Amendment No. 167.

Lord Mackay of Ardbrecknish moved Amendment No. 166: Page 38, line 25, leave out subsection (3).

The noble Lord said: My Lords, Amendments Nos. 166 and 167 offer the Government two options. We discussed in relation to Schedule 1 the special position the Bill gives to Orkney and Shetland. I proposed that it should also make special provision for the Western Isles. The Minister rejected my argument and, unfortunately, I believe the House rejected it too in a Division.

However, for the sake of consistency, I mention this issue with regard to Scottish representation at Westminster. The Bill as it stands makes special provision for Orkney and Shetland. It states that the constituency of Orkney and Shetland will not include any other part of Scotland. The provision is couched in nice legalistic terms but that in effect is what it states. It defines Orkney and Shetland for all time as one constituency. My Amendment No. 167 states that the Western Isles should be given the same protection.

The Government argued in response to my amendments in Committee and on the first day of Report that I should leave this matter to the good sense of the Boundary Commission which would not include the Western Isles in with anywhere else. I think I retorted, fairly justifiably, that if the Boundary Commission is to show such good sense with regard to the Western Isles, why are the Government not prepared to trust it to show the same good sense with regard to Orkney and Shetland. My Amendment No. 166 is based on the belief that as the Boundary Commission is composed of terribly sensible people who would never consider including the Western Isles with any other part of Scotland, they are sensible enough not to do that with Orkney and Shetland. Therefore we do not need special provision in that case as we can rely on the good sense of the Boundary Commission not to do that.

However, if we do not believe we can rely on the good sense of the Boundary Commission, my Amendment No. 167 seeks to protect the position of the Western Isles. I have already explained this argument, but I think it has become more important as I understand that if the Government were to accept the proposals of the noble Lord, Lord Jenkins of Hillhead, and if the electorate in this country were to accept the ditching of the traditional method of first-past-the-post—which I do not believe they will—the number of Scottish constituencies would decline even more than by the figure of about 14, which they will decline by under Clause 82(4). My rough calculation is that the average size of constituencies in Scotland under the Jenkins' proposal would be about 86,000. With the best will in the world, the Boundary Commission would find it hard to leave the Western Isles alone, especially if it was told it had to leave Orkney and Shetland alone. As I said before, there is an argument for putting the Western Isles in with Skye. That argument was proposed by some people—although not by me—at the previous boundary revision.

In the light of these new proposals on the horizon, there is an even greater likelihood that the Western Isles may well be included with a chunk of either the Inner Hebrides or the Inner Hebrides and the mainland in order to try to meet the 86,000 quota which would be the result of a combination of the Jenkins' proposal and the proposals in this Bill. Therefore I believe there is a strong case for protecting the position of the Western Isles.

I know the Government have defeated me before on this issue but I think the argument is stronger now because the number of Scottish seats will decrease and the quota will increase. I therefore would like to know the Government's view on this issue. If they tell me I must trust the Boundary Commission, I may be tempted to press Amendment No. 166, which trusts the Boundary Commission as regards Orkney and Shetland. I beg to move.

Lord Sewel

My Lords, as the noble Lord, Lord Mackay of Ardbrecknish, has told us, he sought the views of the House on whether the Bill should make provision guaranteeing a separate constituency for the Western Isles in the Scottish parliament. Your Lordships decided that it should not. Now the noble Lord has returned for our views on whether the Western Isles should form a separate constituency for the United Kingdom Parliament. I am sure it will come as no surprise to him to hear that the Government do not accept this amendment.

The noble Lord explained that he is probing as to why Clause 82(3) needs to make this provision for Orkney and Shetland and why it does not mention the Western Isles. Indeed, his amendment replaces the reference to the Orkney and Shetland constituency with a reference to the Western Isles constituency.

The provisions in Schedule 1 and Clause 82(3) give effect to the agreement reached in the constitutional convention that there should be separate Scottish parliamentary representation for Orkney and Shetland—nothing more and nothing less. That is what the reference in this clause of the Bill is all about. It is to secure the representation in the Scottish parliament of separate constituencies for Orkney and Shetland.

There is no need to make equivalent provision for the Western Isles. We are making no changes to that constituency in the Bill. However, we have decided that it would be right to ensure that Orkney and Shetland have separate representation in the Scottish parliament and so have split the constituency. We are not splitting a Westminster constituency in relation to the Western Isles. That is what Clause 82 is all about. The noble Lord is trying to extend the effect of Clause 82 beyond that for which it was devised.

Lord Mackay of Ardbrecknish

My Lords, I am grateful to the noble Lord for giving way. We had this difficulty in Committee, and I am still in some difficulty. I appreciate that Schedule 1 states that in the Scottish parliament the Isles of Orkney and the Shetland Isles should have an MSP each. I am not arguing about that; it is fine. What I still do not understand is why the provision has to be included in a clause dealing with the arrangements at Westminster.

If there were no reference to Orkney and Shetland in the clause, Orkney and Shetland would still have an MSP each under Schedule 1. I am puzzled by this argument. The Minister used it in Committee, and a number of noble Lords intervened and pointed to the rubric; namely, "Scottish representation at Westminster". We are talking about Scottish representation at Westminster. Even if this clause were not in the Bill, Orkney and Shetland would still have an MSP each. So I am very puzzled. I can see other arguments to the effect that Orkney and Shetland should always be protected in a UK context; however, I find it hard to see how the separate Orkney and Shetland MSPs are dependent on this part of the Bill.

Lord Sewel

My Lords, one thinks of what would happen if Orkney and Shetland, or part of Orkney and Shetland, became part of another constituency which included an area other than Orkney and Shetland. The build-up to the representation within the Scottish parliament would be disturbed, because the building block would not be there. There is the building block of a Westminster parliamentary constituency which consists entirely of Orkney and Shetland, and solely of Orkney and Shetland, and it is then split. Separate representation for Orkney and Shetland cannot be achieved if part of Orkney and Shetland is linked in a Westminster constituency with another area. I believe that explains the point.

Lord Mackay of Ardbrecknish

My Lords, I understand that. If the Government do not amend the Bill which currently provides for 129 MSPs into the future, with no provision for them to decline to match the Westminster seats, the argument the Minister has made falls. But so long as we are doing a one-to-one and keeping the number of MSPs and MPs coupled, at last I understand his point. However, he would have to reconsider the argument if the Government are able to accept the principles behind the amendment about the 129, carried against the Government.

I think I understand slightly better why the Government have the provision in Clause 82. At this time of night, I shall not have a dispute between Orkney and Shetland and the Western Isles. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 167 to 172 not moved.]

[Amendment No. 173 not moved.]

Clause 85 [Power to adapt etc. cross-border public authorities]:

Lord Sewel moved Amendment No. 173A: Page 40, line 1, leave out ("(if any)").

The noble Lord said: My Lords, this is an appropriate amendment on which to finish our deliberations for the evening. It is a drafting amendment which I can safely say is both minor and technical. It simply deletes the redundant words "if any" from Clause 85(2)(c). It is based on the startling proposition that one clearly cannot amend the constitution of an authority if it does not have one in the first place. I beg to move.

On Question, amendment agreed to.

Lord Sewel moved Amendment No. 173B: Page 40, line 2, after ("section") insert (" 52(4) or").

On Question, amendment agreed to.

Lord Carter

My Lords, before I move that further consideration on Report be adjourned, I should like to congratulate the House on the expeditious way in which it has dealt with a long list, including an important Statement. It just goes to show what the threat of an early breakfast will do!

I am extremely grateful and I beg to move that further consideration on Report be now adjourned.

Moved accordingly, and, on Question, Motion agreed to.