§ 1.42 p.m.
§ Baroness Ramsay of Cartvale
rose to move, That the draft order laid before the House on 1st March be approved [10th Report from the Joint Committee].
The noble Baroness said: My Lords, we have before us today two orders under the Scotland Act. These are the draft Scotland Act 1998 (Modification of Schedule 5) Order 2001 and the draft Scotland Act 1998 (Consequential Modifications) Order 2001. With the permission of the House, I shall speak to both orders together.
Noble Lords have in the past commented on the usefulness to them of seeing the executive notes prepared for the Scottish Parliament by the Scottish Executive for the guidance of its Members on orders debated there. The executive note for the modification of Schedule 5 order has been made available to noble Lords here once again. I should explain that the consequential modifications order is debated only in this Parliament and so there is no executive note.
Schedule 5 to the Scotland Act forms part of the definition of the legislative competence of the Scottish Parliament and sets out the matters which are reserved for the purposes of the Act. It represents a central part of the devolution settlement and changes to it must therefore be treated with particular care.
However, it was never the intention that the devolution settlement should be incapable of adaptation. Section 30(2) was included in the Scotland Act to provide a mechanism for Schedule 5 to be modified by an Order in Council, subject to the approval of both Parliaments. Such an order can be used to adjust the boundaries of the Scottish Parliament's legislative competence by adjusting existing reservations or their exceptions or by removing or adding them.
At present, Section C2 of Schedule 5 to the Scotland Act specifies that certain matters relating to the insolvency of business associations are reserved to this Parliament. There are exceptions to this reservation concerning mainly the process of winding-up. The order adds an additional narrow exception to the reservation of insolvency. It brings legislation on various aspects of the insolvency process within the competence of the Scottish Parliament. However, that applies only in relation to the very specific issue of a moratorium on the disposal of property held by a registered landlord.
In preparing for its Housing Bill now before the Scottish Parliament, the Scottish Executive issued a consultation paper called Better Homes for Scotland's 578 Communities. In its response to that consultation, the Council of Mortgage Lenders suggested that the Bill should include measures to protect tenants, landlords and other lenders in the event of insolvency action by a creditor against a registered social landlord. The Council of Mortgage Lenders pointed to legislation which was introduced in England and Wales as part of the Housing Act 1996 which provides a model for this.
The Scottish Executive has taken up this suggestion and wishes to incorporate a provision to that effect in its Housing Bill. It will provide for a moratorium period in the event of insolvency action against a registered social landlord. During that period, the agency charged with regulating registered social landlords will be able to enter into negotiations with the landlord's secured creditors to agree proposals for the future ownership and management of its assets. The basic aim of the provisions will be to ensure that the regulator will have both the opportunity and the powers to ensure that tenants' interests are to the fore.
There is an additional benefit to the measures proposed by the Scottish Executive. Putting the insolvency regime for registered social landlords in Scotland on a similar basis to the one that currently applies in England and Wales will assist Scottish registered social landlords to see finance on a level playing field.
In considering the proposals, it has become clear that legislation to that effect would be caught by the reservations relating to insolvency in Schedule 5 to the Scotland Act 1998. Specifically, the reservation of,the general legal effect of winding up".in paragraph (a) of Section C2 of Schedule 5 would cover a moratorium on the disposal of land and the related provisions about the ownership and management of such land.
There is also likely to be a provision giving a power to apply to the Court of Session in relation to the execution of the negotiations which take place during the moratorium which would be caught by the reservation in paragraph (c) of Section C2 of Schedule 5. Accordingly, the effect of the order will be to give the Scottish Parliament powers to legislate in this area. The relevant UK departments have been consulted and are happy with that change. That includes in particular the Insolvency Service, an agency of the Department of Trade and Industry, which is responsible for the operation of the Insolvency Act 1986 in Scotland as well as in England and Wales.
It is relevant that the general objective of the reservation of insolvency is to ensure the uniform treatment of business associations throughout Britain. That particular matter, however, has been dealt with through housing legislation in England and Wales and has not been regarded as problematic in terms of insolvency law. In practice, I believe that it has never been used. There seems no reason to deny the Scottish Parliament the opportunity to address the same issue of regulating social housing through its own housing legislation. It is perhaps an added bonus, if slightly ironic, that the outcome is expected to be uniformity with England and Wales.
579 I turn to the second order, which is made under Section 105 of the Scotland Act 1998. Section 105 enables existing enactments or instruments to be amended as necessary in consequence of the Scotland Act. The order amends the wording of the Roads (Scotland) Act 1984 and the Road Traffic Regulation Act 1984. The changes are so that the post-devolution division of responsibility between Scottish Ministers and the Secretary of State for the Environment, Transport and the Regions are properly reflected.
In particular, the relevant definitions of "traffic authorities" and "roads authorities" in the two Acts I have mentioned need to be amended. This is a purely technical adjustment with no policy significance. This is precisely the kind of consequential modification for which Section 105 of the Scotland Act 1998 was provided. I hope that noble Lords will feel able to support both the orders. I beg to move.
Moved, That the draft order laid before the House on 1st March be approved [10th Report from the Joint Committee].—(Baroness Ramsay of Cartvale.)
§ The Earl of Mar and Kellie
My Lords, I thank the Minister for explaining this pair of orders to the House. That is not a complaint. It is inevitable that whenever an anomaly is identified of whatever magnitude, or whenever there is a new piece of UK legislation, there will be another Scotland Act order to rectify it or to bring it into operation in Scotland. I presume that the process will be ongoing and without end. It is undoubtedly characteristic of the devolution process.
A useful spin-off is that whenever that occurs we have a brief chance to debate Scotland. Wisely, in my opinion, the House has been anxious to avoid discussing Scotland following the moment of devolution. I believe that the return of national democracy in Scotland has taken substantial root and that it is now more secure than the Secretary of State's reference to it as being a "fragile flower" would imply. I therefore believe that Scotland ought to be discussed in this House, though perhaps along the lines of how it is "getting on".
Today, the problem is the division of responsibility for veterinary policy and it is a pity that the orders do not deal with that—they clearly do not. I hope that the unified British Veterinary Service can come to see the merit of a vaccination policy in England but not in Scotland. The consequences for Scotland's export trade must be kept firmly to the fore.
I turn to the order dealing with the modification of Schedule 5. That is the most comprehensible of today's three Scotland orders. Not only do I recognise it as a type A order requiring the approval of both Houses of this Parliament and the Scottish Parliament, but it is also supported by a descriptive executive note from Edinburgh. The noble Baroness will note my joy at that!
580 The order is simple and follows the devolutionary trend of which I approve. The devolution of responsibility for certain aspects of the insolvency of a registered social housing provider is not only a mouthful but is also precautionary in nature. However, I do not decry the order because it foresees the merit of instituting a moratorium into insolvency proceedings for the good reason that it ought to protect the position of the tenants of an insolvent registered social landlord.
The genesis for the order is undoubtedly the Housing Bill currently before the Scottish Parliament. The proposed new housing executive agency would use the 28-day moratorium to organise a rescue package for the assets and the tenants of the insolvent social housing provider. I hope that the legislation is never needed in practice, but I approve of its passage today.
I turn to the consequential modifications order, which is more narrowly focused. It is simple to comprehend and difficult to understand. As there is no executive note, it does not need to be approved by the Scottish Parliament. We learn that the order carves up responsibility for trunk and other roads between the Secretary of State at the DETR and the Scottish Ministers. But then if fails to explain exactly how it does so.
I believe that it does not relate to motorways, which are apparently referred to as "special roads", so I am left to wonder what are the other roads. I can recognise a trunk road and I recognise that most of the road networks in Scotland are the responsibility of the 32 local authorities. If my analysis is correct, I hope that the Secretary of State at the DETR and the Scottish Ministers will be wiser than me.
§ Baroness Ramsay of Cartvale
My Lords, I thank the noble Earl for his comments on the two orders. He is right that there will be the unavoidable, expected, logical and normal need to make such adjustments from time to time. Devolution is a process and we were always aware that there would be such requirements. For that reason, the Act contains built-in procedures under which adjustments can be made between reserved and devolved matters and in the interests of greater efficiency.
I noted the noble Earl's comments about a "fragile flower". However, although I accept and agree with his view that devolution is strong, my right honourable friend was correct in saying that the Scottish Parliament and the devolution settlement was one of the biggest constitutional changes this country had known for centuries. As regards its development, it behoves everyone to go forward with care. I do not believe that brutal attacks on the Scottish Parliament, which seem to be the preferred option of the Scottish media, help anything develop properly and well.
I am happy to say that vaccination has nothing whatever to do with the orders and I do not intend to comment on it. The noble Earl is right that the Housing Bill which is going through the Scottish Parliament necessitates one of the orders. Finally, he is 581 also correct in his assumption about the differentiation between the road systems. I hope that with those answers the House will approve the orders.
On Question, Motion agreed to.