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Session 2000-01
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Delegated Legislation Committee Debates

Draft Scotland Act 1998 (Consequential Modifications) and (Modification of Schedule 5) Order 2001

Twelfth Standing Committee on Delegated Legislation

Monday 19 March 2001

[Mr. Jim Cunningham in the Chair]

Draft Scotland Act 1998 (Consequential Modifications) Order 2001

4.30 pm

The Minister of State, Scotland Office (Mr. George Foulkes): I beg to move,

    That the Committee has considered the draft Scotland Act 1998 (Consequential Modifications) Order 2001.

The Chairman: With this it will be convenient to consider the draft Scotland Act 1998 (Modification of Schedule 5) Order 2001.

Mr. Foulkes: This is the first occasion since I became Minister of State in the Scotland Office on which I have had the pleasure of addressing a Committee on orders under the Scotland Act 1998. It is an especial pleasure for me to be doing so under your distinguished chairmanship, Mr. Cunningham. The very fact that we are doing so underlines the importance of the Westminster Parliament and the Scotland Office as custodians of that Act.

I am aware of previous discussions concerning Executive notes, and I know that the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) is especially concerned about those. They are prepared for the Scottish Parliament by the Scottish Executive for the guidance of its Members on orders debated there. I have followed the excellent practice of my predecessor, my hon. Friend the Member for Cunninghame, North (Mr. Wilson), by making the Executive note for the modification of schedule 5 order available to the Committee; I hope that the Committee has found that useful. I should explain that the consequential modifications order is of a type debated only in the Westminster Parliament, so no Executive note was required.

Schedule 5 to the Scotland Act 1998 forms part of the definition of the legislative competence of the Scottish Parliament, and sets out which matters 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 especial care.

However, it was never intended that the devolution settlement should be incapable of adaptation. Section 30(2) was included in the Act specifically to provide a mechanism for schedule 5 to be modified by Order in Council, subject to approval by both Parliaments. Such orders 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 to them. At present, paragraph C2 of schedule 5 specifies that certain matters relating to the insolvency of business associations are reserved to the United Kingdom Parliament. There are exceptions to that reservation—mainly concerning the actual 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 specific issue of a moratorium on the disposal of property held by a registered social landlord.

How did that come about? In preparing the Housing Bill now before the Scottish Parliament, the Scottish Executive rightly and sensibly issued a consultation paper entitled ``Better Homes for Scotland's Communities''. A response to that consultation from 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—particularly to protect the tenant. The Council of Mortgage Lenders referred to legislation that was introduced in England and Wales as part of the Housing Act 1996, which provides a model for the measure.

The Scottish Executive have taken up that suggestion, and want to incorporate such a provision in their Housing Bill. The measure 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—currently Scottish Homes—will be able to enter into negotiations with a landlord's secured creditor to agree proposals for the future ownership and the future management of its assets. The basic aim of the provisions is to give the regulator the opportunity and the powers to ensure that the tenant's interests are to the fore.

There is also a significant additional benefit to the measures proposed by the Scottish Executive. By bringing forward provisions in line with those that currently apply in England and Wales, Scottish registered social landlords will be able to seek their finance on a level playing field with the rest of the United Kingdom.

In considering the Executive's proposals, it has become clear that such legislation would be caught by the reservations relating to insolvency in schedule 5 of the Scotland Act 1998, specifically the reservation of

    ``the general legal effect of winding-up''

in paragraph (a) of section C2 of part II of schedule 5. That reservation would cover a moratorium on the disposal of land and the related provisions about the ownership and management of such land. Under the present provisions of the Act, the Executive are not allowed to legislate on the matter.

The Executive are also likely to include in their legislation a provision giving a power to apply to the Court of Session for the execution of negotiations during the moratorium, which would be caught by the reservation in paragraph (c) of section C2. Accordingly, the order would give the Scottish Parliament powers to legislate in that area. The relevant UK Departments have been consulted, and are happy with the change, including the Insolvency Service, an agency of the Department of Trade and Industry, which is responsible for the implementation of the Insolvency Act 1986 in Scotland, as well as in England and Wales.

The general objective of the reservation of insolvency is to ensure the uniform treatment of business associations throughout Britain. This particular matter, however, has been dealt with through housing legislation in England and Wales, and has not been regarded as problematic under insolvency laws. We know from experience that such legislation works. In practice, it has not been required. There seems, therefore, no reason to deny the Scottish Parliament the opportunity to tackle the regulation of social housing through its own housing legislation.

It is perhaps an added bonus--I would say to the hon. Member for Galloway and Upper Nithsdale (Mr. Morgan) that it is an irony--that the measure is expected to bring Scotland into line with England and Wales.

Section 105 of the Scotland Act 1998 enables Acts or instruments to be amended, as necessary, in consequence of the Scotland Act. The Scotland Act 1998 (Consequential Modifications) Order 2001 is a purely technical adjustment with no policy significance. [Interruption.] I notice a degree of scepticism in the Committee. If anyone can find any policy significance in the order, I will be very interested to know about it.

The order amends certain wording in the Roads (Scotland) Act 1984 and the Road Traffic Regulation Act 1984. The change is designed properly to reflect the post-devolution division of responsibility for trunk roads and certain other roads in Scotland. The Secretary of State who exercises those powers not devolved to Scottish Ministers is the Secretary of State for the Environment, Transport and the Regions, our own Deputy Prime Minister.

Following devolution, Scottish Ministers are responsible for a number of functions in relation to special roads—mainly motorways—and for trunk roads and certain other roads. Those functions include the construction, improvement and maintenance of trunk roads and special roads. They are set out in the Roads (Scotland) Act 1984 and the Road Traffic Regulation Act 1984.

Scottish Ministers are also responsible for certain traffic regulation functions in relation to those roads, such as restrictions on the use of particular roads by certain types of vehicle. For example, they can restrict the use of a trunk road by vehicles over a specified weight or height.

Other functions in relation to special roads and trunk roads are the responsibility of the Secretary of State for the Environment, Transport and the Regions, although power to exercise certain functions has been delegated to the Scottish Ministers by an executive devolution order under section 63 of the Scotland Act 1998. Those functions include the regulation of traffic on special roads, the setting of speed limits and the use of traffic signs for conveying instructions and information to road users. For example, while the Secretary of State is responsible for regulating the size and form of traffic signs for general use on all roads, the Scottish Ministers can decide what traffic signs are required on particular special roads and trunk roads in Scotland. That is a very sensible division of responsibility--I can tell that other Committee members agree.

The current wording of the Roads (Scotland) Act 1984 and the Road Traffic Regulation Act 1984 does not fully and properly reflect the respective responsibilities of the Scottish Ministers and the Secretary of State as a result of devolution. This order provides the necessary clarification. It is a consequential modification such as section 105 provides for. In particular, the definitions of ``traffic authorities'' and ``roads authorities'' in the two Acts need to be amended by this order.

The amendments are purely technical; there are no policy implications. It is therefore with great pleasure that I commend them to the Committee.

4.42 pm

Mr. Dominic Grieve (Beaconsfield): It is a pleasure to welcome you to the Chair, Mr. Cunningham, and the Minister to his first venture into the arcane area of statutory instruments that are consequential on the passing of the Scotland Act 1998. The Minister gave us some description of section 63 of the Scotland Act in respect of speed limits. I recollect, in the dim recesses of my mind, a debate on that subject some time ago. Can I tell the Minister—in what I hope is a cheerful frame of mind—that when the hon. Member for Linlithgow (Mr. Dalyell) said of devolution that the devil is in the detail, I do not think that he anticipated the detail into which the Minister has gone today.

I am happy to tell the Minister that his exposition of the modification of schedule 5 order was so clear and complete—perhaps thanks to the explanatory notes from the Scottish Executive—that I have no matters to raise with him.

It is tempting to go into a great deal of detail about the consequential modifications order, but I shall refrain. However, I cannot resist a sideswipe at the explanatory note on article 3. It succeeds in being as close to incomprehensible with regard to the savings provision as such notes usually are, but it is possible to make sense of it on the third or fourth rereading.

I commend the practice of the Scottish Executive of providing proper explanations for Members—an import that we could readily bring into the House for all our statutory instruments.

Finally, I want to flag up one matter. Does the Minister expect that further statutory instruments in this area will have to be introduced? That is not intended as a spoiling comment, but several aspects of road traffic legislation have presented difficulties, so I wondered whether the Minister thought that this was the end of this particular road, or whether he has received some indication that we may have further such instruments to consider. Otherwise, the import of the order is innocuous—even more innocuous than the problem we encountered over section 63 about whether we should keep conformity of road traffic signs north and south of the border.

I have nothing further to add, except to thank the Minister, in particular for his comments on the modification of schedule 5 order, which were a model of presentation in their clarity.

4.45 pm


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