Select Committee on Scottish Affairs Minutes of Evidence

Examination of Witnesses (Questions 60-79)



Mr Lazarowicz

  60. Could I take up one aspect of the relationship between the Scotland Office and the Scottish Executive in so far as participating in European affairs is concerned. Moving away from the Memorandum of Understanding to the Concordat itself in terms of actual participation, in what I still think it is called Scotland House, in Brussels, what kind of participation does the Scotland Office have in that shop window for Scotland and the Scottish Executive?
  (Mrs Liddell) We have a great deal and, again, it is down to goodwill. It was Scotland Week in Brussels a fortnight ago and I went out and worked with Scottish Executive Ministers on a lot of promotional activity. I made a major speech to a seminar on the future of Europe and how the United Kingdom wishes to sponsor debate on the future of Europe, particularly in relation to the Devolved Administrations. We find the Scotland House extremely helpful. I, as indeed has the Minister of State, have served in many Councils in all my many Ministerial guises and to some extent I do not find myself needing to use formal structures as much now I know how the system works. Scotland House adds great value, it is greatly respected in Brussels, and it is a facility that is available to Members of this Parliament as well as to Members of the Scottish Parliament. I would encourage Members, especially if you are making use of the visit that you are allowed to another institution, to take the time to go and look at Scotland House and how it functions.

Mr Carmichael

  61. Specifically on the European affairs aspect of the work of the Scotland Office, my constituents would argue that the single most important aspect of European politics at the moment is the proposed forum next year on the Common Fisheries Policy, and equally they look to London to take a very strong position on the promotion of some of the proposals in the Green Paper. Can I ask what representations has the Scotland Office in particular made to the Commission on the Common Fisheries Policy?
  (Mrs Liddell) We keep in very close contact with Rhona Brankin on these matters. It is, indeed, the Council where the Scottish Executive has tended to lead the UK delegation. That is an area where Scotland predominates over the United Kingdom view from the point of view of the Scotland Office. We keep in touch with our colleagues in the department down here but because the great majority of fisheries' interests now are Scottish it tends to be the Scottish Executive that is very much in the lead on that, which I imagine should suit your constituents.

  62. Something that we are not unhappy about but we will judge it by the results.
  (Mrs Liddell) Fishermen always do.

Ann McKechin

  63. Mrs Liddell, you have mentioned the fact that your staff are mostly seconded from the Scottish Executive and I take it that you follow the Scottish Executive's equality strategy for staff. Does your Department have any specific strategy with regard to recruitment and equality issues?
  (Mrs Liddell) Just on the general equality point, we made a major breakthrough with the appointment of a woman Secretary of State, the first for 116 years. Save the presence of the Minister of State, at a Ministerial level I think we outnumber men, so there may be other equality issues that have to be brought to bear there. I think Mr Gordon can best fill you in.
  (Mr Gordon) The Scotland Office is committed to the same policies that the UK Government is requiring of all departments in terms of promoting diversity in ethnic terms and in terms of sexual discrimination. In terms of measuring diversity, we have taken the view that, because the Office is really quite small so that we would see huge movements in performance with one or two movements of staff, and given that our staff are for the most part almost entirely from the Scottish Executive, we would be brought together with the Scottish Executive staff for monitoring of diversity. If you would like specific figures for this—

  64. I wonder if it would be possible in future Departmental Reports to give information on targets and how that is taken into account.
  (Mr Gordon) There is certainly no difficulty doing that.

  65. If I could go on further from the staff issue and equality to whether the Scotland Office makes any assessment of the impact of policy decisions concerning Scotland on gender, ethnic background and disability issues? A recent experience I had was when I visited the Inland Revenue Scotland Office during the summer recess and I was advised that they were only now producing leaflets in ethnic languages on Tax Credits despite the fact that they had been introduced 15 months ago. Has the Scotland Office issued any guidelines to offices in Scotland about how they should address these issues?
  (Mr Foulkes) Can I say on that that, as you know, during the summer I, on behalf of the Scotland Office, arranged for Members of Parliament and invited Members to meetings with the Inland Revenue, with the Disability Rights Commission and with the Health and Safety Executive, all of which are reserved areas and operate in Scotland. The officials in Scotland explained their functions very well but also took on board some of the suggestions that you and others made at the meetings. It was a particularly useful one with the Disability Rights Commission and also, as you say, with the Inland Revenue. I have had separate discussions with the heads of the Inland Revenue and the Health and Safety Executive in Scotland and that was one of the issues we discussed with them.

John Robertson

  66. With the link between health and social security do you see yourself to be in an unusual position or a special position, particularly in Scotland, particularly in dealing with disabilities and for that matter any kind of benefit that might come from social security where it is linked to health? Carers, for instance, who are receiving benefit from social security are linked to the health service and health system. Do you see yourself as an important person in this as the link between them?
  (Mrs Liddell) Brokering the bilateral relationships between the two departments is very important and in this case it is three departments. Often where we can add value is making sure that the UK Department is aware of the issues that are specifically Scottish. They need not necessarily be legislative issues. For example, the high incidence of heart disease and cancer in Scotland which is larger than it is in any other part of the United Kingdom, issues related to diet and so on that we all know are significant issues for Scottish people. We have worked quite hard to ensure that colleagues here are alert to the fact that not everything appears on the face of a Bill, there are a lot of issues that are much wider, that are cultural and institutional. In terms of overall equality policy the Minister of State sits on the Equality Committee. We are not an employing department so we are not front line in relation to that but making sure that in issues of diversity, especially in relation to disability, that the specific needs of Scotland are taken into account is something we do as a matter of routine.

  Chairman: We are going to move on to the funding questions now. Before starting that can I say to the Secretary of State, the Committee recognises the technical nature of many of these questions therefore we would expect a broad reply but followed by a detailed memorandum. They are important to us in an attempt to follow and understand the funding arrangements. Could I ask Mike Weir to pick that up.

Mr Weir

  67. We were all given a copy of Funding the Scottish Parliament National Assembly for Wales and Northern Ireland Assembly, while it is a very interesting document one of the points is that the figures that are followed through are not publicly available, what role does the Scotland Office play in assisting the funding for the Scottish Parliament described in the document?
  (Mrs Liddell) We do not actually do the computations, we have a route whereby the money goes to the Scottish Executive, so the Barnett consequentials are all done by Treasury, although it goes through us as a conduit, that is what we are, rather than the arbiters of what should be actually done with the funding.

  68. Do you have access to the Treasury figures?
  (Mr Gordon) Yes, indeed we do. In the course of the Spending Review one of the outcomes is that decisions are taken on the spending programmes of United Kingdom departments. These are the key components of the consequentials from which will be calculated the Scottish budget. We, and indeed the Scottish Executive, have access to those figures to make sure that a fair share is coming to Scotland.

  69. Are these figures published in any form?
  (Mr Gordon) There were figures published at the time of the announcement and we can produce those in the memorandum.[6]
  (Mrs Liddell) Often the Red Book will give you a fair amount of detail in relation to that.

  70. On the funding of the Scotland Office itself I was interested in the figures in Tab 1 on page 15 for the running costs of the Office. I notice they seem to have gone up in the first year fairly substantially and they remained steady thereafter. I appreciate that in 1999-2000, which was a partial year, it seems to come to about four point something million pounds. I am curious as to why there seems to be a large difference. I would have thought that the start-up costs would have been higher in the first year.
  (Mrs Liddell) The reason they are small, firstly, is because it was a nine month period. At the very beginning, understandably, all of the focus of activity from our election in 1997 was making sure that all of the systems were right in the Scottish Parliament, that the Scottish Executive had all of the staffing requirements put in place. I think it is fair to say that we did underestimate what would be needed by the Scotland Office to carry out our functions. As I said at the beginning, we sit on something like 19 different Cabinet committees and that requires advice and analysis. As we were talking in relation to the legislative programme, there has to be detailed analysis of every Bill that goes through for the impact on Scotland and we had not really factored that in to the functioning of the Scotland Office. My predecessor, Dr Reid, took a most worthwhile initiative in raising the issue with the Chief Secretary and it was recognised that we really did have to have a much more policy oriented Scotland Office rather than a small functioning private office. That is the point at which a bigger structure was put in place to make sure we did have the kind of advice that was actually needed. If you look at the range of issues where the reserved matters apply they are very, very considerable indeed and even to have the ability to analyse the anti-terrorism legislation, for example, that was of huge, huge importance to us. At the beginning we had a blank sheet of paper, we wrote down what we thought was a template for what the Scotland Office should be, we did not get it right and basically that is why we have had to put in place a Scotland Office that has a bigger infrastructure than we had initially envisaged.

  71. That may be the remit of the Scotland Office but as such how do the running costs compare to the previous costs?
  (Mrs Liddell) It is infinitesimal.
  (Mr Gordon) I cannot give you specific figures but the direct running costs of the core of the Scottish Office, leaving aside the large agencies which surrounds it, was of the order of £200 million.

  72. I notice the staff numbers seem to have gone up from 1999, again that is partly due to the 53 going to 110, is that the same reasoning?
  (Mrs Liddell) Yes.

Mr Carmichael

  73. Do you actually see a long term future for the Scotland Office, you yourself, when in your introductory remarks you are saying that you saw there was a degree of uncertainty about it before the election? I have listened with great care to all that you are saying today and I accept that there is a legitimate role for representing the interests of the various devolved assemblies within the Westminster Government, do you not think there will come a time when it is no longer appropriate that that be done by the Scotland Office, the Wales Office or the Northern Ireland Office but that some over arching body could do it just as effectively?
  (Mrs Liddell) If you cast your mind back to the time before the General Election or just immediately after the establishment of the Scottish Parliament there was quite a debate in Scotland about, was there a case for a Secretary of State for Scotland. What I have found very interesting is the extent to which that debate has changed. In the run up to the General Election explicit statements came from the business community and the trade union community about their desire to maintain a Secretary of State for Scotland. Some of that may be down to the nuts and bolts way that we actually work. If a business has encountered a difficulty it is not unusual now for them to phone me directly and often our intervention can resolve a difficulty within 24 hours, they see a facility there they can respond to. I mentioned earlier on the whole issue of Chester Street Holdings, the insurance company that went into liquidation leaving victims of asbestosis high and dry. The trade union movement contacted me and I was able to use my office as a way of moving along very rapidly and as a means whereby these issues were dealt with. Whilst there was a debate I think we have shown by our ability to respond to situations that we do add value. Indeed the Prime Minister made it clear during the General Election campaign that he saw a role for the Scotland Office and the Wales Office into the future. I have heard these debates in terms of an over arching department, the reality is my job as champion of Scotland in the Cabinet has actually not changed that much from the role of Secretary of State before. What is different is that I do not take executive functions, they are now devolved to the First Minister and to the Scottish Executive. It is a wider ranging role than even I anticipated it would be when I became Secretary of State in January of this year. There are other areas where we can add even more value. One of the areas that we have tried in the past to have stabs at was getting the profile of Scotland up abroad, not just in trade or in tourism but the generic quality issues about Scotland. I as Secretary of State for Scotland have access to the whole panoply of Her Majesty's Government's international posts internationally and I see it as one of my responsibilities to promote Scotland internationally, to act in a small way as an Ambassador for Scotland. Just two weeks ago I was in New York where I was able to represent the Scottish Police and Fire Service in laying a wreath at Ground Zero but also to address the Scottish/American Foundation. It is not generally recognised that there are twice as many people in the United States claiming to be Scottish as there are living in Scotland. That is a resource that historically we have never properly plugged into. The Irish are very good at it, there is no reason why we should not be good at it and it is something that I am determined we should do.

  74. Do you see your department continuing to build?
  (Mrs Liddell) In terms of resources we are stretched, there is no doubt about that, but I see no need for empire building. What I think would be useful would be for us to have more of an interchange with other Whitehall departments. It would be useful for people from the FCO and Treasury to have experience in a department such as ours, which has very wide ranging experience because everyone has to be multi-disciplined in a department that is as small as this department is. I do believe we do add value. There was a point where we were dangerously under resourced and I think that was the point where you could have put a question mark over it.

  75. Do you think it is still necessary for the Scotland Office to have the presence in Edinburgh that it does? I am thinking particularly of the building that was acquired as a replacement for Bute House. Is that adding value or is it just duplication?
  (Mrs Liddell) We do not have a replacement for Bute House, we just have a functioning office in Edinburgh. That is my key base for liaising and, indeed, the Minister of State and the Advocate General are there as well. That is where we are formally based as part of our carrying out the job of liaison with the Scottish Executive, working with the Advocate General's solicitors at Victoria Quay. We have a tiny outpost in Glasgow which is more functional than anything else. For us to operate in a portakabin somewhere around about the Gyle Centre would not be appropriate for the good conduct of the business of the Scotland Office. George, do you want to add anything?
  (Mr Foulkes) I just want to add a word because I think there was perhaps a slight misunderstanding in Mr Carmichael's first question about representing the Scottish Executive in Westminster. Although we deal with the Scottish Executive and liaise with them and are the custodians, as the Secretary of State said, of the Scotland Act, we do not represent the devolved administration but we represent the people of Scotland in the reserved areas, just as you all do as Members of Parliament. Just a personal point: I was Under-Secretary at the Department for International Development and felt I worked very hard there and was busy morning, noon and night and everyone said when I was going to come to this job that there was not really a job to be done. I have got my diary for this week if anyone would like to have a look at it, at the various meetings, the Clyde Task Force on Friday and I spoke to the Coal Industry Society on Monday and I am talking to the Scottish Council on Single Homeless on Westminster Still Matters. A lot of people are very interested to hear from us that Westminster is still vitally important for the people of Scotland.

  Chairman: Mark, did you want to come in on this point?

Mr Lazarowicz

  76. It was not on this point, it was a point that we discussed earlier. A question was asked in relation to the memorandum which has been promised and I wondered would it be possible for that memorandum specifically to look at the way in which the operation of the Barnett Formula has generated increases to the Assigned Budget in the years covered by Spending Review 2000? I wonder if that could be included as a specific point in the memorandum.
  (Mr Gordon) I think we can try to include a worked example to show how the Barnett Formula actually works, yes.
  (Mrs Liddell) If it would help the Committee to have a seminar on the actual functioning, I promise you it is something to look at when you are having difficulty sleeping because it is quite complex. I was around at the time when the Barnett Formula was put together. Officials could take people through the arithmetic if they wanted.

  77. It was not so much a worked example but actually showing how the Barnett Formula had resulted in increases in Assigned Budget for the years covered by the Spending Review 2000.
  (Mr Gordon) We will have to discuss that with the Treasury and come back to you.[7]

Mr Lyons

  78. Secretary of State, could I just turn to the question on the July 2000 Funding Policy document. Do you still think it is an accurate description of the operation of the devolution financing system? When are we likely to see an updated document?
  (Mrs Liddell) I think in relation to the July 2000 Funding Policy document it is the current up-to-date version and there are no plans for any further edition of the statement on Funding Policy. If there are any specific areas that you are anxious about we will seek to give you a more detailed answer in writing.

Mr Weir

  79. We appreciate that not all of the money comes through Barnett. Page 27 of the Funding Policy document shows the part of the Departmental Expenditure Limit which falls outwith the formula and also the main items within Annually Managed Expenditure, but there are no numbers there. I wonder if the Secretary of State could provide us with a table for the years 1998-99 to 2003-04 showing numbers for these separate items?
  (Mrs Liddell) We certainly can provide a memorandum on that. I think Mr Gordon could probably give some simplified figures if it is useful to the Committee to have them right now.
  (Mr Gordon) The detailed forward projections, the kind of breakdown that is implied by that table, are decisions for the Scottish Executive to take and I do not know whether they have taken and projected those details as far forward as that. There is, I think, a reasonably helpful table in the Departmental Report which gives you at least some sense of scale of these various components. The assigned budget essentially embraces what is called a departmental expenditure limit. Certain items which are handled outside departmental expenditure limits toll under what is called annually managed expenditure. These are elements that are more difficult to forecast. Within the departmental expenditure limit the Barnett Formula applies to almost all expenditure. There are a very small number of items, as you will see in table 27, which are outside the Barnett Formula, and they represent a fraction of one per cent of the departmental expenditure.

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