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Lord Mackie of Benshie: My Lords, I too must thank the noble Lady for initiating this debate. I sympathise with her greatly in that the first time she tried to hold this debate a former Prime Minister died and it was cancelled. I am afraid that on this occasion the hordes of pressmen outside this palace and inside it are not waiting for news of the debate on Scottish devolution. Nevertheless, it is important and has generated a large response from the opposite Benches.

The noble Lady said that there were three possibilities: devolution, separation and the status quo. She proceeded to give a fair account of devolution and separation and went on to demolish them with savage argument. I suspect that when she rises to reply, she will come down in favour of the status quo.

We have heard much about the status quo and how splendid it is. The Secretary of State has immense power in the Cabinet and there are 5,000 civil servants in Scotland. I must say that we have admirable Ministers. They are representative of an older and more pleasant breed of Tory than the Thatcherite ones. They are amiable indeed. The noble and learned Lord, Lord Fraser, on the Bench opposite is one of them. There is the admirable Sir Hector Monro, and the Secretary of State is a very nice man, as is Lord James Douglas-Hamilton. They fight for Scotland. But whom do they fight? They fight their colleagues in England.

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Occasionally they lose. Indeed, we have in the Chamber another good former Minister, the noble Lord, Lord Sanderson of Bowden, who also protects the status quo.

However, they failed to stop the imposition of the poll tax first on Scotland. They have so far been reasonably successful in stopping the privatisation of the Forestry Commission, which every landlord in Scotland who grows trees knows to be an absolute nonsense. They have succeeded in fighting off the Thatcherites enough not immediately to privatise water in Scotland. So I suppose that one could say that they do a good job. But they have no mandate at all. Why they object to PR, I do not know. That would give reasonable representation in Scotland of the Tory point of view. There ought to be representatives of the Tory point of view, although they would not be in much of a majority, if at all. I do not believe that the evidence shows that the people of Scotland are satisfied with a system that refuses any real democratic representation because it is settled by the situation in the country as a whole, though only narrowly.

Let me say at once that I am a unionist to the extent that I believe in a United Kingdom. I believe that the United Kingdom has worked reasonably well. Certainly Scotland benefited from the extension of trade after the union of the parliaments. The tobacco trade in Glasgow, for instance, built Glasgow to a large extent. I suppose that the benefits of union have been considerable. Whether a better arrangement could have been reached or we could have had the benefits without the snags is another question.

Of course we need an equalisation fund. Scotland comprises a third of the whole area of the United Kingdom. It is nonsense to expect it to maintain the same decent services throughout Scotland without an equalisation fund. That we accept. Indeed, we must do. I cannot believe that anyone who wants to preserve the United Kingdom would deny to Scotland that advantage, if indeed there is a Scottish parliament for Scottish affairs.

Many people have said that there is no future in a devolved parliament for Scottish affairs. They have said, with varying degrees of intensity, that it would lead inevitably to an independent Scotland. With respect, that is rubbish. I can think of no case in which granting of reasonable independence in a federal system has led to separation. For example, the situation in Ireland was quite clear. There was no feeling that Britain would give them any independence. It was not on offer. The result was that eventually there was a rebellion and a completely separate nation. The situation in Slovakia was interesting in that there was no genuine devolution of power there and they made the foolish decision to separate. It was not a case of refusing power or local power. So that argument must go by the board.

Southern Ireland, which was the example of the noble Lord, Lord Taylor, was not apt to the situation. It is of course independent. But the situation in Northern Ireland—in Ulster—when they had a parliament in Stormont is extremely interesting.

Many years ago, just after the war, I went to Northern Ireland and did a tour. I was struck by the fact that the contact between the Government, the university and the officials was very tight. They understood perfectly the

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problems of the Province. For example, long before this country had thought of silage and giving grants for the construction of silos, they were on to it there because of Professor Morrison and his close contact with the Government. There are many other examples in agriculture, and certainly in transport. They had an excellent transport system—again, because of the fact that in a small tightly knit community they knew what was going on and had the power to act. The other item which stands out was its attraction of industry. There they were doing things that we only started to do with Locate in Scotland in the early 1980s. They looked after people who wanted to locate in a proper way because they knew of its great importance to the Province. That is the kind of example to which we need to look.

Certainly the whole point about Stormont was that it broke down because of the appalling neglect of minorities and human rights. No one would defend Stormont on that ground. But on technical efficiency, the attraction of industry and all the things that noble Lords opposite say would disappear under a devolved parliament, they were doing very well at that time, until the whole system broke down owing ultimately to the lack of a democratic attitude to minorities.

So there is no question. We can dispose of the argument that devolution of power inevitably leads to separation. I cannot think of examples and I do not believe that the noble Viscount, Lord Hood, will think of any either. The advantages are plain to see. The fact that there is a centre of genuine power in Scotland leads to many advantages. It leads to people staying in Scotland and to Scottish initiatives. What we need now in Scotland, since the Empire has disappeared—every one of us can give examples of relations who have gone to make their money planting tea or, if they were graduates, to join the Indian Civil Service and so on; all that has gone—is to retain our native energy there.

The arguments about tax are complicated by the fact that many companies have their headquarters outside Scotland. It is very difficult, although examples have been used and guesses made to try to say exactly what is the tax position.

I agree that the macro-economic factors must stay within the United Kingdom, and indeed within Europe. The essence of the matter is whether a Scottish parliament, with a democratic background, could produce the sort of people who would make Scotland a better place to live—more prosperous. I believe it could. When one looked at the people elected to Parliament and one looked at Northern Ireland, it was found that the people with real power and ability stayed at home and those who came to Westminster were not of the same quality as the people who stood for the local parliament. I believe that that would happen in Scotland.

The West Lothian question can be settled. Everyone talks about it. Enormous harm has been done by Tam Dalyell in producing a phrase which everyone knows, but nobody quite understands how to overcome the problem. In my view it can be overcome quite simply, even without regional government, by restricting the voting powers of Scottish MPs to the affairs of the nation. I know that the Labour Party does not like that idea; it wonders about the Scottish element in its

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majority. But it must learn that if it does not have a majority in England, it will need to adjust its policies to the wishes of the people of England; that is what democracy is all about. That is what I should like to see applied in Scotland.

The Motion of the noble Lady is interesting, but the first alternative of a devolved parliament is the right one for Scotland.

Lord Sanderson of Bowden: My Lords, before the noble Lord sits down perhaps I can ask him something. I believe he came in on my speech. Can he say whether he is in favour of identical powers being devolved to the regions of England, as I thought was his party's policy?

Lord Mackie of Benshie: My Lords, it is extremely unfair to attach party policy to one. In our party policy we say that the regions of England will need to want it.

6.42 p.m.

Lord Ewing of Kirkford: My Lords, I join with all those who contributed to this debate in a word of thanks to the noble Lady, Lady Saltoun, for initiating what is a very important debate, though I agree with the noble Lord, Lord Mackie of Benshie, that the press—the media—are hardly waiting on every word that has dropped from your Lordships' mouths this afternoon. Somehow or other I have the feeling that there is something else—I do not know what—taking up their attention this evening!

This issue has been on the Scottish political agenda for a long time. Those Members of your Lordships' House who argue that it is not at the top of the list of priorities of the people of Scotland may be astonished to find that I agree with them. When one talks to the people of Scotland, one finds that at the top of their list of priorities are housing problems, education, schools, the difficulty in making ends meet, their mortgage repayments and their negative equity.

I agree with all that, but it is only an excuse for not doing something about devolution rather than a reason. The most dangerous thing your Lordships' House can do is to lull itself into a false sense of security that because this subject is not at the top of the list of priorities we ought not to do something about it. If we wait to the last minute, until it comes to the top—as surely it will—and then try to deal with it, we shall only produce panic measures. That is why I value the opportunity provided to us today by the noble Lady, Lady Saltoun, in this debate.

The matter has been on the agenda for a long time and I have been involved with it for 25 years. During that 25 years I have been joined by some interesting people. The noble and learned Lord, Lord Fraser, was an enthusiastic devolutionist at one time during that 25-year period; the noble Lord, Lord Younger of Prestwick, wisely absented himself from our debate today; a good feast of one's own words always gives one indigestion, and he was certainly right not to take that risk. Malcolm Rifkind, the Defence Secretary, was another supporter. At one time one could not get into the discussion room to discuss devolution for Scottish Conservatives.

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I can give your Lordships one of the reasons why. In the 1974 Conservative Party manifesto—on which John Major himself stood—it was said,

    "We want to give the people in Scotland the opportunity to decide their own spending priorities".

That is a noble ideal and one that I am sad that the Conservative Party departed from for, in my view, purely party political reasons. But I want to deal with the substantive points raised in the debate and unfortunately I shall be addressing some points raised by noble Lords in their absence and I apologise for that.

First, both the noble Baronesses, Lady Carnegy and Lady Elles, raised the question of grants to Scotland at the present time; the per capita grants. It is almost as though the only criteria used to calculate expenditure is "per capita"; per head of population. Noble Lords know perfectly well that that is not the only criterion. For example, Scotland has one-third of the land mass of Great Britain; it has much larger rural communities; it has more rural schools per head of the population than England or Wales, and rural schools are much more expensive to run than large city schools.

A whole host of other criteria have to be used when deciding how expenditure should be distributed. The basis is not purely on the 8.5 per cent. of the population and the 8 per cent. contribution in tax. A whole host of criteria should be used and I want if I may to lay that issue to rest. There is no question of an incoming Labour Government abolishing equalisation. In any case only a Labour Government will give the people of Scotland a devolved parliament.

The West Lothian Question is another substantive point raised by many noble Lords who have contributed to the debate. The West Lothian Question has been conceded in principle by the present Government. Built into the framework document dealing with Northern Ireland is a specific pledge that the Northern Irish MPs can come to Westminster and vote on English and Scottish matters. It is not good enough to say that they are small in number compared with the number of MPs coming from Scotland; it is the principle that is at issue. The principle has been conceded. The noble Lord who mentioned the Irish scene and said that it stripped the Government of some of their credibility had a point, because the argument on the West Lothian Question has now been conceded in principle in the framework document for Northern Ireland.

I turn quickly to the whole question of inward investment. For a number of years I regarded the way in which that debate was conducted, particularly by those—I say this with respect—who do not want any change in Scotland, as the politics of fear. Those who do not want change say that, if we go down this road of devolution, it will, first, lead to separation and, secondly, denude Scotland of inward investment. Neither of those things is true.

Let me put on record a strange phenomenon in regard to the Scottish National Party. Those who have addressed their comments to the SNP this afternoon have been addressing the wrong audience. There is nobody—but nobody—in your Lordships' House who has fought the SNP on its separatist policies more fiercely than I have, and those comments were

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addressed to the wrong audience. But the SNP's popularity has not risen or fallen in line with the rise or fall in the popularity of the Labour Party in Scotland; it has risen or fallen in line with the rise or fall in the popularity of the Conservative Party.

There is evidence of that. In 1979, when the outgoing Labour Government, in which I was a Minister, were heavily defeated in a general election, the SNP lost 10 of its 11 seats in Scotland. Three months after the referendum had failed to produce the 40 per cent. under the George Cunningham amendment, the SNP lost 10 of its 11 seats. The four seats which the SNP holds in Scotland at the present time are four Conservative seats. The SNP's popularity rises and falls in line with the fall and rise of the popularity of the Conservative Party, and the Conservative Party will have to come to terms with that. On inward investment, it simply cannot be shown that Scotland will suffer in inward investment terms if we have our own parliament.

Perhaps I may leave your Lordships with one or two facts. The noble Lord, Lord Younger, who will read this for himself, is chairman of the Royal Bank of Scotland. I saw with interest the comment from a document which the noble Lord, Lord Younger, had produced. I think it passing strange that the chairman of the Royal Bank of Scotland should say such things about the Scottish economy when the Royal Bank itself invests in the quasi-autonomous regions of Spain. It is not afraid of devolution in Spain, but it is afraid of it in Scotland. What kind of Scotsman is that? United Distillers has investments and joint ventures in the quasi-autonomous regions of Spain, to which the noble Lord, Lord Elis-Thomas, referred. British Steel disinvested in Scotland, a part of the Union. Where did British Steel invest? In the quasi-autonomous regions of Spain. Marks & Spencer, which is well-known for investing in devolved regions, has also invested in those quasi-autonomous regions in Spain. It simply cannot be shown in any economic evidence that devolved parts of a country suffer from a lack of inward investment purely and simply because they have their own parliament, and it will not happen in Scotland either.

The proposals coming from the Scottish Constitutional Convention, of which I am proud to have been the joint chairman and still am—with Sir David Steel—are well worked out. The noble Earl, Lord Perth, suggested that we ought to have a Royal Commission. I have to say to your Lordships that if there is any suggestion that a Royal Commission should be appointed, the people of Scotland will throw up their hands in horror and say, "Not again. We have been through this time and again. The time is not now for talking. The time is now for acting".

These proposals for an assembly are well thought out. There will be 112 members. It will not be a carbon copy or a mirror image of the Westminster Parliament. It will have pre-legislative committees. I accept—I argued this when the proposals were formulated—that Orkney and the Shetland Islands are just as remote from Edinburgh as they are from London. Indeed, in the last devolution Bill Orkney and the Shetland Islands were opted out in Clause 83 because of the referendum that they

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themselves had had. In order to avoid this question of remoteness, the pre-legislative committees is where the legislation will be discussed as it is being drafted and not after it has been drafted. The maximum degree of agreement can thereby be reached before the legislation comes to the Floor of the House. The pre-legislative committees will be a valuable asset of the democratic process in the Scottish parliament.

I wish to make two final points. The noble Lord, Lord Elis-Thomas, pleaded for all parties to get together. It is a plea that I have often made myself. The reason that the Conservative Party in Scotland is not in the Scottish Constitutional Convention discussing the issues with us is that it will not join. It does not want to discuss or consider the possibility of change—and from its point of view I understand that. If I thought for a single minute that anything I was doing was endangering the Union, I would stop tomorrow. But I do not believe that for a minute. Indeed, I believe that the process I am following will strengthen the Union.

The Government will not admit that they have lost the argument with the Labour Party, that they have lost the argument with the Liberal Democrat Party and that they have lost the argument with a lot of the communities in Scotland. They have lost the argument with the people of Scotland. That is the most dangerous thing that faces Scotland and the United Kingdom. In order to respond to the argument they have lost, there can be no shadow of doubt that the creation of a Scottish parliament is the answer.

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