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The Earl of Dartmouth: My Lords, I entirely agree with what the noble Lord says. However, the whole point is that there is no desire on the part of the Government to make any attempt to solve the West Lothian question. Their choice is purely to ignore it.

Lord Desai: My Lords, I know as much about the Government's intentions as the noble Earl knows. But I am sure that, after my speech, the Government will be enlightened.

My noble friend Lord Hughes referred to the interesting Norwegian case. I believe that the way of electing the Scottish parliament offers a very natural solution to that problem. I suggest that the 73 directly elected MPs can always constitute the lower chamber and that the 56 elected at the second round or through some slightly dubious procedure, can constitute the upper house. It can be the scrutiny committee. Within a single chamber we have a natural division. We respect the will of the people, and the directly elected MPs with constituencies and those who come from lists of various kinds can act as the upper chamber. I do not believe that any of these problems are insurmountable. As the noble Earl, Lord Northesk said, it is a process and not an event. There is a lot of mileage to go yet. If there is the goodwill and we work hard on the issues, we can minimise possible problems and perhaps even make the Bill better than it is now. If we do that I am sure that it will be a great success.

7.31 p.m.

The Earl of Dundee: My Lords, as a number of your Lordships have implied, there are certain aspects of devolution which have hardly ever been contentious. First, there is the concept of non-parliamentary devolution such as the Scottish Office, its functions and the development of its role. Secondly, even the notion of parliamentary devolution has hardly been disputed. Critics have not objected to this notion itself. They have not necessarily denied that an Edinburgh parliament would deal much more efficiently than Westminster with a majority of matters affecting Scotland. Instead, concerns have correctly focused on the complications which arise as soon as there is both a parliament in Edinburgh and at Westminster. The challenge and context has always been how to institute and progress an Edinburgh parliament without upsetting the stability and integrity of the United Kingdom.

As your Lordships have recalled, before this present Bill several previous drafts have already sought to address these difficulties and to present a stable formula for Scottish devolution within the United Kingdom. The drafts include proposals put forward during the Heath Government by the committee chaired by the late Lord Home of the Hirsel. They also comprise measures which formed the Scotland Act 1978 when the noble Lord, Lord Callaghan, was Prime Minister.

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While the contents of the present Bill are different from those drafts in the 1970s, many of the fears and anxieties then are broadly similar to those expressed now. In the debate yesterday and today a number of your Lordships have cautioned that friction and resentment between Westminster and Holyrood could develop not least from financial arrangements currently proposed and from the consequences of a changed role for Scottish Westminster MPs.

Among other issues your Lordships have referred in particular to proposals in the Bill for elections, to financial consequences relating to the Barnett formula and regarding reserved and non-reserved powers to current anomalies in the Bill affecting Scottish representation at Brussels, and proposals for Scottish agriculture and fisheries. My noble friend Lord Mackay of Ardbrecknish urged the House to examine these issues very carefully in Committee. That we shall certainly do. Clearly, the more thoroughly we succeed in that task, the better able to work in practice will become the provisions of the Bill.

From many of the Bill's provisions we can already surely take heart. Ranging as they do from pre-legislative scrutiny to post-legislative judicial challenge, they present a number of sensible checks and balances. A proper parliamentary committee structure can also be inferred from the parliament's membership of 129. Not least, if votes cast in the country can be fairly represented in parliament, is there some real prospect of political balance and consensus and of parliamentary control over the executive?

Recently I have tried to find out as much as I can about the workings of various regional and national unicameral parliaments comparable to Holyrood in size and for some of their functions. My conclusion is that arrangements for Holyrood compare favourably with those which work best elsewhere. Provided that in Committee we deal with the aspects already referred to, then the parliament can hope to start out on a sure footing.

The noble Lord, Lord Hughes, also said that he had made comparative studies. In particular he referred to the Norwegian parliament, the Storting. He advised that the first thing we must do is to find out how well the single chamber of parliament works. However, he suggested that after a year or so, Holyrood might well wish to introduce an element of bicameralism.

If, at a later date, Holyrood wanted to do that, then the enabling power for that option, even though it might never be used, should probably appear in this Bill. When the Minister replies, can he say whether he agrees that a new clause should be introduced in Committee to achieve that purpose?

I am particularly pleased that it is the noble Lord, Lord Hughes, who puts forward that idea. I nearly always find myself in agreement with him. My father used to tell me how much respect he always had for the noble Lord and for his opinions.

A new clause inserted in Committee could also assist a related purpose. Holyrood may well not need an element of bicameralism at all. However, through time, in discharging certain of its own duties and functions,

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it might want to involve other elected representatives from Scottish constituencies, including Scottish Westminster MPs and Scottish Euro MPs. Perhaps the Minister can also comment on this related aspect when he replies.

Another feature of the Scottish parliament is not only its developing role in Brussels and in the European Union, but also how it comes to relate to other regional and national parliaments of the 40 states which now comprise the Council of Europe.

If one is a parliamentarian seeking to progress various initiatives in any national or regional parliament, very often one's chances of success will be considerably enhanced by a knowledge of how other parliamentarians in other states have proceeded with similar issues in similar circumstances. Such information, useful to parliamentarians, can already be accessed through the Internet, as your Lordships are well aware. That process can be assisted further in Strasbourg by the Council of Europe parliament where I have the honour to serve.

If the Holyrood parliament can already hope to exert a healthy measure of influence over the Executive, use of the parliamentary Internet can further assist the success of the initiatives of its parliamentarians. Paradoxically, in terms of the wider Europe there is all the more scope for regions and their parliaments to set examples of best practice with matters such as business, employment, education, young people and social policy.

Evidence of best practice is often at its clearest when presented on a smaller scale and where initiated by parliamentarians rather than by members of the Executive. That evidence is also often at its most effective when demonstrated on a smaller scale in the form of partnership between the Government or public bodies and voluntary bodies.

One of the keys to the success of Holyrood must be the flexibility of practice and provision affecting its relationship with Westminster. It must adjust to circumstances and, through time, in consultation with Westminster, modify its functions as required. At the outset no doubt its task is a daunting one. Yet within the United Kingdom and Europe it can set a fine example. For Scotland and all its communities it must help to bring harmony and stability.

7.38 p.m.

Lord Gray: My Lords, I do not see the noble Earl, Lord Erroll, in his place so I am afraid that noble Lords cannot put off listening to me any longer. I live and work in Scotland and I am proud to be a Scot. I never had a problem reconciling fierce patriotism with staunch support for the Union. When, 20 years ago, we completed our marathon debates on the 1978 Bill, I did not believe that I would be cantering around the course again. Perhaps that is because I am not a politician. It is perhaps surprising that I am not when I have to own up to the Machiavelli of Scottish politics--best known as Patrick Master of Gray--as a forebear.

Following yesterday's references to ancestors by my noble friend the Duke of Montrose and by the noble Earl, Lord Buchan, I might offer as the earliest example

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of a Gray political action the day, in 1297, when, from the Borders, father rode south to join Edward and son rode north to join Bruce.

We have debated the devolution possibilities for many years. A pre-emptive strike has ended that general debate and we must now, like it or not, focus on the future that this Bill ushers in. I have confessed to political innocence and so I can say with ease that the Bill demands scrutiny which transcends party politics. I recognise the vox populi but, unlike my noble friend Lord Mackay of Ardbrecknish, do not have to say in consequence that I am a convert, albeit reluctant, to devolution; I am not. I do not like what is proposed, nor do I believe that it will advance the interests or prosperity of Scotland, England or the Union.

We are being asked to conduct an experiment which cannot later be set aside after trial and error. It is all very well hoping that this will disarm proponents of separatism, but that is not good enough--only certainty would suffice. Some noble Lords have suggested that this plays into the hands of separatists. It may well prove so; I hope not. That is the kernel of concern for those who value the Union. Let us face it: there are those who will use and abuse the proposed system in pursuit of separatism, even if not all Scottish Nationalists favour a total break.

If we fail to improve this Bill, there will be much scope for mischief. What are some of the areas of particular opportunity for mischief? I suggest that the list includes Edinburgh versus Westminster, in the most general sense; Edinburgh versus Westminster on those occasions when there may be complete political divergence between the two legislatures; Edinburgh versus the local authorities; and the Central Belt versus the Highlands, Islands and other rural areas. I suggest that there will be a diminished voice in Europe in the fashion described so illuminatingly by my noble kinsman Lord Lindsay yesterday. It was suggested yesterday that the city versus country problem would be catered for by the electoral system. I do not think that that will be so in reality. Industry, commerce and dense population have too much muscle. Anyone who lives in rural Argyll, once over-lorded by Strathclyde Region, will know that.

When we come to consider the detail, we cannot--nay, we must not--ignore other proposed constitutional reforms and possible changes; nor changes to the European scene. To consider this Bill in isolation will not do, but it is frustrating to be able only in part to guess at interaction with other constitutional changes. It is no use throwing a pebble into a pond to produce intended ripples if someone else steps up and throws in another. There are murky, indistinct areas in the Bill. The less the clarity, the greater the scope for discord. The 1978 Bill said too much. I suggest that perhaps this Bill says too little.

Speaking 55th in this debate--correction: 54th--it is hard to avoid repetition. I shall confine myself to emphasising just a few of the points made. I choose to highlight the following. I refer first to the future of the Secretary of State for Scotland. By convention, the Bill refers only to "the Secretary of State". Does that,

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perhaps inadvertently, allow for the introduction later of a minister with different, wider responsibilities than purely those for Scotland?

Secondly, I choose to highlight the matter of concordats. We need to know much more, and I believe that we are to be given more information. Presently, the concordats are like a collection of cobwebs, barely discernible for want of illumination--and they sound pretty cobwebby to me.

Thirdly, I look at local government finance. Anyone who listened to the masterly speech of my noble friend Lord Nickson will appreciate how finance is likely to impede the parliament from delivering the electorate's expectations. Local authority finance will be affected. We need to protect local authorities and their financial position.

Fourthly, I refer to the unicameral nature of the parliament. I was encouraged yesterday by the speech of the noble Lord, Lord Hughes, to which the noble Baroness, Lady Ramsay of Cartvale, and others have referred this afternoon. Nonetheless, I should like to see something about that on the face of the Bill. The amount of work and the committees to be manned will place a considerable strain on members of the Scottish parliament.

Fifthly and lastly, I refer to the electoral system. I am sorry, but I find it unconvincing. I hold that it would have been far better to let parliament decide on the electoral system to be adopted--that is, this Parliament, not the one to be. I hope that there may be scope for amendment.

Our debates in 1978 were an experience I much enjoyed for all the hard work involved. The stamina and courteous handling of debates by the noble Lord, Lord Kirkhill, and the noble and learned Lord, Lord McCluskey, were exemplary. Speaking yesterday the noble Lord, Lord Kirkhill, kindly referred to my part 20 years ago. I have looked up a couple of the matters over which he and I locked horns in those days. With some smugness I noted that the authors of the Bill before us have adopted the "reporting of proceedings" clause which I daringly and successfully pressed at Third Reading in this House and which survived the Commons.

Another matter that I looked at is not reproduced in this Bill. This puzzles me. The 1978 Bill included provision for the Secretary of State to advance or postpone a Scottish election. That provision was there to protect United Kingdom interests and, for instance, to deal with any potential clash of electoral dates. There is a scheme, running through several clauses and schedules, covering the holding of elections and their organisation, but only a Minister of the Scottish parliament is given the power of postponement. But the Secretary of State has been written out of the whole matter except in respect of the initial election. I understand that that will not be imported even via the representation of the people legislation. The devil is always in the detail, and it is certainly in vires. As to that, one matter puzzles me. Why on earth does Clause

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31 allow the legislature to overrule its own presiding officer on vires when the ultimate decision remains elsewhere?

In conclusion, there are other ways of expanding and improving existing devolution mechanisms. As I observed last time round, we are being asked to stitch some strange new cloth onto our old constitutional garment that threatens the consequences that that simile suggests. I hope that I am wrong.

7.51 p.m.

Lord Forbes: My Lords, it is always a privilege to follow my noble friend Lord Gray, who speaks with such eloquence and knowledge. There is no doubt that the people of Scotland want devolution, and there is little doubt that they will get it. Sadly, when the people of Scotland voted for devolution they did not know all of the dangers and implications for the unity of the kingdoms that might result from devolution. The voters were carried away by the thought of having more control over their affairs and dealing with the remoteness of Whitehall. Unfortunately, this came about because the Government acted with too much haste over devolution. They simply had not thought it through properly. It is only now that they are beginning to realise some of the pitfalls that may lie ahead, the worst being areas of potential conflict between Parliament in London and parliament in Edinburgh.

The Scottish Office, with areas devolved administratively, has served Scotland extremely well, in spite of the fact that at times the credit for some of its notable successes has been snatched by one of the Whitehall ministries because the department has failed to blow its own trumpet loud enough. Today Scotland is flourishing, with the notable exception of the agricultural industry, which is in dire straits.

I turn to the future and this Bill. Having gone so far down the devolution road, it is up to all of us to see that it works for the benefit of Scotland and the United Kingdom. How are we to make devolution work? Areas of potential conflict between parliament in Edinburgh and London must as far as possible be eliminated. There is little doubt that failure of devolution will lead to the next experiment, separation, which is something that the Government and practically every Member of this House deplore. To assume that a conflict will not arise is to bury one's head in the sand. Each time there is conflict it will give a boost to Scottish nationalism. Once that happens, the survival of the United Kingdom is at stake because the Scottish National Party will see its chance to go for separation.

There are many areas of potential conflict that have already been mentioned by other noble Lords. All of those areas must be scrutinised during the passage of this Bill. It is not just a question of conflict. It is almost certain that there will be frustration in the Edinburgh parliament. It will be able to discuss almost anything it likes but its power to act will be limited by matters reserved to Westminster. This frustration will be made worse if different parties are in power in Edinburgh and Westminster. Make no mistake: Scottish

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devolution will concern England as well as Scotland. The present dormant nationalism in England may well rear its head in future.

My advice to the Government in devolving power to Scotland is "Ca'canny", as is said in Scotland. They should think through all of the implications and get the Bill right; otherwise, the United Kingdom will be the victim of their mistakes. The strength of Scotland and England lies in unity. If that unity is broken both will suffer. Like many other noble Lords, from 1939 to 1945 I fought for the United Kingdom, not just for Scotland. Today, given the chance the Scottish nationalists will break up the Union. They must be stopped.

It is the duty of your Lordships' House to improve this Bill so that it does not lead to the break up of the Union. To achieve this improvement co-operation between the Government and noble Lords on all sides of the House will be required in considering amendments to the Bill. The various stages of the Bill must not be rushed. It is of paramount importance to get it right. The revision of a Bill of great constitutional importance is something at which your Lordships' House excels. To make devolution work the Government will need all the help they can get. The Government may find that even some hereditary Peers can offer considerable assistance. Above all, with their large majority in another place the Government must not steamroller this Bill on to the statute book. To do that will lead to disaster not only for Scotland but also for England. The Government will never be forgiven if devolution for Scotland fails and is replaced by separation.

7.58 p.m.

Lord Sempill: My Lords, it is a remarkable coincidence that I have the privilege to follow one of my noble kinsmen. Our families go back a long way in the history of Scotland. For more than 200 years they were intermarried, and for many of those years my family were known as Forbes-Sempills.

This has been a long debate. I should like to adopt a slightly different tack. Noble Lords may be interested to hear the results of a snap poll which I prepared following yesterday's debate. I categorised the 36 speakers in three ways. The doom and gloom merchants made up some 28 per cent. of the contributions; the Doubting Toms made up 42 per cent. (which after today's performance is now closer to 50 per cent.); and the proponents and supporters of the Bill made up another 28 per cent. Noble Lords may draw their own conclusions, but I suggest to the Government that there are many hours of debate ahead.

In a further analysis of the sample, I observed one underlying concern, repeated many times--the threat to the Union. I shall therefore address my remarks to that one issue and draw some observations that I have also made on the Bill's progress to date.

It is my contention that the Union is like most long established marriages: it has become tired; it has hit some serious problems; it is fraught with frustration; and the net result is that we have arrived where we are today. England and Scotland have come a long way. It is

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unfortunate that the senior partner took the junior partner for granted. However, the promise of a change of responsibility has provided a new impetus which will, it is to be hoped, create a rejuvenation in this long-standing relationship.

I support the intention and good will behind the Bill. The key is to look forward and to take the initiative. Stagnation or the status quo is no longer an option. I see two clear tasks ahead. One is to ensure that the Bill is amended and strengthened in order that it can achieve the objectives of its designers. There are many anomalies. Let us not forget that it has already received a substantial amount of interest and investigation in another place, where a total of 860 amendments were tabled, of which 297 amendments were made.

The contributions made in this Second Reading have highlighted some crucial areas of concern, most notably referred to by the noble and learned Lords, Lord Hope of Craighead and Lord McCluskey. They referred to the issue of the Bill's ability to withstand the scrutiny of the judiciary. That seems to me critical. If the Bill is to endure--it is the objective of all--it will require serious discussion.

The second objective is to address the issue of public perception regarding devolution and its role in the future of Britain. It is a myth that the man in the street understands what is at stake. That myth was well illustrated in yesterday's leader in The Times. I shall quote part of it. The article states:

    "The SNP has been further helped by the seductive illusions which Scottish opposition politicians fostered during the years of Conservative rule. The myth was nurtured that Scots were a nobler people than the devil-take-the-hindmost individualists south of the border who voted Tory. Expectations among Scots of what a Labour Government should do were allowed to exceed those of English voters: now traditional supporters in Scotland appear more disillusioned than their comrades south of the border. The SNP has made of these old ideological comfort-blankets a tartan banner under which dissidents may rally".

The leader added what I maintain is the key towards regaining the initiative:

    "A sustained critical assault ... from a position of economic honesty will see the SNP, like Labour in 1992, fall apart under fire"--

a point that was made clearly yesterday by the noble Lord, Lord Nickson.

I have also followed the progress of this Bill ever since I first read the White Paper. It is one of the most important constitutional documents to have been produced this century. I have been staggered by the limited interest shown in its contents, not just in the public domain but here in Parliament. Noble Lords may not be surprised by my following observations which I made during the Bill's progress through another place. I witnessed six different Sessions and read most of what was said in Hansard. At no time did I see more than 30 to 40 MPs in the Chamber. That is less than 5 per cent. of the elected representatives of the kingdom. Of the 30 to 40 MPs, approximately a quarter to a third came from the Opposition Benches. That implies that they came from English constituencies. That leaves a total of some 20 elsewhere in the Chamber. That is less than one third of all the Scottish MPs.

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More interestingly, it was the same hard core every time. I have no doubt that their knowledge of the Bill is excellent, but as for the others, "I hae me doots". I should have thought that on a Bill of this magnitude, at least a keynote address should have been made by the Prime Minister. As it was, the Bill was guided through the House by the Secretary of State and two of his ministerial colleagues, supported by a core of colourful Back-Benchers, some of whom must be nursing deep grievances having failed to be selected by their party for the very parliament for which they have fought so hard.

I may be naive, but I found it disturbing. I see it as a true democratic deficit. I cannot stress enough the importance of widening this debate throughout the United Kingdom. Too little knowledge can be dangerous, especially if misinterpreted. I suspect that that is where the SNP is gaining substantial ground. The concern I have was well expressed by the noble Baroness, Lady Young, in her powerful contribution in which she highlighted the growing dissent among the English.

Much has been said, and nearly all of it has been recorded. Apart from Hansard, there have been the House of Commons research papers, guidelines to the Bill have been placed in the Library and there have been regular correspondence and editorials in the Scotsman and the Glasgow Herald. Unfortunately, those newspapers have a combined daily circulation of under 200,000; and most of that is in Scotland. The contents and implications of the Bill are therefore known to only a minority. If the Bill is to endure and the Union is to survive, I suggest that a more positive attitude is required in promoting the strength and benefits of the Union to all the citizens of Britain, with special emphasis on the Scots.

I conclude by drawing a sporting analogy. This time last year the British Lions won a test series against the Springboks, the current world rugby champions. The results of the current tours in the southern hemisphere by the individual home nations are, to put it politely, woeful. I do not deny that each country is capable of achieving great success. And while I should love to see my own country win this current World Cup, I should be equally pleased to see England repeat its success of 1966.

8.8 p.m.

Lord Dixon-Smith: My Lords, at the Second Reading of the Government of Wales Bill I argued that the Bill was inappropriately titled and that a more appropriate title might be Government of the United Kingdom (Creation of a National Assembly for Wales) Bill. That criticism applies with even greater force to this Bill. It is of course a Scotland Bill, but, more appropriately--we need to remember this all the time--it is a Government of the United Kingdom (Creation of a Scottish Parliament) Bill.

I accept that such amendment is not necessary. It would indeed be tautologous. The Bill would not be debated in this House if it were not a United Kingdom

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Bill. However, the capacity for misrepresentation which appears to happen because of those deficiencies of title in the far-flung parts of our country causes some concern to me.

We have had an interesting debate. I am almost the 60th speaker and there are more to go, so I shall be no longer than I must. We have heard a great deal of history. We have heard about the deficiencies in 1707 when the Act of Union was put in place and about the deficiencies of some of the individuals concerned. We have gone even further back in history. Perhaps I may say as one who is here by right of surprise as opposed to right of heritage, I find a debate of this nature wonderful because it gives one an enormous sense of continuity and unity.

I suggest that the seeds of this Bill are more recent than those far off times. I suggest that the seeds of the Bill grew because of the philosophy of the corporate state. I can trace that back effectively in my mind to the Second World War when the United Kingdom had to be turned into a war machine so as to achieve a desperate victory. In order to do that, the reins of power were extended in a dramatic way over all walks of life. Although after the war they were in some ways relaxed, they were never wholly relaxed. Such authority was too tempting to give up.

During the 50-year period since that dreadful time one could watch the reins of power, which were largely financial, being exercised initially to mould the country. Latterly, what I can only call "the spurs of authority" were applied to fit society into a procrustean bed--all society.

We should not deny that that process was successful. During that time the country enjoyed economic growth. Of course there were ups and downs. I make no party points because governments of both political philosophies had control at various times. At the same time, educational standards were rising. Despite all our criticisms today, the situation is better than it used to be. Political and philosophical ambitions were rising, too. I have always argued that one of the great forces which needs to be recognised in society is the desire of people to take to themselves as great a political control of their immediate affairs as can reasonably be achieved.

Now the dam has burst. As regards this Bill, I say to the noble Baroness, Lady Ramsay of Cartvale--and my comment takes nothing away from the integrity and aciduity of the Scottish Constitutional Convention--that the convention was invited to consider only the problem of Scotland. The tragedy is that the Labour Party became committed to the conclusions of that conference before it had fulfilled its proper role in considering the implications for the whole of the United Kingdom. That is the situation that we are in today. This is the second major constitutional reform Bill; we have had the Welsh Bill.

We shall have a third Bill, that for Northern Ireland, which will be different yet again. The Irish situation is different because that body will come into being with a community attempting to heal the wounds of division, whereas the danger with the Wales and Scotland Bills is that they will widen the divisions rather than heal them.

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Devolution is a process and not an event. When the three Bills have been completed we will have an unbalanced United Kingdom and our Celtic brethren will have an open and perceived parliamentary representational advantage. The process will have to continue until that deficiency is answered. I am not sure whether I know what the answer is, but the only answer I have seen to the West Lothian question which is satisfactory and will stand the test of time involves an English parliament and a federal United Kingdom, with all the revolutionary change that that implies for Parliament as we know it today. I have seen no other alternative. This Government will have to answer that pressure in one way or another, or be left in a backwater by the floodtide that is unleashed without thought for the consequences.

I cannot let such a situation pass without mentioning the financial arrangements. Much has been made of the Barnett formula. The noble Lord with great goodwill enjoys a distinction that is perhaps unreasonable in the context of funding for the Scottish parliament and the Welsh assembly. The Barnett formula is a fairly simple way of dealing with increases in the initial blocks of expenditure. It is with those initial blocks that we should be concerned.

More than that, we heard yesterday from the noble Lord, Lord Lang of Monkton, that when he was Secretary of State for Scotland he was all too aware of the Barnett formula, which was originally intended to narrow the gap between expenditure in Scotland and England. He was concerned to find his way over, round or under that formula or, perhaps more importantly, to get one across the Chancellor of the Exchequer to the advantage of Scotland. He and his predecessors have been notably successful in that. It will be more difficult in future. One of the outcomes of the Bill will be that the spotlight will be on the Scottish block all the time and its disparities with England will come under severe question.

Perhaps they are best illustrated in this way. Much has been made of the figure of expenditure per head in Scotland as opposed to England. The figure of £777 which was stated yesterday--I have forgotten by whom--is the figure by which the Scottish expenditure per head exceeds the United Kingdom average. The United Kingdom average includes an even higher Irish figure and a slightly lower Welsh figure. The difference between the Scottish figure and the English figure is not £777 but £941. The last figure I saw for GDP per head in Scotland was 98 per cent. for the national average, which is on the medium line. There are numerous English regions where the GDP per head is much lower than that. The lowest figure that I have seen is 86 per cent. but that is neither here nor there.

The people of those English regions will find it increasingly difficult to justify spending those excess sums on Scotland when their own situation is not so fortunate. That will be the motive force which will drive the need for an English settlement.

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All of that said, surprisingly I am a devolutionist, with all the problems devolution brings, because I believe that the corporate state with which we marched for 50 years has been a cul-de-sac, and I am glad that we are at last breaking out of it.

8.21 p.m.

Earl Haig: My Lords, I apologise for having to leave the Chamber before the end of the debate. Some time ago I agreed to attend a dinner on Waterloo night to commemorate my ancestor General Hussey Vivian, who commanded a brigade in that battle. I should also like to thank my noble friend Lord Lyell for agreeing to change places with me to enable me to arrive not too late for the dinner.

I speak as someone who has lived most of his days in Scotland. Most of the organisations and institutions with which I have been involved have been linked with the south but they have their own economy. Some of them, like the Royal British Legion Scotland and the Scottish Arts Council have constitutions that are separate to their English counterparts. Their Scottish identity helps to give them a sense of individuality and a pride in their country. Most of us are proud of the United Kingdom and it is important for unity between Scotland and the rest of the United Kingdom that that pride is not impaired.

This is a unique moment in the history of our country and we must make the most of it so that the challenges we face are dealt with successfully. If they are not, there could be serious divisions which would be detrimental to the whole kingdom.

It is important to be precise about the financial arrangements and safeguards between London and Edinburgh in order to minimise the risk of conflict. It is important to maintain the block grant according to a mutually agreed formula. There must be close consultation between the Scottish executive and the Treasury about financial agreement, but it should not rely on the European Union for funds and must reflect a strong Scottish economy.

At moments of economic difficulty effective remedies have to be found to support particular areas. If they are not supported there will be bitterness. There are difficulties in the Borders region due to the slump in the textile industry. The Scottish Office is working closely with Scottish Borders Enterprise to find ways and means of channelling money to boost failing businesses and to halt redundancies. Looking ahead, there is a need to be clear about tax-raising powers because at times of recession lowered incomes will cause erosion of the tax base and lead to loss of jobs.

The system of the block grant must be reliable and there should be an agreed formula in the Bill. Many institutions depend on their share of it, and their share will be decided by the Scottish executive and by the UK Government. They will be competing for resources with authorities for housing, education and local government. There is a danger that the needs of one institution may suffer because of the needs of another. Availability of regular income is important for those running an institution.

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I should like to emphasise the particular need of the National Galleries of Scotland of which I was for some years a trustee. In the Bill there is no mention of this important institution. Ideally, it should be reserved. At the very least its name should be written into the Bill. It is largely dependent on the block grant for funds. If the Scottish Parliament were to deprive them of their share, the effects would be serious. They are already under-funded. Continuing interest in the galleries on behalf of the Scottish parliament is essential. I am not encouraged by the fact that no Member of the Government has so far put a foot in the door of the galleries since the election.

The present level of the purchasing grant is extremely low--about £700,000--which has to cover the needs of all three galleries plus a fourth, the Dean Gallery, which is due to open.

Looking ahead, much will depend on the quality and expertise of the Scottish parliament. I hope that there will be a spirit of unity and co-operation. I support the words of the noble Lord, Lord Steel, about political accountability, which were echoed by the noble Baroness, Lady Linklater of Butterstone. The avoidance of disruption on party political lines would reduce the conflict between old and new Labour. All political parties in Scotland should avoid party politics for a while so that affairs can be debated in an atmosphere of harmony. As my noble friend Lord Monro of Langholm stated, the majority of members will come from the Central belt. It is from there that the members of my regiment, the Scots Dragoon Guards are largely recruited. They are entirely lacking in class prejudice and, like members of the Royal British Legion for Scotland, are proud of the United Kingdom. They would be supporters of the Scottish parliament on a non-party political basis.

As the Minister pointed out, the success of the Bill will depend upon consensus and consensus will be achieved only by the removal of class prejudice which lies deep in the minds of many people in Scotland. For that reason the cultivation of co-operation rather than division is essential.

8.29 p.m.

Lord Rowallan: My Lords, as I have said before, I am a devout devolutionist and a sincere unionist. I have been a very small voice in the Scottish Conservative Party advocating the setting up of a Scottish parliament and devolution. I feel if we had followed up Sir Edward Heath's 1974 Perth declaration we would not have the problems we face today. Now we are racing into a hotch-potch situation, with each of the four countries who make up our country being offered differing degrees of devolution which must not be allowed to break up the United Kingdom. We would have had long ago a parliament in Scotland which would have been the beginning of a federal Britain, a Britain where the Union was strong and yet the people of Scotland, England, Ireland and Wales would have seen decisions affecting them being taken in their own parliaments. It is a fact that the Scots--and I am proud

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to be one--are all nationalistic in their outlook. It is a fact that we are very proud of our ancestry, the Kilt and our celtic blood.

But, equally, few Scots really understood the consequences of what they were voting for in the referendum. How could they? Even we in Parliament did not understand because we had not seen the Bill at that stage. They voted with their hearts--the Braveheart phenomena--and not with their heads. They voted with their spirits and their political aspirations to get rid of the Tory Party in Scotland--a party that had, as they saw it, ruled them for 18 long years from their English base in the English shires, when since 1955 they had consistently voted for another party. However, to their discredit, as they failed to get the facts across, the Tory Party of Scotland was and still is based in Edinburgh, Scotland and not in England. It is the British Labour Party that has its roots in London and now the Scots are beginning to realise this.

We have seen a tide of nationalism sweep over the country as the Scots nation sees the start of a political independence from England. We must stop that tide and make our compatriots realise that political independence must not lead to complete separation. The parliament we are debating here must have the strengths to show the people that they have all the independence they need with this political power base in Edinburgh.

That brings me to my first real point. This parliament must succeed for if it does not it will surely lead to the break up of the UK. It is a dangerous route we go down if we do not give it our total support. We should therefore get rid of this independence issue once and for all. The SNP has indicated it will call for this in the first session of parliament if it has a majority, and it is beginning to look as if that might happen. But how can the Parliament work properly with the threat of it being only a half-way house or being for a trial period?

My local seat has always been a Labour seat. In fact, it has been such a strong Labour seat for years and years that there was no other party in sight. But a by-election last month saw the return of an SNP councillor, with the added insult for the local Labour party of seeing its candidate coming a very poor and distant third behind the Tory candidate, who was very pleasantly surprised by her second place, and only just in front of the Liberal, who, for the record, was an even worse fourth.

I believe that many Scots vote SNP not because they believe in independence but as a protest, as I have already said, to the two supposedly English-based parties. If the Parliament is to be on trial by the SNP it will not get a chance to prove what it can do when it works properly. It needs to work for at least 10 years to prove itself to the Scottish people.

Totally contrary to what my noble friend Lord Kinnoull said yesterday and what the noble Lord, Lord Watson of Invergowrie, said today, I believe that we should have immediately, before we even start, a referendum on whether there should be independence or separation. I am absolutely sure that we should get the right vote. The Scots would vote overwhelmingly for their continuation within the United Kingdom. We could then carry the message forward that this parliament

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might have its blips in its relationship with Westminster but that they could be sorted out sensibly if there was not the dreadful spectre of separation there--a sort of sword of Damocles--hanging over the heads at all times of all parliamentarians and the parliament itself, as everyone would know that we, the people of Scotland, want to remain a part of Great Britain and want the parliament to work within that remit. That referendum would prove that.

We must, though, never take away what we have offered and are now in the process of giving to the Scots. We receive 20 per cent. more funding per head from central funds than any other part of the UK for our basic services. If we have this differential removed and it is perceived that London is trying to squeeze the Scots of what they see as their fair share, public opinion could and will change in such a way that the SNP could use it for its political gain. Even if there is the same party in power in both Scotland and England, that is a key point of potential confrontational problems. But what will it be like if we had different parties in control in Edinburgh and Westminster and the paymaster--Westminster--wants to cap the parliament because it feels it is not spending money in the way the mother Parliament sees it should? We have seen the chaos that attitude causes at local government level when it gives local councillors carte blanche to blame everyone but themselves for the subsequent cuts in services and jobs that result from these cuts.

Fourthly, we must not cut the number of MPs to Westminster after devolution to answer the impossible-to-answer West Lothian question as again it could be taken as a sign of anti-Scottishness by Westminster. We should make a decision on the correct procedure of voting in both parliaments and the numbers who will represent Scotland now as this Bill goes through this House. It is no good our MSPs having a loud voice in Edinburgh while our MPs in Westminster are political eunuchs with the ability to speak with no more than a whimper here in Westminster, and, most importantly, we must protect the voice and seat in the Cabinet that Scotland enjoys today.

The fifth problem is the tax-raising powers. Are we genuinely to believe that Scots employees will be happy to be paying 3 per cent. more tax than their English, Irish or Welsh fellow workers--or to put it another way will they accept less pay for doing the same job as their fellow workers in other parts of the kingdom? Of course they will not, so that will mean union pressure on businesses to pick up the tab and that means pressure to move the business to more profitable parts of the UK because these days profit is the essential word for most companies to satisfy the stock market and the bank manager.

We already pay more in taxes in Scotland than England as council tax is greater--on average £100 more for domestic rates and a lot more for business rates despite the supposed uniform business rate. The average Scot will not stand for much more just for the pleasure of living in their beautiful and friendly country. What is to stop the Treasury from reducing the Scottish grant if the parliament decides to use its tax-raising

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powers? There are many other problems to do with taxation and to which other noble Lords have referred which we must confront.

The sixth and final problem I wish to raise today is that if Westminster seeks to override laws passed by the Scottish parliament it would simply bring closer the day when Scotland is tempted to go its own way.

The UK is a multinational state made up of four countries with diversity of culture, beliefs and language. The relationships within it are being changed by this Bill. I am not frightened by that, but I am frightened that we could, instead of creating a new strengthened constitutional position, create a monster that destroys the country that has so dominated world affairs for many years and do it at a time when the world trend is to join together--big is becoming more beautiful. We must resist by all means the temptation for the Scot to throw this trend to one side for the sake of nationalism.

Scotland has 59 per cent. of the land mass of the UK but only 10.6 per cent. of the population. But it is a volatile population, especially when it comes to dealing with the "Auld enemy", the English, who are distrusted by so many Scots even today when we have lived in peace and harmony for so many years.

As a unionist I believe we must stand or fall together financially, politically and morally. I have therefore always believed in the idea that if any area of the UK needs help, it should receive it. As a devolutionist I pray now that we will, during this Bill's passage through your Lordships' House, do everything in our power to give this parliament the chance to succeed and to allow the political aspirations of the Scots people to be satisfied within the context of this great United Kingdom of ours.

We can only be assured of the total success of this enterprise if we deal positively with these six problem areas which I have mentioned and which have been mentioned by other noble Lords during the course of the debate.

8.36 p.m.

Lord Monkswell: My Lords, in rising to make my small contribution to the debate, I wish to thank my noble friend Lord Sewel for starting the debate in such a masterful yet succinct way. I compliment also the noble Lord, Lord Mackay of Ardbrecknish, on the dextrous way that he handled his party's conversion to acceptance of the new Scottish parliament from its original outright condemnation. I only hope that he can persuade his Back Benchers not to indulge in wrecking tactics.

I aim to say a few words about how we came to the point where we are now and where we might be going. I shall then say something about the scrutiny of legislation. First, I shall say a few personal words which arise from the fact that the Judicial Committee of the Privy Council will be called into action to determine various matters within the Bill. The first Lord Monkswell, my ancestor, was instrumental in setting up the Judicial Committee of the Privy Council and was one of its founding members. It is interesting to reflect also that that committee was set up to deal with a backlog of cases from the colonies which needed to be

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dealt with. Over the subsequent years, the colonies have fallen away and it is nice to think that we are finding a new role for that committee.

The extensive remarks which I was going to utter about the lead-up to the commitment to a Scottish parliament can be cut very short because, as a number of noble Lords, mainly from the Conservative Back Benches, have already said, the Conservative administration by centralising the state and emasculating local government over the past 18 years, caused the demand for a Scottish parliament to become overwhelming. The imposition of the poll tax only added fuel to that fire.

However, I sincerely hope that the establishment of the Scottish parliament and the devolution programme for Wales and Northern Ireland, the proposals for London, and the development of the English regional assemblies, will be seen as an exciting start towards the fashioning of a new constitutional settlement for the next century rather than as recreating the narrow nationalism which was out of date 300 years ago.

In future I hope that in a rejuvenated House of Lords we will hear the leaders of those new devolved administrations, rather than the hereditary absentee landlords who have very little relevance to the modern world. I hope that the people's representatives elected to the European Parliament will also have ex officio seats in the new House of Lords, alongside captains of industry and commerce.

I was interested in the remarks made by my noble friend Lord Hogg of Cumbernauld who pointed out that the Scottish trades union movement and the Church of Scotland were the two largest "mass membership" organisations in Scotland. I hope that senior members of those organisations will also have seats in the future House of Lords. If we do not weaken in our resolve to fashion a new constitution fit for the new millennium, we shall have an exciting time.

I move from the big picture to a smaller but no less important one. Adequate scrutiny of legislation is fundamentally important. It is best summed up by the phrase, "legislate in haste and repent at leisure". A number of noble Lords have suggested the need for a second chamber. I am not convinced that it is the answer in this case. If we look at the way in which the Westminster parliament operates, we can see that there are two opportunities to amend legislation as it passes through the House of Commons and three in the House of Lords. Those stages are separated to allow for mature reflection.

However, in local government, major changes, which are, in some ways, equivalent to legislation, are discussed by a sub-committee of a main committee, followed by the main committee, and the policy and resources committee, and finally by the full council. That provides an opportunity for amendment at each stage with time delays being built into the process. My noble friend Lord Hughes also mentioned how the Norwegian Storting, or its parliament, organises its affairs. Three principles derive from those examples: first, there needs to be more than one occasion upon

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which legislation can be amended. Secondly, there should be time delays between the different stages of consideration; and, thirdly, different groups of people should be involved in at least two of those stages.

I shall end with a philosophical question: should we, the UK parliament, in setting up these new devolved administrations, hedge them around with rules that we think are important, or do we allow the elected representatives of the people--in this case of Scotland--to do their own thing? I do not know the answer to that conundrum, but I am sure that we shall spend many hours in Committee, on Report, and indeed, on Third Reading discussing such important issues.

8.43 p.m.

Lord Lyell: My Lords, I rise to speak this evening with some diffidence after so many excellent, witty and commendable speeches; and, indeed, comments-- I might even call them asides--from my noble friend Lord Onslow yesterday. He made some particularly good cracks during the Minister's opening remarks. When I look around the Chamber, I believe that I am one of the few who sat through many debates here, virtually on the same Benches, when my noble friend Lord Campbell of Croy was giving as good as he got and in fact even better. Indeed, he has not lost much punch since those days of 1978 and 1979 when we discussed--surprise, surprise!--the same subject; namely, the Scotland Bill.

However, we are here again tonight. Thanks to my noble friend the Opposition Chief Whip, I hope that I speak as a strong Member. My noble friend Lord Glenarthur will follow me as the tail-end Charlie of the club, to stir things up before my noble neighbour Lord Mackie, who is not here at present, speaks. When one goes along to put one's name down to speak in the Whips' office there is usually a four letter word to be seen--"wind". However, I have been told that, no, in that case it is "wynd". I am sorry that my noble friend is not here now. In any event, I shall attempt to wrap up my short thoughts on the massive Bill before us. Indeed, it is probably one of the more important Bills of this Parliament.

Noble Lords will be aware that at the end of July 1997 we discussed the White Paper. I found a copy of the report of the proceedings. I am afraid that in the course of the remarks that were made then I made one or two naughty cracks at the noble Baroness, Lady Ramsay of Cartvale, about "gender balance". I should, first, say that it was a particular pleasure for me to hear the noble Baroness speak today in a major debate with such fluency. I congratulate the noble Baroness on the style with which she delivered her speech. Indeed, I look forward to hearing from her in the future. The noble Baroness has made a very swift--and I hope deserved--transition to her position, far quicker than some of us on these Benches. She has learned quickly and I congratulate her.

I should like to stress now something that I should have stressed in July 1997. In my county of Angus we do not necessarily need too many lessons in gender balance. The provost, who in fact is the chairman and

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convener of the council, is a lady. We have three deputy lieutenants who are ladies, one of whom is my noble friend and neighbour Lady Carnegy. Indeed, the councillor for the Glens who represented my noble neighbour Lord Mackie was a doughty lady. You do not get them much more couthy in the Glens of Angus. There was and still is a very good balance in the county of Angus.

The noble Baroness gave us a lovely gem which I shall treasure for the next few years. Indeed, it may be relevant to the mass ranks of the government supporters. She mentioned two words, an "agreed vision". If the noble Baroness and the noble and learned Lord sitting beside her care to look around them they will realise that that "agreed vision" is one floor up looking at a 56-inch screen. Indeed, I believe that is where many of them will be lurking. Those two words will be used by many enthusiasts who are not present in the Chamber tonight. I have in mind the noble Lords, Lord Ewing, Lord Watson of Invergowie, Lord Kirkhill and especially the noble Lord Hughes of Woodside, because that "agreed vision" will be a term that will be much used, as is the case with the gentleman with the whistle who runs around--and it was the noble Lord, Lord Sempill, who referred to rugby--with his "agreed vision" as he gives another penalty against Scotland or the team that we support. It is indeed something that I shall treasure.

The main thrust of my comments in July 1997 referred to Chapter 7 of the White Paper. Indeed, I hope to do the same tonight, but I shall also refer to Part 1V of the Bill. However, I shall just skate over them this evening. The noble Lord, Lord Sewel, in his opening remarks yesterday mentioned what I believe is technically called the Scottish variable rate. I think that that will be the technical term as regards tax-raising powers. However, yesterday, at col. 1572 of Hansard, the noble Lord seemed to depart a little from that theme. For many years we have been hearing about the Scottish Constitutional Convention, with suggestions that there should be power for the parliament to raise or lower taxes of up to 3p in the pound on the standard rate on that band of income. According to some arithmetic, we are told that that would give rise to a sum not unadjacent to £450 million.

Last July I tabled a Question. The cunning noble Lord, Lord Sewel--if I may call him that in the nicest way--opened the debate but left the winding-up to the noble Lord, Lord Williams of Mostyn, who accused me of being Machiavellian. I wonder whether noble Lords have read col. 1572 of Hansard, because in yesterday's speech, which I presume the noble Lord filled in himself, he mentioned that he understood that the figure involved would be £400 million. Perhaps the noble Lord or someone else may be able to explain to me how the figure of £450 million, or 3 per cent., came about. I am afraid I have not followed the history of the Scottish Constitutional Convention, but if someone could explain that to me over the course of the proceedings on the Bill it will certainly assist me considerably.

In July 1997 when we were discussing the White Paper I referred to Chapter 7, which is broadly set out in Part 1V of the legislation now before us. Noble Lords

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may be aware that I spent five very interesting years purportedly being in charge of the Department of Agriculture in Northern Ireland. After I had had quite a stressful meeting with Members of Parliament who had come over or others, I always had some indication of the success or otherwise of the meeting by the biscuits that accompanied my coffee. If they were chocolate, I knew that the meeting had been good; but if they were ordinary biscuits--well, I shall leave it there.

I should like to congratulate my noble friend and neighbour Lady Carnegy, my noble friend Lady Strange and my noble friends Lord Sanderson, Lord Monro and Lord Rotherwick on perhaps joining the chocolate biscuit club in that it seems that all of them have alluded in some way to the brief which I have also received from the chartered accountants of Scotland. They seem to have it pretty well right.

Last July I referred to paragraph 16 of Chapter 7 of the White Paper. At Committee stage I shall have plenty to say and to ask and to learn. I hope that much will be clarified for me. The honourable Member for Linlithgow and my own Member of Parliament, the honourable Member for Tayside North, have had plenty to say about the complications and difficulties for employers as regards the PAYE system. I refer to Clause 71 and the term of residence. The chartered accountants of Scotland have commented on this matter. It is a fairly formidable body.

Paragraphs 17, 18 and 19 of the White Paper are particularly relevant in this regard. I wonder whether the bulk of United Kingdom employers realise that Part IV of the Bill will affect each and every one of them if they have an employee who will be a Scottish taxpayer. That will result in a pretty hefty extra expense for those employers. I refer to paragraph 19 of Chapter 7 of the White Paper on costs. I have discussed these costs with a leading expert tax accountant from a firm in Glasgow. He used the dreadful term "a joke". I put it more tactfully and say that the figures do not appear to me to have the customary Scottish accuracy of Mr. Stephen Hendry, Mr. Jockie Wilson, let alone Mr. Craig Brown's heroes.

At this stage I should declare my interest. I live in Scotland and I am a member of the chartered accountants of Scotland. I am extremely proud to be a member of that institute. I believe that the noble Earl who is to speak later in the debate is a member of a sister institute. I remember that the vice-chancellor of Heriot-Watt University said 35 years ago when I was a student there, "You chartered accountants think of yourselves as queen bees or kings of the universe".

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