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Lord McIntosh of Haringey: My Lords, I agree with only one point in what the noble Lord said about the Thatcher Government. I agree that it is right that the private finance initiative should continue and will continue. As for the rest of the inheritance from the previous government in public finance management terms, the two most conspicuous characteristics of the Thatcher Government were that they took enormous amounts of windfall receipts--£65 billion from privatisations and all the receipts from North Sea oil and gas--and spent it all on current expenditure, with no provision for investment.

The Earl of Stockton described that as selling off the family silver. I contrast it with what we are doing, which is totally different. We are taking unused and unwanted items from the attic and using the proceeds from their sale for the restructuring of the economy, the restructuring of the building and--to continue the analogy--the rehabilitation of the building for the benefit of its inhabitants. That is the huge difference between us and the Thatcher Government. What we are selling off will be used for investment and not in order to cut taxes for the better off.

The noble Lord echoed the concerns of my noble friend about forecasts of growth for this year. He quoted the OECD figure of 1.7 per cent. If it is any reassurance to him, the Treasury expectation is a figure considerably lower than that. The public expenditure plans are based on the lower figure and, if it is a further argument against the wonderful situation we inherited from Mr. Kenneth Clarke, I think the noble Lord will agree that growth in 1998 is more dependent on Mr. Clarke's policies than those of the present Chancellor.

Lord Elis-Thomas: My Lords, will the Minister accept that I am not interested in discussing the past

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legacy of the Thatcher Government? However, as he will understand, I am interested in assessing the relevance of the Statement to the Wales block as it is transferred to the national assembly.

Does the Minister accept that, although I warmly welcome the key approaches in terms of investment in education standards, particularly the commitment of the HE sector to develop a more effective role in the Welsh economy, I am concerned about the adequacy of the allocation in terms of ensuring that the objectives of Pathway to Prosperity--published last week by the Welsh Office--can be enacted? In other words, we are talking in an official statement by the Welsh Office of a job shortfall of 200,000.

Is the Minister aware that some of us may be concerned that although that represents an additional £2.2 billion over the next three years to invest in the Welsh economy, it may not bring the level of performance of that economy up to the UK and European average? There may even be a need to revisit the public expenditure levels in Wales in line with those indicated in passing earlier by the noble Lord, Lord Barnett.

Lord McIntosh of Haringey: My Lords, I referred to the Thatcher Government when the noble Lord, Lord Marlesford, defended them. I do not tend to engage in disputes unless I am invited to do so.

The noble Lord, Lord Elis-Thomas, is right that the spending plans proposed for the next three years provide an additional £2.2 billion over the next three years. Coupled with the additional resources already committed to health, education and transport, that will meet the commitments made in our election manifesto. I hope that that will reassure the noble Lord.

In relation to the distribution and control of that expenditure, it will increasingly become the responsibility of the Welsh assembly and nobody in this Chamber will be able to answer for it.

Scotland Bill

6.11 p.m.

The Parliamentary Under-Secretary of State, Scottish Office (Lord Sewel): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved, That the House do now again resolve itself into Committee.--(Lord Sewel.)

On Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Lyell) in the Chair.]

Clause 4 [Candidates]:

Lord Mackay of Drumadoon moved Amendment No. 34:

Page 3, line 3, leave out from ("election,") to end of line 4 and insert ("a person may stand for return as a constituency member and may also stand for return as a regional member.").

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The noble and learned Lord said: After a long wait, we begin with a small amendment which I hope will not detain us very long.

Amendment No. 34 is a small drafting amendment to subsection (1) of Clause 4. As drafted, this subsection may not make it entirely clear, certainly to lay readers of the Bill, that the same individual can stand as a constituency member and as a regional member. Some Members of the Committee will be aware that there is a considerable body of case law in the courts as to what the word "or" means when it is used in an Act of Parliament.

It is most undesirable that there should be any misunderstanding or scope for dispute on an issue as important as whether or not one person can stand for the two forms of membership which the Bill provides. Amendment No. 34 makes it abundantly clear that one can stand for both. I beg to move.

The Deputy Chairman of Committees: I must warn the Committee that if Amendment No. 34 is agreed to, I shall not be able to call Amendment No. 35.

The Lord Advocate (Lord Hardie): The purpose of this amendment, as the noble and learned Lord, Lord Mackay of Drumadoon, stated, would appear to be to make it clear that a person may stand as both a constituency member and as a regional member.

In our view, the wording of Clause 4(1) does not prevent a person doing that. Even if there were thought to be scope for argument on that point, the position is put beyond doubt by other provisions of the Bill; for example, subsections (7)(c) and (8)(c) of Clause 4. Members of the Committee will see that registered parties' regional lists must not include a person who is a candidate to be a constituency member for a constituency not included in the region. That suggests by implication that it could include a candidate for a constituency which was within the same region. Clause 4(8) states that,

    "A person may not be an individual candidate to be a regional member for a particular region if he is ...

    (c) a candidate to be a constituency member for a constituency not included in the region".

Again, the implication of that provision is clear. If we look at Clause 7(3) it will be seen that,

    "An individual candidate already returned as a constituency or regional member shall be disregarded"--

that is in the allocation of regional seats. In that situation, therefore, someone who has been returned as a constituency candidate is discounted in the calculation for the allocation of regional seats. That clearly indicates that he or she may stand for both.

There may be difficulties in the amendment since it may have the effect of providing that a person could stand as a regional member only if he or she were standing also as a constituency member. I do not believe that that limitation was intended by the noble and learned Lord; nor would it be desirable. With that explanation, I hope that the noble and learned Lord will feel able to withdraw his amendment.

Lord Mackay of Drumadoon: I am slightly disappointed with the response of the Lord Advocate.

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I have worked my way through all the other provisions of the Bill and I do not for one moment suggest that the correct construction was that one could stand only for one or the other. However, in a Bill of this nature it is important that lay people reading it should be able to look at an individual subsection and from that alone understand what the draftsman intended.

I am disappointed that my helpful suggestion is not accepted, but in view of the fact that we have not made much progress so far, I will not press it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 35 and 36 not moved.]

Lord Mackay of Ardbrecknish moved Amendment No. 37:

Page 3, line 8, leave out ("or individual candidates").

The noble Lord said: This is a large group of amendments and I apologise to the Committee for that. I would have separated the amendments out, but was conscious of the fact that we had slight difficulties with timing this afternoon and so decided to put them together. They relate to the same underlying argument, although they address slightly different issues.

Perhaps I may remind the Committee of the voting system proposed for the Scottish parliament. Scotland will be divided into the European regions and in each of the regions there will be conventional first-past-the-post elections in the Westminster constituencies. That is fairly straightforward. On top of that, we will all have a second vote when we will vote for the party of our choice or for an individual. At the end of the day, all those votes will be added up and, using a formula devised by a Belgian mathematician--d'Hondt--the returning officer will give parties additional members. Up to seven additional members will be available.

The idea behind this is that, by the use of those additional members, any disproportionality in the first-past-the-post system can be remedied so that the final outcome is nearer to proportionality than was the first-past-the-post system originally. However, a problem arises which I want to address.

First, I am puzzled as to why, if the second vote is intended to ensure that there is proportionality in the total number of seats based firmly on the number of first-past-the-post seats gained, we are introducing individual candidates into the second ballot. Any votes the individual candidates achieve will be at the cost of the political parties. Proportionality in the first ballot may therefore be upset.

The problem is greater than that. If people shift their votes on the second ballot the proportionality on the first vote will never be achieved. I can, without too much trouble, produce examples which show that to be so. Parties that under-perform at first-past-the-post and yet have a sizeable vote, could easily find themselves very badly off if the second vote moves away from them. I do not need to remind your Lordships that I do not agree with any PR systems; I am now being a purist on the subject. If the additional member system is designed

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to "correct" any imbalance in the first-past-the-post, the second ballot and the individual member could easily frustrate that.

Last evening I did a rough calculation that if an individual candidate were to poll 8 per cent. in the second ballot--which is a huge "if"--the votes would have to come from the political parties who fought the first-past-the-post. In that case it could deprive one of the political parties of the very proportionality that the AMS system is designed to achieve. If the second ballot is designed to deal with party balance, it is inconsistent that individuals should be allowed to stand.

I doubt that any individual would be able to stand and achieve the 5 per cent. needed to win the very last place in the d'Hondt calculations. I suspect this was put in for Mr. Peter Peacock, the chairman of the Highland Regional Council, who wished to stand as an independent at the time. The Government wanted to keep him on side. They no longer need to bother about the Peacock amendment to the additional member system, they can forget about it. Mr. Peacock has decided to throw in his lot with the Labour Party. Looking at the opinion polls he may be wondering if he has made the right decision, but that is another matter. He is off the screen. The idea of individual candidates in the second ballot is a bit of a nonsense, partly because it is just pretending that individuals will achieve the 5 per cent. required in a regional vote of maybe seven, eight, nine or 10 Westminster MPs. We are talking about a lot of votes over a very big area. It is Cloud-cuckoo-land, but an individual candidate could poll enough votes to frustrate the proportionality.

Another more insidious problem is the split ticket. One of the problems of doing the Government of Wales Bill and the Scotland Bill is that I find myself treading some of the same ground. The audience changes a little, although not entirely. I see that the noble Lord, Lord Thomas of Gresford, is here, probably to check that I am consistent from one Bill to the other. As there are two votes there is the potential for political parties to register themselves as a sort of shadow party, although it is not really different from the main party. For example, the Conservative Party could register itself as the Conservative Party and as the Unionist Party. The Registration of Political Parties Bill as presently constituted would allow for that. There is no bar in the Bill to that. The Conservative Party would then stand in the first ballot and the Unionist Party would stand in the second ballot. I will explain further to your Lordships, but I shall not use the Conservative Party as a working example. The point is rather better achieved by looking at the Labour Party, given the fact that the Labour Party won a few more seats than the Conservatives in Scotland at the last election.

The problem started in a paper by Michael Dyer of the Department of Politics and International Relations at no less than Aberdeen University. The noble Lord, Lord Sewel, will be well aware of the gentleman. We have to say in the presence of the noble Lord, Lord Sewel, that we treat anything an academic says from Aberdeen University with the utmost seriousness. Dr. Dyer wrote a very interesting paper which drew

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everyone's attention to this sleight of hand--for that is what it is--of splitting the ticket of an alter ego party. He illustrated it in a very interesting paper.

The paper was taken up by no less a person than Mr. Ian Davidson, the Member of Parliament for Glasgow Pollock. Mr. Davidson described what I am about to explain to your Lordships as not necessarily a manipulation of the system. He went on to say in Hansard on 28th January 1998 in the other place that it would be a good idea for the Co-operative Party to register itself as a separate party. That was the essence of the Dyer paper.

Let me explain. If the Co-operative Party registers itself as a separate party and stands not for any first-past- the-post seats but entirely in the list, and the Labour Party does not stand in the list but in the first-past-the-post, then serious distortion of the principle of proportionality--which is the object of starting this new system--is possible. I take the results in the city of Glasgow at the last General Election as an example. I have to make an assumption that the second vote would fall the same way as the first vote. I suspect that, by and large, in the city of Glasgow it might.

In the city of Glasgow, 10 first-past-the-post seats were won by the Labour Party with varying degrees of convincing victories--substantial victories in most cases. If that happened in the Scottish parliament, the Labour Party would have 10 first-past-the-post seats. There are seven additional seats. The total votes were taken and the Labour Party achieved over the whole of Glasgow 193,000 votes; the Scottish National Party 62,000; the Conservative Party 27,000; the Liberal Democrats 23,000, and others 8,000--largely for Mr. Tommy Sheridan and his Socialist Party.

Those totals are then divided to start with by one more than the number of seats achieved. As none of the parties other than the Labour Party has any seats, their original vote holds. The Labour Party has its seats divided by 11, which reduces its votes considerably to approximately 170,000. I shall not go through the d'Hondt system. Without an overhead projector it might even defeat my skills of explanation--unless I want to put your Lordships off proportional representation in a very big way, and the temptation is there. Under the d'Hondt system these devices are put in and we come to allocate seven seats. The Scottish National Party gets three seats; the Conservative Party gets one; the Liberal Democrats get one and the Labour Party get two. So we end up in Glasgow with 12 Labour seats, three SNP, one Conservative and one Liberal Democrat. They are not awarded in proportion to the vote. There is a German term for the problem: you have got too many seats; you have got more seats than you deserve under proportionality. I accept that is part of the game of having some first-past-the-post and I do not complain about that.

There is then the problem that the Labour Party has 12 out of the 17 seats in Glasgow. If however the Labour Party does not stand in the second ballot and the Co-operative Party does, the Labour Party can advise its voters to vote Co-operative on the second ballot--and they will have no trouble in doing that because its voters

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will see quite clearly that it is a wise ploy in order to maximise their parties' representation in the Scottish parliament. When that happens and the votes are distributed under the d'Hondt system, the Co-operative Party will get six seats, the Scottish National Party one and the poor old Conservatives and Liberal Democrats will get none at all. So the Labour Party ends up with 16 seats instead of 12; they gain four. It is Labour and Co-operative. People in West Central Scotland have been used to Labour and Co-operative for years and years and years. They will not think that there is anything strange about this. That is a real problem. Dr. Dyer has written an academic paper about it and Mr. Davidson and others have said that it is an attractive proposition. I believe that we should try to do something to prevent it happening.

At the last election, exactly the same kind of thing would have happened in central Scotland; it would have happened in the west of Scotland; it would have happened in Lothian; and it would have happened in mid Scotland and Fife. In the Highlands, where the Liberal Democrats do very well, if I may worry them a little about proportional representation, they would not gain any additional seats because, although they have done well under first-past-the-post, they have not achieved a very high percentage of the votes. They gain hugely by first-past-the-post. However, if the Liberal Democrat Party decided to form the Liberal Party and the Democrat Party, which it would be able to do without any trouble, it could gain many more seats in the Highlands and Islands.

During the proceedings on the Government of Wales Bill, the Minister accepted entirely the strength of my argument. He did not deny that what I was suggesting could happen and was perfectly possible. All the comfort he gave me, as did his colleague in another place, was a guarantee that the Labour Party would not do it. I achieved the same guarantee from the noble Lord, Lord Thomas of Gresford, on behalf of the Liberal Democrats. I achieved the same guarantee from the noble Lord, Lord Elis-Thomas, on behalf of Plaid Cymru. I gave the same guarantee on behalf of the Conservative Party. However, as I explained to your Lordships earlier today, I have enough experience of Ministers to know that one cannot trust the breed for ever and ever. Other Ministers come along who are not bound by the promises parties have given. Frankly, I think we should do something about it.

The way to do something about it is to say that there will be only one vote--a constituency vote. Then one adds up the constituency votes for all the parties and distributes them using the d'Hondt system. There is then no prospect of a party dividing itself into two, like an amoeba, and therefore getting round the system. There is then no prospect of that happening 10 or 20 years down the road. Equally, it resolves the question of independents standing. It also means that the proportionality is based on the number of first-past-the-post wins. Therefore, we are doing what I thought the whole system was devised to do--making sure that the wrinkles, so to speak, and the unfairnesses that could happen in a first-past-the-post electoral system are ironed out. I think I have shown that, while

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they can be ironed out in some circumstances, there are circumstances in which they will not be ironed out. In fact, any unfairnesses will be reinforced by the additional member system.

I accept that the Government will have the additional member system in the Bill. Therefore, that is the system we will use. But I should like to think that we could find a solution to this problem. Another version of the solution will come up later, but, for now, because it ties in with the individual person standing in the second ballot, I am offering the Government the solution of the single vote. It removes the problem of the individual person standing; it removes the problem of alter ego parties--split parties; and I also believe that it will achieve in a more guaranteed way, if I may put it like that, the proportionality on the first-past-the-post seats that the Government wish to achieve by having AMS.

Perhaps I may point out that, initially--I fully accept that it was initially--West Germany, as it then was, used one vote. It then went to two votes. But in Germany the regional constituencies are huge and it is a 50:50 system. Half the members are elected by first-past-the-post and the other half are elected on the additional member system. So I do not think it would be quite so easy in Germany for parties to do that. I accept that it could be done; I believe it has not been done; but that does not mean to say that it would not be done.

When we pass legislation, especially legislation such as this, it is the duty of both Houses to look at how people might abuse the legislation and see whether there are ways of preventing that happening. I offer my amendment to the Government in good faith. I assume that I shall be given assurances that the Labour Party will not perform this operation. I assume that I shall be given assurances that the Liberal Democrats will not perform this operation. I can give assurances for the Conservative Party. But there is a party represented here which, as far as I know, has refused to give that assurance. That, if nothing else, should worry the Government. I beg to move.

6.30 p.m.

Lord Mackie of Benshie: The noble Lord, Lord Mackay of Ardbrecknish, has made his usual persuasive case. However, the great snag of using the first-past-the-post system and simply counting the votes is the fact that one then adds to the party the responsibility of providing a list of people who have not stood for Parliament, who have not gone to the electorate, and who are simply party nominees. One can point to cases in all kinds of parties where the crony system would work. We think that is a bad thing. Although there are anomalies in the system proposed, it is better than leaving the nomination of half the members of the parliament to a party headquarters. That is our objection to that system.

We also do not see why an individual should not stand in a region. He will be required to get massive support in terms of people nominating him and he will have to put up a great deal of money, but if he wants to, and if he can obtain that support--there are

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individuals who could--I think that is a democratic alternative. It may not be taken up but it is a reasonable one to offer.

The noble Lord, Lord Mackay, is probably on stronger ground when he says that precautions should be taken against fiddling the party system. I do not think that we would have a good case in the Liberal Democrats. Perhaps he will explain how we could take advantage of it. But, seriously, there is no case for the splitting of parties. It is certainly true that there is a Co-operative Party in the Labour Party. I never knew that there was a separation between the unionists and the Tory Party. However, we need to take precautions. I shall be interested to hear what the Government say. I am convinced that we have to work out a decent system of proportional representation and voting. Later amendments will address that point.

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