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Clause 1 devolves to Scottish Ministers powers that currently reside with the Secretary of State for Scotland pertaining to the administration and conduct of Scottish Parliament elections. However, it appears that it does not devolve these powers in their entirety. The purpose of this debate is simply to probe why it is that the Government have sought to retain the reservation of some of these powers apparently contrary to the recommendations of Calman. I can assure noble Lords that I do not intend to press this issue to a vote. However, I hope to draw out from the Minister a more comprehensive account than I have been able to ascertain so far of the rationale behind the Government's choice of powers for devolution in Clause 1. It may be simply that all the powers which are clearly about the administration and conduct of Scottish Parliament elections have been devolved and that those that are, in part or totally, about the electoral system have not. If that is the answer and it can be explained, I will be happy to accept it.

It is my understanding that Clause 1 devolves responsibility for the conduct and administration of Scottish Parliament elections and for the consequences of irregularities. However, it reserves powers, particularly, in relation to the registration of electors, the abandonment of a constituency poll or notice of it being countermanded, the procedure for filling regional MSP vacancies-an issue to which we will return in another amendment-and

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the application and modification of electoral law. I would be grateful if the Advocate General could confirm whether this is an exhaustive list. If it is not, what else is reserved?

The Calman commission made a clear recommendation in paragraph 5.1 of its report that the powers of the Secretary of State for Scotland relating to the administration of elections to the Scottish Parliament should be devolved. However, the commission did not discriminate between such powers as to their suitability for devolution. In contrast, it stated explicitly that it was unconvinced that there are strong constitutional or practical arguments against their devolution, particularly when considering that responsibility for local authority elections is already devolved to the Scottish Parliament. This view was widely supported across civic Scotland and by political parties.

By choosing to devolve powers over certain administrative functions but not others, the risk is that Clause 1 will continue the fragmentation of responsibility for Scottish elections, which is precisely what Gould, among others, identified as being the key factor in the chaos of the Scottish parliamentary and local government elections on 3 May 2007-chaos which, as we all know, resulted in the disenfranchisement of in excess of 100,000 Scottish voters. We must avoid that at all costs.

From the Scottish Parliament's point of view, both its previous and present Scottish Bill Committees recommended that the list of powers that remain reserved in this area should be reduced. In particular, the committees highlighted powers over the procedure for filling regional seat vacancies and rules relating to disqualification as more properly residing with Scottish Ministers.

It is vital that the lessons from the 2007 elections are heeded and that the responsibility and rules surrounding Scottish elections are rationalised. The devolution of powers over the administration of Scottish parliamentary elections is a natural reflection of the Scottish Parliament's maturity as a democratic body and of the principle that matters should be determined at the level closest to those-the Scottish people-who are affected by them unless good reason can be seen otherwise. I have initiated this debate simply to ask the Minister to set out good reasons for each of the powers for the administration of elections that remain reserved so that the House may judge whether they are compelling reasons and whether we are being faithful to Calman.

House resumed. Committee to begin again not before 2.55 pm.

Taxation: Avoidance

Question for Short Debate

2.07 pm

Tabled By Lord Dykes



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Lord Dykes: My Lords, I am grateful to the usual channels for providing time for this debate and to the Treasury Minister for coming to the Front Bench at this time. I apologise to him that it is lunchtime-although a slightly late lunchtime because of the previous debate-and I welcome his visit to deal with this important and thorny matter. He is a very busy Treasury Minister and I wish that I could have saved him having to do without lunch on this occasion. I hope he can catch up with that later.

I declare an historic interest as a former member of the London Stock Exchange for many years and as a partner in a leading institutional stock broking firm, as well as a shareholder in other former City interests.

The title of the debate deliberately uses the word "avoidance" because of the grey area of avoidance leading into illegal evasion as well. The title focuses deliberately on the behaviour of business representatives and groups because that really covers almost the whole field. Most wealthy individuals, as well as companies, who seek to lower their tax liabilities tend to arrange schemes through accountants and other professional advisers. Equally, however, it would be reprehensible if non-business sector individuals were either avoiding tax unfairly or evading tax illegally through their own decisions without advisers. I have sought to raise this issue for some time because of the widespread public concern that one hears here, there and everywhere that improper tax avoidance is widespread in the UK. These matters are very sensitive right now because of the bank bonus season as well-we of course assume that our senior bank director colleagues declare and pay tax properly. Bank bonuses and whether they are justified are not within this subject. It is because rumours are so often an inadequate substitute for facts that HMG need to answer questions from Members of Parliament to allay concerns.

Of course, the concept of unfairness in the tax system is hard to grasp. The public as a whole has a strong and maybe unfair impression that ordinary taxpayers, mostly but not all subject to the deduction at source system, do not have the sophisticated advantages of professional and corporate taxpayers to soften what some people regard as the hammer blows of brutal tax demands. Add to this the widespread feeling that, unfortunately, our colleagues in the main part of the coalition seem psychologically far more interested in giving lower-income individuals rather a rough time by cutting into their social benefit payments than pursuing their-dare I say?-friends in the world of business over tax dodging, then we have an explosive political cocktail about the relentless growth of the unequal society. That is mercifully nowhere near the lamentable position in the USA, with its by-now medieval inequalities, obliging even Warren Buffett to complain yet again recently. Personally, I have a cousin in California who is a member of the Libertarian Party that regards any tax apart from defence spending and foreign affairs as positively poisonous and communistic.

In the excellent debate on financial crime legislation launched by my noble friend Lady Williams on 17 March last year, I raised what I called the "sad" case of Sir Philip Green-that is at col. 385 of Hansard-who was able to channel his £1 billion-plus dividend from

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his brilliant and skilful reorganisation of BHS through his wife as a resident of that little territory, Monaco, and thereby avoided paying, I think, £200 million or more in income tax on the dividend. Far from condemning outright this pathetic example of sheer greed, the new coalition Government later hired him as a totally ineffective adviser on efficiency in government. We do not find it hard to imagine how ordinary struggling families feel when they see such goings on in Britain. Could HMG ask HMRC to contact Sir Philip to see whether he could persuade his wife to reconsider and possibly make a voluntary donation to the Revenue as a gesture of social solidarity in these tough times, especially since apparently several hundred Topshop stores are now to close because of the fierce recession? No wonder this sad little saga spawned the UK Uncut movement.

I intend to stay within the time limit of my speech but unfortunately the monitor Clock is incorrect and I do not know when I started. I hope it will be adjusted as quickly as possible.

Of course, I expect the Minister to say on these matters, as ever, "We do not comment on individual cases". I understand that, but the lack of accountability then speaks volumes and the public can draw their own conclusions. At least he might today try to reassure us that the colossal tax dodging that apparently occurs routinely in Britain nowadays is being dealt with. Despite some enlargement of the personnel at HMRC in recent times, it is by all accounts still struggling manfully-and womanfully, I assume-to cope with the huge backlog of dodgy schemes.

Why is it, as I hinted in that same debate in March last year, that if, for instance, you go to dinner parties in large houses in Wiltshire or Oxfordshire-I do not know about Chadlington but maybe elsewhere, too-around the table are people who appear to be in the UK a great deal but who scoff when someone says, "I pay full taxes"? Perhaps they are just boasting and making it up, but all sorts of rumours swirl around.

The absence of definitional precision helps that process of confusion and the shrugging of shoulders. Hence statistics on tax avoidance are fiercely contested and the interpretative basis is elusive. In a court of law for example, the judges presumably base their findings on what Parliament intended in any laws and regulations. That examination alone can spawn huge fees for yet more lawyers and accountants. For instance, I am assured by friends in so-called professional circles that a large number of senior broadcasters in both the public sector-that is, the BBC-and private TV and radio services routinely have corporate plans of their own that offer much bigger offsets than personal taxpayers can claim paying tax as individuals, even though these broadcasters are of course individuals. Can the Minister help here and give us any information that the Government might have to hand?

HMG have regularly referred to what they consider to be more than a £40 billion tax gap-"gap" is the word I use here. On the assumption that it would be somewhat higher because HMRC struggles to cover all cases, if everyone who should pay paid up-like ordinary mortals-that would cover a good chunk of the deficit. However, we are struggling philosophically

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because HMG keep banging on about corporation tax being too high. Is a 50 per cent income tax rate so excessive when it starts at such a high level? We must be careful in this country to avoid the worst horrors of the Tea Party lunacy in America that progressive taxes are worse even than communism or a proper national health service.

What is the latest development on redress policies in the many other secretive tax havens dotted around the world, partly as a result of our historical British Empire? Are the UK and other authorities locally in those areas getting to grips with the most severe abuses-and abuses in general?

Our newspapers, reflecting the reality that most-with some honourable exceptions-are owned and run by non-UK taxpaying moguls who live all over the place but not the UK, probably do not want to run too many stories about UK tax dodgers. They prefer benefit fraud, as in the Daily Mail. That is a much more attractive story for them to run. Naturally, the practical difficulties for the authorities here in dealing with these problems are huge. I sympathise entirely and once again express appreciation for what the Minister and his colleagues have been trying to do in the Treasury.

We know all too well from the world financial crisis of 2007-08 that business anywhere is truly international, global and incredibly complicated. It is hard to keep up with the worldwide legions of tax advisers-often themselves multimillionaires as well. Look how enormous the biggest UK-origin accountancy firms-the famous names-have become as worldwide entities, usually in very large towers. I remember the furore last spring when it was discovered that the Treasury had missed out on some £17 billion of tax due from companies disappearing, along with their directors, or banks and other groups not paying their taxes properly. More than half a million companies were dissolved in 2009-10, with most removed from the official register because they did not even bother to file accounts. Indeed, the Oxford University Centre for Business Taxation estimated last year that nearly a million companies failed to pay tax at all, even though presumably only a small proportion of those were not trading. Richard Murphy, a well-known director of the consultants Tax Research LLP, calculated that the total tax gap in Britain two years ago was over £120 billion. No one knows whether that is correct, but it is obviously likely to be significantly higher than the £40 billion mentioned by the Government on several occasions recently.

I hope that the Minister can reassure the House today that these estimates are ahead of the true figures. My anxiety is that, in reality, not even the Treasury, hardly known for its huge competence in guiding the ever-faltering British economy in recent decades, actually knows the truth. In replying to the debate, I hope that the Minister will also refer to the tax treatment of the overseas subsidiaries profits in UK-registered corporations which seem to be of special artificial help to the banks in recent times.

Finally, he may generously wish to guide us with his analysis of the cash-only economy-the black economy-which obviously deprives the Inland Revenue part of

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HMRC of yet more tax revenues, and how the authorities have managed to deal with VAT fraud and evasion. I am sure that the Government do not wish to give the impression that they are much keener on cuts in services than getting in more tax from what is apparently regarded in the City-some people repeat this again and again-as an army of tax dodgers in Britain.

Baroness Stowell of Beeston: I am sorry to interrupt my noble friend and that the Clock was not working properly. I thought he would find it helpful to know that he has exceeded his 10 minutes.

Lord Dykes: Because of the Clock, I conclude by referring to Danny Alexander, Chief Secretary to the Treasury, who said on Tuesday that tax dodgers have nowhere to hide and that we will get them. I would be grateful if the Minister commented on that comment from the other place.

2.19 pm

Lord Phillips of Sudbury: My Lords, it is perhaps a measure of how the subject of this debate is viewed that only around 10 Members of the House are present, apart from the speakers. I fear that the whole issue of tax avoidance or evasion-I do not see the difference-is of the most fundamental importance to this country at this time. Some of the greatest traditions of our country revolve around integrity and equality before the law. In the legal profession that I started in, in 1957, there was no tax evasion or avoidance industry. It is a creature of the last 30 or 40 years. Indeed, the lengths of tax avoidance would have been to tell your farmer client that he had better give away some land at least seven years before he died, so that he did not have to pay inheritance tax. In the 1970s, we had the growth of what one would call highly artificial tax schemes. Some may remember the name Rossminster. That was the start of what has become an international industry.

There are tens of thousands of lawyers and accountants who do nothing but avoid tax for their highly paying clients. While the vast majority of British accountants and lawyers try to play fair and will not stretch the rules beyond reasonability, they are under pressure because an increasing number of professionals will stretch the law beyond reasonability and will take artifice to byzantine and ludicrous lengths. We had a little hint of that when Mr Diamond gave evidence to the Select Committee and purported not to know how many subsidiary companies Barclays used in avoiding tax in this country. I believe that it paid only 1 per cent of its gains in tax in the UK. Someone was able to inform the committee afterwards that there were literally hundreds and hundreds of subsidiaries spread across the various tax havens, which enabled that state of affairs to come about.

What sort of society is it in which the CEO of Barclays this year, last year or the year before can earn £22 million with his bonus and earn more in a day than a state-registered nurse on an acute ward in one of our hospitals earns in a year? That is so contrary to any concept of a fair or decent society that I put it to the House that the issues that we are talking about run to the very roots of our society, its culture and nature.



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When I started again in the law, solicitors and accountants were what were called pillars of the community. For a complex of reasons, I am afraid that that is no longer the case. There is a quite staggering disconnect between those who work in the City of London and civic society at large. Very few indeed contribute anything to civic society, except their taxes. I believe with a passion that we need to have a renaissance of citizenship in this country, a restoration of a sense of community, national and local, because as a lawyer I have to tell the House that you cannot legislate for virtue. We have already gone a long way down the road of regulation in trying to stop loopholes, as they are called. The statute book has got more and more complicated and, with a great irony, has removed even further from the minds of professionals in this world the sense that they should play fair and have some sort of civic justice in the work they do.

The limited company, too, has been a great engine of demoralisation, to use that word in its literal sense. How few board members these days feel able to say, "I'm sorry, I think that's wrong-I don't think this company should be doing that."? Indeed, a friend of mine whom noble Lords would know, who is a chairman of public companies, made this point around the board table not long ago in relation to some new tax scheme thought up by the company's advisers. The board concurred, but the next day he had a visit from the company secretary, who said, "You know, you acted illegally yesterday in rejecting out of hand the scheme that was put up". That is but one small instance of a demoralised corporate world.

Where amorality rules, it is not able to withstand for long the creep towards immorality when the gains are big enough. I shall give an example, although it is probably unfair to KPMG, because all its competitors have their own dark secrets. In 2006-07, KPMG was exposed in the US as having been party to fraudulent tax schemes that enabled its clients fraudulently to avoid paying $2.5 billion of US tax. In a plea bargain, the partners managed to avoid being individually criminally prosecuted, as in my view they should have been, by agreeing to pay penalties of $450 million. This is a great firm reduced to ignominy because there is no longer any culture of integrity sufficiently strong to withstand the huge pressures and temptations of the tax avoidance industry. And of course the voice that says, "If we don't do it, our competitors will", is a powerful one.

What can we do about it? I am convinced that we have to do something about it, because I am convinced that we are destroying the very seedbed of our proud civic traditions in this country. To whom do ordinary young people look as good examples these days? Unless we do something about this, we will find more of the statistics revealed yesterday by the University of Essex, which did some long-term research on attitudes of the public to honesty. The university has now established a centre for the study of integrity on a longitudinal, cross-departmental basis. That research revealed that the 20 to 25 age group has a radically different view of honesty from the 60 to 65-year age group. The graph is a straight stairway. The evidence is complicated and difficult to interpret, but it is that the standards of probity and attitudes to honesty in our great country

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are in decline. I am sure that everyone here today still feels proud, because we still have standards of probity in public life that are the envy of most countries. However, when standards are in head-long decline, it behoves us in this place most of all to recognise it and do something about it.

Of course, the great stain on our escutcheon was the extensive expenses fraud in both Houses. We suffer from that-and the reckoning of the evidence from the University of Essex is that 91 per cent of the public feels that the politicians in this country are fairly corrupt. They do not trust us-and trust and fairness are the pillars of a good society. Without either of them you cannot have a good society. I am sure that all of us feel passionate about trying to bring about a good society as far as we can.

I end by restating my conviction that there is a strict limit to what we in Parliament can do. Far too much of the time, the citizens of this land look to us to put things right, and far too much of the time we pretend that we can. In this broad matter of honesty in taxation, it is down to individual people and businessmen to assert their moral autonomy for the public good.

2.30 pm

Lord Eatwell: My Lords, the issues raised by the noble Lords, Lord Dykes and Lord Phillips, have recently been the subject of two important reports. First, the report of the Public Accounts Committee into tax disputes, published on 20 December last year, revealed what can only be described as a scandal. It demonstrated a quite extraordinarily cosy relationship between HMRC and major companies, particularly international companies, in the determination of tax liabilities. It also demonstrated a failure to follow proper procedures in the resolution of tax disputes, and a consistent bias towards the favourable treatment of large companies compared with small companies and the ordinary taxpayer.

Everyone in this country who is settling their tax assessment this month, knowing that they will incur a fine and interest charges if they do not pay up on 31 January on the dot, will be astonished to discover that large companies may be given 10 years to settle their tax obligations. They will also be furious that up to £20 million in interest has been lost because of HMRC errors, while, for reasons that are still not clear, the department decided it would not reopen negotiations with the relevant company-a decision that it appears was taken without legal advice. The PAC report says that,

To compound this record of complacency and connivance, the department failed to be open with the PAC investigation and was,

given to the PAC and to the Treasury Select Committee in another place.

It is important to remember that HMRC is, quite rightly, a non-ministerial department, thereby removing Ministers from any suspicion of involvement in individual taxpayers' affairs, but this scandal goes beyond matters

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that can be remedied at arm's length by more effective management and the appointment of extra Revenue commissioners. It strikes at the very heart of the fair and impartial management of the tax system. It reveals systemic failures that have resulted in unfair and partial treatment verging on favouritism, and it demands the exercise of ministerial responsibility, for it undermines public confidence in the probity of government and the integrity of the Revenue.

If the failings exposed by the PAC were an isolated set of events-an aberration-the measures taken so far by HMRC to put its house in order just might be regarded as sufficient. Regrettably, this is not the case. As we have heard from the noble Lords opposite, it is a widely held view that tax avoidance is rife in this country, and that wealthy individuals and large companies that can afford sophisticated tax advisers can avoid attacks by abusive means.

The term "abusive means" has been defined by Mr Graham Aaronson QC as,

This quotation is taken from a report entitled A Study to Consider whether a General Anti-Avoidance Rule should be Introduced into the UK Tax System, published in November last year, which was authored by Mr Aaronson and commissioned, to give them due credit, by Her Majesty's Government. I applaud the initiative. Mr Aaronson concludes that a general anti-avoidance rule should be introduced, and proposes practical means by which this might be done. In his report, he argues that certainty in the tax system makes an important positive contribution to the economic and business environment. The presence of tax loopholes, and their exploitation by the unscrupulous, undermines that certainty. Moreover, competitive pressure forces firms to adopt more and more elaborate tax avoidance measures.

Competitive advantage can be gained by companies that go down the tax-abusive route, and hence firms that attempt to take a high moral stand, as the noble Lord, Lord Phillips, points out, are placed at a competitive disadvantage and may be eliminated from the marketplace. All must join the race to the bottom. Tax avoidance by businesses therefore undermines certainty, forces firms to adopt the tax-avoidance policies of the lowest common denominator, undermines any perception of fairness in the tax system and imposes a dead-weight loss on the economy by spawning a socially useless tax avoidance industry. It is damaging not just to the Revenue, but to the performance of the economy as a whole.

The source of this pernicious burden on our economy, the foundation of the tax avoidance industry, is the complexity of the tax system. It is complexity that by its very nature creates the exceptions and loopholes that can be legally exploited by the enthusiastic, well resourced tax avoider. If we are to tackle the disease rather than the symptoms, complexity should be the target. An important reason for the complexity of the tax system is that Governments attempt to manipulate behaviour via tax allowances and reliefs to incentivise people to behave in a particular way-to invest in new businesses or to undertake more R&D, or to recycle

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waste, or whatever. What is remarkable is that years of academic study have demonstrated that very few of these incentives actually work. Tax allowances to stimulate investment, for example, do not tend to result in more investment. Instead, they are a subsidy to investment that would have taken place anyway.

Another important source of complexity is a government belief that it is appropriate to differentiate between revenues from different sources, so that benefit deemed to derive from capital gains, or, more scandalously, from carried interest, is taxed differently from benefit derived from income. The treatment of interest on debt as a cost, and hence being tax deductible, is a major factor distorting the funding of business in this country. All this is a rich source of tax avoidance. Then of course there are the tax benefits handed out to specific social groups with the most powerful lobbying voices-the non-doms come immediately to mind.

Whether it derives from good intentions, perceived policy objectives, or mere cowardice and/or patronage in the face of the powerful and well funded, complexity is the fundamental source of avoidance. Without tackling complexity, the avoidance industry will never be significantly reduced. I therefore applaud the establishment by the Government of the Office of Tax Simplification and look forward, in hope rather than expectation, to its efforts bearing fruit. In the mean time, while we wait for the simplified promised land, Mr Aaronson concludes that all current approaches to curb tax avoidance,

He might have added, if he had had the PAC report before him, that all attempts to limit tax avoidance are undermined if there exists the cosy relationship between the HMRC and big business identified in the PAC report.

With the PAC report and Mr Aaronson's report before him, the Minister must address a number of questions. First, when did Ministers first know of the matters identified in the PAC report? Were they fully informed, or have they made further investigations? What have their investigations, if any, revealed about further abuse and, if so, what sort of abuses? What action do the Government intend to take to correct the systemic deficiencies in the HMRC? Is it not time for a full investigation into the practices and substance of the taxation of large companies, in order to re-establish public confidence in the probity of government and of the Revenue? Secondly, do the Government accept the conclusions of Mr Aaronson's report? When do they intend to introduce a general anti-avoidance rule, with the institutional support outlined by Mr Aaronson? Thirdly, when can we expect a report from the Office of Tax Simplification that deals specifically with business taxation and tax avoidance?

Confidence in the tax system is, as noble Lords opposite have said, fundamental to our democracy. If confidence in the fairness and probity of the state is lost, effective revenue raising is undermined-colourful examples, perhaps from the Mediterranean, can be imagined. The issues identified in the Public Accounts Committee report and in Mr Aaronson's report demand an urgent response. I hope we will hear from the

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Minister today the concrete steps that the Government intend to take to curb abusive behaviour towards the tax system. If practical steps are not forthcoming, the Government will have some explaining to do to this House and to the British people.

Lord Phillips of Sudbury: The noble Lord raised some extremely pertinent points about HMRC, but does he agree that the Government reducing the staffing at HMRC over the next few years by 12,000 is scarcely likely to increase the effectiveness of tax collection?

Lord Eatwell: I think I shall say yes.

2.40 pm

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, I am grateful to my noble friend Lord Dykes for giving us an opportunity to discuss the important issue of tax avoidance and to remind the House of what the Government are doing to clamp down on it. However, we should put the whole subject into perspective. It is an important topic. There have been few speakers, but a considerable degree of heat has been thrown at the topic that may occasionally have obscured the light.

We must remember what we need to achieve in this area, particularly in the current economic situation, when we are faced with reducing the largest peacetime deficit on record. It is of course more important than ever and fair that everyone, whether businesses or individuals, pays their fair share of tax, but we have to remember that we must keep this country competitive. We are competing in a global economy, so we have to have a tax regime that is competitive for businesses, is fair for individuals and incentivises individuals to get off benefits and into work. Yes, the tax-avoidance question is critical, but we have to remember the wider context in which it operates.

A fair tax system means closing the tax gap and ensuring, as I have said, that businesses and individuals pay in full what they owe. My noble friend Lord Dykes asked questions about the size of the tax gap and whether we really understand its make-up. The figures for 2009-10 are that the tax gap was estimated at 7.9 per cent of liabilities, £35 billion in cash terms, which means that HMRC collects over 90 per cent of all the tax that is theoretically due. We have to do better. HMRC has to do better and it is working on that-I shall come on to that shortly-but, if someone heard this debate in isolation, they might think that the performance of HMRC was much worse. It collects over 90 per cent of all the tax that is theoretically due, or £468.9 billion in revenue in 2010-11. We should also remind ourselves that the latest figures show an overall decrease in the overall net tax gap of £7 billion from 2008-09 to 2009-10.

We should therefore be cautious about the methodology, but the 8 per cent tax gap in the UK compares well with other economies. For example, the USA's tax gap is 14 per cent and, to take a country in Europe that is widely regarded as a model of fiscal rectitude, in Sweden the tax gap is 10 per cent.

The Government's approach to tackling avoidance builds on HMRC's anti-avoidance strategy. There are three core elements to that approach: prevention, detection

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and counteraction, with a clear focus on preventing avoidance before it can occur. I say "avoidance"; I do not of course share my noble friend Lord Phillips of Sudbury's contention. I know that it is nothing new that he feels strongly that avoidance and evasion are the same thing.

Over the past 20 months we have demonstrated real progress. In answer to the challenge from the noble Lord, Lord Eatwell, about the concrete actions that we are taking, in the most recent Finance Act we closed down a range of avoidance schemes to bring in yields of around £1 billion a year over the course of this Parliament. Only this month, we acted quickly to stop a particularly significant avoidance scheme aimed at artificially exploiting an income tax relief. That scheme posed a significant risk to the Exchequer, and our quick action ensured that this risk did not materialise. That is the sort of concrete action that we will take.

In answer to the questions about whether HMRC has the capacity to deal with the threat of avoidance, the Government have underlined our commitment to tackling avoidance with the reinvestment in HMRC, which I am sure noble Lords are aware of, of over £900 million, which should bring in around £7 billion each year by 2014-15 in additional tax-again, concrete additional targeted action.

Lord Phillips of Sudbury: Can my noble friend then reassure the House on the figure about which I asked earlier and say that the reduction in staffing of 12,000 will not affect the front-line effort to reduce tax avoidance/evasion?

Lord Sassoon: My Lords, as I am sure my noble friend would recognise, all government departments are having to tighten their belts; otherwise, the deficit is not going to be tackled. I hope to reassure him by explaining where HMRC is focusing its efforts. The recruitment of over 1,200 staff in new posts to tackle non-compliance is significantly upping HMRC's efforts in this area and will bring in significant additional revenue in each tax year, so the answer to his question is yes.

The customer relationship model that HMRC uses has considerably improved its ability to identify risk and to handle these issues. The report by the National Audit Office on HMRC's 2010-11 accounts, which underlay one of the reports referred to by the noble Lord, Lord Eatwell, noted that HMRC's high-risk corporate programme has brought in a yield of over £9 billion and that it contributed to reduced avoidance activity by major companies. The investment is there. On another point made by my noble friend Lord Dykes, we do not forget the cash economy in those efforts.

I am grateful to the noble Lord, Lord Eatwell, for drawing attention to the question of the general anti-avoidance rule, the GAAR. We are exploring that option to see whether such a rule could help to deter and counter tax avoidance in a fair way. Attention has been drawn to the work of Graham Aaronson and his colleagues and their report. We received the report in November last year. We will be considering it and are actively discussing its implications with businesses and tax professionals. We will respond to the report at the

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Budget and set out our plans if appropriate. We have said clearly that we would not introduce a GAAR without a further formal round of public consultation, so that is very much work in progress.

I am also grateful to the noble Lord, Lord Eatwell, for applauding the introduction and the work of the Office of Tax Simplification. The complexity of the tax system has been much remarked on, and I can echo many of the remarks made by noble Lords on that. The OTS has started its work and published recommendations on tax relief, avoidance legislation and IR35, as well as an interim report on small business tax. More is coming down the pipeline and this ongoing work will be an important part of what we all want to see: a simpler tax system that is easier for individuals to comply with. I may disagree with the emphasis of my noble friend Lord Phillips of Sudbury on some things, but I certainly agree that this is fundamentally about individuals doing what they are required by the law to do.

Another critical component of preventing avoidance is the way in which HMRC engages with the largest taxpayers proactively to identify and tackle avoidance. We do not have the time to go into the detail of this but, in response to some of the somewhat one-sided interpretation and selective quoting of the recent Public Accounts Committee report, I draw the attention of the House to HMRC's detailed rebuttal on many factual points in the conclusion of that report. In brief, to be clear, this effort with large businesses is not in any way HMRC being soft on large business or on those with complex tax affairs. HMRC treats all taxpayers even-handedly and does not allow them to settle for anything less than the full amount due. It is through its engaged and intelligent approach to tax avoidance that the additional revenue to which I have already referred is coming in.

Lord Eatwell: The noble Lord referred to erroneous statements in the PAC report. Did they include the observation that senior HMRC officials had had lunch and dinner with the companies that then had a reduced tax burden?

Lord Sassoon: My Lords, the substance of the issues to which HMRC takes exception is to do with the size of unresolved tax bills and some of the details of cases in which errors were found that HMRC disputes. That is the substance, rather than the question of who met whom with what refreshments laid on. We should stick to the substance.

Other noble Lords have been scrupulous in keeping to their time. I am conscious that, with the interventions, I risk going over my time, so I will press on. I want to answer just one more question, raised by my noble friend Lord Dykes, about the tax treatment of overseas companies. I just confirm that we are reforming the controlled foreign company rules very much to protect against the artificial diversion of profits to low-tax jurisdictions, just as our general reforms are being made to make the UK a good place for global corporates to have their headquarters. Having said that this is a matter for individuals, I will not comment on the affairs of any individuals.



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In conclusion, I have very briefly explained our strategy for tackling tax avoidance to ensure that everyone pays their fair share. This is an important topic and I am glad that we have had this debate. The Government are taking real, decisive, concrete action to close the tax gap. We are making good progress, but there is much more to do. We will ensure that every sector of society pulls in the same direction to tackle the deficit and the woeful economic legacy left to us by our predecessors.

2.54 pm

Sitting suspended.

Scotland Bill

Committee (1st Day) (Continued)

2.55 pm

Debate on whether Clause 1 should stand part of the Bill resumed.

Lord Lang of Monkton: My Lords, I made the mistake before we started today's business of having a brief word with the Minister, from which I gained the impression that if I kept quiet the preliminary business would be dealt with very quickly and we would soon be into the body of the Bill. I increasingly regretted taking the decision to keep quiet. I have picked some of the notes that I made and scribbled all over them, with a view to reintroducing and regurgitating them now.

The first thing I would say to my noble and learned friend is that, historically, two and a half hours of letting off steam at the beginning of the Committee stage on any Scottish legislation has always proved a way of shortening the overall length of proceedings. Perhaps that may happen on this occasion. However, not having let off steam, I still have some to let off and I propose to do it in short, sharp bursts periodically through the progress of the Bill.

I absolutely support the admirable speech made by my noble friend Lord Forsyth and the brilliant way in which he laid out the concern that all sides of the House have. It was an extremely productive and successful debate. I thought that his tone was absolutely first-class as well. While the noble Lord, Lord Kerr, and others have criticised the tone, and are right to do so, we should always remember that tone is important but so are the facts. The facts will be pretty unpalatable but will have to be laid out before the electorate at various stages. We fail in our obligations if we do not take every opportunity to do it in this place, as well as in the referendum when it comes.

This clause was not one that concerned me when I initially looked at the Bill. I had concerns about other clauses but not about this one. However, in the light of what has happened in the past few days, and the way in which the Scottish National Party Administration has behaved, it is not a clause that one should let pass unchallenged without questioning precisely what it would achieve. That is an important approach to take, not just to this clause but to the whole Bill.

It is unsatisfactory that there is no Scottish National Party Peer in the House who could answer for that party. Let us hope that that will soon be put right.

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However, foghorn diplomacy is one of the First Minister's strengths and we hear pretty clearly, even from here, what he has to say. The views of the Scottish Administration shriek out from the paper in which they published them and we are not in much doubt as to what they believe.

Turning specifically to the clause, I think the noble Lord, Lord Browne, raised the question of the possible extension of the franchise to 16 or 17 year-olds. If he did not, I hereby raise it now. I see that Clause 1 transfers certain executive functions in Section 12, relating to the conduct and administration of Scottish Parliament elections. That sounds harmless enough but I should like to hear a little more from the Minister by way of reassurance that it will not jeopardise our position any more than it is already jeopardised by the gymnastics of the First Minister.

Subsection (2) gives Scottish Ministers the powers to make provisions on the conduct of Scottish Parliament elections, which again sounds innocent but is not necessarily innocent in delivery. Subsection (3) amends Section 12(2), which clarifies the scope of the order-making powers of Scottish Ministers to make provisions under Section 12(1)(a). It also amends Section 12(2)(d) to allow Scottish Ministers to combine polls to the Scottish Parliament with other devolved elections where the polls are held on the same day. This seems to me not to involve any principle but to create a potentially anomalous situation. If the electorate were extended to include 16 and 17 year-olds and the poll for a Westminster Parliament took place on the same day as that for a Scottish Parliament, or, indeed, for Scottish councils, would it not seem anomalous if the 16 and 17 year-olds were able to vote for one but not for the other? The same would be true of European elections. To me it points not to any high principle but to self-interest on behalf of the Scottish Administration, who seem to believe that young voters would be more likely than older voters to turn out and vote for independence. Therefore, I hope that my right honourable noble and learned friend understands how my concern grows in looking at this relatively innocent clause.

3 pm

In that context, I should like to revisit the consultation paper published by the SNP yesterday as it is full of self-serving homilies and phrases which, on the face of it, might not spread alarm but could generate considerable concern when the day comes. I was looking particularly at the question that the SNP proposes to ask in the referendum. The summary states:

"The referendum must be trusted and clear".

It also states that the rules are,

However, any question that starts with the words "Do you agree?" is obviously totally loaded in favour of the answer that it seeks. It is rather like a judge saying to a jury before it goes out to consider its verdict, "Do you agree with me that this man is innocent and should be set free?". Immediately, one sees the tone of loading the answer in favour of a particular outcome. Again, it is rather like a plaintiff in a divorce court presiding over the court in which his or her divorce is heard.



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Considering the way in which the Scottish National Party and Administration seem to dress up their intentions in bland language, finessing the difficult areas, should put us on our guard. That is why, when we see that the very first clause of the Bill proposes to hand more controls over parliamentary elections to the Scottish Administration, I ask my noble friend to reassure me on all that and to bear in mind that it is through the prism of the nationalist approach in the Scottish Parliament that this clause, and indeed the whole Bill, should be considered.

The Advocate-General for Scotland (Lord Wallace of Tankerness): My Lords, I thank the noble Lord, Lord Browne, for using the clause stand part debate to allow us to explore and examine what is intended by this clause and, indeed, what is not intended. I also thank my noble friend Lord Lang. I assure him that it was not my intent to try to stop him speaking. I think he knows full well that we genuinely expected the previous debate to be somewhat shorter than was the case. He is absolutely right to say that it was good that we started with a lengthy but very good debate which allowed numerous views to be expressed. It may well facilitate our consideration of these clauses.

This clause transfers to Scottish Ministers certain of the executive functions that are currently the responsibility of the Secretary of State relating to the administration of Scottish Parliament elections. It will enable Scottish Ministers to make general provision by order for the conduct and administration of elections to the Scottish Parliament, the questioning of such an election and the consequences of irregularities. The noble Lord, Lord Browne, asked me to be more specific about what the powers confer and what continues to be reserved. In the same spirit, my noble friend Lord Lang asked for some reassurances. As I have indicated, the Bill will transfer to Scottish Ministers some of the executive functions that are currently the responsibility of the Secretary of State. There is no corresponding widening of the legislative competence of the Scottish Parliament although, obviously, it will have a role in approving the subordinate legislation made by Scottish Ministers. So it is executive devolution rather than legislative devolution.

Specifically, Scottish Ministers will be able to make provision by order as to the conduct of Scottish Parliament elections, the questioning of such an election and the consequences of irregularities. This power includes making provision about the supply or otherwise dealing with the electoral register, the combination of Scottish Parliament elections with other elections falling within the legislative competence of the Scottish Parliament-the most obvious one being local authority elections-as well as the limitation of candidates' election expenses. However, elements of the powers will remain the function of the Secretary of State: the franchise and the combining of Scottish Parliament polls with polls at other reserved elections. This will ensure that issues of constitutional importance continue to be dealt with by the UK Parliament.

I hope that reassures my noble friend that, because of its constitutional importance, the franchise will be reserved to the United Kingdom Parliament. He referred

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to 16 and 17 year-olds being able to vote. Such a situation is purely hypothetical. However, having different franchises for different elections held in a combined poll may not be as anomalous as my noble friend thinks. If a local election were held in a combined poll with a Westminster election, while he and I would have the ability to vote in local elections we would not be allowed to vote in a Westminster election, so you can already have elections which could be combined on the same day with a different franchise applying in each.

As regards the referendum, I remind my noble friend and, indeed, the Committee that the preference expressed by the United Kingdom Government in our consultation paper was that the franchise of the electorate for any referendum on Scottish independence should be that which applies at the Scottish Parliament elections. That same franchise applied at the 1997 referendum. We take the view that, if it was good enough to elect a Scottish Parliament in May last year, it is appropriate for a referendum.

In addition, the Secretary of State will retain the powers to modify the application of Section 7(1) of the Scotland Act, which sets out the modifications to the calculation of the regional figures which are made when a constituency poll is countermanded or abandoned, and to modify Section 8(7), which sets out what happens when the highest regional figure is the regional figure of two or more parties or individual candidates. This is about the election to the Scottish Parliament rather than an administrative part of it. It is about the election itself. That is why we have considered it appropriate to continue the reservation. The Secretary of State will also retain the power to make provision for the return of members of the Parliament otherwise than at an election.

The B3 reservation-that is, elections to the United Kingdom, European and Scottish Parliaments and the franchise at local government elections in Schedule 5 of the Scotland Act-will remain unchanged. The noble Lord, Lord Browne, asked whether that would lead to the fragmentation which the Gould report raised concerns about with regard to the operation of the 2007 Scottish and local government elections. All responsibilities for the effective conduct of a Scottish Parliament election are being handed over to the Scottish Government. I have indicated the nature of the functions being retained, which relate to the framework under which those elections are run-for example, the franchise and the electoral registration system-or to the reserved elections such as the parliamentary elections. We believe that the difficulties encountered in 2007 were the result of a unique combination of factors that is not expected to arise again.

It is fair to put on record that the 2011 elections were well administered, notwithstanding the fact that it was a combined poll with the AV referendum. That is to the credit of electoral administrators, who are now better co-ordinated through the electoral management board that both the UK and the Scottish Governments support. If one were to change the rules with regard to electoral registration and devolve that, you could then get fragmentation because you could possibly find yourself with different rules for electoral registration

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for Scottish parliamentary elections and for Westminster elections. I think we are agreed that, although the franchise may be different for each of these elections, it makes sense to have the one canvass subject to the one set of rules for electoral registration.

The noble Lord, Lord Browne, in referring to the previous report of the Scottish Parliament, asked about disqualification from membership of the Scottish Parliament. Section 15 of the Scotland Act allows Her Majesty to specify, by Order in Council, various office-holders who are disqualified from membership of the Scottish Parliament. At present, Scotland Office Ministers are responsible for preparing the draft legislation and presenting it to Her Majesty in Council, but it must first be approved by the Scottish Parliament. Clause 16 has been added in response to the legislative consent Motion in March last year, and will pass responsibility from Scotland Office to the Scottish Government, although the requirement for approval by the Scottish Parliament will remain.

We believe that devolving the elements of responsibility for the administration of elections as I have outlined is consistent with the Calman commission's principle that these matters should be decided at a level closest to those affected, unless there are good reasons for determining them at a UK level. I have sought to try and make the distinction in respect of constitutional matters and where, in terms of electoral registration, it makes sense to get consistency across the United Kingdom.

Lord Sewel: Perhaps I may make one point. I do not want to keep on bringing the debate back to the present First Minister, but he has made clear over the years his animosity and antipathy towards this House. Would it therefore be possible under the arrangements that have been outlined for the Scottish Parliament to disqualify Peers from being Members of the Scottish Parliament? That would be a great shame because a number of Peers have distinguished themselves as MSPs.

Lord Wallace of Tankerness: No, my Lords, that would not be possible, as eligibility matters will remain reserved. I hope that on the basis of what I have indicated-

Lord Browne of Ladyton: I am grateful to the noble and learned Lord for giving way. From the way in which his voice changed, I had the sense that he was moving towards a peroration.

I am beginning more clearly to understand this division. I understand the difference between the framework within which the elections are conducted, as opposed to the administration; and I understand the difference that I imposed on this debate between the electoral system and conduct. I should be grateful if the Minister would go through the list that I gave-at some stage, if not now. Perhaps he may write to tell me where at least two of those matters lie. One of them may be straightforward and we will come to an amendment on it shortly, one hopes-the procedure and framework for filling regional MSP vacancies-but where does the abandonment of a constituency poll or

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notice of it to be countermanded lie? Those two matters concern me and I will ignore the other two. I should just like a reassurance that beyond the list that I gave there are no matters other than those the noble and learned Lord has identified.

Lord Wallace of Tankerness: My Lords, I will certainly write to confirm, but I can seek to indicate that the rules regarding the regional list will remain reserved to the Secretary of State. On the abandonment of a poll, my understanding is that the issue in question is not so much with the abandonment of the poll itself but where that leads to a difference in the calculation of the regional vote. It is that calculation that would be affected if there was an abandonment of a poll in a particular constituency. I am seeing nods that I have actually got it right. That is the substance of this reservation. I will confirm that, but I hope that that has been a sufficient explanation to the noble Lord.

Clause 1 agreed.

The Deputy Chairman of Committees (Baroness Fookes): The Question is that Clause 2 stand part of the Bill.

Lord Foulkes of Cumnock: My Lords-

The Deputy Chairman of Committees: Perhaps I should explain to the noble Lord that we have to agree that Clause 2 stand part of the Bill before we reach Amendment 1.

Clause 2 agreed.

3.15 pm

Amendment 1

Moved by Lord Foulkes of Cumnock

1: After Clause 2, insert the following new Clause-

"Regional vacancies: individual candidates

(1) Section 10 of the 1998 Act (regional vacancies) is amended as follows.

(2) In subsection (2) omit "the regional member was returned as an individual candidate, or".

(3) After subsection (6) insert-

"(6A) If the regional member was returned as an individual candidate, an election will be held and the single vacancy allocated in accordance with the procedures set out in subsection (6B).

(6B) In any election held in accordance with subsection (6A)-

(a) for each registered party which has submitted a regional list, the regional figure for the purposes of paragraph (c) is the total number of regional votes given for the party in all the constituencies included in the region divided by the aggregate of one plus the number of candidates of the party presently returned as constituency members for any of those constituencies plus the number of regional seats allocated under section 8 to that party at the previous general election;

(b) for each individual candidate, the regional figure for the purposes of paragraph (c) is the total number of regional votes given for him in all the constituencies included in the region;

(c) the vacant regional member seat shall be allocated to the registered political party or individual candidate with the highest regional figure.""



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Lord Foulkes of Cumnock: Thank you, Lord Chairman. I am really grateful to you. You are almost a relative. I have great respect for your knowledge of procedure, including procedure in the other place, where you served with great distinction as Deputy Speaker. I remember very well that you kept me in order from time to time. I wish that you had the same powers here, by the way, but that is another story.

Perhaps I may also be permitted to speak to Amendment 16, which is grouped with this amendment. I am sure that one speech would be welcomed by the House, rather than if I spoke to the amendments separately.

As to Amendment 1, I believe that I have discovered a gap, a lacuna or whatever word one should use, in the electoral process. It came about in my discussions in relation to my very good friend, the independent Member in Lothian, Margo MacDonald MSP, who I have known for many years. In raising this issue, I wish her absolutely no ill at all-quite the reverse. I hope that this issue does not arise in any way. However, it occurred to me when talking to her and then looking at the legal position that if a vacancy arises for a constituency Member, there is provision for a by-election, and if there is a vacancy for a regional Member on a party list, the next person on that list automatically takes over. However, when an independent Member either resigns or sadly dies, there is no provision for filling that vacancy. There seems to be something missing from the arrangements. I am sure that everyone would agree that there ought to be some method for filling that vacancy. Having discussed it with the helpful people in the Public Bill Office, my amendment is just one way of dealing with that issue.

If a vacancy arose due to the resignation or the decease of an independent Member, new subsection (6B) proposed in my amendment would take effect. A new calculation would then be carried out by the returning officer, in the same way as the allocation of the regional seats which resulted in the election of that independent Member. It would be:

we know that figure; that was used in the initial calculation-

So those seats are all taken into account. Proposed new paragraph (b) states:

it should say "or her", but I am sure that in this case "him" includes "her", or embraces "her" may be a better way to put it-

Then, the vacant regional Member seat would be allocated to either the registered political party or the individual candidate with the highest regional figure. That seems to me, and it seemed to the Public Bill Office, the best way to deal with it.



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I hope that the Minister and all Members of the House agree that the issue needs to be dealt with. The Minister has a great deal more advisers on drafting than I do. If, for any reason, this is not the best way to deal with the matter, I hope that at the very least he will say that he will come back with an amendment that deals with it more effectively.

Amendment 16 is very different and addresses a difficult issue on which I have changed my views-as have others, I think. It concerns whether persons should be permitted to stand for both a regional seat and a constituency seat at the same election. Paradoxically, the position is different in Wales from that in Scotland. I do not understand why it should be different. In Wales, the same individual is not permitted to stand for both a regional and a constituency seat.

A few years ago, before the most recent election in Scotland, that seemed to me to be a very sensible provision. I tabled an amendment in this House. Strangely enough-but these things happen in politics-the Minister who had piloted the legislation for Wales, and argued the case in Wales that a person should not be permitted to stand for both, made an entirely opposite argument in rejecting my amendment to bring Scotland into line with Wales. I have great respect for my good and noble friend Lord Evans, especially when he can argue one way one year and the other by the next; that is a necessary skill in politics. However, he did not give any explanation for it.

I hope that if the Minister does not accept my amendment today, he will at least give some logical explanation which will convince not just me but other Members of the House why it should be different in Scotland from Wales.

Arbuthnott identified the problem of dual candidacy in his report. He said that the commission found considerable public opposition to the party control of the closed list. Concerns cited were a lack of voter choice over the selection and election of regional candidates. This was perceived to undermine legitimacy. That is not dealing with precisely my point, but he went on to state that the lack of legitimacy was compounded by the problem of dual candidacy. While candidates were defeated in their constituency, many were then elected because they were included on closed party lists. It was noted that 88 per cent of successful regional MSPs had been failed constituency candidates.

Lord Wigley: That was what led to the change in Wales. There were three defeated candidates in one constituency alone all of whom came back on the list. But would that problem not be overcome if there was an open list rather than a closed list?

Lord Foulkes of Cumnock: There is scope for another amendment, I think. I have tabled enough already, so perhaps the noble Lord might think of tabling one. Everyone here from Scotland will know that list Members have a habit of choosing a seat they would like to stand for in the constituency and then concentrate on opening an office and taking up issues in that constituency. If the constituency Member cannot deal with a problem-elected Members will know that some problems are insoluble-the candidate will jump on the bandwagon and take it up.



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Dual candidacy is a real problem. I have tabled a later amendment proposing a general review of the electoral system. I will discuss that in greater detail when we get to that amendment. It would be a better way of dealing with the issue in the longer term, but this would deal with it in the short term. Our electoral system was set up with the best of intentions, but even the noble Lord, Lord Steel, who was involved, now recognises that it is not fit for purpose. One of the problems is the question of dual candidacy. I hope that other Members who have experienced the problems of dual candidacy in Scotland will comment, and I certainly hope that the Minister will consider the potential change and, at the very least, explain why there should be a different system in Scotland from the one that I understand operates quite successfully in Wales.

Lord Steel of Aikwood: My Lords, the noble Lord has raised two very important, if minor points. We have to remember that when we were legislating on the then Scotland Bill, in which I was involved in this Chamber, the additional Member system, as it is known, was completely new to this country. There were one or two loose ends that were not quite right.

On Amendment 16, which is the noble Lord's more substantial amendment, I entirely agree with him. As Presiding Officer I had to deal privately with complaints from constituency Members about the activities of regional Members. It is slightly worse than the noble Lord said because quite often regional Members had not just stood and been defeated, they were intending to stand again in the constituency. People were sitting in the Parliament-quite unlike this place-and had every intention of fighting a Member sitting on another Bench. That made for bad relations within the Parliament and some people-I shall name no names-exploited it disgracefully. In Wales-

Lord Wigley: My Lords-

Lord Steel of Aikwood: I shall give way in a second. The same problem arose in the original Welsh legislation-the noble Lord will correct me if I am wrong-but it was the wish of the Welsh people to change the rule. Unfortunately there is not the same will in Scotland, not even in my own party.

Lord Wigley: It was not exactly the same in Wales. The circumstances are different in that there are four Members on the list in Wales, compared with seven in Scotland. The proposed changes would not overcome one of the basic problems. Someone who has been elected on a list can still stand at the next election for a constituency seat and do exactly what the noble Lord described, and can give up the regional seat in standing for the constituency.

Lord Steel of Aikwood: I take that, but what they cannot do in Wales and not only can but actually do in Scotland is stand in the constituency and also be on the list. They have a fallback position which is not the case in Wales. That is wrong and it should be put right. Whether we can do it in this Bill is another matter but the noble Lord, Lord Foulkes, raises a very important point.



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On the noble Lord's other more minor amendment about by-elections in the event of an independent Member creating a vacancy, I have an additional point to make. My memory is fading but I think that I gave evidence to the Calman commission, which has not dealt with it in the report. I was elected on the regional list as a Liberal Democrat and when I went into the Chair, of course, I had to resign from the party. There was no way that I could be re-elected because I was no longer a member of the party; I was an independent. I could not stand in Edinburgh and say, "Please elect me because I am the Presiding Officer". I am not saying that I wanted to particularly but it was impossible to do it. My two successors were fortunately elected in constituencies but that might not always be so. When a Presiding Officer happens to be a regional list Member there is no way that he or she can continue for a second Parliament. That cannot be right. There is a minor problem in addition about independents standing on the regional list. The whole thing would be clarified if we had a different electoral system but we are saddled with what we have now and I have no instant solution to that problem. It is one that ought to be taken up as we proceed with the Bill.

3.30 pm

Lord Browne of Ladyton: My Lords, I shall speak to the amendment in this group standing in my name and that of my noble and learned friend Lord Boyd of Duncansby. I also have something to say about the amendments tabled by my noble friend Lord Foulkes.

My amendment would grant the Scottish Parliament the power to ensure that its elections are never again held on the same day as another national poll. The amendment is nearly identical to one tabled by my honourable friend Tom Greatrex, the Member for Rutherglen and Hamilton West, at the Public Bill Committee stage in the House of Commons. However, I regret that during that debate the Parliamentary Under-Secretary of State for Scotland and many others were diverted by the then controversy of the imminent application and interaction of the Fixed-term Parliaments Act. As far as I can see, although my honourable friend spoke to the amendment, it was never properly answered. Therefore, it has been repeated here in order to get an answer. If the answer allows for the avoidance of a coincidence of polls such as we saw in 2007, I will be greatly satisfied.

As noble Lords will know, the coincidence of local government and Scottish Parliament elections on 3 May 2007-and other factors-led to the rejection of 146,099 Scottish Parliament ballot papers and 38,362 local election ballot papers. It was the nadir of electoral administration in the United Kingdom, and everybody has focused on ensuring that it never happens again. It is the firm belief of this side of the House that never again should the people of Scotland be subjected to the confusion and chaos of two polls on the same day. We strongly opposed the coalition Government's decision to impose a referendum on the alternative vote system on the same day as the Holyrood election. The Minister said that it passed off without incident, but we will never know what effect that coincidence had on the

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way in which people behaved. There was no repeat of the dreadful circumstances of 2007, but I argue in my amendment that we should try to avoid repeating the coincidence if at all possible.

I am conscious that Clause 2 relates to the administration of the combination of polls that would be required should there be such a coincidence. I have nothing to say about that; I agree with it. We have been combining polls in those circumstances probably since 1978 or before. It makes good sense. Therefore, I am happy to let Clause 2 pass. What I am concerned about is seeking to use the device of the 1998 Act to avoid this. If the clause is properly drafted-and I hope that it is-it would grant the Scottish Parliament the flexibility to move its poll in the event of a coincidence. It would mean that there should never be any future coincidence of polls unless the Scottish Parliament decided otherwise. Most people believe that probably we cannot have that coincidence. However, despite the Fixed-term Parliaments Act and the devices of extending the period of a Parliament, in particular of the Scottish Parliament, that the coalition Government have agreed to, there is the possibility of an extraordinary election-some noble Lords on this side of the House would quite like next to see ordinary election, despite the Fixed-term Parliaments Act-coinciding with a date fixed for a Scottish Parliament election.

I got myself into some difficulties with the arithmetic of trying to work out whether coincidence is at all possible with the European Parliament elections as a consequence of the movement of the Scottish Parliament elections. It may just be possible, which is why the amendment anticipates the coincidence. I may be wrong about that, but we could in future have to use the device of extending the Scottish Parliament's time again to avoid coincidence. That may throw up the possibility of a European Parliament coincidence. We believe this is the best way to do this. It should be a matter for the Scottish Parliament. In response to Gould, the Scottish Parliament committed to decoupling Scottish Parliamentary and local government elections, which was the real mischief that caused the problem in 2007. Similar provisions have been made to try to ensure that Scottish parliamentary and UK general elections do not follow the same cycle, as I have already said. The Calman commission recommended that, for reasons of practicality and principle, Scottish parliamentary elections should be administered at the level closest to those affected by them. We have already debated that to a degree. In a sense, it was the electorate of the Scottish Parliament who were the victims of the catastrophe that was the 2007 election. We believe that as a mature Parliament the Scottish Parliament should have the responsibility to decide whether it wants to allow this coincidence to persist, should it happen because of the rhythm of parliamentary elections or the possibility of an extraordinary election. This amendment is devised to achieve that possibility.

I turn to the amendments tabled by my noble friend Lord Foulkes of Cumnock. I congratulate my noble friend and, by extension, the noble Lord, Lord Steel of Aikwood. Each of them identified lacunae in the framework for Scottish elections, which is a phrase that I will now use, to the Scottish Parliament that could be addressed. I was not aware that there is

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no process for filling a vacancy for an independent member in the regional part of the system. That should not be allowed to continue. I understand that my noble friend's approach to this is to devise a method that is very similar to the method adopted for electing regional members. It is very close to that, if not precisely the same. I urge the Minister to take this away to see whether, at some stage during the passage of this Bill, we can deal with this. His advisers are, in addition, capable of dealing with a lacuna that has been identified by the noble Lord, Lord Steel of Aikwood. I suggest that the Minister considers that too. It would genuinely be in the spirit of the appropriate approach to this legislation. I am sorry that the Calman commission did not have its attention drawn to this problem because I am sure that if it had the noble and learned Lord in another guise may well have been party to a recommendation to resolve it.

I turn to Amendment 16 which the noble Lord, Lord Steel, identifies as being the more substantial amendment. My noble friend Lord Foulkes of Cumnock is a man of extraordinary experience, not just in your Lordships' House but in the House of Commons and in the Scottish Parliament. Some of us were privileged to be at the celebration of his 70th birthday in the Gorgie Suite in his beloved Tynecastle Park on Saturday night. He knows where my allegiances lie, and I am delighted that there is at least one reason for celebration in the Gorgie Suite in Tynecastle this year because there will be precious few others. For those noble Lords who do not know what I am referring to, in an act of extraordinary generosity his family invited almost 200 people from all over the world to join the celebration of his 70th birthday. The fact that almost nobody refused the invitation no matter how far away they came from or, it seemed to me, failed to turn up is a measure of the high esteem in which he is held. I refer to this because the speeches that night celebrated a lifetime of service to politics in Scotland and to public life. It is from that background that he speaks when he rises in your Lordships' House, and he ought to be listened to carefully. However-

Lord Foulkes of Cumnock: However!

Lord Browne of Ladyton: However, I regret that in this case I cannot support my noble friend's amendment. If there is a mischief here, it seems to me that the solution lies in the hands of the political parties. We should not be legislating for this and I am surprised that we have in fact legislated in Wales, but if the Welsh people wanted that, that is fine.

For many years, the Labour Party had a voluntary prohibition on this. We had a rule that you could not stand for both the lists and the constituencies. We departed from that at the last election to the Scottish Parliament and because of that Sarah Boyack is a Member of the Scottish Parliament. That seems to be a good result; apart from anything else, it may be a reason for maintaining the status quo.



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Lord Steel of Aikwood: Is the noble Lord aware that the Conservative Party in Scotland had precisely the opposite rule-that in order to be on the list you had to stand in a constituency?

Lord Browne of Ladyton: I am most grateful. Every day I come to work in your Lordships' House I learn something, and that is today's learning experience. I had no idea that that was the case. Maybe at some stage-I will not take up your Lordships' time with this now-somebody will explain to me why that was the case.

Baroness Randerson: Perhaps I can add to the amount the noble Lord has learnt today. It was not really the case that the people of Wales wanted to abandon dual candidacy-the Labour Party in Wales was very keen on that. Consultation produced a total lack of interest on the part of the people of Wales. However, although the system of election is better than first past the post, it is rather chancy. Not allowing dual candidacy actually increases the chances of strange results happening. For example, in the last Welsh elections the Conservative Party was extremely successful, led by a leader who was not able to be a constituency candidate because he was a list candidate. He was so successful and they won so many constituencies that he lost his list seat. It does enhance the problems of the system.

Lord Browne of Ladyton: I am very grateful to the noble Baroness for continuing my education. I am better informed than I was when I rose to speak. I have to say that when I started in my political life, the people of Wales and the Labour Party were almost synonymous. In any event, one of the consequences of our generous devolution of power has been that with proportional representation in the political colour of the United Kingdom, parties have taken advantage of opportunities. I accept that and it is all part of democracy.

I am not arguing for maintaining the status quo because of the outcome. In fact, I pray in aid Arbuthnott. The Arbuthnott commission was set up to look into constituency boundaries for the Scottish Parliament, because there was an issue of divergence of boundaries between the Scottish Parliament and the United Kingdom Parliament, and voting and representation in Scotland. I have an extract of the commission's report, entitled Putting Citizens First: Boundaries, Voting and Representation in Scotland. I am looking at paragraphs 4.5 onwards. In moving his amendment, my noble friend quoted from Arbuthnott. I do not intend to quote all these 12 or 13 paragraphs, but they seem to set out a very coherent argument for why it would be inappropriate to depart by law from what has become the practice of dual candidacy.

With all due respect to my noble friend, I will read the conclusion, paragraph 4.60, which in a sense contradicts some of the thinking. It states:

"The Commission believes that preventing dual candidacy would be undemocratic and agrees that it would place"-

and here I think it is quoting a witness-



26 Jan 2012 : Column 1223

Certainly, in Scotland, as a consequence of divergent party practice, in a situation that permitted dual candidacy, there is a belief that people took advantage. In my view, political parties just need to learn to make the best of the circumstances in which they are operating and then we can all take advantage of the circumstances, rather than changing the circumstances or the opportunities that other people take advantage of.

3.45 pm

Lord Wallace of Tankerness: My Lords, in introducing his amendment, the noble Lord, Lord Foulkes, has given us an opportunity to look at a number of the issues that have arisen with regard to the operation of the electoral system. As my noble friend Lord Steel said, when we were legislating in 1998 it was not really possible to foresee all the implications and consequences of it. Therefore, we have had a useful opportunity to highlight a number of the issues and concerns that have arisen.

As the noble Lord, Lord Foulkes, says, Amendment 1 identifies a lacuna, which, to be fair, I am not sure has been highlighted very much in the past. My noble friend Lord Steel pointed out a variation on that with regard to the role of the Presiding Officer, who gets elected on a list basis as opposed to a constituency basis. Perhaps I may add that Mr George Reid did not stand again so the issue did not arise, whereas Mr Alex Fergusson always indicated that he would seek to stand again as a Conservative. No doubt he would have had to win the nomination of the Galloway Conservatives. It may also be said that it would have been open to my noble friend Lord Steel to have sought again to put his name forward in the Liberal Democrat list for Lothian. Although I did not live in Lothian, had I done so I certainly would have voted for him.

The noble Lord, Lord Foulkes, has raised an important point. No doubt with some work he has found an interesting way to address it. As he properly says, currently a seat vacated by an individual candidate who was returned as a regional Member remains vacant until the next general election. The noble Lord proposes that a poll is held across the whole region to select a new Member. Calculations would ensue upon that-he set that out very clearly and I do not propose to repeat it-to identify who would succeed.

The noble Lord is right to point out that a regional seat vacancy has not yet been caused by an independent Member vacating one. I share his view. I bear no ill will towards Mrs Margo MacDonald for being the only independent Member. Not only do I bear her no ill will but I think that everyone who knows her would take the opportunity to wish her well. My experience is that she has always made a very robust and independent contribution to the deliberations of the Scottish Parliament, and long may that continue, although we do not always agree with her.

We should remember that voters continue to be represented by their constituency MSP and several regional MSPs. It is an important issue, which, given that it is novel, I would wish to look at. If we did anything, it would be important that it commanded consensus among all the parties because it is an important

26 Jan 2012 : Column 1224

part of our electoral system. To commit from the Dispatch Box without having taken proper soundings among all the parties would be inappropriate, but I hope that we can get an opportunity to take soundings to see whether this gap can be plugged, and plugged suitably to take account of the position of a Presiding Officer as well.

The other amendment moved by the noble Lord, Lord Foulkes, would allow candidates to stand for both constituency and regional polls, and both he and my noble friend Lord Steel indicated some discontent from their own experiences with the current system. The noble Lords, Lord Foulkes and Lord Browne, quoted from the Arbuthnott commission, which stated that it was,

I am certainly aware from my time in the Scottish Parliament that colleagues representing Orkney would find that not many regional list candidates would bother to get that far, although occasionally it was quite useful to have regional-list MSPs in order to pass on some of the more difficult cases. If a constituent was clearly not satisfied with what you had done on their behalf, and you would be surprised if anyone would be able to satisfy them, it was always useful to have another seven MSPs with whom you could share the burden.

That said, this would be a significant change to the system for electing Members of the Scottish Parliament. The question was raised with regard to Wales-my noble friend Lady Randerson and the noble Lord, Lord Wigley, are in their places. My understanding is that objections were raised by three of the four main political parties in Wales when this was brought forward. The noble Lord, Lord Foulkes, asked me to explain why this position arises. In our debate before we went into Committee I was asked at one stage to explain the policy of the Scottish National Party, and now I am being asked to defend the position that was brought about by the previous Labour Administration, of which the noble Lord, Lord Browne, was a most distinguished member. It actually arose from a proposal in the White Paper, Better Governance for Wales, published in June 2005. It is fair to say that there is no reason why the position in Scotland should be the same as that in Wales. There is an automatic assumption that the systems are always going to be the same, but I think it is reasonable to say that there can be variations tailored to suit particular requirements in different parts of the United Kingdom. I do not think it follows that because Wales has not gone down the route, Scotland should not do so either.

The noble Lord, Lord Foulkes, indicated that a later amendment of his would propose a general review of the electoral system. He will be aware that the Government have stated their intention to consider what has been said about a review of the electoral system in the reports of both the Calman commission and the Arbuthnott commission. There is obviously some support for this in some quarters, but it would be possible to take forward such a review only with the

26 Jan 2012 : Column 1225

full support of the Scottish Parliament as well. The Committee will be aware that quite a number of consultations are under way. The most crucial one at the moment is on the referendum, and in a moment I will deal with the amendment spoken to by the noble Lord, Lord Browne, on the coincidence of election dates. The Government are committed to looking at the issue of fixed-term Parliaments and whether the Scottish Parliament should move to fixed terms. That will generate another consultation. Perhaps this is not the most appropriate and propitious time to start a review of the electoral system, although I repeat that the Government have indicated their intention to consider a response to both Calman and Arbuthnott on that point.

The amendment moved by the noble Lord, Lord Browne, seeks to allow the Scottish Parliament to move the date for parliamentary elections by up to 12 months either way when it falls in the same year as either an early UK general election or a European Parliament general election, so long as the new date is not within six months of either of those elections. He mentioned that when this was debated in the House of Commons, there was more of a focus on the then quite likely coincidence of a Scottish and a Westminster election in 2015. I moved an amendment during the passage of the Fixed-term Parliaments Bill through your Lordships' House that changed the date of the next Scottish election so that such a clash would not occur. The Government are already committed to carrying out a detailed assessment of the implications of the two elections coinciding on the same day and to consult on the possibility of moving permanently to five-year terms for the Scottish Parliament. We will make a more detailed announcement of our plans in due course.

If any future consultation is in favour of moving the Scottish Parliament to five-year terms, that would solve the problem of a clash with both scheduled UK elections and European parliamentary elections, as all three will then be on five-year cycles scheduled for different years. That said, there will always be a risk that an early UK general election could reintroduce a clash of dates due to the resetting of the parliamentary timetable. However, if there are concerns about that happening, I hope the noble Lord will agree that that would be an important issue to raise in the context of a consultation on moving to a five-year fixed term for the Scottish Parliament, as we intend to do.

We are committed to considering a change to the length of the term of the Scottish Parliament. It is an appropriate concern for the noble Lord to have raised, but I hope he would agree that this Bill is perhaps not the place to deal with it. However, it is germane to the consultation that is about to take place. That would be the appropriate place in which to consider it. In these circumstances, I hope that noble Lords will not press their amendments.

Lord Foulkes of Cumnock: My Lords, as always, that was a really helpful reply from the Minister. We are now getting used to helpful replies from the noble and learned Lord, Lord Wallace, for which I am grateful.



26 Jan 2012 : Column 1226

I was hoping that he would answer the question which the noble Lord, Lord Evans of Temple Guiting, did not. I was sure that he would have had exactly the same brief from the excellent civil servants the noble Lord, Lord Evans, had, and that it would not be too difficult for him. As it turned out, it was not, so I am grateful to him for explaining it.

As I said in my introduction to the amendment, I am a little equivocal about it anyway. Perhaps I may return the flattery that I received from my noble friend Lord Browne of Ladyton, whom I thank for his kindness. Now one or two people will ask me why they were not invited to the party, by the way; that is the only problem that I have. My noble friend explained extremely well why we should leave it to the political parties and wait for the promised wider review of the electoral system. I understand also that my right honourable friend Mr Peter Hain is suggesting that Wales should move back to first past the post elections for the Welsh Assembly, which seems like a wonderful idea for those of us who are Neanderthal first past the post supporters-so there is even discussion there. Therefore, I shall not press Amendment 16.

I do feel strongly about Amendment 1, because this matter should be sorted out. I am grateful to the Minister for his reply. As I understood it, he said that he would take the matter away and consult other parties, and that if there was some consensus he would come forward with an amendment on Report. He is nodding, so I am not jumping to conclusions. On that basis, I am quite happy to withdraw my amendment.

Amendment 1 withdrawn.

Amendment 2 not moved.

Clause 3 : Supplementary and transitional provision about elections

Amendment 3

Moved by Lord Wallace of Tankerness

3: Clause 3, page 3, line 25, leave out from "powers)" to end of line 34 and insert "after subsection (1) insert-

"(1A) Subsections (2) to (11), except subsection (9), apply also to the power of the Scottish Ministers to make an order under section 12.""

Lord Wallace of Tankerness: My Lords, Section 113 of the Scotland Act 1998 makes provision about the scope of subordinate legislation powers in that Act. Clause 3(1) of this Bill amends Section 113 of the 1998 Act so that it also applies to Scottish Ministers' new powers to make subordinate legislation about the administration of Scottish Parliament elections under Section 12 of the 1998 Act.

The amendment replaces Clause 3(1) with a provision that has the same effect and restructures Section 113. This is intended to make it easier for provisions in this Bill or in future legislation to provide that Section 113 applies in relation to other powers that may subsequently be conferred on Scottish Ministers. I beg to move.

Amendment 3 agreed.

Clause 3, as amended, agreed.



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Clause 4 : Presiding Officer and deputies

Debate on whether Clause 4 should stand part of the Bill.

Lord Steel of Aikwood: My Lords, I am very grateful to the Government for including in the Bill the second part of this clause on the election of the Presiding Officer, possible deputies and temporary deputies. It arose directly out of evidence that I gave to the Calman commission, which arose in turn from my own experience when, despite trying to juggle radiotherapy for prostate cancer with my duties in the chair, I was absent for some time, and the Parliament found that it had no provision to enable it appoint even a temporary deputy to help take the load. I am glad that this clause appears in the Bill. I am thankful and I welcome it.

The other point that I wish to make is slightly astray of the Bill. Members of the House will note that under Clause 4(3) the Parliament has 14 days from polling day to meet and elect a Presiding Officer. That is in stark contrast to what happens here. I have on other occasions severely criticised the haste with which the present coalition was put together, which I thought was entirely unnecessary. Under the Scottish arrangement, which was already much looser, because of proportional representation it was anticipated before the first election that a coalition was more likely than not and therefore that there was plenty of time. My noble and learned friend was actively involved and will remember how long it took, even with a more limited agenda, which the Scottish Parliament has compared with Westminster, to put a coalition together. It was done with great care and skill and it worked. Without going into extraneous matters, I think that the haste with which the coalition was put together at Westminster was a mistake and that perhaps they can learn by reading Clause 4 of this excellent Bill.

4 pm

Lord Wallace of Tankerness: My Lords, I am grateful to my noble friend Lord Steel. I can indeed confirm that he made representations to the Calman commission on this point, not least in the light of his own experience. His proposal was supported by the then Presiding Officer of the Scottish Parliament, Alex Fergusson, and therefore the Government were happy to agree with the Calman commission's recommendation that there should be greater flexibility in the running of the Scottish Parliament.

My noble friend is also right to point to the other parts of the clause, which gets rid of the restriction that the Presiding Officers and their deputies have to be appointed at the Parliament's first meeting. This inflexibility caused problems during the last Session, given the very close electoral result. This meant that parties had difficulty in deciding quickly to release one of their members to be Presiding Officer.

My noble friend made comments about the time taken to form coalitions. In 2003, we did so in a more measured way than perhaps in 1999, when we were under greater pressure. However, we did not have the markets waiting on every twist and turn of the coalition negotiations. There are important differences between

26 Jan 2012 : Column 1228

Westminster and Scotland, although no doubt we all learn lessons from experience. I hope that what we are putting in here will provide additional flexibility in the election of the Presiding Officer. It has been supported by the previous Scotland Bill Committee in the Scottish Parliament, and the current Scotland Bill Committee has also indicated that it is content with this clause.

Clause 4 agreed.

Clause 5 : Scottish Parliamentary Corporate Body

Amendments 4 and 5 not moved.

Clause 5 agreed.

Amendment 6

Moved by Lord Foulkes of Cumnock

6: After Clause 5, insert the following new Clause-

"Sitting calendar

(1) Schedule 3 to the 1998 Act (Standing orders-further provision) is amended as follows.

(2) After paragraph 7 insert-

"Parliamentary calendar

8. The standing orders may include provision for ensuring that the Parliament shall-

(a) sit on at least 30 weeks in each calendar year,

(b) meet on at least three days in each week that it sits, and

(c) not adjourn for a period of more than 60 consecutive days.""

Lord Foulkes of Cumnock: My Lords, it might be said that by moving the amendment-and even by discussing it, let alone coming to any decision on it-Westminster is interfering in the work of the Scottish Parliament. However, I have raised the issue because it is a dissolved Parliament and, ultimately, until such time as there is an independent Scotland-heaven or the electorate forbid-it is the responsibility of this sovereign Parliament.

I raise the issue also because for four years I served, along with the noble Lord, Lord Stephen, and others, as a Member of the Scottish Parliament. I came across a huge number of people who were absolutely astonished when they found out that the Scottish Parliament sat for only one and a half days a week in plenary. Members of the Scottish Parliament are paid a substantial amount of money-something like 87.5 per cent of the salary of a Member of this Parliament-and it is seen as a full-time job. Of course, just as MPs have responsibilities in their constituencies, MSPs have constituency responsibilities, too-at least, constituency MSPs do. Committees also meet on a Tuesday and a Wednesday morning. Even so, it is difficult to explain that the Scottish Parliament sits for only one and a half days in the weeks that it is sitting.

As a result of that, some strange things happen. It is amazing. There are other former Members of the Scottish Parliament here, including the noble Lord, Lord Selkirk, who can give their experiences in relation to this. In almost every debate in which I took part in the Scottish Parliament, the speeches were limited to four minutes. Occasionally, we get time limits here but it is ridiculous to expect people to be able to put

26 Jan 2012 : Column 1229

forward a coherent argument on a major issue of education, the health service or whatever they are dealing with in four minutes.

Compared with the House of Commons, there are also relatively few opportunities for Statements and Urgent Questions. Recently, under Speaker Bercow in the House of Commons, there have been lots of Urgent Questions. In the time that I was in Holyrood, I cannot remember more than one or perhaps two Urgent Questions. There was not the time. It was difficult to fit anything new or additional into the programme and timetable of the Scottish Parliament.

I find the Report stages of Bills there quite astonishing. These are important Bills dealing, as I say, with important issues such as education, social work, local government reform or the health service. They are rushed through. Sometimes, on an amendment being dealt with on Report, people are allowed to argue a case for only 30 seconds. It is ludicrous that they should be squeezed into that length of time.

Again, Question Time, partly but not completely because of the time constraints, becomes a bit of a farce and a very predictable occasion. I could almost write the script for every First Minister's Questions, with who will come in and how many of them there will be. It does not have the spontaneity of-

Lord Forsyth of Drumlean: I am most grateful to the noble Lord for giving way and sorry that I was not here for the start of his speech; I had to go to another meeting. Could he help me, as I have not had his experience in the Scottish Parliament? Is there some restriction that prevents it from sitting for more than one and a half days a week? Is that not a matter for the Scottish Parliament to decide itself?

Lord Foulkes of Cumnock: As always, the noble Lord is perceptive. I was going to come on to say that but will say it now. I put down the amendment some time ago and am now very pleased to hear that, since then, the Scottish Parliament has started talking about sitting at greater length. The purpose of the amendment was to try and get a debate on this, not just here but in the Scottish Parliament. I am glad that it has achieved that. After this debate finishes-if other noble Lords want to participate-were the Minister to give some indication as to what is happening in the Scottish Parliament in relation to its sitting times, more time for debating these issues and Report stages allowing fuller consideration, I would of course be satisfied and willing to withdraw the amendment. I am very glad I raised this as it is long overdue. If it is now being dealt with, no one will be happier than me.

Lord Forsyth of Drumlean: My Lords, I confessed that I knew nothing about it, but it seems a very sensible proposal. I have in the past suggested that because the Scottish Parliament sits only one and a half days a week, a solution to the West Lothian question would be that all Scottish Members of Parliament should sit in the Scottish Parliament for one and a half days a week and on those one and a half days the House of Commons could discuss those matters not related to devolved issues. This has not proved very

26 Jan 2012 : Column 1230

popular with Members of the Scottish Parliament, for reasons that I cannot imagine. So in following the advice of the noble Lord, Lord Foulkes, they might protect themselves from being endangered by people like me, who might suggest that there were synergies in combining the roles of a Member of the House of Commons with a Member of the Scottish Parliament. I am sure that the Scottish Parliament will show considerable gratitude to the noble Lord in drawing this matter to public attention if, indeed, it has already got that Parliament rethinking its sitting days.

Lord Stephen: My Lords, I agree very much with the first contribution that the noble Lord, Lord Forsyth, made. This is essentially a matter for the Scottish Parliament, which has wide discretion in this area. Unfortunately, I cannot agree with the suggestions that he made in his most recent contribution. I agree with a great deal of what the noble Lord, Lord Foulkes, said. I am sure that others who have been in the Scottish Parliament, most notably my noble and learned friend Lord Wallace of Tankerness, also agree with a great number of his suggestions, most particularly about the guillotining of virtually every contribution made in the Scottish Parliament. The noble Lord is absolutely right; it is impossible to make a full and weighty contribution when the guillotine constantly comes after sometimes less than four minutes. These issues should be addressed, and I hope that in addressing those issues the Scottish Parliament will look to the contributions of former Members and those who have had experience of the Parliament. But I do not think that it should be as a result of an amendment proposed through the House of Lords that those matters are best addressed. I am sure that the Minister will explain that those matters are being looked at; I understand that there is a concerted effort to look at changing the way in which the Scottish Parliament operates. That is all the more important in the context of more powers being granted to the Scottish Parliament; as the Parliament grows and develops, these issues should be tackled, and the noble Lord, Lord Foulkes, made an extremely valuable contribution in pointing to the Parliament the way ahead.

Lord Selkirk of Douglas: If I may, I would like to ask a very brief question to the Minister in this connection. During the Calman commission, we recommended that more time should be given for the final stages of Bills in the Scottish Parliament. It seemed to us that with many Bills, voluntary organisations, charities or other worthy bodies would have recommendations to make but would get virtually no changes in the final stages of the Bill because procedures were so rapid and everything went so quickly. My understanding was that that was under consideration by the Scottish Parliament, and I wonder whether the Minister could give us the up-to-date situation on that subject, if he has the facts readily at hand.

Lord Boyd of Duncansby: This is the first time that I have spoken at this stage of the debate, so I renew my declaration of interest in the Calman commission. I am somewhat surprised to find that I am standing here at the Dispatch Box, and I hope that the Committee

26 Jan 2012 : Column 1231

does not find it strange that two lawyers who were both on the Calman commission now find ourselves on opposing sides of the bar but pulling in the same direction. I hope that it reflects the cross-party approach to the Bill.

To my noble friend Lord Foulkes of Cumnock I can say that I was very pleased, particularly given what has been said already, that I was one of those invited to his party, and that I very much enjoyed it. So if I disagree with him on any point, he can be assured that it is not because I am biting the hand that fed me.

On the issue of timetabling, I think I am right in saying that there are states within the United States that have within their constitution maximum times during which legislators can sit. They take the view that the longer they sit the more mischief they can make. That might be one approach. In Britain, we tend to take the opposite view-that we pay legislators to legislate, and if they are not sitting in plenary session, they are clearly not worth the taxpayers' money.

The court of public opinion is the important element here. I suspect that it modified the sittings of this Parliament, given the criticisms that were made about the long summer recess, but clearly it may also very well have worked in relation to the Scottish Parliament, given the proposals. In particular, the amendment that my noble friend has put down may very well have spurred some action on it. With these words, I look forward to hearing from the Minister.

4.15 pm

Lord Wallace of Tankerness: My Lords, the amendment, which was tabled by the noble Lord, Lord Foulkes, would enable the Scottish Parliament's standing orders to make provision to ensure that the Parliament would have to sit on at least 30 weeks in each calendar year; that it met on at least three days in each week that it sits; and that it does not adjourn for a period of more than 60 consecutive days. In moving the amendment the noble Lord certainly described some frustrations which I can readily identify with, although we never actually served at the same time in the Scottish Parliament. Although it does not relate to a restriction on back-bench time, I remember one Conservative opposition day when Mr Murdo Fraser was the Conservative spokesman on the economy and enterprise and I was the Enterprise Minister, and the Deputy Presiding Officer announced: "A Conservative debate on the future of Scotland's economy. Mr Murdo Fraser, you have seven minutes". That did not really seem to give justice to the issue in hand.

That said, when dealing with the internal arrangements of the Scottish Parliament, it is important that we remember the words in the White Paper which the previous Government published when Mr Donald Dewar was Secretary of State for Scotland, in 1997. The White Paper said:

"The Government intend the minimum of legislation to establish the Scottish Parliament; and wherever possible to leave the Scottish Parliament to decide for itself what its procedures should be".

This Government believe that that statement holds as true today as it did in 1997. The Government do not believe that it is appropriate for the United Kingdom Parliament to place restrictions on the freedom of the

26 Jan 2012 : Column 1232

Scottish Parliament to administer its own affairs. It is now embedded within our UK constitutional arrangements, and our view is that the Scottish Parliament is capable of making its own changes to procedures as it sees fit.

As the noble Lord, Lord Foulkes, mentioned, on 21 December the Standards, Procedures and Public Appointments Committee of the Scottish Parliament published the phase 1 report of its inquiry into the reform of parliamentary business, which is appropriately entitled Remodelling the Parliamentary Week. I do not know whether that happened as a result of or in spite of this amendment, but as the noble Lord indicated when moving the amendment, it certainly was timely. The committee undertook its inquiry into parliamentary business last September in order to review the Parliament's procedures and recommend areas for improvement and change. As I indicated, it is a phase 1 report. The aim of the inquiry is to give the Scottish Parliament greater scrutiny and responsiveness to emerging issues of importance to the people of Scotland.

The report makes a number of recommendations. My understanding is that they will soon be debated in the Scottish Parliament and, if agreed, implemented after the Easter Recess. Recommendation 1 states,

This would mean that the Parliament will sit for three days a week when it is sitting, which would meet part of what the noble Lord's amendment aims to do. The report does not make any recommendations on the other two parts of the noble Lord's amendment-to ensure that the Parliament sits on at least 30 weeks of the calendar year, and not to adjourn for a period of more than 60 consecutive days. However, the report concluded that,

respect-

I have however noted that as the inquiry evolved, it also looked at how the likely addition of new powers and responsibilities proposed in this Bill would need to be taken into account, as further timetabling commitments will need to be made to scrutinise the use of these new powers for the Scottish Government and Parliament. As my noble friend Lord Forsyth indicated in a question, where does the responsibility lie? It is for the standing orders of the Scottish Parliament.

My recollection, though, is that there is also a considerable amount of flexibility. When I was a Member of the Scottish Parliament-more recent Members can correct me-although the normal starting time on a Wednesday, with time for reflection, was 2.30 pm, noble Lords will have realised that yesterday the Parliament managed to sit at 1.35 pm in order for the First Minister to make his statement launching his consultation document, no doubt so that he could then hot-foot it to his appointment with the world's press at 3 pm in the Great Hall at Edinburgh Castle. I recall other occasions-for example, when it was

26 Jan 2012 : Column 1233

clear that stage three of the Bill was going to take much longer-when there was flexibility to sit earlier or later.

My noble friend Lord Selkirk asked about the recommendation from the Calman commission regarding the separation of time to allow more time at stage three if new amendments come up, which would engage more stakeholders. I indicate to him that that is obviously a matter for the Scottish Parliament, but I will write to him and other Members of the Committee who are participating in our deliberations to give our understanding of the up-to-date position with regard to the Scottish Parliament's response to that recommendation.

The Scottish Parliament, now 12 or almost 13 years old, is capable of reviewing its own processes, but we are showing our willingness to look at this issue too. I hope that in those circumstances the noble Lord will feel that the amendment is unnecessary and withdraw his amendment.

Lord Foulkes of Cumnock: My Lords, what surprises me is how the Scottish Parliament in its procedures seems more rigid and in its lack of flexibility seems more sclerotic than even this Chamber, let alone the House of Commons. We have already heard examples from the noble Lord, Lord Stephen, about having less than four minutes to contribute to a debate, which are true. We have heard from the noble Lord, Lord Selkirk, about the recommendations regarding later stages being rushed and civic society not having an opportunity to participate fully, and I have appreciated that as well. The Minister himself said that getting everything in when you are given only seven minutes to talk about the economy is a formidable task.

Under the proposals, all that will happen is that they will meet for three days but only for half a day each, so it is still really effectively only a day and a half. That is not a huge amount extra. Of course it is up to the Scottish Parliament, and I am going to withdraw the amendment on that basis, but, speaking as a member of the public in Scotland rather than a nominated Member here, I would expect that the Scottish Parliament might sit rather more than that and spend rather more time discussing some of the major issues that it has to deal with.

Perhaps we should not be saying this because we are non-elected and they all think of us as Neanderthals. I have been around for an awfully long time; I have just had a birthday, as someone diplomatically pointed out earlier. Perhaps we should not be lecturing the Scottish Parliament, but it is just a wee bit strange that it is not lengthening the times of its plenary sessions a little. I shall leave it at that and withdraw.

Lord Maclennan of Rogart: Before the noble Lord withdraws his amendment, could he inform us whether there is a standing committee in the Scottish Parliament that keeps these matters under review, or is it the case that this is just an ad hoc inquiry?

Lord Foulkes of Cumnock: I think there is a procedures committee that deals with this question in a review.



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There are people who have held more distinguished positions than I did in the Scottish Parliament as Deputy First Minister, acting First Minister and Presiding Officer and who have been around for a long time, but I got the impression that the Scottish Parliament was very set in its ways, and for a new Parliament that is very strange. I tried gently to suggest some innovations, when I was a Member and I had some right to do so, and it was very reluctant to accept any of them. It is ironical that we have had more changes, improvements and developments of our procedures in the House of Lords during my time here than I saw in all my time in the Scottish Parliament. I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Clause 6 agreed.

Amendment 7

Moved by Lord Foulkes of Cumnock

7: After Clause 6, insert the following new Clause-

"Discussion of reserved matters

(1) Schedule 3 to the 1998 Act (Standing orders-further provision) is amended as follows.

(2) After paragraph 7 insert-

"Reserved matters

8. The standing orders shall include provision for ensuring that the Parliament shall not discuss items in Schedule 5 (reserved matters) except on a motion to make representations to the United Kingdom Government.""

Lord Selkirk of Douglas: My Lords, may I speak to-oh! I am sorry.

Lord Foulkes of Cumnock: Members will be getting fed up with my voice by now. I am glad that I withdrew the previous amendment and did not move Amendments 4 and 5. I tabled those amendments but I could have put down dozens more. There is a whole range of issues that we could have discussed. If we had wanted to cause trouble-heaven forbid that I should cause trouble here-I could have tabled dozens of amendments and delayed us. The fact that we are getting though the Bill relatively rapidly shows the good will of not just the Front Bench but the Back Benches on this side towards the coalition Government. Whether they deserve it is another matter, but they are getting it.

I come now to the discussion of reserved matters, which relates in some ways to the previous amendment. In my time in the Scottish Parliament-I think this will apply to other Members here who were Members of the Scottish Parliament-it was very frustrating that the SNP in particular would use up the limited time available, including government time, for discussion of reserved matters. These included foreign affairs and defence; they went on and on about these areas. It is understandable that they should discuss them where they impinge on some of the Scottish Parliament's responsibilities, but it worried me that it restricted the time for discussion of very important matters.

We have devolved to the Scottish Parliament some of the major areas that affect the lives of people in Scotland, such as all aspects of education.

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However, there were no really detailed debates on it. The right reverend Prelate the Bishop of Chester would be astonished if he came to the Scottish Parliament and saw how little time it spends on discussing the details and development of education in the forum of the plenary sessions. Then there is the development of the health service, with telemedicine and all the new developments that are taking place; and social work and the links between it and education and housing. There are many issues that the Scottish Parliament should be discussing, but it never seems to get around to doing so. These are vitally important issues.

This is a related issue but it is slightly different. I also get the feeling that, as the SNP has moved into the ascendancy, first as a minority and now as a majority Government, it seeks to operate almost as a de facto if not de jure independent Parliament. It wants to take on more responsibilities and pretend or imagine that it is dealing with all these issues. I had occasion to raise this with Sir Gus O'Donnell, now the noble Lord, Lord O'Donnell, in a question about the Permanent Secretaries-first Sir John Elvidge and, more recently, Sir Peter Housden, who has gone native since he moved. He is from Shropshire originally, a lovely county of England, as I know only too well. They seem to be advising the Scottish Executive on how to move towards independence. They seem to be giving them all the advice, guidance and detail that they need and, in Sir Peter's case, almost encouragement to move towards independence. I hope that Sir Jeremy Heywood-he has a more pragmatic and sensible view on this than Sir Gus O'Donnell, but perhaps I should be careful about saying that-will look at things in a more pragmatic and sensible way and remind Sir Peter Housden that he is still a member of the UK Civil Service and still owes some loyalty to the Crown and the United Kingdom Parliament although he has been seconded to the Scottish Parliament and should not be dealing with these matters.

It is fair enough for the Scottish Parliament to consider reserved matters when it wishes to make representations on them to the Westminster Parliament, particularly to the House of Commons. However, for it to have debates on nuclear weapons, defence policy, foreign affairs issues, reserved aspects of welfare or on major economic issues which are still the responsibility of this Parliament and the UK Government, seems to me not just wrong in principle but a waste of the Scottish Parliament's valuable time. I hope that we will send a message to it that-

4.30 pm

Lord Wigley: Obviously we come to this question from different perspectives, but if the amendment were passed would it not preclude debate on matters such as industrial and trade links abroad, which are relevant to the economy; matters relating to cultural exchanges abroad, which I would have thought would certainly be part of the remit of the Scottish Parliament; and, indeed, debate on a host of other matters which link through to the European Union, where there is clearly an interest in Scotland having a voice in those areas?



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Lord Foulkes of Cumnock: It is certainly not intended that the amendment should do that. It says,

I should have thought that the areas that the noble Lord mentioned are ones on which the Scottish Parliament might wish to make representations to the United Kingdom Government. However, my noble friend may have a point in that the amendment's wording is not as exact as it could be. There are areas where the Scottish Parliament contributes in this regard. For instance, when I was a development Minister, I encouraged it to take an interest in development matters, just as local authorities and private enterprise do. However, it is a different matter when the Scottish Parliament tries to deliberate on policy in relation to these issues.

This is a difficult area and the noble Lord, Lord Wigley, is right to point to a difficulty. Nevertheless, this Parliament is very careful not to talk about areas that are devolved to the Scottish Parliament. We are sensitive-perhaps sometimes oversensitive-about not dealing with those areas. As I think my noble friend Lord Sewel said in an earlier debate, we still have the right to legislate on any of them. If we wanted to, we could override the decisions of the Scottish Parliament and tell it what to do. However, we do not do that. We are very sensitive and very cautious, perhaps even oversensitive, as I say, but the Scottish Parliament does not reciprocate that sensitivity and caution as regards trampling on reserved areas.

The noble Lord, Lord Steel, will recall that he made the original ruling about the areas that could be discussed. That gave the Scottish Parliament an opportunity to discuss certain areas which it has subsequently expanded and exploited to a degree which was not intended at the time that the noble Lord made that ruling when he was Presiding Officer. I hope that we can send a message to the Scottish Parliament that it should respect our reserved areas just as we respect the devolved areas.

Baroness Liddell of Coatdyke: Perhaps I may make a brief intervention in support of my noble friend's amendment. I, too, should declare an interest. I was at the famous party also, and if I had thought that visiting a football park could be so much fun, I might have gone before now.

I support the amendment because I am particularly exercised about the extent to which the reserved area of foreign affairs is often affected by debate in the Scottish Parliament, and at some of the attitudes that are adopted by Members of the Scottish Parliament as they go abroad. In particular, in the English-speaking Commonwealth, where BBC News, BBC Parliament and Sky are available, the interlocutors among us who have been practitioners in foreign affairs are perhaps watching debates in the Scottish Parliament or are picking up stories on foreign affairs that come out of it that can make life difficult for our people who are involved in sometimes sensitive negotiations. Usually, such debates are set against a background of imperfect knowledge as to why issues are being raised and discussed.

My noble friend Lord Foulkes made a valid point when he said that we go to great lengths in this Parliament to ensure that we do not trespass on devolved

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affairs. Since the beginning of the Scottish Parliament, there has been a laxness of attitude to straying into reserved areas. I am not suggesting that Members of the Scottish Parliament, be they in the Scottish Government or otherwise, should be grounded, but I ask your Lordships to take into account that one of the conventions of this Parliament is that when you travel abroad you do not criticise your own Government, even if it is a Government of a different colour to the party that you are a member of. That can increasingly be undermined by interventions from people who do not owe any loyalty to the concept of the foreign policy of the United Kingdom.

This may seem an arcane part of the debate and, without doubt, it will be portrayed as carping about the magnificent foreign policy of the Scottish Parliament, but there are men and women around the world today doing very difficult jobs in sometimes difficult circumstances. They are not helped by voices off.

Lord Maclennan of Rogart: My Lords, I would not like it to be thought that the views expressed in the previous two interventions were partisan in any sense. I certainly identify with those comments.

It appears to me that if the principle of subsidiarity distributes powers up and down, there should be clear and at least conventional understandings as to the limitations of interventions in respect of matters that are principally for one tier of government. This is not an absolute distinction. In the Lisbon treaty affecting the governance of the European Union, provision has been made for national Parliaments to participate in dialogue with the institutions of the EU about matters in which they are interested. Of course, we have in this House a Select Committee on European affairs and we offer thoughts and advice, but do not attempt to give any impression-and I believe we do not-that we are actually responsible for the matters that are being decided upon. Too often, the voices expressed, particularly by the Scottish National Party, attempt to give that impression.

Although it may not be a requirement that we lay down the law, as it were, it is a worthy motive that inspired the amendment and it emphasises what should be a clear convention. If the Scottish Parliament or any part of it, or a majority in it, want to engage the Government of the United Kingdom in discussion, it would be sensible to adopt the noble Lord's amendment-and I hope that Members of the Scottish Parliament will take note of these recommendations.

Lord Sanderson of Bowden: My Lords, I raise one point on the amendment, which is slightly wide of the purpose and message of the noble Lord, Lord Foulkes. Can my noble and learned friend explain why energy is a reserved matter in the Scotland Act, but, because planning powers are devolved to the Scottish Parliament, the Scottish National Party Government see fit to do nothing about the Torness nuclear station and others in Scotland? After all, when I was happy to be in government dealing with the Electricity Bill, we managed to include powers for the interconnector to send nuclear-generated electricity south of the border. To my mind, that will stop unless something can be done to reverse

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that decision. It seems a total anomaly in the Scotland Act that a reserved matter such as energy cannot be fulfilled for nuclear energy because of the planning powers of the Scottish Parliament.

Lord Forsyth of Drumlean: My Lords, just to show that the noble Lord, Lord Foulkes, and I have not formed some kind of alliance for the purposes of the Bill, I do not agree with the amendment. I agree with the sentiment, which is that the Scottish Parliament should, in so far as is practical, confine its activities to its responsibilities, but to try to write that down is capable of being interpreted as trying to gag the Parliament. I can imagine circumstances in which it might wish to discuss things that are not within its immediate bailiwick and which might not be for representations to the United Kingdom Government. For example, were I a Member of the Scottish Parliament at the moment, I would want a debate on how the Bank of England, rather than the Bank of China, could become the lender of last resort to an independent Scotland. Under the amendment, it would be impossible for one to have that debate. As the First Minister has raised that startling question in the past few days, it would be entirely appropriate for people to raise such issues.

On a more serious matter, at the end of the day, this House and the other place work on the basis of convention. A convention is that we do not discuss devolved matters, and that is respected. That relates to the leadership of the organisation. One of the tragic things in the Scottish Parliament, as the noble Lord, Lord McConnell, pointed out earlier, is that the leadership seems determined to upset the neighbours and to use that to achieve a political objective. It is fair enough to use the Scottish Parliament as a platform to make the case for policy and ideas and to try to persuade the voters, but to use it as a platform in order deliberately to create dissent and division is not the purpose of it. I suspect there is nothing that we can do by way of passing amendments to the law that will change that. To change the way in which the Parliament operates it is necessary to change the calibre and nature of the leadership in the Parliament itself.

Lord Boyd of Duncansby: My Lords, we recognise the frustrations that have been expressed here, especially that this House and the other place have a self-denying ordinance and convention that we do not discuss devolved areas, but that is not respected in the Scottish Parliament. Nevertheless, there are three particular problems with the amendment.

4.45 pm

First, it seems to me pretty difficult to put down on paper a line that states that you can talk about this issue but not that one. If I may say so, the intervention from the noble Lord, Lord Sanderson, highlights that. It is true that energy policy generally, though not in renewables, is reserved to the United Kingdom Parliament. It is not just powers under Section 36 of the Electricity Act but other significant powers in relation to nuclear power that are devolved executively to the Scottish Parliament. One would not wish to stop it discussing

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nuclear power in that context. Similarly, one can make a case in relation to nuclear missiles and their stationing in Scotland. It has economic and social consequences for the area in which they are situated and certainly it would be difficult to discuss the consequences without being able to state whether one was for or against nuclear weapons as a whole. It is equally the case with economic issues. The noble Lord, Lord Forsyth, makes an interesting point about the Bank of England, but more generally one has to be able to discuss the wider economic context in which these issues apply. That is the first point. It is difficult to draw the line.

The second point is that, with the greatest respect, I do not think that the amendment cures the problem, as it states,

I suspect that every discussion of reserved matters will be a "motion to make representations" about all sorts of reserved matters.

The third is that, whatever the rights or wrongs of the original position of the Scottish Parliament, I very much agree with the noble Lord, Lord Forsyth, that it would be wrong to try to put the genie back in the bottle by now saying, "You can't discuss what you have been discussing for the last 10 years or so under successive Administrations". That would be seen very badly in Scotland, so with regret, I cannot support the amendment.

Lord Wallace of Tankerness: My Lords, in responding to the amendment moved by the noble Lord, Lord Foulkes, I am very tempted to adopt the argument of the noble and learned Lord, Lord Boyd of Duncansby, who made the case very cogently. Of course, there is a clear distinction in many cases with regard to reserved matters. I am coming to the point raised by my noble friend Lord Sanderson which was picked up by the noble and learned Lord, Lord Boyd, as to what is reserved. It is not just that the genie is out of the bottle but paragraph 2.5 of the White Paper, published in 1997 as a prelude to the referendum and the Scotland Bill and Act states:

"The Scottish Parliament will also be able to examine devolved matters and debate a wide range of issues of interest and concern in Scotland, whether devolved or reserved".

My recollection of the debates all those years ago was that it was understood that there would be such debates.

I also seem to recall in the early days of the Scottish Parliament, with our fledgling coalition between the Labour Party and the Liberal Democrats, that the Scottish National Party Opposition liked nothing better than to identify a reserved matter at Westminster where the Labour Party and the Liberal Democrats were on opposite sides of the argument. The SNP would wish to debate those Motions to try to drive wedges through the coalition and we usually found some way out, either by having no executive line or by tabling an amendment recognising the position of both parties. After a while the SNP gave up because it realised that it was not having the desired effect of driving a wedge between the coalition partners.

On occasions it will be necessary for the Scottish Parliament to discuss reserved matters when changes have been made that have an impact in Scotland. For

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example, in November last year the Parliament debated maritime safety and coastguards. I certainly share the view of the noble and learned Lord that it would be allowed if it was making representations to the UK Government. One can imagine many Motions starting with the words, "This Parliament calls on the United Kingdom Government to", for example, "not allow the Bank of England to become the bank of last resort", or whatever. It would not require too much ingenuity to do that.

The noble Lord, Lord Foulkes, had ministerial responsibility for international development matters in the previous Administration. While that area was a reserved matter, none the less there was a Scottish interest that was considered legitimate. I pay tribute to the work that was done in the then Scottish Parliament and Executive by the noble Lord, Lord McConnell of Glenscorrodale, in taking forward and developing a relationship between Scotland and Malawi. That was thought all round to be positive and helpful.

The noble Baroness, Lady Liddell, rightly highlighted the difficulties that people sometimes have in not knowing what the relationship is between the Scottish and Westminster Parliaments. They might read things into debates on foreign policy. Therefore, it is important that when people engage in matters of such sensitivity in whatever forum, they do so in a measured and constructive way. I remember-and not just because I took part in it myself-that one of the best debates in the Scottish Parliament was in March 2003, on the eve of the military action in Iraq. The view was that everyone else was talking about it so it would look very odd if the Scottish Parliament did not. There was no line from the Executive because the Labour Party and the Liberal Democrats took different views. It is worth recalling that I moved an amendment on behalf of the Liberal Democrats that opposed intervention in Iraq. Because of the myth that has built up, it is worth remembering that the Scottish Parliament approved military intervention in Iraq in its vote in March 2003, ahead of the event happening. However, by all accounts at the time, it was a good debate.

There will be occasions when there is an interweaving of the issues. My noble friend referred at Second Reading to the question of energy, which is a reserved matter. Renewable energy has been devolved. As the noble and learned Lord, Lord Boyd, indicated, powers under Section 36 of the Electricity Act give Scottish Ministers substantial powers with regard to the licensing of power stations. There is a connection here-even an interconnection-which makes it important that both Parliaments and Governments must co-operate in trying to ensure that, where there is shared responsibility, the issues are properly addressed.

The Duke of Montrose: My Lords, perhaps my noble and learned friend could help me. As time has passed and habit has developed, we have found that the Scottish Parliament can discuss anything that it wishes, and express opinions. If something like the amendment of the noble Lord, Lord Foulkes, was passed, it would be limited to things that it wished to refer to this Parliament. Of course, discussion on the question of a referendum is probably something that the Scottish Government could say was referable to

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this Parliament. My noble and learned friend talked about the resolutions that were passed by the noble Lord, Lord McConnell of Glenscorrodale, on helping Malawi. Is there any limit to the amount of money that the Scottish Government can spend on things that are not devolved? It would be interesting in particular to know how much money they would be allowed to spend on a referendum. My noble and learned friend will know that there is an 80-page Bill attached to the consultative paper that was produced by the Scottish Parliament. It did not just drop out of the sky in a pre-formed manner. A great deal of time and expense was put into it.

Lord Wallace of Tankerness: The first thing I will say in response to my noble friend is that this is not something that has just grown up over the years. As I indicated, it was anticipated from the outset-in the White Paper in 1997-that there would be this opportunity. On the specific case of Malawi, there is a provision in the Scotland Act that allows Scottish Ministers to give assistance to UK Ministers and the UK Government. The co-operation at the time between the international development department and the Scottish Executive allowed that to proceed.

My noble friend raised an important point about a referendum. The United Kingdom Government made it very clear, in our consultation paper of 10 January, that the Scottish Parliament cannot legislate on reserved matters, including on an independence referendum. We have also indicated a preference for a Section 30 order, as have the Scottish Government. By the very nature of a Section 30 order, it deals with things that are currently reserved. One of the earliest was on railways. Therefore it is inevitable that there will be some expenditure and some legitimate activity by Scottish Ministers, who have to discuss and negotiate the terms of any order-which, by definition, must relate to a reserved matter-but look forward to agreeing between the two Governments to put a Section 30 order to both Parliaments. That is clearly why it is important, not just in the context of a referendum but in the context of other areas where a Section 30 order has been used where there has been a transfer of powers from one Parliament to the other, that there is proper co-ordination and consideration. Indeed, in terms of a number of powers in this Bill, there has clearly been discussion between both Governments.

Lord Forsyth of Drumlean: Could my noble and learned friend help with the point that was raised by my noble friend the Duke of Montrose about the position in respect of expenditure incurred on matters that are not within the legal competence of the Parliament? Who is accountable for that? Is it the Permanent Secretary as the accounting officer, the executive members or the Members of the Scottish Parliament? What, if any, sanction is there if there is expenditure that is ultra vires?

Lord Wallace of Tankerness: My noble friend has tabled an amendment on this issue that we will come to. I suspect that the accounting officer must have responsibility in these matters. However, as I sought to

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indicate, it would be very perverse if the United Kingdom Government invited a response and a consultation and then said that it was beyond the Scottish Parliament's competence to engage in it. My noble friend raises an important point, and we will come to his amendment, which will be a proper opportunity to look at that in more detail.

As I indicated, in the case made by the noble and learned Lord, Lord Boyd, it is very difficult to draw the line. It does not cure the problem, but it is not beyond the wit to come up with the appropriate Motion to put before the Scottish Parliament. My noble friend Lord Forsyth and the noble and learned Lord, Lord Boyd, made the point that the genie is out of the bottle. Indeed, it was intended as long ago as the original White Paper that there should be an opportunity to debate these reserved matters. In these circumstances, I invite the noble Lord, Lord Foulkes, to withdraw his amendment.

Lord Foulkes of Cumnock: I have found this debate very helpful, although it pointed out that my amendment is less than perfect. A lot of interesting issues have been raised, not least that raised most recently by the noble Duke, the Duke of Montrose, and picked up by the noble Lord, Lord Forsyth, because according to this consultative document written submissions have to go to the Elections and Constitutional Development Division at Victoria Quay. I remember asking a number of questions and, no doubt, some MSPs are still asking questions about how many civil servants there are in these divisions dealing with breaking up the United Kingdom. They are spending taxpayers' money to employ officials to move Alex Salmond's dream a bit closer. The noble Lord, Lord Forsyth, asked a good question, which needs to be pursued, about how much money is being spent on that and whether it is ultra vires. That is, no doubt, something that we will be taking up on another occasion. It is a very serious matter. It is not just a question of printing the document; it is a question of the civil servants who could be better employed dealing with education, which is pretty ropey and not being dealt with in a perfect manner-let us put it that way-in Scotland at the moment, or with the health service, which is under pressure in Scotland. It would be better to use that money to employ nurses, teachers and policemen rather than these civil servants. I hope the noble Duke, the Duke of Montrose, and the noble Lord, Lord Forsyth, will pursue this important matter.

5 pm

The other thing that came out in remarks made by the noble Lords, Lord Sanderson and Lord Forsyth, the noble and learned Lord, Lord Boyd, and others is actually how much devolution already exists. We sometimes forget how much power has been devolved to the Scottish Parliament and the Scottish Executive. It is a wide range, relating to a number of areas, not to mention transport: the Scottish Executive have responsibility for the Scotrail franchise, a huge, billion-pound operation in Scotland; they also dealt with the relatively recent extension of the Scotrail franchise. There is an awful lot of devolution that is seldom talked about or understood.



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There is a lot of sentiment behind this amendment, as expressed by the noble Lord, Lord Maclennan, and my noble friend Lady Liddell, and some deep concern about the way in which the boundary is being pushed beyond where it should be. However, in practical terms, I accept the advice of-I keep calling him my noble friend-the noble Lord, Lord Wigley, the Minister and particularly my noble and learned friend Lord Boyd, who in his brilliant demolition of my amendment showed what a marvellous Minister he will be after the next election. It was a perfect one-two-three, the perfect demolition: three serious points and you are finished; your legs are knocked from under you. After that demolition job by my very good and noble and learned friend, Lord Boyd, I have no alternative but to withdraw this amendment.

Amendment 7 withdrawn.

Clause 7 : Partial suspension of Acts subject to scrutiny by Supreme Court

Amendment 8

Moved by Lord Selkirk of Douglas

8: Clause 7, page 6, line 13, leave out "The Presiding Officer" and insert "A law officer making a reference under subsection (1)"

Lord Selkirk of Douglas: My Lords, I will speak to Amendments 8 and 11. In seeking to speak earlier, I was confusing Clause 7 with Amendment 7; I was not trying to hurry up the noble Lord-which would have been impossible in any case.

The purpose of Amendments 8 and 11 is to include the law officers-it could be the Attorney-General, the Advocate-General for Scotland or the Lord Advocate-among those who would be responsible for publishing a reference of a part of a Bill to the Supreme Court. The Bill lays down that it should be the Presiding Officer who should publish a notice of the reference to the court in the Edinburgh Gazette, and in such other ways as the Presiding Officer considers appropriate. As the reference should probably be made in most cases by one of the law officers, surely it is appropriate that it should be his or her responsibility to publish the fact that a reference has been made; for example, by putting it on the departmental website. The amendment ensures that the Executive take responsibility for publishing references made by them, thus showing a respect for the doctrine of the separation of powers.

I notice that the Minister has put down Amendments 9 and 10, which may achieve very much the same objective. If I am correct in that assumption, and they fulfil the same purpose but rather better-or at least are better expressed-I will not insist on these amendments and will withdraw them. In any case, I very much look forward to hearing what the Minister has to say.

Lord Boyd of Duncansby: My Lords, this group includes a notice in my name and that of my noble friend Lord Browne about Clause 7 standing part of the Bill. I will start with that and deal with the other amendments in due course.



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Clause 7 introduces a new mechanism of a limited reference of a Bill to the Supreme Court to determine whether certain provisions of the Bill are within the competence of the Scottish Parliament. At present, once a Bill has passed through all its stages in the Scottish Parliament, it is for the Presiding Officer to present the Bill to Her Majesty for Royal Assent. However, before the submission for Royal Assent, there is a 28-day period during which the law officers-the Advocate-General, the Lord Advocate and the Attorney-General-can consider the Bill and if so advised refer it under Section 33 of the Scotland Act to the Supreme Court on a question as to whether any of its provisions is within the competence of the Scottish Parliament. Under Section 33, the whole Bill is referred and there is no mechanism to refer only certain parts of the Bill. Even if only one part is thought to be outwith the competence, none of it can be commenced until that issue is disposed of.

That explanation of the effect of a reference under Section 33 perhaps sets out the argument for the Government's proposals in Clause 7. However, there are serious concerns as to how this will work in practice. I hope that this debate will draw out some of the rationale behind their proposals. To date, there has been no reference under Section 33 to the Supreme Court of a Scottish parliamentary Bill.

It might help if I briefly set out the internal procedures put in place during my time as Lord Advocate to ensure that Scottish Bills were within the competence of the Parliament. A Bill introduced into the Scottish Parliament by a Scottish Minister must be accompanied by a statement under Section 31 of the Scotland Act that in his or her opinion the Bill is within the legislative competence of the Parliament. Members of this House will be familiar with that kind of statement because all Bills presented here are accompanied by a statement made under Section 19(1)(a) of the Human Rights Act. The Scotland Bill is no exception to that. Therefore, there is a certificate, as it were, on all Scottish Bills which are put into the Scottish Parliament.

Certainly, in my time as Lord Advocate, no statement would be given by a Minister without their having sought the advice of the law officers that it could be made. I cannot speak for present procedures and it is possible that they have changed, although I have no reason to think that they have. Nevertheless, there are in place substantial internal procedures to ensure that Bills are within competence. In reaching a view on the competence of a Bill, there were a number of procedures. Those who were Ministers at the time will recall the passporting arrangements whereby there was a process with the Minister for parliamentary business and the Lord Advocate to have what in the UK Government would be a legislation committee-certainly, when I was Solicitor-General there was a legislation committee-which considered all the issues that were thrown up by the Bill, including legislative competence.

In addition, officials from the law officers' departments were in constant touch with each other. We would talk to officials within the Advocate-General's office and, for that matter, the Attorney's office. Officials in the Scottish Government Legal Directorate would also

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engage with relevant departmental officials-for example, in the Home Office-to ensure that issues were identified at an early stage.

The role of the Presiding Officer is very important. The noble Lord, Lord Steel of Aikwood, will have had first-hand knowledge of that. The Presiding Officer must decide whether a Bill presented to the Scottish Parliament is within the competence of the Parliament, although I think I am right in saying that the standing orders allow for that decision to be overridden by the Parliament, but nevertheless it is an important element. Again, contacts were made between the office of the Presiding Officer and the law officers to ensure, as far as possible, that any Bill presented was within competence.


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