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House of Lords

Thursday, 30 January 2014.

11 am

Prayers—read by the Lord Bishop of Leicester.

Royal Assent

11.07 am

The following Acts were given Royal Assent:

Mesothelioma Act Local Audit and Accountability Act Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act European Union (Approvals) Act Hertfordshire County Council (Filming on Highways) Act


Cyclists: Safety

Question

11.07 am

Asked by Lord Bourne of Aberystwyth

To ask Her Majesty’s Government whether they propose to take action to promote the safety of cyclists.

Lord Popat (Con): My Lords, the Government take all road safety, including cycle safety, very seriously and have committed £278 million of funding directly for cycling. Furthermore, the department has made it considerably easier for local authorities to implement a 20 miles per hour speed limit, Trixi mirrors, new designs of advanced stop lines and other highway measures to support cycle safety. We also continue to work with the haulage industry to drive up vehicle standards and awareness of vulnerable road users.

Lord Bourne of Aberystwyth (Con): I thank the Minister very much for that response, which is very encouraging. Many of us wish to encourage safe cycling. In that context, is the Minister in a position to seek to secure a review of all the measures relating to cycling safety—restrictions on heavy goods vehicles, cycling lanes, the 20 mile an hour zone that he mentioned and the vexed question of cycling helmets—and involve in that review cycling organisations, motoring organisations and other relevant bodies?

Lord Popat (Con): My Lords, we are continuously reviewing a number of safety measures. On cycle helmets, this week I had a brief discussion with the Secretary of State in the presence of our Minister for cycling, my honourable friend Robert Goodwill. Our approach is non-legislative—we do not want to make cycle helmets compulsory. We would rather encourage and support people to wear helmets for safety. It is not good to burden cyclists. We would rather see more cyclists on our roads and cycling safely.

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Lord Berkeley (Lab): My Lords, I was pleased to hear the Minister's comments on cycle helmets, because that is not the issue that needs to be addressed. He said that he was encouraging local authorities to spend more money on cycling. Will he confirm that there will be some ring-fenced money for cycling, as local authorities’ resources are very stretched? Will he further confirm that much of that money will be put towards better use of road space for separate cycle lanes so that cyclists can feel safe in respect of other road users?

Lord Popat: My Lords, the investment in cycling safety in any area depends on the local authority, but we have allocated £278 million of funding and are spending double the amount in this Parliament compared to the last one. Local authorities make their own assessment of dangerous cycling spots in their areas and can apply for cycle safety funds. With regard to cycle lanes, new roads are designed in such a way as to take cyclist safety and cycle lanes into account.

Lord Bradshaw (LD): Will my noble friend give us some indication of how best practice in the world of cycling is actually applied? Do the Government encourage cycling? What do they do, or is it left to local authorities and charities?

Lord Popat: My Lords, we need to see more cycling and safer cycling. Hence, we have allocated funds for local authorities to make it as safe as possible. We encourage cycling and want to see more cyclists on our roads. It is the best and cheapest means of transport.

Lord Aberdare (CB): My Lords, as both a cyclist and a motorist, I am often struck by the number of cyclists riding with no lights after dark, creating a hazard both for themselves and for others. What educational or other steps can the Minister take to improve the standards of cycling behaviour and to ensure that, where necessary, the law is enforced equally for cyclists and motorists?

Lord Popat: My Lords, lately there have been conflicts and hostility between the cyclist and the motorist. The Government are doing everything possible, along with the Mayor of London and Transport for London. We have launched a THINK! campaign for motorists and cyclists to eliminate those problems.

Baroness Sharples (Con): Does my noble friend agree that the safety of pedestrians is equally important?

Lord Popat: My Lords, pedestrians should expect to be able to use the pavement and our roads safely, without any collision or confrontation with cyclists. Where cyclists cause problems, it is a matter for the police to take the necessary action. We want to see safe cycling, not dangerous cycling. The noble Baroness raises a very important point about pedestrians, who do sometimes have problems with cyclists, and the Government are taking the necessary action through the police to make sure that bad, dangerous or careless cycling on our pavements is prohibited.

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Lord Davies of Oldham (Lab): My Lords, the greatest danger to cyclists, particularly in our towns, comes from heavy goods vehicles, which are responsible for 20% of cycling deaths, and a much greater percentage in London. Will the Minister note that the Mayor of London is at present berating the Government for their failure to accelerate actions in Europe to make European-wide provision for safety in terms of heavy good vehicles having the necessary equipment to see cyclists more readily? Will the Minister also join in Labour’s campaign to make cycling safe by addressing problems with heavy goods vehicles?

Lord Popat: My Lords, the differences between the Mayor of London and the Government on heavy goods vehicles cropped up this morning in the papers. I do not have a briefing on that subject but would be very happy to write to the noble Lord. We work continuously with a number of stakeholders, including the haulage industry, to make heavy goods vehicles safer. We have introduced Trixi mirrors and passenger left-hand side mirrors, and we will introduce sidebars for lorries. A number of other measures have also been taken, including written and oral tests for haulage drivers. However, we have to wait for what we call the cycle delivery plan, which will take a number of factors into account and is due out in autumn this year.

Lord Geddes (Con): My Lords, following up the supplementary question asked by the noble Lord, Lord Aberdare, does my noble friend agree that one way of improving cycling safety is to persuade cyclists to obey the law of the land?

Lord Popat: I thoroughly agree with my noble friend.


NHS Property Services Ltd

Question

11.15 am

Asked by Lord Warner

To ask Her Majesty’s Government what assessment they have made of the performance of NHS Property Services Ltd in disposing of surplus properties and operating within their working capital.

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, NHS Property Services is on target to dispose of 97 properties by 31 March 2014 and a further 100 properties by 31 March 2015. The department has provided the company with a £350 million flexible working capital loan facility, of which £271 million had been drawn down as at 27 January 2014. This working capital support is in line with the department’s expectations for a start-up company of this size and complexity.

Lord Warner (Lab): I thank the Minister for his Answer, but what action has been taken to improve the performance of this company in controlling its costs? What action has been taken to reduce its running costs, given the large number of staff that it inherited,

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and what action has been taken to improve the professional competence of those staff and to collect bad debts, which have been a rising problem for this organisation?

Earl Howe: My Lords, on administration costs, the company is already reviewing the way in which its strategic asset management and facilities management functions are structured. It is probably inevitable that the consolidation of 161 PCT and strategic health authority estates into one will throw up duplication, overlap and operational policies that conflict. These all need to be rationalised and a commercial ethos introduced. It is vital that the skills are imported into the organisation to match that challenge.

Lord Mawson (CB): My Lords, for the past six years, we in St Paul’s Way in Tower Hamlets have been pursuing the Government’s policy of integration in health services, bringing together a school, housing, health and community services centre on one street. I was asked to lead this project following a murder and considerable racial violence on this housing estate. The overall transformation project has been very successful, and I must declare an interest. However, the primary care premises elements have stalled and we are going backwards in terms of dental outreach facility. Can the Minister explain how NHS England engages with NHS Property Services, the CCG, local GPs and local partners to deliver in an effective and timely manner the kind of innovative and integrated premises we all agree are essential?

Earl Howe: My Lords, I pay tribute to the work that the noble Lord does. However, it is important to understand that the decision as to whether a property in the NHS Property Services portfolio is surplus to requirements and should therefore be sold resides with the commissioners; that is, NHS England and clinical commissioning groups. It is up to the commissioners how they wish to utilise the estate.

Lord Brabazon of Tara (Con): Is my noble friend aware of the situation of Putney Hospital, which closed about 15 years ago and has only recently been sold to Wandsworth Borough Council, but is still undeveloped?

Earl Howe: My Lords, I am not aware of the detail of that particular case, but I will gladly write to my noble friend about it.

Lord Hunt of Kings Heath (Lab): My Lords, I refer noble Lords to my interests in the register; I should have done that yesterday on another health Question, for which I apologise to the House. Can the Minister confirm that the chairman of this organisation resigned early, that capital money was raided to cover a revenue shortfall and that, only months after the organisation formally started, an investigation has been mounted by the National Audit Office? Given that the shares in this company are owned by Ministers, will Ministers take responsibility and can the noble Earl confirm that this was forecast in the NHS risk register, which the Government have not yet published?

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Earl Howe: My Lords, the noble Lord has painted rather a black picture of the company, which we believe has got off to an extremely good start, contrary to his impression. The company’s former chair asked to step down six months earlier than planned because the company had completed the transition phase early, and it was agreed that a chair with a different skill set was needed to oversee the rationalisation of the company.

As regards the company’s cash needs, we made £350 million available to the company as a working capital loan. That was planned some six months ago and was needed in large part due to the slow payment of invoices by the company’s customers, many of whom were themselves new organisations set up as part of the reforms, so it is not altogether surprising that cash flow initially was slow, but the situation is improving.

Lord Colwyn (Con): My Lords, can my noble friend tell us what efficiencies and successes NHS Property Services has actually made?

Earl Howe: My Lords, it has been a good start for the company. It has generated £22 million from sales of surplus assets and savings of £2 million a year on the running costs of those disposed properties. The company is also harnessing economies of scale—for example, savings to date of £1.2 million by standardising the procurement of electricity across the whole estate. The company is now exploring how to make savings across other utilities and services, such as legal services.

Lord Turnberg (Lab): My Lords, following the response to my noble friend Lord Hunt’s question, can the noble Earl tell us why the National Audit Office has decided to conduct an investigation so soon after the establishment of this organisation?

Earl Howe: My Lords, the National Audit Office is indeed looking at the company—only to assure us and itself that the company is properly organised and structured. We welcome that, as does the company. There was no sinister purpose or concern underlying that process; it is perfectly normal and natural.

Baroness Manzoor (LD): My Lords, can the Minister confirm best value for money on all properties sold and that there has been proper consultation with local organisations on all NHS estates?

Earl Howe: My Lords, I can assure my noble friend of that. The company ensures best value by marketing through an arm’s-length open market process, which ensures that the market value is achieved in a sale. Where necessary, the sale price is supported by a district valuer or other third-party independent valuation.

Baroness O'Cathain (Con): My Lords, I ask my noble friend: when people are appointing chairmen to such organisations, could they look at their skill sets in advance rather than getting rid of them because of their lack of skill sets?

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Earl Howe: My Lords, it is important to understand that the chairman who has stepped down had a very good set of skill sets, but it is not the skill set that we now need to take the company forward. The task at the beginning was to consolidate a very complex portfolio of properties, and that was done very successfully. The task now is different: it is to manage those properties effectively and to get maximum value for the taxpayer for the properties that are sold.


Broadband and Mobile Coverage

Question

11.23 am

Asked by Baroness Neville-Rolfe

To ask Her Majesty’s Government what progress is being made with the rollout of broadband and mobile coverage across the United Kingdom.

Lord Gardiner of Kimble (Con): In October 2013, superfast broadband was available to 73% of premises—up from 46% in 2010. By the summer of this year, an additional 40,000 premises a week will have superfast broadband available to them. The aim is to reach 95% of premises by 2017. More than 99% of UK premises are covered by one or more mobile networks. All four mobile network operators are rapidly rolling out 4G mobile broadband.

Baroness Neville-Rolfe (Con): My Lords, truly comprehensive broadband offers a unique opportunity to create a vibrant national market by increasing competition and access for small businesses and consumers and by helping economic development. I thank my noble friend for his answer, but can we be more ambitious and set a target date of, say, 2015, for achieving comprehensive broadband coverage and eliminating those “not spots”—a rather ugly new term—throughout the whole of the UK?

Lord Gardiner of Kimble: My Lords, the UK broadband impact study found late last year that for every £1 the Government invest in broadband, the UK economy will benefit by £20. The broadband infrastructure will have a very positive impact on the growth of the economy and across communities within the country. Indeed we are ambitious. The Government have invested a further £250 million, in addition to the initial £530 million and, even more recently, £10 million in a scheme to reach out to the most remote areas.

Lord Winston (Lab): My Lords, I declare as an interest my employment at Imperial College and my connection with the outreach educational facilities at the college. In proceeding with all alacrity with broadband, will the Minister take into account the huge need for educational fast transfer, which is going to be of growing importance in education? Increasingly, young people use the web much more than they use television, and it will be an important educational facility, both for universities and indeed for schools.

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Lord Gardiner of Kimble: I entirely agree with the noble Lord. The education sector is one where superfast broadband is going to be very important indeed. I am very pleased to report that 43 of the 44 projects involved in the rural broadband scheme are now in delivery. One more will be signed up shortly in Northern Ireland. This is all about rolling out as much as we can, to as much of the country as possible, as fast as possible, so that all communities and all age groups can benefit from this advance.

Lord Avebury (LD): My Lords, has my noble friend seen the report that nearly half a million children of school age have no access to broadband whatever and that this is affecting their achievement in education? What steps will the Government take to deal with this appalling phenomenon?

Lord Gardiner of Kimble: I very much hope that if my noble friend were posing this question in 18 months’ time, we would have a different result. Particularly the rural broadband scheme which is reaching out to remote areas, but also the super-connection for the 22 cities, is all about providing to schools and businesses the opportunity to take advantage of the internet.

Baroness Jones of Whitchurch (Lab): My Lords, the Minister will know that there has recently been a damning NAO report which identified that, far from promoting market competition, BT is now expected to win all of the 44 contracts on broadband. What are the Government doing to intervene on this issue, given that the NAO report also says that it does not have a strong assurance that the costs, the take-up assumptions and the extent of contingency contained in the BT bids are reasonable? What is being done to get value for money for the taxpayer on this issue?

Lord Gardiner of Kimble: My Lords, I should first declare that I own a few BT shares—I emphasise, a very few.

BT is in that situation because Openreach has so much of the infrastructure. There are arrangements and regulatory environment requirements through Ofcom on price and also on other operators using BT property. There are very important safeguards for the consumer through Ofcom, and that is why we are in the right position.

Lord Inglewood (Con): My Lords, while welcoming the extra money that my noble friend has explained to the House, will he tell the House whether the additional rollout will take place in a more flexible and competitive manner than has hitherto characterised the rollout thus far?

Lord Gardiner of Kimble: My Lords, I certainly think that the rollout is gathering pace in those parts of the country that have not had the advantage that other parts have. We certainly want to ensure that the Government’s investment, and indeed the commercial investment, is sufficiently flexible that as many people as possible gain advantage as soon as possible.

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Lord Berkeley (Lab): Will the Minister say when Cornwall and the Isles of Scilly will get this? I thought they were a priority area. They are a rural area and they should be a priority, but the Scilly Isles do not even have 3G yet.

Lord Gardiner of Kimble: That is very interesting. I will look at it in even more detail because, funnily enough, I was meeting some people from Cornwall only two days ago, who said that in fact Cornwall has been very successful and that there is quite a good degree of capacity there because it has a great tourist interest. There has been a great increase in the number of visitors, and we need to accommodate that. However, I will look into that because one of the assurances I had was that Cornwall and the Isles of Scilly were well provided for.

Lord Stoneham of Droxford (LD): Is my noble friend aware that in many rural communities, from Droxford in Hampshire to Harbottle in Northumberland, there is great uncertainty about their potential access to speedier broadband and the speeds that they will experience in future? Can he tell us what further plans the Government have to improve communications with these communities, and whether they have the funding in place to reach 90% of households by 2015?

Lord Gardiner of Kimble: My Lords, this is technical, but we believe that virtually all homes and businesses will have access to standard broadband by the end of the current intervention, which is next year. That means being able to use iPlayer and e-mail, and having normal transactions. Certainly, the rural broadband scheme is to ensure that all parts of the country, from the Highlands and Islands to the Isles of Scilly, will all gain the benefit of it.


Employment: Private Sector Jobs

Question

11.31 am

Asked by Lord Harrison

To ask Her Majesty’s Government, in the light of the report by the Centre for Cities in respect of the proportion of private sector jobs created in London, what steps they are taking to rebalance the economy across the United Kingdom.

Lord Newby (LD): My Lords, the Government are taking a number of steps to ensure that the recovery is balanced across the UK through local enterprise partnerships, enterprise zones, city deals and growth deals. The latest figures show an increase in private sector employment of 928,000 outside London over the past three years, compared to 307,000 in London over the same period, so nearly 80% of all private sector employment growth has come from outside London.

Lord Harrison (Lab): My Lords, according to the recent report, most of the new jobs have come from London and the south-east. Does the Minister share my concern about that? Does he understand that

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concern against a background of declining exports, a parlous balance of payments situation and the matter of small businesses having access to finance in order to grow jobs still not having been resolved? How will we rebalance the economy and how and when will we know that the economy has indeed been rebalanced?

Lord Newby: My Lords, there are a number of measures but one of the key things is what is happening to employment and unemployment regionally. In the past quarter, unemployment fell more quickly in Scotland, Wales and four English regions than it did in London. There is big growth in a number of regions outside London, which is extremely welcome.

Lord Howell of Guildford (Con): My Lords, when it comes to rebalancing, is my noble friend aware that more than 40% of our export earnings come from the services sector, at which we are extremely good? Manufacturing is doing extremely well but services are doing very much better. Can he assure us that the Government will do everything to reinforce and encourage this sector, particularly in international dealings in an increasingly digitalised and networked world where services are the main growth area?

Lord Newby: Absolutely, my Lords, and in a number of the major trade delegations that the Prime Minister and other senior Ministers have undertaken in recent times, promoting services has been uppermost in their minds. One of the great strengths of the UK in terms of professional services is that the standards we set here through bodies such as those for chartered accountants and the legal bodies have a worldwide reputation, which underpins the credibility of British companies seeking to sell their services internationally.

Baroness Armstrong of Hill Top (Lab): My Lords, does the Minister accept that in the north-east there is still a long way to go? Last week’s figures on unemployment showed that the north-east is the region where unemployment has not gone down. The Government’s action in local government finance—putting more money into the least deprived areas and taking it from the most deprived areas—means that the most deprived are seeing cuts of 25% in the services that are critical for those who are suffering from the poor economic position. We do not moan in the north-east—we are proud of it—but it is about time the Government recognised that there are still challenges and that they have a responsibility.

Lord Newby: My Lords, the Government recognise that there are still challenges and that we have a responsibility. That is why, for example, the Government have concluded city deals with Newcastle and Tees Valley and are helping those cities grow and why the industrial strategy around the automotive industry has had such a beneficial effect on Nissan’s employment in Sunderland.

Lord Shipley (LD): My Lords, is the Minister aware that the inward investment arm of UKTI has no regional targets? Would it not be a good idea if it did? Otherwise it can fulfil its national targets by bringing inward investment into London and the south-east.

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Lord Newby: My Lords, that is an interesting idea, and I will pass it on to colleagues in BIS. While in the past year there was a 22% rise in inward investment overall, which bucked a downward trend internationally, there was an increase in FDI of 191% in Wales and 41% in Northern Ireland, so it is not the case that all benefit of growth and inward investment is coming to London and the south-east.

Baroness Donaghy (Lab): My Lords, as the Minister knows, earnings are not keeping up with prices and the housing stock in London is not keeping up with demand. How will his Government protect the losers in this equation who far outnumber the winners?

Lord Newby: My Lords, I do not agree with that basic proposition. I do not think the losers far outnumber the winners. I remind the noble Baroness that there was an increase in employment of some 450,000 in the past 12 months. All those people are winners. Many people on modest incomes have benefited by several hundred pounds as a result of the increase in the income tax threshold. There are very many winners already, and as the economy continues to grow, there will be a lot more.

Lord Hamilton of Epsom (Con): Does my noble friend accept that past economic recoveries have always started in London and the south-east and they then spread to the rest of the country? The noble Lord, Lord Harrison, and other noble Lords opposite should be patient. I am sure the benefits will come through by May next year.

Lord Newby: My Lords, one of the interesting things that came out of the cities report, to which the noble Lord, Lord Harrison referred, was the beneficial effect that London has on the rest of the country. For example, that report shows that in Southampton in the period 2008-12 local firms cut their employment by 7% but London-based firms investing in Southampton increased their employment by 24%. That is the way in which a successful London helps the rest of the country and why the Centre for Cities came to the conclusion that constraining London’s growth would harm the UK economy generally.

Business of the House

Timing of Debates

11.38 am

Moved by Lord Hill of Oareford

That the debate on the Motion in the name of Lord Lang of Monkton set down for today shall be limited to 6 hours.

Motion agreed.

Scotland: Independence Referendum

Motion to Take Note

11.38 am

Moved by Lord Lang of Monkton

That this House takes note of the implications for the United Kingdom of the forthcoming Scottish independence referendum.

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Lord Lang of Monkton (Con): My Lords, I am honoured and delighted to be able to introduce this debate on the implications for the United Kingdom of the Scottish independence referendum. I feel strongly that the question of independence for Scotland raises issues that should involve the whole United Kingdom. I welcome the number and range of interests across the House, and from across the nation, that the debate has attracted, in particular the participation, with her maiden speech, of my noble friend Lady Goldie. The House will look forward to what she has to say.

Although the referendum is now less than eight months away, I hope that today’s debate may cast a broader and more illuminating light on what has thus far been a deeply introspective debate within Scotland. Alas, PG Wodehouse gave us the English view:

“It is never difficult to distinguish between a Scotsman with a grievance and a ray of sunshine”.

We Scots have to work on that.

Scotland, for all its capacity for complaint has, over the centuries, been a full—indeed, more than full—partner in the magnificent success story of our partnership of nations and, I believe, has many friends among the other partners. With Northern Ireland and Wales, there is a kind of fellow feeling against the might of England, yet over 800,000 expatriate Scots live in England and 400,000 English people live in Scotland. It is a source of great regret that so many expatriate Scots are disenfranchised in this referendum. They may think of themselves as British and take pride in that and in their Scottish antecedents, yet north and south of the border, within two generations, countless numbers of Britons could become foreigners to their kith and kin.

For generations, Scots and English have lived alongside each other, sharing a British heritage. They fought shoulder to shoulder in the battles of the past three centuries and still serve together today; we all take pride in that. Together, they built and administered the empire before turning it into the Commonwealth, with Scots very much to the fore. Both countries are woven into the fabric of the United Kingdom. Must they now, both Scotland and England, disavow that shared history? Would that not dishonour the sacrifices, made in common cause, of those who died for the United Kingdom, a nation now to be cut in two if the present generation of Scottish nationalists have their way? I earnestly hope not.

There is nothing positive about an independence campaign that would destroy so much. However deep-rooted the fellow feeling and the sometimes grudging respect with which Scotland has jogged along within the UK, I believe that it would evaporate rapidly after a yes vote. Notwithstanding the rose-tinted spectacles of its present Government, Scotland would become a competitor of England, not a compatriot. The Governments of the remaining UK and its devolved Administrations would be obliged, regardless of sentiment or blood ties, to fight their own corners, fiercely if necessary, in the ensuing relationship. It would risk becoming like an increasingly hostile divorce, in which the parties continued to live next door to each other afterwards.

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Where would that leave Wales and Northern Ireland? No wonder we hear that they feel worried and unsettled. If Scotland leaves, the population of the non-English part of the United Kingdom would be reduced by over half. The Principality and the Province would begin to look like mere add-ons to an overweening England. Surely no one would want to send vibrations from Scotland that might reopen old wounds elsewhere, but the trauma of a broken union would shake all its parts. The once-united kingdom would shrink, not just physically, but in the eyes of the world. Others would see it as diminished: diminished in size, diminished in population, diminished in strength and diminished in authority. The mother of parliaments would be viewed as unable to hold itself together. An historic partnership of peoples would seem to be crumbling and Britain’s international prestige and influence would crumble with it. Our standing in the Commonwealth would change, our standing in Europe, in NATO, the UN, the World Bank and the World Trade Organisation—one could go on. These are just some of the arguments why Scotland’s departure would be so negative and so bad for the UK.

Many specific issues have emerged in Scotland thus far, during many months of debate. I wish that I had time now to address them all in detail, but I am confident that other noble Lords will do so during the debate. Much detailed work has been done, both by the United Kingdom government departments and by many respected independent bodies. However, almost none has been offered by the nationalist Administration in Scotland. A much-heralded White Paper was published by them. We had been told that it would answer all our questions. However, at some 650 pages, it has used its very length to obscure its emptiness. It is a wish list. In reality, the governing party that wants to take Scotland out of the UK has no answers to any of the challenges that a separate Scotland would face. On almost all of them a separate Scotland would be a supplicant, based on blind optimism and reliant on concessions from others for its viability.

Take the vital issue of the currency, on which the Governor of the Bank of England was so lucid in his warnings yesterday. The SNP White Paper asserts that the pound belongs to Scotland as much as it does to England, but that is not so. It belongs not to Scotland or to England but to the United Kingdom, which the SNP wants to leave. If a separate Scotland were to use the pound as its currency, with or without the United Kingdom’s consent, it would find that its fiscal and monetary policy would ultimately reside with the nation that it had abandoned. Scotland would not have a viable central bank. It would not be able to print money in a crisis and it could not be a lender of last resort. In effect its status would have changed from that of partner to that of dependency.

On the economy, the SNP takes pride on the one hand in Scotland’s wealth, while on the other it claims that, liberated from the United Kingdom, Scotland would become one of the world’s wealthiest nations. Yet that is what Scotland is already and that wealth has been achieved as part of the United Kingdom, not just overnight but built up over three centuries. Only last month, the Centre for Economics and Business Research forecast that the United Kingdom, currently

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number six in the world’s GDP table, would overtake France within five years and possibly even Germany later. Who would a separate Scotland overtake and how? We should be told that. The SNP’s answer is a vague reference to growth, yet at present throughout the western world only America is growing faster than the United Kingdom, and by only a fraction. Oil is, of course, the great panacea, but as we all know it is a commodity of volatile value, which is decided by world markets, not by Finance Ministers. No responsible Government could possibly base a national budget on oil.

At present the Scottish economy has strengths, but it also has vulnerabilities. For a start, it has too high a preponderance of public sector jobs and too low a proportion of wealth creators. Scotland does not have many large companies and more than 80% of those companies that employ over 250 people are owned outside Scotland. Of the large Scottish companies such as Standard Life, the Royal Bank of Scotland and Scottish and Southern Energy, most of their business is conducted outside Scotland. For such companies the inescapable introduction of another tax regime, separate regulators and administrative structures and the need to redesign their pension schemes would almost certainly drive some of them south.

Consider the banks in particular. We are told by the Treasury that the assets of Scotland’s banking sector are equal to over 12 times Scotland’s GDP—an astonishing figure. That would not attract the confidence of the outside world or indeed of the bank’s own directors. They need an established lender of last resort, stability and long-term security, but there would be no stability and no safety net in a Scotland in which any new financial crisis emerged. As fast as the new country established a separate financial jurisdiction, its banks would be scuttling across the border to find a lender of last resort. Already the UK Treasury has had to step in to underwrite, for a nervous world, some of the potential debt liabilities of a separate Scotland.

However, one of the present strengths of the Scottish economy—and that of England—is the extent of economic integration that exists between the two countries. Around 30,000 people travel in and out of Scotland every day to work. The postal, telephone and e-mail services hum with transactions every day between the two countries and the roads and rail services are kept busy. Those are the arteries of a united economy. Cut them and both countries would bleed.

A paper published by the Department for Business shows that in 2011 Scotland’s trade with the rest of the UK represented almost 30% of Scottish GDP. Indeed, in 2011 Scotland sold twice as much in goods and services to the rest of the United Kingdom as it did to the whole of the rest of the world. Perhaps more surprisingly, Scotland is the second biggest market in the world for goods and services from the rest of the United Kingdom; only the United States takes more. So it seems clear that, at present, the United Kingdom forms a highly efficient single market, an ever closer union of peoples that has actually worked. The OECD has recognised it as the most market-oriented, economic and regulatory environment among its membership.

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No wonder the United Kingdom has among the highest employment rates in the world. Why put all that at risk?

Membership of the European Union offers no escape. It seems clear that the Scottish Administration’s plans to gain quick re-entry via Article 48 have already been rejected and that no special treatment can be gained under Article 49. It might take years, if it happened at all. What is more, the new Scotland would not take with it any entitlement to a budget rebate on entry but would have to start contributing to the remaining United Kingdom’s budget rebate. It seems probable that it would have to join the euro eventually and to join the Schengen group, which would therefore mean that Scotland could not belong to the United Kingdom’s and Ireland’s common travel area. That in turn would lead inexorably to the rest of the UK having to set up barriers and customs posts across the 95-mile border between Scotland and England, with all the hold-up and disincentive to trade that that would entail.

All this would add up to a new country with big problems, but England would surely prefer to see its neighbour as rich and successful, rather than have its second biggest customer in decline. For the first time in 300 years, England would have an undefended northern land border; it would have a country to its north that wanted to join NATO but refused to pay the nuclear entry fee. The implications for the UK’s defence are immense. I have no doubt that other noble Lords may wish to expand on that important matter and on many others.

I would like to spend a few moments in addressing what I believe could happen after the referendum if, as I passionately hope, the outcome is that the Scottish electorate vote no. The very fact of the referendum shines a light on our now complicated constitutional arrangements. I welcome the Prime Minister’s firm commitment not to discuss any further constitutional change ahead of the referendum, because that would only cloud the issue of separation—just what the separatists want. It is absolutely right that we should address the referendum question head-on, with no distraction. The question of whether or not to walk away from the rest of the United Kingdom will be one for the people who live and vote in Scotland, but what happens afterwards will not be. More devolution, or less, is a quite different matter. It is a matter for the whole United Kingdom, and that includes Wales and Northern Ireland as well as England. As others have pointed out, to resign from a club is for the individual member; to change the rules of the club is for all the members.

There seems to be an extraordinary mood among many in the Scottish political parties who oppose separation, who believe that they can simply agree on a shopping list of further powers for their Parliament and that such powers will be granted as of right. Scotland is going to have to abandon this mood and, I say gently, get real. Devolution is not just about Scotland; it affects everyone. A power devolved to one part of the United Kingdom creates imbalances elsewhere. Devolving a power is not about favours, still less about demands. It is the quality of government that matters, rather than the quantity. It is about responsibility and

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accountability, not just power. The present arrangements give the Scottish Government power to spend 60% of all government expenditure in Scotland—that is comparable with the German Länder and more than the Australian states and the Canadian provinces—but the responsibility is to raise only 20%. Such is the lack of accountability that has developed.

Scotland had for years devolved to it a 3p in the pound discretionary power to raise or lower income tax. It was not used. The SNP Administration even allowed it to lapse. Now there is a new Scotland Act, the 2012 Act, on the statute book for two years. It contains the biggest fiscal transfer in British history, which will soon give the Scottish Parliament the responsibility to raise 10p in the pound of its revenue locally with a corresponding cut in its block grant, and to raise more than that or less than that if it so chooses. Except on borrowing for capital expenditure, there is no upper limit to the use of that power. The Act even grants the power to invent and impose new taxes with the consent of the United Kingdom’s Parliament, but why did it give that power if it did not intend to allow it to be used? Therefore, Scotland now has the power to raise and spend what it needs to implement the policies that it judges necessary. It does not need to wrench the country out of the United Kingdom to achieve that. I find it very strange that that Scotland Act, and the authority that it brings to Edinburgh, has gone entirely unmentioned in the referendum debate so far.

However, all these changes bring anomalies elsewhere. In particular, I believe that the position of England needs to be considered. Already one can see the beginnings of a kind of identity crisis developing there. Two of the serious flaws of the Scotland Act 1998 can surely no longer be allowed to fester—namely, the West Lothian question and the Scottish spending block, in particular the Barnett surplus. You cannot solve the West Lothian question just by ignoring it. One option to solve it that I have suggested in the past is by setting up not a separate English Parliament but an English Grand Committee within the Westminster Parliament. It is not a perfect answer, I know, but it was made to work for Scotland for 100 years before devolution and, with a little imagination and possible adaptation, it could be made to work for England. There is also the work of the McKay commission, which offers a means of diminishing the democratically offensive aberrations of the present position. It is almost a year since the commission’s report appeared and I hope that my noble and learned friend will indicate when the Government intend to respond to it. On the Barnett surplus, everyone knows that the basis of the present distribution of funds is out of date. We know that that, too, created an imbalance that can be put right. A fair-minded Scotland would agree. We need an up-to-date measurement of relative need in Scotland and elsewhere in the United Kingdom.

The United Kingdom will never settle down again, comfortable in its own skin, unless these anomalies are ironed out. They need to be addressed in a positive and broadminded way. We need to look at them not from the point of view of the outstretched hands of devolved Administrations but from the point of view

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of the United Kingdom as a whole, and in its overall interests as well as those of all its parts, all of which should have a say.

I believe that we need a new approach. We need to refresh our understanding of what the United Kingdom is, its strengths and its core values. We need renewal. In short, what we need is a new unionism—a unionism that unites us, binds us and brings us together again and brings constitutional stability to the whole United Kingdom. We need to demonstrate its virtues and its fairness, not through ad hoc disbursements here or there but through a thorough and open reappraisal of our nation’s central strengths and how devolution fits into that. Above all, it is time to put the politics of grievance behind us. Others have suggested that a Joint Committee of both Houses should be set up after the referendum with broad terms of reference. I support that as one option, but we need the commitment of all the major political parties to work together in the national interest. We can turn the challenge of separation into the opportunity for reinvigoration. The break-up of Britain proposed in the referendum—this destructive, negative and irreversible process—does not need to happen. There is a positive alternative for Scotland and all of us within the United Kingdom. I beg to move.

11.58 am

Lord McConnell of Glenscorrodale (Lab): My Lords, I thank the noble Lord, Lord Lang of Monkton, for securing this debate and for the very comprehensive way in which he introduced it. He and I have disagreed on many occasions over the past 30 years but he has always been consistent and honourable in his contribution to the public debate in Scotland and throughout the UK, and we saw that approach again today.

Like the noble Lord, I welcome the noble Baroness, Lady Goldie, to the House, and I look forward to her maiden speech. We fought a hotly contested election in 2007, when she was leader of the Scottish Conservatives and I was leader of Scottish Labour. Both she and her predecessor—the late David McLetchie, who fought nobly for devolution over many years and was a very able Member of the Scottish Parliament and leader of the Scottish Conservatives—made a real contribution to the success of devolution in those early years. I am very pleased to see her join us in this Chamber.

I cast my first vote in 1979—a yes vote for what was then called the Scottish Assembly. I remember the occasion even now, and the disappointment that I felt as an 18 year-old in casting my first vote and not succeeding in achieving devolution for Scotland at that time. I have consistently believed all my adult life that a strong, devolved Parliament within the United Kingdom for Scotland—a Parliament that was autonomous in its decision-making, had real legislative powers and provided a voice for Scotland—not only dealt with the anomalies in our British system of government but provided the best way forward for Scotland and the United Kingdom in government and in action.

In September, Scotland will vote on a different proposition. Much as I disagree with the timing and many of the rules under which the vote is taking place,

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I hope that it is decisive and binding for this generation, and that we can move on. As I said yesterday at Questions, I really welcome yesterday’s intervention from Mark Carney, the Governor of the Bank of England. I hope that the way in which he laid out the facts and the analysis that he wished to present will be repeated by others over the coming months. We need to move from the divisive, rather negative debate that has taken place in Scotland over recent months and years to a really well informed, high-level debate over these six months that allows people to make the right choice, and then to make a choice that we can all believe in afterwards.

I could probably speak for seven hours about this topic, but today I have seven minutes and I will stick to two points in particular. First, the choice in September is not between an independent Scotland and an unreformed, old United Kingdom. It is a choice between an independent Scotland and a reformed United Kingdom, a United Kingdom that has not just devolution in Wales and Northern Ireland and not just major reforms to many of the cities of England, but a strong, devolved and autonomous Parliament in Scotland. Despite the disagreements and reservations that I have about the policy direction of the Parliament over the past six years or so—the way in which certain decisions have been made for reasons of political posturing, such as the disgraceful decision to return Megrahi to Libya—I still absolutely believe that devolution is not only right for Scotland but has been good for Scotland, and that devolution throughout the UK has been good for the UK.

As I always expected, devolution has allowed Scotland at times to go its own road in relation to policy and legislation. Where that has happened, yes, there have been differences between Scotland and the rest of the UK, but by and large those choices have resulted in improvements for the people of Scotland, in health, education and, particularly, the economy. When I took over as First Minister back in 2001, Scotland’s economic performance was lagging well behind the rest of the United Kingdom, and our employment position was much worse than the rest of the United Kingdom. Over a period of years, with the right policies in place, we made a difference to turn that situation around.

Secondly, the Parliament has been an opportunity for national leadership. On issues of sectarianism, for example, or on the important issue this year for Scotland of the Commonwealth Games, we have seen the country come together. The Parliament has provided a focus for people to come together in the national interest to change circumstances or to provide new opportunities.

Thirdly—this is particularly important—the Parliament in Scotland has provided an opportunity to be more creative, to try out new ideas to tackle long-term Scottish problems. I will give two examples. The first is the population decline that we experienced decade after decade. With the support of the Home Office and the Government back in the early part of the past decade, we took a different approach to in-migration. With that and other measures, we have actually seen a reversal of that long-term decline and, for many years now, year after year, an increase in Scotland’s population. The second example is in relation to the ban on

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smoking in public places. I know that many noble Lords were involved in that debate. The UK Government were all over the place on this issue but in Scotland we took a decision to go ahead. We have been proven to be right and that policy was then translated elsewhere in the UK. Without a Parliament in Scotland that decision would not have worked. Experiments in Scotland in the past, such as the poll tax, had not worked. That experiment did. It worked because the Parliament had the support of the people and an opportunity to show national leadership.

I think that it is very important that when we have this debate this year, we do not only address the long-term issues identified by the noble Lord, Lord Lang, today. There is also a need for the whole system of government in the UK—this Parliament in London and the other Parliaments and Assemblies of the UK—to debate what this new United Kingdom looks like, not just in relation to powers that move between different levels of government at different times, but in relation to how government is conducted here in London. What is the relationship between government at the centre and government in the devolved Assemblies and Parliaments? We must have a debate this year that ensures that people in Scotland are choosing between independence on the one side and that reformed, devolved United Kingdom, on the other, which provides real hope and the best of both worlds for Scotland.

12.06 pm

Lord Steel of Aikwood (LD): My Lords, it is a pleasure to follow the noble Lord, Lord McConnell, and I join him in thanking my noble friend Lord Lang for introducing this important debate. I too look forward to the maiden speech of my noble friend Lady Goldie. Having listened dispassionately to her trenchant and witty speeches from the Chair of the Scottish Parliament, I know that she will contribute greatly to our debates here.

In the three years that we have been discussing this matter, the debate has tended to focus on whether Scotland would be better or worse off as an independent country. I would argue that that is not the right question. If to separate off from the United Kingdom and become independent is the right thing to do, surely the cost of doing it is immaterial. The question is whether it is the right thing to do. I would argue that it certainly is not.

I do not know whether other noble Lords have received through their letterboxes this card that I have received, published by the Scottish Government. It is an advertisement for their White Paper, urging people to read it online or borrow it from their local library. It claims that Scotland’s Future—the title of paper—“sets out the facts” on independence. Of course it does nothing of the kind. It sets out, as my noble friend said, a series of wish lists. There is a big difference between a wish list and the actuality. We had an example of this a few weeks ago when the First Minister of Scotland indicated a wish to attend the funeral of Nelson Mandela. He even had his officials call the office of Prince Charles to see if he could get a lift on the plane. That was turned down, possibly on the grounds that he had not been invited—I do not know.

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The First Minister has been totally consistent in his view of his own role. In an editorial in the past week, the Scotsman asked:

“How could a Scottish Government visit to a Ryder Cup event in Chicago come to cost almost £470,000? And was it really necessary for First Minister Alex Salmond to stay in the upmarket, £1,200-a-night Peninsula Hotel? … Even making full allowance for various purposes of the visit, was it really essential that the First Minister had 17 bag-carriers, advisers and functionaries?”.

The answer to those questions is yes, it is. He has been utterly consistent. He is already behaving like the head of state of an independent country. Therefore we should not scoff at that. That is what the future holds for us if we go down that particular route.

Professor Gavin McCrone, who served so many Governments as Chief Economic Adviser, has said on the matter of the currency union proposed by the SNP:

“Scotland would have very little influence on monetary policy, and fiscal policy would, in effect, be overseen by the rest of the UK”.

In other words, the Government here and the Bank of England would continue to run the economic policy of Scotland. What sort of phantom independence is that?

When it comes to the European Union, if noble Lords have got as far as page 222 of the White Paper, this paragraph is very revealing. I quote it in full:

“We recognise that specific provisions will need to be included in the EU Treaties as part of the amendment process to ensure the principle of continuity of effect with respect to the terms and conditions of Scotland’s independent EU membership, including detailed considerations around current opt-outs, in particular the rebate, Eurozone, Justice and Home Affairs and the Schengen travel area”.

That is a long wish list, just in one paragraph of page 222, and the fact that the President of the Commission, the Prime Minister of Spain and others have said, “You’re not on”, is entirely unimportant in the Scottish Government’s view.

Noble Lords on these Benches know that my great guru in political life was Jo Grimond. This is what he wrote about the issue, long before we had any form of Scottish Parliament:

“I do not like the word devolution as it has come to be called. It implies that power rests at Westminster, from which centre some may be graciously devolved. I would rather begin by assuming that power should rest with the people who entrust it to their representatives to discharge the essential tasks of government. Once we accept that the Scots and the Welsh are nations, we must accord them parliaments which have all the normal powers of government, except for those that they delegate to the UK government or the EEC”.

That is the right way forward for all the UK political parties after the no vote. We should be concentrating on what needs to be reserved to retain the benefits of the union rather than what more should be devolved.

The big issue that so far has not been properly debated in Scotland is whether we really are content to jettison our whole history in the United Kingdom. We were the home of the enlightenment. We had four universities for our small population when England had only two. We contributed substantially to the growth of empire and Commonwealth through our explorers, missionaries and engineers. A few months ago, I had former President Kenneth Kaunda to lunch here in the dining room. He talked eloquently and

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passionately about his upbringing in a primary school founded by the Church of Scotland in what was then northern Rhodesia. That was part of our contribution to the Commonwealth as we know it today.

Do we in future retain the glory of our defence forces, which the noble Lord, Lord Lang, mentioned, and with which we fought two world wars? Do we really imagine that persons serving in our Royal Navy, Royal Air Force or regiments would wish to leave those and join some small, independent defence force in Scotland? Do we keep our participation in the British Broadcasting Corporation, or do we have our own SBC—no doubt, as it would have been last week, feeding us on a diet of Eddi Reader murdering Burns’s simple melodies?

The union, after the referendum, should use a reformed Upper House here to strengthen it and give it, if you like, a quasi-federal nature, recognising that nearly 10% of those living in Scotland were actually born elsewhere in the United Kingdom, and that nearly 1 million of those born in Scotland now live elsewhere. I am certain that in this debate we should strengthen and emphasise the glory of our interdependence, rather than the bogus independence on offer.

12.13 pm

Lord Cullen of Whitekirk (CB): My Lords, I, too, thank the noble Lord, Lord Lang, for instigating this debate and for speaking so well in it. I wish to address a specific subject: namely, the funding of research in the context of independence. I do so with an interest in this matter as chancellor of a Scottish university.

It is clear that research is an area in which Scotland punches above its weight. Recently, in the context of the debate about independence, the Scottish Science Advisory Council cited a report, the International Comparative Performance of Scotland’s Research Base, in support of the statement:

“Scotland’s science and research base is among the best in the world. It ranks first in the world, in terms of the rate its research papers are cited relative to GDP, and second in the world, in terms of impact”.

That standing relies on Scotland being part of the UK’s “common research area”. UK research councils play a major part in supporting research through the funding of researchers and providing their own facilities in different parts of the United Kingdom. They also have a central role in the strategic co-ordination of research across the UK.

The effect of Scotland becoming independent would, taken by itself, be that the research councils would have no responsibility for supporting research in Scotland. The relationship between Scotland and the rest of the UK would be an international one. The facilities of the research councils in each country—by that, I mean the fixed assets—would, it seems, belong to that country.

In their White Paper, the Scottish Government state that the best research operates across boundaries, and that it is clearly in the interests of both Scotland and the rest of the UK,

“to maintain a common research area including shared research councils, access to facilities and peer review”.

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They also say in the White Paper that after independence this Government—that is, the Scottish Government,

“will seek to continue the current arrangements for a common research area and funding through established UK Research Councils”.

They go on to say that, with independence, they would intend to negotiate with the Westminster Government what they call a “fair funding formula” for Scotland’s contribution to the funding of the research councils, adding:

“Providing a direct contribution from the Scottish Government budget in this way would create more transparency and clearer accountability around our investment, enabling Scottish interests to be better and more consistently reflected in the identification of Research Council priorities”.

So far, despite indications that something was coming, there has been no explanation from the Scottish Government as to how such an arrangement could be arrived at and what it would involve. It appears to be some form of “buying in” to the UK research councils. It would indeed be a novelty for them, for example, to fund pieces of research in another country—research which might or might not include research activity in the rest of the UK.

That prompts certain questions such as the following. What might be the terms that would be required of the Scottish Government for such an arrangement? What would need to be done to avoid Scottish researchers being placed at a disadvantage, especially in regard to cross-border collaboration, which is so important, and the use of facilities? Would it be feasible to maintain the present system of a single peer review for Scottish researchers? Would UK research councils remain responsible for co-ordinating research across the UK—that is, including Scotland? Would it be possible—and, if so, how—to establish and maintain a Scottish influence over the research agenda and priorities? Those questions I have posed from a Scottish point of view but most of them apply to the UK because we have a system in which there is a high degree of integration across the whole of the kingdom.

There can be no doubt that it is vital to protect and enhance the quality of research wherever it is done and, with that, the excellence of the research base. Science, technology and innovation are key drivers of competitiveness and economic success. That is why this subject is so important.

12.18 pm

Lord Forsyth of Drumlean (Con): My Lords, I congratulate my noble friend on his brilliant speech and on finally stirring up the media south of the border to talk about the importance of the union and the United Kingdom and of the decision that lies ahead.

It is a great pleasure to follow the noble and learned Lord, Lord Cullen, who has done such distinguished public service in Scotland. We will never forget the way in which he dealt with the sensitive issues following the Piper Alpha disaster and Dunblane. His words about research are well worth consideration and I may return to that if there is time.

I know that it is a cliché to say, “United we stand, divided we fall”, but it applies to companies, political parties and families, and it certainly applies to countries.

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That is what is at stake here. It is important that we remember how this union came about in 1707. The truth is that it was an arranged marriage. It was a deal, and the deal was that the English got defence and the Scots got money.

They needed money because of the disastrous experience of the Darien project, where Scotland tried to build its own empire, its own colonies, and failed. One-quarter of the money in circulation in Scotland was lost, along with thousands of lives, in that failed venture where Scotland and England tried to continue to compete with each other. The brilliance of the Act of Union was that a partnership was formed and we started to work together, rather than against each other. And, hey ho, after about 20 years of misery—because the Scottish economy was protectionist and we had to adjust to free trade—suddenly prosperity bloomed. We had the Age of Enlightenment. Scottish philosophers such as Adam Smith, Scottish engineers and Scottish architects were dominating not just the United Kingdom but the globe.

It is very important to remember the financial aspect. All that money, one-third of the GDP, had been lost on the Darien scheme. A new institution, the Royal Bank of Scotland, was formed on the back of that scheme. Today, 300 years later, the Royal Bank of Scotland, with £40 billion lost—nearly one-third of Scotland’s GDP—again was rescued by the union. With 300 years’ experience, what kind of madness is it that cannot look to the past or to the present and conclude that the United Kingdom needs Scotland and Scotland needs the United Kingdom?

I said that the other half of the deal was defence. What happens if Scotland leaves the United Kingdom? Where will our nuclear deterrent be? That is let alone the effect on Scotland of the loss of 10,000 jobs at Faslane, and the loss of future defence contracts for the shipyards, with a further loss of jobs and everything else. But what about the position of the United Kingdom, which would be forced in practice to give up its nuclear deterrent? Where would Scotland be if it was cut off from the intelligence sharing and resources that we have, when we can see the threat that we face from terrorism? What of the British Army and the other armed services? Are we to say, as Mr Salmond proclaims, to the Scots men and women who fought in Afghanistan and Iraq so bravely with the union flag on their shoulders, “You have got to choose between the British Army and Alex’s Dad’s Army. You have got to choose whether you wish to be, in effect, mercenaries working for a foreign country or go off on this half-baked idea which Salmond proposes”. It is insulting. The lesson of the union and the prosperity that came was that free trade and a global outlook—not an inward-looking outlook—are the keys to success.

My noble friend Lord Steel mentioned the role that Scots have played. I wrote down some names which ring down through history, including Watt, McAdam, Telford, Dunlop, Bell, Logie Baird, Watson-Watt, Fleming, Simpson, Livingstone and Carnegie. If we turn to politics, Gladstone, Bute, Rosebery, Bonar Law, MacDonald, Bannerman, Home, Brown and Blair were all Prime Ministers who came from Scotland.

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Scots have played a hugely dominant role in the United Kingdom. The idea that we are disenfranchised is the politics of nonsense.

Together, Scotland, England, Wales and Ireland have saved Europe three times. First, we saved it from Napoleon; secondly, from the Kaiser; and, thirdly, from the Nazis. When the bombs were falling in the East End in the Blitz and in Clydebank in Glasgow, we knew that we were one nation which was forged over the centuries. It is a disgrace that people should seek to break up that family tie, that bond, which has been created through our history and our common heritage, without any single indication of why it could be justified.

Can noble Lords imagine a United Kingdom with Scotland sheared away? It would be a rump. We would be an object of curiosity around the world. The prestige, the influence and the power that we still have is no longer with an empire, but we still have influence and relationships through the Commonwealth. We have institutions that are copied and admired around the world. Why should we let this constitutional Lothario enable the break-up of that union?

A week ago, Scots throughout the globe were celebrating the bard, Robert Burns. At the risk of boring the House, I remind them of his address to the Dumfries Volunteers:

“Be Britain still to Britain true,

Amang oursels united;

For never but by British hands

Maun British wrangs be righted!”

12.25 pm

Lord Browne of Ladyton (Lab): My Lords, I am extremely pleased to follow the noble Lord, Lord Forsyth of Drumlean, and I join in the thanks and congratulations to the noble Lord, Lord Lang of Monkton, on securing this important debate. In the debates on the Scotland Act last year, I rather unkindly suggested to the noble Lord, Lord Forsyth, that Scotland had given up listening to him a long time ago. With his characteristic quick wit he came back to me immediately and said that he was never aware that Scotland ever listened to him. I can say unequivocally and, I think, uncontradicted by those who have heard him today that we all hope that the people of Scotland—my fellow Scots—listen to what he had to say today.

On that subject, perhaps I may say how pleased I am that the noble Baroness, Lady Goldie, is in her place today and that she will contribute to this debate. I certainly know that the people of Scotland listen to her, and we all wait with eager anticipation for her contribution.

I intend to concentrate on one subject alone in these few minutes: the profound implications of the forthcoming Scottish independence referendum for the defence and security of the UK.

The United Kingdom presently enjoys a very high level of security. However, although we face no existential threat, in the words of the national security strategy:

“Today, Britain faces a different and more complex range of threats from a myriad of sources. Terrorism, cyber attack, unconventional attacks using chemical, nuclear or biological weapons, as well as large scale accidents or natural hazards”.

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Consequently, the task of our Armed Forces and our wider security machinery extends far beyond conventional defence. They discharge that remit to an extremely high level of competence. But that competence is built on partnerships—between us and international organisations such as NATO and the EU; between us and our allies, the US, Germany and France; and between Scotland and the rest of the UK. We can meet 21st century threats only with collective capabilities and shared approaches, and independence can only divide that capability, leaving us a little more disparate, but certainly leaving the people of Scotland more remote from the collaborative friendships that have served us so well for the past 70 years.

Let us consider intelligence as but one example. Scotland’s Deputy First Minister, Nicola Sturgeon, accepts that countering the threats facing Scotland would need,

“an independent domestic intelligence machinery”.

However, no part of the existing UK’s intelligence machinery can be disaggregated to an independent Scotland, and no effective intelligence organisation can be domestic. It would have to start from scratch and look outwards to threats that could emanate from anywhere in the world. What Scotland has already, which helps to provide security for its citizens and protect the prosperity of its businesses, could be replicated but not easily, certainly not quickly and not without considerable expense. As we wait for that, Scotland and the rest of the UK may be less effectively secure.

Further, while our relationships across the board with the US may often be misdescribed as “special”, we do have a unique defence and intelligence partnership of trust with the US. It allows us access to intelligence material without which we would be much hampered in containing the 21st century threats that we face. Although obviously secret and perhaps arguably requiring greater parliamentary scrutiny, it is essential to our security. It is improbable that an independent Scotland, particularly one intent on unilateral nuclear disarmament, would enjoy the same relationship. That also has implications, as the noble Lord, Lord Forsyth, said, for intelligence sharing with the so-called “Five Eyes” partners—Australia, Canada and New Zealand—NATO allies and, indeed, with the rest of the United Kingdom.

We must also recognise, as the noble Lord, Lord Forsyth, said, the very human dimension to this debate. Traditionally, Scotland has provided disproportionate numbers of soldiers and operatives to our defence and security forces. I think that I can say without fear of contradiction that no UK unit is without a Scottish presence—nor for that matter an English, Welsh, Irish or Commonwealth comrade. Thousands of Scots serve in our wider intelligence and security forces. Serving with distinction, they form an unbroken line back through Iraq, Afghanistan, countless peacekeeping missions and other crises, and two world wars, and deep into our history. This shared heritage and tradition is stronger than its individual components. The loss of them will not serve the interest of anyone in these islands, especially not the interests of the Scottish people.

Scots are everywhere in the defence architecture of NATO, where they enjoy considerable influence. They are accorded that influence because of their individual

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contribution but also because they come from the tradition, training background and experience of service in the UK Armed Forces. The armed forces of most European states of similar size to Scotland are restricted by their scale to home defence and exercises and to limited international involvement. Those few countries that are the exceptions established their military capability over years when defence spending was considerably higher, and that opportunity is gone for decades. Why would serving Scottish men and women choose to leave that tradition and join the armed forces of an independent Scotland when they could stay where they are and also enjoy the opportunity of promotion, advancement and the influence of being part of a UK larger force?

The inevitable loss of human and intelligence capability during the early decades of a separate Scotland, added to the loss of jobs in defence industries, the local impact of the removal of the Faslane naval base, the huge start-up costs for unique armed forces, the loss of access to intelligence and the loss of scale, will create very real risks to the people of Scotland and significant challenges for the rest of the United Kingdom. In the words of General Andrew Mackay, former GOC 2nd Division and commander of British forces in Afghanistan:

“It is easy to argue from within the comfort of a nearly 300-year-old Union that an independent Scotland would only require a small fighting force. It is not likely to be so comfortable after you have jettisoned your allies and you are on your own”.

12.32 pm

Lord Maclennan of Rogart (LD): I, too, thank my noble friend Lord Lang for initiating this important debate. In following the noble Lord, Lord Browne, it occurred to me that Scotland has played a very significant role in the United Kingdom. He spoke entirely about defence. I shall not confine myself to a single subject but I do recall that, at the end of the First World War, Field Marshal Haig delivered his war memoirs to the home of Richard Haldane with a note on the front page saying, “To the man who made victory possible”. Haldane was a Scot, educated in Germany and Scotland, who had restructured the British Army when he was in Asquith’s Government. That seems to me to be symptomatic of the role that has been played by so many Scots in constructing the civic society which has blossomed since the Act of Union. The list of Scottish names mentioned by my noble friend Lord Forsyth was highly indicative of that contribution. I think he mentioned Logie Baird, but there are others in television, such as John Reith, the first director-general of the BBC. We have had—and have—in this House Scottish Members who have played a significant role in representing Britain. I think of the noble Lord, Lord Kerr of Kinlochard, who was a Permanent Under-Secretary at the Foreign Office and secretary-general of the Convention on the Future of Europe.

The Scots have become integral to the United Kingdom and have helped to make it Great Britain. However, it seems to me that we need to recognise that the constitutional arrangements for the United Kingdom are not ideal. It was certainly sensible to devolve power to the Scottish Parliament, and I remember very well the discussions that I held with Robin Cook on the way to take that forward. However, we now

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need an overview of the structures of the United Kingdom. We need to recognise that Wales, Northern Ireland and England must have more responsive and less centralised government. An important decision that should be taken, before the outcome of the referendum, is to establish a convention on the future of the constitutional arrangements of the United Kingdom. It has to be accepted that independence is an illusion. No country in the global society in which we participate is totally independent, and the more we contract our relations with external powers, the more we shall find that we lose influence. Decentralisation to levels at which decisions can be effectively taken should certainly be part of the remit of this convention that I am advocating.

There is some evidence that there is a strong sense in England in particular that government is too centralised. I am not suggesting that we should carve it up into economic regions, because the history and identity of the different parts of the country of England seem not to be reflected in the rather artificial regions which were created some years ago. None the less, I hope that that step will be taken before the referendum in order to enable the Scots in particular, but others as well, to recognise that the choice that faces this country is not between the status quo and independence.

The fact of the matter is that our constitution has been developed gradually, change by change. The time has now come for our citizens to play a considerable part in the discussion about how we can recognise the limitations of our national power, recognise the strength of what we can do at national level and formulate—not in a short timescale but in open discussion—how we can improve our constitution so that the public can, once again, engage and sense our democracy is working and that the leaders of our democracy reflect the views of the electors.

12.39 pm

Lord MacGregor of Pulham Market (Con): My Lords, I, too, thank my noble friend Lord Lang for an excellent introduction to this debate. In fact, he said so much of what I had wanted to say that I hope not to repeat it, but it was an excellent contribution.

I intend to be as brief as I can be on the issues and to consider them under three headings. The first is the economic implications. The Select Committee on Economic Affairs in the House of Lords produced a report on The Economic Implications for the United Kingdom of Scottish Independence in April 2013. We did so because we believed then that all the issues of an economic nature were not being put before the British people, including the Scots. We believed that voters in Scotland deserved the best evidence-based assessment of all the economic issues before they exercised their votes.

Since then, we have come a long way. We have had various government reports on various economic issues and, of course, we have had the Scottish Government’s paper, Scotland’s Future. In all that paper’s 648 pages, it lists many of the goodies that could come Scotland’s way and makes many commitments and promises, but it gives no price tag. It reminds me of the Labour Party’s 1987 election manifesto where it made many

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spending commitments—until we added up the bill for the taxpayer. I happened to be Chief Secretary to the Treasury at the time, so I remember it very well. As a consequence, Labour lost the election heavily. I say that by way of comment on the Scottish Government’s paper, because it does not address many of the real issues but simply says, “This will be so and that will be so”, with no argument.

On the economy, we are a still a long way from getting the issues properly assessed by the public at large. There is the big issue of the loss of access to the single market, which we went into in great detail. The Barnett formula will no longer apply, which I welcome because I have long thought that it is well out of date—it was meant to be temporary anyway and should have gone a long time ago. However, it will be compensated for as far as Scotland is concerned by the revenue from North Sea oil—that was one of the analyses that we made. On the other hand, the revenue from North Sea oil is highly volatile and is not permanent, so it cannot be depended on in the same way as Scotland originally depended on the Barnett formula. The costs of financial regulation, regulators and many other separate institutions will have to be taken into account. The sharing of the UK’s public debt, including PFI, public sector pensions and many other liabilities is crucial. I was struck by one figure that we came across which showed that the total support extended to RBS during the financial and economic crisis was the equivalent of 211% of Scotland’s GDP. Scotland simply could not sustain that sort of support and one questions whether some of the banks would have to move their headquarters elsewhere because of that.

Defence is a particularly important issue—I shall leave it to others to talk about aspects of that—because it has huge implications for the rest of the UK’s citizens and taxpayers. The cost to the rest of the UK of the proposals from Scotland on defence could be huge, and that will have to be a major issue in any negotiations that take place.

I turn to the EU. At first, Scotland indicated that it would join the eurozone and then said that it would not. It then indicated that there would be no technical problems with being a member of the EU and now it acknowledges that membership will have to be renegotiated. In particular, as I understand it, one of the commitments required of new members is that they will have to join the eurozone, so there is a big issue there. Of course, there is absolutely no guarantee that Scotland’s membership will be accepted, because a single vote from any other member state could exercise a veto. There will be many who will be very worried about the implications for them, so that is a big issue for Scottish voters.

The proposal for Scotland to use sterling as its currency and all the issues that that involves—lender of last resort and all the Bank of England issues—have been widely exposed overnight by the new Governor of the Bank of England’s excellent speech in Scotland. It means that I do not have to comment too much on it, but what he has said is highly timely and salutary, and will certainly require a lot of further follow-up.

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One concern that our Select Committee had was that these issues were not being put fully before the British people—as I said a moment ago. However, we wanted to go further, so that not just the issues were put forward but the red lines of negotiation were established before the vote took place. That is fundamentally important, because those red lines and some of the issues that I have talked about—defence implications, currency and all the rest—should spelt out beforehand so that voters understand what will follow in the negotiations. It is no good just waiting and saying that these are all issues for the negotiations because we do not know what the outcome of the negotiations will be, and I think that the outcome in many cases will not exactly be very popular to a Scottish voter at the end of the day. It is very important that the red lines are established at the beginning and, yesterday, the governor made a very good start.

So much for the economic implications; I want to say a word about the political implications. Ironically, for the Conservative Party in the rest of the UK—if I have to put it that way—we benefit from a vote for yes, because we have only one single Scottish MP in the House of Commons. None the less, a vote for yes is an outcome that I profoundly hope will not happen. Of the political implications I want to mention just one. I have seen the Answer given to the yesterday’s Oral Question relating to the position of Scottish MPs in Westminster if there is a yes vote and whether they would still be eligible to sit in this Parliament after date of Scottish independence in 2016. Obviously, that could happen, because the general election will be in 2015, the Scottish vote will precede that and then, in 2016, if it is a yes vote, there will be an independent Scotland. It is no good to say, “Just wait and see what happens”. The Advocate-General for Scotland replied yesterday that it would be a matter for negotiation. I do not think that it is; it is absolutely clear that we cannot have Scottish MPs with no constituencies, no constituency interests and no wider interests in the Westminster Parliament if Scotland votes yes and becomes independent. That should be established and worked out now and not left to a negotiation.

Finally, on the wider issues, I am a Scot, born, brought up and educated in Scotland; I have many Scottish ties still. I have of course been an MP for an English constituency for many years. I often thought that the two reasons why I was selected for adoption there were, first, that I had a lovely wife and, secondly, that there were many Scots in Norfolk, many of farming backgrounds. Due to this, I profoundly believe that, although I do not have a vote, all parts of the United Kingdom will continue to gain as a result of being part of the wider kingdom. One key implication of Scotland leaving the UK is that all parts of the United Kingdom, not just Scotland, would be the poorer, and that is why I profoundly hope that it will not happen.

12.47 pm

Lord Hope of Craighead (CB): My Lords, I, too, pay tribute to the noble Lord, Lord Lang, for initiating this debate. He has done a valuable service to the House by raising the profile of this issue at a critical time in our national affairs.

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I would like to say just a few words about our legal systems and what the Treaty of Union, to which the noble Lord, Lord Forsyth, referred, had to say about them. In 1606, King James I and VI said of the English system, perhaps rather to the surprise of the Scots, of which he was one, that it was the best law in all the world. His vision was for the English law system to be the system throughout Great Britain. One hundred years later, that was not how the commissioners saw matters when the Treaty of Union was formulated. What was provided there, with great care, was that Scotland would be able to keep its own legal system, which by then had developed, in all time coming. In Article XIX, it was provided that no causes in Scotland were to be heard in any of the English courts sitting in Westminster Hall. At first sight, the idea was that the two systems would be kept entirely separate, standing on their own two feet. The two would never meet: one country, two systems.

However, that is not how the union worked in practice, and it is typical of what happened in so many aspects of the way in which the union has worked. It did not take very long for canny Scots lawyers to spot that the House of Lords did not sit in Westminster Hall, and that led them to bringing appeals before this House. In 1709, the House held that it had jurisdiction to hear appeals from Scotland. That gave rise to an increasingly close association between the English and Scottish legal systems which has lasted for more than 300 years—woven into the fabric, as the noble Lord, Lord Lang, put it. That is reflected today by the fact that the United Kingdom Supreme Court hears appeals from all parts of the United Kingdom, as this House did in this very Chamber for so many years before the Supreme Court was created, and by the fact that the court now has justices from Scotland and Northern Ireland among its membership.

There is a very important question as to what is to happen in Scotland if the referendum were to result in a vote for separation. Typically, the White Paper does not say a word about that, but I am not going to say a word about it either, because our concentration today is on the United Kingdom, not what is to happen in Scotland alone. For that purpose, I want to say just a little more about how that has developed since 1707.

It took a little time before the Scots judges began to sit in this House—the first was in 1867, as it happened—but a few years later, the Appellate Jurisdiction Act was passed, which provided for permanent Lords of Appeal in Ordinary and, more or less, since then there have always been two Scots Law Lords, and now two Scots Justices of the Supreme Court. The total has reached 21 over that period, but merely to mention the figure is only part of the story. It has always been understood that the Scots Law Lords could sit on appeals from other parts of the United Kingdom—as, indeed, those from England and Northern Ireland could on Scots appeals—and this has been greatly to the advantage of all three jurisdictions.

It could perhaps be said that the Scots have pulled somewhat above their weight in contributing to the development of law elsewhere in United Kingdom. One has only to mention the name of Lord Reid, who sat as a Law Lord in this House for 26 years, from

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1948 to 1975, the longest serving Law Lord of them all, to make the point. It is not only his long service that marks him out as one of the outstanding lawyers of his generation: the quality of his judgments, the perception of the issues that they raised and their clarity were all outstanding, and are cited every day in the courts up and down this country. There is no time to go over the contribution that others have made. My part is perhaps enshrined in the fact that I am shown in a portrait in Committee Room 1 delivering the House of Lords’ last judgment in an English appeal. Earlier this month, I was referred to in a case which came from Northern Ireland and, just yesterday evening, a decision by Lord Reid in an English case was referred to in the Supreme Court. The fact is that our contributions have been built into the entire system as part of its fabric.

This brings me to the consequences for the United Kingdom if that tradition is broken. The process of cross-fertilisation of ideas across the border will cease. The tendency to prefer principle to precedent, which is one of the characteristics of the Scottish approach, is also at risk of being lost. So, too, will be the breadth of experience which has always marked Scots judges out in comparison with the specialists from England. Of course, the loss of the two Scots justices, if and when this has to happen, can be made good, but the breadth of vision which comes from having what is at present a court for the entire United Kingdom and draws its ideas from a broad canvas, cannot.

As I said at the start, it was not anticipated at the outset of the union that these two legal systems should grow together as they have, but that is what has happened, as it has been appreciated on both sides of the border that their systems draw strength from working together with each other while respecting their differences, rather than working separately. Both sides have a lot to lose if that relationship is broken—jettisoned, as the noble Lord, Lord Steel, said earlier—as it is bound to be if the right of appeal is to be ended and Scottish justices are no longer present. I, for one, would very much regret that development.

Earl Attlee (Con): My Lords, your Lordships are doing extraordinarily well at keeping to time, but timings are quite tight. If noble Lords speak when the indicator shows seven, they are in the eighth minute. If too many noble Lords do that, we will run out of time.

12.54 pm

Lord Lamont of Lerwick (Con): My Lords, I, too, congratulate my noble friend Lord Lang on the brilliant speech with which he introduced this debate. It is a pleasure to follow the noble and learned Lord, Lord Hope, who, if I may say so, always brings a very Scottish sense of wisdom to our debates. It would be a tragedy if he were removed from this House because of independence.

This is the first time that I have ever dared intervene on the subject of independence for Scotland. As a Scot who has lived in England for a long time, I have always felt that one was not very welcome intervening in the debate. Unfortunately, I do not have my father's

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Glasgow accent, but I have always said that it is not necessary to sound like Rob Roy to prove one is a Scotsman.

Scottish independence would, I believe, diminish what remains of the UK in the eyes of the world. It would be the end of Britain. It is often forgotten that the name Britain came into existence only after the Act of Union, and the name would make no sense if the northern part of this island were to be removed. If Scotland became independent, people around the world would wonder what had gone wrong, what had happened. It would be just as if Illinois or Florida broke away from the United States—people would feel that the standing of the United States, its viability, was somehow diminished.

The departure of Scotland would diminish us internationally. It would have an effect on our standing in international institutions where voting power, as in the EU, is often determined by population. For example, we would have fewer votes in the Council of Ministers and fewer seats in the European Parliament. Sir John Major has said that Britain might well lose its seat on the Security Council of the UN. I do not know if that is right, but I notice that the Scottish Government's White Paper on independence states that an independent Scotland would support the United Kingdom in trying to retain its seat on the UN Security Council? How would it do that? Where are the diplomats? It has no embassies. It does not have a history of independent diplomacy. How would a tiny country be able to help a diminished, smaller UK? If that is a real problem, it is a perfect example of how we are better off together.

There is a curious thing about how Mr Salmond presents independence. He presents it as a situation in which nothing will change: the Queen will be there, the Scottish regiments will be there, the pound will be there, the Bank of England will be there. It was Lampedusa, the Italian writer, who said that things have to change in order to remain the same. For Mr Salmond, things have to stay the same in order to change.

Boris Johnson has referred to a cat’s cradle of legal and political ties. I am sure that there are many things that have not been thought of that will have to be unscrambled. I am sure that the issue of citizenship will throw up many problems. Let us take one. At present, British citizens living outside the UK cannot pass on citizenship for more than one generation, so children of UK citizens living in Scotland, if there is an independent Scotland, will be UK citizens, but not the children of their children. For many people, that could pose family problems. Let us take another question: civil servants. In many countries, the state reserves certain posts in the Civil Service to its own nationals. Will that apply in Scotland, with no UK citizens being able to work in the Scottish Civil Service; indeed, will it apply in the UK? What about the Foreign and Commonwealth Office? What about the Ministry of Defence?

Then there is the issue which the Governor of the Bank of England touched on yesterday: the question of the currency. Mr Salmond believes that in exchange for assuming part of the debt of the United Kingdom,

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he can have part ownership of the Bank of England. If Scotland is going to have its own fiscal system able to decide the balance between spending, borrowing and taxation within its own boundaries and determines its own deficit, that will have an effect on the rest of the UK—on the Bank of England, on monetary policy. If Scotland runs an excessive deficit—let us say, 10% of its GDP—that will have an effect on interest rates for the rest of the United Kingdom. So there would have to be some agreed fiscal limit on borrowing by an independent Scotland. There would have to be some arrangement—like that, dare I say it, between Germany and Greece and the peripheral countries of the eurozone. I am not saying that Britain would treat Scotland as Germany has treated Greece, but there would have to be some agreement.

The words sovereign, the King, sovereign, the coinage and sovereignty, the concept of independence, are all intertwined. Independence without your own currency is a very constrained form of independence. Mr Salmond wants to have a Prudential Regulation Authority that would apply throughout the UK and an independent Scotland, but public opinion will ask why the Bank of England should stand behind Scottish banks. It was expensive enough bailing out RBS when it was a British bank. Are we really going to be expected to bail it out if it gets into trouble as a Scottish bank?

Then we have had the issue of UK debt. The Treasury was forced to say that it would guarantee all existing debt, right up to the point of Scottish independence. Mr Salmond saw that as an own goal. It may have helped him a little in the argument, but the Treasury was forced to make that announcement because of the markets. The markets were nervous about an independent Scotland. There can be no doubt that an independent Scotland would have to pay a higher rate for borrowing simply because it has no track record and there would be uncertainty about what sort of fiscal policy it would follow.

Why is there all this desire to separate? It seems very much to be based on oil. One section of the country thinks it could make itself better off overnight, simply by grabbing the oil—but God put the oil under the North Sea, not Alex Salmond. There is a parallel with Shetland, where I come from. Shetland was not part of Scotland at the time of the Battle of Bannockburn. Shetland could claim part of the oil; Shetland could go independent. I am not saying it will, but how would Scottish nationalists regard that? They would regard it as destructive and selfish. Are we Scots really so different from the English? Well, of course we are—but not so different and not so much better that we need to have a Government of our own. We have been together for so long, achieved so much together. Ripping the blue out of the Union Jack would be a wretched business which would do nobody any good at all.

1.02 pm

Baroness Liddell of Coatdyke (Lab): My Lords, I too congratulate the noble Lord, Lord Lang, on achieving this debate, and on his excellent introductory speech.

Your Lordships’ House may not be aware that the noble Lord, Lord Lang, has already been under attack for having the audacity to mention the First World

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War. He has been under attack from a Mr Keith Brown, a member of the Scottish National Party and a Member of the Scottish Parliament. Frankly, that kind of attitude shames me as a Scot. Like many members of your Lordships’ House, I lost someone in the First World War. I lost my great uncle. I come from a tradition that has always gone out to help others. That is what the Scots are famous for. It is a sign of the contempt with which those of us who believe in the United Kingdom as a family are treated that such attacks are made on the noble Lord, Lord Lang.

I want to take up some of the themes of the noble Lord, Lord Lamont. Like him, I thought the remarks of the Governor of the Bank of England yesterday were excellent. It is quite amusing—this came on the day after Mr Alex Salmond made a remark that England and Scotland will be great pals. The first thing that frightened me about that was the echo of the negotiations in the run-up to setting the level of the euro. I was there. A lot of male bonding went on. The night before the big debate, there was a football match on television. All the Finance Ministers disappeared off to watch the football match, so the sort of thing I was hearing was, “So-and-so was a good chap so he’ll stick to his word on the euro”, and “That guy over there, he was a very nice chap, very convivial in the bar—he will stick to his word on the euro”. I am sorry but that is not good enough. If you are going to enter into a currency union, we now know it is not enough to trust the word of others. You need a firm agreement. We were helped at that time by the five economic tests with which Britain judged whether we should enter the euro. We have to have a similar set of tests, set by the Treasury and the Bank, on what will be right for the rest of the United Kingdom. Do not let us forget—if Scotland votes yes, Scotland becomes a foreign country.

The other aspect is that if you are a best pal or you have a best pal, best pals know that family comes first. The family of the rest of the United Kingdom will be the moral and legal obligation of the Government of the rest of the United Kingdom. We are bandying about that phrase—United Kingdom. It will be pointless if there is a yes vote, because one part of the kingdom will have gone. We will have to find other terminology for the rest of the United Kingdom.

Fiscal rectitude will be absolutely essential in a currency union. You have to be absolutely confident that those in charge of that Government are fiscally correct. The noble Lord, Lord Steel, referred to the First Minister’s visit regarding the Ryder Cup. I applaud the activities to get the Ryder Cup. As noble Lords know, I have a great interest in tourism. It is a major Scottish industry and one of Britain’s major industries. Working together we have made it a major export earner. How on earth anyone other than Paris Hilton could have spent either £51,000 or £54,000 on accommodation for one person at the Ryder Cup, I fail to understand. What angers me also—as a Scot, because we always look after the bawbees—is Mr Salmond’s response that he was not interested in the fripperies; that our concern about whether it is £51,000 or £54,000 is “frippery”. That is twice the average wage. That is the kind of sweeping gesture—dismissing coherent argument—that has so debased the nature of this debate.

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Fiscal rectitude will also mean keeping within public spending constraints, and because of those constraints and the commitment to a 3p reduction in corporation tax, revenues for expenditure elsewhere will necessarily be reduced. One area that significantly worries me, and my noble friend Lord Browne referred to it in relation to defence and the security of this country, is that our counterterrorism activity in Scotland will of necessity be reduced. We will not have access to the same degree of intelligence as at the moment, and we will have porous borders unless a huge chunk of public expenditure from the new Scottish Government is going to go to making our borders secure. That is a huge task. The borderland between Scotland and England is not Waziristan. You can cross it on a Sunday afternoon walk. It will be extremely difficult to secure those borders. There is an implication for the security of the rest of the United Kingdom if you have loose borders and a big land mass. We are a third of the land mass of the United Kingdom. It really increases the risk to great cities such as London.

I am also very conscious of the fact that the financial services sector is a crucial part of the Scottish economy. We have been slightly blinded because of the bad behaviour of the banks; we have forgotten that the other parts of the financial services industry are famous for their probity and are a significant part of the economy. They are all mobile—they can move in the blink of an eye. Why would they wish to remain in a small country when, as major players, they can operate elsewhere?

Perhaps it is because I am the first woman to speak in this debate that when I look at the implications for the United Kingdom, I immediately think of divorce. Divorce is never easy for any party. It is often the weaker party who comes out of it worse. We are not talking about independence, which sounds a nice positive thing. We are talking about separation and we are talking about divorce. That is probably why so many women in Scotland are increasingly in favour of the union.

I will end my remarks there because I know your Lordships are very anxious to hear the noble Baroness, Lady Goldie address the House. She will be an asset to the House and I look forward to hearing her remarks.

1.09 pm

Baroness Goldie (Con): My Lords, it is a privilege to make my maiden speech in this Chamber on such an important subject as the United Kingdom and Scotland’s continuing place within it. By way of preface, may I take this opportunity to thank all the staff here for their unfailing help and courtesy in guiding this rookie through the hoops of admission and introduction? I should also like to thank your Lordships for the warmth of the welcome extended to me, not only today, and most recently by the noble Baroness, Lady Liddell, but also when my noble friends Lord Sanderson and Lord Selkirk introduced me to the Chamber.

I am Scottish born and bred. I grew up in the Renfrewshire countryside, which in many ways is very similar to the Ayrshire countryside of Robert Burns, whose birth we have just been celebrating. As he encountered the merle, the mavis and the corbie, so did I. When Burns wrote:

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“A Rose-bud by my early walk,Adown a corn-enclosed bawk,Sae gently bent its thorny stalk,All on a dewy morning”,

I knew the scent of that wild rose. I had witnessed such mornings. I had a great sense of pride in being Scottish. The highlight of my childhood week was listening to Jimmy Shand and his band on the radio, learning the old Scottish tunes and jigging round the kitchen floor.

In primary school, Scottish history was an important part of our studies, but there was also a wider arena of which I was aware and could not be unaware. I grew up in the very recent aftermath of the Second World War. My father was a Glasgow Highlander in the First World War. I knew from an early age that there was a United Kingdom, that Scotland was a part of it, that these were natural concomitants and that there was nothing incompatible with that partnership and also being proudly Scottish. That perception was reinforced when I went to an excellent secondary school, Greenock Academy. There I was to learn in detail about the history of the United Kingdom: how the Act of Union came about—and, importantly, as my noble friend Lord Forsyth said, why it came about—and what had been possible down the ages within that unique partnership. Going to school in Greenock was also to see at first hand the significance of the Firth of Clyde as a port and maritime route, an eye to the rest of the world.

Being at school in Greenock was also to understand the strategic importance of that area for the Royal Navy in time of war. Of course, in modern times the nuclear submarine base at Faslane on the Clyde has been a British defence facility of major strategic significance. After school, I was to study law and practise as a solicitor in Glasgow for many years before entering the Scottish Parliament in 1999, where I currently serve as an MSP. This autobiographical meander is merely to illustrate that from childhood through my formative years to adulthood, Scottishness and Britishness have been in my very fibre as innate and inalienable conditions.

Just as I feel part of a family within this House, I feel part of a family of nations: proud nations which constitute the United Kingdom, our United Kingdom. When I look at how together we overcame Nazism, how we fought and continue to fight against terrorism, how we exercise global influence through NATO, through being a permanent member of the United Nations Security Council, through being members of the G7 and G8 groups of countries, and how together we faced global recession and the failure of banks, I see a partnership which is relevant, which works and which is a success.

Threaded all throughout the fabric of that United Kingdom are the people and families of our individual nations. What a strength these threads give to that fabric. The famous words of the poet John Donne:

“No man is an island, entire of itself; Every man is a piece of the continent, a part of the main”,

could refer equally well to the United Kingdom. We are not defined by some diverse geographical blobs on a map. We are proud of our individual nations, and

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rightly so, but it is what we constitute together—this union—which is so unique and so powerful. We reach across boundaries; we are not divided by borders. To remove any part of that structure diminishes the rest. It puts the balance out of kilter, so that those who remain are affected every bit as much as those who leave. That constitutional dismemberment imperils the whole United Kingdom.

If I have a plea to your Lordships, it is this. Do not think that the independence referendum in September is Scotland’s business alone. It is not. The whole of the United Kingdom is affected by this debate. Wherever we live within the United Kingdom, if, like me, you value it, then we all need to step up to the plate to keep it. I and my fellow unionists in Scotland need the support of our fellow unionists in England, Wales and Northern Ireland. We are better together; now is the time to stand together.

1.15 pm

Lord Hennessy of Nympsfield (CB): My Lords, it is a great honour to be the first to congratulate the noble Baroness, Lady Goldie, on her fine maiden speech. Her arrival in your Lordships’ House is as timely as it is welcome because she has been at the epicentre of the questions before us today. The noble Baroness’s wisdom, which we have already felt today, will continue to be a boon to this House and so will her company, for she is hugely liked and admired across the political spectrum for her gift for friendship and for her generosity of spirit.

As a non-Scot, and the first non-Scot to speak in this debate, it is hard to know how to declare one’s interests in a debate of this kind. In my case, they come in three varieties. First, I had one Scottish grandmother and, since last year, have close family living in Scotland, in the Northern Isles. Secondly, to adapt the opening line of General de Gaulle’s memoirs, I have always had “a certain idea” of Scotland. More than that, I have had a love of Scotland since my first visit, aged 10, in 1957 when we went from London by car to the Isle of Skye via Edinburgh and Inverness on the way up and the Clyde and Kilmarnock, where the family lived, on the way back. The third interest is difficult to declare because, as many of your Lordships will understand, male Brits of my age were brought up not to speak of emotions in public—quite the reverse. However, I cannot conceive of my country, the United Kingdom, without Scotland as part of it. My fear is that without the Scottish connection England will become a shrivelled nation, psychologically as well as geographically, and more inward looking after the equivalent of a family break-up.

Just think of the benefits that, over the past three centuries, have poured over the border from the family in the north to the family in the south, enhancing the lives of both family branches. We all have our own list—we have had several today—but here is mine in headline form. There are the continuing fruits of the Scottish Enlightenment, which we feel every day in the prowess of Scotland’s universities. I should declare an interest in that the noble and learned Lord, Lord Hope, gave me an honorary doctorate at the University of Strathclyde a few years ago, which I wear with pride. There is Scotland’s industry and flair for invention;

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its gifts for public, judicial and military service; its writers and actors; and the variety, spice and bite that Scotland has brought to our Parliament and our political philosophies. That is quite enough emotion from me— probably too much—save to say that if Scotland separates, whatever the position in international law, I shall always regard it in my mind as part of my country until the day I depart for what will still, I hope, be a UK enclave in the sky.

Perhaps I may concentrate today on one aspect of what I regard as the regrettable decision taken by the Cabinet at the turn of 2012-13 that Whitehall shall not engage in any contingency planning for Scottish separation. The future of the Royal Navy’s Clyde submarine base in such an eventuality is of particular concern to me, as I am a firm believer in the need for the United Kingdom—or heaven forbid, the “remainder of the UK”, as Whitehall calls it—to sustain a nuclear weapons capacity through to the mid-21st-century as the ultimate protection against a highly unlikely but potentially utterly catastrophic contingency we might face in an unpredictable world. Sir Kevin Tebbit, a former Permanent Secretary at the Ministry of Defence, has accurately depicted the UK as the world’s most reluctant nuclear power. It is to our credit, however, that we go through a great and often anguished debate each time we face an equipment or an upgrade decision. But were we ever to give up our nuclear weapons, it should be after we have had the fullest and best informed national conversation possible, not on a side wind swirling out of the Scottish question.

Having visited Faslane and Coulport, I have some idea of the magnitude of any attempt to recreate them in England or Wales in both logistical and financial terms. My research colleague, Dr James Jinks, has furnished me with the original February 1963 study, now declassified in the National Archives at Kew, of possible bases for the Polaris force. This was the list: Devonport, Falmouth, Milford Haven, Loch Ryan, Gare Loch, Loch Alsh, Fort William, Invergordon, Rosyth and Portland. The Gare Loch was chosen for good reasons: it has deep water in which to dive quickly down the Firth of Clyde off Arran, and three possible exits en route to the patrol area—through the North Channel straight into the Atlantic, up the north-west coast of Scotland and out through the Minches, or south down the Irish Sea and through the Western Approaches.

Should an independent Scotland strive to remove the SSBN and SSN forces from the Clyde, which the SNP is pledged to do, there are now only two possible sites for relocation: Falmouth and Milford Haven. Can you imagine the planning process and the construction efforts required, let alone the cost? We may be able to take a stab at imagining these things, but the Ministry of Defence cannot under Cabinet orders. The solution, in my judgment, would be a sovereign base arrangement for Faslane and Coulport on the Cyprus model, but that idea is, I fear, regarded with horror in both Downing Street and the First Minister’s residence. I profoundly hope that the question does not arise.

I shall finish with a thought about the union post a referendum decision in Scotland not to separate. Although the union will be intact for now, there will remain the

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danger of a creeping estrangement between Scotland and England, especially if the SNP forms the next post-referendum Government. There could well be a continuing, perpetual drizzle of complaint about Westminster and Whitehall which would induce still more resentment south of the border and poison any conversations about further devolution. If the post-referendum relationship is one of surliness and sourness, we shall all be the poorer. I was very struck by the words of the noble Lord, Lord Lang, about learning to do things once more as a union. Post-September, if we are still together, it will be necessary to sing a song of the benefits of union. The union quite simply is a 300 year-old international success story. It has done great things for our people and for the world in peace and war. It can still do more, much more.

1.21 pm

The Duke of Montrose (Con): My Lords, it is a great pleasure to follow the noble Lord, Lord Hennessy and, if he is the first Englishman to speak, to hear him nailing his Scottish qualifications so boldly to the mast. The House owes a debt of gratitude to my noble friend Lord Lang for securing a debate on this broad topic. I also thank my noble friend Lord MacGregor and his committee for the work they did and the report they produced.

The economy is the key area and the one in Scotland on which the issue is likely finally to be settled. A small indication of the problems that might arise for the rest of the UK can be speculated on from the fact that on independence, the rules of golf in England might be temporarily suspended. The authority of the Royal and Ancient Golf Club of St Andrews operates in most countries only if they already have their own national organisation with which it can be affiliated.

As we argue with each other in the field of politics, we allocate meaning to words and concepts that are narrower than their original meaning. In this case, it really does not have to follow that a Scottish nationalist is one who is looking for separation and independence. Surely the first feature of a nationalist is that they treasure the assets their country derives from the past and look to the best outcomes for the future. If the rationale proposed is only looking for a major break with what has gone before, then that is the role of an insurgent or a revolutionary rather than a nationalist. Perhaps those who adopt that label should consider which category they wish to belong to. In Scotland, there is a lot of rhetoric about the first concept, but much of the effort is to achieve the second.

I come from a family tradition that goes back at least 900 years in Scotland, and we have been intimately involved in her development. Whatever choice the Scottish people make, I for one will remain with Scotland. A fundamental element of that choice centres on deciding whether a secure future is assured by what has been characterised in the title of a well known play as the “black black oil” and has been regarded by many as Scotland’s black gold, or whether we should shape our future on what is on offer from Scotland’s grey gold: the brain power and inventiveness of her people, which was so well illustrated by my noble friend Lord Forsyth.

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When we come to agriculture—I must declare an interest as a farmer in Scotland—there are numerous areas where we find differences. As the noble Lord, Lord McConnell, mentioned, Scotland has gone down a different road from time to time. Just the other day, we had a visit from my right honourable friend the Foreign Secretary, who said how much Scottish agriculture benefits from participation in the common agricultural policy as part of the United Kingdom. What nobody seems to have told him was that at that moment the Scottish farming industry was seething. The fact was that EU moneys had been received under a scheme whose aim is to bring about what is termed “convergence”, because Scotland is lagging well behind the EU target for support compared to the aim of the policy. The UK Government then decided that they would apply their own idea of convergence and use the money as a way of offsetting the reductions that other parts of the United Kingdom would have experienced from the cuts that they had proposed in the Budget.

Looking today at the wider effects of Scottish independence, there are many ways, as my noble friend Lord Lang of Monkton described, that the UK will be diminished. The issue that stands out for me is that if independence takes place, the remainder of the UK will become almost entirely dependent on external countries for its oil and gas. My noble friends Lord Lang and Lord Steel mentioned that Scotland will lose out on the EU rebate, but another element which will arise from a diminished UK and Scottish independence and which the rest of the UK might like to consider is that in terms of land area, Scotland, at 78,000 square kilometres, represents nearly one-third of the British Isles, but at the same time, at 89,000 square kilometres, it will take over responsibility for 59% of British territorial waters. When it comes to the UK economic zone and fishing, it will take over about three-quarters. This will have considerable implications for the Scots in terms of regulation and defence, but it is also a very considerable reduction in what the present UK represents.

1.26 pm

Lord Robertson of Port Ellen (Lab): My Lords, we are fortunate that the noble Lord, Lord Lang, has obtained this debate today, because, as has been said, it draws attention to a critical issue for this country that applies to more than Scotland. This debate reflects the importance of that subject.

The noble Lord, Lord Lang, and I were on opposite sides of the House of Commons. I shadowed him for a brief period before he was replaced in government by the noble Lord, Lord Forsyth. I remember having a discussion with the noble Lord, Lord Lang, relating to his hyperactive successor. The noble Lord, Lord Lang, said, “I come from the anaesthetic school of politics”. The anaesthetic school and the hyperactive school did not save the Conservative Party from oblivion, but the Scottish Parliament did. The electoral system that the noble and learned Lord, Lord Wallace, and I created has given us the likes of the noble Baroness, Lady Goldie, who has enlightened us with her wisdom and charm today. That is one of the advantages of our

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electoral system, but there were some unintended consequences which I have no doubt the electorate will, in due course, remedy.

There is something bizarre, strange and surreal about a debate on dismembering the United Kingdom and creating a separate Scottish state. The nationalists do not like to be called separatists. The word “separation” is somewhat toxic to them—for good reason, because it means something. If you are going to create a separate state, you are a separatist, and we need to pin that to them. What is surreal is that Scotland is not an oppressed colony. Scots are not discriminated against. We are not disadvantaged inside the union; in fact, Scotland is the second most prosperous part of the UK after the south-east of England. Scots in their hundreds of thousands live and work in England, Wales and Northern Ireland, just as people from these other parts do in Scotland.

Scots play a huge, maybe disproportionate, role in British life. We wake up across the country to the voice of Jim Naughtie on the radio. During the day, we have Ken Bruce and Eddie Mair, and we go to bed after Kirsty Wark has filleted some hapless interviewee. Scottish voices dominate British industry, commerce, culture, academia, trade unions, institutions and organisations. We are not some persecuted minority yearning to escape oppression. We are all of us fortunate to live in a single-language, integrated country where people move, work, trade and socialise without any restraint, divisions or boundaries.

Our native Scottish culture—as diverse inside Scotland as it is different from that in other parts of the kingdom—is not intimidated or threatened by anyone. We have our own Parliament. The proudest part of my long political career is the part I played with the noble and learned Lord, Lord Wallace, in bringing about that Scottish Parliament, which now legislates on nearly every domestic issue that people care about. Within it, as my noble friend Lord McConnell has said, we experiment, we pilot, we make mistakes. We invent and tailor laws to what Scotland wants. It is, as John Smith once memorably said, the settled will of the Scottish people. We indeed have the best of both worlds: part of a strong country respected in the world and punching its real weight—that of a settled state—in the highest levels of global governance; and simultaneously controlling our domestic affairs within a genuine, unconstrained Scottish agenda.

I am proud to be Scottish. I am profoundly comfortable being a patriotic Scot—just as I care about being British and European. When I chaired the North Atlantic Council as secretary-general of NATO, I revelled when we had NATO Foreign Ministers’ meetings with an English Foreign Secretary, Jack Straw, and a Welsh British Ambassador, Sir Emyr Jones Parry, jousting with a Scottish British secretary-general. It was not just entertaining—although it certainly was that—but there was on display a mix of cultures, comfortable and distinct in our own multi-identities inside a polyglot, voluntary, successful union of nations: a vivid example to a continent and a world bleeding throughout history from inter-nation violent conflicts.

That is the spirit of our union, now threatened by a totally unnecessary and unwanted divorce. Just like most divorces, as my noble friend Lady Liddell said,

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the separation will promise damage, turbulence, negativity and friction. It will do nothing to solve the global problems that face us today and will face future generations.

1.32 pm

Lord Crickhowell (Con): My Lords, the people of Scotland should be as grateful as those of us taking part in the debate for the fact that my noble friend Lord Lang has secured it, and for the manner in which he introduced it. Our people and institutions have intermingled and grown strong through three centuries of union. It has been a huge success story. Those who live in Scotland will have a vote in the referendum; huge numbers born in Scotland who live and work abroad will have no say; and the rest of us are hardly allowed a voice. History may judge that it was an insane way to decide the future of a nation, let alone of a United Kingdom.

All those who were born in Scotland and who live and work elsewhere have every right to be indignant at their treatment. They may be deprived of a vote, but I hope that many of them will add their voices to the campaign in favour of the union and will try to influence their friends and relations who live in Scotland. The rest of us, many like me with Scottish relations, must make it equally clear how much we would deplore what would be a tragic family divorce. Like others, I think that that is the right word to use.

Most divorces have painful consequences. If the vote were to be yes, the complexities of dismemberment would be enormous. Under international law, in the event of a vote in favour of independence, Scotland would become a new state and the rest of the UK would be a continuator state. The notion that,

“all current laws … will continue in force after independence day until they are specifically changed by the independent Scottish Parliament”,

as asserted in the Scottish White Paper is quite simply wrong. Acts of Parliament that are UK-wide in scope may establish public bodies that are under a statutory duty to act in the public interest of the UK as a whole, not in the interest of a foreign power, while government departments and agencies would operate only in the rest of the UK on behalf of its citizens, and not in the new state. UK institutions, including the Bank of England, would become institutions of the rest of the UK, whereas the UK’s assets and liabilities would fall to be apportioned equitably. The Bank of England would become an institution exclusively of the rest of the UK, notwithstanding any historic contribution made by Scotland.

My authority is the magisterial report by Professor Alan Boyle of Edinburgh and Professor James Crawford of Cambridge, together with an analysis presented to the Constitution Committee by our special adviser, Professor Adam Tomkins, professor of law at Glasgow. The Scottish Government want to keep the pound and retain the services of the Bank of England, under a formal currency union agreement. The governor, Mike Carney, in his Edinburgh speech this week made it absolutely clear that, for a successful currency union, you require fiscal and political union if you are to avoid sovereign debt crises, financial fragmentation and large divergences in economic performance. It is

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almost impossible to conceive how the necessary political union could be created on the back of a vote for political independence. The Select Committee on Economic Affairs, in its important report, ended its devastating analysis of this vital question with the words,

“the proposal for the Scottish Government to exert some influence over the Bank of England, let alone the rest of the UK exchequer, is devoid of precedent and entirely fanciful”.

The positive case for the retention of the union needs to be made with great force, as it has been this afternoon. The people of Scotland have made, and continue to make, an immense contribution to a partnership that is of benefit to everyone within it. As so many have said, dismemberment would be damaging for both Scotland and the rest of the UK. The outcome concerns us all, because we all benefit from integration.

As a number of noble Lords have pointed out, defence presents a particularly striking example. The defence analysis paper explains with great clarity how Scotland benefits from UK defence capabilities that protect everyone in the UK. The level of spending and economies of scale mean that the UK is able to maintain world-class Armed Forces and equipment, as well as the essential structures and services that are required to make them effective. All defence assets, physical and human, are integrated across the whole of the UK, fitting together as a jigsaw under a seamless UK command and control arrangement. Similar benefits accrue to the defence industry, where, again, Scotland and the whole UK would be massive losers from dismemberment.

We need to get the message across: we are all in this together. With children and grandchildren who have blood and genes drawn almost equally from Wales, England, Ireland and Scotland, I say with particular fervour that I dread the possibility of a divorce at the heart of the United Kingdom family.

1.38 pm

Lord Kerr of Kinlochard (CB): My Lords, I first offer a warm welcome to the noble Baroness, Lady Goldie, of Bishopton, which is famous in Scotland for its Royal Ordnance factory. It is clear that we have a big, new gun in our armoury, here in this House.

I offer my congratulations to the noble Lord, Lord Lang, on his brilliant speech. I need not speak to what I was going to talk about, because two propositions are already absolutely agreed: first, that Scotland would be worse off without the union; and, secondly, that the rest of the union would be greatly worse off without the Scots. That has been absolutely agreed this afternoon. I think that every speaker before the noble Lord, Lord Crickhowell, was a Scotsman, which may have something to do with that, but both propositions are true. It is also true that the Scots are a notably modest race.

I will address a slightly different proposition. Supposing that one got the wrong answer and the Scots decide to go for secession, what would be the responsibility of the United Kingdom? The angle I will touch on—I am sorry, but it will not enhance my reputation in the House—is the task of ensuring that the Scots get into the European Union. That is a very difficult task, which would be the responsibility of all of us, including the United Kingdom Government.

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Of course, the route in that was suggested by the First Minister in his White Paper and all his oratory does not work. However, I will not go into Article 48 versus Article 49 again; the verdict is clear, so I do not have to. The President of the European Council, the President of the Commission and all heads of government and Foreign Ministers who have addressed this question so far are clear that the route in would be via an application for membership once the country became independent. That poses a problem, for three reasons. First, the European Commission cannot negotiate with the applicant until an application is received, and only a sovereign state can be an applicant. Secondly, all member states have to agree the terms which have been negotiated. Thirdly, all member states have to get them ratified in their countries. If you cannot sign the treaty because you are not yet a sovereign state, you cannot pre-negotiate the terms of that treaty, at least formally.

What is the way around that? One needs to find a way around it because, as the noble Lord, Lord Lang, said, we all have an interest in a prosperous Scotland, and we all have a moral responsibility toward the Scottish farmers, fishermen and exporters, the enterprises and the individuals whose legitimate expectations would be dashed and whose rights would go if there was a hiatus between Scotland’s secession from this union and its accession to the European Union. On the face of it, there is quite a high probability that that might arise. My solution is that it would be the United Kingdom Government’s job to attempt to negotiate informally the terms of Scotland’s entry into the European Union and the transitional arrangements for the period before all three stages of that process were complete and the treaty was ratified.

Three conditions would have to be met. First, a great many of the Scottish Government’s negotiating positions would have to be abandoned straightaway. One could not negotiate the impossible. An example is the question of the rebate. It is impossible as an applicant to secure the agreement of all member states, many of whom are much poorer than you, that you should not have to pay the full subscription. Therefore, an applicant Scotland would not secure a rebate. The UK rebate would go down, because UK GNP and the VAT base would go down; UK receipts would go down; and the rebate, which rebates two-thirds of the difference between the two, would also go down. Therefore, there would be a reduction in the rebate here. It is absurd for Mr Salmond to tell us that in addition to having a reduction in the UK, Thatcher rebate, we must write a cheque and send some money to Edinburgh so that it gets a rebate too. That does not work; we could not possibly pay twice, so that position would have to go. There is no point in an applicant country going to Brussels and saying, “I would need a rebate”.

The second condition is that the divorce terms would have to be absolutely clear. I am sure that the Council would be unwilling to allow the Commission to negotiate with a country that has not yet defined what its independence is. What independence means in terms of frontiers and currency would have to be clear. The Scottish and United Kingdom Governments would

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have to agree a precise scenario before any negotiations could start. Even then, the lawyers might object to the start of the negotiation, saying, “They aren’t sovereign”, so the negotiations would have to be conducted by a UK team flying the union jack. You cannot stop members of the Council negotiating with the Commission. They would have to operate on agreed instructions from the London Government and the Edinburgh Government. Even so, they might have a very hard task, because some member states could wish, if the occasion arises, to make the Scottish path to membership of the European Union as difficult as possible in order to dissuade secession movements in their own countries. That is the best I can come up with, and it is not certain that the road I am describing would be open. However, it would be the UK’s responsibility to try.

Edinburgh needs to become much more realistic, and we could not wash our hands of the problem. If the Scots say that they want to be independent, we have an interest and a responsibility to try to get them into the European Union as quickly as can be arranged. It will be extremely difficult. We all now have a responsibility to make clear to the Scots, before they vote, that there is a real risk of a hiatus—of falling into a costly crack between secession from this union and accession to the European Union.

1.46 pm

Baroness Neville-Jones (Con): My Lords, I add my thanks to those of other noble Lords to my noble friend Lord Lang for securing and leading this debate and for the wisdom of what he said. The noble Baroness, Lady Goldie, is no longer in her place, but it is a great pleasure to have her in this House. I agree that we have a great new weapon here—her call to arms was certainly very forceful and also quite right.

Much of the comment on the implications of the referendum in Scotland has focused on the economic aspects, but in the course of the debate so far we have also begun to see a wider picture. In a moment I will focus on the security side, which has already been mentioned by some other noble Lords. First, however, following what the noble Lord, Lord Kerr, said, I should just like to say that it is a very unattractive prospect to be caught like a pig in the middle between the Scottish Government and the Council when trying to do something. I see the point that he made—that it would be extraordinarily difficult. It is not clear to me whether the other members of the Council would play ball. That is only one of the many great difficulties that this potential scenario throws up.

Before I go on to talk a bit about the issues that conventionally come under the heading of security—and the list starts with terrorism—I should like to comment on the question of an independent Scotland’s potential membership of NATO. This throws up equally great difficulties when we come to the propositions that might confront us as regards the economic European Union. Why? Frankly, it is pretty extraordinary that a Government who dispute the central tenets of the defence policies of the alliance and seek to remove from their soil the facilities which are so important to nuclear deterrence should simultaneously imagine that they would be wanted or valued inside the alliance which their actions were weakening. It is very difficult

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to see how the alliance would countenance that. It does not work that way. That is another area where the Scottish people are being sold a false bill, and it is very important that they hear other voices.

I turn to issues that the noble Lord, Lord Browne of Ladyton, mentioned—and I agree entirely with what he said. I want to focus on the threats that this country has been tackling in a major way, from before 2010 but, most particularly, since the national security strategy of 2010. We identified terrorism, cyberattack and organised crime as major threats to the stability of the security and stability of this country. Terrorism and cyberattack were classed as tier 1 risks and organised crime as a tier 2 risk. Despite our great efforts and the investment that has been made since then in combating organised crime, it has enormously grown, and I would not be at all surprised to see in a further security strategy that it came out as a tier 1 risk. My point is, in relation certainly to the other two risks, that those risks are not going away; they are remaining. Daily extensive, intensive and expensive efforts manage to keep them under control.

So what are these efforts? The annual bill in this country for maintaining capabilities and for the operations of the agencies, and for the cyber intelligence alone, runs at over £2 billion per annum. That does not take into account the contributions also made by the police or other government agencies and the military to our overall strategy. As a result of that overall strategy, we have a well honed machine, which goes under the label of Contest, on which our counterterrorist effort is based and which is being used as a model to combat organised crime. It is because of Contest that we have seen so few outrages since the London bombing, but we should not imagine that it is because they are not being attempted—they are, and there are plenty of them, and the operations of the police and agencies frustrate them.

The whole of the UK benefits from this security umbrella that runs from the centre, but this would change, and it would change radically, in the event of Scottish independence. The authority of the agencies, the legal framework under which they operate and their ability to provide security would stop at the border. The noble Baroness, Lady Liddell, was quite right to say this. The Scottish Government have recognised this, and they know that they would have to set up what has been described as a security and intelligence agency, which would engage in what they have described as intelligence sharing. That is all very well, but the putative budget for defence as well as for security in an independent Scotland is only £2 billion per annum; that includes defence as well as other agencies. For a share of this sum it seems highly improbable that, with set-up costs and operations, an intelligence service could be created that was adequate to act as an effective and trusted partner to UK and other allied intelligence services. To share intelligence, agencies have to be capable of generating their own. I have no doubt that the UK, in its own security interests, would want to do what it could to increase the security of its geographical neighbour and long-time partner, but we have to recognise that the control principle governing intelligence derived from third parties would undoubtedly quite severely limit what it could share.

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Scotland would lose the benefit of what the UK has at the moment in its membership of the “Five Eyes” community.

That would have important implications for UK security. The UK could not allow a less secure Scotland, if that turned out to be the case, to be used as a back door to penetrate the UK, and we may be sure that that would be tried. Unavoidably, we would have to fall back on securing the English-Scottish border to become a control point, with all the cost and inconvenience that would be involved. That would be true irrespective of whether Scotland were a member of Schengen or managed to persuade all parties involved to be allowed to continue to be in the common travel area of the British Isles.

I have one last point. The border between Northern Ireland and the Republic of Ireland is often pointed to as an example of the way in which it is possible to keep an open border in the face of a terrorist threat, but this is not an apt analogy. The control border is across the Irish Sea, and it most certainly is monitored and can be closed in emergencies. I would hate to think, but it cannot be excluded, that this could happen within Great Britain. The more we diverge in policy and practice, the greater the danger. We would surely be better off by maintaining the open and peaceful border that we have had for 300 years.

1.55 pm

Lord Brennan (Lab): My Lords, the Motion so well introduced by the noble Lord, Lord Lang, wisely invites the House to note the implications of the forthcoming Scottish referendum. Secession by Scotland from the rest of the United Kingdom is of the greatest constitutional importance to the whole nation. What are those implications constitutionally? First, for the Parliament—or should I say Parliaments of the United Kingdom—if there is a yes vote, it is only the first step, or the beginning of the end. There is much to be done, and to be done by this Parliament. The agendas of defence, economics, banking, transport and education that we have gone through today, illustrate the scope of the Act of Parliament and consequential debates that we would have to undergo before we voted to implement actual independence. The Scottish certainly would require the same process, and I have not looked at the technicalities but the Welsh and Northern Irish might also be involved in their Assembly duties.

What is the reality of that? In September 2014, if there is a yes vote, there will be about six months of parliamentary time before the run-up to the 2015 general election for our country. Nothing will be achieved in those six months except, perhaps, a lot of political noise from north of the border if there has been a yes vote. The United Kingdom Parliament, elected in 2015, will have on the present count 59 MPs from Scotland. Let us forget for a moment the party-political demographics of that 59—it is a substantial part of the manpower of the House of Commons. There will come a time after a yes vote, if Parliament decides on an Act of independence to agree to secession, in which those 59 MPs will cease to act. On when and how, I am afraid that I am, as a lawyer, not convinced that this would be a matter for negotiation. I do not see how

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constitutionally a Member of Parliament can continue to sit in the Commons and act for a constituency that no longer exists as part of this country. In that event, within that Parliament, the structure of politics will suffer a major change. So the implication for our Parliament is much greater than the interests just of Scotland—it is the interests of the whole country.

If there is a yes vote, this Parliament will face a state of affairs in which huge amounts of parliamentary time will be needed to make a decision that the whole country will be looking at, particularly the citizens of England. If there is a no vote, the devolution argument will continue. If, as one suspects, the Scottish National Party wants a 47% yes vote and a 53% no vote, it will then tell the rest of the country, “We are on the way to more devolution. Let’s continue the fight. It will not go away”.

I turn now to the nature of the debate. It will require at the very least long parliamentary debates but also, perhaps, a Joint Committee or a parliamentary commission such as the banking standards commission that we have just had or, as the noble Lord, Lord Maclennan, said, a constitutional convention, probably irrespective of whether there is a yes vote or a no vote. These are major issues which will take up parliamentary time, and the debate has to involve the whole country.

As for the international implications, the international community at the beginning of the 21st century does not do independence-lite. The 70 years since the Second World War have produced a range of international institutions with extremely careful entry and membership requirements which will not be softened or changed for individual circumstances. Apart from the case of colonialism and freedom for various countries which survived that, and other than the fall of communism, I can find only two instances in the past 70 years in which the United Nations has accepted new members—namely East Timor after a civil war involving Indonesia, and South Sudan after a civil war with what is now Sudan. Somaliland has been a non-accepted “independent” country since 1991. It is simply wholly unreal to expect Scotland to enter any of the 10 or 15 international institutions which we can immediately think of that it would need to enter to be a respected and functioning member of the international community.

I never cease to admire the intellect and ingenuity of the noble Lord, Lord Kerr. His description of how the United Kingdom might help Scotland get into the European Union increased my admiration but did not help to convince me of the strength of his argument. Some countries in the European Union will never agree to a country such as Scotland coming into Europe because of their own interests, and neither will the United Nations. We therefore face an independent Scotland being in international limbo for years to come. To whom will the world look to safeguard international interests in which Scotland should play a part but cannot? It will look to the United Kingdom and our international duties will continue as before.

My last point is not extensive. There is no turning back. If Scotland becomes independent, that is it. If it chooses to leave the United Kingdom it will not be welcomed back save in the gravest of circumstances of

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hardship and need. That is a harsh reality to express but, constitutionally, it is almost inconceivable to think that it would return.

Lord Ahmad of Wimbledon: Before the next contribution, I again remind noble Lords that this is a time-limited debate and that when the clock strikes “7”, noble Lords should look to complete their comments.

2.03 pm

Lord Shipley (LD): My Lords, like the noble Lords, Lord MacGregor of Pulham Market and Lord Forsyth of Drumlean, I was a member of the Economic Affairs Committee, which reported last year on the economic impact on the UK of Scottish independence. When we debated the report in this House in June, we said that it was important that voters understood the implications of their vote before they cast it. We said that voters should reasonably expect to know whether membership of the EU would be secure, how long the process of applying might take, what the implications for taxation—both personal and corporate—would be, what the implications for public spending might be, which currency would be used, which fiscal policies would be put in place and what regulatory policies might be different in Scotland from the rest of the UK.

Some of these issues, particularly around banking and fiscal union, have been clearly explained this week by the Governor of the Bank of England. However, there are uncertainties around entitlement to Scottish citizenship, as well as other uncertainties around tuition fees and whether they would or would not be free at Scottish universities for students from England, Wales and Northern Ireland.