24 Nov 2015 : Column 561

House of Lords

Tuesday, 24 November 2015.

2.30 pm

Prayers—read by the Lord Bishop of Rochester.

Introduction: Lord Murphy of Torfaen

2.37 pm

The right honourable Paul Peter Murphy, having been created Baron Murphy of Torfaen, of Abersychan in the County of Gwent, was introduced and took the oath, supported by Lord McFall of Alcluith and Lord Touhig, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Hain

2.43 pm

The right honourable Peter Gerald Hain, having been created Baron Hain, of Neath in the County of West Glamorgan, was introduced and made the solemn affirmation, supported by Lord Kinnock and Baroness Morgan of Ely, and signed an undertaking to abide by the Code of Conduct.

Domestic Violence


2.48 pm

Tabled by Baroness Royall of Blaisdon

To ask Her Majesty’s Government how many convictions have been obtained under the laws relating to stalking and whether they are satisfied with the adequacy of legislative powers to prosecute perpetrators of domestic violence.

Baroness Nye (Lab): I beg leave to ask the Question standing on the Order Paper in the name of the noble Baroness, Lady Royall of Blaisdon.

The Minister of State, Home Office (Lord Bates) (Con): My Lords, the latest figures show that 495 convictions were obtained under the new stalking laws in 2014. Legislative powers in this important area are kept under constant review.

Baroness Nye: I thank the Minister for that information. It is clear, however, that without effective training and a cultural change in the criminal justice system, perpetrators will still not be brought to justice. It is in areas of the country where there has been training that the law is most effective. I would be grateful if the Minister could say what investment has been made in the training of prosecutors. Will he also say why there are still no sentencing guidelines for stalking, and when these could be expected?

24 Nov 2015 : Column 562

Lord Bates: The sentencing guidelines are an independent matter for the Sentencing Council, but I will certainly look into that point. In terms of the training, a great deal of work has gone on through the College of Policing, which is the vehicle by which most training is provided. The Crown Prosecution Service has also done a great deal of work, particularly on encouraging more prosecutions under the stalking laws rather than under harassment legislation, which was there before, so that we get a better picture of the nature of the crime. But we continue to look at this important area.

Lord Wigley (PC): Is the Minister aware of the substantial growth in cyberstalking over recent months and years? Is he satisfied that adequate powers are available, under anti-stalking legislation or other legislation, and will he make it his business to link up with those in the police force who are quite concerned about this?

Lord Bates: The National Crime Agency takes the lead in this area, particularly on child exploitation. A great deal of work has been going on in schools, pointing out the dangers of online abuse. Of course, we took legislative action in the Criminal Justice and Courts Bill, when we introduced the clause on revenge pornography. This area is one that my noble friend Lady Shields, the Minister for Internet Safety and Security, is very focused on and is having conversations with internet service providers about.

Baroness Howarth of Breckland (CB): My Lords, the Minister will be very aware of the effect of domestic violence on children and young people. What are the Government doing to ensure that their rights and emotional needs are being met during the proper but difficult process of prosecution for domestic violence incidents?

Lord Bates: We have now introduced a system where we have independent domestic violence advisers. They have a critical role to play because, in a very chaotic, difficult and emotionally stressful situation, they can signpost people to the help that they need, particularly the families who are victims in this area.

Baroness Brinton (LD): My Lords, during the passage of the stalking law reforms in your Lordships’ House, there was considerable debate about how the CPS could be encouraged not to use the harassment law as an easy way to get a conviction. The Minister has outlined that he believes that more cases are being defined as stalking, but the opposite is true according to the press. How can the Government ensure that the CPS is held accountable to make sure that stalking cases are taken as such and not through the easy win of harassment?

Lord Bates: That is a very good point and comes back to the earlier point made by the noble Baroness, Lady Nye. A consultation is taking place between the CPS and the College of Policing, as well as with Paladin and the Suzy Lamplugh Trust, which do so much valuable work in this area, to see what further training could be provided. When you look at the figures and see that there are 9,180 prosecutions under

24 Nov 2015 : Column 563

harassment and 676 under stalking, clearly there is still further work to be done to make sure that people are being prosecuted in the right area.

Lord Rosser (Lab): My Lords, the Question also relates to domestic violence, and the same point on training and cultural change applies to the new domestic violence offence of coercive control, the campaign in respect of which was led by Paladin, Women’s Aid and the Sara Charlton Foundation. If I am right in saying that it has not happened already, could the Minister say, first, when the new domestic violence offence of coercive control will be introduced? Secondly, what action is being taken to ensure that the necessary training is being and will be provided throughout the police and the judicial system, including for prosecutors, judges and magistrates, to ensure that the new law—including the reasons for it and the psychological intimidation and control it is intended to address—is fully and effectively understood and that it is used and applied as intended in all relevant parts of the country? The evidence, including that from the new stalking laws, suggests that inadequate and incomplete training about new offences leads to cases not being pursued or to unduly lenient sentences because the seriousness of the new offence is not fully understood or recognised.

Lord Bates: That is a fair point. We have pledged that the coercive and controlling behaviour provision in the Serious Crime Act will come into force by the end of the year. It will be in force by the end of the year and training will be provided alongside it. On the other point, about ensuring the right response and that people are trained for it, Garry Shewan, the assistant chief constable of Greater Manchester Police, who is the national policing lead for stalking and harassment, has a very important role to play in co-ordinating the wider police response to this important crime.

Baroness Afshar (CB): My Lords, what measures are being taken to assist Muslim women to access the reporting facilities? A great deal of domestic violence goes on in households against women who do not feel at ease with some of the representatives who are available for them to access.

Lord Bates: There is a particular group called Imkaan which works in this area with BME communities and they are represented on the national oversight group which the Home Secretary set up to advise her on improving her response across government to domestic violence.

Baroness Lister of Burtersett (Lab): My Lords, the Justice Select Committee found that more than a third of the victims of domestic violence were unable to get legal aid because they could not provide evidence that such violence occurred within two years of their application. The Government responded with only a very minor reform. Will they now review the situation with a view to extending the time limits and, if not, why not?

Lord Bates: Certainly in relation to legal aid there is a merits test to go through. I understand that in cases of domestic violence there is a more generous provision than in other areas. There is an important new provision

24 Nov 2015 : Column 564

coming out in which we are going to refresh the cross-government strategy on tackling violence against women and girls. That will include some elements of new legislative responses which are available and being considered by the Government.

Legal Aid


2.56 pm

Asked by Lord Marks of Henley-on-Thames

To ask Her Majesty’s Government whether they are satisfied that the Legal Aid Agency’s evaluation of tenders for the new duty solicitor contracts was fairly and effectively conducted.

The Minister of State, Ministry of Justice (Lord Faulks) (Con): My Lords, we are. The Legal Aid Agency followed a robust and fair process in assessing duty tender bids. The assessment process was subject to careful moderation and management at all stages, including independent validation. All staff who assess the bids received comprehensive training to ensure transparent, consistent and fair treatment of all bids.

Lord Marks of Henley-on-Thames (LD): My Lords, two whistleblowers involved in this assessment process have now said publicly that there were too few staff, many of them virtually untrained agency temps with no relevant experience, and that assessment of the bids and moderation of the assessments were subjected to highly unreasonable time targets. Now that this has led to 100-plus legal challenges and calls from the Law Society for a full and proper investigation, what do the Government propose to do to review the process in view of the Answer just given by the noble Lord?

Lord Faulks: The noble Lord is right that this has been the subject of legal challenges, just as the bidding process itself was subject to an unsuccessful judicial review. There have been individual legal claims under public procurement regulations and a judicial review in relation to the process. It is inappropriate for me to comment in detail about matters which are the subject of litigation. However, I can say that about 19% of the staff were temporary. The Government are satisfied that these staff were thoroughly adequately trained and that what they were asked to do was reasonable in the time afforded to them.

Lord Bach (Lab): My Lords, can the Minister confirm that the criminal duty tender policy, which seems to have gone so wrong, was agreed by both parties in the coalition in 2013? Can he tell the House the current estimate of the eventual cost of the litigation now under way and when he expects that litigation to conclude? Finally, is it not well past time to scrap this ridiculous policy and begin negotiations again with the Law Society and the criminal law solicitors’ groups on a more sensible and sustainable way forward?

24 Nov 2015 : Column 565

Lord Faulks: The noble Lord seems to suggest that the Law Society was not enthusiastic about the process. In fact, in its response it said:

“The Society agrees, for the reasons given below, that change is needed in the procurement of criminal defence services. There is good evidence that the existing market is unlikely to be sustainable in the longer term and that this represents a significant risk for the integrity of the system”.

The Government were trying to ensure that there was adequate representation on the duty provider basis, that this was more efficiently provided and that there was a fair system for making sure that taxpayers’ money was properly spent.

Lord Clement-Jones (LD): My Lords, I declare an interest as a member of the Law Society but we all have an interest in ensuring access to justice. As my noble friend Lord Marks mentioned, two whistleblowers have pointed out how flawed the process was, In addition, there is the potential for mass litigation involved in this duty solicitor procurement. Should not the MoJ stop trying to brazen this out, simply scrap this procurement and start again?

Lord Faulks: No, that presumes the outcome of the litigation. Disappointed contractors may well feel it necessary to challenge and decide it appropriate, as is their privilege, to use the legal process. We have not yet had the legal process, nor do we know what the result will be. There have already been some preliminary hearings, but we are some way from a full judgment. Both the individuals were employed as commissioning assistants in a junior role. We are in no doubt that what happened was a perfectly appropriate way of assessing the competence of the solicitors and their appropriateness for the contract.

Lord Clinton-Davis (Lab): Have the Government received any representations from the Law Society in the light of this Question? Will the Minister signify how the Law Society has reacted? I am in accord with what he has said, but I think it is important that he should be more accurate about it.

Lord Faulks: Of course we listen to what the Law Society says: the Law Society represents solicitors and I am sure that a number of them are disappointed at the outcome, although they will still have an opportunity for own-client contracts and as delivery agents for those solicitors who have a duty provider contract. I should perhaps reassure the House that the Legal Aid Agency has monitored and will continue to monitor the quality of the delivery of services through its well-established audit and peer-review programmes.

Lord Tomlinson (Lab): Will the Minister answer my noble friend Lord Bach’s first question about the role of coalition members of the Government? Did the Liberal Democrats support the policy when they were in government?

Lord Faulks: I am not sure whether the Liberal Democrats supported it. The fact is that it is government policy and we are pursuing it. Whether they supported it tacitly or had reservations seems beside the point if the process is fair, as we say that it was.

24 Nov 2015 : Column 566

Lord Cotter (LD): My Lords, it is clear that this has been a very faulty process. I give an example. A very reputable organisation with quality and community knowledge in London has been ignored and not appointed in any way. The work has been given to firms in Stafford and Leicester. It is surely ridiculous when a firm based in London has a great reputation that work for London should be given to firms in Stafford and Leicestershire.

Lord Faulks: The noble Lord picks on one disappointed solicitor. No doubt a number of solicitors are pleased with the result and feel that it is an adequate response. I fear that some solicitors will be disappointed, but the noble Lord will realise that it is necessary to effect some consolidation—apart from anything else, because there has been a significant drop in the crime rate, which is good for most of the population, although perhaps less good for some solicitors who rely on crime for their living. I am glad to say that the crime rate began to drop in 2007, when the party opposite was in government. It has continued to drop and is now at its lowest rate since 1970.

Northern Powerhouse


3.03 pm

Asked by Lord Greaves

To ask Her Majesty’s Government what proposals they have for strengthening the role and powers of town and parish councils, particularly as part of the northern powerhouse.

Lord Greaves (LD): My Lords, I beg leave to ask the Question standing in my name, and remind the House of my local government interests.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con): My Lords, the northern powerhouse is empowering local areas through devolution, bringing decision-making closer to local people. It is right that local areas are able to involve their towns and parishes as they see fit. The Government are providing additional support to those towns and parishes wishing to exercise the community rights provided by the Localism Act 2011: for example, developing neighbourhood plans, listing assets of community value and running services using the right to challenge.

Lord Greaves: My Lords, all over the north of England there are small towns and villages with town and parish councils in which the northern powerhouse is no more than a remote slogan and of little relevance or meaning. At the same time, local services are being slashed, taken apart and closed down. What advice would the Minister give on behalf of the Government to towns and parishes, and what action should they take in those circumstances?

24 Nov 2015 : Column 567

Baroness Williams of Trafford: My Lords, the northern powerhouse and devolution should not be remote to any area of the country in which devolution is taking place. Whether it is in transport or in increases in the local jobs market—and actually, the north-west has seen the biggest employment growth of any region in the last few years—local people should be able to feel the effects of the northern powerhouse and devolution. Through the Localism Act, local areas such as town and parish council areas should be able to feel the empowerment more than ever.

Lord Beecham (Lab): My Lords, under the Government’s devolution proposals, there will be areas of the country, like Lancashire, with local parish and town councils, district councils, county councils and combined authorities with elected mayors. In the light of tomorrow’s spending review and the forthcoming local government settlement—in which, like his predecessor, the Secretary of State appears to have been first across the Treasury’s door to offer up local government for cuts—what assurances can the Minister give that this pyramidal structure will not be used to house the mummified remains of effective local government?

Baroness Williams of Trafford: My Lords, devolution means empowering communities, from local authorities right down to town and parish councils, and even local neighbourhoods. I do not think—in terms of what the Government have been doing, certainly through devolution and some of their plans for the northern powerhouse—that anybody could accuse local government of not being at the forefront of this Government’s policy.

The Lord Bishop of St Albans: My Lords, the northern powerhouse has great potential to bring social and economic benefit to many people, but it is fundamental from the very start that we embed it in the rural communities. Micro-businesses employing fewer than 10 people make a very significant contribution to the rural economy, yet previous approaches to regional development tended to ignore or sideline the rural dimension of it. Will the noble Lord the Minister assure the House that, with the northern powerhouse and other devolved areas, there will be a specific, focused and relevant approach to providing resources for small rural businesses?

Baroness Williams of Trafford: My Lords, I am getting quite fond of the right reverend Prelate calling me “the noble Lord the Minister” and I take no offence whatever. He is absolutely right, and he has brought up the point about rural communities before. Of course, in many areas where we see devolution, we see rural communities. Most authorities—in Greater Manchester, for example—have rural areas such as Rochdale, Oldham, Stockport and even Trafford, so rural communities are very important. He is absolutely right to point out that they should not be left behind, and, with some of the strengthened powers that central government has given them, they should be able to achieve this.

Lord Shipley (LD): My Lords, a recent BBC-commissioned survey showed that two-thirds of people in the north had either not heard of the northern

24 Nov 2015 : Column 568

powerhouse or knew nothing about it. Given the deep cuts to local council budgets expected tomorrow, does the Minister agree that it has become essential to produce a strategic investment plan for the northern powerhouse area in order to give the public confidence that the northern powerhouse is a reality?

Baroness Williams of Trafford: My Lords, they might not have heard of the northern powerhouse but—as I said to the noble Lord, Lord Greaves—they certainly will have felt the effects of it. In Yorkshire, for example, more jobs have been created than in the whole of France put together. As I also said to the noble Lord, Lord Greaves, there has been, in the north-west, the highest employment growth, and in the north-east, the highest rate of business start-ups. Whether people label that as the northern powerhouse, or just say that life feels a bit better, they should certainly feel the benefits. In terms of a strategy, we have a simple one: to enable areas of the north to maximise their economic potential.

Lord Naseby (Con): Is my noble friend aware that during the last recess, I went to see my tailor in Ossett? While talking to other people who were shopping at that particular retailer, I felt that there was a great vibrancy about the local town council there, and what it was doing. Also, although Bedfordshire is not in the northern powerhouse, as far as I am concerned the town councillors there do a first-class job as well.

Baroness Williams of Trafford: I thank my noble friend for that question. I was not aware that he had gone to Oxford in the recess—perhaps I should have been. He is absolutely right: town councils now feel very much more empowered in driving forward the future of their communities. So I am not surprised to hear that the particular town council he talked about was feeling very upbeat.

Lord Maxton (Lab): My Lords, could the Minister explain the strange anomaly that seems to have arisen where her Tory Government grant devolution to local authorities, the northern powerhouse et cetera, while the devolved Scottish Government are taking power away from local authorities in Scotland?

Baroness Williams of Trafford: My Lords, the Scottish Government will have to answer to their electors in due course.

Baroness Farrington of Ribbleton (Lab): My Lords, would the Minister please ensure that she assesses whether the allocation of resources tomorrow means that counties such as my home county of Lancashire get equal treatment with other county areas in the country—even those counties which happen to have the Prime Minister as one of their MPs?

Baroness Williams of Trafford: I shall certainly take that point away.

24 Nov 2015 : Column 569

Prison Service: Trans Prisoners


3.11 pm

Asked by Baroness Barker

To ask Her Majesty’s Government, in the light of the death of Vicky Thompson, whether they will review the Prison Service’s treatment of trans prisoners.

The Minister of State, Ministry of Justice (Lord Faulks) (Con): My Lords, I offer my condolences to Vicky Thompson’s family and friends. Every death in custody is a tragedy and we are committed to reducing their numbers. While investigations are ongoing it is inappropriate for me to comment on the circumstances of Miss Thompson’s death. The policy on the care and management of prisoners who live or propose to live in a gender other than one assigned at birth is currently under review.

Baroness Barker (LD): I thank the Minister for that Answer. Recent events have shown that placing trans women in male estates is dangerous. Does the Minister agree that trans prisoners should be housed in the estate of their acquired gender in the first instance and moved to another estate only following a thorough investigation that rules out all other safe alternatives?

Lord Faulks: My Lords, Prison Service Instruction 07/2011 sets out the National Offender Management Service’s policy on the care and management of prisoners in the circumstances outlined by the noble Baroness. It suggests that, in the first place, somebody’s gender, whether their original gender or one that they have chosen under the Gender Recognition Act, should be reflected in where they are housed. Nevertheless, there is a degree of discretion allowed to the Prison Service, which it exercises, to make sure that someone in that situation is treated with appropriate care, consideration and sensitivity.

Lord Cashman (Lab): My Lords, mindful of the review of the current policy, what urgent steps will the Minister take to review the location of all trans people in prison and to move them to appropriate prisons according to their acquired gender, to avoid a repeat of the tragedy that befell Vicky Thompson?

Lord Faulks: The important thing is that there is no generalisation here. It is important to assess each individual prisoner according to the stage they are at and their particular case. It might be a diagnosis or they may have fully realised their gender transformation. That individual assessment is carried out by the Prison Service, involving the assistance of psychological services and healthcare experts. It is after that assessment that they should be assigned an appropriate part of a prison.

Lord Hope of Craighead (CB): My Lords, can the Minister assure the House that the policies he just outlined apply in young offender institutions? I believe that Miss Thompson was 21 when she died and assume that she was in an adult prison, but I think it is common knowledge that people tend to become aware of their transgender nature when puberty emerges. Therefore, young offenders are particularly vulnerable and require particular care.

24 Nov 2015 : Column 570

Lord Faulks: The noble and learned Lord makes an important point. I assure him that the policy applies throughout the prison estate and the youth estate. I entirely accept that these matters sometimes occur at an earlier stage, before somebody becomes part of the adult custodial estate. Of course, there may be many other aspects that need careful consideration apart from the problems with gender. Those can provide a real challenge to those working in the prison.

Lord Scriven (LD): Can the Minister confirm that the guidelines to which he has just referred, PSI 07/2011, had an expiry date of 14 March 2015? Therefore, there has been an eight-month gap when those guidelines are no longer applicable because they are past their expiry date. If those guidelines are being updated, what open invitation has been given to trans support groups to help the Government update the guidelines?

Lord Faulks: The noble Lord makes what he may think is a clever point, but I refer him to paragraph 2.6 of the instruction system, on “The Approval and Implementation of Policy and Instructions”, which provides as follows:

“Regardless of expiry dates, instructions remain in force until specifically cancelled, marked ‘obsolete’ or replaced and removed from the Intranet”.

That policy does not fall into that category; it remains current.

Of more substance—of course it is very important that in formulating any change to the Prison Service instruction we take account of the trans community’s views; we are doing so, as my ministerial colleague explained in answering a question of a similar nature to the House of Commons last Friday.

Lord Beecham (Lab): My Lords, the whole House will join the Minister in expressing condolences to the family of Vicky Thompson, and also welcome the Government’s response to this tragic case and look forward to the outcome of the review that has been announced. There have been 186 suicides in prisons in the year to September, and a 21% rise in self-harm. Those statistics reflect the pressure on prisons and staff, echoed in the latest report on Feltham young offender institution. Therefore, will the Government’s review extend to the size of the prison population, and will the training of prison staff—the briefest of any comparable country—be substantially extended in time and depth?

Lord Faulks: I do not wish to pre-empt what may be considered appropriate to be considered under the review. Certainly, training would be an extremely important factor. The training has been extended to cover a specific module for prison officers to consider equality provisions, which takes into account particularly the protected characteristics of transgender prisoners. The scope of the review will embrace all things that are relevant to make sure that the Prison Service treats such prisoners appropriately. The original Prison Service instruction is an impressive document but, of course, there is room for continual improvement, and we will endeavour to arrive at an appropriate destination.

24 Nov 2015 : Column 571

Lord Marks of Henley-on-Thames (LD): Does the Minister recognise that one difficulty under the existing system, with giving priority to legal gender, is that trans people who turn out to be offenders may be the least likely to apply for gender recognition certificates under the 2004 Act? Will the government review take that into account?

Lord Faulks: The decision to apply for a certificate is, of course, an intensely personal one. What is important is that a prisoner, or indeed anybody, should know that they have the right to do so—but it would be entirely inappropriate to in any way place pressure on somebody to go through that process. The matter is one that the Act rightly treats with great care in terms of protection of data and all the sensitive matters that it is necessary to take into account when making a momentous decision of this sort.

Hereditary Peers By-Election


3.18 pm

The Clerk of the Parliaments announced the result of the by-election to elect a Conservative hereditary Peer in the place of Lord Montagu of Beaulieu, in accordance with Standing Order 10.

A paper setting out the complete results is being made available in the Printed Paper Office. The successful candidate was Lord Fairfax of Cameron.

Scotland Bill

Second Reading

3.18 pm

Moved by Lord Dunlop

That the Bill be now read a second time.

The Parliamentary Under-Secretary of State, Scotland Office (Lord Dunlop) (Con): My Lords, the United Kingdom is the most successful multinational state the world has ever known. On 18 September last year, people in Scotland voted in record numbers and by a clear and decisive majority to keep together our United Kingdom. However, last year’s referendum showed that nothing can be taken for granted; our union is precious, to be sustained and cherished day in, day out. There is no national forum more committed to protecting and strengthening the union than your Lordships’ House. Time and again the United Kingdom has shown its resilience and capacity for renewal in order to meet the needs and aspirations of successive generations. This Scotland Bill sits within that tradition. The Bill balances the strong desire of people in Scotland for more decisions to be taken in Scotland, closer to those they affect, while retaining the strength and security of remaining part of the larger UK.

I have only been in this House a short time, but long enough to appreciate the wealth of constitutional knowledge and experience in all parts of the House. This wealth is evident in the quality of those listed to speak today. I look forward to hearing what I know will be thoughtful and well-informed contributions,

24 Nov 2015 : Column 572

in particular the maiden speeches of the noble Baroness, Lady McIntosh of Pickering and the noble Lord, Lord Campbell of Pittenweem.

Your Lordships have already made valuable contributions, including in the recently published reports of the Constitution Committee and the Economic Affairs Committees. From the outset of this debate, I want to recognise and acknowledge with respect the strong feelings already expressed, both about process and substance. I accept that the process has been unorthodox. Then again, the events of last September were unprecedented. The very future of the United Kingdom was at stake. In those circumstances, no stone was left unturned in the defence and preservation of our country. Who among us can say honestly that, faced with the same circumstances and responsibilities of national leadership, we would not have responded with the same sense of urgency and determination?

The task now is to help Scotland move on, building on our shared values and experiences, to forge anew the close bonds of kinship and friendship and sense of common purpose and endeavour that is the glue of any successful nation state. In rising to the challenge, we have a clear choice. We can continue either to pump things up, or we can try to calm things down. I confess to being a firm supporter of the second approach, not least because I am certain that those who want separation would prefer the first.

I hope that we all share a strong desire to work together to bring our nation together, and for those of us who believe passionately in the union to be united in delivering, through this Bill, the promises made to the people of Scotland.

Lord Maxton (Lab): Is the Minister saying that the vow was the way in which the referendum was won? My view is that the vow was not necessary; the no vote would have won anyway.

Lord Dunlop: Fundamentally, I think it was the economic arguments that were decisive in the referendum. When the country is at stake, you want to do everything possible to maximise the no vote. That was what was done.

Lord Forsyth of Drumlean (Con): Could my noble friend confirm that, according to the article written by the editor of the Daily Record, the vow was all his idea and was put together by Gordon Brown and the editor of the Daily Record as a publicity stunt?

Lord Dunlop: I am not quite clear whether he is saying that it was my idea or Gordon Brown’s. The key point about the vow is that three UK party leaders agreed it.

On the night of the referendum, as I waited for the results to come in, I listened carefully to what my noble friend Lord Forsyth of Drumlean had to say on the BBC’s “Scotland Decides” programme. He cut straight to the chase, as he so often does:

“The three party leaders made a promise—which I think they’ll find very difficult to deliver—but it has to be delivered”.

I agree with him—no one said it would be easy. Indeed, I can safely say to this House in all humility that, today, I am gaining some appreciation of what my noble friend foresaw. This Bill is the fulfilment of

24 Nov 2015 : Column 573

that promise. It has to be delivered. Yes, there has been scepticism. Would all parties come to the negotiating table? Would they stay? Would someone walk out before a deal was struck? Could all the milestones be met? For the first time in the history of devolution, all five of Scotland’s main political parties came together, stayed and reached a unique agreement. Every one of the milestones have been met on time.

Here, I want to pay tribute to the noble Lord, Lord Smith of Kelvin. Hot on the heels of leading the fabulous Glasgow Commonwealth Games, he skilfully steered the process to a successful conclusion. We owe him a debt of gratitude. It is good to see him in his place today and back in rude health.

Much has been said about the Smith commission reaching an agreement of such great constitutional significance after only an eight-week process, yet the agreement was the culmination not of an eight-week process but a four-year process which started in 2011 with the election of a majority SNP Government. So the Smith commission agreement did not emerge from a vacuum. It emerged from four years of lively constitutional discussion and debate in Scotland, which was informed by the body of evidence compiled by the Calman commission, and from a discussion punctuated by the publication of numerous reports from Scottish Labour’s devolution committee, the home rule commission chaired by the noble Lord, Lord Campbell of Pittenweem, and the commission chaired by my noble friend Lord Strathclyde, alongside academic and think tank contributions, such as Reform Scotland’s devo plus and IPPR’s devo more reports. Indeed, I believe the Smith agreement was made possible because common ground had already been established by this body of preceding work.

Delivering the agreement in full is therefore a manifesto commitment of not only the Conservative Party but the Labour Party, the Liberal Democrat party and the Scottish National Party. So this Scotland Bill is not just a manifesto Bill; it is a super-manifesto Bill. Its provisions were agreed in the other place, where the Government listened to the debate, responded to the scrutiny and tabled more than 100 amendments on Report, and where the Bill was passed unopposed at Third Reading.

The Daily Record declares its famous vow met, and Gordon Brown says that the Smith commission recommendations, which arose from the vow, are delivered. The noble Lord, Lord Smith, has confirmed that the Bill honours what was agreed by the five parties. “A promise made is a promise kept” is surely an absolute precondition for earning the trust of the people of Scotland. Ahead of next year’s Scottish Parliament elections, the debate in Scotland is increasingly turning to how the powers are used, as it certainly must.

This Bill is not simply about keeping a promise. It is about bringing a better balance to Scotland’s devolution settlement and strengthening the union as a result. The Scottish Parliament was created with extensive spending powers—its budget today is around £30 billion— but little responsibility for raising the funds it wants to spend. The result is a fiscal gap and an accountability deficit. Before the Scotland Act 2012 is fully implemented, the Scottish Parliament controls almost 60% of public

24 Nov 2015 : Column 574

expenditure in Scotland yet is responsible for raising only some 10% of its funding. Once this Bill comes into effect, the Scottish Parliament will be responsible for raising more than 50% of what it spends. Holyrood will be transformed from a pocket-money Parliament reliant on an annual cheque from the Treasury, to the powerhouse Parliament the people of Scotland want it to be. If the Scottish Government want a higher level of public services than the rest of the UK, they will have first to explain to voters in Scotland how they intend to pay for them.

Of course, some argue this Bill does not go far enough, yet it will make the Scottish Parliament one of the most powerful devolved Parliaments in the world. No amount of devolution is going to be sufficient for those who believe in independence, but a majority of people in Scotland rejected independence and voted to retain the benefits of being part of the UK: the security of our own shared independent currency, backed by the strength and stability of the Bank of England; the job and business opportunities of a deeply integrated single market; our social union, in which risks and resources are pooled; and common defence and security in an uncertain world. Indeed, I am delighted that Scotland is to be home to the new maritime patrol aircraft and another squadron of Typhoon fast-jets. These are the UK benefits that the Smith agreement and this Bill are careful to protect. We have heard a great deal about full fiscal autonomy. I will be clear: full fiscal autonomy ends the pooling and sharing of risks and resources across the UK. It would be bad for Scotland and bad for the UK as a whole, and that is why we rejected it.

I turn to the provisions of the Bill itself. Part 1 takes forward the Smith agreement that the permanence of the Scottish Parliament and Scottish Government be set out in UK legislation, and that the Sewel convention be put on a statutory footing. This reflects the existing political understanding and does not alter the principle of parliamentary sovereignty. The Scottish Parliament will be very largely responsible for how it runs itself, how it is elected and the people who can vote to elect it. Part 2 covers taxation. Maintaining the integrity of our single market and minimising business burdens means that not all taxes are candidates for devolution. Central to the debate is the devolution of income tax on earnings, building on the Scotland Act 2012 tax devolution, which comes into effect in April, and providing the Scottish Parliament with £11 billion of revenues. Income tax is paid by voters and is highly visible; whoever levies it is accountable to those paying it in the most direct way. While the definition of income remains reserved, the Scottish Parliament will have full control over rates and bands of income tax. It will be able to set a 0% rate, if it can afford to do so.

However, the Smith commission agreed that national insurance contributions should be reserved, so Scottish taxpayers will continue to help fund UK-wide services. Alongside income tax devolution sits VAT assignment. Differential VAT rates inside a member state are against EU law. This Bill assigns half of all VAT receipts raised in Scotland: £4.5 billion of revenue. Assigning a share of VAT was first suggested by the Calman commission. The more the Scottish economy grows, the greater the share of VAT revenue Holyrood will keep. That is an

24 Nov 2015 : Column 575

incentive to achieve growth. With the devolution of location-specific air passenger duty and the aggregates levy, the Scottish Parliament will have a mix of taxes and vitally important decisions to make.

Part 3 of the Bill means that the Scottish Government will be responsible for welfare provision in Scotland, worth approximately £2.7 billion last year, and able take decisions for a number of types of social security benefit, discretionary payments, and employment support. Universal credit and its legacy benefits, such as pensions, remain reserved, although Scottish Ministers will be able to vary certain limited aspects. Devolving labour market benefits would undermine their role as automatic stabilisers and potentially put undue pressure on Scotland’s finances in the event of a localised economic shock. What the Bill does devolve are benefits strongly linked to powers already exercised by Scotland, such as social care and health. The Scottish Parliament will have responsibility for benefits to meet extra costs paid to carers, disabled people, those who are ill, and those who require help with winter fuel, funeral, and maternity payments. When people most require help, the Scottish Government will be able to tailor that help to particular Scottish circumstances.

The Smith agreement was also of the view that the Scottish Government should be able to top up reserved benefits: the Bill allows this to happen. On Report, the Commons approved a new government clause enabling the Scottish Parliament to create new benefits in devolved areas of responsibility. We must be clear about these new welfare powers. If the Scottish Government wish to make supplementary payments to people in receipt of a state pension or universal credit, for example, or create new benefits in devolved areas, they should be able to do so. However, crucially, they must be able to pay for it from their own revenues.

Lord Forsyth of Drumlean: I am sorry to interrupt again, but can my noble friend explain what the second no-detriment principle contained in the Smith commission report means—the idea that both sides, north and south of the border, should compensate each other for changes in policy—and how that relates to the welfare and other provisions in the Bill?

Lord Dunlop: I shall come on to speak about the fiscal framework. The Government of Scotland and the UK Government are negotiating the fiscal framework and exactly how we put those principles, including the no-detriment principles, into practice. I will come back to that.

The Bill also enables the devolution of many other responsibilities, from the management of the Crown Estate’s economic assets in Scotland to the management and operation of reserved tribunals. The Commons also agreed the devolution of abortion policy, which the Smith agreement concluded was an anomalous reservation. There are also significant measures relating to transport and energy.

I want to say something about the fiscal framework, to which my noble friend has alluded, the importance of which is rightly recognised by many of your Lordships. I am particularly grateful for the work done on this by the Economic Affairs Committee. The Government

24 Nov 2015 : Column 576

agree with the committee that the relationship between the fiscal framework and the legislative powers in the Bill is critical. It underpins the transfer of tax and welfare powers to Holyrood. The issues raised by the committee’s report are exactly those being addressed in the detailed negotiations between the UK and Scottish Governments. Both Governments have agreed not to provide a running commentary—negotiating in public is not conducive to reaching an agreement.

We are committed to reaching an agreement as soon as we can after tomorrow’s spending review and the draft Scottish budget on 16 December. We cannot guarantee when the negotiations will end—that is not in our gift—and to try unilaterally to set a specific date risks weakening our negotiating position. I hope the House will understand both Governments need time and space to reach an agreement that is right for Scotland and the UK as a whole and is built to last.

Lord Foulkes of Cumnock (Lab): I am sure the House will recognise that, but can the Minister help us? If, during the discussions on the fiscal framework, the Scottish Government’s representatives conclude, as they may well do, that they are better off with a block grant based on the current arrangement of the Barnett formula than raising money through the tax powers on a low tax base, and if they do not accept the proposal from the UK Government on the fiscal framework and the Scottish Parliament fails to give legislative consent to this Bill, what is the Government’s plan B?

Lord Dunlop: I seem to have heard “plan B” somewhere before. I say to the noble Lord that we are planning for success here. We working for success and the UK and Scottish Governments are saying the same thing. We are working constructively together to reach an agreement as soon as we can and good progress is being made.

Lord Reid of Cardowan (Lab): I would just like to probe a little on the Government’s view that it is unhelpful to have a timeline for this and to envisage potentially indefinite discussions. I heard what the Minister said about unilateral declarations of times being unhelpful, which surprised me because the vow, of which he has spoken very much, unilaterally declared three timetables: St Andrew’s Night, Burns Night and so on. I wonder why the Government have changed their mind. Would it not be helpful at least to have some indication of the timescale in which they would hope to reach agreement? I declare an interest as a former Secretary of State for Northern Ireland, where things tended to drift on for years rather than months.

Lord Dunlop: I thank the noble Lord. In broad terms, the Scottish Government and the UK Government are working in sync on this. On Friday, the Deputy First Minister, John Swinney, said,

“I think fundamentally we need to make progress on the Scotland Bill so that the Scottish Parliament can take its final decision on whether the bill is to be adopted before we get to the Scottish Parliament elections next May”.

Our firm intention is for the fiscal framework to be available to both Parliaments before the Bill completes its passage.

24 Nov 2015 : Column 577

Baroness Liddell of Coatdyke (Lab): I am very grateful to the noble Lord for giving way; he has been very generous. One of my concerns following what he has just said is that we are going to be legislating in this Chamber on a wing and a prayer. I have taken Finance Bills through the other place. Changes to taxation have to be looked at meticulously because they have an impact on other parts of the taxation system. I can appreciate the difficulty that the Minister is in because of the commitments made by the leaders of the three parties, but I am extremely worried that we will end up taking decisions that we cannot back out of and that will have a negative effective not just on Scotland but on the whole of the United Kingdom. Can he give me any reassurance on this?

Lord Dunlop: As I said, we are working very hard to get this fiscal framework agreed as quickly as we can. This House considered the tax provisions of the previous Scotland Bill on their merits but, when it did so, aspects such as the block grant adjustment had not been agreed, so there is a precedent here. However, as I said, these two processes need to come together, and that is what we are working hard to achieve.

This House will be involved in the normal way if legislation is needed to implement aspects of the framework. To help the House fulfil its scrutiny role, the order of consideration for Committee will ensure that Parts 2 and 3 of the Bill—its tax and welfare clauses—are scrutinised at the end of Committee, giving more time for the negotiations to progress. As I have already said, it is the firm intention of the UK Government that the fiscal framework should be available to both the Scottish Parliament and both Houses of the UK Parliament before the passage of the Scotland Bill is completed. I shall be happy to say more about the fiscal framework in my closing speech and I particularly look forward to listening to what the noble Lord, Lord Hollick, has to say.

The Government believe that the new powers contained in the Smith agreement provide the basis for a stable devolution settlement for Scotland. Both Governments will need to work together to ensure that the powers are used effectively. The powers in the Bill are substantial and offer real opportunities to develop Scottish solutions to Scottish issues. This is not devolution in isolation but part of a broader process that recognises the need to reflect changes in other parts of the UK and that one size does not fit all.

Lord Lamont of Lerwick (Con): I get the impression that the Minister is getting towards the end of his speech. If I heard him correctly, he said that he would give an explanation of the second no-detriment principle, and I very much hope that he is going to do that.

Lord Dunlop: I need to make progress, as a lot of noble Lords want to speak. I have a closing speech and will say more about the fiscal framework in response to points made during the debate.

At this stage, let me conclude by saying that I am confident that the settlement agreed by the Smith commission, as set out in the Bill, will show itself in time to be durable. I beg to move.

24 Nov 2015 : Column 578

3.43 pm

Amendment to the Motion

Moved by Lord Hollick

As an amendment to the Motion that the Bill be now read a second time, at end to insert “but that this House calls upon Her Majesty’s Government not to schedule Parts 2 and 3 of the Bill in Committee until the updated fiscal framework proposed in Scotland in the United Kingdom: An Enduring Settlement (Cm 8990) has been published”.

Lord Hollick (Lab): My Lords, the Economic Affairs Committee, which I chair, has over the past four months conducted an inquiry into the devolution of public finances to Scotland. We heard evidence in London and Edinburgh from academics, economists, politicians and business leaders, and we met the Scottish Parliament’s Finance Committee. Based upon the evidence that we heard, we unanimously concluded that the financial measures in the Bill could be understood and scrutinised only once the fiscal framework was available. The amendment in my name seeks to ensure that the framework is available to Parliament in time to allow a full and informed consideration of the Bill. As the Minister mentioned, the Governments in Westminster and Holyrood declined to appear before us, citing the need to maintain confidentiality until agreement had been reached. Therefore, the terms of the fiscal framework remain shrouded in mystery.

The Scotland Bill is based on the recommendations of the Smith commission, the aspiration of which was,

“to bring about a durable but responsive democratic constitutional settlement, which maintains Scotland’s place in the UK and enhances mutual cooperation and partnership working”.

There are three aspects to the Smith commission recommendations on financial matters: the tax powers, the welfare powers and the fiscal framework. The latter is the mechanism to make the first two work. The Bill contains the tax provisions and the welfare provisions. It does not contain, nor is it accompanied by, the fiscal framework. This lacuna prompted the former Chancellor, the right honourable Alistair Darling, to tell us that the process was a “rotten” one, and that,

“nobody has a clue what is going on”.

So what is the fiscal framework, apart from elusive? On 14 October 2015, the Secretary of State for Scotland told the Scottish Affairs Committee that:

“The fiscal framework is a vital element of the package that will make Holyrood one of the most powerful devolved parliaments in the world”.

In Scotland, the Deputy First Minister has said the framework is,

“an integral part of the devolution of further responsibilities”.

The Smith commission stated that the framework would contain,

“the funding of the Scottish budget, planning, management and scrutiny of public revenues and spending, the manner in which the block grant is adjusted to accommodate further devolution, the operation of borrowing powers and cash reserve, fiscal rules, and independent fiscal institutions”.

The fiscal rules will provide the operating system for Scotland’s devolved financial powers under the Bill. For example, Scotland will need to be able to borrow

24 Nov 2015 : Column 579

more to manage the potentially increased income volatility arising from its reliance on devolved tax income, which, unlike the block grant, may fluctuate. Without the fiscal framework we do not know how much it can borrow, the limits to that borrowing or what would happen if the borrowings cannot be repaid. Scotland’s block grant will need to be adjusted annually to take into account the devolved taxes. How this is done may operate to Scotland’s detriment over time. The mechanism to make the annual adjustment will be a crucial part of the fiscal framework.

On 14 October, the noble Lord, Lord Dunlop, told the Scottish Affairs Committee he was confident that agreement on the fiscal framework would be reached this autumn. More recent reports suggest that the target date for publication is now mid-January, which would of course be in time for consideration in Committee. Our report identified seven crucial problems with the Bill, the first of which is the absence of the fiscal frame-work. The majority of the other problems also arise from its absence. Let me describe four of the problems.

How will devolution affect Scotland’s funding? Scotland is funded through the block grant as adjusted each year by the Barnett formula. The formula has been used since 1978 and produces disparity in spending per head between regions of the UK. The latest Treasury figures, published last week, show that taking the UK’s identifiable spending as 100%, England is 97%, or 3% below the average; Scotland is 116%; Wales is 111%; and Northern Ireland is 125%. It is generally assumed that the disparities reflect the differing needs of the four countries. That may well be the case but, at present, this assumption is not based on any logical underlying assessment. Six years ago, the Select Committee on the Barnett Formula recommended that the assessment of funding should be based on need and introduced over a 10-year period. We endorse its conclusion and urge the Government to consider this option. It will produce a fairer, more transparent and, crucially, more sustainable outcome for the whole of the UK.

One of the most important and complex issues is how to determine the amount by which the block grant paid to Scotland would be adjusted each year to take account of devolved powers. In the first year, the block grant is set by subtracting the revenues foregone by the UK Government from the total block grant. This fulfils the first no- detriment principle enunciated by the Smith commission. In following years, it must be indexed to reflect the tax foregone by the UK Government. The choice of a method of indexation may seem technical, but it is of vital importance to Scotland and the rest of the UK. If it is not transparent and judged to be fair, it will become a source of annual grievance—and the figures involved are substantial.

As we have heard, Scotland will be taking responsibility for £11 billion of income tax revenue, which is 30% of Scotland’s total block grant of £37 billion. We looked at three indexation options: a fixed percentage, indexed deduction to changes in the rest of UK revenues, and indexed deduction to changes in the rest of UK revenues per head. In each case, even if Scotland matched UK economic performance and grew its tax base by the same rate as the UK, the amount deducted from the

24 Nov 2015 : Column 580

block grant would be bigger than the revenues collected from tax. Within three or four years, the Scottish budget could be hundreds of millions of pounds lower as a result. Over 20 years, we calculate that it would reduce in real terms by between 34% and 27%. This is unlikely to be a recipe for harmony between nations.

Deciding who bears the risk is another thorny subject. Devolution gives the devolved entity the powers to take responsibility for its overall economic performance. If successful, Scotland expects to benefit from that success. But what if it is less successful or its economy suffers from a UK-wide shock, such as the banking crisis? To what extent should it be protected in such adverse circumstances? Well, that will depend on the fiscal framework.

Another principle governing the financial relationship between Scotland and the UK is the Smith commission’s second no-detriment principle, which states that there should be no detriment to the UK or the Scottish Government as a result of policy decisions made after devolution. But how will this work in practice? Professor Kay asked what would happen if you reduced health expenditure in England and made people pay for certain procedures, with the result that ill people would be more inclined to go to Scotland and healthy people more inclined to go to England. Does anybody really imagine that compensation will be paid between the two jurisdictions to reflect that? Furthermore, if the Scottish Government lowered air passenger duty, would they have to compensate Newcastle Airport for any loss of revenue caused by passengers moving their custom to Scottish airports? How would the compensation be decided? Would there be an annual negotiation between the Scottish Government and HM Treasury? If one side is dissatisfied, who would decide? That is yet another opportunity for an annual row. Our witnesses concluded that the second no-detriment principle was simply unworkable and should be abandoned.

The Scotland Act 2012 granted Scotland increased borrowing powers and the power to borrow on the market. Witnesses agreed that the current powers were insufficient to cover the additional devolution in the Bill. Any changes to Scotland’s borrowing will be part of the fiscal framework and require legislation. Linked to expanded borrowing is the question of what will happen if Scotland is unable to meet its debt obligations. Is a “no bailout” rule really feasible? We have seen what happened to that rule in the eurozone, while during the financial crisis the UK Government bailed out the largest Scottish bank. The evidence that we heard was clear: a “no bailout” rule would simply not be believed by the markets. It is therefore essential that there are clear and consistent rules in the fiscal framework specifying the amounts that can be borrowed.

Much hangs on the terms and principles of the fiscal framework. It deserves very close scrutiny. Yesterday, the Constitution Committee said that:

“In the absence of any information about the fiscal framework, it will be impossible for the House to assess whether or not the Bill will cause detriment to all or part of the United Kingdom”.

Holyrood has made it clear that it will not give legislative consent to the Bill until it is satisfied by the fiscal frame- work and until MSPs have the opportunity to consider the fiscal framework in detail. However, the House of

24 Nov 2015 : Column 581

Commons completed all stages of the Bill without sight of the framework. The Government’s haste to legislate risks adding insult to injury. Not only is this major constitutional change being made on the hoof; it is being made in the dark. This is currently, in the words of Alistair Darling, a “rotten” process but does not have to be so.

In the overview accompanying his letter to Peers dated 11 November, the noble Lord, Lord Dunlop, stated that the Government aimed,

“to give respective Parliaments time for due consideration of both the Fiscal Framework and the Scotland Bill”.

He has today confirmed that this remains the Government’s firm intention. This is welcome, but meaningful only if the fiscal framework is available while the Bill is scrutinised in Committee. By moving Parts 2 and 3 to the end of Committee stage, the Minister no doubt hopes to ensure that the framework will be published before the final Committee day, but if it is not he must assure the House that he will defer the final Committee day until it is published. If he cannot give that assurance today, will he explain how the Government will make good on the promise given in the overview, repeated today, to allow Parliament time for due consideration of the financial framework if its publication is further delayed? This is a settlement that must endure. Undue haste will make for a bad outcome. I beg to move.

3.55 pm

Lord McAvoy (Lab): My Lords, I thank the Minister for the way he introduced the Bill and for the always constructive manner with which he approached initial proceedings. On that basis, I am confident that this House will be able to have a positive impact on the Bill. I look forward to working with Members from across the Chamber to ensure that this happens.

I also thank my noble friend Lord Hollick for the crucial work that he and other members of the Economic Affairs Committee have done in producing this incredibly detailed and important report on the relationship between the proposals outlined in the Bill and the revised fiscal framework. I will address the fiscal framework and outline the Opposition’s position later in my speech, but suffice it to say for now that it is incredibly disappointing for everyone that we do not have draft proposals to consider alongside the Bill. I do not want to pre-empt the debate, but I am sure that if a Joint Committee could redouble its efforts to proceed at the quickest pace possible, without compromising on consensuality and scrutiny, it will be warmly welcomed by colleagues across the House.

By any standards, it has been an extraordinary 18 months for Scotland. Today is yet another milestone in the history of Scottish devolution. The referendum was certainly unlike any political campaign that many of us have ever been a part of, invigorating political debate across party and generational divides. The Scottish people voted to remain part of the United Kingdom, not on the basis of a return to the status quo, but in a belief that they would be a member of the union with an enhanced role in how to govern their lives. Here is also the best place I can think of to record, once again, my and our appreciation for the right honourable Alistair Darling’s chairmanship of

24 Nov 2015 : Column 582

Better Together; the absolutely brilliant managerial work carried out by my friend, Frank Roy; and the invigorating intervention by the right honourable Gordon Brown.

I mentioned giving the Scottish people an enhanced role in how to govern their lives. The Bill is that change and it delivers on the promise made. It is important to acknowledge from the outset the unique challenge that this House faces, given that the party of the majority of Scotland’s current elected representatives does not have a voice in this Chamber. It is something to which we must be wise as we debate the Bill. That said, we on this side will not shy away from what needs to be done to ensure that the Bill is as effective and workable as it can be. The decision by the Government to accept so many of our amendments, and those of other opposition parties, on Report in the other place was an essential part of this process. As a result of these concessions, we are confident that the vow has been delivered and that the Bill fulfils the powers promised and agreed by all parties in the Smith commission. The noble Lord, Lord Smith of Kelvin, has stated that the Bill, as amended,

“honours the agreement that was reached”.

The House will be aware that before the Government introduced its amendments we on this side of the House felt that the Bill fell well short of the commitments the main political parties had given to the Scottish people. However, following these crucial concessions—it must be recognised that the Government have moved from their original position, particularly on social security—the Bill now delivers on the vow and the Smith agreement in both spirit and substance. Her Majesty’s Opposition, therefore, fully support the Bill and all it seeks to achieve. As my honourable friend Ian Murray has stated,

“the Bill really matters, because it guarantees not only economic benefits and UK social solidarity, but the scope under devolution to do more, to make different choices and to set a different course for Scotland, distinct from a UK agenda that might not always be … in accordance with the public opinion of Scotland”.—[

Official Report

, Commons, 8/6/15; col. 933.]

The Scottish Parliament, as has been said, will be one of the most powerful devolved legislators in the world. This presents a huge opportunity for Scotland. Not since the Scotland Act 1998 has there been a bigger transfer of powers. It is now up to the Scottish Government to ensure that these powers are used for the benefit of the Scottish people. The permanency of the Scottish Parliament and Government is now beyond question and, as a result of another Labour amendment, the Government have removed any UK ministerial veto on the new regulation-making powers on universal credit. Along with constitutional changes, the Bill also devolves power over electoral matters to the Scottish Parliament.

I am glad to say that significant headway has also been made on gift aid, following a great deal of concern from Labour and third sector organisations that changes to income tax levels in Scotland could cause considerable confusion among charitable donors, and financial and administrative problems for charities. The Secretary of State has committed to,

“an ongoing dialogue with the charity sector before and after the enactment of the Bill to ensure that gift aid continues to operate effectively”.—[

Official Report

, Commons, 9/11/15; col. 100.]

We fully endorse this.

24 Nov 2015 : Column 583

From April 2017, the Scottish Parliament will have total control over the rates and thresholds of tax on non-savings and non-dividends income. Following the acceptance of the Labour amendments, the Scottish Government will now be able to create new benefits in devolved areas and top up existing reserved benefits, including tax credits. These substantial new powers will enable Scotland to raise more than 50% of its own expenditure and to design a new social security system. It will allow the Scottish Government to restore, if they so choose, the loss in tax credits for working families, just as the Scottish Labour leader, Kezia Dugdale, has committed to do.

As part of this welfare package, we were pleased that the restricted definition of carer’s allowance was removed from the Bill. This will mean that there is significant additional scope for the creation of a new, more generous and more expansive, benefit. However, it was disappointing that the Government did not table a similar amendment with regard to disability benefit. That brings me to the areas of the Bill where we still think improvements can be made.

Although the Government’s welfare concessions are warmly welcomed, there remain further measures which, if introduced with enhanced provisions, would clear up some of the Bill’s inconsistencies. One area of concern is the definition of disability benefit, as I mentioned. At present, that definition is overly restrictive and could place unnecessary limitations on the kind of replacement benefit the Scottish Government have the power to introduce. Despite the similarity between the amendment and the one pertaining to carer’s allowance, the Government failed to table the requisite amendment in this area—we are not certain why. The devolution of the Access to Work scheme is another area where there should be further debate.

Beyond the two specific measures that I have highlighted, it is paramount that a smooth transition is afforded for all the welfare provisions that are to be devolved with the passing of this Bill. Labour believes that the most effective means of ensuring this is the establishment of a Joint Committee on welfare devolution. The committee would oversee the transition and implementation of welfare powers and include Members from both Parliaments. Such a committee would be completely open, impartial and transparent. Transparency is something we regard as having been lacking in discussion so far, particularly in the negotiations surrounding the fiscal framework, an issue I expect to dominate much of our debate today and the remaining stages of the Bill. The Scottish Government have been quick to claim that the Bill will be rejected if the accompanying funding is “not fair to Scotland”. However, they have been slow to produce accounts of the meetings that have taken place so far.

The Joint Exchequer Committee between the United Kingdom and Scottish Governments promised that an agreement would be reached by the autumn. However, as has been said, we now understand that the negotiations will not be completed until January at the latest. This is disappointing. It is vital that agreement on the revised framework is reached on a consensual basis and in a timely manner, as well as being made more

24 Nov 2015 : Column 584

formal and transparent. This is something that we will be looking to pursue and explore during the passage of the Bill through your Lordships’ House.

Lord Reid of Cardowan: I congratulate my noble friend on his presentation. He has tiptoed through some very big thistles—with some aplomb, if I might say so. On the question of reaching an agreement on the fiscal framework, I think the whole House would be unanimous, whatever view we take on the amendment, that that is desirable. Should it not be reached by the time we get to the latter stages of the Bill, does he have a view on how we should address it?

I fully understand that we are caught between a rock and a hard place because we have made a promise. Some of us take the view that that was a strategic masterstroke; some of us, like me, think it was a tactical ploy that turned into a strategic disaster, and we are now facing up to it. Nevertheless, whatever view we take—I am personally of the view that we are where we are now and we have to go on with this—how do we go on with it if we do not have the fiscal framework, which, it seems, would lead not to a sustainable agreement but to years and perhaps decades of future grievances? I hope I have given my noble friend the time to respond to me.

Lord McAvoy: My noble friend is as helpful as ever.

Lord Forsyth of Drumlean: Keep going.

Lord McAvoy: Once again, the noble Lord, Lord Forsyth of Drumlean, shouts encouragement to me. The facts of life are that we are in a very complicated situation. It would be foolish for anyone—me, my noble friend Lord Reid of Cardowan, or even, dare I say, the noble Lord, Lord Forsyth of Drumlean—to make specific, hard-line declarations of what is to be expected, when it should happen and what we do if it does not happen.

I believe that there is good faith—I have no reason to think otherwise—in the discussions between the United Kingdom Government and the Scottish Government. Your Lordships’ House should remember that the onus is on the UK Government to come up with a negotiated deal but the onus is also on the Scottish Government to come up with a deal. The people of Scotland voted to stay in the United Kingdom—not unanimously but there was a lot of support for the vote—so there are strictures awaiting anyone who plays games with these very important negotiations. It is not often I say this but I believe we have to trust the Government and the Scottish Government to deliver for the Scottish people.

The Labour Party supported many of the amendments that the Government brought forward in the other place, not least because the concessions had been debated thoroughly. However, that was not true for all the amendments, particularly those concerning the devolution of abortion law. I put on record that our concern is not about the issue of abortion—as we all know, that is different from constitutional matters—but about process. We will be calling for extensive consultation with relevant groups and representatives in Scotland to see what support there is for this proposal. This is not a reflection on the Scottish Government; this is about following the advice of the Smith commission.

24 Nov 2015 : Column 585

Beyond these issues, we will be keen to debate a number of the transport provisions, most notably those surrounding the British Transport Police. Clause 43 follows the recommendation of the Smith commission that the functions of the British Transport Police should be devolved; but not to abolish them, which is what is being proposed by the Scottish Government, who want to transfer the existing functions of the British Transport Police to Police Scotland—more centralisation. This news has been met with strong criticism from trade unions and British Transport Police itself. This is something that we will explore in Committee.

We also intend to extend the Scottish Government’s capacity to bring about equality, particularly in relation to the functions of Scottish and cross-border authorities. That means increasing the accountability of the Equality and Human Rights Commission to the Scottish Parliament. This House has an excellent record of bringing about greater levels of equality in public life.

The final point to make on specific areas of the Bill that we hope to improve is about the Crown Estate, which again will be the subject of much debate in Committee. Although we are largely supportive of the measures the Government have brought forward, we seek clarification on a number of issues, which we will do in Committee. There are issues that need to be examined.

Lord Forsyth of Drumlean: I am most grateful to the noble Lord—I can tell he is reaching the end of his remarks. Could he have a go, on behalf of the Official Opposition, at explaining to us how the second no-detriment principle will work?

Lord McAvoy: Your Lordships’ House should be aware that I was sitting here a few minutes ago, before I started, wishing that the noble Lord, Lord Forsyth of Drumlean, would ask that question. The noble Lord was a driving force in imposing the poll tax in Scotland, which was certainly to the detriment of Scotland. He did not give any consideration to the detriment to his country then. I am really glad that the noble Lord asked that question.

Lord Forsyth of Drumlean: And the answer is?

Lord McAvoy: The answer is that we will not support anything that we know is detrimental to our nation—unlike the noble Lord during the poll tax debacle.

The passage of the Bill through your Lordships’ House was always going to strike a different tone from its passage in the other place—the noble Lord has confirmed that—for a variety of reasons that I mentioned during the start of my speech. However, the concessions made on Report and the acceptance of amendments from Labour and other opposition parties has meant that the Bill, as drafted, delivers the vow in full. That has to be stated time and time again.

Your Lordships’ House has a genuine opportunity to focus on the detail of the Bill and to ensure that it meets the standards that the Scottish people deserve. This is what your Lordships’ House does best, and I caution those on the outside who snigger at or demonise the work that we can do in this Chamber, with insults such as “unelected cronies” and all the rest of it. As we set out to engage in a thorough, detailed and thoughtful debate, which has at its core the very best interests of

24 Nov 2015 : Column 586

the Scottish people, I am sure your Lordships’ House will live up to that. I am proud of a lot of what the House of Lords can achieve through the scrutiny and revision of legislation. I am also a proud Scot. Whatever people may say, these two facts are not contradictory.

The Bill is a real opportunity to provide a stable, durable devolution settlement and gives the Parliament the capacity to create a fairer, more prosperous Scotland. Once it has finished its passage through your Lordships’ House, we must turn our attention to ensuring that all these new powers are devolved and, crucially, to how they can be used. In the mean time, as always, there is more that can be done. We support the Bill.

4.13 pm

Lord Wallace of Tankerness (LD): My Lords, we on these Benches very much welcome the fact that we now have this Bill before us and congratulate the Minister on introducing it.

Many times before today, and already in this debate, the history of the Bill has been well rehearsed. Reference has been made to the agreement among the three party leaders and the fact that on the morning after the very successful outcome of the referendum—which showed that the people of Scotland did, by a significant margin, wish to remain part of the United Kingdom—the Prime Minister announced the establishment of the commission under the chairmanship of the noble Lord, Lord Smith of Kelvin. I am delighted to see the noble Lord with us today. As has been said, there was a very exacting timetable for the publication of the commission’s proposals, which were due before St Andrew’s Day last year, with the draft clauses due before Burns Night. I had some engagement in those days with the Scotland Office, the Cabinet Office and the Treasury, and the work that was put into meeting that particular deadline is a great tribute to the staff. Since then, in the light of further discussions, there has been some refinement of the clauses, but we on these Benches believe that the commission’s recommendations and proposals—taking forward, as they did, the agreement among the three party leaders—are delivered in full in this Bill we have before us. The noble Lord, Lord Smith of Kelvin, has also indicated that, and we look forward to hearing more precisely what he thinks about the detailed provisions of the Bill.

We also support the Bill because it is a further step along the road to federalism, which for my own party has been the ultimate destination for many years. Indeed, the Scottish Liberal Democrats’ contribution to the Smith commission was based on Federalism: The Best Future for Scotland, the report produced by a commission chaired by my noble friend Lord Campbell of Pittenweem. We very much look forward to hearing his maiden speech today. He brings to this House great expertise and experience, not just in politics but also outside politics, in particular on this subject. We also look forward to the maiden speech of our fellow member of the Faculty of Advocates the noble Baroness, Lady McIntosh of Pickering.

While it is important that we support this Bill, as the noble Lord, Lord McAvoy, echoed, the House must do its job properly—a job of proper scrutiny. I think that is more incumbent on us, given that the three principal parties actually agree on the Bill. As I said at our

24 Nov 2015 : Column 587

briefing last week, I think we should be haunted by the Child Support Agency which went through Parliament with the support of all parties. Those of us who were Members of Parliament at the time know how much our constituency mailbags and surgeries expanded because, I think, something that was agreed by all parties did not perhaps get the scrutiny that it should have had. If we seek to improve on the Smith commission proposals and do so in the spirit of the commission, then we should feel that we can certainly do so.

Lord Reid of Cardowan: In fairness, since the noble and learned Lord said that we have to give this scrutiny, I should ask him the same question that I asked my noble colleague here. How can we give it scrutiny if an essential, central, crucial part of it—the fiscal framework —is not available for us to scrutinise? Does he have a view on how it might proceed? My noble friend gave us his view that we should have a degree of trust and wait to see how things develop. Does the noble and learned Lord have a view?

Lord Wallace of Tankerness: My Lords, I do. If I start answering that partly now, I will probably end up repeating myself. I certainly will address the point that the noble Lord, Lord Reid of Cardowan, asks.

I see the Bill as having a number of different parts, dealing with constitutional issues, fiscal issues, welfare issues and what might be described as miscellaneous provisions issues. On the constitutional issues, the commission recommended that,

“UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions”,

and that,

“The Sewel Convention will be put on a statutory footing”.

Clause 1 of the Bill does indeed state that the Scottish Parliament and the Scottish Government are permanent institutions, and it is claimed, as the Minister said, that it should not encroach on the sovereignty of Parliament. I certainly believe that federalism would be a better guarantee of the long-term establishment and entrenchment of the Scottish Parliament, but that is not on offer—it was not before the Smith commission.

During the Scottish Constitutional Convention—there are a number of noble Lords present who were party to that convention—we had many agonising debates as to how we might best entrench the Scottish Parliament that we were intent on establishing. We came to no really good conclusion. When the Labour Party, in Opposition in 1996, recommended and proposed a referendum, my party colleagues and I were opposed to that. In retrospect, I think we were wrong. The fact that we had a referendum in 1997 with such an overwhelming result—both on the Parliament itself and on its tax powers—means that there was a political entrenchment that no amount of legal debate, legal argument or legal wording was ever going to establish. While it is undoubtedly the case that, technically and legally and in constitutional theory, Parliament can repeal what has been said here, nevertheless the fact that it is suggested that there should be a referendum before there is any abolition of the Scottish Parliament lends a political entrenchment which is very welcome indeed.

24 Nov 2015 : Column 588

With regard to Clause 2, I note that what is in the Bill is almost literally what the commission proposed—that it should put on a statutory footing the Sewel convention—because it states:

“But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament”.

Those are the words that Lord Sewel used on 21 July 1998. Of course, in practice, legislative consent Motions have been extended by Devolution Guidance Note 10 to include Bills in the United Kingdom Parliament which confer new powers or responsibilities on Scottish Ministers and the Scottish Parliament. By definition, if we are conferring new powers, the powers cannot already be devolved. My question for the Minister is: why is the clause limited to the very narrow, literal expression used by Lord Sewel in July 1998? In practice, that wording plus Devolution Guidance Note 10 has worked. Strictly speaking, this Bill does not require a legislative consent Motion because it is conferring new powers on the Scottish Parliament. Are two categories of legislative consent Motions envisaged and, if not, why not just put the whole practice of legislative consent Motions on to the statute, rather than limit it to the words of Lord Sewel during the passage of the Scotland Act 1998?

With regard to welfare powers, we believe—and it was reflected in the outcome of the Smith commission report—that it is consistent with the principle of securing a social union that many welfare benefits are rightly reserved to the Westminster Parliament, but we support the proposals for the Scottish Parliament to have power to create benefits in the areas of its devolved responsibility: housing, carers, disabilities and discretionary payments in areas of welfare. As the noble Lord, Lord McAvoy, said, no doubt they need to be looked at in more detail so that they deliver what was said on the packet, and we will certainly do so.

It is also important to remember that with that power goes responsibility. There is not much point if people go around promising more in terms of top-up benefits unless they are prepared to say where the money will come from to pay for them. It is an inevitable consequence of having a mixed welfare system—partly devolved, partly reserved—that the Scottish Government and the United Kingdom Government will have to work more closely together. That in itself cannot be a bad thing; we hope that it will generate more collaborative working than we have sometimes seen in the past.

The amendments made in the other place have to some extent taken away the concern that there was a veto, which is welcome. I always thought that the veto case was totally overstated. I think it is a question of practicality. I remember that when I was in the Minister’s position of having to answer to your Lordships’ House, I asked: “What is actually meant by this?”, when we were dealing with the draft clauses. The example given to me was: “If the Scottish Parliament decides that it wants to have a top-up benefit for left-handed redheads, frankly, the social security system does not have a database for that, so we could not agree to it until such time as we had one”. It was therefore not unreasonable that such a mechanism was included to allow the practicalities to be resolved.

24 Nov 2015 : Column 589

There are one two other specific provisions. The commission recommended that there should be,

“a formal consultative role for the Scottish Government and the Scottish Parliament in designing renewables incentives and the strategic priorities set out in the Energy Strategy and Policy Statement”.

Clause 58 refers to “Renewable electricity incentive schemes”, but it does not refer to heating schemes. I am not sure that any explanation has been given as to why heating schemes should not be included, given the wider remit of the Smith commission proposals.

I echo some of the comments made by the noble Lord, Lord McAvoy, on equality. However, I think it is important that we ensure that the basis of equalities legislation in the United Kingdom is in no way diluted through devolution.

With regard to the Crown Estate, the commission recommended that there should be devolution of management to the Scottish Parliament—or, more practically, to Scottish Ministers—and onward devolution to the communities of Orkney, Shetland and the Western Isles, and indeed, other local authorities. Many of us here are hugely suspicious about whether a Government in Edinburgh who seem to spend all their time centralising, as the noble Lord, Lord Maxton, said during Questions today, will actually adopt the spirit of decentralising power further. The noble Lord, Lord Smith of Kelvin, in his personal comments on the commission, stressed the importance of devolution going beyond Edinburgh. We may wish to examine amendments along the lines of those moved by my right honourable friend Alistair Carmichael in the other place to leapfrog, as it were, and genuinely ensure the empowerment of local communities.

Turning to the fiscal powers, we now have full income tax, aggregates tax, air passenger duty—the latter, too, having been recommended by the Calman commission on which I served. Can the Minister indicate why aggregates tax is included now? We did not include it before because we were awaiting judgments from the European Court of Justice. An update on where we are on that, and why the Minister thinks it is possible now when it was not in previous legislation, would be welcome.

We owe it to your Lordships’ Select Committee on Economic Affairs to respond to the report that it has given us, which undoubtedly has aroused some controversy. I certainly understand and recognise the frustration that we do not yet have the fiscal framework. In response to the noble Lord, Lord Reid of Cardowan, I believe that it is important that we should have sight of that at some stage in our proceedings, but I just utter this word of caution. We cannot do this in a political vacuum. Delaying the Bill at this stage would effectively give the SNP Government a veto on the progress made, and that would not be particularly desirable either. The Minister said that John Swinney was on record saying that he wanted this agreement. We must take that at face value, but, equally, those of us who are immersed in Scottish politics well know that, if something went wrong and we did not manage to reach agreement, they are the masters and mistresses of turning that to their account, and the finger of blame would point unequivocally at your Lordships’

24 Nov 2015 : Column 590

House. Those who have made milking grievances a master art would be only too pleased to have a narrative of betrayal.

Lord Reid of Cardowan: I have a great deal of sympathy with what the noble and learned Lord says, because, on the one hand, we have the cause of rational scrutiny, and on the other the imperative of politics—of keeping a vow. My worry is actually politics: I worry that, in capturing the minutes, we will lose the hours. In other words, if the criticisms being made are correct, then we might have a political storm at present if we were to do as was suggested and in any way delay the Bill, but if the criticisms are correct, we will have decades of such grievances and political problems in future. I probably come down on the same side as the noble and learned Lord on this: the imperatives of the politics are necessary today, but it is essential that the Government recognise that this fiscal framework has to come back at some stage before we get to the end of this process. Otherwise, we are having to make the devil’s alternative choice.

Lord Wallace of Tankerness: My Lords, nothing I said takes away from what I said at the outset: that it is very desirable that we see the fiscal framework. The Government should take from all sides of the House that there has been a view to that effect. While I think it is nonsense to expect the Government to reveal their negotiating hand in this debate, it is not unreasonable to ask, perhaps, for more transparency to show that progress is being made, and for the Government to enunciate some principles as to what they wish to see in the fiscal framework.

For example, one hopes that the Government’s negotiating stance is to seek fairness on all sides—for Scotland and the rest of the United Kingdom. Their role is to take in the whole of the United Kingdom, not just the rest of the United Kingdom. The no-detriment principle should be at the point of devolution: that there is no detriment one way or the other when a particular tax is devolved. There should be a form of indexation—I do not underestimate the difficulties, but it should be one which in itself is neutral, with an automatic mechanism to avoid an annual row.

Lord Forsyth of Drumlean: Does not the noble and learned Lord think that there is a great irony that the Scottish nationalists are arguing that it is essential for the Scottish Parliament to be able to consider the Bill alongside the fiscal framework, in order to ensure the best interests of Scotland, when this is a Bill that will affect every part of the United Kingdom and the House of Commons has not had an opportunity to do what the nationalists are saying is essential, and quite rightly so, in a Scottish context?

Lord Wallace of Tankerness: My Lords, I am not sure what, if anything, was said in the House of Commons about the lack of the fiscal framework when the Bill was being debated there—in fairness, I am sure that it was discussed—but what I have said is that the Government should be seeking to negotiate for the whole of the United Kingdom: there should be fairness all round with regard to this.

24 Nov 2015 : Column 591

Crucially, we should make it very clear that Scotland should bear the full fiscal consequences of its own decisions. There has been some suggestion somewhere that there has been a bit of “cake and eat it”: that somehow or other, if things go wrong, Westminster will top it up. There are those of us who believe that the important rationale for more tax powers is accountability, but that goes out the window unless—for better or worse—the Scottish Parliament accepts responsibility and accountability for the consequences of its decisions.

In conclusion, the important thing that many of want is to get on and use the powers. From next April, there will be the Scottish rate of income tax. We look forward, once this Bill is implemented, to more than £15 billion-worth of tax powers and £3 billion-worth of welfare.

Lord Lamont of Lerwick: I am most grateful to the noble and learned Lord for giving way and apologise for having hesitated for a moment; I was just reflecting on what he had said. I strongly agree with him about the Scottish Government accepting responsibility when they have the power to make individual decisions relating to rates of income tax. He said they must be accountable because they have the responsibility, but is that not utterly inconsistent with the idea of the second no-detriment principle which seeks to safeguard them and does it not make a nonsense of the responsibility that they have?

Lord Wallace of Tankerness: I look forward with interest to what the Government have to say on the second no-detriment principle. If I may say so, one of the shortcomings of the Smith commission report—I am sorry, this will have to take up a bit more time—is that it just gives a heading on page 26 that says:

“No detriment as a result of UK Government or Scottish Government policy decisions post-devolution”.

It then says:

“Where either the UK or the Scottish Governments makes policy decisions that affect the tax receipts or expenditure of the other, the decision-making government will either reimburse the other if there is an additional cost, or receive a transfer from the other if there is a saving. There should be a shared understanding”.

Scotland has powers over the threshold and rates of income tax. As I understood it—no doubt the noble Lord, Lord Smith of Kelvin, will be able to tell us—if for example, as was indicated, the United Kingdom Government were to change the definition of an income tax payer, that could have an impact on Scottish tax rates. I see that as the other detriment that would have to be addressed. It is certainly how I understood it—but more important is how the Government understand it. Thank goodness I do not have to answer for that any longer.

This should actually be an exciting time. The two most exciting elections I fought in Scotland were in 1999 and 2003, when we had got the constitutional settlement and were debating how we would use the powers we had. That made for real political debate. We should be able to use the powers imaginatively. Parties should be able to debate how we set out an agenda for an enterprising Scotland, a more socially just Scotland, a greener Scotland and a fairer Scotland, and how we can benefit all its communities—not just

24 Nov 2015 : Column 592

in the central belt but from the islands down to the Borders. This Bill is not an end in itself. It is a means to try and improve the governance of Scotland and the accountability of that governance, give the Scottish people an opportunity to take more decisions into their own hands and build the kind of Scotland we want to see. The Bill has our support.

4.32 pm

Lord Smith of Kelvin (CB): My Lords, in the run-up to the Scottish independence referendum, the leaders of the UK’s main parties made a series of commitments about further powers for the Scottish Parliament. I was asked to chair political talks to agree the detail of what those powers should be. These talks led to an unprecedented agreement among Scotland’s five main parties. That agreement has now been translated into the Bill before us. I will address three main issues in my brief remarks today: first, to talk about the process through which the agreement was reached; secondly, to reflect on how the agreement has been translated into the Bill; and, thirdly, to address the issues that remain outstanding.

Before I do so, I will explain my role in the process. I stand here today as a Cross-Bench Peer, and throughout my career I have sought to avoid any political affiliation. Although the agreement has come to bear my name, its conclusions have not been influenced by me. I never discussed my views on Scotland’s constitutional settlement or how the powers should be used—and I intend that to remain the case.

I begin with some reflections on the process that led to the agreement. The process was the first time that Scotland’s main parties came together and reached an agreement like this. It was an unprecedented outcome of an unprecedented time in Scottish politics, so it was no surprise that the agreement was hard fought. All parties had to make compromises. Some felt that the agreement had in some areas gone further than they would have liked and others felt it had not gone far enough, yet they all put their personal positions to one side to reach a deal. I pay tribute to the parties for doing this, especially the representatives that I had the pleasure to work with directly. I think we have one solitary member of the commission with us today—the noble Baroness, Lady Goldie.

Lord Foulkes of Cumnock: In relation to good faith, the noble Lord says that all the parties agreed to the agreement. I saw his press conference, when he announced the agreement, and I also saw John Swinney immediately afterwards say that he did not agree with what had been agreed. Is that good faith?

Lord Smith of Kelvin: What actually happened was that he signed up to every single word in that agreement. Immediately afterwards, as a lifelong nationalist, he said that he would always want much greater powers—and, indeed, independence. That was probably what he was going to say when he entered in—but they did not leave the table, and they signed up to every word in the agreement.

The agreement was published on 27 November and it was and is a political agreement. Then it had to be turned into law and, very importantly, in the months

24 Nov 2015 : Column 593

that followed, a commitment to implement the agreement was set out in the 2015 general election manifestos of the Conservative, Labour, Liberal Democrat and Scottish National parties. At the same time, teams of civil servants were busy translating the agreement into a Bill.

That leads me to my second point: does the Bill match the agreement? I believe that the Bill that we have before us honours the agreement among the five parties. Both the House of Commons and the House of Lords will have an important role to play in making sure that the Bill makes for good law, but I am also sure that this House will reflect very carefully before making any substantial changes to the Bill that would result in it differing significantly from the agreement.

I turn to my last substantive point: the issues that remain outstanding. Not all the agreement requires legislation. One crucially important part remains outstanding, as we have been hearing time and again: a new fiscal framework for Scotland. This is fundamentally important to making Scotland’s new powers work. It is the final piece of the interlocking jigsaw. As we have heard, it is not yet agreed and is being discussed between Governments. I am told by Ministers on both sides—I am taking a healthy interest in this—that conversations have been constructive and carried out in good spirit. I expect that to continue and to deliver an outcome in line with the principles set out in the agreement. It is vital that they do. I know that noble Lords and the Scottish Parliament will have views on how the Bill and fiscal framework should proceed. In my view, it is an issue to be discussed and agreed between both Governments, so I shall defer any questions on the parliamentary handling of this issue, at any rate, to the Government Front Bench.

That leads me to the final issue that I want to raise under the heading of unfinished business: the working relationship between a Scottish and UK Government.

Lord Forsyth of Drumlean: I am most grateful to the noble Lord, but before he moves on to that point, could he explain how he sees the second no-detriment principle operating, as the author of that idea?

Lord Smith of Kelvin: The principle is very simple. We established the principle that there should be two areas where there should not be detriment. In the second area, as I am sure the noble Lord is aware from his time working on budgets for Scotland, there is a very complex calculation even now, without these new powers, under the Barnett formula, whereby averages and so on are looked at. The noble Lord, Lord Hollick, expertly explained that it will be even more complicated in future. We arrived at a principle whereby, when taxes are raised, the money is kept and is available and, when taxes are reduced, the money comes off the block grant. There should be no change between the two countries aside from that. It is very complicated indeed, but it is rather like the Schleswig-Holstein question. I am not saying that no one remembers the answer to it, but it is that complicated. May I leave it at that? The noble Lord could perhaps ask future speakers as well.

The Bill important to Scotland and to the rest of the UK. I think noble Lords will agree that it is one of the most important we are going to see in this Parliament.

24 Nov 2015 : Column 594

To return to the point I was making before the noble Lord, Lord Forsyth, intervened, in my view, relations between the UK and the Scottish Government are not good enough right now. We need to see greater respect from each Government to the other in public and in private. The agreement reached with the Scottish parties, and subsequently tested with the electorate across the UK, demonstrated a clear intent. I believe the Bill honours that intent and I hope noble Lords can work to support its progress, improving it where necessary, to deliver that intent into law.

4.40 pm

Baroness Goldie (Con): My Lords, I am delighted to take part in this important debate. For me, it is reaching the destination of a journey which started more than 16 years ago. I will explain further why my perspective on this Bill is slightly different from that of any other Member of this Chamber. I view it through the prism of having been a Member of the Scottish Parliament since 1999, a stalwart supporter of the union who fought with Better Together to reject independence, and a member of the Smith commission on which it was a great privilege to serve. It was a commission set up by the Prime Minister after the referendum to respond to a universal demand to broaden the powers of the Scottish Parliament.

This Bill is two things. It is a pragmatic response to a Scottish Parliament with power to spend money but with very little responsibility for raising it. It is also, very importantly, a political response to a manifest and tangible sentiment in Scotland which emerged during the referendum campaign from people who, although uneasy about independence, did not support the status quo and wanted a parliament with greater political responsibility.

To put this into some kind of context, when I was elected to the Scottish Parliament in 1999, I was not among those who thought it was the first stage of a journey to hell in a handcart. Nor did I share the views of those at the other end of the spectrum who, even then, flirted with full fiscal autonomy and greater spending flexibility. After several years of devolution, I recognised that the structure was flawed. The fault lines were prised open in 2007 when an SNP administration took office. Admittedly, it was constrained by being a minority administration, but that was a temporary abeyance. That period of political indigestion paved the way for the Calman commission to which some noble Lords have already referred. Its recommendations induced the Scotland Act 2012—a cautious, not extensive increase of powers.

In 2011, the election of the SNP to the Scottish Parliament with an overall majority introduced a completely new political dynamic in Scotland. Among other things, the SNP embarked on an almost daily, relentless gripe about the inadequacy of resources given to Scotland. It also possessed a clear mandate to hold a referendum on independence. However, something else was happening. There was a growing awareness among Scottish voters that things needed to change. For example, many were aware that, while welfare was interlinked with the devolved competencies of health, housing, local government, skills and training, welfare itself was reserved to Westminster. It was such inconsistencies that the SNP relentlessly exploited. There was a vacuum

24 Nov 2015 : Column 595

of any meaningful political responsibility in the Scottish Parliament, whereby the SNP could constantly criticise lack of resources and yet have responsibility for raising only a fraction of them.

Some have argued that the Bill before us was a panic reaction to a highly charged referendum debate. In fact, the deficiencies, frailties and inconsistencies of the devolution settlement were laid bare by the referendum debate. This Bill is a pragmatic response to that reality. At the heart of this is also an issue of political trust with the people of Scotland. Prior to the referendum, voters were demanding clarity from the individual political parties in Scotland—clarity about a commitment to extend the powers of the Scottish Parliament if Scotland voted no. That led to the collective undertaking by David Cameron, Ed Miliband and Nick Clegg—to which some noble Lords have already referred—to honour that commitment within a timescale. The first part of that commitment was the Smith commission, so ably chaired by the noble Lord, Lord Smith of Kelvin.

The Smith agreement is the genesis of this Bill, which has been passed by the House of Commons, was not opposed by the SNP and has received the approbation of Lord Smith himself. It is far-reaching and exciting legislation that delivers the Smith agreement. As a pragmatic and political response, it does what it says on the tin. In anticipation of these real political responsibilities, parties in Scotland are already drafting manifestos for the elections next May.

Lord Forsyth of Drumlean: My noble friend served admirably on the Smith commission. Can she explain to us how the second no-detriment principle will work?

Baroness Goldie: The noble Lion, my noble friend Lord Forsyth of Drumlean, may, with the passage of time, have lost a fang or two, but I have learnt that whenever the matter of devolution and the Scottish Parliament comes before him, his demeanour is more predatory than benign. I could not improve on the answer given to him by the noble Lord, Lord Smith of Kelvin.

Regarding the Economic Affairs Committee’s report advocating a delay in enacting the Bill, I have very real political concern because I have to look at all this through a political eye. Were such a delay to be a possibility, Nicola Sturgeon would be cracking open the champagne and thinking all her Christmases had come at once, because such a delay would write the script for her. I can hear the words tripping off her lips: “deception”, “betrayal”, “bad faith”, “broken trust” and “Westminster is a bunch of scheming ferrets”.

This Bill must be enacted. Were it not, the political breach of trust and the betrayal of commitments to Scottish voters would be unacceptable. However, the Economic Affairs Committee is absolutely right to identify that the fiscal framework consequential on the Bill is of huge importance. The Smith commission recognised that, as it did the need to retain the Barnett formula. As has been indicated, constructive discussions are ongoing between the two Governments about how the formula should be adjusted to reflect the changing circumstances consequential upon the Bill. That is not a reason for delaying the Bill; it is a reason for the intergovernmental discussions arriving at a stable and flexible solution that can withstand financial shocks.

24 Nov 2015 : Column 596

The committee is right to identify these challenges, but the fiscal framework is a modus operandi for the two Governments to agree. As a member of the Smith commission, I was privileged to play a part in the genesis of the Bill; as a Member of the Scottish Parliament, I know Scotland needs this Bill; and as a proud Scot, I look to Westminster to deliver this Bill.

4.47 pm

Baroness Liddell of Coatdyke (Lab): My Lords, I am delighted to follow the noble Baroness, Lady Goldie. She and I were a double act during the referendum and spread fear throughout the land. I shall take up one of her final points. She talked about faith and trust in the process and the vow, or the promise, or whatever you call it. I agree that Ms Sturgeon will be cracking open the champagne bottle, but whether we pass this Bill or not, she will be cracking open the champagne bottle because the one thing the SNP is very good at is whingeing. It has raised it to an Olympic sport.

I believe that a promise is a promise and should be kept, but there is something that overrides that, and it is the well-being of the Scottish people—and, indeed, the people of all of the United Kingdom. It should not be above our capabilities to sort this and get a move on with the fiscal framework. Contained within this, there are a number of traps that could cause huge damage to the Scottish economy and therefore to the Scottish people, but, as was pointed out in my noble friend Lord Hollick’s excellent speech and in the excellent document from the Economic Affairs Committee, there are real threats to the performance of the United Kingdom economy. I shall pluck one from the air: borrowing rights and borrowing costs. If they are not resolved, we could find ourselves in a Greek situation: we could be into the Varoufakis school of economies. I apologise to the noble Lord, Lord Lamont, who I know is a friend of Mr Varoufakis.

The faux outrage that we have had from the SNP in relation to the powers in the Bill was absolutely predicable, and it will wish to keep it going because what it is most interested in is process. The longer we keep on at process, the less we look at competence. I will come on to some of the competence issues later. The Scottish Government do not want this legislation on the statute book before the next election because if it is, they will have to say what they are going to do with it. They have powers from previous Acts that they have not used. So there are issues here which we need to address in Committee, but there are some which the Scottish people need to be made aware of because the constant undertone of whingeing and complaint drowns out those who are raising real concerns about the competence of the Scottish Government.

Lord Maxton: I entirely agree with what the noble Baroness has said. Will she make it quite clear that the SNP is interested only in an independent Scotland, not in devolution in any form whatever?

Baroness Liddell of Coatdyke: I agree with my noble friend and will come back to that point later. The debate on the fiscal framework is interesting, particularly the intervention by Professor Anton Muscatelli, who is no fan of those of us on the union side. The work by

24 Nov 2015 : Column 597

him and by the Economic Affairs Committee, and some of the comments from the Scottish Government, reveal that the Barnett formula, and the process we have had up until now, delivers the best possible deal for Scotland. It is interesting that there is now back-tracking, with people saying, “We are going to get less”, or, “We could get less” as a consequence of losing chunks of the Barnett formula. This makes the case that we were all making during the referendum campaign. The SNP was trying to get the Scots to walk away from that very formula.

The independent Institute for Fiscal Studies says that the real significance of the fiscal framework is the no-detriment deal. I will get this in before the noble Lord, Lord Forsyth, does. That deal is,

“unworkable and will simply create ongoing disputes”.

I would take this one stage further: you have to define what detriment is. You cannot conclude that something is detrimental until you have set out the parameters of what detriment means. The overall deal gives the Scottish Government the power to design a significant part of the welfare system and control income tax. We have to reflect here, in the short term, on issues of competency, because there are impacts for all of the UK and how we are perceived internationally—and the omens are not good.

This is one of the reasons why we have had such histrionics from the other place about this legislation. Audit Scotland has already revealed that the Scottish Government are running a deficit: an underspend of some £350 million. This is at a time when our health service and education system are underperforming and crying out for money. Speaking as somebody who has been a Finance Minister, it is an even greater sin to have an underspend than an overspend, because it means that you have not done your planning properly and it raises issues of competence or cynicism. What is more, we have never been given a proper explanation of why previous powers have not been used. We also have lots of examples of how money has been misspent. In the past week, there were two cases of IT systems that are not even going to be used because they were so badly specified.

The performance of individual departments within the Scottish Government also gives me real cause for concern. Many Scots are really concerned about what is happening with Police Scotland. We have had some terrible tragedies recently. I was quite astonished to discover that the Justice Minister had not met the Chief Constable for four months. That is a shocking statistic and I am really concerned about it. We have 2,000 fewer police staff in Scotland.

The other area I have a concern about is one that we in Scotland have always been extremely proud of: our health system. The headlines may be about people dying on trolleys, but behind that there has been a 0.7% fall in real-terms spending on NHS services and new hospitals in Scotland over the past six years. Bed blocking has increased from 200,000 in 2011 to more than 612,000 last year because of a lack of community support, 71% of vacancies in accident and emergency staff are unfilled for six months and 2,000 NHS nursing jobs were cut in Scotland when Nicola Sturgeon was Health Minister.

24 Nov 2015 : Column 598

I am a proud bus driver’s daughter from Coatbridge. It is a coincidence that I am standing behind my noble friend Lord Reid of Cardowan as both of us went to the same school and both of us got our opportunities because we were given a good Scottish education that allowed us to go to university. The gap between Scotland’s most and least deprived children stands at 12% in reading, 21% in writing and 24% in arithmetic. There are 4,000 fewer teachers in Scotland and the figure that really sickens me is that fewer people from poor homes in Scotland are now able to go to university—down at less than 10% when it is more than 12% in the rest of the United Kingdom. That shames Scotland and it must be put right.

I suspect that many Members of your Lordships’ House would not be aware of the fact that the budget for bursaries and grants in Scotland has been cut by £40 million and that the total value of student debt in Scotland stands at almost £2.7 billion. It is the SNP Government’s biggest financial asset. That is absolutely shameful. Against that record of incompetence we have to look at agreeing the legislation in this House without knowing the detail of the fiscal framework.

Many of us in this House are a bit long in the tooth. We should be able to come up with ways to examine the fiscal framework in time to meet the promise before the legislation is enacted. If we cannot see the detail of the fiscal framework—if we cannot see the workings, as they used to say in primary school—if the Government would be prepared to release to us the minutes of the discussions between the UK and Scottish Governments, we would at least have a flavour of where it was going.

The noble Baroness, Lady Goldie, referred to the jollity that there would be if this Bill was not passed. In the other place there was a lot of criticism from the SNP Benches about how bad this legislation was. Yet did they put down amendments? Did they vote on those amendments? One very important amendment that my noble friend Lord McAvoy referred to was about abortion being devolved to the Scottish Parliament. They put down an amendment on that because they support it. They did not put in tellers. What could be more cynical than that? You have the amendment, you have the debate but you run away at the final hurdle because you are frightened of the nature of the debate that it will create.

I apologise that I have taken longer than the advisory time. As noble Lords may gather, I feel very passionate about this. The noble Lord, Lord Dunlop, referred to the fact that he listened to the results on the night and heard the noble Lord, Lord Forsyth. I listened to the results outside Stirling—Stirling in South Australia. The next day, when I went into shops, as is my wont, people would come round the counter when they heard a Scottish accent and shake hands and say, “We are glad that Scotland is part of the United Kingdom and will continue to be part of it”. If we muck this up, that is not going to be the case.

I will shut up now and look forward to the noble Lord, Lord Campbell of Pittenweem—the second most beautiful place in Scotland after Coatdyke—and I very much look forward to hearing the noble Baroness, Lady McIntosh.

24 Nov 2015 : Column 599

4.59 pm

Lord Campbell of Pittenweem (LD) (Maiden Speech): My Lords, I am not entirely clear how to respond to that but I think that the good people of Pittenweem will make their own judgment.

I hope that it will not be thought presumptuous of me to suggest that we should be loath to draw any parallels between the Schleswig-Holstein question and any of the contents of the Bill. It will be remembered that one of those who claimed to understand the question went mad, and it may be thought an unfortunate omen.

Contrary to expectation, this is not the first time that I have spoken in your Lordships’ House. The last occasion was more than 30 years ago but I have good cause to remember it well. Outside, there was a most Indian of Indian summers; inside, being after 1 October, the central heating was going full bore, and I was dressed in full court dress and wearing the necessary full-bottomed wig when appearing before the judicial committee in the Chamber. Notwithstanding that ordeal, worse was to be suffered. I spent a whole day being eviscerated by Lord Bridge of Harwich, whom some of your Lordships will remember for his robust interventions on the judicial committee. It is only very recently, and reluctantly, that I have come to the view that perhaps he did not care for my argument.

For maiden speakers, the advice is clear: be grateful, be short and be uncontroversial. I believe that I will be able to meet the first two of these but I have some reservations about my ability to adhere to the third. I am indeed grateful to all those who have successfully piloted me through the necessary steps to enable me to become a Member of your Lordships’ House but I have little doubt that I shall be seeking their indulgence for some considerable time to come. However, if I may offer a tentative conclusion, it is now patently clear to me that the House of Lords is run by the attendants. I am left with the feeling of a junior who has left to join the seniors, and I mean no adverse implication by that characterisation. As for being short, I believe that I can meet this requirement, as in my previous life I never showed any enthusiasm for long distances or indeed endurance events.

However, it is the third of those pieces of advice of which I am less confident. This is a debate nominally about Scotland but, as has been made clear in some of the contributions, it is also about the future of the United Kingdom. In the febrile and sometimes intimidating environment of Scottish politics, it is almost always necessary to state one’s qualifications for joining in the debate, and that is why I will state mine.

I was born in Scotland, my parents were Scottish, I went to school and university in Scotland, I am married to a Scot, I qualified in and practised Scots law, I represented a Scottish constituency for 28 years and I am the chancellor of Scotland’s oldest university. I believe that I have the right to participate in any debate about the future of Scotland and the United Kingdom wherever it may be held. But my pride in Scotland is not exclusive: I am equally proud to be a citizen of the United Kingdom. At Murrayfield I cheer for Scotland, although not always to good effect;

24 Nov 2015 : Column 600

at the Oval I cheer for England; and, wherever the Ryder Cup is played, I cheer for Europe. These are not competing but complementary affiliations.

So why should I be proud to be a citizen of the United Kingdom? Here are a few reasons. This country has had no civil war since the last convulsions of Jacobitism in 1745. It successfully resisted the fascism and the communism which blighted so many countries in Europe. It invented the welfare state and created the National Health Service. Human rights are at the very heart of our governance and we have a judiciary, both north and south of the border, of enviable independence. Our freedom of speech, expression and assembly are admired by liberals everywhere. Beyond that, we are permanent members of the Security Council of the United Nations, the G8, NATO, the European Community and the Commonwealth. We have much to be proud of in our unique contribution to international affairs.

And yet our union is under threat. I have no doubt that the people of Scotland agreed that we are better together but, following the events of the last few weeks, I am equally convinced that we are safer together. I simply do not believe that an independent Scotland would be capable of providing the level of security required if we are to live in safety. A failure to do so would have dangerous implications not only for Scotland but for the rest of these islands. If we are to preserve our union, I believe that we need to legislate for a new Act of Union; legislating for England, Wales, Northern Ireland and Scotland, and setting out clearly the responsibilities and rights of all four nations. If you advance that proposition, you have to answer the question of what form such a reinvigorated union should take.

Until very recently the F-word was not mentioned in polite society, and certainly not before the BBC’s 9 pm watershed. But now, it is in common parlance. My personal view, agreeing with that of my noble and learned friend Lord Wallace of Tankerness, is that the case for federalism has never been more popular or stronger than it is now. This is not the occasion for a detailed debate on a new Act of Union or indeed on the principle of federalism itself. However, I hope that we shall return to these matters early here. If I may, out of nostalgia as much as anything else, I will say as I said on the previous occasion when I spoke in your Lordships’ Chamber: my Lords, I rest my case.

5.07 pm

The Earl of Kinnoull (CB): My Lords, what a pleasure to follow that wonderful speech from the noble Lord, Lord Campbell of Pittenweem. As ever, it was perceptive and thought-provoking. I note that in the short interlude since his promotion from the other place he has lost none of his eloquence nor the stamp of wisdom. He was most modest about his many achievements. The House is very much aware of his political ones, but he shone too in a stellar athletics career, holding the 100 metres record for Great Britain for seven years. He was an Olympian and also captain of the Great Britain athletics team for a couple of years.

One achievement that he is not aware of, and which I think is an equally great achievement, is capturing the vote of my grandmother. She was a constituent of his who lived in Elie, a neighbouring village of Pittenweem,

24 Nov 2015 : Column 601

and a life-long Conservative. She cited his great charm and his common sense, and we have seen that evidenced today. I think we can look forward very much to his further contributions in debates.

I declare my own interests as set out in the register of the House, especially as a Member of your Lordships’ House who lives and farms in Perthshire.

At this important stage of an important Bill, it is a great pity that we will not hear at all from the Scottish National Party. As a matter of SNP party-political policy, its members have refused the offer of appointments to your Lordships’ House. The result is that at least a part of Scotland has no voice in proceedings today and no method of advancing some, or indeed any, of the many amendments that the SNP put down in the other place, which were substantially not debated. I am sure that many in the House today regret this self-inflicted state of affairs. It would be very interesting, for instance, to have the SNP’s view on the fiscal framework and the second no-detriment principle.

I have at home a handwritten set of the minutes of the 1706 meetings between the commissioners for Scotland and England that gave rise to the union, and I spent part of last weekend rereading it and reflecting on it. It is a fascinating document dealing with the proceedings over several months, between April and July that year. The early part of the proceedings were very much about political structure and the later part about financial matters—Scotland being effectively bankrupt at the time. The symmetry of history means that one could cast this Bill as substantially being the final financial follow-on to the political settlement of devolution.

Put simply, the Smith commission agreement hands more power to Holyrood, substantially over financial matters. However, the Parliament or Government who are to receive the new power must be ready to receive it. There has recently been considerable public comment about perceived failings in Scotland today—very ably summed up by the noble Baroness, Lady Liddell, in her powerful speech, which I look forward to reading again tomorrow. The criticism is directed at government performance and at the way in which Holyrood scrutinises new legislation. On this latter point, I have some direct personal experience—which I will not go into today for timing reasons—and I cannot see how MSPs, with their heavy constituency programmes, can lend the time required for the sort of careful scrutiny that your Lordships undertake; I hope that this scrutiny point is being thought about in Holyrood with a view to change. Accordingly, we must be very careful not to overimplement the Smith commission report.

Turning to the specifics of the Bill, given that there are some 40 speakers I will comment only on Clause 34, which concerns the Crown Estate. Currently, the Crown Estate is managed by the independent Crown Estate commissioners, pursuant to the Crown Estate Act 1961. The make-up of the commission is, by custom and practice, politically neutral, as it looks after so much of great national importance. The commissioners have done a very good job over the years and, in the last financial year, returned £285 million to the Treasury. The Scottish assets within the Crown Estate render a much larger percentage of the Crown Estate income

24 Nov 2015 : Column 602

than the 10% or so that Scotland might get through the operation of the Barnett formula. Accordingly, this became the subject of a Smith commission discussion about money.

In closing, I put three questions to the Minister. First, the Smith commission agreement calls for the assets to be transferred to the “Scottish Parliament”. In the Bill, this has become “Scottish Ministers”. The proposed move is therefore from apolitical commissioners to highly political Ministers. Can the Minister explain this change? Secondly, the Smith commission envisages further onward devolution to various named local authorities, as was pointed out by the noble and learned Lord, Lord Wallace of Tankerness. The Bill is silent on this. Can the Minister explain this? Finally, can the Minister confirm that it is the intention in this Bill to ensure that in future the Scottish assets are held on an exactly analogous basis and cannot be used for political purposes? The Crown Estate commissioners have an excellent record of service to the United Kingdom, and I very much hope that the new Scottish replacements will maintain these high standards and that this Bill will act as a strong constitutional document for them.

5.14 pm

Lord Lang of Monkton (Con): My Lords, it is a particular pleasure to follow the noble Earl, Lord Kinnoull, and to echo his tribute to the noble Lord, Lord Campbell of Pittenweem, who gave us a most interesting and elegant speech and whose presence in this House will enhance it considerably, not least because of his great distinction in the field of defence—knowledge of which will be quite welcome in the weeks and months ahead.

We must pass the Bill. That is not in doubt. Promises were made, agreement was reached between the parties, and approve it in due course we certainly must. But it must also be pointed out that, for the leaders of all the major parties in Westminster to agree in advance to pass into law whatever the Smith commission came up with—to do it in full and at once—is indeed, mercifully, a unique constitutional experience. No constitution committee could fail to protest at such an abandonment of due constitutional process, or to identify, as our report did, its dangers and possible shortcomings. Nor can the House fail in its duty as a revising Chamber to scrutinise the Bill thoroughly.

I make no criticism at all of the Smith commission or its chairman. Indeed, I congratulate the noble Lord, Lord Smith of Kelvin, on reaching an orderly conclusion. He presided with great skill. He showed perceptive and sensitive guidance that contributed much to the process. His comments in the foreword of the agreement are indeed valuable, in particular his reference to further devolution in Scotland and to improvement in intergovernmental relations—a subject on which the Constitution Committee has already reported, to which we await the Government’s response. I also pay tribute to the productive contribution to the Smith commission of my noble friend Lady Goldie, whom I am sure helped to contain some of the wilder aims of others.

Nor do I blame for the problems we now face my noble friend the Minister, who has the misfortune to be the last in line in the legislative process, with a

24 Nov 2015 : Column 603

difficult job to do and a lot of troubles piled up. But the bigger picture is not just about this Bill. We now have the third Scotland Bill in just 17 years—a box set of enduring settlements, each one seeking to regain lost ground. We all saw how the nationalists signed up to the agreement and then resiled from it the very next day, trying to use it as a stepping-stone. To them, it was simply ground gained.

The Bill has one really important aim: it will at last force the Scottish Government to face up to the responsibility for raising much of the revenue in Scotland and thus be held accountable to their electorate. That alone is a good reason for the Bill passing in due course, but that does not excuse it from scrutiny. I trust that your Lordships will indulge me for a little longer than the advisory speaking time so that I can draw attention to some of the most significant concerns our Constitution Committee has expressed. In the interests of time, I will leave to others the vital issue surrounding the fiscal framework. I will not endeavour to explain the double jeopardy point—what was it called?

A noble Lord: Detriment.

Lord Lang of Monkton: The double detriment point. To do so would be to the detriment of my speech.

A similar problem attaches to the shared powers over welfare, whereby the House cannot assess how the vital intergovernmental relations will operate without the revised memorandum of understanding and joint ministerial committee structure now still being negotiated. Our report has therefore suggested that, as with the Economic Affairs Committee’s concern about the lack of a fiscal framework, a delay in the progress of the Bill may be necessary to allow for proper scrutiny of the welfare provisions.

I agree with my noble friend the Minister about the desirability of calming things down, but I hope that in his winding-up speech he can reassure me and the Constitution Committee on a number of points. Clause 1, on enshrining the permanence of the Scottish Parliament, seems simple, straightforward and declaratory, but it could have profound constitutional significance. The Government now appear to seek to compromise the United Kingdom Parliament’s competence with regard to the devolved institutions, first by stating their permanence in statute and secondly by creating conditions involving a referendum that have to be met before the UK Parliament could move to abolish them.

It is of course completely implausible to suggest that such a course would ever be contemplated, but the concept of parliamentary sovereignty is a fundamental principle of the United Kingdom’s constitution and it has long been understood that no Government can bind their successors. In seeking to limit Parliament’s powers in this manner, the Government are introducing confusion and uncertainty about the nature of parliamentary sovereignty where once there was none.

Clause 2 compounds this concern. By giving the Sewel convention a statutory basis, the Bill opens the door to judicial intervention on the right of Parliament to legislate. It risks creating a route through which the courts might be drawn—inappropriately but perhaps inescapably—into an area hitherto within the jurisdiction

24 Nov 2015 : Column 604

of Parliament alone: its competence to make law. That is serious enough, but it seems to me that the original meaning and purpose of that convention may have already mutated, with no debate or authority from Parliament, into something much more far-reaching, which could breach the whole principle of devolution: that power devolved is power retained. Even the word “normally” in the clause raises clouds of uncertainty and the prospect of judicial involvement.

Our committee believes that it is now vital that the Government clarify the purpose and reach of the Sewel convention as stated in Clause 2. Can my noble friend confirm that the guidance note GGN2, issued in 2005, to which the noble and learned Lord, Lord Wallace of Tankerness, referred, did not change the purpose of the convention in any material way? In addition, the combined impact of Clauses 1 and 2 could be dangerous and no thought seems to have been given to this. These two clauses might not be just declaratory and, taken together, could have far-reaching consequences. Will my noble friend also confirm that in the final analysis, no devolved Parliament or Assembly is entitled to veto legislation passed by the sovereign United Kingdom Parliament?

Lord Wallace of Tankerness: The noble Lord is raising an important point. Does he agree that, as we now have a system under Standing Orders whereby legislation passed by both Houses can be vetoed by a subset of the House of Commons—namely, English MPs—the Government have already sold the pass on the sovereignty of Parliament?

Lord Lang of Monkton: The noble and learned Lord identifies precisely the kind of confusion and obfuscation which endangers the sovereign nature of this United Kingdom Parliament. It is a very important area and I hope we are able to pursue it further.

The Bill also has significant implications for England. Considerably fewer issues will now be reserved, and the West Lothian question will consequently intensify. By increasing the scope of matters devolved to the Scottish Parliament, the number of issues to which the new English votes for English laws procedures will apply will increase. This will add to the complexity of establishing whether new legislation deals solely with devolved matters. I do not believe enough consideration has been given to that, and further confusion will flow from matters that are shared between the two Parliaments.

Our report commented on several other matters of concern, but the recurring theme was that no serious consideration seems to have been given to the implications of the Bill for the union as a whole. We need to articulate a coherent vision for the future shape and structure of the union if the ongoing process of reactive, ad hoc devolution, demand-led and indiscriminately granted, is to be stabilised. No major constitutional measure that does not take account of its implications for the United Kingdom as a whole can possibly claim the right to provide for an enduring settlement. It is that wider challenge of stabilising the union, and rationalising devolution within it, that your Lordships’ Constitution Committee is engaged with in our current inquiry.

24 Nov 2015 : Column 605

5.23 pm

Lord Foulkes of Cumnock: My Lords, I also congratulate the noble Lord, Lord Campbell of Pittenweem, for his very statesman-like maiden speech—I was going to refer to it as “Ming’s maiden speech” but that might not be appropriate in this setting. It was a tremendous tour de force. I am also very much looking forward to the maiden speech of the noble Baroness, Lady McIntosh of Pickering, who I know well from the other place.

As a number of Members will know, not least my noble friend Lord McAvoy on the Front Bench, I have been an enthusiast for devolution for a very long time. I argued for it in the 1970s and was very disappointed at the result of the 1979 referendum, when, although we had a majority, we did not get over 40% of the vote. We were all disappointed but we pulled up our skirts—or our kilts—and fought again and we managed to get it in 1997 in the general election and in 1999 in the referendum. We were very pleased about that. The constitutional convention in Scotland—with, let us be honest, the SNP and the Tories on the sidelines—came up with a great scheme. At least we thought it was a great scheme. The noble and learned Lord, Lord Wallace, and I served on that constitutional convention and many compromises were made, as he knows.

I must confess—and I know the noble Lord, Lord Forsyth, will say, “I told you so”—that, on reflection, the Scottish Parliament and particularly the electoral system have not functioned as we had hoped and expected. We were told that that electoral system would not result in an overall majority. Yet in 2011 we saw the SNP, with only 45% of the vote, get an overall majority: 69 out of 129 seats. Let us be honest about it. This is something we all have to face up to, particularly the noble Lord, Lord Smith, but everyone here. It may not be known by some of the people south of the border that the result has been an SNP hegemony—control by one party—in Scotland.

The SNP does not just have a majority in the Parliament, but there is an SNP Presiding Officer—it did not see fit to let another party have that job. There are SNP majorities on every committee—which never criticise, unlike our committees in both Houses of this Parliament. Civil society, through a succession of carrots and sticks, is becoming increasingly subservient to SNP dominance, as are the media. We saw that one of the committees of the Law Society seemed to have been taken over. There are the voluntary organisations: we saw a £150,000 grant, without any submission, being given to T in the Park because there was a little bit of elbowing by someone very close to the SNP.

Of course, there are no checks on the power. There is no “House of Lairds”—or, even better, a Senate—that might hold the SNP to account. It has total control. Let us not pretend. My noble friend Lady Liddell—I call her the Secretary of State Emeritus—and my noble friend Lord Maxton said this. Everything the SNP does is subservient to its goal of independence. We must never forget that. That is what it is doing. If it agrees, it is a tentative agreement. It is done just because it is expedient to do so at the time.

24 Nov 2015 : Column 606

As the noble Lord, Lord Lang, said, we have had three Scotland Bills. The tax-varying powers in the 1998 Bill were never used. The second Bill in 2012 led to the Calman commission and all those powers—tax-raising powers, borrowing powers, the revenue Scotland created—but very little recognition or credit was given to this Parliament for giving that kind of devolution. The SNP keeps asking for more—this Oliver Twist syndrome, which is part of the slippery slope towards independence. That is how the SNP sees it.

As the noble Baroness, Lady Goldie, said, the 2011 election provided the SNP with the 2014 referendum. With no disrespect to the Prime Minister, he was conned by Alex Salmond into deciding that it should be yes/no—and the Electoral Commission went along with that. It is not doing that for the European referendum, which is not going to be yes/no; it is going to be “withdraw or stay in”. Of course the SNP made its proposal the yes proposal because it is good to be positive. It chose the date. It used all the resources of the Scottish Civil Service to argue its case.

Then, just as we were getting near, there was that flawed YouGov poll—and it was flawed. It was out of kilter with every other poll. That led, as my noble friend Lord Maxton said, to the unnecessary vow. It led to panic. It led to the Smith commission. With no disrespect to the noble Lord, Lord Smith, that was rushed and we have ended up with an unworkable proposal. That created the momentum for the 2015 victory; it led to the SNP being elected with—well, it was 56 seats, then it was 55, now it is 54; they are toppling one by one through various means.

What have we got in Scotland? We have an Education Minister who cannot string two sentences together, a Justice Minister who does not seem to see the need to meet with the chief constable regularly and a Health Minister who is totally oblivious to the failings of the Scottish health system. They are not exercising their powers. The noble and learned Lord, Lord Wallace, made a very eloquent plea for the SNP to improve services in Scotland, to improve education, to have innovation and new ideas in the health service, and to improve the justice system to get fewer people in prison—all those kinds of things which it promised it was going to do but has not been doing. It has let the services take over while the First Minister and her Cabinet Ministers go around the country for photo opportunities, campaigning for independence. That is exactly what they are doing—let no one be in doubt about that.

In an intervention that I made on the Minister, I asked about the now increasingly likely event that the SNP will see that it is going to get these proposals but will be worse off in financial terms than it is currently under the block grant and will decline legislative approval for the Bill. It might well do that. We are in a very difficult position because the Government have no plan B. The Conservatives are doing this and everything else on an ad hoc basis. As for the truth of what went on between the First Minister and French ambassador, I still believe that she did say to her that she would prefer Cameron as Prime Minister to Miliband, because it serves the SNP’s purpose to have a right-wing Tory Government making cuts, doing the kind of things that the people of Scotland do not want.

24 Nov 2015 : Column 607

What is the alternative? The Minister could well ask me what my plan B is, but I have said it again and again. It was great to hear the noble Lord, Lord Campbell of Pittenweem, come in and say it and to hear the noble and learned Lord, Lord Wallace, say it again. We have the Bill from the noble Lord, Lord Purvis of Pittenweem, and we have heard this now from the Constitution Committee of this House on a number of occasions. What we need is a UK constitutional commission to work towards a federal or a quasi-federal system to deal with the English democratic deficit, to include Scotland, Wales and Northern Ireland, and to provide an opportunity to consider proper Lords reform at the same time. There is a growing consensus for that, and the only people who do not see it are the Government. If the Government continue to fail to understand this and what is happening in Scotland, I warn them now that independence is inevitable sooner rather than later. It is about time that the Conservative Government woke up and did something positive to protect the union.