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Lord Mackie of Benshie: No, but I thought that the speeches from the Government side of the House were sensible. The noble Lords, Lord Kirkhill and Lord Hughes, put up sensible suggestions about the troubles that we will encounter with this Bill and talked about how one can examine legislation properly in a
Lord Mackie of Benshie: Ah, the West Lothian question! It is perfectly soluble. Worse problems have been solved very easily. Here in this House, we have a majority of hereditary Peers, with prejudiced views. Some of those noble Lords are brilliant; others are not so clever. They are mostly Tories. They follow the Salisbury convention quite happily. That is a solution to a problem that is potentially far more difficult than the West Lothian question. So, as I have said, there are solutions. The noble Lord, Lord Hughes, quoted the Norwegian solution. I am certain that there are other solutions that could apply without any great trouble or difficulty.
People appear to be terrified that the parliament in Scotland will upset the status quo. It will, to a degree. However, everybody talks--we have had examples from all sides--of the success of the Scotsman abroad and the Scotsman in the south--and of what a splendid fellow he is. There does not appear to be any good reason why he should not be a sensible fellow at home if matters are properly put to him. I have no doubt that the Liberal Democrats, the most sensible of all the parties, will gain many more seats in the election than the 10 per cent. with which we are credited. We always do--mainly because of the excellence of the candidates. However, I have been heartened by the number of independents and people who would not normally consider that they have the time to be a Westminster MP who want to stand for election to the Scottish parliament. I refer to able people who are at the height of their professions. I know that I have referred to this previously, but I ask noble Lords to consider the quality of the local Members of the Stormont parliament as regards administration and ability, if not fairness to minorities. Their ability was certainly infinitely greater than is found at Westminster. Good people will be attracted to the creation of a centre of power.
Of course, there will be snags, but I trust that we shall be able to iron out many of them if we approach the matter with goodwill and not with the sense of resentment which I feel that many good people who sit on the Tory Benches in this House are bringing to bear on this issue.
If the Government will listen--I hope that they will listen; indeed, I wish that they would listen now to what I am about to say--I advise them that it is most important to note what was said by the noble and learned Lords, Lord Hope of Craighead and Lord McCluskey, who put so well the legal points that are so important to liberty and to the good governance of Scotland. I hope that we shall be able to discuss those points and to make something of them.
Lord Mackay of Drumadoon: My Lords, at the conclusion of the Bill's passage through another place the Secretary of State for Scotland remarked on the number of people who had spoken to him since the referendum along the following lines: "I voted 'No' in the referendum to both questions, but I am as determined as you to make the Scottish parliament a success". I cannot claim to be one of those to whom the Secretary of State has spoken. His political difficulties may be increasing by the week but they have not driven him to seek my advice; nor do I expect that situation to change in the weeks ahead. However, without any reservation I wish to be regarded as someone who is determined that the Scottish parliament should be successful not only as an institution in its own right in Scotland but as one that plays an effective role in the continuing success of the United Kingdom as it moves into and through the next century.
During the extensive debate that we have enjoyed over the past two days a number of noble Lords, including many of my noble friends, have expressed serious reservations as to whether the setting up of a Scottish parliament will ferment rather than dissipate the forces that seek to break up the Union and bring independence to Scotland. They have done so in a variety of ways. With the greatest respect to my noble friend Lord Dartmouth, they have done so with varying degrees of passion. All of these views are very genuinely held. Many are expressed by those who speak from years of experience of public life and in the field of politics. In particular, I refer to the very eloquent and carefully thought out speeches of my noble friends Lord Lang of Monkton and Lord Gray of Contin.
I understand why those concerns are expressed. I respect those who hold those views and I can well understand the reasons. Equally, I respect the views of those who speak without reservation in support of devolution. The very eloquent speech that we heard tonight form the noble Viscount, Lord Thurso, who traced his family's support for devolution, was impressive and clearly genuinely felt. Equally, last night the noble Lord, Lord Kirkhill, reminisced with affection about his involvement in the previous devolution Bill. Noble Lords could not have failed to be impressed by the genuineness of the views that he held. I hope that those who have promoted devolution over the years will also learn to respect the views of others who have reservations about the project, because if together we address the provisions of this Bill over the next few months that is the best way to ensure that it goes forward in the best possible form.
I believe that after the manifesto commitment, the election and the referendum one crucial question remains unanswered: what will happen if the Scottish parliament is not a success? The answer to that question is obvious. Unless the parliament is a success there can be little doubt that nationalism will flourish. If the Scottish parliament is set up and fails it is difficult to
For that reason, I very much hope that, whatever their perspective before the election and the referendum, noble Lords on all sides of this House will apply their talents and efforts to a searching yet constructive revisal of a Bill which on more than one occasion the Secretary of State for Scotland has publicly acknowledged to be a difficult measure to draft and one that merits the closest attention of Members of your Lordships' House.
I hope that in that debate we shall hear somewhat more from the active supporters of devolution than we may have heard over the past couple of months. I noted in particular what was said by the noble Lord, Lord Watson, earlier today: that the noble Lord, Lord Ewing, had not taken part in the debate. There are others who fall into that category, although none has played as distinguished a role as the noble Lord, Lord Ewing. If it is important that those who have doubts about devolution constructively criticise the Bill, it is equally important that those who actively support it do so as well. With respect, that seems the best approach to revising the detail that lies ahead of us.
I welcome and pay tribute to what was said yesterday by the noble Lord, Lord Sewel, when he addressed, in what I took to be an utterly genuine way, a few words of encouragement to members of the official Opposition. In turn I look forward to a constructive response from the noble Lord and his colleagues, the noble and learned Lord the Lord Advocate and others in addressing the issues that lie ahead. I and my colleagues on this Front Bench are more than happy to meet with them at any time to discuss in fuller detail than may be possible in debate the concerns we have about the terms of the Bill. Equally, it is important that the main issues are debated on the Floor of this Chamber so that drafting can be improved and to ensure that those who have to construe the Bill's provisions in the years ahead will be aware of the problem areas, the Government's policy and what the statute is intended to say.
Before I go further, it is right that I pay tribute to the skill of the draftsmen who prepared the Bill. The Bill's provisions are in most instances clear and succinctly drawn. It is a matter on which I have commented before. The Scotland Bill is some 40 pages shorter than the Government of Wales Bill which bestows on the assembly much fewer and less complicated powers than will be available to the Scottish parliament and the Scottish executive. The impression on reading the Bill is that the setting up of a parliament is a comparatively straightforward exercise; and that in no small measure is due to the skill of the draftsmen. In particular, that same skill has been deployed--I use the words advisedly--to slightly more devious means. There are, as one expects in a Bill of this complexity, certain important clauses that seek to address what I might describe as flash points, where there might be conflict between Whitehall on the one hand and the Scottish executive on the other--between this Parliament on the one hand and Holyrood on the other.
I know that the draftsmen and the Ministers will expect us to explore those clauses in great detail, to expose to public view the policy that lies behind them and to provide assistance to the parliamentarians in Edinburgh and to the courts on the practical implications that will flow from what lies ahead.
I turn to some of the important constitutional issues. First, it is essential to understand the central role the courts will play in the devolution settlement--a role of supervising the activities of the Scottish parliament and the Scottish executive. That duty will fall primarily on the courts and tribunals of Scotland and the Judicial Committee of the Privy Council. But it is a role that will be played by the courts of England, Wales and Northern Ireland. The extent and nature of that jurisdiction were at the forefront of the two excellent speeches we heard yesterday from the noble and learned Lords, Lord Hope of Craighead and Lord McCluskey. I shall turn in a moment to what they said about the need for the independence of the judiciary following devolution. But at this stage perhaps I may deal with the role that the courts are to be given.
I believe that the role of the courts should be confined to what is strictly necessary. When the referendum took place, those who voted in favour of the setting up of a parliament were aware from reading the White Paper that some issues as to the legal competency of the actings of the parliament and of the Scottish executive might end up being resolved in a court of law.
Notwithstanding what they may have read in that White Paper, I believe that when the same voters have elected members of the Scottish parliament, and when the Scottish executive has been appointed, the voters will look to the members of the parliament and the executive to take and to be answerable for decisions on devolved matters. They will not anticipate, nor do I believe will they welcome, the regular involvement of the courts in such matters, whether such involvement arises as an attempt to interfere with the proceedings of the parliament or in some way to quash the executive action on the part of the executive.
The Bill's provisions as currently framed offer a considerable scope to litigants to seek to involve the courts in what we have until now regarded as political issues. They confer on the courts significant powers over the deliberations of the Scottish parliament which are not available to the courts in relation to the exercise of this Parliament's responsibilities.
There is a discretionary element in certain of the powers that the courts are being given, the exercise of which may involve the consideration of highly political issues. I and others believe that these powers could draw the judiciary into fierce conflict with the Scottish parliament and the Scottish executive not out of any wish on the part of the courts to be so involved but as an unavoidable consequence of cases brought before them. For those reasons, it is important to scrutinise with great care the provisions in the Bill relating to the role of the courts. They do not wish any greater powers than are necessary; and, arguably more importantly, I do not believe that the general population wish them either.
The second area to which I turn is the role of the Law Officers. On this issue my comments can be somewhat briefer. When we debated the White Paper which was published last summer, I drew attention to a concern which was held in many quarters about the Government's decision to devolve the role of the Lord Advocate. I suggested that the Government might like to consult further on that matter and I look forward to hearing in Committee what further consideration has been given to that.
However, if contrary to my views, the role of the Lord Advocate is to be devolved, his powers must be carefully defined. In the Bill his independent role as public prosecutor has been recognised and I fully welcome that. But I question whether it is sensible that the Lord Advocate shall be a full member of the Scottish executive, able to exercise the statutory functions of other members of the Scottish executive in a way in which would not be competent for a Law Officer of the United Kingdom Government to proceed.
One of the Lord Advocate's roles will be to give the Scottish executive legal advice. Is it sensible that he should be a member of the executive body to which he will be giving such advice? Is it sensible that he, rather than the first Minister, should be given the discretionary and politically sensitive role of exercising the powers under Clause 33 to refer Bills to the Judicial Committee to determine whether they lie within the legislative competence of the Parliament? Whether they do lie within that competence is clearly a legal issue. The decision whether to take the matter before the Judicial Committee could be one of the highest political sensitivity. When he exercises that role, will he be acting in the public interest, as the Lord Advocate has traditionally done in many cases over the years, or will he be acting in his capacity as a member of the Scottish executive? Is the public interest and the interest of the Scottish executive synonymous? Those matters must be urgently and fully explored.
The same observations apply to the role of the Advocate General. He will be a Member of the United Kingdom Parliament. He will have certain discretionary powers and we will wish to explore the circumstances under which he should be authorised to exercise them.
I now turn to another topic which received scant consideration when the Bill was in another place: the terms of Clauses 33 and 54 of the Bill which give the Secretary of State power to intervene and overrule by order the acting or failure to act of the Scottish parliament or the Scottish executive. These powers will be available to any Secretary of State, not just the Secretary of State for Scotland. The Bill proposes that the Secretary of State can intervene even when the parliament and the executive are acting within the bounds of their competence; in other words there is no suggestion that they have acted ultra vires.
In certain circumstances any Secretary of State will be able to order the Scottish executive to make subordinate legislation. He will even be able to insist upon the Scottish executive introducing a Bill to the Scottish parliament. It is not difficult to imagine the political controversy that might arise if the Scottish
Standing the supremacy of this parliament, as explicitly recognised in Clause 27(7) of the Bill--unnecessarily so, as the noble and learned Lord, Lord Hope, pointed out last night--it is difficult to understand why such powers are being included in a Bill setting up what has been correctly described as a "mature parliament for a mature people". This is a good example of where the skill of the draftsman has arrived at a superficially attractive solution to a very serious area of political conflict.
I believe that when the parliament and the executive are acting within the limits of their statutory competence they should not be subject to interference in such a way as would play straight into the hands of those who seek to see the Scottish parliament as a stepping stone to independence. The power of a Secretary of State to intervene in such circumstances should be limited to where the parliament or the executive is acting contrary to international treaty obligations and even then the power should be exercised by making an application to the court for a ruling on what is essentially a legal issue.
The noble and learned Lords, Lord Hope and Lord McCluskey, last night dealt with the issue of the appointment of judges and the provisions for the removal of judges in Scotland. Judges in Scotland, whether they be judges of the Court of Session or sheriffs, will continue to exercise civil jurisdictions that cover reserved and devolved matters. The same applies to High Court judges who sit in the High Court of Justiciary and the sheriffs in connection with criminal matters. In certain instances they may be required to adjudicate in legal cases between the United Kingdom Government and the Scottish executive. In those circumstances there is great force in the argument that we heard yesterday about the need for their independence to be fully protected.
I suggest this House might consider it prudent to require resolution of at least one House of this Parliament, in addition to a resolution of the Scottish parliament, before any judge could be removed from office. Those noble Lords who have studied the Bill in great detail will appreciate that there is nothing novel in suggesting that an order should be subject to the approval of both parliaments. Certain of the order-making powers fall into that category.
The noble and learned Lord, Lord McCluskey, indicated that he might not be present in Committee when these matters are debated. I will make every effort to ensure that they are fully debated. I look forward to his announcement of his retirement from the Bench and his active return to politics. If he does not follow that route he could take up the role of trade union leader for the judges, one that he deployed with great skill and eloquence yesterday.
I turn next to the future role of the Scottish Law Commission. One thing which has struck me throughout the debate is the number of noble Lords who have commented on the consequence of there being only one chamber in the proposed parliament. One possible, albeit not complete, solution to the problems which that might create would be to place upon the Scottish parliament an obligation to consult formally the Scottish Law Commission as one of the mandatory stages of the consideration of any public Bill.
I should say to the noble Baroness, Lady Ramsay, who suggested earlier that a unicameral legislature offers a new and more inclusive style of politics, as a more than casual observer of the political scene in Scotland over the past few months I have not been struck by the great success which that new inclusive form of politics is acquiring. Indeed, some of the political invective which has been flowing between members of her party and members of the SNP is of a nature to which my former colleague, Michael Forsyth, could only have aspired.
To be more serious, I was much struck by the suggestion which the noble Lord, Lord Desai, made as to how we might address the absence of two chambers. I suggest to the House that that is a matter which should be explored in greater detail during later stages of the Bill, as should the number of Henry VIII clauses which are to be found in the Bill.
I cannot conclude without making some mention of the points raised by my noble friend Lord Lyell about the assistance which he apparently gave me in filling out entries in squares on the white forms. I have no recollection of that assistance, although it is much required. I doubt whether this is a Bill to which we can bring forward amendments to ensure that the numbers that we put in the boxes are somewhat larger than they are at the moment.
It falls to the noble and learned Lord the Lord Advocate to make the final speech in what is undoubtedly an historic debate. It is singularly appropriate that the current holder of that historic office should have the opportunity to do so. Since the Union of the Parliaments, the Lord Advocate has been charged with a very important public role in the affairs of Scotland in representing Scotland in the UK Parliament and, in more recent years, being a very active Member of your Lordships' House.
I should not wish him to reminisce in detail about the origins and history of his office, but were he to do so it would be discovered that the office which I formerly had the honour to hold and which he now holds predates many of the historical anecdotes to which we have been treated over the past couple of days.
I am sure that if they do so, we shall, as the noble Lord, Lord Kirkhill, and the noble and learned Lord, Lord McCluskey, said, if we are around in 20 years' time, look back with considerable affection and pride at having taken part in debates on the most historic of Bills.
The Lord Advocate (Lord Hardie): My Lords, in comparison with most noble Lords who have spoken in this debate in the course of the past two days, I am a novice both in terms of membership of this House and of political experience. Noble Lords will understand that, as holder of my present office, I feel particularly privileged to be involved in this important Bill at this important stage in the history of Scotland. I hope the noble Lord, Lord Beloff, will not be too critical of the language that I use, far less the content of my speech.
We have had a useful and constructive debate over the past two days. This Bill must be one of the most important which this House has debated in recent years. I am pleased to see that the House recognises the desire of the Scottish people, expressed so forcefully on 11th September, for the creation of a Scottish parliament with tax-varying powers. During the various stages of our deliberations on the Bill, I trust that we shall not lose sight of that fact.
This is a truly momentous day for Scotland and indeed, as so many noble Lords have said, for the United Kingdom as a whole. Like all noble Lords who have spoken, I am committed to a United Kingdom as much as I am committed to a Scotland with appropriate status within the Union. At the end of the debate, I am confident that this House will approve in principle the Government's plans to establish a Scottish parliament. We shall thus be paving the way for one of the most significant shifts in the British constitution in decades.
I share the confidence of many noble Lords who have spoken--a confidence which was encapsulated in what I respectfully suggest was an outstanding contribution from the noble Viscount, Lord Thurso. Like the noble Viscount, I do not see this Bill as a means for separation, resulting in the fragmentation or disintegration of the Union as was feared--unreasonably in my submission--by some noble Lords opposite. Like the noble Viscount, I see this Bill rather as a means of strengthening Scotland's role within the Union and, thereby, strengthening the Union itself. As my noble friend Lady Ramsay of Cartvale said, we should all co-operate. I confirm that it will be my intention and that of my noble friends on this side of the House to co-operate with noble Lords at all stages of the Bill. We should all co-operate and work towards ensuring that we have a scheme which recognises and achieves the benefits of diversity within the Union.
Many important issues have been raised in the course of our debate. I should like to spend a little time dealing with some of them from the Government's point of view. As the noble and learned Lord, Lord Mackay of Drumadoon, observed, it would be impossible for me to do justice to all the points raised by noble Lords. However, I can confirm that I and my colleagues are content to meet any noble Lord and to correspond with any noble Lord at any time--indeed, we would prefer to do so in advance of the Committee stage--in the hope of allaying fears and in order to focus upon the real issues which must be addressed and addressed properly during the various stages of the Bill.
Before dealing with particular points which have been raised by noble Lords opposite, I should like briefly to consider some aspects of devolution which are close to my own heart, and that of many noble Lords present today; namely, the Scottish courts and legal system and the position of the Law Officers.
As has been observed, the Lord Advocate and the Solicitor-General for Scotland will become members of the Scottish executive. I can reassure noble Lords that I do not intend to go into the long history of the distinguished office that I hold because time does not permit me to do so. However, the positions of Lord Advocate and Solicitor-General are ancient offices and they pre-date the Union. They are at the very heart of the Scottish legal system. The Bill will ensure that they continue to operate effectively in the Scottish context, including provision for the participation of these Law Officers in proceedings of the Scottish parliament. I do not share the concerns of the noble and learned Lord, Lord Mackay of Drumadoon, about the Law Officers being part of the Scottish executive. However, I am sure that we shall have the opportunity to debate that matter in more detail at later stages of the Bill.
The wide-ranging nature of the devolutionary settlement proposed by the Government makes it sensible to include the Lord Advocate as part of that process. We believe that it is crucial for the proper government of Scotland that the independence of the office of Lord Advocate is fully recognised. The Bill therefore confirms the independence of the Lord Advocate and preserves his position as public prosecutor.
I refer to another point raised by the noble and learned Lord, Lord Mackay of Drumadoon. I do not share his concern about the power of the Lord Advocate conferred by this Bill to refer Bills independently of the executive if the Lord Advocate considers that they are ultra vires. In the exercise of that function the Lord Advocate is acting as a Law Officer, and Law Officers do not act other than in an independent fashion at present. They act independently of the Government. They give independent advice. If they think at any stage that a Minister is about to transgress the proper boundaries of activity, it is the function of the Law Officer to pull back the Minister and to advise him or her accordingly. For the Lord Advocate to have the power to intervene and to refer a Bill independently of the executive is consistent with the actions of the Law Officer.
The Lord Advocate and the Solicitor-General for Scotland will be the Law Officers of the devolved Scottish administration. They will continue to prosecute crime independently and in the public interest. But the United Kingdom Government will continue to require advice on Scots law. For this reason the Bill creates a new ministerial office of Advocate General for Scotland. I hope this provides reassurance to the noble Lord, Lord Gray of Contin, who asked whether the Lord Advocate or the Advocate General would be regarded as holding the more senior post. If I may say so, and as I hope has been clearly explained, the question is, with respect, misconceived. The Lord Advocate and Advocate General will fulfil quite distinct and separate roles. The Lord Advocate will continue to be the senior Law Officer to the devolved Scottish administration. The Advocate General will be the Law Officer of the United Kingdom Government on matters relating to Scottish law.
Devolution of the Scottish courts and legal system will mean that responsibility for this fundamental part of the Scottish constitution will lie where it rightly belongs. The first minister will have the same role as the Secretary of State for Scotland has at present relating to the appointment of Scottish judges, sheriffs principal and sheriffs. We have benefited from substantial and thoughtful contributions on the relationship between the Parliament and the judiciary from the noble and learned Lords, Lord Hope of Craighead and Lord McCluskey, in their impressive contributions last night. They have signalled that this House will be asked to look very carefully during Committee stage at the parts of the Bill which deal particularly with the issue of judicial independence. I look forward to that debate.
The noble and learned Lord, Lord Hope, spoke eloquently about the need for judicial independence. He described the new role for the courts envisaged in this Bill. He was perhaps unduly modest about the role the courts already play in relation to European legislation. However, as he rightly said, this Bill and the Human Rights Bill mean that devolution and human rights issues will be raised in the courts. But it is important to recall that for devolution issues the final decision will rest with the Judicial Committee of the Privy Council.
Both the noble and learned Lords, Lord Hope and Lord McCluskey, mentioned in particular Clause 89 and the provisions contained there relating to the appointment and removal of judges. We have already introduced a number of amendments relating to this clause into the Bill in response to concerns raised by the senior judiciary in Scotland. But we will of course look carefully at any further detailed suggestions which are made during the Committee stage. The noble and learned Lord, Lord McCluskey, expressed particular concern that a government could easily command the two-thirds majority required for the removal of a judge. I have to say that I do not think even the current Government would regard such a hurdle as an easy one to overcome.
The noble Baroness, Lady Macleod of Borve, who has unfortunately had to leave due to illness, indicated that, as Lord Advocate, I should be required to appoint more judges. The number of judges required to ensure
There is one final point that I should like to make on this theme this evening. I should not like noble Lords to leave this debate with the impression that anything in the Bill detracts from the Lord Advocate's present role in advising on the appointment of judges, as seemed to be suggested by the noble and learned Lord, Lord McCluskey. It is proposed that, where the Secretary of State consults the Lord Advocate in relation to such appointments under existing arrangements, those arrangements will be continued by the first minister. We believe that the arrangements in the Bill strike an appropriate balance to ensure a judicial system which is at once independent and accountable.
Perhaps I may deal with the point raised by the noble and learned Lord, Lord McCluskey, and by the noble Lord, Lord Kingsland, in a most powerful and impressive contribution to the debate. At present, there are eight Scottish judges who would be able to consider cases. However, as the noble Lord, Lord Kingsland, indicated, it would be wrong to suggest that judges would be selected to represent national interest. What matters is not their country of origin, but to have a sound legal decision from the most senior and authoritative source. That was why we widened the pool from the Lords of Appeal in Ordinary.
The Scottish parliament will also provide an opportunity which is simply not available at Westminster to devote significant amounts of time to debate and to legislate on aspects of Scottish private law which may not have been given sufficient attention in recent years. For example, I believe that the Scottish parliament will wish to bring forward a more extensive programme of law reform based on the valuable work of the Scottish Law Commission. I am sure that the noble and learned Lord, Lord Mackay, will be reassured to know that it is intended that the Scottish Law Commission should have as important--if not more important--a role to play after devolution. I believe that that will help to promote consistency in Scots law in years to come.
I now turn to other issues raised in the debate. The issue of Europe was raised by a number of noble Lords. I trust that noble Lords will forgive me if I do not mention them all by name. That would take up valuable time in what has already been a very long debate. In that regard, the noble Earl, Lord Lindsay, and other noble Lords spoke from practical experience as former Ministers. They were concerned that, after devolution, Scottish Ministers will not have the right to attend EU Councils. Noble Lords will recognise that Scottish Ministers do not have such a right at present. Even in matters such as fisheries and agriculture, Scottish Office Ministers attend the relevant Councils at present only by agreement with the Minister of State for Agriculture, Fisheries and Food, who is the lead Minister. It is not correct to suggest that Scottish Office Ministers currently have an automatic right to attend Councils of their own volition. After devolution the situation will be essentially the same. There will be discussion between
The noble Earl also raised the question as to whether a Scottish Minister could act on his or her own as a representative on behalf of the United Kingdom Government. The simple answer is yes, because in terms of Schedule 5 to the Bill such a Minister would be able to assist the UK Minister. Of course, a Scottish Minister in those circumstances would be speaking on behalf of the United Kingdom on the basis of a policy which has been agreed in advance.
I turn to the Barnett formula, about which many noble Lords have spoken, and the funding arrangements for a Scottish parliament. In particular, the Barnett formula loomed large in many contributions from noble Lords. It is, I think, important to put on record the limited nature of the Barnett formula. Scotland has a historic baseline and all that the Barnett formula does is to calculate, on a population basis, an appropriate Scottish share of any changes in comparable Whitehall programmes. It is important also to make the point that this arrangement has worked very well and to the general satisfaction of all sides for 20 years, serving to reduce enormously the scale of annual head-to-heads between the Scottish Office and the Treasury. Yes, there have been annual discussions and disputes, but they have ultimately been at the margins of any settlement. The great bulk of the Scottish budget has been sorted out each year largely automatically and without dispute.
Perhaps I may deal with the point raised by my noble friend Lord Desai. It is not necessary or appropriate to incorporate the Barnett formula into the legislation. The formula has never had such a formal status and the support of successive governments for the formula suggests that legislation is unnecessary. In any event, legislation would not bind future governments to maintaining it, as the UK Government are sovereign. They could change such a provision if they wished. Furthermore, we propose to build on and improve the arrangement: first, by publishing the rules which will apply each year, making the details of the Scottish settlement a matter of public record; secondly, as announced by my right honourable friend the Chancellor of the Exchequer last week, by moving from an annual PES settlement to a three-year deal. That will offer the parliament greater certainty and a much improved capacity for long-term planning.
My noble friend Lord Dean of Beswick specifically raised questions of what the new parliament would cost and where the funding will come from. The noble Earl, Lord Balfour, suggested that it should be made clear that the cost will come from the Scottish block. Perhaps I may refer noble Lords to pages x and xi of the Bill's Explanatory and Financial Memorandum. The costs of establishing the parliament and its subsequent operating costs will be met from the Scottish block, with no additional cost to the UK taxpayer. We anticipate an annual running cost of £30 million--about a quarter of 1 per cent. of the overall block. This will not be at the
I do not accept arguments which say that the funding arrangements will diminish the financial responsibility of the parliament. Subject to the limited tax-varying and borrowing powers, it will have a budget and it will have to live within it. Its prime responsibility will lie in ensuring that it uses its resources efficiently, effectively and to the benefit of the people it will serve.
I turn to the tax-varying powers. The proposed tax-varying powers were discussed by a number of noble Lords and a range of issues was raised. The Government have, of course, listened carefully to all the points that have been made about the proposed power. We have discussed and will continue to discuss issues of detail with a wide range of interested bodies. A number of noble Lords, including the noble Lord, Lord Lyell, referred to the Institute of Chartered Accountants in Scotland. I am able to say that meetings have been arranged between my honourable friend the Minister responsible for devolution and the institute. So there is ongoing dialogue.
Furthermore, my right honourable friend the Secretary of State met CBI representatives on a number of occasions and the Inland Revenue is conducting a series of wide-ranging and in-depth consultations. What is clear is that, notwithstanding the criticisms voiced in some quarters, the powers in the Bill are practical, workable and will deliver to the Scottish parliament an ability to vary its total budget up or down in any year by something in excess of £400 million--equivalent to around 3 per cent. of the parliament's overall budget.
That is not just my view. Contrary to the impression given by the noble Lord, Lord Sanderson of Bowden, it is firmly backed by the Inland Revenue with its long-standing and unparalleled experience of our tax system. Of course, we continue to look at points of detail--a number of which were raised by noble Lords--and will be listening carefully to what noble Lords have to say during the passage of the Bill on this and other topics. However, I am satisfied that the substance of our proposal is both right and robust. It is a limited power which will not place undue burdens on either individual taxpayers or business. The maximum liability which anyone might face is £660 per year, but only around 7 per cent. of Scottish taxpayers will be liable for that--those earning in excess of £30,000.
In practice, nearly two-thirds of taxpayers will pay only £145 on average, assuming a full 3p. increase. The average liability will be £230. The impact of tax on individuals will therefore not be excessive in any circumstances. I do not believe that it can be seriously suggested by noble Lords--for instance, the noble Lord, Lord Rowallan--that such figures will act as a disincentive to business which values many of the specific skills of the Scottish workforce available within
In relation to the referendum on independence, that again was an issue raised by a number of noble Lords, including the noble Lord, Lord Campbell of Croy, who speculated that there would be an early referendum for independence. With respect to the noble Lord, that is not so. The present Government have no plans for such a referendum, nor can the Scottish parliament legislate for such a referendum. I have dealt with many items raised by noble Lords. I am conscious that there are many more with which I have not dealt.
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