Relevant document: 17th Report from the Constitution Committee.

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Lord Wallace of Tankerness (Liberal Democrat)

I beg to move that the Report be now received.

Lord Forsyth's amendment to the Motion not moved.

Motion agreed.

Amendment 1

Moved by Lord Wallace of Tankerness

1: Clause 7, leave out Clause 7

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, your Lordships will remember that last Wednesday I indicated that agreement had been reached between the United Kingdom Government and the Scottish Government on a number of changes to the Scotland Bill and supporting non-legislative measures. Following this agreement the Scottish Government tabled a legislative consent Motion recommending the Scottish Parliament support the Bill. The amendments in this group are part of the changes to the Scotland Bill as a consequence of the agreement that has been reached between the Government and the Scottish Government to ensure that the Bill continues to retain the support of the Scottish Parliament, previously affirmed in an overwhelming vote of support in March 2011.

These amendments will remove Clause 7, Clause 12 and the associated Schedule 2, Clause 13 and Clause 26 of the Bill. With regard to Clause 7, the Government's intention in pursuing the limited reference procedure contained in that clause was to prevent unnecessary delays to Bills in the Scottish Parliament, where the majority of provisions are considered to be within the legislative competence of that Parliament. The Scottish Government had raised concerns that this clause could have potential for introducing unintended consequences and delay in enacting legislation in the Scottish Parliament.

Likewise, during Committee consideration, the noble and learned Lord, Lord Boyd of Duncansby, raised concerns about whether the provision was necessary, as he believed that the existing arrangements appeared to be adequate. As a result of our discussions with the Scottish Government, we have agreed that this clause should be removed. The Scottish Government accept that in future, as at present, only a full Act of the Scottish Parliament can be referred to the Supreme Court, even if only a single provision raises competence issues.

Amendment 14 removes Clause 26 from the Bill. This would have allowed UK Ministers to implement international obligations on a UK basis, where it would be more convenient to take action on such a basis. The Scottish Government believe that this clause could undermine the clarity about which Parliament and which Ministers have responsibility for a particular matter. Both Governments acknowledge the importance of ensuring that all of the United Kingdom's international obligations are fully implemented across the UK on a timely basis.

The UK Government are willing to remove this clause, on the understanding of course that Scottish Ministers will ensure that any international obligations that fall within their responsibility are implemented on time. In turn, we have made clear to Scottish Ministers that the Government would be prepared to use their existing powers of direction under Section 58(2) of the Scotland Act 1998, should we have concerns about the implementation of international obligations within the remit of Scottish Ministers.

Clause 12 and associated Schedule 2 relate to insolvency. It would have returned legislative competence back to the United Kingdom Parliament in relation to all aspects of the winding up of business associations. The United Kingdom Government continue to believe that, where appropriate, Scottish procedures for insolvency should be in step with the rest of the United Kingdom. Our discussions with the Scottish Government have provided us with assurances that these concerns can be addressed without amending the devolution settlement in this respect. We therefore seek to remove this clause on the understanding that the Scottish Government will consider the modernisation measures for the devolved areas of winding up in Scotland introduced into the reserved insolvency procedures in 2009 and 2010; and have provided assurances that future changes made by the UK Parliament or Ministers in this area will be considered timeously by the Scottish Government in their area of competence.

Finally, Amendment 7 seeks to remove Clause 13, dealing with the regulation of health professionals, from the Bill. While the Scottish Parliament has had power to introduce for Scotland separate legislation in respect of regulating a number of health profession-that is, those not listed by reference to specific statutes in Schedule 5 of the Scotland Act-it has chosen not to do so. Rather, it has approved the use of the existing, reserved machinery, in the form of orders made under Section 60 of the Health Act 1999, to regulate new groups of healthcare professionals.

During our discussions with the Scottish Government they raised some concerns about this clause. The Scottish Government have provided us with clear assurances that they will work closely with the Government to ensure that consistent regulatory regimes apply to all health professions. Given these assurances, the Government are content to continue to develop policy in relation to regulating the health professions with the Scottish Government. The United Kingdom Government, through the Department of Health in England, will continue to engage closely with officials, not just in Scotland but also in the Administrations in Northern Ireland and Wales, to develop future policy proposals concerning the regulation of healthcare professionals.

The Government have received assurances on all these matters that the same effect that was sought by provisions in the Bill can be secured by non-legislative means. On that basis we have agreed to seek to take out the provisions from the Bill. I beg to move the amendments.

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Lord Foulkes of Cumnock (Labour)

My Lords, I wonder if this would be a good opportunity for the Minister in his reply to inform the House what will now happen in relation to the legislative consent Motion. It would be helpful if he could briefly give us a timetable about when it will be considered by the Scottish Parliament and the procedures thereafter. If there are any problems, how will this House be informed? Does he envisage that the legislative consent Motion will be passed through the Scottish Parliament without any difficulty; and are there any further procedures that may be necessary within this Parliament following the passage of the legislative consent Motion?

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Lord Boyd of Duncansby (Labour)

My Lords, before I address the amendments that the noble and learned Lord has spoken to, I should place on record the fact that the handling of this Bill has been nothing short of scandalous. To start three hours late, almost on the dinner hour, is quite unforgiveable. Yet again, those of us who are participating in this Bill are under pressure to sit longer and at unusual times to accommodate the Government's business. At a time when we are trying in this House to demonstrate the evident utility of remaining part of the United Kingdom, of Scotland playing a meaningful role in Parliament, and of this Parliament playing a meaningful role in the affairs of Scotland, it smacks of contempt for the position of Scotland. I do not for one moment suggest that the noble and learned Lord has any part in this. I know that he is frustrated by the progress that has been made, but frankly those who are responsible for this should be ashamed of themselves.

As for the amendments that the noble and learned Lord has spoken to, we are pleased that agreement has been reached between the Government and Scottish Ministers. This allows for the passing of the legislative consent Motion. We recognise, of course, that compromises have been made on both sides, though those made by the Scottish Ministers from the demands that they set have clearly been much more substantial. It will be interesting to read how Scottish Ministers deal with the Scotland Bill Committee and Report when they come to deal with the legislative consent Motion. This group of amendments implements much, though not all, of the agreement. Inevitably, there are issues that we support, such as the removal of the clause on the partial suspension of Bills of the Scottish Parliament or the reference to the Supreme Court, and those that we find much more difficult, such as the regulation of health professionals. However, in the spirit of compromise, we support these amendments.

On insolvency, we stated our belief in Committee that the clause did not appear to be in keeping with the spirit of the original Calman recommendations, in that it went beyond the reservation of the power for the Insolvency Service to lay down the rules to be applied by insolvency practitioners on both sides of the border and reserved the whole body of law on corporate insolvency. As far as we can see, neither the original proposals in the Scotland Bill nor the state of affairs following the removal of this clause really address the issues identified by Calman. Given that, it might be helpful if the noble and learned Lord outlined what next steps might be taken with regard to insolvency.

On health professionals, we are actually genuinely sorry that this part of the Bill is being removed. Clause 13 implemented the recommendation of the Calman commission. The recommendation was made not lightly but on the evidence proffered, while the royal colleges and others have expressed concern that the fragmentation of the regulation of healthcare professionals should be rational and appropriate. Nevertheless, we understand the Government's reasoning for leaving this provision out in order to secure the agreement of the Scottish Parliament to the passing of the consent Motion. Particularly importantly, the Scottish Government have given assurances that they will work closely with the Government to ensure that consistent regulatory regimes apply to health professionals throughout the United Kingdom. We will look to them to hold to this commitment, as I am sure will the health professions, royal colleges and others.

On international obligations, we were neutral on the inclusion of the original clause. We were not wholly convinced that it was necessary, although we accepted that it was a potentially useful measure, and for that reason we did not seek to oppose it being part of the Bill. We think that the Government have won important assurances from the Scottish Ministers that they will work with the Government to ensure that the United Kingdom continues at all times to implement international obligations. We note, too, that if there is a failure to implement such obligations, the Government may use their existing powers under Section 58(2) of the Scotland Act to direct Scottish Ministers appropriately. Accordingly, we support the amendments moved by the Government.

7:00 pm
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Lord Pearson of Rannoch (UKIP)

My Lords, before the noble and learned Lord sits down, perhaps I could associate myself with his earlier remarks. I regret that I have not taken part in the proceedings on this Bill until now. I was not sure whether or not I should declare an interest as someone who spends most of the year in Scotland. Now that I have worked it out that I do not, I feel free to join in.

My specific question follows what the noble and learned Lord, Lord Boyd, said. Our Companion requires that there should be 14 days between Committee and Report. On this occasion, there has been one working day, which was a Thursday. I have never formed part of the usual channels-and never will-so can the Minister explain to your Lordships how this decision has taken place at this stage of this hugely important Bill to the Scottish people, who have not been consulted about it at all?

No one has told the Scottish people that this Bill is going to result in them paying more tax in future, and no one has asked them. All we are being told is that the manifestos said that the Calman commission results were going to be taken seriously, but no one knew at the time of the election that this was going to be the outcome. I am sure that the Minister is not personally responsible but I ask him to explain to us how and why this decision was taken, in view of the enormous importance of these matters to the Scottish people.

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, I thank noble Lords who have taken part in this debate. I heard the stringent comments of the noble and learned Lord, Lord Boyd of Duncansby, echoed by the noble Lord, Lord Pearson of Rannoch. I am sure that they will be noted. Having had experience of the House of Commons, the Scottish Parliament and your Lordships' House, if there is a thread that links these three experiences it is that the usual channels have currents and depths that I have rarely, if ever, been able to fathom.

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Lord Sewel (Labour)

Of course we do not hold the Minister at all responsible for what happens in the usual channels, but it seems rather perverse that we have discussed this Bill late at night and on Thursdays, under pressure of time. I accepted that because of the nature of the parliamentary timetable, but then we were told that we are having an extra week's recess. Those extra days would have enabled this Bill to be given the due and proper consideration that it deserves, and I hope that the Minister and my noble and learned friend on the Front Bench will pass on those comments to the usual channels.

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Lord Wallace of Tankerness (Liberal Democrat)

This almost proves my point. I am sure that these points will be noted and I will indeed draw them to the attention of colleagues.

With regard to the further point made by the noble Lord, Lord Pearson, about the number of days between Committee and Report, it was agreed between the usual channels, and as a result of a delay for further sessions in Committee to take place after the end of the consultation on the referendum, there was a need to reduce. As I indicated, that was agreed. In response to his further point, all parties-or at least all non-Scottish National parties that fought elections in Scotland: the Labour Party, the Conservative Party and the Liberal Democrats-had these proposals in their manifestos and I do not think it is fair to say that they had not been aired at all prior to the general election, nor indeed since.

I welcome the general support that the noble and learned Lord, Lord Boyd of Duncansby, has given to these moves, in the spirit of seeking agreement. He asked about insolvency. Specifically, there will be engagement with the Scottish Government to ensure that the modernisation programme contained in the reforms of 2009-10 is delivered in Scotland for the benefit of those affected by corporate insolvencies.

More generally, the Accountant in Bankruptcy is an executive agency of the Scottish Government that holds policy responsibility for devolved insolvency matters in Scotland, and the Insolvency Service is aware of the need to stay in close contact with counterparts in the Accountant in Bankruptcy's office, as indeed already happens, to help ensure that as far as possible developments in insolvency law in devolved areas do not create unnecessary difficulties for users of the legislation. So there are the specific provisions of the 2009-10 changes, which we have had assurances will be implemented, and there is a means by which we can maintain contact and dialogue in the longer term.

With regard to health professionals, like the noble and learned Lord, I was a member of the Calman commission and certainly took this matter seriously. He will appreciate that we have agreed to seek removal of this clause on the receipt of assurances that the Scottish Government will work with us to ensure consistency in the regulation of health professionals. I sometimes wonder if we had had some representations from the Scottish Government when we sat on the Calman commission whether we might have been able to reflect those in the report, but that was not the case.

The noble Lord, Lord Foulkes, asked about the procedure from here on in. In his letter to my right honourable friend the Secretary of State, the Scottish Cabinet Secretary for Parliamentary Business and Government Strategy, Mr Bruce Crawford, having gone through the terms of the agreement, indicated:

"I can therefore confirm that the Scottish Government is now prepared to recommend to the Scottish Parliament that it consents to the Bill, amended in line with your proposals, and supported by the undertakings in your letter".

Of course, it will be a matter for the Scottish Parliament. It is my understanding that the Scotland Bill Committee of that Parliament will meet to discuss the amendments on Wednesday. We expect that the legislative consent Motion will be debated after the Easter Recess but before Third Reading in your Lordships' House. Given the engagement that there has been, I very much look forward to the Scottish Parliament approving the Motion to support the Bill. I hope that answers the noble Lord's inquiry.

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The Earl of Caithness (Conservative)

Before my noble friend sits down, could he comment on his final point? If the legislative consent Motion is agreed by the Scottish Parliament before Third Reading and we pass an amendment at Third Reading, what is the situation then?

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Lord Wallace of Tankerness (Liberal Democrat)

I suspect that the Scottish Parliament may have something to say about it if it is something that it does not agree with.

Amendment 1 agreed.

Amendment 1A

Moved by Lord Forsyth of Drumlean

1A: Before Clause 10, insert the following new Clause-

"Legislative competence: amendment to the 1998 Act

In section 29 of the 1998 Act (legislative competence) after subsection (2)(d) insert-

"(da) it would result in residents in England, Wales or Northern Ireland being treated differently to citizens from other EU member states.""

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Lord Forsyth of Drumlean (Conservative)

My Lords, I add my voice to those who are complaining about the way in which this Bill has been handled. In his reply, it would be helpful if the Minister could indicate where he proposes to get to this evening. It is suggested we can get to Clause 25-that is 15 groups of amendments and we normally finish at 10 o'clock. Although I mean to be brief, I do not think that that will be achievable. It is extraordinary that a Bill of this importance is being treated in this way. When I complain to the usual channels, they blame each other. Something has gone very wrong with the business managers in this House and they need to get their act together.

The great argument for devolution, which I opposed, was that Westminster was not able to deal with Scottish legislation. I have been around Westminster since 1983 and I have never seen a piece of legislation affecting Scotland handled as badly as this piece of legislation has.

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Lord Foulkes of Cumnock (Labour)

Has the noble Lord heard the suggestion from the Government's usual channels that if we do not make progress today and Wednesday we should consider sitting on Thursday to deal with it? Is that not an astonishing suggestion?

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Lord Forsyth of Drumlean (Conservative)

It is an interesting suggestion and if I thought it was correct I might defer consideration of my amendment until then as I would be able to get a majority quite easily, even if I just voted for it myself.

The noble Lords, Lord Hannay, Lord Sutherland and Lord Foulkes, have added their names to Amendment 1A. This is an historic occasion and there will be few occasions in this House when these four names together appear on one amendment. It emphasises the nature of this amendment and the nature of the injustice it seeks to deal with.

The amendment simply says that residents in England, Wales and Northern Ireland should be treated in exactly the same way by the Scottish Parliament as other members of other European states. One would assume this matter was completely uncontroversial. The amendment is grouped with Amendment 59, which provides for the Scottish universities to be consulted and for a delaying implementation provision in order to deal with any administrative difficulties that might arise.

I was acutely conscious of this issue when I ran at the beginning of this year for rector at the University of St Andrews, I regret to say unsuccessfully. I was beaten by a better candidate who had more time to commit to a great university. I attended the University of St Andrews with Alex Salmond. He ran the SNP and I ran the Tories. We had 1,300 members; he had three. It has changed round since those days. One of the characteristics of the University of St Andrews was that lots of students came from the rest of the United Kingdom and that is still the case today. What outraged me was discovering that students sitting side by side in classes are expected, in the case of those who live in England, Wales or Northern Ireland, to pay £36,000 in fees while those who live in Scotland or Poland or Germany or Italy or anywhere else in the European Union pay nothing at all.

That is an utterly divisive and wrong policy. It has been exacerbated by the increase in fees and by the fact that Scottish universities have four-year degrees. This amendment seeks to create the circumstances which would exist in Scotland if it were independent. If we had an independent Scotland, it would not be allowed under European law to discriminate in this way against those people who live in England, Wales and Northern Ireland.

I know that some people-not everyone, including me-have received directly a brief from the universities in Scotland which have expressed concern about this amendment. My noble friend Lord Vallance has made representations to me that if it were passed it would mean that there would be administrative chaos for the student intake arriving in September, which is why the amendment allows for some delay while this matter is sorted out.

The Scottish Government have been saying that if English and Welsh and Irish students-and that means people who are resident in England, Wales and Ireland; they might well be Scottish students whose families have moved to other parts of the United Kingdom-could go to universities in Scotland for free, there would be a flood across the border. This is the most disingenuous and dishonest argument. Ireland has no fees. People can go from Northern Ireland to the Republic of Ireland and they deal with it by having a quota for the number of students that they will accept. If it is suggested that quotas would be wrong, there is already a quota in operation. There is a quota set by the Scottish Government on the number of students who come from Scotland and from other European Union countries. To suggest that they could not have people resident in the rest of the United Kingdom coming on the same terms as those from Germany and elsewhere is, to say the least, misleading.

My noble friend Lord Sassoon and I have disagreed about the tax provisions in this Bill which say that if one Government make a change to the tax base the other Government have to compensate them for it. So why does this not apply to higher education in this case? There is an issue about funding. Just over 5,000 students are affected by this and the cost is of the order of £24 million. The block grant is of the order of £28 billion. My noble friend Lord Baker was telling me that the Scottish Government got a big increase in their funding as a result of the marvellous work he is doing with technical teaching in universities. When he went to Scotland, he found that it had been spent on something else.

The Barnett formula, which we will discuss again later this evening, provides for funding which is broadly getting on for 20 per cent more per head than is spent in England. It is an outrage to tell students living in Wales and Northern Ireland and England, who are contributing to that extra funding that they cannot go for free.

7:15 pm
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Lord Baker of Dorking (Conservative)

My noble friend is right about the incident that affected me because in the previous Budget the Chancellor gave £150 million to university technical colleges to develop the ones my educational trust is promoting. These train technicians and engineers. We have 19 in England and are looking at 22. But I discovered under the Barnett Formula that, out of the £150 million, £25 million was allocated to Scotland. I was rather glad about that because I have industrialists wanting to support UTCs in Aberdeen and in Glasgow. When I went up and met Mr Russell, who is the Education Minister in the SNP Government, he told me that that money had been spent on other things. I have no idea what it was spent on; it certainly was not spent on what it had been allocated for.

This is another case where Scottish students and indeed the Scottish economy are losing out as a result of this particular arrangement under the Barnett formula. The money has been snaffled to do something else with and it is a great loss to Scotland.

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Lord Forsyth of Drumlean (Conservative)

I am most grateful to my noble friend. I am not arguing that the Barnett funds should not be transferred from one budget to another but I am arguing for free tuition being available, in the same way that it is available for German and French students, for students from the rest of the United Kingdom. I do not think that is unreasonable. If the issue of funding will cause difficulty between the Governments, they have got lots of negotiations on and they should sort it out. If we believe in the United Kingdom-and I do with a passion-I can think of nothing worse than creating a situation where young people are burdened with substantial debt because they went to a Scottish university and they see everyone else in Europe going for free.

It could be argued that that arises from the Scottish Government's policy of having free tuition fees. I do not argue against their ability to do that but they have to operate it in a fair and balanced way. This amendment would enable fair treatment for all students throughout the United Kingdom. It may not be perfectly worded. I would be very happy if my noble and learned friend said that he could not accept this amendment but that he would bring forward one of his own at a later stage of the Bill which would remedy the problem. I do not want to detain the House as I am anxious that if we divide, everyone will have disappeared. I beg to move.

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Lord Foulkes of Cumnock (Labour)

My Lords, I was pleased to put my name to the amendment of the noble Lord, Lord Forsyth. It is not something anyone on this side does lightly. However, as I have said before, even a Tory is not always wrong and on this occasion he is absolutely right-spot on. It is an issue of fairness. I shall be very brief.

It is an issue of fairness when students from Lithuania and Poland can go to Scottish universities for free, but students from England, Wales and Northern Ireland have to pay full fees. As the noble Lord, Lord Forsyth, said, there is double jeopardy. The parents of the students from Poland and Lithuania do not contribute to the costs of Scottish universities, but the parents of the English, Welsh and Northern Irish students pay UK taxes. They have to pay full fees and the taxes that subsidise Scottish universities.

I know that there are concerns about funding. These have been expressed by the chancellor of the Royal Conservatoire of Scotland, the noble Lord, Lord Vallance, and in a letter to me from the noble Lord, Lord Smith of Kelvin, the chancellor of the University of the West of Scotland. However, that is not a matter for us; it is a matter for the Scottish Executive. As the noble Lord, Lord Forsyth, said, they get billions of pounds from the block grant. It is a matter of priorities. Scotland has free care for the elderly, free prescriptions for everyone, including the very rich, and a whole range of other things that are provided. Surely this is something to which they can give consideration. Without pre-empting what the noble Lord, Lord Sutherland, will say, he has looked at the funding in much more detail and can make suggestions. If the Scottish Executive need help, I am sure he would be very willing to provide it-at no cost, I presume.

Finally, I say to my colleagues on the Labour Benches that we now have no Whip on this matter. Therefore, we have the opportunity to vote as we wish. I hope we will make the right decision in voting on this and support the amendment. I have spoken to Labour MSPs who have supported what the SNP Administration are doing. They said that they did not want to do it and regretted having to do it but had no option because of how it was put to them in terms of funding. We have an option: we can support the noble Lord, Lord Forsyth, and we can support fairness. I urge noble Lords so to do.

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Lord Sutherland of Houndwood (Crossbench)

My Lords, the position before us requires a brief summary of how we got to where we are. I see a number of Members in the House who did not sit through all the longueurs of the Committee stage. To them I say, "Welcome to the Michael and George show. It's amazing". That said, why are we where we are? How did we get here and what is it? If you live in Dublin or Dundee, you pay no fees. If you live in Belfast or Berwick-I do my shopping in Berwick-you will pay fees at a Scottish university. We could go on with examples.

We all accept that these are unfortunate consequences of administrative procedures. We might also accept that they are unintended consequences of administrative procedures. However, I ask noble Lords to note that they are divisive consequences of administrative procedures, of which the only beneficiaries are those who would turn that divisiveness into the final division of separation. This suits their hand of cards.

The current situation over fees was not sought by the Scottish universities. I wish to stress that. There were some who hinted that the Scots were desperate to charge the Sassenachs et cetera large fees. This was not sought by the Scottish universities. Like the members of the Labour Party in the Scottish Parliament, this was imposed on them.

My reckoning is that this year approximately £28 million to £30 million will be withheld from the Scottish universities grant. That money has to be found by the universities if they are to continue functioning. It will be withheld on the assumption that they can charge students from RUK, as they call it-the rest of the United Kingdom-fees that will fill that gap. That is just the start. The estimate is that the figure will be for just the first year. Over another four years, by 2015, the reduction in funding for Scottish universities from the Scottish Government might be £120 million. This is surely not something with which we can rest content.

By negotiation and ingenuity, the Scottish universities have avoided having an inadequate level for rest-of-UK students imposed on them. This was a risk for them. They have the power to vary their fees, charging up to £9,000 a year. Clearly, several of them will do this. I say to them, "Well done". At that stage, I would have done the same but why did we get to that stage? The horse has already bolted through the stable door with the first £30 million: the Scottish Government have withdrawn this funding. As realistic chief executives, they did not have much choice other than to enter into a negotiation with which I suspect none of them is particularly happy.

The universities have also done well in devising bursary arrangements, for which I pay tribute to them. I know about the situation in the University of Edinburgh, my former university, in detail. It has done well and has the best bursary scheme anywhere in the UK for students in need. Some of the universities down here could take a look at that; it might help with some of their problems of recruitment.

Scottish universities also have a legitimate fear that, if this amendment were to be passed in its current form, without the following amendment, it would cause chaos if it were imposed for 2012-13. There may have been a hint of that earlier but this amendment does not imply imposing these new procedures for next year. Of course there would be chaos. However, we can deal with that-I will come back to it in a moment. I would not support an amendment that caused such chaos to the intake of students preparing for entry in 2012. That is common ground between all those who have put their names to the amendment. These are short-term consequences and we can deal with them. I completely understand that the short-term consequence would be to cause chaos now but we can deal with it by setting the date back.

However, there are longer-term consequences and implications. This is what I can only call another example of "devo drift" by practice, rather than by legislation. It inserts a further series of divisions, in this case between the young people of the rest of the UK and those of Scotland. This "devo drift" will not, I hope, be subject to another negotiated deal with the Government in Scotland. Are there any pegs that should be put in place? For example, if the next step gave Scotland a capacity in relation to research councils, which is a reserved business at the moment, it would be absolutely horrendous for Scottish universities. I see nothing in current attitudes to suggest that it might not be the next stage along the way. The Scottish universities would then have to decide whether negotiation was a wise practice.

That is all very easy to criticise but how do we proceed? In its briefing note, of which I was eventually given a copy by indirect means, Universities Scotland suggests that everything had been done to raise the question of the European demand that European Union students should not be charged fees. Indeed, the briefing note claims that the Education Secretary in Scotland,

"has actively pursued this issue in Europe and UK support for this issue, including voices within the Lords, would be welcome".

I support him on that issue. Now what will he do about it? There is a question there to be looked at and we need a bit of time.

More importantly, I suggest that there is a way forward, and we need a bit of time for that. There should be a call for a UK-wide discussion, with all regions-all the rest of the UK-and Westminster, with the relevant Secretaries of State sitting down together and setting a quarter of places for RUK students in Scotland, an equivalent quota for EU students in Scotland, and a quota for Scottish students who go to universities in the rest of the UK. Within that, there may be room for financial manoeuvre because the Scottish students who take places in English universities displace England-based students for whom the Government here would have to make some provision, albeit that they would be charged fees.

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Baroness Brinton (Liberal Democrat)

Does the noble Lord accept that under Article 24, paragraph 1 of directive 2004, it is not possible to provide quotas for EU students, because of the issue of free movement?

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Lord Sutherland of Houndwood (Crossbench)

My Lords, I am prepared to take expert opinion on that. That does not rule out the possibility of the Administrations from Northern Ireland, Wales and Scotland sitting down with the Westminster Government and working out a quota system for within the UK. It is a broader question how the European Union behaves itself on this matter, and there may be alternative views.

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Lord Forsyth of Drumlean (Conservative)

Is it not the position that in practice because the Scottish Government set a budget for the number of Scottish and EU students that they will fund-that is how they operate-all the noble Lord is saying is that there should be a budget for the English, Welsh and Northern Ireland-based students who attend?

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Lord Sutherland of Houndwood (Crossbench)

Certainly the Scottish universities funding council sets an overall budget which will pay for students who, as it turns out now, are resident both in Scotland and in the rest of the European Union. I accept the point made by the noble Lord, Lord Forsyth.

The force of what I have to say is that there needs to be discussion-I suspect it has been rather absent-between the funding councils and those who instruct them to see whether there is a way of removing this anomaly that none of us likes. How did we get here? By a slow process of change that has not had good consequences.

It would be unfair and unjust to discriminate only against the rest of the UK students, and if that is a principle that this House accepts, I hope that it will support the amendment.

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Lord Steel of Aikwood (Liberal Democrat)

I am grateful to the noble Lord, Lord Sutherland of Houndwood, for spelling out how we got into what I can only call an unholy mess. Before we turn to the amendments, let me say that I fully support what the noble and learned Lord, Lord Boyd, said at the start of this debate. In fact, I marvelled at his moderation. It is appalling that we are attempting-I hope we are not attempting-to deal with this on Report in the time that has been allotted at present. We have not only got the debate in the dinner hour, but we also have a Statement coming up which will take another 40 minutes out of the time. It is intolerable. It is the kind of thing that, as my noble friend Lord Forsyth hinted, we used to object to in the Commons. Scottish business of very serious import is being debated here-this is only one of many issues we are supposed to be discussing in the next few hours-and it should not be dealt with in this rushed way. I hope we will be told, when the Whip-or whoever deals with this on the Front Bench-proposes the break for the dinner hour, what is going to happen, and when we are going to sit to give this proper consideration.

I find myself in some difficulty because when I read Amendment 1A, in conjunction with the letter I received from the vice-chancellor of Heriot-Watt University, I sympathised with the universities possibly finding themselves being bereft of revenue they were expecting. That is why I warmly support Amendment 59, which the noble Lord has just spoken to, and to which four distinguished Members of this House have put their names.

By giving at least a year to all the authorities-the funding councils, the two Governments-they should be able to sort this out. The anomaly is intolerable, and we cannot allow this simply to drift on. Here is our legislative chance to put it right, and we should do that by accepting Amendment 59.

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Baroness Liddell of Coatdyke (Labour)

My Lords, I will speak briefly. It is no secret that I am most unhappy with the fact that we are continuing with this Bill when it has been so comprehensively overtaken by events. There is a sense that "We've started so we'll finish". Partly because it has had the gestation period of an elephant, we seem to be debating it at a time when the whole constitutional discussion in Scotland has moved on.

I regret to say that it seems that the business managers of the House share my view of the Bill. I can think of no other reason for the way that it has been treated, and indeed the way that those noble Members who have taken an intense interest in it have been treated, in the course of its process. When I first went to the other place I complained that Scottish legislation was usually done after everyone else had gone home to bed. It seems as though that procedure is now being copied in this House.

However, we can redeem the situation by getting one issue up and live in the debate. There are no two ways about it: what has happened with tuition fees for students from England, Wales and Northern Ireland is so unfair as to shame all of us Scots who have benefited from a Scottish education. Perhaps it needs those of us who have a clear and distinct Scottish accent to say so.

I have not been lobbied by vice-chancellors. That could be because I was a Scottish Education Minister, and maybe they are feart. However, even if I had been I would still take the point of the noble Lord, Lord Sutherland, that it is important to seize an opportunity now to resolve this matter. There is a sound educational argument for ensuring that we continue to have the maximum number possible of English, Welsh and Northern Irish students in our universities. One of the secrets of a good Scottish education is the nature of the diversity of the experience. That is being denied.

I will make one other point briefly, because I am conscious of the time. Rich English students can continue to come to Scottish universities, either because their parents can afford to pay the fees or because they own an island or a hunting estate or a lovely Georgian house in Edinburgh and so can easily establish residency. Someone who, like me, is a bus driver's daughter, frankly has no chance whatever.

I will make an appeal to the noble and learned Lord, whom I do not blame for one minute for the difficulties that have been encountered in passing this Bill-if ever there was a Minister who ended up with the short straw, it is the noble and learned Lord. I appeal to him to take this back, having listened to the representations made tonight and in other places, and seek a resolution to this manifest unfairness that-I repeat-shames Scotland.

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Lord Vallance of Tummel (Liberal Democrat)

My Lords, I declare an interest as the chairman of the Royal Conservatoire of Scotland, which as a higher education institution would be directly affected by the amendment if it were agreed. I will not take up much of your Lordships' time, but I feel that I should draw attention to the chaotic practical consequences that the amendment would have on the Scottish universities and other higher education institutions, which have been levying modest fixed fees on students resident elsewhere in the UK, without controversy, since 2001, in part to manage the flow of students into Scotland.

The decision made here in London to introduce market-based, variable fees up to £9,000 per annum in English, Welsh and Northern Irish universities, changed the game radically. It demanded a response if there were not to be a veritable tsunami of applications from students south of the border for far less expensive places at Scottish universities, with clear consequences for potential students resident in Scotland, and for funding by the Scottish Government. That Government's decision, on which I pass no judgment one way or the other, was to withdraw funding for students resident elsewhere in the UK, and to allow the Scottish universities to apply the same market-based, variable-fee regime for such students as they would have enjoyed, if that is the right word, had they stayed at home.

Some, including Universities Scotland-the representative body for all the higher education institutions-would say that that was entirely reasonable in a UK context. However, it is also anomalous, particularly as regards the rest of the European Union. However, anomalies of one kind or another are almost inevitable in areas where competence has been devolved to Scotland. Various practical problems stemming from the legitimate pursuit of widely different policies on either side of the border will have to be addressed. In the case of higher education, the EU requirement to give preferential treatment to students resident elsewhere in Europe, as against those from other foreign countries, simply compounds the anomaly.

The substantive issue is how best to deal with such anomalies. The amendment, although on the face of it eminently reasonable in seeking to give European Union benchmarks pride of place, would not only unnecessarily and indefinitely constrain the scope for manoeuvre here in the United Kingdom but would create a major and immediate practical problem for Scottish Universities, for the simple reason that the new fee regime has already been implemented, as we have already learnt.

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Lord Vallance of Tummel (Liberal Democrat)

I am coming to that. For the next academic year and for the years beyond, places have already been offered to and readily accepted by students who are resident south of the border. Bursary and scholarship arrangements have been substantially modified to help them. Indeed, the financial basis and plans of Scottish universities for the years ahead are dependent on those arrangements, which, as of today, are quite legitimate under the provisions of the Scotland Act 1998. I appreciate the willingness of my noble friend Lord Forsyth to delay implementation, but the question is for how long. A year is simply not long enough.

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Lord Forsyth of Drumlean (Conservative)

If the Scottish Government had their way and Scotland became independent, they would have to do this anyway. Given that we are going to have a referendum on independence, does the noble Lord not accept that the uncertainty arises from the Scottish Government's own policy?

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Lord Vallance of Tummel (Liberal Democrat)

I share entirely my noble friend Lord Forsyth's willingness and desire to keep the United Kingdom united. We should not discuss here the circumstances of a hypothesis in which we are no longer a United Kingdom.

To alter the provisions of the 1998 Act now would outlaw arrangements already in place and would throw into considerable disarray the Scottish universities' administrative and financial arrangements not just for the next academic year but for succeeding years as well. I cannot imagine that this is an outcome that your Lordships would wish to endorse.

Rather than constraining ourselves through legislation that prays in aid European Union regulation, and in so doing simply shifts the locus of the problem within the UK, we should surely retain as much scope as we can to sort out United Kingdom issues in a UK context and to find practical measures between good neighbours for dealing with the problems thrown up by the inevitable anomalies that flow from devolution-as the noble Lord, Lord Sutherland, said.

I will paraphrase the remarks of the Abbess of Crewe in Muriel Spark's novel of the same name. A problem you solve; an anomaly you live with.

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Lord Morgan (Labour)

I intervene very briefly, not as a member of the Labour Party but as a former vice-chancellor. The present situation is deeply harmful to the very concept of a university. Universities are founded on the ethic of equality, whereby all students should be treated the same. We have legislation to deal with some of the more harmful aspects of discrimination-with regard to racial matters, for example-but the current situation is a fundamental breach of that principle. The situation is harmful in two respects. There is a divisive principle at work, whereby students doing the same work in the same institution are not treated the same.

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Lord Vallance of Tummel (Liberal Democrat)

Such divisiveness already occurs as regards international students. The only foreign students who are treated differently are other European Union students.

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Lord Morgan (Labour)

That was not my experience as vice-chancellor, and I reject that argument. The situation is divisive and is more extreme than in Wales. I regret what has happened there, but at least Welsh-origin students have to pay something. In a sense, they all suffer because there is top-slicing of the grant for higher education. In that sense, the situation in Scotland is more extreme than in Wales.

The other concern is that the Scottish situation works against one of the fundamental principles of universities, which is that they should not be politically instrumental or be the agents of political discrimination. That is precisely what is happening and it is not only at total variance with the spirit of universities in this country-including the great universities of Scotland that are the famous cradles of the democratic intellect-but hostile to the spirit and ethic of universities everywhere. It will get worse. University policy and finance is deeply fluid. The situation is not static. The unfairness will grow. There will be a growing gulf in claims on students of Scottish origin and those from elsewhere in the UK. For the sake of universities and for the sake of Scottish universities-the great institutions-we should not found our university higher education policy on these extremely bad and unfair principles.

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Lord Wilson of Tillyorn (Crossbench)

My Lords, I will speak briefly. I declare an interest as a chancellor of one of the Scottish universities. I seem to be one of the very few people who has not received a briefing from Universities UK, Universities Scotland or anyone else.

There is no doubt that Scottish universities benefit enormously from having students from outwith Scotland. Whether they are from the rest of the UK, Europe or the rest of the world, they are very beneficial. There is also no doubt that it is uncomfortable to have students from, say, Northern Ireland, sitting next to students from the Republic of Ireland who pay different fees. It is not a happy situation. However, the reality is that the financing of universities in Scotland is a matter devolved to the Scottish Government. I cannot believe, even though I hope for the day when the situation is evened out, that it is right or practical for your Lordships' House to legislate to change the financial structure of Scottish universities. I hope that the situation will be resolved over time, but I cannot believe that it would be right for us to legislate, and I would feel obliged to vote against the amendment.

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Lord Forsyth of Drumlean (Conservative)

We are not legislating to alter in any way the devolved responsibilities of the Scottish Parliament. All that we are doing is requiring it to treat people from the United Kingdom in the same way as those from Europe. The amendment does not refer to tuition fees or universities; it simply states that you cannot discriminate against students within the United Kingdom but must treat them in the same way as you treat all other EU students. The amendment does not in any way unravel the devolution settlement.

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Lord Wilson of Tillyorn (Crossbench)

I understand what the noble Lord is saying, but the amendment would change the current way in which financial arrangements are made for Scottish universities.

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Lord Selkirk of Douglas (Conservative)

My Lords, I wish to ask a question in the context of the amendment. I seem to remember that when the Scotland Act was passed, discrimination issues were reserved to the United Kingdom Parliament. That was certainly the case as far as the Equal Opportunities Commission was concerned and, in a sense, this is an extension of the commission's argument. My question is as follows: why cannot provision for English students to be treated on the same basis as other European students be earmarked in the block grant? Most of us who follow history are aware that when a large number of Scots descended on Scotland after the Act of Union, discrimination was not unknown. That would have been condemned by Scottish parliamentarians at the time, and it is extremely difficult to justify an element of discrimination against students from elsewhere in the United Kingdom. I hope that the Government can come up with a solution.

There are two principles at stake. One is whether discrimination is wrong and the other is whether this should be treated solely as a devolution issue. It comes down to whether the principle of outlawing discrimination is one that comes under the United Kingdom Parliament and should be enforced throughout the United Kingdom, or whether it should be treated primarily as a devolution issue. It is very hard to justify the existence of discrimination against those who come from elsewhere in the United Kingdom. If discrimination is tolerated in one case, it will be tolerated in another case. As a Parliament, we should do everything within our power to prevent this anomaly continuing.

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Lord Sewel (Labour)

My Lords, perhaps because of my previous interest in Scottish higher education, I have been somewhat targeted by universities in Scotland. I must say, from the start, that I find myself in the difficult position of being in opposition to the noble Lord, Lord Wilson of Tillyorn, who was my chancellor. I was targeted for making what have been called "unhelpful comments" in Committee. I quite like making unhelpful comments in Committee. Of all the representations that I have received, not one adequately addressed the EU anomaly. They were silent on that. They were, of course, concerned, institution by institution, with the need to protect their income but that is ultimately a matter for the Scottish Government, not for this Parliament. The Scottish Government could easily devise a funding formula that enabled English domiciled students to be supported at Scottish universities.

The other thing that I have found offensive-I use the word carefully, but I do use it-is the argument that if there is not this discrimination, Scottish universities will be swamped by English students. That has something akin to the ring of ethnic cleansing about it. I say that as someone who has, fortunately, had the great privilege of being educated in an English, a Welsh and a Scottish university. As my noble friend Lord Morgan said, anything that turns away from that great value just does not understand the nature of higher education as a universal good.

Let us come down to the grubbiness of it. When I was a Scottish Office Minister I was in charge of the first comprehensive spending review. As we developed the argument, I asked the simple question: what would happen if Scottish universities were funded out of the block grant on the basis of Scottish students? My officials turned to me and said: "Minister, we would at least have to close one Scottish medical school. The best card we have up our sleeve to defend the Barnett formula is that we educate English students out of the Scottish block". Just think what the implications for higher education would be if that became the reality: much more than the problem of solving English students being properly financed to attend Scottish universities.

That is in the past. Issues like this can usually be reduced to very simple propositions. The simple proposition here is that what is intended is deeply and grossly unfair and nothing that I have read or heard persuades me otherwise.

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Lord Stephen (Liberal Democrat)

None of this is simple. The Scottish Parliament came forward with some very practical and pragmatic solutions to try its very best to tackle this problem. Back in 2000, when we first looked at the problem, the big issue was how we treated Scots attending universities outside Scotland, because they, too, are prejudiced-in terms of some of the quite extreme language which has been used at times in this debate. For them, there is a system that is different from that for students from England, Wales and Northern Ireland when they choose to study at a university outside Scotland. I referred to the legal advice that we received that day when I said in the Scottish Parliament:

"We wished to treat all Scots the same, but a significant problem was drawn to our attention. Members have asked for the legal advice and I will try to be helpful on that point ... Article 12 of the Treaty on European Union prohibits discrimination on the ground of nationality against nationals of other EU states. The imposition of fees on students who are students of other member states as a condition of access would amount to discrimination if the fees were not imposed on nationals of the host member state ... We had to consider whether we, in Scotland, as part of the UK member state, could provide that Scots-who for this purpose would be regarded as UK nationals-did not pay tuition fees in the rest of the UK. Given the risks of challenge by other EU nationals and based on the best advice available, we produced the proposals that are before us today".

In other words, if we had funded Scottish students to attend universities in England, Wales or Northern Ireland without payment of tuition fees, to put them on a level playing field with other students in Scotland, the Scottish Government could have been held liable to fund the tuition fees of all EU nationals from outside the rest of the UK who attended universities in the rest of the UK. This is a complex and difficult problem created, in many ways, by the EU legislation. "Change your lawyers", I hear from the Bench in front in me, but we were given that advice by some very senior lawyers, one of whom is present on the Opposition Bench today-a noble and learned lawyer. We came up with what were called the Quigley principles-how many people remember them? It was all about creating some sort of level playing field. I am not going to get into the rather offensive language of ethnic cleansing or use the word "swamping". We simply wanted to stop a surge in demand-a disruption of the system that currently allows over 20,000 students from the rest of the UK to study in Scotland. That is a significant number of students, it has been a pretty stable number of students and it has only stayed stable because we have managed to maintain a level playing field. We were given legal advice that this was the only legal way to do it-that quotas would not be acceptable.

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Lord Forsyth of Drumlean (Conservative)

Did the noble Lord think of looking at what happens in Ireland? Ireland has free tuition fees; students cross the border from Northern Ireland to attend Irish universities and are treated in exactly the same way. What is the difficulty with replicating exactly that with Scotland?

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Lord Stephen (Liberal Democrat)

I can only repeat that we were given very clear legal advice that that would not be possible. As I understand it, that was the best legal advice of the UK Civil Service. If that advice has changed, I am sure that Ministers in both London and Scotland would be interested to receive it.

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Baroness Brinton (Liberal Democrat)

Perhaps I may assist my noble friend by reminding the Chamber that the EU advice is about a member state. Under the definition of a member state, Eire, Ireland, is one state; Northern Ireland is different. That is why the rules are different.

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Lord Stephen (Liberal Democrat)

Based on the legal advice we were given, we had to come forward with a pragmatic solution. That was to increase the fees to students from England, Wales and Northern Ireland but not above what students were paying to attend their own universities. It was to maintain the principle of equality among those students, if you like to look upon it that way. That is a very different situation from that which has been described this evening.

It all started in 2000 and was introduced in 2001. When fees went up due to the decision of the then Government in 2006, we had to introduce a different system. My colleague at the time, the noble Lord, Lord McConnell, and I were First Minister and Deputy First Minister respectively. There was pretty much cross-party consensus that that was the right thing to do. English, Welsh and Northern Ireland students pay their fees personally, normally through the Student Loans Company or through local authority funding arrangements. However, an important point that has not been mentioned this evening is that payment for tuition in Scotland has, until now, been topped up by the Scottish Government to the tune of about £5,000 per annum for each and every English, Welsh and Northern Ireland student attending university in Scotland.

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Lord Sutherland of Houndwood (Crossbench)

The noble Lord assures us that there was interparty discussion within Scotland about these things. Was there any intergovernmental discussion and, if not, why not? I fear that that is what is lacking at the moment.

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Lord Stephen (Liberal Democrat)

I agree with the noble Lord. The answer is that there was not enough intergovernmental discussion because the UK Government were entirely hostile to the notion that tuition fees should be removed for Scottish students. Their hostility was made known to us on more than one occasion. They were unhappy with what was proposed in Scotland.

Scottish students had their fees paid by the Student Awards Agency for Scotland and then, separately, the £5,000 payment from the funding council was given for their tuition. In other words, until now, English, Welsh and Northern Ireland students were part of the cap as well as Scottish students. It is important to make that point.

We introduced that pragmatic solution to a potentially major problem, which could have scuppered the proposal to get rid of tuition fees in Scotland. I have to say that many of my colleagues in the Labour Party, my friends whom I worked with in coalition, subsequently said that it was one of their proudest boasts, their proudest achievements through the Scottish Parliament to get rid of tuition fees in Scotland. It was certainly one of mine. As I said, back in 2000, we were disappointed with the legal advice that we were given at the time and wished that it were different. If it can be changed, let us change it.

The bigger question, in my view, is the one mooted by more than one noble Lord this evening: if Scotland were to be independent, how would the Scottish Government tackle the legal situation? It would be difficult to understand how they could legally respond to the challenges I have described. Free tuition would then have to be offered to all EU students, including those from Scotland, England, Wales, Northern Ireland and the rest of Europe. We have not heard a response from the SNP on that issue.

The situation now is that English, Welsh and Northern Ireland students are being moved outside the cap. That is another important point. The funding from students will now be sufficient to remove the need for a contribution from the funding council. Why is that? Self-evidently, because fees in England, Wales and Northern Ireland have been allowed to increase so much. There will now be the £9,000 per year limit, so English, Welsh and Northern Ireland students will be in the same position as international students, who have always been discriminated against-if that is the language we wish to use. They will be put in the same position as international students, but with a cap of £9,000 per year.

In my view, the preferred solution would be to remove tuition fees across the whole of the UK. That would work equally well in tackling the problem- removing it, to use a political phrase, at a stroke. The policy was never to fund all EU students. That is not what we wished to do; that was what the legal advice drove us to do.

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Lord Sewel (Labour)

The noble Lord has given us a detailed exposition of the funding difficulties. Perhaps he could carry that a little further in terms of what he thinks the effect on the Barnett formula would be if the Scottish Funding Council funded only Scottish-domiciled students.

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Lord Stephen (Liberal Democrat)

As I understand it, there would be no effect on the Barnett formula, so the £85 million per year currently spent on the English, Welsh and Northern Ireland students to attend universities in Scotland would become available to the Scottish Government as those funding arrangements changed. The noble Lord, Lord Sewel, looks incredulous at that, but that is my understanding.

To finish, different policies for different parts of the UK so that different people, including students, can be treated differently sounds to me pretty much what decentralising power, devolution, is all about. It is surely the responsibility of those elected to the Scottish Parliament to introduce new ideas and new policies. What we found deeply uncomfortable was the notion that you could discriminate within a member state but not between member states. That seems nonsense, but I know of no other way to tackle it based on the legal advice and the pragmatic solution that we have chosen. Let us be honest, this is hardly a burning issue of major importance in the reaction of students and families across the UK, because we still have ready access through our pragmatic solutions for English, Welsh and Northern Ireland students to universities in Scotland and we continue to have Scots attending universities outside Scotland.

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Lord Flight (Conservative)

Does the noble Lord agree that among those English students who are at Scottish universities and who are having to borrow money and build up their loans, there is quite a degree of resentment that their Scottish friends do not have that burden? To argue that this has no impact is candidly wrong.

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Lord Stephen (Liberal Democrat)

I would argue very strongly that the difference is based on the different policy approaches that the UK Government and the Scottish Government have introduced to the funding of students and tuition fees. I repeat: I do not see that an English, Welsh or Northern Ireland student studying in Scotland is in a different position from that same student studying in their home country. To that extent, they are treated broadly equally.

I would much prefer that we had no tuition fees in universities across the UK, but, in conclusion, I am very pleased that there continue to be no tuition fees for Scottish students in Scotland.

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Lord O'Neill of Clackmannan (Labour)

There seems to be a new Scottish excuse running around. It seems to affect Rangers Football Club, the Scottish Football Association and the noble Lord, Lord Stephen: "That was the legal advice we got and it seemed all right at the time". We as Scots have enjoyed a degree of financial support for a variety of reasons through the Barnett formula from the whole of the United Kingdom. It can be argued that from some of the nations of the United Kingdom there has been a degree of grudging of those payments, but the grudging might well have been set alongside the gratitude for having opportunities to benefit from Scottish institutions-in the case of this evening's debate, not art galleries, such as the superb ones we now enjoy in Edinburgh and Glasgow, but the universities, which are just as important a part of our social and cultural heritage in the United Kingdom as a whole.

It must be recognised that we are talking here about something that is fundamental to the unity of the United Kingdom. There is access to institutions of higher education on the basis that it is available to all-although financially no longer free, which is an argument for another day. However, three sections of the United Kingdom are being discriminated against, yet the taxpayers within those parts of the United Kingdom are contributing to these institutions.

We have been told this evening of a tsunami of English students coming to Scottish universities-the word "tsunami" sometimes slips far too easily off the tongue; sometimes you forget that it has a "t" at the beginning-but that is probably unlikely. However, we might have a slightly different social composition of the youngsters who would be coming up to Scotland. This is because of the fact that they have to pay fees and that they have to pay what are almost the equivalent of London rental prices for student accommodation in a city such as Edinburgh, where there is tremendous pressure. In addition, as has been suggested, some parents are able to achieve Scottish domiciliary status by a bit of shrewd property investment, which, by the end of the four years their kids have been at the university, will more than repay them for the outlays that they made four years previously.

There is a degree of naivety here. We know that Scottish universities will have to face financial problems. Some of us might have known more about this had we been sent briefing notes, but, perhaps because of some of the speeches that we made in Committee, we were regarded as lost causes and it was decided that we were therefore not to benefit from them. We know that there are financial costs, but these are problems that, were there to be Scottish independence, which I do not want, would have to be confronted the first moment that the union jack came down and whatever it would be for Scotland-whether the lion rampant or the saltire-went up. Of course, this is why the silence from Salmond is so deafening, because he knows that this is the kind of issue that will have to be dealt with. What is more, our great Scottish institutions, which would suffer financially, are suffering already because of the manner in which the funding arrangements have been arrived at. We know that they are not getting the resources that they require.

If this were just a question of finance, resource and discrimination, we could have debates about that, but there is an irony here. Not every youngster who is Scottish and pursuing a degree-level course gets free education. If a youngster attends a further education college and is doing a level 5 or 6 technical qualification, which is to all intents and purposes equivalent to a degree, they have to pay their fees. Their fees are not paid from the largesse of the Scottish Government. There is no social justice to people having to pay to pursue vocational courses that, as some would argue, are even more valuable for the lifeblood of the Scottish economy than perhaps some other courses that are rather more interesting but not necessarily more economically relevant in the immediate short term.

I make that point because there is an inconsistency here-inconsistencies have been identified in a number of categories this evening. We may simply accept the argument that this is an example of gross discrimination, which is basically unfair and which is unsettling for the United Kingdom, and that it would be in everyone's interests to look towards a renegotiation of the settlement. We are not arguing that universities be bankrupted overnight. We are not suggesting that they be swamped with students coming northward-students who, from what we can gather, would be coming not in buses but in their own sports cars and the like. All we are saying is that we have an opportunity this evening to confront an issue that threatens the unity of this kingdom. It requires us to look afresh and to use far more ingenuity rather than bureaucratic complaints or concerns about legal advice that may or may not have been appropriate at the time. We now have to recognise that within a different political context we need to have a degree of agility that involves negotiation and understanding on both sides. This amendment this evening would go no small way towards trying to achieve that.

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Lord Empey (UUP)

My Lords, in many respects it is a pity that the legislation to which this amendment applies this evening is not a UK-wide piece of legislation, because that, quite frankly, is the only way that we will fix this. We are suffering from the fact that we forwent some time ago a unitary state with a central Government. I have to declare that I was responsible for, among other things, further and higher education for three and a half years until 18 months ago and was therefore very much aware of these issues. The Scottish Government and Parliament, in their wisdom, decided to have free tuition fees. In Northern Ireland, we had the same rate as applied in England. However, the new Assembly has decided to depart from that parity arrangement and now students coming to Northern Ireland from England and other parts of the United Kingdom will pay the higher fee. I regret that; had I remained in post it would not have been my intention to have kept that arrangement, but nevertheless that is where it is. I understand that there are similar arrangements in Wales, whereby the Welsh, too, have frozen their fee or have a lower fee than would be applicable in England.

For me, the issue concerning devolution is this. We already see anomalies. Prescription charges are one, higher education is another and of course there are others, and there will be more. However, what sticks in the craw in this case is the fact that somebody from Bratislava can come in but somebody from Scunthorpe cannot-or at least they cannot get the same treatment. I have no difficulty with devolved regions being entitled to pursue their own policies when Whitehall and this Parliament give them the authority to spend their block grant as they see fit within the law. I speak as someone who for many years had that opportunity and spent money in different departments, and I am sure that many statues of the noble Lord, Lord Barnett, will be erected in towns and villages all over the place. The Barnett formula worked; we were permitted to spend the money and that was the whole point of devolution. However, the issue for me is the severe difficulty faced by 25 per cent of our students who have to leave Northern Ireland because there are no places for them. We have sent thousands of students to Scotland. In fact, at the peak the number of students involved was effectively sufficient to keep a university going. Therefore, this is something that we feel acutely.

In Northern Ireland I implemented the MaSN-maximum annual student number-cap as a way of controlling higher education expenditure. We set a limit on the number of students that our budget would allow us to support, and that MaSN cap would be altered from to time if we were able to find more money. We did that on several occasions to raise the number of students whom we could accommodate.

This Bill is not the vehicle to resolve this problem but it does perhaps provide us with an opportunity to send a signal. When he replies, I should like the Minister to say whether he is going to consult his ministerial colleagues in government to establish whether they will be able to deal with this discrimination in the United Kingdom. It is very hard to cope with the fact that somebody from Dublin goes to a university within the United Kingdom and is treated in one way but somebody from Belfast going to the same university is treated differently. That is the issue for me.

I fully support the right of a devolved Administration in Edinburgh to choose its higher education policy. I did it, so I cannot deny the opportunity to others. However, the question is how we deal with this conundrum. The noble Lord, Lord Stephen, mentioned the legal advice that he was given, and I understand the rationale behind that. We had difficulties with students coming across the border for further education. We had to ensure that they did not pay higher fees than our indigenous students, so we experienced almost a reversal of this situation. It is perfectly proper for devolved regions to choose their policies in areas such as the payment of prescription fees-if that is how they spend their money, that is fine-but the question for me is whether it is right and proper to treat an EU citizen from England differently from an EU citizen from Scotland. That is the basic question, but it will not be entirely resolved by this amendment because it is a UK-wide issue.

Foreign students are a totally different ball game. They are cultivated because they can pay their fees, and all universities run after them to get the money and keep their coffers topped up, but the fact is that foreign students are not UK taxpayers. That is the big difference. They make no contribution whatever to the building up or long-term maintenance of our institutions, whereas UK taxpayers will continue to do so. Therefore, I say to the noble Lord, Lord Vallance, that I understand the difference of opinion that he has with the noble Lord, Lord Morgan, and he is probably right in many respects because there is a difference, but people accept it because foreign students do not contribute to our taxes. The Government need to deal with this matter at a UK level. I should be very interested to know whether the Minister is going to discuss it with his colleagues, what discussions they have had already and what long-term solutions he envisages.

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Lord McFall of Alcluith (Labour)

My Lords, as a predecessor of the noble Lord, Lord Empey, as Minister for Education in Northern Ireland, I was very aware of the number of Northern Ireland students who went to Scotland for their education and, indeed, stayed in Scotland or in the UK generally as a result. I was left with the lasting impression that education is a UK-wide initiative. In a globalised world where the transfer of wealth and economic power is going from west to east, we have to keep the integrity of the UK education system, but I fear that we are losing it with the current situation in Scotland.

The noble Lord, Lord Vallance, and Scottish universities have made the point about the stability of the system. In particular, cross-border student flow is given at 24,000 students from England applying to Scottish universities, which could cause chaos for 2013. That is a legitimate argument, but the main issue here is the actions of the Scottish Funding Council, which in a letter in December last year said that £27.8 million was going to be taken off Scottish universities. In the next four years, the sum will be more than £100 million. That is not a capricious act on the part of the Scottish Funding Council; it is because the Scottish Government have stated that that is the case. That will decrease the teaching grants as well as the quality of student experience at Scottish universities.

We are facing a crisis at the present time and it is appropriate for us to debate this. If we were only debating Amendment 1A, then I would not be supporting the noble Lord, Lord Forsyth, and others. However, we have Amendment 59, which is giving us a year's grace. Frankly, the Scottish Government are having their cake and eating it. This amendment should be saying to them: "You cannot have your cake and eat it. If you want to provide quality education, then you have to be honest about it". A dishonest conversation has taken place in Scotland and there is a narrow, introspective approach to education where there should be an inclusive, global approach. If we are making a plea for anything tonight, it is to be honest in our debate and ensure that we will look at the UK as a whole and keep the integrity of the UK education system, so that we have a more prosperous country with increased skills which can accept and face up to the challenges of globalisation in the years ahead. We should not run backwards, as, sadly, I think is happening in Scotland at the moment.

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Lord Browne of Ladyton (Labour)

My Lords, in opening my contribution to this debate, I am tempted to repeat what other Members have said and express my frustration and disappointment that, once again in dealing with this Bill, we have been deprived of a substantial amount of the time that was planned for debating it. In the interest of time, however, I do not intend to go into that in too much detail, other than to say that the frustration that all noble Lords feel about this, and have repeated almost every day of the Bill's deliberations, is exacerbated by the fact that it now appears that it was all unnecessary because we have managed to add a week to the Recess.

We understood that this was because time was limited and we would lose the Bill if we did not do certain things before certain dates. Managing that against the challenge of trying to find time for the Government to make their position clear about the way forward on a referendum for Scotland, and allowing that to feed into our deliberations, caused me to go along with some of that inconvenience. Now we discover that it was all unnecessary because we can add a week to our Recess. Much of this could have been done on the other side of the Recess. I say that with deep regret. I excuse, once again, the noble and learned Lord from any responsibility for this because I suspect that it came as much of a surprise to him as it did to the rest of us that we could have an extra week's Recess and that this week was not precious and necessary for the conclusion of the Government's business. The reason for that is that the decision about the Recess dates is entirely within the gift of the Government and was not, and cannot be, discussed in the usual channels. I deeply regret that we are in this position because it appears it was all unnecessary.

I turn to the amendments tabled by the noble Lord, Lord Forsyth. We had the advantage of debating at length a similar amendment on the second day in Committee. I intend, by reference to that debate, to shorten my remarks. I support devolution. I even support the asymmetric devolution we have in the United Kingdom; I am not a federalist in that sense. Devolution is an incomplete process and it is for the people of the regions of England to decide when they are ready for it. There is quite significant devolution across these islands, including substantial devolution to those who run this great city of London. Of course, one of the consequences of devolution is that there will be different policies and different consequences as a result of those policies across the United Kingdom. If that makes people feel uncomfortable, they should not support devolution. However, those of us who support it are prepared to live with that.

When we debated this last time we established that, with the possible exception of rights of audience for the legal profession, there is only one example of the practice of discrimination as a consequence of separate policies, and that is the issue which is concentrating our minds today. The practice of discrimination appears to apply only to the funding of higher education student fees. It is for that reason that this is such a significant issue and why it has attracted the interest of the House. The need for a resolution to it appears to have captured the imagination of noble Lords. In Committee we had the benefit of a contribution by the noble Lord, Lord Sutherland, which he has augmented today. Also, the Minister set out in detail the history of how differential fees came about and how long they have been in existence.

The noble Lord, Lord Stephen, went into more detail than he did on the previous occasion about the thought processes that informed the minds of those who were at the heart of the Labour and Liberal Democrat Scottish Executive that introduced the concept of differential fees and subsequently increased the cap on them. I listened carefully to the noble Lord and, because I have another source of confirmation, I absolutely do not doubt that legal advice informed that decision. However, in the end, whatever the legal advice was about the interaction between European law, domestic UK law and the plans and priorities of the Scottish Government, they were political decisions. These priorities are political decisions. The Scottish Executive then and the Scottish Government now could readjust their spending and say that this is a priority. For example, they could be persuaded by the arguments put forward by my noble friend Lord McFall and say, "In the interests of Scotland in the United Kingdom, we should invest more in the higher education of our young people. If we are to compete in the world, we need to compete with the kind of education that young people around the world are getting in the areas of engineering, science or whatever". These are political policy decisions and we need to take responsibility for them.

As I say, in Committee we had the benefit of the history of this policy. We know that differential fees have existed since 2001, that they were revised in 2006 and again by the current Scottish Government in 2011. Those of us who received the briefing note from Universities Scotland will have read its take on this history. It sets out why there was a significant change at the point when the rest of the UK decided to substantially increase student fees and the effect that that had on the thinking of the Scottish Government and the universities. What interests me on listening to the noble Lord, Lord Sutherland, in particular, and reading the briefing note, is that no one really wants to take positive ownership of the consequences that young people across the United Kingdom live with if they are from England, Wales or Northern Ireland and want to be educated in Scotland at the higher education level. Nobody seems to be happy with them.

Paragraph 3 on page 2 of the Universities Scotland briefing paper states that it should also make clear that the Scottish Government Cabinet Secretary for Education has made plain that this is not his preferred way forward but, in line with universities-it speaks for universities but it appears that it is not the only group to speak for them-he believes it to be necessary given the scale of change in the rest of the UK. So it may be a bit like the way in which the noble Lord, Lord Forsyth, is briefed about the fact that we cannot seem to get the Scotland Bill down for a day in which we start and end at the time we are supposed to. Everybody blames each other and no one seems to take ownership of the situation.

What seems absolutely certain, however, is that we have allowed the differential fee to persist for over 10 years.

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Lord Browne of Ladyton (Labour)

That is the point: it has got worse. It has got worse now after 11 years and the answer appears to be that we will impose a solution by amending the Scotland Bill because we have the Scotland Bill before us. The noble Lord, Lord Forsyth, shakes his head. I am sure that is not what he intends but that is what we are doing. From what I can gather having listened carefully to what noble Lords have contributed, those who were involved in decision-making and those who have been party to the process, we are doing this without any attempt to try to get what a number of noble Lords, including the noble Lord, Lord Sutherland, the noble Lord, Lord Empey, and others, have called for, which is a discussion across the United Kingdom to see if we can resolve this issue. Everyone's briefing appears to be that we have been put into this position because of the activities of others and these are the consequences.

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Lord Forsyth of Drumlean (Conservative)

The noble Lord, Lord Stephen, made an important point in his speech which I do not think is appreciated. We have been using the term fees but there are two issues here: one is fees and the other is the teaching grant. The fees have been of the order of £1,800 per head; the teaching grant has been £5,800. I understand the noble Lord's problem in that he feels that his colleagues may have played a part, but when the noble Lord, Lord Stephen, and his Labour colleagues decided on this, the issue was the fees of £1,800. The £5,800 per place taken by rest of UK students has been paid every year up until now. It is only next year that that money is being taken away. That is the £28 million that the noble Lord, Lord Sutherland, is discussing.

The Scottish Government have changed the position and the numbers are very much larger. They have used opportunistically the position where students are going to have to pay high fees in England to turn the rest of the UK students into a cash cow for the universities. That is where the change has occurred and why my noble friend Lord Steel says it has got much worse.

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Lord Browne of Ladyton (Labour)

I appreciate that it has got much worse but the catalyst was a similar action by the coalition Government in that in England they transferred the burden from the public purse to the student. It was a similar action. This is not the place to debate whether student fees in a particular place are right. In the context of devolution, the debate is about whether it is appropriate for your Lordships' House to impose on the Scottish Parliament an obligation, or a restriction, on a power that they have been exercising in a particular way for the best part of 10 years, when no attempt has been made to have a serious cross-UK discussion about the situation to see whether it can be resolved.

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Lord Foulkes of Cumnock (Labour)

I am not going to argue that ultimately this Parliament can decide anything it wishes in relation to any part of the United Kingdom. I certainly would not argue that because I respect devolution and was a great advocate for it. Could my noble friend deal with the point raised by the noble Lord, Lord Selkirk of Douglas, about discrimination. Discrimination is still a matter for the United Kingdom Parliament-it is a reserved area-and is it not overwhelmingly an issue of discrimination that has been raised today?

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Lord Browne of Ladyton (Labour)

I am happy to deal with that point, but I will deal with it directly by responding to my noble friend on this issue. My noble friend was a Member of the Scottish Parliament for four years, during all of which time the Executive of that Parliament had the differential fee. I am not aware of my noble friend at any stage during his time in that Parliament raising this issue as one of discrimination against students from England, Wales and Northern Ireland or suggesting that something should be done-where the power lay, and where it was created.

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Lord Foulkes of Cumnock (Labour)

I shall answer my noble friend's question and I hope that he will answer mine. It never came up specifically as an issue. My noble friend needs to take account of the point raised by the noble Lord, Lord Steel, that we are talking about an issue entirely different in scale. As the noble Lord, Lord O'Neill of Clackmannan, said in relation to the National Gallery of Scotland-can you imagine that gallery saying, "Are you Scottish? You can come in free". If the gallery had then asked an English person to pay £1, they might have said, "Okay, it's only £1". But imagine that they were asked for £10, £20 or £30-that is the kind of scale that we are talking about. It would be entirely wrong, and this is the same principle. It is discrimination.

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Lord Browne of Ladyton (Labour)

It is discrimination, but I do not think that a little discrimination is any better than a lot of discrimination. The fact of the matter is that there has been discrimination for 10 years, and we have established in this debate that no serious attempt has been made across the United Kingdom to deal with it.

I will deal directly with the point raised by the noble Lord, Lord Selkirk. There is an argument, and I am attracted by it, that we reserved to this Parliament the right to deal with issues of discrimination and that, as a matter of law, we can deal with it here. I am not learned enough in the law in this area to know whether that is so, but as a matter of law, in terms of devolution, we can deal with anything; we are the sovereign Parliament. We do not need to rely on the reserved area to claim our right to deal with it-we can deal with anything.

This is politics and we are doing this in the context of probably the greatest challenge that the union of the United Kingdom has faced in any of our lifetimes. Those of us who believe in this union are trying to manage a difficult political situation in which all of the parties represented in the Scottish Parliament have their DNA in this discrimination to some extent. I exclude the noble Lord, Lord Pearson, from that. We now decide in an entirely opportunistic way-encouraged, as the noble Lord, Lord Forsyth, points out, by the nature and the scale of the discrimination-to deal with it by imposing these conditions.

And when do we do it? We do it at a time when a Government Minister can come to the Dispatch Box and say that they have just negotiated a legislative consent motion to deliver this Scotland Bill, which is the policy of all our parties after weeks if not months of negotiation. We are just at the point where we can do something that can ensure that all the negotiations and discussions are wasted. We are back to square one again, back into confrontation and back into giving those who lead the Scottish Government the script that they want: that the unelected House of Lords has told the people of Scotland what they can do. They will say, "They give us devolution with one hand and then take it away. They let us use it for 10 years and then, when we use it in a way that they don't like, they take it away. That is exactly why we need to be independent of these people". This is bad politics in my view.

There is a way forward. We should accept all of our responsibilities for the situation that has been created by the actions and the interactions of the Government at the UK level with the history that was left to the Nationalists when they became the Scottish Government and the challenge that they faced in terms of university funding. We should sit down together and try to resolve the situation-not in the interests of whether we have the right to impose this but in the interests of the young people whom we want to live, work and be educated together for the benefit of the United Kingdom. That seems a much more sensible way of dealing with the situation, rather than trooping through the Lobbies tonight and making a point which will be to the detriment of the issue that most of us feel passionately about-the preservation of the union.

The other point is that, because we have the benefit not only of the briefing of Universities Scotland but the benefit of the contributions to this debate from the noble Lords, Lord Sutherland and Lord Vallance, we are not in a position, other than by assertion, to say what the consequences of our decision, should we choose to support the noble Lord, Lord Forsyth, in his Division, will be on the students who are expecting to go to Scottish universities this year or on the funding and future of those universities. There seems to be enough doubt about that that we have to be very careful that the combination of these two amendments, which the noble Lord, Lord Forsyth, has ingeniously put together, will resolve this and not cause the problems that four pages of briefing from Universities Scotland tell us about. I may not be in a position to make the arguments as to which is right, but there is enough doubt in my mind that I am not prepared to change the status quo, because I am persuaded by an argument that, emotionally, I think is right.

Finally, I say to my noble friend Lord Foulkes, whom I respect enormously, that this is not a free vote as far as we are concerned. We support the maintenance of the status quo. I am happy to support a call for both the Government of the United Kingdom and the Scottish Government to try to resolve this, but this is not a free vote. This is a whipped vote, as far as our party is concerned.

8:45 pm
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Lord Browne of Ladyton (Labour)

My noble friend is an experienced Member of this House and has been a Member of other parliaments. I understand this position, and I think that he should understand the position, too. The Opposition Benches are voting against this amendment. He is not obliged to vote.

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, once again, as we did in Committee, we have had a passionate debate. As I think the noble Lord, Lord Browne, said in his closing comments, it has been a debate where clearly there is a strong emotional sense that what happens at the moment is not right. I want to salute my noble friend Lord Forsyth for the tenacity with which he has pursued this issue. I indicated in Committee that I certainly would reflect on the strong views expressed then. As I said, my officials and I have engaged with the Department for Business, Innovation and Skills, and indeed with Universities Scotland. These are discussions to see if we could identify some way to resolve this problem rather than just accept an anomaly that we must live with, as my noble friend Lord Vallance said.

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Lord Gilbert (Labour)

My Lords, I realise that it is normal to intervene towards the end of a Minister's remarks, but I think on this occasion it is rather more helpful to intervene at the beginning. What I would like to know is: when are we going to have the dinner break?

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Lord Wallace of Tankerness (Liberal Democrat)

I probably share the noble Lord's feelings on this. For that reason, I think it is only right that I do proper justice to the many comments that have been made; but I will try to do so as concisely as possible so that we can proceed. I accept and I have heard again the strictures that have been made about the timing.

As was expressed very clearly by the noble Lord, Lord Empey, today we are debating an issue caused by the fact that higher education is devolved across the United Kingdom.

This UK Parliament is responsible for higher education in England, in Scotland the Scottish Government are responsible, in Wales the Welsh Assembly has responsibility and in Northern Ireland the Northern Ireland Executive has responsibility. All four countries in the UK have chosen to fund higher education in different ways. Because of EU law, and my noble friends Lord Stephen and Lady Brinton have both explained the limitations of what is permitted under EU law, non-UK EU students in universities in the UK are entitled to the same financial support regarding tuition fees as local students. We recognise, and perhaps this is common ground, that our challenge is to ensure access to university education and to ensure the quality of that education.

A point that I should make at the beginning, and I will deal with this in a little more detail as I proceed, is that English students attending Scottish universities should be no worse off than English students attending English universities as a result of the present arrangements. The latest figures from UCAS at 21 February this year, compared with the same date a year earlier, show that as a proportion of the total number of applicants so far, prospective English students have not been put off from applying to Scottish universities. In both years, 5 per cent of the total population of applicants have applied to a Scottish university. That is a circumstance where the English students are aware that they would be no worse off if they choose to attend a university in Scotland than if they went to a university in another party of the UK.

I do not want to open this up into a wider debate on tuition fees but the noble Lord, Lord Browne, indicated that part of the Scottish Government's response to the UK Government deciding that, to ensure the long-term sustainability of higher education, tuition fees were to be increased was that the Scottish Government had decided to fund undergraduate tuition fees for Scottish students and directly fund Scottish universities, which are therefore able to charge students from the rest of the UK up to £9,000 a year. This means that attending university in Scotland, as I have said, should be no more expensive per year for an English student than for an English student attending a university in England. Indeed, as university courses in Scotland are typically four years long, many Scottish universities have committed to charging students from the rest of the UK a maximum of £27,000 for a four-year course-the same as the maximum fee that students would pay for a three-year course in England.

The fee, however, is only one part of the equation of student finance. The universities of Edinburgh and St Andrews, which have not capped for a four-year course, have both committed to providing generous bursaries to students from the rest of the UK. Little has been said in today's debates about that aspect of student finance. Edinburgh University is offering bursaries of up to £7,000 a year to the least well-off English students, which they can use either to reduce their fees or to help them with their living costs. St Andrews University will be topping up support for all English students who qualify for a maintenance grant so that they will receive no less than £7,500 a year in total government and bursary support.

That is why I do not recognise what the noble Lord, Lord O'Neill, said about only the very rich paying up-front fees. It is not a question of up-front fees; for English students in England or Scotland, the loans that cover the fees do not start to be repaid until they are earning at least £21,000 a year.

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Lord O'Neill of Clackmannan (Labour)

How many students are likely to benefit from these awards? The noble Lord, Lord Sutherland, has already made the point about the generosity of the Edinburgh settlement, but what we have not heard today is how many students will be eligible to apply and therefore benefit from such a generous scheme, which I freely acknowledge it is.

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, I cannot give the full figures at the moment but the position is that all Scottish universities have announced their proposed fees for the rest of the United Kingdom, and the average per annum is £6,841. Work undertaken by Universities Scotland and accepted by NUS Scotland shows that this drops to an estimated £6,270 fee after means-tested bursary support is accounted for. In England, the average per-annum fee is £8,470, dropping to £7,815 when fee waivers, bursaries and student support are taken into account. Over the totality, the average in Scotland is certainly less. Universities Scotland has indicated that the average fee paid by students in receipt of means-tested bursaries-an estimated 4,281 students based on current populations-would be £4,262. Many will pay significantly less than this, with around 25 per cent of all English students studying in Scotland expected to benefit. That is an indication of the average. When one takes bursaries and fee waivers into account for English students studying in Scotland, it would be less than would be the case for English students studying in England.

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Lord O'Neill of Clackmannan (Labour)

I am grateful to the Minister for the breadth of his answer. But he did not actually answer the question I wanted: the number of students. It is 25 per cent of how many? I realise that it is a considerable improvement and a generous offer, but we still need to know what the numbers are. We know that three times as many students coming to Scotland will not be getting any of these generous endowments, but the other 75 per cent do not need them.

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, I am afraid that I do not have the figures for each university institution. One does not really know until the applications are in and turned into acceptances. However, I hope that I have indicated that the average will be less in Scotland, taking into account bursaries. It is also important to point out that the United Kingdom Government provide support to English students. Some may say that it is more generous than the support provided to Scottish students by the Scottish Government in terms of living support. In that situation, English students are entitled to a loan for the full cost of their tuition fees, regardless of where in the United Kingdom they study. This loan is not repayable until students have left university and are earning over £21,000, and even then, at only 9 per cent of earnings over £21,000.

To help with living costs, English students are also entitled to a maintenance loan of up to £5,500 and a grant of up to £3,250. All students are entitled to a loan of at least £3,575 regardless of their household income; and English students will receive a larger amount of maintenance grant compared to Scottish students with the same household income. So if one accepts my noble friend's amendment in terms of fees, the concern would be that you can equalise fees, but would still have a considerable disparity in student finance and funding. That is because of the more generous arrangements that the United Kingdom Government have made for English students as compared with the arrangements the Scottish Government have made for Scottish students.

My noble friend Lord Forsyth said that students from England would be burdened by substantial debts because they came to a Scottish university. However, the truth is that they would have no greater debt-and arguably a lesser debt-coming to a Scottish university than they would if they went to one in England. That is a relevant point. The noble Lord, Lord Sutherland, acknowledged the fact that bursaries had been made available.

We have tried to look at the possible outcomes of my noble friend's amendment and we have identified three. First, Scottish universities could begin charging tuition fees to European Union students. We believe that this would be a breach of European Union law and could place the United Kingdom, as a member state, in danger of infraction proceedings. Secondly, Scottish universities could charge Scottish students and therefore also EU students, tuition fees. Thirdly, Scottish universities could stop charging tuition fees to students from the rest of the United Kingdom.

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Lord Wallace of Tankerness (Liberal Democrat)

My noble friend has indicated which one of the three he favours. I do not think that anyone has actually suggested that we breach European Union law, although the noble Lord, Lord Empey, said that at the heart of that is where the problem lies. If one accepts a devolution settlement across the United Kingdom, it will produce different outcomes in different places.

9:00 pm
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Lord Pearson of Rannoch (UKIP)

Is the noble and learned Lord aware that there is no way, under European treaties, that a country can be forced to pay a European Union fine?

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, I am not going to embark on a lengthy debate on the pros and cons of the European Union. As the noble Lord, Lord Empey, said-as did many noble Lords who have contributed to this debate-the problem is that if a student comes from Scunthorpe they are charged a fee; if they come from Bratislava they are not. I am certainly prepared to look at whether that European Union problem can be addressed, but I do not to wish to raise any expectation or hope that it can be. It is a piece of legislation that is very firmly in the European Union rules and directives. The Scottish Government have indicated they want to examine it and I am sure we would be prepared to examine it along with them, but I say that without offering a hope that it is likely to be changed.

My noble friend clearly indicated that his preference would be for Scottish universities not to charge students from any part of the United Kingdom. It is our view that that would not be financially sustainable. My noble friend suggested that it would be £24 million in the first year, but of course as one year succeeded another that would be a cumulative amount. The United Kingdom Government have come to the decision that in order to guarantee the long-term financial stability of universities, it is necessary to require students to make a greater contribution to the cost of their higher education. It would be unreasonable and unrealistic to expect the Scottish Government to fund free higher education for students from all parts of the United Kingdom, and in the long term it would be damaging to Scottish universities and their ability to compete with other universities in the UK and worldwide, which potentially have much greater financial resources available to them.

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Lord Empey (UUP)

As I said earlier, the issue for me is not the minutiae of the individual operation of devolution in each region-even though we are on the Scotland Bill and the amendment specifically applies to Scotland-it is that there is a difference in treatment between a non-UK EU citizen and a UK EU citizen. Will the Minister give the House an undertaking that he will speak to his ministerial colleagues and perhaps come back to us at a later stage? The issue of how many bursaries we are getting and so on is missing the point. We are not here to examine the entrails of higher education funding in the regions; we are trying to deal with the feeling in the House that we do not like this idea of UK students being treated in this way as opposed to EU students, when UK students are UK students. That is the issue.

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, I hope that I represented what the noble Lord said, that that is the point, and that is why there is such concern. It is a point that my noble friend Lord Stephen made with regard to the strong misgivings that the Scottish Executive had back in 2000 in having to go down this course. It had to acknowledge that if we went down this course of free tuition fees for Scottish-domiciled students attending Scottish universities, the consequence would be that students from European Union countries attending Scottish universities would have to be treated on the same basis. In Committee, I said that I was then Member of the Scottish Government and that although it was not something we particularly wanted to do, it was a consequence that we had to accept, however reluctantly, if we wished to bring in a policy of free tuition for Scottish-domiciled students.

I indicated that I am more than willing to look at whether there is a way of resolving this at a European Union level but I do not wish to mislead the noble Lord or the House into believing that there is a realistic prospect of that happening, certainly before Third Reading. It is something that is so deep within the relevant directive that it would be a significant mountain to climb-although I know my noble friend Lord Forsyth is quite good at climbing significant mountains.

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Lord Empey (UUP)

I was not expecting to resolve it at an EU level. I am asking whether we can try to resolve it at a UK level. It is in the UK that this differential has arisen.

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, I apologise if I misunderstood the point. I think that the noble Lord, Lord Browne, also made the point about some sort of pan-UK discussion on this. I will ensure that that proposal is taken up by the Department for Business, Innovation and Skills. We will certainly relay it to the department, which will undoubtedly be in contact on an official level on a number of issues with those who deal with higher education in the devolved Administrations. Again, however, I should flag up the scale of the challenge of making progress if there is even one Administration who want free tuition and say that they will not change that until the rocks "melt with the sun"-I think that that was the quote. It is a reasonable request that that pan-UK discussion should take place.

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Lord Wills (Labour)

My Lords, as an Englishman, I was not going to contribute to this debate. However, having listened to it all, and listened to the Minister's response, I wonder if he could give the House an indication of whether he understands the damage that this situation is doing to the union. Does he understand that that is perhaps the most fundamental challenge at stake here?

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, I understand that there is a serious issue here. As the noble Lord, Lord Browne, indicated, if we end up telling the Scottish Parliament what to do-my noble friend Lord Forsyth says that that is not what his amendment says but I think that, de facto, that is what it would lead to-that would be a serious position for the union, and it would undermine the whole devolution settlement. That is why I find this a difficult issue.

I think that my noble friend has, as the noble Lord said, totally underestimated the number of students who would seek to apply to Scottish universities. It only stands to reason that if you can get free tuition at the St Andrews university but would have to pay £9,000 at Durham, you are more likely to apply to St Andrews. The notion of quotas has never been particularly welcomed.

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Lord Sutherland of Houndwood (Crossbench)

I wonder whether the Minister remembers when this argument was last put forward. On that occasion we were, perhaps unusually, on opposite sides of the argument. I was recommending a form of care for the elderly, wrongly categorised as free, and one of the counterarguments was that there would be a-they did not use the word then-tsunami of pensioners crossing the border to Scotland. I think that it would have been more of a steady trickle which grew. It did not happen, although it was claimed that it would.

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, it is too easy to dismiss the possibility of it happening. It is probably much easier for a student to choose which university he or she would wish to attend than for a pensioner completely to up sticks and settle in a different part of the United Kingdom. I think, with respect, that the noble Lord is not comparing like with like. However, I do recall that when tuition fees were first significantly increased by the then United Kingdom Government, around 2003 or 2004, the then Scottish Government had to respond to it. There were very clear signs that if the Scottish Parliament did not respond to it-and my noble friend Lord Stephen has indicated that it happened again in 2006-there would be an increase.

I should like to make it clear to the noble Lord, Lord Morgan, that I strongly believe that part of the richness of university education-one of its great pluses-is that it includes people from all different backgrounds. Universities in Scotland would certainly take the view that it is important that there should continue to be students not just from other parts of the United Kingdom but from other parts of the European Union and from around the world. That adds to the richness of a university education. They seek to achieve a manageable flow of students from the rest of the United Kingdom which would ensure the long-term stability of universities in Scotland.

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Lord Sewel (Labour)

I thank the Minister for giving way. I put it to him that the noble Lord, Lord Empey, has spoken for virtually the whole House in explaining the deep bitterness that people feel about the EU anomaly. In discussions with the First Minister, has the Minister or any of his colleagues pointed out to the First Minister that if he was successful in achieving his primary political policy objective, which is independence, then all these arguments would fall away? There would be the opportunity for English domiciled students to go to Scotland and there would be no way in which a Scottish Parliament would be able to impose a differential fee. Has the Minister pointed that out to the First Minister?

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Lord Wallace of Tankerness (Liberal Democrat)

I have not pointed it out personally but, frankly, it is not the best argument for the case that the noble Lord has been prosecuting. He certainly does not wish to see an independent Scotland; neither do my noble friend Lord Forsyth or anyone who has spoken in this debate. The argument that this will all be the consequence of an independent Scotland is perhaps one argument for why we should resist an independent Scotland.

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Lord Sewel (Labour)

I just hoped that there was at least the glimmer and possibility of consistency.

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Lord Wallace of Tankerness (Liberal Democrat)

My Lords, I am not sure that I follow that. What about the consistency of Mr Salmond's position? I have to answer for a number of things in your Lordships' House but, fortunately, I do not have to answer for Mr Salmond.

I agree with the comment that the noble Lord, Lord Empey, has encapsulated what the problem is. There are differential solutions around the United Kingdom-Northern Ireland charges £9,000-so simply to adopt this amendment would not solve the problem across the country. I do not believe that the Bill is the right place to address this. I have indicated that we are prepared to look at the European Union dimension and that we are more than willing to engage with the different Administrations. I just do not want to suggest to your Lordships' House that this matter can be resolved easily; it would be wrong to suggest that. Even if one does not accept the word "tsunami", the consequences, which could include a complete disruption of the Scottish higher education system, are sufficiently uncertain for it not to be a risk that we can take. Even allowing for one year's grace, the problems would still arise in subsequent years. Therefore, I urge my noble friend to withdraw his amendment.

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Lord Forsyth of Drumlean (Conservative)

My Lords, I am most grateful to everyone who has spoken in a very interesting debate. Given the lateness of the hour, I am sure noble Lords do not want me to respond to all the points or to repeat any of the arguments. I am very impressed by the argument from the Labour Party's Front Bench that if something has been going on for 10 years, you should keep it. That seems a very conservative point of view to me.

In all the arguments about the practicalities and difficulties, all of which can be addressed and overcome, the overriding issue here is one of fairness. Why did I table this amendment? I spent a week at St Andrews. I went there nearly 40 years ago and I have to say that the students now are much harder working and much more focused than they were in my day. They are absolutely outraged by what is happening to them. Those students have a much tougher time ahead of them than any of us in this House had when we left university. We owe it to them to address this problem.

I was not sure whether I would have to press this matter to a vote tonight. However, I have to say to my noble and learned friend that we debated this in Committee, when I urged him to raise it with the Prime Minister and his colleagues. Perhaps this was said in confidence and I should not repeat it, but one of his ministerial colleagues in the Scottish Office called me today to say, "How can we help you with the Scotland Bill?". I said, "You can help me by accepting my amendment, or at least giving some commitment. What is your position on student fees?". He said, "We're waiting to see what the strength of opinion is". On that basis, I beg leave to test the opinion of the House.

Division on Amendment 1A

Contents 72; Not-Contents 151.

Amendment 1A disagreed.

Division number 2

See full list of votes (From The Public Whip)

9:24 pm
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Baroness Rawlings (Conservative)

My Lords, I beg to move that further consideration on Report be now adjourned. In doing so, may I tell the House that we shall not be having the Statement and suggest that Report should begin again not earlier than 10.25 pm?

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Lord Steel of Aikwood (Liberal Democrat)

My Lords, I would like to protest at what is being proposed. It is quite ridiculous that on a Bill of this importance we should be asked to come back. We now have the debate of the noble Baroness, Lady Deech, which will take us to nearly 10.30 pm. It cannot seriously be proposed that we should continue from 10.30 pm until we get to Amendment 26, as it says on the Order Paper, from 10.30 pm. I gave notice that I was going to object when this Motion was moved. I gave notice several hours ago that we wanted to hear from the Government about what they proposed to do with the rest of Report.

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Baroness Anelay of St Johns (Conservative)

My Lords, something has clearly gone wrong in the transmission because I was not aware that my noble friend was going to make that comment. I know that all those taking part in debate on the Scotland Bill consider it important, as does the rest of the House that may be listening to it. It is a usual channels agreement that the Bill will be concluded by the end of Wednesday evening. We discussed this earlier and that commitment remains. There will be a discussion later among the usual channels about what progress should be made tonight. I am aware that we have just taken two hours on one amendment. That was an amendment very dear to the hearts of those who took part in it, but the overall time allocated to Report was agreed and the intention is to keep to the agreement that Report should be concluded at the end of the Wednesday sitting. As I say, we will shortly be discussing in the usual channels what the last amendment to be considered tonight shall be.

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Lord Foulkes of Cumnock (Labour)

My Lords, this Bill has been treated abominably at all stages. On one occasion all of us sat around all day-afternoon and evening-while the welfare Bill went on and on and on. We were led to believe by the Government Chief Whip that the Scotland Bill would be taken that day. Then we were told summarily: "You can go, off you go", as if it was of little concern that the Bill was being dealt with in such a way. It is outrageous. We were then told that we would have the day's debate today. When did we start? Not until the evening, after a very substantial, albeit important, debate. I am not saying that the debates that took place earlier were not important-but so is the Scotland Bill. It is outrageous that we should be dealt with in such a way.

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Baroness Anelay of St Johns (Conservative)

My Lords, the noble Lord is good at perorations. I will simply keep to the facts. I had intended that the Scotland Bill should start today, as first business. The Opposition decided that they wished to have the other debates before it. The House therefore had those debates. I agree that the Scotland Bill was very much disaccommodated by this. It might be convenient if the House were able to listen to me. I know that the noble Lord, Lord Foulkes, likes interventions, but I wish to conclude what I am saying which is that it was very difficult on the first day for those waiting for the Scotland Bill because of the time taken by the Welfare Reform Bill. I object to the implication-the clear indication, in fact-that I cared nothing for the Scotland Bill that day. I did care, and we found another date for the Scotland Bill. It is the view of usual channels that we should continue with this. If the noble Lord, Lord Foulkes, wishes to say more he can, but it is a courtesy in this House to let one Member finish speaking before the next gets up.

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Lord Foulkes of Cumnock (Labour)

The Government Chief Whip says that I like interventions. It was I who was speaking and she who intervened. This is the way that we have been treated all the way through the Bill. Over the weekend, I found out that we were going to have an extra week of recess. In that week we could have carried out proper consideration of the Bill. As was pointed out earlier, we did not have the proper time between Committee and Report. We are being treated abominably and it is absolutely disgraceful. The Government Chief Whip should realise that it is not the Opposition's responsibility to programme business in this House; it is the Government's responsibility and it is her responsibility, and she should take the blame as well as the credit.

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Baroness Deech (Crossbench)

My Lords, I suggest that the valuable time of the House would be better used by allowing me to have my dinner break debate and then using such time as is left at noble Lords' discretion.

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Lord Forsyth of Drumlean (Conservative)

My Lords, I certainly do not want to impose on the patience of the noble Baroness, Lady Deech. I must say to my noble friend the Chief Whip that her treatment of Members of this House is becoming very difficult to defend. I watch noble Lords' facial expressions. We were promised a full day on Report after Committee finished in the middle of last week. We had to struggle to table amendments. We were promised a full day today and a full day on Wednesday.

The next amendment, Amendment 2, is mine, which I am expected to speak to at 10.20 pm. If we are to get to Amendment 26, we will be here until the early hours of the morning. There is plenty of time on Wednesday to debate these matters, which are serious matters and deserve to be properly debated. It is true that we had a long debate on the previous set of amendments, but that was because many Members who had not been following our proceedings came in to speak because it affects their interests all over the United Kingdom. My noble friend is treating us very harshly indeed, and I do not believe that that is the best way to get the Government's business on the statute book.

Motion agreed.

Consideration on Report adjourned.