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Queen’s Speech — Debate (2nd Day)

Part of the debate – in the House of Lords at 1:30 pm on 9th May 2013.

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Photo of Lord Trimble Lord Trimble Conservative 1:30 pm, 9th May 2013

My Lords, I will not follow the example of the noble Baroness who has just spoken by referring to the contents of the Queen’s Speech. My attention has been drawn to something that was published a few weeks before the ending of the last Session. I refer to a report that has already been mentioned by the noble Lord, Lord Bew: the McKay report, entitled the “Report of the Commission on the Consequences of Devolution for the House of Commons”. As the noble Lord, Lord Bew, said, that report was sparked largely as a response to the clear sense of grievance among many people in England about how devolution has worked out.

That sense of grievance is very real, and there is substance behind it in that they have seen over the last few years a number of cases of different policies and decisions being taken in some of the devolved areas that have left people in England feeling that things are in some respect unfair. That is a real feeling, and it should be addressed, but I would hope that the McKay commission, in addressing this issue, looked a bit more broadly at the issue in question.

One point to make is that while there have been cases of significant variations in social policy in a devolved area from social policy here, if you look at the broad scope of policy you will find that those differences occur in quite a minority of cases. In all the devolved regions, the same broad scope of social policy that is brought in with regard to England and Wales also occurs in the devolved regions. There are a number of reasons why what is decided on in Whitehall still rolls out into the regions as a whole. One of them is that, as noble Lords will remember, people in some areas complain about policies made on a postcode basis. That concern to avoid the postcode lottery applies just as much to people in Scotland, Wales and Northern Ireland. Their expectations of social policy are set largely by the media. Of course, in the United Kingdom we have a highly concentrated media, so people’s expectations are largely set by the largely Anglocentric, London-based media, and they expect to see the same things happening in their area.

Another factor that one should bear in mind is that the policies brought up by Her Majesty’s Government are policies that evolve within the Whitehall departments, which actually have a greater policy-making capacity than their equivalents in the regions. This is particularly true for the region that I am most familiar with, which is the smallest of them all. Our policy-making capacity was limited. We knew that the folk in London would have a broader range of persons to draw on to draw up the policy. Therefore, the regions, and the public services in the regional areas, tend to look to what is happening in the centre. The Arts Council of Northern Ireland, for example, is separate from the Government, but when in the 1990s the Arts Council of England started to focus very much on outreach, community arts and all the rest of it—bingo, the Arts Council of Northern Ireland followed exactly the same patterns and borrowed a lot of its paperwork, such as application forms, from the Arts Council of England. There is, therefore, a tendency in the regions to look to Whitehall for guidance on policy.

That tendency is then reinforced by quite a significant mechanism that is not terribly widely known about, and is not mentioned at all in the McKay report: the joint ministerial councils. JMCs are brought into existence by the Government here in London in order to involve the devolved regions in the formulation of policy—in other words, to get them to buy into the policy that will come from the Whitehall departments. There is no statutory basis for the JMCs; it is simply a practice. However, as so often happens in our case, the way in which things are done matters as much as what is said in the print of legislation.

The third thing, which cuts both ways because as one will see it helps to explain why there are such differences as well as uniformity, is the way in which the Barnett formula operates. Because Barnett relates to increases in public expenditure in England, in effect it finances the regions to carry out the policy determined in England. Increases in funding in England will happen because of the policies that the Government here adopt. Therefore, the money that goes to the regions is the money that is needed to carry out those policies regionally. What went wrong with Barnett, which the Select Committee of this House went into a couple of Sessions ago—I was a member of that Committee, which perhaps helps me in dealing with this—is that it became clear that in a number of cases there was what we called a Barnett bypass: the Barnett formula was not strictly followed, and some regional Administrations were quite adept in persuading London to give them extra money. The most successful at that was Scotland, because the Secretaries of State for Scotland regarded their primary job as making sure that Scotland did better than anywhere else, and they were most effective at it.

The McKay report, interestingly, comments on how it notices that the Members of Parliament for the devolved regions still do not seem to be terribly interested in arguing for more funds for their region. Of course they do not: it was their Secretaries of State who did that. The ordinary Member of Parliament did not need to do it for Wales and Scotland because they were dependent on their Secretary of State. I suppose that to a certain extent we did the same in Northern Ireland. However, leaving aside for a moment the circumstances in which successive Ministers managed to do particularly well for their department, in the broad run of Barnett it is to reinforce the policies that are adopted elsewhere. There is a slight reference to the Barnett formula in the McKay report—I will come back to that in a moment—but had McKay looked more closely at the factors that led to the evolution of policy, it may have given a better result.

At the core of the McKay report is a policy or principle which they put forward as something that should underlie the constitutional relationship between London and the devolved regions. Paragraph 109 of the report says:

“Decisions at the United Kingdom level having a separate and distinct”—

I note that that is italicised—

“effect for a component part of the United Kingdom should normally be taken only with the consent of a majority of the elected representatives for that part of the United Kingdom”.

The key issue is the question of having a separate or distinct effect. The question then depends on how you define that.

Noble Lords will also notice that the principle also refers to decisions at UK level. In fact, McKay’s terms of reference do not focus on decisions. McKay was asked to produce a report on legislation. The bulk of the McKay report deals with procedures in the House of Commons with regard to legislation. There is a problem with the way McKay understandably focuses on decisions, because decisions and policy give rise to the sense of grievance. This morphs into the question of legislation. The problem with the notion of separate and distinct is how you define it. In paragraph 136, McKay says that separate and distinct is easier to define in practice than in the abstract. No effort is then made to define it in the abstract. Perhaps one can understand why.

However, the issue has been looked at for decades within our government system. It is a key part of the Barnett formula. Every time a policy evolves from Whitehall departments, or a decision is taken, the Treasury has to take a decision. Paragraph 44 of our report on the Barnett formula states:

“When making spending decisions for a project or event in England the Treasury has to decide whether that expenditure is ‘UK-wide’ or ‘England only’. The decision to categorise spending in England as ‘England only’ requires an exercise of judgment by the Treasury triggering a ‘consequential’ payment through the Barnett Formula to the devolved administrations. By contrast categorising expenditure as ‘UK-wide’ does not trigger a ‘consequential’ payment”.

The report goes on to give examples. The example that it gives of UK-wide expenditure is the Olympic Games. They did not trigger consequentials. The example given by the report of expenditure in England on a national policy was Crossrail. The money is spent in London. It is part of a national policy of providing an effective rail network, so the England-only decision triggers a Barnett consequential.

I am afraid that this gets a little complicated, because while McKay talks about the separate and distinct effect in England that requires special procedures in the other place, under Barnett terminology “England only” triggers a consequential and so is not separate and distinct from England. That is hugely important. Unfortunately there is no discussion of this in McKay. The report makes a couple of references to consequential payments as side-effects of decisions. If it reflected more fully on Barnett and the fact that Barnett consequentials are attracted by decisions that are “England only”, in Treasury speak, it would see that the number of occasions on which procedures to do with things that were separate and distinct in England would be comparatively few and limited.

As the noble Lord, Lord Bew, said, there is an interesting history to this. It is mentioned in only one sentence in McKay, which refers to the home rule Bills. The noble Lord told us that the problem was just that Parnell and Gladstone could not agree. With respect to him, I should say that the problem was a little wider than that. There were three home rule Bills, and the persons who framed the Bills had to put a provision into them relating to this. They may have had difficulty working out the basis on which they would take a decision, but they had to take a decision. Therefore, in each of the three home rule Bills, a different decision was adopted as to what to do with this sort of problem. I will not go through all of them in detail.

In summary, in the first home rule Bill they decided to solve the problem by not having any Irish MPs in the House of Commons. In the second they decided that that was not a good idea and that they would ignore the problem so that all the Irish MPs would be in the House of Commons. The third home rule Bill was not titled a home rule Bill because the Government of Ireland Act 1920 was intended to apply to all Ireland but was operational only with regard to Northern Ireland. Their basis was, “We’ll have a sort of compromise, but we can’t think of a principle on which to make a compromise so we’ll roughly divide representation of the Irish area in the House of Commons by half. We’ll just give them half the MPs that strictly speaking they’re entitled to”.

None of those decisions involved a clear principle. I am not surprised, because I do not think that there are any issues of principle in dealing with this. The West Lothian issue, created by the flamboyant Member for that area, was a marvellous bit of rhetoric in terms of its argument, but the reality of the situation was that the House of Commons decided that devolution was going to apply not universally but to only three comparatively small areas, for particular reasons that I will come to in a moment.

It is entirely up to our sovereign Parliament to decide that it is going to change the way in which business is done. If it is done in an unbalanced way but Parliament wishes to do it like that, that is entirely within its capacity. When people worry about the relationships between the devolved Assemblies and Parliament, they should bear in mind that they are not talking about the same things. There is only one sovereign Parliament. The devolved Administrations are not sovereign. They have a limited capacity that in no way changes the capacity of the sovereign Parliament, which could, if it wished, legislate for the devolved areas or decide to abolish devolution at any time, in which case we would not need to look at things further. That is the underlying situation.

Before I leave the question of home rule, I will mention one little side-effect. It is another issue that people might like to look at. Between the various home rule Bills, another area that was deeply discussed was the fiscal powers of the devolved Administration. The view of what fiscal powers could be devolved to the Administration changed with each of the three Bills. It got narrower as it went on. I hope that the people who in some Scotland-related areas talk about devo-max will look at what was thought about this when those Bills were considered. They will find that the view taken then was that the scope in fiscal matters for what is now called devo-max was very limited. I hope that people will look at that.

My final point is that one of the ironies of the situation is that, at the end of the day, devolution was considered necessary in those areas because of the way in which England, by having 85% of the population of the United Kingdom, had become so dominant that the London-based Administration repeatedly failed to take local circumstances fully into account. Devolution was intended to balance that. It would be hugely ironic and very damaging if, as a result and consequence of devolution, special measures were taken in the House of Commons to see that the representatives of the 15% were further marginalised.