Scotland Bill - Committee (3rd Day)

– in the House of Lords at 3:07 pm on 22nd February 2016.

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Relevant documents: 6th Report from the Constitution Committee, 15th Report from the Delegated Powers Committee

Moved by Lord Dunlop

That the House do now resolve itself into Committee.

Photo of Lord Dunlop Lord Dunlop The Parliamentary Under-Secretary of State for Scotland

My Lords, in light of the amendment to the Motion tabled by my noble friend Lord Forsyth, I want to set out the reasons why we should consider Parts 2 and 3 of the Bill today. I start from the proposition that there is a consensus in this House that wants to see the Bill reach the statute book and the fiscal framework to be agreed, and why should that not be the case? The Bill implements not only the manifesto commitments of the Conservative Party, but the commitments made by the Labour and Liberal Democrat parties as well. Indeed, as my noble friend so rightly reminded us on referendum night, the unionist parties must deliver on the commitments that they made.

Like my noble friend, I understand that the first step in strengthening bonds of trust in Scotland is to keep your promises and to be seen to keep them. The Government want to see a Scottish Parliament that is more financially responsible and accountable than it is today, and to meet the overwhelming desire of the majority of people in Scotland for a Scottish Parliament with more powers within the United Kingdom. I therefore ask the House to consider carefully whether agreeing to this amendment will help or hinder the passage of the Bill in the process of achieving an agreed fiscal framework that is fair to Scotland and to the UK as a whole. I submit to your Lordships that it would not help. Indeed, it would put both in considerable jeopardy. The fiscal framework negotiations are at a sensitive and critical point. There have been intensive discussions between the UK and Scottish Governments throughout last week. These have continued over the weekend and today. Significant progress has been made and, while nothing is ever certain, a deal now seems within reach. Both Governments are very conscious of pressing timetables for both this Parliament and the Scottish Parliament to scrutinise the fiscal framework before the Bill reaches the final amending stages in this House, and to enable the Scottish Parliament to consider a legislative consent Motion.

My noble friend Lord Forsyth is fond of angling analogies. He has suggested that this is a fishy business and the UK Government are being played by the SNP because it has no intention of ever doing a deal. If my noble friend is right, and I do not think that he is, then the effect of his Motion is to let the SNP off the hook. Why? Because it will become clear to the Scottish Government that in legislative terms—I hope I am not stretching the angling analogy too far—we are running out of line. I therefore ask the House not to let the amendment frustrate what must surely be our priority today: to do all we can to support the achievement of a successful outcome.

I understand, of course, the frustration and that discussions are protracted. I am sure noble Lords will understand that this is a challenging negotiation and it is important to do the right deal. The UK Government cannot be pressured to sign a deal at any cost to meet a parliamentary deadline. I believe it is possible to consider in Committee today, and on their own terms, the merits of parts 2 and 3 of the Bill, and to discuss in detail the outcomes the fiscal framework is intended to achieve. This will help to identify issues we can return to on Report, and I assure the House that there will be ample opportunity on Report to scrutinise the fiscal framework if it can be agreed by then. There is no shortage of information on these issues to inform our debate, whether it is independent analysis or information provided to the House by the Treasury.

I also understand noble Lords’ frustrations at the confidentiality of the process. However, I do not believe that conducting negotiations in public is conducive to reaching a deal. All that happens is that each party paints itself into a corner, making it more difficult for compromise to be reached. Once the fiscal framework is agreed, the Government are committed to providing Parliament with every opportunity to scrutinise it. In particular, any changes to borrowing and fiscal institutions will require legislation and debate.

While I accept that Smith is a substantial devolution package, I note, finally, that it is not without precedent to consider devolution provisions without all the details being available. The last Scotland Bill—a significant devolution package—was considered and agreed by the House before the block grant adjustment mechanism was agreed. I therefore ask my noble friend not to press his amendment and to help secure the passage of this important Bill and a successful outcome for fiscal framework negotiations. I beg to move.

Amendment to the Motion

Moved by Lord Forsyth of Drumlean

As an amendment to the motion that the House do now again resolve itself into a Committee upon the Bill, to leave out from “House” to the end and insert “declines to consider parts 2 and 3 of the Bill further in Committee until the updated fiscal framework proposed in Scotland in the United Kingdom: An enduring settlement (Cm 8990) has been published, as recommended by the Constitution and Economic Affairs Committees in a letter to the Parliamentary Under-Secretary of State, Lord Dunlop, on 28 January.”

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

My Lords, I am grateful to the House for giving me the opportunity to move the amendment. I am particularly grateful to my noble friend the Chief Whip for persuading the House to consider the Scotland Bill in an order that meant we looked at parts 2 and 3, concerned with taxation and welfare, last. I am not so grateful to my noble friend for suggesting, on the whip, that my Motion was a fatal amendment. It is not a fatal amendment. All it seeks to do is to implement the advice of both the Constitution Committee and the Economic Affairs Committee that we should not go on to discuss the Committee stage until we have the fiscal framework. It would be fatal only if my noble friend the Chief Whip thought that we would never ever agree the fiscal framework. As my noble friend the Minister is indicating that agreement is imminent, I do not see why he is so concerned about delaying the Committee stage by a few days. I have to say to him in the gentlest terms, since he used the fishing analogy, that it looks to me very much like a sturgeon is playing him like a salmon.

From the very day he was appointed, I have rather unkindly been asking the Minister if he could give an absolute guarantee that the Bill would not be broughtbefore this House for consideration until the fiscal framework was agreed. He said that he hoped that would be the case because he expected it to be agreed by the end of the Summer Recess. We were then told that it would be in November; then, it was going to be in January; and most recently it was going to be on St Valentine’s Day—but there he was, sat at a table for two on his own, with no sign of the First Minister turning up to deliver the fiscal framework.

This is not a minor matter that is just concerned with Scotland; it affects every part of the United Kingdom, and the authority of this House and its ability to conduct its business. My noble friend says that he expects the fiscal framework to be agreed shortly. That is like Billy Bunter’s postal order, which is always coming tomorrow. What is the reason for the delay? It is because it has dawned on the nationalists that if you move from a system in which a grant through the Barnett formula is 20% higher per head than in England, to a system where you rely on an income tax base that is not 20% higher than in England, you end up with a very big gap in funding. They have suddenly realised that what they have been asking for is going to result in Scotland having less money and higher taxes. The Government, having committed themselves through the Smith commission—the noble Lord, Lord Smith, is not in his place—which did not even consider these details, now find that the Scottish Government are saying, “Hang on a second, we are going to lose out”, and as a result these negotiations have been going on to try to square the circle.

The fiscal framework sounds like a technical matter, but perhaps I may gently chide my noble friend. The chairmen of the Constitution Committee and the Economic Affairs Committee wrote to him on behalf of both their committees on 28 January, which is unprecedented. That letter was copied to all Front-Benchers and the Chief Whips. It was not circulated to other Members of the House, which is disappointing, but it was posted on the committees’ websites. That letter, signed by the noble Lords, Lord Hollick and Lord Lang, a former Secretary of State, stated:

“The Economic Affairs and Constitution Committees continue to believe that the House should not consider in Committee the financial aspects of the Bill until the fiscal framework is published”.

My noble friend has not even replied to that letter; as of Friday, the committees had not had a response. I really do think that the Government have to explain why they are choosing to ignore advice—advice which has been on the record since November.

Perhaps I may detain the House a little by taking some of the points that were made by the Economic Affairs Committee, of which I am a member. The report is called, significantly, A Fracturing Union? and it states:

“The implications of the Scotland Bill 2015 cannot be understood without reference to the fiscal framework and vice versa. Despite this the Scotland Bill has gone through the House of Commons without MPs having any details of a revised fiscal framework …The Bill should not progress to Committee Stage until the fiscal framework is published”.

It goes on:

“The regime for funding devolved services is perceived by many as unfair: in 2014/15 identifiable expenditure per head was £8,638 in England, £10,374 per head in Scotland, £9,904 per head in Wales, and £11,106 per head in Northern Ireland. In the absence of any mechanism to promote fairness based on need, a sense of grievance will persist. The UK Government claims to be seeking an enduring settlement. This will not succeed if the new arrangements take as their starting point the existing inequity and contain no provision to adjust the system over time to make it fairer and to keep it fairer … The fiscal framework will set out how the Scottish block grant should be adjusted to account for Scotland retaining nearly all of its income tax receipts”.

The report goes on to explain the different methods which are available to do that, saying:

“Whichever method is chosen could have a large impact on the size of the Scottish block grant: a witness told us that the existing method for doing this under the Scotland Act 2012 would lead to an ‘intolerable’ reduction”.

The House is entitled to know what is being proposed and to debate that in the context of the United Kingdom as a whole.

On borrowing, the report says:

“The fiscal framework would grant Scotland additional borrowing powers. These should be subject to clear limits”.

What are the limits? We know not. The report says:

“The Smith Commission suggested there should be no detriment as a result of UK Government or Scottish Government policy decisions post-devolution. Such a principle is unworkable in practice and a recipe for continuing conflict”.

I have repeatedly asked Ministers and those who are advocating the no-detriment principle, including the noble Lord, Lord Smith, what the no-detriment principle means. From that Dispatch Box Ministers have said, “We don’t know”. The Minister has said, when I have spoken to him, “It is all part of the negotiation”. We are entitled to know the impact of these things.

The Constitution Committee said:

“Our report on the Draft Clauses noted that there were ‘key considerations around the fiscal framework that should be addressed by the Government before these proposals are implemented, and explained to Parliament when a bill is introduced’. These matters, on the face of the Bill, remain unaddressed. Parliament has been asked to vote on devolution of taxation powers and welfare spending powers without a full picture of the implications of these for future central funding of the devolved administrations, of how the block grant will be adjusted to take account of the newly devolved fiscal powers, or of the processes by which funding arrangements will be worked out”.

It concluded:

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

I have to say to my noble friend: it is just unacceptable that we should be asked to do this without having that information. Noble Lords can imagine how surprised I was, having seen that information and having seen the work of the committees, to read in the Scottish edition of the Times on 15 February:

“A senior Treasury insider said, ‘If the model that we are recommending had been in place in 1999, Scotland would have benefitted to the tune of £6.6 billion’”.

It is better than Barnett by £6.6 billion. In other words, what is being proposed in secret goes over and above Barnett by £6.6 billion. I do not know whether that is the Government’s position. I certainly do not think that it will go down too well in Wales or in the north of England. Indeed, I can make an argument, on the other side, that Scotland might lose out and that someone living in Scotland might end up paying higher taxes to see a lower standard of public services. This is central to the Bill and it is a disgrace that the Bill is being rushed through in this way without proper consideration.

I understand the politics. My noble friend and the noble Lord on the opposition Bench are terrified that they will be blamed by the SNP for not delivering the Scotland Bill. If my noble friend feels that he cannot accept my Motion, perhaps he might accept an amendment saying that the Act should not commence until we have the fiscal framework and it has been approved by both Houses of Parliament. If, in his reply, he would give an undertaking to do that, that would be a compromise. It is not an ideal. He says he may well get the statement later this week and we may well consider it on Report, in which case, that is fantastic, but both Houses of Parliament should have an opportunity to do that.

I have a final point. I do not know why the Secretary of State for Scotland is not involved in these negotiations. I do not know why Ministers responsible for welfare have not been involved in these negotiations. The Chief Secretary to the Treasury, Mr Greg Hands, not confirming the amount but saying that Scotland would be better off than it was under Barnett under what he was proposing, went on to say, in a letter which my noble friend circulated, very helpfully, at 1 pm today, that he accepts that what is being proposed goes far further than the Smith commission proposals. So, if we are prepared to depart from the Smith commission proposals by making them better, it rather cuts a hole in the argument that we have to implement to the letter what was proposed by Smith. I beg to move.

Photo of Lord McCluskey Lord McCluskey Crossbench 3:15 pm, 22nd February 2016

My Lords, I support the amendment proposed by the noble Lord, Lord Forsyth. I can be brief because he has covered many of the arguments. I wish to make it clear that in my view and, I think, the view of many, the important thing is that this Bill does not concern simply Scotland but the United Kingdom, and in particular the taxpayers in Great Britain. That is why the noble Lord mentioned Wales and, of course, the north of England.

The general view is that Scotland has for many years been subsidised by taxpayers in the rest of Great Britain. That view is inconvertible and I think that the Treasury strongly supports that opinion. Whether that subsidy has been justified is a different question that I will not go into at this stage. The underlying issue is not the interpretation of a word such as “detriment”, which does not mean too much, although, if you ask the people of Wales, they will tell you that they recognise it when they see it arising from this Bill. The real underlying issue is whether taxpayers in the rest of the United Kingdom, and certainly in the rest of Great Britain, should continue to subsidise the Scots and, if so, at what level and on what basis. The issue underlying that is whether it is time for this House to face up to the weaknesses of the Barnett formula and begin to ask whether it is proper to make need the sound basis for supplying tax money to different regions of the United Kingdom.

We have waited for the fiscal framework since May 2015, when the Bill was introduced in the House of Commons. I agree with the noble Lord, Lord Forsyth, that we cannot do our job without the fiscal framework. However, my one reservation about the amendment is that I fear it would let the SNP off the hook because the truth of the matter is that it cannot live with devo-max on any basis other than an improved subsidy; and, if it cannot live with devo-max, it certainly cannot live with independence. Therefore, the argument on this matter is very important because it reveals the basic weakness of the Scottish National Party’s position. I hesitate to give it an excuse for blaming us and condemning us in the usual terms as being unelected et cetera. Therefore, I invite your Lordships to support this measure but I hope that, ultimately, the noble Lord will withdraw the amendment.

Photo of Lord Hope of Craighead Lord Hope of Craighead Convenor of the Crossbench Peers

My Lords, the point that the noble and learned Lord, Lord McCluskey, made at the end of his brief speech seems to me to support the position that the Minister is urging us to adopt. The last thing we want is to be seen to be delaying the progress of the Bill through Parliament. As I listened to the noble Lord, Lord Forsyth, what occurred to me was the lack of clarity over how today’s debate will be affected by the absence of the fiscal framework. The Bill proceeds in stages, of course. We are looking today at the Committee stage and the fine wording and tuning of the various clauses in Parts 2 and 3. For the moment, I do not see how the wording of those clauses will be affected by the fiscal framework. At a later stage, the noble Lord may propose that we should not allow these clauses to go forward in the Bill. However, that could be done on Report; it does not have to be done today. If, as the Minister said, there is a prospect of the fiscal framework being agreed tomorrow so that we have it before us on Report, I do not see why the points made by the noble Lord, Lord Forsyth, cannot be examined at that stage, too, or, as a last resort, at Third Reading. Given the nature of today’s debate, I respectfully suggest that the balance of advantage is to proceed to maintain the parliamentary timetable, which is crucial if we are to do our job of supporting the Smith commission.

Photo of Lord McAvoy Lord McAvoy Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland), Opposition Deputy Chief Whip (Lords) 3:30 pm, 22nd February 2016

My Lords, I wish to make it clear from the start that the Labour Party will not support the amendment in the name of the noble Lord, Lord Forsyth of Drumlean. The facts of life are that the future of the United Kingdom is at stake, and while I certainly would not accuse the noble Lord of exaggeration, it is becoming clear that with his oratorical skills—I do not think anyone in the Chamber can match him, although some Members on my side are a match for him in maintaining a position—he seems to be succeeding in creating an atmosphere of crisis. With all due respect, he has taken a drama and made a crisis out of it. I do not say that he exaggerates, as that would be unfair and untrue, but a sense of calm, reason and responsibility has to pervade this Chamber. We are speaking about the future of Scotland and of this United Kingdom.

The Minister has made the point that there is a precedent because the last Scotland Act proceeded to implement matters with the detail being discussed later. Quite frankly, apart from the procedures of this House, the practical effect of the noble Lord’s amendment to the Motion being passed would be to kill off the negotiations and the chance of reaching a successful conclusion to these important discussions. I believe that this amendment has been devised to kill off the Scotland Bill, the fiscal framework procedure and the progress being made in Scotland.

Photo of Lord Elton Lord Elton Conservative

Can the noble Lord explain why accepting the amendment should kill off the negotiations? Surely it should accelerate them.

Photo of Lord McAvoy Lord McAvoy Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland), Opposition Deputy Chief Whip (Lords)

I can understand why the noble Lord makes that point, but the nation and country of Scotland is awaiting the results of these negotiations. Whether the noble Lord likes it or not—and I certainly do not—passing the amendment would send this message to Scotland: “Westminster’s not agreeing. Westminster’s kidding you on. Westminster’s conning you. They don’t mean it and here they are obstructing Scotland yet again”.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

All my amendment does is say that we should not proceed with the Committee stage until we have the fiscal framework. It does not say that we should not proceed with the Bill or should not pass it. If the noble Lord’s argument is right, why would it not have been interpreted in the same way when we decided to delay consideration of Parts 2 and 3 until today?

Photo of Lord McAvoy Lord McAvoy Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland), Opposition Deputy Chief Whip (Lords)

The noble Lord will have to accept that I do not agree with him on this, and I do not think he will agree with what I am about to say. The arrangements are designed to facilitate the passage of the Bill and the fiscal framework discussions. Quite frankly, I do not believe that that is the noble Lord’s intention; I believe it is his intention to kill off the discussions.

The atmosphere in Scotland is one of mistrust. I try not to make political points, but the result of the 2015 general election was, I maintain, a direct result of the Prime Minister’s triumphalist press conference in Downing Street the morning after the referendum when he sent the message, “English votes for English laws”, and hostility towards those who had voted yes. There was a sea change in Scotland, where all Labour Party seats were wiped out with the exception of one. We were seen to be conniving and in collusion with a Conservative Prime Minister.

On the other side of the coin, we have got the SNP, with its grievance culture, which is determined to attack Westminster and cast doubt on Westminster’s good intentions—unfairly, because I believe that the intentions here for Scotland are good on both sides of the House. I also think that there was an element of scare story when the noble Lord mentioned that I, the Labour Party and the Conservative Party were terrified of Scots. Terrified of my own people? I respect their desire. I respect their wishes—it is our job to facilitate them—and I believe that that is also the position of the House of Lords.

From the Cross Benches, the noble and learned Lord made it plain that the fiscal framework can still be discussed on Report. This is not a panic measure. This is not ifs, buts or maybes. This is the calmness for which this House is renowned. There will be plenty of opportunity if we can get these discussions to a conclusion. Certainly the indications give hope that we can get the conclusions.

Photo of Lord Hamilton of Epsom Lord Hamilton of Epsom Conservative

Does the noble Lord accept my noble friend Lord Forsyth’s argument that Scotland will lose out if it comes to a settlement that abolishes the Barnett formula and makes it rely on income tax in Scotland?

Photo of Lord McAvoy Lord McAvoy Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland), Opposition Deputy Chief Whip (Lords)

The time to discuss the fiscal framework will be when public announcements are made. With all due respect to the noble Lord, Lord Hamilton, we can discuss it until we are red or blue in the face. We are not discussing anything that is there in front of us. This House must be allowed to get on with facilitating the Bill, facilitating the people of Scotland getting the Bill, guarding—

Photo of Lord Pearson of Rannoch Lord Pearson of Rannoch UKIP

Does the noble Lord accept that he is making the Scottish people sound really stupid, whereas in actual fact they are highly intelligent and perfectly capable of following the argument of the noble Lord, Lord Forsyth? I suspect that they would support him because they may get a proper deal in the end.

Photo of Lord McAvoy Lord McAvoy Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland), Opposition Deputy Chief Whip (Lords)

The noble Lord, Lord Pearson of Rannoch, is absolutely right. The Scottish people are too intelligent to be fooled. That is why they will never vote for UKIP. I do not like making political points when the future of the country is at stake, but there we are.

Cheap!

Photo of Lord McAvoy Lord McAvoy Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland), Opposition Deputy Chief Whip (Lords)

Cheap? I have been called worse. I take the point of view that we must be allowed to get on with this. I urge the Labour Party, and I am sure that everybody in this House urges both negotiating teams, to come to a conclusion. It is hard; it is difficult. However, we should not underestimate the task that that team is facing, nor should we underestimate the task that the Government are facing in getting this Bill through. We on the Labour side of the House believe that this Bill must go through. This amendment is a distraction. It is not quite right in the threats that it makes. We should get on with the Bill as quickly as we can.

Photo of Baroness Buscombe Baroness Buscombe Conservative

Before the noble Lord sits down, does he agree that it would be sensible at least to respond to what my noble friend Lord Forsyth has suggested in urging the Minister to consider and bring forth a sunrise clause, to ensure that at least we can go through this process in the knowledge that this Bill will not pass until this framework is published and considered by your Lordships?

Photo of Lord McAvoy Lord McAvoy Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland), Opposition Deputy Chief Whip (Lords)

With due respect to the noble Baroness, that would send the message to Scotland from this House, from Westminster, that I have been arguing against for the last five or six minutes. That would be interpreted as Westminster reneging on its commitment to Scotland. I do not accept that argument but that is the argument that would win the day because in my opinion—the noble Baroness will have to take my word for it—that is the mood of Scotland in listening to Westminster.

Photo of Baroness Buscombe Baroness Buscombe Conservative

It may assist the noble Lord if he were to remind those who seem to mistrust this House that the Smith commission comprised purely Scottish representatives. It is therefore wrong to say that our Prime Minister was in any way not supportive of the Scottish coming out of this with a fair deal. We have all accepted this process thus far. By having a commission—whose results we have all accepted—to decide the future of our overall relationship, but in which only Scotland was represented and not the rest of the United Kingdom, we have made a huge step forward in trying to show Scotland that we care about its future.

Photo of Lord McAvoy Lord McAvoy Shadow Spokesperson (Northern Ireland), Shadow Spokesperson (Scotland), Opposition Deputy Chief Whip (Lords)

The noble Baroness has not addressed my response that the mood in Scotland is such that, correctly or incorrectly, that sort of behaviour would be seen as Westminster tricks or deviousness. That is how it would be seen and there would be a massive reaction against it. This is a massive development for this United Kingdom of ours, in dangerous times when we need to keep a cool head. I may take stick for this elsewhere, but there we go. We have confidence in the capacity of the Scottish Government and the United Kingdom Government to come forward with an arrangement that will guarantee the future of this country.

Photo of Lord Hughes of Woodside Lord Hughes of Woodside Labour

My Lords, I hesitate to enter this debate, especially as it has been going on for a long time and I have always opposed Scottish devolution. I accept what has happened, that changes have to be made and that we have to move forward. However, the noble Lord, Lord Forsyth, makes an interesting point and if he forces a Division, I shall certainly support him in the Lobby.

As this debate has proceeded today, I have become more and more alarmed. We must choose our words very carefully. When my noble friend Lord McAvoy says that the Bill must go through, that is not the same as saying that, “This Bill must proceed”. We need an absolute guarantee that the Bill will not reach the statute book until the fiscal agreement has been reached; otherwise it will face opposition at every stage. Anyone who raises a question is accused of deliberately trying to stop the Bill going through and to stop the Scottish people getting their own way. Nothing could be further from the truth. We want to see a lasting settlement that will avoid the procedure whereby it seems that, almost every five minutes, the Scottish National Party demands greater concessions which it is given and which it accepts and hails as a great victory. The next day it says, “We have been sold down the river again”. If the debate on the future of Scotland is to be proceeded with solely on the basis of the attitude that the Scottish National Party takes, we are doomed to disaster.

This House and this Parliament have a responsibility, and we should proceed on that basis. When the Minister gets to his feet, he should at least give a categorical assurance that, if we reach Report and still do not have a fiscal agreement, that Report stage will not proceed until the agreement is reached. If he cannot go that far, he should at least go so far as to say that the Bill will not go on the statute book until that agreement is reached and agreed by Parliament.

Photo of The Earl of Kinnoull The Earl of Kinnoull Crossbench

My Lords, I thank the noble Lord, Lord Forsyth, for enabling us to have this debate on the sorry state of the timetabling for this important constitutional matter. I want to make just three points.

The first concerns precedent. The Bill is the first of a series of devolutions in the UK and obviously precedential in its financial settlement. It is also precedential in terms of all the Bill’s contents. I hope that the one thing where it is not precedential is in the extraordinary process which has led to us being in this debate today. Your Lordships’ House is justly proud of its ability to scrutinise legislation, to bring to bear its considerable powers of analysis to improve that legislation and to test the thinking behind every provision within it. That scrutiny process is multi-layered and the Committee stage is an extremely important layer of it, and I would strongly resist the giving-up of it. The scrutiny process has been honed, through centuries, to the effective peak that there is today.

We aim to produce legislation that will stand the test of time. This Bill is likely to last a very long time, so we need to proceed carefully. I hope that the House will agree with me that, in a constitutional matter such as this, it is especially important that the full spectrum of the House’s abilities are employed, given that it is a new settlement within the United Kingdom and will definitely be precedential on the other devolution settlements under consideration.

I turn to the fiscal framework itself. Quite rightly, the two negotiating parties are not providing a running commentary. I know of no reason to believe that the parties are not negotiating on an entirely bona fide basis, so there can be no blame on the part of one party or another for the slow speed of progress. But slow it has been; and what commentary there has been in the press has emphasised the complexity of the issues. Indeed, that is emphasised in the report of the Economic Affairs Committee. Does the Minister agree that that complexity means there is all the more reason that the full, multi-layered scrutiny process, both in Westminster and Holyrood, is allowed to take place?

Finally, I ask the Minister: what is the tearing hurry? All the parties to the Smith agreement have been treating it as a matter of utmost good faith that they will get to an agreement. For those involved it is an instance of that British maxim, dictum meum pactum. During the Committee stage so far—and I have been present for almost every minute—all the amendments and the debate, from all sides of the House, have been entirely consistent with the Smith commission agreement. Indeed, the only bit in the Bill that seems to be potentially inconsistent is the Henry VIII clause which we will debate later today. We will learn more about that, I am sure. There is a great certainty in this House that the Bill will be enacted, and enacted on a basis that is consistent with the Smith commission agreement. I therefore believe it would be far better in the long term for the citizens of Scotland and the United Kingdom to afford the Bill proper scrutiny, both here and in Holyrood. If that means that it passes into law in May, not March, then so be it.

Photo of Lord Turnbull Lord Turnbull Crossbench 3:45 pm, 22nd February 2016

My Lords, I, too, share many of the concerns raised by the noble Lord, Lord Forsyth. We have reached a point where the House is being asked to approve that certain taxes and welfare measures should be devolved, but nothing is being said about the framework in which they are to be operated. I do not accept the proposition put forward by the noble Lord, Lord Hope, that we can divorce the two, nor do I accept that the precedent of the previous Scotland Act of leaving certain details to be settled after this stage is appropriate. What is at stake are billions and billions of pounds and the distribution of those between the different parts of the United Kingdom.

We have been told nothing about two vitally important elements of the fiscal agreement: the method for adjusting the Barnett formula to take account of the new distribution of taxes and the regime for borrowing and debt. We know that there is a dispute over two different methods of adjusting the block grant. Noble Lords will be pleased to know that I am not going to attempt to explain those now, but no Minister in this House or the other place has attempted to explain what the two approaches are and the merits of each. Despite that, and contrary to the assurances given, the completion of Committee stage has been scheduled to proceed. It is extraordinary that a major change in constitutional arrangements, both political and financial, is being sought without either House having a chance to see the detail of what is proposed or, importantly, to take a view on its effectiveness or fairness. It has been pointed out that this is not simply a bilateral matter between Scottish and UK Ministers: it has implications for the whole country.

The other place may be content to allow all this to glide by unremarked, but I believe that this House has higher standards. It has always prided itself on ensuring that matters of constitutional significance are properly scrutinised. At the moment, that is not happening.

If an agreement is reached in the next few days, even though it has been a case of “Mañana, mañana” so far, the Government need quickly to come up with a process that allows the Bill to be scrutinised before final assent is given to it. For example, if this is effectively delayed until Report, will the rules of Report be modified to adopt the rules of Committee—for example, with noble Lords being able to speak a second time? That has been done before, I think in the case of a financial services Bill. Alternatively, a separate consent Motion could be provided, which is something that the Holyrood Parliament itself intends. Something needs to be done because it is not acceptable to allow the Bill to be finalised and matters of this importance to be sorted out thereafter.

Photo of Lord Selkirk of Douglas Lord Selkirk of Douglas Conservative

My Lords, I should mention first that I was an MSP for the first eight years of the Scottish Parliament. I want to make a series of small points. The first is that an agreement between the Government and the devolved Scots Administration should not be beyond the wit of humankind, even in difficult circumstances. I hope that the Minister will keep negotiating and that his efforts will be rewarded with success.

I thought that the noble Lord, Lord Forsyth of Drumlean, not only made a persuasive case but made a particularly important point when he suggested that an amendment could be made saying that the Act must not commence until the fiscal framework was in place. My understanding is that the Bill cannot be implemented in the absence of an agreement as it requires a consent Motion in the Scottish Parliament. Without an agreement, no consent Motion will be passed. I hope that the Minister will look very carefully at my noble friend’s proposal.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

My proposal was that the Act should not commence until this House and the House of Commons had approved the fiscal framework. My noble friend is right that the only parliament that is going to be able to consider this Bill in the context of the fiscal framework is the Scottish Parliament, and that seems a bit odd to me.

Photo of Lord Selkirk of Douglas Lord Selkirk of Douglas Conservative

My noble friend’s suggestion does not seem to have the disadvantages of the amendment, which I will come to in a moment, and I hope that it will be looked at sympathetically in some form because it could be an important step forward.

There is of course frustration in the Scottish Parliament about this. The convener of the Devolution Committee, Bruce Crawford MSP, recently stated there would be “a substantial impact” on the ability of the Scottish Parliament to go through the process of proper scrutiny. Obviously he was referring to what he regarded as unreasonable delays. He expects the teams from Holyrood and Westminster to appear before his committee tomorrow to give a full explanation of their position on a fiscal framework, whatever the circumstances. There is a strong group of 15 Tory MSPs in the Scottish Parliament. To the best of my knowledge they want the Bill to proceed, and they are the third largest group.

My concern is based on two factors. This could become a major issue in the forthcoming elections to the Scottish Parliament on 5 May. If there is no agreement, the Scottish electorate will most certainly want to know who to blame. If the Bill fails because the Scottish Government shrink from accountability then the SNP will have to take responsibility, but if the Bill fails because the noble Lord’s amendment delays it unreasonably then this House and unionist parties could become a lightning conductor for criticism.

My most important reservation is that the amendment could lead to a serious weakening of the United Kingdom. Noble Lords may wonder what the Scots really want. I think that the answer is given in three ways: in opinion polls, in the referendum and in the recent general election. My interpretation of the referendum was that there is a decisive majority in Scotland for the United Kingdom. That means that the Scots will want to keep the UK intact, which should be remembered and never forgotten. My interpretation of the general election results in Scotland was that it was a clear indication that a large majority of the Scottish people wish to have a Scottish Parliament with increased powers and responsibilities, and within a reasonable timescale. I do not wish this House to do anything that would give the SNP a major propaganda coup during an election because I am a passionate supporter of the United Kingdom.

There are three difficulties with the amendment. First, it could be used to prevent the promises made by the Prime Minister and other party leaders being fulfilled. That could easily enrage the Scottish electorate on the basis that promises should be kept. The second difficulty is that the timing is not totally convenient because the Scottish election campaign will pick up on this and it could become a major issue. The third and most important consideration is that the United Kingdom probably stands a very much better chance of long-term survival if we do not unreasonably delay this Bill. In short, it is the kind of amendment that could trigger the law of unintended consequences.

Finally, I had the privilege of working under my noble friend Lord Forsyth in the Scottish Office. I have no hesitation in saying that he was a very strong, powerful and highly effective Secretary of State, frequently coming up with extremely interesting and exciting new ideas. I will mention one of them as an example. He wished the Stone of Destiny to be returned to Scotland and he got his way: that was a tremendous achievement. The Stone of Destiny was put in a “Stonemobile”, and there was a terrific reception in Edinburgh Castle. Of course, the Scots were not going to be satisfied merely with a stone: they wanted more. I recall a story that when the Stone of Destiny was originally pinched from Westminster Abbey by some youngsters of a nationalist disposition, and the police were searching for it, a Scotsman from the back of beyond telephoned the police and said that he knew who the thief was. The police officer went round to see him and took out his notebook, and the old man said, “It was King Edward I”.

As I have said before, finding a really satisfactory way forward in this area is very much like walking a tightrope. The noble Lord, Lord Smith of Kelvin, put it very well when he said:

“The new powers set out in the Scotland Bill will lead to a transformation of the powers held by Holyrood and it would be a terrible shame if they were to fall away at this late stage”.

My noble friend Lord Forsyth of Drumlean has put forward an amendment that might be entirely logical, but the potential disadvantages, in my view, outweigh other considerations. Above all, we at all times have to keep in mind the essential need to protect, maintain and sustain the United Kingdom.

Photo of Lord Purvis of Tweed Lord Purvis of Tweed Liberal Democrat

If the House will allow me to make a brief observation about the process, I will not detain it much longer. I believe that this Bill should proceed today to the clauses. It is a balanced judgment: the noble and learned Lord, Lord Hope, made a very valid point in saying that the amendments on the Order Paper would not have been meaningfully impacted upon even if there had been an agreement. However, the question is whether there would have been amendments in light of the agreement if it had been made in a timely manner. That means that the Minister needs to give a bit more information when he winds up this short debate on the amount of scrutiny that is going to be afforded to the fiscal agreement, not only in this House but in another place. Half a day of Report stage might not, I venture, be sufficient.

To paraphrase many whom I have heard over the past 24 hours, we need to progress with a heavy heart, because we are in unfortunate circumstances. They are unfortunate because there has been considerable press coverage, even though the Minister had said that this was a negotiation in private. However, the circumstances of these negotiations go far beyond the previous legislation to which he referred. The adjustment of the block grant will now require a permanent and significant constitutional mechanism given the very large extent of the powers that will be transferred to the Scottish Parliament, and it requires considerable scrutiny. Later on we will debate the adjustment, not only for fiscal powers but for welfare powers, and its financial implications. For the first time, the Scottish Government will have current revenue borrowing powers, which, similarly, are part of the negotiations. Most important, however, is that these discussions are pertinent not just to Scotland—the implications will be much wider for the constitutional arrangements we have across the whole of the United Kingdom.

It is a pleasure to follow the noble Lord, Lord Selkirk, who in the Scottish Parliament we always referred to simply as “Lord James”. I was a Member of the Scottish Parliament with him and a member for five years of the Finance Committee, and I know that there is considerable pressure on its processes as well. I will avoid the obvious political ramifications of this, given the imminence of the Scottish Parliament elections. We need to set aside the politics of this, and I commend the noble Lord for doing so when he comes to this House. I will offer only one bit of advice to the noble Lord—I know that he does not need it, as he is more experienced than I am. To negotiate in private with the SNP is rather different from negotiating in private with any other political party across the United Kingdom. Therefore, when he says that he wishes to conduct all of this in private I respect his view, but privacy was not entirely clear in the letter from the First Minister of Scotland when she sought to define the principle of no detriment. There has been scant information from the UK Government as to its view of this. Finally, given that we will now use forward projections, and the significance of these for population, tax revenue forecasts, and so on, simply to rely upon Treasury forecasts and often competing Scottish Government forecasts does not bode well for future adjustments and negotiations.

Therefore, all we have had so far has been in the public domain, whether it has been briefings from the Treasury to newspapers rather than factual information presented to Parliament, or the positioning of the Scottish Government rather than information they have presented to the Scottish Parliament. We may all agree with the concept of fairness to taxpayers but we need to know the details of how it has been defined by each side. The lack of civil society contributions and academic review draws my attention to the fact that we cannot conduct such discussions like this again in the future. The time is absolutely right for a UK independent fiscal commission, given that there are significant implications for Wales, the cities and local authorities, which we are debating in Parliament. For the Government, if it is not Edward I’s contribution, it should be “go home and think again” on some of these issues with regard to reviewing our constitutional frameworks.

I hope that when the Minister winds up he will give more information about the scrutiny that this will be afforded. The Chief Secretary to the Treasury told the Scottish Affairs Committee that he could foresee a situation in the Commons where there would be a day’s debate and the fiscal agreement would be referred to a Select Committee. Will the Minister indicate whether that is still the Government’s intention and what level of scrutiny we will have? When, as I hope, we proceed with this stage today, we need to make sure that the fiscal agreement, with its significant implications for the long term, is afforded proper parliamentary scrutiny.

Photo of Lord Elton Lord Elton Conservative 4:00 pm, 22nd February 2016

My Lords, we should be coming to a conclusion, so I do not wish to detain your Lordships for long. However, I remark that my noble friend Lord Selkirk, in a wonderfully elegant and skilful speech, invited your Lordships, not unreasonably, to delay the Bill. What gives my noble friend Lord Forsyth’s amendment weight and reason is the joint letter from the two chairmen of the two senior committees of this House, which has scarcely been addressed in this debate at all. They have both said, after considerable deliberation, that it would not be proper or wise for us to proceed until we have the fiscal framework before us. We therefore have to find some means of doing that—if possible keeping within the timetable, which is an unreasonable one. It was not unreasonable to start with but it has become so because of the extraordinary foot-dragging of the seeking of the agreement itself. That is not our fault.

It is also important to remember that we are here for a purpose. It is the reasonable purpose of seeing that the legislation we pass is fit for purpose and does not handicap unnecessarily or unfairly any part of the United Kingdom. From what I have heard this afternoon I understand that that is something we cannot fairly do until we have the framework.

What other devices are there to achieve this compromise of timing? I am sure it is already in my noble friend the Chief Whip’s mind but there is, of course, the device of recommitting clauses that have been taken in Committee at a later stage when circumstances change. I remind the noble and learned Lord, Lord Hope—I hope I have got my procedure right—that the clause stand part procedure is in Committee and therefore there are no opportunities to suddenly excise a clause that has already been voted in. It is asking to decide the same issue twice in opposite senses. Therefore the idea of a recommital which gets round that decision seems a reasonable one. I put that to your Lordships as well as my noble friend Lord Forsyth’s plan B, as it were, which also has its merits, but I think they are less good because there would be less chance to do anything with this Bill once it is on the statute book.

Photo of Lord Stephen Lord Stephen Liberal Democrat Lords Spokesperson (Scotland)

My Lords, all of this emphasises the need for more open government. We have very limited information on the fiscal framework negotiations and neither Government have won plaudits for transparency and openness. From the UK Government there has been little more than, “We met. Good progress was made,” and possibly, occasionally, an overview of the agenda. I quote from the meeting held as recently as last Friday. This is supposed to be us coming to the end of the negotiations:

“MINISTERIAL MEETING ON SCOTTISH GOVERNMENT’S FISCAL FRAMEWORK – 19 FEBRUARY 2016”— the title takes up more space than the minute of the meeting, which states:

“The Rt Hon Greg Hands MP, Chief Secretary to the Treasury and John Swinney, Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy met in London today. They had a useful further discussion on Scotland’s fiscal framework. The discussion made progress in a number of areas. The two governments have not yet been able to reach an overall agreement”.

This is the sort of information that we as parliamentarians are being asked to rely on. The UK Government appear to believe that this is the best way to conduct these intergovernmental negotiations. I suspect that a major reason for this is the Treasury, which has a long track record of secrecy in all matters and doubtless feels that this has served its purposes well over the decades. The annual Budget negotiations with spending departments is probably the best example of this. By default we accept that the Treasury tends to be secretive, but I do not believe that this makes for good government. The more open we can be, the better. People should be encouraged to get more involved in politics and helped to understand government and the issues facing Governments. Too much is still done behind closed doors. This is a very big issue for the future of Scotland and the United Kingdom. So far everything has been done behind closed doors.

There is another dimension to this beyond the issue of secrecy. At both UK and Scottish levels we have been asked to, “Trust us, we’re the Government”. Governments, however, can be trusted only so far and Governments are ultimately answerable to the people and to the parliaments. Their powers are not, and must not be, unfettered. There can be real advantages to openness, particularly when they are dealing with, and are answerable to, the parliaments.

However much we may wish to support the passage of this Bill, there will come a point when we have to say that we need to see the fiscal framework, at least in its final draft form. This week we are reaching that final point with the Bill. We are supposed to move on from the Committee stage today to Report on Wednesday, but the negotiations between the Scottish and UK Governments are still to be concluded. Indeed, it is widely reported in the media that there is still a dispute. As parliamentarians in this Chamber, we have not been told the detail of this dispute but it is certainly all about the detail of the formula to be used, or indeed which formula is to be used, to calculate the funds to come to Scotland once the new tax-raising powers have been introduced. Surely there is bitter irony in negotiating this with an SNP Government, because with independence there is no formula and no safety net. The situation as we all understand it is that all that is swept aside: goodbye Barnett, goodbye population weighting and goodbye all forms of protection.

It seems inconceivable that we can proceed to complete Parliament’s consideration of the Bill without much greater openness and clarity on this issue and on the fiscal framework and all its clauses in general. Ideally, the terms of a final agreement need to be revealed to us. However, failing that and accepting that the UK Government cannot force a final agreement, we need to see the full draft of the fiscal framework identifying the area, or areas, of dispute and explaining the different proposals of the two Governments. Without that, the progress of the Bill is in serious danger of grinding to a halt, so I am very sympathetic to the view of the noble Lord, Lord Forsyth.

My noble and learned friend Lord Wallace of Tankerness has suggested, for example, that we might be able to pass the Bill subject to a commencement order, which would require a legislative consent Motion from the Scottish Parliament. The noble Lord, Lord Forsyth, has suggested another possible approach today in the event that we cannot reach a final, agreed position on the fiscal framework. All these arguments carry considerable force and a lot of work needs to be done on this in the coming hours. However, all of us know that stopping the Bill now, and stopping it in the House of Lords, would have huge practical and symbolic consequences, which could threaten the delivery of the extra powers promised to Scotland ahead of the Scottish Parliament elections in May. There would be the most profound political consequences. So, as we have listened carefully to the noble Lord, Lord Forsyth, we should listen carefully to the Minister’s response.

Photo of Lord Hughes of Woodside Lord Hughes of Woodside Labour

I accept the point that the noble Lord has made about the dangers but does he not see that that is precisely what the SNP is playing for: to prevent an agreement before the election, as that is what it will fight the election on?

Photo of Lord Stephen Lord Stephen Liberal Democrat Lords Spokesperson (Scotland)

If that is the case, we must flush the SNP out on this, and we must be transparent and open about the progress that has been made and what is being offered by the UK Government in terms of the fiscal framework. The UK Government must be prepared to defend their position as fair and reasonable.

Whatever the result today, I believe that the arguments for greater openness and transparency on the fiscal framework will apply with even greater force when we reach Report. That will be the critical stage for the future success of the Bill.

Photo of Lord Hollick Lord Hollick Chair, Economic Affairs Committee, Chair, Finance Bill Sub-Committee

My Lords, the Economic Affairs Committee, which I chair, and the Constitution Committee both concluded after extensive inquiry that, in the absence of any information about the fiscal framework, it will be impossible for the House to assess whether the Bill will cause detriment to all or part of the United Kingdom. As the noble Lord, Lord Forsyth, pointed out, we are talking about billions of pounds which could move between the rest of the United Kingdom and Scotland, so this is no small matter.

I think the Government have accepted the logic of that position, which is why we are taking Parts 2 and 3 out of order in today’s Committee. In his opening remarks, the Minister said that there will be ample opportunity on Report to scrutinise the fiscal framework. If, as he has hinted and as newspapers have reported, the fiscal framework is to be published in the next few days, would he agree that ample scrutiny can take place only if the procedural rules of Committee stage are applied to Report stage? Will the Minister confirm that he and his noble friend the Chief Whip will press for that?

Photo of Lord Darling of Roulanish Lord Darling of Roulanish Labour 4:15 pm, 22nd February 2016

My Lords, I have a great deal of sympathy with the remarks made by many Members of this House on the importance of the fiscal framework. It is no exaggeration to say that, without it, this entire legislation will fall apart—it is the most important part of the Smith settlement. It is deeply regrettable, therefore, that here we are at the parliamentary equivalent of the 11th hour and we still do not know what it is or what is in it.

Although I have some sympathy with those who are involved in negotiations, I have to say that as a non-Conservative and non-nationalist, I am not altogether sure that I am happy about the prospects for my country—either Scotland or the United Kingdom—being determined by two sets of negotiators, one of which wants to break up the United Kingdom and the other of which, the Conservative Party, has made a series of wrong calls since 19 September 2014. Talking of which, I must declare an interest that I am still the chairman of Better Together, which is in the course of being wound up but has not been quite yet. As I said, I have a great deal of sympathy with what is being said, but it would be a mistake for this House to be seen to delay or block matters today. I hope that when the Minister comes to reply, he will give an absolute undertaking that the House will have the fiscal framework by Report, which must be imminent.

This is not just a matter for the Scottish Government and the UK Government. There will be many people outside in different parts of the UK who will have comments to make because this will determine not just how much tax is raised but how the balance is to be achieved between different parts of the United Kingdom and how adjustments are to be made, not just this year but in five years’ time. It would be very difficult to see to whose credit it was, or whose fault it was, that the tax take went up or down from that expected. This will determine who is paying for the welfare measures that are being devolved and, if no adjustments are made to them, who bears the cost of that. Also, it will determine the amount of borrowing and on whose account the borrowing is done. Is it on the part of the Scottish Government? Is it on the part of the UK Government? Is it temporary? What are the constraints? These are massive considerations. I heard what the noble Lord, Lord Stephen, said about the Treasury, but the Treasury is not always as curmudgeonly as he might suggest and sometimes has the nation’s best interests at heart—at least it did for a period in the past.

It is important that we get these things right. We cannot overestimate the importance of the fiscal framework, which is why I hope that the Minister, with whom I had the pleasure of working very closely over the last few years and who is, I am quite sure, not the villain of the piece, gives us an undertaking that we will have the fiscal framework.

I struggle to see how it is going to work. If we do not get it right, we could simply be storing up problems for the future and providing rich and fertile ground for those who seek out grudges and grievances as a way of life to feed on for many years to come. I do not want to see that happen, but I am very conscious that discussions are taking place not in the spirit of good will because, at the end of the day, these are two parties with opposing objectives. This is important, and I urge the House not to block the measure at this stage, especially if the Minister can give the undertaking that I think most of us want.

Photo of Lord MacGregor of Pulham Market Lord MacGregor of Pulham Market Conservative

My Lords, I wish to intervene very briefly. We are indebted today to my noble friend Lord Forsyth for bringing this before the House. As a former chairman of the Economic Affairs Select Committee, a current member of the Constitution Committee and a former Chief Secretary to the Treasury, like the noble Lord, Lord Darling, with whose comments I very much agree, I would like to stress the absolute importance of this House being able to discuss the fiscal framework in some form or another, and its huge implications for the future of both Scotland and the rest of the United Kingdom, before the legislation is finally implemented. I support those who are making the point that, once the fiscal framework is published, we must have the opportunity to discuss it thoroughly before we can go further.

Photo of Lord Hain Lord Hain Labour

My Lords, I want to briefly support my noble friend Lord Darling and, indeed, endorse the point made by the noble Lord, Lord MacGregor. It arises, in a way, out of a question that he put to me when I was giving evidence to the Constitution Committee. It is this: we have allowed tax devolution to leave the station without any clear idea of what the destination is.

I am an enthusiastic devolutionist. As Secretary of State for Wales, I brought in the Government of Wales Act 2006, and I was instrumental in helping to win the 1997 Welsh referendum—albeit very narrowly; it was a hard fight. My concern is one that I do not see being addressed in the Bill, certainly not until we have the fiscal framework, at least, before us to scrutinise. It is this: 40% of the wealth of the United Kingdom is generated in London and the south-east. So what happens if parts of the UK—across the UK, not just in Wales and Scotland but in the north-east of England, Cornwall, and other parts of England that are not as wealthy as the south-east and London—are offloaded from the ability to benefit from redistribution, and the fairness involved in that redistribution?

The Government’s present ideology seems to be, “You have the powers to raise your own taxes, and it’s on your heads”. And if that particular part of the UK, be it Northern Ireland, Wales or Scotland, cannot raise what it previously raised, that is tough. I do not think that is a future for the United Kingdom that will command the support of all the nations and citizens of Britain and Northern Ireland. Therefore, although I cannot support the amendment of the noble Lord, Lord Forsyth, I want to leave on the record a severe reservation about where this is all leading.

Photo of Lord Mackay of Clashfern Lord Mackay of Clashfern Conservative

My Lords, I would like to say a word or two about the fiscal framework, which I agree is fundamental. The difficulty of it cannot be underestimated. This is a situation in which an authority has a grant-making power, and a power to raise taxes in order to raise the money for that grant—but at the same time, it is making a grant to a body that has a power to raise taxes itself. We have had this problem in the United Kingdom for a long time in relation to local authorities. Nobody needs to be told that every year local authorities have difficulty in accepting what central Government allocate to them. The Scottish Government have had that problem too, with refusing to allow local authorities to use their tax-raising powers under the community charge.

This is a very difficult situation, and I am not at all confident that it is possible to arrange things in a way that will work for all time in this fiscal framework. There is an element of prophecy involved, as we can see from what has been said about the need to take account of how the Scottish population is ageing; of course I am very much part of that factor myself, and I am very conscious of it. The important thing is that there are various powers, and it is difficult to see that they could be effectively regulated for all time coming. I know of no country in the world that has a very satisfactory arrangement for local government. Germany, for example, has inter-state relationships, and relationships between the states and the federation. The United States has problems of that kind too. We have before us the same sort of problem, in a different context. This is a very difficult thing to do—and I do not believe that the powers can be granted without knowledge of what that power arrangement is going to be, if it is possible to reach it.

On the other hand, as the noble and learned Lord, Lord McCluskey, said, it would be a mistake for us to use the power of this House to get the Bill in place before the deadline for the parliamentary elections in Scotland. If we were to do that, I think it would be regarded as something that the House of Lords had done to destroy the vow.

Photo of Lord Dunlop Lord Dunlop The Parliamentary Under-Secretary of State for Scotland

I thank all noble Lords who have taken part in the debate for their contributions. Before I address some of the points that have been raised, may I first make a correction? It came as something of a surprise to me to hear that I had not responded to the noble Lords, Lord Lang and Lord Hollick. I certainly signed lots of letters and I understand that those were sent off in early February, and copied to the leaders and Chief Whips of the main political parties and the Convener of the Cross-Bench Peers.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

I apologise to my noble friend if that is the case, but I asked the Clerk to the Economic Affairs Committee if we had received a reply to the letter from the two chairmen and was told last week that we had not. Certainly, it has not been circulated to committee members.

Photo of Lord Dunlop Lord Dunlop The Parliamentary Under-Secretary of State for Scotland

Well, it was certainly signed off by me, and my understanding was that the letters had gone off, but we will check that.

We want to secure the passage of the Bill and reach agreement on the fiscal framework. We can all agree that we want the focus at the Holyrood election to be on how the powers in the Bill are used. A number of noble Lords said that this House’s holding up consideration of the Bill would hinder the outcome that we all want and put the Bill’s timetable at unnecessary risk.

A number of noble Lords, including my noble friend, raised substantive points about the fiscal framework. One strong reason for proceeding today into Committee is so that we can have a debate and consider these matters in more detail. I very much agree with the noble and learned Lord, Lord Hope, that Report gives us an opportunity to consider these matters further. I was particularly interested in the suggestion by the noble Lord, Lord Hollick, which was also made by the noble Lord, Lord Turnbull, about using Committee rules at Report. I undertake to ask my noble friend the Chief Whip, who has been listening very closely to this debate, to speak to the usual channels to see if using Committee rules at Report can be agreed.

The Government are working flat out to get a fiscal framework agreement. As I said in my opening speech, there has been intensive discussion, which continues today. I remain optimistic that a deal can be reached soon. But today is not the day to speculate about what happens if we do not reach agreement and what options we might have to consider in that scenario. I therefore ask my noble friend not to press his amendment.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

My Lords, was that it? We have had a splendid debate with a lot of suggestions. I think there was a consensus that we could not put this Bill on to the statute book without having discussed the fiscal framework. It is interesting that former judges such as the noble and learned Lords, Lord Hope, Lord McCluskey and Lord Mackay of Clashfern, are advising us on the politics of the situation in Scotland and I am arguing about the constitutional implications. I feel that my expertise is more limited than theirs on both counts.

Of course, I understand why the noble Lord, Lord McAvoy, feels that if we were to delay consideration of the Bill, the SNP would complain that unelected Peers were interfering in the democratic decisions of the Scottish people and the Prime Minister’s vow—which, incidentally, was the Daily Record’s vow—had not been delivered. The noble Lord questioned my motives and said that I wanted to kill the Bill. I understand that the Bill will go on to the statute book; that will happen. But I want a stable, lasting framework that will end this business of the nationalists pretending that Scotland gets a bad deal out of the union and, at the same time, the other parts of the United Kingdom to feel that they are treated fairly. That is the objective, and the fiscal framework goes to the heart of that. Far be it from me to give advice to the Labour Party, but perhaps it should stop running away in Scotland and confront the nationalists for what they are and on what they say.

My noble friend said that the fiscal framework may be agreed before Report. The noble Lord, Lord Darling, for whom I have considerable admiration and respect, suggested that perhaps we might consider it on Report, but Report is the day after tomorrow is it not? Is the fiscal framework going to be agreed tomorrow? If so, perhaps it might have been sensible to delay Committee until Wednesday and then we could have had Committee with the fiscal framework. If my noble friend is right that the fiscal framework is imminent, clearly, it would be silly to delay Committee today and to accept my amendment—I am still speaking in favour of it, by the way—I can see that.

However, it was then suggested by the noble Lord, Lord Turnbull, and others, that perhaps we could change the rules. It is perfectly open to me or any other Member of the House to bring forward a Motion on Report to say that we should recommit the Bill to Committee. Therefore, there is no reason for me to press my amendment today if, indeed, we are going to get the fiscal framework on Report. If we are not, and if the view of the House is that the Bill ought not to reach the statute book without an opportunity for the House of Commons particularly, as well as ourselves, to consider the fiscal framework, then it is open to my noble friend to accept an amendment in Committee today. There are several amendments—I have one of them—stating that there should be a sunrise clause whereby the Bill will not come into effect until the fiscal framework has been agreed by both Houses of Parliament.

The noble Lord, Lord McAvoy, thinks that that would provoke hysteria in Scotland. I do not see why. The Bill will get on the statute book and they will get what they want. If it does not get on the statute book, it will be because of the intransigence of the SNP in agreeing the fiscal framework. One of the most important speeches was made by the noble Lord, Lord Stephen, who talked about the importance of transparency. We have also had speeches from a former Chancellor of the Exchequer, a former Permanent Secretary to the Treasury, a former Cabinet Secretary—they are both the same person—and all have advocated that we look at this issue.

I have to say to my noble friend—my father used to sell second-hand cars so this is no aspersion on second-hand car salesmen—that trying to approve the Bill without the fiscal framework is like buying a shiny car and not being allowed to look at or start the engine. It simply will not do. My noble friend heard voices from every quarter of the House—from those who are ardently pro-devolution, those who are against devolution or have been, those who predicted we would get into this mess, and others who thought it might not end like this—and the general view is that the House should not be asked to send the Bill for Royal Assent unless the fiscal framework has been debated and agreed. I hope the Government will give further consideration to this matter and take account not just of the widely expressed views in the House, but of the detailed reports from both committees. I beg leave to withdrawn my amendment to the Motion.

Amendment to the Motion withdrawn.

Motion agreed.

Clauses 13 to 18 agreed.

Schedule 1 agreed.

House resumed.