Scotland Bill

Lord Smith of Kelvin Excerpts

Tuesday 24th November 2015 Lords Chamber

[Lord Smith of Kelvin (CB)]

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

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

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

[Lord Foulkes of Cumnock]

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

[Lord Smith of Kelvin]

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

The agreement was published on 27 November and it was and is a political agreement. Then it had to be turned into law and, very importantly, in the months that followed, a commitment to implement the agreement was set out in the 2015 general election manifestos of the Conservative, Labour, Liberal Democrat and Scottish National parties. At the same time, teams of civil servants were busy translating the agreement into a Bill.

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

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

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

[Lord Forsyth of Drumlean]

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

[Lord Smith of Kelvin]

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

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

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