Criminal Justice (Scotland) Act 2016 (Consequential Provisions) Order 2017

Lord Wallace of Tankerness Excerpts

Wednesday 10th January 2018 Lords Chamber

I am minded to press this to a vote and to ask my colleagues on all sides to vote against the order. However, if the Minister is able to give the House a clear assurance that he will take this matter up vigorously with the Scottish Government, I will not press it, and he will have done the House and, even more importantly, the British Transport Police a great service.

[Lord Wallace of Tankerness (LD)]

My Lords, with characteristic vigour, the noble Lord, Lord Foulkes of Cumnock, has laid out the many misgivings that have been expressed about the proposed merger—it is not even a merger but a dismemberment of the British Transport Police, with the Scottish part of it being put into Police Scotland. Many of the arguments were rehearsed when your Lordships’ House debated the devolution of legislative competence for dealing with the policing of railways and railway premises during the passage of the Scotland Act back in 2016.

Before coming back to that, perhaps I may do the unforgivable and talk about what the order and the amendment say. As the noble Lord, Lord Duncan, indicated, the order takes forward the response by the Scottish Parliament to a decision of the Supreme Court on which the noble and learned Lord, Lord Hope of Craighead, sat in the Cadder case. I have a vivid memory of the time, because the Scottish Parliament had to pass emergency legislation immediately to address the breach of the European Convention on Human Rights that had been identified by the Supreme Court. At the time, as Advocate-General for Scotland, I had to take careful note of what was going on in the Scottish Parliament. We had a TV monitor of the parliamentary proceedings in my office because we had to decide very quickly whether we wished to make reference to the Supreme Court if we thought that any Bill had gone beyond the legislative competence of the Scottish Parliament and whether any amendments being passed right up to the last minute would change that. It was open to me under Section 33(3) of the Scotland Act 1998 to indicate to the Presiding Officer that I would not use the four weeks available to consider whether there should be a reference to the Supreme Court and to indicate that I would not refer it. At that point, with concurrence from the Attorney-General and the Lord Advocate, the Bill could go immediately for Royal Assent, and that is what happened.

It was always anticipated that there would have to be further legislation, which came along six years later, but with the benefit of a review undertaken by the then Lord Justice Clerk, now Lord Justice General Carloway. It is the provisions of that 2016 Act—which, I should point out, received Royal Assent two months before the Scotland Act 2016, to put into perspective what we are debating today—that give rise to the order. As the Minister said in his opening remarks, many of the provisions are to increase the rights of suspects held in detention and deal with the powers of police. Because the Scottish Parliament cannot legislate for police outside Scotland in relation to an arrest made in respect of a crime committed in Scotland, or make legislative provision for the British Transport Police—at least, it could not in 2016—the order is necessary to ensure that if the British Transport Police, for example, arrest someone, that person should have the same rights as if they were arrested by a constable of Police Scotland.

That is perfectly proper. These are the provisions of the order that relate to the British Transport Police, along with a further provision relating to stop-and- search powers, which are important and which we do not regret—far from it. I rather suspect that if Her Majesty’s Government reviewed the operation of the provisions in the light of incorporating the British Transport Police into Police Scotland, they might well find that it makes things simpler, because it would not need to be included in the order.

That is why I have misgivings about supporting the amendment, but it is important to reflect on some of the points made by the noble Lord, Lord Foulkes. It is important to say at the outset that the integration of the Scottish part of the British Transport Police into Police Scotland was not a recommendation of the commission under the chairmanship of the noble Lord, Lord Smith of Kelvin. It recommended devolution of legislative competence in relation to the policing of railways and railway premises and that the British Transport Police should become a cross-border authority. It is the SNP’s interpretation that it has to be integrated into Police Scotland. Integration was only one of three options that the British Transport Police working group identified. Significantly, it was the option with the highest degree of risk and was opposed by most stakeholders.

The noble Lord mentioned the recent report of Her Majesty’s Chief Inspector of Constabulary in Scotland. He found in paragraph 47:

“As the decision to transfer BTP’s functions in Scotland to Police Scotland was a Ministerial decision, no single, detailed and authoritative business case which articulates the benefits, disadvantages or costs of the transfer to Police Scotland was developed”.


In many respects, the Scottish Parliament has been asked to do this blind but, as we have heard, there is a majority. There was a failure to consult in any meaningful way, a failure to work out how we maintain the detailed expertise of the British Transport Police on the railways postmerger, how costs would be assigned and how potential disputes would be resolved. That is being done at a time when it is fair to say that considerable challenges face Police Scotland as a result of what I and my party believe was a botched centralisation. Indeed, my Liberal Democrat colleagues in the Scottish Parliament were lonely voices when they made the case against the centralisation of Police Scotland. We have seen a succession of resignations, suspensions of senior officers and early retirements, both in Police Scotland and the Scottish Police Authority. We welcome Susan Deacon’s appointment and hope she can get a grip on things, as she has recently taken the reins. There has been a failed IT project and a report from the Auditor-General in Scotland referring to a number of instances of poor governance and poor use of public money. If that had happened in the second biggest police force in England, let alone the second biggest in the United Kingdom, we would probably have had a “Panorama” special by now. I am not sure why the media have not latched on to what has been going on.

I do not think the time is right at all for this merger. There are other issues which the Chief Inspector of Constabulary has identified in his findings. Among them are the facts that full costs have not been assessed, and the financial impact on railway policy in England and Wales of transfer of railway policing in Scotland has not yet been fully assessed. In that respect, will the Minister tell us, if it transpires that there are costs to transport policing in England and Wales, under the various memorandums of understanding with regard to allocation of costs, where will that cost fall? Will it fall to the Scottish Government to bear? That will undoubtedly be important as things go forward.

The noble Lord, Lord Foulkes, raised the potential issue of transfer of property. Are there any consequential orders or steps that have to be taken under the Railway Policing (Scotland) Act 2017 that would involve the United Kingdom Government in giving full effect to that? What would be the UK Government’s policy in relation to it? As the noble Lord said, there is some leverage here, and I hope it is used sensitively.

It is also fair, however, to acknowledge that this Parliament, including this House, agreed to the devolution of railway policing in Scotland. I was going to say that the ship has sailed but it is probably better to say that the train has left the station. It is a matter for the Scottish Parliament. My Liberal Democrat colleagues in the Scottish Parliament, supported by Labour and Conservative MSPs, sought to delay the merger until 2027 at the very earliest, failing which to oppose it outright—but it was a decision of the Scottish Parliament to reject that delay and, indeed, to support what happened. It would be remiss of this House to gainsay what has been done by the elected Scottish Parliament, but there are issues still to be determined and some indication of the Government’s stance on those would be very welcome.

[Lord Forsyth of Drumlean (Con)]

My Lords, the noble and learned Lord may be correct about the train having left the station, but I remind him that during the passage of the Scotland Act as it now is many of us warned about this problem—and he himself made a speech exactly saying that. But such was the political imperative from some people not to be seen doing anything that would cause an upset with the Scottish nationalists that we allowed this to go ahead. The result is that we are looking at the prospect of the destruction of an organisation that has served this United Kingdom well for more than two centuries. Is it two centuries, or over two centuries?

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[Lord Duncan of Springbank]

The noble Lord may well say that but I stress again that the important thing is that the salient points raised by noble Lords today are considered in all seriousness by the programme board. I hope there will be an opportunity for that board to respond and to satisfy all the questions raised today. I have noted them down. To put them in context, we need to know that terrorism and security issues are addressed head on—there can be no diminution in these. We must recognise that this involves real police officers and that there can be no impact upon their well-being, their morale or their situation, and that they must be treated with respect throughout this process. We must be cognisant of the no-detriment principle. Where there are costs, we must understand how those costs will be allocated fairly and appropriately. We must also recognise that they should not be unfairly or inappropriately placed elsewhere.

[Lord Wallace of Tankerness]

On the question of costs and the no-detriment principle, is this a matter for the joint programme board to sort out or do the United Kingdom Government have a view as to how any detriment to the British Transport Police in England and Wales should be addressed?

Inquiries into Fatal Accidents and Sudden Deaths etc. (Scotland) Act 2016 (Consequential Provisions and Modifications) Order 2016

Lord Wallace of Tankerness Excerpts

Tuesday 22nd November 2016 Lords Chamber

[Lord Wallace of Tankerness (LD)]

My Lords, I add my condolences to those of the Minister and the noble and learned Lord, Lord Hope.

I welcome the proposed changes and the opportunity taken in the Section 104 order to extend the categories where a mandatory fatal accident inquiry is carried out. The Minister will be aware that there has been concern for some time because the bodies of service personnel who are killed not in the circumstances he described but in foreign parts are generally repatriated to England, and therefore the jurisdiction has been an English jurisdiction, albeit that the families of the servicemen involved may well be in Scotland. Concern has been expressed about this and I know that efforts have been made to resolve it. I have lost track of whether any progress has been made. Will the Minister take this opportunity to indicate what the position is?

[Lord McAvoy (Lab)]

My Lords, I add my condolences to those expressed to the family of Lance Corporal Joe Spencer. It befits this House that such condolences are offered.

I thank the Minister for the usual clarity with which he explained the order, which we welcome. The legislation makes much-needed changes to update and improve the system of FAIs. These are tragic cases and are incredibly difficult for the families affected. It is right that we should do everything we can to establish what happened to their loved one, and to make sure that lessons are learned for the future.

The changes made by the 2016 Act go some way to improve the system. The Cullen review made its recommendations seven years ago now, so it is welcome that we have reached this point of action. There has been a wait to see this system updated. This order allows the 2016 Act to be implemented in full, so we are happy to lend it our support. As has been mentioned, particularly welcome are the provisions on the death of military service personnel. This issue has been made painfully resonant in the past few weeks by the tragic death of Lance Corporal Spencer. We again send our thoughts and condolences to his family and friends.

I thank the noble and learned Lord, Lord Hope of Craighead, for the specific, experienced point of view he brought to this brief debate. I echo the words of the Minister that this UK Parliament stands ready, as I think it always has, to make devolution work not only in Scotland but in the other devolved Assemblies in the country.

Press Matters

Lord Wallace of Tankerness Excerpts

Tuesday 1st November 2016 Lords Chamber

[Lord Keen of Elie]

I have no doubt that that will be taken into account, as will the general conduct of IPSO, when it comes to determining and reporting on the terms of the consultation itself.

[Lord Wallace of Tankerness (LD)]

My Lords, the noble and learned Lord acknowledged that the work that had gone into the cross-party agreement and the subsequent royal charter was intended to set up a body and a mechanism as far removed from political interference as possible to ensure press freedom. By refusing to commence Section 40 and now by having a consultation on the matter, have the Government not brought it right back into the field of political play, undoing all the work done to try to remove political interference from this very important area for those of us who want to see freedom of the press?

Brexit: Scotland

Lord Wallace of Tankerness Excerpts

Thursday 15th September 2016 Lords Chamber

Asked by

[Lord Wallace of Tankerness]

To ask Her Majesty’s Government what discussions they have had with Ministers and officials of the Scottish Government regarding the implications of the referendum vote to leave the European Union, since the Prime Minister’s visit to Edinburgh on 15 July.

[The Parliamentary Under-Secretary of State, Northern Ireland Office and Scotland Office (Lord Dunlop) (Con)]

The Prime Minister is clear that the Government will work closely with the Scottish Government and other devolved Administrations to ensure that the interests of all parts of the United Kingdom are properly taken into account. Discussions have already taken place between UK and Scottish Government Ministers and officials. The Secretary of State for Exiting the European Union first spoke to the First Minister on 20 July and underlined the importance that the Government attach to engagement in Scotland.

[Lord Wallace of Tankerness (LD)]

My Lords, the Government have rightly expressed their support for a continuing soft border with the Republic of Ireland, yet they also appear to want to control freedom of movement from the European Union. In trying to square that circle, what assessments have the UK and Scottish Governments made of the increasing number of immigration offenders travelling to Scottish ferry ports from Northern Ireland, and how do the respective Governments intend to address any consequent financial and operational pressures on Police Scotland?

[Lord Dunlop]

The First Minister of Scotland was before the Scottish Parliament’s European and External Relations Committee yesterday. I think she said that there have been extensive ongoing discussions between the Scottish and UK Governments and that she was very optimistic that the discussions could make progress. I am sure that the issue raised by the noble and learned Lord will feature in those discussions.

Scotland Bill

Lord Wallace of Tankerness Excerpts

Monday 21st March 2016 Lords Chamber

[Lord McCluskey (CB)]

My Lords, I accept that Amendments 1 and 2 could not be moved, and will not be moved by me or by the noble and learned Lord, Lord Wallace of Tankerness. However, in the light of the Minister’s statement, I make a brief comment. It sounds to me very like a Pepper v Hart type of statement, designed to guide a court, when a court sits down to decide on an ambiguity in the interpretation or application of the provision. I am not at all sure that it will work, but it is no doubt the best that the Minister could come up with, even with the assistance from behind him of the noble and learned Lord, Lord Mackay of Clashfern, who is unfortunately unable to be here today. It does not solve the problem, but it is better than nothing.

The very fact of making the statement appears to be to concede the point that we were all making, that the provision in the clause is just a shibboleth, because Pepper and Hart statements have no locus at all unless in a court of law when a statement is invoked to assist the interpretation. However clear the statement is, it is not binding on the court, which has a duty to apply the words of the statute to determine what it means. However, I welcome it, while regretting that the Government did not pick up on the amendment proposed by the noble and learned Lord, Lord Wallace of Tankerness, which would have solved the problem within the statute itself, and we would not have needed this. However, in the light of the Government’s attitude, we have to leave it there.

[Lord Wallace of Tankerness (LD)]

My Lords, following on from the noble and learned Lord, Lord McCluskey, it was with some considerable regret that I agreed not to move Amendment 2, part of which I shall come back to in a moment. I welcome the Minister’s statement as far as it goes, which is not very far. I agree with the noble and learned Lord, Lord McCluskey, that it is an attempt at a sort of Pepper v Hart statement, but I make two observations on that. First, for Pepper v Hart to come into play, there has to be an ambiguity that has to be resolved. If, in fact, there is no ambiguity—and I am not sure whether the absence of something that has been debated in Parliament and expressly rejected by the Government could amount to an ambiguity as they have made it very clear that they do not wish for Devolution Guidance Note 10 to be part of what is on the statute book—I am not sure that Pepper v Hart would come into play.

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[Lord McCluskey]

The noble and learned Lord talked about the likelihood of litigation. Is he aware—I am sure he is—that the Human Rights Act itself is extremely productive of legislation at all levels of our courts in Scotland and elsewhere? Therefore, if the Government proceed with their intention to introduce a domestic human rights Act, and that has a direct effect upon the Scotland Act and the Human Rights Act in Scotland, then there is bound to be litigation that in turn will raise the question of the meaning of this so-called clause.

[Lord Wallace of Tankerness]

As I said, these are not academic issues but very real ones. The Human Rights Act could certainly give rise to them as indeed could measures in the Trade Union Bill. They would not necessarily be issues between Governments; they could be issues that impacted on other public bodies in Scotland, for example. That is why it is regrettable that the Government have not been more forthcoming and willing to look at the proposals that we want to put on the statute book.

[Lord Cormack (Con)]

My Lords, both noble and learned Lords have made powerful points. I do not wish to make anything other than a very brief intervention, but I have amendments, strongly supported both in Committee and on Report, concerning the word “normally”. I am extremely sorry that the Minister has not really met that point. It has been made with great eloquence by noble Lords learned in the law, and it was made by those of us throughout the United Kingdom who share the concern of the two noble and learned Lords who have just spoken. I am sorry that their amendments have not been deemed admissible. Of course they have done entirely properly in not seeking to move them, but this is an unsatisfactory Bill and we are in an unsatisfactory situation.

I put it on record that I remain extremely concerned about the use of this very loose word “normally”. I believe as a layman that it is clearly something that could be justiciable. I know not what will happen, but I fear that we are not putting on the statute book something that recognises what noble Lords in all parts of this House have recognised. In my opinion this is a flaw in the Bill, and it has been demonstrated as such by many people. I am sorry that the Minister has not felt able to move on this issue.

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[Lord Keen of Elie]

My Lords, I am obliged for all the contributions from your Lordships in respect of this matter. I will not seek to repeat the arguments that were rehearsed so fully in Committee and on Report but I wish to make some observations.

The Smith agreement was explicit in its reference to putting the Sewel convention on a statutory footing, and that is what has been done—essentially as the noble Lord, Lord Stephen, noted—in a declaratory sense.

Mention has been made repeatedly of the case of Pepper v Hart. I am not going to go there in any detail, but the starting point for that case is ambiguity. A number of noble Lords indicated that there was no ambiguity. I am inclined to agree with that—but not necessarily for the same reasons. However, it appears to me that if there were room for ambiguity then of course Pepper v Hart might come into consideration.

Reference was made to the LCM—the legislative consent Motion—process and the suggestion that it should be incorporated into the clause. With respect, the LCM is a process of the Scottish Parliament, not of this Parliament—it is what the Scottish Parliament does in response to us applying the Sewel convention—and therefore it would not be appropriate to bring it into Clause 2.

There is then the question of what is or is not a devolved matter. This point—and indeed the difference that I have with the noble and learned Lord, Lord Wallace—is perhaps highlighted by the amendment that he originally proposed. The last part of that amendment says:

“For the purposes of subsection (8), the words ‘devolved matters’ means any matter not reserved to the United Kingdom Parliament under this Act”.

With respect, the Scotland Act 1998 is a great deal more sophisticated than saying that all matters listed in Schedule 5, which are reserved, are the only matters not requiring the consent of the Scottish Parliament. It entirely ignores the fact that, for example, it is not within the competence of the Scottish Parliament to modify any of the protected enactments listed in Part 1 of Schedule 4 to the Scotland Act.

[Lord Wallace of Tankerness]

Rather than read out his brief, will the noble and learned Lord acknowledge that I said that parts of Schedule 4 also exclude matters from being within the legislative competence of the Scottish Parliament? If I have not, with my own resources, got the amendment right, can the noble and learned Lord, with all the great resources that he has in his office—I know the expertise that he has there—say what definition he would give of “devolved matters”?

[Lord Keen of Elie]

There is no strict requirement to go into the definition of “devolved matters” at this stage, but it is perfectly clear from the amendment that the noble and learned Lord originally intimated that he contemplated it listing only the matters in Schedule 5 to the Act. I appreciate that in making observations in this House he qualified that statement, but the point is that the question of what is reserved goes well beyond Schedule 5 and includes all those protected enactments in Part 1 of Schedule 4.

The point that I was going to come to is this: one of the protected enactments is the Human Rights Act. This Government were elected upon a manifesto to address the Human Rights Act and to amend its terms by way of a Bill of Rights. That matter will be addressed in due course, but this is not the time or the place to consider what the implications of that may or may not be in the context of all the devolved Administrations in the United Kingdom. I would not consider it appropriate to go there.

[Lord Wallace of Tankerness]

I am not asking the Minister to tell us what is going to be in it but, if a proposed new British Bill of Rights confers new responsibilities on Scottish Ministers, does he believe that is a matter to which Devolution Guidance Note 10 would apply and that the United Kingdom Government would respect it as such and expect a legislative consent Motion in the Scottish Parliament? He can clear this matter up if he is prepared to say yes to that. If he is not, we can only suspect the worst.

[Lord Keen of Elie]

There is no reason to suspect the worst. What we have to do is await the relevant Bill of Rights. Then, when we have considered its terms, we shall see whether it does or does not intrude upon matters covered by DGN10. If it does, then DGN10 will be addressed, as it always has been. There is a clear and consistent record of the United Kingdom Parliament and this Government proceeding in accordance with DGN10 in the context of devolved issues. I do not anticipate, and have no reason to anticipate, that that will change in the future. However, I am not going to comment on a Bill that is not before this House and the terms of which have not yet been finalised.

In these circumstances it appears to us that Clause 2 is sufficient for the purpose of expressing, essentially, a declarator of the Sewel convention in accordance with the Smith commission agreement.

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[Lord Cormack]

My Lords, a constant theme in your Lordships’ House is that the other place has inadequate opportunity to scrutinise legislation thoroughly. When we say that, we always then go on to say that in your Lordships’ House things are different. In this case, they are not. It is nothing short of disgraceful that the other place has not had an opportunity to debate the fiscal framework. Twenty-nine of us put our views on that on the record when we had a Division a few weeks ago, but it was a vain gesture.

I speak as a Member of your Lordships’ House who feels proud of our reputation for scrutiny and our ability to look at Bills forensically and to get change by either passing more amendments or, more regularly, by getting the Government to recognise that points of substance have been made and that alterations of substance should follow. In this case, that has not been possible.

It is deeply regrettable that that is the case. I make no personal criticism of my noble friends on the Front Bench; they are men of great charm and ability. However, they have been working under orders and have not been able to respond to points of real weight and substance because the brief has not allowed them to do so. In so many ways, this is a one-off Bill. I trust, above all, that in the context of scrutiny it will remain a one-off Bill.

[Lord Wallace of Tankerness]

My Lords, like the noble and learned Lord, Lord McCluskey, I thought that the remarks made by the noble Lord, Lord Dunlop, in replying to the last amendment, when he thanked everybody, were more suitable for the Bill do now pass debate. However, although I did not take part in that discussion, I would not wish in any way to lessen the appreciation I express on behalf of my colleagues to those who have helped to get the Bill to its present state, not least the Bill team, with some of whom I have worked in the past and know of their exceptional quality and hard work. I particularly thank the Minister, who with his customary courtesy has gone out of his way to meet us, engage with us and discuss issues with us—regrettably, not always to any effect from my point of view, but no doubt from his point of view it has been very effective. That is very much appreciated.

Aspects of this process have not been at all satisfactory. The short period that we had in which to look at the fiscal framework was not satisfactory. The Bill could be in a better state than it is and perhaps more favourably reflect the spirit of the Smith commission. The House has not done much to respect, or even give proper consideration to, the points made by the Scottish Parliament’s committee that looked at the Bill. Those are matters of regret and do not augur well for having mutual respect and trying to improve the relationships between the institutions of the Westminster and Scottish Parliaments. But that is where we are.

This amendment addresses the Barnett formula. The Minister referred to the vow in his wind-up speech. I happen to believe that the referendum was won in spite of rather than because of it. However, it is important that we celebrate the fact that we won the referendum and are not facing independence day on Thursday of this week, with one dreads to think what consequences.

I note that, when I stood where the Minister stands now, the most difficult question I ever had to answer in one of these debates came from the noble Lord, Lord Turnbull, who referred to the vow. It says:

“We agree that the UK exists to ensure opportunity and security for all by sharing our resources equitably across all four nations to secure the defence, prosperity and welfare of every citizen”.

It goes on to refer to the,

“continuation of the Barnett allocation for resources”.

I was asked how I could square the equitable sharing of resources with the continuation of the Barnett formula. I struggled to find an answer. I will allow the Minister to find his.

[Lord Selkirk of Douglas (Con)]

My Lords, when the Calman commission sat, the most important principles that it was trying to support were equity and accountability; this echoes what the noble and learned Lord has just said. I remind the House that on 7 September 2004, the day the Scottish Parliament opened at Holyrood, the Reverend Charles Robertson, minister of the Canongate church, was first to speak during the regular time for reflection. He reminded us of the previous uses of the site for the newly-built Parliament. It had been a house of refuge, a soup kitchen for the destitute and Scotland’s largest independent geriatric hospital, not to mention the site of a profusion of well-known and much-loved breweries. Given this history, it is perhaps not surprising that, on that day, the then First Minister, the noble Lord, Lord McConnell, urged MSPs to “raise their game”.

This legislation—the amendment relates to the heart of it—will bring about major changes in the powers and competence of the Scottish Parliament as, for the first time, the majority of funds that the Scottish Government spend will come from revenues raised in Scotland. When the prevailing philosophy has been a culture of spend, spend, spend, popularity is relatively easily won. That will now change as tough decisions will have to be made on how services will be financed.

There seems to be some uncertainty about who observed:

“With great power comes great responsibility”.

Some attribute it to Voltaire. In a debate in the other place in 1817, William Lamb, later Prime Minister Lord Melbourne, made an exhortation to the press. He begged leave to remind them of their,

“duty to apply to themselves a maxim which they never neglected to urge on the consideration of government—‘that the possession of great power necessarily implies great responsibility’”.—[Official Report, Commons, 27/6/1817; col. 1227.]

Similarly, on the same subject, Prime Minister Sir Winston Churchill said:

“The price of greatness is responsibility”.

What Churchill meant was that anyone who aspires to greatness must also be willing to shoulder the accompanying responsibilities. His advice still holds good today.

Scotland Bill

Lord Wallace of Tankerness Excerpts

Monday 29th February 2016 Lords Chamber

[The Parliamentary Under-Secretary of State, Scotland Office (Lord Dunlop) (Con)]

My Lords, Clause 44 devolves power to the Scottish Parliament for regulation of licences to search and bore for petroleum in the Scottish onshore area. Clause 45 transfers the functions of the Secretary of State to the Scottish Ministers. However, as consideration payable for such licences is to remain reserved to Westminster, Clause 45(8) retains the power of the Secretary of State to make model clauses on the consideration payable for a licence granted by the Scottish Ministers, and on matters related to the keeping of accounts and the measurement of petroleum.

Amendment 46 would revise Clause 45(8) to ensure that the Secretary of State’s enforcement ability in relation to such reserved matters is preserved for licences in onshore Scotland. This will be achieved by maintaining the Secretary of State’s current power to cancel licences in onshore Scotland, applicable only for infringements in relation to consideration payable for a licence, the keeping of accounts and the measurement of petroleum related to consideration and taxation. Nothing in this amendment changes the powers being devolved to the Scottish Parliament. A definition of “appropriate Minister” under Clause 45(5) is removed, as this is redundant in light of Clause 45(17). I therefore beg to move Amendment 45.

[Lord Wallace of Tankerness (LD)]

My Lords, I shall speak to Amendment 47 and others in this group which are in the name of my noble friend Lord Stephen and myself. Amendment 47 would in effect devolve legislative competence for consents for electricity generating stations and overhead lines to the Scottish Parliament. The position at the moment is that the Scottish Government have executive power to grant development consent for generating stations of 50 megawatts capacity or more and overhead lines of 20 kilovolts nominal voltage or greater. However, the Scottish Parliament does not have legislative power to reform the law in relation to such development consents. This is the only type of development that the Scottish Parliament does not have legislative power to regulate.

As I have indicated, such consents are governed by Sections 36 and 37 of the Electricity Act. This legislation, which goes back to 1989, is outdated. In fact, it is sufficiently outdated that, in the mean time, in England and Wales, it has been changed so that applications for development consent are dealt with under the Planning Act 2008, a much more suitable system. In Scotland, it has been described as effectively a legislative orphan. The Scottish Parliament has no power to reform it, and when the United Kingdom Parliament reformed it in respect of England and Wales, the opportunity was not taken to reform it in Scotland. Moreover, it is my understanding that the draft Wales Bill is devolving power to the Welsh Parliament, as it will be known, to legislate on consents for almost all energy development there. The aim of this amendment is therefore to devolve to the Scottish Parliament legislative power to reform the system of development consenting for energy infrastructure. The generation, transmission and distribution of supply of electricity is presently reserved although, as I said, the actual power to grant consents has been devolved.

This issue has some practical consequences in the context of the Energy Bill, which is currently in the other place. I was advised last week that a development in the south of Scotland, which I think is of about 65 megawatts, is therefore subject to the present regime under Section 36. However, if the same development had been just several miles further south in Northumbria, it would have been the responsibility of the local authority. If the local authority had refused it in England and Ministers had called it in, the grace period that the Government proposed for onshore wind farm consents would have kicked in. However, that does not cover the situation in Scotland given that it is already subject to ministerial fiat there, so there is a mismatch in practical terms. I apologise that this gap was drawn to my attention after Committee but I have certainly made the noble Lord, Lord Dunlop, aware of these concerns. He has had some notice and I hope that he may be able to give an encouraging reply.

The other amendments, to some extent, go over the ground that we covered in Committee. I appreciate that the Minister has met me since then and we have discussed these amendments. The Government argue that there is already adequate statutory provision for consultation, and the Minister asked why the industry was not satisfied and agreed to meet the industry to find out. My understanding is that, in the event, negotiations on the fiscal framework took over. That is perfectly understandable—there is no criticism there. However, his officials did meet the industry.

The current position is in spite of the fact that a commitment followed a request in the Smith commission for further consultation. Indeed, in the initial response to the Smith commission, the Government’s Command Paper stated:

“The UK Government will work with the Scottish Parliament and Scottish Government to devise a proportionate and workable method of consulting the Scottish Parliament on the strategic priorities set out in the Energy Strategy and Policy statement”.

However, the Government’s position now is that this is not necessary and that there is already a statutory regime there under the Energy Act 2013.

The fact that the industry remains unsatisfied is of some concern. Notwithstanding new Section 90C(4), which states,

“a ‘renewable electricity incentive scheme’ means any scheme, whether statutory or otherwise”,

people in the renewables industry have formed the impression that any consultation with Scottish Ministers is likely to be triggered only by legislative changes. It would therefore be helpful if, in responding to this debate, the Minister could indicate the overarching legal basis for the contract for difference regime being set out in primary legislation, while the main detail as to how it will operate is contained in statutory instruments and any changes to these statutory instruments would trigger the consultation in terms of this Bill and the Energy Act.

The experience of the accelerated closure of the renewables obligation for onshore wind, which went ahead with, I think, minimal consultation with Scottish Ministers, has given rise to the concerns within the industry. It would be useful if the Minister could indicate whether the position with regard to any order to remove specific technologies from the contract for different regime is something about which Scottish Ministers would be consulted. There is no obligation on the Secretary of State to consult on the budget notice issued in advance of each allocation round. However, there is a need to consult Scottish Ministers on other aspects of the contract for difference mechanisms, for example on setting the new administrative strike prices, and it would be helpful if the Minister could perhaps give some clarity on how he sees that operating in the future.

Officials seem content that the issue addressed by Amendment 55 is dealt with adequately under existing provisions, but the view is that the improved consultation mechanism would have been better if a Scottish member could have been appointed to the Gas and Electricity Markets Authority. Again, this is a matter that the Smith commission flagged up. The Bill does a similar thing for Ofcom, and perhaps the Minister could indicate how he intends to improve the consultation and whether there is any further mechanism through the GEMA board which would meet the industry’s concerns.

Finally, one of the amendments gives Ministers the power to bring forward a scheme which effectively would devolve contracts for difference to Scottish Ministers. I stress it is a scheme which UK Ministers could devolve, so the concerns that this could lead to a bigger levy on consumers across the United Kingdom would not necessarily come through. The specific point here is that there is concern in the industry that, under the next tranche or round of contracts for difference, onshore wind may not be included under the technologies, notwithstanding that onshore wind has been at £82.50 per megawatt hour for 15 years, index linked, while offshore wind has been at £114.40 per megawatt hour for 15 years and nuclear is index linked for 35 years at £92.50. There is a very strong argument that Scotland has a considerable abundance of resource in onshore wind and that it could be developed there. This is not in the Smith commission, but had it been known that the Government were going to change the rules on the renewables obligation for onshore wind when the commission was sitting, it may well have made such a recommendation, because it would have been entirely consistent.

I simply remind the Minister that in the Scotland analysis paper for energy, the then Government said:

“The UK Government is now introducing the Contracts for Difference scheme, which will provide long term support for all forms of low-carbon electricity generation. These contracts provide industry with the long-term framework to make further large scale energy investments at least cost to the consumer”.

I stress the words “all forms”, which includes onshore wind. I am sure the Minister would like to take the opportunity to say that the present Administration will stand by the commitment that the previous coalition Government presented to the Scottish people in the run-up to the referendum. I hope the Minister will be able to give us some reassurances when he comes to reply.

--- Later in debate ---

Tabled by

[Lord Wallace of Tankerness]

47: After Clause 50, insert the following new Clause—
“Consents for electricity generating stations and overhead lines
(1) Section D1 in Part 2 of Schedule 5 to the Scotland Act 1998 (electricity) is amended as follows.
(2) For the heading “Exception” substitute—
“ExceptionsConsent for the construction, extension or operation of electricity generating stations.
Consent to install or keep installed overhead lines.
The grant of any ancillary consent or right including—
(a) regulation of public rights of navigation in respect of offshore installations for electricity generation and transmission;(b) establishment of a safety zone in respect of offshore installations for electricity generation and transmission;(c) decommissioning of offshore installations for electricity generation and transmission;(d) compulsory acquisition of land by holders of licences under Part 1 of the Electricity Act 1989;(e) acquisition of wayleaves by holders of licences under Part 1 of the Electricity Act 1989.””

--- Later in debate ---

[Lord Wallace of Tankerness]

My Lords, in light of what the Minister said and his willingness to continue to engage and look at this further, I hope that we can get to a sensible outcome, so I do not wish to move the amendment.

Amendment 47 not moved.

--- Later in debate ---

[The Deputy Speaker (Lord Haskel) (Lab)]

My Lords, I have briefly to interrupt to give the following correction. The result of Division No. 1 on the Welfare Reform and Work Bill was announced incorrectly as Contents 289, Not Contents 219. The correct figures were Contents 286, Not Contents 219.

[Lord Wallace of Tankerness]

My Lords, I shall speak to the amendment in this group in the name of my noble friend Lord Stephen and myself. I am sure the House is grateful to the noble Lord, Lord Forsyth, for raising this important debate on the fiscal framework. It is long awaited. Although we had a very good debate in Committee, it was a bit like “Hamlet” without the Prince of Denmark; it was about the fiscal framework without the actual fiscal framework agreement. At least we can now have a debate on this important part of the architecture of Scottish governance following the Smith commission’s proposals in the light of the agreement which was published at the end of last week.

The amendment which my noble friend and I have tabled is to address the mechanism for the review of the fiscal framework. The Smith commission said that it was important that there was a review, and in Committee we moved an amendment to establish a review. We have tried to revise that amendment in the light of the agreement as we now see it.

When the Minister replies, it would be helpful if he could give us some indication of how the Government understand the review and the mechanisms. The Chief Secretary to the Treasury, Mr Greg Hands, was right to point out that there is a distinction between the review and dispute resolution. I am rather intrigued by the fact that in the agreement the review is referred to in paragraphs 20 to 23 and again in paragraphs 111 to 113, some of which appears repetitious and almost as if there is something uncertain about it. It is as if the more often you say it, it might just happen. Perhaps the Minister will tell us if there is anything we should read into the fact that it was felt necessary to repeat some of the proposals with regard to the review at a later stage.

The First Minister of Scotland in her Statement to the Scottish Parliament last week seemed to indicate—I sat and listened to it—that there could be a veto over the Scottish Government accepting anything which was not to their advantage following the review. Indeed, paragraph 112 states:

“It will be open to either government to propose changes to the fiscal framework from”,

the point of the review or the end of 2021, and:

“The fiscal framework does not include or assume the method for adjusting the block grant beyond the transitional period”.

The Chief Secretary seemed to say today that it was “our model”, which I assume to mean Her Majesty’s Treasury’s model, whereas the transition period was the Scottish Government’s transition period. So—this is a question which the noble Lord, Lord McConnell of Glenscorrodale, asked last week when the noble Lord repeated the Statement—what is the default position? Is the default position the Treasury model, or is there in fact a veto? What happens if there is not agreement following a review? One was left with the impression that it is a bit, “it’ll be all right on the night”. Those of us who have seen the negotiations with the Scottish Government know that it will not necessarily be all right on the night. They may well take things up to the brink.

Under Section 64 of the Scotland Act 1998, the Scottish Consolidated Fund is established, and subsection (2) states that the Secretary of State shall pay sums into the Consolidated Fund, but the sums are not predicated by any agreement or formula, and certainly are not predicated by the statute. I imagine that if all else failed, the ball would be at the feet of the Secretary of State, who has to pay money into the Scottish Consolidated Fund. Perhaps the Minister could indicate how, in the event of impasse and of no agreement being reached, the UK Government, particularly Her Majesty’s Treasury, see that sum to be paid into the Scottish Consolidated Fund being arrived at, given that it is actually the Secretary of State’s decision and, according to statute, is not in any way fettered. It is important that we get some clarity about what should happen.

[Lord Forsyth of Drumlean]

Is it not clear throughout? Paragraph 52, regarding a dispute over the no-detriment principle, says:

“Without a joint agreement, no transfer or decision will be made”,

while paragraph 103, on dispute resolution, says:

“If no agreement can be reached”,

between the Governments,

“then the dispute falls—there would be no specific outcome from the dispute and so no fiscal transfer between the Governments”.

[Lord Wallace of Tankerness]

My Lords, I noted earlier, with regard to paragraph 103, that it surely cannot be conceivable that the funding would dry up. The House is therefore owed an explanation as to precisely what lies behind paragraphs 52 and 103 of this agreement.

The proposal that my noble friend and I have tabled is that there should be a review, which should be informed by a commission. The commission should be three persons from the Office for Budget Responsibility advisory panel, to be appointed by the OBR’s chairman, therefore taking it even more than arm’s length away from the Government, and there also should be membership of a Scottish professional body—it could be the Institute of Chartered Accountants of Scotland or CIPFA—to be agreed by Her Majesty’s Treasury and Scottish Ministers, whose members should be appointed by the senior office-bearer of that body. Again, that is an attempt to put it at one remove from the Scottish Government. It would be a genuinely independent body that would inform the review about how the fiscal framework had worked.

We go further than that by saying that no person appointed to the commission should have been a member of any political party for five years prior to accepting membership. Consistent with the fiscal framework, the report should be laid no later than 30 November 2021 and submitted to both Houses of this Parliament, the Scottish Parliament, the Chancellor of the Exchequer and Scottish Ministers.

All that we find out in the fiscal framework agreement is that the arrangements for review, including how independent they will be, should be left to the Joint Exchequer Committee. We may feel that in order to be reassured, it is not unreasonable for Parliament to set some parameters for how the independence of that review body will be established. The amendment is therefore intended to probe just what Ministers have in mind with regard to the working out of that review, and indeed to answer some of the questions about what happens in the event of a failure to reach agreement on the review. There are important questions to be answered, and I look forward to the response of the Minister.

I am sorry, is the noble and learned Lord, Lord Hope, waiting to intervene or to ask a question?

[Lord Hope of Craighead (CB)]

I was hoping to follow the noble and learned Lord.

[Lord Wallace of Tankerness]

That is fine. I hope that the Minister will be able to fill in the gaps when he comes to reply to this important debate.

[Lord Hope of Craighead]

My Lords, I would like to pursue the points made by the noble Lord, Lord Forsyth, and the noble and learned Lord, Lord Wallace of Tankerness, about dispute resolution. As a lawyer, one tends to look to the dispute resolution bits, because they are the things that matter to us, to see that there is actually an effective mechanism for that, rather than at the fiscal parts, which I am content to leave to others.

Would the Minister care to look at paragraph 46, which the noble Lord, Lord Forsyth, identified? It contains the definition of “policy spillover effects”, which is where either Government make a policy decision that affects the tax receipts or expenditure of the other. If that happens then there is a spillover and a spillover effect. In paragraph 98 we enter the dispute resolution system, which applies to, among other things,

“All disputes arising from the consideration of direct and behavioural spillover effects, including both gains and losses”.

So this particular group of paragraphs deals with the resolution of the dispute. We can see how it works: first, if it cannot be settled at working level then it becomes a disagreement and is referred to senior officers at director level or above, including consideration at Joint Exchequer Committee official level too. If that does not work, the matter becomes not a disagreement but a formal dispute. It is then referred to Ministers to be raised and discussed at a meeting of the JEC.

We then move to paragraph 100, and so far we are working down the line of complete impasse:

“If … there is a dispute that cannot be resolved between Ministers, there is an automatic pause placed on the disputed finances, i.e. no decisions … can be taken by either government in relation to the disputed amount until the dispute is resolved”.

That seems a strange system, given that revenues either way are crucial to the running of the country. To have a dispute simply frozen in that way is very strange. The formula goes on a little further, because if that happens then the Governments are to draw up a statement of fact on the dispute, and technical input may be sought to ensure that the facts are correctly stated. It will then be considered by both Governments, who commit to using their best endeavours to resolve the dispute.

However, the agreement says in paragraph 103:

“If no agreement can be reached then the dispute”,

fails—or rather “falls”—and, as the noble Lord, Lord Forsyth, pointed out,

“there would be no specific outcome from the dispute and so no fiscal transfer between the Governments”.

What puzzles me further is paragraph 104, and maybe the Minister can help here:

“If either Government wishes to pursue the dispute further”—

let us imagine that the UK Government are anxious to do that—

“it can be referred to the ‘Protocol on the Resolution and Avoidance of Disputes’ attached to the Memorandum of Understanding between the UK government and the devolved administrations”.

I do not know where the memorandum is—it is not in the Printed Paper Office, as far as I know—and it is also said to be subject to review. So there is a cloud of uncertainty over exactly what paragraph 104 means and how fixed it is as a system for resolving these disputes.

If one is entering an area like this where it is plain that there will be political arguments on either side that may lead to a complete impasse, it is crucial that there should be a system for the resolution of disputes; otherwise one is left with a situation where no transfer takes place although one side is calling for it and the other is not. How can the system be left in that situation, hanging in the air without anyone to decide it? Can the Minister inform the House about that? It has a direct bearing on the amendment by the noble Lord, Lord Forsyth.

--- Later in debate ---

[Lord Dunlop]

I am very happy to make that commitment. The Government intend to make an annual report to Parliament that will cover how the powers under the Smith agreement are being implemented in practice. That is fundamental to our approach. Regarding the review, I can confirm what has already been confirmed: there is no default position for it. All the evidence that will be built up over the succeeding five years will be on the basis of the Government’s comparable model.

I turn to the prospects of reaching an agreement. This review will be informed by an independent report. We will have had five years of experience of how these powers operate. Instead of seeking to negotiate in the months leading up to an election, this will be a negotiation after an election. Those conditions lead me to believe that an agreement can be reached.

[Lord Wallace of Tankerness]

The noble Lord has indicated—and the agreement says—that the report has to be received by the end of 2021. What will happen if we are approaching the financial year 2022-23 and there is no agreement? While he is right to say that there is not an election to focus minds, one imagines—although one does not know—that there will not be the passage of a Scotland Bill to concentrate the mind either. Given how close we are to the start of the next financial year, when there is actually a Bill that we hope to pass before the Easter Recess, what happens if that imperative does not exist? What will the position be then? Will it be the transitional arrangements or will it be the Treasury model?

[Lord Dunlop]

I am not sure I will be able to satisfy the noble and learned Lord on that point because I have learned not to deal in hypotheticals or to speculate about what might happen in five years’ time. As I say, I think the conditions that pertain then will be favourable to reaching an agreement and I am confident that we will reach an agreement at that time.

On the amendments relating to the fiscal framework being approved by Parliament, the Government do not believe it would be appropriate to subject the framework as a whole to approval by both Houses. Many aspects of the fiscal framework are administrative, not legislative, and the need to update these aspects requires a degree of flexibility. There is also no precedent for these non-legislative aspects to require parliamentary approval; for example, the block grant adjustment mechanism arising from the power to devolve under the Scotland Act 2012 was not subject to separate parliamentary approval.

[Lord Dunlop]

My noble friend is of course quite right that the fiscal framework should receive detailed scrutiny from this Parliament. I know that this House will play a full part and I anticipate that the House of Commons will do the same. What the House is being asked to do today is to scrutinise and approve one of the most significant aspects of the framework: the capital and resource borrowing powers. The noble Lord, Lord Empey, raised this issue and we will have an opportunity to debate it in detail in the next group of amendments. Dr Angus Armstrong of NIESR told the Lords Economic Affairs Committee that the question of borrowing is,

“the most important question in the whole debate”.

In due course, this Parliament will also be asked to approve changes to tax legislation as a result of the fiscal framework and the Smith commission. That legislation will be scrutinised by Parliament in the usual way. Likewise, the legislation required in Westminster to establish the Scottish Fiscal Commission on a permanent footing by means of an order under the Scotland Act will receive scrutiny in both Houses before it is approved. As I said to the noble Lord, Lord McFall, the Government have committed to report annually to Parliament on the operation of the framework. I know that these reports will receive full scrutiny.

At the end of the day, the fiscal framework has been agreed between the two Governments. To introduce a further process at this stage would not only delay the transfer of powers, it would mean that the UK Government—

[Lord Wallace of Tankerness]

I understood the Minister to say that the establishment of the Scottish Fiscal Commission will require an order of the United Kingdom Parliament. I understood it to be a Bill that was going through the Scottish Parliament to establish the Scottish Fiscal Commission and put it on a statutory basis. Can he elaborate? What would be the content of an order in relation to the Scottish Fiscal Commission that would have to be passed by both Houses of the United Kingdom Parliament?

[Lord Dunlop]

I think I am right in saying that it does require this Parliament to establish the Scottish Fiscal Commission as a statutory body but I am happy to clarify that in more detail, perhaps in succeeding debates that will deal with this issue. That is certainly my understanding.

Scotland Bill

Lord Wallace of Tankerness Excerpts

Wednesday 24th February 2016 Lords Chamber

[Lord McAvoy (Lab)]

My Lords, I can understand where my noble friend Lord Faulkner is coming from. Along with the details that have been announced there is the extra factor of security, and I would have thought that that would justify a sympathetic approach from the Government. However, I cannot get away from the reality that devolution is devolution, and for us to try to lay down the conduct of the Scottish Government in relation to the British Transport Police, much as we would like to go up against this proposal of devolution, is wrong. I know where he is coming from and I sympathise with him. He has put a terrific case but, fortunately or unfortunately, it falters on the issue of devolution.

Amendment 43 is in the name of myself and the noble and learned Lord, Lord Davidson. What we are trying to do is influence not only the UK Government but the Scottish Government. The amendment would provide for the establishment of a joint board that would examine the transfer, implementation and operation of the devolution of the British Transport Police. I understand that the full integration of the BTP into Scotland would take around three years. During those three years there are bound to be issues that arise, possibly security in particular. In this amendment, the joint board, or whatever it would be called, would report back to the Scottish and UK Governments. It would not interfere or try to influence what the Scottish Government were doing except in the way of good advice, so the principle of devolution would be protected. I do not like to use the expression “holding feet to the fire”; it smacks of violence and I am dead set against violence.

The amendment would establish a joint board to oversee this specific aspect of the devolution settlement, with the requirement to report back to the UK and Scottish Parliaments about the transfer, implementation and operation of proceedings, with particular reference to security issues. It is a response to the wide-ranging debate that we had in Committee, which attracted considerable attention and participation from across the House, about the devolution of the BTP.

I make it very clear, as we have done all through these proceedings, that the amendment is not intended to delay, postpone or in any way alter the timetable of the devolution of the BTP. In keeping with the nature of devolution, once these powers have been devolved, it is up to the Scottish Parliament to determine the future of the BTP. I am honestly making it plain that we have no intention of forcing a vote on that. We are not into gesture politics.

[Lord Wallace of Tankerness]

The whole thing is a gesture.

[Lord McAvoy]

However, let me deal with those who are. Earlier, the noble and learned Lord, Lord Wallace of Tankerness, shared with the House a conversation that he alleges he had with the Labour Whips’ Office. I do not know whether it is true, but in my 23 years in the House of Commons conversations with the usual channels and with Whips were sacrosanct. But seeing as how the noble and learned Lord has seen fit to venture into this territory, I shall share, in further defence of our strategy of trying to influence not only the UK Government but the Scottish Government, a statement from the noble and learned Lord to myself at the Bar, which I would not normally share, in which he indicated that the Liberals were going to use the vote on the Crown Estate for election leaflets in the islands. So here we are—the Scotland Bill is reduced to a political gambit for cheap political point-scoring. [Laughter.] The noble Lords may laugh and scoff, but they are the only ones who are doing so. Therefore we are taking the honourable position of trying to influence, not just engaging in gesture politics and staging votes for cheap political points, and we hope that we have influenced the Government—we will see what their response is—and the Scottish Government as well.

--- Later in debate ---

[The Earl of Kinnoull]

My Lords, I am grateful to the noble Lords, Lord Faulkner and Lord Empey, for speaking to these amendments—which, as I said in Committee, are most important. I am also grateful to the Minister for organising the drop-in yesterday. I regret that I turned up 27 minutes late, as I was detained on other business of the House, so I was only able to get a debrief—a very interesting debrief—from the noble and learned Lord, Lord Mackay, and the noble Lord, Lord Empey.

I approach this matter from the point of view of the citizen, as I have done before. I think that the citizen is interested in security. They are interested in not having their daughter thumped on a train, and in drug smugglers not getting through. They are interested in terrorists being arrested. Our two holy documents—the white Smith agreement and the green Bill—as ever, need to be a good guide. This is another instance where they are in conflict. The noble Lord, Lord Forsyth, has been eloquently telling us about the no-detriment principle now for three months. I know that he knows it, but I thought that it should be read out. The agreement should,

“not cause detriment to the UK as a whole nor to any of its constituent parts”.

That is one of the core principles of the negotiations. Coming as it does at the start of the Smith commission report means that it has extra power. It is even more powerful than the many paragraphs that follow. Of course, paragraph 67 says very curtly:

“The functions of the British Transport Police in Scotland will be a devolved matter”.

Those two paragraphs—I stress again the no-detriment principle, which has been so much the core of what we have been talking about for three months—are at odds with what is in the sacred green document, and that needs to be resolved. It is something this House needs to work hard to resolve. It is not resolved at the moment. I certainly agree that it needs to be resolved for Third Reading.

To repeat what I said in Committee, I note that the British Transport Police has separate duties, separate skills, separate powers and separate staff, who are trained and motivated differently. They have different skills and lives. It has a totally different structure. Its IT systems are completely different and plugged into some of the most sensitive IT systems in the United Kingdom—to which the standard Police Scotland constable does not have access. In short, they are an elite. They are after passenger safety and suppressing terrorism, and they get a seven-figure sum every year just for dealing with their part of combating terrorism.

Police Scotland, as the noble Lord, Lord Forsyth, so eloquently said, is a very troubled organisation. I have had just two Police Scotland officers in my home in the past six months—one from Dundee and the other from Perth. The particular matters that they came to talk to me about took 30 seconds, but I spent probably an hour with them listening to the awful difficulties they are dealing with as morale has collapsed and management appears to be on the floor. To be transferring into chaos at this time of terror alert—let us remind ourselves how big the terror alert is—one of the functions that is trying to keep us safe is pretty irresponsible. The Scottish Government might be nationalists, but they are a pretty responsible bunch of people. Neither they nor the UK Government should really be contemplating that. Of course, with all the differences in staff, training and IT duties, it would be very difficult.

I would very much like to hear from the Minister why the no-detriment principle is not the trump card, and why the collection of very well thought through and interesting amendments that make up this group could not be put in place. They would be consistent with the Smith commission agreement; they would certainly be consistent with the no-detriment principle. The core, surely, of both the UK Government and the Scottish Government is the security and safety of the citizen with whom I started this short speech. There is an overwhelming case for the Government introducing something at Third Reading, and I look forward to hearing a little about what that might be.

[Lord Wallace of Tankerness]

My Lords, paragraph 67 of the Smith commission report states:

“The functions of the British Transport Police in Scotland will be a devolved matter”.

That is a simple and straightforward sentence, but what lies behind it is actually very profound. My concern is that what is being proposed by the Government does not safeguard the functions of the British Transport Police if they are devolved. I respect and generally support the way it is being done in terms of exceptions to the general reservation under Part 2 of Schedule 5 to the Scotland Act 1998, but what we have heard is that the Scottish Government intend to put the British Transport Police under the ambit of Police Scotland.

I will not go into the woes of Police Scotland with the noble Lord, Lord Forsyth, and the noble Earl, Lord Kinnoull, who have both mentioned them, but even at its best one can readily imagine that once the BTP comes under the auspices of Police Scotland, if you are the chief constable and you have problems and challenges with regard to resources, you might well think, “Well, why do we have a specific police presence in Waverley station? Surely it can be covered by the police we have got who would otherwise be monitoring Princes Street?”. It would not be proper for politicians to interfere in the operational decisions of the chief constable. For operational reasons the functions of the British Transport Police under a different guise could be whittled away bit by bit.

[Lord Forsyth of Drumlean]

Of course there is also the complicating factor that part of the budget of the British Transport Police is actually paid for by the transport operators.

[Lord Wallace of Tankerness]

The noble Lord is absolutely right, and we aired these concerns when this was debated in Committee.

It is interesting to note in the submission made by the British Transport Police Federation to the Scottish Parliament Devolution (Further Powers) Committee that:

“In 2001, the government response to the DfT consultation which led to the BTPA’s creation … stated that: ‘The Government therefore considers that the national railway network is best protected by a unified police force providing a dedicated, specialist service and able to give proper priority to the policing of the railways’”.

The memorandum to the committee of the Scottish Parliament goes on to quote the Transport Select Committee of the other place in 2004, which,

“looked at the reforms to the BTP’s governance arrangements … It concluded that: ‘The British Transport Police is not a Home Office Force, and nothing we have heard suggests that it should become one. The railways are a specialised environment, with specialised needs, and need a specialised Force’. They continued: ‘The steady reduction of resources allocated to traffic policing leads us to agree with Her Majesty’s Inspectorate of Constabulary that unless there is a national force dedicated to policing the rail network, the task will not be given the priority it needs’”.

Our concern is that if, having devolved and lost control of this area and the Scottish Government exercise the devolved powers that they have to bring it under the direction of Police Scotland, the very concerns that were expressed by the BTPF and others will be borne out. The specialist services which the British Transport Police currently deliver could be lost over time, and therefore what the Smith commission argues is that the functions possibly could no longer be exercised.

Noble Lords have referred to a number of those functions, in particular tackling terrorism on our transport network. One I particularly note is that:

“The British Transport Police has created specialist teams with responsibility for the management of multi-agency support for local and national suicide prevention, mental health interventions and vulnerable persons encounters. An ongoing force-wide operation (Operation Avert) has so far achieved a 30% reduction in suicide attempts compared to the same period the year before”.

These are very profound specialist functions that the British Transport Police provide.

[The Earl of Kinnoull]

I think that we would all be very interested to hear the view of the noble and learned Lord on the quote that I read out about the no-detriment principle.

[Lord Wallace of Tankerness]

My Lords, one of the problems is that the no-detriment principle has so far tended to be looked at primarily in financial terms, but I think that the noble Earl is right that there are other detriments of a qualitative nature which he pointed out to the Minister. We could lose something of value. That would be to the detriment not just of Scotland, but of the whole country.

I share the views of other noble Lords that it is disappointing, despite the many concerns expressed in Committee, that the Government have not come forward with an amendment that would seek to address this. We owe a debt to the noble Lords, Lord Faulkner of Worcester, Lord Empey and Lord Forsyth of Drumlean, and to the noble Earl, Lord Kinnoull, who have sought to try to meet the Smith commission’s recommendation while ensuring that the specific functions of the British Transport Police are preserved.

I have some reservations about Amendment 41, which would be inserted at the end of Clause 42. Clause 42 fits the Smith commission’s arguments—it does devolve, in as much as it makes an exception—but my concern about Amendment 41 is that, having devolved, it seems to take back and would make it a requirement to have an agreement between the British Transport Police Authority and the Scottish Government. I prefer Amendment 42, which at least says that, if there is to be a police services agreement that applies in Scotland, Scottish Ministers should be involved, and that the oversight arrangements that the noble Lord, Lord Empey, spoke to—he indicated that they were over and above what was proposed—are consistent with the spirit and the letter of the Smith commission proposals, while trying to ensure that this is a practical way to address them.

I hope that when the Minister responds to the debate he will take on board that there are genuine concerns that a simple further exception to the reservations in Schedule 5 will not necessarily guarantee that the functions of the British Transport Police would be safeguarded after the devolution proposals put forward there. I therefore hope that the Minister, even at this late stage, will be prepared to come back and give some further thought as to how the functions can be properly safeguarded.

[Lord Mackay of Clashfern (Con)]

My Lords, in my view the words used by the Smith commission on this subject do not imply the break-up of the British Transport Police so far as it operates in Scotland. It says that the functions of the British Transport Police shall be devolved. If the British Transport Police does not exist in Scotland, it will not have any functions that are devolved. That does not seem to make sense.

My second point is that if this provision is to be applied in a sense that the British Transport Police is not to function in Scotland, but would have some kind of associated unit in Police Scotland, there will be no chief constable responsible for operations of transport police in Scotland whose exclusive attention is devoted to transport. The chief constable of Police Scotland has some responsibilities other than transport, whereas the British Transport Police chief constable is devoted entirely to transport—the full attention of the most senior rank there is in the police is available relating to transport only. Transport is sufficiently important to merit the attention of a chief constable.

Scotland Bill

Lord Wallace of Tankerness Excerpts

Wednesday 24th February 2016 Lords Chamber

[Lord Wallace of Tankerness (LD)]

My Lords, as the noble and learned Lord, Lord Hope of Craighead, indicated, we had a very lengthy debate on the issues in Clause 1 in Committee. He is right to point out that the wording in the Bill, as amended in the House of Commons, is not particularly felicitous and leaves open some questions of interpretation. But, as the noble Lord, Lord Norton of Louth, indicated, as I said in Committee we are to some extent dealing with a hypothetical position. The real situation is that it is a political reality.

Of the various amendments, I find the amendment in the name of the noble Lord, Lord Norton of Louth, probably the most logical. The problem I have with Amendment 2, in the name of the noble and learned Lord, Lord Hope of Craighead, is that there are two conditions for a repeal: that,

“the Scottish Parliament has consented to the proposed repeal; and … a referendum … in Scotland on the proposed repeal”,

has a majority voting for it. The problem there is that you get the majority voting for it, then you ask the people in the body that you are about to repeal to consent to it, too. It may have received the majority among the people of Scotland because they want to get rid of it, but the people already there have a vested interest in hanging on to it. Therefore, I do not think that that is a particularly satisfactory situation.

I say to the noble Lord, Lord Forsyth, on his amendment that states:

“Nothing in this section alters the sovereignty of the United Kingdom Parliament”,

that that position is made perfectly clear in Section 28(7) of the Scotland Act 1998.

As I said, at the end of the day this is a matter of political reality. The Smith commission gave the parliamentary draftsmen a rather daunting challenge. Paragraph 21 of the commission’s report said:

“UK legislation will state that the Scottish Parliament and Scottish Government are permanent institutions”.

Therefore, it is almost necessary that there is some element of a declaratory nature in here. The sovereignty of Parliament is such that the Bill could be repealed, as any other Bill could be. That is why, at the end of the day, it does boil down to political reality.

As I said in Committee, in the Scottish Constitutional Convention that sat in the early 1990s we wrestled at great length with how to entrench any Scottish Parliament that was established. We looked at various possibilities, including some declaratory statements, but never quite managed to work out how we could do it. In the end, it was a referendum. My party opposed it at the time, but in retrospect the 1997 referendum gave the Scottish Parliament that legitimacy and has made it, de facto, a permanent part of our constitution. That is why, in the political situation we now have, it will be a political reality.

If the circumstances were such that the people of Scotland no longer wished for a Scottish Parliament then the political reality would kick in, and no matter what we put in this statute, that political reality would come to pass. That is why it is important that we try to get clarity in legislation as best we can. At the end of the day, this is a political matter, and I do not believe that it ever will arise, but if it did arise, a political solution would be found.

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[Lord Davidson of Glen Clova]

Oh, yes, he is. I hear observations that I am mischaracterising him, but no doubt the noble Lord, Lord Cormack, will be able to look after himself in due course. If he is suggesting that I am proposing that the House of Lords should never do anything that would go against the other place, then that is an entirely incorrect assessment of what I am saying. What I am trying to get across is a recognition that we are dealing here with something that is very much sui generis. This is terrain in which we have not normally been operating. This is an area of legislation which goes well beyond the situation that underlies the observations of the noble Lord, Lord Cormack, about the relationship between the two Houses of Parliament.

[Lord Wallace of Tankerness]

The noble Lord is basically saying that, albeit various people, not least the noble Lord, Lord Norton of Louth, have said that Clause 2 does not actually deliver the Smith commission, the Labour Party is prepared to live with the situation whereby the Smith commission proposals are not delivered, for some political imperative. I am not quite sure what that political imperative is. If it is a question of time, ping-pong would not take weeks. It is still perfectly possible to get the Bill delivered by the Easter Recess. I am not quite sure what that political imperative is, particularly if it is not going to deliver what, up until now, we thought the Labour Party wanted to deliver.

[Lord Davidson of Glen Clova]

The noble and learned Lord wants to know whether I am correct in identifying a political imperative. These are matters of judgment and in judgment, one can be right and one can be wrong as matters go by. There is an assessment made in this judgment and when one makes a judgment and comes to a particular conclusion, if that conclusion is one that one wishes to live with and follow through, well, one does that. I think that that is something that the noble and learned Lord will appreciate, because he has spent many years in politics and has had to realise that these political judgments have to be made. These political judgments can sometimes be right and sometimes be wrong, but this is the judgment that we have made. It would be most unfortunate, on this of all areas, were this to involve tension, difficulty, a contest, friction between this House and the other place. On this point, therefore, we adhere to the position we have thus far asserted.

Let me make another point. Clause 2 states:

“But it is recognised that the Parliament of the United Kingdom will not normally legislate with regard to devolved matters without the consent of the Scottish Parliament”.

That is language that is, at least, redolent of what a convention might be. It is the type of language that has been seen in the past in legislation in Northern Ireland and elsewhere—it is not a complete innovation. It is language that can be understood, and understood by courts. However, the amendment in the name of the noble and learned Lord, Lord Hope of Craighead, for example, states:

“But the Parliament of the United Kingdom may not pass any measure applying to Scotland that makes provision about a devolved matter without the consent of the Scottish Parliament”.

We have heard much in this House on the extent of this Parliament’s sovereignty. Might it not possibly be seen—I would be very interested to hear the views of the noble Lord, Lord Norton of Louth, on this—that this language, saying what the Parliament of the United Kingdom may and may not do, is itself an attempt to trench on the sovereignty of the UK Parliament? Therefore, if one is going to find tremendous support for such an amendment, one has to be conscious of what one is doing constitutionally, because this would appear to be another innovation.

The Opposition are not against innovation. Some innovations can be good, some innovations can be bad; people adopt positions here and there depending on their assessment of those various innovations. However, this innovation is one we are disinclined to immediately jump into and support.

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[Lord Davidson of Glen Clova]

The suggestion that I am waffling is one that I do not find wholly offensive.

[Lord Wallace of Tankerness]

The noble and learned Lord asked whether he had dealt with all the issues. He has not dealt with the issue, raised by the noble and learned Lord, Lord McCluskey, and by my noble friend Lord Stephen, of the importance we attach to having some subsection in here which would make the matters non-justiciable. We would welcome the view on that of my predecessor as Advocate-General for Scotland.

[Lord Davidson of Glen Clova]

I shall finish answering the noble Lord, Lord Tebbit, before I come to the interesting point made by the noble and learned Lord, Lord Wallace. I thank him for the name check.

The noble Lord, Lord Tebbit, wanted to know what I was getting at, what my point was and why I was waffling, to use his word. I am trying to deal with various issues that seem to trouble many noble Lords and many noble and learned Lords. The point I am trying to make—the simple nub—which he will readily understand, is that we perceive, and our judgment is, that the political imperative suggests that these amendments be not passed in this House. It is as simple as that.

To deal with the point raised by the noble and learned Lord, Lord Wallace of Tankerness, about whether the matter may be looked at from the point of view of the purely legal analysis, in looking at this clause now—we have not always looked at it this way—we see that there is considerable virtue in having the support of the Minister’s statement on how this clause will be perceived by this House, and why this House is putting it forward in these terms. That statement by the Minister will, of course, feature were this matter to come before the courts, where it would be of some consequence in how the court would decide whether this language suggested that the issue was justiciable. I hope that offers a measure of response.

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[Lord Wallace of Tankerness]

My Lords, to pick up the noble and learned Lord on that point, I think he is suggesting that a Pepper v Hart statement by the present Advocate-General would put the matter beyond doubt if it came before the courts. But surely the point is that we do not want it to come to the courts at all because that is when uncertainty comes in. Very important matters, such as people’s investment decisions, may be involved and they will not know the outcome until the courts have decided the matter. Our measure, which has stood the test of time since the Parliament Act 1911, would mean that the issue would never come to the courts at all, because, if it does, the genie is out of the bottle.

[Lord Davidson of Glen Clova]

I feel that genies should not come out of their bottles; they should probably stay in their lamps. However, the point here is that, when one looks at this clause, no matter how one seeks to alter it, there is the potential—such are the fertile minds of our legal colleagues—to find one way or another in which any issue can be brought into court. My noble and learned friend the Advocate-General for Scotland, his predecessor and even his predecessor have frequently had to deal with issues by saying at no stage was this ever intended to go before a court, and yet we found that it did come before the courts, and in those areas the court had to make a decision whether it was a matter that was before the court or not. This is just the way our constitutional arrangements work. That has stood the test of time and it enables the finest minds of the Supreme Court to consider these types of issue. At this point, I will perhaps draw to a close, but if—

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[Lord Wallace of Tankerness]

Perhaps I can help the noble and learned Lord because his Whips’ Office told my party’s Whips’ Office that is exactly what happened. They have been told by the other end not to support any amendment, however sensible, which would lead to a situation that could result in ping-pong.

[Lord Davidson of Glen Clova]

As every Member of this House—every noble Lord, every noble Baroness—who has spent any time in the other place and has been involved in the political toings and froings will know, what is said between Whips of different parties is normally regarded as confidential. Therefore, while the noble and learned Lord, Lord Wallace, may have an observation that somebody has told him, that is simply a matter for his Whip, I guess. I will try to sit down now unless anyone—

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[Lord Keen of Elie]

I am obliged to the noble and learned Lord and I can express it only in these terms. It is the Government’s considered position that the clause implicitly determines that point in any event. It would therefore not be necessary to express it in the terms proposed in the amendment.

[Lord Wallace of Tankerness]

The Minister says that the Government think that it is implicit in the clause. What is the problem in making it explicit? It would be interesting to consider whether their view is that there is a problem in making it explicit, because if there is not it would be very much to their advantage to accept the amendment of the noble and learned Lord, Lord McCluskey.

[Lord Keen of Elie]

I note the observations of the noble and learned Lord, Lord Wallace, but I can observe only that it is not appropriate to layer legislation with unnecessary detail and that if the matter is to be regarded as implicit in the present clause, it would be inappropriate to add a further clause. I cannot elaborate upon the point at this stage.

The concluded position of the Government is that Clause 2 as drafted delivers what was required by the Smith commission agreement by placing the Sewel convention, as it is properly understood, on a statutory footing. It is in these circumstances that I invite your Lordships to withdraw or not move their amendments.

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Tabled by

[Lord Wallace of Tankerness]

13: Clause 2, page 2, line 7, at end insert—
“(9) The application of subsection (8) shall not be questioned in any court of law.”

[Lord Wallace of Tankerness]

My Lords, with the same observation that the noble and learned Lord, Lord Hope of Craighead, made about reserving the right to come back to this issue at Third Reading, I will not move this amendment.

Amendment 13 not moved.

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[The Earl of Lindsay (Con)]

My Lords, I support the amendment in the names of my noble friend the Earl of Dundee and the noble Earl, Lord Kinnoull. I remind the House that, quite apart from what the noble Lord, Lord Smith, said when reporting on his commission’s work, the Government, in their reply to the Smith commission, also accepted the call for greater co-operation and respect. They said:

“Effective inter-governmental working is essential to guarantee the best possible provision of services and representation for the people of the UK; a renewed commitment to build these relationships and explore better ways of working, as recommended by the Smith Commission Agreement, will require close collaboration between the UK Government and Devolved Administrations”.

The noble Lord, Lord Smith, and his commission, were absolutely right in endorsing that strong, unambiguous message.

It is perhaps a source of regret that in 2013, the recommendations of the Calman commission, which reported in 2009 in this very important area of intergovernmental co-operation, have to a large extent been either ignored or progressed in a way that has not been wholly effective. The noble and learned Lord, Lord Wallace of Tankerness, and I, as members of the Calman commission, were largely responsible for what became the largest section of the report, with 23 recommendations that dealt with intergovernmental co-operation, interparliamentary co-operation and inter-institutional co-operation. We on the Calman commission were very clear that this was a very important ingredient of achieving a stable, devolved constitution.

In coming to those 23 recommendations in 2009, we were acting on the evidence that we had heard from countries such as Canada, Australia, Germany and Spain—from memory—where the message was very clear. That was that the mortar between the bricks that delivered a stable and resilient devolved constitution came from relationships, not just primary legislation that determined which powers were devolved and which were reserved.

I encourage the Government, who have had both the Calman and the Smith commission recommendations, and now have this worthy amendment in the name of the noble Earls, Lord Dundee and Lord Kinnoull, to take seriously the message that it contains.

[Lord Wallace of Tankerness]

My Lords, I shall speak briefly to support the spirit of the amendment in the names of the noble Earls, Lord Dundee and Lord Kinnoull, and to endorse what the noble Earl, Lord Lindsay, said. The noble Earl referred to the Calman commission, on which he and I served and were charged specifically with looking at intergovernmental and interparliamentary co-operation. We found that there was much to be done. It came down to simple things such as passes for Members of the Scottish Parliament to access the Palace of Westminster and MPs to access the Scottish Parliament. There is much more that can be done.

I make only two further points, because there is a lot in the amendment that should give us impetus. Legislation cannot do it on its own; a culture requires to be built up as well. First, I wanted to pick up on,

“the sharing of examples of best practice between the Scottish institutions and United Kingdom institutions”,

in subsection (2)(c) of the proposed new clause. I have always believed that it is one of the potential strengths of the devolution settlement that we have in the United Kingdom that we not only have a United Kingdom Parliament that deals with England and in some cases England and Wales on otherwise devolved matters but we have Welsh, Scottish and Northern Ireland legislation. There is much that we can do to learn from each other. There are things that might have been tried that did not work which there is no point in repeating elsewhere. For example, the Scottish Parliament took the lead on the ban on smoking in public places, which other devolved institutions then followed. But the sharing of best practice has probably been patchy at best.

Secondly, the Bill does not allow this proposal to go beyond the terms of the amendment, but clearly it is not just about interchange and exchange between the United Kingdom institutions and the Scottish institutions—it is something that we will want to do for the Welsh and Northern Ireland institutions as well. We can all learn from each other, but I hope that the House will endorse the spirit of the amendments that have been tabled.

[Lord Norton of Louth]

My Lords, I very much support the amendment introduced and moved so ably by my noble friend. It is over a dozen years ago now that the Constitution Committee of your Lordships’ House undertook an inquiry into devolution and inter-institutional relationships within the United Kingdom. We found exactly what the Calman commission found later—that what should be in place to encourage inter-institutional relationships was not there. Had the recommendations of the Constitution Committee report been implemented, we would be in a much stronger position now than we are.

There is a tremendous amount to support in this amendment, because it injects a useful discipline. It focuses the mind, because if consideration must be given to this each year it encourages reflection, as has been mentioned, addressing such things as best practice. That is wholly for the good; I see no real arguments against it, and I very much hope that my noble friend’s amendment will get a positive response from the Front Bench.

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Moved by

[Lord Wallace of Tankerness]

28: Clause 34, page 35, line 29, at end insert—
“90C The Crown Estate—Island Authorities
(1) The scheme under section 90B of the Scotland Act 1998 shall make provision for the Scottish Ministers to transfer to the management of each of Shetland Islands Council, Orkney Islands Council and Comhairle nan Eilean Siar (“the island authorities”) on the islands transfer date all the existing Scottish functions of the Commissioners relating to those parts of the Scottish zone surrounding each of the island authorities.
(2) The exact extent of the parts of the Scottish zone to be transferred under subsection (1) will be agreed by the Treasury and Scottish Ministers in consultation with the island authorities and in accordance with the general principles contained within the United Nations Convention on the Law of the Sea as they applied for the delineation of boundaries between States.
(3) In this section, “the islands transfer date” means a date no later than one year after the transfer date referred to in section 90B of the Scotland Act 1998.”

[Lord Wallace of Tankerness]

My Lords, I am grateful to the House for allowing us to keep going. This amendment relates to the Crown Estate in relation to the islands authorities. It is an amendment that I moved in Committee, and I am very grateful for the support that it received from many parts of your Lordships’ House.

The Smith commission basically argued that the management of the Crown Estate should be devolved to, I think it said, the Scottish Parliament but, for reasons that the Government explained, that was not technically possible so it was devolved instead to Scottish Ministers. The commission also recommended that there should be onward devolution of the management of the Crown Estate to the three islands authorities of Orkney, Shetland and the Western Isles. The purpose of the amendment is to give some substance to that recommendation.

Since we debated this matter in Committee, the noble Lord, Lord Dunlop, has met representatives of the islands authorities, the chief executive and the leader of the Western Isles Council, who came on behalf of the other two islands councils; I am very grateful to him for giving us his time. A number of noble Lords also met the representatives while they were here. I was very grateful to the noble Lord, Lord McAvoy, who was willing to meet them and hear the very compelling case that they put.

As I said, the commission said that there should be devolution of the management of the Crown Estate to Scottish Ministers and then on to the islands authorities. What we are principally talking about here is the management of the marine estate, an estate that has substantial resources, not least in aquaculture but increasingly, as we look to the future, in the development of renewable energy. We are talking about a substantial area of activity.

Why would I seek to put this into statutory form? There is a suspicion about whether Scottish Ministers would fully deliver what the Smith commission actually proposed. It has been widely recognised that there is a considerable amount of centralisation in the present Scottish Administration. There is a concern that the Scottish Government have indicated that they intend to bring forward only a single consultation on how they might manage the Crown Estate, whereas those in the islands authorities believe, with the recommendation of the Smith commission, that by this stage they should be going further and having a separate consultation on how that particular recommendation would be taken forward. The fact that that has not happened makes them suspicious.

The islands forum, the Islands Area Ministerial Working Group, took place in Lerwick on Monday this week. It was chaired by the Minister for Transport and Islands in the Scottish Government, Derek Mackay, who was accompanied by Marco Biagi, the Minister for Local Government and Community Empowerment. The communiqué that was issued after the meeting said:

“There were also positive discussions on the potential for increasing local accountability for decisions on Crown Estate assets in the three council areas, ahead of a Scottish Bill on the future management framework for Crown Estate assets in Scotland after devolution. Scottish Ministers’ current priority is to secure the devolution of management and revenue of the Crown Estate so that Scotland and its communities can benefit from the Scottish assets. Ministers have already confirmed that island and coastal councils will receive the net income from Crown Estate marine assets out to 12 nautical miles after”,

devolution. That sounds fine so far as it goes, but this guaranteeing of net income—the question of course is what will constitute net income—falls short of management. Again, I think that is because the commitment from Scottish Ministers up until now has been to net income rather than to management, and again there is a concern that what would happen after devolution to the Scottish Ministers would still fall short of what the Smith commission recommended.

Those who met the representatives from the councils will know that the leader of the Western Isles Council, Angus Campbell, effectively and forcefully made the point that management really means the communities taking responsibility themselves for how these assets should be developed. There is a sense of community empowerment. He pointed out the problems that many of the islands communities are facing, particularly the Western Isles, with warnings of high levels of unemployment, particularly youth unemployment, or youth migration. The idea that they might be able to manage the assets of the Crown Estate within their communities gives them some opportunity to be able to do positive things for their communities and tackle issues such as youth migration. That is why it is important that there is the opportunity to manage the Crown Estate marine assets, not simply to receive net income from them.

We have already seen the way in which Orkney Islands Council and Shetland Islands Council, under the Orkney County Council Act and the Zetland County Council Act, have been able over the years to manage the works licence regime regarding the development of aquaculture. They have been able to undertake that very successfully—in fact, sufficiently successfully that what they have been doing for many years in planning in the marine environment has now been extended to the rest of Scotland.

The noble Lord, Lord Gordon of Strathblane, made the point when we debated this in Committee that there is an understandable concern that we are second-guessing Scottish Ministers and doing double devolution without giving them a chance to take it forward. To that I say that there is a distinction between the responsibility that currently rests with Westminster and Westminster deciding that that should go to the islands, compared to a situation where a responsibility has already been devolved and this Parliament tries to suggest how an already devolved responsibility might be exercised. Indeed, I received representations that we might take the opportunity of the Bill to impose upon Scottish Ministers an obligation of, for example, proportionality and subsidiarity when they were dealing with local authorities. That would be wrong; it would lead to trying to put a responsibility on them for subjects already devolved. This is not a devolved subject, and therefore it is not inappropriate that we should devolve.

A better argument is to look at the scheme in the amendment that we propose. I am very grateful to the noble Earl, Lord Kinnoull, who has added his name to it. The amendment says that the scheme under Section 90B of the Scotland Act will make provision. Under proposed new subsection 90B(13), inserted by this Bill, the Treasury may make a scheme only with the agreement of Scottish Ministers. So in fact Scottish Ministers would be very much involved in making the scheme, which would lead to the onward devolution of the Crown Estate management to the islands community. Far from being cut out, they would actually be actively involved in the scheme; indeed, it would require their consent. Our amendment itself says that the actual transfer would be done by the Scottish Ministers to the islands.

In his foreword, the noble Lord, Lord Smith of Kelvin, talks about the,

“strong desire to see the principle of devolution extended further, with the transfer of powers from Holyrood to local communities”.

All sides of the House have previously noted that with approval. It is very easy to pay lip service to the aspiration, but this amendment seeks to give it real substance. I beg to move.

[Lord MacKenzie of Culkein (Lab)]

My Lords, I support much, though not all, of what the noble and learned Lord, Lord Wallace of Tankerness, has said. My only slight worry is the issue of double devolution and whether the amendment is competent, but that is not to say that the debate is unimportant. We in the Highlands are sick of the centralisation that has been happening in Scotland—I certainly am.

To allow the management of the Crown Estate to be taken over by the northern islands councils and the Western Isles Council would be a good step forward, because migration has always been a particular problem in the northern and Western Isles.

I recently visited the Isle of Lewis and the school I used to go to as a child when my father was principal lighthouse keeper in Lewis. It has closed, as have a number of other junior and secondary schools because of falling school populations. We need to bring some wealth back into that part of the world. There are always difficulties about the yard at Arnish, which was involved and perhaps still may be in manufacturing for wind farms. There has been a fall-away in fishing, which used to be the mainstay of that island, the potential, as we have heard, aquaculture and wind energy, and the difficulties with the interconnector to the Western Isles. Therefore we need something to bring some certainty to these islands. They are so much forgotten about in Edinburgh; historically, the highlands have always been the poor relation of Edinburgh, and many highlanders like me always tended to think that we did better out of Westminster than Edinburgh.

There is now a Government in Edinburgh who have the opportunity to devolve the management of the Crown Estate to the Northern and Western Isles. I am suspicious of the Scottish National Party’s plans here—I agree with the noble and learned Lord that there is no certainty whatever that anything other than the net proceeds will be given to these islands. I hope that this debate will at least help to put pressure on those who will have the ability in the future to further devolve, as the Smith commission said.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Scotland Office (Lord Dunlop) (Con)]

My Lords, I thank the noble and learned Lord, Lord Wallace, the noble Lords, Lord MacKenzie and Lord McFall, and the noble Earl, Lord Kinnoull, for their contributions. Let me begin by saying that I understand and sympathise with the intention of this amendment and with the island authorities. I also commend the noble and learned Lord, Lord Wallace, the noble Lord, Lord Stephen, the noble Earl, Lord Kinnoull, and my noble friend Lord Dundee, who have shown such resolute commitment to this important issue.

As the noble and learned Lord, Lord Wallace, has said already, I had the opportunity to meet the island authorities and other stakeholders. I found it an enlightening and informative experience to talk through this issue with them. I hope that I have further opportunities to meet them, and I certainly encourage others to do so. When he and I met the representatives of the Western Isles Council recently, it was clear how much appetite they had for the management responsibilities of the Crown Estate to be devolved with as little delay as possible. However, the Smith commission agreement was absolutely clear that:

“Responsibility for the management of the Crown Estate’s economic assets in Scotland, and the revenue generated from these assets, will be transferred to the Scottish Parliament … Following this transfer, responsibility for the management of those assets will be further devolved to local authority areas”,

such as Orkney, Shetland and the Western Isles or other areas that seek such responsibilities. The Smith commission chose these words with good reason. I believe that the devolution of management responsibilities will be quicker, simpler and come with fewer practical difficulties if the UK Government devolve these responsibilities in a single transfer to Scottish Ministers. A consultation can then take place in Scotland to determine the best way to further devolve these assets. I stress that the UK Government’s view is that this should be a consultation about how, not whether, the management of those assets will be further devolved to the island councils.

I note that the Scottish Government are never shy of saying how they will hold the UK Government’s feet to the fire on how they live up to the commitments under the Smith agreement. I assure noble Lords that the UK Government will take every opportunity to press Scottish government Ministers to deliver on the commitments made by the SNP as part of the Smith process. I was glad to note, and to hear the noble and learned Lord, Lord Wallace, repeat today, that the island councils met the Scottish Government on Monday and that some progress, although not complete progress, was made in those talks.

However, the Government do not believe it would be in keeping with the principle or spirit of devolution for the UK Government to determine how the management of the Crown Estate in Scotland should be further devolved. But I take this opportunity to assure noble Lords that the UK Government take this issue seriously. The Exchequer Secretary to the Treasury, who has policy responsibility for the Crown Estate, will make a Written Ministerial Statement to Parliament six months after the transfer of Crown Estate assets. This statement will outline the progress that the Scottish Government have made on the onward devolution of these assets. This is a new commitment which the Government are prepared to make, having been persuaded by the arguments in this House and having met and listened to the group Our Islands Our Future and other passionate voices. I hope that this commitment gives noble Lords comfort. As I have said, we will continue to press the Scottish Government to deliver what was promised to the island communities and other communities in the Smith agreement. I have no reason to suspect that the Scottish Government will not deliver the onward devolution of these assets.

The noble Lord, Lord McFall, asked about timing. Conversations between officials are ongoing, and it is envisaged that Ministers of the UK and Scottish Governments will commence further detailed discussions after the Scottish Parliament elections about the precise timing.

In conclusion, I reiterate that although I respect and understand the intention of this amendment, the Government cannot support it. I ask the noble and learned Lord to withdraw this amendment.

[Lord Wallace of Tankerness]

My Lords, I am grateful to all noble Lords who have taken part in this relatively short debate. I particularly thank the noble Lord, Lord MacKenzie of Culkein, who speaks with personal experience and knowledge about the challenges that face many of our islands communities and about the opportunities that those communities wish to have to be masters or mistresses of their own destiny.

The noble Earl, Lord Kinnoull, made an important point. Oban would certainly be outwith the immediate scope of the provision, but of course, as the Smith commission said, the measure could then go on to cover other coastal communities. He made the important point that in such circumstances, you have officials who know the individual concerned. Also, if you are a developer, you will then have to deal with only one regulatory body and will not have to get planning permission from an islands council and separate permission from the Crown Estate or the body that the Scottish Ministers set up after devolution.

I am grateful, too, for the very constructive and positive response from the noble Lord, Lord McFall. I think it was Lomondgate that he and I went to together during the referendum campaign. It was a very impressive set-up that he had had a considerable hand in developing and promoting.

I welcome the very understanding and sympathetic views of the Minister. He quoted the Smith commission quite properly, saying that following the transfer there would then be a transfer to the islands. That is precisely what our amendment says—that there would be a transfer and, following that, another transfer. However, the significant point is that he said that he would not hesitate to hold the Scottish Government’s feet to the fire, and that it was a question of how rather than whether. I fear that at the moment the Scottish Government have not taken that step. They are still talking about net revenues and not about management. Therefore, it might be helpful in holding the Scottish Government’s feet further to the fire if your Lordships were to agree to the amendment.

If the Minister was able to hold the Scottish Government’s feet to the fire and was able to tell us that they are now committed to the management and not just the transfer of assets, giving some indication of a timetable, no one would be happier than me to accept that positive outcome from the Minister’s efforts. In those circumstances, I think it would be helpful to test the opinion of the House.

Scotland Bill

Lord Wallace of Tankerness Excerpts

Monday 22nd February 2016 Lords Chamber

[Lord Kerr of Kinlochard]

I hope that the noble Lord, Lord Dunlop, knows, but I do not think that any of the rest of us knows what this means in the Smith report. Alas, the noble Lord, Lord Smith of Kelvin, is not here today to tell us.

It could be argued that there is no need to have any of this in the Bill, and I would like to hear from the Government whether that is their view. After all, they could have brought forward a Bill which said nothing about borrowing, despite the fact that it was a key part of paragraph 95 of the Smith report covering the fiscal framework. If it is their argument that there is no need to say anything about borrowing, I want to know why. As I said at the start, I believe that borrowing will be cheaper for Scotland and therefore better for the United Kingdom and Scotland if it is clear beyond doubt that the United Kingdom stands behind it. If it does, it is then clear that the United Kingdom has the right and the duty to set limits on that borrowing. I repeat that those limits should not be in the Bill. They should be set by affirmative resolution of both Houses, but the provision to require that should be in the Bill, and that is why I have tabled Amendment 75A.

[Lord Wallace of Tankerness (LD)]

My Lords, I shall speak to Amendment 76. The points made by the noble Lord, Lord Kerr of Kinlochard, beg questions which I am sure the Minister will seek to answer in terms of the Government’s understanding of how the Scottish Parliament’s borrowing powers will operate after the passage of this Bill. The Scotland Act 2012 also contained borrowing provisions and I would be interested to know what the dynamic between them is and how they will fit together. This is an important part of the overall arrangement because specific borrowing limits might not necessarily appropriately appear in statute. It is therefore important that the Committee be made aware of what is in the Government’s mind.

The amendment I have tabled with my noble friend Lord Stephen seeks a review of the fiscal framework. We tabled it some time ago, perhaps even before the Scottish Affairs Committee came up with a similar recommendation. That was done on the basis that, by the time we reached it and could debate it, the fiscal framework would have been published. Noble Lords will remember that even at Second Reading there was much concern about the fact that we did not have any detail on the fiscal framework. There is a recognition that however much work goes into this—I do not dispute the good will that the Minister has indicated on a number of occasions—there is a possibility, I put it no stronger than that, that it might not actually be perfect. It therefore makes sense that somewhere down the line there should be a review of how the fiscal framework is operating. We say that it should be given at least four years to run, but not much longer. We also propose that this should not be done by one Parliament or the other. In fact—although it is probably quite a novelty, we should not be scared of that—it should be reviewed by a committee that involves Members of the Scottish Parliament and of both Houses of the United Kingdom Parliament. A report should be published with recommendations that are submitted to both Houses of the UK Parliament and the Scottish Parliament. Quite simply, this tries to ensure that once the fiscal framework has had an opportunity to operate, a better judgment can then be made of how well it is living up to expectations.

I do not want to repeat all the points made earlier by my noble friend Lord Stephen in the debate on the amendment to the Motion moved by the noble Lord, Lord Forsyth, but it is absolutely right to talk about transparency. For example, the First Minister of Scotland released a letter to the press in which she set out the Scottish Government’s view of the no detriment principle, but we do not have a clue about the United Kingdom Government’s view. Anyone who knows the workings of the Scottish Government and the Scottish National Party knows that they are very adept at this. They will get in first so that their definition of no detriment suddenly becomes the currency. The United Kingdom Government will then try to come up with a different definition, but they will be told that they are selling out, and because the Scottish Government got in first and have defined the terms of the debate, that puts everyone else on the back foot. That is why we have been arguing both privately and in the Chamber with Ministers that we need far more information and that the Government need to be much more transparent—not necessarily about the nitty-gritty, small-print detail of where they are at any particular moment but about what they understand by the no detriment principle, for example.

An amendment in this group from the noble and learned Lord, Lord McCluskey, also provides for the fiscal framework by way of a Scottish fiscal commission, modelled on the Office for Budget Responsibility. It is a very worthwhile idea, which the Scottish Parliament has been looking at. However, it falls short of the independence of the OBR that we would like to see, although the noble and learned Lord does seek to address that. Indeed, paragraph 16 of the letter we received at lunchtime today from Mr Greg Hands, the Chief Secretary to the Treasury, to Pete Wishart MP, the chair of the Scottish Affairs Committee, indicates that, “All elements of the fiscal framework are being discussed with the Scottish Government, including the important recommendation of the Scottish Affairs Committee that there is a clear consensus that forecasting should be done by a body independent of Government. We agree with the conclusions of the Finance Committee of the Scottish Parliament and recommend that an enhanced Scottish Fiscal Commission be made responsible for forecasting in Scotland”. Perhaps the Minister would care to elaborate on that and how he sees it developing.

--- Later in debate ---

[Lord Wallace of Tankerness]

If there was migration from Scotland as a result of higher tax rates, clearly the population ratio would change, and we are being told that there was much discussion around the concept of per capita. How would the United Kingdom Government and the Scottish Government agree on how many of those who have left Scotland have left as a result of higher taxation as opposed to having to look after elderly parents?

[Lord Dunlop]

As I was saying, that is an indirect, or behavioural effect. It is not a direct effect: that is the point that I was making. What the adjustment mechanism takes into account is these direct effects. They are things that can actually be calculated, but I will come on to talk about behavioural or spillover effects, which is what I think the noble and learned Lord is talking about.

--- Later in debate ---

[Lord Dunlop]

My noble friend misunderstands what I am saying. I am not necessarily saying that those should be compensated for. In the evidence that the Chancellor of the Exchequer gave to the Treasury Select Committee, he said:

“My personal view is that tax competition is something that we should allow”.

He is effectively saying that if there are different tax rates north and south of the border, that is something that we should not automatically try to compensate for. Another example relates to childcare. We all remember that at the time of the independence referendum White Paper, central to the retail offer being made by the SNP was its childcare policy. It was a matter of complaint that, were that policy to be successful and increase income tax revenues, the benefit of that would actually flow to the Treasury and not to the Scottish Government. Under the Smith package, if such a policy succeeded in increasing participation by women in the labour market, the benefits of that would flow to the Scottish Government.

[Lord Wallace of Tankerness]

Teasing this out, may I give an example that is hypothetical in one sense, because it is historic? During the 1990s, the Conservative Government privatised the water industry in England, and, I think, in Wales. Clearly, the decision was taken by the then Conservative Government not to do so in Scotland. However, after that privatisation had taken place, there were no further consequentials under the Barnett formula for Scotland. The money had to be found to fund the water industry in Scotland in public hands. If the arrangements that we are now talking about had been in place then, and the UK Government had decided to take the water sector into private ownership in England and Wales, which would have led to a decrease in the funding for Scotland, would that have been a detriment for which the Scottish Parliament would have had to be compensated?

[Lord Dunlop]

No, I do not believe that that would be a detriment in the sense that the UK Government would have to compensate the Scottish Government. The situation would apply; the Barnett formula would apply; the equivalent departmental spending from England would flow through to Scotland. I do not think that this package changes that at all. Although the ownership structure north and south of the border is different, the cost of this on both sides of the border is met in water bills.

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[Lord Wallace of Tankerness]

This is the point I was trying to get at before. The Minister has just said it; he may correct me, and I apologise as it is complex. He said that, if the Scottish population falls and is a lower proportionate share of the population, there would be a lower tax deduction. But if that population has fallen because of the tax policies of the Scottish Government, why should there be a lower tax reduction?

[Lord Dunlop]

I think we are reflecting at the outset that Scotland produces a lower proportion of total UK income tax. We are applying that comparability factor from the outset. The Scottish Government will still bear population risk. If there is deviation from that initial situation—whether it is a result of their policy choices—that is how they would bear the population risk.

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[The Lord Speaker (Baroness D’Souza)]

My Lords, if this amendment is agreed to, I cannot call Amendment 79AA by reason of pre-emption.

[Lord Wallace of Tankerness]

My Lords, amendments in my name and that of my noble friend Lord Stephen are in this group. Basically, the arguments are very similar to those just advanced by the noble and learned Lord, Lord Hope of Craighead. The powers in Clause 68 are extremely wide. We are coming to the end of the Bill and people will think that these are technical amendments but in fact they are of profound constitutional importance. In its report on the Bill, your Lordships’ Constitution Committee has already drawn the House’s attention to the extent of the powers conferred by Clause 68, and therefore it is important that the Government take these points seriously.

Our Amendment 79AA is very similar to the amendment moved by the noble and learned Lord, Lord Hope, with one difference, which is that we allow the powers to apply in respect of Part 3 because of the report of the Delegated Powers and Regulatory Reform Committee. Paragraphs 24 to 28 of the committee’s 15th report of this Session deal with this clause.

The noble and learned Lord gave a number of reasons why he thought that this provision was exceptional but I think that he may have missed one out. He said that there was no limit to when these powers could be used but in fact there is no time limit on the legislation that it can apply to. Subsection (2) says:

“Regulations under this section may amend, repeal, revoke or otherwise modify any of the following (whenever passed or made)”.

I emphasise the last four words, which mean that future legislation could be affected by these powers. The Delegated Powers and Regulatory Reform Committee said in paragraph 25 of its report that the memorandum from the Government,

“acknowledges that the power to amend or repeal future enactments is exceptional. Reasons are given as to why this is needed in connection with Part 3 of the Bill which deals with welfare benefits: the commencement of Part 3 is expected to take place over a period of time and, because of the complexity of the area, it may be necessary to make changes to legislation enacted between the date on which the Bill is passed and the date on which the functions to which Part 3 applies are transferred to Scottish Ministers. We consider this provides a reasonable explanation for needing the power to amend future enactments in relation to Part 3 of the Bill”.

But the report goes on to say that that,

“does not justify the extension of this power to the other Parts of the Bill. It may be that similar considerations apply, but because nothing is said about this in the memorandum it is impossible to know”.

In other words, the Government are not only trying to take these powers but they have given the appropriate committee of your Lordships’ House that is scrutinising the Bill no reason whatsoever for such wide powers, including the exceptional power to amend or repeal future enactments. They did provide an explanation in respect of Part 3, which the committee found to be a reasonable one, and that is why we have not sought to remove it. Amendment 79AB is consequential.

As was also picked up on by the noble and learned Lord, Lord Hope, Amendment 79BA refers to the provision that talks about,

“any other instrument or document”.

Our amendment would remove those words from subsection (2), as it is thought that it is extremely wide. Again, the 15th report of the Delegated Powers and Regulatory Reform Committee commented on this at paragraph 27, noting its exceptionally wide effect without any compelling reason—that no justification has been given for a power to revoke any instrument or document, whenever made. Therefore, we believe that it should be removed from the Bill.

The other point is one touched on by the noble and learned Lord, Lord Hope. We deal with it in Amendment 79EA, which would remove references to Acts of the National Assembly for Wales and Northern Ireland legislation from this regulation-making power. Again, no substantive reason has been provided for extending the Secretary of State’s regulation-making power under Clause 68 to legislation made by either the National Assembly for Wales or the Northern Ireland Assembly. It seems very wide and raises the interesting question of whether legislative consent Motions were required in the Northern Ireland Assembly or the National Assembly for Wales before including these provisions in the Bill or whether, indeed, if these powers are ever wished to be used, doing so would require legislative consent Motions. Perhaps the Minister can enlighten us when he comes to reply.

[Lord McCluskey]

Before the noble and learned Lord sits down, may I ask him a question on that point that I meant to ask my noble and learned friend Lord Hope? The particular measure in subsection (7) refers to, as the noble Lord said, Wales and Northern Ireland legislation. Is that within the Long Title of the Bill? The Long Title is:

“To amend the Scotland Act 1998 and make provision about the functions of the Scottish Ministers”,

not the Secretary of State, “and for connected purposes”. I am not very good at reading Long Titles, but when I read this I cannot see how the subsection objected to fits within it.

[Lord Wallace of Tankerness]

The noble and learned Lord makes a very important and perceptive point, and I am glad it is not me who has to reply to it from the Dispatch Box. I certainly see his point that it is a very stark, simple Long Title. To actually extend the ambit of the Bill to Measures or Acts of the National Assembly for Wales or legislation of the Northern Ireland Assembly does seem a bit of a stretch. No doubt the Minister can enlighten us when he comes to reply.

The important point is that we do take seriously the report from the Delegated Powers and Regulatory Reform Committee. At the heart of it, these are extremely wide powers and, in some respects, exceptional powers. With the one exception relating to Part 3, no explanation or justification has been provided by the Government for taking these wide powers.

[Lord Forsyth of Drumlean]

Could the noble and learned Lord, with his considerable experience, give me some legal advice? I wonder whether, if a clause like this had been included in the previous Scotland Bill, it would have been necessary to have this Bill at all.

[Lord Wallace of Tankerness]

That is a good point. As the noble Lord was making it I was wondering whether the phrase,

“any other instrument or document”,

could apply to the fiscal framework—but perhaps that is stretching things a bit too far. Actually, “any document” could include the fiscal framework, so perhaps the Minister can tell us more.

--- Later in debate ---

[Lord McCluskey]

I beg to move.

[Lord Wallace of Tankerness]

On the important point made by the noble and learned Lord, Lord McCluskey, about having to table amendments again to maintain the sequence, and, indeed, in relation to the point made by the noble and learned Lord, Lord Hope of Craighead, on the last group of amendments, perhaps the Minister will take this opportunity to clarify whether, when we come to Report, the order of consideration will be as in Committee; in other words, that Parts 2 and 3 will be taken at the end—I think next Monday is the day currently set down for that—and the other parts will be debated on Wednesday.

[Lord Dunlop]

Yes, I can confirm that.

--- Later in debate ---

[Lord Wallace of Tankerness]

My Lords, it certainly had not been my intention to take part but I do so given the comments of the noble Baroness, Lady Hayter, and the contribution of the noble and learned Lord, Lord Hope, because I took part in the debates in the other place on the 1998 legislation. Indeed, I tabled an amendment to devolve abortion—the argument being that abortion law is a matter of health and the criminal law, both of which are themselves devolved. It therefore seemed anomalous that abortion should not be. The noble and learned Lord may correct me if I am wrong but I think that prior to 1967, the criminal law in relation to abortion was different in Scotland from what it was in England. So there have been many years, probably decades, in which there were differences on different sides of the border.

Having spoken for the devolution of abortion in debates in the other place in 1998, I recall that when the then Secretary of State spoke, there was a conscious decision that the Government’s position was that abortion should not be devolved. So the late Donald Dewar spoke very coherently, as your Lordships would expect, putting the case for a continued reservation of abortion. However, when we came out of the Chamber later he said to me, “I’m glad you did not read my speech during the debates on the 1978 legislation”. So before Committee on this Bill, I went back and looked at Donald Dewar’s speech when he advocated the devolution of abortion during the passage of the 1978 legislation. It made a compelling case for its devolution.

[Lord Dunlop]

I thank the noble Baroness, Lady Hayter, and the noble Earl, Lord Kinnoull, for the amendments that they have tabled. I hope that the Committee will indulge me if, given this late hour, I am relatively brief in responding to them.

As has already been explained, Amendment 80 would require the Secretary of State to lay a statement before Parliament stating that the Scottish Government and Scottish authorities have made appropriate arrangements in relation to the exercise of the powers which have been devolved to them before parts of the Bill are commenced. The Government regard this amendment as against the spirit of how devolution operates. Moreover, this is an enabling Bill: constitutional legislation which transfers legislative competence to the Scottish Parliament and executive competence to the Scottish Ministers. There will be no change in law until such time as the Scottish Parliament and Scottish Ministers use the powers devolved to them. It will therefore be for them to decide whether they have made appropriate arrangements before doing so. I have discussed this point with the noble Earl—namely, how we ensure an effective transition. It requires the co-operation of the two Governments to discuss those issues. A number of mechanisms are in place to support a smooth transfer of powers and joint working. We have already debated how that works in relation to welfare and I expect similar joint working with regard to the Crown Estate.

Scotland Bill

Lord Wallace of Tankerness Excerpts

Tuesday 19th January 2016 Lords Chamber

Moved by

[Lord Wallace of Tankerness]

65: Clause 58, page 67, line 21, after “electricity” insert “or heat”

[Lord Wallace of Tankerness (LD)]

My Lords, this group comprises a number of amendments relating to renewable energy. The background is not only proposals for devolution but obviously must be seen against what the Government have done with regard to the Energy Bill, or least what they had done until this House took out the provision relating to the acceleration of the closure of the renewable obligation for onshore wind.

The first set of amendments, Amendments 65, 66, 68, 70, 71 and 72, are concerned with renewable heat incentive schemes. The Smith commission, which of course is holy writ, states at paragraph 41:

“There will be a formal consultative role for the Scottish Government and the Scottish Parliament in designing renewables incentives and the strategic priorities set out in the Energy Strategy and Policy Statement to which OFGEM must have due regard. OFGEM will also lay its annual report and accounts before the Scottish Parliament and submit reports to, and appear before, committees of the Scottish Parliament”.

The initial amendments were intended to incorporate references to the renewable heat incentive schemes, whereas the clause as it stands relates only to renewable electricity incentive schemes. I was grateful to the Minister for writing to me on 1 December last to say that he did not think that this set of amendments was necessary. He indicated that heat was,

“not covered by any of the reservations in the Scotland Act 1998, and so should be treated as already devolved”.

He went on to say that, with specific regard to the renewable heat incentive,

“the Scottish Government already has a formal consultative role on both the domestic and non-domestic RHI schemes. Section 100 of the Energy Act 2008 states that for regulatory changes to RHI schemes, the Secretary of State for Energy and Climate Change”,

had certain obligations relating to the,

“competence of the Scottish Parliament”,

and the “consent of Scottish Ministers” but, where there was not a competence within the Scottish Parliament, he had a consultation requirement on Scottish Ministers. Having received the Minister’s letter, I decided that it was still better to leave these amendments in so that we could have on the record why renewable heat incentives were not included. I know that their omission has caused some concerns in the industry, but this makes it clear that there is nothing to stop the Smith commission recommendation being given full effect in that regard.

There is, however, an important issue with regard to Amendment 68B. On how many occasions in the course of our debates have we heard the Minister pray in aid, “This is what the Smith commission says and this is what we are delivering”? I am sure that the Smith commission was never intended to be a straitjacket, but that is sometimes how it appears. I shall repeat:

“There is to be a formal consultative role for the Scottish Government and the Scottish Parliament in designing renewables incentives and the strategic priorities set out in the Energy Strategy and Policy Statement to which OFGEM must have due regard”.

But look at what is in the Bill. It states in Clause 58:

“(1) The Secretary of State must consult the Scottish Ministers before—

(a) establishing a renewable electricity incentive scheme that applies in Scotland, or

(b) amending such a scheme as it relates to Scotland”.

Let us turn to the next two new subsections:

“(2) Subsection (1) does not apply to amendments that appear to the Secretary of State to be minor or made only for technical or administrative reasons”.

I am actually prepared to live with that. It is probably perfectly reasonable provided that not too wide an interpretation is made of “technical or administrative reasons”. But new subsection (3) goes on to say:

“(3) Subsection (1) does not require the Secretary of State to consult the Scottish Ministers about any levy in connection with a renewable electricity incentive scheme”.

Where in the Smith commission is that exception made? We have heard how important it is that we should stick rigidly to the commission, yet it does not make the exception that the Government seek to import into this provision.

Moreover, the Command Paper which was published almost exactly a year ago stated specifically that, in implementing paragraph 41 of the Smith commission agreement, a clause would be included in the Scotland Bill to,

“establish a broad duty on the Secretary of State to consult the Scottish Government on the design of new incentives to support renewable electricity generation, or the re-design of the existing incentive schemes … The duty will arise where the new incentive would apply in Scotland, or any re-design would affect the way an incentive operates in Scotland. It will apply to incentives that are both statutory and non-statutory in nature”.

If that had been translated into the legislation, it probably would have been fine. The paper was clear that the reference to existing incentive schemes included the renewables obligation and contracts for difference. There were no exemptions, yet exemptions have been added. The Government have to explain to the House why they are departing in a very material way from the recommendations of the Smith commission. Quite clearly, any levy in connection with the renewable electricity incentive scheme could put a coach and horses through what is given by new Section 90C(1), to be inserted into the Scotland Act 1998 under Clause 58. The Government may have a guilty conscience because they sought to bring about the early closure of the renewable obligation in relation to onshore wind and solar panels with precious little, if any, prior consultation with Scottish Ministers. Therefore, they are trying to cover their tracks by this rather niggardly exclusion that they have sought to put in. The Minister owes it to the House to explain why he has driven a coach and horses through that new subsection.

Again, I wrote to the Minister and asked about the consultation with Scottish Ministers. On 21 December, he helpfully responded saying that,

“similarly to the position on the Renewables Heat Incentive, we have not included a requirement to consult Scottish Ministers on the Strategy and Policy Statement … as the Energy Act 2013 already gives Scottish Ministers a clear formal consultative role in the development of the SPS. The process of designing the SPS requires two rounds of consultations where Scottish Ministers can provide their views on the draft document before it is designated. As legislation already exists to address paragraph 41 of the Smith Commission Agreement, no additional provisions have been included in the Scotland Bill”.

It provides us with a rather unusual situation. The Government are saying that something that was already in existence pre the Smith commission is being used to fulfil the recommendation of the Smith commission.

We must assume that the Smith commission was fully aware of what the pre-commission legislative position was because of things such as the British Transport Police. We have been assured that it knew all the implications of what was being proposed. We must assume that it knew the position under the Energy Act 2013.

[Lord McAvoy]

I am curious about things and about systems. Was there not any report back from the Liberal representatives on the Smith commission to the noble and learned Lord’s party?

[Lord Wallace of Tankerness]

I do not remember the precise detail of what went in when they came forward with this proposal but I presume—I give credit to those who were on the Smith commission, including the noble Lord’s own party members—that they did not seek to make a recommendation and that it already existed. I hope that the noble Lord would give due credit to the other members of the commission—the Labour members—that they would not have signed up to something that was already there. That is why I want the Minister to explain why he thinks that the Government’s interpretation of that recommendation is satisfied by something that was already in place. Can we not reasonably assume that those who were engaged in this were looking for something more? Indeed, Scottish Renewables is not satisfied that the legislation is sufficient. In an email to me, it said:

“If this recommendation is not to be carried forward through the Scotland Bill, we would like clarification about how any new or improved mechanism will be formalised outside of the primary legislation”.

We have to get some indication from the Government as to what more they are doing than what was already in place before the Smith commission sat.

I fully accept that Amendment 73A goes well beyond the Smith commission, so that probably bottoms it out before I even open my mouth. But there is an important point here as well. When the Smith commission was deliberating, it did not know that several months later the Government would pull the rug from under the onshore wind industry, not just in Scotland but throughout the United Kingdom, by bringing forward the date of closure of the renewables obligation. We are entitled to speculate that, if the Smith commission had deliberated after the announcement to accelerate the closure of the renewable obligation for onshore wind and solar, it may well have incorporated something along the lines of what we propose in Amendment 73A.

Amendment 73A says that:

“Within three months of the passing of this Act, the Secretary of State shall publish proposals to transfer to the Scottish Ministers powers on the awarding of contracts under Contracts for Difference and the setting of electricity feed-in tariffs in respect of electricity generation from renewable sources in Scotland”.

This is quite a major step, but it is very much within the Government’s ability to shape what kind of scheme they would bring forward. We propose this because there are a number of different ways of doing it. There could be a full set of powers through a suitable adaptation of the Energy Act 2013; the Government may wish to limit it to onshore wind to encourage electricity generation by onshore wind; or it could be done by an intergovernmental agreement on budget limits and a restriction on the power to set the strike price.

--- Later in debate ---

[Lord Dunlop]

The noble and learned Lord, Lord Wallace of Tankerness, is very interested in these energy schemes and very knowledgeable about them, and has spoken on other pieces of legislation in this connection. He raised a number of specific points in the debate. I am, of course, very happy to meet him to discuss those further.

Clause 58 creates a formal consultative role for the Scottish Ministers in the design of renewable electricity incentive schemes that will apply in Scotland. Our aim is to ensure the Scottish Ministers are able to comment on the design of new incentives to support renewable electricity generation that will apply in Scotland, or the redesign of existing schemes as they relate to Scotland. The new arrangement provides for a general duty to consult the Scottish Ministers on the design of incentive schemes for renewable electricity which will apply with respect to the existing schemes as they relate to Scotland, and any new schemes that will apply in Scotland.

The noble and learned Lord has tabled amendments that would extend the scope of Clause 58 to heat incentive schemes. We have exchanged correspondence and discussed it further. He has put on the record the response that I gave in my letter, so I will not repeat what he has already said. However, we believe that these amendments would duplicate existing regulations and are therefore unnecessary.

Amendment 67 seeks to amend Clause 58 to require the Secretary of State to consult the Scottish Parliament, in addition to consulting the Scottish Ministers, on renewable electricity incentive schemes, treating the Scottish Parliament as a conventional stakeholder rather than a legislative body. The amendment requires the Secretary of State for Energy and Climate Change to statutorily consult all 129 Members of the Scottish Parliament when making changes to renewable electricity incentive schemes. In our view, this would lead to overly complex and time-consuming consultations that would affect the smooth operation of renewables schemes. For example, were the Scottish Parliament in recess, this could delay the conclusion of a consultation, delaying the implementation of UK government policy. The Government consider the inclusion of consultation with the Scottish Ministers is appropriate. However, Members of the Scottish Parliament are already able to make their views known during public consultations.

Amendment 68B seeks to amend Clause 58 to require the Secretary of State for Energy and Climate Change to consult the Scottish Ministers on amendments to renewable electricity support schemes which are of a minor nature or are made only for technical or administrative reasons and to consult the Scottish Ministers about any levy in connection with a renewable electricity incentive scheme. The noble and learned Lord took on board the de minimis aspect of the first part of that. As drafted, Clause 58 excludes the requirement to consult the Scottish Ministers on minor, technical or administrative issues. In general, this exclusion will apply to changes unlikely to have a significant impact on generators or potential generators, such as making changes to references to technical documents, or making changes to an application procedure. This amendment would, therefore, lead to overly complex and time-consuming consultations that would affect the smooth operation of the schemes.

Amendment 69 also seeks to amend Clause 58 to require the Secretary of State for Energy and Climate Change to consult the Scottish Ministers about any levy in connection with a renewable electricity incentive scheme. I note what the noble and learned Lord said about that and I am very happy to discuss this further with him. Levies on particular companies—for example, electricity suppliers—are sometimes created to sit alongside renewable energy incentive schemes as a way of funding them. An example is the supplier obligation which requires electricity suppliers to pay for the contracts for difference scheme. Levies to fund renewable support schemes are considered to be a form of taxation and taxation is generally a reserved matter. Devolution of specific tax powers is dealt with elsewhere in the Smith commission agreement

[Lord Wallace of Tankerness]

I am grateful to the Minister for giving way. My first question is: where in the Smith agreement is provision made for such an exception? Secondly, even allowing for what he says— and I would want to read it and consult on whether it is a legitimate point—does the Minister not think this is drafted very widely? It says “any levy”, and could completely negate what is set out in subsection (1).

[Lord Dunlop]

As I have said, I am very happy to meet with the noble and learned Lord to discuss this specific point and I undertake to do so.

Similarly, Amendment 68A is also unnecessary as the phrase “a renewable electricity incentive scheme” would include a hydropower incentive scheme. I met and discussed this with the noble Lord, Lord Steel, last week. I put on record the importance of small-scale hydro installations. Some 500 of these have been built in Great Britain since the start of the feed-in tariff scheme in April 2010. These installations represent a doubling in the number of hydro sites across the country but a significantly smaller proportion in terms of capacity, as none of these new sites is above 2 megawatts in size. The majority of these are in Scotland, where hydro accounts for 16% of the capacity of all feed-in tariff installations, with solar on 44% and wind on 39%. Going forward, the tariffs should still offer sufficient incentive for well-sited installations, with an estimated return of 9.2%, based on costs supplied by the industry. It is therefore estimated that around 500 further installations could be installed in the next three and a quarter years, to April 2018-19.

Clause 58 ensures that Scottish Ministers will have a formal consultative role on contracts for difference, the renewables obligation and feed-in tariff schemes, all of which incentivise the deployment of hydropower. Therefore, we do not believe it necessary to make specific provision for any of these amendments within the Scotland Bill and I ask that this amendment not be moved.

Amendment 73 would duplicate existing arrangements. The Energy Act 2013 already gives Scottish Ministers a clear, formal consultative role in the development of the Ofgem strategy and policy statement, which gives them an opportunity to influence its content. Section 135 of the Act makes the Scottish Ministers “required consultees” on drafts of the statement and Section 134 also requires the Secretary of State to consult them on the action that she proposes to take following any review of the statement. The current strategy and policy statement arrangements give effect to the Smith agreement and therefore the amendment is unnecessary.

Amendment 73A seeks to introduce a new clause to transfer powers to the Scottish Ministers to award contracts under the contracts for difference scheme and to set the level of feed-in tariffs in respect of electricity generation from renewable sources in Scotland. Publishing such proposals, as well as the transfer of any such powers, goes well beyond the Smith commission recommendations, as the noble and learned Lord himself said, which relate to consulting on establishing and amending schemes that apply or relate to Scotland. In addition, both contracts for difference and feed-in tariffs are Great Britain-wide schemes and do not currently operate in a regionally specific way. This is linked to the fact that we have a GB-wide integrated energy system on which those schemes rely, which has been shown to work well over many years and from which all energy consumers benefit.

Scotland has more than proportionally benefited from financial support from all GB bill payers under current energy policies. Around 9% of the UK population is in Scotland, but we estimate that just over 20% of the support under the renewables obligation as a whole—around £760 million of the total—will go towards funding Scottish renewables projects. For feed-in tariffs, Scotland represents over 10% of the renewable electricity capacity installed to date, particularly in the wind and hydro sectors. In conclusion, I urge the noble and learned Lord not to move this amendment.

[Lord Wallace of Tankerness]

My Lords, I am very grateful to the Minister for his reply and I certainly appreciate his offer to discuss this. I very much hope it will be a productive discussion.

There are things here which merit further discussion. In particular, Scottish Renewables does not feel that the Bill has met the Smith commission proposal on consultation on Ofgem’s energy strategy and policy statement. Legislation might not be necessary, and I would be interested to pursue that with the Minister. Obviously, the Smith commission included the Deputy First Minister, who had overall ministerial responsibility for these matters during part of his time in office, so one assumes he felt that there was a need to go further than the Energy Act 2013.

I cannot say that I am surprised by the Minister’s response to the new clause proposed by Amendment 73A, but it is unfortunate because this is an opportunity to build on the Smith commission in the light of developments that have taken place since. I will take one point of issue with the Minister. He talked about the importance of the integrated UK market and I entirely agree—indeed, I made that point myself. He seemed to indicate that there was no room within that for regional variations. Perhaps he should get those who prepared his brief to ask what has been going on for the past seven, eight or nine years. The renewables obligations have been dealt with on a separate Scottish basis under executive devolution, and this has worked very well. Indeed, my noble friend Lord Stephen and I, and our successors in office, have been able to do some innovative and imaginative things with the ROCs, so the system would not fall apart if there was regional variation. I am disappointed, and perhaps on reflection, the Minister may think there is still a case for that.

I thank the Minister for his offer of a meeting, which I will certainly take up. I am appreciative of that. I beg leave to withdraw the amendment.

Amendment 65 withdrawn.