Draft Scotland Act 1998 (Modifications of Schedule 4) Order 2000
We move to item 3 on the agenda, which is the draft Scotland Act 1998 (Modifications of Schedule 4) Order 2000. I invite the minister to speak to the motion that has been lodged in his name, and I remind him to move the motion formally at the end of his remarks.
Thank you for the opportunity to be at a meeting with such a comprehensive agenda; I hope that we have a fruitful morning.
Before I go into any of its detail, let me put the order in context. Schedule 4 of the Scotland Act 1998 forms part of the definition of the legislative competence of the Scottish Parliament. It places restrictions on the extent to which certain legislation—including the Scotland Act 1998 itself—can be modified by the Scottish Parliament.
The devolution settlement was always intended to be flexible. Therefore, section 30 of the Scotland Act 1998 provides a mechanism whereby schedule 4 can be modified by an order in council, subject to the approval of both the Westminster and the Scottish Parliaments. That allows for the boundary of legislative competence to be adjusted or clarified.
On the content of this order, I will deal first with the area that is of interest to the Finance Committee. Members will already have seen the note that was prepared by the Executive to explain the effect of the order in greater detail. Paragraph 4 of schedule 4 has the effect that the Scottish Parliament cannot amend the Scotland Act 1998. That is hardly a great surprise. However, paragraph 4 recognises that there are some parts or aspects of that act that it makes sense to allow the Scottish Parliament to amend, so restrictions are relaxed, for example to allow the Scottish Parliament to modify some references to the Scottish consolidated fund.
At present, and subject to certain exceptions, the Parliament can legislate to amend provisions in the act that charge sums on the fund or require sums to be paid from or to the fund. However, the Scottish Parliament cannot legislate to make amendments to the provisions of the act that provide for expenditure to be
"payable out of the Scottish Consolidated Fund".
There are two provisions in the 1998 act that provide for sums to be payable out of the SCF and that the Scottish Parliament cannot, therefore, amend. The first is section 21(6), which provides for payment of any expenses of the Scottish Parliamentary Corporate Body from the fund. The second is section 51(5), which, in effect, provides for payment of the salaries and allowances of the Scottish Administration civil servants out of the fund. The upshot of that is that under the legislation as it currently stands, Parliament cannot legislate to put in place alternative arrangements, such as having some part of the Administration staff or the affairs of the SPCB funded directly from the proceeds of trading.
It was never intended that those sections of the Scotland Act 1998 should be put beyond the reach of the Parliament. The amendment that would be made by the order would allow Parliament to amend those sections if it wished. This is purely a tidying exercise. There are no plans to use the new power, but the order will allow Parliament greater flexibility in future.
I welcome Scott Barrie from the Justice and Home Affairs Committee. That committee looked at the pensions part of the order last week and, like me, that committee wanted clarification on the order. When the Scotland Act 1998 was being drafted, the concept of pension-sharing had not developed sufficiently to enable those who were involved in the preparation of the act to deal with the matter fully. The position is now settled following the passing of the Welfare Reform and Pensions Act 1999 but, as a consequence, it has become necessary to amend schedule 4 of the Scotland Act 1998 to bring it into line. General pensions law and, in particular, the law that deals with the sharing of rights relating to pensions arrangements on divorce are reserved matters. Nothing in the order changes the extent of the reservation that is set out in schedule 5 of the Scotland Act 1998.
This order is concerned with the complex rules in schedule 4 that determine the extent to which the Scottish Parliament can amend rules of Scots private law that relate to reserved matters. Paragraph 2(1) of schedule 4 states that an act of the Scottish Parliament cannot amend the "law on reserved matters", which includes the aspects of pensions law that are reserved under schedule 5.
Paragraph 2(3) relaxes that restriction for rules of Scots private law. Together with section 29(4), it allows the Parliament to modify Scots private law as it applies to reserved matters, as long as the purpose of such provision is to make the law in question apply consistently to reserved and non-reserved areas. However, certain rules of Scots private law are protected from amendment if they are
"special to a reserved matter"
or are listed in paragraph 2(3). The order extends the list of protected provisions of Scots private law to include pensions obligations that were introduced by the Welfare Reform and Pensions Act 1999. Following the chain of exceptions to exceptions, the inclusion of the new entries to schedule 4 ensures that no modification to those rules of Scots private law can be made by the Scottish Parliament.
In practical terms, we do not expect the amendments made by this order to have any great effect. They do not change pensions law or Scots private law, nor is it likely that the Scottish Parliament would wish to legislate in that area as it is the preserve of the United Kingdom Parliament. Schedule 4 was intended to cover pension-sharing on divorce, and the order ensures simply that its terms fit with the Welfare Reform and Pensions Act 1999 now that the concept has firmed up.
In summary, the order is more a matter of good housekeeping than great constitutional policy.
I move motion S1M-988,
That the Finance Committee, in consideration of the draft Scotland Act 1998 (Modifications of Schedule 4) Order 2000, recommends that the Order be approved.
Thank you, minister.
As Jack McConnell said, Scott Barrie is here as a representative of the Justice and Home Affairs Committee, which considered the matter last week. I will give Scott the opportunity to question the minister.
Thank you, convener.
Jack McConnell indicated why I am here today. Members of the Justice and Home Affairs Committee found the order difficult to understand last week and as we did not have anyone from the Executive or with a finance background to explain it to us, we were totally in the dark. We had papers that were supposed to help us, but the order confused all that committee's members.
The main concern that was expressed by committee members was that the order appeared to amend the Scotland Act 1998, but the background papers did not indicate why that had to be done. Several committee members expressed concern. The note that I received subsequently from the Executive—I do not know whether it has come to members of the Finance Committee—clarifies some of the issues that were raised. It explains that the order is about bringing the Scotland Act 1998 into line with the Welfare Reform and Pensions Act 1999, which is a reserved matter.
The only question that I have from the Justice and Home Affairs Committee is whether the order could have been brought forward and notified to the committee earlier or did we have to wait until the legislation was passed at Westminster before it could be discussed here? There seemed to be some confusion about time scales.
As I understand it, the matter was considered during the passage of the Scotland Act 1998, but because neither the UK-wide legislation nor the Government's thinking on it were finalised at that time, the Scotland Act 1998 could not be complete. It was always envisaged that shortly after the Scottish Parliament was created there would be an order that would tidy up the Scotland Act 1998, as the order does. This is the earliest opportunity that we have had to introduce such an order. The timing will tie in nicely with the timetable at Westminster. I understand that the commencement date for the Welfare Reform and Pensions Act 1999 is December this year. Therefore, if the order is in place, all the arrangements will be in place to implement the Welfare Reform and Pensions Act 1999 at the end of 2000.
I have read the background paper, which was issued to the Justice and Home Affairs Committee following last week's meeting, and given that and what I have heard today, I do not think that the Justice and Home Affairs Committee will have any further concerns about the order.
The Subordinate Legislation Committee has also examined the order and has reported no matters of concern.
The supplementary Executive note, FI/00/16/5, states that:
"The key difference in substantive law in Scotland is the concept of ‘matrimonial property'."
The note goes on to say that the division of a pension will apply only to the period of a marriage. Is there any difference between Scotland and England in that respect? If so, what is it?
Secondly, how will the pension-splitting arrangements apply to cohabitation, common-law marriages and relationships of that sort?
Was your second question whether there are any differences in relation to common-law marriages?
Yes. Will the pension-splitting arrangements also apply to common-law marriages?
I have studied the legislation in relation to the Scotland Act 1998 and the finances relating to that rather than pensions, so I hope that members do not mind if I check the position with my officials.
I understand that there is a difference in interpretation in England and Scotland in relation to the division of pension rights. I thought that the note explained that there was a different method of calculation in England. In Scotland, the concept of matrimonial property to be shared relates to the duration of the marriage; in the rest of the UK the method of valuation is the cash equivalent transfer value. Is that in the note?
There is a bit in it about that, but it does not relate to my question about the length of time to which the split would apply.
I say, on behalf of the minister, that that is not really a financial matter. It is a legitimate question to ask, Richard, but it is perhaps unreasonable to expect an answer immediately. Could we perhaps have a written response on that question?
I am sure that I can get an answer for Dr Simpson.
As the question is technical, perhaps Mr Parr will answer?
In Scotland, the division of a pension is up to the date of separation; in England it is the date of the divorce.
On Richard Simpson's point, the gap while Mr McConnell consulted his official was necessary because officials are not allowed to go on the record in relation to orders. This is like dealing with legislation; it is not an evidence session, but we got there in the end.
The fundamental point in relation to the order is that provisions in Scots law and in law in the rest of the UK are not changed as a result of it. The order merely ensures that there is consistency in the application of the Welfare Reform and Pensions Act 1999 in relation to pension-sharing, which was passed last year at Westminster and commences in December throughout the UK. The important point is that that is what this order affects—it does not affect other existing provisions in Scots law or in the law of the rest of the UK.
Can the minister tell us—
I hope so.
So do I.
Can the minister tell us, in the context of the Government's current legislative programme at Westminster, how many orders of this nature we might have to examine to synchronise the legislative competence of the Scottish Parliament with the Westminster Government's legislative programme?
I am not aware of any other orders and my officials are not aware of any others that are in the offing. I certainly have none on my desk for consideration.
Motion agreed to,
That the Finance Committee, in consideration of the draft Scotland Act 1998 (Modifications of Schedule 4) Order 2000, recommends that the Order be approved.