(~@p
....--=-...._ ....~
Mr Walford
Copy to
Mr Jamieson
Mr Ewing
Mr Ro,gers.
Mr Beaton, SCA .
Mr Mullin, Sols
Mr I Campbell
Ms Kearns
Mr Clarke
Mrs Wilson
I
WESTMINSTER
LEGI~LATION
ON
DEVOLVED
MATTERS:
LIMITEDI
LIABILITY PARTNERSHIPS
BILL ETC
)
1.
Following our discussion on Friday, I have redrafted the submission circulated by ~r
Parr on 8 June and have now also included a draft statement for the First Minister.
TheSe
I
drafts are attached.
I
I
I
2.
Mr Jamieson suggested in his minute of 10 June that we should seek the earli,r
introduction of the UK Bills, or postponement
of their second reading, or removal of t~e
devolved provisions :ITomthe Bills, rather than sacrifice :ITomthe outset the convention tha.t
Scottish Parliament consent is obtained after introduction but before second reading.
I hav;
some doubts as to how much attention we would get :ITomWhitehall colleagues in arguing fi r
any of these courses in relation to the 3 Bills currently being considered.
If we ask fi r
devolved provisions to be removed we run the risk that they might not be so easily reinstated
once the Bills are undergoing their various stages. It is my policy interest to ensure that thes~
Bills do apply to Scotland.
I
'::;3::
The convention which safeguards the rights of the Scottish Parliament
to approvt
, Westminster legislation on devolved matters is more for the Executive Secretariat than fot
me. It is unfortunate the first time the convention isp U.tto the testis in relation to Bills th~
are candidates for the new carry over procedures.
Normally Bills are introduced earlier in th
Parliamentary session so as to ensure a reasonable chance of Royal Assent before the nex
Queen's Speech. However these Bills are to be carried forward. The result is that they are al
likely to be introduced very shortly before the Scottish Parliament recess and maY,well get
their second readings in July. Therefore unless there is a window of opportunity to debat~
them between their publication and adjournment of the Scottish Parliament, they could weI1
get their second-readmg
before tne-SCOffiSIi-Paf1.iamenfCan
cOIisei:i.t--The-~wif1dow--o-t------_·
opportunity is very short, perhaps only the last week or few days of June.
The only wa~
round this would be to proceed on the basis of a memorandum,
as proposed by Mr parrj
which states the contents of the unpublished Bill or Bills. The problem with that is whethe~
the Scottish Ministers can publish a document describing a Bill which UK Ministers have not
yet published.
That seems to me to be questionable.
The draft PS minute reflects my latest
information on timings of publication.
I
I
4.
Because of these difficulties, I have suggested that we treat these Bills as special an~
not setting a precedent for the general operation of the convention.
If any of the Bills i~
introduced in sufficient time for the Scottish Parliament to approve it before it gets its second
reading good and well. The First Minister will table a motion recommending approval of thatl
Bill or those Bills.
The Financial Services and Markets Bill is the most likely to reach the
.
,
starting blocks in time but the Electronic Commerce Bill also has a chance.
The m~'st
doubtful one is now the Limited Liability Partnerships Bill which has not yet been agreed
y
the Opposition as a carry forward Bill and which is now unlikely to be introduced
il
towards the end of June. I suggest that the First Minister's motion could relate to one, two,
r
all three of the Bills and we do not need to decide until the timing of publication is clearer.
On this I would be grateful for advice from Mr Campbell who will know the deadline fuy
which the exact wording of the motion has to be agreed and the possible timing of the
business.
I
5.
I also suggest that the First Minister should be given a statement to make in movi1g
the motion.
This would make clear that the motion only covers Bills already introduced rt
Westminster and that there could be other Bills, which because of the accident of timing, may
have had their second reading before the Scottish Parliament can consider a similar motion ht
respect of them. The First Minister should make it clear that such circumstances are a fea~ e
1
of the particular timing and that the convention will generally be to seek approval betwe n
publication and substantive consideration by Westminster.
This is the thinking behind
Ie
recommendations ofthe PS minute and the new draft statement at Annex B.
I
6.
The flaw in all this is that the motion and statement will be very coy about Bills which
we can name and know are in the pipeline.
Indeed they could even be introduced
~t I
Westminster after the motion is taken but before the Scottish Parliament adjourns.
If this i~
thought to be unacceptably disingenuous then I would be in favour of reverting to Mr parr'f
suggestion of describing the unpublished Bills in a memorandum, but we will need to ensur~
that Whitehall colleagues are content.
7.
You asked to see a redraft of the submission before it goes forward.
However ~
understand that Mr Campbell is concerned it should be put forward as soon as possible.
I
would therefore be grateful for comments by noon on Monday 14 June.
MRS M H BRANNAN
... -- ...-11 June 1999
HD-CLLAD
Spur VI
Saughton House
Ext 42258
Fax 42195
e-mail:
[email address]
Arnice
5 (Step_h_an_i_e
.••
>
_
From:
Rogers DA (David)
Sent:
14 June 199910:14
To:
Amice S (Stephanie)
Subject:
FW: Legislation at Westminster about Devolved Matters: Limited Liability Partn~rhsips Bill,
Financial Services & Markets Bill, Elec tronic Communications
Bill
Follow Up Flag:
Follow up
Flag Status:
Flagged
From:
Walford IN (Ian)
Sent:
Monday, June 14, 1999 10:14:07 AM
To:
Rogers DA (David)
Cc:
Kelly 00 (Owen) .
Subject:
FW: Legislation at Westminster about Devolved Matters: Limited Liability Partnerhsips Bill, Financial Services &
'\
Markets Bill, Elec tronic Communications Bill
.•• to forwarded by a Rule
David (copy to Owen)
Micheline's minute follows discussion with myself and Ian C on Friday.
[----Ori~al
Message-----
16 pages nom Micheline Brannan - Urgent
First Minister - top copy.
Margaret Barrington
X 42844
~
/IfIIIJO0229.doc
1
From: Mrs M H Brannan
I
HD Civil Law & Legal Aid Divisioin
14 June 1999
!
First Minister
I
Copy to:
Deputy First Minister
Scottish Ministers
PS/Perm Sec
PS/Departments
Director, SCA
Solicitor
Mr Gordon, OSSS
Mr Jamieson, Sols
Mr Walford, ES
Mr Ewing, ES
Director, InD
Mr Rogers, ES
Mr Campbell, ES
Mr Beaton, SCA
Parliamentary Clerk (Scottish Parliament)
Mr Rafferty
Mr Whitton
Mr Fitzpatrick
LEGISLATION AT WESTMINSTER
ABOUT
DEVOLVED MATTERS:
LIMITED LIABILITY PARTNERSHIPS BILL
FINANCIAL SERVICES & MARKETS BILL
ELECTRONIC COMMUNICATIONS
BILL
Purpose
1.
To recommend that:-
1.1
You should table a motion (as at Annex A) that the Scottish Parliament note&
with approval the proposal
that Westminster
should enact one or more of thd
. following Bi~ls:
1.1.1
the Limited Liability Partnerships Bill,
--I. I .2 --the Finahciaf SerVlces-and Matkets Bill; and
1.1.3
the Electronic Communications Bill,
after these Bills have been introduced but if possible before they receive secondl
reading.
-----
1.2
You should make a statement (as at Annex B) to introduce the motion.
I
1.3
A memorandum (as at Annex C) should be put to the Parliamentary
Bureau I
explaining the content of the Bills and suggesting that it is not necessary to timetable:
debates.
mab00229.doc
1
1.4
You should write to Scottish party leaders (as at Annex D) explaining t~e
content ofthe Bills and suggesting that it is not necessary to timetable debates.
I
•
I
Timing
.
I
2.
Urgent.
Should you not wish to follow the procedures suggested in this minute lit
may be necessary to ask Whitehall to change the timetable or content of the Bills.
TIle
Secretary of State would need to be involved during the transitional period. A response by ~6
June is therefore requested..
I
Background
3.
Following Mr Walford's minute of 3 June you mad~ a statement to the Scottisb
Parliament on 9 June explaining the convention which is expected to be established th~t
Westminster will not normally legislat.eabout devolved matters without the consent of t~
Scottish Parliament. You made clear that the Scottish Parliament will have an opportunity t
debate the Food Standards Bill (although it will have second reading before this is possible.
You also said that there will be several other Bills introduced this session which, thougp.
essentially about reserved matters, will include provision about devolved matters.
I
4.
The statement also notified the Scottish Parliament of those Westminster BillS
expected to be enacted this session which were introduced before the establishment of th~
Scottish Parliament and which may still be before Parliament on D-day.
I
5.
The UK. Government intends to introduce Bills at Westminster later this month 0*
electronic commerce and on the regulation of financial services and markets.
The VI{
Government is now also planning to introduce a Bill to create a new form of busines$
association (Limited Liability Partnerships). These Bills, while primarily concerned witlJ.
reserved matters, would contain provisions on devolved matters and in the case of financi~t
services and markets would marginally affect the legislative competence of the Scottisli
Parliament in the field of Scots private law.
I
I
6.
The draft memorandum at Annex C ~ummarises each of the 3 Bills, outlines th9
purpose of the Bills and highlights the provisions on which the Scottish Parliament's consen~
is required.
,
I
The desired convention
I
I
I
7...
Mr Wartord's minute of 3 Jurie proposed that a Westininster Bill relating to devolvedI
matters in Scotland would normally be promoted by the UK.Government only when UK.andII
Scottish Ministers agree that a policy should be given effect by a UK or GB-wide Act. I
Scottish Ministers would inform the Scottish Parliament of that decision. The announcement:
J 11/'1,
could take the form of an answer to an SPQ or a statement introducing a debatable motion.: )
..
The best timing for such an announcement would be following introduction at Westminster.:
:-li~\.{,
but before second reading (a window of normally not less than 2 weeks). This would mean I
f ~LL
that the Scottish Parliament had the opportunity to consent to the Bill before it received I
j.,~-.{
approval in principle from the House of Commons or Lords.
I
:J"'-i
Timing problem
mab00229.doc
2
I
I
8.
There are difficulties, however, about the timing of the 3 Bills mentioned
ab~ve,
because the Scottish Parliament will be going into recess on 2 July leaving very little timel (if
any) after the planned introduction ofthese Bills for a debate before their second reading.
I
9.
There is no definite date for the introduction of the Limited Liability Partnerships Bill
but it is very unlikely to be before the last week of June.
The Electronic Communicati~ns
Bill cannot be introduced before 23 June.
The Financial Services and Markets Bill is ~he
most advanced and could be introduced on 17 June.
There is a good possibility of putt~g
down a motion for the Scottish Parliament to approve the Financial Services and Markets Bill
•
I
after it is published and before the Parliament goes into recess, but time is very short for
doing so for either of the other 2 Bills.
I
I
I
The options
10.
There are a number of options. You could
)
10.1
Put down a single motion' as soon as the Financial
Services and Markets
Bill is introduced,
and provide a memorandum
describing
the proposed
contelfs
of that Bill and the proposals
in the other 2 Bills even although
they have nrt
been published.
We do not think this would be desirable.
The Scottish Parliament
should not be asked to approve the contents of legislation which it has not had t4e
chance to see as the eventual contents might differ from those described
in arty
memorandum.
introduced
by, say, 23 June.
This could be timetabled to be taken on 24 June.
s I
10.2
Put down a motion relating
only to the Bill or Bills which
have bee~
would allow the Scottish Parliament to see the legislation in draft although it woul
:
not have time to consider it in any detail. In speaking to the motion, you could m
e
7 ')
it clear that any further Bills containing devolved provisions which are introduced an
'
have their Westminster second reading before the Westminster recess will be regarde
1
as an exception to the normal procedure, caused by the timing of the 2 recesses.
Yoh;
could undertake that the Scottish Parliament will have the opportunity to debate an~(
formally approve these Bills after it returns.
This seems to us to be a possible way\
forward.
' .
10.3
I Ask
the Secretary
of State to intervene
with Whitehall
colleagues seeking
that they either bring introduction
of Bills forward,
or delay second reading unti)
after the Scottish Parliament
has passed the necessary motion approving
the BiIIl
I
We do not recommend this because we do not think it is feasible to bring forwarq
introduction of Bills which may not yet have been approved by the relevant UFq.
Cabinet Sub-Committee (LEG), as none of the 3 have been.
Nor do we think it is
practicable to ask Whitehall to delay second reading of any of the Bills which could
receive this at Westminster in July. This would seem an excessive request that might
prompt Whitehall colleagu~s to remove the devolved provisions, rather than hold u~
I
progress.
I
I
I
10.4
Ask the Secretary of State to intervene with Whitehall
colleagues seekin~
that they remove the devolved provisions from any Bills not yet approved
by th~
Scottish Parliament
by its recess, if they are to have second reading in July.
Thisl
would remove the risk of undermining
the convention which we are seeking tOI
mab00229.doc
3
•
I
•
establish that Scottish Parliament approval is given after introduction but before ~y
t
of the substantive stages.
This would be a purist approach.
However White
ll
colleagues
might take it amiss that we were seeking at a late stage to rem ve
provisions dealing with devolved matters that have already been drafted.
They mi;
t
no~ be enthusiastic about the Scots seeking to reinstate these provisions by way I of
Government amendment during the passage of the Bill. This would have to be ddne
through the intervention of the Secretary of State and would be cumbersome.
I
Consideration
I
11.
As indicated, we think that the option in paragraph 10.2 is the best available.
T~s
would mean obtaining Scottish Parliament approval only to those Bills which have befn
introduce5f in sufficient time to put down a motion before the Scottish Parliament recess.
Other Bills would have to be left until the Scottish Parliament resumes, albeit that they m~y
have had second reading at Westminster.
This can be presented in your statement to me
)
Scottish Parliament
as an exception to the normal convention, which is only being made
because of the nearness to the recess.
It would in the past have been exceptional also fbr
Bills at Westminster to be introduced so near to the summer.
Before the new carry forw~d
arrangements were introduced,
Bills had to be introduced much earlier in the session to ha~e
a chance of obtaining Royal Assent. .However it is likely. to become more common in futuIje
years for Bills to be introduced to be carried forward.
The point may as well be made not
that Scottish Parliament approval may have to be held over in such circumstances, but th4t
this is exceptional because of timing considerations.
For the majority of the year when therF
are no timing problems, the convention that approval is obtained before second reading
should be sustained.
If this is made clear to Whitehall, they are less likely to regard a
concession in the case of any of these Bills as undermining the general convention.
'
Conclusion
12.
I therefore seek your approval to
12.1
the draft motion attached at Annex A,
I
'j
12.2
the draft statement at Annex B,
12.3
the draft memorandum attached at Annex C, and
12.4
the draft letter at Annex D.
13.
I also recommend that
13.1
the motion should be tabled for consideration on [ ] June;
13.2
the motion and statement should be the subject of a news release;
13.3
the Secretary of State should be informed of these proposals;
14.
If you are content to proceed on this basis, I will provide final versions of the letter at I
Annex D as soon as the timing of introduction ofthe Bills is known.
'
mab00229.doc
4
MRS M H BRANNAN
HD Civil Law & Legal Aid Pivisidn
Spur VI
Saughton House
Ext 42258
Fax 42195
14 June 1999
)
\
./
mab00229.doc
5
ANNEXI A
I
DRAFT
MOTION
TO
BE
TABLED
FOR
CONSIDERATION
IN
THE
SCOTTIqH
PARLIAMENT ON [ ] JUNE 1999
[81M -##)
First Minister:
That the Parliament notes with approval the proposal t~at
the Westminster Parliament should enact [the Limited Liability Partnerships Bill], [the
Electronic Communications Bill] [and the Financial Services and Markets Bill].
I
)
)
mab00229.doc
6
ANNEXI B
I
DRAFT STATEMENT TO BE MADE IN INTRODUCING MOTION
As I indicated on 9 June, it is possible that Bills rpay introduced
in th~ Westminster
Parliament which are principally concerned with reserved matters, but which contain a sm~ll
number of provisions with a bearing on devolved matters necessary for the consistency aild
coherence ofthe UK Government's policy.
'
It has been agreed as part of the Devolution
settlement that the UK Parliament will nbt
legislate on devolved areas unless the approval of the Scottish Parliament has been given.
This is an important principle.
I
,
For this reason,
the First Minister
will normally
present
a motion
to the Parliame~t
recommending
that the Parliament notes with approval the proposal that the Westminster
)
Parliament should legislate on the subject matter in question.
This will normally be done ~s
I
soon as draft legislation is available but before either House of the UK Parliament h<!S
considered the principle of the legislation.
In a minority of cases, however, the timing will not permit this sequence of events.
F3r
example should the UK Government publish a Bill touching on devolved matters very c10sf
to our recess, it is possible that the accident of timing will not allow this Parliament t~
approve the legislation before it has had its second reading
at Westminster.
In suc~
circumstances, I give an assurance that this Parliament will normally have the opportunity to
approve the Bill at the earliest opportunity during its passage through Westminster.
The motion I have tabled relates to [one/two/three] Bills which have been introduced.
These
are [list relevant Bills]
A memorandum has been place in the Library which describes the provisions of these Bill~
and indicates their impact on devolved matters.
[Briefly, the main purpose of the Bills relate~
to reserved matters: the creation of new business associations, the regulation of financial
.J
I
services and the facilitation of electronic commerce.
The regimes created by the Bills would
extend throughout the UK.
It is therefore appropriate that the legislation
should appl~
throughout the UK. However, in order to apply in Scotland, it is necessary for the Bills tol
c~ntain legislative provisions that would be within the competence of this Parliament afte~
1 July.
Two of the Bills (Limited Liability Partnerships Bill and Electronic Commerce Bill) would I
create the new regime by providing regulation-making
powers that in Scotland would bel
I
exercised by Scottish Ministers.
It would also be for Scottish Ministers
to make the;
commencement order for the devolved provisions.
The third Bill (Financial Services & Markets Bill) relates to reserved matters.
It would II
however apply the new regulatory regime for financial services to sole traders engaged in I
providing financial services.
This would create new special rules of Scots private law in I
relation to personal bankruptcy (which is devolved) that would become part of the law on:
reserved matters. The new rules would be outwith the legislative competence of the Scottish I
Parliament.]
modify these paragraphs
when exact Bills known.
mab00229.doc
7
[There may be other Bills introduced shortly at Westminster which similarly provide fur
reserved matters with consequential provisions on devolved matters. Any such Bills will ~e
brought to this Parliament for approval at the earliest opportunity on our return after t]j).e
recess.]
I
mab00229.doc
8
ANNE~ B
DRAFT
PAPER
TO
BE· MADE
AVAILABLE
IN
THE
SCOTTISH
PARLIAMENT
DOCUMENT SUPPLY CENTRE
I
I
LEGISLATION
AT
WESTMINSTER
ABOUT
MATTERS
WITIDN
TIJE
LEGISLATIVE
COMPETENCE
OF THE SCOTTISH
PARLIAMENT:
I
I
LIMITED
LIABILITY
PARTNERSIDPS
BILL
FINANCIAL
SERVICES
& MARKETS
BILL
ELECTRONIC
COMMUNICATIONS
BILL
This memorandum follows on rrom the statement to be made by the First Minister on 9 Juhe
I
1999 about legislation of the United Kingdom. Parliament
which makes provision
abo~t
matters which rrom 1 July 1999 will be within the legislative competence
of the Scottish
Parliament.
The appendices
to this memorandum
describe Bills recently introduced
lat
.)
Westminster which make such provision.
[Copies of the Bills are available in the Scotti_fh
Parliament Library? Perry Clarke to liaise with Ian Stage about getting copies of the Bills f\:>r
the Scottish Parliament Library]
The UK Government has introduced these Bills because the main purposes of the Bills relate
to reserved matters: the creation of new business associations,
the regulation of financikl
services and the facilitation of electronic commerce.
The regimes created by the Bills would
extend throughout the UK.
It is therefore appropriate
that the legislation
should app]y
throughout the UK~ However, in order to apply in Scotland, it is necessary for the Bills to
contain legislative provisions that would be within the competence of the Scottish Parliam~t
after 1July.
Two of the Bills (Electronic
Communications
and Financial
Services ~
Markets Bills) were specifically mentioned in the Queen's speech on 24 November 1998 for
the Westminster Parliament's
1998/99 session.
The third was included under the genedlI
provision in the speech: "Other measures will be laid before you".
Two of the Bills (Limited Liability Partnerships Bill and Electronic Commerce Bill) woultl
create the new regime by providing regulation-making
powers that in Scotland would b~
!
exercised by Scottish Ministers.
It would also be for Scottish
Ministers
to make th
commencement order for the devolved provisions.
In addition, the Scottish Parliament woul
be able to amend or repeal the devolved provisions.
AB such, if it so wished, the Scottis,
Parliament could enact Scottish legislation to achieve the same effect as that provided in th~
two Bills.
The approach
of a Westminster
Bill is being taken as an administrativ~
convenience
and also to emphasise
that the regimes
that would
follow would
applr
throughout the UK ..
The third Bill (Financial Services & Markets Bill) relates to reserved matters, but - since it
would apply the new regulatory regime for [mancial services to sole traders engaged TIt
providing financial services - would create new special rules of Scots private law in relation
to personal bankruptcy (which is devolved) that would become part of the law on reserve1
matters.
The new rules would be .outwith the legislative
competence
of the Scottis4
Parliament.
It would be beyond the legislative competence of the Scottish Parliament
tq
create a regime to regulate the financial services sector, or even to create the new specia~
rules of Scottish private law. Consequently, the only possible way of providing a commori
UK wide regulatory regime would be for the Westminster Parliament to legislate in the wa~
proposed.
"
I
mab00229.doc
9
The effect ofthe three Bills would be to establish a better environment for business across the
United Kingdom through electronic comm~rce, a new flexible fonn of partnership
and I a
streamlined and effective fonn of regulation for the financial services. If the provisions were
not to be enacted in the Westminster Bills, the effect would be to deny business in ScotlmiId
th~ opportunity of electronic commerce and limited liability partnerships until such time as
the Scottish Parliament could legislate.
As noted already, the Scottish Parliament would nrt
have legislative competence to establish rules on financial service regulation, so this wou~d
be lost to Scotland.
The Scottish Parliament's approval is sought for all three Bills, in line with the convention
referred to by the First Minister on 9 June.
J
mab00229.doc
10
APPENDIX I 1
I
LIMITED LIABILITY PARTNERSIDPS BILL
Description of Bill
The DTI proposes to create a new form of corporate business association to be known as I a
"limited liability partnership"
(LLP).
The Bill to give effect to this will apply to Gre~t
Britain. An Order will apply corresponding provisions to Northern Ireland.
The main purpose of the Bill is the creation of a new form of business association.
Th~t
would be a reserved matter under the terms of Head C, Section C 1 of schedule 5 to tije
Scotland Act 1998.
However, Section C2 (Insolvency) provides an exception
from t1\.e
reservation in relation to the process of winding up business associations.
)
The proposals would limit the members' exposure to the extent of their stake in the busines~.
Members would remain personally liable for their own acts.
So, an LLP would be a legaI
entity distinct from its members with the capacity of a legal person including the capacity to
enter into contracts etc. Business would normally be transacted with the firm as princip~,
not the members.
As well as providing for the formation ofLLPs, the Bill sets out:-
•
registration requirements
• the relationship between partners;
• winding up and insolvency
• taxation provisions;
and
• application of company law
Devolved provisions
There are only minimal provisions required specifically for Scotland. These:-
)
• allow for registration ofLLPs with the registrar of companies in Scotland;
• provide for a regulation making function in relation to the winding up of LL~s.
The Bill contains provisions in relation to devolved law with regard to the process of th~
winding up of a Scottish LLP. As noted in the opening section of this memorandum,
thb
regulation making powers would be carried out by Scottish Ministers
in relation to th~
winding up of LLPs in Scotland. It would also be for Scottish Ministers to make the order tp
commence the devolved provisions in the Bill. This is given effect by a clause deeming th~
Bill for the purposes of the Scotland Act 1998 to be a pre-commencement
enactment withih
the meaning of tha.t Act.·
,
The Scottish Parliament could amend or repeal the devolved provisions.
mab00229.doc
11
APPENDIX12
ELECTRONIC COMMUNICATIONS
BILL
Description· of Bill
Electronic commerce refers to a new way of marketing goods and services, using electron1c
means.
This involves
buying
and selling goods
and services,
money
transfers,
aIfd
advertising,
and
also
includes
transactions
with
Government.
The
Electronic
Communications Bill would include powers to create a statutory voluntary approvals reginte
for bodies offering electronic signature and confidentiality
services. These services enabte
people to check who has signed an electronic message, that it has not been tampered wi*,
and that it has been kept confidential.
However, the statutory scheme will only be broug1j1t
into force if industry fail to deliver a suitable self-regulatory scheme.
)
The Bill would also ensure, as far as possible, that the law is technology neutral in its
application. It will clarify the position regarding legal recognition of electronic signatures anf:I.
begin the process of updating the statute book so that electronic means can be used as well ~s
the traditional pen and paper.
Provision for which Scottish Parliament consent is required
The Bill is largely concerned with reserved matters, but includes devolved provisions
ih
relation to the Scots law of contract and evidence [and concerning jurisdiction and tribunals j.
[DN: SCA to note. The Bill is still being drafted but the current draft has provisions relating
to jurisdiction
and tribunals.]
The provisions would allow electronic documents to be as
validly formed as their paper counterparts and would allow for the recognition in Scots law olr
electronic
signatures.
This would be done by giving Ministers
powers
(by statutorr
instrument) to modify existing legislation for the purpose of authorising,
facilitating
or
encouraging the use of electronic communications or electronic storage.
As noted in the opening section of this memorandum, Scottish Ministers would carry out th~
regulation making powers.
It would also be for Scottish Ministers to make the order tq
commence the devolved provisions in the Bill. This is given effect by a clause deeming the
Bill for the purposes of the Scotland Act 1998 to be a pre-commencement
enactment within
the meaning ofthat Act.
.
,
The Scottish Parliament could amend or repeal the devolved provisions.
mab00229.doc
12
APPENDIXi 3
FINANCIAL
SERVICES
& MARKETS
BILL
Description
of Bill
This Bill would replace the existing regulatory
arrangements
contained in the Financial
Services Act 1986, the Banking Act 1987, the Insurance Companies Act 1982, the Buildirlg
Soc~eties Act 1986 and the Friendly Societies Act 1992 with a single regulatory ftamewo~k
for the UK. financial services industry and a single statutory regulator, the Financial Servic@s
Authority (FSA). The Bill was the subject of consultation in July 1998 and a progress repott
was published in March 1999 by HM Treasury. The proposals were generally well received.'
Provision for which Scottish Parliament
consent is required
)
Only one part of the Bill has direct Scottish implications.
This sets out the role of the FSA
X·:
insolvency proceedings.
The majority of the proposals are related to giving the FSA powe
in relation to the winding up of financial institutions, and insurance companies.
As such, the
are related entirely to reserved law.
However, there is one issue in relation to Scotland !-
bankruptcy of sole traders - that relates to devolved law.
At present the FSA is able to petition
for the winding up of companies
(includin~
partnerships) which are authorised to carry out financial services business.
However, it does
not have an equivalent power to petition for the bankruptcy of a sole trader carrying out •.
financial services business.
In such cases it is difficult or impossible to distinguish betwee1
an individual's
personal and business affairs.
Consequently, it is, proposed that the FS~
should be given a power to petition for bankruptcy of an individual.
This area of law is contained in the Bankruptcy (Scotland) Act 1985 (the 1985 Act).
The
proposals would introduce new grounds for petitioning for the sequestration
of a person' ~
estate, which would be available to the FSA - who would not normally be a creditor of tha~
estate. Under the 1985 Act, only ~he debtor (either with the consent of creditors, or follo~in~
demands
for payment
by credItors),
a trustee under a trust deed (under
exceptlOna~
circumstances),
or a "qualified creditor or qualified creditors" to whom at least £1500 is
owed (individually or collectively) may petition for the sequestration of the debtor's estate.'
The major ground for petitioning is that the petitioner can show that the debtor is 'unwilling o~ I
unable to pay an established debt. Bankruptcy law in Scotland is essentially a creditor-drivenl '
process.
Therefore, the Bill would create new special rules of Scots private law in relation to personal!
bankruptcy that would become part of the law on reserved matters.
As such, the new rules;
would be outwith the legislative competence of the Scottish Parliament.
So, the Scottish,
--Parliament
could neither amend nor repeal the provisions.
However, it should be noted that, i
while bankruptcy law would be within the legislative competence of the Scottish Parliament,:
the purpose of the Bill relates to the supervision and regulation of financial services, which is,
a reserved matter.
mab00229.doc
13
ANNE~
C
DRAFT LETTER FOR THE FIRST MINISTER TO SEND TO SCOTTISH PARTY LEADER's
You will recall that on 9 June I made a statement to the Scottish Parliament
about future
·1
legislation
by the Westminster
Patliament
on matters
that are within
the legislat~ve
competence of the Scottish Parliament.
I referred to the convention that the Westminster
Parliament would not normally legislate with regard to devolved matters in Scotland withqut
the consent of the Scottish Parliament.
.
In my statement I mentioned that several other Bills may be introduced at Westminster t~is
session which make provision essentially about reserved matters but which will have imp1ct
upon devolved areas.
Consequently,
I plan to seek the Scottish Parliament's
consent Ito
[one/ltwo/three] Bills that the UK Government has introduced and that conltain provisions t11alt
relate to devolved matters.
I shouid first stress thalt the purpose of the Bill[ s] is related to
)
reserved matters and that the provisions on devolved law are required simply to ensure a le'1el
playing field of regulation across the United Kingdom.
The attached memorandum describes each of the Bills, including the provisions that relate to
devolved matters.
It is my intention to place the memorandum in the Scottish Parliame~t
Library.
It is also my intention to table a motion that the Scottish Parliament
notes wi~
approval the proposal that Westminster should enact [the Bill[s] referred to]. The motion will
be taken [ ] June.
The convention that we .are seeking to establi~h i~ that UK Bills which pertain .essentially t
reserved matters but which have a consequentIallIDpact
on devolved matters WIll be referrep.
to the Parliament for approval after their publication but before either House of Parliamerlt
1
gives them substantive
consideration.
The extension
of [these Bills]
to Scotland
js
uncontroversial. I would hope that you would support the motion and agree that it would b~
unnecessary to devote debating time.
There may be other UK Bills which make consequential provision for devolved matters an~
)
which are introduced after we have adjourned for our recess.
In such cases it may not b~
practicable
to bring them to our Parliament before they have received
any substantiv~
consideration because of the timing.
However you have my assurance that any such Bill~
will be brought before our Parliame,nt at the earliest opportunity on our reconvening after th~
recess.
DONALD DEWAR
mab00229.doc
14
Document Outline
