Head A: Financial and Economic Matters
Section A1: Fiscal, Economic and Monetary Policy
Purpose and Effect
This Section reserves fiscal, economic and monetary policy, with the exception of local taxes.
Details of Provisions
Reservation
The reserved matters include the issue and circulation of money, taxes and excise duties (and the bodies which administer them), government borrowing and lending (including the issue of Government Securities), the exchange rate, the Bank of England and control over United Kingdom public expenditure. This last reservation does not affect the Scottish Parliament’s ability to allocate resources, whether part of its assigned budget or raised through its tax-varying powers.
Exception
Local taxes to fund local authority expenditure are excepted from the reservation. Current examples of such taxes are the council tax and non-domestic rates.
Parliamentary Consideration
| Stage | Date | Column |
|---|---|---|
| CC | 30-Mar-98 | 939 |
| CC | 30-Mar-98 | 951 |
| CR | 19-May-98 | 812 |
| LC | 23-Jul-98 | 1040 |
| LR | 3-Nov-98 | 185 |
Executive Devolution
The following functions have been included in the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 1999 (S.I. 1999/1750).
The Taxes Management Act 1970 (c.9): (a) sections 2(3), 2(6) and 3(4); and | Section 2(3) - The function of the Secretary of State to appoint the General Commissioners for the divisions in Scotland and for determining their period of office. Section 2(6) - The function of the Secretary of State to create new divisions, abolish existing divisions or alter any divisions or their boundaries Section 3(4) - The function of the Secretary of State to dismiss clerks or assistant clerks of the General Commissioners |
(b) sections 4(1) and (4), 4A(1), 46A(1) and 56B(1). | Section 4(1) and (4) - The function of the Secretary of State of being consulted by the Lord Chancellor on appointment of Commissioners for the special purposes of the Income Tax Acts and on removal of such persons. Section 4A(1) - The function of the Secretary of State of being consulted by the Lord Chancellor on appointment of a person to be a deputy Special Commissioner. Section 46A - The function of the Secretary of State of consenting to regulations made by the Lord Chancellor concerning jurisdiction in tax appeals. Section 56B - The function of the Secretary of State of consenting to regulations made by the Lord Chancellor concerning practice and procedure in tax appeals. |
| The Income and Corporation Taxes Act 1988 (c.1), sections 79(4) and 79(8). | Section 79(4) - The function of the Secretary of State to approve a body as an “approved local enterprise agency” for the purposes of section 79. |
| The Income and Corporation Taxes Act 1988 (c.1), sections 79(4) and 79(8) (cont.). | Section 79(8) - The function of the Secretary of State to make his approval of a body conditional upon compliance with certain requirements. The function of the Secretary of State, if it appears to him that certain circumstances apply, by notice to withdraw his approval from the body concerned with effect from such date as he may specify in the notice. |
| The Finance (No.2) Act 1992 (c.48), section 75(1). | The function of the Secretary of State of consenting to regulations by the Lord Chancellor providing for Commissioners to hold office by a different name. |
(a) Schedule 12, paragraphs 2, 3(2), (4) and (5) and 9; and | Schedule 12, paragraph 2 - The function of the Secretary of State of being consulted by the Lord Chancellor on appointment of the President of VAT tribunals and also the terms and conditions of the appointment. Schedule 12, paragraph 3 - The function of the Secretary of State of being consulted by the Lord Chancellor on the retention of the President beyond normal retirement age, removal of the President from office and discharge of the President’s functions by a nominated person. Schedule 12, paragraph 9 - The function of the Secretary of State of being consulted by the Lord Chancellor on procedural rules for VAT tribunals. |
(b) Schedule 12, paragraph 7(8). | Schedule 12, paragraph 7(8) - The function of the Lord Chancellor to pay salary and fees to a chairman or other member of a VAT tribunal. |
| The Social Security Contributions (Transfer of Functions etc.) Act 1999 (c.2), section 13(1). | The function of the Secretary of State of concurring in regulations by the Board concerning appeals to the tax appeal Commissioners. |
Section A2: The Currency
Purpose and Effect
This Section reserves matters relating to the currency.
General
In addition to the general macroeconomic reservation in Section A1, which reserves the issue and circulation of money, this Section explicitly reserves coinage, legal tender and bank notes.
Parliamentary Consideration
| Stage | Date | Column |
|---|---|---|
| CC | 30-Mar-98 | 954 |
| LC | 23-Jul-98 | 1056 |
Details of Provisions
Reservation
The matters reserved are coinage, legal tender and bank notes. This includes the denominations of money in the currency and the coins or notes which constitute legal tender and what coins and bank notes may be issued.
Section A3: Financial Services
Purpose and Effect
This Section reserves financial services.
General
This reservation contributes to the preservation of common markets for financial services, and depositor, investor and policyholder protection, across the UK. Fixing the dates of bank holidays is excepted from the reservation.
Details of Provisions
Reservation
What is reserved are financial services, including investment business, banking and deposit-taking, collective investment schemes and insurance.
All matters relating to financial services are reserved, not just those dealt with in the Financial Services Act 1986. The reservation expressly includes:
investment business, e.g. managing investments or providing investment advice and the authorisation and regulation of those who undertake such activities, as in the 1986 Act;
banking and deposit-taking e.g. the authorisation and regulation of those carrying on banking or deposit-taking business, as in the Banking Act 1987;
collective investment schemes e.g. unit trusts and open-ended investment companies and their regulation and authorisation, as in the 1986 Act; and
insurance.
The expression “financial services” also includes financial services, other than those expressly mentioned, such as the services provided by building societies or friendly societies.
Exception
The subject-matter of section 1 of the Banking and Financial Dealings Act 1971 is excepted from the reservation.
Section 1 of the 1971 Act deals with the fixing of bank holidays. The Scottish Parliament is able to legislate to fix what are bank holidays in Scotland. A further exception in this regard is made from section 1.5.
Executive Devolution
The following functions have been included in the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) Order 1999 (S.I. 1999/1750).
| The Insurance Brokers (Registration) Act 1977 (c.46), section 20. | The function of the Secretary of State to make rules as to the functions of assessors appointed under section 20. |
| The Building Societies Act 1986 (c.53), section 47(2)(a). | The function of the Secretary of State of appointing a chairman of a tribunal to determine an appeal by a building society under section 46. |
| The Financial Services Act 1986 (c.60), section 96(2)(a). | The function of the Secretary of State of being consulted by the Lord Chancellor on the appointment of legally qualified members to the Financial Services Tribunal. |
(a) section 28(2)(a); and | Section 28(2)(a) - The function of the Secretary of State of being consulted by the Lord Chancellor as to the appointment of a chairman of a tribunal to consider an appeal under section 27. |
(b) section 30(4). | Section 30(4) - The function of the Secretary of State to make regulations in respect of the conduct of appeals under Part 1 of the Act where the appeal concerns a Scottish institution. |
(a) section 59(2)(a); and | Section 59(2)(a) - The function of the Secretary of State of being consulted by the Lord Chancellor on appointment of a chairman of a tribunal to hear an appeal brought by a Scottish society. |
(b) section 60(4). | Section 60(4) - The function of the Secretary of State to make regulations in respect of conduct of appeals under the Act brought by any society with a registered office in Scotland. |
Advice to The Queen
Special arrangements for giving advice to The Queen were described in a Prime Ministerial answer on 30 June 1999 (WA col 215) and an associated paper deposited in the House of Commons Library. The Secretary of State for Scotland’s role in providing advice to the Privy Council on Proclamations by Her Majesty in Council under section 1 of the Banking and Financial Dealings Act 1971 altering statutory bank holidays in Scotland etc. has passed to the First Minister.
Section A4: Financial Markets
Purpose and Effect
This Section reserves financial markets.
General
The reservation of financial markets ensures a common market across the UK in securities and other financial instruments, for investors and traders, including markets which operate for the purpose of raising capital and for dealing with financial instruments and currency, including foreign exchange.
Details of Provisions
Reservation
What is reserved are financial markets, such as investment exchanges or money markets.
The reserved matters are expressly stated to include:
the listing and public offers of securities and investments, such as the matters which have to be disclosed in the application for official or unofficial listing of securities by the Stock Exchange;
the transfer of securities e.g. on paper in the case of certificated securities or electronically in the case of uncertificated securities as in the CREST system; and
insider dealing. This reserves all matters relating to what constitutes insider dealing and its consequences.
Section A5: Money Laundering
Purpose and Effect
This Section reserves the regulation of financial and other businesses so as to require systems to be in place to prevent money laundering. It does not, however, reserve the criminal law as it relates to money laundering, competence in respect of which is, with certain exceptions, devolved as part of the general devolution of the criminal law.
Details of Provisions
The subject-matter of the Money Laundering Regulations 1993 (S.I. 1993/1933) is reserved. Those Regulations provide a scheme of rules to regulate certain financial businesses so as to prevent money laundering. The reservation is not however limited to financial businesses.
The Scottish Parliament is able to legislate on the criminal law generally, including the criminal law relating to money laundering. The only exception to this concerns statutory offences involving money laundering the proceeds of drug trafficking which is reserved by Section B1 (Misuse of Drugs).
