Throughout the summer and autumn of 1321, Edward was in hot water with the barons of the Welsh border. At the July parliament at Westminster, he was compelled to banish the Despensers, and to send home the turbulent lords with pardon. These troubles prevented him from sending the promised envoys to 'enlighten the consciences' of the Pope and his Cardinals as to the wickedness of the Scots. On August 25, however, he wrote the usual denunciatory generalities, and yet again impressed on his Holiness the necessity of dealing severely with Bruce and his adherents. The summons of Bruce and his four Bishops had meanwhile been postponed to September 1; but even then they did not compear. Edward's envoys, at last despatched on December 8, were still in very good time. Having taken Leeds Castle in Kent and driven back the marauding Marchers to the Welsh border, he informed the Pope that his domestic troubles were settling down, and, in view of an expedition on the expiry of the Scots truce at Christmas, he appealed for a subsidy from Rome. But already Lancaster was stretching one hand to Bruce and the other to the malcontents of the Welsh March.

The Marchers rose, but Edward proved himself the stronger, and by the third week of January received the submission of the Mortimers. On February 8, he tried conciliation with Lancaster, and also authorised Harcla to treat with Bruce for 'some sort of final peace.' Lancaster, however, received the Welsh insurgents, and harassed Edward's advance, but was compelled to fall back on his castle of Pontefract.

Lancaster's negotiations with the Scots had begun as early as December. His emissary, Richard de Topcliffe, an ecclesiastic, had obtained a safe-conduct from Douglas (December 11) to visit Jedburgh, and one from Randolph (January 15) to come to him wherever he could find him. Randolph was then at Corbridge on a swift raid, while Douglas and the Steward advanced, the one towards Hartlepool and the other towards Richmond, harrying or taking ransom. Immediately on the junction of Hereford and his Marchers with Lancaster at Pontefract, in the beginning of February, before they went south to oppose Edward's advance, the rebel chiefs despatched John de Denum with a letter to Bruce, Randolph, and Douglas, 'or which of them he shall soonest find,' asking an appointment for a final agreement. The precise terms proposed were presently found on the dead body of Hereford at Boroughbridge. Bruce, if not detained by illness or other serious cause, and Randolph and Douglas, with their power, shall join the Earls in their enterprise 'in England, Wales and Ireland, and with them live and die in the maintenance of their quarrel, without claiming conquest or dominion in the said lands of England, Wales, and Ireland.' The Earls, on their part, shall never aid Edward against the Scots, and, their quarrel ended, shall do their best to establish and maintain peace between the two countries on the footing of independence. Fortunately for Edward, John de Denum lost ten days in his peregrinations. He missed Douglas on February 7, and was unable to obtain his reply till February 17. On February 16, Randolph, then at Cavers, near Hawick, had issued a safe-conduct for Sir John de Mowbray and Sir Roger de Clifford to come to him in Scotland. In either case, the ten days were gone. But for this accident, the history of the English crown would probably have been turned into another channel.

The approach of the royal troops decided the insurgents to retire towards the Scots, to Lancaster's castle of Dunstanburgh. At Boroughbridge, however, they were confronted by Harcla on March 16, and disastrously defeated. Hereford was slain on the bridge; Lancaster was captured, tried, and beheaded. Harcla was created Earl of Carlisle. 'Do not trouble yourself,' wrote Edward to the Pope (March 25), 'to proclaim a truce between me and the Scots. Formerly some exigencies inclined me to a truce, but now, thank God, these no longer exist, and I am constrained, by God's help, to war them down for their broken faith.'

Edward at once summoned his army to muster at Newcastle by the second week in June; but early in May he postponed the assembly till July 24. By that time, however, the Scots had completed another destructive raid. Before mid June, a force had crossed the western March; and in the beginning of July, Robert himself, with Randolph and Douglas, penetrated beyond Preston and ravaged the length and breadth of Lancashire and the archdeaconry of Richmond, burning Lancaster town and castle 'so entirely that nothing is left,' and carrying off what cattle had not been driven for safety into the remoter parts of Yorkshire. They do not seem to have encountered local opposition. As they returned, they lay five days before Carlisle, without drawing forth the prudent Harcla; and on July 24, they struck their tents for home.

The English army followed them, entering Scotland by the eastern March in the first days of August. Robert withdrew both men and cattle from the Merse and the Lothians, either to the strongholds or beyond the Forth, and lay with his army at Culross. Barbour tells how an English foraging party found but one lame cow at Tranent: 'It is the dearest beef I ever saw yet,' remarked Warenne, 'it must have cost £1000 and more.' Edward himself subsequently wrote that he had 'found neither man nor beast' in the Lothians. The English fleet failed to bring up provisions, and, on August 23, Edward found himself with some 7000 men at Leith, in like predicament with his father before the battle of Falkirk. He was starved into retreat. Immediately the Scots hung upon his rear, and Douglas cut up an advance company of 300 men near Melrose. The English had sacked Holyrood; they now sacked Melrose Abbey, killing the prior and others; and they burnt to the ground Dryburgh and other monasteries. 'But,' says Fordun, 'God rewarded them therefor.'

Bruce instantly followed up his advantage. By the middle of September, the Scots were before Bamborough and Norham. Bamborough bought off the invaders; and on September 26, Sir Roger de Horsley, the constable, as well as the constables of Warkworth, Dunstanburgh, and Alnwick castles, received a severe wigging from Edward for not showing fight against such an inferior force. Norham was defended by Sir Thomas Gray the elder against an inadequate body of 200 Scots. Edward displayed great energy of rebuke and counsel, while Robert steadily advanced southwards. On October 14, the English army barred the way on the ridge of Blackhowe Moor between Biland and Rievaulx; but Bruce's rapid action enabled him to strike a decisive blow before the Earl of Carlisle, who was at Boroughbridge with 2000 (surely not, as some say, 20,000) horse and foot, could effect a junction, if indeed he really meant to do so.

Douglas at once offered to storm the English position, and Randolph, leaving his own division, led the way up the hill as a volunteer. The Scots were strongly opposed by Sir Ralph de Cobham, who was held to be the best knight of his day in England, and by Sir Thomas Ughtred, constable of Pickering, whose gallantry in the fight raised him to a higher position than even Cobham. The assailants were grievously embarrassed by stones rolled down upon them and by the fire of the archers. Robert supported them by sending 'the Irishry,' the Argyll Highlanders, and the men of the Isles to scramble up the crags in flank. At the top they were confronted by the main body under the Earl of Richmond, but they charged with such impetuosity as broke the English ranks and scattered them in flight; Gray even uses the conventional expression, 'like a hare before hounds.' 'In these days,' says John of Bridlington, 'the Lord took away the hearts of the English.' Richmond was captured and held to heavy ransom (14,000 marks). Lord Henri de Sully and other French knights surrendered to Douglas; by arrangement with whom, King Robert soon released them by way of diplomatic compliment to the King of France. Edward narrowly escaped from Biland Abbey and fled through the night to Bridlington, whence the prior conducted him to Burstwick. Sir Walter the Steward pursued as far as York. Robert occupied the abbeys of Biland and Rievaulx and divided the spoils of the English camp and the king's baggage. Then, making Malton his headquarters, he wasted Yorkshire at his will, taking ransoms from Ripon, Beverley, and other towns, and despoiling religious houses; and he returned, with immense booty, to keep Christmas in Scotland.

Three calamitous invasions in one year might well have induced reflection in a statesmanlike mind. They merely excited Edward's impotent eagerness for revenge. But the Earl of Carlisle, as doughty a warrior as the best, saw that the contest was both hopeless and ruinous; and on January 3, 1322–23, he was closeted with Randolph at Lochmaben. There and then they drafted an agreement. The fundamental provisions were: (1) that each realm should have its own national King; (2) that the Earl should aid King Robert in maintaining Scotland against all gainsayers; and (3) that King Robert and the Earl should maintain the realm of England under the direction of a council of twelve, six to be chosen by each party. Then, if the King of England should assent to these conditions within a year, King Robert was to found an abbey in Scotland, of 500 marks rent, for the souls of the men slain in war, and to pay an indemnity of 40,000 marks within ten years; and the King of England was to have the marriage of the heir male of the King of Scotland under advice of the council of twelve.

Harcla at once published the terms of the agreement, and they were received with intense satisfaction on the Border. He appears to have acted in concert with the chief officers in these parts, and to have believed, or at least professed, that he acted within the terms of his commission. Edward, however, on January 8, ordered that no truce be made without his knowledge, and summoned Harcla to his presence; and on January 19, he sent a copy of the Lochmaben indenture to his Council at York, with the comment that it appeared to him 'fraught with great danger.' He had already (January 13) instituted a search of the Chancery rolls for any authorisation to Harcla to treat with the Scots. On February 25, Harcla was arrested in Carlisle Castle; and on March 3, he was tried, condemned, and barbarously executed. The charge of treason, though formally too well grounded, was essentially baseless; otherwise it is unintelligible that Harcla should have limited his measures of self-defence to the procurement of the formal oaths of the northern sheriffs to stand by him 'in all things touching the common good of England and the said peace.' His action was simply the action of a strong, business-like, and patriotic man, forgetful of finesse. His mistake lay in omitting to obtain express authority to treat, and in neglecting either to veil his contempt for the King, or to provide against his natural resentment, inflamed as it was sure to be by the envy of personal enemies.