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Mr. Deputy Speaker: I inform the House that this amendment involves privilege.

Mr. Caborn: This is a technical amendment, to ensure that the transfer of assets in schemes made under the Bill is neutral for the purposes of corporation tax. The amendment follows a similar provision contained in the Electricity Act 1989. It provides that the body receiving the assets stands in the shoes of the body from which they have been transferred, so that, for tax purposes, it is as if the assets had not changed hands. That is particularly important in the case of assets transferred to the RDAs from English Partnerships.

Part of English Partnerships' work is to reclaim land for redevelopment. When the land is sold, English Partnerships is liable to pay tax on the proceeds, but can offset against that the cost of reclamation and other work. The amendment will allow an RDA to offset against tax expenditure incurred by English Partnerships before the land was transferred to the RDA. Without it, the RDA would be liable to pay tax on the whole of the increased value of the land, regardless of the fact that much of that would be due to the money that English Partnerships had invested in reclaiming it.

The Corporation Tax Act 1988 provides for similar arrangements in the case of companies in common ownership; but, as "common ownership" is defined there in terms of share capital, we need specific provision in the case of non-departmental public bodies in the common ownership of the Secretary of State.

I commend the amendment to the House.

Lords amendment agreed to [Special Entry].

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European Parliamentary Elections Bill

Lords Reasons for insisting on certain of their amendments to which the Commons have disagreed and for disagreeing to the Commons amendment to the Bill in lieu, considered.

Lords Reason:

7.20 pm

The Secretary of State for the Home Department (Mr. Jack Straw): I beg to move, That this House insists on its disagreement with the Lords in their amendments, but does not insist on its amendment in lieu.

Mr. Deputy Speaker (Mr. Michael Lord): With this it will be convenient to discuss the further Government amendment in lieu of the Lords amendments, in page 3, line 46, at end insert--

'Review of electoral system
.--(1) The Secretary of State shall appoint one or more persons--
(a) to review, in accordance with subsection (2), the operation of the system of election provided for by section 3 of the European Parliamentary Elections Act 1978 as substituted by section 1 of this Act, and
(b) to make a report to the Secretary of State within six months from the day of appointment.
(2) The review shall consider, in particular, how the ability of electors to vote for particular persons on a party's list of candidates might affect the results of an election.
(3) The Secretary of State shall carry out his duty under subsection (1) within one month from the date of the first general election to the European Parliament which takes place after the coming into force of section 1.
(4) The Secretary of State shall lay a copy of any report received under subsection (1)(b) before each House of Parliament.'.

Mr. Straw: This is the fourth time that I have had to invite the House to approve the election system for the European parliamentary elections, and the third time that I have had to ask this elected House to override their unelected Lordships.

The arguments against the proposals from the other place are, on their merits, overwhelming; so are the arguments in favour of the closed or simple-list system that we have advanced. The so-called open-list system is not more democratic than the closed-list system, but less democratic. If it were implemented, the result would be anger and incredulity on the part of the electors, directed against those who had instigated it. The electors would feel that an elaborate confidence trick had been played on them. Let me explain why.

The essence of a democratic election system is that those who win the most votes win the most seats: winners win, and losers lose. Under this Conservative system, the winners may lose and the loser may win. The Conservative party claims to support first past the post--it claims to be united on that, if on nothing else. This, however, is not first past the post, but last past the post.

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Although the proponents of the system on the Opposition Benches here, and in the other place, understand this only dimly, their system is so flawed that a candidate from, for example, the Conservative party who receives 500,000 votes may not be elected, while a candidate from, say, the Liberal Democrats who receives 350,000 votes may be elected in his place. Is that the result that Opposition Members want? Do they understand the nature of the system that they propose? What explanation would they offer their candidates and their party--let alone the public--if that happened? It is the politics of the absurd; and the fact that the Tory party has chosen this of all propositions on which to manufacture a battle between the Lords and the Commons shows the extent to which good judgment has now departed the leadership of the Conservative party.

Mr. Andrew Lansley (South Cambridgeshire): If the Home Secretary considers the arguments in support of the closed list to be so overwhelming, why did 36 Cross-Bench peers vote against the Government, and only one with?

Mr. Straw: I must say, with all due respect to the Cross Benchers in the House of Lords, that most of them are also hereditary peers, and I do not believe that they understand the arguments any more than the Front Benchers.

Let us be clear about this. I tried it to help the hon. Gentleman on the last occasion. When Conservative Members engage in complexities, they usually end up making a complete dog's breakfast of their suggestions, and that is what is happening now. The unavoidable truth of the so-called open system that the Conservatives propose is as I have spelt out: candidates receiving more votes may not be elected, while candidates receiving fewer votes may be elected.

Mr. Lansley: Will the Home Secretary give way again?

Mr. Straw: No.

The Conservatives have synthetically manufactured this battle. What gives the lie to their claims that they are defending some grand democratic principle against a dastardly new Labour scheme is the fact that they, as a Government, were the first to use the closed list. I know that they do not wish to be reminded of that--I have watched them squirm every time we remind them--but the system that I am now recommending to the House, for the fourth time, is the same in every particular as the scheme that the Conservatives recommended to this House and the other place in 1996. If the closed-list system is so bad in principle today, why was it not so bad two years ago, when the Conservatives suggested it?

The only excuse to which the Conservatives resort--a threadbare excuse--is that they proposed a closed list for Northern Ireland. What kind of argument is that, especially from a party that was once proud to have "Unionist" as part of its name? The former Prime Minister, the right hon. Member for Huntingdon

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(Mr. Major), did not say that Ireland needed the closed-list system because it had particular problems. Speaking of the very same system that we are now discussing, he said:

    "I believe that this is a fair and balanced system that will produce a representative outcome."--[Official Report, 21 March 1996;Vol. 274, c. 498.]

In Committee on the same Conservative Bill, proposing closed lists, the right hon. Member for Devizes (Mr. Ancram)--the Conservative party's constitutional expert, and its chairman--said:

    "The strength of the system that we are proposing is that, for the voter, it requires only one cross to be put against one party. We must make sure that the voter understands that when he goes into the polling booth and is faced with the ballot paper. I think that what we are proposing is the best way to achieve that."---[Official Report, 23 April 1996; Vol. 276, c. 283.]

Sir Norman Fowler (Sutton Coldfield): The Home Secretary is making a terrible case for his measure--even worse than usual. Does he not concede that the former Prime Minister made it clear that that position was being adopted only in the context of Northern Ireland? [Interruption.] The right hon. Gentleman laughs. Will he not also concede that his Prime Minister, then Leader of the Opposition, said:

my right hon. Friend the Member for Huntingdon(Mr. Major)--

    "would agree, the solution on the election process is certainly not ideal"?--[Official Report, 21 March 1996; Vol. 279, c. 499.]

Mr. Straw: If the right hon. Gentleman had bothered to read the debate properly, he would know that one of the reasons why my right hon. Friend said it was that what was proposed was a combination of the single transferable vote and the closed list. We never objected to the closed-list system at that stage, and--this is more to the point, as it is they who are now objecting to it--neither did the right hon. Gentleman and his colleagues.

What the right hon. Member for Devizes said about the strength of the system as it applied to Northern Ireland must also apply to the rest of the United Kingdom. After all, it is the same system. As I said in the House last week, it is extraordinary that the Conservative party should now propose one of the most complicated of the alternatives--leaving aside its other defects--given that one of its many objections to the Jenkins proposal related to its complexity.

If the right hon. Gentleman will not take advice from me, he might be wise to take advice from one or two of his noble Friends, particularly those who are standing for the European Parliament under the closed-list system. There was a fascinating letter in The Daily Telegraph today from Lord Bethell, who was MEP for London North-West until he lost his seat in 1994 under the old first-past-the-post system. He now stands as No. 3 on the Conservatives' closed list, and plainly hopes and expects to be elected. Having gone through a ritual congratulations to the Opposition in the Lords, he said--I quote directly from the letter:

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    names will be put forward have any public profile. Ballot papers will carry 50 or more names. Hardly anyone will know of them. Voters will mark their crosses at random."--[Interruption.]

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