House of COMMONS









Thursday 25 October 2007



Evidence heard in Public Questions 221 - 283




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Oral Evidence

Taken before the Public Administration Committee

on Thursday 25 October 2007

Members present

Dr Tony Wright, in the Chair

Paul Flynn

David Heyes

Kelvin Hopkins

Julie Morgan

Mr Gordon Prentice

Mr Charles Walker

Jenny Willott


Examination of Witnesses

Witnesses: Professor Justin Fisher, School of Social Sciences, Brunel University, Dr Michael Pinto-Duschinsky, Brunel University, and Dr Meg Russell, Constitution Unit, University College London, gave evidence.

Q221 Chairman: Welcome to our witnesses this morning. We are delighted to have Professor Fisher of Brunel, Dr Michael Pinto-Duschinsky, also from Brunel, and Dr Meg Russell of the Constitution Unit at UCL. You have come to help us with learning the lessons of what has been going on in terms of 'cash for honours' and propriety issues surrounding the honours system which we have been inquiring into. Because you are all people who know about our political system in a variety of ways and we are interested in issues of standards, corruption, party financing and the House of Lords, we thought that, between you, you would have some things which you may be able to help us with. Firstly, do any or all of you want to make a short opening statement?

Dr Pinto-Duschinsky: Thank you for inviting me to give evidence to this important inquiry. Following your last session on Tuesday, I will be extending my memorandum of evidence to cover some broader matters arising from your Committee's work, but I will do that after this session, but I would like to give four initial propositions.[1] First, the new system of scrutinising nominations for peerages has proved successful, although your Committee's interim report gave useful proposals for some detailed changes. Second, to a considerable extent, the 'loans for lordships' or 'cash for peerages' affairs resulted from failures of electoral administration. It is clear that the Electoral Commission deliberately avoided giving guidance in the run-up to the 2005 election about the meaning of political loans on other than commercial terms, and I think there are important lessons to be learned from this. Third, recent problems about party funding have arisen because of the parties' reliance on a small number or a relatively small number of large donors. Tightening the rules on nominations for peerages will not deal by itself with this problem, nor will a back-room deal between the parties to award themselves more public money and nor will a cap on donations since such a cap will fairly easily be avoided. Fourth and finally, the system of awarding peerages has its problems and there is no excuse for any shortcomings of the current system, but foreign experience shows that alternative systems of reward have more malign consequences. We must recognise that the root problem is a decline in party membership and activity and unfortunately there is no easy legislative fix for this.

Q222 Chairman: Thank you. All of that we shall want to return to in just a moment. Would either of you two like to say anything?

Dr Russell: Well, unlike Dr Pinto-Duschinsky, I have not provided a written memorandum and I also have not prepared any significant kind of opening statement, but just to let you know what I know, as it were, I have been for the last nine years a senior research fellow at the Constitution Unit at University College London. I am not an expert at all in party funding, unlike my two colleagues here, but I have worked over the last nine years on issues around the House of Lords and its reform. During that time, I have had hands-on experience when I was seconded for two years as Special Adviser to the Leader of the House of Commons, Robin Cook, when he was grappling with this problem, so, aside from studying it academically, I have done that. I have written quite a lot on reform options for the House of Lords and I was an adviser to the Royal Commission when it was working and most recently I have been studying the Chamber as it is now. I am interested in the effects of the reforms which have already happened, so I have been looking at voting patterns in there and the extent to which it is having an impact on policy and how it has changed the culture of the House, and I have conducted surveys of Members and interviewed a lot of Members of the House of Lords, so I think what I bring are some ideas about possible reform options for the appointments process and also I do have some data on peers' views on some of the points that you are looking at in this inquiry.

Q223 Chairman: That is why we have invited you, for all those reasons. Professor Fisher?

Professor Fisher: I have a number of points that I would like to make, but I will begin with four. Firstly, I think what the 'cash for peerages' episode has demonstrated is that British politics is not as corrupt as is commonly thought. Secondly, I feel that the media's role in the entire episode was generally corrosive and often irresponsible. Thirdly, I think that the Electoral Commission has been unfairly criticised over the episode, particularly by the CSPL.[2] Finally, I think the Committee should bear in mind that good law and regulation is not necessarily law that results in prosecutions, but regulation and law which sets the boundaries for political life.

Q224 Chairman: Well, that is very interesting, not least because it opens up areas of potential disagreement. I would like to start with one rather general point and you mentioned it in your remarks just now, Professor Fisher. One of the undercurrents of this whole recent controversy has turned on the extent to which our government arrangements were or were not corrupt and where we stood on any sort of comparative analysis of these things. I sometimes got criticised for saying that I thought on the whole we were not corrupt, but that there were areas that needed attention. I notice in what Dr Pinto-Duschinsky says at one point that there is complacency around on this front. You are saying rather what I was saying, which is that it is not a corrupt system, but that there are problems that need attention. As political scientists, asked to give a dispassionate assessment overall of how our system rates in terms of cleanliness and corruption, where do we sit and where are the areas that require attention?

Professor Fisher: As a political scientist, I would have to say there are always measurement issues here, but insofar as one can measure perceptions of corruption which are of course in some ways as important as actuality and it is important that we consider the public and their confidence in public life, if you look at comparative evidence about perceptions of corruption, we are mid-table. We fall below the Scandinavian countries, but we come above many other of our European partners, so we perform comparatively well.

Q225 Chairman: We had trouble with this when we did a report recently on standards that, although there was data on perceptions, that is soft data, and you have just told us in your opening remarks how corrosive the media is. If you get people being told all the time that the system is corrupt, that will feed through into perceptions, so what I am after really is some hard, analytical assessment of how corrupt we are.

Professor Fisher: Well, in terms of party funding and indeed the aspect of appointments to the House of Lords, it is a point worth making that there has only been one prosecution since 1925. That may be because the law is not working, it may be due to complacency, but in terms of hard, empirical evidence, the evidence for seeking selective benefits by virtue of making contributions to a political party is remarkably thin. If you were saying, "Give me some evidence of corruption that occurs around party finance", I would have to say that you could look at the 1920s and then, beyond that, it is very, very difficult to demonstrate corruption on a scale that we see in other European countries.

Q226 Chairman: Is that the area then that you would primarily focus on if we were looking for areas that needed attention in a system which, overall, is not corrupt?

Professor Fisher: No, no, it would examine a number of the other aspects in which party finance often falls into the areas of corruption, such as the award of contracts, legislation that favours donors over non-donors and so on and so forth. The evidence is simply not there. Now, one can make inference and it is something that I find very difficult to deal with, the idea that somebody who makes a contribution inevitably is seeking to make some personal gain, and I think that is quite the wrong way to look at issues of party finance or indeed appointments to the House of Lords. It is perfectly legitimate for someone to make a contribution to a party simply on the grounds that they share the beliefs of that party.

Q227 Chairman: Well, the police investigation ran into problems essentially between a correlation and a crime, but this is what we want you to help us with. If I can go to the other end of the table, in reading your memorandum to us, I think that you seem to be saying something rather different, that there is more complacency than there should be on this front.

Dr Pinto-Duschinsky: I think that British public life has been complacent for many years, that it should be remembered that when the press have brought up various cases, many of those cases have turned out to be quite justified. Going back quite a long way, not to do with party funding itself, if one looked at a local government committee in the late 1960s, there was a member of that committee who came out with the view that corruption did not exist in British public life virtually and a few years later he was in jail as a major player in the Poulson case. Before the Poulson case came up about corruption in local government, it was very difficult to get any credibility about that and we know now that local government contracts were rife with corruption at that time. If we look at the political funding area, it is certainly true that we cannot look inside the box recently because we just do not have the evidence and I think one should be very careful in that in the absence of that evidence, and in that respect I agree with Justin, that correlation and causation are different things. You must remember that in, say, the 1930s when the party leaders met about how to deal with Maundy Gregory, and this appears in David Marquand's biography of Ramsay MacDonald, it was under discussion that all the political parties had been involved in it and that, if it became public, there would be a scandal which would be like a sewer which would poison public life. The three parties' leaders agreed with each other that an illegal knighthood would be given to a donor who would give a slush fund which would keep Maundy Gregory silent for the rest of his life, so here you find that all of the party leaders were complicit in a cover-up, and British political culture is actually very good at cover-up and often cross-party cover-up. I think that whenever there has been too much complacency in British public life, it has come back to haunt us, so I do believe that there is much more corruption in British public life in general than we often give credit for. As a final point, I should report, and I hope you will not ask me for names, that I was asked to see a government minister some years ago and the opinion was put that that minister knew of only one person who had given a large donation who had not asked for some favour in return, and that is the reality of public life, so I do not think we should be too nave on this. On the other hand, this does not mean that we set up people to prosecute them and potentially send them to prison or destroy their reputation without very good evidence, so there I would agree with Justin.

Q228 Chairman: We know about the historical record. We also know though that we have regulated in many of the areas that you have pointed attention to just now, much more regulation and much more transparency altogether. You do comparative work as well, so on this issue of where we sit, on any objective test, do we sit mid-table or do we sit at one end? Where do we sit, do you think?

Dr Pinto-Duschinsky: Well, I have been studying political corruption in one way or another for many years and the recourse to perceptions, it has been done by an organisation called Transparency International and that is precisely because they have no idea of the objective facts, and cannot know about them, so you have a survey of perceptions which actually is a deeply flawed survey methodologically and, incidentally, Transparency International refuses to be transparent about the sources it uses.

Q229 Chairman: That is why I was asking you.

Dr Pinto-Duschinsky: There is not an objective test of this, but what we do know is that British public life time and again has come to sting us if we are too complacent.

Q230 Chairman: The warning against complacency is clearly a good one.

Dr Pinto-Duschinsky: The area where I think there has been special complacency has been in the area of electoral administration.

Q231 Chairman: Yes, your paper is very helpful on this. Can I just bring Meg in in case she wants to say anything on this.

Dr Russell: The only thing, listening to this conversation, that I would wish to comment on, because I am not an expert in corruption and all of that, is that I would agree with Justin, that, although it is difficult to find any hard evidence for this, I believe that probably most people who give money to political parties give it because they want to further the ends of those political parties rather than because they want to get something in return. It is very difficult to prove that, but certainly a very great deal of people do give money for quite proper reasons. At one level, I think it would be extremely surprising if there were not a lot of major donors in the House of Lords because the House of Lords is a chamber which is principally made up of people who have reached high recognition in their fields, be it in business, in science, in the law, et cetera, and many of those people, by their nature, are well-paid individuals. In a funny sense, if you have someone who is at the top of their field who is being considered for membership of the House of Lords, you have to be a little bit suspicious as a party if they have not given a significant amount of money to the party because when you are a wealthy individual, it is one of the only ways that you can show your commitment, particularly when you are extremely busy. The House of Commons is full of donors to political parties and we do not tend to think that that is corrupt. I do think there is a problem here about perceptions and taking perceptions as a proxy for reality. Having studied the House of Lords, one of the things that we have done is study press coverage of the House of Lords since the 1999 reform and what that showed was that press coverage of the House of Lords has become gradually more positive, and our study ran from 1999 to, I think, 2005. Obviously people get their perceptions to a large extent from the media and the media was presenting the House of Lords increasingly positively following the removal of the hereditary peers, but then of course we have had just an avalanche of press coverage on this issue which I have not tested, but which I am sure has probably damaged people's perceptions of propriety around the House of Lords, done a disservice to the House of Lords and done a disservice to British politics generally. However, this has come to light in large part because actually the system is working rather than because the system is not working because it is the House of Lords Appointments Commission that brought this to our attention, so there is a great conundrum there.

Q232 Chairman: It seems to be said that, on the one hand, we have got regulatory success which is in terms of the House of Lords Appointments Commission, that it did its job and it turned down names that it thought were not credible, applying the test that it applied, and there is some difference there, by the way, from the Crown Prosecution Service who say that these people were credible, but that is a separate issue. The Electoral Commission, certainly in the evidence that Dr Pinto-Duschinsky has given us, is cited as an example of regulatory failure which produced the effect that it was not possible, it was said to us on Tuesday, to take action under the 2000 Act on loans. Is there agreement here, that there was regulatory success on one side and regulatory failure on the other?

Professor Fisher: No.

Q233 Chairman: Can you say why?

Professor Fisher: I think there are two reasons here. The difficulty the Electoral Commission had in respect of the declaration of loans is that there is no legal definition of what constitutes a commercial loan and, therefore, regardless of legal advice that may have been provided to parties, it was always open to challenge in court. That, therefore, is a failing of the legislation, not a failing of the regulator. That has been tidied up with the Electoral Administration Act. Were that not the case, it would have been essential for a legal definition of 'commercial' to be included in an amendment to the legislation. That being so, it would be unreasonable to ask a regulator to advise on something where there is no legal agreement as to the definition, so I think the Electoral Commission was hampered not by its own ineffectiveness, and I do not think it was ineffective, but simply because it was an area of law that was untested. In relation to that, I think what this episode throws up is uncertainty about the point at which the police should be involved in any breach of the Political Parties, Elections and Referendums Act. Initially, the complaint, as I understand it, was made about breaches of the 1925 Act and in the case of the possible breach of PPERA,[3] the Electoral Commission were unable to mount their own investigation and the police simply took over, so I think there are issues both in terms of the difficulties in the wording of the legislation and the procedure, the point at which the police become involved, as opposed to the Electoral Commission, in regulating political parties.

Q234 Chairman: The argument is though that the Electoral Commission should simply have pronounced on what a commercial loan was.

Professor Fisher: They were not able to. That pronouncement would have had no legal standing. There is no legal definition of what constitutes a commercial loan and, therefore, whatever pronouncement they made could have been open to legal challenge.

Dr Pinto-Duschinsky: Naturally, if you have a law that is untested, it is a matter of definition that it cannot be defined until it is tested in a court of law, so to that extent I completely agree. However, if you have a major new Act which sets up rules for our democratic life, it would be a shame, a sorry state of affairs if it would need a court case against at least one of the parties before we could have any guidance as to what the law was, and in many countries electoral commissions do give advisory opinions which can indeed be challenged afterwards in a court of law, but which nevertheless help political parties. In fact, when the Chief Executive of the Electoral Commission was questioned about this by the Committee on Standards in Public Life, he said himself that he favoured the giving of such advisory opinions, despite the fact that they could then be challenged in the courts later on, so the Electoral Commission itself now agrees that it is desirable to give advisory opinions, as are given in the United States, as are given in Canada, et cetera. The other point is that the Electoral Commission said that it had given what it called 'comprehensive advice', so it did not take the point in defence of its behaviour to say, "We couldn't give advice because it's not our role", but they actually said that they had given comprehensive guidance, which were the words used by the Chief Executive. They said that they were sure that the parties knew what the laws meant, so they did not need to give advice on that ground. When it turns out later on, when I asked the Electoral Commission and they acknowledged in answer to a freedom of information request, that they had not given advice, they said that during the period, the Commission and its Chairman did not issue any specific advice when they had previously said to the Committee on Standards that they had given comprehensive guidance. Now, you cannot have it both ways.

Chairman: Well, a clear thing is that the difficulty in this area meant that one arm of the police inquiry fell away pretty rapidly. I want to bring colleagues in now to explore these and other issues.

Q235 Kelvin Hopkins: If I may just follow this particular point a little further, two days ago we interviewed Assistant Commissioner Yates and Carmen Dowd from the Crown Prosecution Service and I asked about this very point of Carmen Dowd. I asked whether it was really crucial that the Electoral Commission had failed to give a definition of a commercial loan which was the crucial factor in the CPS deciding not to proceed towards prosecutions, and she rigorously agreed with me. I then also suggested that one of the reasons perhaps why the Electoral Commission was loth to do this was because they too could see how crucial this particular definition would be and they might be in the firing line with the Government for having given such a definition. Indeed, the Electoral Commission, and I would like to know Dr Pinto-Duschinsky's view on this, has been in the firing line with the Government for some time because the Government have had desires, particularly on things like individual votes for registration which the Government did not like because they thought it might damage their electoral standing, and postal voting, there have been big issues about that and other areas. The Electoral Commission have to an extent been intimidated by central government and it could see that this might be a real red rag to the Government if they proceeded in this way and they might be really in the firing line. Do you think all that is just in my imagination, Carmen Dowd certainly agreed with that, or what would your view be?

Dr Pinto-Duschinsky: Well, I am in a bit of difficulty here because I have had talks over the years that have been off-the-record talks. I agree with your interpretation and I think there is direct evidence that the Electoral Commission felt that, as a new body, it did not want to offend anybody in the early years, that it had to build up its organisation, it had to build up its budget and, therefore, it was unwise to stick its neck out on virtually anything and it certainly did stick its neck out, to its credit, on the question of registration and individual registration, but in general it was very cautious and I think there is not very much doubt on that. There was a specific point where this came up because on 21 April 2005, about two weeks before the election, it was reported in The Times that the Conservatives had taken out 16 million in loans. It was also reported from a treasurer that they had a rate below the rate that a commercial bank would have asked for. Subsequent to that, the Conservative Party approached the Electoral Commission to ask if their interpretation of the law was correct and they met with a refusal to give any guidance. Now, having asked for, and been refused, guidance by the Electoral Commission and having asked its lawyers, as indeed Labour had, for their guidance and been told that they were acting within the law as the lawyers saw it, it would have been, I think, iniquitous if the parties were then hauled before the courts with criminal penalties since they had done what they responsibly should have done to check what the law was.

Q236 Kelvin Hopkins: It is interesting that the Electoral Commission, even though it was cautious, still became very unpopular with the Government, not quite as unpopular as its fairly closely associated body, the Committee on Standards in Public Life, which did an inquiry into the dealings of the Electoral Commission, which I made a submission to myself. It brings me on to my second point and that is about the Government in Britain and the essence of, particularly, the Blair regime and even before that which is a very powerful, overweening executive which is quite different from many other across the world, and that the Blair regime in particular used patronage at every level to try to ensure that their power, the power of Downing Street, held sway on all occasions. This is really to Meg Russell because you worked with Robin Cook for some time and Robin made some very interesting observations about this and made some changes, I do not know whether that was with your advice. On the control of the way the leaders of parties are elected, for example, Robin made the point shortly before he died that what had changed was that the Leader of our Party, a Labour Member of Parliament, was now elected by the mass membership in the electoral college rather than by MPs and, therefore, the Leader of the Party had to pay very little attention to MPs because he was not elected by them and he or she did not have to balance the forces within the Government so that the Cabinet has changed. Cabinets used to have the Benns and Jenkins across a range of people, but now they are ciphers in the image of the Leader. Do you think those things are significant?

Dr Russell: Those are interesting points and I think you might be taking us outside the scope of the inquiry!

Q237 Chairman: It is my job to say that!

Dr Pinto-Duschinsky: If I may make one response, I do not think that I would want to get into overall judgments on the Blair era or the Blair system of government because that would go beyond my knowledge and capacity. I do feel on the very specific issue of the loans that the situation having been as it was, namely that the parties had taken legal advice and that there had been a refusal by the Electoral Commission to give other advice, that it was unfortunate that prominent members of both parties and their offices were left in a period of a lot of tension where the parties could not go ahead with their fund-raising and other activities because of the suspicions about the non-disclosure aspect. I think that aspect should have been ruled out much earlier than it was in the absence of a satisfactory definition of 'commercial loan', so to that extent I would have sympathy with both of the political parties. If, however, there was a clandestine trade in peerages, that is quite a different matter and I would not like to comment on that because I do not know.

Q238 Kelvin Hopkins: Earlier, there was talk about corruption in government. Although corruption may be at a lower level than people suspect, could we not say that some of the things that are done within the law by government, by central government, are maybe not legally corrupt, but are actually undesirable if we want to have a pluralistic system of government with a degree of push and pull with different forces within the sphere of government instead of having what we have, which is extreme power at the centre? Should we not actually try to change the law and change our Constitution to an extent to make it more plural in the way that it operates?

Professor Fisher: Well, it is almost certainly the case that there are some undesirable results, but the worst response to that would be to create more regulation and legislation because you end up with the dilemma of trust versus rules. If you create more and more rules, it creates incentives for actors to seek loopholes. It is far better, and British politics has been served far better, by relying principally on trust and applying rules where appropriate, and that applies to all aspects of public life. If we are saying, "Is the loans issue desirable? Has it brought credit to the British political system?" Absolutely not, it was against the spirit of the law. Was it nevertheless legal? Absolutely, and I think it would be a very bad road to go along to respond to this episode by a raft of unwise and ill-thought-out legislation, as is currently being proposed by indeed both political parties.

Q239 Kelvin Hopkins: Well, one very simple way forward might be to take away all the Prime Minister's powers of nomination for honours, for example, and to have much stricter rules about the links between business and government.

Professor Fisher: I think I would defer to Dr Russell on this.

Dr Russell: Yes, and coming back to the question about the Appointments Commission and whether it did its job, I think all the indications are that it did, but its job is rather narrow. What the Appointments Commission has said is that being a major donor to a political party is not a bar to getting a peerage, but neither is it a qualification for getting a peerage. The qualifications are a separate matter; you will be judged on your merits and then, if you have made a donation, so long as it is a clean donation and above board, that is not a problem. I do agree with the tone of what you are saying, that one of the things which might improve the situation would be if the Prime Minister's patronage powers were further reduced and the Appointments Commission was actually given more power because it does seem to have been fairly successful. It does have fairly limited powers; it only selects the independent Members of the House and it has no real discretion beyond the vetting for propriety over the choice of party-political members. In the way I see it, I think the Prime Minister, in creating the Appointments Commission, gave up significant patronage power. He gave up patronage power largely over the appointment of independent Members of the House of Lords, but he retains three very important patronage powers: one is to decide how many Members are put in the House and when; the second is to decide what the balance between the parties of those Members are; and the third is to decide, on the Labour side, who the nominees for Labour should be. I think there is a case to look at greater Appointments Commission involvement in all of those three things. I do not see that it is defensible really for the Prime Minister of the country to be deciding how many people are appointed to the Legislature and when. I do not see that it is defensible for the Prime Minister to be deciding what the balance between the parties is and in fact I think you could quite easily devise a formula for that, if not indeed for the first one as well, so I would give both of those powers to the Appointments Commission, as has been suggested by various groups over the years making proposals on Lords' reform. I also think that we could look at giving the Appointments Commission greater power in the third area, which is greater discretion over who the party appointees are. Indeed, this Committee in 2001, when it issued a report on House of Lords' reform, suggested that the parties should put up long lists of members from whom the Appointments Commission should be able to choose who was appointed. That was not going as far as the Royal Commission which had suggested that the Appointments Commission should have complete control over who the party nominees were, and I think that is rather unrealistic. I think the parties need to have some control over who their members are in Parliament, but I certainly think that the Appointments Commission could be given more discretion which would help to avoid some of these difficulties and it would also help it to carry out its duty which it has been given by the Prime Minister to ensure that there is diversity in the House, diversity of expertise, diversity in terms of gender and so on. It is very hamstrung at the moment when all it can do is control who the independent members are and it has to take the names of the party members from the parties.

Q240 Jenny Willott: On that particular point, in the session with the police and the CPS earlier this week, John Yates suggested that something that would help was that there should be more transparency in the way that the political parties choose who their nominees are. He did not make any suggestions about how that could be, but actually that there would be a transparent process so that the Appointments Commission could identify better what the criteria were for nominating that individual. Do you think that would be enough?

Dr Russell: It is interesting to hear a member of the police making that recommendation.

Q241 Jenny Willott: I thought so.

Dr Russell: I think most political scientists and politicians might not dare to make that recommendation themselves because the way the parties go about their business is generally seen as an internal matter and they are largely seen as voluntary organisations. It is interesting that two of the political parties do already have a pretty transparent process. The Green Party had a ballot of all its members to select who its nominee for the House of Lords should be, although that person has not yet been appointed, but it was rumoured that they would be, that they were due a seat and they went to the trouble of having an internal election. The Liberal Democrats have certainly an element of democracy, although their process is a bit more complex. Ultimately, I suppose, this is a matter for the parties and the parties must defend the way that they choose their members. I am not sure it is a matter for regulation.

Q242 Jenny Willott: No, but we are looking at recommendations in general. It does not quite come to, I understand, the HoLAC's recommendation that nominations by political parties should be put forward almost with a CV of why they are a credible nominee, obviously it does not go as far as that, but if there was an element of transparency, would it ---

Dr Russell: The Wakeham Commission effectively recommended, if I remember correctly, that the only route into the House of Lords should be via an application to the Appointments Commission, so, if you are a member of a political party and you want to sit in the House of Lords, you send your CV to the Appointments Commission and they will choose between you and the other members of your party, so the party bureaucracy is cut out of it altogether and I think that is rather unrealistic. I think we could move to a situation between that and what we have now where the parties put up lists of names from which the Appointments Commission can choose so that there are two levels of vetting, if you like, where the party vets the people and then the Appointments Commission vets the people put forward by the parties. I think there is room for more transparency in the parties, but a lot of this is focused on the Labour Party and, for example, the names which are put up by the Leader of the Labour Party are not approved by the National Executive Committee of the Party. That would be a small element of democracy introduced which might make it appear a little more transparent, but, as I say, I think that is a matter for the parties themselves.

Q243 Mr Prentice: Are you surprised that Commons' Members who retire in the immediate run-up to a general election very often find themselves in the House of Lords?

Dr Russell: No.

Q244 Mr Prentice: You are not? They are selling the seat, that is what I am saying. They are selling the Commons' seat because the constituency party does not have time to look for a successor candidate, but a candidate is imposed by the centre.

Dr Russell: Well, I think there are all sorts of different cases of former MPs getting into the House of Lords. There are a lot of extremely distinguished former Members of this House who find themselves in the other House, not least people who have been in the Cabinet, but also chairs of select committees from the past, for example. There is nothing per se wrong with Members of this House finding themselves in that House after they retire.

Q245 Mr Prentice: That is not the point I am making. The point is that people tell their constituency parties that they are going to stand for election and serve in the successor Parliament and then decide in the immediate run-up to a general election that they are not going to do that. They invent an illness or something like that and a few months later they find themselves in the House of Lords. Now, I am not going to name names, but there are lots of examples where this has happened and I am inviting you to say that this is a corrupt practice with a small "c".

Dr Russell: I am not going to say that this is a corrupt practice and I will not be caught in that trap, but I would say that the kind of system which I am recommending would avoid any such corruption, should it exist, because it would no longer be in the gift of the party leaders to promise people a seat in the House of Lords. If they met the criteria, the party leaders could put Joe Bloggs MP forward to the Appointments Commission and say, "I would like this person to have a seat", the Appointments Commission would look at their qualifications, look at the other names in front of them and choose whether they were the best person for the seat, so I think that problem, if it exists, would be dealt with.

Q246 Julie Morgan: You have more or less answered my main question which was whether you think there is any scope for political patronage and I think you are saying that there is a bit of scope for political patronage. Would that be true?

Dr Russell: Well, I think there are bigger questions about whether you want an elected House or an appointed House and so on, but, if you have an appointed House or if you have an appointed element in the House which includes Members who represent political parties, then I do not think it is realistic to shut political parties out of choosing who those people are completely.

Q247 Julie Morgan: I was interested in your very commonsense comments, I thought, at the beginning, saying that it is not surprising that there are major donors in the House of Lords and that it is not surprising that there are probably major donors in the Commons. I wondered if you could tell us a bit about the survey you have done of peers and what were the sorts of questions? Were you asking them about these sorts of issues and what was their response?

Dr Russell: We did not ask them a great deal about these sorts of issues, they were not the main focus of our survey, but when I looked back through the survey, I realised that there are a few questions which would probably interest you. We asked a small number of questions about future reform and what kinds of future reform they would support, for example. We know from the way they vote what their views are on election and our results obviously reflect that, but, for example, we asked them whether the Appointments Commission should be made statutory and 91 % of peers believe that the Appointments Commission should be made statutory, so there is overwhelming support for that. We asked whether they thought it was doing a good job at picking independent Members and they were a bit more ambivalent about that and 44 % felt it was doing a good job, but 68 % amongst the cross-benchers, who were the ones that they are actually picking. There is a degree of ambivalence about the cross-benchers which I think is reflected in the responses coming from across the House. We asked that, if any appointments continue, should party peers be chosen by the Commission rather than party leaders, and there was also ambivalence about that. It received majority support from Labour and the Liberal Democrats, but not from the Conservatives. We also asked whether the peerage link should be broken, and I think that could be part of the solution here because, if what people want is an honour, if there is a trade in honours, and I am not commenting on whether there is, to me that is a great deal less problematic if that honour does not win you a seat in the Legislature, and it has consistently been suggested by reform groups that the peerage link should be broken. There is ambivalence again about that, 44 % across the House, but with a majority amongst Labour and Liberal Democrat Members believing that the peerage link should be broken. Another question which we asked, and I regret that I have not brought the actual figures, but we asked Members of the House of Lords what they thought was important to the legitimacy of the House and we offered them a range of options which they could rank as important, very important, et cetera, things like there being a fair party balance in the Chamber, we included whether they were elected Members, the quality of the scrutiny process in there, and we also asked about trust in the appointments process as one of those options. Trust in the appointments process was the thing that they thought was most important for the legitimacy of the House of Lords, and I can send you those figures if you want. This comes back to the perception point. I think Members in the other House are very aware that there is a problem for them, there is a problem for their ability to do their job if there is mistrust in the way that people are getting into the Chamber, so I think they would very much want to see that changed.

Q248 Julie Morgan: One of the good things that has happened in the House of Lords is that there are more women there and more people from minority ethnic groups. Has that played any role in thinking how the Lords should be in the future?

Dr Russell: I think this is one of the things that people have not noticed very much. It is interesting that, amongst life peers, there is actually a higher proportion of women than there is amongst MPs, but the image of the House of Lords remains very much stuck in the past and this is something the Lord Speaker is trying to do something about, but I suspect this is taking us out of the scope of your inquiry.

Q249 Paul Flynn: Could I declare a lack of personal interest in a place in the Lords. Some people were unkind enough to think I was nominating myself, but such an impure thought never entered my head. We are in the Lloyd George Room today and a statue to Lloyd George is being unveiled at this moment. One of the things he said was, "It is foolish to try to cross a chasm with two leaps". In the reform of the House of Lords, we appear to be trying to cross a chasm with two or three leaps. Do you think it would have been better if we had gone for reform in one go?

Dr Russell: No, actually. I have changed my views on this rather. I think that the history of Lords' reform shows us that attempts at major reform throughout the last 100 years have consistently failed, whereas the reforms which have managed to succeed are the small, incremental steps which are relatively uncontroversial.

Q250 Paul Flynn: On the question of the MPs entering the Lords, a neighbour of mine, now deceased, wrote about the whole process of how "they came at me like elephants", when he suggested that he might retire, and they offered him a place in the Lords in exchange for virtually selling his seat to a former Conservative MP. Now, that has happened, it is there, he has given the record of it. We know of other undistinguished former trade union leaders and others who have found places in the Lords who will openly confess that they have been given their places because of favours they have done for party leaders in the past. On the Commission, it is suggested that HoLAC should have some kind of discretion on this. When they get a group of distinguished ex-parliamentarians, ex-Members of the Commons, fine, but when there is a group of party hacks who have been rewarded for favours they have done, should HoLAC have the discretion to eliminate them from the list ----

Dr Russell: I am saying yes to that.

Q251 Paul Flynn: ---- and to add on to the list possibly, and we think it is unlikely we are going to see a Lord Skinner, for instance, but people who are distinguished back-benchers who have not always toed the party line?

Dr Russell: I think that last point is a tricky one. I think it is easy to say that the parties should put up more names than they are going to get seats and that the Commission should have discretion on choosing between those names. Whether the Commission can add additional names is more tricky because ultimately a political party can choose whom it gives the whip to, but I think a case could be made, particularly in the case of former parliamentarians who have surely in some sense proved their worth, that, if the Commission feels that there is a name of a former parliamentarian missing from a list, maybe it should be able to put that person in even if they have not been put up by their party. You would have to draft that very carefully, I think, because I think the parties would resist it if the Commission could potentially bring in anybody.

Q252 Paul Flynn: On the roles of legislators and peers, if peers have a role, there are a number in the Lords who are extinct volcanoes and, if you look up the splendid website 'theyworkforyou.com', and there should be a number on a website 'theydontworkforyou.com'; one of them has not taken part in a division, he has not voted, he has not asked any questions or made any speeches since the year 2000, yet he is still a lord. Is it reasonable for these people to continue, and he is splendid in other ways, a remarkable man, but to continue as a lord when he clearly has no interest in the House itself or in taking part or doing the job for which he was appointed as a legislator?

Dr Russell: I think that touches on two reform issues. One is how people get in, and the Appointments Commission has become much keener on questioning the independent members going in as to whether they are going to play an active part, but of course they are not able to ask any such questions of party members going in. The other one is about whether Members can depart the House when they no longer feel able to play an active part and I think that would be a very sensible measure to, at the very least, allow people to retire if they want to, and that is part of, for example, the Bill being moved in the House of Lords by David Steel. I think that would be a perfectly sensible, again, minimalist move to move us a little further on from where we are now as perhaps an interim solution.

Q253 Paul Flynn: Do you think that there should be a divorce between the job as a member of a second chamber, that we stop calling it 'the Lords', and the whole pantomime of going around, prancing around dressed in ermine and all the rest of it?

Dr Russell: I think the big constitutional issue is the peerage and I would say yes, break the link between membership of the Legislature and the peerage.

Q254 Paul Flynn: Professor Fisher, you talked about the corrosive role of the press in the recent inquiry and now we are coming to the end of that inquiry. We have seen the coverage over the last few days and I think many of us might have the view that that was a justified political stand by a Scottish Nationalist who took it up and reported it to the police, but it never really had any practical chance of going through to a prosecution, but it was handled by an ambitious policeman who took the view, as he told us the other day, that, "You never know what's going to turn up", and he mentioned that twice. He was going on a fishing expedition, elongated it to 16 months and before it all came apart and came to nothing, it damaged the reputation of people who were probably entirely blameless in that period. A parallel investigation was started on July 30 this year and finished on October 10 and that investigation involved Conservative donors which had no attention, no dawn raids, no excitement whatsoever. Do you think there is a lesson to be drawn in this, in the attention given to the Labour donors in this and the Conservative donors, the partiality and the malign interest of the press?

Professor Fisher: That is a big question. I cannot comment on the career aspirations of John Yates, but it does strike me that the case was taken up by the police remarkably quickly. I would like to think that, if I made a complaint, there would be a 16-month investigation into something that did not provide any evidence, I agree with that. I do not agree that there was a party-political aspect to it. The focus was on the Labour donors or Labour loaners simply because Labour was in government and it is fair to say that when the Conservative Party has been in government, its contributors have been subject to the same intrusive form of investigation, so I think it was unfortunate for the Labour loaners simply because Labour was in government. My comments about the media: in some ways of course it is an exciting story and of course we would expect the media to cover it, but the assumption of guilt and the implication of guilt throughout the coverage, I think, was quite scandalous. Looking at the reports of Mr Yates' appearance on Tuesday, again I was struck by the same thing, that the headline, for example, in The Guardian was that Number Ten obstructed the inquiry. Well, to the best of my knowledge, that was not precisely what Mr Yates was saying. I do think that, if the Committee takes something away from this inquiry, it is that, whilst one would not want to regulate the media on this, they share a considerable part of the blame if there is any diminution in trust amongst the British people of the political system. I have brought one or two quotations and Simon Jenkins writing in The Guardian says, "Don't give them an inch. Not one inch. They are a bunch of knaves." Now, that, as a former editor of The Times, strikes me to be a quite disgraceful way of writing about party finance, and it goes on to accuse parties of having their hands in your pockets and so on. I do think that there is an issue and, if you were to call further witnesses, I would recommend you call the editors of The Guardian and The Times.

Q255 Paul Flynn: I think many of us were baffled by the press coverage of what happened, which was witnessed by millions of people because it was broadcast widely. I was puzzled by the stories that there had been conditions laid down by Tony Blair on his interview and I specifically asked Yates, "Were there any conditions that Tony Blair had laid down for you?" to which he said, "Only his diary." He made a comment later on which was entirely vague which did not refer to Blair, as I understood it, it referred to his staff, but the denial that there were any conditions laid down by Blair was not reported even at all, so I think we have seen their partiality in there. If we come back to the points being made, there have been analyses done, and they are weak, as we know, of which are the corrupt countries in the world and there are scales of corruption which have been published by the World Trade Organisation who have one for advising people, and certainly we are second only to the Scandinavians. The Scandinavians are at the top, we are second, the rest of Europe are next and then the rest of the world on that basis. I can see that Dr Pinto-Duschinsky is shaking his head. If that is truly the reality and that is about the position we are in, we are, in world terms, a clean democracy with little murky corners.

Professor Fisher: Of course I would agree absolutely with Michael's previous points, that there have been episodes of corruption in the past, and we have mentioned the local government scandal, and in any large organisation or large democracy, there will be episodes when that occurs. If you look back at British politics and at party funding, in particular, which is my particular area of expertise, the actual episodes, the ones supported by empirical evidence, are surprisingly few when you compare them with other countries, so I would agree with Michael, that creating a perfect scale, a rank order of corruption is very, very difficult. I do not agree that perceptions are unimportant because I think that, whenever one regulates on these things, you have to bear in mind what the impact on public perception is going to be and of course public perception has been at the heart of not only the Haydn Phillips' review, but also of the CPS whole review of party funding in the late 1990s. I do think you are absolutely right, that actually one might go back further and congratulate Michael Portillo when he made a much-derided speech at the Conservative Party Conference which said that Britain was actually really rather clean, and he was derided for that, but, I have to say, he was right.

Q256 Paul Flynn: It was not a bunch of names which introduced the 2000 Act. The 2000 Act was well-intentioned and it was a major reform, but with a loophole in it about loans, but, all being said, no attention was given to the 2000 Act. It was not intending to do what it has done in order to make the system more transparent, but a wholly biased picture is given of a system which is certainly not corrupt.

Professor Fisher: Equally, I would respond to that, that it happened to be passed under a Labour Government, but it was not something that was subject to division in the House and it reflected the all-party fifth report of the Committee on Standards in Public Life, so yes, a Labour Government brought it in, but the credit for its introduction should not be Labour's alone.

Dr Pinto-Duschinsky: I would actually not wholly agree with all of that. When one says, "The fact is we are rather clean", there are no facts. The investigation of corruption in this country has been held back by the assumption that we are all clean and there is nothing to investigate. It is rather a comfortable, self-perpetuating image. If you do not investigate because there is no need to investigate, then you will not find out. I think that consistently over time, when there have been some major press allegations, they have turned out to be correct. If one looks at the late 1960s with reports of lobbying by a Member of Parliament on behalf of the Greek colonels, well, that was not false, and it showed something about the parliamentary system that led to important reforms, so I am hesitant to attack the press to quite that degree, maybe because I sometimes write for the press, so do we all, but I do not think that they should be condemned for bringing up this issue.

Q257 Mr Prentice: On this point, we do not know how many complaints have been made to the Metropolitan Police, and Mr Yates could not tell me 16 months ago or two days ago, but have there been instances in the recent past, and I am talking about the 1980s, 1990s and 2000s, when you and your seasoned observers of these matters thought, "Goodness me, that looks a bit fishy. That warrants an investigation"? Have either of you ever lodged a complaint yourself with the Metropolitan Police?

Professor Fisher: No, I have not.

Dr Pinto-Duschinsky: I am in touch with a police force at the moment about a complaint which has been made by others and the question that is being debated is: what should trigger a police investigation? I felt that Assistant Commissioner Yates gave a very balanced and useful statement on this, that you do not start an investigation because there is any old rumour, but the barrier to starting an investigation must be lower than the barrier of prior proof because, if you only started an investigation if you already had proof, you would never start any investigations, so it is somewhere between. I think that too often actually the police, with allegations of, say, fraud to do with voting, for example, have been too reluctant in many cases to start an investigation.

Q258 Mr Prentice: But my question was quite specific. Have there been instances of appointments made where you thought to yourself, "Hang on a minute, this doesn't look right and perhaps the police ought to investigate it"? I ask you that question because you spend your whole lives looking at this sort of thing.

Dr Pinto-Duschinsky: I have not previously gone to the police on any matter because I have regarded the press and my writings as what I do, but I think that there has been an underlying change in situation that brings us closer to the 1920s, namely that in the 1920s and just after the First World War, the Liberal Party, and especially the Lloyd George wing, found that they did not have any more constituency support and they needed money, so they went to large donors. In recent years, the Conservatives who were the decline of corporate donations and Labour, for other reasons, have tended to go more to large, individual donors than was the case until, say, the 1987 election when it first became noticeable that large donors were playing a part. I think that the point that Assistant Commissioner Yates was making was that, if you have a high correlation, although that is no proof of anything, and if you also have parties relying on a smaller number of large donors, that creates a situation which maybe is more worthy of investigation, and that was all that he was saying. I think there is a point in that and I think the point of public policy is: is it desirable that we have British party politics so reliant on relatively few donations which, by international standards, are extremely large, and what are the implications of that? That, I think, is a policy point which, I think Justin would agree with me, does merit looking at.

Q259 Mr Prentice: A Conservative Party donor, Lord Laidlaw, was ennobled in 2004, he was a tax exile then and he is a tax exile now. He promised the House of Lords Appointments Commission that he would become a UK resident for tax purposes in 2004 and he broke that promise. He is still a Member of the House of Lords, but he slithered out of this by going on a leave of absence. My question is this: should we allow peers a leave of absence who are not prepared to pay taxes, but want to make our laws, or should we change the rules to exclude people who do not participate or are not prepared to pay UK taxes, although they serve in the UK Legislature?

Dr Russell: I think this comes back to some points which have already been made. The Appointments Commission has closed that loophole, so that situation will not arise again.

Q260 Mr Prentice: He is still on leave of absence though.

Dr Russell: He is still on leave of absence which brings us back to the point that there is no route out of the House of Lords, except in a wooden box unfortunately and maybe something should be done about that.

Q261 Mr Prentice: He can still come into the House of Lords, he can still sit on the steps of the Throne, he can still use the dining facilities.

Dr Russell: And he can come back from leave of absence, should he so wish. It is purely down to his decision to comply with that recommendation. It has been a factor in pretty much all of the reform proposals in the past, that there should be circumstances in which somebody should be able to lose their seat in the House of Lords, and that is another thing on the reform agenda, so I think there are two questions about people's ability to depart the Chamber, one being whether they should be able to do so voluntarily and another one is whether under certain circumstances they should be able to be forced to do so. With respect to this issue of where people are registered for tax, the Appointments Commission has closed that loophole and I am not sure whether that applies to party peers as well, but I imagine it does. It is an example.

Q262 Mr Prentice: I do not know how many current Members of the House of Lords, apart from Lord Laidlaw, are not UK residents for tax purposes. It rather sticks in my craw that people should be members of the UK Parliament that do not pay UK taxes. Perhaps I can move on slightly to the House of Lords Appointments Commission which, Dr Pinto-Duschinsky, you said worked broadly as intended. Well, tell Dr Chai Patel that and he would laugh. The fact is that the people who were blocked by the House of Lords Appointments Commission do not know why they were blocked, they do not know why they were turned down. Do you think it would improve the system if people who were putative Members of the Lords and were rejected could approach the House of Lords Appointments Commission and ask for the reasons?

Dr Pinto-Duschinsky: I think what was unfortunate and unfair in that case was that names leaked out while they were being considered, and that casts a cloud on persons being considered that is unjust. My understanding of the matter, and I read the evidence of Lord Hurd and Lord Stevenson two weeks ago - it was very interesting - is that quite unlike the Lloyd George cases (saying they could not become a member of the House of Lords because they had traded with the enemy or had been convicted of stealing, and various things that had happened in the Lloyd George period) there was nothing positively wrong about them (is my understanding); the implication is that the House of Lords Appointment Committee did not feel that, at the moment, they had a sufficient record of public service and other things to make it ----

Q263 Mr Prentice: If it is public service -----

Dr Pinto-Duschinsky: That was my impression, but I think all of those people whose names were disapproved do so without a stain on their character, and it is very important to mention that.

Q264 Mr Prentice: If it is public service, why can the nominations not go via the other route rather than the party political route? Were the nominees all members of the Labour Party? How long had they been members of the Labour Party? Two of the individuals who were blocked gave money to establish city academies. If that was a public good and a policy objective of the government to establish city academies, why were those individuals not nominated through the other route, rather than as a party political nominee?

Dr Russell: I think this is a difficulty which - I am sorry to keep coming back to some of the same points - is a product of the narrow remit which the House of Lords Appointments Commission currently has; it has the ability to select and put into the House people who will sit as independent, cross-bench peers; it does not have the capacity to pick people who may be upstanding members of the community, who may have done all kinds of public service but who are members of one of the political parties - any of the political parties. It is explicitly there to choose independent members only, and I think this is a bit of a problem. In a sense, it feeds this distrust in the process that somehow there is a difference between people who are members of parties and people who have outstanding records in the community through voluntary sector organisations, and so on, who are the sort of people who go in as independent peers. That kind of firm dividing line does not exist. I think we all know that, but it is sort of institutionalised in the arrangement. So, I would say, broaden the Appointments Commission remit to allow it to put people in, to choose people from parties as well as independent members.

Q265 Mr Prentice: We are putting a lot of faith in the Appointments Commission. How many people are on the Appointments Commission? Five, six - something like that? They are going to exercise judgment, and it must be subjective - it must be - and who I think would be a proper member of the public to put in the House of Lords could be very different from someone else's assessment. My question is: can an appointments system which must, inevitably, be subjective, really deliver just outcomes?

Dr Russell: That is a big question and takes us to the question of election versus appointment, which has been long debated. I think, probably, the job here in this inquiry is to look at the appointments process and whether the appointments process, for so long as it exists, can be improved. I would suggest that it can be. Furthermore, if I could make this point, in case I do not get the opportunity to do so later, because I think it is an important one: I imagine that your inquiry will recommend that the Appointments Commission is put on a statutory basis, but I would simply make the point that you can achieve things without that statutory change. I would support the Appointments Commission being put on a statutory basis but legislation in this area is difficult; it is difficult to get legislative time, and something about the Appointments Commission would be liable to be amended to try and turn it into some bigger, kind of Lords reform package, and so on. However, the Appointments Commission that was created in 2000 was created by a Downing Street press release. The Prime Minister can, tomorrow, should he wish, say that he is no longer going to decide how many people are put in the House and give that power to the existing Appointments Commission; he can, tomorrow, should he wish, say that the Appointments Commission should decide the balance between the parties, who should have greater power over selecting who the party members are. I do not see why he does not, frankly. I think you should invite him to do so.

Q266 Mr Prentice: We have got a big Constitutional Reform Bill coming up in January, and it could be in there, could it not?

Dr Russell: It could be in there, but until then (that Bill will not happen until, maybe, next year) we could do this tomorrow, by Downing Street press release.

Q267 Chairman: These are interesting, helpful and fascinating suggestions, but we had an exchange with Lord Stevenson about some of this a week or two ago, when he gave us the line about: "Oh, we're just humble people doing this narrow task". In fact, they are not, are they? They make up the rules as they go along. They just made up the rules about the nature of the financial declarations that they are going to ask of people - that is pretty straightforward; that comes out of what has been happening. They made up the rules about residency and residency for tax purposes - they just decided that is what they would do. They have these requirements about credibility. What is credibility? We know that the CPS and HoLAC have taken different views on credibility; they talk about adding "lustre" to the House. This is huge, subjective territory. All this is being done, as you say, on the back of a Number Ten press release. There is something intrinsically unsatisfactory about this, is there not?

Dr Russell: Things such you have mentioned are very difficult to legislate for, and we have had a conversation about, perhaps, some of the weaknesses of the legislation on loans - you have to pick your words extremely carefully and then they become rigid and they become contestable in courts of law. One positive way of looking at this is that this is in the best traditions of our flexible constitution, which relies on conventions and allows things to develop over time. However, I am not saying we should not have a statutory Appointments Commission; I am just saying we could have a better Appointments Commission immediately if the Prime Minister would decide to give up some of his patronage powers, and that could be underpinned by statute at a later date.

Q268 Mr Walker: I think democracy is a pretty good thing (I hope we all do), and I think that it is a good thing that people can support democracy by making financial donations. I was watching a programme on Newsnight last night; all these Americans queue up to throw vast sums of money at the candidates for the nomination to run for President for their particular parties. This whole thing has done a huge amount of damage, I think, to party funding. I would hate to see party funding thrown on to the State because I think people should have an option as to which party they support, but I would be interested to know from you three distinguished doctors and professors where you see party funding going over the short to medium term.

Professor Fisher: I actually think that you will be disappointed in the way that party funding will go. What we have seen in this country is a decline of grass roots members. They were never a huge source of income, it has to be said, but there has been a decline of those. As Michael rightly pointed out, there was a growth of large contributors; that has diminished somewhat because of the current episode. The reality is that political life is becoming ever more expensive, with more and more elections, and therefore, in the interests of providing the public with a choice of well-funded parties, and trying to ensure as far as possible (and it is not a panacea) that difficulties such as the one we are examining today do not occur, I think it is probably inevitable that the State will play some role. It would be wrong for the State to fund parties entirely, but I do think the broad proposals made by Sir Hadyn Phillips' review are defensible. In a sense, I would say that; I was the principal adviser on the review, although I do not agree with all of the conclusions that were drawn. So I do think there is a strong role for individuals' continual involvement, but I do agree with Michael here that there is a case, to help avoid public concern, that there should be some sort of cap on very, very large donations. Where that cap is set is a matter for discussion; it could be 50,000, which is the figure that is currently being thrown around; it could be 100,000 - it could be whatever. That is how I see it going. This is partly through realism (I think this is the only way in which parties will be able to function properly in the next 20 years) but it is also partly through preference because, rightly or wrongly, the public tends to perceive that where there are large donations from business, trade unions or individuals, that relationship is somehow unsavoury. In answer to your question, that is where I think things will go.

Dr Pinto-Duschinsky: Can I make one or two comments? I am slightly reluctant since Justin has said he was the principal adviser, but I do not think that he is responsible for all that was in Haydn Phillips' report ----

Professor Fisher: Not at all, no.

Dr Pinto-Duschinsky: If he had been I am sure that some of the defects of the report would not be there. The fact is that the report is woefully inaccurate on some of its basic facts and has not done its basic homework before coming to conclusions, because it was based on an assumption that it was trying to have a deal on public funding and, therefore, had very little interest in analysing the empirical situation. There is one assumption that the costs of politics have been going up. Curiously enough, there has not any comprehensive research to tell us whether they have been going up or not. There have been some odd quotations about the costs of General Elections at the centre, but that is not the same as all politics. There may well have been a decline in constituency funding, an increase in central funding - unless you look at it all you cannot tell what the trends are, and the evidence just is not there. The Phillips Committee muddled up central funding and overall funding, and did not know the difference between them, which I felt very surprising, in its main report. So we do not know about trends yet; although the costs may be going up, they may not be, but it is an unknown area until the research is done. We also do not know roughly how much State funding there is. To know what the short money is is just one tiny bit of the State funding that exits; we would need to know what proportion of money that goes to Members of Parliament is used for party political purposes; we would need to know how much MEPs' money is used for party political purposes; we need to know about the "Widdecombe" money that goes to party groups on local councils. There are all sorts of aspects of State funding that we do not know about, and Haydn Phillips refused to go into that aspect. It was brought to his attention but they chose not to do it, and the effect of not doing it is to understate the dimension of public funding that already exists. So I feel that before recommending, look at the facts first. That has been the problem with most of the recent inquiries, including that of the Electoral Commission in 2004, and certainly including the Phillips inquiry.

Q269 Mr Walker: One last question: in your considered view, why is it that you feel politicians now are so despised? I have been here for two and a half years (I am a very new MP) and I am actually quite amazed at the amount of work my colleagues get through - the thousands of letters every year they answer, the vast number of constituency appointments they go to. My stepfather was an MP in the sixties and seventies and he said they simply did not get through the work we get through. Yet now, at this time, you have got MPs who spend Friday to Sunday, most of them, rushing around their constituencies, for actually very little political gain but out of a pure sense of duty and obligation to their constituents. Why is it that we are held in such low esteem?

Professor Fisher: I would agree. I think the trail of MPs is a very bad one and I would wholeheartedly agree with the picture of the overwork of MPs. I think it is partly because there is an unfortunate tendency to target those in positions of power and paint a very bad picture of them. I also think that the measurements of dislike are actually not awfully accurate; saying: "Do you trust X or do you trust Y?" does not actually tell you a great deal and does not get under the real meaning of "trust". Unfortunate as it is, I think it is simply something that you have to deal with, and I do return very much to this idea of how politics is portrayed to the wider public. I go back to the quotation that says: "You are simply a bunch of knaves." That sort of ill-informed and, frankly, irresponsible approach to reporting politics, unfortunately, gives you all a bad name. I wholly regret that and I fully support your views that MPs across all parties, 99.9 % of the time, do an exceptionally good job.

Dr Pinto-Duschinsky: The trouble is that, even though you might not like what Simon Jenkins says, if there was not a tendency to believe that anyway then nobody would take any notice. There is a real problem of disengagement and lack of trust, and it is important that the cracks in trust are not papered over by just giving more and more money for central political education and propaganda that says: "You must vote; we will make it easy for you to vote" without tackling that base issue. In a way, a Member of Parliament is in an excellent position because he or she does have contact with real, live constituents. So, in a sense, you are in the best position to deal with that and answer that yourself, because that is one of your core roles in the political system. It is a very important question that should not be brushed aside by artificial boosts to political education and funding without looking at the core problem.

Professor Fisher: Could I come back on this? I do not think this is a problem that is unique to Members of Parliament. In what Michael describes you could simply change the word "MP" for "NHS"; people are awfully critical of the National Health Service until they have some experience of it, and then they think the National Health Service is wonderful. Equally, when people encounter their MPs, working on a Friday and Saturday, turning up at school fetes, and so on and so forth, their vision of MPs changes. I have to say I think MPs face great difficulty because unless you work 36 hours in a 24-hour day you will not make much more progress. I think that is to be regretted.

Q270 Chairman: You talk about the lack of attention to these issues. The fact is, for the last 15 years in this country we have talked about nothing else but sleaze and distrust; we have been obsessed by it, which is why we have had endless new bits of legislation, we have had vast new regulatory bodies. The idea that we have not been attending to this - it is the light motif of this modern period! Has the effect been to increase trust because we have attended to it in this elaborate way? No, entirely the reverse, because, as we have been hearing, it is just too easy to keep pumping out stuff about everybody in public life, and knaves and fools.

Dr Russell: Can I make a point on this? I agree with all of what all of you have said on this, but I think it is worth pointing out that there is a danger of over-romanticising the past here. I think Justin would agree with me. There is constant talk about a lack of trust in politicians but it is not clear quite when the golden age of high levels of trust was, and it is a disputed matter in political science as to whether trust really has declined. Furthermore, I agree with Justin that it is not unique to politics, it applies to the NHS, etc; it is also not unique to Britain; it is going on all over the developed world. The greater aggressiveness of the media is one of the reasons for it. If you want to know my detailed analysis, I have written a pamphlet for the Fabian Society on this a couple of years ago, and I said one of the factors is our adversarial political system as well. As the Chairman said, the Labour Party spent the 1990s complaining about Tory sleaze and the Conservatives have rather picked that up and run with it once Labour got into Government, and there are some pretty terrifying quotes in my pamphlet, coming from people on both sides of the divide, about how fundamentally corrupt people on the other side are. I think you know that is not true, and I am afraid I had to say: "I think you should stop saying it to each other".

Mr Walker: I will bring this to an end but this is obviously a great day for Members of Parliament; this is our favourite day of the year because it is allowances day, when our allowances are published. So tomorrow the world will be told that all of us - I, Paul, Gordon - have been pocketing - pocketing - (pejorative word) 135,000. So all the money I pay to my staff I have been "pocketing" right here!

Chairman: There we are. We feel better now!

Q271 David Heyes: I want to go back to a point that Gordon tentatively touched on earlier, which is about objectivity. I wonder whether a lot of the difficulties that we have talked about today are down to an attempt to de-politicise and objectivise what really ought to be decisions that should be in the political arena. So we have given Haydn Phillips the difficult task of sorting out party funding, looking to the House of Lords Appointments Commission, and the difficulties that we have heard described with the timidity (to be polite about it) of the Electoral Commission. Just a few weeks ago we had the Charity Commission in here and they have been given some difficult political decisions to make around the charitable status of public schools. It is ironic because a significant proportion of the membership of the Charity Commission are themselves the product of public schools or send their children to public schools. I wonder whether what we are doing here, because of this lack of trust in politics, is attempting to de-politicise decision-making that ought to be in the political arena.

Professor Fisher: I would disagree with that entirely. I would be loth to move towards a more legalised state where you did de-politicise a lot of issues, but the experiences of the last week demonstrate very clearly to me why independent reviews of party funding are necessary because of the antics of both the Labour Party and the Conservative Party over the two aspects of the Haydn Phillips review on which they disagree; in the case of the Conservative Party on applying caps to trade union contributions and Labour's attempt to over-regulate constituency spending for elections. In an area like party funding, I am afraid that if it is left to parties to legislate upon you will simply have a game of ping-pong. That is precisely what happened when the Conservatives drafted legislation in the 1980s which forced trade unions to ballot on an area that was up to the trade unions to ballot on, and that is the continuation of the political fund. As a result of that, Labour vowed to legislate and, indeed, introduced shareholder ballots. One of the great successes in the area of party funding has been the recommendations that came from the Neil Committee which brought about consensus between the parties and did lead to radical change. I think if that had come from a partisan basis we would have had a number of difficulties, so that if Labour now imposes aspects of legislation that the Conservatives do not agree with what will simply happen is if and when the Conservative Party returns to power it will react accordingly. I cannot comment on the Charity Commission - that is not my area of expertise - but on party funding, I think, broadly speaking, we have got it right, and it is better to take it out of the hands of politicians.

Dr Pinto-Duschinsky: I agree with both of you that in the arena of political funding there is an area of accuracy and expertise that should be there. For example, I would hope that we would be able to reach agreement as to whether party expenditures have been growing or not. It is ridiculous that you cannot have some expert look and agreement on a matter of fact such as that. There also ought to need to be expert input into the small print of legislation. Although I agree with Justin that the general consensus that emerged from the Neil Committee in 1998 led to a lot of support for the 2000 Act, the PPERA, it is also true that PPERA has more pitfalls than just commercial loans. Wait until we have a referendum and see what the small print of the Act says on that, or wait about third party funding and see what the wording of PPERA does on that. So that we do need much more care about legislation. Having said that, there are issues of principle that say that, whether one wants to give priority to freedom of speech or to a form of fairness or equality, that is a difference of principle that is going to depend on people's political views. That kind of choice, I think, must be made by a sovereign parliament based on good advice but on the political views of the members. There are fundamental differences of political choices that ought to be left to the politicians. So to that extent I agree with you.

Dr Russell: I agree with both of you as well. I agree with everything that Justin has said, but I think there is something in what you are saying about de-politicising to too large an extent the political. One of the examples which I drew attention to in my pamphlet (which I realise, for the record, I did not name; it is called Must Politics Disappoint) was about the Electoral Commission itself, which was set up not only with a requirement that none of the Commissioners be members of political parties, but that nobody working for the Commission should be a member of a political party. This is the body which is set up to regulate the political parties, which clearly has no institutional knowledge of how political parties work. To me that is crazy, and it actually reinforces the view that political parties are, somehow, rather mucky, that it is a minority interest, and that you can easily construct an institution which has never had anything to do with them. However, I come back to the point that I made to you, that these rules were made by politicians. In fact, the rules on the tightening up of party membership amongst members of staff on the Commission were put in in an amendment - I think it was a non-government amendment - in the House of Lords, in an attempt to make it "cleaner than clean". So I think it certainly can go too far, and it does not help to increase trust in the political process when you do that.

David Heyes: I will join in and agree with everybody as well. I used to think politicians were becoming increasingly timid-behaving politically.

Q272 Mr Prentice: Would it make any difference if members of the House of Lords Appointments Commission were not Lords - because they are all peers? If we had an Appointments Commission that was just Misters and Mses would it make a difference?

Dr Russell: I think you could make a similar point, actually, that if you constructed an Appointments Commission that was putting people into the House of Lords, which included nobody who had ever been in the House of Lords, they might make rather ill-informed decisions. I think this is a matter of balance.

Mr Prentice: But the Chairman does not participate - he said that to us a couple of weeks ago.

Chairman: He explained why and we heard that explanation.

Q273 Jenny Willott: I wanted to get right back to something you were talking about at the beginning, which is to do with the laws in place around sales of honours and around this whole area, which is one of the fundamental parts of our inquiry. Given that there have not been any prosecutions since 1933 (whenever the last one was) is that because there have not been any cases of sales of honours since then, or is it because the law actually is impossible to prosecute because it is out of date or deficient in some way?

Professor Fisher: I could not tell you whether or not there have been sales of honours. The core fact is that there have been no prosecutions, and to the best of my knowledge there have been no subsequent accusations which were taken any further, other than a nod and a wink. So it is impossible to answer that question. I do return to the point I made at the beginning, and that is that when we look at the laws surrounding political life - and, indeed, more broadly, public life in general - the success or failure of a law should not be judged against whether or not there have been any prosecutions. One way of looking at a law is in terms of setting the boundaries of what is acceptable. A very good example of that is one of the finest pieces of legislation on our statute book, which debars political parties from taking out advertisements through broadcast media; we only have party political broadcasts and party election broadcasts. There have been no prosecutions under that piece of legislation, but does that make it a bad piece of legislation? Not at all, it sets the boundaries of electoral and political life. So, in terms of your question, I cannot answer whether or not there have been cases that should have been tried; I am not a lawyer and I cannot tell you whether the wording of the legislation is sufficient to allow for prosecution, but I think it is an erroneous assumption to assume that simply because there has not been a prosecution the legislation is itself at fault.

Dr Pinto-Duschinsky: It depends what kind of act. Justin talked about broadcasting acts. Well, there are very few broadcasting authorities, so you would not expect that there is so much of a scope and a need for prosecution for going right against the law on that. In, say, the case of overspending by Members of Parliament or, more than that, local government candidates, we have not had a Member of Parliament, I think, who has lost his or her seat since 1924, so that is 83 years, and I do not know of any prosecution, let alone conviction, of any local government councillor, although they may well exist without my knowing it, for overspending at local elections. It does strain credibility as to whether that means they have all obeyed the law, or whether the law has not been enforced. In that case I would have thought it is a lack of enforcement. So lack of cases can be evidence in some cases. Coming to the Maundy-Gregory case in the early 1930s (I referred to this in my memorandum), and the view of John Ramsden in his work on the The Age of Balfour and Baldwin, not very much changed; he says that it seems clear that apart from tidying up the residue of the Lloyd George era the, in this case, Conservative Party Chairman, J C C Davidson, did not fundamentally change his party's attitude towards honours.[4] In other words, they were ----

Q274 Jenny Willott: Does that mean that the law was bad then?

Dr Pinto-Duschinsky: No. I slightly disagree with the stress in John Ramsden's work because I think there were some features of the Lloyd George system that were there. One is that a number of the appointees were actually crooks - technically so. They are not alive so they could not have me up for libel but I would be fine if I could prove it. So they were crooks. The second was that the deal was extremely specific; that you pay so much and there is a tariff and you get a peerage. Third, there was a trader, a middleman, who would take a cut himself and then have lunch at his club, which was set up for the purpose, with the party chairman or the chief whip, and they would then do the deals. I think what we are suspecting now is that there is an uncomfortable correlation between large donations and honours, which is not the same as saying that we know of a trade that is as crude as it was in the Lloyd George era.

Q275 Jenny Willott: That is not, actually, what the police investigation was into. Everyone recognises there is a correlation between giving large amounts of money and becoming a peer, though it is not necessarily causation, as was discussed earlier. Actually, the allegations were that people were giving money in the expectation that they were going to be getting a peerage.

Dr Pinto-Duschinsky: An expectation is not enough; there must be a favour ----

Q276 Jenny Willott: Absolutely, which raises the question as to whether the law is sufficient. Given that the allegations this time, whether true or not, are of a different nature from the allegations in the Act that were taking place in the 1920s and 1930s, if we are looking at our inquiry as to whether what is in place now is enough to make sure that it is not possible for there to be trade or a nod and a wink, or the sort of actions that have been alleged this time, if the law that was drafted in the 1920s does not cover the suggestions of what took place this time then, actually, is the law deficient and do we need to revise it?

Dr Russell: On that question, I think your inquiry has uncovered quite well the difficulties of legislating in this area, and if there are nods and winks going on then it is difficult to prove a case, and so on. I do not necessarily believe that there are nods and winks going on, actually, but if there were that would make it difficult to prosecute. If you are looking at revising the 1925 Act you are looking in the wrong place, because that, in a sense, is trying to treat the symptoms rather than the cause, and the cause is that the Prime Minister has these patronage powers over putting people into the legislature. If you deal with that then these problems will not arise.

Dr Pinto-Duschinsky: I think that it was the correlation, or what was seen to be a high correlation, which led to an inquiry to see if there was an explicit deal that was against the 1925 Act. So it was a matter of the difficulty of evidence. So I do not think the Act is the right place to go. I agree with Meg about symptoms and causes, although I do not think the symptom is only the ability of the Prime Minister to appoint members of the House of Lords, because if one took that away there would be all the other forms of patronage that a Prime Minister would have, and new ones that would grow to fill the vacuum. The cause is the reliance on a few large donors, and that is what I see as the root problem here.

Professor Fisher: I would like to take issue with a term that has been used both today and on Tuesday, and that is the use of the term "correlation", because in actual fact if you are arguing that there is a correlation you would need to demonstrate that people of a similar standing but who had not made contributions were somehow being denied a seat in the Lords. To the best of my knowledge, that analysis has not been conducted. So if there is a simple coincidence then that is what it is; it is not a correlation.

Q277 Chairman: Let us not explore at great length the difference between a correlation ----

Professor Fisher: I am sorry, Chairman, but these terms are important.

Chairman: It is an important point for the record, I just do not want to explore it further.

Q278 Jenny Willott: Can I ask my final question, which you have picked up in your response to a previous question? Is there a need to look at the law or is it actually the regulation and the framework within which political parties are operating? Tweaking, for example, the House of Lords Appointments Commission, and so on, is that enough, if there are problems here, to deal with the problems without needing to look at legislation?

Professor Fisher: In respect of party funding or in respect ----

Q279 Jenny Willott: In respect of the issues connected with cash for peerages; so the issues around patronage.

Professor Fisher: I do not think you can ever fully legislate for the fact that some individuals at some point in time may make contributions in the hope that there may be some pay-off.

Q280 Jenny Willott: That is not ever going to be illegal, is it?

Professor Fisher: You can never do that. As to the mechanics of making appointments to the Lords, I would defer to Dr Russell on this. However, I do think it is a mistake to imagine that you can legislate on everything. Meg makes a very important point that you cannot legislate on a nod and a wink, unless you have a CCTV camera in the room; it is simply absurd to do so. I am not familiar with all the details of the 1925 Act but it does seem reasonable to me that, given that there was a 16-month investigation and some considerable resource thrown at it, the utility of the Act was tested and it may be that the Act is in full working order and that, actually, the wrong-doing simply did not take place. Again, I go back to the point: the fact that there was not a prosecution does not mean to say that the law is wrong.

Q281 Chairman: Could I just ask one thing, as we end? When we were talking to Assistant Commissioner Yates on Tuesday and asking him, as it were, what he had learnt about the system or what improvements he could think of, I think I am right in saying that the only thing he really talked about was transparency in relation to the list of names that are put forward for peerages. Clearly, he had been trawling through all the draft lists before they had become the final lists and it was, obviously, a great sort of black hole which he had trouble navigating. I had trouble understanding quite how you could have transparency inside that system because, as other people have said, one of the problems arose because of the lack of secrecy around the names that went to the House of Lords Appointments Commission this time. No one is really proposing that all this should be a public process, even, presumably, if we have a system of nomination from the parties, with the House of Lords Appointments Commission deciding who the people should be. Presumably, these will not be published lists of nominees because, otherwise, you will have the consequence that we have talked about, which is people will suffer reputational damage if they are not selected, and so on. Surely, transparency, in this sense, is not quite the answer.

Dr Russell: To a great extent I agree with your point, but on the point about people suffering damage, I think the damage would be far less if, for example, a party was to have 10 new peerages and to provide a list of 30 names, because there would be no suggestion that 20 of those people were corrupt; it would be simply that they were not the best people for the job. Employers select from shortlists all the time; there is no discredit to the people who do not get the job, they just want the best candidate.

Q282 Chairman: So you think it would be possible and desirable for the list of nominees to be published?

Dr Russell: I am not sure about that, actually. There are limits to how far transparency is necessary, and these things involve a bit of political judgment, do they not, as well? If you take, perhaps, the comparison of appointments to Select Committees, where there has been a lot of debate about whether that should be made more transparent and whether it could be more democratic, some of the things that have been suggested are that people should have to formally apply and it might be possible to see who applied, and then to see who got on in the end. However, the decision as to exactly which people were chosen - a whole range of factors are taken into account; a lot of the same factors that the House of Lords Appointments Commission will take into account, not just party balance but balance of interest, expertise, length of service, age, gender, part of the country, etc. It is not a slur on anybody who does not get on, it is just you have to come up with a group of people which is broadly balanced and useful.

Dr Pinto-Duschinsky: May I make one comment about long lists? I have looked into this matter with relationship to nominations of members of the European Court of Human Rights, and each country, for example, Lichtenstein, can propose one justice, we can propose one justice as well, and so can Monaco and so can Armenia. They go to make up the court. What happens in certain countries is that they will put forward three nominees and one has been the minister of justice, and the second has been detective sergeant Smithsky, and the third has been the same; it is quite obvious that the long list has just been made up of people whom they hope will be included and others who have very little chance of being included.

Chairman: Shrewd point.

Kelvin Hopkins: Just on the point about Select Committees, I am glad they have raised it because I was seriously concerned about this and it was our former friend, Robin Cook, who changed the system so that, in our party at least, now there is a greater chance of people who, perhaps, might have differing views from the leadership getting on to Select Committees. I want to broaden the whole debate about the patronage because it goes way beyond the House of Lords; at every level in politics, in recent years, patronage has ruled and it is all about political power being secured at the centre. That is what is wrong. I do not know if you would agree that we ought to look at ways of building more checks and balances into our political system and making it more plural again.

Chairman: With respect, Kelvin, that takes us off into other territory, so can we leave that as an interesting observation?

Kelvin Hopkins: It was more a rhetorical question.

Q283 Mr Prentice: May I ask one final question? We have got the Cabinet Secretary, Gus O'Donnell, coming in front of us in a couple of weeks' time. When I asked Mr Yates about co-operation with the Cabinet Office, and so on, he said he had received the fullest co-operation but he had met the Cabinet Secretary only once. There were subsequently suggestions that there had been conspiracy to pervert the course of justice, emails being deleted, and so on and so forth. Do you think there are any changes at the centre that could have been made to tighten up the system so that 10 Downing Street could not run on a kind of parallel with the rest of the civil service - the role of special advisers?

Professor Fisher: I do not think I can comment on that.

Chairman: We will save the question for the Cabinet Secretary when he comes. Thank you so much, all of you, for that. If you think we have not asked you things that you would like to tell us, by all means drop us a further note. Anything you think, as we say, would be helpful in our inquiries we would like to know about. I think we have had some extremely valuable evidence from you today. I was slightly dejected when you gave us your initial list, Dr Pinto-Duschinsky, and then you said, at the end, your fourth point was "but alternative systems are worse", which did not fill us with great constructive zeal. However, we will do our best, knowing that, to make some modest improvements. Thank you very much indeed for your help.

[1] Ev

[2] Committee on Standards in Public Life (CSPL)

[3] Political Parties, Elections and Reform Act (PPERA)

[4] John Ramden, The Age of Balfour and Baldwin: 1902-1940, (Longman Higher Education, 1978)