Select Committee on Public Administration Second Report


Summary


This report into questions of propriety in the awarding of honours and peerages was much delayed by a lengthy police investigation. We paused our inquiry in March 2006 because we did not wish to risk prejudicing any criminal trial. Once it became apparent, however, that there would be no such trial, we have hastened to complete our inquiry and publish our findings as quickly as possible.

We have been clear throughout our inquiry that our business was not to re-run the police inquiry or to judge the performance of the police. Our aim has been to examine the systems designed to ensure propriety and recommend improvements to those systems.

The public impression of covert patronage created by the 'cash for honours' affair is at odds with a system that is, on the face of it, more transparent than ever before, thanks to recent measures to improve the regulation of party funding and of appointments to the House of Lords.

More has been done since. Central to the affair was the regrettable loophole in the law which did not require parties to declare loans that were received on commercial terms, without adequately defining what those terms were. The passage of the Electoral Administration Act 2006 has closed this loophole. However, the spirit of the law on loan funding was very clear. If all parties had acted in that spirit, many of the subsequent difficulties could have been avoided.

A package of reforms is needed. Proposals relating to party funding are already being considered by the Government, hopefully in conjunction with other parties. The Electoral Commission's role is to be refocused on enforcement of standards. Our proposals complete the package.

The Honours (Prevention of Abuses) Act was severely tested by the police investigation. In our view, its scope remains appropriate, even if the behaviour it criminalises is inherently difficult to prove to the necessary standard. In the longer term, we hope that these offences can be incorporated into a more general law on public sector corruption, a modern version of which is long overdue.

However, while the ability successfully to prosecute offences is essential, an effective system would act to prevent corrupt behaviour in the first place. The core of this matter is party leaders' powers of patronage. Political patronage has been effectively removed from the honours system; its scope should also be greatly reduced in the awarding of peerages. This would, at a stroke, remove much of the room for abuse in the alleged link between donations and peerages.

Our main proposal is for an immediate House of Lords reform measure, clearly defined in scale and scope. Its primary purpose would be to put the independent House of Lords Appointments Commission onto a statutory footing, and empower it to take decisions on the size, balance and composition of the House against agreed and explicit criteria. A mechanism is also needed for peers to resign from the House—or, in some circumstances, to be compelled to leave.

Although these proposals ought to be, and some need to be, set out in legislation, the Government should not wait where it does not have to. The Government could implement immediately our proposal for new peers to be chosen by the Appointments Commission rather than by political parties. Under our proposals, the Commission would choose candidates from "long lists" provided and published by the parties, with the qualifications of nominees made public. The methods used by the parties to choose candidates to put on those long lists would be for the parties themselves to decide, but we suggest that more transparent arrangements will be more likely to command public confidence.

Lastly, the report argues that the link between the honours system and the award of seats in the legislature—already significantly weakened—should be broken for good. Honours and titles should be for past service; a seat in Parliament for potential future service.

Our recommendations build on principles to which the major parties have already signed up. We hope that the experience of the last two years will provide the impetus to make them happen, and with a proper urgency.


 
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Prepared 18 December 2007