House of Commons - Public Administration

Select Committee on Public Administration Second Report

7 An interim House of Lords Reform Bill

136. The previous chapter has made the case for producing a Bill to put the House of Lords Appointments Commission onto a statutory footing, and for doing it soon. The next question is what such a Bill should contain. We do not intend to be too prescriptive. The last century has shown that the detail of Lords reform is hugely contentious, and that large scale packages of reform simply flounder. Incremental changes may not be ideal, but as Dr Russell told us, in this area they have been the only ones that have ever happened:

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An interim House of Lords Reform Bill must be relatively concise, and it must be relatively non-contentious. We believe the package of reforms we set out in this report can meet those criteria.

Reforming appointments processes

137. Three particular problems with the appointments processes have been continually mentioned to us throughout our inquiry (and indeed previous inquiries into these matters). The first is the continued link between the honours system and a seat in the legislature; the second is the lack of an exit route from the House of Lords; and the third is the party leaders' continuing power of patronage. We consider the first two briefly here; fuller consideration of the third follows later in the chapter.

HONOURS AND PEERAGES: BREAKING THE LINK

138. As we made clear at the beginning of Chapter 2, a peerage is much more than an honour, not a prize but a duty. A seat in either House of Parliament should be sought for one reason only—to serve the people. It is not always clear whether all putative peers are attracted by the chance to improve the law or provide better scrutiny of the business of government. We doubt it is overly cynical to suggest that some people might be tempted more by the title of Lord or Lady. In our view such people have no place in Parliament.

139. The Cabinet Secretary told us that, in his view, the honours system and the granting of peerages were already totally separate processes:

As far as I am concerned, I have them in two separate areas … what is important about the House of Lords is that the right people go there who can make a contribution to the House of Lords. That is why it is different from the honours, which recognise contribution in society.[

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We accept Sir Gus's point that the systems for allocating honours and peerages are separate—or largely so—but we are not convinced that the public entirely understand the distinction. Lord Hurd suggested that "if you ask most people in the street or in the newspapers what a peerage was, they would say it was an honour".[122] We agree. It is surely inevitable that the titles of Lord or Lady will continue to be seen as honours. Lord Stevenson happily conceded this point, insisting that we should refer to him as Mr Stevenson or even Dennis:

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Dr Russell also agreed:

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140. The Government has indicated in its last White Paper not only that it agrees that the link between the honour and the seat in the legislature should be broken, but that this idea had support from the cross-party group convened by Mr Straw before that White Paper was published.[125] The White Paper's suggestion was that the peerage should continue as an honour unconnected with a seat in the legislature.

141. One of the simplest ways to reduce the potential market value of peerages would be to separate the honour and the title from the seat in the legislature. The Government has already indicated it supports this, and that a cross-party group on Lords Reform has endorsed the principle. We recommend the inclusion of provisions along these lines in an interim House of Lords Reform Bill.

142. Consideration will have to be given to both the name of the House and how its members are referred to—clearly a linked question. We hope that the discussion will not get bogged down on this question of etiquette. The principle of the change is far more important than nomenclature.

AN EXIT ROUTE

143. One of the reasons why it is currently so crucial to make the right appointments to the House of Lords is that once people become members there is no way of removing them if their conduct subsequently is unacceptable. Peers cannot be disqualified. They cannot even resign from the House. The only practical way in which a peer can formally withdraw from the House's proceedings is to take a "leave of absence", which is taken voluntarily and can be terminated voluntarily at any time with one month's notice, allowing that peer to resume their seat and full voting rights. Obviously, the goal of the system should be to ensure that the wrong people do not get into the House of Lords in the first place, but sometimes misconduct will inevitably either come to light or even take place after the relevant person has already taken up a seat in the House. In that circumstance it seems unduly complacent to expect that person to police themselves.

144. The House of Lords Appointments Commission reluctantly cited the case of Lord Laidlaw of Rothiemay in its last annual report:

During spring 2004, the Commission vetted a list of party-political nominees. One of the individuals on the list, Irvine Laidlaw (now Lord Laidlaw of Rothiemay), was not resident in the UK for tax purposes. Following an exchange of correspondence and a face-to-face meeting, the Commission accepted an assurance from Lord Laidlaw that he would become resident in the UK for tax purposes from April 2004.

On the basis of this assurance the Commission found no objection to his appointment. The Commission would have taken a different view on Lord Laidlaw's nomination if it had known that he would not be resident in the UK for tax purposes from April 2004. In June 2004 he was appointed to the House of Lords.

Lord Laidlaw has not become resident in the UK for tax purposes. The Commission has drawn the Prime Minister's attention to the situation.[

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Lord Laidlaw is currently on leave of absence; he takes no part in the proceedings of the House of Lords, but it is of course within his power to rescind that decision. Lord Hurd told us that as the Commission had no penal power, it had decided that its only option was to effectively name and shame Lord Laidlaw—and so that is what it had done.[127]

145. Lord Stevenson would not be drawn on whether the system was unsatisfactory, but he did acknowledge that a case could at least be made:

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The Government has been less equivocal on this matter. Their White Paper suggested that peers should be able to resign on any grounds whatsoever, and that disqualification provisions should be brought into line with those of the House of Commons—meaning that the idea of leave of absence would no longer be necessary.[129] In the House of Commons, Members are disqualified automatically if they are convicted of a criminal offence and sent to prison for over 12 months. Peers in the same circumstances are free to resume their seats. It is illogical that while HoLAC can require that a putative Member of the House of Lords should be a UK resident for tax purposes, there is no provision to enforce this once someone is an actual Member. The White Paper also indicates that the cross-party group convened by the Government were in agreement over the need for disqualification provisions.[130]

146. Even with the best appointments mechanism in the world, there will be occasions when the conduct of members of the House of Lords will be such as to warrant their removal from the House. The example of Lord Laidlaw shows that the Appointments Commission cannot enforce the undertakings given by prospective peers—it took the Commission years to persuade him to relinquish his position in the House, and even now he can change his mind at any time. Leave of absence provisions are clearly not sustainable in a modern second chamber. A Private Member's Bill is currently before the House, brought in by a Member of this Committee, which would disqualify a person from membership of Parliament if he or she is not a UK resident for tax purposes.[131]

147. We do not suggest that the Appointments Commission should necessarily have the right to remove members of the reformed House. But it is surely right that as a general principle disqualification provisions are broadly consistent with the House of Commons. It is surely also right that there should be some mechanism for resignation from the House of Lords - on grounds of impropriety or on any other grounds.

Limiting party patronage

148. The reforms we have listed so far are essential for a working system, but we do not believe they will in themselves satisfy the public that appointments to the House of Lords are 'clean' or remove the basis for future allegations of impropriety. The fundamental concern surrounds patronage. Dr Russell was clear that in her view this was the central issue for our inquiry:

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.[

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It is essential to a nominated chamber that political parties are involved in putting forward prospective members. Yet the perception, right or wrong, of unfettered patronage clearly plays a large part in public unease about the Lords appointment process. This is the key balance that has to be struck—between party influence and appointment on merit.

SETTING OUT THE CRITERIA

149. One part of securing public confidence, as we have seen, is having transparent criteria against which candidates are judged. These criteria will need to be carefully considered, agreed by Parliament through primary legislation so that there is a chance for them to be amended at several stages. We will not attempt to draw them up here. However, the artificial distinction between suitability and credibility should certainly be dropped. We can also suggest that there ought to be, as now, separate criteria for suitability and for propriety—but both ought to be applied equally to all prospective peers whether partisan or crossbench. Our inquiry has not covered the question of what makes a person suitable to be a peer, and so we make no suggestions as to the criteria to apply with regard to suitability.

150. Criteria for propriety will doubtless include much that is already considered by the House of Lords Appointments Commission. Their criterion that a candidate should be "in good standing in the community in general and with particular regard to the public regulatory authorities" seems to cover much of the right ground. But it is far too vague. This is a chance to be explicit about what constitutes acceptable behaviour and what does not. For example, one of the new statutory criteria could be that candidates for peerages must be resident in the United Kingdom for tax purposes. We understand that this rule is already being applied, but as we have noted, we are not sure from where the Commission derives the authority to do so.

151. There is another question of propriety which has exercised us and could be addressed in the new statutory criteria for prospective peers. It would be possible to have a rule that nobody who had donated money to a political party could be nominated by that party to the House of Lords. That rule could also be nuanced so that it only applied to donations over a certain size, or another alternative would be to put a compulsory time period between donations and entrance to the Lords, so that for example the rule might be "no candidate can have made a donation to the nominating party within the last five years". The argument for any of these rules would be to give the public confidence that donating large amounts of money to a political party cannot buy a place in Parliament.

152. On balance, we are minded against the creation of such a rule. Donating to political parties is, to quote a former Member of this Committee, "an act of civic virtue".[133] As long as parties are dependent on donations for funding, it will be both legitimate and necessary for people to make those donations. There is nothing inherently suspicious about wealthy individuals making large donations to causes they believe in. Indeed, if someone is wealthy and a strong supporter of a political party which is in need of funds, it would almost be odd if they did not donate. Certainly it would be perverse to discourage it in law. Dr Russell noted that sitting and prospective Members of the House of Commons also donate to political parties,[134] and we observe that there are no limitations on that. We are also concerned that preventing all former donors or even all recent donors from entering the Lords would serve only to stigmatise further the giving of money to political parties.

153. The criteria to be used in deciding who sits in the House should be set out in the interim House of Lords Reform Bill. They should include criteria on both suitability and on propriety, to be applied equally to all prospective peers whether partisan or crossbench. On propriety, there should be enough detail to make it an objective judgement for the Appointments Commission and not a subjective one, in order to be fair to all candidates.

154. The Bill should make it explicit that one of the criteria for appointment to the House will be residence in the UK for tax purposes.

155. On balance, we do not believe the Bill should put any kind of limit on donors to political parties being nominated by those parties to the House of Lords. Donating to a cause you believe in can be virtuous—it should not be stigmatised. The Bill should formalise the current stipulation that a donation is neither an advantage nor a bar towards being appointed.

THE ROLE OF THE STATUTORY APPOINTMENTS COMMISSION

156. The corollary of setting out transparent criteria for entry to the House of Lords is that it also needs to be transparent who is making the judgement against those criteria. In our view, that can only be done by a new statutory House of Lords Appointments Commission.

157. The Wakeham Commission argued that the independent Appointments Commission should be the only route into the second chamber.[135] It saw a continuing role for political parties, but only in making suggestions:

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This arrangement would give the Commission the right to disregard the nominations of the party leadership entirely, even in selecting members of the second chamber from their own party. This would have the effect of allowing those whose views were out of line with the leadership of their own party to nonetheless find their way into the upper House if they were deemed to be suitable by the Commission.

158. The Government's proposals in its last White Paper were subtly different from this. They give more powers to political parties, without removing the ability to select from the Appointments Commission. The White Paper suggests that:

As the Wakeham Commission proposed, the parties would put forward recommendations for suitable members to the Statutory Appointments Commission … It is proposed that the Statutory Appointments Commission would perform a more extensive role in relation to the party members than it does now, and assess the suitability of those put forward by the parties against its published criteria. The Statutory Appointments Commission would therefore have the power to refuse to recommend a person for appointment on more than simply grounds of propriety.

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This proposal can effectively be summarised as a "longlist" system. Parties submit longlists to the Commission, who choose a certain number of people from it against explicit criteria to become members of the reformed House. We note that these proposals are no longer live, following the votes in the House of Commons against an appointed party element remaining in the Lords.

159. The advantage of the longlist system is that it significantly lessens the element of party patronage, in that the parties cannot guarantee who will get into the Lords and therefore are in no position to "sell" places in it even if they wanted to, while maintaining a strong role for parties in choosing their own Lords candidates. The Wakeham suggestion, allowing the Commission to choose some candidates for party peerages who were not put forward by their own party, raises trickier issues, but is also worth considering as a safeguard against crude patronage.

160. Our predecessor Committee called for a longlist system to be introduced back in 2001-02.[138] Dr Russell is also an advocate, and gave an additional advantage:

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161. There is a further advantage to the longlist, and that is that it allows the party's nominations and their reasoning to be made public. We explained at paragraph 36 that the Government's reasons for not publishing citations were perhaps defensible for honours—where recipients should be surprised by the award—but not for peerages. On the other hand, as things stand there is an argument against publishing citations, in that as we have seen it can be damaging to a person's reputation to have their candidacy rejected by the Appointments Commission and have no opportunity to defend themselves. Longlists take away that problem, as Dr Russell explained:

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162. We did hear one word of warning from Dr Pinto-Duschinsky:

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163. The possibility raised by Dr Pinto-Duschinsky is real, but we believe that ways could be found to mitigate it. We recommend that the Bill introduces a longlist system for political party nominees to the House of Lords. Parties should publish a long list of candidates, explaining how they believe each one meets the criteria for membership. It should then be up to the Appointments Commission to choose those candidates from that list who they believe to be the most suitable against agreed criteria, as well as conducting the current propriety tests. All nominated candidates would then be chosen by the Appointments Commission. The scope for party patronage and hence sale of peerages is thereby dramatically reduced.

164. However, this will not work if parties are asked to list their preferences in order, as in that scenario non-selection would be a public slur. We believe the objective of transparency is more important than allowing parties to rank their nominees in order of preference. We therefore recommend that this one element of the Government's proposal is reconsidered.

INTERNAL PARTY PRACTICES

165. There is one other element of the appointment system we have not examined, and that is how candidates find their way onto party lists in the first place. This could continue to be an issue even if there were longlists and published citations from the parties, as it seems inevitable that at least some nominees will be considered contentious.

166. Assistant Commissioner Yates raised this as the part of the system which, from his perspective, was most in need of clarifying:

At the moment with the three major parties you have three entirely separate processes operating, either by committee, consultation or by the party leader's choice. So that is the problem from our perspective, the lack of transparency and consistency in the process which gets it to HoLAC … it is the actual process beforehand which we think could do with reviewing so there is something consistent and transparent and can stand some tests.[

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Mr Yates explained how he had found one system at least hard to navigate:

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167. Dr Russell also suggested that more transparent internal party processes might improve public confidence, citing the Labour Party but making a general point at the same time:

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We agree both that a bit more transparency might help, and that it is a matter for the parties themselves—especially if this leads to questions about internal party structures. We note only that greater transparency of selection processes may prove popular with the electorate, and that what is done in the name of parties should at least have been properly agreed by the parties through an agreed procedure. The more robust and transparent the parties' nomination processes, the more credible and legitimate will be the names put before the Commission.

168. How parties choose their candidates for nomination to the House of Lords is rightly a matter for them to decide. We note, however, the observations of our witnesses that it does not reflect well on the public perception of politics and of individual parties if their processes are seen to be less than fully transparent.

Remaining elements of the Bill

169. There remain a few crucial ingredients to a successful reform package that we need to mention. The first of these is that the Appointments Commission, when put into statute, must cease to be even technically only advisory. We know that the Prime Minister has never overruled any of its advice, and we applaud that—but it is not acceptable that he even has the opportunity to do so. We note that the Government agrees with this position.[145]

170. We also repeat our call for the Appointments Commission to be made entirely independent of the executive. As we have noted, the current Appointments Commission was designed to be a transitory body, and there was always an intention for a statutory commission to be set up at a later stage. It is for this reason alone that HoLAC is currently an advisory non-departmental public body sponsored by, and supported by, the Cabinet Office—with appointments made by the Prime Minister. Our predecessor Committee called for the Commission to be statutory and independent of the executive in 2002;[146] and we reiterated that call in our recent report on Ethics and Standards.[147] The Government has now accepted this suggestion, with the 2007 White Paper stating unequivocally that:

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171. Dr Russell made the point that another Wakeham recommendation to guard against patronage was well overdue—removing the power of the Prime Minister to determine the size and party balance, excluding the independent element of the upper House:

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We agree entirely with this, and note again that the Government accepts the suggestion that party balance, excluding the independent element, should be decided by a formula and administered by the Appointments Commission.[150] The proposal is that the balance of party seats should be connected to the proportion of votes received by each party at the last general election, which seems a fair starting principle. The actual implementation is complex because seats in the House of Lords do not become vacant en bloc at a set time, and so we do not propose a precise formula here. The important principles would seem to be that the formula is public, agreed by Parliament, and administered by the Appointments Commission.

172. Lastly, we note that interim legislation is an opportunity to remove the last of the hereditary peers. The House of Commons has already voted in principle to do so;[151] we see no reason why this should remain controversial. We note that a Bill containing this and many other relevant provisions is currently before the House of Lords, having been proposed by Lord Steel of Aikwood.[152]

173. A House of Lords Reform Bill must ensure that the role of the Appointments Commission is no longer only advisory. There is no excuse for a remaining Prime Ministerial veto over the Commission's decisions, even if that veto is only theoretical.

174. The Bill should also remove the Prime Ministerial role in appointing members of the Appointments Commission, and the role of the executive in sponsoring and supporting the Commission. The statutory Commission should be entirely accountable to Parliament.

175. Provision should be made to ensure that the Prime Minister no longer determines the size of the House of Lords and the party balance of the nominated element. The size and the proportion of non-partisan members may be determined in statute, but the party balance should be variable along with the prevailing mood of the nation. A formula should be devised, as the Government suggests. This formula should then be administered by the Appointments Commission.

176. Lastly, we note that it has now been agreed in principle by the House of Commons that the remaining hereditary peers should be removed from the House of Lords. This should also be part of the Reform Bill.

120 Q 392 Back

121 Public Administration Select Committee, Fourth Report of Session 2006-07, Ethics and Standards: The Regulation of Conduct in Public Life, HC 121, Qq 256-258 Back

122 Q 172 Back

123 Q 182 Back

124 Q 390 Back

125 Leader of the House of Commons, The House of Lords: Reform, Cm 7027, February 2007, para 2.10 Back

126 House of Lords Appointments Commission, Annual Report 2006-07, June 2007, paras 57-58 Back

127 Q 156 Back

128 Q 171 Back

129 Leader of the House of Commons, The House of Lords: Reform, Cm 7027, February 2007, paras 9.30-9.32 and 9.39-9.41 Back

130 As above, para 2.10 Back

131 Disqualification from Parliament (Taxation Status) Bill, [Bill 24, Session 2007-08] Back