Conclusions and recommendations
Honours and peerages
1. A
peerage is more than an honour. An honour is a reflection of past
achievement, whereas a peerage ought to be an appointment for
future service. The procedures for appointing peers have grown
organically out of the procedures for allocating honours, but
it is time that a clean break was made. There is no reason for
any surviving overlap between the two processes. (Paragraph 39)
2. The honours system
itself is much improved in its independence since our predecessors'
report in 2004. Some of this results from the new processes recommended
by Sir Hayden Phillips' review, but the more important development
may be the last Prime Minister's commitment not to put his own
names forward, a commitment maintained by the current Prime Minister.
It is our view that this commitment should be binding on all future
Prime Ministers. (Paragraph 40)
3. We have nothing
further to add to the recommendations on changes to the honours
system in our interim report. The Government understandably awaited
this report before responding, but we expect a response to those
recommendations now. (Paragraph 41)
4. There is a legitimate
role for the police in investigating allegations that honours
or peerages have been sold. Criminal offences serve no purpose
if allegations that they have been committed cannot be investigated.
(Paragraph 57)
The legal framework
5. In
order to avoid any possibility of prejudicing any prosecutions,
we agreed to pause our original inquiry. This was on the understanding
that, given the nature of the evidential test, the police investigation
would be relatively brief. The fact that it turned out not to
be brief meant that we were unable to carry out our inquiry in
the way that we had originally intended to. In retrospect, it
is not clear that the inability of a parliamentary committee to
examine in public serious allegations of misconduct has served
the public interest. (Paragraph 58)
6. The Honours (Prevention
of Abuses) Act still serves a purpose as a long stop. It defines
behaviour which was totally unacceptable in 1925, and is totally
unacceptable now. The failure of the police to secure a prosecution
in recent years is not necessarily a failure of the Act - we do
not know that anything illegal took place. We would therefore
resist any proposals that suggested the Act should be repealed
in the absence of more comprehensive legislation coming forward.
(Paragraph 66)
7. It does appear,
however, that the likelihood of securing prosecutions under the
1925 Act will always be very low even if peerages or honours are
covertly traded. The behaviour which the Act criminalises is deliberately
very limited. One effect of that limitation is that to secure
a conviction in practice, the police would almost certainly have
to catch someone red-handed. Given the nature of clandestine deals,
this seems unlikely to happen. We must therefore look for ways
to improve the law in this area. (Paragraph 67)
8. What is rightly
regarded as reprehensible is the idea that donors are seeking,
and getting, something in return for their donation. It is impossible
to legislate for motivations. However, while it would be desirable
to prevent people from even trying to buy favour, it makes more
sense to ensure that even if they do try, they cannot succeed.
This must be the objective of any reform. (Paragraph 70)
9. It is hard to see
what would be gained from seeking to criminalise any additional
forms of behaviour beyond those already caught by the 1925 Act.
An offence of giving money in the un-stated hope of some reward
would never be possible to prove. It is already illegal implicitly
to agree an exchange of cash for honours or peerages; the difficulty
lies in the low likelihood of proof. If the police cannot find
evidence of an unambiguous agreement, we can hardly make an offence
out of an ambiguous one. (Paragraph 72)
10. The legal advice
we have received is that it is probably not compatible with the
European Convention on Human Rights, and hence with the Human
Rights Act, to change the burden of proof for offences under the
1925 Act. While we must ensure that corrupt behaviour is effectively
prevented or, failing that, effectively punished, this has to
be balanced against the human rights of those accused. In this
case, we do not believe the case for changing the burden of proof
is sufficient to justify the human rights implications. (Paragraph
78)
11. Consideration
should be given to subsuming the specific law on abuses around
honours and peerages into a new general Corruption Act. The need
for such an Act is not disputed. The Law Commission is currently
working on something along these lines, at least with regard to
bribery. We recommend they should consider incorporating the behaviour
outlawed by the 1925 Act in their new draft Bill, and give serious
attention to the points raised in this part of our Report. (Paragraph
82)
12. When a Bill is
produced, we hope the Government will soon find time for it in
the parliamentary schedule. The last Corruption Act was in 1916a
modern law is overdue. We would also suggest that this Committee
or its Members should be invited to play some part in giving pre-legislative
scrutiny to the draft Bill. (Paragraph 83)
13. However, corruption
in the public sector remains very rarely prosecuted, and it may
always be difficult to secure convictions. Any attempt to bribe
or to solicit bribes of any kind ought to be effectively punishable;
but our first priority ought not to be refining the law to punish
offenders. It must be preferable to take steps to prevent offences
from being committed. (Paragraph 84)
Loans and electoral administration
14. In
retrospect, it was a mistake for the Political Parties, Elections
and Referendums Act 2000 not to require the declaration of all
loans, whether commercial or otherwise. The Government was right
to acknowledge that mistake, and right to take swift steps to
rectify it in the Electoral Administration Act 2006. (Paragraph
90)
15. Our understanding
of the 2000 Act is that it did not give the Electoral Commission
the power to publish binding guidance on what would constitute
a commercial loan. Therefore, the Commission's decision not to
give advisory guidance was quite defensible, as to do so would
not have given helpful clarity over the legal position. Instead,
it might even in some circumstances have prevented justified prosecutions.
The Commission was damned if it did and damned if it didn't. The
failure to define a "commercial loan" was in the drafting
of the 2000 Act. (Paragraph 97)
16. The Electoral
Commission's inability to give binding guidance was entirely consistent
with the way the Commission was set up. There is now a striking
consensus behind the need to make the Electoral Commission into
a more effective, proactive regulator. We add our voice to that
consensus. The Government is currently considering what steps
to take next. One of these steps might need to be changes to legislation
to give new powers to the Commission. (Paragraph 99)
17. The pattern of
events is clear. While legal advice was taken to ensure that no
law was broken, a deliberate attempt was made to stretch the loophole
on commercial loans as far as it would go. Having agreed legislation
to make party funding transparent, parties appear to have gone
to some lengths to get around it. (Paragraph 106)
18. If there was any
doubt about whether it was legally necessary to declare their
loans, parties should have done so. If there was any doubt about
whether it was legally necessary for candidates for peerages to
disclose their loans, they should have done so. Even if there
was no doubt on either of these matters, there is a strong ethical
case that loans should have been declared. The letter of the law
may not have been broken, but the spirit of the law was quite
clear. (Paragraph 107)
House of Lords appointments
19. Experience
shows that the failure to find consensus on a comprehensive reform
package can prevent progress on the running repairs that are needed
now. We recommend that the next stage of Lords reform should not
wait for a consensus on elections. (Paragraph 110)
20. The intention
was always to create a Statutory Appointments Commission as part
of the second stage of Lords reform. This inquiry has demonstrated
why it is now important that this happens sooner rather than later.
(Paragraph 115)
21. It appears that
the regulatory system for assuring the propriety of party nominees
to the House of Lords had the right outcome, in that those who
made undeclared loans to a party were blocked from becoming peers.
It would certainly have cast the House of Lords in a very bad
light if the four nominees had become peers and the loans had
subsequently come to light after they had been ennobled. (Paragraph
121)
22. We do not know
on what grounds the House of Lords Appointments Commission advised
against these four candidates being ennobled, or what the source
of the leak of the names was, but we commend the Commission for
the robust performance of its scrutiny role. (Paragraph 122)
23. We agree with
Lord Stevenson that it is inappropriate for people who are not
tax resident in the UK to serve in the legislature, and we understand
that the Commission has had largely to make up the rules as it
goes along, because it is operating in an area where there are
no rules. We make no criticism of the House of Lords Appointments
Commission. But it cannot be right that the rules for entry to
one half of our legislature are made by just six people, whoever
they may be, and can be unmade or re-made at any moment without
any proper process. (Paragraph 126)
24. We believe there
is a fundamental problem with the House of Lords Appointments
Commission's aim to judge party nominees to the House of Lords
on their credibility but not on their suitability. We do not see
a difference of anything but degree between suitability and credibility.
A candidate is credible if he or she is sufficiently suitable;
we see no other means of measuring it. We cannot visualise a candidate
who is credible but unsuitable. (Paragraph 129)
25. The House of Lords
Appointments Commission seems to us to be judging party nominees
for their suitability as well as non-party nominees. The difference
would appear to be that the bar is set lowerwhereas non-party
peers have to be the most suitable candidate of many, party peers
only have to be suitable enough to not diminish the workings and
the reputation of the House of Lords and the appointments system.
(Paragraph 131)
26. We are not surprised
to find ambiguity in the Commission's rules. Rules need to be
consulted on in draft; and rules of this nature ought to be made
through proper Parliamentary processes. The criteria used in vetting
prospective peers must be clarified. (Paragraph 132)
27. One of the major
lessons to be drawn from the events of the last two years is that
the rules for entry to the House of Lords are far too ad hoc.
They must be clear; they must be widely agreed; and they must
be of unquestionable legitimacy. In short, they must be statutory.
We call upon the Government to legislate as soon as parliamentary
time allows to put the House of Lords Appointments Commission
onto a statutory footing. (Paragraph 135)
An interim House of Lords Reform Bill
28. 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. (Paragraph
141)
29. Consideration
will have to be given to both the name of the House and how its
members are referred toclearly 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. (Paragraph 142)
30. 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. (Paragraph
145)
31. 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 peersit 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. (Paragraph 146)
32. 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.
(Paragraph 147)
33. 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. (Paragraph 153)
34. 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. (Paragraph
154)
35. 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 virtuousit
should not be stigmatised. The Bill should formalise the current
stipulation that a donation is neither an advantage nor a bar
towards being appointed. (Paragraph 155)
36. 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. (Paragraph
163)
37. 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. (Paragraph 164)
38. The more robust
and transparent the parties' nomination processes, the more credible
and legitimate will be the names put before the Commission. (Paragraph
167)
39. 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. (Paragraph 168)
40. 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. (Paragraph 173)
41. 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. (Paragraph 174)
42. 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. (Paragraph 175)
43. 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. (Paragraph
176)
44. Although we have
made legislative proposals, and believe this is the right way
to proceed, it would be possible to achieve much of what we recommend
without legislation. If there are problems about parliamentary
time, or concerns on the part of the Government that a limited
Bill might get derailed by wider issues of second chamber reform,
there is a remedy to hand. Just as the last Prime Minister set
up the House of Lords Appointments Commission without legislation,
the current Prime Minister could make changes without needing
Parliamentary approval. For example, he could implement tomorrow
all the changes we suggest to House of Lords appointments procedures.
He could call on all parties in future to submit longlists of
nominees to the Appointments Commission, and give the Commission
the formal power of selection. He could undertake never to veto
or change any decision on either honours or peerages, effectively
withdrawing himself from the process. He could allow the Commission
to determine the size and party balance of the second chamber,
on agreed principles. All of this ought to be formalised through
legislation as soon as parliamentary time allows, but the point
is that it could be done now if the Government wanted to. We believe
that it should, as an immediate and proper response to the lessons
to be learned from recent events. (Paragraph 181)
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