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The report contained 10 recommendations requiring further primary legislation, as they relate to the structure and functions of IPSA, which are governed by the Parliamentary Standards Act 2009. I shall now go through the recommendations, discussing first those relating to the status and enforcement powers of the compliance officer and then dealing with those relating to the new arrangements for determining Members' pay and pensions. A great debate took place-the shadow Leader of the House will recall it, because he was a participant-both in this Chamber and literally below it, in the cross-party consultations that were held downstairs, about where the investigator of complaints against the schemes that were to be enforced by IPSA would be situated. The debate was about whether the investigator would be part of IPSA, whether his role would be separate from it but alongside it-detached from Parliament-or whether he would be within the House.

I shall not go back over the rather tortuous debate that took place, but I can tell hon. Members that we ended up with a Commissioner for Parliamentary Investigations who, in a way, straddled both the House and IPSA. The 2009 Act also made provision for the Parliamentary Commissioner for Standards-currently Sir John Lyon-to be double-hatted, if the House wished, with the commissioner appointed under the original Act. Sir Christopher and his colleagues said that they wanted there to be a separation; they proposed that decisions on the financial code of conduct should be returned to the Commons so that that would become entirely a Commons matter, while compliance in respect of the system that they proposed should be operated by IPSA which would be separate and removed from the House.

That is what we are proposing. There will be a compliance officer, but we then need to consider who appoints the compliance officer. One of the reasons for the length of the provisions before us is that, as the Committee will readily recognise, it is often one thing to describe in prose what one wants to do-as Sir Christopher and his colleagues did-but it is an often more complicated matter to set it out in legislation that can be enduring and clear. For that reason, some of the new clauses and new schedules are extensive.

Peter Bottomley (Worthing, West) (Con): The Justice Secretary has explained that the compliance officer will work with IPSA. Those of us who are not up-to-date with all this would understand from what he said that we will also have a parliamentary commissioner who will deal with non-pay, non-money and non-allowance matters. If that is so, what are the limits to what the parliamentary commissioner might take a look at?

Mr. Straw: The role of the parliamentary commissioner is to enforce the various codes-Standing Orders-that the House has established to deal with, for example, declarations of interest. That is the most obvious example, but included in that would also be examples of advocacy in the House-cases where somebody has been taking money from a particular organisation or individual to advocate a cause and has then failed to disclose that-and many other matters. The enforcement of the rules about allowances, for example in respect of office costs, travel and accommodation, is plainly a matter for IPSA and therefore would fall to the compliance officer.

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We have separated the two roles, as set out in the group of amendments. The Committee will note that new clause 70 provides for the appointment of a compliance officer and that one of new schedules sets out in more detail how that officer would be appointed and how he or she could be removed.

5 pm

Sir George Young (North-West Hampshire) (Con): Further to the intervention from my hon. Friend the Member for Worthing, West (Peter Bottomley), will the terms of reference of the Standards and Privileges Committee and the Parliamentary Commissioner for Standards then be constrained, so that it will not be possible to refer the matters to which my hon. Friend referred to them?

Mr. Straw: It is subject to any advice that we get from those at the Table, but the responsibilities of the John Lyon figure and the Standards and Privileges Committee are entirely a matter for the House, full stop. These changes do not deal with that. What is in the tin will be on the tin. This is about the Independent Parliamentary Standards Authority and its responsibilities to establish and administer schemes for the payment of pay, pensions and allowances and to ensure that there is proper compliance with those schemes not only by Members of this House but by the chief executive officer and staff of the authority. So, there is a separation.

Somebody has to appoint the compliance officer. It was implicit and partially explicit that since the compliance officer had to be separate from the House, the appointment of the compliance officer could not be made by it. The question was then, "Who else could appoint the compliance officer?"

Mr. David Heath (Somerton and Frome) (LD) rose-

Mr. Straw: I will give way in one second.

Various suggestions were made informally, including that we could perhaps ask the Judicial Appointments Commission to appoint the compliance officer. I should say, given that I am responsible at arm's length for the Judicial Appointments Commission and have a role in the appointment of members of the judiciary, too, that we did consider that option seriously but decided that it was not appropriate to give the JAC an one-off responsibility for a position that, although it has to follow principles of natural justice, is, at best, quasi-judicial rather than judicial.

The solution on which we landed was that the IPSA board would appoint the compliance officer. There is nothing unusual about that, and Sir Christopher Kelly explicitly drew a parallel between the compliance officers of the Department for Work and Pensions who deal with benefits and those of Her Majesty's Revenue and Customs who deal with tax. Those departmental compliance officers are certainly not subject to any sort of elaborate arm's length appointment procedure, as in this case, but, as we all know when we take up complaints about benefits, they can still operate at arm's length from those who are responsible for the day-to-day administration of the benefits system.

We also pointed out to Sir Christopher-it was, frankly, merely an omission from his scheme-that, these days, if there is an appeal against a decision by a compliance
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officer in DWP or HMRC, it goes to a first-tier tribunal. Appeals on tax used to go to the commissioners, but they now go to a first-tier tribunal. They can then proceed up to the appeals tribunal and, if there is a serious point of law, to the senior courts. We are proposing exactly that arrangement for decisions reached by the compliance officer in terms of parliamentary standards. I think that must be right.

The schedule sets out how the compliance officer will be appointed and the powers to remove him or her from office are very tightly constrained. Once appointed, the compliance officer will be an independent office holder who will not be accountable to IPSA for the decisions that he or she might take. Kelly, whose recommendations we are seeking faithfully to implement, did not want an arrangement by which the compliance officer was appointed by some other third party. I commend to the Committee where we have landed on that point.

In new clause 87 tabled by the right hon. Member for Hampshire North-East, one issue-

Sir George Young: North-West. It was a 50:50 chance.

Mr. Straw: I did not do badly. The right hon. Gentleman used to represent Ealing; that is the problem.

Sir George Young: Ealing, Acton.

Mr. Straw: I am not quite as old as the right hon. Gentleman, but I am getting on that way.

The terms of new clause 87 are linked to concerns about how even-handed the compliance officer and the appeal system will be. Many colleagues have raised questions informally with me, as I am sure they have with other Members of the House, about what will happen if a Member runs into difficulty not because of any malfeasance or failure on their part but because of maladministration by IPSA, its chief executive or staff. The answer is that the compliance officer will be able to investigate complaints not only against individual Members, but against the authority and its offices.

Mr. Mark Field (Cities of London and Westminster) (Con): I am still slightly unclear about something, perhaps because I have not picked up some of the nuances of earlier interventions. Will there still be an overlap between what the compliance officer does and the work of the Select Committee on Standards and Privileges? Or is it envisaged that issues that are directly within IPSA's ambit will be matters entirely for the compliance officer, and that the Committee will therefore deal only with other issues? A failure to create such a separation will lead to overlap and ever more confusion, which will not be very helpful and will be very expensive for the taxpayer.

Mr. Straw: Day by day, those responsibilities will not overlap, but there must be the overlap that I am describing. I think that the Committee accepts that. Without that overlap, the system could be subject to outrageous abuse. That is unlikely, given what the House and Members, whether they have transgressed or not, have been through in the past year, but one can ever be surprised. If there were such an abuse-a serious fraud, which might involve
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police prosecution-the case would go to the compliance officer and a civil sanction might be imposed, as might a requirement to repay money. However, if the abuse were particularly outrageous, the compliance officer might decide to refer the case to the Standards and Privileges Committee, with a view to the relevant person being expelled or suspended from the House. There is no rule here, any more than there is a rule in real life, that says that if one transgresses criminal law or a statutory code, the only consequences that will follow will be those related directly to the transgression of that law or code. If one transgresses criminal law and the case is serious enough, one might go to prison, but one might also lose one's job. Police officers who transgress the criminal law and the disciplinary code may lose not only their liberty and their job, but, in extreme circumstances, their pension as well. When I was the Home Secretary, I had to take decisions on such matters. The measures I am outlining will run parallel to such systems. I hope that that satisfies the hon. Gentleman. We do not propose that there should be second-guessing, or two parallel systems of enforcement.

Peter Bottomley: No one would claim that these are easy things. It seems clear from what the Secretary of State has just said that nothing in today's proceedings on the Bill will alter the parliamentary commissioner's responsibilities in any way. If some of the things that the parliamentary commissioner is now responsible for will fall to the compliance officer, there is clearly an opportunity for overlap or double dealing. I suspect that we can expect the compliance officer and the parliamentary commissioner to ensure that that does not happen; they will reach an agreement.

Another issue that the Secretary of State has just raised relates to crime. A provision in new clause 79, which appears on page 662 of the amendment paper and is entitled "Parliamentary Standards: Relationships with other bodies etc", states:

I hope that he will explain at some stage how the two things can go along together. I do not object to that, but it should be done explicitly.

Mr. Straw: Colleagues will know-it is a well-trodden path-that if someone was convicted of a serious offence, they would normally come within the automatic disqualification. Let us say that the penalty imposed by the criminal courts was less than the 12 months in prison that would require automatic disqualification. Let us say that someone was acquitted in a criminal court but the facts had been admitted and the acquittal rested on a technical matter, or that the facts had been admitted but the extent of the mens rea-the individual's guilt-was challenged and the jury decided on balance to acquit them. The jurors are saying that the person is not guilty, according to the criminal standard of proof; they are not saying that the person is innocent.

Mr. Richard Shepherd (Aldridge-Brownhills) (Con): They are not saying that the person is guilty either.

Mr. Straw: No, they are saying that the person is not guilty, according to the criminal law. As happens very often in employment law, an acquittal will not exempt
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the individual from appropriate proceedings under employment legislation and the contract of their employment, because the standard of proof is lower, as everyone who has ever employed anyone knows. However, I do not anticipate that this will be a huge problem in practice.

Under new clause 75, an MP who is dissatisfied with IPSA's decision to refuse a claim can ask the compliance officer to conduct a review, having first given IPSA reasonable opportunity to conduct its own review. There could be an appeal against that decision as well. So the Member could go all the way and appeal against a refusal by the authority. I hope that, in practice, such appeals will be few and far between.

Under new clause 87, which appears on page 665 of the amendment paper, the right hon. Member for North-West Hampshire (Sir George Young) wishes to add a new subsection to section 6 of the Parliamentary Standards Act 2009 that states:

Aside from the inevitable drafting problems, which can always be resolved, I hope that the right hon. Gentleman will not push that new clause to a vote, given the undertakings that I am providing. I understand exactly what he wants to achieve.

Ultimately, this is a matter for the House, but we are concerned to ensure that, if possible, the members of IPSA embrace what we are attempting to achieve and that it is practical in terms of their administration. They will certainly offer guidance in any event. I can think of cases from my own experience-they are nothing whatever to do with questionable expenses, but with straightforward matters that relate to the running of my office-where I have phoned someone in the Department and said, "Is this in line with the rules? I can't find it anywhere in particular," and they have said, "Yes," and then paid it, or they have paid it for a number of years and then said, "We don't think that it should be paid anymore," at which point I say, "I'm now in a slight difficulty. Do you think that you could think again, and by the way, here is the paper trail?" There is no fiddle; we must know where we are. Contrary to what is often thought outside, we do not have our own compliance officers. Assiduous Members of Parliament are busy, and we are trying to run what amount to small businesses, while abiding by what will be increasingly complicated, as well as very public, rules.

Mr. Mark Field: I recognise that, as the Secretary of State rightly says, all of us are busy, though I am sure that we will all have learned the lesson that all the forms and applications for expenses and allowances must be completed by us, and that we should not rely on office staff to do that. We all know that there have been some terrible abuses, but where an open and transparent claim has been signed off, the biggest concern and the aspect that has aroused the anger of many Members of Parliament on the grounds of natural justice has been the attempt at retrospection-a very successful attempt under Sir Thomas Legg-going back some years.

I have always said that the rules were far too lax and that, in many ways, Members cannot complain. None the less, the issue that arises, which my right hon. Friend the Member for North-West Hampshire (Sir George
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Young) has tried to address, is the need for some sort of clearance process. That would apply if we had a compliance officer. If an open and transparent claim is made and accepted, surely it is wrong that many years later a Member should be expected to repay or more importantly, even if repayment is made, should be seen to have committed wrongdoing, where in fact there has been openness, transparency and the opportunity for clearance. Does the Secretary of State not see that there would be great benefits from putting in place some sort of clearance process that would avoid such problems in the future?

Mr. Straw: I accept entirely the burden of what the hon. Gentleman says. The issue is how to achieve that. Let us suppose that in such a case, the authority says, "We shouldn't have agreed this amount for training or for cleaning," and the Member says, "Sorry, but you did, and I did this in good faith"-there was no trickery, and on the face of it, the claim was entirely consistent with the rules. One of the things that we need to consider between now and Report is how to ensure that there is a clear power available to the compliance officer, to the first-tier tribunal and so on, to say, "There has been a technical transgression here. We accept now that the authority is right to say that there was an error, but this was nothing whatever to do with the Member, so we are not requiring any repayment."

5.15 pm

IPSA is clear, as are we all, that the rules must be much more categorical. Let us take as an example the issue that has not affected me, but has affected a number of Members, who are understandably sore about it-levels of cleaning costs, which were set retrospectively by Sir Thomas Legg at £2,000. My understanding is that some right hon. and hon. Members claimed considerably in excess of that. I am trying to remember whether cleaning costs are provided for. To the extent that an item is provided for, the parliamentary authority and the House have been much more specific.

The first way of avoiding the need for detailed advice is to be clear about what can be paid and what cannot be paid. That said, there will always be areas where discretion has to be exercised, just as the Revenue, day by day, has to exercise discretion, as do tax accountants, about what is wholly, necessarily and exclusively incurred in pursuit of the individual's employment, which is the mantra for schedule E. Since that definition is taken straight from tax law, and is the fundamental test, aside from the specifics of the regulations as to whether an expenditure is acceptable, there is bound to be some scope for debate. I accept that some measure of guidance, good practice and consistency, which we did not get from the Fees Office all the time, will be very helpful.

The other side of this is that the Independent Parliamentary Standards Authority does not want to be in a position where somebody phones up and, in good faith, a member of staff says, "We think you should do such and such." The member of staff may not be a senior member and is just giving informal advice, but that is regarded as holy writ. Nobody is suggesting that that should happen. I promise that between now and Report we will discuss the matter actively with colleagues here to try and reach wording that is acceptable to Members of the House and as far as possible to Sir Ian Kennedy and his colleagues on the authority.

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New clauses 73 and 84 and new schedule 9 relate to Members' pay and pensions. The Committee will recall that on 3 July 2008 we took the long-overdue decision to end the practice, which was unseemly to say the least, of determining our own pay and voting for our own pay increases. We passed a resolution saying that responsibility for determining pay should go to the Senior Salaries Review Body, and we established a formula for that. The Kelly committee argued that one body should be responsible for considering in the round, and determining the full remuneration package for, Members' pay, pensions and expenses. We now propose that all that, in respect of pay and pensions structure, be shifted from the SSRB and the House to the Independent Parliamentary Standards Authority.

Peter Bottomley: This may be helpful to the Minister. New clause 73(2) and (3) deal with MPs' salaries. It is probably better if I do not read out both, but subsection (2) states:

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