Public Administration Select Committee - The Honours System - Minutes of EvidenceHC 19

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House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Public Administration Committee

the Honours System

Tuesday 15 MAY 2012

LORD DIGBY JONES and RT HON ALISTAIR DARLING MP

GRAHAM SMITH and JOHN LIDSTONE

Evidence heard in Public Questions 104 - 190

Oral Evidence

Taken before the Public Administration Committee

on Tuesday 15 May 2012

Members present:

Mr Bernard Jenkin (Chair)

Charlie Elphicke

Kelvin Hopkins

Greg Mulholland

Priti Patel

Lindsay Roy

________________

Examination of Witnesses

Witnesses: Lord Digby Jones and Rt Hon Alistair Darling MP gave evidence.

Q104 Chair: Welcome to this morning’s session, which is the second one on the honours system. Would each of you identify yourself for the record, please?

Mr Darling: I am Alistair Darling, Member of Parliament for Edinburgh South West.

Lord Jones: I am Lord Digby Jones, Cross-Bench Member of the House of Lords.

Q105 Chair: We are particularly interested in what both of you have said about the way Fred Goodwin was stripped of his knighthood. What are your concerns about the way the decision was taken?

Lord Jones: The morning after it all happened I woke up and, frankly, the emotional response would be, "It serves him right." He was a man whose faults gave the man to my left a serious headache and almost caused the downfall of democratic capitalism. I guess the emotional response is that he got off lightly. As I said at the time and I repeat today, this was no way to go about meting out any form of discipline, sanction or punishment. I said it then and will repeat it: it had about it the whiff of the village green lynch mob.

I just thought to myself that you have some people who in secret meet every one of them who had a knighthood. They decided that this person should not have one against a load of criteria that, frankly, at the end of the day, seemed to me, in ignorance, had been dreamt up on the spot. He had never been convicted of a single offence. Everybody says, "Jolly good," the mob is satisfied and you have sent them another drumstick on which they can chomp. It is not the way I would like to see issues like this dealt with.

Mr Darling: I agree with what Lord Jones has said. I said at the time I thought the whole thing was tawdry, and that remains my view. I do not carry any particular flag for Fred Goodwin. We know what happened with RBS, but he was singled out when there were other members of the board of RBS who had knighthoods. The board is legally responsible for that company. If you look at HBOS, there were knights sitting round the table then, one of whom in particular is still on one of the advisory committees of the honours system. They were not gone after.

If you look at what happened, there was a campaign by a newspaper to remove the knighthood from Fred Goodwin. The thing seemed to gather momentum out of nowhere. The Prime Minister said he would refer it to the Forfeiture Committee. Having been in Government for 13 years, I had never come across it before. I knew there were some circumstances in which you could get rid of it. Then, rather like a train being set on a set of rails, it came to the only conclusion it was ever going to come to, and Fred Goodwin was stripped of his knighthood. I think the whole thing was unfair. As Lord Jones said, it looked like the lynch mob. Interestingly, one of the reasons I do not think you will see this happen again is that the public reaction was the complete opposite of what the Government anticipated. A lot of people said, "We’ve got no time for Fred Goodwin; we know what he did, but the way in which this has been dealt with is very distasteful."

Especially vis-à-vis our relations with the rest of the world, one of the things people value in this country is the rule of law, due process and predictability. Once you start to depart from that and say this was a one-off case, which it was not because he is not the only person one might want to look at, you bring the entire system into disrepute. The whole episode backfired. It should not have been done. You are going to inquire into this and I would dearly like to know what happened here. Who set this process going? How does this committee get convened? What deliberation did they have over the thing? It seems to me to be something dreamt up as an instantaneous reaction to a particular campaign, and in years to come the Government will probably think this was one terrible mistake.

Lord Jones: If you are graduating from a university in Bangalore you might think, "Where in the world am I going to plan my career? Where am I going to create some wealth? Where am I going to make my fortune and do so in safety and security?" I have always believed that I belong to a country that is number one in the world for that. We have our faults. I spent 20 years as a lawyer. Often, the law is an ass, but the one thing I always knew as a lawyer was that I was working to a set of rules. They had been made in advance by democratically elected people, and at the end of the day I knew where I stood. I fully understand that the conclusion could be commonsense going out of the window, but everybody knows where they stand.

Suddenly, you have this and, at the same time, the disgraceful behaviour of the lynch mob towards Stephen Hester’s bonus. The rule book, transparency and predictability went out of the window, and they responded as on 14 July with the fall of the Bastille and the guillotine. If I was that young man in Bangalore I would think, "Maybe there are better countries than Britain in which to plough my furrow." That will be the greatest casualty of this.

Q106 Chair: Are you saying that Fred Goodwin deserved to retain his knighthood?

Mr Darling: I do not think that is the question. Assuming you want a system where people are awarded honours, it is clear that, for example, if you go to prison for more than three months, or you are censured or struck off by a professional association, you run the risk of your honour being forfeited. I know there is a catch-all that says "in exceptional circumstances". If you look at what happened in this case, it was not as if there was some sort of inquiry into his conduct. The committee relied on the FSA report, which was drawn up for completely different reasons. It started off life as an inquiry into what the FSA had done wrong, and then it was extended to look at some of RBS, but it was not a trial of Fred Goodwin. Had due process been followed for all the knights, or anyone who held an honour-I do not know who did-and who happened to be culpable in this whole sorry business involving the banks, regulatory system and, who knows, Government going back years, by all means do that, but do not just dream up a set of rules that fit one particular instance. That was the thing that was so unfair.

The public reaction to this is interesting. By chance, I had written an article for The Times the day before. The news came out to allow me to comment on this as well. As to the reaction to the things I said the following day on television and radio, I was surprised at just how one way the traffic was. People do not have any time for Fred Goodwin, but they had absolutely no time for the way this was dealt with.

Q107 Chair: The public knew he was being scapegoated.

Mr Darling: Yes.

Lord Jones: When someone is in receipt of an honour it would perhaps be helpful if they were sent discreetly a letter, or whatever-or maybe called in for a briefing-in which it is said, "This is what is expected of you." People might say it is a statement of the obvious. Nevertheless, "This is what is expected of you and this is what will happen if certain things occur." If Sir Fred Goodwin, as he then was, had been called in and told, "By the way, on these events happening, your name will go forward to a group of people who have the power to do this," I would settle for that.

Q108 Chair: You want a much more transparent process.

Lord Jones: Not just transparent-because it certainly was not-but a set of rules we obey. We have sets of rules. In this country we are making 10 regulations a day, including Christmas Day. For some reason, in the honour system there are no rules, regulations and understanding, and it seems very much as if there is a response to the last headline in the popular press. That is no way to run a railway.

Q109 Chair: Mr Darling, you were suggesting that future governments might regret this. Do you think it does set a precedent?

Mr Darling: I do not think they will touch this again. My guess is that were you, for example, to come up with a recommendation that there ought to be clear rules governing the giving and taking away of honours, they will look at it. I saw the useful note prepared by the House of Commons Library. Numerous attempts have been made by successive governments to try to improve the entire process, not just this narrow one. I suspect the time is now ripe to look at it again in the light of this, but, frankly, I do not see this happening again because it went badly wrong for them.

Q110 Chair: Do you think we need to make some recommendations?

Mr Darling: I do. You need to make sure this does not happen again. It is entirely right that as a country we should honour people who have done well or made a contribution to our national life, in whatever sphere it is, but we need to be clear about the process of nomination and how that works but also, if something goes wrong, what circumstances might cause the whole thing to be reviewed. Having a catch-all that allows you to open something up and, frankly, go into uncharted territory is wrong. Everybody has to be judged by this. The board of RBS, just like the board of HBOS, were legally responsible for their company. Why go after one knight just because he happens to be in the public mind?

Lord Jones: I would very much welcome the Select Committee coming up with recommendations and using your brief to go a little wider to answer some of the questions that certainly the public asked me at the time. I remember being on BBC’s Question Time during the week it occurred. There were a lot of questions about it. For instance, is it right that for MBEs, OBEs and CBEs we still use the word "empire"? Is it right that a civil servant does his or her time, gets to a certain level and, bang, thank you very much, gets a gong? Is it right that Fred Goodwin gets a knighthood for services to banking when he was paid incredibly handsomely for doing so? I ask the questions, and possibly there are some rhetorical answers in there, but the whole issue is: why did he get a knighthood? Why do so many people get theirs? What are the rules pertaining to the granting of honours and those honours being taken away?

Q111 Chair: At the end I was going to ask about the word "empire". Should we drop it?

Mr Darling: We do not have one. In some way we are in a difficult position. We are making someone a Commander of the British Empire and we are in no position to offer him such a command. There is a lot of tradition about knighthoods and so on. I feel less strongly about that. If I were giving you advice, having seen this operate for over 25 years, the wider you go, the greater the chance people just ignore everything you say. I would go for the things that are fixable. Two things are fixable. One is how people get on the list in the first place. There is the business of having quotas for top civil servants and the top brass of the military. Whenever you open the newspapers at new year or in the summer time, it is striking. You see the usual suspects at the top end with a knighthood, and the people who have done something special and it really matters to them are at the MBE end of the market. I would have a look at that.

In relation to this particular mischief, if someone has transgressed what are the criteria? That is something you certainly need to look at. It is not just here. I do not think it is entirely for the other place. One of the things I am sure Lord Jones came up against was people saying, "How can you take a knighthood off Fred Goodwin when people who have been in prison are sitting, legislating and voting in another place?"

Q112 Chair: Unfortunately, that does not fall within our remit.

Mr Darling: It has never stopped you in the past.

Lord Jones: I think Alistair is absolutely spot on with that. I would change the word "empire". One of the ways we are going to win in the 21st century is on merit. We will get round the world; we will shelve and dismiss the arrogance that comes from 200 years of empire and show the world that we are damned good at what we do. I have done this for a living, and I also do it because I care. You go round the world and somebody says, "So and so is with you. He’s a CBE. What does that stand for?" The moment you say the word "empire" you wish you did not have to. At one end you get the opium wars; at another you get some battle for independence. All over it smacks of arrogance.

Q113 Chair: Do you not get it also with knighthoods? You do not wear armour and carry a lance any more.

Lord Jones: The only upside of a knighthood in my little example is that it does not have the word "empire" attached to it. I would call the whole thing to a halt for 12 months to give yourself a clean break. Then I would start with three orders, and over that I would probably still have knights and dames. Those three orders would be the same as MBE, OBE and CBE, but they would be called something that related to Her Majesty, or one day His Majesty, because it is a gift from the monarch and not Government, and possibly-I do not know-involve the Commonwealth. I would certainly have the word "British" in it.

Q114 Chair: How about substituting the word "empire" with "excellence", and then we do not need to change the orders, which is what we recommended before?

Lord Jones: Maybe. I just would not have "empire". I would push that one, but the other thing you can fix, and you should do, is I would like to see these awards, from knighthoods down to MBEs, given for something extra over that for which you are paid. If you are a business person and are fabulous at creating loads of wealth for a bank and making money yourself, but you are also doing charity work, fair enough, but do not say the award is for banking; say it is for charity.

Q115 Chair: People have said in evidence that you should not get an honour for doing a day job.

Lord Jones: Exactly right.

Q116 Chair: Do you agree with that?

Mr Darling: Yes.

Q117 Chair: So do away with all the automatic honours for military, diplomats and civil servants.

Mr Darling: If you look at the Civil Service, as Secretary of State I remember lists coming up to me. Not only does someone automatically expect a knighthood; you get upgrades of knighthoods. I do not know how many different orders there are, but every year you see that someone is upgraded. That means nothing to the general population, but it means an awful lot to Sir Humphrey that he has been upgraded to the top notch. I think it is all nonsense. There should not be quotas, either explicit or implicit, about these things.

Q118 Chair: To be devil’s advocate, there are certain pinnacles of professions and careers where you have to be excellent to get to that position. That goes for the Chief of the Defence Staff, Cabinet Secretary and so on.

Mr Darling: That is fine. If someone has been recognised for something that they have done really well, I do not mind. It is not something that keeps me awake at night. That was why I had nothing to do with the calls to remove Sir Fred Goodwin’s knighthood in 2008 and 2009, because there were rather more pressing issues to deal with. However, if you are to look at it you need to consider the whole thing afresh and proceed on the basis that this should be something exceptional. The people I would like to see going to the palace in larger numbers are those who, frankly, do an awful lot in whatever field it is but do not always get the recognition they should.

Lord Jones: The world has changed. Not only do we no longer have an empire, but there are lots of ways we can sing our song and reward excellence with honours that do not reflect that word. Similarly, when you were a very poorly paid civil servant or diplomat and not being rewarded on a market rate, I can see why a grateful country and sovereign should say thank you by way of honours recognition. Now a top civil servant is getting more than a top manager in many a business and a stonkingly good pension compared with the private sector. I am sorry, but the idea of rewarding because you are not being paid in the same way goes out of the window. I am thrilled that at last we are rewarding the public sector in a way they thoroughly deserve, but they cannot have it both ways. They cannot then say, "By the way, I’d also like my automatic honour."

Q119 Kelvin Hopkins: I hold no brief for Fred Goodwin and I am no enthusiast for the honours system but, given the crisis that came upon us because of the behaviour of a large number of people, including officials from the FSA, Treasury and Bank of England who should have known better and got a grip of it earlier on, something dramatic had to be done to pull people up short and restore some integrity, if you like, to the British banking system. People from Bangalore no doubt know it is a bit better now than it was then. It may not be perfect now, but something dramatic had to be done. It just so happens that Fred Goodwin was first in line.

Mr Darling: That is precisely my objection to it. We are all supposed to be equal before the law. Something is very wrong when you say, "Right, I’m picking you out two years after the event." You are right that the banking system is better, but not because of the removal of Fred Goodwin’s knighthood but because various other things have been done in the meantime. If you look round that boardroom table, all of those guys still have their knighthoods and, by the way, are still operating in other boardrooms and other parts of the British establishment. Fred’s mistake-I told him this would happen-was holding on to his pension. If he had not done that, he would have been able to dip below the horizon and reappear somewhere. As it is, I think the man is virtually unemployable.

Q120 Kelvin Hopkins: But the boil had to be lanced somehow. I agree with you that we should not be scapegoating, but the parallel, if you like, is with MPs’ expenses. Something had to be done to try to get back some public respect.

Mr Darling: Yes, but people have to be treated equally.

Lord Jones: You execute Admiral Byng pour encourager les autres, do you?

Q121 Kelvin Hopkins: It may be a lot of knighthoods, not just one.

Lord Jones: The problem is that the subject matter is so easy to condemn. I thought next morning that he thoroughly deserved it.

Q122 Chair: Do you think that if the public could strip politicians of their honours and privy councillorships, they would vote to do so.

Lord Jones: On the basis that they make mistakes as well.

Q123 Chair: Perish the thought.

Lord Jones: Exactly.

Q124 Charlie Elphicke: Mr Darling, you have dealt with honours to businessmen and civil servants. What about politicians? For example, do you think that Gordon Brown should have an honour for his services as Prime Minister, or was he simply doing a day job?

Mr Darling: I would not exclude politicians, national or local, in either House from being awarded it if they had done something special. It would be a great pity if we went back to the system where there were political honours in every list. Basically, you would see "for political services" in relation to the chairman of a local party, or something like that. I do not think that is a good thing. What I am saying is that it should not be automatic; it should be something special. In other words, MPs and politicians should be treated as the rest of the population.

Chair: We will come to political honours later on. I know you have views on that.

Q125 Lindsay Roy: Is it your contention that Sir Fred Goodwin was a sacrificial lamb?

Mr Darling: The problem was that there was a bit of the lynch mob about it. He was offered up and dealt with.

Q126 Lindsay Roy: Can you elaborate on what changed between 2009, when there were calls for annulment, and 2012? You have made mention of lynch mobs, but what were the various pressures brought to bear to bring the Forfeiture Committee about to make this decision?

Mr Darling: I do not know what happened under the present Government. In 2008 and 2009 occasionally there would be calls-you would read about them in the newspapers-for one or more people concerned to have their honours removed. I was very clear at the time that, with all the other things we had to deal with, with banks on the brink of collapse, frankly it was not at the front of my mind. My permanent secretary at the Treasury said he had been approached by the Cabinet Secretary on one or maybe two occasions to see what we thought. I was very clear, as was Sir Nick Macpherson, that we wanted nothing to do with it. The rules, as we understood them, were that you lost your honour if you had broken the law and gone to jail, or you had been struck off. Whatever you think of Fred Goodwin, he had not done either of these things.

Q127 Lindsay Roy: It was the wrong way to go about it.

Mr Darling: It was something I did not entertain for more than a couple of minutes. Suppose we had done this. I think we would have got exactly the same reaction as the present Government, where people say, "Hold on, you are trying to pass all the buck on to this one man." When you look at the build-up to the banking crisis and so on, it was not the fault of one man. He made mistakes-do not misunderstand me-but to try to pass this off on the basis that by dealing with one man you deal with the problem is something that brings politics into disrepute.

Lord Jones: To answer your specific question, I think the publication of the FSA report suddenly provided chapter and verse to dish out a bit of blame around the place.

Q128 Lindsay Roy: And the wolf pack came out.

Lord Jones: Exactly. He got a kicking in the FSA report. As Alastair rightly says, he was not accused of any criminal offence.

Mr Darling: He was not the only one who was criticised in that report.

Lord Jones: To answer your specific question about what changed, I think suddenly the pack got a bit of paper it could work on.

Q129 Chair: It is worth pointing out that the FSA’s Bill Knight told the Treasury Select Committee there was "no evidence" of Mr Goodwin’s incompetence, and that the FSA report did not amount to a censure of Mr Goodwin.

Mr Darling: Absolutely.

Lord Jones: The fact is that there was a report that provided a hook.

Mr Darling: It would be interesting to see the deliberations of the Forfeiture Committee. Every one of them is a knight and civil servant. When you criticise a country in another part of the world for lack of democratic process, you know what the verdict will be once you refer a case to a court or committee. That is precisely what happened here. From the moment I heard it had been referred to that committee I was in no doubt what it could come up with. It is a function of the way it was dealt with, but there is no way this should be decided by six permanent secretaries and one or two others.

Q130 Chair: We are going to interview the chairman of the Forfeiture Committee.

Mr Darling: You tempt me to come along.

Q131 Lindsay Roy: To clarify, the Forfeiture Committee did not change the rules.

Mr Darling: No, it did; it used the holdall, and then referred to the FSA report, but, as the Chairman just said, that does not help them.

Q132 Chair: We have a Labour vacancy on this Committee at the moment, if you would like to volunteer.

Mr Darling: I have other commitments at the moment.

Q133 Priti Patel: Should decisions to annul honours take into account the views of Members of Parliament?

Mr Darling: No.

Lord Jones: Certainly not.

Q134 Priti Patel: Going back to the case of Mr Goodwin, do you think the fact that many Members of Parliament were commenting at the time helped to drive it, or influence what then happened?

Mr Darling: Yes. To be blunt about it, I suspect that the members of the committee were fooled. Inasmuch as one can say, they were fully aware of what the noise was. I think that would include the fact there was an early-day motion, or something like that. Lots of MPs were quoted-I cannot remember which-but that is all the more reason, as in any court, for it stand aside from what people are shouting and say, "Let’s look at the facts here and the criteria and come to a view." Despite what a lot of people said, the reaction afterwards was almost universally one of criticism.

Lord Jones: If an MP sat in his or her surgery the weekend before the Forfeiture Committee sat and the issue of Fred Goodwin was mentioned, it would have been said, "This man doesn’t deserve his knighthood. How on earth he got a knighthood is beyond me; he should be in prison and bankrupted." That is the sort of thing the average guy in the street-or my mum-would have said. I understand why MPs reflect that; that is why they have surgeries. That would have filtered up to places. One of three things could have been done. He could not be put in prison because he committed no criminal offence. He could not be bankrupted, because, as I understand it, he had not committed an actionable tort. He could have his knighthood taken away, but only in my view by action taken today and implemented retrospectively. In that respect was the action taken because of MP pressure? I think it helped, but the biggest pressure of all was the headlines in the newspapers and a Government who were influenced by that and went forward to satisfy the mob. It is not the way this nation should be seen to mete out justice. It was nothing more or less than punishment, and in our nation punishment should be meted out to people after due process and proper trial by their peers in a transparent way, unless there are huge reasons why it should not be transparent. Not one aspect of that happened.

Q135 Chair: Would you not say that in part this was politicians shifting the blame on to the banking and regulatory class?

Lord Jones: No, I would not, to be fair to them, although I do not know why we should be fair to them. The huge anti-banking, anti-business and anti-wealth creation sentiment in this nation at the moment does not need to be fuelled any more by politicians.

Q136 Chair: But the politicians ramped this up.

Lord Jones: Of course they ramped it up; it is populist to hate business and to try to get people to dismiss wealth creation. I do not think this decision was taken to shove blame away from politicians, which was your question. Do I think it was part of a populist revolt against wealth creation and banking in particular? Yes, I do.

Mr Darling: It is worth reflecting that this was the end of January and beginning of February; it was just coming into the bonus season. I referred to the article I wrote in The Times-I wrote it during the day-about the fact I thought the Government were making a big mistake in going along with vilifying the chief executive of RBS. That evening the news came out, so I added to it. Those were the atmospherics at the time. But it will not wash. The public are well aware that, when it comes to pointing the finger on this particular thing, there are many different groups to look at. Anyone who thought for a moment about trying to put it all on to one person would realise it would not work. This is a classic case where the Cabinet Secretary should have said, "If you want to change the rules, fine, but don’t ask us to do this for you using rules on the subject that are somewhat less than clear."

Q137 Kelvin Hopkins: You have said that MPs should not sit on the Forfeiture Committee. Who should sit on that committee?

Mr Darling: I would make it independent of the political establishment. I certainly would not have MPs on it. You might have a top civil servant advising the committee. I would give the job to a retired judge, or somebody like that, maybe with three or four other people, but it has to be seen to be independent. There might be the odd one or two who do not have a knighthood.

Q138 Kelvin Hopkins: It does have some rules to go by.

Mr Darling: It has to have clear rules; otherwise, you cannot judge anything, but I think the committee itself should be out of the establishment, so there is no temptation for civil servants to say, "What do our masters want?" In the Civil Service mind, that can happen very easily. Of course, they would not be told what to do, but I should not think any of them would have any doubt as to the general mood at the time.

Q139 Chair: They have to be people who are capable of resisting public pressure.

Mr Darling: Yes. You ask me what MPs think. Over the past three or four years I have had the job, and still do to some extent, of defending bankers’ high pay and bonuses. At times you think, "I’m not getting any of that, and here I am having to defend this because of the world in which we live." Sometimes you have to stand up and say things that are not popular. When I said what I said about Fred Goodwin’s knighthood, I believed that next morning when I went into the BBC the world would be against me, but I thought that if I did not speak up on the subject I would be making a huge mistake, because I just found the whole thing so repugnant.

Lord Jones: I completely agree with that. I remember that it came out at about five o’clock. I was in the studios doing something else. I went on all the news channels at six o’clock to deal with it. I remember thinking, "I don’t think I am where the public are on this, but I know I am standing up for something I believe in, which is the rule of law." I did think I would get a kicking in the morning’s newspapers but at least I could look in the mirror and think I had done something right that night. Quite a few journalists came out against me, but, as I got round the country and talked to businesses, I was quite surprised that they were all of the same opinion, which is what you found: "We didn’t like him; we thought he thoroughly deserved everything he got, but this is not the way of going about it."

Q140 Kelvin Hopkins: I agree about not scapegoating, but, from your experience, someone somewhere in the Treasury or Bank of England must have seen what was happening. I wrote articles in a scurrilous leftwing newspaper suggesting that running an economy on an asset price bubble and credit card debt was not sensible, and at some point it would all crash. I wrote this long before it all happened. Surely, people in the Treasury must have been saying, obviously before your time, "Chancellor, this is not going to work in the end."

Mr Darling: It is a subject on which I can speak for some hours. Happily, much of it is covered in my book.

Lord Jones: It is available in all good book shops.

Mr Darling: And now out in paperback. Since I have mentioned it, perhaps I should draw the Committee’s attention to my entry in the Register of Members’ Interests, which includes the book. There are many examples where people inside or outside Government saw things going wrong. Part of the problem was that at no point prior to this did someone bring all this together and say, "Hold on, we’re sitting on a potential time bomb here." There was concern expressed about the property bubble and the amount of private debt. What I do not think anyone really foresaw was that it was all coming together in such a lethal combination. Critically, a lot of people, including the regulators, failed to spot the interconnections, especially within the banking system, so that when something went wrong it fed right through the system within a matter of weeks. We are still living with that today. One of the problems we have today is that, while we and the Americans cleaned up the banking system four years ago, Europe did not. We saw Spain last week desperately trying to do that, but that is probably way off your honours inquiry.

Q141 Chair: We could spend hours on that, and I would love to do so, but we cannot.

Mr Darling: Good.

Lord Jones: Perhaps I may declare an interest because of my book. It does not talk about the banking crisis. Let’s take the example of Northern Rock. In about 2004 or 2005 if a non-executive director had said, "I’m completely uneasy about this because it depends on the rest of the banking system lending you money, and one day the rest of the banking system might run out of money to lend you," he would have been told to go into a corner, put a towel round his head and wait until the feeling went away. I am not making a value judgment about whether that is right, wrong or indifferent, but if he had said the reason his bank would be made bankrupt is that the rest of the banking system would have no money, no one, including my learned friend, would have agreed with him.

Q142 Chair: This is the interesting thing, but we cannot spend too much time on this. There are others like Mr Hopkins who were forecasting impending doom for some years. For some reason the system could not do that. We look at strategic thinking across Government. You may not be aware that an organisation tried to put forward global banking collapse as one of the major risks to be addressed in the first iteration of national security strategy, and it was excised.

Lord Jones: When was that?

Q143 Chair: In 2006, which was before your time. Moving on, perhaps we may talk about the Parliamentary and Political Service Honours Committee. I first learned of this in a letter from the Prime Minister that I was not expecting. Lord Spicer will chair this committee, which will be composed of Patrick McLoughlin, Conservative Chief Whip; the Liberal Democratic Chief Whip; the Labour Chief Whip; Baroness Hayman; Lord Butler; Dame Mary Keegan; and Peter Riddell. This committee is to oversee honours for parliamentarians and staff in Parliament. Is it necessary to have this separate honours committee in your view?

Mr Darling: Can you help me on one point? Your clerk was kind enough to send me a copy of this letter, and a copy of a letter written to you by the Head of the Civil Service, but I was also reminded that, because the Committee had not yet made it public, I should not make it public myself. I really need to refer to the second letter to answer your question. Am I allowed to do that?

Q144 Chair: Of course you can, because I have.

Mr Darling: I have probably now left you with no option but to say yes. I do not think that Members or Parliament, or peers for that matter, should be treated any differently from the rest of the population; in other words, if someone does something special, or above and beyond the call of duty, of course they should be considered. That is entirely acceptable. When I was elected in 1987 the House of Commons had a surprisingly large number of knights on the back benches, predominantly in one party rather than another, who had got these things for political services. I think the general feeling was that this was out of date; it should not be happening, and over the years there were fewer and fewer knighthoods given in particular. I think we said we would specifically end the knighthoods and honours for political services. The Prime Minister now explicitly says he wants to restore that. I do not think that is right.

What I have concerns about is that the letter from Sir Bob Kerslake, Head of the Civil Service, refers to an allocation of four knighthoods or damehoods, four CBEs, six OBEs, nine MBEs and two BEMs. I think that is quite wrong. There should not be allocations. It means, presumably, that this allocation will be taken up. As far as I know, there are not allocations for doctors, nurses, lollypop men and women; they are just not there. I think this is the wrong way to go about it.

Q145 Lindsay Roy: Not only that. Would it not be a hugely disproportionate percentage of the overall honours?

Mr Darling: I do not know how wide the field is and whether it is just Members of the House or all politicians, meaning local ones, but you are right; it is still a pretty small section of the population. I do not think people in political life should be excluded from public honour, if you like. As I said to you earlier, in the Civil Service there are quotas. When these things come up before secretaries of state there is a quota. You see things like, "We’re likely to get two CBEs this year. Here are three names." I just do not think it is right. At a time when politicians are not held in perhaps the highest regard we should not have a special allocation essentially for MPs.

Lord Jones: I completely disagree with any form of quota. Alistair Darling’s deduction is completely right. I would not want a quota in any other part of our society either, and I do not see parliamentarians as better or worse in that regard.

I am quite convinced of my indecision about the following. Take a footballer, rugby player, tennis player, racing driver or swimmer. If they swim or play rugby or football to the best of their ability, they have done the job for which they are paid. They may happen to win and bring glory to our nation and to their sport. All of us can see the difference between an enfant terrible and a fabulous exemplar in a particular sport; we know various examples of both sorts. I never know the answer to the question: do you reward the England rugby world cup team that won the world cup in 2003? The manager got a knighthood; the skipper got a CBE and the rest got OBEs or MBEs. In one way, I am thrilled to bits. Personally, I would have given all of them knighthoods. I thought it was marvellous for the nation and great for the sport. Most of them were role models who would help in the community and all the rest of it, but they were only doing their job, which is the other side of the argument.

If you are an MP, you are doing the hard hours MPs do and shouldering the burden of being unpopular all the time. In my experience 99% of MPs really do make a contribution to society. I may disagree with them politically sometimes and agree with them at other times, but the vast bulk are much unloved and yet do a fabulous job. They are a bit like that world cup winning team, are they not? They are only doing their job for which they are paid. Therefore, they should not get recognition. On the other hand, society is better off for them and they are making a contribution that is greater than other people, so they should get an honour. I am convinced of my indecision, and I would look forward to your recommendations to advise me on where I should put my cross.

Q146 Lindsay Roy: Are you of the view that too many honours are given for just doing a day job, no matter where it is?

Lord Jones: Yes, in all aspects of society.

Q147 Lindsay Roy: One of the criteria should be that to achieve an honour there should be a contribution way above and beyond the call of duty.

Lord Jones: I think so. The military is a very good example. It is a very sad fact of life-we are finding it daily and tragically at the moment-that when you join the Armed Services one of the things you may sign up to do is die. I suppose that police and prison officers are much the same. I cannot think of many others cases where that is part of the job description. Therefore, an act of bravery, as opposed to doing your job, is something that can be recognised by military honours, all the way from the Victoria Cross at the top to the bottom. I can understand that. But I do not understand why there are honours for a military career, no matter how brave you may have been on the way through it, for which there are awards for gallantry. You are doing your job, as you are if you are a senior civil servant or chief executive of a business.

One thing Mr Darling’s Government did really well after 1997 was to start to dish out knighthoods to head teachers of big comprehensive schools that got good reports and results. I thought it was fabulous because it was elevating education and excellence in managing education to the same extent that business, the Civil Service and the military had had for years. On my argument, do I think that those head teachers deserved it, because they are only doing their jobs? On the other hand, it was a huge morale boost for probably the most important sector of our society. I do not mean you can use the honours system on the basis, "Give me a load of money for my political party and I’ll give you a knighthood." I mean you can use it to reward a sector to get their heads up and make them feel good about themselves, and then you will get the results for society going down through the classroom.

I can see why you use policy to move that forward, probably unfairly when looked at in the round, but they did use the honours system as a way of elevating the importance of education in our society. I personally applaud them for that, but, if I was to be cynical about it, it is no different from giving it to a civil servant or businessman because they are just doing their job. Jonny Wilkinson scored a drop goal and won the world cup. He did only what he was trained and paid to do. On the other hand, he won the world cup and we all said, "Well done," and he got an honour for it.

Q148 Lindsay Roy: Should a citation go beyond, for example, services to banking and indicate what it is over and above the call of duty that gained that award?

Lord Jones: Definitely and absolutely categorically. When I was at the CBI and signed off recommendations to what was then the DTI-in fact to you-I always asked to see what else they had done. What charitable work did they do? Did they give their time willingly to do a report, investigation or something like that? What other contribution did they make other than their day job? I felt that very strongly, as I did about mine. I do feel very strongly that should happen. I would go as far as to say that if it does not happen they should not get it.

Chair: That has been very helpful. I do not know whether my colleagues have any further questions.

Q149 Greg Mulholland: I am sorry for being late; I travelled down this morning. Perhaps I may ask one quick, final and related question. We have been talking exclusively about what the honours system is technically, but there is another way that the public perceive people, including politicians-of course, both of you are former Government Ministers-being rewarded, which is by giving them seats in the House of Lords. Digby, you have become Lord Jones. That is perceived to be an honour, often very well deserved for a number of reasons. Do you agree with me that that muddies the water considerably? I am not asking for your view on what you think of reform of the Lords.

Lord Jones: You do not want me to give you a discourse on reform of the House of Lords.

Q150 Greg Mulholland: I am not asking you to do that. We have very different views on this Committee, and that is absolutely reasonable. Nevertheless, do you accept this is an issue and somehow we need to find a way? Of course, the accusations of cronyism with regard to the House of Lords, fairly or unfairly, are most pertinent and troubling to the public. Do you think we need to find a way of dealing with that as we go forward to restore more credit to the honours system as well?

Mr Darling: I would make a distinction here. In relation to the House of Lords generally, I happen to be in favour of an elected second chamber. That is the way you would sort out that problem. However, a problem remains. If prime ministers want to bring in people from outside the House of Commons into Government, they have to be answerable to Parliament. Therefore, the only thing you can do is put them in the House of Lords. I think that when Gordon Brown asked Digby Jones to join the Government, he had to become a Lord; otherwise, there was no other way to get him to the Dispatch Box. There is no way round that. If you move to an elected system and wanted to have provision for outsiders to be Ministers, you would have to think of some way to allow them to be answerable. There are a number of stages before you even get to that point. I have not spent much time thinking about it, but the only way ultimately you can resolve the House of Lords problem that you enunciate is by electing it because appointment then does not arise, but, as I understand it, there will be many happy hours of debate in this place when we come to look at that.

Q151 Chair: I take it you are voting for an open list system.

Mr Darling: I remember studying this in great depth some years ago, so much so I came to the conclusion, like so many others, that of all the problems we face in this country the House of Lords is probably not the biggest one, although there is merit in reforming it. I would have thought there are other matters, economic dare I say, on which we would better concentrate our minds at the moment.

Lord Jones: It will come as no surprise that I fundamentally disagree with the man on my left.

Mr Darling: We have fallen out at last.

Lord Jones: As I go round the businesses of Britain and ask what are the top 10 things a government could do right now to create jobs, wealth, generate taxation and sort out the mess, I have to say they do not say, "Please reform the House of Lords." It is not exactly at the top of the national agenda, so on that we agree.

To answer your specific question, first, you are right that I became a peer to do a job. I became a peer to be able to stand at the Dispatch Box and participate in fighting for trade and investment within the Government. I am the only Minister the country has ever had that did not belong to the party of government. I did not want to belong to any party; I never have and never will in my view. I and the Prime Minister felt that trade and investment was the one job you could do that was not party-politicised. It was very promotional, especially overseas. We live in a world where overseas you need titles. I am not too sure what those titles need to be, but they have to be recognised so people understand they are talking to a certain stratum of the country you are representing. It might be anathema to some people; it just happens to be a fact of life. If you sit down with people in other countries and promote trade and investment, believe me they want to know they are talking to senior people and they need titles. We can certainly have a conversation about what those titles should be.

Second, I considered it an enormous honour and privilege, and I still think that today. People always say I am one of those who never take it for granted any day of my life, and I do not. But I did not see it as an honour in the same way as I did when I got my knighthood. When I was knighted by Her Majesty, that was purely an honour. There were no obligations or responsibilities coming with it at all. That was recognition for charitable work and for the work at the CBI and business. I considered that a most tremendous honour.

When I became a peer I saw that as a job of work and an obligation and responsibility to fulfil a task every day. It was a tool to enable me to do so. I find it difficult to answer a question you have not asked me: even if you bought that argument, on that basis does it mean that when you stop doing that job you cease to be a peer? Do I go back to "Sir" in my case or "Mr" in others? I do not know. What I do know is that I participate actively in the House of Lords as a cross-bench peer, and I take part in debates. I am there quite often. Did my experience from all the things I have done add to the quality of the debate to which I can contribute? Yes, it does. By the way, loads of peers with former ministerial briefs carried on in the House of Lords when the job stopped and add to the quality of the legislative process by being there, which could not happen if your title stopped when your job stopped.

Q152 Chair: I think we are going off the subject.

Lord Jones: But I am answering these questions. I would end that little bit by saying that, even if you have an elected upper chamber or you do not-in other words, the thing on which Alistair and I disagree-the matter on which we are both in agreement is that somehow you have to get expertise into the government side of life within Parliament, which has to be accountable to Parliament. How you do that, whether it is elected or not, is for another day.

Chair: It is for another day, but thank you both very much. It has been a delight to have you both before us.

Examination of Witnesses

Witnesses: Graham Smith, Chief Executive, Republic campaign, and John Lidstone, commentator on the honours system, gave evidence.

Q153 Chair: I welcome our second panel of witnesses. I would be very grateful if you could identify yourselves for the record.

John Lidstone: My name is John Lidstone.

Graham Smith: I am Graham Smith, chief executive officer of the Republic campaign.

Kelvin Hopkins: I want to put on record that I am a member of Republic.

Q154 Chair: Let me start by putting a question to Mr Smith. The Cabinet Office did a survey on this topic in 2009 and it was found that 71% of people were proud that the UK honour system existed. Does that not suggest that the reforms you propose are unnecessary?

Graham Smith: I did look at the evidence. I could not see any source materials. I am not quite sure what questions were asked of people.

Q155 Chair: Generally, people are content with the honours system.

Graham Smith: Maybe they are or are not. I think it is difficult to take one bit of evidence and draw too many conclusions from it. I think there is widespread discomfort with a lot of the details of the honours system, even if they are happy with the fact that we have such a system. Some of those issues were raised by the previous witnesses, Lord Digby Jones and Mr Darling. Clearly, there is a lot of discomfort with issues such as the use of the word "empire" and the idea of giving people titles. I think the problem with titles is the distinction between recognition and elevation. Rather than simply recognising people, you are elevating them and implying there is a structure within society in which some people have a higher status than others. I do not think that is appropriate in a democratic society where we are all supposed to be recognised as equal citizens with political equality, if not other forms of equality.

Q156 Chair: Mr Lidstone, do you want to comment on that?

John Lidstone: If one looks at the Republican argument, my problem is that we have a Queen who has been on the throne for as long as she has and, having come to the throne at the age she did, she did not have what I would call any publicly stated views on anything. She now has that remarkable ability to be able to meet all conditions and types of people throughout the world and the Commonwealth. She has great abilities to give counsel to the Prime Minister and any other member of the Government or Opposition. My difficulty with republican argument-I have made some attempts to study it-is: where will you get that accumulation of wisdom? Where will you find a person who can fulfil that role in the same way she has? We have got Charles coming, and that is a problem with all the ammunition he has given to the opposition through his rather ill-made remarks.

Q157 Chair: I do not think we want to discuss that.

John Lidstone: We do not need to go that way, but it has to be taken in the balance when one looks at the republican argument versus the monarchy. What I am saying is that I find myself in a difficulty in being able even to say who could be a candidate for that job, even if the argumentation was not so many in favour of royalty and so few in favour of a republic at the moment.

Graham Smith: I think the focus is on honours rather than the monarchy.

John Lidstone: But I wanted to give that view about the republican case.

Graham Smith: The problem is that there is a fundamental dishonesty in the whole system in the pretence that the Queen is granting honour and she is the fount of it. Clearly, the Queen has very little input into the process and she is simply doing what is required of her, which is to turn up and go through the ceremony. The system ought to be open and honest and it should be clear who is doing the rewarding.

Q158 Chair: But the principle is that those recommended to receive honours from Her Majesty have to pass a certain threshold or test that they are suitable for such honours.

John Lidstone: Edward Heath remarked upon the ‘fount of honour’ years ago. He said he wanted to do as little as possible to damage the Queen’s ability to exercise the fount of honour, and yet she does not exercise it; it comes through all these different committees up to her. Of course, one of the problems is that, as we heard from your previous witnesses, so many honours are given for being in the job you do. If you take Gus O’Donnell, who as just retired as Chief Secretary to the Cabinet and Head of the Civil Service, he has four gongs. For what, for heaven’s sake? All of these permanent secretaries have gongs; they all go with the job. Why? Nobody has answered that question at all. The fact is that they are civil servants doing their job, and that is it.

Graham Smith: We are supposed to be a democratic society, and our sovereignty ought to lie with the people, not the Crown or Parliament. It ought to be the people who are the fount of honour. It is the people who ought to be rewarding and recognising their fellow citizens, and the monarch ought not to have a place in this process at all.

Q159 Chair: The honours system ought to be run like X Factor, should it?

Graham Smith: I am not suggesting we have public votes on it. I agree with a lot of what was said earlier by Alistair Darling and Lord Digby Jones about putting in place a process involving an independent committee. I think that the rules of that process ought to be entirely in the hands of a cross-party parliamentary committee.

Q160 Chair: That leads to a more specific question. What steps do you think we ought to take in order to improve the transparency of the honours system?

Graham Smith: Remove Government’s participation in the process completely and have an independent committee that is open and transparent and has clear rules. The rules ought to be set and policed by a crossparty parliamentary committee independent of Government influence, so that the people awarding the honours are managed through an independent committee on behalf of Parliament-not on the behalf of an unelected monarch.

John Lidstone: I have gone on record as saying that, in my judgment, honours should only be given for two categories of people: those who do outstanding things beyond their job and duty and those in the armed forces or in civilian life who perform acts of outstanding bravery-nobody else. We have heard a not dissimilar view from Alistair Darling that the honours system should virtually recognise that. The starting point is that there is no definition, as it were. Forget about republicanism and monarchy and all the rest of it; let us start by saying "what are honours for". I thought I would draft something: this is how I look at the honours system. "The honours system exists to recognise, through tangible awards, acts of outstanding excellence or bravery beyond an individual’s duty or job." If you do that, you are immediately going to exclude all these politicians, diplomats, people like that, who get honours with the job. If you analyse the Birthday and New Year honours lists, it seems to be that you see these people coming up and getting their honours all the time. Ambassadors getting knighthoods: for what? They are doing their job, nothing more. It does not open any gates to political favour because they have knighthoods or anything like that. The starting point has to be a definition of what you mean by honours.

Flowing from that, you have to look at all the committees. If you look at the committees at the moment, the latest committees we have, there are 84 members of all the committees. Guess how many honours they have all accrued to them: 102. You have all these people sitting there with titles. Nearly every chairman has a title or an honour, mostly going with the job. Why? No objectivity about any of those committees at all. In fact, Mr Chairman, I made the excuse when I campaigned after the last inquiry of going around the country. I thought I would put my own name forward to one of these committees that was going to be put forward to take the place of the ones headed by the Civil Service. I was rejected, although I do bring a bit of knowledge about this subject. The fact that I turned down the CBE when it was offered to me might have played a part in that; I am not sure.

Graham Smith: Putting aside the republican issue, I agree with a great deal of what John has said in terms of the limitations of who should be awarded. There is a lot of fiction and euphemism around the awards that are given. People are saying they should go with their jobs, but I was looking at the New Year honours list for 2012, and the knighthoods were almost entirely for people doing their jobs: mathematicians getting it for doing maths; professors getting it for services to scholarship. The list is entirely full of people getting it for their jobs and for no other reason. I find that quite bizarre. Particularly with the knighthoods, it is insidious that we are essentially elevating these people to some higher status. It reinforces this idea that there is a stratified society, where there is an elite that awards these titles to members of their own circles and rarely do they get awarded outside of those circles.

Q161 Lindsay Roy: We would accept there seems to be a widespread public view that some people get an honour for doing their job. Is there also a widespread public view that honours can be bought?

John Lidstone: Yes.

Graham Smith: Absolutely.

Q162 Lindsay Roy: What evidence do you have for that?

Graham Smith: Again, looking at this list, there is evidence from Paul Ruddock, who suggested some changes. He claims that he was given his knighthood for charitable work. It is very notable that he was a long-standing donor to the Conservative Party. Quite frankly, having read his evidence, I cannot see any reason why he ought to be knighted over and above anybody else. The only thing that does stand out is his very close relationship with the Conservative Party.

Q163 Chair: To be fair to Sir Paul Ruddock, his charitable work and his donations to charity utterly dwarf his donations to the Conservative Party. Are you suggesting that anybody who gives money to a political party should be excluded from any honour?

Graham Smith: There needs to be a very good reason for anybody getting an honour; I do not think charity work is good enough. It is very difficult to judge these things. This is the whole question of philanthropy. If a very rich person gives large amounts of money to a charity, I do not think that is sufficient to be awarded. Someone who is on the minimum wage may give a considerably greater contribution to charity, whether it is in terms of their own money or whether it is in terms of time and effort. It is considerably less likely that they would then be knighted for that effort. It is a matter of how much sacrifice they are making: is it really a huge sacrifice for a multimillionaire to give a few thousand pounds to a charity? Is that a greater sacrifice than a person on the minimum wage giving hundreds of pounds, £50, or a considerable amount of their time?

Q164 Chair: To be fair to Sir Paul Ruddock, who is not here to speak for himself, he has devoted a considerable amount of time and effort to his charitable work as well.

Graham Smith: As do many other people, and I think it is notable that it is people occupying certain circles in society who are much more likely to receive knighthoods for charitable work than other people who do so without recognition.

Q165 Chair: Do you think it is right for the press to demonise somebody who gets an honour just because they have given a donation to a political party? Is it not quite a patriotic thing, to support political parties?

Graham Smith: I have no problem with people supporting political parties.

Q166 Chair: Would you rather they were funded by the taxpayer?

Graham Smith: I have no problem with people supporting political parties at all, and I certainly do not think that people should be demonised for it.

Q167 Chair: That is the only reason he got publicity-because he had given money to a political party.

Graham Smith: Most people would accept there is a link, and I do not think the evidence would suggest this is a fair and balanced system of awarding people for charitable work.

Q168 Chair: You believe he got his knighthood because he gave money to a political party?

Graham Smith: That is my personal thought.

John Lidstone: I have an example, and Kelvin Hopkins will remember this, from when I was asked by Tony Wright to introduce myself. This is one example of many. A great friend of mine, who was chairman of four major British companies-Rank, <?oasys [pc10p0] ?>Westland, one of the banks, Standard Chartered, and Glynwed-was playing golf with me on the morning of the publication of the honours list in 1984. His name came up and I said, "Leslie, how come?" He said, "Well, the President of the Board of Trade"-it was called Secretary of State for Trade and Industry at that time-"asked me if I would write a cheque out for £40,000 made to the Conservative Party, and if I did that he would make sure I got a knighthood." It was quite blatant. Then he quoted Showering and all sorts of other people, and the list that is published of all these people that gave £290,000, or £429,000, like Jeffrey Sterling of Plaistow.

The other point I would make about charity-and you may find this uncomfortable-is I do not think anybody who gives large sums of money to charity should ever be allowed to employ a publicity agent or a PR person to make sure that is broadcast so that it comes to the attention of people. Edward Heath-funny old sod that he was-had a great reputation for giving to charity in secret; nobody knew that until he died. I do not think people should buy titles through charitable giving. I think it is quite obscene. Give it in private, give it in secret, but do not publicise it for your own aggrandisement.

Q169 Chair: The Government has the opposite policy: they want to encourage charity.

John Lidstone: They do, but I do not agree with it.

Q170 Chair: They want to encourage charitable giving by encouraging people to advertise their charitable giving.

John Lidstone: It is a bit like trying to steer political policy-and, presumably, knighthoods and all that flows from them-from the Big Society, or, in Blair’s case, teachers: funnel your knighthoods towards teachers.

Graham Smith: It is worth noting that there are other awards for philanthropic behaviour. I do not want to pick on Paul Ruddock; it is just that he was the example being raised in the evidence. You do get other awards from the charities involved. You might get a box in the theatre or status and recognition for your generosity, and so on and so forth. I do not think it is appropriate as a nation to single these people out and say, "Because you happen to be very wealthy, and you happen to be"-as many people are-"generous with your charitable donations, we are going to then raise you to a higher status and give you a title that you can expect to be used in perpetuity." I do not think that is appropriate at all.

Q171 Lindsay Roy: Are you arguing that what is happening is an over-influence on charitable giving in terms of finance, as opposed to time, energy and enthusiasm.

John Lidstone: Yes I do. There are two categories of charitable giving: one is to give of yourself, your time and your expertise. I used to give a lot of free time, when I was in business, to charities that needed the expertise I could bring in place of the fees they would <?oasys [pc10p0] ?>have had to pay, which might have been £5,000 to £10,000. That was one form of giving, as opposed to money, which is the easiest thing to give without too much effort. Again, I would stress that I find the way people peddle their money in order to get honours slightly obscene. It is quite disgraceful.

Q172 Priti Patel: You spoke earlier on about civil servants receiving gongs for doing their day job, and the fact that there are some civil servants, very senior ones, that have several gongs and awards. How do you feel about the crowding out of the availability of honours at that level, so that it prevents other people, members of the community and society, from getting awards?

John Lidstone: You are now touching upon a number of issues, one of which is quotas; another of which is the ethnic minority of 7%; another is the percentage of women in society. All these issues seem to contend to compete with the availability of honours that are going to be handed out. I find that in itself very odd. Again, Kelvin Hopkins was a member of the last Committee that looked at this. One of the things that shook me was the way the last Committee in 2004 had its recommendations, except two rather paltry ones, kicked into the long grass. Why? Because there was a General Election coming up and Blair wanted to milk the system so that he could sell more honours before the General Election of 2005.

Q173 Chair: It is a good job this session is privileged.

John Lidstone: It is privileged, which is why I say it.

Graham Smith: I do not think these views are particularly unusual among the public.

John Lidstone: They are very common.

Graham Smith: I speak to people about these sorts of issues all the time. It is widely held, not just by republicans, that this system is widely abused.

Q174 Chair: Mr Lidstone, would it not be rather odd if the vast majority of recipients of honours were all white men in our present society?

John Lidstone: I do not disagree with that at all, but the question that was being put by Priti Patel was about the numbers of honours. I think too many honours are being given out to privileged people. I would like to see the recommendations of the last Committee, which recommend from 16 to 4, and then get rid of the knighthoods, because knighthoods and titles divide society, whereas what you do and achieve distinguishes you. For me, titles are an aberration; they are totally irrelevant to society as we live in it today.

The other thing about this whole business of trying to decide how many honours you have is let us say we have a man and woman competing on level terms for an honour: what is that committee going to do? Is it going to say, "Right, we have to have a bigger quota of women, so we give it to a woman," or an Anglo Chinese rather than a white person? Some of it is absurd once you start to look at it.

Graham Smith: With the quotas, it does seem very odd that the process seems to start with: "We have 1,000 honours; let us go and find people to give them to." We ought to be finding the people through some other, more natural means and then saying, "Can we give them an honour." There was something Digby Jones said that I thought was very strange. He was implying that people would come to him with names of people they would like to give honours to, asking whether he could then find reasons to give them an honour. He would have to investigate their background and see whether they had done other things beyond being in the City. If you are asking people to go and investigate them after you have already decided you would like to give them an honour, that is a very strange, backward process.

Q175 Priti Patel: Are you calling for a radical overhaul and complete change in the criteria of the honour system?

John Lidstone: Yes I am. What I am calling for first of all is, as I read out earlier, a definition of the starting point from which you found an honours system. I gave my version of it. Whatever the defining point you would like to put down for it, let that be the criteria that you use, and from that you then have to look at the committee structures that sift through all of this and make sure that the right people are coming forward and being given honours. I have been up and down the country talking about the honours system for the last eight years, and I will quote what a rather cynical woman said to me in Wallingford, a very conservative place, where there are about 260 men and women at a meeting. She said, "John, why don’t you just accept that the honours system is totally corrupt, and let us, like the Americans, have a tariff and sell them, quite openly. And I will tell you one thing," she said, "that I am sure will go down a hell of a treat, and that is that people are paying a great deal of money to have tea at the Ritz and the Connaught. The Queen could make a fortune out of afternoon tea parties." When she said that-it is very cynical and paltry-there was a clap of applause, because they felt that is the level to which our society’s approach to the honours system has fallen.

Q176 Charlie Elphicke: I have two very quick questions. Given all you say, first, do you think we should just scrap the honours system altogether?

John Lidstone: No, I do not think that. Every country needs to honour by exception people who have done outstanding things in bravery, civilian life or elsewhere. That is the starting point.

Graham Smith: There is widespread agreement that there is a place for an honours system. I spent many years in Australia where they have an honours system. It is very simple: people are awarded an AO and there is generally very little controversy about it. There are no knighthoods or anything else.

John Lidstone: There were, but the Australians dropped them.

Graham Smith: Curiously, New Zealand has reintroduced knighthoods having previously got rid of them. That has caused some controversy. Something of that simplicity would be fine. I agree with John’s limitation of whom you might give them to; the other things are independence and honesty about where the honour is coming from. Clearly it does not come from the Queen; it comes from other places, and it ought, as I say, to come from the people via a system that is controlled by Parliament. Part of the problem is it is done as a means of PR, both by government and the Palace: they award celebrities in order to try to bask in the reflected glow.

John Lidstone: I would disagree with the Palace, because the Palace does not award honours, except four.

Graham Smith: The Palace certainly exploits the system. I know some celebrities have commented on the fact that they have had to go through the process of the award ceremony in a manner that was going to be good for their photo and PR opportunities. It is notable that these things are televised and recorded. Very often you see on TV someone going up to the Queen and receiving their honour when they become a knight. After the controversy with Fred Goodwin, the Palace slapped a ban on the broadcasting of the footage of him becoming a knight. They clearly see it as part of their PR to be a central part of this system of honour, and were clearly very concerned they then might be blackened by association with giving an honour to someone who was vilified in the press.

Q177 Charlie Elphicke: My second question, moving on, is if we are to have an honours system, let us look at the mechanism. Currently a bunch of civil servants sit round and make a recommendation to the Prime Minister, who recommends to the Queen. For many years that has been the case; for many years there has been a concern that the bunch of civil servants propose a bunch of civil servants, and that Prime Ministers like to give honours to political cronies and things like that. If we swept away that system and simply gave it to the monarch to do, and establish a committee and a group of people to award honours to-monarch elected or otherwise-would that be a better system: that you take it away from the Civil Service, away from the politicians, very much in a philosophy that it is truly separated from the governmental system?

Graham Smith: The monarch herself would have reservations about that, because when you come down to controversies about whom you have given the awards to, it would then very directly reflect back on the monarch as having been personally implicated in that process. It is quite clear-we saw this with the hung Parliament in 2010-that the Palace now wants to distance itself from all of its serious constitutional duties in order to protect itself from undue scrutiny and challenge. That is the flaw of the monarchy: it cannot withstand that kind of scrutiny and challenge, and therefore it tries to distance itself from anything remotely controversial.

John Lidstone: Your question was implicit in one of the recommendations of the 2004 Honours Report, which said that there should be an independent commission. If I remember rightly, one of my recommendations was that there should be a royal commission constituted so that Parliament no longer had anything to do with the honours system and the <?oasys [pc10p0] ?>Prime Minister had no more power to do anything to the honours system. They could make recommendations, but it would be a group of totally independent people who would propose those honours. By implication, if you adopt some of the things that we have been talking about, the honours given would be much fewer and of greater stature. If you take what was said about Fred Goodwin, he was given a knighthood, and it described his award in six words, "For services to the banking industry." If you read any citation for a VC, an MC or any of those bravery awards, it runs sometimes to 150 words, whereas if you read most of these MBEs, OBEs, CBEs, KBEs, the citation is about four words. What does that tell you? What does that tell anybody? All it tells the general public is that it is a stitch up.

Q178 Chair: Are you recommending there should be a much longer citation?

John Lidstone: There should be a much longer citation, fewer honours, and they should be outstanding honours. For example, if you take a question that arose from Priti Patel’s one to us earlier about honours, if you take the law, Parliament itself, livery companies, industry, the acting profession: all of these bodies have mechanisms for recognising outstanding competence beyond what they do in their normal way. The greatest joke to me was the award of a knighthood to Bruce Forsyth. It was absolutely bizarre, as it was to Terry Wogan. These people have their Oscars, Baftas and everything else.

Graham Smith: There also seemed to be with Bruce Forsyth-

John Lidstone: That was a campaign.

Graham Smith: There was a campaign, but there seemed to be a sense of entitlement: simply because he had reached a certain age and longevity in his career, it was now his turn. I do not think that is appropriate at all. It completely debases the whole system and devalues the awards. Personally, if I had done something quite extraordinary that saw me awarded an MBE and I then saw Bruce Forsyth getting something for essentially making an awful lot of money out of entertaining people, I would have been very angry indeed. I imagine some people were.

John Lidstone: Paul Scofield, the famous Shakespearean actor, said, "I am totally against knighthoods for anybody who acts." He said, "They may stand up and say, ‘Of course, I am accepting this on behalf of my fellow thespians.’ Rubbish-who are they kidding?"

Q179 Kelvin Hopkins: This is a question to Mr Smith. You have called on nominees for honours to, and I quote, "publicly reject any such honour until such time as they are appropriately titled and properly reserved for legitimate purposes." How successful have you been at persuading people?

Graham Smith: People do reject them. This is a fairly recent statement. Obviously the whole process is secretive, so it is difficult to know who is in line for them before they accept them. There is a long line of <?oasys [pc10p0] ?>people who have rejected them, and one of the problems of the system is it is, for some people, divisive and exclusive. I do not think we ought to put up with a system-even if it is only a minority of people-where some people feel unable to take those honours because of their views about empire and the monarchy. I do not think that is appropriate. An honours system ought to be acceptable and open to everybody in the country if they have done things worthy of nomination. There are people, Benjamin Zephaniah, Joan Smith, for example: they have rejected them for different reasons.

John Lidstone: Or returned them, as in the case of Yasmin Alibhai-Brown.

Graham Smith: People do reject them; that in itself is a sign that it needs to be changed so that it is acceptable to everybody. I do not think it is right that some people should be excluded from that system.

Q180 Kelvin Hopkins: You want to move towards-as I would personally-a democratic country of citizens, rather than subjects.

Graham Smith: Democratic values are very deeply and widely held in this country; that should be reflected in the honours system. It should be citizens rewarding other citizens for great deeds or bravery, and it should not be a slightly patronising notion of a higher power conferring status upon a lower subject. I think that is quite wrong.

John Lidstone: Chairman, could I make just one comment about the nomination system that I think John Major introduced, did he not? It was his idea. You earlier had interviewed two Lord-Lieutenants. It seems to me that if the nomination works properly that could be one of the principle sources for the discovery of people of outstanding courage in civilian life or outstanding acts in civilian life. Of course, the services have their own bravery awards. That could be a principal source-to feed into an independent commission-of people who could be considered for an honour, and give the Lord-Lieutenants a greater say in these matters, assuming that one wants to continue that system. At the moment-and I cannot get any information about the nomination system-it seems to me there were about 7,000 people coming into that system through the application. If about 20 got an honour, would that sound right? It would be about as many as did. That seems to me to be so bizarre in itself that it is not working. That should be a principal source.

Q181 Lindsay Roy: The evidence from the Lord Lieutenants was they felt marginalised.

John Lidstone: Indeed they did, as I read, very marginalised, but you see, in a way one of the problems with Lord-Lieutenants is most of them come from very privileged backgrounds. Therefore their ability to relate to the general public is rather stifled, to say the least.

Q182 Chair: I am not sure they would agree with that.

John Lidstone: One of them would not.

Q183 Greg Mulholland: If I could turn to the question of forfeiture, which was touched on by the first panel. An obvious place to start is what are your views on the decision to cancel and annul Fred Goodwin’s knighthood? I do not know which of you would like to start with that.

Graham Smith: I would start by saying I was in the strange position of agreeing with quite a lot of what Digby Jones was saying. I have absolutely no sympathy for Fred Goodwin whatsoever, but I felt that the process and the manner in which it was done were quite odd. As was said earlier, there was a complete lack of clarity about the rules, about the process, about who was making the decision and why he was being singled out without everybody else being subject to the same punishment, if you like. One of the big problems with Fred Goodwin is that most people could not really understand why he got the honour in the first place.

John Lidstone: I agree with that.

Graham Smith: That is quite a significant contributory factor. This is the problem with the honours system: these things are just given out to people like Fred Goodwin who have done nothing to deserve it. That is widespread. When you are watching the news you get experts from senior positions in business, politics, academia and so on, and an awful lot of them are sir this and sir that. People get the impression that, if you mix in certain circles and you are of a certain class, if you like, the odds of you getting a knighthood are considerably increased.

John Lidstone: One of the points about Fred Goodwin’s knighthood is that, normally speaking, the job that he was doing, if he did a good job-forget about what happened with NatWest and the Royal Bank of Scotland-at the end of his career, when he was retiring, somebody might well then say, "He has done a first class job, was outstanding in other respects and could be perhaps worthy of some sort of an honour", but not, first of all, give it whilst he is still working there.

So far as the Forfeiture Committee is concerned, and you can go back to people like Roger Casement and all those people who have had their knighthoods removed from them, the problem with that-and I also agree with a lot of what Digby Jones said-is that there is no framework of legality about that system of removing somebody under forfeiture. One of the problems we have at the moment is we have a chap sitting in the House of Lords and there is no way of getting rid of him-Jeffrey Archer-and a lot of other peers of dubious background and behaviour over expenses. But I do agree that, if the Forfeiture Committee is to have teeth and be respected, it has to have a legal framework within which to make its decisions.

Q184 Greg Mulholland: Thank you for that. I think we all agree that the process is not sufficiently clear, and certainly there is a lack of transparency about decisions like that, whatever people may think of them. Do you not think there is a clear, gaping hole <?oasys [pc10p0] ?>in the criteria for forfeiting an honour, whether it should have been given or not? The two criteria that are laid down are to be found guilty of a criminal offence and sentenced to a term of three months’ imprisonment, or to have been censored, struck off, by the relevant body.

John Lidstone: That makes the point that there was not, if you like, a really factual basis on which the Fred Goodwin case was founded.

Q185 Greg Mulholland: Indeed, but the point I am coming on to is that they are two very specific criteria, and then there is discretion. That is where the grey area is, which is unacceptable. Is there not one third, blindingly obvious criteria that should be there? If someone has been given something for services to an industry and they then are deemed to have damaged that industry, they should lose it. I wish to give one example, because there are many examples. This is also an example, Mr Lidstone, that fits very well with your description of the reasons for giving honours. Ted Tuppen, the CEO of Enterprise Inns, in 2007 was given a CBE for services to the hospitality industry, which I think surprised Enterprise Inns’ tenants-

John Lidstone: A lot of people.

Q186 Greg Mulholland: -at the time, but in fact Enterprise Inns have had a 96.6% collapse in share prices over the last five years. At the same time Mr Tuppen has paid himself half a million pound bonuses, he has also increased his pay by 50% and the company has been over £3 billion in debt. There are many people-including me-who study the pub industry very closely who believe he has done more damage singularly than any other individual in this country to the British pub industry. Should there not be a third criteria to say that where people are deemed to have damaged the very sector they are supposed to have helped, they should forfeit their honours?

Graham Smith: That is fair enough, but the problem would be better resolved by having a clearer understanding of why people get them in the first place.

John Lidstone: More transparent, yes.

Graham Smith: If Fred Goodwin, for example, had been knighted for a singular act of bravery, it could be argued that what he did as a banker did not reflect on the fact he had, at one time in his life, committed a singular act of bravery. You could clearly say that the two are disconnected. If you are just going to give people these bizarre awards for doing their jobs, and then just term it "services to whatever", that is where the problem lies. Certainly if you are going to give it for services to banking and you then cause a major collapse in the banking system, clearly there are grounds for revoking that honour. However, if you just did not award the honour in the first place, that would be a stronger step forward. You would not be faced with that problem.

John Lidstone: Your Chairman asked me about that earlier. The transparency with which honours are given, and the facts and citations that are given, would enable you to have a really good understanding for the general public when they read this to say, "Yes, yes, yes," or "No, no, no." You would not have so many "nos" if you had the facts before you. In his case we had none of those facts. Of course, you are getting situations now where not just honours but huge great salary increases are given for failure. It is almost the same thing.

Q187 Chair: That is different.

John Lidstone: I know it is a different thing, but it is almost parallel to the way that honours are given.

Graham Smith: It is related in the sense there is a sense there is this network of people at the top end of society who get rewarded no matter what. They are generally the same groups of people rewarding each other, and yet the people at the bottom really are the ones that suffer the consequences of all these decisions. It is part and parcel of a wider problem.

Q188 Greg Mulholland: Very clearly and finally, I absolutely agree giving people like Ted Tuppen an honour brings the honours system into disrepute; he has rewarded himself enormously whilst his companies are failing, his tenants’ businesses are collapsing, families’ lives are being ruined and pubs are closing up and down the country. Should there be tighter criteria that say, "We will reward you for certain things"-perhaps not most things, but for certain things-"and if you then do things that are an antithesis to that, you will have that honour taken away," and that then should become an understanding of the system?

John Lidstone: I have a lot of sympathy with that view. That is why historically honours were given at the end of somebody’s working life rather than at the beginning, because all their dirty linen-if there was any-had been hung out before. The point you are making about removing honours should be a part of the honours system for people who have disgraced it.

Graham Smith: It does need to be made clear when you are awarded the honour, and Fred Goodwin was part and parcel of a system where there was no need to behave in a certain way or there was never any suggestion of any consequences relating to his honour in the future.

Chair: I would just like to say that any views expressed about any individual by a Member of this Committee are the views of that Member and not necessarily the views of the Committee.

Q189 Lindsay Roy: The last Committee suggested substituting "empire" with "excellence". Is that something you would support or is that just another recipe for rewarding people who have done the job but done it well?

John Lidstone: If you look at the OBE itself, it was iffy in its conception under Lloyd George, who was looking for another source of sale. There were about 25,000 of his OBEs given out, for which I believe Maundy Gregory said he could get £100 a time for the sale. It has an iffy background. John Major was then able to put together words that seemed to be too clever by half: you could keep the OBE, but just change one word, calling it "excellence" rather than "empire". The empire does not exist anymore, and therefore to have an award for a nonexistent empire is a bit ridiculous.

Q190 Lindsay Roy: It is purely an anachronism.

Graham Smith: I obviously completely agree that we should not have "empire" in the title. This is certainly one of the reasons why some people reject the title. That is grounds enough. Even if we say that 74% of the population are happy with the honours system, if 25% think that they cannot accept an honour because of the word "empire" being in them, that is sufficient grounds to change it immediately. Whether it is called "excellence" or something else-I think we suggested Companion of Honour, or something similar-it does not matter too much, so long as it has a certain prestige about it and so long as it is acceptable to every rightminded person.

Chair: Any further questions? Thank you very much indeed for your evidence today. It has been extremely helpful and we are very grateful for your being with us this morning.

Prepared 29th August 2012