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Lord Mackay of Ardbrecknish: The noble Lord is right. Let us take, for example, the Scottish academic institutions. I was going to say that they are not nearly as well represented but, in fact, they are not represented at all in comparison to the triangle of London, Oxford and Cambridge where people can carry on their academic studies and work. I have in mind people like the noble Lord, Lord Desai, who is sitting in the Chamber today, and many others. They play an important part in your Lordships' House. Therefore, I agree with the noble Lord, Lord Marsh, in that respect. It is important for us to stick to the kind of system that we have at present.

I have a great deal of sympathy with the amendment tabled by my noble friend Lord Stanley of Alderley, but I do not know whether I feel the same about that tabled in the name of my noble friend Lord Ferrers. I just wonder whether the latter is a case of, "Well, I don't want to see the expenses going up after I've gone; indeed, I don't see why you lot should be paid more than we are". It is important for us to suggest gently to the Government that they, in turn, suggest gently to the senior salaries review board that it could perhaps come forward with a report. If I recall correctly, the board took evidence in 1996-97 on the question of your Lordships' position. It was not just a matter of the expenses; indeed, it was also the salaries and pensions of Ministers.

I gave evidence at that time, while working as a government Minister. I did not give much evidence about Ministers' salaries, but I thought it was right to give some evidence about ministerial pension provision, as you would expect a pensions Minister to do. In fact, some of the anomalies have been highlighted by the fact that the noble Lord, Lord Richard, a retiring--if I may use that gentle word--or a retired, Leader of your Lordships' House, received absolutely no pension at all for the time he spent in that position. Perhaps the noble Lord did not really need it because he might have got a pension as a result of having been a European Commissioner. I am sure that such a pension would look after someone pretty well. None the less, he might not have had such a pension. Therefore, having given a few years' service to your Lordships' House and to the Government, it would seem quite unfair that he could be left without a pension just because of the way that the pension rules rest with the ministerial pension fund.

I also gave considerable evidence regarding the role of the Opposition. Those Members concerned worked a great deal in your Lordships' House. My example was my then opposite number, the noble Baroness, Lady Hollis of Heigham. Bluntly, I gave evidence on her behalf and she also gave evidence on mine. It is possible that both of us thought that we might be changing places in the very near future. However, we never admitted that at the time. I trust that I can use the

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noble Baroness as an example, despite the fact that I have not given her notice. I do not believe that she will mind.

When we had social security Bills, which were to be dealt with on Tuesdays and Thursdays, the noble Baroness, Lady Hollis, had to come down to London on Monday and appear in the House, despite the fact that she had no other business, if she was to collect her attendance allowances, and so on, for that day. She could probably have spent the time much better and much more to my detriment if she had managed to stay at home and work there, fashioning the bullets to fire at me, rather than having to take the train to London and come here. I emphasised to the senior salaries review board that I thought at least some Members of this House could have a dispensation from having to clock in every day because of the important role that they played either on the Liberal Democrat Front Benches, the Opposition Front Benches (the Labour Front Bench as it then was) and, indeed, in certain parts of the Cross Benches.

I do not want to go on at any great length, but there are some serious points that we should address with a view to keeping the remuneration of your Lordships' House clearly focused on the attendance allowance and on expenses. That is the right way to proceed. If we do end up with a House where membership is by appointment, which certainly seems to be the direction that the Government's evidence is taking, it would be sensible not to go down the salaries route for future Members. I believe the amendment of my noble friend Lord Stanley is certainly to be recommended, but I cannot say the same for that of my noble friend Lord Ferrers.

Lord Carter: My noble friend Lord Ponsonby made the point that I intended to make; namely, that the Chamber has filled up remarkably since we started to debate this amendment. The noble Lord, Lord Mackay, referred to me as the shop steward on the Government Front Bench. Indeed, having heard the debate, I can see why my noble friend the Leader of the House asked me to deal with the amendment.

The effect of Amendment No. 73 would be to require the senior salaries review board to keep under review the salaries, expenses and allowances which are paid to Members of the House of Lords. It would substitute a legal statutory requirement for the present situation where the issues in question are within the board's terms of reference as matters on which it, from time to time, should advise the Prime Minister, but for which there is no statutory requirement.

The amendment deals with the question of remuneration of Members of your Lordships' House. It suggests that such matters should be kept under review, having regard to the functions and duties of the House. That, of course, is unexceptionable. It is, indeed, the present position. Peers' allowances already fall within the remit of the Senior Salaries Review Body, to give it its correct title. Therefore, there is no need to put it on the face of the Bill.

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However, we do not think that there should be any change in the status of the review body's remit during the period of the transitional House. The review body is a non-statutory body. It advises the Prime Minister about Peers' allowances on the same basis that it advises on pay, pensions and allowances of Members of the other place and of Ministers. Why should the basis on which it deals with Peers' allowances be changed for what is an explicitly temporary arrangement?

I turn now to a few of the points raised during the debate. A point was made by the noble Lord, Lord Elton, the noble Earl, Lord Ferrers, and others, about what will happen if there is no stage three. We have said over and again that we intend there to be a finally reformed House. We have said so endlessly. So there is no need for me to speculate on something not happening which we fully intend to happen. It really is as simple as that. The Royal Commission will make recommendations. These will then be considered by a Joint Committee of Members of both Houses--an important point--and then the Government will take the appropriate action. As I said, there is no need for me to speculate on something not happening which we fully intend to happen. I give way to the noble Lord.

Lord Elton: Will the Minister accept a simile? When the Pilgrim Fathers sailed for America they expected to make the journey in about five weeks but, fortunately, they carried stores for about 14 weeks. You cannot count on arriving somewhere where you intend to arrive; indeed, you can only do your best.

Lord Carter: That is a statement of process; I am dealing with a statement of policy. The policy of this Government is that there will be a finally reformed Chamber. We are not quite sure what the policy of the Opposition is on this matter. We have made our intentions entirely clear. I do not intend to speculate on something not happening which we know will happen. The noble Lord, Lord Lyell, made a shrewd point when he referred to the difference between allowances and earnings. The Committee will be aware that at the moment allowances are tax free.

Noble Lords: Hear, hear!

5.30 p.m.

Lord Carter: Exactly! The noble Lord, Lord Marsh, made the point indirectly that if we start to put all this on the face of the Bill and start to discuss salaries, that would be inappropriate as regards the transitional Chamber. What we have to consider is the principle of allowances or salaries, which is a matter for the Royal Commission, and the level of allowances, which is a matter for the review body on senior salaries. All Members of the Committee can give evidence to the review body. I shall return to that point.

I believe that the noble Earl, Lord Onslow, laughed when the noble Lord, Lord Crickhowell, referred to his back pay of £30 million. I laughed because I knew he was joking, but my colleagues on the Front Bench thought he was being serious.

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I quote from page 31 of the Labour Party's evidence to the Royal Commission. That will make a change for the Committee from hearing quotes from the Labour Party manifesto. The evidence states:

    "The Labour Party believes that a modern chamber should have modern working conditions and arrangements...The Labour Party believes that the Royal Commission should consider the physical and other conditions necessary for the new body to carry out its work in an efficient manner, having regard to needs such as office accommodation and meeting rooms". Under the heading "Allowances", the evidence continues:

    "The Labour Party would welcome an examination of this issue by the Royal Commission, to determine whether current arrangements fairly meet the needs of members. The Royal Commission should also consider whether the current arrangements are sufficient to ensure that individuals are not discouraged from membership for lack of adequate resources". The view of the Labour Party on this matter is entirely clear.

The noble Lord, Lord Mackay, commented on the nature of the Chamber and on elected Members. Those are matters to be decided in stage three. They are matters to be decided by the Royal Commission, and not in this Bill. As we have said endlessly, this Bill is not about stage three. The noble Lord was quite correct to say that the evidence was previously taken in 1996-97. I think I am correct in saying that the question of allowances was deferred until either 2000 or 2001. That might be thought appropriate in terms of the transitional Chamber. It looks as if the review body will consider allowances in that timescale. It has considered the salaries of Lords' Ministers a little earlier than that, as we have just discussed.

I shall discuss a point which is slightly tangential to this amendment, but which I think is relevant. It has been implied that once all but 92 of the hereditary Peers have gone, we shall need additional resources to attract people to do the work of the Chamber. We do not believe that that will be the case. We believe that the 500 life Peers who will remain are competent to keep the work of the Chamber going. We have now added to that figure 92 hereditary Peers. Thus we shall have a total Chamber of well over 600 Peers. Life Peers have always been prepared to come forward on this basis in the past and we see no reason why they should not continue to do so in the few years that the transitional Chamber will last.

I now mention what I call a Chief Whip's point. Due to the size of the various groups in this Chamber and the relative strengths of each of the groups, Labour Peers do not comprise more than 30 per cent of the membership of any of the committees of your Lordships' House. I have a list of life Peers who are willing to serve on committees but I cannot accommodate them. Therefore, it is clear that there will be a sufficient number of life Peers to carry out the work of the committees and the other work of the Chamber.

When the time comes, depending on the outcome of the long-term review, it will obviously be relevant to consider the question of remuneration. That will depend on the composition, role and functions of the reformed second Chamber. There will be decisions to be taken about whether Members of the second Chamber in the

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future should continue to receive allowances or should be paid a salary. However, that is a matter for the reformed Chamber. There will be decisions to be taken about the degree of administrative support to which they should have access. We have already made it clear to the Royal Commission that the cost of its recommendations is one of the issues to which it should have regard. However, these are matters to be dealt with once we know what the long-term picture is; they are not matters for the present Bill. The review body already has a role; it should retain that role, but not strengthen it.

I turn to Amendment No. 105 in the name of the noble Earl, Lord Ferrers. The effect of this amendment would be to fix the salaries and allowances of Members of the House of Lords as they were on the day before the Act came into force. The noble Earl has many good friends in this Chamber and I count myself as one of them. However, if he is really suggesting that all our allowances should be frozen for the foreseeable future, I believe that the number of those friends will considerably diminish! Just as we rejected the idea that there should be a statutory requirement on the review body on senior salaries to review noble Lords' allowances, so obviously we reject the idea that there should be a statutory bar on changing those allowances in the lifetime of the transitional Chamber.

We are not, of course, proposing to make significant changes in the way in which we remunerate life Peers in the transitional Chamber, as I have said already. However, that is not the same as fixing the present allowances in stone. Although under the economic policies of my right honourable friend the Chancellor of the Exchequer, inflation is at historically low levels, it is still with us. The noble Earl's amendment would not even allow for the uprating of allowances in line with inflation. Even at 2.5 per cent a year over four years, that would amount to about a 10 per cent cut in real terms. However, I note that it is more than that because it is a geometric and not an arithmetical progression.

I do not believe--nor do I think the Committee will believe--that it is equitable to fix allowances in this way at this point. As we know, these are, after all, mostly expenses allowances. Leaving room to consider changes in the costs which they are meant to cover seems to us to be only reasonable. I cannot promise of course that any particular level of remuneration will be offered when the allowances come to be reviewed. That is a matter for the review body. I simply make the point that the removal of the hereditary Peers is not a reason for changing the system that we presently have, and is certainly not a reason for removing from it all flexibility.

As I said on the previous amendment, the advisory remit of the Senior Salaries Review Body extends to all Members of both Houses of Parliament. In our view, there is no justification for singling out Peers alone for statutory treatment.

We have had a useful debate. The Committee has expressed its views on this matter extremely clearly. Most of the views that have been expressed did not surprise me. However, when the Committee has

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considered the arguments I have produced and the background to these amendments, I hope that the noble Lord will withdraw the amendment.

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