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Baroness Scotland of Asthal: My Lords, the information in that regard is something upon which I think it would be more appropriate for me to write to the noble Viscount.

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3.27 p.m.

Earl Cathcart asked Her Majesty's Government:

    By how much the burden of taxation has increased in the United Kingdom since May 1997.

Lord McIntosh of Haringey: My Lords, as a result of the last Budget, the tax to GDP ratio is lower this year than last year. The tax ratio in the two following years will also be lower than last year. Under the previous government's plan these rates would have been higher than the latest projections in this year and both of the next two years.

Earl Cathcart: My Lords, I thank the Minister for that Answer. Given the fact that before the last election the Prime Minister vowed that he had,

    Xno plans to increase tax at all",

and went on to say:

    XThis is my covenant to the British people. Judge me upon it. The buck stops with me",

can the Minister reconcile these pledges with the figures from the House of Commons Library, which show that over the life of this Parliament taxes have increased by over £40 billion, or £1,500 per taxpayer?

Lord McIntosh of Haringey: My Lords, the Prime Minister said that he would not increase taxes. He did not say that there would be no increases or decreases. He did not say that there would be no changes in taxes. There have been substantial reductions in taxes which have benefited the ordinary people of this country. We have never accepted the figures produced by the House of Commons Library, as the Chancellor made clear at the earliest opportunity.

Lord Taverne: My Lords, is it not a slightly sterile debate to concentrate on which proportion of the increased tax burden has been caused by the policies of the previous government and which proportion has been caused by those of the present Government, especially as so much depends on the growth rate of the economy? Is not the real question, given the strong state of the Government's finances, and even with the greatest respect to the demands of the Lady Prudence, whether we should give priority to tax cuts, as the Conservatives want, or to more spending on schools and health, as the Liberal Democrats want? Does the Minister agree that the priority this time should be given to the better provision of public services?

Lord McIntosh of Haringey: My Lords, the grain of truth behind what the noble Lord says is that the tax to GDP ratio is a percentage which is the difference between two very large figures. The tax figure is, of course, under the control of government; the GDP ratio is less directly under the control of government, although this Government have been outstandingly successful in achieving growth at a time when the Opposition said only a year ago that we were on the brink of an economic abyss. Under those

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circumstances I think that the achievement of sustainable growth is the correct objective and decisions on both tax and expenditure follow from that.

Lord Clark of Kempston: My Lords, does not the Minister agree that a categoric assurance was given at the previous general election that taxes would not be increased? While the Minister will not accept the House of Commons Library figures, has he looked at the international figures which confirm the House of Commons Library research? Is it not high time, in view of the promise given, which has been sadly broken, that the Government should admit that they misled the general public and should apologise?

Lord McIntosh of Haringey: My Lords, I assume from what the noble Lord says that he refers to the OECD report which was published last month. I have to tell him that that report was based on tax levels in 1997, for four months of which his own party was in power, and on preliminary estimates only for 1998. This is certainly not up-to-date information.

Earl Ferrers: My Lords, with regard to the Deputy Chief Whip's earlier answer, is he suggesting that the House of Commons Library gave incorrect information?

Lord McIntosh of Haringey: My Lords, I could give a long lecture on the different ways of interpreting--

Noble Lords: Oh!

Lord McIntosh of Haringey: My Lords, I know that noble Lords would not want me to do that. There are two basic ways in which it is possible to define the tax burden: one is the cash basis, which the Treasury uses; the other is the national accounts on an accruals basis. There are variations within that. What we do--which is the honourable thing--is to make it possible for both of these methods of estimation to be calculated from the pre-Budget report and from our other financial documents.

Lord Brooke of Alverthorpe: My Lords, can my noble friend the Minister say how many, if any, tax increases that have occurred have been attributable to the previous government's tax plans? Further, can he say what was the burden of debt that we inherited? What steps have been taken to reduce that and what has been the cost of doing so?

Lord McIntosh of Haringey: My Lords, on the question of the previous government's tax plans, I think that we ought to look at the forecast in the FSBR of 1996, which was the previous Conservative government's final Budget. The figures for tax as a percentage of GDP are as follows: for 1998-99 the figures are 36.6 compared with our figure of 37.4; for 1999-2000 the figure is 37.1 under the Conservatives and 37.0 for us. For 2000-20001, the figures are 37.6 for the Conservatives as opposed to 36.8 for us.

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I believe that that is a more useful measure than some of the more detailed figures which my noble friend would like me to give.

Viscount Trenchard: My Lords, is the Minister able to tell the House whether the Government propose to compensate pension funds for the reduction of income amounting to more than £5 billion a year that they are suffering as a result of the abolition of advanced corporation tax credits? Is he also able to tell the House whether he proposes to compensate charities which, starting this year, will progressively be similarly penalised?

Lord McIntosh of Haringey: My Lords, the announcement in July 1997 of the change to the taxation of pension funds was based on the abolition of a tax credit for tax benefits which pension funds did not receive. It was therefore a correction of an anomaly and no compensation is therefore required. The noble Viscount will know that in the pre-Budget report statement on Tuesday considerable help is to be given to charities by the Chancellor.

Lord Avebury: My Lords, does the noble Lord agree that the figures published in the Guardian yesterday show that there is an enormous disparity between the wealth and incomes of the top 10 per cent. and the poorest in our community? Does he therefore also agree that it was a pity that the Prime Minister constrained this Government not to increase tax rates on the highest incomes in the country?

Lord McIntosh of Haringey: My Lords, if we have disparities in income between the richest and the poorest in this country--I certainly agree that these disparities exist--surely the right approach to the problem is the approach of this Government; namely, to seek to improve the conditions of those most in need in this country. That has been the object of our tax policy and of our social policy for the past two and a half years and we shall stick to it.

Message from the Commons

A Message was brought from the Commons, That they agree to certain of the amendments made by your Lordships to the House of Lords Bill without amendment and they disagree to the remaining amendments, for which they assign reasons.

House of Lords Bill

3.37 p.m.

The Lord Privy Seal (Baroness Jay of Paddington): My Lords, I beg to move that the Commons reasons be considered forthwith.

Moved, That the Commons reasons be considered forthwith.--(The Lord Privy Seal.)

On Question, Motion agreed to.

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[The page and line refer to HL Bill 38 as first printed for the Lords.]

2After Clause 1, insert the following new clause--
(X.--(1) There shall be an Appointments Commission (Xthe Commission") which shall make proposals to the Prime Minister for recommendations to Her Majesty for the conferment of life peerages in accordance with the Life Peerages Act 1958.
(2) The Commission shall be an advisory non-departmental public body and shall-
(a) be appointed in accordance with the rules of the Commissioner for Public Appointments and may seek his advice about best practice in attracting and assessing potential nominees;
(b) operate an open and transparent nominations system for peers not belonging to, or recommended by, any political party (Xthe Cross Bench peers");
(c) actively invite nominations by the general public and encourage nominations from professional associations, charities and other public bodies that it judges appropriate;
(d) publish criteria under which it will determine a candidate's suitability for nomination;
(e) reinforce the present function of the Political Honours Scrutiny Committee in vetting the suitability of all nominations to life peerages by the political parties; and
(f) scrutinise all candidates for life peerages on the grounds of propriety in relation to political donations, as proposed in the 5th Report of the Committee on Standards in Public Life.
(3) The Commission shall appoint its own Chairman.
(4) It shall, at most every 6 months, and at least every year, make proposals to the Prime Minister for nomination as Cross Bench peers, sufficient at least to fill any vacancies among Cross Bench peers that may occur through death, disqualification or a decision to join a political party represented in the House of Lords.
(5) The Prime Minister may not refuse to submit to Her Majesty the names of those recommended as Cross Bench peers by the Commission, and shall not seek to influence such nominations, save in exceptional circumstances, such as those endangering the security of the realm.
(6) The Commission, in considering nominations as Cross Bench peers, shall not give any additional weight to recommendations from the Prime Minister or the Leaders of other political parties.
(7) Following the passing of this Act the Commission shall make a report annually to Parliament on the recommendations made to Her Majesty by the Prime Minister for the conferment of life peerages, which it will declare if the following criteria are being observed, namely that-
(a) no one political party commands a majority in the House of Lords;
(b) the Government has broad parity of numbers with the main opposition party;
(c) the proportion of the Cross Bench peers to the total number of peers in the House remains the same as the proportion of the Cross Bench life peers to the total number of life peers in the House on the day before the passing of this Act; and
(d) more than half of the total membership of the House of Lords is composed of peers who in the opinion of the Commission have experience of, and expertise in, fields other than (or in addition to) politics.

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(8) The Commission shall consist of eight members of the Privy Council, of whom four shall be appointed by a special Commission of the Prime Minister, the Speaker of the House of Commons, and the Lord Chairman of Committees of the House of Lords.
(9) One Commissioner shall be appointed from each of the three largest parties in the House of Commons on the nomination of the Leader of each such party, and one shall be appointed from the Cross Bench peers on the nomination of the Convenor of the Cross Bench Peers.").

The Commons disagreed to this amendment for the following reason--
2ABecause it is not appropriate to make statutory provision for an Appointments Commission.
2BLord Stanley of Alderley rose to move, That the House do not insist on their Amendment No. 2 to which the Commons have disagreed, but do propose the following amendment in lieu thereof--
2CInsert the following new clause-

(X. In making, or making provision in connection with, recommendations to Her Majesty for the conferment of life peerages in accordance with the Life Peerages Act 1958 the Prime Minister shall ensure that more than half of the total membership of the House of Lords is composed of peers who have experience of, and expertise in, fields other than (or in addition to) politics.")

The noble Lord said: My Lords, I have tabled this amendment with the support of my noble friend Lord Caithness because we feel strongly that the Commons have not addressed the main purpose of the appointments commission as stated in our amendment which was accepted by your Lordships at Third Reading.

This amendment goes to the heart of the controversy over the reform of your Lordships' House. While I have no objection to the Government removing the rights of the hereditary Peers--indeed they received that mandate at the general election--the Government did not receive a mandate to get rid of us without stating clearly who is to follow us. Despite repeated requests, we have been unable to get much, if any, guide from the Government, in particular as regards the Commons consideration of the amendment which is now before us.

Our amendment guides the appointments commission as to who is to follow us in the interim Chamber which inevitably will affect the final reformed Chamber. The amendment states that over 50 per cent of Members should be persons whose main occupation and experience is non-political, commonly called in your Lordships' House specialist Peers. This criteria would apply to those sitting on Labour, Conservative and Liberal Benches, not just the Cross Benches.

This view is widely supported throughout the country, by letters in The Times yesterday, in particular, and on page 34 of the Economist last week--a paper which, perhaps, noble Lords opposite read more widely than I because it spends most of its time criticising the farming industry. It is also a view which was widely supported by the Australian

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electorate, who voted for Her Majesty as a non-political head of state, rather than for one appointed by politicians. At Report stage, even the noble Baroness, Lady Jay, did not object to the principle of our amendment.

To sum up, I hope that our amendment will concentrate your Lordships' minds on the original theme of no stage one without stage two. I commend our amendment to your Lordships on those grounds. I beg to move.

Moved, That the House do not insist on their Amendment No. 2 to which the Commons have disagreed, but do propose Amendment No. 2C in lieu thereof.--(Lord Stanley of Alderley.)

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