Annual Report 2002-03


House of Lords Resource Accounts 2001-02

43. An entirely new method of accounting for House of Lords' expenditure was introduced with the publication in February 2003 of the Resource Accounts for 2001-02. Resource accounting and budgeting is a system for planning, controlling and reporting on public expenditure which has been introduced in all Government departments and which both Houses of Parliament agreed to adopt some years ago. The benefits of resource accounting and budgeting are better information for management decisions and, through the publication of more comprehensive accounts, better information for Parliament and the public. Once fully embedded within internal financial management, it should enable the House to manage its resources and decision-making processes more effectively.

44. The resource accounts incorporate all the financial transactions of the House and contain a statement by the Accounting Officer of the system of internal control within the House; a certificate and report of the Comptroller and Auditor General (which gave an unqualified audit opinion on the Accounts); and accounting schedules, including a balance sheet and cash flow statement. The accounts for 2002-03 and future years will continue to be published separately once completed and audited by the National Audit Office. The accounts are prepared in the Accountant's Office in close co-operation with the Department of Finance and Administration in the House of Commons. Formal cash accounts are no longer produced, although a breakdown of expenditure in 2002-03 is set out in page 33 and in Appendix E.

House of Lords Reform

45. As noted in the 2001-02 Annual Report, on 13 May 2002 the Lord Chancellor and the Leader of the House of Commons announced the appointment of a Joint Committee, in order to "forge the broadest possible parliamentary consensus on the way forward". The Joint Committee was to be asked as a first step "to report on options for the composition and powers of the House of Lords once reform has been completed". This was to be followed by free votes in both Houses, and then a subsequent report to "define in greater detail the proposed composition, role and powers of the reformed second Chamber, taking account of the opinions expressed by the two Houses. It should also recommend the transitional strategy for transforming the existing House of Lords into its fully reformed state". The Committee, comprising 12 members of each House, met for the first time in July 2002 and elected Dr Jack Cunningham MP as its Chairman.

46. The Committee made a Special Report8 in July 2002, setting out its proposals for fulfilling its remit. In December, it published a First Report9 setting out options for the composition of a reformed House against a background of what the Committee saw as "broad agreement on the role, functions and powers of a reformed second chamber". That broad agreement was that the present role and powers of the House should continue largely unchanged.

47. The Committee put forward seven options for composition: (1) fully appointed, (2) fully elected, (3) 80 per cent appointed/20 per cent elected, (4) 80 per cent elected/20 per cent appointed, (5) 60 per cent appointed/40 per cent elected, (6) 60 per cent elected/40 per cent appointed, and (7) 50 per cent appointed/50 per cent elected. The Committee proposed that the reformed House might comprise about 600 Members who would serve for about 12 years. Nominations of appointed Members would be scrutinised by a new Appointments Commission established on a statutory basis.

48. The Committee's Report was debated in both Houses ­ on 21 January in the Commons and on 21 and 22 January in the Lords. On 4 February, both Houses were asked to vote on the seven options. The voting figures were as follows:

Option Option Option Option Option Option Option
Amendment 1 2 3 4 5 6 7
For 335 106 39 93 60 91 84
Against 110 329 375 338 358 317 322
For 172 245 272 281 253
Against 390 323 289 284 316

49. As proposed by the Joint Committee, each option was the subject of a separate motion for approval, and Members were invited to vote in favour of as many of the options as they considered acceptable. In the Lords, option 1 (fully appointed) was agreed to by a large majority and the other six options were all disagreed to by large majorities. The Commons began by voting on an amendment proposing abolition of the House of Lords, which was disagreed to by 390 votes to 172, and then disagreed to all seven options, three of them without a division.

50. In the light of the failure of the House of Commons to approve any option, the Joint Committee made a Second Report10, published on 9 May 2003, identifying the area of consensus that had been achieved and areas where further work needed to be done (on the issues of the remaining hereditary peers, the appointments system, and such matters as the size and conditions of tenure of the House). The Report concluded: "We look forward to a reply from Government within the customary two months and then acceptance by both Houses that our work should continue on the lines we have set out." The diversity of views in both Houses on the future composition of the House of Lords was shown not only in the votes on 4 February but also within the Joint Committee, where the text of the Second Report was the subject of 17 divisions in the Committee.

8HL Paper 151, session 2001-02.

9HL Paper 17, session 2002-03.

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