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10.34 am

Lord Goodhart: My Lords, I have resisted with some reluctance the temptation to move a resolution that the noble Lord, Lord Selsdon, be no longer heard. I may come back to that if, when we get to Committee stage, he speaks for as long as he did on the previous occasion. Since the end of 1999, when the House of Lords Act came into force, all Members of your Lordships’ House have been here by choice, either by accepting a life peerage, by standing for election as an elected hereditary Peer or by accepting an appointment, such as that of a Law Lord or a Bishop, which carries with it the right to sit as a Member of your Lordships' House.

Life peerages are no longer awarded, at least in principle, as honours for past services. They are awarded, or should be, in the expectation that the donee of the peerage will play his or her proper part as a Member of your Lordships' House. Membership of the legislature or one of the Houses of the legislature should involve personal commitment to this country. For Members of your Lordships' House, that commitment should include willingness to be liable to pay taxes on the same basis as the great majority of citizens of this country and the great majority of Members of your Lordships' House who are resident, ordinarily resident and domiciled in the United Kingdom. Those who limit their time in the United Kingdom to 90 or

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91 days a year to preserve their non-resident status will be insufficiently frequent in attendance and insufficiently in touch with what is happening in this country to justify their membership of your Lordships' House.

As I explained in the Committee stage of the predecessor of this Bill, I was a “non-dom” until 1968. Non-doms are in a very favourable position because, even if they are resident in the United Kingdom, they are taxable only on income from a source in the United Kingdom or that is remitted from abroad to the United Kingdom. There is no tax on capital remittances, so it is easy for someone who is non-domiciled to avoid a great proportion of income tax by ensuring that, even if they are living a high life in this country, they are doing that out of capital remittances. Domicile is a complicated issue. Broadly, you are domiciled in the United Kingdom if that was your domicile of origin and you have not taken up permanent residence in another country or if you have a domicile of origin elsewhere and have taken up permanent residence in the United Kingdom.

The question of whether residence anywhere is to be regarded as permanent is notably subjective because it depends not on the present position but on an individual’s intentions. An individual may be able to say, “Oh, I do not intend to live permanently in the United Kingdom”, knowing perfectly well that in all probability he or she will. Those who have surrendered domicile in the United Kingdom, or who are resident in the UK as non-doms, because they have not committed themselves to personal residence, do not have sufficient commitment to the United Kingdom to justify membership of your Lordships' House. I suspect that very few Members of your Lordships' House are not resident and domiciled in the United Kingdom and that they pay their tax accordingly. But those Members who are non-resident or non-domiciled include some people—I will not name any names—of great wealth who have accepted the prestige of a title, without accepting the liability to pay United Kingdom taxes or any obligation to attend your Lordships' House. They have no intention of taking an active part here when they accept their peerage. They should not be among us.

This is a good Bill, which may benefit from some amendment. In the debates on the predecessor Bill in the last Session I moved an amendment to exempt people who have undertaken temporary public service abroad. That would include the notable cases of my noble friend Lord Ashdown who, so to speak, was the Viceroy of Bosnia-Herzegovina, and the noble Lord, Lord Robertson, when he was Secretary-General of NATO. It seems perfectly fair that people who are non-resident because they are performing an important public service should be exempt from the Bill. But these are only minor improvements that would affect a small number of people.

This is a good Bill, and whether or not it is likely to get through the other place, I hope very much that your Lordships will see fit to give it a passage through this House.

Lord Selsdon: My Lords, trying to correct someone of such eminence is very shaming for me, but I should say that the rule is 91 nights in this country, not

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91 days. It is an important point because people reading these proceedings may feel that the noble Lord is misinformed.

Lord Goodhart: My Lords, I am most grateful to the noble Lord for his correction of my mistake.

Baroness Gardner of Parkes: My Lords, as a non-domicile, I must correct many of the statements the noble Lord, Lord Goodhart, has just made. If you have lived in this country for more than a certain number of years, you are classified as “ordinarily resident” here, but to lose your domicile of origin is far from simple. His comments about the basis for taxation, particularly in terms of income, are quite wrong. The remittance basis was cancelled by the Treasury from April 2008, and now people pay tax on a worldwide income or £30,000, or whichever is greater, whether or not they remit their money.

Lord Goodhart: My Lords, the noble Baroness is broadly right but as I understand it, the £30,000 basis is an option that a non-dom can choose whether or not their actual remittance of income is higher than that.

10.42 am

Viscount Astor: My Lords, politics, rather like the weather, has seasons; spring, summer, autumn and winter. But politics has another season that usually comes around in August and is known as the silly season. One of the joys of the Lib Dems is that they always get there first. Normally, they get there in March or April when they come up with Private Members’ Bills, but this year they have beaten their own record, because the noble Lord, Lord Oakeshott, has brought forward the first Bill of the silly season in January. That must be a huge record for them and we must congratulate them.

But, really, this is a rubbish Bill. It takes no account of any of the reservations that were expressed during Second Reading or in Committee on the previous Bill. The noble Lord, Lord Goodhart, said that he moved, he thought, Amendment 3 to the previous Bill. But although the noble Lord, Lord Oakeshott, has had a number of months in which to include that amendment, which affects people working abroad for charities, for NATO or whatever, he has not done so—he has made no changes to his Bill. He has not listened to any of the debates, not even to his noble friend Lord Goodhart, because he should have made those changes.

Between the last occasion on which we debated the Bill and this, the Government have published their proposals in a White Paper. The foreword states clearly that there will be no changes to this House until after the next election. They also made some interesting remarks that are worth quoting about nationality requirements and taxation. Page 63 of the White Paper states that:

“The Government proposes that in the absence of any other changes to nationality requirements for membership of the legislature, British citizens and qualifying citizens of the Commonwealth (including citizens of British Overseas Territories) and citizens of the Republic of Ireland would be eligible for membership of a reformed second chamber”.

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I presume that the Lib Dems signed up to this; certainly no one has said that they do not agree with it. If that is the case, the Government are saying that there could be Members of this House who are domiciled abroad in, say, the British Overseas Territories.

Lord Goodhart: My Lords, I thank the noble Viscount for giving way. Nothing in this Bill says that such people cannot be Members of the House. There is simply an obligation to pay taxes on the basis that they are resident and domiciled in this country.

Viscount Astor: My Lords, the noble Lord has again proved that he does not really understand the difference between “resident” and “domiciled”. Although people may easily be able to change their residence and pay tax here, they may not be able to change their domicile—you cannot just go and change it. Indeed, if they are citizens of a British Overseas Territory—

Lord Goodhart: My Lords, I think that the noble Viscount has not understood what I said, although I thought that it was perfectly clear. Someone who is domiciled in, let us say, Ireland, and who becomes a Member of this House, would not be disqualified from being a Member and would not have to change their domicile. It is simply that they will be taxed on the same basis as they would have been taxed if they had in fact been domiciled here.

Viscount Astor: My Lords, that makes absolutely no sense because you cannot be taxed on a basis that you are not a part of. The Government’s report talks about British Overseas Territories.

Lord Oakeshott of Seagrove Bay: My Lords, in all honesty, I can only assume that the noble Viscount is wilfully misunderstanding the point. In my speech, I took the trouble particularly to refer to him and to the noble Lord, Lord Selsdon, because the same misunderstanding arose last time. Of course you can be taxed on that basis if the Bill is passed. It provides that someone will pay tax on the full British basis whatever their status actually is. I should have thought that that was crystal clear.

Viscount Astor: My Lords, the noble Lord did say in his speech that it was on the basis, but of course his Bill contradicts him. What his Bill says is that it is not on the basis that someone has to be resident and domiciled—it is nothing to do with the basis. The noble Lord cannot have it both ways; it is just not good enough. Indeed, it is the usual Liberal fudge.

Perhaps I may turn to the next page of the White Paper where it states that the Government,

That is perfectly fair, but it says absolutely nothing about domicile because that is not in the Government’s proposals. So far as I can see, no other party has made any objection to that. So the noble Lord says that he wants it on the basis, but that is not what his Bill says. It really is not good enough.

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No changes have been made to this Bill. The noble Lord, Lord Desai, who sadly is not in his place, wanted an amendment to provide that these proposals should not, for life, be irrevocable, but I can see nothing in the Bill to that effect and the noble Lord, Lord Oakeshott, did not mention it. Moreover, one of the weaknesses of the Bill is that we want everyone who is a Member of the Parliament of this country to pay tax, whether here or in another place. The rules for this House should be exactly the same as those for another place. But if we are going to do that, the same provisions should be brought in for the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly so that they are the same for everyone. To select just this House seems bizarre.

As I say, everyone should pay taxes if they sit in this place. The noble Lord, Lord Goodhart, told us that he is a former non-dom and remarked that no one comes here as a reward for past services. I do not think that that is correct. A number of noble Lords were Members of another place and the reason that they are here is because they were very distinguished Members of Parliament. Yet again, we have heard from the Liberal Benches something that does not make sense.

This is a silly Bill because it is a half-hearted attempt at reform. It does not take account of all that is happening elsewhere and I really hope that this time it will not go any further.

10.48 am

Lord Lipsey: My Lords, no one should be even faintly surprised that noble Lords opposite are trying to get straight to the Committee stage of this Bill by looking at the detail. Even they would blush at defending the present situation in this House so far as people who do not live or pay tax in this country are concerned. I warmly commend the Bill on its Second Reading, although of course more work does need to be done on the detail. But being an awkward guy, I shall begin by addressing a point on which I profoundly disagree with the noble Lord, Lord Oakeshott, and indeed with my noble friend the Minister, which is the nature and composition of this House. They are believers in a democratically elected House of Lords, and they are entitled to their view. When this Bill was last introduced, that was the morning glory in full flower. Today the proposition of an elected second Chamber is for all practical purposes dead, buried, no more, and has fallen off its perch. We need therefore to look at this Bill from the point of view of what is likely to continue to be an appointed Chamber.

The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath): My Lords, perhaps I may inform my noble friend that there are still some true believers.

Lord Lipsey: My Lords, my noble friend is right, there are still true believers—there is no faith so absurd as not to still attract true believers—but the truth of the proposition that I have advanced speaks for itself.

In all probability we shall continue to be an appointed House, so why then do we need this Bill? We need it as a matter of legitimacy. I do not have any difficulty in

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saying that an appointed House can have legitimacy as a second Chamber to an elected House within a balanced Parliament. Precisely how that is achieved—how it is appointed and so on—is an important matter, but I have no difficulty with the proposition.

But the advocates of election have difficulty with that proposition and they try to find examples whereby our legitimacy as a House can be questioned. The fact that people who no longer have, or choose not to have, much or anything to do with this country can pass legislation is indefensible in the way that legislation being effected by people who have expertise and knowledge of this country is defensible. Therefore, by simply buttressing the legitimacy of this House, a Bill such as the one proposed by the noble Lord, Lord Oakeshott, is desirable.

I am disappointed that the Government have not enthusiastically embraced the Bill, put it through both Houses with full ministerial backing, and backed up their own rhetoric, public and private, with action. The reason behind that—I have raised this issue in the House before—lies in the fact that there are people in the Government who grew up when Trotskyism was alive and well in this country and who are in an impossible position on the House of Lords. They want to keep this House, with all its absurdities—of which there are some—in place so that the contradictions in its being are emphasised, thereby advancing the case for electoral reform of the House. That is a position which is both indefensible and immoral.

The simplest answer to the issue came from the Public Administration Committee chaired by Tony Wright—another of those who want to see this House elected—which stated:

“The introduction of a fully or largely elected second chamber would render the changes we propose obsolete. But that moment is some years off even at best”.

If by common consent of both the reformers and the non-reformers it is, at best, some years off, surely we should do everything we can to get rid of some of the problems that exist with this House. This issue is one problem; the status of the Appointments Commission is another; and the issues covered by the Steel Bill are others. Get those out of the way and then we can get on with a true discussion as to what is the best nature of this House. I am not afraid to have that discussion.

But to allow to continue these false obstacles to the way the House is, to defend them or to take no action to get rid of them, is both an immoral and indefensible way in which to proceed. I hope therefore that my noble friend the Minister—although I cannot now hope for his conversion to an appointed House—will announce at least that the Government have been converted to making a good House even better.

10.54 am

Lord Teverson: My Lords, not being an expert on taxation, I, too, wish to address the principles of the Bill. It has a number of positive aspects: it is short— only two pages—and it is simple. I read the Bill for the first time when I put my name down to speak and I found that it was clear about what it is trying to achieve. The strong point about the Bill is that it is about the straightforward principle that if you have

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the privilege to engage in the legislative process of this country then, on the other side, you have obligations and responsibilities. In discussions about the Human Rights Act and so on, we often hear people say, “Never mind rights. What about obligations?”. One of the biggest obligations of parliamentarians is to play a full part in civic society, and the most basic obligation is to pay taxation and dues—your membership fee to the nation—for the great privilege of being a part of the legislation process.

That is the fundamental principle of the Bill, against which all of us would find it difficult to argue. More details may emerge in Committee—I did not attend the last Committee stage of the Bill—but what we are discussing today is the principle of the matter, which is quite clear and unarguable. I would be interested to hear any noble Lord argue against the principle that if you have the privilege of being a part of the legislative process, you should pay your taxation as a citizen. We often refer to there being no taxation without representation, but surely you have an obligation to pay taxation if you make legislation. I have been a Member of this House for a short period of time, as the noble Lord, Lord Selsdon, reminded me; it is a great privilege but has great responsibilities. I am happy to pay my taxes and other Members of your Lordships’ House should be as well.

This is a small but important matter in constitutional change which reinforces the dignity of this House and Parliament. I hope that the Government will see it as a significant part of the constitutional reform programme that they wish to implement more generally and use it as a piece of the jigsaw in that process.

Lord Selsdon: My Lords, I agree with some of the principles the noble Lord has outlined, but they should be applied to everyone in the country who makes legislation—county councillors and so on—which is somewhere around 106,322.

Lord Teverson: My Lords, I agree with the noble Lord. But this House has a responsibility to put its own house in order. I look forward to speaking at the Second Reading of a Bill that does exactly that, should the noble Lord wish to introduce one.

10.58 am

Lord Trefgarne: My Lords, the basic principle is one with which many noble Lords will agree. I say to the noble Lord, Lord Oakeshott, that there are respectable arguments in the other direction. I shall not attempt to deploy them because I am not sure that I have them at my fingertips and I am more concerned with a range of difficulties which emerge from the Bill. But they are for consideration at the Committee stage, not today, and I will resist the temptation to recite some of the difficulties which occurred to me the last time the noble Lord introduced this Bill. I may well wish to return to them again in Committee if the Bill receives a Second Reading.

The other principle that has been deployed is that we are reflecting as a Parliament and as a nation upon the future composition and role of this House. As has been mentioned, a White Paper was issued by the

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Government some months ago anticipating that we should move forward in an agreed manner on the question of House of Lords reform when that agreement can be reached. I fear that it has not yet been reached and certainly the Government are not intending to make further legislative proposals on this matter within this Parliament. If a different Government are in office in the next Parliament, I dare say this issue will not be top of their agenda, so we are not facing an early prospect of Lords reform.

The Bill suffers from the same defect as similar Bills in the past and, for that matter, the Bill that went through Parliament in 1999. They were a piecemeal attempt at reform of your Lordships’ House, and incomprehensive reform at that, that included some of the provisions in this Bill.

It is therefore inappropriate for the Bill to be considered at this moment. It did not find favour when the noble Lord introduced this Bill in the previous Session, and it is now only a few months on from that consideration. I hope that he will not press his Bill through this House if he gets a Second Reading today. If the Bill goes to Committee, I, and, I dare say, others, will want to table amendments to it. I shall certainly do so, as I think will my noble friend Lord Selsdon and other noble Lords—even the noble Lord, Lord Goodhart, who has already identified some of the shortcomings of the Bill, speaking, as he does, with some expertise in these matters and from the Liberal Democrat Benches.

I promise the noble Lord, Lord Oakeshott, that the Committee stage will not be quick. We will need to consider the Bill very carefully. In the mean time, I look forward to seeing what happens to it at Second Reading.

11.01 am

Lord Wallace of Saltaire: My Lords, this is a serious issue. It concerns the reputation of this House, and of the Conservative Party in particular. I presume that that is why the noble Lord, Lord Strathclyde, is here on a Friday. I welcome him; we have missed him here in recent days, and I hope he has not been ill. I look forward to him expanding on the intervention he made at the beginning of this debate when he said that we needed to talk about taking responsibility. That is what the Bill is about: Members of this House taking responsibility. If I may turn around the phrase from the American revolution, “No taxation without representation”, in the British Parliament there should be no participation in legislation without taxation. We do not want Members of either House of Parliament who are tax evaders.

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