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An additional safeguard is that the judicial member of the IPSA will have a hand in agreeing the investigation, complaint and publication handling procedures. The IPSA will also need to act in setting these procedures in a way that is compatible with the Human Rights Act. This means that courts will be able to review the exercise of functions of the Independent Parliamentary Standards Authority on the basis of the ordinary principles of administrative and human rights law.

Clause 7 includes a number of sanction powers so that the IPSA may direct those who have received allowances to which they were not entitled to repay them. In addition, the IPSA will be able to direct an MP to amend his or her entries in the register of financial interests. Where appropriate, the IPSA will also be able to recommend to the House of Commons Committee on Standards and Privileges that the House takes disciplinary action against a Member who has broken the rules. It will be up to the committee whether it accepts, rejects or modifies such a recommendation. Such disciplinary action may include withholding a Member's pay, being suspended or even expulsion from the other place.

It is important that we should note that these are powers that the House of Commons already has; the Bill does not confer them on the House. They are mentioned only as an indication of the matters on which the IPSA may recommend, not as an indication of the sanctions the House can impose. Moreover, the Bill does not prevent the House exercising any of its disciplinary powers otherwise than following an investigation by the commissioner or a recommendation by the IPSA. However, we are willing to consider further whether the commissioner should simply make a report on fact and refer rather than recommend this to the Committee on Standards and Privileges.

In addition to the enforcement powers for the IPSA and commissioner, Clause 8 of the Bill creates the following new criminal offences: of providing information that the Member knows is false or misleading in a claim for an allowance, for which the maximum sanction is up to 12 months' custodial sentence or an unlimited fine; failing, without reasonable excuse, to comply with the rules on registration of financial interests, for which the maximum penalty is a fine of up to £5,000, and an offence prohibiting paid advocacy. There are precedents for such offences; I have made available in the Library a chart that shows a range of comparative offences.

Clause 9 provides that the Speaker may agree with the IPSA that it shall take over certain registration functions currently carried out by the Standards Commissioner. It further provides that the Speaker may agree with the Commissioner for Parliamentary Investigations that he or she shall take over other functions of the Standards Commissioner. Any such agreement would take place only after appropriate consultation with the House of Commons Committee on Standards and Privileges; it would be laid before the House of Commons and be subject to approval by resolution of the other place.

We must recognise that, already, there is a wide-ranging scheme on allowances and financial interests in the House of Commons. To manage the transition from

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the old system of allowances, Clause 11 sets out the powers to make transitional provision which may be exercised by a Minister of the Crown, for example the Leader of the House of Commons. This is to ensure that a valid system of rules relating to allowances and financial interests is in place as soon as possible after the IPSA has been established. I should emphasise, however, that the new rules on offences will apply only in relation to an allowances scheme or financial rules made by the IPSA. Moreover, the IPSA and the commissioner will not be able to exercise its functions under the Bill in relation to any matter arising under the old rules.

Perhaps I might now turn to the thoughtful scrutiny that this Bill has received from several committees. The House of Lords Constitution Committee, the Joint Committee on Human Rights and the House of Commons Justice Committee have all published reports in the last week. First, let me address the reports from the House of Lords Select Committee on the Constitution. Its first report concludes that the committee is unconvinced that the case has been made for fast-tracking this Bill and that the policymaking has been rushed.

This Bill is the result of constructive cross-party discussion, which included representatives from your Lordships' House. Throughout the cross-party talks on this Bill, there has been a broad consensus that we must end the self-regulation of the House of Commons allowances schemes and the registration of financial interests. It is critical that the IPSA should be up and running as soon as possible for MPs currently in the Commons, but it is also crucial that it is established and properly embedded before the forthcoming general election, so that any new MPs elected at that time are not sullied by the problems of this Parliament.

I am grateful to the Constitution Committee for its reports on this Bill. As members of the committee will know from the evidence that I gave to them, we agree on many issues, including expedited legislation. On that point, following a key recommendation of the committee, I undertake to ensure that in this House, any Minister seeking to bring forward fast-track legislation makes an early statement to the House when the legislation is introduced, setting out the case for expedition. On a second key recommendation, I believe that there should be a post-legislative review of the Parliamentary Standards Bill within two years. This would provide Parliament with an opportunity to review the impact and effectiveness of the legislation in the near future. On the committee's second report, published this lunchtime, we will study it and come back in Committee to the issues raised in it.

I would also like to touch upon the key issues raised in the report of the Joint Committee on Human Rights. The report suggested that the Bill may not be compatible with Article 6 of the European Convention on Human Rights. Article 6 sets out a right to a fair and public hearing where there is to be a determination of a civil right or a criminal charge. The committee suggests that more procedural safeguards, such as the opportunity to call and examine witnesses, should be included in the Bill.

The report also concludes that there should be a right of appeal to the Judicial Committee of the Privy Council against determinations of the IPSA and the

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House of Commons. The Government very much appreciate the work of the Joint Committee but we do not accept that the Bill as currently drafted is incompatible with Article 6. We will set out our reasons fully in due course. I should stress also our belief that nothing in the Bill as it currently stands is incompatible with Article 9 of the Bill of Rights 1689.

The Justice Committee report aired concerns about the infringement of parliamentary privilege. The Government have listened to its concerns about including a statutory requirement for there to continue to be a code of conduct incorporating the Nolan principles and we have removed this from the Bill. On its introduction, the Bill also included provisions that proceedings in Parliament may be admissible in a court in relation to the three new offences in proceedings against a Member. At the behest of the other place, this no longer forms part of the Bill. The removal of these clauses in no way undermines our key objective, which is to establish an independent and transparent system of regulation.

In the light of this, and following further cross-party discussions-

Lord Lester of Herne Hill: My Lords, in relation to the work of the Joint Committee on Human Rights, the right honourable Jack Straw, in the Commons, indicated to Mr Dismore, the chair of the committee, that the Government were open minded about introducing fairness procedures. Is it the Government's intention to do that at Committee stage?

Baroness Royall of Blaisdon: My Lords, we will bring forward amendments.

In the light of what I was saying, and following further cross-party discussions, we will be tabling an amendment to the Bill to remove the new offence on paid advocacy. We agree that this issue requires further consideration and we intend to return to it in the next legislative Session.

In conclusion, the Bill, which is wholly and solely for the Commons, is necessary. It is an essential Bill; a Bill which the Commons wants; a Bill which the Commons needs; and a Bill which will bring about the changes in the Commons that the public of this country want to see. It is a Bill that does not apply to this House; a Bill which will not apply to this House. Nevertheless, it is a Bill towards which this House, as the second Chamber of our Parliament, has a clear responsibility. It is a Commons Bill and it is a Bill which this House must ensure that the Commons has. I commend the Bill to the House.

4.03 pm

Lord MacGregor of Pulham Market: My Lords, as the first speaker from these Benches, I make it clear that I am speaking as a Back-Bencher and expressing my own views; I am not speaking on behalf of my Front Bench. My past interests in this area have been as Leader of the House of Commons, chairman of the Standards and Privileges Committee some 20 years ago, although much has changed since, and more recently as a Member of the Committee on Standards in Public Life, the committee that produced the report on the House of Lords.

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I wish to make four general points today. The first is this: there is no question but that there have been, it would appear, some serious abuses of the Commons allowances system, although it is easy to get an exaggerated view on how many-but more on that later. It clearly needs to be attended to and I have no objection in principle to an independent body being responsible for it. However, that does not mean that we should give this Bill, which is the Prime Minister's answer to the abuses, swift approval. There are some serious and fundamental flaws in it, which anyone reading the paper by the Clerk of the House of Commons to the House of Commons Justice Committee, our own Constitution Committee report and the Joint Committee on Human Rights report would see in abundance. In particular, the first two are devastating in their criticisms. At Second Reading in the other place, Alan Duncan referred to the Clerk's paper. He said that it had two central concerns, which were,

"Parliament", not only the House of Commons-

Those are devastating criticisms.

My first point therefore is that the handling of this matter is little short of disgraceful. It bears all the hallmarks of a knee-jerk response by a beleaguered Prime Minister in a bunker making legislation on the hoof in response to newspaper headlines and announcing his quick thought for the day on YouTube. It flies in the face of all the Government's own rules for public consultation-I stress public consultation, as distinct from secret cross-party talks-and adequate time for scrutiny of legislation. It raises serious constitutional issues as a result of the thoughtless haste with which the Government did the drafting. We see evidence of that in the continuing response by the Government in making changes and even promising some-if I heard it right-in the next Parliament. In all my time in Parliament, I have never seen such a critical report by a clerk in the House of Commons. I say to the Leader that my criticism does not include her role. I have great sympathy for her and I am grateful for the assurances that she fought for and gave today.

Admittedly, in the House of Commons, Clause 6 was withdrawn and Clause 10 was defeated, albeit by a majority of three. These clauses were highly objectionable on constitutional grounds but, as the report of the Constitution Committee makes clear, much still needs to be done on what are now Clauses 6, 7 and 8. I leave it to my noble friend Lord Goodlad to talk about his Constitution Committee report, but I quote one sentence from it:

"This is no way in which to legislate on matters which raise complex constitutional and legal issues".

The Earl of Onslow: My Lords, the noble Lord is very critical of the Government, with which I agree 100,000 per cent, if my mathematics is not a bit ropey, but the same criticism applies to our own Front Bench for allowing this through on the nod. We should not have done that. We should have stopped it in the Commons and said no.

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Lord MacGregor of Pulham Market: My Lords, I do not want to talk about what happened in the other place, except to say that several of my honourable and right honourable friends, including the shadow Leader of the House, tried hard to get changes and succeeded in getting some.

We in this House are left to pick up and sort out the pieces. I believe that, contrary to the implication that the Leader gave, there are many in the other place who expect us to do just that. Indeed, some have said that to me. This raises the question of timing, about which my noble friend Lord Norton has tabled an amendment to the Motion-I wait to hear what he has to say. If we do not go down that route, there are other ways of giving this House more time, such as extra days or postponing other business to the spillover. Whatever it is, we must find some way or other of ensuring that we give this Bill enough time for the proper scrutiny to take place. That includes the question of a sunset clause for further considered thoughts in the next Parliament. We have to bear in mind that the other House passed this legislation in three days with no Third Reading.

My second point relates to the fact that, although this Bill relates only to the House of Commons, there are, as all three reports to which I referred confirm, major constitutional implications in the Bill relating to the Bill of Rights, parliamentary supremacy, the relations between Parliament and the courts, judicial review and human rights. I leave it to others in this debate more qualified than I am to talk on these issues.

In passing, I observe on human rights that one of the most disgraceful aspects of this whole episode has been the way in which what is effectively a kangaroo court of three people, with no proper right of hearing or appeal, has been allowed to cause one or two Members of the other place to retire from Parliament because they were not able to stand again. I refer in particular to the case of Ian Gibson, the former Member for Norwich North. I come from that area. Although I disagree profoundly with him on many political issues, I thought that the way in which he was treated was utterly disgraceful and should not have been allowed. I know that that feeling is widely shared in the whole community and in all parties in Norfolk. In my judgment, there will have to be much debate and significant amendments on all these counts before this Bill is allowed to pass.

Again, as Alan Duncan said at Second Reading,

So this Bill is not just about internal matters of the House of Commons; there are much wider parliamentary issues at stake. Since the House of Commons gave such little time to it, it behoves us to give much more.

My third point relates to outside interests. There is a curious paradox in that there is much complaint nowadays that too many MPs have never had experience outside the narrow channels of going from university to politics, being a research assistant, then a special adviser, then a Member of the House and then, just possibly, a Minister. Now measures are being introduced

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to curtail and hugely discourage outside interests. Shortly after I left the Cabinet, I had to give what was almost the first piece of evidence in the first session of the Committee on Standards in Public Life. I made a plea to it, and delivered a paper, on the importance of allowing Members of Parliament to continue with outside interests to enable them to bring the proper experience and judgment to the House of Commons. I am glad to say that that committee, which was under pressure to recommend against outside interests, strongly agreed with me.

I know that having outside interests hugely helped me in my parliamentary career and I do not believe that it is to the detriment of what MPs do in their role as Members of Parliament or in their constituency. It means a heavy workload, but it brings huge advantages to the House. Let us not forget that Ministers, who have an even bigger role than many of those with outside interests, also have their constituency and parliamentary interests as well. So there is one law for Ministers and another for everyone else.

This Bill-and even the petty timekeeping that will now be required to have an outside interest-will mean a continuation of the trend of stopping outside interests, which will mean the demeaning of Parliament and reinforce the very trend that so many criticise of a House dominated by people with no outside experience. In my view, it is not necessary to include outside interests in the Bill, as the Standards and Privileges Committee in the House of Commons has been doing a good job in the area of the register, the code of conduct and breaches. I am not aware of criticism of the committee, whose chairman I pay tribute to-he has done a terrific job-along with the parliamentary committee itself. The committee should have been left to deal with all of that.

I come to a point that takes me outside the Bill but that worries me most. I know that what I am about to say will be unpopular in some quarters, but I believe that it needs saying. Of course, there have been serious abuses that need to be tackled but, in the media witch-hunt that is taking place, the fact that most MPs are highly honourable is being overlooked. They have to have second homes if they are to undertake their constituency activities and have time even to see their families. They are immensely hard-working and commit themselves to public service, their constituents and the great issues of the nation, often at some considerable financial sacrifice. I do not think that most people realise, unless they have been in it, how time-consuming the whole business is. The commitment is enormous.

The unpalatable fact-and perhaps I will be unpopular for saying it, but it needs saying-is that one reason why allowances have got out of kilter and sometimes been misused is that salaries have gone way out of line for the kind of people whom we should be trying to attract to Parliament. Of course, there will always be people who will stand for Parliament, but it is people of talent and experience whom we need to attract. After all, it is the greatest institution in the nation. Ministers are drawn primarily from it and in their roles in all sorts of ways they have much greater responsibility and impact on people, the nation's affairs and internationally than do those in many other roles outside Parliament.

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When I left the Cabinet and rejoined some companies, I simply had not realised the extent to which salaries had fallen behind in the House of Commons, compared with the kind of salaries-and pensions-that I saw offered even in middle-ranking positions in not very big companies. The whole thing has got completely out of kilter. Indeed, many people in public sector jobs in local authorities are paid greatly more than Members of Parliament, who are supposed to have the responsibility over them. Most people know that there are recently qualified lawyers in their mid-20s, with perhaps only one or two years' experience, who are earning as much as Members of Parliament and who expect to go on earning hugely more. That also applies to other professions.

Being a Member of Parliament should be one of the most important and worthwhile careers, but I am concerned about everything that is now happening to many good and worthy MPs and the unfair vilification of them, on top of outdated salaries. I realise that in the current crunch this is not the moment to raise salaries, but that issue has to be addressed in the future. My concern is that, unless we put these things right, it will be very difficult to attract the sort of talents that we want in the House and to stand for Parliament. And that would be a tragedy.

4.15 pm

Lord Shutt of Greetland: My Lords, I thank the noble Baroness for introducing the Bill. The need for it is self-evident in the harm that has been done to the body politic in the past two or three months. I am mindful, as many noble Lords will be, of the agreement involved. Not only the Prime Minister, but the three party leaders in the Commons, believe it is important for a Bill of this nature to be brought here. I agree that we have to be flexible with the timetable. If more days are required for Committee stage-it will depend on the number of amendments tabled-further time will have to be provided.

This is a short Bill and it seems to be getting shorter in terms of what is before us. It has been an interesting experience for me as one who has been invited for what one might call informal pre-legislative scrutiny with the Lord Chancellor, the right honourable Jack Straw MP, representatives of all the parties in the Commons, including the nationalist parties and the Northern Ireland parties, and Cross-Benchers from this House. There have been at least five meetings, and the Bill changed in many ways before it became the one now published. The Bill is to create this thing called IPSA to create and run an expenses regime and pay salaries, to investigate alleged wrongdoing and deal with the consequences. My noble friends Lord Goodhart and Lord Lester of Herne Hill will have more to say on such matters.

We have also been informed that the Bill does not affect this House, and the noble Baroness reiterated that point. One way of making that clear would be to re-name the authority the IHOCSA or the Independent House of Commons Standards Authority. The aim is to get MPs out of fixing salaries and expenses; yet Parliament is supreme. However if, through this regime, expenses became too much or were perceived as too little, I doubt that IPSA would last that long.

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I also want to mention the relationship between the various bodies that are looking at these matters. The Bill creates IPSA for the moment, which will look at the expenses regime and then pay those expenses, but we have Sir Christopher Kelly's report to come, and then there is the SSRB. I am far from clear about the inter-relationships there. It could be, as the noble Lord, Lord MacGregor, indicated, that there is a greater relationship between these matters; particularly the salaries issue where, in certain circumstances, expenses seem to have been embraced as an addition to salary. Perhaps that should be put to one side and these things looked at in the round, and not separately.

Reference has already been made to a sunset clause. There is no doubt about it: all those meetings have taken place; nevertheless, this is being done in a rush. Is it right? If there is a sunset clause and this Bill lasts a couple of years, it would be a good thing, particularly with post-legislative scrutiny. There are details in the Bill that need looking at. I am amazed that the Bill suggests that five people should become the IPSA and that those five can resolve themselves into a committee of-I assume-fewer than five. The committee can then resolve itself into a sub-committee, of fewer than fewer than five. It is strange that they cannot co-opt someone to serve on a sub-committee of a committee, when doing so may assist them on some element of benefit in kind, or something that they have no expertise in.

At the Second Reading of a Bill, there comes a point at this stage where people say, "Well, I very much welcome this Bill and perhaps we can improve it in Committee", or, "This is a Bill that I want to oppose at every turn". I think this Bill may well need very much amendment, but it is one of those Bills that I feel we will just have to put up with.

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