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I wish to make two points. I emphasise the point made by the noble and learned Lord, Lord Woolf, about the unnecessariness and deep undesirability of providing for separate criminal offences for Members of Parliament when the existing offences of false accounting and fraud more than cover any relevant misconduct. Furthermore, it is bound to be observed, with proper criticism, that these offences carry much lighter penalties than the common law, which carries seven years and 10 years respectively for those other offences.

The principle in relation to that aspect and the other point that I wish to make is the same: that Members of Parliament-and, indeed, Members of this House-should be treated, as far as possible, under the law and in relation to laws of taxation and remuneration, like other citizens of this country. It is

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the disclosure that people are suddenly getting kitchens, bath plugs and massive mortgages as part of so-called expenses or allowances that is upsetting people.

In summary, the system of allowances for second homes in the House of Commons should be abolished. It should be rolled into and paid as part of a fair salary as recommended by the Senior Salaries Review Body to cover, as well as normal living expenses, the reasonable needs of Members of Parliament to maintain homes both near Westminster and in or near their constituencies.

A great deal has been said about our being in hock to the press and I was heartened about three weeks ago to read a leader in the Times that said, broadly, that the expenses for this aspect should be rolled into a salary-as they always, in a sense, had been while they existed-and that there should be an overall taxable salary for these purposes of £90,000. Whether that figure is too high or too low is for the Senior Salaries Review Body and not for us-Parliament will have to consider it and take responsibility-but the principle that we should be treated the same as other citizens would do more to restore confidence than anything else.

For those of us who were Members of the other place, the background to the present system is fascinatingly set out in the broadsheet Order, Order!, which former Members of Parliament receive. There is an interesting article by Joe Ashton, the former Labour Member of Parliament for Bassetlaw in Nottinghamshire, who was always a gutsy speaker. He is as gutsy today as he was then and he points out the background. It all started in July 1974, between the two elections, when Harold Wilson was faced with a revolt by 150 Members of Parliament. There are former Members of Parliament here who were there then and will know whether Joe Ashton is right or wrong.

Certainly when I came in, five years later, at first I did not claim. I could not quite understand the living away from home allowance and I rented a servant's room from Lady Airey in Marsham Court, for which I paid £40 a week, and that is what I claimed. I then asked a more experienced old hand in Parliament how it worked and he said, "No, don't do that; it's part of your pay". I then claimed the living away from home allowance for the next 22 years because I believed that that was what every Member of Parliament did.

There is nothing party political in this because, although that system may have been started under the Labour Government, it was adopted by Mrs Thatcher, John Major and Tony Blair. I am all in favour of openness-I am being fairly open in this speech-but the system began to fall apart when people saw these new kitchens and massive mortgages. It is not satisfactory to have massive mortgages as the only way in which you can get an essential part of your salary. I do not excuse the flipping of homes-it did not happen in those days; I do not think that anyone thought of it-but the complexities of changing tax law to do away with it are, I suspect, much greater than most of us have given our minds to.

It comes back to this point: we should stand back and look at this with common sense and be truthful and realistic about Members' remuneration. We should

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put it to an outside body, set a level of what we should get and pay tax on it. One noble Lord of great distinction said to me, when I tried this out on him, "If you make this reform, you will not need this Bill". To a great extent that may be true, because the other aspects of expenses, such as secretarial and travel allowances, are not difficult to model. Although there have been some fiddles, with people allegedly employing their sons in dubious circumstances and so on, they have not caused a major problem.

We do not know what Sir Christopher Kelly is going to recommend; we are putting the cart before the horse and we are legislating in haste and in abstract. I ask the Government, even at this stage, to reflect on whether to defer the remaining stages, at least for a reasonable time, to enable us to have a proper debate and to help us to make good law, not bad law.

7.08 pm

Lord Norton of Louth: My Lords, this Bill is introduced on the basis of a false premise. That premise underpins the desire to fast-track the Bill. Given that it is a false premise, it follows that there is no case for expediting the passage of the Bill and setting aside the House's recommended minimum intervals between the stages of a Bill. I shall argue not only that there is no case for fast-tracking the Bill but also that there are strong-I would suggest compelling-arguments for not fast-tracking it.

The Bill is designed, as we have heard, to help restore public trust in Parliament. Recent months have seen a collapse of confidence in the political class. The problem has not been so much with Parliament as with parliamentarians. There is a widespread perception of a misuse of public funds. The case for expediting the passage of the Bill is that creating an independent parliamentary standards agency to regulate MPs' pay and allowances, and to do so as soon as possible, will help lance the boil of public anger.

This argument fails to grasp the nature of the public anger. As far as the Government are concerned, the crucial point is that the Bill creates an independent body: MPs will not be in control of their own pay and allowances. What this ignores is that the problem is not one solely of public disapproval of how the allowances are being administered; it is the fact of the allowances themselves. They will remain-look at Clause 3. Having an independent body dispersing money to MPs for furniture and mortgages, however independent the body and however rigorous the rules, will not lance the boil of public anger. Believing that this Bill will have such an effect is not only misguided but dangerously so.

Had there been greater discussion, not only within Parliament but with people outside, then this may have been apparent. I draw to the attention of the House the words of Natascha Engel, Labour Member for North-East Derbyshire, during Second Reading in the other place when she said:

"Until we know what sort of Parliament the people out there want this to be, it will be much more difficult for us to create an appropriate system of remuneration and reimbursement. We have had any number of opportunities to go out and talk to people, but we have failed at every turn".-[Official Report, Commons, 29/6/09; col. 92.]

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We are legislating against a background of public anger but without fully appreciating the depth of that anger and what people want Parliament to do.

This brings me to the arguments against expediting the passage of the Bill. Given what I have said, there is no clear case for fast-tracking the Bill. There are, I suggest, three powerful arguments against. An expedited passage will be counterproductive, perverse, and dangerous.

First, fast-tracking the Bill is counterproductive. It would, as some noble Lords have already outlined, reinforce the very condition it seeks to counter; that is, a lack of confidence in parliamentarians. The point has been well expressed by the Joint Committee on Human Rights in its report on the Bill. It said:

"We note, with a certain irony, that although the bill is designed to restore public confidence in the House of Commons, it is being rushed into the statute book and will not receive proper scrutiny, as a result. We have been unable to write to the Government to ask for its views on the issues we raise".

It is a point developed in the report on the Bill of the Constitution Committee of your Lordships' House, on which I serve. Paragraph 23 of the report states:

"There is an undoubted need to restore public confidence in the parliamentary system. It is not, however, clear to us that a cobbled together bill rushed through Parliament will help rebuild public trust; on the contrary, if parliament cannot be seen to be scrutinising proposals with the thoroughness they deserve, public confidence in parliamentarians is likely to be further undermined".

Secondly, fast-tracking is perverse, given that the Committee on Standards in Public Life is due to report in the autumn. What if its recommendations-which party leaders have said, in advance, that they will accept-run counter to the provisions of the Bill? The Justice Secretary has claimed that the Bill creates the scheme for pay and allowances and that the committee will fill in the details of the scheme. The committee, justifiably in the light of the Prime Minister's invitation, believes that it is addressing the most appropriate scheme.

This raises an obvious question. It was raised by Professor Dawn Oliver in her evidence to the Justice Committee in the other place. In commenting on Clause 3, she wrote:

"This clause assumes that there will be an allowance scheme. This pre-empts the CSPL recommendations, which might not recommend allowances but flat rated salaries instead".

Flat-rate salaries, as my noble and learned friend Lord Lyell has touched upon, would address the problem probably far more effectively than the provisions of the Bill. The question I put to the Government is this: if this Bill becomes law before the recess and the Committee on Standards in Public Life makes recommendations that run counter to its provisions, what then do we do? The party leaders have signed up to implementing the committee's recommendations. Jack Straw appears to believe that the answer is to amend the Act. We enact it before the recess and we amend it in the autumn. Does anyone really believe that this will restore public confidence?

Thirdly, fast-tracking the Bill is dangerous. This is the most important point. This, as has been so well argued already by noble Lords, is a public Bill with constitutional implications. Those implications have been drawn out in the memorandum of the Clerk of

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the House of Commons to the Justice Committee; in the memorandum of the Clerk of the Parliaments to the Constitution Committee of this House; and in the reports of the Joint Committee on Human Rights and the Constitution Committee. They are also clear from other evidence submitted to the Justice Committee in the other place.

The Bill was hastily drafted and the constitutional implications not fully realised. When some of the implications became apparent, the Government accepted that one clause had to go. Another was removed by a vote of the House, even though there had been no opportunity to debate the clause and no opportunity to take account of its consequences. Indeed, as the Justice Secretary said after the vote and at the very end of Committee stage:

"I say to the right hon. Member for Berwick-upon-Tweed ... that although we will not be able to do so on Report, we will take full account of the decision of the House in the consequential amendments in the other place".-[Official Report, Commons, 1/7/09; col. 387.]

So we have to look at the consequences of that change to the Bill. However, we also have to address the constitutional implications of the remaining clauses. The clauses that have been removed in the other place have not shed the Bill of constitutional implications, as we have already heard this afternoon. Anyone who believes that they have should read the report of the Joint Committee on Human Rights and the memorandum of the Clerk of the Parliaments. There was no time in the Commons to consider all the issues raised by the Joint Committee. The chairman, Andrew Dismore, made clear that he expected that his Joint Committee colleagues in this House would pursue amendments similar to those tabled in the other place. In other words, there is a lot to be done on a Bill that, without thorough consideration, may have significant unintended consequences. As the Constitution Committee makes clear, the move towards greater external regulation, as provided for in the Bill, breaks with the principle of "exclusive cognisance" and has the potential, again as we have heard this afternoon, to give rise to conflict between Parliament and the courts.

In the House on Monday evening, I drew attention to the fourth report of the Constitution Committee in the 2001-02 Session on the process of constitutional change. The committee took evidence from the then Lord Chancellor, the noble and learned Lord, Lord Irvine of Lairg, who made clear that constitutional measures brought forward by government were subject to a rigorous process of preparation within government. He produced a diagram showing the process. He told the committee that,

This Bill clearly departs from the process detailed by the noble and learned Lord. The devil most certainly is in the detail but there has not been the necessary intensive work prior to introduction. The Constitution Committee yesterday published a report detailing the steps that should be undertaken by government when proposing to fast-track legislation. Those steps have not been followed in respect of this Bill.

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Given that the Bill has not been brought in on the basis of consultation, within government or with anyone outside, and has been rushed through the other place in three days and is demonstrably incomplete, the onus falls on this House to ensure that it is subject to detailed examination. That point has been made by Members of the other place. Like my noble and learned friend Lord Mayhew in his excellent speech, I, too, quote Dr Denis MacShane, the Member for Rotherham, during Committee stage of the Bill. He said:

"In my 15 years as a Labour Member of Parliament, who would like an elected second House, I never thought that I would say, as I say tonight, that I hope that the other place takes time and considers the matter carefully".

He added:

"The concern is cross-party-many of us are talking about the matter in the Tea Room and in the corridors".-[Official Report, Commons, 30/6/09; col. 211.]

The report of the Constitution Committee is clear. Its conclusion could not be more emphatic. It states that,

I shall later invite the House to support that conclusion. This is a matter not for the political parties but for this House. There is an important principle at stake and I hope very much that the House will agree to uphold it.

7.19 pm

Lord Williamson of Horton: My Lords, to me, as the 21st speaker in this debate, it seems a long time since we heard the first presentation by the noble Baroness the Leader of the House. However, before I comment briefly on the Bill and pose some questions, I thank her for her presentation of the real situation in which we find ourselves and of why, as she says, the House of Commons needs this Bill. I understand the overall situation. I am also grateful to her for her quite definitive statement of the non-application of provisions similar to this Bill to the House of Lords-although this Bill does not apply to us. That is a very important statement, as it effectively negates earlier statements made by Ministers in recent days, which is important for us in this House.

When I was in the Army, in the Royal Signals, we spent a lot of time repairing equipment and trying to make it as good as new. Then the great day came when we were told that if the product was bust we should simply scrap it and replace it with a new model. I believe that in the present circumstances and in the light of public reaction, the Bill follows the second course, as the intention is to make a really substantive change, as well as to establish a new independent authority to pay the salaries and allowances of Members of the House of Commons, to prepare their allowances scheme and a code relating to their financial interests. I have great sympathy with a recent point made by the noble Lord, Lord Norton of Louth. The people are not concerned so much with the creation of some new body as about the existence of the allowance scheme in itself. That is a very important point, and one that we need to concentrate on.

In view of the importance in our political system of the need for Parliament not to cede its powers either to the Government or to another body, one might have

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hoped that the House of Commons would keep the final control of the allowance scheme to itself. In the present circumstances, I see that is very difficult. However, I note that the code of conduct relating to financial interests to be prepared by the Independent Parliamentary Standards Authority does not come into effect until approved by a resolution of the House of Commons. That remaining element of parliamentary control is to be welcomed in that matter.

I have a number of questions. In the debate so far, everyone has expressed an opinion, mostly very strongly, and we have had a whole range of quotations from important committees. In my intervention, I want to pose specific questions to the Government, because what I am interested in is their reaction to these points. We may be very unhappy, but I want to know what they think about them.

First, of course, is the important point about parliamentary privilege. The situation is not the same as it was when the Bill went into the other House. There has been a substantive change in the removal of important clauses from the Bill, including the one headed "Proceedings in the House of Commons", which was removed without a vote on the amendments but in a vote in the other House. The clause then vanished. It was a rather curious vote, as there was a majority of three and a former Home Secretary and a former Foreign Secretary voted against the Government on that occasion. If you do the mathematics, you can see that it was rather a curious result-but, as the Australians say, "Good on them".

None the less, despite the non-existence of that clause from the original draft, subsequent to that we have the note from the Clerk of the Parliaments-and I am not referring to Dr Jack from the other House. It says that,

that is, the famous Article IX of the Bill of Rights. I know that the Government may find a way around that, but I pose the question to the Leader of the House: what is her reaction to that in relation to the question of parliamentary privilege?

The second point, the House will be delighted to hear, has not been raised before-so there is one other thing in this Bill that noble Lords will be able to complain about. We understand that the decision to create the Commissioner for Parliamentary Investigations was principally because it would avoid the risk that the independent authority might be judge and jury in its own case. That seems quite reasonable, but there are still elements that we need to look at. I ask the Leader of the House to say whether she is satisfied that there will be a clear division between the independent authority and the Commissioner for Parliamentary Investigations and that the activity of the independent authority will clearly take account of those points.

I turn to one separate point on this, which is not in the main part of the Bill but in the schedule to the Bill, in paragraph 17(2), which states:

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"So far as possible the IPSA's administration functions and its regulation functions must be carried out separately, so that one set of functions does not adversely affect the carrying out of the other".

I do not want to make too much of this point, but the phrase "so far as possible" is not very encouraging. It is very important that we should have a proper differentiation of functions in the new proposals.

Thirdly-and this is the most important point that I come on to-there is the question of the extent to which the Bill introduces dangerous proposals that would affect relations between Parliament and the courts. For me, that is the most important point. Will the Leader of the House comment on that specifically? In the text of Clause 7(6), there is written,

That is interestingly written, but it is not really the point. The point is that, as indicated by the noble and learned Lord, Lord Woolf, some elements in this Bill could very easily end up in the courts. He made clear, and I agree, that some of the actions of the independent authority and the commissioner could be covered by that statement-in particular Clause 6(3), which he quoted. That is quite possible, and it is a matter that concerns me. The differentiation of the responsibilities between Parliament and the courts is something to which we need to give attention and respect and not to overtarget in an incidental manner in some other proposal.

That is my third point. Very briefly, I repeat, what about parliamentary privilege, what about the extent to which the independent authority and the commissioner divide their work and what about-a key issue raised by so many Members-relations between Parliament and the courts?

7.29 pm

The Earl of Onslow: My Lords, I have never been a Member of the House of Commons, but when I am either booted out of this House or I die, it will be the first time since 1550 that there has not been an Onslow in one or both Houses of Parliament continuously for 500 years. I feel an enormous and overawed awe of this place. Whenever I come into it, I am shattered by the grandeur of it. I know that I am a descendant of a hairy-cloaked Anglo-Saxon who attended the Witan of Alfred the Great; because that is what we are.

One of my forebears was Speaker of the House of Commons for 33 years, and I promise noble Lords that he would not have descended into wearing one small robe to think that he was bringing the House back into proper repute. Somebody said of him, "Judging by the silence in the room, Sir Arthur Onslow has just made a joke", but he produced most of the rules by which the House of Commons was run. He was a man of the utmost integrity and was unbribable in the days of Walpole.

Why has this scandal arisen? The noble Lord, Lord Crickhowell, alluded to it, as did the noble Lord, Lord Jenkin. It was because the executives of both parties chickened out of awarding. So what did they do? They said "No, old boy. Don't take your full pay. We'll make it up to you in allowances". What was constructed was a trough. Over that trough was a large neon sign which said, "Put not only your snouts but your front trotters

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and your floppy ears into it and go slurp". I suggest to your Lordships that only 20 per cent of the Members of the House of Commons have taken the mickey out of the system and 80 per cent of them have not, as was mentioned by one noble Lord. Those 80 per cent are quite entitled to say, as did Clive when surrounded by the treasury of the Siraj-Ud-Daulah, "Gentlemen, I stand astonished at my own moderation".

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