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The Government's sunset clause has been improved immeasurably by the inclusion of these clauses and Clause 5 in particular. There are many on all sides in another place who worry about the potential impact on another place and the quality of those prepared to sit there of Clause 5 and the regulatory regime that it governs. When I spoke to Clause 5 on Tuesday, I raised several questions about the kind of regime that IPSA is likely to bring in-for instance, how detailed will registration be? Unfortunately, at that time the noble Baroness was unable to give an answer to those questions. Perhaps she will give more detail today or on Monday about IPSA.

I recognise that these matters will, in the execution, be largely within the exclusive cognisance of another place, but we are creating statute here and the whole of Parliament must understand the nature of any potentially constrictive regime under which one of its Houses is being placed by the Executive. The continuing uncertainties about the final form of the scheme demonstrate how important a sunset clause may well prove to be. We know nothing about the new requirements that will surround the registration of financial interests and we have not yet seen the Kelly report. Indeed, there is no certainty that the regime put in place under this Bill will be proportionate, reasonable and based on evidence rather than assertion, and there is very little known about the new offices that will administer and investigate it. The offence relating to its breach has, of course, been removed, but a scheme does not need a criminal offence attached to it to do a great deal of damage.

Once again I emphasise that this is a matter for another place, but I note the arguments put forward by distinguished commentators and many others outside the House that overintrusive and other requirements-for example, the suggestion that MPs should publish time sheets of every minute spent outside Parliament-may cause a great many people who would be an asset to the House of Commons to decide that politics is not what they wish to do.

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If errors of proportion are made by this House or another place, we can correct them, but if it is done by statutory authority it is far harder to change. It will therefore be wise to enable the new Parliament to clean up politics and to assess and improve the regime that we are now so hastily putting in place in such exceptional circumstances.

Although we welcome the amendment as a chance to ensure that the new Parliament will look again at the whole scheme in two years, there are still a couple of details where the government amendment deviates from that put down in the name of the noble Lord, Lord Tyler, and the one to which I attached my name. First, the Government are starting the countdown from the moment that the scheme is brought into effect, not from Royal Assent. This moves the break point a considerable way further into the future. We feel that two years from Royal Assent is enough time to assess whether the scheme is working; it is certainly more than enough time for the damage to start happening if the scheme does not operate as well as the Government assure us that it will. In allowing a flawed scheme to run for as long as this, the Government are risking serious damage to the operation of another place. Secondly, the government amendment allows for the possibility of extending the effective period by affirmative resolution. That is not the optimal way forward; I would much rather have a clean break to these clauses within two years.

I hope that we can, in these unusual circumstances, return to this issue for clarification if need be, and perhaps for adjustment on Report or at Third Reading, depending on what the Minister says. I thank her for the flexibility that she has shown, but I would like to hear why the Government believe that a clean-break sunset clause as envisaged in this amendment is not the best way forward.

3 pm

Baroness Royall of Blaisdon: I say at the outset that I hope what I say in response to noble Lords opposite will answer their questions and assuage their concerns. I do not propose to come back to this issue on Report. I would like to clarify the situation regarding sunset clauses today. We have an awful lot of things to come back to on Report, and this issue is relatively clear.

The government amendments provide for a review mechanism for the clauses that deal with the independent commissioner and the sanctions regime, including offences, and for the provisions on the code of conduct on financial interests. The amendment from the noble Lords, Lord Shutt of Greetland, Lord Tyler and Lord Strathclyde, would apply a sunset clause to the provisions of the Bill that deal with the powers and functions of IPSA in relation to the code on financial interests and of the commissioner in relation to investigations, as well as offences. It would leave the regime with no means of dealing with any breaches of the rules on allowances, and would leave the commissioner with no powers and functions at all, although it would continue his existence.

We recognise that there has been considerable pressure in the House to introduce a sunset clause for the Bill, not least on the grounds that it has been passed under emergency or expedited procedures. I, too, have carefully

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read the excellent report from the Constitution Committee. Emergency legislation takes many forms. Sometimes it is to deal with a situation that will resolve itself very quickly. Sometimes there is a suitable legislative vehicle into which a revised proposal can be inserted with the normal timescale for parliamentary debate. This Bill, however, falls into neither of those categories. There is an urgent need to act-that is why, with the co-operation of the leaders of the other parties, we have sought to get the legislation passed before we rise for the summer.

The mischief that the Bill is intended to address is a continuing one. We need to restore the people's trust in Parliament, particularly in the way in which MPs' financial interests and allowances claims are dealt with. The Government simply do not accept that the people will be satisfied with a provision that implies that in two years' time we could abandon the whole process and revert to the old ways. Nor do I believe that the parties opposite really think that either, but is it realistic to suppose that, near the beginning of a new Parliament, any Government would want to have to find time to re-enact this Bill or the bits of it that deal with the code on financial interests and the investigations regime? I think not.

We have heard a lot in debates on the Bill about the "chilling effect" of certain propositions. I suggest that the noble Lords' sunset clause would itself have a chilling effect on the new IPSA. It is important that the members of the new body should be distinguished and authoritative people. The Bill says that they should be appointed for five years. The opposition amendment would leave IPSA and the commissioner in existence but shorn of many of their functions. Where would be the incentive for good people to put themselves forward for these positions in these circumstances?

I recognise that the Conservative Opposition have moved considerably from their position in the other place, where they were proposing that the whole Bill should be sunsetted within one year of it being passed. They have now moved to supporting the proposition that the parts of the Bill that do not deal with the allowances scheme should be sunsetted after two years. I am grateful for their flexibility on that, but what they are proposing would still have an impact on the quality of IPSA. It might not throw the staff of IPSA into the sort of uncertainty that their previous proposal would have done, but it still raises questions about the position of IPSA and, even more, of the commissioner. The institution of the commissioner would continue to exist under the proposed amendment, but he would have no powers or functions at all unless the Act were to be renewed. Who good would wish to apply for the position in those circumstances?

Nevertheless, the Government understand the concern that to some extent we are moving into uncharted waters with this Bill. We have therefore tabled these amendments to provide an opportunity for Parliament to reconsider whether the legislation is working as intended, but without requiring its complete re-enactment to continue its existence. We are clear that IPSA must continue to exist, and that we must be able to offer certainty to those whom we want to work in it. It is essential that we have an independent body outside the House setting a transparent allowances regime. That much is common ground.

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Noble Lords will know that we had great doubts about the wisdom of applying the sunset provision to Clause 5, but we have decided to do so, given the strength of feeling in this House that we should. However, in contrast to the noble Lords' amendment, we do not see any point in continuing the existence of the commissioner if he or she is to be shorn of all functions. That is why our amendment also refers to Clause 1(3) and Schedule 2.

There are two differences between our amendment and that of the noble Lords. The first, and perhaps the minor one, is that our timescale runs from commencement and not from Royal Assent. The purpose of a sunset clause is to evaluate the effectiveness of the provisions in practice. It will inevitably take some time to appoint members of the authority and the commissioner, and further time to allow the authority to consult fully and create the allowances scheme and code of financial conduct. If the two-year period ran from Royal Assent, which we hope will be next week, that would involve a period of many months when the timescale was running out but none of the functions to be reviewed were in existence. We therefore think that it is more logical for the egg-timer to be started when IPSA is actually brought into existence.

Our major difference with the noble Lords is over the way that they approach sunsetting. In a way, it is a question of the definition of "sunsetting". Instead of providing for the relevant portions of the Act to expire after two years, whatever happens, the amendment would provide for the relevant portions of the Act to expire unless they were continued by resolution of both Houses. The relevant portions of the Act could be extended for two years at a time by order approved by a resolution of both Houses of Parliament. Such a sunset clause, as the noble Lord, Lord Tyler, pointed out, would be similar to provisions in the Prevention of Terrorism Act 2005 whereby the powers in that Act relating to control orders may be continued by the affirmative procedure for set periods.

That is the critical difference between the two approaches. Both give Parliament the opportunity to consider whether or not it wishes to continue with the investigations regime set up under the Act, but, in the case of the government amendment, if Parliament decides that it wants to continue the regime, it may simply vote to do so. Neither the Government nor Parliament would need to find the time for primary legislation needed to re-enact the Bill. Also, if all the provisions of the Act were working very well, why would Parliament want to take an inordinate amount of time in re-enacting the Bill? That may not be the best way forward. I suggest that the proposal put forward by the Government provides a much more satisfactory outcome, both for Parliament and for the public, who can be assured that the new regime can be continued. It is the best outcome for members of IPSA and the commissioner himself, all of whom deserve some security.

Baroness Hamwee: The noble Baroness's defence of her approach to IPSA membership, the commissioner and so on, makes it very clear that hers is not a sunset clause as most of us would understand it but, as my noble friend said, a renewal clause. Indeed, she referred to the definitions.

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With primary legislation, there is the opportunity for both Houses to consider the detail, to reflect on arguments and to deal with fairly nuanced points. My noble friend used the term "perfunctory" in referring to a statutory instrument. If there is primary legislation and will on all sides to renew and move forward quickly, it is open to both Houses to deal with the primary legislation quickly, and with little fuss. Conversely, with a statutory instrument, it is not possible to take the time that would be needed to have a debate, come back to it and tweak it. As for the noble Baroness's defence of the opportunity for an abrupt and quick way of dealing with the matter-knee jerk was the term that I wrote down when I first saw this provision- I think it would be a pity. The sunset clause that would require primary legislation for extension or renewal, whatever one likes to call it, would give both Houses the opportunity to deal with a very serious matter in a serious and reflective manner.

Baroness Royall of Blaisdon: I heard the noble Lord, Lord Tyler, refer to statutory instruments as being perfunctory, but I do not regard debates on statutory instruments as being perfunctory. Of course, one can always vote on them; they are affirmative instruments, so the House has enormous power.

I suggest to noble Lords that we are where we are now. One reason we are having difficulties is that this is an expedited piece of legislation. The noble Baroness is suggesting that, if we have to resort to another piece of primary legislation, it can be done rather quickly. We are just going to be back where we are now. It may well be that IPSA and the commissioner and everyone else related to that will be working absolutely fine-in which case, why would we want to go through the pain of another piece of legislation? It would be much more appropriate for Parliament to go down the line that the Government have suggested.

Baroness Hamwee: If IPSA and the commissioner are not working fine and the Government come up with their proposed solution in the form of a statutory instrument, the is no opportunity for Members to do other than say yes or no. The noble Baroness will accept the problem about there being no possibility of amending a statutory instrument.

Baroness Royall of Blaisdon: I accept that statutory instruments cannot be amended, but they can be voted on. Before any statutory instrument was brought forward, there would of course be extensive consultation.

3.15 pm

Lord Goodhart: The noble Baroness suggested that it would need serious primary legislation if the sunset clause had to be applied, but that is surely not true. All that would be needed is a very short new Bill, which would simply give effect to the existing provisions, minus the sunset clause. It would be a very simple business indeed to do that.

Baroness Royall of Blaisdon: I merely point out that very simple primary legislation is very seldom very simple, and that it takes rather longer than anyone would like.

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Lord Tyler: I am very grateful to the noble Baroness, not only for the amendments that she has introduced but for the way in which she has dealt with this important choice. It may seem to be finely balanced but it is an important choice, and I regret that we have had comparatively little time in Committee to examine the merits of the two approaches. I am grateful to the noble Lord, Lord Strathclyde, for pointing out the two major differences between these two approaches-one that I had already dealt with, which was the issue of secondary legislation and affirmative resolution as opposed to a sunset clause and a clear break, to use the noble Lord's phrase.

I am not so anxious about the timing. I accept the noble Baroness's view that the trigger may be preferable. That is a matter of degree rather than principle. However, I cannot accept her argument that somehow the sunset clause would be likely to leave IPSA and the commissioner without statutory authority, in limbo. No responsible Government are going to allow that to happen. Clearly, if the process has worked very well, my noble friend Lord Goodhart is absolutely right in saying that a very short amendment would be necessary to the Bill, which could certainly be passed without an "inordinate amount of time", which was the noble Baroness's phrase-a rather depressing response to how Parliament works. Parliament can work perfectly effectively when something is obviously working well and simply needs to be endorsed. It really is barking up the wrong tree to suggest that the Government would leave it to the last minute of the two years and then allow the whole thing to collapse. That is simply fanciful. What really worries me is that the noble Baroness is appearing to confuse the two quite different concepts, which are so clearly set out in the Constitution Committee report to your Lordships' House, between a sunset clause-I read the passage-on the one hand and a renewal procedure on the other. I do not think we have reached entirely the end of the road.

The real problem is that, as I have said, this is all coming to us rather late in the day in Committee. I regret that. I should prefer that we look at it again on Monday in the context of the Report stage in your Lordships' House when we can more carefully consider these issues.

I am advised by the House authorities that were we to vote on this issue it might be more difficult to examine it again on Monday. Therefore on that basis I suppose that the best we can achieve is for me to ask leave of the House to withdraw the amendment and to hope that the government amendments go through without a Division so that we can look at them in more detail on Report on Monday. On that basis, I beg leave to withdraw the amendment.

Amendment 80 withdrawn.

Clause 10 : Interpretation

Amendment 80A not moved.

Amendment 80B

Moved by Baroness Royall of Blaisdon

80B: Clause 10, page 8, line 17, after "to" insert "the Committee on Standards in Public Life or to"

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Amendment 80B agreed.

Clause 10, as amended, agreed.

Clause 11 : Power to make transitional etc provision

Amendment 81had been withdrawn from the Marshalled List.

Amendment 81A not moved.

Debate on whether Clause 11 should stand part of the Bill.

Lord Higgins: We have been debating matters of great constitutional importance. It is in the nature of the way Bills are drafted that amendments towards the end tend to conclude, in T S Eliot's words:

"Not with a bang but a whimper".

I am therefore not going to delay the Committee more than a moment or two. My only concern is that Clause 11(2)(a) and (b) seem to give the Minister of the Crown considerable powers to amend things by amendment and by statutory instrument when the original legislation has been given much more opportunity for consultation. May I simply ask therefore what kind of specified purposes the Government have in mind, either in regard to subsection (2)(a) or (b)?

Lord Hunt of Kings Heath: I am very glad to respond to the Clause 11 stand part debate of the noble Lord, Lord Higgins. I hope I can put his mind at rest on this point. Essentially, Clause 11 deals with the transition from the existing regime in the House of Commons to the new regime. It deals with matters that are exclusively the concern of the other place. It has been discussed and, indeed, amended in the other place. The provisions were included in the Bill as a result of discussions between the leaders of the parties in both Houses and representatives of the Committee on Standards and Privileges and the House authorities.

Perhaps I could set out what Clause 11 does. Essentially, it provides that a Minister of the Crown, who would be the Leader of the Commons, may by order make various provisions. First, the order may provide that the House's rules on allowances should have effect for specified purposes as though they were included in a scheme made by IPSA. That essentially allows IPSA and the Commissioner for Parliamentary Investigations to take up their functions as soon as possible without having first to go through the process of revising the existing rules.

It may also provide that the rules on registration of financial interests and the rules prohibiting paid advocacy should have effect as if they had been included in the code drawn up by IPSA. Again this allows IPSA and the Commissioner for Parliamentary Investigations to take up their functions as soon as possible.

The order may also provide for the setting off of allowances unpaid before the advent of IPSA against allowances due to be paid after IPSA comes into operation. This is because some MPs who have previously been overpaid allowances, instead of repaying that amount immediately, receive in lieu a lower amount of allowances for a period in the future. This order-making power permits such arrangements in respect of overpayments under the old system to continue even after the transition to the new system.

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The order-making power also permits a scheme to be established so that the transition of the staff from the House to IPSA can be managed sensibly, without either duplication or gaps. Such a scheme could only be made by the Minister of the Crown with the consent of the Speaker in his capacity as chair of the House of Commons Commission.

I take this opportunity to draw your Lordships' attention to subsection (3), although I understand the noble Lord, Lord Higgins, was specifically asking questions on subsection (2). However, perhaps I may go on to talk about the clause in general. There was some concern in the other place that IPSA and the commissioner might apply more stringent standards to the investigation of complaints under the old rules once they took over administering them. The amendments which have already been made to the clause addressed many of those points, in particular making it clear that where a case had been settled under the existing regime it could not be reopened under the new one. In other words, IPSA and the commissioner can deal only with complaints that arise after they take on responsibility for the scheme or the code. Subsection (3) reinforces the effect of this by making it clear that the offences regime in the Bill will not apply to any complaint relating to the existing scheme or code, regardless of when the complaint is made.

I say to the noble Lord, Lord Higgins, that it is not a question of the Minister of the Crown-that is, the Leader of the House of Commons-changing rules willy-nilly as he feared might be suggested. It enables the current rules to be transferred to the new regime in the transitional period before work has been undertaken by IPSA to bring the new schemes into fruition. I also assure him that these would have to be approved by the House of Commons. The role of the Leader is to place the matter before the Commons to be decided. These are sensible provisions that essentially allow for a sensible transition from the current situation to the new situation, ensuring that there will be no gap between the operation of the old and new systems. I hope that I have reassured the noble Lord on that point.

Lord Higgins: I am most grateful to the Minister for that helpful explanation.

Clause 11 agreed.

Clause 12 : Short title and commencement

Amendment 82 not moved.

Amendment 82A had been withdrawn from the Marshalled List.

Amendment 82B

Moved by Baroness Royall of Blaisdon

82B: Clause 12, page 9, line 27, at end insert-

"(d) section (Expiry of provisions of the Act)."

Amendment 82B agreed.

Clause 12, as amended, agreed.

Amendments 83 and 83A had been withdrawn from the Marshalled List.

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