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The noble Lord made a point about previous and current tax years. We have changed the requirements so that the amendments propose requiring a donor to be resident or ordinarily resident and domiciled-ROD, in short-in the year of giving the donation or the loan. The version of the amendments debated in the other place referred to the previous tax year. Why did we make that change? We made it in the light of discussions with Her Majesty's Revenue and Customs and Her Majesty's Treasury. Fundamentally, we believe that it would be bizarre and an unintended effect if an individual who was not ROD but had been last year was a permissible donor whereas someone who was ordinarily resident and domiciled in the current year but had not been so in the year before was not a permissible donor. So we recognise that for some people it will not be clear in-year what their tax status is. If a donor or recipient is in doubt about the permissibility of their donation, they should not give it without independent advice to satisfy themselves of their position.

He also makes a fair point about the complexity of the tax system. It is certainly an argument that we have employed, and it still exists: the tax system is still complicated in this field. Of course we are not claiming that it is straightforward but-and I go back to something I said a few minutes ago-what we have proposed is a workable and effective means of addressing a clear decision from Parliament, not least from this House on Report. When these matters went back to the other place and were debated through the Government's then amendments, there was of course no Division called at the end of that debate this time last week.

Finally, on why the anomaly is not a problem now, we took and stand by the view that it is better to tackle these issues in the round. The House decided that this issue ought to be addressed now, not at some time in the future, and we have sought to give effect to that decision. This does not prevent further consideration of the wider issue in due course; indeed, I would be very surprised if there were none.

Motion agreed.

Parliamentary Standards Bill

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4.46 pm

Amendment 1

Moved by Baroness Royall of Blaisdon

1: After Clause 1, insert the following new Clause-

"House of Lords

(1) Nothing in this Act shall affect the House of Lords.

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(2) But that is subject to-

(a) section 13(5),

(b) paragraphs 5(3) and (4), 16(2), 22(1), 24(2)(b) and 25(1) of Schedule 1, and

(c) paragraphs 4(2) and 8(1) of Schedule 2."

The Chancellor of the Duchy of Lancaster (Baroness Royall of Blaisdon): My Lords, when we debated the question of whether we should say that this Bill applied to your Lordships' House, on the basis of an amendment in the name of the noble Lord, Lord Strathclyde, I said that the Government were happy to accept the principle of the amendment with some exceptions. I undertook to return to the matter on Report. As I explained then, we were unable to accept the amendment as drafted because it was inaccurate in some minor respects. I explained that the Bill gives your Lordships a role in the administration of the new regime. I said, for example, that the chair and members of IPSA, and the commissioner, may be removed from office only following an address by Her Majesty to both Houses of Parliament. The accounts and annual report of IPSA must be laid before each House of Parliament.

The amendment that I have now tabled gives effect to that undertaking. As well as the two points which I mentioned in Committee, there are a number of other references to your Lordships' House in the Bill. The point on removal of the chair and members of IPSA and the commissioner is covered by the references to paragraphs 5(3) and (4) of Schedule 1 and paragraph 4(2) of Schedule 2. The point on the accounts and annual report of the IPSA having to be laid before each House of Parliament is covered by the references to paragraphs 24(2)(b) and 25(1) of Schedule 1, and paragraph 8(1) of Schedule 2.

There are three new references to your Lordships' House which also need to be covered. The first two are the references in paragraphs 16(2) and 22 of Schedule 1, which both refer to the expenditure of IPSA being funded by money provided by Parliament. The final amendment refers to the review clause which we inserted into the Bill in Committee. Under that clause, a statutory instrument to continue in existence the provisions of the Bill covered by that clause must be laid before each House of Parliament, and approved by a resolution of each.

The small exceptions which are now included in this clause do not undermine the basic principle. As I made clear at Second Reading, and again in Committee, the Government entirely accept that this Bill does not apply to your Lordships' House. That is self-evidently the case. We also accept that it should not be extended to your Lordships' House as it is presently constituted. We obviously cannot in legislation put the latter point on the record, but we can put the first point on the record in the Bill and I am happy to do so. I beg to move.

Lord Strathclyde: My Lords, this amendment was tabled to fulfil a commitment that the noble Baroness the Leader of the House made in Committee. My purpose was to make good the words of some Ministers, notably the noble Baroness, to exclude the House of Lords. On the face of it, I think she has done exactly

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that. Therefore, I am extremely grateful to the noble Baroness for bringing forward this amendment and I wholly support it.

Amendment 1 agreed.

Amendment 2

Moved by Lord Jenkin of Roding

2: After Clause 1, insert the following new Clause-

"Article IX of the Bill of Rights 1689

Notwithstanding any provision of the European Communities Act 1972 (c. 68), the European Convention of Human Rights or the Human Rights Act 1998 (c. 42), nothing in this Act shall be construed by any court in the United Kingdom as affecting Article IX of the Bill of Rights 1689."

Lord Jenkin of Roding: My Lords, in discussing the new clause in my name we are also discussing the subsequent new clause. I begin by saying how pleased we are to see the noble and learned Baroness the Attorney-General in her place. We are very grateful that she will be able to give us the benefit of her advice. We have had a long letter from her comparatively recently, but of course it is not on the record. We look forward to hearing what the Attorney-General has to say-no doubt in many cases repeating what is in the letter-because what she says will then be on the record.

The House will recognise that these two new clauses are exactly the same as those we debated in Committee last Thursday. I have retabled them partly because, in a very important speech, my noble and learned friend Lord Mackay of Clashfern gave his view that European Union law is unlikely to apply to the procedures in the Bill. He added that,

Indeed, that is advice that I have had from other sources, and to which I will refer in a moment. My main purpose here is to give the noble and learned Baroness the Attorney-General the opportunity to give the House her authoritative opinion. Even my noble and learned friend Lord Mackay said that this view was "subject to correction" by the Attorney-General. I suspect that there will not be much correction because both noble and learned Lords are extremely knowledgeable.

The House will be relieved to know that I do not intend to repeat at length what I said in Committee. I know that the noble and learned Baroness has had that drawn to her attention; she deals with it in her letter. Perhaps I can summarise the argument in this way. There are two avenues whereby one might find that Clause 1 of the Bill, as it is now, might be called into question by a European court. I deal first with the question of the European Court of Justice in Luxembourg. Let us suppose that a disgruntled citizen, upset by a proceeding that comes from IPSA, the commissioner or the Committee on Standards and Privileges in the other place, tries to raise the issue by judicial review in court here. That court will then have to decide whether it is covered by Article IX of the Bill of Rights. That, indeed, is something that the court must do. The noble

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and learned Baroness the Attorney-General made that very clear in a report that she sent to the Leader of the House in another place. I do not think I need to quote it because it is well established.

Suppose that the UK court then decides that the case falls on the privilege side of the line which divides cases that are within Article IX from those that are not, and therefore declines to hear the case. Suppose that our disgruntled citizen-who must be very disgruntled by this stage-then decides to go to the European Court of Justice in Luxembourg. He cites some provision of EU law-which is obviously an enormously important part of the case if it is going to be established-that might be relevant to his case and asks that court to invoke Article 234 of the treaty. Again, I do not think I need to quote that; it is all in Hansard. Article 234 requires that if such a case comes before the ECJ, that court can ask the UK court to refer the matter to it for review. That seems to me, prima facie, to give jurisdiction to the European Court of Justice to, as it were, "call in" the court.

When I raised this previously, the noble Baroness, Lady Royall, dealt with it very firmly. I quote her from Hansard of 16 July at col. 1304. She said:

"A UK court must refer questions of the interpretation of EU law to the ECJ when it considers it necessary, but this is entirely distinct from questions relating to Article IX of the Bill of Rights".

She continued:

"The wider question of whether the Bill of Rights prevents any international court looking at proceedings in Parliament is a separate issue".-[Official Report, 16/7/09; col. 1304.]

I am not quite sure what the basis is for saying that the issue is entirely distinct from Article IX. When she said that it was a separate issue, she was, I think, referring to the second avenue, which could be the European Court of Human Rights.

I return for a moment to the hypothetical case which I postulated. The applicability of the Bill of Rights has to be right at the centre of the issue before the national court, and so must be relevant to the case before European Court of Justice. If there is an issue of EU law-and I entirely accept that that is a precondition for this process to be applied-it seems that in those circumstances the European Court of Justice would have to apply itself to an issue relating to Article IX of the Bill of Rights.

This of course follows the acceptance by the Government of what is now Clause 1, which makes it absolutely clear that nothing in the Bill affects the Bill of Rights-but that applies only to UK courts, because it is essential to protect the freedom of speech in Parliament from interference by the courts. However, this issue that might, in certain circumstances, be called before the European Court of Justice.

With the greatest respect to the Leader of the House-I do respect her; she has handled the Bill with great skill and has made many concessions to the views expressed in all parts of the House-I do not think that she really answered that question. Although my noble and learned friend Lord Mackay thought that such a case could not come before the European Court of Justice, and that, as he put it, it was,

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he added,

I received exactly the same advice from another legal source who I consulted between then and now. That source states, in almost exactly the same words:

"It seems rather unlikely that the IPSA Bill"-

I think that he is referring to the Bill-

Although such circumstances may be unlikely, the evidence that I have been given so far suggests that they are unlikely but not impossible.

Since then we have received the long letter from the noble and learned Baroness the Attorney-General, who made a definite statement, which she will, no doubt, wish to repeat in her reply to this debate. I very much look forward to her speech. However, we must ask her to assure the House that there is no possibility of such an issue arising under this Bill or under any of the procedures in it. If there is doubt, we would be wise to have the protection offered by the new clauses which I have tabled.

When we consider the European Court of Human Rights-I have taken further advice on this-we are faced with different issues. First, the court does not have a power to call in, as it were, the case from the domestic court. It is the litigant who takes his case to the ECHR. There is no obligation-there is nothing parallel to Article 234-under that procedure. However, we find there that the ECHR can consider all the merits of the case. If an issue is raised involving Article IX of the Bill of Rights, the court will consider it.

5 pm

I will enlarge on that for a moment. The House will be aware that the ECHR is a convention that imposes general human rights standards, irrespective of their subject. Article 6 of the ECHR is likely to be the issue. It prescribes procedural guarantees for fairness in the determination of any criminal charge or any "civil rights and obligations". My adviser says that it is conceivable that an Article IX point would arise in such ECHR proceedings. As these concern the international obligations of the UK-that is to say, of the executive, judicial and legislative branches of the state-we could not simply assert our own constitutional arrangements as a conclusive answer. That is the advice that I have been given.

However, we could expect to be given,

I am not sure that I understand what that means. It was applied in a very interesting case. I assure noble Lords that I do not intend to read all 77 pages of the judgment. The case of A v The United Kingdom came before the ECHR. I will simply say that it was the "neighbours from hell" case that some noble Lords may remember. The neighbours, having been named in another place, took the case to the European Court of Human Rights. What resulted was detailed consideration-page after page of the majority judgment-arguing whether the Article IX provision

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in the Bill of Rights overrode the right of the applicant, namely the neighbour who had complained, to have what they regarded as justice.

There was a dissenting judgment. The dissenting judge said that Article IX did not override the other conditions. However, the majority of judges in the court found that, on balance, it did. The court considered that the parliamentary immunity enjoyed by the Member of Parliament in the case pursued the legitimate aims that we all support of protecting free speech in Parliament and maintaining the separation of power between the legislature and the judiciary. The judges used this phrase when they ruled that,

I would be most grateful if the noble and learned Baroness, in her reply, could explain what is meant by "margin of appreciation".

I hope that I have established to the satisfaction of the House that it is within the competence of the ECHR to examine whether Article IX applies to a case before it. In the case that I have quoted-I will not read it out to noble Lords, as that would try their patience-there is at least doubt as to whether matters under the Bill could come for judicial review. This would not be by our own courts-Clause 1 removes that possibility-but by the European Court of Human Rights. That is the case that I made in Committee, and the case that I make now. My noble and learned friend Lord Mackay said that he was not sure and that an outcome could not be guaranteed. If there is any doubt left in our minds, the two new clauses that aim to put the matter beyond doubt should be added to the Bill. I beg to move.

The Attorney-General (Baroness Scotland of Asthal): My Lords, with the leave of the House, it has been suggested that I should rise at this stage to respond to the comments of the noble Lord, Lord Jenkin. I shall then give the House an opportunity to debate the issues more fully and, if necessary, your Lordships can be wearied by me again in response.

I am very grateful to have this opportunity to respond to the request made in Committee that I should attend today. The noble Lord, Lord Jenkin, among other noble Lords opposite, asked in particular that I provide an assurance that the constitutional relationship between Parliament and the courts will not be adversely affected by the Bill. My views have also been sought on the criminal offence in Clause 8(1), the need for and effect of which have both been rigorously probed by eminent lawyers in this House during debate.

In response to that invitation and with the House's agreement, I shall take a little time so that I can read into the record the matters that I have already referred to in my letter. I was not able to attend earlier proceedings on the Bill and therefore I assure the House that I have carefully read the Official Report. As ever, I was greatly impressed by the care and concern that this House has shown in examining the Bill and subjecting it to the closest and most intelligent scrutiny. I hope to be able to provide your Lordships with the assurance that they seek.

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Today, as the noble Lord indicated, I have written to all those who took part in the debate on the Bill and have made copies of that letter available in the Printed Paper Office. I apologise to anyone who has not yet had sight of it but I assure the House that it was done as speedily as humanly possible. I do not intend to repeat the contents of the letter now but I shall, with your Lordships' indulgence, explain as briefly as I can why I believe that the proper concerns that have been raised can be answered.

The Bill has been amended substantially during its progress through the other place and the proceedings so far in this House. I shall not enumerate here all the changes that have been made but I think I may fairly say that the version that remains is less ambitious in its aims. Serious concerns were raised that the Bill, which might affect freedom of speech in Parliament and the relationship between Parliament and the courts, could not properly be considered in the time available before the Summer Recess. It is, however, genuinely urgent that the payment of expenses and allowances and the rules relating to financial interests for Members of the other place are put on a transparent and independent statutory footing.

I assure the House that the Bill does not now affect the privileges of this House or the other place, or the operation of Article IX of the Bill of Rights 1689; nor does it enable the courts to question proceedings in Parliament. The Independent Parliamentary Standards Authority will be charged with establishing a new scheme for allowances and for drawing up a code of financial conduct, which will govern the rules relating to the registration of financial interests and paid advocacy. It will be responsible for paying salaries and allowances and for maintaining the register of interests. It will also determine the procedures for investigations by the independent Commissioner for Parliamentary Investigations, who will be charged with investigating alleged breaches of the allowance scheme and failures to register financial interests. However, the authority will have no role in enforcing the scheme or the code or in investigating the actions of individual MPs. It will, as a statutory rule-making body, potentially be subject to judicial review, just as Ministers are subject to the court's jurisdiction when making rules. There is, in my respectful submission, nothing to fear from that.

Were the Independent Parliamentary Standards Authority to make rules that were irrational or that failed to take account of relevant matters, it is right that it should potentially be subject to review by the Administrative Court. The new statutory Commissioner for Parliamentary Investigations, established under the Bill, will be able to investigate alleged breaches of the allowances scheme or of the code of financial conduct as far as they relate to the registration of interests and within the framework set up by IPSA. He or she will be empowered to agree the terms on which the overpayments of allowances and minor or inadvertent breaches of the registration rules can be settled. In more serious cases, findings may be referred to the House of Commons Committee on Standards and Privileges. The new commissioner will have no jurisdiction

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to investigate allegations of paid advocacy or failures to declare interests in debate, which will remain, as now, matters for the House.

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