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Many noble Lords have said to me that they feel that the report does not give due weight to differences between the two Houses. I can see why that might be so. We have to recall that when the Prime Minister commissioned the report, it was he who instructed the SSRB to,

Mr Brown, the Prime Minister, at that time envisaged putting your Lordships under the same external regulating body as the other place-an idea pressed again in recommendation 26 of the report. Therefore, your Lordships might feel that it was the Government who pushed the authors of this report down what I believe to be a false trail. A workable allowance system for this House-unpaid, for many part-time, and for all not representative-cannot and should not replicate the Commons, which is salaried, full-time and representative.

Most of the problems that we have had recently have concerned so-called second homes. There have been flagrant examples of bad behaviour here which need to be dealt with, and that in itself is one reason why we should accept the report's demand for greater controls here. However, there is an illusion, perhaps again resulting from the Prime Minister's instruction to work with Kelly, that the second homes issue in the Commons and the second homes issue in this House are connected. I do not believe that they are.

Members of this House do not have constituencies. They do not turn up at a selection meeting where the first question they are asked is, "Will you find a home in the constituency?". You do not need a second home to do this job but what you do need, whether you live in London or not, is a place to lay your head near enough to enable you to attend your Lordships' House. That is why in July I suggested in my evidence to the SSRB that we should have a system based on one single allowance to recognise all the costs of attendance, with travel costs dealt with separately. That would have avoided the complications of trying to mend a second home system which originated with the Top Salaries Review Body in the first place and which has led to so much trouble. It was rejected, for reasons in paragraph 3.8 that I do not find wholly convincing,

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but rejected it has been. I have to tell your Lordships that I accept that, because we must work with what we have.

However, in respect of homes, I only wish that there had been more equitable treatment of those who own and those who rent. In a House with an average age of nearly 70, many Peers will have acquired their homes and paid off their mortgages. Would there be another walk of life where, after we have been encouraging home ownership for generations, a report would suggest, as paragraph 8.12 does, that noble Lords who own homes should sell them, incurring all the costs involved, and rent another one so as to benefit from the rent offset allowances offered? I fear that that will happen, and I shudder at the likely public reaction. Can the authors of the report seriously intend that to be a consequence of their proposals, and will they undertake to defend it if it happens?

I have also been struck by the number of noble Baronesses from all parts of the House who have asked, "Was it because all 10 of the authors of the report were men that they saw no issue in lady Peers, some of them elderly, needing financial support to rent a hotel room in Victoria rather than be in their own homes?".

Sensible though many elements of the report are, there is a great deal for an ad hoc group to look at. However, despite its defects, the report does offer a coherent basis for a system that-stripped of some of the barnacles set on it-will hold down costs, will be more transparent and can be more openly audited in a way that meets our duty of accountability. It is far from perfect, but it does what we ask. It addresses areas in which the current system no longer carries public confidence. I believe that those matters needed to be addressed. Change is never congenial, and as we have seen in other aspects of the life of this House, we do not always get it right the first time. The Members' group can take us forward on some of the details that I have mentioned, and on many others that I am sure other noble Lords will raise.

With that in mind, my firm recommendation is that we should accept the broad structure and principles of the report today, as the Chairman of Committees has asked. We shall have another opportunity to debate points of detail when the Members' group reports and when the House Committee reports back on its impact a year into its operation. The present system does not carry full confidence outside but the report offers the basis for a fresh start, and I urge my colleagues to support the Motion.

3.46 pm

Lord McNally: My Lords, the Leader of the House and the Leader of the Opposition have done the House a service by being so unequivocal in recommending acceptance of this report. The Leader of the House rightly put our debate in the context of the wider issues of conduct, reform and the crisis of confidence that we face in terms of public attitudes to our Parliament.

During the past five years, I have been a member of the Leaders' Group, the Procedure Committee and the House Committee, the main committees responsible

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to the House for allowances and conduct. Over the past few months, as we have had to deal with the various challenges to the reputation of this House, I have asked myself many times whether we, who were charged with these responsibilities, could and should have acted sooner and with a greater sense of urgency to avert some of the troubles that have beset us. On conduct, I do not think that is true. On the issue raised by the Sunday Times sting, we acted decisively and even rejected the views of an Attorney-General to assert our right to discipline wayward Members. We acted quickly to appoint the Eames committee, which moved with commendable speed to report. In my view, our acceptance of that report puts matters of conduct and discipline on a clear and transparent basis. I am less sure that we can claim the same about the handling of expenses and allowances.

The truth is that the system that we are in the process of replacing is, to put it at its kindest, cheap and cheerful. Its main benefit was that it allowed Members of modest means to participate fully in the work of this House and also allowed for a greater geographic spread of participation. In short, as the Leader of the House indicated, it prevented the House of Lords becoming the preserve of the rich, the retired and the London-based.

Whatever any strict interpretation of the rules may have said, Members were encouraged by nods and winks to assume that they could claim beyond reimbursement for outgoings and expenditure to provide a little padding. Such rough justice worked well in encouraging men and women in their 40s and 50s to accept working peerages in spite of the fact that such acceptances involved loss of career and salary advancement within their profession as well as a large measure of pension contribution and entitlement.

As that rough justice worked, as it provided a very effective and value-for-money return to the taxpayer and as its cost was not bureaucratic and cost little to administer, perhaps we lost sight of the change in public mood to such arrangements. As the Chairman of Committees reminded us, and as the SSRB bluntly put it, our existing systems,

and do not meet current standards for control of public money. Or, as the Lord Speaker put it in her excellent Hansard lecture last Thursday, which I recommend that every noble Lord read:

Whether those of us charged with responsibilities in those matters could and should have acted earlier is a judgment easier to make with hindsight. In June of this year, we did act, as the Chairman of Committees explained, by referring the matter to the SSRB. My group, the Liberal Democrat group, submitted joint evidence to the SSRB which recommended replacing the attendance allowance, office costs and 40-day additional office costs by a single, taxable daily rate for

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the job. Our evidence also called for a specific and receipted overnight allowance. These changes, we argued, would involve,

That being the thrust of our evidence and the outcome of the SSRB deliberations, I hope that my colleagues on these Benches will support what the House Committee has called "the architecture and principles" of the system proposed in the SSRB report. The House Committee also recommends that an ad hoc group of Back-Benchers,

and the Leader of the House has set out in her speech some of the topics that noble Lords could submit as ideas to the group.

I support that way of going forward. Like the noble Lord, Lord Strathclyde, I agree that we need to deal with some of the gargoyles in the report, but it would be disastrous if we were to allow it to be thought that by setting up the committee we were giving ourselves some wriggle room on the main recommendations of the report: namely, the £200 daily allowance and the £140 overnight expenses. Those, in my view, are the immovable iron poles of what has been termed the architecture, and voting for the resolution today should mean accepting those figures. We cannot appear to be setting our own rates-in that way lies public condemnation.

What the ad hoc committee can and should do is look at some of the recommendations on overnight expenses so that they are fair and realistic not only to hotel and club dwellers, but to renters and owner-occupiers as well. I hope that it will look also at guidance on travel both for long distance out-of-towners and middle distance commuters. Some of both the wording used and implementing bureaucracy suggested by the SSRB would be more suitable for tagged prisoners on day release than for Members of the House of Parliament.

In the excellent Hansard lecture to which I have already referred, the Lord Speaker cited President Obama's Chief of Staff, Rahm Emmanuel, as advising, "Don't let a serious crisis go to waste". That is good advice. That is why, like the Leader of the House and the noble Lord, Lord Strathclyde, I believe that the ad hoc committee should be bold in looking at how, while accepting the broad architecture of the SSRB, we use the collective wisdom of this House to make sure that we have the accountability and public acceptability which I think acceptance of the SSRB report will bring. However, at the same time, we must not burden the public purse with a bureaucracy whose costs will outweigh any notional savings and which will not reflect the realities of life for an active working Peer.

Retaining and enhancing the reputation of this House is a three-legged stool. The first leg is the Eames report, which, as I said, offers a clear basis of truth and consequences in terms of conduct in this House. The second leg is our response today to the SSRB report. Our message must be that we accept the report and that we are determined to make it work.

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The third leg is equally important if the other two are to stand. I do not believe that public patience with this House will long remain if the notional membership is bloated to more than 800 in the next year without at least the very modest proposals suggested by my noble friend Lord Steel making their way into law. The Constitutional Reform Bill seems to be dawdling a suspiciously long time in the Commons. Unless the provisions relating to this House can be enacted before the general election, any notional saving to the public purse will be swallowed up by the cost of new creations, who are bound to be regular attenders. I accept that fundamental reform of this House is for another day and another Parliament, but we must do what we can in the time remaining in this Parliament to tidy up what we can if we are to avoid further public outrage and contempt.

I think I have said before that it is now 43 years since I first entered this Palace seeking my first political job. I did so with a sense of awe for what it is, and what it stands for, and awe I retain to this day. My predecessor on these Benches, Roy Jenkins, once likened public trust to carrying a very valuable glass vase across a highly polished floor. It is our turn to do the carrying. Voting for this Motion tonight will be one step in ensuring that we do not slip.

Lord Gordon of Strathblane: My Lords, can the noble Lord clarify whether he regards the overnight allowance as part of the architecture, and therefore immovable? If he does, would he care to comment on the previous report by the SSRB, which stated in Appendix 2, paragraph 5.9

"It is our view that the current arrangements for reimbursing the costs of overnight accommodation in London are fit for purpose and set at an appropriate level"?

That was in January 2008, when the level was £174.00.

Lord McNally: My Lords, I seriously suggest to the House that there is one golden rule in this: if you ask an external arbitrator to look at a matter, to report and to make recommendations, you start challenging those views at your peril.

Lord Gordon of Strathblane: My Lords-

Lord McNally: And you make your speech later.

3.57 pm

Baroness D'Souza: My Lords, this is a long awaited day. There is a full House to debate the report before us and express our views freely. All that really needs to be said has been said, and so I should agree with most of the previous speakers and sit down, but I am not going to-at least, not immediately. I want to put on record two points: first, a recognition of what the new scheme will mean to many who have relied on expenses as a form and, indeed, sometimes the only source, of income, and, secondly, the recognition that the current system cannot continue, if only because it invites actual or potential abuse, however fuzzy, and is therefore not fit for purpose in the 21st century. This has been brutally exposed in recent months and has done more damage than I think this House is ready to admit. I suspect that none of us wishes to creep around being

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unsure about whether we are entitled to a given allowance, and I hope that the clarity that the report aims for will be a relief to most of us.

I know that some views expressed today will be somewhat hostile, and perhaps that is inevitable, but I would like to point out that the work that we do in this House is adequately acknowledged in the introduction to the report and the case for reforming the expenses system is certainly cogent. I shall not go over the arguments that were made in the report and were subsequently made by others, but I support the main pillars in the conclusions of an allowance, a cap on overnight expenditure and the vital issue of receipts. As has been said, there are many other aspects of implementation that will have to be sorted out, and the main concern expressed by Cross-Benchers is that there should be a degree of flexibility in the application of these new rules.

What is meant by flexibility? Given the principles of good practice and good employment that this House enjoys in the day-to-day administration, the different needs of individuals must be taken into account. To give but one example, a rigid system whereby attendance might in future be electronically recorded would unfairly discriminate against the disabled who perforce need to do much parliamentary work at home. Again, there will be occasions when an extra overnight stay is necessary beyond four or five nights a week for reasons of weather, illness or even late sittings in this House. There are already quite salient differences in the amount of work that individuals put in to, say, committee work: some Members chair committees and/or work many hours per week, others decline to sit on committees or perhaps attend less than half the scheduled sessions. Some are prevented from attending due to illness, and the system of expenses that is anticipated will penalise those who can least afford it by disallowing during the recesses recompense for what has been lost at sitting times.

No doubt some noble Lords will feel that it is no longer worth attending the House, no matter how committed they are to public service; others will simply be unable to afford to attend if their travel and overnight expenses are not covered; so, while the report aims at clarity and fairness, the system must also be sufficiently flexible to accommodate those who do not fall neatly into the categories that are set out in the report. This will be the task of the working group, if it is agreed by this House, under anticipated competent chairmanship. I believe that the group will be ready to listen to Members with special needs and to take these into account. With this in place, I feel sure that most of your Lordships will agree to the Motion before us.

Finally, I for one rather favour the share-a-room scheme, and suggest that the House might set up a ballot so that proper democratic allocations can be made on the basis of "first come, first served", rather than along party political lines.

4 pm

The Lord Bishop of Chester: My Lords, I should make it clear at the outset that I speak personally on this matter, although, from the limited consultations that I have been able to undertake, I believe that other Members on these Benches welcome the report and urge its speedy implementation.

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A number of speakers have already emphasised the word "independence". Indeed, the independence of the recommendations is what is important at this time. The self-regulation of the House is a very important characteristic of the House, but self-regulation does not preclude proper recourse to independent and authoritative advice. That is the key aspect of this report. Even if some Members of the House feel unhappy about aspects of the report, independence is absolutely crucial, as the noble Lord, Lord McNally, emphasised. I also associate myself with the noble Lord's views on the Constitutional Reform and Governance Bill and on other issues to do with the reform of the House. In many ways, I am a minimalist in this, but if we do nothing we will jeopardise the House as we know it more than anything. That lurks in the background of our debate this afternoon.

I have a couple of words to add about accommodation, particularly given the general experience of Members on the Bishops' Bench, who are usually not here sufficiently often to justify renting accommodation. I strongly welcome the idea of access to a booking agent or accommodation office for Members of the House, which would be very valuable particularly when we need to book accommodation at short notice. If we are booking some way ahead, I am sure that suitable accommodation within the figure of £140 could be found. Sometimes, however, business comes up at short notice in the House and one needs to book accommodation, so to have the use and protection of an accommodation office would be a wholly helpful development, not least if the market rate in London at that time was pushing above £140. Indeed, I go further and ask why, if we might be able to use a travel card, the underlying bill itself should not be met by the accommodation office directly if the accommodation has been booked through it.

There is one small proviso, however. The report talks about the recommended standard of accommodation, but, so far as I can see, is rather silent about what that standard should be. That needs to be teased out with care, because it should not be assumed that all we need is a bed for the night. If I am in London, typically I work into the evening on the business of the House. I could work in the Bishops' Room, but the Bishops' Room has only three desks and I ask noble Lords to imagine what would happen if all 26 Bishops turned up to work in it. You would need the Danish police to exercise crowd control and to sort things out. There is a need to have somewhere outside the House where one can at least have a desk or a table at which to work. Those who maintain flats almost certainly have that. Those who stay in booked accommodation need more than just a bed. I am not asking for luxury, and I hope that the House Committee will look at those matters.

Secondly, there is an assumption in the report that Members of the House have only one principal residence. In the case of Bishops, that is a little hard. We have a see house where we live, but which we do not own. Typically, towards retirement, a bishop may buy a retirement house somewhere else in the country. Most often, understandably, we will travel to London from our see house. I do not think that I have ever travelled

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to London from my house in the Scottish borders, but I can imagine that circumstances will arise when I will need to do so. We need to give attention to whether there can be proper reasons why a Member of the House has two residences; that is, the principal residence and, as in my case, a separate house which for tax purposes is the only house that I own. I hope that the House Committee will look at details of that sort. I feel that it is incumbent upon us to look at issues like that and to move as swiftly as we can to accept this report.

4.05 pm

Lord Crickhowell: I do not think that it is just a heavy cold, for which I apologise, that makes me dislike this Motion so much. I wish that we were being asked simply to take note so that our views could be heard before we make commitments that we may regret. When the noble Baroness the Leader of the House comes to speak I hope that she will be able to persuade me that we are not putting our heads in a noose. She has given us definitions of "architecture" and "principles", which I can completely accept. But she did not reassure me that we would be able to change the damaging proposals in this report, which were described by my noble friend Lord Strathclyde as the gargoyles. I will be seeking reassurance from the noble Baroness when she winds up that there will be real scope for the ad hoc group to have sufficient flexibility in preparing the proposals for implementation to ensure that they can be made fair and workable. For a good many of us, such assurances will be important.

The Cockburn review and our affairs are linked by an umbilical chord to the Kelly report. For that reason, I will start with a few words about the conduct of MPs and the conclusions of Sir Christopher Kelly. Those of us who were MPs when pay and the allowance system made impossible the kind of abuses that have occurred feel as angry as any member of the public about what has happened. Having said that, I fear that the remedies proposed will damage our system of parliamentary democracy. My fears are exactly the same as those set out so admirably on 23 November by my noble friend Lord MacGregor of Pulham Market during the debate on the Queen's Speech. Like him and the writer of the Times editorial on 5 November, I regret that the Kelly report failed to make any comment about the need to,

Sir Christopher Kelly, with his denial that salaries would need adjustment if allowances were to be slashed, his view that other employment should be limited in scope and his failure to understand the effect on family life of his rules about the kind of accommodation that will be permitted, seems blind to the consequences of his proposals. We need to consider the wise comments of Sir John Baker, the former chairman of the Senior Salaries Review Body, in his powerful letter to the Times on 6 November. He wrote:

"Once the new expenses regime is in place and the last repayment made ... there should be a substantial increase in MPs' pay no matter what the 'court of public opinion' or tabloid headlines may say".

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