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House of Lords

Tuesday, 20 July 2010.

2.15 pm

Prayers-read by the Lord Bishop of Bristol.

Introduction: Lord Macdonald of River Glaven

2.24 pm

Sir Kenneth Donald John Macdonald, Knight, QC, having been created Baron Macdonald of River Glaven, of Cley-next-the-Sea in the County of Norfolk, was introduced and made the solemn affirmation, supported by Baroness Kennedy of The Shaws and Baroness Scott of Needham Market, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Howard of Lympne

2.29 pm

The right honourable Michael Howard, QC, having been created Baron Howard of Lympne, of Lympne in the County of Kent, was introduced and took the oath, supported by Lord Lamont of Lerwick and Lord Marland, and signed an undertaking to abide by the Code of Conduct.

Introduction: Baroness Nye

2.35 pm

Susan Jane Nye, having been created Baroness Nye, of Lambeth in the London Borough of Lambeth, was introduced and made the solemn affirmation, supported by Baroness Royall of Blaisdon and Baroness Kinnock of Holyhead, and signed an undertaking to abide by the Code of Conduct.

Energy: Large Combustion Plant Directive


2.40 pm

Asked By Lord Willoughby de Broke

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley): My Lords, the Government's intention is that all combustion plants in the UK which are subject to that directive should comply with its requirements.

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Lord Willoughby de Broke: My Lords, I am grateful for that frank Answer. However, can the Minister confirm that, under the provisions of that directive, 25 per cent of the UK's generating capacity is due to close down by 2015? Would it not be preferable for the United Kingdom's energy policy to be made by the Government and the Parliament in this country rather than contract it out to the European Commission?

Lord Henley: My Lords, I cannot confirm the noble Lord's figure; I would not accept that it will be as high as 25 per cent by 2015. I accept that a number of plants are so dirty in their emissions that they will have to close in due course, but I can confirm that other generating capacity is coming on stream in time to replace those that will close.

Lord Teverson: My Lords, does the Minister-my noble friend the Minister-

Noble Lords: Oh!

Lord Teverson: Absolutely. Does my noble friend agree that by the directive we reduce important pollution-sulphur dioxide and nitrous oxides-and that that is a good thing? When will the coalition Government bring forward the emission performance standards for power stations, which will also rid us of some of our carbon dioxide?

Lord Henley: My Lords, I can confirm exactly what my noble friend said: by the directive, we will be reducing by quite large amounts the sulphur dioxide, the nitrogen oxides and the dust emissions which can be harmful to both human health and the environment. That can only be a good thing. As I said in answer to the first supplementary question, we also hope to have other capacity on stream to deal with the plants that are closing.

Baroness Quin: My Lords, the party of the noble Lord who asked the Question is of course opposed to binding EU targets on renewables, biofuels and other EU environmental initiatives, but is it not the case that, when emissions affect a number of countries simultaneously, European and international action is both welcome and indispensable? Is it not also the case that, given the recent vote in the European Parliament, while stricter emissions standards are favoured, the situation of individual member states will be more greatly taken into account in future?

Lord Henley: My Lords, I can agree on that. Where emissions from one country affect other countries and the whole world, that should be dealt with internationally. That is why it is quite right that the EU should deal with them, especially those that are damaging to human health, which is the case with those dealt with by the large combustion plant directive. The noble Baroness then referred to the recent vote by the European Parliament on the industrial emissions directive. Again, we will take that forward, and it will replace the large combustion plant directive in 2016. That will further tighten the requirements, but those are matters that we

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have agreed, and we have introduced certain flexibilities that will make life easier for a lot of those plants until the end of 2023.

Lord Tebbit: My Lords, can my noble friend tell me how much of our generating requirement over the next five years will be fulfilled by buying electricity from France?

Lord Henley: My Lords, I am afraid that I cannot give that figure to my noble friend off-the-cuff; I will certainly write to him. If the French have spare capacity from their nuclear power stations, I do not see anything wrong with buying in capacity from them to deal with shortfalls that we may have.

The Lord Bishop of Chester: My Lords, can the Minister tell us what will be the method of generation for the plants that will need to be constructed and brought on stream by 2015?

Lord Henley: My Lords, I imagine that most of them will be gas, but there will also be a certain amount of renewable, particularly wind. However, there will also be renewable from other sources, such as biomass, which the noble Baroness opposite referred to. In due course, as we have large stocks of coal, and by means of clean coal procedure-the further derogations that we have until 2023 will allow us to develop this further-coal could also play a part.

Lord Pearson of Rannoch: My Lords, have the Government any reason to disagree with the respected think tank Open Europe's estimate that the EU climate change policy will put at least 1 million British people into fuel poverty? Do they have any reason to disagree with Mr Derek Birkett, a former grid controller, as reported in yesterday's Daily Express, who has estimated that the calamity about to be visited upon the British people through the climate change policy of the European Union-the science for which has completely collapsed-will amount to at least the cost of the banking crisis?

Lord Henley: My Lords, this is not just about climate change. It is also about human health, which is why it is important that we see a reduction in the particular gases that we talked about earlier-nitrogen oxides and sulphur dioxides-and, for that matter, dust emissions. On his further point about how many people are allegedly going to be put out of work, if we had not secured the changes to the industrial emissions directive, we would have seen an increase in electricity prices of some 8 per cent. As a result of the changes that we have secured, which I talked about earlier and which go up to 2023, those rises will be only about 3 per cent. I do not think that that is bad, and I do not think that it will lead to any loss of jobs.

Lord Tomlinson: Will the Minister undertake to give us a health warning if ever the Government were tempted to formulate their European policy on the basis of the opinions of Open Europe and the Daily Express?

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Lord Henley: My Lords, I will give that assurance to the noble Lord if he so wishes.

Lord Pearson of Rannoch: My Lords-

Noble Lords: Order!

Lord Pearson of Rannoch: My Lords, I did not say unemployed; I said fuel poverty. One million people will be put into fuel poverty.

Lord Henley: My Lords, I believe I answered that question by making it quite clear that electricity prices are not going to rise as much as the noble Lord and his alarmist friends suggested.

Debt Management Office


2.47 pm

Asked By Lord Higgins

The Commercial Secretary to the Treasury (Lord Sassoon): There are no current plans to transfer responsibility for the Debt Management Office to the Bank of England.

Lord Higgins:My Lords, I thank the Minister for that reply, but I urge him to reconsider it since it effectively endorses the mistaken decision of Mr Gordon Brown, when he first became Chancellor of the Exchequer, to give responsibility for monetary policy to the Bank of England but to take away its responsibility for debt management, which is clearly a major influence in deciding what is likely to be the money supply. The problem has become even clearer with the introduction of quantitative easing because the Bank has been buying assets while at the same time the Debt Management Office has been selling them. It has been an entirely circular arrangement, and there has been virtually no increase in the money supply as a result of the quantitative easing. Would my noble friend not agree that in the present circumstances, it is crucial that we have an effective monetary policy and that can happen only if the Bank of England is given the powers it used to have?

Lord Sassoon: My noble friend Lord Higgins raises an important question. I think that it is part of a wider debate at the moment about the responsibilities and levers which central banks have, including, among others, the linkages between the conduct of monetary and financial stability policy. As noble Lords are aware, we are not shy of making structural changes where they appear to be justified, as we are doing by moving banking supervision back into the Bank of England.

That said, I believe that the arguments for minimising conflicts of interest by separating debt management and monetary policy objectives and accountabilities

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are persuasive. The IMF has maintained the position that countries should have such separation and it has become international best practice among our peer-group countries, including France and Germany.

Lord Bilimoria: My Lords, the Americans passed the Glass-Steagall Act in 1933, which was to reform their banking sector. That was repealed only in 1980 and now they have just passed the Dodd-Frank Act. Will the Minister explain the pros and cons of this Government's proposed banking and financial sector reform compared with the American Dodd-Frank Act?

Lord Sassoon: My Lords, there are some big questions. I will try to bring the question asked by the noble Lord, Lord Bilimoria, back to the Debt Management Office and the Bank of England, which will make it more manageable. In the context of a fragile banking system, it is very important that the objectives on monetary policy of the Bank of England, including its ability which it exercised up to £200 billion to use quantitative easing as a way of fulfilling its monetary policy objective, are kept separated from the equally critical role of the Debt Management Office. Thanks to the deficit left to us by the previous Government, it had to issue more than £200 billion of debt last year, which compares with £8 billion in 1998-99. They both have challenging objectives and separation in that sense is very important.

Lord Newby: My Lords, given the decision yesterday by National Savings & Investments to withdraw its index-linked bond, have the Government any plans to review the strategy of NS&I and, in particular, its scope for generating funds to help meet the Government's overall funding target?

Lord Sassoon: My Lords, we consider carefully each year and publish transparently the mandates for the Debt Management Office, but consider in that context the remit that we give to NS&I. Its essential task is to contribute in a cost-effective manner to debt raising. It has to look against the targets for debt raising, which we give it, at the appropriate product set that it offers to the public. It is in that context that it periodically withdraws or introduces new products.

Lord Pearson of Rannoch: My Lords, do the Government agree with the Written Answer of the previous Government on 21 July 2009 to the effect that overall supervision of all our financial services is to be vested in the European Union? Which category does this debt management fall under? Is it day-to-day supervision or will it be controlled by the overall supervision of all our financial services which we have passed to Brussels?

Lord Sassoon: My Lords, I do not recollect the previous Government's Answer to that Question, but I would be surprised if they gave the Answer that we have just heard because supervision of our financial institutions is not being transferred to Brussels under any current proposal.

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Lord Trimble: My Lords, coming back to the original Question, does my noble friend the Minister agree that an increase in the money supply would be highly desirable from the point of view of the recovery? If there has been no increase in the money supply because of the inter-relationship between debt management and quantitative easing, is that not something that should be looked at again?

Lord Sassoon: My Lords, as I have stressed, monetary policy is for the Bank of England. Therefore, it is not for me to comment on the way in which it exercises that responsibility. But the fact is that it took the decisions that it did to purchase assets under the so-called quantitative easing programme in order to meet the inflation target which the Chancellor gives them. The Bank's latest assessment was that that programme contributed to keeping long-term interest rates 1 per cent below what they would otherwise have been.

Lord Barnett: My Lords, the noble Lord has just said that it is not for him to comment on what the Bank of England does, but a senior official at the Treasury sits in on Monetary Policy Committee meetings on a permanent basis. Does he never talk to him?

Lord Sassoon: My Lords, it is correct that a senior official of the Treasury sits in on the monthly Monetary Policy Committee meetings, but that official is not a member of the committee. I have performed that function myself on one occasion, and I understood that it was my duty to bring to the attention of the MPC anything the Treasury thought it ought to be aware of.

Agriculture: Single Farm Payments


2.55 pm

Asked by The Duke of Montrose

The Duke of Montrose: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as a farmer receiving payments from the Rural Payments Agency.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley): My Lords, similarly, I declare an interest. Over the past year, all farmers in England have been sent updated maps where required for the purposes of the common agricultural policy. This was intended to ensure that the maps better represented the current situation on the ground. However, we are aware that too many farmers were initially sent incomplete or incorrect maps. We intend to ensure that farmers receive a better service in the future. The Welsh Assembly is responsible for farmers' maps in Wales.

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The Duke of Montrose: My Lords, I thank my noble friend for that reply. Has he noted that the rural land mapping exercise was not part of the Rural Payments Agency review that has been published today? Can he confirm that one month before the closing date for single farm payment applications, nearly 1,250 farmers in England were still waiting to receive their revised maps? How many units are still awaiting their maps? Is he satisfied that the problems have been identified and that they are unlikely to be repeated?

Lord Henley: My Lords, I can confirm that the review which was published today was not asked to look at the mapping exercise. Nevertheless, due to the problems in this particular area, the review commented on it. I cannot confirm the figure of 1,250 farmers not having received their maps by the end of the period last year, but I can confirm from an Answer given by the noble Lord, Lord Davies of Oldham, that in March last year, some 10,333 were still outstanding. I do not know how far the figure dropped in the closing months. I can confirm that all have now been issued, but if my noble friend knows of any individual cases in England, I would be grateful if he could let me know.

Baroness Byford: My Lords, further to the Minister's answer to my noble friend, can he say how many of the outstanding single farm payments-the figure I have been quoted is that some 818 such payments are still outstanding-are due to computer problems and how many to a combination of the mapping exercise and the computer system? That would help to clarify the situation for others.

Lord Henley: My Lords, I cannot give my noble friend a precise figure, but there are very few left. My understanding is that most of those remaining relate to problems other than those she describes, such as those in connection with probate or other such personal changes that might affect them. However, the agency is certainly doing what it can to clear the small remaining backlog.

Lord Grantchester: My Lords, will the Minister pay tribute to the staff at Defra who I know have worked tirelessly on these issues, and will he give an assurance that farmers will not be penalised for mistakes that are not of their doing? In asking these questions, I declare my interest as a farmer and would like to put the record straight that the microphones did not pick up my declaration last week.

Lord Henley: My Lords, I am grateful to the noble Lord for what he has said about the staff in Defra. I have taken it on board and will pass it back to the department. However, there are some tough messages not only for the RPA but also for Defra itself as a result of the review of the agency that has been published today. I can also give the noble Lord an assurance that the RPA is already committed to not applying penalties in specific circumstance where a

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farmer has had an outstanding mapping query on a land parcel and as a result has estimated entries on his form.

The Lord Bishop of Hereford: My Lords, while recognising that the new mapping exercise has been necessary but also acknowledging the inaccuracies that have arisen, leading to far too many people having to seek support from both the Rural Stress Helpline and the Farm Crisis Network, can the noble Lord tell us what steps are being taken to ensure that any future updates that are needed will be done as efficiently and speedily as possible so as to reduce stress on claimants?

Lord Henley: My Lords, as regards the mapping updates, I can assure the right reverend Prelate that we will look carefully at what is the best way of doing this and whether we should have more regular small-scale updates or less regular large-scale updates; either is possible. On his more general point about problems in the Rural Payments Agency, as I said earlier in answer to another question on another day, my honourable friend the Minister of State, Mr Jim Paice, has given an assurance that he will look hard at this matter and that he will personally chair the body which will overlook the changes to the RPA.

Lord Greaves: My Lords, the Rural Payments Agency's business plan for this year already requires a reduction in administration costs of about 10 per cent. Will the Government require further cuts in the RPA's budget as part of the austerity measures? If so, what will they be; how big will they be; and what effect will they have on the service provided?

Lord Henley: My Lords, I can confirm the noble Lord's earlier figures but I cannot confirm what other cuts that agency, or any other agency, may have to face. My noble friend will be aware that all parts of government are facing severe measures to deal with the deficit we inherited from the previous Government.

The Earl of Selborne: Can my noble confirm that the review to which he referred amounts to a damning indictment of the Rural Payments Agency and that it suggests two options: one is to outsource part of the operations and the other is to outsource all of the operations? Does he agree that the latter option seems the most preferable?

Lord Henley: My Lords, we will look at both options. I note that my noble friend used the words "a damning indictment"; I will say only that there are some fairly tough messages for the Rural Payments Agency and leave it at that.

Lord Livsey of Talgarth: My Lords, given the statistics about the waiting list for single farm payments, will the Minister acknowledge that the system in Wales uses GIS technology? Will he urge the RPA to adopt it because there are practically no problems with it?

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Lord Henley: My Lords, I am sure we can always learn a great deal from the devolved Administrations in Wales and in Scotland.

Elections: AV Referendum and Scottish Parliament


3.02 pm

Asked By Lord McAvoy

The Advocate-General for Scotland (Lord Wallace of Tankerness): My Lords, the letter that my right honourable friend received from the convener of the board made no such representations. Specifically, there are no rules of the Scottish Parliament which deal with these matters as responsibility for election administration remains with the United Kingdom Parliament.

Lord McAvoy: My Lords, that then begs the question of exactly who arranges and legislates for the specific date. What the Minister has said contradicts what the election board convener has said and needs further clarification. When the Deputy Prime Minister made a Statement in the other place on the proposed referendum he made no mention of the position in Scotland regarding the date. The suspicion there is that in the rush to satisfy the Liberals, no proper consideration was given to ascertaining the correct position regarding the date. How does it meet with the Government's policy of respect for the Scottish Parliament and for this House if we are asked to rush through legislation based not on the needs of the country but on the needs of a shabby collaboration between two political parties?

Lord Wallace of Tankerness: My Lords, I am grateful for the opportunity to clarify the position, because I have had the benefit of seeing the letter from Mr Tom Aitchison, the board convener, and have not had to rely just on press reports. In that letter Mr Aitchison indicates that he would encourage the UK Government to amend the order for the Scottish Parliament elections to allow a combined poll to be held. Under the current rules, under the order of 2007, it is not possible for that to happen. However, he goes on to say:

"Allowing a formal combination of polls, for the referendum and parliamentary elections, would have many advantages both for the voter and the electoral administrators".

We were already seized of that, and it will be addressed in the forthcoming legislation to pave the way for the referendum and the alternative vote. I would only add that the noble Lord-whom I welcome to this House, having served with him in the other place-whipped the Scotland Act, which makes provision for the Scottish

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election polls to be combined with a poll for another election. It does not allow them to be combined with a poll for a referendum, but that is what the forthcoming legislation will seek to do.

Lord Maclennan of Rogart: My Lords, has my noble friend had an opportunity to consider the possible coincidence in timing of the elections to the Scottish Parliament and the general election to the United Kingdom Parliament in 1915? Would that require some alteration of our legislation?

Lord Wallace of Tankerness: My Lords, I am sure that my noble friend meant 2015-1915 is beyond my abilities. He makes a very important point. My right honourable friend the Secretary of State for Scotland has already written to the First Minister, the Presiding Officer of the Scottish Parliament, the other political leaders in Scotland, the Electoral Commission and election administrators to say that he is prepared to discuss this issue with them. I can assure my noble friend and the House that my right honourable friend will listen constructively to what they have to say on the coincidence of elections, as a result of fixed-term Parliaments, in 2015 and every 20 years thereafter.

Lord Hunt of Kings Heath: My Lords, in addition to the issue of a number of votes taking place on the same day next May, including potentially three votes in Wales, is there not also the issue of a differential turnout? Parts of this country, particularly London, will not have any vote at all except the potential referendum vote. There will be a differential turnout. Will that not call into question the very fairness of a referendum?

Lord Wallace of Tankerness: No, I do not think that it should. Indeed, I make no secret of the fact that there is a combination of polls in Scotland, Wales, Northern Ireland and many parts of England where there are local elections. One of the advantages will be increased turnouts for both the respective elections and the referendum. It will be up to the respective yes or no campaigns in places where there are no other elections to try to ensure that there is a good turnout for a referendum on a very important issue facing the country-how its elected House should be elected. It is an issue on which the noble Lord's party brought forward legislation when it was in government. I look forward to receiving its support when we debate these matters when the Bill comes to this House.

Lord Grocott: Further to the answer that he has just given, does the noble and learned Lord not recall, as I do, that for years and years the Deputy Prime Minister and others have been assuring us that the British public are desperate to get rid of the first past the post system and will queue at the polling stations at the first opportunity to do so? Now we are being told that it is essential that we have the referendum on the same day as some other elections because it is the only way that you can guarantee that anyone at all will be bothered to turn out. Who is right?

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Lord Wallace of Tankerness: The answer is the one that I just gave to the noble Lord, Lord Hunt, who is concerned that there might not be a good turnout in places such as London. It is an important issue, and these issues will be well debated. However, I think that those who are suggesting that, somehow or other, people in Scotland, Wales, Northern Ireland and parts of England cannot cope with dealing with two issues on the one day are totally underestimating them. It is an insult for them to suggest that it is not possible to vote on both matters on the same day.

Lord Tyler: Will my noble friend confirm whether there is a precedent for holding a referendum on the same day as local elections? I have been informed that the voters of London were able to vote in a referendum about the future governance of the city at the same time as local elections were taking place. Will he confirm that the people of Scotland are quite as intelligent as the people of London?

Lord Wallace of Tankerness: I am certainly happy to give that confirmation. I think-I will need to check, but I think-that my noble friend is right that the referendum on the mayoral system for London was on the same day as the London local elections. I think that I was registered in London at that time, when I was a Member of the other place. I remember going to the same polling station as my noble friend Lord Ashdown and, as we entered it, the then leader of my party asked, "Which way do we vote?".

Lord Foulkes of Cumnock: My Lords, it is in no way connected with the lack of intelligence or otherwise of the electorate in Scotland. However, can the Minister confirm that should the Scottish Parliament make a decision that it does not wish the referendum in Scotland to be held on the same day as the Scottish Parliament elections, the United Kingdom Government will honour its wishes? In asking that, I declare an interest as a Member of the Scottish Parliament.

Lord Wallace of Tankerness: I recognise the noble Lord's interest. My right honourable friend the Deputy Prime Minister has made clear what we wish to do. There are many examples from many places around the world of elections and referendums taking place on the same day. With the first Scottish election taking place in the shadow of the Kosovo engagement and the second Scottish election coinciding with the Iraq war, I do not believe that there will be any question of the Scottish elections being overshadowed by the referendum.

Lord King of Bridgwater: Can my noble friend give an assurance that if voters are queuing to vote in large numbers, there is some chance of their being able to vote and having their votes counted, after the shambles under the previous Government?

Lord Wallace of Tankerness: I think that all sides of the House would agree that that it is very important that anyone who wishes to vote and turns up in time to vote should be allowed to vote.

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Baroness Farrington of Ribbleton: My Lords, what will the Government advise people who believe that a referendum on an alternative voting system for the House of Commons ought to be considered in the context of proposals from the Government for elections to this place? Surely it is logical for people to be able to view things in the round rather than having to make a judgment about one-half of the issue.

Lord Wallace of Tankerness: As my right honourable friend the Deputy Prime Minister has indicated, there is no doubt that proposals will be brought forward in a draft Bill to consider the constitution of this House and how part of it, if not all of it, will be elected. However, we should now move forward to determine the mode of election to the other place. That was clear in our coalition agreement, and it was supported by the Labour Party-indeed it was in legislation-at the last election. The sooner we get it done, the better.

Equality Act 2010 (Consequential Amendments, Saving and Supplementary Provisions) Order 2010

Electricity and Gas (Carbon Emissions Reduction) (Amendment) Order 2010

Motions to Refer to Grand Committee

3.11 pm

Moved By Lord Strathclyde

Motions agreed.



3.11 pm

Baroness Anelay of St Johns: My Lords, as there is no speakers list for this afternoon's debate, it may be helpful if I say a few words about the expected running order. There are three Motions on the Order Paper today: two resolutions in the name of my noble friend the Leader of the House and a Motion in the name of the noble Lord the Chairman of Committees, to which two amendments have been tabled. My noble friend Lord Strathclyde will open the debate by moving the first resolution. It may then be for the convenience of the House to hear from the noble Baroness, Lady Royall of Blaisdon, the noble Baroness, Lady D'Souza, and then the noble Lord, Lord Dholakia, before other noble Lords rise to speak. At the end of the debate, it is expected that the noble Lord, Lord Brabazon of Tara, will respond to the issues raised that fall within the remit of the House Committee, after which my noble friend Lord Strathclyde will reply to the debate.

Baroness Farrington of Ribbleton: My Lords, will the noble Baroness, Lady Anelay, please explain why the noble Lord, Lord Dholakia, is included in the original list? He is a supporter and member of the government parties.

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Baroness Anelay of St Johns: My Lords, we have courtesies in this House which mean that, when we are dealing with House matters, we hear from all parts of the House who have views to be represented. As a courtesy, which is the way this House has behaved, we have always ensured that the parties are able to express a view on House matters. In the House Committee, the parties are represented. That is why I have tried to assist the House. I assure the noble Baroness, Lady Farrington of Ribbleton, that during the course of the ensuing debate this afternoon, all noble Lords who wish to speak will have every opportunity to do so.

House of Lords: Allowances

Motion to Approve

3.15 pm

Moved By Lord Strathclyde

House of Lords Allowance

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): My Lords, on 28 June, I made a Statement in this House on the merits of a new proposal for the remuneration of Peers. Today, I introduce two resolutions that will put the essence of that Statement into effect.

These resolutions will have an impact on all Peers and, while I welcome any interventions that Peers may wish to make during the course of my speech, I hope that noble Lords will intervene only if any clarification is required because my opening remarks will, I hope, lay out the ground and I will pick up queries when I wind up at the end of this afternoon's debate. I echo my noble friend the Chief Whip: there will be an opportunity for all Peers who wish to take part to do so.

We have before us today a final set of proposals for a new system of financial support for Members which, if approved, will come into effect on 1 October this year. This is not a new subject. The discredited parliamentary expenses regime is one that has caused this House much difficulty in the past, but today we have the opportunity to put that behind us and approve a new scheme that is direct, transparent and accountable, a scheme that is simple and not open to abuse, a scheme that will lay to rest the risk of the scandal of claims for so-called second homes that so damaged the House, a scheme that is fair in treating all Members alike.

When I made a Statement to the House, putting forward the outline of a radical new scheme for one single allowance to be paid on the basis of attendance on each sitting day, a number of comments were made on it. That proposal has now been considered by the House Committee, which brought its wisdom to bear and, as noble Lords would expect, has refined the proposal. The result is a sensible and workable scheme, which I have no hesitation in supporting today.

The scheme is set before your Lordships' House today in the form of two resolutions in my name, and the Motion to approve the House Committee report in the name of the noble Lord, Lord Brabazon of Tara, Chairman of Committees. It may be helpful if I set out some of the detail of the proposals contained in the Motions on the Order Paper. I will do so partly on behalf of the noble Lord, Lord Brabazon of Tara, who will speak towards the end of the debate and, in doing so, will be able to respond to any questions Members raise about the details of the House Committee proposals.

The central element of my original proposal remains a single daily allowance paid on the basis of attendance on any sitting day. The allowance will be set at £300. This can be claimed if a Member has attended the

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House or a Committee of the House. Next, the reduced rate of £150 also remains a central part of the proposal. Paragraphs 3 and 4 of the resolution set out the circumstances in which a Member may claim the reduced rate. First, for attendances at Westminster, at a sitting of the House or a Committee of the House, any Member may elect, on a monthly basis, to claim the reduced rate,

I am aware that the question of when a Member might claim this reduced rate was an issue of concern to some. As the House Committee report states at paragraph 6:

"It is difficult to arrive at specific criteria for measurement of a Member's contribution to the work of the House".

It will therefore be a matter for Members to judge their own circumstances in deciding whether it is appropriate to claim the full or reduced rate. Secondly, the reduced rate applies if the attendance on any day is on authorised business away from Westminster. Members attending such business will already be in receipt of reimbursement for the costs of accommodation, food and transport. These two categories of authorised business for which the reduced rate applies are the same as those for which Members may claim financial support under the current system. They are travel on official Select Committee business or on parliamentary delegations to certain interparliamentary assemblies; and travel in connection with certain authorised business such as CPA and IPU.

The new scheme, if approved, will come into effect on 1 October. Up to that point, the current scheme continues to have effect. In respect of the additional office costs allowance, the resolution makes it clear that Members may continue to recover office costs up to a maximum 40 days per year while the House is not sitting. This will apply for the period from 1 August to 30 September. The House Committee decided that this provided a degree of certainty to those Members who employ staff and who may otherwise be affected by the scheme agreed today. I have accepted that advice.

When I made my Statement to the House in June, several noble Lords raised the question of whether the new allowance would or should be taxable. Tax is not paid on the current expenses system on the basis that membership of the House is neither an employment nor an office. Any change to this position would require primary legislation and reconsideration of the level-£300-at which the attendance allowance is set. The Government currently have no plans to legislate to change the tax status of the scheme that is on the table today. If and when there is full reform of the House, the whole basis of financial support would need to be reviewed.

The issue of travel expenses is properly House Committee territory, but it may be helpful if I set out, on behalf of the noble Lord, Lord Brabazon of Tara, the recommendations on travel made by the committee. In line with the SSRB and the Wakeham group reports, the committee recommended that car parking and road tolls should be treated as "permissible travelling expenses" but that Members should not be able to

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claim for the London congestion charge. Provision for this is made in the text of my second resolution. Also in line with the SSRB and the Wakeham group reports, the committee recommended that, where Members do not make use of the House of Lords travel credit card, travel expenses should be reimbursed only on the basis of receipts or tickets. Equally in line with those reports, the committee recommended that claims for vehicle mileage must be accompanied by details of the individual journey and that only one claim per journey per vehicle can be made. The committee recommended that only those Members who live outside Greater London may claim reimbursement for travel expenses to and from Westminster.

The committee made a number of recommendations on the class of travel for Members and for Members' spouses, civil partners and dependants. Members may be reimbursed for train travel up to the cost of a standard open ticket, whatever class they ultimately choose to travel. The committee recommended that the same rules should apply in respect of travel by Members' spouses, civil partners and dependants.

Lord Faulkner of Worcester: This is a quick question. Does the description,

apply after the application of a senior citizen discount or any other discount card that Members may hold or does it apply only to the standard open ticket?

Lord Strathclyde: My Lords, the standard open ticket is the price ceiling on which all claims will be judged.

That neatly brings me towards the end of my words. The committee recommended that the new arrangements be put in place for the duration of the present Parliament. I fully support that approach.

This has been a long and at times difficult journey to reform the discredited expenses regime, but it is a journey that is coming to an end. I hope that today the House will approve the Motions before it so that the reforms can be made and, when the House returns in October, we can start afresh under a simpler, more transparent allowance scheme that can command public confidence. I commend the scheme and I beg to move.

Lord Stoddart of Swindon: Before the noble Lord sits down, will he say what the position is with regard to travel by standard class? If Members are travelling with officials who are entitled to first-class travel, will the officials be able to travel first class while Members of this House and Members of the House of Commons have to sit at the back?

Lord Strathclyde: My Lords, the situation that the noble Lord, Lord Stoddart of Swindon, suggests will never arise.

Baroness Royall of Blaisdon: My Lords, I strongly support the Government's resolutions and the House Committee's report. The House Committee report puts forward changes to the system of financial support for Members of your Lordships' House, based on

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proposals from the Leader of the House. The report rightly describes them as important changes. I agree with these proposed changes. I also agree that the changes proposed by the ad hoc group set up by your Lordships' House and chaired by the noble Lord, Lord Wakeham, form a marked move away from the current system of financial support for Members of this House.

The report of the ad hoc group sets out in some detail how we have got to this point. The background to the issues is also summarised in the report from the House Committee, so there is no need for me to repeat that history. This has been a long and complicated matter, and I add my thanks to all those involved who have worked so hard to get to the point where what is on the Order Paper today is, I believe, the right way forward.

First and foremost, I thank the noble Lord, Lord Wakeham, and all the other Members of the House who served on the ad hoc group that was appointed by the House to examine these issues in the wake of the report from the Senior Salaries Review Body.

I also pay tribute to the Leader of the House for the decisive action that he has taken in bringing forward the alternative proposal, set out in the Wakeham report, that forms the resolution and the report before the House today. I know from my time as Leader of the House, and in Government, that these are very difficult issues to address, and I believe that the noble Lord has performed a considerable service for this House and its Members in bringing forward the proposals that are before us today.

In considering these proposals, we need to bear in mind two fundamental points: the nature of this House, and its cost. On the first point, I can do no better than to quote from the introduction to the report of the ad hoc group:

"Membership of this House is not an office nor is it an employment. From their appointment to the House, Members are unsalaried volunteers and they offer their experience, time and commitment freely because of a strong sense of duty and public service. The fact that the House of Lords is an unsalaried House is fundamental to its nature and character; to how and what it does as a House, and to the issue of financial support to enable Members to carry out their Parliamentary duties and to discharge their Parliamentary responsibilities".

That is exactly right.

The second point concerns the cost of this House. The ad hoc group says that the cost of your Lordships' House is "relatively low". Again, that is exactly right. The report points out that not only are the total costs of this House currently less than one-third of the costs of the House of Commons but the cost of the current expenses scheme for Members of this House is, at around £19 million, just 15 per cent of the running costs of this House and a fraction of the comparable cost of £150 million in the Commons. An unsalaried House, a low-cost House-that is where we are.

We all accept that we are in a time of considerable economic difficulty. We may well-indeed, we do-have serious political disagreements with the coalition Government about how best to resolve these matters, but all sides accept that we are in straitened economic times. I welcome, therefore, the efforts made by the

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SSRB, the Wakeham group and the Leader of the House to reform the old system of expenses in your Lordships' House, which, as the ad hoc group says,

while keeping costs under control.

Both the full debate in the Chamber on 14 December last year and the responses of Members detailed in the ad hoc group's report made it clear that many Members of your Lordships' House had real reservations about the SSRB's proposals. Many believed that what the SSRB proposed was unnecessarily complicated, cumbersome and bureaucratic. The Wakeham group sought to deal with those issues, but at the same time recognised that the context for them had changed-first, because of the proposals made in March this year by the Independent Parliamentary Standards Authority for changes to the system of allowances in the House of Commons, and secondly because of the changed political context following the outcome of the general election, particularly the proposals from the coalition Government for further reform of your Lordships' House.

Accordingly, the ad hoc group recognised that the emergence of an alternative proposal would be worth consideration, reducing the level of support currently set aside for overnight accommodation and combining it with the daily allowance as a single allowance claimable by all Members. That is the essence of the proposal before us today in the report from the House Committee and in the Motion from the Leader of the House. As the ad hoc group itself says:

"If this change were to be made, it would be simple, easy to implement, easy to administer and easy to explain to the public".

I agree.

I am of course aware that not everyone in the House agrees, including on my own Benches. I know that there are real concerns about equity, about the impact on Members travelling to attend the House from far distances and about other points. I understand those concerns; I respect those who feel them, and who either have voiced them to me privately or within our political group or may voice them in the Chamber today. But no system of financial support is perfect. All systems of financial support have to strike a balance between comprehensiveness and simplicity. I believe that the package in front of the House gets that balance right.

3.30 pm

Chief among the virtues of the proposal before the House is its simplicity. As a self-regulating House, we took the decision last year not to involve IPSA in determining these matters in this House. I think that decision was the correct one for this House. The House of Commons, for different reasons, took a different route. It is not my place to comment on arrangements in the House of Commons, but there is no doubt that some Members of the other place are highly dissatisfied with their new arrangements under IPSA, not because they disagreed with the necessity for change but because of what many of them see as the intricacies and complexities of the new system being introduced.

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In sharp contrast, we have in front of us a simple, straightforward system which will be easy to administer and easy to understand. I recognise that, as with any system, it inevitably has disadvantages. The ad hoc group is right to stress-as it does in its report-the need to maintain and indeed improve the diversity which is such a feature of your Lordships' House. This has always been an important issue, and a matter of concern, especially, I might say, to the Benches behind me.

As the ad hoc group's report says, membership of your Lordships' House is drawn from a wide range of backgrounds and comprises people of widely differing occupational backgrounds with very different financial circumstances. It comprises people of different ethnic, religious and cultural backgrounds from all parts of the United Kingdom and men and women, young and old. We need to ensure that a new system of financial support as proposed today does indeed maintain and improve that. To that end, I draw the House's attention to the final paragraph of the House Committee's report. The House Committee envisages that the new arrangements, if agreed by the House, should be maintained for the duration of the current Parliament. In our current national economic circumstances, that must be right. However, the House Committee also says:

"The House would, of course, retain the ability to seek an earlier review, as appropriate, should any difficulties with the new scheme arise".

I hope that this important proviso will help satisfy those with reservations about what is before us today. If we find that the system is not working and that Members travelling great distances are indeed deterred from attending the House, as some are forecasting, that would unquestionably be a difficulty which might well merit further consideration.

We know that we need a new system of financial support for Members of your Lordships' House. We have deliberated on and considered the issues involved at considerable depth and over a long period of time. We have before us a system of financial support which, as the Lord Speaker noted in her letter to Members of this House last week, has,

These are indeed advantages. Those are indeed the qualities of the proposals before us today. I urge all Members of your Lordships' House to give the proposals their full support.

Baroness D'Souza: My Lords, it has indeed been a long journey but we are very nearly there. The two resolutions tabled by the Leader not only clearly define the parameters of legitimate claims but take us into new territory by granting all Members of your Lordships' House an equal allowance. As has been said, but is worth saying again, this single move will deter accusations of fraudulence-if Members of this House attend, they are entitled to an allowance. It is very simple.

I know that there is discontent among some Members, particularly as regards travel. However, as has already been said by the noble Baroness, Lady Royall, no

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system can be perfect. Nor should anyone doubt the struggle by the Wakeham group to achieve a reasonably fair and transparent system while taking Members' concerns into account.

I am somewhat reassured by the tentative suggestions in conversations outside this Chamber that in time special cases could be looked at when for example, a given Member is unable to attend due to infirmity and suffers, or is likely to suffer, genuine hardship as a result. That is an avenue that needs to be explored. Perhaps the fact that a maximum of 40 days of secretarial allowance is offered for the two months of August and September is some compensation to those who more than regret the abolition of this allowance.

As has been said, the Motion assumes that this level of allowances will remain in place for the duration of the current Parliament. However, that should not rule out-it does not do so, according to the last paragraph of the House Committee's report-the possibility of a review at an earlier stage should the economic climate change significantly.

The IPSA rules in the House of Commons have caused some Members hardship. The new allowances regime in this House will do likewise. However, in these days of stringency, we cannot do other than expect and accept cuts. All in all, I suspect that many in the House are relieved that the rules are now clear and that the matter of financial support is settled. I will therefore support the Motions in the names of the Leader of the House and the Chairman of Committees, and I thank all those involved in forging this new regime.

Lord Dholakia: My Lords, I thank the House for its courtesy in allowing me to contribute on behalf of my colleagues to this important debate. I shall be brief.

Let me say straight away that we support the Motion. I am delighted that it has the support of the noble Baroness, Lady Royall, from the Opposition. The matter of allowances paid to Peers has been discussed by my party on a number of occasions. My noble friend Lady Scott participated in the committee of the noble Lord, Lord Wakeham. The present system is cumbersome and my colleagues often felt uncomfortable about claiming allowances which were often not backed by proper receipts. I am also aware that there have been various interpretations of what constitutes a main residence. Many new Peers have relied on the advice of other colleagues, with the result that we have subscribed to a system which would not be accepted in any other institution.

It is therefore right that we subscribe to a system which is simple to operate, clearly understood and commands the confidence of both the public and Parliament. I well recollect my discussions with my noble friend Lord McNally as early as 1997, when I was introduced into the House. He then advocated a system of per diem allowances, and I am glad that we are referring to that matter today.

However, there remain anomalies in the proposed system. I hope that the noble Lord, Lord Strathclyde, will look at this to see what we can do to iron them out. I am uncomfortable that there would be two types of allowances-£300 and £150. The administration of

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a system which allows discretion would be difficult to operate. A uniform allowance system for all noble Lords is appropriate, and it should be left to individuals if they wish to claim or not. We do not wish to be in a position whereby the newspapers can prey on who claims what. There have been examples in the press whereby reporters have waited outside the railings of the House of Lords to count how long a noble Lord has been in the House. This is not something that I welcome.

On the two amendments in the names of my noble friends, I say that there is substance in what is recommended, and I hope that we will look seriously at their comments on the amendments.

Lord Wakeham: My Lords, I support the Motions.

As noble Lords will be aware, I chaired the ad hoc group of Members which was established to consider the recommendations of the SSRB review and advise the House Committee on how they might be implemented. It may be of assistance to the House if I say a few words about that process.

However, I first thank the Members of that committee who worked with me. It was not what some people might refer to as a patsy board. We had a series of vigorous discussions and reached conclusions, but I would not pretend that the group had an easy task, and I hope that our report has made a useful contribution to the debate. I am pleased that most of the group's recommendations have been accepted by the House Committee and by the Government. We placed great value on conducting as thorough and wide-ranging a consultation of noble Lords as possible, and we were rewarded-if that is the right word-with a wealth of views, diverse though they inevitably were.

If I was not aware at the beginning of the process, I was certainly aware by the end of it that no one would be able to design a system of financial support which would meet with universal support. Inevitably, any change to the current system would create winners and losers.

In carrying out our report, the group stuck to the principles and structure of the SSRB review. That was our remit from the House and it was right to do so. I believe that the recommendations in the group report represented a much needed adjustment, simplifying to an extent the SSRB proposals while keeping their core and remaining cost-neutral to the current scheme.

Yet the further we went in preparing our report, the more I was convinced that, in an ideal world, we should put in place a still simpler scheme rather than increasing the existing scheme's complexity and attendant bureaucracy. The case for a simpler scheme grew stronger with the coalition Government's announcement of their intention to reform your Lordships' House for the start of the next Parliament. It seemed to me less and less sensible to overhaul the current scheme with more complex arrangements, possibly on a very temporary basis, particularly when the political consensus appeared to be that a reformed House would in fact be a salaried House. For this combination of reasons the group, with one Member dissenting, decided to invite the House Committee to consider the possibility of,

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We thought that such an allowance,

until the "reform of the House" and that such a scheme would be "simple", easy to operate and,

On publication of the group's report, the Leader of the House put forward his proposals endorsing such an approach.

I shall mention one further point, which is on taxation. I welcome and agree with the opening remarks made by my noble friend the Leader of the House. The SSRB suggested in its report that,

and that,

I understand that officials from the House authorities met officials at HMRC to confirm that it was their view that, in the absence of legislation, the fee or allowance would not be subject to tax. The level of the allowance is set on the assumption that it is not taxed. If it were to be so as a result of new legislation, the level would have to be looked at again. Speaking entirely personally, I do not think that the Inland Revenue has the slightest desire to get involved in the complications of taxing at all. It does not think that it is losing a penny piece by these present arrangements.

As I have said, I believe that there is no perfect solution; my noble friend's proposal is, however, a fair solution. It is straightforward and sweeps away the expenses system as it stood. It will be cheap to administer and easy to explain. While I regret that some noble Lords will be worse off, I believe that the proposed level, combined with the reimbursement of travel costs, will mean that all noble Lords will have sufficient support to enable them to contribute to the important work of this House. On that basis, I agree entirely with my noble friend's proposals.

Lord Tomlinson: My Lords-

Lord Davies of Coity: My Lords, I want to ask a very simple-

Noble Lords: Tomlinson!

3.45 pm

Lord Tomlinson: My Lords, the Statement of the noble Lord, Lord Strathclyde, on 28 June was in my opinion deficient in a number of respects. It was not fully accurate. Today's resolution tabled by the noble Lord rests on that, which I believe is a weak foundation. I shall give three examples of where his Statement of 28 June was inaccurate. The noble Lord said that,

That is not what we were asked to do. The remit for the ad hoc group established following the Motion

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agreed by the House on 14 December-as is shown at paragraph 3.6 of the ad hoc committee's report-was that it should,

On 14 December 2009, the House also agreed that the principles and architecture of the SSRB should be part of our mandate.

Secondly, the noble Lord, Lord Strathclyde, said that,

In fact, the ad hoc group had completed its report and was persuaded to reopen it following certain discussions that took place in the House Committee involving the Leader of the House. The genesis of the new idea was not in the ad hoc committee but elsewhere, and it was that which led to the paragraphs in the report to which I added my note of dissent-in particular, my dissent to recommendation 17 in the ad hoc committee's report. That arose from a reopening of the report after the committee had finished its deliberations. Recommendation 17, however, did not suggest an alternative system. It said that,

three very important words-

That brought into play the very views that the Leader of the House had been discussing with the House Committee, on which the ad hoc committee never had a formal paper. However, there was a majority view that perhaps we should leave the matter open in the recommendation, which led us to say that,

Thirdly, the noble Lord, Lord Strathclyde, also claimed that the proposal was broadly cost-neutral compared with the existing scheme. However, the extension of what has been seen as a payment for the legitimately incurred costs of overnight stay in London and extending it to all Members of the House destroys the pretence of cost-neutrality. On my estimation-and I have checked this with the Finance Department-it adds possibly £1.5 million to the cost of the scheme. If we really think that the proposal for a payment of £150 is going to recoup that £1.5 million, I suggest we are living in cloud-cuckoo-land, but that is what will need to happen in order to achieve cost-neutrality.

Perhaps I may also say, more in sorrow than in anger, that when on 28 June I raised my reservations, in less detail than I am doing today, the noble Lord, Lord Strathclyde, rather disingenuously, said to me, a member of the ad hoc committee-I assume still compos mentis, following its proposals and making some contribution to its work-

"If the noble Lord reads the document, as I have done".-[Official Report, 28/6/10; col. 1518.]

I not only read it; I helped to prepare it. I hope that I have demonstrated that I have read our report accurately and not in the rather inaccurate way in which the noble Lord did.

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I turn to my specific objections to the new system. The first one is on grounds of equity. It is not a demonstration of equity to say that you treat everyone the same when the costs of attending your Lordships' House are vastly different. A noble Lord who lives around the corner and can walk to the House is being treated in exactly the same way as another who lives in the furthest reaches of the country and who, in order to attend here, is forced, having no option whatever, to get accommodation in London. That is not equity; it makes a mockery of the word. In mocking equity, it also produces a potential threat to the regional balance in this House-a regional balance that Members of this House hold to be important and which was part of the remit given to the SSRB.

Those are two fundamental questions, and there is the question of costs which I have already mentioned. There are still taxation implications but I shall not go into them further. We have seen in this resolution a concern about a problem with our expenses regime but as far as I can tell from reading the press, in each and every instance there was an allegation of somebody claiming a London overnight allowance to which they were not entitled. And so what do we do? We give everybody the London overnight allowance, wrap it all up together and call it a single per diem. I do not think that that is either fair or right. I am also very fearful that those who tell us that that will satisfy public opinion and the press will live to regret their optimism. I can see no basis on which this system will or should satisfy public opinion, and there is no basis on which this system should or will satisfy the media. It is the antithesis of the transparency that we were talking about. We will regret it and the system will not have my support.

Baroness Harris of Richmond: My Lords, it may be appropriate at this juncture to speak to the amendment in my name to which we will come later. In doing so, I declare an interest as one who travels weekly to your Lordships' House. I am also a recipient of a senior railcard.

My amendment refers to paragraph 30 on page 8 of the report and I shall speak to it for two specific reasons. First, like the noble Lord, Lord Tomlinson, I believe that it discriminates against those of us who travel from the far reaches of the United Kingdom to participate in the work of your Lordships' House. For those of us who are old enough to use a senior railcard it is possible to purchase a first-class flexible ticket for just below the cost of a walk-on standard fare. That is fine for those who have a senior railcard. However, for younger Members of this House who live in the far reaches of this country and who do not have the advantage of age, the difference between the cost of the two tickets is enormous.

That is unfair and ageist. It takes no account of those younger Members who might have disabilities so it is discriminatory. The House Travel Office advises me that anyone without a railcard who wishes to purchase a first-class ticket would have to book well in advance and keep to that date and time to be within the guidelines. As your Lordships know, it is impossible to say when the House will finish its business, so it would be extremely difficult to book ahead. Other

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Members may wish to address that issue. If, for instance there is a difficulty on the day of travel, for whatever reason, and a pre-booked advance ticket has been purchased that ticket will be invalid if it is not used and the new ticket will have to be purchased at the cost of the full walk-on standard fare. It will then be a battle to try to persuade IPSA to refund the original fare. That moves me on to my second point.

I was perturbed that it was IPSA's solution to travel for Members of the House of Commons that prevailed with the House Committee for your Lordships' House. I had understood that this House generally accepted the SSRB rulings, not those of IPSA, which was set up to deal with arrangements in another place. Indeed, on page 7 of the report, it is the SSRB which advises on all other parts of our travel expenses, and the House Committee concurs with its proposals in those parts of the report. I find it strange, therefore, that we should suddenly find it introducing IPSA into the mix. Paragraph 30 is the only part of the report in which IPSA appears. I find it invidious that its proposals are preferred to those of the SSRB. That creates a two-tier membership of the House.

I thought long and hard about seeking the House's endorsement for my amendment. In the almost 11 very happy years that I have spent working in this House, I have never once challenged the will of the House Committee, and I do so today with great sadness. I know that many hours of work went into the report, the main conclusions of which I am very happy to endorse-except paragraph 30. It is that simple but important change that I wish to revisit, and I sincerely hope that the House Committee will feel able to do so.

Lord Williamson of Horton: My Lords, I was a member of the ad hoc group appointed to consider and consult on issues in the SSRB report and to advise on their implementation. Although there were moments when I felt that membership of the group was a cruel and unnatural punishment, on the whole, I concluded that the work was well worth while and contributed to the improvement of the arrangements for the financial support of Members. I shall say a very few words about the group's report, in so far as it is still relevant to the Motions before the House today, and then comment on the recommendations of the House Committee and the Motions on the Order Paper.

Although events have moved on since the ad hoc group's work and report, it is still worth noting that, first, the group consulted widely, and the many references to the views of Members are well based. We received 89 written submissions from Members and held a whole series of consultative meetings, with members of the group present, to take views. We also produced a survey on overnight accommodation, to which 473 Members replied. Our report is therefore well informed.

Secondly, the SSRB was rightly concerned that the proposals should ensure that no Member was prevented from attending and playing a full part because of lack of financial resources, and that the diversity of the House should be maintained. The group considered that to be an important principle, and it is obviously relevant to our consideration today. It would make no sense to accumulate so much political experience and

20 July 2010 : Column 928

other expertise in this House and then to reduce its efficiency, particularly since its Members receive no salary or pension and, to that extent, work for nothing.

Thirdly-my last point about the group's report-we sought to avoid an excessive administrative burden and to ensure that the cost to taxpayers of the financial support to Members was held down to reasonable limits. It was for that reason that we proposed an optional and interim alternative of £100 a night for the overnight allowance. We noted in the report that that would be considerably cheaper and simpler to administer than the current arrangements. Indeed, we estimated that the combined effect of the SSRB proposals and the £100 a night interim allowance would reduce the current cost to the taxpayer by about £2 million.

4 pm

These points underlying the ad hoc group's report are still important for the decisions today, which I now turn to. Evidently, the move to a daily allowance system, which began with the SSRB proposal of a single fee of £200 a day to cover daily subsistence and all office and secretarial costs, is now being completed-changed, I accept-by the proposal to do away with overnight subsistence and to combine the daily subsistence, the overnight subsistence and the office costs elements in a single flat rate of £300 to which Members are entitled on the basis of attendance. There are some obvious advantages in this change, notably that attendance is already checked, the scheme would be very simple to operate and the administrative cost to the taxpayer would be very low. I think we should accept the proposal, which we would accept to remain in place for the duration of the present Parliament.

Finally, I turn briefly to travel, where an expense system based on receipts or the travel card is to be retained. Having attended Sessions of the House for 11 years, every day or a very large number of days in every Session, and travelling 330 miles by rail each week for the past 11 years to work here, I should say that travel is a large part of my life, so I gave some attention to this. I know that some Members, notably the noble Baroness, Lady Harris, have long and hard journeys and would have preferred to retain the present system, or at least the SSRB proposal, which involved first-class travel if working. However, in this area we have, of course, to pay attention to the new rules for Members of the House of Commons, and I therefore accept the House Committee's proposal that reimbursement of train travel should be limited to the ceiling cost of a standard open ticket. If all the proposals presented to us today are accepted, and I hope that they will be, and we look back later at expenditure and financial support, I suggest that the main factor will be the extent to which any savings are offset by the increased number of new Peers, who will no doubt be attending and contributing greatly to the continued high performance of the House.

Lord Methuen: My Lords, I think it may be appropriate that I speak to my amendment at this stage. In so doing, I declare my interests as a member of the British Group of the IPU, although I have not attended any of its delegations, and as a participant in the Lord Speaker's Peers Outreach to Schools programme.

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This amendment aims to remove an anomaly in the proposed financial support for Peers participating in external parliamentary activities such as the CPA, the IPU, the BAPG, the BIPA and similar organisations, and the Armed Forces Parliamentary Scheme and the Police Service Parliamentary Scheme, and refers to paragraph 22 of the House Committee's report.

Paragraph 3.17 of the SSRB proposals covers these activities:

Paragraphs 4.22 and 4.23 of the ad hoc group's report, which are headed, "Away from Westminster", noted Members' disquiet about the arbitrary and inconsistent financial arrangements covering these activities. In paragraph 5.22, it recommend new arrangements "as may be agreed" to be presented to the House Committee for approval in due course, which is what we are doing now. Annexe 5 to the report is an indicative list that is effectively the same as that included as Annexe A to the report that we are debating.

The second table in Annexe A covers the external activities of Peers with organisations such the CPA, the IPU, et cetera and the Armed Forces and police schemes, and it is that which my amendment alters. Noble Lords will notice that the second table in Annexe A precludes the payment of any allowances for days on which the House is not sitting. I have attempted to gather information about the number of Peers involved in these activities. With respect to BIPA-the British-Irish Parliamentary Assembly-there were about 15 days of assemblies and meetings of various types attended by some 17 Peers. I believe that some of those meetings were on Sundays. They were held at locations within the British Isles, Brussels and Stockholm. I am unable to break them down further into recess and term time.

In 2009, for the British group of the IPU, 12 Peers travelled in the recess and three during term time. About 70 per cent of the BAGP's activities were during a recess. I do not have figures for the Armed Forces scheme. A noble friend has told me that he attended an attachment with the RAF on a Thursday, Friday and Saturday. Only the Thursday was a sitting day for which he could claim attendance. I believe that this shows the bizarre nature of the current arrangements.

Noble Lords should note that the outreach programme today has similar restrictions. However, I am glad to say that the House Committee has seen fit to remove this restriction in the new financial arrangements proposed to come into effect after the Recess. Living in Derbyshire, for instance, there is no way in which I can visit a local school and attend the House on the same day, so I am pleased that this change has been made. It is unreasonable that noble Lords who are prepared to undertake the activities listed in this table on behalf of the House when it is not sitting should be penalised in this manner. My amendment corrects this situation. I hope that I will have some support for this amendment.

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Lord Grenfell: My Lords, I have a lot of sympathy for what the noble Lord, Lord Methuen, has said in his amendment, but I wish to address the question of the all-party parliamentary groups, of which I am a great supporter. The country groups-I do not exclude the others but my experience is with the country groups and I declare an interest as an officer of three of them-are great added value for your Lordships' House because they bring us into contact with the Parliaments and Governments of other countries.

However, there seems to be a problem which may be an inconsistency. Perhaps the noble Lord could clear it up. Under "Type of business" in Annex A, it says that the daily allowance would be available for,

"Committee Visits and official business

Members of parliamentary delegationsTravel as a Representative of the HouseLords outreach programme".

But paragraph 21 says:

"There are three categories of such business as follows",

for parliamentary business away from Westminster.

Paragraph 21(b) refers to,

Unless that covers the activities of the all-party groups, we have a problem. Will the Leader of the House tell us whether the phrase,

would cover all-party groups because so many of them are in relation to the IPU? We need to know that. A lot of Peers would like to go on some of these all-party group visits but are somewhat deterred by the fact that when they are away they are deprived of some of the allowances to which they feel that they are entitled.

Lord Sewel: My Lords, a centrepiece of the proposals, which perhaps causes some of us great difficulty, is the abolition of the separate overnight allowance and its wrapping up in a uniform fee of £300 for all Peers. Before I speak on that, I want to speak briefly about the matter of the £150 dealing with committee visits and delegations. For some years now I have been a member of and have chaired various sub-committees and committees of your Lordships' House. I have found an understandable reluctance among some Peers to travel away from Westminster on specific days when the House is sitting. My fear is that the proposals before us today will increase that reluctance. Can we have an assurance from the Leader of the House that if it is evident that it is becoming more difficult for Peers to go on delegations and, for example, committee visits to Brussels on a day basis, that that will be looked at fairly quickly? We get enormous value out of short visits to see the Commission and other European institutions, so it would be a sad thing if those were to attenuate over time.

Let me return to the main issue. On 28 June the noble Lord, Lord Strathclyde, in referring to the advantages of the £300 uniform fee, said:

"How much Peers spend on each item would be entirely up to them".

Yes, but that is not the entire story. He also said in summing up that one of the major advantages would be that:

"This will mean a reduction in the amount that some Peers have claimed in the past".-[Official Report, 28/6/10; cols. 1512-13.]

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Again, yes, but that is not the whole story. First, how much real choice do Peers have on how they spend the daily allowance? There is actually not much choice at all if you live a significant distance from London. If you live 300, 400, 500 or 600 miles from London-I should declare an interest as I live in Aberdeenshire, which is just over 500 miles away from Westminster-and come down on a Monday, you are here for the rest of the week. You cannot go backwards and forwards, so you have to have accommodation for an entire week.

I do not think that Peers should be expected to live out of a suitcase. It is quite reasonable that they should be able to rent or obtain a modest one-bedroom flat. The going rent for that, on checking with estate agents and The House magazine, is somewhere in the region of £350 a week, which is £18,200 over a year, plus council tax and utilities. That is approximately £20,000 a year that someone needs to pay out in order to maintain a presence in London, which is an absolute requirement to attend your Lordships' House. It is not a matter of choice; it is an imperative and a requirement.

Under the proposals, a payment of £300 over 145 sitting days-over a five-year Parliament there are actually fewer than 145 sitting days, but we shall take that figure for the moment-produces support of £43,500 a year. Those living a significant distance from London are locked into a system where almost 50 per cent of their total possible support will be taken up by the housing costs that are a pre-requisite of attending your Lordships' House. That is not something which is faced by those whose primary residence is in London.

The noble Lord, Lord Strathclyde, said that some will lose. Yes, that is absolutely true, and we pray in aid austerity to defend it, which is reasonable. We ought to be prepared to make sacrifices in a situation where our fellow citizens are making sacrifices. So let us look at the 24-hour rate. The claimable amount for those whose principal residence is outside London will go down from £335 to £300 a day, which on a weekly basis is a small reduction of £140 a week. For those whose principal residence is in London, it is a move from £161 a day to £300 a day. That does not seem to be a contribution to austerity. How is that figure squared?

I recognise that there were two problems with the overnight allowance: some people did not tell the truth; and some people were confused because we had never defined what was a principal residence. We went through the pain of establishing a robust, common-sense and sensible definition of what is a principal residence. That is now followed-up by a paper trail by which you can clearly demonstrate that your principal residence is outside London. Why do we not use the robust system that we have introduced?

As the noble Lord, Lord Tomlinson, said, equity does not mean that you treat everyone the same but that you recognise the differences that people have to face in order to perform the same task. That is the essence of the problem. I accept that what is proposed has been brought forward in all honesty, that it is not perfect but deals with a number of problems, that everyone is treated the same and superficially it looks fair and simple and provides rough justice. My problem is that it has within its heart the possibility for great injustice, and that has not been addressed.

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4.15 pm

Lord Marlesford: My Lords, I support the proposals made by the House Committee and introduced by my noble friend the Leader of the House. I should like to offer some brief comments which, to some extent, relate to what the noble Lord, Lord Tomlinson, said-although they do not answer his questions and probably will not satisfy him.

First, I underline, and certainly welcome, the simplicity and lack of ambiguity in the new scheme. It will reduce to an absolute minimum the administrative cost and the bureaucratic burden on both the House and Members. I should point out that IPSA, which is tormenting MPs with its arrogance, insensitivity and pettiness, is costing £10,000 per MP per year to administer. It must be one of the most expensive payroll systems in the world. Newly-elected MPs are already expressing their resentment and irritation with it. It may well deter those who might otherwise consider becoming MPs in the future unless they are either independently wealthy or have a very low earning capacity in the outside world. I hope we never allow IPSA anywhere near the House of Lords.

Secondly, the new system may be rough and ready. It is not able and not intended to deal with individual circumstances: that would be the way which leads both to scandal and to IPSA. Some of us who live outside London will lose out, but so be it. On balance it is sensible, economical, transparent and fair.

Thirdly, to those who suggested the allowance should be taxable, I point out, because this is how the tax system has always worked, that that would enable the wealthiest with plenty of outside resources to benefit by arranging with their accountants, and through dialogues with inspectors of taxes, for their expenditure to offset the allowance under the appropriate tax codes.

Fourthly, to those who still believe that the allowance should be subject to receipts, I point out, as I did in my evidence to Cockburn, that a system based on actuals, as used in the business world, depends on three steps: first, checking the expenditure was made; secondly, ensuring that it was necessarily and exclusively related to the business function performed; and, thirdly, that the level of expenditure was appropriate to the status of the employee. These steps are the function in business of a line manager. We do not have line managers. To ask officials of the House of Lords to act as our line managers would be unreasonable, inappropriate and impractical.

Fifthly, the sums proposed-a maximum of £300 a day to cover all the cost of participating-are far from extreme. I believe that the public are much too sensible to compare this, for example, with the minimum wage. The maximum amount that one could receive would be £45,000 a year, but, on the basis of the average number of days on which we sat during the previous five years, the average would be £43,500. Let us compare that with three other reasonably comparable fields-I am sure that colleagues will have lots of other examples that they could give. An MEP currently receives a salary of £78,000 a year, a daily allowance amounting to £39,000 for a 160-day year, a general expenditure allowance of £42,000 and allowance for parliamentary

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assistants of £193,000. That makes a total of £352,000 per MEP, of which only the salary element is taxable. In addition, MEPs receive pensions and medical costs.

Three hundred pounds a day would pay the standard fee charged by a medical consultant, an accountant or a solicitor for about one hour. The international rate for a keynote speech of the sort which many Members in the House are experienced in making has for many years been approximately $10,000, which is £6,500 or the equivalent of five weeks' worth of the proposed attendance allowance in the House of Lords or two-and-a-half weeks' worth at a 50 per cent tax rate.

Let us end this prolonged discussion of our financial support so that we can focus our time and efforts on the parliamentary role for which we are privileged to be here.

Lord Soley: I shall speak not just on the matters before us today but also the way in which we address them. We are doing a bit of what we have done in past-it happened in the House of Commons, too; that is, amending on the Floor of the House. It is that which gets us into so many difficulties. This problem started in the House of Commons some 40 or 50 years ago. It blew apart with the passage of the Freedom of Information Act. That Act affected us here far less, but it is very important.

We need to emphasise, first, that this House is cheap to run, as my noble friend on the Front Bench said, not just by British but also by international scales of comparison. We need to emphasise, secondly, that we are unsalaried and, thirdly, that we do a very important job. We are part of the democratic system of which we should all be proud. That is why I have been so acutely concerned during the past few years by the disgrace brought on politicians by the collapse of a system which none of us could justify. Is today's solution an absolutely good one? Of course it is not. Is it absolutely fair? Of course it is not. However, we need to look at it as part of a process, which is what I said when I last spoke on this matter. My concern is that if we go on doing what we have been doing, either in the House of Commons or here, and try to amend our income system on the Floor of the House after one report here and another there, we will continue to make mistakes.

For the past four or five years, I have argued against defining "first home" or "second home", mainly because, in the British system of doing it, you invariably run into traps and dangers which you had not envisaged. I do not attempt to justify what David Laws said, but I ask what on earth we are doing in creating a system where it is legitimate and proper for the press or anyone else in public to ask, "Who are you living with? What is your relationship with them?". We should not go down that road.

My noble friend Lord Tomlinson explained in a very good speech the problem of geography. I am with him on the principle, but make the point that an awful lot of people make the mistake of believing that we should say "London"-I notice how often "London" comes up. The reality is that you can get to most of the cities around London-Oxford, Reading, Chelmsford

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and so on-more cheaply and very often more quickly than you can get to the outer reaches of London. So that is not fair either. If you want to go to Oxford you can slip down the road to Victoria and catch a bus every 20 minutes, any time of the day or night, for £8.

IPSA in another place has suggested-I know that IPSA is not popular and I will come back to that in a second-that there needs to be another geographical way of measuring this. I am not convinced that geography is the best way of determining the question of how, as a couple of my noble friends have pointed out, we ensure that those people who come the furthest distance are given sufficient support to continue doing that.

That brings me back to the problem of how we define this. I know that IPSA is not popular. I know that from talking to colleagues on all sides of the House of Commons and from common sense. I have spent some time talking to Sir Ian Kennedy. He also knows that it is not popular. We need a system that enables us to address these problems over a period of time, getting it all right without having to have an occasional report, which we then present to the House and amend on the Floor, and then wonder why it goes wrong. I understand the feeling about IPSA and my guess is that, in the long run, it will get there but it is painful while it is learning not to make mistakes any more. If we are not to have IPSA I suggest that we need a committee of the House to look at all the anomalies and unfairnesses and address them as we go along-not in one grand slam every now and then. We need to do that on an annual or biannual basis.

Many other Parliaments have these problems. It will be a great comfort to my noble friend Lord Tomlinson to know that, when the Germans tried to pass their system over to an independent body for adjudication, the German constitutional court overruled them and said, "You can't do that because the position of representatives, elected or otherwise, is too critical to the constitution to have another body decide it". That is a great addition to the armoury of my noble friend sitting next to me. However, if we are not going to go down that route we need to find a better way than to amend reports on the Floor of the House because that is where it goes wrong. I have watched this happen in the House of Commons on a number of occasions.

We all had legitimate gripes about that system. It was a bad system in many ways. It often did not compensate Members in the way that they needed to be compensated for the work that they do, and exactly the same applies here. People talk about distance being unfair. I have raised the issue before that if you have a business such as a lawyer's office or you are in academia or whatever, that gives you the administrative backup that you need so you may not need to employ a full-time person as others of us do. That is not fair either. These are complex issues that do not get sorted out on the Floor of the House in a big-bang solution every now and then.

What we are being offered today is a way of dealing with our immediate problems in a way that does not tie us up in this incredibly difficult business of defining a first or second home. We should remember that a number of noble Lords have already said that they

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would end up spending more time away from their primary home-which nobody questions is their primary home-because they are doing other things as well or have family commitments. Therefore, according to the rules that we have practised just recently, they would not be eligible to claim. In at least one case I know that a noble Lord has stopped claiming. There is no nice simple option. What we have today as the leaders of the Conservatives, Labour and the Cross Benches have said, is a straightforward system that is pretty robust and which we can use, but I ask the House to consider how we do this in future.

There has been a lot of talk about the media. It has to be said that the media did what they should do in exposing some of the abuses in the House of Commons and here. But-and it is an important but-the majority of MPs and certainly the majority of noble Lords in this House behaved perfectly well. There was a danger last year in my judgment that the media would inflict acute damage to the concept of democracy and to our democratic institutions. If you create a situation in which politicians are regarded with contempt-and they are never going to be wildly popular or the most popular people around-you create dangers. Curiously enough, it is that House down there and this House here that actually defend the freedoms that the media put into effect, and it would be quite good if every now and then the media remembered that. In the past 12 months, I wrote three articles on why we needed to change the existing system-one for the Sunday Times, one for the Daily Telegraph and one for the Times. None of them published them, and one of them actually said that it did not want to publish my article because it did not agree with it! Yet it is very largely what we are doing today. I noticed in the Times today a very supportive editorial for what the Government are doing today.

We should all start getting proud again of the constitution of which we are all part. We should all stand up and defend it and recognise that what happened was largely our fault because we did not change the system, but also recognise that we need some form of procedure that enables us to deal with these matters, not in some occasional debate of this type or by constantly trying to change it on the Floor of the House, but in a rather more sophisticated way. If it is not to be IPSA-and that jury is still out, as we wait to see how it deals with its current problem-we have to devise our own, because otherwise we will continue to get into problems and have to make amendments as we are doing on the Floor of the House today. If we had a trade union and a business negotiating on how you paid people and compensated people, everyone in the trade union and business would think that you had gone stark, staring mad-but we are doing it.

4.30 pm

Lord Palmer: My Lords, I concur with what the noble Lord, Lord Sewel, said-especially with regard to committees of this House going to Brussels. The last time I went under his wise guidance as chairman of Sub-Committee D, I was horrified that I was allowed to claim for a not necessarily needed glass of white wine, which cost €3, yet when telephoning home, I was

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not allowed a €3 call to check that my wife was alive. I concur with what the noble Lord said-this really must be looked at again.

I add support to the amendment proposed by the noble Baroness, Lady Harris. If the Leader of the House could always guarantee the exact timetable for the Sittings of the House, full-fare flexible tickets would not be required. But until the timetable can be cast in stone, Members are forced to buy full-fare flexible tickets. A four-hour train journey in standard class, which is what I have to endure, is just about bearable if one is in flip-flops and a T-shirt, but not if you are trying to study parliamentary papers and dressed to attend your Lordships' House. It is for these reasons that I very much hope that the House Committee will look at the noble Baroness's amendment.

Like the noble Lord, Lord Tomlinson, in his very powerful speech, I would like to put on record that I acknowledge that the current system of expenses is swimming in murky waters. I am acutely aware of the recession, as are other noble Lords, as I watch both the businesses that I try to run struggle from the downturn in the economy. But it is important to put on record that the proposals before us today are heavily weighted against those of us who have long and arduous distances to travel, with all the extra hassle and expense that we incur having constantly to eat out in London. We are also away from our families and we do not have what the noble Lord, Lord McIntosh of Haringey, described back in December as the luxury of sleeping in one's own bed.

I hope that the Leader of the House and the Chairman of Committees will look most carefully at what has been said this afternoon.

Lord Shaw of Northstead: My Lords, I entirely agree with the proposals that have been put forward, but I have one query. Will some discretion be allowed to play a part in fixing entitlement to travel expenses? On the face of it, when we come back in the autumn, I shall be able to claim mileage costs to and from Wakefield station, as well as car parking as well-a weekly Bill of £56. However, I could catch a taxi there and back for £32, which is a difference of £24 or, annually-if I work it out from usual attendance-of £700. Is this discretion open to the authorities that pass my expenses or not?

Baroness Symons of Vernham Dean: My Lords, I, too, was a member of the ad hoc committee under the chairmanship of the noble Lord, Lord Wakeham. It is worth remembering that we are talking, simultaneously at times, about four different systems: the current system; the system that the SSRB put forward; the system recommended by the ad hoc committee; and the system in today's proposals. I should like to compare the ad hoc committee's proposals with today's proposals, as I think that we are missing some important points.

My noble friend Lord Tomlinson was exercised by the fact that the recommendation made by the ad hoc committee at paragraph 5.61 of its report moved outside the remit that the House gave us. It is important to recognise that the report makes that point fully and coherently at paragraph 5.56. The report goes on to

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recognise, as my noble friend Lord Tomlinson said, that since the general election things have changed. That is spelt out in paragraphs 5.58 and 5.59, which consider IPSA and possible changes to your Lordships' House. There was no sleight of hand; this was clearly spelt out in the report. In paragraph 5.61, the noble Lord, Lord Wakeham, recommended, with the support of most of the group, that,

The position is straightforward; I do not think that anything underhand went on.

The simplified allowance that we are looking at is a £300 a day flat-rate allowance. I remind your Lordships that the ad hoc committee report recommended that we accept the SSRB's £200 flat rate. It also recommended, as an alternative-the noble Lord, Lord Williamson, referred to this a moment ago-a £100 flat-rate, unreceipted allowance, or £300 for those living outside London. Concern has been expressed about the House not being so diverse because of the difficulties of travel on that basis, but that applies equally to the alternative proposed by the SSRB. It could be argued that there was another alternative-the £140 receipted alternative. Indeed, we recognised that that was the SSRB's alternative. However, that £140 receipted alternative was attenuated for every day that an individual did not attend the House, so that the individual not only lost for that day but faced an additional deduction from what they would have received. In essence, I do not think that many people would have received anything like £140, because everybody has to be away from the House at some point. I really do not see that the £300 flat rate is very different from what the ad hoc committee put forward, which was either to take the SSRB proposal with its deductions or to have the flat rate that we proposed. I do not think that that is an arguable point. It is written in our report, which I am sure all of your Lordships have read assiduously.

The question then is whether this is fair in the light of what London-based Members would receive. It may be argued that London-based Members will get more, but I have always found the argument that some people's good fortune must mean other people's misfortune difficult to agree with. The fact is that I am one of those who are not London-based Members and therefore, theoretically, I lose under this. I do not believe that I am losing any more than I would have lost under the report, but I accept that London-based Members will be receiving more.

That then raises the question of equity. Equity can be looked at in a huge variety of ways-equity according to need or the equity of getting the same rate for the job that you do. Both are arguable cases. The fact is that the proposals before us are the same rate for the job that you do.

On a personal level, one of the reasons why I want these proposals to go through is that I have seen many of my colleagues torn apart on Thursdays and Fridays by the ghastly telephone call that goes, "Hallo, it's the Sunday Times here". People know exactly what is coming-intrusive questions of a deplorable nature, people outside their house and their neighbours' houses,

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questions down at their local pub. To me, this system is worth it because it means peace of mind for me and my colleagues. That is of enormous value to all of us.

Then there is the public interest argument. The fact is that this is a transparent system. What people receive is absolutely in line with their attendance in this House. There is no hidden agenda, there is nothing else for someone to look for and there are no constant questions about who you are living with and how that works. It is completely transparent. The public can have confidence in what is happening. The rate for the job is £300 a day-end of story. I hope that it will be our end of story too.

Lord Tebbit: My Lords, I have a good deal of sympathy for the amendment put forward by the noble Baroness, Lady Harris. My main point, however, is about the allowances as they affect staff who Members may employ.

Let me be clear. I do not think that this ought to be a full-time House. We should not be full-time politicians. Over the years since I have been in this House, I have tended to attend on 60 or 70 days a year. At times I think I have made some difference in what I have done while I have been here, for good or ill-opinions may differ about that. I do not think that we want to encourage people simply to come here every day. Frankly, there are too many of us now anyway; we would overfill the place.

As I look back, I find that for several years-because I take that view and I attend for only about half the days that the House is sitting; that is, when there are things that I think are important for which I should be here or things that interest me-the amounts that I have drawn in allowances have been less in total than I have paid my part-time secretary. It is a privilege to be here, and I have been prepared to accept that. What worries me now, however, is the loss of the provision to be able to claim secretarial allowance-or office allowance, whatever you call it-during the time when the House is in recess. I cannot tell my secretary that she is not going to get paid because the House is not sitting. I am not prepared to do that; it would not be right. There is a case to be made for looking again at how the new system will affect those of us who intend to attend only 60 or 70 days a year but whose activities in the House and as politicians generate enough work to cause us to retain a secretary to help. Whatever happens, and broadly speaking I support the proposals that my noble friend has put forward, we need to look again at that aspect.

4.45 pm

Lord MacKenzie of Culkein: My Lords, I support the resolutions before us but have some sympathy with the amendment of the noble Baroness, Lady Harris of Richmond. I was particularly surprised to note that there was no provision for first-class travel on sleeper trains. Many years ago, I got on to a sleeper train in Taunton, Somerset, where a rather drunken fellow countryman of mine insisted that I shared his cans of lager through most of the trip. After that, nobody in my organisation ever travelled second class on a sleeper train. I hope that the House Committee will look at that measure.

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I support the changes proposed today, despite the fact that I am one of the losers. Noble Lords might ask why I do so, given that some provisions appear to be manifestly unfair. I live in Scotland but acquired a house in London solely for the purpose of attending this place. I go back to the decisions we made here on 22 March, when we approved the House Committee's third report. At first blush, the decision on what constituted a principal residence seemed most reasonable. As my noble friend Lord Sewel said, it seemed straightforward and perfectly sensible-that is, the place where you spend most of your nights at weekends and during recesses. I too thought that was reasonable until I looked at the guidance for declaring one's principal residence, which asks where you will spend most nights at weekends and during recesses in the forthcoming year.

I had considered going to Australia this summer for six to eight weeks. I have a brother in Melbourne, a brother-in-law in Sydney and a stepson in Perth-three very different parts of that very large continent. Given that I am in my 71st year, I am not going to see them that often so I thought that I would spend some time there. As I did not want to do anything that put me in breach of the Code of Conduct, or required me to appear before the commissioner, I rang the finance department to check that my travel plans would not cause any difficulty. The staff said that that was one of the things which would be looked at in a meeting that afternoon. I called back two or three weeks later and was told that they had not yet reached a final decision and were still considering the matter, but that their first thoughts were that my plans would go against me. Presumably, that means that I could not count my Scottish home-my home where I have lived for the past 10 years-as my principal residence and therefore could not claim travel expenses either.

I do not blame the staff in the finance department, who were most helpful. They have to work within the decisions that we make on the Floor of this House. This is clearly a classic case of the law of unintended consequences. However, it is one of the reasons I support the proposals before us, as they would remove all the opportunities for that sort of bureaucratic decision-making and for the denizens of the local press to check with my neighbours whether I have been seen at my principal residence over the whole of the summer. I certainly do not want that sort of nonsense; I do not think that any of us do. Several noble Lords have raised similar concerns.

I look forward to this House supporting the Motions before us. Let us accept them and see whether they have any effect on the pattern of attendance at this House. If they do, they will have to be revisited. However, in the mean time, I am pleased to support them.

Lord Monson: My Lords, I agree with a great deal of the argument proposed by the noble Lord, Lord Tomlinson, although I do not claim overnight allowance. I agree with his argument about fairness-or absence of fairness, as the case may be-and with his contention that the proposed changes will not, as is hoped, satisfy elements of the media or the public.

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I turn briefly to a point made by the noble Lord, Lord Dholakia. Can the Leader of the House confirm that the proposed £300 and £150 are maximum daily allowances and that if a Member on a particular day felt that the amount of time, effort and expense incurred justified only a slightly smaller claim-say £120 or £100 -he or she would be free to make that claim and would not be faced with a choice between £150 and nothing at all?

Lord Graham of Edmonton: My Lords, I support the recommendations and fully recognise that colleagues on all sides of the House are not only entitled to but are justified in making their comments, especially from their own experience. I have been a Member of this House for more than 25 years, and until the past 18 months I never dreamt that there were different interpretations of the rules. I am not an expert, but I was told what I could claim and I have claimed it. Yet I have been astounded to find that colleagues, whose integrity I do not impugn, have interpreted the rules differently.

Colleagues in the House have gone through the past 18 months fearing that they will accidentally find themselves in trouble when they are not trouble-makers-and I very much sympathise with my noble friend Lady Symons. That is in part due to the various anomalies and blemishes in our arrangements, as has been explained by various experts and keepers of our conscience, from the Clerk of the Parliaments downwards. I pay full tribute to all my colleagues around the House. I look at the Leader; he and I have sparred for 25 years. None of us has lost any weight, we are still standing, and we are still here. From the Leader downwards-I say that with no disrespect to anyone-colleagues have had not only to wait until today but to grapple with finding a solution. What we have before us is their idea of a solution. I am sure that the Leader and his colleagues will understand that there will be a need to revisit the issue in light of what has been said by a number of colleagues.

As far as I am concerned, I am not wedded to either the past or the future. I accept that what we are looking at is the product of our good friends who help to lead us in one way or another. However, we are entitled to dignity and respect from outside the House for what we try to do. We know that it is terribly difficult to measure who is a good Member, who is not and who attends every day. I note that the noble Lord, Lord Tebbit, said that he is able to give 60 or 70 days a year here and, when he is here, he makes his presence felt. But others are able to attend more or less every day. We are all on the same level as far as integrity is concerned, and we are all entitled to weigh up our responsibilities in light of the great honour given to us by our party leaders, et cetera. The one thing that sticks in my craw is that collectively colleagues from all around the House, who without exception are good and honourable, have had to carry the burden of a nasty campaign waged through the press. At the end of the day we know that, whatever decision we take, we will be subject to exploitation and criticism by the press and others.

We are here to look at the benefits of the proposals and the extent to which our colleagues are saying, "This is what we think is a fair and equitable system".

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I respect very much the point of view put by my noble friend Lord Tomlinson and others that noble Lords will lose out. As far as I am concerned, we will all be winners if we accept the Leader's recommendations, and I wish them well.

The Chairman of Committees (Lord Brabazon of Tara): My Lords, before the Leader of the House concludes today's debate, I wonder whether the House might feel that it is time now for me, on behalf of the House Committee, to attempt to address those points which noble Lords have addressed to the committee's report rather than to the Leader's two resolutions. I shall attempt to deal first with the amendment in the name of the noble Lord, Lord Methuen. As the noble Lord described, that amendment would extend the £150 allowance for certain types of mandated business in the second category in Annex A of the report while away from Westminster on the days when the House is not sitting.

The House Committee took the clear view that now was not the right time to expand or uprate the entitlements on business away from Westminster. Therefore the range of entitlements is exactly the same as at present. For the types of business in category B, I point out that up until a few years ago, when they were reviewed by the House Committee, there was nothing paid at all. Category B was then included; it includes such things as CPA and IPU business. Members are currently reimbursed the relevant categories of expenses only in respect of days when the House is sitting. This sort of activity has been quite clearly distinguished from travel as an official representative of the House or a committee where Members are acting on our behalf. The noble Lord is asking for the current policy to be expanded, and on the grounds of cost and principle the committee does not support such an expansion at this stage. I emphasise that these categories and rates were reviewed relatively recently by the House Committee and that they will probably be reviewed again in due course.

The noble Lord, Lord Grenfell, made an interesting point about all-party groups-particularly on all-party country groups. Those have never been included in any category for allowances. It could be limitless if we were to include that sort of thing and, as I have said, we felt that this was not the right time to expand the entitlements and that we should try to keep them the same.

Lord Grenfell: The noble Lord says that this could become limitless, but I am not sure that that is really a fair argument. The question is whether, when Members of this House visit another capital on an exchange visit to other parliaments, the effect of that is the same as if they were going there representing the House. I am not quite sure why the noble Lord feels that this might be a limitless affair. It should be treated the same as when one is going to represent the House of Lords.

Lord Brabazon of Tara: If the noble Lord travels as a representative of the House of Lords, he would be able to claim an allowance under the first category in the table, so that is already provided for.

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The noble Lord, Lord Sewel, was worried that members of Select Committees might be less willing to travel on committee visits at the rate of £150. I cannot remember exactly what the rate is now, but it is not the full daily rate. It is a reduced rate and is not far different from £150. The new scheme is intended to provide adequate support for Members to contribute to their activities, but if we find that there is a problem with Members being inhibited from travelling on committee visits, we will have to review the system-we are keeping it under review, as I have said. However, it is not the proposal to do so at the moment. In passing, I point out to the noble Lord, Lord Palmer, that the cost of his telephone call to his wife on an overseas visit could be taken from his daily subsistence allowance, which he would receive. I turn to the amendment in the name of the noble Baroness, Lady Harris of Richmond, which would, evidently, reimburse Members for first-class travel regardless of cost. The noble Baroness referred to the Wakeham group's report and the difference between the SSRB's recommendations and those of IPSA. The Wakeham group considered the merits of both sides of the proposals on train travel. It was prepared to accept the SSRB's recommendations but noted the difficulty of verifying whether a Member was working. Noble Lords will recall the arguments about whether one was going to be working on the train and therefore whether one should travel first or second class. The group expressed a preference for the IPSA proposal, which rightly emphasised value for money over class of travel, and the House Committee agreed.

5 pm

Of course, the committee understands the noble Baroness's argument but it does not support her suggestion. Members with senior rail discounts who can book in advance will almost certainly be able to book first-class tickets at a cost lower than the standard open fare and, if they do that, they will be reimbursed in full.

In advance of this debate, I did some research into fares using the internet and with the help of the Travel Office. With the minimum of forward planning, I was able to find first-class fares that were easily lower than the standard open fare, which of course is the maximum that can be reimbursed. For example, I looked at the costs of taking a train from York to London. The standard open return fare is £223. I looked at booking a train at around, say, nine o'clock next Monday, when the House comes back, and returning at about six in the evening on Wednesday, when we rise for the Summer Recess. Whatever the noble Lord, Lord Palmer, says, it is not very difficult to predict that kind of timetable for one's week. We normally rise for the weekend on a Thursday, which is a debating day, and we nearly always know roughly when that is going to be. However, returning to my argument, as I said, the price of a standard open fare is £223, whereas the cost of a first-class return ticket with a senior rail discount is £131.35 and so is easily covered within the allowance. If the noble Baroness is still worried about the minority of Members of this House who are not yet eligible for a senior railcard, even without the senior railcard discount the price of a first-class return is £199-still £24 short of the maximum.

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I should be very happy to share the fruits of my research with the noble Baroness or, indeed, with any other noble Lord, but I also have an assurance from those who work in the Travel Office downstairs that they are very willing to help noble Lords in seeking out the best value for money for their tickets. Of course, in the event that Members cannot find a lower fare, they can decide for themselves whether to travel standard class, which is not as bad as all that-a point made by some noble Lords. However, the key here is not class of travel but securing value for money for the taxpayer. Therefore, I hope that the noble Baroness will not feel that she needs to press her amendment.

The noble Lord, Lord Shaw of Northstead, made a brief point about the cost of parking a car at the local station, saying that it was cheaper to take a taxi. I assure him that this is the kind of detail that we will need to look at in future reviews of the scheme.

The noble Lord, Lord MacKenzie of Culkein, raised the matter of travel by sleeper on trains. I recognise that this can be a problem and we agree to look at it after Christmas, when we will learn what experiences noble Lords have had. It might be quite off-putting for a member of the ordinary general public suddenly to find themselves having to share a sleeper compartment with a noble Lord. One's sympathy might go out to the public in that.

I close by saying that, as indicated in the report, the committee agreed with the Leader of the House that the scheme should be put in place for the lifetime of the present Parliament and not be subject to a review in one year or three years' time. However, as has been said, that does not mean that every detail set out in the report is set in stone for all time. If any of the new elements of the scheme cause problems for individual Members-the sort of problems that the noble Lord, Lord Sewel, raised-the House Committee will of course consider them in the future. I hope that, when it comes to it, noble Lords will support the Motion standing in my name.

Lord Strathclyde: My Lords, this has been an interesting and lively debate in which many noble Lords have participated, and in which a considerable number of other Members have listened carefully to what has been said. The noble Lord, Lord Brabazon of Tara, has already responded with his customary dexterity to those issues that fall within the remit of the House Committee, and I would not seek to add anything other than my full support to his response.

It falls to me to respond to noble Lords who raised issues about the proposed scheme and the provisions in the two resolutions on the Order Paper. I begin by thanking the noble Baroness, Lady Royall of Blaisdon, for her handsome tribute to me. The House needs to understand that none of this would have been possible without a certain amount of co-operation, understanding and agreement among the usual channels, the Convenor of the Cross Benches and my noble friend Lord Wakeham and his group. Nothing has been simple about this. It required a great deal of thought and hard work. Many reports were commissioned and it took a great deal of time to bring us to this moment. I am painfully aware that this scheme does

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not and will not suit everybody but in our combined judgment, it was the best we could possibly do to suit as many Peers as possible.

When the noble Baroness, Lady Royall, said that we searched for a balance and got it about right, that is the right approach. It may be that we got it completely wrong and that there will be a deleterious effect on the attendance of the House. Of course, we will have to come back to review it if such difficulties arise. The Convenor of the Cross Benches was particularly concerned about that.

A number of issues were raised by my noble friend Lord Dholakia and others on a range of detailed issues. In the end, two speeches cast a substantially more cautious note about the direction in which we are going. The first was by the noble Lord, Lord Tomlinson, and the second was by the noble Lord, Lord Sewel. I understand where they are coming from although I had difficulties following entirely the thought processes of the noble Lord, Lord Tomlinson, and what alternative he was suggesting. While he was speaking I read again the words in the Wakeham report. To me it is clear. Paragraph 5.57 states:

"Since the publication of the SSRB'S report, and the appointment of this group, two key developments have taken place which we believe should cause those tasked with putting forward a new scheme to consider whether an alternative approach to that set out in this report ... should be put forward".

Paragraph 5.58 states:

"The first development was the publication of IPSA's proposals for the House of Commons on 29 March 2010",

and the second was,

That was the clear signpost by the Wakeham committee to examine alternative proposals. Indeed Recommendation 17 states:

"We recommend that consideration might also be given to the case for putting in place a simplified allowance".

I know that the noble Lord does not agree with that and we could spend a great deal of time on the process, but let us deal with the substance. I am indebted to the noble Baroness, Lady Symons, for what she said. She almost took the words from my mouth but put it rather better and more elegantly than I would have done. Equity can be viewed in different ways, but the flat-rate scheme that we are proposing-that I am proposing-today treats all noble Lords in exactly the same way. We recognise that Peers have to travel from afar through the travel arrangements. Under the scheme, the noble Lord, Lord Sewel, will be able to claim, for a four-day week, £1,200 per week. I know that that is not for every week, because sometimes the House does not sit, but it is a substantial amount of money. The noble Baroness, Lady Symons, described extremely well the differences between what was proposed by the SSRB and this proposal.

I have one unhappiness with what the noble Lord, Lord Tomlinson, said. That was his accusation that I had said that, broadly, this scheme would be cost-neutral and that he did not think that it would be. It is worth me explaining what I meant. The £300 is 11 per cent less than the current £335.50 maximum. It is 12 per cent less than the £340 maximum suggested by the SSRB. As my noble friend Lord Marlesford pointed out, it saves a considerable bureaucratic and administrative

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cost. My calculation was that if only 20 per cent of Peers claimed the £150 reduced fee, the scheme will cost no more than it currently does.

This time next year, we may or may not be in a position to make that judgment. Of course, it is still open to Peers to charge nothing at all. Extraordinarily-we should talk about this more-last year, 13 per cent of Peers attended the House of Lords, made their contribution and decided not to charge anything. They should be recognised for having done so.

It was about 40 years ago that the expenses scheme was brought in.

Lord Tebbit: I am sorry to interrupt my noble friend, but are his sums on the assumption of an unchanged number of Peers, or do they take into account the enormously increased number of Peers?

Lord Strathclyde: It is entirely typical of my noble friend to ask such an excellent question. My figures were, of course, on a like-for-like basis. He will recognise that phrase from his time in government.

Lord Sewel: I am very grateful to the noble Lord for giving way. Has he any calculation of the effect of moving from £161 a day to £300 a day for those who do not claim the overnight allowance?

Lord Strathclyde: No, my Lords, because I do not know how many of those who claim the £160 amount would claim the £300 amount, so I cannot help the noble Lord with that. It is my view that, on a like-for-like basis, it is broadly cost-neutral. The House is increasing in size, but was in any case, so it was going to cost more. I hope that we will get a worthy and worthwhile contribution from the new Members of this House who come here to play their part.

I was just saying that it is now 40 years since the original expenses scheme was introduced. I have no idea whether it will be another 40 years before we return to the issue. I know that it is the dream of the Deputy Prime Minister-and me-that long before that, we will have a fully reformed House, in which case there will be an entirely different regime.

The resolutions and Motions before us today will allow us to return in October to start afresh with a new scheme of financial assistance for Members. They allow us to put past indiscretions very much behind us. I believe that they will give us the confidence to look forward and concentrate fully on the excellent work that this House does in holding the Government to account. I very much hope that the House will now approve the resolutions before us.

Motion agreed.

House of Lords: Travel Expenses

Motion to Approve

5.15 pm

Moved By Lord Strathclyde

Travel Expenses

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Motion agreed.

House Committee: First Report

Copy of the Report

Motion to Agree

5.16 pm

Moved By The Chairman of Committees

Amendment to the Motion

Tabled by Lord Methuen

Lord Methuen's amendment to the Motion not moved.

Amendment to the Motion

Moved by Baroness Harris of Richmond

Baroness Harris of Richmond: I beg to move and to test the opinion of the House.

The Lord Speaker decided on a show of voices that Baroness Harris of Richmond's amendment to the Motion was disagreed.

Motion agreed.

Consolidated Fund (Appropriation) Bill

First Reading

5.17 pm

The Bill was brought from the Commons, endorsed as a money Bill, and read a first time.

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Employment and Support Allowance (Transitional Provisions, Housing Benefit and Council Tax Benefit) (Existing Awards) Regulations 2010

Copy of the Report

Motion to Take Note

5.17 pm

Moved By Baroness Thomas of Winchester

Baroness Thomas of Winchester: My Lords, these regulations are about transitional arrangements for the gradual migration of people from incapacity benefits-that is, incapacity benefit, severe disablement allowance and income support on the grounds of incapacity-to employment and support allowance, which will begin in October this year with a small trial run and then, from next February, will be rolled out nationally over the next three years. At the outset I should make it clear that I support the direction of travel of these regulations. My reason for drawing them to the attention of the House is simply that they are very important to the lives of many of the most vulnerable in our society and there are questions that need answers-not least because Citizens Advice, in its evidence to the Social Security Advisory Committee, said that the goalposts appear to have shifted since the introduction of ESA. Another good reason for having this debate is that these regulations were in the previous Government's pipeline and we need to know where we are now.

Under the regulations everyone on the old incapacity benefits will be retested by an Atos Healthcare professional for the work capability assessment, after which, according to the revised impact assessment for the regulations, 23 per cent of the cohort are expected to be found fit for work and therefore not entitled to any component of ESA. Another reason I was encouraged to table this take note Motion was the Merit Committee's helpful report-its first report of this Session-and, in particular, Appendix 1, which has a very useful question-and-answer section. The Merits Committee drew attention to these regulations on the grounds of interest to the House. I only wish that they were of interest to more Peers-although I must say that there is a much fuller House now than there usually is when we discuss social security regulations. Although I am extremely pleased to welcome the noble Lord, Lord Knight of Weymouth, to the opposition Front Bench-for these are really his regulations-I wonder where are all the other Peers who might be expected to speak up for the disadvantaged.

We owe a debt of gratitude to the Social Security Advisory Committee, which has published a thoroughgoing report into these regulations. The more I read the committee's report, the more I realised that there was a lot of complication in the system, although I accept that things will eventually be simpler. Even the Explanatory Memorandum says:

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"The introduction of a Transitional Addition to ESA will add some complexity to the benefit system on a short term basis".

It can say that again.

The House will be delighted that I am not going to list all the complications arising from the different permutations of benefits, tax credits and pensions. Nor will I mention various anomalies resulting from migration, some of which the Government have addressed as a result of the SSAC's report. However, I will mention just one complication. Contributory ESA is a taxable benefit, whereas for those who were migrated in 1995 from the old invalidity benefit to incapacity benefit there was an income tax exemption. There is a cohort of about 500,000 claimants who theoretically could find themselves liable to pay tax, although it has not yet been decided by HMRC whether to continue to exempt them. As time goes on, that number will drop.

One glimmer of light is that the Budget has increased the amount of tax-free allowance, so I would imagine that the number of claimants owing tax by the time migration is complete will be small. Perhaps my noble friend can tell us when he expects a ruling on this. However, I accept that income tax rules are not part of the regulations but a consequence of them. One reason why this is important is that, as the Explanatory Memorandum says:

"Ministers have committed on several occasions that no existing incapacity benefit customer will see a cash reduction in their benefit on conversion to ESA".

Turning back to the SSAC's report, I note that the committee is calling for a delay in the rollout of ESA until various conditions are met. The conditions are that there is a stronger evidence base on what works and whether ESA is achieving its aims of helping more people into work; that the new regime for claimants with a health condition has bedded down; that changes have been made to the WCA as a result of the review by the DWP; and, finally, that there is an upturn in the labour market.

Not surprisingly, this Government are even keener than the previous Government to get cracking with the migration. The last thing that they want is to wait any longer, which I understand. However, the SSAC is not the only body warning about trouble ahead if changes are not made. Professor Gregg, the architect of the sanctions regime in the two most recent Welfare Reform Acts, has now added his voice to those who urge the Government to make radical changes to the way that ESA operates before the migration of IB claimants begins. In particular, he criticises the way in which the system leaves large numbers of failed WCA claimants to languish on jobseeker's allowance with no prospect of work. Professor Gregg is reported as saying:

"To start moving people who may have been on incapacity benefit for years straight onto jobseeker's-


This sentiment is echoed by many groups, including Citizens Advice, which gave valuable evidence to the SSAC. It states:

"ESA was welcomed by many as offering support to those who face significant barriers to working, because of an illness or disability. There seems to be considerable confusion, however, as to whether it is effectively offering help to those who may be able

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to work with a lot of support. The goalposts appear to have shifted since its introduction, with the current implication being that if a person is able to work at all, they will not be eligible for ESA even if their illness or disability presents a very significant barrier to their finding work".

It goes on to point out that those who are found to be ineligible for ESA will be moved on to JSA, which offers a lot less support, or perhaps on to no benefits at all, and will therefore be much further away from the help and support they need if they are to return to sustainable work.

In Appendix 1 of the Merits Committee report the department states that claimants on JSA with a health condition may restrict their availability for work provided that the restrictions are "'reasonable' given their condition". It goes on to say that,

Can my noble friend elaborate on whether that additional support is going to be forthcoming?

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