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Successfully combating this piracy infection in the wider Indian Ocean is a much more demanding task. There are 1.5 million square miles to cover-an area larger than the Mediterranean-and ensuring the same protection as in the Gulf of Aden would require hundreds of warships, which no country has today. However, the volume of trade is, of course, much lower and the practical and effective approach being taken by EU-NAVFOR in monitoring pirate action groups and disrupting their efforts has delivered positive results. To date, more than 60 pirate attacks have been successfully disrupted as a result of EU operations. The Government commend these proactive efforts most highly.

I have suggested that, to do much more, the operation needs more assets; indeed, several of your Lordships have reinforced that obvious point. The commanders have said that they have sufficient assets to achieve their mandate, narrowly drawn, but quite rightly they want to do more. The Government have supported actively, including through our leadership in the contact group, the need for specific additional assets. Top of this list has been aerial surveillance assets, about which several of your Lordships made comments, but the Government are also trying to help to provide more oil tankers, more helicopter-capable warships and a greater use of military vessel protection detachments, as I mentioned.

Let me deal with some of these issues more specifically, as noble Lords did in their speeches. On aerial surveillance, France, Germany, Spain, Luxembourg and Sweden are already providing maritime patrol aircraft coverage, but much more would certainly be welcome. The UK, it is true, is no longer able to provide support in this area, but we have been engaged in discussion with partners to provide more and to help in support with basing over this enormous area. I would like to single out the generous support of the Government of Japan, who in addition to sending warships have also deployed three maritime patrol aircraft, which make a vital contribution, supplying data to all the multinational operations. I was asked by my noble friends Lord Selkirk and Lord Avebury about UAVs. The UK has none of these. There are some in the coalition, but I cannot comment on details for security reasons.

The UK is providing oil tanker support, a point that the noble Lord, Lord Sewel, raised, and we are discussing with partners whether they can do more, maximising the time that warships can stay on station. The Government are grateful in particular for the provision by the Government of Saudi Arabia of a tanker. Helicopter-capable ships are also essential, as helicopters are usually the first means of response and

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deterrence. I cite as an example the deployment by the Netherlands of a landing ship rather than a frigate, which has made a substantial contribution.

I want to enlarge on what I said about vessel protection detachments. This means putting marine or other military personnel aboard a vulnerable vessel. They can help to ensure its security without the need for a frigate in close proximity, which, of course, can then free up the frigate for wider counterpiracy duties. There is a growing list of partners keen and willing to make their contribution in this way, in the most part partners who are unable to send warships. The use of VPDs both broadens the coalition and makes best use of the warships deployed-I think that that was the point that my noble and gallant friend Lord Inge rightly and perceptively made.

Several of your Lordships mentioned the insurance industry, which is obviously important as well. There has been constant dialogue, through the contact group, with the insurance industry and the Government welcome the announcement at the working group meeting on 21 October-only the other day-by representatives of the insurance industry that they will require higher premiums for vehicles that are not seen to be complying with best management practice. We look forward to hearing a lot more about the impact of this development in practice, but it clearly makes sense, as it begins to introduce into the whole insurance pattern incentives to get real and to organise properly and in compliance with best management practice, rather than floating through serenely in a cavalier manner. That must be an advance.

In its report, the committee highlighted the fact that the World Food Programme's use of small slow ships contravened the advice given to the shipping industry-a point that the noble Lord, Lord Sewel, and others raised. The programme has a dilemma: it wishes to maximise the food that it delivers, but the bigger, better and more modern the ships it has to charter, the more money goes on the ships rather than on the food. It is wrong, though, for military support to be unduly skewed to the protection of these deliveries if they can be done by other, better means. Negotiations are going on between the military operations, the United Nations and the World Food Programme to do better. I welcome the fact that these discussions include, once again, the greater use of vessel protection detachments. I am also pleased by discussions with other multinational and national operations to enable them to share the burden of these duties and therefore enable EU-NAVFOR to pursue its much wider mandate. Indeed, I welcome the fact that convoys have now been carried out by Russian ships, with NATO interests helping in this area, too, again reinforcing the impressive nature, almost unmatched in recent times, maybe even in wartime, of the co-ordination going on between the different navies and naval detachments of the world.

I turn to the legal issues that were raised by several noble Lords. I make it clear that the UK will always prosecute pirates wherever there is a chance of success and I know that that is also the intent of the EU-NAVFOR naval commanders. We are grateful for the support of industry in helping to provide the witnesses who are essential to prosecute these cases.

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On a point that the noble Earl, Lord Sandwich, raised, the UK and the EU are also providing technical and financial support to Kenya, the Seychelles, Somalia and soon, I hope, others, in order to support work in developing courts and prisons to accept more pirates. I suppose that in the longer term one would look to places that are relatively calm, such as Somaliland-in contrast to Somalia-for developments of that kind.

Mr Ban Ki-Moon, Secretary-General of the United Nations, has talked about some international facilities such as courts and prisons for dealing with pirates. Negotiations on an EU handover agreement with Mauritius, which the noble Lord, Lord Anderson, asked about, are now at an advanced stage and I expect renewed discussions to begin with Tanzania shortly. Of course there is a question over whether these countries have the capacity for these things-some concerns were expressed in Kenya-but nevertheless prosecutions have been carried out. I think that some are going on while I stand here. There are currently over 130 pirates in prison, of whom to date 54 have been successfully prosecuted and convicted, following the handover from counterpiracy operations. The eight pirates detained by HMS Cumberland in November 2008-that is a couple of years ago-are now serving 20 years in Kenyan prisons for piracy. That is a deterrent.

I turn to the other major theme of the debate, spoken about perceptively by many of your Lordships, which is embraced in the words "root causes". There is wide acceptance that piracy off Somalia will not be stopped until the problems of lawlessness and instability within Somalia are addressed, a point correctly made by the noble Lord, Lord Alton, my noble friend Lord Avebury, the noble Lord, Lord Williams, and the noble Earl, Lord Sandwich. Foreign Office and DfID ministerial colleagues are working with African leaders and Foreign Ministers to ensure that a long-term solution for Somalia is found. That is, naturally, what one would say, but of course it embraces a huge challenge. It is important not just to stop piracy-that is not all that we are talking about-but to curb the much wider threats that emanate from Somalia towards British interests. Most notably, that includes terrorism-al-Qaeda-related, no doubt-but also includes the trafficking of people, weapons and drugs, and threatening the destabilisation of the wider region.

As the noble Lord, Lord Williams, said in a very interesting contribution, al-Shabaab may well be benefiting from that. Certainly, al-Shabaab and al-Qaeda appear to have links. Then again, such is the complexity of the Somali situation that al-Shabaab may actually be working against the pirates. There was one report that they have cleared out the port of Eyl-for the benefit of Hansard, that is spelt E Y L-which was a pirate nest and from which the pirates have now fled. It is a complicated situation, but what can definitely be said is that many of these evil developments, including terrorism, are flourishing in that unsettled area.

Finding solutions inside Somalia and in the region is therefore essential. The UK has played an important role in mapping a way forward through its leadership of the contact group working group on capability development. The contact group has agreed a needs assessment report, assembled by a UK-led team, making

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clear the key priorities for action. This is the outline of the plan for which many noble Lords today have rightly called. The Government also welcome the results of the Mauritius regional ministerial meeting on maritime security on 7 October, which agreed a strategy and action plan broadly consistent with the contact group assessment. Inside Somalia, it will be important to continue the work to support the development of good governance through the transitional federal Government.

I know that the time limit is being pointed to, but there have been so many fascinating points that it would be impertinent not to refer to some of them. I move into the final phase by saying that it is obviously important to support economic development in coastal regions and to support community and religious leaders in continuing to speak out against the pirates, saying that what they are doing not only is morally wrong, obviously, but is distorting and destroying the economies of many coastal areas and delaying the establishment of law and order. The regional action plan agreed recently includes a request to the Intergovernmental Authority on Development to take forward work inside Somalia to address piracy at its roots. This is correct and welcome.

I shall talk briefly about tackling financial flows, where the money goes and so on. I am afraid that the money disappears into lavish living-a Mercedes, new weapons, drugs and all sorts of other things-but we are working closely with international partners, as well as supporting the work of Interpol, Europol, the UN Office on Drugs and Crime and the Financial Action Task Force towards the tracing and recovery of the illicit gains of piracy. We are also working with regional partners to develop effective anti-money-laundering legislation and action to enhance our ability to prosecute the financiers of piracy.

The UK pays no ransom-that is absolutely against UK government policy-and we strongly counsel third parties against doing so. Obviously, though, if they are foreigners or non-British nationals, we do not have any direct influence.

The Government agree with the committee's report of the continuing high value of Operation Atalanta. The Foreign Secretary has agreed with his European counterparts that, subject to scrutiny requirements of both Houses, the operation should be extended for a further two years, with Northwood continuing to act as the operation HQ and the UK continuing to provide the commander. The Government hope that this can shortly be agreed. The task ahead is tough. This is a serious danger globally and to our national interest and we intend to pursue it with all possible vigour.

6.29 pm

Lord Teverson: My Lords, I will make very short concluding remarks as I am aware that in the following debate noble Lords have only two minutes each in which to speak and I do not want to reduce that even further.

I am sure that the committee very much welcomes the Minister's statement that the UK will always prosecute pirates. That is one of the core issues around this

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risk-reward ratio. I will refer only to the speech of my noble friend Lord Hamilton, which I welcomed very much. The risk-reward ratio is an important area. Many of us feel that we should not just stand by and pay ransoms for hostages held by pirates, but neither would I want to be a member of a ship's crew, or a relation of one, when that policy changed. That is the difficulty in making decisions in this area. I am sure that the committee will continue to look at this matter, track it and ask the Government and the European Union questions about it. All that remains to me to do is to thank the committee's staff: Kathryn Colvin, Oliver Fox and Bina Sudra.

Motion agreed.

Parliament: Elected House of Lords

Question for Short Debate

6.30 pm

Asked By Lord Grocott

Lord Grocott: My Lords, this Question seeks the Government's view on the effect of an elected House of Lords on the relationship between the two Houses of Parliament. I hope it does not sound presumptuous of me to say that I think this is a matter of fundamental constitutional importance, albeit that we have only an hour and a half in which to debate it. It needs to be addressed, not least because the present relationship between the two Houses is the right one and works very well. That is not just my judgment; it is shared by a committee of this House, the Cunningham committee, which reported a few years ago and whose report was adopted unanimously by both Houses of Parliament. Therefore, if my judgment is not considered sufficiently strong, I hope I can persuade the House that that committee's report is conclusive.

The basis of the relationship could not be simpler; the primacy of the Commons is secured by the fact that it is elected and we are not. That is the conclusion of the report, which explains the current relationship. My argument is very simple and I shall try to develop it. An elected upper Chamber-whatever you call it-would fundamentally change that relationship for the worse. This question has been disgracefully neglected or ignored by the previous and present Governments. Every time I have attempted to raise it on various occasions it has been dismissed as something we should not spend too much time worrying about.

First, I wish to look at the key arguments of those who say that this does not constitute a major problem, that the two Houses will be fine after any reorganisation of the House of Lords and that we are worrying unnecessarily. They use two arguments most frequently. The first is that the Parliament Acts are supposed to be the absolute guarantor of the supremacy of the Commons over the Lords because in the last resort the Commons can insist on its legislation going through. People who recite that mantra do not know, or do not

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want to know, anything at all about the practical day in, day out consequences of the ways in which the two Houses relate to one another, which is demonstrated most vividly when ping-pong occurs. That is rather a dismissive title for a fundamentally important part of our constitution but we all know what I am talking about. I recall that ping-pong between the two Houses has occurred six, seven or eight times, but it always concludes in the same way in my experience, which is that the Commons defers to the Lords.

Noble Lords: Oh!

Lord Grocott: I am sorry. I should have said that the Lords defers to the Commons. I remind the House of a much admired Peer whom we remember with great affection, the late Lord Kingsland, who took many Bills through the House that were subject to ping-pong. On one occasion when the Lords finally deferred to the Commons, he said to the House that this procedure would not happen if the House of Lords was elected. That is obvious to me but I wished to cite a higher authority than myself to demonstrate that point. Frankly, it would be bound to be the case. People who say that there is nothing to worry about do not even begin to imagine what it would be like to stand as a senator for this House-I refer to senators for the sake of argument-and say to one's electorate, "I very strongly oppose the poll tax", or, "I very strongly oppose the imposition of an identity card system and will do so as strongly as I can as a senator in the House of Lords but ultimately I will stop opposing it if the Commons insists". That would be a very peculiar plea to put to your electorate when you are hoping to be elected to this House.

I wish to dismiss the other common argument reasonably quickly: that is, when people say that there is nothing to worry about because other parliaments across the world have no difficulty whatever in having two elected Houses. The answer to that question is so obvious that I am almost embarrassed to repeat it; they started with a blank sheet of paper. We have a House with existing powers, which in most respects are identical to those of the House of Commons. That is the difference between us and other parliaments. If we were starting with a blank sheet of paper, of course we could define what the Lords does and what the Commons does and away we go-there would be no problem. It clearly would be a problem if you had an elected House taking over the powers that we enjoy but which-this is crucial-we choose not to enforce. That is the difference between the present position and the one that would apply if this House were elected.

I am more than half way through my time, so I shall recount quickly what I think are the inevitable, predictable consequences for the relationship between the two Houses of an elected second Chamber. First, there would be a constant battle for legitimacy between the two Houses and constant arguments about which represented the most authoritative voice of the British people. Would noble Lords on the Lib Dem Benches who are so passionately in favour of proportional representation-we are told that we will have proportional representation in the upper House-declare that an upper House elected on the basis of proportional

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representation is not as legitimate as the other House down the Corridor, which is elected on first past the post? Of course they would not say that. There would be endless debates and arguments about which was the most legitimate Chamber.

The second inevitable consequence would be that this House would demand more powers. I do not know of any House anywhere, whether it is the Scottish Parliament, the Welsh Assembly or the European Parliament, where people, once they are elected and in situ, do not demand more, not fewer, powers. I say that to people who argue that the only answer is to have a written constitution. I ask them whether they can really imagine sitting down and writing a constitution, the first few paragraphs of which would have to state, "We are now going to have an elected upper House instead of the appointed upper House, but we think it is important to start by reducing its powers". That would be quite a difficult argument to get across in any rational debate.

I wish to ask two more questions to which I do not know the answers, but perhaps brainy people in the Deputy Prime Minister's Constitution Unit will have worked them out. In a situation in which there are two elected Houses and a Motion of no confidence in the Government, what is to stop both the Houses having Motions of no confidence in the Government? What happens if one says, "We have confidence in the Government", but the other says that it does not? I should like to know the answer to that question. I do not know what it is. I should have mentioned earlier that, if this were an elected House, there is no question whatever of its having far more Secretaries of State. There is no reason why any of the key offices of state should not be held by Members of this House, except, I suppose, that of the Chancellor of the Exchequer. In the 19th century, the Prime Minister sat in this House, when it was an hereditary House and a Prime Minister could do so again if the House were fully elected.

We have had the Deputy Prime Minister, the Secretary of State for Business and the Secretary of State for Transport in this House. What is to stop this elected House having a roughly coincident number of Secretaries of State, or even more, than the other House? The question about the votes of confidence is not mischievous, but it would be an odd thing if this House had passed a Motion of no confidence in the Government, and half the members of the Government were in it, while the other House thought the Government were wonderful. Even more seriously-this is not frivolous-we have now decided that it is pretty important for the elected House of Commons to make a judgment before our troops are committed in battle. If one House, democratically elected, said yes it is right to go ahead, and the other House, also democratically elected, said no it is not, I would not like to be the lawyer to work that one out. Those are the kinds of questions, when there are two elected Houses with equally democratic legitimacy, that simply have not been sensibly addressed.

The only reason why I wanted to raise this issue today is that I believe it is the absolute duty of the Government to think not only about whether the House of Lords should be elected or not elected, but about the consequences not just for the House of

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Lords but for the House of Commons, for MPs' relations with their constituents, and for relations between the two Houses. That needs to be addressed before any fundamental change is made. If this debate makes a small contribution towards that, it will be time well spent.

6.41 pm

Lord Howe of Aberavon: My Lords, three questions ought to be answered in light of the prospect of the arrival of elected Members in this House. First, will any fault be corrected thereby? Secondly, will any improvement be achieved thereby? Both those questions have so far secured only absolutely void answers. On the contrary, virtually all the judgments on the performance of this House have been strongly positive. The House will remember the Jay White Paper-as I call it-in 1999, which stated:

"The most valued features of the present House",

are summarised by the following epithets:

More important than that, perhaps, the fifth report of the Commons Public Administration Select Committee-the Wright committee-stresses the considerable virtues that should be preserved, and sets the objective of building upon the strength of the present Chamber.

I come to the third question: is there therefore any reason for change in the direction of elected Members? Only one answer is actually offered by any of the champions of change, to the effect that the present membership of the Lords lacks legitimacy, on the assumed basis that only election can confer true legitimacy. This presumption sits uneasily alongside the Wright committee finding that the principal cause of today's widespread public disillusionment with our political system is the virtually untrammelled control by the Executive of the elected House. Hence the two conclusions of the Wright committee: first, that there is a need to ensure that the dominance of Parliament by the Executive, including the political party machines, is reduced, not increased; secondly, that the second Chamber must be neither rival nor replica but genuinely complementary to the Commons and therefore as different as possible. On that basis, it surely cannot make sense that the most fundamental change proposed for the second Chamber-the introduction of elected Members-is the most likely to extend the influence of the elective dictatorship that so manifestly provokes disenchantment with the present elected House.

The Prime Minister said a few years ago that we keep what is good and we change what needs to be changed. Let him be sure that we keep what is good.

6.44 pm

Lord Stevenson of Balmacara: My Lords, I thank my noble friend Lord Grocott for securing this important debate. Sadly, I cannot go all the way with the implications behind some of the questions he was asking, which seemed to me to be extremely leading towards a particular set of conclusions. I think there are answers to some of the points he raised. I particularly want to stress that the problem with having a legislature that is not elected is that it is simply both unacceptable in principle and unsustainable in practice.

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There are three answers to the question that is implied in the Question. First, relations between the Houses will certainly be affected by the way in which the House is elected. It surely must be common ground that the way in which the House is elected will determine its legitimacy, perhaps not just in absolute terms but in the way in which that legitimacy is perceived. That may be key to whether we have the authority to act when we come to do so.

Secondly, relations will be affected by the powers that are allocated to the House after it becomes an elected House, and not necessarily a straight continuation of them. My noble friend referred to the Parliament Acts of 1911 and 1949. According to Professor Vernon Bogdanor and others, this has established a unicameral system in this country in the sense that a determined Government can always get their business through, irrespective of the wishes of this House, except in two very narrow cases: extending the term of the elected House, and the dismissal of judges. On the other hand, as we learnt to a considerable extent yesterday, the Parliament Acts do not affect secondary legislation, so this House has powers over those. In practice, although it is a restraint, we really have not used the powers that are allocated to us. It will be interesting to see whether they will develop in time. Between 1911 and 1949, the Parliament Act was invoked three times; since 1949, it has been applied only four times.

Thirdly, relations should not be affected in the areas in which the House has earned a fantastic reputation-I have certainly enjoyed in my short time here the sort of debates we have just experienced. Committee work seems to be the envy of the world. It is one of the most extraordinary features of this House when you first come into it, it goes on virtually unnoticed and yet is of terrific quality, and in the specialist debates often arising from that committee work we hear contributions from noble Lords on all sides of the House that are of the highest quality. Indeed, that third function-in addition to legislative scrutiny and efficient government-is what really sets out this House as different.

In closing, I suggest simply that we might think about separating out the functions along the lines suggested by my noble friend Lord Maclennan of Rogart and the late Lord Bingham, who made proposals for a council of state that could deal with issues that are separate from the legislative processes we have been talking about.

6.47 pm

Lord Tyler: My Lords, I am a great fan of the noble Lord, Lord Grocott, but I really think he ought to be more frank about his motives. This is going to be seen to be yet another attempt to delay long-overdue reform. The idea that somehow or other these issues have not been properly examined in the past is frankly nonsense. They were constantly and exhaustively examined.

In 2002, the Joint Committee on House of Lords Reform envisaged,

That is clear enough.

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Then there was the Joint Committee on Conventions-the Cunningham committee-which has been referred to and which I also sat on, which looked at those conventions and spelled them out very carefully. Under the leadership of the noble Lord, Lord Cunningham, we rejected any idea that there should be a cut in its powers and set out very clearly the present relationship. It, too, could not be clearer.

Even more important, the Government responded to that report. I know I have the support of the noble Lord, Lord Grocott, in this contention because it was his Government who said in response to the Committee's report:

that is, his Government-

I am sure that the noble Lord, Lord Grocott-who was Chief Whip at the time-would have signed off on that particular point.

The truth is that the relative responsibilities and roles of the two Houses have been constantly re-examined. Yes it is true that when we get the draft Bill in the new year and there is again pre-legislative scrutiny, we will have to face up to the fact that all three parties have committed themselves to thoroughgoing democratic reform of your Lordships' House. If we believe in the primacy of the Commons-and I know the noble Lord, Lord Grocott, does-that cross-party consensus must surely be extremely important. Our challenge as a House is to look at that draft Bill when it is published and do our best to make sure that it produces a new House that is worthy of its predecessor.

6.49 pm

The Lord Bishop of Bath and Wells: My Lords, the issue of relationships between the two Houses is important, whether or not there is to be an elected upper Chamber. Election to the House of Lords has its attractions, but election to the upper House, whether 100 per cent or less would involve considerable constitutional upheaval, for which we must ask: are we ready? We might equally ask: how would it serve the people better? The general public understand something of their MP; would they so easily identify with their Peer?

Four areas concern me. First, on the potential for conflict between the two Houses, we do not have the kind of situation that exists, for example, in the United States of America, where the major institutions of government are held by different parties for a time. However, as President Mitterand once said when describing the relationship between a socialist President with a right-wing parliament, cohabitation does not make for easy government. Here, two elected bodies of the same political persuasion could be disastrous without parliamentary checks and balances. Equally, two elected bodies of different persuasions could deadlock the country, even if Parliaments had fixed terms.

Secondly, I am concerned about the cost. In the current climate of recession and in the wake of the expenses scandal, is this a wise time to increase spending on Parliament?

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Thirdly, while the present system undoubtedly has faults, your Lordships' Chamber provides space for scrutiny of legislation; and the range of experience in the present Chamber provides some very expert scrutiny indeed.

Finally, a fully elected House of Lords would inevitably contain more active politicians whose loyalty to the Government or Opposition would, without doubt, prevent the kind of dispassionate and well informed testing of legislation that is one of the features of our present system. If the House is to be reformed, we need in the first instance to set out its powers and codify the relationship it should have with the Commons. Only then can we decide who should sit within the reformed upper House.

6.51 pm

Baroness Shephard of Northwold: My Lords, I congratulate the noble Lord, Lord Grocott, on securing this debate, which strikes at the heart of reform of this House. His remarks reinforce the point, so well understood in this House, that our legislative structure rests on the fact that we have two Houses in our Parliament and their work is complementary, not competitive. It follows, therefore, that reform of one of the Houses cannot be undertaken without considering the impact on the other; and it seems to me that we are in danger of doing just that.

It seems equally obvious that if we have two elected Houses, instead of one, there will at some point be a struggle between them for electoral supremacy, as the noble Lord said, along the lines of which kind of elected Member is more accountable than the other, and which House has the greater legitimacy. I am not sure whether such a struggle will enhance the quality of law-making, but it certainly will not enhance relations between the Houses.

I can well understand, as we all can, that the easy answer to the question, "Should all legislators be elected?" is, "Yes, of course". However, the next questions are not quite so easy. For example, would that make the legislative process better or more transparent? What happens if the Houses clash? Or even-we really need to face up to this-whether there is an unquenchable desire on the part of the public for more elected politicians. However, these questions will have to be tackled if there is to be any kind of credible attempt at reform of the House of Lords.

After those questions, we should ask this one: if we proceed to reform this House without a thoroughgoing examination of all our process in both Houses, will the result be a more accountable, and above all-as the right reverend Prelate mentioned, at man-in-the-street level-a more comprehensible system of government? That is because, in comprehensibility lies accountability.

6.54 pm

Lord Sewel: My Lords, my earlier speech was on Somali pirates; my second is on reform of your Lordships' House. There is no connection.

With this question we come to the nub of the issue which was highlighted immediately. It is quite simply: how can you have an elected second Chamber without

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fundamentally changing the relationship between the two Houses? The primacy of the House of Commons rests on its monopoly of democratic legitimacy. That principle underpins the restrictions on the House of Lords' powers brought in by the Parliament Act 1911. You have that Act only because you accept that principle.

Give the second Chamber democratic authority and you change everything-not immediately, but inevitably. The elected second Chamber will become more and more assertive. Indeed, if elected by STV, as my noble friend Lord Grocott said, some will argue that the second Chamber has greater legitimacy than a House of Commons elected on first past the post or even AV-God forbid. Create a legislature that has democratic authority, and it will push for more and more power. You do not have to have a crystal ball for this; look at what is happening in Scotland or in Wales. We are promised a Calman Bill, we have already done something for Wales, and there is to be a referendum on more powers for the Welsh Assembly.

The previous Government thought that they could get out of this issue in their draft Bill, which admittedly received limited circulation, by including a clause which stated that the powers and-listen to this-the conventions of the House of Lords would not be changed. That is simply not good enough. It will not work because it lacks any underpinning principle. If you are doing constitutional reform, you actually need an informing and uniting underlying principle, and there is not one in this debate.

6.56 pm

Baroness Howe of Idlicote: My Lords, what is particularly frustrating in trying to dissuade the Government from implementing their ill-conceived plans to legislate for a fully or partially elected second Chamber is that your Lordships still do not have a clear idea of the number of Members envisaged for it or, indeed, the method of election that will be proposed.

What is equally confusing is why on earth the coalition Government, who are rightly or wrongly determined to achieve significant changes to the Commons covering the size and boundaries of parliamentary constituencies, should at the same time want to take on the replacement of the House of Lords with a second Chamber that will inevitably become a serious challenge to the supremacy of the Commons. Surely it would be more logical to deal with the Commons, and only then turn to trying to achieve whatever changes to the House of Lords make sense.

It is of course acknowledged that some changes are needed. The Steel Bill proposes to make the House of Lords Appointments Commission statutory and end replacing hereditary Peers, for example. However, to plan simultaneously for a completely new Chamber, either wholly or mainly elected, is surely asking for trouble.

Perhaps, as one of the first tranche of 14 of that new breed of life Peers selected by the Appointments Commission, I can offer a relevant insight into how things might develop. Inevitably at first, we sought and took the advice of the established Cross-Benchers that, like them, we should stick to those issues where

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we had the expertise and experience for which we had been selected. It did not stay like that for long, and we became more interested in wider and more politically sensitive issues. We gained confidence and wanted to play a more active part. Our contributions and votes have therefore played a growing part in the decisions made on amendments to Bills in your Lordships' House.

Against that background, consider just how, in a so-called reformed House, with Members who claim they are more legitimate because they are elected, this new wave of elected Members would be likely to behave. Even if they have originally accepted a Commons decision that the second Chamber, elected or not, should have only the same or broadly similar powers as your Lordships' House possesses today, how long will that restraint last before a challenge is mounted? The conflict will assuredly become a battle between two tribes, each with an equal claim to legitimacy. What, if anything, will our so-called mother of Parliaments have gained from that?

Lastly, we should remember that the Prime Minister has forbidden MPs to continue with any job or profession outside their parliamentary role. In these circumstances, how can it make any kind of sense to do away with an appointed House, containing as it does this incredible range of experience and expertise that has contributed effectively to our legislative process?

To give one recent example of that, the noble Lord, Lord Puttnam-

Noble Lords: No!

6.59 pm

Earl Ferrers: My Lords, I am grateful to the noble Lord, Lord Grocott, for introducing this debate, because it seems elementary not to realise the huge problems that there will be between the two Houses if your Lordships' House becomes an elected Chamber. It seems obvious.

People-particularly our dear friends the Liberal Democrats-always say, "Reform the House of Lords". It is as if they feel they are in the sixth form and have been told to write an essay on how you make a democratic Parliament and the answer is "Two elected Chambers". Of course that may be so, but as the noble Lord, Lord Grocott, said, we are not starting from there. That is what the dear Liberal Democrats do not ever seem to understand; we are not starting from scratch. We have inherited a constitution, which is the envy of all other countries, and it works. It works. Yet we are now out to try to destroy it. It is a great privilege. It has worked for 600 years and the answer is that you want to build on it, and not destroy it. Whatever Members of another place may say about wanting an elected second Chamber, their successors will hate it because there will be another Chamber saying, "We have been elected too, we have got just as much right as you have to have our views prevail and our votes too". Are people going to offer themselves for election to a House which has the powers that we have? The answer is no. The power between the Houses is finite and if your Lordships' House gets any more powers, another place will have to give up some of their powers. Is it likely to do that? No.

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How do you get an elected Chamber? The first thing is to throw out all the Members of the present Chamber. You cannot get the elected ones in as well. I see my noble friend Lord Attlee is getting all bouncy. The next thing is you are going to have to pay them to leave. That is grotesque. I suggest to your Lordships that it is far better to retain what we have got and build on it-not destroy it.

7.01 pm

Baroness Kennedy of The Shaws: My Lords, I chaired the Power inquiry into our democracy. We took evidence around the country and a high percentage of the public thought that the House of Lords should be reformed. There were many things about the current House that people liked, especially our role over the last few decades-not just with the previous Government, but with the one before-in holding the Government to account and challenging policies which might have slid through without sufficient scrutiny. However, they still wanted this House to be elected. Here is the rub. When you asked them what sort of person they wanted to see in this House, they said independent-minded people with expertise. That is the problem. They did not want it to be full of people embedded in party-political machines; they wanted people who were going to contribute some wisdom-perhaps a tall order. They wanted a House that took the long view and was not just looking over its shoulder. They were making a high demand.

We ultimately made a recommendation. It was because of the concern of the public to square that circle that we recommended that there should be a 70 per cent elected and a 30 per cent appointed element. Many have sought to complain about a hybrid House but in fact that was what we recommended. We thought that retaining a cohort of appointed independents would help to maintain the culture of this House as a forum of independents, as a forum that protected the constitution and would guard future generations' interest when there was a rush to legislation because of demands, particularly of the tabloid press.

You cannot imagine what it feels like to people outside to hear what sounds like self-interest when we all say that we should be left as we are, that we are wonderful. It really is too self-congratulatory. For this reason, I suggest that one of the recommendations that we should be making is that there should be a role for the public in considering the way forward. Why should parliamentarians be the ones to decide how they should be reformed? There should be a deliberative poll where you have a cross-section of the public and you organise it in a way that has been done in other jurisdictions-in Canada and elsewhere. That cross-section of the public would hear evidence about the role of this House and how it might affect the Commons. It may be that the public would opt for little or no change, because they would understand how you all worked. I suggest that that should be done.

We should be very careful in constitutional change, but caution is not a recipe for resisting change. It is important that we recognise that there is a desire out there for this House to change; we should go at this with some care, but we should listen to the public and not just our own voices.

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7.05 pm

Lord Maclennan of Rogart: My Lords, the noble Lord, Lord Grocott, made points which I hope will be considered by those who are drafting the legislation that we are going to see in the early new year. But he is somewhat too complacent in suggesting that our constitution could not be improved in the balance of duties and responsibilities which are discharged by the two Houses. The overriding criticism of the constitutional arrangements we have is that our Executive is too dominant. That is largely because the Government consist of those who are Members of the House of Commons, predominantly, and they are too acquiescent in what the Government put forward.

The House of Commons, furthermore, is seriously overburdened. It has grown in the number of committees that it has established, which were sensible in the form of departmental select committees under the St John Stevas reforms. There should be a proper distribution of functions between the two Houses of Parliament. The Commons should have primacy in respect of money Bills, but why should this House not have primacy in respect of the ratification of treaties? That is not something which exercises a constituency Member of Parliament as much as other things closer to home.

All responsible Ministers should be required to account to the relevant Chamber. That a member of the Government is in one or other Chamber seems to me to be old-fashioned and something that deserves to be changed. The second Chamber could have a function which is predominantly bringing the regional attitudes of the country to bear on legislation. If we want to have scrutiny and expertise of the kind that this House is so distinguished at delivering, then let us think of separation; let us think of a council of state that could have such appointed people without the power to block or amend legislation, but which, because of its composition, would be listened to.

7.07 pm

Lord Norton of Louth: My Lords, if there is a change in the composition of this House with Members being elected, then that has consequences for the power of the House-a fact recognised by those responsible for the passage of the Parliament Bill in 1911. A Cabinet committee in 1907 rejected a reform of the composition of the House because it accepted that this would strengthen the House of Lords against the Commons. As Chris Ballinger notes in a forthcoming article on the Parliament Act 1911, members of the Cabinet were reluctant to consider going further. As he writes:

"Any reform to composition would have augmented the power of the Upper House, and thereby its ability to impede the enactment of the social welfare policies to which the Liberals had become committed."

I also remind the House of the resolution passed by the House of Commons on 26 June 1907, which stated that,

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In other words, the supremacy of the Commons rested on its Members being the elected representatives of the people-that is what they were asserting. There were no elected representatives of the people in the other Chamber. Once one has Members elected to the second Chamber, then the rationale for the Parliament Act disappears. The Government may seek to maintain it, but they will have problems maintaining their claims for its legitimacy. Its foundations will have been kicked away.

7.09 pm

Lord Cobbold: My Lords, I am one of those who feels strongly that the proposal to turn the present House of Lords into a wholly or partly elected Chamber is not reform but abolition. It is the abolition of an institution that has a unique history and performs a valuable function in the scrutiny of new legislation, while at the same time recognising the supremacy of the House of Commons. An elected senate would be bound to challenge that supremacy. The strength of the House of Lords is the experience and expertise of its Members in most walks of life. They have made a mark in life and would be reluctant to stand for election. A new senate would be more party political and considerably more expensive.

Another question is whether the public are ready for yet another election. The Deputy Prime Minister said in his Statement on 5 July that it is important to avoid asking people to keep traipsing to the ballot box. There is room for some reform measures-for example, those set out in the Bill of the noble Lord, Lord Steel-but I do not believe that an elected Chamber would improve relations between the two Houses.

7.10 pm

Baroness Noakes: My Lords, when we speed-debated House of Lords reform last month, I said that the purpose of your Lordships' House was to protect the public interest. While I am sure that the public interest will dominate whether the House is elected or appointed, it is inevitable that an elected House will have a different interpretation of how assertive it should be against the other place in order to protect the public interest.

The noble Lord, Lord Grocott, raised the primacy of the other place. Clearly, if different parties dominate each elected House, as will be entirely possible, each House will claim a different democratic mandate, and there will inevitably be less willingness to give way on legislation. The game of bluff known as ping-pong will become more like a war game. While the Parliament Act will remain the ultimate weapon to protect the primacy of the other place, it is a blunt weapon. We saw with the Hunting Act what a mess can be made when the Parliament Act is used.

By convention, we do not vote down statutory instruments. However, as recently as 1994, your Lordships' House reaffirmed its power to do so, as set out in the Companion. Why should an elected upper House be content with non-fatal Motions on secondary legislation that is poorly drafted, insufficiently consulted on or just plain wrong? We must expect more fatal Motions.

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The coalition Government need to wise up to the fact that creating a wholly or mainly elected House of Lords is full of problems. My noble friend knows that the Government will have huge difficulty in getting legislation for an elected House through your Lordships' House. More importantly, the Government need to recognise that they are playing a dangerous game with the constitutional balance between the two Houses, for which history may well condemn them.

7.12 pm

Lord Wills: My Lords, I congratulate my noble friend Lord Grocott on securing this debate. I am afraid that I agree with very few of his views on the issue, but his continuing focus on it should be welcomed by all of us who care about our constitutional arrangements. He is right about its importance, and everyone should care about this because it concerns the very distribution of power in our country.

I recognise the force of my noble friend's arguments. It is logical to assume that a democratically elected second Chamber would acquire greater legitimacy and would challenge the pre-eminence of the House of Commons, which could lead to all sorts of undesirable outcomes. However, when the argument is scrutinised it becomes a little less compelling. It is predicated on the assumption that this House as currently constituted knows its place and seeks only-and meekly-to tweak legislation in order to improve it. This is not exactly so. The power of this House to delay, especially at the end of a Parliament, can lead to significant legislation-as all noble Lords have seen-being abandoned by the democratically elected Government of the day.

Conflict between the two Chambers is nothing new. However, for those who worry-and I understand their worry-that the current tension between the two Chambers will become fiercer and less reconcilable if this House is elected, comfort is available. I agree that the pre-eminence of the House of Commons is essential, but retaining appointment for this House is not the only way of securing this. An indispensable part of any democratic reform of this House must be the codification of its functions, to put beyond doubt the respective roles of the two Chambers and their relationship. Nor would such a codification-as my noble friend Lord Grocott suggested-reduce the powers of this House. It could simply entrench its current powers, which so many noble Lords have celebrated today.

I conclude with a plea to the Minister that I have already made to his noble friend Lord McNally. Will he reconvene the working group of experts that the previous Government set up but never got under way, to look at the codification of this House and report to the Government within three months on how such a codification of functions might be achieved?

7.14 pm

Lord Eden of Winton: My Lords, on the issue of what is in my view incorrectly referred to as reform of the House of Lords, a collective madness seems to have taken hold of the leadership of our three main political parties. It appears bent on destroying what is here, which is good, and on replacing it with a variant of the Commons, which would be bad. Democratic legitimacy is the parrot cry. However, conflict would

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arise and both of our much-prized parliamentary institutions would be damaged. I emphasise the example given by my noble friend Lord Norton. The 1911 Act limits the blocking powers of the upper House on the grounds that the unelected House should not prevail over the elected one. However, if both Houses are elected, there will presumably be pressure to repeal the Act, and consequences will inevitably flow from that.

What could be more legitimate than the wide range of expertise and experience on which this House is now able to draw? What could be more in the interests of the people in our democracy than having a Chamber of Parliament able to hold the Government of the day to account and competent to scrutinise and revise complex pieces of legislation? Those qualities that we now possess are too precious to lose.

7.16 pm

Lord Steel of Aikwood: My Lords, it is time we were more frank about the vocabulary that we use in dealing with the future of the upper House. There seem to be two schools of thought. One is in favour of reform and the other is in favour of abolition. I say straightaway that if the committee of both Houses comes up with a proposal for a small, elected senate of, say, 200 Members, elected by proportional representation, not first past the post or party lists, with no constituency responsibilities, representing the devolved nations and the great regions of England, I will happily go along with that, because it would lead us towards a written federal constitution of the kind that has long been the policy of my party. However, my fear is that that is not what we will be offered. We will be offered some kind of fudge.

The phrase "wholly or mainly elected" has been co-opted from the previous Government. The words "or mainly" suggest that they have some doubts about whether they are doing the right thing and think that perhaps they should keep some of the expertise that is here already. However, simply adding nominated Members because they fear they may be making a mistake would itself be a fundamental mistake. Both the Labour and Conservative Parties believe in first past the post elections. That, too, would be a mistake.

I will repeat something I said before in this House. When I became Presiding Officer of the Scottish Parliament, I presided over a system that we had legislated for in which we had regional elected Members in addition to constituency Members. I spent a lot of my time sorting out differences, both in the Chamber and in my office, between Members who were elected from the regions and constituency Members-usually of different political parties, but even sometimes of the same party. The minute we have elected Members here, trespassing on the territory of constituency Members of the House of Commons, we will be in real difficulty, and the Commons will come to rue the day that it agreed to an elected upper Chamber.

7.18 pm

Lord Stoddart of Swindon: My Lords, it is completely naive to think that we could have an elected second Chamber without additional powers-or, indeed, with even fewer. Not only would the inhabitants of the Chamber demand more power, but their constituents would demand more power. They would say: "What

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on earth are we paying these people salaries and expenses for when they have no power?". The drive would come not only from the Chamber but from constituents as well, who would demand value for money.

My second point is that the present situation is unique and virtually perfect. You have a unicameral system posing as a bicameral system, under which the House of Commons is all-powerful but is assisted by a group of people who are very well qualified to advise it, to slow it down a bit but not to usurp its sovereignty. My advice is, quite frankly, that if something works leave it alone.

7.20 pm

Baroness Knight of Collingtree: My Lords, good legislation is rarely produced without the House of Lords. Often whole sections of Bills sail through the Commons with no debate at all. Disaster is avoided because this House works on those neglected parts-it holds debates, it moves amendments, it sets things right. As the Lord Speaker said last week, second Houses are for second thoughts and those are often essential. An elected or partly elected Lords may keep that rule but it would alter profoundly the quality of suggestions for improvements.

We have here a truly astonishing powerhouse of experience-former ambassadors, former leaders of industry and trade unions, heads of police forces, Cabinet Ministers, judges, service chiefs, education experts, professors. There is no end to the depth of experience here and I can confirm from long experience in both Houses that the level of expertise in debate is far higher here than it is at the other end of the Corridor. Whatever the subject under discussion, at least five or six top experts in that subject will contribute. These people have reached the top of their particular ladders. They would never stand for election. Can you see a professor facing a political election committee or a Bishop banging on doors to get votes? Those raring to do so may have star-studded futures but it is past experience which guides judgment and wisdom, not experience which is yet to come.

Some advocate only some Peers being elected but to have a mixed fish and fowl House would be hopeless. Every elected Peer would have to work hard in their constituency, seeing voters, visiting factories, schools and old people's homes, mirroring and duplicating what the MP for the area would have to do anyway. They would not have time to do any scrutinising of Bills as they do at the moment. They could not be expected to do the same job as an MP voluntarily. Surely they would have to have the same rate of pay as an MP. You could not then have a House some of whose Members were salaried and some of whom were not. That would give big problems to any Government needing to cut public expenditure.

If it ain't broke, don't fix it. The Lords, contrary to being broke, gives hugely valuable service to Britain for no salary at all. Let's not throw it away.

7.22 pm

Lord Grenfell: My Lords, when the last Government set out their vision of what an elected second Chamber would be like, they imagined,

"A second chamber that is more assertive than the current House of Lords",

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to quote from their July 2008 White Paper. Such a reformed Chamber,

That is precisely the argument which the present Government advance, among others, to convince us of the merits of an elected Chamber. They advocate, within the constraints set by the Parliament Acts, a more assertive House of Lords but one which does not threaten the primacy of the other place. This is a smokescreen and one in which they themselves now seem to be stumbling about in some confusion.

The danger in establishing an elected second Chamber lies not in some imagined threat to the primacy of the House of Commons because, as in the case of other countries where there is a wholly or partially elected second Chamber, constitutional arrangements and conventions are set in place to protect that primacy. In our case, we have the Parliament Acts and the Salisbury convention. Our focus instead should be on the relationship change because there can be a substantial change in the relationship between the two Chambers, as my noble friend Lord Grocott most convincingly said, without primacy being threatened.

With an elected senate, the relationship that will see the most significant change will be that Chamber's relationship not with the other Chamber, although that will be significant enough, but with the Executive. Within the confines of respect for the primacy of the other place, an elected senate will seek the means to be more assertive in its efforts to hold the Government to account. In the interests of there being a better check on the Executive, that is in principle good but, shorn of the expertise to be found in this present House, I do not see the new assertiveness of an elected senate adding much if any value to the effort of Parliament as a whole to hold the Government better to account. The second Chamber will replicate the first and its relationship with the Executive will change accordingly, from an expert scrutinising House much to be reckoned with, as it is now, to a pale, unthreatening junior partner to the House still enjoying its primacy. The beneficiary of this change in relations will be the Executive. Is that really what we parliamentarians want?

7.25 pm

Lord Kilclooney: My Lords, I have served in five different parliamentary institutions-seven years in the Northern Ireland Parliament, 10 years in the European Parliament, seven years in the Parliamentary Assembly of the Council of Europe, 18 years in the other place and now nine years in your Lordships' House. The worst of these was the European Parliament; the best is your Lordships' House, in so far as quality of debate is concerned.

First, if we have an elected upper House, irrespective of the electoral system or the size of constituencies, there will be competition between the elected Members here and the elected Members in the other place. Secondly, there will be political yes-men and no independence. That will be a severe loss to this House-the loss of the independent voice. Most important of all,

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as I saw during my experience in the European Parliament, it had been a nominated Parliament and then became an elected Parliament. It spent every day struggling to take powers away from the European Commission in Brussels. The same would happen here with an elected body. It would spend every day fighting to take powers away from the other place. I hope that Members in the other place recognise that if they vote for an elected upper House they are diminishing their own status and it will truly become the lower House in the United Kingdom Parliament.

It is important that the public know what the role of the House of Lords is. Last night, as a taxi driver took me out, he said, "Are you a Labour Peer or a Conservative Peer?". I said, "Neither, I'm an independent Peer-non-party". To which he said, "I didn't know there were independent Peers in the House of Lords". The sooner we get the public educated, the sooner will the cry for an elected upper House disappear.

7.27 pm

Viscount Younger of Leckie: My Lords, I believe that an elected upper Chamber would have a detrimental effect on the delicate and subtle balance of power between this House and another place. Furthermore, it would impact adversely on the decision-making process of government and diminish the broad skills base in this House that is so important for our effective role within the constitution.

We must first understand and agree our collective purpose within the relationship. Our mandate is to examine, advise and revise but not challenge the supremacy of another place. The Executive must ultimately be given the chance to carry out their manifesto, as mandated by the people but not without the power of the upper Chamber as the quality control department.

If your Lordships were wholly elected, the terms of reference for complementary coexistence would change substantially for several negative reasons. First, there would be a divided accountability if the second Chamber was also answerable to constituencies; there would be the danger of a tug of war between factions-inter-Chamber, more equal in power-claiming a mandate for its preferred legislation. This could lead to paralysis of decision-making, but more probably decision-making where the lowest common denominator prevailed, with protracted negotiations as a means for agreeing legislation. This would surely be undesirable and undemocratic. The system could be open to influence by party faction and by interest groups in both Houses. There could be a lack of accountability.

An elected upper House would create the danger of more confrontational politics in this Chamber, with stronger Whips, which would detract from the necessity for complementarity. The Salisbury convention would undoubtedly be challenged, as would Bills of aid and supplies.

Your Lordships sit in this House as individuals,not Members representing a particular constituency. This allows for independentconsideration and scrutiny. The breadth and depth of skills and experience in this House across a range of professions, sectors and regions, built up over time, would be compromised with election.

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An election process would not replicate; it would more naturally attract candidates who were politically ambitious and who would see the route into the upper Chamber as a means to an end, with less focus on its purpose.

It is an easy but slack argument to say that an upper Chamber is legitimate only if it is democratic. Its legitimacy is confirmed only if it is "fit for purpose" in relation to the Executive. That is the point.

7.29 pm

Lord Brooke of Alverthorpe: My Lords, I congratulate my noble friend Lord Grocott on securing this debate. We hold different views on whether we should have an elected or non-elected Chamber but I agree with one view that he expressed: if we had an elected Chamber, I would not wish to see a great change in the nature of the relationship between this House and the Commons, although there would be some change.

I believe that the key to that rests in two areas: first, the Parliament Act; and, secondly-my noble friend Lord Sewel pointed to this and it was also focused on by my noble friend Lord Wills-the conventions. The conventions need to be codified. In the 2002 Joint Committee on which the noble Lord, Lord Tyler, sat, we spent time talking about that but no progress was made. That Joint Committee was chaired by my noble friend Lord Cunningham, who subsequently chaired the committee that looked at the nature of the relationship, but again the question of codifying the conventions was not addressed. It was decided that, in the event of there being an elected Chamber, we might have to return to having codification of the conventions or changes to them.

On the last occasion that we had a debate on this matter, I asked the Benches opposite-and I particularly thank my noble friend Lord Grocott for giving me the chance to come back to this question-whether they had commenced work on codifying the conventions. I got no reply, so I ask the question again. If work has not started, I should like to know why not. I should also like to know whether they will make a start on it, because such a change is most certainly needed to ensure a proper relationship between the two Houses when we have elections.

7.31 pm

Lord Scott of Foscote: My Lords, I rise to make a few short remarks in the gap. The issue being debated this evening was considered in 1999 and 2000 by the Wakeham commission, whose report came before the House in 2000. For the purposes of its deliberations, the commission engaged an eminent academic at UCL, Meg Russell, who wrote a report for it on each of the western European democracies with two elected Houses. She also wrote a report on the United States, Canada and Australia.

The Library very kindly downloaded for me all the reports that she wrote. However, I could not reach the end of them without feeling great gloom at the prospect of this country going through the same troubles and processes that the countries with two elected Houses have had. Moreover, I do not think that anyone could

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read the reports produced by Meg Russell and still think it a good idea to replace the current system in this country of a healthy constitutional equilibrium between the largely appointed House here and the elected House in the Commons. Those reports by the lady in question are important reading for anyone who retains any lingering wish to have an elected House of Lords.

7.33 pm

Baroness Royall of Blaisdon: My Lords, this is a debate of fundamental importance to both the House of Commons and the House of Lords. I pay tribute to the continuing force and validity of the considerations and conclusions of the Joint Committee on Conventions, chaired by my noble friend Lord Cunningham of Felling, to which many noble Lords have referred today.

I have to disagree with the noble Lord, Lord Tyler, about the conclusions of that report-they were approved by all parties in both Houses-on the implications of any future change in composition for the relations between the two Houses:

"If the Lords acquired an electoral mandate, then in our view their role as the revising chamber, and their relationship with the Commons, would inevitably be called into question, codified or not ... should any firm proposals come forward to change the composition of the House of Lords, the conventions between the Houses would have to be examined again".

That conclusion was right when the committee reported in October 2006 and it is right now. I am the only member speaking in tonight's debate of the Government's committee on further reform of your Lordships' House, chaired by the Deputy Prime Minister. I can tell the House that the committee has given some consideration to this point, although not much, and that as yet it has come to no clear conclusion.

My own view, in addition to a point that I have repeatedly made-that the issue of any further substantive reform of your Lordships' House is of such constitutional significance that it should be put to the people of this country in a referendum-is that, if the group chaired by the Deputy Prime Minister does come up with firm proposals to change the composition of the House of Lords, as specified by the Joint Committee, then the conventions between the Houses should indeed be examined again, in line with the agreed recommendation of the Joint Committee.

I believe that the right body for such an examination would, again, be a Joint Committee of both Houses and I roundly reject those, including the Deputy Leader of your Lordships' House, who claim that such a view is the last refuge of reform refuseniks. I am a reformer; I want an elected House and I do not want to delay the process. For that reason, I suggest that a Joint Committee on conventions be convened to meet in parallel with the pre-legislative scrutiny committee on the draft Bill. I should be grateful for the Minister's views on that. As I said, I am not a reform refusenik but I believe that the relationship between the two Houses and their powers is fundamental to the successful reform of this Chamber.

7.35 pm

Lord Taylor of Holbeach: My Lords, I am grateful to the noble Lord, Lord Grocott, for bringing forward this short debate and to other noble Lords who have

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spoken this afternoon. We appear to be beginning a series of these rapid-fire debates. Brief the contributions may have to be in accordance with the requirements in the Companion, but that does not lessen the quality or, indeed, the value of the debate.

The Government value highly the views of your Lordships on the implications of reform of this House. This afternoon's debate has concentrated on one aspect of the reform-the relationship between the two Houses-and I am very pleased that the noble Lord, Lord Grocott, has given us the opportunity to respond.

We recognise that this House has an important role, distinctive from that of the other place. I confirmed the Government's view of the House's role on 11 October, in response to a similar Question for Short Debate tabled by the noble Lord, Lord Hunt of Kings Heath. This is, and we intend that it will remain, a scrutinising and revising Chamber, holding the Government of the day to account.

Many noble Lords-I should probably change my notes to read "most noble Lords"-took the opportunity once again to question the Government's case for a wholly or mainly elected reformed second Chamber. However, this Government are committed to reform and I do not want to rehearse the arguments about that today. Those who make the laws must be democratically legitimate, and legitimacy must come from a significant element of election to provide a direct link between those who make legislation and those who must live by it.

The right reverend prelate the Bishop of Bath and Wells asked whether we can afford such a change. The Government will of course carefully consider the costs of reforming the House of Lords. We believe that it is worth paying more for a legitimate second Chamber and we are still considering the size of a reformed second Chamber-an issue that will determine the overall cost of such a Chamber.

The Government recognise that their proposals for a wholly or mainly elected second Chamber will have implications for the relationship between the two Houses. I assure noble Lords that this is an issue that the Government and the cross-party committee are taking seriously. The Government are mindful that their plans for reform must allow the second Chamber to maintain its complementary role relative to the other place. The second Chamber must become neither a competitor to the other place nor a replica of it-a point reiterated by a number of noble Lords. Currently, the primacy of the other place does not rest solely on the fact that it is an elected Chamber while this House is not; it also rests in the Parliament Acts and in the financial privilege of the House of Commons-a matter to which I do not think any noble Lord referred. The Prime Minister and most senior Ministers are also drawn from the other place.

Most noble Lords have suggested that democratic legitimacy will embolden the second Chamber to act to the limit of its powers. However, the Government are clear that the other place should continue to remain the primary Chamber. Many noble Lords referred to the report of the Joint Committee on Conventions, which considered the practicality of codifying the key

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conventions on the relationship between the two Houses of Parliament. That committee concluded that, if this House were elected, its relationship with the other place would inevitably be called into question. The noble Lord, Lord Brooke of Alverthorpe, asked me whether work was already beginning on the codification of conventions. I believe that that would be putting the cart before the horse in the sense that we need to see the horse-the draft Bill-before we are able to debate in detail the codification of the conventions and how they might apply to a reformed House.

The Joint Committee also concluded that, should any firm proposals come forward to change the composition of the House of Lords, the conventions of the two Houses would have to be examined again. I can reassure noble Lords that the cross-party committee is giving careful consideration to the issue of the powers of the reformed second Chamber and the relationship between the two Houses, including the conventions.

The noble Lord, Lord Grocott, raised two matters that are fundamental to the conventions. He asked whether questions of votes of confidence had been considered by the Government. I can assure him that the cross-party committee will consider this type of issue in its deliberations. He also asked about debates on treaties and the declaration of war. These matters are for the committee to consider and it will no doubt consider them and report on its conclusions with the draft Bill. However, we have only one member of that committee present-the noble Baroness, Lady Royall of Blaisdon. She has given us as much detail as she could on the committee's progress. I am not privy to its detailed discussions, nor should I be.

Earl Ferrers: My Lords, could I interrupt my noble friend? I was following what he was saying and I wanted to get it absolutely right because I could not believe what I heard. Is he saying that the Government are in favour of a fully elected House of Lords?

Lord Taylor of Holbeach: No, a mainly elected House of Lords is the phraseology that I think-and hope-that I have used, because that is the Government's position. It may well be that the draft Bill will allow for the retention of unelected Members on an appointed basis. We know that the likelihood is that there will be a long transition period during which a large percentage of the existing House of Lords will remain to work alongside elected Members. That is an important aspect of House of Lords reform, to which we have not given full consideration in this debate but to which I am sure, when it comes to the draft Bill, we will probably find ourselves giving considerable thought.

As I said, there will be a process of transition. It will be a long process and it is likely to mean that the relationship between the two Houses, including the conventions, will develop over the time of transition. This is not big bang; we are talking about evolution. This House will have the opportunity to discuss these issues during pre-legislative scrutiny of the draft Bill. The Government hope that pre-legislative scrutiny will be carried out by a Joint Committee of both Houses.

The cross-party committee is also considering other issues that will reinforce the differences between the two Chambers. The Government's proposal for a

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proportional electoral system will set up a different relationship between voter and representative in the second Chamber compared with the link between a constituent and an MP. As set out in the coalition agreement, the cross-party committee is likely to advocate single, long terms of office for Members of the reformed second Chamber. This again would reinforce the differences between the two Chambers. Of course, the House will retain control over its affairs and, in particular, its committee system and it will be for both Houses to agree the degree to which they work jointly.

Many noble Lords have argued that the present House of Lords has expertise and experience to a degree that sets it apart from the other place and which makes it especially qualified to scrutinise and improve the legislation from the other place. This, they say, will be lost as a result of reform. The Government do not accept that the present means of joining this House are the only ways of securing expertise and experience. Elected Members are capable of possessing and drawing on their own experience. Moreover, the House already has in place a widely respected committee system that allows it to call on the evidence of outside experts.

The Government believe that the British people must be allowed a say in who makes the laws to which they are subject and that the character and design of the political institutions of this country should reflect the society that they serve. We consider that this House must be constituted on a more democratic basis. We recognise the implications for the relationship between the two Houses and we will consider these implications carefully.

Lord Tyler: My Lords, I wonder whether the noble Lord would confirm that it is the Government's view that it would be better for one Joint Committee both to undertake pre-legislative scrutiny of the Bill and to consider the relationship between the two Houses, rather than-as I understand the noble Baroness, Lady Royall, has suggested-for a separate Joint Committee to look at that issue. Would it not be better that that issue is looked at comprehensively by one Joint Committee in pre-legislative scrutiny over the full period to the Queen's Speech in 2012 rather than that two exercises should act separately?

Lord Taylor of Holbeach: I thank my noble friend for that interruption. I think that I said earlier that the Government have it in mind that there should be a Joint Committee of both Houses, but in the end it is up to Parliament to decide how it scrutinises this legislation. The Government and the committee are accountable to Parliament and I have no doubt that there will be many debates on any draft Bill that is produced early in the new year.

Lord Wills: Will the noble Lord confirm when in the new year this draft Bill will appear? Will it be in the first half of the year or the second half of the year?

Lord Taylor of Holbeach: Early in the new year, but-

Noble Lords:Which new year?

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Lord Taylor of Holbeach: The new year that is yet to come. I have been advised that early in the new year is the likely time of arrival. The noble Baroness, Lady Royall of Blaisdon, no doubt has a better idea than I have on the timing. She is shaking her head, so I suggest that the authority that I have in giving the House the timing is as good as we can have for today. However, we are engaged in a long process-I can hear my noble friend the Leader of the House by my side saying exactly that, as I think I said last time. We are engaged in a long process with much debate, and much of the detail-the noble Lord, Lord Brooke, rightly reminded the House of the conventions and their codification-is very much further down the track, given the type of reform that the committee is likely to bring forward.

I believe that I was saying that the House should be constituted on a more democratic basis. We recognise the implications for the relationship between the two Houses and we will consider them carefully. The Government and the cross-party committee will be mindful of the House's view as expressed in this and previous debates. A draft Bill will be brought forward early in the new year, which will allow all sides to examine and discuss in greater detail the Government's plans for reform.

I am sorry that I have not been able to answer or even refer to all noble Lords who have spoken. The free expression of opinion demonstrates the challenge that there will be for those of us who are charged with the task of presenting reform to this House. We welcome debates of this nature in preparing us for the task ahead. It has been a valuable and thought-provoking debate and I am grateful for your Lordships' contributions.

Royal Family: Civil List

Question for Short Debate

7.50 pm

Asked by Lord Berkeley

Lord Berkeley: My Lords, I am grateful for the opportunity to have a short debate on the basis for the Royal Family's financing. This is supposed to be done on a 10-year basis, and the last time was in 2000, so it is a timely opportunity. Of course, quite recently, the Chancellor of the Exchequer made announcements about royal financing in the Statement on the comprehensive spending review.

As some background, at the moment, the Royal Family receives £7.9 million civil list for salaries, entertainment, opening Parliament, et cetera, £15.4 million for palace repairs and maintenance and about £7 million for travel. That comes to a total of about £30 million annually, plus security. That is designed to fund the Royal Family's state activities and maintain the buildings and palaces used. I think that the buildings include Buckingham Palace and Windsor Castle but not Sandringham or Balmoral.

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The Queen and the Duke of Edinburgh receive money to undertake royal work, as they do very well. They deserve credit for reducing their travel bill in the past year in parallel with the cuts that the Government announced. The Queen has also announced that she will try to reduce the running costs of the palace's activities.

Prince Charles is in a different situation, as he relies on income from the Duchy of Cornwall to maintain his household and activities, which goes back to the time of the Black Prince and was seen by successive sovereigns as providing a separate income for the monarch's eldest son. Last year, the Duchy provided £17 million for Prince Charles. Sadly, I have not been able to see any evidence that he has followed his mother's lead in trying to reduce costs.

Looking at the travel of the Royal Family, in which I have taken interest for some time, in addition to the three members of the Royal Family whom I have mentioned, there are nine others who do not get paid a salary by the state but who receive royal travel finance, details of which are published every year in the royal travel reports. This may all sound fine and equitable, so why is there a problem?

Out of the £7 million for royal travel, when one looks at examples, there are some concerns. For example, the Duke of York took a £6,000 helicopter trip from his home in London to open a bridge in Sussex. That was last year. The Prince of Wales and the Duchess of Cornwall flew to Kirkwall and Edinburgh at a cost of £15,000 on a charter flight to visit some lifeboats and a marine centre. That is all very good. Also, the Duke of York spent £14,000 of our money visiting lifeboat stations. I am not saying that they should not do it, but there is a question whether they really ought to have charter flights and spend quite so much money on them. Perhaps it would be better if they went a bit slower.

Unfortunately, transparency has got more difficult since it was agreed between the Treasury and the Royal Family that only journeys over £10,000 are recorded separately. A couple of years ago, Princess Anne took a £5,000 helicopter trip from London to visit a pony club rally in the Midlands, and Charles took a helicopter from his Gloucester home to Gloucester. I have to ask: what is wrong with using cars or scheduled trains?

There are several issues here. Is it necessary for the state to fund the travel of 12 members of the Royal Family? Do they need to go so fast, so frequently and with so much so-called security that helicopters have to be used? For the Queen, Prince Philip and Prince Charles, that is probably reasonable, but what about some of the others? What was the value to the UK of a state visit to South America, including the Galapagos Islands, which cost more than £600,000 in 2009? It is a nice way of seeing the islands, but at taxpayers' expense? There are some serious questions that need to be answered about whether the state should be funding all 12 of those people travelling for royal duties. Some people might suggest that they get jobs and pay for their own travel.

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There is also another problem, exacerbated by the lack of transparency, about which activities are state functions and which are private. The activities of the Duchy of Cornwall are a good example. It is a business; it pays some tax; but it is also a way of providing the heir to the throne with some income to undertake his official duties. He has 124 staff to do that, who, I am told, write regular letters to Ministers-some of my colleagues who are former Ministers said that that caused quite a lot of trouble-lobbying for pet architects, commissions or whatever. Last year, I saw evidence in Cornwall of the Duchy encouraging one of its tenants to flout the planning and environmental laws to build an oyster farm on the Halford River. They put this metal cage down in an SSSI without bothering to get planning permission or to do an environmental study. That is wrong. It is throwing weight around with people who do not feel that they can respond. It is also meddling in government, with the taxpayer funding the meddling. I believe that he should be above politics, and certainly not paid by taxpayers to lobby.

Her Majesty the Queen has a much better track record of staying out of politics, and she is not wasting money, but I worry about Chancellor's latest proposal in the CSR to give the royal household a proportion of the profits from the Crown Estate. It is suggested that it would be 15 per cent of the profits, which would give them about £37 million a year, which would be a 44 per cent increase on the present amount. The Chancellor claims that that is a better idea because it would avoid the embarrassment of regular negotiations with the Palace, but the Crown Estate has been a part of government revenue since the time of George III. He gave up his right to receive any revenue for them to get bailed out because he ran out of money. What is the future of the revenue of the Crown Estate? It has lots of land in London and, we hope, the revenue from that will increase, and there are lots of wind farms being developed around the country, for which they receive a royalty. However, that can go up and down in revenue, and it seems a bit odd to link a long-term arrangement for funding for the monarch's official duties to a percentage of such a volatile revenue. If the percentage is not fixed, there will probably be many fraught and embarrassing negotiations every year. Another anomaly is that the Crown Estate is still owned by the sovereign, even though the revenue is handed over. I would suggest that consideration should be given to handing over ownership of the Crown Estate to the state once and for all. That would provide the opportunity for some rather better parliamentary scrutiny. I worry about the longer term because Prince Charles has a record of meddling. He supports wind farms so surely there is going to be a temptation to speak out in favour of these, which would have the effect of increasing his revenue if they are offshore. It would be a strong temptation which would be hard to avoid.

I hope that the Government and the Royal Family will start negotiating the next 10-year arrangement for the funding of official royal activities based on six issues: first, by stating clearly what buildings, contents, et cetera, are owned by the state and loaned to the monarch to enable them to undertake their constitutional duties; secondly, by transferring the Crown Estate to

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state ownership; thirdly, by stating clearly which activities and members of the Royal Family are part of the duties and who should get free travel-and I suggest there is an urgent need to review the roles of the minor royals in this context; fourthly, by reviewing the security needs and costs, particularly of the minor royals-royal security costs £150 million a year at the moment and I question whether that is all really necessary; fifthly, by fixing the 10-year figure for the Civil List, taking into account the savings and everything else we have talked about; and, sixthly, by doing the same with the Duchy of Cornwall, making it a state-owned landlord with any profit going to the state and giving Prince Charles an allowance for the Civil List. It is not quite clear from the Chancellor's proposed changes whether this is part of his intentions or not.

In conclusion, the Chancellor has hinted that dealing with the royal funding has become a thorn in Ministers' sides. I believe it could get very much worse unless the Government take this issue seriously and undertake a full and transparent review of the Royal Family's finances.

8.02 pm

Lord Addington: My Lords, when I found myself being volunteered to speak in this debate, I was not sure what direction the noble Lord, Lord Berkeley, was going to go in. To hear from the Labour Benches a call for the nationalisation of private landholdings, which is in effect what they are, cast me back to my youth and speeches of days gone by, but that is by the bye.

Many of the points made by the noble Lord, Lord Berkeley, have been made in many forms in the media over the years. The Prince of Wales is accused of throwing his weight around by everyone he wins against but he is applauded by others. He is not the monarch yet but he is entitled to his opinion. Does he abuse his position? Do we abuse our positions? Those of us who sat through the last debate heard how non-elected people are almost perfect. We have great worth and value, et cetera-those of us who have come here via a hereditary route, albeit with chinks and having been rebranded occasionally, and those who have not. Not everyone agrees with the architects the Prince of Wales has annoyed, and wind power is ultimately cleaner than other forms of power. So let us just stand back a bit.

The noble Lord, Lord Berkeley, made an important point about justifying who is on that list and who is taking on those duties, but when it comes to cutting down on security for anyone undertaking a public duty who is potentially an incredibly soft target, not only endangering them but everyone around them, I would step very cautiously towards that. Maybe we should just send them out less. I wonder how many members of the Royal Family, especially its junior members, would be quite happy to be sent out less. But the idea that they should not travel securely and safely, particularly in these times, is something we should think long and hard about.

The change to the sovereign support grant-or the SSG, as it is called in the briefing I received-sounds sensible, bringing everything together in one coherent lump. As for making money from privately owned

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land, inherited from a line of succession, with the Crown getting most of the money back, who knows? We are treading on some very uncertain ground. But ultimately, if we do not use the Royal Family, what else do we use? Once again, going back to the previous debate-I wonder whether I am cheating by mentioning it-would an elected President be any cheaper to run? I suspect not. The French President still has a lot of cavalrymen wearing heavy armour parading round in front of him. The American Presidents have marines in full-dress uniforms marching around in front of them. Would that be any cheaper overall? I do not know but I suspect not. I doubt whether any regime is going to sell off Windsor Castle as a theme park or shopping mall. So if we are going to keep the institution, if we want to have a head of state who fulfils the functions both publicly and diplomatically, it is going to cost some money. We cannot get rid of the historical infrastructure, and if we have people travelling outside on public engagements, including anyone who has a connection with them, we are going to keep them safe. I would be very careful about saying we should do things on the cheap because I do not want to be the one who condemns a historic building or causes a major terrorist incident.

8.06 pm

Lord Brooke of Alverthorpe: My Lords, I am grateful to the noble Lord, Lord Berkeley, for giving us the opportunity for this debate. My last intervention on a Royal Family issue was when I asked the noble Lord, Lord Mandelson, when he was president of the Board of Trade, whether the Government would consider promoting or supporting a special classic horse race in 2012 to celebrate Her Majesty the Queen's diamond jubilee. A number of people were quite interested in that and I still hope there may be a possibility that such a unique race may be run because I believe that Her Majesty has been an outstanding public servant, and that when we come to 2012 we should do everything in our power to let not just the country but the world see what we think of her. So I come in as a supporter of the monarchy and not as a republican. I do not believe that the noble Lord, Lord Berkeley, was speaking as a republican either, but, like him, I am also interested in how public money is defrayed, especially at a time of extreme economic constraints that are being forced through at the moment by the coalition Government. So I am interested in access to financial and related information on public expenditure in the way that my noble friend Lord Berkeley was seeking to shed revealing light on it.

It has not always been easy to access the Royal Family's expenditure and its income-it is difficult to trace the real overall expenditure when a range of departments pick up a range of different bills-and freedom-of-information exemptions in certain areas prevent people from securing certain pieces of information. But it would be churlish not to say that there has been greater openness in recent years and that the Royal Household has made major efforts to increase its efficiency and to contain the growth of costs that we saw some years ago. The Civil List has been frozen for a number of years and it will remain frozen at £7.9 million for the coming year.

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The present Civil List processes will then be changed and the Chancellor of the Exchequer, in his words,

and that will come at a later date. As part of this change, the Royal Household has agreed that, in future, Civil List expenditure will be subject to the same audit scrutiny as other government expenditure both through the National Audit Office and the Public Accounts Committee of the House of Commons. This is a strong step forward and should be welcomed by all. It is good that the Royal Household has been prepared to go down this route.

However, that progress was somewhat tarnished last month when George Osborne announced that the existing Civil List arrangement, which determines how much the state pays to the Royal Family, should be abandoned. Instead, the Royal Family will get 15 per cent of the profits from the Crown Estate's £6 billion property portfolio. I shall give the reasons for making that comment. Over the past 10 years, the capital value of the Crown Estate has increased by £2.6 billion. The estate owns around £6 billion of land and other assets and chattels that last year brought in a profit of £210 million. But as my noble friend Lord Berkeley indicated, and as the high degree of press coverage of this shows, there are substantial rumours around that the profits of the Crown Estate are set to rocket in the coming decade as revenues come in from offshore wind turbines installed on the Crown Estate seabed. It is projected that the development of wind turbines and farms could more than double the current annual profits of the Crown Estate.

Developing wind power is expensive, especially when it is developed offshore. Progress to date has been slow because of the high initial investment costs-sufficiently so that, notwithstanding the current restraints we are facing, the Government, in trying to accelerate development and attract more money into developing offshore wind farms, recently stated that they would be prepared to make available an extra £200 million of subsidies for offshore wind farms and for the port facilities and grid links that will be needed to handle the electricity. Thus the Royal Household will additionally be indirect beneficiaries of a very substantial taxpayer investment of £200 million, which will help to boost Crown Estate profits. From those, the household will then take 15 per cent.

We already spend more on our Royal Family than is spent on any other royal family in Europe. It would be ironic if these new arrangements mean that, for the first time since Parliament bailed out George III's debts by taking over the management of the Crown Estate and introducing Civil List payments that have to be negotiated between the Government and the Royal Household to determine its expenditure, this new coalition Government will now entirely reverse the system. Instead, our greatly indebted state-we are told this every day-will hand the Royal Family an independent source of income from the Crown Estate that could greatly outstrip the household's current and anticipated costs. It does not surprise me that Prince Charles, who has an aversion to onshore wind farms, has now become a well-known campaigner for offshore

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wind turbines. If he was a parliamentarian, I think he would be requested to declare a personal interest before making any speeches about the development of green marine energy, but that is an aside that perhaps I should withdraw.

I will be interested to hear from the Minister whether my understanding of what is about to happen is correct. I should also like to know if there will be any public consultation on the review process that has now been put in train, the extent to which Parliament will be involved in that consultation and, indeed, whether the public will be involved. I ask this especially since only in the past few days Her Majesty the Queen has launched a Facebook page that has attracted a substantial amount of interest, with 100,000 people logging on to it. Answers to these questions and the detail that will arise from these topics are things that ought to be in the public domain. I think that more openness would strengthen the Royal Family's position rather than weaken it because, as we all know in a modern society, secrecy creates more problems than it leads to solutions.

My final and perhaps most important question is this. If I am right and there is to be a 15 per cent take from Crown Estate profits, whatever they might be, given that there could be very substantial increases in those profits, have the Government given any thought to the need for a cap? How much could be paid over to the Royal Household? I ask this because even though the household will declare its expenditure to the NAO and so on, it is conceivable that there could be a very substantial gap between the costs of running the household and what the profits turn out to be by 2015 or 2020. In the interests of the Royal Family, I do not think that that would be the best way to go. There is a requirement for a reasonable approach to be taken, and we could end up with an option, the one we are now considering, that would lead to a level of unreasonableness that would be unacceptable to the public at large.

8.07 pm

Baroness Jones of Whitchurch: My Lords, I thank my noble friend Lord Berkeley for tabling this timely debate. He has made some important points on which I look forward to hearing the Minister's response. As he said, the changes announced by the Chancellor in the CSR could potentially have large financial implications which should be the subject of proper parliamentary scrutiny, notwithstanding the sensitivity of some of the issues raised.

The monarchy and its funding has always been a tricky issue for those on this side of the House-populated, as we have heard, with both ardent monarchists and equally ardent republicans. I hope to tread lightly on this subject. But I am sure that my colleagues, whatever their views on the principle of a monarch in this country, recognise the strong and ongoing public support for the Royal Family in general and for the Queen in particular. She has been a constant in times of turmoil. She is on her 12th Prime Minister and is a constant in the world too. The Queen is widely admired throughout the world, and I have heard it said that she has met more heads of state than any other person, alive or dead, which is quite a feat. In addition, one could argue that the Royal Family provides good value for

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money for the Civil List. Its attraction in terms of tourism for Britain should not be underestimated, especially as tourism is the fourth largest employment sector in the UK.

I shall move on to the financial structure for the Royal Household, which is the subject of this debate. As we have heard, until now the Crown Estate has managed Crown land on behalf of the Government. Surplus revenue goes to the Treasury in return for which the monarch receives a fixed annual payment-the Civil List. It is an arrangement that has worked well for a number of years and the amount paid has been gradually falling in real terms. But there has been some worrying press coverage of the Chancellor's recent announcement suggesting that there is some kind of secret deal afoot here. I am sure that that is not the intention or the desire of the Royal Family, and it is therefore vital to defend its reputation by providing further details as soon as possible. So I would be interested to hear from the Minister what pressures the Government came under to change the Civil List arrangements and what the reasons were. In what way was the Civil List system not working? What was the problem the Government were trying to solve when they came up with the new proposals for a sovereign support grant?

Reflecting the public mood on the Royal Family, since 1993 the Queen and the Prince of Wales have paid tax under voluntary arrangements agreed with the Government. Most of their sources of income are now dealt with in accordance with the usual tax rules. This includes activities such as private investments, profit and losses from farming at the royal houses, such as Balmoral and Windsor, and money generated from opening to the public the houses and gardens at Sandringham and Balmoral.

According to the comprehensive spending review document, grant support for the Royal Household will be static in 2011-12 and 2012-13 at £30 million, a further real terms cut. After that the Royal Household will receive the new sovereign support grant linked to the revenue of the Crown Estate. So, in echoing some of the questions that have been raised in the debate, I ask the Minister to give more details of how this will work in practice. There are no further details in the CSR document, or anything on the Royal Family's website, or on the Crown Estate website.

In particular, the new arrangements in which the sovereign support grant is based on a proportion of the Crown Estate's turnover could, as we have heard, vary wildly from year to year. How will the Queen budget for expenditure on that basis? Furthermore, in the welcome circumstances of the Crown Estate managing its activities particularly well-my noble friend Lord Berkeley gave an example of how this might work-the Royal Household income could rise significantly from its current position, such that there could be real public concern that the Royal Family was doing rather well while the public were living in a time of greater austerity. I should welcome the Minister's comments on that possibility. Conversely, if the global economy was to take a serious downward turn, the Royal Household income could, potentially, fall substantially below its current level. What would happen in these circumstances? Would the Government be forced to step in?

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It is hard to imagine that the Chancellor's proposals are as sketchy as has so far been revealed. It would therefore be of great assistance if the Minister could provide details of the background to the agreements made so far, the remaining issues still to be discussed and the process of parliamentary scrutiny to be provided. We could then all be assured that the transparency and accountability developed over the years will still be honoured.

8.22 pm

Lord De Mauley: My Lords, I congratulate the noble Lord, Lord Berkeley, on securing this opportunity to debate a matter that is of considerable interest to people and I thank him for the clarity with which he advanced his arguments and sought information about the royal finances.

I am sure that noble Lords will join me in recognising the Queen's long and loyal service and her immense contribution to public life, as several noble Lords mentioned. I will in a moment explain the proposed new arrangements for supporting Her Majesty's official business as monarch, but I should perhaps first give some context.

Since 1760, successive sovereigns have surrendered to the Exchequer their hereditary revenues, such as from the Crown Estate, in return for an annual income, known as the Civil List, and certain other financial support. The Queen's Civil List covers the central staff costs and running expenses of Her Majesty's official household. Certain other expenditure of the Royal Household is met by government departments through annually voted supply grants, including, in particular, the grants in aid for royal travel and maintenance of the royal palaces. The Civil List Act 1972 requires the Royal Trustees to keep under review and report on Civil List expenditure and the sums available to meet it, with reports to be made every 10 years.

In the trustees' 1990 report, the fixed annual amount of the Civil List was set to exceed projected expenditure in the earlier years, with the surplus being accumulated to meet later expected deficits as a result of inflation. Rather than forecasting inflation for the 10-year period, the Royal Trustees recommended £7.9 million as the fixed annual amount of the Civil List for the ensuing 10 years, assuming annual inflation of 7.5 per cent. In the event, of course, annual underlying retail prices index inflation averaged about 3.2 per cent during those 10 years, while Civil List expenditure increased by approximately 10 per cent less than inflation. Additionally, interest of about £12 million was earned on the surplus, leaving a reserve of about £35 million to be carried forward into the 10-year period to the end of December 2010.

In view of that substantial reserve and the expectation of low inflation, in July 2000 the Royal Trustees recommended that the fixed annual amount of the Civil List should remain at £7.9 million. Also, at the suggestion of the Royal Household, it took on responsibility for some £2 million of expenditure previously met from the votes of government departments or from the consolidated fund, utilising a substantial part of the reserve during the new 10-year period.

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In his Budget Statement on 22 June this year, my right honourable friend the Chancellor of the Exchequer announced the decennial review of the Civil List. As the noble Lord, Lord Berkeley, said, my right honourable friend also announced that payment of the Civil List for the calendar year 2011 would remain unchanged at £7.9 million. Therefore, the amount provided for the Civil List will have remained unchanged for more than 20 years and is today worth only a quarter of what it was in 1990. The Chancellor also said that he would, in due course, propose a new means of consolidated support for Her Majesty in future. He made it clear that he wanted a durable settlement for the Royal Household that would not require frequent government intervention in future.

Before coming to the new arrangements, let me give your Lordships some details of the principal grants in aid that are made by the Department for Culture, Media and Sport and the Department for Transport. The property services grant in aid is the annual funding provided by DCMS to the Royal Household to meet the cost of property maintenance and other costs at the royal palaces used by Her Majesty in fulfilling the role and functions of head of state, known as the occupied royal palaces. DCMS has overall responsibility for the maintenance of and provision of services to the occupied royal palaces. However, since 1 April 1991, management and operating responsibility has been with the Royal Household.

The royal travel grant in aid is the annual funding provided by the Department for Transport to the Royal Household to meet the costs of official royal travel by air and rail. As with support for the occupied royal palaces, support for official royal travel is one of the expenses met by the Government in return for the surrender by Her Majesty of the hereditary revenues of the Crown. The Department for Transport has overall responsibility for the use made of moneys voted by Parliament for royal travel. However, day-to-day responsibility for that expenditure has been with the Royal Household since 1 April 1997.

In his spending review Statement on 20 October, the Chancellor announced the new arrangements for support of the Royal Household. He announced that grant support will be static in 2011-12 and 2012-13 at £30 million. As Her Majesty has graciously agreed, this will call for a 14 per cent reduction in cash terms for Royal Household spending in 2012-13, as the Civil List reserve will by then have been exhausted. In addition, in order to support the costs of the historic diamond jubilee, to which the whole country is looking forward, as the noble Lord, Lord Brooke of Alverthorpe, said, a one-off additional £1 million will be provided. I am sure that the whole House will join me in appreciating the Queen's considerable achievements in leading and guiding the country with dignity and grace for such a sustained period.

From 2012, support for the Queen in her official duties will be simplified. It is intended that there will be a straightforward unitary grant to Her Majesty, replacing the current system of multiple grants. From 2012-13, the new sovereign support grant paid to the Royal Household will support Her Majesty's expenditure on her official business, replacing the Civil List, which

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is paid directly from the Exchequer, and the voted grants in aid for royal transport and royal palaces. It will be set by a formula related to the revenue of the Crown Estate and paid through the Treasury vote. Her Majesty has graciously agreed that, for the first time, funding through the sovereign support grant will be audited by the National Audit Office, providing transparency and accountability. A single grant structure will allow the Royal Household to set its own priorities and control costs. These arrangements will be transparent, accountable and dignified, generating a durable outcome that gives the Royal Household security over future funding.

Giving effect to these proposals will require primary legislation. The necessary Bill has not yet been drafted, but the Government hope that it will be introduced so that it can pass in time for the start of the sovereign support grant in 2012. The proportion of the Crown Estate's revenue to be used will be decided by Parliament, but there will of course be safeguards to ensure that the formula is fair.

The noble Lords, Lord Berkeley and Lord Brooke of Alverthorpe, and the noble Baroness, Lady Jones, expressed concern about the volatility of earnings from the Crown Estate and whether it was an appropriate basis for annual funding. I quite accept the question. It is important to be clear: the Crown Estate's earnings will continue to be remitted directly to the Exchequer as now. They will not be hypothecated to the Royal Household. Several noble Lords mentioned a figure of 15 per cent and I should like to try to correct a misunderstanding. The setting of the formula for the SSG, which is for Parliament to decide, will simply use Crown Estate revenue as an appropriate starting point. It will not continue into the future to be based on a simple percentage. However, I am not clear on that point; I shall write to noble Lords afterwards, as there may be a misunderstanding.

The noble Lord, Lord Berkeley, asked whether the Prince of Wales accepts the need to reduce his costs and how the mode of transport for members of the Royal Family is decided on. In deciding those things, the household will have to bear in mind criteria including the safety not only of the royal person but also of people in their vicinity, security, value for money, the length of the journey, whether the transport is consistent with the requirements and dignity of the occasion, the most effective use of the Royal Family's time and minimisation of disruption to others.

The noble Lords, Lord Berkeley and Lord Brooke of Alverthorpe, commented on the need for transparency. The new sovereign support grant will mean that all royal expenditure will be audited by the National Audit Office.

My noble friend Lord Addington suggested that a president would be no cheaper. Other countries are strangely coy about publishing the full costs of their presidencies, so it is difficult either to agree or disagree with confidence, but I note the rumoured $100 million cost of President Obama's inauguration. I wonder whether we perhaps do not enjoy a bargain in this country. My noble friend also made a strong point about security in answer to the question asked by the noble Lord, Lord Berkeley, and I agree with him.

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The noble Lord, Lord Brooke of Alverthorpe, asked about the publication of the finances. They are published annually. All trips of greater than £10,000 by air and rail are listed separately from the royal travel grant in aid.

The noble Lord, Lord Brooke, asked about a cap. The formula for the sovereign support grant will be set by Parliament. It is envisaged that there will be a mechanism to ensure that the formula is fair and neither adversely too high or too low.

The noble Baroness, Lady Jones of Whitchurch, asked about the opportunity for parliamentary scrutiny and for more detail about the new arrangements. The details will be set out in a Bill that will be subject to full parliamentary scrutiny.

I suspect that I have not been able to answer all noble Lords' questions-

Lord Berkeley: I am grateful to the Minister for his explanations. It is an excellent idea to put all the different grants from different departments in the one

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pot, which will come from the Treasury at the end of the day. However, what is the argument for linking it to the Crown Estate's profit, which goes into the Treasury in the first place? If he does not have the answer now, perhaps he could include it in his letter.

Lord De Mauley: I am grateful to the noble Lord for that question. I am conscious that I have not adequately answered it. I am finding it difficult to express the answer in words; I am out of time. I will write to him if I may and put a copy of the letter in the Library.

I hope that in the short time available I have been able to give some help to noble Lords in obtaining a better understanding of the provision of financial support for the Royal Household. The Government are extremely grateful to Her Majesty for accepting a measure of austerity in grant support in the near term and we all hope that she has a continuing long and happy reign.

House adjourned at 8.35 pm.

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