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Grand Committee

Wednesday, 10 December 2014.

Arrangement of Business


3.45 pm

The Deputy Chairman of Committees (Baroness Andrews) (Lab): My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.

Bioeconomy: S&T Committee Report

Motion to Take Note

3.45 pm

Moved by Lord Krebs

That the Grand Committee takes note of the Report of the Science and Technology Committee on Waste or resource? Stimulating a bioeconomy (3rd Report, Session 2013–14, HL Paper 141).

Lord Krebs (CB): My Lords, I start by thanking the members of the Science and Technology Select Committee for their excellent contributions to this inquiry. At the same time, I thank our specialist adviser, Mr Ian Shott CBE, who is an experienced expert in the bio-based industries. I also thank the committee support team for their superb contributions, and I thank the Minister for the Government’s response to our report, to which I will come later.

This report deals with just one aspect of waste—namely, carbon-containing waste. In this, we include biological materials such as food waste, wood offcuts and farming waste, including manure and plant remains, and the carbon-containing gases, such as carbon dioxide and carbon monoxide, which come out of our factory chimneys.

Our central question was simply: should this carbon-containing waste be treated as an environmental problem or as a business opportunity? Before delving into the report, perhaps I may set it in a wider context. The United Kingdom, in common with other advanced economies, produces a colossal amount of the stuff that we call waste. According to official figures, the tonnage of waste produced in this country is equivalent to the weight of 200 million cars—that is, six times the total number of cars on the UK’s roads. This waste includes the biological material that I have referred to, including food, and it includes building materials, industrial bioproducts and discarded consumer goods, as well as the industrial gases that I mentioned.

The disposal of this waste is to a large degree governed by a number of EU directives—in particular, the waste framework directive and the landfill directive. EU policy is based on the well known principle of the waste hierarchy. The first priority is to reduce it—that is, to produce less waste. The second is to reuse material or recycle it, and there are other types of recovery, including energy generation. The last, at the bottom of

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the hierarchy, is to dispose of it—for instance, into landfill. All four Administrations of the UK have policies to deal with waste according to the EU directives.

The UK has traditionally lagged behind many other European neighbours in dealing with waste. For instance, we still put nearly half of our municipal waste into landfill, while some other countries, such as Germany and the Netherlands, put none of theirs into holes in the ground. While this could be seen as bad news for the environment and for business, it may also present us with an opportunity, as I shall explain shortly.

Our Select Committee report is not the only recent analysis to point to the business opportunities that could arise from waste. The 2020 commission’s report, Sweating our Assets, produced by a group of parliamentarians within the last year, makes the important point, which we echo, that waste is a business opportunity. It estimates that £1 billion-worth of materials is thrown into landfill each year instead of being used for productive purposes. The report goes even further, suggesting that, rather than measuring our economic performance in terms of labour efficiency—per capita GDP—we should measure ourselves in terms of how efficiently we use resources. As I understand it, the report was produced at the request of the Chancellor of the Exchequer, and I should like to ask the Minister whether she is aware of any impact of this important and thoughtful report on thinking in the Treasury.

Food waste has been very much in the news in the last few days, particularly in relation to food poverty and the provision of food by food banks. It has been estimated that more than one-third of our food in this country is wasted, mainly in retail, catering and the home. The ideal, according to the waste hierarchy, would be to eliminate this waste but, given where we are, the highest priority is to reuse it, which is what the Oxford Food Bank—I declare an interest because my wife is a trustee—is trying to do. But, however good we are at eliminating and reusing, we will inevitably produce food waste and other carbon-containing waste. Therefore, the question both now and in the long term is: how can we make the best use of it?

Current policies incentivise relatively low-value uses of carbon-containing waste such as feed stocks for generating energy in the form of heat, liquid fuel or electricity—for example, through anaerobic digestion facilities. While this may be better than putting waste into landfill, it may not be the best possible solution. In fact, some other countries, such as Germany, have gone much further down the anaerobic digestion route, and are having to grow crops to feed their AD facilities as not enough waste is available. Rather than rushing in this country to build many more anaerobic digestion facilities, we have an opportunity to think about smarter uses for carbon-containing waste.

In our inquiry, we heard how developments in microbiology, synthetic biology and enzymology will in the future enable carbon-containing waste, including waste industrial gases, to be turned into high-value products. These include speciality chemicals such as limonene—a fragrance—pharmaceuticals, polymers such as polylactic acid, and commodity chemicals such as esters. Many of these chemical compounds are built of atoms of carbon, oxygen and hydrogen, the major

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components of carbon-containing waste. By harnessing the power of biological chemistry it is possible to reassemble waste into valuable products instead of simply burning or burying it. This is not just a gleam in the scientists’ eye. The technology for some of these transformations already exists, and for others it is within reach in the next few years. We heard of one industrial-scale example already in practice, a partnership between Virgin Atlantic and LanzaTech to use bacteria to convert carbon monoxide waste gas from steel mills into jet fuel. LanzaTech estimates that 19% of the world’s jet fuel demands could be met by this technology, which has a carbon footprint of probably around half that of conventional jet fuel.

The bioeconomy may also have a role in helping us to meet our legally binding target for reducing our greenhouse gas emissions. At the moment, one of the key strands of the nation’s strategy is the development of carbon capture and storage—putting waste carbon dioxide underground. If we are smart, in the future we may see carbon capture and storage replaced by carbon capture and use, as a way of generating a new economy and tackling the challenge of climate change.

Extracting high-value chemicals from waste is not necessarily an alternative to the lower value use of using it to generate energy. Once the high-value products have been extracted, the residue can often be used in anaerobic digesters or syngas generators for energy production. There is no doubt about the potential to develop significant money and economic benefit from carbon-containing waste. BIS gave us an estimate for the market of £100 billion for the bioeconomy as a whole, of which products from carbon-containing waste will be a substantial proportion. INEOS estimated that waste could supply the equivalent of 40% of our petrol needs in this country.

Turning waste into useful products may also make good environmental sense, but this needs careful life-cycle analysis for each case. We recommended that a more consistent approach to life-cycle analysis should be adopted, in order to assess the environmental costs and benefits.

Let me turn to some of our other conclusions and recommendations and some questions for the noble Baroness the Minister to answer in her reply, I hope. I should say at once that we were very pleased that the Government accepted some of our key recommendations without reservation. In their response, the Government agreed with our recommendation that the lead department for developing a long-term strategy for a waste-based, high-value bioeconomy should be BIS rather than Defra, reflecting the transformation from treating waste as an environmental issue to treating it as a business opportunity. The Government’s response said that the Minister of State for Business and Energy was the lead Minister, with a cross-departmental steering group. We were pleased with this response. However, more recently—that is to say yesterday—the Government updated this by telling us that the ministerial champion role is now shared between that Minister and the Parliamentary Under-Secretary of State in Defra for Water, Forestry, Rural Affairs and Resource Management. I understand from the recent update that a working group across departments is supporting the two Ministers

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in developing a long-term plan. Naturally, if a responsibility is split between departments, there is a danger of it falling between the cracks, so I seek a reassurance from the noble Baroness that that will not be the case. Perhaps she would also update us on the progress of the working group.

We also recommended that the research councils and the Technology Strategy Board should work together to ensure that funding is available to enable the UK’s outstanding academic community of scientists, chemists and process engineers to develop the knowledge base that would underpin the new industries. In their response, the Government referred to a number of new initiatives, including the new Industrial Biotechnology Catalyst with £45 million-worth of funding, which is most welcome. We were also concerned about the “valley of death”; that is, how ideas which are developed in the laboratory may not be able to cross the development phase into full-scale industrial application. We recommended that BIS should review whether the High Value Manufacturing Catapult, which was set up to help to bridge the valley of death, has sufficient capacity to support technology transfer in this area, and again I hope that the Minister will give us an update on this from the Government’s perspective.

We drew attention to the fact that the current subsidies for generating energy from biowaste may be distorting the market, and the Government share our view that subsidies should not inhibit the development of high-value products from waste and that the policy framework should be stable to encourage investment by the private sector. I hope that the Minister will offer a comment on this.

Finally, I come to two areas in which we were a little disappointed with the Government’s response. The first, perhaps remarkably, is that it is difficult if not impossible to get an accurate picture of precisely how much waste there is. I shall quote from one industrial witness, who told us that the,

“publicly available data is poor and patchy, coarse-grained and gathered for different purposes and hard to compare from source to source. It throws into stark relief how poorly informed we are as a sector to make robust strategic decisions about the future delivery of waste infrastructure”.

That is not a good comment to come from the industrial sector, which we hope will step in to take forward this important new area. We recommended that BIS should take steps to ensure that information on both domestic and non-domestic waste is collated in such a way that it is able to be used as a resource. The Government did partially accept that, but it was not totally clear that our recommendation had been accepted. I would very much welcome clarification from the Minister on this point. Are the Government really committed to creating a single database that will be of use to the industries?

Secondly, we were told in our inquiry that the different pattern of waste collection by local authorities in England was a real barrier to fully effective utilisation of biological waste. Strikingly, we heard that while 95% of Welsh local authorities had separated food waste collections, and that by next year 100% of non-rural Scottish local authorities will have separated food waste collections, for England the figure is a mere 27%. This may explain why fully one-third of food waste goes into landfill in England, which is a shocking

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statistic given that this is a potentially valuable resource. Unfortunately, the Government’s response was to say that waste collection is a matter for local councils. It does seem to me that if the Government are serious about utilising biowaste as the feed stock for a new high-tech bioeconomy, they will need to do more to ensure that waste is collected in a way that helps rather than hinders the emerging industry. I hope that the Minister will be able to make some positive remarks on this matter. I know that she has a local authority background herself and thus will be well tuned to these matters.

In closing, I should confess to the fact that I come from Sheffield, where I learned the local saying, “Where there’s muck, there’s brass”. Waste has traditionally been seen as a problem, but it now needs to be seen as a valuable resource—a way of making brass. However good we become at reducing waste, there will always be some and this will, if we get it right, be the basis of a new high-tech economic sector creating jobs and wealth, and at the same time helping to protect our environment. I look forward to hearing the contributions of other noble Lords to this debate and the Minister’s reply. I beg to move.

3.59 pm

The Earl of Selborne (Con): My Lords, I thank the noble Lord, Lord Krebs, most warmly for not just introducing this debate so comprehensively but for chairing the inquiry and the Science and Technology Committee from 2010 until earlier this year. In that time, the committee has produced no fewer than 12 reports. This is the penultimate report. All who served with him on the committee are enormously grateful to him for his calm, wise and very well informed leadership. May his successor be half as successful. I also thank our clerk, Chris Clarke, and our specialist adviser, Ian Shott. We were very well served.

I repeat the fundamental question that we posed: is there a case for developing an industry in the United Kingdom which derives high-value products from carbon-containing wastes? If there is an economic and technological opportunity in this case, should the Government have a role or could this new industry be expected to develop through market forces? If the Government have a role, how will they enable the market to work more effectively? After all, the reason for government involvement would presumably be because of market failure.

As we have heard from the noble Lord, Lord Krebs, the technology opportunities are clear. This is a new technology. There are only a few examples around the world of it being operated on a large commercial scale, although there are plenty of pilot schemes. As the noble Lord said, it is not just a gleam in scientists’ eyes: it is a fact. The greatest opportunities lie in industrial and commercial waste simply because you are dealing with larger quantities of a homogenous nature. The processing of fuels, flavourings, pharmaceuticals and plastics from these waste streams is seen not just as an opportunity but, indeed, is already in production.

Domestic and municipal waste is more varied and fragmented and there is less of it. Even though the data in this area are rather poor, we know that domestic

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waste comprises very much the minority of waste. Nevertheless, if properly organised, it could contribute to these high-value products, and that should be the aim. The reason this new opportunity should be grasped is obvious: it would offer new jobs, often in rural areas, would make an important contribution to the United Kingdom and there would be environmental benefits. Most of these processes, probably all, would lead to reduced greenhouse gas emissions, although that would always have to be tested process by process. Reusing waste products by definition reduces our demand for natural resources which have not already been exploited.

So the answer to the first question is that there is, indeed, an economic and technological opportunity and we should exploit it. The second question is: do the Government have a role? The Government are already setting the waste agenda by transposing into domestic law the waste framework directive and the landfill directive, and they fund the Waste and Resources Action Programme, which has responsibility for delivering the United Kingdom Government’s policies on waste and resource efficiency.

As we have heard, the waste framework directive sets out the requirement to manage waste in accordance with the waste hierarchy. This is one of the holy cows of the environment movement. However, like many holy cows, it needs to be challenged from time to time. As regards waste prevention, reuse, recycling, other types of recovery and, finally, disposal or landfill, there is no explicit incentive or requirement to promote higher value uses of waste. I think that such a measure needs to be put into the waste hierarchy.

The Government’s reaction to this waste hierarchy tends to be sector-focused and to support particular technologies. Particularly in Defra, which is obviously looking at rural and agricultural waste and the like, anaerobic digestion in some ways meets the SME requirements for energy production. However, there is very little opportunity to derive high-value products from anaerobic digestion. Indeed, as we have seen in Germany—the noble Lord, Lord Krebs, referred to this—there is a risk that eventually, as you try to scale up in order to make sure that your anaerobic digestion plant is fully serviced, you start growing maize and other crops in place of food. That is clearly a conflict which is not necessarily desirable. The sectoral approach that we seem to have in this country at the moment, driven very clearly by the waste hierarchy, misses the overall opportunity to contribute to the national economy to the greatest advantage.

The Royal Society of Chemistry, as quoted in paragraph 64 of our report, referred to the review of waste policy which took place a year or two ago:

“Much of the Waste Policy review focuses on waste management practices, rather than treating waste as a resource … Existing policy dealing with waste recovery is largely focused on energy generation, rather than creation of higher-value products”.

That is precisely the conclusion that we also came to and puts it quite well. The Government need to lead the way in refocusing national waste priorities, and there is a need to develop a new waste strategy which recognises waste as a feedstock for high-value products.

Then there is the further question of whether industry could be expected to develop this strategy itself and why it should have to look to government for assistance.

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The Chartered Institution of Wastes Management is the trade association or body for the waste industry. Its written evidence referred to the paucity of data on commercial and industrial wastes. It wrote that,

“we are sailing steadily towards a market failure to recover resources or value from up to 15 million tonnes per year of wastes from businesses in the UK and Ireland. Failure to secure adequate … commercial and industrial … infrastructure will lock us into either continued landfill or reliance on export markets which may or may not be there in the future”.

It also said that the lack of reliable data is a key barrier to convincing financial backers that a proposed facility would be viable. How you attract investment into this area is of course the main question. Research Councils UK drew attention to the,

“many excellent academic groups and active small companies developing new technological approaches”,

but noted that,

“the UK appears to lack sufficient numbers of large companies … who have the financial backing to develop a whole ‘process’, integrating a range of technology platforms, taking feedstocks to end product(s)”.

If this investment is to be attracted, confidence needs to be provided to investors, which will require demonstration facilities. The catapult in the north-east is providing that for at least one sector, but this will have to be rolled out further—another role for government or at least for government funding.

British Airways, which has a particular interest in the production of biofuels from waste, stressed the importance of government support to reduce the risks of high-capital intensive projects. There are other barriers to the development of the industry, such as the long contracts that exist for domestic or municipal waste—including, incidentally, contracts to export waste for refuse-derived fuel on the continent. Then there is the fragmentation of the household waste collection system, which is a historical fact. Much as one would like to say that this needs to be resolved, it is an issue that simply has to be recognised. Again, if there is an overall long-term strategy, time will eventually make it possible to co-ordinate and produce the sort of quantities of material and to build the infrastructure to meet the needs of this burgeoning technology.

We have put a lot of effort nationally into co-firing biomass with coal in power stations. That immediately provides an opportunity. Just think of the prodigious quantities of wood that has been stacked up in the generating power stations. Incidentally, this wood very often is imported. However, Professor James Clark very reasonably suggested to us that once one has accumulated so much biomass, one should extract the valuable chemicals first before burning it. After all, the calorific value is not affected. There is an opportunity here but one would not expect, I fear, a company whose business was generating electricity to start thinking in these terms. However, again, it is an opportunity. How do we encourage this little bit of lateral thinking? Indeed, as the noble Lord, Lord Krebs, pointed out, in other technologies it is not either/or; one can often first extract the high-value chemicals and then use the remaining biomass or biological material for energy.

We were careful to restrict our inquiry to what is defined as waste—something that at the end of an industrial, agricultural or forestry process becomes

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waste. However, in practice, once the infrastructure is in place, I am quite confident—particularly in the case of wood—that there will be an enormous amount of other raw material, or feedstuffs, available. I should declare an interest as a farmer and therefore own some rather scruffy woodland in the south-east; that is the nature of woodland in the south-east of England. It is a highly wooded area but, frankly, the woods are deciduous and are not managed commercially. They tick over. They used to be managed, when one could afford coppicing and there were charcoal burners. However, the woods are not producing the sort of products that they used to when there were charcoal burners. Once one starts to create a market for the thinnings and by-products, one suddenly finds that a lot more waste is generated than one ever knew existed—certainly not in the current statistics. In my case, our woodlands would be enormously improved by a start-up business—perhaps someone who had graduated from the local rural college, bought a chainsaw, set himself up in business having suitably qualified, and who would feed timber into these new infrastructure plants. It would be to the benefit of everyone.

We have now two champions in Matthew Hancock and Dan Rogerson. I welcome the fact that we have Whitehall champions, provided that this proves to be an example of joined-up government. I suggest that the first thing they do is, at least for the purposes of the United Kingdom, rewrite the waste hierarchy, make sure that adding the most value to waste is a high priority in our waste strategy and, with a bit of luck, we will soon be able to say that landfill has been consigned to history. It would be an embarrassing failure to explain to future generations why we had made such poor use of our resources.

4.13 pm

Baroness Sharp of Guildford (LD): My Lords, I, too, was a member of this committee and add to what the noble Earl, Lord Selborne, has said in thanking the noble Lord, Lord Krebs, for his careful chairmanship—not only of this report but for the last four years of the committee. I have been a member for only three years but have much enjoyed it. I was also a member of the committee back in 2006-07, chaired, I believe, by the noble Earl, and we produced a report on waste reduction. I was therefore familiar with the concept of waste as a resource and of the degree to which waste streams could add to wealth creation. I pick up the remark of the noble Lord, Lord Krebs: where there is muck, there is money.

The UK has a poor record in the continuing use of landfill. I take on board that, as others have mentioned, our ability to measure waste streams is limited but, nevertheless, something like 57% of our waste goes to landfill whereas most of our European counterparts hardly use landfill. Switzerland, Germany, Austria, the Netherlands, Sweden and Denmark are all now almost stopping the use of landfill. However, there is a notable difference between them and the UK in that they all make much more use of incineration. Something like 30% to 50% of their waste goes to incineration whereas in the UK it is rather less than 10%. I shall come back to this issue in a moment.

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As a member of the earlier committee I was familiar with the fact that although much is made of the disposal of domestic waste—with the selective collection of recyclable, combustible and food waste—it constitutes only 13% of what we think is our total waste in this country. Industrial and commercial waste is of much more importance than domestic waste and therefore the recycling of such waste is extremely important. Here, again, there has been a revolution. When I see a building demolished these days I wonder whether it ends up in a pile of rubble which is then recycled, either into cement or the foundations of roads and so on.

In this report we concentrated on one narrow area of waste recycling and one method of processing. We were concerned with how carbon-containing waste—organic waste such as food and forest residues, biological waste such as slurry and sewage sludge and gases—could be turned into higher value-added products by biological or biotechnological processes. A straightforward example of citrus waste, to which the noble Lord, Lord Krebs, has already referred, was given by Professor James Clark of York University. He said:

“We already take out oils from citrus waste in some other countries for various applications, flavours and fragrances and so forth. We can also now get solvents. Limonene, a very well-known chemical you can get from citrus waste, is now being used for cleaning printer circuit boards”.

It became clear as we took evidence that more or less any carbon-based waste could be converted into higher value-added products. Professor Clark added:

“I am not too far away from Drax power station where the volume of biomass to be burned is staggering. I look at it and I think, ‘If you are going to burn it, then why can we not extract the chemicals first?’ You can extract a lot of valuable chemicals in a very large volume, given the volumes we are talking about, and calorific value is not affected. In fact, in many cases you can end up with a material that is easier to co-fire with coal”.

Likewise, food and plastic waste can be converted by bioprocess into valuable chemicals, a potential world trade market of some $100 billion.

I had not appreciated until we took evidence for this report the potential revolution that the bioprocess technologies present in recycling waste gases and general plastics waste. Virgin Airways provided an example. It said:

“In October 2011 we [Virgin Atlantic] announced our partnership with LanzaTech to pioneer their ground breaking new technology, to develop the first of the next generation of low carbon fuels. Their technology uses a microbe to convert waste carbon monoxide gases from steel mills (which would otherwise be flared off direct to the atmosphere as CO2) into ethanol. The alcohol is then converted to jet fuel through a second stage process. Initial Life Cycle Analyses suggest that the resulting biofuel will emit 60% less carbon than the fossil fuel it will replace, kerosene. Moreover, because it uses a waste-stream, it creates a biofuel that does not impact on land use or food production”.

On the other waste stream I mentioned of waste plastic matter, whether from domestic or commercial waste, we were told that:

“British Airways is working with a US-based technology company to construct a state-of-the-art facility that will convert around 500,000 tonnes of waste normally destined for landfill—into 50,000 tonnes of sustainable low-carbon jet fuel, 50,000 tonnes of biodiesel and 20,000 tonnes of bio-naphtha per annum. The plant

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itself will be powered by the waste feedstock. The work on the detailed plant design is about to commence and we expect construction in early 2015”.

Those are two examples of the potential for creating high-value added and very useful products from what is currently regarded as waste material. This also, particularly the recycling of waste gases, holds out very exciting potential for converting carbon dioxide itself into a useful material, which the noble Lord, Lord Krebs, mentioned. A recent report from the Ellen MacArthur Foundation described how carbon dioxide can be transformed into valuable materials, with huge potential if we are going to move forward with the carbon capture and storage facilities that we are talking about.

Given all this potential, one wonders what is holding things back. From the evidence we heard, I came to three conclusions. First, a considerable amount of work in this area is going ahead. The Centre for Process Innovation, one of the seven centres that make up the High Value Manufacturing Catapult set up by the Technology Strategy Board, told us that the two scale-up and proving plants which make up its National Industrial Biotechnology Facility were fully booked four to five months ahead, indicating the degree of innovation being developed in this area.

My second conclusion was that while the Centre for Process Innovation offered pilot plant facilities, the complaint from the innovators was the lack of any support for demonstration plants. I think there are opportunities within the EU framework programme to develop demonstration projects. However, there are also drawbacks to using the framework programme because these projects have to be promoted on a collaborative basis between EU partners, which is not always appropriate. In the two examples we have had—the Virgin example and the BA example—we have seen non-EU partners playing a considerable part.

This, in turn, raises the third point, which is the difficulty that small innovation firms in the waste management business have dealing with the plethora of government departments on the one hand and the fragmentation of local authorities on the other. One of our suggestions was that a BIS Minister should take the lead and act as a champion. I am delighted that the department has taken up this suggestion, even if it is a split responsibility, with the danger that the issue may fall between two stools.

I end by coming back to incineration, which I mentioned earlier. I noted the very considerable role that incineration played in limiting the use of landfill in many of our European partners. A feature of the last few years has been the growing export trade from the UK to these countries of what is called refuse-derived fuel, which is based on recycled plastics and other wastes, often from household and commercial sources. It obviously makes sense for environmental reasons, if no other, for this country’s waste to be processed in this country rather than be exported. It requires expensive transport to export it and so forth.

When we were writing the report, in spring this year, the Government had set up a consultation about the export of refuse-derived fuel. The consultation closed in May, and in their response the Government

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promised us that they would make a decision on the way forward. Does the Minister have any more up-to-date information about what has happened to the consultation on refuse and plastic waste in this context? One aspect of this is that quite a lot of the waste that local authorities collect is polluted in one form or another and tends to go immediately for incineration. Many of these continental incinerators are lacking in fuel, and their need for it is part of the reason why the trade has become so developed. I will be very interested if the department has any further information on what is happening in this area and why some of this potentially valuable waste is actually going to a very low-value form of processing.

4.26 pm

Lord Oxburgh (CB): My Lords, I, too, thank the noble Lord, Lord Krebs, and his committee for what seems to me an admirable and extremely useful report. I also congratulate the Government on what seems to be a timely, positive and supportive reply. It is quite a rare event, I think—that one can have such a good report which has been so well received by a Government. The timely action which they are taking is extremely welcome.

I was going to draw attention to the situation which the noble Lord, Lord Krebs, and the noble Baroness, Lady Sharp, drew attention to in figure 1 in the report, which demonstrates how poorly we do by comparison with many of our western European neighbours, with which we like to be compared under many circumstances. One actually wonders whether we would have got as far as we have with recycling had it not been for a certain amount of pressure from Brussels. I also emphasise the point, made by several speakers, that it is clear that we have a really massive information deficiency here. The new combined governmental effort should have, as one of its high priorities, the collection of useful data from people who are producing, disposing of and managing waste.

Purely by chance, I happened to be in a meeting this morning which had a presentation from the waste industry. The speaker there commented on the difficulty that he had in trying to collect information, but the information that he had been able to collect suggested that the number of anaerobic digestion facilities which were either in existence at the moment or planned was far in excess of any plausible supply of feedstocks for those digesters. He made a similar comment about landfill capability: given the prospective reduction in landfill, it looked to him as if there were going to be excess landfill facilities available. I have no way of verifying these figures independently, but if he is right, individuals are wasting money investing in facilities which are not going to be used.

The main thesis of this report, which seems to be undeniable, is that we have a massive resource here which we are not really taking advantage of, although it is perhaps not as easy to take advantage of it as some of the academic studies would suggest, and there may well be practical difficulties in all sorts of ways and all sorts of places. Just to give a feeling of the size of this resource, going back a few years when I was at

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Shell, one of my colleagues in North America calculated that if you were able to extract the full calorific value from the organic waste in the United States, it would be enough to fuel all surface transport in the United States. Obviously, extracting the full calorific value is not a sensible or a practical thing to do but it gives a sense of the massive amount of energy that is potentially available from this resource. As the report points out, using this resource as an energy source is in many cases not the best thing to do, but it gives a feeling of the scale of the opportunity.

The other point to make is that the technology in this area is changing rapidly. It is quite a hard time to invest when technology is changing rapidly. There is a considerable temptation to put off your investment because in six months or a year’s time a better technology will be available, and we have to bear that in mind as an inhibitor. However, the technology is relevant to the sorting of collected waste and, in essence, it is rather similar to the problems that exist in the mineral-dressing industry. You crush a rock in order to extract a particular mineral from it and then you put it through a series of processes to concentrate the component in which you are interested. Exactly the same problems exist in the case of waste. You can use many of the same techniques and, in fact, you probably want to separate the waste into four or five different components.

Therefore, there are separation technologies and then there are added-value technologies, which produce some of the high-value end products to which the noble Lord, Lord Krebs, and others have referred. However, there is a snag here, which is emphasised if I read a sentence from page 8 of the report:

“A waste is something that costs you money to have taken away, a by-product is more or less cash neutral to your business, and a co-product is something that contributes profit to profitability”.

If you build up a business on the basis of someone’s waste—something that they do not care about—and then they improve the efficiency of the process, which of course is what we are telling them to do by telling them to reduce waste, you may well have invested in a capability which you cannot use properly. Alternatively, let us say that the industry with which you are working and on which you depend simply finds a much better process and does not produce that waste any more. Therefore, you have to be extremely careful and you probably have to enter into a long-term agreement to take what might originally have been seen as waste but then becomes either a by-product or a co-product. The industry concerned agrees to continue to supply you with it and maybe locks itself into a slightly less efficient way of doing things. That is what I mean by saying that sometimes the practicalities get in the way of progress. I am not saying that we should not do this; we should—it is a very high priority—but there are difficulties.

What is the role for government? Obviously we are in a time of financial stringency and suggesting that the Government put money into things is probably not a very good route to follow at the moment. However, I think that there is an extremely important role for government here in terms of sympathetic regulation and help with regulation. The problem is that we are talking about new technologies which were not in

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mind when the present set of regulations, whatever area you are looking at, were devised. I shall give a very good example.

A few years back, I visited a plant which was burning straw—maybe not the best thing to do with straw—to generate power. That carried enormous additional cost because the regulations under which the operators were constrained were actually those that applied to coal-burning plants. The operators were obliged to fit sensors to their flue to pick up all sorts of rather disagreeable elements that are present in coal but not in straw, such as mercury and so on. Nevertheless, the regulation was there that they had to do this. That turned a perfectly sensible operation into something much more expensive and tedious than it need have been.

This sensitivity to problems of this kind, and assistance with ways around them, is an area where the Government really could be proactive. In this new, combined interdepartmental service, there could be a way in for new technologies to say, “Look, we are being hamstrung by the regulatory system as it is at the moment. Can you help us?”. It might be a European regulation or an English regulation. It would not be that expensive and could be positively useful. Another thing that this organisation should do is provide support to local authorities, which cannot be expected to keep up with the research developments and new technologies in this area. In many cases, they probably do not have the time or competence to evaluate them properly. Again, there should be support for local authorities in understanding how to manage their waste and evaluate new technologies. At this point, I pay tribute to the work that WRAP has done, which is extremely important.

In conclusion, I can say to the noble Baroness, Lady Sharp, and the noble Lord, Lord Krebs, that technology exists to make CO2 react with material from open garbage and turn it into useful materials. There is a company called Carbon8, which takes urban garbage that has been minimally processed and reacts it with a stream of CO2 to turn it into carbonate pellets that can then be used in building materials. That operating company is making a profit but is constrained a little by a regulatory regime from expanding. However, the technology exists.

4.38 pm

Lord Dixon-Smith (Con): My Lords, I acknowledge the noble Lord, Lord Krebs, and his time as chairman of the Science and Technology Committee. I had the privilege of being with him for some of that period. I had the privilege of serving on that committee back in the 1990s, which seems an awfully long time ago. To me, the great joy of being there is the amount that I am exposed to and learn. I suspect that most other Members find that to be the case; however good and clever we are, the specialist examinations that we undertake, of which this is one, are always superb. I thoroughly enjoyed this report. I also enjoyed the Government’s response and I hope that my noble friend, in her reply, will assure us that we are going to get the Government’s road map on time in the new year. At this time in politics, when one is approaching an election, administrative flaws seem occasionally to

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develop in the system, which hold up the essential business of managing the affairs of the country because the politics of the country, for some reason, takes an improper priority.

I am also somewhat prompted to intervene because I have a nephew who is involved with a company in this business. As I understand it, the company has eliminated completely the word “waste” from all its paperwork. I have to say that I have not tested him on the title of our report with that word eliminated, but it is in fact an important psychological point. Most waste is not waste, except for a point I am going to make where in fact that is what it is.

I should talk for a moment about the way this business has evolved. I was involved in Essex for a long time. At one stage we had one of the most notorious hazardous waste dumps in the country. It was a huge problem for everyone, including the firms which had to export their hazardous waste all the way across the country to dispose of it because we were one of the very few places that could take it. It was a wonderfully managed scientific site, but—this is the key point—the owners came increasingly to the realisation that they were dealing with materials that someone else wanted. The site is virtually non-existent today, except of course that there is a still a big mound which is full of hazardous materials. However, it is only a matter of time before they will be mined. I merely want to make the point.

We also used to receive in Essex a great deal of London’s waste, and indeed we probably still do. The less of it we receive the better, as far as Essex is concerned. However, it was an important source of land reclamation material when we had to deal with the scars of what I choose to call industrial extraction from the land. That was a pretty brutal process and left the land deeply scarred, and the material was useful for that. However, we were running out of holes; it was as simple as that.

The development of the organic wastes business—I have to use the word—into the transfer of a resource is a process which began a long time ago in other fields, and it is very good to see it coming here. However, the waste I want to talk about, and which we have not dealt with, is waste heat, particularly the waste heat from power stations. I hope that I will be forgiven for raising the issue but this is an opportunity to do so. I should say that I do not expect my noble friend the Minister to reply, but merely to take note of my comments. We have not discussed this aspect very much. Perhaps I should begin by saying that it is not an easy matter. In south-east London, somewhere down Deptford way, is an organisation that was established around 20 years known as South East London Combined Heat and Power, which I think is now called simply South East London Power. The idea was to establish an incinerator in the middle of a built-up area. It was constructed to a very high standard so that it would produce no pollution, and there have never been any complaints about it in that respect. It was to generate electricity and to provide heat for the surrounding community. The problem with waste heat is what to do with it. It should be possible to heat huge areas. But there has been no agreement about who should do the

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plumbing, which is why the company is known today just as South East London Power. Noble Lords might think that that is such a basic little thing, but of course it has to be paid for. It was a complete failure.

I am now going to misinterpret a law of physics that I learnt in school, which is something like: heat lost equals heat gained. I suspect that when we talk about power stations it is a fact that energy lost is energy gained. If we are looking ahead to solving the problems of the energy economy into the middle of this century—we have the Climate Change Act, which sets out the necessary targets for carbon emission—we cannot afford to lose all the heat produced.

Some of us unquestionably enjoy the wonderful tomatoes which come from a bank of greenhouses close to one power station, but we cannot take all the heat from our power stations like that. I live in Chelsea. We had there what used to be one of the most efficient power stations in the country—Battersea—which heated nearly all of Battersea and a large chunk of Chelsea. It has completely gone and is now a building site; fair enough, it is better that than it does nothing. Perhaps we should have put two nuclear reactors in there and heated half of London, I do not know, but, when you look at their safety record there is no reason why that should not have happened.

The difficulty is that we are producing this huge resource in remote landscapes where we cannot use it. Many industries are very effective in their use of recovered heat, but the power generation industry cannot do it because there is no demand for such heat where they are located.

The reasons I am raising this issue today are deep and difficult. Rationally, if we were to solve this problem—and I think, in 2015, we need to solve it—we would put our power stations much closer to residential areas, where the heat could be piped in and used for district heating. Denmark and other European countries are much better at this than we are and there is a significant lesson to be learnt. I apologise for introducing what could almost be called a red herring, but I thought it sufficiently important to have on record that this is a problem that has got to be tackled at some point in the future.

4.47 pm

Lord Young of Norwood Green (Lab): My Lords, I, too, congratulate the noble Lord, Lord Krebs, and the Science and Technology Committee, on introducing this fascinating debate in an area to which, I must confess, I have not paid a great deal of attention previously—that is, treating waste as a resource rather than as a problem to be dealt with. It has certainly focused my mind. The committee has done a valuable job.

The fourth paragraph of the Government’s response states:

“The Government supports frequent waste collection and the recycling rewards schemes which reward and recognise those who reduce, reuse and recycle their waste”.

I do not understand why we have to support frequent waste collections because the problem is not the waste collection but what you do with it. At home, because

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my council collects plastic, food, paper and everything else, I do not need waste collection particularly frequently. I have calculated that, by the time I have sorted everything out, I can fill a black plastic sack about once every three weeks. So it is not the frequency. Surely it is what councils do with it.

This brings me to another part of the Government’s response, which states:

“In developing a long-term plan for a high value waste-based bioeconomy, we recommend that the Department for Business, Innovation and Skills examines the strategies used by other countries to extract maximum value”.

That is a sensible suggestion but should we not be looking at what is best practice in the UK—at local authorities’ best practices? Should we be giving them some sort of award? It also seems to me that it is not just local authorities. I would have thought that the LEPs or local employment partnerships—which the Government, after all, created—ought to be drawn into this equation, to look at how they can encourage the development of local industries which extract the maximum value from waste.

We can see that this is a complex problem. Once upon a time, not that long ago it seems, we thought that anaerobic digesters were great and were the answer to the problem. Now we find that they are beginning to create a problem. I even heard a debate on the radio recently where a farmer asked whether he could get a better price by putting milk into an anaerobic digester rather than selling it, because the price he was getting for milk was so low. It verged on discussing the ethics of producing milk only to feed it into an anaerobic digester. There is a complexity about how we deal with this, but the basic approach that the committee has taken is that there is a really valuable resource here that the Government ought to encourage. There are signs that the Government are encouraging it but it seems to me, when we look at this problem, that reducing the amount of food waste in itself is important.

Again, I cannot help reflecting that we seem to have lost the use of a common-sense approach to this. I have watched people look at something and say, “That is the sell-by date so you throw that away”, even though most of these products actually last well beyond the sell-by date. We have a very crude device that labels food products and encourages the totally unnecessary creation of food waste. We seem to have brought up a generation of people for whom that is the only means of checking. You cannot open it up, smell it or look to see whether it has any obvious signs of organic decay any more; the only thing you can look at is the use-by or sell-by date. Surely we ought to be doing something about that.

One thing that was touched on in this debate that I found interesting—I think it was the noble Lord, Lord Dixon-Smith, who mentioned it—was that landfill sites themselves are capable of being mined and that a vast amount of chemicals could possibly be extracted. There are technologies around that could do that. We have touched on food waste and organic waste, but we know there are whole other areas of waste that are a huge problem. Electronic waste and the amount of used tyres in this country create huge problems, so there are other vast areas. To go back to the issue that the committee looked at, it seems to me that the

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Government surely ought to be encouraging the new European committee to publish a five-year strategy on food waste prevention, to address the issues raised throughout the House of Lords inquiry and, as I have said, to ensure that the best practice in individual member states and local authorities can be translated into action elsewhere.

Does the Minister agree with the Waste Minister that the Government should step back in areas where businesses are better placed to act and there is no clear market failure? I listened carefully to the noble Lord, Lord Oxburgh, who reminded us how difficult it is to pick the winner, if you like. He talked about the need for sympathetic or smart regulation to encourage that, which was a valid point. There is also the question of ensuring that we have solid, reliable data. It seems to me that, in developing our policies, we need a holistic approach to this. We would then be able to see, for instance, that biomass and anaerobic digesters are not going to solve the problems; in fact, they could create problems. We now know that we are importing a huge amount of timber to feed biomass power stations. I have read the analysis and I am told that, even if you import the timber from American forests and so on, it is still a viable proposition. However, I am sceptical; that does not seem the way forward in the long term.

I think that there were two references to the fact that it is possible to extract valuable chemicals from timber. I read in the report about high technology, the catapult and the Technology Strategy Board, but are those enough to encourage the development of these industries?

I think that I have covered the area of food waste by households and encouraging retailers not only to use better labelling but to take a better, more scientific approach. There are more sophisticated ways of ensuring that the public at large are much better educated so that we can help them to prevent food waste.

What are the Government doing to support WRAP, the waste and resources organisation, and to encourage low-carbon initiatives by food chain suppliers and other businesses? We can see that there is enormous potential here but the real challenge is going to be in how we convert that potential. I referred to LEPs but surely universities, colleges and schools all have a responsibility to focus on this area. What are they doing in their own environs? Surely we should encourage the next generation to think about how we deal with waste and to ask what opportunities there are, first, to prevent it and, secondly, to use it as a possible resource. Surely there ought to be a local strategy to ensure that all the educational establishments, first, look at their own environmental footprint and, secondly, encourage the study of this area, as well as practical participation by their students and schoolchildren.

Once again, I thank the committee for its valuable contribution to this area. It has pointed out that we should see waste as an asset that can be developed if we get it right. Looking at the Library notes, there are many interesting areas. I was attracted to the idea of creating fuel from ground coffee beans. However, the challenge for us, as a country, is going to be in ensuring that we develop a programme that will enable us to

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achieve what the Science and Technology Committee wants—that is, waste stimulating a real bioeconomy. I look forward to the Minister’s response.

4.58 pm

Baroness Williams of Trafford (Con): My Lords, I am grateful for the opportunity to respond to this debate on behalf of the Government. I am grateful to the noble Lords on the Science and Technology Select Committee for their very important report, Waste or Resource? Stimulating a Bioeconomy, under the very able chairmanship of the noble Lord, Lord Krebs. I extend my good wishes to my noble friend Lord Selborne in his future role. I am sure that he will do more than half as good a job. In fact, he and the noble Lord, Lord Krebs, seem to be at one in their approach. I also thank all noble Lords who have taken part in this debate. It has been a bit of an education for me as well.

The report recognised the important role played by government departments in incentivising the use of high-value assets of carbon-containing wastes, discouraging landfill—or, as the noble Lord, Lord Young, said, utilising landfill—and developing and commercialising new technologies to enable economic opportunities.

The noble Lord, Lord Krebs, made some very important points, including one about the ministerial champion role. The report recommended that the Government should appoint a champion for the waste economy and that the appointment should be given to a Department for Business, Innovation and Skills Minister. As the noble Lord, Lord Krebs, told us, there has been a development in this ministerial champion role. My right honourable friend in the other place, Matthew Hancock, BIS Minister of State for Business and Enterprise and also Minister for Energy at the Department of Energy and Climate Change, will now share this responsibility with Dan Rogerson, Parliamentary Under-Secretary of State for Water, Forestry, Rural Affairs and Resource Management at the Department for Environment, Food and Rural Affairs. This change allows for the respective policy ownership for the economic development and for waste to be combined on this important issue. This change is a welcome development which reinforces the partnership necessary for government to deliver a truly cross-Whitehall vision and action plan for developing a high-value bioeconomy with waste as an initial focus. The noble Lord, Lord Krebs, made an important point about ensuring that, with two people sharing a role, the agenda does not fall between the cracks. I assure him that the two departments are already working very closely on this agenda.

The noble Lord, Lord Oxburgh, commented on regulation and how it will be a changing picture as time goes on. The Government are encouraging industry and the Environment Agency to consider how new high-value processes can be allowed to move up the waste hierarchy. Government can facilitate this dialogue with the Environment Agency to change this over time.

Several noble Lords asked how the Government can manage and steer the agenda cross-departmentally over time. This work is being taken forward through a

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co-ordinated cross-government working group to facilitate the joined-up approach needed to succeed in the task. In fact, this is already under way. The working group is reporting progress to the Defra-chaired Resource Steering Group and to the Circular Economy Task Force. The working group is being advised and steered by the Industrial Biotechnology Leadership Forum. These existing boards will ensure co-ordinated development of this agenda across Whitehall, industry and stakeholders.

Other key stakeholders, including WRAP—the Waste and Resources Action Programme—are contributing as well. The primary responsibilities for the two cross-Whitehall bioeconomy champions are to ensure the production of a long-term plan or road map with at least a 15-year horizon, to support the development of a growing bioeconomy looking at waste as a feedstock. The road map is being developed now and I am pleased to inform my noble friend Lord Dixon-Smith that it should be delivered by March 2015.

The noble Lord, Lord Oxburgh, and my noble friend Lady Sharp talked about looking at international best practice. The road map planning will include a review of international best practice in bioeconomy strategies, including waste. The noble Lord, Lord Young, made the very sensible point about looking at best practice within this country. That certainly can be looked at. The picture differs across local authorities but there are examples of very good practice.

The noble Lord, Lord Krebs, and other noble Lords made points about research funding. I can confirm that a range of funding is in place across the research council and Innovate UK, including the Catalyst Fund for major integrated research and development projects. The second phase of catalyst funding was recently announced, which extended it by £40 million; the noble Lord made that point. The High Value Manufacturing Catapult will play a vital role in bringing technologies in this space through to commercial reality. Some £60 million of additional core funding was secured for this resource at the Autumn Statement, and the Centre for Process Innovation—a key part of this catapult—received an additional £28 million to extend its facilities.

The noble Earl, Lord Selborne, the noble Lord, Lord Krebs, and other noble Lords made points about information on waste. The bioeconomy road map will look at this issue and take account of what is known about the location, volumes and trends in waste arisings. I appreciate that this is a complex area and it is difficult to get those figures at this time, but the road map will be looking at it.

A lot of comments were made about local authorities. As a local authority leader, I totally appreciate the fact that there is a varied picture in terms of what local authorities collect, their different contracting arrangements, the fact that those arrangements are completely out of kilter, and the fact that some local authorities collect food waste and others do not. I am pleased to say that the local authority of which I was leader collects it. However, the Government continue to support the sharing of best practice and joint procurement across local authorities to help councils

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reduce costs and drive up quality and value. I will make the point about, for example, Greater Manchester and the devolution of powers to the whole conurbation. I hope, in time, to see some harmonisation of waste collection. Perhaps that might be in that authority’s consideration as it drives down costs and drives up value for money. There is one waste authority—the Greater Manchester Waste Disposal Authority—but different methods of collection across the local authorities in the area.

The noble Baroness, Lady Sharp, said that municipal waste accounts for only 13% of total waste. I thought that it was actually 15% but it is even more depressing if the figure is 13%. The use of waste products will certainly help to improve the efficiency of use of waste materials. She also mentioned incineration, which in a local authority context I have found to be a political hot potato. I was asked about the consultation on refuse-derived fuels. I know that the responses are out and were published a week ago, and the Government will publish their response to those responses in due course. The noble Lord, Lord Young, asked why the Government supported the frequent collection of waste. I assume that waste includes recyclable waste as well as other waste; we all have our various bins collected on different weeks. I, like him, can manage to fit my non-recyclable waste in a black bin bag over two weeks. Certainly, the amount of non-recyclable waste in local authorities is getting less but I am making the assumption—I will correct that in a letter if I am wrong—that there is more recyclable waste. That is the point about frequent collection.

The noble Lord, Lord Krebs, referred to a report entitled Sweating our Assets—Productivity and Efficiency Across the UK Economy, and how it has been received by the Government. It highlights the need to increase the productivity and resilience of UK businesses through better resource efficiency. With businesses taking the lead, the Government continue to work closely with and support the transition of sectors towards a more circular economy which makes the best use of our materials and resources.

I shall take up some other points made by noble Lords in the debate. My noble friend Lord Selborne raised the issue of subsidies. These will need to be reviewed over time for several reasons, including how they serve their purpose and how the business case for a subsidy may change over time. Something that springs to my mind is, for example, tidal and wave energy, for which the business case is quite poor at the moment, but the technology may improve to the point where it becomes very viable to subsidise it. I know that that is not a waste issue, but it is an example that came to mind. The Government seek to incentivise new developments, but not to distort the landscape. This point was made during the evidence session with representatives from DECC.

My noble friend Lady Sharp mentioned the need for co-ordination in order to unlock progress. The waste strategy will be devolved and managed under the umbrella activity of the Chemistry Growth Partnership, the sector council that is leading the strategy for chemical and chemistry-using industries. She also talked about the need for whole-system

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development at scale. I can say to her that industry in the north-east is working with local enterprise partnerships to develop plans for the wholesale use of industrial waste gases for biorefining.

My noble friend Lord Dixon-Smith talked about heat from power stations. I can give him a partial response now. Waste heat is being harvested between businesses in clusters. An example is industrial biotech processes which can utilise heat. Local enterprise partnerships have a role to play in encouraging this, and they are doing so on Teesside.

The noble Lord, Lord Young, mentioned a pet interest of mine, which is food waste and how we have a generation of children who will not even smell things that are past their sell-by date. When my children were little, I had a particular interest in yoghurt, which lasts well after the sell-by date. I used to force them to eat the yoghurt and they never came to any harm. The noble Lord also mentioned the capabilities of landfill sites. Again, that will be mentioned in the road map.

I am pleased to hear that by and large noble Lords are pleased with the Government’s response, but I should make the point that much needs to be done. I hope that noble Lords will agree that the summary reports good progress against the actions. I conclude by thanking all noble Lords who have taken part in the debate. I hope that I have not left out any points, but if I have, I will write to noble Lords in due course.

5.13 pm

Lord Krebs: My Lords, I thank the Minister for her detailed response to the various points that I and other noble Lords raised in the debate. We certainly look forward to the publication in the spring of next year of the road map, which will set out more fully the Government’s strategy for dealing with this important area. I, too, thank all noble Lords who have contributed to the debate and made such interesting and important points.

Motion agreed.

Political Parties: Funding

Question for Short Debate

5.15 pm

Asked by Lord Dykes

To ask Her Majesty’s Government what plans they have to reform the funding of political parties in the United Kingdom.

Lord Dykes (LD): My Lords, I am grateful for the opportunity to raise the question of the absence of an agreement on party funding by the political parties. This mainly, of course, affects the activities of the House of Commons rather than our own but it also reverberates throughout British politics.

I have to start on a sad and depressed note, which is unusual for me because I am normally a cheerful personality, I hope—at least that is what most members of my family still say to me. I feel sorry for MPs collectively because in recent years there has been a

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huge demoralisation in the House of Commons. This is a severe problem. British politics is in the doldrums, as we are all aware, and wondering how to get out of it. I am grateful, therefore, that the Minister is here today. I am sure he has many ideas on this issue but, in the time he has to discuss them today, he will concentrate mostly on the subject of the debate.

The reasons for this demoralisation are various. All party leaders actively overreacted, almost to the point of hysteria, on the MPs’ expenses scandal. There were some bad examples but the demoralisation of the House of Commons resulted from people being unfairly accused of doing things they did not do or which they did by mistake. Only a small number of MPs did anything seriously wrong—and they were, quite rightly, punished if that was appropriate—but others were driven out of politics without having done anything wrong. I can give plenty of names if anyone wants them.

Another reason over the long term was the blocking of MPs’ wage rises by various Prime Ministers. When I first came into politics, my boss, Edward Heath, was the only Prime Minister to immediately accept the independent recommendation of a substantial wage increase for MPs from, in those days, £3,000 to £4,500. Ever since then, every Prime Minister, of whatever hue, has blocked rises and the demoralisation caused by the freezing of MPs’ wages has partly produced that absence of morale.

On the question of party funding, there was much optimism when the subject was launched either side of the beginning of the coalition Government and afterwards. When Labour was replaced by a coalition for the first time in the post-war period, there was optimism that it might produce a better system in which people would be inclined to agree more. The party funding system was regarded as a serious problem which needed to be tackled. As we know, a committee was set up which produced some notable suggestions and I again commend its work. Could the politicians, the political leaders, their representatives and advisers agree on anything that emerged from the imbroglio unleashed by this quest for some kind of agreement on party funding? You had only to see the headlines in the papers, of whatever colour, in those days about how they were struggling to get there. One paper, at the end of October 2011, referred to the idea of using public money—£3 for every vote—as a state funding plan for political parties. Immediately most of the press objected violently to that idea. However, it happens in other countries—Germany is a notable example—on a large scale and helps to produce more sensible, modern, up-to-date politics dealing with complicated political economies, as Britain is.

Then, because austerity was gradually deepening, the parties got nervous about even suggesting that. They said that in a time of austerity it would be quite wrong of them to seek to use public money, although relatively small amounts had always been used for party research activities and so on—the Short money and the Cranborne money in the House of Lords. MPs urged swift action to limit donations to political parties. What a problem that now is. We have recently seen more and more donors coming to this place. I

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have to be careful in what I say because of course the Liberal Democrat Party has recently benefited from a £1 million bequest from Professor Watson of Cambridge University. At least it is not a donation from a living person. It is gratefully received by our party, which has a very modest budget of about only £4 million or £5 million in comparison with the larger figures for the other leading parties.

The three main political parties pledged in their election campaigns to take big money out of politics. They were embarrassed by the stories of huge donations, mainly for the Conservatives but also for the others, including ourselves. A fraudster who had offered us £2.5 million went to prison. There were mistakes, scandals and dramatic headlines. The Conservatives ended up offering their business supporters a sort of tariff of what they could get by contributing certain amounts of money. If they paid £2,000, they could have,

“a lively programme of drinks receptions, dinner and discussion groups”.

For £5,000, they could,

“meet and debate with MPs at a series of political lunches and receptions”.

For £10,000 they could have,

“dinners and political debate with eminent speakers from … business and politics”,

and for £25,000—I pause here for effect—they could,

“join senior figures from the … Party at dinners, lunches, drinks receptions, election result events and important campaign lunches”.

It is not only the Conservatives who do that; we all do it, although perhaps in a more modest way.

Again, it is a symptom of the problem that we really have to deal with, with consensus, on a cross-party basis. There is no harm in occasionally having a bit of consensus in British politics on major issues such as this. I feel that the public are turned off by the instantaneous opposition to a suggestion from another political party in order to compete with it as though an election is hovering. Of course, there is a general election approaching now and we have to acknowledge that. None the less, the differences between the parties remain at the margin and are sometimes infinitesimal. A politician from one party says, “We’re saying 18.4679% and that’s the right policy. Someone from another party says the figure is 17.237%, but that’s ridiculous”. The public get turned off by these marginal differences, as well as by politicians changing their mind. They keep shifting in their positions and the public become more and more bewildered, shut out and switched off by this very depressing phenomenon.

The talks resumed in the spring of 2012, having collapsed and the suggestions of the independent committee having been rejected by all the party leaders. I thought that the essence of setting up that independent Committee on Standards in Public Life was to reach agreement on the suggestions, including a cap on donations. The political parties ended up by shelving the funding reform talks, and by July 2013 there was a complete breakdown in any co-operation at all. Why was that? The original suggestion of a £5,000 limit was then dismissed as donations became larger and larger, and more and more members of parties became Members

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of the House of Lords—coincidentally, of course; there is no direct connection between the two, because that would be a criminal offence. The Lords now has just under 800 Members, many of them financial contributors. Good luck to them—they are entitled to do that under the present system.

We have to get away from this. My colleague, my noble friend Lord Oakeshott, who has now taken leave of absence, made himself thoroughly unpopular through some of his suggestions and behaviour not only in my party but also generally, and we have not heard from him since. However, he had a point when he suggested that voters could be asked whether they wanted to give £5 to a political party of their choice at the ballot box, and he also wanted to cap political donations at £5,000. That would stop wealthy donors having such power over political parties, and Mr Clegg could, for example, team up with Labour to co-operate on reforms of party funding if the Conservatives were less inclined to agree.

That led to what I believe to be Ed Miliband’s quite substantial reorganisation of unions’ individual funding systems. Members of trade unions now donate on a different basis and are not compulsorily obliged to give money to trade unions against their will. Ed Miliband’s reform in that area, which was quite a major step, did not get the credit in the British papers that it deserved. Again, that was part of this atmosphere, with the party leaders unable to co-operate and work with each other. I am sad to have to say this, but I thought we would get a better quality of politics coming from this thing.

This matter really needs to be dealt with very urgently indeed now. I hope that my noble friend will make some interesting suggestions today, and it will be very important to return to this subject. Presumably, alas, we cannot do it before the general election, for obvious reasons, but we must surely return to it after the election. The British public are really quite fed up with what has been happening and they want a sensible system. It may include some public money, on a limited basis. The total figures of £25 million, £75 million or £100 million are very modest for a five-year Parliament, even if public funding is to be involved, now the economy is recovering and people are feeling more self-confident in that sense.

The other thing is that donations must be capped and the attribution of union membership dues must be on a voluntary basis only. That should be officially registered, recognised and accepted by everybody, and then we will get to a position where we are on a more even keel and we will begin to restore the public’s confidence in our politics. I hope that there will be lots of other measures as well in the manifestos—and good policies of course—and then we will begin to make progress. But the whole of this five years has been wasted.

5.26 pm

Lord Campbell-Savours (Lab): My Lords, I am very pleased that the noble Lord, Lord Dykes, has raised this debate today, because it is a debate that is very close to my heart, going back over some 30 years. I am also glad that he raised the issue of IPSA, because I

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am utterly convinced that IPSA has effectively destroyed Parliament for many parliamentarians. It has so circumscribed the rules on expenses now in the Commons that many people—worthy people—who should be attracted to Parliament will no longer stand for Parliament. I know people who will not come to Parliament any more, because they believe that the way in which the new regime has been set up, effectively based on distrusting Members of Parliament, leaves them exposed to media attack for the smallest of sins, if you might call them that. They are not prepared to risk their family and professional reputations, or indeed their careers, on the basis of something where they can be removed on a whim. If I was starting off again in my first election as a candidate, all those years ago in 1974, I would have second thoughts about coming into Parliament in the light of developments that have taken place following the introduction of IPSA.

In my view, one of IPSA’s biggest sins was to presume that it could propose a substantial increase in Members’ salaries and justify it on the basis that it was cutting back on the expenses regime. What it did not realise, and what a schoolboy with an elementary knowledge of politics could have told it, was that the moment you talk about a 10% increase for MPs prior to a general election, MPs get bombarded with letters asking whether they are going to take the increase. I know that MPs are currently writing back to their constituents and saying, “No, I am not going to take the increase”. What a ludicrous position we are in whereby MPs, because of the power of the press and concerns about the ballot box, are now turning down increases that should legitimately be accepted. I completely blame IPSA for that, along with those who proposed the idea of this monstrous organisation four or five years ago.

I now want to speak specifically to this debate. I believe that the issue of political funding is a festering sore undermining the credibility of Parliament, parliamentarians, the political process and the political parties. I do not think we should underestimate the level of cynicism in the mind of an electorate following articles alleging impropriety in the relationship between politicians and money.

People are becoming heartily sick of these stories and wonder what is going on in Westminster. In fact, very little is going on in Westminster that should worry them. The facts are that they read these stories and believe that something is fundamentally wrong. I do not believe that people necessarily follow policy when they vote in general elections. I actually think that people make an instinctive judgment, very often not on the basis of their knowledge of a particular party’s political posturing but on their feelings of trust and distrust. They make up their minds on the basis of an aggregate series of stories they hear over a period of time that undermine their trust in political institutions. This is one of the areas influencing public judgments.

When I first stood for Parliament in the early 1970s, we used to regularly get turnouts of 70-odd per cent. In my by-election in Workington in 1976, the turnout was nearly 73%. We regularly had turnouts of nearly 80% in the general elections up to and throughout the 1980s and 1990s. Now, when one looks at general

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election results nationally, one sees a collapse in the vote in almost every constituency in the country. We have to ask ourselves why. It is because of this disconnect and distrust that has built up between the public outside and this institution. It is often the case that bad headlines have swamped all the good that we do in this institution. Bad donor stories damage the whole political process.

We read stories about trade unions, and they somehow are condemned for the donations they make. Again there is a misunderstanding. Trade unions and their contributions reflect the collective giving by millions for their collective interest in collective provision. One cannot liken that to the donations of individuals, whether they be companies or people making single donations. Those single donations by companies and individuals are more often than not about personal advancement and advantage. That was the Oakeshott analysis. He and we knew that there are Members of the House of Lords who are here because they paid money to their political parties. It is a fact, and we know it. I know a particular case, not in my party. I know the sum that was paid, the chap is no longer with us, he almost never spoke and he was here because he paid. The police may carry out their inquiries and may find nothing, but the facts are that this system is wrong and has to change. The power of big money and big donations has to be brought to an end.

It was with all that background in mind that I put up, during the passage of the then Political Parties, Elections and Referendums Bill, a proposal to change this system. I want to take down the contribution I made on that occasion off the shelf where it still sits unnoticed and bring it once again before this Committee to consider, because I believe that it would help resolve the difficulty. What I proposed at the time was a system that would have incentivised systems of donations by individuals by allowing taxpayers to reclaim the basic rate of tax on their donations to political parties. It would have limited the relief to the standard rate and operate in the same way as gift aid to charities or covenanting to one’s local church. It was not my idea; it was done in America. Obama had hundreds of thousands of small donors who were tax-relieved. I cannot see why we could not have done something similar in this country. Then we would have mass financial contributions and membership of political parties. This issue has had much support over the years from all political parties and all the organisations that are associated with political debate. The Committee on Standards in Public Life, chaired by the noble Lord, Lord Neill of Bladen, recommended essentially the proposal I made when we were dealing with the legislation. He suggested that 15 years ago. The Electoral Commission’s report of 2004 on the funding of political parties recommended a similar change in the law, with a £200 cap per individual on their tax relief.

In 2006, the Constitutional Affairs Committee of the House of Commons made a similar recommendation in line with my proposal at the time. The Conservative Party’s Tyrie report of 2006, entitled Clean Politics, also made reference to an amendment of the nature of what I was moving. In 2004, the Liberal Democrats called for a scheme of tax relief of a similar nature, and in 2009 moved an amendment very similar to the

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one that I was moving during proceedings on the Political Parties, Elections and Referendums Bill. When the Labour Government established the Hayden Phillips inquiry in 2007, they recommended a tax relief match-funding scheme that bore a close resemblance to the scheme that I was proposing. Why was it blocked when we tried to introduce it into the legislation? It was blocked because we were told that negotiations were going on between the political parties. That simply was not true. Mr Clegg told us quite clearly from the Dispatch Box in the House of Commons that negotiations had finished, so that was not an obstacle. The negotiations had ended and therefore we were free, if we wished, to proceed on the basis of changing the law in favour of what I was proposing.

It was also put to me, sadly by people in my own party, that a single party—in this case it was targeting the Conservative Party—might gain by increasing the low tax relief contribution cap that I had set. It may have done, but it would never have set it so high that it was not credible in terms of what the public would accept. Anyhow, the Conservative Party never has trouble raising money; it is always raising money. It is the other parties that have great trouble raising funds from individuals. Therefore, that someone might at some stage in the future be inclined to raise the cap slightly higher than the one I propose is irrelevant to me. I was interested in ensuring that, in raising funds, the smaller parties were in a position to develop this contributory financial base. Finally I was told that the cost was too much. I proposed a cap in the third year of £96 per annum per contributing taxpayer. We could not cost it but we gave an estimate of approximately £3 million per year. It would have begun the process of tax-relieved small sums widening the base of contributions, narrowing the base of big donors and ultimately giving us the much wider contributing base that we all believe is necessary if we are to develop a more healthy politics.

If, indeed, there are negotiations of the conditions of a minority Government next year, I hope that, whatever happens, at least those who are in a minority will demand this change. They will be in a position to do so. If no party has an overall majority next year there may well not be a coalition but there will certainly be a minority Government, and those who can influence that minority Government should use their power to begin to secure that elementary change, which will not cost a lot of money, in the culture of financial contributions in British politics.

5.38 pm

Lord Kennedy of Southwark (Lab): My Lords, like my noble friend Lord Campbell-Savours, I thank the noble Lord, Lord Dykes, for introducing this debate. I agree with him that he is a happy and friendly noble Lord. I always enjoy our conversations together, whether they are in the Bishops’ Bar, outside the Table Office when we are waiting to put our Questions down, or anywhere else. I see the points that he makes about politicians and the low feelings in the House of Commons. Unlike the noble Lord and my noble friend Lord Campbell-Savours, I have never served in the other place but Members there and Members of this House are honourable and only a few exceptions cause problems.

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The funding of political parties is an extremely important issue, and having healthy parties is crucial to our democracy. Whether locally or nationally, most people elected to public office stand on a party ticket. Those elected to form the Government of the UK, the Opposition or devolved institutions or to form the administration of a local council are drawn from people who, in virtually all cases, are elected from party tickets.

However, before we get to the point of seeking elected office, parties must have structures and procedures in place. They must have built up organisations and developed the skills to undertake campaigns. All this costs money, and everyone in this debate wants the funding of our political parties to be transparent, open and free from suspicion of people buying influence or seeking favours.

Over a number of years there have, as my noble friend and the noble Lord, Lord Dykes, said, been a number of attempts to reform party funding. The present interests or concerns can be traced back to the 1990s and the last years of the Conservative Government led by John Major. The biggest reform followed the report undertaken by the Committee on Standards in Public Life, which led to the 2000 Act commonly known as PPERA. It introduced spending limits for national election campaigns, the regulation of donations, the publication of what money had been received in each quarter by the parties and the publication of annual accounts, among other things, including the establishment of the Electoral Commission.

Since then, there have been other problems. After the 2005 election, we saw allegations of cash for peerages, which went on for well over a year. We then had the review by Sir Hayden Phillips, to which other noble Lords have referred, but the interparty talks were suspended in 2007. Then we had the election of the coalition Government, whose agreement said:

“We will also pursue a detailed agreement on limiting donations and reforming party funding in order to remove big money from politics”.

We have had the inquiry by the Committee on Standards in Public Life into party finance, published in November 2011. It is a good report with lots of sensible recommendations on how party funding could be reformed. However, the biggest problem is that the public—the taxpayer—would not accept additional public funds going to parties when we are in such difficult economic times and when efforts to improve the public finances and the economy are set to continue well into the next Parliament, no matter which party or parties are in government after May next year. That is the real issue and one that the parties cannot ignore.

The interparty talks again failed to reach agreement, as the noble Lord, Lord Dykes, said, and the Government moved ahead with their lobbying Bill. There have been other developments. In terms of my own party, my noble friend Lord Collins led a review which fundamentally changed the relationship we have with the trade unions, with individual union members having to opt in, as the noble Lord, Lord Dykes, said. That in itself may bring about other changes regarding the funding of political parties. These are difficult issues to resolve but I am firmly of the opinion that they

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must be resolved by agreement between the parties and that that agreement must not produce winners or losers. It needs to be a fair funding settlement whereby, in effect, every party has to give up something or make changes but where every party also gains as well. My noble friend Lord Campbell-Savours made some powerful points about how important it is to look at what impact that might have, particularly on the smaller parties. A deal can be made only on that basis and that is the real challenge for everyone who wants to seek a resolution to this problem.

The Political and Constitutional Reform Committee came to similar conclusions in its report published on 29 January 2012. It said that a solution perceived as partisan would undermine any positive impact on public opinion which would otherwise be achieved by resolving this issue.

I want to move on and look at some of the suggestions that have been made in recent years. Some have considerable merit and others not so much. As I said before, additional state support for parties in our present economic climate is not something that, in my opinion, the public are going to accept, but the proposals put forward by Andrew Tyrie MP, John Denham MP and the noble Lord, Lord Tyler—particularly in connection with making savings on things such as the freepost costs and possibly using that money in a different way—are certainly worth exploring further. I wonder whether the noble Lord, Lord Wallace of Saltaire, has any idea of the sums of money that would be involved, which might be used in a different way. Would it be possible for this money to be used to begin to limit the size on donations received by a political party? I do not have any figures but could a start be made? It would be good to get the noble Lord’s views on this.

Often when people look at party funding reform, it is suggested that there should be some reduction in the national local spending limits to curtail expenditure and stop the development of an arms race. In a previous life I was the director of finance for the Labour Party. A political party is not shielded from the everyday cost pressures that any other organisation faces. I refer to things like mortgage payments, rents, pay claims, IT costs, insurance and other office costs. Many of these limits for campaigning in national elections have not risen for many years. I really do not want to see an arms race, but parties must be able to mount effective campaigns with reasonable expenditure limits.

I have always liked the idea of fixing limits, but then building in a process whereby an annual uprating for inflation is made as a matter of course. That would let you protect the original decision you made and allow for reasonable annual increases which would not become a row after a number of years because no one had actually dealt with the issue. Then you have to deal with rises to cover four or five years in one go.

I did this with the Labour Party membership fee. No one ever wanted to put the fees up and they were withering on the vine. After five or six years we would end up having a big row because the fees had to be put up. There was always trouble at conference about this, so I proposed, and it was agreed by the

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National Executive Committee, that in future our fees would be put up on 1 January every year using the October figure for RPI, rounded up to the nearest 50p. We had a standard rate membership fee and a reduced rate at half that which was for unemployed and retired people, and then we had a rate for elected people such as Members of the House of Lords. That was to be double the standard rate. It took the heat out of everything. There are no more rows about membership fees at party conferences or anywhere else. The system is simple, fair and reasonable, and everyone accepts it.

I have always been a bit reluctant to entertain schemes that involve tax reliefs, but I wonder if the noble Lord, Lord Wallace of Saltaire, could say a little about what thinking there is in government about them. My noble friend Lord Campbell-Savours made some valuable points about this area.

The noble Lord, Lord Wallace, has kindly written to me this week about the question of the governance of the Electoral Commission. I know that we are not going to look at this issue until after the election, if at all, but I do think that if any of these changes take place, we must also look at how the regulator is held to account and is subject to proper challenge. I do not believe that speeches in the House of Commons present that proper challenge in areas such as the governance of the Electoral Commission. These are major issues that need to be taken on, so we need to make sure that they are done properly. I was for many years an electoral commissioner and my experience tells me that we need to look very carefully at the whole question of the commission’s governance.

In conclusion, I thank the noble Lord, Lord Dykes, for tabling this short debate. It is important that we have healthy political parties that can function properly and that the political system is free from the suspicion of acting improperly in relation to party funding matters. While we often sit and watch the TV or see in the newspapers an opponent’s party getting caught up in all sorts of funding nonsense, as my noble friend Lord Campbell-Savours has said, in the end we all lose because people begin to think that all the parties are at it. They think that the system is corrupt and we all suffer as a result. It is really important that we get this right. There should be no winners or losers, but a fair, functioning system that actually respects everyone.

5.48 pm

Lord Wallace of Saltaire (LD): My Lords, looking around the Committee room, I think we can say with great confidence that none of those here bought their peerages. I do not think that it was open for us to afford any such thing. Indeed, part of the negative attitude towards the House of Lords is the image that somehow we all bought our peerages. That is not the case, although most of us have probably paid too great a proportion of our salaries to our political parties. We have walked too many pavements over too many years. We have fought too many elections, and that is how we eventually ended up here in this place. It is part of the problem of politics, however, that the popular image is one where money plays too great a role.

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Lord Kennedy of Southwark: I have been in the House for almost five years. When I filled in the forms I was in the bizarre position of having to explain that I was actually being paid a salary by the Labour Party. It paid me money.

Lord Wallace of Saltaire: I wish my party had paid me. The first time I worked for my party, in the 1966 general election, when I took four weeks off from writing my PhD to be the party’s assistant press officer, I worked flat out—probably 14 to 16 hours a day for four weeks. At the end of it, Lord Byers, who was then the party’s chair, presented me with a £50 note, which I had never seen before and which in those days was a substantial sum of money. I and a friend spent a very enjoyable holiday in France on the basis of that £50 note. That is the only occasion on which I have benefited from money flowing the other way.

There is a consensus on the need to limit the impact of money on politics. There is also a particularly negative campaign from the right-wing media that we are all in politics only for the money. All I say on that is that I would encourage the noble Lord, Lord Campbell-Savours, who pursues many very effective campaigns in politics, also to campaign to ensure that those right-wing newspapers pay their full taxes in the country which they seek to defend because we all know that they do their utmost to avoid that.

The problem for all of us is that political campaigning costs money and the public, as consumers of politics, expect the parties to put leaflets through their doors, to phone them and to maintain websites, Twitter feeds and so on. When I was out in Hull two or three weeks ago, people told me on the doorstep, “How good to see you. Hardly anyone ever comes round and asks us about our political attitudes”. I was glad that we were doing it there, but in quite a lot of constituencies, no parties really manage to do that actively. We know that it does not come for free and that maintaining a basic constituency organisation requires a level of funding. Voters complain vigorously when parties do not maintain contact with them but show no willingness to help pay for those activities.

That pushes us towards the question of donors. The noble Lord, Lord Campbell-Savours, and other noble Lords asked whether all the political parties could manage on less money and depend more on volunteers—but we all face similar problems in how many volunteers we can attract. Perish the thought, but if UKIP had three or four really major donors, that might drive the three parties together to an eventual consensus on this issue.

We all know the context for this debate. The Political Parties, Elections and Referendums Act 2000 introduced some important changes in the field of party funding. It established the Electoral Commission, about which the noble Lord, Lord Kennedy, has rightly raised issues today and on previous occasions. It required political parties to register with the Electoral Commission, set down accounting requirements for parties, introduced controls on donations to parties and their members, and controlled campaign expenditure within certain periods, both for parties and third parties in national election campaigns. I stress “control periods” because I suspect that all three parties have spent a fair amount

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of money in the last four weeks. We are just about to start the control period for the election; that is part of the problem. The Act set down rules on the donations received and expenses incurred in election campaigns and required companies to obtain approval before making political donations. These provisions are useful and important. Political parties have to keep records of donations over £500, and donations over £7,500 have to be declared to the Electoral Commission, which publishes details every quarter of donations received by political parties. That information is published on its website and is accessible to all—so far, so good. Parties can only receive donations from permissible sources: individuals who are on the electoral register, UK-registered companies—I stress “registered” as that raises a number of questions of definition—trade unions, building societies and other bodies such as unincorporated associations and limited liability partnerships.

The Electoral Administration Act 2006 introduced further provisions on the disclosure of loans to political parties. Since these reforms, there have been continued public and media attacks on large donations and on trade union funding—to which I shall return—which have led to further reports. These include the 2004 review by the Electoral Commission, reports by Sir Hayden Phillips and the Constitutional Affairs Select Committee in 2006 and, most recently, in 2011, a report from the Committee on Standards in Public Life, which recommended, among other things, a £10,000 annual cap on donations, trade union members having to opt in to fees paid to political parties if donations are to be counted individually—I stress that was a proposal from the Committee on Standards in Public Life; it was not a partisan proposal by other political parties—and an increase in public funding.

The problem is in getting consensus among the political parties on this. We all have different interests and we all have different sources of donations. My party has proudly said on its website that when the Electoral Commission has published the number of donations to political parties, over the past three years we have received on several occasions more individual donations than the Labour Party. The problem is that we have not received half as many large corporate donations or donations from other collectivities known as trade unions, or indeed any other large donations—let alone those received by the Conservative Party. In that sense, it does us good as a democratic principle, but it does not provide us with the money we need to employ staff, work on our website and do all the other things that need to be done.

We had a further round of discussions in the light of the report of the Committee on Standards in Public Life which the Deputy Prime Minister convened in 2012-13. Seven meetings were held and the Deputy Prime Minister made one thing clear in setting out the remit, which was that in the current circumstances of a squeeze on public spending, there was no possibility of increasing state funding for political parties. After those discussions, the group failed to agree, and it is quite clear that between now and the next election we are not going to make any progress. Over the past 25 years we have established a whole set of additional funding for political parties—Short money, Cranborne money and the like—which has been very useful and

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has helped us to carry out our parliamentary functions and to raise the quality of our political research. However, public support for the expansion of political public funding is clearly absent at the present moment. So those talks broke down and we are stuck. We need to fund political parties and we benefit enormously from not having to pay for radio and television advertising, but politics and political campaigning cost money.

The noble Lord, Lord Campbell-Savours, raised the question of the extent to which the harsh regulation that we all suffer, including under IPSA once you are elected, discourages political recruitment and political retention. I think that that is an enormous problem and we will all need to address it once the election is out of the way and we have seen many good MPs from all parties retire rather than continue. I think that the noble Lord and I would probably agree that some of the best of the new Conservative intake are retiring after one period in Parliament, regrettably, because they really do not want to put up with the situation in which they live. That is a loss to us all in terms of democratic politics as much as those retiring from other parties.

Lord Campbell-Savours: I have listened very carefully to the noble Lord. Is he suggesting that there will be discussions about reform of the regime? Has he heard something that we have not heard?

Lord Wallace of Saltaire: My Lords, for many of us, the world in its current form ends on 8 May 2015. If anyone here knows what the shape of the new Government will be, I would love them to tell me so that I can put down a large sum with the bookmakers and donate the winnings to my political party. I have no knowledge of that. What I am saying is that awkward people like the noble Lord, Lord Campbell-Savours, should insist, as soon as they come back, that it is put back on the agenda because it is a very important question and we cannot get away from it. I therefore encourage him to continue to stir on all of this.

I am not entirely sure that I agree with the noble Lord that trade unions act as virtuous collectivities, which I think is what he was saying, with benign general secretaries representing the enlightened interests of their diverse memberships. That is not quite how I see all the general secretaries of trade unions, so there are some questions around that.

Lord Kennedy of Southwark: Will the noble Lord accept that our contributions come from individual members paying in so many pence per week? The contributions come from individual trade union members paying the political levy.

Lord Wallace of Saltaire: I will accept that. A proportion of the fees that individual members pay is deducted for a political fund which goes to one political party. How conscious or voluntary that is is, of course, part of the dispute.

I have a great deal of personal sympathy for the argument made by several noble Lords in support of gift aid tax relief. That is absolutely part of the way forward and it is one of the issues that quite a few of us, in whatever position we find ourselves after the election, should put straight back on to the agenda.

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We can then argue about the cap to be set, but again we are facing the problem that so far, the evidence of the number of voters who are sufficiently committed to any political party to want to pay money to it has fallen and we therefore need to increase it yet again. Some of us, and I am one of them, do our best to narrow the gap by entering the EuroMillions lottery each week and promising that we will give a substantial part of our winnings to our political party. Unfortunately only the SNP has benefited from that so far, not the Liberal Democrats or any other party.

I had expected the noble Lord, Lord Campbell-Savours, to ask me why the Government have not commenced the part of the last Act which deals with the tax status of donors. The answer I was ready to give to him, and which I cannot resist giving to him, is that the tax status of donors is actually not very easy to establish during a current tax year. For example, whether someone is domiciled in Britain or not is not entirely clear until after the end of the tax year. It is also a matter of confidentiality between the taxpayer and HMRC. If we are to have an information data gateway between HMRC and political parties that political parties can access, which might well be part of what we need to do, it will take us a year or two to establish—my notes say a minimum of two years. That, again, is an issue which we may wish to return to after the election. The question of whether or not a company is registered within Britain and carrying out serious activities in Britain is also a very difficult issue.

Lord Dykes: Would my noble friend also consider the possibility of imitating the American regulations so that owners of newspapers in Britain have to be based in the United Kingdom and pay UK personal taxes?

Lord Wallace of Saltaire: My Lords, the coalition Government have no policy on that, so I had better not comment. I think that that covers all the issues which have been raised. I encourage the noble Lords, Lord Campbell-Savours and Lord Dykes, to continue to press this. It is an issue to which we will all have to return after the next election.

Lord Campbell-Savours: The Minister referred to my amendment on this question of foreign donations, over which, if I remember rightly, we defeated the Labour Government. He has given the Committee an explanation, although I did not raise the issue. Could we have a written explanation as to exactly why we have had difficulty in implementing that particular area of the law?

Lord Wallace of Saltaire: My Lords, I will see what can be done in that respect and, if possible, I will write to the noble Lord.

Lord Kennedy of Southwark: I also mentioned the whole issue of freepost. I know he does not have figures here, but maybe we could look again at how much we spend on freepost in the UK, and use that money in a slightly different way.

Lord Wallace of Saltaire: Again, I will take that back and see whether we can write to the noble Lord.

Committee adjourned at 6.05 pm.