I commend the last Government, in particular my noble friend Lord Livingston and UKTI, for continuing to bang the drum for the UK to bring in that inward investment we need and boost our exports to reduce the trade deficit still further. That, combined with more trade promotion and agreements with key partners across the globe, will ensure that the UK continues to lead the world out of crisis and into more prosperous times. The world is very keen to do business with us. It likes our products and services, our rule of law, our quality of product and our efficiencies, and it likes our business-like approach.

The new business-friendly Government, whether in or out of the EU, will give confidence to many that this is the time to come here to the UK for business. Our future is enshrined in our past. Just as we sent ships into uncharted waters in search of new markets 400 years ago, I look forward to hearing how my noble friend will chart the course for us. I am delighted that we are proverbially doing so again.

5.34 pm

Lord Empey (UUP): My Lords, I want to make a brief contribution in the gap. It is encouraging that the Minister is in his current post. Having someone who has been at the centre of government in the past five years come into this post I hope illustrates that the Government are taking the issue much more seriously and putting our exports and trade further up the agenda. I wish him well in his new task.

Like other noble Lords, I was privileged to be a member of the Select Committee on SMEs and exports in 2012, to which the noble Lord, Lord Popat, referred. I commend our report to the Minister for consideration because there are important lessons to be learned there.

The principal reason why I wanted to speak is that I have the honour of being a vice-president at the Institute of Export. The Minister will know that the institute is an educational charity that has existed since 1935. It is an Ofqual-regulated body, which allows it to give qualifications up to degree standard to students, both young and old, with various levels of experience in exports. Listening to the debate and the very significant

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contributions—some very encouraging, others more worrisome—there is one thing missing. As a nation we no longer value to the same extent as many of our competitors people in business, in trade or who are exporting. We do not give it the same amount of priority.

All of us can come here and ask for more money for this service, for health, for transport or for infrastructure —we are all good at it. Indeed, if we did, we could pump up expenditure with very little difficulty. But the fact is we are less good at telling Governments how this money is to be provided and where it is coming from. We have not had a trade surplus since 1983, if my memory serves me correctly. Obviously that cannot go on. I ask a simple question: would you allow someone to perform dental work on you if that person did not have a qualification in dentistry? Would you allow somebody to fix your car if they had not been trained in fixing cars? I suspect not, but we are quite happy to have people come into exporting who are not trained in exports. We are quite happy not to train people, to give them qualifications, or even to give them tax incentives to be trained in exports. The basic knowledge that qualifications in exports can give is a very simple thing. If we prioritise that, such as through providing a tax incentive for people who are trained in export qualifications, that would be one small step to help businesses move forward.

The far bigger issue is the attitude of our country. We just do not put the same value on other skills as some of our major competitors, such as the Germans. The title “Herr Engineer” is really big among our German colleagues; here, it is a person with an oily rag in their back pocket. That is the core issue that is wrong with our approach. I hope, with the Minister in his new role and with the profile and contacts that he has, that perhaps we will be able to break through this barrier. Many people talk about glass ceilings; we have a concrete ceiling in this country that we need to break through to get people to realise that we have to do trade to pay for the public services that we all want.

5.39 pm

Baroness Kramer (LD): My Lords, on the night of the general election, the noble Lord, Lord Maude of Horsham, and I sat for a time on the same panel for the BBC—of course, he did not yet have his title. I cried; he smiled. However, it gave me the opportunity to welcome him to this House, even though, very discreetly, he said absolutely nothing. It is a delight now properly and formally to welcome him to this House. I listened with enthusiasm to his opening speech in which he talked abut cross-party working. Many aspects of export and investment are commonly supported around this House and are areas on which we can work constructively together.

Many noble Lords talked about the importance of the WTO and bilateral free trade agreements, as did the noble Lord, Lord Maude. There has been much discussion of the EU. The noble Lord, Lord Maude, will have heard my noble friends Lord Stoneham and Lord Clement-Jones, the noble Lord, Lord Davies of Stamford, and other noble Lords talk about the importance of having an early resolution of the uncertainty that hangs over our role in the EU, given

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the inhibiting effect of that uncertainty on investment. However, I suspect that the noble Lord, Lord Pearson of Rannoch, does not agree with their views.

The noble Earl, Lord Caithness, spoke in support of the potential that the EU offers the UK. In my role as a Transport Minister, which is sadly over, I had the opportunity to go to Asia and meet a number of companies that have made very substantial investments in the UK, and which promised future investment. However, they are hanging back on making that decision until they are certain what role we will play. It was very clear to me that they considered it crucial that we remain in the EU. Many of these major investors have plants and operations right across continental Europe and are constantly deciding where they will invest next. We cannot be certain that it will be the UK if we decide to exclude ourselves from one of the largest and wealthiest markets on the planet.

We have heard today of many success stories. The noble Lord, Lord Kakkar, talked about extraordinary success stories in healthcare and life sciences, and urged further support. No one can match the enthusiasm of the noble Lord, Lord Bilimoria, but he underscored an issue often raised in this House—namely, the importance of allowing immigration. Home Office policy is constantly to restrict and restrain immigration to the “tens of thousands”. However, we know that such a policy starves the key industries that we require to enable our economy to grow. We look to the noble Lord, Lord Maude, to fight the corner for UK business and the economy around the issue of immigration.

I wish to take a few minutes to pick up on the issues of SMEs and exports. Like the noble Lords, Lord Empey and Lord Popat, I had the privilege of serving on the Select Committee. Indeed, the noble Lord, Lord Popat, had the idea of setting up the committee, which was brilliantly chaired by the noble Lord, Lord Cope of Berkeley. Given the work we did on the committee, it was a shock to me to recognise how crucial to UK exports the SME sector continues to be. The report states:

“Our great companies are already highly successful worldwide, but many are wholly or partly foreign owned and for a step increase in exports we must look to our SMEs”.

However, in the transport field that I know well, which I think is not dissimilar to other fields, over the last couple of decades we have lost most of our British-owned tier 1 companies. Although our SMEs are still successful in the domestic supply chain, they find it very hard to participate in projects overseas because they are not part of the natural global supply chain for companies that now own what were once UK tier 1 companies. I am sorry not to be quite clear in saying that but it is an ongoing problem that our small SMEs manage to operate in the UK supply chain but find it very difficult to then follow a company as it exports overseas and to participate in the supply chain elsewhere. The noble Lord, Lord Green of Hurstpierpoint, gave excellent evidence to the committee. He pointed out that 5 million SMEs in the UK export something like £100 billion a year and that an increase of a mere one-third would eliminate our trade deficit. So the potential with SMEs is huge.

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I join others in recommending the report to the noble Lord, Lord Maude. It identifies a number of barriers and contains some important recommendations, some around skills—the noble Lord, Lord Empey, talked about the importance of skills and the lack thereof, particularly at SME level, when it comes to exports. The noble Lord, Lord Davies, talked about the importance of productivity, which, again, ties very much into the skills agenda. The noble Earl, Lord Caithness, too, addressed the lack of relevant skills to provide the basis for our SMEs to drive forward the export sector.

Some issues were not addressed at all in the debate. The lack of export finance on reasonable terms was raised over and over again by almost every SME. Our UK banks are extremely poor at providing finance to SMEs generally but when it comes to providing export finance—and dealing with foreign currency exchange rates, which small companies face; big companies rarely do—their weaknesses become even more evident. Much of the advice we heard was that a company looking for export finance should ignore British banks altogether and try to find a European bank with an outlet in the City of London because it might provide support in a way that no native bank would.

I raise this issue particularly at this point in time because we are about to divest ourselves of RBS. I have raised it before and it is one of my eternal frustrations that we have not restructured that bank in a way that meets the gaps within our own domestic banking sector, whether it is community banking, regional banking or a capacity to really deliver hard on export finance for the SME sector. I wish the Government would take the opportunity to look at that set of issues again before an opportunity is lost for ever.

The committee also looked at the UK Export Finance programme. In 2012 it was just starting to have some programmes potentially targeted at the SME sector. Perhaps the Minister can fill us in on how successful that programme has been because, quite frankly, the take-up when we looked in 2012 was virtually negligible. This area is critical if we are going to get the growth in exports that we seek.

Many people, including the noble Lords, Lord Bilimoria and Lord Risby, praised UKTI, and I join in that praise. After neglect for generations, frankly, the coalition turned it into a really effective body with some superb people, but it remained small and its reach remained exceedingly limited. The Select Committee report recommended a fund for LEPs to work with UKTI and introduce it to the relevant SMEs within their territories. I do not know if anyone has taken up that idea but it struck me as exceptionally important.

Of course, in places such as Germany, the Government can reach and talk to small companies, make them aware of opportunities, help them and support them, because they know about them because of their membership of the chambers of commerce. We have a purely voluntary system for membership of chambers of commerce, the result of which is that barely a single company joins. The example that the noble Lord, Lord Heseltine, often quotes is that a chamber of commerce of standard size in Germany will have 30,000 members; a similar one in the UK will have 400. Surely we can use the vast

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reach of government to try to identify SMEs so that we can at least communicate with them and make them aware of potential opportunities. Government seems to constantly operate in silos, and other government departments could assist us in trying to compile that list and making sure that we have access. Even a simple tick-box, frankly, on a tax form ought to let us know which companies are out there and give us the opportunity to get to them.

I also want to raise what I fear is the constant exhortation for small companies to focus on exporting to the rapidly growing emerging markets. I am delighted if we can help SMEs get to China. The noble Lord, Lord Sheikh, talked about the potential in Africa and the noble Baroness, Lady Mobarik, about the potential in Pakistan. It is crazy that so many companies fail to recognise that we have people with ethnic roots here who could help them to access those markets, because they have the cultural understanding, contacts and specialised knowledge to make that possible. However, it is extraordinarily hard for many SMEs to get into these more distant markets. There is everything from regulation to—let us be honest—corruption, which can be an issue. Frequently, you have to know certain families or be tied to key decision-makers. There is also the whole area of intellectual property. That is surely the reason why one in five SMEs exports to the EU but only one in 20 goes beyond it.

I have talked to a number of SME companies within the transport sector. A highly respected company engaged in accreditation told me with excitement of the sale of one of its products to China. I congratulated it on what would be a growing business but it said, “No, you don’t understand. With China, you make one sale; after that, they have the intellectual property and make the future sales. It is one product only”. I have heard that over and over. We have to tackle these issues and provide appropriate and proper support for SMEs, even when going into the US market. People at one of the companies that we spoke to during the work of the Select Committee sounded very positive about the American market but I happened, by chance, to have a follow-up meeting with them. They had decided that their only way to access their market was in a joint venture because only in that way could they afford to defend their patent. The consequence is that all future exports anywhere outside Europe will now go through that joint venture, not the UK company. We repeat those problems again and again.

Could the noble Lord, Lord Maude, talk to us about how he is reorienting the work that his department does to support SMEs? The large companies will tell him what they need, and they frequently need no help. But we depend for our growth and exports on small and medium-sized companies, which desperately need appropriate support and vigorous resource from the UK Government.

5.52 pm

Lord Mendelsohn (Lab): My Lords, I draw attention to my registered business interests in roles connected to being an inward investor and an exporter who is involved with government agencies. It was a real pleasure

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to witness the maiden speech of the Minister, the noble Lord, Lord Maude of Horsham. He is an excellent addition to the Government’s Front Bench and I wish him well in his duties. He has certainly shown that he is an effective and canny operator, and many achievements are to his credit. The rise of David Cameron to lead the Conservative Party was hugely guided by the noble Lord’s careful management of the leadership process. He guided his party to the candidate who embraced the “No change, no chance” lessons of an election defeat. I think there is a demand for such a role in a number of other places at the moment, but I am sure the Minister is very pleased that he has chosen this duty.

I am also pleased to be able to acknowledge the Minister’s work in reforming the Civil Service and upgrading the capability of the UK Administration by tapping into a pool of talent, including his excellent decision to involve individuals of the calibre of Dr Martin Read and others. As someone who has been involved in business turnarounds and restructurings, I can only admire anyone who is able to change the direction of the Civil Service. Looking at what the noble Lord has done and how it operates, there is a real sense of accomplishment in achieving such great results. His exhortation to make sure that we keep attentive—that more can always be done—is also a very modest way to look at his achievements. He takes on a hugely important brief and I hope that in this task, he can show some of the skills he has shown in other areas. In a very impressive maiden speech, as one would have expected, he covered many areas—including the broadest possible effort to support trade and investment, which I think this whole House responds to. I hope the Minister enjoys this House as I have. Debate and discussion in your Lordships’ House provides sometimes critical but usually constructive and useful perspectives that can serve to clarify one’s thinking.

We on these Benches are firmly committed to open, competitive and dynamic markets and to a very strong approach to exports and encouraging inward investment. We have had a very interesting and wide-ranging debate, with a great deal of honesty from all sides. I will make a number of points that I hope highlight some of the current key concerns on this side of the House.

First, we are also committed to finding ways to establish a firm recovery and to ensure growth and the conditions for our long-term competitiveness, as well as the right sort of capability and adaptability to ensure that we are ready to capitalise on the future shape of business technology, markets and trade. In this regard, we hope that the Minister uses his considerable reputation and ability to fashion a new strategy for the Government to follow.

Our future is at risk, and trade and investment are at the heart of many of the challenges we face. Growth is better than austerity as a policy for bringing debt under control. In business, we cut hard so that we can grow, but government can certainly adopt different approaches, not least through their ability to reform markets and make interventions. I agree with the view that the recovery is too weak to allow for a normalisation of monetary policy. Focusing on the latter would leave us weak and unprepared for any downturn, whether here or in Europe, and very exposed if the growing

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emergence of highly leveraged instruments were to cause even a small shock. We need to add lustre and sustainability to our economic recovery.

Britain’s widening trade deficit dragged down growth for the first three months of the year. The data show that net trade took a chunk out of the economic position. Imports surged by 2.3% and exports fell by 0.3%. The performance reflected a rise in imports of oil, machinery and transport equipment which knocked almost 1% off growth. Recent published data identified that the UK ranks almost at the bottom of the OECD countries in respect of export growth since 2010. I note the comments from all sides of the House, including the very thoughtful ones from the noble Lord, Lord Popat, and the noble Viscount, Lord Hanworth. The data from the Office for National Statistics show that the deficit is still strong and now in its 18th year.

The 2011 government paper, Trade and Investment for Growth, was a useful attempt to synthesise an effective operating strategy, but it urgently requires renewal—in fact, it requires change. The Government have grasped one very important nettle, but the UK regions will not become the powerhouses of growth and trade unless they are powered up by investment in skills and growth, which is a hoped-for benefit of the northern powerhouse. From that point, they can help to encourage exports, imports, investment and growth.

I hope the Minister takes the support he has received in this debate as licence to think more broadly, deeper and harder about what we can do. In this context, his comments about the UK-Israel tech hub being a new pioneering method are warmly welcomed. I hope that when he responds, he will further set out his thoughts on how he can make some changes.

Secondly, an effective trade and industry strategy is critical given the need to deal with our productivity crisis. A profound area of concern and one very relevant to the trade and investment debate is the huge problem with our foreign direct investment. I have previously clearly stated that our foreign direct investment is a great source of pride to us, but in recent years we have started to see some significant challenges, which the noble Lord, Lord Davies of Stamford, spoke about. Foreign direct investment may well have reached a tipping point where, as an aggregated measure, it does not provide us with greater productive capacity for the economy.

There is a long-standing concern that the size and scale of financial and asset purchases make our FDI numbers look more flattering for the UK economy. We have long trailed the levels of actual job-generating investment by other companies, including in the UK. Recently, there has been not just the idea that deals and high-end property are not hugely significant, but a growing concern that levels of foreign ownership have started to affect the productivity of investment itself. If the general and standard investment in public utilities is done by foreign companies, is it really the same measure of foreign direct investment as a similar investment in France and Germany? If we strip out this type of investment, do we really have more manufacturing projects than Germany? Do we have more jobs created or preserved?

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We also believed and always said that much of the benefit of the asset sales was that the jobs could not go overseas. Can we now properly distinguish between business and corporate development locked into the UK and the investment we use to generate new growth in new areas? It is perhaps time for some revision of the measure of FDI. I am sure that the Government agree too that the long-term approach to earn and grow our way to higher living standards is through a high-productivity, high-skilled, innovation-led economy. To get there we need more British-based businesses creating good jobs, investing, innovating and, of course, exporting. Does the Minister support evolving our approach to reporting and monitoring FDI to ensure that we support this aim? In the next few years, might we develop a plan to help increase not just the quantum size of FDI but its quality? Not all investment is the same and not all of it will help growth and our productivity challenge.

Thirdly, we are firm believers in the principle that if you do what you have always done you should expect the results that you always have had. We embrace change, experimentation and innovation. Undoubtedly having a branding campaign, such as the GREAT campaign, is a useful and modern approach. It has many advantages and I thought that the National Audit Office report provided a useful series of suggestions for its future work. However, the National Audit Office was very sceptical of the methods used to suggest the return. The Cabinet Office’s numbers suggested a £1.2 billion return on £113 million layout. I, too, am sceptical of the return. I believe that there are a variety of data deficiencies, not least that much of it was the expectation of what overseas students would be able to bring in, when we have before us the proposal to require our overseas students to go home as soon as they graduate. I urge the Minister to look at this carefully. If direct economic impact of investment can be 10:1 then we should expect the Budget to raise the amount we are spending on this into the many billions. I suspect it will not. However, it is important that we report these things openly and sensibly so that we can all really help to start looking at how we can do things better. I urge the Minister to consider a new evaluation of our strategy and to provide a greater degree of reporting and scrutiny of the performance of the whole of the Government’s approach to the trade and investment framework for action, and especially the country and region-specific actions. Many noble Lords across this House have raised a number of very good initiatives, ideas and suggestions of where we should focus and it would be very helpful to emphasise those.

Fourthly, we are broadly supportive of the Transatlantic Trade and Investment Partnership, provided that the benefits flow to consumers and to employees of the companies involved. Our position has always been that these are the benefits of open and competitive markets. It will be the biggest trade agreement of its kind and the negotiations to cut tariffs and lower regulatory barriers to make trade easier between the two markets can lead to great benefits. However, the negotiations must make sure that those things that require preservation are preserved. We have already made clear our views on the NHS and the objectives of the United States

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negotiators. A recent peer-reviewed research paper from Tufts University made tough predictions about the impact of TTIP on Britain and, tellingly, it predicts a shift in GDP of 7% from labour to capital with all the likely consequences for inequality, wages and jobs. This would be hugely challenging for us but it is not a reason to stop our support for open markets and free trade, more a reason to improve discussions to a speedy conclusion. We need progress on this but not at any cost. I would be very grateful if the Minister could outline how he sees the development of the negotiations, where he feels the key issues are and what the Government’s current predictions are for its opportunity or impact.

Finally, the Minister honestly addressed our weaknesses in our export performance. There is considerable concern that we are not where we need to be on this. Major exporters do not report a universal story of support and frequently point to the better service they perceive international competitors to get from their Governments. I am not sure that all these issues are justified and we have heard a number of very powerful stories from noble Lords of where our agencies have been highly supportive. It is very important that we get business as a whole engaged in this mission and that we approach this as a very strong pro-business mission. It was good to hear the noble Lord, Lord Risby, again championing the cause of taking this strong, business-focused approach.

I was encouraged to hear that the Minister had taken an interest in the Cole commission—an independent commission established under the leadership of Graham Cole to galvanise industry to develop ideas about how we can improve exports. Its interim report was a very useful addition to the debate and had some good ideas. The report showed that we had a lot to celebrate—cars, planes and pharmaceuticals. As the noble Baroness, Lady Kramer, said, it identified that many firms do not always make the most of the supply-chain opportunities that our major exporters present. Submissions to the report made clear that riding on the coat-tails of major exporters can be a road to exports for smaller firms, and we need to find ways to add to that and support it.

In addition, the report suggested that we should look at whether public authorities could set a lead in developing local supply chains by making an export plan mandatory—including for SMEs—in all public procurement bids that have export potential.

I urge the Minister also to champion the existing potential of our education and health areas, and our services sector, including of course our legal services sector, which was raised by the noble Lord, Lord Clement-Jones, and to champion and redouble the work of our creative industries.

The Government’s commitment to reach a target of £1 trillion in trade now falls on the Minister’s shoulders. It is a big task which I suspect no amount of journeys, air miles, calories or dinners will make it possible for him to achieve alone. I look forward to hearing of his future progress in developing strategies to reform and galvanise all parts of government in this crucial mission. As he said, this is a cross-party effort. I can assure him that we will respond positively and work with him if he continues in the manner in which he has started.

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6.06 pm

Lord Maude of Horsham: My Lords, I am very grateful to your Lordships for the warm welcome and the very bipartisan spirit in which this debate has been conducted. I said at the outset that I knew that your Lordships’ House contained a wealth of knowledge and experience on all matters pertaining to trade and investment, and the debate has amply borne that out, with a majestic and historic sweep going at least back to Magna Carta—very appropriately on this day—and a positively cosmic geographic sweep embracing joint space initiatives. It has been hugely impressive and I am enormously grateful for the breadth and depth of the contributions to the debate. I am afraid that time will not permit me to do full justice to all the points that have been raised, but I will deal with as many as I can.

The noble Lord, Lord Stoneham, began with issues around the commitment in Magna Carta to free trade. It is good that we remember that today. He and a number of other noble Lords talked about the proposed EU referendum, and the desire that this should be conducted as quickly as possible. I was rather sorry to hear the noble Lord, Lord Pearson of Rannoch, say that he was going to be well behaved; that was rather disappointing. He and I have not always been on opposite sides of the argument. When I was shadow Chancellor in the last part of the 1990s, we were joined in our opposition to Britain joining the single European currency, the euro. How right we were, and how glad we should all be that we avoided that trap and snare. Many thought that it would be a disaster—that was the word that often crossed people’s lips—if we stayed out, but we were right then, and it was a pleasure to collaborate with him on that occasion.

The noble Lord, Lord Davies, talked principally about productivity, which of course is a huge issue. A number of noble Lords talked about the puzzle over why our productivity, as measured, falls below that of our competitor countries. Of course, in 2010 Britain was just emerging from a major recession—a recession that, if I may be slightly partisan, happened to start around the time that the noble Lord left the Conservative Benches to join Labour. I am sure that that was just a coincidence. The challenge, obviously, was to stabilise the economy and to create jobs. There is a productivity puzzle, but there is also an employment puzzle. Economists have scratched their heads for the past five years about how an economy which, certainly in the early period, did not have a strong level of economic growth was none the less creating jobs. It was extraordinarily successful at creating jobs. Of course, these are two sides of the same coin, but none the less we take the productivity challenge very seriously indeed. The Government will be publishing a productivity plan. The Government cannot create greater productivity. We can remove barriers to greater productivity, and we will do our best to do that. This is hugely important, and it will be a key challenge for this Administration.

My noble friend Lord Caithness, a member of the club of former Paymasters-General—which includes my father, if we are going to go back into the depths of history—talked about the progress towards doubling exports. He asked about progress with implementing

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the recommendations of the Cole commission. It has not yet published its final report. I met the members of the commission last week, and very productive that was, and I am looking forward to their full report. I think there will be some interesting ideas which we will certainly want to take forward.

My noble friend asked about progress on the implementation of EU single-market directives. He is quite right to focus on that. Our record is not always quite as stellar and perfect as we like to maintain, but none the less if single-market measures are to create the economic upside that we all hope for, they need to be implemented properly and rigorously. The European Commission will be publishing a single market strategy in the autumn. I know that the new Commission, particularly the vice-president of the Commission who has responsibility for the digital economy and the digital single market, is deeply committed to making rapid progress on that front.

The noble Lord, Lord Kakkar, spoke with great expertise about healthcare and life sciences, in which he has enormous knowledge. He is completely right to emphasise that these are areas of great strength and that with the growth in healthcare markets, particularly in China, India and the Middle East, this is a huge opportunity for Britain. I am delighted that my friend the Minister for Life Sciences, George Freeman, is hugely committed. He sees it as a key part of his role to support British businesses in making the most of those opportunities. Of course, public procurement can support our export initiatives. The noble Lord on the opposition Front Bench and the noble Baroness, Lady Kramer, also talked about the potential for using procurement to support exports. They are right about that. This is a big opportunity.

The noble Lord also spoke about the role of trade within the Commonwealth. He gave an interesting and, I am sure, completely accurate statistic that the cost of trade between Commonwealth countries is nearly 20% less than outside. I did not know that, but that is powerful. We do underplay. I sometimes think that the “C” in “FCO” is a little underemphasised. I pay great tribute to the role of my noble friend Lord Marland in promoting trade and business activity within the Commonwealth. It is an underexploited opportunity for British business, and we will be looking to take all of that forward. I know there is a programme of activity in the margins of the Heads of Government meeting in Malta in November, which I am hoping to take part in, that will support this initiative.

On the same theme were the remarks of my noble friend Lady Mobarik, whom, as she said, I met earlier this month. Of course, she is completely right to talk about the potential in emerging markets. The seduction is always to try to target down and limit the number of places in which we give government support for exports. It is absurd that we should not take seriously this market of nearly 200 million people in Pakistan, with all the affinity that there is and the connection with the Pakistani diaspora in Britain. I am sceptical of the overtures sometimes made to me that we should narrow down our focus, either by way of sectors or by way of geographies. The truth is that we have a very well-developed network of overseas missions, and every single

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one of those overseas posts—not just the UKTI people—should be really focused on looking for business opportunities. It is not just for UKTI; it is for everyone concerned with government to look on behalf of British businesses for opportunities.

I completely take the point that my noble friend makes that Pakistan is too big an opportunity to be ignored. It is a hugely strong relationship. I visited Islamabad just before the election, and I was struck by the fact that too much of our relationship and the Government’s interaction with the Government of Pakistan has, understandably, been around issues with security, counterterrorism, Afghanistan and so on. Far too little of it has been about developing the economic and commercial relationships that can create huge benefits for Pakistan and Britain.

My noble friend Lord Risby mentioned that we had worked together on four different occasions. When he decided to leave the House of Commons five years before I did, he must have thought that at last he was getting away from me—but foiled again. I pay huge tribute to the work that he has done in opening up on behalf of Britain, and with the support of the Prime Minister, this important market in Algeria. Again, that makes the point—if you were going to draw up your list of the 20 most important markets for British business, it would not necessarily include Algeria. Yet there is an opportunity that we can exploit and open up if we do it in different ways.

The role that my noble friend takes as the Prime Minister’s trade envoy in Algeria is one example of doing things differently. With the commitment that he shows and the knowledge and expertise that he brings, we can open up opportunities for British business. The initiative of trade envoys is completely bipartisan—Members of both Houses, from all parties and no parties, are involved in it—and I am happy to restate my commitment to it and that of the Prime Minister. We will build on this; it has worked for the most part extremely well, and we think that we can go much further.

My noble friend talked about the commitment of ambassadors. That is not, I would say, completely universal, but it needs to be. It is really important that the official leadership of the Foreign and Commonwealth Office makes it clear that it is a primary duty of the heads of mission overseas to give enormous support to British business and Britain’s commercial interests.

The noble Lord, Lord Clement-Jones, talked very knowledgably about the importance of professional and particularly legal services. He and other noble Lords talked about the tensions that can exist between a concern that immigration should be properly controlled and the constraints that that can be seen to impose on economic and commercial development. He is completely right to draw attention to that. Frankly, any Government will have to grapple with those tensions and manage them in a grown-up and mature way.

The noble Lord also asked about savings in the UKTI budget, which is relatively small in the context of overall government spending. We will be expected to make efficiency savings—that was my day job for the last five years, and I can see scope for that. However,

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to pick up the point that my noble friend Lord Leigh raised about the balance between what UKTI spends on its own resources, as it were, and giving financial support to businesses to enable them to develop their exporting, I see scope for rebalancing within that budget.

My noble friend Lord Popat talked about SMEs, as have many noble Lords. SMEs are very dear to my heart; part of the work that I led in the last Parliament was on increasing the amount of government procurement spend that was spent with SMEs. We said that our ambition was that it should rise above 25%, and in 2013-14 it went up to 26%. There is a relationship between procurement and exports. He and other noble Lords are right to say that there is huge scope for building on SMEs’ propensity to export, and for understanding properly why too many SMEs start exporting and then stop. That is something that we need to understand better than we do at the moment and to address.

Regarding my noble friend’s focus on Africa, I again make the point about targeting. We know that, while this will not be at all uniform, parts of Africa are growing and will continue to grow very fast, and we need to ensure that our presence in those markets is equipped well to ensure that British businesses can take advantage of that.

The noble Lord, Lord Bilimoria, spoke with huge passion and knowledge about the progress that has been made in the British economy in the past 30 years. I was impressed that, in his long list of sectors where Britain has strengths, beer came in only half way through; he slipped it very elegantly into the middle of his list. He referred to the tour that we both had of the Rolls-Royce facility at Goodwood. He asked about JLR and said that he had last been there a couple of years ago. Yes, he will find next time he goes that that is out of date. I recently visited the new line producing the new XE car. It is amazing in terms of productivity: you will see very few people on that line and a lot of robots. It is gleaming and smart—there is not an oily rag on site—and hugely impressive.

With the success of sectors like automotive, we need to ensure that we build more of a supply chain as well. When a vehicle gets built in this country, typically 45% of its content is imported. That compares with America or Germany, where typically 25% will be imported. We have strengths in this area but we need to build on them and go further.

The noble Lord referred, as did other noble Lords, to the “Great” campaign. It is an unusual example of consistency, where we built a brand and have continued to invest in it. One of my jobs in the last Parliament was to prevent government departments spending money on advertising and marketing, and we managed to cut out spending that did not continue to focus on that channel. It is very powerful and, although the methodology may not be perfect, as the noble Lord, Lord Mendelsohn, mentioned, that it works and succeeds and we should stick to it is beyond doubt.

My noble friend Lord Sheikh talked very knowledgeably about Africa. He knows it extremely well and is deeply committed. He asked whether the co-ordination between departments is sufficient. The answer to that is that it is never completely sufficient

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but it is better than it was, and I will continue to work hard to make it yet better. On his suggestion that our overseas posts should be tasked with preparing really good plans based on an assessment of opportunities, frankly, whether or not there is a big UKTI presence there, that is absolutely what our posts should be doing. I take that extremely seriously.

I enjoyed the contribution of the noble Lord, Lord Pearson; I can assure him that I am capable of reading more than one page at a sitting, but I am grateful to him for his pointers towards the short versions, and will add that to my reading list.

My noble friend Lord Leigh talked about China and its importance. China is very big; we have doubled our exports, but we are only at the very beginning of this. British businesses are not yet getting into the tertiary let alone deeper cities that are there, so that should be a huge focus for us. We have overtaken France to become the second-biggest European exporter to China, but we can do much more. He talked about financial services, which is a huge strength for us, and we need to build on what can be done there.

The noble Lord and others talked about the EU-US free trade agreement. Noble Lords will have noticed that the Obama Administration has had one or two difficulties with Congress in recent weeks—that is not unusual. However, there is a huge commitment from that Administration to use their remaining time in office to achieve a complete negotiation.

On the concerns raised about the NHS, on which I had a meeting with some representatives of trade unions this morning, I am confident that the issues are not well founded. However, I understand the concerns and will ensure that they are properly addressed.

I am enormously grateful to all noble Lords who took part in this important debate and I hugely appreciate the warm words and good wishes expressed to me as I take on these responsibilities. Making a success of this endeavour is hugely important to the success of our country, and I take great heart from the support given in the course of this debate.

Motion agreed.

United Kingdom: Election Law

Question for Short Debate

6.27 pm

Asked by Lord Kennedy of Southwark

To ask Her Majesty’s Government what plans they have to review the law governing elections in the United Kingdom.

Lord Kennedy of Southwark (Lab): My Lords, in opening this debate on what plans the Government have to review the law governing elections in the United Kingdom I should first say that for many years of my working life I have been involved in elections at all levels, and until 2014 I was a member of the Electoral Commission.

The law governing elections is spread across 25 major statutes. It is complex, fragmented, and not easy to understand. For a mature democracy such as ours to

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find itself in such a position is not good enough. Today we can be asked to vote for a variety of positions at the same election, including local councillors, mayors and police and crime commissioners, along with voting for an MP—although not your Lordships—and if you live in Scotland an MSP, in Wales an AM, in Northern Ireland an MLA, in London an AM, and on top of that we can all vote for MEPs. In addition, there are different methods of electing people to these positions, often with their own set of rules governing each election. This is not a good place for us to be, and the law needs urgent review and reform to bring it up to date and to make it fit for purpose to regulate elections in 2015 and beyond. All this legislation and regulation needs to be simplified, clear, easy to understand, modernised and easier to enforce; and, where infringements take place, it needs to be easier for action to be taken.

I am fully aware that the Law Commission issued a consultation paper, which could be seen as a precursor to legislation coming forward at some point in this Parliament. I very much hope that that will happen, but that legislation must deal with the points I outlined previously, it must also come forward embedded in the principle of seeking robust and fair laws governing elections, and no attempt must be made to seek party advantage out of that process. I hope that the noble Baroness can confirm that this is the only way in which the Government would consider bringing legislation forward to update this area of law in this Parliament.

I move on to outlining what I would like to see in a number of areas in any future legislation. I would like the see the laws governing elections placed into a single Act of Parliament to give us consistent and clear rules about how to conduct elections with a minimum amount of differentiation. Any such differentiation would then be due only to the voting system used or some other very important point of principle or policy that needed to be taken account of. We need clear powers for returning officers, and clear powers for the Electoral Commission to give directions to returning officers, in specific areas with no ambiguity.

The procedures in areas such as the review of boundaries in local authority wards need to be looked at carefully. I invite the noble Baroness to look at the actions of Northampton Borough Council in the recent review. I am not convinced that the action taken was necessarily in the best interests of all voters in all parts of the borough.

On registering voters, we need clear and consistent rules, and we need the franchises for all elections to be set out in primary legislation, along with placing a clear and unambiguous duty on returning officers to maintain an accurate, comprehensive and up-to-date register of electors. Nothing in the legislation that brought in individual electoral registration was intended, or should be used or be hidden behind, to allow the number of people registered to vote in the UK to decline even further. We always have had and continue to have a serious under-registration problem here in the UK.

Clear duties should also be set out for a number of organisations and individuals, such as university vice-chancellors, head teachers in secondary schools and other institutions where young people attend, to assist

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the ERO in maintaining an accurate and up-to-date register of electors. The same can be said for other organisations where data-matching has been, or could be, undertaken. We must also make it clear that nothing in the Data Protection Act prevents this sort of co-operation taking place. By working together in a co-operative manner, we can enable the ERO to identify more people who could possibly be registered to vote. There are other groups of voters, such as the elderly, who may need specific help in getting registered to vote. Academic research has suggested that anything between 6 million and 9 million people who are eligible are not registered to vote in the UK.

I think it is time for the Government to review the whole operation and set out clearly what can and cannot be done in the days running up to polling day and the day itself. In my opinion, too much seems to be left to local returning officers, and different practices which appear to be acceptable in one place but not in another have sprung up. One example of this is the attaching of posters to lamp-posts. That is perfectively acceptable in Birmingham but outlawed in Coventry. Personally, I think that it is a complete waste of time and money but I can see that if one party puts posters on lamp-posts, all the other parties will do the same. A poster in a resident’s window or on a stake in a garden demonstrates support from voters and is much more important and effective for the campaigners.

There also needs to be a proper review around the whole question of absentee voting and the effectiveness of the code of conduct that has been in operation in recent years. The nomination process could be made much simpler for candidates and agents alike. Getting everything you need in order to be nominated on to one form that the candidates, agents and nominators could sign could be a way of making progress.

Nor am I convinced that the legislation surrounding emblems and party descriptions has been as effective as it should be, although it has created quite a bureaucracy. Why cannot one form be used, to be submitted to the returning officer in a local government area saying that all the people listed are authorised to use the party logo and description as detailed below?

I hope that we can have a proper debate on issues such as which is the best day on which to vote, whether we should move to a weekend or whether we should have early voting in a couple of places in a local area so that people can vote in person before the Thursday or whichever is the normal polling day.

I have no fixed views on those points, other than to say that we need to improve the way in which we conduct our democracy at present. Nothing in the conduct of elections in any part takes account of the transformation in communications in recent years through things such as blogs, Facebook and Twitter. That is a major omission and, frankly, it is ridiculous in 2015.

I am also clear that in any review of electoral law we should include the Electoral Commission—its workings, its areas of responsibility and its governance. The legislation that brought the commission into being has been on the statute book for 15 years, and I contend that not to review it when conducting a major review of electoral law would be a major error. The

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creation of the commission has been a good thing but, from my time as a member of the Parliamentary Parties Panel and then as an Electoral Commissioner, I am clear that a review needs to take place so that we are agreed that it is focused on the right areas and in the correct proportions, and that the governance arrangements are commensurate with the important work we ask it to do.

I would like the Electoral Commission to have a much more hands-on role in the electoral registration process and in respect of EROs and returning officers, to ensure consistency of approach at a local level. The performance standards compiled by the commission are not effective enough. There is no independent audit of the return that an ERO submits, so we cannot be confident that everything is as good as it is said to be.

I also think that the Electoral Commission reporting to Parliament should be reviewed. I am not convinced that the Speaker’s Committee gives the organisation the required level of challenge. I would like consideration to be given to the Electoral Commission reporting to the House of Commons’ Public Accounts Committee in respect of its annual budget and how it spends public money, and to the Constitutional Affairs Committee in respect of more policy-based and general activities.

I could go into many other areas, and I am delighted that a number of experts on elections have decided to speak in this debate at such short notice. There is much we can be proud of in how we conduct elections in the UK. My purpose in putting the Question for Short Debate was to ensure that, at the start of this Parliament, the Government can hear from Members across the House just how important it is that we always strive to have the best possible electoral systems, best methods and best regulations to ensure that elections in the United Kingdom are always conducted to the highest standards. This is an area where, on a cross-party basis, we can work together to constantly improve the conduct of elections in the UK.

6.36 pm

Lord Tyler (LD): My Lords, on the 800th anniversary of the signing of Magna Carta, it is somehow ironic that it is left to just six of us to debate some of these fundamental issues. However, I warmly welcome the fact that the noble Lord, Lord Kennedy, has secured and opened this debate. He does so, of course, with considerable expertise and experience as a former commissioner of the Electoral Commission. I also very warmly welcome the Minister, as she is a neighbour from Gloucestershire.

I wish to touch with speed on six elements of current electoral law. The first, naturally, is the electoral system for the House of Commons. I need only refer very briefly to the results of last month’s general election, because so many others, less partisan than me, have already declared the first past the post system no longer fit for purpose.

Last December, at a British Election Study seminar, I forecast that there would be wide discrepancy between votes and the seats gained by different parties. As we now know, UKIP supporters have been cheated by the system and SNP supporters over-rewarded by it.

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The excellent report by ERS,

A Voting System in Crisis

, demonstrates the scale of this distortion. I also forecast that the inhabitant of No. 10 would get there with the support of less than 25%, or a quarter, of the eligible electorate—and sure enough he has. If equality before the law includes an attempt to ensure that every citizen has rough equality of electoral influence, we are a long way from that right.

That brings me to my second issue. It is now widely accepted that a drastic change to almost every parliamentary constituency boundary every five years is unnecessarily disruptive. The motive of the 2011-12 exercise was undoubtedly correct, since the variation between the sizes of some constituencies led to unacceptable inequality. However, there clearly needs to be a further reassessment along the lines suggested just before the election by the late, lamented Political and Constitutional Reform Committee in the House of Commons.

I noted also, in the last few days, a report in Total Politics that the 1922 Committee of Conservative Back-Benchers may no longer be so wedded to the idea that changes similar to those postponed in 2013 should now be resurrected. In particular, any reduction in the number of MPs without recourse to the other changes needed in our constitution is likely to be controversial with colleagues of all parties recently elected to the other end of the corridor.

My third issue relates to local authorities. As I said during the debate on the gracious Speech, after a political lifetime of seeking a fairer voting system, I am sufficient a realist to know that newly elected MPs are unlikely to rush to reform the way that they have just been elected. MPs have always proved more enthusiastic in favour of proportional systems for everyone else—for Holyrood, Cardiff, Stormont and even the European Parliament—just as your Lordships’ House has for internal elections here.

However, that need not stop us tackling the appalling way in which the system currently cheats those who vote in local authority elections. Here we have empirical evidence of the huge benefits of moving to a better system. I am indebted to Dr Lewis Baston for his meticulous comparison of the results of Scottish council elections before and after the change made by the Labour and Liberal Democrat coalition there to introduce the single transferable vote. The core of his case is that the consumers of the democratic process—the voters—now get a considerably better deal north of the border than south of it. They are more likely to be “happy voters” whose choice contributes towards the election of someone who can truly represent them. In Scotland, fully three-quarters get to see the candidate they gave a first preference to elected, and 90% of them see a candidate to whom they gave either a first or a later preference.

My fourth point follows immediately on from that. The Cities and Local Government Devolution Bill, currently before your Lordships’ House, offers an early opportunity to address this deficiency in our election law in England. As it stands, the Bill will create a potentially unprecedented concentration of political and economic power in one person’s hands, or that of a very small clique. Without effective electoral

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authority and constraints, the new mayors and their immediate entourage will clearly be a classic case of elective dictatorship in one-party states—totally unrepresentative new rotten boroughs—and, as the Minister may have noted, they are unlikely to be, at least in the first tranche, dominated by her party, or mine for that matter. We will start work on improving the Bill next week, when I anticipate there will be concern in all parts of the House to address this democratic deficiency.

My fifth issue concerns the franchise. We have yet to have conclusive evidence of the success or otherwise of the efforts to transfer from the old electoral registration system to the new one before the May polling date. My impression is that the pessimists will prove to be excessive doom-mongers but that the Liberal Democrats were right to insist on a steady transition, which will not end until after the Scottish, Welsh and London elections in May 2016. It could also be the register for the forthcoming referendum to decide our future membership of the European Union.

Obviously, there are different opinions about the date for the referendum. Personally, I think the sooner the better—as was indicated by the previous debate—as indecision could do much harm to the UK’s economy and individual job prospects.

However, there seems to be a growing conviction that the political establishment cannot exclude 16 and 17 year-olds from this crucial decision about their future. After the triumphant involvement of this age group in registration and voting in Scotland last year, I pity the poor politician who tries to pretend that English, Welsh and Northern Ireland young people are somehow less mature, less well-informed and less responsible than their Scottish counterparts. As a long-term advocate of this change, I welcome new recruits to the cause.

My sixth issue, and by far the most urgent, relates to the law which seeks to monitor, constrain and illuminate the money spent on electioneering. The Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act 2014—it is quite a mouthful—attempted to ensure that the efforts of non-party campaigners to assist the election of candidates and parties became more transparent and that the amounts spent were limited. Despite huge concerns at the time, we have yet to hear from the Electoral Commission if there were any serious infringements or confusions arising from it. In due course, I know, we will get the report of the reviewer, the noble Lord, Lord Hodgson.

Meanwhile, however, the comparable weakness of the law relating to the political parties themselves is now shown in sharp relief. I take just one disturbing example. All Members of your Lordships’ House who have previously contested parliamentary or local authority elections will recall the dire warnings from our agents about incurring any expenditure over the limit set which could be said to enhance our chances of election—that an election court could declare our election invalid.

But in the recent contests vast sums were spent, no doubt by all parties, to persuade electors in marginal, target constituencies, by means of mailshots, telephone calls and social media, to change their votes. However,

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since the candidate was not explicitly named, all this activity fell outside the constituency limits. This tears up the principles controlling payment for local electoral advantage which have been in place since 1883. What is good for the goose must be good for the gander. If non-parties are to be subject to constituency-based regulation on any and all targeted spending, the same should apply to political parties. Surely now is the time to grasp the nettle on a full party funding reform—and the template is already there to do it.

Following the excellent report of the Committee on Standards in Public Life in 2011, I convened a cross-party group, with Andrew Tyrie MP and Alan Whitehead MP, to develop a draft Bill based on the CSPL recommendations and on the previous recommendations of Hayden Phillips. That draft Bill sought to provide material on which a consensus for reform of party donations and party expenditure could be built. This is classically an issue that needs to be addressed well in advance of general election campaigns. The CSPL should be invited, under its current chairman the noble Lord, Lord Bew, to advise urgently on the next steps, and this time the search for complete consensus, which amounts to giving the veto to the most reluctant and recalcitrant, must not be allowed to impede the whole process. Ministers can retain credibility only if they proceed with the whole CSPL package. If they do I will stand with them in facing down its detractors. They cannot simply deal with the relationship between the unions and the Labour Party.

My noble friend Lord Rennard will deal in detail shortly with issues of electoral fraud, and the continuing opportunities for potential fraud, and I am grateful to him for his continuing efforts in your Lordships’ House to highlight and prevent these problems.

Some noble Lords may take a relatively complacent view of the health of our democracy and the extent to which it is reinforced by our electoral laws. I am far from optimistic and certainly not complacent. The perception among the public is that we no longer occupy a leadership role in these matters, and can hardly lecture other countries on how to run their democracies. In recent days, I have heard people suggest that the outcome of the elections in Turkey was not legitimate. We should note that success there was built on 41% of the vote. Our own Government were elected with just 37%.

The barons at Runnymede may not have known just what they were starting, 800 years ago. I trust that Barons and Baronesses today will surely realise that the price of democracy is eternal vigilance and that clearly our electoral laws are well short of perfection.

6.47 pm

Lord Cormack (Con): My Lords, I thank the noble Lord, Lord Kennedy, not only for choosing this subject but for the moderate, balanced, sensible way in which he introduced it. His call for a review of electoral law is a powerful one and it was made more powerful by the fact that he understated it. I hope that my noble friend, who I welcome most warmly to this debate, will be able to give him an encouraging answer to the moderate points that he made.

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It is difficult to accuse the noble Lord, Lord Tyler, of moderation when it comes to electoral law and I will not do him the injustice of accusing him of that. He talked about Magna Carta and Runnymede. I had the honour to be at Runnymede this morning in the meadows for the 800th celebration. It was, I am pleased to say, a very happy, warm and splendid occasion. A number of fine speeches were made, not least by the Attorney-General of the United States at the rededication of the American memorial at Runnymede.

Of course, Magna Carta was not the foundation of democracy, but it was the foundation of our liberties. From that shaky start—it was annulled within 10 weeks by the renegade King John—nevertheless it planted some seeds that have grown and grown remarkably, not only in this country but around the world.

I would like to touch on one or two of the points made by the noble Lords, Lord Kennedy and Lord Tyler. The noble Lord, Lord Kennedy, made a plea for clarity, precision and an end to confusion in the law governing our elections. His points were well made and should be heeded. In a civilised society it is important that all should fully understand just what the electoral law is.

In that context, I reiterate a plea that I have made several times in your Lordships’ House for better citizenship education in our schools. All young people leaving school should have a full and proper knowledge of the electoral system, which is not the same as saying that they should have the vote. The noble Lord, Lord Tyler, and I have clashed on that before. I fully respect the integrity of his opinions but I disagree profoundly with them. Where I do agree with him is that it was a pity that it had its introduction in Scotland. There should have been a greater examination of it. We now have a precedent that is difficult to fight against in some respects, but I am glad that the Prime Minister has made it plain that in the European referendum the franchise that we understand will apply. I sincerely hope that that will be the case. There are always inconsistencies in life, but when young people are not allowed legally to drink alcohol, smoke and drive motor cars it seems a bit odd that they should be given the franchise. I therefore hope that we will stand firm on that.

I also think that it is very important that we recognise the real disappointment that many of us feel in the percentage of people who vote. That is why I am so keen on citizenship education. I fought my first general election in 1964; I fought every general election from then until 2005. I have been involved in the last two general elections, just as I was in the one in 1959. What has been the most disappointing aspect over this long period has been the drop in the percentage, with the exception of the Scottish referendum last year, where there were very particular and peculiar—I use the word in its proper sense—circumstances.

There is a case, which I have raised in your Lordships’ House before, for compulsory registration—that everyone should be registered to vote. It is a civic duty. I would actually go further: I have become convinced that Australia has something to commend it in this regard. To oblige people to cast their vote, or to cast a vote and go to the polling station, is not saying that they cannot write rude slogans on the ballot paper or refuse

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to vote for anybody at all, but it concentrates the mind. The mind should be concentrated, because democracy—a system that we were celebrating this morning at Runnymede and which has been fought for bravely by people in all parts of the world over many centuries—is in danger of dying from apathy and from single-issue politics. Therefore, although my noble friend of course cannot give an undertaking from the Dispatch Box tonight, I hope that she will agree to talk to her ministerial colleagues about compulsory registration at least. It has a great deal to commend it.

Where I find myself in some agreement with the noble Lord, Lord Tyler, is in his remarks about the size of the other place. There is a case, of course, for proper boundary reviews, but to link that with a reduction in the size of the House is not necessarily the best way forward. Therefore, although I applaud the Prime Minister’s seeking to have proper boundary reviews, I urge him to reflect a little on the wisdom of linking that with a reduction in the size of the House of Commons from 650 to 600. That is perhaps a step too far at the moment.

I again agree strongly with the noble Lord, Lord Tyler, about the financing of elections. We have to look extremely carefully at how we finance our politics, without being partial in the direction of any particular group of people. There is a case for making a tax optional. There is certainly a case for saying that no individual or corporation should give more than a certain amount. Although it is entirely reasonable to say that individual members of trade unions should opt in to whether they pay a political contribution, we should not treat that group of people less fairly than others. There should be parity.

I agree strongly with the basic plea made by the noble Lord, Lord Kennedy. I accept, as the noble Lord, Lord Tyler, said, that nothing can be done until the group of elections that will be held in 2016. However, at the beginning of a new Parliament, there is a strong case for a commission or committee of both Houses—I am a great believer in committees of both Houses—to look at our electoral system thoroughly, dispassionately and in an unbiased way to see how we can improve it and make it clearer and more consistent, with the fundamental aim of engaging the interest of people, particularly young people and those who do not necessarily have a long history of residence in this country. We should engage their interest to take part in something which it is a privilege to take part in, and to do so in a way that makes it almost impossible for fraud to prevail. Another situation such as that which occurred at Tower Hamlets would do very little for our electoral system.

6.57 pm

Lord Pearson of Rannoch (UKIP): My Lords, it seems that the law governing elections in this country may have been designed for a two-party system. Now that there are more than two parties I fear that it is no longer fit for democratic purpose. The most obvious proof of this is that modern Governments are elected by only about 24% of the electorate. Roughly 40% do not bother to vote and modern Governments are elected by about 40% of the 60% who do vote. Indeed,

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the present Government were elected by 37% of those who voted, or 11.3 million votes, which gave them 330 seats and an outright majority in the House of Commons. The SNP got 4.7% of the votes, or 1.4 million votes, and was rewarded with 56 seats in the Commons. The Liberal Democrats got 7.9% of the votes, or 2.4 million votes, and were rewarded with eight seats. My party, UKIP, got 12.6% of the votes—some 3.8 million votes—which gave us just one seat.

I submit that these figures speak for themselves. If we want to live in a democracy, I suggest that we have to change the system of election to the other place. I do not know to what, but to something which more accurately reflects the will of the electorate and respects minority views. In this respect I am most grateful to the noble Lord, Lord Tyler, for his remarks.

When we come to your Lordships’ House, the situation is just as unsatisfactory. Of course, your Lordships’ House is not appointed by any obviously democratic process, except that over the years the Prime Ministers of the day recommend peerages to Her Majesty. It is the law governing elections in the UK that decides the make-up of the Government of the day, thus who is the Prime Minister and thus who sits in your Lordships’ House. In your Lordships’ House, we are blessed with about 31% of our number sitting as Bishops, Cross-Benchers and independent Peers—perhaps the most valuable of us all because they provide the essential independence of your Lordships’ House and stop us being a rubber stamp for the House of Commons, where the Government of the day tend to get their way, which of course is democratically as it should be, but the Government are not always right.

After the 2010 election, the coalition Government said they would appoint new Peers in accordance with the votes cast in that election. I did not think that a wise policy because, as I have said, one of our great strengths is precisely that we do not reflect the composition of the Commons. But UKIP got some 3% of the votes in that election and so the Government’s policy should have given us some 23 Peers, whereas at the time we had only two. As the leader of UKIP at the time, I wrote to the Prime Minister in May 2010 and suggested that we should have perhaps four more. Three months later he wrote back, very politely, and said that he took the point on board and would keep the matter under review but that press speculation vastly inflated the number of Peers he could recommend to Her Majesty and he was not intending to do any UKIP Peers just then. At the time the media were speculating that he would recommend about 60 new Peers. In fact, he went on to recommend 185, but not a single one for UKIP.

I did not let the matter rest during the previous Parliament. I wrote again to the Prime Minister on 27 March 2013 when I heard that more Peers were on the way, and chased him for an answer on 9 May, to which I did not even get an acknowledgement from Downing Street, and again on 4 December 2013. In the mean time, my noble friend Lord Stevens of Ludgate had put down a Written Question which was answered rather beautifully for the Government on 21 May 2013 by the noble Lord, Lord Wallace of Saltaire, thus:

“It remains the Government’s intention that appointments to the House of Lords will be made with the objective of creating a

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second Chamber that is reflective of the share of the vote secured by the political parties in the last general election. The Prime Minister exercises his powers in relation to appointments to the House of Lords in order to deliver this coalition commitment and will continue to keep numbers under review”.—[

Official Report

, 21/5/13; col.

WA 57

.]

That seems pretty clear, does it not?

My colleagues and I raised this matter with the Government several times in Written and Oral Questions and were given the same Answer by the noble Lords, Lord Strathclyde and Lord Hill of Oareford, and even by the noble Lord, Lord Maude—as he now is—when he was in charge of the Cabinet Office, to which No. 10 appears to have passed the file. All those Answers confirmed the coalition Government’s policy, just that the Government had not got round to it.

I trust your Lordships will agree that this is a good example of a Government saying they have a policy which they intend to fulfil when in truth they have no intention of doing anything of the kind. Your Lordships will not be surprised that I have written again to the Prime Minister suggesting that UKIP should be better represented in your Lordships’ House. I have confirmed to the Prime Minister that I still do not think that the coalition Government’s policy of appointing Peers in proportion to the votes cast in the previous general election was a wise one.

However, the present composition of your Lordships’ House is perhaps even less representative of the views of our people than that of the other place. To make this point, the only guide I can take is as though that policy was indeed reflected in our membership. Thus we find that the Conservatives, with 11.3 million votes from 37% of those who voted, would have 202 Peers in your Lordships’ House, whereas they enjoy 226—24 more than they would have had under the previous Government’s policy. Fair enough, your Lordships might think, and I would agree. The situation with Labour is quite a bit worse: 9.3 million votes from 30% of those who voted would give Labour 166 Peers, whereas it has 212—46 more than it would have had under the previous policy.

However, it is when we come to the positions of the Liberal Democrats and UKIP that we see that things have gone badly wrong. The Liberal Democrats got a mere 2.4 million votes from 8% of the electorate in the election we have just had, which would give them 43 Peers. Yet they have 100, or 57 more than they would have under that policy. But UKIP got 3.8 million votes from 12.6% of those who voted and we have only three Peers, or 66 fewer than we would have under the previous policy. I repeat: the Liberal Democrats have 57 more and we have 66 fewer. I trust that your Lordships will agree that UKIP deserves a few more.

Apart from the inequity of the present position, one great advantage would be that your Lordships would hear less from me and more from my new, and I trust energetic, colleagues. I have heard another and perhaps complementary suggestion: that a number of Liberal Democrat Peers might care to stand down—perhaps quite a large number. I seem to remember that the Liberal Democrats have not been all that committed to your Lordships’ House or to its present system of appointment, so I hope that they will take this great opportunity to put words into deeds.

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7.06 pm

Lord Rennard (LD): My Lords, first, I thank the noble Lord, Lord Kennedy of Southwark, for securing this debate. He brings considerable experience to this issue from his years of working for the Labour Party and as an Electoral Commissioner.

Tonight’s short debate is very timely in different ways. As my noble friend Lord Tyler and the noble Lord, Lord Cormack, said, it is of course 800 years to the day since the sealing of Magna Carta, the 14th clause of which sets out the role of the “common counsel” of the realm. Historians regard this as the initial basis for our modern Parliaments, although the emphasis then was on the role of,

“the archbishops, bishops, abbots, earls, and greater barons”,

rather than, as it states, those,

“summoned generally, through our sheriffs and bailiffs”.

We are now in the process of reviewing what can be learned from the conduct of a parliamentary election eight centuries later.

While the text of Magna Carta can be seen on a single page, our electoral laws are now expressed in 25 Acts of Parliament, as the noble Lord, Lord Kennedy, said. I do not know how many pages in total they would cover. These laws have not been consolidated since 1983—when I was the election agent for the noble Lord, Lord Alton of Liverpool, when he was elected to represent my home area of that city in the other place. Much has changed since then in the way in which elections are contested, and they are now held for many more bodies than when the Representation of the People Act 1983 had simply to cover Westminster parliamentary and local government elections. So now we wait to see how the Law Commission proposes to recommend changes, in the first major overhaul of all our election laws in the 32 years since I was a constituency agent.

The commission’s excellent consultation document of December 2014 poses a number of questions and makes clear the need to review our electoral laws, and to consolidate them. In this brief debate, I want to focus on the need to examine changes in electoral law to reduce the incidence of electoral fraud, which I believe must also be matched by efforts to improve voter registration and turnout. Measures to make it harder to commit electoral fraud should be one of the prime objectives of any review of electoral laws, even if the scale of electoral fraud under the present ones is hard to determine. I have often heard Ministers here make very complacent remarks on this subject because of the relatively low number of successful prosecutions made in relation to it. But as most crimes of any kind go unreported and undetected, this is clearly not a reliable indicator of the scale of the problem. Major problems may be confined to a few particular areas but the ease with which fraud can be committed means that we really have no idea how widespread it is.

The various judgments of Richard Mawrey QC, from different election courts, are required reading for anyone examining the need to review our electoral laws, especially his most recent, 200-page judgment in the case involving the disqualification of the former

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mayor of Tower Hamlets, Lutfur Rahman. The court over which he presided in relation to Tower Hamlets found that,

“corrupt practices extensively prevailed at the election both of the Mayor and of the Councillors for the twenty wards of Tower Hamlets held on 22 May 2014”.

His judgment explains carefully the ease with which fraud can be committed in relation to postal votes and the difficulty of assessing the scale of it. He was satisfied that people were registered to vote who did not exist, but on whose behalf postal votes were cast. Other people, he said, had their postal votes taken away from them against their will, and their votes were actually cast by others. In his judgment, he described “bribery” by the distribution of grants and the use of “undue spiritual influence”. He referred to,

“thuggish conduct at polling stations”,

and said that the bar for legal challenge is set,

“much too high for dealing with intimidatory behaviour during the conduct of the poll”.

In presiding over other election courts, he has concluded that these sorts of problems are by no means unique to Tower Hamlets. In 2005, he barred six councillors in Birmingham from standing for election after uncovering fraud that he said would “disgrace a banana republic”. In 2008, a case in Slough involved the use of bogus postal votes and, in spite of some reforms, he observed that,

“opportunities for easy and effective electoral fraud remain”.

We may, in my view, have reached the point at which it is no longer desirable to permit postal voting on demand and without reason. With my noble friend Lord Greaves, we secured some greater measures of security for the postal voting process in the past, such as requiring a signature to accompany a postal vote that matches the signature on the application to vote by post, and requiring a reason to be provided for a postal ballot to be sent anywhere other than the address for which the voter is registered. But these measures appear to have proved inadequate. The widespread incidence of postal voting in many areas means that we have now, in my view, effectively removed much of what was achieved by the ballot Act of 1872. The postal voting process means that ballot papers are often not completed in conditions of secrecy—and probably often not by the people entitled to complete them. Their votes are therefore stolen from them. Perhaps a reason should now be given for choosing to vote by post rather than going to a polling station and voting in supervised conditions of secrecy. A reason is required for the appointment of a proxy to cast a vote on someone’s behalf, and we should now consider if this principle should be extended to postal voting.

Certainly, some greater safeguards are required to prevent the democratic process from such abuse, but the measures taken must be proportionate, and care must be taken not to reduce participation in elections unnecessarily. Changes such as these should only be considered if we also properly address other and perhaps even more significant problems with our electoral laws, in particular the way in which many people qualified to vote are not included in the electoral register, and thereby denied their chance to participate in elections. This remains the most serious issue in terms of modernising our electoral laws.

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In the last Parliament, I argued successfully in favour of the principle that registering to vote should remain a requirement, with at least civil penalties to be part of the process of enforcing compliance. But I am far from convinced that every appropriate effort is being made to make people properly aware of this principle and to address the issue of under-representation.

Irrespective of possible changes to the voting franchise that I support, involving 16 and 17 year-olds, we still need to ensure the proper involvement of all schools in the registration process throughout Great Britain, in the same way as now happens in Northern Ireland. This could be part of the civic education process that the noble Lord, Lord Cormack, referred to earlier. We should also look again at how students are registered and how people with two homes determine where their general election votes should most properly be cast. Above all, we need to look at how we increase participation in the democratic process.

There was an excellent article in the Guardian during the recent election campaign about the inconvenience to many schools from polling day always being on a Thursday. Thursday is generally a convenient day to vote for people not in work but it is much less convenient for many others. We therefore need to look more at polling stations perhaps being open on Saturdays and Sundays when many more people might be able to participate. All these potential changes will require careful scrutiny of the kind that was undertaken in the last Parliament in the other place by the Political and Constitutional Reform Committee. Therefore, further to my recent Question in the House on 4 June, can the Minister please explain to the House the Government’s justification for the abolition of this committee?

7.16 pm

Baroness Chisholm of Owlpen (Con): I thank the noble Lord, Lord Kennedy, for this debate. After a general election and a new Parliament there are always points raised about the electoral system and it seems that this year is no exception. This debate has raised many interesting issues and I thank all noble Lords who have taken part. I will start by making some points I feel are important and then answer noble Lords. I apologise if I miss out any of the points that have been raised, and I hope noble Lords will come to me at a future date so I can answer them—there is a lot to try to get through.

The Government have already set out our intentions on a number of points that affect elections or involve polls, such as removing the 15-year limit on voting by British citizens living overseas and carrying forward commitments to devolve electoral responsibilities to Scotland and Wales for the polls relating to their national and local governments. As part of looking at devolution across the UK, there are plans to allow for the election of metro mayors as part of packages to give powers to the cities so they can develop their local economies and take responsibility for matters such as transport, housing and policing to bring decision-making into a more local arena. I think the noble Lord, Lord Tyler, expressed reservations about this but there is no evidence to suggest that metro mayors will not be a positive move towards more effective local democracy. Party funding is a long-standing debate that I am sure will continue to be a subject for change in the future.

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There will be other areas to look at too during the course of the Parliament but, specifically related to the noble Lord’s question is the ongoing review of electoral registration being taken forward by the Law Commission with the support of the Government and input from the Electoral Commission. This will report later in the Parliament with proposals to simplify electoral legislation and will doubtless benefit us all in allowing a clearer understanding of the now complex law governing electoral matters. This area requires a much more streamlined approach, making it much simpler for the election registrars to understand and implement. The Electoral Commission is charged with ensuring consistency through performance, standards and guidance, which is a point the noble Lord, Lord Kennedy, raised. Other work started in the previous Parliament is continuing, in particular the transition to individual electoral registration, or IER. This has been a positive process so far, with the introduction of online registration being recognised as a major achievement by electors as well as by those who run elections. Record numbers of people applied to register ahead of the elections on 7 May and we now have a more secure registration system. We are committed to taking the process forward to completion in order to safeguard the electoral process and ensure that the electorate can have trust and confidence in it. If we are going to get more people to vote, public trust and confidence in the integrity of elections is of paramount importance.

There is a programme of work that is looking at building on the successful implementation of IER to date and, in particular, the online registration service. We are keen to build on the benefits that flow from the system. For example, it takes only three minutes to register online. This can be done on a smartphone or tablet, which is obviously popular with the young.

There will be a decision on ending the transition to IER in due course, informed by the report from the Electoral Commission that is due later this month. Underregistration remains a challenge, but important steps have been taken to improve the position: for example, the introduction of online registration and the investment of more than £14 million over the last two financial years to support activities aimed at increasing levels of voter registration. All political parties and community organisations have a responsibility to encourage people to register to vote and take part in our democracy. Before the general election, we communicated with organisations such as the British Youth Council, UK Youth and the National Union of Students, and undertook media advertising, which included the Sol Campbell and David Harewood poster where they whitened up and said, “If you don’t vote, you’re taking the colour out of voting”. It is clear that online registration has helped all these things.

On a more mechanical level, as with any area that attracts close scrutiny, there will be issues of detail raised throughout the Parliament that will require some changes. For example, forms and notices are constantly kept under review and improvements made where they will assist electors and the process in general. We need to look at the Electoral Commission’s report on the May polls when that is available in the summer and see what recommendations are made.

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I turn to some points raised by noble Lords. The noble Lord, Lord Kennedy, suggested that the Electoral Commission should be reviewed and that the Speaker’s Committee should do more. The Electoral Commission was reviewed in 2007 by the Committee on Standards in Public Life. This led to some changes in the commission’s focus. The Speaker’s Committee has now been set up for this Parliament, and I am sure that the Speaker will be made aware of the noble Lord’s comments so that he can take them into consideration in looking at the commission’s work.

The noble Lord also said that the Law Commission needed to produce a review with no party bias. The commission is operating in an independent capacity. It is consulting all relevant organisations, including political parties, but its recommendations will be its own.

The noble Lords, Lord Kennedy and Lord Rennard, mentioned weekend voting. It is not clear that voting at the weekend would be more convenient than on a Thursday. Voting at the weekend would also raise concerns for faith groups and potentially increase the cost of elections.

The noble Lord, Lord Tyler, brought up the point about 16 and 17 year-olds and why they could not vote. The Government have no current plans to lower the voting age. However, they welcome the ongoing discussion and debates on the issue and believe that it is important to engage with young people, so this will be kept in mind for the future.

The noble Lord, Lord Tyler, also mentioned lobbying. The transparency Act is about giving the public more confidence in the way third parties interact with the political system. My noble friend Lord Hodgson of Astley Abbotts has been appointed to conduct an independent review of the impact of the new rules, as required by the Act. The report must be published before November 2016, and the Government will consider it carefully.

My noble friend Lord Cormack brought up compulsory registration. There are no plans to introduce such a system at present. Electoral registration officers have the discretion, after completing several safeguards, to issue a civil penalty for not responding to an invitation to register to vote. It is equally important for all in our society to work together to explain why registering to vote is important, not simply to penalise those who are not registered. My noble friend feels that voting is a civil responsibility and that the importance of political participation should be reinforced without making voting compulsory. We feel it is up to individuals to decide whether they wish to vote.

My noble friend Lord Cormack brought up reducing 650 MPs to 600. He feels it is a step too far. Change is already in law. The review will start in 2016 and will report by 1 October 2018. He also mentioned better citizenship education in schools. Citizenship education has been a statutory programme of study in schools since September 2014. Schools have been encouraged to do much more in this regard. My noble friend also feels it is time for a review of the electoral system. The Law Commission’s work will provide a basis for considering legislative change. It provides an opportunity for people to raise views on change. No doubt it will be put forward for a debate in future.

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There are lots of questions still to be answered about this subject.

Lord Pearson of Rannoch: I sense the Minister may be coming to the end of her remarks without mentioning my speech. I quite accept that my suggestions are not within her department’s remit, but what I said is within the remit of the Government and the Prime Minister, so I trust she can pass my remarks on to No. 10, the Cabinet Office and even, perhaps, to the Liberal Democrats.

Baroness Chisholm of Owlpen: The noble Lord got in just before I was about to say that, indeed, he is right that it is not within my remit. However, I was going to say that I will certainly come back to the noble Lord with a written reply as soon as I can.

Many interesting points have been raised during this debate. We will probably have further debates on these subjects. Voting is enormously important. It is our democratic right, and everybody should be encouraged to take part. Overall, we have a challenging programme of work and reform before us. It will include a number of changes to the law governing elections in the UK through direct changes to the process and systems, such as full transition to IER and ensuring that Brits abroad are not excluded, and wider changes that include electoral events, such as devolution across the UK, to ensure that decisions are made closer to the people they affect and that those people have more input.

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Lord Kennedy of Southwark: Before the Minister sits down, I am conscious that she said that she could not respond to all the points in the debate today and that we could speak to her later. Could she go a bit further and agree to write to the five noble Lords who have spoken in the debate, as some very important issues have been raised here today?

Baroness Chisholm of Owlpen: Indeed, the noble Lord is right, and I shall certainly be doing that. I have made a note of several of the points that I would like to go back to, to make sure that I have a fuller answer, rather than just giving a short answer now. I shall certainly go back to noble Lords with written replies.

Lord Pearson of Rannoch: Could the Minister give an undertaking that she will pass my speech on to No. 10 and the Cabinet Office—and I leave the Liberal Democrats as an option? A reply to me may not get into the system in the way that I hope it will.

Baroness Chisholm of Owlpen: I shall certainly make sure that the noble Lord’s speech goes to everybody, including to those on the Liberal Democrat Benches, as I am sure they would like it.

House adjourned at 7.30 pm.