House of Lords

Wednesday 9th February 2011 Lords Chamber

Wednesday, 9 February 2011.

15:00

Prayers—read by the Lord Bishop of Wakefield.

Small Businesses

Wednesday 9th February 2011 Lords Chamber

Question

15:06

Asked By

[Lord Harrison]

To ask Her Majesty’s Government what role they forecast small businesses will play in the Big Society.

[Baroness Warsi]

My Lords, small businesses are the cornerstone of our economy and have a vital role to play in growing the big society. Businesses already make a significant contribution in supporting local voluntary and community organisations by sharing assets and expertise, philanthropic donations and exchange of staff. In December of last year, we launched Every Business Commits, asking businesses to do their part in growing the economy as well as in helping to tackle social problems and building stronger communities.

[Lord Harrison]

Given the Government’s failure to define the big society and, indeed, the role of small businesses within it, especially in helping to strengthen local communities, will the Minister look again at the regional growth fund, whose administrative possibilities—the £1 million threshold that it applies and the early closure date—mean that there has been a restriction on small businesses? Also, given the Government’s failure in their tepid approach to getting the banks to help out small businesses, will she take up the idea proposed by the chairman of the London Stock Exchange to encourage blue chip companies to contribute to funding small businesses, especially those that are regional and have an innovative flair to them?

[Baroness Warsi]

My Lords, the big society is defined by many in this House as being what most of them have done for most of their lives. It is a volunteering, social action, philanthropic approach to life, but it is also about the opening up of public services to local control and devolution of power. The regional growth fund is a discretionary fund to stimulate economic growth and employment and will operate over a period of three years. In particular, it will help those areas and communities that currently depend on the public sector to make the transition to sustainable, private sector-led growth and prosperity. Small and medium-sized enterprises have a vital role to play in that.

[Lord Bilimoria]

My Lords—

[Lord Laming]

My Lords, does the Minister accept that, if the big society means nothing more than what many of us have been doing for most of our lives, that would be a disappointment? I say this on a purely non-political basis. We now have an opportunity to regenerate local communities and to help them to become much more involved in their own quality of life. However, we can do that only if we get out into local communities and stimulate people to become involved.

[Baroness Warsi]

I agree with the noble Lord’s comments. Indeed, the big society goes beyond what noble Lords have been doing because, as I said, there will be devolution of power and an opening up of public services to local control. However, I am sure that noble Lords around the Chamber will agree that we can always do more.

[Baroness Browning]

Does my noble friend agree that for small businesses to play their part in the big society they need more of what the Government have already started, which is to remove the burden of regulation imposed by the previous Government, such as the burden of proof in disputes in court cases? I am also thinking of reducing the employers’ national insurance contribution and, particularly, maintaining a stable economy. In that way, small businesses will thrive, create jobs and play their part in society.

[Baroness Warsi]

I agree with my noble friend. We must also ensure that we cut back the red tape that stifles those businesses. Indeed, the Cabinet Office and the Department for Business, Innovation and Skills are jointly working on a task force to do just that. It is also important that we open up public and government contracts to small and medium-sized enterprises to ensure that they have a part to play not just in helping communities but in bidding for and having access to all government funding.

[The Lord Bishop of Hereford]

My Lords, I know that the Government share the concern of all of us who live in rural communities that small businesses in rural areas should also be encouraged. I also know that there has been a commitment to widen broadband and speed it up. However, the two things throttling small businesses in the countryside, which has a higher ratio of self-employed people than elsewhere, are broadband and fuel and therefore transport. Will the Government say something about the urgency with which they take those issues, so as to encourage small businesses in rural areas as well?

[Baroness Warsi]

The right reverend Prelate raises some important points. As your Lordships may be aware, one of the first vanguard areas for the big society was in Cumbria and it dealt with that very point: the extension of broadband to rural communities. However, I take on board the other concerns as well.

[Lord West of Spithead]

My Lords, I declare an interest as the secretary of the micro-business APPG. I became very aware as a Minister of the value of SMEs, VSMEs and micro-businesses to the security environment. Today, almost 105 years to the day since the launch of the “Dreadnought”, built by British workmen and enterprise in 12 months, can the Minister please assure me that we will reduce the red tape that is between those small companies and the Government? That is across government but particularly with the MoD, where it damages the ability of those companies to really help us.

[Baroness Warsi]

My Lords, we are committed to reducing red tape in all sectors. Noble Lords will agree, and the Benches opposite will recognise, that business has been stifled over the past decade by excessive red tape.

[Lord Bilimoria]

My Lords—

[Lord Cotter]

My Lords—

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

My Lords, there is time for both Peers. Perhaps we could have my noble friend Lord Cotter first and then, if it is the will of the House, the noble Lord on the Cross Benches.

[Lord Cotter]

My Lords, it is well recognised that small businesses are a crucial part of the local community and are ready to deliver on the big society. Local enterprise partnerships were recently established to do this and to help small businesses. However, I point out to the Minister that there is great concern that big business is overshadowing small businesses in the local enterprise partnerships, which were intended to give opportunities for small businesses in the community to provide employment for local people. Will she look at that issue?

[Baroness Warsi]

My Lords, business has always played a vital role in the community. The organisation Business in the Community has been doing that for many years. In light of the fact that 60 per cent of those employed in the private sector work in small and medium-sized enterprises, it is vital that small businesses play a role when local communities are planning local regeneration as part of the local economic partnership.

Companies: Executive Remuneration

Wednesday 9th February 2011 Lords Chamber

Question

15:14

Asked By

[Lord Donoughue]

To ask Her Majesty’s Government what plans they have to monitor the ratio of the average total remuneration of a chief executive of a FTSE company to the median wage.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, the Government have access to a wide range of statistics about remuneration and have two reviews taking place in this area; the Department for Business, Innovation and Skills' call for evidence, A Long-term Focus for Corporate Britain, and Will Hutton's independent fair pay review. The Government will take further decisions following the conclusion of these reviews.

[Lord Donoughue]

My Lords, I thank the Minister for that helpful reply and note the initial steps, which are really quite good, in dealing with bankers’ pay. Is she aware, as I suspect she is, that the remuneration ratio of FTSE 100 chief executives’ pay and employee pay is currently well over 100:1 and that a recent figure I saw was 128:1, and that the gap has more than doubled in the past decade or so? Do the Government have any plans to deal with this problem which is socially divisive and where the increases often bear no relationship to profit performance? Will the Government require public companies to publish this key ratio in their annual reports so that the public, employees and shareholders can know the facts?

[Baroness Wilcox]

My Lords, I am aware of the growing differential over the past 10 years in the pay of chief executives, executives and employees. The noble Lord will expect me to comment on the fact that this occurred in the decade of the previous regime and we inherited it. We are now looking very carefully at how we can get fairness into this. Excessive differentials are not helpful. At a time of challenging economic conditions, it is important that the focus is on linking rewards to growth.

[Lord Renton of Mount Harry]

My Lords, I find myself very much in line with the noble Lord, Lord Donoughue, on this. Does my noble friend agree that the prime interest in this matter lies with the shareholders of the FTSE companies? Is it therefore not reasonable and sensible to require in law that quoted companies compare the total remuneration of their chief executive with the average wage of their workers, and do that in their annual report which everyone can read?

[Baroness Wilcox]

My Lords, we are in the middle of discussions about these very subjects. They are areas that have been under review for quite some time. Some people ask that shareholders should have separate votes, and some people ask the Government to intervene in all sorts of ways. There are ongoing discussions, particularly about the role of remuneration committees. I emphasise that it is for shareholders to go to shareholders’ meetings and say what they think.

[Lord Lea of Crondall]

My Lords, I was for many years a member of the Royal Commission on the Distribution of Income and Wealth which looked at data going back to the 19th century. We are now going back to the 19th century in so far as we had these ratios certainly before the First World War. Although it may be said that the gap occurred under a Labour Government—and some of us raised this question then—do this Government think it is satisfactory that it continues to grow, rather contracting?

[Baroness Wilcox]

I suppose what the noble Lord is really asking about is directors’ pay and fairness. That is where we all are now. I think we would all agree that there must be a robust link between the pay of those who run companies and the performance of those companies; that rewards for failure are not acceptable; and that exceptional rewards for mediocre performance are not in anybody’s best interest. I can assure noble Lords that this Government are very interested in making sure that companies are run well and that there is fairness in distribution on the payment for everybody in a company.

[Lord Taverne]

My Lords, in the previous Parliament, the noble Lord, Lord Gavron, introduced a Bill, widely supported on all sides of the House, that provided for publication in the annual report of public companies of the ratio that the noble Lord, Lord Donoughue, talked about. Would it not be a very simple matter for the Government to introduce that Bill? It would be a very effective way of naming and shaming.

[Baroness Wilcox]

My Lords, before I came to your Lordships' House today to answer this Question, I rather thought that this question was going to come from the noble Lord, Lord Donoughue, who commented greatly on the Bill introduced by the noble Lord, Lord Gavron, when it was debated in 2009. The question on that Bill, which will fit with the questions I have been asked now, was: should the AGM meeting vote on the directors’ remuneration report be binding instead of advisory?

[Lord Campbell-Savours]

On the publication of information.

[Baroness Wilcox]

On the publication of information. At the moment, we are going through this again with the first report to which I referred, A Long-Term Focus for Corporate Britain. I shall be reporting on this just before Easter.

[Lord Brooke of Alverthorpe]

My Lords, I raised this question previously with the noble Lord, Lord Sassoon, and I referred him to the Private Member’s Bill of the noble Lord, Lord Gavron. His response was that it was too radical. Does the Minister share that view?

[Baroness Wilcox]

We shall look at this carefully. I do not think anything is beyond review. I am very happy to look at anything and I am not afraid to either, so I am delighted to answer your question.

[Lord Hunt of Kings Heath]

My Lords, the noble Baroness has said that she is concerned about a widening gap. I want to refer to the agricultural sector. If the Minister is concerned about such a gap, why are the Government proposing to abolish the Agricultural Wages Board which provides some protection against the exigency of the wage structure in that sector for very low-paid and vulnerable workers?

[Baroness Wilcox]

My Lords, the noble Lord will know that that is an entirely different question, but I am delighted that he took the opportunity to air it.

Water Supply: Northern Ireland

Wednesday 9th February 2011 Lords Chamber

Question

15:21

Asked By

[Lord Trefgarne]

To ask Her Majesty’s Government what assistance they provided to the Northern Ireland authorities during their recent difficulties with water supplies.

[Lord Shutt of Greetland]

My Lords, during the period of extreme cold weather, my right honourable friend the Secretary of State for Northern Ireland met the devolved Ministers with policy responsibility in this area and offered the Government’s assistance. He subsequently discussed the matter with the Secretary of State for the Environment and with Water UK, and helped to identify additional call-centre capacity to deal with the heavy volume of calls from customers in Northern Ireland who had suffered disruption.

[Lord Trefgarne]

My Lords, I am grateful to the noble Lord for that reply. I am reassured to hear that there was additional call-centre capacity, but I wonder what additional water was supplied.

[Lord Shutt of Greetland]

As far as water is concerned, there is no shortage of water in Northern Ireland. The good Lord makes good provision. The problem is getting the water to where it is needed. Extra water was pumped into the pipes but the problem was that some of that leaked out. However, the call centres were very important indeed and we must not forget that. An offer of assistance was made by the First Minister of Scotland—a sort of Christmas gift—and 160,000 litres of Scotland's water were taken across to Northern Ireland. I am sure that those in Northern Ireland were very pleased to have it. However, Northern Ireland's daily consumption of water is 625,000,000 litres. In other words, the gift from Scotland, welcome though it may have been, was 0.000256 per cent of a day’s water usage.

[Lord Rogan]

My Lords, is the Minister aware that the people of Northern Ireland were greatly appreciative of the generous donation of Scottish water to Northern Ireland? Will he confirm that the Sinn Fein/IRA Minister, Conor Murphy, the Minister responsible for water in Northern Ireland, declined to ask for aid from a British Government or agency to the people of Northern Ireland in their hour of need?

[Lord Shutt of Greetland]

I would not detract from the Scottish generosity to Northern Ireland. I am aware that the Minister in Northern Ireland was involved in discussions with my honourable friend. It is not clear to me whether he believed that there was a request that he ought to make. Assistance was offered to him in regard to the call centres. I would like people to understand that more than 400,000 people on one day tried to telephone Northern Ireland Water and only 4,000 of those calls were answered. Therefore, bringing in the call centres, which were available through Water UK, a UK and Northern Ireland-wide body, was a tremendous help to people who were seeking it.

[Lord Smith of Clifton]

Does my noble friend agree that successive Administrations, from the first Stormont through to the second Stormont, to both periods of direct rule and to the Stormont Assembly as now constituted, have totally neglected the refurbishment of water ducts and so on in Northern Ireland and it is now time that they addressed that?

[Lord Shutt of Greetland]

Something like £2,000 million was invested in water in Northern Ireland in the 18 years up to 2006-07. Since then, a further £1 billion has been invested but it is quite clear that more money is required for investing in the infrastructure. However, acquiring help in the crisis is a different issue compared with long-term involvement in the infrastructure.

[Lord Dubs]

My Lords, given that the level of rainfall in Northern Ireland is probably not very different from that in the Republic of Ireland, why was there such a serious problem in Northern Ireland when there does not appear to have been one in the south?

[Lord Shutt of Greetland]

I was there at the time, so I can tell the noble Lord that there was a bit of bother in the south as well. Incidentally, a piece of work was published yesterday by the Consumer Council for Northern Ireland showing that the biggest problems were people understanding what was going on, indicating that they had problems, wanting assistance and getting through to those who could help. That was the problem in Northern Ireland. If you look at the 60-page paper that was produced yesterday by the consumer council, you will see that it believes that Northern Ireland Water—these are the council’s views, not mine—was not prepared for an emergency of this type. It has been asking Northern Ireland Water whether it could see the advanced planning in case there is an emergency and it had not had it.

[Lord Mawhinney]

My Lords, my noble friend has sought to distinguish between the crisis and the long-term structural inadequacy that most people believe is the reality in Northern Ireland. I hope he will not mind me saying that the big problem that the Northern Ireland people had was not a lack of information so much as a lack of water. Does he believe that getting structural change in the hope that such a crisis will not happen again is more likely to take place if the water service is privatised?

[Lord Shutt of Greetland]

My Lords, it does not matter what I think about whether it is privatised or not. It is not up to the Government either. This is a devolved matter. You cannot devolve something and then say, “We are going to make the decisions”. The water service in Northern Ireland is a devolved service and it is up to the people in Northern Ireland—I believe there will be an election there before too long—and to those who are elected to decide what sort of water service is required. Northern Ireland and Scotland have state water and in England we have a privatised service. It is their decision because it is a devolved matter; it is not our decision.

Apprenticeships

Wednesday 9th February 2011 Lords Chamber

Question

15:28

Asked By

[Lord Young of Norwood Green]

To ask Her Majesty’s Government what steps they are taking to maximise the number of apprenticeships for 16 to 18 year-olds.

[The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford)]

My Lords, the Government are strongly committed to investment in apprenticeships for 16 to 18 year-olds. The latest data show that 116,800 young people started an apprenticeship in 2009-10, a 17.5 per cent increase on 2008-09, and we are keen to see continued growth. Some 60 per cent of the overall apprenticeship budget for 2010-11 is for 16 to 18 year-olds. We expect there to be more than 131,000 16 to 18 year-olds starting an apprenticeship in 2010-11. Funding for 16 to 18 apprenticeships will increase by a further £19 million in 2011-12.

[Lord Young of Norwood Green]

I thank the Minister for his Answer. I was impelled to ask this Question as this is National Apprenticeship Week, as I am sure he is aware, and we have record levels of youth unemployment. The previous Government achieved a record number of apprenticeships, rising from 65,000 to nearly 280,000. I am glad to see that there will be an increase in spending. The Government are asking businesses to co-operate in recruiting apprentices but what pressure are the Government putting on government departments and local authorities to recruit apprentices, especially in the 16 to 18 years range?

[Lord Hill of Oareford]

I am grateful to the noble Lord for raising the Question in National Apprenticeship Week, as he said. I am very aware that few people in this House have done more to promote the cause of apprenticeships than him. I know that he takes a personal interest in this. During his time as a Minister, he and his ministerial colleagues did a lot to get apprenticeships taken seriously again and to increase the number of them. I personally, and the Government generally, are keen to build on that. In National Apprenticeship Week, we have already seen a number of employers in the private sector coming forward with new apprenticeship schemes. The Government should absolutely keep up the pressure on the public sector to do so. There is an exemption on apprenticeship recruitment in government departments—that is one way we can help. However, I agree with him that we all need to keep up the pressure. I would be very keen to work with him and other noble Lords to raise the profile of apprenticeships and do what we can to encourage the provision of more places.

[Baroness Sharp of Guildford]

My Lords, how far have the Government succeeded in finding employers to take up these new apprenticeships, and how many of them are college-based, programme-led apprenticeships?

[Lord Hill of Oareford]

I believe that 85,000 employers are involved. A number of large employers have increased their offers of apprenticeship places in National Apprenticeship Week. The National Apprenticeship Service can encourage more employers of all sizes—not just large employers—to become involved. There is a task for everyone in raising the profile and importance of apprenticeships, and in making it easier for employers to become involved. There is an issue around the bureaucracy involved in this. If we can make it simpler for employers to participate, we should do so.

[Baroness Howe of Idlicote]

My Lords, I congratulate both Governments on their records on making more apprenticeships available. Does the Minister agree that it is equally important to make more apprenticeships available to those in the age group somewhat above the 16 to 18 year-olds, who may well have missed out on previous opportunities, no doubt often due to circumstances such as deprived backgrounds?

[Lord Hill of Oareford]

My Lords, I am glad to tell the noble Baroness, Lady Howe, that as well as increasing the number of apprenticeships available for 16 to 18 year-olds, we are increasing the number available to people older than 19.

[Lord Knight of Weymouth]

My Lords, the Minister is right to pay tribute to the excellent work of my noble friend Lord Young of Norwood Green, who, when he was a Minister, legislated in this House to bring forward a guarantee of an apprenticeship place for every suitably qualified 16 and 17 year-old. Why, then, will the Minister’s own Education Bill get rid of that apprenticeship guarantee?

[Lord Hill of Oareford]

The difference between us is in essence a philosophical one. As I hope I have demonstrated, both sides of the House are committed to the idea of increasing the number of apprenticeships, their status and the esteem in which they are held. The difficulty with the previous approach of offering a guarantee is that, given that apprenticeships are employer-based, they are dependent on employers providing the place in work, which is not in the gift of government to control. Giving a guarantee on which one cannot deliver does not seem to me to be a guarantee.

[Lord Martin of Springburn]

My Lords, I welcome what the Government are doing with regard to apprenticeships and giving young people a chance, but can steps be taken to contact self-employed journeymen and journeywomen— there are far more of them now than has ever been the case previously—to encourage them to take on apprentices? Small businesses and self-employed people are worried about the administration involved in apprenticeships. Can they be helped with the administration? Nothing beats a self-employed man or woman taking on an apprentice and becoming a mentor to him or her.

[Lord Hill of Oareford]

I have huge sympathy with the noble Lord’s point and agree with him entirely. I am sure that we can do more. We are trying to establish a system across the country but journeymen face difficulties in this regard. I know of a local farrier in my village who wants to take on a young lad but it is not straightforward, so I very much take that point on board and will certainly look into it.

[Baroness Hughes of Stretford]

My Lords, the Minister referred to the challenges of getting businesses and organisations to take on young people as apprentices. That is why the Labour Government required public sector bodies to commit to provide a number of apprenticeships. Therefore, why have this Government now absolved the Civil Service, local authorities and health bodies—all of them major employers—from those specific commitments? Does the Minister not agree that the public sector should show a lead here and help to meet the huge demand for apprenticeships among young people?

[Lord Hill of Oareford]

As I have already said, I accept fully that there is a role for both the public and private sectors to play. If we are able to encourage more people from the private sector to offer good apprenticeships with good opportunities for employment and progression, that is good, and young people are keen to get into those kinds of jobs. However, I also accept that we should do as much as we can to encourage the public sector to play its fair share as well.

Electric Personal Vehicles (Use on Highways) Bill [HL]

Wednesday 9th February 2011 Lords Chamber

First Reading

15:36

A Bill to make provision for the use of electric personal vehicles on highways.

The Bill was introduced by Lord McColl of Dulwich, read a first time and ordered to be printed.

Parliamentary Voting System and Constituencies Bill

Wednesday 9th February 2011 Lords Chamber

Report (3rd Day)

15:37

Clause 11: Number and distribution of seats

Amendment 22D

Moved by

[Lord Pannick]

22D: Clause 11, page 10, line 37, at end insert—
“Exceptional circumstances5A If, but only if, a Boundary Commission is satisfied that—
(a) it is necessary to do so in order to achieve a viable constituency, and(b) such necessity arises from special geographical considerations or local ties, as defined in rule 5(1)(a) or (d) above, of an exceptionally compelling nature,the Boundary Commission may decide that the electorate of the constituency shall be—
(c) no less than 92.5% of the United Kingdom electoral quota; and(d) no more than 107.5% of that quota.”

[Lord Pannick]

Amendment 22D stands in my name and those of the noble Lords, Lord Williamson of Horton and Lord Armstrong of Ilminster, and the noble Baroness, Lady O’Neill of Bengarve.

The purpose of the amendment is to recognise and address the competing strength of the arguments advanced from each of the Front Benches on a matter of considerable significance: namely, the extent to which the Boundary Commission should have flexibility to depart from the electoral quota for each constituency laid down in the Bill. The Government contend—this is a very forceful argument—that equality in this area is of enormous significance. They have already recognised a 5 per cent margin either way. One must be very careful about giving any further flexibility lest one undermines the important goal of equality. Those arguments are very forceful, but equally forceful are the arguments advanced by noble Lords on the opposition Front Bench. They point out that equality is not the only goal: geographical considerations, local ties and community cohesion are also important in this sensitive area and there may be constituencies where the Boundary Commission would wish to depart from the electoral norm further than the 5 per cent margin.

The amendment recognises the force of each of those arguments and it suggests that the solution is to confer on the Boundary Commission in its discretion a very narrow—I emphasise very narrow—additional discretion to allow for a departure from the electoral norm of up to another 2.5 per cent either way. That would apply only if the Boundary Commission believes, in its judgment, that two criteria are satisfied. The first criterion is that a further departure must be necessary—not reasonable nor desirable, but necessary. The second criterion is that it must be necessary in order to address special geographical considerations or local ties—already the criteria in Rule 5—of an exceptionally compelling nature. On a matter as important as this, it is appropriate to include in the Bill that limited additional flexibility outside the 5 per cent norm, but I accept that it is absolutely vital that any such flexibility is defined in a way that ensures that the exception does not swallow the rule.

Amendment 22D has been drafted with the assistance and encouragement of noble Lords from all parts of the House. It has been drafted in a manner that I am confident achieves this narrow objective. I thank the noble Lord the Leader of the House, the noble and learned Lord, Lord Wallace of Tankerness, Mr Mark Harper, the Minister in the other place and the Bill team for the time and trouble that they have taken in discussing with me very patiently and courteously the Government’s concerns about this issue. I really have tried my best to accommodate those understandable concerns in this amendment in a constructive manner. There remain, I understand, four main concerns that Ministers still have. I will briefly identify and seek to address them.

The first concern is that the criteria, particularly the term “exceptional” are subjective. The Boundary Commission will, Ministers fear, be under pressure from people in many constituencies to recognise that their cases satisfy these criteria. The answer is that the criteria are very narrowly defined and the Boundary Commission will, I am sure, respect the clear limits in both the language and purpose of the amendment. I refer noble Lords to a 1998 judgment by the late and much lamented Lord Bingham of Cornhill, where he explained in another statutory context what “exceptional” means. He was, incidentally, rejecting arguments from counsel, Mr Clegg QC—no relation. Lord Bingham said that exceptional means something,

“which is out of the ordinary course, or unusual, or special, or uncommon”.

There are many contexts in which Parliament has used the term “exceptional”, and public bodies are used to exercising narrow discretions accordingly.

15:45

The second concern of the Government is that that discretion will cause practical problems. It will involve large amounts of work for the Boundary Commission and cause potential delays in the whole process of boundary review. I do not share those concerns because the Boundary Commission will in any event be looking at precisely the special geographical considerations and local ties to see whether, in its judgment, it is appropriate to vary the electoral size of a particular constituency by up to 5 per cent from the norm. That is already its job. The amendment will simply mean that, if the Boundary Commission concludes that, in its judgment, there are special geographical considerations and local ties that make it appropriate to go up to the 5 per cent variation, it may if it wishes ask a further simple question. Is this a case of necessity and of such strong geographical considerations and local ties that it would be appropriate to exercise exceptional discretion and use the additional 2.5 per cent margin? I suggest to noble Lords that to allow the Boundary Commission to ask and answer that question will not cause practical problems.

The third concern expressed by the Government is about the knock-on effect. They say that this discretion will inevitably have a knock-on effect on neighbouring constituencies if it is exercised. The answer again is that Clause 11 already allows for variations of up to 5 per cent either way. To the extent that the Boundary Commission exercises that power, there will already be a knock-on effect on neighbouring constituencies. There is nothing different in principle if you expand the band of discretion to 7.5 per cent to be exercised only in these exceptional circumstances. Of course, the Boundary Commission will not exercise discretion to allow a variation of up to 7.5 per cent without taking into account any potential knock-on effect.

The fourth and final concern that the Government have expressed to me is about judicial review. Of course, the exercise of this exceptional power, if we give it to the Boundary Commission, will be, like all other public powers, subject to control by the courts, and rightly so. But the Government’s concern about judicial review in this context is wholly unrealistic. Any judge faced with a judicial review application in this context will adopt the approach that the Boundary Commission has been given a very narrow discretion. It is for the Boundary Commission and not for the courts to decide whether the criteria of necessity and exceptionally compelling circumstances are satisfied and it is not the role of the courts to substitute their discretion for that of the Boundary Commission.

The Government then say, “We’re not so much concerned about judicial reviews that will or may succeed; we’re concerned about hopeless judicial reviews which will delay the process of boundary review”. The answer to that is that judicial review applicants are required to present any claim speedily where the context so requires, as this undoubtedly does. No judicial review claim can proceed to a substantive hearing without the permission of the court, and the court will not give permission unless the claim is proper and has a realistic prospect of success. The Government’s position is simply not tenable given the narrow nature of the discretion that would be conferred. In public law, the courts are accustomed to resolving speedily any issues which require expedition. The worry about judicial review can provide no answer to this amendment.

I very much hope that, even at this late stage, the Government may feel able to accept this compromise amendment in the spirit in which it is put forward. It is a compromise amendment that recognises that we are dealing with an important and sensitive area of national life. It is an area where equality is a most important value, but it is an area also where a little extra flexibility is needed to mitigate the rigour of the formula in those cases, if any, where the Boundary Commission is satisfied that the criteria of necessity and exceptional circumstances are met.

I very respectfully suggest to the Minister who is to answer this debate that wisdom and maturity on the part of the Government require recognition of the importance of consensus in this sensitive political context. This amendment recognises the strength of the competing arguments on both sides of this debate. I commend it to your Lordships as being reasonable and workable. I beg to move.

[Lord Williamson of Horton]

My Lords, my name is also on the amendment, so ably presented by my noble friend in moving it, and I rise to support it. The amendment is of course a compromise, but it is perhaps all the better for that, because I think that some noble Lords think that compromises have not been very frequent during the long passage of the Bill.

There are two, very strong reasons for noble Lords to support the amendment. First, with the proposed reduction in the number of Members of Parliament and the redrawing of the constituency boundaries, we are entering into, through the work of the Boundary Commissions, a very substantial operation. It is very difficult to foresee where some of the difficulties may arise for the drawing of sensible constituency boundaries. Is the 5 per cent proposal in the Bill enough? We are not sure. This is perhaps a typical situation where a very small increase in the margin for exceptional circumstances could make the difference between a good-sense constituency and a nonsense constituency.

Secondly, this amendment has been very carefully drawn up, as my noble friend explained, to ensure that, while providing a small additional margin for use in exceptional circumstances, it does not significantly conflict with the Government’s objective of achieving an equalisation of the size of constituencies. This is quite clear, because the use of the extra margin in the amendment is limited to cases where it is “necessary”—a very strong word—to achieve a viable constituency. Surely the Government want viable constituencies. The amendment provides also that such necessity must arise from special geographical considerations—inconveniently placed mountains and so on—or local ties of an exceptionally compelling nature. These considerations or local ties are already in the Bill at Clause 11, but, in this amendment, they are permitted to play a role under very strict conditions.

From time to time, I speak to schools about the work of the House of Lords. I intend to cite this amendment as an example of a wholly reasonable amendment that has been tabled in the spirit of the way in which we work in this House. It would certainly help me if I could cite it as an amendment discussed and then included in a Bill. I hope that the Government will accept it and make that possible.

[Lord King of Bridgwater]

My Lords, perhaps I may make a wholly reasonable response to the noble Lords, Lord Pannick and Lord Williamson, and commend them on the way in which they have put forward their amendment. I entirely accept the spirit in which it has been proposed. We have had some pretty unhappy times in past days in this House. I have not yet spoken on the Bill, but I felt that we had reached the moment when I wanted to make a contribution.

I am one of the Members of this House who has had his boundaries changed often enough in his earlier life. It is not totally world shattering; it happens; there have to be adjustments. There has sometimes been rather too much suggestion that it is almost a criminal offence to change some constituency boundaries. I do not regard it in that way. It is a necessary move. With population changes and demographic growth, there is an obvious need at times for boundaries to change.

As noble Lords said, the amendment is a compromise. It is not unfair to say—I do not wish to misrepresent the noble Lords—that it might have been conceived at a moment when it appeared that there was deadlock in this House and when we were going through a very unhappy period. I think and hope that the House is now conducting itself in a way that many of us hoped for, where there is reasonable debate and where there are then proper votes on which—as is clearly the Government’s point of view—you win some and you lose some. That is surely what democratic debate is about.

I come to this part of the Bill with two considerations. I believe that there must be more equal constituencies. I do not know whether anyone in this House would challenge the fact that there are serious discrepancies in the size of constituencies that must be put right. I believe also that that must be achieved by 2015. I was very struck by a comment by the noble and learned Lord, Lord Wallace, who said in moving the opening amendment yesterday:

“If we took no action, the next boundary review may not take effect until 2020. This would mean that in 2018 there will be electors who reach voting age and register to vote who will not even have been born when the basis of the pattern of representation in the Commons was determined”.—[Official Report, 8/2/11; col. 128.]

We all know that it is very constipated and far too slow a process.

Does the amendment help? Is it making constituencies more equal or less equal? There is only one answer to that. At the moment, the Government are proposing a spread of 10 per cent. This amendment proposes a spread of 15 per cent, which would allow for the possibility of less equal constituencies. I admired enormously the noble Lord, Lord Pannick—I hope that that does not sound patronising—when he said that the knock-on effect of moving from 10 per cent to 15 per cent, meaning that other constituencies might have to have more or less, is not different in principle. Of course, he is right, but it is rather different in quantum. I think the noble Lord will understand that point as well. This amendment allows the possibility of less equality, so I cannot support it on that ground.

16:00

Another thing that concerns me, which the noble Lord dealt with fairly and frankly, is exceptional circumstances and the issue of judicial review. The noble Lord, Lord Pannick, with his great experience, advised the House exactly how a judge would handle circumstances that came in front of him. He appeared to give a guarantee that the court would also deal with it extremely promptly and speedily. I do not know that I absolutely share that confidence in every case, given what has happened in some of the circumstances. I thought that that might be generally true, but if the noble Lord, Lord Pannick, with his skill, is handling the case in front of that judge, I am not sure that very interesting further legal arguments, or exceptional circumstances of one sort or another that someone has discovered but that have not been taken fully into account, would not be found, which would mean that the matter would have to be further delayed. That is my point, because it would be outrageous if we could not have proper, more equal boundaries by 2015.

This amendment opens up the certainty of less equality and the possibility of further opportunities for delay. I put it no higher than that. Although I say this, I do not want in any way to suggest that I do not appreciate very much the leadership of the Cross- Benchers, the Convenor, and her colleagues in what was clearly a difficult situation and in trying to find a way forward by the House. I think that circumstances in the House have now changed and that the House should take a straight decision on this.

I know that many people were worried that we were heading towards a really serious breach of convention in a timetable Motion. Perhaps I may presume to say that another convention might be under threat. We all respect the Cross-Benchers for the individual independence of mind and experience that they bring to this House. The suggestion that there should be a Cross-Bench position on this is not the sort of House that I expected to find.

[Noble Lords]

Oh!

[Lord King of Bridgwater]

I am sure that that is not true because I know that I can talk to the Cross-Benchers, many of whom—

[Lord Pannick]

My Lords—

[Lord King of Bridgwater]

Perhaps I may just finish my sentence. I have had the pleasure of working with many Cross-Benchers over the years who will bring their independence of mind to this House.

[Lord Pannick]

I reassure the noble Lord that there is no Cross-Bench position on this. Each Cross-Bencher who has considered this issue has a position. Many of them agree with the views that I explained to the House, but some of them no doubt will not agree. There is no official Cross-Bench position.

[Lord King of Bridgwater]

I am extremely grateful and, of course, I entirely accept what the noble Lord, Lord Pannick, says. That is entirely as I understand and hope it will always be in this House. There have been suggestions in other directions, and I am very glad to have the authoritative response of the noble Lord, Lord Pannick, on this point. I accept that this is entirely well intentioned and is intended to be a constructive amendment for the reasons that I have given, but it fails to pass the two essential tests of this Bill: more equal constituencies and getting new boundaries in by 2015. I hope that the House will not support it.

[Lord Maples]

My Lords, I, too, hope that the House will reject this amendment. The noble Lord, Lord Pannick, moved it in extremely reasonable and persuasive terms, but it is a bit of a split-the-difference amendment. There has been a call for a 20 per cent spread—10 per cent either way—in the debates in Committee, and 7.5 per cent seems to be a nice compromise between 5 per cent and 10 per cent. However, 5 per cent is quite a lot.

The underlying principle of this Bill is that constituencies should be of equal size. Five per cent either way seems to be reasonable latitude to allow the Boundary Commission in setting those constituency boundaries. It means that the biggest constituency will be about 8,000 voters bigger than the smallest. If we went to 7.5 per cent, that difference would be somewhere between 10,000 and 12,000 voters. I do not believe that there should be any exceptions to this rule. I am not persuaded about the Isle of Wight or the Scottish island seats. I do not see why those specific geographical considerations should outweigh others.

I was a Member of the other place for two constituencies, one urban and one rural. All of us who have been in that position can construct reasons to persuade the Boundary Commission why our constituency is special or different. We have all had different geographical considerations and a weight of problems and correspondence in one area that another constituency does not. In my experience, they roughly balance out and the workload is about the same. I do not expect that the number of immigration cases in the Western Isles is very large, and I have some difficulty with whether the workload there is great enough to justify a constituency electorate of, I think, 21,000. There is a principle at stake here that constituencies should be of equal size.

Another issue with this amendment is that, whatever the noble Lord says, it introduces areas of vagueness and subjectivity, including what is “viable”, what is “an exceptionally compelling nature” and “local ties”. Some of these expressions are already in the Bill. When the noble Lord said that judicial review of a Boundary Commission decision was unlikely to get very far and would be dealt with very speedily, I could not help asking myself whether he would give a client exactly the same advice as to whether this was a hopeless prospect.

It seems to me that there is not just the possibility of one case of judicial review; there is the possibility of a great many cases of judicial review. I think I share with my noble friend Lord King an absolute determination that these new boundaries should be in place for the next election. This unfairness has to be eliminated. The amendment makes that less likely. It introduces some concepts of vagueness, which will make the Boundary Commission’s task more difficult and will possibly, although I have to defer to his professional expertise on this, make judicial review more likely. It also seemed to me that his arguments would be equally valid if, instead of putting in 7.5 per cent, he had put 10 per cent or 15 per cent. The figure of 7.5 per cent seems to be a somewhat arbitrary half way between 5 and 10 per cent.

At the next election, the biggest constituency, if the Bill stays as it is, will not just be 10 per cent bigger than the smallest; it will be considerably more than that because the Boundary Commission’s decisions will be based on the electoral registers as they were at the end of last year. If one looks at the problem that this has created in the past, in the 2005 election—I shall pick just two examples—Sheffield Brightside was 19,000 voters under the quota and Banbury was 19,000 over. By the 2010 election, which was based on the year 2000 registers—10 years earlier—the Banbury constituency was about 9,000 voters over quota and the Sheffield Brightside constituency was 9,000 under. At the last election, only 218 seats were within the 5 per cent quota; 161 were within 5 per cent to 10 per cent; 200 were within 10 per cent to 20 per cent; and 60 were more than 20 per cent out.

The next boundary review will be a bit better than that because it will be only five years in arrears, but it will still be based on registers that will at that point be about five years out of date. I have done some very rough arithmetic; one would expect 200 seats to be more than 5 per cent out and about 60 to be more than 10 per cent out. Anything that goes further from the principle that the constituencies should be of equal size should be resisted. Five per cent gives the Boundary Commission considerable leeway, and I would be very reluctant to see the Boundary Commission allowed more subjective judgments and more opportunities for judicial review, or a result in which a considerable number of constituencies were more than 5 per cent away from the average.

[Baroness Butler-Sloss]

I should like to make it clear to the House that I speak as an individual and support what the noble Lord, Lord Pannick, said: that the Cross-Benchers are never to be seen as a group. We all vote according to our individual consciences, as we see our position in this place. I live in an area that has had three changes of constituency in the past three elections, and I have not had the slightest problem with that. I also recognise the importance of all these changes being done by the next election in 2015. Consequently, I totally support the Government’s approach that there should be a leeway of 5 per cent each way. However, I support the noble Lord, Lord Pannick. I played no part whatever in drafting the amendment, and indeed had not read it until I came into the Chamber this afternoon. If one reads the amendment with care and listens with care to what the noble Lords, Lord Pannick and Lord Williamson of Horton, have said about it, it is perfectly obvious that it would give the Boundary Commission leeway in an exceptional, small group of cases. It is not intended to disrupt or change the standard situation, which is the proper way in which to readjust constituencies that are out of kilter.

As someone who has been a judge, I would say that it would be most extraordinary if there was a judicial review of any of these cases. If there was one, it would be very unlikely that the result of that one would encourage further judicial reviews.

[Lord Rennard]

My Lords, I wish to address individual consciences on this matter. I do so having reflected on yesterday’s debate about public inquiries and the role of lawyers and legal challenges in the Boundary Commission process, and having noted that that debate was almost entirely dominated by those from the legal profession. I speak as someone who is very much not a lawyer and who cannot possibly say that he is in any way above the political fray between parties about elections, campaigns and constituencies. However, I am someone who, over more than 30 years, has had extensive experience of fighting and organising elections in many dozens of different constituencies in every part of Great Britain, in general elections and in parliamentary by-elections, as well as extensive involvement in the Boundary Commission processes that have gone into drawing up those constituencies in the past.

I very much appreciate the very sincere efforts of the noble Lords, Lord Pannick and Lord Williamson, and other noble Lords, to try to see whether some reasonable consensus or agreement might be reached and to try sincerely to improve aspects of the Bill in reasonable time, so that the Bill is agreed on the timetable that the Government want. However, there is a fundamental problem with the definition that the noble Lord, Lord Pannick, and his noble friends have drawn up. There is simply no reasonably agreed and commonly accepted definition of the key phrase “a viable constituency”. There is no agreed definition, and to try to agree on it would be a subject of great controversy. Without a definition of a viable constituency, we are simply inviting four different Boundary Commissions to devise their own definitions of the phrase, which I believe would be very controversial. Nor was it clear to me—or I think to anyone else, although I am not a lawyer—what the meaning of the phrase “exceptionally compelling nature” might be. The Boundary Commissions would have a lot of argument about what considerations of an exceptionally compelling nature are.

I can easily see large numbers of lawyers in many courts arguing for a very long time over definitions of a viable constituency and over exceptions, such as geographic ties and local considerations, which in themselves are very vaguely defined, that might be considered to be of an exceptionally compelling nature. Such phraseology will, I am in no doubt, lead to many legal challenges to the Boundary Commission’s processes, which should be determined by independent boundary commissioners using the criteria given to them by Parliament. They should not be determined by lawyers in the courts arguing over these definitions. Too many problems in the past have been caused by legal arguments. A noble friend of mine, when a Member in the other place, came to me for advice on how to handle Boundary Commission processes. I gave him the best of my advice—and, of course, it was free of charge. By the time he had consulted learned counsel on how to make his representations to the Boundary Commission, a bill in excess of £10,000 had been incurred. If we pass an amendment such as this, we will have to go on by defining viable constituencies and exceptional circumstances, and there will be many legal challenges. These issues will be determined by who has access to the funds for which party, which MP, which candidate and in which constituency. That will be a wholly unsatisfactory process.

The noble Lord, Lord Pannick, said that he was creating a narrow definition in this amendment. With great respect to the noble Lord, it is absolutely not a narrow definition to try to say what a viable constituency is or what wholly exceptional circumstances are. They are two very widely defined concepts. He also said that he was trying to reassure Ministers who are concerned that the exception might become more general. This amendment will fail, because the exceptions will become very general.

16:16

[Lord Scott of Foscote]

My Lords, I rise simply to say a word about the possible effect of litigation on the timetable proposed for litigation. The possibility of delay was mentioned by my noble friend Lord Pannick, who has great experience in this field. It is my experience that the prospect of obtaining a favourable end result to the litigation is not the only reason why people commence litigation. Both as a barrister and as a judge, I remember cases in which litigation was commenced not with any realistic prospect of success at the end but simply for the purpose of achieving delay. Where judicial review is concerned, the permission of a judge is required. So the applicant goes in front of the judge and sets out his case, asking for permission to start judicial review. Sometimes a judge will grant him permission when he ought not to have done. The noble Lord, Lord Pannick, proposed the likelihood that permission would be refused in the cases of judicial review as a result of this amendment, and I do not dispute that—but there might be a judge who would grant it. If permission is refused, the applicant can then renew his application for permission in front of the court of appeal and try again. Throughout this process, which will take a little time, whatever expedition might be granted by the courts, the pending litigation will deter the Boundary Commission from getting on with its job.

I support the amendment—or at least I think I do; I am listening carefully to the arguments for and against—but I would not wish this House to proceed on the footing that a degree of delay might not be occasioned by litigation of the sort that I have described, which may be vexatious litigation.

[Lord Phillips of Sudbury]

Would it be unfair to ask the noble and learned Lord to utilise his vast experience of judging to comment on the point just made by my noble friend Lord Rennard as to whether the definition of a viable constituency would be an issue that delayed a competent lawyer for some considerable time, especially if paid per diem?

[Lord Scott of Foscote]

A competent lawyer will give an opinion on that after he knows the facts. The notion that the constituency proposed is not viable will have to depend on facts, some of which are bound to be much stronger than others. As a general proposition, the question of what a viable constituency is and is not will be a subjective matter and one properly for the Boundary Commission. Whether there was an angle that would allow an attack to be launched would depend on the facts of an individual case and is not something that could be answered in the abstract.

[Lord Elton]

My Lords, before we come to a conclusion, there is something about which I need to remind myself and your Lordships. It is necessary to keep two or three things in mind. As my noble friend Lord King has already reminded us, at present the Bill permits a variation of 10 per cent, whereas what is proposed is a variation of 15 per cent. I need to remind myself that we are talking not about numbers, areas or acreages but about the value of votes. The proposal is to raise to 15 per cent the discrepancy between the value of a vote in one constituency and in another.

The principle of the Bill is to try to reduce the variations so that everybody’s vote is roughly equal. My subjective—but not, I think, unreasonable—view is that 10 per cent is quite enough. That gets around an awful lot of arguments that have been made and, for me, it is conclusive.

[Lord Campbell of Alloway]

My Lords, may I take up the point which I made yesterday? It is really for the Boundary Commission, which exerts no political influence and has no political influence upon it, to decide what is a viable constituency. That cannot be explained in a definition which you write out in black and white; it is a matter of common sense for the commission. To impede that by a lot of legal processes and lawyers—I am one, although I am a bit past my sell-by date now—is a tremendous mistake and, although it is well intentioned, I do not support this amendment.

[Lord Armstrong of Ilminster]

My Lords, once upon a time there was a man called Procrustes. He made a very beautiful bed, and he liked people to come and lie on it. Being a man of very high and strict principle, he insisted that the bed and the people should fit. Unfortunately, he made the bed unalterable, so he had to make the people fit the bed. He either stretched them out a little if they were too small or chopped a little bit off if they were too tall, with painful, serious and sometimes fatal consequences for the people concerned. Quite apart from the consequences for the people concerned, Procrustes found his reputation deeply damaged; great hostility was shown towards him and there were demonstrations in the street.

Then four good, independent people came along and suggested a simple mechanism whereby some of the strain could be relieved. It was closely restricted; it could be used only in exceptional circumstances and for reasons of an extraordinarily compelling nature. It was a simple mechanism whereby, in these very exceptional cases, the bed could be stretched or shortened by a very small amount. The number of cases would be few but there would be cases in which the variety of human nature was recognised and allowed for and the painful consequences to which I have referred were avoided.

There were many arguments about the principle; it was thought to be very proper, good and strictly maintained. I am sorry to say that Procrustes grumbled greatly about the idea that there should be any stretching or changing of the bed. But in the end he accepted that there had been one or two cases which he agreed should be allowed past and the exceptions and exceptionally compelling reasons were such that the further breaches of the principle which would ensue would not be very serious or great. Therefore, grumbling, he accepted—to the relief of those few people whose lives and bodies were spared and, in the end, to the contentment of Procrustes himself, who accepted that this small degree of flexibility had enabled the bed to survive and the principle to be broadly maintained.

[Lord Butler of Brockwell]

My Lords, this amendment allows the Boundary Commission, in very exceptional circumstances, to exercise its discretion within a range of 15 per cent rather than 10 per cent. The noble Lord, Lord Rennard, made the point that this would give people who wished for one reason or another to delay the operation of the reforms greater scope to introduce litigation. Of course, even within the 10 per cent provided in the Bill, the Boundary Commission is exercising discretion. It is not clear to me why, in these very exceptional circumstances, there would be more scope for challenging under the 15 per cent variation than under the 10 per cent. If people, for reasons of their own, wish to obstruct this process, is there not exactly the same power to do that under the 10 per cent provision? The advantage of having 15 per cent is that without giving much greater scope—or, indeed, any greater scope—for challenge, the Boundary Commission can reach reasonable recommendations in cases where it is necessary.

[Lord Rennard]

My Lords, my point about the prospects for potential legal challenges is not relevant to the 5 per cent or 10 per cent consideration. It is purely about the existing Boundary Commission criteria as in the five previous general reviews undertaken by the Boundary Commissions.

[Lord Glentoran]

My Lords, I think noble Lords are allowed to speak only once on Report.

[Lord Rennard]

I understood that an intervention on a matter of clarification was allowed. My point is that the criteria of the Boundary Commissions are clearly established and therefore not likely to be subject to future legal challenge. Interestingly, the amendment contains wholly new criteria regarding viable constituencies and considerations of a wholly exceptional nature.

[The Countess of Mar]

The Companion says that noble Lords may make a brief intervention in order to clear up a point. The noble Lord is making a speech.

[Lord Rennard]

My Lords, I think I was briefly clearing up the issue, which I have done.

[Lord Falconer of Thoroton]

My Lords, we have had a very good and a very short debate. I support entirely the amendment moved by the noble Lord, Lord Pannick. We moved an amendment at an earlier stage in these proceedings proposing 10 per cent in exceptional circumstances. As the noble Lord has described, the Government, through a variety of Ministers, raised a number of reasons why a succession of amendments would not work. In relation to each of the problems raised by the Government, the noble Lord, Lord Pannick, produced a sensible solution.

At the heart of what the noble Lord is suggesting is acceptance of the principle of much greater equality, but there will be exceptional cases where it is necessary to give effect to an exception based on geography or local ties where a small bit of procrustean flexibility is sensible. That is a classically common-sense amendment which should be considered on its merits.

With the greatest of respect to the well known legal expert, the noble Lord, Lord King—a much respected figure in the House—I suggest that noble Lords look at the matter on the basis of the merits of the argument being advanced by the noble Lord, Lord Pannick. They should ignore views about the conduct over this Bill, ignore what the position may be in the future and ask themselves, “If we, as a House, agree this amendment to the Bill, will people outside this House think well of us and think that we improved the Bill in a way that gave a sensible degree of flexibility?”.

Almost the most powerful speech that we have heard in the course of the debate came from the noble Lord, Lord Williamson, who said that this should be an object lesson in how this House should operate. That is, the power of the argument on the merits should succeed. Of course, I am parti pris and therefore not in a position to give an argument that would be regarded as anything other than subjective but, my goodness, the noble Lord, Lord Pannick, has done the work, which nobody else has done in relation to this debate. I commend his amendment to the House.

16:30

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

My Lords, I start by thanking the noble Lord, Lord Pannick, for his amendment. I also thank all those who have contributed to what has been a very good debate. Given the way that the noble Lord, Lord Pannick, presented his amendment, I am sure several constituency associations will be lining up to engage him for various cases when the Boundary Commissions bring forward their proposals. I appreciate not only the manner in which the noble Lord presented the amendment but his willingness to engage. As he recognised in moving the amendment, considerable efforts have been made to see whether the Government and the noble Lord, Lord Pannick, could find common ground.

The effect of the amendment would be to give the four Boundary Commissions discretion to propose constituencies with an extended 15 per cent range—from 92.5 per cent to 107.5 per cent of the United Kingdom’s electoral quota—in the event that the commission considers that exceptional local ties or geographical circumstances make it necessary to create a viable constituency. As my noble friend Lord King indicated, at the heart of this part of the Bill is the principle of seeking equal value—one vote, one value—and doing so in order that the new boundaries can come into effect for the general election to be held in 2015. The Bill before your Lordships’ House is founded on the clear principle that constituencies should contain an equal number of voters. Having given great consideration to the points put forward and the detail, we do not believe that these principles would necessarily be achieved—they would certainly be put at risk—by passing this amendment, so we find that we must resist it.

The principle that constituencies should contain an equal number of voters is not exactly new. The existing legislation—the Parliamentary Constituencies Act 1986—requires the Boundary Commissions to recommend seats that are as near to equal as practicable. The problem with that legislation, as has been mentioned on many occasions during our debates in this House and the other place, is that although it clearly sets the goal of equal constituency sizes, the mutually contradictory rules in the Act result in a wide variation of constituency sizes. That is not an abstract problem. One person, as we have said, should mean one vote. Nor is it just a matter of local representation; the nature of our parliamentary democracy means that one’s vote is one’s stake in who forms the Government of the day. As we have also heard in debates, turnouts will vary but the system should not compromise an elector’s stake in the Parliament long before a ballot has been cast.

That is why the Bill that the Government brought to this House had very few named exceptions to the parity principle—only two constituencies out of 600. The specific exceptions that we made were born of the necessity to guarantee effective representation in constituencies that were not only geographically remote but had no obvious link to a mainland constituency. The same principle informs the geographical size limit, which also has very limited application. I acknowledge that there is a range of views across your Lordships’ House on which specific areas, if any, should have such treatment in the Bill. However, as has been said, the general principle of equality is accepted on all sides of the House. That equality informs the guiding principle in the rules in Clause 11. It is clear that absolute equality is neither desirable nor practicable. That is why the Bill already moves from absolute equality to allow flexibility for the Boundary Commissions to vary seats by 10 per cent between the smallest and the largest. My noble friend Lord Maples made that point. The amendment of the noble Lord, Lord Pannick, would allow a range of more than 11,000 voters between the smallest and the largest.

The figure of 5 per cent, moving as it does from absolute equality, has a rationale. We have made it clear that in our judgment it is the closest to equality that can be achieved while allowing wards to continue being the building blocks of constituencies in most cases in England. For local government reasons the wards in Scotland and Wales are somewhat different. However, the figure seeks to strike the right balance between the principle of “one elector, one vote” and the opportunity for local flexibility. Last night we debated a government amendment that will reinforce the notion that the commission should use wards in this way.

I hope no one can doubt the Government’s commitment to the guiding principle in the Bill: that as far as practically possible there should be equality of treatment between electors. In our view, the only case for exceptions to this principle should be where Parliament has determined that the exception is merited. We have debated, and will return later, to several specific exceptions. That is how we should move forward when we approach these very difficult issues.

The noble Lord, Lord Pannick, fairly pointed out some of the concerns that the Government have rehearsed with him as we have discussed these matters. Our first concern is that, although I understand where the amendment comes from, it breaches the principle of equality of treatment. The Boundary Commissions would be set a clear task by the Bill’s provisions: to propose constituencies that are within the same range of 7,500 electors across the whole of the United Kingdom, subject to the two named exceptions. There is also the exception that has already been voted for by the House. The same rule applies to everybody unless an exception has been explicitly approved by Parliament. That does seem to be an approach that is rooted in some principle.

By contrast, the amendment asks the Boundary Commissions to grant a number of special seats outside the general rule, effectively conferring special status on electors who live there. That could put the Boundary Commissions in a difficult position. Let there be no doubt that the Boundary Commissions would be in an invidious position. A decision about special treatment for one elector has a direct impact on an elector elsewhere. The noble Lord, Lord Pannick, said that the impact would be felt in a next-door constituency, but it does not necessarily follow that it would. This is particularly the case in Scotland, Wales and Northern Ireland, where there is less scope in the number of seats to make adjustments. To take Scotland as a case in point, on the 2009 electorate figures Scotland would have 50 seats plus the two exceptions. Once the commission had proposed a number of smaller seats at 92.5 per cent to take account of the sparsely populated areas in the highlands, the result would be that it would have to allocate larger seats on average elsewhere.

That could already happen to some degree under the Bill; the key difference is that at present under the Bill there is one rule for everyone. In other words, one part of the country’s exception would be another part of the country’s squeeze. There would be less flexibility in another part of the country, which might be some distance away. Under the amendment, the commission would be asked to award greater power to electors in a smaller number of seats outside the norm for the rest of the country. As my noble friend Lord Elton said, that goes against the principle of the value of the vote as set out in the Bill. The noble Lord’s amendment would ask the commissions to trade off the rights of different communities alongside potentially far-away constituencies.

There is a further point, which relates to timing. If these changes were made as a result of representations taken after the first period of consultation, because exceptional circumstances had been identified at the second phase, constituencies that were perfectly happy and content with the original proposals might well find that because a change was made in one or two places the ripple effect meant that what was acceptable first time around would not be acceptable second time around.

I recognise the attempts that have been made in the amendment. Regarding judicial review, on which much has been said in this debate, I agree with the noble Lord that the amendment would send a clear signal to any court considering a judicial review of the Boundary Commission’s decision to exercise flexibility. However, I am concerned less about the verdict of the court than the effect that the amendment might have on the conduct of the boundary review in practice. There might be an effect not only on how the commission balanced the specific factors referred to in the amendment but in the greater subjectivity to which the amendment could lead. The noble Lord’s prediction that a commission may ultimately have the support of the courts, if the matter were put before them, might turn out to be right, but the effect of giving the commission discretion for exceptional circumstances might, in the real world, mean that it felt compelled to use that discretion. The experience of trying to set a high bar to limit the exercise of discretion is not always encouraging. In reality, a procedure sanctioned expressly on the basis that it is intended as exceptional can, and sometimes does, end up becoming common practice.

My noble friend Lord Rennard made an important point on the question of what a viable constituency is. To whom is it viable? Is it viable to the electors or to the Member of Parliament? Also, there are four Boundary Commissions. If each took a different view on what constituted a viable constituency, the danger would be that we could move even further away from trying to achieve the equality that is at the heart of the Bill.

Even unsuccessful judicial reviews will have an impact on resources. I hear and give careful consideration to the points made by noble Lords with considerable experience, including the noble and learned Baroness, Lady Butler-Sloss, and the noble Lord, Lord Pannick. I also heard what the noble and learned Lord, Lord Scott of Foscote, said about the opportunity to use litigation and judicial review as a means of stringing things out. On many occasions in our debates, noble Lords have mentioned that it is important that the Boundary Commission proposals are presented to Parliament and passed in good time for the 2015 election to be fought on new boundaries.

I make a further point on the figure of 7.5 per cent on either side of the UK boundary quota. I have already described the Government’s case for a range of 5 per cent on either side. I am not sure what rationale there is for the figure of 7.5 per cent; perhaps it is because it is half way between 5 per cent and 10 per cent. Sometimes compromise is right, but, as I have indicated, strict equality would be zero. Our movement to accepting a 5 per cent variation already allows for some of the geographical considerations and local ties that have been mentioned.

In conclusion, exceptional treatment would not help some of the specific cases that have been debated—for example, in Argyll and Bute. It would not guarantee the sanctity of the Tamar. I recognise and welcome the spirit in which efforts have been made to find common ground on which we could have moved forward. I thank all noble Lords who have sought to help us make progress. However, I hope that I have set out that, in practice, the amendment not only would place the commissions in a difficult position but could breach the principle of equality of treatment that is at the heart of the Bill. There would be a potential risk that the Boundary Commissions’ target of reporting before the next election is fought in 2015 would not be met. I invite the noble and learned Lord to withdraw the amendment.

16:45

[Lord Pannick]

I thank all noble Lords who have spoken in this important debate. I particularly thank the noble and learned Lord, Lord Wallace of Tankerness, for the reasoned way in which he addressed the points that I have made at all stages. I hope that this House is performing its vital function in relation to constitutional matters.

The noble Lord, Lord King, said that his concern was whether the amendment would promote equality, but equality is not the only value recognised by the Bill. The Bill accepts that there should be a 5 per cent variation either way. It accepts that there should be exceptions for Orkney and Shetland, the Western Isles and, as a result of the amendment moved by the noble Lord, Lord Fowler, the Isle of Wight. Equality is not the only value; there are other considerations that noble Lords will wish to take into account. The noble Lord, Lord Maples, said that he would not accept any of those exceptions. That is a logical position that I respect, but it is not the position taken by the Bill. It recognises that there are and there have to be exceptions to equality.

The second concern of the noble Lord, Lord King, which was shared by some noble Lords, was about delay. The noble Lord, Lord Maples, asked me specifically whether I would advise a client that a judicial review is hopeless. My short answer—indeed, it is also the long answer—is yes; in the context of a statutory provision that confers discretion, by reference to the criteria of necessity and exceptionally compelling circumstances, I would advise that it is hopeless.

The noble and learned Lord, Lord Scott of Foscote, expressed—if I may say so—a more nuanced view. I hope that that might demonstrate to the noble Lord, Lord King, if nothing else does, that the Cross-Benchers do not think and act as a group. If the noble Lord still has any suspicions in that respect, he may wish to look at yesterday’s Division lists, which will confirm that we do not think and act as a group on these vital issues.

My point is not that judicial review can never be used to delay action in any context. My point—which, with respect, was not addressed by noble Lords who are understandably concerned about this—is that in this context, where the criteria are so narrow, subjective and political, judicial review is simply not realistic; it is not an appeal to the merits. The key point was made by the noble Lord, Lord Butler of Brockwell, who rightly pointed out that if noble Lords are concerned about judicial reviews holding up the process, the real concern—which I do not share—should be about judicial reviews of the exercise by the Boundary Commission of the subjective functions that it has been given already under Clause 11. Those functions are not circumscribed in the way that the amendment circumscribes this discretion.

The noble Lord, Lord Rennard, expressed great concern about the term “viable”. The Oxford English Dictionary defines it as “workable” and “practicable”. It is not simply that “viable” is in the amendment; it is linked to a concept of necessity and a judgment by the Boundary Commission of what is necessary. That is the answer to the intervention of the noble Lord, Lord Phillips of Sudbury.

The noble and learned Lord, Lord Wallace of Tankerness, expressed concern that, under the amendment, Boundary Commissions would set different standards for different constituencies. They would not; the same criteria would apply to all constituencies. Of course, their application would differ according to the circumstances, just as the application of the existing Clause 11 criteria—the same criteria for all—will differ according to the circumstances of the constituency, and rightly so, in the judgment of the Boundary Commission.

Finally, the noble Lord, Lord King, pointed out that noble Lords should not accept an amendment simply in order to secure a compromise. He is right. I commend this amendment to the House not because it is a compromise but on its merits. It is fair, reasonable and workable. I say to all noble Lords that in the context of a Bill that makes fundamental changes to our constitutional arrangements—a context where consensus is vital if it can be achieved—it would be desirable, if possible, to give the Boundary Commission a carefully controlled discretion outside 5 per cent, which will undoubtedly give a large degree of reassurance to those who are concerned about the fundamental changes that we are making to an important aspect of our constitution. That would be a wise step for Parliament to take. My central point is that the amendment is right on its merits and I wish to test the opinion of the House.

16:51

Division 1

Ayes: 275

---

Labour: 185
Crossbench: 72
Bishops: 3
Independent: 3
Ulster Unionist Party: 2
Liberal Democrat: 1
Plaid Cymru: 1

Noes: 257

---

Conservative: 164
Liberal Democrat: 74
Crossbench: 11
Bishops: 2
Ulster Unionist Party: 1

17:08

Amendment 22E

Moved by

[Lord Brooke of Sutton Mandeville]

22E: Clause 11, page 10, line 37, at end insert—
“Special authorities(1) The geographical area of a special authority shall, so far as is practicable having regard to the rules of this Schedule as they apply to England, form part of not more than one constituency at any time.
(2) Where the geographical area of a special authority forms part of not more than one constituency, the name by which that constituency is known shall refer to that area.
(3) In this rule, “special authority” has the same meaning as in section 144(6) of the Local Government Finance Act 1988.”

[Lord Brooke of Sutton Mandeville]

My Lords, I last moved this amendment, prior to withdrawal, in Committee last month in the small hours of 19 to 20 January. My noble friend Lord Jenkin of Roding, who eloquently supported the amendment on that occasion, has drawn my attention to the House of Lords newsletter entitled Red Benches, No. 23 dated 7 February 2011, and its column “Procedural Corner”, where we are reminded that the Companion states:

“Arguments fully deployed either in Committee of the whole House or in Grand Committee should not be repeated at length on report”.

My observation of this rule may reassure your Lordships’ House today, but I must explain the more cryptic aspects of the amendment.

The amendment relates to the City of London, where I served for 24 years as Member of Parliament in the other place, making me the City’s third longest-serving Member since 1283. I commented in Committee that the definition of a “special authority”, referred to in paragraph (3) in the amendment, is,

“an authority covering an area with a population of less than 10,000 whose gross rateable value divided by its population is more than £10,000”.—[Official Report, 19/1/11; col. 481.]

In other words, it is an area that is primarily commercial and not residential, and that applies uniquely in the United Kingdom to the City of London. The fact that this anonymous description uniquely applies to the City avoids any suggestion of potential hybridity. I will add to this arid language only the verdict of the Duke of Wellington’s ally at Waterloo, Field-Marshal Prince Blücher, who, on being taken up to the dome of St Paul’s to survey the City from on high, simply opined: “What a splendid city to sack”.

The words,

“so far as is practicable”,

in paragraph (1) in the amendment, while establishing a presumption, avoid adding any rigorous straitjacket to the Bill, and paragraph (2) in the amendment lays down:

“Where the geographical area of a special authority forms part of not more than one constituency, the name by which that constituency is known shall refer to that area”.

This mirrors the present statutory status of the City.

In Committee, I set out the long history of the City of London constituency, which merged with Westminster as recently as 1950, and described how it led up to its precise present status. In Committee, the Minister kindly agreed to a meeting with us between Committee and Report, and I thank him both for that and for his open-mindedness. I thanked in Committee those who universally spoke in favour of the amendment on that occasion, and I single out in particular the noble Baroness, Lady Hayter, on the Benches opposite, who moved a similar supportive amendment of her own that evening. I beg to move.

[Baroness Hayter of Kentish Town]

My Lords, I rise briefly to support this amendment, as I did on the previous occasion. The City of London is the very heart of the community of London and of the country. It is bounded on one side by the Thames and on the other by very different areas. It is worth keeping as a discrete area. It has been laid down in law that it should be a single constituency ever since it lost its own unique representation. I support the amendment because the City has an unusual local electorate, with many businesses voting. I think it is right that the City, which is so important as a financial centre, should have a single Member in the other place to which it can relate and who will speak on its behalf. Therefore, it should be kept whole, rather than risk being moved into two or even three other constituencies.

[Lord Jenkin of Roding]

My Lords, I, too, support my noble friend Lord Brooke and reiterate my thanks to the noble and learned Lord, Lord Wallace of Tankerness, for his kindness in meeting several of us to discuss the amendment.

One has to remember that the City has fewer than 7,000 electors. It is smaller than a great many wards. The arguments for keeping it as a single whole to be attached to one other constituency seem to me to be overwhelming. The idea that one should split the City between two or three different constituencies is very odd indeed. The only question is: does that need to be reflected in the Bill, as under my noble friend's amendment; or is it enough to leave it to the boundary commissioners? I strongly urge that there should be some reflection of this very important case in the Bill. I hope that my noble and learned friend on the Front Bench will be able to give us some comfort.

[Lord Bach]

We on the opposition Front Bench also support the amendment of the noble Lord, Lord Brooke. We hope that he has, in his usual way, managed to persuade the noble and learned Lord of the good sense of what he proposes. I give him a word of advice: if he does not get satisfaction from the noble and learned Lord, I suggest that he presses the issue to a vote.

17:15

[Lord Wallace of Tankerness]

My Lords, I thank my noble friend Lord Brooke for tabling the amendment and the other noble Lords, including the noble Baroness, who have spoken to it. As my noble friend said, Amendment 22E requires that the area of a special authority, as defined by the Local Government Finance Act 1988, should form part of only one constituency, and the constituency name should refer to that special authority. As he said, in practice, only one authority area satisfies the definition of a special authority, and that is the City of London. As has been explained many times, the number of exceptions in the Bill has deliberately been kept as low as possible. In introducing the Bill, the Government accepted only two seats where there is genuine extreme geography precluding them from being readily combined with other constituencies.

As has been said, we debated an equivalent amendment in Committee moved by the noble Baroness, Lady Hayter of Kentish Town. That made clear the expert knowledge of many noble Lords of the past and present of the City of London, and their connections with it. I certainly would not wish in any way to diminish the rich history of the City, nor the importance which the City has played and continues to play in the life and economy of our nation.

From a practical point of view, I hope that I can offer some reassurance by reminding the House that in the 25 wards in total, the City has approximately 7,000 electors, which is smaller than some individual wards. Although it would be for the Boundary Commission to decide, I suspect that it is unlikely that the City would be split between two constituencies. Nevertheless, I recall the argument made that it is desirable from an economic point of view to have one MP who can say unequivocally that he or she represents the City of London’s interests in Parliament. I certainly valued the opportunity to meet my noble friends Lord Brooke and Lord Jenkin and the noble Baroness, Lady Hayter. They elaborated on the potent arguments that they made in their speeches in Committee, which they have made again today.

I have clearly heard the case that they make. The Government understand the strength of that concern. Although I cannot commit myself to the wording of the amendment, I am happy to tell your Lordships' House that we will take this away and that I fully expect to be able to address the issue when we return to this at Third Reading. I hope that, on that basis, my noble friend will be prepared to withdraw the amendment.

[Lord Brooke of Sutton Mandeville]

My Lords, I thank those who have spoken in the debate; I am grateful to them for what they said. Everyone who has the welfare of the City of London at heart will be grateful for what the Minister said. In the light of his response, I beg leave to withdraw the amendment.

Amendment 22E withdrawn.

Amendment 23 had been withdrawn from the Marshalled List.

Amendment 23A not moved.

Amendment 24

Moved by

[Lord Lipsey]

24: Clause 11, page 11, line 5, at end insert—
“( ) a constituency named Brecon and Radnor, comprising the present constituency of Brecon and Radnor”

[Lord Lipsey]

My Lords, we had a very good debate on the case for keeping the constituency of Brecon and Radnor on 24 January—my, that seems a while ago—at cols. 795-805. The case was supported then not merely from these Benches but from the Cross Benches in remarkable speeches by the noble Baroness, Lady Finlay, and the noble Lord, Lord Elystan-Morgan, who said that it would be a “colossal, monstrous injustice” if that constituency were changed.

The case, in a nutshell, is that this is the largest constituency in England and Wales. It takes one and a half hours on poor roads from one end to the other, but at 58,000 its electorate is well short of the electoral quota. What really makes it different is that it cannot expand south, because that would take away still more voters from the valley constituencies, which are themselves short of electoral quotas. It cannot expand east because constituencies cannot cross country borders. Therefore, it has to go into sparsely populated and unrelated areas, either to the west or to Montgomeryshire, to the north. That argument was strongly put, including again by my noble friend Lady Hayter. I hope that I have the same luck on this amendment as she had on the previous one.

Only one person spoke against that proposition: the noble Lord, Lord McNally, who was not, perhaps, at his formidable best, because he went off to hospital soon after—I hope not as a result of any remarks that I made about him. He has, happily, recovered—he is smiling on the Front Bench now—so I hope that, having thought about it long and hard in his hospital bed, he will now feel able to accept the amendment.

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, although in better health than the last time I spoke, I am not sure that I will be able to please the noble Lord any more. When he tabled the equivalent amendment in Committee he argued that the exception was necessary for two reasons: first, there was no logical way in which the existing constituency could expand to allow it to sit within the 10 per cent band of tolerance around the UK electoral quota; and, secondly, there was a challenge of accessibility which would increase if the surface area of the constituency increased. On the first point, we certainly acknowledge that the constituency could not expand to the east, as that would mean crossing the border into England, which is prohibited under the Bill. However, on the other points that he makes about expansion in the other directions, we believe that this is a task best assessed by the Electoral Commission itself, and we will wait to see what it does on this.

That brings me to the noble Lord's argument on geography. In Committee, he said:

“It took me an hour and a half to get to a Labour Party meeting in the south of the county quite recently”.—[Official Report, 24/1/11; col. 797.]

Although I was tempted to use the old joke, “I had a car like that once”, I know—because I visited my late and most lamented friend Lord Livsey in his constituency—that it is an enormous place, as the noble Lord, Lord Lipsey, has acknowledged. However, I do not think that it would be useful to compare exact distances and journey times in various constituencies because one person's enormous place is another person’s back garden. The noble Baroness, Lady Liddell of Coatdyke, reminded us in Committee of some Australian parliamentarians whose constituencies are the size of Portugal. Nevertheless I believe that, in general terms, there is a real distinction in magnitude between a 90-minute car journey that may be undertaken at almost any time of day or night and, say, a 12-hour ferry trip from Shetland to the Scottish mainland which is possible at only a handful of times each day.

Concerning the difficulty of constituencies which cover large surface areas, it is also worth remembering that the Bill takes that into account. The Bill provides for a maximum size of around the largest current constituency area because the Scottish Boundary Commission recommended that this area was manageable for both MP and constituents. As that was the last time that this question was considered at length, and using the independent expertise of the Boundary Commission, this seemed to us the best benchmark to use in our proposals today, and it was also discussed last night.

We are open and ready to be flexible with the noble Lord's proposals where they do not contradict a key principle of the Bill. Keeping preserved constituency exceptions to an absolute minimum is important to support the Bill's fundamental aim—the degree to which votes throughout all four parts of the UK have equal value. Provided that the constituency sits within a 10 per cent band of tolerance as the Bill provides, the Bill allows specific geographical factors to be considered, as is the case today.

I do not in any way dismiss the challenge that the MP and constituents have in a constituency such as Brecon and Radnor. However, we are testing against a high bar: the principle of one elector, one value. Because the bar is set high we feel that it is justified to test these claims thoroughly and reach different conclusions. We recognise the challenges of Brecon and Radnor, but we also take the view that it does not justify exemption when compared with some of the large constituencies of the Highlands. We feel that this position sets up a reasonable balance between being sensitive to local circumstances and allowing votes throughout the United Kingdom to have a more consistent value. I therefore, sadly yet again, ask the noble Lord to withdraw his amendment.

[Lord Lipsey]

The very sheep are baaing their dismay at the words they have just heard in their fields in the Brecon Beacons. I beg leave to withdraw the amendment.

Amendment 24 withdrawn.

Amendment 24A

Moved by

[Lord Kennedy of Southwark]

24A: Clause 11, page 11, line 5, at end insert—
“( ) a constituency named Ynys Môn comprising the whole of the island of Anglesey”

[Lord Kennedy of Southwark]

My Lords, I will not detain the House long; many distinguished noble Lords will know Wales and the island of Anglesey much better than I do. It is an island constituency which deserves exemption in much the same way as your Lordships agreed to exempt the Isle of Wight recently. I hope that the Minister will respond positively to my amendment. I beg to move.

[Lord McNally]

My Lords, this is another attempt to except a single constituency; we have already debated a longer list of proposed exemptions. In the case of Anglesey, where geography is concerned, the two road bridges crossing the Menai strait clearly show there is no question of Anglesey being a difficult place to travel to or to travel around for the MP or constituents. We believe that parliamentary constituencies often cross the boundaries of a local authority without taking away all the sense of identity of each community within the constituency. Nor does it take away the ability of an MP to represent various communities with different senses of identity in one constituency.

I understand the noble Lord's motives in moving this amendment, as I do those of other noble Lords who have a particular attachment to a constituency. However, the fact remains the same. If we are to pursue our overall aim of having votes of equal weight we do not want to make the type of exceptions that the noble Lord proposes. I therefore invite him to withdraw the amendment.

[Lord Kennedy of Southwark]

I thank the noble Lord for his response and beg leave to withdraw the amendment.

Amendment 24A withdrawn.

Amendments 24B to 24D withdrawn.

Amendment 25

Moved by

[Lord Teverson]

25: Clause 11, page 11, line 10, at end insert—
“Cornwall and the Isles of Scilly
(1) All parts of Cornwall and the Isles of Scilly must be included in constituencies which are wholly in Cornwall and the Isles of Scilly.
(2) Rule 2 does not apply to these constituencies.”

[Lord Teverson]

My Lords, I can perhaps help my noble friend on this one because this amendment is not at all about a single constituency—it is about something that is far more important than that. I remind noble Lords that, back in the early 1970s, a royal commission—the Kilbrandon commission—looked at the situation prior to the first attempt at devolution. It also looked at Cornwall. The report stated that what the people of Cornwall,

“want is a recognition of the fact that Cornwall has a separate identity and that its traditional boundaries shall be respected ... Just as the people of Scotland and Wales tend to resent the description of their countries as regions of the United Kingdom so the people of Cornwall regard their part of the United Kingdom as not just another English county”.

It went on to describe a,

“special relationship and the territorial integrity of Cornwall”.

I do not think that Cornwall’s position could be described better than that. Indeed, Cornwall is seen by many—not just Cornish people themselves but its residents and those who move there—as the fourth Celtic nation of the United Kingdom. It has a Celtic language. It has Celtic place names and family names. It has that whole tradition. It was not a part of Anglo-Saxon England, and many will say even now that it was not seen as a part of England until well into the previous millennium.

It is the area of culture, history and geography that makes Cornwall and the Isles of Scilly a very important exception which should be recognised within the Bill. The background of its culture, as I said, is Celtic. Its industries—fishing, agriculture and particularly tin mining, which goes back many centuries—are a particular characteristic of Cornwall. More recently, China clay has been mined there. Apart, I concede, from a little bit of Devon, that is a unique feature of the area. Many noble Lords will know that place names beginning with “Pol”, “Tre” and “Pen” are unique to Cornwall and to be found at a high density. They go back to the Celtic language, which is actually closer to Breton. Brittany is a region with which Cornwall still has a close relationship.

17:30

I stress to the House that the wish to keep Cornwall constituency boundaries separate is not just a Liberal Democrat wish. In Cornwall I chaired a group that was genuinely made up of all political parties and none, but which was unanimous in its support for the proposal that the boundaries of constituencies should remain within Cornwall and the Isles of Scilly. The group included representatives of the Conservative Party, the Labour Party, Mebyon Kernow—the Cornish nationalist party—the Liberal Democrats, the Stannary Parliament and those of no party whatsoever. There is unanimity on this, and indeed I stress to Members of this House that this argument is important not just to the political classes within Cornwall. It is something that arouses real feelings and passions in ordinary people, in voters and families, throughout Cornwall.

It is often argued that much of east Cornwall depends economically on Devon and the unitary authority of Plymouth, and indeed that close economic relationship is welcomed by people in Cornwall. But I recall in the 1990s when trying to become the Member of the other place for South East Cornwall that, if there was one thing sure to arouse strong feelings in the border town of Saltash, it was to suggest that maybe the boundaries of Plymouth could extend over the Tamar into Torpoint and Saltash. Believe me, the reaction to that suggestion was far greater than you would have seen in West Penwith or Truro or on Bodmin Moor. The feeling throughout Cornwall of its political, geographical and cultural integrity is as strong as that. As the noble Lord, Lord Myners, pointed out in the debate yesterday, this cuts across all political parties and none.

I strongly support most of the principles of this Bill but what I know and what I believe is that, in politics and in government, there has to be a human factor and there is no perfect formula that cannot be moved or changed slightly to accommodate communities that people feel they are a part of. They are limited in number, and that is why on Report I am promoting a change only for Cornwall. But the human factor means that boundaries which are historic and arouse strong feelings in citizens can, in extreme cases, be recognised. I believe that this is one of those cases.

The House has already recognised the argument for the Isle of Wight, and this amendment is written in exactly the same way as that for the Isle of Wight except that it applies to a number of constituencies rather than just one. I also point out to noble Lords that if this amendment becomes part of the Bill, which I hope it will, it will mean that rather than Cornwall having five and a half constituencies, it will almost certainly have only five, yet the people of Cornwall are satisfied with a smaller representation in the other House rather than share or go up to six. That is the feeling in Cornwall and the Isles of Scilly. The Bill also recognises that there should be exceptions, of which Orkney and Shetland is one example. That is why I believe that this amendment is vital in terms of people’s belief in the way that the parliamentary system in this country works, and that is why it is being supported by a wide range of people, including all six Members of Parliament for Cornwall, both Liberal Democrat and Conservative, in the other place.

My noble and learned friend Lord Wallace of Tankerness is not in his place at the moment, but on the first amendment we considered today I think he referred to the “sanctity of the Tamar”. I believe that is what he said, rather than the “sanctity of this Chamber”. Although I know he did not mean it, he said it in a slightly disparaging way. But what I would say is this: there is a sanctity about the boundary of the Tamar that is felt by people in both Cornwall and Devon. It has been a boundary for over a thousand years. It is respected and it is a boundary that people feel should be recognised in the Bill. Just as the boundaries between Scotland and England and Wales and England are recognised—a point made by my noble and learned friend earlier—so I believe that the boundary of the Tamar should also be recognised in this Bill. I beg to move.

[Baroness Butler-Sloss]

My Lords, as a Cross-Bencher, I wonder whether I might be permitted to say something as someone who has lived in Devon for 45 years. I should like to endorse the fact that Devonians have absolutely nothing in common with Cornwall. The Tamar is a genuine barrier between Devon and Cornwall. Perhaps not all noble Lords will know that although you are welcome to go into Cornwall, you have to pay to come out. I wonder what a Member of Parliament with a constituency partly in Cornwall and partly in Devon would be expected to do if, every time he visited a constituent on one side of the Tamar or the other, he actually had to pay the toll. That is just an indication of the fact that Devon and Cornwall are quite separate places.

So far as we in Devon are concerned, Cornwall is foreign territory. Indeed, that is exactly what the author Daphne du Maurier said in her famous books about Cornwall. She wrote a splendid one that I think is called Rule Britannia in which she wished Cornwall to become independent of the rest of the country. I am not suggesting that Cornwall should be independent, but I believe it should have its own MPs and that they should not trespass upon Devon.

[Lord Berkeley]

My Lords, it is good to follow the noble and learned Baroness from across the water and probably across the frontier too. I support the amendment and I endorse everything the noble Lord, Lord Teverson, said about the view of the people of Cornwall, particularly of those at the eastern end where I live. The noble Lord did not mention the treaty between the Celtic Cornish and the Saxon English signed in AD 936 by King Athelstan which started all this off. I would compare this debate about the Tamar and the problem of mixing two races with the thought of what would happen if there was a constituency that crossed the border between Wales and England. I do not think that the people of Wales would like that.

I want to mention just one other thing. Cornwall and the Isles of Scilly have recently been awarded a local enterprise partnership, one of the first to have been made. It is a great tribute to the county council and the other people who promoted it, and it is a fine achievement. It also demonstrates that the Government think that Cornwall is different and that it is separate. It has economic problems as well as many other ones, but the LEP demonstrates that one part of the Government thinks it should be separate. I trust that the Minister, when he comes to reply, will express his support.

[Lord Williamson of Horton]

My Lords, the noble Lord, Lord Teverson, referred to the human factor, and I think that I am actually the human factor, so on this occasion I wish to intervene. I carry a heavy load of family history in relation to Cornwall. My grandfather was the vicar of Padstow on the north coast, the vicar of Falmouth on the south coast, the archdeacon of Bodmin in the middle, and the canon of Truro, which is the county town. As I say, I carry rather a lot of weight that favours the amendment, and I support it. Incidentally, I am now 76 years old. The first memory I have of my entire life is that of my first visit to Cornwall, which was made in 1939.

[Lord Newton of Braintree]

Briefly, I ask my noble friend why, if this river and estuary are to be written into the law in this way, others should not be? We have already had arguments about the Mersey. I live in Essex and the Thames is at least as substantial a division between Essex and Kent, I suspect, as the Tamar is between Devon and Cornwall. One can think of a number of other rivers including the Severn, which is a big division between the south-west and Wales, so why are we going to pick out only one? The problem with most of these rivers—I am afraid I do not know the West Country well enough to know whether it is thus with the Tamar—is that a dividing factor at the mouth, where that is so big, becomes a uniting factor further inland, where towns straddle the same river: the Thames, the Severn or whatever it might be. It is not rational to build this kind of consideration into this kind of legislation.

[Lord Falconer of Thoroton]

My Lords, I fear that I disagree with the noble Lord, Lord Newton of Braintree, and agree with the noble Lord, Lord Teverson, who, through the conduct of this sometimes slightly choppy Bill, has consistently carried the hopes of the people of Cornwall on his shoulders. He has spent a lot of time inside and outside the Chamber persuading people that Cornwall should be treated differently. He has persuaded us, strongly supported by the fact that we—and everyone else in this House—have heard forcibly from people who know about Cornwall. We support the noble Lord, Lord Teverson, and this House owes a lot to him.

One person who the noble Lord thought he might have persuaded was the noble Lord the Leader of the House, who said in Committee:

“Of all parts of the country, I think there is a genuine feeling in Cornwall”.

Unfortunately, he later went on to say:

“we reject the argument made in Cornwall because we want clarity and similarity to stretch right across the country”.—[Official Report, 25/1/11; col. 921.]

In this Bill, the Government have understood before they started that certain places required special consideration. The noble Lord, Lord Fowler, persuaded this House that the Isle of Wight should be given special consideration; the noble Lord, Lord Teverson, has done the same service. Please listen to what the people of these places are saying. I very much hope the Government will accede to what the noble Lord, Lord Teverson, has said.

[Lord McNally]

My Lords, I do not have any doubt about the passion, sense of identity and pride that my noble friend Lord Teverson brings to this debate about Cornwall. We are well aware of the broad views of the various political groupings and of the Members of Parliament. Last night I heard the noble Lord, Lord Myners, explaining why he could not be here today but leaving his own views on this on the record. As always, with this, as with a number of the other amendments that we have discussed throughout this Bill and in recent times, we come again to whether a special pleading—I do not say that in any pejorative sense—outweighs the Bill’s objectives of giving equal weight to the votes.

I also understand the argument being put that Cornwall would rather have only four MPs than five if one of them crosses the Tamar. I am not sure whether that is actually in the best interests of the people of Cornwall. I do not really understand the argument that the pride and the identity—the pride in Cornwall’s rich history and the talk of strong community—that we have heard of will be diminished simply because one MP is going to take responsibility outside Cornwall. The answer to my noble friend Lord Newton’s question is that I totally agree that there is no unique argument about river borders and we have not applied that in the Bill.

I recognise the strength of feeling in Cornwall but I cannot agree that Cornwall’s position is similar to the Scottish island constituencies in terms of why the exceptions were accepted. By this, I mean that the Bill originally provided for exceptions on the practical level. Without these exceptions, we would be faced with constituencies that would be impractical for Members and constituents and so would deny effective representation. In other words, the genuinely extreme geography of the dispersed Scottish island groups does not make it possible to combine them with the mainland, for practical reasons. If we look at the Scottish island groups in this way, we do not think it possible to argue the same case for Cornwall.

I recognise the strong sense of identity that many have in Cornwall. I do not agree that parliamentary constituencies can create or destroy that identity. I believe that a parliamentary constituency can cross the boundaries of a local authority, without taking away at all from the sense of identity of each constituent community within that constituency. The fact that a parliamentary constituency might cross boundaries, be it in Ayrshire or Cornwall, in no way takes away from that sense of identity. I repeat; I have heard no argument that convincingly sets out the opposite case.

I know that we have had a lot of fun about Cornwall and Devon. I occasionally have jousts with my noble friend Lord Shutt about the relative merits of Lancashire and Yorkshire. That is part of a long tradition within our United Kingdom but it is very difficult to push those arguments too far. Further, I argue that there is strong evidence to support the case that constituencies can and do exist that contain more than one community with more than one sense of identity. Many Members of the other place represent diverse communities today, from constituents with rural and urban communities to those containing the speakers of dozens of different languages, all of whom have their different cultural identity. Belonging to one constituency does not detract from one or diminish that diversity. I believe that Members of the other place who are in that situation do an excellent job representing the various interests of all their constituents.

Again, I recognise the strength of feeling and pay tribute to the campaign that my noble friend has waged, but I cannot agree that we should depart any further from our objective of greater equality in the value of votes unless the geographical ramifications of doing so might create an impractical constituency. We do not see a sense of local identity and the setting of a parliamentary constituency as an either/or decision. Instead, we seek the best balance between respecting a local objective and a national one. Locally, the opportunity to voice one’s opinion to the Boundary Commission at a public meeting means that those commissions will be able to take local factors into account on a case-by-case basis. Nationally, we want electors to know that their vote counts and has equal weight as much as we possibly can. The Bill, we believe, presents the best balance between those two important principles, so, although I respect his passion, I invite my noble friend to withdraw his amendment.

[Lord Teverson]

My Lords, I thank my noble friend the Minister for his reply, but I am deeply disappointed by it. Perhaps I might first take up the issue raised by my noble friend Lord Newton of Braintree. I stress again that I am not just talking about physical rivers and saying, “Those are the boundaries”. The Tamar is a symbol of that boundary, rather than the river itself. Other rivers act as boundaries which this Bill does not allow to be crossed. Much of the passage of the Wye, at its south, is the border between Wales and England, and the Bill does not allow that to be crossed. How does Cornwall see itself? Some call it a nation; others see it as a historic nation of the United Kingdom.

I also disagree with the Minister on the importance of this. I stood for South East Cornwall in the 1992 election, and I was blessed with a visit from my noble friend Lord Ashdown. He was going to walk with me and all the media—there was a question of a hung Parliament at the time—down the high street in Saltash. He got off his battle bus and said to the gathered press of the south-west and the nation, “It’s great to be back in Devon”. That is why I never became a Member of the other House. Cornwall really believes in its own destiny, its future and its contribution to the United Kingdom, but it wants its own parliamentary constituencies, and on that basis, I wish to test the opinion of the House.

17:51

Division 2

Ayes: 221

---

Labour: 173
Crossbench: 27
Liberal Democrat: 11
Independent: 3
Bishops: 1
Conservative: 1

Noes: 250

---

Conservative: 150
Liberal Democrat: 61
Crossbench: 31
Ulster Unionist Party: 1

18:05

Amendment 25ZA

Moved by

[Lord McAvoy]

25ZA: Clause 11, page 11, line 10, at end insert—
“Rutherglen, Cambuslang and Halfway(1) All parts of Rutherglen, Cambuslang and Halfway must be included in one constituency wholly within South Lanarkshire Council.
(2) Rule 2 does not apply to these constituencies.”

[Lord McAvoy]

My Lords, in the forlorn hope that, as I have not moved three previous amendments, the House will be a little tolerant of me for a couple of minutes, I would like to spend those two minutes moving an amendment about Rutherglen, Cambuslang and Halfway. I have illustrated the arguments for Rutherglen, Cambuslang and Halfway many times before, so I do not intend to repeat them and abuse the patience of the House.

Those areas have been together now for about 100 years. There are close connections and a bond between the historic Royal Burgh of Rutherglen, the Cambuslang community and the former mining area of Halfway. In 1975, there was an attempt by a previous Conservative Government to destroy the communities by moving them into the City of Glasgow. A more enlightened Tory Minister, Allan Stewart, and I got Rutherglen, Cambuslang and Halfway out again. If one starts from the border with blocks of 75,000 or 76,000 people, as the Bill suggests, Cambuslang and Halfway could end up in the lower part of Scotland and Rutherglen could be in the northern part of Scotland; there would be only one way for Rutherglen to go and that would be with the City of Glasgow, which would mean the end of our parliamentary cohesion.

I hope a Liberal Minister replies because that would certainly make it plain to the people of Rutherglen, Cambuslang and Halfway that it is a Liberal Minister who is rejecting the amendment. I beg to move.

[Lord Wallace of Tankerness]

My Lords, as a coalition Minister, I am more than delighted to reply to the noble Lord’s amendment, which would result in an exception for Rutherglen, Cambuslang and Halfway so that they remained in a constituency which does not cross the boundaries of the South Lanarkshire Council area. The amendment in the Marshalled List brought back memories, as I recall my great aunt and uncle had a Halfway telephone number—I cannot remember the digits, but it was certainly Halfway exchange and, as a child, that always interested me as I wondered where it was halfway between.

I recognise the strength of the communities that the noble Lord used to represent in the other place but, as has been made clear on a number of occasions in Committee and on Report, the Bill as originally drafted had two named exceptions to the principle for a clear and tightly defined set of reasons. Both those exceptions involve remote locations and populations too small to be put in the parity target. The Bill now includes the Isle of Wight, following the vote in Committee on that. I do not think it is possible to argue that extreme geographical considerations apply in South Lanarkshire.

However, I have no doubt that when it comes to the Boundary Commission having regard to the circumstances and the community ties that link Cambuslang, Rutherglen and Halfway, it will be permissible under the rules for the Boundary Commission to take those ties into account and give such regard as it thinks fit to the fact that those communities have had historic links. I have no doubt that, under the public hearing arrangements for which the House voted yesterday, the noble Lord will—I have every certainty—make a very eloquent case when the opportunity for a public hearing comes, assuming that the Boundary Commission does not, in its original proposals, have Cambuslang, Rutherglen and Halfway together.

I think the noble Lord recognises that the case has not been made for an exception to be on the face of the Bill in this respect, but, of course, as I have indicated, community ties is an issue to which the Boundary Commission can have legitimate regard. I ask the noble Lord to withdraw his amendment.

[Lord McAvoy]

Obviously, I do not wish the Minister any ill will but I certainly hope that his late auntie and uncle are on his mind tonight when he is trying to get to sleep if he is going to do this to Halfway. I certainly hope that they have a word with him. Halfway is so called because it is halfway between Glasgow and Hamilton—I offer that bit of information to the noble and learned Lord.

The areas I have referred to suffer from the fact that they have had a Labour Member of Parliament for 46 years, and that seems to be a problem; other areas seem to find the circumstances to enable them to get exemptions from the Government. However, I recognise the reality and the bigger picture here in the sense that we will be dealing with different countries in the next amendment. I fully accept that. However, I assure the Minister that, when it comes to the campaign, the fig-leaf of claiming to be a coalition Minister will not do the Liberal Party much good in Rutherglen. I beg leave to withdraw the amendment.

Amendment 25ZA withdrawn.

Amendment 25ZB

Moved by

[Lord Falconer of Thoroton]

25ZB: Clause 11, page 12, line 13, at end insert—
“(6) The total number of seats to be allocated to any part of the UK shall not be more than ten per cent fewer than the current number of constituencies; and if the number of seats allocated by the process described in sub-paragraphs 1 to 5 of rule 9 exceeds that limit in any part of the UK then additional constituencies shall be allocated to that part to bring its allocation within ten per cent of the current number of constituencies.
(7) This number of seats shall then be the allocation for that part of the UK for the purposes of rule 9.
(8) Any reallocation to one or more parts of the UK made under the terms of sub-paragraphs (6) and (7) above shall not result in any change to the allocation already allotted to any other parts of the UK.”

[Lord Falconer of Thoroton]

My Lords, we have in this group two amendments which relate principally to Wales. The Bill will have a greater impact on Wales than on any other nation in the UK. Wales is projected to lose 10 seats of the 40 it currently has; that represents a 25 per cent reduction in its Westminster parliamentary representation. In Committee, we heard noble Lords from across the Chamber passionately describe the effect of that on Wales.

The Welsh Affairs Select Committee in the other place produced a report in October last year that was highly critical of the proposed changes. A decision to cut the representation in Parliament of one of the nations of the United Kingdom—Wales—by a quarter at a stroke should be shown to have been subject to the most careful and measured consideration and should be taken in the light of proper examination of alternative approaches, including a slower pace of change. The impact of the Government’s proposals on Wales is a complete departure from the current legal minimum of 35 seats for Wales enshrined in the Parliamentary Constituencies Act 1986. It is also a significant reduction in the number of Welsh constituencies in place when the Welsh people voted for the devolution settlement in 1998. That settlement, as the former Welsh Secretary, the right honourable Paul Murphy, noted in debates in the other place, was a package. It was, he explained,

“not simply the establishment of the Assembly, but the continuance of Members of Parliament, at that level, here in the House of Commons to protect the interests of the people of Wales and their nation. If we have a referendum, and there are greater powers, that might change, but at least people would have voted on it. However, in 1998, they voted for the opposite—the retention of Members of Parliament”.—[Official Report, Commons, 6/9/10; col. 72.]

That point was echoed by Mr Simon Hart, the Conservative Member of Parliament for Carmarthen West and South Pembrokeshire, who warned the Government that a reduction of 25 per cent in the number of Welsh constituencies ahead of the referendum on new powers for the Welsh Assembly was being decided,

“without any reference to the Welsh nation”.—[Official Report, Commons, 6/9/10; col. 119.]

This speaks to the second of the amendments in this group which the opposition Front Bench also supports. We acknowledge that there was a reduction in Scottish Westminster representation when powers were devolved to Holyrood. There may need to be a reduction in the number of Welsh Westminster seats following a similar pattern, but it is right that such a reduction should take place only once further primary law-making powers are transferred. For this reason we should await the outcome of the March referendum in Wales and then make a judgment. That is the tone and purpose of Amendment 30.

Putting aside the issue of the referendum, the amendment in my name and that of my noble friend Lord Bach would in effect ensure that there was no reduction in the number of seats greater than 10 per cent in any one country in the United Kingdom at one time. The imposition of a UK-wide electoral quota of the kind imposed by the Bill is bound to create one or two enormous Welsh constituencies that will be overwhelmingly rural in nature and will cover wide, and in places, inaccessible territories. It will force the construction of new constituencies in the Welsh valleys, which will be impractical, difficult and injurious to local community ties. We are not arguing that Wales should be protected from any reduction in parliamentary representation. We are political realists and we understand that the Government have basic objectives, including the creation of more equal sized seats. We recognise the legitimacy of some of those objectives. The question is whether they need to be pursued in quite so rigid and fast a fashion and in a way that excludes almost all other factors.

As we are beginning to see in debates and votes on amendments, those things which would inject a little more flexibility in the rigid rules set out in the Bill are implacably opposed by the Government. Wales appears an obvious area where sensitivity ought to be given to its special geographical characteristics as well as to its status as a small nation within a larger union in which England is the dominant force in wealth, population and political representation. The Welsh Affairs Committee stated that its concern was,

“about how the Government's proposals will affect Wales in ways distinct from the overall picture for the UK”.

While Wales will lose 25 per cent of its MPs, Northern Ireland will see a reduction of 17 per cent, Scotland 16 per cent and England 5 per cent. Our amendment seeks to assert that a more sensible approach would be to ensure that at any one boundary review no part of the United Kingdom should experience a drop of more than 10 per cent in its number of seats. If the Government profess to be interested in fairness, it is important that the interests of each region of the United Kingdom are properly heard at its national Parliament when national representation is being debated.

As I have said, the Government’s proposals would reduce at a stroke the number of MPs representing Wales by 25 per cent. As the Select Committee concluded, by any yardstick this would be a profound change to the way that Wales is represented in Parliament. Our amendment does not preclude an eventual reduction to that effect but would ensure that such a change would be gradual. I invite the Government to consider accepting this amendment. I beg to move.

18:15

[Lord Touhig]

My Lords, I rise to support Amendment 25ZB in the names of my noble and learned friend Lord Falconer of Thoroton and my noble friend Lord Bach, and to speak to Amendment 30 in my name and that of my noble friend Lord Anderson of Swansea. I believe that they complement each other.

On 26 January we had an excellent debate on Wales. In particular, we were able to highlight the adverse impact that the Bill will have on Welsh representation in the House of Commons. That debate was conducted in the best traditions of your Lordships’ House. Powerful arguments were put for and against the question of whether Wales should have the statutory minimum of 35 Members of Parliament. That was introduced in the Parliamentary Constituencies Act 1986 and, unlike this Bill, it had all-party support.

I say at the outset that I do not intend to repeat the arguments I made on that occasion. My noble and learned friend Lord Falconer has pointed out that Wales will lose 25 per cent of its parliamentary representation if the Bill is not changed. Indeed, 20 per cent of the entire reduction for the whole United Kingdom will come from Wales if the Bill is not altered. On 26 January the Government were unmoved by the merits of the argument that we put to retain at least 35 Members of Parliament. Indeed, they would not even take time to reflect on the merits of the case that we put. Reluctantly, of course, I and many others therefore accept that there will be a reduction in the number of Welsh constituencies and Members of Parliament. However, I urge the Government to consider that in the first boundary review the reduction should be limited to 10 per cent. Amendment 25ZB would allow for that.

On 3 March the people of Wales will go to the polls to decide whether powers to enact primary legislation in designated areas such as health and education should be passed from the Parliament of the United Kingdom to the National Assembly for Wales. None of us knows for certain what the outcome of that referendum will be and for that reason I urge the Government to take these amendments seriously and to reflect on them. I believe it would make sense to pause and await the verdict of the people of Wales before deciding on such a drastic reduction in the number of parliamentary constituencies. Neither of the amendments before your Lordships prevents the Government from making further reductions in the number of Welsh parliamentary constituencies in the future. They simply allow the process to take place over a longer period of time. That would be the time to reflect and consider the implications of a yes vote in the referendum on our constitution. The amendments would give time to consider the impact of passing those primary powers from Parliament to the National Assembly and the impact that that would have on the work of the House of Commons and Members of Parliament.

Without taking much of your Lordships’ time in repeating the arguments that I made in the debate on 26 January, it is nevertheless right to point out that even if the referendum says yes to the transfer of powers, the asymmetrical devolution system that we have in the United Kingdom means that significant areas of legislative responsibility for Wales will still rest here in the Parliament of the United Kingdom. The devolution settlement in Wales is significantly different from that of Scotland and Northern Ireland. In particular, policing and criminal justice are not devolved in Wales and remain the responsibility of the United Kingdom Government and this Parliament. In addition to policing and criminal justice, huge areas of Welsh life will continue to be determined by decisions of the United Kingdom Government and this Parliament, including pensions, benefits, taxation, levels of public expenditure, macroeconomic policy, defence and foreign affairs. Our education system in Wales is very similar to that in England. Indeed, teachers pay and rations are decided on an England and Wales basis. Until the views of the Welsh people are known and new powers are transferred to the National Assembly, it is important that Wales is properly represented here in the United Kingdom Parliament.

My point is simple and is reflected in Amendment 30 in my name and that of my noble friend Lord Anderson of Swansea, which complements Amendments 25ZB. Until the constitutional settlement between Wales and the United Kingdom is resolved in the referendum and its impact examined, there should be no more than a reduction of 10 per cent of Welsh Members of Parliament at the appropriate boundary review. Neither amendment would prevent the Government and Parliament from looking again at the levels of Welsh representation in the other place.

This debate is doing what your Lordships' House does best: it is giving the Government an opportunity to reflect on the amendments before us and consider their merits. Amendments 25ZB and 30 would not thwart the will of the Government and the elected House. They allow time for sober reflection and to consider the constitutional impact and the impact that any transfer of powers from Parliament to the Assembly will have on the House of Commons. They would give the Government an opportunity to achieve an outcome that they have singularly failed to achieve so far with the Bill: the opportunity to gain all-party support, certainly for this part of the Bill.

Without consensus and all-party support, no constitutional change of this magnitude will stand the test of time. I hope that the Government will consider the merits of the case being put before your Lordships this evening and agree, at the very least, to accept Amendment 25ZB.

[Lord Morris of Aberavon]

I support the speech made by my noble and learned friend Lord Falconer of Thoroton. I also spoke on 26 January and I do not intend to rehearse again the points that I made then and others made even better. We are not against a reduction in seats, but it should take place over a longer period of time. It is utterly disproportionate that the seats in Wales are reduced in one go by 25 per cent. That is 20 per cent of the whole of the reduction in the United Kingdom. I support my noble and learned friend.

[Lord Morgan]

I add my support to both amendments because of the extreme unfairness and inequity with which Wales has been treated. I begin with a reflection of what the United Kingdom is. It is a very special kind of polity. It is not a federal state. It is a union state in which different nations are brought together and, through the mediation of all political parties over 100 years, a union state in which all the nations have equality. They do not seek separatism: they seek equality. Wales in this instance is being treated most unequally.

From time to time, I reflect on a famous Liberal, whose successors do not appear to be very close to his traditions—David Lloyd George. On one occasion, Lloyd George pointed out the sheer hypocrisy of a Tory Government before 1914 who claimed to be Unionists and yet somehow implied that the Irish nationalists were lesser members. He said that they were hypocrites: they were either equal members of the union or not. It seems to me that something of the same attitude is being shown towards Wales on this occasion: that Wales can somehow be dismissed in this casual way without debate as we have heard.

In the status of Wales in a union state, Parliament is absolutely crucial. The representation of Wales in numbers is crucial. We had an intervention by the noble Lord, Lord Crickhowell, who is not in his place at the moment, in which he pointed out the quality of people such as Aneurin Bevan, David Lloyd George and my noble and distinguished friend Lord Kinnock sitting behind me. That was an argument for saying that if you had a group of geniuses, Wales could be represented by 10 people or even one person. There is no limit. It is the kind of argument that the noble Lord himself applied when we were discussing the amendment about the threshold for the referendum. There seemed to be no minimum: if only 5 per cent of the electorate voted in a referendum that was absolutely fine. If 40 per cent voted that was fine. Any percentage was fine.

Wales has, as I said in a previous speech, created and won recognition for its status through its power in Parliament, not just the ability of people who have represented Wales in Parliament, but the fact that collectively they are able to make a major contribution and to fulfil the wider role that parliamentary representation can have.

There is a point about the Assembly. The Scottish Parliament has greater powers, as we heard from my noble friend Lord Touhig, than the Welsh Assembly. That has been taken into account in relation to the representation of Scotland in Westminster. We do not know what will happen in the Assembly. We are therefore just second-guessing what the result might be and the sensitive relationship between the Assembly and Parliament is therefore being put at risk. The potential way in which a lesser number of MPs and a greater number of Assembly Members might be able to collaborate is also being put at risk.

This is an unfair distortion of the political process. It is unfair on the Welsh people and on Wales as a nation. When we discussed this previously, the Minister produced an argument that I hope we will not hear from him this time. He said that because Wales is being organised by the same rules as other parts of the country, the unfairness would somehow be accepted by the people of Wales as simply a part of accepting the rules. That is rather like looking ahead to next Saturday when Wales play Scotland at Murrayfield. It is like saying that Wales will be playing by the same rules as Scotland; Wales will be the same pitch but will be playing three men short. That is therefore a fair way of looking at it.

Wales is manifestly been treated far more seriously and severely than any other part of the country. It is at variance with our history and particularly at variance with the history of the previous proponents of the views of the Liberal Democrats who are supposed to be heirs of that liberal tradition. This is treating Wales with contempt. It is putting the union at risk and is likely to cause enormous anguish and a feeling that the tradition to which all parties have contributed has been wantonly betrayed.

18:29

[Lord Kinnock]

Contrary to the fears expressed by some noble Lords in our previous debate, the reduction by 25 per cent of the number of Welsh Members of Parliament would not immediately lead to further feelings favouring secession. The consequence would in some ways be even more serious. By cutting the number of Welsh Members of Parliament by 25 per cent, which is hugely out of proportion with anything else that is happening in any other part of the United Kingdom, the Bill, unless the amendment is accepted, will foster the feeling among the people of Wales that they are being treated as if they are second rate. The consequent response is one of alienation—the feeling of being downgraded, of being marginalised and of being dispensable.

When those feelings are nourished, sometimes by mischievous politics but also by economic and social circumstances, they develop a life of their own. I do not seek to be one of those who foster those feelings—on the contrary; I want an optimistic, forward-looking Wales, which is what I have worked for all my life—but when a central Government say that, of all the parts of the United Kingdom, one part shall lose 25 per cent of its representation in Westminster while another will lose 5 per cent and others lose 16 per cent and 17 per cent, the message that is received in Wales is entirely negative.

A very patriotic and insightful Scottish member of the Government will comprehend the implications that will reverberate over years and throughout innumerable communities of the effect on Welsh attitudes of introducing legislation in this form. Even if we do not succeed with this amendment, I beg the Government further to reflect and listen to the words of Welsh representatives and those with honourable records in Wales from their own Benches, who will convey in clear terms the risks that are being taken with the political psychology and the patriotic feelings of the people of Wales by their being treated so arbitrarily, so disproportionately and so outrageously.

[Lord Rowe-Beddoe]

My Lords, I echo the words of the noble Lord, Lord Kinnock, who touched on some of the points that I made in Committee. I fully support the amendment of the noble and learned Lord, Lord Falconer, and that of the noble Lord, Lord Touhig.

We have heard so much in these past hours and days about fairness and the equivalency of vote, but we are dealing with one of the most unfair pieces of legislation, as far as Wales is concerned, that I could possibly conceive. The maths do not add up—we know that. There would be a reduction of 25 per cent in the number of Welsh MPs if you wanted to do it one way and one of 20 per cent if you wanted to do it another.

I was told in a meeting the other day that Wales has been “grossly overrepresented”. That might have been so. It might have been so with good reason and good cause. It might have been so since David Lloyd George’s day, since Winston Churchill’s Speaker’s Conference and, more latterly, since 1986, when Parliament stated that that nation should have no fewer than 35 parliamentary seats.

Where is the fairness in this proposed cut? Where can it be seen to be fair? As the noble Lord, Lord Kinnock, said, the people of Wales will look at these most ferocious cuts and not understand them. The people of Wales will feel, despite everything else, that they have been expressly targeted and disadvantaged, and who will explain it to them? If it is to be the Government, might I ask with what credibility they will do so? I remind them that, with the greatest will in the world, the voice of the Government is not a great voice in Wales.

I therefore ask the Minister to consider very seriously what we are talking about. I mentioned in Committee the union, which I firmly believe will be threatened. I humbly ask the Government to look again at the amendment proposing 35 seats. If we were to have the result of the referendum in our hands, we might think a little differently. However, we do not. It would in any case take time to implement. Embedded in the amendments also is a process that would take a little longer to implement. I exhort the Government to look at the matter again.

[Lord Hamilton of Epsom]

I say to the noble Lord, Lord Rowe-Beddoe, that the union is threatened, and has been for some time, by devolution. Once you start the process of devolution, it becomes a ratchet, with more and more powers then transferred, in the case of Wales, to the devolved Assembly. That is a very good reason for not supporting the amendment. The Welsh have their own Assembly, whose Members deal with many local matters. I think most people would think that the referendum that is coming up in Wales was very likely to transfer further powers to the Welsh Assembly—it would be very unlikely if Wales said, “No, we don’t want to have these extra powers”.

We have had previous debates about very large geographical areas in Scotland. Orkney and Shetland might have only 30,000-plus electors, but they have three Members of Parliament—two in Edinburgh and one in Westminster. The same principle applies to Wales. It seems to be almost overrepresented as things stand today, and I sincerely hope that the Government will resist the amendment.

[Lord Anderson of Swansea]

My Lords, I was advised by a veteran politician to begin every speech with the word “finally” because it excites expectations. Wales is clearly the big loser in this proposal. The Select Committee for Welsh Affairs, an all-party committee, came out unanimously against it. It will be seen in Wales as making us a poor relation. It represents a wholly insensitive way of looking at Wales. Far from what the noble Lord, Lord Hamilton, suggested—he seems to be against devolution as such—we will not put the clock back. Indeed, devolution, moving in the way that Welsh and Scottish people want it to go, is a way of avoiding separation. Of this, finally, I am sure; this insensitivity which the coalition Government have shown will indeed be a threat to our union.

[Lord Elystan-Morgan]

My Lords, the contribution by the noble Lord, Lord Hamilton, is the only contribution that we have heard as yet from the Back-Benchers on my left. The case that he puts is not so much the case for union as for uniformity. He may or may not recollect the preamble to the Act of Union 1536 in relation to Wales: that the country, dominion and principality of Wales shall be incorporated, annexed and united within the greater realm of England. Some people thought that an end had been put to the Welsh nation then. How wrong they were. It seems to me that the noble Lord still takes a pre-1536 view of the situation.

Many noble Lords have stressed the central point that the changes contemplated to seats in Wales are on such a massive scale as to be injurious on account of that scale alone. It is not a question of how greater they are than other parts of the country, but how much they represent the totality of seats—in other words, a quarter of the seats of the principality of Wales. In the whole of the United Kingdom, I believe that 7.6 per cent of seats will disappear. In Wales, it will be 25 per cent. That point has already been made with great eloquence and accuracy by other Members.

In addition, in losing a quarter of its seats it follows in reason that the disruptive effect—the knock-on or domino effect—on the 30 seats that remain will be much greater, and proportionally greater, than in any other part of the United Kingdom. There can be no doubt about that. The effect generally might be that each and every one of the 30 seats essentially loses its identity.

For a short period of eight years, I had the great honour of representing the county of Cardigan in the other place. Cardigan is almost as old as Wales itself. The old community from the estuary of the Dyfi to the estuary of the Teifi with Cardigan Bay on the west and the Plynlimon range on the east was created and hammered out on the anvil of time. It has distinctive characteristics. I will not go through them now, but some of them are very noble and some perhaps not so noble. The late Lord Elwyn-Jones used to say of the times he had in assizes in Cardiganshire that on the whole a Cardiganshire jury was against crime. He said, “Thank goodness they weren’t dogmatic about it”, but be that as it may.

I have no doubt that the Welsh scene in terms of parliamentary constituencies will be changed out of all recognition. The question has been raised by many—it was raised by my noble friend Lord Rowe-Beddoe in our debate a fortnight ago—of what the perception might be in Wales of what is happening. I believe that it will be a corporate and national reaction. It will be the feeling that Wales has been pointed out for special punishment. People say that it is one of the most anti- and non-Tory countries in the world. I think I am right in saying that the Ballot Act 1872 made it no longer necessary for tenants to vote in the presence of their landlords. Since that Act, the Conservative Party has never won a majority—I do not mean an overall majority; it has never been the leading party—of seats or votes cast for it in Wales. That will perhaps be the perception of Wales in relation to the Conservative Party.

18:45

What the perception of Wales will be in relation to the Liberal Party, I shudder to think. The Liberal Party has a proud and honourable record of standing up for the constitutional rights of Wales. Even now the Liberal Democrats are playing a leading part in the referendum for 3 March. I pay them that tribute, but why is there this thundering silence? On 26 January, we heard the explanation tendered by the noble Lord, Lord Crickhowell, which has already been demolished by the noble Lord, Lord Morgan, of Aberdyfi in the county of Glamorgan. It was one of the most feeble and weakest defences that I have ever heard, and I have heard some in my time. No justification was put forward at all.

The case for the special treatment of Wales is its special, individual situation as a nation. If you deny that case, you deny the essential meaning and significance of that nation, which the Liberal Democrats have to face up to. Half an hour ago, many of its members broke ranks and voted for Cornish patriotism. Will they do the same for Welsh patriotism?

[Lord Kilclooney]

My Lords, I express my support for this amendment. The three nations within the union that will be most severely hit by this legislation are Wales in particular, Northern Ireland secondly and Scotland. I fully understand the sentiments expressed by the noble Lord, Lord Kinnock. They reflect my own feelings in Northern Ireland. The voices of Scotland, Wales and Northern Ireland are already overwhelmingly outnumbered in the other place, but they will be even more overwhelmingly outnumbered if this legislation goes through, which will cause considerable resentment and misunderstanding. I am sorry to say that I fear that it is a decision that, if taken by the majority who come from England, will damage the United Kingdom.

When we were involved in the discussions on the future of Northern Ireland, we were always told that the majority should be magnanimous to the minority. Here is an occasion where the Conservative and Liberal Democrat majority should be magnanimous to the minorities in Scotland, Wales and Northern Ireland.

[Lord Wallace of Tankerness]

My Lords, it has been evident from the good debate that we have had that this group of amendments looks at the allocation of seats to nations. Indeed, the amendment moved by the noble and learned Lord, Lord Falconer of Thoroton, could apply to Scotland, Wales and Northern Ireland, although until the previous contribution from the noble Lord, Lord Kilclooney, we focused, understandably, on Wales. From the outset, I should say that I recognise the passion with which these arguments have been put. Amendment 25ZB seeks to ensure that the allocation of seats to any part of the United Kingdom will be within 10 per cent of the current allocation. It provides for an additional allocation of seats, if the Sainte-Lague process set out in rule 9 results in an allocation that reduces the number of seats by more than 10 per cent of the current allocation.

In spite of its name, the process nevertheless recognises the fairest way to allocate seats. The British Academy report explicitly refers to it as such. It is the method that the Electoral Commission uses to allocate seats to European parliamentary regions, and the Government believe that it is the right method to use in allocating seats to parts of the United Kingdom. For those reasons, we have written it into rule 9, so that it will apply in this case.

The proposed amendment would undermine this fairness by putting an artificial floor on the process. The proposed top-up of seats would tamper with the balance struck by the Sainte-Lague method of allocating seats between the constituent parts of the United Kingdom. We do not believe that it can be right to change the result derived from a system recognised, as the British Academy report described it, as,

“the fairest way of making such allocations”.

In practical terms, the amendment would create a reduction in stages for Scotland, Wales and Northern Ireland. When the secretaries of the Boundary Commissions were giving evidence to the Political and Constitutional Reform Committee, their clear advice was that there were advantages in making the reduction in one go. The Government consider that one reducing review would be less disruptive to constituents and Members in the other place than the continuing reductions that this amendment would introduce. I think that I have calculated properly that, under the amendment, in 2015, Wales would move from 30 to 36 and, in 2020, from 36 to 32. Only in 2025 would it would reach the level that would put it on an equal basis with other parts of the United Kingdom.

I reassure noble Lords that we are not proposing less representation for Wales than for other parts of the United Kingdom. This Bill provides that the value of a vote in Wales will be the same as the value of a vote in England, Scotland and Northern Ireland, within a 10 per cent range of tolerance. I do not see how that can be doubted. It is not like putting the Welsh team on to the field at Murrayfield next Saturday with three men less, as the noble Lord, Lord Morgan, suggests. It would be putting them on the field with three men more, if the amendment was agreed. The provisions are fair to the voters in the constituent parts of the union. Of course, there will be a reduction in the number of constituencies in Wales, as in the rest of the UK, but overall the proportion of Welsh seats in Westminster will go from 6 per cent to 5 per cent.

The Government believe that the system proposed in the Bill, whereby seats are allocated to constituent nations in a well recognised and fair process, giving electors equal value across the United Kingdom, is the best way of bringing about fairness in all parts of the United Kingdom.

Amendment 30, introduced by the noble Lord, Lord Touhig, and spoken to by the noble Lord, Lord Anderson of Swansea, would make any boundary change in Wales contingent on the National Assembly for Wales gaining enhanced legislative powers in the referendum held on 3 March. The amendment leaves open the possibility that a key objective of this Bill would not be achieved. Every elector's vote in elections to the other place would not have the same value if this amendment was agreed. As I said about the amendment from the noble and learned Lord, Lord Falconer, we are not proposing less representation for Wales. The value of a vote in Wales will be the same as the value of a vote in England, Scotland and Northern Ireland, within a 10 per cent range of tolerance. I cannot see where the unfairness is to electors in Wales.

[Lord Morgan]

I apologise for interrupting the Minister, but may I point out that every single argument that he has used is simply mathematical? He has considered no other aspect of Wales at all, culturally, politically or socially, and he has based that on a very selective reading of the British Academy report.

[Lord Wallace of Tankerness]

I do not believe that it is simply mathematical. It relates to the principle of equal value, and one value for one vote. That is not a mathematical concept but a matter of fairness. It is equally wrong to suggest that the provision does not have regard to the cultural and historical matters in Wales. I indicated that to the noble Lord, Lord Elystan-Morgan, in the previous debate. I recognise Wales as a constituent nation of our United Kingdom, but other parts of the United Kingdom have their own historical and cultural importance and ties, as indeed do parts of England as well as England as a whole. What I have not yet heard answered by anyone who has argued the case is why a vote in Swansea should carry more value than a vote in Newcastle, Coleraine or Aberdeen. Each of those other cities have their own importance and distinctiveness, and I have not yet heard an answer to why the citizens of Swansea should have a vote to the United Kingdom Parliament that is worth more than the vote of a citizen in Newcastle, Aberdeen or Coleraine.

[Lord Touhig]

I understand the point that the Minister is making, but how does he stand that argument up when his Government are making a deliberate exception for Orkney and Shetland? Their votes will not be equal to the rest of the votes in the United Kingdom.

[Lord Wallace of Tankerness]

That case has been argued, and we have had specific debates on that and an amendment from the noble Lord, Lord McAvoy. What we have said—and I think I have said it about three times already, this afternoon and in Committee—is that the Government have put into the Bill two exceptions in places with extreme geographical situations and no ready link to anywhere on the mainland. In the rest of the United Kingdom we are seeking one vote and one value.

[Lord Anderson of Swansea]

My Lords—

[Lord Wallace of Tankerness]

Perhaps the noble Lord, Lord Anderson, will tell me, if I let him intervene, why a vote in Swansea should be worth more than a vote in Aberdeen.

[Lord Anderson of Swansea]

Because, historically, there has been a Welsh exception and no exception elsewhere. The Minister is crucifying Wales on a mathematical altar and deliberately reducing the voice of Wales in Westminster.

[Lord Wallace of Tankerness]

The simple answer to that is that there was an exception in respect of Scotland under the 1986 Act. I think that the noble Lord, Lord Morgan, mentioned that the 1986 Act said that there would be no fewer than 35 seats; the same Act said that there would be no fewer than 72 Scottish seats. Yet the last Labour Administration repealed that. I do not criticise them for that—indeed, I supported it. The number was reduced by some 18.5 per cent.

[Lord Elystan-Morgan]

I greatly respect the integrity and ability of the noble and learned Lord, but his whole argument is based, is it not, on the question of equality? He equates equality totally with arithmetical consistency. Is not that a total fallacy?

[Lord Wallace of Tankerness]

This is not down simply to mathematics. The principle at the core of this part of the Bill is to ensure the equality of the ballot, which all of us hold very dear indeed and which is not a purely mathematical thing. One elects one’s representative to sit in the other place and, by doing that, contributes to what the Government of this United Kingdom will be. There is a merit in that vote having equal value in all parts of our United Kingdom.

[Lord Howarth of Newport]

Even on his own basis—that numerical equality is the only thing that really counts—the Minister is under an illusion in supposing that, by achieving numerical equality between constituencies in Swansea and Aberdeen, he necessarily creates votes of equal value. The value of votes will also depend on registration, turnout and marginality in particular constituencies. He is pursuing a chimera in this respect, while at the same time ignoring that the basis of parliamentary representation in the United Kingdom has historically been that constituencies should be expressive of communities. Communities in Swansea and Aberdeen are, of course, of equal value, but the design of their parliamentary representation should reflect their particular characters.

[Lord Wallace of Tankerness]

My Lords, we have rehearsed the arguments before about matters such as turnout, on which, I accept, the Government cannot legislate—and turnout will have an effect—but on the morning of the election before anyone has turned out, at least what we are seeking to do gives a greater likelihood of equality before factors such as turnout come into effect. It does not say much for the quality of the value of a vote if, before you have even gone to the polls, an imbalance is already implicit in the system.

[Lord Kinnock]

Does the Minister accept that he can offer what we could call the Swansea-Aberdeen question in the form in which he puts it only because, without an electoral mandate, this Government are proposing to cut the number of seats in the House of Commons at one cut by 50 seats, from 650 to 600? Were it not for that, he could certainly have his equalisation of constituencies, and even a reduction in the number of Welsh seats, without inflicting on Wales or the rest of the country all the difficulties that have rightly been identified in the course of this debate.

[Lord Wallace of Tankerness]

My Lords, we have had many debates on the size of the other place, and I think that we voted on it yesterday evening. Certainly, there have been many counterproposals to 600, but 600 is the number in the Bill. We have passed that point in our deliberations. It is what the other place agreed to, and it has not been defeated or changed by any debates or votes in your Lordships' House. With 600, I have not yet heard the argument why Wales should be treated preferably to other parts of the United Kingdom. It cannot be related to devolution because, if we did that, we would have to calibrate different parts of the United Kingdom depending on the different powers that respective Parliaments had.

[Lord Morris of Aberavon]

Will the Minister put on one side this dogmatic reliance upon simple arithmetic? Why, over decades, have our predecessors agreed that the magic figure of representation to meet the needs of Wales was 35? Is it not a recognition of the need of a small nation to have a voice? If a small nation is incorporated into a larger nation in a union, is there not a case for the voice of the smaller nation to be adequately represented, hence our predecessors’ magic figure of 35?

19:00

[Lord Wallace of Tankerness]

My Lords, I would passionately defend a united kingdom, but I do not honestly believe that it is doing service to all parts of the United Kingdom if we say that some part of it needs a hand-up. I believe in each of the constituent parts of our United Kingdom—Scotland, Wales, Northern Ireland and England—having equal status. That is why, when the other place is dealing with issues such as defence or macroeconomic policies, the votes of a person in Wales should carry equal value to those of a person in Scotland, Northern Ireland and England. That is not unfairness or inequality. In fact, to do otherwise would put inequality into the system. I therefore ask the noble and learned Lord to withdraw the amendment.

[Lord Falconer of Thoroton]

My Lords, as the noble and learned Lord said, “I have not heard why Wales should be treated differently”. Our amendment simply proposes getting to the same point as everyone else but doing it in a gradual way that does not put the union under strain. Not once did the Minister address that argument. I wish to test the opinion of the House.

19:01

Division 3

Ayes: 191

---

Labour: 160
Crossbench: 21
Independent: 3
Bishops: 1
Ulster Unionist Party: 1

Noes: 247

---

Conservative: 149
Liberal Democrat: 74
Crossbench: 18
Ulster Unionist Party: 1

19:15

Amendments 25A to 27 not moved.

Amendment 27A

Moved by

[Lord McNally]

27A: Clause 11, page 12, line 28, leave out from “of” to end of line 31 and insert “counties and their electoral divisions, districts and their wards, and London boroughs and their wards,”

Amendment 27AA (to Amendment 27A) not moved.

Amendment 27A agreed.

Amendments 27B to 27BB not moved.

Amendment 27C

Moved by

[Lord McNally]

27C: Clause 11, page 12, line 32, leave out “and county boroughs” and insert “, county boroughs, electoral divisions, communities and community wards”

Amendment 27C agreed.

Amendment 27D

Moved by

[Lord McNally]

27D: Clause 11, page 12, line 33, leave out from first “of” to “, and” in line 35 and insert “local government areas and the electoral wards into which they are divided under section 1 of the Local Governance (Scotland) Act 2004”

Amendment 27D agreed.

Amendment 27E not moved.

Amendment 27F

Moved by

[Lord Falconer of Thoroton]

27F: After Clause 11, insert the following new Clause—
“Variation in limit of number of holders of ministerial offices
(1) The House of Commons Disqualification Act 1975 is amended as follows.
(2) For section 2(1) substitute—
“(1) The number of holders of offices specified in Schedule 2 to this Act (in this section referred to as Ministerial offices) entitled to sit and vote in the House of Commons at any one time, whether paid or unpaid, must not exceed 95 if the number of constituencies in the United Kingdom is 650.”(3) After section 2(1) insert—
“(1A) If the number of constituencies in the United Kingdom decreases below 650, the limit on the number of holders of Ministerial offices entitled to sit and vote in the House of Commons referred to in section 2(1) must be decreased by at least a proportionate amount.”(4) In subsection (2), after “subsection (1)”, insert “or subsection (1A)”.”

[Lord Falconer of Thoroton]

My Lords, this is about the size of the Executive. The effect of this amendment would be to reduce the size of the Executive in proportion to the reduction in the number of MPs. There is no issue that it should not happen. Not surprisingly, Mr Nicholas Clegg declared before the election:

“I want to be clear: I am talking about a major reorganisation of Whitehall … As a result of our restructure the number of Ministers and government whips would be reduced from 119 to 73”.

Mr David Cameron, now the Prime Minister, in a lecture entitled “Rebuilding Trust in Politics”, sounded a similar note, promising:

“We’d want to reduce the power of the executive and increase the power of Parliament … We’ve got to give Parliament its teeth back so that people can have pride in it again—so they can look at it and say ‘yes: those MPs we elect—they’re holding the government to account on my behalf’”.

The effect of reducing the number of MPs by 50 without decreasing the number of officeholders entitled to sit and vote in the House of Commons by the House of Commons Disqualification Act 1975 is to increase the size of the government Front Bench proportionate to the number of Back-Benchers.

In Committee the noble Lord the Leader of the House said that,

“there is a very serious underlying point and that is the fear that the proportion of the Executive will increase as the number of Members of Parliament falls. I understand that there is an impatience in this Committee to know how the Government will address that fact. I am trying to be as helpful as I can but there is a limit to the helpfulness.”

You can say that again. He went on:

“We have said that we will address this issue and we will, but there is plenty of time to legislate before 2015 if we need to. The Minister for Political and Constitutional Reform told the Constitution Committee, of which my noble friend and the noble and learned Lord are members, that we will bring forward proposals during this Parliament. That is in good time as the reduction in the size of the other place will not yet have taken effect. I hope that is a sufficient reassurance”.—[Official Report, 26/1/11; col. 1058.]

No; that is, on the scale of reassurance, nil. Do we trust this Government to introduce measures to reduce the number of Ministers in the other place? No we do not. The only way to deal with that is if Parliament is prepared to do it by saying, “Let’s reduce the number of Ministers”, as Mr Nicholas Clegg, Mr David Cameron and the noble Lord, Lord Strathclyde—the triumvirate on which the Government are based—said they would. I do not trust them to do it in 20 years. In those circumstances, I invite the House to do it. I beg to move.

[Lord Howarth of Newport]

My Lords, my Amendment 27FA would insert a new clause after Clause 11, and after the new clause inserted by the amendment of my noble and learned friend. His new clause relates to the size of the Executive—the number of Ministers. My new clause is intimately related to that and deals with the number of Parliamentary Private Secretaries. I propose that their number should also be reduced commensurately with any reduction in the size of the House of Commons. We are talking here of the so-called payroll vote—the payroll which consists not only of salaried Ministers and one or two unsalaried Ministers, but of Parliamentary Private Secretaries. Although they are unpaid, they are always somewhat sardonically referred to as being members of the payroll vote.

In Committee, noble Lords on all sides of the House expressed their concern that the capacity of the House of Commons to hold the Executive to account would be further enfeebled if the size of the payroll vote were not to be reduced in proportion to the reduction of the size of the House of Commons. An important amendment on that matter moved by the noble Lord, Lord Norton of Louth, attracted a great deal of interest and support on all sides. Since then, I have learnt that the Speaker of the House of Commons himself has expressed concern that reducing the number of MPs without a commensurate reduction in the number of Ministers would skew the Westminster playing field in favour of the Government, as has the steady expansion of the payroll. Those sentiments were attributed to Mr Speaker Bercow in an article in the House Magazine.

Mr Cameron has appointed a lavish number of Parliamentary Private Secretaries, considerable numbers of party vice-chairmen and special representatives. His latest appointment in that genre is a defence envoy for Gibraltar. The Member of Parliament who has been appointed to that distinguished role is someone for whom I have the highest personal regard, but the important point is that she will be bound into the patronage system and lose her capacity to express an independent point of view—certainly in terms of voting. Richard Hall, writing in the House Magazine, said that patronage sucks in more and more Back-Benchers, leaving fewer to hold the Government to account.

[Lord Tyler]

Given that the Government have appointed a number of Labour Members to perform particular tasks, does the noble Lord include them in the payroll vote—Mr Frank Field, for example?

[Lord Howarth of Newport]

I entirely deprecate this tendency and I am delighted that the noble Lord has drawn our attention to a continuation of a baleful tendency that has persisted for many years. In 1900, there were just 60 salaried government posts, of which only 33 were filled by Members of Parliament. In addition, there were nine Parliamentary Private Secretaries. The total payroll vote in 1900 was 42. One hundred years later, in the year 2000, which was during the period of the previous Labour Government, the payroll consisted of 129 out of 659 Members of Parliament. We should also bear in mind that other legislatures—for example, the legislatures in the United States of America and in France—do not have to supply the ministerial Bench. We should not forget that when considering the Government’s claims that we are overrepresented in Parliament by comparison to other nations.

As a result of the exercise of patronage by Mr Cameron, possibly advised by Mr Clegg, there are now 95 Ministers in the House of Commons and 46 Parliamentary Private Secretaries. The Constitution Unit tells me that that represents more Parliamentary Private Secretaries than there have ever been. The payroll vote is 141 out of 650 Members of Parliament. A year ago, Mr Cameron, addressing the Conservative Party asked:

“How has the mother of all Parliaments turned itself into such a pliant child?”

The answer is that it has done so on the basis of thorough, systematic and unscrupulous use of Prime Ministerial patronage. The Prime Minister is now able to answer that question he posed a year ago. Ministers in the coalition Government profess to repent themselves of this; but, like Saint Augustine, they do not intend virtue just yet. This Bill provides an opportunity for them to embark on a reformed life, but they hesitate—indeed, decline—to take that opportunity.

This is a very important constitutional issue. It is about the capacity of the House of Commons to debate with some measure of freedom, to scrutinise with some independence and to hold the Executive to account. The capacity of your Lordships' House to do that is under threat, in consequence of the coalition having a political majority in this House. The plight of both Houses of Parliament must now be a matter of intense concern. The proposed new clauses provide the opportunity to assist the House of Commons to recover its capacity to perform the function within our constitution that the people expect of it.

[Lord Boateng]

My Lords, patronage has oiled the wheels of the Palace of Westminster since time immemorial, and we should not inveigh too much against it, particularly those of us who have been its beneficiaries—and quite a few on all sides of the House have been. Nevertheless, these amendments are important, because they are not against patronage per se—it has its place—but they seek proportion; that is all. They seek balance in order to prevent the abuse of patronage, which we have to be vigilant in guarding against.

Those of us who take our friends and former constituents around these august halls always stop at perhaps the most important picture in the Palace of Westminster—that of Charles I being gainsaid by the then Speaker when he came to arrest the five Members. It is a wonderful picture, not least because it embodies the principle to which traditionally we have adhered ever since those times: at the end of the day, what matters above all in this place is the capacity of the Back-Bencher to make a difference and to hold the Executive to account.

We live in different times from those of Mr Speaker Lenthall, the five Members and Charles I. None of us will lose our heads as a result of how we vote. None of us will be put in the same peril as Members were in those days. Nevertheless, the exercise of the power of patronage and the threat of the withdrawal of patronage—and I am cognisant of where I stand in relation to those who sit behind me—is a real power in the hands of the Executive. We seek with these amendments to make sure that that power is exercised proportionately. As my noble friends have said, that is an important constitutional point, and this House has given considerable attention in recent weeks to the importance of upholding our constitution and its traditions. The Palace of Westminster has sent more constitutions to more countries than any other Parliament in the world. That is something of which the House should be proud, because in the main the export of constitutional democracy has been to the advantage of our world. However, I cannot think of a single instance—perhaps the Minister will help me on this—when this House has sent a constitution to a former colony or dominion and not required that at least two-thirds of those elected to power under that constitution have supported it before it comes into effect. Yet I fear, on this as on many other issues, that the strictures of the Constitution Committee have been cast to one side, the previously expressed opinions of the Prime Minister and Deputy Prime Minister on the validity of the substance of the amendment have been cast to one side, and we are about to see something of profound constitutional significance railroaded through this House. That must be a matter of regret and I hope that noble Lords on all sides of the House will think twice before they fail to support the amendments.

19:31

[Lord McNally]

My Lords, the debate has been dominated by realism and cynicism: realism from the noble Lord, Lord Boateng, who said that patronage had oiled the wheels of the Palace of Westminster since time immemorial, and cynicism from the noble and learned Lord, Lord Falconer, who said that he did not trust the Government.

I am grateful to noble Lords for contributing to the debate. I see myself as a transitory Minister but a long-time believer in parliamentary checks and balances on the Executive. There is no difference between us on that. In Committee, we on these Benches outlined two key points that are worth returning to now. First, we are not at all against the spirit of the amendment. Since the Government came to power, they have demonstrated on several occasions that they believe in dispersing power. For example, they moved swiftly in the other place to implement the Wright committee recommendations to establish the Backbench Business Committee, passing control of much more parliamentary time to Back-Benchers and enabling them to elect the chairs and members of Select Committees by taking these decisions away from the Whips, who had such a dead hand on parliamentary democracy for so many years. I am too delicate to name the guilty men at this moment.

Noble Lords, including the noble and learned Lord, Lord Falconer, can be reassured that the Government are not looking to extend their influence. We are not seeking to expand the so-called payroll vote as a proportion of Members in the other place. However, we are not certain that legislating for this is necessary. We have said that we will look at all legislative and non-legislative options for addressing this—and we will—but we need to look at all the ramifications. For example, it might seem an odd consequence if we were to reduce the number of Ministers in one House by increasing the number of Ministers in another—this House. If the business of government demanded a larger number of Ministers who could not sit in the other place, that would be the only alternative. Ultimately, we want to be governed by the principle that the number of Ministers must be a function of need, which is not necessarily related to the number of MPs.

[Lord Forsyth of Drumlean]

Is the problem not that only a fixed number of Ministers is allowed, and as a result many Ministers in this House are unpaid? Surely that is unfair given the very considerable workload that this House undertakes because the other place does not seem to get round to revising legislation. We are all very appreciative of the Front Bench, but it seems very odd that so many of them should be unpaid so that there can be more paid Ministers in the other place.

[Lord McNally]

That is a very valid point that could be looked at. Successive Governments have relied on the goodwill of Members of this House to take on considerable duties and responsibilities. Again, I do not rule out looking at those matters. However, now is not the time to legislate on the issue. The reduction in the size of the other place will not come into effect until the next election in 2015. It would be much better to consider these questions closer to the time, when the parliamentary landscape will be much clearer. I assure noble Lords that we are looking at this question, but it does not need to be answered—and it would be wrong to answer it—in the Bill. Therefore, I invite the noble Lord to withdraw his amendment.

I am grateful to the noble Lord, Lord Howarth, for tabling Amendment 27FA. The amendment is similar in principle to that tabled by the noble and learned Lord, Lord Falconer, and the noble Lord, Lord Bach, so I shall be brief in my response. We are sympathetic to the intention of the amendment. The Government are keen to investigate the options for addressing the issue, and keen to hear any thoughts that noble Lords may have. We recognise the noble Lord's desire to limit the payroll vote. However, even with the provisions of the amendment, were the number of parliamentary private secretaries to be increased before a general election, a post-electoral reduction would not introduce the changes that the noble Lord intends. The issue needs further consideration and we cannot commit to making these provisions in the Bill.

We do not wish to see an increase in the payroll vote as a result of the Bill, but now is not the right time to legislate on the issue. The Government believe that it would be better to consider the issues after the change in the political landscape that will be brought about by the Bill has been made clearer. As I said, the issues raised are very real ones about the relationship between the Executive and Parliament, and even in eight months, the Government have established a record that means that the realism of the noble Lord, Lord Boateng, is more appropriate than the cynicism of the noble and learned Lord, Lord Falconer. We will address these matters and I ask the noble and learned Lord to withdraw his amendment.

[Lord Falconer of Thoroton]

The noble Lord, Lord McNally, has the respect of the whole House. However, with regard to the two areas to which he referred, the Government’s record over the past eight months has been dismal. The first issue that he mentioned was the Government’s respect for Select Committees, but I have today been shown a letter sent by the Constitution Select Committee of this House, agreed by every single member of that committee, complaining about the fact that the Government did not provide a reply of any sort to their comments on this Bill. The Select Committee said that now that the proceedings are almost over, any reply would be “of no value”. Therefore, the Government are wrong to claim that they have a good record on Select Committees. Secondly, as my noble friend Lord Howarth of Newport said, the Government now have the biggest payroll vote in history.

Therefore, in my view it is misplaced, first, to complain that we should admire the Government for what they have done in those respects over the past eight months, and, secondly, to ask us to trust the Government in relation to delaying the reduction in the size of the Executive proportionate to the reduction in the number of MPs. The noble Lord asked why we should do that now when it would not come into effect until 2015. However, we are legislating now to reduce the number of MPs, and therefore the obvious time to make the change is at the same time. I am completely unclear what further information is required to make a decision about this, the Government having said that they support such a reduction, and so I wish to test the opinion of the House.

19:39

Division 4

Ayes: 161

---

Labour: 139
Crossbench: 12
Independent: 3
Conservative: 2
Ulster Unionist Party: 1

Noes: 222

---

Conservative: 132
Liberal Democrat: 68
Crossbench: 15
Ulster Unionist Party: 1

19:51

Amendment 27FA not moved.

Amendment 28A

Moved by

[Lord McNally]

28A: After Clause 13, insert the following new Clause—
“Review of reduction in number of constituencies
(1) The Minister must make arrangements—
(a) for a committee to carry out a review of the effects of the reduction in the number of constituencies brought about by section 11; (b) for the findings of the review to be published.(2) A majority of the members of the committee are to be Members of the House of Commons.
(3) Arrangements under subsection (1)(a) are to be made no earlier than 1 June 2015 and no later than 30 November 2015.
(4) In this section “the Minister” means the Lord President of the Council or the Secretary of State.”

[Lord McNally]

My Lords, Amendment 28A provides for a committee to carry out a review investigating the impact of the reduction in the number of MPs from 650 to 600. The arrangements for that would be required to be made between June and November 2015—in other words, directly after the next scheduled general election.

In Committee, many noble Lords asked what the rationale was behind reducing the number of seats in the other place to 600. In response, other noble Lords, including the noble Lords, Lord Wills and Lord Lipsey, proposed setting up an independent or cross-party committee or a Speaker’s Conference, the intention being to consider the size of the other place and to use the various committees’ findings as a basis for determining the size of the House of Commons. We resisted those amendments because we were not persuaded that it was possible to consider the number of factors that some noble Lords suggested and arrive at a golden number that would balance all the considerations and interests. Ultimately, setting the size of the other place is a matter of judgment. We based our judgment on a variety of considerations, including the manifesto commitments of the Conservative Party to reduce the number of MPs. Members of the other place then decided that the reduction should be from 650 to 600.

We also resisted the amendments because the reviews, committees and inquiries would have delayed the boundary review and almost guaranteed that they could not have been completed in time for the next general election, scheduled for May 2015. The result of such a delay would be to use constituencies based on electoral data that would be up to 15 years old. That would fail to achieve a fundamental objective of the Bill: to create more up-to-date and equally sized constituencies and to provide that one vote has equal value throughout the UK. Continuing with the status quo would mean continuing with today's situation, where votes in small constituencies have almost twice the weight of those in larger constituencies.

However, we have listened to the proposals and have sought through the amendment to reflect the spirit of some of the amendments. That is the aim of our post-legislative review of the impact of the reduction of constituencies. Conducting the review under the terms of the amendment would allow practical evidence of the impact of the reduction to be taken into account. We believe that that would be of greater value than a review that could use only hypothetical evidence of what impact the proposed reductions might have. In addition, we have not specified in the Bill detailed terms of reference or factors that the committee should consider. That is to allow the committee flexibility to consider what is necessary and practical in the light of issues such as the time that it has available and the resources at its disposal. I beg to move.

Amendment 28B (to Amendment 28A)

Moved by

[Lord Falconer of Thoroton]

28B: After Clause 13, line 4, after “the” insert “anticipated”

[Lord Falconer of Thoroton]

My Lords, the government amendment inserts the creation of a committee to review whether the decrease in the number of constituencies is right. The committee has no end date. The committee comes into effect only after the introduction of the reduction of the number of Members of Parliament. Yesterday, during Report, the Leader of the House, the noble Lord, Lord Strathclyde, described the committee as the starting point for the changes in the reduction from 650 to 600. He was right to describe it as the starting point, because most people, looking at whether to make a major change, look at the evidence first, examine it and then reach a conclusion whether or not to act. That is why it is called a starting point. That seems sensible. This Government, however, will instead make the change and then set up the starting point—which, with respect, seems absurd. That is why our amendments make the arrangement that the committee is set up first, before the change is done.

That is illustrative of the lack of care which has been taken about these changes, and it is a serious matter. This should not be dealt with in a flip or unthought-out way. A committee without an end date, without a process for choosing a chair, and with the most limited terms of reference is by no means ideal. We accept that there should be a committee. If this hardly thought-out piece of work is what is being offered, we will take it because nothing else is on offer. I would have hoped that the Government could have tried a little harder.

[Lord Williamson of Horton]

In this case, as in many others, timing—in particular, the timing of this review—is the principal question. That is apparent from the amendments tabled by the noble and learned Lord, Lord Falconer. I sometimes think that it would have been instructive if, when we started the whole of this great debate on the Bill, we had installed a couple of clocks on the wall of the Chamber—not clocks to keep a record of the length of our speeches but to show the number of hours and minutes remaining until a referendum on 5 May, and until the completion of the constituency and boundary changes in October 2013.

It is those periods and the Government’s fear that proposals might prejudice them which have determined the fate of many proposed amendments. In the case of this amendment, as the noble Lord, Lord McNally, said, there have been a lot of questions about the decision to move to 600 Members of the House of Commons, the reasons for that change and a demand for some independent study of the consequences. The most comprehensive of those was the amendment moved yesterday, which was not accepted, by the noble Lord, Lord Wills. In Committee, I myself proposed an amendment that would have deferred the coming into force of Clause 11 until the end of the Boundary Commissions’ work, thus providing some time in which it would have been possible to undertake some examination of the consequences. The Government, however, made it quite clear that any infringement of the march to October 2013 is not acceptable to them. I assume that they will have the same difficulties with the amendments of the noble and learned Lord, Lord Falconer.

We should therefore consider the proposal of the noble Lord, Lord McNally, on its merits as a proposal for post-legislative scrutiny—which is what it is now. For myself, I think that it would be useful to have it in the Bill. It is a requirement that there should be a committee to carry out a review of the effects of the reduction and the changes to the constituencies; otherwise we may very well not get one at all, ever. Who knows what Government will be in power from 2015? It will be useful to have a review to draw some conclusions. I do not think that we should overrate its importance, but I think that it would be useful to do that.

I am aware that yesterday the noble and learned Lord, Lord Falconer of Thoroton, described Amendment 28A as “almost contemptible”. I do not agree with that. However, I was extremely glad that he included the word “almost”. I think that it is reasonable to have this proposal which the Government have now put forward in the Bill, and I hope that it will pass this evening.

19:59

[Lord Grocott]

My Lords, I would be grateful if the noble Lord, Lord McNally, would respond on just one point of fact. As we know, one of the major justifications that the Government have offered for the reduction in the number of MPs is—to quote either the Prime Minister or the Deputy Prime Minister—to reduce the costs of democracy. Can the noble Lord confirm to us that among the issues reviewed in five years’ time, according to this amendment, will be an assessment of the savings to the Exchequer from the reduction in the number of Members of the House of Commons, and whether that assessment will weigh those savings against the costs of increasing the size of the House of Lords?

[Lord McNally]

My Lords, I am grateful for the contribution of the noble Lord, Lord Williamson. I have noticed as this debate has gone on over the days that the comments of the noble and learned Lord, Lord Falconer, have got increasingly strident. However, I am happy to be thought of as one of the old contemptibles in this respect. I think that we are moving closer to what has been the objective all along, as the noble Lord, Lord Williamson, recognised—the urgency of giving the electorate the opportunity of opting for fair votes in fairly drawn constituencies. That has been the thrust of the Bill throughout. That is why we resist these amendments.

As for the question from the noble Lord, Lord Grocott, yes, I fully imagine that a cost-benefit analysis will be included in any post-legislative review—as the noble Lord, Lord Williamson, termed it—that is undertaken. By that time we will also have the full benefit of the reform of this House which my right honourable friend the Deputy Prime Minister will propose in the draft Bill that he will shortly bring forward.

[Noble Lords]

Ha!

[Lord McNally]

As I have said before, many of the dynamics of this, and much of the cynicism from the Opposition, will be overtaken by the sheer dynamism of the Government’s reform programme.

If these amendments were accepted, there would be a real risk that the deliberations of the committee and the publication of its review would interfere with, and even potentially undermine, the ongoing boundary review. That could result in fighting the next general election on the basis of unequal constituencies which are based on electoral data that are 15 years out of date. The cynics might even suggest that that has been the motivation behind much of what the Labour Party has been about these last—five months, is it? Secondly, if the review were conducted on the basis of an anticipated reduction of constituencies, the advantage of taking into account what the Bill’s actual effect had been would be lost.

If we put in train the review next month it will be little more than a continuation of the debate that we have had over the past few weeks. Although I know that many noble Lords will be suffering withdrawal symptoms, I think that we should resist this proposal. We have had a very thorough discussion and debate on the reasons that the Government had in mind when they provided for this reduction of the size of the other place. Noble Lords opposite have returned many times to the Government's rationale, probing carefully at each stage of the Bill’s passage through this House.

The culmination of these debates was yesterday, when we debated the proposal for a committee of inquiry moved by the noble Lord, Lord Wills, and the amendment that effectively retained the number of constituencies in the other place moved by the noble and learned Lord, Lord Falconer. Noble Lords tested the opinion of the House on both those amendments and both those amendments were disagreed. Given that, I feel that it is now right that we press on with the boundary review and consider its impact when we have the hard evidence of the impact that it has had. That would have two advantages. First, it would move on from the useful debates that we have had about what might be the case, to see what actually was the case. Secondly, it would allow the aim of the Bill to be achieved, which all sides of the House have said that they are in favour of—that the next election will be based on more equally sized constituencies and the most up-to-date electoral data available. I therefore ask the noble and learned Lord to withdraw his amendment to my amendment.

[Lord Falconer of Thoroton]

My Lords, there is force in what the noble Lord says about the rejection yesterday of the amendments on a committee of inquiry. I therefore beg leave to withdraw my amendment.

Amendment 28B (to Amendment 28A) withdrawn.

Amendment 28C (to Amendment 28A) not moved.

Amendment 28A agreed.

Clause 14 : Orders

Amendments 29 to 29A not moved.

Clause 18 : Commencement

Amendment 30 not moved.

Amendment 30A

Moved by

[Lord Forsyth of Drumlean]

30A: Clause 18, page 15, line 34, at end insert—
“( ) Section 11 shall not come into force until legislation has been introduced into either House of Parliament limiting the number of members of the House of Lords.”

[Lord Forsyth of Drumlean]

I think that the import of my amendments is perfectly clear and very simple, and I appreciate that noble Lords will be thinking about the dinner break and the Statement that is to follow, so I shall try to keep my remarks relatively brief.

I raised this matter on Second Reading. I did not feel that I wanted to get involved in the Committee stage because I felt that there was something of a logjam there already. I do not know who will be replying to this debate, but I am very much looking forward to an answer to the question that I raised on Second Reading, which is how we explain reducing the size of the House of Commons—the point that has just been made by the noble Lord, Lord Grocott—in the interests of saving public expenditure and economy while at the same time greatly enlarging the size the House of Lords.

I have been in this House for rather more than 12 years and I have grown to love it. If I do not know what I think about something, I come and listen to debates in this House. The arrival of new Members is something that we all welcome. Since the general election they have been arriving at the rate of about three a week, which means that there have been 115 new appointments to this House. Many have taken their seats recently and I hope they do not think that what they have seen over the past few weeks is typical. That is because the great thing about this House is that we proceed on the basis of argument. In the last Parliament, when we were in opposition, it was impossible to defeat the Government unless we were able to persuade our Liberal friends and the Cross-Benchers, and therefore the nature of the House was focused very much on debate and argument. The changes in the composition of the House have put the Opposition in a position where it is now difficult for it to win on the basis of reasoned argument if the Government are not prepared to listen and take account of it. The changes in the size and composition of the House have had an unexpected effect in that they have changed the nature of the debate in this Chamber, and that is something which the Government need to reflect upon.

There must be a physical limit to the size of this House. I am told by the Information Office that there are now 830 Peers. I do not know what argument one can make to explain how it is that a House of Commons of 600 should be matched by a House of Lords of more than 830. It is not something that is without cost. People may say that when the hereditaries were here, the House was very much larger, but one of the criticisms made of the hereditary Peers was that not all of them came to this place. Although many were the mainstays of the House, attendance even when the House comprised 1,200 was about 400 a day, which is where it is now. So I do think that the facilities of the House—the Library, the restaurants, the Peers’ Guest Room—and our ability to conduct our business must be impaired if the number of Peers reaches a figure that is unsustainable. The question I have to ask the Minister is this: what do the Government think is the limit of the size of this House? My amendment seeks to prevent the Government implementing a reduction in the size in the House of Commons until they have set a limit on the size of the House of Lords.

Aside from the ability of the House to do its job, which it does extremely well, I am also worried about the reputation of this place. If we become a kind of parking place for people who wish to continue their career in politics and if the numbers are so excessive compared with the House of Commons, I believe that that will attract considerable public criticism. Indeed, some of the mischief makers in the media have started already. Michael Crick on “Newsnight” the other night suggested that nobody down the Corridor would lose their jobs because they were all going to be appointed to this House. That is a disaster in terms of our public perception and in terms of the Government’s overall message, which is that they wish to reduce the cost of Parliament and its impact on the taxpayer.

I am pleased to see that my noble friend Lord McNally is to reply to the debate because he may well remember that last year I asked him a Question about the size of the House of Lords. I asked him if he was not concerned that if this House became so large relative to the House of Commons, that would be damaging to its reputation. He said that he was very much aware of that and he agreed with me. Since then, the House has increased in size by more than 100, which is rather like Caligula complaining about the composition of the Senate after appointing his horse to the membership as a consul. The Government, if they are serious about maintaining the reputation of the House, and if they agree that the size of this House relative to that of the House of Commons is an issue, really need to give us an indication of what is going on.

In response to the noble Lord, Lord Grocott, my noble friend suggested that we should wait for the proposals on reform. I await those proposals with great interest, but I hope my noble friend will forgive me if I make the observation that those who think that an elected House would be a good idea may want to reflect on what happened to our procedures during the Committee stage of this Bill and consider what the impact might be in the future. Further, those who feel that the Opposition should perhaps have given way earlier to the views of the Commons might want to reflect on how we would all behave if we were elected and had constituents. I suggest that we would be gridlocked on legislation like this, perhaps spending a whole Session on one Bill. So I look forward to seeing what the proposals are, but I find it very difficult to understand, if one is going to make a radical change to the composition of the House, why one would expand its size so rapidly. I hope very much that that will have reached a conclusion.

20:15

It may well be that the Deputy Prime Minister has found the Holy Grail for reform of this place, but observing this disparate series of constitutional reforms, it looks to me a bit like someone taking apart a fine clock and the wheels building up on the table. I have a horrible feeling that when the clock is put back together again, there will be some wheels that do not quite work and the clock will not actually tell the time of day.

I appreciate that moving this amendment in this Bill is a little opportunistic, and I know that the purists will argue that the size and composition of the House of Lords is in no way connected to the other place, that we are a separate House and they should not be linked. But there does seem to be a link in so far as the Government are proposing a reduction in the size of the House of Commons at the same time as increasing the size of this House. We did have a Royal Commission which was set up by the previous Government and very ably chaired by my noble friend Lord Wakeham. To be fair, the Royal Commission said that there should not be a limit set on the size of the House but that it thought it should be around 550 Peers, and put forward some persuasive arguments in support of that proposal. It also said that the peerage should be separated from the right to sit in this House, and that the power to appoint people to this place should be removed from the Prime Minister and should instead go to a statutory appointments commission. I think that my noble friend Lord Steel of Aikwood has now had three goes at bringing forward a Bill which would establish a statutory appointments commission, but that Bill has been unable to find the support necessary to bring it forward.

In the interests of maintaining the reputation of this House, I believe that it is important that the Government indicate how many more people they think can be appointed to this place. They should also explain to us how it is that they are increasing the size of this House while, at the same time, arguing for a reduction in the size of the House of Commons and how they believe that we can protect the reputation and standing of this House, which is very high in the country. That is in part because of the way that we have conducted our affairs, which I believe are being undermined by the way in which this House has been treated.

On that latter point, I spoke earlier on the issue of unpaid Ministers in this House. I imply no criticism at all of my noble and learned friend Lord Wallace of Tankerness, who has done a marvellous job in handling this Bill. However, in its handling it is absolutely apparent that Ministers in the other place have not quite tuned in to how this place operates. They have not given Ministers the freedom that they need in order to be able to respond to argument, which is a disaster. I know how it has happened because I plead guilty to being the same when I was down the other end of the Corridor. I had no understanding of how this place operated or of how much it contributed. This is a confession that we hear regularly from those who were Ministers in the other place—I dare say that even some former Deputy Chief Whips have been converted by their arrival here. This is a serious problem and one which needs to be addressed. That is why I am moving this amendment tonight.

[Lord Grocott]

My Lords, I simply want to say a couple of words on this because I suggested an amendment in Committee and as the noble Lord, Lord Forsyth, has said, he raised this at Second Reading. At whatever time of the night it was during Committee, I moved an amendment which, I admit, was not as good as this. I tried to find a way in which we could debate the effect of changing the size of the House of Commons and its relationship with what was happening to the size of this House.

This is an extremely important amendment. I hope that it does not embarrass the noble Lord, Lord Forsyth, if I tell him that I agreed with absolutely everything that he said about the relative size of the two Houses and the effect on this House if it grows and grows. Like him, I need to put in the caveat that this is in no way a criticism of the people who have been appointed to this House, many of whom have already made a tremendous contribution. However, there has to be a limit. I say this in the spirit in which the House is operating at the moment: I think that the noble Lord, Lord McNally, assured us on the previous amendment that the Government really were taking an overview of the three key constitutional reforms that are taking place. However, the constitutional changes are connected not just with the legislation involved in this Bill and the two Bills that are to follow. They are also affected, as the noble Lord, Lord Forsyth, has said, by the way in which the composition of this House alters, irrespective of any change in the legislation.

I conclude with my only point of disagreement with the noble Lord, Lord Forsyth. He quite rightly said that a fully elected House could easily end in gridlock. That is certainly one end of the spectrum, but there is another, which is particularly relevant to this Bill. This is no criticism whatever of the coalition, which is the first time I have been able to say that. It is that had this been a fully elected House on proportional representation, this House would have had a huge government majority. This Bill, far from being gridlocked, would then have gone through this House whipped—and how can I, as a former Chief Whip, criticise a Whip? It would have gone through quickly and almost certainly have been guillotined. I hope that when the noble Lord, Lord McNally, explains the position in relation to the two Houses, while he cannot respond on the proposals that he is bringing forward on abolishing this House in its present form and replacing it with an elected House, he will have something to say on the almost absurd disparity where, just as we are moving the House of Commons down to 600, the House of Lords exceeds 800.

[Lord Howarth of Newport]

My Lords, I agree with every word that the noble Lord, Lord Forsyth, said. The coalition appears to have invented a new-fangled constitutional doctrine: that the strength of the parties in the House of Lords ought to reflect the electoral support that they obtained at the last general election. It may be that the noble Lord, Lord McNally, will indeed expound to us that doctrine. I do not know that but I would certainly be most grateful if the noble Lord, Lord Forsyth, when he comes to his concluding remarks, would let us know what his own opinion of that doctrine is.

[Baroness O'Cathain]

First, I support my noble friend Lord Forsyth on the basis of the reputation of this House, which will be eroded significantly if we carry on like this. Secondly, it is very difficult to do the proper job that those of us who work in Committees have to do here when we find ourselves without even a place to sit, if we come in late to some of the debates here in the House. It is making the working conditions very difficult indeed. Can my noble friends in the Government give us some assurance that this will be looked at seriously, because we cannot go on like this? If we have the same number of Peers coming in over the next few months as we have had over the last few, it would make the whole place intolerable. Again, I support my noble friend in saying that there is no suggestion that the people coming in here will not do the work, but it will just be impossible to get the work done.

[Lord Low of Dalston]

From the Cross Benches, I must say that that was an absolutely marvellous speech from the noble Lord, Lord Forsyth. Most ingeniously, he managed to give us a wonderful warm-up for the debates that we shall no doubt have about the reform of this House. However, at this stage of the Bill, on which we have laboured for so many hours, I suggest that it might not be a good idea to go too much further into that debate. At one and the same time, he has not only done that but has also given us a wonderful valedictory on the debates we have had. He pointed to a number of factors that he rightly suggested we would do well to reflect on. The first was the great increase in the number of Members of this place, but I will not elaborate on what he said about all the disadvantages that that can entail. In a very even-handed and fair-minded way, he made some comments about what his side of the House would do well to reflect on: namely, the flexibility with which they have handled the many issues that have been raised in this debate. He also suggested that the brinkmanship, which some of us may have felt has been practised on the other side, may have also gone too far and affected the reputation and regard in which this House is held.

The noble Lord, Lord Forsyth, has therefore at a stroke pointed to a number of factors that, unless we row back from the place that we have got to, could well contaminate the debates which we are bound to have about the future shape and composition of this House. We would do very well to heed his words and, as we come to the end of these proceedings, to reflect on all the points that he has brought to our attention and perhaps row back a bit from the place that we have got to at the end of this Bill.

[Lord Falconer of Thoroton]

My Lords, I believe that this is a significant amendment and that the speech that the noble Lord, Lord Forsyth, made in introducing it impressed the House with its quality and seriousness. He made a number of points that obviously resonated around the Chamber. I support the amendment. With respect to the noble Lord, Lord Low, I do not agree that it is not appropriate for this Bill. It is appropriate because of the underlying principles that have been advanced by the Government in relation to why the House of Commons is going to be reduced.

The anxiety that now exists throughout this House is that no regard is being shown to the good workings of the House in the context of the people who are coming here. I make it absolutely clear that every single one of the people who have come has the highest possible quality and regard. This has nothing to do with the quality of the people who have come who are all much admired and many of whom have made a real contribution to the House. It is to do with the good working of the House. If we are having a reduction in the size of the House of Commons in order to make it work well, at the same time, we should not have an increase in the size of the House of Lords that might, for the sorts of reasons referred to by the noble Baroness, Lady O’Cathain, make its workings become more difficult. In those circumstances, we support this amendment.

It is important to look briefly at the position of the Government. They justify the reduction in the number of MPs in part by the costs they incur. Mr Nicholas Clegg, the Deputy Prime Minister, stated during the Second Reading in the other place that:

“We settled on 600 MPs, a relatively modest cut in House numbers of just less than 8%, because it saves money—about £12 million each year”.—[Official Report, Commons, 6/9/10; col. 39.]

I am not persuaded that cutting the size of the other place is necessarily wise; nor am I persuaded that the real way to judge whether we should cut the number of MPs is how much they cost; nor am I necessarily persuaded that that is the real motivation. But accepting all those things at face value, it is worth just considering what the cost has been of increasing the size of the House of Lords. Since the general election, the Prime Minister has appointed 116 new Peers. On the basis of an Answer given by the Chairman of Committees in 2009, each Peer costs £168,000 per year. That totals £19,656,000. According to the House Library, the Prime Minister is appointing—

[Baroness O'Cathain]

That figure surely includes items such as building works, security and maintenance. The fact that we are operating in this amazing building should not be added on to the cost of Peers. In any business, you would not do that.

[Lord Falconer of Thoroton]

I am using the figures that the noble Lord, Lord Brabazon of Tara, gave. The noble Baroness may well be right that looking at those figures again, we could take other and better figures, but these are the only figures we have at the moment because I understand that the noble Lord, Lord Strathclyde, was asked and refused to answer.

According to the House Library, the Prime Minister is appointing new Peers at a rate well in excess of any of his recent predecessors. The number of new Peers appointed in the first year by Mr Callaghan was 19; by the noble Baroness, Lady Thatcher, it was 18; by Sir John Major it was 25; by Mr Blair it was 38; and by Mr Brown it was 16. I remind the House that the number appointed by the current Prime Minister before the end of his first year is 116. That is a remarkable trend.

[Lord Trimble]

Steady on. A large chunk of that was the nominations that he inherited from the outgoing Prime Minister and I think the noble and learned Lord should acknowledge that.

[Lord Falconer of Thoroton]

I do not know what number that was. It was perhaps 30 at the most, so that would make the Prime Minister’s figure double the highest figure. I do not think that anyone, except perhaps the noble Lord, Lord Trimble, would dispute that the Prime Minister has appointed Peers at a much faster rate than anyone else in recent times and as we understand the effect of the coalition agreement, he has not yet finished. The coalition agreement says:

“Lords appointments will be made with the objective of creating a second chamber that is reflective of the share of the vote secured by the political parties in the last General Election”.

The report of the constitution unit of University College London of 22 November 2010 estimates that fulfilling that commitment will result in a House of 977 compared to the current 786, which makes it already the largest second chamber in the world. The coalition agreement on Lords appointments would therefore mean an additional 200 Peers. Accepting the limitations on the figures, which the noble Baroness, Lady O'Cathain, has rightly pointed out—that means that there may be better figures—that would mean an additional cost of £33.5 million. Even if one took a third of that figure to deal with the capital costs, the saving of approximately £12 million each year, which is advanced as the reason for making the cull in MPs, would be dwarfed. The importance of those figures is that they perhaps undermine the justification given.

Even assuming that one put to one side the question of the unsound basis being advanced by the Deputy Prime Minister for culling the number of MPs, the views expressed by the noble Lord, Lord Forsyth, my noble friend Lord Grocott and the noble Baroness, Lady O'Cathain, are very widely shared around the House. If the trend goes on at the rate that has been said, putting aside the costs, the workings of this House will not improve but will get worse.

What the noble Lord, Lord Forsyth of Drumlean, is suggesting is not something that will cause delay in the introduction of the reduction of MPs in the other place. It is not in any sense an amendment that cuts to the quick of the Bill. He proposes that the changes will not come into force until legislation has been introduced—only introduced—into either House of Parliament to limit the number of Members of the House of Lords. He is not saying what the number should be and he is not saying how it should be calculated. He is simply saying to the Government, “Put your money where your mouth is and do something about it. What you do is a matter for you in detail but you must address the issue”. That is a moderate and reasoned approach that would find favour around the House. It is a very serious issue which connects in completely with this Bill and I shall be very interested to hear what the noble Lord, Lord McNally, has to say about it.

[Lord McNally]

My Lords, I am grateful to all noble Lords for their contributions. Perhaps I should put the statistics given by the noble and learned Lord, Lord Falconer, into place, as I could see a few puzzled faces when he mentioned the figure of £168,000 as the cost per Peer. I thought I saw the noble Lord, Lord McAvoy, take out his pocket calculator to work out why he was getting a fair amount less than £168,000 for attending this place. As newspapers love to bandy around such figures, it is better to put on the record that expenses drawn by most Peers for attending this place average out at about one fifth of that figure. Let us not get canards about—

[Lord Falconer of Thoroton]

I completely accept that and I completely accept that £168,000 could not possibly be the costs that an individual Peer draws from the House. I quite understand that, without this correction, people might well have understood that that was what I was saying. However, I was saying that obviously the cost of a Peer is most certainly not simply the expenses that he or she draws but also particular costs such as the provision of a room, heat and support which go up by reference to Peers; and that comes to a lot more. The marginal costs are obviously significantly more than the expenses drawn by individual Peers.

[Lord McNally]

More and more, the noble and learned Lord reassures me that he was in the MoJ and not the Treasury. I accept that.

I should also like to associate myself with the comments about the quality of newcomers. I really think that the new intake has established itself with authority and that it adds to the strength of the House. As to my own credentials for replying to this debate, before the 1997 election, I was on the Cook-Maclennan committee—the Liberal Democrats and the Labour Party—which discussed reform of this place. Indeed, at one stage in that committee we considered the concept of a great reform Act that would tie all the constitutional reforms into one great Bill. However, we backed off doing that due to the complexity of such a measure.

I should point out right at the beginning that, interestingly, throughout our history there has never been an interdependence in terms of reforming the two Houses. The oft-quoted 1832 Bill was a reform of the House of Commons; it did not touch the House of Lords. The 1911 Bill was a reform of the House of Lords—it did not touch the House of Commons—as was the 1999 Act introduced by the previous Labour Government. Therefore, there is no interdependence in this regard.

I put forward another thought in this interesting debate in relation to the Wakeham commission. I now freely admit that I think we missed an enormous opportunity in not accepting the Wakeham commission’s report. At that time I was a “big bang” reformer who thought that reform could be introduced quickly. I remember saying to the noble Lord, Lord Rodgers of Quarry Bank, that I could not believe that the Labour Government, given the majority that they had, would leave Lords reform on the shelf. I also said, “Wakeham is too timid. Let us wait and they will come forward with a real ‘big bang’ reform”—little did I know. However, as I have said before, there is a lot in the Wakeham report that could be revisited when we consider Lords reform. I also believe that the Steel Bill constituted a missed opportunity on the part of the previous Government. They could have accepted it and it would have been a major step forward.

However, that is in the past. The noble Lord, Lord Forsyth, asked how we could justify enlarging the House of Lords while reducing the size of the other place. The only frank answer to that is, “with great difficulty”. It contrasts with what we are doing in this Bill. However, as I have said, the reason for that in part is the skill with which this House has deflected reform. We are left with a situation where it is difficult, if not impossible, for Peers to resign. We have always had to face the problem that without the ability to resign, and with Peers sitting for life, the composition of this place would be adjusted when Governments changed, and that there would always be a ratcheting upwards unless we addressed more fundamental reform.

However, the illogicality—or the lack of kilter—in what is happening should not be judged as a snapshot but, as I have said before, as part of a moving picture of dynamic reform by the Government, who will bring forward measures. As I explained, the Deputy Prime Minister is chairing a cross-party committee and one of the key issues that it is discussing is the size of the reformed Chamber. We are working to publish a draft Bill for pre-legislative scrutiny early this year.

I understand the variety of views that have been expressed. As one who wants a reform that works, I hope that the pre-legislative scrutiny committee drawn from both Houses will be broad based and will give all sides the chance to put forward their ideas and fears. I am not sure that I have ever accepted the fears about gridlock. Many countries in the world have two elected chambers and manage to work out relationships. I know that many books have been written about the dangers of gridlock developing in the United States and elsewhere but it is possible to work it out. I foresee developments emerging such as a business committee of both Houses which would do that. As I said, I sat on the Cunningham committee. I have always taken the view—the noble Lord, Lord Grocott, and I have debated this—that the relationship between the two Houses and our conventions would hold and would be tested by the two Houses, as they have always been. Therefore, these fears of doom and gloom are much exaggerated.

The Government believe that more can be done to allow Members of this House to leave permanently so that the size of the House can be reduced. The Leaders Group on Members leaving the House, chaired by my noble friend Lord Hunt of Wirral, published its report on 13 January. The Leader of the House has asked the Procedure Committee to come forward with proposals to put these recommendations into effect. I do not think that I would breach any secrets of the Procedure Committee on which my noble friend and I sit by saying that these proposals are on the agenda for our next meeting.

There is a Bill before the other place that seeks to limit the size of this House. The Parliament (Amendment) Bill was introduced by Mr Christopher Chope on 26 October 2010. Although the text of the Bill has not been published, it is clear from its Long Title that it will deal with the number of Peers. The size of this House is an important issue. But determining the size of the other place and this House do not have to be connected to one another in legislation. As I pointed out, they never have been in our history. The Bill aims to deliver concrete improvements to our electoral system as we find it today. Noble Lords will have ample—

[Lord Campbell-Savours]

Will the Minister give us an assurance that the Government will give the Chope Bill time on the Floor of the House?

[Lord McNally]

As such an experienced parliamentarian, the noble Lord knows darn well that I could not possibly give him that guarantee—but that is exactly why he asked that question. Noble Lords will have ample opportunity to discuss this House and all other matters relating to it when the Government's proposals for reforming your Lordships' House are published. As I said, I have great interest in some of these issues and would like to see them pushed forward with a real sense of urgency. In the mean time, I urge my noble friend Lord Forsyth to withdraw the amendment.

[Lord Forsyth of Drumlean]

My Lords, I had no intention of pressing the amendment to a vote tonight, but I have to tell my noble friend that he has not addressed the simple question I asked him. Do the Government have a view as to what the limit on the size of this House should be? I get the distinct impression in listening to his explanation of House of Lords reform and the relative sizes of the House of Commons and the House of Lords that the Government are making this up as they go along. If there is a plan for people to be able to leave the House, and if there is a plan for the size of the House, would it not be a good idea to know what the plan is before making additional appointments on such an enormous scale?

I am embarrassed by the praise being heaped upon me by Members opposite. I am in quite enough trouble already without the comments of the noble and learned Lord, Lord Falconer, although I appreciated the kind words of the noble Lord, Lord Low.

I do not enjoy moving an amendment of this kind at all. But I am concerned that not enough thought has been given, as my noble friend Lady O'Cathain pointed out, to the impact on this House of these changes. I am not being overly critical, I hope, of the Deputy Prime Minister, but if he thinks that the current gulf between the voters and Parliament will be solved by making this place larger, altering the nature of the composition of this House and altering the ways in which Parliament functions, I think he is missing what is going on in the country. We are in danger of damaging in this case a well-oiled machine. There is a case for parliamentary reform, but it is more at the other end of the building than at this end.

Because of the response that I have had, it is with considerable regret that I should like to test the opinion of the House.

20:50

Division 5

Ayes: 136

---

Labour: 117
Conservative: 8
Crossbench: 7
Ulster Unionist Party: 1
Independent: 1

Noes: 195

---

Conservative: 111
Liberal Democrat: 63
Crossbench: 13
Ulster Unionist Party: 1

21:01

Consideration on Report adjourned until not before 10.01 pm.

Banking

Wednesday 9th February 2011 Lords Chamber

Statement

21:02

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, with the leave of the House I will now repeat the Statement on banking delivered earlier in another place by my right honourable friend the Chancellor of the Exchequer. The Statement is as follows:

“Mr Speaker, I would like to make a Statement. The near collapse of the British banking system more than two years ago still generates today deep feelings of anger and cries for retribution. I completely understand that, for the link between risk and reward that underpins our free market was completely broken. Bankers who had made the most catastrophic mistakes walked away with huge payouts and pensions. Those entrusted by us to regulate those bankers and to run our economy washed their hands. Meanwhile, the rest of the country is left paying every day for their failures. The Government have to pick up the pieces. Let me set out how we will do that.

First, we will make sure that we learn every lesson that needs to be learnt so that this never happens again. We are entirely replacing the tripartite system of regulation that was introduced in 1997 and completely failed. Next week, we will publish the detailed proposals to give the Bank of England responsibility for prudential regulation, and to create a new consumer protection and markets authority that will protect the interests of bank customers. We will then undertake pre-legislative scrutiny, as requested by this House, before introducing the Bill. I hope that it will command support from all sides.

Later this year, we will also receive the interim and final reports of the Independent Commission on Banking, which this Government established and which I asked Sir John Vickers to chair. Sir John and his fellow commissioners are asking the difficult questions that need to be asked about how we protect the British taxpayer from future bank failures so that never again is a bank too big to fail, and we look forward to receiving their recommendations.

I should make it very clear that nothing I will say today about the settlement we have reached with Britain’s banks, including references to a level playing field, in any way pre-judges the outcome of the commission. That includes both the commission’s recommendations and the Government’s response.

The second task facing this Government is to make sure that we get the maximum sustainable tax revenues from the financial sector. HM Revenue and Customs confirms that the one-off bank payroll tax introduced in the dying months of the previous Government raised £2.3 billion net but, as my predecessor as Chancellor has pointed out, it could not be repeated without massive tax avoidance. I agree with him and we will not repeat the bank payroll tax. Instead we have implemented a new and permanent bank levy, which is why yesterday I announced an increase in that levy so that it raises £2.5 billion this year. This will bring the total raised by the new bank levy to £10 billion over the Parliament, and it means that in each and every year of this Government we will raise more in bank taxes than the previous Government raised in any year.

We have also required all the major banks operating in the UK to comply in spirit and by the letter with the code of practice on taxation. This code was announced with a fanfare, but I discovered today that only two banks had signed up to it. Today all the major banks have signed.

The third task facing the new Government was to reach a new settlement with the banks so that they contribute to Britain’s economic recovery. Some prominent people in this House were predicting just 24 hours ago that my tax announcement meant that our discussions with the banks on lending were falling away. The House will be pleased to know that this prediction was wrong. This morning, the heads of the major British banks—Barclays, RBS, Lloyds and HSBC—reached a new settlement with the British Government. I want to thank John Varley, the former chief executive of Barclays, for the huge amount of time and personal commitment he has given to this project. The essentials of this new settlement are exactly as I set out last month, and I am today publishing an exchange of letters between John Varley and myself. The banks will: lend more money, especially to small business; pay more taxes; pay fewer bonuses; be more transparent about the bonuses they do pay; and make a greater contribution to our regional economy and society.

In return the Government commit to the success of a strong, resilient, stable and globally competitive financial services sector in which UK banks can compete with the best banks in the world on a level playing field and in which London is a world centre for finance. That is good for jobs and growth in our country.

I shall go through each part in detail, starting with pay and bonuses. Most of us of find the levels of pay in financial services to be completely out of kilter with what the rest of society would regard as fair or reasonable. We are determined to bring responsibility and constraint and to ensure that pay is properly taxed. Four years ago, at the height of the banking boom, the City paid £11.5 billion in banking bonuses, most of which was in cash, most of which could not be recovered when the banks collapsed, and too much of which went untaxed. The new remuneration code introduced last month and the tax avoidance measures we are taking will change that. Today I can tell the House that the four major British banks have also agreed that total bonuses for their UK-based staff will be lower than last year and lower than they would have been without today’s settlement. The independent, non-executive director who chairs each bank’s remuneration committee will have to confirm personally in writing to the FSA that their pay accord conforms with today’s commitments. For the first time, the banks have agreed to seek explicit approval from their board’s remuneration committee for the pay of the 10 highest paid employees in each of their main business units. This did not happen in banks such as RBS before the crisis, where the board was ignorant of what was going on.

We have also insisted that the banks be far more transparent about who and how they pay. From this year onwards, the four major banks have committed to disclosing the pay details not just of their executive board members, but also of the top five highest paid executives not on the board. This will mean that the salary details of at least seven executives at each bank will be published this year. That compares with five individuals in the US and Hong Kong, and only board executives in Germany and Japan. By disclosing individual pay levels, it goes further than the Walker disclosure recommendations, on which we are seeking international agreement. We will consult on whether to make it a mandatory requirement from 2012 on all large UK banks to publish the pay of both the board plus the eight highest paid senior executive officers. This would mean that Britain has the toughest and most transparent pay regime of any major financial centre in the world.

I shall also provide an update on the situation at RBS and Lloyds. In 2009, the last Government signed an agreement with RBS that explicitly said would,

“enable pay arrangements in line with the market”,

this year. Despite that constraint, which we have inherited, UKFI, the arms-length body that manages the Government’s stake in these two banks, has agreed the following: for all staff at RBS and Lloyds, the maximum up-front cash bonuses will be limited to a maximum of £2,000 this year. All executive directors, including the chief executives, have agreed to receive this year’s bonuses entirely in the form of shares. Directors will have to wait until 2013 to convert these shares into cash. As the Prime Minister made clear last month, the bonuses at RBS and Lloyds will in total be smaller than they were last year and so, crucially, will the compensation ratios. They will be backmarkers in the industry, instead of the frontrunners they once were.

Let me turn from pay to the additional support that British banks have committed to provide to the regional economy. At the end of last year, the industry pledged £1.5 billion to a new business growth fund that will invest in the kind of expanding small businesses that hold the key to Britain’s more balanced economic future. Today it commits to making an additional £1.2 billion contribution to society. The four major banks commit to an additional £1 billion for the fund and an additional £200 million to capitalise the big society bank. The business growth fund contribution will be front-loaded over the next couple of years so that more help can be given to businesses sooner. This money will be additional to the lending commitments and additional to any funding already allocated from dormant bank accounts.

Finally, at the heart of today’s settlement is a commitment from the four major banks, as well as Santander, to make much more money available for lending to small and medium-sized businesses. Last year, these banks lent £66 billion to such businesses; today, the banks commit to lend £76 billion this year—£10 billion more gross new lending to small and medium-sized businesses. This is a massive 15 per cent increase, materially higher than they had been planning to lend this year and materially higher than anyone who followed these discussions would have expected. It comes alongside a very welcome commitment from the banks to improve greatly their customer service to small businesses, with a free mentoring service, published lending principles, transparent appeals and improved access to trade finance. Overall gross new lending to all businesses, large and small, will increase from £179 billion to £190 billion. They make a commitment to lend even more if demand materialises. Absent this accord, the banks were actually expecting lending to fall this year.

In order to ensure that progress against these lending commitments can be monitored, the Bank of England has agreed to collect the relevant data and publish them on a quarterly basis. To help ensure that today’s agreement is honoured, for the first time the pay of the chief executives of each bank, as well as the relevant business area leaders, will be linked to performance against the SME lending targets. Of course, if, even then, the banks fail to live up to their promises, the Government reserve the right to return to the issue and take further measures. However, I sincerely hope that that is not necessary.

The anger at the terrible mistakes of the banking industry and the failure of those who regulated it will long remain, and rightly so. But let us, as a country, confront this hard truth: anger and retribution will not bring one percentage point of economic growth or create one single new job. The anger will remain, and we must never make the same mistakes again, but Britain needs to move from retribution to recovery. Today we get the banks to commit, with more for lending—£10 billion more for small businesses—more for our regional economies and society, £10 billion more in taxes, lower bonuses and the most transparent pay regime in the world. In return, let us build a banking industry that creates jobs for hundreds of thousands of our citizens and competes in the world. Above all, let us make sure that the economic catastrophe that befell this country can never be repeated. That is how this Government will clean up the mistakes of the past. I commend this Statement to the House”.

My Lords, that concludes the Statement.

21:14

[Lord Eatwell]

My Lords, I am grateful to the noble Lord for repeating the Statement made by the Chancellor of the Exchequer in another place. What a pathetic performance—not, I hasten to add by the noble Lord, who read very well, but by the Chancellor. It was described this evening by “Channel 4 News” as lying,

“somewhere … between charade and sham”.

This was a Statement hatched in a smoke-free room in Downing Street, probably not over beer and sandwiches but maybe over smoked salmon and champagne. It sees the unwelcome resurrection of that distinguished and unlamented figure of the 1970s, Mr Solomon Binding. It is not only in their policies that this coalition Government seek to return Britain to the past; they are returning to the old methods of back-room deals masquerading as proper governance.

Before turning to the fundamental issues raised by the Statement, could the noble Lord clarify some of the aspects of the agreement, as published by the banks? The agreement states that there is,

“a commitment by the Government to the stabilisation … of the relationship between the Government and the banks”.

What exactly does that mean? Moreover, the agreement states that the Government accept,

“the right of self-determination by bank boards”.

What could that possibly mean, other than that the Government agree to let the banks do whatever they want?

Let us turn to the fundamental question: what is this for? More importantly, how will it help the recovery of the UK economy? Take first the question of bonuses. The essential problem with bonuses, apart from the sheer immorality of the quantum of money involved, has been that they embody perverse incentives. They encourage excessive risk-taking and reward mediocrity. They absorb resources that could be used to rebuild bank balance sheets and expand lending to the real economy. They attract to an essentially non-productive activity people with skills that could be deployed to perform productive tasks elsewhere in the economy—less financial engineering, more real engineering. Indeed, by their grotesque distortion of pay relativities, bank bonuses devalue the hard work of talented people in the public sector, in manufacturing and industry, and in non-financial services.

What now is to be done about bonuses, over and above the measures already being enforced by the European Union, such as the requirement that bonuses be paid predominantly in shares? In the Statement the Chancellor claimed:

“Britain has the toughest and most transparent pay regime of any major financial centre in the world”.

Will the Minister confirm that this statement is incorrect? Will he confirm that the US banks in receipt of TARP funds not only have to provide more wide-ranging disclosure of the details of remuneration, but have to do this for past years, too? This is all detailed in the recent report on bank bonuses by Mr Andrew Cuomo, Attorney-General of the state of New York. Finally, in the section of the agreement on bonuses, we find the wonderful clause 3.5, which is destined to have enduring fame as the ultimate get-out clause:

“Nothing in this statement derogates from the obligation of the banks, and their boards and remuneration committees, to manage pay policy in a way which protects and enhances the interests of their shareholders”.

In other words: “Get lost, Mr Osborne, we’ll do what we want”.

Given that nothing of any matter has been achieved on bonuses, what of the much trumpeted agreement on lending? The agreement clearly states that any increased lending—any of it—must be on commercial terms. If it is on commercial terms, would it not be done anyway? After all, that is what the banks are supposed to be for. We are told that the banks will increase their gross lending to £190 billion in 2011. However, this is a deception, for gross lending is not the relevant figure. What matters is net lending—new lending minus repayments. It is net lending that defines the amount of new spending power funding the investments of British industry. If gross lending increases but repayments increase too, the net benefit to Britain will be negligible. Will the noble Lord tell us: is there an agreed target for a net increase in lending? Will refinancing of current financial facilities be deemed to be new gross lending or not?

Then there is the commitment to a new £1.5 billion business growth fund, building up,

“over a number of years”.

Not too much too soon. That is less than 1 per cent of current gross lending and, moreover, it is not at all clear that this will be new money. There is nothing at all in the agreement about the cost of credit, other than the reference to “commercial terms”. However, ask any small business and they will tell you that it is the price of credit, rather than its availability that is often the problem. It is so easy to avoid making a loan by pricing it out of the reach of the small business borrower.

We are told in the agreement that there is to be an appeal mechanism for those denied credit, managed by “a senior independent reviewer”. Who is this reviewer to be? Who will appoint him or her? What will be the terms of reference? What sanction will there be on those banks that the reviewer deems to have failed in their commitment? Will the reviewer be able to assess all the terms of the credit, including the price? What arrangements have the Government made for the publication of the banks’ lending data to include data on credit refused, so that lending behaviour can at least be subject to some public scrutiny?

This is not the way to make economic policy. Three facts must be obvious to all. First, this crisis was inflicted on the economy by the profligate lending policies of the banks. Secondly, a sustainable recovery of the British economy requires a steady secure flow of affordable credit to British industry. Thirdly, to attain this goal there must be a fundamental reform of banking in this country. Those three propositions will be shared on all sides of this House, other than probably on the coalition Front Bench. This Statement addresses none of those three challenges. It does nothing to limit profligate lending—indeed, I suppose it tries to encourage it—it does nothing to secure a steady flow of affordable credit, and it is irrelevant to the cause of fundamental reform. Let us hope that this tawdry so-called deal will stimulate Sir John Vickers and his committee to address these issues with enhanced vigour.

The Government’s overall policy towards the banks was summed up perfectly in today’s Financial Times, which stated:

“With much noisy showmanship, the Conservative-Liberal Democrat coalition is puffing demands that are little more than cosmetic. A slight change in a levy on bank balance sheets and a commitment to greater small business lending and transparency in bankers' pay may play well politically. But they are no way to fix the banking system”.

I agree.

21:23

[Lord Sassoon]

My Lords, I am disappointed that the noble Lord, Lord Eatwell, recognises nothing in this Statement that moves things forward because, compared with what the previous Government did, my right honourable friend the Chancellor of the Exchequer has made enormous strides forward.

Where should I start? On the question of lending, it is precisely the gross lending target that matters. The net lending target which the previous Government imposed on a couple of banks let them off the hook. It is the significant total lending for 90 per cent of the SME market that is captured by the banks in the agreement that means we can confidently say that the banks are committed to lending 15 per cent more to the SME market this year than they did last year. Through the process of these talks, the banks have got themselves from a position of looking at flat or reducing lending this year to looking at a position of increased lending. I regret that the noble Lord, Lord Eatwell, seems to have confused gross and net lending. It is the gross figure for the whole market that matters. We have linked—in a way that the previous Government did not—the achievement of those lending targets with the pay of the key decision-makers in the banks. If they do not meet the targets, it will be reflected in their pay in a way that was never done before.

I turn to the business growth fund. Again, I regret that the noble Lord, Lord Eatwell, may be a little confused. He talked about loans from the fund, but it is an equity investment fund; it is absolutely additional funding to anything comparable that the banks have done before. As to the pace of build-up, the banks have today committed £1 billion in addition to the £1.5 billion that they had previously committed. They will front-load the commitment of that money, which will go with the pace of businesses that are growing and are in a position to receive the equity support. It is a significant fund.

The other thing that is different about the lending targets and the agreement of this Government compared with that of its predecessor is all the qualitative measures that the banks have come up with in their task force to stimulate demand and give the confidence that SME businesses need to approach the banks to ask for the money that is now clearly available. In every dimension—by moving from partial net targets to sensible gross targets that cover 90 per cent of the market; by the linkage to pay; by capturing that market; and by the qualitative measures that are in the task force—we have come up with completely different and better measures than did the previous Government.

Similarly, on the question of remuneration, the noble Lord, Lord Eatwell, talks selectively about the backward-looking and one-off disclosure requirements that were linked to the TARP. Under normal US banking requirements, no more than five executives are likely to be caught by the remuneration disclosures. What we have done—to which the noble Lord did not draw attention—is focus the disclosures on the people who are running the main lines of business. It is not a question simply of bandings, but of focusing the disclosure on the people who matter, because they are taking the key decisions.

I am disappointed that the noble Lord, Lord Eatwell, appears to have spent too much time today listening to Channel 4 and reading the newspapers and not enough time concentrating on the agreement, which takes us to a completely different place from where the previous Government were. Perhaps it is regrettable that none of the noble Lords who were Ministers in the Treasury at different times under the previous Administration were here to put him right.

21:28

[Lord Higgins]

My Lords, the Minister repeated a very complicated and extensive Statement on what the Government propose to do. One thing is clear: they are right to get rid of the tripartite agreement that was so disastrous under the previous Government. It would seem that the Government are now adopting a very balanced view. They have a very difficult task in maximising revenue from the City while at the same time not driving people abroad who would otherwise contribute an enormous amount to the British economy.

When the previous Statement was made, I expressed concern that in the discussions that the Government were having, they confused the situation by appearing to say, “We will be soft on bonuses, provided you lend”. In the event, it is clear that the Government are being extremely tough on bonuses and have reached a separate agreement on increasing the amount of lending, which is so important.

The public anger on this matter is very much related to the expression “bonus”. In the public mind is the simple thought that any amount extra that is paid ought to reflect performance. However, what has been so clear in the banking sector is that bonuses continue to be paid on a huge scale while performance has been lamentable. Can my noble friend say to what extent the restrictions that are now being placed on bonuses will ensure that they reflect the performance of the various individuals and banks concerned? The idea of a pool of bonuses among the banks when their performance has been very poor is, I think, a serious problem. The bonuses for individuals seem to be related hardly at all to performance.

Finally, I welcome the fact that much tougher action has been taken with regard to the banks which have been rescued by the taxpayer and that the remuneration committees and, in particular, UK Financial Investments Ltd will make sure that in future these matters are looked at on a commercial basis while ensuring that bonuses are not excessive.

[Lord Sassoon]

I am grateful to my noble friend Lord Higgins for pointing out that at the heart of the failure of the system and the mess that this Government have had to pick up and sort out was the failure of the tripartite system of regulation, which of course we are sweeping away. Seeing the noble Lord, Lord McFall of Alcluith, opposite reminds me that he very perceptively characterised it as a Rolls-Royce system when it sat on the shelf but an old banger when it got on the ground. I wish that I had his turn of phrase, but the tripartite system was indeed at the heart of it.

As to bonuses and their linkage to performance, that is absolutely at the heart of what the Government have agreed with the banks today. I think that the critical new element is the linkage between the performance of the banks on meeting SME lending targets and the pay of the chief executive and the other senior executives who are directly responsible for that line of business. Therefore, it is a crucial point. It is well made by my noble friend and it is at the heart of this agreement.

[Lord McFall of Alcluith]

I refer the House to the Register of Lords’ Interests, as I have an interest in this area. Does the Minister not agree that there is still too much wriggle room on the issue of transparency for the banks and that one of the big issues in this crisis was the mispricing of risk? Therefore, the more people whose salaries are known—particularly, for example, traders, although I do not know whether that is taken into consideration here—the better in terms of aligning the risk. When we talk about bankers’ bonuses and anger, the Governor of the Bank of England had it right when he appeared before the Treasury Select Committee a few years ago and said that the incentive structure in banking was distorted. Do the Government not agree that we need to tackle that issue to ensure that we restore trust and confidence in the banking sector?

[Lord Sassoon]

Indeed, I completely agree with the noble Lord, Lord McFall. With regard to the Merlin agreement, the fact that the five highest-paid senior executive officers now come within the remuneration disclosure is very important. As the noble Lord will know, senior executive officers typically encompass not only those responsible for managing the key divisions but also people such as the chief financial officer and the chief risk officer, who are at the heart of controlling risk in the system. Therefore, I think that the noble Lord’s point is very well made and, as I said, the Government will consult on this issue in the forthcoming year.

[Lord Newby]

I think the Minister for repeating the Statement and I agree with him that the noble Lord, Lord Eatwell, should surely be directing his moral outrage at his colleagues—not least the noble Lord, Lord Myners. If it was so easy to make all the changes which he is castigating the Government for having failed to make, I wonder why none of those changes was implemented by his Government.

A number of measures in the Statement are welcome. I welcome the fact that cash bonuses for the part-nationalised banks are limited to such a small amount. The noble Lord, Lord Eatwell, may not think that £2,000 maximum cash bonus is a change, but if you ask bankers whether they think that it is a change, I suspect that they would have a different view. I also welcome the fact that the banks in their statement said that they aim to foster more demand in lending to SMEs. Given that the view of the SME community over the past two years has been that those banks have been thwarting demand and that one of the main problems has been the attitude at the top level of those banks on lending to SMEs, if senior management in those banks get their regional people to foster more demand for loans, there will be more loans. That is clearly what we want.

I want to make two points for now. First, there is a rather curious suggestion about consultation on disclosure of the highest paid earners. That is the proposition that the banks should publish the pay of the board plus eight of the highest paid senior executive officers. Eight seems to be a figure plucked out of the air. Surely it would be more sensible for the Government to consult more widely and, in particular, to consider whether disclosure should not apply to everyone in the banks who earns above a certain amount.

Secondly, as the noble Lord, Lord Eatwell, pointed out, the Banking Commission is the next part of the story in the operation and regulation of the banks. The Statement simply states that the Government are looking forward to receiving the recommendations of the Banking Commission. That is an extremely weak statement. It implies that the Government will receive them, say thank you very much and then leave them on the shelf. Can the Minister reassure me that the Government will be minded to accept proposals from the Banking Commission and will not simply regard this as an academic exercise?

[Lord Sassoon]

I am very grateful to my noble friend Lord Newby for expressing some of the sentiments that I wish I had expressed as succinctly as he did about the Opposition's abject failure to have gripped these issues earlier, and for pointing out what a dramatic difference a mere £2,000 in cash makes to a senior banker who, under previous arrangements, would have been expecting to receive many multiples of that.

We will consult on my noble friend's specific questions and have no presumption as to where the outcome of the consultation will be on the remuneration/disclosure issue. There is no particular magic about the number eight, but eight plus two executives on the board, which there might typically be, would total 10. That is about double the number disclosed in, say, the US or Hong Kong so we are already exceeding disclosure in the US and Hong Kong and going further to a position which might double the number of directors whose remuneration is detailed. That seems to be a good point to start a consultation, but it will be an open one.

As for the independent Banking Commission, I can absolutely confirm that the Government do not remotely regard this as an academic exercise. We appointed the commission early after we took office because we thought that it was so important to get to the bottom of the issues about the structure of the industry, “too big too fail”, and so on. When my right honourable friend says “Look forward”, he means in a positive sense look forward to what will be a serious and important piece of work.

[Lord Liddle]

My Lords, many commitments in Project Merlin—such as more lending to more businesses in the regions; the establishment of the equity fund promised in the Rowlands review, which was an initiative of the previous Government, as the Minister will remember; and, indeed, the support for the big society, if that comes off—if delivered on, and it is a big if, are welcome, and no one wants a vendetta against an important industry such as financial services. However, on the central question of remuneration, the Government have set themselves the important test that it should be fair and reasonable. On that basis, does the Minister agree that the Government’s proposals fail that test? Does he think that the £9 million bonus that Mr Bob Diamond will get from Barclays is fair and reasonable—yes or no? It seems to me that the Government have to be clear on these issues. That is particularly true for a Government where the Secretary of State for Communities and Local Government seems to think that the problem of local authority cuts can be solved by cutting chief executives’ pay. That is populist politics being played in the public sector, but will the Government play honest politics when dealing with bankers’ bonuses?

[Lord Sassoon]

My Lords, today is precisely about honest politics. In answer to the first part of the noble Lord’s assertions and questions, there may have been plenty of good ideas floating around—whether it was the Rowlands review, the tax code for banks, the big society bank; I could go on and on and on—but the previous Government were completely unable to deliver on any of them. My right honourable friend has today set out hard delivery on so many of these issues. As for the question of remuneration, I believe that the deal on remuneration that has been done today on behalf of the British taxpayer and the British people is a fair and reasonable one. I certainly do not know, and do not wish to know, the individual bonuses that hypothetically may go to people, and I do not intend now or in the future to comment on individual banker's bonuses. The critical thing is that we now have a fair and reasonable deal between the Government, as the representative of the taxpayers of this country, and the banks, and it is one that will be enforced.

[Lord Risby]

My Lords, would the Minister care to consider the impact of the failure of the tripartite regulatory system in the context of European regulatory arrangements and our credibility not only in the European context but in the domestic context as well? Does he think that after this disastrous failure of policy, a new regulatory framework is urgently needed to put stability back into the system?

[Lord Sassoon]

I completely agree with my noble friend Lord Risby that at the heart failure of the failure and the heart of what needs to be done is the need to get the British regulatory system back on to an even keel. That is why we came forward with ideas in opposition and consulted widely on them even then. We have also moved fast in government. Only last week the appointment of the prospective head of the new consumer body was announced. We will continue urgently to roll out our proposals on the new regulatory structure. I absolutely take my noble friend's point that in the context of the United Kingdom's standing internationally, the leadership that we have shown in getting a new structure in place has been very much understood and respected by our peer group in Europe and more widely.

[Baroness Kramer]

My Lords, does the Minister not agree that it is absolutely crucial that a significant portion of the new lending should go to small businesses in areas of deprivation and to areas that will suffer severely from job cuts in the public sector? As a consequence, what will he do to encourage the banks to take a more sophisticated view of credit analysis so that micro-companies and new companies, which are the best hope in those areas, have access to funding, rather than just well-established small entities?

[Lord Sassoon]

I am grateful to my noble friend for allowing me to emphasise that the banks have at the heart of their intention on all lending to make sure that there is absolutely universal coverage across the United Kingdom. On the question of how businesses are put in a position to come forward, one of the most important elements of the banking task force is its proposals for mentors for businesses. Whether that is mentoring businesses to put them in a better position to apply for and take up loans or having a much clearer system of principles around lending and appeals processes, there is certainly a package of measures which goes to the points my noble friend rightly makes.

[Lord Maples]

My Lords, may I suggest to my noble friend that the central issue here is the rate of growth of credit, which is at the bottom of all banking crises? It does not matter what system of regulation is in place if it does not bring the rate of growth of credit back in line with the rate of growth of the economy. There has been a considerably faster rate of growth in credit. If that continues, we are going to have another banking crisis, whatever the system of regulation may be. Perhaps I may ask a specific question. One of the reasons the banks have made so much money over the past couple of years is that the Bank of England has been lending them money—money that it does not have, incidentally—at an interest rate of around 0.5 per cent. The banks have been able to lend that money on at 4, 5 and 6 per cent and thus have made a huge amount of money, out of which they are paying bonuses, presumably on the basis that it has been their clever management that has made all this money. Has my noble friend pointed out to them the value of this subsidy, and has he indeed calculated the value of this subsidy towards banks’ profits? We needed to help them rebuild their balance sheets, but that was why they were being lent money cheaply by the Bank of England. They are booking that as profits, attributing it to their own clever management, and paying themselves bonuses out of it.

[Lord Sassoon]

My Lords, because of the failure of the regulatory system and because of the huge over-leveraging in the economy, it was absolutely necessary for the previous Government to take drastic measures to get the banking system back on to an even keel, and of course that did mean that a number of measures were taken by the Bank of England to pump in liquidity under special schemes which always were time-limited and will have to be repaid. That was a necessary part of the rescue of the system. As I say, those measures are time-limited. It is precisely a combination of those measures and making sure that the banks, with the capital and liquidity available to them, now focus on advancing the resources they have to the small and medium-sized enterprises of this country that is at the heart of the agreement today.

Trade and Investment

Wednesday 9th February 2011 Lords Chamber

Statement

21:48

[The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Green of Hurstpierpoint)]

My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Business, Innovation and Skills.

“Today, I turn to one of the main building blocks of economic recovery: achieving growth through international trade and by attracting inward investment. Britain makes up just 4 per cent of the global economy. Without aligning ourselves to faster growth elsewhere, we cannot hope to prosper, but to do this we have to do better than in the past. In the last few decades, we have consumed too much and exported too little. While our competitors were sending manufactures across the globe, we were building a property bubble. Now, with Germany exporting over three times as much as Britain, it is vital to turn this around.

We have also done better in attracting inward investment. We are one of the top three recipients of foreign investment in the world and are home to more European headquarters of overseas companies than all the other European countries put together. Inward investors do not just provide jobs, they also provide 30 per cent of our R&D. However, there is no room for complacency in an environment that is increasingly competitive. This White Paper therefore sets out a strategy for creating opportunities, for providing the conditions for private sector growth through trade and investment that will help to rebalance our economy, and for securing the benefits of greater trade and investment openness for the world’s poorest people.

The Government want to focus on SMEs, which are much less engaged in trade than bigger companies. They have told us that they want to take advantage of the opportunities, especially in emerging markets, but cannot always access the trade credit insurance or finance to take the risk. Since the economic crisis, they feel that it has become much harder to get cover from private credit insurers at reasonable rates, so we will create several new government schemes and extend one existing scheme. These will be launched in the coming months.

First, BIS will launch an export enterprise finance guarantee scheme that offers export finance valued up to £1 million to SMEs. Secondly, the Government’s Export Credits Guarantee Department will launch an export working capital scheme for those not eligible for the export enterprise finance guarantee scheme, which will offer export finance in amounts of over £1 million. Thirdly, the ECGD will launch a bond support scheme under which the Government will share risk with lending banks on the issue of contract bonds and, fourthly, it will launch a foreign exchange credit support scheme that will support banks offering foreign exchange hedging contracts to SMEs by sharing the credit risk. Fifthly, the ECGD will extend its short-term credit insurance scheme to cover a broader range of exports, including those of SMEs. In addition, UK Trade & Investment, or UKTI, will increase its focus on emerging markets and on helping SMEs. It will launch a new online service offering access to sales leads around the world.

All Ministers have been asked to support our trade diplomacy. I have led or supported the Prime Minister in high-level trade delegations to Brazil, India, China and Russia with business representatives promoting exports and seeking inward investment. We will do more of the same this year and beyond.

However, half our exports are to the EU, and consequently we have a strong interest in ensuring that the EU grows. That makes the completion of the EU single market even more vital. Some recent analysis suggests that trade between the UK and other EU member states could be as much as 45 per cent below potential. This is largely because of significant non-tariff trade barriers. Completion of the single market could translate into 7 per cent additional income per capita per UK household. We therefore strongly support efforts to remove barriers to trade—particularly for SMEs in fields such as e-commerce and low-carbon products and in professional and business services, where there are currently an estimated 3,000 regulatory requirements—as well as pressing for energy and agriculture liberalisation.

At the international level, completing the Doha round is one of our top-level objectives. Finishing these trade negotiations could deliver a £110 billion boost per year to the global economy. We have spent 10 years negotiating and need urgent action now to agree the key elements of the Doha deal this year, so I am glad that momentum towards a deal seems to be building again. Britain will do its utmost to get the WTO past the finishing line this year. Doha is the top priority, but we will also pursue an ambitious programme of EU free-trade agreements with our main trading partners, including India, Canada, Singapore, the South American Mercosur countries and, we hope, Japan, following the recent agreement with South Korea.

Finally, the UK is committed to assisting poor countries to take advantage of the opportunities presented by an open global trading system. International trade is one of the most important tools in the fight against poverty, and research evidence shows that countries without trade barriers have growth in per capita incomes three times faster than in other developing countries. We will therefore ensure that trade is a central theme across our bilateral aid programme and promote regional integration, notably in Africa through our Africa free-trade initiative. Helping the developing world in this way is the right thing to do, both on moral grounds and in Britain’s economic national interest.

This White Paper sets out an ambitious direction for the UK and will guide the Government’s work on trade and investment. We will implement it vigorously and actively, and I urge British business to seize the opportunities it will present. That way, we will all benefit from the vision it sets out: an open trading system and a competitive British economy, driving growth and jobs. I commend this White Paper to the House”.

My Lords, this concludes the Statement.

21:55

[Lord Young of Norwood Green]

My Lords, I thank the Minister for sending me a copy of the White Paper earlier today and for notice of the Statement. I welcome the broad thrust of the Statement, so far as it goes. However, may I remind him that exports alone will not deliver without a credible plan for growth across our economy? Putting new tyres on the car will not make it perform better if the engine has not been fixed. We welcome the importance given to exports and export support, and support the increased focus on the major emerging markets such as Brazil, China and India without neglecting our longer established markets. We also welcome the commitment to opposing protectionism and promoting free trade. Subject to the detail, we will support the particular measures that the Secretary of State proposes to develop export support for SMEs, although I hope the Minister can give us a timetable for their implementation. I hope he acknowledges that all those measures build on work done by the previous Labour Government.

Like the previous Government, this Government are committed to the completion of the Doha round of global free trade talks. Given the difficulties that those talks have had in the past, can the Minister tell the House what specific new initiatives he will take in the coming year to ensure that talks are completed successfully? His predecessor and my right honourable friend the former Prime Minister played an active and engaged role in trying to move the WTO towards agreement. What personal role has the Secretary of State played and what commitments has he gained from the Prime Minister about his personal involvement in securing agreement this year? Does the Minister accept that the Doha round must foster development, and will he respect and build on the work of his department and the Department for International Development under the previous Government to ensure that trade agreements support poorer developing countries? The White Paper recognises the potential benefits of completing European free trade agreements. What specific new initiatives will the Secretary of State take within the Council of Ministers to get things moving forward? Finally on Europe, what specific measures will he take to broaden and deepen the single market, as the White Paper puts it?

There appear to be some significant problems underlying the White Paper. Can the Minister assure me that the cap of £25 million does not create a gap in export support for mid-range companies? Will he confirm that the UKTI budget will be cut by 19.5 per cent in real terms? Given the expansion of activities in the White Paper, where and how will cuts be made without damaging support for exporters? What role will the Science and Innovation Network play in supporting the export strategy? Does the Minister recognise that a successful export drive depends fundamentally on having goods and services to sell and on having the companies that can provide and sell those goods and services? Does he therefore also recognise that the Government’s reckless approach to deficit reduction is damaging the prospects for growth and jobs? Can he tell the House why the strategy for growth has still not been published when he promised it in October? Does he acknowledge that the new director-general of the CBI has now joined the previous director-general in criticising the Government for having no plan for growth? Without a clear vision for the economy and a plan for growth, we will not have enough companies to export all the products to sell.

Will the Minister confirm that pharmaceuticals and the life sciences are some of the knowledge-based industries by which we can hope to earn our way in the world? Last week, Pfizer announced the closure of its Sandwich plant. Is that not a chilling message that one of the world’s leading pharmaceutical companies looked at its global activities and decided that it no longer needed to be in the UK and that it could afford to leave the UK outside its global research strategy? How much more investment will we lose before this complacent Government produce a credible plan for growth?

The White Paper says that the Government will invest in UK infrastructure. Will the Minister confirm that the introduction of universal broadband has been delayed by three years and that there is no credible plan for fast broadband? Does he accept that those failings make the UK a less attractive place for investment by companies that support the digital economy? Does the Minister recognise that a recent report by Experian and the National Endowment for Science, Technology and the Arts concluded that there are companies with the potential to grow and export in every region of the country and in many different sectors of the economy? Does he recognise that regional development agencies often work with UKTI to support exporters? The Secretary of State has abolished RDAs, but can the Minister explain why the White Paper contains only one passing mention of regional support for exporters and support for exporters in the regions? How will he ensure that potential exporters get the right support in every part of the country?

The White Paper praises higher education as a gross export earner of £5.3 billion, so why is the Secretary of State supporting changes to student visa policies which will do real harm to the country's seventh biggest export earner and undermine our long-term trade and development interests? The White Paper speaks of investing in science but does the Secretary of State recognise that, with science investment cut in real terms and other countries increasing their science investment, we are in danger of losing world leadership in this area?

We welcome the recent performance of manufacturing exports which have taken advantage of the competitive pound. Will the Minister confirm that the strength of the manufacturing sector has been supported by the previous Government’s support for science research and development tax credits and capital allowances and that, in the worst of a global recession, the scrappage scheme, Time to Pay and flexible tax credits all helped manufacturers to retain more of their workforce? Does he recognise that we now have a unique opportunity to use manufacturing exports to strengthen the supply chain companies and to develop the next generation of world-beating export products? What is he doing to ensure that we take advantage of that opportunity? There is much common sense and continuity in the White Paper and no need for artificial arguments about it, but the Minister must recognise that its impact will be severely limited without a credible plan for growth.

22:01

[Lord Green of Hurstpierpoint]

I thank the noble Lord, Lord Young of Norwood Green, for those comments and for his recognition that there is a great deal of common ground on what it takes to enhance British trade performance and to ensure that we remain an attractive place for inward investment. We all recognise that British trade performance has been inadequate for a very long time. That goes back many years, if not decades. As we look for ways to achieve stable growth going forward—we are coming out of a crisis which itself followed a period of clearly unbalanced growth—we all recognise that we need to rebalance the UK's growth model. It is clear that trade and investment will have to play a key role. It is no longer possible to grow the economy by consumer demand fuelled by excessive borrowing. It is plain that government spending will not drive growth for all the reasons of which we are well aware. Therefore, it is inevitable that those sectors of the economy which contribute the rest of the demand—for example, investment and the external sector—will have to drive growth.

I absolutely agree with the noble Lord that manufacturing will play an important role in this. Although the trade statistics at the moment are not good and show that we have plenty of work to do, there are some encouraging signs about manufacturing’s contribution to exports. There is much work to be done. I say as someone who is relatively new in the job but who has spent some time going round the country meeting exporters—large and small, big companies and SMEs—that I am confident that there is a great deal of talent and energy raring to go. The measures that we have announced in today's White Paper, in particular the measures concerning the ECGD on the one hand and the UKTI on the other, will provide very useful support to those companies as they seek to achieve their aspirations.

The noble Lord raised a number of other questions about pharmaceuticals. There is no question but that the news about Pfizer is very sad for Sandwich. All the indications are that it is not a reflection on Britain but is part of Pfizer's global strategy and dealing with its specific issues. I assure him that Ministers and the Government are taking this issue very seriously and that my colleague—one of the Ministers in the department for business—has been down to Sandwich and is in discussion with a number of entities that are making contributions to getting the site partly used and possibly saving some jobs. It is early days yet on that but we are working hard on it.

It is clear that the Government have credible plans for growth. It is interesting to note that Sir Richard Lambert’s speech referred to a couple of things that he considered to be very important in terms of growth. One was providing better finance for SMEs, which we have done, and one was ensuring that UKTI focused more on SMEs and we have done that. Indeed, the warm welcome for today’s White Paper from the present director-general of the CBI reflects the way in which we have responded to an obvious gap in the support for SMEs.

I believe that we are making progress. As we say in the White Paper, this is absolutely a marathon and not a sprint. A weak trade performance is something that this country has lived with for a long time and it will not be cured by waving magic wands. If there were any magic wands to be waved, they would have been waved by now. However, what we have set in place now will, over time, make a serious contribution to enabling more businesses to get involved in international trade.

22:05

[Lord Razzall]

My Lords, I thank the Minister for repeating the Statement made in another place and congratulate him on what I suspect is his first Statement in your Lordships' House. I count eight Ministers who are present. I do not think that they are here to monitor the noble Lord’s performance; I suspect that they are here for other reasons.

I wish to ask the Minister two questions. First, having listened to the banking Statement by the noble Lord, Lord Sassoon, and this Statement—both of which I welcome—I am concerned about the practicalities of what is being suggested. This Statement indicated that there would be a significant increase in grant to the SME sector and the banking Statement indicated that the Project Merlin agreement would produce an increase in lending to SMEs of £66 billion to £76 billion. However, given the present culture of the banks, I worry that they will not be able to deliver that increase in lending, however much the Government aspire to that in the agreement. Those of us who have dealt with the clearing banks as SMEs know what actually happens. You go to your relationship manager—it does not matter whether it is Barclays, RBS or who owns the bank—and he or she says, “Yes, that is fine. I think we’ll recommend that loan”. Then the matter is passed to a credit committee, the members of which you have never met, and they often turn it down or come back and say, “It’s got to be 7 per cent over LIBOR”. How will the Government deal with the change in culture that will be necessary on the part of all the clearers if they are to deliver the loans and the business for the SMEs that are necessary to achieve the growth that the Minister, and indeed all of us, wish for?

My second point relates to UKTI, which is definitely within the Government’s control. In practical terms, if an SME wants to use UKTI to generate sales overseas, it gets in touch with it and someone at UKTI says, “Fine, I’ll let you know what sales expertise we can provide you with and what possibilities there are so long as you pay us £3,000”. Will the Government ensure that UKTI does not charge people for that element of expertise? That is an important point as that matter is under the Government’s control.

[Lord Green of Hurstpierpoint]

I thank my noble friend Lord Razzall for his comments. I absolutely agree with his first point about the practicalities. As I said, this is a marathon, not a sprint. One of the reasons why that is true is that the production of a White Paper is not the culmination of a process but the beginning. The next step is to translate the White Paper into a large number of action steps, assign responsibilities, time lines and all the rest of it, and drive it through. One of the most important aspects of what we have announced today in the White Paper—this may seem a rather bureaucratic point but I absolutely underscore its importance—is the creation of a new interministerial committee. It is, in fact, a sub-committee of the Cabinet Economic Affairs Committee and the Prime Minister has asked me to chair it. The committee will bring the Ministers in different departments involved in this whole project together on a monthly basis to drive these actions forward. It is in that context that we will review how well it is all going and make any adjustments as we go along.

My noble friend raised some particular issues about banks. For reasons that the House will understand, I am slightly nervous about commenting on banks, but I think there will be considerable recognition in the banking community engaged in commercial banking in this country of the force of a good deal of what my noble friend said. For example, he spoke of the need to ensure that in the context of businesses where there are credit committees and so forth—and rightfully so—nevertheless there is a real relationship that we need to keep alive with individual firms, even small ones, so that there can be a real understanding of the needs of the business.

I do not think anyone in this House would want to go back to some of the culture of lending prevalent in the go-go years in the early part of the previous decade, when lending was carried on as if it was going out of style. There is a need to introduce some prudence and credit control into banks’ business if we want to ensure that banks themselves are stable and profitable. But that must be balanced with an appropriate understanding of the real needs of businesses. We need to monitor that. The Merlin agreement that was announced by the Chancellor of the Exchequer in another place this afternoon includes agreements by the banks on this front, and the Government will hold the banks to account on it.

I have had the opportunity in recent weeks of meeting a number of UKTI people both here and overseas and my experience is that on the whole it is a good institution. There is always scope for improvement, certainly, and in any institution employing some 2,500 people you will find those who are average in quality and those who are very good. But coming at this from the outside, I am impressed by the dedication, hard work, commitment and enthusiasm of UKTI people in the many offices that I have had the opportunity of visiting.

On the specific question of whether to charge for its services, the Government believe that it is appropriate to charge for some UKTI services, but there are plenty of services that are not charged for. OMIS—I am afraid that I cannot remember what that stands for—is a service that is charged for, but generally the feedback is that it is widely welcomed.

[Lord Lang of Monkton]

My Lords, I warmly welcome the well focused nature of my noble friend's announcement. I suggest that the key to growth in the long run is surely increased productivity, as the example that he gave of Germany indicates, though rather to the detriment of Germany's unfortunate partners within the eurozone. Against the background of the sad decline in productivity growth during the period of the previous Government, will he indicate the extent to which he believes the announcements that he has made this evening will stimulate further productivity growth and thus lead to the creation of more jobs and prosperity?

[Lord Green of Hurstpierpoint]

I thank my noble friend Lord Lang for that question because it is an important one. Productivity is indeed something of an Achilles’ heel, at least in parts of the British economy, and we need to work at that. It is a complex matter that involves the whole question of the skills base. There is one very interesting fact about exports that is extremely important to this question. Research shows that as small companies get engaged in the international markets, they not only tend to be the more efficient ones, they tend to get more efficient as they do so. In other words, an enhanced trade performance engaging more SMEs in the international markets has the effect of strengthening the backbone of the whole economy. That is an extremely important consideration that leads me to underscore again the very centrality of this trade agenda to the growth strategy for this economy for the next few years.

[Lord Hunt of Kings Heath]

My Lords, perhaps I may follow up the question raised by my noble friend about the pharmaceutical industry, particularly the decision of Pfizer. Is the Minister aware of a Department of Health consultation on value-based pricing, which essentially changes the way in which the health service will compensate the pharmaceutical industry for the cost of drugs?

Under the current system, the PPRS, companies have great flexibility in setting a price within an overall profits cap. The advantage of that is that price sets a benchmark for at least 25 other countries and probably many more than that. That is one of the attractions for the industry of investing in the UK. When I was responsible for the pharmaceutical industry at the Department of Health, the UK had 4 per cent of global turnover in pharmaceuticals and 10 per cent of global R&D investment.

The Department of Health’s concern is to control the cost of pharmaceuticals to the NHS but, frankly, there is a much greater issue: the strength of our pharmaceutical R&D investment. I therefore urge the Minister to make sure that we are looking at pharmaceutical prices from the point of view of UK plc. I should say to the House that I have a number of health interests which are declared in the register.

[Lord Green of Hurstpierpoint]

I thank the noble Lord, Lord Hunt of Kings Heath, for that suggestion. I have to say that, as somebody relatively new to my role, this is not an area with which I am very familiar. However, his idea is very interesting and I am happy to undertake at least to inform myself more about the issues.

I am aware that Britain has been a very attractive site for R&D in the pharmaceutical industry. I think that we are all aware of the way in which the pharmaceutical industry is changing, with an increased tendency for the major companies to look at whether primary R&D is better contracted out to smaller operations. There is a need to think through the implications of that for the strategy of attracting and retaining inward investment in that sector.

[Lord Burnett]

I welcome the Statement and my noble friend’s appointment. Some of our major banks execute transfers of money rather more swiftly than others. It would be of great help to small and medium-sized businesses if money transfers took at the most, let us say, 24 hours rather than three or perhaps even more days. Will my noble friend encourage dilatory banks to speed up the system? Will he also take steps to encourage large companies to pay their suppliers without delay?

[Lord Green of Hurstpierpoint]

I thank my noble friend Lord Burnett for those suggestions, which are both important. I am happy to undertake that the Government will ensure in their dialogue with the banks that money transfers, particularly for small businesses—but, frankly, for anybody—are done as rapidly as is reasonable. I also agree that we should encourage large companies to ensure that they settle bills with their smaller suppliers as promptly as possible.

[Lord Northbrook]

My Lords, I congratulate the Minister on the White Paper. I applaud the strengthening of the ECGD scheme and the focus on improving important emerging markets such as India, China and Latin America as well as on existing trading partners. I also agree with him on the importance of the Doha round. However, I have a problem with the coalition’s measures for restricting capital allowances for manufacturing companies. If we are to try to refocus the UK economy on manufacturing, surely we need to encourage our manufacturing companies to reinvest and thus not restrict these capital allowances.

[Lord Green of Hurstpierpoint]

I welcome my noble friend Lord Northbrook’s support for what is proposed in respect of the ECGD and the commitment that the Government have given on Doha. The Government are clear that they want the most competitive corporate tax environment of any of our major competitor countries. As the noble Lord is aware, the headline rate of corporation tax is coming down by one percentage point between now and 2014. When it reaches its final level in 2014, it will be the most competitive rate among the G7 economies. From the many comments received from many companies, we have also recently announced the introduction of what I know is important to them; namely, a patent box to enable them to benefit from the fruits of research and intellectual property.

Overall, the sense is that we have got the balance about right. In recent weeks, as I have visited small and larger companies in the regions of this country, I have found that tax does not register as one of the regular issues where they are looking for enhanced government support. I think that they recognise the intent and the substance of what policies have already been announced.

[Baroness Hooper]

I also welcome the Statement and the White Paper. Because of my interest in Latin America, I note in particular and with pleasure the references to promoting trade and investment with that continent—in particular, Brazil and Mexico with their large and vibrant economies. I note also that the White Paper states:

“Our Embassies and High Commissions overseas are uniquely placed to advise on the complex political, economic and cultural factors that affect trade and investment opportunities in other countries. They can help facilitate access for UK business, help overcome barriers to market entry, secure a better in-country operating environment”.

Will my noble friend therefore assure us that the previous policy of closing, down-sizing and placing severe budgetary constraints on our embassies and overseas missions will be reversed?

[Lord Green of Hurstpierpoint]

I thank my noble friend Lady Hooper for drawing attention to a very important region, Latin America. Brazil is one of the most exciting countries in the world and I think that we all recognise that British business has not paid that part of the world as much attention as we probably should have in recent years and decades. That is now beginning to change. The Deputy Prime Minister is visiting Latin America next week, which follows a visit by the Secretary of State for Business, and I will be going later in the year. We are paying Latin America a great deal more attention.

With regard to embassies, I make two points. Embassies play a crucial role in this trade and investment strategy. The Government have defined the key priorities of the Foreign Office as being, first, commercial diplomacy and the prosperity agenda; secondly, security; and, thirdly, the consular function. The priority attached to commercial diplomacy is extremely important.

In terms of the deployment of resources, there is an intention to gradually shift resources in diplomatic terms to the faster growing countries, the emerging markets. Without being precise about the plans at this stage, I think that noble Lords can expect to see the sorts of countries that are of concern to them being beneficiaries of this process.

[Lord Risby]

I warmly congratulate my noble friend on his White Paper. Does he agree that the desire to learn English and to be educated in the English language produces a huge and lucrative opportunity for us, and that the work of the British Council and the arms of our universities abroad can play a critical role in trade development policy?

[Lord Green of Hurstpierpoint]

I thank my noble friend Lord Risby for that intervention, because I agree completely. The role of British educational institutions as export earners in their own right and, importantly, as in some sense ambassadors for what Britain is around the world cannot be prized highly enough. All indications are that those who come into contact with the British educational experience end up taking with them a warm experience of Britain for the rest of their working lives. They are all the more keen therefore to engage with us, whether as investors or as traders later in life. I think that this is extremely important.

[The Archbishop of York]

My Lords, I too am very thankful for the White Paper. I am particularly grateful at how this Government are committed to assisting poor countries to take advantage of the opportunities presented by an open global trading system. I am also grateful that when the Secretary of State for International Development addressed the General Synod of the Church of England he reaffirmed what the Prime Minister has said; namely, that deficit reduction will not be achieved on the backs of the poor and that the 0.7 per cent will be retained to be given to those poor countries.

To have more joined-up thinking between that department and the Minister’s department, will the Minister ensure that they do not simply support poorer countries? As some people have said, it is one thing to give a poor man a fish, but it would be better to teach the poor man how to fish.

[Lord Green of Hurstpierpoint]

Trade is at the heart of what it takes to achieve successful economic and social development. Yes, the Government are committed to their plans to move towards the 0.7 per cent target for official development assistance. As my right honourable friend the Secretary of State said in the other place earlier today, we will commit to ensuring that our support for trade facilitation as part of our official development programmes remains at least at the current level. There is ample evidence that helping countries to improve border controls, regulatory environments and communications of all kinds has an enormous effect on trade, which in turn has an effect on people’s ability to earn their own livelihoods and find their way into the economic and social mainstream. So we are completely in agreement with the instinct that the most reverend Primate calls for.

Parliamentary Voting System and Constituencies Bill

Wednesday 9th February 2011 Lords Chamber

Report (3rd Day) (Continued)

22:26

Schedule 1: Further provisions about the referendum

Amendment 31 not moved.

Amendment 31ZA

Moved by

[Lord Low of Dalston]

31ZA: Schedule 1, page 19, line 26, at end insert—
“( ) directions about the discharge of their functions in relation to voters with disabilities”

[Lord Low of Dalston]

My Lords, I rise to move Amendment 31ZA and shall speak briefly to Amendment 31ZB, which is also in this group.

Amendment 31ZA adds to the matters on which the chief counting officer may give directions to regional counting officers or counting officers, direction about the discharge of their functions in relation to voters with disabilities. In Committee, the noble Lord, Lord Strathclyde, gave very welcome reassurances, setting out the Government’s clear expectations around the accessibility of the referendum for disabled people. It was most welcome that the noble Lord stated on 31 January:

“The chief counting officer will issue guidance and directions to RCOs and COs that will cover their duties in relation to accessibility and disabled voters under relevant equality and electoral legislation. These include: ensuring that polling stations meet the accessibility requirements of the DDA; ensuring that information, forms and notices relating to the voting process are available in alternative, accessible formats; making available enlarged sample versions of the ballot paper in polling stations; and providing a tactile voting device in each polling station to enable voters with visual impairments to vote”.—[Official Report, 31/1/11; col. 1292.]

I know that disabled people’s organisations outside this House have very much welcomed those reassurances, but it would help to underline the priority that should be given to meeting the needs of disabled voters to have the power to give directions on these matters on the face of the Bill.

Amendment 31ZB gives the chief counting officer power to give directions regarding the handling of complaints from persons dissatisfied with the way in which regional counting officers and counting officers have discharged their functions. This would apply not only to disabled voters but to voters generally and would in effect establish a complaints procedure that could be used by voters dissatisfied with the conduct of any aspect of the referendum. I raise this matter because it is surely right that there should be an avenue other than the costly and legalistic process of judicial review for members of the public to register complaints about the conduct of the referendum—whether that be over a failure to make reasonable adjustments to inaccessible polling stations or to provide the tactile voting template to a sight-impaired person, or because they feel that the arrangements for access made by regional counting officers and counting officers have fallen short of the standards that the noble Lord, Lord Strathclyde, set out in Committee.

The nature of the complaints procedure would be up to the chief counting officer to decide, no doubt in consultation with local authorities and other stakeholders. Following the serious access problems experienced at the last election, it is essential that we provide a lighter-touch, non-legalistic way of addressing complaints which enables the chief counting officer to investigate and leads to the complainant receiving a report of his findings, perhaps an apology, and a statement about the steps which will be taken to ensure that the problems do not recur. None of this is a million miles away from the powers given to the Electoral Commission by Section 67 of the Electoral Administration Act 2006 to determine and publish performance standards for electoral officers, to direct them to provide the commission with reports on their performance against those standards and to publish an assessment of that level of performance.

Noble Lords may say that my amendment will have no impact on future elections. I accept that. This amendment is designed purely to ensure that we can deal with complaints that arise during the referendum. That is all we can do in this Bill. However, if the Government could see their way to accepting the amendment, I think it would provide a good platform on which to build for the future. I hope very much that we might see provisions along the lines I am seeking by having this amendment enshrined in future electoral legislation as soon as there is a legislative opportunity. I beg to move.

[Lord Bach]

We on this side support very much the amendments of the noble Lord, Lord Low. We hope that the Government will react favourably to them; he is quite right to say that the noble Lord the Leader of the House reacted sympathetically in Committee to the debate that the noble Lord introduced. We hope that the Government might be able to go a little further this evening and agree with the amendments as far as they are able to do so. We look forward to what the Minister has to say.

[The Archbishop of York]

I, too, support the amendment of the noble Lord, Lord Low. I hope that when we talk about functions in relation to voters’ disabilities, we do not forget one particular category of people—that is, deaf people. It is no good getting people in if there is no British Sign Language available. I hope that that will be taken into account as well.

[Lord Howarth of Newport]

My Lords, I, too, support the amendment in the name of the noble Lord, Lord Low of Dalston. It is the mark of a civilised society that disabled people are able to participate in all its activities. It is certainly the mark of a mature and properly functioning democracy that disabled people are in no way obstructed from participating in elections.

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

I thank the noble Lord, Lord Low, for the way in which he introduced his amendment and referred to the discussions we had in Committee. Like him, I thought that they were constructive and useful. I also appreciate the words of the most reverend Primate the Archbishop of York.

The Government very much understand the concerns raised by the noble Lord, Lord Low. Naturally, this debate has thrown up interesting suggestions which the Government think merit further consideration. Although the amendments tabled by the noble Lord raise some valid and useful points about which we have thought very carefully, the Government resist these commendable amendments.

First and foremost, we remain unconvinced that the amendments in their current form will make any difference to the provisions already in the Bill or, indeed, to voters at the poll. The provisions already enable the chief counting officer to issue directions or guidance in relation to voters with disabilities or in relation to the policies and procedures for the handling of complaints. Therefore, these amendments add very little in terms of substance.

I know that the commission treats disability issues very seriously and is mindful of the importance of ensuring that counting officers are aware of the needs of voters with disabilities. Noble Lords will also be aware of the legal obligations that public bodies are already under to meet the needs of people with disabilities.

However, although the Government resist these amendments, we are entirely conscious that these are important issues, which may well warrant, after proper consideration and consultation, some application—in perhaps a modified form—and for that to be brought to bear on future polls. I know that the noble Lord will regret what I have to say but this is neither the appropriate time nor vehicle for these amendments. To consider carefully and consult on the implications of the kind of changes envisaged by these amendments will require more time than we have at present. However, they are a useful pointer to the issues that need to be addressed.

On that basis, I hope the noble Lord will understand and assist the Government by continuing the dialogue he has already had and withdrawing his amendment.

[Lord Low of Dalston]

I thank the noble Lord for his response and all other noble Lords who spoke so warmly in support of the amendments. At this late stage of the proceedings it would be appropriate to withdraw the amendment. The noble Lord the Leader of the House certainly encouraged continuation of the dialogue and spoke positively about aspects of the amendments. He said that there were things there that merited further consideration. I can take just enough away from those words to give me some confidence that the Government will wish to return to this in the context of future electoral legislation. The noble Lord can be assured that we will certainly work strenuously with the Government to ensure that that does indeed happen. On that basis, I beg leave to withdraw the amendment.

Amendment 31ZA withdrawn.

Amendment 31ZB not moved.

Amendments 31A to 32A not moved.

Amendment 33

Moved by

[Lord Lipsey]

33: Schedule 1, page 21, line 9, at end insert—
“( ) These steps shall include measures to ensure that all those wishing to vote and arriving at the polling station within the appointed hours are able to do so.”

[Lord Lipsey]

My Lords, this follows an amendment that I moved in Committee, which included the general duty on the Electoral Commission, as included in this amendment. It was pointed out that in doing that I had not tackled one of the main problems that beset this area, namely that the legislation seems not to allow people who arrive at a polling station on time but have not cast their vote by 10 pm to cast their vote by the expiry of those hours prescribed by the legislation. Therefore, I drafted this amendment so that they should be permitted to vote. To remind the House; in Committee there was general agreement that the chaos of May 2010, when 1,200 eager citizens were denied the right to vote—in one of the most advanced democracies in the world—must never happen again. Many moving words were spoken about that.

The Electoral Commission also inquired into that, as you would expect. In its initial report it asked for legislation. It has produced a briefing document that summarises the position in the report, saying that,

“we recommended that the Government should urgently change the law so that people who are … in the queue to enter the polling station at the close of poll are allowed to vote”.

If I could pick one phrase out of that, it would be “urgently change the law”. When I picked up the Electoral Commission’s briefing for these debates, I expected that at least it would offer me some support in trying to do that. That was perhaps naive, because in between its initial report and now, the Deputy Prime Minister has made it clear that he is not in favour of legislation on this subject. I do not like to ascribe motives or to deduce cause and effect, but in the briefing the Electoral Commission went rapidly from calling for an urgent change to saying that the change proposed in my amendment would be significant, that it could be open to different interpretations, that there was insufficient time to consider its full implications, and that the Electoral Commission was unable to support it.

If the Electoral Commission did not like my amendment, given that it wanted urgent legislation it would have been perfectly sensible for it to have proposed a substitute. There is Third Reading to come, and if the matter remained not cleared up we could have debated it then. However, the Electoral Commission has not proposed a substitute. Here we have a situation, only the facts of which I describe, of a body urgently seeking a legislative amendment, an indication in the press that the DPM is against it, and a legislative vehicle to deal with the situation, and what is commission’s reaction? It shows all the urgency of a tortoise on valium.

You cannot spend long in either House without discovering that the Electoral Commission does not always command the total confidence in its activities which Members of both Houses would hope for. To some extent that is right, because the commission must not be a puppet of Members in either place. However, I detect an underlying lack of confidence that this is truly an efficient and fit-for-purpose body. The commission’s reaction in this case seems somewhat to underline that charge and suggests that it has validity.

I say nothing more than that the time has come for the Electoral Commission to up its game. I am sure that tonight Ministers will be absolutely delighted to hide behind the commission’s coat tails and will therefore not embrace the amendment or put forward a preferred amendment of their own. I should be highly delighted to be surprised. I beg to move.

[The Archbishop of York]

My Lords, the incident referred to by the noble Lord happened in my province, Sheffield. Had that happened in Africa or India, we would have said it was scandalous that people had been in the queue for three hours but, because the voting had to stop at 10 o’clock, were told to go away. There would have been an outcry that people had been queuing for hours and were denied a vote. For me, the purpose of the law is to state public policy. This amendment is a statement that such an occurrence must not be allowed to happen again, and the regulations should make that clear. If you do not prescribe it now, the same will happen somewhere else. The African saying, “People in Britain have watches, while in Africa we have time”, might come true in the end.

[Lord Bach]

My Lords, my noble friend Lord Lipsey raises an interesting couple of points in the amendments. They seem to us on the Front Bench to be absolutely unarguable. They are sensible and deal with the situation very well indeed. My noble friend’s points about the Electoral Commission were interesting. I should make a revelation; I found the Electoral Commission much more impressive when I was in government than I do now, sitting on the other side of the Chamber. That may reflect on me, but it also reflects to some extent on the Electoral Commission. I know that the noble and learned Lord who will respond will deny that it is anything other than pure coincidence that the Electoral Commission should change its mind so quickly on this issue and shut off any chance of my noble friend’s amendments being accepted.

22:44

[Lord Tyler]

Perhaps the noble Lord also saw that the Electoral Commission, in its advice to your Lordships' House, also said something that the noble Lord, Lord Lipsey, did not mention: namely, that while it supported the principle of the amendment, it did not feel that it was necessary as its intended outcome could be achieved through the chief counting officer's power of direction for the referendum, as provided for in the Bill. Therefore it is not entirely fair to say that the situation has changed in the way that the noble Lord, Lord Lipsey, and the noble Lord, Lord Bach, said.

As someone who has in the past given informal advice to the Electoral Commission, I agree that it is not beyond criticism. I am sure that some criticism of it is entirely proper, but it would be unfair to suggest that it has changed its mind in the way that was mentioned.

[Lord Bach]

I am very grateful to the noble Lord, as always—and the Electoral Commission must be even more grateful than I. These are sensible amendments that one would have thought the commission would have supported, given all that it said about the scandalous issues that arose in Sheffield and a few other places during the last election. It is remarkable that it seems to have changed its mind.

I will put that to one side. The Government will make up their mind about whether to do something about the scandal in May last year. My question to the noble and learned Lord is: what do the Government intend to do to make sure that this does not happen again in May this year?

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

I thank the noble Lord, Lord Lipsey, for returning to this important issue in his amendment. Many of us who watched the election night coverage of the scenes at certain polling stations where people who had been queuing were not given the opportunity to vote found that it offended our sense of justice as democrats. The Government certainly take it seriously. The Electoral Commission's report found that queues built up at a number of polling stations on 6 May for various reasons. It identified 27 polling stations across the country. In most cases, it found that the common factor was inadequate planning processes and contingency arrangements that were not in place.

I assure the House that the Government are considering the Electoral Commission's report. We will consider what steps are necessary to prevent a repeat of the problems. It is important that we make sure that any changes to the rules are workable and will benefit the public. The noble Lord, Lord Lipsey, referred to the briefing from the commission to Members of your Lordships' House in which it indicates that a change to the rules on the close of polls would be significant; that details of any changes would need careful consideration to ensure that they could be consistently applied and would not have any unintended consequences; that the amendment could lead to inconsistent practice; and that there has not been sufficient time to consider the implications of how the provisions of amendment might work in practice.

We previously assured the House, in a reasonably long debate on this issue in Committee, that the Bill already gives the chief counting officer the necessary powers and discretion to ensure that the referendum runs smoothly. She will have sufficient flexibility to decide what is right in particular circumstances, including the steps that have already been taken by the Electoral Commission to ensure that some of the problems that occurred on 6 May are not repeated. This will include all counting officers having effective planning processes and contingency plans. We advised the Committee that the Electoral Commission had indicated that the chief counting officer intends to issue directions to counting officers on the maximum number of electors who will be allocated to any polling station, and the associated minimum number of staff who must be present at each polling station to ensure that polling runs smoothly and that all electors who wish to vote are able to. The Government take this seriously and are considering the Electoral Commission's report.

[The Archbishop of York]

The amendment simply refers to taking measures to ensure that all those wishing to vote and arriving at a polling station within the appointed hours are able to do so. What could be the unintended consequences of that?

[Lord Wallace of Tankerness]

The Electoral Commission and the chief counting officer ultimately have responsibility for the smooth running of the election. Certainly—this may well be because we are running relatively close to polling day—they have taken the view that making such a significant change could have unintended consequences. In their judgment, it could lead to some inconsistencies in different parts of the country, and it would be regrettable if, in trying to address one very serious problem, we opened up some other unintended and unforeseen problems. I do not think we would be thanked for that, and therefore I urge the noble Lord to withdraw his amendment.

[Lord Lipsey]

I have enjoyed the contribution of the noble and learned Lord, Lord Wallace, to our proceedings and notice that tonight he has transformed himself into Sir Humphrey. That could come straight out of “Yes Minister” and we would have them rolling in the aisles.

The Electoral Commission rushed out a report within two weeks of this scandal because people were outraged. We are now nine months on from the incident and we are told that I am rushing by putting forward an amendment tonight when no alternative proposal has been put forward. It is another three months until the referendum. The Electoral Commission has plenty of time to put these things right and the Government have plenty of time to put the legislation right, which they could have started doing tonight. Therefore, I feel a sense of deep unease and disappointment. In the Government’s response I see none of the urgency that the Electoral Commission pressed for last May.

I wholly agree with, and am delighted with the contribution from, the most reverend Primate, who spoke from the experience of knowing just how bad it was for the people who were not able to vote. I cannot do anything further about it myself but I urge Ministers to push this to a resolution of some kind so that we can go out into the world in the future with a sense of pride that, when something goes wrong in our democracy, we put it right and do not let it linger, stinking, over our system. I beg leave to withdraw the amendment.

Amendment 33 withdrawn.

Amendment 34 not moved.

Amendment 34ZA

Moved by

[Lord Phillips of Sudbury]

34ZA: Schedule 1, page 21, line 13, at end insert—
“( ) The Chief Counting Officer must take whatever steps the officer thinks appropriate to facilitate co-operation between that officer and the officers to whom sub-paragraph (3) applies in taking any steps under sub-paragraph (1) or (2).”

[Lord Phillips of Sudbury]

My Lords, I hope to deal with this amendment quickly. It is a modest and practical amendment, and it is similar in effect to the amendment moved in Committee. I see that a number of Members of the House do not have a copy of this manuscript amendment and I hope that it will be in order for me to read it out:

“The Chief Counting Officer must take whatever steps the officer thinks appropriate to facilitate co-operation between that officer and the officers to whom sub-paragraph (3) applies in taking any steps under sub-paragraph (1) or (2)”.

The nub of the amendment is a desire to ensure that there is co-operation between all those who under paragraph 10 of the schedule have a duty to “encourage participation”. The regional counting officer is given that duty under paragraph 10; so, too, is every regional counting officer, every counting officer and every registration officer. Your Lordships may remember that, when I moved a similar amendment in Committee, there was support for it all around the Chamber, and the noble Lord, Lord Bach, was very generous in strongly supporting it. This amendment brings back that principle, and I have tabled it following very helpful discussions with the Minister and the Bill team.

I think that I need say little more. The point is that, under the Bill as it stands, no one is given the task of co-ordinating what could be extremely dislocated efforts to encourage participation. This amendment, as I said, simply states that, among the four groups of officials involved, the chief counting officer has the role of ringmaster in trying to maximise the encouragement of participation, because everyone in this House wants this referendum to engage as many members of the public as possible. That is the size of it. I beg to move.

[Lord Falconer of Thoroton]

My Lords, the manuscript amendment moved by the noble Lord, Lord Phillips of Sudbury, comes under the part of the schedule headed “Encouraging participation”. As I understand it, he wishes to place on the chief counting officer responsibility for co-ordinating the activities of a regional counting officer, a counting officer and a registration officer in performing their duties under paragraph 10 to encourage participation. It is very hard to see how anyone could object to that. I do not know whether there are any technical objections to the terms of the noble Lord’s manuscript amendment, but it seems a sensible measure, because there is no one in the House who does not want to encourage participation.

If there are technical problems with the manuscript amendment, I imagine that they could be tidied up at Third Reading on Monday. On the basis on which it has been advanced by the noble Lord, Lord Phillips of Sudbury, we support the principle of the amendment, subject to any difficulties that we have not foreseen to which the Minister may draw our attention.

[Lord Wallace of Tankerness]

My Lords, I thank my noble friend Lord Phillips of Sudbury for tabling the amendment. He gave a history of the debate in Committee. We agreed when he withdrew his amendment in Committee that we would have further discussions. I am pleased that we have been able to have those discussions. In Committee, the Government indicated that we were not persuaded that such an amendment was necessary. My noble friend and I have agreed that there was merit on both sides. Our meeting has added clarity. It has put the issue of co-operation right up front. The noble and learned Lord, Lord Falconer of Thoroton, has emphasised the importance of co-operation, with which we all agree, in trying to ensure encouragement of participation in the referendum, usbregardless of which side of the campaign one might be on.

It is a manuscript amendment. If my noble friend is willing to give us the opportunity to reflect on its wording, I very much hope to be able to come back to him with a definitive response during Third Reading. Perhaps he would be prepared to withdraw his amendment at this stage on that basis.

[Lord Phillips of Sudbury]

I am grateful to my noble and learned friend. I assume that there was a clear implication in that—

[Noble Lords]

No.

[Lord Phillips of Sudbury]

Am I speaking out of turn?

[Noble Lords]

No.

[Lord Phillips of Sudbury]

I hope that there was a clear implication that my noble and learned friend accepts the nub of the amendment and that it is just a question of technical jiggery-pokery.

[Lord Falconer of Thoroton]

I apologise to the noble Lord, Lord Phillips, for making two loud noises from a sedentary position, but his point was precisely that which was going through my mind about the noble and learned Lord’s response. It was not clear from what he said whether he would come back with something or whether he was just considering something. The response of the noble Lord, Lord Phillips, is exactly the response that I would have given.

[Lord Wallace of Tankerness]

If it helps, I very much hope to be able to come back with a very positive response to my noble friend. I just wanted to check.

Amendment 34ZA withdrawn.

Schedule 2 : Rules for conduct of the referendum

Amendment 34A

Moved by

[Lord Strathclyde]

34A: Schedule 2, page 35, line 27, after “entry” insert “1A,”

[Lord Strathclyde]

My Lords, this is a series of government amendments to deal with the issue of postal and proxy voting. They provide that anyone who registers or is already registered to vote by post, or has a proxy vote in a combined poll, will receive a postal vote for the referendum. They include, I fear, a long string of consequential amendments. Therefore, I beg to move Amendment 34A and will then move en bloc Amendments 34B to 34AS, with the leave of the House.

[Lord Falconer of Thoroton]

I am slightly at a loss. Roughly, in a sentence or two, what are they doing and why are they being done at Report?

[Lord Strathclyde]

I spoke in one sentence, and I thought that I was the object of clarity. Why are we doing it at Report? Because we did not spot it before. No doubt in those long days in Committee the officials were busily looking at these issues again and came to the conclusion that there needed to be some clarification.

The point is that an elector who is already registered for a postal vote for one of the polls combined with the referendum, and who is therefore entitled to vote in the referendum, is now as a result of these amendments, which I hope will be agreed, also automatically registered for a postal vote for the referendum. It is about dealing with the issue of the combination of the polls at the same time. It is designed to make life easier, and I am sure that the noble and learned Lord will agree it.

Amendment 34A agreed.

Amendments 34B and 34C

Moved by

[Lord Strathclyde]

34B: Schedule 2, page 35, line 30, after “entry” insert “1A,”

34C: Schedule 2, page 35, line 33, at end insert—
“( ) in the case of a peer within entry 1A of the table, state that the peer’s entitlement to vote by proxy in the referendum arises by virtue of the peer’s inclusion in the list of proxies for a specified poll mentioned in that entry;”

Amendments 34B and 34C agreed.

23:00

Schedule 3 : Absent voting in the referendum

Amendments 34D to 34AS

Moved by

[Lord Strathclyde]

34D: Schedule 3, page 80, line 17, at end insert—

“1A

A person who— (a) is entitled to vote in the referendum and in a poll that is taken together with the referendum, (b) is included in the postal voters list for that poll, and (c) is not within entry 1 in this table or entry 1 in the table insub-paragraph (3).

Address provided in the application that gave rise to the person being included in the postal voters list or, if the person is included in more than one, the address provided in the latest of those applications.”

34E: Schedule 3, page 80, line 23, after “1” insert “or 1A”

34F: Schedule 3, page 80, line 24, after “1” insert “or 1A”

34G: Schedule 3, page 80, line 37, after “1” insert “or 1A”

34H: Schedule 3, page 80, line 38, after “1” insert “or 1A”

34J: Schedule 3, page 81, line 14, after “1” insert “or 1A”

34K: Schedule 3, page 81, line 15, after “1” insert “or 1A”

34L: Schedule 3, page 81, line 23, at end insert—

“1A

A person who— (a) is entitled to vote in the referendum and in a poll that is taken together with the referendum, (b) is included in the list of proxies for that poll, and (c) is not within entry 1 in this table or entry 1 or 1A in the table in sub-paragraph (2).

Proxy appointed for the purposes of that poll or, if there is more than one, the proxy appointed for the poll in respect of which the latest of the person’s applications to vote by proxy was made.”

34M: Schedule 3, page 81, line 29, after “1” insert “or 1A”

34N: Schedule 3, page 81, line 30, after “1” insert “or 1A”

34P: Schedule 3, page 81, line 43, after “1” insert “or 1A”

34Q: Schedule 3, page 81, line 44, after “1” insert “, 1A”

34R: Schedule 3, page 82, line 14, after “1” insert “or 1A”

34S: Schedule 3, page 82, line 15, after “1” insert “, 1A”

34T: Schedule 3, page 83, line 9, at end insert—
“( ) in relation to a principal who is included in the list of proxies by virtue of entry 1A in that table, the appointment of the person mentioned in column 3 of that entry;”

34U: Schedule 3, page 84, line 2, leave out from “paragraph” to “, and” in line 3 and insert “7(2)(a)”

34V: Schedule 3, page 84, line 7, after “7(2)” insert “(b), (c) or (d)”

34W: Schedule 3, page 84, line 28, at end insert—

“1A

A proxy who— (a) was appointed as mentioned in column 3 of entry 1A in the table in paragraph 5(3) for a person mentioned in column 2 of that entry, and (b) is included in the proxy postal voters list for the poll in respect of which that appointment was made.

Address provided in the proxy’s application to vote by post as proxy in that poll.”

34X: Schedule 3, page 85, line 41, after “3(9)” insert “, 4(6)”

34Y: Schedule 3, page 85, line 43, at end insert—
“( ) articles 8(9), 9(6) and 12(13) of the National Assembly for Wales (Representation of the People) Order 2007 (S.I. 2007/236) (dates of birth and signatures of certain electors and proxies) in relation to persons entitled to vote in the referendum,( ) articles 8(9), 9(8) and 11(12) of the Scottish Parliament (Elections etc.) Order 2010 (dates of birth and signatures of certain electors and proxies) in relation to persons entitled to vote in the referendum,”

34Z: Schedule 3, page 89, line 27, at end insert—

“1A

A person who— (a) is entitled to vote in the referendum and in a poll that is taken together with the referendum, (b) is shown in the absent voters list for that poll as voting by post, and (c) is not within entry 1 in this table or entry 1 in the table in sub-paragraph (3).

Address provided in the application that gave rise to the person being included in the absent voters list or, if the person is included in more than one, the address provided in the latest of those applications.”

34AA: Schedule 3, page 89, line 33, after “1” insert “or 1A”

34AB: Schedule 3, page 89, line 34, after “1” insert “or 1A”

34AC: Schedule 3, page 90, line 14, after “1” insert “or 1A”

34AD: Schedule 3, page 90, line 15, after “1” insert “or 1A”

34AE: Schedule 3, page 90, line 29, after “1” insert “or 1A”

34AF: Schedule 3, page 90, line 30, after “1” insert “or 1A”

34AG: Schedule 3, page 90, line 38, at end insert—

“1A

A person who— (a) is entitled to vote in the referendum and in a poll that is taken together with the referendum, (b) is shown in the absent voters list for that poll as voting by proxy, and (c) is not within entry 1 in this table or entry 1 or 1A in the table in sub-paragraph (2).

Proxy appointed for the purposes of that poll or, if there is more than one, the proxy appointed for the poll in respect of which the latest of the person’s applications to vote by proxy was made.”

34AH: Schedule 3, page 90, line 44, after “1” insert “or 1A”

34AJ: Schedule 3, page 90, line 45, after “1” insert “or 1A”

34AK: Schedule 3, page 91, line 14, after “1” insert “or 1A”

34AL: Schedule 3, page 91, line 15, after “1” insert “, 1A”

34AM: Schedule 3, page 91, line 29, after “1” insert “or 1A”

34AN: Schedule 3, page 91, line 30, after “1” insert “, 1A”

34AP: Schedule 3, page 92, line 15, at end insert—
“( ) in relation to a principal who is included in the list of proxies by virtue of entry 1A in that table, the appointment of the person mentioned in column 3 of that entry;”

34AQ: Schedule 3, page 93, line 9, leave out from “paragraph” to the end of line 10 and insert “18(2)(a),”

34AR: Schedule 3, page 93, line 24, after “18(2)” insert “(b), (c) or (d)”

34AS: Schedule 3, page 93, line 45, at end insert—

“1A

A person who— (a) was appointed as mentioned in column 3 of entry 1A in the table in paragraph 16(3) for a person mentioned in column 2 of that entry, and (b) is included in the proxy postal voters list for the poll in respect of which that appointment was made.

Address provided in the proxy’s application to vote by post as proxy in that poll.”

Amendments 34D to 34AS agreed.

Schedule 4 : Application to the referendum of existing provisions

Amendment 34T

Moved by

[Lord Strathclyde]

34T: Schedule 3, page 83, line 9, at end insert—
“( ) in relation to a principal who is included in the list of proxies by virtue of entry 1A in that table, the appointment of the person mentioned in column 3 of that entry;”

Amendment 34T agreed.

Schedule 5 : Combination of polls: England

Amendments 34AU and 34AV

Moved by

[Lord Strathclyde]

34AU: Schedule 5, page 159, line 6, after “entry” insert “1A,”

34AV: Schedule 5, page 159, line 10, after “entry” insert “1A,”

Amendments 34AU and 34AV agreed.

Schedule 6 : Combination of polls: Wales

Amendments 34AW and 34AX

Moved by

[Lord Strathclyde]

34AW: Schedule 6, page 194, line 26, after “entry” insert “1A,”

34AX: Schedule 6, page 194, line 30, after “entry” insert “1A,”

Amendments 34AW and 34AX agreed.

Schedule 7 : Combination of Polls: Scotland

Amendment 35 not moved.

Amendments 36 and 37

Moved by

[Lord Strathclyde]

36: Schedule 7, page 235, line 26, after “entry” insert “1A,”

37: Schedule 7, page 235, line 30, after “entry” insert “1A,”

Amendments 36 and 37 agreed.

Schedule 10 : The alternative vote system: further amendments

Amendment 38

Moved by

[Lord Strathclyde]

38: Schedule 10, page 304, line 24, at end insert—
“Parliamentary Constituencies Act 1986In Schedule 2A to the Parliamentary Constituencies Act 1986 (public hearings about Boundary Commission proposals), in the definition of “qualifying party” in paragraph 9, for “votes” there is substituted “first-preference votes”.”

[Lord Strathclyde]

My Lords, this is a small and technical amendment dealing with the definition of a qualifying party. I beg to move.

[Lord Falconer of Thoroton]

The obvious question is, “What are these for?”, but it is just too late at night to ask that—so don’t even get up to respond.

[Lord Strathclyde]

I cannot resist, because I know that it would be helpful to the noble and learned Lord if I tell him that this amendment is relevant only to Northern Ireland.

Amendment 38 agreed.

Amendment 39

Moved by

[Lord Strathclyde]

39: After Schedule 10, insert the following new Schedule—
“Schedule Section 12 Public hearings about Boundary Commission proposalsThe Schedule referred to in section 12(1A) is as follows—
“Schedule 2ASection 5Public hearings about Boundary Commission proposalsPurpose of hearings The purpose of a public hearing is to enable representations to be made about any of the proposals with which the hearing is concerned.
Number of hearings(1) In relation to any particular report under section 3(1)(a) of this Act—
(a) the Boundary Commission for England shall cause at least two and no more than five public hearings to be held in each English region;(b) the Boundary Commission for Scotland shall cause at least two and no more than five public hearings to be held in Scotland;(c) the Boundary Commission for Wales shall cause at least two and no more than five public hearings to be held in Wales;(d) the Boundary Commission for Northern Ireland shall cause at least two and no more than five public hearings to be held in Northern Ireland.(2) The public hearings in an English region shall be concerned with proposals for that region, and shall between them cover the whole region.
(3) The public hearings in Scotland shall be concerned with proposals for Scotland, and shall between them cover the whole of Scotland.
(4) The public hearings in Wales shall be concerned with proposals for Wales, and shall between them cover the whole of Wales.
(5) The public hearings in Northern Ireland shall be concerned with proposals for Northern Ireland, and shall between them cover the whole of Northern Ireland.
Chair of hearings For each public hearing the Boundary Commission concerned shall appoint a person to chair the hearing.
Length of hearings A public hearing shall be completed within two days.
Procedure at hearings It is for the chair of each public hearing to determine the procedure that is to govern that hearing.
The chair shall make arrangements for a public hearing to begin with an explanation of—
(a) the proposals with which the hearing is concerned; (b) how written representations about the proposals may be made (as mentioned in section 5(1)(a), (4)(b) or (5)(c) of this Act). The chair of a public hearing must allow representations to be made—
(a) by each qualifying party; (b) by any other persons (whether individuals or organisations) considered by the chair to have an interest in any of the proposals with which the hearing is concerned.Paragraph (b) above has effect subject to sub-paragraph (3)(b) below.(2) The chair may restrict the amount of time allowed for representations—
(a) by qualifying parties, and(b) by other persons,and need not allow the same amount to each.(3) The chair may determine—
(a) the order in which representations are made, and (b) if necessary because of shortage of time, which of those wishing to make representations are not allowed to do so,in whatever way the chair decides.(1) The chair may put questions, or allow questions to be put, to a person present at the hearing.
(2) If questions are allowed to be put, the chair may regulate the manner of questioning or restrict the number of questions a person may ask.
InterpretationIn this Schedule—
“the chair” means the person appointed under paragraph 3 above;
“English region” means an electoral region specified in Schedule 1 to the European Parliamentary Elections Act 2002 (ignoring paragraph 2(2) of that Schedule and the references to Gibraltar) as it has effect on the day referred to in rule 5(2) of Schedule 2 to this Act;
“public hearing” means a hearing under section 5(1)(b) of this Act;
“qualifying party” means a party that is registered under Part 2 of the Political Parties, Elections and Referendums Act 2000 and either—
(a) has at least one Member of the House of Commons representing a constituency in the region, or (as the case may be) the part of the United Kingdom, in which the hearing is held, or(b) received at least 10% of the votes cast in that region or part in the most recent parliamentary general election.””

[Lord Strathclyde]

I beg to move.

Amendments 40 to 68 (to Amendment 39) not moved.

Amendment 39 agreed.

House adjourned at 11.03 pm.