Grand Committee
Pensions Bill
(11 years ago)
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The Deputy Chairman of Committees (Baroness McIntosh of Hudnall)
My Lords, I remind the Committee that in the event of a Division in the Chamber, the Committee will adjourn for 10 minutes from the sound of the Division Bell.
Clause 2: Entitlement to state pension at full or reduced rate
Amendment 9
“(c) regulations may provide that spouses or partners accompanying Service personnel abroad shall receive ten additional credited years backdated to 2000.”
Baroness Hollis of Heigham (Lab)
My Lords, this is a very simple and brief amendment about service wives. Service wives without children who accompany their husbands abroad have in the past relied on receiving the 60% married women’s pension as a default. Obviously the option for NI contributions through work does not easily apply if you are abroad, and voluntary NICs become expensive if you are there for a long period.
The married women’s dependency pension is going to disappear. The previous Government recognised the particular difficulties of service wives when in 2010 they introduced credits for spouses or partners accompanying service personnel abroad, so the principle is rightly established. Since then, there has been easement for JSA and ESA entitlement.
However, if you are in your late 30s you may have a decade behind you with no NI cover until the 2010 provisions kicked in. This amendment simply allows backdated credits for, frankly, an arbitrary 10 years which, if he is on a 22-year contract, should allow her sufficient cover, and later sufficient time to make up the rest of her contributory years. I do not know the numbers, and I do not know the cost. I hope the Minister will help me out. There may be a better way to do it—for example, as with the reduced married women’s stamp election, which is being turned into a 60% dependency pension, which retains the service wife’s eligibility for a 60% dependency pension, although the problem there will be split years.
I believe that the Government may have found a way to address the problem—this was a hint I received from the Minister in the other place. I hope so. If it is true, it would be great to know about it; and if it is not, this amendment, or something similar offered by the Government, might do the job. We owe it under the service covenant to support wives who do the right thing, perhaps, by accompanying their husbands abroad and then pay the price by lacking a pension when they retire. I beg to move.
Baroness Dean of Thornton-le-Fylde (Lab)
My Lords, some years ago I was chair of the Armed Forces Pay Review Body and I saw the way that wives were discriminated against. I remember one case. We went to Belize, where the commanding officer had been offered promotion conditional on his wife accompanying him. She was a very successful lawyer in London and they had to make a decision. She decided to give up her career. While she was abroad—a two-year posting—she was unable to contribute to a private pension fund because she was not doing recognised work. She was working as his partner in Belize on behalf of the British people looking after Army wives. She gave up her career and she lost the opportunity of a good private pension here as she could not contribute because she was not working in this country. She was also losing out at the end of her life because she could not contribute to the state pension scheme either. The changes made in 2010 helped, but this Bill will almost send us backwards. The changes made by my Government in 2010 did not fully resolve this issue. That is one case.
Among the officer cadre in all three services you still find wives giving up their job to accompany their husband, and they get a very raw deal. Until recently, other ranks would have gone to Germany for a two-year posting, and they, too, would lose out. Under the Armed Forces covenant and the updated report issued only this week by the noble Lord, Lord Astor, it is taken into account that we should be looking after families. I have no idea what it would cost and I cannot imagine that it would cost an awful lot of money, but maybe the Minister can help us. As my noble friend says, this may not be the way of dealing with the problem, but somehow it has to be recognised that, in bringing in a Bill that has cross-party support and in general terms is certainly advantageous for most, if not all, women, here we have a group who will continue to lose out, despite the changes that are being made. So it is with a deal of pleasure that I support the amendment, and I hope that the Minister will agree to go back and look at the issue. Perhaps he will come up with something that may not use this wording but which recognises the contribution that these women have to make—and, indeed, by which they lose out when they help their husband’s career, because the post requires accompaniment. If that solicitor, going back those few years, had said, “No, I’m not giving up my career”, the husband would have had to refuse that promotion. There are parts of the Armed Forces where the divorce rate is higher than normal. I am not suggesting that this is the only reason, but I think that it is perhaps one of a whole number of reasons, stress and overreach being another couple.
Lord McKenzie of Luton (Lab)
My Lords, I speak briefly in support of my noble friends and the thrust of this amendment. I should like to ask one or two questions. As I understand it, there is currently a class 1 credit going to people in this service category, which helps to build up not only pensions but access to contributory benefits such as JSA and ESA. In respect of the latter, there is also an easement that was introduced in 2011 in respect of the first contribution condition, because for contributory ESA and JSA you need both to pay an amount in a certain period of time and to have sufficient credit. My first question is whether that credit arrangement is going to continue under the new regime and whether the easement will be continued, because that is important, too.
Of course, the credit has to be claimed; it is not automatic. I wonder whether we could do something to address that issue, because we have a group of people here who would qualify only under certain clear conditions, and one would have thought that arrangements for these individuals could somehow be organised centrally, or perhaps by the separate Armed Forces, so that the information goes in directly and there is an automatic credit, rather than people having to claim. I understand that the take-up is limited at the moment, with only 601 applications in 2012-13, or maybe in the previous year. That is not as many as one might have expected. Perhaps we could also have clarification as to who is treated as a member of the Armed Forces for these purposes. I am not sure that the TA or reserves will be included within this.
This issue draws a wider question about crediting national insurance contributions. My understanding, based on some helpful information from the Bill team this morning, is that if, at the moment, you are in a category of benefit or activity that gave rise to a class 1 credit, that would continue post-April 2016. If you are receiving a class 3 benefit for a particular activity or being in a particular position, that would become a class 3 contribution credit also, under the new regime. So nothing has changed in that respect. These things are important, because a class 3 contribution builds up entitlement only to the state pension and bereavement benefits, not to contributory benefits. This gives rise to the broader question of universal credit. At the moment, if you are on JSA or ESA, you would get a class 1 credit. In the world of universal credit, my understanding is that you would get a class 3 credit, which means that you do not build up entitlement thereby to contributory JSA and ESA, which sit outside universal credit.
I apologise for this rather convoluted series of questions, but this very important issue prompts them, and it would be useful to have clarification on them either today or later by correspondence.
Lord Browne of Ladyton (Lab)
My Lords, I am grateful to my noble friend Lady Hollis for tabling the amendment, for the very reason that it allows your Lordships’ Committee to engage in this important issue. As we have already heard, successive Governments have committed to end any disadvantage that armed service causes members of the Armed Forces and their families—a group of people who have come to be known in these circumstances as the service community.
In July 2008, the Government set out to put flesh on the bones of that commitment in a command paper entitled, A Nation's Commitment: Cross-Government Support to our Armed Forces, their Families and Veterans. In pursuit of the ambition of that document, the DWP announced and introduced on 6 April 2010 new rules that allow spouses and civil partners accompanying service personnel serving overseas outside the United Kingdom to be eligible to claim class 1 national insurance credits during such periods.
In certain circumstances, spouses and civil partners may get credits on their national insurance contribution record for state benefit purposes, and as my noble friend Lord McKenzie pointed out, that helps protect their eligibility to a state pension and contribution-based benefits. Application for the credit is made at the end of each accompanied assignment outside the United Kingdom, but there are complications about that. My noble friend is right to say that it has to be claimed. I understood that the services had in place default arrangements to ensure that everyone who could be entitled to make such an application was advised fully of that. Can the Minister elucidate the current situation?
I do not think that one need go into the complications that service abroad generates for service families, but one can imagine that service abroad may mean that the family is split up. For example, some of our troops are based in Germany, or the families may be there but the service member might be serving somewhere else overseas. All of these complications are accommodated. Indeed, circumstances may arise where there is a need to make an application part way through an assignment, and provision is made in the regulations to facilitate that. There is helpfully discretion—and the DWP is to be commended for this—as to the time that an application can be made. It is already provided for to accommodate the lifestyle of the armed services community. Importantly, however, this improved benefit was not made retrospective.
We have already heard from my noble friend Lady Dean’s experience of her engagement with the service community the sort of circumstances that can lead to the need for this provision. At the heart of it, there is a clear and good reason why we need this. Members of our Armed Forces are commanded to work in overseas environments. If they stay in the services, they have no choice where they work, and often they are there for extended tours. Often their spouses and civil partners are unable to accrue a full national insurance contribution record because of that. Fairness demands that they not be disadvantaged by that service in so far as is possible.
When my noble friend Lady Hollis introduced this amendment she described it as simple, but it has become slightly more complicated in the debate. I am not seeking to complicate it because it is a relatively simple policy issue, although it may have complex consequences. She implied that the trend would suffer regression as a consequence of implementation of the Bill. My noble friend Lady Dean specifically said that the Bill would have a consequence of regression in relation to the position of service wives in particular. It is important for the Minister to address that position. If it is indeed the case that the direction of travel is being regressed as a consequence of the Bill, that needs to be identified. I am sure that all parties, including the coalition parties in the Government, would wish to deal with that situation in the context of this Bill. I do not think that there will be any division, in terms of policy, in relation to ambition here.
Unfortunately, when the change was made in 2010, it was realised that this was a “start”. My noble friend Lord McKenzie has identified, with his characteristic care in these matters, that there has already been a minor change in relation to this provision to improve it. Indeed, the coalition Government are to be congratulated: they have built on the work of the previous Government in pursuing the commitment of “no disadvantage” which is at the heart of the military covenant. In May 2011 they published the Armed Forces covenant. In paragraph 5 on page 7, under the heading “Scope of Covenant”, it states:
“Members of the Armed Forces community should have the same access to benefits as any UK citizen”.
Page 33 of the guidance document that accompanies the covenant, The Armed Forces Covenant: Today and Tomorrow, states that,
“the Government has no plans to make further adjustments”,
to the benefits rules. Importantly, however, it goes on to say that they will,
“keep this issue under review”.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, the amendment tabled by the noble Baroness, Lady Hollis, concerns the position of spouses or civil partners of service personnel who accompany them on overseas postings, a group in which I know the noble Baroness has a keen interest. The amendment would enable people in this position to be credited with national insurance contributions for the full 10 tax years between 2000-01 and 2009-10.
We have already taken steps to shore up the contribution records of this group. In 2010, arrangements were put in place to allow the spouses of Armed Forces personnel to gain a national insurance credit for time spent accompanying their spouse or civil partner on postings abroad. These credits are awarded for tax years from 2010-11 and provide entitlement to all contributory benefits, including the state pension. Their main purpose was to provide access to contributory working-age benefits to spouses and partners who might have difficulty in finding employment when they return home. I confirm to the noble Lord, Lord McKenzie, that no changes are planned to those crediting arrangements.
The amendment would enable a person to meet the minimum qualifying period for the new state pension and therefore qualify for a reduced single-tier pension. However, if we were to combine the qualifying years that could be gained under the 2010 credits with those available under this amendment, a person could be credited with up to 16 qualifying years.
We should caution that the existing arrangements incur administrative costs for HM Revenue and Customs and the Ministry of Defence. Applications for the existing national insurance credits need to be validated by service welfare officers and processed by HMRC. Similar arrangements would need to be put in place for these new credits, but that would involve more onerous administration because any validation would relate to periods some years past.
The noble Lord, Lord Browne, made a point about difficulties with take-up of the current credits. We are not aware of any difficulties but, on the back of his concern, we will check with the MoD on that.
Currently, around 500 to 600 people a year have been awarded the credits that have been in place since 2010, but it is unclear how many are likely to benefit for pension purposes from the noble Baroness’s proposed retrospection measure.
Baroness Hollis of Heigham
The Minister obviously agrees with my noble friend’s figure of 500 to 600 people, but how many eligible non-recipients does he think there may be? In other words, what would be the total population, of which 500 to 600 are claiming? Does he know the answer to that? I certainly do not.
Lord Freud
Unless I am rapidly informed otherwise, I do not think that we know either at this stage. It is likely that most of the people in this group will have been at work or be covered by other credits during the past periods covered by the amendment. Over the course of a 50-year working life, we would expect many to build the 35 qualifying years to qualify for the full single-tier pension in their own right. That is where this problem lies. That said, I understand the concerns of the noble Baroness and would not want to ignore the position of this group of people if they have genuine difficulties in building the qualifying years that they need.
The Committee will understand the Government’s general concerns about going back in time to treat particular groups in different ways, because there are always issues of fairness and parity when you do that—the noble Lord, Lord McKenzie, talked about some of the relationships with people moving into UC and so forth—and that is the case even though special consideration is reserved for the Armed Forces and their families. However, turning to the point raised particularly by the noble Baroness, Lady Dean, and the noble Lord, Lord Browne, we will consider this further.
I have to warn noble Lords that this is a difficult matter, so I am not promising that anything will come out of that consideration. Sometimes, in saying that, one suggests that there is a solution, but we are finding this quite difficult. We are doing that exercise and I am sure—
Baroness Hollis of Heigham
Why is it difficult? I understand that when most people in civvy life claim X years ago to have done Y it is very hard to check that, but the one thing that the MoD will have is records. So why is it so difficult?
Lord Freud
I will be in a much better position to explain the difficulties in a little while. So, rather than presuming on this, I would say that we are considering it. It is difficult, and I am sure that we will have the opportunity to return to it on Report.
Lord Browne of Ladyton
I am extremely grateful to the Minister for giving way at this stage, and I am not ungrateful to him for his undertaking to consider this and report back. That is the most that we could have expected. However, I ask him to consider two things. First, there is certainty that the Ministry of Defence will have records—there is no question about that. Secondly, I direct his attention back to the provision in the guidance note issued on the covenant, in which the Government promised to keep the issue of access to benefits under review. It might be helpful if the Minister explored why that promise was made and what was in mind at that time. Clearly some consideration was given to it, which instructed that promise. Surely it was not just a cosmetic promise, with nobody having any idea what could possibly be offered in the future.
Lord Freud
Let me take the two issues there. It is not necessarily the case that the MoD will have records on this, especially of an accompanying partner. That is clearly one of the issues. I think what was envisaged was exactly to look at this kind of thing and other benefits, which is exactly what we are doing. We are, as I say, treating it very seriously, but that is not the same as being able to say that there is a ready solution. We will come back to this issue.
Lord McKenzie of Luton
I am not sure whether the Minister confirmed that, whatever happens with the impact of this amendment, there is no suggestion that the existing arrangements both in respect of the crediting and the easement of the first contribution condition are not going to continue post-April 2016.
Lord Freud
I am pleased to confirm that the crediting and the easement will continue post-2016.
Lord Browne of Ladyton
Can the Minister also confirm whether the Bill, if it becomes law as drafted, will have a regressive effect on the position of service spouses or civil partners, as is believed to be the case by at least one of my noble friends and suspected by another, and whether that will in fact be the case when the review is conducted?
Lord Freud
I will not answer what could in practice be a huge review of everything to make a hard statement on that, but I will write on that point. Having finished, I hope, all the questions asked, I ask the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
My Lords, I thought this was short, sweet and simple. It is now long and less simple but still very sweet, in the sense that I think there is consensus all round the Committee. I welcome that and I am very grateful to the Minister for his responsiveness to the concerns that we raised. Clearly this amendment was a peg for the discussion that we have had. My noble friend Lady Dean is highly knowledgeable about service families and speaks from very real experience. I am very glad that my noble friend Lord McKenzie was able to get on record from the Minister what the Government’s intentions were about easement, which was very useful. I am still slightly surprised that we did not have this information about the eligible population base for claiming credits since 2010-11 and how many have actually claimed. Is it 500 of 5,000 or 500 of 700? We do not know and I would have expected that information, but I am sure that the Minister will write to us with that because it gives us some sense of how problematic it is when you rely on people to claim, as we have experienced with means-tested benefits for pensioners, for example.
Lord Freud
It is a little early to get into the practicalities, but I am sure that we can arrange, one way or the other —either from a spontaneous governmental unleashing of information or in response to an amendment —to get the latest information on the record at Report.
Baroness Hollis of Heigham
I thank the noble Lord. What I would love to see—I know that this has been done in the past because I have done it—is an amendment jointly in the names of my noble friend Lord Browne and the Minister, which will amaze and command total support. In that context, I ask leave to withdraw the amendment.
Baroness Turner of Camden
Baroness Turner of Camden (Lab)
My Lords, this amendment is about the level of the full rate of the single state pension. As we know, the Bill states that it will be specified in regulations and, as we know, the Government propose an entitlement of about £144 in 2016. The amendment would raise the level by about £40. Although that is calculated by reference to 40 qualifying years under the current system, it still represents only 80% of working age years and an earnings level which will by then be about £15,000 per annum. Only at that level would the single state pension make a genuine improvement to the state pension. That would address the concerns of those many millions of current employees with contracted-in careers who will see their state benefit reduced under the current proposals.
As I said at our previous sitting, I have had discussions with the pensions officer of Unite, as a result of which I have tabled some amendments, including this one. I am told that Unite policy is for the restoration of an earnings-related pension to supplement a higher level of basic state pension, as it is felt that that will provide a better foundation for employees in company and private pensions. I explained to the officer with whom I had discussions that the single state pension is the model before us which we have to discuss today but, on the other hand, it is believed that it has merit only if it is set at a realistic level. The amendment before the Committee is intended at least to produce a discussion about what a realistic level would be. I am not alone in suggesting that we need to look at the realistic level, because my noble friend Lord Whitty has tabled a similar amendment, Amendment 17—a very well worded amendment, in my view—which also proposes 40 qualifying years and requires a realistic assessment of what the benefit should ultimately be.
Lord Whitty (Lab)
My Lords, as my noble friend said, I have an amendment which is very similar to hers. It is worded slightly differently and in my view, and with no disrespect to my noble friend, it is in a better place—in other words, it relates to Clause 3 rather than Clause 2. However, the central issue is that for a lot of people who have worked most of their working life and have paid into the earnings-related pension in its various guises over that period, a figure of £144 or thereabouts will be a significant drop compared with what they might otherwise have expected.
If we are to have a scheme that is going to achieve a reasonable degree of support and consensus across the workforce and among potential and future pensioners, we need to pitch it at a level where existing workers do not miss out. I think that most of us are reasonably convinced that a single-tier answer is the right one, but it has to be structured on the basis of people’s existing expectations. The exact formula that we have in these amendments may not be acceptable to the Government but it needs to be a lot closer to current expectations for this reform to receive the kind of support that the Government are hoping for. At the moment, I know that £144 is, in a sense, a guess—or, if I am being nice to the Government, an informed guess—but it has raised alarm bells, certainly among the trade unions and those who, on pension schemes, represent the workforce who have hoped for more from the earnings-related element of the state pension.
I do not expect the Government to accept these amendments but I hope that they take the issue seriously before we reach the final stages of the Bill, and certainly in the regulations that are coming forward to define the level of the new single-tier pension.
Baroness Donaghy (Lab)
I support my noble friends Lady Turner and Lord Whitty. The pension letter that I receive reads a bit like a history book. Having completed the 40 years, I have a bit of graduated pension, some SERPS and some S2P. Obviously it all adds up penny by penny but, as I said at Second Reading, one of my concerns is that simplicity is not of itself the best objective. If the amount is set too low, the middle earners will not buy in to the new system. Any system that does not have a buy-in from the middle earners will, in the future, give rise to enormous political pressure from those people for some form of opting out, which I do not believe anyone in this room wants.
When we looked at all the charts at the briefing, we found the crossover point—which I think was in about 2040—before people start losing out. The discussion that took place on Monday about net versus gross may well place that crossover point a lot earlier, and people will see that they are going to lose out much earlier. They will then make a judgment about whether this flat rate is any good and, again, either there will be pressure to opt out or there will be pressure—dare I say it?—for SERPS, graduated pensions or S2P in about 20 to 30 years’ time. Therefore, this gives rise to very important issues.
I know that we are going to have another discussion about net versus gross when we come to later amendments, but I want to make the point that this is not a straightforward issue. I realise that there is cross-party consent about the flat rate but I am slightly sceptical about its long-term holding, although the Minister has said very confidently that it will last for more than 10 years. I hope that he is right, because the last thing I want to see is Governments tinkering with this. As I said, I do not want my grandchildren to have a history lesson in 40 years’ time in which they are reading about the different names for the pension.
Lord McKenzie of Luton
My Lords, perhaps I may raise a point about the level of the single-tier pension, and couple it with a reference to passported benefits in the impact assessment. I looked at the assessment again this morning and there was a point that I had not identified, or did not understand before. This is to do with the interaction with the guarantee credit. This passage is about passported benefits, but it says:
“Receipt of Guarantee Credit passports pensioners to the full amount of Housing Benefit and Council Tax Benefit, if the pensioner is eligible for these benefits. There is little reduction in Guarantee Credit eligibility resulting from the single tier”—
about 1%. I thought that the whole thrust of this simplicity as a base for people to be able to make judgments about saving was that, in a sense, it floated people at a level which was above the guarantee credit. Here we are saying that only 1% of people who get STP will not be affected by guarantee credit in the future. Can the Minister explain that to me, please?
Lord Browne of Ladyton
My Lords, by tabling and moving these two amendments my noble friends have done the Committee in general and the Minister in particular a favour by creating an opportunity for him to expand on what his right honourable friend the Pensions Minister was able to tell the House of Commons about Clause 3. Despite the fact that my noble friend Lady Turner’s amendment is to Clause 2, I think that most of the issues raised can be dealt with within the context of Clause 3.
The provisions of Clause 3 set out a mechanism for calculating the full rate and the reduced rate of the single-tier pension for those whose contribution record commences post 6 April 2016. As we have already established, that does not actually set out in monetary terms the full rate; and as much of Monday’s debate made clear, that is at the root of some nervousness, not to say anxiety—or, on the other side, a possibly optimistic expectation—on the part of future pensioners, a state which, rightly, we anticipate will heighten as we approach these provisions’ implementation date.
Many are concerned as to what the single rate will be, whether they will be worse off as a consequence of change versus their expectations of the continuation of the status quo, and whether the actual rate will keep the new single-tier pension rate above the level of the pension credit sufficiently for it to prove an incentive to save, which is the relevance of my noble friend Lord McKenzie’s point, based on his characteristically forensic examination of the paperwork that is before us, and picking up this key point which instructed much of the debate in the House of Commons on these matters: the degree to which a prime objective of this policy—that is, to reduce in the longer term dependence on means-testing—will in fact be achieved by the full implementation. In addition, people need some predictability of future pension arrangements to enable them to make appropriate decisions to prepare for their retirement, confident that they will live up to society’s expectations of them now and avoid financial difficulties in life and a life of poverty. My noble friend Lord Whitty described the central issue as whether there could be certainty that this figure would not disappoint people’s expectation to such a point that they would fail to support the policy. By the device of these amendments, my noble friends have created an opportunity for the Minister to engage with these challenges.
Lord Freud
My Lords, the amendments relate to the single-tier pension. I have to confirm that the noble Lord, Lord Whitty, is in a better place, but I think we all knew that. I covered quite a lot of this in detail on Monday, so I will keep my comments relatively brief.
The amendments describe a minimum entitlement at a level broadly equivalent to the state pension entitlement that a person with 40 qualifying years could receive under the current scheme through their basic state pension and the additional state pension. For someone on low earnings, that equates to around £180 a week. That is the question that the noble Lord, Lord Browne, was seeking an answer to.
I fully appreciate the sentiment behind wanting to set the rate higher than the illustrative rate of £144, which is from last year's effective equivalent rate. Indeed, under the Bill, future Governments will be free to make above-earnings ad hoc increases in the light of economic conditions at the time, but setting a starting rate that cannot be afforded within the current spending projections would instead force the hand of future Governments, siphoning off greater and greater amounts of GDP into pensions spending. Setting a minimum starting level of £180 a week would add a further £12 billion in real terms to the single-tier costs by 2030—that is a per annum figure. Over the longer term, it would increase annual pension expenditure by another two percentage points of GDP in 2060 and squeeze out other spending pressures from an ageing society.
Sustainability is a core principle of the reforms. Our proposals work within projected expenditure on the current system, and our current modelling, including the illustrative start rate of £144, stays within 1% of current expenditure until the late 2030s.
During Second Reading, much was made of the consensus following the Pensions Commission report, which recommended that the state move away from providing earnings-related pensions. I was pleased to see that the noble Baroness, Lady Donaghy, had moved her scepticism out from 10 years to 30 years in the space of a few weeks, so there is hope that we may move her to the 100-year objective. To this end, under previous reforms, the earnings-relation provided by the additional state pension was effectively being squeezed out of the system, moving over time to a flat-rate state pension but, as many respondents to the Green Paper pointed out, that was not doing enough to support private saving and underpin automatic enrolment.
I have said this before, so I will go on record twice on this. These reforms are not about increasing pensions expenditure. They are not about reducing it. They are about spending the money differently, so that we can move to a flat-rate pension quickly to tackle an urgent problem of undersaving.
To respond to the pointed question of the noble Lord, Lord McKenzie, about why the single tier does not lift many clear of the guarantee credit, that is largely because many people on the guarantee credit have a higher standard minimum guarantee. About 37% are entitled to one or more additional amounts—for instance, for disability—and we do not want to remove those additional amounts.
Lord McKenzie of Luton
I understand that point, but what does that do to the argument that this is all about having a very clear platform so that people know that it will pay to save and that they will be above means-tested benefit levels? On the basis of this information and what the Minister just said, 99% of people who will get STP will still be eligible for the guarantee credit. Indeed, annexe C to the impact assessment states that total spending on the guarantee credit and the savings credit will actually go up by the end of the period in the tabulation. That does not make sense to me. I understand that it is the additions that mean that guarantee credit is above the level of STP, but that seems totally to undermine the whole thrust of the rationale of the Bill.
Lord Freud
Despite the guarantee credit not changing a lot, there is roughly a halving of the overall reliance on means-tested benefits, so there is a move, but I acknowledge that it is not by any means a complete elimination of the use of means-tested benefits.
Baroness Sherlock
I think the Minister may be offering a rather dramatic understatement. It is not an elimination; it is a change of 1%. As we established in the Committee on Monday, most of the reduction in means-testing is related to the abolition of the savings credit, which is removing access to something for people. If my noble friend is right, he has hit on something quite extraordinary, which is that despite the Government saying that the STP will be pitched at a level above the means-tested level for the pension credit, it is in fact, according to his modelling, pitched at a level that will not lift anyone but the 1% who get it out of means-testing. Surely the whole argument collapses at that point.
Lord Freud
My Lords, the guarantee credit does go down in absolute terms. It is already a small percentage of the total. When one gets into arguments about data it gets very confusing, so I will set this issue out very clearly. As I understand it, the issue is about the number of people on means-testing as we look forward into the single tier over the decades. The subsidiary question behind that is what it does to the incentive to save. I will address those two questions with some proper data in a letter rather than trying to do so off the top of my head when I am not absolutely confident about providing exactly the right information.
The start rate of the full single-tier pension should not be viewed in isolation but in combination with the private pension income that some 6 million to 9 million people will gain from having been automatically enrolled in a workplace pension. An inflated start would be unaffordable and unsustainable, and I ask the noble Baroness to withdraw her amendment.
Baroness Sherlock
I am very grateful to the Minister for his offer to write to all Members of the Committee. Will he prioritise that letter and write it before the Committee next sits, rather than waiting until we come back at a later stage of the Bill?
Lord Freud
Yes; I am trying to get letters out at great speed. I am expecting to sign letters relating to the questions from Monday later today in order to get them to Members of the Committee as quickly as possible, so that is a three-day turnaround. I will aim to do something rapidly for today as well.
Baroness Turner of Camden
I thank all noble Lords who have contributed to this debate, which I found extremely interesting. My noble friend Lord Whitty was quite right that this amendment is in the wrong place and should have been on Clause 3 rather than Clause 2. However, it has enabled us to have a discussion about what the full rate of the single state pension ought to be. A number of noble Lords expressed a view that indicates that it is certainly worth considering, although I am not surprised that the Minister’s argument relied heavily on the cost if we got what we wanted, which is a great deal more than I think most people contemplated.
Even so, there is a case for looking again at the level that is being paid, because a lot of people will rely on this. They rely on the basic state pension—they do now—and few of them will have savings or access to a decent pension provided by an employer, although we hope that the new arrangements with regard to automatic enrolment in the new pension schemes will enable people to save. That needs to be looked at, and we will have an opportunity to do so later in the passage of the Bill. In the mean time, I thank all noble Lords for their contribution, and I look forward to hearing what the Minister has to say, particularly about the cost. I beg leave to withdraw the amendment.
“( ) Regulations may provide for circumstances in which a person may opt to have a year treated as a qualifying year if by aggregating income from two or more jobs, that person’s earnings is equal to or greater than the earnings factor for that year.”
Baroness Hollis of Heigham
My Lords, this is an amendment about multiple jobs below the lower earnings limit, LEL. There are about 40,000 women and 10,000 men who we know about with two or more jobs each, each of which is below the LEL but which, aggregated, bring them above the LEL and should, I argue, bring them into NI and the state pension.
Who are they? Let me tell some of their stories: all people whom I have met, talked to and canvassed. They are rural women in their 40s with their youngest child over 12, who are patching together what we grandly call a portfolio, the components of which vary over the seasons in rural Norfolk. It might be six hours caravan or boat cleaning on the Saturday—handover day—during the summer, three small house-cleaning jobs during the week for the affluent incomer retirees on the northern coast, some mushroom or fruit picking for a few weeks and, during the winter, two or three evenings working at the nearest pub or newsagent.
One woman averages about 20 hours paid work a week, most of it at minimum wage—as much as she can manage given the danger of five to 10 hours a week travel time between jobs. She has no private car, there is extremely limited public transport in rural counties and she has teenage children to care for and feed. In any case, there are few if any decent 20-hour part-time single jobs, let alone full-time jobs, in rural Norfolk for unskilled middle-aged women without their own transport and with a family to care for. This could be her life for 10 or even 20 years.
Half the jobs in Norfolk, for example, are located in my city of Norwich, which is a 30-mile to 40-mile bus ride away for many people living near the coast, and buses are few. She will never be able to access those jobs, with their better pay and hours. She needs and deserves a pension, and if she cannot build one for herself she will not—this is key—be able to rely in future on any from her husband through the married women’s 60% pension.
A second person whom I met was a divorced Norwich woman in her 50s working as a receptionist for an alternative medicine practice, who told me that her employer would not allow her to work more than 15 hours a week, although she would like to because she enjoys the job, so that he can avoid paying national insurance. He pays three women each for 15 hours a week—because he works a long week—in order to avoid paying NI on any of them. At the time, she was topping up her income, although not her eligibility for BSP, by working extra hours in a florist’s shop. She was desperately worried about her pension situation but did not see what she could do about it.
Another woman’s work patterns are shaped by her caring responsibilities. She does not qualify for carer’s credit, but she fits some pieces of paid work around supporting three elderly relatives in my former ward, plus some cleaning and working in the local launderette.
All those women are working sufficient hours to bring them into the NI system for a pension but because they cannot aggregate them, they do not qualify. When some of us campaigned on this in the past, we were told, first, that you could not reasonably divvy up the employers’ national insurance if there were two or three such jobs, secondly, that the women would not want to pay class 1 contributions and that, in any case, they were few in number, only 15,000, and they were passing through. We were next told that it was a temporary problem for them and they had plenty of time to make up their missing years; finally we were told that they could always buy voluntary NICs and, if all else failed, there was pension credit.
The Government’s supporting papers rebut every one of those arguments and show them to be wrong. We now know that we have 50,000, not 20,000 people caught in this dilemma; two or three times as many. If we do not bring them into NI, they may well cost almost as much on pension credit down the line. That keeps more people in the means-tested legacy system, which we surely want to avoid. The second argument run by the Minister in the other place was that this was a temporary period of their lives. We simply do not know. The Minister is guessing. Some, certainly, may become entitled to a credit or move house into, say, the city of Norwich, and thus have a wider choice of jobs, and as a result may be able to come into NI, but others are stuck. Their patchwork life goes on for years because that is all that is available. We do not have the statistics for them, but 40% of the self-employed have been self-employed for more than 10 years. They include some of the poorest self-employed. The women I have described likewise tell me that they expect their position to continue for many years, often because they need the flexibility that it offers around their caring responsibilities or because they lack realistic alternatives, especially in more rural areas.
They can certainly buy voluntary NICs but, frankly, at £13 a week that is not usually feasible or realistic. It is five times more than we expect a self-employed man to pay. Bluntly, she probably cannot afford it. Is it fair? If she were working those 20 hours on the minimum wage for a single employer, she would get her national insurance but she would be below the PTT and probably would not pay a penny. She would come into national insurance without paying because she would come between the two thresholds. If she were on JSA or a disability benefit and not working a single hour, she would, again, get her NI and not pay a penny. Where she is conventionally self-employed, she will pay £2.70 a week and get NI. If she is employed with one employer, she will pay nothing and get her NI. If she is unemployed, she will pay nothing and get her NI, but because she works 20 hours a week, splintered, she will get nothing at all. Perhaps someone can explain to me why that is fair.
I accept that it has been hard to find a way through in the past, even for those who were sympathetic and did not dismiss mini-jobs as pin money. The Minister has never done that when we have been talking about UC and I am grateful to him. The Bill—bless it—gives us a way through. At last, it is now very simple. HMRC—and the Minister will know infinitely more about this than I do—is building real-time information. Rightly, we are giving the new state pension to all those who are self-employed: 4 million self-employed people will, I understand, gain significantly. Surely we are not going to say to them that we can afford to help 4 million self-employed people, largely men, but not 40,000 people with mini-jobs, mainly women.
Let us now class this woman as self-employed. If she pays the flat rate £2.70 a week, she can, by choice, buy herself a pension for the current year and opt in. We can discuss any backdating rules on retrospective purchase. Equally, we could, say, by regulations, agree that by working a certain number of hours—say, 16 or even 20—she conforms to JSA work search conditionality. She could, if necessary, discuss this with Jobcentre Plus—I have no problem with that—so that she meets the threshold. However, it would be absurd to say that to get an NI contribution she has to stop working 20 hours a week in real, convenient jobs and go and work in Poundland as part of an internship to meet work search conditionality. She is already doing 20 hours a week in work that fits around her caring responsibilities. In this way, she will qualify for a credit just as does someone on JSA who is not working at all.
UC may or may not be available to help her in due course. We do not know how many people it would apply to and by what route. In any case, it would be wrong to rely on it, given the current delays in rolling it out. Realistically, it may be several years beyond April 2016, although not too many, I hope—all years in which she continues to miss out. What number of women in a patch of mini-jobs does the Minister expect to still be unable to build their NI by 2020?
I want to make one final point. I have been describing older women, family women and often rural women, but I ask noble Lords to look around them. I think—it is only an estimate—that 5 million people are estimated to be on zero-hours contracts with uncertain hours, largely in the service sector and usually on the minimum wage. They work perhaps 10 hours one week and 20 the next, and they cannot run a regular job, as we understand the phrase, alongside it, as they always have to be available, so this involves evening and weekend top-ups. It is a major and growing problem in my view. Some may, over the year with one employer, come above the LEL. How many, I do not know. If the Minister has figures, that would be good. However, others on zero-hours contracts will not do that.
Employers love such a flexible, low-paid, semi-casualised labour force—what is not to like for them?—with staff patching together a living wage as best they can around their zero-hours contracts. The price paid is in tax credits from us. There is a burgeoning tax credit bill which, despite the wildly erroneous statements of the Secretary of State, does not come from those who do not get up in the morning but from the working poor, many of whom are on these contracts, as the Minister and this Committee know very well. That cost is paid by us in tax credits and by the worker in poverty, low wages and insecurity in their working lives, and poverty, insecurity and a relatively low pension in their retirement years.
The Bill gives us a way through, either by classifying them as self-employed or possibly by saying that they now conform to JSA conditionality. There are other ways I can think of by which we can do this, but this is a decent opportunity to rectify a problem that has gone on for far too long—that women who are doing their best for their family while contributing to the economy find themselves penalised. We can rectify that. It could be the decent and right thing to do, as I hope noble Lords will agree. I beg to move.
Baroness Drake (Lab)
My Lords, I support Amendment 11. It is always a great pleasure to follow my noble friend Lady Hollis. The disadvantage is that she mobilises the argument so compellingly that one feels rather depleted before one even starts to come in to support her. I will try, in a slightly depleted way, to give support on the very important issue which she has identified.
In the numerous iterative debates on the UK pension system in recent times certain criteria key to the design of that system and appraising outcomes have held constant. One of these has been that it must work for women. We cannot wholeheartedly say yes to that, notwithstanding the reforms that we have seen in the Bill. Clearly there is still room for improvement, and two weaknesses are frequently referred to. First, the level of the earnings trigger set for auto-enrolment is too high and excludes too many part-time workers, mainly women. Secondly, women who undertake mini-jobs—each of which delivers earnings below the lower earnings limit of £5,668, the access point for the national insurance system, but which if added together would put them above that level—do not have access to the state pension system under the contributory system because there is no provision for people with mini-jobs to aggregate their earnings in a way that would allow them to enter the NI system.
If we strip that back to its essentials, a woman with two part-time jobs, earning £100 per week from each job, will not be accruing pension rights unless she is covered by some alternative credit arrangement. Someone who may be working fewer hours but earning £110 per week from one job would accrue pension rights. However, £100 equals about 16 hours on the national minimum wage, so if one was doing more than one mini-job, one would be doing a lot more than 16 hours. Yet in the way that the system operates, they are not allowed access to the NI system.
As my noble friend Lady Hollis so clearly explained, this amendment would allow women and men to aggregate income from two or more mini-jobs and opt to have a year treated as a qualifying year for state pension purposes, and to pay national insurance as though they were self-employed. Having said that, I note from the Peers’ briefing pack that the rate of national insurance payable by the self-employed will be a matter for the Government to decide closer to implementation. If the Minister is able to give us indications of the Government’s thinking on that, which would go to the efficiency of the solution, that would be helpful.
As my noble friend confirmed, the DWP analysis found in 2012-13 that 50,000 people—40,000 women and 10,000 men—had two jobs with a combined income above the lower earnings limit, but were not accruing qualifying years towards their pension. Those may be relatively modest numbers—although the real figure may be higher, given that these things are difficult to measure. However, fairness is not simply a function of the number of people affected, because the disadvantage for these people is very real. As my noble friend Lady Hollis pointed out, the changes in the contemporary nature of the labour market may indeed increase the incidence of what the noble Baroness refers to as a “portfolio of mini-jobs”. We are increasingly seeing an intensity of flexibility requirements within contracts when it comes to the hours of work that employers want in any one week. Certainly, therefore, we need an NI system and a state system able to reflect the developments in the labour market so that it stays fair for people who are working.
Lord McKenzie of Luton
I hesitate to follow those two powerful speeches, but I wanted to ask the Minister a question around RTI. It is understood that, so long as an employer has a PAYE system, RTI requires reporting of all earnings whether or not the individuals are earning each week at a rate in excess of the LEL. That would not apply to an employer where all employees were below the threshold and nobody was issued with a tax code. We are now in a position whereby, at least in theory, HMRC has within its system details of earnings per paid period of each employee with each employer. Even if that is not the basis of a calculation, it would at least provide a basis on which individual claims might be verified. That seems a potential change that ought to help with this important issue.
Baroness Dean of Thornton-le-Fylde
My Lords, I shall not detain the Committee long except to give my support to this. It is quite interesting that the changes that HMRC has carried out actually help this particular argument. The situation as it stands is completely counterintuitive to what the Government are trying to achieve, which is that we all save while we are working so that when we retire we have built up a state pension. If people do not have a state pension, they will be reliant on welfare benefits, or whatever the Government of the day decide. So it is a matter of independence.
My noble friend Lady Drake is so right: women find it offensive that they are excluded from contributing when they are able to towards their own pension. I said “women” deliberately, because the nature of work today will change that argument. Since the recession, we have seen more and more men also working part time. So what has been traditionally an argument on equality for women is being diluted by the nature of work in the country today. The argument that we are putting forward is not just for women—it is for citizens who may, by force of circumstance or choice, have more than one job.
The Inland Revenue has no problem in finding solutions to quite complex issues when it comes to collecting tax, and this goes hand in hand with that. Citing the excuse or reason that it is very complex and impossible to do is wearing very thin. Given the remit to do it, I am sure that the Revenue would have to find a way through. The issue is not going to go away; it will be raised at every opportunity, and it is one that runs four-square with what the Bill is trying to achieve, which is for us all to contribute to a state pension while we are working.
Lord Browne of Ladyton
My Lords, in engaging with this issue, your Lordships’ Committee has had the benefit of comprehensive speeches by my noble friend Lady Hollis and, despite her reluctance, my noble friend Lady Drake. Between them they have demonstrated a level of adequacy on the detail of this which, for the rest of us, makes her feeling on following our noble friend Lady Hollis pale into insignificance.
In the interest of brevity I intend to ignore a substantial number of the notes that I have before me and engage with just two issues in order to focus the Minister’s mind on them. I shall make these two points because we also have the benefit of the Government’s position. It is summed up in one sentence, which is that addressing this issue by combining hours in some way addresses a problem which is a perception rather than a reality. That is not a direct quote, but it is what the Pensions Minister said in the House of Commons. That argument relies on all those elements that my noble friend Lady Hollis articulated. I have a list of them here which is presented in a slightly different way.
At the heart of them, there are two arguments. The first is that this is a temporary phenomenon, often coming at the end of a working life, and as one will get a pension for 35 years’ contributions over a working life of about 50 years, the better option for most people is not to pay national insurance. It was argued that at present many of these people are not paying insurance and would not thank the Government for requiring them to do so because no one volunteers to pay tax. If that is true, it is a powerful argument.
The other argument is that the Government’s estimate is that only in the order of 50,000 people are in this position, that that number has grown only slightly recently and that, in any event, one in five of them may be on national insurance credits as a result of claiming universal credit. If that is true, that is also a powerful argument. It does not undermine all the arguments that my noble friends have made, but it is powerful.
I want to address both arguments. Of course it is difficult to challenge them because the data do not exist, but we all live in this world. My sense is that large numbers of people working two or more low-earning jobs, many of them on zero-hours contracts, is a phenomenon that is growing throughout the country. That is my experience of living in the United Kingdom and of travelling, because of where I live for parts of the week, across two very distinct communities. I see it growing in both communities that I have contact with.
In fact, I believe that this is a strong and growing characteristic of the modern UK labour market. It is at the heart of the flexibility that has allowed the UK labour market to be able to maintain and grow jobs in circumstances where one would intuitively have expected unemployment to have increased significantly more because of recession. It is a part of the flexibility of the labour market that, in a sense, we celebrate, and spent a period trying to get other countries to follow.
My sense is that this is much greater, and I shall share this short anecdote because it is instructive about how it is affecting people in the communities in which we live. On my way home from our debates on Monday, I overheard a conversation among three young people in a very quiet overground train. I sometimes find it difficult to estimate age, but they were all in their mid-20s. They were all coming back from employment with one employer, which was a mini-job. From their conversation, it was clear that they had, by my reckoning, seven jobs among them at least. Each of them had at least three jobs. Most importantly, they had all had the benefit of a tertiary level education. I could not guarantee that they were all graduates, but at least two of them were, from what they said, and the third also had the benefit of a tertiary level education. These were not your traditional B&Q employees at the end of their life. They were well educated young people coming into a labour market where that was the expectation. That fundamentally challenges the idea that this is a temporary phenomenon and that it can be dismissed, as it has in the past.
Lord Freud
I thank the noble Baroness, Lady Hollis, for tabling this amendment on an issue which I know is of great concern to her: access to contributory state benefits, including pensions, for those who have more than one job but do not earn above the national insurance low earnings limit in any one of them.
We have debated this issue over the years. She will be aware that I have equal concern about this issue. Before we get into the specifics, we have a policy to seize this issue head-on, and that is through universal credit. When you look at the debate this afternoon when we talked about the present system—JSA, tax credits, the problems of going through—universal credit basically combines in-work JSA where you are credited for your pension, and in-work benefits. Therefore, the low paid will be credited in the same way as people on JSA are currently credited. Our estimate is that 800,000 more people will be credited as a result of the adoption of universal credit. Noble Lords may well say that universal credit is taking its time coming in: one or two noble Lords have made that point to me. I can only say that we are going as fast as possible. We are rolling it out.
That is the fundamental solution. Any of the adjustments suggested today would be time-consuming changes to make. One has to take a strategic decision. Does one have a system that sweeps away these problems, or does one make itsy-bitsy changes with HMRC here or there? They all take time. I think it was the noble Baroness, Lady Dean, who said that HMRC is slow to make adjustments, but they are genuinely difficult to do. I have been involved in quite a few government change programmes now and even relatively modest changes are time-consuming and soak up the energy of the people doing them.
The question asked by the noble Lord, Lord McKenzie, about cutting into the RTI system ahead of universal credit is an interesting one. Clearly, we are looking very closely at how we use RTI in different ways. One of the issues in terms of a comprehensive solution for this relatively small group is that we have to be sure they are on the PAYE system in order to use it as a comprehensive cut through. My instinct—again, data are short here—is that this is not a comprehensive solution in the same way as catching them at the UC level. If you are not on PAYE, you can self-declare and get the system to work. I do not think that RTI is the solution.
As noble Lords have pointed out, the numbers are relatively small—some 50,000—but just because the numbers are small does not mean that we should not worry about the issue. That is what universal credit is trying to catch.
Baroness Hollis of Heigham
The Minister said that the numbers were small, which is to restate the 50,000 figure. I thought that my noble friend exploded that pretty effectively. Not only is that itself pretty doubtful, but we now have the issues associated with zero-hours contracts. We specifically asked whether they had been taken into account and what would now be a reasonable basis on which to go forward with shared information.
Lord Freud
My Lords, as I said even before the noble Baroness intervened, even though the numbers today are relatively small, I am not decrying that particular issue. I was referring to the 50,000 figure—the current estimate of those affected. Let me get on with my argument and not worry about that at the moment.
The drive to universal credit is to allow greater flexibility in the labour market, so zero-hour contracts work with universal credit. There may be elements of zero-hour contracts that are of concern, particularly if the balance of power between the employee and the employer is unfair, but universal credit works with that flexibility of the labour market.
Baroness Sherlock
I understand the argument the Minister is making, but let us suppose that the woman described by my noble friend is in a relationship with a civil partner or a husband. What is the most the husband could earn before she would effectively be excluded from universal credit? As they do not have children, if her earnings are low but his are at a reasonable level, she would no longer be able to benefit from his pension. So you cannot assume that she would be caught up in universal credit because her earnings are low.
Lord Freud
I accept that. This is for low-paid households. That is what universal credit is. There will be some people in higher paid households who will have to take a view on how to make their arrangements through voluntary NICs or whatever. I accept that point.
Lord McKenzie of Luton
The Minister proffers universal credit as a solution, but as I understand it, universal credit will generate only a class 3 credit, not a class 1 credit. Therefore, it would help towards pension entitlement but not to contributory JSA or ESA.
Lord Freud
The noble Lord is exactly right. It goes to the point of what we are discussing. It would get you the pension entitlement and the bereavement benefit entitlement but not the contributory entitlements. The current arrangements for crediting a person with national insurance contributions are comprehensive. They cover all the main reasons why someone may not be working, or working only a small number of hours, such as ill health and unemployment, or where people are caring for a child aged nought to 12 or for someone with a disability. They also cover those currently entitled to working tax credit, and we have recently introduced credits to protect the contribution record of working-age grandparents looking after their grandchildren.
Those who fall outside the scope of the crediting arrangements and who can afford to do so—higher paid households are clearly in that category—can make payments on a voluntary basis. The current rate of voluntary class 3 national insurance contribution is a very fair price at £13.55 a week, or £705 a year. The person could recoup the cost within four years of receiving basic state pension benefits.
Using this approach to establish whether a person’s combined earnings exceed the lower earnings limit would require the collation of tax and contribution returns for employees with multiple jobs. That clearly would place a burden on business and require HMRC to develop complicated IT which would take time and money and benefit a small number of people. We would also need to consider collecting the employer’s national insurance contributions in proportion to the earnings in each job, which would add considerable administrative complexity.
The question that one needs to consider is whether those who have aggregate earnings above the primary threshold should be credited or should pay a discount rate of national insurance. That is a question I address to the noble Baroness. It could be seen as quite unfair on someone who is earning just over the threshold in one job and has to pay full national insurance, whereas someone else just below might be credited.
Baroness Hollis of Heigham
That applies if someone is in one job and £1 below the PTT for these purposes; they will still be credited and not pay a penny. I do not see the difference at all.
Lord Freud
That is the issue about whether one wants to introduce this kind of system across for mini-jobs.
Baroness Hollis of Heigham
We already have. All my lifetime, I think, we have had exactly the same cliff edge between those who are below or above the PTT when that diverged from the LEL. That exists now, so there is no difference at all.
Lord Freud
Clearly, under universal credit, there would be a crediting arrangement for everyone within that system anyway, so I accept the point to that extent. I agree with the point on zero hours made by the noble Lord, Lord Browne, in that robust data are currently simply lacking and we are waiting to see the ONS data when they arrive. As I say, the universal credit system that is coming in adapts very elegantly to that kind of flexible labour market.
Lord Browne of Ladyton
Before the Minister moves off the question of the data, the fundamental point about the zero-hours contract estimate that I was attempting to make was that that was despite it being part of the Labour Force Survey. There was an apparently robust basis for a figure that turned out to be, potentially, 300% wrong. We are being asked to debate this against an estimate of a figure that every single part of our experience of life suggests to us is grossly wrong—that is, the figure of 50,000.
Lord Freud
The previous estimate for zero-hour contracts—which is what we are talking about—was that there were 250,000. Let us see the figures today for those on part-time work. I cannot remember the figure offhand—is it 1.5 million? There is a boundary, therefore, about what proportion of flexible working is formally on the zero-hour contracts. Rather than speculate on what the real figure is, I think that we should wait until the ONS comes out with a figure, if it is going to revise that.
On the pointed questions about self-employment rates raised by the noble Baroness, Lady Drake, rates of national insurance are clearly a matter for HM Treasury. However, we have not assumed that self-employed contributions will increase single-tier cost estimates.
I know that the noble Baroness has been a champion of this group and has genuine concerns about it losing out. As the new systems come into sharp focus—universal credit, RTI, single tier—there will be a chance to look at this issue properly when we know exactly what is happening, where the remaining issues are and then to find a precise way of dealing with it. It is simply too early, right now, to get a clean and elegant solution, but we do intend to look more broadly at crediting arrangements to examine the possibilities of modernising and simplifying the arrangements in that light. So there is a process. Her point is taken: it is just about what is the most efficient and effective way of solving a particular problem. What I do not know and cannot offer now is a timetable. It is something to be looked at some years—not a lot of years—in the future, in terms of exactly what should happen. I think that there will be a solution in the medium term. For those reasons, I ask the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
I am extremely grateful to everybody who contributed, including the Minister. The debate was very interesting and revealing and a lot of new issues were raised that had not been raised on previous occasions when we have debated jobs below LEL. That suggests that it is worth going back to some of these issues, as the information that we get and the changes in the labour market make those new concerns increasingly relevant.
My noble friend Lady Drake spoke with all the appropriate authority of one of the pensions commissioners. She rightly emphasised—and sometimes I feel that we are simply retreading the same territory—that every pension issue has to be judged through the perspective of how it affects women, because if we get it right for women we get it right for everybody. Actually, that is not usually what we do; we tend to go on bulk numbers, which are made up by men because they are more reliably, through their working life, attached to a pay grade in the labour market that takes them over the LEL level. As a result, we ignore pockets of women here, there and everywhere, around the system, because, for very good reasons indeed, they do not conform to patterns of male working life.
I honour the Minister in his appreciation of the need to have the recognition of mini-jobs through universal credit. He has never tried to underestimate the significance of these issues, and I put it on record that I appreciate that. However, where we have got to today is not quite good enough.
My noble friend Lady Drake emphasised the need to put up the gender filter and, absolutely rightly, emphasised that women are locked out twice over—in their own ability to get into the NI system and by their ability to go through their husband or partner. They are suffering a double whammy. This Bill makes their default position disappear, which is why the problem has increased urgency from when we discussed it around the universal credit and welfare reform proposals some 18 months ago.
My noble friend Lord McKenzie emphasised the practical feasibility of doing this through HMRC arrangements. Given his lifetime of experience in working with businesses on issues like that, I think that his expertise should be taken very seriously by the department, which may not have had similar experience.
My noble friend Lady Dean, like my noble friend Lady Turner, has fought for women’s pensions since the 1990s, as far as I am aware. She got it absolutely right when she said that this amendment, or an alternative way in which to meet that need, would conform to the spirit of the Bill, and that it should not be left in the hope that, in four or five years down the line, the world may be different.
My noble friend Lord Browne made a devastating critique in talking about the inadequacy of the statistics, how every month the number seems to double—geometrically, not arithmetically—and that very soon we will find that the whole basis on which the Government have estimated their costings and needs, on the basis that it is a tiny minority, will be undermined. He certainly makes me even more uneasy about the neglect of this group than I was before we discussed the issue today.
The Minister is relying essentially on universal credit. I see why he would want to do that, but I am trying to do some back-of-the-envelope calculations. Let us take a group of women and say that the system comes into effect and is rolled out nationally in 2020. It may happen a year earlier than that, but it is unlikely to be more than a year earlier. Following the example of my noble friend Lord Browne, let us say that people leaving school at 18, or college or university, are going to a patchwork or portfolio life for much of the rest of their lives, given the increasing dominance of labour market flexibility. I calculate that when they come into the labour market, if at 2020 they subsequently need 35 years, which they will get through some universal credit arrangements—and thanks to my noble friend there is a big question mark over that—that means that they will qualify for a basic state pension in 2055. They therefore have to have been born in 1990 and are currently aged 23. Under the Minister’s own figures, as far as I can tell, any young woman or man who is older than that probably will not qualify under UC for a full pension by the time they retire.
Lord Freud
My Lords, I cannot leave that unchallenged. People will have inherited rights, including credits, before 2016. Clearly, many of the examples quoted by the noble Baroness related to people who had had children, so 12-plus years would be credited under the existing system to be pulled forward into the system with the foundation amount, building up beyond that. I also need to remind the noble Baroness that the intention with the universal credit schedule that we have announced is to bring in all people, certainly in the working population, by 2016 and 2017, with a group of ESA recipients left beyond that point for very good reason, because we need to deal with them very carefully. Therefore, under the timings that we have announced, the people about whom she is concerned would be brought in very shortly after the introduction of the single-tier pension.
Baroness Hollis of Heigham
I hope that the Minister is right but I do not believe that he is. It is very unlikely that the UC system will be sufficiently stable to be rolled out to the entire working-age population—the Government are not catching these people in their labour statistics—before about 2019 or 2020. I would like to be proved wrong but I very much doubt that I will be. Even somebody who has had two children, which means that they will have had 14 years-worth of credit under the new rules, would still be stuck at about 43 or 44 with no ability to add to those years if they came within this category of having no single job that took them above the LEL. Therefore, we wipe out people who are something like 20 years off their pension life, and they will go into retirement with a fairly trivial amount barely over the minimum qualifying amount. I do not think that the Minister can rely on that.
He is right that some women will manage. Particularly if they have children, they will be fine, but if they have no children, they may have a husband. They may both be on perfectly modest incomes but when, taken as a household, they are tested for their eligibility for working tax credits, where the threshold is relatively low, she will not qualify through that either under the joint claim.
Therefore, I am not at all confident but I would be delighted to receive the statistics from the Minister about the coverage, under the circumstances identified in today’s discussion, for those whom UC is intended to help.
The Minister wants a clean and elegant solution. The clean and elegant solution would be to get as many people as possible into the new system and not to rely on pension credit, a legacy system which will otherwise continue for 30 or 40 years. Unless we can get this group into the system as early as possible, he will not find clean and elegant solutions to sustain the Bill. I am glad that he is going to work on it. I hope that, certainly before Report, he can come back and give us an idea of how he is going to address this issue, even if it is about extending conditionality as a credit into JSA conditionality. That would work for me. I want some way of bringing these people in. I promise the Minister that, if he does not address it, this problem will not disappear; it will grow. It is his responsibility to bridge the deficit between where people are and where some of them may be when he has introduced UC three, four, five or six years down the road. Under the circumstances, I beg leave to withdraw the amendment.
“( ) Regulations may provide for the transitional rate of the state pension for a person who is ordinarily resident in the United Kingdom and who reaches pensionable age before 6 April 2031 to be increased where the person would have received a higher pension under the previous system based on their spouse or civil partner’s contribution record.”
Baroness Hollis of Heigham
My Lords, I apologise to the Committee that I want to raise another substantial issue. After this, I promise that the issues that I raise will get smaller, but other noble Lords’ amendments may be appropriately substantial.
This is about the married women’s dependency pension. This is the first of three amendments. The second amendment is intended to address the issue that widows may face and the third amendment addresses those that divorcées may face. They try to avoid the cliff edge for some vulnerable women—please forgive the political incorrectness. This also applies to men and civil partners, and later amendments apply to male divorcés and widowers.
The peak cost of some £200 million which was suggested by the Minister in the other place would fall in the 2030s for all three groups, including overseas spouses, I gather, which suggests a lower figure, perhaps £100 million a year, during the next 10 years or so. I am grateful to the Box for giving me some additional information on numbers, although I am still not clear about costs. If the Minister can clarify that, that would be helpful.
The Government have rightly helped 10,000 women—it is a diminishing number—who paid a reduced stamp and have put them effectively on to the equivalent of the former 60% dependant pension. At the same time, they are taking that same pension from about 5,000 married women who would otherwise qualify for it each year. This amendment calls for a transitional period of 15 years, as urged by the Select Committee on Work and Pensions on this part of the Bill, having taken a considerable amount of evidence, including some very effective evidence from Age Concern.
This amendment seeks to help women, not many of them, who have, for one reason or another, lived their lives among an older, shall we call it—although I do not mean this to be patronising at all—Daily Mail model, without any expectation that the Government were going to change the rules around them.
On the one hand, the Government are about to reward about 4 million non-working wives with a marriage tax allowance for their husband worth £3.85 a week, costing £700 million a year, and on the other hand they are taking away a £66 per week pension, also derived from marriage—bingo for marriage—at a fraction of the cost of the marriage tax allowance, from older women who have no time to rebuild. The Government are giving to married women with working husbands and taking away from married women who now face retirement with no pension of their own. Husbands—younger men—immediately benefit from a tax allowance transfer which has come as a windfall, while older women lose support that they have been promised all their lives. It is bizarre. Why not spend the first on the second? It will pay for itself several times over and will be far more useful and far more fair for, given their age and such short notice, older women can do little or nothing to build a pension of their own greater than the 60% that they would get as a derived right. That would take 16 years.
Women approaching retirement age had expected the 60% pension and planned their retirement around it. They had, and have, a legitimate expectation. The younger woman and her husband—they are not just cohabiting—receiving the £3.85 household income have not built their lifetime around it and planned for it, unlike the 60% pension. That is simply a windfall. It is unexpected and unplanned and, in my view, much less deserved than the pension that older women were entitled to expect. That younger woman is likely to have many years ahead both to work and gain income and to secure her own retirement with a full pension. I cannot think what mentality, frankly, has produced that juxtaposition and this disjuncture between those two groups, both of whom derive their rights through marriage.
In the other place, the Minister made much of the fact that a significant proportion—more than two-thirds—were male spouses or partners who were born or lived overseas. I now calculate, with the revised statistics that we have had, that huge number to be all of 2,000. However, I have tried to cover that with my,
“ordinarily resident in the United Kingdom”,
which has a good case behind it and which will not trouble the Government.
Indeed, the Minister may also argue, as Steve Webb did in the other place, that he finds it hard to conceive of women who might fall into this group given the wide array of credits—the up to 50 years of working life, which would mean that you start collecting credits at the age of 15 to bring you up to 65, and the 35 years’ NI record requirement. Let me help him, if I may, with two possible categories of women, both of which I am familiar with; I am sure my noble friends have other examples.
I am aware of at least two groups of women who continue to need transitional protection. To get the equivalent of 60% of the future pension equivalent, they would need cover on their own record of at least 16 years—less than that, and they are worse off. Younger women, I readily agree, have time to reshape their plans. They also have appropriate childcare credits, not HRP, which required you to earn actual NI years for it to come into play. Many may have undertaken part-time work above the LEL and may have signed on for JSA, all of this bringing entitlement to a pension of their own. That is as it should be. But women in their 50s do not have that, hence the 15-year transitional period.
Who are likely to lose? The first group is older women with patchy NI years. They got HRP and perhaps did not understand what happened when we replaced it with childcare credits. They did small jobs below the LEL for many years knowing that they would get the 60%. That is what women have told me. They did miscellaneous caring for elderly relatives, credit for which was introduced only in the past five years, which is too late to benefit most of them.
Perhaps their husband’s job took them around the country and they were unable to keep finding new jobs above the LEL for themselves while they moved house and supported his career. As we have discussed, service wives are an extreme case of this. They juggled untidy lives; lives which did not conform to NI requirements. But they knew—or they thought they knew—that they could count on their husband's pension to give them a dependent’s fund. Virtually overnight, as there are no transitional arrangements, that has been taken away.
The Pensions Advisory Service, which I quoted on Monday, completed its survey of nearly 1,000 women and women often commented with additional views. I quote from one of them.
“Had to give up my part-time job when my grand-daughter was born to look after her full-time while her mother and father worked. I’m now desperately looking for work”,
because the NI years have risen to 35. She thought that with 30 years she was all right. She is now 58 and has tried hard to find work but without success. She continues:
“I am getting very worried about the future. I go to bed thinking about it and wake up to face it all again”.
She has a patchwork. She has missing years and we are told that she cannot buy them back before 2006 once universal credit comes into play. Even if she had voluntary NICs, she could not deploy them in circumstances such as hers.
The second group is women who have had poor health for most of their lives—depression, arthritis, angina or diabetes—and they either did not think about or know about incapacity benefits or perhaps believed that the condition was not so incapacitating that they would qualify, especially given the somewhat deliberate stigmatising in the past few years of benefit claimants. Frankly, there has been humiliating treatment of certain claimants by ATOS. I know that the Minister will not want me to recite some of the cases that I have experienced, but they are relevant to this. Their husbands earned enough and, given their poor health, keeping house and perhaps helping out neighbours or local charities was as much as they could manage. If this sounds improbable to the Minister, we are talking about women approaching pension age where the DWP’s own research on benefit take-up among entitled but not claiming pensioners shows how deeply ingrained is the reluctance to claim means-tested benefits.
Such women may have had a few years of NI work behind them but not enough to bring them over the 10-year threshold. If they had nine NI credits or years, they could at least have received £36 a week that they do not in the conventional way, which would normally not have needed to come into play because the 60% was more generous. That de minimis has been removed, although I hope and expect that some women affected will buy an extra year to get over the 10-year hurdle and enjoy £40 a week. However, they probably do not have the time, good health or employability, or in some cases the income, to bring it up to 16 years, or the 60% level that they reasonably expected.
Let me again quote from the TPAS survey. Asked about how they would cope, one woman wrote that she was,
“sick and disabled so unable to save or plan, though very worried as had break in NI due to illness but never claimed benefit”.
Some, but few, I suspect, of the 30,000 affected will be able to afford to buy back missing years. I am not sure whether they can buy them back previous to 2006—we had confirmation on Monday that they could not—where the missing years may have occurred. That relaxation appears to expire in 2015 and the Minister is not continuing it from 2016 onwards.
The Minister at the other end several times argued that if the DWP introduced any transitional period, this would be found by the courts to be arbitrary and would presumably be overturned. He seemed very nervous about the courts; he introduced this argument at least twice when reading his speeches. I am surprised by this. In my experience, if Parliament’s policy intent is clear—see Roe v Wade—it would not fall to judicial review unless it could be shown that it was a decision that no reasonable person could have made. That is quite a high hurdle and clearly not the case here, so if the Minister is going to argue that, may we have proper information about the legal advice that the DWP has received on which the Minister at the other end so heavily relied?
We phased in the rise in people’s pension age over a decade. We are scrapping the pension that they might have drawn at pension age, effectively overnight. I do not think that is fair. If we feel the need to give adequate warning when raising the state pension age, as we did, we should provide adequate warning and therefore transitional arrangements for the most obvious group of real, not notional, losers. It is not difficult. We have the precedent of the reduced married women’s stamp, which we should follow. I beg to move.
Baroness Sherlock
My Lords, I shall speak to Amendment 23, which is in my name and that of my noble friend Lord Browne, and to Amendment 12 in the name of my noble friend Lady Hollis, who has outlined the basic issue at stake here. I need not repeat that. As we know, the single-tier pension will be based solely on an individual’s contribution or credit record. Everyone will get out depending on what they put in; as they sow, so shall they reap. But we are concerned in this group with people who chose to sow as a couple, expecting to reap in like fashion, when from now on it will be every reaper for himself or herself.
Changes in labour market participation rates and social structures mean that we recognise that, in future, a system built on individual contributions is the right way forward. This year, 75% of those retiring will have complete contribution records of 30 years. It will be interesting to know what happens when that moves up. However, it is obviously important that the appropriate protections remain in place for those who have caring responsibilities or childcare responsibilities and that adequate information is put out. Subject to those caveats, we accept the direction of travel.
However, we are concerned to understand fully the impact of this provision in the short term on those who will lose entitlements derived from a partner’s NI contribution record on which they may have done their retirement planning. It is crucial, for the reasons that my noble friend outlined, that the transitional arrangements are fair and seen to be fair. We have had representations from groups working with older people, particularly older women, highlighting a range of circumstances in which women did not build up any entitlement. There are women who were entitled to credits but did not bother to claim them as they were planning to piggyback off their husbands’ records and there was no advantage in doing so. Then there were women who worked part-time around caring commitments, as my noble friend described here and in the last amendment. There were women who chose to do voluntary work, knowing that their husband’s pension would support them and who were often the pillars of their local community. I see a lot of them in Durham, who helped to support their neighbours and really were the backbone of the local community.
Lord Freud
My Lords, there are three amendments that are closely related, of which this is the first. I welcome the fact that there seems to be general agreement in principle that what I will loosely call “derived entitlement”, established in the 1940s, is past its sell-by date and has no place in a modern state pension system.
I apologise for the fact that I am going to speak at some length, but it is important that I lay out the Government’s argument for removing derived entitlement by reference to the criteria for judging single tier as laid out by the noble Baroness, Lady Sherlock, at Second Reading: that is to say fairness, simplicity, sustainability, the provision of a decent standard of living for all and, at the same time, the encouragement of private saving through clarity of outcome.
First, we believe that fairness means ensuring an adequate state pension for people who have contributed to the system. That is why we are recycling the savings from aspects of the current system being abolished, including derived entitlement, to give a boost to individuals who have historically been excluded from additional state pension, such as carers, the self-employed and the low-paid. Indeed, around 650,000 women who reach state pension age in the first 10 years of single tier will receive an average of £8 per week more in state pension due to the single-tier valuation.
Sustainability and affordability are also key qualities that the Opposition have made it clear that they are looking for. Let me be absolutely clear that we are ending derived entitlement from principle and not to save costs. However, as we have been asked a number of times about this, and as affordability is one of the criteria of interest to the Opposition in judging single tier, I shall respond to the question raised by the noble Baroness, Lady Sherlock, and deal with the cost issue.
Our analysis shows that to continue running the basic pension derived entitlement provisions for people reaching state pension age up to 2030-31, the cohorts targeted in these amendments, would cost around £200 million per annum in the early 2030s, and those are just the costs for Great Britain. We do not think that it would be possible to restrict transitional protection to those ordinarily resident in the UK, as the noble Baroness, Lady Hollis, hoped. While it is difficult to quantify the cost for those overseas, we think it likely that it would cost about the same amount again as in the UK, meaning transitional protection for the first 15 cohorts could have further costs peaking at another £200 million a year.
Baroness Hollis of Heigham
Why does the Minister think that the courts would not support us in having transitional arrangements for those who are ordinarily resident? I am not a lawyer, but, in my somewhat limited experience of judicial reviews, there have been a number of challenges. The two criteria I lay down are: was Parliament’s intention was clear—Roe v Wade—and would it be a position that a reasonable person would think was not unreasonable. The addition of ordinarily resident would seem to fit the criteria for transitional arrangements. If the Minister could help us on why that is not the case, I would be interested.
Baroness Sherlock
My question is slightly different, but perhaps the Minister could answer them both at once. Are the costings net of any additional expenditure on pension credit?
Lord Freud
Yes, it is a net figure. On the legal position, clearly the noble Baroness will remember that we are in the European Union and there are definitions of which kind of payments are transportable, so to speak, and which ones can be restricted. That is where our legal issue comes from. Therefore, rather than go into huge detail on that—
Lord Freud
Perhaps I can make sure that the noble Baroness is briefed on that outside the Committee. The question of which types of benefit are transportable around the EU and which you can justifiably keep is immensely complicated. I think that the definition is that a social support you can keep within an area but a pension tends to be transportable. However, I can arrange a detailed legal session for the noble Baroness if she would like that.
Perhaps I may turn to the figures that the noble Baroness, Lady Sherlock, was talking about. Some 290,000 people would be affected at some point up to 2030, which represents less than 4% of those reaching state pension age up to that point. The 30,000 figure is a snapshot in 2020 of the number of people projected to be receiving less at that point in time. That is the explanation of those two sets of figures.
One point concerning payments abroad is that it does not seem fair on our taxpayers and pensioners who have made contributions to the UK, or indeed even affordable, to spend money on those claiming overseas who have never set foot in the UK.
Simplicity is another virtue that the noble Baroness, Lady Sherlock, concentrated on. If people are to save for their retirement or make sound decisions on purchasing voluntary contributions, they need clarity of outcome. Extending the derived entitlement provisions would run counter to the goal of achieving simplicity of outcome for tens of millions of today’s working-age people. At the moment, we are in the position where we can tell people shortly after April 2016 what they have, in the words of my colleague Steve Webb, banked to date.
The key to being able to do that is to have a full rate of single tier that people work towards and a base entitlement on an individual’s own record. At the moment, we will crystallise people’s national insurance record as at 2016, recognising past contributions, and we will move on from there into the single-tier system. We can say, “You’ve got this to date. If you get this many more qualifying years, then you will get the full rate of single tier”.
However, let us imagine what would happen if we were to put in place provisions that allowed people to continue to draw a pension based on someone else’s record. We would have to tell people, “This is what you’ve got on your record but if you’re married or divorced, or if you get married or divorced between now and state pension age, or you get divorced or are widowed after state pension age, then your entitlement might be different. We can’t tell you what it might be because you would have to look to your partner’s, or even ex-partner’s, record”.
Baroness Hollis of Heigham
My Lords, I support the Government's position on this, as I think we all do, but what will be the position for the reduced married women’s election, where you are effectively introducing—I was going to say inventing—a 60% dependency pension for a whole new group of women which is rather larger in number than the group we are talking about?
Lord Freud
Because we can at that point tell those married women exactly what they will be getting. The difference here is that it is very hard to trace those people to tell them definitively what they will be getting. That takes us back to today’s problem, which is, when you phone up to ask what your pension is going to be in three years’ time, we can give a guesstimate at best. That will remain the case if it is open for lots of people.
Turning to the aim of providing a decent standard of living, we already have an underpin that guarantees pensioners living in Great Britain a minimum amount of weekly income. I confirm the point made by the noble Baroness, Lady Sherlock, that the very purpose of pension credit is to provide support to people in Great Britain who, for whatever reason, have not built up sufficient savings or pension entitlement through their life.
If the current system were to carry on, we project that by 2020, fewer than 10% of people reaching pension age after 2016 would be on the standard minimum guarantee. We have also looked at the group of people who would, under the current system, have been claiming a basic state pension on their spouse’s record—either at the point of reaching state pension age or later, on bereavement. Even if the current system carried on for ever, 40% of the people in that group would be on guarantee credit. That group of people—this 40% of all of our people losing out from the removal of derived entitlement—will get their loss in state pension replaced pound for pound with more guarantee credit. But there will be people not on guarantee credit who experience a loss. If we look at the average changes to household income as a result of removing derived entitlement, we see that the median loss for households affected is about £6 a week. The mean average is about £10 a week. There will undoubtedly be examples where people do lose larger amounts, but again, pension credit is there for them.
I hope that by now it is clear why we have not put in place transitional arrangements and why we have no intention to undertake a review to this effect. We have, however, put in place some protection, specifically to ensure that women who had paid the reduced rate election within 35 years of pension age will get roughly what they thought they would receive. Putting in place protection for these individuals is right: they have clearly participated in the labour market and have contributed. The difference between them and the wider group of people who would have relied on derived entitlement is that those people made an explicit deal with the state.
Furthermore, to address the point raised by the noble Baroness, Lady Hollis, those who have paid a reduced rate election are, crucially, easily identifiable. The message of simplicity for the wider single-tier population will not be affected, and the size of the group enables a bespoke calculation. Were we to apply such blanket protection to everyone, we would simply be awarding everyone with any history of work or credits a 60% basic state pension and, later, a full basic state pension; clearly the costs would become an issue and would not be tenable. We would ultimately be awarding people with just one qualifying year a full basic state pension.
On the point about the married women’s pension, if their entitlement under normal transitional rules would be higher, we will give them that instead, but we are not looking at their husband’s record for that; we will be assuming that they have a full record and award them a pension accordingly. Indeed, we project that, with the vast majority of couples involved, the husband will already have 35 qualifying years. It may be possible for people who are long-term sick but not claiming benefits to apply for credits for a past period. It is not essential for a person to be receiving a benefit to qualify for credits for periods of incapacity, but they would need to meet the entitlement criteria for incapacity for work or limited capability for work each day within the meaning of the legislation that applied at the relevant time. Provided that medical evidence for the whole period can be obtained, it may be possible to apply to a local Jobcentre Plus for credits for past periods. Clearly, I cannot comment on people’s success in that regard or otherwise, but I am glad to be able occasionally to provide some new information to the noble Baroness.
For the individual with 30 years who is looking for work, perhaps after looking after grandchildren, and is now worried, in the example that the noble Baroness, Lady Hollis, gave, we have credits for national insurance for exactly that type of situation.
Baroness Hollis of Heigham
I was talking about someone who had cared for her grandchild before the credits were introduced.
Lord Freud
Okay. On the specific case of someone who has 30 years and wants to get 35, that is part of the issue that we discussed at length at the last sitting. That individual should be able to benefit from the transitional arrangements. I draw your Lordships’ attention to the analysis in our recent ad hoc publication, which shows that the equivalent of the married person’s pension would be achievable even for the majority of those reaching state pension age in the initial period to 2020 through the purchase of voluntary contributions to cover years back to 2006, or by working or engaging in an activity that earned credits between 2016 and pension age.
I turn to the suggestion that we review the possibility of putting in place transitional arrangements. Such a review would be unnecessary and unhelpful. Noble Lords will agree that, in the interval between Royal Assent and implementation of the new scheme, communications will be crucial. A review at a time when we are preparing the implementation of the new state pension system would create great uncertainty just when we are being urged to ensure that we provide clarity. We had a discussion on that matter on Monday.
I make the general point that one problem here is that we are moving from the current system because it is too complicated for anyone to understand. The risk of some of these arrangements is that we just re-import all the complexity that we are trying to get rid of. That is a real and substantial risk, which we believe we must try to avoid.
In summary, we have had to make decisions about how we move over to the new system. In a system where changes to society and to the existing pensions system mean that a majority of women and men already receive a full state pension, these provisions, designed for the post-war era, are now an anachronism. I hope that I have set out the case that our approach in this respect has been as fair, simple and sustainable as possible. I ask the noble Baroness to withdraw her amendment.
Baroness Hollis of Heigham
Thank you. I would like to push the Minister on the comments made by my noble friend Lady Sherlock, who rightly warned against hindsight and applying modern attitudes to labour market decisions made some time back. That discussion will be repeated when we come on to widows in a moment. The Minister’s references to women being eligible in certain situations to claim pension credit precisely missed the point raised by my noble friend. If someone is in a couple with a husband who has acquired full contributory years, possibly with some minor additional savings, they will be floated off pension credit, so they will not be entitled to claim it, nor will she be entitled to claim it in lieu unless she is indeed solo.
I am grateful for the Minister’s help on “ordinarily resident”. I should like to see the legal advice, because I think it is arguable which side of the bridge it falls on. We have had plenty of debate on that in the past.
The Minister cited the four tests raised by my noble friend on Second Reading. I remind him of the tests in the impact analysis in October 2013: what are the policy objectives and intended effects? Four were offered. It stated that the intended effect of state pension reform was that,
“individuals have a better understanding of the state pension system,”
and how much they can expect to receive,
“and therefore engage more actively with planning for retirement”.
The people we are talking about understood the rules perfectly well. It is the Government who have changed the rules around them, not that they have failed to do anything that the Government think that they should have done at the time. We fail the first test in the impact assessment.
The second test is that the,
“inequalities of state pension outcomes within the current system are reduced”.
Some are reduced, but the Minister is substituting new ones, including those involving the green stamp and the women I am talking about. The third test is that,
“individuals have reduced interaction with means-tested benefits in retirement”.
That is highly doubtful, given discussion on previous amendments. The amount so far established is pretty trivial. The final test is that,
“the state pension system is more affordable and sustainable in the long-term”,
whereas the Minister has been arguing that it is cost-neutral. He failed to address the fact that there appears to be adequate money—£700 million—to introduce a marriage allowance while taking away support for marriage when it comes to pension arrangements. It is a modern world when it comes to pensions; it is what I do not doubt that the Minister would call a Beveridge world when it comes to married women’s tax allowances. I noticed that he did not venture a comment on or pray the modern world in aid against the Beveridge assumptions behind the married women’s tax allowances, as he would no doubt have described them if we had proposed them and he was criticising them.
The Minister says that the present arrangements are an anachronism. I am sure that it will be a great comfort to those women who are going to lose their 60% entitlement virtually overnight to be told that they are an anachronism and that it is their fault that they cannot shape up in the limited time available to change their situation.
Women have always had a lousy pension deal; it has never worked for them. By refusing to permit a transitional arrangement, we are colluding in that lousy deal by picking off an easy, voiceless, vulnerable group. I have to say that I am disappointed by the Minister’s response, but I beg leave to withdraw the amendment.
“( ) Regulations may provide for the transitional rate of the state pension for a person who is ordinarily resident in the United Kingdom and who reaches pensionable age before 6 April 2031 to be increased where the person would have received a higher pension under the previous system based on their deceased spouse or deceased civil partner’s contribution record.”
Baroness Hollis of Heigham
My Lords, I will be pretty brief.
Until the Bill comes into force, a married woman would qualify for 60% on her husband’s record on retirement. A widow would get his full record, which was usually the full 100%. That is a different issue because they claim entitlement to different sums. In future, under the new state pension, she is on her own. If she does not herself have the requisite number of NI years, she gets no derived pension either as wife or as widow; she will be reliant on means-tested pension credit. To change the system in that cliff-edge way is quite wrong.
We know that mortality and morbidity rise sharply with age. There is a threefold increase in deaths between 55 and 65. In that decade, twice as many men die as women. Usually, they will have died from lingering illnesses, such as cancer, heart disease, Parkinson’s or similar, unlike younger men who tend to die from external accidents and so forth. Their wives may for many years have been home, been around, reassuring them, helping and caring but not perhaps sufficiently to get a carer’s allowance, and carer’s credit has only recently been introduced and is not sufficiently known about or claimed. Then, after 2016, he dies. Her own pension record is considerably incomplete and she cannot substitute his contributions for her own.
Baroness Sherlock
My Lords, I shall speak briefly on this amendment. I was exceedingly brief last time, but since the Minister did not feel any compulsion to do likewise, I shall take my time this time round. The amendment again raises a particular question about transitional protection. I will not revisit the substantive debate that we have just had, but I want to highlight a couple of points. To do that, I want to use a case study given to us by DWP officials.
In this case, we have a couple who have been named Jack and Jill—a slight lack of imagination, but better than the DEL and AMI beloved of Treasury case studies. Jill reaches state pension age in 2020 and her husband Jack reaches state pension age in 2018. Conveniently, they have average life expectancy, so Jack survives until 2040 and Jill until 2044. In this case, Jill had 15 qualifying years of contributions.
Under the current system, Jill would get a married woman’s pension of £64. Under the new system she would get £62. But the real crunch comes when Jack sadly dies. At that point, Jill would receive £113 a week under the current system. Under the new system she would receive only £62 in single-tier pension. That is a huge difference and a real worry to the real Jills of this world, and even more so to those who outlive their husbands by more than two years. The Minister may say that Jill can claim pension credit, but the DWP did not tell me how much Jill has in the bank, so it may be that her savings would preclude that. Even if they do not, I have reason to believe that Jack always thought that his contributions would be enough to ensure that Jill got a pension without having to turn to means-tested benefits. I would be grateful if the Minister could comment on Jack and Jill.
There is some transitional protection in place and I want to be sure that I have understood it properly. If I understand the rules correctly, if the dependant—in other words the person seeking to benefit from the derived entitlement—reaches state pension age before 6 April 2016, he or she would be entitled to derived and inherited state pension as under the current system, but only based on the other person’s national insurance contributions as paid up to 4 April 2016. If he reaches state pension age before April 2016 but she does not then she gets no derived or inherited entitlement. In either case, it is possible for the surviving partner to receive 50% of the additional state pension accrued after 2002 and before April 2016, and between 50% and 100% of the additional state pension accrued under SERPS before 2002, depending on when the contributor reached or would have reached state pension age. I would be grateful if the Minister could confirm whether that is correct.
If it is, perhaps the Minister could answer a different question. He spent a lot of time in his response to the last amendment stressing the simplicity of this case in order to respond to a concern that I had made at Second Reading. I am flattered that he read it so carefully. However, does the Minister think that Jack and Jill’s case or the description that I have just outlined passes that simplicity test? If I am right, will the Government then tell the Committee two other things? First, what consultation have the Government done with the real Jacks and Jills of this world and, secondly and more crucially, what steps are the Government taking to identify and warn those couples who are in this situation and may still be married, widowhood not yet having broken in, what the impact of these changes will be so that they can start to make provision as soon as possible?
Lord Freud
My Lords, I have already set out the Government’s position on the issue of the ability of one individual to derive a pension based on another’s national insurance record. As the noble Baroness, Lady Sherlock, pointed out somewhat bitterly, I did that at some length, so I will try to be as brief as she was in dealing with this. I appreciate that the noble Baroness, Lady Hollis, wishes to discuss the three interrelated issues separately, so I want to address her specific concerns here.
It is the ability for individuals to receive a survivor’s state pension, often called a widow’s pension, to which we have now turned. Let me outline the different groups that this amendment concerns. These are, first, those who would otherwise have gained a married woman’s pension and, secondly, those who would not have been entitled to the married woman’s pension because they have more than the equivalent of a 60% basic state pension in their own right but less than 100%, so would otherwise have received a widow’s pension. There will also be some who, regardless of whether they derive any basic state pension, may have expected to inherit some additional state pension.
We are putting in place transitional arrangements for that last group for inherited additional state pension. This will mean that where a survivor is in a marriage or civil partnership with someone in the current system they will inherit additional state pension, as now. For those where both parties are in the single tier, the survivor will be able to inherit 50% of the protected payment, where one exists. This is what Clause 7 and Schedule 3 achieve.
Limiting inherited additional state pension and the ability to derive a widow’s pension will, however, mean that some people receive less. In terms of how much those losses are, we estimate that the figure will be about £8 per week in 2025. That is the median figure and is made up mostly of people receiving less by way of inherited additional state pension. This loss is also due to the fact that people cannot carry on building up additional state pension after 2016, limiting the potentially inheritable amount.
However, around three-quarters of people reaching state pension age in the first 10 years of single tier who would have inherited some additional state pension under the current system will receive more single-tier state pension over their lifetime than they would have in the current scheme. This is because the gain from current system inheritance at the point of bereavement—and, potentially, very late in retirement—will be more than offset by the gains in state pension as a result of the single-tier valuation and uprating arrangements.
I think that this particular point feeds through into the issue of fairness. We are giving less to some people but we are using those savings to fund higher entitlements at state pension age for many people. Many people will benefit when they are younger—and by that I mean at the point of state pension age as opposed to widowhood—and are more likely to spend the money than would be the case towards the end of their lives.
On the simplicity test, I have to acknowledge the point from the noble Baroness, Lady Sherlock, that there are elements of complexity in the transition. However, that is because of the current system, not because of the single-tier system.
On the related issue of communications, the core objective of our strategy on communications is to raise awareness of the changes, particularly among those significantly affected by the reforms or those reaching state pension age shortly after the reforms are introduced. As I said on Monday, I will be producing our communications package in the new year.
The noble Baroness, Lady Sherlock, mentioned two examples. I think that it would be best to take up the Jack and Jill example with officials later, but her second example seemed to be correct, and I have confirmation of that. I think that she interpreted correctly the different groups—that is, who is in single tier and who is out.
Baroness Sherlock
My Lords, when I used the example of Jack and Jill, I was not asking whether it was correct. Unless the officials have made a mistake—in which case I am sure they will let me know—I presume it to be so. I was simply using it to demonstrate how much somebody would lose under the system.
Lord Freud
I am sorry, I was not referring to the Jack and Jill question; I was referring to the second example, where the noble Baroness asked me whether she had interpreted it correctly. I have the pleasure of telling her that, as always, she is absolutely correct, except of course where she disagrees with me.
I will not go into the arguments on simplicity and clarity or fairness, because the same arguments apply. In the light of my response, I hope that the noble Baroness will withdraw her amendment.
Baroness Hollis of Heigham
My Lords, my noble friend was referring to Jack and Jill. I assumed when I read this that HMRC, with perhaps unsuspected irony—perhaps the people who drafted this have young children—remembered that Jack fell down the hill and no doubt departed from this life, and Jill came tumbling after, thereby losing her 100% derived rights. I suspect that that is what HMRC may have intended, in which case it was all too accurate.
I simply think that what the Minister is doing is harsh, unnecessary and not costly to remedy. People made decisions and plans for their lives many years ago and he is now—this is the same point that my noble friend made about hindsight—projecting current takes on the labour market and women’s role in it back on to a previous generation who shared no such perceptions and perspectives. I think that in all decency we should give them a chance to remedy their situation through transitional arrangements.
We may revisit some of these issues when we come to bereavement payments, and I am sure that the noble Lord is looking forward to that. On that basis, I beg leave to withdraw the amendment.
“( ) Regulations shall provide for the transitional rate of the state pension for a person who is ordinarily resident in the United Kingdom and who reaches pensionable age before 6 April 2031 to be increased where the person would have received a higher pension under the previous system based on their former spouse or civil partner’s contribution record.”
Baroness Hollis of Heigham
This amendment is the last in the series and is, I hope, equally short.
Some dozen years ago, with the help of my noble friends Lady Dean and Lady Turner, we established pension-sharing on divorce. For many couples then, the man’s pension, especially his occupational pension—and it was usually his—was more valuable than the home, but it was not regarded as a matrimonial asset. Even now, not enough solicitors, in my view, seem to be fully aware of that, although couples will often trade: she the house, he the pension.
For less well-off couples, his additional state pension was a structured income that could be shared to help her too. Therefore, at the point of divorce—usually, perhaps, in the couple’s early 40s—she could substitute his NI record, so far accrued, which might be 20 or 25 years, for her own, and in addition they could have attributed to her half his additional pension. As I understand it, in the future she will be eligible to pension-share his SERPS or S2P—that is, his additional pension acquired up to that point—but not to substitute his basic NI contributions for her pension if hers are also more favourable. She is on her own.
Again, it is a matter of age. Younger divorced women, with or without children, will have enough time, through either NI contributions or child credits and, I hope, universal credit, to build their own pension. However, older divorced women in their 50s do not have that head space or do not always have that resilience; they may have been looking after his elderly parents for him or have helped him, as we learnt at the time, unpaid, to build his small, self-employed plumbing or taxi-driving business, keeping the books and booking the jobs. When looking at this in 1995, my friends and I found countless stories of this exploitation where she sinks her labour into his work, he builds up his pension—assuring her that it is for both of them—and then, at quite a late age, she gets dumped, as the phrase goes, for a younger model. I would be sorry to see history repeat itself. We can avoid that by permitting a transitional period of 15 years. I beg to move.
Baroness Turner of Camden
I support what my noble friend has just been saying; nobody likes being dumped. I do not know whether noble Lords have seen from the newspapers lately that there has been a rise in the number of older women divorcing. It is quite remarkable; people who are quite elderly and approaching pension age are getting divorced, whereas formerly they simply put up with it. It can be quite a problem.
Lord Freud
My Lords, I will avoid the issue of divorce rates because I am aware of the quagmire in which I will incredibly rapidly end up if I say anything at all.
The final amendment tabled by the noble Baroness on the issue of derived entitlement focuses on the impact upon divorcees and people whose civil partnerships have been dissolved. Under the current system, divorcees can—through a somewhat complex mechanism colloquially known as “substitution”—use their former spouse’s or civil partner’s contribution record to qualify for a full, or enhanced, basic state pension. With the ability to derive a pension ending for post-2016 pensioners, we accept that some divorcees may be affected, and they are likely to be those divorced relatively late in their working life. We estimate that these individuals could number about 70,000 up to 2031.
Turning to the specific situation of divorced women, it is likely that single individuals who themselves have not achieved a record sufficient to build up a full basic state pension will be eligible to claim guarantee credit, which is considerably higher than the maximum a divorcee could derive from a former spouse through the current, complex substitution arrangements.
These provisions are extremely complex and, as with the married woman’s and widow’s pensions, there is no longer any substantial need for these arrangements because the vast majority of women will receive a pension in their own right.
I repeat that in designing the transition to single tier, we have had to make decisions about the way that we spend the money we have available and about how to achieve the simplicity needed for people to make decisions about their retirement plans. A safety net will remain in place and absolute losses will, on average, be relatively small. I therefore urge the noble Baroness to withdraw the amendment.
Baroness Hollis of Heigham
My Lords, the Minister is absolutely right to say that it is a problem for late divorcees, as it is for widows or for women who married in their 50s and expect but then have removed from them the married woman’s dependency pension. Those people do not have time to rebuild their lives. My calculation is that that involves perhaps fewer than 5,000 people a year.
What interests me is that, given that the impact analysis claims that the Bill is determined to reduce means-testing, I have checked back in my notes and in something like five out of the last six amendments to which he has spoken the Minister has referred to pension credit and top-up, thus re-importing back into the system pension credit means-testing for cohorts of people that he could perfectly well take out if he was willing to contemplate transitional arrangements. He is getting rid of complexity for him and giving it over to them, because they will be required to go through all the stumbling blocks of pension credit and a reluctance to claim a means-tested benefit, which we discussed at some length on Monday. His position is harsh and unfair on all three amendments, particularly when we take into account that the Government are willing to find money for the married women’s tax allowance—which he still has not addressed, after three amendments—but not on these amendments, when older women are losing rights around which they have built their lives. I beg leave to withdraw the amendment.
Lord McKenzie of Luton
“( ) Within 12 months of the passing of this Act the Secretary of State shall report to Parliament on a strategy to improve the take-up of National Insurance Credits.”
Lord McKenzie of Luton
This amendment moves us into somewhat gentler waters. The amendment calls for a strategy to improve take-up of national insurance credits. It is by way of a probing amendment, seeking clarity on what is planned to encourage greater take-up. In a sense, it is a subset of the debate that we had on Monday about communications in general, which we have touched on today. We had a very thorough note from the Bill team, which confirms that the NI crediting system is comprehensive but also highly complicated. There is a low level of awareness of some credits, carer’s credits in particular, the very aim of which is to protect state pension provision for individuals who take time out of paid work due to caring responsibilities. Of course, the issue especially affects women.
The importance of ensuring take-up of maximum credits is increased under S2P because of the increase from 30 to 35 years in the number of years required for a full state pension and the 10 years’ minimum threshold. This is a reversal of the position whereby the reduction in qualifying years from 44 and 39 to 30 meant that the gaps were not so important. The increase in the number of years to 35 has in part rebalanced that, although the value of credit in the new system would be higher.
We are promised a review of the national insurance recording and operating systems and an HMRC review of deficiency notices. Perhaps the Minister will say a little more about that. There was reference to deficiency notices being suspended for those due to retire on or after 6 April 2016, and the Minister might like to take the opportunity to clarify that. Some awards of credits, of course, are automatic; some have to be claimed, including class 3 credits for foster carers or kinship carers and those caring but not receiving carer’s allowance, and class 1 credits for maternity, paternity or adoption pay, for non-governmental sponsored training, jury service, for those wrongly imprisoned and, as we discussed earlier, for Armed Forces spouses or civil partners. There is also a new issue for those with high income who would be excluded from claiming child benefit.
Our briefing note identifies the carer’s credit as achieving take-up significantly lower than the 2007 legislation anticipated. We acknowledge that those in receipt of universal credit will automatically get a class 3 credit and that this would cover some of these circumstances. However, universal credit will not be fully in place for a number of years and, in any event, there will be some credits which will be claimable. Crediting entitlements has come a long way in recent years, and universal credit looks to improve the position further, but some are still missing out and this needs to be addressed.
I will revert to one point that I touched upon earlier. As I understand it, the credit for universal credit is a class 3 credit and therefore is focused on pension and bereavement entitlements only. Given that employment and support allowance, jobseeker’s allowance and working tax credit are at the moment a class 1 credit—obviously those benefits will be subsumed within universal credit—it seems that we are worsening the position of some groups. I will be interested in the Minister’s response. The purpose is to give the Minister a chance to focus on those who have to claim where take-up is not as it should be and to see what can be done. I beg to move.
Baroness Sherlock
My Lords, I thank my noble friend Lord McKenzie for giving us the opportunity to touch on this issue and for setting out the challenges in his characteristically clear and well informed style. I shall be very interested to hear what the Minister has to say in response.
I would be grateful if the Minister would answer the following questions. First, will he clarify whether all the routes to gaining national insurance credits which are currently available will continue to be available in the new system on the same terms? Secondly, if not, or if there is any doubt about that, have the Government consulted on changes or will they commit to a public consultation before making any changes? I include within that any changes that are implied or necessitated by the switch to the new pension system or the universal credit system.
My noble friend raised an issue concerning the Government’s strategy. In particular, I am concerned about the categories of people who have actively to make claims for credits and will not get them automatically, even under universal credit. I think he cited all the ones that I have been able to identify, plus child benefit, which I had not noted. Will the Minister tell us whether the Government’s strategy will include elements targeted at those categories of person? Within that, will they consider how they engage with direct routes, rather than just generalised campaigns? My noble friend Lord Browne mentioned that the Armed Forces look for ways to make sure that members of the forces community can take up those credits. Will the Government consider other routes to that—for example, through adoption services or the ways in which the Government already communicate with those in receipt of maternity, paternity, adoption or sick pay? Is the department in discussions with other government departments about the way to take this forward?
My noble friend Lord McKenzie also mentioned take-up. It would be helpful if the Government could report on take-up now and under the new system and tell us how they will monitor that and report to Parliament on it. Finally, will the Minister tell the Committee whether the Government have considered ways in which people might actively be supported in claiming credits for past years, which might now become important, where they would not have been previously?
Lord Freud
I thank the noble Lord, Lord McKenzie, for this amendment. I hope that I shall be able to offer some reassurances about the current arrangements and those within the context of the work that we are planning. The existing arrangements provide for national insurance credits to cover a wide variety of contingencies and activities, as he acknowledged. They are generally available to people who are unable to work and pay contributions. This could be because they are unemployed, incapacitated or caring for others, but credits are also available to cover a range of other circumstances—for example, jury service or if an individual is employed but is in receipt of working tax credit.
Credits protect a person’s national insurance record and their future entitlement to benefits. Under the current system, all classes of credits protect the basic state pension, and in certain circumstances an earnings factor credit can be awarded to protect state second pension entitlement, mainly for caring responsibilities and long-term incapacity. I can confirm that the crediting arrangements will be brought forward to the new system and that people will still be able to get credits to protect their single-tier pension position.
Lord McKenzie of Luton
Before I do, will the Minister comment on the issue of universal credit being just a class 3 credit, whereas some of the benefits that will be subsumed into universal credit—ESA, JSA and the working tax credit—are class 1 credits? Is that not a diminution in the crediting opportunity?
Lord Freud
JSA is, I think, already a class 3, is it not? I have a comprehensive list of national insurance credits. Rather than running through them all, perhaps I should just forward it to the noble Lord and the Committee to make the point.
Lord McKenzie of Luton
I am grateful to the Minister. I think that I have the list, which probably came from the same source as his did. I was interested in the rationale for the universal credit just being a class 3 credit, because that is a change for somebody who would previously have been on JSA or ESA in particular. Has any assessment been made of the extent to which people are likely to lose out on their contributory JSA or ESA as a consequence of that?
Lord Freud
The principle is not to allow access to contributory benefits through claiming another benefit. That is fairly logical, if you think about it. If you were purely claiming unemployment benefits and you were on them for a year, you would automatically go into contributory unemployment. That is the logic that we are pursuing when we move to class 3 in universal credit.
Lord McKenzie of Luton
My Lords, I thank the Minister for his reply and my noble friend Lady Sherlock for her questions. On the latter point, I am not sure that the Minister specifically dealt with whether there would be individual strategies focused on those types of people whom we particularly need to reach, such as carers. On the issue that was just raised about not accessing the benefits through other benefits, the point about contributory ESA and contributory JSA, as I understand it, is that you cannot achieve them only by credits; there has to be a payment arrangement as well to qualify. If the credit is changed, that makes it potentially more difficult than it is at the moment. The Minister mentioned the earnings factor credits but, as I understand it, those disappear because S2P obviously disappears as well in the new regime.
I am comforted by the fact that deficiency notices, perhaps in their new form, are to be reactivated once we get to the stage where the April 2016 data are available, which is helpful. I suppose that, broadly, one accepts that there is going to be a big communications strategy. I see that my noble friend Lady Sherlock is poised to ask a question, so I will give her that opportunity.
Baroness Sherlock
Before my noble friend withdraws his amendment, the reason I asked the Minister generally at the beginning about whether all the currently available routes to gaining NI credits would continue on the same terms was precisely to try to draw out the kind of things that my noble friend has been highlighting. If the Minister finds anything else which could possibly fall under that category when he goes back and consults more with his officials, perhaps he might write to us.
Lord McKenzie of Luton
I am grateful to my noble friend and to the Minister. I am happy to read the record on this but, in the mean time, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
“( ) Where the state pension is uprated other than by reference to the triple lock for any period to 6 April 2020, the regulations shall require a calculation of the difference between the actual uprating and what uprating by the triple lock on a cumulative basis would have provided.
Lord McKenzie of Luton
My Lords, as the Minister will have spotted, this is a device to continue the debate on the level of the STP and the associated costs and savings in the Bill. The Bill assumes that STP, but not any projected payments, will be uprated by not less than earnings but the impact assessment is predicated on the triple lock applying, with uprating by the higher of earnings, CPI or 2.5%. Looking long term, these two bases of uprating produce materially different results, as illustrated in annexe B to the impact assessment.
Overall, we know that these reforms will reduce the overall percentage of GDP going to pensioner benefits. As we discussed briefly on Monday, by 2060 the share of GDP, compared to the current position, would fall by 0.6% if uprated by the triple lock but by 1.3% if uprating was just by earnings. Over the long term, the cumulative effect of uprating by earnings rather than the triple lock would lead to STP being 10% lower than if uprated by earnings. This is not a small difference and although the long term— 2060—may seem a long way away, it is the scenario which those in the labour market today will face. Annexe C shows projected expenditure in total support for pensioners at various points over the period to 2060. It shows, in 2013-14 prices, that state pensions in total will be £30 billion less than they would have been under current arrangements. This is why we need to keep an eye on how things are uprated.
One message we take from all this is that the Treasury has undoubtedly taken advantage of a progressive proposal—the STP—to claw back support from pensioners where it can. The figures just discussed do not, I think, include amounts being withdrawn from the systems because of the introduction of the minimum qualifying period, now confirmed at 10 years and saving some £650 million a year, nor the changes to the rules on deferrals, with savings rising to something like £300 million a year. We will obviously come on to debate those in due course. We do not have clarity on the savings that may be made from restrictions on passporting although, as we discussed earlier, these may be limited. None of these figures take account of the increases in national insurance which the Treasury will garner: some £5 billion in 2016, £4.6 billion in 2020 and £3.7 billion by 2030, which are very significant sums.
We heard much praise on Monday for the triple lock and we should acknowledge its significance. However, my noble friend Lady Sherlock explained previously why our priorities had to be elsewhere—to tackle the legacy of pensioner poverty. Given the manner in which the Treasury has clawed back money where it can, it is reasonable for us to at least ask about the Government’s aspirations for the triple lock without, of course, conceding the likelihood of them being in a position to implement those aspirations. I beg to move.
Baroness Sherlock
My Lords, I can understand why the Minister might be reluctant to commit his Government—or indeed a future Government, should one appear before too long—to a particular level of uprating of any benefit. However, the device of my noble friend Lord McKenzie is very interesting. I realise that the Government are finding themselves under increasing pressure to agree to the triple lock, but I suppose that to a degree they are caught in a trap of their own devising, in that the more they trumpet the importance of a triple lock, the more people will expect them to carry on being committed to it. As we discussed on Monday, all the assumptions in the impact assessment and the various illustrations with which we have been furnished are based on the single-tier pension being uprated by the triple lock.
Obviously, the Opposition are in no position to commit to what they might do in any future Government. They would have to make a judgment based on the state of the public finances when they arrived. In the mean time, my noble friend Lord McKenzie makes a very interesting suggestion—that the Government should, if they choose a route other than the triple lock, have to tell Parliament and the public what they have and have not done.
Earnings have been lagging behind prices in all but one of the months since David Cameron became Prime Minister, but we live in hope that that will not always be the case. At that point, the difference could be quite significant and that would have to be taken into account by any future Government. I look forward to hearing the Minister’s reply.
Lord Whitty
Before the Minister replies, the noble Baroness, Lady Greengross, who has an amendment in this group, has had to leave. She apologises.
Lord Freud
My Lords, the engagement of the guaranteed minimum 2.5% uplift in April this year saw the basic state pension reach a higher share of average earnings than at any time since 1992. Next year, in 2014-15, the basic state pension will be more than £8 a week higher than if it had been uprated by earnings alone in this Parliament.
This Government believe that, like the basic state pension, the single-tier pension should be uprated by at least earnings to ensure that it retains its value compared to wages, but there is flexibility in legislation for above-earnings increases. I therefore reassure the noble Lord, Lord McKenzie, that the triple lock could be used for the uprating of the single-tier pension, as it has been in this Parliament for the uprating of the basic state pension.
Clearly, the noble Lord would not—and the noble Baroness, Lady Sherlock, was generous enough not to—expect me to commit future Governments for the next 47 years. Looking back 47 years would take us back to 1966. That was a long time ago. Was it the summer of love? Perhaps that was 1967, but in any case it takes us back a long way. Therefore, I do not think that one could commit any Government to anything, and I am sure that there will be lots of different Governments over the next 47 years. However, when you look at the proportion of GDP taken up on the assumption of a triple lock, it is possible that Governments will want to stick to it. The Office for Budget Responsibility adjusts for the triple lock by applying a 0.3 of a percentage point premium to the annual uprating of the basic state pension over and above the earnings rate.
Clearly, the triple lock has insulated pensioners from periods when the inflation rate has been relatively high, and has been particularly important in the unusually uncertain economic climate that we have seen in recent years. The Government do not want to constrain future Administrations by placing a requirement to uprate by the triple lock in primary legislation. It must be up to future Governments to decide, based on their annual reviews, whether uprating above the minimum of earnings is applied.
In response to the noble Lord’s question, the expenditure figures include the impact of the minimum qualifying period and deferrals, but the chart in chapter 3 of the impact assessment—there is a loser’s chart there —does not. No savings are assumed from passporting.
On the provisional outcomes on the basis of earnings upratings, the White Paper set out the assumption that the triple lock would be extended until 2060, but we have nevertheless demonstrated the impact on earnings upratings on expenditure in our impact assessment. That is in chart B2 in the impact assessment, which shows that the triple lock uprating has a progressively greater impact on expenditure, and therefore pensioners’ incomes, over time.
The annual uprating process for the state pension is transparent, based on a review made by the Secretary of State with reference to the general level of earnings and the overall economic situation. The indices for earnings and prices are published by the Office for National Statistics before the uprating decision is announced and are readily available. As a result, we see no advantage in committing in legislation to providing a relatively straightforward calculation. I therefore ask the noble Lord to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I am grateful to the Minister for that reply. I did not expect him to announce that it was going to be triple lock for the next 47 years; my noble friend Lady Sherlock made our position clear.
There is nothing wrong in looking back 47 years to 1966. England won the World Cup. Harold Wilson was Prime Minister and in his ascendancy. Those were halcyon days and well worth reflecting on.
As I said, the amendment was just a peg to get a debate to highlight that the Treasury is withdrawing quite a lot from the S2P. To an extent, we accept that that is a progressive measure. The Treasury has been chipping away at various bits and I have by no means listed them all. We will probably have another go at listing them in the interim, but in the mean time, I beg leave to withdraw the amendment.
Lord Whitty
Lord Whitty
I shall speak also to Amendments 20 and 21, 24, and 41 to 43. We are now moving to a different implication of the Bill. The strategic objective of the Bill to simplify the state pension system is broadly recognised, but, of course, the state pension is only part of the pension scheme. To some extent, the relatively low expenditure on state pensions in this country compared with some others is due to what was a very healthy occupational pension system covering a significant proportion of the population, although by no means everyone. Those occupational pension schemes will seriously be hit by the Bill.
That impact has not been highlighted in the Government’s public presentation of the Bill. You have to get to page 39 of the impact assessment before it is mentioned. Page 39 clearly states that the net impact on occupational pension schemes will be £5 billion a year.
I shall speak generally about public sector schemes, and most of these amendments relate primarily to them. I declare a non-pecuniary interest as a vice-president of the Local Government Association and a member of the GMB. I was also, until relatively recently, chair of one of the funds in the local government scheme, the Environment Agency scheme.
As I mentioned at Second Reading, I have a longer historic interest in this, but not quite as far back as 1966—I was at the cup final, by the way, and have not had such a high point since. In the early 1970s, I was instrumental in setting up an occupational pension service in my union, now the GMB, to establish in the private sector schemes which covered manual workers for the first time and to make improvements in public sector schemes to allow, in particular, part-time women workers into them for the first time. Those who were in their 30s and 40s at that time retired on a pretty decent pension. As has been in the headlines over the past few days, it is clear that those who retire in a few years’ time—those who are in their 40s and 50s now—will have less good pensions and a less good life in retirement than their parents.
There are many reasons for the withdrawal of occupational pensions, particularly defined benefit pensions in the private sector, and their dilution in the public sector, including the recession, the fall of asset values and, I would argue, the rather overrigorous way in which we judge the assets of pension schemes. They have also been affected by this Government’s activity, particularly the Public Service Pensions Act, which had a direct effect on public sector pensions, and the very significant indirect effect of this Bill.
This arises at various points in the Bill. Schedule 1 and Clause 4 deal with the ending of contracting out. Aspects of this are covered in Clause 24, Schedule 13 and Schedule 14. The net result is that, as a result of the withdrawal of the rebate arising from the ending of contracting out, employees in such schemes on between £109 and £770 a week—in other words, the vast majority—will have to increase their contribution as employees by 1.4% and employers will have to increase their contribution by 3.4%. In the case of the LGPS, this means an increase for employers of £700 million a year, plus £300 million for employees, or £25 per month for the average employee member of the scheme. Equivalent levels will arise in other public service schemes. It will be £0.9 million for employers in the National Health Service, for example.
It will have a very significant impact on the viability of these schemes. It is a logical effect of the Bill, and there is a real dichotomy at the heart of the Bill which by simplifying one part of the pension system is undermining the other. There is no obvious solution. These costs of £4.2 million in the public sector and £0.7 million per annum in the private sector will somehow have to be compensated for, either by the Treasury—I assume that, as of today, the Minister has no agreement to that, but one of my amendments addresses that situation—or by those who are in charge of the governance of such schemes. In the private sector, many such schemes have already been forced to reduce benefits, and to some degree that has applied to the public sector as well. In the public sector, it took a lot of negotiation between employers and the unions to ensure that we are now in the process of implementing the changes due to the Act earlier this year.
Baroness Turner of Camden
My Lords, I do not want to add anything to what my noble friend just said about public sector schemes, but at Second Reading I referred quite briefly to the fact that DB schemes have been under threat for a very long time. I can well remember when I was head of the pension committee of a well known charity that had a very good DB scheme. While I was there, there was a suggestion that in future new people would not be entered into the DB scheme. Gradually, it would be phased out. I spent a whole day persuading the executive not to go down that path. Time went on, and I ceased to be in that office. I went to a dinner on one occasion several years afterwards and somebody said, “Remember that? It’s all changed now. They waited until you’d gone and changed it”. It is absolutely dreadful, quite obviously, as far as my union is concerned.
I have tabled amendments further on that deal with the private sector. My noble friend dealt with the public sector, but also mentioned the private sector, for which we have very much the same cover as far as DB schemes are concerned. I am sure that a number of us have had letters from public sector unions that are very concerned about the future of their schemes, and they have every right to be. I hope very much that the Government will consider very carefully what has been said this afternoon. It is very important.
Lord German
My Lords, I congratulate the noble Lord, Lord Whitty, on his success in having a ticket for the 1966 World Cup final—very exciting for those of us who can remember it—and for raising these issues. At Second Reading, I also raised the issue of public sector schemes and how we should try to deal with them. I want to address Amendment 41, which I will not support in its directive approach to the Government, but I echo some of the issues that the noble Lord raised as being significant to the discussion of the Bill. Undoubtedly, we will return to them later when we get to the appropriate clause, Clause 24.
The abolition of contracting out will result in additional national insurance revenue to the Exchequer: £6.1 billion in 2016, of which £3.7 billion comes from public sector employers and £1.5 billion from public sector employees. If you project those figures forward from the £6.1 billion in 2016, they go to £5.6 billion in 2020, £4.3 billion in 2030, £3.8 billion—which is the lowest point in projections—for 2040 and start to rise again to £4.7 billion in 2050 and back to £6 billion in 2060.
So far the Government have allocated some of the funding they see coming back to them already up front. They have allocated to the Dilnot proposals and to some employment measures; but that leaves a significant tranche of money, of the money available, for the Government to deal with as they see fit but also, I hope, to use to deal with some of the problems that affect public sector pension schemes.
The first question that we have to ask ourselves is: what is a public sector pension scheme? I am a recipient of the Local Government Pension Scheme, although I did not work for local government, because I worked for a charity that was a company limited by guarantee and a member of the Local Government Pension Scheme. I transferred my teacher’s pension scheme to the local government scheme, as it was, but I have never been an employee of local government. I was a councillor, but that was not a time when councillors were entitled to retirement benefit.
A public sector scheme, therefore, could mean a scheme that has private sector people within it. We need a definition of whether that is just one single member of a scheme, because it can work the other way round for a private scheme. Does a single member make it a public scheme, or does it mean a group of members or which organisation came into it? The effect of having no, or very little, room for manoeuvre in public sector pension schemes means that there is going to be an effect on the employers, or those public sector services which we all cherish.
The point about local authorities is probably the most relevant. I took the opportunity to try to work out, with some help, what might be the effect upon the small Welsh council, because they are smaller than those in England. I did choose not the one that I live in, but the one alongside it. The extra cost on that Welsh council, if it simply had to meet the cost of the reduction in NIC, would probably be a £33 rise in council tax. If you took a council in the south-west of England—which shall remain nameless, but is probably far west—you would see an increase in its expenditure of £2 million that it would have to find, simply in the first year of the new scheme. Of course, it is possible to work out the impact on a specific council by doing the figures—working out what is 3% of payroll or 3.4% adjusted. Not all their employers are in the scheme, but you can work out what might apply to each local authority in the land.
Some public sector pension schemes can make adjustments through their investment policies; but I think the noble Lord was probably right that not many public sector pension schemes have the ability to match and manage this change. Therefore I believe, quite sensibly, that it is important that the Government use some of the tranche of money that they will have available by not having to pay out national insurance contributions to smooth over the process of changing from one to another. Over time, pension schemes are able to make adjustments through their investment policies. These are important issues.
I have a plea to make to the Government, and I hope that my noble friend can help with this. I know that it is the Exchequer, and not the DWP, that will make this decision. As the Government have made some forward commitments in relation to this money and have forward-spent it in advance, I think that it would be right for them to say now that they are prepared to help these public sector schemes to smooth the transition over the period in which they can make those adjustments in order that we, the council tax residents and people who use public services, will not have to pay more for those services in the immediate future. These are crucial issues and I am grateful to the noble Lord, Lord Whitty, for raising them, but the Government are going to have to make some effort to compensate the way in which these changes impact upon the public services that we all cherish.
Lord Flight (Con)
My Lords, these amendments raise some issues that relate back to the previous Pensions Bill and, at least as far as I was concerned, some not very clearly answered questions about the potential size that the cash-flow deficit would grow to with regard to pay-as-you-go pensions.
First, my understanding is that, whether it is a pay-as-you-go public sector scheme or a funded public sector scheme, with the ending of contracted-out contributions, the money that the schemes will no longer receive will go towards financing part of the new state pension. Therefore, it has gone off to one box for that purpose. So we are left with pay-as-you-go public sector schemes and the impact that there is on them, and financed public sector schemes, such as local government schemes. My understanding is that, with pay-as-you-go public sector schemes, the money is no longer going to come in from contracting out and therefore the impact will be on the extent of cash-flow deficit going forward relating to public sector schemes. I should be interested to know the aggregate amount that pay-as-you-go public sector schemes will lose per annum as a result of no longer receiving the contracted-out contributions.
I think that there was some discussion during the passage of the Public Service Pensions Bill about the extent of the potential cash-flow deficit. Mr Michael Johnson and I calculated that it could be as large as £25 billion on the basis of including an estimate of the loss of contracted-out contributions. I think that the Government argued that it was not going to be as large as that but I could never quite get my head round the figures.
With regard to contributory public sector schemes, such as local government schemes—which is what these amendments are particularly concerned with—it will automatically become the financial liability of local government to make up the loss of the contracted-out contributions. How is that going to be financed? Not just in terms of what it might mean for a particular local authority, what is the extent of the aggregate cost to public sector schemes which are financed, and what is the average proportion that local government schemes, in particular, will have to make good as a result of the loss of contracting out?
I do not expect the Minister to be able to answer those questions with figures off the cuff, but it is desirable that they should be known and understood. Indeed, the impact on funded local government schemes may be very substantial, implying either significant increases in local council tax or the need for yet further substantial reductions in local government expenditure to finance the loss of contracting out.
Lord McKenzie of Luton
My Lords, briefly, I commend my noble friend Lord Whitty and the noble Lord, Lord German, on trying to focus on solutions to deal with what seems to be a major problem, particularly in relation to local authorities. My noble friend Lord Whitty said that the annual cost of losing the 3.4% rebate is in the order of £700 million a year. Today, we had the local government finance settlement, which reinforced what was announced in the spending round: a further real terms cut of 2.3% in overall local government expenditure. Sir Merrick Cockell, who is a Conservative and the chairman of the Local Government Association, said that local authorities will have lost one-third of their budget by 2015. He said,
“This is the calm before the storm. We do not know how big the storm will be or how long it will last”.
The Audit Commission last year found that 29% of councils showed some form of financial stress. Council tax increases to cover this, even if they were contemplated at the level that the noble Lord suggested, simply are not on because of the need to have a referendum to go beyond a very small increase. Do the Government see this as a new burden which central government is placing on local authorities and therefore a burden which it should it meet?
Lord Browne of Ladyton
My Lords, I am content to join in commending my noble friend Lord Whitty and other noble Lords for bringing and developing this argument. They will forgive me if I do not join in the nostalgia for 1966. The removal of contracting out from April 2016 has significant implications for all occupational pension schemes. I shall make my speech short, given the time. It is bad enough to be between somebody and their dinner; it is impossible to be between somebody and Christmas.
It is clear just how significant are the figures quoted by the noble Lord, Lord German. I did not immediately recognise them, but they are in the same ball park as the figure, which I understand to be the Government’s figure, which suggest in excess of £5 billion a year going to the Treasury in extra NI contributions from 2016 when the new state pension scheme begins. Because of the scale of public service pension schemes, the lion’s share of that increase will come from them. It is far from clear, in the complexity of the Bill, how the increased NI contributions in the public sector can be met. Not surprisingly, those who have responsibility for these schemes—bearing in mind that they have just, in many cases, entered into agreements to reform them—are seriously concerned about the impact these changes will have on local authorities, health services, fire and rescue services and policing.
I note that in Committee in the Commons, Oliver Colvile correctly also put the Armed Forces Pension Scheme in the frame in the context of public service pension schemes. If that is correct, if the Minister is minded to accept Amendment 42, the definition of public service pension scheme will include the Armed Forces, which will answer more clearly the question asked by the noble Lord, Lord German, about what is a public service pension scheme. Rightly, Oliver Colvile was concerned that the defence budget should be spent on defending our country and should not be directed back to the Treasury. If it encourages the Minister to engage with this issue in a positive way, I promise not to tell noble and gallant Members of your Lordships’ House that this issue may impinge on that aspect of public policy. If he considers that, I will keep it quiet in the mean time until we see whether we can make some progress on this issue.
The Local Government Association has been in touch with all of us and has advised us that it supports my noble friend Lord Whitty’s amendments, which defer the end of contracting out for public service pension schemes until the tax year beginning 2018, and require the Government to credit public service pension schemes with amounts equivalent to the money lost through the end of contracting out.
It is understandable why it supports them, because, in the absence of an alternative from the Government, the choices they face are extremely unpalatable. They include loss of services or increased council tax, for example, or, as we are advised, the certainty that low-paid workers will leave the schemes or that settlements, including the settlement of the public service pension scheme, would have to be renegotiated. I am also told by those who know that it will mean the renegotiation of a lot of contracts in relation to privatised services, because assumptions were made about commitments in relation to pensions in the TUPE environment that no longer stand true.
It is not unreasonable in those circumstances to ask the Government how they will resolve the additional expenses and how they expect those who run public service schemes to deal with the increased cost and, for that matter, how they expect the individuals affected to deal with the increased costs. Will the Minister address the advice that we have been given and the concerns of those who run these schemes? Does he accept that there will be a perverse incentive unless this is resolved and that low-paid workers may decide to opt out of their public sector pension schemes? Does he accept that there is genuine worry that this will undermine agreements to reform that have already been reached? Does he accept that there is genuine concern that this will impact on existing contracts for provision of services by the private sector?
Lord Freud
As a consequence of ending the additional pension for those reaching pension age after 2016, we are ending contracting-out. This means that individuals in defined benefit schemes—public sector and private sector—and their employers will no longer be entitled to pay a lower rate of national insurance contributions by contracting out of the state second pension. At the moment, they receive a rebate of 1.4% for employees and 3.4% for employers on earnings up to £40,000.
The abolition of contracting out will result in additional national insurance revenue for the Exchequer. Of this, about £4 billion is national insurance contributions from public sector employers and employees. That is the money that the noble Lord, Lord Whitty, is most concerned about.
The extra information that I can provide to my noble friend Lord Flight is that the cost of the public sector schemes of paying extra employer national insurance is about £3 billion per annum. We do not have any breakdown of which schemes are at local authority level. I will speak to Her Majesty’s Treasury to find out whether any further information is available.
Noble Lords will know that the Government have not set a fixed spending envelope, nor one for individual departmental budgets, beyond 2015-16, and contracting out is abolished in 2016-17, so is outside the current settlement. Public sector employers will have to absorb the burden, as is always the case with tax changes. Any spending review in the next Parliament will, of course, consider the £4 billion cost in the round. This does not affect our commitments on protecting spending on health and education in this Parliament. Treasury officials have already met with Local Government Association officials concerning the impact on the local government pension scheme. This follows conversations between the Chief Secretary and the Local Government Association, and I would expect similar discussions to take place concerning other schemes when settlements are set.
Turning to the noble Lord’s amendments, I note that he moved back from 1966 to 1963, but then he would, would he not? The amendments would effectively defer the loss of the rebate to public service pension schemes for two years—until April 2018—but in doing so would defer the introduction of the single tier to more than 4 million people.
Amendments 19, 20 and 21 would change Clause 4 by redefining pre and post-commencement qualifying years, so that public service pension scheme members have them counted up to and from 2018 rather than 2016. Amendment 24 would change Schedule 1—the detail of the transition—to bring into account the old scheme and introduce the new scheme two years later for public sector workers, with a tidying-up clause in Amendment 43.
Lord Whitty
I thank the Minister and noble Lords who have intervened, largely in support of doing something about this situation. The Minister has kicked a ticking time bomb down the road, effectively saying that this threat to the future of occupational pension schemes, in the public as well as the private sector, will only be dealt with by the next Parliament and probably not then. Whoever is in power at that point is going to have a problem. We have long relied on occupational pension schemes to provide an assured income in retirement as part of the terms and conditions of working within that particular public sector or that particular company. If we are reneging on that—and it is a reneging—then the Government of the day will find themselves in some difficulty if we pass this Bill as it currently stands. The Government need to think again.
As I said, there may be other ways of dealing with this, or at least cushioning it. Yes, there will always be winners and losers in the short and long term, but it must surely be the Government’s intention, in the long term, that effective, well run and well funded private occupational pension schemes—a non-state occupational pension scheme—should continue to be part of our landscape and available on good terms to workers of all sorts.
This indirect effect of the Bill threatens that and is a very serious prospect for the future pensions landscape. I hope therefore that the Government will think again, preferably by Report. I welcome the round table, as long as Merlin is also present, because this will require some degree of ingenuity. I am not sure that the Minister has demonstrated that appropriately today but for the moment, I will withdraw my amendment.
House of Lords
Royal Assent
Small Businesses: Late Payments
Lord Harrison
To ask Her Majesty’s Government what progress has been made in ensuring that small businesses are not penalised by the late payment of bills.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie) (Con)
The Government take the problem of late payment very seriously and have taken a number of steps to support small businesses. We have strengthened the UK’s legislative framework on late payment; we have put pressure on large companies to commit to good payment practices, resulting in the majority of FTSE 100 companies signing up to the prompt payment code; and we have helped small businesses help themselves by improving their access to working capital.
Lord Harrison (Lab)
My Lords, given that the Forum of Private Business says that action is now long overdue on this issue, and given that 94% of the firms in the British Chambers of Commerce are habitually paid late, when will this quixotic Government, forever tilting at the wrong windmills of public policy, implement the late payment on commercial debt legislation so that government departments pay on time and big businesses do not use small businesses and suppliers as shadow banks? Will the Minister institute a kitemark for those good firms that do pay on time and that are currently unprotected by this idle Government?
Viscount Younger of Leckie
My Lords, we need no lessons from the former Government opposite on how this matter is handled. The fact is that tackling late payment requires a change in business culture and that the Government alone cannot solve the problem without interfering in the freedom of businesses to contract with each other. However, the noble Lord makes an important point about a kitemark and, in effect, an accreditation system. The Prime Minister decided to consult on this issue and on 7 December we published a discussion paper on building a responsible payment culture in the UK. We are working with business organisations to ensure that we get views from a wide range of businesses, and we will decide what further legislative or non-legislative action to take based on responses to this paper.
Baroness Maddock (LD)
My Lords, I welcome the Government’s consultation, but I am sure that the Minister is aware that huge quantities of money are held up through retentions and that many small businesses never get complete payments at the end of their contract. As I understand it—I would be grateful if he could confirm this, and, if it is the case, do something about it—neither of these issues is part of the consultation that the Government have put forward. I hope he can assure me that they will be included.
Viscount Younger of Leckie
I cannot reassure my noble friend on that particular point, but I can reassure her that the discussion paper, Building a Responsible Payment Culture—from my department, BIS—seeks views on changing the business culture by increasing accountability and transparency, on encouraging small businesses to make better use of the statutory rights that they already have, on whether there is a case to enhance those rights and on how we can empower small businesses to help themselves reduce the risk of late payment.
Lord Peston (Lab)
My Lords, first, I congratulate my noble friend on asking this important Question, although I hope he would agree that it is not only small firms that suffer from the late payment problem. All firms tend to find that the problem arises. Does the Minister agree that there are two aspects to this Question? One is an ethical aspect: namely, businesses simply should not, as a matter of course, use late payment as their method of financing themselves temporarily. Do the Government agree that this is a serious ethical problem and that businesses ought to start to behave better? The second aspect is an economic one. Does the Minister agree that, rather like the parable of the fleas, if a big firm does not pay the next firm down, it in turn will not pay the next firm down and it will go on ad infinitum until eventually someone will go broke? When they go broke, lots of firms will go broke and the system will become destabilised. Does the Minister agree that the last thing this country needs is any new form of destabilisation?
Viscount Younger of Leckie
The noble Lord makes a couple of important points. It is an ethical issue. The previous Government brought in the prompt payment code, which is voluntary. My honourable friend in the other place—the Minister of State, Michael Fallon —contacted a number of FTSE 100 companies and managed to increase the number signing up to the code from 30 to 72. The noble Lord is completely correct on the economic issue. That is why we have made some good progress in ensuring that supply chains are properly managed.
Baroness Lane-Fox of Soho (CB)
Is the Minister aware that only 30% of the UK’s small and medium-sized businesses are able to transact online? Therefore, does he agree that building their digital skills and encouraging them to use them is a fundamental part of addressing this problem?
Viscount Younger of Leckie
I know that the noble Baroness has a long and very successful history in this field. Of course, I very much support what she says and, with her, I encourage businesses to do just that.
Baroness O'Cathain (Con)
Can my noble friend give a copper-bottomed guarantee that no government department goes beyond the pay days to pay its debts? If he cannot, can he make it very clear to his lords and masters that that is what is demanded of them and that in future we will need that guarantee?
Viscount Younger of Leckie
The Government aim to lead by example. Since 2010, all central government departments have been committed to paying at least 80% of their invoices within five days. I am pleased to say that my own department, BIS, pays 97.3% of its invoices within five days. My noble friend makes a good point. We want small businesses working on public sector projects to benefit from prompt payment.
Lord Wills (Lab)
Can the Minister say what instructions or suggestions the Government have given to the state-owned banks to show understanding when small firms find themselves in difficulties through late payment?
Viscount Younger of Leckie
That is a very specific question. I will certainly write to the noble Lord on the specific aspects of that.
Lord Methuen (LD)
Is the Minister aware that, due to the inefficiency of the Stortext system used by the Treasury Solicitor’s Department to pay its accounts with firms such as costs lawyers, some of these small firms have outstanding accounts going back to May? This compares unfavourably with HMRC, which pays its accounts with minimum delay.
Viscount Younger of Leckie
My noble friend makes a good point, of which the House will certainly now be aware—as am I.
Lord Young of Norwood Green (Lab)
My Lords, in January the Minister of State said that he would name and shame FTSE 100 firms that failed to sign up to the prompt payment code. However, companies that pay their small suppliers in 90 or 120 days could still be signatories to the code. In fact, at least one FTSE 100 company extended its payment terms and then signed up to the code. The Government know that 2,000 firms went bust last year due to late payments. Is it not time that they implemented minimum standards for all signatories to the prompt payment code? That is not really a lesson, but a strong recommendation for practical action.
Viscount Younger of Leckie
There are two points there. First, on the example to which the noble Lord alluded, my honourable friend the Minister of State in the other place followed up quickly on that particular issue. That major company spoke to its suppliers, which were content that there was no particular issue. As far as we are aware, none of the suppliers has complained to the Institute of Credit Management, which they are entitled to do, so it is not possible to judge the merits of that particular case. However, the noble Lord makes a good point.
Railways: High Speed 2
(11 years ago)
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Lord Roberts of Llandudno
To ask Her Majesty’s Government whether they plan to establish training facilities in relation to the extra jobs anticipated to be created by the HS2 project.
The Minister of State, Department for Transport (Baroness Kramer) (LD)
My Lords, we expect the construction of HS2 to generate up to 50,000 jobs, which represents a huge opportunity for the UK workforce. HS2 Ltd is developing skills and procurement strategies that will identify the skills required to deliver HS2 and set out the approach to promoting skills and training throughout the procurement process. The Government will, in responding to the task force of the noble Lord, Lord Deighton, set out what we will do to support and build on this work.
Lord Roberts of Llandudno (LD)
I thank the Minister for her encouraging reply. With the likely approval of this new railway link and the need for 19,000 construction and engineering employees, what action will the Government take to ensure that our youngsters throughout the United Kingdom are adequately trained in sufficient time to take advantage of these opportunities? Secondly, can the Minister tell me whether the Government would consider setting up scholarships related to HS2 so that youngsters throughout the United Kingdom will be able to apply for and, we hope, find employment in this new construction?
Baroness Kramer
I thank my noble friend. He is exactly right that the demand for skills would be significant, not only with HS2 but with all the other infrastructure projects that are being launched thanks to the actions of this Government. My noble friend will take some comfort from the fact that the National Skills Academy for Railway Engineering, which was established in 2010 with wide railway industry support, is helping to tackle the current and future skills needs within the industry. It is working closely with HS2 to identify skills gaps and promote railway engineering skills. We obviously have the Tunnelling and Underground Construction Academy, which has played an important role in the Crossrail project; one would assume that it would do so with the super-sewer for London and then HS2. The skills academy is one of the participants, along with BIS and the DfT, with some support also provided by Siemens, in looking at training entry-level employees as well as skilling up others to respond to new technology developments in the industry with initiatives such as the Siemens Rolling Stock Academy.
Lord Berkeley (Lab)
My Lords, when the Prime Minister recently visited China, he announced that the Chinese would help us build HS2. Can we expect several thousand Chinese people to flood into this country, and will they be welcomed in the same way that Romanians and Bulgarians apparently will be?
Baroness Kramer
My Lords, the discussion was primarily about finance, rather than the range of engineering skills and jobs on which I have just reported. I can assure the noble Lord that the programme that HS2, along with various engineering companies, is taking out is targeted at schools in Britain rather than those overseas. For example, HS2 sent a contingent of 30 people to the skills show in Birmingham to which youngsters came from all over the country. I am confident that a large number of these skills can be achieved in the UK, creating a base for our youngsters to participate not only in HS2 but in a wide range of engineering projects. However, we will always consider financing from overseas.
Lord Cormack (Con)
My Lords, my noble friend’s enthusiasm is almost infectious but I have not caught it yet. Can she assure the House that no report on the implications and costs of HS2 will be withheld, either in whole or in part, by the Government?
Baroness Kramer
My Lords, I can confidently say, looking at the size of the body of documents that was disclosed with the hybrid Bill, that the Government have been putting out more data than most people have ever seen around a project of this size and interest. It is crucial that we are open and transparent and, although there will be times when we have internal discussions, the transparency has been quite exceptional in this case.
The Earl of Listowel (CB)
My Lords, will the Minister look at the very successful National Grid Transco young offender programme, which has trained more than 1,000 young offenders to become workers in the utilities, and see whether it can be applied in this instance? Will she also consider whether young people leaving care, who are overrepresented in the NEET category, can be drawn into this?
Baroness Kramer
My Lords, we are looking at this infrastructure project in an exciting way. Rather than treating it within a transport silo, we are looking much more at the regeneration possibilities. The idea raised by the noble Earl has real potential and I will definitely take it back.
Lord Davies of Oldham (Lab)
My Lords, in the spirit of Christmas, I have two presents: two easy questions for the Minister at this stage. Will the HS2 jobs and skills strategy, to which she referred, be published and, if so, when? Will she also clarify a little more how we will protect the skills developed through Crossrail—to which she also referred—and ensure that they will be available for HS2?
Baroness Kramer
My Lords, there is never an easy question from the noble Lord, Lord Davies, but I do appreciate it. As he knows, the noble Lord, Lord Deighton, is going round the country with a series of consultations looking at the economic growth issues, of which skills are a very important part. Work is happening through many strands: HS2 itself, the work of the noble Lord, Lord Deighton—whose report is expected in the spring—and other more general work with the industry. I will see whether there is a way to pull these strands together into a more comprehensive piece that would give the noble Lord the picture he is seeking.
I have now completely forgotten the second issue. Would the noble Lord mind telling me?
Baroness Kramer
Crossrail has done two crucial things on skills. It has played an important role in the tunnelling academy and we want that to carry over. It has also been excellent at engaging with British companies in the supply chain. By number, rather than value, 97% of contracts have gone to British-based contractors. We hope to see that repeated by using the same techniques of outreach.
Health: Birth Defects
(11 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Rooker
To ask Her Majesty’s Government what is their current approach to reducing the number of children born with neural tube defects; and whether they will consider fortifying white bread flour with folic acid as an additional measure.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)
My Lords, we encourage women to plan pregnancies, and advise those seeking to become pregnant to take folic acid supplements before conception and for the first 12 weeks of pregnancy, and to increase their intake of folate-rich foods. We are considering our nutrition advisers’ full recommendation to fortify flour with folic acid and will take into account new data on the folate status of the population in reaching our decision.
Lord Rooker (Lab)
My Lords, given that folic supplementation needs to be taken before most women know that they are pregnant, is the Minister concerned that less than 6% of 20 year-olds actually take folic supplements? The follow-up research published earlier this year is now available—on top of the scientific advice that the Government received in 2007 from independent committees and the Food Standards Agency—and shows that putting folic acid in flour causes no side effects for males. Is it not therefore time to change policy and put folic acid in white bread flour, which the BMA says is the most cost-effective way of avoiding the misery of hundreds of affected pregnancies, and to join 50 other countries that are doing the same?
Earl Howe
My Lords, mandatory fortification of food is, by any standards, a big step; it is not a decision to be taken lightly. The issue that we have been facing is that the survey data used by the Scientific Advisory Committee on Nutrition is more than 10 years old. The latest data available on the folate status of the population will be available early next year, and we feel that it is prudent to use that information to assess the risks and benefits of fortifying flour with folic acid before we make our decision.
Baroness Brinton (LD)
My Lords, international academic research since 2005 has shown that including folic acid in bread and cereal products is important and that it reduces neural tube defects by between a quarter and a half, so it undoubtedly helps raise the levels of folic acid in women before and during pregnancy. However, it is not at the level that would remove all possibility of NTDs. Research says that folic acid supplements are recommended, too. What will the Government do to alert women who are thinking about having a baby to take supplements before becoming pregnant?
Earl Howe
My Lords, we recognise that some women do not always access maternity services early or attend regularly for antenatal care, and that poorer outcomes are therefore reported in some cases for mother and baby. Maternity services need to be proactive in engaging all women. To help reduce variation and improve services, NICE has published a comprehensive suite of evidence-based clinical guidelines and quality standards for maternity services. We are also promoting the taking of folic acid supplements through a number of channels including Healthy Start, NHS Choices, Start4Life, and the Information Service for Parents.
Lord Patel (CB)
My Lords, what do the Government think are the contraindications for fortifications of flour with folic acid, knowing that the evidence shows that it would cause a reduction of about 300 in the number of babies born with neural tube defects?
Earl Howe
My Lords, I recognise the opinion that is shared among many members of the medical community on this. However, the advice we received from SACN, our expert adviser, clearly showed that there are risks and benefits associated with this proposal. It is not an open-and-shut case. Among the things that we have had to consider are the practical implications of implementing SACN’s advice, which is no small matter.
Lord Hunt of Kings Heath (Lab)
My Lords, does the noble Earl not recognise that in fact the scientific committee he referred to has looked at the issue that he raised and has upheld its previous recommendation that the Government should go ahead? Some 50 countries have already done that; the scientific advice is clear; why on earth are the Government not getting on with it?
Earl Howe
My Lords, as I said, SACN’s recommendations highlighted both the risks and the benefits of this proposal—and I certainly acknowledge that there would be benefits. However, there are also implications. For example, SACN recommended that mandatory fortification should proceed only if accompanied by:
“Action to restrict voluntary fortification of foods with folic acid; measures for careful monitoring of emerging evidence on any adverse effects of long-term exposure to intakes of folic acid … and guidance on supplement use for particular population groups”.
We have to take those recommendations into account before taking any long-term decision.
Lord Turnberg (Lab)
My Lords, is the Minister aware of a recent publication that suggests that folic acid deficiency in men, too, may lead to birth defects in their offspring? Is this not another good reason for fortifying flour?
Baroness Hayman (CB)
My Lords, the Minister said that this was not a decision to be taken lightly, and that is absolutely right, but we now have the experience of 50 other countries. We have had scientific evidence on this issue for many years. The fortification of white bread flour is a targeted measure that could significantly reduce the number of pregnancies, not just births, that involve neural tube defects, and thus prevent a great deal of unnecessary and painful suffering. Will the Minister undertake to look at this matter again as a matter of urgency?
Earl Howe
My Lords, we are looking at this as a matter of urgency. I recognise what the noble Baroness says about the experience of other countries, but we must make policy in relation to the population of our own country, and that involves weighing up both the potential benefits and the potential downsides of any policy.
North Korea
(11 years ago)
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Lord Alton of Liverpool
To ask Her Majesty’s Government what is their assessment of the impact of events in North Korea on security and human rights.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)
My Lords, North Korea continues to have one of the worst human rights records in the world. The recent execution of Chang Song-thaek provides further evidence of its disregard for even the most basic human rights. We are closely monitoring the situation, and we are consulting allies in order to understand the implications of recent events.
Lord Alton of Liverpool (CB)
My Lords, is the Minister aware that even before last week’s execution of Chang Song-thaek, the Times reported that there had been 80 public executions in seven cities on one day alone, the victims tied to stakes, hooded and killed by machine-gun fire? The United Nations estimates that there are some 300,000 people in the gulag network in North Korea—a network which, according to Amnesty International, is being expanded. Will the Minister read the report An Unmet Need, launched this morning at Westminster, which calls for the extension of BBC World Service broadcasts to North Korea as a way of breaking the information blockade, of exercising soft power—as we have done so successfully in places such as Burma—of promoting democratic values and of challenging a regime that relies on Stalinist purges, show trials, the obliteration of opposition and a cruel reign of terror?
Baroness Warsi
I will of course read that report, and will ensure that it is brought to the attention of the Minister with responsibility for North Korea. I understand the noble Lord’s position in relation to the BBC; indeed, he has asked questions on this subject in the past. I also understand that the BBC has recently conducted a feasibility study of, for example, radio broadcasting in North Korea, but has concluded that because of the North Korean Government’s ability to jam broadcasts, the reach that would result from such broadcasting would not provide sufficient value for money. The noble Lord will know that the BBC has full editorial, operational and managerial independence on such issues, and we understand that it is not currently persuaded that a Korean language service would be an effective use of its funds. However, I will look at the report.
Lord Bach (Lab)
My Lords, the whole House is of course united in its condemnation of recent shocking events. The Opposition are at one with Her Majesty’s Government in their concern about the impact of this unpredictable regime on regional stability. Given China’s important role, both now and in the future, did the Prime Minister discuss North Korea with his Chinese hosts during his recent visit? In any event, is it the Government’s intention to have some discussion now, as a matter of some urgency?
Baroness Warsi
The noble Lord may well be aware that Chang Song-thaek was closely involved with China. At the time of the execution, China issued a statement but said that it was an internal matter for North Korea to deal with. The noble Lord is right that this is an incredibly unpredictable regime. We engage with human rights in North Korea in so far as we can, but he will also be aware that North Korea has refused to engage in any form of meaningful dialogue on human rights.
Lord Alderdice (LD)
My Lords, the noble Lord, Lord Alton of Liverpool, has regularly and rightly brought our attention to this matter in terms of the internal implications within North Korea. However, I think that the situation is now coming to the point where the whole Korean peninsula is at risk and there are wider elements. Did the Prime Minister in his engagement with the Chinese raise this wider question of whether the problems within North Korea are now in danger of spilling into the wider peninsula and perhaps even beyond?
Baroness Warsi
My noble friend will be aware that there are six-party talks which deal with the issue of the wider peninsula, which involve China, South Korea, Japan, Russia, the US and North Korea. We are not a party to those talks but we feel that that is the best forum to take some of these discussions forward.
Baroness Cox (CB)
My Lords, what specific measures are Her Majesty’s Government taking to pursue a twin-track approach with the DPRK regarding accountability for crimes against humanity, which we have been hearing about this morning, alongside robust, critical, constructive engagement, in an attempt to open up that most closed nation and alleviate the suffering of the peoples of North Korea who have suffered at the hands of that regime, which acts with impunity, for so long?
Baroness Warsi
We are taking exactly that approach. The noble Baroness will be aware of the UN commission of inquiry, which we co-sponsored, which began in March this year and I think is due to report to the Human Rights Council session in March 2014. Human rights, including the issue of prison camps, will be dealt with as part of that report. We also engage with North Korea bilaterally. As I said earlier, North Korea does not engage in any form of meaningful dialogue on human rights, but it must be remembered that we are only one of 24 countries that have an embassy in North Korea. We have had a diplomatic relationship with it for the past 30 years, which provides us with some opportunity to engage with it.
Lord Kinnock (Lab)
My Lords, for clarification, did the Prime Minister raise the issue of North Korea at all in the course of his lengthy conversations with senior members of the regime in the People’s Republic of China during his recent visit?
Baroness Warsi
I do not have details of that in my brief, but if I have any further information I will certainly write to the noble Lord.
As we approach the end of Questions, I take this opportunity to wish all noble Lords a very merry Christmas and a peaceful new year.
Syria: Aid
(11 years ago)
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Baroness Boothroyd
To ask Her Majesty’s Government, in the light of reports about the impact of winter weather on rapid increases in food prices in the region, what steps they are taking to ensure that aid reaches the refugee camps in Syria.
Baroness Boothroyd (CB)
My Lords, I beg leave to ask a Question of which I have given private notice.
Baroness Northover (LD)
My Lords, according to the World Food Programme, food prices fluctuate. There has been a steady increase in prices since October, but there is no evidence that this is due to the onset of winter. We are providing £500 million of humanitarian support for the Syrian crisis—£276 million for those in Syria and £224 million to support refugees and host communities in the region, including £60 million to help with the onset of winter.
Baroness Boothroyd
I appreciate the Minister’s reply, but are the Government aware that the International Rescue Committee, led by David Miliband, has found severe shortages of food and basic medical items in eight regions of Syria, and a complete lack of blankets and warm clothing for refugees as winter sets in? Is the Minister aware that the Miliband report says:
“Syria is truly on the road to hell”,
and the world’s leaders must,
“pull out the stops and do something about it”,
at least to staunch the dying by ensuring greater access to life-saving assistance? If the Paris conference next month fails to restore peace, will the Government press their partners on the UN Security Council to stiffen their declared support for humanitarian access to the war zones by passing a resolution that ensures the needs of humanity are a priority instead of pleading there is no easy option as a reason for inaction?
Baroness Northover
We agree with the position that the noble Baroness has just outlined. It is an absolutely dire situation. There is a catastrophe in Syria and also, in terms of the effects, outside. As the noble Baroness knows, getting access is extremely difficult. We have been pressing extremely hard on this issue as well as making a financial contribution. She will be aware that the UNSC made a presidential statement on access on 2 October. If implemented, that would deliver a huge amount, but putting it into effect is the difficulty that she rightly identifies. We will continue to work extremely hard to try to achieve that.
Lord Collins of Highbury (Lab)
My Lords, as we are to have a debate in January, I stress the point that now is the time for all sides fully to implement the presidential statement on humanitarian access. We cannot wait. Can the Minister update the House on the funding of the Save the Children and Oxfam aid programmes for Syria?
Baroness Northover
I cannot give the noble Lord specific answers on Save the Children and Oxfam, but he will know that both of those organisations are major recipients of aid. In answering a previous Question I was asked about Hand in Hand. It is receiving aid from DfID via Save the Children. I can provide detailed answers on that in due course. We are working with a number of international organisations to try to get aid into every part of Syria. As I emphasised before, access is exceptionally difficult.
Lord Wright of Richmond (CB)
My Lords, the Minister is, I am sure, aware that I asked a Question on 2 December calling for resumed contact with the Government of Syria. I received a rather guarded reply from her colleague. Can the Minister update us on where we stand on direct consular and diplomatic contact in Damascus?
Baroness Northover
I am aware that the noble Lord thinks that this is extremely important. It is important to engage with everybody in this conflict, both within Syria and in the countries around, and those countries which appear to have an interest in its continuing instability. It is extremely important that the United Kingdom is involved in widespread engagement.
Lord Reid of Cardowan (Lab)
My Lords, given the wise decision not to intervene militarily in Syria, will the Minister accept that there is therefore an even stronger obligation on us to attend to the desperate needs of these refugees? If we are not dealing directly with Assad or the Syrian regime, and in view of the importance of Iran in the region and the tentative but significant steps that have been taken on engagement with Iran on other issues, can the Minister tell the House to what extent we have engaged with the Iranian regime as regards what should be, objectively and neutrally, the priority for all of us, which is dealing with the humanitarian refugee crisis?
Baroness Northover
It is in nobody’s interest to have instability increasing in this region, which is exactly what is happening at the moment. That is why it was incredibly good news when relations were improved with Iran. As I did before, I pay tribute to our colleague, the noble Baroness, Lady Ashton, for the work she did on that. Iran is indeed an interested party in the area.
Lord Alderdice (LD)
My Lords, on behalf of the United Nations, the noble Baroness, Lady Amos, made an appeal for direct access for humanitarian need. The Foreign Minister of Syria publically stated a few days ago that the Government of Syria would now facilitate this. Can my noble friend indicate whether the statement by the Foreign Minister of Syria is evidenced in actual fact or is this yet again a statement from the Syrian Government that has no real strength and basis in fact?
Baroness Northover
DfID is managing to get into all 14 governorates of Syria. However, there are 2.5 million people in hard-to-reach areas and 250,000 in besieged areas, which bears out the point that my noble friend makes. We call on the Syrian Government—we have not had an adequate response as yet—to remove some of the bureaucratic constraints that they have put in place which hinder humanitarian relief operations.
Baroness Symons of Vernham Dean (Lab)
My Lords, the Miliband report very specifically pinpointed the issue of the shortage of vaccinations. Can the noble Baroness tell us a little more about what is being done, as the lack of vaccinations endangers public health in general and is particularly dangerous, of course, to young children?
Baroness Northover
The noble Baroness is absolutely right. That is a major concern of ours, but it hinges so much on access. She will be well aware, for example, of the cases of polio in an area where it had been eliminated. As we try to seek the elimination of polio worldwide, to see it going backwards in this region is extremely concerning. It is a problem of access. We are working to try to ensure that all medical supplies, including for the vaccination of children, get through.
Lord Elton (Con)
My Lords, I presume that the most difficult people to reach are those who are being targeted by the various forces active in Syria. Can my noble friend tell us in particular whether aid is able to reach and support the Christian communities in Syria, which are under very great pressure?
Baroness Northover
They are indeed under great pressure and a number of them are in hard-to-reach areas. Those who are blocking humanitarian access come from all sides in this conflict and we urge all parties to the conflict to remove those barriers to humanitarian operations.
The Earl of Sandwich (CB)
My Lords, we have all seen thousands of refugees crossing the Lebanese border. What are this Government doing to assist the Lebanese Government in bringing their shelters for refugees up to international standards? Have we considered sending British troops, who are very well versed—as we knew in Macedonia—in meeting these appalling conditions and building structures that will be durable?
Baroness Northover
We are contributing £89 million to Lebanon, and that will contribute shelter, food, medical consultations, water and sanitation. Lebanon has recently come out of a long, protracted civil war and we are very concerned about its stability. In terms of troops, the noble Lord will be well aware from his work with Christian Aid and other organisations how essential it is to make sure that any apparent military intervention is separated from humanitarian intervention, and I think there would be risks in what he proposes.
Co-operative and Community Benefit Societies Bill [HL]
Privileges and Conduct Committee: Ninth Report
The Chairman of Committees
That the Report from the Select Committee on the Conduct of Lord Mackenzie of Framwellgate (9th Report, HL Paper 95) be agreed to.
The Chairman of Committees (Lord Sewel)
My Lords, in speaking to this Motion, I shall speak also to the three following Motions in my name on the Order Paper.
The facts in the cases of Lord Mackenzie of Framwellgate and Lord Laird are set out at length in the reports printed as House of Lords Papers 95 and 96. The two Lords were subject to what might be described as a sting operation by the Sunday Times newspaper. Lord Laird was, in addition, a subject of an undercover operation by the BBC television programme “Panorama”. In the course of conversations with undercover journalists posing as intermediaries for legitimate businesses or as communications consultants, the two Lords said things that the House’s Commissioner for Standards found to indicate a clear willingness to breach the House’s Code of Conduct, contrary to the requirement that they should always act on their personal honour. The commissioner found that Lord Mackenzie of Framwellgate had in addition breached the code by improper use of the House’s facilities for hosting functions and by entering into an agreement to accept payment in return for providing a parliamentary service.
The Sub-Committee on Lords’ Conduct has the function of recommending the appropriate sanction for breaches of the code and has recommended suspension of Lord Mackenzie of Framwellgate for six months and of Lord Laird for four months. The Committee for Privileges and Conduct has the task of reviewing the findings of the Commissioner for Standards and the recommended penalty in the event of any appeal by any Member of the House investigated by the commissioner. The Committee for Privileges and Conduct considered appeals by both Lord Mackenzie of Framwellgate and Lord Laird and heard evidence from both of them. The committee decided not to uphold their appeals. Accordingly, I beg to move the first Motion in my name on the Order Paper.
Privileges and Conduct Committee: Ninth Report
The Chairman of Committees
That Lord Mackenzie of Framwellgate be suspended from the service of the House for six months.
Privileges and Conduct Committee: Tenth Report
The Chairman of Committees
That the Report from the Select Committee on the Conduct of Lord Laird (10th Report, HL Paper 96) be agreed to.
Privileges and Conduct Committee: Tenth Report
The Chairman of Committees
That Lord Laird be suspended from the service of the House for four months.
European Union Committee
The Chairman of Committees
That Baroness Quin be appointed a member of the Select Committee in place of Lord Carter of Coles, resigned.
Procedure Committee
The Chairman of Committees
That Baroness McIntosh of Hudnall be appointed a member of the Select Committee in place of Lord Filkin, resigned.
Draft Modern Slavery Bill Committee
(11 years ago)
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Lord Hill of Oareford
That it is expedient that a joint committee of Lords and Commons be appointed to consider and report on the draft Modern Slavery Bill presented to both Houses on 16 December (Cm 8770) and that the committee should report on the draft Bill by 10 April 2014.
Electoral Registration and Administration Act 2013 (Transitional Provisions) Order 2013
Lord Gardiner of Kimble
That the draft order and regulations laid before the House on 17, 23 and 30 October be approved.
Relevant documents: 9th, 11th and 12th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 9 December
Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) (Northern Ireland) Order 2013
(11 years ago)
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Lord Astor of Hever
That the draft order laid before the House on 19 November be approved.
Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 17 December
Anti-social Behaviour, Crime and Policing Bill
(11 years ago)
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Lord Taylor of Holbeach
That the amendments for the Report stage be marshalled and considered in the following order:
Clauses 1 to 10, Schedule 1, Clause 11, Schedule 2, Clauses 12 to 86, Schedule 3, Clauses 87 to 96, Schedule 4, Clauses 97 to 105, Schedule 5, Clauses 106 to 120, Schedule 6, Clauses 121 to 138, Schedule 7, Clause 139, Schedule 8, Clauses 140 to 142, Schedule 9, Clauses 143 to 166, Schedule 10, Clauses 167 to 171.
Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill
(11 years ago)
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Lord Hardie
Lord Hardie (CB)
My Lords, in moving Amendment 166, I wish to speak also to Amendment 166B. At Second Reading, a number of noble Lords expressed concern about the changes to the existing limits on controlled expenditure that Clause 27 seeks to introduce. Justification for such a change is obviously necessary. The Explanatory Notes provide no assistance in understanding the rationale for this change. In his response at Second Reading the Minister, the noble Lord, Lord Wallace of Saltaire, did not explain what problems had been caused by the existing limits. I am confident that if there was sound justification for reducing the expenditure limits based on past experience of the operation of Section 85 of the Political Parties, Elections and Referendums Act 2000 within its limited scope of activities, the Minister would have advised the House of that. That is particularly so where justification was sought by noble Lords, but none was forthcoming.
If there have been no problems, why reduce the limits which have been in existence for at least 13 years? Moreover, how can the Government justify reducing expenditure limits while at the same time increasing the range of qualifying activities? In his reply, will the noble and learned Lord the Advocate-General please answer the following questions? First, what is the reason for Clause 27(1)? Secondly, what problems have been caused over the years by having the existing limits? Thirdly, in proposing to reduce the limits, what assessment did the Government make of the likely increase in expenditure caused by the extension of controlled activities introduced by Clause 26? If the noble and learned Lord has no answer that justifies this extreme provision, will he acknowledge the strength of feeling that exists that this clause is grossly unfair, is a disproportionate interference in the right to freedom of speech and political engagement, and is an obstruction to democracy?
Lord Tyler (LD)
My Lords, we have Amendment 166A in this group. Before I come to it, I have a great deal of sympathy for the approach of the noble and learned Lord, Lord Hardie, but with an important reservation. I noted with interest that he referred to the advice of the Committee on Standards in Public Life, but the committee gave much more detailed consideration to some of these issues in its later report of November 2011. That is the context in which we are having this discussion. Our amendment seeks to return to the existing, well known situation of the registration threshold, with one very important qualification, to which I will refer when I also speak to the amendments being proposed by the noble and learned Lord, Lord Hardie, and others.
Nursing my cold and cough yesterday evening, I carefully read the whole of our Hansard proceedings on Monday. If anybody has been having as much difficulty in sleeping as I have recently, I fully endorse that as a very good way of avoiding insomnia. I was struck that almost all the constructive amendments to make this part of the Bill more workable and effective came from the Cross Benches, and from the Conservative and Liberal Democrat Benches. This clearly reflects the reality outside the Houses of Parliament. The organisations potentially affected by its provisions want to ensure that the Bill deals with the doubts and the defects in the existing law, the PPERA 2000, rather than simply maintain some of the unsatisfactory features of that status quo.
I have met representatives of literally dozens—scores, perhaps even hundreds—of organisations over recent weeks, some charities and some not, to discuss the perceived effects of the Bill. It is becoming increasingly clear that all serious organisations recognise that the loophole that could enable a single-issue-obsessed multimillionaire or campaign group to target huge sums of money into one or more marginal seats must be addressed. One of the problems with the other amendments in this group is that they do not restrict that targeting into a small number of seats. Our amendment does.
Baroness Royall of Blaisdon (Lab)
I am sorry to stop the noble Lord in full flow, but we have all had many conversations with charities over the past weeks and not one charity has mentioned that to me personally or to my noble friend. Can the noble Lord name the charity that has these grave fears?
Lord Tyler
My Lords, they are innumerable: NCVO, Bond and a whole number of organisations have said to us that targeting into one constituency or a small number of constituencies is recognised as a possible problem. It is not something that they necessarily want to do but they recognise that there could be a threat.
As my noble friend Lady Williams pointed out so powerfully on Monday evening, this type of deliberate distortion of our electoral process is far advanced elsewhere, in the USA in particular, but is already on its way this side of the Atlantic as well. By definition, however, we need to ensure that the net is not of so fine a mesh that we create a totally inappropriate bureaucracy for much smaller, much more locally based groups. Here I think I share the objectives of the noble and learned Lord, Lord Hardie, and others.
I referred on Monday to this essential balance between transparency and accountability on the one hand and excessive regulation on the other. The collective contention of very many organisations is that while the 2000 legislation was a concern and is defective, many of them simply did not have to worry in the past because their spending came beneath the existing thresholds.
In evidence to the Commons Select Committee, the chair of the Electoral Commission described the threshold as the measure that determined how far you go down in the pyramid of organisations engaged in campaigning. I think she described the situation very well. It is not a simple, two-dimensional triangle; it is a three-dimensional pyramid, so the further you go down in terms of the threshold, the more small organisations—huge numbers of organisations—potentially feel threatened and have to look to the way in which they are operating. At the top are a small number of large organisations that might seek deliberately and decisively,
“to promote or procure electoral success”,
of a party or candidate—the now accepted definition in the Bill—and at the bottom are a whole range of smaller bodies that are concerned that their activities might be perceived to be doing so.
We can continue to seek to reassure them as to whether they really would be caught by definition or we can provide explicit reassurance in the Bill by lifting the threshold to its existing level. I think we should do just that. Our amendment on this subject deals neatly with the conundrum that the Government have faced in so doing. My noble friend Lord Wallace of Saltaire said in his letter to colleagues on 5 December that in increasing the thresholds the Government would,
“need to take account of the consequences for the constituency limits set out in the legislation and the Government will reflect further on the detail of how to bring this about”.
This comes to the nub of the issue I referred to earlier. I hope that the amendment helps my noble friend.
The Minister was right, of course, that it would be plainly illogical to have a simple threshold of £10,000—or a much bigger one of £20,000 or £25,000—and then have a constituency spending limit during the post-dissolution period of £5,800. An organisation could be spending the whole limit of £5,800 and beyond without even being registered and therefore without declaring the expenditure. This would undermine the whole spirit of transparency and accountability that runs through the Bill. In the second part of our amendment, we stipulate that a higher threshold can apply unless all the spending is targeted in one constituency. I have heard the argument that this somehow adds complexity, but I do not accept that.
Of course, in a later group we will come to other detailed amendments, which clarify and make more workable the application of constituency limits. A whole section will do just that. I am sure that the Committee will recognise how crucial these are to the success of the Bill, and to its acceptance by MPs in the other place. After all, they themselves face very stringent expenditure limits at elections. When Amendment 166A in this group is taken in conjunction with our later Amendment 170A, which clarifies the scope of the constituency limit, it will be very clear when spending has occurred only in one constituency.
Lord Hodgson of Astley Abbotts (Con)
My Lords, the noble and learned Lord, Lord Hardie, and my noble friend Lord Tyler have fought this issue pretty well. I will make a short contribution to the debate on this important topic. Amendments 167 and 168 accept that there need to be limits, but seek to change as little as possible. As was pointed out by the noble and learned Lord, Lord Hardie, the reason for this is that there is not evidence that the limits so far have caused great difficulties or given rise to many problems. The amendments therefore seek not to reduce the amounts from £10,000 to £5,000 and from £5,000 to £2,000, but merely to restore the purchasing power of those figures. I must say to my noble and learned friend on the Front Bench that I think £2,000 for a single constituency is a very low sum indeed. Hiring a hall and some audio equipment would make a very sizeable dent in that sum.
The Bank of England’s inflation indicator, a wonderful thing to play with of an afternoon, enables you to check purchasing power on any day from 1750 to 2012. The purchasing power of £1 in 1750 is equivalent to £187.76 in 2012, just as an aside. The relevant figures are from 2000 to 2012. The purchasing power of £1 in 2000 was equivalent to £1.42 in 2012. In other words, inflation has averaged 2.9% per annum, and therefore the purchasing power of £1 is now only 70p. On that basis, applying that across the piece, you come out with a figure of £14,200 from £10,000, or £7,100 from £5,000. I have merely rounded it to the nearest £1,000.
The reason for my contribution to this debate is that I think we want as few changes as possible. This matter was debated at great length during the PPERA proceedings, and all we seek to do is restore the status quo ante in terms of purchasing power. I hope that the Government will look with favour on this contribution to the debate on an important topic.
Lord Harries of Pentregarth (CB)
My Lords, I shall speak to Amendments 167A and 167B. The Government have indicated quite clearly that they will raise the registration threshold, so the question at issue is what the sum should be. We have had various alternatives put before us already today. The recommendation of the commission that I have the privilege of chairing is £20,000 for England and £10,000 for the other three nations.
The noble and learned Lord, Lord Hardie, reminded us of the Neill committee’s recommendation in 1998 that the limit should be £25,000 and that that should be the figure also for Scotland, Northern Ireland and Wales. He posed a very sharp question: why should the registration thresholds be lower for those nations? Although our commission eventually plumped for the figure of £10,000 for those three nations, we were very tempted to put it higher, particularly because of all the difficulties in Northern Ireland, the key role that charities are playing there and their great desire not to be identified with any particular political party at this time of emergence from conflict to democracy. There is therefore a very strong case for Northern Ireland’s registration threshold to be higher.
The reasons for the raising the thresholds are obvious. The Electoral Commission says that they should be raised to at least the present PPERA levels. The argument for raising them higher than that is, first, the increased range of activities—even if you take out staff time, as we hope the Government will, there is still an increased range of activities which will cost more money. The second is inflation. Perhaps most important of all is the stated aim of the Government to give smaller charities in particular more freedom of manoeuvre without the fear that they might overstep the line.
In our report, we summed up what all smaller charities were saying. They had said that,
“they limited or stopped altogether some campaigning activity in order to ensure they did not get close to the registration threshold. For many organisations, the perceived issue of reputational risk associated with registering as a third party was important in addition to the administrative burden. The reputational risk was a particular concern to some NGOs”.
This was the case with Oxfam. Evidence gathered for the report stated that:
“Oxfam deliberately chose to ensure their spending was capped under £10,000 so they didn’t have to register, because for charities, they see it as a real brand reputational risk, they have to register as a third party because we are meant to be really apolitical NGOs. But yes they do have large budgets but have chosen not to spend them on election campaigns”.
That question of reputational risk for charities in particular is an important consideration.
So much of this legislation, and the lowering of the thresholds in particular that we are talking about now, represents an attempt to escape the influence of the super-PACs in this country. It is as though a huge net has been thrown in order to catch some great fish which might swim across the Atlantic, but the only effect of which is to trap smaller fish quite legitimately swimming freely in the waters of democracy. I hope that the Government will raise the threshold very high indeed in order that their stated aim might be achieved; that is, that smaller charities can get on with their legitimate business of campaigning on policies without fear of being caught.
On Monday, the noble Lord, Lord Gardiner, referred to his 15 years working with the Countryside Alliance. He said that,
“we were punctilious about not promoting or procuring the electoral advantage of a party or candidate”.
I am sure that they were. He continued:
“We were punctilious about these matters”.—[Official Report, 16/12/13; col. 1097.]
In fact, we understand that the Countryside Alliance had specific legal advice that its activities would be subject to PPERA regulations if it spent enough on materials to breach the registration threshold. It did not register, but that is only because it did not spend enough on printed materials. As the case study in the second commission report shows, it would clearly have needed to register under the Bill because of the new activities subject to registration. Its activities were not just to become transparent through regulation but would have been restricted because of the lower spending cap and the very low constituency limits.
In our report we set out the particular case of the Countryside Alliance and the difficulties that it would find itself in as a result of the Bill, and I wonder whether the Minister was aware of that legal advice at the time. The Government have given lots of reassurances to charities that they are not in the business of promoting or procuring the electoral advantages of a particular party, but that reassurance does not work because the sting is in not that sentence but the qualifications. A charity campaigning on policy can suddenly find that inadvertently, even if it has not mentioned a political party, and even if its primary purpose is something else altogether, it is coming up to the line where it might be caught by this regulation. It is this in particular that the commission wishes to draw to the attention of the Minister as we debate this amendment on thresholds; they need to be as high as possible in order to allow the maximum freedom that should properly be allowed in a democratic society.
Baroness Williams of Crosby
I ask the noble and right reverend Lord to give us his view about the last part of the amendment spoken to by my noble friend Lord Tyler. All the way through this, we are trying to find a balance between the very legitimate arguments put forward by charities, not least by the noble and right reverend Lord himself, and the real danger—I am sorry to have to say this again—of there being very heavy expenditure within one or a few constituencies that might, almost inevitably, alter the outcome of an election, despite the fact that it was not the intention to elect a particular candidate. At a certain point the level of material, campaigning and so on begins to reach such a high volume that it is very hard to make that distinction; indeed, it is an unreal distinction in those cases.
Secondly, it is crucial that we hear from the noble and right reverend Lord on the issue of bunching together different kinds of campaigns in a particular constituency. Does he recognise that it is not difficult to find all kinds of ways around our incredibly complicated registration and election regulations? It is therefore true that those small fish can grow to be quite big fish, and there is a temptation to follow the examples elsewhere. Not only does that give an illegitimate basis on which to hold the election but, perhaps equally important, it discourages people of moderate income from standing for Parliament because of the very large figures that they are supposed to meet. Will he address that part of the issue before he completes his presentation?
Lord Harries of Pentregarth
I have listened with great attention to what the noble Baroness has said, as I did on Monday when she suggested that the commission had not taken that point seriously enough. I was going to address it when we came to talk about constituency limits because there are a whole range of issues related to them. I notice also what the noble Lord, Lord Tyler, said about constituency limits, and I take very seriously what he has said: there is clearly a major issue there that has to be addressed. There are other issues connected with constituency limits that also need to be taken into account, though, not least all the complications of trying to ascertain which constituency it might be attributed to. I take seriously what noble Lords have said but, if I may, I will address it when we come to address the amendments on constituency limits.
Baroness Mallalieu (Lab)
My Lords, I put my name also to Amendments 167A and 167B on which the noble and right reverend Lord, Lord Harries, has just spoken. Essentially they are amendments about registration thresholds and I will confine what I am going to say, quite briefly, to that aspect. It is clearly accepted that the thresholds are going to go up from those proposed in the Bill, which are very low indeed. The question is clearly: how far? If the aim is to catch wealthy organisations and individuals and to prevent undue influence on the electoral process by those with money, the response has got to be proportionate, as I am sure the Minister would accept.
As the noble and right reverend Lord, Lord Harries, said, the mesh of the net has got to be set so that small NGOs and charities can carry on with their campaigning work without being frightened off by the fear of the expense and the staff time that registration and its associated bureaucracy—which I hope later we will cut down to a degree—will entail. The larger organisations are to be caught; the smaller ones should not be, so that they can carry on with their usual activity.
The current thresholds under PPERA have done just that; hence the lack of problems arising from the drafting of the definition. This was revealed only by the most recent consultation, because most small organisations simply did not meet the existing threshold. However, those thresholds will not be enough if the activities covered by the Bill, even the non-contentious ones, are included, as everyone agrees that larger staff costs will be included with them.
I remind the House that the Electoral Commission said in relation to this very aspect that,
“we think the Bill’s Impact Assessment under-estimates both the regulatory burden that the Bill would impose on registered campaigners, and the number of non-party campaigners that may need to register with us as a result of the Bill’s provisions”,
and the lower threshold. The Electoral Commission is going to be faced with a great deal more work.
I am sorry hear to that the noble Lord, Lord Tyler, has been having difficulty sleeping. Indeed, the speech from the noble Baroness, Lady Williams of Crosby, on Monday caused me some lack of sleep. She chided me about what I had said about ogres coming out of the woodwork, so I had a further look at it. Because she has just raised the point now, I will say this. She produced shocking figures about what was going on in America and raised the spectre of this somehow creeping across the Atlantic and affecting our electoral process. No specific evidence has been produced for the need for specific constituency spending limits. The Government have produced no specific examples in defence of their argument on this topic—for example, of disproportionate spending in one constituency that has had undue influence on the outcome.
However, this is not the only piece of legislation that deals with this matter. There is also the Representation of the People Act 1983. Even if there were to be targeting of a specific candidate in a specific constituency, that Act covers constituency spending by candidates and also—this needs to be restated—spending by non-party campaigners who have campaigned for or against a specific candidate. What is more, breaches of the Representation of the People Act are the responsibility of the police to investigate, with all the sanctions that follow from that. The Electoral Commission does not have the enforcement powers for these rules. So, if these people exist, we in this country already have the powers to deal with them and the mechanism to do so.
The Earl of Sandwich (CB)
My Lords, I have not been part of the commission, but I support what the noble Baroness, Lady Mallalieu, and my noble and right reverend friend said about Amendments 167A and 167B. I was convinced by these amendments and then, when I heard the noble Lord, Lord Hodgson, with his extraordinary mathematics on inflation, telling us how much it actually costs to put on a show, be it a conference or a different occasion, I was completely convinced. Then the noble Lord, Lord Tyler, said that these things were costing far too much. Has he seen printers’ bills lately and does he know how much 3,000 leaflets will take out of your pocket in no time at all? These figures are still really quite limited, and I hope that the Government have seen sense. I have a feeling that we are not going to hear their answers because they are reserving them all for Report.
The issue I mentioned in relation to Clause 26 was that of smaller charities. The noble Lord, Lord Tyler, was quite right in describing the role of smaller charities. My particular question for the Minister was: what happens if these charities are linked in a coalition? I know that we are going to discuss the coalitions again, but it hinges on this a little bit. Many of these charities which were spawned by the larger charities—Oxfam and Christian Aid—are now growing in their own right but nevertheless have a symbiotic connection and are often seen together in conferences. Will the Government reflect on that effect on smaller charities as well?
Lord Ramsbotham (CB)
My Lords, I support Amendments 167A and 167B. I have two questions for the Government that have not been raised. First, we have had no specific evidence from the Government that the previous spending limits were overly permissive, resulting in undue influence on the outcome of general elections. Therefore, I would be grateful if the Minister would outline what specific evidence gave rise to this clause.
Secondly, because it again comes from the Government, I note that the Electoral Commission thinks that the regulatory burden that the Bill would impose on registered campaigners has been grossly underestimated in the Bill’s impact assessment. With many Bills coming before this House, I have had occasion to question the depth of the impact assessment. It really must go into the impact on others who will be affected by the Bill, and that has not happened in this case.
Baroness Royall of Blaisdon
My Lords, noble Lords from across the House have made it abundantly clear that the Government’s decision to significantly reduce the threshold at which organisations register with the Electoral Commission was not based on any evidence and would significantly hamper the ability of civil society organisations to participate in democracy in the run-up to an election. I add to that the comments from committees of this House and of the other place about the lack of an evidential base for this policy.
The Joint Committee on Human Rights said:
“We are not yet satisfied that the Government has sufficiently explained the need for the reduced registration thresholds (particularly in light of the increased range of regulated activities)”.
The Political and Constitutional Reform Select Committee said:
“In the absence of any evidence that there is a need to lower the threshold for third parties to register with the Electoral Commission, we recommend that the Government revert to the existing levels”.
The reductions are patently unreasonable and unfair, but they give rise to a particular concern because of the cumulative effect of provisions in the Bill. The evidence of that is overwhelming in the report of the commission. The noble and learned Lord, Lord Hardie, was right to ask what assessment had been made of the cost of the new obligations and bureaucracy. I look forward to the Minister’s answer.
The decision taken by the Government when they drafted the Bill to lower the thresholds at the same time as increasing the range of regulated activities—including, astonishingly, staffing costs, which we debated on Monday—suggests that the Bill is more about stifling dissent in the run-up to an election than about taking big money out of politics; at least, that is certainly the effect of the proposals that they have come up with. The Network for International Development Organisations in Scotland has said that,
“a prevalent fear is that it will put a halt to all activity. If the threshold is as it stands, that would be one member of policy staff. Everybody else would have to stop work. It would effectively cut down some organisations”.
The Electoral Reform Society agrees, and says that:
“I think that this will kill small organisations. They just won’t participate. There is just too much bureaucracy. They’ve never had to register before”.
Finally, the RSPB corroborated both these statements, saying that,
“it is illogical to halve the thresholds and caps at the same time as widening the activities that count towards them; this could seriously curtail legitimate charitable work”.
I wonder why the thresholds were changed and I would be grateful for an explanation from the Minister.
The noble Lord, Lord Tyler, was, in many ways, fear-mongering about the flooding of organisations by big money. I have looked at Bond, because the noble Lord quoted it. It said that big money in a constituency was “theoretical” and that no one had provided a specific example. As the noble and right reverend Lord, Lord Harries, said, we are casting our net to catch the large fish but it is the small fish—which play a hugely important part in making our civil society vibrant—that are being caught, and the governance of the country will suffer.
My noble friend Lady Mallalieu was very clear about the issue. The Commission on Civil Society and Democratic Engagement says, in its report:
“The most important measures to avoid undue influence, such as US style super PACs, are already in PPERA and the Representation of the People Act. In addition, none of the measures introduced effect undue influence in relation to political parties or candidates”.
I look forward to the Minister’s response.
In closing, I will say that I, like others, am particularly concerned about the situation in Northern Ireland, where the reduction to £2,000 is not just unfair and unworkable but absurd. On Monday, we all agreed that civil society has a vital role in sustaining the peace process in Northern Ireland, where the situation is still fragile, and the reduction in the threshold can act only as an impediment to the fantastic work of its vibrant and valuable civil society. I look forward to hearing from the Minister that the Government have, indeed, listened and will move on this issue.
The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)
My Lords, I thank the noble and learned Lord, Lord Hardie, for introducing these amendments. It has been obvious since Second Reading in this House, and indeed before, that the registration threshold has given rise to considerable controversy and debate. As noble Lords are aware, third parties that incur controlled expenditure are not subject to any electoral controls on their activities provided they campaign only up to a particular expenditure threshold in a relevant election.
The 2000 Act sets this threshold at £10,000 for third parties campaigning in England and at £5,000 for third parties campaigning in Scotland, Wales or Northern Ireland. As has been said by numerous contributors, the Bill amends these amounts to £5,000 and £2,000 respectively. The noble and learned Lord, Lord Hardie, perfectly fairly asked the purpose of this. The aim is to increase openness. There is a good argument that those who spend money in a way that can reasonably be regarded as intended to promote or procure success at any relevant election—to promote not a policy but the advantage of a party or candidate—should do so transparently. Amendment 166, tabled by the noble and learned Lord, seeks to return the thresholds to their original PPERA levels. The amendment tabled by my noble friend Lord Tyler seeks the same result, but proposes a third threshold of £5,850 where spending has been incurred solely in a single constituency.
My noble friend Lord Hodgson goes a step further and suggests thresholds of £14,000 in England and £7,000 in Scotland, Wales and Northern Ireland. The amendments tabled by the noble and right reverend Lord, Lord Harries of Pentregarth, go further still and propose thresholds of £20,000 and £10,000 respectively. Finally, the noble and learned Lord, Lord Hardie, suggests a registration threshold of £25,000 applied to each of the constituent parts of the United Kingdom.
Noble Lords will know that when a third party registers with the Electoral Commission, it becomes a recognised third party. Upon registration, the third party becomes subject to spending and donation controls for the duration of the regulated period of the relevant election. The Bill intends to ensure greater transparency of campaign finance, which is why it revised the current registration thresholds to £5,000 and £2,000. It was intended to have the effect that more third parties would be required to account for expenditure and provide details of the donations they receive, bearing in mind that the fact of registration means that the expenditure can reasonably be regarded as intended to promote or procure success in a relevant election for a particular party or candidate.
Baroness Hayter of Kentish Town (Lab)
I was going to bring this up in our stand part debate, because it is important. With the permission of the Committee, I will do so now. On Monday an impression was given—I am sure misleadingly—by the noble and learned Lord, which he has just now repeated. He said that,
“organisations … will incur controlled expenditure … only where their activities, ‘can reasonably be regarded as intended to promote or procure electoral success’, of ‘parties’ or ‘candidates’”.—[Official Report, 16/12/13; col. 1042.]
He keeps using that phrase, which is accurate, and in the Bill. However, that is only part of the definition. The House needs to recognise the point that my noble friend made on Monday. It is not simply about promoting but also, of course, about reducing the chances of electoral success. I think that the examples given were of the campaign against the war in Iraq or against the bedroom tax.
I will make just one other point. The law goes on to state:
“In determining whether expenditure can reasonably be regarded as intended to promote or procure electoral success … it is immaterial that it can reasonably be regarded as intended to achieve any other purpose as well”.
That, therefore, could be activity that is aimed at some other purpose, but which may damage a party, and so it would be covered. I am sure that the Minister did not want in any way to give a misleading impression, but by continuing to concentrate only on activity to promote a party rather than to harm it by discussing a policy—a policy that could suddenly become it—that is wider than his words perhaps suggest.
Lord Wallace of Tankerness
I hear what the noble Baroness says. I am sure, as she recognises, that it is difficult to be criticised for quoting directly from the Bill. However, she makes the point that there could be detriment to a party. It is quite proper, too, that if a third-party organisation was to campaign to try to defeat the Labour Party’s chances in a range of constituencies and its activities could be quite reasonably seen as aiming to thwart the Labour Party in a campaign, it is important that there is transparency—that people know where the money comes from and what is behind the campaign to do down a particular party. On Monday we had a debate on principal purpose which the noble and learned Lord, Lord Hardie, introduced. Of course there can be other purposes. It may be that in trying to do down the Labour Party that group hopes to raise funds and increase its membership. However, that does not detract from the fact that there is an electoral purpose, which is what we seek to catch. I see the noble Baroness shaking her head, but it is important to remind the House that the definition we are talking about is one that her party put into legislation in the 2000 Act. It is slightly ironic that I am having to defend that definition, when her own party put it into the original 2000 Act.
Baroness Hayter of Kentish Town
That Act covered publications, which are quite clearly and easily defined as this. The worry about this clause is that it includes rallies that might happen. They are not aimed at harming the Labour Party. On Iraq, they were aimed at stopping the war. The effect was to affect a political party. Therefore again, the Minister is suggesting that the activity has to be aimed at electoral outcome rather than at a particular policy. Every group that has spoken this morning about this as a result of reading his words on Monday, says that his words are narrower than what its lawyers tell them is suggested by the wording of the Bill.
Lord Wallace of Tankerness
My Lords, it is not a subjective test—we made that very clear. The Labour Party did not put a subjective test into its legislation in 2000. It is an objective test. Therefore, to say that it is solely about what a particular third-party organisation aims to do is not a fair representation of what it says. It is about what can reasonably be regarded. That is an objective test, and we rehearsed all the arguments for and against an objective or subjective test. Therefore it is not unreasonable to remind the Committee about what is here in the Act, which is a definition that the Government introduced by amendment in the other place because people clearly expressed that they wanted us to use the tried and tested definition that was used in the elections of 2005 and 2010. However, I accept that there has been a perception of the possibility of a chilling effect. I think I said that on Monday, and I accept that representations have been made to me and to my noble friends.
Baroness Mallalieu
In the light of what the noble and learned Lord is saying, could he clarify what the position would be if a charity, or a non-charity, had a core campaign on which it had been working for some time, and during the regulated period the Government of the day, or an opposition party, adopted that policy—or, indeed, adopted a policy directly contrary to it? A party might adopt that campaign objective as policy—or, indeed, a party might introduce legislation affecting it. If the organisation steps up its campaigning because of the change in the political situation, does that core policy not then become something that is brought under the Bill, where it would not otherwise have been?
Lord Wallace of Tankerness
I think I addressed that point in our debate on Monday, and I quoted from the Electoral Commission’s guidance on the subject. The noble Baroness’s final sentence was interesting, because she asked what would happen if the organisation stepped up its campaign. I think I gave reasons on Monday why, if an organisation had a campaign that had been going on for many months or even years, and one party subsequently decided to endorse it, that should not affect the organisation. However, if it seized on that development and sought to ratchet up its campaign by several notches, and encouraged—at least by implication—people to vote in a certain way, that would make a difference. That is reflected in the Electoral Commission’s guidance. On Monday we had a discussion on whether it would be better to clarify such things in the Bill or to leave it to guidance. That is a perfectly legitimate question, and as I said then, it is one on which the Government would obviously want to reflect.
Baroness Mallalieu
Will the Minister, during the reflective period, focus on the idea of something that suddenly becomes topical because the Government of the day introduce a Bill that does exactly the opposite of what the campaigning organisation wishes to achieve? He talked about “ratcheting up”, or increasing the volume. Surely that would be an inevitable part of campaigning if the organisation were suddenly faced with what it saw as a piece of hostile legislation. Would that organisation not then be able to campaign actively against the measure—although presumably, that is not something to which a Government who were anxious to encourage democracy would object?
Lord Wallace of Tankerness
We had a very thorough debate on this subject on Monday; I do not want to go over again everything that I said then, and rerun that debate. I will certainly reflect on what the noble Baroness has said; indeed, I spoke on Monday about some of the clarity sought. I think that the noble and right reverend Lord, Lord Harries, was encouraging me to act, and said that a number of people wanted to put things in the Bill. He listed a number of things, and I said that there had to be a balance between what we put in a Bill and what we leave to guidance. That is a perfectly proper matter for us to reflect on, and we shall bear the noble Baroness’s comments in mind.
I was about to say that charities and other campaigners had expressed fears that because low-level campaigning and expenditure could be regulated as a result of the Bill, small organisations would face a disproportionate reporting and compliance burden. Those concerns have been reflected in most of the contributions this morning. My noble friend Lord Tyler talked on Monday about the balance between transparency and regulation. Almost inevitably, the more transparent we seek to make the arrangements, the greater will be the amount of regulation. That point was echoed this morning by my noble friend Lady Williams.
This is the balance that we are trying to get right. We believe that there should be greater clarity about who is campaigning for the electoral success of parties or candidates—but equally, we do not want small campaigners to be dissuaded from taking part in public debate by fear of having onerous burdens placed upon them. Therefore, in line with what my noble friend Lord Wallace of Saltaire committed in the House on 5 November, as I have said, and, indeed, as I said when opening the first set of amendments on Monday, the Government will bring forward amendments on Report to increase the registration thresholds.
Lord Tyler
Will my noble and learned friend make one point absolutely clear to the Committee? If, as has been suggested this morning, the registration threshold was moved as high as £25,000, it would be perfectly possible for an organisation or individual to spend £24,999.99p in one constituency without being in any way accountable for how that money was spent and without having to be transparent about where the money came from, even though that sum would far exceed what we might expect to have as the limit on spending. It simply would not be known that that was happening because the registration threshold was so high; hence the significance of the measure that my noble friends and I have tabled.
Lord Wallace of Tankerness
My noble friend anticipates what I was about to say. However, he is right, subject to the caveat in the Representation of the People Act and its interplay with the restrictions on spending in individual constituencies, that sum would be almost twice what the candidate could spend. It seems a bit perverse that, if you have a campaign, you cannot answer for it if you are a candidate or party. However, we will come on to the constituency limits and the important interplay with the Representation of the People Act.
The noble and learned Lord, Lord Hardie, referred to the figure of £25,000, which, as my noble friend says, would allow quite a lot to be done without the need for transparency. Nevertheless, the noble and learned Lord made an important point abut there being the same threshold in each of the constituent parts of the United Kingdom. At a very early stage—I think before I had been given the “hospital pass” —I met a group of citizens in my former constituency as my successor thought that it would be a good idea for me to meet them. One of the points that they made was that, in reducing the thresholds from £10,000 and £5,000 to £5,000 and £2,000, there had been a bigger pro rata decrease for Scotland, Wales and Northern Ireland. I have certainly raised that issue. It is an important issue with regard to what the threshold is in the different parts of the United Kingdom. I certainly undertake that we will consider that point. I think it was also raised by the noble Baroness, Lady Royall, specifically in relation to Northern Ireland.
I reiterate the point made by my noble friend Lord Tyler with regard to constituency limits, consistency and not subverting the constituency limit by having a threshold that is too high. I accept that some of those who argue for a higher level do not want a constituency limit at all, but we shall deal with that in greater detail later.
I repeat that our objective is to ensure transparency, but we need to strike a balance. We do not want to have a chilling effect, even if it is just a perception on the part of smaller organisations that they would exceed the threshold even if their activities were not necessarily ones that would require them to register. Therefore, I repeat that we believe a substantial increase from the level in the Bill would, indeed, be appropriate.
The noble and learned Lord, Lord Hardie, possibly in a festive mood, tried to be seductive by suggesting that we accept his first amendment and restore the status quo. It is seductive but, at the risk of spoiling the Christmas spirit, I do not think that the legislative hokey-cokey of “in out, in out and shake it all about” is the best way to do this. The Government will bring forward an amendment on Report which, as I have indicated, will introduce a substantial increase from the level in the Bill. On that basis, I urge the noble and learned Lord to withdraw his amendment.
Lord Hardie
My Lords, I am grateful to noble Lords in all parts of the House for speaking in this debate. The noble Lord, Lord Tyler, suggested that the 2011 report was the more appropriate one. I went back to the 1998 report because that was the one which founded the 2000 Act, which set out the limits that we are discussing. On that basis, I went back to that report to find the justification for the legislation.
I hear what the noble and learned Lord the Advocate-General has said in response. I am disappointed that despite his white hair he is not Father Christmas and will not give me the gift that I was seeking. But I look forward to the amendment on Report and hope that it sets appropriate levels, and may not be confined to the £2,000 and £5,000 levels, but will be above that, if the Government are truly listening to the concerns of the third sector. With these observations I beg leave to withdraw my amendment.
Lord Hardie
Lord Hardie
My Lords, Amendment 169B also stands in my name.
The issues here are similar to those raised in the previous group of amendments, except that they apply to the total control of expenditure that may be incurred by a recognised third party in the various constituent countries of the United Kingdom. The current limits are contained in paragraph 3(2) of Schedule 10 to the Political Parties, Elections and Referendums Act Act 2000. Clause 27(2)(a) proposes to alter these limits by substituting them for,
“2% of the maximum campaign expenditure limit in that part of the United Kingdom”.
The effect of that provision is that the relevant figures for the countries are: £319,000 for England, reduced from £793,000; £35,000 for Scotland, reduced from £108,000; £24,000 for Wales, reduced from £80,000; and £10,080 for Northern Ireland, reduced from £27,000. My concerns about these reductions are similar to those about the reductions in registration limits.
I will not repeat the figures, but I will ask the noble and learned Lord the Advocate-General to justify the changes in this particular paragraph. The activities subject to control have been extended, yet it is proposed to reduce the total permissible expenditure. Moreover, the period covered is 12 months before an election. At Second Reading I drew attention to the following anomaly: in the context of Scotland, I doubted whether a campaign group could fund a national rally about an issue of importance to it, within a budget of £35,000. Even if it could, such a rally would exhaust its budget, leaving it unable to campaign effectively in any other way.
The unrealistic level of expenditure is highlighted when one has regard to the provisions in paragraph 5 of Schedule 10 to the 2000 Act about elections to the Scottish Parliament. The relevant figure for controlled expenditure is £75,800 and the relevant period is four months prior to the election. At the risk of showing my lack of the mathematical expertise that the noble Lord, Lord Hodgson, has, I say that a simple arithmetical approach of multiplying that figure by three would produce an equivalent annual figure of £227,400. But that, I acknowledge, is oversimplistic, as the greater part of any allowance will be expended in the last few months prior to an election. Accordingly, although probably still higher than the current annual figure of £108,000, the equivalent extrapolated figure would be approximate to it. If the proposed figure of £35,000, represented by the 2% introduced by Clause 27(2), is implemented, the discrepancy between the allowance for UK elections and elections to the Scottish Parliament is vast. Such a discrepancy for the same country in the same schedule to the 2000 Act demands an explanation and justification. In his reply will the noble and learned Lord the Advocate-General provide the House with the required explanation and justification for this disparity?
The deletion of this subsection will restore the status quo as far as limits are concerned, although the burden on that expenditure will be greater if the definition of controlled expenditure is expanded as proposed. I invite your Lordships to conclude that the effect of Amendment 169 would be to restore some public confidence in the democratic process and to avoid the absurdity and likely confusion that will arise from such disparate figures in Scotland, where campaign groups will be subject to different regimes within the same geographical boundaries.
Amendment 169B was tabled in case the previous amendment was not accepted, and the Government remained determined to reduce the overall figures and could justify such a policy. This amendment is a proposed compromise. By increasing the percentage from 2% to 5% the figure for England is more approximate to the current figure, and might even be slightly higher; but the decreases for Scotland, Wales and Northern Ireland are less dramatic. The equivalent figure in Scotland would be £87,500. I beg to move.
Lord Harries of Pentregarth
My Lords, I wish to speak to Amendment 169A. I would like to ask the Minister what the rationale was behind such a drastic reduction in the spending limits. For England it was a 60% reduction; for the other nations it was 70%. This is a vast reduction, for which no reason was given. The commission which I have the privilege of chairing simply wishes to revert to the original PPERA figures plus inflation. Those are written in the amendment, and would mean £1,125,000 for the year for England; the comparable figures for Scotland, Northern Ireland and Wales would be £155,000, £86,000 and £40,000. We are simply recommending the original PPERA figures plus inflation.
I will give one example of a big spending campaign which is concerned about the cap. In the 2010 general election, Hope not Hate registered £319,231 of spending in England with the Electoral Commission. It is a national grass-roots organisation that seeks to challenge and expose openly racist political parties, candidates and policies. It works on the assumption that there is a risk that far-right racist policies might be campaigned on vigorously at election time, and it wishes to oppose that with racially tolerant policies. For example, in an area like Barking and Dagenham in 2010 where it mobilised people, its spending included printing of leaflets and Hope not Hate newspapers, staff time to write campaign literature, media coverage costs, communicating the campaign to supporters, and its battle bus bill. Of course, an organisation such as this, quite properly, needs to register and needs to be totally transparent in what it does, but the spending limits proposed in the Bill would severely reduce what that organisation would be able to do. It spent in 2010 £319,231, which is above the limit in the Bill. There is clearly a strong case for reverting not only to PPERA but to PPERA plus inflation on the cap.
Lord Tyler
I wonder if I may ask the noble and right reverend Lord a question. He and his commission have justifiably encouraged us to see the package—how different elements of the Bill stick together. I draw his attention to the fact that his amendment, combined with other amendments to remove all constituency limits that he and his colleagues have proposed, would, if they were to be implemented, mean that the sum of £1.25 million could be spent in a small number of target marginal constituencies. That is a huge sum of money. When we come to the other sections that deal with constituency limits, will he think about the implications of the interaction between those two propositions from his commission?
Lord Harries of Pentregarth
The commission is keen to emphasise that every aspect of the Bill is integrated with every other. Clearly, constituency limits have to be taken into account very seriously when we are thinking about raising either the threshold or the cap.
Lord Horam (Con)
I intervene briefly to support the Government and oppose the amendments put forward from the Cross Benches because the overall argument about undue influence is important here. As the noble Lord, Lord Tyler, has just said in his intervention, it is not only a question of the total amount of money spent but of the way in which it is deployed in any geographical area, whether it is in one constituency, a number of constituencies, Scotland, Wales or England. That is the problem and that is why the Government are right to try to reduce the spending limits, with a view to reducing the possibility of undue influence.
There has been some discussion of the figures of a 60% or 70% reduction, and I obviously do not know exactly how they were arrived at in detail, but I know, as we all know, what happened at the last general election. As the noble and right reverend Lord, Lord Harries, rightly pointed out, spending by the Hope not Hate campaign throughout the whole country totalled £319,000. It was the third biggest spender, and only two registered third parties spent more than the Government are proposing—the public services union, Unison, which spent £671,000, and Vote for Change, which is a Liberal Democrat-backed organisation wanting change to the electoral system. Those are the only two organisations, apart from Hope not Hate, which spent anywhere near or above the amount proposed by the Government.
I fully accept that there will now be a different definition of controlled expenditure, and on previous amendments I pointed out that the Government should look very carefully at what is included in controlled expenditure, particularly in relation to staff costs. If they were to be removed from the definition of controlled expenditure, most of the problems in that regard would be solved. However, leaving that aside, the fact is that the spending of most other organisations that registered—all the fuss is about only the 30 or so organisations that took the trouble to register in the last general election—was way below £319,000, which is the limit proposed by the Government in the Bill. There is plenty of headroom there for people to run a proper campaign, given that they can concentrate those resources in a particular area. However, it is the overriding view of the Government that such a campaign should not unduly influence the result in any particular constituency. It is therefore entirely consistent with the logic of their position to reduce the spending limits as they propose.
Lord Harries of Pentregarth
I hope that the noble Lord is not suggesting that the Hope not Hate campaign unduly influenced the election with that £319,000, which was spread right across the country. Was it not a fundamental expression of democratic rights that that campaign should have been able to do that? I am sure that he would not want its work to be hindered.
Lord Horam
I would not want its work to be hindered but there should not be undue influence in any particular set of constituencies or a constituency. That is what concerns me. If the noble and right reverend Lord says that this campaign was across the whole country, then clearly there was not an undue influence. None the less, if a campaign is focused on particular areas there may be undue influence.
Baroness Mallalieu (Lab)
My Lords, I rise very briefly indeed to support the proposal contained in the commission’s amendment, and simply to say in answer to the noble Lord, Lord Horam, that I am unaware of an example—I still await one, although I have asked a number of times—of where there has been undue influence as a result of excessive spending in one constituency or spending specifically directed against a candidate in the last election. It does not appear to have happened. This is a pretty draconian cut of between 60% and 70%. It is perhaps right that I should simply add that, so far as the commission is concerned and the package that has been spoken of, those figures reflect a period of 12 months. If, as I hope happens, the period is to be reduced to six months, those figures would need to be adjusted accordingly.
Baroness Lister of Burtersett
My Lords, I wish briefly to draw attention to what the Joint Committee on Human Rights said about this. I am a member of that committee and I apologise because I have a meeting this afternoon and will not be here for much of the rest of our debates. The committee acknowledged that the Government were right to review the maximum spending limits; I imagine that they need to be reviewed every so often, not least because of inflation, which the amendment addresses.
The committee’s report makes the point about the lower limits now being,
“applied to a wider list of controlled activities (such as media events, rallies, canvassing)”,
and that,
“the Government admits that it is difficult to assess how much is currently spent on these additional activities by third parties and therefore it is difficult to assess the impact of the measure. The Government’s inability to provide this assessment is of concern, and adds to the overall uncertainty and lack of understanding regarding the Bill”.
Is the Minister able to provide some assessment of what this will mean and allay the concerns that have been raised? In the absence of that and of decent evidence, which is generally lacking around the Bill, I strongly support the commission’s amendment.
Baroness Hayter of Kentish Town
My Lords, it will probably come as no surprise that the Labour Party supports reducing the cost of politics, not simply because that is right nor just because of the warnings sounded by the noble Baroness, Lady Williams, who is not in her place, on Monday and this morning, but perhaps because Labour is outspent by the Conservatives. The current situation is bad for democracy, not simply for ourselves, and the major reason is because money and politics rarely mix. We want all groups, candidates and parties to be able to put their views to the electorate without needing to raise large sums or without having to be rich enough to fund a campaign themselves.
Although we are slightly unsure about the wording of the Bill, we think we have much in common with the intention behind the Government’s changes, in that we support transparency and lowering costs. However, we are concerned, for the reasons that we have just heard, about what they have sought to do and the figures that they have chosen. Neither the noble Lord, Lord Horam, nor the rest of us know where the figures come from. The Electoral Commission quite rightly says that it is for the Government to propose and for Parliament to decide on the appropriate limits, in order to balance that freedom of expression against controls of undue influence. The commission listed some of the factors we ought to think about, such as inflation and the wider range of activities. However, we find it difficult to see how the Government have thought about those matters in the way that my noble friend Lady Lister suggested because we have seen nothing of the assumptions that they have made about the costs associated with policy research, press, meetings, debates and staff, which will now be covered by the Bill—and over a 12-month period.
In the earlier debate the noble Lord, Lord Tyler, compared what a third party might be able to spend against what a candidate might spend; of course we are talking about a 12-month period, not when the candidates are affected in the short campaign. So, as others have done, we ask: what are the factors that led to these figures? Were they grabbed out of the ether, rather like the 500 seats in the Commons that the Government, as the House will remember, were set on last time? Did these figures just come out of a roulette wheel without rhyme or reason, or is there something that we could look at to test the Government’s assumptions that these are the rights figures? Without that, it is very hard to see the logic behind them.
Lord Wallace of Tankerness
My Lords, again we are grateful to the noble and leaned Lord, Lord Hardie, for introducing this part of the Bill and the consideration of the overall spending limits. As no doubt the Committee is aware, third parties are subject to limits on the amount of controlled expenditure that they may incur during the regulated period of a United Kingdom parliamentary general election. The initial figures set out in PPERA 2000 set the limit at £988,500 for the whole of the United Kingdom and this Bill, as has been heard, seeks to amend that limit to £390,000. The limit in either case is of course the aggregate of individual limits of each part of the United Kingdom. That means that expenditure is allocated in accordance with where its effect is most significantly felt. If a body has its head office in Scotland, for example, but undertakes and targets its campaign work only in England, then that spending will be allocated to the English limit and not the Scottish one.
The noble and learned Lord, Lord Hardie, has tabled amendments so that the spending limit for third parties remains as it is in PPERA 2000, and the noble and right reverend Lord, Lord Harries of Pentregarth, has proposed limits that would take the spending limit to £1,406,000 across the United Kingdom as a whole. This substantial increase, as I understand it, is to reflect inflation since the original limit was set 13 years ago. There has been considerable discussion, not just in this House but also in the other place, about third-party campaigners and the potential to incur significant amounts of expenditure in campaigns. This was spoken about very eloquently by my noble friend Lady Williams. The noble Baroness, Lady Hayter, indicated that her party has no desire to see the cost of politics increase, nor, indeed, do we want to see a disproportionate effect on elections by those who have lots of money to throw around.
There is also the potential, given that limits are imposed on political parties—let us remember that, if we look at this in its full context, there are limits on political parties—that we would undermine that regime if their supporters could still demonstrate their backing by diverting funding to a formally or informally aligned party. Allowing very large sums to be spent to the benefit of parties that are candidates in this way risks, I believe, undermining the basic rules that have evolved over the years in terms of restriction of political spending in elections. The nature of third parties means that controls on their spending are necessary. I do not believe that we have really debated limits, but I do not think that anyone has challenged the principle that there should be some control on substantial spending.
There is some evidence of third-party expenditure increasing. In 2010, eight third-party organisations spent more than £100,000, although, as I think my noble friend Lord Horam correctly pointed out, most who were registered—and only 30 were registered—spent considerably less than that. Indeed, some who were registered spent nothing at all. Although there were eight who spent more than £100,000 in 2010, in 2005 only two groups did so. I believe, and we have said all these things many times, that it is about trying to strike the right balance to ensure transparency. We believe that the figure in the Bill is a reasonable limit for national third-party campaigning. Most campaigns in the last election did not spend anywhere near either the total amount that was available then or the amount that is proposed in this Bill.
It has been argued that these previous campaigns did not require third parties to account for a much wider range of activities, but it is worth reflecting on the fact that the Green Party, a political party, spent £330,000 on its national campaign in the 2010 general election. That campaign activity included incurring expenses on advertising, unsolicited materials, manifestos, market research, transport, media events and rallies—all activities that third parties should also account for. No one can doubt that the Green Party had a very strong voice in that campaign and indeed succeeded in getting its first ever Member elected to the House of Commons. It was a voice within a national debate. In fact, only four out of well over 100 registered political parties spent more than £390,000 in 2010: the Conservative Party, the Labour Party, the Liberal Democrats and the UK Independence Party.
We are setting a limit which, as I said, only four political parties exceeded in 2010, and a party that was recognised as having played a full part, albeit without standing in every constituency, in a national election in all its activities spent less than £390,000. We do not believe that third parties should be dominating the electoral landscape—by “third parties” I do not mean political parties but such as we have discussed in this debate, as of course I think third parties have an important role to play in the party-political scene—and creating campaigning inequality among political parties. We believe that the spending limits are appropriate and proportionate.
The noble and learned Lord, Lord Hardie, drew attention to the differential that exists in Schedule 10 to the 2000 Act, and I accept that this Bill is looking at the UK limits. It will also recognise that while you might have a campaign to be undertaken on a pan-UK basis, it is not quite the same as if you were focusing solely on Scotland for a Scottish election and so I think that there is some scope for a differential.
We believe that, having reduced the limit to a sum that has not inhibited, or would not have caught, the Green Party at the last election or indeed the vast majority of third parties that were registered and campaigned, this is not an unreasonable balance to be struck. I invite the noble and learned Lord to withdraw his amendment.
Lord Harries of Pentregarth
Will the Minister not acknowledge, in relation to the spending by the Green Party, that of course it did not have to include staff costs in the figure that he quoted? As the Bill now stands, third-party campaigners have to include staff costs, so there is not an even playing field. Furthermore, will he acknowledge that the whole political landscape now is very different from what it was, say, 20 or 30 years ago, with a dramatic decline in political-party membership and the rise in membership of third-party campaigners? Does the apparent indifference of so many people, sadly, to political-party campaigns and their enthusiasm and commitment to third-party campaigns not indicate that third-party campaigns should be treated equally seriously as a fundamental feature of our democracy along with political parties, particularly at election time?
Lord Wallace of Tankerness
The noble and right reverend Lord, Lord Harries, makes a fair point that, as a party, the staff costs were not included, but I think one of the reasons was referred to by my noble friend Lord Gardiner on Monday. Political parties’ staff are fully committed and are very transparently fighting an election, whereas one might reasonably assume that, when larger organisations undertake political campaigning—and we accept that they are registered because they believe that their campaigning could reasonably be judged to give an electoral advantage, or disadvantage, to one party or another—their staff’s time is not entirely taken up with it. He makes a fair point, but there is also a distinction because it would not be the entire staffing costs of a particular organisation that would be taken into account.
I wholly accept the point that has been made about the richness of the debate, with groups contributing in ways they have not done before, much of which is made possible, I suspect, by electronic media. Those of us who have had to stuff envelopes in the past probably realise that there are easier ways of campaigning and getting the message across, as well as being cheaper than the printed material which the noble Earl, Lord Sandwich, mentioned in his earlier intervention. In some respects, campaigning costs themselves have gone down over the years because of the nature of much of modern campaigning.
Lord Aberdare (CB)
I have been listening to the debate in as objective a fashion as I can manage. The noble and learned Lord has made a strong case for why the limits should perhaps not be increased, and to me he has also made a strong case for why the existing system is working well. The bit that still puzzles me, particularly in the light of the increased coverage of the new definition of controlled expenditure, is the justification for actually reducing the limits. That, I am afraid, I have not been convinced by.
Lord Wallace of Tankerness
My Lords, I think I indicated that even with the reduced limits, on the list I have before me there were only two organisations that went above them, one being UNISON and the other being Vote for a Change Ltd, and neither of those got anywhere near the limits set out in PPERA. Even with the reduced limits, most organisations would not get anywhere near them. I take the point made about staffing made by the noble and right reverend Lord, Lord Harries. Even a political party, the Green Party, which fought a fully fledged election campaign, admittedly not in every constituency but one that registered in the national campaign, did not reach the reduced limit. In trying to strike these balances, these limits are not unreasonable.
Lord Hardie
I am grateful to noble Lords on all sides of the Committee for participating in the debate. I hear what the Minister has said about what the effect of these limits would have been had they been applied to the last election and I want to reflect on that. I note also that the noble Lord, Lord Hodgson, referred to the experience of the last general election.
I think that the noble and learned Lord also acknowledged that much of the difficulty might be removed if staff costs were taken out of the equation. Certainly that is a point the noble and right reverend Lord, Lord Harries of Pentregarth, raised just now. I wish to reflect on these matters before Report, but in the meantime I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town
My Lords, we gave notice of our intention to oppose the Question in order to say some of the things that have now been covered, so the Committee will be pleased to learn that I shall not repeat them. One of them is the lack of rationale given for the figures for the threshold and, indeed, for the spending limit. I congratulate the Minister, who has managed to give a whole answer without explaining why the figures were chosen. Given the questions that he was asked, it is a clever move. It remains the case that the Electoral Commission, which after all is the Government’s independent adviser, has called on them to raise the thresholds and put up the spending limits, because everything is going to be covered. Some organisations have been mentioned already, but the BMA, NCVO, RSPB, Oxfam, the Royal College of Nursing and ACEVO, which have to work with this, all say that they do not know why the changes to the thresholds and the spending limits are there, or how the new figures were chosen. That remains our worry about this clause.
I want to add one point, but I do not want to repeat the exchange that the noble and learned Lord and I had on the first group of amendments today. He again used the phrase that the provisions will cover only those things that are done in a way to “influence” an election. But as we know, the law says that it is immaterial whether something can be regarded as intended to achieve any other purpose as well, and therefore things that can be done not with the intention of influencing an election could well be covered. The definition of electoral material goes on to include, for example, a definition of a “candidate”, which,
“includes a future candidate, whether identifiable or not”.
There is no need to mention parties or candidates by name for an activity to be deemed to be controlled expenditure. That, I think, is one of the issues that remains with us even after the debates today. I think the Government still feel that the NGOs are exaggerating the potential damage. However, the NGOs will continue to worry about what is covered by both sets of limits in this clause, and by the lack of a rationale for the new figures.
Lord Wallace of Tankerness
My Lords, I thank the noble Baroness for raising these issues once again. The Government accept that the figures for the spending threshold for registration set out in the Bill need to be revisited, and I suspect that the outcome of that will reflect the concerns that have been expressed. However, I do not think I can honestly say that there is a scientific means of arriving at a figure, any more than I suspect the Labour Government used a scientific method to reach their figures for spending limits and thresholds in 2000. I repeat that the balance we seek is one that will secure greater transparency but not lead to unnecessary regulation, particularly taking into account the concerns that have been expressed by a number of smaller organisations. I hope that when we come back with our amendment, it will meet the test of not imposing undue burdens but providing for fair transparency.
I shall not rehearse again all the arguments that were made in the debate immediately prior to this on the total spending limit, but we must have regard to the fact of what one political party is able to do, and bear in mind that the fifth report of the Committee on Standards in Public Life thought that the existing limits were quite generous. Of course, no science will ever get this absolutely right, but the figure will nevertheless still allow the healthy involvement of a number of campaigning organisations.
The possible difference between us is that the noble Baroness takes the view that a subjective test should apply, whereas we are sticking by the objective test. That is a perfectly legitimate difference of view for us to have, but I believe that the objective test is more rational. It is reasonable and is the one that informed the legislation currently on the statute book. In respect of some of the concerns that the noble Baroness has expressed, organisations which are properly campaigning on issues and trying to persuade Governments to change policy or reinforce policies they already have would not be seen, on an objective test, as trying to secure an electoral advantage.
I hope that that reassurance will be passed on because it is important that those organisations continue to play their very proper role in trying to persuade Governments, Oppositions or whoever about particular policy issues. There is certainly no desire on the past of this Government to try in any way to inhibit that. With those remarks, which I hope were reassuring, I ask the Committee to agree that the clause should stand part of the Bill.
Lord Tyler
(a) sending election material falling within paragraph 1 of Schedule 8A which is—(i) addressed to, or(ii) by virtue of delivery instructions directed to,any person registered, or entitled to be registered, in the register of parliamentary electors for any particular constituency, or to households within a particular constituency;(b) unsolicited telephone calls falling within paragraph 2 of Schedule 8A, made to such persons or households.( ) For the purposes of this paragraph, “election material” is defined as in section 143A.”
Lord Tyler
My Lords, I should apologise to Members who were anticipating that by now we might be moving on to the QSD. It is certainly not at my insistence that this group of amendments should be taken at 1.41 pm. However, as we have been gathering from all sides of the Committee during discussions this morning, the constituency limits, which are the subject of Clause 28 and therefore of this group, are very important and of central significance to the Bill.
We have heard that the Government did not bring this legislation forward to affect charity campaigning or to stop NGOs having their say about policy issues. The purpose of the Bill is to stop big money flooding into constituencies in the year before an election in an attempt to, in one direction, augment or to subvert candidates’ own spending limits. As I have already had occasion to say to the Committee, even if we in this House did not think that was important, there will be Members at the other end of the building who would think that it was extremely important—not least, perhaps, those pro-Europe Conservative MPs and candidates who might well be targeted by substantial sums of money, let alone others who may be in a similar position and a target for single-issue campaigning by individuals, multimillionaires or organisations.
Clause 28 is very important but it is by no means perfect, as has already been made apparent by many noble Lords this morning. The Bill talks about activity that has “significant effects” in a particular constituency or group of constituencies. The difficulty is that some of the groups that we have all met might, for example, hold a rally in one constituency which would have an effect on a great many others. I recall chairing just such a constituency rally, but if it had that significance for neighbouring constituencies in Cornwall, it would be very difficult to allocate the actual expenditure in any particular way. It would be very difficult to see what relative effect this was going to have in different adjoining constituencies. Frankly, as a former candidate, I rarely worried about somebody holding a meeting in the neighbouring constituency—or, for that matter, even in my own constituency—in terms of that affecting the outcome of the election. What affects elections most strongly is direct communication with electors and, as has already been mentioned this morning, the means of doing that have become more effective and cheaper in recent years. That is what can really sway a constituency result one way or another.
Lord Harries of Pentregarth
My Lords, I take seriously what the noble Lord, Lord Tyler, has said and what earlier on the noble Baroness, Lady Williams, said. Clearly, if there is a possibility of abuse, that must be guarded against. The commission takes that seriously. However, we must also take into account a number of other factors, not least that the Electoral Commission regards constituency limits as they are in the Bill at the moment as unworkable and unenforceable. It states:
“In our previous briefings on Part 2 of the Bill we have noted that except in extreme cases, the new year-long constituency controls may be unenforceable within the regulated period, given the difficulty of obtaining robust evidence to determine and sanction breaches”.
That seems to be a key point. If the Electoral Commission believes that these controls cannot be enforced, there must be something fundamentally wrong with the law.
It should also be noted that political parties’ national campaigning during the year before a UK general election is not subject to limits on spending at constituency level. Why is there one rule on this for political parties? Perhaps I can ask the Minister to reply to this. Why, when according to the Bill there is to be a limit on what third-party campaigners can spend, should the political parties have a rule that says that there is no limit on what they can spend in a particular constituency? Furthermore, PPERA did not contain the provision for constituency limits. We have heard a lot about the threat of abuse at constituency level, but there was no clear evidence of abuse at the 2010 general election.
The Electoral Commission states:
“The existing controls for constituency level campaigning are set out in separate rules under the Representation of the People Act 1983 (RPA)”.
These controls cover constituency campaigning by candidates who are standing for election and spending by non-party campaigners who campaign for and against those candidates, as, for example, in “vote for this candidate”. Earlier on the noble Baroness, Lady Mallalieu, made a point of this. Any potential abuses of the kind that the noble Lord, Lord Tyler, and the noble Baroness, Lady Williams, have pointed out are the responsibility of the police to investigate. The Electoral Commission does not have any enforcement powers in relation to these rules.
The main burden of the commission’s report, backed up by a number of vivid case examples, is that it would be impossible to comply with this law because a fair amount of campaigning crosses a number of different constituencies. For instance, the Save Lewisham Hospital campaign operates across three parliamentary constituencies. So far, the campaign has collected and spent around £36,000. The hospital serves a number of different constituencies. How on earth would the campaigning groups involved in the campaign allocate the different amounts of expenditure per particular constituency?
A similar problem arises in relation to Stop HS2. As well as the national organisation, there are 120 local action groups. In the Kenilworth and Southam constituency alone, there are 11 separate action groups. Stop HS2 goes through a whole range of different constituencies. How are the groups that are part of this campaign to allocate their expenditure to the different constituencies? Even if they were able to do that, how would the Electoral Commission be able to enforce it?
I shall not repeat other examples because of the shortage of time. They are all set out at the back of the report. One example relates to stopping climate change. We must take seriously what the noble Lord, Lord Tyler, has said. It may be possible for the Government to bring forward a very sharply focused amendment to deal with that problem. As it stands at the moment, for the reasons I have given, it would be difficult if not impossible for campaigning groups to comply with the law and the Electoral Commission would have great difficulty in enforcing it.
Baroness Mallalieu
My Lords, I, too, intend to oppose the Question that Clause 28 stand part of the Bill. I shall be brief.
Clause 28 needs to come out altogether. First, it is written in gobbledegook. At Second Reading I took up some of the House’s time by reading out part of Clause 28. I recommend it to the noble Lord, Lord Tyler, for his insomnia. It is impossible for a criminal lawyer like me, not a charity lawyer or an electoral lawyer, to begin to understand it. It is inconceivable that any small charity or campaigning organisation without its own legal team would be able to look at it and understand it. They would be bound to have to seek expensive legal advice that would take money and staff away from the objects and the work that they were doing. Whatever else happens in relation to Clause 28, this present clause should be taken away and written in English.
Secondly, if the Government insist on having a clause of this nature, perhaps I may also point out, as has already been done by the noble and right reverend Lord, Lord Harries, that it is unworkable. It is impossible to divide some of the expenditure by campaigning organisations between constituencies. Where does it leave the rally that draws people from a number of different constituencies? Where does it leave the battle bus that drives around the streets and crosses some constituency boundary? How on earth does an organiser who is running a national campaign apportion the particular pieces of his time to the various constituencies that may or may not be covered?
Thirdly, it is unenforceable. The Electoral Commission, comprising the people who are meant to be doing that, has said so, as your Lordships have just been reminded. One can well imagine the avalanche of complaints that are likely to be made to the Electoral Commission during and after a campaign, especially if a result has been close. Its resources are now stretched beyond what it is being required to do. It is unlikely that it will receive adequate additional resources to help with the Bill. If it does, they will be inadequate for investigating and dealing with the process of investigation and adjudication of these complaints.
Lord Tyler
Should I interpret the noble Baroness’s remarks that she is supporting the very carefully targeted Amendment 170A that I moved? That would deal with all the uncertainty to which she understandably refers.
Baroness Mallalieu
That would certainly be a much better step than what is included at present. I would say that it is absolutely unnecessary. If it is right that the spending limits are to be reduced, does that not provide one safeguard? I return to my old friend, the Representation of the People Act 1983, which in any event provides the safeguard that people are concerned does not exist now. For all those reasons, Clause 28 needs to be scrapped.
Lord Horam
My Lords, I agree with the noble Baroness about the way in which this clause has been written. I thoroughly applauded her speech at Second Reading in which she drew out the extent to which this is incredibly complicated, even for someone with some arithmetical skills, which I do not possess, let alone any understanding of law by a non-lawyer. None the less there is a supremely important principle in this clause and my noble friend Lord Tyler drew it out perfectly. In many ways it is the heart of this Bill.
The fundamental issue is that spending by political parties is controlled because we do not want there to be a free-for-all spending-wise in this country in the way there is in America. Therefore, we have control of political parties’ spending. We have control at a national level and we have control in a regulated period; we can argue about the length of the regulated period but we have one. We have control at the constituency level. That control must be strong. Therefore, we are really arguing about what the level of control should be.
I am quite amazed that the commission of the noble and right reverend Lord, Lord Harries, said quite specifically that there should be no constituency limits on spending by third-party campaigners. That must be absolutely wrong in principle because they are not standing in the election. Why should they have an unlimited influence in a particular constituency as opposed to the people who have actually got the guts to stand for election and put their name, personality and fortune on the line in the hope of coming to Parliament? It must be wrong for them to be outbid financially by some third party, who is not willing to put their name and person up for election in the way the candidate has had the courage to do.
I hope that the noble and right reverend Lord will reflect on this. The idea that there should be no constituency limits is wrong in principle. Therefore, I think there should be a clause of this kind, although I would hope it would be very much better drafted than the one we have at the moment.
Secondly, the argument is put forward by the commission that any limits placed are unenforceable. Obviously, the commission is making the point that it is being asked to do a new task. Previously, the commission has looked post hoc at what has happened in a general election; here it is being asked to do it in real time, during the course of the election, to find out exactly what is going on and whether the system is being abused. That is a very difficult task and the commission is right to say that it is having tasks imposed on it that it has not done before and which therefore may well be very difficult to enforce, to the point of being unenforceable in some circumstances.
Those of us who have fought elections know that the existing limits on what parties can spend in elections are very often unenforceable in practice. As I know to my personal cost, parties find all sorts of devious ways around the amount that can be spent in a general election and it is very difficult to track them down. In that sense, the existing rules are unenforceable, but they do have a restraining effect. As a candidate in a general election, when I came to fight the election I knew that I had to get a little war chest together. The general assumption was that you had to try to get together about £10,000 to fight an election.
I will say in passing that most associations and local parties are extremely poor. Getting together £10,000 is quite hard to do. At the penultimate general election, when I was defending a majority of 269 against the Liberal Democrats, I reached £10,000 only by having a gift from the noble Lord, Lord Ashcroft, of £6,000; otherwise, I and the local party would have had to fork out. We are living in a poor world. Local parties do not have the resources of Oxfam and all those large organisations that want to home in on an election and put their view—as they rightly should, within proportionate limits—to the people who stand in elections.
Having constituency limits acts as a clear restraint on what parties think they can spend and what third parties think they can spend. Therefore, if there was a restraint of the kind the Government recommend, that would exercise a good influence on the whole electoral system.
The issue has been raised, in relation to the Save Lewisham Hospital campaign, that you cannot have a spending limit related to one constituency. There are three constituencies in Lewisham; of course you could have the expenditure divided between three constituencies. Some expenditure would not be allowed in a particular constituency. In Orpington, for example, there was always a huge banner, usually taped up by the Labour Party, in one main road in my constituency and it was never accounted for in the local expenses of the Labour Party in Orpington although it would actually influence people going round the M25 and other roads nearby. These things can be dealt with and there is no real difficulty in trying to apportion expenditure in the way that is described.
It is all perfectly possible, it is doable and it is essential if we are to have a proper democracy in this country. Indeed, I would argue that what the commission is proposing is actually anti-democratic.
Lord Harries of Pentregarth
I feel I ought to point out something that the commission made quite clear at the beginning of its report: that its recommendations were for the 2015 election only and that there should be a proper review post-2015. We had only six weeks to consult, despite the recommendation of a lot of bodies, including ourselves, that there should have been a proper three-month or six-month review. In the six weeks, we could not find a workable solution to this, so for the 2015 election our recommendation was that we should not have limits. We could not get our minds round this to find one that is really workable. The Government may be able to do this—we will just have to see—and they may accept the amendment in the name of the noble Lord, Lord Tyler. In defence of the commission, I point out that this was only for the interim because we had such a short time to consult.
Lord Horam
I understand what the noble and right reverend Lord is saying and I accept that. None the less, I want him to understand that, in running a proper democracy, at a constituency level this is a very important issue.
Lord Tyler
I know that the noble Lord speaks in a personal capacity but he has also the very important, practical experience of being a member of the Electoral Commission. For the avoidance of doubt, I will read again the specific recommendation of the Electoral Commission on my Amendment 170A, which deals with this very important practical point of being able to tie down where precisely a campaign is aiming its efforts. The commission says:
“In principle we see potential benefits in defining the scope of activity covered by the constituency controls more specifically than in Part 2 of the Bill generally. For example, costs relating to material sent to specific addresses can be identified and evidenced with some confidence”,
which will deal with precisely the circumstances to which the noble Lord is referring. I hope, therefore, that there may be support from the Government for what I think is a very practical approach to this otherwise quite tricky problem.
Lord Horam
I hear what my noble friend says and I think he will also recognise that the Electoral Commission made the point of practicality—whether this really is a practical way forward. Whether it is workable in practice has to be the test.
As the noble and right reverend Lord, Lord Harries, knows, I have supported quite a few of the recommendations of his commission, which was a very thoughtful and helpful exercise. But on this point, I am very certain that the Government must hold their ground for the sake of democracy in this country.
Lord Ramsbotham
My Lords, because constituency-based limits seem to be even more inappropriate than some of the other sanctions we have been discussing when related to non-party charities and other organisations working in the criminal justice system, as the noble and right reverend Lord pointed out—and I have referred to these organisations already—I would like to preface my contention that Clause 28, which was so admirably described by the noble Baroness, Lady Mallalieu, should not stand part of the Bill in its present form.
On Monday, we took almost six and a half hours to complete four groups of amendments in Committee, which not only confirmed what many other noble Lords have felt since it appeared—namely, that this is a thoroughly bad Bill—but caused me to reflect on its actual aim. My reflections were stimulated by the remarks of the noble Baroness, Lady Williams, who suggested that its purpose was to prevent money taking over politics as it is doing in the United States.
On rereading Part 1, which is all about professional or consultant lobbyists, the scales fell from my eyes. The noble Baroness’s description of young people being trained to lobby by the Tea Party called to mind a conversation on the steps of Washington Cathedral one Sunday in September 1973 when I was accompanying my then boss, the Chief of the General Staff, to Matins during an official visit to the American army. A delightful elderly ex-ambassador to South Vietnam whom we met earlier in the visit said to him, “The trouble with this country is that it’s governed by whizz-kids, and the trouble with whizz-kids is that they haven’t got time to listen. You see, I’d told them that the Watergate building was in the Foggy Bottom district of Washington, and if they’d only called it the Foggy Bottom incident nobody would have taken them seriously”.
Then it dawned on me. Looking around Whitehall, I am struck by the numbers of whizz-kids advising every ministerial office. I understand that this is soon to be increased by 10 more per Secretary of State. They are not civil servants but whizz-kids: clever young people employed because they are uninhibited by practical experience. They are not afraid to put forward blue-skies theories, many of which I suspect that the more experienced Ministers would confine to the waste-paper basket.
The Bill is nothing more than a whizz-kid panic attack, brought on by the spectre of hordes of Tea Party-trained consultants flooding across the Atlantic and rotting up the 2015 election. Having panicked, they then tried to prove their virility by dreaming up preventive measures, which in their headlong rush they tried to process without submitting them to the normal procedures which, as we know, rubbished them once they saw them. This House too was swept along by this rush, until on Monday the voice of experience had a chance to make itself heard. I hope that on looking through Hansard their bosses will have realised that something is wrong and the whizz-kids need to be told to calm down. These hordes are not going to stream across the Atlantic, and even if they did we already have mechanisms in place that can cope with them.
Our political system, including our electoral system, may be at risk, in which case we may need to take remedial action. However, let us watch what happens in the 2015 election to see what action may need to be taken. Having made so much noise about the big society, the very last thing the Government ought to do is risk alienating voters by threatening the contribution of the voluntary sector, which is one the UK’s jewels. Rather than risk doing any more damage to ourselves and our reputation, surely we should now withdraw the Bill until we know whether we need such an instrument after 2015. I wonder whether any other noble Lords share the pious hopes of an old general.
I turn now to Clause 28. Again, we have had no examples from the Government of where disproportionate expenditure in one constituency has had an undue influence on the outcome of an election. Non-party organisations and charities, particularly those which work in the criminal justice system, are not organised into political constituencies. I cannot imagine how it is possible to divide their activities and apportion them to what is going on in constituencies, as my noble and right reverend friend pointed out. For example, consider the Shannon Trust, which provides the Toe by Toe reading programme in every prison in the country. Would it have to report how it is campaigning for funds in each of the constituencies which are involved in an election?
As has been pointed out, the Electoral Commission said that controls may be unenforceable within the regulated period, given the difficulty of obtaining robust evidence to determine and sanction breaches. If all of that is so abundantly clear to anyone looking at the whole system, why on earth are we presented with what the noble Baroness, Lady Mallalieu, so rightly called gobbledegook which I defy anyone to understand?
Lord Hardie
My Lords, I rise as a fairly junior judge, and I also have pious hopes about the future of the Bill. My name is among those who oppose Clause 28 standing part of the Bill. I associate myself with the remarks of the noble Baroness, Lady Mallalieu, my noble and right reverend friend Lord Harries of Pentregarth and my noble friend Lord Ramsbotham. I will not repeat what they have said. Much of what I wanted to say has already been said, but I want to concentrate on two things.
Baroness Hayter of Kentish Town
My Lords, we have talked about taking money out of politics. If I heard the noble Lord, Lord Horam, correctly, he received a donation from the noble Lord, Lord Ashcroft, of £6,000. It is Labour Party policy that donations should be limited to £5,000, so perhaps the most important thing that we could do to get money out of politics—not under the Bill—would be for him and other members of his party to sign up to a maximum donation of £5,000.
Whatever the intention of constituency limits, we have heard that they are unworkable for campaigning organisations and certainly unenforceable by the Electoral Commission. As the noble and right reverend Lord, Lord Harries, and the noble and learned Lord, Lord Hardie, said, political parties do not have these rules for national campaigning, let alone for a whole 12-month period. They do not have to account for staff costs nor try to parcel up their national spending by ward or constituency boundaries. However, political parties at least have a very good reason to organise by constituency; campaigning organisations do not. They campaign against wind farms, for a new zebra crossing, against payday lenders, or in favour of badgers. As we know, badgers move, as does HS2, which will run through hills and dales, counties and boroughs. Such campaigning does not fall into neat little constituency boundaries, which of course the Government anyway want to change for every election under their new law.
The new limit is £9,750 per constituency spread over a full year. That must cover costs of staff, hire of halls, adverts for meetings, posters and publicity. It will cause difficulty for small organisations which run a campaign limited to a geographical area but also for national campaigns with a federated structure. The boundaries for national and even local organisations rarely follow the constituency boundaries that we in politics know well.
Those organisations will need to estimate whether their campaigning costs relate to activity in particular constituencies and ensure that their planned spending will then stay within the new limit for each activity in each constituency. That will be problematic. First, they will have to find what the constituencies are. Many of them will not know—they are not political anoraks and they do not know the boundaries of those constituencies. They will then have to see which bit of spending lies where. It will be different for local organisations, but it will also be, as has been mentioned, virtually unenforceable within the time limit of this election by the Electoral Commission, particularly where breaches occur in the last few weeks of a campaign. It will require real-time monitoring; it will require the commission to respond to allegations across 650 constituencies during a whole 12-month period—that is, starting in May. I defy anyone who, like me, has run an organisation to be up and able to do by then something of that nature.
As has been said, this clause is incomprehensible, unworkable and unnecessary. The Conservatives, of course, have form on Clause 28. I suggest that they get rid of this one so that they do not have the same trouble as they did with the last one.
Lord Wallace of Tankerness
My Lords, it was clear from many of our previous debates that the issue of constituency limits had attracted considerable discussion, not to say controversy. The fundamental point here, which was very well made by my noble friends Lord Tyler and Lord Horam, is that it would be wrong if a third party could choose to direct its entire national spending limit at only one small part of the UK, thereby focusing the full force of the considerable spending available to it on that very small part. It would be disproportionate if that was one constituency. That point was articulated. It would be a travesty of the democratic process if so much was focused on one constituency.
To prevent such occurrences, the Bill introduces what I admit is a new provision whereby third parties will be permitted to spend only a certain proportion of their controlled expenditure in individual constituencies. Clause 28(6) limits per constituency spending to 0.05% of the maximum campaign expenditure limits applied to political parties. This amounts to £9,750. The limit applies for the duration of the regulated period for a UK parliamentary general election.
It is proposed that a third party’s expenditure would be wholly attributed to a constituency provided that the expenditure had “no significant effect” in any other constituency. It is of course possible that expenditure in a local area may be attributed to a number of constituencies—for example, in Lewisham, where I think that it would be relatively straightforward to see three constituencies.
I accept that if someone was handing out leaflets in Princes Street in Edinburgh, it would be very difficult to say that that was focused on a constituency—which I think used to be Edinburgh Central, but these boundary changes happen so often—and was not having an effect elsewhere. If anyone was handing out leaflets in the constituency which I formerly had the privilege of representing, in Kirkwall or in Lerwick, it would be almost impossible to suggest that it was intended to have an effect on any other constituency, as it would be focused in the one place. The concerns that have been expressed about how you identify boundaries will often be easier to determine with regard to specific case examples.
In response to a point that the noble Baroness, Lady Mallalieu, raised on a number of occasions, I should stress that the limits on constituency spending do not remove or replace the important existing controls of the Representation of the People Act 1983. These rules are long-standing and stipulate that third parties campaigning for a candidate or candidates in a particular constituency—which includes negative campaigning against others—may spend only up to £500. Clause 34 would raise this amount to £700. While introducing a limited requirement to keep a record of such expenditure, the Bill does not otherwise affect the provisions of the Representation of the People Act. Third parties campaigning in local campaigns would be well advised to heed the strictures of the Act. First and foremost, if a particular organisation or group intends to go into a single constituency to promote a particular candidate, or to attack a particular candidate, it would be well advised to have regard to the provisions of the Representation of the People Act.
Lord Tyler
Will my noble friend confirm that that applies to the post-dissolution period in a constituency and not to the 12 months leading up to a poll?
Lord Wallace of Tankerness
My noble friend is absolutely right, but it is important that we do not lose sight of that provision.
There are other types of campaigning that are already regulated under PPERA and that we consider should be subject to the national third-party controlled expenditure campaigning limits and the constituency limits which this clause introduces: first, campaigning for or against a particular party; and, secondly, when a campaign is intended, or may reasonably be regarded as being intended, to support groups of candidates because they are of a particular type or because they support particular policies or hold particular views. For instance, if a third party campaigns with the message “vote for those candidates who support green taxes”, this would be spending regulated under PPERA and subject to the national third-party controlled expenditure campaigning limits and the proposed constituency limits. For both types of campaigning, a third party could choose to direct this entire national spending limit at only a small number of constituencies. That is why we consider this clause to be necessary.
A number of amendments have been proposed. The noble and right reverend Lord, Lord Harries of Pentregarth, has proposed Amendment 170, which would remove constituency limits altogether. I accept his point that this would be for the 2015 election, and that we must look at it in that context, but I think that there is concern that a huge loophole could be created.
Some have said that there was no evidence of a problem in 2010—or, as the noble Lord, Lord Ramsbotham, said, that there has been no example of a constituency being completely swayed or influenced by third party expenditure. But how many times do Ministers receive strictures because they did not anticipate a problem? If this were not in place, what would happen after the 2015 election if the kind of event to which the noble Lord refers had taken place in a constituency and there was felt to be a considerable travesty? I rather imagine that some would say, “Ministers knew they had a Bill going through Parliament. Why did they not do something about it at the time?”. Is it the case that we always have to wait for a problem or travesty to arise before we take action?
The constituency limits will be enforced by the Electoral Commission. I have heard the concerns that have been expressed about that. The Government have been in many discussions with the regulator on this issue, and we believe that the commission can regulate spending in constituencies in the same manner as it regulates national spending. The noble and learned Lord, Lord Hardie, asked whether an Electoral Commission enforcement officer would be needed in each constituency. That is certainly not what is anticipated.
Lord Hardie (CB)
I did not say that. I was not anticipating 650 enforcement officers. I was suggesting that if there was to be contemporaneous enforcement of this provision, it would be necessary to monitor each of the 650 constituencies, and for the appropriate enforcement officer, who might be covering several constituencies, to take action.
Lord Wallace of Tankerness
I accept that clarification and apologise if I misrepresented the noble and learned Lord. As I think my noble friend Lord Horam indicated, the current political parties expenditure rules are not always the easiest to enforce. Very often the best enforcers are the opposition—because, as those of us who have had active experience of political campaigns know, if there is any hint that somewhere or other there has been jiggery-pokery or money spent that should not have been, the candidates on the receiving end will be very quick to alert the regulatory authorities to what has gone on.
The same applies to the question that was raised, quite fairly, about how expenditure could be attributed to a constituency. We believe that it would be in line with the current guidance that attributes spending between different parts of the United Kingdom. Where spending in constituency A has a minor effect in constituency B, the entire spending amount should be allocated to the constituency that it was aimed at. For example, if a third party advertised in a local paper in constituency A that just happened to be distributed in a small part of constituency B, the entire amount should be allocated to constituency A.
That was really brought home to me when the noble and right reverend Lord, Lord Harries, asked, “How would we allocate the timing of the activities of a battle bus?”. I say this with no criticism whatever, but those who have not been involved in party election campaigning do not understand the difficulties that are sometimes experienced by those who have to act as election agents in allocating and working out expenditure returns for those who are involved in it. The noble Baroness wishes to intervene but I am just going to give an example. In 1979, my noble friend Lord Steel of Aikwood, then David Steel, the leader of the Liberal Party, probably introduced the battle bus to British politics. Immediately after that election in May 1979, I was adopted as the Liberal European candidate for the south of Scotland, which included the constituency of Roxburgh, Selkirk and Peebles. I had as my election agent the agent for Roxburgh, Selkirk and Peebles, who had been David Steel’s election agent in the general election that immediately preceded it. He went by the wonderful name of Riddle Dumble, and, as my election agent, he told me, “I’ve got this nightmare of trying to do David’s election expenses return; I have to sit down and allocate the amount of time that his battle bus was in the constituency, and what part of it represented constituency campaigning and what was part of the national campaign”. This is not something that is new.
Baroness Hayter of Kentish Town (Lab)
We are professionals in a party. It is our job to run elections. That is the whole point that we are making. It is core to us; it is what we are trained for. I ran European elections. We know about it; we train our agents; we have the systems and have our computers set up for that; and we know ward boundaries and constituency boundaries. Here we are talking about different organisations that are here to help people with a drink problem, people in poverty and people who are going to be affected by the bedroom tax. They do not get trained in the way that we do.
Lord Wallace of Tankerness
I hear what the noble Baroness says, but if we are dealing with a situation where an organisation is trying to intervene in a constituency for the purpose of promoting the electoral advantage of one particular party, one particular candidate or a series of candidates in an area, then it is not unreasonable that there might be some responsibilities that go with that, particularly with the kind of substantial volume of money that we are talking about being spent in one or a number of focused geographical areas. No one is asking them to account for the work that they are doing in trying to tackle mental health issues or alcohol problem issues—that does not arise. They are caught by this only if the amount that they are spending in one particular constituency or group of constituencies is caught by these provisions, in which case there might just be a responsibility that goes with that. The point that I am making is that there is nothing new about that in terms of its enforceability. It is something that people, not least the Electoral Commission, have been grappling with for some time.
My noble friend Lord Tyler tabled a series of amendments that he hoped would add clarity to the provision. The word “clarity” is something that the noble Baroness, Lady Mallalieu, and the noble Lord, Lord Ramsbotham, would certainly echo. My noble friend quoted the Electoral Commission with regard to his Amendment 170A, which would mean that election materials—leaflets, mailshots, adverts and so on that were specifically addressed to or delivered to households in a constituency, and unsolicited telephone calls to households—counted towards constituency limits. The main issue that I have with this amendment is that there could be key activities, such as rallies or events that were deliberately focused on an area, which would not be regulated, and it would not restrict material from otherwise being distributed or displayed. As I said, leaflets being handed out in the middle of George Square in Glasgow are different from leaflets being handed out in the marketplace of Thurso, for example, in the Caithness, Sutherland and Easter Ross constituency, which could not be said to be influencing any other constituency. However, I hear what numerous contributors have said in this debate about simplification, and there is an obligation on us to look at the provisions, without giving any commitment, to see if there is the possibility of looking generally at the question of simplification.
My noble friend also tabled Amendments 170B and 170D, altering constituency limits so that the figure was £10,000 for the whole of the regulated period and £5,000 for the post-Dissolution period. He has already pointed out that RPA kicks in for the post-Dissolution period. As for the proposal that there should be an opportunity for the Secretary of State to amend the constituency limits by order, there is already provision in Clause 30 for the Secretary State to amend constituency limits by order on the recommendation of the Electoral Commission. I hope that that covers his concerns, but no doubt if he thinks that they do not meet what he was proposing, he will indicate that to me.
His final amendment was one that I thought had much to commend it in terms of, as he said, trying to encourage political engagement. Amendment 170G would allow the constituency limit to be exceeded to a maximum of £15,000, or £10,000 in the post-Dissolution period, if a third party’s controlled expenditure was being funded by donations of less than £250 from donors within a parliamentary constituency. It would also allow a third party to spend up to 50% more than the national limit that would otherwise apply.
Because amounts below £500 are not currently considered to be donations under PPERA, the amendment would require a third party to carry out permissibility checks and record all donations, however small. This would be a fundamental change to the PPERA donation rules and would be likely to involve unmanageable compliance. Given the concerns that have been expressed about compliance and regulatory burdens, that factor would have to be borne in mind. It would increase the burden and would also risk having the opposite effect to what was intended. A large third party organisation with members and donors across the country may be able to identify sufficient donors in each constituency to give itself a disproportionate advantage, whereas a small organisation funded by very small donations would not be able to benefit in the same way.
I referred earlier to the Representation of the People Act. We are also concerned that linking expenditure to local donations in constituencies in this way could quite easily risk confusion with and undermine RPA rules or third party candidate campaigns, and I know that my noble friend would not wish to have such confusion between the two regimes. I hope that noble Lords agree that there is a need for constituency limits and that these can be properly enforced. I urge my noble friend to withdraw his amendment.
Lord Tyler
My Lords, I will respond very briefly to the debate. I think my noble friend the Minister will accept that there is real concern about making sure that we have—if we are going to have—applicable, effective and manageable constituency limits. Therefore, I am sure that we will return to this on Report. If we do not and were to remove the whole of Clause 28, I am sure that it would be put back, in one form or another, by our colleagues in the other place, who have a considerable interest in the extent to which their constituencies are subjected to considerable investment—
Baroness Royall of Blaisdon
My Lords, perhaps I may point out that it has already been through the other place and it was not thus amended.
Lord Tyler
The very fact that it has come to us is making the point for me. I think that the other place would consider it essential to retain some constituency limits. However, I accept that there are concerns about workability. I hope my amendments will improve the extent to which they will be manageable and enforceable, but in the mean time I am happy to withdraw the amendment.
First World War: Personnel from the Indian Subcontinent
(11 years ago)
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Lord Sheikh
To ask Her Majesty’s Government what plans they have to commemorate the role of armed forces and other personnel from the Indian sub-continent in the First World War.
Lord Sheikh (Con)
My Lords, I am pleased that this important subject was called for debate today. The centenary of the First World War is almost upon us. This war saw conflict and suffering on an unprecedented scale. The four war years serve as both a reminder and a commemoration of the struggles and the sacrifice of so many people across the world. I hope that time will encourage us all to honour and appreciate the lasting impact these events have had and will continue to have for generations to come.
In March this year I spoke in a debate on the centenary of the war in your Lordships’ House. I specifically focused on the contribution of Indian forces then and I want to expand on those points today. The significant part they played is not widely acknowledged and the sacrifice made by the Indians and the suffering they endured need to be fully appreciated. I hope today’s debate will serve to inform others and help address the situation.
This matter holds a special significance to me; I trace my family heritage back to India. That is where my father originally lived before moving to Uganda in the 1920s. I feel a deep connection with the many stories documented by Indian soldiers throughout the conflict. On the outbreak of the First World War all opposition to the British Government ceased, and the feelings of Indians at large were well summed up by the Honourable Pandit Madan Mohan Malaviya, a former president of the Indian National Congress. He assured the viceroy and the governor-general that,
“India would ensure the sacrifice of men and money in order that the British armies shall triumph”.
India raised the world’s largest volunteer army, with a total of 1.5 million people, during the First World War. Indians from all over the world, from such remote countries as Australia and Argentina, came forward to serve the Empire in its hour of need. More than 1 million of these personnel were sent overseas and 140,000 were engaged in active service on the western front. This marked the first time that Indian soldiers had ever fought on European ground.
They were originally called on to help when the British forces were suffering heavy causalities, which reinforces just how historically important their role was. The great Mahatma Gandhi was instrumental in making the case for Indian assistance. On 13 August 1914, he and 50 other activists signed an important circular, which stated the decision,
“for the sake of the Motherland and the Empire to place our services unconditionally, during this crisis, at the disposal of the Authorities”.
The seven Indian expeditionary forces provided crucial support and fought directly alongside British Forces in Europe. For example, at the battle of Neuve Chapelle they provided half the attacking force. A British general described them as a magnificent body who performed the most useful and valuable service. The expeditionary forces also saw action in east Africa, Mesopotamia, Sinai, the Suez, Gallipoli and Palestine. The Royal Indian Marine also served alongside the Royal Navy in a number of functions. Some ships served as gunboats and others as coastal minesweepers. Their merchant services in transport and supply were also crucial to the war effort. More than 74,000 Indian troops were killed or declared missing in action during the First World War, a number that is testament to the level of sacrifice and loyalty shown by the Indians in supporting the Allied Forces.
Participants from the Indian subcontinent were recognised for their bravery and valour in combat during the First World War with more than 9,200 decorations, including 12 Victoria Cross medals. Sepoy Khudadad Khan was the first native-born Indian to win the Victoria Cross for his gallantry in the face of overwhelming numbers in Belgium. He served in the 129th Duke of Connaught’s Own Baluchis regiment. Similarly, the courage of Naik Darwan Singh Negi of the 1st Battalion of the 39th Garhwal Rifles was recognised in 1914. He was one of the very few soldiers to have the great honour of being personally presented with the Victoria Cross on the battlefield in France by King George V. A notable example of the spirit and pride of the Indian subcontinent soldiers is that of a platoon of Sikhs, who in 1914 died fighting in Belgium to the last man, who shot himself with his last cartridge rather than surrender to the enemy. The soldier believed in the concept of chardi kala, which gave him the strength to be courageous and not to surrender.
The participation of the Indian subcontinent was not confined to the battlefield alone. Doctors and students from the Indian Medical Service provided care and rehabilitation to the wounded and many Indian military hospitals were set up across the UK, perhaps the most famous of which was the Royal Pavilion Hospital in Brighton. This housed more than 600 wounded soldiers from the western front. As shocking as these facts and figures are, we must also remember the personal and social hardship that was felt by Indian citizens and families not directly involved in the conflict. Much of the essence of the war is captured in writings from the time, and India contributed in this respect, too. One of the greatest poets during those years was an Indian called Rabindranath Tagore. Tagore wrote in a letter on 18 November 1915 that the war was fought,
“for the cause of liberty”.
Speaking in 1921, upon the placing of the foundation stone of the All-India War Memorial, Lord Chelmsford, the viceroy of India, remarked that the,
“immortal story of the endurance and valour of the sons of India is a legacy which their sons and their sons’ sons will treasure above all the wealth the world can offer”.
This memorial, completed in 1931, remains a testament to the sacred memory of the Indian soldiers who fell in different parts of the world. There are indeed numerous similar memorials in existence across the world to commemorate those soldiers who gave their lives during the First World War. A site called the Chattri exists on the South Downs, at Patcham near Brighton. It is associated with 53 Hindu and Sikh soldiers whose remains were cremated at that spot. A memorial service is held there every year. There is also a Muslim burial ground on Horsell Common in Woking, where 17 Indian soldiers were originally buried. Further burials took place after the Second World War. Renovation works are currently taking place there in preparation for next year’s anniversary. In Neuve Chapelle in France, there is a memorial that has been erected to honour the memory of the Indian soldiers who died fighting in Europe. In addition, I know that some years ago the noble Baroness, Lady Flather, led a successful campaign to erect a memorial on Constitution Hill to soldiers from India and other regions of the British Empire who served in the two world wars.
The commitment of these brave men to the war effort often emerged from a strong sense of personal duty to the Empire. Many letters written by Indian soldiers at that time reveal the honour they felt in fighting for their king. It was this loyalty and dedication that endeared many British troops to them. Indeed, alongside the military assistance they provided, there was the opportunity for social interaction between our different cultures.
I know that the Government have been proactive in developing a substantial programme of tributes and events, including last month’s announcement that a series of lectures will be held to commemorate the contribution of Commonwealth countries to the war effort. I shall be obliged if my noble friend the Minister can explain to your Lordships’ House what plans have been formulated to honour the contribution by the people of India during the First World War. I am looking forward to sharing in the commemoration and honouring their memories.
Lord Parekh (Lab)
My Lords, next year we commemorate the centenary of the First World War, which until 1939 used to be called the Great War. The Government, the British Library and various organisations have provided a syllabus of a wide range of activities that should be undertaken, and adequate resources for this. I welcome this, but have two reservations. First, I am not sure that those organisations are entirely clear about what they are commemorating. Commemorating the war: what can that mean? Do they mean our victory in the war or remembering those who died? We need to be clear about what exactly we are commemorating. Secondly, how should we be commemorating? Are we proceeding along the right lines?
On the first question, the war needs to be placed in a context. We need to ask how the war started. How did it become a world war, so that it was not just an ordinary war but had to be given a special name: the Great War or, after 1939, the First World War? What were we doing in the war? How did we use the war to break up the Ottoman Empire? How did the Germans intervene in the war in order to urge the Ottomans to declare jihad against Britain and France, while we in turn asked the Arabs to revolt against the Ottoman Empire and change the geography of the Middle East, as it is now? In short, we ought to understand the origins of the First World War and draw important lessons. It was a horrendous war which resulted in enormous tragedy and pain, as seen in the letters and poetry that grew out of it.
We could use the event to exorcise the fascination with war that has sadly been an important part of our psyche. We have more statues devoted to military generals and heroes than many other countries. It is about time that we asked ourselves whether there are some elements of our national psyche that need to be addressed more carefully than we have done so far.
Secondly, we need to commemorate the fact that the war was a collaborative effort. We were able to survive, maintaining our liberties and prosperity because of the enormous contribution of the Commonwealth troops. Indians alone contributed substantially: 1,250,000 Indians were involved, of whom about 72,000 died, 12,000 won medals and about 11 won the Victoria Cross. We must also not forget that about 200 Army nurses died, of whom more than 50% were Indians. Many of the Indian soldiers fought in a climate which was not at all familiar to them, in the European theatres of war. Many of them spent weeks in freezing, waterlogged trenches.
Since the war was a collaborative effort, in which others countries helped us, it is important to highlight the fact that this is not peculiar to the First World War. The situation was only slightly different in the Napoleonic wars. You need only to walk down the Royal Gallery and see the fresco on the right, which depicts Nelson’s death. In that picture, you see a black gentleman and an Arab, showing that even during the Napoleonic wars, countries other than our own contributed. Those are the two things that I would like to see commemorated.
How do we commemorate? Obviously, exhibitions, lectures and information packs for schools are all important, but I suggest three things in particular as relevant to commemorating the Indian contribution. First, the Indian community here should be involved in the planning and execution of the various projects, because the whole thing seems to be operating over their heads. Secondly, we should commemorate in such a way that the multi-ethnic character of Britain is highlighted and our people are able to feel at ease with it. In those areas where large numbers of ethnic minorities are concentrated, it might be useful to devote greater attention than we have done to commemorating the Indian contribution to the First World War so that Indian kids grow up knowing that they were part of this country’s history long before they arrived, and white kids grow up recognising that Indians are not simply arrivals after the Second World War but have also been making an important contribution.
We should also use the occasion to consolidate consciousness of the Commonwealth in our schools and the Commonwealth as an international institution, because the Commonwealth played an extremely important part. If we are lucky, in emphasising the Indian contribution we might also be able to bring the Indians, Pakistanis and Bangladeshis together and create, here in Britain, the kind of harmony that should obtain, but sadly does not, in the subcontinent itself.
Lord Shipley (LD)
My Lords, I thank the noble Lord, Lord Sheikh, for initiating the debate. We shall for the next five years be marking the centenary of the Great War and remembering the horrors that it represented. I pay tribute immediately to all those who are planning events to commemorate the war, from the Imperial War Museum, to local museum services and to the thousands of community and local groups.
In the UK, we tend to think of the war in terms of family memories, local war memorials, the volunteers who responded to Kitchener’s call to arms, the Somme, Passchendaele, the war poets, literature, plays and so on. However, the role of the Indian Army in World War I is not as widely understood in the UK as it should be. I hope that the centenary commemoration over the next five years will be an opportunity to redress the balance.
The Indian Army played a critical role in France and Belgium in the early days of the war because it plugged the line on the western front before Kitchener’s army was ready to cross to Flanders and France. As we have heard, it was the first time that troops from the Indian Army had fought in Europe. The Indian Army also played a critical role in Mesopotamia in the early months of the war. In 1914, it was the largest volunteer army in the world and, during the course of the war, over 800,000 volunteered for the army and 400,000 for non-combatant roles. Some 657,000 troops went to Mesopotamia; 144,000 to Egypt and Palestine; 138,000 to France. Troops also went to East Africa and Gallipoli, and there were of course people in the navy and merchant navy. In autumn 1914, troops were moved from India to Mesopotamia to secure the oilfields if Turkey came out in support of Germany. As I mentioned, the movement of troops to Europe at the end of September 1914 was to help hold the western front against the German invasion of Belgium and France.
How do we mark the role of those from the Indian subcontinent and all that they did? There are two ways: places and people. On places, we have to have specific events on the western front. First, the role of the Indian Army in the first battle of Ypres in October 1914 was particularly important. In the first attack, on 26 October, the Indian Army demonstrated huge bravery, with over 200 soldiers killed. Secondly, its role at Neuve Chapelle, 25 miles south of Ypres, two days later on 28 October, when the German troops had driven a gap in the British lines, was marked. Its troops were engaged for six days in house-to-house fighting in Neuve Chapelle: 500 Indian Army officers and men were killed and almost 1,500 wounded. On 23 November, when German troops broke through at Festubert, near Ypres, Indian Army troops were ordered to recover the line by dawn, which they did showing immense bravery. I suggest there should be events at all three of those places, on the relevant centenary dates, to mark their massive contribution in those early days of fighting on the western front.
More troops were committed to Mesopotamia, which was largely an Indian Army campaign. Despite eventual success, by October 1918 11,000 Indian Army troops were killed, with 4,000 more dying from wounds and 12,500 from disease. Some 51,000 were wounded, many of whom were shipped home in inadequate hospital ships because they had to use ordinary troop ships. We should also mark the disaster at Kut, in the spring of 1916, where 9,000 Indian Army soldiers were captured and marched northwards. They were not treated as prisoners of war and 2,500 died on the march. We have heard about the East Africa campaign and Gallipoli, where another 1,700 died in 1915.
Turning to people, we have heard about the award of Victoria Crosses. There were nine on the western front, eight in the first two years of the war and they were won in Mesopotamia, Palestine and Egypt. Is there a case for commemorating the award of those crosses in the towns and villages the recipients came from in the Indian subcontinent or, perhaps, through their descendents? Some practical demonstration of our thanks to them is particularly important.
In conclusion, we have to express our appreciation to the people of the Indian subcontinent. Last year, I stood at the India Gate in Delhi pondering the enormous contribution made by so many individuals. Let us not forget that people from the Indian sub-continent kept volunteering throughout the war. We owe them a very great deal for the sacrifice of so many so far from home.
Baroness Flather (CB)
My Lords, I, too, thank the noble Lord, Lord Sheikh, for securing this debate. Part of me is sorry that there are not more speakers, and part of me is very glad because it gives me a few more minutes to speak. I hope this is not because of lack of interest: perhaps holidays have started for most people.
This is an important issue and is particularly so for me personally because my father volunteered in the first war—I was going to say “Great War”. Gandhiji said to Indian students that they should volunteer but not fight to kill. So my father was a stretcher bearer in Mesopotamia. Goodness knows what kind of a time he had there. He would not speak about it, which tells us it was a pretty awful time for him. All I know is that he lived on bully beef. I remember him saying that and it was the first time I had heard the word.
Young people who were studying in this country also volunteered because Gandhiji said so. Gandhiji himself was an amazing man who had fought in the Boer War—I know we are not talking about that war—and was at the battle of Spion Kop. Spion Kop was a hill that some noble Lords will know about. All the stretcher bearers at that battle were Indians and Gandhiji held the rank of sergeant-major. It is good to remember his contribution. As the noble Lord, Lord Sheikh, said, he actually canvassed people to join the British Army in the first and second wars and said, “We have to save the Empire”. Even Mark Tully got that wrong.
When I was deputy mayor and then mayor of Windsor and Maidenhead, I laid the first wreath on the war memorial. During my mayoralty, one of my fellow councillors asked me if Remembrance Day meant anything to me. Noble Lords might feel the same shock I did that an educated man, an elected councillor, had no idea what the Indians had done in the two world wars. This was so shocking to me I started to think about the memorial mentioned by the noble Lord, Lord Sheikh. It took me many years to get people to agree to work for it and I am not sure anybody really believed we would get a memorial in the end, but we have one. I note what the noble Lord, Lord Parekh, said about the Indian community. I have been very disappointed indeed by the interest it has shown—or not shown—in the memorial. It is their memorial, built not by the Government but by people giving money. However much I have tried to get them interested in visiting, I have not been very successful. Every year, we have a commemoration—a gathering not a service—when we try to remember the people. The noble Lord, Lord Parekh, asked, “What is war?”. War—whichever war it is—is horrible but we should never forget the contribution of the people and that is what this debate is about.
I remind noble Lords that when the British Expeditionary Force went to France the British standing army was very small and it lost. The first group who came to support them were 150,000 members of the Indian standing army. When they arrived in November they had no warm clothing. It was not just that they were not used to the cold: the army had not thought to provide them with the appropriate clothing. This has happened in many wars. There was also a lot of racism, and many problems with food. Nevertheless, our people were stalwart, and stayed with the Army and fought—and in such a way that they cannot be said to have been just cannon fodder. They were wonderful people and had a very important role to play in both roles.
Brighton Pavilion is an interesting place, because the then Prince of Wales thought that if he put the wounded Indian soldiers in Brighton Pavilion they would feel at home. Those people were from villages and had never seen any kind of palace, not even an Indian one, let alone the English Brighton Pavilion. In any case, they were put there; I hope that they were looked after but do not know whether they were—probably not terribly well, I should not wonder.
We have to work on the curriculum. We have to get some information about the Indian contribution in the curriculum—not just to the First World War, but even more importantly to the Second World War. I urge noble Lords to try their best to influence those who should be influenced.
Lord Lexden (Con)
My Lords, this short debate made possible by my noble friend Lord Sheikh, to whom we are all greatly indebted, provides us with an opportunity to recall and to reflect upon the immense contribution made by the peoples of the Indian subcontinent during the First World War. There is so much to remember, and so much to hold firmly in our minds with gratitude and veneration as the centenary of the outbreak of this terrible conflict approaches. The part played by the Indian Armed Forces and by all those who assisted them in their many tasks in three continents, on which my noble friend Lord Shipley has elaborated, should feature prominently in the period of commemoration that lies ahead.
Speaking as a historian, although I lack the eminence of the noble Lord, Professor Lord Morgan, who is to follow me and who can correct all my mistakes, I am particularly glad that the Imperial War Museum—the world’s leading authority on conflict and its impact, which as many noble Lords know is so conspicuously involved in the work of commemoration—has incorporated within its plans full recognition of India’s role as the biggest imperial contributor to the war. The museum’s famous First World War galleries will re-emerge next year, utterly transformed. One of the central objectives is to ensure that a proper understanding of India’s contribution and of the sacrifice made by its peoples is conveyed vividly and powerfully to visitors. Film, photography and representative items of warfare, which can stir the imagination so strongly, will all be deployed effectively for that purpose. Nor will the disappointment that was so widely felt in 1918 and thereafter be neglected. The final section of the renovated galleries will make clear the widespread discontent aroused by Britain’s decision to withhold from India the large measure of self-government that was conferred elsewhere as dominion status emerged.
I very much hope that the Imperial War Museum’s plans will be widely noted, as I am sure the Minister will agree. The plans need to be reflected at all levels throughout the country to make commemorative activity full and complete. That is particularly important where India is concerned, since among British historians there was for too long a tendency to underrate the contribution its peoples made. It was suggested, for example, that the Indian Army Corps, dispatched to France on the outbreak of war, failed to come up to expectations. Nothing could be further from the truth, as the current generation of my fellow historians has now properly acknowledged. Indian troops—and they alone—made good Britain’s acute shortfall in trained manpower in the first year of war on the western front. As one senior British officer emphasised,
“they filled a gap in the line when we had no other troops to put in”.
It should be added that that was at a great cost to themselves. By 1915 the Indian Army Corps had lost 50% of its original strength. Indian troops taught the rest of the British Expeditionary Force the art of patrolling in a form that would be suited to trench warfare on the western front. Skills that had been learnt while skirmishing in the Himalayas were adapted to a new purpose in the first night raids on the western front.
We can hear the voices of brave men from India, caught movingly in the letters they sent home. Here is one written on 1 May 1915 from the hospital established for them at the Royal Pavilion in Brighton:
“Do not be anxious about me. We are very well looked after. White soldiers are always besides our beds—day and night. The King has given a strict order that no trouble be given to any black man … in hospital. Men in hospital are tended like flowers, and the King and Queen sometimes come to visit them”.
I hope that that might provide a measure of reassurance to the noble Baroness, Lady Flather, who wondered about the treatment that had been accorded to Indian soldiers in hospital in Brighton. The Indian troops, to whom so much is owed, speak to us across the century through such letters published in a fascinating volume entitled Indian Voices of the Great War.
At the moment we know rather less about what courageous Indian troops had to say about the grave hardships which they faced in Mesopotamia, where most of them served—some 650,000 altogether, as my noble friend Lord Shipley mentioned. It was very much an Indian campaign from first to last. In Britain today it is not remembered with the gratitude that it deserves, or with sufficient consciousness of the sacrifices that were made. My noble friend Lord Shipley referred to the siege of Kut in early 1916, where Indian soldiers endured terrible privations. After the inevitable surrender they were held captive by the Turks in conditions so appalling that more than half of them died. Next year’s commemorations must give full and proper recognition to those sacrifices.
There is one thing above all on which our country should reflect. As we look back across the century to the First World War, it is surely always important to remember that the magnificent contribution of the peoples of the Indian subcontinent to the great common endeavour in war also contributed to strengthening ties with the people of Britain—ties that would survive all the political difficulties, violence and crises that were to follow.
Lord Morgan (Lab)
My Lords, this debate, admirably launched by the noble Lord, Lord Sheikh, is very welcome. It enables us to pay proper tribute to the courage and sacrifice of the over 1 million Indian troops who took part in the First World War, as well as enabling us to test the Government’s resolve: how far will they subscribe to what we heard from the Minister, that the commemoration of the war would not be a celebration of militarism but would deal with matters such as the role of women, trade unions and new currents in poetry, and that in the case of Ireland it would focus not only on the Irish troops who volunteered to fight in the war, but also on the fact that it led to the Easter Rising and to the domination of Sinn Fein?
So it should be in India. As we have heard in a series of admirable speeches, Indian troops fought in very large numbers on the western front and in east Africa; enormous numbers fought in Mesopotamia and at the terrible siege of Kut al-Amara. The names of Indian troops are recorded in monuments in at Neuve Chapelle and on the Menin Gate. My own father served with Indian troops in the First World War in Palestine and always spoke with enormous warmth about that experience.
Gandhi encouraged Indians to volunteer for the British Army. At the same time, it is important to say how Gandhi shows how the war changed the perceptions of so many public figures in India. He was not at first the major nationalist in India—that was BG Tilak, who founded the Home Rule League. By the end of the war, Gandhi was convinced that the experiences of India in the war—the sacrifice of Indian troops—had given a new sense of unity and identity to all Indians; as we know, Gandhi worked a great deal with Muslims as well as with Hindus. The war gave the movement for home rule—swaraj—and Gandhi himself a new historical significance. Gandhi therefore illustrates what we should perhaps most fundamentally commemorate about the First World War.
We should note how the war encouraged movements in India to expand and to take up wider horizons. At first, Gandhi himself focused on internal issues within India—famously, the role of the untouchables, which he worked in a dedicated fashion to cope with in his own community. But by the end of the war he was adopting a much wider viewpoint, and challenging what he saw as the harshness of British rule, and how far a war supposedly fought to liberate subject nationalities was in fact reinforcing British control over his country. It is enormously important both for Gandhi and for the Indian nationalist movement that the First World War within India encouraged the famous non-violent strategies with which Gandhi is associated to work against the grain of imperial policy and win support for Indian nationalism outside India. Gandhi did this very conspicuously, if I may say so, within the Labour Party.
The First World War should be commemorated above all because in India, and thereby in a wider world, it was a period of historic change. The legacy of the Indian troops fighting so gallantly, on the western front and elsewhere, was not a stronger commitment of Indians to imperial rule; it marked the beginning of the end for the Raj. It was followed by the Rowlatt Bills against what was called terrorism, and by the terrible massacre at Amritsar. General Dyer was sacked after Amritsar, but Indians were appalled by the sympathy shown by many people in this country for his conduct. It is deeply to the discredit to the House of Lords that at that time it passed a Motion sympathising with and supporting General Dyer.
The legacy of the war appears to be commemorated in the imperial architecture of Lutyens and Baker in New Delhi. But the most prescient observer of these developments was the former French Prime Minister Georges Clemenceau, who said that it would be,
“the grandest ruin of them all”.
That, perhaps, is what we should be commemorating.
Viscount Slim (CB)
My Lords, it is with pride that I am able to speak to you today, because I was an officer in the Indian Army. We had quite a few here when I first came to your Lordships’ House, but we are withering away. I am old, but not old enough to have fought in the First World War. Lord Weatherill was probably the most famous officer of the Indian Army in World War II who has been among us. He had a great record of gallantry and service in a very wonderful Indian cavalry regiment in Burma.
My father was in the Indian Army too, as was the father of the noble Baroness, Lady Flather. He too fought in Mesopotamia, and also in Gallipoli. He was then in the British Army, but fought alongside a couple of battalions of the Indian Army. He was so impressed by their gallantry, by the way they fought and by the way in which they were commanded and organised that he said to himself, “If I get out of this mess, I shall transfer to the Indian Army.” And he did—for the next 30 years.
We have talked loosely and happily about the bravery of the Indian Army, but I would like to take you into a battalion of the Indian Army as it was then, and show you the various components. As the noble Lord, Lord Shipley, said, there was no conscription: every man was a volunteer. Some regiments were strictly of one warrior, martial tribe; others were mixed. There were about 14 or 15 Punjab regiments, and in those there were Sikhs, Muslims, Hindus and Christians, completely integrated. There is a lesson there, you know, for the good people of Bradford and elsewhere in our nation. Of course they lived, not separately, but alongside each other, because they all ate different types of food, but there was a mosque, a Hindu temple and a Sikh gurdwara, there was the nearest Christian church, and there was often a Buddhist temple. We used to go to each other’s—and that was really rather good. It was the first real sign of integration of the people in India in those days. The Indian Army led, and later the police in India did much the same.
There was a difference of content, in that we had two types of officer in the battalion—the King’s commissioned officer and the Viceroy’s commissioned officer. They were probably the most important part of the Indian Army. The average British battalion had probably 30 or 40 British officers. But in an Indian Army battalion we had only about a dozen, because underneath those 12 or so officers the Viceroy commissioned officer was also an officer: he had his own officers mess, soldiers saluted him, and he provided the stability and the junior leadership of the Indian Army battalion—a rather special sort of battalion.
I do not think that it is generally known that in peacetime, the British officer was not accepted in the Indian Army unless he passed very high up out of Sandhurst. My father was the Indian Army instructor at the Staff College next door to Sandhurst, and I remember all those hopefuls coming to him to be looked at to see whether they were up to the very high standard of British Army officer required. He took some, and I know that he rejected one or two. You certainly needed to pass out in the first 25 or 30 at Sandhurst to be accepted.
May I end on a story? The Duke of Wellington always said that he learnt his soldiering in India, and he was damn nearly beaten by the Marathas, who had been led by probably one of the greatest guerrilla leaders in history, a man called Shivaji. The Duke, like all of us, learnt a lot in India.
Lord Stevenson of Balmacara (Lab)
My Lords, as this is a time-limited debate and we have to give the Minister time to give a complete response, I am time-limited to one minute. I shall try to observe that limit, but I may slightly exceed it. I do not think it is important for me to say what I would have said if I had had time, because I hope that the noble Lord, Lord Sheikh, will give us other opportunities to reflect on some of the important issues that have been raised today. So many good speeches have been made that anything I would have said would have been relatively uninformed and lacking in authority.
However, I would like to say two things. It seems to me that the legacy of the Empire and Commonwealth soldiers, like so many aspects of the First World War, will be argued about. The centenary debates must capture the fact that the tale of the Empire and Commonwealth soldiers is a contested, complex story—a human story of valour and tragedy, of victory and futility, of respect and racism, and of forgetting and re-remembering. What cannot be doubted is that these events and encounters provide an important foundation stone for an understanding of the making of modern Britain. If we know the history, we can hope to understand how we became the country we are today. It is important to recognise that the British and Empire Army that fought the First World War a century ago had more in common, demographically, with the Britain of 2014 than that of 1914.
A number of noble Lords have asked the Minister to give us more details about what events are planned. Within that response, will he think hard about what my noble friend Lord Morgan said about the resolve of the Government to make sure that this is an all-inclusive, non-celebratory event?
Lord Bates (Con)
My Lords, I am very grateful to the noble Lord, Lord Stevenson, for generously curtailing his speech to allow me more time to respond. On behalf of all who have spoken in this debate, I thank the noble Lord, Lord Sheikh, for giving us the opportunity to discuss how we commemorate the role of soldiers from the Indian subcontinent in the First World War. As the noble Lord, Lord Stevenson, said, the emphasis on commemoration, not celebration, is absolutely central to everything that we will do. I pay tribute to the noble Lord, Lord Sheikh, for what he has done not only in initiating this debate but in ensuring that we are reminded of, acknowledge and recognise the contribution made by people from the Indian subcontinent to business and our culture in general.
The noble Baroness, Lady Flather, spoke of her personal story and experience at the war memorial in Maidenhead, and of people’s ignorance of the enormous contribution made by forces personnel from the Indian subcontinent. The noble Lord, Lord Shipley, spoke very powerfully about the need to ensure that that contribution is not forgotten in any way. That is one of the reasons why I reassure noble Lords that the commemorations will have education and the curriculum at their centre.
The noble Lord, Lord Morgan, who is a distinguished historian, will recognise that this is not about the Government handing down a sterile statement or version of history that people must discover. What we want to do—this is the purpose of all the Government’s action in this area—is simply to encourage people to pause, think and take note of the scale of the suffering, and the reasons for it, and to engage with it in a very personal way and draw their own conclusions about what happened.
The most powerful contributions in this debate came from noble Lords who brought their personal experiences to it, such as the noble Viscount, Lord Slim. We appreciate their comments very much. The noble Viscount, Lord Slim, said that the Indian Army was an entirely voluntary army. The fact that it raised so many volunteers to fight in a different continent should be humbling for all of us who cherish our freedom won through their efforts, energies and sacrifice. That is another reason why we want to ensure that that is not forgotten.
I want to mention a couple of things that the Government plan to do. The British High Commission in New Delhi is working with the Indians on a number of projects to mark the centenary. These include a guidebook about the Indian Army’s role in France and Flanders, the digitisation of the Indian Army’s war diaries and the production of a number of books about India’s contribution and experiences. My noble friend Lord Lexden spoke about the voices that we can hear down the generations emanating from moving letters, and how those will be central to the Imperial War Museum’s new galleries’ commemoration of the contribution which India made.
The Government plan to recognise the outstanding contribution of Victoria Cross recipients. The Indian corps won 13,000 medals for gallantry, including 12 Victoria Crosses. We will create lasting memorials to all those who served with courage and valour. The noble Lord, Lord Shipley, asked how these people might be commemorated in their own country. There are plans for paving stones to be inscribed with the names of the recipients of the VC in the cities, towns and villages from where they came, but Her Majesty’s Government cannot dictate how other countries commemorate these people but we are coming together as a Commonwealth to recognise them.
A number of noble Lords referred to the importance of the Commonwealth. Indeed, the commemoration process will begin at the end of the Commonwealth Games in Glasgow next year. The first service will be a Commonwealth service with the entire Commonwealth coming together to commemorate the First World War and recognise its effects. That service will be held in Glasgow cathedral. More countries were involved in the war than not—from the vast Indian subcontinent to the small island of Nevis. All should be remembered for the part they played, and I assure noble Lords that that is central to the commemoration plans.
The noble Lords, Lord Morgan and Lord Parekh, and the noble Baroness, Lady Flather, referred to the role of Gandhi. I know that the noble Lord, Lord Parekh, has written extensively on the life of Gandhi. It is absolutely appropriate that his life, example and story should also be part of the commemoration process. Indeed, my noble friend Lady Warsi has initiated a series of lectures with the Curzon Institute to explore the stories of the individuals involved. The noble Lord, Lord Sheikh, referred to soldiers such as Sepoy Khudadad Khan, the first soldier from the Indian subcontinent to be awarded the Victoria Cross. I would mention also Walter Tull, the first Black British officer and George Blackman of Barbados, the last survivor who served in the war from the West Indies, who passed away in 2003 at the age of 106. We will come back to these personal stories time and again as we realise that they are the most powerful way of communicating the horrors which affected the world at that time, and that they shaped a generation.
My right honourable and noble friend Lady Warsi has visited Grootebeek military cemetery and the First World War graves of soldiers from her parents’ home village in Pakistan—another personal story. The noble Lord, Lord Shipley, asked whether there would be commemorations at Neuve-Chapelle. Those preparations are being discussed and I think that my noble friend Lady Warsi will find the contributions to this debate very helpful.
I am afraid that because of the time constraints I have not been able to cover this matter in as much depth as I would like. Nevertheless, this has been a very important debate. There is no doubt that we could not have prevailed in the First World War without the support and sacrifice of our Commonwealth partners. As we came together then, so the centenary gives us an opportunity to come together now, not just people in this country but also people in the subcontinent, as noble Lords said, with the different faith traditions and nationalities which make up that subcontinent. We should come together to reaffirm our shared values, forged through experiences that will not be forgotten, and that bind us together inseparably.
Recognition of the important role that those from the Indian subcontinent played is an integral part of the Government’s plans for an inclusive commemoration —the inclusive commemoration that the noble Lord, Lord Stevenson, implored us to establish. This commemoration will not airbrush the horror of the war nor shy away from the concept of victory. We approach the centenary in a spirit of reconciliation, acknowledging that the loss and suffering recognised no national boundaries and that those who were once our adversaries are now our partners in building a better world.
Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill
(11 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Harries of Pentregarth (CB)
My Lords, in putting my name down to oppose Clause 29 standing part of the Bill, I hope that the Minister will be able to explain what this whole clause is really about, and what mischief it is intended to block. I went to the Public Bill Office, whose staff have been extraordinarily helpful on this occasion, as on so many others. In order to run through my amendments and to make sure that I understood the Bill properly and what I was putting forward, I asked about this clause, and what it really meant. I said to them, you are all highly trained lawyers; you will be able to tell me what it is all about. They said that they deliberately do not have lawyers in the Public Bill Office because it is very important for people to understand legislation, and that is why they are lay people and not lawyers. I said, “That’s very good—I’ll leave this with you for a day, and perhaps you can tell me what all of this is about”. I went back the next day and they said that they were very sorry but they did not think they would be able to help me with this one. I then contacted the lawyer who specialises in electoral law who has been advising the commission, and asked her. She sent me a reply. I am still not quite sure that I understand what it is all about, but this is what she says:
“Clause 29 imposes limits on the amount non-parties can spend on activity that could reasonably be regarded as promoting a particular party and none other, to £38,500, unless they have the party’s authorisation. This limits the freedom of expression association beyond the limits of proportionality”.
She adds:
“Although not a focus of the commission’s work, it is another position that would leave groups open to inadvertence, and the onus on what parties do, as opposed to campaigners’ intent. If the rest of the commission’s recommendations are implemented, this would be a highly peculiar—and, from a regulatory viewpoint, bizarre—provision to remain”.
I hope that the Minister will be able to explain what this clause is really about, and what mischief it is intended to block.
Baroness Mallalieu (Lab)
My Lords, my name is also down to oppose the question that Clause 29 stand part. We had some powerful speeches from Welsh Members of your Lordships’ House the other day about the living language that is Welsh. This is another part of the Bill that is written in the living language of gobbledegook, although that is living only in parts of Whitehall. I, too, was completely puzzled by it. I obtained the Explanatory Notes, read them with care, and was none the wiser at the end of it. This, I hope, will also be included in the undertaking that the Minister gave when he said that he felt an obligation to look at those parts of the Bill that are incomprehensible. This certainly needs translating; it has been written by lawyers for lawyers—of a specialist sort—yet not for the people who have actually to apply it, particularly those in small charities and organisations. They have to be able to understand the detail of the Bill. I hope this clause can be completely rewritten, if indeed large parts of it are at all necessary.
Lord Cormack (Con)
My Lords, I also put my name down here. I apologise to your Lordships for not being able to participate for the latter part of Monday, and earlier today. However, the noble Baroness, Lady Mallalieu, and the noble and right reverend Lord, Lord Harries, have both indicated something that ought to be of prime and absolute concern to every Member of both Houses of Parliament: legislation should be intelligible. People to whom this will apply ought to know what the law says they can and cannot do. In this House and in another place, I have often advocated a redistribution of Sir Ernest Gowers’s famous book Plain Words. If anyone needs a copy, it is those who give—devoted and conscientious, I am sure—service to my noble and learned friend Lord Wallace of Tankerness, because what has been produced here is utterly incomprehensible, to moderately intelligent people in all parts of this House. First, we need my noble and learned friend to give us a child’s guide from the Dispatch Box, to tell us what is intended. He should then take this clause away, which is total gobbledegook, as the noble Baroness said a few moments ago, and after Christmas, bring us a new year’s gift of something which we can all understand.
The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)
My Lords, I hear the message. The current provisions of the Political Parties, Elections and Referendums Act 2000 do not prevent political parties benefiting from expenditure by third parties in a way that would enable the political parties to avoid party spending limits. Although measures exist to regulate political party spending, third-party spending and the notional campaign expenditure of political parties—that is, spending by third parties for or on behalf of a political party—those measures are not necessarily effective in ensuring that all spending for the benefit of a political party is properly captured. Our concern, which influences or informs this clause, is that that risks undermining trust in the controls on party spending.
Clause 29 therefore introduces a new measure that requires third parties that spend significant sums in a way that can reasonably be regarded as supporting a particular political party or its candidates to be specifically authorised by the relevant political party to campaign in that manner. I heard and will certainly reflect on what the noble and right reverend Lord, Lord Harries, of Pentregarth, said—that this might somehow be something that innocent people or groups can stumble into, but I rather think that the political reality on the ground is that if a particular group is, to all intents and purposes, supporting the Liberal Democrats—I am being neutral about this—it will not do so innocently or without any notion that that is what it is doing.
Under proposed new Section 94B(3), authorisation would be required only in instances where the third party wishes to incur expenditure that exceeds 10% of its spending limit for a part of the UK. This would be treated as “targeted controlled expenditure”, and the Bill defines it as more than 0.2% of the maximum campaign expenditure limit for political parties in that part of the United Kingdom. That limit would be £31,980 in England, £3,540 in Scotland, £2,400 in Wales and £1,080 in Northern Ireland. If a political party does not want the third party to spend more than 10% of its spending limit in support of it, or for that expenditure to count towards its limit, it can simply withhold authorisation. A third party will commit an offence if it either exceeds the targeted expenditure limit without authorisation or exceeds an authorised cap set by a political party. In other words, if such a group comes to the Liberal Democrats, in the highly unlikely event that the Liberal Democrat treasurer says, “Sorry, we are not going to accept your offer of going beyond the 10% limit and we are not giving you authorisation”, it would be an offence if the group then spent money in obvious support of the Liberal Democrats beyond the 10%.
The intention of this clause is to bring a greater degree of transparency where third parties campaign to support a particular political party or its candidates. Requiring expenditure incurred as part of that campaigning to count towards the spending limits of both the third party and the political party, and for this information then to be disclosed to the public, will prevent political parties evading their spending limits by relying on co-ordinated support from campaigning groups. Clause 29 will not prevent third parties campaigning up to a significant limit without needing any kind of authorisation from a political party. Nor will it curtail third-party expenditure that cannot reasonably be regarded as intended to benefit a particular party—for example, because that expenditure supports multiple parties or candidates who support the third party’s aims.
This is an important provision to try to prevent the spending limits on political parties being circumscribed or undermined by third parties campaigning on their behalf. It does so by requiring authorisation at 10% of the third party’s spending limit. I take the point that what I believe is a relatively simple and important principle or objective may not have been expressed in the most felicitous terms. I would normally share my noble friend Lord Cormack’s desire to see legislation in much plainer English. I confess that having negotiated a coalition agreement with the Labour Party in the Scottish Parliament in 2003, including a commitment to making progress towards drafting legislation in plain English, I fear that we failed to honour that commitment. That suggests that it is easier said than done. Some challenges are bigger than others.
I do not know whether delivering the objective can be done in much simpler language. In the previous clause, much of the apparent complexities related to an interrelationship between different relevant periods because of different elections. However, judging by the mood of the House, we at least ought to look at this clause to see if something can be done in that regard. However, the underlying objective, to stop the subversion of the limits on party political funding, is a proper objective.
Lord Tyler
“Third parties acting in concert
(1) Section 94 of the Political Parties, Elections and Referendums Act 2000 (limits of controlled expenditure by non-recognised third parties) is amended as follows.
(2) In subsection (6)(b) after “arrangement” insert (“the plan”).
(3) In subsection (6), at end insert “in pursuance of the plan”.”
Lord Tyler (LD)
My Lords, I have tabled this proposed new clause with my colleagues, my noble friends Lady Williams of Crosby and Lady Tyler of Enfield and, in a private capacity, the noble and right reverend Lord, Lord Harries of Pentregarth. We have given it the heading:
“Third parties acting in concert”.
We think that that is a better definition of the problem that has been brought to our attention on many occasions than using the word “coalition”, which might have other overtones.
Among all the groups that we have met, the present PPERA 2000 rules on this type of working between different organisations have emerged as a major area of concern. Indeed, they have caused great confusion and, more than anything else, given rise to the alleged chilling effect among smaller organisations. I checked with the Electoral Commission earlier this week about what exactly is meant by the present rules. Suppose organisation A contributes £15,000 to a combined operation, which acts in concert in some form of policy coalition. Then organisation B contributes £375,000 to that same campaign. Therefore, under the present rules, A and B have to record £390,000 as having been spent. However, vitally, organisation A, which has spent only £15,000, is recorded as having spent right up to the total of £390,000. That creates an extremely difficult situation for small organisations. Just by being caught up by some joint operation, they get clobbered because they might very well want to take on some different campaign activity that is nothing to do with that original campaign, and then find that they have already exceeded the limit. That is the nature of the present law, and that is the nature of the present problem that so many organisations have drawn to our attention.
The noble and right reverend Lord, Lord Harries, and his colleagues have a good amendment that would deal with this for small organisations making a contribution below the registration threshold and, of course, that is welcome. Our amendment goes further: it embodies the principle that any one group or any one campaign should be capped at the level of the national or constituency limit. We do this by engaging in the amendment with the phrase,
“common plan or other arrangement”,
which is already referred to in the 2000 Act. We are effectively saying that the money spent on that plan should be capped—it should not then be carried forward for any other campaign of a different nature—or that that money spent by a different organisation should be capped. If, in my example, organisation A was spending only £15,000, that would be the limit of the restraint on it because it clearly would not be contributing a huge sum. Just because organisation B has spent a considerable sum in pursuance of the common plan, it should not be effectively restricted by what has happened with one of their allies.
There is a way around these rules at present, which is to set up an umbrella organisation to accept donations from all the different organisations involved, but if they simply campaign together then they will be caught by the present rules. There is a defect in the 2000 PPERA rules and the Bill is our opportunity to deal with it, remove that uncertainty and assist a number of organisations that feel that this is a real constraint on what they are permitted to do. I should say briefly that, on these Benches, we strongly refute the case for Amendment 182A, tabled by the noble Baroness, Lady Royall of Blaisdon, which would seek to take away all the coalition rules. It would mean no constraint whatever on organisations, allowing them simply and artificially to multiply and then provide multiple spending limits. I am sorry that the noble Lord, Lord Bassam, is not here to explain exactly the rationale for those original 2000 PPERA rules, which were thought at the time to be both necessary and desirable. Unfortunately, they have proved to be, to a large extent, not very effective and, in some respects, a discouragement to small organisations being involved in perfectly proper campaigning operations.
The amendment of the noble and right reverend Lord, Lord Harries, goes a long way to dealing with the problem, but we think that our approach goes a little further and we hope that the Government will accept the direction in which it is going. I beg to move.
Lord Harries of Pentregarth
My Lords, I wish to speak to Amendment 170M. First of all, the charities and campaigning groups have indicated very strongly that what the present Bill puts forward on coalition working is totally unacceptable. All charities are encouraged by the Charity Commission and by their own trustees to work together in coalitions. We have seen many very successful examples of coalition working, but under the law as it is put forward in Part 2 of the Bill, the total amount of money spent by the coalition is attributed to each single member of the coalition. This must be, by any standard, totally unfair. We have racked our brains for the past six weeks and do not feel that we have come up with any solution to the fundamental problem. Therefore, in the first week after we come back, we will be calling a round table conference to which the Minister has agreed to come and various other people will be invited, to see whether, together, we can crack this fundamental problem of coalition working and how it can be fairly regulated. I am sure that the suggestion of the noble Lord, Lord Tyler, to which I put my name in a private capacity, will be very much on the table to be considered at that point.
However, as he mentioned, our Amendment 170M will go some way towards solving the problem for smaller groups. In that amendment, we mark the difference between a minor third party and a nominated third party. A minor third party is one that has not yet reached the registration threshold. If it is working in coalition with other parties, on the basis of my amendment it will be able to nominate another party, called the nominated third party. With the agreement of both the third party and the nominated third party, the money that the minor third party spends on that campaign will be attributed to the nominated third party as part of its overall expenditure and the minor third party will simply be able to indicate to the Electoral Commission that it is below the threshold and has, as it were, contributed this amount of money towards the nominated third party, which is very likely to be regulated. We believe that this is quite a neat way of ensuring that smaller parties—those which do not hit the registration threshold and certainly are very anxious to work in coalition —will not be brought within the scope of regulated expenditure. The Electoral Commission, in examining this amendment, remarked that it is “attractive in principle”, but wants to think about it further to see whether there are any unintended consequences.
The issue of coalition working is one of the key areas about which charities and campaigning groups are concerned. I will not go through any of the examples set out at the end of our report, but I would draw the attention of noble Lords to the Human Rights Consortium in Northern Ireland, which has been referred to at least once in this debate already, where something like 180 NGOs work together on a crucial issue. That gives some indication of why getting coalition working right is absolutely fundamental to the charity sector and, indeed, to the workings of our democracy.
Baroness Tyler of Enfield (LD)
My Lords, I add my support for Amendment 170H, to which my name is attached. As my noble friend Lord Tyler has already explained, the amendment seeks to apply the limit of £390,000 to any one registered third party or to any one coalition campaign, but not to limit the spending of one body by virtue of the spending of another. That is a key point.
As I looked into this issue, it became clear that, under the existing 2000 legislation, if a number of organisations campaign together on one issue, each member has to account for the full amount spent on that joint campaign, regardless of their individual contributions, however large or small. As I understand it, this aggregated reporting of coalition spending was put in place at the time as a form of anti-avoidance mechanism for these rules. My concerns are based on my own experience of working in coalitions of charities, and focus on the impact that this can have on collaborative working across the voluntary sector. I am particularly concerned about the impact on small and medium-sized charities and other organisations. In the year before an election, small organisations are quite unlikely to join coalitions for fear of having to deal with the related administrative burdens, while larger organisations are likely to walk away from such coalitions in order to avoid reaching the maximum expenditure limits.
I have also looked at the work of the Commission on Civil Society and Democratic Engagement, and I pay tribute to the noble and right reverend Lord, Lord Harries of Pentregarth, for highlighting the issue of the impact on coalitions of charities. I was struck by how charities would be affected, because they will have to deal with two regulators. I know very well that the Charity Commission encourages coalition working in order to achieve the efficient use of resources—and, frankly, because when smaller charities work together they are likely to have a far greater impact on the policy area they are concerned about.
My personal experience is based on three things. For two and a half years I was the chair of the Kids in the Middle coalition—an interesting coalition of around 30 charities in the children and families sector, working with 30 of the country’s agony aunts and one or two agony uncles. It was all about the impact that very high-conflict separation of parents can have on children. I like to think that it was a rather effective campaign in terms of the things that were achieved, but I fear for how such a coalition of charities would be able to operate under the Bill as it stands.
I am also currently the chair of a coalition of charities called the Making Every Adult Matter group, which looks at how organisations trying to help adults with multiple and complex needs can better work together to produce more joined-up solutions on the ground. It is very difficult for small to medium-sized charities, given the size of their resources, to campaign individually. They simply do not have the resources to do it, and it is probably not a very good use of their very limited time.
I will finish by making a couple of broader points about coalitions and how they could be affected by this legislation unless these amendments are taken on board. It is really important that coalitions are able to campaign effectively, often over a long period of time, to get their point across. I think, for example, of the Mental Health Alliance, which has existed for nearly 10 years. The lead organisations in any alliance or collaboration need to have clarity that they themselves will not be penalised by excessive regulation if their campaign happens to straddle election periods. They also need to be absolutely sure that their governance responsibilities are clear.
I feel quite strongly about federated charities. I was chief executive for five years of Relate, a federated organisation in exactly the same position as federated charities such as Mind or Age UK. They are federations of local independent charities that operate under an umbrella and are federated with a central charity. My concern is that, unless an amendment of the type that we are talking about is taken forward, individual charities that work as part of an umbrella charity will find themselves in a very difficult position and will perhaps feel that they would not wish to be involved in any campaigning work. That would be very unfortunate.
Baroness Mallalieu
My Lords, my name is on Amendment 170M. This issue creates a number of problems, some of which have been mentioned and some of which have not. One concern is that it gives a completely misleading impression of what each partner in a coalition has spent, because it has to include everybody else’s contribution with its own. This does not give the impression of transparency—if that is what we are trying to achieve—but just the opposite. It gives the public a picture of smaller organisations, and the campaign as a whole, spending far more than they have actually done.
It also of course reduces the amount that can be spent by those groups on other messages or campaigns that they may be conducting. It is inhibiting in both ways and provides the opposite of transparency—it draws a veil over the whole coalition and does not give a true picture to those who want to see how much each of them is spending. Others have said that it is a discouragement to coalition working, which charities are encouraged to do.
We also know from the evidence we have heard that there is very considerable concern about coalitions that involve charities and non-charities working together. How does the Minister see such a coalition working if he were tempted to agree to the amendment moved by the noble Lord, Lord Phillips, which sought to take charities out of the Bill? If that was done, the charity would of course be under no obligation to register or, indeed, to record its contribution, but the non-charity would. If he has a chance to do so, I would be grateful if the Minister could deal with my worry about that particular situation.
It is quite clear, as we grapple with this, that five weeks is totally insufficient to reach a proper conclusion that would create transparency but at the same time not inhibit proper campaigning. The Electoral Commission has said that, ahead of Report in this House, it is looking at all the options for mitigating the burdens on campaigners with a common plan that spend less than the registration threshold, and that it will publish its conclusions to help the House before that stage.
Lord Ramsbotham (CB)
My Lords, I have added my name to the amendment. I have done so in relation to the organisations involved with the criminal justice system that I have mentioned before. I refer in particular to the two initiatives being driven at the moment by the Secretary of State for Justice. One is Transforming Rehabilitation, which involves establishing new partnerships working with prisons. The other is the transforming of the probation service, which involves setting up community rehabilitation companies. These consist of a mixture of private companies, charities and other non-voluntary organisations.
They are being encouraged to do this and to do it on a payment-by-results basis. The results are not yet clear. It should be borne in mind that 50% of the rehabilitation work in prisons today is done by voluntary organisations, many of which are very small. Have the possible implications of them joining in coalition with larger organisations that may well fall into the catch of this amendment been explained to the Ministry of Justice and does it have any comment to make? In theory it should explain the implications to those who are minded to join in the coalitions under its leadership.
Baroness Pitkeathley (Lab)
My Lords, there is little wonder that there is so much concern in the charitable and voluntary sectors about the idea of collaborative working being detrimentally affected by the Bill. That is because collaborative working coalitions are the most effective way of campaigning and bringing about policy change. They bring together large and small organisations, single-issue and multiple-issue organisations, service providers and self-help organisations, and charities and other types of organisation. As well as enabling a powerful voice, collaborative working moderates the kinds of demand that are made and makes them more realistic. You have to achieve some kind of consensus, if, for example, you are putting together a manifesto, as many coalitions do in the run-up to an election. This may mean moderating the demands of the more extreme and pushing along the demands of the more cautious. These coalitions are very effective and this is why it is important that we get this right. This issue requires much more detailed consideration. In the mean time, the amendment proposed by the noble and right reverend Lord, Lord Harries, gets us some way along that road. I very much support it.
Lord Hodgson of Astley Abbotts (Con)
My Lords, I should like to emphasise the challenge posed to coalition working by the present PPERA rules. I have an amendment in a later group about the practical reporting requirements that flow from it.
My noble friend Lord Tyler laid out the challenges, but the noble and right reverend Lord, Lord Harries of Pentregarth, put his finger on the issue. Our big challenge is to come up with the answer. Charities, particularly smaller ones, will always work in coalitions and therefore we must find a way to facilitate that, for the reasons given by several previous speakers. The noble Baroness, Lady Tyler of Enfield, explained this clearly from her personal experience. I can see that we are not there yet, but I hope that the round-table conference taking place early in January, to which the noble and right reverend Lord, Lord Harries, referred, will produce something that will address the weaknesses of the present system. I also hope that my noble and learned friend on the Front Bench will be able to approach that with an open mind so that we can tease out the right solution to this undoubtedly difficult but fundamental challenge.
The Earl of Sandwich (CB)
My Lords, I have already expressed my concerns about the smaller charities and the noble Lord, Lord Tyler, has articulated this so much better than me. I think that the Minister has been waiting for this amendment to reply to me and to others.
I back up what my noble and right reverend friend Lord Harries has said about encouraging charities to work together. Let us look at the example of slavery, which is in the minds of the Conservatives at the moment. We are rather surprised about that because that campaign comes from the voluntary sector and the Liberal party and not the Conservatives. Why is that? It is because the ecumenical coalition against trafficking and Anti-Slavery International came up with legislation. They have been working on this subject for 20 years, not five or 10 years, and the Prime Minister has embraced it at the forefront of present legislation. I am delighted about that but the Government have a lot of difficulty in the voluntary sector at the moment. If they are proceeding along these lines, they are going to have to think of something else soon.
Baroness Hayter of Kentish Town
My Lords, the last example given by the noble Earl, Lord Sandwich, is a really powerful one and it adds to the criticisms, which I endorse, of the catch-all provisions that have been added to the existing rules, which worked in the past but have become unworkable because of the increased range of activities, the addition of staff, travel and other costs, the reduction of thresholds, and the cut in the spending cap. This is what makes what was a quite innocuous concept now very difficult.
We endorse the criticisms but go further and suggest in Amendment 182A, which is in my name and that of my noble friend Lady Royall, that the combined effect of all of that is so serious and could so jeopardise joint working that it is time to review whether such an anti-avoidance dollop of restrictions, red tape and responsibility for another organisation’s spending is actually worth the candle.
Of course, had we had pre-legislative scrutiny of the Bill and known about this in advance, we might have ironed it out before, but we did not, so we are left with a situation in which restrictions on coalition spending—or, at least, subjecting it to joint limits and reporting—seem aimed at anti-avoidance only in the belief that 10 groups will get together and campaign and they will all spend £100 less than the limit. Again, we have had no evidence of this. It seems to be a solution in search of a problem.
The Royal Society for the Protection of Birds, which supports our amendment, has pointed to the increased significance of the rules because they will now apply to such a wide range of activities, and with new constituency limits. It thinks that this will threaten legitimate coalition campaigning, especially locally. For example, the RSPB works locally with other groups on infrastructure projects that affect the natural environment, such as an M4 relief road, when public reports or press events may be used. This may well be caught because one party may be in favour of a road and another party against it. Even if that is not the purpose of its work, the RSPB risks being caught if its particular objective chimes with—or is at variance with—one party, even though the RSPB’s objectives are based on the interests of birds rather than politics. It is particularly worried about how its spending would count against every member of the coalition’s spend and each member’s £9,750 limit would in a sense be double- or treble-counted if each group had to declare it as if it was its own. As the RSPB says, the combined effect of all the different rules is likely to limit what it can do.
The Board of Deputies of British Jews, also looking at the confusion surrounding coalition spending, was worried that simply having its logo on something, with therefore a bit of cost involved, would mean that that would have to be apportioned to a coalition, which could present problems and reduce its ability to support a campaign. The Libel Reform Campaign, which is made up of Sense About Science, English PEN and the Index on Censorship, believes that if it was pooling all those expenditures over a year, all those three organisations would hit their limit even if the combined limit was still below what is permissible.
NAVCA highlights that £5,000 is a lot of money for one small charity alone to spend. However, as my noble friend Lady Pitkeathley said, working in partnership can be much more effective for charities and what they want to achieve for the groups they support. Yet because all the funding is put together, the thresholds create a burden. This could discourage small charities from working in partnership to gain a voice, because they would fear everything that went with that.
It has been mentioned that the Electoral Commission itself, which traditionally saw the old coalition rules as a good anti-avoidance tool, now acknowledges that there are strong concerns about the impact, particularly on small local campaigns. If a local campaigner which is spending only a few pounds enters into a coalition with another which is spending more than the registration threshold, it may then be required to register. One campaigning group would have to take the other party’s spend as part of its own, and then comply with all the rules.
Of course, the amendment proposed by the noble and right reverend Lord, Lord Harries, might appear attractive. It allows a bigger organisation to take responsibility for some of the spending of a smaller organisation. The problem is that a smaller organisation may have decided to spend only £1,000 on something over a year, but then something happens—it gets another member of staff, or the car breaks down and it has to hire a bus—and its expenditure suddenly goes up over that year. It will be the bigger organisation, the responsible body, which will suddenly have to answer for a new range of expenditure that has not been agreed in advance. I am afraid that for small voluntary organisations that is often how spending takes place. They do not spend with a budget in advance, as the Government do. Spending is often as and when.
Problems remain, despite the attempts to answer this. As has been said, the Electoral Commission itself has failed to come up with a response, only promising us its ideas by Report. This highlights the fact that not only was this not subject to pre-legislative scrutiny but the Government did not even consult the Electoral Commission before they brought in the Bill. It is a little worrying that neither the Government nor the Electoral Commission have found a way to answer these very serious questions. For that reason, we suggest removing the old requirements on all participants to be responsible for the actions of the other. We ask the Government to find a better way of tackling any attempts by various bodies to circumvent the very proper objectives of PPERA.
Lord Wallace of Tankerness
My Lords, from almost every meeting I took part in with charities or representatives of NGOs, I was certainly aware that the issue of what we described as coalition or co-ordinated planning was of considerable importance to them. That said, it is worth reflecting that the Bill does not actually make any changes, apart from the technical changes to take into account the other activities. The basic architecture on expenditure by organisations going towards a coalition plan was set down in the 2000 Act. I am not quite sure whether there was pre-legislative scrutiny before that particular architecture fell into place. However, it is not the case that the law was put forward in Part 2, as was said by the noble and right reverend Lord, Lord Harries. That law is already there in PPERA.
What has happened has perhaps been fortuitous. The Bill has brought activity and greater focus, which have targeted minds on what is actually there. I accept that there is more activity now, as I am sure would be said by the noble Baroness, Lady Hayter. Yet in fact, as the law stands at the moment, if 10 groups each contribute £1,000 to the activities or to the election materials covered under the present Act, they would each be required to register. This is therefore an important issue. The noble Earl, Lord Sandwich, made this point about the concern of smaller organisations in a number of his contributions. I say to the noble Lord, Lord Ramsbotham, that we should remember to put this in the context of what the controlled expenditure is. If we are talking about the valuable and important work that is done in our prisons in terms of rehabilitation, it does not readily strike me how that would be the kind of expenditure envisaged, albeit that the groups concerned might be engaged with other bodies which fall within the ambit of the Bill and of what would lead to controlled expenditure. However, it is important that we recognise that this issue has now been identified, and I think that we all agree that we should seek to address it.
The rules on coalitions are necessary. In its evidence to the Commission on Civil Society, the Electoral Commission said:
“In our view, rules that limit what different campaigners can spend on co-ordinated campaigning are a vital element of the controls on election spending. Without them, individuals or organisations seeking to spend more than the limits on campaigning at elections could do so by setting up multiple organisations working together, with each organisation able to spend the full amount”.
As I have said, the existing provisions have been in place for both the 2005 and 2010 general elections. They seemed to work well and they remain unchanged by the Bill.
There has been some confusion about the operation of the rules, so perhaps I should take this opportunity to clarify them. Section 94(6) of PPERA stipulates that where two or more third parties work together as a group or coalition in pursuance of a common plan, the whole of the expenditure they incur as part of that coalition must count against each third party’s individual spending limit. As my noble friend Lady Tyler pointed out, that is a key anti-avoidance provision. If total spending by a group of third parties acting as part of a common plan was not counted in full against each individual third party’s limits, it would allow third parties to form many coalitions on single issues in order to evade their spending limits.
However, the amendment put forward by my noble friend Lord Tyler perhaps does not have the effect that, I am sure from what he said in moving it, he intended, because it would appear simply to reinforce what is already provided for in PPERA. I am sure that my noble friend seeks a different outcome, which is perhaps the cessation of third parties accounting for aggregated coalition expenditure. Nevertheless, his amendment has raised an issue which I see as current and, as will be clear when I come to respond to the specific amendment proposed by the noble and right reverend Lord, Lord Harries of Pentregarth, the Government want to look carefully at what more can be done to deal with these concerns. My noble friend mentioned a round-table conference—when we broke for lunch, I think that dates and times were being arranged for that.
The amendment proposed by the noble and right reverend Lord, Lord Harries of Pentregarth, would create a category of what he described as “minor” third parties which are exempted from having to account for any coalition expenditure provided their individual contribution is below the registration threshold. The third party must not have incurred expenditure in any other circumstances, and a “nominated” third party must be willing to absorb the “minor” third party’s spend and report it as its own to the Electoral Commission.
I accept that that is a constructive approach to addressing the problem that has been identified. Already, if a coalition campaign is organised by a lead third-party organisation which alone incurs, or decides when to authorise, regulated spending for the campaign, only the lead organisation is required to register with the Electoral Commission. The lead campaigner may receive contributions or donations from other organisations towards the campaign. These will be considered as donations. Where other organisations provide services or materials to the lead campaigner, these will be regarded as both in-kind donations and “notional” spending on behalf of the lead organisation. I reiterate: it is only where there is no lead organisation, and several third parties co-ordinate their campaigning while making their own decisions on when to incur regulated expenditure, that they will be covered by the rules on coalition campaigning.
I hope that in indicating what the present position is on when donations are made I have gone some way to reassuring the noble and right reverend Lord, but we recognise the concerns of small organisations which may wish to join a larger coalition to campaign on an issue. We will continue to look carefully at what more can be done. I hope that, when we meet, the benefit of a break might have enabled us to find a way to address an issue which, as I said at the outset, already exists even under the law as it stands.
In the same vein, the noble Baroness, Lady Mallalieu, specifically asked what the position would be with regard to charities. If charities were exempted, they would not incur the controlled expenditure so it would not be counted towards spending on a common plan. As I indicated in my response to the amendment moved on Monday by my noble friend Lord Phillips of Sudbury, though, while there is certainly an issue there to be addressed and we want to consider it, the Government’s position has not been to exempt charities. If we were to go down that path, the kind of issue that she has raised is one of those that would have to be considered.
Lord Tyler
I am very grateful to the Minister but also to others who contributed because, if we have done nothing else in recent minutes, we have demonstrated that there is a basic misunderstanding of the current law. It is therefore not surprising that many organisations outwith Parliament, large and small, have been confused by this issue. We should be absolutely clear, and my noble and learned friend’s latter remarks underline this, that if we are not very careful, if it were removed completely from the current 2000 Act by this Bill, this could result in those who have a direct interest in avoidance using this as a cunning plan to get around the constraints of the current law. I have read the Hansard from the time and this was anticipated as a potentially dangerous loophole in the debates in 2000 that led to the PPERA Act, and it would be totally wrong to just tear it up and throw it out.
Incidentally, in that connection, there have been comments about the role of the Electoral Commission. As I have frequently reminded your Lordships, I have a role as a member of the cross-party informal advisory group to the commission. I think that the commission should be taken to task for not identifying that this was a problem over 13 years of experience. It is unfortunate that in that respect it did not recommend to the previous Government and to Parliament that this needed to be looked at, whatever future legislation was going to try and tackle it.
It is clear from the contributions right around the House that many here who have contact with small organisations and charities know that in the past there has been a chilling effect, to use that expression, on those who wish to work in a collaborative way, which, for the reasons that have been explained so well by my noble friend Lady Tyler, needs careful attention. We need to try to avoid the existing distortions that have been identified as having been there for some time, although obviously are now more pressing, given the other changes in the Bill.
Obviously I, too, hope that between now and Report the promised discussions will result in a fairer, more rational approach for those who wish to campaign in an election together. I therefore hope that in the next two or three weeks we will see a practical solution. A number of ideas have been put forward to the Minister and I have every confidence, given what he has just said, that the Government will look at them very carefully. In the mean time—
Lord Hardie (CB)
Can I just clarify the noble Lord’s comments about the Electoral Commission, as I did not fully understand them. The criticism of the commission for not identifying this problem—was it that it ought to have identified it before the 2000 Act or between the Act and now? It was set up, as I understand it, by the 2000 Act so it could not have done it in anticipation of that.
Lord Tyler
My Lords, I am so sorry if I did not make that clear. Since the 2000 Act it has become increasingly evident that this was having an effect and discouraging a number of organisations from working together. This has come to a head now but the principle was explicit in PPERA in 2000 and it is unfortunate that the commission allowed some discussion to continue at a low level but was never in a position to nor felt able to recommend to government and to Parliament that this matter needed close attention.
Lord Hardie
“Publication of guidelines for third parties regarding regulation of expenditure
(1) As soon as is reasonably practicable after the passing of this Act, the Electoral Commission shall publish guidelines to assist third parties to determine what procedures are necessary for them to ensure compliance with the provisions of this Act.
(2) The provisions of this Act regulating expenditure by third parties shall not come into effect until three months have elapsed after the publication of the guidelines mentioned in subsection (1).
(3) In the event that the effect of subsections (1) and (2) is that the period remaining prior to the 2015 general election is less than the relevant period, the limits on expenditure by third parties will be reduced to the relevant proportion of the maximum permitted expenditure.
(4) In subsection (3) the “relevant proportion” means the proportion of the maximum permitted expenditure represented by where A is the number of days remaining after the expiry of the three month period specified in subsection (2) until the date of the poll for the 2015 general election and B is 365.”
Lord Hardie
My Lords, I will speak also to Amendment 170K. Both amendments introduce new clauses into the Bill. Amendment 170J introduces a requirement on the Electoral Commission to publish guidelines for the assistance of third parties to ensure that they comply with the provisions of the Bill, when it is enacted. I understand that it would be normal for the commission to provide such guidance, but subsection (1) of the proposed new clause requires publication to be:
“As soon as is reasonably practicable after the passing of this Act”.
That provision recognises that the commission may not be able to prepare such guidance until the final version of the legislation is known.
Unlike many pieces of legislation where one might be able to prepare guidelines in anticipation of enactment, the Bill has a number of issues of uncertainty. There remains a considerable amount of uncertainty about the final provisions of the Bill in view of the extent of the opposition to different clauses and the commitment by the Government—which is welcome—to come back on Report with amendments. The Government’s response to the report from the Commission on Civil Society and Democratic Engagement is also awaited. Until all of that is known it would not be sensible to embark on preparing guidelines because one might ultimately be dealing with different provisions. It would be a waste of resources to commence work until the picture was much clearer.
Subsection (2) of the proposed new clause thereafter allows a period of three months after the publication of the guidance to enable recognised third parties to put in place procedures necessary to ensure that they comply with the Act’s provisions. It is clear from the discussion in Committee that there will undoubtedly be a bureaucratic burden on third parties. Once the guidelines are known, the procedures might well involve the recruitment and training of staff. It will certainly involve administrative procedures, including measures for recording and monitoring expenditure on a constituency basis—if the constituency provisions come in—and it will involve procedures for making returns, including weekly ones, as mentioned by my noble and right reverend friend Lord Harries of Pentregarth.
We should not underestimate the huge bureaucratic burden imposed on small organisations by this legislation. It is appropriate that, if this legislation is to work, they should be given a reasonable period to make arrangements to enable them to comply, particularly as a failure to comply will expose them to criminal conviction and sanction.
I recognise that by furthering this approach, one might well be encroaching into the year before the election. Subsections (3) and (4) of the proposed new clause are my attempt to address that difficulty. They provide, in that eventuality, for the regulated period to be reduced below the 365 days before the next election. Their effect is to reduce the period and to reduce the maximum amount of allowable expenditure in proportion to the amount of the year that is left.
The provisions of my proposed new clause are fair and reasonable. They will not prevent the Bill, when enacted, having effect prior to the next election, if that is the will of Parliament. However, I recognise, having regard to other possible approaches, that the new clause will be unnecessary if the relevant period is reduced to, say, six months, which other noble Lords suggested. However, it is lodged in anticipation that the period will remain at one year.
The second proposed new clause is in Amendment 170K. It would ensure that the Government recognise—as I am sure that they do—the significant additional burden that the Bill would impose upon the Electoral Commission. This is reflected in the various new provisions, requiring guidance, monitoring and enforcement, particularly if the commission has to monitor and enforce contemporaneously the provisions on constituency expenditure. I referred to my concerns about that when opposing the Question that Clause 28 should stand part of the Bill, and I do not intend to repeat them here.
In addition to those concerns, I anticipate that if we are in the realms of monitoring constituency expenditure and taking contemporaneous action, and stopping campaign groups or whatever from doing particular things in the course of an election, there will be a great increase in the work of the courts in the form of judicial review. Some campaign groups will just not accept the decision of the commission and will challenge its action. Has provision been made for that eventuality by the Government in making some allowance for the commission to resist such actions, should they arise?
There will be an added burden on the commission’s resources due to the time constraints occasioned by the history of the Bill. Many noble Lords expressed concern about this at Second Reading. Again, it is unnecessary to repeat those concerns today. Suffice it to say that the limited consultation and the short period of time available before the general election, coupled with the 365-day relevant period, combine to impose additional pressures on the commission’s staff to produce guidelines that will be effective within a very short timescale.
Of necessity, that will involve the commission in expenditure that could have been avoided, or at least reduced, if the Government had followed a different course. The commission should not bear that cost or the additional cost of monitoring and enforcement. This clause seeks to ensure that they do not do so. There is no point in passing the Bill if the Government will not give a commitment to provide adequate resources to those who are charged with the responsibility of regulating and enforcing the regime that the Bill introduces. I beg to move.
Lord Hodgson of Astley Abbotts (Con)
My Lords, it is a pleasure to follow the noble and learned Lord, Lord Hardie. Amendment 175 picks up the early part of Amendment 170J and seeks, as a probing amendment, to require the production of joint guidance between the Electoral Commission and the Charity Commission. During all the debates on Part 2 of the Bill, the underlying theme has been the practical implications for individual charities, especially smaller ones, many of which—as has been pointed out on several occasions—were not yet aware of their responsibilities. As the noble Lord, Lord Phillips, pointed out on Monday, the overwhelming proportion are run by people of the utmost integrity. The challenge is how to do this so they can discharge their responsibilities at minimum commensurate cost and disruption.
As we have discussed, there is guidance. The oft referred to CC9 from the Charity Commission is 35 pages long but is commendably clearly written and laid out. There are two parts to the Electoral Commission’s guidance: one is entitled Overview of non-party campaign material and the other is on non-party campaigners. That runs to another 15 or 20 pages, so we are talking about something north of 50 pages in total. That is what it looks like for a small charity. I suspect my noble friend Lord Tyler would call it a very good aid to sleeping.
These are two separate sets of guidance which are not easy to integrate. For example, in section G of CC9, entitled, “Campaigning: getting it right”, it says:
“This section is aimed at charities that have already decided to campaign or work in the political arena. There are a range of detailed questions and issues that may arise, along with the need to comply with charity law, and other laws and regulations.”
Strangely, the Electoral Commission is not mentioned at all in the text that follows. What is mentioned is the Advertising Standards Authority, a body which has not hitherto featured large in our discussions. In the Electoral Commission guidance on non-party campaign material, the focus is on two tests: the purpose test and the publicity test. These form no part at all of the CC9 guidance and the overall impression is of two ships passing in the night. This will pose considerable challenges, especially to smaller charities, so the amendment is intended to require—force is perhaps an unattractive word—the Electoral Commission and the Charity Commission to produce an integrated set of guidance laying out how to comply with the new Act.
This is a challenge but not an insuperable one. It will, of course, be opposed by both commissions. Members of your Lordships’ House will already have had an opening salvo from the Electoral Commission:
“We think that a legal requirement for us and the charity regulators to produce joint documents is unnecessary and likely to be inflexible. It may also be counterproductive because it could hinder our ability to respond quickly to the needs of charities whose activities fall within our regulatory remit, especially as new questions will arise during the regulated period.”
I do not find these arguments persuasive at all. I see nothing in them that will be made more difficult by requiring a joint approach. Indeed, if the Electoral Commission is proposing to introduce new guidance during an election campaign without the agreement of or consultation with the Charity Commission, this has the potential to put charities in an extremely difficult position.
I do not underestimate the challenge this will pose to my noble and learned friend on the Front Bench. I have been trying for some three years to encourage greater co-operation between Companies House and the Charity Commission to save 30,000 charitable companies making two returns where one could and should suffice. That has never seemed an insuperable objective but progress to date has been glacial. The same applies to collaboration between HMRC and the Charity Commission. However, that issue of collaboration between the Charity Commission and the Electoral Commission is altogether more pressing because of the short timescales and the imperatives created by a general election campaign.
If the requirement to produce joint guidance is not made a statutory one, I confidently forecast that none will be produced. The two commissions will keep to their own separate turfs, and the affected charities will be left in no man’s land in the middle. I therefore hope that my noble friend will appreciate the importance of tackling this matter.
Baroness Royall of Blaisdon (Lab)
My Lords, I am grateful to the noble and learned Lord, Lord Hardie, for his amendments and I welcome the amendment tabled by the noble Lord, Lord Hodgson, who just pointed out the ghastly complexity and challenges that will be faced by charities as a result of the Bill. It is eminently sensible to have an integrated set of guidance, and I very much hope that the Minister will accept this amendment so that it will be clear that this House and the Government want there to be a requirement for an integrated set of guidance.
On Monday the Government made a great deal of how the guidance that would be issued after the Bill becomes law would clear up many of the apparent difficulties contained within it. The Minister—I do not know if it was the noble and learned Lord—said:
“The Government believe that it is essential that campaigners have clarity on how they are to comply with the third-party regulatory regime. The Electoral Commission has a power to produce guidance for third parties campaigning in elections, and indeed has exercised that power in previous elections”.—[Official Report, 16/12/13; col. 1040.]
Indeed, the Minister placed such a heavy emphasis on the guidance that would be given that the noble and right reverend Lord, Lord Harries of Pentregarth, was moved to say while speaking to his amendments:
“However, perhaps I may anticipate, rather too boldly, the response that the Government are likely to make: that these kinds of issues can be dealt with in guidance”.—[Official Report, 16/12/13; col. 1057.]
Charities and NGOs need to understand how the Bill will affect them as the Bill passes through the House. To place the amount of weight that the Government place on guidance is effectively another way of avoiding proper consultation.
The first amendment from the noble and learned Lord, Lord Hardie, would ensure that the Electoral Commission is able to give charities and NGOs guidance in good time before they are subject to the regulated period, and would reduce the spending limits in line with the reduced regulated period that would result. The second would ensure that the Electoral Commission is resourced to apply these changes. As the Electoral Commission has said itself,
“The current PPERA rules on non-party campaigning are relatively narrow in scope … and the definition of what is covered is relatively clear, so we are able to produce guidance that builds on the legislation”.
However, it goes on to say with regards to the Bill before us:
“This will be particularly challenging for campaigners because of the need to apply the definition of ‘election purposes’, which is new and untested in the context of non-party campaigning. In the limited time available we will aim to produce guidance to assist with this, and will offer advice on particular queries where possible, but our experience strongly suggests that it will not be straightforward to apply the new rules to many specific types of activities”.
I know that the Electoral Commission will do all in its power to produce the guidance, but it will need time because of the complexities.
I say to the Minister that of course the best way of ensuring that the Electoral Commission is able to issue clear guidance in time is to draft clear law—to draft a very clear Bill. These sensible amendments would therefore assist in that. However, notwithstanding the desired clarity, this is a complex Bill, and time will be needed to ensure the best possible guidance so that the voluntary and charitable sectors understand their new obligations and do not unintentionally fall foul of the law. Like the noble and learned Lord, Lord Hardie, I think that small charities and voluntary organisations that do not employ lawyers as a matter of course could well find themselves unintentionally in breach of the law. As in so many things we do in this House, the lawyers will gain the most, and we cannot allow that to happen. I therefore very much hope that the Minister will signal that the Government will accept these or similar amendments in due course.
Lord Wallace of Tankerness
My Lords, Amendment 170J, tabled by the noble and learned Lord, Lord Hardie, would require the Electoral Commission to produce guidance for third parties, so that they are clear what actions they must take to comply with the provisions of the Bill. The Bill, should it have received Royal Assent by the time that guidance is produced, would not be permitted to take effect for a further three months. The noble and learned Lord further proposes that the Electoral Commission be given the extra resources it might need to produce this guidance and to comply with its other obligations under this Bill.
My noble friend Lord Hodgson has tabled Amendment 175, which, similarly, would require the Electoral Commission to produce guidance, but jointly with the Charity Commission. This would be designed to address specifically the impact upon charities.
The debate surrounding this Bill has made clear just what a lack of awareness there was, not only among third parties but among the public at large, of the existing provisions of the Political Parties, Elections and Referendums Act 2000—PPERA. I have certainly heard from more than one of the organisations that I have spoken to that they had not been aware that they might just have been edging towards a registration threshold back in 2010. They had not appreciated that fact. This lack of awareness has highlighted the crucial importance of comprehensive and clear guidance for all third parties, not just charities, so that they understand whether they could be affected by the provisions of this Bill as it amends PPERA.
As I said in at least one of the debates on Monday, when the original Committee on Standards in Public Life was considering the architecture and proposing the idea of an Electoral Commission it accepted that in some ways we could never achieve an absolute definition, and that, as the noble and learned Lord, Lord Hardie, predicted, some cases may have to go to the courts. However, much of that uncertainty could be avoided through guidance. That was one of the functions and roles that the Committee on Standards in Public Life saw for the Electoral Commission that it proposed should be set up.
The Electoral Commission already has the power, under PPERA, to produce guidance for third parties. As I said on Monday,
“The Electoral Commission has a power to produce guidance for third parties campaigning in elections, and indeed has exercised that power in previous elections. Campaigners require clear guidance to support them and help them understand the revised regime, and I am reassured that the commission recognises this too”.—[Official Report, 16/12/13; col. 1040.]
I think that I went on to say that the sooner the guidance can be produced in draft, the better.
Although there is existing guidance on third parties and the PPERA rules, noble Lords will be aware that the commission has already indicated that it will indeed produce fresh and enhanced guidance in time for the 2015 UK general election. It did so in its briefing to members in the other place, as recently as 29 August. Both the Electoral Commission and the Charity Commission will be aware of the demand from campaigners for clear and detailed guidance of this sort. I have no doubt that today’s debate, and the amendments tabled by the noble and learned Lord, Lord Hardie, and by my noble friend will have reinforced that message.
As in previous elections, the Electoral Commission and the Charity Commission will work closely together to develop guidance that will assist campaigners and charities to have a clear understanding of how the provisions in Part 2 relate to them. Again, the Electoral Commission made this clear in its briefing of 4 November. The Government stand ready to support this work.
I hope that the fact that the Electoral Commission and the Charity Commission have indicated an awareness of the need for clear and comprehensive guidance is of some reassurance to the Committee. However, the Government are also keen to reassure campaigners and charities that the provisions of the Bill and the PPERA rules will, and should, be clearly communicated to them. It is our view that the Electoral Commission should produce guidance in consultation with the Charity Commission, and provide specific consideration of charities. I am not sure whether a particular statutory provision is needed, but the benefit of that is very evident.
The other point made by the noble and learned Lord, Lord Hardie, in his amendment, which was also spoken to and supported by the noble Baroness, Lady Royall, was about the funding of the Electoral Commission. It is important to be aware—
Lord Hodgson of Astley Abbotts
Before my noble and learned friend moves on, may I ask him a question? When he was speaking so encouragingly about the joint guidance, I was not quite clear whether, in his mind’s eye—I know that he will not wish to commit himself yet—this will be one document produced by the two commissions? I ask this because once the two bodies are able to produce two documents they will do just that and leave the charities to connect them. They should be doing the connecting. They are the regulators, and they really need to do that. Is that how my noble and learned friend sees it?
Lord Wallace of Tankerness
I am not sure that that is entirely how I see it; my point was that whatever is produced should be produced in collaboration. I certainly am wary of saying anything that might be seen as a direction to two independent bodies, which must act independently of Government. That is why I hesitate, as I am sure my noble friend will understand. Ministerial colleagues have had meetings with the Electoral Commission—I have not done so personally—and, I think I am right in saying, with the Charity Commission, and I am sure that the message conveyed by noble Lords here will also be conveyed by Ministers.
Baroness Royall of Blaisdon
My Lords, as the noble and learned Lord says, he cannot give directions. However, if the measure were included in the Bill, both the Electoral Commission and the Charity Commission would be obliged to produce joint guidance.
Lord Wallace of Tankerness
Obviously, if Parliament wishes that to be the case and the measure is included in the Bill, we would have a different proposition, and we would want to reflect whether that was one which the Government would wish to support. Notwithstanding whether or not the measure is in the Bill, the respective commissions will no doubt hear the concerns that have been expressed and the legitimate expectation as regards their response in respect of these matters.
As I said, the noble and learned Lord, Lord Hardie, and the noble Baroness, Lady Royall, referred to resources. It is important to recognise the position of the Electoral Commission. It is an independent body established by Parliament and is overseen by the Speaker’s Committee on the Electoral Commission, which oversees the Electoral Commission’s annual estimates. I checked during the debate and I am not aware of it having asked for more resources in respect of this legislation. However, if the commission requires extra resources to perform this or any other duties, including producing this guidance, it would be for the Speaker’s Committee to come to a view on the resourcing of the Electoral Commission in the light of its roles and responsibilities. I think that there is agreement across the Chamber on the importance of proper guidance and clarity. I hope that this debate has been helpful in communicating that message to those who have responsibility for that. I therefore invite the noble and learned Lord to withdraw his amendment.
Lord Hardie
I have certainly found the debate helpful. I thank the noble Lord, Lord Hodgson of Astley Abbotts, and the noble Baroness, Lady Royall of Blaisdon, for their contributions. I should say to the noble Baroness that, as a lawyer who has benefited in the past from gaps in legislation, it may seem a bit churlish of me to deprive the modern generation of that. However, I agree with her that we in this House should do what we can to avoid gaps arising of which people can take advantage because of the uncertainty that causes for others. I thank the Minister for his response. I note that the Electoral Commission will produce guidance. I had not appreciated the niceties about funding, but I am grateful to him for those comments. In those circumstances, I beg leave to withdraw the amendment.
“Controlled expenditure
(1) Schedule 10 to the Political Parties Elections and Referendums Act 2000 (limits on controlled expenditure) is amended as follows.
(2) In paragraph 3(3)(a) for “365 days” substitute “six months”.
(3) In paragraph 3(3)(b) for “365 days” substitute “six months”.”
Lord Harries of Pentregarth
My Lords, this is a blessedly simple and straightforward amendment. It would reduce the regulatory period from the current one year to six months. There are two reasons for the amendment. The first is that a year is a very long time for charities to be burdened with the regulation of electoral law. In the debates today and on Monday, we have begun to see exactly how burdensome that could be. It would be a huge relief to charities if they could focus on what is required of them for election purposes only in the last six months leading up to the election. The second reason for the amendment is that it is supported by the Electoral Commission, at least for the 2015 election. I do not want to say that it is committed to it beyond that but it supports the measure for the 2015 election.
There are particular complications about this one year length in other parts of the British Isles. For example, Oxfam reports:
“Oxfam Scotland is concerned that Scottish organisations may end up being in a regulated period repeatedly for the next three years, with the UK elections in 2015, and Scottish national elections in 2016. It seems to be a disproportionate amount of time for a regulated period”.
Obviously, if the regulated period was six months rather than a year, the problem in Scotland and elsewhere would be lessened.
It might be argued that if the Government accept this amendment, or the other amendment which we are to debate, there should be a change in the registration threshold and the cap—that both of those should be lowered. But to anticipate that argument, the charities have made it quite clear that their expenditure—if there is any—during campaigning, in so far as it is directed towards an election, is loaded up very close to the end of the election period. They do not start thinking about the election right at the beginning of the period. This simple and straightforward reduction from one year to six months would be a huge help to the charities and campaigning groups generally. I cannot see that by making that change there would be further opportunity for abuse by unscrupulous organisations or people. I beg to move.
Lord Ramsbotham (CB)
My Lords, I have put my name to this amendment and also added Amendment 170P in the spirit of what the Army refers to as KISS: “keep it simple, stupid”. That is because there is already an allowance that the Bill reduces the period to four months before European elections and elections to the devolved Administrations. I know that a number of organisations would be very happy if the period were four months rather than six months, because it would mean that there was one period for all elections. That is why I have tabled my amendment. But the great thing is to have the period reduced.
Lord Tyler (LD)
My Lords, the argument does appear to be very simple. I wish it was so. I will illustrate the complexity that could be caused by one or other of these amendments. Amendment 170L would create a fourth regulatory period in electoral law; there are already three. One would be of 12 months for both non-party and national political party expenditure. One would be of four months for candidates’ long campaign, introduced for the 2010 election by the PPE Act 2009. There would then be the traditional four to six-month period post-Dissolution of the so-called “short campaign”, which was imposed by the Representation of the People Act 1983 but which originated from the Corrupt and Illegal Practices Prevention Act 1883. So there is a little more complexity than both of the noble Lords who have already spoken suggested.
As the noble and right reverend Lord, Lord Harries, indicated, there are of course implications for a number of other parts of the Bill. If either of these amendments were to be passed, they would have an impact on spending caps. It would surely be very odd if his commission’s recommendations for the higher spending limits—that is, £1.25 million in England—applied over half the regulated period. This would make the proposed new limit equivalent to £2.5 million if it had been over 12 months. There could then be an argument for no constituency limits. This could mean an unlimited sum being spent in constituencies up to four or six months before an election. I do not accept the argument that nobody is interested in what is spent in the longer period leading up to an election. It can be very influential, as those of us who have fought elections know. After that period, a further £1.125 million could be spent in one constituency—a target constituency, a marginal seat or a small number of constituencies—which would vastly outspend the candidates themselves. The argument is very seductive. The two noble Lords who have spoken are regularly seductive in this House and speak with the tongues of angels, but I have to say that this particular case is not as simple as they suggest.
Lord Deben (Con)
My Lords, I am hoping to be seduced. There is a kernel to this that is more important than the detailed argument we have just heard. The kernel is that it might be more sensible to have a shorter period in which this whole thing operates. If I may say so to my noble friend, it is not a sensible argument to say, “It’s awfully inconvenient to do this because all sorts of other things might have to be reorganised”. I hope that the Minister will take seriously the following argument. We now have a system whereby we know when the next election and the election after that will be. If you think about it in those terms, you realise that no one is going to get anything much under way at this point just before Christmas. The real period will in any case be that from 1 January onwards. That is what is going to happen.
Given that there is so much unhappiness about this bit of the Bill and that so many people are concerned—I have checked my Twitter feed and seen how many people remain unconvinced by what the Government and the Minister are saying—it might be sensible to think about making a clear change, and saying to people, “Look, we have listened and we can see that there is still a concern about the weight upon organisations, and therefore we will at least think about the possibility of integrating into the Bill a shorter period”. That would of course mean that my noble friend’s concerns would have to be looked at. After all, this is the Committee stage. One of the things that you do in Committee is raise matters that do not actually fit at the time but might lead one to wonder whether there might be a little bit of a shift.
I was hoping perhaps not to be seduced but, in a gerundive sense, to be put in a state to be seduced. In other words, it would be helpful for the Minister to say that he will look at this and see if there is a possibility of giving confidence to people that their fears would be at least more limited.
The only other thing that I will say is that I am concerned about the immediate effect, because all the arguments about referenda and other things fitting at the same time create a very complex web. That is the second reason why I have difficulty with the views of my noble friend Lord Tyler, with whom I often agree—even though I am not supposed to. There is this difficult web in any case, and therefore it is not unreasonable to take apart the pieces and knit them together in a different manner.
Baroness Hayter of Kentish Town
My Lords, I am not going to repeat the points that have been made, which in part arise from two issues. One is that there are so many bits in the Bill that change the way in which a number of organisations are going to have to work that a lot of them are concerned. The changes are also bureaucratic—and none of us likes that.
We have to place the other issue on the shoulders of the Government, I am afraid, because they brought the Bill in so late. We must remember that the Bill was introduced the day before the Commons rose for the Summer Recess, had its Second Reading on the day the Commons returned, and so on. That added to the feeling among organisations that there was such haste with the Bill that their views were not being heard. I fear that some of the questions that have been asked are still not getting answered
From the point of view of the organisations, how on earth are those that are affected going to get all their bureaucracy up and running before the regulated period? It starts in 23 weeks and two days’ time. In fact, it really starts at the beginning of April, because virtually every organisation’s financial year runs from 1 April to 31 March. Therefore, all their systems have to be up and running by then. That is adding to the concerns.
I remain worried that we are not going to see a number of workable proposals. We talked earlier about the ones relating to coalitions in Part 2 coming in good time. I know that the Minister was unable on Monday to promise that we would see the new government amendments on 7 January. It was for the sake of this House that we should have them, but of course it is the affected groups that will also need to see those amendments in order to even begin to work out how to respond in good time.
The noble Baroness, Lady Williams, who is not in her place, said that Part 2 had to be reconstructed from the ground up. We know that that is what she wants and what the outside groups want. Failing that, perhaps the noble and learned Lord could explain what changes the Government will make to ensure that organisations can prepare for the regulated period well ahead of the due date.
Lord Wallace of Tankerness
My Lords, the noble and right reverend Lord, Lord Harries of Pentregarth, has proposed an amendment that would reduce the length of the regulated period for third parties from 365 days to six months. The noble Lord, Lord Ramsbotham, has tabled a similar amendment, reducing the regulated period to four months under the banner of “keep it simple”, although as my noble friend Lord Tyler has illustrated, it is perhaps not quite as simple as it might appear on the surface.
I am aware from the engagement in meetings that this is an issue that has come up on a number of occasions and not least because, for the first time, some bodies that might have been getting pretty close to being regulated in 2010 but did not realise it have now realised that there is something that they will have to address. I will explain by way of background the different regulated periods that operate for different elections. The regulated period for UK general elections is 365 days and for devolved Administration elections and European parliamentary elections it is four months. The reason why we have put these in is that we believe that it is not unreasonable that third parties and political parties should adhere to the same regulated period for an election. This is because the campaigns relate to the same election. I am sure, if one thinks about it for a moment, that it would be somewhat unusual and unfair if third parties were allowed to incur unlimited amounts of expenditure campaigning for or against a party or candidates in a period when the political parties themselves would be faced with a limit on their spending. That is the principle that underlies why we wish to keep the periods in tandem.
As we have discussed earlier, particularly on whether the clause would stand part—when we talked about expenditure by a third party, which is ostensibly and is indeed intended to support a registered political party—there could be a scenario where a short third-party regulated period really detracted from the rules on the political parties, as political parties could use these third parties as expenditure vehicles for a considerable period of either six months or eight months. I do not believe that this is the sort of situation that we want to end up with. That said, believing that it would be possible to have the relevant guidance in time before the regulated period starts for the 2015 election, I recognise that there are issues; my noble friend Lord Deben highlighted some of them that relate to the first election under this. Of course there will be a review, which we will come on to but the Government have already indicated that there will be a review post-2015. I hear the points made that there are still concerns with regard to the immediate prospect facing a number of organisations. The noble Baroness, Lady Hayter, made reference to that too.
I can say this in a spirit of consideration but not promise, because the principle involved here is to keep the times so that they march together. Not doing so could undermine an important aspect of the restriction on expenditure by political parties. That is why it is important that we do not disregard that principle and I invite the noble and right reverend Lord, Lord Harries, to withdraw his amendment.
The Earl of Sandwich
My Lords, can the noble and learned Lord explain why he always goes back to parity with political parties? We are not talking about political parties; we are very different in kind.
Lord Wallace of Tankerness
My Lords, I am happy to explain that. The very nature of the expenditure that will fall to be covered by Part 2 will be expenditure that is very much geared towards an election, the same election in which the political parties will be fighting. It would seem rather odd if the political parties themselves are restricted in what they can spend over a period of one year. If, for example, we were to accept the amendment spoken to by the noble Lord, Lord Ramsbotham, for eight months of that year other third-party bodies, some of whom would be endorsing quite unashamedly the policies and perhaps the candidates of one of the political parties, would be able to spend freely without any restriction at all while the political parties themselves are campaigning with restrictions. That is why I make the comparison because it would create a sense of unfairness and imbalance if those who are actually fighting an election, those whose heads are on the block on polling day, as it were, were under restrictions but third parties did not have any such restrictions for a substantial part of that time.
Lord Harries of Pentregarth
My Lords, I thank the noble Lord, Lord Deben, for his support in principle for reducing the regulation period. Perhaps I may remind the Minister that the Electoral Commission, at least for the 2015 election, is supportive of a six-month period. It will be reviewed after 2015, but there is a great deal to be said, at least for the 2015 election, in support of testing the six-month period. With that, I beg leave to withdraw the amendment.
“Returns as to controlled expenditure
(1) Section 96 of the Political Parties Elections and Referendums Act 2000 (returns as to controlled expenditure) is amended as follows.
(2) In subsection (1)(a) after “expenditure” insert “in excess of the limits in section 94(5)”.
(3) After subsection (1) insert—
“(1A) Where—
(a) during any regulated period the total controlled expenditure incurred by or on behalf of a recognised third party is below the limits in section 94(5) in any relevant part or parts of the United Kingdom, and(b) that period ends,the responsible person shall submit a declaration to the Electoral Commission that it has not spent in excess of the limits in section 94(5) in respect of the relevant part or parts of the United Kingdom.””
Lord Harries of Pentregarth
My Lords, this amendment is about reporting requirements, and I shall speak also about the two clauses included in the grouping. I think that the Government are sympathetic to the idea that the regulatory burden, particularly on charities, should be reduced if at all possible. The Electoral Commission has noted that the current provision in the Bill appears to be onerous as far as reporting procedures are concerned. At the moment, charities and campaigning groups have to report every month, and every week during the post-Dissolution period. Amendment 170N provides that those organisations which register because they think that they will be above the registration threshold, but do not in fact go above it, will simply have to report that they have not spent above the limit. They would not have to submit detailed accounts, they would just note the fact that they had not spent above the limit. It is a simple way in which the regulatory burden on them could be lessened.
I have called for a debate on whether Clauses 32 and 33 should stand part of the Bill because we need to go way beyond that. Surely it must be possible for smaller organisations in particular, but even slightly larger ones, to make a single report of expenditure after the election period rather than having to submit monthly reports and, in the post-Dissolution period, weekly reports. I hope that the Government will be sympathetic to doing all they can to minimise the regulatory burden, particularly on charities. I beg to move.
Lord Hodgson of Astley Abbotts
My Lords, I have tabled a couple of amendments in this group. They follow the line of attack of the noble and right reverend Lord, Lord Harries of Pentregarth, and they deal with reporting requirements. They are quite simple and entirely deregulatory. As regards Amendment 173, if at present a body makes a donation which has to be reported under PPERA rules as part of the quarterly reporting procedure, that triggers a requirement to make returns in subsequent quarters even though the body may not have made any further donations; that is, the body has to make a nil return.
This situation becomes rather more pressing during an election campaign, where a single report of a donation may require a series of weekly nil returns during the rest of that campaign. That arrangement will apply to all charities and all non-party campaigners under the new regime. I have argued quite strongly that nil returns are superfluous—indeed, they may be worse than superfluous, in that a blizzard of nil returns may distract the Electoral Commission from its regulatory role. Amendment 178 seeks to achieve a position where, if a reportable donation is made, it must be reported, but if no further donations are made, then no further reports are required—we dispense with the requirements to make nil returns.
Amendment 174 takes us back to the challenge from a couple of groups ago about the reporting of coalition working, where groups and charities collaborate to work on a particular issue. I referred a moment or two ago to the quarterly and then weekly reporting requirements. Extraordinary though it may seem, as we heard in the earlier debate, every member of a coalition has to report the record of all the members, even of expenditure for which they have no responsibility. That of course is immensely time-consuming and duplicative.
I will give the Committee a quick example. A group of charities may wish to raise the issue, say, of the export of live animals. They establish an agreement and a budget of £200,000. One large charity puts up £150,000 and five smaller charities put up £10,000 each—all are therefore above the reporting requirement. The consequence is quarterly reporting, and weekly reporting during the general election, for all six organisations, which have to make the return to the Electoral Commission. This surely cannot be a sensible use of resources for any of the parties involved, not least the Electoral Commission itself.
Amendment 174 would permit a coalition of charities to nominate a lead charity, which will make the return on behalf of the group. My noble and learned friend may fear a loophole being created. Indeed, in his remarks when we were discussing coalition working an hour ago, he hinted at this particular concern and fear. However, I am not sure that he needs to be concerned, because the lead charity will have to take the responsibility —and all that implies under electoral law—for all the activities of all the members of the syndicate. It is unlikely to take on the leadership role unless it is satisfied that its fellow coalition members will behave properly and legally. Amendments 173 and 174 are supported by the NCVO and have the support, in principle, of the Electoral Commission. They are of course also in tune with the Government’s general deregulatory approach and policy. I hope the Government will study the amendments, which are in a purely probing form at the moment, and perhaps come back with some reaction on Report.
Lord Deben
My Lords, I will say one thing. I am very puzzled by the way in which, almost every day in our debates, something happens which reminds us that it is entirely out of kilter with the Government’s generally stated opinions. This Government have generally stated their opinion that they wish to get rid of unnecessary red tape. They are always saying that and yet, every now and again, we have a Bill that seems to have absolutely forgotten that.
We owe a great debt to my noble friend for raising this particular example. It is not the only example—there are a whole lot of examples in the Bill where the Government have suddenly decided that they will do precisely the things that they said they will not do, for very much better purposes, in a whole lot of other areas. For example, we could do with a lot more regulation on environmental matters to get things going, but every time one raises that, one is told, “We don’t want more regulation”. However, in this particular area, regulation appears to be not only implicit, and explicit, but continuous and extensive.
Lord Berkeley of Knighton (CB)
My Lords, may I add a small rider to what the noble Lord, Lord Deben, has just said? I have been involved to a certain extent with raising funds, mainly in the arts, but also for charitable work. One of the questions that people are most frequently asked is: how much of the money will go on administration and bureaucracy? We must bear that in mind and minimise it as much as possible.
Baroness Tyler of Enfield
My Lords, I support Amendment 174. As my noble friend Lord Hodgson said, it relates to our earlier discussion about coalitions of organisations working and campaigning together. As my noble and learned friend the Minister said when summing up that debate, it is important to get the balance right between not creating loopholes in the rules, or rules that can turn into avoidance measures and things like that. But we must balance that with not just allowing but recognising in many cases that it is a good thing for small and medium-sized charities, in particular, to work together in their important campaigning. That should not be made overly burdensome or difficult for them. The amendment proposed by my noble friend Lord Hodgson is a sensible way of allowing coalitions to nominate a lead charity to deal with the reporting requirements, and I look forward to hearing what my noble and learned friend the Minister has to say about this in his summing up.
Baroness Hayter of Kentish Town
On this side we very much support getting rid of red tape for small organisations. I think that it is tomorrow that the Joint Committee on the Government’s draft Deregulation Bill will produce its report, so it will be slightly ironic if there is that on the one hand and, on the other, we are regulating these small groups. I look forward to what may be the time when the Minister gives us a “yes” today.
Lord Wallace of Tankerness
My Lords, Amendment 170N would insert a new clause that would remove the requirement for recognised third parties to provide a spending return after the election if they had not incurred controlled expenditure above the registration threshold. Instead, a recognised third party would be required to submit a declaration that they had not spent in excess of the registration threshold.
Amendment 173, spoken to by my noble friend Lord Hodgson, would amend Clause 32 so that a recognised third party would not have to submit a nil report where it had not received a reportable or substantial donation. Amendment 174 would amend Clause 32 so that a recognised third party would be able to appoint a responsible person who had been a responsible person for another recognised third party.
I will give some background before addressing specific amendments. To improve transparency and to ensure that people can see who is funding a third party before the poll takes place, third parties will be required to report any large donations in advance of the poll. This will align the reporting requirements of third parties more closely with those of political parties, and will take two forms.
First, recognised third parties will be required to provide quarterly reports of donations for each reporting period that falls within the regulated period for a UK parliamentary general election. Secondly, between the dissolution of Parliament and polling day, recognised third parties will be required to provide weekly reports of any large donations.
I am not sure if I heard correctly whether the noble and right reverend Lord, Lord Harries, suggested that the quarterly and weekly reports also applied to spending. To clarify, the quarterly and weekly reports prior to the election apply only to donations—of more than £7,500—and the spending return will continue to be a requirement after the election.
Both the quarterly and weekly donation reports would be submitted to the Electoral Commission, which would publish the information. The quarterly reports must be accompanied by a signed declaration from the responsible person of the recognised third party, stating that all reportable donations accepted were from permissible donors. The Bill introduces measures that are necessary to achieve this increased transparency. The Bill proposes that third parties provide information about large donations in advance of the election, in quarterly and weekly donation reports.
At present, recognised third parties have to provide details of their campaign income and expenditure to the Electoral Commission after a UK parliamentary general election, and after the poll for certain other elections. To improve transparency by providing a clearer understanding of the finance of those involved in elections and to align the reporting requirements of third parties more closely with those of political parties, a statement of accounts would form part of the return third parties already provide to the Electoral Commission.
To ensure that this additional obligation is proportionate, individuals are excluded from this requirement. The Government believe that not to exclude individuals would result in an unwarranted intrusion into their personal financial matters, although they will still be required to provide details of their campaign income and expenditure, as is currently the case. Third parties, such as companies, charities and trade unions, which are required to prepare a statement of accounts under another legislative framework would be able to submit these accounts as part of their return to the Electoral Commission. I hope that this is an example of proportionality.
Turning to the amendments, I hope that noble Lords support the principle of providing information on reportable donations during the election period. However, the Government acknowledge that the correct balance has to be struck between increased transparency and overly burdensome requirements. With this in mind, the suggestions of the Electoral Commission in relation to nil reporting have provided a very useful starting point. The Government want to consider these matters very carefully and to revisit them on Report, to ensure that adequate and proportionate reporting requirements are included in the Bill.
Amendment 174, spoken to by my noble friend Lord Hodgson, concerns the role of the responsible person. When a recognised third party seeks registration with the Electoral Commission, they must nominate a responsible person who ensures compliance with the provisions of the Political Parties, Elections and Referendums Act 2000.
It is for the recognised third party or coalition to nominate a responsible person who they feel is best placed to ensure compliance with legislation. That could be a person who is already a responsible person for another third party. There are therefore no restrictions placed on who the recognised third party can nominate as a responsible person, except where an individual registers as a third party, where they will automatically become the responsible person.
In relation to Amendment 170N, the Electoral Commission made a similar suggestion in its June 2013 regulatory review. The Government see merit in the suggestion, which underpins our aim that smaller bodies should not be subject to overly burdensome reporting requirements. As a result, the Government will want to consider this issue carefully and revisit it on Report.
We have heard the—understandable—strictures from my noble friend Lord Deben. In that spirit, I ask the noble and right reverend Lord, Lord Harries, to withdraw his amendment.
Lord Harries of Pentregarth
I thank the Minister for his response. It is probably the most positive response we have had this afternoon—it must have been the intervention of the noble Lord, Lord Deben, which tipped the balance. He has been useful on one or two things on that side in recent years.
I accept the Minister’s assurance that the Government will do all they can to reduce the regulatory burden on both donations and expenditure. With that, I beg leave to withdraw the amendment.
“( ) In subsection (2), after paragraph (c), insert—
“(ca) a body incorporated by Royal Charter, or”.”
Lord Hodgson of Astley Abbotts
My Lords, I shall speak also to Amendment 172. It is with some relief that I reassure the Committee that this is not, for the moment, about charities. It is about the position of royal chartered bodies. At present, royal chartered bodies cannot register with the Electoral Commission, but nor are they charities. They are floating in the electoral ether, so to speak. These amendments attempt to regularise their position.
Amendment 171 amends Section 88 of PPERA, which is concerned with recognised third parties, by adding royal chartered bodies to the list in subsection (2) of those who may make returns to the Electoral Commission. Amendment 172, which is consequential, adds the officers of the relevant chartered body to the list of relevant participators at the end of Clause 31(3). I have tabled these amendments on behalf of the Law Society. Sections 94(3) and 94(4) of PPERA set out that where a third party is not a recognised third party and exceeds the limit of expenditure, which under the Bill will be £5,000, it will be guilty of an offence if it knew or ought reasonably to have known that the expenditure would be incurred in excess of that limit.
The fact that the Law Society cannot register as a third party, together with the Electoral Commission’s clear guidance that campaigning on policy issues could be deemed to be controlled expenditure, leave the society vulnerable to possible criminal sanctions for any campaigning it does on issues which arguably have a political dimension. Without the ability to register, the Law Society may have to cease such activity to avoid such sanctions.
There is inevitably a human rights argument that the position of chartered corporations breaches Article 10 of the ECHR, which is on freedom of expression, combined with Article 14, which covers discrimination. As these bodies do not have the options available to other bodies to come under the Act’s system of proportionate control subject to transparency, their freedom of expression is stifled. This is nothing to do with party political activity. Chartered corporations such as charities must not be party political. The exclusion of chartered corporations from being donors in Part 4 of PPERA is right, and is not touched by the amendment.
Until now, the Law Society has been able to live with the low level of uncertainty as to its precise legal position. Two developments have altered this. The first is the provisions and implications of the Bill we are discussing today. The Electoral Commission noted in its briefing of 22 October 2013 that:
“The combination of lower registration thresholds and spending limits, new constituency limits, and the wider scope of regulated activity, is likely to create a much higher level of allegations of breaches of the rules by non-party campaigners than at previous elections”.
Further, the detailed guidance on the width of controlled expenditure given by the Electoral Commission at a 22 October briefing is new. Whether it is right or wrong, it represents the regulatory enforcement approach it proposes to take. The second issue is developments in public policy—for example, the already referred to European Convention on Human Rights—which have an increasingly political dimension. They bring organisations such as the Law Society, which represents a substantial body of membership, increasingly close to the complex line between policy research and campaigning.
The Electoral Commission is sympathetic to this. Its briefing states:
“We support the principle of this amendment and agree that this is an issue that should be considered and note that any organisation that does not fall within one of the categories listed in PPERA as having appropriate links to the UK will not be able to register. This effectively means that their spending on matters covered by this Bill is capped at the registration threshold”.
It goes on to make a further point, which I had not focused on and which is an issue the Government will have to consider:
“There are other organisations that are currently ineligible to register, including Charitable Incorporated Organisations (CIOs)”.
Of course, that came into force only in the past 18 months and was not in existence in a corporate form at the time when PPERA was passed. It will be an increasingly important corporate form, because of course it offers the trustees of charitable trusts limited liability. We will therefore need to address this issue at some point during the passage of the Bill, but I had not come across it until this moment.
I have tabled these amendments on behalf of the Law Society, but it will not just be the Law Society that is affected. Other relevant bodies which may or may not be aware of the fate that awaits them include the Chartered Institute of Taxation, the Institution of Civil Engineers, the Institute of Chartered Accountants in England and Wales and the Royal College of Surgeons. The full list of royal chartered bodies contains no fewer than 1,002 corporate bodies—whose names I shall not read out—but it may interest the Committee to know that the list of establishment, which is set out in date order, begins at No. 1 with the University of Cambridge, established in 1231, and ends with No. 1,002, the Marylebone Cricket Club, or MCC, established by royal charter on 12 December 2012. That is not a bad pair of bookends for this amendment, so I hope that the Government can be persuaded to look sympathetically at the plight of this important and widespread set of bodies. I beg to move.
Lord Harries of Pentregarth
My Lords, Clause 31 is entitled, “Notification requirements for recognised third bodies”. My plea to the Minister is simple and straightforward, as it was with the earlier clauses. The regulatory burden under this clause should be as small as possible for charities and other campaigning groups. The great list under subsection (3) includes company directors, friendly societies, building societies and so on. At the very least, someone will have to give some very clear guidance—I presume that it will be the Electoral Commission—not only to charities, to which the measure might be clear, but a whole range of campaigning groups to which it may not be clear who is the governing body or the accountable body among them. Again, I look to the Minister to give some assurance that the regulatory burden regarding notification requirements will be kept to a minimum.
Lord Gardiner of Kimble (Con)
My Lords, in respect of the amendments in the name of my noble friend Lord Hodgson, I have some further positive news. The Government acknowledge that, as 13 years have now passed since PPERA was enacted, there may be other bodies which should now be added to the list. My noble friend mentioned a number of bodies, including the Law Society. Organisations incorporated by royal charter are among them. The Government would like to consider what other bodies should be added to the list of bodies which can register with the Electoral Commission. The Government are committed to ensuring that those bodies which would like to register as a third party are able to do so.
I entirely agree with the noble and right reverend Lord that it is important in all that we do that we do not overburden organisations, be they small or indeed large. Looking through the list, it is my understanding that for companies the relevant participators would be the company directors; for trade unions, it would be the trade union officers; for building societies, it would be the directors; for limited liability partnerships, it would effectively be the partners; for friendly societies, it would be the management committee; and for unincorporated associations, it would be members or, if there are more than 15 of them, the officers of the association. It is certainly not intended to be an extensive list, but it is important to ensure that the activities of third parties are transparent. We think that the change will assist that, but, clearly, we do not want to burden people. Being a director of a company myself and a partner, I know that one has always to put down the names of the directors of the company or the partners, but, certainly, one does not want in any way to make this a difficulty for charities and non-party organisations. That is why these details are included in Clause 31. I hope that, in these circumstances and with that positive news, my noble friend will feel encouraged to withdraw his amendment.
Lord Harries of Pentregarth
Before the Minister sits down, it is crystal clear in the case of company directors and lawyers who are in partnership, but if you take, let us say, Save Lewisham Hospital, a great campaign group with perhaps lots of other little groups, it may not be at all obvious who it has to put on its paper to report. Then there is the Stop HS2 campaign, with thousands of smaller groups. It will not be obvious which is the organising group or body or the equivalent of directors for those kinds of campaign groups.
Lord Gardiner of Kimble
I tried to explain what would be the case with unincorporated associations but, given what the noble and right reverend Lord has said, I will certainly look into that.
Lord Hodgson of Astley Abbotts
It is the fate of those of us who scrutinise legislation to spend most of our time pushing against a door that remains firmly shut. When the door suddenly opens, one is inclined to stagger into the room slightly off balance. I am extremely grateful to my noble friend on the Front Bench for that very constructive reply. I invite him to confirm that charitable incorporated organisations will be on the list that is being considered. If he cannot tell us that now, perhaps he can write and let us know. For the charity sector, that is going to be an increasingly important corporate form because of the limited liability that it affords to trustees, who otherwise have unlimited liability. As the noble Lord, Lord Forsyth, would say, it will apply to Scottish CIOs as well. Can he give us any further reassurance?
Lord Gardiner of Kimble
I have a note that includes the CIOs. We will be looking into this issue, including the Scottish incorporated organisations, so I can give my noble friend as positive a reply as I am able.
Lord Hodgson of Astley Abbotts
It is therefore with great pleasure that I beg leave to withdraw the amendment.
“Part 2ATax relief on donationsTax relief on donations
(1) In the Political Parties, Elections and Referendums Act 2000, after section 70 insert—
“70A Tax relief on donations
Tax relief shall be given, subject to Schedule (Tax relief on donations), to individuals who make donations to a registered political party.”(2) Schedule (Tax relief on donations) has effect.”
Lord Campbell-Savours (Lab)
My Lords, I shall speak also to Amendment 177. Amendment 176 is an attempt to reduce some of the controversy over the funding of political parties. It would incentivise a system of donations by individuals by allowing taxpayers to reclaim the basic rate of tax on their donations to political parties. It would limit the relief to the standard rate. It would operate in the same way as gift aid to charities or covenanting to your local church.
The objective is to help to build a more participatory democracy where a far larger section of the population can sign up to more active forms of political engagement. It would widen the donor base, as Obama managed during the course of his campaign for the presidency in the United States of America. It would be far healthier for democracy than a system where a few large donors and organisations stand accused of exercising undue influence over the democratic process. We all know that while that may be the case on occasion, more often than not it is not the case, but the public simply do not believe us. I argue that an arrangement that widens that donor base and reduces the reliance on large donors is to be welcomed.
I have support for my amendment right across the parties and there is wide support in both the Commons and in this House. I know that there are many who would have been here today if the debate was not taking place at this time of day shortly before the Christmas Recess.
Why has it not happened before? Why has my simple proposal not been considered and implemented in law? To examine the reason for that we have to go in the history of what has been a very difficult debate. Over the past century there were repeated scandals involving political donations. By 2000 the debate had become sufficiently heated to provoke the Government into introducing legislation in the form of the Political Parties, Elections and Referendums Act, which has been referred to repeatedly during proceedings on this Bill. However, that Act dealt with only part of the problem. Deficiencies in the legislation surfaced around the 2005 general election when a series of arguments broke out over the use of loans—or what were described as loans—as a means of funding political campaigns. As a result, the parties were driven into all-party discussions on reforms which, predictably, broke down. That breakdown and the inevitable stalemate that followed led to the 2007 review undertaken by Sir Hayden Phillips. It was hoped that this review would lead us out of the impasse but its report indicated only the nature of the problem and did not provide a solution. However, the review paved the way for further talks between the three main political parties, under Sir Hayden Phillips himself. Again, the inevitable happened as the talks broke down in October 2007. In May 2010, after aborted discussions and a general election, a reference to the problem surfaced in the coalition agreement:
“We will also pursue a detailed agreement on limiting donations and reforming party funding”.
The coalition agreement was followed in July 2010 by the Committee on Standards in Public Life, which re-energised the debate with its 2011 report. The report was accompanied by caveats in the appendices from both Labour and Conservative party representatives. We were back on the old merry-go-round with caps on contributions, trade union donations and the usual differences and suspicions—what appeared to be irresolvable problems. Two months later the Political and Constitutional Reform Committee called for heads to be banged together and a solution found to this intractable problem, which is so damaging the political class. The committee, despairingly, called for a resolution of the problem to help avoid further party funding scandals. Not that that plea had much of an effect. Within two months we had a further scandal, with the Cruddas affair: an allegation that led to a libel action against the Sunday Times, which Peter Cruddas, incidentally, won. Once again, Parliament had been submerged in sleaze allegations and more damage was done to its credibility.
Following the Cruddas affair, in the same month, Francis Maude, a Minister in the other place, announced a new series of talks. In his statement establishing the talks he said:
“We could also look at how to boost small donations and broaden the support base”,
for the parties. I could not agree more. That is the basis for this amendment. I understand that there were seven meetings in 2012 and 2013. Once again the predictable and the inevitable happened. The talks collapsed. They have been described to me as, “collapsed talks” that “fizzled out”. On 4 July this year, the Deputy Prime Minister, Mr Clegg, announced that there was no agreement between the parties and it was, in his words,
“clear that reforms cannot go forward in this Parliament”.
Where does that leave us? It leaves us with a totally discredited donor regime in place. Personally, I am fed up to the back teeth with all this ducking and weaving. All we are doing is bringing the entire political establishment, particularly Parliament, into disrepute, while increasing the disconnect between Parliament and the people. The rot has got to stop.
My amendment is the embryo of a scheme. It provides a framework on which a tax-relieved donor regime can be built. Discussions about what constitutes a political party or levels of tax-relieved donations, although defined in my proposal, can be the subject of negotiation and more precisely defined at a later stage. Today, I am simply moving a probing amendment, and I look forward to the considered response of Ministers.
Lord Tyler
My Lords, I was delighted to be able to put my name to this amendment, which indeed has cross-party support. It would be fair to say that the four Members of your Lordships’ House who have put their names to the amendment have all had extensive experience, long commitment and real concern about the maintenance of our parliamentary democracy and its health. My noble friend Lord Marland has also had considerable responsibilities in this field, and I hope that he will be able to address your Lordships’ House in a minute because he will have a particular dimension to add.
I do not think that any of the four of us are dangerous radicals, exactly, but we have all of us given a great deal of thought to this issue and have a common concern. I and my Liberal Democrat colleagues have long recognised that a broad range of small donations is preferable to a small number of large donations; that is where we come from. Tax relief along the lines of gift aid would be a good way to embody this principle in regulations about donations. As your Lordships’ House is aware, we believe that those regulations should also include a comprehensive donation cap on individual and corporate donations; that is not for this evening’s debate but I very much hope it will come in due course. With colleagues in the other place, I launched a cross-party draft Bill earlier this year, which would have made specific provision both for tax relief and for a cap.
The amendment before us has the potential to move the debate forward. After so much self-interest has thwarted progress so far, I welcome a further attempt to put momentum behind this change. The amount of money that this would cost is clearly limited in the noble Lord’s amendment, which makes clear that the maximum tax relief for the first two years of operation would be only £16 per taxpayer, and in later years a figure of £96 or another figure set by the Secretary of State. We do not have figures before us for the total cost of such a measure, but we do know that there are ways to find this money without increasing the overall cost to the taxpayer of political parties. I think that it would be the common experience of Members of your Lordships’ House that this is not exactly the best time to be persuading our fellow citizens to spend more on political parties, or even the political process.
However, I have advocated before that the freepost election addresses from which candidates at UK and European parliamentary elections can send at the cost of the Treasury—of the taxpayer—should be converted into booklets of the kind used in the London mayoral elections. It is a staggering fact that a saving of something in the region of £50 million per Parliament could be secured by doing this, and could be put into a tax relief measure of the kind being suggested. Therefore there would be no necessary net increase in taxpayer subsidy to the political parties or the political process. Now that Royal Mail is privatised, it may be increasingly attractive to taxpayers to divert some money away from their coffers and profitability into this very simple way of improving how our political system is funded.
There is no reason for anyone in this House to fear this simple change. It seems that it would apply only to small donations and would roughly affect and benefit the parties equally. Given the desire for consensus in this area, that ought to be enough to recommend it to us. It is a very good measure which has my strong support and I hope it will make some progress.
Since I am an optimist, I hope I will not have to speak again in Committee. I am sure other members of the Committee will be glad to hear that. I therefore take this opportunity of hoping that colleagues on all sides of your Lordships’ House have a very collaborative, transparent, enjoyable campaign of partying during the Christmas recess.
Lord Marland (Con)
My Lords, I also support the amendment. I am grateful to the noble Lord, Lord Campbell-Savours, for tabling it and for being associated with the noble Lord, Lord Tyler, who does so much thinking on this subject it is a joy to behold.
I speak with some experience as a former treasurer of the Conservative Party for three and a half years. I may not be entirely supported by the Government on this amendment but most politicians I know think that money grows on trees when it comes to fundraising for a political party and have no concept of how incredibly difficult this is whatever time of the electoral cycle you are in. Working with former Prime Minister Blair, I was one of the instigators of the Phillips report. I participated keenly in that and was disappointed when it came to naught, largely over the issue of trade union donations.
I approach the amendment by asking myself three questions. The first question is: why do people join and participate in political parties? The simple reason is that they have a keen interest in politics and democracy. However, in my experience it is also—as the noble Lord, Lord Campbell-Savours, said—fostering a hobby in the same way as you might join a museum society or any other club or society. It is therefore quite reasonable that a donation to a political party should be treated on the same basis. It also allows people to foster political debate. We are the home of democracy and, as the Prime Minister’s trade envoy, I have been proud to be able to use this as a message throughout the world. Democracy is created by political parties; political parties are created by the individuals who work for them and fund them. Democracy is therefore dependent on giving. New political parties like UKIP, for example, would not have been able to start had a large number of people not donated to it. That, in turn, fosters democracy.
We must also recognise that, as I said earlier, fundraising is incredibly difficult. Very few people like doing it, are good at it or like to be asked. Because funding is so important to our political parties, it is also incumbent upon those of us who are involved in politics to stop the continual denigration of people and institutions for giving money to them. In my experience of three and a half years as a treasurer there were very, very few people who wanted something in return for giving money and most of them were not treated with any respect. There are, of course, situations where people want to persuade a Minister or shadow Minister of the benefits of their ideas, but they will probably not take a blind bit of notice unless the idea has reasonable resonance with their political approach. It is incumbent on us to resist the temptation to criticise people who give political donations or to show them up in a bad light for doing so. It is they who allow us to promote democracy.
The next question I ask myself is: do we want to continue a mix of public and private funding of political parties? Let us not kid ourselves: political parties are funded by public money. There is something called Short money which is £6.5 million a year given to all the opposition parties. There is also the Cranborne money, which is given to opposition parties to support their shadow Ministers in action, which is public money, and a considerable amount. The future of political-party funding should be that blend of public and private support. Of course, the problem with Short money is that it goes only to opposition parties, and believe you me, there are times when parties in government suffer from a complete dearth of funding and therefore require financial support, which at the moment they do not get. Therefore the amendment proposed by the noble Lord, Lord Campbell-Savours, is worthy of support.
The final question I ask myself is: do we want to encourage parties to focus on increasing their membership and their small donations? Of course, there is overwhelming support for that. We have to rebuild our donor base of small donors and our membership, just to excite people into the task of politics and support for politicians, which has, sadly, been under attack and under threat. Every argument leads to a mixture of public and private funding. This is a very good start on the road to trying to find the best route to doing it, and so I have great pleasure in supporting the amendment.
Lord Cormack
My Lords, I will speak briefly in support of my three noble colleagues. The noble Lord, Lord Campbell-Savours, has done a very good service to the House by tabling this amendment, and I hope that there will be a sympathetic and encouraging response from the Minister who replies. I take issue with just one point made by my noble friend Lord Tyler. I would not like to see the booklet sent out in place of the individual election addresses which candidates are able to send out, one to each elector, at public expense. That would be a further depersonalisation of our politics in this country. Every candidate should be encouraged to send out an individual election address which reflects that particular candidate and his or her interests—that should continue. However, I agree with all that my noble friend Lord Marland said about encouraging participation. It is right for us to give that modest encouragement and assistance, because, after all, it is capped—at a realistic and modest level—and it would not transform politics in the short term. One of the problems we have in this country is the declining membership of political parties. Nevertheless, that would be a move in the right direction and it has my total support.
Lord Finkelstein (Con)
My Lords, I apologise for not having spoken at Second Reading, when I was not present, and I declare my interests in charities that are in the register of interests.
It is natural for us, as people who are involved in politics, to think that it would be a good idea to subsidise politics in a way that other activities are not subsidised, and for us to be keenly aware of the difficulties we all have as members of political parties in raising money for our political causes. However, our problems in doing that are the same as those that other people have. We should therefore think very deeply about appropriating for ourselves a privilege that is not given to other people. Although this is a modest proposal, and does not go as far as other proposals for state financing of political parties, it would be naive of us to think that if we asked the electorate to treat political parties as if they were charities, they would not in return begin to expect political parties to behave as if they were charities and ask us to do all sorts of things that justify our claim that subsidising our activities is something of public worth. Therefore, although I respect the intention behind this amendment, and I understand why we all feel that our work is incredibly important and therefore should be exempt from the normal taxation that other people’s important work is subject to, we should be careful before appropriating to ourselves that privilege.
Lord Campbell-Savours
Does the noble Lord know by how much the state already funds political parties now? Does he know what the figure is?
Lord Finkelstein
I know it is already many millions of pounds, and I am very nervous and worried about that. That money leads to the state beginning to suggest to political parties how they should spend that money, in a very restricted way. In the end, to avoid the problems that the noble Lord talked about in his speech, we would have to impose all sorts of restrictions on political parties’ funding. Otherwise, political parties would be able to raise that money on top of the other money that has been given to them.
Lord Marland
Before the noble Lord sits down, perhaps I could reiterate what I said earlier. The state gives political parties £7 million a year. Does he not agree that, because he did not know that himself, this has not been transparently demonstrated to the world at large—and that the proposition in the amendment is much more transparent than what currently exists?
Lord Finkelstein
Yes, I think I would agree that it is more transparent, but the noble Lord is assuming that for that reason I agree with the original proposal that we should be spending all that money in the first place. I am very nervous about the amount of money that the public are already giving to political parties. It is not very transparent to people, and I think that if they knew what was being given they would not agree with it. Although I can see why this idea might be an improvement, it is being proposed not as an alternative but as an additional sum.
Lord Cormack
Does my noble friend not accept that we are talking about voluntary donations? Nobody is going to be compelled to give anything. All it means is that if my noble friend decides, in his generosity, to give a modest sum to a political party—I cannot guess which party it would be—that would be his voluntary decision, and a very modest subsidy from the Treasury would come with it. This will broaden the base of political parties in a way that both he and I would surely desire.
Lord Finkelstein
I am going to gain an exemption from my other duties as a taxpayer, in order to do this. It therefore constitutes a privilege that I am being given for giving that money to a political party. Naturally, we are all in favour of doing that because we are all involved in politics.
Lord Deben
I am sorry to interrupt, but if we are starting to talk about taxation in that form, I must say that I do not want a state in which it is a privilege not to pay taxes. That is a very peculiar Conservative view, if I may say so.
Lord Finkelstein
We are required to give money to the state to pay for all the services that we enjoy, and the amendment suggests that instead of doing that, we should be given an exemption from that duty merely by dint of the fact that we wish to give money to a political party—a privilege that is not granted to us in respect of any other decision that we may take. Any other decision that I may take about what to do with my money is not granted that privilege; I am not to be granted an exemption from my duty to fund the National Health Service—except, by coincidence, in the opinion of a group of political activists, if I give money to the cause of political activism.
Lord Deben
My noble friend has just admitted that he has a large number of charitable activities. I am very happy that that should be the case. The real problem with not extending this provision to political parties is that it says that a political party is somehow less worthy than charities. My concern is that that is an insult to the noble nature of a political party.
Lord Finkelstein
Being a member of a political party is not a charitable activity.
Lord Finkelstein
If it were a charitable activity, the party would be a charity. It is not a charitable activity; it is a political activity. There is a distinction between a charitable activity and a political activity. I am sure that the noble Lord is motivated in his politics by a charitable instinct, but that is very different from a political party being a charity. There are rules that govern what is a charity—rules that we have determined should exist. If we wished political parties to be charities, my point is precisely that the electorate would begin to expect us to impose on political parties the same sort of restrictions that we place on charities.
Lord Campbell-Savours
In the light of these interventions, might the noble Lord not wish to revise his article on these matters in the Times this morning?
Lord Finkelstein
It is hardly to my surprise that I discover that in a group of people who are involved in politics, everybody thinks that political activity is very special and ought to be granted privileges not granted to other activities. It should not come as a surprise to any of us that we are all very keen on it and understand its importance. My question is whether we think that because we have an interest in politics and believe it to be a noble and important activity, we have a right to expect the electorate to grant us that privilege—an exemption from our other duties as taxpayers. I would argue that we do not.
Lord Hodgson of Astley Abbotts
My Lords, I wish to add a few words. This discussion shows that in the area of political funding, for every solution there is a problem. I take a more sympathetic view of the issue than my noble friend Lord Finkelstein because I think that it is dangerous for parties to depend for their existence on a few major donors, wherever those donors may come from. We therefore have to find a way to replace those donors either with the state or by encouraging more people to make their donations worth more: for example, by means of gift aid, thereby taking them into the charity arena.
At the moment, there is a disconnect between the general public and Parliament. There are a number of reasons for that but the noble Lord, Lord Campbell-Savours, put his finger on it: a large proportion of that disconnect is due to difficulties in the area of funding. Some reports are blown up by the newspapers but the public is left with the impression that everybody has their nose in the trough. Even when people are found not guilty of offences in this regard or libel suits are successful, that impression is nevertheless left behind.
I offer a personal view on this. I am on the Lord Speaker’s outreach panel, the members of which give talks in schools, mostly to sixth forms, but sometimes to members of luncheon clubs and so on. It is interesting to see the reaction of 17 and 18 year-olds to talks about Parliament. After you have told them a bit about what we do, you ask them what they think about Parliament and the subject of money always comes up. It is not a question of one party or the other but of a general “smell”. At the moment, we are not passing the “smell” test as far as 17 and 18 year-olds are concerned. I am not suggesting that this amendment is perfect, but it provides a way for us to begin to address the “smell” test and start to deal with some of the issues that so far we have failed to grasp. If we do not grasp them, I fear that the reputation of Parliament will continue to decline because the newspapers and the media will continue to make hay with our reputation.
Although my noble friend is absolutely right about his narrow point, he has to decide where the balance of advantage and disadvantage lies. We should tell our fellow citizens that this process should mean a lot to them as it is the means by which irreconcilable policy issues are reconciled, and that if we do not reconcile them inside this place, we literally fight it out in the streets; and that is not very attractive either. Although I do not think that the amendment is the answer to this problem, I am sympathetic to it because it is the beginning of the answer and deserves to be explored further.
Lord Deben
My Lords, I have always been an agnostic about this issue and it is rare that I agree with the noble Lord, Lord Campbell-Savours, but I thought that his speech was remarkably informed. However, the important point is that those who do not want this measure have to find an alternative; and that is the trouble. Every time you talk about party political funding, people do not like whatever you suggest, so you end up with a system which is clearly not acceptable.
This measure is the best solution I can think of for the very reason that the noble Lord who has just spoken put forward: that is, whenever you give a talk in schools, money is the universal and everlasting concern that is always raised. I am not sure that it is easy to answer it because I know perfectly well that, in all the cases I have ever known, donors to the Conservative Party did not get what the newspapers thought they got. I think of a specific occasion when I was a Minister when, because somebody dared to tell me that a particular person was a donor, I am afraid that the opposite happened to what would otherwise have happened. I am sure that the noble Baroness on the Front Bench opposite would agree that such things happen on the opposite side of the House as well. That is what decent people do but it is not what indecent newspapers pretend those people do.
If our whole body politic is being poisoned by the present system, it is incumbent on those who object to the measure being put forward to suggest a different, better solution. I hear none, so, although I do not particularly like this measure, I do not know of a better one. We need to think about this issue much more seriously. The political parties should not wander on saying, “Well, we cannot think of anything better so we will go on with this”, because it is damaging the whole system.
Lord Finkelstein
Is the noble Lord proposing that there should be a cap that accompanies this amendment? Because if he is not, why would it affect the problem that he is talking about? It only affects the problem that the noble Lord is talking about if you ban people from making the bigger donations.
Lord Deben
I am sorry; my noble friend misses my point. I am an agnostic on this. I am merely saying that as an agnostic listening to the debate, having listened to this debate for many years now, I think that those who defend the present system should not be allowed merely to say, like my noble friend did just then, that this is a problem, and that that is a problem. They have to explain how we can go on with the present system without the poison constantly dripping down into the system in which we live. It is rather like climate change. I never understand why I am supposed to explain that it is dangerous to put vast quantities of gases into the atmosphere. They should have to explain why it is safe to do so. That seems to me to be the right way round. I am in exactly the same position here. Those who defend the present system have got to explain why it is that we should go on with something that is clearly poisoning the body politic.
Baroness Royall of Blaisdon
My Lords, that is an interesting idea in an interesting debate. I certainly do not defend the present system. I agree with all of the noble Lords, including my noble friend Lord Campbell-Savours, that funding causes a disconnect with the people of our country, and that we have got to do something about it. We have to lance the boil, or whatever metaphor one wants to use. People have made various suggestions, including about the cap and about other things such as those that the noble Lord, Lord Tyler, talked about. It is absolutely clear that we have to find a solution. I am sure that all of us who are engaged in politics, and all of us who are here would agree, that politics is a “noble activity”, as the noble Lord said. It is a fundamental part of our democracy, and we are here to protect our democracy and to be vibrant activists.
However, it is my party’s strong view that whilst this is an interesting idea, it should not be looked at in isolation, and that what we have to do is to knock each other’s heads together, and find a solution in the round. My party—our party—wants to resume the all-party talks. It can be done; we have got to find a way through. It is not that I am being complacent. I can see that the noble Lord, Lord Marland is getting frustrated by what I am saying, but I can assure him that I spend a huge amount of my time raising funds for my party. I know how difficult it is, and I know all the problems with the media and everything else. We have to find a solution. It may well be that this is part of the solution, but it cannot be dealt with in isolation. But I am very grateful to my noble friend for raising this very interesting issue.
Lord Wallace of Tankerness
I, too, would like to thank the noble Lord, Lord Campbell-Savours, for raising this. Having spent much of the earlier part of the Committee discussing non-party organisations and the limits on party expenditure, I think that it is interesting that we now move on to party revenue and how it is raised. Indeed, there is much in this debate in which I find myself in considerable sympathy, as there is a disconnect and there is a problem.
As my noble friends Lord Deben and Lord Marland and the noble Baroness, Lady Royall, reminded us, politics is a noble calling. It is not always seen like that, and we understand sometimes why it is not seen like that. But much of the work that is done in this House and in the other place, and in the various devolved Administrations and council chambers up and down the land, requires people to make a commitment and very often a sacrifice in order to make the system work. It does not work perfectly, we know that, and it will not always produce the policies that people like, but nevertheless, without the people prepared to do that work, the system would completely break down and democracy would be seriously imperilled. Democracy does not come cheap, and if people are going to have proper choices at election times it is important that funding and resources are there for particular programmes to be put before voters, who should have an opportunity to respond.
Lord Campbell-Savours
To illustrate the point, I was making a distinction between a monthly contribution and an annual contribution.
Lord Wallace of Tankerness
I am grateful to the noble Lord for explaining that.
It will not come as any surprise that the Government do not feel able to support the amendment. There have been discussions among the three main parties, which have been guided by the principle of consensus. There has been not total consensus but substantial consensus in your Lordships’ House this evening—a consensus that was not found in the discussions that have taken place. The noble Lord, Lord Campbell-Savours, said that there had been seven such discussions. In a Written Ministerial Statement on 4 July, my right honourable friend the Deputy Prime Minister indicated that the talks had not produced results and that it was,
“clear that reforms cannot go forward in this Parliament”.—[Official Report, Commons; 4/7/13; col. 62WS.]
From what has been said, it has been a source of considerable disappointment that agreement could not be reached. I do not necessarily think that the Bill is the best place in which to start to do these things without that wider consensus as to what other things might be needed. However, it is important that we have had this debate, which has shown that there can be consensus across the parties.
I therefore say to my noble friend Lord Cormack that, while I am sympathetic, I regret that I cannot be encouraging. I therefore ask the noble Lord, Lord Campbell-Savours, to withdraw his amendment.
Lord Campbell-Savours
My Lords, I do not know whether to describe that as a disappointing reply. I hope that behind the scenes wise heads get together and further consider these matters.
All that I have tried to do in the amendment is break a logjam. These talks go on and on, collapse, start again and collapse. That is the history of this debate and we are getting nowhere. Meanwhile, our Parliament is submerged in a reputation of sleaze nationally, and some of us really resent it. Whether it is due to Hanningfield, Mackenzie and all these people, it is all part of the same reputation that is developing and surrounding Westminster. We cannot go on forever talking and nothing happening.
I say to the political parties that this is the beginning and is a way through. It would mean that we would have to re-engage in discussions about how to go forward. I am grateful to the noble Lords, Lord Deben, Lord Tyler, Lord Marland, Lord Hodgson of Astley Abbotts, Lord Finkelstein, and Lord Cormack, and my noble friend for their comments. The fact is that more people spoke on this amendment than on most amendments to this Bill, because people really are conscious of this matter and they know that there is a problem of credibility outside in the country.
I beg leave to withdraw my amendment, but I hope that at some stage in the future heads are banged together to sort this problem out.
“Operation of this Act
The Minister must before the end of the period of two years, beginning with the day on which this Act is passed, appoint a person to review generally the operation of this Act.”
Lord Hodgson of Astley Abbotts
My Lords, as we approach this last group for debate I shall be as brief as I can. This amendment inserts a new clause into the Bill and provides for the operation of the Act to be subject to a review. Whatever one’s views on the purpose of the Bill and whether it is sufficiently necessary, proportionate and effective, whatever one’s views are on the process of the Bill and whether it is too quick or perfectly adequate or whatever one’s views are on the implications of the Bill, one thing is certain: it has proved controversial. If this were not so, I am sure that the Government would not have agreed to the pause during the past few weeks. As the NCVO said in its briefing on this particular part of the Bill, three senior parliamentary committees have raised their concerns about it: the Political and Constitutional Reform Committee, the House of Lords Constitution Committee and the Joint Committee on Human Rights.
Yet at this stage, all our views and opinions are so far merely supposition. We have yet to meet my noble friend Lord Tyler’s unintended consequences. This probing amendment is designed to ensure that the operation of the Act, in particular Part 2, is reviewed once we have had some real-life experience on its operation. My amendment suggests a review within two years of it coming into force. This will, I presume, mean a review commencing in the spring of 2016—that is to say, about nine months after the next general election, close enough that the lessons learnt in that election will remain fresh, but not so close that those lessons are distorted by the passions inevitably aroused during the campaign itself.
This approach, which is supported by the NCVO, offers the Government the opportunity to say to the doubters, “Let us see what happens in the run-up to and during the general election in 2015, let us then have a formal review and then Government, Parliament and the parties affected, including the charity sector, can decide and lobby for whatever changes need to be made”. I beg to move.
Lord Harries of Pentregarth
My Lords, I wish to speak to Amendments 181A, 181B and 181C, which all move in the same direction as the noble Lord, Lord Hodgson, on reviewing the Act. We made it clear from the standpoint of the commission, from the word go, that our recommendations, as a result of only a fixed five weeks of consultation, were only provisional for the 2015 election and we were very glad to learn from the Minister that he thinks that it should be reviewed.
Amendment 181B, also in the names of the noble Baroness, Lady Mallalieu, and the noble Lords, Lord Cormack and Lord Ramsbotham, puts forward the recommendation that the review should be undertaken within six months of the next parliamentary election. Amendment 181C, also in the names of the noble Baronesses, Lady Mallalieu and Lady Williams of Crosby, provides that the review should be undertaken within one year. That one-year recommendation is closely linked to Amendment 181A, which provides a sunset clause so that the Act would cease to have effect on 31 May 2016, and therefore at the end of Amendment 181C we say that the committee set up by the House to review the Act should report on its conclusions and those should be debated in both Houses before 31 May 2016. There is a clear timetable for this, and I hope that the Government will accept it.
It has been borne in upon the Government that there are issues here which are far more difficult and complex than they first thought when this legislation was put before the other place in July. We have seen this in particular in relation to constituency working, in relation to coalition working, and in relation to what is the actual heart of this, which is the definition of controlled expenditure. These are major issues that will need to be reviewed after the 2015 election.
My final point is that it is clear that the Government have approached this legislation from the standpoint of how electoral law might be abused. It is the contention of those who are heavily engaged in the democratic process, charities and other campaigning groups, that in trying to clamp down on potential abusers, they have severely curtailed the legitimate activities of people who want to contribute during an election year. The Electoral Commission has said that much of the present Act would be a burden on charities and NGOs generally. When the Minister goes away and thinks about what has been said today, I hope very much that he will do all he can to give NGOs that want to contribute to the democratic process much greater freedom and the liberation to do so without fear of crossing registration thresholds and so on, as would happen if the present Bill goes through unamended. I hope that not only will he think about what has been said both today and on Monday, but that he will support the idea of a sunset clause and a review within a year.
Baroness Williams of Crosby (LD)
My Lords, I rise briefly to support what has been said by the noble and right reverend Lord and to make two precise points. The first is that the original amendment provided for a period of nine months, which is too short. As we know from many experiences, there is a complexity about elections and everything does not surface as quickly as that. It is sensible and important, if we are to have a review, that it should take into account all that has happened during an election—some of that will be local and some national—and that it is allowed to take note of all the propositions that have arisen. That is because a review that comes too early is one that might well get it wrong.
My second point is the importance of the sunset clause, as has been mentioned by the noble and right reverend Lord. I am afraid that I am a little cynical about government reviews. In my experience they do not always happen, sometimes they happen with some very odd persons being involved in them, and sometimes they just disappear into thin air. The great thing about a sunset clause is that it concentrates the mind of Government wonderfully. It is like a wicket in cricket. It makes it possible to consider very carefully what is at stake. I therefore strongly support the noble and right reverend Lord in calling for a sunset clause to be linked to the review because the sunset clause makes it certain that the review will happen and be taken seriously. The Government of the day will then have to consider in detail, in the way that the noble and right reverend Lord has asked for, many aspects of this very complex law.
Lord Cormack
My Lords, we had no pre-legislative scrutiny and many of us are unhappy about the way in which this Bill was produced. I think that a sunset clause would set our minds at rest to a considerable degree and there is, frankly, an unanswerable case for having one. I sincerely hope that my noble and learned friend, who has already been helpful and has indicated that he accepts the need for review, and who gave us the five-week period of grace—it was not enough but nevertheless it was appreciated because it marked a recognition on the part of the Government that they had not got it entirely right—can give us an assurance that there will be a sunset clause. That, I think, would send us all off to the Christmas festivities and the new year celebrations with a spring in our heels.
Baroness Royall of Blaisdon
My Lords, I will briefly say that I am in favour of both a review and the sunset clause. I also very much hope that the noble and learned Lord has been listening attentively—that is a stupid thing to say as I am sure he has been—over the two Committee days that we have had on this really important part of the Bill. Amendments have been put forward by all sides of the House, notably by the noble and right reverend Lord, Lord Harries, but both the review and the sunset clause may well be too late because some charities and NGOs may well have been silenced by then—not necessarily by the legislation itself but by the fear of the legislation and its consequences. This legislation needs time and good guidance, as we discussed earlier today. It desperately needs amendment and I am sure—at least I very much hope—that the Government will come forward with the appropriate amendments, including an amendment saying that there will be a review.
Lord Alderdice (LD)
My Lords, I have listened carefully to what has been said. One of the important developments in your Lordships’ House over the past year or two is that of post-legislative scrutiny. Noble Lords have focused on the usual way of addressing such things, such as a sunset clause and a plea for a government review—my noble friend expressed some scepticism about government reviews and about who gets asked to do them and so on—but Parliament now has it within its own hands. We would do well to consider not so much depending on government to produce a review at some stage down the line, or putting in a sunset clause, but rather whether we should use post-legislative scrutiny more regularly, after an appropriate time, whether that is two years or otherwise. I say that because it is so easy for us to put taking responsibility for something we ourselves feel strongly about on to somebody else. It is now in our hands to conduct post-legislative scrutiny.
Lord Cormack
The fact is that post-legislative scrutiny—which I am a great advocate of—is no substitute for a sunset clause, which brings the Bill to a proper stop. We do not have the power to do that.
Lord Wallace of Tankerness
My Lords, I will very briefly say that of course we need to be aware of the effects of any legislation and that often these effects do not become clear until after the legislation is in force. As far as Part 2 is concerned, the Electoral Commission already has, under PPERA, the statutory function of reporting on the conduct of elections. That report will include how third-party campaigning is carried out.
I reassure your Lordships that we agree that the impact of the provisions of Part 6 of PPERA, which would include, if it passes, the measures in Part 2 of this Bill, should be subject to a review after the 2015 UK parliamentary general election. The passage of the Bill has shown that the provisions of PPERA are not necessarily as widely known as they ought to be, and even less well understood. The 2015 election will provide an opportunity to review the effectiveness of the provisions of Part 6 of PPERA as enhanced by Part 2 of this Bill.
The Government are still considering the precise details of the review but we commit to laying the review before Parliament, and a government amendment to that effect will be tabled on Report. Such a review was recommended by the Commission on Civil Society and Democratic Engagement, led by the noble and right reverend Lord, Lord Harries, and we are grateful to him for that recommendation. When the review is carried out, it is only right that Parliament should have the opportunity to consider how to respond to its findings.
The reason I hesitate in agreeing to the sunset clause is that Amendment 181C calls for the report to be debated “before 31 May 2016”, whereas Amendment 181A would have the effect that Part 2 would expire “on 31 May 2016”. It is important that, if we have a review, it is a proper one. If there are things that need to be done, there should be an ample opportunity for Parliament to take steps and consider any amendments that are required. That would not necessarily give a proper opportunity for a full review and for Parliament to take any necessary legislative steps. The spirit is that there should be a review. It should be brought to Parliament. It is clear to all parties, regardless of who is in government after 2015, that the will to have a review and learn the lessons that any review might teach us is there. In these circumstances I hope that my noble friend Lord Hodgson, who set the ball rolling in this, will be prepared to withdraw his amendment.
I hope this will be the last time that I will be on my feet in this Committee stage. I thank noble Lords in all parts of the Chamber for their contributions. It is important that we have had them. I also thank noble Lords for the good nature in which, debating pretty complex matters, our deliberations have proceeded. The Government have been listening and will reflect over the Recess on the matters that have been raised in your Lordships’ House.
Lord Hodgson of Astley Abbotts
My Lords, for the second or maybe the third time this afternoon I can say how grateful I am to my noble and learned friend for his very positive response. It has been a long afternoon and I take this opportunity to thank him for the courteous way in which he has dealt with the extensive probing to which he has been subjected. In withdrawing my amendment I hope that it is not out of order if I wish him and all members of the Committee a very happy Christmas.
Baroness Anelay of St Johns (Con)
My Lords, it is customary at this point of the year for the Chief Whips and the Convenor to pay tribute on behalf of the whole House to the dedicated, patient and courteous staff who have facilitated our work this year, and whose efforts are sincerely appreciated by us all. The adjournment is also an opportunity to record our particular thanks to long-serving members of our staff, who have perhaps left us recently or are about to leave the service of the House.
I begin with the name especially well known to the scholarly among us, Isolde Victory, the recently departed director of library services. I do hate the word “departed”. It sounds as though she has gone not only from here but even further afield; she is still very much active. Isolde joined our House in October 1984 and became a Library clerk a year later. In her 29 years of service, she brought her sharp intellect to more than 4,000 pieces of individual research that covered issues as varied as Lords reform, Alpine skiing and tractors, or, given those who are here today, I might mischievously suggest the Recess itinerary for many of my noble friends. Perhaps her most enduring piece of research concerned delegated legislation, for which her briefing note is considered to be the definitive reference material on that subject. Isolde also took the lead in developing Library services. As the Library’s first head of research services and then as its director, she oversaw a significant period of expansion. In doing so, she kept at heart the Library’s core purpose of providing reference and research services to Members and she leaves a wonderful legacy for her successors. In retirement, Isolde has already enjoyed a family trip to Canada. To her other pursuits she will no doubt bring the same thoughtfulness and, I understand, dry sense of humour that characterised her time in our House.
I also note the departure of Kathryn Colvin, who retired as clerk of the Committee Office after seven years. Kathryn joined the Lords after a career in the Diplomatic Service, which culminated in her appointment as our first ever female ambassador to the Holy See. In that role, she represented Her Majesty’s Government following the death of Pope John Paul II and hosted a visit from the Prince of Wales. Her service saw her recognised not only as a Commander of the Victorian Order but, perhaps uniquely among the staff of this House, as an Officer of the Légion d’honneur. Kathryn’s Lords career was similarly devoted to foreign affairs in her role as clerk to the EU Sub-Committee on External Affairs. She brought her diplomatic ability and intellect to bear on the fast-moving work of that committee, granting it levels of access to the Foreign Office that were previously unknown, and guiding it in the production of notable reports on relations with China and Russia. Outside the House, she has played a leading role on the UK national committee of UN Women, and I have no doubt that she will continue to fly the flag for gender equality during her retirement.
Finally, Anne Bannerton also retired from the House this year after 17 years of service. Anne is perhaps best known for 14 years in the Peers’ Dining Room, first as a waitress and latterly as a wine steward. She became a warm and familiar face to many. In all that time, my experience was that she never lost her enthusiasm and diplomacy in dealing with all manner of occurrences in the Peers’ Dining Room. Perhaps Peers are not always quite as patient as they might be. Anne was a very popular member of staff with colleagues and Members, and her presence will be missed.
I also pay tribute to John Rogers, an attendant who served the House for 14 years. He first worked for the Law Lords as a senior clerical officer, where he prepared legal bundles and provided administrative support on what I am told was the notoriously hectic Law Lords’ Corridor. Other colleagues may feel that it is hectic on every Corridor. After the establishment of the Supreme Court, John wisely opted out of the confines of Middlesex Guildhall and instead joined the corps of attendants, where he worked in our Peers’ Lobby until his retirement in February this year. He was a popular figure throughout his time in the House. As with all other members of staff who retire, we wish him a long and happy retirement.
All that remains for me to do is to register the thanks of all of us to all the marvellous staff of this House and wish them all a very festive period ahead. I will formally adjourn the House later, but will now leave the matter of other tributes to the noble Baroness the Leader of the Opposition, a representative from the Liberal Democrat Benches and the Convenor of the Cross Benches.
Baroness Royall of Blaisdon (Lab)
My Lords, I echo the thanks that have been given by the noble Baroness the Chief Whip to our marvellous staff in this House. The fact that I am standing here in almost splendid isolation does not mean that my Benches do not think that the staff of this House are not just unfailingly helpful and courteous but amazingly patient and superb in dealing with the many daily challenges and problems that arise. I am particularly grateful to staff when some of our noble friends are ill. Two noble friends of mine were taken ill of late and the staff were impeccable and I am extremely grateful.
It should be my noble friend Lord Bassam standing at the Dispatch Box this evening but I am afraid he has been transported to the TARDIS. He has gone to see a “Doctor Who” film—I would say another great British achievement—and that is why I am here. I seem to have rather different notes from the noble Baroness, because I have some different aspects of the lives of some people.
First, I pay tribute to Mr James McWhinnie, who is clearly a very interesting character with great joie de vivre. I am told that Mr McWhinnie asked for a day off for a doctor’s appointment. Of course, his request was granted. When he came in the following day, everyone asked him how he got on, and he said, “Oh I’m absolutely fine, no problems at all”. However, a number of weeks later his colleagues from the RAF were looking through an RAF magazine and came across a picture of Mr McWhinnie with a wide grin on his face at a top table lunch, on the day he asked to go to the doctor. So I am glad that he has other things in his life apart from the House of Lords.
For the past number of years, a group of the doorkeepers go on what is called a “jolly boys’ outing”. The outing takes place over a weekend and they cruise the high seas. During the cruise, Mr Edwards gives a lecture on whale watching, so it is not just a drinking exercise. On one particular occasion Mr McWhinnie was at his muster point by the bar when he reached out to lean against a chair. However, he missed the chair, fell on the floor and, in falling, managed to fuse all the electrics that operated the bar, including the tills and, more importantly, the pumps to the barrels. I am told that the chap who ran the bar was not too happy. I am sure that we will greatly miss Mr McWhinnie, and I am glad that he did not cause that havoc in this House.
Next I pay tribute to Mary O’Keefe, who was a housekeeper. I pay tribute to all the housekeepers, who do a fantastic job in the early morning before we arrive. When we arrive every day, the House of Lords looks splendid. Mary worked as a housekeeper for 10 years and spent almost all her career in Old Palace Yard. She was highly regarded by all the Members and the departments which occupied the building. She ended her career in the Lords working in the Royal Gallery and the Sovereign’s Entrance. Both these areas were kept to her usual meticulous standards, and she will be missed by all those who worked with her and by the House in general.
Maria Teresa Rey has retired on medical grounds after many years of service to the House, working as a catering assistant in the River Restaurant since its opening in 2006. During that time she served many customers including Members and staff of both Houses, and we wish her well in retirement.
Finally, I pay tribute to Mr Paul Langridge, who joined the Corps of Attendants in April 1996 after a career in the London Fire Brigade. He rose rapidly through the ranks, becoming a principal attendant in 2001 and then moving on to become deputy staff superintendent in Black Rod’s department, in charge of all the attendants. His career included some memorable moments, not least when a Member collapsed here in the Chamber. Paul attended and, using his first aid training and a defibrillator, without doubt saved the Member’s life. Other notable events were the lying in state of Her Majesty Queen Elizabeth, the Queen Mother, along with state visits by the Pope, Barack Obama and many more during his 17 years of service to the House. He retired on 17 May 2013. Our great thanks go to these valued members of staff.
I also take the opportunity to thank the staff who work in the Government Office, in the Liberal Democrat Office, the Cross-Bench Office and my own staff. They all do a fantastic job, ensuring that noble Lords opposite are an effective Government in this House and we are an effective Opposition. My thanks go to all the staff of this House.
Lord Alderdice (LD)
One of the extremely valuable services that we all use every day in this House is Hansard, the Official Report. This does not only serve us now, but continues to provide a remarkable resource into future decades and indeed centuries. One of our senior Hansard officials has recently retired, and I would like to express our appreciation to Glenice Hoffmann. Glenice joined House of Lords Hansard as a reporter on Monday 12 January 1987, and worked as a chief reporter before being promoted to managing editor in 2004. The welfare of her colleagues was always a priority for her, as she showed in her work as union representative, health and safety officer and, perhaps most importantly, founder of the department’s tea club. Glenice gave a remarkable 26 years of service to the House and we owe her an enormous debt of gratitude. Thank you, Glenice.
Most of us also use the House Library facilities regularly and I would like on all our behalves to say a word of appreciation to Sian King for her service. She retired earlier this year, having joined the House of Lords Library in March 2003 as an assistant librarian. Later, she became technical services librarian, with responsibility for the Library’s core systems and infrastructure—invisible but vital for a modern library. One of her outstanding achievements and legacies is the successful introduction of a new library management system in 2011. She also played the key role in implementing the new e-deposit system whereby in 2007 both Houses moved overnight and seamlessly from a paper-based to a fully electronic deposit system for documents, which was a huge advance and a major achievement on her part.
Sian’s technical expertise and commitment to the Library profession were legendary and she did notable work with CILIP, the professional body for librarians and information scientists. She was a mentor for younger librarians early in their careers and she took every opportunity to champion the cause of libraries, promoting the collections and pursuing opportunities to move from print to digital, which is a very important element of the Library transition these days. On her retirement, Sian and her husband show no sign of taking things easy, as they move to Wales to self-build a new home and spend time with their new grandchild. Thank you, Sian, and very best wishes to you.
The housekeepers look after us quietly and unobtrusively. Patience Owivri has given nine years’ service as a housekeeper here in House of Lords. During that time, she worked in Millbank House, Fielden House and in all areas of the Palace. She was one of the group of housekeepers who volunteered for State Opening duties, working in the Moses Room helping the team of attendants dressing Members in their robes prior to going into the Chamber for the Queen’s Speech. Thank you, Patience, for all your work here in the House.
I say thank you from these Benches not only to those staff who depart in 2013 but to all of those who continue with us. We are mindful and deeply appreciative of the warm and courteous way in which you enable us to do our parliamentary work. I was asked to express particular appreciation on behalf of some of our Members who suffer from disabilities and need assistance to continue their parliamentary work. The staff are impeccable, courteous, warm and helpful at all times. We trust that you all, our staff, have a restful and enjoyable time over the festive season and look forward to continuing together with you to serve our nation in the new year.
Lord Laming (CB)
My Lords, on behalf of the Cross-Bench group, I associate myself with the warm tributes that have already been so well expressed. It is always a pleasure to take part in this important tradition in the House, because it rightly gives us the opportunity to make some time to express our gratitude to the many staff who have served us so well over the years.
We are all agreed that we owe a great deal to the staff of this House. Many are required to work late into the evening and sometimes unexpectedly, as was illustrated this year during two occasions when the House was recalled. Throughout the year, the staff carry out their duties with care and thought, and their support is of immense value in enabling the House to function so effectively. We are fortunate to have such dedicated and resilient staff who are committed to their task.
It is a pleasure to make special mention of three former staff who have served the House in different but equally important roles. The first to mention is Lieutenant Colonel Edward Lloyd-Jukes, who was widely known and respected by all Members of this House. Ted worked in Black Rod’s Department for more than nine years, first as administration officer and, for the last four years, as Yeoman Usher. Of particular note, was Ted’s ability to act at very short notice as Black Rod during the absence, caused by serious illness, of Sir Freddie Viggers in 2010 and 2011.
During nine months as Black Rod, Ted conducted the introduction ceremonies of no fewer than 108 new Members, a number thought to be a record for such a short period. At the State Opening in May 2010, Ted carried off the ceremonial duties of Black Rod with great assurance and, later that year, played a leading role in ensuring that the visit to Parliament by His Holiness Pope Benedict XVI was such a memorable occasion.
Throughout his tenure, Ted was at the heart of the arrangements for all the state events in the Palace of Westminster. His tally of visits by heads of state is no fewer than 18. The State Opening of Parliament in 2013 was his ninth. Just as for all previous State Openings of Parliament, it was his task, in which he took enormous pride, to direct and supervise in minute detail, and of course because of that the results were always flawless. Ted’s service was rightly recognised in June this year when he was appointed LVO in the Queen’s Birthday Honours.
Next, I pay tribute to Michael Walsh. Mick joined the House of Lords in 1997 as one of the two judicial doorkeepers after a career in the London Fire Brigade. Two years later, in 1999, he joined the Palace of Westminster Fire Service, where he remained until 2002. He was clearly bitten by the doorkeeper bug because he returned to us and remained until 2011 as a senior doorkeeper. He then joined the Department of Facilities as a facilities manager for property and office services. In this role Mick was in charge of the housekeepers and the training for the whole department. He remained in this position until his retirement on 11 December this year. We are most grateful to Mick for his dedicated service to the House and to us all.
I also pay tribute to Felicia Ojo. Felicia was a housekeeper in the House of Lords for six years, and until her retirement was part of the team that cared for the Peers’ Entrance, the Peers’ cloakroom and the Peers’ staircase. The area that she worked in presented a number of challenges, not least being the importance of not disturbing any papers that Members of this House had left around their pegs or on the floor by their pegs. Despite all this, the area was always maintained to a very high standard, which reflected well on Felicia’s work ethic and attention to detail. We thank her and wish her a very long and happy retirement.
I end by adding my own thanks to all the staff, and wish them and noble Lords a very happy Christmas.
Lord Brougham and Vaux (Con)
My Lords, I speak on behalf of the Lord Speaker and all the other Deputies. We associate ourselves with all the tributes paid to everyone in the House and wish everyone a happy Christmas.