Strengthening Standards in Public Life

Alex Sobel Excerpts

Wednesday 17th November 2021 Commons Chamber

[Thangam Debbonaire]

There are all these interventions from a sedentary position about the trade union movement; I have yet to see the Electoral Commission tell us that we should not be taking, and declaring quite properly, donations from the trade union movement that do not come anywhere near our individual accounts. Such donations are to fund political campaigns and are properly declared.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

Trade unions use their political funds, which are regulated under the Political Parties, Elections and Referendums Act 2000, voted on by millions of working people up and down this country and properly registered when they are donated to a political party. If the Conservative party is anti-worker, let it say that clearly.

[Thangam Debbonaire]

I am grateful to my hon. Friend for putting it much better than I could have. Trade unions are not-for-profit organisations to help to support workers’ rights. There is a world of difference there and they are quite properly declared. As far as I can see, there is no suggestion in the report from the Committee on Standards in Public Life that that should be changed. We are talking about the difference between private companies trying to buy access to the Government and trade unions that stand up for and campaign on workers’ rights making properly declared donations quite rightly within the electoral rules.

--- Later in debate ---

[Alex Sobel (Leeds North West) (Lab/Co-op)]

Thank you for calling me, Mr Deputy Speaker, and I thank the previous occupant of the Chair for guiding me in the conventions of the House. I did email the Member to whom I shall refer, but I can see that he—the Leader of the House—is in his place. I am not sure whether he read my email, but I am going to refer to him because last Sunday, on social media, I saw an article in the Mail. I am not an avid reader of the Mail—which may surprise Conservative Members!—but I opened and read the piece, and I was myself somewhat surprised by its contents. It is good that the Leader of the House is present, as he may wish to intervene and respond to some of my points.

According to the Mail, the Leader of the House

“borrowed up to £2.94 million a year in ‘director’s loans’ from his UK-based Saliston Ltd between 2018 and 2020.

Parliamentary rules require MPs to be ‘open and frank in drawing attention to any relevant interest’.

Although it does not explicitly cover director’s loans, the code of conduct requires directors to declare ‘taxable expenses, allowances and benefits’.

In the MPs’ Register of Interests, Mr Rees-Mogg disclosed himself as an ‘unremunerated director’ and shareholder of the firm, but did not say he had taken out the loans.

By using ‘director’s loans’—classed by the Government as a taxable benefit—he was able to borrow the large sum at very low interest.”

I will come to the details of that later.

The Leader of the House “insisted”—I assume directly to the Mail—that

“as the loans were not earnings, he was not required to declare them to Parliament and he had not broken any rules.”

He told the Mail that

“the 2018 loan was ‘primarily’ used to buy and refurbish his £5.6 million home in Westminster. He would not say what the rest of the money was for.

But a source in the Commons sleaze watchdog”—

that is the Mail’s language, not mine; I assume that it refers to the office of the Parliamentary Commissioner for Standards—

“said the loans should ‘absolutely’ have been declared in the Register of Interests, adding: ‘The whole point of registration is the public should be able to know what is governing your decision-making and the actions that you take.’”

The Leader of the House, says the Mail,

“bought his house, formerly Tory HQ”.

On Twitter, Baron Leigh of Hurley, a former Conservative party treasurer, challenged me, saying that it was absolute rubbish that the house was formerly the Tory headquarters. If the Leader of the House wants to tell us that it was not, I shall be happy to apologise, but that is what is says in the Mail. It says that the Leader of the House bought the house

“in February 2018 using a mortgage with Coutts bank, Land Registry documents show.

The £6 million he took in loans includes £2.94 million in 2018, £2.3 million the following year and £701,513 in 2019-2020, Companies House documents reveal.

In the first year he paid no interest, in the second he paid £46,915 and in the final year £2,030—£48,945 in interest over three years, equivalent to a rate of 0.8 per cent.”

My constituents, when buying a house, would struggle to get an interest rate of 5%. It sounds like a benefit to me, although I might be wrong.

The Leader of the House, says the Mail,

“was a director of Saliston Ltd until he joined the Cabinet in July 2019, but retains a 100 per cent shareholding and is a ‘Person of Significant Control’…Saliston Ltd has previously been described as a ‘holding company’ by Mr Rees-Mogg.

“It has £8 million property assets”—

including a Mayfair house—

“and nearly £1 million in other investments.

“In 2018”—

I am particularly interested in this—

“it took out a £2.87 million bank loan…the same year it lent Mr Rees-Mogg £2.9 million.”

I do not know the interest rate at which it took out the bank loan, but we know the interest rate at which the Leader of the House repaid it. [Interruption.] I am happy to take an intervention from the Leader of the House at any point. Saliston Ltd has a controlling stake in Somerset Capital Management LLP, the parent firm of Somerset Capital Management (Cayman) Ltd in the Cayman islands—an offshore entity.

I do not have much time, so I will come to the point; I would be fascinated to hear from the Leader of the House on this. He is quoted as saying:

“The loans from 2018 were primarily taken out for the purchase and refurbishment of [my home] as temporary cash flow measures.

All loans have either been repaid with interest in accordance with HMRC rules or paid as dividends and taxed accordingly.”

I worked out that, on a ministerial salary, it would take approximately 100 years to repay the loan.

However, this might be an explanation for how it happened:

“Somerset Capital Management LLP’s accounts show its limited-liability members were remunerated with £3.8 million in 2021.”

I do not know whether those two things were connected at all. I might be wrong; I am not an expert in complex financial instruments—[Interruption.] Yes, I am not, so if the Leader of the House wants to intervene and correct me, I am happy to let him, because unfortunately I have never managed millions of pounds.

What I would like to know is whether the Leader of the House declared the loan and the details of it to the permanent secretary. Should he not fully disclose those dealings so that it can be judged whether he breached the rules of this House and the ministerial code? It is a matter of trust, not just in this Government, but in the handling of business in this House and where the responsibility, accountability and sanctions lie for the breach of the ministerial code.

The public are getting the impression that this Government are just marking their own homework, and obviously the Prime Minister makes adjudications on the ministerial code. Coming back to the recommendations from the 2018 report by the Committee on Standards in Public Life, while the Leader of the House blames the House for not having implemented them more quickly, it is his own failure, because he controls our time. When is he going to bring forward the recommendations from that report?

--- Later in debate ---

[The Paymaster General (Michael Ellis)]

I thank all right hon. and hon. Members who have taken part in the debate for their thoughtful contributions over the past three-and-a-half hours. In closing, I will respond to a few of the issues raised by hon. Members, but first I want to say this. The impassioned nature of the proceedings this afternoon, and the range of opinions, experiences and insights put forward by Members on both sides of the House, proves how important it is that we now move forward as one from a position of consensus. I look forward to the constructive support, therefore, of the Opposition Front Bench as we make progress.

As my right hon. Friend the Leader of the House said in opening the debate, the Government have reflected carefully on the concerns that have been raised in recent weeks about the outside interests of Members of Parliament and fully recognise the need for the rules that bind all our behaviour in the code of conduct to be up to date, effective and rigorous. Indeed, we on the Conservative Benches are pleased that the Labour party brought forward a motion on this important matter. The Government not only support the intent of the motion, but take a tougher stance than the Opposition in advocating, as we do, recommendation 1 of the 2018 report by the Committee on Standards in Public Life.

The Government have put on record that they would support a change to the code of conduct to endorse recommendation 10 from the same report. Those recommendations, if they were to be adopted, would serve to allay the concerns that have been aired eloquently in this place and outside it, establish that the role of the MP continues to command the confidence of the general public, and ensure that the rules on outside activity reflect the fundamental principle enunciated eloquently by Edmund Burke in 1774 and many times since that, first and foremost, Members of Parliament have a duty to their constituents.

That duty is paramount. It is why we, as Members of Parliament, are here today: because we were elected on a vow to serve those whom we represent. If duty to our constituents is as important to the leader of the Labour party and the sponsor of today’s Opposition motion as it is to the Government, he might ponder whether the people of Holborn and St Pancras have been sufficiently served by the right hon. and learned Member, or whether the British people wish their MPs to be mouthpieces of trades union interests. An updated code of conduct would mean—

[Alex Sobel]

rose—

[Michael Ellis]

No, I don’t think so. An updated code of conduct would mean that Members of Parliament who neglected their constituents and put their outside interests first would be investigated and subject to the proper sanctions, if found to be in breach of those rules. That, in turn, should help to ensure that the work of this House continues to command the confidence of the public.

The Government recognise that the Standards Committee has a vital role to play and would welcome advice from the Committee on how these proposals can best be implemented. The Government also await the Standards Committee’s report on the code of conduct with interest. Any changes to the system will need to be taken forward on the basis of cross-party consensus of the whole House, for obvious reasons. Naturally, the Government will advocate for the development of such a process. We look forward to the constructive support of the Opposition Front Benchers in the coming weeks and months.

To turn to the comments from hon. Members, my hon. Friend the Member for Broxbourne (Sir Charles Walker) made eloquent and powerful points and made it clear how difficult this situation is, in an impassioned contribution. My hon. Friend the Member for Amber Valley (Nigel Mills) made points about how important it is to get the balance right in this complicated argument. My hon. Friend the Member for Weston-super-Mare (John Penrose) made a constructive contribution, suggesting some additional measures. He is well placed to make those suggestions and they will be listened to carefully.

My hon. Friend the Member for Wantage (David Johnston) spoke about the difference that was being advocated in some quarters between the public and private sectors, and he made extremely powerful points about getting more people into politics in future when that is hard enough at the moment. My hon. Friend the Member for South Cambridgeshire (Anthony Browne) said that we have very high standards in this country and that we are one of the least corrupt countries on the planet. That is without question. My hon. Friend the Member for Devizes (Danny Kruger) also made the point that the trade unions have a part to play in this discussion.

So often, these issues are presented as intractable lines in the sand between two incompatible and firmly entrenched positions, but they are not entrenched positions. They are about finding a way ahead that reflects our duties to the people and the nation and a process that we can all get behind, given the strength of feeling. I am grateful again for the contributions that we have heard in the House today and for the work that will be brought forward as a result.

Question put (Standing Order No. 31(2)), That the original words stand part of the Question.