Public Institutions

Lord Watson of Richmond Excerpts

Thursday 30th June 2016 Lords Chamber

[Lord Fairfax of Cameron (Con)]

My Lords, it is an obvious truth that openness and transparency are desirable attributes of public institutions. As far as this House is concerned, one of the places that is recognised is in paragraph 10 of the Code of Conduct, which sets out the general obligations of a Member to register and declare their interests and then goes on to say:

“The test of relevant interest is whether the interest might be thought by a reasonable member of the public to influence the way in which a Member of the House of Lords discharges his or her parliamentary duties … The test of relevant interest is therefore not whether a Member’s actions in Parliament will be influenced by the interest, but whether a reasonable member of the public might think that this might be the case”.

The importance of the Code of Conduct is recognised in the first sentence of the report of the Committee for Privileges dated 13 April 2016, which is ironically entitled Undermining Public Confidence in the House. It reads as follows:

“A central purpose of the Code of Conduct is to provide the openness and accountability necessary to reinforce public confidence in the House of Lords”.

The relevance of this, and the reasons that I balloted for this short debate on this important topic of public interest, is that while it may have a topical EU context, I believe that the principles at stake are of much wider relevance. Since rejoining this House eight months ago, I have had a particular, personal experience of a public institution apparently rejecting the principles of openness and transparency. This is a matter of concern to me and I thought it only right to draw it to the attention of this House and, therefore, the public. I apologise if some of my remarks are rather specific and detailed.

This came about after I spoke last autumn in the first debate on the referendum. Having myself just completed that lengthy and exhaustive declaration of interests, with which all your Lordships will be familiar and which all new Members of this House have to complete, I was surprised to note that some Members speaking in that debate who were former EU Commissioners did not, when speaking, declare the pensions that they receive from the EU. I looked into this further and discovered that there was a specific exemption from the Committee for Privileges and in the code exempting such Members from declaring such pensions and that the committee had confirmed this exemption on several occasions. This resulted in my writing a letter, co-signed by 30-odd Members of this House, to the committee in March this year setting out the reasons why we thought this exemption was, in 2016, inappropriate and, frankly, wrong. A copy of this letter is in the Library for those noble Lords who would like to look at it later.

That letter made a number of points. I have another quote, if your Lordships will forgive me. Paragraph 58 of the Code of Conduct for Members of the House of Lords and Guide to the Code of Conduct states:

“Members are not required to register pension arrangements”—

I think that we are all familiar with that—

“unless conditions are attached to the continuing receipt of the pension that a reasonable member of the public might regard as likely to influence their conduct as parliamentarians”.

And here is the important sentence:

“Such conditions attaching to pensions from European Union institutions do not normally require the pension to be registered or declared in proceedings in the House”.

In other words, as we wrote in our letter, a Member is not at the moment normally required to register or declare a pension from EU institutions, even if the receipt of that pension by such a Member is subject to conditions that a reasonable member of the public might regard as likely to influence their conduct as parliamentarians.

My next point that I draw to your Lordships’ attention is very important and is contained in Article 213 of the treaty of Rome. This, in my submission, makes this situation different from all other pensions that are exempted from the normal obligations of disclosure. It states:

“The Members of the Commission shall refrain from any action incompatible with their duties ... When entering upon their duties they shall give a solemn undertaking that, both during and after their term of office, they will respect the obligations arising therefrom … In the event of any breach of these obligations, the Court of Justice may … rule that the member concerned be … deprived of his right to a pension”.

That is key, because the nuisance that I am trying to point out here is not only that, if a former EU Commissioner and Member of this House is speaking, the fact of his or her being in receipt of an EU pension needs not be disclosed, but that this financial sword of Damocles is also unknown. In this era of transparency, I submit that this is inappropriate.

My third point is that this matter was considered, I have found out, about 10 years ago by the Sub-Committee on Lords’ Interests under the noble and learned Lord, Lord Woolf, who is, as many noble Lords will know, a very distinguished Law Lord. He looked into this exemption and his report contained a very simple conclusion—please forgive me for another quote; it is only one sentence, recommending that,

“Members of the House in receipt of pensions from the European Union should as a matter of course declare such pensions as a financial interest when taking part in debates, Statements and Questions on European Union matters”.

The curious thing is that is an unequivocal recommendation, but the committee rejected it and has done so ever since.

As noble Lords have heard, normal pensions are exempted from obligations of disclosure. For the reasons I hope I have set out, we consider this situation to be different. However, the Committee for Privileges disagrees with us. As a new Member of this House, albeit the second time round, I was genuinely surprised—

[Lord Watson of Richmond (LD)]

Is there a scintilla of evidence that the receipt of pensions from the European institutions has ever influenced the position of a Member of this House or that the European authorities have threatened such a Member for expressing a view?

[Lord Fairfax of Cameron]

Anyone who listened to that question will realise that I cannot say that there has been but, as the noble Lord heard, in the Code of Conduct the question is whether a reasonable member of the public might think that such was the case if they knew the facts.