Lords Sitting of 12 November 1998

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwell.

North Irish Horse Squadron
Lord Holme of Cheltenham Lord Holme of Cheltenham asked Her Majesty's Government:
Whether the North Irish Horse Squadron will be disbanded as a result of the reserve forces cuts set out in the Strategic Defence Review.
The Minister of State, Ministry of Defence (Lord Gilbert): My Lords, an announcement on the future of the Territorial Army will be made very shortly.
Lord Holme of Cheltenham: My Lords, I am delighted to have that Answer from the Minister. However, in making a decision on the matter about which I was inquiring, I hope that he will bear certain issues in mind. Is he aware, for instance, that the North Irish Horse Squadron is the only cavalry unit in the whole island of Ireland? Is he further aware that the percentage of Roman Catholics serving in the squadron is twice that in relation to the RUC; that the regiment has a history of prowess of which many people in Ireland, north and south, are very proud; and that in the impoverished areas in which it recruits it provides a useful focus for the young men as regards achievement in their lives? I am sure the Minister is aware that their attendance at annual camp is exceptionally high. Therefore, when the decision is made I hope that those matters will weigh favourably, if not conclusively, in the balance.
Lord Gilbert: My Lords, I am obliged to the noble Lord for the encomium he has just delivered. I assure him that all the considerations he raised have been borne in mind. I hope that he will not be disappointed in the announcement when it is made.
Lord Mayhew of Twysden: My Lords, I accept that the noble Lord cannot anticipate the outcome of the overall review, but will Ministers be guided by the important fact already alluded to—that the regiment recruits right across the community and that its good standard of recruitment has been achieved notwithstanding the difficulties existing in Northern Ireland which all territorial units experience? If its distinguished history were to come to an end, what the planners call the "yeomanry" or the "reconnaissance footprint" would miss out Northern Ireland altogether.
Lord Gilbert: My Lords, once again, I am happy to endorse all the complimentary comments made about the unit. I hope to set your Lordships' minds at rest before long.
Lord Chalfont: My Lords, in the light of the two previous questions, the Minister will agree that we are
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talking not only about cavalry regiments but this element of the Royal Armoured Corps (the armoured and reconnaissance arm of the British Army) which is the only one left in the Province? If that is removed there will be no presence of reconnaissance or armoured units in Northern Ireland?
Lord Gilbert: My Lords, I take on board the point that the noble Lord makes. I am even more full of admiration for the unit considering the strength of the lobbying that it has managed to assemble in your Lordships' House.
Lord Dean of Beswick: My Lords, I lived and grew up in a part of Manchester where there was a large number of Irish people from both north and south, many of whom served in both world wars to fight for peace. Does the Minister agree that bearing in mind their previous history and what they did for this country and the symbolic gesture which recently took place in Ireland and which was attended by Her Majesty the Queen, it is of paramount importance to keep these servicemen in the forces?
Lord Gilbert: My Lords, I am grateful to my noble friend. All noble Lords are sensible of the contribution made to the allied side in two world wars. My noble friend is right to draw attention to and reinforce the significance of what took place yesterday in the presence of Her Majesty the Queen and the President of Ireland.
The Earl of Carlisle: My Lords, will the Minister bear in mind the expanding role of armoured car regiments, not least the need to form a nuclear, biological and chemical armoured car regiment? Will he bear that in mind in considering the future of the North Irish Horse Squadron, in particular when more yeomen will be needed to man the regular NBC armoured car regiment?
Lord Gilbert: My Lords, at such time as I am at liberty to disclose the Government's decisions on these matters, the noble Lord will find that we have taken into account the need for a nuclear, biological and chemical capability.
Lord Burnham: My Lords, your Lordships will be beginning to believe that the motto of this Government is "the House will be told very shortly". It is now four months since the SDR. Another place has had a two-day debate on the SDR and a one-day debate on the Army. It is becoming most urgent that your Lordships should have an opportunity of discussing the forces in general and the Territorial Army in particular. Can the Minister assure the House that we shall have an opportunity of hearing from the Government before the House prorogues?
Lord Gilberta: My Lords, I understand the importance which the noble Lord attaches to discussing defence matters in this House. I am not responsible for the progress of business in this House. All I would say

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is that your Lordships seem to have been having a very happy time discussing other matters at rather greater length than I would have enjoyed myself. However, I can assure the noble Lord that I am looking forward with great relish to announcing the Government's intentions with respect to the Territorial Army and I hope that it will be very soon indeed.
Lord Ironside: My Lords, is the North Irish Horse Squadron still a mounted squadron? Will the Minister tell the House what is the horse establishment (which is now managed by the Defence Animal Centre) in the Army?
Lord Gilbert: My Lords, I do not carry at my finger tips the number of horses in the Army but I shall look into the matter and convey the results to the noble Lord as soon as I can.

Cycling
3.13 p.m.
Viscount Long Viscount Long asked Her Majesty's Government:
Whether, in line with their policy to encourage the use of bicycles, they have any plans to introduce a form of licensing for cyclists.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty): My Lords, the Government have considered the merits of licences for cyclists but we have no plans to introduce such a system. That approach would be likely to work against our policies to encourage an increase in cycle use. It would require a large administrative operation and the expenditure that would be needed could not easily be justified.
Viscount Long: My Lords, I thank the Minister for his Answer. Does he agree that in this day and age bicycles can travel at anything from 15 miles per hour to 30 miles per hour when one is going downhill? That poses a great risk of danger to pedestrians, especially the blind and the deaf who can neither see nor hear them coming along the pavement or crossing zebra crossings. Surely cyclists should be made to take out a proper insurance policy. A system of licensing is also required. Does the noble Lord agree that cyclists would then know, when they are riding along the pavements and so on, that they are not the only pebbles on the beach?
Lord Whitty: My Lords, I have no way of knowing what speed the noble Viscount attains going downhill. As I have had occasion to remind the House on two occasions in the past three weeks, the vast majority of accidents affecting pedestrians in this country are caused by motorised traffic and not by cyclists. Less than 1 per cent. of accidents are caused by cyclists. We have 20 million people owning cycles in this country, a large number of which are owned by children. It would be an incredible administrative effort to introduce a licensing system.
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We encourage the taking out of insurance in those circumstances but, in a sense, that is not the point. In all insurance claims following a road accident, compensation is paid only if it can be shown that that person is negligent. That applies to cyclists the same as it does to anybody else.
Lord Clark of Kempston: My Lords, is the Minister aware that in January this year, I was knocked down outside your Lordships' House by a cyclist who jumped the lights, did not have a front light and as soon as the accident occurred, he got back on his bicycle and cycled off? If there had been some sort of registration, I might have been able to trace that cyclist. Will the Minister explain why the police go for motorists? Daily one reads about careless driving and so on on the part of motorists, but very seldom do we read anything about cyclists. They go along one-way streets the wrong way; they cross lights which are against them; and ride on pavements to the detriment of pedestrians. Is it not about time that the Government took some action in that regard?
Lord Whitty: My Lords, I am aware of the noble Lord's unfortunate experience. While, no doubt, it was traumatic for him, he is something of a statistical oddity. The vast majority of cyclists use their bicycles safely and the vast majority of accidents are caused by motorists. We do not read about cyclists being prosecuted because very few of them are involved in accidents. However, they are subject to the law and, in the particular case which the noble Lord described, I am sure that, had a policeman been on hand, he would have arrested and prosecuted that cyclist. It does not make any difference whether or not that cyclist had a licence in his back pocket. Unfortunately, there was not a policeman on hand and it was not possible to charge and prosecute the cyclist. However, cyclists, like everybody else, are subject to the law and must not ride on the pavement nor ride without a rear light.
Baroness Nicol: My Lords, does the Minister agree that most of the accidents which have been referred to would be eliminated if there were proper cycle tracks? Will he assure the House that every effort will be made by the Government to persuade local authorities, or whoever else it is necessary to persuade, to press on with a network of cycle tracks as soon as possible?
Lord Whitty: My Lords, I agree with that. Indeed, it is part of the Government's transport policy to encourage the provision of cycle tracks where we can and cycling priorities elsewhere. In some towns that is more difficult than others, but it is a priority for those of us involved in local transport plans.
The Viscount of Falkland: My Lords, in a spirit of helpfulness, perhaps I may suggest a compromise which may help the noble Lord, Lord Clark. We should issue licences to cyclists who are riding at night. Then all cyclists who persist in riding without lights at night can lose their licences, and that may be of benefit to all of us.
Lord Whitty: My Lords, I note the noble Viscount's suggestion. Frankly, I believe that that would be even more difficult to enforce. However, I shall consider what he said.
Lord Dean of Beswick: My Lords, is my noble friend the Minister aware that, had the noble Lord, Lord Clark,

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been badly injured by that cyclist, he would not have been entitled to any compensation even though he was engaged in the business of coming here? The House of Lords, unlike the House of Commons, refuses to insure its Members. Can my noble friend confirm that the position will be looked into as a matter of urgency, because someone may well have an accident here and will have to bear the full costs involved; or, indeed, their family may have to do so?
Lord Whitty: My Lords, I note with some sympathy my noble friend's point. However, it is a matter for the authorities of the House of Lords and not for me.
Lord Swinfen: My Lords, do the Government have any plans to carry out a survey of road worthiness as regards bicycles? If not, why not?
Lord Whitty: My Lords, it is already an offence to ride an unsafe cycle and the police have powers in that respect. The law is there but, of course, it is not easy to enforce.
Lady Kinloss: My Lords—
A noble Lord: My Lords—
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, I think it is the turn of the Cross-Benches to ask a question.
Lady Kinloss: My Lords, I thank the noble Baroness the Leader of the House. Does the Minister agree that it would be much safer for cyclists in rural areas if proper lighting was provided and if they wore something light on their clothing? Indeed, cyclists are extremely difficult to see where there are no street lights.
Lord Whitty: My Lords, I totally agree with the noble Lady. Lighting is a legal requirement and we strongly advise the wearing of more visible clothing than some cyclists wear.

Multilateral Agreement on Investment
3.21 p.m.
Lord Newby Lord Newby asked Her Majesty's Government:
Where matters currently stand in the negotiations on the Multilateral Agreement on Investment.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Sainsbury of Turville): My Lords, OECD Ministers ordered a pause in MAI negotiations earlier this year. Following the decision of the French Government to withdraw from negotiations in October, it now looks most unlikely that agreement can be reached on an MAI.
Lord Newby: My Lords, I thank the Minister for that Answer. However, will the Government ensure that, in any future discussions on the subject, there will be involvement of all affected countries, including the
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developing countries which were excluded from the negotiations that the OECD conducted? Moreover, can he confirm that any son of MAI will contain adequate measures on employment and environmental protection?
Lord Sainsbury of Turville: My Lords, the Government believe that an MAI on the right terms is desirable as it would liberalise international investment flows. The "right terms" means the strong protection of labour and environmental laws. The agreement is helpful to the developing countries and has a proper balance between the commitments that we take on and the commitments taken on by other countries. The most likely event is that negotiations will now take place at the World Trade Organisation, where developing countries are totally represented.
Lord Clinton-Davis: My Lords, can my noble friend the Minister confirm that it was this Government who insisted upon the inclusion, as a condition precedent, of environmental and social conditions; in other words, that it was the initiative taken by the new Labour Government? Further, can my noble friend confirm that at all times at ministerial and other levels non-governmental organisations were involved and, indeed, that there was a requirement for developing countries to be included in the negotiations at a proper level?
Lord Sainsbury of Turville: My Lords, I thank my noble friend for his remarks. It is correct to say that it was the initiative of this Government to make certain that environmental and labour laws were protected. Throughout this process, we have pursued our objective on an open and consensual basis.
Lord Razzall: My Lords, given the fact that it appears to be accepted that this was the wrong MAI, negotiated by the wrong organisation with the wrong people involved, and given the fact that it has been accepted by the Government and others that we clearly need such an agreement, can the Minister say what steps her Majesty's Government are taking to ensure that negotiations in the correct form with the correct people get back on the rails?
Lord Sainsbury of Turville: My Lords, it is very likely that these negotiations will move to the WTO. As my honourable friend the Minister of Trade made clear, the Government see an opportunity to start from a blank sheet of paper and to pursue our objectives there on an open and consensual basis. I believe that the WTO is probably the best place to do so. However, in my view, it would certainly be on the basis of a fresh agenda which would take full account of social and environmental concerns.
Lord Lucas: My Lords, does the Minister agree with the French that the MAI, as it stood, was an unacceptable infringement of national sovereignty?
Lord Sainsbury of Turville: My Lords, the French Government concluded that the MAI was unreformable.

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However, we never reached that pessimistic conclusion or indeed felt that it was an infringement of national sovereignty. There would have been hard negotiating to do, but we believed that a good agreement was achievable.

EU Banana Imports Policy: US Reaction
3.25 p.m.
Lord Clinton-Davis Lord Clinton-Davis asked Her Majesty's Government:
Whether they have received any representations from the United States Government concerning threatened trade sanctions over the European Union's banana import regime; and, if so, what has been their response.
Lord Sainsbury of Turville: My Lords, on 10th November, the United States Government published for domestic consultation a list of EU products which might be targeted for retaliatory trade action in pursuance of their dispute with the EU over banana import arrangements. Her Majesty's Government very much regret this threat of unilateral action by the United States Government. We do not believe that it will help to resolve the problem. We would urge the United States scrupulously to follow the procedures provided by the WTO dispute settlement understanding. The Commission has agreed to accept an expedited panel procedure under which a final ruling could be reached in 90 days if the US withdraws its threat of unilateral retaliation.
Lord Clinton-Davis: My Lords, I thank my noble friend the Minister for that most helpful and positive reply. Is it not absolutely deplorable that, having established a panel for the resolution of disputes of this character, the American Government should see fit to bypass it on this occasion? Is there not a real threat of a trade war if this sort of conduct continues? Does my noble friend agree that perhaps the American Congress, rather than the American Government, seems to have rather more compassion for Chiquita than the Caribbean banana growers who are very vulnerable and poor?
Lord Sainsbury of Turville: My Lords, in the absence of any hard information I would not want to comment on the motives behind this move or on American politics. However, I am aware that such concerns have been voiced. I find it difficult to see how the US economy would be damaged by a 90-day delay in resolving the matter properly through an expedited panel. I am sure that all Members of this House will realise that the issue is of the greatest importance for islands such as Dominica, where the sale of bananas represents 20 per cent. of its GDP, and St. Vincent 19 per cent. I am sure noble Lords will also be aware that the Government have made clear on a number of occasions that they will stand by their commitments to the ACP producers.
Baroness Williams of Crosby: My Lords, is this not a matter which should be discussed at the highest level
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between the European Union and the US Government? The likely alternative for these desperate small islands in the Caribbean, if they are unable to live healthily on the sale of bananas, is a move towards producing plants related to drugs. Can the Minister confirm that Her Majesty's Government will also consider carefully whether what I propose might not be a better channel than the WTO where, as we know, the developing countries have representation by only one person compared to 200 for the United States?
Lord Sainsbury of Turville: My Lords, I thank the noble Baroness for her comments. She can be certain that this matter is being taken very seriously at the highest level. Indeed, on a number of occasions we have made clear our views on the matter to the American ambassador and to the State Department. I totally agree with the noble Baroness that there is a very real danger that, if the exports of these countries are decimated, they will indeed turn to some of these other activities. That would be very deplorable.
Lord Peston: My Lords, although I am probably ill-advised to use the words "economics" and "bananas" in the same sentence, I carried out a study some years ago on the economics of bananas in the countries we are discussing. Is my noble friend aware that almost all reasonable research would show that Her Majesty's Government can fulfil their moral obligation to those countries with minimal interference in free trade, much as we believe in free trade? Is he aware how appalled those of us who are strong supporters of the United States are at its reaction at this time? It is shocking. Will my noble friend reassure us that our Government, together with the other EU governments, will stand absolutely firm?
Lord Sainsbury of Turville: My Lords, the WTO has clearly accepted that we have commitments to these islands under the Lomé Convention. We shall stand by those commitments which we take extremely seriously. We shall make it clear to the Americans how strongly we feel on the matter.
Baroness Young: My Lords, while I greatly welcome what the Minister has said on this extremely serious issue—I speak as someone who is a supporter of both the Caribbean and of America—I urge the Government to take all the steps that are possible within the World Trade Organisation and particularly to draw to the attention of the Americans that one arm of their government appears to be supporting unlimited free trade while another is trying to deal with the narcotics problem. They are likely to have a completely contradictory policy as regards what will happen in the eastern Caribbean if those small islands are unable to grow the only crop which provides them with a suitable income.
Lord Sainsbury of Turville: My Lords, I thank the noble Baroness for those remarks. I agree totally that there is real incompatibility in the Americans' approach as between their different arms of government.
Lord Callaghan of Cardiff: My Lords, I believe the whole House is united on this matter. Will my noble

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friend convey the thought to the Prime Minister that when he next speaks on the telephone to President Clinton he might tell him that his trade negotiators betray an absurd lack of proportion in the way this dispute has been elevated, especially at a time when maximum unity is needed between the allies whose armed forces may shortly be engaged in an issue in the Middle East of far greater significance than this matter?
Lord Sainsbury of Turville: My Lords, it would be a great pleasure to convey that message to the Prime Minister.
Lord Redesdale: My Lords, does the Minister agree that the needs of multi-nationals seem to far outweigh the needs of developing countries and that it may be time to renegotiate representation at the WTO?
Lord Sainsbury of Turville: My Lords, that is an extremely interesting point but we would need to consider whether it is a practical and useful way forward.
Lord Fraser of Carmyllie: My Lords, we on this side of the House wholly agree with the question put to the noble Lord by the noble Lords, Lord Peston and Lord Callaghan. This is a matter on which I believe the House is united. There is good cause for maintaining our position. Having regard to the list of goods threatened with being subject to 100 per cent. tariff, does the noble Lord have any suspicion of other ulterior motives beyond bananas that lie behind the threatened trade war? After all, the United States is not exactly a major producer of bananas.
Lord Sainsbury of Turville: My Lords, I think I have made clear what we regard as a grave over-reaction to the situation. I also agree that the list of products is somewhat bizarre, but I do not think anything more should be read into that other than the fact that it is a bizarre list.
Lord Tomlinson: My Lords, will my noble friend the Minister welcome the steps taken by President Santer in writing to President Clinton pointing out clearly that the steps taken or threatened by the American Administration not only risk an international trade war but are also in breach of its obligations to the WTO? Will he also make clear in all these discussions that the responsibility of the world community is to make sure this issue is resolved without damage to the Caribbean states which, if encouraged to diversify any further into agriculture, will have the option only of drugs production?
Lord Sainsbury of Turville: My Lords, I think I have made it clear that this is an unfortunate episode, particularly at a moment of great economic insecurity. The WTO should be allowed to resolve the matter through the proper procedures.
Lord Monson: My Lords, does the Minister agree that Dominica and St. Lucia, which are highly
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dependent on banana exports, took the risk of backing the United States at the time of the latter country's controversial invasion of Grenada? Should not the Americans be urged to show some gratitude to those countries for their support?
Lord Sainsbury of Turville: My Lords, I thank the noble Lord for those comments. It is inappropriate to take this action in view of the support that has been given.
Lord Judd: My Lords, does my noble friend agree that, as with the previous Question on the multilateral agreement on investment, this case illustrates the absurdity of approaching world trade from the over-simplified standpoint of level playing fields? If we are taking seriously sustained development in the poorest developing countries, the overriding challenge is how we enable countries to reach the point at which they can participate on equal terms in world trade.
Lord Sainsbury of Turville: My Lords, I remind the House that the WTO has conceded the point that we should abide by our obligations to the Lomé Convention which allows the ACP producers to have a privileged position. What is in debate is the exact way the quotas are designated. This is a matter which should be resolved through the procedures for disputes.

European Parliamentary Elections Bill
3.36 p.m.
The Minister of State, Home Office (Lord Williams of Mostyn): My Lords, I beg to move that the Commons amendment be now considered.
Moved, That the Commons amendment be now considered.—(Lord Williams of Mostyn.)
On Question, Motion agreed to.

MOTION MOVED ON CONSIDERATION OF A COMMONS AMENDMENT IN LIEU OF LORDS AMENDMENTS
[The page and line refer to HL Bill 88 as first printed for the Lords]

LORDS AMENDMENTS
1 Clause 1, page 2, line 1, leave out ("a registered party, or")
2 Page 2, line 2, at end insert—
("(2A) Each candidate shall declare that he is either—

(a) the candidate of a party (and shall name that party); or

(b) an independent candidate.

(2B) There shall be added together the number of votes given for each party's candidates in each electoral region.
(2C) The number arrived at under subsection (2B) shall be the number of votes for the party for the purposes of this Act.").
3 Page 2, line 15, at end insert—
("(5A) After the allocation of seats to the parties, the order of candidates in each list shall be such that the candidates are ranked in terms of the votes each received, with the candidate with the highest number of votes appearing first.

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(5B) If two or more candidates have the same number of votes, their order on the list shall be determined by lot.").
4 Page 2, line 18, at end insert (", following the rearrangement required under subsections (5A) and (5B)")

COMMONS AMENDMENT IN LIEU
The Commons insist on their disagreement with the Lords in their Amendments Nos. 1 to 4 but propose the following amendment to the Bill in lieu thereof—
4A After Clause 2, insert the following new clause—

REVIEW OF ELECTORAL SYSTEM
(".—(1) The Secretary of State shall appoint one or more persons—

(a) to review the operation of the system of election provided for by section 3 of the European Parliamentary Elections Act 1978 as substituted by section 1 of this Act, and

(b) to make a report to the Secretary of State within six months from the day of appointment.

(2) The Secretary of State shall carry out his duty under subsection (1) within one month from the date of the first general election to the European Parliament which takes place after the coming into force of section 1.
(3) The Secretary of State shall lay a copy of any report received under subsection (1)(b) before each House of Parliament.")
Lord Mackay of Ardbrecknish: My Lords, I beg to move that the House do insist on their amendments to which the Commons have disagreed and do disagree with the Commons in their amendment in lieu thereof.
The other place has debated this issue again and, as I forecast it would and could, has amended your Lordships' amendment by inserting another new clause into the Bill promising a review of the way next year's elections to the European Parliament work. However, that election will still be held on the basis of a closed list, and not the open list so clearly preferred by your Lordships and by just about everyone else outside the new Liberal Democrat Party, with a few noble exceptions, and 10 Downing Street. The review will be laid before Parliament. There is no word about whether we will have the chance to decide in legislation what system will be used in future elections and no guarantee that the report, if unfavourable to the closed list, will be allowed to do anything other than gather dust.
I intend to ask your Lordships to ask the Commons to think again and to come back with amendments which reflect the broad measure of support on all sides here in your Lordships' House and elsewhere for a fairer, more open system than the closed list system. Your Lordships are well aware of the case for the open list as against the closed list. I shall not weary your Lordships with repeating the arguments at any length which, both in debate and in Division Lobby, have proved more powerful than the arguments of the few believers in the closed list. It has been a debate between the people's choice and the parties' choice. Even the open list system gives the party the kind of poll position which the noble Lord, Lord Williams of Mostyn, has been keen to give it. That is done openly by the Liberal Democrats and ourselves through votes of our members, or done by a small cabal in the case of the Labour Party. However, the party decides who goes on the list. Indeed,
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it decides even the order of the list on the ballot paper. But do we allow the parties' electors to decide who from the list goes to Brussels, or do we simply ask the electors to vote for a party and have absolutely no say on which of the eight or 12 will represent them in Brussels—not the electors' representatives but the parties' representatives?
I should not like to argue that case again—that argument has been won—but I would like to draw your Lordships' attention to some of the arguments put forward in the other place. I suggest that the debate in the other place, if not the vote, showed that the other place is divided on this issue and that the division is not on party lines. To show my fairness and balance—something which I know I am noted for—I will, first of all, quote from the Government's only Back-Bench supporter in the other place in the debate, Mr. Dale Campbell-Savours. He intervened and, with regard to the review which the Home Secretary had announced, he said:
"I welcome the review. It is very good news, and it will be greatly appreciated by people across the country".—[official Report, Commons, 10/11/98; col. 207.]
Your Lordships will have noticed the bonfires last week in celebration.
Then came a procession of Labour Back-Benchers with something interesting to say, all of them opposed to the closed list. Let me pick but two. Mr. Rhodri Morgan—I cannot think why I picked him, but he seemed to have something sensible to say—asked the Home Secretary this question.
Lord Shepherd: My Lords, is it permissible for any noble Lord to quote verbally, accurately, from the House of Commons?
Noble Lords: They have changed the rules!
Lord Shepherd: My Lords, I beg the noble Lord's pardon. It would seem that I am out of date in that respect.
Lord Mackay of Ardbrecknish: My Lords, I have checked that and I believe that our procedures have been changed. Otherwise I would have had to attack this in a different way.
I return to Mr. Rhodri Morgan, known to all in Wales and favoured by all in Wales. He said:
"Is there not one way in which the internal processes of, let us say, the Labour Party intersect with the measure before us"—
that is the amendment your Lordships sent there—
"in that the one advantage of an open-list system is that it prevents a party from slipping a Mickey Finn into the cocktail? Does it not thus prevent a party from putting a person who for some reason would not be popular with the electorate, high up the list, so that the voters can do nothing about it?".—[Official Report, Commons, 10/11/98; col. 216.]
It is a pity that Mr. Rhodri Morgan had not been reading some of the Government's propaganda. That is the only defence of the closed list that the Government have really put forward; that is, that it allows them to slip in what, for some unknown reason, Mr. Rhodri Morgan calls a "Mickey Finn".

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Then there was Mr. David Winnick. I never thought that I would pray in aid Mr. David Winnick, but there you are; he probably never thought that he would be prayed in aid by a Conservative Member of your Lordships' House. It is a funny old world, as somebody once said. Mr. Winnick said:
"Many of us are deeply uneasy about a system that gives too much authority to people in a party who have not necessarily been elected. It gives too much authority to people who will be able to decide whether or not a particular candidate's views are orthodox".—[Col. 224.]
Interestingly enough, he made an important point when he said:
"I hesitate to speak for my hon. Friends, but it is doubtful—I shall put it no higher than that—that a majority of the parliamentary Labour party is in favour of the closed-list system".—[Col. 223.]
So your Lordships, in voting with me this afternoon, will also be voting for the system which Mr. Winnick tells us is favoured by a majority of the parliamentary Labour party.
I received yesterday a letter from a Mr. Henry McCubbin. He was the Labour MEP for north-east Scotland from 1989 to 1994. During that time he was elected and re-elected as Whip of the Socialist Group of the Parliament. He still calls it the Socialist Group, and that is probably one of the reasons for his lack of success in being placed in a decent position on the list. He put his name forward to be considered in two seats for the election next May. In the first ballot he won nominations in both. Along came the panel from London and he was, to use his own expression,
"dropped out of the lists comfort zone".
No doubt he will be in trouble for sending me this letter. In it he points something out to me which I would like to share with your Lordships' House. It is Rule 2 in the European Parliament's rules. It is headed the "The independent mandate" and states,
"Members of the European Parliament shall exercise their mandate independently. They shall not be bound by any instructions and shall not receive a binding mandate".
Mr. McCubbin continues in his letter:
"To my mind the open list is the only way to meet this simple but important criteria".
With the closed list the member only has to keep his party apparatchiks happy and he can be re-elected again and again, especially if he is number one. He does not have to please any other people—none of the electors; nobody bar the apparatchiks.
Mr. McCubbin concludes his letter by saying:
"I have written to you for the simple reason that I support the Lords amendment to provide for open lists. I hope that sufficient numbers of your fellow peers continue to show their support".
It is not just Labour MPs who are branded "off message", or former MEPs who, having received votes from the party membership, are then dumped by a small cabal; it is a lot wider than that. The Government have very little support anywhere for their proposition of closed lists.
I will leave your Lordships with, for me, an unlikely source of comfort and succour; namely, today's edition of the Daily Mirror and the comments of Mr. Paul Routledge, the chief political commentator. I would like
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to read out the whole column but only one part of it is relevant to this debate. First, he discussed the way a "clique" of, as he calls them, "craven Blairite numpties"—I cannot imagine who he is thinking of—treated Dennis Canavan and how Ken Livingstone is to be stopped by, in his words,
"the control freaks in Downing Street".
He then went on to the chaos in Wales and finally came to the issue of the closed and open lists. He says:
"Then there is the European election. The Lords have twice thrown out New Labour's notorious 'closed list' system which enables party bosses to choose who will represent us in Europe. Wherever you look, it is the same story. A handful of Millbank disciples is given the job of deciding who will he our parliamentary representatives and mayor of London. The Millbank Tendency has replaced the Militant Tendency. And it stinks just as much".
I do not see why the country, the electors and the other political parties should be saddled with a voting system which has been designed entirely to suit the internal machinations of the governing party. I recommend my Motion to your Lordships.
Moved, That this House do insist on their Amendments Nos. 1 to 4 to which the Commons have disagreed and do disagree with the Commons in their Amendment No. 4A in lieu thereof.—(Lord Mackay of Ardbrecknish.)
Lord Evans of Parkside: My Lords, can I—
Lord Shore of Stepney: My Lords, I find this—
Baroness Jay of Paddington: My Lords, there is obviously plenty of time for this debate. I believe my noble friend Lord Evans was on his feet first.
Lord Shore of Stepney: My Lords, I find this a disagreeable debate—and I have hardly been encouraged by what has happened in the last 30 seconds. As is well known, I shall be advancing a point of view which is not well received on this side of the House, but at least it will be listened to.
This is an increasingly disagreeable subject for me. On the whole, I like to be with my friends and colleagues in the voting Lobbies and in terms of general argument about political matters of importance. But I find it rather depressing, having studied the latest debate on 10th November in the House of Commons, that the argument is becoming increasingly petty and unserious. No new argument was put forward during that debate. One does not have to go over the whole ground because nothing new was said and we are now quite familiar with the old ground. In one way, of course, a very, very, old argument was put forward as being now the only remaining reason why the Government should be supported in these defective provisions in this Bill. The reason put forward was the old classic reason that the will of the House of Commons as the elected, democratic body should prevail over that of the unelected House of Lords.
I find that to be a serious argument and I would be the last to dismiss it. But it requires not just, as it were, bowing down before it; it requires serious examination. There have been many occasions when the two Houses

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have come into conflict and the will of the House of Commons has properly prevailed, particularly when the matter in question has been advancing a cause especially dear to the interests of the majority party opposite. I have looked carefully at the Bill from that point of view and I must say in all fairness that I do not see that the majority party in this House—the Conservative Party—despite its many other defects, has a particular vested interest or a particular gain or advantage to make from persisting in their rejection of these provisions. So the argument that it is simply a matter of elected Commons versus unelected Peers and that the unelected Peers, because they are dominated by hereditary Conservative Members, should always be brushed aside, is not in itself strong enough.
I have a second point to make which I referred to when last I spoke on this matter. In this House, particularly after it has been reformed, it will matter a great deal that independent voices are heard and listened to. We do not want a rubber stamp Chamber. We want, therefore, legitimate and serious objections to be properly considered. There is a slight indication of that independent opinion. I have looked at the voting on the previous two occasions, particularly at the distribution of votes as recorded by Cross-Benchers. I am not naive and if I was not sufficiently alert to this point I would be quickly corrected by my colleagues. There are many Cross-Benchers who have at least a small "c" commitment if not a large Conservative standing and bias. But when you are putting a serious issue of a constitutional nature, where no obvious vested interest, apart from that of the Liberal Democrats, is involved, and you find that among the Cross-Benchers 36 voted against and only one voted with the Government, it is at least some indication that people who have reasonable independence of judgment have not had sufficient information, argument and substance put before them to cause them to change their view. That should make noble Lords on this side of the House think; and think very carefully.
So I am not prepared to accept that it is a simple Commons versus Lords issue in the way that it has been put forward, I think rather speciously, because those who put it forward know that it will carry particular weight with people who support the Labour Government under normal circumstances. I say no; it is not Commons versus Lords; it is not democracy against autocracy in the sense that the advocates of the original closed system would like; it is something quite different. I shall sum it up in just a few words.
The issue is about the open list against the closed list. It is about an open democratic list against a closed party management list. It is about accountability to the electorate, to the voters, against accountability to a party committee—what we are now officially informed is a joint panel of regional representatives and members of the party's ruling National Executive Committee. It is indeed—I repeat the words I used on the previous occasion—the electorate versus the electorate.
I stand, and I hope the House will continue to stand, firmly on the side of an open list, remembering too—1 address this particularly to my friends and
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colleagues—that there is nothing in the Labour Party manifesto to indicate that we should be voting for one form of proportional representation rather than another. There is only a commitment to introduce a new proportional system, which I do not particularly like, for elections.
Earl Russell: My Lords, in the great days of Don Bradman, when he used to play in a Test in Sydney, once he got set the crowd on the hill would start chanting, "You'll never get him out". Well, of course, in cricket, "never" is an even shorter time than it is in politics. Usually, after two or three days, we did get him out, but during those two or three days he usually settled the destination of the Ashes. That is the answer to the riddle: What do Don Bradman and the closed list have in common? That is why I do not put very much weight on the review which the Home Secretary offered us.
So far, the discussion has concentrated on the issue of party discipline. Not enough attention has been given to the fact that the closed list presents the party managers of all parties with a pork barrel. Party managers are not in the habit of giving away pork barrels for nothing. So that is why I do not have very great faith in the review.
The Home Secretary appears to have had two arguments. The first is that the vote was carried by the votes of hereditary Peers. I would ask the Government to be wary of that argument because it might have the effect of making hereditary Peers rather more popular than they are at present. That is not an effect which I wish. I hope that the Government do not wish it either.
The other argument is that the voters are incapable of coping with the flow of information. That has been the classic anti-democratic argument for centuries. I give it no weight. In 10 years in this House I do not think I have ever thought quite so long or changed my mind quite so many times about what to do in one vote. In fact, yesterday I changed my mind no less than five times, each time on the basis of further, more up-to-date information. That is why I was not in a position to do any consulting about what I was going to do because my mind changed like the moon. It was not settled until I saw what was tabled and had considered everything at about lunchtime today.
Granted that the review is no good, we must consider the consequences of what we do. The closed list is a blow to democracy. But we on these Benches also believe that the loss of the Bill would be a blow to democracy. All of us, whichever way we have gone, have had to weigh one of those points against the other. I hope the House will bear that in mind. That is why I believe that my noble friends, although I believe them to have been mistaken, have been acting honourably, and I will not say anything to the contrary.
I found the question as to whether I prefer to assault democracy with a blunt instrument or with a pillow rather forbidding. Before anyone laughs at the pillow, Desdemona discovered that it was a lethal weapon. I did not succeed in answering that question to my own satisfaction. The question that I found more constructive was this. Which of those consequences is more likely if

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the amendment were carried or rejected? If the amendment is rejected, that we shall have the closed list is certain beyond any shadow of doubt; that we shall lose the Bill is far from certain and, in my opinion, highly unlikely.
I understand that matters always become very heavy when there is confrontation with another place in November. I took the precaution of taking advice before coming here today. The advice was that there is clearly time for one more round of ping-pong. That is confirmed in forthcoming business where the return of this matter from the Commons is scheduled for 17th November. Perhaps I may remind the House that the Third Reading of the Registration of Political Parties Bill is down for 18th November. The Government must have considered the hypothetical possibility that there could be an amendment carried to that Bill which would require the attention of another place. If that is manageable, so is this. The argument that time has run out is, in my opinion, not satisfactory.
I now touch on the consequences for the Prime Minister if he should abandon the Bill. I would not go as far as the Home Secretary, who described the situation as "chaos", but it is pretty serious. The organisational consequences of abandoning the Bill will cause him great difficulties, as will the political consequences. The impression would be given that the Government are prepared to accept proportional representation only in situations where they have a closed list, those being the only circumstances in which, to date, the Government have introduced it.
As the House knows perfectly well, my noble friend Lord Jenkins of Hillhead and his commission recommended a different system. Their views on the closed list are very close to mine. So were the Government to drop the Bill it would, in effect, pre-empt the debate on the Jenkins report and give a clear answer "No" at this moment. For all I know, it is possible that the Prime Minister may at some stage do that. I would be extremely surprised if he were prepared to forego all the advantages of delay by doing that now. In fact, "extremely surprised" understates the case.
I believe that loss of the Bill is extremely unlikely. Until 4 p.m. yesterday I was planning to abstain. Since then my thinking has been concentrated on the fact that much though I want proportional representation—I want it very deeply indeed—its achievement at the price of a return to the two-party system, which would be the result of concessions such as voting for the Bill in its present form is not a price worth paying.
4 p.m.
Lord Barnett: My Lords, I should make clear that I prefer the open list system. I am sure all noble Lords will have read the detail of the open list and closed list systems and will know that the open list system, as proposed by the noble Lord, Lord Mackay of Ardbrecknish, would eventually entail determining something by lots. I am sure all noble Lords are aware of that and I apologise for reminding them again. But
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my view is that either system, or any system one cares to use, will be unfair at some point.
The noble Lord, Lord Mackay of Ardbrecknish, called in aid the report of the commission of the noble Lord, Lord Jenkins, on a single list—an open list. Of course, the noble Lord, Lord Mackay of Ardbrecknish, is not in favour of that; he wants nothing to do with it. Nevertheless, he called it in aid. In practice it is a very different open list system from the one proposed here. I am sure all your Lordships are aware of that. On balance, I prefer the open list system. I believe that your Lordships are perfectly entitled to ask the other place to think again.
I ask my noble friend Lord Shore: how many times can we ask the other place to think again? This is the third time. I am bound to say that whether the other place puts forward a proposition that is good, bad, awful or just plain wrong, as I believe it to be in this case, after three times of our asking it to think again—and it is the elected Chamber—it is entitled to have its way.
The noble Lord, Lord Mackay of Ardbrecknish, enjoys himself too much on these occasions. I never begrudge him that because I know how much he likes to enjoy himself. As I have told him before, I hope he does so for many more years on that Bench. The plain fact is that he is opposed to the Government in principle. He is a very shrewd noble Lord. He uses the end of term situation to his and his party's advantage. I understand that only too well. All oppositions may have done it from time to time. I have no doubt we did it.
I say to my noble friends Lord Shore and Lord Stoddart that they too are entitled to vote against the Government. I understand that. However, I take exception to the constant use by my noble friend Lord Stoddart of the word "duty" that leads him to vote against the Government. The noble Lord did not tell us, of course—but perhaps most of us know—that he was speaking, as he always does on European Union matters, as a leading Euro-sceptic. My feeling is that Euro-sceptics like my noble friends Lord Shore and Lord Stoddart would vote against anything the European Union proposed, even if it proposed that we should all be given a gold bar as a present. I must say that I would be inclined to vote against that as well.
I can understand the noble Lord, Lord Mackay, and my noble friend Lord Shore, with whom I served for some years and whom I like. But I find it offensive and distasteful in the extreme when my noble friend Lord Stoddart implies that he is the only Labour Peer who cares, the only one who has a duty, and all the rest of us do not care. I take offence at that. I care and I also have principles, but after the House of Commons, the elected Chamber, has voted three times against this unelected Chamber—and I am not referring to whether noble Lords are appointed or hereditary—it is entitled to have its way.
I return to the noble Lord, Lord Mackay of Ardbrecknish. In my view, he does not care about the system because he knows that if he looks at the system which he has recommended, in practice the likelihood is that it and the closed system would have virtually the same result. Anyone examining the situation in detail

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will know that. The noble Lord, Lord Mackay, does not care. He wants, rightly and understandably, to frustrate the will of the Government and of another place.
I accept that situation. I recognise that the noble Lord is prepared to accept the support of Euro-sceptics on either side. I hope, however, that some noble Lords opposite and on the Cross-Benches will recognise this for what it is and will not vote with the Opposition.
Lord Alton of Liverpool: My Lords, in Committee and on Report I moved an amendment supported by the noble Lord, Lord Evans, which would have deleted closed party lists and inserted the single transferable voting system. I am not a Euro-sceptic and I am in favour of electoral reform. I do not suspect the motives of the Opposition Front Bench because it has advanced the same arguments at every stage of the Bill—arguments in favour of modifying what is a far worse system than first-past-the-post. I have some arguments that I wish to advance as to why we should stand firm in asserting the rights, not of this place, but of the public in the constituencies outside.
The first of those arguments is that the Home Secretary caricatures this as a set-piece battle between hereditary Peers and the House of Commons. It is clear to anyone who followed the debates that there was support throughout your Lordships' House and another place for genuine reforms which would improve our system but not at the expense of the accountability of the elected representative to his constituents. The argument was not about hereditary Peers. The noble Lord, Lord Evans, is the former chairman of the Parliamentary Labour Party. If noble Lords read the record of our proceedings at Report stage they will note that the noble Lord set out the extremely democratic reforms that he introduced 10 years ago for the selection of candidates for European elections. It was he who told your Lordships' House, quite properly, that it should have nothing to do with a closed party list system.
Another specious argument is placed before us: that it is a manifesto commitment. The Labour Party manifesto states that they have supported a proportional voting system for elections to the European Parliament. The amendment to the Bill moved by the Opposition also refers to a proportional system. So there is nothing to choose in that respect. The noble Lord, Lord Barnett, said that the results would in any event probably be the same. That is an argument in favour of the amendment. If the results would be the same from an electoral point of view, then let us choose between the merits of the respective systems. My last point concerns the merits of the respective systems. The closed party list system ensures that the politicians produced come straight out of central casting at Millbank. That produces a politician who will merely be accountable to the party machine. It is about machine politics.
I find it tragic that my former noble friends—with the honourable exception of the noble Earl, Lord Russell, who has spoken in the debate today and speaks as the President of the Electoral Reform Society—said at Report stage that they had made a "deal", in the words of the noble Lord, Lord McNally, with the Government.
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The debate should not be about deals. It should be about creating consensus between the political traditions, about a system that can work to the advantage of the people in this country. Anyone who has been elected to public office in this country surely knows that there is almost a mystical allegiance between an elected representative and the people who voted for him. To sever that, and to replace it with an allegiance merely to party machines will give us a situation such as that which led to Mr. Canavan not being selected to fight for the Scottish parliamentary elections despite his extraordinary track record as a great Member of Parliament. He has given his constituents great service. It will lead to the kind of disputes that we see currently in Wales; and those that we see with Mr. Livingstone and the Labour Party over the elections for a directly elected mayor in London.
It is not desirable that the party should exercise that degree of discipline. Severing the umbilical cord which links an elector with the people in the constituencies is an act of folly. That is why your Lordships should stand up to the other place and on behalf of the people of this country who, when they examine the detail, I think will be extremely resentful that such a cynical system could be imposed upon them.
4.15 p.m.
Lord Evans of Parkside: My Lords, I should like to start by putting the record straight. I was not the chairman of the Parliamentary Labour Party. I was chairman of the National Executive Committee of the Labour Party. There is a difference between the two bodies.
I think that most Members of the Government Front Bench are aware that since the Bill's inception over a year ago I have opposed sections of the Bill. In particular I have opposed the closed list; and I have been even more vehement against the party's methods of selecting candidates and placing candidates in a batting order on the electoral list.
It is the third time that the House has debated the issue. At Third Reading on 20th October, I spoke in favour of the opposition amendment and voted for that amendment. At col. 1322 of the Official Report I asked:
"Is this Chamber a revising Chamber, as has often been pointed out?"
I continued:
"An argument is being presented in relation to one aspect of the Bill. It is not an instruction to the House of Commons that it has to accept anything from the House of Lords; it is an opportunity for it to have second thoughts about this particular aspect".
The amendment was carried. It was passed to the House of Commons which considered it and rejected the House of Lords amendment. While I was not impressed with the Government's simple flat rejection of the amendment, I nevertheless accepted the absolute right of the Commons to refuse to accept a Lords amendment. Indeed, at col. 282 of the Official Report of 4th November, I said
"I will not tonight vote for the Opposition amendment; I shall respect the Commons' decision. However, I must make it clear that I will not, indeed I could not, vote in the Government Lobby on this occasion".

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The Government were again defeated and the matter was returned to the Commons for further discussion.
The Commons discussed the Lords amendment on Tuesday of this week. I took the trouble to attend that debate and listened to the Home Secretary. I have to inform your Lordships that on that occasion the Home Secretary was in a more conciliatory mode than previously. While he referred to the hereditary Peers and their vote, he was not sneering in any way at hereditary Peers. In fact he said:
"The Government have carefully studied reports of the debates in another place … We therefore give proper consideration to any suggestion that it might make that a piece of legislation … ought to be revised. Having done so, I am moving an amendment to make one important change to the Bill which we hope will meet some of the concerns that have been expressed".—[Official Report, Commons, 10/11/98; col. 206.]
He added a new clause to the Bill which ensures that a review of the new electoral system for European elections will be examined in detail and a report produced which will be laid before both Houses of Parliament, and debates will be held on the effect of that review. So, effectively, he put something into the Bill which was conciliatory. He also expressed his appreciation of the proper role of this House. I believe that that was a victory for this House in that context: that he recognised those two factors.
The noble Lord, Lord Mackay of Ardbrecknish, now invites the House to reject the new clause. I find that slightly surprising because in Committee on 25th June of this year the noble Lord moved an amendment to set up a review body to report on the workings of the European election. At col. 355 of the Official Report of 25th June he said,
"1 am therefore being realistic in considering that next year's parliamentary elections will probably he done in the way the Government want. In that light, we ought to set in place now a mechanism for a review of what has happened".
Although the noble Lord did not press the amendment to a Division, nevertheless he expressed himself quite forcefully on that subject on that occasion. And that is what the Government now propose.
As the noble Earl, Lord Russell, said, we now have to consider the effect and impact of what happens if this House again rejects the Commons amendment. It is obvious to all of us that the parliamentary clock is now ticking into its final hours. The Government have recognised the depth and strength of the arguments about closed lists. They have also recognised the role of this House. The new clause means that there will be an examination and there will be future debates.
We also have to recognise the rights of the House of Commons. When the House of Commons debated the issue on Tuesday night of this week—I have drawn attention to this, as have other Members of this House—despite the fact that there was no vocal support from the Government Benches from either this House or the other House, when the issue was put to the vote the Government had a majority of 182 in the Lobby. That is a significant vote. It has to be recognised that the House of Commons has put forward an amendment. It has also recognised our situation and has chalked up a huge majority in arriving at that conclusion. If this
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House tonight rejects the House of Commons amendment we shall create an unnecessary constitutional crisis.
I also ask noble Lords opposite: If this matter is returned to the Commons next week, as is possible, is it suggested that the House of Commons will realistically change what this House has already done? There is no chance whatsoever of that happening. Indeed, I suggest that the authorities in the House of Commons would ensure that another 100 votes would be added to that majority of 182 to let this House see the views of the elected Chamber.
Perhaps I may also point out that we also have a duty to the candidates who will contest those elections. Almost 300 candidates of all parties are now in place. I believe that their thoughts and views must be considered. It is essential that this Bill receives Royal Assent before Prorogation—indeed, after this debate, I hope.
I shall continue to oppose closed lists. I shall take up, through my party's machinery, the absolute necessity of getting rid of the appalling methods we have used to select candidates. However, that is for future debates; it is not the issue now before us. This is about respecting the House of Commons' majority and its right to be the main legislative Chamber in the British system. I shall oppose the Opposition's amendment and support the Government's new clause.
The Earl of Onslow: My Lords, I heard the Home Secretary give three reasons for opposing this amendment. The first was the hereditary peerage. The second was that John Major had done the same with regard to Northern Ireland. I cannot remember the third reason! However, under no circumstances did the Home Secretary oppose the merits of the case put forward by my noble friend.
I do not particularly like proportional representation because it may mean a permanent post for Paddy Ashdown—and that must be bad. I prefer our old and tried methods. However, I do not like the Government's present proposal. It is pure pride on their part not to be able to say, "We were wrong".
It strikes me that to use the argument, "Oh, the hereditary peerage voted for it", is on a par with, "Oh, they were Jews that voted for it", or, "Oh, they were blacks that voted for it". It is exactly the same. It is an argument without moral fibre. Is the Home Secretary saying that I am a half-wit? I may be, but not because I am an hereditary Peer. There are lots of half-wits who are not hereditary Peers and I accept that there are half-wits who are hereditary Peers. But that argument should not be used as a blanket case for objection.
As for the concept, "Oh, it's a good idea because the Conservatives did it", I thought that we had an election in 1997 when people said, "We don't like the Conservatives". If the Government are using the argument that something is a good idea because the Conservatives did it in Northern Ireland legislation, why do they not all resign and ask Mr. Major to go back to 10 Downing Street? It is as logical as that. Surely it has been established that that is a bad idea. Governments

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who can change their minds are great governments. It seems to me that on this issue the Government are copying the Conservatives, but they are copying Mrs. Thatcher at her most stubborn. I am sure that the Government would not like to do that. I shall certainly vote for my noble friend's Motion.
Finally, this is a perfect example of why this House should be properly reformed. When it is properly reformed, we can use the powers that we have with legitimacy and pride rather than be blackmailed because we are told that we are all idiots of hereditary Peers. I support my noble friend Lord Mackay of Ardbrecknish.
Lord Stoddart of Swindon: My Lords, my noble friend Lord Shore of Stepney put the arguments for continuing to support the amendments. I had not intended to speak in today's debate. Unfortunately, however, my noble friend Lord Barnett ascribed to me motives for continuing to support the amendments which, in fact, were untrue and completely unfounded. He implied—indeed, he stated—that the reason I oppose this legislation is because I am a leading Euro-sceptic. I have to tell him and the House that that has nothing to do with my motives. Indeed, as a leading Euro-sceptic, it would suit me very well to support this legislation because it divides and separates even further the Euro MPs from the electorate. At present, they have a direct link with the electorate which, in fact, is good for the European Parliament; for those who represent people in it; and for those who are represented. There is that direct link.
So, if I opposed this legislation strictly on the basis of my Euro-scepticism, that would not be an absurd thing to do. The fact of the matter is that I believe that this legislation is bad because it removes the link between the electorate and the elected. I have said that before; I repeat it today; and I hope that the House will accept that that is my motive and that it is a perfectly reasonable and honourable motive.
Noble Lords: Hear, hear!
Lord Stoddart of Swindon: My Lords, while I am on my feet, perhaps I may deal with the question of duty. My noble friend Lord Barnett accused me of feeling that I have a duty. It is not a question of whether I feel that I have a duty; it is whether the House of Lords feels that it has a duty to insist on amendments in which it believes. If it does not believe in them, it should not pass them. Therefore, this House has a duty. That is the way in which I use the word "duty". This House has a duty, if it believes in something, to insist that its amendments should be agreed.
I have heard a lot today about the rights of the House of Commons. Of course, the House of Commons has its rights, and they are very serious rights because it is the elected Chamber. But the elected Chamber must operate within the constitution. The constitution says, quite clearly, that the House of Commons may pass a Bill or a measure; the House of Lords is entitled to scrutinise it and, indeed, according to the Parliament Acts of 1911
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and 1949, may insist on its amendments, in which case there will be a delay of up to one year. That is the constitution, whether or not people like it.
As I have already said, if this House feels that it is right, it has a duty to insist. People may not like that—even I may not like that—but that is the situation. Therefore, this House has the right—indeed, it may have the duty—to insist on its amendments. I hope that I have made my attitude and what I believe is our "duty" absolutely clear to my noble friend. I hope he will accept my comments.
In the last analysis, if this House is not prepared to do its duty, if it does not understand what its powers are, then there is no point in its being here. It is also no use my Front Bench and the House of Commons "going on" about the House of Lords when it exercises its powers. If they do not believe that the House of Lords should have those powers, or that a proper second Chamber should exist, they should say so; and they should bring forward legislation—it is to be hoped in the next Session of Parliament—to deal with that. If they believe in a unicameral system, which is being mooted, they should bring forward legislation to that end. In the meantime, this House has the right and duty to insist on its amendments if it believes that they are correct.
4.30 p.m.
The Earl of Carlisle: My Lords, it is a pleasure and a privilege to follow the noble Lord, Lord Stoddart of Swindon. I entirely accept and understand his motive, and I share his sense of duty on this occasion.
I was unable to be present on 20th October, when this House last debated this matter. I was on an All-Party Defence Group visit. I read the debate, and I should not have had to think three times before knowing which way to vote. I should have voted against the closed list system because it diminishes democracy and in favour of the open list system because it enhances democracy.
Perhaps I may remind noble Lords of two sentences spoken during the previous debate by my noble kinsman Lord Russell. He stated:
"This Bill allows us to choose what party represents us; it does not allow us to choose what person represents us. That appears to be a fundamental blow to democracy".—[Official Report, 20/10/98; col. 1323.]
He was speaking in the present. I wish to refer to the consequences in the future if we are to have a closed list system.
I wish to mention three points. First, at the previous European election, only 25 to 30 per cent. voted. The noble Lord, Lord Alton of Liverpool, mentioned to me outside this Chamber that at the previous Euro by-election in Merseyside only 11 per cent. voted. If we go into the 1999 Euro election with the closed list, the percentage of voters will be down to 20 per cent. Surely the Government and all parties wish to see the electorate coming out to vote in that election. That will not happen under the closed list system.
Secondly, I believe that MEPs elected by means of the closed list, which will be a discredited system, will not enjoy the support of the electorate during their tenure as MEPs. That is a further matter of concern that needs to be considered.

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The Government promise a review. There are questions that I wish to put to the Minister. We are told, if we accept the government amendment, that the review has to be on the Secretary of State's desk within six months. Who is to be on the review body—politicians; MEPs elected under the closed system; or lawyers? I wish to know more about the review body.
What will happen to the report when it lands on the Secretary of State's desk six months after he calls for it? We already have an example. On 25th October a different report landed on the Home Secretary's desk. It was The Report of the Independent Commission on the Voting System. That commission was chaired by my noble friend Lord Jenkins of Hillhead. We are now told that that report may never see the light of day. How can we be assured that the report promised us today will ever see the light of day or be acted upon?
In 1980 I was in the northern part of Hong Kong, on the Sunchong river. I understand that the noble Lord, the Minister, was in the south of Hong Kong. He is a jurist and was acting in court on behalf of clients. In the north, I was pulling out illegal immigrants who were crossing the Sino-Hong Kong border. I and my colleagues in all the services were doing our best to save their lives in the muddy water of the Sunchong river. As his colleagues from that time tell me, after the noble Lord left the court the lawyers decided to throw a party. They had a tug-of-war in the clean mud of Lantao.
We have been told by the noble Lord, Lord McNally, that in politics you sometimes have to get your hands dirty. This "closed list" Bill is a dirty Bill. Let us wash our hands of closed lists. I ask the Minister to do what his colleagues told him to do on the shores of Hong Kong—join in the clean mud tug-of-war and jump for the open list.
Lord Richard: My Lords, I hope the House will forgive me if I do not exactly follow the geographical and military wanderings and musings of the noble Earl, Lord Carlisle. He lost me slightly in the Hong Kong mud.
I am concerned about this debate. I am not concerned about the issue of open lists and closed lists, but I am concerned about what this House may be doing in respect of its constitutional relations with the other House.
Of course this House has the right—I even go so far as my noble friend Lord Stoddart did at one point in saying that it may have a duty—to ask the House of Commons to think again on an issue on which this House has views. How often are we to ask the House of Commons to think again—once, twice, three times, ad nauseam? Is there really to be a battle of attrition between this House and the other place?
Our constitution is a strange and rather fragile instrument. It is not written. It functions as a result of understandings between the two Houses and those who are in charge of them. If those understandings were to break down, the sensible constitutional relationship between the two Houses would also break down.
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Last week, the noble Lord, Lord Mackay of Ardbrecknish, urged us to send this proposal back to the House of Commons. He said that this House had a duty, if there was a new matter that the House of Commons had not considered, to send the Bill back. I listened with great interest to see what was new. The noble Lord's fig leaf last week, if I may put it that way with no disrespect, was the report of the noble Lord, Lord Jenkins of Hillhead. He said that the House of Commons had not had a chance to consider the report and that we should therefore send the Bill back to the other place so that, in reconsidering the Bill, the other place could consider the report with it. It went back to the Commons, the Commons thought again and decided that they preferred their original opinion and not the opinion of the noble Lord, Lord Mackay of Ardbrecknish, or the opinion of this House.
I ask the question rhetorically: what is new this afternoon? What is it this afternoon that justifies, on the test proposed last week by the noble Lord, Lord Mackay, this House sending it back to the House of Commons to ask the Commons to think again; to reconsider their position in the light of something fresh. There is nothing fresh.
The other side is going to break the understanding that has arisen over a number of years under successive governments as to the circumstances in which this House should insist upon its position. I believe it is wrong. That course is dangerous and is one that it will regret. I hope that those in this House who are capable of looking at and are prepared to look at the matter in its constitutional sense, as well as on the merits or demerits of the narrow issue, will support the Government on it.
Baroness Jay of Paddington: My Lords, I hesitate to intervene again but there is some feeling in the House that noble Lords would like the wind-up speeches. If they wish to hear another speaker, the noble Lord, Lord Bethell, has been trying to intervene for some time.
4.45 p.m.
Lord Bethell: My Lords, I am grateful to the noble Baroness and I am glad to have the chance to say a few words. The noble Lord, Lord Evans, reminded us that there are Members of the House who hope to stand for election for the European Parliament in June next year; on my side of the House there are four. All of us, as it happens, are hereditary Peers, so there may be hope for some of us yet.
As the noble Lord, Lord Mackay, is aware, I have supported him throughout this debate and believe that he is quite right to continue to support the idea of the open list. Since I was not selected but elected as a prospective candidate, I have seen some of the worst features of the closed list system: the idea that a job lot of candidates is available to be parachuted in, with no chance of people discriminating or differentiating between one candidate and another.
I hope that in the next few days the Government and the Opposition will consider a compromise solution. I have in mind the mixed system—the so-called Belgian

863
system—which allows a voter to vote for a party or for a candidate, whichever seems most appropriate. I am not quite sure whether anyone has seen a possible ballot paper for next June. I have seen one for the London area where I am a prospective candidate: in fact, number three. Such a ballot paper will contain about 40 or 50 names. Hardly any of them will be known to more than 1 per cent. or 2 per cent. of the voters. On the London list one will see Villiers, Tannock, Bethell and seven more names. With the greatest respect to all of us, how many voters will be able to make even a vaguely informed value judgment about whom to put the cross against?
It would be good if the party leaders could get together at this stage and work out the mixed list which would enable voters to support a party for an individual candidate, if that seems most appropriate.
I have stood for the European Parliament four times. In each case my campaign had a personal as well as some party input. But in those days it was the simple majority system. We had 500,000 voters. That was enough. On the next occasion there will be 5 million voters in the constituency in which I hope to stand. Conservative, Labour and Lib-Dem candidates will not easily be able to put their names forward to a London public of 5 million voters. It is hard to see how the public will be able to judge between one or another members of a party.
Another problem that will arise under a wholly open list will be that candidates from the same party will be more in competition than candidates from opposing parties. This is something that occurs in Ireland. At the moment, 10 of us in London work harmoniously together against the Labour Party. This unites us. In particular, a fully opened list would throw us against one another.
I therefore hope that we will in the end decide—maybe not today but in the course of the next week—to adopt the half-way system which is the least bad of the many types of PR that have been thrown at us.
I have one final point. A move to a fully open list at this late stage will destabilise the practicalities of next June's elections. There are those in my party who, at our election—not selection—were given the right to stand in a closed list. They turned down that offer because they were low down in the ranking. If they now find that the law has changed and the list is open, they will feel cheated with the goalposts having been moved so widely so late in the match. They may even have a legal claim.
I do not wish to give the impression that I am at all in favour of the closed list system. One thing that this debate has done is to reveal the bizarre way in which candidates from the Labour Party were selected by the leadership. However, I very much hope that the Government can, at this stage, get together with the leaders of the other parties and work out a way in which candidates can be selected on a sensible basis of
864
knowledge of the candidate and knowledge of the party; not on a matter of pure random selection on 10th June next year.
Lord McNally: My Lords, in an earlier life I remember attending a meeting of the national executive of the Labour Party. An old Scottish trade union leader was invited to join in voting with a certain faction, with many high principled arguments being put his way. He refused to do so. Afterwards, I asked him why he had not joined the opponents' side. He said: "They must have thought I came up the Clyde in a barrel". I have never worked out why travelling up the Clyde in a barrel made someone particularly gullible, but it seems to me that quite a number of noble Lords are being invited to join such a journey with the noble Lord, Lord Mackay.
In essence, we have a wrecking amendment to the Bill. Those who are prepared to go along with the wrecking amendment should fully consider the consequences.
Many of the criticisms we heard today have been about how one party—the Labour Party—has managed its internal affairs. The noble Lord, Lord Evans, put if perfectly correctly when he said that he would use the offer, breathing space and review from the Home Secretary to campaign within the Labour Party to repair such shortcomings as may be within that party's internal democracy. That is as it should be.
We in the Liberal Democrats have no such problems. We elect our candidates on one member, one vote. As I have said on previous occasions, some members of the awkward squad have ended up on top and some party loyalists have turned up on top. That is the way it is in the Liberal Democrats. From the beginning, we have joined with the Government not under any deal but on the basis that we both fought the general election to bring forward a proportional representational system for the next elections to the European Parliament. During the long course of this Bill through Committee and many other stages, we have argued various cases. At this stage, we view the Bill in its entirety. Elements of the debate have been like a revivalist prayer meeting, with various sinners getting up to confess. Those who today have advocated the open list system acquiesced for almost a quarter of a century in systems of election or nomination to the European Parliament that were not simply less fair than the open list system but much less fair than the system your Lordships are considering now.
Noble Lords: Rubbish!
Lord McNally: Members of the Conservative Front Bench say "Rubbish." There is no doubt in my mind and in the minds of my noble friends as to why we will be with the Government tonight. What is on offer for the 1999 European elections is a fairer system than ever

865
before. We know from previous elections that 60 Conservatives have won and some 20 Labour Members have been returned, but no Liberal Democrats or others.
Noble Lords: Ah!
Lord McNally: At another election, some 60 Labour and 20 Conservative Members were returned, but again no Liberal Democrats.
Noble Lords: Ah!
Lord McNally: "Ah!" indeed, for the 20 per cent. of the electorate who did not want to vote Conservative or Labour.
For the first time with this Bill, we will have a Labour representative from the West Country, a Liberal Democrat from the Midlands and a Conservative from the north east. That will produce by far the most balanced delegation in terms of votes cast and their geographic spread. I do not have to apologise for the Bill because it will be a good Bill. It will educate the British people in a new system of regional representation in which two or three Labour Members from the West Country will have a powerful voice in the European Parliament. Those changes are much different from constituencies of 70,000. That cannot be done—as the noble Lord, Lord Bethell, said—with constituencies of 8 million.
We are dealing with realities. What we have between ourselves arid the Government is a partnership of principle that is advancing the cause of fair representation in Europe. Ranged against that partnership is an unholy alliance of those who are first-past-the-post, those who do not like Europe and those who have other reasons for assembling that unholy alliance. I cannot do anything to influence Conservative Members. As we know, they can summon up—we know not from where—vast numbers to vote on certain occasions, when they are not here on others. But I say to Cross-Benchers, as they look to their responsibilities in this House and in a reformed House of Lords, and to those who want to see a proper role for Cross-Benchers in a reformed House of Lords, that they should carefully consider before getting into Lord Mackay's barrel and voting for such a partisan and wrecking amendment.
The government amendment has been little discussed this evening but it is a reasonable and reasoned amendment that will allow the various parties to assess the impact of the Bill. Meanwhile, we send forward the fairest system of election to the European Parliament that this country has yet experienced. As such, we do so with enthusiasm.
Lord Williams of Mostyn: My Lords, we should not forget for a moment nor doubt for a second that we are here on a very serious occasion. That was most notably identified by my noble friend—as he presently remains—Lord Shore of Stepney, who referred to "the old classic reason." Yes. It means justified supremacy after due consideration of the elected Chamber. We revere that principle and we propose to abide by it. It is a fact, not an abuse, to point out that on earlier occasions
866
in this House the Government were defeated by the block hereditary vote. Had there been no hereditary vote, the Government would have won on the first occasion by 119 votes to 72, and on the second by 119 to 90.
The noble Earl, Lord Onslow, in a phrase that I for one, for reasons your Lordships know, found particularly offensive, spoke of Jews and black people. I say this. No Jew that I know sits here because of his ancestral faith, nor any black woman by virtue of her skin.
We have voted twice already to amend the Bill. It has gone back to the Commons. Last Tuesday—and allow me to permit fact to intrude for just a second—the Commons voted 307 to 125. The Home Secretary introduced his own amendment to have a review, which is intended to be speedy, to be established within one month and to report within six months. And that report will be placed before Parliament. That is a reasonable outcome, offered by way of a genuine desire to accommodate your Lordships' views. Not, I appreciate, to capitulate but to accommodate and offer what I regard as a decent, acceptable, compromise—if compromise is in the air at all.
The Home Secretary said that the review would be wide. If it concluded that the closed list system was the wrong system, there would be huge pressure on the Government to change. Open lists have defects. No one on any occasion has disputed my proposition that with the open list system some candidates can be elected with fewer votes than those who fail to be elected. It is worth bearing in mind the point made by the noble Lord, Lord Bethell—who is number three on the London list—that we will have on an open list internal, internecine party squabbling. In other words, it will be the uneasy illegitimate offspring borne out of a sort of sub-primary system and a sort of general election.
It is a fact that political parties bring forward candidates. It is not ignoble for a party to put forward a slate of candidates any more than a slate of policies. It is not improper or constitutionally illegitimate for us to say, if we wish, that we want particular expertise in Europe and a fair geographic spread within a specific European constituency. Above all, no longer do we want ethnic minorities and women to suffer the disabilities that they presently suffer. That is why we want a closed list system. Questions about internal party choice and whether or not one party air-brushes out rather more vigorously than another are utterly not to the point and I waste no time upon them.
It is a fact that cannot be disputed that this system was first introduced, not by the then Mrs. Thatcher, but by Mr. Major's government in the context of Northern Ireland. It was perfectly acceptable then. Both Houses voted for it. The Government of Wales and the Scotland Bills have passed through your Lordships' House with a closed list system. I ascribe no ill motive to anyone, but the question that offers itself to my mind at least is: what is the real purpose of this long drawn-out trench warfare?
We are a revising Chamber. I do not believe anyone can say that we have not discharged our duty at length, in detail and in depth by putting forward, on two distinct

867
occasions with different emphases, the request that the Commons should think again. The proposition put forward by the noble Lord, Lord Mackay of Ardbrecknish, was that the Commons had not had the benefit of the report of the noble Lord, Lord Jenkins of Hillhead. I can tell the noble Earl, Lord Carlisle, that that is not being hidden. It has been published and was the subject of a full debate in the House of Commons.
Your Lordships know the issues and I hope that I have faithfully defined them as the Government see them. The elected House has a moral legitimacy that we do not. It has considered the matter not once but twice and the majorities have been overwhelming. We shall use every means at our disposal to ensure that the clearly expressed will of the elected House is carried through and put into effect. We propose to stand fast.
5 p.m.
Lord Mackay of Ardbrecknish: My Lords, the noble Lord, Lord Williams of Mostyn, has again suggested that in the open list system members can be elected by fewer votes than others, but that is not so inside the same party. I do not believe that electors will fail to understand that distinction. They will understand that inside the same party those with the most votes will be elected. That is the point about an open list. I do not pray in aid Northern Ireland; it is neither for nor against because it is such a uniquely difficult place in which to advance democracy and peace. But what was done in Northern Ireland was for the forum, not a parliament, and was a precursor of the peace process that we hope will move towards success.
The review that we have been promised is fine. The noble Lord, Lord Evans, rightly chided me with the fact that I had asked for the review. I suppose that if I push at the door for long enough I shall get something. The review was not in place of voting systems but was designed to look at whatever one chose to adopt in place of first-past-the-post. All one gets from the Government's promise of a review is what noble Lords have just heard from the noble Lord, Lord Williams of Mostyn; namely, if the review comes out against the closed list there will be huge pressure on the Government to change. We should expect a little more than that before we are able to agree with the other place.
It is interesting that at least in this debate we have managed to get a few government Back-Benchers to their feet. However, I noticed that they did not defend the closed list. They said, perfectly justifiably, that the Commons had been asked to think again, had responded and we should accept what we had been given with good grace and not go back. But I could not fail to notice that no one defended the closed list. As always, it was left to the noble Lord, Lord McNally, to defend it. I shall not go into the various points made by the noble Lord, save that I do not believe the correct expression to be "coming up the Clyde in a barrel" but rather "coming up the Clyde in a banana boat". I did not do that either.
We should address the argument about the rights of this House to ask the other place to think again. As to being up against the wire, that is not my fault. This Bill
868
started in the other place as long ago as last November. A good question to ask is where the Bill has been dilly-dallying on its way. It is not exactly a long Bill but it has been around for a very long time. It is not my fault that the wire is there next week.
The noble Earl, Lord Russell, said that there was time to ask the Government to think again. It is a serious matter for your Lordships' House to ask the Government to think again. But we are not shutting the door on the Bill. Over the weekend the Government have every ability to come up with something else and to make another suggestion. As the noble Earl said, we are detailed to be here again next Tuesday to see what the Government bring. That tells me that the Government are already working out what they have to bring if the arguments of the Minister have not carried the day.
This House should say to the Government that it is not convinced. The Government have put forward no arguments in favour of the closed list over the open list. Frankly, a review is not sufficient. Think again about how to accommodate the views not only of the Conservative Party, a few members of the Liberal Democratic Party, the majority view of the Cross-Benchers and the views of a good part of the press—I could have quoted a good deal more—but also the views of a good number of the Government's Back-Benchers down the corridor. I believe that we should ask the Government to think again. I beg to move.
5.6 p.m.
On Question, That this House do insist on their Amendments Nos. 1 to 4 to which the Commons have disagreed and do disagree with the Commons in their Amendment No. 4A in lieu thereof.
Their Lordships divided: Contents, 237; Not-Contents, 194.

Division No. 1

CONTENTS

Aberdare, L.

Blyth, L.

Ackner, L.

Boardman, L.

Addison, V.

Bowness, L.

Ailsa, M.

Brabazon of Tara, L.

Aldington, L.

Braine of Wheatley, L.

Alexander of Tunis, E.

Brentford, V.

Alton of Liverpool, L.

Brigstocke, B.

Ampthill, L.

Brougham and Vaux, L.

Anelay of St. Johns, B.

Burnham, L. [Teller.]

Annaly, L.

Buscombe, B.

Archer of Weston-Super-Mare, L.

Butterworth, L.

Arran, E.

Byford, B.

Ashbourne, L.

Byron, L.

Astor, V.

Cadman, L.

Attlee, E.

Caithness, E.

Balfour, E.

Campbell of Alloway, L.

Balfour of Burleigh, L.

Campbell of Croy, L.

Banbury of Southam, L.

Carew, L.

Barber of Tewkesbury, L.

Carlisle, E.

Belhaven and Stenton, L.

Carnock, L.

Bell, L.

Carrick, E.

Beloff, L.

Chalfont, L.

Bethell, L.

Charteris of Amisfield, L.

Biffen, L.

Chorley, L.

Blaker, L.

Clancarty, E.

Blatch, B.

Clanwilliam, E.

869

Clark of Kempston, L.

Leigh, L.

Cochrane of Cults, L.

Liverpool, E.

Cockfield, L.

Long, V.

Colwyn, L.

Lowry, L.

Cope of Berkeley, L.

Lucas, L.

Courtown, E.

Lucas of Chilworth, L.

Cowdrey of Tonbridge, L.

Luke, L.

Cranborne, V.

McColl of Dulwich, L.

Crathorne, L.

McConnell, L.

Crickhowell, L.

McFarlane of Llandaff, B.

Cross, V.

Mackay of Ardbrecknish, L.

Cuckney, L.

MacLaurin of Knebworth, L.

Darcy de Knayth, B.

Macleod of Borve, B.

Dartmouth, E.

Malmesbury, E.

Davidson, V.

Mancroft, L.

De Freyne, L.

Marlesford, L.

Denbigh, E.

Mayhew of Twysden, L.

Denham, L.

Merrivale, L.

Denton of Wakefield, B.

Mersey, V.

Dilhorne, V.

Miller of Hendon, B.

Dixon-Smith, L.

Milverton, L.

Dudley, E.

Molyneaux of Killead, L.

Eccles of Moulton, B.

Monk Bretton, L.

Eden of Winton, L.

Monson, L.

Ellenborough, L.

Montagu of Beaulieu, L.

Elliott of Morpeth, L.

Monteagle of Brandon, L.

Exmouth, V.

Montgomery of Alamein, V.

Feldman, L.

Moran, L.

Fookes, B,

Mountevans, L.

Fraser of Carmyllie, L.

Mowbray and Stourton, L.

Freyberg, L.

Moyne, L.

Gage, V.

Munster, E

Gainford, L.

Napier and Ettrick, L.

Gardner of Parkes, B.

Newall, L.

Gilmour of Craigmillar, L.

Newton of Braintree, L.

Gisborough, L.

Noel-Buxton, L.

Gladwyn, L.

Norrie, L.

Glentoran, L.

Northesk, E.

Gormanston, V.

Norton, L.

Grantley, L.

Norton of Louth, L.

Greenway, L.

Nunburnholme, L.

Haddington, E.

O'Cathain, B.

Halsbury, E.

Onslow, E.

Hambro, L.

Onslow of Woking, L.

Hanningfield, L.

Oxfuird, V.

Harding of Petherton, L.

Palmer, L.

Harmsworth, L.

Park of Monmouth, B.

Hayhoe, L.

Pearson of Rannoch, L.

Hayter, L.

Peel, E.

Henley, L.

Pender, L.

Hereford, Bp.

Perry of Southwark, B.

Higgins, L.

Phillimore, L.

Hogg, B.

Pilkington of Oxenford, L.

Holderness, L.

Platt of Writtle, B.

HolmPatrick, L.

Plummer of St. Marylebone, L.

Home, E.

Poole, L.

Howe, E.

Prior, L.

Howe of Aberavon, L.

Rankeillour, L.

Howell of Guildford, L.

Rawlings, B.

Hunt of Wirral, L.

Reay, L.

Hussey of North Bradley, L.

Rees, L.

Hylton-Foster, B.

Rees-Mogg, L.

Inglewood, L.

Remnant, L.

Jenkin of Roding, L.

Renton, L.

Johnston of Rockport, L.

Renwick, L.

Jopling, L.

Rodney, L.

Kenilworth, L.

Rotherwick, L.

Kinnoull, E.

Rowallan, L.

Kitchener, E.

Russell, E.

Knollys, V.

Ryder of Wensum, L.

Knutsford, V.

Saatchi, L.

Laing of Dunphail, L.

Sainsbury of Preston Candover, L.

Lamont of Lerwick, L.

St. John of Fawsley, L.

Lane of Horsell, L.

Sandwich, E.

Lauderdale, E.

Sandys, L.

Lawrence, L.

Seccombe, B.

870

Shannon, E.

Teviot, L.

Shaw of Northstead, L.

Thatcher, B.

Shore of Stepney, L.

Thomas of Gwydir, L.

Simon of Glaisdale, L.

Trefgame, L.

Skelmersdale, L.

Trenchard, V.

Slim, V.

Trumpington, B.

Soulsby of Swaffham Prior, L.

Vivian, L.

Waddington, L.

Southwell, Bp.

Wedgwood, L.

Stewartby, L.

Westbury, L.

Stockton, E.

Wharton, B.

Stoddart of Swindon, L.

Wilcox, B.

Stafford, E.

Willoughby de Broke, L.

Strange, B.

Windlesham, L.

Strathclyde, L. [Teller.]

Wise, L.

Sudeley, L.

Wynford, L.

Tebbit, L.

Young, B.

NOT-CONTENTS

Acton, L.

Gallacher, L.

Addington, L.

Geraint, L.

Ahmed, L.

Gilbert, L.

Alderdice, L.

Goodhart, L.

Allenby of Megiddo, V.

Gordon of Strathblane, L.

Alli, L.

Goudie, B.

Amos, B.

Gould of Potternewton, B.

Annan, L.

Graham of Edmonton, L.

Archer of Sandwell, L.

Grantchester, L.

Avebury, L.

Gregson, L.

Bach, L.

Grenfell, L.

Barnett, L.

Grey, E.

Beaumont of Whitley, L.

Hacking, L.

Berkeley, L.

Hampton, L.

Blackstone, B.

Hamwee, B.

Borrie, L.

Hanworth, V.

Bragg, L.

Hardie, L.

Brightman, L.

Hardy of Wath, L.

Brooke of Alverthorpe, L.

Harris of Greenwich, L.

Brookeborough, V.

Harris of Haringey, L.

Brooks of Tremorfa, L.

Haskel, L.

Bruce of Donington, L.

Hayman, B.

Burlison, L.

Headfort, M.

Burns, L.

Hilton of Eggardon, B.

Callaghan of Cardiff, L.

Hogg of Cumbemauld, L.

Calverley, L.

Hollick, L.

Carmichael of Kelvingrove, L.

Hollis of Heigham, B.

Carter, L. [Teller.]

Holme of Cheltenham, L.

Chandos, V.

Hooson, L.

Christopher, L.

Hoyle, L.

Clarke of Hampstead, L.

Hughes of Woodside, L.

Cledwyn of Penrhos, L.

Hunt of Kings Heath, L.

Clement-Jones, L.

Inchyra, L.

Clinton-Davis, L.

Irvine of Lairg, L. [Lord Chancellor.]

Cocks of Hartcliffe, L.

Crawley, B.

Jacobs, L.

Dahrendorf, L.

Janner of Braunstone, L.

David, B.

Jay of Paddington, B. [Lord Privy Seal.]

Davies of Coity, L.

Davies of Oldham, L.

Jeger, B.

Dean of Beswick, L.

Judd, L.

Dean of Thornton-le-Fylde, B.

Kennedy of The Shaws, B.

Dholakia, L.

Kirkhill, L.

Diamond, L.

Leathers, V.

Dixon, L.

Lester of Herne Hill, L.

Donoughue, L.

Linklater of Butterstone, B.

Dormand of Easington, L.

Lockwood, B.

Dubs, L.

Lofthouse of Pontefract, L.

Elis-Thomas, L.

Longford, E.

Evans of Parkside, L.

Lovell-Davis, L.

Evans of Watford, L.

Ludford, B.

Ezra, L.

Macdonald of Tradeston, L.

Falconer of Thoroton, L.

McIntosh of Haringey, L. [Teller.]

Falkland, V.

Mackie of Benshie, L.

Farrington of Ribbleton, B.

McNair, L.

Fitt, L.

McNally, L.

871

Maddock, B.

Sawyer, L.

Mallalieu, B.

Scanlon, L.

Mar and Kellie, E.

Scotland of Asthal, B.

Mason of Barnsley, L.

Serota, B.

Merlyn-Rees, L.

Sewel, L.

Meston, L.

Sharp of Guildford, B.

Methuen, L.

Shaughnessy, L.

Miller of Chilthorne Domer, B.

Shepherd, L.

Milner of Leeds, L.

Simon, V.

Mishcon, L.

Simon of Highbury, L.

Molloy, L.

Smith of Clifton, L.

Monkswell, L.

Smith of Gilmorehill, B.

Montague of Oxford, L.

Stallard, L.

Morris of Castle Morris, L.

Stone of Blackheath, L.

Morris of Manchester, L.

Strabolgi, L.

Murray of Epping Forest, L.

Symons of Vernham Dean, B.

Newby, L.

Tanlaw, L.

Nicholson of Winterbourne, B.

Taverne, L.

Nicol, B.

Taylor of Blackburn, L.

Northfield, L.

Tenby, V.

Ogmore, L.

Thomas of Gresford, L.

Parry, L.

Thomas of Walliswood, B.

Paul, L.

Thomson of Monifieth, L.

Peston, L.

Thornton, B.

Pitkeathley, B.

Thurlow, L.

Plant of Highfield, L.

Thurso, V.

Ponsonby of Shulbrede, L.

Tomlinson, L.

Prys-Davies, L.

Tope, L.

Puttnam, L.

Tordoff, L.

Ramsay of Cartvale, B.

Turner of Camden, B.

Randall of St. Budeaux, L.

Uddin, B.

Razzall, L.

Varley, L.

Redesdale, L.

Walker of Doncaster, L.

Rendell of Babergh, B.

Wallace of Coslany, L.

Renwick of Clifton, L.

Warner, L.

Richard, L.

Weatherill, L.

Rix, L.

Whitty, L.

Rochester, L.

Wigoder, L.

Rodgers of Quarry Bank, L.

Williams of Crosby, B.

Rogers of Riverside, L.

Williams of Elvel, L.

Sainsbury of Turville, L.

Williams of Mostyn, L.

Sandberg, L.

Winchilsea and Nottingham, E.

Resolved in the affirmative, and Motion agreed to accordingly.
Bill returned to the Commons with a reason.

Registration of Political Parties Bill
5.20 p.m.
Report received.
Clause 1 [The register]:
Lord Goodhart Lord Goodhart moved Amendment No. 1:
Page 1, line 10, at end insert—
("(3) The Secretary of State may by order transfer the functions of the registrar under this Act to such body established by statute or the holder of such office so established as the Secretary of State thinks appropriate.").
The noble Lord said: My Lords, at this stage the noble Lord, Lord Williams of Mostyn, to use a cricketing analogy which has already been introduced from these Benches, is entitled to claim a tea interval and if not that, at least drinks being brought out by the 12th man. However, I fear that we must go on so I propose to do the best I can at this point, which is to bowl him a gentle long-hop.
In Committee, I moved this amendment to make it clear that the Registrar of Companies is not the appropriate officer to carry out the functions of the registrar of political parties and that an alternative solution would need to be provided within a reasonably short time. I suggested that, in accordance with recommendation 82 of the Neill Committee report on the funding of political parties, it might be appropriate in due course to transfer the functions of the registration of political parties, and perhaps other functions as well such as the hearing of appeals from the decisions of returning officers to the election commission proposed by the Neill Committee.
The noble Lord said that he would look very carefully at the recommendations of the Neill Committee but went no further than that. Since then, there has been a debate on that report in another place. This is a probing amendment. I wonder whether the noble Lord is in a position to say anything further than what he said on the previous occasion. I beg to move.
Lord Henley: My Lords, I have also added my name to the amendment. I intervene merely to add my voice to that of the noble Lord, Lord Goodhart. The noble Lord, Lord Williams, is entitled to what the noble Lord described as the tea interval. I assure the noble Lord and the Deputy Chief Whip that we shall not take very long on this Bill. I imagine that it will be only a matter of minutes before the noble Lord can retire for his tea, or possibly something stronger.
With the noble Lord, Lord Clement-Jones, I went to see the noble Lord, Lord Williams, last week and we were extremely grateful for the constructive nature in which he dealt with some of our queries about the Bill, with which we shall deal later. I look forward to hearing the Minister's reply.
Lord Williams of Mostyn: My Lords, when I was offered tea, I wished that I could imitate Dame Edith Evans and say, "Tea!" because we may all want something rather better than that in a moment or two.
I was extremely grateful for the meeting with the noble Lords, Lord Henley and Lord Clement-Jones. It was originally the initiative of the noble Lord, Lord Henley, and was taken up by the noble Lord, Lord Harris of Greenwich. That was the precursor to the meeting.
I am happy to repeat what I said in Committee. The Government will give careful consideration to the Neill Committee's recommendations that the role of registrar of political parties should be transferred to the electoral commission.
Your Lordships will know that on Monday of this week there was a debate on the Neill Committee report in another place. The Home Secretary said in opening that debate that the case for an electoral commission had been made out and, accordingly, the legislation to implement the main findings of the Neill Report will provide for such a commission to be established.
He went on to say that we needed to give further consideration to the precise functions of the electoral commission. It may well make sense for the commission

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to take over the role of registrar. We have given our commitment, which I have reiterated now on the Home Secretary's behalf, to establish an electoral commission. I reiterate his commitment to publish the draft Bill before the Summer Recess. I hope that that is of assistance to your Lordships generally.
Lord Goodhart: My Lords, I welcome the statement which has just been made by the Minister. That takes the matter as far forward as it can reasonably be expected to be taken at this stage. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 2 [Applications for registration]:
Lord Henley Lord Henley moved Amendment No. 2:
Page 1, line 17, at end insert—
("( ) Where the constitution of a party establishes a devolved or federal structure, the party may apply for several entries in the register to reflect these arrangements.
( ) Any such entry may specify a different name and a different emblem for each branch of the organisation.").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to government Amendments Nos. 3 to 7, 11 and 13 and Amendment No. 8 in the name of the noble Lord, Lord Goodhart. The Minister will remember that in Committee we raised the concern that it was possible to register only one emblem for any particular party in the United Kingdom. That caused some concern to my noble friend Lord Mackay and myself in that, within the Conservative Party, the Scottish Conservatives have a separate emblem from that which is held by the party in England.
I raised that issue with the noble Lord, Lord Williams, when we saw him last week and, again, I was grateful for the fact that he took on board our concerns. Those concerns may apply to other parties in the future if they wish to give a distinctive emblem or logo to the party in other parts of the Kingdom.
The noble Lord very kindly came forward with government amendments which deal with the problem far better than my Amendment No. 2. Therefore, I shall not press that amendment when the time comes because it will obviously be better that we should follow the Government's route.
Since then, it has occurred to my noble friend Lord Mackay and myself, being a Scotsman and an Englishman respectively, that we had forgotten our colleagues in the Principality and that we have three different logos within our party—one for Wales, one for Scotland and one for the remainder of the party within England. I know that noble Lords on the Liberal Democrat Benches have criticised our logo. They may not like it but we do and we have selected it. However, we also find it convenient to have separate logos in the distinct parts of the Kingdom.
Therefore, we are grateful that the Government have been prepared to move and have come forward with an amendment which allows us to have two separate emblems. However, we are keen to extend that to three emblems.
The noble Lords, Lord McNally, Lord Clement-Jones and Lord Goodhart, have tabled Amendment No. 8 which would allow three registered emblems to be used. I do not know whether their amendment is effective or whether further work needs to be done. In view of the fact that the Government have had to put forward a number of amendments, I understand that further amendments may be needed in addition to Amendment No. 8. I await the Minister's advice on that.
The Minister has bent over backwards to be generous to us in granting us an extra emblem. I wonder whether he will now look at this particular problem, particularly as he hails from the Principality. Therefore, he will understand the slight which we may be permitting if we were allowed only two emblems. I put it to the noble Lord that, if he could see his way to improving these government amendments still further in trying to deal with our question of a third emblem on Third Reading, we would be most grateful. In my absence, my noble friend Lord Mackay of Ardbrecknish certainly hopes to return to the matter at that stage. In the meantime, I beg to move.
5.30 p.m.
Lord Clement-Jones: My Lords, I should like to add my thanks to the Minister for the way in which he heard representations made to him during the course of the Committee stage and for the way in which he has accommodated us on these Benches as regards some of our concerns. It may appear to be slightly cheeky in a sense as this was an area about which we did not appear to be greatly concerned—that is, the matter of emblems and the number of them. Indeed, this matter has effectively arisen for us since that meeting. Nevertheless, it is of concern to us.
As the noble Lord, Lord Henley, pointed out, it was the Welsh dimension which we were not considering at the time. We believe that the Scots have been well catered for in regard to the amendments; indeed, they certainly fit the bill, so to speak. It is the ability of the Welsh to have the potential for their own logo. At present—and perhaps I should not say this—being a federal party officer I am glad to say that we have a corporate identity which holds across the federal party of the Liberal Democrats. It may not do so in the future. In a sense, we are trying to be a little precautionary in this respect.
For the purposes of fighting local elections for the assembly in Wales and for the parliament in Scotland, those parties may wish to adopt their own logo and their own distinctive style. That is certainly a strong possibility for the future. I should like to commend our amendment for three emblems as opposed to two. I can assure the Minister that we shall not return with requests for four, five or six in the future and that this is not one of those unravelling situations. However, there is a real need for this and a real hope that it can be accommodated.
Lord Williams of Mostyn: My Lords, I am most grateful not only for the tone which both noble Lords have used today but also for the tone of our meeting. Indeed, when they put the problem of Scotland to me at

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the meeting, the officials, as always in the Home Office, were extremely helpful. When the three of us invited them to consider whether they could redraft the Bill at a very late stage, they immediately cheerfully and willingly said that they could do so. One of the problems is that these logos will become the property of the first stage parties. The first stage applicant parties are those which have at least one seat in the House of Commons. I think that that amounts to nine parties. If one then multiplies nine by three, that will produce 27 emblems which may possibly be bagged at a very early stage.
We were asked specifically to deal with the question posed by the noble Lord, Lord Mackay of Ardbrecknish; namely, that the Scottish Conservatives may want a distinctive logo. He told us on the last occasion that that was a lion and we were able to meet that request. It is really a matter of practicality and whether or not this can be done. I am not holding out undue hope, but I shall certainly consider the matter. Time is very tight, not simply for Third Reading but also for the registrar's preparations. I believe that the registrar had already begun to make preparations on the basis of one logo. He is now being invited to cast his mind to two logos. If we are to have three, it will be very difficult with a tight timetable because these provisions must be ready, published and available for public scrutiny in respect of elections which are due to take place as early as May next year.
I am not being difficult; I am simply looking at the practicalities. With that cautionary though not gloomy note, I can certainly undertake to consider the matter to ascertain whether or not we can have an accommodation in this respect. However, I make one plea to noble Lords: please not more than three emblems. Indeed, what about Northern Ireland?
Lord Clement-Jones: My Lords, I thank the Minister for his typically helpful reply. My only point of clarification is that it would be very unlikely for our Scottish and Welsh parties to apply for separate logos. Therefore, the possibility of trying to scoop the pool with all these logos is remote. Indeed, it is a potential issue and not a current one.
Lord Henley: My Lords, before I withdraw my amendment and allow the government amendments to be moved and, I hope, accepted by the House, perhaps I may say how grateful I am to the Minister for considering the point. It is a very real point for us in that we do have three separate logos and that could cause us considerable embarrassment in deciding the apportionment of two logos between three separate parts of the party. I am most grateful that the noble Lord is at least prepared to consider the matter over the next few days when I imagine that Home Office officials might have their minds on other matters. I appreciate that the time is tight. However, we have at least until next Wednesday to consider these matters.
When speaking to a previous amendment, I gave the Minister notice that I thought it unlikely that I would be present on Third Reading. However, I very much hope that my noble friend Lord Mackay will be. If the
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Government are not able to bring forward some amendments at that stage, I am sure that my noble friend will wish to return to the matter next Wednesday. Having said that, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Clause 5 [Emblems]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 3:
Page 2, line 18, leave out ("an emblem") and insert ("up to two emblems").
On Question, amendment agreed to.
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendments Nos. 4 to 6:
Page 2, line 19, after ("section") insert ("in relation to an emblem").
Page 2, line 20, leave out ("the emblem") and insert ("it").
Page 2, line 22, at end insert ("for another party").
On Question, amendments agreed to.
Clause 6 [Changes to the register]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 7:
Page 2, line 39, leave out ("a registered emblem,") and insert ("two registered emblems,").
On Question, amendment agreed to.
[Amendment No. 8 not moved.]
Clause 10 [Speaker's committee]:
Lord Goodhart Lord Goodhart moved Amendment No. 9:
Page 4, line 12, at end insert—
("(2) A party whose application under section 3, 5, 6 or 18 is refused may appeal to the committee against the decision of the registrar.
(3) A registered party may appeal to the committee against a decision of the registrar under section 3, 5 or 6 in respect of another party.").
The noble Lord said: My Lords, again, this is an amendment which has been brought back in order to hear what the Minister has to say about it. There is concern that there is no appeal process against a decision of the registrar other than by way of an application to the court for judicial review. It is felt that there ought to be some process by which either a party whose name is rejected by the registrar should be able to appeal against that decision or an equal process by which a party which is already registered, or which may be seeking registration, can object to the proposal of the registrar to register another party with a particular name. In those circumstances, I should like to hear what the Minister has to say on the issue. I beg to move.
Lord Henley: My Lords, there is nothing that I wish to add to what the noble Lord, Lord Goodhart, has just said. We also have concerns about there being some appropriate appeal system. We met the Minister and he explained the practical difficulties in the way of doing something on this occasion under the Bill in terms of time. However, he offered us the prospect of some reassurance in that respect. I, too, look forward to hearing the Minister's response on this particular matter.
Lord Borrie: My Lords, I should like to say a few words at this point, especially as I did not have the

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privilege of being on the "net" of the Front Benches in their discussions with my noble friend the Minister. I also expressed concern at earlier stages of the Bill that there was no appeal process and pointed out that the decisions of the registrar are of tremendous importance over a long period.
I have some queries in regard to Amendments Nos. 9 and 10. For example, on Amendment No. 9, it seems clear to me that it is a committee of MPs because the committee referred to is one which is appointed by the Speaker from Members of Parliament. Alternatively, the amendment tabled in the name of the noble Lord, Lord Henley, refers to the Secretary of State establishing a committee, and says:
"The committee shall consist of seven persons appointed by the Speaker of the House of Commons, a majority of whom shall not he members of any political party".
One might suppose at first sight that a committee appointed by the Speaker would be a committee composed of Members of Parliament. However, to find a group of seven Members of Parliament, the majority of whom do not belong to any political party, may be rather difficult at the present time and indeed at other times. Perhaps the noble Lord, Lord Henley, is referring to a committee which is more broadly based and would include people who are not Members of the House of Commons. However, that is not clear.
In previous discussions on this matter I expressed some concern—as did noble Lords opposite—about the absence of any appeal. I was particularly concerned because of the kind of person the registrar is. With respect to him, an expert on companies appointed by the Department of Trade and Industry is not particularly an expert on the matter we are discussing. Over the next few months he will take decisions on matters on which he can hardly be considered an expert. The only possibility of becoming an expert is by approaching the Speaker's committee for advice. According to my noble friend the Minister, that advice would be expected to be accepted. That is good up to a point.
I would worry less about the absence of an appeal if the electoral commission was in existence now and was taking all these vital decisions as to the registration of political parties for the long term. I hope that the Minister will comment on the absence of an appeal against the registrar under the Bill as it stands. That still disturbs me. While the electoral commission may be a much more satisfactory body—noble Lords opposite have mentioned this—it will not come into existence until later next year when most of the vital decisions may well have been taken on the first round of registration of political parties (those which are represented in the House of Commons) and on the second round, those parties which are not represented in the House of Commons. The electoral commission will therefore come into play when matters have already been determined. I hope that the Minister can reassure me on those worries. I should be most grateful for that reassurance.
5.45 p.m.
Lord Williams of Mostyn: My Lords, we discussed these matters on an earlier occasion. We thought that a number of the points raised were worthy of a fair degree
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of reflection. As I indicated on the previous occasion, Amendment No. 9 could be circuitous because the registrar is likely to refer the application in the first place to the Speaker's committee if there is any difficulty. The Speaker's committee cannot be an appellate body on its own decision. The noble Lord, Lord Borrie, used the phrase, "in the long term". We are tight on the timetable. I believe that as regards the first raft of elections which concern the National Assembly for Wales and the Scottish parliament there will not be any real difficulty. We can all anticipate perfectly easily the kind of parties which are likely to stand in an election which is as soon as next May. I take the noble Lord's point about the long term as other parties may develop which would wish to stand in future years.
The proposed new clause in Amendment No. 10 is extremely wide. But it is rather short on detail. I accept entirely that it is tabled on the basis of a probing amendment, as I believe the noble Lord said. I have some sympathy with the reasons for tabling Amendment No. 10. I understand the arguments which were developed on the previous occasion, not least by the noble Lord, Lord Borrie. At the moment an appeals machinery would add significant delay to the registration process. Our priority is to get the elections under way with registered parties.
Among the Neill committee's 100 recommendations is included the proposal that an electoral commission should be established and that it should, as I said, assume the role of registrar of political parties. There have not been any decisions on the precise role and remit of the electoral commission but it may well make sense for it to take over the role of registrar. When the commission is set up we shall want to look again at the arrangements for registering political parties. The experience up to and beyond the Welsh and Scottish elections will, of course, form an important part of that consideration. We shall examine in particular—I give this undertaking—whether or not the absence of any appeals machinery has in practice been a cause of disquiet. We shall consider in the light of our findings what additional safeguards, if any, need to be put in place. I hope that is helpful; it is intended to be.
I shall discuss the Speaker's committee because it was mentioned. As I understand the position from the Speaker, she will shortly announce the composition of her committee in the Votes and Proceedings of the other place. She has told the Home Secretary she thinks it is important that the committee should not operate, or appear to operate, on a party political basis. In setting it up she does not therefore intend to take into account in any precise way political balance or geographical spread. Her intention—I think it is a sensible one, if I may say so without disrespect to her—is to appoint senior Members of the House. I hope those comments are helpful. As I said, they are intended to be helpful. If the amendments were intended to be probing amendments, they have perhaps winkled out a pearl or two.
Lord Goodhart: My Lords, I am grateful to the Minister for what he has said on this subject. It is certainly clear that problems are most unlikely to occur at the first stage of registration. But, given the ease with which it will

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be possible to register political parties—one person or organisation may register—there could well be large numbers of people applying to register political parties at the second stage. It is certainly possible that at that stage more serious problems may arise. That being so, I regret the absence of any procedure for an appeal.
I recognise the technical defects of Amendment No. 9. I do not press it as a solution to this problem. I accept that there are serious time constraints involved. Obviously the registration process for parties wishing to compete in the Welsh and Scottish elections must be concluded before it is time for people to submit their nominations. That being so, I accept that it is unrealistic to expect anything further at this stage. I welcomed what the Minister said about the possibility of returning to this matter at a later stage. If legislation is introduced to substitute the electoral commission for the registrar of companies—that seems likely to occur—that will provide a good opportunity to look again at the question of incorporating some kind of appeals process both as regards registration and appealing against the decision of returning officers on whether party descriptions are acceptable. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 10 not moved.]
Clause 18 [Transitional ground for refusal to register]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 11:
Page 5, line 41, leave out ("a registered emblem,") and insert ("an emblem which is already registered for another party,").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Schedule 2 [Amendments of the Parliamentary Elections Rules]:
[Amendment No. 12 not moved.]
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 13:
Page 9, line 37, at end insert ("(or, as the case may be, one of the party's registered emblems)").
The noble Lord said: My Lords, I have already spoken to this amendment. I beg to move.
On Question, amendment agreed to.
Schedule 3 [Consequential Amendments and Modifications]:
Lord Williams of Mostyn Lord Williams of Mostyn moved Amendment No. 14:
Page 11, leave out lines 21 to 25.
The noble Lord said: My Lords, this is a purely technical amendment. The paragraph is not needed because the amendment it sought to make to the Scotland Act 1998 was made directly to the Bill itself on Third Reading. I beg to move.
On Question, amendment agreed to.

Waste Minimisation Bill
5.49 p.m.
Read a third time.
Lord Hardy of Wath: My Lords, I beg to move that the Bill do now pass. I do not wish to detain the House but I would like to take this opportunity to express my appreciation to noble Lords on both sides of the House who have given the Bill their supportive consideration. I also thank my noble friend Lady Farrington of Ribbleton, who has been most helpful in her consideration of the Bill and the very good advice that she has given me. I beg to move.
Moved, That the Bill do now pass.—(Lord Hardy of Wath.)
On Question, Bill passed, and returned to the Commons without amendment.

Hotel Accommodation: VAT
5.50 p.m.
Lord Gordon of Strathblane Lord Gordon of Strathblane rose to ask Her Majesty's Government whether they believe that a reduction in VAT on hotel accommodation might boost tourist traffic and so increase Exchequer revenues.
The noble Lord said: My Lords, I must first express my gratitude to the House for permission to debate this small but very important subject. I am particularly delighted that it will afford an opportunity for the noble Lord, Lord Nunburnholme, to make his maiden speech, and that the noble Lord, Lord McIntosh of Haringey, will reply to the debate. I am sure that we can expect his customary robust defence of the Treasury coffers.
In this House the noble Lord, Lord McIntosh of Haringey, wears many hats. One that he wears with particular distinction is that of spokesman for the Department for Culture, Media and Sport. Although that department does not include "tourism" in its title, it is one of its responsibilities. I need not preach to the noble Lord, Lord McIntosh of Haringey, about the importance of tourism. It is one of our most important industries and will shortly become our most important.
Tourism is the fastest growing industry in the world. In this country it is responsible for more than £40 billion in turnover and 1.7 million jobs. More importantly, perhaps, it is responsible for one in five new jobs. My concern is that the UK is losing market share. Although I am chairman of the Scottish Tourist Board—and I declare that as an interest—and I am happy to champion the cause of the tourist industry in Scotland, my remarks here apply to the whole of the UK.
The UK share of tourism is declining. If tourism is the world's fastest-growing industry and our share is declining, that cannot be good for Britain. I am happy to look for reasons for that decline, but it must concern us. There are parts of Britain that are totally dependent on tourism for their survival, particularly some rural communities. There is a growing awareness in Whitehall of the importance of tourism, and I am

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delighted that this Government have appointed a Minister for tourism. That is certainly a step in the right direction.
In 1980 we had close to a 7 per cent. share of international tourist expenditure. That is now down to 4.6 per cent.—which is a drop of nearly a third—and that is serious. In that period British expenditure abroad has increased from 6.7 per cent. market share of international spending to 7.45 per cent. That is perfectly natural. I have no wish to place any inhibition on any of our fellow citizens travelling abroad. Travel broadens the mind and it is a very good thing that we travel to other countries. With increased leisure and, for the most part, somewhat cheaper air fares, that is a possibility of which many avail themselves. But it is getting to the point where people know more about Benidorm than they do about their own resorts at home. That is a bad thing.
Other countries in Europe, too, have shown a very slight decline. For example, France's share has gone down from 6.8 per cent. to 6.6 per cent. That is regrettable but not drastic, but nothing like as serious as the decline in the UK. This decline has been occurring for some time. It has been camouflaged at times of weak sterling. When sterling was weak people flocked here and the true reason for the decline did not show up. I am, regrettably, confident that when the BTA issues its annual report next year it will show a slight downturn in British tourism receipts. If it is anything like the Scottish Tourist Board, that statistic will camouflouge a very serious threat to quite a few businesses in the industry. Some have done quite well, some have done quite badly and are under threat.
The industry must shape up. It must be more competitive, offer better services and better products. The industry has taken all that on board. It will do its utmost to ensure that that happens. I am quite happy to listen to criticism of both the BTA and the Scottish Tourist Board. I am sure that we can do our job of marketing Britain abroad much better. My motto in life is that we should always be better than we were yesterday and hope that we can be even better tomorrow. The day that we think we cannot do any better we should resign, because somebody else will do the job more efficiently.
Is there anything the Government can do? I am not at this stage asking for an increase in the fairly small support that the Government give to tourism in this country and which brings them a very good return on their investment. If we have the second highest rate of VAT on accommodation in Europe, are we putting our tourism industry at a disadvantage? The only country with a higher rate than ours is Denmark, with 25 per cent. VAT. What has happened to Denmark? It is showing a decline in tourism. Without getting into correlations, coefficients and so on, it is almost commonsensical to say that if you increase the taxation on something people are less likely to use it if they have an alternative. And they do have alternatives.
Out of 15 countries in the European Union, only three do not have a lower rate of VAT on accommodation. I hope that I am not mesmerised by numbers; I am not
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looking for the democratic option that countries adopt a lower rate. If those 12 do not do very well we should not follow them. But what has happened to the three countries with the higher rates? Germany's tourism is in slight decline; Britain's, as I have already mentioned, is just growing and no more; and Denmark's is in decline. So the only three countries in Europe that do not have a differentially lower rate of VAT on accommodation do worse than the others.
That suggests, on a common sense basis, that it might be worth looking at the idea of introducing lower VAT on accommodation. Of our competitors across the Channel, in France for example, the VAT on accommodation is 5.5 per cent. I am aware that this country has wonderful attractions, but so have other countries. If one country charges 17.5 per cent. VAT and the other charges 5.5 per cent. VAT, there must be a certain predisposition to consider the one that charges less. In Spain VAT is only 6 per cent. and in Italy 9 per cent. In the European Union the average rate of VAT on accommodation is 8.95 per cent., just about half the rate that we charge.
We need to look at whether a change would produce any positive effect on tourism. We have some experience to go on quite near to home, in Ireland. Ireland used to charge VAT at the rate of 18 per cent.; it then reduced it in 1986 to 10 per cent. in response to the kind of pressure that the BTA is trying to bring on the Government here; and, more recently, in 1990 increased it to 12.5 per cent. I am not arguing a strict cause and effect, but it surely cannot be coincidence that in the period 1986 to 1990 the number of visitors to Ireland doubled. Its foreign earnings between 1986 and 1993 went up from £437 million to £1,012 million. It has a tourism surplus. In other words, more people spend money in Ireland than Irish citizens spend money abroad.
It is important to regard tourism as a form of importing and exporting in reverse. People who spend money in this country are the equivalent of the country making exports. Our citizens spending money abroad on their well-earned holidays are the equivalent of imports. We have a rather unhealthy negative balance of payments on tourism. I am asking the Government to look at whether reducing VAT on accommodation would have any effect on correcting that imbalance.
There is another case in point with the Isle of Man. Believe it or not, in 1994 the Treasury gave the Isle of Man permission to reduce its VAT on accommodation to 5 per cent. Therefore, there is a precedent. If the Government want another precedent, I am sure that I could persuade the industry in Scotland to accept a decrease in VAT to 5 per cent. But your Lordships would quite rightly say that that would be giving Scotland an unfair advantage. That is precisely the point. If you reduce VAT, you are giving our industry an advantage. With higher VAT than anywhere else in Europe bar Denmark, we are putting our tourism industry at a disadvantage vis à vis the Continent.
There is the possibility of reducing VAT across the board—on eating out as well. That has its attractions. But a more cautious approach would be simply to

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reduce VAT on accommodation first. I am not trying to reduce the Treasury's receipts. The Treasury needs receipts to undertake the Government's wholly admirable spending programme. So I am not trying to reduce the Treasury's total take. I concede immediately that if the rate of VAT is reduced receipts from VAT will fall in the short term, although perhaps not in direct proportion. It is common sense that the number of people visiting this country will increase. Therefore, the decrease in VAT receipts will not be quite the same as the proportionate decrease in VAT.
It is important that the Treasury gets money from other sources. The increase in employment—taking people off social security and unemployment benefit and having them in jobs and paying income tax—would mean more receipts for the Treasury. A proportionate increase in the profitability of people in tourism would yield more corporation tax. I do not necessarily endorse the BTA report from Deloitte & Touche that the two would balance out, but there is certainly not much in it.
What is most important is the creation of new jobs. Tourism will create more jobs for a government committed to an increase in jobs than any other industry. Therefore, there is every reason for looking closely at the case advanced by the British Tourist Authority for reducing VAT on accommodation to 12.5 per cent. or 8 per cent., which would be the European average. I commend the proposal to the Government.
6.3 p.m.
Lord Rowallan: My Lords, I thank the noble Lord, Lord Gordon of Strathblane, for bringing this interesting subject before your Lordships' House. I must declare an interest as a director of a company that is currently developing a hotel and of another that is developing a tourist activity centre.
Tourism accounts for 5 per cent. of this country's GDP and provides 7 per cent. of its employment, which amounts to 1.7 million people. It is an industry which is important as a source of employment for unskilled and first job applicants. It is the cornerstone of business creation and development and it is dominated by small businesses—more than 200,000 of them. But, as the noble Lord, Lord Gordon, said, at the same time as international tourism is growing, tourism in the UK is falling. Both the numbers of British people taking a holiday in the UK and the numbers of foreign tourists coming to our green and pleasant land are diminishing at a depressing rate. Ask any hotelier on a Scottish island, ask any taxi driver in London, where the tourists are: "Not here in the UK" is the answer. Yes, there are the backpackers, but, no, there are not the spenders; the hotel users; the purveyors of souvenirs from the cottage industries throughout our country.
Why is that the case? Is it the weather? Is it the strength of the pound? Is it the cost of staying at a British hotel? Or is it a combination of all three? There is little or nothing we can do about the weather. That is British. We can do little or nothing about the strength of the pound, as this Government have handed over the control of that to the Bank of England. But we can do
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something about the cost of staying in a hotel. In fact, 17.5 per cent. of the cost, or nearly a fifth of the total price, is VAT.
I feel that we should now take cognisance of the law of diminishing returns. It is indisputable that the number of tourists, both domestic and foreign, in this country is falling and has been falling since the 1980s. It follows that the number of people being employed in the industry is also falling. It also follows that the profitability of the businesses involved is reducing. All this means that the Government's tax take is becoming smaller and smaller. VAT on tourism services is higher in the UK than in 13 of the 14 member states of the EC. In fact, as we heard from the noble Lord, Lord Gordon, it is twice the European Union average.
The Republic of Ireland halved its VAT in the 1980s and, as the noble Lord said, the Isle of Man did the same in 1994. In both cases, tourism was immediately seen to rise. That proves that lower tax rates can generate higher tax yields by stimulating growth in the whole sector. It follows logically that, if the price of tourism rises, both the British and the foreign tourists go elsewhere. However, the two examples I have given are of countries which do not have the charisma for the tourist that the UK has. We have heritage. We have history aplenty. We have a Royal Family with its palaces. We have ancient castles in which tourists can stay or just visit. We have pomp and ceremony. We have our arts. We have our eccentricities, such as the Loch Ness monster. In fact, we have what the people of the world want to see, as many of their own countries are not old enough to have the treasures of age that we have.
We have three options if we want to encourage tourism. First, we can do nothing and watch the tourism industry wither away; watch hoteliers large and small go bankrupt; watch large communities die, leaving only a few specialised hotels in place to cater for an even smaller number of clients. Secondly, we can reduce VAT on all parts of the tourism industry. That would be a huge step fiscally, but also probably too enormous a tax change for the Treasury to absorb in one go. However, it would have far reaching effects on employment. Thirdly, we can do what the Question asks and reduce VAT on hotel accommodation only. That would be easier to manage for Customs and Excise. It would act as a half-way house of indeterminate length for officials to monitor and it would go a long way to reducing the pressure on the industry.
According to the British Tourist Authority's report published in March this year, it is quite clear that a reduction in VAT down to 8 per cent. for accommodation would significantly reduce the UK's tourism deficit and significantly improve growth. It goes on to say that the expected income increase from such a move would be £2 billion in year one, going up to £3 billion in year three, while the loss on VAT income would be only £0.4 billion. That loss would be immediately offset by the same amount in year one, rising to nearly £0.7 billion in year 10 in indirect gains from additional income and corporation tax receipts through increased profitability and smaller social security payments, as more people are employed. So we can see that the Treasury would actually gain financially

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from such a move immediately, as would the Departments of Employment and Social Security. So why are we waiting?
As employment must be one of the central planks of any government, this by-product of more employment being created as profitability increases in the industry must be an added bonus for the scheme we are debating. Another by-product is the ability for hoteliers to expand, invest in and redecorate their hotels and thereby give the modern tourist a better standard of room and service at a more affordable price and at the same time generate work for local companies and the building trade. Interestingly, 70 per cent. of all potential tourists spoken to at overseas BTA offices said that if there was a reduction of 10 per cent. in prices in the UK they would be more likely to come here. The cost to them of coming to the UK was the single biggest factor in persuading them to go elsewhere.
It was Harold Wilson, in the 1970s, who showed everyone that it was possible to go abroad more cheaply with a package tour than it was to stay in this country and he did that at a time when you were allowed to take only £50 out of the country in a year. From then on the hotel industry in the UK needed to and should have smartened up its act. It took a long time for many British tourists and the hoteliers themselves to accept this principle. But now Blackpool and the many other popular resorts of the 1970s, Butlin's and other great British holiday traditions are struggling to survive, let alone bring back their old clients.
Times have changed. The tourist of today expects a higher standard of service and better accommodation than is all too often found. The only way that resort towns, remote Scottish holiday islands, hotels in the West Country and other remote parts of the UK can survive is by providing what the new Cool Britannia tourist wants, and that must be provided at the right price. That price is lower than today's price. That price must be lower, or at least comparable, with what we have to pay when we go abroad.
It is surely nonsense that it is cheaper to go on holiday abroad, when a plane journey is necessary, than it is to go by rail or car on holiday in our own country. The only way to correct that is for the Treasury to take a gamble, for once in its life—a gamble, as the figures clearly show, which will pay off for the tourist industry and the Treasury. In fact, it is not a gamble at all because it is an absolute certainty. The Government must do something to save this important industry, and they must do it soon.
If the noble Lord the Minister who will reply gave the idea his support, it would be a tremendous signal to the whole industry to get its act in order for the 1999 season. The Government claim to be revitalising the country with new ideas and new visions. Now is the time for them to show that they are a forward-looking Government. Now is the time for them to prove that they have the guts to go where no government have gone before.
I trust that the Government will take up the mantle and the challenge of the noble Lord, Lord Gordon of Strathblane, who is after all an ardent supporter of the
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Government, and will accept the principles that he has set down in the debate tonight. Therefore, I look forward to hearing the Minister's reply and affirmation of the laudable ideas that he will hear from all sides of your Lordships' House, ideas for the rebirth of the tourist industry in the United Kingdom, which have the support of the British Tourist Authority. After all, that organisation is the expert in the field.
6.11 p.m.
Lord Nunburnholme: My Lords, with your permission I should also like to concentrate on tourism. The noble Lord, Lord Gordon of Strathblane, and my noble friend Lord Rowallan have more or less covered everything that I was going to say. I have been working on my speech for about three weeks. I can put forward some figures, in addition to the figures that they have put forward, which come from the British Hospitality Association and cover the years up to 1996.
I had thought that the average rate in Europe was 8.5, but apparently it is 8.9—I bow to the noble Lord's figure—and our rate is 17.5. If the figure were
8 per cent., Customs & Excise would lose £400 million per annum. However, the equation becomes more simplified. The increase in corporation tax and income tax receipts thereby will compensate and cover the full amount in the first year. That is what noble Lords say. And that is apart from the savings in social security payments to the unemployed. Within 10 years there will be further increases of revenues to the tune of something like £300 million per annum minimum. I would put it much higher.
On Ireland, I can add to the information which the noble Lord has given. In Ireland tourism accounts for 6.4 per cent. of GNP and 8.3 per cent. of employment. By 1996 visitors to Ireland had increased to 4.7 million and its own population is only 3.6 million. In 1986 Irish residents spent 150 per cent. more on holidays abroad than on holidays at home. By 1991 that was reduced to 80 per cent. The VAT receipts doubled between 1984 and 1993.
Tourism is highly price-sensitive. For 25 years I delivered high quality goods to well over 500—though I never counted—hotels and restaurants from the south of London to the west of Glasgow. In general I was aiming for the higher end of the market. Very quickly I discovered that there is a definite grading system, as one can imagine, and the first thing I looked for when looking at a restaurant was the type of cars in the car-park—Bentleys, Rolls-Royces, Mercedes-Benz, BMWs. That was my market because I dealt with the top end.
I now turn to Portugal, which has not yet been mentioned. The tourist industry in Portugal today is not recognisable from the situation 20 years ago. There are 9 million visitors to Portugal per annum. The VAT on accommodation is the lowest except for Norway and the entire population is only 9 million.
The catering trade is a useful start-up, as has been said, for the young unemployed. It can be the first foot on the ladder. Incidentally, I know a lot of chefs, restaurateurs and staff and I can tell your Lordships that

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the staff in this House are the finest that I have ever seen. Since 1979 in this country, as has been said, there has been a trade imbalance in tourism. As the noble Lord said, it is a business. In a survey one-third of UK residents stated that they would be much more likely to have a holiday in Britain if the rate came down. A further 36 per cent. said that they would be "slightly more likely" to do so. The Portuguese VAT rate is less than one-third of the UK rate. The entire economy of the Algarve is based on golf, hotel complexes and ex-patriots eating in the plethora of restaurants that have sprung up over the past 20 years.
I started in the tourist business some 50 years ago as a car-park attendant on the opening day of the stately home business as we know it today. Earnings to the Exchequer have been enormous. I suggest to your Lordships that we take a gamble or a punt and not even have 8 per cent. VAT, particularly on accommodation. I do not believe it would cost us a penny.
Lastly, there is a lot of inward investment—hoteliers' money—waiting in the wings. But they are also awaiting a declaration on whether we will equalise up corporation tax to EU levels. If that is done, those potential investors will look for a more profitable market away from this country. With your Lordships' permission, I repeat that tourism is a highly price-sensitive business.
6.18 p.m.
Lord Cochrane of Cults: My Lords, I must make my customary declaration of interest. As many noble Lords will know, I am still actively engaged with caravan business. It falls to me, happily, to congratulate my noble friend Lord Nunburnholme on his excellent speech, which gives a new perspective on the problems of tourism and adds greatly to the views that we have heard expressed from time to time in your Lordships' House from the usual suspects. If one looks at those who spoke in the last debate on tourism in April, one can see that a good number are here again tonight. I am glad to see the noble Lord, Lord McIntosh of Haringey, once again at the crease.
I welcome the Unstarred Question of the noble Lord, Lord Gordon of Strathblane. It is particularly important that the noble Lord has raised this point, and more so that he has raised it from the authoritative position of chairman of the Scottish Tourist Board, a body close to my heart.
I mention one slight difference that I have with the noble Lord, who has drafted his Unstarred Question a little narrowly. With hindsight, perhaps he will agree that the word "hotel" could usefully have been omitted. I shall seek to explain to your Lordships why I believe that that is so. There is no doubt that hotels are the most obvious source of accommodation when one is away from home or on holiday. However, an enormous sector, the caravan sector, which is predominantly devoted to self-catering accommodation also exists. I shall not labour the point with a mass of figures. They have been provided by those far better informed than myself. I have always felt that your Lordships may be able to
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stand three figures, after which they are rather turned off. However, caravans provide 40 per cent. of the accommodation in the self-catering sector. In total that amounts to some 13 million bed nights per year. There are about 18 or 20 noble Lords present today in this debate. Theoretically, if the population of the United Kingdom stays in a caravan for one night every four years, it means that on the law of averages four or so of us should have done so in the past 12 months. I admit that I am not one who has done so, but I see a great deal of the other end of the business.
Were a concession to be granted by the Treasury on the terms suggested by the noble Lord, Lord Gordon, I suggest that omitting the caravan sector would be unfair. We provide an enormous amount of accommodation. As my noble friend Lord Rowallan said, VAT takes an unconscionable slice out of what one pays. If one considers Peers' current overnight allowance of £80.50, according to my calculation £11.99 of that goes straight to the Treasury in VAT. That is quite a large amount. If it is not agreed that accommodation includes the caravan sector, we shall be playing on a "cloth untrue".
The cost of holidays is extremely price sensitive. We have great difficulty with the tour operators' margin scheme, about which the noble Lord, Lord McIntosh, has heard me speak. It is an excellent European Community scheme, but to operate successfully and fairly requires that VAT rates are broadly equalised across the participating countries. When we have a high rate, and many of our citizens visit countries with low rates, the effect is that the scheme subsidises them to go on holiday abroad in a low-rated country and penalises the citizens of higher rated countries who wish to come to this country. That is rather perverse, and, I think, could be fairly described as being a "twisted cue".
Finally, will the new VAT grouping rule moderate the effect of transfer pricing and similar financial manoeuvres by the vertically integrated major tour operators who provide so much of the outgoing tourism in this country? It would be invidious to mention names. However, there is immense complexity in the rules of the tour operators' margin scheme. From memory, in order to calculate one's liability there are some 22 steps of calculation. Perhaps I may explain the margin scheme. Tour operators pay VAT only on the profits they make on an individual holiday, plus the VAT on the foreign accommodation. That is non-recoverable but amounts to about 5 per cent. Accommodation is normally about one third of the total cost of the holiday. That is a generality. Therefore holidays sold at a big discount will attract a refund of VAT. As well as the "cloth untrue" and the "twisted cue" previously mentioned, that is the clincher: the "elliptical billiard balls".
I hope for better things. I am sure that with the noble Lord, Lord Gordon, at the helm, and with the Scottish parliament, tourism has much to look forward to.
6.25 p.m.
Lord Montague of Oxford: My Lords, first, I congratulate my noble friend Lord Gordon on bringing

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the subject to our attention today. Secondly, I congratulate the noble Lord, Lord Nunburnholme, on his maiden speech. He made many important points. Perhaps I may refer to one of them. He kindly paid a compliment to the staff of this House, which was justified, I am sure we all agree.
It is timely for us to put our minds round the future of tourism. It is a natural growth industry as long as we nurture it with care. Before making some suggestions as to where the Government should direct attention, including a proposal that variable VAT rates should be implemented, I believe that it is appropriate to look at the industry from the point of view of the tourists. As we have heard already, service in many establishments is still poor, slow and lacking in charm. "Have a nice day", "Have a nice time", said with sincerity gives a visitor an uplift. As regards dirt, tourists make a mess. Any gathering of people does. Disney's theme parks have demonstrated that their parks and hotels can be almost impeccable. They are famed for it. They shame too many establishments in our country. Many toilet facilities are grubby. Hotels have windows which do not open to let in cool air in the summer, or cool air in the winter where there are no room thermostats and central heating can become stifling, ruining a good night's sleep. I refer to establishments which over price, where the final bill for a family makes them decide to tell their friends that they are not going back there. And then there are the rip-offs. Particularly disgraceful are the places which put a gratuity charge on a bill—a questionable practice about which the noble Viscount, Lord Bradford, himself a London restaurant and Shropshire stately home operator has frequently talked in this House—and, in addition, leave the total open on credit cards, inviting yet a further gratuity to be added. It is quite disgraceful and we should stop that. Foreign visitors who do not understand these matters pay out either from embarrassment or ignorance. I repeat: it is a shameful practice. Those are some of the matters that the industry should correct.
What about the Government? First, it is not true that the Government have been doing little. It could be argued that more money has gone into tourist attractions than at any time. The Heritage Lottery Fund, the Millennium Commission and the Sports Council have combined to give grants in excess of £2 billion either for improving existing theatres, parks, galleries and sporting facilities, or for creating new ones such as the great new V&A Modern Art Gallery to open on the site of the Bankside Power Station in London, the Lowry Centre in Manchester, and major tourist developments in Portsmouth, Birmingham, and Cardiff. The list is endless in our towns, cities and villages. Lottery money is the friend of leisure and pleasure, which is as it should be as we punters all pursue the lottery dream. All that is at a time when the tourist industry thrives. I am a little critical of those who suggest that it is not thriving at present. However, there is one big black spot—our seaside resorts. Without question, they need urgent help, as the Labour Party's decision to absent itself from Blackpool—it is to be hoped temporarily—demonstrates.
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It is against that background that we are asked to comment on the BTA proposal to reduce VAT rates on the argument that the amount lost to the Exchequer from lower rates would be made up from more visitors and thus more spending. Frankly, I just do not believe it. Of course, there would be some gain, but I doubt that in itself it would add materially to the number of visits or visitors. More importantly, it would be untargeted. London, the biggest source of tourism revenue, does not need any help. I see no point at all in considering any additional proposal which would further assist the capital, which in the summer is almost bursting at its seams.
The further away from London you go, the greater the need for direct government involvement. Scotland and Wales have this with the Scottish and Welsh tourist boards. In addition to the English seaside resorts, to which I have referred, our farmers, particularly our hill farmers in Cumbria, are having a dreadful time, and can benefit from some income from what is known as "agri-tourism". Wales and Scotland are blessed with grants for capital developments, known as Section 4, so they can help those sectors. The last government, unwisely in my view, terminated them for England. It is time to reintroduce them for small enterprises, and I do mean very small enterprises, in the English seaside resorts, and in Cumbria, for example. A large sum of money would not be involved—£5 million would be adequate to act as the catalyst which is needed. Only a minor amount of the total capital need be considered. Ordinary commercial lending, plus part from the beneficiary, should provide the balance. I strongly urge that the responsible government department considers this, and ask my noble friend the Minister to bring this to its attention.
Briefly, there are some further matters to which the Government should also attend. They should end the confusion about the plethora of signs, stars, crowns, and statements like "commended" which confuse the public about the quality standards of hotels.
A clear statement is now required with regard to the co-ordination of tourism in England. It must embrace all local authorities as their expenditure at a conservative estimate is circa 15 times that of the present national tourist board.
We should ensure that planning applications for extending present sites are made significantly easier. It is in the industry's interest not to allow further development on greenfield sites.
We should also use all the powers possible to stop European employment legislation making employment costs more expensive or less flexible
I come now to a proposal that I think is more important than the variation in VAT. We should give benefit on business rateable valuation to industries which earn significant overseas earnings; for example, hotels and tourism generally.
Finally, we should sort out the future of the English Tourist Board and the BTA. The co-operation which has been started between the British Council and the BTA is encouraging. The BTA has far too many overseas offices, which is an old-fashioned approach. There are

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currently over 40. This could be cut to under 20 and the finance released used to assist the areas of England to which I have referred.
We have been awaiting action on tourism for more than six months. It is good that we have a new tourism Minister, Janet Anderson, of whom we all have great expectations.
6.33 p.m.
Lord Mountevans: My Lords, to follow a former chairman of the national tourist board in pursuit of an Unstarred Question tabled by the present chairman of a national tourist board; to listen to an excellent maiden speech from my noble friend Lord Nunburnholme and to three other equally competent speeches by tourism operators makes me wonder why I, as a pensioner, should declare an interest. But as I have done in the past, I should, and I shall.
I am grateful to the noble Lord, Lord Gordon of Strathblane, for raising and articulating the argument that a cut in VAT would be good for our tourism business. I think that he put his arguments very well. However, some of his arguments were hypothetical. I had sympathy as a government Back-Bencher, and now that I am an opposition Back-Bencher I still have sympathy, with those who dismiss hypothetical arguments.
Plausible arguments have been made for cutting the tax on accommodation or, as my noble friend Lord Cochrane of Cults reminded us, on hotel accommodation. My first concern is whether that saving would be passed on to the consumer. There is evidence in this country—some of your Lordships may remember this—that a cut in duty is not always passed on to the consumer. I recall a cut in the duty on beer. I am indebted to the VAT authorities for reminding me of the cut in duty on sparkling wine. What happened? Were those cuts in duty passed on to us or to any other consumer? No; mostly they were absorbed by the suppliers and the retailers and eventually, of course, benefited the shareholders.
Alternatively, if the VAT on hotel accommodation were to be cut, would the duty be replaced by a bed tax? That is something of which we must be aware. Only a couple of months ago we debated, in the context of the Scotland Bill, whether, if we give the Scottish parliament the ability to raise funding, it might be easier to have a bed tax. That would not be perceived as a tax by the person who pays income tax because a bed tax would be paid by the tourists, the foreigners, the visitors, or whatever one likes to call them. If Her Majesty's Government were to cut VAT on accommodation, I am concerned that that would be recycled under the new regimes with which we shall have to live in the next couple of years. This question does not apply only to Scotland. A person who has put himself forward as a potential Labour candidate for the mayoralty of London sees a bed tax as a serious revenue-raising exercise.
So I come to a different point. Government spending has increased, is increasing and will, of course, increase in the future. Increased spending requires increased
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funding. Would it not be wonderful if we gave the tourism or accommodation industry a "leg up" by cutting VAT? I have to ask: How shall we replace the revenue? A hypothetical case has been put before us. Again, I am not totally persuaded by hypothetical cases. I wish that I shared the hypothetical faith of my noble friend Lord Gordon.
6.37 p.m.
The Viscount of Falkland: My Lords, I too thank the noble Lord, Lord Gordon of Strathblane, for this opportunity to speak on tourism. Although my noble friend who normally speaks on such matters may have supported or even replaced me tonight, I have spoken previously on tourism.
I was impressed by the charming and ingenious way in which the noble Lord made his arguments. As has been mentioned, his arguments were fairly narrow, but I do not think that the debate has been any the worse for that. In fact, his arguments, which have been echoed by other noble Lords, were the subject of a report some years ago by the British Hospitality Association which endeavoured to show that if the level of VAT in this country were lowered to a level comparable to that enjoyed in other European countries, the resulting increase in trade in the hotel industry would mean a higher tax take for the Treasury. I have heard that argument before in other areas. I am thinking particularly of the film industry. I dare say that the noble Lord, Lord McIntosh of Haringey, who is to answer the debate, will have that well in mind even if he does not refer to it directly.
The overall assumption that a reduction in VAT would be directly reflected in the prices offered to visitors must be open to sceptical questioning. A number of hotels in London, particularly the five-star variety which charge, say, £200 per night for a room, quote their prices exclusive of VAT. But the vast majority of hotels both in and outside London provide accommodation inclusive of VAT. When in the past VAT has been increased, as one would expect that increase is passed on directly to the consumer. I do not think there has ever been a decrease in the rate of VAT. Is it being sceptical to think that that decrease would not be passed on to the customer? Would hoteliers pass on the difference in rate to the bottom line of their profits? I am inclined to that view because London hotels provide for their shareholders the highest operating margins in any capital city in Europe. I am told that that information appears in the Arthur Andersen European Survey. Being sceptical still further, one might say that it is those who are making the largest profits who complain that their prices are too high as a result of tax levels. Even taking into account the charming way in which the noble Lord, Lord Gordon, presented his arguments, one could be forgiven for being slightly sceptical. I shall not continue in that vein since I am sure the noble Lord, Lord McIntosh, will take up at least some of that line of thinking.
The cost of labour in Europe is generally considerably higher than in the United Kingdom. There are many elements of cost that make up the overall pricing of hotel accommodation. Depending on one's point of

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view, one could make perfectly good arguments for one area or another, if attended to, resulting in a beneficial package being offered to customers.
What are the real factors governing tourism in the United Kingdom? One factor must surely be the fluctuating exchange rate, the effects of which have been felt recently when sterling has been strong. It has deterred foreign visitors coming to this country and spending money here, particularly at the lower levels. It has probably not affected business visitors to the five-star hotels in London so much. It has encouraged me, among others, to take the shortest trip to Dover in my car or on my motor-cycle in order to benefit from the improved exchange rate in France. But it is not just a matter of the exchange rate. I tend to go to France anyway since I receive better value there and find the service better. But that is another area.
Another equally important factor affecting the enjoyment of tourism in this country, touched upon by the noble Lord, Lord Montague, is the registration of accommodation. So far as I know, there is no obligation in this country for those who provide accommodation to place their names on a register. My car has been full of guide books over the years, all equally confusing. Again, it is different in France where guide books are generally of a very high standard at all levels and, even if one does not speak French, one can understand them. In this country establishments are classified according to a star system. There is a ludicrous situation in this country whereby tourist boards have introduced a crown system for accommodation. The confusion is added to when a two-star hotel is granted four crowns and a four-star hotel is granted two crowns. There is now an attempt to introduce a uniform rating system which it is to be hoped will benefit the situation. In all fairness it should be said that a different system is in preparation for Scotland. The accuracy and reliability of guide books is of the utmost importance.
We on these Benches have a policy, though I do not know whether, given the new arrangements, it will influence the Government in any way. We should require all providers of accommodation offering five bedrooms or more to be listed in a UK-wide register. We should require the four national tourist boards to implement and regulate a national grading scheme. But that is for the future, and we shall see what happens.
This is a difficult area. I do not want to be too rude about Britain, but I have travelled extensively in France this year and have found, taking equivalent towns on either side of the Channel, that the French provide a very much better service at all levels, both in restaurants and hotels. There is no escaping that. I know that one risks being lynched in this House if one says that anything is better in France than it is here, but that is the case. Roads are better; everything is better in terms of food and accommodation. There is no getting away from it. It is no good trying to pretend. We have something special, but we do not exploit it properly.
I hope that I have done justice my noble friend Lord Thurso. I am sure that he would have done better; however, I know that he agrees with almost all the points I have made—except perhaps for the use of a motor-cycle when going on holiday.
6.46 p.m.
Viscount Astor: My Lords, I, too, wish to thank the noble Lord, Lord Gordon of Strathblane, for providing this opportunity to, as it was described by my noble friend Lord Cochrane of Cults, "round up the usual suspects". I congratulate my noble friend Lord Nunburnholme on his maiden speech. He has joined "the usual suspects" and will be rounded up when we come to debate tourism in this House, as we do on a fairly regular basis.
I, too, must declare an interest. I am involved in the hotel and leisure business. The noble Lord, Lord Gordon, has put an interesting Question. It is rather a joy, since it is always interesting to be able to disagree with a Question immediately upon looking at it. That is what I am about to do. I do not believe that it is relevant to the industry as a whole. I am not even sure whether it would be legal for the Government to impose two rates of VAT, or indeed whether it is legal for the Government to lower a VAT rate having set it in line with other rates. I know that the Government can lower the VAT rate as a whole; however, I believe I am right in saying that, having set a rate, they cannot merely pick certain parts of an industry and lower that rate. Perhaps the Minister will comment on that point.
The most important factor in relation to this industry is a strong economy. The industry lacked investment in the past because the returns were not good enough. There has been a great deal of investment in the past 10 years. Of course, the industry is subject to problems. It is presently subject to the strong pound; it is always subject to fluctuations in the exchange rate. As the noble Viscount, Lord Falkland, said, there has never been an industry that has not put the argument that lower taxes would lead to double the profits. We have heard it from almost every industry in the land at one time or another—whether it is a question of taxes, duty or VAT. I am an economist, and I understand that economics are not that simple.
My noble friend Lord Rowallan said that the Treasury should "take a gamble", and that "it was a certainty". With great respect to my noble friend it can be either a gamble or a certainty, but it cannot be both. I shall not even touch on the subject of hypothecation and the Treasury. We should concentrate on what can be done, and on the role that can be played by the Government in relation to this industry. The industry is affected by the enormous amount of regulations which have been pouring out of Europe. When my party was in power, we had a deregulation initiative; we tried to cut regulations affecting the industry. In many cases we failed, and we should admit it. When I was at the Department of National Heritage there seemed to be a tide of regulations that we attempted to control. I often felt that we were being overwhelmed by them. I shall be interested to see whether the noble Lord, Lord McIntosh, believes he has been more successful.
For example, the working time directive could be enormously damaging to the hotel industry. One of our successes in this country is mobility of labour in the hotel industry working flexible hours. Without that we would not have a tourism industry. The Government must champion the cause of the industry in Brussels.

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It is an expensive industry. That is why there has been a lack of investment. The costs of getting planning permission are too high, the costs of buying sites are too high as are the costs of appeals and of building. It is an expensive industry to do business in.
However, there have been notable exceptions with those who have invested, looked at their products, and brought in new concepts. They have made money. London has done exceptionally well over the past five years, but so have other places. Let us look at new concepts such as Center-Parcs, which have been very successful. It just shows what one can do in an industry with a new concept and with investment.
We must improve the product. The noble Lord, Lord Montague of Oxford, referred to the crown scheme. Could the Minister comment on progress? The Scots have decided to opt out of the new scheme and have their own separate one. That is disappointing. Perhaps the Minister would comment on where we are with the new scheme. Will it be operated with the AA and the RAC? Will there be one national scheme that we all understand?
That leads me to the role of the BTA. I believe that the organisation does a good job in representing the country abroad. But what about the English Tourist Board? Will it remain or be merged with the BTA? How will regional tourist boards be funded? I understand that there is a BTA report. Could the Minister comment on it? The BTA has been successful in raising money by matching spending with the industry and being prepared to back those who are willing to invest.
As the noble Lord, Lord Montague, said, there is an enormous amount of local government spending in the industry, it is staggering how much authorities spend. It is much more than the Government and the BTA spend; they spend the same amount as the industry. It is extraordinary how they spend it in different ways. There is a lack of co-ordination. Could the Government see how this could be improved on, take a lead and encourage local authorities to spend the money together? Too many local authorities concentrate, perfectly reasonably, on promoting their own area without any idea of what is happening in other areas, and how it relates to the industry as a whole.
I began by saying that this industry needs investment. It also needs improvement on training; it needs to raise its standards and to be promoted. There must be a good incentive for people to invest in the industry. I do not believe it needs more government money than is provided at the moment. It needs government support and encouragement. The noble Lord, Lord Gordon, said that there was a Minister for Tourism, but there was a Minister for Tourism before. I was that Minister at one point and the noble Viscount, Lord Ullswater, who is present in the Chamber, was also responsible for tourism in his day. The industry has been made a priority by every government.
I return to the theme of investment. The Government must create the conditions so that the industry can get on with the job and encourage investment. We can attract people to this country if we have a good product to sell. I look forward to hearing the Minister's speech.
6.54 p.m.
Lord McIntosh of Haringey: My Lords, I too am grateful to my noble friend Lord Gordon of Strathblane for introducing the subject and giving an opportunity for an interesting debate. It included an extremely well informed maiden speech from the noble Lord, Lord Nunburnholme. I congratulate him on it. It is always helpful to have people who know their subject inside out, in his case from a background of 50 years. I hope he will feel able to speak on this and other subjects in the future.
However, I do not recognise the description of the state of the tourist industry which my noble friend Lord Gordon gave. He complained about the drop in the UK share of world tourism. Still less do I recognise the doom scenario given by the noble Lord, Lord Rowallan, who seemed to think that the whole of the UK tourist industry was grinding to a halt. In fact, the history of tourism in this country in recent years is of almost unqualified success. Recently, the past three years, 1995–1997 have been real boom years. In 1997 there were 26 million visitors to this country, double the number in 1980. In the past five years, the number of visitors from Europe has increased by 68 per cent. and visitors from America have increased. There has been a record spend of £13 billion by visitors to this country. Britain is now the fifth most popular tourist destination in the world. In no sense is that a record of failure. I hope that the message which goes out from this debate will be of congratulation to the tourism industry rather than complaint.
It is not just me saying that; I am confirmed in it because the British Tourist Authority put out a news release in May this year, two months after the report was published which was the basis of my noble friend's Question. It said that despite all the problems there have been—and we must allow for a certain amount of flowery language from my old friend David Quarmby, the Chairman of the British Tourist Authority—Britain is a "fashionable, 'must-see' destination". The variety and diversity of tourist attractions are one of its strengths. He said, quite rightly, that the millennium will see more activity by this country than any other in the world. It will have a knock-on effect not just for tourism in the year 2000 but in the years into the next century. He said that our great strengths of countryside, culture and tradition would be of enormous value to us.
I know that there are complaints about the difficulties of tourism in this current year, although the figures for the first six months do not show them. There has been a strong pound; it has never varied against the dollar, but it is down now against European currencies to the same level as it was at the last election in May 1997. I am told that there was a loss of tourism because of the World Cup. There must have been a certain loss of tourism because we had no summer. It must have had an effect.
However, at the same time in this country we have had not just the vast increase in tourism to which I referred but specifically in hotels we have had record occupancy rates and room yields. That is because not only the Government but also many others have invested in tourism and the tourism strategy. The noble Viscount, Lord Astor, rightly referred to the huge local government spend on tourist attractions.

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My noble friend Lord Montague mentioned the billions of pounds of lottery-assisted investment in this country. The Department of Culture, Media and Sport which is responsible for tourism set up, immediately after the election, working groups not of officials but people from the tourist industry itself who covered the whole range of subjects: tourism, promoting the quality of tourism, development, opportunities for young people, training, marketing, employment prospects to which my noble friend Lord Gordon rightly referred, and many others. The working groups have produced recommendations from which, in the next few months, my honourable friend Janet Anderson, Parliamentary Under-Secretary with responsibility for tourism, will publish a comprehensive strategy paper.
The noble Viscount, Lord Astor, is right when he says that a strong and stable economy is required, and that is the Government's firm intention in creating conditions for tourism growth.
It is perfectly true that 12 countries in the European Union impose a reduced rate of value added tax on hotel accommodation, which is perfectly legal under EU legislation. The reduced rate varies from 3 per cent. in Luxembourg to 12.5 per cent. in Ireland, which has been used as an example of how important is VAT. The noble Lord, Lord Mountevans, rightly pointed out that some countries that have the lowest VAT tend to offset it by having a bed tax.
It is not just the higher VAT itself that is important. This country has the widest range of zero-rated items in Europe. Food and drink account for 23 per cent. of tourist expenditure in this country. Passenger transport is also zero rated, and internal transport accounts for 16 per cent. of tourist spend in this country. Children's clothing is also zero rated, although that may be less important.
We also have the highest VAT threshold for small businesses: of £50,000. That affects cottage lets, bed-and-breakfasts, guest houses and others falling within the category of accommodation. We have unprecedented low rates of business tax—the lowest rate of corporation tax ever and lower business taxes than most of the European countries cited as examples. The pattern of taxation in this country and in other European countries is by no means as one-sided as appeared from some speeches this evening.
The report produced by Deloitte & Touche in April for the tax working group of the British Tourist Authority stated that a reduction in VAT on hotel accommodation to 8 per cent. would cost the Exchequer £400 million but would be offset by increased spending on tourism and would therefore improve the yield from corporation tax and achieve reductions in social security payments. That is legitimate lobbying and I do not complain about it, but it is no more than lobbying and does not stand examination. The noble Lord, Lord Cochrane of Cults, used the fanciful statistic of each person in this country staying in a caravan one night in four years. That is about the level of some of the statistics in the report.
The noble Lord, Lord Rowallan, seems to believe that if one cuts the rate of VAT on hotel accommodation by 10 per cent., one is somehow cutting prices by the same
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percentage. Nothing could be further from the truth. Only 34 per cent. of tourism spend in this country is on hotel accommodation. If VAT were cut to 8 per cent., that would be a reduction of 3 per cent. in total tourism spend. If it were reduced to the average of 12.5 per cent., to which my noble friend Lord Gordon of Strathblane referred, that would produce a cut of less than 2 per cent. in total spend. That is the absolute maximum because 12 per cent. of expenditure on hotels is by UK business visitors who can recoup the tax anyway.
Some £427 million is spent by overseas conference visitors to this country, many of whom can recover VAT. Also, 18 per cent. of hotel expenditure involves establishments that are below the VAT threshold. The effect on prices of cuts in VAT of the kind proposed would be only 1 per cent. or 2 per cent., to be generous. Noble Lords are right to say that tourism expenditure is price sensitive but the claim that matters can be improved by the sort of cut in VAT proposed is not proven. In fact, it is highly improbable.
I want to conclude on a friendlier note but before I do so, I will refer to some particular points raised. The noble Viscount, Lord Falkland, and the noble Lord, Lord Mountevans, questioned whether any cut in VAT would be passed on. When we introduced the cut on long-term hotel stays of more than one month, the evidence was that saving did not appear to be passed on. The noble Lord, Lord Cochrane, asked about the tour operators' margin scheme, which is a simplification that creates savings. It is true that there is some distortion where there are different standard rates but the scheme is based on charging the standard rate on hotel accommodation, not any reduced rate. As people usually use tour operators in their own countries, I doubt that the effect of the tour operators' margin scheme is significant.
The noble Viscounts, Lord Falkland and Lord Astor, and my noble friend Lord Montague, referred to the crown grading scheme. Good progress is being made with that in England and Wales, with agreement between the RAC, the AA and the English Tourist Board. It will take a long time to put that scheme in place. It will be advertised, and only then can it be brought into force. The noble Viscount, Lord Astor, referred also to the danger of over-regulation, but he is not right about the working-time regulations, which are very simple and afford a minimum of justice. I do not accept any criticism of them.
I am sceptical about the claims made for the potential effects of a cut in VAT on hotel accommodation in what is already a highly successful tourist industry. However, Customs & Excise are studying the BTA report carefully, as are Treasury Ministers, and they will give it every possible and sympathetic consideration. But VAT is a significant part of our revenue and hotel accommodation is a significant part of VAT receipts. It is our duty to balance that with any claimed savings that might result from a change in VAT on hotel accommodation.
House adjourned at ten minutes past seven o'clock.