Lords Sitting of 22 July 1999

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by The Lord Bishop of Hereford): The LORD CHANCELLOR on the Woolsack.
Lord Laird
John Dunn Laird, Esquire, having been created Baron Laird, of Artigarvan in the County of Tyrone, for life—Was, in his robes, introduced between the Lord Cooke of Islandreagh and the Lord Molyneaux of Killead.

Lord Rogan
Dennis Robert David Rogan, Esquire, having been created Baron Rogan, of Lower Iveagh in the County of Down, for life—Was, in his robes, introduced between the Lord Cooke of Islandreagh and the Lord Molyneaux of Killead.
Lord Marks of Broughton Lord Marks of Broughton—Sat first in Parliament after the death of his father.
Lord Killanin Lord Killanin—Sat first in Parliament after the death of his father.

Listed Building Repairs: VAT
3.14 p.m.
Viscount Gage Viscount Gage asked Her Majesty's Government:
Whether they will consider lowering the rate of VAT on repairs to listed buildings.
Lord McIntosh of Haringey: No, my Lords. European agreements mean that we cannot introduce a reduced VAT rate for repairs to listed buildings as such. It is Government policy to offer financial assistance to the heritage through targeted conservation grants and capital taxation relief.
Viscount Gage: My Lords, does the Minister agree that the charging of the full rate of VAT on the repair of listed buildings which do not generate profit is an anomaly compared to the zero rating on improvements where there is a potential for gain? Does he further agree that this anomaly is responsible for the lack of viability of the built heritage? Does he think that that may have some bearing on the development of brownfield sites?
Lord McIntosh of Haringey: My Lords, the noble Lord suggested that it is an anomaly for VAT to be charged on repairs where there is no opportunity for gain and for no VAT to be charged on improvements where there is an opportunity for gain. It could be argued that it is an anomaly to charge VAT on repairs where there is no opportunity for gain or on improvements where there is an opportunity for gain.
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The distinction is not between greenfield or brownfield sites, or whether or not there is an opportunity for gain, but between repair and improvement. That distinction goes back to the noble Lord, Lord Lawson of Blaby, in 1984.
The Lord Bishop of Hereford: My Lords, is the Minister aware that the VAT burden on repairs to church buildings is currently running at approximately £18 million a year, which is almost as much as the £20 million a year which the Churches are receiving in state aid? It makes very little sense in a partnership between Church and state for the state to take away with the one hand almost as much as it is giving with the other. Is the Minister able and willing to further qualify his Answer about European directives? Will he commit the Government to supporting the proposal, when it comes to the Council of Ministers, which has been adopted by the European Parliament of adding repairs to church buildings to the list of labour-intensive services covered by Annexe H to the Sixth Directive, which entitles lower rates of VAT to be charged? Is the Minister further aware that the present heavy burden of VAT on church repairs is encouraging the replacement of ancient fabric, rather than the much more to be preferred policy of conservation?
Lord McIntosh of Haringey: My Lords. I am grateful to the right reverend Prelate for drawing attention to the £20 million which has been offered to churches by English Heritage and by the Heritage Lottery Fund in the current financial year. He could have added to that amount—as he did not, I will—the £2.4 million which has been offered to the Churches Conservation Trust by the Department of Culture, Media and Sport. From a heritage point of view, we do not see any reason why there should be a distinction between listed churches and other listed buildings; all are valuable. Annexe H to the Sixth Directive cannot be applied retrospectively; in other words, it is not possible for us to add to the list of exemptions which existed before 1992, when Annexe H was adopted. The exemptions which existed at that time were exempted on a transitional basis.
Lord Saatchi: My Lords, does the Minister's reluctance on this issue stem from his statement earlier this week that:
"The Government do not like abolishing taxes if they can possibly avoid it".
Does not this highlight people's anxieties about tax harmonisation? Whenever a tax increase is proposed the Government accept it and blame it on Brussels; whenever a tax cut is proposed the Government reject it on the same grounds. Is not the charm of this procedure from the Government's point of view that it enables them to accept or reject any legislation from Europe—on tax, unions, working practices or whatever—while shrugging their shoulders and saying, "Not me, Guv"?
Lord McIntosh of Haringey: My Lords, what I actually said was that the Treasury does not like it. That is what is being corrected in Hansard. It will teach me not to make jokes.

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On the second point, there is a limited number of European provisions, notably in VAT legislation, which we are obliged to adopt. Where we are not obliged to adopt tax or any other legislative provisions, we consider them carefully on their merits before making a decision in the best interests of this country.
Lord Kennet: My Lords, this matter has now rumbled on for more than 30 years. Is my noble friend aware that I have recently received a letter from his colleague, a Treasury Minister in the House of Commons, not praying in evidence that we cannot change the position because of Commission rules, but saying that we do not want to change it because there is no obvious gain in productivity if we do. Does my noble friend agree with that judgment? Will he accept that the main purpose of such a change would be to benefit the heritage and therefore—to be grasping about it—to bring in more tourists and more money from them?
Lord McIntosh of Haringey: My Lords, I cannot comment on a letter that I have not seen, particularly when I have not seen the letter from my noble friend to which it is a response. It sounds from what he is saying as if it refers to the proposal for an experimental reduced rate for building work. But that has not been agreed. If it were agreed, it could exist for only three years. As I made clear, we believe that targeted conservation grants and capital taxation reliefs are a more appropriate method. We do not believe that there will be a significant employment benefit from the proposal to which my noble friend refers.
Baroness Maddock: My Lords, I hear what the Minister says about VAT and older buildings. However, does he agree that it is urgent that we examine the discrepancy of nil VAT on new build, but VAT on the refurbishment of all types of older buildings? If we are serious about urban renaissance and protecting our countryside, we need to examine this issue. I am sure that the Minister is well aware of the recommendation in the report of the noble Lord, Lord Rogers of Riverside, Towards an Urban Renaissance, that VAT should be harmonised across the two sectors and that some of the money raised should be put into urban renaissance projects. Will the Minister reassure the House that the Government will examine the matter urgently?
Lord McIntosh of Haringey: My Lords, indeed I am aware of my noble friend's Urban Task Force report and of the recommendations contained in it. The Government's response to the report will have to take account of the realities of European VAT legislation. I repeat what I said to the noble Viscount, Lord Gage. The distinction between repairs and improvements, although it may be anomalous, is not a distinction between greenfield and brownfield sites. It is not an urban/rural issue. It is an issue that arose because the then Chancellor, after 10 years' experience of the tax,
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came to the conclusion that it was not possible to make a realistic and firm distinction between repairs and improvements which was enforceable in law.

Hong Kong: Political and Judicial Developments
3.22 p.m.
Lord Howell of Guildford Lord Howell of Guildford asked Her Majesty's Government:
What further plans they have for monitoring political and judicial developments in Hong Kong.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Symons of Vernham Dean): My Lords, as co-signatory to the Joint Declaration, we take seriously our political and moral responsibilities towards the people of Hong Kong. Our assessment of events in Hong Kong during the first half of 1999 will be published in the fifth six-monthly report to Parliament today. We will continue to follow closely developments in Hong Kong by maintaining a dedicated staff in both London and Hong Kong to follow the situation there.
Lord Howell of Guildford: My Lords, I am grateful to the Minister for that reply. I appreciate that Hong Kong is now part of the sovereign territory of China. However, the Minister will recall that, at the time of the hand-over, a promise went out from the two Houses of this Parliament that the people of Hong Kong would not be forgotten. Given the rather difficult times through which Hong Kong has been going—for example, there has been the question of the interpretation of the Basic Law in regard to the issue of immigration from other parts of China, and difficulties over the currency, which have been extremely skilfully managed by the Hong Kong government—does the Minister accept that there is a case for expressing, in the way she described and in every other way, our concern and sympathy, and for gaining a balanced view of what is going on in Hong Kong? Will she support the idea that the task of keeping a close watch on our friends in Hong Kong, still one of the greatest cities on earth, should be remitted to one of the committees of this House—although I appreciate that that is more a matter for this House than for the Government?
Baroness Symons of Vernham Dean: My Lords, as the noble Lord says, it is more a matter for this House. However, I re-emphasise words of the Prime Minister on Hong Kong last October. He reiterated that we retain a political and moral commitment towards Hong Kong, and that we are committed to upholding the Sino-British Joint Declaration, which is an international treaty, until the year 2047. The noble Lord raises the particular issue of the currency. The Hong Kong Special Administrative Region has responded robustly and with a high degree of autonomy to defend the Hong Kong dollar ong Honagainst attacks by speculators and to defend the fixed exchange rate with the United States dollar. There is also the question of the Court of Final Appeal and the

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Basic Law, as the noble Lord indicated. There have been expressions of anxiety about the independence of the judicial system. It is very important that those key principles are upheld in the future. We have noted the clear expressions and commitment to the rule of law from the SAR government.
Lord Borrie: My Lords, will my noble friend indicate what conditions are required of the Hong Kong authorities as to political and democratic freedoms and judicial independence if UK judges, some of whom are Members of this House, are to assist and continue to assist in the judicial work of Hong Kong?
Baroness Symons of Vernham Dean: My Lords, these are complex and difficult questions. There has been an interchange between the CFA in Hong Kong and the standing committee of the National People's Congress on the complex issues surrounding immigration, which I believe is what the noble Lord has in mind, between Hong Kong and mainland China. There are a number of different interpretations of these issues. It is clearly important that the key principles are upheld; namely, the authority and standing of the CFA, the independence of the judicial system in Hong Kong and the robustness of the rule of law there.
Baroness Williams of Crosby: My Lords, will the Minister agree that, by and large, the Basic Law has been recognised and accepted by the Republic of China to an extent that beggared expectations? But having said that, and given the statement by Martin Lee, who is perhaps the leading figure in the democracy movement in Hong Kong, that he thought the decision of the NPC to override the Court of Final Appeal constituted, to use his phrase, the beginning of the end of the rule of law in Hong Kong, will the Government, do everything possible to encourage links between Commonwealth judges and the Court of Final Appeal in order to strengthen the standing of that body?
Baroness Symons of Vernham Dean: My Lords, I, like many in this House, have the highest possible regard for Mr Martin Lee, who is very courageous in a number of the things that he says. It is the case that he has on previous occasions been rather more apocalyptic in his thoughts about what would happen next in Hong Kong, than has been the case when we have seen how matters have worked out. If the noble Baroness looks at the report, which is now in the Library of the House, she will see that there are many positive signs of the freedoms that the people of Hong Kong enjoy, and that, as she rightly notes, the Basic Law has been upheld to a remarkable degree. There are undoubtedly questions of interpretation which are difficult to resolve. However, we must hang on to what the SAR government have said about the importance of the rule of law.
Baroness Rawlings: My Lords, given the Sino-British Joint Declaration on the transfer of Hong Kong, which guaranteed the territory of 6.7 million people its capitalist freedoms and quasi-autonomy under the auspices of English common law, and given that the
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Minister in the other place expressed the highest regard for the integrity of Hong Kong's legal institutions, do Her Majesty's Government support China's challenge of a decision made by the former British colony' s highest court to dismiss common law ruling over residency rights by Hong Kong's Court of Final Appeal?
Baroness Symons of Vernham Dean: My Lords, as I have already said to the House, it is an enormously' complex and difficult area. There are a number of different interpretations. Today, when I asked exactly the same point as the noble Baroness raised just now, I was told that there were four lawyers and five opinions on the subject. That does not necessarily distinguish it from a wide range of different legal issues.
I wish to bring the noble Baroness back to the basic point: the principles on which the CFA operates in Hong Kong. They have recently been upheld by the SAR government, they have re-committed themselves to it and we welcome the SAR's assurances that their request for interpretation was based on what they termed "exceptional and unprecedented circumstances".
Lord Campbell of Alloway: My Lords, what is the—
Noble Lords: Next Question!
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, the clock has now reached 16 minutes. As the time limit is 30 minutes, perhaps it is time we moved on.

Troop Commitments
3.30 p.m.
Baroness Park of Monmouth Baroness Park of Monmouth asked Her Majesty's Government:
Whether they have sufficient trained troops available to meet their commitments in Kosovo, Bosnia and Northern Ireland in view of their commitment to provide 8,000 troops for a United Nations force anywhere in the world in the future.
The Minister of State, Ministry of Defence (Lord Gilbert): My Lords, we are able to meet our current obligations. The Memorandum of Understanding agreed with the United Nations last month is not an open commitment to provide troops. The decision to commit UK troops to UN operations remains a national one arid will be considered case by case.
Baroness Park of Monmouth: My Lords, I thank the Minister for that distinctly "un-full" reply. This morning the Secretary of State agreed that there is serious overstretch and undermanning and an unprecedented level of commitment. He said that people should not be asked to do too much. Does the Minister agree that overstretch is hitting the families harder than ever? Does

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he agree that we will not retain our trained troops and comply with the SDR unless the Government reduce their commitments and start thinking about people?
Lord Gilbert: My Lords, we have been thinking about people right from the beginning—since this Government took office. It is one of the essential elements of the Strategic Defence Review, as I am sure the noble Baroness knows. My right honourable friend the Secretary of State for Defence has made several suggestions and we are now starting a review to see where we can reduce commitments.
Lord Hardy of Wath: My Lords, does my noble friend accept that while there is enormous strain in the services—partly because of the high quality of the services—the Government have introduced ameliorative arrangements to ease the difficulties? Can my noble friend tell the House how the number of troops and personnel in training compares with the number two or three years ago?
Lord Gilbert: My Lords, I confess that I have not come to the House today armed with the number of troops in training. I shall happily give my noble friend such statistics as I can raise when I return to the department. There is no question but that the Army is suffering a considerable overstretch at the moment. However, we hope considerably to reduce the numbers of our forces in KFOR over the next few months. My right honourable friend announced his intentions only yesterday in the other place. By the end of October, all being well, we shall be down to a total of the order of 5,000 or 6,000 as against a peak figure of around 14,000.
Lord Wallace of Saltaire: My Lords, can the Minister tell us how recruitment figures are going? Part of the problem is the difficulty of filling the recruitment target. In particular, since one of the problems of recruitment has been the failure to attract adequate numbers of people from the ethnic minorities, can he tell us how the new efforts to attract more ethnic minority groups are proceeding?
Lord Gilbert: The recruitment figures are extremely healthy. They do not convey the whole picture and we have a problem with retentions. I am glad to say that for the last month for which figures are available there is a net increase in recruitment over people leaving. It may be a blip, and I would not want to put too much weight upon it. But it is encouraging that recruitment has increased substantially since the beginning of operations in Kosovo.
As to ethnic recruiting, we are doing extremely well against, I have to say, fairly modest targets. In the Household Division we have been commended for our efforts. Two special campaigns were waged in Sandwell and Newham to penetrate the ethnic communities. Both
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exercises are going forward and have many months to run but at the moment everything is looking extremely promising.
Viscount Cranborne: My Lords, can the Minister tell the House, first, what the average tour interval is now in the emergency tour plot? Secondly, can he tell us how many infantry battalions are less than 70 per cent up to establishment?
Lord Gilbert: My Lords, again I have not come armed with either of those figures. The tour plot is going down, I can tell the noble Viscount that beyond contravention.
Lord Hylton: My Lords, can the Minister say whether British forces are being withdrawn from Kosovo before KFOR has reached its agreed and planned strength? If that is the case, it seems unsatisfactory in view of the tensions that exist.
Lord Gilbert: My Lords, the total KFOR is currently around 39,000. There have been planning figures as high as 50,000 but it is not essential that we reach that. Our forces are being taken out of theatre as our allies' contributions come through, and I am glad to say that they are coming through smoothly.
Lord Burnham: My Lords, the noble Lord mentioned the figures given by the Secretary of State with regard to retentions. However, he admitted to the Commons Defence Committee that premature voluntary retirement was running ahead of recruitment. What positive steps are the Government taking to improve retention? It is much more important to have trained men than new recruits.
Lord Gilbert: My Lords, I thoroughly subscribe to the noble Lord's final proposition. It is much more important to have trained men than recruits. We have been wrestling with the problem of retentions which has been with the Armed Forces for many years. Some recent actions of my right honourable friend have been to introduce a fairer pay structure, to increase leave for people who have just come from active service abroad, and to increase the free travel arrangements for servicemen abroad. On a longer term basis, he has introduced an increase in learning arrangements, higher education arrangements, for members of the forces to facilitate, among other things, their acquisition of civilian qualifications, so putting them in a better position and, we hope, encouraging them to stay in the forces.
The Earl of Carlisle: My Lords, can the Minister inform the House how many Territorial Army personnel are serving alongside their regular counterparts in the three operational areas mentioned in the noble Baroness's Question? Will he consider, as a way of alleviating overstretch, calling up more Territorial Army

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personnel? That will in turn mean that we can put on hold some of the cuts that his department has decided to inflict on the Territorial Army.
Lord Gilbert: My Lords, as the noble Lord and the rest of the House are well aware, it is the Government's policy to modernise the Territorial Army and convert it increasingly into a specialist body of men and women. There are only a handful of Territorials in Kosovo. I shall certainly consider the noble Lord's other suggestion.

Mental Health Policy: Announcement
3.28 p.m.
Lord McNally Lord McNally asked Her Majesty's Government:
Why they did not announce their consultation paper, Managing Dangerous People with Severe Personality Disorder: Proposals for Policy Development, first to Parliament.
The Minister of State, Home Office (Lord Williams of Mostyn): My Lords, the publication of the consultation paper, Managing Dangerous People with Severe Personality Disorder: Proposals for Policy Development, was announced to Parliament on Thursday 12th July in response to a parliamentary Question from Graham Stringer, MP.
Lord McNally: My Lords, I thank the Minister for his reply, but does he agree that there were dangers in the PR exercise mounted by the Home Office on Monday in which Ministers were available from early morning until night to announce what appeared to be a solution to a very complex problem? Will Ministers take warning from the reaction to those statements by psychiatrists and organisations concerned with mental health that the Government are in danger of misrepresenting the problem and going for flip solutions which put at risk one of the most fundamental rights; namely, the right not to be imprisoned without due process? Does the Minister accept that this is not just a matter for psychiatrists but that there should be a judicial process if the Government insist on going down this road?
Lord Williams of Mostyn: My Lords, the publication of the paper was announced in the Commons on 12th July, and Jack Straw rightly made himself available for questioning on the 19th, one week later. That is part of his duty. If people get the wrong end of the stick, they may well be advised to read the document in question. That document is extremely thoughtful and addresses civil rights issues in particular; not least, it directs the attention of the reader to the European Convention on Human Rights. I give one citation from Marjorie Wallace, chief executive of SANE:
"There are a small number of people who for their own protection and the protection of others should have specialised management and help which is neither punitive nor uses stretched mental health resources".
I believe that to be absolutely consistent with our policy.
The Earl of Listowel: My Lords, does the Minister agree with the statement in the consultation paper that most of these people have a lifelong history or profound difficulties from an early age, that many are the children of violent, abusive or inadequate parents, and that some may have been removed into care? Can he assure the House that all is being done to meet the needs of such people?
Lord Williams of Mostyn: My Lords, that is precisely the purpose of the consultation document. There are a small number of people in the general community—we believe the figure to be between 300 and 600—who suffer from severe personality disorder. Sometimes I read their case files. I find them extremely worrying. Some of those people are quite likely to kill or injure innocents among our fellow citizens. I do not believe that we are entitled to do nothing about it.
Lord Cope of Berkeley: My Lords, to give us a flying start in considering the consultation document, can the Minister provide, as he has, not only an estimate of the number of unconvicted people who are likely to be locked up for life but also an estimate of the number of people in recent years who have been murdered or seriously injured by those who are known to have severe personality disorders?
Lord Williams of Mostyn: My Lords, I need to correct the noble Lord's misapprehension. I did not say that between 300 and 600 people were likely to be locked up for life, but that that number of people suffered from this particular disorder. It is notoriously well known and documented that people with this disorder have a disproportionately larger representation among those who kill. We have to think only of the recent example of the murder of Mrs Zito's husband. He was a completely innocent man who was murdered by somebody who needed treatment but did not receive it.
Lord Clement-Jones: My Lords, we may well be in danger of arguing about what constitutes a Statement to the House. We on these Benches view this as an opportunity to question the Minister and to raise issues about the consultation paper. In the light of the fact that in this House we have not had the opportunity to ask questions about the document, will the Minister, through the Government Chief Whip, make arrangements for a debate on the subject before the end of the consultation period? Will he also undertake to ensure that when the report of the review of the Mental Health Act emerges a full Statement will be made to this House which gives us the opportunity to raise issues on that Statement?
Lord Williams of Mostyn: My Lords, of course these are serious issues; but the Question did not address itself to a Statement to the House. The noble Lord, Lord McNally, asked when this matter was announced and why it was not announced in Parliament first. I repeat that it was. Debates on this consultative document, or any other matter of importance, are matters for the usual channels in the normal way.
Lord McNally: My Lords, in some of his replies today the Minister has fallen into the trap of suggesting

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that those who question this course of action are somehow willing to leave dangerous criminals loose on our streets. That is the danger of such a populist approach. As the Minister quotes one authority, perhaps I may quote Jeremy Coid of the St. Bartholomew's and the Royal London School of Medicine, who warns that the public should have no illusions about the "inexact science" of risk assessment of people with mental disorder. It is misleading for Ministers to pretend that they are doing something dramatic to make our streets safer when they are going down a very dangerous road in terms of civil liberties.
Lord Williams of Mostyn: My Lords, it is wiser to read the document which concentrates on civil rights issues, in particular in the context of Article 5 of the European Convention on Human Rights. It refers to a process of appeal and to authority to detain being subject to regular independent review. That has nothing to do with populism. If the noble Lord levels that reproach against me for having a degree of responsibility in this matter, I wonder how I am expected to answer the relatives of those who may be murdered. That is a perfectly legitimate, and serious, question.

Procedure of the House: Select Committee Third Report
3.46 p.m.
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move that the Third Report from the Select Committee (HL Paper 81) be agreed to. The Third Report of the Procedure Committee makes proposals for two new Standing Orders to give effect to what we have come to know as the Weatherill amendment. The first proposed new Standing Order relates to the election of 90 hereditary Peers who are to stay on in the House. Two other hereditary Peers are also to stay on in the House; namely, the two great officeholders of state: the Earl Marshal and the Lord Great Chamberlain. But those two Peers are to be Members of the House ex officio, as it were, and are not to be elected.
The Third Report of the Procedure Committee also proposes a new Standing Order to provide for by-elections. The purpose of this Standing Order is to ensure that in the House there are never fewer than 90 elected hereditary Peers. The Government will move an amendment at Third Reading of the House of Lords Bill in this House to write into the Bill the statutory basis for the new Standing Order. The Third Report of the Procedure Committee also sets out proposals drawn up by the Clerk of the Parliaments relating to what one might call the mechanics for the election of the 90 hereditary Peers. I believe that the detailed proposed arrangements for the elections are clear. I shall do my best to answer any questions that your Lordships may have about them.
As to the election arrangements, Peers are expected to vote in person unless a doctor has certified that they are unable to travel to Westminster, in which case they
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will be allowed a postal vote. It has been agreed by the usual channels that Peers who are absent on Select Committee business should also be entitled to a postal vote. The Clerk of the Parliaments has been busy working on numerous details of the election arrangements. A notice will be circulated before the Summer Recess setting out the timetable for the elections and other information.
If the House this afternoon approves the Third Report of the Procedure Committee, with or without the amendments proposed by the noble Viscount, Lord Bledisloe, the Leader of the House will table a Motion early next week so that the House can give its express approval to the new Standing Orders. This is necessary because what we are approving this afternoon, with or without amendments—if we do so—is the Third Report of the Procedure Committee and, therefore, only indirectly the new Standing Orders.
It is the custom to approve the Standing Orders expressly in a separate and later Motion. I anticipate that any such Motion next week will be purely formal. The decision on the substance of the matter is to be taken by the House this afternoon. I invite your Lordships to raise any matters arising from the Third Report of the Procedure Committee in the debate that we are about to have. The debate need not be confined to the noble Viscount's amendments. I believe and hope that that will be for the convenience of the whole House.
Moved, That the Third Report from the Select Committee (HL Paper 81) be agreed to.—(The Chairman of Committees.)
Following is the report referred to:
Page 1
ELECTION OF HEREDITARY PEERS
The Committee considered new standing orders and other proposals to give effect to the "Weatherill amendment" to the House of Lords Bill. Under this amendment, which is now in the bill as clause 2, 92 hereditary peers will retain their rights to sit and vote in the House of Lords after the end of the present session of Parliament. The government will be tabling for the third reading of the Bill amendments to provide for by-elections to fill vacancies among 90 of the 92 peers excepted from clause I of the bill (the two others being excepted by virtue of holding the office of Earl Marshal or Lord Great Chamberlain).1 The Committee agreed to the following standing orders to give effect to these amendments.
New standing orders

Procedure of the House: Select Committee Third Report

  HEREDITARY PEERS
  (1) In implementation of section 2 of the House of Lords Act 1999, this Standing Order makes provision for hereditary peers who are excepted from section 1,
  (2) The excepted hereditary peers shall consist of the following categories:

  (i)

  (a) 2 peers elected by the Labour hereditary peers;

  (b) 42 peers elected by the Conservative hereditary peers;

  (c) 3 peers elected by the Liberal Democrat hereditary peers;

  (d) 28 peers elected by the Cross-bench hereditary peers;

  (ii) 15 peers, elected by the whole House, from among those ready to serve as Deputy Speakers or in any other office as the House may require; and

  (iii) any peer holding the office of Earl Marshal or performing the office of Lord Great Chamberlain.

  (3) Elections shall be conducted in accordance with arrangements made by the Clerk of the Parliaments.
  (4) In order to stand for election or qualify as an elector under paragraph (2)(i), a peer must register with the Clerk of the Parliaments, identifying the party or Cross-bench group to which he belongs. In order to stand for election under paragraph (2)(ii), a peer must register separately with the Clerk of the Parliaments. A peer may not stand for election nor vote if he has not taken the Oath or is on Leave of Absence.
  (5) In the event of a tie between two or more candidates standing in any of the elections held in accordance with paragraph (2), the matter (if not resolved by the electoral arrangements adopted by the House) shall be decided by the drawing of lots.
  (6) The Clerk of the Parliaments may refer any question concerning the propriety of the electoral process to the Committee for Privileges,
  (7) In the event of a vacancy occurring at any time up to the end of the initial period through death among the peers elected in category (2)(i) or (2)(ii), the vacancy shall be filled by the nearest runner-up in the relevant election under paragraph (2) who both wishes to fill the vacancy and is otherwise available. The provisions of paragraph (5) are applicable for
  1 The amendments are as follows:

  1. Page 1, line 9, leave out ("no more than")

  2. Page 1, line 14, at end insert—

  ("() Standing Orders shall make provision for filling vacancies among the people excepted from section 1; and in any case where—

  (a) the vacancy arises on a death occurring after the end of the first Session of the next Parliament after that in which this Act is passed, and

  (b) the deceased person was excepted in consequence of an election, that provision shall require the holding of a by-election.")

  Page 2
  this purpose. If no such runner-up is available, the House shall decide how the vacancy shall be filled.
  (8) In this Standing Order and in Standing Order (Hereditary Peers: By-elections) the end of the "initial period" is the end of the first session of the next Parliament after that in which the House of Lords Act 1999 is passed."

  HEREDITARY PEERS: BY-ELECTIONS
  (1) In implementation of subsection (4) of section 2 of the House of Lords Act 1999, this Standing Order makes provision for by-elections to fill vacancies occurring by death among excepted hereditary peers after the end of the initial period.
  (2) In the event of the death of a hereditary peer excepted under Standing Order (Hereditary Peers)(2)(i) only the excepted hereditary peers in the group in which the vacancy has occurred shall be entitled to vote.
  (3) In the event of the death of a hereditary peer excepted under Standing Order (Hereditary Peers)(2)(ii) the whole House shall be entitled to vote.
  (4) The provisions of paragraphs (2) and (3) shall apply also in the case of any subsequent by-elections.
  (5) The Clerk of the Parliaments shall maintain, and publish annually, a register of hereditary peers (other than peers of Ireland) who wish to stand in any by-election.
  (6) By-elections shall be conducted in accordance with arrangements made by the Clerk of 20 the Parliaments and shall take place within three months of a vacancy occurring.
  (7) Paragraphs (5) and (6) of Standing Order (Hereditary Peers) shall apply to by-elections under this Standing Order."
  Electoral arrangements
  The Committee also agreed the following arrangements for elections and by-elections.

  (a) The Clerk of the Parliaments will be the Returning Officer.

  (b) Hereditary peers will be required to register, if they wish to vote for the hereditary peers in the party groups. The officers of each group will be entitled to examine the registers to ensure that they are correct. If any peer who wishes to vote is not on any party or Cross bench list, the Clerk of the Parliaments will consult the relevant group to ensure that no hereditary peer is disenfranchised. The registers will be up-dated before by-elections are held.

  (c) Hereditary peers who wish to stand for election in a particular group must register as candidates for that group. Hereditary peers wishing to stand in the election for Deputy Speakers and other offices must also register for such election. Any hereditary peer may stand in either, or both, elections.

  (d) Peers who have not taken the Oath or who are on Leave of Absence shall not be qualified to stand or vote in any of the initial elections. All peers, including those on Leave of Absence and those who have not taken the Oath, will receive a House of Lords notice about arrangements for the elections not less than 6 weeks before the intended date of the elections. This will make clear to those who wish to vote, or stand for election, that they must, if necessary, terminate their Leave of Absence and take the Oath. This requirement will not apply in the case of candidates in by elections.

  (e) The election for Deputy Speakers and other office holders will be held before the party elections. So far as by-elections are concerned, paragraph (3) of the by-election Standing Order provides that voting for a candidate to take the place of any hereditary peer elected as a Deputy Speaker will be by the whole House. Any peer elected at a by-election will, however, not be expected to serve as a Deputy Speaker.

  (f) The initial elections will take place in the forthcoming "spill-over".

  (g) Peers will be invited to register in person or by post or fax during a period of two weeks, one of which may be the last week of the summer recess and the other the first week of the "spill-over". Telephone registration will not be allowed because it could result in error or omission. Registration by e-mail will not he allowed because of the problem of authentication.

  Page 3
  (h) On the Monday of the week following the period of registration a list of candidates will be issued for the elections for the Deputy Speakers and other office holders. In view of the large numbers likely to vote and in order to ensure that as many who wish to vote can do so, the election will be held over two days (probably Wednesday and Thursday) and between such hours as will best suit the convenience of peers. Ample notice will be given of the dates and times. Peers will vote in person in a Committee Room designated for this purpose. The result of this election will be reported in accordance with sub-paragraph (0) below on the next sitting day.
  (i) A list of candidates will then immediately be issued for the party elections, eliminating the to names of any peers who were successful in the earlier election. Voting will take place in a Committee Room designated for this purpose, possibly over two days, but the numbers voting will be smaller since only hereditary peers will be voting. Again, the date and times will be announced well in advance.
  (j) No candidate will be allowed to indicate on the ballot paper (including the ballot paper for Deputy Speakers and other office holders) any qualification or reason why he or she should be elected. The Clerk of the Parliaments will however facilitate the publication, in a form yet to be decided, of a separate paper giving electors information about each candidate.
  (k) Postal voting will be allowed only where the Clerk of Parliaments receives a doctor's note to say that a peer is unable, for medical or incapacity reasons, to travel. Since voting in these elections will he parliamentary business, peers will be entitled to claim reimbursement of their travel and subsistence expenses.
  (l) The electoral system will be as follows. The ballot papers for the party elections will he printed with the names of all the candidates for the relevant party/group, and voters will be required to vote for the total number of vacancies for that party/group in order of preference, marking against each name the figure 1, 2, 3, 4 etc The figure 1 will indicate a first preference, the figure 2 a second preference and so on. It must be stressed that a voter will he required to vote for exactly the number of vacancies in the relevant party or group; failure to do so will result in the ballot paper being spoilt and not taken into account when the votes are totalled. So if there are 28 vacancies, voters must place the figures 1, 2, 3 up to 28 against 28 names and not more or less than 28 names.
  In the initial count, every vote will have equal weight and the candidates who receive the largest number of votes will be elected to the relevant vacancies. In the event of a tie, the number of first preferences received by a candidate will be taken into account, so that the candidate with the higher number of first preferences would be elected. If this does not resolve the tie, second preferences will be taken into account, and, if necessary, third preferences and so on. In the unlikely event that this did not resolve the tie, lots could be drawn.
  (m) The ballot papers for the Deputy Speakers' etc election will be printed with the names of all registered candidates, and voters will be asked to number the candidates of their choice as above.
  (n) The count will he undertaken by staff of the Parliament Office under the supervision of nominees from each of the parties (including the Cross-Benches). The voting papers will not be made public.
  (o) The results of the elections will be reported to the House by the Clerk of the Parliaments. The number of votes cast for the various candidates, including the votes for unsuccessful candidates, will be published in this report. The names of the successful candidates will also be recorded in the Minutes of the House and in the Clerk of the Parliaments' certificate to the Clerk of the Crown.
  (p) The Clerk of the Parliaments will, after consulting the party Leaders and whips and the Convenor of the Cross-benchers, issue a code of conduct for candidates and voters in the elections.
  Page 4
  If the Clerk of the Parliaments suspects, on reasonable grounds, that some material irregularity or improper conduct may have occurred in the electoral process, he may refer the matter to the Committee for Privileges for investigation.
  (q) The ballot papers and overall votes recorded for each hereditary peer will be retained by the Clerk of the Parliaments for the purpose of deciding how subsequent vacancies occurring in the 90 hereditary peers are filled. When subsection (by elections) of Clause 2 of the House of Lords Bill becomes effective this provision will become redundant.
  To help the House to understand more fully the arguments used in the Committee to reach these conclusions, a transcript of the Committee's proceedings is appended to this report.
  Viscount Bledisloe Viscount Bledisloe moved, as an amendment to the Chairman of Committees' Motion, at end insert ("with the following amendments:
  Page 1, line 5, leave out ("hereditary") and insert ("qualified")
  Page 1, line 6, leave out ("hereditary") and insert ("qualified")
  Page 1, line 7, leave out ("hereditary") and insert ("qualified")
  Page 1, line 8, leave out ("hereditary") and insert ("qualified")
  Page 1, line 12, at end insert-
  ("(2A) Each of the Labour, Conservative and Liberal Democrat parties and the Cross Bench peers may decide whether the qualified peers for the party or group referred to in paragraph 2 above are to consist of

  (i) all hereditary and life peers of that party or group, or

  (ii) only the hereditary peers of that party or group.

  Such decision shall be notified at least one month before the date of the elections to the Clerk of the Parliaments by the leader of each party and the Convenor of the Cross Benchers. If no such notification is given by any party or group, the qualified peers of that party or group shall be deemed to he only the hereditary peers.")
  Page 2, line 11, leave out ("excepted hereditary peers") and insert ("qualified peers who are members of the House")
  Page 2, line 21, after ("Paragraphs") insert ("(2A,)")
  Page 2, line 26, leave out first ("hereditary")
  Page 3, line 11, leave out ("but the numbers voting will be smaller since only hereditary peers will be voting")").
  The noble Viscount said: My Lords, as your Lordships will see, the Motion proposes certain amendments to the Standing Orders and to the consequential directions to which the noble Lord the Chairman of Committees has referred. As set out on the Order Paper I accept that these amendments appear somewhat complicated, but they all relate to one topic only; namely, who among your Lordships should form the electorate which will select the 90 hereditary Weatherill Peers who are to remain in this House pending stage two of the reform.
  As noble Lords will by now be well aware, these 90 Peers fall into two classes. First, there are the 15 who are to be chosen because of the services it is expected they will render to the House, either as Deputy Speakers or as chairmen of various committees. Those 15 are to be elected by the Whole House; that is, by all Members of the House, whether hereditary or life Peers, and all such Members will have an equal vote for those 15. The second class is the 75 Peers who are to be selected by each party or group according to the number set out in the report of the Procedure Committee. These Peers will, of course, be selected only by the Members in their party or group. Thus the 42 Conservatives will be chosen by the votes of Conservatives; the 28 Cross-Benchers by votes of Cross-Benchers, and so on. So far so good.
  However, as the report now stands, those 75 Peers are to be elected solely by the votes of the hereditary Peers in that group and the life Peers are to have no say whatsoever in this process of selection. No explanation has been forthcoming as to why it is appropriate for the life Peers to have a voice in deciding who shall chair committees, or who shall sit on the Woolsack, yet it is wholly inappropriate for those same life Peers to be allowed any say in who shall be their continuing colleagues in their own party or group.
  I suggest to your Lordships that this exclusion of the life Peers is wholly illogical and wholly unjustified. Ideally I would have wished that the electorate for all parties and groups should include the life Peers as well as the hereditaries. However, the Conservative Party, or, to be somewhat more accurate, the majority of the Front Bench Members of the Conservative Party, have set

  1141
  their face resolutely against it. So far it has been impossible to determine the logic of their attitude, but what is beyond doubt is that the attitude exists.
  In the light of this stance by the Front Bench, I recognise that we might have some difficulty in persuading the House to determine that every party and group shall be required to include the life Peers in their electorate. The amendment before the House, therefore, proposes that each party or group shall be entitled to make its own choice as to whether it wishes its Weatherill Peers to be elected by all its Members or only by the hereditaries.
  One of the Government's recurrent themes on Lords reform has been their recognition of the need for a strong, independent Cross-Bench element. It seems at the lowest to be somewhat inconsistent with that to deny to that independent element the right to select its Members in its own independent way. Since one of the main arguments for this Motion is that it would be utterly wrong for the Cross Benches to be compelled by the two main Front Benches to have the wrong electorate, so likewise we recognise that it might be wrong for us to seek to compel the Conservative Party to follow what is undoubtedly the best and most sensible course if, even after reflection, that party remains determined to have a solely hereditary electorate.
  Thus this Motion is—I make no bones about this—a compromise between the ideal and what should be practically achievable. Indeed, as a compromise it departs from the view which I have previously expressed: that it would have been preferable to have a uniform system. But it seems that an acceptable uniform system is not achievable and therefore my Motion allows everyone to follow his or her own conscience without in any way interfering with the desires of other parties.
  Why, then, do I feel so strongly that all Members of the House should be entitled to vote for their group? It has been decided that 75 hereditary Peers are to remain in this House until stage two; and it is surely very important, first, that those who remain are the people who can make the most useful contributions to the ongoing work of the House; and, secondly—I venture to suggest that this is important—that they are seen by the outside world to have been chosen by the method best suited to achieve that result.
  If one wishes to select the most appropriate and useful people it would seem obvious that the persons best suited to make that selection are those who attend the House with some regularity and who have therefore experienced the contribution which can be made by the various candidates either on the Floor of the House or in the committees upstairs. The importance of the work on those committees was referred to by the noble Lord, Lord Bruce of Donington, at a previous stage. I had hoped that we should hear from him on the same topic. As he pointed out, only those who sit on those committees can know which person makes a valuable contribution.
  In each party or group a very considerable proportion of the people who attend regularly, and who sit on committees and therefore have the necessary
  1142
  knowledge, are the life Peers. Further, since by definition the life Peers cannot themselves be candidates for election they will not only be well informed but also wholly dispassionate in the casting of their vote.
  On the other hand, if only the hereditaries are allowed to vote, many of those who attend regularly will themselves be candidates. Thus the dispassionate voters will comprise the relatively few hereditary Peers who, although regular attenders, have decided not to stand, and other hereditaries who attend only seldom and have little knowledge of the candidates.
  In this connection it is important to bear in mind—it is a point which may not have fully caught the attention of some of your Lordships—that anyone who wishes to vote in the election of their group out of the 75 is obliged to cast as many votes as there are places in his group. Thus every Conservative voter has to vote for 42 people; and every Cross-Bench voter has to vote for 28, and if he does not exercise every one of those votes his entire ballot paper is void. Those hereditaries who attend only rarely may well know five, 10 or perhaps even 15 candidates whom they regard as well suited to remain in the House. But I suggest that they are likely to find it virtually impossible to fill up the remainder of their list from their own knowledge. In those circumstances, they will either have to make a very random selection to fill the list, or they may have to seek and follow the guidance of the Whips. When one reaches that point, if one were a cynical observer, one might feel that one had detected the true reason for the Front Bench enthusiasm for excluding the knowledgeable life Peer in favour of those who will be driven to seek the Whips' guidance on the exercise of their vote.
  From time to time the noble Lord, Lord Strathclyde, has said that,
  "hereditary peers can well be trusted to make their own decisions."
  My Motion does not suggest that the hereditaries are not capable of making a decision or that any decision they make will be bad. What it says is that a decision which is made with the participation of the life Peers as well is almost certain to be better informed and therefore to produce an even better result. More importantly, it is a method which will be seen by the outside world as much more justified. I suggest that there is a real risk that if only the hereditaries elect their colleagues, the press and the public will regard this as an exercise of the old boy net merely to provide a consolation prize for some of the poor old hereditaries.
  The need to include the life Peers among the electorate is emphasised by the amendment to which the noble Lord, Lord Boston of Faversham, referred on the replacement of those among the 75 who die. It will provide that after a short time vacancies occurring among the 90 hereditaries should be filled by means of by-elections, not simply by a topping-up process. The voters in those by-elections shall be only those who remain as Members of the House. As was pointed out on Report, that model of by-elections to fill vacancies among the Labour or Liberal Democrat hereditaries solely by the votes of those parties' hereditaries makes no sense. If one of the two Labour Weatherill Peers dies,

  1143
  there will be a by-election involving one voter only. If both of them die together or in quick succession or if the remaining Peer is unfortunately incapable, there will be no voters. If one of the three Liberals dies, there will be only two voters, who may well be deadlocked.
  Even in the rottenest of rotten boroughs, matters never degenerated to quite that level of absurdity. It seems somewhat strange to find the new Labour Government seeking to reintroduce the constituency of Old Sarum into our parliamentary system. That prospect was described by The Times today as "nonsensical and farcical." I hope that the Front Benches on both sides will be duly grateful to me for producing a proposal that extracts them from that unfortunate position.
  What is the argument against my suggestion? When the matter was discussed on the recommittal of the Bill on 25th May, the principal proponent of the argument that the electorate should be restricted to hereditaries was the noble Viscount, Lord Cranborne. His argument was that the 75 Peers were to be in the House,
  "to represent the hereditary peerage".—[Official Report, 25/5/99; col. 802.]
  He and many others in his party have repeatedly emphasised that the 75 Peers were to be representative of the hereditary peerage and therefore must be elected by the hereditary peerage.
  I accepted then, and I still accept, that if that is their real role, the noble Viscount's argument is justified. His argument was bolstered by reference to a supposed analogy with the representative Scottish Peers elected under the Act of Union. That argument is demolished by what is now Clause 4 of the Bill which provides that all the hereditaries who do not remain in this House are entitled to vote and stand in elections to the House of Commons. That is in direct contrast to the position of the Scottish Peers under the Act of Union. No Scottish Peer—not even one who was not elected to sit in this House—had any right to vote or stand in any election to the Commons. That was a direct application of the well established principle that no one can vote for representation to both Houses of Parliament.
  4 p.m.
  The Earl of Onslow: My Lords, Irish Peers had the right to elect Members to this House on a life-long basis and they were also allowed to stand for the House of Commons. The rules for the Irish Peers were different from those for the Scottish Peers.
  Viscount Bledisloe: My Lords, the noble Earl is half right. The Irish Peers who were not elected had the right to stand for the House of Commons and, if elected, had the right to vote in another constituency. But they had no other right to vote.
  Faced with that constitutional anomaly, the Conservative Front Bench has entirely abandoned the suggestion that the 75 Peers are to be in any way representative. At the meeting of the Procedure Committee they fell over themselves to disclaim any suggestion that the 75 were to be in any way representative of their hereditary colleagues, abandoning
  1144
  the only argument advanced by the noble Viscount, Lord Cranborne. Having abandoned that point, they advanced no logical argument as to why the electorate should be restricted to the hereditary Peers. It is merely ordained as the will of the party leaders, not as a logical position.
  The decision of the Procedure Committee was plainly based solely on the stated fact that election by hereditaries forms part of the Cranborne agreement. Very honourably, the noble and learned Lord the Lord Chancellor feels that while the Conservative Front Bench continues to insist that election should be by the hereditaries alone, he and his Front Bench colleagues are bound to follow their lead. I venture to suggest that one cannot feel that the Labour Party has any doctrinaire enthusiasm for the concept that the hereditaries have the sole right to elect. Indeed, I doubt whether the Government Front Bench has any view on the appropriate machinery other than a very understandable desire to ensure that some method of election is finally determined so that we can get on.
  Others far better qualified than I will deal more fully with the agreement. Your Lordships have to decide whether the Conservative Front Bench should be entitled to impose on all parts of the House the system that appealed to the noble Viscount, Lord Cranborne, at the time of the negotiations, even though other parties might regard it as much more appropriate to allow their life Peers a say in the selection process.
  The amendment would allow each party or group to decide for itself whether the Peers who are qualified to vote in its group election should consist of all the hereditaries and life Peers or only the hereditary Peers. That decision will be notified to the Clerk of the Parliaments by the leader of each party or the convenor. The Clerk of the Parliaments will not in any way be concerned with the mechanism by which each group reaches its decision. Once a party or group has decided on the composition of its qualified Peers, that decision will apply to the initial elections and to all subsequent by-elections.
  If passed, the amendment would pay proper regard to the rights of independent groups to decide for themselves. In no way can it merit a party line or a party Whip. It is a matter solely for the views and conscience of each individual in the House.
  One of the unfortunate consequences of the debates on the House of Lords Bill is that, for the first time, Members of the House have been distinguished from each other by virtue of the fact that they are hereditary or life Peers. That division is a great pity and every effort should be made to ensure that it disappears as quickly as possible after the Bill is passed. The process would be greatly assisted if the House recognised that all its Members are of equal value and have a right to an equal say in the election. I beg to move.
  Moved, as an amendment to the Chairman of Committees' Motion, at end insert ("with the following amendments:
  Page 1, line 5, leave out ("hereditary") and insert ("qualified")
  Page 1, line 6, leave out ("hereditary") and insert ("qualified")
  Page 1, line 7, leave out ("hereditary") and insert ("qualified")
  Page 1, line 8, leave out ("hereditary") and insert ("qualified")
  Page 1, line 12, at end insert-
  ("(2A) Each of the Labour, Conservative and Liberal Democrat parties and the Cross Bench peers may decide whether the qualified peers for the party or group referred to in paragraph 2 above are to consist of

  (i) all hereditary and life peers of that party or group, or

  (ii) only the hereditary peers of that party or group.

  Such decision shall be notified at least one month before the date of the elections to the Clerk of the Parliaments by the leader of each party and the Convenor of the Cross Benchers. If no such notification is given by any party or group, the qualified peers of that party or group shall be deemed to be only the hereditary peers.")
  Page 2, line 11, leave out ("excepted hereditary peers") and insert ("qualified peers who are members of the House")
  Page 2, line 21, after ("Paragraphs") insert ("(2A,)")
  Page 2, line 26, leave out first ("hereditary")
  Page 3, line 11, leave out ("hut the numbers voting will be smaller since only hereditary peers will be voting")").—(Viscount Bledisloe.)
  Baroness Jay of Paddington: My Lords, I am not summing up the debate at this point. That is not my role today and we have had only a brief series of contributions so far. The Labour Peers have no great numerical interest in the results of the elections that we are discussing. I agree with the noble Viscount, Lord Bledisloe, that we do not have a doctrinaire enthusiasm for the procedures. We expect in the main to be able to watch the process in a splendidly disinterested way.
  However, the process is important. The Government support the Standing Orders and the electoral arrangements agreed by the Procedure Committee. I am afraid that we cannot support the amendment moved by the noble Viscount, Lord Bledisloe.
  The draft of the first Standing Order on hereditary Peers was the outcome of detailed discussion by the so-called "O" group of officials and party and Cross-Bench representatives. The group's remit was to give effect to the agreement between my noble and learned friend the Lord Chancellor and the noble Viscount, Lord Cranborne. The draft, which was immediately placed in the Library—some time ago now—represented the best judgment of a consensus that it was thought could command general support. I believe that events have proved that judgment to be correct. The deliberations of the Procedure Committee, which approved the draft in its entirety and made only a few amendments to the draft electoral arrangements, certainly suggested that the scheme was likely to be acceptable to all sides of your Lordships' House.
  The second Standing Order before the House today is new. It gives effect to the amendment which the Government intend to table at Third Reading, as my noble and learned friend the Lord Chancellor promised during discussions on the Bill at Report stage. The order makes provision for by-elections to fill Vacancies arising among the Weatherill Peers in the unlikely event that the transitional House lasts beyond the First Session of the next Parliament. Your Lordships know from our debates on the subject that the Government were content to rely on the fastest loser system for the entire duration of the transitional House. We are confident that that system will work perfectly well for what we fully expect
  1146
  to be a matter of only a very few years. If, for whatever reason, that system failed to produce a replacement, we preferred to leave it to the discretion of the House to decide at the time how to fill a vacancy. To deal with the matter in Standing Orders would allow the flexibility that we thought, and still think, would be simplest and best.
  However, the noble Lord the Leader of the Opposition craves certainty in the matter; and we have agreed to propose a statutory provision. This of course rests on the hypothetical assumption that the transitional House lasts longer than any on this side of the House would like or, indeed, intend. As the by-elections Standing Order makes clear, only the relevant excepted hereditary Peers will be entitled to vote. Excluded hereditary Peers, who will no longer be Members of the House, will have no vote in that process.
  In support of his argument, the noble Viscount, Lord Bledisloe, made an important part of his case the assumption that Peers of ability and, indeed, of independence should be among the chosen few who will remain for the temporary period. I am sure we all subscribe to that view. Of course, we all want to see the most able individuals staying on in the transitional House. I see no reason to suppose that the hereditary Peers cannot be trusted to elect their colleagues on that basis.
  However, regardless of whether or not we accept that thesis, the most important reason why we cannot accept this amendment is that, as my noble and learned friend the Lord Chancellor has had occasion to explain many times during the course of our debates on this subject, the hereditary composition of the electorate for the 75 was an inherent part of the agreement he reached with the noble Viscount, Lord Cranborne. The agreement was reached on the basis that the elections within the party and other groups would be of hereditaries, by hereditaries, for hereditaries. I appreciate that there were Cross-Bench reservations about that at an earlier point, but indisputably it was one of the cornerstones of the "O" group, and that is why it is so clearly reflected in paragraph 2(i) of the first Standing Order, which faithfully gives effect to the agreement.
  Finally, perhaps I may touch briefly on one of the arguments of the noble Viscount about the by-election procedure. He has expressed concern that limiting the electorate to hereditary Peers in the relevant party could make a mockery of the proposed by-election system for the Labour and Liberal Democrat parties. I shall make two points in response to that particular concern. First, as I have already said and I am happy to repeat, we have no expectation that by-elections will be necessary, because we expect to press ahead with stage two of reform before the relevant provision kicks in. Secondly, in the unlikely event that a by-election to replace a Labour or Liberal Democrat excepted Peer was required, it would of course be open to your Lordships' House to refer the matter to the Procedure Committee for it to take another look at an alternative option. For our part, therefore, we have no fears about what is likely to be a hypothetical scenario which, if it did materialise, could in any event be practically addressed at the time.

  1147
  I am sure that nothing I have said in my short intervention will come as a surprise to the House. The Government have argued consistently their position on these questions as they have arisen in the course of our extended debate. The noble Lord, Lord Boston, will sum up the debate later.
  4.15 p.m.
  Lord Strathclyde: My Lords, perhaps it would be helpful if I were to follow the noble Baroness the Leader of the House and say a few words on behalf of these Benches. What we have before us today is essentially a technical decision. The House has already voted by a substantial majority for what have come to be known as the Weatherill arrangements. Perhaps I may again pay tribute to the role played by the noble Lord, Lord Weatherill, the noble and learned Lord the Lord Chancellor, and indeed my noble friend Lord Cranborne in securing the agreement.
  At the time, the noble and learned Lord described it as an act of statesmanship. He was right to do so, because it is not easy for a government committed to a particular plan to look at it again, to see its weaknesses and to agree to change. The noble and learned Lord, after his initial volley of sulphur and brimstone in warning against any changes to the text of the House of Lords Bill, came to recognise that a wholly nominated House, as proposed in the Labour Party manifesto, was not an attractive or desirable prospect to the country. He recognised the value of the work carried out by hereditary Peers in this House. He agreed to keep a number of independent hereditary Peers, and we very much welcomed that change of heart, as I believe did the majority of the House. We should like to believe that the statesmanlike stance of the noble and learned Lord was shared by all his colleagues.
  The principle of the Weatherill arrangement is not at issue today. The House has voted on that issue of principle. What is at issue are the practical details. We may not like all of the details; indeed, some of us may not like any of the details at all. However, the House has resolved that it wishes to retain some 92 hereditary Peers, and we must agree the means by which those Peers are elected. In that context, I pay tribute to the Clerk of the Parliaments, who has done a great service to the House in preparing for the Procedure Committee the paper which lies behind the proposal before your Lordships today.
  The Procedure Committee examined the ideas with great care. The report before the House is acceptable to the Government, and it is acceptable to me. I must tell my noble friends that I shall support the Motion in the name of the noble Lord the Chairman of Committees, and I support the adoption of the Procedure Committee report unamended. In any Division, I shall urge my noble friends to do the same.
  However, that is not to say that I regard the necessity for this system with anything other than distaste. It is still my view that the House of Lords Bill is a thoroughly bad Bill. It is a Bill that will weaken Parliament and further strengthen the hand of the
  1148
  executive, which is already too powerful in this country, whatever the colour of the party rosette it wears. But the Weatherill amendment makes a bad Bill somewhat less bad, and for that reason, we support it. I have no affection for these arrangements.
  Equally, I have difficulties with some of the details of the voting system. I should perhaps have preferred all 90 Peers to be elected in one common system, and I should certainly have preferred a representative system on the Scottish or Irish model, with hereditary Peers outside the House electing replacements in any by-election. However, what we have here is a package. It may not be perfect, but it is one on which all parties in the Procedure Committee—except for the Liberal Democrats—were able to agree. I advise the House that a counsel of perfection may be a self-defeating course.
  In another act of statesmanship, the noble and learned Lord the Lord Chancellor has agreed, on behalf of the Government, that hereditary Peers will be replaced in by-elections. As he knows, I do not instinctively favour this model of by-elections, but I believe that securing the principle of by-elections is more important than indefinite wrangling over the small print. I therefore advise the House to go along with what is proposed.
  The noble Viscount, Lord Bledisloe, in his amendments to the Motion on the Procedure Committee report, has proposed that each party should be allowed to choose its own electoral college. He envisages that in some cases both life Peers and hereditary Peers should choose members of the 75. I cannot support the amendment. Indeed, I firmly oppose the amendment. I cannot agree that each party should determine its own election system. I oppose it for a number of reasons. First, the Clerk of the Parliaments has rightly reminded us that these are elections to a House of Parliament; more particularly, to a House of Peers. We are all equal, and that has always been the principle of the House—at least, until the Government introduced the divisive poison enshrined in this Bill.
  Parties should not be given a decisive hand in deciding how Peers are chosen for this place. There should be a common system. Then, all those who come to this place as members of the 75 can say, "We came here by the same means and for the same purpose. No one of us has any election system that is more valid than another's".
  I am sure that a common system would be right for this House. Even if I did not think that, I could not favour the amendment moved by the noble Viscount, Lord Bledisloe, because it envisages that some elections for the 75 would be by both life Peers and hereditary Peers. I oppose that because I believe that the 75 Weatherill Peers are representative hereditary Peers. The system is logical and well precedented. The House has accepted such a system before and it is one that is likely to endure in the event that the Government, of whatever party, fail to come forward with a second stage of reform in the next Parliament.
  It would be odd for life Peers to be able to vote in elections in which they could not stand. I fear that some of those who want an election by all Peers somehow do not trust hereditary Peers to make sensible choices. I do

  1149
  trust them. It will be a well informed election and, if by some chance it is not, it will be the electorate who are to blame. That hereditary Peers outside the House should elect representatives, I see as no odder than the people of this country sending representatives, whom they may not know at all, through elections to the other place.
  The noble Viscount, Lord Bledisloe, mentioned the potential problem that might arise for the Liberal Democrats and the Labour Party with by-elections, but he ignored the possibility of hereditary Peers from those parties being elected to the 15, thus increasing the electorate for any potential by-elections of the 75. If, for whatever reason, the by-election system proposed becomes unworkable, it will be a simple matter for the House to change the Standing Orders to take account of that.
  I believe that we should trust our fellow hereditary Peers in any election. I therefore believe that we should reject the amendment and stand by the Procedure Committee's report. I hope that my noble friends will agree.
  Lord Rodgers of Quarry Bank: My Lords, it is all of five weary months ago and many hours of debate since from these Benches we described the Weatherill amendment as it was then called—it is now Clause 2—as a dog's breakfast. For some noble Lords, that was relatively strong language and unjustified hyperbole, and for others it constituted unfair ridicule. However, a dog's breakfast is what Clause 2 has proved to be and, if we needed further evidence, it is contained in the report of the Procedure Committee that we are discussing today.
  I do not agree with the noble Lord, Lord Strathclyde, when he said that this was basically a technical matter, a question of practical details. There are very important political and constitutional ideas behind the decisions that we are being called upon to make. I agree that the House has agreed, although the other place has yet to pronounce, that despite the purpose of the Bill—and it has no other—being to remove the hereditary Peers from Parliament, 92 will stay on. That has been decided and is part of the Bill that we are discussing. In the view of many of us, there was a better way of keeping on the most talented and most hard-working hereditary Peers, but the matter has been decided.
  It has also been decided that the selection of 90 out of the 92 should be a matter for our Standing Orders. I still view it as an extraordinary presumption without precedent or justification that the House of Lords through its Standing Orders should decide who should sit here and that the House of Commons should have no say in that matter.
  If there was any doubt about the difficulties that we have let ourselves in for, they are illustrated by the report of the Procedure Committee and, indeed, by the minutes of the committee. It is an example of parliamentary decision-making at its worst and it would be laughable, if the issue were not so serious.
  In these elections, no one will need to be nominated. Every candidate will simply register his wish to stand. I can think of no election in my life, parliamentary or
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  other, in which someone has not needed to nominate me. Standing in these elections will be by self-nomination and that is unique in the experience of most of us. Furthermore, if someone stands for the post of Deputy Speaker or other office, he or she will have no obligation to fulfil that role once elected. As the noble Viscount, Lord Bledisloe, said, those elected would be expected to serve and they will be honourable men. However, there is no provision in the Standing Orders or the legislation before us to require those who have stood for election to a particular office to carry out its duties once they have been elected.
  The noble Viscount, Lord Bledisloe, also drew attention to the unique system of voting. Noble Lords will have to number candidates in order of preference to fill the exact number of vacancies—not one more or less, but precisely the right number. They will do so on the assumption that they are expressing preferences, but the votes will not be preferences at all, except in the case of a tie. We can forget the problems with the European elections because this election will be a perfect formula for spoilt ballot papers.
  In this election, according to the proposals before us, a candidate may send all his voters a jeraboam of champagne, whereas buying a pint of beer for an honest vote in parliamentary elections was banned by the Corrupt Practices Prevention Act 1854. I shall he told, although I know already, that there is to be a code of conduct. It will be discussed through the usual channels and will not come before your Lordships' House. The code of conduct will suggest restraint, but the only restraint I can see will be on sending a jeraboam of champagne to a prospective voter after registration, which will begin on 11th October. My advice to noble Lords who intend to stand in the elections is, "Get your champagne sent quickly by Berry Bros. and do not leave it too late".
  Lord Randall of St. Budeaux: My Lords passing champagne around would not be fair. However, in the other place—I know that the noble Lord spent some time there—it is established practice to have networking in voting. In this case, for example, four or five Peers would come together and agree that each of their supporters would vote for the other four and, eureka, all five would get in. The noble Lord's proposal appears to be eminently sensible. In order to ensure that such behaviour does not have a deleterious effect, it is best to have as big an electorate as possible, thus making the case for life Peers voting alongside hereditary Peers.
  Lord Rodgers of Quarry Bank: My Lords, I am grateful to the noble Lord for anticipating my destination. For the moment, I make no proposal of my own. Today I am only listening to others and supporting what they propose to do. The noble Lord's comments will have been heard by those responsible for our code of conduct. I believe that the code of conduct would be ridiculed if it were not part of the extraordinary arrangements that we are making in this House.
  The noble Viscount, Lord Bledisloe, said—and it was clear from our discussions in the Procedure Committee—that we are in a most extraordinary

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  situation. An excepted hereditary Peer, if he is the only one from a party, will be in a position to nominate someone to take the place beside him. It is very odd, and I see no precedent, that one Member of Parliament, which is what we all are, will be free to choose to nominate and to elect one other person to sit on the Benches beside him. How much money has been paid over very many years, including to Lloyd George, to get into this House? On this occasion, you only have to be nice to one Member of your Lordships' House to be able to sit here free of charge.
  The best argument, and it is not a good one, which we hear from the Leader of the House, the Government Front Bench, is that the arrangements, muddled, confused, unsatisfactory though they are, will last only for a short time. Well, we all have our views on that. Most of us believe that they will last at least five years. Some of us believe that they will last at least 10. But the Leader of the House has come up with an interesting suggestion; if they look like lasting longer, we can change the rules. We do not have to be committed to what we are deciding today; we will return to it again. Why not decide something sensible today which will endure for five or 10 years, rather than have the nonsense included in the proposals before us?
  In the light of these anomalies and contradictions, the outright nonsense in some cases, it is tempting to suggest that your Lordships' House should reject the Procedure Committee report and ask it to try again. But I have conceded, and I concede again, that the root of the problem lies in the agreement reached between the noble and learned Lord the Lord Chancellor and the noble Viscount, Lord Cranborne, last December, which is incorporated in Clause 2.
  Out of that flawed deal much trouble has come, but there is little we can do about it now. However, we have the amendment in the name of the noble Viscount, Lord Bledisloe, and at least we can support that. I know that the House will share my view that it was moved with brilliance and panache by the noble Viscount. I hope that the House will share my view that his arguments were wholly convincing.
  We on these Benches would have preferred the House to agree that if there are to be 92 excepted Peers, all Peers should choose the 90 who are open to election, life and hereditary alike. After all, we are arguing about the principle that hereditary Peers should choose hereditary Peers. That was spelt out clearly by the noble Baroness the Leader of the House. She said as much today. Some of us do not like that principle, but it is not the principle in the legislation. It is a principle breached. Fifteen of the hereditary Peers are to be elected by all of us, so where is the principle that some noble Lords seem so anxious to hold on to? If 15 can be elected by all Members of the House, hereditary and life Peers, why not elect the remaining 75? There is no rational justification for this proposal.
  The noble Viscount, Lord Bledisloe, has settled for choice. That is what he is offering the House. He is not dictating to any party or any group; he is simply saying that each party, Cross-Benchers, too, should be able to choose whether they prefer an electoral college of all
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  Peers or an electoral college of hereditaries. It is a compromise. It is a fair-minded solution. I join in commending it to your Lordships' House.
  4.30 p.m.
  Lord Weatherill: My Lords, I must begin by correcting the report of the Select Committee. Noble Lords who have read the report will have noticed that my comments on page 11 do not make sense because the words "short term" have been left out in lines 15 and 24. Perhaps those of your Lordships who have the report would be kind enough to put them in.
  When we negotiated the arrangement, it was envisaged to be a short-term one. What has muddied the waters has been the acceptance of the by-election procedure. If the arrangement was intended to be short-term, surely the replacement of the 90 plus two hereditary Peers by a system of fastest losers would have been both simple and adequate for the two to three years envisaged when Clause 2 was incorporated into the Bill.
  I imagine that many of your Lordships will know the story of Bismarck negotiating with the Austrians towards the end of the last century. In the course of those negotiations, the Austrian Ambassador died and Bismarck's immediate reaction was, "I wonder what he meant by that".
  Lord Acton: My Lords, I am sorry, but it was Talleyrand.
  Lord Weatherill: My Lords, I thought that it might have been Metternich, but the story stands. I wondered what was meant by the by-election procedure which, as the noble Viscount, Lord Bledisloe, pointed out, has serious flaws and difficulties for the replacement of hereditary Peers on the Liberal Democrat and Labour Benches if the electorate consists only of the hereditary Peers.
  When we were negotiating the details of Clause 2, it was clearly understood that the 75 hereditary Peers would be representative hereditary Peers. I was under the impression that that had been discounted. In previous debates, we were informed that they would be elected to carry on the work of the House not as hereditary Peers but as those best qualified so to do.
  The reason we negotiated in that way was to ensure that the Government would move rapidly to stage two, because as the noble Viscount, Lord Cranborne, and others pointed out, the Government would not wish to have a body of representative hereditary Peers in this House for longer than absolutely necessary. As the noble Lord, Lord Rodgers, pointed out and as the noble Viscount, Lord Bledisloe, said so well, there is no logical reason why after the election of the 15 Chairmen of Committees—those who will sit on the Woolsack and will serve the whole House—the 75 additional hereditary Peers, who will also serve the whole House, should be elected by a different method.
  When I moved my amendment, which is now Clause 2 of the Bill, I made it plain that I was speaking as an individual and not as the Convenor of the

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  Cross-Bench Peers. Today, I do speak as Convenor of the Cross-Bench Peers, and I do so in order strongly to express their views. Many of them would have liked to speak today, but will not do so for reasons of time. I therefore support the amendment tabled by the noble Viscount, Lord Bledisloe, and I hope that the House will weigh its arguments and do likewise.
  In saying that, I must pay a tribute to the noble and learned the Lord the Lord Chancellor, who I know takes a different view. He has consistently and honourably said that he struck the arrangement, the deal, with the noble Viscount, Lord Cranborne, and that he must stick to it.
  Lord Campbell of Alloway: My Lords, I thank the noble Lord for giving way. Will he explain a crucial point? It is accepted that a private arrangement was made between the noble and learned Lord the Lord Chancellor and my noble friend Lord Cranborne. This was long after the deal brokered by my noble friend Lord Cranborne. There is no doubt—it is accepted—that the private arrangement was hereditaries for hereditaries. None of us knew what happened, so I am asking the noble Lord whether he could be kind enough to say that it was no part of the deal brokered by my noble friend, which ended up in the Weatherill amendment, that hereditaries should support hereditaries.
  Lord Weatherill: My Lords, the noble Viscount must speak for himself on that. I was present at some of the negotiations with the noble and learned Lord the Lord Chancellor, but not at all of them. It was always my understanding that the hereditary peerage would select the representative Peers, for the reasons that I have already stated; namely, that the Government would not wish to have a body of representative hereditary Peers in this House for longer than was absolutely necessary. I think that in a previous debate the noble Lord, Lord Campbell of Alloway, said that it was sand in their shoes. I would rather use the expression "ginger under the tail". But the intention was to ensure that they got on with the second stage.
  Perhaps I may return to paying a tribute to the noble and learned Lord the Lord Chancellor. It is quite remarkable that the Government have a manifesto commitment, regularly repeated in your Lordships' House, that no political party should seek a majority in the reformed House of Lords. I doubt whether there is any other government in the world who would contemplate subscribing to such an arrangement. In effect, it means that the balance of influence will always be with the independent Peers on these Cross Benches.
  If that commitment is to be put into practice, it must surely mean that the independent Peers should not be pressurised into voting one way or another by any deal that may have been arrived at through the usual channels, of which we are not normally part. So, in a sense, the vote on the amendment of the noble Viscount, Lord Bledisloe, is a test of that commitment.
  The debate on the report of the Select Committee is not about a matter of government policy. It has already been described as a technical matter, and it was arrived
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  at by members of the Select Committee on Procedure, of whom there are 27, only three of whom are Cross-Benchers, one of them a Law Lord. That is despite the numbers; we are inadequately represented on that committee.
  Despite the committee's recommendation, I hope that in a matter of this kind—a matter of procedure, not of government policy—there will be a genuine free vote. If the amendment of the noble Viscount, Lord Bledisloe, is carried, it will not bind any other party to follow suit. If the Conservative Opposition prefer that the election of the 42 hereditary Peers should be by hereditaries alone, so be it; it is a matter entirely for them. Similarly, that would be true of the government party and of the Liberal Democrats, as the noble Lord, Lord Rodgers, has already said.
  All that the Bledisloe amendment seeks to achieve is the freedom of the independent Cross-Benchers to exercise their judgment as they think best. It is their majority view that the choice of the hereditary Peers best qualified to carry on the work of the House in the interim period before the second stage of reform of your Lordships' House would best be made by life Peers as well as by hereditary Peers.
  Therefore, despite the fact that this arrangement was made between the noble and learned Lord the Lord Chancellor and the noble Viscount, Lord Cranborne, to which I have already said that I subscribed at the time, for reasons stated, I wholeheartedly support the amendment so well and so eloquently moved by the noble Viscount, Lord Bledisloe. I do so because I so strongly applaud the commitment of Her Majesty's Government that the balance of influence in your Lordships' House should be with the Cross-Benchers, and because the amendment is a test of that commitment.
  4.45 p.m.
  Viscount Cranborne: My Lords, I am delighted to follow the noble Lord, Lord Weatherill, because that enables me once again to congratulate him on his wisdom in advising your Lordships' House to put the minimum amount of detail on the face of the House of Lords Bill, thereby ensuring that your Lordships can control your own procedures, a matter to which the noble Lord rightly gave considerable weight, particularly because, as he has reminded us, as if we really needed reminding, that, as in all things, it is for your Lordships to decide on your own procedures. I seek merely to persuade your Lordships. I am under no illusions that I have any prior claim on your Lordships' support beyond the power of the arguments that are laid before the House this afternoon.
  Before coming to the matter of the electorate for the 75 hereditary Peers—the most contentious issue before us this afternoon—I should like to reiterate two points which I seemed to make repeatedly during the Bill's Committee and Report stages.
  First, I personally would much have preferred it if the electorate, when and if by-elections are held, consisted of all hereditary Peers. As I never tire of saying, the noble and learned Lord the Lord Chancellor has behaved

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  more than honourably over the past few months. I know that the basis of our agreement was that the election of hereditary Peers should be by hereditary Peers for the 75. We were less certain about the basis of election for the 15, a matter to which I should like to come in a minute.
  There are perhaps sensible reasons for suggesting that it is unwise for the House, certainly for the 75, to elect its own Members. It has been suggested—most notably by the noble Lord, Lord Rodgers, and others during previous debates and today—that it would be unwise to allow a large number of hereditary Peers, many of whom do not come to your Lordships' House regularly, to make a judgment on who would be most appropriate to serve in your Lordships' House from among the hereditaries. It has been said that the life Peers together with the hereditaries would be far better qualified to perform that task because, by implication, life Peers are more likely to see more of the active hereditaries than the hereditaries themselves.
  I may have misread the figures, but I do not necessarily find from my reading of them that the overwhelming majority even of life Peers are here all the time. Of course, very many life Peers are; but it seems not entirely sustainable to assume that the life Peers are more likely to be able to judge who is a sensible Member of your Lordships' House.
  I also wonder how sensible it is for us to assume that we should trust the experts. I am always doubtful about the wisdom of trusting experts. That is a principle to which we should do well to adhere in parliamentary institutions. Experts have often misled us in the past. The whole basis of election to another place is that it is the inexpert electorate that we trust beyond the specialists who, in some other polities, perhaps might be chosen as more reliable. It seems to me that the whole basis of election in this country is that it is the non-expert, the broad outside electorate, on which we rely. I suspect that no one in this House would oppose that fundamental principle.
  Let us take the example of another place. We trust the electorate, who see no more of the work of Members of the other place carried out in Parliament—as opposed to work in their constituencies—than the media allows them to. We are clear that we encourage the electorate, even though they have limited exposure to proceedings—unless they are complete groupies and watch Parliament all the time on television or sit in the Gallery—to elect Members of another place. I fail to see why we cannot trust a wider electorate of hereditary Peers, which is no more or less deficient in judgment—I make no assessment between the two—to elect the representatives of the hereditary peerage in the interim House.
  For that reason alone, the broad franchise which applies to the initial electorate could have been applied to the question of by-elections with great advantage. Such a franchise would have avoided the remote possibility of the absurdities to which a number of noble Lords, notably the noble Viscount, Lord Bledisloe, have alluded. Equally, I agree in principle with the noble Lord, Lord Rodgers, that large electorates are better than
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  small ones. However, I make one proviso. It seems to me that large electorates are advisable as a general principle of the need to avoid the Old Sarum difficulty so long as those electorates—
  Earl Baldwin of Bewdley: My Lords, if the noble Viscount will forgive me, I believe that what my noble friend is suggesting is that we make the electorate even wider.
  Viscount Cranborne: Yes, my Lords, he is. I was coming to that point. I was entering a proviso just as the noble Earl rose to intervene. The proviso is so long as those electorates are rooted outside the institutions to which they are electing representatives.
  It seems to me unwise for any House of Parliament, as my noble friend Lord Strathclyde said, to elect its own membership. That is why I have been nervous during the course of previous debates, as I believe I made clear both in Committee and at Report Stage, about the whole House electing the 15. That is for similar reasons to the ones I have just tried to explain. Nevertheless, there is a stronger case for the whole House electing the 15 than the 75. The reason is quite simply due to the nature of the tasks for which the 15 are making themselves available. After all, the other place would not expect the electorate to make a judgment of those who were to serve as Chairmen of Committees there.
  Similarly, it seems to me arguable that if noble Lords are to choose who is to serve as a Deputy Chairman or Deputy Speaker, then there is a case for this House to exercise its expert judgment in a way which perhaps does not apply to the broader electorate of the 75. Nevertheless, I am the first to admit that one could argue, as indeed the noble Lord, Lord Rogers has, that it is inconsistent. I merely suggest that it is marginally less inconsistent for the whole House to elect the 15 than for the whole House to elect the 75.
  My noble friend Lord Strathclyde was clear that we must look at the matter as a package. I should have preferred a broader electorate of hereditaries to elect candidates in by-elections, if we should come to that. However, the Government have refused to do that. In the interests of compromise—a point which the noble and learned Lord and I addressed briefly, but on which we did not come to any conclusion—I find that I am willing to accept that.
  I should like to make one further point. The compromise before us, recommended by the Procedure Committee, preserves the nature of the understanding which I reached with the noble and learned Lord and with the Government; that is, that in the transitional House the hereditaries should elect themselves. If they are to do that, it seems to me consistent that they should elect themselves and continue to do so in by-elections, should they occur. It would be odd and inconsistent to change the system for the sake of by-elections when we already had a system for electing the original incumbents.
  I regard that point as important, given the purpose of the original agreement as I saw it. As the noble Lord, Lord Weatherill, said, the good reasons for maintaining

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  a representative group of hereditary Peers in the transitional House are, first, as an incentive for the Government to proceed to stage two, which is something I believe we all want.
  I make my next suggestion with some diffidence because I do not want it to be felt that I am singling out my hereditary colleagues. I believe, however, that I must try to make the point. As the embodiment of a wish which many hereditary noble Lords have often expressed in the House, I believe that we hereditaries should retire gracefully on completion of a full and satisfactory reform. It is, I believe, an honourable aspiration of hereditary Peers that we should hand on the baton, perhaps with some relief, but certainly with some sense of honour.
  For non-hereditaries to choose which of us should become the residual element of that wish would perhaps dilute our purpose. With the greatest respect to my life Peer colleagues, it seems to me slightly odd that they should be the ones to choose which of us should discharge that obligation. For those reasons, I find myself strongly opposed to the amendment of the noble Viscount, Lord Bledisloe, if only because I find it peculiar to suggest that a Member of this House should be elected on the same basis and from the same category, but nevertheless by a different system, simply by virtue of the accident of the Whip he takes. It would be a curious principle if that part of the noble Viscount's amendment were to apply.
  For the reasons I have tried to explain, I strongly oppose the noble Viscount's amendment. I hope that before considering whether to support it, the House will consider carefully whether the adoption of the amendment would not in fact introduce more difficulties than those it attempts to solve.
  5 p.m.
  The Earl of Longford: My Lords, I have listened with great interest to the reflections of the noble Viscount. I recall that his great grandfather left Disraeli's Cabinet because Disraeli was introducing the vote for the working class. I shall not pursue the issue of representation today.
  I remember Sir Winston Churchill was once asked which side he supported in the Spanish civil war. He replied, "Both sides". It is very easy, as an honest person, to be on both sides of the argument in relation to the amendment proposed by the noble Viscount, Lord Bledisloe.
  On the one hand, if we are to retain some hereditary Peers, as I want to, there is a powerful argument that they should be allowed to choose their own representatives. On the other hand, it seems that some of the best opinions on the Cross Benches take a different view.
  As someone who inherited a hereditary peerage—but I am glad to say I now have a life peerage—I feel profound sympathy for the devoted hereditary Peers, who have performed great work in the House, as they are being sacked. They do not like speaking up for themselves as that is not quite the gentlemanly thing to do, but I feel great sympathy for them.
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  I feel like someone in a hospital suddenly being told that half the patients have cancer and it is not clear what will happen to them. It is pretty certain that they will not last long. By the same token, news comes through of a wonderful operation that costs a fortune but which only a few people will be selected to undergo. Everyone, including the cancer patients, has to decide who will be the lucky people who will survive. One has to feel enormous sympathy for the hereditary Peers. I suppose I admire them dying gracefully, as I suppose the French aristocrats died gracefully when they went to the guillotine. I am not sure that is ideal.
  I agree that I voted for the Second Reading of the Bill. The Chief Whip kindly helped me to vote at 3 o'clock in the morning. I voted for it and I suppose I shall have to do the same again if the facilities are still available. Nevertheless, my colleagues are disappearing; they are being sacked. It is a terrible situation.
  I turn to the immediate situation. What do we do now? I had thought of mentioning a few hereditary Cross-Benchers by name, but I shall get into trouble with those I do not mention, so I had better not. The noble Lord, Lord Weatherill, is well qualified to advise us on this. I have talked to him. There are many who work in the House, including some younger people, who I am sure will do great work in years to come. The noble Lord, Lord Weatherill, takes the view that the hereditary Peers on the Cross Benches who do the most work and show the most promise will benefit from the change suggested. What is good enough for the noble Lord, Lord Weatherill, is likely to be good enough for me.
  Lord Campbell of Alloway: My Lords, I oppose the Motion and support the amendment of the noble Viscount. One does not have to do so strongly or weakly. It is a question of objective argument. Whichever system of election may commend itself to your Lordships, it is in implementation of the Weatherill agreement, now Clause 2. It cannot delay the Bill and the Bill as a whole will stand, subject to consideration of certain matters on Tuesday. The great cross-party contrivance that masterminded the massive support of the Weatherill amendment, and that has ever since fretted over engaging in any activity that could engender its removal in another place, has no cause whatever 10 dominate these proceedings.
  It is all but inconceivable that discussion on a procedural matter such as this could trigger implementation of the threat to remove Clause 2 in another place. Notwithstanding what has been said by my own Front Bench and by my noble friend Lord Cranborne, in principle it is a procedural matter on which there should be a free vote on the merits of the argument. Which system should be adopted is of no interest or concern to the Government, although the choice between the two is a matter of very serious concern to many noble Lords on all sides of the House, not only to some noble Lords on this side of the House.
  The patrician system, somewhat akin to that adopted by the Doges, was agreed. It was agreed between the noble and learned Lord the Lord Chancellor and my noble friend Lord Cranborne in a private agreement, hereditaries for hereditaries. That agreement was made.

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  It is totally correct that the noble Lords, as men of honour, should stand by their agreement. That is fully understood. But the agreement was made without authority; it was made subject to the ratification not of the Procedure Committee, but of your Lordships' House. It has to be ratified on the merits of the argument. This debate is all about that.
  Let us start at the beginning. If I may say so, there are two Cranborne deals. The first deal was brokered by my noble friend. The second deal, if it was a deal, was a private arrangement made with the noble and learned Lord the Lord Chancellor. Under the first deal, the Weatherill amendment has been ratified. That is all well and good. That is the end of it. If that arrangement of hereditaries for hereditaries was part of the deal that was ratified, what is the object of making it all over again with the noble and learned Lord the Lord Chancellor? My noble friend said it was, but it could not have been. The deal with the noble and learned Lord the Lord Chancellor was made months after the deal was brokered by my noble friend Lord Cranborne. I see signs being made across the House.
  The Lord Chancellor (Lord Irvine of Lairg): My Lords, will the noble Lord accept from me, as I am sure the noble Viscount, Lord Cranborne, will confirm, that there were not two deals, but one integral deal only. I have no notion at all from where the noble Lord, Lord Campbell of Alloway, has obtained the idea that there were two separate deals. There was one deal and one alone.
  Lord Campbell of Alloway: My Lords, if the noble and learned Lord says so. What on earth could have been the object of the meeting and the second private arrangement, which was never ratified and which was not known about by the other parties? I have asked some of them whether they knew. They did not know. I said that it was made without authority and the short answer to that is that whether or not it was made without authority it still has to be ratified by this House on its merits. That is the point. I am grateful to the noble and learned Lord because he will realise that we do not understand and do not know what on earth has been going on. It is all done between Privy Counsellors on Privy Council terms. We do not know what is going on. Now we are asked to ratify it. We are entitled to look into it. If I have made a mistake, it is not a mistake that goes to the essence of the problem of whether or not, when one examines this matter on its merits, one is going to ratify it. We have to ratify it. It does not bind us until we do.
  Lord Williams of Elvel: My Lords, I beg to move that the Question be now put.
  The Earl of Onslow: My Lords, I want to speak to the point raised by the noble Lord who just put the Question. One is entitled to debate this Motion. Two or three noble Lords have spoken. There is more than one view. It is perfectly reasonable for the House to debate this.
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  I do not agree with absolutely everything that has been done. I do not agree with a lot being said by my noble friend Lord Campbell. But it is surely his right to say it without our shutting him up. Nobody should ever attempt to shut up my noble friend Lord Campbell of Alloway; that would be a major mistake.
  I hope that we do not put the Question yet, but that we continue with the debate for a reasonable and civilised time. This is an important constitutional issue and we ought, first, to get it off our chests; and, secondly, to be intelligent about it. Cutting short the debate does not help in that.
  The Deputy Speaker (Baroness Serota): My Lords, I am instructed by Order of the House to say that the Motion that the Question be now put is considered to be a most exceptional procedure and the House will not accept it save in circumstances where it is felt to be the only means of ensuring the proper conduct of business of the House. Further, if the noble Lord who seeks to move it persists in his intention, the practice of the House is that the Question on the Motion is put without further delay.
  Lord Williams of Elvel: My Lords, I beg to move that the Question be now put.
  Noble Lords: No!
  The Deputy Speaker: My Lords, the Question is, That the Question be now put. As many as are of that opinion will say, "Content"; to the contrary, "Not-Content". The "Not-Contents" have it.
  Question negatived.
  Lord Campbell of Alloway: My Lords, I do not speak in my defence. I am grateful to your Lordships for having heard me so far. If I am allowed to speak further, I shall bear that tolerance in mind.
  Lord Chalfont: My Lords—
  Lord Peston: My Lords, I think it is the turn of this side now. The Cross-Benchers have been speaking continuously.
  Lord Chalfont: My Lords, I appreciate that the noble Lord, Lord Williams, was just making clear that many noble Lords may feel that we have had quite a long debate on this issue but, like the noble Earl, I feel that it is a matter of such profound importance that we should debate it to the full and as long as constructive contributions are being made. I hope therefore that I may be allowed to rise to support the Motion tabled by my noble friend Lord Bledisloe. I must say at once, as others have said, that—for me at any rate—it is not the ideal solution.
  Like the noble Lord, Lord Strathclyde, I go back to the beginning of this matter and say that it is a bad Bill, a deplorable Bill. But that is all history. Since then we have had the Weatherill amendment arising from the arrangements made on Privy Council terms. I have

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  always strongly believed that the voting arrangements for what are now called the "Weatherill Peers" should be uniform throughout the House, as my noble friend Lord Bledisloe said, and that the electorate should consist of Peers, both life and hereditary.
  After all, we are all Members of the same House and of the same Parliament. Although we may have different allegiances, different ideologies, different social backgrounds, we are all Members of the same House of Parliament. It might be worth reminding this House that the word "Peer" means equal in standing and in rank. It was to underline that fact that as long ago as the 15th century those who had previously been Lords Temporal had their names changed to Peers; meaning that all were equal. The only distinction was between the ranks within the peerage. That remained the case even after the Life Peerages Act 1958; we were all equal Members of this House.
  5.15 p.m.
  Viscount Cranborne: My Lords, not true.
  Lord Chalfont: My Lords, does the noble Viscount say, "Not true"?
  Viscount Cranborne: My Lords, I was not asking the noble Lord to give way but as he has so kindly and so suddenly sat down, perhaps I may take advantage of his good nature to say that I am sure that he is exactly right and that it is perfectly true; but they did not choose themselves.
  Lord Chalfont: No, my Lords, and I never suggested that they did. Evidently my quick sit-down was to no great effect.
  It is only in the passage of this reform Bill that an attempt is now being made to make an important distinction—a discrimination—between life and hereditary Peers. However, those are statements of principle and your Lordships will know better than many that principles sometimes have to be compromised in order to achieve proper and desirable ends.
  I remain convinced that the electorate for the Weatherill Peers should consist of both life and hereditary Peers. In the first place, as others have said but it bears repeating, there is no logic in the present proposal that 15 Peers—the Deputy Chairmen and others—should be chosen by the whole House, while the remaining 75 are to be elected by hereditary Peers only. I have never heard a persuasive argument for that and to me it is an illogical arrangement.
  A good deal has been said—the noble Lord, Lord Strathclyde, referred to it again during this debate—about it being in some way offensive to hereditary Peers to suggest that they cannot manage their own affairs without the participation and help of the life Peers. The answer to that somewhat insubstantial debating point might be that this is not merely a matter of the "own affairs" of hereditary Peers; it is a matter of the composition of this House, affecting everyone in it. It is equally offensive to life Peers to suggest that they should have no role whatever in electing those who are
  1162
  to be their colleagues in the interim House. So, the less we hear about the way in which we cause offence to the hereditary peerage, the better.
  It became clear to me when I was privileged to attend and address a recent meeting of the Procedure Committee that the possibility of ensuring that the electorate for the Weatherill Peers would be an electorate of both life and hereditary Peers was remote. I discovered that the Procedure Committee consisted substantially of heavily whipped Front-Bench representation from the major parties. It may be worth while in this context pointing out that in that fairly large committee there are only three Cross-Bench Peers. The committee was clearly bent on a system in which only hereditary Peers would elect the Weatherill Peers. That is what appeared in its report. It seemed to me from the discussion that took place in the Procedure Committee that that determination was based largely, if not entirely, on the now famous deal negotiated between the noble and learned Lord the Lord Chancellor and the noble Viscount, Lord Cranborne.
  Perhaps at this stage I should say a few words about the agreement. The first point I should like to make is that the agreement cannot be binding on anyone who was not a party to it. That certainly applies to us on the Cross-Benches, where each Member is independent and obviously will not be bound by an agreement between the Labour and Conservative Front Benches, even if a small number of Cross-Bench Peers were involved in the negotiations which led up to it.
  Those in favour of the present form of the legislation have made much of the point that it is important to have an independent element in your Lordships' House. We on the Cross Benches regard ourselves—with some justification—as that independent element. My noble friend's Motion this evening, as he implied, seeks to remove from the realm of rhetoric the need for an independent element and to place it in the realm of reality.
  In any case, I turn back to the agreement—the famous deal—for a moment. I may be wrong and no doubt, if I am, the noble and learned Lord the Lord Chancellor or the noble Viscount will correct me. However, I do not believe that this business of the hereditary Peers being the only voters for the excepted hereditary peerage was a fundamental, important and integral part of the deal. Indeed, I do not believe that the deal would have stood or fallen on that one element alone. It is, of course, entirely right and honourable that those who were party to the deal should consider themselves to be fully bound by it. However, in my opinion, it is extremely doubtful that such an agreement should be the sole basis, or even the main basis, for a fundamental procedural decision of this kind.
  I return to the recommendations of the committee. I was present during the proceedings of the Procedure Committee. No strong arguments were advanced at that time in favour of this system of hereditary Peers electing hereditary Peers. Although my noble friend Lord Bledisloe and I took the time to advance very strong arguments against it, I never heard any of those arguments refuted. Indeed, as my noble friend Lord Bledisloe has

  1163
  said, the only argument that was ever seriously advanced in favour of the "hereditary-only" electorate seemed to have disappeared. I refer, as he did, to the argument that the Weatherill Peers were to be representative. If the proceedings of the Procedure Committee are to be taken as a guide, apart from anything else, the Conservative Party now seems to have abandoned any pretence, or any claims, that the Weatherill Peers are to be representative.
  In my view, the recommendation of the Procedure Committee as it stands is, therefore, based entirely on assertion, not on argument. Indeed, a friend of mine, for whose legal expertise I have great respect, has suggested to me that if the proceedings of the committee were subject to judicial review, they would almost certainly be quashed. Despite the significant change on the subject of the representative nature of the Weatherill Peers, from the soundings that I have taken since the meetings of the Procedure Committee it seems to me to be clear that the possibility of ensuring that the electorate consists of a universal system and that all Peers—not simply hereditary Peers—should form the electorate is, to say the very least, in the balance.
  As this is my major preoccupation and as I very passionately want to see adopted the principle that the Weatherill Peers should be elected by a mixture of life and hereditary Peers—a substantial number of my noble friends on the Cross Benches believe the same thing—it seems that the only way in which we, the independent element in the House and in any future House, can avoid being bulldozed by the major parties and bring about the system that we want to see, is to support the Motion tabled by my noble friend Lord Bledisloe.
  As a result of this debate, if for no other reason—it has, in my view, been a good, constructive and informative debate so far—I trust that there will be support from a sufficient number of Peers of all groups and parties to ensure that my noble friend's Motion is carried.
  Lord Peston: My Lords, I have been looking forward for a very long time to debating the minutiae of this remarkable document containing the new Standing Orders. It is equalled in its remarkable nature only by the verbatim account of the proceedings of the Procedure Committee. If various amateur dramatic societies wish regularly to perform that as a playlet in due course, I hope that Her Majesty's Government, or whoever owns the copyright, will not make any effort to stop them.
  Unlike one or two noble Lords on the Cross Benches, I did not regard this as a matter of "profound importance". It is a matter of importance, but the idea of using the word "profound" for a technical matter of this kind is really quite absurd. As I have been looking forward to a long debate, I hope that nothing I say will shorten it. I start from exactly the opposite position to that of the noble Lord, Lord Strathclyde, but I come to exactly the same conclusion. He starts from the position that it is a bad Bill which is made better; and I start from the position that it is a very good Bill which has been made slightly worse by the Weatherill amendment.
  1164
  However, having said that, I begin from the position set out by my noble and learned friend the Lord Chancellor on page 9 of the Third Report of the Procedure Committee's proceedings. He said that,
  "it was expressly agreed between myself and Lord Cranborne that the electoral range should be confined to the hereditaries of the relevant grouping and exclude the life peers".
  I emphasise the words "expressly agreed". He continued:
  "I am aware of the press release to which he refers"—
  that is, the noble Lord, Lord Chalfont—
  "To the extent it gives a different impression, it was erroneous. There may have been a failure of communication but what was agreed between myself and Lord Cranborne is precisely as I have said".
  I understand that the noble Viscount, Lord Cranborne, has said much the same now.
  I was completely bemused, although perhaps my hearing is not so good, by the intervention of the noble Lord, Lord Weatherill. I say that because, on page 11 of the report, he says:
  "I am bound to say that it was my understanding that the arrangement was that the hereditary peers would elect hereditary peers".
  I do not know whether the noble Lord was trying to say that that is no longer his understanding, but he certainly said that it was his "understanding". Therefore, I have no idea why this debate is proceeding or why anyone on the Cross Benches is supporting the noble Viscount, Lord Bledisloe—
  Lord Weatherill: My Lords, I was making the point that my words were not correctly reported.
  Lord Peston: My Lords, I do not understand that either. Obviously, I am in a rather "thick" mood this afternoon.
  In connection with the interpretation of all this, perhaps I may say that, for once, I am able to say how much I agree with the noble Earl, Lord Ferrers. I am afraid that he said nothing during the whole of the debates on this Bill with which I have been able to agree; and that has brought me enormous disappointment. However, apropos something that his noble friend Lord Skelmersdale said, I believe that he said that the 75 might be elected by hereditary Peers but that that did not mean that they would represent them. Once they were elected, they would be here as Members of the House the same as everybody else; they would not be representative of anybody. That is of the essence.
  Therefore, when my noble and learned friend the Lord Chancellor debates with the noble Viscount, Lord Cranborne—who, I believe, was then Leader of the Opposition—and comes to an agreement, are we to say that this somehow has no significance for your Lordships and that we should all start from scratch, despite the fact that two of the major figures in this House have, in all honesty, done what a great many Peers have done?
  I repeat my point: I do not like the Weatherill amendment. Indeed, I have said that consistently. I should like the hereditary Peers not to sit and vote in

  1165
  your Lordships' House. However, to suggest that we regard what my noble and learned friend the Lord Chancellor, the former Leader of the Opposition and colleagues—I use that word to refer to the whole House—said as just another few words, when they have negotiated in all honesty, and to suggest that we can now debate the matter as if none of this had happened, does not seem to me to be remotely a way in which your Lordships should proceed.
  I do not want to stop all the other Cross-Benchers who are ready to speak from doing so. I certainly have no wish for them not to vote. However, if this House is to stick to its great traditions, it is time that we stopped making remarks which imply that, somehow or other, leading figures in this place are not to be trusted and carry no great weight. Of course, the agreement is not binding, in the sense that it cannot be binding for Liberal Democrats who were not party to the deal. However, the fact that it has weight seems to me to be of enormous importance. It certainly has weight for me, and I speak as someone who does not agree with keeping any of the hereditaries. Therefore, if it has weight with me, it ought to have weight with a great many other noble Lords.
  5.30 p.m.
  The Earl of Onslow: My Lords. I think it is reasonable to say that I support wholeheartedly the 75 plus 15. I see grave difficulties, however, with the by-election system.
  The by-election system has to come about because obviously things go wrong and we have to plan for things going wrong. Let us assume for the sake of argument that of the 15, there are three Liberal Democrats who are chairmen or deputy speakers and three Labour Party members as well. Under those circumstances in a Labour by-election there will be an electorate of four and in a Liberal Democrat by-election there will be an electorate of five. I am sorry but I do not think that that is good enough: 42 is "iffy", 28 is "iffyish", five is not on, and four is awful.
  I therefore think that we ought to do one of two things. Either we say—and I think it is a perfectly reasonable proposal—that all hereditary Peers elect at by-elections; that is, all those who are still in the House. In those circumstances, if the noble Lord, Lord Strabolgi—who I sincerely hope is elected under one ticket or another—were, unfortunately, to fall under a bus, or die of a surfeit of lampreys or whatever, I would be quite happy to vote for a Labour successor of his, be he inside the House or—as he obviously then will be—outside the House. I think that most of us would have no difficulty with that and the electorate would then be 90, which is a respectable number. Equally, I suspect that if one of us, who were or were not elected, were to die, the noble Lord, Lord Strabolgi, could be trusted to vote for an appropriate Conservative replacement. Either we do that, or we say that the whole of the Labour peerage elects its hereditary successor and that the same applies to the Liberal Democrats. I believe that the
  1166
  by-election system is in danger of bringing us into serious disrepute.
  I happen to think that the noble and learned Lord the Lord Chancellor and my noble friend Lord Cranborne, by a mixture of bluff and ignorance—all the things that make England work—have come up with an extremely good compromise which I hope will result in a proper reformed House in due course. We must not allow one small bit—the mote and the beam in someone's eye—to ruin what is either a good enough compromise which will stand on its own or the sand in the oyster which will ensure that we have a properly reformed House of Lords, which I certainly want, able to kick governments where it hurts most. The by-election system is not good enough.
  Lord Barnett: My Lords, I disagree, unusually, with my noble friend Lord Peston. I agree that this is not a profound matter, as he said; it is a technical matter. I trust my noble and learned friend the Lord Chancellor and the noble Viscount, Lord Cranborne, but that does not mean to say that I feel bound by what they did in a "deal": I do not. I do not feel bound by that at all. As the House will know, I would prefer the simple solution; namely, to have elected life Peers and not to have a Weatherill clause. I say that with great respect to the noble Lord, Lord Weatherill, who is really the noble Viscount, Lord Cranborne. The plain fact is that if we are dealing with the kind of technicality described by my noble friend Lord Peston, there is absolutely no reason why we should be bound by a deal done by two noble Lords for whom I have the greatest regard and respect, as the noble Viscount, Lord Cranborne, and my noble and learned friend know.
  As I say, we are dealing here not with a profound matter but with technicalities. We are all entitled to a view. My view—I at least agree with my noble friend Lord Peston on this—is that the document before us, and some of the stuff in it, is quite hilarious. I thought that Peter Riddell was quite modest in his comments in The Times this morning. It is the greatest load of nonsense I have seen in my life. I say that with the greatest respect to those who compiled it. We are dealing here with a technicality. I would prefer not to deal with it, but we are. I trust my noble and learned friend, as I do my noble friend Lord Peston, although on this matter I do not agree with him. As he said, we are dealing with a technicality. On a technicality we are all entitled to a view. My view is that I shall support the amendment of the noble Viscount, Lord Bledisloe.
  Earl Ferrers: My Lords, I feel sorry for the poor noble Lord, Lord Peston, who no longer has the confidence of his noble friend, at least in this debate. Meanwhile I am deeply indebted to the noble Lord because if I have been able to give him any pleasure at all, I am glad. He said I had because he was able to agree with something that I had said even though I have not yet said anything.
  I am singularly excited at the fact—which I thought would never happen—that I should be on the side of the noble and learned Lord the Lord Chancellor. I always reckoned I was on the side of the angels in the matter,

  1167
  and to find myself not on the other side but perhaps the same side as the noble and learned Lord is a gratitude I had not expected to come about.
  The matter is, I believe, relatively simple. I do not agree with the amendment but with the Motion. I say with the greatest of respect that I do not think it matters what the "deal" was or whether we are supposed to agree with it. We have to agree with the Motion or the amendment. The noble Viscount, Lord Bledisloe, made a persuasive speech, along with the noble Lord, Lord Rodgers, and the noble Lord, Lord Chalfont. That surprised me a great deal. They said that they could not understand why life Peers should be excluded from voting for hereditary Peers. It seems to me there is a perfectly obvious reason; namely, that the life Peers are here and the hereditary Peers are being—to use the words of the noble and learned Lord, Lord Falconer—thrown out. Therefore the hereditary Peers are quite right to vote for those people whom they would like to see remain as hereditary Peers.
  The noble Lord, Lord Chalfont, said that he could not understand why, if life Peers were excluded from voting for hereditary Peers, they should vote for the 15. The answer is perfectly simple; namely, because the 15 hereditary Peers are being voted for as servants of the House, or rather Members of the House who occupy positions which facilitate the running of the House, such as deputy chairmen. There is a perfectly logical argument for two forms of votes. However, what is illogical—here I agree with my noble friend Lord Strathclyde—is that the Labour Party could use one form of voting, either hereditary Peers, or hereditary and life; the Cross-Benchers could use another; and the Conservative Party another. We must have a similar thread running through the whole lot.
  Lord Chalfont: My Lords, I am grateful to my noble friend for giving way. If he says that the 15 are being voted upon and elected to be of service to the House, what are the other 75 going to do?
  Earl Ferrers: Dear, oh dear. The noble Lord, Lord Chalfont, has not been following all this very well. The 15 are supposed to be deputy chairmen of committees and chairmen of other committees, whereas the other people are what you might call the PBI in old-fashioned language. I do not propose to translate what that means because it might be unparliamentary language.
  However, I agreed with the noble Lord, Lord Chalfont, when he said that he hated the whole Bill. He is absolutely right about that; I hate it too. The trouble with the Bill is that it is rather like going to a tenpin bowling alley. Every time a new ball gets thrown, about six perfectly good upstanding skittles get knocked over. That is what is happening here. Now we are all getting into a muddle as to how people should be elected and who should vote for them. This situation has never arisen before. It has arisen because of this jolly old Bill which is perfectly awful.
  1168
  I believe that we should stick with the Motion and vote with the noble and learned Lord the Lord Chancellor. It will be fun seeing each other in the same Lobby. It will no doubt be a day he remembers for as long as he lives. I believe that we should vote against the amendment so ably put by the noble Viscount, Lord Bledisloe.
  I was concerned about one or two things in the report. Reference was made to people producing CVs—curriculum vitae. We must be very careful that this does not turn into people giving election addresses. Can one imagine a noble Earl, with his coat of arms and wearing a nice Earl's coronet—on the front of which is a message? As one goes down the scale, a Viscount might have a less glamorous coronet; and when one comes to the Barons, they are like all the rest except that their papers and coats of arms are usually more flamboyant than anyone else's. That would be pretty disagreeable.
  What will be put in this election statement? "I will be a regular attender; vote for me"; "I will be a loyal party member"; or "I will use my nous and I will vote not for the party when I want to but in my own way"; or "I will guarantee not to speak too long and so keep your Lordships from dinner". I know your Lordships cannot be that hungry. It really is pretty awful. I bet that, if we are not careful, some noble character will start producing an election statement. I hope that will not happen.
  The noble Lord, Lord Rodgers, spoke about jeroboams of champagne. I agree with him. What will happen if a Peer seeking election is seen giving a drink to a Peer who might be a voter, or taking him out to dinner? What will happen if he takes him to the ballet? Where does sleaze start and common sense end? Or has it already ended? It is a frightful thought.
  I had a great deal of sympathy for the noble Viscount, Lord Bledisloe, when he said that he did not like the idea of voting for all 42 Peers. I was told that all one had to do was vote for oneself and then get off; that one had more likelihood of getting in that way. But of course the powers that be have seen through that trick and they now say that we have to vote for 42. I do not know whether we all know 42 Members for whom we would like to vote. What happens if a noble Lord does not know 42 Members? That is a pretty curious thing.
  I am thankful that the replacement for what somebody described rather grotesquely as the "dead Weatherill Peers" is to be established by a vote and not by going back to the old system of who will be the 12th man. It is obviously much better that it should be done in that way. I hope that we vote for the Motion and not for the amendment.
  5.45 p.m.
  The Chairman of Committees (Lord Boston of Faversham): My Lords, it might be for the convenience of the House if I were to make something of a summing up before the noble Viscount, Lord Bledisloe, winds up on his amendment.

  1169
  After the speech we have just heard from the noble Earl, Lord Ferrers, I find myself in very great difficulty; I cannot possibly match that at all. He has not only pleased the noble Lord, Lord Peston, but he certainly pleased me with the exuberance and humour of his speech and, I suspect, the whole House.
  That brings me to another relevant point in connection with the noble Earl. I would not dream of entering into any question of—or indeed revealing—whom I might support among those who will stand for election; I have my own personal thoughts. After the noble Earl has brought me such great pleasure, I am not sure that I can bring him excessive pleasure because if your Lordships reject the amendment of the noble Viscount, Lord Bledisloe, and accept, as the noble Earl has suggested, my Motion, I will not be in a position to vote for him anyway. I shall reveal no more.
  After a debate such as this—which has been very thorough even though a comparatively limited number of your Lordships contributed to it—I think the House will forgive me if I do not refer to all the points that have been made. Your Lordships will forgive me even further if I do not refer to all those who have taken part in the debate. It is right to make clear that I do not feel it would be for me anyway, doing the job that I try to do for your Lordships, to enter into the substantive arguments of either one side of today's debate. The arguments emerge from policy matters and they are not matters in which, traditionally, a Chairman of Committees gets involved. So I will not deal with those points.
  However, there are one or two subsidiary matters which it might be thought I am required to answer. The noble Lord, Lord Rodgers of Quarry Bank, mentioned that those who stand for election for the Deputy Speaker and chairmanship posts will not be required to undertake to carry out the duties of a Deputy Speaker. I paraphrase his words, I hope without inaccuracy. We grappled with that difficulty in the Select Committee. It would be very difficult to compel anyone to undertake any particular work. In accepting the services of those people who serve us so well as voluntary Deputy Speakers and as chairmen of committees and sub-committees of your Lordships' House, we must rely on good faith, as we always have. That is all we can do. I hope that reliance will be sufficient.
  Perhaps I may comment on the speech and the amendment of the noble Viscount, Lord Bledisloe. He clearly put in a tremendous amount of work on the paper that he submitted to the Procedure Committee. He and the noble Lord, Lord Chalfont, put forward their proposals—as they have today—with great clarity, cogency and moderation. I know that those attributes are always acceptable to your Lordships' House.
  I can say, without going into the substantive matters which it discussed and which have been discussed this afternoon, that the Procedure Committee came forward to your Lordships' House with a very clear recommendation. It came forward with that recommendation on the basis of a substantial majority within the committee in favour: 18 to 4. However, in
  1170
  fairness, I should point out that that majority probably needs to be regarded as 17 to 4 because the noble Lord, Lord Weatherill, in the customary honourable way in which he approaches the House, has indicated the different view he has expressed this afternoon.
  This matter was discussed very thoroughly and at considerable length within the Procedure Committee, as I hope your Lordships will have seen from the transcript of the proceedings. At the end, there was a substantial majority within the committee for the recommendation which is before the House. On behalf of the Procedure Committee, I ask that your Lordships bear that very much in mind.
  That is all that I propose to deal with. On behalf of the Procedure Committee, I ask your Lordships to decline to accept the noble Viscount's amendment and to accept the Motion before the House.
  Viscount Bledisloe: My Lords, I am under instructions from the noble Lord, Lord Carter, to close the debate at this stage. On such matters I am, as ever, the soul of obedience. I think that is a pity. I know that there are many Back-Benchers on all sides of the House who still wish to contribute. We have heard at some length from the heavy guns on the Front Benches; we have heard rather less from the Back-Benchers.
  The noble Lord, Lord Boston, has prayed in aid the recommendation of the Procedure Committee. A decision like that is not surprising in a matter which is Whipped and when, almost in its entirety, the committee is composed of Members of one Front Bench or another. With respect to—
  Lord Carter: My Lords, will the noble Viscount give way? Half the members of the Procedure Committee are Front-Benchers, the rest are Back-Benchers.
  Viscount Bledisloe: And, my Lords, the Back-Benchers of both parties were Whipped. I gather that that is not the case today.
  The noble Lord, Lord Boston of Faversham, says that the matter was fully debated by the Procedure: Committee. With respect to the noble Lord, I confess., having been present, that I do not believe that it was. The noble Lord, Lord Chalfont—and I to some extent—put forward reasoned arguments. The}' were met solely with the response: "Well, it's in the agreement, ain't it?". If that is what is meant by being "debated cogently and thoroughly", it is not what those words normally mean to me.
  I want to make three points. First, the noble Lord, Lord Strathclyde, has today returned to the concept of, "Oh well, they are representative". That is remarkable. At a very early stage in the Procedure Committee, the Chairman, the noble Lord, Lord Boston of Faversham, said,
  "I would venture to suggest that neither those who would support the original proposal"—
  that is, the draft orders—
  "nor those would support Lord Bledisloe's proposal is going for … what has been called been called representation".

  1171
  So the noble Lord said plainly that no one was arguing for representation. That was the way in which the Procedure Committee was conducted.
  Secondly, I deprecate the argument that the "O" group or the Clerk of the Parliaments has examined the matter carefully. It is absolutely plain that that admirable body and that even more admirable person have skilfully put down on paper what they were told to put. They have in no way given thought to whether this is the right way of doing things. They acted as draftsmen, and they have said so.
  Thirdly, at the end of the day, the question is: does the House do what is sensible, or does it merely say, 'Two people have made an agreement. We have to follow that"? This House has a unique reputation among the parliaments of the world for actually listening to the arguments and deciding matters on that basis. I hope that on this occasion the argument will prevail over the wishes of the Front Benches. I wish to test the opinion of the House.
  5.52 p.m.
  On Question, Whether the said amendment shall be agreed to?
  Their Lordships divided: Contents, 146; Not-Contents, 229.

  Division No. 1

  CONTENTS

  Ackner, L.

  Dholakia, L.

  Addington, L.

  Downshire, M.

  Ailesbury, M.

  Drogheda, E.

  Alderdice, L.

  Dunleath, L.

  Allenby of Megiddo, V.

  Dunrossil, V.

  Ampthill, L.

  Effingham, E.

  Arlington, B.

  Exmouth, V.

  Ashbourne, L.

  Ezra, L.

  Ashburton, L.

  Falkland, V.

  Avebury, L.

  Fookes, B.

  Baldwin of Bewdley, E.

  Freyberg, L.

  Barnett, L.

  Geraint, L.

  Beaumont of Whitley, L.

  Gibson, L.

  Blaker, L.

  Gisborough, L.

  Bledisloe, V. [Teller.]

  Gladwyn, L.

  Blyth, L.

  Glasgow, E.

  Bridge of Harwich, L.

  Goodhart, L.

  Brightman, L.

  Gray, L.

  Buccleuch and Queensberry, D.

  Greenway, L.

  Butler of Brockwell, L.

  Grey, E.

  Calverley, L.

  Halsbury, E.

  Campbell of Alloway, L.

  Hamwee, B.

  Carew, L.

  Hankey, L.

  Carlisle, E.

  Harding of Petherton, L.

  Carnarvon, E.

  Harris of Greenwich, L.

  Carrick, E.

  Harrowby, E.

  Chalfont, L.

  Hawke, L.

  Chorley, L.

  Hereford, Bp.

  Clancarty, E.

  Holme of Cheltenham, L.

  Clement-Jones, L.

  Hooson, L.

  Clifford of Chudleigh, L.

  Howie of Troon, L.

  Cooke of Islandreagh, L.

  Huntingdon, E.

  Craig of Radley, L.

  Hylton, L.

  Craigmyle, L.

  Hylton-Foster, B.

  Dahrendorf, L.

  Iddesleigh, E.

  Desai, L.

  Iveagh, E.

  Devonport, V.

  Jenkins of Hillhead, L.

  1172

  Killanin, L.

  Rodgers of Quarry Bank, L.

  Kinloss, Ly.

  Roll of Ipsden, L.

  Kintore, E.

  Runciman of Doxford, V.

  Laming, L.

  Russell, E.

  Lauderdale, E.

  St. John of Bletso, L.

  Lester of Herne Hill, L.

  Sandberg, L.

  Lincoln, Bp.

  Sandford, L.

  Listowel, E.

  Sandwich, E.

  Longford, E.

  Shannon, E.

  Mackie of Benshie, L.

  Sharp of Guildford, B.

  McNair, L.

  Slim, V.

  McNally, L.

  Smith of Clifton, L.

  Maddock, B.

  Strafford, E.

  Mar and Kellie, E.

  Strange, B.

  Marlesford, L.

  Swinfen, L.

  Mersey, V.

  Tenby, V. [Teller.]

  Methuen, L.

  Thomas of Gresford, L.

  Middleton, L.

  Thomas of Swynnerton, L.

  Miller of Chilthorne Domer, B.

  Thomas of Walliswood, B.

  Molyneaux of Killead, L.

  Thomson of Monifieth, L.

  Monson, L.

  Thurlow, L.

  Montgomery of Alamein, V.

  Thurso, V.

  Mountgarret, V.

  Tope, L.

  Napier and Ettrick, L.

  Tordoff, L.

  Nathan, L.

  Trenchard, V.

  Newall, L.

  Trumpington, B.

  Newby, L.

  Wallace of Saltaire, L.

  Norton, L.

  Walton of Detchant, L.

  Ogmore, L.

  Waverley, V.

  Pym, L.

  Weatherill, L.

  Rathcavan, L.

  Westbury, L.

  Razzall, L.

  Wharton, B.

  Redesdale, L.

  Wigoder, L.

  Rennell, L.

  Wilberforce, L.

  Renton, L.

  Williams of Crosby, B.

  Rochester, L.

  Wright of Richmond, L.

  NOT-CONTENTS

  Acton, L.

  Carter, L. [Teller.]

  Addison, V.

  Castle of Blackburn, B.

  Ahmed, L.

  Chadlington, L.

  Ailsa, M.

  Chandos, V.

  Alexander of Tunis, E.

  Chesham, L.

  Alli, L.

  Clanwilliam, E.

  Amos, B.

  Clarke of Hampstead, L.

  Anelay of St. Johns, B.

  Clark of Kempston, L.

  Archer of Sandwell, L.

  Cledwyn of Penrhos, L.

  Ashley of Stoke, L.

  Clinton-Davis, L.

  Astor of Hever, L.

  Cocks of Hartcliffe. L.

  Bach, L.

  Colwyn, L.

  Bathurst, E.

  Cope of Berkeley, L.

  Belhaven and Stenton, L.

  Courtown, E.

  Berkeley, L.

  Cowdrey of Tonbridge, L.

  Berners, B.

  Cox, B.

  Biddulph, L.

  Cranborne, V.

  Biffen, L.

  Crawley, B.

  Blackstone, B.

  Cross, V.

  Blackwell, L.

  David, B.

  Boardman, L.

  Davidson, V.

  Borrie, L.

  Davies of Oldham, L.

  Bowness, L.

  Denbigh, E.

  Bragg, L.

  Denham, L.

  Brentford, V.

  Diamond, L.

  Brett, L.

  Dinevor, L.

  Bridgeman, V.

  Dixon, L.

  Brooke of Alverthorpe, L.

  Dormand of Easington, L.

  Brooks of Tremorfa, L.

  Dulverton, L.

  Brougham and Vaux, L.

  Dundee, E.

  Burlison, L.

  Eden of Winton, L.

  Burnham, L.

  Elder, L.

  Buscombe, B.

  Erne, E.

  Byford, B.

  Erroll, E.

  Cadman, L.

  Evans of Parkside, L.

  Caithness, E.

  Evans of Watford, L.

  Carnegy of Lour, B.

  Falconer of Thoroton, L.

  1173

  Farrington of Ribbleton, B.

  Montrose, D.

  Faulkner of Worcester, L.

  Morris, L.

  Ferrers, E.

  Morris of Castle Morris, L.

  Fisher, L.

  Mountevans, L.

  Forsyth of Drumlean, L.

  Mowbray and Stourton, L.

  Gainford, L.

  Moyne, L.

  Gardner of Parkes, B.

  Munster, E.

  Geddes, L.

  Murray of Epping Forest, L.

  Gilbert, L.

  Murton of Lindisfarne, L.

  Gladwin of Clee, L.

  Newton of Braintree, L.

  Glentoran, L.

  Nicol, B.

  Gordon of Strathblane, L.

  Noel-Buxton, L.

  Goudie, B.

  Norfolk, D.

  Gould of Potternewton, B.

  Northbrook, L.

  Graham of Edmonton, L.

  Northesk, E.

  Grenfell, L.

  Norton of Louth, L.

  Hacking, L.

  Nunburnholme, L.

  Hanningfield, L.

  O'Cathain, B.

  Hanworth, V.

  Onslow, E.

  Hardinge of Penshurst, L.

  Park of Monmouth, B.

  Hardy of Wath, L.

  Peston, L.

  Harlech, L.

  Pilkington of Oxenford, L.

  Harmsworth, L.

  Pitkeathley, B.

  Harris of Haringey, L.

  Plummer of St. Marylebone, L.

  Hayman, B.

  Ponsonby of Shulbrede, L.

  Henley, L. [Teller.]

  Puttnam, L.

  Higgins, L.

  Ramsay of Cartvale, B.

  Hilton of Eggardon, B.

  Randall of St. Budeaux, L.

  Hogg, B.

  Rawlings, B.

  Holderness, L.

  Reay, L.

  Hollis of Heigham, B.

  Rendell of Babergh, B.

  Hooper, B.

  Richard, L.

  Hothfield, L.

  Roberts of Conwy, L.

  Howe, E.

  Rogers of Riverside, L.

  Howell of Guildford, L.

  Romney, E.

  Hughes, L.

  Rotherwick, L.

  Hughes of Woodside, L.

  Rowallan, L.

  Hunt of Kings Heath, L.

  Saatchi, L.

  Hunt of Wirral, L.

  Sainsbury of Turville, L.

  Hurd of Westwell, L.

  St. Davids, V.

  Irvine of Lairg, L. [Lord Chancellor.]

  Sawyer, L.

  Scotland of Asthal, B.

  Janner of Braunstone, L.

  Seccombe, B.

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

  Selborne, E.

  Serota, B.

  Jeffreys, L.

  Shaw of Northstead, L.

  Jeger, B.

  Shepherd, L.

  Jenkin of Roding, L.

  Shore of Stepney, L.

  Jenkins of Putney, L.

  Shrewsbury, E.

  Kingsland, L.

  Simon, V.

  Kirkhill, L.

  Simon of Highbury, L.

  Lea, B.

  Skelmersdale, L.

  Leigh, L.

  Smith of Gilmorehill, B.

  Levy, L.

  Soulsby of Swaffham Prior, L.

  Lockwood, B.

  Stewartby, L.

  tollhouse of Pontefract, L.

  Strabolgi, L.

  Long, V.

  Strathclyde, L.

  Lovell-Davis, L.

  Sudeley, L.

  Luke, L.

  Symons of Vernham Dean, B.

  Lyell, L.

  Taylor of Warwick, L.

  McColl of Dulwich, L.

  Teviot, L.

  McIntosh of Haringey, L.

  Thatcher, B.

  Mackay of Ardbrecknish, L.

  Thomas of Gwydir, L.

  Mackenzie of Framwellgate, L.

  Thornton, B.

  Mallalieu, B.

  Tomlinson, L.

  Malmesbury, E.

  Torrington, V.

  Massereene and Ferrard, V.

  Trefgarne, L.

  Mayhew of Twysden, L.

  Turner of Camden, B.

  Merlyn-Rees, L.

  Uddin, B.

  Merrivale, L.

  Vivian, L.

  Milverton, L.

  Walker of Doncaster, L.

  Mishcon, L.

  Wallace of Coslany, L.

  Molloy, L.

  Warwick of Undercliffe, B.

  Monk Bretton, L.

  Watson of Invergowrie, L.

  Monkswell, L.

  Whitty, L.

  Montague of Oxford, L.

  Williams of Elvel, L.

  1174

  Williams of Mostyn, L.

  Young, B.

  Windlesham, L.

  Young of Old Scone, B.

  Winston, L.

  Resolved in the negative, and amendment disagreed to accordingly.
  On Question, Motion agreed to.

Procedure of the House: Select Committee Fourth Report
6.4 p.m.
The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper. I was tempted to say that we now move to calmer waters, but one can never make that kind of rash judgment about matters before your Lordships' House.
The main item in the Procedure Committee's Fourth Report concerns the format of the statute law. A working group of officials, chaired by the Clerk Assistant of the House, has made recommendations for a new look for Bills and Acts of Parliament. I am pleased to say that your Lordships' Procedure Committee and the Modernisation Committee in another place have now put forward agreed recommendations on the basis of the working group's report.
The proposals from the working group are set out in two reports from the Select Committee, the Second and Fourth Reports. The most conspicuous changes are a new format for clauses, with bold clause titles instead of side notes and an increase in the type size of schedules to make them the same as clauses. It is also proposed that the typeface should be larger than the traditional typeface used in the past.
The case for change arises out of two separate factors. First, there is the development of electronic publishing and the Internet on which all Bills and Acts are now published. This new technology made a re-think of the format desirable. Secondly, the Inland Revenue tax law re-write project, to which the House has already agreed in principle, has set about making tax law easier to understand. The steering committee—to which we are all grateful for its hard work—chaired by the noble and learned Lord, Lord Howe of Aberavon, has been at the forefront of proposals to improve not only the language of the tax law but also its appearance and readability.
If your Lordships agree to this report, it is intended that Bills and Acts should take on their new appearance from the beginning of the Session 2000 to 2001. A two-page spread of this year's Finance Bill in the new format is annexed to the Procedure Committee's report by way of an example.
I should also mention the second item in the Procedure Committee's report which concerns long Answers to Written Questions. It is proposed that practice in this House should be the same as that in another place and that a limit of two columns of print should be placed on Answers to Written Questions. Lengthy Answers would be placed in the Library of the House. I beg to move.
Moved, That the Fourth Report from the Select Committee (HL Paper 84) be agreed to.—(The Chairman of Committees.)
Following is the report referred to:
1. FORMAT OF THE STATUTE LAW
At its meeting on 13 April the Procedure Committee approved recommendations from a working group of officials for changes in the format of bills and Acts of Parliament. A sample of the new format was appended to the Committee's second report (1998–99 HL Paper 52).
The Commons Modernisation Committee also considered the proposed changes and agreed to all but one of them, namely the typeface. Whereas the Procedure Committee endorsed the working group's recommendation of Times New Roman, the Modernisation Committee preferred Palatino, which is a larger typeface. Accordingly, the Procedure Committee reconsidered its earlier decision and now recommends a typeface similar to Palatino but one which is more generally available on Windows-based personal computers, namely Book Antiqua. This typeface has also been agreed by the Modernisation Committee.
A sample of the new format in the revised typeface is appended to this report.
It is proposed that the new format should take effect from the beginning of session 2000–01.
2. LONG WRITTEN ANSWERS
The Committee recommends that extremely long answers to written questions, usually in the form of lists or tables, should not be printed in Hansard. There should be a limit of two columns of print for answers to written questions. Answers to questions requiring more than two columns in Hansard should use the formula "The information has been placed in the Library of the House".
Lord Marlesford: My Lords, I am afraid that I am not happy with the second recommendation of the Procedure Committee. It is to stop printing in Hansard what is described as,
"extremely long answers to written questions".
I would probably be happy if the Answer were extremely long, but the report goes on to say:
"There should be a limit of two columns of print for answers to written questions. Answers to questions requiring more than two columns in Hansard should use the formula 'The information has been placed in the Library of the House'".
I am not happy about it because Written Questions are a most important part of the parliamentary process for eliciting information, often new information, often in a numerical form. It is information which not only becomes available to the Member of Parliament who has asked for it but also to the press and, through the press, a much wider audience.
I have been looking at Hansard and it is rare that the proposal which is in the Select Committee's report would have to be enforced. But on many of the occasions when it would be enforced, if the Procedure Committee's report is accepted, it would be most undesirable. Often it is possible to obtain useful statistical information as an authoritative ex cathedra source that has not previously been published or put together in that way. Having looked through Hansard on a random basis in recent months, I have found a number of such Written Answers. I shall not weary your Lordships with them. Suffice it to say, those Answers cover economic, social, educational and health matters, law and order, aid, relations with foreign powers and so on.
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Many Answers are extremely useful pieces of information that should be in the public domain. The Library is not open to the public. Although a Written Answer may be available somewhere on a piece of paper, it is not the same as printing it in Hansard. I believe that the value of Written Answers would be considerably reduced if we agreed to censor them in this arbitrary way. I ask the Chairman of Committees to rethink this particular recommendation.
Lord Richard: My Lords, I have considerable sympathy with the observations of the noble Lord, Lord Marlesford. I am a little surprised to hear the Chairman of Committees say that this is now the practice in another place. I did not know that. If so, the practice has changed a great deal since those of us who are now Members of this House were Members of the other place. The noble Lord is absolutely right in his description of the use of Hansard. It is a method of disseminating important information with the imprimatur of the government machine behind it. Therefore, it deserves the kind of publicity that Hansard gives it rather than merely being placed in the Library.
I also see the other side of the argument. It is costly to enumerate matters at great length in Hansard. I would not object to an indicative limit that in normal circumstances Written Answers should not exceed two columns, but to have a blanket prohibition, as the report recommends, that no Written Answer should exceed two columns in Hansard goes a little too far. I hope that the Procedure Committee will look at it again and consider a persuasive rather than mandatory approach.
Lord Peston: My Lords, I rise to support the noble Lord, Lord Marlesford, and my noble friend Lord Richard. I have great difficulty in understanding how, on general grounds, such a proposal could have emerged. The matter that I find terribly unconvincing—whether or not it is true—is the practice in the other place. I have never regarded that as guidance in deciding anything in your Lordships' House.
I believe that this proposal will lead to inefficiency. If I discovered that I could not have a Written Answer in the form of economic data in Hansard, I would put a different Question. Instead of asking for data for 1979 to the present, I would ask for data from 1979 to 1989. I would follow it with a second Question asking for data from 1989 to 1999. I am most unimpressed with the proposal.
I tend to ask Questions precisely to put the data in the public domain. I cannot recall whether that part of Hansard is on the Internet. If it is, a fortiori this information should be published in Hansard. It follows that the Chairman of Committees should take this away, not press this particular part of the recommendations and ask one or two of us who are interested parties—this is what we do on occasions, some more and some less— what we think. No one has asked me about it. I do not

1177
know whether the noble Lord, Lord Marlesford, or anyone else has been asked. I am very unhappy about the recommendation.
6.15 p.m.
Lord Henley: My Lords, perhaps I may intervene briefly also in support of my noble friend and the noble Lords, Lord Richard and Lord Peston. I start with the confession that I am a member of the Procedure Committee and was at the meeting which discussed this matter. It slipped through at the end of the meeting without my noticing it. Together with other noble Lords, I have concerns similar to those already expressed. I suspect that the best that the Chairman of Committees can offer is a promise that at the next meeting of the Procedure Committee the matter should be discussed again. It is obvious that there are considerable concerns which we overlooked at the time; and I suspect that further concerns will be voiced behind me. Perhaps the Chairman of Committees can respond in that way.
Lord Renton: My Lords, my noble friend Lord Marlesford raises a very important point. Hansard is distributed throughout the English-speaking world, whereas documents deposited in the Library do not go very far. If a problem is created by long Written Answers, the solution is that Ministers should instruct their departments not to produce long Answers. Many Answers are too long. Nevertheless, their contents are important and they should be published in Hansard so that they can have the widest possible publicity, which they will not get in the Library.
Lord Stewartby: My Lords, I add a word of support to my noble friend Lord Marlesford and others who have spoken. In your Lordships' House there are former Ministers who will have encountered this issue from the other end. I recall many occasions when there was discussion in the Treasury and other departments about how best to put a substantial piece of information on the public record. To place a copy of the document in the Library is not the best way to do it. I accept that there may be a tendency to abuse the Written Answer procedure; it is perhaps that which has led the Procedure Committee to make this recommendation. As another place has implemented this arrangement—like the noble Lord, Lord Richard, I was unaware of that fact until I heard the Chairman of Committees say so this afternoon—it is all the more important that we should not take the final step of removing it from our Official Report without further thought.
The noble Lord, Lord Peston, made the valid point that if a limit is imposed on the space that a Written Answer can occupy before it is sidelined into the Library, all one needs to do is to fragment it. One asks several Questions which may not necessarily be printed together and therefore will be much less useful for purposes of references. They will be scattered throughout a number of editions of the Official Report. Hansard is very much easier to consult than is the Library, not simply because it has a wide geographical spread. Even if one wants to consult the Library, it is far easier to refer to a particular issue of the
1178
Official Report than to ask an overworked clerical assistant to dig around in various boxes, perhaps tucked away in different places, to find the document in question. Although the assistants are very assiduous, it takes a great deal longer than consulting the index of the Official Report. I hope that this matter will be given further thought.
Baroness Park of Monmouth: My Lords, I also support my noble friend. In particular, in the field of defence it is important that facts should be placed on the record where they can be clearly seen. In many ways that dispels misunderstanding. It is vital that those truths should be available. The more transparent the Government seek to become under freedom of information legislation, the more they need to ensure that something as matter-of-fact, well known and respected by everybody as Hansard, continues to be available to provide the kind of information that people want, which very often cannot be compressed into two columns.
Lord Rowallan: My Lords, I too am extremely concerned by the recommendation. We may face the ludicrous situation where, if there is a limit of two columns and the matter is slightly controversial, a Minister makes the Answer so long that it does not come into the public domain. That should be viewed with great concern. Cost has been cited as a reason. Surely, democracy should not be decided on cost but on public service and accountability. I do not see how it costs any more to print something in Hansard than to print the same information and place it in the Library. I understand that on average 1,850 copies of Hansard are sent out on a daily basis. Therefore, there are extra bits of paper involved. Apart from the cost of the paper, I should not have thought that the cost is much greater.
We must ensure that the workings of your Lordships' House are totally visible on a daily basis rather than hidden away in the Library to which the general public has little or no access. I believe that the proposal would be a retrograde step.
Lord Brightman: My Lords, I invite your Lordships to go to less controversial territory in the form of paragraph 1 of the report.
The Commons Modernisation Committee and the Procedure Committee are, in my opinion, to be congratulated on the admirable new format proposed for Bills. That said, with your Lordships' leave, perhaps I may take the opportunity to invite noble Lords' attention to a curious anomaly which exists in this field. I refer to the absence of any Minister with whom one can discuss the general policy applicable to the drafting and formulation of Bills.
Bills are mostly drafted by the Office of Parliamentary Counsel. The Minister to whom that office is responsible is no less than the Prime Minister. To be certain of that crucial fact, I checked it by two Questions for Written Answer in Hansard of 16th November 1998, col. WA 127, and 8th December 1998, col. WA 81. It would of course be the height of absurdity to suppose that one could seek to discuss the drafting

1179
policy of Bills with the Prime Minister. In the result there is simply no Minister with whom drafting policy can be discussed.
There is much which needs to be examined. For example, no guidelines exist in the Office of Parliamentary Counsel applicable to the drafting of Bills, such as apply to the drafting of Community legislation—or at least that was the situation when I inquired last October. The Community has admirable rules which I am sure some of your Lordships will envy. For example, Rule 1 states:
"Legislation should be drafted clearly, simply, precisely and unambiguously".
Rule 3 states:
"Long sentences, convoluted wording and excessive use of abbreviations should be avoided".
Rule 17 states:
"Amendments should take the form of a text to be inserted in the Act to be amended".
That is to say, what I call jigsaw amendments—where the reader has to put together bits and pieces in order to read the section as a whole in its amended form—should be avoided. The most extreme example of a jigsaw amendment that I have ever encountered was contained in Clause 5 of the Trustee Delegation Bill of this Session. The clause was intended to amend Section 25 of the Trustee Act 1925. Instead of printing Section 25 in its amended form, the draftsman presented the reader with no less than eight separate amendments to two Acts of Parliament, which the reader had to put together himself in order to read Section 25 in its amended form. I can tell noble Lords that it took me 15 minutes to get the whole section cobbled together in its proper form so that I could read it as it stood. Luckily, wiser counsels prevailed and the Bill left this House containing Section 25 set out as a whole in its amended form. If your Lordships desire a reference to this epic, I refer to Hansard of 9th March 1999, col. 125.
Clause 1(6) of the National Health Service (Private Finance) Bill, as it reached this House, was described by one highly experienced Peer as "incomprehensible". I refer to Hansard of 26th June 1997 at col. 1648. Fortunately, at Third Reading, the Minister accepted an amendment which had precisely the same intended effect and was as clear as daylight. The reference is Hansard of 3rd July 1997 at col. 306.
In my opinion it would be of immense benefit to this House as a revising Chamber, and to the public to whom Parliament is responsible, if the Office of Parliamentary Counsel could be made accountable to, for example, the Lord Chancellor. There would then be a Minister with whom drafting policy could be discussed when his workload permitted that course to be taken.
In paragraph 1 of the report, the Procedure Committee has taken on board consideration of the format of Bills. I should like to ask the noble Lord the Chairman of Committees whether the Procedure Committee could perhaps go one short step further and consider whether it is completely satisfied with the manner in which Bills are drafted. It is, after all, only a short step from format to formulation. If the answer is that the committee is
1180
not completely satisfied, appropriate quarters might be willing to consider whether the Lord Chancellor, or some other Minister, might take the place of the Prime Minister as the Minister to whom the Office of Parliamentary Counsel is responsible; and perhaps guidelines for the drafting of Bills might emerge.
Lord Renton: My Lords, before the noble and learned Lord sits down, perhaps I may remind him that there is an exception to what he says about responsibility for the parliamentary draftsman. For many years in Scotland the draftsman has been responsible not to the Prime Minister but to the Lord Advocate; and that is a valuable precedent.
Lord Brightman: My Lords, I am much obliged to the noble Lord for pointing that out. It is a helpful example.
Lord Swinfen: My Lords, I do not wish to follow the issue raised by the noble and learned Lord, Lord Brightman, because he knows far more on that subject than I do. However, I wish to support my noble friend Lord Marlesford. The noble Lord, Lord Peston, wondered whether Hansard is on the Net. I believe that it is.
Lord Peston: My Lords, I am aware that Hansard is on the Net. I sought to recall whether Written Answers were on the Net. I hoped for reassurance on that.
Lord Swinfen: My Lords, I believe that as Hansard is on the Net, Written Answers will also be on the Net. The noble Lord is right. Anything placed in your Lordships' Library will not be for public consumption. We are not allowed to take guests into the Library, even when the House is not sitting.
The Government pride themselves on open government. It is essential that everything should be published in Hansard no matter how long the answer may be. Some speeches are remarkably long—my speech is getting too long—and they are faithfully reported in Hansard. So should Questions.
6.30 p.m.
The Chairman of Committees: My Lords, perhaps I may deal first with the point raised by the noble and learned Lord, Lord Brightman. I am grateful to him for letting me know well in advance that he proposed to raise the matter. On behalf of the Procedure Committee, I thank him for his kind words.
The noble and learned Lord asked whether the Procedure Committee might be invited to consider drafting policy for Bills. I believe that his main concern was to seek to transfer responsibility for the Office of Parliamentary Counsel from the Prime Minister to the noble and learned Lord the Lord Chancellor. It is a matter of ministerial responsibility and the machinery of government. I cannot be of any further help on the matter today other than to say that I am sure that Ministers will have heard what my noble and learned friend has said and taken note of it. They will see that his comments are considered by the proper quarter.

1181
I cannot accept his suggestion to refer the matter to the Procedure Committee, because it does not fall within that committee's remit. However, I hope that what I have said is of some help and I am sure that his comments will have been heard in the appropriate quarters.
The point made by the noble Lord, Lord Marlesford, about long Written Answers was supported by all the other noble Lords who have spoken in this short debate apart from the noble and learned Lord, Lord Brightman. I am grateful to the noble Lord for having told me this morning that he proposed to raise the subject. In case it should be thought that I am not fulfilling one of the duties that your Lordships impose upon me—to be one of the guardians of your Lordships' procedures—I ought to point out that the correct course for dealing with the issue would have been to give notice and table an amendment not later than last night to achieve the aim that the noble Lord sought.
I hope that I may be able to bring a little comfort to your Lordships, but in view of the fact that a number of noble Lords seemed to think that there was no thought-out policy behind the proposal, 1 ought to spend a moment explaining the arguments. I understand the point made by the noble Lord, Lord Richard. It is true that another place follows the same practice, arising as a result of a ruling by Madam Speaker. That ruling came long after I served in another place and it might have come after the noble Lord, Lord Richard, was there, so it is understandable if he was unaware of it. The practice has been followed by the Editor of Debates in your Lordships' House, although without any guidelines hitherto. The Procedure Committee has suggested some guidelines.
I ought to mention the arguments lying behind the proposal to limit the length of material incorporated into Written Answers, particularly in the form of tables. It arose from a recent experience in which a question that received an Answer covering 31 A4 pages of typescript was answered on the basis that the information requested had been placed in the Library. I understand that today an answer covering 28 pages has been given.
I appreciate what has been said about costs but, with great respect, it would not be right for your Lordships' House to go on record as believing that matters of economy and public expenditure ought to be ignored. Considerations of accountability are important, but we should not ignore the need for economy and issues relating to costs.
6.30 p.m.
Lord Renton: My Lords, I am grateful to the noble Lord for giving way in the middle of his very interesting reply. He gave an example of a very long Answer. Would it not be feasible for every Answer to be no longer than two columns and for any amplification that was needed to go into the Library or to be sent to the noble Lord who had tabled the Question?
The Chairman of Committees: My Lords, I am grateful to the noble Lord, Lord Renton, for that helpful suggestion. That might be feasible. The noble Lord,
1182
Lord Peston, asked whether Written Answers were on the Net. I can confirm that they are. I am grateful to the noble Lord, Lord McIntosh of Haringey, for having said to me sotto voce while I was listening to your Lordships contributions that that could be a way of dealing with long Answers.
Reverting for a moment to the example that I gave at the outset that had led to the proposal, that 31-page Answer prompted an investigation into previous practice with Written Answers of comparable length. It was discovered that the formula had been applied on previous occasions, although not always consistently, it has to be admitted. It is only right to mention that to your Lordships.
Lord Renfrew of Kaimsthorn: My Lords, does not the preparation of a Written Answer of 31 pages involve considerable public cost? Is it not therefore desirable that the fruits of such labour should be on the public record? Will the noble Lord deal with the point made by my noble friend Lord Swinfen that an Answer deposited in the Library may well not be considered part of the public record unless, as the noble Lord, Lord McIntosh of Haringey, has suggested, it might be put on the Internet—if that was his suggestion? That might be a less expensive solution in some respects. Is it not a waste of effort if the Answer is concealed in the Library and not part of the public record?
The Chairman of Committees: My Lords, that is a valid point. I do not wish to go further than that this afternoon.
Long tables are often involved in such Answers. Printing them requires a large amount of time and manpower, with consequent staffing costs to add to the other costs to which I have referred. The noble Lord who asked the Question would in any case receive the full tables and information with the signed Answer provided to him or her, a copy of which would be placed in the Library.
Lord Peston: My Lords, before the noble Lord comes to his conclusion, when noble Lords from both sides of the House have gone to some trouble to speak at length and cogently it is traditional in your Lordships' House that a brush-off, which is what the noble Lord seems to be giving us, is not appropriate. It is too late now, because we do not tend to reject such Motions, but the least that I expected was that he would promise to go away and think about the matter again. I hope that those words will pass his lips before he finishes.
En passant, I should also like to know who decided that the value of such tables was less than their cost. I should like to see that analysis and know who carried it out. The fact that a table is long is irrelevant. What matters is whether it contains worthwhile material that justifies the cost of producing it. The intervention of the noble Lord, Lord Renfrew, was decisive. If the cost of collating the information has already been incurred, the marginal cost of publishing it is trivial. Before he finishes, I hope that the noble Lord will reflect on who has spoken today, at what length and why and will at

1183
least say that he will think again. I do not require any promises, but I would like to be treated slightly better than we have been so far.
Lord Swinfen: My Lords, before the noble Lord the Lord Chairman replies, will he tell the House what publicity is given to Answers placed in the Library, bearing in mind that not everyone is on the Internet?
The Chairman of Committees: My Lords, as regards the point raised by the noble Lord, Lord Peston, if he had felt able to contain himself for a moment or two longer, he might have found it unnecessary to impose his second speech on your Lordships' House. However, I take no more exception to what he said than that. It is open to noble Lords to say whatever they please.
I do not know the answer to the question of the noble Lord, Lord Swinfen. I shall inquire into it. However, as I have already indicated, it is the case that these Answers are on the Internet and therefore, to that extent, there is publicity. However, I shall at a later stage give the noble Lord a specific answer to his question on publicity.
It is clear that your Lordships are very concerned about this matter. As I have already indicated, all noble Lords who have spoken on this part of the Procedure Committee's report have supported the suggestion of the noble Lord, Lord Marlesford. In those circumstances, I am prepared to ask the Procedure Committee to take another look at the matter. I am sure that noble Lords will appreciate that I am not able to give a definitive answer as to the result of any deliberations, because that is a matter for the committee. However, if it is acceptable to your Lordships, I am prepared to ask the Procedure Committee to take another look at it.
I also ask your Lordships to accept that I should prefer not to tie either myself or the committee to a specific time. I believe that the next meeting of the Procedure Committee has been suggested. Your Lordships have found that in recent times the intervention of urgent and weighty matters has replaced the Procedure Committee's normal agenda. Such contingencies must be provided for. However, if your Lordships would like me to do so, I am happy to follow up my suggestion on the matter of principle and to ask the committee to look at this again to see what might be possible.
On Question, Motion agreed to.

Commonwealth Development Corporation Bill [H.L.]
6.43 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Lord McIntosh of Haringey.)
On Question, Motion agreed to.

Commonwealth Development Corporation Bill [H.L.]
  COMMONS AMENDMENTS
  [The page and line refer to Bill 60 as first printed for the Commons]
  COMMONS AMENDMENT
  1 After Clause 19, insert the following new clause—

  TAX
  (" . Schedule (Tax) shall have effect.")
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. In moving this Motion, I shall speak also to Amendment No. 2.
  Amendment No. 1 is a paving clause for the new schedule in Clause 9 which, for the convenience of the House, I should point out that the noble Baroness, Lady Rawlings, wishes to have debated separately. Amendment No. 2 removes the amendment on taxation purposes added to the Bill at Third Reading by the noble Baroness and the noble Lord, Lord Redesdale. I understand that they agree that the need for the amendment has been dealt with by the insertion of Amendments Nos. 4 and 5. I beg to move.
  Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord McIntosh of Haringey.)
  Baroness Rawlings: My Lords, in speaking to Amendment No. 1, I shall speak also to Amendment No. 2. It is with considerable relief that we see this amendment, which seeks to include on the face of the Bill a reference to a schedule laying down the CDC tax arrangements. I should like to thank the Minister for his clear description of this unusual arrangement, and for the briefing notes provided by his department. We should also like to take the opportunity to pay tribute to the achievement of the Secretary of State in finding a solution to this difficult question with the Inland Revenue and the Treasury.
  Our relief, however, is mixed with a persistent sense of disquiet. We shall have the opportunity to discuss the detail of the tax provision when considering a later amendment. Now, we should like to raise only a few more general points. As the Minister will recall, during the first passage of the CDC Bill through the House, both opposition parties felt very strongly that the tax status had to be resolved at the outset; otherwise, the PPP design would be half-baked and its chances of success dramatically reduced.
  We shall not detain the House rehearsing the arguments yet again. Nevertheless, I wish to record that I remain sceptical about the PPP concept. We remain convinced that three elements are crucial to the CDC public/private partnership if it is to have a chance to succeed: that it has a strong balance sheet; that its sale is not rushed; and that its tax status is clarified. On the first two elements, the Minister gave us assurances at Report stage. On the third, the Government have introduced in the other place two very important amendments settling the issue. It is a step in the right direction.

  1185
  Of course, we cannot legislate for success, but we can try to create the right framework. In the Bill the Government have applied considerable ingenuity in creating a framework for a third way—between public and private—which we on these Benches doubt exists.
  When passing the Bill, my honourable friend the Shadow Secretary of State said,
  "we are taking a step of faith".—[Official Report, Commons, 14/7/99; col. 529.]
  It is in the nature of faith never to be disjointed from hope. For the sake of the third-world beneficiaries of the CDC's work, we therefore hope that the Bill does not just embody a clever abstract construct, which in practice will fail to live up to its expectations. Notwithstanding those anxieties, we agree to Amendment No. 1.
  I turn now to Amendment No. 2. Subsection (3), which we are now being asked to take out, was inserted in this House at Third Reading, after grappling with considerable drafting difficulties. I am very grateful to the noble Lord, Lord Redesdale, for his support in this matter. Our intention was to put pressure on the Government to settle the tax status of the new CDC at the outset. We felt that achieving tax efficiency was of paramount importance and that it would be wrong to postpone it.
  I appreciate that both CDC and DfID wanted the tax issue settled as well, but it has ostensibly been a long and difficult struggle with the Treasury, not least because of its difficulty in terms of delivering the Government's vision of PPP. I feel that our amendment contributed in nudging it in the right direction. I am therefore glad that we were able to do something, however small, to put pressure on the Inland Revenue and the Treasury to assist in the negotiations. We agree that the subsection is now redundant.
  Lord Redesdale: My Lords, I shall speak only to Amendment No. 2. I start by thanking the noble Baroness for her kind words. It was indeed a hard and lengthy process to put our amendment on the face of the Bill, but I am happy to remove it. I feel that there is almost an air of satisfaction about the Minister that it is now being removed. However, we shall be discussing the tax schedule later.
  Lord McIntosh of Haringey: My Lords, I rise to express my gratitude to the noble Baroness and the noble Lord for agreeing to the removal of their amendment. I trust that their faith in the Government's solution to the problem will be justified when they hear our arguments.
  On Question. Motion agreed to.

  COMMONS AMENDMENT
  2 Clause 27, page 11, line 28, leave out subsection (3).
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 2.
  Moved, That the House do agree with the Commons in their Amendment No. 2.—(Lord McIntosh of Haringey.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  3 Clause 27, page 11, line 33, leave out subsection (4).
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 3, which is the privilege amendment.
  Moved, That the House do agree with the Commons in their Amendment No. 3.—(Lord McIntosh of Haringey.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  4 Schedule 2, page 14, line 36, at end insert—
  ("Status as investment company
  11A.—(1) Section 266 of the Companies Act 1985 (investment company) shall have effect with the omission of subsection (2)(d) in relation to any accounting reference period which—

  (a) falls within the exempt period, or

  (b) begins before and ends within the exempt period.

  (2) Section 842(1A)(a) of the Income and Corporation Taxes Act 1988 (holdings in groups) shall not apply for the purposes of determining whether the Corporation complies with the requirement in section 266(2)(b) of the Companies Act 1985 at any time during the exempt period.
  (3) Paragraph 73(a) of Schedule 4 to the Companies Act 1985 (company accounts: investment company) shall he taken to be satisfied in relation to the financial year of the Corporation during which it first becomes an investment company.
  (4) If at any time which falls within the exempt period and within the first period during which the Corporation is an investment company—

  (a) the Corporation is prohibited under section 265(4) of that Act from making a distribution by virtue of that section, and

  (b) the prohibition arises by reason only that the condition in section 265(4)(a) is not satisfied,

  the prohibition shall be ignored for the purposes of paragraph 73(b) of Schedule 4 to that Act.
  (5) In this paragraph—
  "the exempt period" means the exempt period for the purposes of Schedule (Tax) to this Act, and
  "investment company" has the meaning assigned by section 266(1) of that Act.").
  MOTION MOVED ON CONSIDERATION OF COMMONS AMENDMENT 4
  That this House do disagree with the Commons in their Amendment No. 4.
  Baroness Rawlings: My Lords, I beg to move that the House do disagree with the Commons in their Amendment No. 4. I thank the Minister for his helpful explanation of this highly technical clause and I believe it is of significant importance. We wish, however, to look at this provision more closely as we feel that the Government whisked their amendment through at the very end of the Committee proceedings in the other place.
  Our somewhat ham-fisted amendment is intended to provide the opportunity to scrutinise more carefully the consequences of the clause. The effect of our amendment would be that the CDC would be barred from being regarded as an investment company.

  1187
  Why has the change been brought in so late? Is it again because of difficulties in negotiations with other departments? What were the objections to allowing this sort of modification to the Companies Act? Can a PPP only be cobbled together by making exceptions—by tailor-making both tax provisions and company law? Is it not the case that good will is not sufficient to set up a partnership, and a whole raft of exceptions are necessary to get the PPP to take off? What sort of precedent does the arrangement set for future PPPs? Are the Government as enthusiastic about PPPs now as they were before encountering the difficulties of constructing the first one? I should be grateful for the Minister's reply to those questions.
  We are told that the purpose of the amendment is to place the CDC on such a footing as to make it comparable with other investors in emerging markets, which are usually investment companies. Given the nature of those markets, an investor buying into CDC will not be like Sid, who picks up a few shares in any old public utility because his mate told him so over a pint of beer. The investors we are talking about are far more sophisticated and they can clearly see that the CDC is a peculiar investment company. Does the Minister not think that will not affect their decisions negatively?
  Even if my suspicions are only partly correct, I wonder whether we are dealing with a device to improve presentation. To what extent do these provisions amount to a mere gimmick to make the CDC look more attractive? If I understand the mechanisms correctly, an investment company can reflect unrealised gains both on its balance sheet and on its profit and loss account. That means that unrealised gains would be fed into the equation for calculating the return. If the investments are good, those unrealised gains will help to push up the CDC return from its exceptionally poor 1998 level of minus 3.4 per cent. The increase in return that we are likely to witness between this year and next will not be directly comparable if in the meantime the CDC has become an investment company. Is this measure just a sweetener for investors? I beg to move.
  Moved, That the House do disagree with the Commons in their Amendment No. 4.—(Baroness Rawlings.)
  Lord Redesdale: I am grateful for the interpretation of the amendment given by the noble Baroness, Lady Rawlings. I was slightly surprised when I saw it on the Marshalled List, considering that it is precisely the issue for which we have been fighting. On reading Amendment No. 4, I note that it fully meets the expectations I had and fulfils the criteria that the Liberal Democrats wished it to fulfil.
  I have one question on the amendment. At every stage of the Bill we were told that at the next stage this tax exemption would be put forward as part of the Bill. At what point were the Government able to finalise the agreements? I got the impression from reading the Hansard report of the other place that it was only at the last minute there—let alone at Committee, Report or
  1188
  Third Reading stage in your Lordships' House—that the exemption was added. I believe that certain reasons were given, not the least of which was the European dimension of the nature of the tax exemption.
  I realise that this is an exceptional Bill and it is unlikely that such problems will arise again, but I would be grateful if the Minister in his reply could give us a chronology of the development of this amendment.
  Viscount Eccles: My Lords, for some two and a half years I was on the board of the CDC and for some nine years I was its chief executive. We always sought a degree of tax exemption and we did not get it, so it would be difficult for me now to argue against the CDC becoming in some form tax exempt. However, I wish to make a couple of points.
  The way in which the information has arrived that CDC would become tax exempt has been somewhat hurried. It is difficult on first reading of the amendment to understand exactly how far the tax exemption would stretch. There was a previous argument about whether the CDC should go offshore, and it was decided that it should not. Because all its investments are offshore, if it went offshore itself it would not be taxable in the UK anyway. That argument has already been fought out and I do not wish to go over it again.
  Within the conversations about tax exemption there was some implication that it would not apply to the CDC if it earned fee income. It would only apply to tax on its investment status, and corporation tax would apply normally. There is a longer term issue about what might or might not happen when or if the golden share is no longer held by the Government, but that is probably better discussed on another amendment. I would be grateful for a little more information on how we got to this position and whether it is water-tight.
  Lord McIntosh of Haringey: My Lords, it is an anomaly of the procedure of your Lordships' House on consideration of Commons amendments that we move straight to a speech on disagreement before I have had the opportunity of explaining what the amendment does. That is contrary to the way in which we normally deal with such matters. The noble Baroness, Lady Rawlings, was entirely in order when she did what she was invited to do, but it seems to me to be the wrong way around.
  The purpose of this amendment is to permit CDC to have the status of an investment company for the purposes of the Companies Act. The CDC's business is in substance that of an investment company. It will seek funds from investors by offering active management of its investments and the spreading of risk. Although it does still have holdings of senior debt, its investments in recent years have increasingly taken the form of equity and risk capital. As noble Lords who took part in earlier proceedings will know, it is our intention to intensify that trend. However, because of the nature of the countries in which it operates, it does not meet all the technical requirements of the Companies Act definition of an investment company. This amendment allows it nevertheless to have the status of an investment

  1189
  company by not applying to the CDC—and to the CDC alone—the requirement to meet these specific Companies Act criteria.
  That has two practical effects. The first is that CDC would be permitted to prepare its accounts in the way that investment companies do, which is different from other companies. In particular, it allows investment companies to reflect unrealised gains on investments in its accounts. We are advised that potential investors will see and value CDC as an investment company, and will expect it to account in this way.
  The second point concerns distribution of profits. Companies other than investment companies can, broadly, only pay dividends from accumulated realised profits less accumulated realised losses, without distinction between revenue and capital. Thus, for example, if a company made revenue profits but capital losses it may not be able to make a distribution. Investment companies on the other hand can in addition pay dividends from accumulated realised revenue profits minus accumulated realised revenue losses, and so may he able to pay dividends even if they make capital losses. That reflects the fact that an investment company's business is subject to fluctuations in the value of its investments which are classed as capital assets, and can be affected by provisions, for example, against transient restrictions on remittability of funds from abroad, which do not reflect on the underlying soundness of the investment. It would not be possible to list the CDC as an investment entity without the secure prospect of regular dividends, and it is therefore important that, like other investment entities, CDC is able to make distributions in this way.
  There are three reasons why the CDC will not be able to meet the Companies Act requirements. First, it will need to retain more than the permitted 15 per cent of its income from securities. Secondly, it holds more than the permitted 15 per cent by value of its investments in subsidiaries. Thirdly, initially, it will not be listed. Those are set out in the amendment and unless your Lordships wish to press me on the point I shall not describe in detail how it works.
  The reason for the first of these is that in countries where the CDC invests, where sophisticated stock markets often do not exist, it is necessary to look for gains through higher income returns rather than through crystallisation of gains on exit from a transaction, as tends to be the case in western venture capital transactions. Since a high proportion of the CDC's returns will therefore come from income, a requirement to retain not more than 15 per cent would significantly affect its ability to reinvest.
  The reason for the second is that because of shortages of management capacity as well as capital in developing countries, the CDC sometimes needs to exert management control or is unavoidably the largest equity participant, so it has a higher proportion of majority owned subsidiaries than would be allowed. It would not be able to fit either of these criteria without changing the whole nature of its business. The listing point, on the other hand, is essentially a transitional issue.
  1190
  Noble Lords asked about the timing of Amendments Nos. 4 and 5. I shall try to deal with them together. I acknowledge that it will be later than we would have wished. When we first introduced the Bill here we wanted to have the taxation and investment company provisions on the face of the Bill. It is not a matter of power struggles; it is a matter of trying to get it right. We have come up with a solution which is particular to the CDC. The investment company provisions in Amendment No. 4 are tailor-made only for the CDC. They are not applicable to anyone else. They do not provide a precedent for future public private partnerships. They do not indicate a change in the Government's views about public private partnerships in general. They are serious exceptions. They have been made because this is a different case. I hope that noble Lords will feel that this amendment and Amendment No. 5, because they are so carefully thought out for the purposes of the CDC, are worthy of approval.
  7 p.m.
  Baroness Rawlings: My Lords, I am grateful to the Minister for his detailed answers to our questions. We hope that the CDC, which has been such a successful company for so many years, will be able to continue in its dedicated wonderful work after all the dramatic changes have been made.
  I thank the noble Lord, Lord Redesdale, for his contribution to the debate and for the wise intervention from my noble friend Lord Eccles who has had great experience with the CDC. I do not believe that at this stage there is any benefit in dividing the House arid I beg leave to withdraw the Motion.
  Motion, by leave, withdrawn.
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 4.
  Moved, That the House do agree with the Commons in their Amendment No. 4.—(Lord McIntosh of Haringey.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  5 After Schedule 2, insert the following, new schedule—

  SCHEDULE TAX
  The exempt period
  1.—(1) The exempt period for the purposes of this Schedule shall begin with a day appointed by the Secretary of State by order math by statutory instrument.
  (2) If—

  (a) an order is made under section 18(5) as a result of which section 18(1)(b) ceases to have effect, and

  (b) the Crown ceases on any day to hold any special share provided for under the Corporation's articles of association,

  the exempt period for the purposes of this Schedule shall end with that day.
  Exemption from tax
  2.—(1) The Corporation shall not be chargeable to corporation tax on profits arising during the exempt period.
  (2) The Corporation shall not have a liability to tax by virtue of section 747(4)(a) of the Income and Corporation Taxes Act 1988 (controlled foreign companies) in respect of profits arising during the exempt period.
  Residence for tax purposes
  3.—(1) Sub-paragraph (2) shall apply if—

  (a) the exempt period ends, and

  (b) at that time the Corporation would be regarded for the purposes of the Taxes Acts as resident in the United Kingdom by virtue only of section 66 of the Finance Act 1988 (company incorporated in UK).

  (2) That section shall not apply in relation to the Corporation at any time during the period beginning with the end of the exempt period and ending in accordance with sub-paragraph (3).
  (3) The period shall end—

  (a) with the seventh anniversary of the final day of the exempt period, or

  (b) if earlier, at any time when the Corporation comes to be regarded for the purposes of the Taxes Acts as resident in the United Kingdom (otherwise than by virtue of section 66).

  (4) The following provisions shall not apply where the Corporation ceases to be resident in the United Kingdom by virtue of sub-paragraph (2)—

  (a) section 179 of the Taxation of Chargeable Gains Act 1992 (company ceasing to be member of group);

  (b) section 185 of that Act (deemed disposal of assets when company ceases to be resident in UK).

  (5) In this paragraph "the Taxes Acts" has the same meaning as in the Taxes Management Act 1970.
  Groups of companies, &c.
  4.—(1) The Corporation cannot be a member of a group of companies for the purposes of Chapter I of Part VI of the Taxation of Chargeable Gains Act 1992 (groups of companies) at any time during the exempt period.
  (2) Where a company ceases to be a member of a group of companies by virtue of sub-paragraph (1), section 179 of that Act shall not apply.
  5.—(1) The Corporation cannot be a member of a group of companies for the purposes of Chapter IV of Part X of the Income and Corporation Taxes Act 1988 (group relief) at any time during the exempt period.
  (2) The Corporation cannot be a surrendering company for the purposes of a consortium claim within the meaning of section 402(3) of that Act.
  Distributions
  6.—(1) This paragraph applies where the Corporation makes a distribution during the exempt period.
  (2) The following provisions shall not apply in relation to the distribution—

  (a) section 208 of the Income and Corporation Taxes Act 1988 (exemption from corporation tax);

  (b) section 231 of that Act (tax credits).

  (3) The distribution shall be treated for the purposes of corporation tax and income tax as income falling within Case V of Schedule D as set out in section 18(3) of that Act.
  (4) The distribution shall be treated as equivalent foreign income for the purposes of section 1A of that Act (rate of tax for income from savings and distributions).
  (5) In this paragraph "distribution" has the same meaning as it has in the Corporation Taxes Acts by virtue of Chapter II of Part VI of the Income and Corporation Taxes Act 1988 (company distributions).")
  Lord McIntosh of Haringey: My Lords, I beg to move that the House do agree with the Commons in their
  1192
  Amendment No. 5. It may be for the convenience of the House if I speak to that before the noble Baroness speaks to her amendments, Amendments Nos. 5A and 5B.
  We said at the Report stage on 2nd March that we had agreed the principles of a tax solution which would provide the CDC PPP with the required tax efficiency and that we intended to introduce necessary amendments to the CDC Bill at the appropriate time in the House of Commons. I have acknowledged that the appropriate time was late in parliamentary terms and I have apologised for that. Amendment No. 5 was paved by Amendment No. 1.
  The overall policy aim of the proposal is to provide the CDC with a level playing field in relation to competitors located outside the UK so it can achieve its goal of investing in developing countries using private capital raised in the context of a competitive private investment market. It does not seek to give the CDC anything more than that.
  The key element of the new schedule is that (unless the partnership were to end) the CDC's (and only the CDC's) income and chargeable gains would not be chargeable to UK corporation tax, capital gains tax or income tax. The CDC would remain liable to applicable local taxes as at present and investors in the CDC would be liable to tax on their income and gains according to their own circumstances. It is also intended that where the CDC undertakes activities other than investment (such as investment management) this would be undertaken through a separate subsidiary, subject to tax in the normal way. That is the answer to the point raised by the noble Viscount, Lord Eccles, about fee income.
  The provisions of the new schedule and reasons for them are reasonably straightforward. The exempt period in paragraph 1 provides for the exemption from tax to begin on a day appointed by the Secretary of State by order. Our intention is that the exemption should take effect at the same time as the CDC's new capital structure is implemented so that the CDC can start to develop a financial track record on the same basis as it will go to market.
  There is always a potential state aids angle in any government sale. We have discussed this informally with the European Commission and we do not consider that either the tax, or balance sheet proposals more generally, will distort intra-Community trade. However, we intend to notify the European Commission of the tax proposals along with the capital restructuring, and any other relevant details, to provide investors with certainty.
  The exemption, like the partnership, is intended to be an indefinite arrangement which will remain in place for the foreseeable future. But paragraph 1 also provides a necessary protection in that if Parliament were to decide, under the provisions of Clause 18, that the special share could be redeemed, and it then was redeemed, the exemption would come to an end with the partnership.
  Paragraph 2 covers the main substance of the tax treatment. It provides that the CDC's income and chargeable gains will not be chargeable to corporation tax in the UK. The CDC will also be exempt from capital gains tax and income tax (under existing

  1193
  provisions of the Income and Corporation Taxes Act 1988) but will be liable to other taxes such as VAT and stamp duty.
  Sub-paragraph (2) is a technical provision, necessary because the language used in legislation dealing with controlled foreign companies refers to a charge arising which is equal to corporation tax rather than it being actual corporation tax, so the CDC's exemption would not necessarily cover this.
  Paragraph 3 is about residence for tax purposes and would apply only if the partnership had been brought to an end following the redemption of the special share. Although it is not our intention that this should happen, it is not possible to bind future governments. Therefore, it is necessary to make clear now what will happen if the exemption were to end. Investors will require comfort as to what will happen to them in these circumstances since any decision under Clause 18 would he for Parliament alone and not for them.
  The paragraph therefore provides for the CDC to have the option to restructure and possibly go offshore without liability to UK tax provided that its central management and control had moved offshore by the expiry of the exempt period and not thereafter. This aims to maintain the level playing field which we are seeking to create for the CDC. The mechanism set out would provide for an orderly transfer without providing scope for tax avoidance.
  Paragraph 4 deals with groups of companies. It is designed to prevent tax avoidance by preventing other members of CDC's shifting assets into CDC to avoid tax.
  Paragraph 6 on distributions provides that dividends should be treated as if they were coming from an overseas company. This is to prevent investors benefiting from provisions designed to prevent double taxation of company profits, first, in the hands of the company and, secondly, as distributions from those profits in the hands of the shareholders. That would not be appropriate because CDC's profits are exempt in the company's hands.
  I understand that the noble Baroness wishes me to comment on her Amendments Nos. 5A and 5B before she speaks to them. Amendment No. 5A would have the effect that CDC's tax exemption would be dependent on the special shareholder being satisfied that the investment policy and business principles had been adhered to. I agree entirely with the thinking behind the amendment. We want them both to be firmly entrenched and adhered to, but we do not think that it is appropriate that this should be done by an amendment to the provisions on tax exemption.
  All the advice we have received is that the partnership should be designed in such a way that there is no possibility, and no appearance of any possibility, of ad hoc government interference in the day-to-day functioning of CDC, and that all our requirements should be set out in the partnership documents so that investors have clear knowledge of what they are investing in. We would not wish to allow political discretion, or the appearance of it, over CDC's tax liability, which would
  1194
  be the effect of Amendment No. 5A. The special share is the right instrument for protecting and enforcing the investment policy and business principles.
  The articles of association contain provisions for the investment policy in Article 51, and for the business principles in Article 52. These are entrenched in the articles of association and can be changed only with the consent of the special shareholder, the Secretary of State. That in turn requires the approval of Parliament. The content of the investment policy and the business principles is also protected. For investment policy, no change could be made without the approval of the majority of the ordinary shareholders and the consent of the special shareholder.
  The mechanism for changing the business principles is different. Changes to the business principles could be made only by a majority of CDC's board, that majority to include at least three of the four members of the business principles committee, which is set up to monitor operation of the business principles and review their content and make recommendations to the board. The two directors appointed by the Secretary of State will sit on this committee, which means that at least one of them would have to have voted in favour of the change before it could be agreed.
  I hope it will be accepted, therefore, that both the investment policy and the business principles, to which the amendment refers, are already enshrined in the articles of association under the Bill, and that it is better for them to be protected in that way than through an amendment to the tax exemption provisions.
  Amendment No. 5B would change "seventh" to "tenth" in the period in which Section 66 of the Finance Act 1988 is disapplied so that CDC could shift its assets offshore. In order to go offshore, a company incorporated in the United Kingdom would normally set up a company outside the UK, in a country with a suitable tax regime, transfer its assets to it and then effect a merger into that offshore company. Because of the nature of CDC's assets, held in a large number of overseas jurisdictions, it could take CDC several years to do that. I imagine that that is what is behind the amendment. But it would not be appropriate to encourage it to be doing so during the partnership, and if it waited to commence the process until after any redemption of the special share there could be a period in which it was exposed to UK tax. So far, I think, we have everything in common.
  The proposal is that a rule which says that a company incorporated in the UK is UK resident for tax purposes, under Section 66 of the Finance Act 1988, should be disapplied to CDC for a period of seven years after the end of the exempt period. This means in practice that CDC could initially go offshore by moving its central management and control offshore. It could then shift its assets in the seven year period during which Section 66 was disapplied. CDC estimates that it would take about three or four months to shift its central management and control. This should happen in the notice period fits redemption of the special share. The seven year period which we proposed fits in with the average life of

  1195
  CDC's investments. CDC is confident that the seven year period would be sufficient to allow for an orderly transfer.
  I hope that that gives the noble Baroness the reassurance that she seeks about the detail of this admittedly complex amendment.
  Moved, That the House do agree with the Commons in their Amendment No. 5.—(Lord McIntosh of Haringey.)
  7.15 p.m.

  AMENDMENT TO COMMONS AMENDMENT No. 5
  5A Line 20, at end of paragraph 2(2) insert ("provided that the special shareholder is satisfied that the investment policy and statement of business principles have been adhered to").
  Baroness Rawlings: My Lords, I beg to move Amendment No. 5A as an amendment to Commons Amendment No. 5. I should also like to discuss, in speaking to Commons Amendment No. 5, my Amendment No. 5B.
  I wish to thank the Minister for his helpful explanation of the complex and crucial amendment that Commons Amendment No. 5 is, and for his co-operation at this stage and throughout the passage of the Bill. The main effect of the amendment, at least, is clear: as long as the Government hold the golden share, CDC is exempt from corporation tax, capital gains tax and income tax, but not from other taxes such as VAT and stamp duty, and from PAYE obligations.
  I have laboured sufficiently the reasons why a tax-efficient status is essential to the CDC PPP, and I shall not detain the House on the matter further. However, I should still like to ask the Minister one question.
  Although helpful to CDC, this tax arrangement is also very unusual, in that the exemption is given to an individual company rather than a category of entities. Is there a danger that this exemption represents the thin edge of the wedge? Is it not sufficient to say that CDC is unique? I am sure that other companies will attempt to argue that they are unique. If I am allowed to strike a provocative note, the National Lottery, for instance, is unique, serves good causes and would save substantial sums of money were it to be tax exempt. Will the noble Lord, the Minister, give assurances that the CDC exemption will not be treated as a precedent? I should be grateful if the noble Lord could answer my questions afterwards.
  Amendment No. 5A would make tax exemption conditional on the Secretary of State's being satisfied that the CDC had followed its investment policy and the statement of business principles. The intention of the amendment is not to wreck the tax arrangement, but to entrench the CDC development purpose more securely. In another place the shadow Secretary of State argued forcefully that the development purpose was not satisfactorily entrenched. Furthermore, he argued convincingly that the investment policy and the statement of business principles do not embody the
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  development purpose adequately. As they stand, nothing would prevent CDC from investing, albeit in the prescribed countries and geographical areas, in high-performance, high-yield companies, rather than in labour-intensive ones benefiting the poorer groups in those countries. CDC would be under pressure to follow this course in order to achieve higher returns which would attract private sector investors.
  In the future CDC will be unlikely to invest in hardwood forest plantations, as it did in the Câte d'Ivoire, or in setting up an avocado pear farm which will not produce any fruit in the initial seven years and will therefore earn no money, as Mr Bowen Wells clearly explained in another place. Over the last two years we can already detect the beginning of this trend in the composition of the CDC portfolio. Whereas the share of agribusiness is decreasing significantly, that of manufacture and commerce is increasing.
  That trend will be particularly strong and its effects detrimental to the poor in large and diverse countries like India. There, CDC has invested in the first private sector Internet access provider. That will no doubt contribute to the development of the communications infrastructure that business needs to be efficient. However, what will it do for the rural population of Rajasthan, who do not even have electricity? When will the benefit of that investment reach them? It will never do so because they live in a different economy. Instead, that particularly poor region, which is well known for its stone and marble quarries, would probably benefit from investments in companies cutting and polishing stone, like Jaswal Granite, a South Indian company of which CDC owns 9 per cent. I believe that we shall see less and less of such investment in the future. How is that potential investment vacuum to be filled?
  The Government argue that the focus of their development policies is poverty. They maintain also that CDC is one of their policy instruments. Therefore, CDC should have the same focus. However, that focus cannot be achieved by an investment policy and a statement of business principles enjoining CDC to look across countries alone. If the development focus is to be maintained, the assessment policy must encourage the poorer groups within particular countries. Will the Minister give assurances that the Government will undertake a review of the investment policy? In short, we are asking the Government to get the investment policy right and then incorporate it into the Bill.
  The effect of Amendment No. 5B is to lengthen from seven to 10 years the transition period after the Government relinquish the golden share. This is a probing amendment. Aspects of the CDC's tax arrangement are particularly unusual and complex and we feel that the arrangement has not been sufficiently scrutinised in another place. What is the fundamental reason for the amendment? Once the exempt period expires, what do the Government envisage that CDC would do to maintain the effect of its unique tax status? The helpful briefing notes provided by the department suggest that provision exists to ensure that CDC,
  "would have the option to restructure and possibly go offshore without liability to UK tax".

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  But the Secretary of State finds that to be politically unacceptable. Has government policy changed? If that is the case, is the position that existing investments will remain in CDC onshore but the latter would be treated for tax purposes as though it were offshore while new investments would be made by a pew CDC entity offshore and therefore outside the UK's tax net? Will existing investments remain onshore until they are realised or until those assets are transferred offshore? In what respect does that arrangement differ from granting CDC a grace period after expiry as the exempt period in which to transfer assets? Would that complicated arrangement be necessary if CDC were allowed to go offshore as a PPP? Would the residence status during the transition period amount to state aid under EU competition law? I should be grateful if the noble Lord could clarify those points.
  I come now to the substantive aspect of the amendment. We are told that the period of seven years was chosen because it fits the average length of CDC's investments. Unfortunately, in practice, there are no averages. Is Inland Revenue trying to fit CDC's investments into a procrustean bed? How will the existing longer term investments, or those which are particular difficult to transfer, be treated after seven years? Is seven years not an arbitrary period of time?
  We understand that that period of seven years was the outcome of negotiations. The Inland Revenue was looking for a figure of zero years but CDC was looking for a period of 12 to 15 years to accommodate its longer term investments. On these Benches, we believe that the transition period should be longer.
  Moved, That Amendment No. 5A, as an amendment to Commons Amendment No. 5, be agreed to.— (Baroness Rawlings.)
  Lord Redesdale: My Lords, we wish to speak to these amendments because it was not possible to do so at the last stage of the Bill. However, the Minister gave a comprehensive statement and he has already answered many of the questions which I wished to asked. Therefore, I shall not take up the time of the House.
  On these Benches, we are glad that the CDC will not be going offshore as that goes against the fundamental principles of the nature of the CDC. I admit the idea that the CDC could somehow avoid PAYE would gladden the hearts of those working for it but I do not believe that it would receive a great deal of support from the Treasury.
  The Minister set out quite clearly how he believes the CDC will operate and under what development criteria it will be bound. As the noble Baroness pointed out, there is a danger that the CDC will move away from investments in some of the poorer areas of the world. That would he extremely unfortunate.
  However, as the Minister has set out his views quite clearly for Hansard, which are now on the record. Therefore. I do not believe that we need to press for a strengthening of the statement of business principles or the investment policy.
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  Many of the issues which we have raised are in relation to the unlikely event that the Secretary of State cashes in the golden share. I believe and hope that that will never be the case, even under a change of government. The amendments provide a belt-and-braces approach which was spoken to at great length in another place. But the assurances which the Minister has given this evening have helped to ease some of our fears.
  Viscount Eccles: My Lords, I am grateful to the Minister for saying that CDC can have a wholly-owned subsidiary overseas even if it cannot be overseas itself. In its history, it has had a number of wholly-owned subsidiaries overseas.
  I believe that I am finding some sort of a middle position here. As I see it, this Bill is an enabling Bill. I want to say briefly why that is so. A welcome aspect of the matter is the transformation of CDC from being a statutory corporation to being a plc, although one must shed a tear for what is almost the last of the statutory corporations.
  The reason for this being a welcome measure is that the Act of 1948, which was implemented in 1947, has been tinkered with in respect of the way in which CDC could invest. It has never been radically altered and, of course, the world and its economy has moved on. The provisions of those original CDC Acts are extremely restrictive as to the way in which CDC can invest. Under the Companies Act, as a plc, it will he able to invest in a much more modern and effective way, even in the 70 per cent of the poorest countries and the 50 per cent which are in sub-Saharan Africa and Asia.
  Many of the questions which the Minister has been asked arise from the fact that, as my noble friend Lady Rawlings said, the CDC is a sui generis. It is not like anything else and never has been quite like anything else. It has had to pick up gleams of opportunity and common sense from other organisations. It has picked up a lot of good tips from 3i, the IFC, from its European comparators, finance institutions and even from companies such as Unilever. Of course, its present chief executive comes from Shell and there is no doubt plenty of overseas experience from which it has benefited.
  In essence, CDC is self-taught. It did not leant its trade from anywhere else. I am confident that, with the provisions in this enabling Bill, CDC will find a way through the next few years. I hope that it has another 50 years ahead of it. Its path as a plc is bound to be tortuous, as its chairman, the noble Earl, Lord Cairns, said in the House at Second Reading when he did not minimise the difficulties of operating effectively as a plc.
  I believe that these amendments are relevant in that we need CDC to settle down to a consistent policy as a plc and to have plenty of time in which to do that in order to demonstrate its effectiveness. The Government have been ingenious, but they have also been experimental. The public/private partnership has yet to be proven. I believe it is doubly difficult to prove it in the case of CDC.
  Immediately, there is the problem of restructuring the balance sheet. Perhaps the Minister can tell us how that is progressing because, without that, no further progress

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  can be made. Can he also tell us when a prospectus will be issued for the intended 75 per cent external shareholders? I should certainly have had nightmares if I had had to write such a prospectus. In my opinion, by virtue of the fact that CDC is so generous, it will not immediately be attractive to any class of conventional investor as they do not like to have to think out things de novo.
  I am pleased that CDC will be converted from a statutory corporation into a plc, although the same results could have been achieved by amending the existing Acts. I am much more doubtful about whether the public/private partnership experiment, ingenious as it is, will succeed. Anything that gives CDC an opportunity of proving continuity of purpose and policy and of having longer in which to do it is welcome.
  7.30 p.m.
  Lord Birdwood: In the closing minutes of the CDC's process of transition and in speaking to the amendment, I want to say that I have been lucky enough over the years to count CDC employees among the circle of my closest friends. I make a plea that the culture that has always pertained in CDC is not destroyed by the transition process. The men and women of CDC collectively have always put the welfare of the nations in which they work before their own welfare and before the concept of profit. When an organisation changes so profoundly its cultural foundations, as is the prospect today, those influences become fragile to those who work in it. I hope that the Minister can reassure me that that fragile culture can be reinforced by the process, rather than destroyed.
  Lord McIntosh of Haringey: I am grateful to all noble Lords who have taken part in this short debate. When the noble Viscount, Lord Eccles, first intervened I neglected to welcome him to our deliberations. He was not in the House when we considered the matter before. The only hesitation I have in expressing my pleasure in seeing him here today is remembering the sad death of his father.
  I anticipated a number of the questions which have been posed, but I shall respond to the additional points raised. The noble Baroness seems to think that this is the thin edge of the wedge and that because we have made special provisions for CDC, it will be easier for other people—she named the National Lottery—to take advantage of the same procedures. The fact that it has been so difficult, that it has required primary legislation, and months of negotiation and consideration during the passage of that primary legislation, in my view makes it clear that this is not a precedent that is likely to be followed. If anyone attempted to follow it in regard to the National Lottery, it would be over my dead body. I believe it would be over the dead body of the Chancellor of the Exchequer as well. We have taken care to get the procedures right because we recognise
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  CDC's unique quality and the marvellous work that it has done over a period of more than 50 years.
  The noble Baroness commented on the investment policy and the development purpose—
  Lord Redesdale: My Lords, I am sorry to interrupt, but I am reminded that a number of years ago—I believe in 1994—when we debated the National Lottery, the Minister, when speaking from the Opposition Front Bench, opposed the 12½ per cent tax on the National Lottery. I put that forward for information.
  Lord McIntosh of Haringey: I had nothing to do with the National Lottery. There are those of us who think that in the next negotiations for the National Lottery we should consider the possibility of a not-for-profit National Lottery. We said that at the time. That will be possible in the consideration of the re-awarding of the contract. That is not the same as a tax exemption, and it certainly is not the same as going off-shore, as appeared to be suggested.
  The amendment concerns where we enshrine the investment policy and the development purpose of CDC. I hope that I made it clear in my opening speech that it is well entrenched in the memorandum and articles of the CDC and in the procedures that make it clear that it cannot be changed without the agreement of the Secretary of State and without the agreement of Parliament. I believe that that is the right place for that entrenchment, rather than in the provisions on tax exemption, which is where Amendment No. 5A would place it.
  The concerns of the noble Baroness go much wider than how the investment policy is protected. She queries the investment policy and says that her honourable friends in the Commons suggest that we are already departing from what ought to be the investment policy and development purpose of the CDC. She gave some examples.
  It is difficult to judge individual investment decisions in that way as the work of CDC in any country is complementary to other investment activities, whether venture capital activities or the investment activities of the state itself. It is difficult to say in Pakistan, Uganda or anywhere else what the role of CDC may be because it will vary from country to country. If your Lordships will forgive me, I do not want to open up the question of the adequacy of the purposes of CDC. They were fully debated when the Bill went through the House. Those issues are not raised by the Commons amendment before us or the amendment to it.
  On Amendment No. 5B, which concerns the exempt period, I do not believe that CDC wanted a longer period than that which is provided. As I said in my opening speech, my understanding is that it is content that that will meet its needs. If we have an average investment cycle of seven years, the investments will be falling in over that seven-year period and all but perhaps a tiny number of them will have fallen in by the time the seven-year period is reached.
  However, I acknowledge—indeed, I welcome—what the noble Lord, Lord Redesdale, said. We are talking here about an exit strategy which we had to include—

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  an exit strategy has to be included in any change of this kind—but one which we do not intend to use. We do not intend to dispose of the golden share, but we have to be sure that if there were some seismic change in policy in the future (to use the Prime Minister's phrase) it would be possible to make changes without further primary legislation. That is what we have done. It appears to us, and it appears to CDC, that seven years is the right period.
  The noble Viscount, Lord Eccles, asked about the restructuring of the balance sheet. It is the important next step. We aim to have it in place for inclusion in the 1999 report, which will be produced for April 2000. It will take the results of 1999 into account after the abnormal results of 1998. As for the timing of the prospectus and the sale, it is far too early to say. That will depend on market conditions and the CDC track record. We have always made it clear that we expect that to be a considerable way off.
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  The noble Lord, Lord Birdwood, asked about the culture of CDC and whether that will be preserved. I very much hope so. I believe that we have set in place a process and a framework which will enable those who have valiantly served CDC over the years to continue to serve and to achieve even better results than they have in the past.
  Baroness Rawlings: My Lords, I beg leave to withdraw Amendment No. 5A.
  Amendment No. 5A, as an amendment to Commons Amendment No. 5, by leave, withdrawn.
  [Amendment No. 5B not moved.]
  On Question, Motion agreed to.

United Reformed Church Bill [H.L.]
Reported from the Unopposed Bill Committee with amendments.
House adjourned at seventeen minutes before eight o'clock.