Lords Sitting of 27 November 2000

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lichfield.

Legislation: Parliamentary Scrutiny
Lord Renton Lord Renton asked Her Majesty's Government:
Whether they will ensure that their legislation next Session is less detailed and contains more statements of purpose and of principle, and that adequate time is provided for its thorough consideration by each House of Parliament.
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, the noble Lord, Lord Renton, with his long-standing interest and authority in this area, will be aware that statements of purpose and principle have been less common in recent years under successive governments and that detail is often seen as the fail-safe way of achieving certainty in law. In the 1970s the noble Lord chaired a committee on the preparation of legislation which decided that the draftsman should not be required to sacrifice legal certainty for simplicity of language. The Government agree and also seek to ensure adequate time for consideration of legislation. In this Session we have sat for extra days to allow such scrutiny, although the number of Bills introduced in Parliament has been an average number for a third Session.
Lord Renton: My Lords, while I thank the noble Baroness for her reply, perhaps I may remind her that so far in this Session we in this House have made 4,619 amendments to government legislation, which is more than twice as many as ever before. That is partly because the legislation is too detailed but also because Members of another place have not had a full opportunity to consider it. In the interests of democracy, will the Government please mend their ways?
Baroness Jay of Paddington: My Lords, I was very grateful to receive from the noble Lord a copy of his lecture on this subject entitled, The Evolution of Modern Statute Law and its Future, in which in his concluding remarks he enjoined everyone to do better. That is what the noble Lord is seeking to do today. In his lecture he made some very constructive proposals for achieving change and improvement in legislation, which included increasing the number of Bills that should be considered in pre-legislative form and increasing the number of Bills in draft. I think the noble Lord would agree that the Government are seeking to do that whenever possible.
Lord Peston: My Lords, am I alone in believing that we provide more than adequate time to scrutinise the
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legislation placed before us and indeed that we would have even more time if noble Lords would consider sticking to the rules and not making Second Reading speeches at every stage of a Bill's progress through the House? If noble Lords actually scrutinised the legislation, my guess is that we would certainly improve it and that we would certainly get through it rather more quickly.
Baroness Jay of Paddington: My Lords, I am grateful to my noble friend. He has raised on several occasions the point about the strict procedures of the House. I must say that my observation of current practice inclines me to agree somewhat with his general remarks. As he will know, there has been discussion about perhaps taking the Committee stage of more Bills in the Moses Room, which might allow for precisely the practice that he suggests. Perhaps I may point out that in the equivalent Session—the third Session—of the 1987–1992 Parliament the House sat for 153 days and passed 27 Bills. In the last Session, we sat for 154 days and passed an equivalent number of Bills. Therefore, my noble friend can see that this practice has been going on for some time.
Lord Peyton of Yeovil: My Lords, I hope that the noble Baroness will not accuse me, at any rate, of not being impartial on this matter. Perhaps I may remind her that increasingly over the years it has been a besetting sin of all governments to bombard Parliament with ill-conceived legislation which then requires an immense amount of amendment. Will the noble Baroness attempt to persuade some of her less helpful colleagues that quantity can be the enemy of quality?
Baroness Jay of Paddington: My Lords, the noble Lord, Lord Peyton, gives me the opportunity to repeat the point that I made to the noble Lord, Lord Renton, about the advantages, which the Government are anxious to pursue, of considering Bills in pre-legislative form and publishing Bills in draft. The noble Lord is of course right; this has been a problem for successive governments, as I think I made clear in my original Answer. I would just say to him that in the third Session of the 1979–83 Parliament—that is, 1981–82—the House considered 46 Bills, and this year we hope to pass 39 Bills. Therefore, as I said a few moments ago, it is not a new problem.
Lord Elis-Thomas: My Lords, does the Leader of the House agree that were the Government, both in your Lordships' House and in another place, to draft primary legislation in broader terms, that would have the added benefit for the United Kingdom of allowing the National Assembly for Wales to prepare its subordinate legislation within a broader framework?
Baroness Jay of Paddington: My Lords, without venturing into the question of the appropriate activities for the National Assembly, I would simply say to the noble Lord that this demonstrates the continuing problem of the tension between broad-brush statements of principle—there have been

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occasions in the past few years when those have seemed appropriate—and the difficulty of ensuring absolute legal accuracy in the detail of a Bill.
Lord Goodhart: My Lords, it is clear that our parliamentary draftsmen are working under enormous pressures of both time and the number of people available to carry out the work. Will the Government consider increasing the number of parliamentary draftsmen to enable them to cope with the amount of work that they are now being forced to carry out?
Baroness Jay of Paddington: My Lords, I am sure that noble Lords on all sides of the House will wish to congratulate the parliamentary draftsmen on their herculean efforts in often difficult circumstances. The noble Lord, Lord Goodhart, will be pleased to hear that the number of parliamentary draftsmen is being increased. Whether the increase will be sufficient to meet the demands upon them we shall have to wait and see.
Lord Strathclyde: My Lords, does the Leader of the House agree that one of the biggest problems we face is that, increasingly, legislation arriving in this House from another place has been badly scrutinised? Given that the other place is reviewing its procedures in order to introduce far more use of the guillotine, does the Minister further agree that that will increase the problem and that even more badly drafted, badly scrutinised legislation will arrive in this House, which will have a knock-on effect as regards the work that we do here?
Baroness Jay of Paddington: My Lords, the Leader of the Opposition is braver than I in criticising the activities and procedures of the other place. As I have said on two occasions, the practices that we are introducing of a greater amount of legislation being looked at under pre-legislative scrutiny arrangements—as we did, for example, with the Freedom of Information Bill and the Financial Services and Markets Bill—have meant that both Houses have been able to give such legislation greater attention. It has been acknowledged that both of the Bills that I have mentioned have been improved by the detailed scrutiny of this House.
Lord Ampthill: My Lords, does the noble Baroness accept the figure produced by the noble Lord, Lord Renton, that the number of amendments passed by the House during this Session amounts to 4,619? A couple of weeks ago she said that such a figure was not available.
Baroness Jay of Paddington: My Lords, I think what I said then—I shall repeat it for the noble Lord, Lord Ampthill—is that amendments that are passed are not broken down between those which originate from the Government and those which originate from other sources. But, of course, the majority of amendments passed are those brought forward by the Government.
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If it is not too dangerous to say so, I am willing to believe that the research of the noble Lord, Lord Renton, is better than the figures provided to me. The figure that I have in front of me is that 3,930 amendments have been passed, which is the figure that I gave on the previous occasion.
Lord Renton: My Lords, the figure that I have just given was obtained this afternoon from the Public Bill Office.

Asylum Seekers: Health Needs
2.44 p.m.
Baroness Prashar Baroness Prashar asked Her Majesty's Government:
What financial resources have been given to the National Health Service and primary care services in areas affected by the Government's dispersal system in order to assess and meet the health needs of asylum seekers.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, the Government recognise that caring for asylum seekers can place additional pressure on the NHS. We expect the service to meet the cost of caring for asylum seekers from its unified budget. We are also encouraging it to meet these pressures through a number of initiatives which target specific resources in these areas. These include PMS pilots and local development schemes.
Baroness Prashar: My Lords, I thank the Minister for that Answer. Does he agree that information about entitlement to healthcare is not getting through to asylum seekers and that in some cases they are being denied care? What steps are being taken to develop a coherent strategy to meet both the health needs of asylum seekers and to ensure that they are made aware of their entitlements?
Lord Hunt of Kings Heath: My Lords, the noble Baroness is right to draw attention to the issue of providing information to asylum seekers. She will know that the Audit Commission report which was published earlier this year suggested that the department and the National Asylum Seeker Service should issue new arrivals with information about their entitlement to health services and a simple explanation of how the UK health system operates. We intend to ensure that that suggestion is implemented. In relation to the Audit Commission's recommendation that we should issue good practice guidance to health authorities so that they can ensure effective service delivery to asylum seekers and refugees, we have made available a grant of £30,000 to ensure that such good practice guidance is issued.
Baroness Gardner of Parkes: My Lords, can the Minister say exactly what is the entitlement of asylum seekers? Obviously an asylum seeker has not yet been granted asylum. Is he or she in the same category as a

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visitor to this country, whereby emergency treatment would be available, or, if asylum has been requested, is he or she immediately entitled to full national health treatment? Can the Minister clarify the position?
Lord Hunt of Kings Heath: My Lords, any asylum seeker given leave to remain in the UK or awaiting a decision on his or her application is regarded as ordinarily resident and is eligible for free treatment by a GP. Similarly, asylum seekers needing hospital care will be treated on the same basis as anyone else eligible to receive NHS hospital treatment.
The Lord Bishop of Lichfield: My Lords, perhaps I may ask the Minister about interpreter services. In a Midland town in my region an asylum seeker who had lost an eye through torture received no on-going medical treatment through lack of an interpreter, even though he was registered with a GP. Can the Minister comment on that situation?
Lord Hunt of Kings Heath: My Lords, the right reverend Prelate has identified a particularly difficult issue in relation to language. As part of their health improvement programmes, which are aimed at assessing health needs, we expect health authorities to identify interpreting issues and to ensure that such services are available. As part of the good practice guidance arising out of the Audit Commission report, we would expect health authorities to identify the necessity for action in training staff on cultural issues and in providing interpreter, advocacy and translation services.
Lord Janner of Braunstone: My Lords, I declare an interest because all four of my grandparents were fortunate enough to emigrate to this country at the end of the 19th century in circumstances which today would clearly have made them asylum seekers. Can the Minister give an assurance that in health and other matters every effort will be made to deal with asylum seekers swiftly and fairly—perhaps more swiftly and with more apparent fairness than in the past—recognising not only their rights as human beings but that many asylum seekers who settle here will make a significant contribution to the life of this country?
Lord Hunt of Kings Heath: My Lords, I agree with everything that my noble friend has said. So far as concerns the National Health Service, we are under an obligation to ensure that asylum seekers receive high quality health services.
Lord Greaves: My Lords, does the Minister agree that in many cases asylum seekers do not have easy access to the health services, especially dental services? In many towns there are no vacancies for national health dental patients—if indeed they have national health dentists. Even in the case of emergency treatment there is extreme difficulty. What are the Government doing to make dental services properly available to asylum seekers?
Lord Hunt of Kings Heath: My Lords, what we are doing to improve dental services will apply to all
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residents of this country. The dental strategy published by the Government two months ago outlines our proposals to ensure that those people who wish to receive NHS dental treatment do receive it. We are establishing dental access centres. We are also establishing initiatives to provide incentives to dentists to increase their NHS provision. Those improvements would apply to asylum seekers as much as to any other group.
Baroness Trumpington: My Lords, what happens if an asylum seeker has a baby in this country? Is that baby a British citizen?
Lord Hunt of Kings Heath: My Lords, I shall have to write to the noble Baroness on that issue. The responsibilities of the Department of Health are great but they are not as great as that. We expect the families and dependants of asylum seekers to receive the appropriate NHS services.
Earl Howe: My Lords, does the Minister agree that the single most important step towards solving the difficulties identified by the noble Baroness is proper co-ordination between the Home Office, the Department of Health and local authorities? Does he share my perception that, without a single body taking overall responsibility for the welfare of refugees, general practitioners are picking up the extra workload, often with no notice and no extra back-up funds?
Lord Hunt of Kings Heath: My Lords, the Department of Health will be anxious to pick up any issues raised by general practitioners and ensure that they are discussed either with the Home Office or with the NASS directly. At the end of the day, I do not think it matters which part of government or which particular unit takes overall responsibility. What is important is to ensure a co-ordinated response. I am satisfied that in areas where a greater demand is placed on health authorities through the development of a proper health improvement programme, through the use of local initiatives such as PMS and the local development of services authorities are in a position to target resources where they can be used most effectively.

Military Museums
2.53 p.m.
Lord Burnham Lord Burnham asked Her Majesty's Government:
What security of tenure military museums have on Ministry of Defence property.
The Minister of State, Ministry of Defence (Baroness Symons of Vernham Dean): My Lords, military museums are afforded tenure of occupation on Ministry of Defence property under a commitment first made in 1956. They should continue to be accommodated unless there are changes in deployment or estate requirements. Some have applied

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for security of tenure by way of a lease from the department. But a number of smaller museums, the majority of which are Army regimental and corps museums, have not made such applications. The trustees of these museums may apply to lease their accommodation, except for a very small number which occupy buildings on land known as Old Land Revenue Property, which is owned by the Crown Estate.
Lord Burnham: My Lords, I thank the noble Baroness for that very full Answer. My Question was originally based on an article I read. The noble Baroness's department was kind enough to point out to me this morning that Mr Max Hastings, who wrote it, had reneged on his statement. He said that the Ministry of Defence had stated that most existing museums would be unaffected. I hear what the Minister says, but that sounds rather dangerous. I hope that she can inform the House that all existing museums will be unaffected if they so wish.
Baroness Symons of Vernham Dean: My Lords, I cannot give the noble Lord that complete assurance. As I indicated in my initial Answer, there may be changes to regimental accommodation because of changes in deployment or in estate requirements. Where there are such changes, as there have been on one or two occasions, sometimes the museum is able to follow its regiment elsewhere.
I am interested that the noble Lord believed every word of the article. As I recall, it started off by saying that Malcolm Rifkind was a disastrous Defence Secretary and Michael Portillo only marginally less so. The author did not renege on those points.
Viscount Falkland: My Lords, based on the exchange that has taken place, can I take it that there is some reason for regimental and other museums to be anxious about the future because their tenure is not secure in the long term? Has there been any contact between the noble Baroness's department and the Department for Culture, Media and Sport, and also with the area museums councils, which are particularly concerned with these issues? Not all regiments which have connections with areas and regions and which have stories and treasures relating to those regions can make the arrangements that have been made, for example, by the King's Liverpool Regiment, which is now under the umbrella of the National Museums and Galleries on Merseyside, and the 60th in Hampshire. Can the Minister offer some word of comfort? Is there a dialogue between her department and other agencies, so that we do not lose valuable treasures?
Baroness Symons of Vernham Dean: My Lords, there are some 68 regimental and corps museums throughout the country. In 1998, the executive committee of the Army Board agreed a policy which allows the trustees of museums on the MoD estate to lease their museum accommodation for up to 50 years on sites where the MoD is prepared to agree to such a lease being taken out. That is very different from the
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DCMS position. There is contact between all departments on matters of mutual concern, but in this case the leases are a matter for the MoD. As I explained to the noble Lord, Lord Burnham, we are not able to give the absolute assurance he would like. Some 14 museums have currently applied for leases; I believe that two have signed up and the remainder are being considered.
Baroness Carnegy of Lour: My Lords, in Scotland, museums are devolved to the Scots Parliament but defence, of course, is not. Is the noble Baroness able to give any assurance or information regarding the important military museum at Edinburgh Castle?
Baroness Symons of Vernham Dean: My Lords, I shall write to the noble Baroness with any details that I manage to get together about the museum at Edinburgh Castle. However, the MoD estate will remain a matter for the Ministry of Defence. Any museum which is currently on Ministry of Defence land will be affected in the way I have described. There are three categories: a museum may have tenure of occupation under the commitment made in 1956; it may secure a lease under the 1998 Army Board requirements; or it will not be able to do so because it is on Crown property.
Lord Haskel: My Lords, are there any more nuggets of wisdom in the article that was drawn to our attention by the noble Lord, Lord Burnham?
Baroness Symons of Vernham Dean: My Lords, like a good deal of what Mr Max Hastings has written recently, it was very interesting indeed and I can recommend it. It was written on 28th October, and Mr Hastings apologised to the MoD on 25th November for getting the matter wrong.

Criticism of the EU
2.58 p.m.
Lord Monson Lord Monson asked Her Majesty's Government:
Whether they accept the opinion of an Advocate-General at the European Court of Justice on 19th October that harmful criticism of the European Union or its institutions is akin to blasphemy and that in such cases the normal right to freedom of expression does not apply; and, if not, whether they will raise the question at the forthcoming European Council in Nice in December.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Baroness Scotland of Asthal): My Lords, the noble Lord's Question is based on a factual inaccuracy. At no point in the opinion to which he refers did the Advocate-General state that criticism of the EU was akin to blasphemy or that the right to freedom of expression did not apply in criticism of the EU. The Advocate-General merely concluded, in the context of an internal Commission

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staff case, that a former official had been in breach of his obligations according to his terms of employment and that his dismissal was therefore justified. The case will now be considered by the European Court of Justice. We shall await its final judgment before passing further comment.
Lord Monson: My Lords, I thank the Minister for that reply. It is true that the Advocate-General in question, Senor Dámas Ruiz-Jarabo Colomer, whose 18-page opinion in the French translation I have with me, did not actually say that it was akin to blasphemy. What he said—and this is an opinion commonly held among the continental elite but not, thank goodness, in this country—is that damaging criticism that undermines the prestige, the self-confidence, the dignity, and so on, of institutions like the European Union is as heinous and as unacceptable as blasphemy. He did not say that it was "akin", but it comes to very much the same thing. In the light of that, when the proposal for a European public prosecutor comes to be discussed at Nice in less than a fortnight's time, can we hope that Her Majesty's Government will be extremely cautious?
Baroness Scotland of Asthal: My Lords, the noble Lord raised a number of questions in his response. I should point out that the appointment of a public prosecutor is not something for which the Government find there is any need. Perhaps I may remind the House that the opinion of the Advocate-General is not binding; the European Court of Justice may or may not heed the opinion; and that substantive comment should await the final judgment. Noble Lords will know that advocates are prone to making arguments and suggestions and that judges are prone to disregard them.
Lord Clarke of Hampstead: My Lords, in the light of her previous answers, is my noble friend the Minister able to inform the House as to why in her opinion the European Court of Justice has not so far sought a retraction from the Daily Telegraph?
Baroness Scotland of Asthal: My Lords, I can assist the House. The press articles written by Ambrose Evans-Pritchard are factually inaccurate. The ECJ wrote to the Daily Telegraph twice asking it to print a rectification. Only this Saturday, nearly one month after the appearance of the original story, did the Daily Telegraph finally print a response from the ECJ. In that letter the ECJ wrote:
"Ambrose Evans-Pritchard is wrong to state that … the Advocate-General … claims that criticism of the European Union is, 'akin to blasphemy and could be restricted without violating freedom of speech'. In fact, the Advocate-General in no way makes that assertion".
As with the earlier Question today, they seem to have got it wrong once again.
Lord Howell of Guildford: My Lords, even if the Advocate-General was misquoted—one difficulty may be that his views were set out in both Spanish and French and only recently became known in
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English—will the Minister at least reassure the House that there will be nothing unpatriotic or blasphemous about arguing for a development of the European Union in a more flexible and democratic direction than anything that seems to be in prospect at Nice or even in daring to suggest that the, at best, command structure for the defence of Europe might not necessarily lie at the heart of the European Union institutions?
Baroness Scotland of Asthal: My Lords, I can certainly reassure the noble Lord that it is not blasphemous. However, whether or not it is good sense is another matter.
Lord Taylor of Blackburn: My Lords, does my noble friend agree with me that we now find ourselves in the position where it is no longer prudent to believe everything that we read in newspaper reports?
Baroness Scotland of Asthal: My Lords, it would, regrettably, appear to be so.
Lord Pearson of Rannoch: My Lords, is it not true that Article 52 of the new Charter of Fundamental Rights provides for limitations on imposed rights and freedoms otherwise recognised by the charter "if they are necessary" and
"meet the objectives of general interest recognised by the Union"?
Does not that give one cause for concern, especially bearing in mind that, with this unfortunate development of the European Union, we are now in the phase of, "It doesn't exist"? We shall of course in future, as we have with all previous initiatives of this kind in the European Union, go through the phase of, "It doesn't matter", "We'll vote against it", or, "Our partners don't want it either". We then come, do we not, to the final phase, which is, "Oops, sorry; it's too late. You were warned"?
Baroness Scotland of Asthal: My Lords, if I may say so, I do not know what the noble Lord's precise question was—
Lord Pearson of Rannoch: My Lords, perhaps the Minister could answer my point about Article 52 of the new Charter of Fundamental Rights, which proposes precisely the sort of sanction to which the noble Lord's Question applies.
Baroness Scotland of Asthal: My Lords, Article 52(1) of the Charter of Fundamental Rights does not permit the wholesale undermining of citizens' rights, as subsequent Articles 53 and 54 make clear. Fundamental rights are guaranteed by the legally binding ECHR, the treaties and the member states' constitutions that the non-binding charter cannot go below.

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Perhaps I may further assist the House. Article 52(1) of the charter does indeed state that limitations may be placed on the rights contained within it,
"if they are necessary and generally meet objectives of general interest recognised by the Union, or the need to protect the rights and freedoms of others".
Yet—I should stress that this is important—the following Articles 53 and 54 state that nothing in the charter should be interpreted as restricting or adversely affecting the rights contained within the European Convention on Human Rights, the treaties or member states' constitutions. I hope, therefore, that the noble Lord is content and comforted by those words.
Lord Acton: My Lords, does my noble friend agree with me that it is not altogether akin to blasphemy to suggest that the noble Lord, Lord Pearson of Rannoch, for whom I have the greatest respect, is not always totally sound on the subject of the European Union?
Baroness Scotland of Asthal: My Lords, as someone said before me, "You may say that; I couldn't possibly comment".

Business of the House: Standing Order 40
Baroness Jay of Paddington: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That Standing Order 40 (Arrangement of the Order Paper) be suspended on Wednesday 29th November so far as is necessary to give the Government power to arrange the order of business.—(Baroness Jay of Paddington.)
On Question, Motion agreed to.

Political Parties, Elections and Referendums Bill
3.7 p.m.
Read a third time.
Clause 36 [Assistance by Commission for existing registered parties
The Parliamentary Under-Secretary of State, Lord Chancellor's Department (Lord Bach)The Parliamentary Under-Secretary of State, Lord Chancellor's Department (Lord Bach) moved Amendment No. 1:
Page 30, line 32, leave out ("£500,000")and insert ("£700,000").
The noble Lord said: My Lords, this amendment fulfils a commitment that the Government gave on Report to increase, from £500,000 to £700,000, the funding available to assist registered parties to meet the start-up costs associated with the Bill. I know that the noble Lord, Lord Beaumont of Whitley, would have liked the funding to be paid over a period of five years, but I hope that he now accepts that it is preferable to distribute the funding available to
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qualifying political parties as soon as possible. This will enable parties to put in place quickly the necessary internal systems so that they can comply with the accounting requirements and the controls on donations set out in Parts III and IV of the Bill. I beg to move.
Lord Beaumont of Whitley: My Lords, I am extremely grateful to the noble Lord for small mercies—that is, if one can call an increase of £200,000 a "small mercy". As the noble Lord said, it is not exactly what I sought to achieve. However, as long as the administration and distribution of this money is dealt with both sensitively and fairly, I realise that that will enable the smaller parties not only to do exactly what they need to do to set up these arrangements but also to "squirrel" a little bit by to deal with what happens immediately after, thereby ensuring that they have the necessary mechanisms in place.
I have only one question for the Minister at this point. Can he confirm that there is no terrible little snag somewhere at the back of all this; namely, that, if the money is given in the first year, all of it has to be spent in the first year? Can the noble Lord also confirm that it will be possible for parties which receive this money to spend it over a period of time?
Lord Bach: My Lords, my understanding is that it does not have to be spent in the first year. If I am wrong about that, I shall, of course, let the noble Lord know.
On Question, amendment agreed to.
Clause 52 [Payments, services etc. not to be regarded as donations]:
Lord Bach Lord Bach moved Amendment No. 2:
Page 41, line 27. leave out ("less") and insert ("not more").
The noble Lord said: My Lords, in moving government Amendment No. 2 I wish to speak also to Amendments Nos. 3, 13, 14, 15, 16, 19, 20, 23, 36, 37, 38, 41, 42, 43, 45, 46, 47 and 48.
I remind noble Lords opposite that these comprise the group of government amendments that the Opposition have promised they will not criticise for being brought forward at this stage. They are the balance of those amendments moved last week on Report by the noble Lord, Lord Mackay of Ardbrecknish, amending the terms "not less than £5,000" and "more than £5,000" about which he felt so strongly. The amendments simply complete that process we started at Report stage of converting references to "not less than £5,000", or whatever the sum might be, to references to "more than £5,000". For consistency we also need to change references to, for example, "less than £200" in Clause 76(2) to read "not more than £200". I beg to move.
On Question, amendment agreed to.
Clause 68 [Reporting of multiple small donations]:
Lord Bach Lord Bach moved Amendment No. 3:
Page 54, line 17. leave out ("less") and insert ("not more").
On Question, amendment agreed to.
Clause 69 [Register of recordable donations]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 4:
Page 54, line 42, at end insert—
("(6) The Secretary of State may by order make provision for exempting from inclusion in the register maintained by the Commission under this section any specified details in respect of donations to parties registered in the Northern Ireland register.
(7) An order under subsection (6) shall be so made as to—

(a) apply to the specified details in respect of donations to every Northern Ireland party, and

(b) make the same provision with respect to every such party.

(8) In this section —
"Northern Ireland party" means a party registered in the Northern Ireland register; "specified" means specified in an order under subsection (6).").

The noble Lord said: My Lords, this group of amendments concerns the proposed exemption from the whole of Part IV of political parties in Northern Ireland. During the Committee and Report stages we had some enlightening but often, I regret to say, frustrating debates on these matters.
The Neill committee, on whose recommendations the Bill is based, did not recommend a complete exemption from the controls on donations which now comprise Part IV of the Bill. Despite what the noble Lord. Lord Bassam, has said on previous occasions, what the Government propose goes far beyond what the Neill committee thought necessary.
We now have the situation where, certainly until 2005 and possibly beyond, none of the provisions on donations in Part IV will apply to any registered political party in Northern Ireland. I should say, first, that a four-year renewal period is unacceptable. In Committee in another place, the Minister, Mr Tipping, gave some support to the idea of a 12-month renewal. That is what my Amendments Nos. 9 and 10 are intended to achieve. However, the main point is the substance of the exemption from Part IV. During a previous debate the Minister said that politics in Northern Ireland are not yet conducted on the same basis as in the rest of the United Kingdom. I wonder what he meant by that. Surely, he did not refer to the activities of Sinn Fein, for example, now regarded by the Government as legitimate enough to take its place and have Ministers in the Northern Ireland Executive. What are the "special factors" relating to Northern Ireland to which the Minister has repeatedly referred? In what circumstances does the Minister envisage that Part IV will be applied to Northern Ireland only partially? We never had any explanation of what was meant by that.
The situation in the Bill as at present drafted has a number of serious implications. First, there is the question of foreign funding. The Neill committee recommended a very limited exemption to the general ban on foreign funding. One of the central points of the Bill is that political parties in the United Kingdom should no longer be allowed to receive funding from anyone abroad. That is one of the central points of the Bill and of the Neill report.
The Neill committee stated, however, that as regards Northern Ireland there may be a case for exempting citizens of the Republic of Ireland, resident in the Republic and subject to compliance with that country's electoral law; that is, they should be allowed to donate to Northern Ireland parties. My Amendment No. 6 reflects that point. But that is not what the Government intend to allow in the Bill. They intend to allow anyone living anywhere in the world, be it America, Australia or wherever, to give money to political parties in Northern Ireland. The noble Lord, Lord Bassam of Brighton, admitted that on 11 th May, after rather an effort on my part to get him to do so. He said,
"The question that has been asked is whether a person in the USA can give money to a Northern Ireland party. Fairly and honestly, I believe that, yes, he probably can".—[Official Report. 11/5/00; col. 1823.]
The Minister could have missed out the word "probably"; the fact is that such a person can do so.
The noble Lord, Lord Molyneaux, said on 18th October that it was believed that the fund-raiser, Mr Galvin, had now transferred his allegiance to the Real IRA and the Continuity IRA and that those organisations intended to field candidates who would be backed by the foreign money that the Government were perfectly content to allow to flow to Northern Ireland parties.
I shall not speak in detail about the anomalies the provision creates. The most obvious example from my point of view is that the Irish diaspora, predominantly that in America, will be allowed to donate to Sinn Fein but the Scottish and Welsh diaspora will not be allowed to donate to the SNP or to Plaid Cymru. In that respect at least, violence has paid.
We also discovered a further issue in debate. Despite the Minister's initially strong assertion that it was not the case he eventually had to admit that Northern Ireland parties can use foreign money to campaign both in Northern Ireland in a referendum on the constitutional status of Northern Ireland and in the United Kingdom on a GB-wide referendum, for example, on the euro or on proportional representation. I have no doubt that even now some are considering the loopholes the Government have created to see how they can be exploited in any future referendum. What really worries me is that a referendum on the constitutional status of Northern Ireland could be seriously affected by foreign money.
On 18th October the noble Lord, Lord Bassam, said:
"I like to be straight with your Lordships' House. The information I have from officials is that Northern Ireland parties can use the fruits of money raised abroad in a UK referendum".—[Official Report, 18/10/00; col. 1038.]
But no one else can, not the Labour Party, not the Conservative Party, not the Liberal Democrats nor the Scottish nationalists. No political party in Great Britain would be allowed to do that. The Minister concluded at col. 1038:
"That may well present difficulties".

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Later that day he spoke of the need to ban foreign funding of referendums in the whole of the United Kingdom. Therefore he seemed to be aware of the dangers we had highlighted. However, those difficulties vanished into thin air, along with the need to ban the foreign funding of referendums. By 24th October the Minister said that he was,
"not persuaded of the case for preventing a Northern Ireland party using the proceeds of a foreign donation to meet its own referendum expenses".—[Official Report, 24/10/00, col. 191.].
Not only will Northern Ireland parties be allowed to take foreign money for ordinary elections, they will also, unlike all other UK parties, be allowed to take foreign money for referendums. That seems an amazing exemption.
We have dragged the Minister and his officials, kicking and screaming, to admit that the situation I have described exists. The Bill's ban on foreign participation in referendum campaigns is a sham for a number of other reasons, but here we have the Government explicitly and consciously allowing foreign funding to be used in referendums in Northern Ireland and the rest of the United Kingdom. That is plainly wrong. My Amendment No. 11 would go some way, although, I admit, not all the way, to address the point.
We have tried to approach the Bill in a spirit of compromise. The amendments the Government moved a few moments ago were the result of agreement between us. I have tried to envisage how we can find a way to help the Government obey the recommendations of the Neill committee and yet stop the foreign funding. I have conceded the issue of public reporting of donations over £5,000 on security grounds. As I said on Report, the Government have repeatedly justified all they are doing on the basis of donations needing to be kept confidential for the reason that someone in Northern Ireland who was known to give a large donation to a political party might be in danger from some of the men of violence.
If the Government had really believed that there were serious security considerations, they would have done exactly what I suggested doing. But they have gone much further. I am perfectly content to have donations to Northern Ireland parties kept secure and not made public. I think that that is quite reasonable. Amendment No. 4 does just that: no public disclosure of donors' names; and leaving out Clause 70 would achieve that objective. So the Government cannot complain that I have not taken on board their security argument.
The Minister admitted that Amendment No. 4 was something the Government had considered. He gave the impression that they were still considering it. But he said that it should be in addition to, and not in place of, the wider powers in Clause 70 which would allow them to exempt Northern Ireland parties from other parts of the Bill. He claimed—I thought that it stretched credulity somewhat—that one could not give the list of donations to the electoral commission and not make it public because the electoral commission
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might leak donors' names. What a condemnation of the Government's view of the electoral commission they are about to set up. What confidence can parties on this side of the Irish Sea have in giving confidential information to an electoral commission that the Government themselves say cannot be made leak-proof?
As I said on Report, the continuation of foreign funding from North America, or any other foreign country, for Sinn Fein/IRA and other republican groups cannot be justified on any grounds whatsoever. The Government cannot logically make the leap from wanting to ensure donors' anonymity to a complex exemption from the ban on foreign funds.
I accepted that the Neill committee suggested that there is a problem with the Republic. Largely at the prompting of the noble Lord, Lord Goodhart, I lifted from the Government of Ireland legislation of 1947 the idea that Ireland was not a foreign country and, therefore, accepted that people who had votes and were resident in the Republic could give money to Northern Ireland parties. Initially I thought that the easy way out would be to allow them to give money to any British political party, but the Government did not like that so I have narrowed the issue further.
The three provisions I put forward are hardly options because one builds on another, but I refer to them as the three options before your Lordships. First—I do not disguise the fact that it is my preferred solution— Amendment No. 12 on its own would remove entirely any special provision for Northern Ireland parties and make Northern Ireland parties subject to the same rules and regulations as parties in Great Britain. However, I have listened to the Government's case and I know that they will not accept that. I am aware of what the Neil committee said.
The combination of Amendment No. 4 with Amendment No. 12 would stop donors' names being made public. That is what the Government have said they want for security reasons. But it would also mean that there would be no foreign funding. The electoral commission would know where the money was coming from and the parties would have to observe the rule on not accepting impermissible donations.
My third building block, the third option—it is not my preferred one, but it is a good deal better than the provisions in the Bill—brings in Amendments Nos. 6 and 8. It would allow the foreign funding of Northern Ireland parties to come from the Republic of Ireland only. Only Northern Ireland parties could be so funded and foreign donations could come only from the Republic of Ireland which, according to the Government of Ireland measure, is not a foreign country. It would also mean that the names of large donors would not be made public so they would still be secure. That would mean that in Northern Ireland parties would have to observe the rules on donations; the commission would be able to ensure that they were not accepting money from abroad; but they would be able to receive funding from the Republic of Ireland.
As I have indicated, Amendments Nos. 9 to 11 are ancillary to the main question. They are about the renewal period. Amendment No. 11 refers to referendums.
Noble Lords have had before the House over the past few weeks a number of measures which many of us believe amount to a massive concession to the men of terror. As well as the provisions in the Bill which allow for foreign funding, we have had the Police (Northern Ireland) Bill which, as we predicted, has undermined morale in the RUC and risks undermining the fight against terrorism. Over the weekend a senior officer has indicated that he no longer wishes to serve in the RUC. Then we have the sinister Disqualifications Bill which has never been properly justified.
It seems to me that in this Bill there is another huge concession without anything given in return, as usual. We oppose what the Government are doing. We believe that it sends out dangerous signals. I have gone a long way to take on board what the Neil committee recommended. I have gone a long way to take on board the problems the Government put before your Lordships' House in defence of what they sought to do. I believe that my amendments together represent the taking on board of the Neill committee's report and represent a sensible way forward which would bring the Government and Opposition together. However, if not, I shall seek the opinion of the House. I hope that noble Lords will consider the issue in a dispassionate way, will see how far my amendments accommodate the objections and, if necessary, will join me. I remind the Liberal Democrats that in another place they voted against the clause standing part of the Bill. I look forward to their transferring that support to your Lordships' House. I beg to move.
Lord Molyneaux of Killead: My Lords, I fully support this group of amendments. We have to consider this rather peculiar provision, in particular Clause 70, in the context of what we have been doing in your Lordships' House over past months, and during the past two weeks. The provisions to permit the IRA in various forms to import unlimited funds from abroad were included in this Bill for reasons which were entirely unconnected with the Neill report. Like several other unique Bills in this category, they come into the "most favoured son" group. The obsession so prevalent in both Houses is that of extra-special treatment of terrorist parties: they have to be placated at all costs, even at the costs of integrity and of honesty. The second obsession is that we in your Lordships' House must avoid sending the wrong signal to terrorists just in case they get annoyed. So we grovel and lick boots in the expectation that our taskmasters in the various terrorist groups, from both sides of the community, will observe obligations and keep their part of any bargain. As many noble Lords have said on other occasions, it is a vain hope. But we now have proof positive of their inability and unwillingness to observe any contract into which they may have entered.
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So I ask: is it any wonder that they, the terrorists, despise the lot of us? Can Her Majesty's Government justify Clause 70, with its endearing rubric, on grounds other than what I call the "most favoured son" formula which the Parliament of the United Kingdom has been induced to swallow thus far?
On a similar occasion some weeks ago, I asked your Lordships—I apologise for the language—whether there is anything to which we will not stoop. Last week we completed the passage of the Police (Northern Ireland) Bill. The IRA/Sinn Fein grouping has thrown that back in our face in the past 24 hours; and, worse, it has completely wrecked the plans for a new police service consisting of a 50:50 composition. Most, if not all of us, were in favour of a balance representing both sides of the Northern Ireland community in the new force. But Sinn Fein/IRA has this weekend warned Catholics not to join the new service. It has warned those who might volunteer and be suitable to serve on the new police body. Saying that they cannot advise nationalists to serve is code for intimidation—kneecapping and all the rest of it; we have seen it all before. People who serve on the new police board will be putting their lives on the line. There is no doubt about that.
The IRA has gone further and dragged the entire nationalist community into a virtual boycott of all the constructive passages of the Patten report. My comments apply equally to Clause 70, because the terrorist groupings will cheat and cheat again. They will not keep their word.
The noble Lord, Lord Mackay, quoted the Neill report, which says early on:
"Political parties should in principle be banned from receiving foreign donations".
Why are we exempting from that a political party—or rather a terrorist movement masquerading as a political party? The Neill report went on:
"In relation to donations to political parties in Northern Ireland, the definition of a permissible source should also include a citizen of the Republic of Ireland resident in the Republic subject to compliance with the Republic's Electoral Act".
The Neill committee incorporated a Sinn Fein exemption into its fifth report. It will not benefit the Ulster Unionist Party, the Alliance Party, the Democratic Unionist Party or any other properly constituted democratic party except the nationalist parties, and in particular Sinn Fein. Much to my regret, Sinn Fein will dominate the nationalist grouping and the nationalist community in general, as has been proved over the past 48 hours.
I particularly support the point made by the noble Lord, Lord Mackay, about the confidentiality of donors. If names are to be disclosed, Catholics will be limited in their financial contributions to supporting one party only—Sinn Fein/IRA. It does not take much imagination, particularly among those of us who come from Northern Ireland or have served there, to understand that that intimidation will be carried through to the ballot box.
3.30 p.m.
Lord Fitt: My Lords, over the weekend I watched a video cassette that had been sent to me from Northern Ireland. It was a recording of an Ulster Television "Insight" programme. The programme contained a discussion about the relative merits of Sinn Fein and the SDLP and which one better represented the nationalist population in Northern Ireland. When the SDLP representative was asked why his party had refused to condemn many of the murders and atrocities carried out by the Provisional IRA over the past year, I was disheartened to hear him answer that it was in case it made the party sound like unionists. What a very lame excuse. Presumably the fact that I am supporting the Opposition and the noble Lord, Lord Molyneaux, makes me sound like a unionist. I do not believe that I do. I believe that the amendment should have been taken up long ago in the deliberations that have affected this country and its relations with the IRA.
Only this weekend we read in the Northern Ireland newspapers that the relatives of the victims of the Omagh bomb courageously took it upon themselves to come to a public house in the north of London, where, in a room above the bar, representatives of the Continuity IRA—the political arm of the Real IRA, which carried out that atrocious bombing that caused such tragedy in Northern Ireland—were collecting funds from the patrons, be they Irish or English. I take it that they were appealing to the Irish community in London.
How can that be justified? Again I refer to the speech of the noble Lord, Lord Mackay. Eric Anderson, who has just resigned, was one of the most dedicated senior policemen whom I have ever met in Northern Ireland. He carried out all the investigations into that terrible tragedy and the people who brought it about. He has just given notification that he is going to resign because he cannot accept some of the recommendations in the Patten report. He knows the identity of those who carried out the bombing in Omagh, but he cannot bring them before a court because it is very hard to get evidence. Does anyone believe that he can be replaced? Does anyone believe that any other member of the Royal Ulster Constabulary will be able to carry on where he has left off? I do not think that that is possible.
It is a contradiction that the House appears unwilling to ban contributions that come from the United States to reinforce the armed rebellion among the different factions of the IRA. The Government are not expressing the view of the vast majority of the people in the island of Ireland by permitting contributions to be brought from America to support the different factions in the IRA—and making excuses for doing so.
Northern Ireland is allegedly a foreign country, but I know from my experience at the SDLP's yearly functions in the Republic that the amount that we received from people there to help our political objectives would not bankrupt the exchequer. We can push that aside. However, Sinn Fein/IRA receive
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subscriptions from America. One group in America is ably led by a man called Martin Galvin, who broke away from the Provisional IRA and is now getting funds to support the Real IRA—the group that let off the bomb at MI6 headquarters and has continued a series of minor explosions in this country. Only the financial assistance of some seriously misguided people in the United States of America makes that possible. I hope that any legislation that we pass will do everything possible to stop foreign subscriptions to such organisations.
Lord Sanderson of Bowden: My Lords, I strongly support the amendment tabled by my noble friend Lord Mackay. Having had the difficult honour of being the chairman of a political party north of the Border, I know the strength of the links between Scotland and Canada and the United States of America. I cannot for the life of me see why I, as a previous chairman, should be prevented from asking Scots over there for money to fight elections, when my colleagues in the Ulster Unionists will be able to do so. I hope that my noble friend will press his amendment most strongly.
I wish to raise one other point. Amendment No. 6 seeks to include,
"citizens of the Republic of Ireland resident in the Republic (subject to compliance with the Republic's Electoral Act 1997)".
I do not know the terms of that particular Act. I only hope—my noble friend may be able to enlighten me—that residents in the Republic of Ireland will not be a post box for those further afield who may enter the lists at election time.
Lord Dubs: My Lords, only a few days ago we read in the newspapers that the British and Irish governments had jointly approached the American Government to ask that the Real IRA be declared a terrorist organisation. That was done with the intention of closing up funds from North America to the Real IRA. It was a very clear step.
I believe that there is confusion in the minds of some Members of this House as to the money that goes, I suggest, illegally and completely improperly from North America to fund terrorism in the United Kingdom. It does not require the clauses which the noble Lord, Lord Mackay, wants to amend to enable that flow of money to take place, even though for the past 30 years the British Government have done their best to prevent such a supply of money funding terrorism in Northern Ireland. The money does not have to be processed through a political party. The terrorists have only to raise the money, spend it in eastern Europe and then smuggle arms, weapons, bombs and explosives into Ireland to be used in Northern Ireland or in Britain.
Therefore, I do not believe that the argument that the Government are soft on terrorism—an argument that the noble Lord, Lord Mackay, used in relation to the Police (Northern Ireland) Bill and the Disqualifications Bill—is legitimate. Surely we are talking about money which is used for political purposes. Whatever the closeness of the links between

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Sinn Fein and the IRA—I do not dispute the closeness of those links—nevertheless, Sinn Fein also happens to be a legitimate political party. We may not like it, but if Sinn Fein seeks to raise money for legitimate democratic purposes, we should recognise that that is what it seeks to do.
The noble Lord, Lord Fitt, said that very little money for the SDLP came from the Republic. I believe that there is sufficient to make it important for the SDLP to raise its money there. The difficulty lies in the fact that there is no neat way out of the dilemma that has been posed. Sinn Fein happens to be a political party, both in Northern Ireland and in the Republic. As such, it can raise money for its political activities in the Republic and it is then not difficult for it to use some of that money for political purposes in Northern Ireland.
There is no neat way out of the dilemma. That is why I believe that the Government are right to include the clauses in the Bill. And that is why I do not believe that the noble Lord, Lord Mackay, is right to suggest that the clauses should be removed. I repeat: it is a very difficult problem. The Government have done their best to find a way through it and I believe that they have succeeded. For that reason, I hope that these amendments will not succeed.
Lord Monson: My Lords, the noble Lords, Lord Mackay of Ardbrecknish, Lord Molyneaux and Lord Fitt, powerfully drew our attention to the extraordinary series of concessions, not least the legislative concessions, made to Sinn Fein/IRA. Having observed them at reasonably close quarters over the past three-and-a-half years, I cannot believe that in their hearts most members of this Government welcome so many concessions to such a group. One can only suppose that they are acting under duress but that, for reasons of maintaining public confidence, that cannot be admitted publicly.
3.45 p.m.
Lord Rees-Mogg: My Lords, I support the amendments moved by the noble Lord, Lord Mackay of Ardbrecknish, on somewhat different grounds. I believe that a serious constitutional position arises and I very much hope that the Members on the Liberal Democrat Benches will consider these issues. In recent years we have adopted a strong principle that our constitution rests on equality and that there should not be discrimination in terms of gender, race or, indeed, colour. However, there is an inherent proposal in the Bill that there should be a discrimination in terms of geography.
The European Convention on Human Rights, which we have adopted into our own law, seems to me also to be based on a principle of equality; that is, it is against human rights for a legal provision to be made which has radically different effects on different groups on a purely arbitrary basis. I believe that these amendments would improve the Bill substantially by bringing it nearer to the constitutional equality which it has been a major aim of the present Government to secure in relation to other matters.
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Let us look at the experience of other countries. A major issue which has arisen in the United States is whether there should be equality under the constitution. In the 1954 case which resulted in a declaration that there should not be segregation in education, it was determined that "equal but different" means "unequal"; that is, it cannot be claimed that something is all right although it is a discrimination because, in some other sense, it is equal.
In this case, I do not believe that it can even be said that the treatment of the non-Northern Ireland parties and the parties in the rest of the United Kingdom is equal. However, if in some sense that could be held out to be so, the position would remain essentially unequal and essentially a discrimination.
Therefore, the question which arises is: if we pass the Bill as the Government would like in an unamended form and if the Government persist in their view that they will not accept all or any of the amendments in the name of the noble Lord, Lord Mackay, shall we be passing a Bill that meets the tests of law, including the tests of the convention on human rights? That is a matter which may come before your Lordships' House in another way through the ordinary process of litigation.
Baroness Park of Monmouth: My Lords, I strongly support the amendment. I believe that on the last occasion that we discussed this matter, I asked the noble and learned Lord, Lord Falconer, whether Sinn Fein/IRA had supported, and had said that it would support, the proposal that Catholics should enter the RUC. I received no answer to that question. Sinn Fein/IRA has given that answer since and it has been no surprise to most of us.
Perhaps I may suggest strongly that, if the House does not accept this amendment, the people of Omagh will lose all faith in the process of justice. I am afraid that it is no good to say that Sinn Fein is a political party struggling to escape from its unwelcome IRA encumbrance. Sinn Fein/IRA consists of the very people who, when the people of Omagh appealed to both Gerry Adams and Martin McGuinness to set the witnesses free and tell them they could testify, said that they would not do so because they did not recognise British justice.
If Sinn Fein is a political party in the United Kingdom which does not recognise British justice, I suggest that it is the last party to which we should give special concessions. The people of Omagh will judge us. They will say, "You passed the terrorism Act; you said how hard you would be on terrorism; and the terrorism Act says that money to these people will be stopped. But when an opportunity comes, instead of stopping it, you actually create a position in this Bill in which they will receive favourable treatment and be able to obtain money". That will be absolutely incomprehensible and I suggest very strongly that it would be utterly wrong to accept it.
I hope that the Government will reflect on the fact that Sinn Fein/IRA has now come out into the open and said that it will not support Catholics in the RUC.

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At the same time, the best of the RUC are going. One thing which Sinn Fein/IRA has been calling for is the disbanding of the Special Branch. We can expect a good deal of action in the United Kingdom which may not be very agreeable and it will serve us right.
Lord Peyton of Yeovil: My Lords, I strongly support that question which my noble friend Lady Park has addressed to the Government. She is asking what kind of message the Government expect will be received in Northern Ireland. With respect, I do not believe that the emollient efforts of the noble Lord, Lord Dubs, will be of any great assistance to them.
I found the speech of my noble friend Lord Mackay very convincing indeed. It was a real effort to recognise the difficulties which the Government face in relation to this appalling problem. He went a long way to make it easy for them by not pressing for the omission of Clause 70.
As this debate has gone on, it has taken on more and more of the quality of a nightmare. I have begun to wonder more and more whether I am taking part in or listening to a procedure which is real. My noble friend on the Front Bench talked of another huge concession without any return so far, nor expected. It is just another huge concession. I wonder how on earth the noble Lord on the Front Bench, admittedly not a senior member of the Government, will have the gall to answer that challenge. He must reply also to the noble Lord, Lord Molyneaux, who pointed out that this was a concession—I believe I have his words correctly—to our taskmasters in the various terrorist groups. When the noble Lord replies, I hope that he will remember what the noble Lord, Lord Molyneaux said; namely, that this is another huge concession to our taskmasters in the various terrorist groups. We heard too from the noble Lord, Lord Fitt. He never fails to move me because he speaks from terrible experience.
What I find odd—maybe I am wrong; I hope I am—is that in a short time we shall have the spectacle of the noble Lord, Lord Bassam of Brighton, representing the Government of this country, representing all of us in a manner of speaking, in delivering the message that this Government are prepared to facilitate the collection and passage of money by Sinn Fein or its agents from foreign countries for whatever use may be contemplated. It is all very well for the noble Lord to shake his head. I hope he will lend some force to his apparent rejection of what I am saying when he gets to his feet and defends what most of us believe to be totally and absolutely indefensible.
In conclusion, I want to say that the message which the noble Lord will he delivering this afternoon, in the event that he does not, on behalf of the Government, accept the amendment, is one which for all of us now involves unlimited shame and may well, in the future, provoke physical results of which we shall all bear the consequences.
Lord McNally: My Lords, since it was pointedly asked which way noble Lords on these Benches will vote this afternoon, I can tell the House that we shall be supporting the Government.
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It is very easy for those on the Conservative Benches to make emotional speeches. It is worth considering—and it is now on the public record—that it is now nearly 20 years since a leading member of the government of the noble Baroness, Lady Thatcher, the late Lord Whitelaw, entered into direct negotiations with the IRA. Sometimes, some of the speeches this afternoon from those Benches have had the whiff of one more push; that, somehow, there is an alternative which is easily available to a government with more backbone militarily to defeat the IRA.
Baroness Park of Monmouth: My Lords, I merely wish to ask the noble Lord whether he does not draw a distinction between negotiating with what were then people who might conceivably behave in a civilised way eventually and people whom we now know do not behave in a civilised way. We have had years of experience.
Lord McNally: My Lords, I believe that terrorists behave in an uncivilised way full stop. But politicians have a duty not to support them, as the noble Baroness said from a sedentary position, but to try to find a way forward to peace. Of course, just as Lord Whitelaw must have done 20 years ago, the present Government face that horrific dilemma of negotiating with men of violence. Those are difficult dilemmas. I often think of George Woodcock's description of good trade unionism being shabby compromises. There is a lot in the peace process which is shabby compromise. But the peace process is about giving some kind of breathing space for the normality of politics to return to Northern Ireland.
We know that around that process, there are those who will be determined actively to destroy it. The fact is that to give peace a chance, the Executive and the political process, such as it is, with its defects, must he given a breathing space. We believe that this is part of a package of legislation, as has been pointed out, and it does provide such a breathing space. It will be abused; attempts will be made to undermine it by the men of violence; but it gives the men of peace something to hang on to and to build on as well.
As the Neill committee recognised, we all know that it is possible to dog-leg funds through the Republic of Ireland and for the terrorists to cheat. But, as the noble Lord, Lord Dubs, mentioned, action can be taken. The joint demarches by the British Government and the Government of the Irish Republic are examples of that.
I thought that the noble Lord, Lord Mackay of Ardbrecknish, made an extremely effective speech. On these Benches, we must take a balance of judgment. It is not right on one side. If it were that simple, we should have either defeated the IRA or returned Northern Ireland to some perfect democracy. But neither is on offer at the moment. What is on offer is a peace process which needs help. Because we believe it needs help and because we believe that this Government are trying to make that peace process work, we shall be with them in the Division Lobby today.
4 p.m.
Lord Goodhart: My Lords, I want to speak personally and not on behalf of my party. I have made my personal position clear to my noble friends, and they have accepted it. Having signed the report of the Neill committee, it would not be honourable for me to vote in a manner inconsistent with the report to which I have put my name. In no way is this a criticism of my party or of the stand being taken by it on this issue. Had I not been a member of the Neill committee I should have been in an entirely different position. Personally, I shall be unable to vote on any Division on these amendments.
The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, with these amendments we return to the vexed matter of the special provisions for Northern Ireland parties. I readily admit that it is a vexed matter, with strong passions running on both sides of the argument. The House is by now well aware of the case made by the Neill committee for these special provisions, so I shall not detain the House by going over that ground again, but shall confine my remarks to the amendments before us.
The amendments address four different aspects of Clause 70: first, the exemption from disclosure; secondly, the exemption from the ban on foreign funding; thirdly, the time limit on any order made under subsection (1); and, finally, the effect of the exemption in respect of the ban on foreign funding on a referendum campaign. I shall address each of those points in turn.
Amendments Nos. 4, 7 and 8 address the issue of disclosure. They seek to take what some may describe as the middle road between applying the controls in full to Northern Ireland parties and a complete exemption. As I indicated on Report, that is a middle way which the Government have previously closely examined. We have concluded, however, that it is not an approach that we can adopt at this time.
Concern has been expressed that the disclosure of donations to the electoral commission, but not more widely, would not provide the necessary assurance to donors in Northern Ireland. Let me make it perfectly clear that this is not because the Government lack confidence in the ability of the commission to keep information about donors in Northern Ireland parties confidential. The key consideration here is public perception. We know that sections of the community in Northern Ireland do not have full confidence in the public institutions operating in that part of the United Kingdom. Whatever the reality of the situation, there will be a perception that information given in confidence to the electoral commission will somehow leak out.
Consequently, this half-way house will not take the trick. If donors are fearful that their details will be made known, they will stop making donations and it would, as a result, become very difficult for democratic parties in Northern Ireland to operate effectively. Such
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a result would not advance the peace process. At this time, therefore, I cannot commend this middle way to the House.
Amendment No. 6 seeks to give effect to the letter of the Neill committee's Recommendation 29. Let me remind the House why we think that this particular recommendation is impractical. Under the amendment, a party in Northern Ireland could accept a donation from a citizen of the Republic of Ireland resident in the Republic, subject to that person's compliance with the Republic's Electoral Act 1997.
The first difficulty with that approach is that we do not believe that it would be practical to require that a United Kingdom party satisfy itself that a donor complies with legislation in force in another state, in another jurisdiction.
The second difficulty with this approach is that it would simply serve no useful end. The noble Lord knows very well that the Republic of Ireland's legislation in this area does not ban the foreign funding of political parties. I make no comment about t hat as it is clearly a matter for the Irish state. But, in the absence of such a ban, any citizen of the Republic could accept a donation from the United States or elsewhere and then simply reroute it to a party in Northern Ireland. The noble Lord has argued that we should at least make an attempt to confine the foreign funding of parties in Northern Ireland to funds emanating from the South of Ireland, but this amendment patently fails to do that. If the amendment has no effect in practice, frankly it should not be made.
Amendments Nos. 9 and 10 relate to the time limit on any order made under subsection (1) of Clause 70. On Report the House accepted a government amendment to limit the life of such an order to four years. It is right and proper that an exemption order should be subject to regular review and we believe that once every four years or so is about right. These two amendments would require an annual review. I put it to the House that that is too frequent. We very much hope that the political climate in Northern Ireland will continue to improve year on year.
I believe that the impassioned plea made by the noble Lord, Lord McNally, is right. This process is not and never will be perfect, but we have to do all that we can to help it. This is not the same as saying that the political situation will have changed sufficiently one year over another to justify an annual review of a Clause 70 order. I invite the House to stick at four years, albeit with the possibility of an interim review should the climate change materially, as we all hope, in which case the order then in force could, if appropriate, be revoked.
Finally, Amendment No. 11 returns to the issue of foreign funds being used by a Northern Ireland party to meet the costs of a referendum campaign. I am aware that the noble Lord, Lord Mackay, continues to be unhappy about such a consequence of a Clause 70 order.

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If, as we propose, an order is made under Clause 70 to exempt Northern Ireland parties from the restrictions on the acceptance of donations, that exemption will apply for all purposes. It is not, and never has been, our intention to allow Northern Ireland parties to accept foreign donations to meet their general running costs or to meet the cost of election campaigning, but not to meet the cost of a referendum campaign. On what possible grounds can such a distinction be made? There is simply no case for this amendment.
The noble Lord is perfectly entitled to argue that there should be no special provisions whatsoever for Northern Ireland. It is up to your Lordship's House to decide whether to accept the noble Lord's case or to accept the Government's and the Neill committee's case. If your Lordship's House comes down in favour of Clause 70, the case for Amendment No. 11 simply evaporates. The fact that a Northern Ireland party may use foreign donations to fund a referendum campaign raises no new issues.
At each stage of this Bill we have heard the arguments for and against Clause 70. Sadly, there has been no meeting of minds at least between these Benches and those of the Official Opposition. The time has come to decide once and for all whether this clause should stand part of the Bill. I put it to the House that there are compelling arguments for these special provisions and I therefore invite the House to reject these amendments.
Lord Mackay of Ardbrecknish: My Lords, perhaps I may comment on the Minister's reply in reverse order. On foreign funding for referendums, he seems to be quite happy that that should go ahead and he seems to accept, in fact almost suggests, that the Government deliberately set out to allow that. To take a narrow aspect, if the Scottish National Party ever arrives at the stage—I hope that it will not—of forcing a referendum on an independent Scotland, it seems to me that there would be no justification for saying, "No, you cannot have foreign money"; whereas in a referendum on the future of Northern Ireland, we could say to one side of that argument, "You can have foreign money". The position is totally without logic and—dare I say it? — totally without integrity.
The third point, the limit of four years, is not the most important part of these amendments, but it seems to me that if the Government are to make progress on Northern Ireland and want to sweep away all these exemptions as soon as possible, which I understand is the Minister's position, they would be better reviewing the situation once every year rather than once every four years. However, that is the least important of the four amendments.
On the second point—essentially, of how we can check whether money that has come from a donor in the Republic has not originated in the United States—the same question could be asked in relation to Great Britain. How will we check that? The electoral commission will carry out some checking, as no doubt
1128
will political parties. But I fully accept that it would be wrong for the other political parties in Northern Ireland to know about large donors, wherever they are from, for reasons of which we are all aware.
However, I should have thought that, with all the co-operation we have with the Republic's government, it would not be too much to ask them to go a step further and help the electoral commission in any investigation it had to conduct in relation to a large donor in the South. I should have thought that that was a small price for the Republic of Ireland to pay in return for all that it has had from the United Kingdom Government over the past few years. So I do not believe the noble Lord made a case at all in that regard.
On the question of donations and keeping them confidential, perhaps if there had been a fourth stage of the Bill—thank goodness, there is not; that is one thing at least on which the Ministers agree with me—I might have knocked out the fact that we should tell the electoral commission and allow Northern Ireland parties not to report their donations of £5,000 to anyone. But it is an amazing proposition that we cannot trust the electoral commission with confidential information.
This has been a sad debate. I say to the noble Lord, Lord McNally, that I hope that his friends in the other place who voted with us on these issues in the Commons do not read in Hansard what he has said today. I do not believe the exaggerated nature of his speech, which was more or less that this would be a threat to the whole peace process, to be in the least bit justified. I noted what the noble Lord, Lord Dubs, said—that Sinn Fein should be allowed to seek to raise money for legitimate political purposes. I have no problem with that. But why, in reality, should they be the only people who are allowed to raise money for legitimate political purposes outside these islands? The Labour Party is not allowed to and I do not believe for a moment that anything the Labour Party raised would not be used legitimately.
Lord Dubs: My Lords, because it is the only political party which operates both within the United Kingdom and in another country.
Lord Mackay of Ardbrecknish: My Lords, my exemption of the Republic of Ireland electors from the ban addresses the noble Lord's point. That is my original point about this being a series of bricks that builds up the position where I take on board the objections of noble Lords opposite.
With the exception of the two noble Lords I mentioned and the Minister, no noble Lord is in the least happy. I could repeat some of the points made. I shall not do so, apart from to say this. If the noble Lord, Lord Fitt, believes these amendments to be proper and sensible amendments to accept, it might be worth those noble Lords who intend meekly to obey the Government Whip thinking about it before they vote. I commend the amendment to the House.
4.13 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 148; Not-Contents, 167.

Division No. 1

CONTENTS

Aberdare, L.

Hogg, B.

Ackner, L.

Home, E.

Alexander of Weedon, L.

Hooper, B.

Allenby of Megiddo, V.

Howe, E.

Ampthill, L.

Howe of Aberavon, L.

Anelay of St Johns, B.

Howell of Guildford, L.

Arran, E.

Hunt of Wirral, L.

Ashcroft, L.

James of Holland Park, B.

Astor, V.

Jellicoe, E.

Astor of Hever, L.

Jopling, L.

Attlee, E.

Kimball, L.

Barber, L.

Kingsland, L.

Belstead, L.

Lamont of Lerwick, L.

Blackwell, L.

Lane of Horsell, L.

Blatch, B.

Liverpool, E.

Brabazon of Tara, L.

Luke, L.

Bridgeman, V.

Lyell, L.

Brougham and Vaux, L.

McColl of Dulwich, L.

Burnham, L. [Teller]

Macfarlane of Bearsden, L.

Buscombe, B.

Mackay of Ardbrecknish, L.

Butterworth, L.

Mackay of Clashfem, L.

Byford, B.

Marlesford, L.

Campbell of Alloway, L.

Marsh, L.

Campbell of Croy, L.

Mason of Barnsley, L.

Carlisle of Bucklow, L.

Miller of Hendon, B.

Carnegy of Lour, B.

Molyneaux of Killead, L.

Chadlington, L.

Monson, L.

Chilver, L.

Montrose, D.

Cockfield, L.

Moore of Lower Marsh, L.

Coe, L.

Moore of Wolvercote, L.

Cope of Berkeley, L.

Mowbray and Stourton, L.

Courtown, E.

Murton of Lindisfarne, L.

Craig of Radley, L.

Naseby, L.

Craigavon, V.

Neill of Bladen, L.

Cranborne, V.

Noakes, B.

Crathorne, L.

Northbourne, L.

Crickhowell, L.

Northbrook, L.

Cuckney, L.

Northesk, E.

Cumberlege, B.

Norton of Louth, L.

Denham, L.

O'Cathain, B.

Dixon-Smith, L.

Oppenheim-Barnes, B.

Dundee, E.

Palumbo, L.

Eccles of Moulton, B.

Park of Monmouth, B.

Eden of Winton, L.

Patten, L.

Elles, B.

Pearson of Rannoch, L.

Elliott of Morpeth, L.

Perry of Walton, L.

Elton, L.

Peyton of Yeovil, L.

Enroll, E.

Pilkington of Oxenford, L.

Feldman, L.

Platt of Writtle, B.

Fitt, L.

Plumb, L.

Fookes, B.

Plummer of St. Marylebone, L.

Freeman, L.

Powell of Bayswater, L.

Gardner of Parkes, B.

Quinton, L.

Geddes, L.

Rawlings, B.

Glentoran, L.

Rawlinson of Ewell, L.

Goschen, V.

Reay, L.

Gray of Contin, L.

Rees, L.

Greenway, L.

Rees-Mogg, L.

Hanham, B.

Renton, L.

Haslam, L.

Roberts of Conwy, L.

Hayhoe, L.

Sainsbury of Preston Candover, L.

Henley, L. [Teller]

Higgins, L.

Sanderson of Bowden, L.

Hodgson of Astley Abbotts, L.

Seccombe, B.

1130

Selborne, E.

Tenby, V.

Selkirk of Douglas, L.

Thatcher, B.

Sharples, B.

Trefgarne, L.

Shaw of Northstead, L.

Trumpington, B.

Vivian, L.

Simon of Glaisdale, L.

Walker of Worcester, L.

Slim, v.

Warnock, B.

Soulsby of Swaffham Prior, L.

Weatherill, L.

Stewartby, L.

Willoughby de Broke, L.

Strange, B.

Wolfson, L.

Strathclyde, L.

Young, B.

NOT-CONTENTS

Acton, L.

Haskel, L.

Addington, L.

Haskins, L.

Ahmed, L.

Hayman, B.

Alli, L.

Hilton of Eggardon, B.

Amos, B.

Hogg of Cumbernauld, L.

Andrews, B.

Hollis of Heigham, B.

Archer of Sandwell, L.

Hooson, L.

Ashley of Stoke, L.

Howells of St. Davids, B.

Ashton of Upholland, B.

Hughes of Woodside, L.

Bach, L.

Hunt of Kings Heath, L.

Barker, B.

Irvine of Lairg, L.(Lord Chancellor)

Barnett, L.

Bassam of Brighton, L.

Jacobs, L.

Berkeley, L.

Janner of Braunstone, L.

Bernstein of Craigweil, L.

Jay of Paddington, B. (Lord Privy Seal)

Billingham, B.

Blackstone, B.

Jeger, B.

Borrie, L.

Jenkins of Putney, L.

Bradshaw, L.

King of West Bromwich, L.

Bragg, L.

Layard, L.

Bristol, Bp.

Lea of Crondall, L.

Brooke of Alverthorpe, L.

Lipsey, L.

Bruce of Donington, L.

Lockwood, B.

Burlison, L.

Lofthouse of Pontefract, L.

Carter, L. [Teller]

Longford, E.

Chandos, V.

McCarthy, L.

Clarke of Hampstead, L.

McIntosh of Haringey, L. [Teller]

Clement-Jones, L.

Clinton-Davis, L.

McIntosh of Hudnall, B.

Cocks of Hartcliffe, L.

MacKenzie of Culkein, L.

Cohen of Pimlico, B.

Mackenzie of Framwellgate, L.

David, B.

McNally, L.

Davies of Coity, L.

Maddock, B.

Davies of Oldham, L.

Mallalieu, B.

Dean of Thornton-le-Fylde, B.

Massey of Darwen, B.

Desai, L.

Merlyn-Rees, L.

Dholakia, L.

Methuen, L.

Dixon, L.

Miller of Chilthorne Domer, B.

Dubs, L.

Mishcon, L.

Ezra, L.

Mitchell, L.

Falconer of Thoroton, L.

Molloy, L.

Falkland, V.

Morgan, L.

Farrington of Ribbleton, B.

Morris of Castle Morris, L.

Faulkner of Worcester, L.

Morris of Manchester, L.

Filkin, L.

Newby, L.

Fyfe of Fairfield, L.

Nicol, B.

Gale, B.

Northover, B.

Gibson of Market Rasen, B.

Oakeshott of Seagrove Bay, L.

Gladwin of Clee, L.

Peston, L.

Goldsmith, L.

Phillips of Sudbury, L.

Gordon of Strathblane, L.

Plant of Highfield, L.

Goudie, B.

Ponsonby of Shulbrede, L.

Gould of Potternewton, B.

Prys-Davies, L.

Grabiner, L.

Ramsay of Cartvale, B.

Graham of Edmonton, L.

Randall of St. Budeaux, L.

Greaves, L.

Redesdale, L.

Grenfell, L.

Rendell of Babergh, B.

Hamwee, B.

Rennard, L.

Hardy of Wath, L.

Richardson of Calow, B.

Harris of Greenwich, L.

Rodgers of Quarry Bank, L.

Harris of Haringey, L.

Roll of Ipsden, L.

Harrison, L.

Roper, L.

1131

Russell, E.

Thomson of Monifieth, L.

Sainsbury of Turville, L.

Thornton, B.

Sandberg, L.

Tomlinson, L.

Sawyer, L.

Tope, L.

Scotland of Asthal, B.

Tordoff, L.

Scott of Needham Market, B.

Tumberg, L.

Sewel, L.

Uddin, B.

Sharman, L.

Varley, L.

Sharp of Guildford, B.

Wallace of Saltaire, L.

Shepherd, L.

Walmsley, B.

Shore of Stepney, L.

Warner, L.

Shutt of Greetland, L.

Warwick of Undercliffe, B.

Simon, V.

Watson of Richmond, L.

Simon of Highbury, L.

Wedderburn of Charlton, L.

Smith of Clifton, L.

Whitaker, B.

Smith of Leigh, L.

Whitty, L.

Steel of Aikwood, L.

Wigoder, L.

Stone of Blackheath, L.

Wilkins, B.

Strabolgi, L.

Williams of Crosby, B.

Symons of Vernham Dean, B.

Williams of Elvel, L.

Taverne, L.

Williams of Mostyn, L.

Taylor of Blackburn, L.

Winston, L.

Thomas of Walliswood, B.

Woolmer of Leeds, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.23 p.m.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 5:
After Clause 69, insert the following new clause—

Political Parties, Elections and Referendums Bill
  TAX RELIEF ON POLITICAL DONATIONS
  (" . After section 379 of the Income and Corporation Taxes Act 1988 (interpretation of sections 369 to 378) there shall be inserted—
  TAX RELIEF ON POLITICAL DONATIONS

    Tax relief on political donations.
    379AA.—(1) Tax relief shall be available to an individual ("the donor") in accordance with this section on qualifying political donations made by him of up to £500 in any year of assessment.
    (2) A donation is a qualifying political donation for the purposes of this section if it is made to a registered political party (other than a minor party) and—

    (a) it takes the form of the payment of a sum of money,

    (b) it is not subject to a condition as to repayment,

    (c) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the political party, its members or accounting units, otherwise than by way of gift, from the donor or a person connected with him, and

    (d) the donor is a registered elector.

    (3) For the purposes of this section a political party is an eligible political party if—

    (a) it is a registered party within the meaning of section 22 of this Act other than a minor party, and

    (b) at the last general election preceding the donation in question—

    (i) two members of that party were elected to the House of Commons, or

    (ii) one member of that party was elected to the House of Commons and not less than 150,000 votes were given to candidates who were members of that party.

    (4) If an individual makes a qualifying donation he shall be entitled, on making the payment, to deduct and retain out of it a sum equal to basic rate tax thereon.
    (5) Where a sum is deducted under subsection (4) above, the sum deducted shall be treated as income tax paid by the person to whom the payment is made.
    (6) Any person by whom a qualifying donation is received shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (5) above is treated as income tax paid by him; and any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the qualifying political donation to which it relates.
    (7) The following provisions of the Taxes Management Act 1970, namely—

    (a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act.

    (b) section 30 (tax paid in error, etc) apart from subsection (1B),

    (c) section 86 (interest), and

    (d) section 95 (incorrect return or accounts),

    shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.
    (8) In the application of section 86 of the Taxes Management Act 1970 by virtue of section (7) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment ("the relevant year of assessment") under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date—

    (a)is 1st January in the relevant year of assessment in a case where the person falling within subsection (5) above has made a relevant interim claim; and

    (b) in any other case is the later of the following dates, that is to say—

    (i) 1st January in the relevant year of assessment; or

    (ii) the date of the making of the payment by the Board which gives rise to the assessment.

    (9) The Board may by regulations make provision—

    (a) for the purposes of any provision of this section which relates to any matter or thing to be specified by or done in accordance with regulations;

    (b) with respect to the furnishing of information by donors or recipients, including, in the case of recipients, the inspection of books, documents and other records on behalf of the Board; and

    (c) generally for giving effect to this section.

    (10) In this section—

    "financial year" in relation to any person, means a financial year of that person for the purposes of the relevant regulations;

    "interim claim" means an interim claim within the meaning of the relevant regulations;

    "relevant interim claim" means, in relation to an assessment made for a period coterminous with, or falling wholly within, a person's financial year, an interim claim made for a period falling wholly or partly within that financial year; and

    "the relevant regulations" means regulations made under subsection (9) above.

    (11) Section 839 of this Act shall apply for the purposes of this section to determine whether one person is connected with another."").
    The noble Lord said: My Lords, this amendment deals with the issue of tax relief, in respect of which the Government have decided to depart from the recommendations of the Neill committee. Chapter 8 of the Neill report deals with the question of allowing tax relief on donations to political parties in the same way that tax relief is given to charities.
    I could develop this argument at some length. I could even read out the recommendations of the Neill committee on this matter. If I did so, I believe that your Lordships would be convinced. However, that would take time. In addition, I know that government supporters tend to wear earmuffs so that they are unable to hear good arguments, and that they are allowed to remove the earmuffs only when the Whips think that the arguments are bad. I believe that the arguments are extremely good. I therefore hope that they are listening.
    The conclusion to which Neill came, on page 99 of the report, was:
    "Tax relief by deduction at source should be introduced, limited to the basic rate, on donations of up to £500 a year to 'eligible', registered political parties".
    I shall précis the argument. Having decided that donations of over £500 should be made public, and having decided that donations to British political parties should come only from people on the electoral register in this country, the Neill committee felt that the time had come to encourage small donors. In addition, concern was expressed about the involvement of people in the democratic process, a concern shared by all of us. I have previously said that political parties are about the most important voluntary organisations in the country, bar none, because they form the very basis of the political system. Without political parties, one cannot have democracy. They are, therefore, very important.
    We saw in last week's by-elections, with very poor turn-outs, a reduced interest in the political process. I believe that that interest extends to members of political parties. It is not easy to retain members. One way of encouraging people to donate to political parties may be to explain to them that their donations will be treated in the same way as their charitable donations. Interestingly, inheritance tax is already treated in that way, from which political parties doubtless also benefit a little.
    I want to make only one other point about the Neill committee. Reference was made in paragraph 6 of the report to evidence presented from Germany. In Germany, where a system of tax relief was introduced in 1974, the pattern of giving to political parties has changed in favour of many small donations and against large donations. I should have thought that the Government and the Opposition could agree on this. Is that not where we want to end up—with many more small donors to political parties? The German experience demonstrated that that was encouraged in relation to tax relief. Political parties know that there is an extra incentive to getting small donors. This is an important point. It would help the funding of political parties. It would perhaps help them to set up the bureaucracy needed by this Bill. A certain amount of money raised by political parties at the moment will be side-stepped into the setting up of procedures to carry out some of the burdens imposed by this Bill on the political parties. That seems to me a sensible way of helping.
    I am told that tax relief would cost the Government about £4 million. It would be a good way of filling the gap that the Neil committee contended would be left by donors ceasing to make large donations to political parties. I believe that it would also underline to the public the importance of our political parties and the importance of supporting them, both in terms of canvassing and donating the money that political parties need. I beg to move.
    Lord Goodhart: My Lords, I have put my name to this amendment and I strongly support it. If a recent article in the House Magazine is correct, this Bill may well prove to be the noble Lord, Lord Mackay's, swan song on the Front Bench of his party. If that is correct, it will be a great loss to his party and, in view of his great skill in debate, to the whole House.
    Noble Lords: Hear, hear!
    Lord Goodhart: My Lords, everybody agrees that it would be preferable for political parties to have a large number of small donors rather than a small number of large donors. That is the direction that we all want to take. The requirement of disclosure of donations over £5,000, or, in some circumstances, over £1,000, may diminish the number of large donations. Probably within a few months, we shall see whether or not that is so. That requirement can be regarded as a stick but, in order to encourage smaller donations, we need also to provide a carrot. I agree with the Neill committee that the appropriate carrot is tax relief.
    We were impressed in particular by the example of Canada, where by coincidence a general election is being held today. It has an excellent system of public support for political parties through both tax relief and the partial funding of campaign expenditure. In Canada, a gift to a federal party qualifies for up to 500 dollars' tax credit on a donation of 1,150 dollars. There are similar reliefs on donations to parties at the provincial level. Those seem to work well and are popular.
    Our proposal would achieve the same result but by a different route. The Neill committee proposed a simple system similar to the well known gift aid system for charities, except that no credit would have been available to a taxpayer against the higher rate tax. The use of the gift aid method would have meant that the donation would have had no effect on PAYE and there would have been no need to inform employers or in any way publicise the fact that a gift had been made.
    A number of arguments have been made against tax relief. One made at an earlier stage of the Bill was that the money would be better spent on schools and hospitals. That argument was never strong, given that the estimated cost was about £4 million against government expenditure in the region of £400 billion. The tax relief would have been equivalent to £ 1 in every £100,000 of government spending.
    Other arguments put forward the view that it is unfair to those who, by making a donation to their party, cannot pass on the benefit of tax relief because their income is not high enough to bring them into the

    1135
    tax-paying bracket. There will be a few donors in that category; for instance, some students and some nonworking partners of people in work. However, I believe that the number of people in those categories who would make donations would be small. In any event, I do not understand why it is a serious argument against tax relief. If people give the same amount to a party and that amount is worth a little less to the party sometimes, that is bad luck for the party but no handicap to the donor.
    A more serious argument is that there is an imbalance between parties because some have more supporters who will be willing to give £500. However, there would undoubtedly be a substantial benefit to all parties. The Labour Party, in its evidence to the Neill committee, indicated that it had approximately 400,000 donors who gave an average of £20 each. That would enable it to recover about £2 million by way of tax relief.
    The arguments in favour seem to be stronger. I have already spoken about the carrot issue: the proposal is an important incentive to parties to go out and raise more money from smaller donors rather than to concentrate on the large donors. However, there is an argument which goes well beyond that. I believe that it sends an important signal to members of the public that donations to political parties are good. That is already clearly recognised in the case of charities. Tax relief has always been given on charitable donations through the covenant system. In recent years, it has become more widespread because tax relief used to be available on gift-aid gifts of £250 or more and is now available on gift-aid gifts of any amount. That tax relief is given in order to recognise that the state regards the making of charitable donations as good and in the public interest.
    Obviously, many people will not think it right to give their own money to political parties because they do not support any particular party. However, the proposal sends a necessary signal to the public that political parties are an essential part of the democratic system—that is clear and everyone agrees with it—and that people who make small donations to political parties in amounts which cannot influence anyone are serving the public interest and strengthening democracy in our country. That is why I believe that giving tax relief on donations of up to £500 is very much in the public interest.
    Lord Neill of Bladen: My Lords, I support the amendment. I declare an interest as chairman of the Committee on Standards in Public Life, which produced the report underlying this legislation. At Second Reading I made the point I am now about to make. Apart from one other intervention, I have kept out of the debate on the Bill because I believe it to be a matter for your Lordships. The views of the committee have been made plain. However, I feel strongly about this issue.
    Allowing tax relief to donors of small sums not exceeding £500 is a signal that public support is encouraged and invited for political parties. We have
    1136
    seen lamentable election turn-outs. In the past week's by-elections we saw turn-outs of between 27 and 29 per cent. Turn-out at elections to the European Parliament has been as low as 15 per cent.
    The move, which is modest and will cost the Treasury little, will encourage people of relatively small means to contribute. The proposal is not one in favour of fat cats because the tax relief is on only £500. The arguments against it have appeared to me to be nothing other than arguments of expediency and convenience. The proposal is disliked by the Treasury which does not want to give up the sum. Under the old phrase, "Where there's a will, there's a way", there would not be the slightest difficulty about introducing the exemption and allowing it to operate when the Bill comes into force. I strongly support the amendment.
    Baroness Fookes: My Lords, I rise strongly to support the amendment and the arguments adduced by the noble Lord and others. I want to make only one additional point. A school of thought suggests that parties might be the recipients of straight subsidies from the state. I do not favour that argument; I believe that such a course should be avoided as far as possible. I therefore believe that if we encourage ordinary voters by giving a tax relief, we shall avoid going down that road. I strongly support the amendment on that ground, in addition to the others which have been put forward.
    Baroness Gould of Potternewton: My Lords, I want to examine the contradictory arguments which have been put forward in relation to the recommendation and the proposal for state funding. There is a clear distinction between the current funding to political parties—for example, the Short money, the Cranborne money or a freepost, which relate to identified, specific purposes—and the proposal before us which is for general state funding and state aid. I believe that that is where the contradiction lies.
    The Select Committee on Home Affairs of another place identified the proposal for tax relief for donations as genuine state aid, and I believe that that is what we should debate. If the views of the Select Committee are taken as read—I shall be corrected if I am wrong, but I have not heard anybody yet deny it—the case for state aid must be made out. Such a case was made out by the Liberal Democrats, who have always been open and honest about their support for state aid, only at the very early stages of the debate. That matter has not been addressed by the Conservative Benches; rather, it has been studiously avoided, presumably because it contradicts their view held consistently that direct state funding should be opposed. One of their arguments is that such funding would reduce the dependence of parties on their own activities and the distinction between them and the electorate.
    If the case for state funding is not made, I believe that the argument for this amendment has been inaccurately expressed. I look forward to hearing the noble Lord, Lord Mackay of Ardbrecknish, put forward a good argument, which we have not yet heard, in favour of direct state funding. If one is

    1137
    opposed to state funding, one has no option but to oppose the amendment. In making these observations, it is not that I do not believe that we should look for ways to enable smaller donations to be made and give a signal to the public that political parties are respectable and should be viewed as a very important part of our democratic society. That is not the issue. The issue before us is the amendment, the basis of which is state aid in its true form.
    Lord Campbell of Alloway: My Lords, I had not intended to speak in this debate, but I strongly support the amendment. In view of the speech of the noble Baroness, surely there is a world of distinction between state funding which I have always understood meant subvention by the state to the parties, and what is called "state funding", which is this amendment, which, as I understand the term, is not. I am totally opposed to what I have always understood was state funding—I hope that it will never be introduced—and I entirely support this amendment which, to me, is not state funding at all.
    4.45 p.m.
    Lord Peyton of Yeovil: My Lords, I support the amendment, although somewhat half-heartedly. During the many years—some may believe too many—that I have been in one or other House of Parliament I have lost affection and admiration for political party machines which have grown in size and power and have gone a long way towards forfeiture of public respect. I have said publicly that I regard political parties as rather sombre examples of nasty things of which there must be more than one.
    Having said that, I regard the amendment as a preferable alternative to anything in the way of state subsidies for political parties. If there were subventions I would be very worried that they would become so substantial that it would be very difficult to give a hearing to small and respectable voices in the community. One of the most regrettable features of post-war Parliaments has been the disappearance, save in your Lordships' House, of the independent Cross-Bencher. One of my fears is that reform of your Lordships' House may well have the effect of "ironing out" the Cross Benches. I do not know anyone who is wiser or better when he or she wears a party hat than when the individual is bareheaded.
    I regard with suspicion and fear any move to help political parties out of difficulties which are very much of their own making. The amendment that we are now debating at least has the merit that the support is influenced primarily by an individual. It is astonishing that over the years the power and influence of party machines through patronage and the Whips has been allowed to grow to the extent that it has. We should be very careful before we encourage that growth in any way.
    Lord Molyneaux of Killead: My Lords, I support the amendment. I believe that that is also the view of parties in Northern Ireland, with the exception of one which naturally takes the view that with a gun you do
    1138
    not need gift aid. I am not sure that the public are fully aware of the existing state aid to parties in the form of Short money, free postage at elections and so on. As one who was involved in the electoral process at the other end of the building, I believe that the beneficial effect of the amendment is that it would involve a far greater number of people, who would not regard this as state aid but who would believe that they were stakeholders (if I may use that term) in the party to which they have made a contribution.
    We all share the concern—our colleagues at the other end of the building feel more strongly about it than we do—about the steady erosion in the turn-out at elections, be they general elections, European elections or by-elections. We all welcome action, such at that proposed in the amendment, to arouse greater interest in democracy.
    Lord Hodgson of Astley Abbotts: My Lords, at Second Reading the Minister described one of the purposes of this Bill as being to revive involvement in our democracy. As my noble friend said, there has been a diminution in the roots of democracy and an increase in the power of the centre. That process can be reversed in two ways, which are not mutually exclusive: first, one can encourage local political involvement and commitment; secondly, one can encourage local economic involvement and commitment. I believe that we should do both as widely as possible.
    The amendment provides only a modest incentive for individuals to take an economic interest in the wellbeing of whatever political party they seek to support. To meet the needs of transparency, we must limit that support; and this amendment does so. As the noble Lord, Lord Goodhart, said, no one can argue that £500 per head is a sum likely to lead to difficulty in that regard.
    On Report, the Minister referred to the dangers of the sum being increased. That argument did not convince me. The amendment will amend primary legislation. Therefore, any change to it will require further primary legislation. No Parliament can seek to bind its successors. The Bill can be no exception. But if a successor Parliament proposed to increase or decrease the sum before us, surely the contrary case would be fully ventilated.
    During the lengthy stages of the Bill noble Lords have talked about the value and importance of broadening the base of the funding of our political parties. This modest measure will significantly assist in that. I hope my noble friend will press strongly his amendment.
    Lord Marsh: My Lords, the noble Lord has said that in the future any opportunity for changes in the position will come before both Houses and be duly debated. I believe that that will be so. I believe also that every time it happens the limits will increase. The present situation is that none of the parties is really underfunded. They all mount large campaigns. What has happened is that the party machine is in many cases bigger than the politicians. I do not find that

    1139
    particularly attractive. In terms of principle it is highly undesirable. There is no difficulty in raising large sums of money. The problem—it is always the problem with money—is that every time people get it, they want to spend more than they have.
    Lord McNally: My Lords, my noble friend Lord Goodhart spoke from the Neill committee Benches. It is my responsibility to say that on this occasion the Liberal Democrats will be supporting the Opposition in their amendment.
    I disagree with the noble Lord, Lord Peyton. Parties in a democracy are thoroughly healthy. It is just nostalgia to go back to some non-existent day when we were all independents. If there was a golden age perhaps it was one when every boy and girl born alive in this world was either a little Conservative or a little Liberal. I have got that one wrong, but noble Lords will know what I mean.
    Lord Peyton of Yeovil: My Lords, I have no desire whatever to go back to that distant age, with or without the company of the noble Lord. What I am saying is that the political parties have grown too fat and obese. They need to change. I would not want to go back to anything. I hope the noble Lord will accept that.
    Lord McNally: My Lords, I thoroughly accept that. I remember the days when the Conservative agents were seen as the brigade of guards of political agents. That was when there was, perhaps, a disparity in funding between the two parties. I should also put on record that I have always admired the party agents. They are a very important part of the system.
    The debate today has echoed with sinners repenting, not least from the Conservative Benches. I hate to tell the noble Baroness, Lady Fookes, but this is state funding of political parties. If one is not willing to grit one's teeth and vote for it as such, then one had better vote with the Government.
    As the noble Lord, Lord Neill, and my noble friend Lord Goodhart know, I believe that the Neill committee missed an open goal by not going straight for state funding of political parties. It would have made our politics a great deal healthier. But as a second best this proposal has attractions, especially if it is carried with the other amendment—it is another conversion by the Conservative Party—which suggests an overall cap of £15 million. The real danger arises when parties are set these very large sums which will not be raised by jumble sales and Christmas fetes, but by big donors.
    What is attractive to us about the Bill is its pincer movement. On the one hand it caps expenditure so that parties do not have to go cap in hand to big donors. The amendment will bring in the other side of the pincer, a positive incentive to go and find individuals to participate in the political process and get tax relief for the parties. We support the amendment.
    1140
    To the Conservatives I only say that there is a totally politically incorrect story of a young lady offered first £1 million and then £1 for her services. At the £1 offer she said, "What kind of girl do you think I am?" and the answer is, "Well, we know what you are. We are now haggling about the price". If the Conservatives support this amendment, they are supporting state funding of political parties and we really are just haggling about the sum.
    Lord Bassam of Brighton: My Lords. I have enjoyed this debate more than I thought I would. Not only has it given me a sense of déjà vu, it has also been a debate riddled with contradiction. It seems to me that it is true that two opposites can agree.
    I have listened to noble Lords from the two parties opposite. Although they disagree on where they come from, they agree on one thing; that is, they want tax relief. It is a question for those noble Lords on the Benches opposite who are concerned about direct state funding as to whether they can live with that and support the position of the noble Lord, Lord Mackay.
    The noble Baroness, Lady Fookes, and the noble Lord, Lord Campbell of Alloway, do not like state funding. The noble Lord, Lord Peyton, is only halfheartedly in support of it. He made a coruscating attack on the growth of the central bureaucracy of political parties. I found much to agree with in what the noble Lord said. That was echoed very wisely by the noble Lord, Lord Marsh.
    Where is the Conservative Party coming from? This is state funding by the back door, or, perhaps now the cat has been carefully let out of the bag by the noble Lord, Lord McNally, and rather nicely let out of the bag by the noble Lord, Lord Goodhart, it is clear that tax relief is state funding. Tax relief is a state-funded subsidy to political parties. If that is the case, how is it that noble Lords on the Opposition Benches can so enthusiastically support this? It is worth quoting the Conservative Party's evidence to the Neill committee. It said:
    "We do not believe that a convincing case has been made for taxpayers' money to be directed towards the campaigning activities of political parties … Forcing taxpayers to contribute to the cost of Party political activities of which they do not approve would he a very significant step. It could only be justified if it were believed that it would otherwise be impossible for political parties to operate effectively".
    So is it the case that members of the Conservative Party have now come to the conclusion that their political life has reached such a strange and unfortunate pass that it is impossible for them to operate effectively as a political party? Is it because they are in a state of penury or is it that they have been converted by the full weight of the argument of the noble Lord, Lord McNally, on the issue? I am intrigued to see whether I am right or wrong.
    Several good arguments have been raised in the debate in favour of tax relief. The encouragement of small donors is a very laudable point. But where was the compelling and telling evidence that, as a fruit of this particular move, there was going to be a mad rush of small donors to the Conservative Party, the Liberal

    1141
    Democrat Party, or, for that matter, the Labour Party? There was no compelling evidence given in that case. There was an argument made but no compelling evidence.
    We heard too that one of the arguments against the proposal—the schools and hospitals argument—was riddled with falsehood. The noble Lord, Lord Goodhart, made that point. Yes, I take the point, and it is not an argument which I shall deploy against the proposal. But I make the following point because I think it is an interesting one. It is interesting to me that the Conservatives now place a premium on state funding by the back door while deciding as a party that they favour tax cuts. They put tax relief on political donations—the state funding of political parties—above the proper funding of public services, which their programme would commit the country to cutting.
    It is no doubt the case that tax relief as a form of gift aid for charities has been most successful in the past. The noble Lord, Lord Goodhart, said—I may be misquoting him here—that it is like the state giving recognition to the important and valuable work of charities. That was certainly the case that was argued for gift aid tax relief by a succession of Conservative Party Chancellors. That is exactly what this is—it is gift aid to political parties. The Labour Party is opposed to that. We have been opposed to it in the past; we are opposed to it now; and we will no doubt be opposed to it in the future. The Tories need to be honest with us today and say that they accept that this is state funding for political parties. If they do not, I cannot understand the logic of their argument. Indeed, I have not understood the logic of their argument throughout our debates on the matter.
    5 p.m.
    Lord Jacobs: My Lords, before the Minister sits down, does he accept that there is general disapproval of large donors? For many years I have been a large donor to my political party. But we would welcome government encouragement to small donors. We are not in a privileged position. It is a position that we accept reluctantly. By bringing in support for small donors who give to political parties, the Government now have an opportunity to remove the undesirable effect of having a number of large donors in all our parties.
    Lord Bassam of Brighton: My Lords, I happen to believe in the value of small donors. I have personal knowledge of how the Labour Party has tried to develop its funding base over many years. We encourage members of our party to increase the level of their support through small donations. We have done that reasonably effectively. It is for the political parties to do that. We collect many millions of votes in general and local elections. We have that contact with the electorate. It is for us to go out to sell the benefits of participation in political parties and to secure those extra small donations. I agree with the noble Lord that an over-reliance on a small number of large donors is
    1142
    less desirable in the body politic. No doubt noble Lords on the Opposition Benches will want to reflect carefully on that point.
    Lord Mackay of Ardbrecknish: My Lords, before the intervention of the noble Lord, Lord Jacobs, the Minister left us with the thought that he could not understand the logic of the Opposition's position. I must say that for most of the proceedings on the Bill the Opposition have been unable to understand the Minister's logic. Perhaps he joins us just for a moment in being perplexed; we have been perplexed for hours.
    I was interested in the Minister's arguments. When he goes back to the office perhaps he might think about sacking his researcher and his speech writer. They did not give him anything with which to address the main points in the amendment. The main points arc those made in the Neill committee report. If the Minister wants to find out about state funding and how that relates to tax relief, I suggest that his researcher invites him to read Chapters 7 and 8 of the Neill committee report. The noble Lord might try to address some of the arguments in those chapters. He might try to address some of the arguments put forward by the noble Lords, Lord Neill and Lord Goodhart, both of whom sat on the committee. But the noble Lord simply refused to address those arguments. The noble Lord had his own tiny agenda and he was determined to pursue that.
    If the noble Lord's researcher had drawn the noble Lord's attention to the evidence given to the Neill committee by the Conservative Party, he would have seen what is stated on page 241:
    "Rather than call for state funding we would welcome the Committee's views about how more individuals could be encouraged to donate. We note that in some countries individuals are offered tax relief for political donations, elsewhere tax credits or matching grants are provided. We believe that the Committee should give serious consideration to the practicalities of these approaches in the context of the United Kingdom's voluntary system".
    Half-way through his speech the noble Lord said that we could not point to anywhere in the world where what we propose takes place. I pointed to Canada—not because the point was original to me but because it was made in the Neill committee's report. However, I had forgotten that the noble Lord's researcher had not pointed out to him that he ought to read the Neill committee's report before he talks about these matters. In evidence given on 22nd April my noble friend Lord Parkinson explained where the Conservative Party was coming from.
    The idea that what we propose is direct state funding—that was the argument of the noble Baroness, Lady Gould—does not hold water. The noble Baroness quoted evidence given some years ago by the Conservative Party to a House of Commons Select Committee. I quote what the noble Baroness quoted—I wrote it down. She referred to the,
    "dependence of parties on their own activities".
    That is the whole point. State funding implies that the parties just sit back and the Government give them money. But tax relief implies that the political parties

    1143
    have to go out and persuade people to join and to give those donations of under £500; and on the back of that they will get tax relief on it. It is very dependent on the activities of the political parties. If a political party decides to sit back and do absolutely nothing, it will not get very much help in the way of tax relief. Therefore, I do not think that the noble Baroness's argument is sustainable.
    We have had an interesting debate. I thank the noble Lord, Lord Goodhart, for his support and for his kind words. This is a slightly nostalgic day. I now look forward, perhaps for the last time, to leading a defeat of the Government in the Lobbies. I hope that that can be achieved by the Liberal Democrats sticking with what was said by their colleagues in another place. I wish to test the opinion of the House.
    5.7 p.m.
    On Question, Whether the said amendment (No. 5) shall be agreed to?
    Their Lordships divided: Contents, 199; Not-Contents, 136.

    Division No. 3

    CONTENTS

    Aberdare, L.

    Eccles of Moulton, B.

    Alexander of Weedon, L.

    Eden of Winton, L.

    Ampthill, L.

    Elles, B.

    Anelay of St Johns, B.

    Elliott of Morpeth, L.

    Arran, E.

    Elton. L.

    Ashcroft, L.

    Erroll, E.

    Astor, V.

    Ferrers, E.

    Astor of Hever, L.

    Fookes, B.

    Attlee, E.

    Gardner of Parkes, B.

    Barber, L.

    Geddes, L.

    Bell, L.

    Gilmour of Craigmillar, L.

    Belstead, L.

    Glentoran, L.

    Blatch, B.

    Greenway, L.

    Brabazon of Tara, L.

    Griffiths of Fforestfach, L.

    Bridgeman, V.

    Hanham, B.

    Brougham and Vaux, L.

    Hanson, L.

    Burnham, L.

    Hayhoe, L.

    Buscombe, B.

    Henley, L.

    Butterworth, L.

    Hodgson of Astley Abbotts, L.

    Byford, B.

    Hogg, B.

    Campbell of Alloway, L.

    Hooper, B.

    Campbell of Croy, L.

    Howe, E.

    Carlisle of Bucklow, L.

    Howell of Guildford, L.

    Carnegy of Lour, B.

    Hunt of Wirral, L.

    Carr of Hadley, L.

    James of Holland Park, B.

    Chadlington, L.

    Jopling, L.

    Chalker of Wallasey, B.

    Kimball, L.

    Chilver, L.

    Kingsland, L.

    Colwyn, L.

    Lamont of Lerwick, L.

    Cope of Berkeley, L.

    Lane of Horsell, L.

    Craig of Radley, L.

    Lang of Monkton, L.

    Craigavon, V.

    Liverpool, E.

    Cranborne, V.

    Lucas, L.

    Crathorne, L.

    Luke, L.

    Crickhowell, L.

    Lyell, L.

    Darcy de Knayth, B.

    McColl of Dulwich, L.

    Denham, L.

    Macfarlane of Bearsden, L.

    Dixon-Smith, L.

    Mackay of Ardbrecknish, L.

    1171

    Mackay of Clashfern, L.

    Rawlings, B.

    Marlesford, L.

    Rawlinson of Ewell, L.

    Marsh, L.

    Reay, L.

    Mayhew of Twysden, L.

    Rees, L.

    Miller of Hendon.B.

    Rees-Mogg, L.

    Molyneaux of Killead, L.

    Renton, L.

    Monro of Langholm, L.

    Roberts of Conwy, L.

    Monson, L. [Teller]

    Rotherwick, L.

    Montrose, D.

    St. John of Bletso, L.

    Moore of Lower Marsh, L.

    St John of Fawsley, L.

    Mowbray and Stourton, L.

    Sanderson of Bowden, L.

    Murton of Lindisfarne, L.

    Seccombe, B.

    Naseby, L.

    Sharples, B.

    Newton of Braintree, L.

    Shaw of Northstead, L.

    Northbrook, L.

    Soulsby of Swaffham Prior, L.

    Northesk, E.

    Sterling of Plaistow, L.

    Norton of Louth, L.

    Taylor of Warwick, L.

    O'Cathain, B.

    Tebbit, L.

    Onslow of Woking, L.

    Thatcher, B.

    Oppenheim-Barnes, B.

    Trefgarne, L.

    Park of Monmouth, B.

    Trumpington, B.

    Perry of Southwark, B.

    Vivian, L.

    Peyton of Yeovil, L.

    Waddington, L.

    Pilkington of Oxenford, L.

    Wade of Chorlton, L.

    Platt of Writtle, B.

    Walker of Worcester, L.

    Plummer of St. Marylebone, L.

    Warnock, B.

    Powell of Bayswater, L.

    Willoughby de Broke, L. [Teller]

    Prentice, L.

    Wolfson, L.

    Quinton, L.

    Young, B.

    NOT-CONTENTS

    Acton, L.

    Eatwell, L.

    Addington, L.

    Elder, L.

    Ahmed, L.

    Evans of Parkside, L.

    Alli, L.

    Ezra, L.

    Amos, B.

    Falconer of Thoroton, L.

    Andrews, B.

    Falkland, V.

    Archer of Sandwell, L.

    Farrington of Ribbleton, B.

    Ashley of Stoke, L.

    Faulkner of Worcester, L.

    Ashton of Upholland, B.

    Filkin, L.

    Avebury, L.

    Fyfe of Fairfield, L.

    Bach, L.

    Gale, B.

    Barker, B.

    Gibson of Market Rasen, B.

    Barnett, L.

    Gladwin of Clee, L.

    Bassam of Brighton, L.

    Goldsmith, L.

    Berkeley, L.

    Goodhart, L.

    Bernstein of Craigweil, L.

    Gordon of Strathblane, L.

    Billingham, B.

    Goudie, B.

    Blackstone, B.

    Gould of Potternewton, B.

    Blease, L.

    Grabiner, L.

    Borrie, L.

    Graham of Edmonton, L.

    Bradshaw, L.

    Greaves, L.

    Bragg, L.

    Gregson, L.

    Brennan, L.

    Grenfell, L.

    Brett, L.

    Hamwee, B.

    Brooke of Alverthorpe, L.

    Hardy of Wath, L.

    Burlison, L.

    Harris of Greenwich, L.

    Carlile of Berriew, L.

    Harris of Haringey, L.

    Carter, L. [Teller]

    Harris of Richmond, B.

    Chandos, V.

    Harrison, L.

    Clarke of Hampstead, L.

    Haskel, L.

    Clement-Jones, L.

    Hayman, B.

    Clinton-Davis, L.

    Hilton of Eggardon, B.

    Cocks of Hartcliffe, L.

    Hogg of Cumbernauld, L.

    Cohen of Pimlico, B.

    Hollis of Heigham, B.

    Crawley, B.

    Hooson, L.

    David, B.

    Howells of St. Davids, B.

    Davies of Coity, L.

    Hoyle, L.

    Davies of Oldham, L.

    Hughes of Woodside, L.

    Dean of Thornton-le-Fylde, B.

    Hunt of Chesterton, L.

    Desai, L.

    Hunt of Kings Heath, L.

    Dholakia, L.

    Hutchinson of Lullington, L.

    Dixon, L.

    Irvine of Lairg, L. (Lord Chancellor)

    Donoughue, L.

    Dubs, L.

    Jacobs, L.

    1172

    Janner ot Braunstone, L.

    Renwick of Clifton, L.

    Jay of Paddington, B. (Lord Privy Seal)

    Richard, L.

    Richardson of Callow, B.

    Jeger, B.

    Rodgers of Quarry Bank, L.

    Jenkins of Putney, L.

    Roper, L.

    Jordan, L.

    Russell, E.

    King of West Bromwich, L.

    Sainsbury of Turville, L.

    Kirkhill, L.

    Sawyer, L.

    Layard, L.

    Scotland of Asthal, B.

    Lea of Crondall, L.

    Scott of Needham Market, B.

    Linklater of Butterstone, B.

    Sewel, L.

    Lipsey, L.

    Sharman, L.

    Lockwood, B.

    Sharp of Guildford, B.

    Lofthouse of Pontefract, L.

    Shepherd, L.

    McCarthy, L.

    Sheppard of Liverpool, L.

    Macdonald of Tradeston, L.

    Shutt of Greetland, L.

    McIntosh of Haringey, L. [Teller]

    Simon, V.

    Simon of Highbury, L.

    McIntosh of Hudnall, B.

    Smith of Clifton, L.

    MacKenzie of Culkein, L.

    Smith of Leigh, L.

    Mackenzie of Framwellgate, L.

    Stone of Blackheath, L.

    McNally, L.

    Strabolgi, L.

    Maddock, B.

    Symons of Vernham Dean, B.

    Mallalieu, B.

    Taverne, L.

    Mar and Kellie, E.

    Taylor of Blackburn, L.

    Massey of Darwen, B.

    Taylor of Gryfe, L.

    Merlyn-Rees, L.

    Thomas of Gresford, L.

    Methuen, L.

    Thomas of Walliswood, B.

    Miller of Chilthorne Domer, B.

    Thomson of Monifieth, L.

    Mitchell, L.

    Thornton, B.

    Molloy, L.

    Tomlinson, L.

    Morgan, L.

    Tope, L.

    Morris of Castle Morris, L.

    Tordoff, L.

    Morris of Manchester, L.

    Turnberg, L.

    Newby, L.

    Uddin, B.

    Varley, L.

    Nicol, B.

    Walker of Doncaster, L.

    Northover, B.

    Wallace of Saltaire, L.

    Oakeshott of Seagrove Bay, L.

    Walmsley, B.

    Peston, L.

    Warner, L.

    Plant of Highfield, L.

    Watson of Richmond, L.

    Ponsonby of Shulbrede, L.

    Whitaker, B.

    Prys-Davies, L.

    Whitty, L.

    Puttnam, L.

    Wigoder, L.

    Ramsay of Cartvale, B.

    Wilkins, B.

    Randall of St. Budeaux, L.

    Williams of Crosby, B.

    Rea, L.

    Williams of Mostyn, L.

    Redesdale, L.

    Winston, L.

    Rendell of Babergh, B.

    Woolmer of Leeds, L.

    Rennard, L.

    Young of Dartington, L.

    On Question, amendments agreed to.

    Resolved in the affirmative, and amendment agreed to accordingly.
    5.19 p.m.
    Clause 70 [Special provision for Northern Ireland parties]:
    [Amendments Nos. 6 to 12 not moved.]
    Clause 73 [Notional campaign expenditure]:
    Lord Bach Lord Bach moved Amendment No. 13
    Page 58, line 18, leave out ("less") and insert ("not more").
    On Question, amendment agreed to.
    Clause 76 [Restriction on payments in respect of campaign expenditure]:
    Lord Bach Lord Bach moved Amendment No. 14:
    Page 60, line 15, leave out ("less") and insert ("not more").
    On Question, amendment agreed to.
    Clause 86 [Notional controlled expenditure]:
    Lord Bach Lord Bach moved Amendment No. 15:
    Page 68, line 26, leave out ("less") and insert ("not more").
    On Question, amendment agreed to.
    Clause 91 [Restriction on payments in respect of controlled expenditure]:
    Lord Bach Lord Bach moved Amendment No. 16:
    Page 71, line 30, leave out ("less") and insert ("not more").
    On Question, amendment agreed to.
    Clause 101 [Referendums to which this Part applies]:
    Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 17:
    Page 78, line 37, after ("Parliament") insert ("or pursuant to resolutions of both Houses of Parliament on the advice of the constitutional committee of the House of Lords that certain provisions of the Bill substantially affect the constitution").
    The noble Lord said: My Lords, I beg to move Amendment No. 17, which serves as a paving amendment to Amendment No. 18. With the leave of the House, I should like to speak to both amendments. The leave given on Report to withdraw Amendment No. 17 is acknowledged with gratitude and will not be misused today. The Official Report of 21st November, vol. 619, cols. 790 to 798, should be taken as read. Having explained the nature of the amendments, it is proposed to deal only with the objections raised on Report which went wide of the essential arguments, which did not seem to have been understood, and were not well conceived. Before coming to the objections, the only other matter is to acknowledge the origin of these amendments in Clause 3 of the Bill promoted by my noble friend Lord Cranborne.
    Amendment No. 17 eases the restraint in Clause 101(2)(a) which inhibits any referendum triggered by Parliament despite the government. It also asserts the freedom of both Houses, if so advised under extant rules of procedure, to resolve that a pre-legislative referendum be conducted as proposed in Amendment No. 18 on the provisions of a Bill which, according to the advice of the constitutional committee of this House, would substantially affect the constitution.
    As the provisions of Part VII of the Bill covering referendums are of generic application to all referendums which have to be held by or under an Act of Parliament, the Bill would have to be amended before enactment to afford a referendum as proposed. As regards the objections, the first was that there was a fundamental and principled objection to referendums. But referendums are already de facto a part of the unwritten constitution, as conceded by my noble friend Lord Mackay of Ardbrecknish.
    It was also apparent from the debate on Report on these amendments and from the debate in Committee on the amendments tabled by the noble Lord,

    1147
    Lord Owen, that there is a very substantial body of well-informed opinion in favour of the principle derived from Clause 3 of the Bill promoted by my noble friend Lord Cranborne, as reflected in these amendments, albeit that, as yet, no trigger mechanism has been devised which has been found to be acceptable.
    As regards that matter, my noble friend Lord Mackay of Ardbrecknish expressed some sympathy with the search for an acceptable trigger mechanism, as he put it,
    "triggered by Parliament despite the government".—[Official Report, 21/11/00; co1.796.]
    I have now borrowed that concept to adopt as my own. My noble friend also rejected the mechanism proposed in these amendments, but gave no reasoned objection and suggested no alternative. However, he conceded that this was a problem which, "we shall have to address". Perhaps noble Lords may wish to address the problem today as the main justification for my tabling the amendment and taking up the time of the House.
    Assuredly, this matter was not addressed by the noble Lord, Lord Bassam of Brighton, who appeared to confirm that it was by design that the referendum provisions of the Bill were of generic application and, by implication, that the advice of the constitutional committee or, indeed, its very existence, were more or less irrelevant to the implementation of the provisions of this Bill. However, with respect, as has happened again today, the noble Lord, Lord Bassam, did not address the essence of the argument.
    The second objection took the form of the argument put forward by my noble friend Lord Norton of Louth, that the advice of the constitutional committee should precede the Bill rather than the resolution of both Houses under the amendments which advise either House and which each House would be at liberty to ignore. But that argument, which expresses a preference for pre-scrutiny of a Bill, with which I agree, goes nowhere near the principle of the argument in support of these amendments.
    Lastly, there was the argument that these amendments would not be acceptable to another place. But another place would have total freedom as regards whether to entertain these amendments, subject to the resolution of your Lordships' House. It is not understood why, on any reasoned approach, these amendments should not be acceptable, or whether it is for us in this House to pre-empt the question as regards whether they might be acceptable to another place. For this is but an enabling measure, a provision which will act as a safeguard to be put at the disposal of Parliament and at the disposal of another place. It would add a new dimension of comity which could take us a little further along the road of safeguarding the unwritten constitution from unwelcome erosion by statute, and would do so on a case-by-case basis, without derogation from the delaying power under the Parliament Acts.
    If another place were to resolve that a referendum should be held, it could impose conditions such as the form of the question to be put and the threshold and conduct of the referendum, which would be held by an independent body appointed by the Secretary of State rather than by the electoral commission. In neither House could the argument for or against a pre-legislative referendum be foreclosed upon, a matter which may well have been overlooked by my noble friend Lord Norton of Louth.
    The scope of these amendments excludes Bills on which provision is being made for a referendum as well as interpretation or implementation of the Parliament Acts or any other enactments upon which it would be within the remit of the constitutional committee to advise this House, a remit which noble Lords may think could involve a reference by this House to consider and report on some acceptable trigger mechanism.
    5.30 p.m.
    Viscount Cranborne: My Lords, I should like to thank my noble friend Lord Campbell of Alloway for his persistence in refashioning amendment after amendment at every stage during the passage of the Bill. I thank him for persisting in promoting an idea which he perhaps over-flatteringly ascribes to Clause 3 of my parliamentary government Bill, to which your Lordships kindly gave a Second Reading in the summer of 1999 and which, for understandable reasons, did not proceed to its later stages.
    My noble friend has acknowledged that, like it or lump it, referendums are with us. I accept that my noble friends Lord Mackay of Ardbrecknish and Lord Norton of Louth deplore that fact. However, as the old admiral, Lord Charles Beresford, said to my maternal grandfather—I bowdlerise the quotation determinedly for your Lordships—if my aunt had been differently fashioned, she would have been my uncle! We are in a world in which referendums exist. We must address—as the Bill attempts to do, thoroughly unsatisfactorily—the rules for conducting them. Those rules ought to include a means for triggering them. I believe I am correct in saying—particularly if I understand my noble friend's reading of the Bill—that at present a referendum can only be triggered by the Government. The political complexion of a government does not matter, but in most cases in recent as well as ancient history the government of the day have commanded a majority in another place and the other place ultimately does what the government of the day decree; and in the end, thanks to the Parliament Acts, this House has to follow suit.
    In an age in which referendums are increasingly held on what are by common consent big issues, if they command a "Yes" vote they give rise to decisions that are irreversible. So it is curious, when the government of the day would not undertake a referendum of that kind unless they thought they could win it—and indeed wanted to win it—that the decision should be entirely at their discretion. If they thought that they could not win the referendum, theoretically they could push an irreversible measure on a big issue through

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    both Houses of Parliament without reference to the electorate, which in practical terms might never be able to get another crack at the decision. It would be taken over the heads of the electorate, often by a government whose supporting political party might be divided as to the outcome.
    So we have to worry at this point. That is something that my noble friend has magnificently succeeded in doing during the passage of the Bill. Also, in the redrafted amendments that he has submitted, he has made an extremely interesting attempt—probably a successful one—to address the criticisms that were raised.
    At previous stages, the noble Earl, Lord Russell, who is not in his place, and other noble Lords asked how we define a big constitutional question. The noble Earl rightly said that it cannot be defined. However, I suspect that your Lordships would find it difficult to define an elephant, but that when you saw one, you could recognise it. Whether it was an elephant would often depend on the amount of political steam that had been raised behind any issue at a given time.
    There was another objection with which I did not wholly agree, but whose force I nevertheless recognise. In the present transitional state of this House, to suggest, as I originally did, that it should be the constitutional committee of this House alone which should decide whether a question should be submitted to a referendum, might be to incur the powerful disagreement of another place. As a result, however sensible the proposal, it would not be practical.
    The beauty of my noble friend's Amendments Nos. 17 and 18 is that it is open to the constitutional committee of this House to suggest that a question should be submitted to a referendum and, if another place disagrees, for exactly the same rules to apply as when the two Houses disagree in another context altogether. With his usual ingenuity, my noble friend has found an extremely attractive way round the question.
    I shall not detain the House any longer. My noble friend has performed a useful service for us. We have to consider how we can close what is presently an unclosed circle between Parliament and the electorate on the major issues of the day and when there is a big, irreversible question to be decided. In an age when we increasingly deplore the lack of involvement of the electorate as a whole in the great political questions of the day, the amendment seems to me at least sensible. It offers a way of addressing that lacuna, which has constantly been deplored during the passage of the Bill through this House. It would be curious if we did not at least take my noble friend's suggestion seriously. I would go so far as to suggest that your Lordships might consider supporting it. I have certainly not heard of a better suggestion during the course of the past few months.
    Lord Peston: My Lords, I, too, do not care much for referendums. However, I know that I am hopelessly out of date and it would be absurd for me to suggest that it is not a good path to go down. I believe in
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    Parliament as the place to take decisions and convince the country. But that is an old man speaking, and I shall go no further on the point.
    If we are to have referendums, there is one point on which I am not clear after listening to the noble Lord, Lord Campbell, and the noble Viscount, Lord Cranborne. Is the problem that the Government want a referendum and perhaps they should not have it; or is it that the Government do not want a referendum and perhaps they should have it? I am not clear as to what drives the argument.
    Viscount Cranborne: My Lords, I cannot speak for my noble friend; he is more than able to look after himself. My feeling is that it is the latter case, not the former, that presents the difficulty.
    Lord Peston: My Lords, as I understand it, the problem that we are asked to contemplate is that there is the need for a referendum and it is not going to take place. That slightly gets me off board as someone who does not like referendums. I am interested in regard to the question of the symmetry or asymmetry and I hope that my noble friend will reply on that point.
    Secondly, as someone who does not fully understand these matters, I am interested to know what would be the role of the constitutional committee of this House were it not to be connected with referendums. In what other way would it he of use? I find it hard to believe that in most Bills that come before this House—whether an elephant or not—major constitutional issues arise. If they do, I never seem to spot them. I am intrigued to know what this body would do. It would certainly help most noble Lords if my noble friend the Minister could clarify what the committee will contribute if it does not contribute in a matter of this kind.
    The noble Lord, Lord Campbell, is right to have raised this issue. Although it is his decision, I believe it would be wrong to divide the House on this matter. What is required at this stage is clarification on a very interesting point.
    Lord Mackay of Ardbrecknish: My Lords, the noble Lord, Lord Peston, is not alone—as, indeed, he would realise if he had listened to many of these debates—in having a suspicion of referendums. My suspicion is added to when it seems to me that we shall have only those referendums that the Government decide that they want us to have; that is very unfair. It is not symmetrical. If we continue to use referendums, there will at some time in the future be a reasonable and understandable demand for referendums to be held not just on issues on which the Government decide that they want us to have them, but also on issues on which they do not want them to be held. I realise that that is a difficult proposition for government to comprehend, but it is certainly the case. Moreover, I am not sure that that will be limited only to constitutional issues in the future. Therefore, I have some concerns that my noble friend's amendment may not really address the whole of the issue about who decides on referendums.

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    I believe that we have made some satisfactory progress on the question to be asked in referendums, but we need at some stage to make progress on who actually decides to have referendums. At present, it is entirely a matter for the Government. I know that people will say that it is Parliament; but, in reality, the Government have such a majority in the other place that they could hold referendums every other month on any issue they wish. I believe that to be wrong in principle, so I do not agree with them. I also think that it would be wrong if the Government alone could trigger them. As I say, my noble friend's amendment does not seem to address that wider issue, but it is certainly worthy of debate; indeed, it is as worthy of debate as the other issues raised during the passage of the Bill.
    Lord Bach: My Lords, the Government also agree that the issue is worthy of debate. We are extremely grateful to the noble Lord, Lord Campbell of Alloway, for raising the issue and for his patience with the House on Tuesday of last week when his amendments were called very late in the evening. The noble Lord was good enough to move them then and, indeed, has been good enough to do so again today. We had a interesting debate last week and, if I may say so, an even more interesting debate this evening.
    The opposition put forward last time—not least by the noble Lord, Lord Norton of Louth, in a most interesting speech, to which reference has been made today—referred to noble Lords' distaste for referendums. Of course a number of noble Lords on all sides expressed their distaste for referendums. It is not the same as saying that there should never be any referendums, but it is probably the same as saying that there should not be very many of them. That is one of the issues about which those who say that they are not very keen on referendums must think and talk. The crucial issue is how often referendums will be used, and not just whether they are ever used.
    It was unfortunate that on Report these amendments did not receive the full debate that they merit. The Government's position remains approximately that which was set out late at night last Tuesday. We do not believe that these are issues upon which it is appropriate to legislate in the context of this Bill. That may be a view that is shared around the House. These are important issues, but perhaps not issues for this Bill. Why do I say that? The fact is that this legislation has sought, sometimes with more success than at others, to give effect to the recommendations of the Neill committee with regard to how referendums should fairly be conducted. The circumstances in which referendums are held, which, in some ways is the critical question, is an issue of an altogether different order and one that will certainly need to occupy more of your Lordships' time in due course. Indeed, the House will be grateful to the noble Viscount, Lord Cranborne, for, as he said, having raised the issue in the middle of last year.
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    The noble Lord, Lord Campbell of Alloway, has pleaded the case for arrangements that safeguard our constitution. The idea that matters of profound constitutional importance should be put to a referendum is no longer a novelty. The Royal Commission on the Reform of the House of Lords (the Wakeham commission) recommended the establishment of a sessional committee of this House to scrutinise public Bills in the light of their constitutional implications. We believe that to be a positive step.
    My noble friend Lord Peston asked about the nature of the job of the House of Lords' constitutional committee. I can give the House a quotation from the commission. It is a short quotation, but one which sums up what the commission had in mind. The task of such a committee would be to examine the constitutional implications of all public Bills coming before the House and,
    "to keep under review the operation of the 'constitution'".
    That last point seems to me at least to be fairly wide in scope. I very much doubt that the committee will feel particularly restricted when it comes into being.
    The noble Lord's amendment puts two and two together, but we are not convinced that making a statutory provision to the effect that the committee's advice on such matters should trigger Parliament's consideration of whether a referendum should be held would be desirable. We are not sure how far it would help such a committee in its work to know that each time it adjudicated on the implications of a Bill, its deliberations might be a prelude to a charged debate—because it would be charged—about the holding of a referendum.
    However, in one important sense, the proposal before the House is correct. The decision on whether a referendum should be held would be one for Parliament as a whole to make. On a case-by-case basis Parliament would decide whether a particular constitutional reform warranted endorsement in a referendum. But, to that extent, it is not clear that this proposal would add very much to the present constitutional position. As matters stand, it is already open to Parliament to decide that a particular Bill should be subject to a referendum and to legislate accordingly. It may be thought that it is better to do so by means of legislation rather than by means of a resolution.
    Of course, as the noble Lord, Lord Mackay, pointed out on the previous occasion—and, indeed, as has been said again this evening—the chances of Parliament coming to such a decision other than at the instigation of the government of the day are probably, in practice, slight. But we do not see anything in the noble Lord's proposals to make that chance very much greater, as the support of both Houses of Parliament is needed before a referendum can take place.
    I turn now to the other aspects of the proposals—
    5.45 p.m.
    Viscount Cranborne: My Lords, I am most grateful. I do not wish to detain either the noble Lord or the House for very long. However, in the light of what he

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    has just said, will the noble Lord accept that the very fact of incorporating in the statute the opinion of the constitutional committee of this House would provide something of a hurdle for the Government and would, therefore, force them to take such matters more seriously than would otherwise be the case?
    Lord Bach: My Lords, I would not go as far as that, but it would be something of a hurdle. But how much of a hurdle it would prove to be is a matter of doubt. Perhaps I may refer again to the important speech made by the noble Lord, Lord Norton of Louth, on Report. I, too, like other noble Lords, have had the advantage of reading the Hansard report of the debate. I hope that this will in some way explain why I believe that there is some doubt about how high a hurdle it would turn out to be. The noble Lord said:
    "The other problem I mention at this stage and draw to the attention of my noble friend is that the House of Commons is likely to find the provision unacceptable, as it provides that resolutions have to follow advice from a committee of this House. For the reasons that have been advanced I do not doubt that the committee will be highly qualified to comment on the matter. But that is not at issue. It is a committee of one House that would trigger resolutions of both Houses".—[Official Report, 21/11/00; cols. 795–96.]
    He mentioned that specifically—
    Lord Campbell of Alloway: My Lords, I am very much obliged. I wonder whether I can help on this because we are going slightly off track. The question is not bow high is the hurdle. It will not be very high when it starts. The whole concept is to develop a new dimension of comity—an enabling provision. Obviously my drafting would not be right; that is clear. I am not competent to draft this sort of provision. It would have to be drafted in consultation and there would need to be a willingness on the part of both Houses to recognise that something had to be done about the constitution. My noble friend did not quite understand what I was getting at.
    Lord Bach: My Lords, perhaps the noble Lord is right to say that the noble Lord, Lord Norton of Louth, did not understand what he was getting at. However, in my experience the noble Lord, Lord Norton of Louth, is learned in these matters and normally understands these issues rather better than I.
    Lord Norton of Louth: My Lords, as my name has been mentioned I had better speak to prove that I am present. My noble friend says that I misstate his position. I point out that that was based on a misstatement of what I said on Report; therefore, it is a misstatement based on a misstatement. I hope that I may help the noble Lord in one respect as I think that there is a point here which relates to what my noble friend Lord Cranborne said, particularly with regard to recognising an elephant when you see one.
    Under my noble friend's amendment, the constitutional committee would merely give advice on whether a matter substantially affects the constitution. It would not necessarily give advice on whether a referendum should be held. That, I think, serves not to
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    strengthen but to undermine the position of my noble friend. Merely to say that something substantially affects the constitution could include a number of issues on which no one would feel a referendum was necessary. Therefore, it would be easy for the Government to say that they do not think that this is something on which a referendum is necessary. As there would be several issues on which there would be general agreement that matters of that kind should not be put to a referendum, I do not think that the amendment would create a substantial hurdle.
    Lord Bach: My Lords, I talk of other aspects of these—
    Lord Peston: My Lords, I know that my noble friend wants to get a move on, as does everyone else, but before he does so I refer to an earlier question that I expressed badly. I merely asked whether the constitutional committee could—this follows the remarks of the noble Lord, Lord Norton of Louth—say that this is an important matter for the constitution and that it thinks that the Government ought to consider holding a referendum. Would it be within the committee's powers to say that, or would it be ultra vires? That was my question. Could the committee at least recommend a referendum? Is the constitutional committee permitted to do that?
    Lord Bach: My Lords, that is a much more difficult question than the first one that I thought the noble Lord had asked me. I do not know whether that would be beyond the committee's powers but I suspect that the constitutional committee will be a strong committee and will take a strong line. However, I am looking to the future.
    I turn briefly to the other aspects of these amendments. We do not understand why the noble Lord considers that an independent body other than the electoral commission should administer a referendum held under these provisions. In the Bill, whatever its faults, we have gone to considerable lengths to secure the independence of the new electoral commission from the government of the day. The noble Lord's amendment appears to intend that the independent body which he has in mind would be appointed by the Secretary of State.
    The debate about the proper place of referendums in our constitutional arrangements will run and run and rightly so. However, the Government do not think that matters of this order should be harnessed to proposals set out in the Bill. I do not believe that the noble Lord thinks so either. However, we and the House are grateful to him for having raised in this short debate matters of considerable importance, to which the House will no doubt return in future.
    Lord Campbell of Alloway: My Lords, I thank all noble Lords for their contributions to this debate. I shall deal with one or two questions. No, it was not the concept that the constitutional committee should have the remit to recommend a referendum; its remit would be merely to advise on whether provisions in a

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    Bill substantially affected the constitution. As to the hurdle, I am afraid that my noble friend Lord Norton of Louth still does not have it right, but I shall not pursue that on this occasion.
    I take the point that this Bill, from a government point of view, is not the right vehicle for this amendment. But from anyone else's point of view, when you look at Clause 101 and you see that it is a generic application, and that it inhibits a referendum other than at the behest of government and inhibits Parliament, one is bound to put an amendment such as this down at all events at the very least to draw attention to the situation. That has certainly been done. As my noble friend Lord Cranborne said—I am most grateful to him for his help and support—this is something that we do have to worry about. It is something that we shall have to consider—it will not go away—as it is an important de facto part of our unwritten constitution.
    I am not so sure that my attempt is sufficiently successful to be, so to speak, the end of the road and for me to seek to divide your Lordships' House and to take a formal opinion. I should prefer, if I may, again saying how much indebted I am to all noble Lords who have contributed, to ask leave to withdraw the amendment, but I may well wish to come back to this matter on the gracious Speech. I beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendment No. 18 not moved.]
    Clause 112 [Notional referendum expenses]:
    Lord Bach Lord Bach moved Amendment No. 19:
    Page 86, line 5, leave out ("less") and insert ("not more").
    The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
    On Question, amendment agreed to.
    Clause 114 [Restriction on payments in respect of referendum expenses]:
    Lord Bach Lord Bach moved Amendment No. 20:
    Page 86, line 43, leave out ("less") and insert ("not more").
    The noble Lord said: My Lords, this amendment has already been spoken to. I beg to move.
    On Question, amendment agreed to.
    Clause 125 [Restriction on publication etc. of promotional material by central and local government etc.]:
    Lord Willoughby de Broke Lord Willoughby de Broke moved Amendment No. 21:
    Page 93, line 19, at end insert ("; or
    (c) any institution of the European Union").

    The noble Lord said: My Lords, Amendments Nos. 21 and 44 are two modest but, I believe, necessary amendments. If they are put on the face of the Bill, as I hope noble Lords will accept that they should be, they will simply ensure that the EU institutions will not be tempted to interfere in a referendum—whether or not that concerns the euro—during the referendum period. I believe that that is not unreasonable.
    Similar amendments were moved in Committee. The noble Lord, Lord Bassam, dismissed the fear that there was any need for this kind of amendment. He said:
    "My view and the Government's view is that it would be entirely counter-productive for the commission to become embroiled in a referendum campaign on this issue".—[Official Report, 24/10/00; col. 195.]
    He later stated:
    "I do not believe that the European Commission wishes in any way, shape or form to become involved in any attempt to slant the debate in this country".—[Official Report, 24/10/00; col. 200.]
    The Minister must have been working terribly hard on his brief over the past few years as over the past years and months we have all been subjected to a constant bombardment of lectures from members of the Commission and other Eurocrats on the dangers that we face if we miss the various trains, planes, boats and bicycles that are so dear to EU image-makers.
    I give one or two examples that support the need for my amendment. The Commission—it is one of the prime movers—supports the European Movement with money. The European Movement supports Britain in Europe. They are bed fellows and share the same offices. That is a good way to transfer money direct from the Commission to Britain in Europe. Britain in Europe is likely to be one of the major players in any referendum on the euro. I note that the noble Lord, Lord Bassam, is a supporter of Britain in Europe. Perhaps he may care to clarify whether he is still a member of its council. The Commission also supports 24 Euro-info centres in the United Kingdom. These are funded in part by the Commission, in part by the Government and in part by other business interests. One of the activities of these Eurocentres is to distribute literature for the Association for the Monetary Union of Europe, a strongly pro-euro campaigning group.
    The EU Trade Union Information Bulletin informs that it is supported by DG X—the trades union division of the Commission. I am afraid that that bulletin is unashamed propaganda. It claims that the euro will,
    "reduce interest rates and mortgages and increase competition, reduce prices and create unemployment".
    In other words, they are the usual fairy tales.
    The contention that we do not need to have any safeguard in the Bill against interference by the European Commission or any other of the European institutions does not hold water. The Minister said in effect, "Don't worry, the Commission will be too clever or too wise to interfere". The Minister and some noble Lords may believe that but does the Commission? In order to be certain that the Commission and other institutions will not interfere, the safest move would be to put the provision on the face of the Bill. I beg to move.
    6 p.m.
    Viscount Cranborne: My Lords, I support my noble friend's amendment. It has been the theme of critics of the Bill that the Government, quite rightly, have

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    powerful opinions about which they are endeavouring to persuade the British public. A perception could grow that, despite the Government's natural desire to appear to conduct referendums under rules which are perceived to be and are fair, their opinions are driving them so strongly that they are blind to the fact that that is no longer so. There is more than a suspicion that the conditions under which two previous pre-legislative referendums on devolution in Scotland and Wales were held were rigged by the Government. This Bill is an opportunity to ensure that the Government are seen to make it more difficult to rig referendums.
    My noble friend's amendment has a narrow application. But we know that very large sums of taxpayers' money, whatever their opinions, are paid through the EU budget into making propaganda on behalf of the European Union. If there were a universal consensus about the European Union and the desirability of a number of its activities and aspirations that might just be acceptable. But we are talking about probably the most important and most contentious political issue of the day. We know that the institutions of the European Union have a well-financed propaganda campaign, as my noble friend made clear. Large sums of taxpayers' money are poured into various lobbying groups. They may be groups employed directly by the European Union, like Mr Martin's organisation not far from this very building. Alternatively, those funds may be directed into supporting various campaigning groups, particularly in this country, of the kind to which my noble friend referred.
    If the Government are to avoid reinforcing the impression that they are not averse to rigging the rules on referendums in their favour, they would be wise to make one little nod in the sceptics' directions—I do not use that term in the European sense but as regards sceptics of the Government's own intentions—by looking favourably on my noble friend's suggestion.
    Lord Stoddart of Swindon: My Lords, I support the amendment of the noble Lord, Lord Willoughby de Broke, and concur with the previous speaker. It would be in the Government's own interest to consider the amendment favourably. After all, we are being told by the Prime Minister and others that there is no intention of having a European superstate. What could better convince people that we shall not have a European superstate than to make it illegal for what some term to be the European superstate to intervene directly or indirectly in referendums in this country? There is no doubt that the European Commission finances the European Movement in many ways. Indeed, until 1994 our own Government were subsidising and making contributions to the European Movement. That fact was elicited by questions that I asked. It was no small sum—£320,000. Since the Government make it clear that no government agencies in this country should be permitted to intervene unfairly or on one side of any argument, that should surely be extended to what is becoming increasingly the government of Europe in Brussels.
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    If the Government want to make the European Union more acceptable to the people of this country, it would be in their interest to accept this modest amendment which would do no harm to the Bill.
    Viscount Astor: My Lords, in principle we support the amendment. It seems somewhat bizarre that in a referendum campaign no Minister of the Crown, government department, local authority or any body funded mainly from public funds is allowed to take part, whereas the Commission may do so. It would seem sensible to put the issue beyond doubt. Presumably the Government would not want interference in this way. It would be dangerous to tilt the argument.
    Amendment No. 44 concerns donations. It seems a sensible amendment. I shall listen to what the Minister says. During the passage of the Bill, we have had debates about donations. We have been accused of seeking to have, for example, different rules for English companies than for foreign companies. Our argument did not prevail. However, this amendment makes the rules the same for everyone. There seems some sense in it.
    Lord Bassam of Brighton: My Lords, we have been round this part of the course several times. As I have said before, this is specifically not a Bill to make provision for the holding of a referendum on the euro. We do not want to add extraneous provisions designed with that referendum alone in mind. If a referendum on a particular issue warrants special rules, they can be provided for in the separate legislation that is needed to enable that referendum to be held.
    Lord Stoddart of Swindon: My Lords, my noble friend says that this is only about the euro.
    Lord Bassam of Brighton: My Lords, the noble Lord misheard me. I said specifically that the Bill is not about a referendum on the euro.
    Lord Stoddart of Swindon: My Lords, I was going to say that a government could have a change of heart and there could be a referendum on, for example, the EU charter of fundamental rights. The euro is not the only issue. A number of other issues connected with the European Union or in which the European Union might be interested could also be involved.
    Lord Bassam of Brighton: Yes of course, my Lords. Specific measures would have to be taken to deal with such an eventuality. I have developed that point on other occasions—rather successfully, I thought—arid I reiterate it this evening.
    Amendment No. 21 would apply the restrictions on the publication of promotional material set out in Clause 125 to European Union institutions. As a result, the European Commission would be prevented from publishing promotional material about the euro in the 28 days before the date of the poll.

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    As I have previously made clear, any decision to join the euro will be for the British people alone. It would be wholly counter-productive for the Commission to become embroiled in a referendum campaign on the issue.
    Lord Wedderburn of Charlton: My Lords, my noble friend says that the Bill is not about the euro. All right, let us put the euro aside. If the Government felt that an issue such as whether qualified majority voting should apply to taxation across the board were so important that a referendum should be held on it, such a referendum would come within the Bill. Would it not be right to forbid the institutions of the Union to finance one side?
    Lord Bassam of Brighton: My Lords, clearly that has to be a matter for the Commission. I shall come to that.
    The Commission knows that it would be wholly counter-productive for it to promote one side, as does the noble Lord, Lord Willoughby de Broke. In some ways, given his perspective on the issue, he might want the Commission to seek to get involved, because that would strengthen his line of argument, but I do not believe that it would want to do so. The commissioners are rational and sensible people who realise that the decision on such matters is for the people of our country.
    Lord Marsh: My Lords, the European Union has an entire infrastructure in this country specifically designed to intervene—as some would see it—on just such an issue.
    Lord Bassam of Brighton: My Lords, I am aware that the European Union has an infrastructure, but I am sure that most of its work is directed towards explaining the institutions of the European Union. Given that successive governments have ensured that we are party to the European Union and have signed up to participation, it is logical that the Commission should continue its informational role.
    The red herring of the Commission being involved in the Danish referendum has been much raised in the debate. In fact, it did not seek to engage in the debate in Denmark. The example of the Danish referendum ought to lay any lingering fears on the subject to rest.
    Some realism is required on the Commission's intentions. That should go hand in hand with realism about what such prohibition could achieve. An explicit ban on referendum expenditure or the publication of referendum material by the institutions of the European Union would beg the question of how such a ban could be enforced. The territorial application of the Bill is confined to the United Kingdom. It could not bite on expenditure or the publication of material on the Continent. That argument has been deployed from the Conservative Front Bench on other aspects of the Bill. Given the provisions of the Protocol on the Privileges and Immunities of the European Union, the
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    jurisdiction of our courts in relation to a breach of the provisions of this part of the Bill by an institution of the European Community would be doubtful.
    6.15 p.m.
    Viscount Cranborne: My Lords, I hope that I have misunderstood the Minister. I wonder whether he could confirm what he has said. Is he saying that even if we wanted to stop the institutions of the European Union undertaking propaganda activities within the boundaries of this country, we could not do so because of the immunities that we have given them?
    Lord Bassam of Brighton: My Lords, that is the point that I have been making. I shall happily repeat it, or perhaps the noble Viscount—less happily from his point of view—can read it in Hansard. Those immunities have been given to the European institutions in various protocols in the past. Indeed, the noble Viscount was party to the government that provided those immunities.
    The purpose of Amendment No. 44 is to prevent a permitted participant accepting a donation made by or on behalf of an institution of the European Union. The amendment is unnecessary for the simple reason that an institution of the European Union does not constitute a "permissible donor" as defined in Clause 54. The amendments have no place in a generic referendums Bill. I once again urge the noble Lord to withdraw the amendment.
    Lord Willoughby de Broke: My Lords, before the Minister sits down, will he tell us first on what subject he envisages having a referendum if not on the euro? Secondly will he answer my question about whether he is on the council of the Britain in Europe movement?
    Lord Bassam of Brighton: My Lords, I cannot predict from the Dispatch Box what issues may be the subject of any future referendum. Any Minister who did so would be very foolish.
    I have never attended a meeting of the council of Britain in Europe. I thought that I had resigned from that body. If I have not done so, I shall make sure that I do so pretty sharply.
    Lord Pearson of Rannoch: My Lords, before the Minister sits down, in response to my noble friend Lord Cranborne, he said that certain immunities had been conveyed. As that may come as a shock to some of us, will he undertake to put in the Library a memorandum confirming exactly where we have given such immunity to the European Union? I am sure that that would not be very difficult and would help the debate.
    Lord Bassam of Brighton: My Lords, I am not an expert on such matters, but I think that the decision was made on matters relating to the single market.
    Lord Willoughby de Broke: My Lords, I am grateful to all those who have spoken in this short debate, which has made the Government's position untenable.

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    They have said that the issues do not need to be specified in the Bill but have given no serious argument why not. They have simply said that the European commissioners would behave themselves and would not interfere. That is putting hope over experience.
    I am tempted to divide the House, but I know that your Lordships are anxious to get on, so I reluctantly beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    Lord Marsh Lord Marsh moved Amendment No. 22:
    Page 93, line 29, at end insert—

    ("(3A) Subject to subsection (3B), no material to which this section applies shall be distributed or displayed to the public free of charge during the referendum period by or on behalf of—

    (a) any Minister of the Crown, government department or local authority;

    (b) any other person or body whose expenses are defrayed wholly or mainly out of public funds or by any local authority; or

    (c) the Post Office;

    unless such material—

    (d) is factual and impartial; and

    (e) has been circulated to permitted participants at least seven days before it is published.

    (3B) Subsection (3A) does not apply to—

    (a) material made available to persons in response to specific requests for information or to persons seeking access to it; or

    (b) material published on web-sites.").

    The noble Lord said: My Lords, the amendment is connected with the general issue raised by the previous amendment. I should make it clear that I have been involved with Business for Sterling since its inception and am president of its council. Having said that, one day I should be interested to hear privately why the noble Lord, Lord Bassam, left the council of Britain in Europe. I can think of many reasons why I would have done so, but that is his personal grief.
    This amendment clearly has a relationship with the euro and the single currency because they will almost certainly be the subject of the next referendum. I believe, however, that it raises fundamental issues which go much wider than that. We have to recognise that over the years there will be other referendums. I cannot believe that there will not now that we have embarked upon that course. I believe that basically this amendment goes to the guts of the extent to which taxpayers' money and the full machinery of government may properly be used to influence the outcome of a referendum. It does not matter what the subject is; it so happens that the next one is likely to concern the single currency.
    The argument is clearly set out in the report of the Committee on Standards in Public Life:
    "We believe it is perfectly appropriate for the government of the day to state its views and for members of the Government to campaign vigorously during referendum campaigns, just as they do during general election campaigns. But we also believe that, just as in general election campaigns, neither taxpayers' money nor the permanent government machine—civil servants, official cars, the Government Information Service, and so forth—should be used to promote the interests of the Government side of the
    1162
    argument. In other words, referendum campaigns should be treated for these purposes in every way as though they were general election campaigns".
    That is the issue. It is not a case of whether one does or does not join the single currency, or whether one likes or does not like the European Union. It is a question of the use of public moneys on such occasions.
    The Government's view, which, as we would expect, the noble Lord spelt out clearly last time this matter was debated, was that that was simply not possible. They believe that the issues are so complicated that no one can tell the difference between party political propaganda and a civil service document. The noble Lord gave as an example the passage through Parliament of a Bill which would make possible provision for the referendum. He suggested that even the Explanatory Notes could be controversial.
    With the greatest respect, I suspect that over the years most senior Ministers and senior civil servants have had long discussions and arguments about the dividing line between legitimate public expenditure and political activity which is clearly at the taxpayers' expense. They are two different things and, as the proverbial elephant (which seems to be making its presence felt in this debate) shows, you can always tell it when you see it. The position is similar to that of managers who deal with senior executives' expense claims. It is difficult to describe the exact point at which a claim becomes unacceptable, but the manager always knows when it is and the executive always knows when it is. I believe that the same analogy can apply in this case.
    If one says that it cannot be done, that assumes that our Parliament is not sophisticated enough to accept the fact that, whichever party is in power, the Government have a right and a duty to govern whether or not a referendum or a general election is in process. I do not believe that any of the parties would have any sympathy if, having complained about the political activities of the Government, they were then to turn this into a political argy-bargy.
    Many of us considered that, if a difficulty arose which appeared to be insuperable, the way round it would be to favour no limits on expenditure. Perhaps I may take as an example the euro. I suspect that the campaigns for both sides of that argument will not be short of money. However, the Government have rejected that and chosen a course which in my view is indefensible.
    Briefly, in the six-month run-up to the poll, the political parties will be limited to expenditure of between £0.5 million and £5 million. But the Government will have no limit on the amount of public money that they can spend in support of their party's policy. That is the problem. The Government should not pretend that there is a dividing line between the Government and the Government's political party. They are one and the same, and in my view it is wrong when they use public moneys for a party aim.
    Between £0.5 million and £5 million will be available for the parties involved. However, there will be no limit on the amount of public money that the Government

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    can spend in support of their party's policy up to 28 days before the poll. But the parties outside the Government are to be limited to a period of six months. That involves two totally different sets of rules and is based on the argument that we could not conceivably draw a distinction between public expenditure used for party ends and the proper activity of a political party.
    Of course, there are strong arguments in favour of what other people will see as the blatant misuse of taxpayers' money for party benefits. President Mugabe would have no problem with that. He would wonder what the debate was about. After all, that is one of the perks of being in office. However, that is not how we have traditionally done things in this country. Senior Minister Lee Kuan Yew, for whom I have great respect, would probably argue that Singapore would never have achieved the success that it has if it had adopted our Westminster traditions. When it comes to public expenditure, there is a rigid distinction between party and government.
    As I said at the beginning, I believe that this is an issue of fundamental principle and importance. I do not believe that it is confined to a single party. It has ramifications which go much wider than that. As referendums develop, what is now seen as a disputed process will become accepted and improved upon. In that connection, I am told that Article 10 of the convention on human rights includes,
    "the right … to receive and impart information and ideas without interference by public authority".
    It is public knowledge that Business for Sterling has taken legal advice on this issue. The advice that I have seen is that, although the Act permits even-handed regulation of referendums, controls which give an advantage to one side are open to challenge. If a solution exists through the courts, we shall pursue it because I do not believe that the issue should simply be allowed to die.
    I can understand why any Opposition may well believe that, when it takes up the reins of government, this may turn out to be a useful piece of legislation. I believe that that would be false and this is a very dangerous precedent which should be resisted. The provisions in the Bill introduce a new and highly undesirable development in the use of public money for political purposes. The Bill as drafted legitimises a gross abuse of the freedom of future governments to access public funds for party political uses. We may be able to test the matter in the courts or discuss it further. I do not believe that it is enough simply to say that this is an argument about the Eurosceptics. It is an argument about the British constitution and how we run public affairs. I beg to move.
    Lord Avebury: My Lords, will the noble Lord explain why he believes that it is legitimate for governments to publish material on websites that is not factual or impartial? The noble Lord did not deal with the proposed subsection (3)(b) in the amendment and I am rather mystified by it.
    6.30 p.m.
    Lord Marsh: My Lords, I felt some sympathy for the noble Lord, Lord Bassam, who has undergone very long hours on this subject, as have other Members of the House. Therefore, I tried to keep my speech as simple as possible.
    The reason for those exemptions is precisely because we believe that you cannot stop a government carrying out their activities. If they have a website, that gives government information. I give an example. It is not legitimate to send out 800,000 letters to British businessmen, 75 per cent of whom do not trade outside the country in any event, trying to persuade them that they should be supporters of a single currency.
    So, yes, Ministers will make speeches which will receive publicity. Ministers will no doubt issue White Papers which will happen to appear in the course of the events. Those things will happen. The idea that Ministers cannot express their governmental views and carry out their governmental jobs is nonsense.
    Viscount Cranborne: My Lords, I support the amendment tabled by the noble Lord, Lord Marsh. Anyone who has been a Minister anywhere near the centre of government in the run-up to a general election will know how assiduously civil servants very often attempt the impossible: to differentiate between what is a party political point in the way of information and what is legitimate information of the kind which the noble Lord, Lord Marsh, has been trying to define for the noble Lord, Lord Avebury.
    We know how difficult that is. Indeed, it has been one of the more difficult tasks which the Government have had to address during the course of the passage of the Bill. My noble friend Lord Mackay of Ardbrecknish in particular has acknowledged that the Government have not only a right but a duty to give factual information.
    Equally, I am sure that the Government would acknowledge that in the run-up to a general election campaign, over the years, it has been thought to be self-evidently right that government Ministers should try to wear two hats: the hat of a government Minister and the hat of a party politician. We know how difficult that is, but we know also how the convention has grown up in the run-up to general election campaigns—and there are many noble Lords all round this House who have experienced this, as I have—that that attempt is made and, to a surprising extent, it is successfully made. Difficult judgments are drawn in the run-up to a general election campaign as well as during the campaign itself because it is acknowledged that, by convention, we must be extra careful in the run-up to a general election campaign, even though the rules are not explicit. It is part of belonging to the unwritten constitutional club which still works and to which I know the Government still subscribe, at least in that respect.
    If that is true of a general election campaign, should it not be true also of a referendum campaign? In many ways it should be easier in relation to a referendum campaign which, by definition, addresses a much

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    simpler set of questions. If I had my way it would only ever address one question because we should be talking only about post-legislative referendums in which case it should be asked whether the people want the legislation and want it implemented—yes or no. That should overcome all the difficulties of definition which have so bedevilled the passage of this Bill.
    But let us not become side-tracked. Here we have a much simpler definition than we should have if we were facing a general election campaign with the whole gamut of policy issues which are raised under those circumstances. So it does not seem to me to be more difficult under those circumstances; it seems to me to be simpler. If it is simpler, I argue also that it is more important because, almost by definition, the very substantial issues on which the country will be asked to decide in referendums are quite likely to be even more important than the issues of a general election campaign. Whether or not we join the euro seems a matter of huge importance whichever view one takes. What makes it all the more important is that whatever may be the theory, if we were to answer "yes" to that question, to all intents and purposes it would be a "yes" which is irreversible.
    The same is true of the referendum question in relation to devolution for Scotland and Wales, particularly for Scotland. However much the referendum was rigged at the time, I do not believe that anyone would argue that the people of Scotland would not have voted "yes" under any circumstances. They clearly would have done. Nevertheless, it is irreversible. This is a matter of transcendental importance which will endure beyond the next general election and the election after that.
    Therefore, is it not all the more important that referendums of the kind we are discussing should be seen to be conducted fairly, without unfair practices, by a government than it is in relation to general elections for which practices are already in place? It seems to me so obvious that that is right that I am surprised that it even needs discussing, although experience of the passage of this Bill has proved to us that it does.
    The noble Lord, Lord Marsh, made the most telling point of all when he referred to bringing the matter into the courts. We know that one of the agreeable aspects of our present electoral practices is that, more or less all the time, they produce a definite and unquestioned result. We do not have to undergo the agonies which the United States is undergoing at present. Why is that? It is because over the years we have developed electoral law and practice which may not be perfect but which is universally accepted as being sensible.
    Again, there are many in your Lordships' House who have had to endure their own counts while waiting to see whether or not they have been elected to another place. Those noble Lords will know the practice of scrutinising votes as to whether they are valid or not. We know who has the authority to decide on those matters and we accept that authority.
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    As soon as it looks as though the rules are being skewed in one direction or another, that certainty and the stability which flows from it are undermined. I earnestly beseech the Government to think again not only in relation to this amendment but also in relation to many other provisions of this Bill. By undermining that confidence, they will be undermining the stability of our system altogether. That is why this amendment, and others like it, which we have endeavoured to draw to the Government's attention during the passage of the Bill, are so important.
    Lord Goodhart: My Lords, I rise to deal with one serious defect in this amendment. The Neill commit tee was extremely anxious that umbrella groups should be formed and, to encourage them, recommended that they should be entitled to a free mailshot. That recommendation was accepted by the Government and is now dealt with in Clause 110.
    The effect of including the Post Office in the proposed subsection (3)(a) in the amendment moved by the noble Lord, Lord Marsh, would make it impossible to provide a free mailshot for umbrella groups since the material to be distributed would plainly fall within Clause 125(1). That being so, it seems to me that that is a serious defect. I wonder whether it is a matter which the noble Lord has considered.
    Lord Marsh: My Lords, that issue has been raised. The problem regarding the Post Office has received very wide publicity. It is a public body embarking on a propaganda campaign of its own. That is not comparable with a government issuing a free postage system to all the parties which will have different views and circulating those views as a post office. It is the job of the Post Office to deliver letters; it is not the job of the Post Office to campaign for political parties.
    Lord Goodhart: My Lords, this will stop the Post Office from doing that because the Post Office will be distributing material free of charge, even if it comes from someone else.
    Lord Marsh: My Lords, "to distribute" can be taken as physically pushing material through letterboxes, with which we all agree, or being responsible for other people who push it through letterboxes.
    Viscount Astor: My Lords, all participants in a referendum would want a clear result that is accepted by all who have participated so that the issue is not subject to endless further debate or question. The Government have introduced Clause 104 which enables the question to be looked at and it promotes fairness, which we welcome. That will help the conduct of referendums in the future.
    In regard to spending, this Bill is slanted in favour of the Government in relation to referendums and it is slanted in favour of outside parties, as we heard earlier, effecting a referendum. The noble Lord, Lord Marsh, has raised an issue of principle which is important. It

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    must be in the Government's interest to remove all doubt about the conduct of referendums so that all sides appreciate and understand the situation.
    My noble friend Lord Cranborne talked about elections and how the system works in the Civil Service. In elections the system works well. There is a clear divide between what is political propaganda—the words that the noble Lord, Lord Marsh, used—and what comprise Civil Service documents. Part of the reason that it works is that the Civil Service knows that its political masters may change shortly, so civil servants are on their best behaviour. However, in referendums the situation is rather different as they know that they will have the same political masters afterwards. It is not for me to cast any aspersions on the Civil Service, but looking at what has been produced in the life of this Government, I believe that the only things that have not been political propaganda have been the statistical reports. The only thing that was not propaganda, for example, in the magazine promoted by the Government on women was the date. As far as I am concerned, the whole of that magazine was propaganda.
    In looking at the amendment of the noble Lord, Lord Marsh, I was concerned about who would define the words "factual and impartial". I agree with him that when you come across it, you can recognise it. It is the "heffalump" argument: you cannot describe one but when you see one you recognise it. It would be helpful if the noble Lord, Lord Marsh, could say how that phrase would be defined. The amendment raises issues of great importance and we shall listen carefully to the Minister on this subject.
    Lord Bassam of Brighton: My Lords, on this amendment we return to the role of government during a referendum campaign. Having listened carefully to what the noble Lord, Lord Marsh, has said, he is obviously fearful of the scales in a referendum on the euro being weighed against the "No" campaign by a deluge of government misinformation, as he puts it. On Report he referred to the fact that,
    "the Government have already spent more than £15 million on 'information', including a direct mailshot to 800,000 businesses".—[Official Report, 22/11/00; col. 895.]
    He repeated that this evening. I remind the noble Lord that the Government's communication campaign on the euro is not aimed at promoting the euro, but at ensuring that UK small and medium-sized enterprises are aware of the implications of the single currency and have the information that they need to prepare. No doubt, if we were to revert to the groat we would do exactly the same in the interests of ensuring that small, large and medium-sized enterprises knew what the reintroduction of the groat may involve.
    Lord Marsh: My Lords, before the Minister goes on too much about the euro, I cut what I said as short as I could, but I did test the patience of the House by spending some time saying quite specifically that I thought that this went far wider than simply a campaign on the euro.
    6.45 p.m.
    Lord Bassam of Brighton: My Lords, it seemed to me that the primary interest of the noble Lord was in promoting the position of Business for Sterling. It seems that this whole debate is overshadowed by the interest—some may say the obsession—that some Members of your Lordships' House have about a referendum at some future point on the euro.
    It is worth putting on the record and pointing out to the noble Lord the longstanding conventions governing the work of the Government Information Service. In presenting government policy and providing publicity and advertising material during a referendum period, these conventions require of the GIS that its activities are relevant to government responsibilities; objective and explanatory, not tendentious or polemical; not open to misrepresentation as being party political; and conducted in an economic and appropriate way, having regard to the need to be able to justify the costs as expenditure of public funds.
    No doubt all governments seek to ensure that those fundamental principles and rules are carefully adhered to. No doubt previous Conservative governments adhered precisely to that when explaining the implications of the single European market; no doubt they provided the same level of support so that businesses could well understand what the single market meant to them.
    Of course, there will always be debates about whether material can be wholly factual and impartial. That is why the Neill committee recommended that the government of the day in future referendums should, as a government, remain neutral and should not distribute at public expense literature, even purportedly "factual" literature, setting out or otherwise promoting their case. The 28-day purdah period provided for in Clause 125 is our response to that recommendation.
    I remind the House of what the Neill committee has made of that response. In its comments on the White Paper and draft Bill, the Committee said:
    "We welcome your proposals on the part which should be played by the government in referendum campaigns, and your recognition of the importance of ensuring that there is a period immediately prior to a referendum in which, as you say, 'the government of the day … stands aside and the campaigning is left to the political parties and other organisations'".
    That message was reinforced by one of the members of the Neill committee, John MacGregor, at Second Reading in another place when he said:
    "I am glad that the Bill includes the 28-day moratorium, which meets our point".—[Official Report. Commons, 10/1/00: col. 67.]
    So, Clause 125, as it stands, fully addresses the recommendation of the Neil] committee and as such there is no case for this amendment.
    The noble Lord strayed from his amendment to raise the issue of the referendum spending limits. As there were no amendments down on this matter for Third Reading, I had rather hoped that the issue had been settled once and for all, but I see from the press

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    that Business for Sterling, of which the noble Lord, Lord Marsh, is a member, is threatening to challenge this part of the Bill under the Human Rights Act.
    The Government are satisfied that the referendum spending limits are entirely compatible with the European Convention on Human Rights. In the context of elections, in the Bowman judgment the European Court of Human Rights accepted that a restriction on the amount that could be spent during a campaign is not in itself a breach of Article 10 of the convention. The court recognised that there may be a conflict between the right to freedom of expression and the need to ensure free expression of the opinion of the people and that it may be necessary in a period preceding a poll to place certain restrictions on freedom of expression.
    In support of the spending limits, for which we have previously argued, I refer the noble Lord also to a passage in a judgment by the Canadian Supreme Court in the case of Libman v. Quebec 1997.
    Lord Mackay of Ardbrecknish: My Lords, I had not actually noticed an amendment about spending limits. I thought we had resolved that matter. So why is the Minister addressing the issue of spending limits? I thought I had been defeated on that.
    Lord Bassam of Brighton: My Lords, the noble Lord is right, but I was seeking to address the issue of inequity between the "No" and the "Yes" campaigns.
    Lord Marsh: My Lords, I would be grateful if the Minister would take no notice of the noble Lord, Lord Mackay, and continue. He is actually saving us a fortune!
    Lord Bassam of Brighton: My Lords, I am most grateful for that amusing intervention.
    The court noted that:
    "In its egalitarian aspect the Act [was] intended to prevent the referendum debate being dominated by the most affluent members of society. At the same time, the Act [promoted] an informed vote by ensuring that some points of view are not buried by others. This highly laudable objective, intended to ensure fairness of the referendum on a question of public interest, [was] of pressing and substantial importance in a democratic society".
    Both the European Court and the Canadian Supreme Court acknowledged the need for spending limits.
    Lord Wedderburn of Charlton: My Lords, before my noble friend sits down, he is surely aware of the enormous difference between the European Convention on Human Rights and the Canadian charter. He cannot quote cases on the Canadian charter as though they are related to the same wording as the convention.
    Lord Bassam of Brighton: My Lords, of course; I take the point of my noble friend. But there is a bearing on this issue in trying to develop a general point.
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    The European Court and the Canadian Supreme Court acknowledged the need for spending limits. We believe that the limits set out in the Bill are fair and equitable and will stand up to scrutiny in any court. We do not believe that this amendment is appropriate in the way in which it is argued. Therefore I invite the noble Lord, Lord Marsh, to withdraw Amendment No. 22.
    Lord Marsh: My Lords, first, I thank all those who took part in this debate. The Minister raised some interesting subjects. I could not resist rising because, with the greatest respect to some other Members of his Front Bench, lawyers' fees are colossal and the cases produced by his department are greatly appreciated.
    But my basic argument remains; that is, that this is an issue of principle. It is a fundamental issue and, since so many Members of your Lordships' Chamber have stayed behind, we should test the opinion of the House.
    6.51 p.m.
    On Question, Whether the said amendment (No. 22) shall be agreed to?
    Their Lordships divided: Contents, 134; Not-Con tents, 184.
    7.2 p.m.
    Clause 134 [Meaning of "election expenses"]:
    Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 23:
    Page 101, line 49, leave out ("less") and insert ("not more").
    Clause 162 [Interpretation: exempt trust donations]:
    Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 24:
    Page 125, line 23, leave out (", other than one falling within subsection (5)").
    The noble Lord said: My Lords, this group of amendments deals with the question of trusts. The original drafting of the Bill prohibited donations from all trusts, whether blind trusts or not. The Government recognised that that would be wrong and that the

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    original wording of the Bill did not reflect the views of the Neill committee. These amendments were therefore tabled. However, I believe that there are some serious, and almost certainly unintended, defects in the amendments on exempt trusts, which came into the Bill on Report and are now in Clause 162.
    The chosen cut-off date of 27th July 1999 is the date on which the White Paper was published. That date is used for the establishment of exempt trusts which do not need to prove that the property was placed in trust by a permissible donor. However, what would be the position in respect of a trust established between that date and the commencement date of Part IV? Would such a trust, established perfectly legitimately by a permissible donor, fall within the definition in Clause 162(2) or (3)? If not, would a party therefore be prohibited from accepting any donation from such a trust? I cannot believe that this is the intention of the drafting. It is a complicated matter. I have therefore written to the Minister requesting a definitive reply.
    The drafting of Clause 162(2)(b) and (c) is also problematic. This prevents a pre-27th July 1999 trust (to which I shall refer as an old trust) to which after that date any property has been added, or which has had its terms varied, from donating to a party. Given that these amendments were tabled only two weeks ago, I do not believe that that is fair or just. Perfectly legitimate open trusts established before July 1999 may well have had their terms varied, or property added to them, after that time.
    Paragraph 3.34 of the White Paper makes reference only to prohibiting donations from blind trusts. Therefore, it cannot have been expected by any trustee or person wanting to donate to or establish an open trust after the publication of the White Paper that any variation of terms or further donations that they may have made to any open trust would render that trust unable to make donations to political parties.
    In addition, the Government have said that the provisions preventing donations from old trusts to which property has been transferred after 27th July 1999 are necessary to stop such trusts being used to channel impermissible donations in the future. But what is wrong with allowing a permissible donor to continue to put money into an old trust that he may have established either between July 1999 and today or in the future? That is especially true of donations made to old trusts by permissible donors that may have been made between July 1999 and the present. While a permissible donor may now realise that continuing to donate to an old trust would render the trust unable to donate, and could therefore perhaps set up a new trust, this would not have been the case until the Government tabled their amendments two weeks ago. Therefore, things done by permissible donors and trustees before they were aware of the government amendments tabled last week could mean that perfectly legitimate open trusts were nullified.
    To remedy the situation, I have tabled a number of amendments to Clause 162(2) to change the cut-off dates in respect of the creation of old trusts, the transfer of property to them and the variation of their
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    terms. They propose that the cut-off dates in each of these cases should be changed either to the date on which the Bill receives Royal Assent, or the date on which the clause comes into force. While the latter would be preferable, our view is that the former is the least that should be done.
    Finally, as I indicated at Report stage, it seems preferable that Clause 162(5) should be taken out altogether. It prohibits donations from any trust, whether old or new, where a trustee exercises any discretion in making the donation. I believe that this would have almost exactly the same effect as the original wording of the Bill; it would prohibit donations from any trust. As we have pointed out, trustees may have a discretion as to whether to give capital, rather than interest, to beneficiaries. That would be a discretion. They would not be allowed to donate.
    In all trusts a degree of discretion is given to trustees. A trust may have been established in very broad terms for the benefit of the conservative cause, the socialist cause or the liberal cause. Even if trusts were set up to benefit the Conservative Party, the Labour Party or the Liberal Party, the trustees may have a discretion as to whether or not the money should be donated centrally, to local constituencies, or even regionally. Provided trustees comply with the terms of trust deeds and provided the source of donations to the trust is declared, as required under the provisions of the Bill, in the case of all trusts, or the source of permissible donors in the case of new trusts, I do not understand why donations from such discretionary trusts should be prohibited; nor do I believe that that is the intention of the Government or of the Neill committee. However, that is the effect of the drafting.
    This is a complex matter. I wrote to the Minister on Friday, outlining my reasons for tabling the amendment. I hope that he and his experts have had an opportunity to consider the matter with a view to ensuring that the Bill represents the intentions of the Neill committee and those of the Government, so that donations from open trusts, which are legitimately set up, will continue to flow to political parties. I beg to move.
    Lord Bassam of Brighton: My Lords, with his customary efficiency, the noble Lord has outlined a number of arguments. I shall try to answer some of the points. If I do not answer them as thoroughly as he would like, I hope that they can be dealt with in later correspondence.
    At Report stage, we amended the Bill to allow donations to be received from trusts in certain circumstances, if they were established prior to the date of the publication of the White Paper for this Bill. This concession can be found in Clause 162(2). It was designed to cater for only one circumstance—that of a trust set up so long ago that it would now be difficult, or perhaps impossible, to establish with certainty that the person who had donated money to the trust was a permissible donor. The concession was not designed to allow an old trust to be used as a mere shell for a new

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    set of transactions which would not comply with the regular conditions for donations from trusts as set out in Clause 162(3).
    Amendments Nos. 25 and 26 would alter the whole scope of Clause 162(2) so that instead of making special consideration for old trusts it would make special provisions for ones established after Royal Assent or the coming into force of this clause. Old trusts would then have to comply with subsection (3). We doubt whether that was the noble Lord's intention in tabling the amendments. In any event, it would destroy the purpose of subsection (2) and others in the House would clearly be opposed to that.
    If the proposed amendments were made, first, it would be possible for a donation to come from a trust established by a person who was not a permissible donor. That is inherent in subsection (2) as it stands. Secondly, it would be possible for the trust to be a discretionary trust; that is, one which allows the trustee to choose who should be the recipient. Thirdly, it would be possible for the trust to have been varied after proposals for legislation in this area were published on 27th July 1999. Fourthly, it would be possible for money to have been transferred to the trust after that date. Again, there would be no requirement that the money must have come from a permissible donor. Nor would there be any limit on how large the transfer might have been compared with the money that was originally put into the trust. The result of Amendment No. 29 would have been to allow additional funds to have been put into an old trust, or to be put into it in the future, without any limit of time, provided that the additional funds came from a permissible donor.
    The Government were persuaded to allow a limited exemption for old trusts and we want to be as reasonable as possible about it. We have moved a long way since the draft Bill published with the White Paper, but I cannot commend to the House a set of arrangements which would simply open the door to a wholesale evasion of the requirements which we are now setting for the future. Indeed, if the amendments were made, we would no longer feel able to commend subsection (2) to Parliament.
    We do not believe that a case has been adequately made out on this issue and we are not certain of the trusts which the noble Lord has in mind. However, we shall of course pay close attention to the points that the noble Lord raised in his recent correspondence on this technical matter. I hope that he will feel able to withdraw his amendment. I believe that he should do so and that we have the balance about right in regard to trusts.
    Lord Mackay of Ardbrecknish: My Lords, I shall not labour the point because I had hoped that we could agree and that would have been that. The other place will have to examine the issue when it sees the amendments that we put into the Bill on Report. I shall read with care the points that the Minister made and any letter he decides to send to me after he has read what he said. The situation could be worrying because
    1176
    some trusts which thought they were acting properly could be faced with the imposition of retrospective legislation as a result of changes made at the Report stage. I shall leave it at that and beg leave to withdraw the amendment.
    Amendment, by leave, withdrawn.
    [Amendments Nos. 25 to 32 not moved.]
    7.15 p.m.
    Schedule 1 [The Electoral Commission]:
    Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 33:
    Page 131, line 32, leave out sub-paragraph (2) and insert—
    ("(2) A person may not be appointed—

    (a) as chief executive of the Commission if he is a person who (by virtue of section 3(4)(a) to (d)) may not be appointed as an Electoral Commissioner; or

    (b) as a member of the staff of the Commission if he is a person who (by virtue of section 3(4)(b) to (d)) may not be appointed as an Electoral Commissioner.").

    The noble Lord said: My Lords, during the Committee and Report stages we had many debates about the staff of the electoral commission and how political they could be. The Government and I disagreed on a number of occasions but have now concluded that a chief executive should not be a member of a political party. I still have reservations about any of the staff being members of a political party and wonder whether the Government, having accepted my argument about the chief executive, believe that I am right about all the staff.
    My amendment proposes that the chief executive cannot be a member of a political party and the Government's amendment does the same. By the nature of things, I am sure that the noble Lord, Lord Bach, will tell me that my amendment is not properly drafted and that his is. Whichever is the case, I am grateful that my argument has been heard in that regard. I beg to move.
    Lord Bach: My Lords, the noble Lord's arguments have been heard. His amendment carried forward the debate we had in Committee and on Report about the qualification and disqualification for being a commissioner or a member of the staff of the commission. The effect of the amendment is that a person cannot be appointed as chief executive of the commission if he is a member of a political party.
    We had our doubts about that because of the concern that the right to be a member of a party should not be abridged unless absolutely necessary. However, we now all agree because we believe that there is not sufficient reason to refuse the amendment. It seems right that the chief executive of the commission, like the commissioners, should not be associated with any party.
    The noble Lord anticipated my reply. We tabled our Amendment No. 34 for simple technical drafting reasons. We believe that it has the same effect as that intended in the Opposition's amendment.

    1177
    The Government's Amendment No. 35 is a consequential amendment. If it is right to require the chief executive to resign any membership of a party upon appointment, it must also be right to require him or her not to resume or take up membership of a party after appointment. Amendment No. 35 is designed to plug that small gap. We believe that although views on both sides have ebbed and flowed during the long course of the Bill in this House, we have the double advantage of consensus and of getting the Bill right on this small issue. I invite the noble Lord to withdraw his amendment.
    Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Lord. I beg leave to withdraw my amendment.
    Amendment, by leave, withdrawn.
    Lord Bach Lord Bach moved Amendments Nos. 34 and 35:
    Page 131, line 32, leave out ("as chief executive or") and insert—

    ("(a) as chief executive of the Commission if he is a person who (by virtue of section 3(4)(a) to (d)) may not be appointed as an Electoral Commissioner, or

    (b) as any").

    Page 131, line 40, after ("terminate") insert—

    ("(a) if he is their chief executive, on the occurrence of such an event as is mentioned in any of paragraphs (a) to (d) of paragraph 3(3), and

    (b) in any other case.").

    Schedule 7 [Control of donations to individuals and members associations]:
    Lord Bach Lord Bach moved Amendments Nos. 36 to 38:

    Page 159, line 2, leave out ("less") and insert ("not more").

    Page 164, line 17, leave out ("not less") and insert ("more").

    Page 164, line 45, leave out ("less") and insert ("not more").

    Schedule 9 [Limits on campaign expenditure]:
    Lord Hodgson of Astley Abbots Lord Hodgson of Astley Abbots moved Amendment No. 39:
    Page 169, line 17, leave out ("£30,000") and insert ("£20,000").
    The noble Lord said: My Lords, we return to the discussion which we had in extenso during the Committee and Report stages. I am afraid that I and, I believe, other noble Lords did not find the Minister's reply convincing. As a result, I gave notice that I should raise the issue again at Third Reading.
    At the heart of the Bill a number of balances are to be struck. There is the important balance between transparency and local democracy. There is the equally important balance between the funding needs of a party nationally and those of a local association. I do not believe that we yet have that aspect of the Bill entirely right.
    First, even during "peacetime"—the period between elections—the burden of bureaucracy which we intend to apply to political parties and local associations is huge. I point out to those noble Lords who doubt that, that the Bill and its schedules which we received in Committee ran to 180 pages and it is now 243 pages. We have therefore increased it by one-third. That
    1178
    burden on local associations, some of which are weak, may well be the straw which breaks the camel's back. That in turn will mean that national headquarters must take a much closer interest in the operation of local associations, thus increasing the trend towards centralisation. That will not help to revive local democratic activity—quite the reverse.
    Secondly, during election campaigns the trend towards a presidential style of campaigning will accelerate. As part of the reawakening of interest in our democracy, I should like national political parties to be forced to consider how to enthuse, involve and include their local activists, not merely to find further ways to reach past, or bypass, them by focusing on massive spending on the media, posters, direct mail and other forms of communication.
    The amendment seeks to give an incentive for the development of local democracy by restricting the level of national spending that can be undertaken during general election campaigns. Under my amendment national spending will be restricted to £20,000 per constituency contested, not £30,000 as presently proposed. If every constituency was contested, total spending centrally would be about £13 million, not £19 million as proposed.
    Some may believe that that figure is too restrictive to undertake an effective national election campaign. However, before one reaches that conclusion one should not overlook two additional sources of permissible finance. First, each constituency will in addition be able to spend its normal allowance, which is about £8,500. If every constituency is contested, that will amount to a further £5.6 million. Secondly, there is a further allowance for centralised expenditure under Part I of Schedule 8 which lists exempted items. It is not easy to calculate that amount of expenditure, but included in those items of permitted expenditure are the costs of staff and their accommodation. That expenditure may well amount to a further £3 million or £4 million. Even under my amendment, if a party contests each and every constituency it can spend £13 million, plus £5.6 million at constituency level, plus a further £4 million of exempted expenditure, making £22.6 million in all. Surely, that is enough; and it is a larger figure than Neill recommended.
    There is disquiet about the level of expenditure at general elections. The noble Lord, Lord Rennard, has spoken eloquently about this, and I suspect that he will contribute to the debate later. One of the reasons for the whole Bill is the level of expenditure and the funding of general elections. I am concerned about the damage that we are probably doing, almost certainly inadvertently, to local democracy and our democratic institutions. My amendment seeks to revive local democracy by giving it more prominent ranking in the priorities of campaigning and campaign expenditure. Unamended, the Bill will permit a party to spend up to £29.6 million. Of that, only £5.6 million (less than one fifth) can be spent locally. If my amendment is accepted, total expenditure will be limited to £22.6 million, of which £5.6 million (one quarter) can be spent locally. Surely, that proportion which parties must spend locally is not unreasonable. I believe that

    1179
    £22.6 million is a perfectly adequate total for a national party to spend to run an election campaign. One quarter of that amount is the right balance for local expenditure, and by those means we shall significantly enhance local democracy. I beg to move.
    Lord Rennard: My Lords, we consider again tonight one of the most important election rules that we can possibly introduce. For the first time there is to be a limit on spending by national party organisations. I believe that such reform is long overdue and essential if we are to clean up our political system, reduce the power of the millionaire interests and give power back to voters. We need to curb the trend for millions of pounds to count for more than millions of votes. But the question now is: what is the appropriate limit, and how should it be set before the electoral commission may examine the issue?
    I believe that consensus is the best approach. In evidence to the Neill committee, the Labour Party said that,
    "those who compete for political office should have a fair opportunity of doing so and should not be placed at a disadvantage by inadequate financial resources relative to others".
    In its document Transparency, Participation, Equality, the Labour Party argued for a national limit of £15 million. The Liberal Democrats have also consistently argued here and in another place for the same limit. In another place that limit was strongly supported by Mr Martin Linton who is a recognised expert in the field of party funding. He argued that 70 per cent of Members of another place belonged to parties which then supported a limit of £15 million.
    In spite of that, in Committee in your Lordships' House the Government said that for the moment they would stand by the £20 million limit set out in the Bill. The noble Lord, Lord Bassam, said that he was,
    "in the peculiar position of barking against my own party on this occasion".—[Official Report, 18/10/00; col. 1098.]
    More significantly perhaps, he also said at col. 1099:
    "If presented with a fresh consensus in favour of a lower figure, we would be prepared to reconsider the matter, but it is not one to be pursued on a unilateral still less a partisan basis".
    There is now a fresh consensus on a lower figure and the Government should not pursue the £20 million limit on a purely unilateral basis. During consideration of the Bill we have removed from the calculation of total expenditure some important items, including utility bills, headquarters and staff costs and legal services. In part, that has led to a new Conservative position which has brought the Opposition into line with both the Labour Party and the Liberal Democrats.
    At Committee stage the noble Lord, Lord Mackay of Ardbrecknish, proposed a national limit of exactly £15 million, while the noble Lord, Lord Hodgson of Astley Abbotts, argued for a very slightly lower limit. The Government would, therefore, be isolated if they sought to adhere to the limit of £20 million. I remind the Minister that he said that this matter should not be pursued on a unilateral still less a partisan basis. In
    1180
    future the electoral commission can review the limit and increase it if there is a new consensus, but for the moment the limit should be set at a lower level for which there is much greater consensus. It would be open to the Government to increase the limit on constituency spending, if they wished to do so, to make the total available nationally and locally consistent with the figure in the Neill report. That would help to address the imbalance between constituency and national spending. Let us have a national limit of about £15 million on which there is far greater consensus.
    Lord Mackay of Ardbrecknish: My Lords, we have been round this particular course before. When I tried to persuade the Minister to accept a limit of £15 million instead of £20 million I failed fairly comprehensively. I am interested that my noble friend now returns to the matter but looks at it from the constituency upwards. I much prefer to look at it from the national limit already set downwards.
    I am concerned by what the Government intend to do if there is to be an election in May. When will they tell the world at what level total expenditure is to be set? Obviously, it cannot be the whole £20 million because the period will be far shorter than 365 days. I am concerned that it should not be front-loaded. I seek an assurance from the Government that they will talk to the political parties so that they will know as soon as possible the figure that has been arrived at in conversations, I hope by consensus. It would be wrong if, following the new year, two or three months elapsed before the political parties had any idea of what they might be permitted to spend in an election to be held in May. I do not know how the Government will deal with that without committing themselves to a May election. But, frankly, they will have to do it because it is their Bill and they have wished this ludicrous situation on themselves as well as the other political parties. The people who run the Labour Party will want to know, as will the rest of us, how much they will be allowed to spend between whenever the Bill is enacted and the next election. I hope that the Minister will address that point in his answer.
    7.30 p.m.
    Lord McNally: My Lords, before the noble Lord sits down, perhaps I may ask him a question. At the moment the Labour Party is festooning towns with this "Thank you" campaign. Will that be in its general election expenditure?
    Lord Mackay of Ardbrecknish: My Lords, in Scotland we have an expression about coming up the Clyde in a banana boat. The noble Lord has been doing that. I am not joining him. I can assure him that that will not be part of the Labour Party's expenditure for the next election. That is probably why the Government are doing it—because the race will not start until the Bill has been enacted and the announcement about the money has been made. So I think they are trying to jump the gun. It perhaps shows that all the pious stuff we have heard from them about

    1181
    funding political parties and controlling general election expenditure is not quite as accurate as they would like us to believe.
    Lord Bassam of Brighton: My Lords, we return again to the level of the limit on campaign expenditure. The noble Lord, Lord Hodgson, said that he was not convinced by what I had said at an earlier stage on this matter. I was not entirely convinced. I was not entirely convinced because as I saw it there was something of a volte face from noble Lords on the Opposition Benches.
    I am grateful that the noble Lord, Lord Cope, has joined us because it was the noble Lord who advised us in Committee that we should stick with what was in the Bill. The noble Lords on the Liberal Democrat Benches were suggesting a lower limit. On Report we heard from the noble Lord, Lord Mackay, an argument for reducing the limit by one-quarter. The noble Lord said that the position had changed because the list of qualifying expenses in Schedule 8 had been pared back to make it more manageable for the parties. That is indeed the case. But the noble Lord, Lord Cope, knew that when he spoke so enthusiastically of the £20 million limit. It would be very nice to know exactly where the Opposition now stand and exactly what lies behind their sudden change of heart. I note that the noble Lord, Lord Hodgson, is sitting very comfortably next to the noble Lord, Lord Ashcroft, who I suppose gave some admiring glances during his peroration. I am not sure why that was the case. Perhaps it is because he is the party treasurer and is concerned about the quantum of money that might be available for a forthcoming general election.
    The case is this: a responsible government cannot chop and change their policy in the way that has been suggested by some—
    Noble Lords: Oh!
    Lord Bassam of Brighton: My Lords, I hear mirth from those in a sedentary position, but a responsible government—this is an entirely responsible government—do not chop and change their policy. I do not wish to hide the fact that the Labour Party argued in its evidence to the Neill committee for a £15 million limit. But it falls to the Government, and not to the Labour Party, to respond to and implement the Neill report. That is exactly what we are seeking to do. We have consistently taken the view that once the matter had been carefully considered by an independent advisory body, the proper course was to accept its recommendation. That is exactly what we have done.
    The level of the limit should be altered only after full consideration by another independent body; namely, the electoral commission. Before coming to a view, there should be full consultation with other registered parties, not just the big three. We should remember that separate limits apply in each of the four parts of the United Kingdom. I put it to the House that it would be presumptuous of the Labour, Conservative and Liberal Democrat Parties, which are well
    1182
    represented here, to decide such matters without reference to the nationalist parties in Scotland and in Wales and to the nationalist and Unionist parties in Northern Ireland. I wonder how much consultation with those parties noble Lords opposite have undertaken in arriving at the view that they have in preparing for this particular amendment.
    Nor can we simply change the figure in paragraph 3(2) of Schedule 9 on its own. The limits in paragraphs 3(3) and (4) of that Schedule and the third party limits in paragraph 3 of Schedule 10 are all linked to the £30,000 "allowance". If one changes that figure, one has to change the others. The Neill committee set the expenditure limits for elections to the European Parliament and devolved legislatures by reference to the £20 million for a parliamentary general election. We need to consider whether there should be a pro rata reduction in those other limits. These are considerations to be carefully made, not made late in the day when a Bill is reaching its concluding stages.
    So, whatever the merits of the amendments, we should not be changing course in this way, at this late stage and without full and proper justification, and full consideration of, and consultation over, the other related matters. The right way forward—the only way forward—is to apply the £20 million limit, or an appropriate proportion of it, to the next general election. We should then ask the electoral commission properly to review the matter. If then there is a new consensus in favour of a lower limit, which is endorsed by the commission, it would be open to the Home Secretary to vary all the relevant sums by means of an order under Clause 155.
    The noble Lord, Lord Mackay, asked a fair question about the transitional limit. That transitional limit must be in place by 16th February 2001 when Part V comes into force. We shall be very carefully consulting during December with regard to what that limit might be. That is the proper course of action for us to follow. We shall fulfil that responsibility.
    We have a late, half-baked and poorly thought-through amendment which does not do the job that it is designed to do. The amendment still puzzles me. Why is it that the Conservatives—some of them at least—seek to change their position on this many months after the Bill has been published and after many debates on these matters when just a matter of 10 days ago they had a clear policy position and statement of intent in this regard? I am puzzled by that. Perhaps it relates to funding within the Conservative Party; I know not. The proper course for the noble Lord to take is to withdraw his amendment and put his case to the electoral commission in due course.
    Lord Hodgson of Astley Abbotts: My Lords, the Minister has not taken us much further than on Report. We engaged in some political knockabout on the premise that if one is short of arguments, one should engage in some political banter. That is fair enough. I am not sure that as a very new Member of the House it is in order for me to say this, but I think

    1183
    that it is a little unfair to talk about my noble friend Lord Ashcroft who has not made a maiden speech yet and therefore cannot respond.
    The Minister's substantive arguments came down to two. First, he suggested that there should be a review after the general election, which does not answer the point I was trying to make at all. Secondly, consequential amendments would be required if the amendment were accepted. The amendment is nothing to do with the detail he is talking about; it is about restoring a balance. It is not about any individual political party seeking to gain or lose a funding advantage; it is about a vote for decentralisation, for the small battalions and for local democracy. I propose to test the opinion of the House on this matter.
    7.38 p.m.
    On Question, Whether the said amendment (No. 39) shall be agreed to?
    Their Lordships divided: Contents, 64; Not-Contents, 134.

    Division No. 4

    CONTENTS

    Addington, L.

    Montrose, D.

    Ashcroft, L.

    Newby, L.

    Avebury, L.

    Northover, B.

    Barker, B.

    Norton of Louth, L.

    Bell, L.

    Oakeshott of Seagrove Bay, L.

    Blatch, B.

    Perry of Southwark, B.

    Bradshaw, L.

    Phillips of Sudbury, L.

    Campbell of Alloway, L.

    Redesdale, L.

    Carlile of Berriew, L.

    Rees-Mogg, L.

    Clement-Jones, L.

    Rennard, L. [Teller]

    Dholakia, L.

    Renton of Mount Harry, L.

    Elton, L.

    Rodgers of Quarry Bank, L.

    Ezra, L.

    Roper, L.

    Falkland, V.

    Russell, E.

    Goodhart, L.

    St John of Fawsley, L.

    Greaves, L.

    Sandberg, L.

    Hamwee, B.

    Scott of Needham Market, B.

    Harris of Greenwich, L.

    Sharman, L.

    Harris of Richmond, B.

    Sharp of Guildford, B.

    Hodgson of Astley Abbotts, L. [Teller]

    Shutt of Greetland, L.

    Smith of Clifton, L.

    Hooson, L.

    Taverne, L.

    Hutchinson of Lullington, L.

    Taylor of Warwick, L.

    Thomas of Gresford, L.

    Jacobs, L.

    Thomas of Walliswood, B.

    Kingsland, L.

    Thomson of Monifieth, L.

    Linklater of Butterstone, B.

    Tope, L.

    McNally, L.

    Tordoff, L.

    Maddock, B.

    Walmsley, B.

    Mar and Kellie, E.

    Warnock, B.

    Methuen, L.

    Watson of Richmond, L.

    Miller of Chilthorne Domer, B.

    Wigoder, L.

    Miller of Hendon, B.

    Williams of Crosby, B.

    NOT-CONTENTS

    Acton, L.

    Ashton of Upholland, B.

    Ahmed, L.

    Bach, L.

    Alli, L.

    Barnett, L.

    Amos, B.

    Bassam of Brighton, L.

    Andrews, B.

    Berkeley, L.

    Archer of Sandwell, L.

    Bernstein of Craigweil, L.

    Ashley of Stoke, L.

    Billingham, B.

    1184

    Blackstone, B.

    Jeger, B.

    Blease, L.

    Jenkins of Putney, L.

    Borrie, L.

    Jordan, L.

    Bragg, L.

    King of West Bromwich, L.

    Brennan, L.

    Kirkhill, L.

    Brett, L.

    Layard, L.

    Brooke of Alverthorpe, L.

    Lea of Crondall, L.

    Burlison, L.

    Lipsey, L.

    Carter, L. [Teller]

    Lockwood, B.

    Chandos, V.

    Lofthouse of Pontefract, L.

    Clarke of Hampstead, L.

    McCarthy, L.

    Clinton-Davis, L.

    Macdonald of Tradeston, L.

    Cocks of Hartcliffe, L.

    McIntosh of Haringey, L. [Teller]

    Cohen of Pimlico, B.

    Colville of Culross, V.

    McIntosh of Hudnall, B.

    Craig of Radley, L.

    MacKenzie of Culkein, L.

    Crawley, B.

    Mackenzie of Framwellgate, L.

    David, B.

    Mallalieu, B.

    Davies of Coity, L.

    Marsh, L.

    Davies of Oldham, L.

    Massey of Darwen, B.

    Dean of Thornton-le-Fylde, B.

    Mitchell, L.

    Desai, L.

    Molloy, L.

    Dixon, L.

    Morgan, L.

    Donoughue, L.

    Morris of Manchester, L.

    Dubs, L.

    Nicol, B.

    Eatwell, L.

    Peston, L.

    Elder, L.

    Plant of Highfield, L.

    Evans of Parkside, L.

    Ponsonby of Shulbrede, L.

    Falconer of Thoroton, L.

    Prys-Davies, L.

    Farrington of Ribbleton, B.

    Puttnam, L.

    Fanlkner of Worcester, L.

    Ramsay of Cartvale, B.

    Filkin, L.

    Randall of St. Budeaux, L.

    Fyfe of Fairfield, L.

    Randall of Babergh, B.

    Richard, L.

    Gale, B.

    Richardson of Calow, B.

    Gibson of Market Rasen, B.

    Sainsbury of Turville, L.

    Gladwin of Clee, L.

    Sawyer, L.

    Goldsmith, L.

    Scotland of Asthal, B.

    Gordon of Strathblane, L.

    Sewel, L.

    Goudie, B.

    Shepherd, L.

    Gould of Potternewton, B.

    Sheppard of Liverpool, L.

    Grabiner, L.

    Simon, V.

    Graham of Edmonton, L.

    Smith of Leigh, L.

    Gregson, L.

    Stoddart of Swindon, L.

    Grenfell, L.

    Stone of Blackheath, L.

    Hardy of Wath, L.

    Strabolgi, L.

    Harris of Haringey, L.

    Symons of Vernham Dean, B.

    Harrison, L.

    Taylor of Gryfe, L.

    Haskel, L.

    Thornton, B.

    Hayman, B.

    Tomlinson, L.

    Hilton of Eggardon, B.

    Turnberg, L.

    Hogg of Cumbernauld, L.

    Varley, L.

    Hollis of Heigham, B.

    Walker of Doncaster, L.

    Howells of St. Davids, B.

    Warner, L.

    Hoyle, L.

    Warwick of Undercliffe, B.

    Hunt of Chesterton, L.

    Whitaker, B.

    Hunt of Kings Heath, L.

    Whitty, L.

    Irvine of Lairg, L. (Lord Chancellor)

    Wilkins, B.

    Williams of Mostyn, L.

    Janner of Braunstone, L.

    Winston, L.

    Jay of Paddington, B. (Lord Privy Seal)

    Woolmer of Leeds, L.

    Young of Dartington, L.

    On Question, Motion agreed to.

    7.49 p.m.
    [Amendment No. 40 not moved.]
    Schedule 11 [Control of donations to recognised third parties]:
    Lord Bach Lord Bach moved Amendments Nos. 41 and 42:
    Page 185, line 14, leave out ("less") and insert ("not more")
    Page 187, line 48, leave out ("not less") and insert ("more").
    Schedule 15 [Control of donations to permitted participants]:
    Lord Bach Lord Bach moved Amendment No. 43:
    Page 196, line 45, leave out ("less") and insert ("not more").
    [Amendment No. 44 not moved.]
    Lord Bach Lord Bach moved Amendments Nos. 45 to 47:

    Page 198, line 22, leave out ("not less") and insert ("more").

    Page 199, line 20, leave out ("not less") and insert ("more").

    Page 199, line 23, leave out ("not less") and insert ("more").

    Schedule 16 [Control of donations to candidates: New Schedule 2A to the Representation of the People Act 1983]:
    Lord Bach Lord Bach moved Amendment No. 48:
    Page 202, line 50, leave out ("less") and insert ("not more").
    Schedule 19 [Control of political donations by companies: new Part XA of Companies Act 1985]:
    Lord Bach Lord Bach moved Amendment No. 49:
    Page 218, line 44, at end insert—

    ("(8) For the purposes of this Part—

    (a) a company does not need to be authorised as mentioned in section 347C(1) or section 347D(2) or (3), and

    (b) a subsidiary undertaking does not need to be authorised as mentioned in section 347E(2),

    in connection with any EU political expenditure in relation to which an exemption is conferred on the company or (as the case may be) subsidiary undertaking by virtue of an order made by the Secretary of State by statutory instrument.

    (9) The restrictions imposed by sections 347C(1), 347D(2) and (3) and 347E(2) accordingly have effect subject to subsection (8); and, where a resolution is passed for the purposes of any of those provisions, any amount of EU political expenditure in relation to which, by virtue of subsection (8), no authorisation is needed shall accordingly not count towards the sum specified in the resolution.

    (10) An order under subsection (8) may confer an exemption for the purposes of that subsection in relation to—

    (a) companies or subsidiary undertakings of any description or category specified in the order, or

    (b) expenditure of any description or category so specified (whether framed by reference to goods, services or other matters in respect of which such expenditure is incurred or otherwise),

    or both

    (11) An order shall not be made under subsection (8) unless a draft of the statutory instrument containing the order has been laid before and approved by each House of Parliament.").

    The noble Lord said: My Lords, on Report the House was told that it was the Government's intention to table an amendment for debate at Third Reading to provide that the definition of "political expenditure" would not apply to business activities such as journalism. The definition of "EU political expenditure", as amended at Report, covers any expenditure incurred by companies in respect of activities which could reasonably be regarded as intended to affect public support for a political party or organisation or to influence voters in a referendum. The definition has been widely drawn to ensure that it
    1186
    cannot easily be evaded. We believe, for example, that companies should be required toseek shareholder authorisation for political expenditure in relation to a national or regional referendum.
    As was mentioned on Report, the Government are conscious that some companies carry on business activities which may, by their very nature, involve the publication or dissemination of material which seeks to influence the views of members of the public. Journalism is an obvious example. It is not our intention that carrying on activities such as the publication of newspapers should be considered as incurring "political expenditure" and we wish to exclude such activities from the definition of political expenditure under Part IX of the Bill. We believe, however, that it would be unwise to risk the rigidity which would result from putting such an exemption in primary legislation at a time when the modes of delivery of news and comment are developing and changing fast, and that it is important to maintain a level playing field for all the relevant forms of media. The amendment would therefore confer a power on the Secretary of State by order made by statutory instrument enabling him to exempt certain categories of company or expenditure from the requirements for the obtaining of approval resolutions in relation to the incurring of political expenditure. The order-making power would be subject to affirmative resolution in both Houses.
    I should like to emphasise that the power does not extend to donations to political parties and organisations. Companies which may enjoy the benefits of the exemption will therefore remain subject to control in respect of donations. I beg to move.
    7.50 p.m.
    Lord Bassam of Brighton: My Lords, I beg to move that the Bill do now pass. In doing so, I shall say a few words, mostly of thanks and congratulation.
    I thank the noble Lord, Lord Mackay of Ardbrecknish, for the constructive part he has played in this legislation. As I understand it, this is his swansong—and a very fine one it is too. He has been witty and amusing, and even more amusing and even more witty in equal measure. He has kept the House greatly entertained through one of the most complex pieces of legislation that I have ever had the pleasure of being a party to. We have gone from zero to total regulation of political parties in one Bill, and the noble Lord, Lord Mackay, mastered the points of opposition to it very well indeed.
    I should also like to pay tribute to the noble Lords, Lord Rennard, Lord McNally and Lord Goodhart, for the roles that they have played. I thank my noble friend Lady Gould for her promptings and encouragement, and for her interest in a complicated Bill which has lasted an inordinately long time. The noble Viscount, Lord Astor, ably played his role in support of the noble Lord, Lord Mackay.
    The Bill will bring a sea change to the regulation of political parties in our country. It will go a long way to cleaning up the political party act. It brings in the

    1187
    thoroughly new and welcome innovation of the electoral commission—a big change which will improve the quality and the culture of party political work. It will help political parties in the future and go a long way towards restoring the credibility of many of our political institutions.
    I shall not detain your Lordships' House further. The Bill has been with us for many months and we have had many long debates, as the noble Lord, Lord Mackay, wittily reminded us at an earlier stage of our deliberations. I am grateful for the support and encouragement I have had, particularly from the noble Lord, Lord Bach, who has been unstinting in his efforts. As ever, his promptings have been very helpful. The officials have played their parts, as has, latterly, the noble Lord, Lord Davies. I would be remiss if I did not mention the noble Lord, Lord Cope of Berkeley, who, on one occasion, stood in famously for the noble Lord, Lord Mackay, to assist the Opposition Front Bench.
    I have enjoyed the Bill. It will make a great difference to our politics. For all of those reasons, I wish it well. I commend the Bill to the House.
    Moved, That the Bill do now pass.—(Lord Bassam of Brighton.)
    Lord McNally: My Lords, it is customary at golf championships to allow the last putt to go to the retiring champion and it is with a real sense of sadness that I say farewell to the noble Lord, Lord Mackay. I make only one point from which others may care to draw conclusions. Since being in the House, I have had two sparring partners. One is now the Attorney-General. The other, the noble Lord, Lord Mackay, goes on to manage Scotland or whatever is his preferment; I have not yet had an opportunity to consult the House Magazine. He will be sadly missed by the Conservative Front Bench.
    I am extremely grateful for the support that I have received— 100 per cent from my noble friend Lord Rennard and 85 per cent from my noble friend Lord Goodhart. On these Benches we are grateful for both the stamina shown by the noble Lord, Lord Bassam of Brighton, during the passage of a Bill of great length and complexity, and for the help that he has been given by the noble Lord, Lord Bach. Again, he has been rewarded by promotion during the passage of the Bill. I tell you fellows: stick around me and it works.
    A final point worth making is that the Bill was in part a response to accusations of sleaze in our political system. However, on whichever side of the House we sit and whatever parties we represent, we know that— whatever misdemeanours have gone before—our political system is carried forward by thousands and thousands of individual volunteers who carry out their work with absolute probity and dedication. My one concern in seeing the Bill go forward is that in some of its detail we may have imposed severe burdens on people at constituency level whose whole commitment to politics has been blameless and exemplary. I hope and trust that they will be able to deal with those rigours.
    1188
    We wish the Bill well—as we do the noble Lord, Lord Mackay, in whatever new personality he comes before us.
    Lord Mackay of Ardbrecknish: My Lords, it is a bit like listening to your own obituary but, none the less, I am grateful to noble Lords for what they have said. I wish to thank my noble friend Lord Astor and my noble friend Lord Northesk, who acted as Whip and kept me on the right lines. I also wish to thank my noble friend Lord Cope, who stood in for me on a day when I had to go to Scotland on a sad mission. I shall almost bundle in that I am grateful to the noble Lord, Lord Goodhart, for not taking a vow of silence and for giving us many words of wisdom on what the Neill committee thought.
    The Bill contains major issues which were by and large agreed. But it has taken a long time to get to the stage of Bill do now pass. The reason for that has been the detail in the Bill and the fact that a lot of the devil was in the detail. Like the noble Lord, Lord McNally, my regret is that I think we have imposed too many regulations on the constituency parties which are the very bedrock of our democracy and which consist largely of volunteers. I hope that I am wrong about that, but I fear that I am not. I appreciate that the Government have accepted a great many amendments or have taken on board several points that were made and then returned with government amendments. We are all grateful for that.
    Noble Lords will see the amount of work that has been done on the Bill when they see the Commons consideration of amendments. I believe that that consideration will form about as large a document as the Bill is today. That is a tribute to the efforts of Members of your Lordships' House in struggling with the Bill, as well as a tribute to the Ministers who, after a little—it has to be said—initial teasing, have listened to the arguments and have addressed themselves to the reality of political activity on the ground.
    I shall not embarrass anyone on the Benches opposite by enrolling them into the general acknowledgements, but I believe that when the Labour Party machine came to read the Bill in detail, my arguments suddenly began to hit home.
    In conclusion, I am grateful to all noble Lords who have been kind in their thanks. I suspect that I shall miss this kind of debate and deliberation. However, I hope that, at least, this Bill will not prove to be so difficult for constituency parties that they decide to check up on who led the debates on it and allowed it to pass, so that I then join a rogue's gallery.
    On Question, Bill passed, and returned to the Commons with amendments.

Race Relations (Amendment) Bill [H.L.]
8 p.m.
Lord Bassam of Brighton: My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Lord Bassam of Brighton.)

Race Relations (Amendment) Bill [H.L.]
  COMMONS AMENDMENTS
  [The page and line numbers refer to Bill 60 as first printed for the Commons.]

  COMMONS AMENDMENT
  1 Clause 1, page I, line 9, leave out from ("a") to end of line 21 on page 2 and insert ("public authority in carrying out any functions of the authority to do any act which constitutes discrimination.
  (2) In this section "public authority"—

  (a) includes any person certain of whose functions are functions of a public nature; but

  (b) does not include any person mentioned in subsection (3).

  (3) The persons mentioned in this subsection are—

  (a) either House of Parliament;

  (b) a person exercising functions in connection with proceedings in Parliament;

  (c) the Security Service;

  (d) the Secret Intelligence Service;

  (e) the Government Communications Headquarters; and

  (f) any unit or part of a unit of any of the naval, military or air forces of the Crown which is for the time being required by the Secretary of State to assist the Government Communications Headquarters in carrying out its functions.

  (4) In relation to a particular act, a person is not a public authority by virtue only of subsection (2)(a) if the nature of the act is private.
  (5) This section is subject to sections 19BA to 19D.
  (6) Nothing in this section makes unlawful any act of discrimination which—

  (a) is made unlawful by virtue of any other provision of this Act; or

  (b) would be so made but for any provision made by or under this Act.

  COMMONS AMENDMENT

    Exceptions or further exceptions from section I9B for judicial and legislative acts etc.
    19BA.—(1) Section 19B does not apply to—

    (a) any judicial act (whether done by a court, tribunal or other person); or

    (b) any act done on the instructions, or on behalf, of a person acting in a judicial capacity.

    (2) Section 19B does not apply to any act of, or relating to, making, confirming or approving any enactment or Order in Council or any instrument made by a Minister of the Crown under an enactment.
    (3) Section 19B does not apply to any act of, or relating to, making or approving arrangements, or imposing requirements or conditions, of a kind falling within section 41.
    (4) Section 19B does not apply to any act of, or relating to, imposing a requirement, or giving an express authorisation, of a kind mentioned in section 19C(3) in relation to the carrying out of immigration and nationality functions.
    (5) In this section—

    "immigration and nationality functions" has the meaning given in section 19C; and

    "Minister of the Crown" includes the National Assembly for Wales and a member of the Scottish Executive.").

    Lord Bassam of Brighton: My Lords, I beg to move that the House do agree with the Commons in
    1190
    their Amendment No. 1. These amendments are consequential on discussions and deliberations held many months ago in your Lordships' House. I do not intend to take noble Lords through the meaning and significance of each individual amendment, except to say that on this occasion I am delighted with the amendments that have been considered by the Commons in their deliberations. They give effect to the agreements that were struck in your Lordships' House and they take forward considerably this important piece of legislation. They improve its quality and widen its remit. Furthermore, they give effect to many of the aspirations that have been expressed across the political divide for a modern, well-structured and well-organised body of legislation which will outlaw discrimination and tackle racism at its core.
    We could spend a long time going over the detail, but I do not think that our time would be well spent in that regard. However, I should like to pay tribute to all those noble Lords who have played their part in our earlier discussions on the Bill. I thank in particular my noble friend Lady Howells of St Davids and the noble Lord, Lord Dholakia, for his sterling work. In all fairness I should compliment the noble Lord, Lord Cope of Berkeley, on his role in helping us to improve the quality of the legislation. We achieved a high degree of unanimity on the moves that were necessary to improve the Bill. After all, it is the first piece of legislation in this area for well over 20 years and thus is long overdue.
    We all welcome the Bill and look forward to the practical implementation of its provisions. They should make a dramatic change to the way in which good race relations are practised in our country and they will help to tackle evils such as racist xenophobia and the violent and occasionally vicious racism that we see on our streets and in our communities.
    Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord Bassam of Brighton.)
    Lord Cope of Berkeley: My Lords, I welcome all the government amendments to the Bill, not only those in this grouping, but also the amendments in the later groupings. As the Minister has rightly pointed out, they follow substantially arguments deliberated during our debates at earlier stages of the Bill.
    Since we last saw the legislation, it has been completely rewritten. Some 21 pages of government amendments have been added to a Bill which is itself only 14 pages long. That indicates the scope of the rewrite. The Government have come to believe, I suggest substantially as a result of the debates held in your Lordships' House, that the instructions given to the draftsmen at the beginning of the Bill were mistaken. They have now been improved immensely.
    Lord Dholakia: My Lords, first, perhaps I may thank the Minister from this side of the House for his comments on the Bill. I should like to thank also the Official Opposition for their help in trying to get the

    1191
    Bill to this stage. As the Minister rightly pointed out, this is the first major piece of race relations legislation since 1976 and is thus greatly welcome.
    If we cast our minds back a little, we shall recall that a major recommendation of the Macpherson report was to look again at the provisions of the Bill which gave immunity to certain agencies in this country. With the co-operation of all sides in this House, I am delighted to say that we have been able to introduce the clause on indirect discrimination, which is to apply literally to all those bodies that had earlier been excluded. We wish the Bill every success and hope that it will foster confidence in the minorities for whom this legislation is so important.
    On Question, Motion agreed to.

  COMMONS AMENDMENTS
  2 Clause 1, page 2, line 45, after ("1999") insert ("but excluding sections 28A to 28K of the Immigration Act 1971 so far as they relate to offences under Part III of that Act").
  3 Page 3, line 10, at end insert—

  COMMONS AMENDMENTS

    Monitoring of exception in relation to immigration and nationality cases.
    19CC.—(1) The Secretary of State shall appoint a person who is not a member of his staff to act as a monitor.
    (2) Before appointing any such person, the Secretary of State shall consult the Commission.
    (3) The person so appointed shall monitor, in such manner as the Secretary of State may determine—

    (a) the likely effect on the operation of the exception in section 19C of any relevant authorisation relating to the carrying out of immigration and nationality functions which has been given by a Minister of the Crown acting personally; and

    (b) the operation of that exception in relation to acts which have been done by a person acting in accordance with such an authorisation.

    (4) The monitor shall make an annual report on the discharge of his functions to the Secretary of State.
    (5) The Secretary of State shall lay a copy of any report made to him under subsection (4) before each House of Parliament.
    (6) The Secretary of State shall pay to the monitor such fees and allowances (if any) as he may determine.
    (7) In this section "immigration and nationality functions- and "relevant authorisation" have the meanings given to them in section 19C.").
    4 Page 3, leave out lines 11 to 14 and insert—

    Exceptions from section 19B for decisions not to prosecute etc.
    19D. Section 19B does not apply to—

    (a) a decision not to institute criminal proceedings and, where such a decision has been made, any act done for the purpose of enabling the decision whether to institute criminal proceedings to be made;

    (b) where criminal proceedings are not continued as a result of a decision not to continue them, the decision and, where such a decision has been made—

    (i) any act done for the purpose of enabling the decision whether to continue the proceedings to be made; and

    (ii) any act done for the purpose of securing that the proceedings are not continued.").

    5 Page 3, leave out lines 15 and 16.
    Lord Bassam of Brighton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 2 to 5.
    Moved, That the House do agree with the Commons in their Amendments Nos. 2 to 5.—(Lord Bassam of Brighton.)
    On Question, Motion agreed to.

  COMMONS AMENDMENT
  6 After Clause I insert the following new Clause—
  SPECIFIED AUTHORITIES: GENERAL STATUTORY DUTY
  (" .—(1) For section 71 of the 1976 Act (local authorities: general statutory duty) there is substituted—
  SPECIFIED AUTHORITIES: GENERAL STATUTORY DUTY

    Specified authorities: general statutory duty.
    71.—(1) Every body or other person specified in Schedule 1 A or of a description falling within that Schedule shall, in carrying out its functions, have due regard to the need—

    (a) to eliminate unlawful racial discrimination; and

    (b) to promote equality of opportunity and good relations between persons of different racial groups.

    (2) The Secretary of State may by order impose, on such persons falling within Schedule 1A as he considers appropriate, such duties as he considers appropriate for the purpose of ensuring the better performance by those persons of their duties under subsection (1).
    (3) An order under subsection (2)—

    (a) may be made in relation to a particular person falling within Schedule 1A, any description of persons falling within that Schedule or every person falling within that Schedule;

    (b) may make different provision for different purposes.

    (4) Before making an order under subsection (2), the Secretary of State shall consult the Commission.
    (5) The Secretary of State may by order amend Schedule 1A; but no such order may extend the application of this section unless the Secretary of State considers that the extension relates to a person who exercises functions of a public nature.
    (6) An order under subsection (2) or (5) may contain such incidental, supplementary or consequential provision as the Secretary of State considers appropriate (including provision amending or repealing provision made by or under this Act or any other enactment).
    (7) This section is subject to section 71A and 71B and is without prejudice to the obligation of any person to comply with any other provision of this Act.

    General statutory duty: special cases.
    71A.—(1) In relation to the carrying out of immigration and nationality functions (within the meaning of section 19C(1)), section 71(1)(b) has effect with the omission of the words "equality of opportunity and".
    (2) Where an entry in Schedule 1A is limited to a person in a particular capacity, section 71(1) does not apply to that person in any other capacity.
    (3) Where an entry in Schedule 1A is limited to particular functions of a person, section 71(1) does not apply to that person in relation to any other functions.

    General statutory duty: Scotland and Wales.
    71B.—(1) For the purposes of the Scotland Act 1998, subsections (2) to (4) of section 71 (and sections 71(6) and 74 so far as they apply to the power conferred by subsection (2) of section 71) shall be taken to be pre-commencement enactments within the meaning of that Act.
    (2) Before making an order under section 71(2) in relation to functions exercisable in relation to Wales by a person who is not a Welsh public authority, the Secretary of State shall consult the National Assembly for Wales.
    (3) The Secretary of State shall not make an order under section 71(2) in relation to functions of a Welsh public authority except with the consent of the National Assembly for Wales.
    (4) In this section "Welsh public authority" means any person whose functions are exercisable only in relation to Wales and includes the National Assembly for Wales.

    General statutory duty: codes of practice.
    71C.—(1) The Commission may issue codes of practice containing such practical guidance as the Commission think fit in relation to the performance by persons of duties imposed on them by virtue of subsections (1) and (2) of section 71.
    (2) When the Commission propose to issue a code of practice under this section, they—

    (a) shall prepare and publish a draft of the code;

    (b) shall consider any representations made to them about the draft; and

    (c) may modify the draft accordingly.

    (3) In the course of preparing any draft code of practice under this section the Commission shall consult such organisations or bodies as appear to the Commission to be appropriate having regard to the content of the draft code.
    (4) If the Commission determine to proceed with a draft code of practice, they shall transmit the draft to the Secretary of State who shall consult the Scottish Ministers and the National Assembly for Wales.
    (5) After consulting the Scottish Ministers and the National Assembly for Wales, the Secretary of State shall—

    (a) if he approves of the draft code, lay it before both Houses of Parliament; and

    (b) if he does not approve of it, publish details of his reasons for withholding approval.

    (6) If, within the period of forty days beginning with the day on which a copy of a draft code of practice is laid before each House of Parliament, or, if such copies are laid on different days, with the later of the two days, either House so resolves, no further proceedings shall be taken on the draft code of practice, but without prejudice to the laying before Parliament of a new draft.
    (7) In reckoning the period of forty days referred to in subsection (6), no account shall be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than four days.
    (8) If no such resolution is passed as is referred to in subsection (6), the Commission shall issue the code in the form of the draft and the code shall come into effect on such day as the Secretary of State may, after consulting the Scottish Ministers and the National Assembly for Wales, by order appoint.
    (9) Without prejudice to section 74(3), an order under subsection (8) may contain such transitional provisions or savings as appear to the Secretary of State to be necessary or expedient in connection with the code of practice thereby brought into operation.
    (10) The Commission may revoke, or from time to time revise, the whole or any part of a code of practice issued under this section; and, where they revise the whole or any part of such a code, they shall issue the revised code, and subsections (2) to (9) shall apply (with appropriate modifications) to such a revised code as they apply to the first issue of a code.
    (11) A failure on the part of any person to observe any provision of a code of practice shall not of itself render that person liable to any proceedings; but any code of practice issued under
    1194
    this section shall be admissible in evidence in any legal proceedings, and if any provision of such a code appears to the court or tribunal concerned to be relevant to any question arising in the proceedings it shall be taken into account in determining that question.
    (12) Without prejudice to subsection (1), a code of practice issued under this section may include such practical guidance as the Commission think fit as to what steps it is reasonably practicable for persons to take for the purpose of preventing their staff from doing in the course of their duties acts made unlawful by this Act.

    General statutory duty: compliance notices.
    71D.—(1) If the Commission are satisfied that a person has failed to comply with, or is failing to comply with, any duty imposed by an order under section 71(2), the Commission may serve on that person a notice ("a compliance notice").
    (2) A compliance notice shall require the person concerned—

    (a) to comply with the duty concerned; and

    (b) to inform the Commission, within 28 days of the date on which the notice is served, of the steps that the person has taken, or is taking, to comply with the duty.

    (3) A compliance notice may also require the person concerned to furnish the Commission with such other written information as may be reasonably required by the notice in order to verify that the duty has been complied with.
    (4) The notice may specify—

    (a) the time (no later than three months from the date on which the notice is served) at which any information is to be furnished to the Commission,

    (b) the manner and form in which any such information is to be so furnished.

    (5) A compliance notice shall not require a person to furnish information which the person could not be compelled to furnish in evidence in civil proceedings before the High Court or the Court of Session.

    Enforcement of compliance notices.
    71E.—(1) The Commission may apply to a designated county court or, in Scotland, a sheriff court for an order requiring a person falling within Schedule 1A to furnish any information required by a compliance notice if—

    (a) the person fails to furnish the information to the Commission in accordance with the notice; or

    (b) the Commission have reasonable cause to believe that the person does not intend to furnish the information.

    (2) If the Commission consider that a person has not, within three months of the date on which a compliance notice was served on that person, complied with any requirement of the notice for that person to comply with a duty imposed by an order under section 71(2), the Commission may apply to a designated county court or, in Scotland, a sheriff court for an order requiring the person to comply with the requirement of the notice.
    (3) If the court is satisfied that the application is well-founded, it may grant the order in the terms applied for or in more limited terms.
    (4) The sanctions in section 71D and this section shall be the only sanctions for breach of any duty imposed by an order under section 71(2), but without prejudice to the enforcement under section 57 or otherwise of any other provision of this Act (where the breach is also a contravention of that provision)."
    (5) Schedule (Bodies and other persons subject to general statutory duty) (which inserts Schedule 1A into the 1976 Act) is to have effect.").
    Lord Bassam of Brighton: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 6.

  AS AN AMENDMENT TO COMMONS AMENDMENT No. 6
  6A Line 25, at end of inserted section 71(4) insert ("and the persons in respect of which the order is to be made").
  Lord Cope of Berkeley: My Lords, I beg to move, as an amendment to Commons Amendment No. 6, Amendment No. 6A. I should like to speak also to Amendment No. 6B.
  These amendments make two small suggestions to further improve the Bill. They concern the power of the Secretary of State to impose on the authorities to whom the Bill applies duties that he considers appropriate. The first amendment suggests that, before making an order, he should consult not only the commission—as is required under the terms of the Bill—but also the authority in respect of whom the order is to be made. That may be a government department, a local authority, a group of local authorities and so forth.
  The second amendment proposes that, when the Secretary of State lays down duties of this kind, which can be important and sweeping in their nature—the Home Office has already indicated as much when discussing how these powers are to be used—they should be made subject to the affirmative resolution procedure in Parliament rather than the negative procedure, which is currently provided for in the Bill.
  Moved, That Amendment No. 6A, as an amendment to Commons Amendment No. 6, be agreed to.—(Lord Cope of Berkeley.)
  Lord Dholakia: My Lords, the noble Lord, Lord Cope of Berkeley, makes an interesting suggestion. It would go some way towards satisfying this side of the House if the Minister would indicate whether the person affected by the order will be consulted and whether discussions will be held with that individual before an order is issued. We believe that it would be right for adequate consultation to take place with the person to whom it applies.
  It will also be important, as a prerequisite of the process, effectively to ensure, before an order is made, appropriate proportionate and adequate discussion, so that part of the process in terms of consultation would go a long way in terms of implementing the order when it is issued.
  Lord Bassam of Brighton: My Lords, I am grateful to the noble Lord, Lord Cope, for tabling the amendment.
  Amendment No. 6A to Commons Amendment No. 6 would require the Secretary of State, when considering making an order under subsection (2) of Section 71 to impose specific duties to promote race equality, to consult those persons to whom those specific duties would apply.
  Noble Lords will recall the commitment that I gave to this House on Report regarding the duty to promote race equality. I explained that the Government were
  1196
  already committed, in their equality statement of 30th November 1999, to placing the promotion of equality by public authorities on a statutory footing.
  I said that we would,
  "reinforce that commitment by bringing forward a government amendment … to enshrine the principle on the face of the Bill as a positive duty, leaving room for consultation on how exactly the duty will operate in practice and how it will be enforced"".— [Official Report, 27/1/00; col. 1673.]
  I emphasised the importance of these two issues to the Government.
  Given that commitment to the House, the noble Lord, Lord Cope, would expect me to be able to say that I see merit in his proposed amendment—and I do. It would require the Government to consult, as we have made clear we wish to do.
  However, given that that is the Government's clear intention and, in particular, the late stage at which we now find ourselves with the Bill, sadly, the Government cannot accept this amendment despite its merits. I hope that the House will accept the Government's firm assurances that we will proceed as we have always said we would, in public consultation. With that, I hope that the noble Lord, Lord Cope, will feel able to withdraw his amendment. We are with the noble Lord in the spirit of the amendment. Because we are at such a late stage with the Bill, we do not feel that we can take that extra step at this point, but we are fully committed to the consultation that the amendment anticipates.
  Lord Cope of Berkeley: My Lords, given what the Minister has said about the spirit of my Amendment No. 6A, I shall not press it further. I am not sure that I can take the silence in relation to Amendment No. 6B to indicate consent—perhaps not. I beg leave to withdraw the amendment.
  Amendment No. 6A, as an amendment to Commons Amendment No. 6, by leave, withdrawn.
  [Amendment No. 6B not moved.]

  COMMONS AMENDMENTS
  7 Clause 2, page 3, line 27, leave out ("or refused").
  8 Page 3, line 28 at end insert—
  ("(3A) Subsection (4) also applies to—

  (a) any recommendation made by a Minister of the Crown or government department in relation to a conferment by the Crown of a dignity or honour; and

  (b) any approval given by such a Minister or department in relation to any such conferment.").

  9Page 3, line 29, leave out from ("giving") to end of line 36 and insert ("the approval, and in making the arrangements for determining who should be recommended or approved, the Minister of the Crown or government department shall not do an act which would be unlawful under section 4 if the recommendation or approval were an offer of employment and the Crown were the employer for the purposes of this Act.

  (5) Subsections (3) to (4) do not apply in relation to the making of negative recommendations.

  1197
  (5A) Subsection (5C) applies to—

  (a) any negative recommendation made by a Minister of the Crown or government department, or any refusal to make a recommendation by such a Minister or department, in relation to an appointment to an office or post where section 4 does not apply in relation to the appointment, and

  (b) any approval refused by such a Minister or department in relation to any such appointment.

  (5B) Subsection (5C) also applies to—

  (a) any negative recommendation made by a Minister of the Crown or government department, or any refusal to make a recommendation by such a Minister or department, in relation to a conferment by the Crown of a dignity or honour; and

  (b) any approval refused by such a Minister or department in relation to any such conferment.

  (5C) In making a negative recommendation or in refusing to make a recommendation or give an approval, and in making the arrangements for determining whether to make such a recommendation or refusal, the Minister of the Crown or government department shall not do an act which would be unlawful under section 4 if the recommendation or refusal were a refusal to offer the person concerned employment and the Crown were the employer for the purposes of this Act.
  (5D) Subsection (5E) applies in relation to any appointment to an office or post where section 4 does not apply and—

  (a) the appointment is made by a Minister of the Crown or government department, or

  (b) the office or post is an office or post in relation to which a Minister of the Crown or government department has made a recommendation (other than a negative recommendation) or given an approval.

  (5E) A Minister of the Crown or government department shall not do an act in connection with—

  (a) the terms of the appointment;

  (b) access for the person appointed to opportunities for promotion, transfer or training, or to any other benefits, facilities or services; or

  (c) the termination of the appointment, or subjecting the person appointed to any other detriment;

  which would be unlawful under section 4 if the Crown were the employer for the purposes of this Act.").
  10 Page 3, line 39, after ("(4)") insert (", subsection (5C) or, in relation to an appointment falling within subsection (5D)(b), subsection (5E)").
  11 Page 3, line 43, at end insert—
  ("() The sanctions provided by virtue of the operation of section 53(2) to (4) in relation to this section shall be the only sanctions under this Act in relation to appointments, conferments and other acts to which this section applies.").
  12 Page 3, line 45, leave out from first ("to") to end of line 46 and insert ("refusal include references to deliberate omission;").
  13 Page 4, line 3, after ("and") insert ("any part of").
  14 Page 4, line 3, at end insert ("and
  () references to Ministers of the Crown and government departments so far as they relate to the making of a recommendation or a refusal to make a recommendation, or the giving or refusal of an approval, in relation to a conferment of a peerage for life under section 1 of the Life Peerages Act 1958 include references to any body established by a Minister of the Crown to make such a recommendation to the Prime Minister or to determine whether to give such an approval.").
  Lord Bassam of Brighton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 7 to 14.
  1198
  Moved, That the House do agree with the Commons in their Amendments Nos. 7 to 14.—(Lord Bassam of Brighton.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  15 Clause 3, page 5, line 30, after second ("officer") insert ("or other person").
  Lord Bassam of Brighton: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 15.
  Moved, That the House do agree with the Commons in their Amendment No. 15.—(Lord Bassam of Brighton.)
  On Question, Motion agreed to.

  COMMONS AMENDMENT
  16 Clause 4, page 6, line 15, leave out ("or").
  17 Page 6, line 20, after ("conduct;") insert ("or
  (c) any investigation which is conducted by a person in carrying out functions to which section 19B applies and which in the circumstances may lead to a decision by that person to make a report to the procurator fiscal for the purpose of enabling him to determine whether criminal proceedings should be instituted;").
  18 Page 6, leave out lines 26 to 45 and insert—

  ("(4C) Subsection (4D) applies where a party to proceedings under subsection (1) which have arisen by virtue of section 19B has applied for a stay or sist of those proceedings on the grounds of prejudice to—

  (a) particular criminal proceedings;

  (b) a criminal investigation; or

  (c) a decision to institute criminal proceedings.

  (4D) The court shall grant the stay or sist unless it is satisfied that the continuance of the proceedings under subsection (1) would not result in the prejudice alleged."").

  19 Page 7, line 8, at end insert ("or would reveal the reasons behind a decision not to institute, or a decision not to continue, criminal proceedings").
  20 Clause 5, page 7, leave out lines 16 to 29 and insert—
  (""(7) This section has effect subject to section 57A."
  () After section 57 of that Act there is inserted—

  COMMONS AMENDMENT

    Claims under section 19B in immigration cases.
    57A.—(1) No proceedings may be brought by a claimant under section 57(1) in respect of an immigration claim if—

    (a) the act to which the claim relates was done in the taking by an immigration authority of a relevant decision and the question whether that act was unlawful by virtue of section 19B has been or could be raised in proceedings on an appeal which is pending, or could be brought, under the 1997 Act or Part IV of the 1999 Act; or

    (b) it has been decided in relevant immigration proceedings that that act was not unlawful by virtue of that section.

    (2) For the purposes of this section an immigration claim is a claim that a person—

    (a) has committed a relevant act of discrimination against the claimant which is unlawful by virtue of section 19B; or

    (b) is by virtue of section 32 or 33 to be treated as having committed such an act of discrimination against the claimant.

    (3) Where it has been decided in relevant immigration proceedings that an Act to which an immigration claim relates was unlawful by virtue of section 19B, any court hearing that claim under section 57 shall treat that act as an act which is unlawful by virtue of section 19B for the purposes of the proceedings before it.
    (4) No relevant decision of an immigration authority involving an act to which an immigration claim relates and no relevant decision of an immigration appellate body in relation to such a decision shall be subject to challenge or otherwise affected by virtue of a decision of a court hearing the immigration claim under section 57.
    (5) In this section—

    "the Immigration Acts" has the same meaning as in the 1999 Act;

    "immigration appellate body" means an adjudicator appointed for the purposes of the 1999 Act, the Immigration Appeal Tribunal, the Special Immigration Appeals Commission, the Court of Appeal, the Court of Session or the House of Lords;

    "immigration authority" means an authority within the meaning of section 65 of the 1999 Act (human rights and racial discrimination cases);

    "immigration claim" has the meaning given by subsection (2) above;

    "pending" has the same meaning as in the 1997 Act or, as the case may be, Part IV of the 1999 Act;

    "relevant act of discrimination" means an act of discrimination done by an immigration authority in taking any relevant decision;

    "relevant decision" means—

    (a) in relation to an immigration authority, any decision under the Immigration Acts relating to the entitlement of the claimant to enter or remain in the United Kingdom; and

    (b) in relation to an immigration appellate body, any decision on an appeal under the 1997 Act or Part IV of the 1999 Act in relation to a decision falling within paragraph (a);

    "relevant immigration proceedings" means proceedings on an appeal under the 1997 Act or Part IV of the 1999 Act;

    "the 1997 Act" means the Special Immigration Appeals Commission Act 1997;

    "the 1999 Act" means the Immigration and Asylum Act 1999.

    and, for the purposes of subsection (1)(a), any power to grant leave to appeal out of time shall be disregarded." ").
    Lord Bassam of Brighton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 16 to 20.
    Moved, That the House do agree with the Commons in their Amendments Nos. 16 to 20.—(Lord Bassam of Brighton.)
    On Question, Motion agreed to.

  COMMONS AMENDMENTS
  21 Clause 9, page 9,1ine 5, leave out ("Schedules 1") and insert ("Schedules (Bodies and other persons subject to general statutory duty)").
  22 Page 9, line 10, after ("such") insert ("transitory,").
  23 Page 9, line 11, at end insert—
  ("() Transitory provision made in exercise of the power conferred by subsection (3)(b) may, in particular, include provision made in consequence of any provision of any other Act passed before, or in the same session as, this Act not having come into force.").
  24 Page 9, line 11, at end insert—
  ("() No amendment by this Act of an enactment shall be taken, for the purposes of the Scotland Act 1998, to be a pre-commencement enactment within the meaning of that Act unless the amendment so provides.").
  25 Page 9, line 12, leave out subsection (4) and insert—
  ("() Any amendment or repeal by this Act of an enactment has the same extent as the enactment amended or repealed.").
  26 Page 9, line 14, leave out subsection (5).
  Lord Bassam of Brighton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 21 to 26.
  Moved, That the House do agree with the Commons in their Amendments Nos. 21 to 26.—(Lord Bassam of Brighton.)
  On Question, Motion agreed to.

  COMMONS AMENDMENTS
  27 Schedule 1, page 10, line 2, leave out Schedule 1.
  28 After Schedule 1, insert the following new Schedule—

  SCHEDULE BODIES AND OTHER PERSONS SUBJECT TO GENERAL STATUTORY DUTY
  The following Schedule is inserted into the 1976 Act after Schedule 1—
  SCHEDULE 1A BODIES AND OTHER PERSONS SUBJECT TO GENERAL STATUTORY DUTY

    Ministers of the Crown and government departments
    1.—(1) A Minister of the Crown or government department.
    (2) Sub-paragraph (1) does not include the Security Service, the Intelligence Service or the Government Communications Headquarters.

    Scottish Administration
    2.—(1) An office-holder in the Scottish Administration within the meaning given by section 126(7)(a) of the Scotland Act 1998.
    (2) Members of the staff of the Scottish Administration within the meaning given by section 126(7)(b) of that Act.

    National Assembly for Wales
    3.—(1) The National Assembly for Wales.
    (2) An Assembly subsidiary as defined by section 99(4) of the Government of Wales Act 1998.

    Armed forces
    4. Any of the naval, military or air forces of the Crown.

    National Health Service: England and Wales
    5. A Health Authority established under section 8 of the National Health Service Act 1977.
    6. A special health authority established under section 11 of that Act.
    7. A primary care trust established under section 16A of that Act.
    8. A National Health Service trust established under section 5 of the National Health Service and Community Care Act 1990.

    National Health Service: Scotland
    9. A Health Board constituted under section 2 of the National Health Service (Scotland) Act 1978.
    10. A Special Health Board constituted under section 2 of that Act.
    11. A National Health Service Trust established under section 12A of that Act.

    Local government
    12. A local authority within the meaning of the Local Government Act 1972, namely—

    (a) in England, a county council, a London borough council, a district council or a parish council;

    (b) in Wales, a county council, a county borough council or a community council.

    13. A council constituted under section 2 of the Local Government etc. (Scotland) Act 1994.
    14. A community council established under section 51 of the Local Government (Scotland) Act 1973.
    15. The Greater London Authority.
    16. The Common Council of the City of London in its capacity as a local authority or port health authority.
    17. The Sub-Treasurer of the Inner Temple or the Under-Treasurer of the Middle Temple, in his capacity as a local authority.
    18. The Council of the Isles of Scilly.
    19. A parish meeting constituted under section 13 of the Local Government Act 1972.
    20. Any charter trustees constituted under section 246 of that Act.
    21. A fire authority constituted by a combination scheme under section 5 or 6 of the Fire Services Act 1947.
    22. A waste disposal authority established by virtue of an order under section 10(1) of the Local Government Act 1985.
    23. A water or sewerage authority constituted under section 62 of the Local Government etc. (Scotland) Act 1994.
    24. A port health authority constituted by an order under section 2 of the Public Health (Control of Disease) Act 1984.
    25. A licensing planning committee constituted under section 119 of the Licensing Act 1964.
    26. A licensing board constituted under section 1 of the Licensing (Scotland) Act 1976.
    27. An internal drainage board which is continued in being by virtue of section 1 of the Land Drainage Act 1991.
    28. A probation committee constituted under section 3 of the Probation Service Act 1993.
    29. A joint authority established under Part IV of the Local Government Act 1985 (fire services, civil defence and transport).
    30. A joint board within the meaning of section 235(1) of the Local Government (Scotland) Act 1973.
    31. The London Fire and Emergency Planning Authority.
    32. A body corporate established pursuant to an order under section 67 of the Local Government Act 1985 (transfer of functions to successors of residuary bodies, etc.).
    33. A body corporate established pursuant to an order under section 22 of the Local Government Act 1992 (residuary bodies).
    34. The Broads Authority established by section 1 of the Norfolk and Suffolk Broads Act 1988.
    35. A joint committee constituted in accordance with section 102(1)(b) of the Local Government Act 1972.
    36. A joint board which is continued in being by virtue of section 263(l) of that Act.
    37. A joint authority established under section 21 of the Local Government Act 1992.
    38. A Passenger Transport Executive for a passenger transport area within the meaning of Part II of the Transport Act 1968.
    39. Transport for London.
    40. The London Development Agency.
    41. A regional development agency established under the Regional Development Agencies Act 1998 (other than the London Development Agency).
    42. Scottish Enterprise and Highland and Islands Enterprise, established under the Enterprise and New Towns (Scotland) Act 1990.
    43. A National Park authority established by an order under section 63 of the Environment Act 1995.
    44. A joint planning board constituted for an area in Wales outside a National Park by an order under section 2(1B) of the Town and Country Planning Act 1990.
    45. A magistrates' courts committee established under section 27 of the Justices of the Peace Act 1997.

    Other educational bodies
    46. Governing bodies of—

    (a) educational establishments maintained by local education authorities;

    (b) institutions within the further education sector (within the meaning of section 91(3) of the Further and Higher Education Act 1992); or

    (c) institutions within the higher education sector (within the meaning of section 91(5) of the Act of 1992).

    47. The managers of a grant-aided school (within the meaning of section 135 of the Education (Scotland) Act 1980).
    48. The managers of a central institution (within the meaning of section 135 of the Act of 1980).
    49. The board of management of a self-governing school (within the meaning of the Self-Governing Schools etc. (Scotland) Act 1989).
    50. The board of management of a college of further education (within the meaning of section 36(1) of the Further and Higher Education (Scotland) Act 1992).
    51. The governing body of an institution within the higher education sector (within the meaning of Part II of the Further and Higher Education (Scotland) Act 1992).

    Other housing bodies
    52. The Housing Corporation.
    53. Scottish Homes.
    54. A housing action trust established under Part III of the Housing Act 1988.

    Police
    55. A police authority established under section 3 of the Police Act 1996.
    56. A police authority established under section 2 of the Police (Scotland) Act 1967.
    57. The Metropolitan Police Authority established under section 5B of the Police Act 1996.
    58. The Common Council of the City of London in its capacity as a police authority.
    59. The Service Authority for the National Criminal Intelligence Service.
    60. The Service Authority for the National Crime Squad." ").
    29 Schedule 2, page 13, line 3, at end insert—
    (". In section 17 of the 1976 Act (prohibition on discrimination by certain education bodies), in the Table—

    (a) in paragraph 7 for "73(c) or (d)" there is substituted "73(d)"; and

    (b) after paragraph 7 there is inserted—

    "7AA. A grant-aided school, within the meaning of section 135 of the Education (Scotland) Act 1980.

    The managers of the school."

    30 Page 13, line 3, at end insert—
    (". In section 27(1) of the 1976 Act (extent of Part III) for "19" there is substituted "18D".").31
    31 Page 13, line 4, leave out ("the 1976 Act (extent of Part III)") and insert ("that Act").
    32 Page 13, line 10, leave out ("section 65") and insert ("the Special Immigration Appeals Commission Act 1997 or Part IV").
    33 Page 13, line 15, after ("76(4)") insert ("or (5C) or by virtue of section 76(5D)(b) and (5E)").
    34 Page 13, line 15, at end insert—
    (". In section 57(5) of that Act (claims under Part III in relation to certain educational bodies)—

    (a) for the words "section 19(1)" there is substituted "subsection (5A)"; and

    (b) the words from "and" to the end of the subsection are omitted.

    . After section 57(5) of that Act there is inserted—
    "(5A) This subsection applies to—

    (a) local education authorities in England and Wales;

    (b) education authorities in Scotland; and

    (c) any body which is a responsible body in relation to an establishment falling within paragraph 3, 3B or 7B of the table in section 17." ").

    35 Page 13, line 15, at end insert—
    (". In section 59(1)(b) of that Act (appeal against non-discrimination notice) after "the court" there is inserted "(ignoring section 57A)".").
    36 Page 13, line 15, at end insert—
    (". In section 62(1) of that Act (persistent discrimination) after "or" at the end of paragraph (b) there is inserted—
    "(ba) a finding under the Special Immigration Appeals Commission Act 1997 or Part IV of the Immigration and Asylum Act 1999 that he has done an act which was unlawful by virtue of section 19B; or"").

    37 Page 13, line 15, at end insert—
    (". After section 65(6) of that Act (help for aggrieved persons in obtaining information etc.), there is added—
    "(7) This section does not apply in relation to any proceedings under—

    (a) the Special Immigration Appeals Commission Act 1997; or

    (b) Part IV of the Immigration and Asylum Act 1999." ").

    38 Page 13, line 15, at end insert—
    (". After section 66(7) of that Act (assistance by Commission) there is added—

    "(8) This section (except for subsection (4)) applies to proceedings or prospective proceedings under the Special Immigration Appeals Commission Act 1997 or Part IV of the Immigration and Asylum Act 1999 so far as they relate to acts which may be unlawful by virtue of section 19B as it applies to proceedings or prospective proceedings under this Act.

    (9) In this section as it applies by virtue of subsection (8) "rules and regulations" means—

    (a) in relation to proceedings under the Act of 1997, rules under section 5 or 8 of that Act;

    (b) in relation to proceedings under Part IV of the Act of 1999, rules under paragraph 3 or 4 of Schedule 4 to that Act.".").

    39 Page 13, line 15, at end insert—
    (". After section 67(3) of that Act (extension of jurisdiction of county courts and sheriff courts) there is inserted—
    "(3A) A designated county court or a sheriff court shall have jurisdiction to entertain proceedings under this Act with respect to an act done outside the United Kingdom where section 19B applies in relation to such an act by virtue of section 27(1A)." ").
    40 Page 13, line 15, at end insert—
    (". In section 68(2) of that Act (period within which proceedings to be brought), at the beginning there is inserted "Subject to subsection (2A)".
    . After section 68(2) of that Act, there is inserted—
    "(2A) In relation to an immigration claim within the meaning of section 57A, the period of six months mentioned in subsection (2)(a) begins on the expiry of the period during which, by virtue of section 57A(1)(a), no proceedings may be brought under section 57(1) in respect of the claim."").
    41 Page 13, line 15, at end insert—
    (". In section 69(2) of that Act (evidence), after "Act" there is inserted "or any enactment mentioned in section 19C(5)".").
    42 Page 13, line 18, leave out ("75(1)") and insert ("75(2)").
    43 Page 13, leave out lines 19 to 21 and insert—
    (""(2A) Subsections (1) and (2) do not apply in relation to the provisions mentioned in subsection (2B).
    (2B) Sections 19B to 19D, sections 71 to 71E (including Schedule 1A) and section 76 bind the Crown; and the other provisions of this Act so far as they relate to those provisions shall be construed accordingly (including, in particular, references to employment in Part IV).".").
    44 Page 13, line 22, after ("Act") insert ("—

    (a) for "and (2)" there is substituted "to (2B)"; and

    (b)").

    45 Page 13, line 28, at end insert—

    ("() proceedings on dealing summarily with a charge under the Army Act 1955 or the Air Force Act 1955 or on summary trial under the Naval Discipline Act 1957;

    ()proceedings before a summary appeal court constituted under any of those Acts;").

    46 Page 13, line 29, leave out from ("under") to ("or") in line 31 and insert ("any of those Acts").
    47 Page 13, line 34, at end insert—

    Local Government Act 1988 (c.9)
    . In section 18(1) of the Local Government Act 1988 (race relations matters)—

    (a) for the words from "71" to "regard to" there is substituted "71(1) of the Race Relations Act 1976 and any duty imposed by an order under section 71(2) of that Act (duties relating to the"; and

    (b) for "local authority" there is substituted "public authority to which section 17 above applies".

    . In section 18(2) of that Act—

    (a) for "local authority" there is substituted "public authority to which that section applies"; and

    (b) for "71" there is substituted "71(1) or any duty imposed by an order under the said section 71(2)".

    . Section 18(7A) of that Act is omitted.").
    48 Page 13, line 34, at end insert—

    Special Immigration Appeals Commission Act 1997 (c.68)
    . In section 2A(1) of the Special Immigration Appeals Commission Act 1997 (jurisdiction: human rights), after "appealable decision," there is inserted "racially discriminated against him or".
    . In section 2A(2) of that Act, after "this section," there is inserted "—

    (a) an authority racially discriminates against a person if he acts, or fails to act, in relation to that other person in a way which is unlawful by virtue of section 19B of the Race Relations Act 1976; and

    (b)".

    . In section 2A(3) of that Act, after "the proceedings," there is inserted "racially discriminated against the appellant or".
    . In section 2A(5) of that Act—
    (a) after "concerned" there is inserted "—

    "(a) racially discriminated against the appellant; or

    (b)"; and

    (b) for "that ground" there is substituted "the ground in question".
    . In the side note to section 2A of that Act, after "Jurisdiction:" there is inserted "racial discrimination and".").
    49 Page 13, line 34, at end insert—
    (". In section 5 of that Act (procedure in relation to jurisdiction under section 2 of that Act etc.)—

    (a) in subsection (1)(a) after "2" there is inserted "or 2A";

    (b) in subsection (1)(b) for "that section" there is substituted "section 2 or 2A above"; and

    (c) in subsection (2) after "2" there is inserted "or 2A".").

    50 Page 13, line 34, at end insert—
    (". In Schedule 2 to that Act (appeals: supplementary)—

    (a) in paragraph 4 after "2" there is inserted "or 2A"; and

    (b) in paragraphs 6 and 7 after "2" there is inserted "and2A".").

    51 Page 13, line 34, at end insert—

    School Standards and Framework Act 1998 (c.31)
    . In paragraph 8(b) of Schedule 4 to the School Standards and Framework Act 1998 (school organisation committees to have regard to certain obligations owed by local education authorities and governing bodies under the Race Relations Act 1976) after "Part III" there shall be inserted "or section 71".
    . In paragraph 6(b) of Schedule 5 to the Act of 1998 (adjudicators to have regard to certain obligations owed by local education authorities and governing bodies under the Race Relations Act 1976) after "Part III" there shall be inserted "or section 71".").
    52 Page 13, line 38, leave out ("him") and insert ("the appellant").
    53 Page 13, line 45, at end insert—
    (". In section 72(2)(a) of that Act (miscellaneous limitations on rights of appeal), after "rights" there is inserted "or racially discriminated against him".").
    54 Page 13, line 45, at end insert—
    (". In section 73(2) of that Act (limitation on further appeals), after "a claim that" there is inserted "in taking a decision, a decision-maker racially discriminated against the appellant or that".
    . In section 74(7) of that Act (duty to disclose grounds for appeal etc.), after paragraph (a) there is inserted—
    "(aa) if he claims that he was racially discriminated against, include notice of that claim;".
    . In section 76(3)(a) of that Act (result of failure to give statement of additional grounds for appeal), for "breached the applicant's" there is substituted "racially discriminated against the applicant or breached his".").
    55 Page 13, line 45, at end insert—
    (". In Schedule 4 to that Act (appeals), in paragraph 9(2) for the words "that the claim is one to which this paragraph applies" there is substituted "with the opinion expressed in the Secretary of State's certificate".
    . In that Schedule to that Act, after paragraph 9 there is inserted—

    Racial discrimination
    9A.—(1) This paragraph applies to an appeal under Part IV of this Act by a person who claims that he has been racially discriminated against, if the Secretary of State has certified that, in his opinion, the claim is manifestly unfounded.
    (2) If, on an appeal to which this paragraph applies, the adjudicator agrees with the opinion expressed in the Secretary of State's certificate, paragraph 22 does not confer on the appellant any right to appeal to the Immigration Appeal Tribunal." ").

    56 Schedule 3, page 14, line 4, column 3, at end insert—

    ("Section 19. Section 19ZA.

    In section 57(5), the words from "and" to the end of the subsection Section 58(6).

    In section 68, subsection (2)(b) and the word "or" immediately preceding it and, in subsection (3), the words "or, as the case may be, eight" and "or (b)".")

    57 Page 14, line 8, at end insert—

    ("1980 c. 44.

    Education (Scotland) Act 1980.

    In Schedule 4, paragraph 14.")

    58 Page 14, line 8, at end insert—

    ("1985 c. 51.

    Local Government Act 1985.

    In Schedule 13, paragraph 13(h).

    In Schedule 14, paragraph 54.

    1985 c. 69.

    Housing Associations Act 1985.

    Section 75(5).

    1988 c. 4.

    Norfolk and Suffolk Broads Act 1988.

    In Schedule 6, paragraph 16.

    1988 c. 9.

    Local Government Act 1988.

    Section 18(7 A).

    1988 c. 40.

    Education Reform Act 1988.

    In Schedule 12, paragraphs 19 and 79.

    1988 c. 43.

    Housing (Scotland) Act 1988.

    Section 2(11).

    1988 c. 50.

    Housing Act 1988.

    Sections 56 and 63(5).

    1989 c. 39.

    Self-Governing Schools etc. (Scotland) Act 1989.

    In Schedule 10, paragraph 6(3).

    1992 c. 13.

    Further and Higher Education Act 1992.

    In Schedule 8, paragraph 88.

    1992 c. 37.

    Further and Higher Education (Scotland) Act 1992.

    In Schedule 9, paragraph 5(4).

    1994 c. 19.

    Local Government (Wales) Act 1994.

    In Schedule 13, paragraph 20(g).

    1994 c. 29.

    Police and Magistrates' Courts Act 1994.

    In Schedule 4, paragraph 51.

    1994 c. 30.

    Education Act 1994.

    In Schedule 2, paragraph 6(4).

    1994 c. 39.

    Local Government etc. (Scotland) Act 1994.

    In Schedule 13, paragraph 108.

    1995 c. 25.

    Environment Act 1995.

    In Schedule 8, paragraph 8(4).

    In Schedule 10, paragraph 15(2).")

    59 Page 14, line 9, column 3, leave out ("paragraph") and insert ("paragraphs 1(2)(1) and").

    60 Page 14, line 9, at end insert—

    ("1996 c. 56.

    Education Act 1996.

    In Schedule 37, paragraph 42 and, in paragraph 117(4), paragraph (b) and the word "and" immediately preceding it.")

    61 Page 14, line 10, column 3, leave out ("paragraph 35") and insert ("paragraphs 35 and 36").62

    62 Page 14, line 10, at end insert—

    ("1998 c. 38.

    Government of Wales Act 1998.

    In Schedule 16, paragraph 30.")

    63 Page 14, line 12, column 3, at end insert—

    ("1999 c. 29.

    Greater London Authority Act 1999.

    Section 391.")

    64 Page 14, line 12, column 3, at end insert—

    ("2000 c. 21.

    Learning and Skills Act 2000.

    In Schedule 9, paragraph 10.")

    Lord Bassam of Brighton: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 27 to 64.
    Moved, That the House do agree with the Commons in their Amendments Nos. 27 to 64.—(Lord Bassam of Brighton.)
    On Question, Motion agreed to.

Transport Bill
8.16 p.m.
The Minister of State, Department of the Environment, Transport and the Regions (Lord Macdonald of Tradeston): My Lords, I beg to move that the Commons reasons for disagreeing to the Lords amendments be now considered.
Moved, That the Commons reasons be now considered.—(Lord Macdonald of Tradeston.)
On Question, Motion agreed to.

Transport Bill
  COMMONS REASONS FOR DISAGREEING TO CERTAIN LORDS AMENDMENTS
  [The page and line refer to HL Bill 64 as first printed for the Lords.]

  LORDS AMENDMENT
  27 Clause 40, page 27, line 5, at end insert
  ("() No direction to make a transfer scheme shall be given under subsection (1) before the first Session of the next Parliament after that in which this Act is passed.")
  The Commons disagreed to this amendment for the following reason—
  27A Because the effect of the amendment would be to delay unjustifiably the setting up of a public-private partnership in respect of air traffic services.

  LORDS AMENDMENT
  28 Clause 41, page 27, line 25, at end insert
  ("() No approval of a transfer scheme shall be made under subsection (2) before the first Session of the next Parliament after that in which this Act is passed.")
  The Commons disagreed to this amendment for the following reason—
  28A Because the effect of the amendment would be to delay unjustifiably the setting up of a public-private partnership in respect of air traffic services.

  LORDS AMENDMENT
  Clause 42, page 27, line 38, at end insert
  29 ("() No transfer scheme shall be made under subsection (2) before the first Session of the next Parliament after that in which this Act is passed.")
  The Commons disagreed to this amendment for the following reason—
  29A Because the effect of the amendment would be to delay unjustifiably the setting up of a public-private partnership in respect of air traffic services.
  Lord Macdonald of Tradeston: My Lords, I beg to move that the House do not insist on their Amendments Nos. 27, 28 and 29 to which the Commons have disagreed for their reasons numbered 27A, 28A and 29A.
  These amendments relate to the deferral of the introduction of the NATS public-private partnership. When the amendments were moved in this House I argued strongly against them, and I am gratified that the Commons endorsed the Government's view.
  The purpose of these three amendments is to ensure that no transfer schemes are made or approved before the first Session of the Parliament following that in which this Bill receives Royal Assent.
  Transfer schemes involve the transfer of assets, rights and liabilities to relevant parties in readiness for the NATS public-private partnership. The partnership cannot be set up until these transfers have been effected. The amendments therefore have the effect of delaying the public-private partnership until the next Parliament—in other words, until after the next general election. They would also have the effect of preventing the separation of the operation of air traffic

  1209
  services from their regulation. That is completely at variance with the views of this House, and with those held in another place. The separation of operations from regulation is a key instrument of progress that will enhance the safety regime for air navigation services. It would be very counter-productive to delay that key objective for the sake of political manoeuvring.
  I am sure that it will come as no surprise to noble Lords that the Government do not think that this delaying tactic is acceptable. We do not see the need for any further delay in proceeding with the establishment of the PPP. Our proposals have been given ample publicity. Indeed, before the last election the Prime Minister said in his message to the nation in the 1997 party manifesto:
  "We will search out at every turn new ways and new ideas to tackle the new issues … how to put the public and private sector together in partnership to give us the infrastructure and transport system we need".
  In February 1997, Mrs Margaret Beckett said that NATS was not ruled out as a candidate for the public-private partnership. In April 1997, just before the general election, the Chancellor said that he would consider partial privatisation of NATS, and the Prime Minister confirmed, during the course of a very public pre-election debate, that he would not rule out its sale. That was followed by a public consultation on our White Paper after we had announced the proposal for the partial sale of NATS in June 1998. A Statement was made following that consultation and there has also been a Select Committee inquiry. Therefore, there has been ample time for public scrutiny of the policy, and of its detail.
  In addition, it has, of course, been necessary to introduce legislation to enable the partial sale of NATS to take place. There have been thorough debates on this Bill's provisions, both in this House and in another place. This in itself has enabled the Government's proposals to be subject to detailed scrutiny. The Government have listened to representations made to them, both in this House and in another place, and introduced amendments, where appropriate, to meet the concerns expressed. Most recently, we moved amendments on Report to make safety the number one priority under Part I of the Bill, which were warmly welcomed by all three main parties in your Lordships' House.
  We have also introduced amendments that reaffirm the Government's commitment to the two-centre strategy, based on Swanwick and Prestwick in Scotland. We have also listened to concerns about pensions arrangements for NATS staff. The Government will explain more about that when we come to the debate on the pensions amendments.
  Moreover, the aviation industry is not largely opposed to the PPP, as some might have us believe. The airlines, through BATA, have expressed concern that a delay in the PPP will have the effect of delaying much needed investment in NATS. They are also satisfied that safety will not be jeopardised by the PPP—otherwise they, who bear primary responsibility for their passengers, would not be supporting the
  1210
  proposal. I am sure noble Lords will seriously consider the views of those airlines, which play such a crucial role in safety matters.
  I turn now to the main purposes of the PPP. The proposals that we set out for NATS have been carefully crafted to meet the needs of that company and the national interest. What we are setting up here is a well-balanced, genuine partnership between the public and private sector, so as to secure the best from both. It is not ideologically driven; it is simply the right thing to do. It will set up a new company, bringing in private sector financing for crucial safety systems, and project management expertise, to deliver those systems on time and to budget. But these elements will be added to the operational excellence that we see today in NATS. They will all sit in a company that will pay proper attention to the views and interests of all stakeholders through a stakeholder council—a company with government-appointed partnership directors, who will help to assure the delivery of a strategy for the future of the company which the Government will agree with the successful strategic partner when the PPP is put into place. The new NATS will be a company whose staff will have a significant stake in its effective operation through their shareholdings.
  There is also an urgent need for investment in NATS, and for the injection of new project management skills. Important investment decisions need to be made now in respect of major projects, and the ability of a strategic partner to make a meaningful contribution to these may be lost if the PPP is delayed. There have already been delays in introducing new technology at the Swanwick centre, and there is a pressing need for the contribution from the strategic partner, both at that centre and at the New Scottish Centre at Prestwick (the NSC).
  NATS has an excellent record on safety but would benefit from a strengthening of its capabilities in respect of the introduction of new technology. A delay in the introduction of the PPP, which these amendments would cause, could jeopardise the prospects for both Swanwick and Prestwick.
  Moreover, further delay and uncertainty will not be helpful to NATS or its staff. They have had to live with uncertainty for far too long. The previous administration started questioning the future of NATS some years ago, and announced their intention to privatise. We have tried to put a stop to this uncertainty by making an early announcement concerning the PPP. To add further delay at this stage would be unfair to NATS staff, and could jeopardise the urgent need to step up the recruitment of more air traffic controllers—
  Lord Clinton-Davis: My Lords, I hope that my noble friend will give way. Can he tell the House whether any discussions have taken place between any government Minister and the members of the staff—the air traffic controllers?
  Lord Macdonald of Tradeston: My Lords, we have had a number of discussions, going back many months, with the staff unions and with lay members from the NATS staff.
  During the earlier stages of this Transport Bill, the noble Lord, Lord Brabazon of Tara, divided the House in pursuit of the privatisation of NATS and was defeated. On Report, the noble Lord quoted a precedent for delaying the implementation of transfer provisions. In 1982, during the Telecommunications Bill, the then Secretary of State for Trade and Industry said that neither the transfer of assets and obligations to the new company, nor the issue of shares to the public, would take place before the next general election.
  However, there is a major difference between the British Telecom case and NATS. The former was a flotation in which the Government were selling off their interest in the business in its entirety (albeit in two stages). In the case of the PPP, the Government are only disposing of a proportion of their interest in NATS, and will be retaining a stake to ensure that the public interest remains protected. In fact, there will be a legislative requirement on the Government to secure parliamentary approval of the sale of any government shares.
  Those are the practical issues. However, the amendments also raise constitutional matters that have wide-ranging implications. I am sure that your Lordships will agree, on consideration, that it would be wholly inappropriate for provisions to be put on the face of a Bill preventing the Government from implementing certain of the provisions of that Bill until the next Parliament. It is for the government of the day to determine the speed at which they can implement their legislation. The House has approved the policies in the Bill by giving the Bill a Second Reading, and these delay amendments are an attempt to undermine at a very late stage the decision of the House on that occasion. Were these amendments to remain on the face of the Bill, we would be straying into very dubious territory in constitutional terms.
  This House has, over the years, fulfilled its duty admirably as a body that revises, and subjects to detailed scrutiny, Bills that are referred to it from another place. I am sure that your Lordships will agree that we have made a very worthwhile contribution to the Transport Bill by virtue of the amendments that were introduced by this House. It would be most unfortunate if we were to sully those achievements by upholding amendments that seek to dictate to the Government when their legislation can or cannot be implemented. That is not part of our role, but it is precisely what Amendments Nos. 27, 28 and 29 would achieve.
  Moved, That the House do not insist on their Amendments Nos. 27, 28 and 29, to which the Commons have disagreed for the reasons numbered 27A, 28A and 29A.—(Lord Macdonald of Tradeston.)

  MOTION MOVED ON CONSIDERATION OF COMMONS REASON NO. 27A
  27B Lord Brabazon of Tara rose to move, as an amendment to the Motion that the House do not insist on its Amendment No. 27 to which the Commons have disagreed for their reason numbered 27A, leave out "not".
  Lord Brabazon of Tara: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 28B and 29B. The gist of all of these amendments is to say that the House should insist on its amendments that were passed on Report. The Minister made a great deal of the constitutional point. In fact, I heard him say on a radio programme this morning that it was a "constitutional outrage" that we should even consider asking the Commons to take another look at the matter.
  As we all know, since the House of Lords Act the relationship between this House and the other place has inevitably been destabilised. The relationship has changed, as composition of the House changed. This was recognised by the noble Baroness the Leader of the House in her now famous doctrine. The noble Baroness declared that this new House would be more legitimate and that it would speak with more authority. She also promised that your Lordships' decision, if taken—as the decision on this issue so far has been—by Peers of, as she put it,
  "a range of political and independent opinions".
  would carry more weight with the Government. Should the voice of this House not be afforded some weight on this subject, as the noble Baroness promised?
  I do not argue, nor do my noble friends, that the Salisbury doctrine has wholly passed its time. The unelected House should not try to block a manifesto item on which the elected majority in another House has insisted. But this is not such an item. We are not seeking to block the implementation of this proposal, but merely to defer it for a few months.
  There is nothing in the amendment to prevent the Government going ahead with all the preparation necessary to implement their proposals. All we suggest with these amendments is that the actual transfer schemes be delayed until after the next election so that the proposal can be put into the manifesto and put before the public. As I said on Report, this is exactly what we did with the BT privatisation proposals in 1982. The Minister says that this is not a privatisation but a public/private partnership. But the Bill allows under Clause 48 for the Crown shareholding to drop to 25 per cent. Furthermore, subsection (10) of that clause provides that,
  "The Secretary of State may by order amend or repeal this section".
  In other words, the whole business could be sold. That sounds to me very similar to the British Telecom privatisation back in the 80s.
  We are not taking that action in the teeth of a manifesto commitment widely proclaimed and deeply held. We are taking it in the face of a proposal that was explicitly condemned by the Labour Party before the

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  previous general election, and on the opposition to which many Members of another place were elected. The Government in another place may be entitled to insist on our respecting their manifesto commitments. But are not we in this new and, we are told, more legitimate House, entitled equally to tell the Government that they should wait for a mandate before enacting something completely the reverse of a public promise they have given to the electorate? That is all we are asking tonight: that they should wait a little and ask the public for endorsement of this policy.
  I am reminded forcefully of the words of the noble and learned Lord, Lord Simon of Glaisdale, on a recent analogous occasion. He was speaking on the Second Reading of the Criminal Justice (Mode of Trial) (No. 2) Bill in your Lordships' House on 28th September. Your Lordships will recall that in that Bill the Government sought to restrict the right to jury trial—something the Government had flatly opposed before the election. The noble and learned Lord said at col. 987 of Hansard:
  "There is no reason at all, no constitutional convention which bars a vote against this Bill with approval of the amendment tonight".
  This is not a manifesto commitment; on the contrary, on 27th February 1997 less than two months before the election, the Home Secretary made absolutely plain his opposition to this proposal. It was with his words ringing in its ears that the Labour Party went into the general election.
  Equally were not the famous words of Mr Andrew Smith, now Chief Secretary but then Labour's transport spokesman, at the 1996 Labour Party conference,
  "Our air is not for sale",
  equally ringing in the ears of the electorate in 1997, or the words of Mr Keith Bradley, another shadow transport spokesman, in a letter of 5th February 1997, when he stated,
  "I would like to confirm that the Labour Party are completely opposed to the privatisation of NATS and under a Labour Government they will remain in the public sector"?
  One cannot get much clearer than that. But was not this proposal also absent from the manifesto and has not this been a reversal of policy on a well publicised issue equally as striking as that on jury trial?
  The Minister quotes accurately from what the Leader of his party said in the foreword to the manifesto. So what does one do? One then turns to the relevant pages in the manifesto which deal with transport. And what does one find? Lo and behold it states clearly with regard to London Underground:
  "Labour plans a new public/private partnership to improve the Underground".
  The manifesto further advocates with regard to buses,
  "partnerships between local councils and bus operators".
  With regard to roads, the manifesto refers to,
  "using public/private partnerships to improve road maintenance"
  and so on. That is all clear, until one gets to the aviation section of the manifesto which states:
  "The guiding objectives of our aviation strategy will be fair competition, safety and environmental standards".
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  There is not a word in the manifesto about a public/private partnership for National Air Traffic Services. Therefore, I am led to believe that the general public, or at least that part of it that reads manifestos, would be entitled to assume that the famous words,
  "Our air is not for sale",
  still hold good.
  The noble Lord referred to investment and to the letter from the British Air Transport Association which I have seen today. Of course we understand the need of the industry for new investment, but after three and a half years in office why is this suddenly so urgent? Swanwick progresses, whether or not the PPP goes through, and so can the new Scottish centre. Is it not better to have a delay of only a few months to get this PPP the endorsement from the electorate that it needs? Would it be outrageous to suggest that after last week's public finance figures, which showed the public sector net borrowings standing at a surplus of £11 billion, the Treasury might allow NATS the limited freedom to borrow, if only temporarily—the same freedom as the Post Office now has permanently? So, too, do regional airports. Immediate and urgent privatisation is not the policy of these businesses, why should it be necessarily so for NATS?
  There is not a shred of justification for the other place bulldozing the voice of this House on this matter. Far from there being a mandate or even there being absence of a mandate, there is the absolute opposite of a mandate. In such a case as this I argue that what I might call the "Simon of Glaisdale doctrine" should apply, just as it did on the proposed restriction of jury trial. Your Lordships not only have the right to ask the Government to seek an honest mandate from the electorate for a policy they previously promised to oppose; some might consider that this House would be in dereliction of its constitutional duty if it did not do so. For all those reasons I believe that another place should have the opportunity to re-examine these amendments. I beg to move.
  Moved, as an amendment to the Motion that the House do not insist on their Amendment No. 27 to which the Commons have disagreed for their reason numbered 27A, leave out "not".—(Lord Brabazon of Tara.)
  8.30 p.m.
  Baroness Thomas of Walliswood: My Lords, I support the amendment in the name of the noble Lord, Lord Brabazon of Tara. First, I want to set out our position as it now stands. During earlier stages of the Bill we on these Benches did our best to persuade the Government to substitute a not-for-profit trust for the PPP option for NATS.
  The advantages of going for the option of a not-for-profit trust are clear. The public interest in NATS will be preserved, and a true partnership with stakeholder and employee interests would be assured. The Government would avoid the burden of the required investment falling on the public sector borrowing requirement. The not-for-profit trust would nevertheless be able to borrow at near government

  1215
  rates, thus contributing to a reduction of NATS' costs. The temptation to skimp on safety to satisfy shareholders, to which Gerald Corbett has referred in respect of Railtrack, would be avoided. This would protect the "safety ethos" element identified by many Labour Members in discussions in this House as a major worry with the PPP option.
  Lord Dubs: My Lords, I am sure that, like almost everyone else, the noble Baroness will have seen the letter in today's Times from the chairmen of British Airways, British Midland and Virgin in which they stated,
  "If safety was at risk, we would be leading the criticism of the PPP proposal; but it is not"?
  Baroness Thomas of Walliswood: My Lords, all those companies have an interest in purchasing their share of NATS, so they would say that, wouldn't they?
  The main exemplar of the not-for-profit trust option, NavCanada, has proved capable of stretching its wings to co-operate with Russia in research which it is hoped will lead to non-stop polar routes between North America and South-East Asia. Thus a not-for-profit trust is capable of being entrepreneurial and of expanding its business—a major government ambition for NATS.
  Moreover, while we understand that the failure of NATS to control the project at Swanwick and to bring it in on time and at budget is a matter of concern to the Government, as it is to all other Members of this House, it is no argument that the private sector is always better at such management to show that the public sector is sometimes deficient. There have been many prominent scandals when introducing new technology in the private sector as well.
  The fact that we are tonight again supporting the Conservative amendment to delay the implementation of a NATS/PPP proposal does not mean that we have abandoned our hope that the Government will change their mind. On the contrary, we hope that the Government will use the opportunity provided by the six-month delay to rethink their project. At present, rumours are rife all over the place that they may try to do just that. Our belief is that the not-for-profits trust was never considered by the Government because they had already committed themselves to the PPP option, perhaps at the behest of the Chancellor. The option deserves serious consideration.
  Secondly, we reject suggestions, as did the noble Lord in introducing his amendment, that defeating the Government tonight would be in some sense outrageous or disgraceful. This matter is no game but a matter of great significance where the Government have apparently pitted themselves against their own spokespeople before taking office, against the professionals—pilots and controllers—against the transport Select Committee in the House of Commons, which also endorsed the option for a not-for-profits trust, against large numbers of Labour MPs who are still trying to convince their own Government to change their mind, and against the
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  public who in various polls have shown their opposition to a PPP by majorities ranging from more than 60 per cent to nearly 80 per cent. That level of opposition to the Government's plans is in itself a justification of continued pressure from this House on the Government to change their mind.
  Thirdly, I wish to state quite clearly that comments from Ministers suggesting that the Bill might be lost are absurd. The fate of the Bill is in the hands of the Government, not of the Opposition. The Government could accept tonight's amendment. That would secure the passage of the Bill with a delay of about six months in the implementation of Part I. Perhaps, since they claim to be so supportive of the PPP for NATS, Ministers should recommend going to the country at the next election with a PPP for NATS in the manifesto. That would leave the remainder of the Bill unimpaired.
  We hope that the Government will concede. Politically speaking, there could hardly be a worse time to be gung-ho for the privatisation of an essential transport aid. We have Railtrack in chaos, and increasing dispute about the PPP for the London Underground. What a time to launch yet another extremely controversial and potentially dangerous scheme upon the public. We hope that even at this late stage the Government will have the courage to change their mind and to get off the hook of dogged devotion to an inappropriate solution for NATS on which they have impaled themselves for too long.
  8.45 p.m.
  Baroness Jeger: My Lords, as probably the oldest old lady who has ever been chairman of the Labour Party, perhaps I may say that we always believed that we had to put what we had in mind in the manifesto. One of the most unacceptable factors is that this proposal was not in the manifesto. Moreover, we had balloons stating, "Our air is not for sale". Members of trade unions have said that we do not want a Railtrack in the sky. In view of the recent happenings on the railways we should take that on board.
  It is necessary to gain acceptance for the policy from the people who work in this area. One of my noble friends referred to a letter in The Times. Anyone can get a letter in The Times; even I have had a letter in The Times. However, another letter suggested that the workers' views were not being taken into consideration. However, I am taking them into consideration in my humble way. I have received many letters, as I am sure others have, which do not come from those fat chaps writing letters to The Times but from members of the trade unions and the pilots and those who support the chaps doing the work. I am so old: I love to remember all that the Battle of Britain meant to us. One of my friends said to me, "You're just still keen on pilots"!
  I do not often speak against my own party. But I honestly think that we are wrong. We are being inconsiderate to the pilots and others who undertake

  1217
  this work, and their trade unions. I am disgusted that my party seems to be taking no notice of their opinions because private money is more important.
  Baroness Hogg: My Lords, I am very honoured to follow the noble Baroness. This seems to be an evening for friendly fire. I most reluctantly oppose the amendment put forward by my noble friend. My reluctance should be evidenced by the fact that in five years' membership of this House I have never been moved to vote against my friends; and at earlier stages of the Bill I supported these Benches on the issue. But we are up against the buffers now on the Bill and have to consider what is on offer. I believe that with this amendment we are in danger of losing sight of the wood for the trees.
  My opposition to the amendment has nothing to do with what seemed to me the utter nonsense uttered this morning by the Minister on constitutional outrage. It is not a constitutioal outrage to be considering voting on the amendment. Frankly, in view of a number of things that the Government have done, I do not think that the Minister would know a constitutional outrage if it hit him on the nose.
  I am also getting sick and tired of hearing government Ministers bellyache about the remaining hereditary element in this House. If the Government do not believe that the elected hereditaries who remain in the House have the right to speak and vote on their considered views, they should have had the guts to vote them out of this Chamber. As they have not done so, they should respect the constitutional position. It is an outrage to say that they are not entitled to vote. However, I do not think that we on this side have a constitutional duty to stop the Labour Party changing its mind, particularly if I approve of the direction in which it is going. It is those considered views on which I should like to reflect briefly.
  There are elements on both sides of the Chamber who try to pretend that what is being discussed is not privatisation. The opposition to this part of the Bill seems to be coming from two directions. On the one hand, there are those who want less privatisation than is being proposed; and they are trotting out some of the arguments we heard at the very beginning about safety, as though private companies such as chemical plants and airlines throughout the economy were not dealing with safety issues day in and day out. We have also heard about national security, as if we did not have emergency powers to deal with those issues across a wide range of essential services and utilities.
  On the other side we hear that this privatisation does not go far enough. That is the point at which the contradictions in the opposition to the Bill begin to lose me. Privatising a natural monopoly in the form of a network, which NATS is, raises all kinds of difficult issues. I have worked on a number of different models in the UK and other countries, although I hasten to assure the House that I have not worked on this model. The issue can be approached in a variety of ways and I do not argue for a moment that the Government have chosen the single, ideal model. I think that the
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  partnership model has some advantages in this situation, but there are other ways to bring in private involvement.
  However, what is sticking in my gut—this is my fundamental point—is that the involvement of the private sector has been fought for by the Conservatives for 20 years. We have fought to spread the understanding that the involvement of private enterprise in state activities is a plus. Privatisation, contracting out and public/private partnerships are different manifestations of an idea, put forward by the Conservatives, that has truly changed the world. It is changing economies from south-east Asia to eastern Europe.
  Most remarkably, those ideas have even penetrated the understanding of the Labour Party. The Bill is the clearest evidence that, albeit imperfectly, the Labour Party has been converted to the idea. I find the Liberals' continued opposition the clearest possible evidence of their unreconstructed corporatism. I cannot bring myself to support that attitude against the Government. I am not keen to ride on Liberal prejudices just to cause the Government short-term embarrassment. That would not redound to the Conservatives' credit in the long term.
  What will happen? We can see that some parts of the Labour Party will be only too glad to be shot of the issue. The Government will tell NATS that they are unable to go forward with their brave and difficult plan because the Tories have turned tail on privatisation. Because it is important to show that some of us have not done so and to avoid NATS being left in limbo with its future uncertain, I find myself, very reluctantly, obliged to oppose my party.
  Lord Clinton-Davis: My Lords, I abstained when the issue was first discussed, but I shall vote for the Government tonight. I shall explain why.
  The Conservative Party has been less than frank with the House. The real reason why the Conservatives want to delay is to work out what they are going to say about the privatisation of NATS. That is what they want, but they dare not say it, because it is unpopular with the electorate. The noble Lord, Lord Brabazon, has argued that we should delay a few months. What is the likelihood of persuading the air traffic controllers that that is a good idea?
  I do not believe that the Government can win on the issue, but I support the rest of the Bill, because I believe in the principles adumbrated in it. However, the Government will not win on NATS unless my noble friend the Minister argues a little more forcefully than he has done tonight. He was unable to tell us the outcome of the discussions between Ministers and the air traffic controllers. He told us that there have been discussions—I am glad about that—but what was the result? The Institution of Professionals, Managers and Specialists—the union represented by my noble friend Lord Brett—had a long discussion on the issue and came out against the semi-privatisation of NATS.
  My view, as a former aviation Minister, is that our air traffic control compares with anything in the world. I believe it to be a good system. The onus of

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  proving otherwise falls on my noble friend the Minister. He does not argue that NATS is insufficient, but that it does not have the money, does not have the right sort of money or does not put its money in the right direction. That is not the fault of NATS, but the fault of the Government, as my noble friend well knows. NATS has performed well over the years and there is no reason to interfere with it. The Government can do much better than propose its disestablishment.
  However, I am not prepared to lose the rest of the Bill, as the Government have suggested may happen, not only in the House of Commons, but more publicly elsewhere. The Government have a job between now and the election to convince not only the electors, but the air traffic controllers that their plan is right. I do not think that they can do it.
  The issues are very important, for the reasons that have already been given in the debate. Time is of the essence and the Government do not have a lot of it on their side. However, I do not want the air traffic controllers to say that the issue should not be proceeded with because the Government do not have time on their side. They should face up to the problem with the Minister fairly and squarely. That they have not so done yet is not their fault, but largely the fault of the Government.
  I do not believe that the Liberal Democrats should support the Conservatives tonight. That is what they are going to do. They have no policy. They say that they believe in National Air Traffic Services, so they should support the Bill, albeit reluctantly. I believe it is important that all parties should speak frankly tonight as to where they stand on this issue. I do not believe that the Tories have done that.
  It is with a heavy heart that I shall go into the Government Lobby. It is not very important whether I go with a heavy heart or a light heart, but I shall support the Government, not because they have won my support on the issue of NATS but because I believe that the "venue" has changed. The House of Commons has spoken. I take that very seriously indeed. I hope that my noble friend will not be reluctant to speak to the air traffic controllers and put forward his point of view. However, I hope that he will go with his ears open and that he will listen carefully to those who have the day-to-day job of flying and looking after the aeroplanes. That is the burden that rests on my noble friend tonight.
  9 p.m.
  Lord Smith of Clifton: My Lords, this amendment seeks to delay a wretched piece of proposed legislation which few want. As we heard, 62 per cent of public opinion is opposed to it, as are the airline pilots and the air traffic controllers. Pace the Minister, as has been pointed out by the noble Lord, Lord Brabazon, and others, if there is a constitutional outrage, it is that the Government have no electoral mandate for it. Indeed, quite the reverse is true; they have done a complete U-turn on NATS.
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  Part-privatisation is neither one thing nor the other. As a corporate beast it is unrecognisable and is most likely to be a mere staging post on the way to complete privatisation. The government scheme for NATS is the most expensive option. On Report I challenged the Minister, the noble Lord, Lord Macdonald, to ask the National Audit Office to make a prior assessment of it, both as regards value for money and safety, as it is doing with London Underground. He evaded that question.
  Again, we have been endlessly and repeatedly assured that safety would be, if not paramount, then at least the top priority. The public were given such reassurances after the fatal Southall and Ladbroke Grove rail disasters by Ministers, the privatised Railtrack and the railway operating companies. Then Hatfield happened. Ministers have failed utterly to answer the question of how safety can be maintained alongside severe cost-cutting.
  Only yesterday the Observer newspaper revealed:
  "A briefing document prepared by NATS last month says that plans to cut up to £165 million from their budget over the next five years will undermine safety of passengers and mean that 1.8 million flights a year over Britain could descend into chaos".
  On the previous Sunday, 19th November, the main editorial leaders of both the Observer and the Sunday Times condemned the Government's scheme, with the latter endorsing the NavCanada model of the kind advocated by the Liberal Democrats, the noble Lord, Lord Brett, and his like-minded colleagues on the Labour Benches.
  The country is bewildered by the Government's blind intransigence on the future of NATS. That bewilderment was elegantly encapsulated in the Steve Bell cartoon of 17th November in the Guardian. It graphically depicted the Prime Minister, scooped up in the claws of a giant eagle, anxiously telephoning his chief press officer on his mobile, saying:
  "Alastair, remind me why we must privatise air traffic control? Is it logic, principle, financial pressure, or have I taken a bung?"
  Although no one would suggest that the last is the case, few people, if any, can fathom the Government's motivation behind their irrationally obsessive determination to create what the noble Baroness, Lady Jeger, called "a Railtrack of the air".
  The proposals should be deferred until the Government include them in their election manifesto next time or, preferably, when they have had second thoughts and have come up with a better and more credible option along NavCanada lines.
  Lord Stoddart of Swindon: My Lords, when this matter was last debated and voted upon, I voted against the Government. I voted for this amendment and I intend to do so this evening as well. Indeed, if I needed any convincing to do so, my noble friend Lord Clinton-Davis provided the very arguments which I needed to re-establish my faith in my own decision when the issue was last discussed.
  It is no good to say, as has been said on the Front Bench by my noble friend Lord Macdonald, that this is a constitutional outrage. The noble Baroness, Lady

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  Hogg, dealt with that at some length, but I wish to add something myself. The fact is that this House of Lords is the creation of the present Government. Its constitution depended on government decision and House of Commons votes, supported by votes in this House. Therefore, it is a government creation. Make no mistake about that.
  I well remember hearing my noble friend the Leader of the House when she was challenged by the Opposition that this House would be a rubber stamp. She refused to accept that, saying that it was not intended to be a rubber stamp; it was intended to be a significant House which would bring the Government to account. Indeed, she asked how it could be a rubber stamp with people such as the noble Lords, Lord Stoddart and Lord Bruce, in the House. Tonight I shall prove that my noble friend was absolutely right, and that while we have people such as myself, Lord Bruce and others—many others, I hope—this House will not be a rubber stamp; it will give proper advice to the House of Commons.
  At this point it is strange to ask Labour Members of this House to do the exact opposite of what we were told we should do before the election. Some of us have brains. We shall not simply be told one minute that something is wrong and the next minute that it is right and that we must have a completely different mindset. It may be that others are prepared to do that but I am afraid that I am not and particularly at this time, because we have seen the shambles that Railtrack is in as a result of privatisation. I do not want the same shambles to follow as regards air traffic control.
  It has been said that the airlines are in favour of this measure. Of course they are; it will suit them. But what about the pilots? They are the people who must fly the planes and have confidence in the air control system. They are dead against this piece of legislation and we should listen to them.
  Therefore, with great regret, I must tell my noble friends that I shall be voting for this amendment this evening. My noble friends are laughing. But I can remember a Labour Party which was in favour of public ownership because it was necessary for matters which affected the whole of the population; because it was necessary for the safety of people; and because, as in this case, public ownership was a strategic necessity. So it is no good my noble friends laughing at me. I have been in the Labour Party for 54 years. I joined it because I believed that public ownership had a place in our economy, particularly where public safety was involved and where a great service was involved.
  My noble friends can laugh if they want to. But I repeat that it is with great regret that I shall go into the Lobby against the Government. I hope that the delay will persuade them that they should bring forward different proposals for the retention of NATS in public ownership.
  Baroness O'Cathain: My Lords, I wish to declare an interest. I am a director of British Airways plc and a member of the British Airways Board Safety Committee. That close involvement with many aspects
  1222
  of the operation of air traffic control has resulted in my following a self-denying ordinance so far throughout the passage of the Bill. However, I have become increasingly concerned that a distinct pressure has been applied by those who do not wish the partial privatisation of NATS, and the various companies which have expressed an interest in being involved in the process have been barred from lobbying. That rule has not been imposed on the opponents. The opponents, orchestrated by the noble Lord, Lord Brett, the former general-secretary of IPMS, the union of air traffic controllers, if the report in the Guardian of 23rd November is correct, seem to have had it all their own way.
  In the circumstances, I feel compelled to state some facts clearly to make sure that the arguments are fairly balanced. I must emphasise that I am not speaking as a supporter of any consortium interested in becoming the 49 per cent shareholder but solely from my experience of the sector, going back some 40 years from my first job as a very junior airline economist.
  Like my noble friend Lady Hogg, it gives me no pleasure to be in a position of speaking against my party on this issue. It will be a most uncomfortable experience for me to vote against my party's amendment. But in my view the House of Lords must do what it thinks is best in the interests of the best quality of legislation for the country. I believe that the partial privatisation of NATS falls into that category. My sole aim in taking part in the debate is to do all I can to achieve the objective that the partial privatisation of NATS is not derailed by political shenanigans. It is far too important for that.
  The noble Lord, Lord Stoddart, was very forceful in his comments about his party changing its mind. I agree. Although I shall vote in a different Lobby from him, I find it extremely difficult to accept that my party has changed its mind.
  The current situation of NATS is that it must take its place in line for Treasury funding long behind, one suspects, education, education, education and the National Health Service. That really is not good enough. Although the air traffic control system has served us well and has caused no anxiety in the minds of the general public, there is a crying need for significant investment. It is imperative that access to capital is free from PSBR constraints. Investment is urgently needed.
  I gently remind your Lordships of what happened on 17th June this year. There was a catastrophic failure of the air traffic control system which left thousands of passengers stranded and delayed and having to spend nights at hotels near the airports. Indeed, it cost British business many millions of pounds in total.
  Are we convinced that even if the Government did give NATS the investment needed, such expenditure would be subject to effective programme management and robust corporate discipline? I do not intend to make a cheap point about the startling record of mismanagement of large systems-focused projects in the public sector, tempting though that may be. However, it is appropriate in this debate to mention

  1223
  just one word—Swanwick. That is a project which, if completed and up and running by the revised date of 2002, will be a full six years late. By now we should have had the latest in computer systems and a state-of-the-art control centre. Not only is it not yet on stream, but the revised system specification is less advanced than that promised when the project was first drawn up. Between now and the year 2002 shall we be in danger of yet another collapse like the 17th June collapse or indeed, heaven forbid, many more collapses like the 17th June collapse?
  There has been an amount of irresponsible scaremongering about the threat to safety resulting from the proposed public-private partnership. That really is what one would call colloquially a "no brainer". One has only to look at the huge emphasis upon safety which is the number one objective of the airlines. Membership of the British Airways Safety Committee for the past seven years has left me in no doubt of that fact. NATS does not have the sole monopoly on safety, but because of the lack of investment and mismanagement of what investment there is, one wonders whether a continuation of NATS in its present form is the best way of ensuring that safety comes first, second and third.
  Business people recognise another point as essential; namely, the separation of regulation from the service provision. Business people rail against regulation and are strident in their calls for the abolition of regulation, but in something as fundamental as the safety of millions—I do not exaggerate—I believe that it is imperative that there should be such separation. From an organisational position, I would much prefer to see those functions separated and run by totally different bodies.
  I hope that my contribution will take some of the heat out of this stupid situation that we seem to be in. We need the safest, the most efficient air traffic control organisation possible and I firmly believe that the proposals put forward in the Bill are currently the best way of achieving that. Believing that, I can see absolutely no validity in the demand for delay in achieving the public-private partnership. I am sure that I am not alone in believing that, if we delay it, it will never happen. That would be in nobody's interest; it would not be in the interest of the country nor of the Government nor of all those involved in air transport, be they employees or travellers.
  9.15 p.m.
  Lord Trefgarne: My Lords, I am not opposed to privatisation, but the blatant fact is that this Bill is not privatisation; it is partial privatisation, as my noble friend Lady O'Cathain has acknowledged. I believe it is less than that. It is a public-private partnership and it is a scheme to enable the Chancellor of the Exchequer to balance his books.
  I accept that moving the National Air Traffic Service into the private sector has no bearing on safety. I am certain that private sector operators will be equally capable of running a safe air traffic system.
  1224
  The problem is that this is a botched privatisation and a rushed privatisation. At earlier stages of this Bill I raised some of the admittedly minor difficulties about which I had been concerned relating to access to air space by non-public transport users. The noble Lord and I have been in correspondence on that matter.
  The plain fact is that this is a botched proposal that ought to be delayed. I am not opposed to privatisation. I believe that in the fullness of time the National Air Traffic Service can be, will be and should be privatised. Indeed, at the moment, running as it does in the private sector, it is running short of money for investment, which is abundantly obvious.
  My noble friend Lady O'Cathain referred to the problems at Swanwick. They are not caused by the fact that NATS is still in the public sector. The Swanwick programme is being run by a large American company that has not succeeded in fulfilling its contractual obligations. No doubt there are great difficulties, but they have not been caused by NATS being in the public sector; they are the result of the failure of the contractor to deliver.
  Baroness O'Cathain: My Lords, I did say that project management and robust corporate structures were important in the management of such projects and that is why Swanwick has not been properly managed.
  Lord Trefgarne: My Lords, Swanwick may or may not have been well managed as far as NATS is concerned, but the plain fact is that the contractor has failed to deliver the technology required in the timescale that was set. Sadly, my noble friend said that it was six years late. The failures of the Swanwick programme are as a result of the failures of the contractor and not the failures of NATS.
  When I was a junior Minister at the Ministry of Defence I had some experience of managing large, highly technical programmes from a government point of view. In those days, as now, the problems were very much with the contractors, and with the relationship between the contractors and the National Air Traffic Service. Moving NATS into the private sector will not wave a magic wand over Swanwick or Prestwick when it comes to pass in a little while.
  My noble friend Lord Brabazon is right to suggest that there should be a delay in this programme. I have nothing to say about the views of members of the Labour Party or what the Labour Party said before it came into office. For practical reasons we should agree to the amendment proposed by my noble friend. I am not opposed to privatisation. I am not opposed to the thrust of what is contained in the Bill and I support the separation of the regulation of NATS from the operation of the system itself. My noble friend's amendment will enable this programme to be moved forward in a more responsible and effective manner and I hope that the House will agree.
  Lord Young of Dartington: My Lords, I support my two noble friends Lord Stoddart and my older noble friend Lady Jeger, who spoke against this amendment.

  1225
  The public sector borrowing requirement was mentioned. It is certainly a vital matter. Many of those who have studied the history of public ownership in the past 50 years believe that it is the way in which the public sector borrowing requirement was applied, giving the Government the iron hand over publicly-owned industries, which was partly responsible for their not living up to the hopes we had in them.
  A vital service like air traffic control should not depend on those considerations if extra investment is necessary to enable the service to continue as efficiently as in the past and to guard against the dangers of the terrible accidents that could occur if that efficiency is put at risk. Safety is the prime case for public investment. The Treasury should not wield the tired old argument about the PSBR. It should not be the case that the efficiency of this vital service is held back and the need for private capital so strongly asserted when it is not necessary for that argument to be put forward.
  When we consider this question, we must keep safety in our minds. There was always a strong argument for public ownership when a natural or created monopoly arose. Another argument was when safety was involved. I remember that when I had the privilege of inscribing the nationalisation of the coal industry into the 1945 manifesto, a good deal was made of the need for safety in the mines. It was argued that safety in the mines had been put at risk partly because profit was such an important consideration for the owners of the coalmines. Where has that tradition gone? Why have those arguments for the moment been scuppered?
  Safety is the main reason why many of those who are of the same mind as myself want to go along this road. It has of course been brought to our attention by the sad disasters that have occurred recently.
  If this Bill is passed in the form proposed by the Government and, shortly before the next general election, an air disaster occurred over this country, whether or not it had anything to do with air traffic controllers, it would be a tragedy for the people directly involved, about which the whole country would be extremely distressed. The Government may also find themselves particularly distressed, because it would yet again be pointed out, as in the case of Railtrack, that such a disaster—for example, over Heathrow—could be attributed in part to a decision to add to the woes of the air traffic control system, which is already in some degree of chaos, waiting for the new day to dawn. If responsibility for such a dreadful crash was attributed to the Government, they would feel very sad that they had taken part. Many other people would feel sad for personal reasons, but it would have a political impact.
  I beg the Government to consider the tradition that lies behind the kind of opposition from three of us on this side of the House and agree, to the maximum possible extent, with the plea that has been made by those who on this occasion disagree with the proposal.
  Lord Oakeshott of Seagrove Bay: My Lords, I have two points to make. The first is financial. With some
  1226
  trepidation, I disagree with the two accomplished lady economists who have spoken from the Conservative Benches in support of the Government. I am particularly nervous about disagreeing with the noble Baroness, Lady Hogg, since we learned our economics at the same time and at the same university. However, I invite both of them to return to basic economics.
  Air traffic control is a licence to print money. It is the classic case of a natural monopoly. Volumes rise steadily, year in, year out; the charges are a tiny fraction of the total cost of air travel. The revenue is therefore rock solid. If a not-for-profit trust were established, I have not the slightest doubt that our pension funds and insurance companies would be queuing up to lend money, through long-term bonds secured on those revenues, at very fine interest rates. If, as the noble Lord, Lord Young, put it, the Treasury loosened its grip, and if the Government lost their obsession with privatisation, there would be no problem about funding the investment NATS needs.
  Nor is there any need to confuse privatisation with good management; Railtrack surely proves that. Why on earth should a privatised Airtrack, as I suggest we call it, do any better? A not-for-profit trust based on the Canadian model, free of the dead hand of the Treasury, with proper, secure, long term funding, would be well able to recruit the people with the skills that it needs, both at board and project management level. That is the financial point.
  My second point, as a relatively new Member of this House, is about the rights of the House and the constitutional implications of pressing this amendment. Last night on the BBC, I heard the Leader of the House of Commons, at her most gracious, telling us that the House of Lords could invite the Government to think again about a Bill, but that if our invitation to reconsider it were declined, it would be quite wrong for us to continue to oppose it, whether or not it was in the election manifesto. I listened very carefully to the noble Lord, Lord Macdonald, reading out the so-called manifesto commitment. Possibly John Prescott at his finest may be able to make that sound like a manifesto commitment, but the noble Lord certainly did not. I am relatively new to this House and I have not previously heard the Beckett doctrine, but it seems to me that it would turn this House into very little more than a glorified focus group.
  This morning we heard the noble Lord, the Minister of Transport, accuse the opponents of the Bill of complete cynical opportunism—that was just a warm up—and we then heard what a constitutional outrage it would be if we were to pass this amendment from what he called,
  "this deeply unrepresentative institution, with 70 per cent of the Lords against us".
  Noble Lords opposite might bear in mind that the votes cast for the three main political parties at the previous general election are more fairly reflected in the party strengths in this House than they are in the House of Commons. But if Ministers think that this House is deeply unrepresentative, they have no one to blame but themselves. We on these Benches accept no

  1227
  lectures on our rights or composition from a Government moving on to stage two reform with all the speed of a snail stuck in the long grass.
  We on these Benches invite the Government to think again—and again, and again, if they have to—about this idiotic privatisation. We shall be happy to repeat the invitation as often as is necessary.
  9.30 p.m.
  Lord Peston: My Lords, I am loath to rise but I am concerned about the constitutional question. The House as it voted a week or so ago was doing its job correctly in asking the Government to think again. It voted in that way. I believe that the arguments are well balanced and I do not regard anyone arguing either way as being unreasonable or unethical, or betraying anything on this matter. When my noble friend Lord Stoddart was a member of the Nationalised Industries Select Committee and I was its expert adviser we were committed on issues of nationalisation. I can be persuaded as easily by his arguments as I can by the arguments the other way.
  However, I am concerned about one issue. I believe that your Lordships' House, in asking the Government to think again, is doing the right thing and is not being a rubber stamp. I regard it as ridiculous, if I may use a strong word, to talk about the issue as though it were the kind of last-ditch issue on which we must ask the Government to think again and again and again.
  We asked the Government to think again and the House of Commons duly said, "No". What reasonable person would then say, "We would like you to think yet again and if necessary again and again"? I am totally devoted to this House and believe that it should not be a rubber-stamp House. However, once it has voted and returned the matter to the other place, and the other place has sent it back to us, then, unless the matter is of such depth as to threaten the whole future of the nation, I believe that we ought to accept the view of the other place.
  Lord Macdonald of Tradeston: My Lords, much as I regret the attempt by noble Lords opposite to insist on their amendments, we have had a robust debate on the issues raised. I am grateful for the many and varied contributions. We have ensured that these important matters have once again been fully aired. I listened most carefully. Following such a debate, noble Lords cannot fail to be aware of the importance of the proposition before us.
  I am sure that it will come as no surprise to your Lordships that the Government continue strongly to believe that the House should not insist on the amendments. As regards the substance of the Bill, I have already set out in detail the effect which delaying the PPP might have on a number of the parties involved and I want to repeat the arguments. However, let this House be in no doubt that the effect of the amendments would be harmful to NATS, to the airlines, to the passengers and to the country as a
  1228
  whole. We should not forget in particular the needs of the NATS staff, who for a long time have lived in a state of uncertainty about the future. I do not believe that it will do any good to prolong the uncertainty. Noble Lords should be aware that further delays to infrastructure investment, which NATS needs so badly, will cause considerable difficulties, especially as regards the delivery of the vital two-centre strategy.
  I return to the constitutional issue. As I said earlier, this House prides itself on being a Chamber which strives to refine and improve the quality of the legislation put before us. However, I do not believe that its remit extends to the introduction of provisions which specifically seek to delay the implementation of government policy, particularly when, as I have demonstrated, full consideration has been given to our proposals. Our adversarial political system produces good democracy, a parliamentary democracy which is still the envy of the world. It does so because we set limits beyond which opposition is not pressed.
  We have very full debates and listen to each other; we modify our legislation in the light of what is said, and what emerges is better legislation. But, ultimately, the democratically elected majority in another place should not be prevented from carrying through its policies, whichever government are in power. I hope that noble Lords opposite will, even at this late stage, consider the ramifications of insisting on these amendments. I urge noble Lords not to insist on the amendments.
  Lord Brabazon of Tara: My Lords, I am grateful—I believe—to all noble Lords who have taken part in the debate. I cannot possibly deal with every point made by each noble Lord. I particularly enjoyed the speech of the noble Baroness, Lady Jeger. We have not heard much from the noble Baroness recently and it is always a pleasure to listen to her contributions.
  Much has been said, not least by the Minister, about the constitutional aspect. From what I have heard, in particular the contributions of my noble friends Lady Hogg and Lady O'Cathain, I am convinced that as far as concerns the constitutional issue we are on safe ground. There is no question that if this amendment is agreed the Bill, or even Part I, will be lost, as some noble Lords suggest. All the amendment does is to ask the Government to postpone the implementation of the transfer until after the next general election when, if they are returned to power, they have a mandate for it.
  It has been said that the House of Commons has spoken. It has spoken twice, with the second largest rebellion on the Labour Benches this Parliament. The Select Committee of the House of Commons which considered this matter said that in its view the current proposal for a PPP for NATS was the worst of all possible options for the future structure of the company. I listen to that as well as the response of the Minister.

  1229
  The Minister said that NATS staff did not wish the uncertainty to be prolonged. All the information that I have received from the union which represents NATS staff is that they are wholly opposed to these measures. Therefore, I am not sure that the Minister is correct in saying that the staff want the uncertainty stopped.
  We have had a good debate on the issue and the time has now come to take the opinion of the House.
  9.38 p.m.
  On Question, Whether Amendment No. 27B, as an amendment to the Motion that the House do not insist on their Amendment No. 27 to which the Commons have disagreed for their reason numbered 27A, to leave out "not" be agreed to?
  Their Lordships divided: Contents, 132; Not-Contents, 125.

  Division No. 5

  CONTENTS

  Addington, L.

  Harris of Greenwich, L.

  Ampthill, L.

  Harris of Richmond, B.

  Anelay of St Johns, B.

  Henley, L. [Teller]

  Arran, E.

  Higgins, L.

  Astor, V.

  Hodgson of Astley Abbotts, L.

  Astor of Hever, L.

  Hooper, B.

  Attlee, E.

  Hooson, L.

  Avebury, L.

  Howe, E.

  Barber, L.

  Howell of Guildford, L.

  Barker, B.

  Hunt of Wirral, L.

  Bell, L.

  Hutchinson of Lullington, L.

  Belstead, L.

  Jacobs, L.

  Blatch, B.

  James of Holland Park, B.

  Brabazon of Tara, L.

  Jeger, B.

  Bradshaw, L.

  Kingsland, L.

  Bridgeman, V.

  Linklater of Butterstone, B.

  Brougham and Vaux, L.

  Liverpool, E.

  Burnham, L. [Teller]

  Lucas, L,

  Byford, B.

  Luke, L.

  Campbell of Alloway, L.

  McColl of Dulwich, L.

  Carlile of Berriew, L.

  Mackay of Ardbrecknish, L.

  Chadlington, L.

  McNally, L.

  Clement-Jones, L.

  Maddock, B.

  Cope of Berkeley, L.

  Mar and Kellie, E.

  Craig of Radley, L.

  Methuen, L.

  Craigavon, V.

  Miller of Chilthorne Domer, B.

  Crathorne, L.

  Miller of Hendon, B.

  Crickhowell, L.

  Monro of Langholm, L.

  Denham, L.

  Montrose, D.

  Dholakia, L.

  Mowbray and Stourton, L.

  Dixon-Smith, L.

  Murton of Lindisfarne, L.

  Dundee, E.

  Naseby, L.

  Eden of Winton, L.

  Neill of Bladen, L.

  Elliott of Morpeth, L.

  Newby, L.

  Elton, L.

  Northbrook, L.

  Ezra, L.

  Northesk, E.

  Falkland, V.

  Northover, B.

  Feldman, L.

  Norton of Louth, L.

  Ferrers, E.

  Oakeshott of Seagrove Bay, L.

  Fookes, B.

  Onslow, E.

  Forsyth of Drumlean, L.

  Oppenheim-Barnes, B.

  Gardner of Parkes, B.

  Park of Monmouth, B.

  Geddes, L.

  Phillips of Sudbury, L.

  Goodhart, L.

  Rawlings, B.

  Greaves, L.

  Redesdale, L.

  Green way, L.

  Rees-Mogg, L.

  Griffiths of Fforestfach, L.

  Rennard, L.

  Hamwee, B.

  Renton, L.

  Hanham, B.

  Roberts of Conwy, L.

  1230

  Rodgers of Quarry Bank, L.

  Taverne, L.

  Roper, L.

  Taylor of Warwick, L.

  Rotherwick, L.

  Tebbit, L.

  Russell, E.

  Thatcher, B.

  Saatchi, L.

  Thomas of Gresford, L.

  Sandberg, L.

  Thomas of Walliswood, B.

  Scott of Needham Market, B.

  Thomson of Monifieth, L.

  Seccombe, B.

  Tope, L.

  Selkirk of Douglas, L.

  Tordoff, L.

  Sharman, L.

  Trefgarne, L.

  Sharp of Guildford, B.

  Waddington, L.

  Sharples, B.

  Walmsley, B.

  Shaw of Northstead, L.

  Watson of Richmond, L.

  Shutt of Greetland, L.

  Wigoder, L.

  Smith of Clifton, L.

  Williams of Crosby, B.

  Stoddart of Swindon, L.

  Young, B.

  Strathclyde, L.

  Young of Dartington, L.

  NOT-CONTENTS

  Acton, L.

  Hayman, B.

  Ahmed, L.

  Hilton of Eggardon, B.

  Alli, L.

  Hogg, B.

  Amos, B.

  Hogg of Cumbernauld, L.

  Andrews, B.

  Hollis of Heigham, B.

  Archer of Sandwell, L.

  Howells of St. Davids, B.

  Ashley of Stoke, L.

  Howie of Troon, L.

  Ashton of Upholland, B.

  Hoyle, L.

  Bach, L.

  Hughes of Woodside, L.

  Barnett, L.

  Hunt of Chesterton, L.

  Bassam of Brighton, L.

  Hunt of Kings Heath, L.

  Berkeley, L.

  Irvine of Lairg, L. (Lord Chancellor)

  Bernstein of Craigweil, L.

  Billingham, B.

  Jay of Paddington, B. {Lord Privy Seal)

  Blackstone, B.

  Borrie, L.

  Jordan, L.

  Bragg, L.

  King of West Bromwich, L.

  Brennan, L.

  Kirkhill, L.

  Brett, L.

  Layard, L.

  Brooke of Alverthorpe, L.

  Lea of Crondall, L.

  Burlison, L.

  Lichfield, Bp.

  Carter, L. [Teller]

  Lipsey, L.

  Chandos, V.

  Lockwood, B.

  Clarke of Hampstead, L.

  Macdonald of Tradeston, L.

  Clinton-Davis, L.

  McIntosh of Haringey. L. [Teller]

  Cocks of Hartcliffe, L.

  Cohen of Pimlico, B.

  McIntosh of Hudnall, B.

  Crawley, B.

  MacKenzie of Culkein, L.

  David, B.

  Mackenzie of Framwellgate, L.

  Davies of Coity, L.

  Marsh, L.

  Davies of Oldham, L.

  Marshall of Knightsbridge, L.

  Dean of Thornton-le-Fylde, B.

  Massey of Darwen, B.

  Desai, L.

  Merlyn-Rees, L.

  Donoughue, L.

  Mitchell, L.

  Dubs, L.

  Morgan, L.

  Elder, L.

  Morris of Castle Morris, L.

  Falconer of Thoroton, L.

  Nicol, B.

  Farrington of Ribbleton, B.

  O'Cathain, B.

  Faulkner of Worcester, L.

  Peston, L.

  Filkin, L.

  Plant of Highfield, L.

  Fyfe of Fairfield, L.

  Ponsonby of Shulbrede, L.

  Gale, B.

  Prys-Davies, L.

  Gibson of Market Rasen, B.

  Puttnam, L.

  Gladwin of Clee, L.

  Ramsay of Cartvale, B.

  Goldsmith, L.

  Randall of St. Budeaux, L.

  Gordon of Strathblane, L.

  Rendell of Babergh, B.

  Goudie, B.

  Richard, L.

  Gould of Potternewton, B.

  Richardson of Calow, B.

  Grabiner, L.

  Sainsbury of Turville, L.

  Graham of Edmonton, L.

  Sawyer, L.

  Greengross, B.

  Scotland of Asthal, B.

  Grenfell, L.

  Sewel, L.

  Hardy of Wath, L.

  Shepherd, L.

  Harris of Haringey, L.

  Sheppard of Liverpool, L.

  Harrison, L.

  Simon, V.

  Haskel, L.

  Smith of Leigh, L.

  1231

  Stone of Blackheath, L.

  Warner, L.

  Strabolgi, L.

  Warwick of Undercliffe, B.

  Strange, B.

  Whitaker, B.

  Symons of Vernham Dean, B.

  Whitty, L.

  Thornton, B.

  Wilkins, B.

  Tomlinson, L.

  Williams of Mostyn, L.

  Turnberg, L.

  Winston, L.

  Varley, L.

  Woolmer of Leeds, L.

  Resolved in the affirmative, and Amendment No. 27B agreed to accordingly.
  9.48 p.m.

  LORDS AMENDMENT
  28 Clause 41, page 27, line 25, at end insert
  ("() No approval of a transfer scheme shall be made under subsection (2) before the first Session of the next Parliament after that in which this Act is passed.")
  The Commons disagreed to this amendment for the following reason—
  28A Because the effect of the amendment would be to delay unjustifiably the setting up of a public-private partnership in respect of air traffic services.
  Lord Macdonald of Tradeston: My Lords, I beg to move that the House do not insist on their Amendment No. 28 to which the Commons have disagreed for their reason numbered 28A. I spoke to this Motion when dealing with Lords Amendment No. 27.
  Moved, That the House do not insist on their Amendment No. 28 to which the Commons have disagreed for their reason numbered 28A.—(Lord Macdonald of Tradeston.)
  Lord Brabazon of Tara: My Lords, I beg to move Amendment No. 28B, as an amendment to the Motion that the House do not insist on their Amendment No. 28 to which the Commons have disagreed for their reason numbered 28A, leave out "not".
  Moved, as an amendment to the Motion that the House do not insist on their Amendment No. 28 to which the Commons have disagreed for their reason numbered 28A, leave out "not".—(Lord Brabazon of Tara.)
  On Question, Amendment No. 28B agreed to.
  Earl Ferrers: My Lords, perhaps I may ask the Leader of the House on a point of order whether it is correct for the Captain of the Gentlemen-at-Arms to sit at the Clerk's table and conduct the Labour Peers as if he was conducting an orchestra?
  Lord Carter: My Lords, there are times when the Benches opposite resemble Monty Python's Flying Circus. I am sitting here because there is no room on the Front Bench. I want to get to the Dispatch Box to explain to the House that the whole of the group of amendments in regard to the deferment have been won by the Opposition. It would be easier if we got on with it.

  LORDS AMENDMENT
  Clause 42, page 27, line 38, at end insert
  29 ("() No transfer scheme shall be made under subsection (2) before the first Session of the next Parliament after that in which this Act is passed.")
  The Commons disagreed to this amendment for the following reason—
  29A Because the effect of the amendment would be to delay unjustifiably the setting up of a public-private partnership in respect of air traffic services.
  Lord Macdonald of Tradeston: My Lords, I beg to move that the House do not insist on their Amendment No. 29 to which the Commons have disagreed for their reason numbered 29A, to which I spoke on Amendment No. 27.
  Moved, That the House do not insist on their Amendment No. 29 to which the Commons have disagreed for their reason numbered 29A.—(Lord Macdonald of Tradeston.)
  Lord Brabazon of Tara: My Lords, I beg to move Amendment No. 29B, as an amendment to the Motion that the House do not insist on their Amendment No. 29 to which the Commons have disagreed for their reason numbered 29A, leave out "not".
  Moved, as an amendment to the Motion that the House do not insist on their Amendment No. 29 to which the Commons have disagreed for their reason numbered 29A, leave out "not".—(Lord Brabazon of Tara.)
  On Question, Amendment No. 29B agreed to.

  LORDS AMENDMENT
  31 After Clause 61, insert the following new clause

  PENSION ENTITLEMENT OF PRESENT AND FORMER EMPLOYEES OF NATS
  (" .—(1) In this section—

  "NATS employer" includes NATS, any designated company which succeeds to the business of NATS and any employer other than a designated company which succeeds to or acquires any part of the business of NATS;

  "NATS" is National Air Traffic Services Ltd whose air traffic services are to be transferred under the provisions of this Act;

  "protected beneficiary" includes—

  (a) any person who, on the transfer date, is employed by NATS and is an active member of the Scheme;

  (b) any person who is employed by NATS on the transfer date, but is then too young to join the Scheme, and who subsequently joins;

  (c) any person who is not an active member of the Scheme on the transfer date but who is subsequently entitled to rejoin as a NATS employee without a break in their continuity of employment;

  (d) any person who is not an active member of the Scheme on the transfer date, but who is entitled to accrued pension rights under the Scheme at that date; and

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  (e) any person who is prospectively or contingently entitled to benefit under the Scheme on the death of a person covered under (a) to (d) above;

  "relevant scheme" means the Scheme or any other scheme of a NATS employer that covers protected beneficiaries, and that provides benefits in respect of the protected beneficiaries which are at least equivalent in value to those applicable to the protected beneficiaries as at the transfer date;

  "Scheme" means the Civil Aviation Authority Pension Scheme;

  "transfer date" means the date of the transfer of NATS to the public-private partnership.

  (2) NATS (or, if appropriate, the designated company) shall, subject to the consent of the Pension Schemes Office of the Inland Revenue, participate in the Scheme as a non-associated employer.
  (3) If NATS (or the designated company) does participate in the Scheme as a non-associated employer, a proportion of the total assets of the Scheme shall be segregated for the benefit of the protected beneficiaries and the share of assets so segregated shall be equal in proportion to the proportion that the Scheme's liabilities in respect of the protected beneficiaries bears to the Scheme's liabilities as a whole.
  (4) If NATS (or the designated company) is unable to participate in the Scheme, that NATS employer shall instead make available a relevant scheme for the benefit of the protected beneficiaries.
  (5) If the shares or business of NATS (or the designated company). or any part of that business, is transferred to a NATS employer other than NATS or a designated company, that NATS employer shall become a non-associated employer in the Scheme and if that is not possible that NATS employer shall instead make available a relevant scheme for the benefit of the protected beneficiaries.
  (6) For the purposes of subsections (4) and (5), if a NATS employer is to make available a relevant scheme other than the Scheme, a share of the assets of the Scheme (or of the previous relevant scheme if not the Scheme) shall be transferred to the receiving relevant scheme, calculated on the basis described in subsection (3).
  (7) If a protected beneficiary transfers to the employment of another employer that also participates in the Scheme but which is not a NATS employer, that beneficiary shall remain a protected beneficiary for the purposes of the benefits to be provided to and in respect of him under the relevant scheme and if that beneficiary subsequently transfers back to the employment of a NATS employer he shall still remain a protected beneficiary.
  (8) For so long as a NATS employer remains as a participating employer of the Scheme in respect of protected beneficiaries, one trustee of the Scheme shall be a member representative selected from amongst the protected beneficiaries, and one trustee of the Scheme shall be an employer representative of the NATS employer.
  (9) The NATS employer shall contribute to the relevant scheme at no less than the rate recommended by that scheme's actuary as being sufficient to secure the accrued rights from time to time of the protected beneficiaries in full by the purchase of annuities and the NATS employer shall not be entitled unilaterally to suspend or terminate its contributions to the relevant scheme except upon its insolvency.
  (10) On the full winding-up of a relevant scheme, or on a partial winding-up which involves protected beneficiaries, any shortfall in the assets required to buy out the accrued rights at that time of the protected beneficiaries shall be met in full by the relevant NATS employer and shall be treated as a debt on the employer.
  (11) If, on the full or partial winding-up of a relevant scheme, as described in subsection (10), the trustees wish, rather than securing benefits by the purchase of annuities, to pay a bulk transfer to another scheme, that other scheme shall be a relevant scheme and the transfer value payable in respect of the protected
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  beneficiaries shall be sufficient to secure a buy out of their accrued rights if the receiving scheme were to be wound up immediately following the transfer.
  (12) The NATS employer shall provide future benefits in the relevant scheme which, in respect of the protected beneficiaries, are at least equivalent in value to those available under the Scheme at the transfer date.
  (13) No amendment may be made to a relevant scheme which would result in a reduction of the accrued or future rights of protected beneficiaries, nor in an increase in the contributions payable by protected beneficiaries who are active members.")
  The Commons disagreed to this amendment for the following reason—
  31A Because all necessary protections in respect of pensions arising by virtue of employment with National Air Traffic Services Limited, or any subsidiary of that company, can be put in place without this amendment.

  MOTION MOVED ON CONSIDERATION OF COMMONS REASON NO. 31A
  Lord McIntosh of Haringey Lord McIntosh of Haringey rose to move, That this House do not insist on its Amendment No. 31 to which the Commons have disagreed for their reason numbered 31A, but do propose Amendments No. 31B and 31 C in lieu thereof—
  LORDS AMENDMENT IN LIEU
  31B After Clause 88, insert the following new clause—

  CIVIL AVIATION AUTHORITY PENSION SCHEME
  (" .—(1) The Secretary of State may by order make provision for the allocation of assets, rights, liabilities or obligations between different sections of the Civil Aviation Authority Pension Scheme.
  (2) An order under this section may include provision for or in connection with—

  (a) securing that the Scheme continues to be approved for the purposes of the relevant enactments;

  (b) the amendment of the Scheme;

  (c) the manner in which questions arising under the order are to be determined.

  (3) The reference in subsection (2) to the amendment of the Scheme includes a reference to the amendment of—

  (a) the trust deed of the Scheme;

  (b) the rules of the Scheme;

  (c) any other instrument relating to the constitution, management or operation of the Scheme.

  (4) An order under this section may be made so as to have effect from a date falling before the making of the order.
  (5) In making an order under this section the Secretary of State must secure that each person falling within subsection (6) is overall in materially at least as good a position, as respects pension arrangements, as a result of the order.
  (6) A person falls within this subsection if—

  (a) he is or has at any time been a contributing member of the Scheme, or

  (b) he is or may become entitled to benefits in respect of a person falling within paragraph (a).

  (7) A contributing member of the Scheme is a member who makes, and whose employer makes in respect of him, contributions under the Scheme.
  (8) The relevant enactments are—

  (a) Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 (retirement benefit schemes);

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  (b) Part III of the Pension Schemes Act 1993, so far as relating to occupational pension schemes.").

  LORDS AMENDMENT IN LIEU
  31C Clause 95, page 60, line 6, at end insert—
  ("(11A) The power to make an order under section (Civil Aviation Authority Pension Scheme) is exercisable only after consultation with the trustees of the Civil Aviation Authority Pension Scheme.").
  Lord McIntosh of Haringey: My Lords, I should like to reassure the House right from the beginning that the Government regard the matter of pensions protection for air traffic control staff as one of great importance. Pensions affect us all, and I can well understand why this is a matter of such importance to NATS employees. I must therefore make it clear that we would not act in any way that would put them at threat. We are not doing so.
  We have looked in some detail at the adequacy of protections for NATS employees. We believe that there are already a number of non-statutory protections in place which amount to a very strong regime of safeguards, even before the amendments I am now moving and the new guarantee I shall describe in a moment. I shall attempt to explain, as briefly as possible, the existing protections. Some of this will, of course, be very familiar to the House because we have discussed these matters before on more than one occasion. None the less, these are key points on which the House needs to be clear.
  First, the Civil Aviation Authority pension scheme, to which NATS staff currently belong, is to be amended to make it possible for staff employed by the public/private partnership to remain members of that scheme. This will involve NATS becoming a non-associated employer within the scheme. This arrangement will prevent cross-subsidy between the new NATS section of the scheme, which will relate to a company classified to the private sector, and the CAA section of the scheme, which will remain in the public sector. It will enable NATS staff to continue to enjoy the benefits that they currently enjoy.
  Secondly, current pensioners and deferred pensioners within the scheme will remain unaffected by the PPP. They will remain in the Civil Aviation Authority pension scheme and they will be in the CAA section of the scheme, which will also include current CAA staff. This section will, as I have just said, remain in the public sector. Both groups of pensioners will continue to receive benefit in exactly the same way as they do now.
  Thirdly, returning to the position of existing NATS staff, we have made it very clear to all those bidding to be our strategic partner in the PPP that securing the continued participation of current staff in the scheme is a fundamental condition of being considered for that role. In addition, we will be putting into the strategic partnership agreement a binding commitment, enforceable at law, that guarantees the continuation of that right on terms at least as favourable as those now existing. This is a very significant safeguard, underpinned by the Government's continued participation in the PPP.
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  Fourthly, NATS staff will also enjoy the protections on pensions that exist under the law of the land, such as the Pensions Acts of 1993 and 1995. These provide, among other things, protections for accrued benefits and funding levels.
  Finally, but most importantly, yet another level of protection exists in the scheme's trust deed and rules. These are unusually restrictive and protective of members' interests. It is not uncommon for the sponsoring employer of a pension scheme to have the ability to reduce the level of benefits for future service (known as "prospective benefits"). However, no employer who participates in the Civil Aviation Authority pension scheme has that particular power, because the restrictive power of amendment in the trust deed provides that amendments cannot be made to reduce prospective benefits. Let me spell that out. Under the CAAPS, the future benefits have to continue to be at least as good as the accrued ones. This is a very valuable protection indeed. For the avoidance of doubt, let me make it clear that the new strategic partner will not have the ability unilaterally to change the trust rules. They are embedded so that change can come only with the consent of the trustees.
  My noble friend Lord Brett tabled Amendment No. 31, which this House approved on Report, and with which the Commons subsequently disagreed. We consider that the amendment has some technical flaws that cause difficulties, in particular, for the trustees of the Civil Aviation Authority pension scheme. I believe that my noble friend would not disagree with this. Instead, the Government are proposing a package that meets the legitimate concerns on pension arrangements of both the trustees and NATS staff who will be employed by the PPP. The measures I am about to describe are new since this House last considered the issue and add further protections over and above those that I have already mentioned.
  The package is made up of two elements. First, the Government have tabled Amendments Nos. 31B and 31C, which we propose should replace Amendment No. 31. The purpose of these two amendments is to meet the concerns that have been expressed with regard to the pension arrangements by the scheme trustees. Amendment No. 31B provides the Secretary of State with a power to make an order by negative resolution which will enable him to allocate the assets, rights, liabilities or obligations of the Civil Aviation Authority pension scheme between different sections of the scheme. Amendment No. 31C confirms that the power can be exercised only after the trustees of the scheme have been consulted.
  I am sure that noble Lords will recall from our previous debates that the scheme is to he divided into two sections. The first section is the CAA section, which will cover CAA employees, together with all pensioners, irrespective of whether they were employed by the CAA or NATS prior to the establishment of the PPP. The second section is the NATS section, which will embrace all current staff who are in the employment of NATS when the PPP is created.

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  The responsibility for making an equitable division of assets and so forth between the two sections rests with the trustees. They are understandably concerned at the prospect of a disaffected member mounting a legal challenge to any decision they may reach, and wish to guard against this eventuality. As was made clear on Report, they were intending to make an application for a court order to provide them with the necessary protection. Noble Lords will be well aware that court proceedings could become lengthy and costly. The order made by the Secretary of State under the terms of our amendment will provide the trustees with the protection that they are seeking and so avoid the need to resort to court action.
  I come now to an important point. The amendment ensures equitable treatment for all scheme members and their dependants by specifying that in making an order for the division of the fund, the Secretary of State must secure that every potential beneficiary is in materially at least as good a position, as regards pension arrangements, as a result of the order. I am sure that the House will welcome this addition of a protection of staff to the face of the Bill. I imagine that the trustees will welcome these amendments as well.
  The second element of our package does not involve making an amendment to the Bill. Its aim is, however, broadly the same as that which my noble friend wished to achieve with Amendment No. 31. That aim is to provide protection for the pension benefits currently enjoyed by NATS staff. I understand that staff have particular concerns over a possible future change of ownership or a "TUPE" transfer of part of NATS' current activities, or a change of attitude on the part of a future government.
  The Government have, therefore, devised a scheme that I shall explain to the House. The scheme will give the fullest possible protections in the circumstances of concern to staff. It is, for staff, as good as having protection on the face of the Bill yet, at the same time, does not cause the Government the problems that would flow from offering the protections in that form.
  The essence of the scheme is as follows. The Government would, as part of the PPP, ensure that each and every NATS employee at the time of the sale is required to be permitted to stay in CAAPS—or a scheme that is at least as good as CAAPS—in the opinion of the courts or an independent trustee—and continue to build up CAAPS benefits on the same basis as they do now. I shall come back to the role of the trustee shortly.
  On that basis, there is no way that NATS could erode that right or those benefits without the consent of each individual concerned. If NATS tried to do this, the employee would have the individual right to go to court to prevent NATS from cutting back on his or her benefits, and to require NATS to continue to provide for the benefits that he or she has or could reasonably be expected to earn under CAAPS.
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  The Government would also create a process for an independent third party—called a "trustee of promise"—to have the role of guaranteeing the implementation of this promise. The third party chosen would almost certainly be an independent trust, such as, for illustrative purposes only, the Law Debenture Trust Corporation, although we have not yet approached that body. The Government will examine the possibility of involving staff representatives in this in some way. The third party could act quickly and relatively informally to ensure that NATS was adhering to its promise. Using legal rights to be given to it, either under general trust law principles or under the Contracts (Rights of Third Parties) Act 1999, the third party would have the ability to enforce its decisions if it was necessary to do so.
  I hope that the House will agree that this two-part package gives the fullest possible protections to both the trustees and to NATS staff. It is, for staff, as good as protection on the face of the Bill, without causing the Government the problems that would flow from offering statutory protection. It will also serve to remove the difficulties presented by Amendment No. 31.
  Moved, That the House do not insist on their Amendment No. 31 to which the Commons have disagreed for their reason numbered 31A, but propose Amendments Nos. 31B and 31C in lieu thereof.—(Lord McIntosh of Haringey.)
  Lord Brett: My Lords, I rise to express the appreciation of myself and of my noble friends on this side of the House who proposed and persuaded noble Lords that Amendment No. 31 was valid. I apologise in part because, of course, we found that there were technical problems with that particular amendment. However, I am most grateful for the initiative shown both by Treasury officials and by Ministers in seeking to provide the degree of protection that is equal to that which would be available were there to be a statutory provision on the face of the Bill. This has gone a long way and, indeed, will go a tremendous way towards reassuring the staff of NATS that their pension concerns have been taken on board. It will also be of comfort to the trustees.
  I have two points for clarification. I should like confirmation that there will be close liaison and consultation with the CAAPS trustees on these matters. Secondly, can my noble friend the Minister confirm my understanding on the following key point? I have in mind a situation where, for example, a contract currently operated by NATS at an airport, or elsewhere, is lost to another provider of services whereby the staff would normally he cheaply transferred. However, subsequently, down the track, there is a requirement for technology and so on which results in redundancy of former NATS staff. If my interpretation is correct, that would fall within the

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  NATS pension scheme, and those employees would be entitled to all their pension and redundancy benefits, which are tied into the NATS pension scheme. These are the accrued entitlements about which the staff are most concerned at this most difficult time. I am sure that my noble friend can confirm those two points. I should like, once again, to express my appreciation for the efforts that have been made in this respect.
  Lord Lea of Crondall: My Lords, I wish to welcome this most useful amendment. It will stand the employees in good stead. I should like to thank my noble friends and the Government for the constructive spirit in which the negotiations were carried out and for the wider understandings reached. The words used by my noble friend the Minister regarding the rights of all members of the scheme over and above the particular amendment will be on the record. We are very content with my noble friend's explanation.
  Baroness Thomas of Walliswood: My Lords, can the Minister confirm something that I believe he said in his introduction; namely, that those employees remaining with the CAA will be in exactly the same position in relation to their pension and other benefits as they would have been if NATS and the CAA had not been separated?
  Lord Brabazon of Tara: My Lords, I congratulate the Minister and the Government on coming forward with the amendments. I also congratulate the noble Lord, Lord Brett, on his persistence in bringing this issue forward. I believe that this House has done a valuable job. When we achieved an amendment on Report on this issue, I believe that the Government
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  then said that nothing needed to be done. I am glad that the Government have reconsidered the matter and I congratulate them on that.
  Lord McIntosh of Haringey: My Lords, I am grateful to all noble Lords who have taken part in this brief debate. I think that I can give all the assurances which have been asked for.
  The noble Lord, Lord Brett, asked me to confirm that the Government would remain in close liaison and consultation with the trustees. I can certainly give him that assurance. He asked me what would happen if NATS staff have to transfer to another employer, for example, because NATS loses the contract for services at an airport. I confirm that the noble Lord is correct in thinking that their terms and conditions, including pensions and redundancy terms, would be the same as if they were still employed by NATS. In the situation that he described, the scheme would provide individual legal rights for qualifying staff to stay in the CAA pension scheme, or a scheme at least as good as the CAA pension scheme. This would involve the successful bidder either joining CAAPS as a further non-associated employer, accepting the need to make contributions to the scheme at the level required to maintain the benefits of staff, or persuading the independent third party or the courts that any alternative scheme is at least as good as CAAPS.
  The noble Baroness, Lady Thomas, asked me for confirmation that those remaining with the CAA—I think that she meant those remaining with the CAA pension scheme—would not lose out in any way. That is indeed the case. Their scheme will remain in the public sector. I commend the Motion to the House.
  On Question, Motion agreed to.
  House adjourned at seven minutes past ten o'clock.