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Mr. Gerald Bermingham (St. Helens, South): I think that I lost my vote when I changed chambers, but I was one of the 15,000 voters in the City of London. Does the hon. Gentleman agree that if the Bill goes through, if two or three major companies get together in any ward, they will be able to control the elected person? If that happens on a large enough scale, the City could be sold over the head of the citizens by the common council, without any recourse to justice.

Mr. Hughes: I shall come to that. The hon. Gentleman's proposition is in the right direction. We should be careful, because the Bill has some worrying aspects, while it also does not contain certain other measures that should be enshrined in law rather than in a document that does not have the force of law.

Picking up on a point of order made by the hon. Member for Hayes and Harlington (Mr. McDonnell), as someone who once took a case to the European Commission of Human Rights and also worked there for a while, I believe that there may well be a case, though not necessarily a winnable one, for claiming that article 3 of the first protocol of the European convention, which says:

of which this country is one--

    "undertake to hold free elections at reasonable intervals by secret ballot, under conditions which will ensure the free expression of the opinion of the people in the choice of the legislature",

could be difficult to uphold properly if the free expression of the opinion of the people who live in the place can be overridden by the free expression of the opinion of people who live outside. I am not saying that such a case would definitely win. I have not taken legal advice on that, but it is an arguable point.

Mr. McDonnell: Is the hon. Gentleman offering to undertake that case on a no win, no fee basis? If so, we shall talk about it later.

Mr. Hughes: The current state of my finances might mean that I would have to negotiate a different arrangement, but the hon. Gentleman was right to raise the issue.

There is no Liberal Democrat whip on the Bill, so I am not speaking on behalf of my party. I am just making a contribution as someone who has followed the issue. My hon. Friends are free to vote or not as they choose.

I should like to put a logical sequence of questions. Should the City of London have its own local government? We have been persuaded, as the Labour party was nationally in recent years, that that is acceptable, reasonable and appropriate.

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What sort of local government should the City have? Should it be different from the rest of local government, which has just residents electing the people who administer their affairs? Like the London Labour party, the Liberal Democrats in London have debated the issue and come to conclusions, some of which are central to the debate: the City must have procedures and practices that are transparently democratic and accountable; the electorate and service users must be involved in decision making; and, most importantly, the system should be based on a democratic franchise under which City residents can elect their government, but which recognises that the City is an exceptional case and requires the business community to have some contribution to corporation policy.

Can we have local government for the City that has more than just residents as electors? We believe that the case can be argued. The hon. Member for Hayes and Harlington made a linked point on that. There is no logical reason why other places in Britain cannot have business voters if the City of London can. There are good reasons why cities such as Glasgow or Birmingham might want similar business votes. There is no reason--other than the historical reason--why the City has different rights from other places.

However, we believe that City of London residents should have the majority say. They do not at the moment and the Bill is defective in that it will not rectify that. The right hon. Member for Cities of London and Westminster (Mr. Brooke) said, as the chairman of the policy and resources committee--the effective leader of the City council--has also told me, that there has been consultation with residents and that they are happy with what is proposed. I am satisfied that that is true. A system that does not give the majority of votes to residents would, however, be more satisfactory if there had been a proper referendum with a clear, independently scrutinised result. The City might think of doing that.

We had a debate on this issue in a Committee of the whole House on the Greater London Authority Bill a couple of weeks ago. I said that the City's proposals to reform itself--like us, the Labour Government said, "City, reform thyself", and the City has come back with some proposals--are pretty timid. I repeat that: they are pretty timid proposals. Although, on balance, the Bill would make the system slightly better than before, there must be much more change for the system to be a democratic form of local government. I hope that those in the City who support that view will be able to persuade those who do not that they need to change quickly in that direction.

Is the City willing to be braver? The jury is out. There is no suggestion of that in the Bill, but there are other encouraging signs. I thank those in the City and outside who are enlightened enough to realise that considerable further reforms are needed.

What is the effect on residents? Are they being disfranchised by the Bill? They are not. Are they being given less power? The right hon. Member for Cities of London and Westminster correctly said that they are not. I have learnt something about the City in preparing for this debate. It has a strange anomaly; there are 25 wards in the City, four of which currently have a majority of residential votes. Under the proposed reforms, there will

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still be a majority of residential votes in four wards, so the relative balance of power for the residents will remain the same.

There are also plans, although not in the Bill, to increase the residents' power as against that of businesses, even though--this is one of the Gilbertian circles--the number of businesses and business people with votes increases as a result of the Bill.

Mr. Love: I listened carefully to the right hon. Member for Cities of London and Westminster (Mr. Brooke) when he tried to explain this matter, and I have listened carefully to the hon. Gentleman's explanation, yet I still have some difficulty. If there is a vast increase in the number of electors, and representation on the common council is not based on a specific number of electors, there will be a considerable increase in the number of representatives of the business interest, which will dilute representation of the interests of those who live in the City. How can that be called protecting their interests?

Mr. Hughes: The hon. Gentleman is right to ask questions, because the subject becomes almost fiendishly complicated. I do not want to give a seminar on it, but because it is germane, I will try to answer the question in a few sentences.

Mr. Love: Perhaps the hon. Gentleman would prefer to write to me.

Mr. Hughes: I would rather talk to the hon. Gentleman than write to him.

There is a proposal that the number of business voters should increase, but not the number of people who will be elected. There is another proposal, which is not in the Bill, to reduce the number of councillors. At present, there are more than 100 councillors and aldermen, and the City is already reducing the number of councillors per ward. There is a debate about how far that should go, but I share what I think is the Government's view--that the objective should be that the City council ends up being about the same size as any other local council, with about 50 or 60 people. Greater influence and power can be achieved by allowing residents to elect more of the representatives even while businesses are given the right to have a say in the electoral system.

The business vote change is, on balance, welcome. At present, only sole traders and partners get votes in the City. That group is diminishing: there used to be about 40,000 electors in this group and now there are about 15,000. Many accountants, for example, who would have been partners in the past, are now in companies. If we are to have a business vote at all, it would be nonsense to keep only the present category of business voter.

Mr. McDonnell: It is critical that we understand the hon. Gentleman's mind. As soon as one takes the first step on that path, one accepts the principle of the business vote. There are no compromises on democracy. Either we have one person, one vote or the system is not democratic. What is his view?

Mr. Hughes: My view is clear: the majority of people elected in the City of London as local government

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representatives should be elected by residents, but I am prepared to accept that, because of the authority's particular nature, a minority could come from a business franchise. I do not comment on whether that should be limited to the City or whether, if other places wanted to do it, they should be allowed to.

Mr. McDonnell: That is a startling revelation of Liberal Democrat policy. I fear for the hon. Gentleman's leadership chances as a result. He is willing to countenance in his own borough businesses having control in some areas, or having a direct vote on the delivery of services. That is a startling development.

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