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Baroness Trumpington: My Lords, does the Minister agree that there are many war pensioners among expatriates? They are diminishing in number and therefore the amount of money required would, regrettably, get smaller every year. How much will the average expatriate get in English money per week in Australia after the present agreement expires?

Baroness Hollis of Heigham: My Lords, it would cost £300 million to unfreeze frozen pensions. The figure for Australia is approximately £125 million. As to the noble Baroness's second point, it may be that she misunderstands what the Australian Government are proposing to do. They are not proposing to uprate English pensions; they have never done that. At the moment, for UK pensioners in Australia to qualify for an Australian pension, they have to be resident there for 10 years and to pass a means test. The current agreement, which goes back to 1953, is that UK national insurance contributions may count towards that 10-year residence period. The same is true in reverse; Australian periods of contribution count towards the English state pension. The removal of the current agreement would affect some 850 people in Australia and some 1,000 Australians living in the UK. So, perversely, the effect of Australia reneging on an agreement which has been in place since 1953 will be to save the Government money.

Earl Russell: My Lords, the Minister is aware that we are increasingly living in a global economy. Does she agree that if states, jointly or severally, fail to meet the needs of those who live in a global economy, that could prove as dangerous to the political health of the state as it already is to the financial health of pensioners?

Baroness Hollis of Heigham: My Lords, the noble Earl was kind enough to give me notice of his question; I suspect on the grounds that he thought it unanswerable. He is right; it is, but I shall have a go. I cannot conceive of globally co-ordinated social security--if that is what the noble Earl has in mind--between, say, sub-Saharan Africa and Sweden. Our view and the view of the previous government is that it is for national governments to decide the terms of their social security schemes in the light of their national economies.

VAT and Duties Tribunals

2.59 p.m.

Lord Goodhart asked Her Majesty's Government:

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Lord McIntosh of Haringey: My Lords, the tax appeals tribunals are the subject of a consultation paper published by the Lord Chancellor in March of this year. One of the issues on which views are sought is the responsibility for appointments of lay members to the VAT and duties tribunals. The closing date for responses to this consultation document is 30th June 2000.

Lord Goodhart: My Lords, I thank the Minister for that Answer. But does he accept that the Treasury has a very direct interest in the outcome of decisions by these tribunals? Does he accept that it is certain that as soon as the Human Rights Act comes into force there will be a challenge to an adverse decision on the ground that the decision was taken by a tribunal which was not independent and impartial? Does he accept that there is a very good chance indeed that such a challenge would succeed? Does he accept that, in order to protect public revenues, it is very important that as soon as possible this kind of challenge should be made impossible by transferring the responsibility for the appointments to the Lord Chancellor's Department, which already has responsibility for appointing the chairmen of these tribunals?

Lord McIntosh of Haringey: My Lords, for many years it has been the practice in this country that the appointments to panels of this kind should be the responsibility of the same department as that which is responsible for the administration of the matter before the tribunals. But, of course, the issue raised by the noble Lord is one on which views are sought in the consultation paper to which I referred in my first Answer. Although I cannot confirm what the noble Lord said about the Human Rights Act and what the result of any appeal would be, that is one of the issues which the Lord Chancellor will take into account in responding to the responses to the consultation document.

Lord Skelmersdale: My Lords, has not the Human Rights Act become a great big bogey? Did we not sign the convention many years ago--even decades ago--and is there not recourse to that legislation through Strasbourg, although it takes a long time?

Lord McIntosh of Haringey: My Lords, the noble Lord is strictly right. If the case had been as clear as the noble Lord, Lord Goodhart, implied in his Question to me, an issue of this kind could have been brought to the European Court indirectly. The effect of the Human Rights Act is that it can now be taken directly.

Lord Saatchi: My Lords, is it a breach of the human rights of the British public for the Government to tell them that their taxes are going down when in fact they are going up?

Lord McIntosh of Haringey: My Lords, the noble Lord keeps on trying with unanswerable questions. Indeed, if he chooses to engage in discussion with me on tax burdens rather than on human rights issues, he will find us talking at cross-purposes, as we so often do.

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Lord Carter: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lord McIntosh of Haringey will, with the leave of the House, repeat in the form of a Statement an Answer to a Private Notice Question in another place on the latest developments in respect of Rover. The Statement is likely to be taken after the speech of the noble and learned Lord, Lord Howe of Aberavon, in the first debate.

Political Parties, Elections and Referendums Bill

3.3 p.m.

Lord Bassam of Brighton: My Lords, I beg to move that this Bill be now read a second time. The core purpose of this Bill is nothing less than to reinvigorate our democracy. Over the past decade or so public confidence in our democratic institutions has suffered as a result of the now well documented instances of financial sleaze that at times seemed to pervade the political life of our country. This is not the time or the place--or perhaps the day--to point the finger at particular individuals or particular parties. The debate, as we have seen in another place, has now moved beyond that. But the secretive funding of our political system, including funding from a number of foreign sources which had no direct stake in the future of this country, has undoubtedly left a sour taste.

We came into government determined to clean up the way we conduct the politics of this country. One of our early acts on entering government was therefore to refer the whole matter of the funding of political parties to the Committee on Standards in Public Life, as we had repeatedly pressed the previous government to do. Perhaps I may say how pleased I am to see in the Chamber today members of that committee: the noble Lord, Lord Neill of Bladen, who, of course, chairs the committee, my noble friend Lord Shore of Stepney and the noble Lord, Lord Goodhart. I particularly look forward to their contributions to the debate on the Bill and I am sure the whole House will be anxious to hear what they have to say on these important matters.

Among the issues which we asked the Neill committee to examine were how best to give effect to our two other manifesto commitments in this area--to ban the foreign funding of political parties and to require the disclosure of donations of more than £5,000. As the House will know, the Neill committee reported in October 1998. Its report and recommendations mark a turning point in the way we conduct the political life of this country. The committee found that once you lift the lid on the funding of political parties, a whole range of wider questions present themselves. I should like to place on record my thanks to the noble Lord, Lord Neill, and to his colleagues for the authoritative and incisive way in which they examined the wide range of issues that are covered in their report. Their recommendations provide the foundations of this Bill. Indeed, it is to

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their credit that, with only one notable exception, we can map those recommendations across to the clauses of and schedules to this Bill.

This is perhaps as good a point as any to deal with that one exception; namely, tax relief. I am conscious that the Neill committee laid heavy emphasis on the fact that its recommendations had been conceived as part of an overall integrated scheme which should be considered as a whole. This Government have no desire to cherry pick from the committee's 100 recommendations. Indeed, in the spirit of bipartisanship, we have studiously avoided doing so. In the case of tax relief, however, we are simply not persuaded that the case for the recommendation has been made out. In particular, the Government do not believe that a tax relief scheme for political donations sits comfortably with the committee's conclusion, which we share, that there should be no system of general state aid to political parties, Moreover, it falls to the government of the day to make the difficult choices about spending priorities. As the Chancellor of the Exchequer made clear in his Budget Statement last month, this Government's priorities are efficient and effective healthcare and excellence in education. This is not the time to give a tax hand-out of £4 million or £5 million to political parties.

Tax relief aside, we have sought faithfully to give effect to the other recommendations of the Neill committee. In doing so, we are conscious of the need to take the other main political parties with us where at all possible. Save on a small number of specific issues on which I shall touch later, there was a broad measure of cross-party support for the provisions of the Bill during its passage in another place. I very much hope that we can consolidate and build on that broad consensus so that the Bill that we return to another place is one that will stand the test of time as an important part of our constitutional arrangements. We are going to attend carefully to what this House says on the Bill, and we are ready to discuss any matter at any time with representatives of the other parties.

I shall now turn to the detail of the Bill. Part I establishes the electoral commission on which so much of the rest of the Bill depends. A number of Members of your Lordships' House have long argued for such a body to reinforce the integrity of our electoral arrangements. Among these I am pleased to see the noble Lord, Lord Plant of Highfield, and the noble Baroness, Lady Gould of Potternewton, in their places. It is essential to the effective working of the controls on parties' income and expenditure that they are rigorously enforced. But the electoral commission will be much more than simply an enforcement body. Another key function will be as the moderniser of our electoral system. You Lordships have only recently had an opportunity to examine what needs to be done to bring our electoral machinery into the 21st century. A number argued that the Representation of the People Act, as it now is, did no more than advance the way we organise and conduct our elections into the 20th century. If that is the case, the electoral

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commission will have its work cut out to ensure that our electoral law and procedures finally catch up with the 21st century.

The electoral commission will also play a key role in promoting a greater sense of citizenship. This will involve more than simply encouraging voter turn-out at elections, although the commission will undoubtedly have a part to play in that. Indeed the problem of low turn-outs, particularly at local and European elections, cannot be addressed without promoting a wider understanding of both the rights and responsibilities we each have as citizens in a democratic society.

In order to undertake these and the many other functions conferred on it by the Bill, the commission will need to be seen to be scrupulously independent both of the government of the day and of the political parties. We agree with the Neill committee's statement at paragraph 10.8 of the report that the commission, unlike the United States Federal Election Commission, should consist of independent persons and not of party representatives. We also agree that the commission's members should not be people who have previously been involved in any substantial way in party politics. Such involvement would clearly include serving as an MP, MEP or local councillor and holding office within a political party, perhaps as the chairman of a constituency association. That is an important point about the electoral commission which should not be left to the government of the day or to a selection panel. It should be set out on the face of the legislation. I shall be bringing forward amendments in Committee. To judge from debates in the other place, they will command general support.

I should point out that the Bill already contains a number of important safeguards to guarantee the political neutrality of the electoral commissioners. In particular, these will be Crown appointments and not ministerial appointments. What is more, the appointments may only be made with the agreement of the Speaker of the House of Commons and after consultation with the leaders of all parties with two or more Members of Parliament.

Finally, the selection process, which we intend to commence within the next month, will be conducted in accordance with the code of practice on public appointments. In keeping with the provisions of the code the posts will be publicly advertised and the whole selection process will be overseen by an independent assessor.

Part II of the Bill sets out the arrangements for bringing political parties within the regulatory control of the electoral commission. In large measure the provisions of this part re-enact, with modifications, those of the Registration of Political Parties Act 1998. There is, however, one important difference between the scheme as set out in the 1998 Act and the scheme in this Bill. Under the 1998 Act, the registration scheme was essentially a voluntary one. Under the Bill, organisations which support candidates at an election are effectively obliged to register with the electoral commission. It is only by introducing this measure of

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compulsion that all political parties can be brought, as clearly they must be, within the scope of the controls on donations and campaign expenditure.

Consequently, it will no longer be possible for an independent candidate to include a description against his or her name on the ballot paper--unless, that is, the person or the organisation which he or she represents, if any, first registers as a political party, There may be different views on whether this change in itself is good or bad. But it is certainly, we think, unavoidable. If we continued to allow independent candidates to enter a description on the ballot paper, it would be open to an organisation to circumvent the controls on parties' income and expenditure by supporting any number of supposedly independent candidates up and down the country each of whom used the same description on the ballot paper. Because all these candidates had adopted the same description it would be possible to run a nation-wide advertising campaign in support of their election.

Before I leave Part II, I want to outline important changes to the registration scheme that the Government will be bringing forward in Committee. The purpose of these changes will be twofold. First, we shall be proposing a separate registration scheme for parties in Northern Ireland. The Neill committee, in its response to the draft Bill published last summer, rightly pointed out that any exemptions for Northern Ireland parties from the controls on donations in Part IV should apply to all such parties. As drafted, Clause 65 defines a Northern Ireland party as a party with one or more MPs elected for a Northern Ireland constituency or with one or more Assembly Members. The separate registration arrangements for Northern Ireland parties will enable all parties operating in Northern Ireland to benefit from the terms of an order made under Clause 65.

While on Clause 65, I ought to address the more fundamental objections that were raised when the clause was considered in another place--

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