That the Bill be read a second time.

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the House of Lords (Members’ Taxation Status) Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

My Lords, Britain is officially in recession. The spectre of deflation looms large. Retail prices have fallen over the past quarter at an annual rate of 10 per cent. Millions of our fellow citizens are struggling to keep their jobs, stay in their homes and pay their taxes, but there are Members of this House who are non-resident or non-domiciled for tax purposes. How on earth can it be right for Peers who avoid paying full British tax to vote, for example, on the Banking Bill as we pour tens of billions of ordinary, hard-working taxpayers’ money into the banks? How can any noble Lord in all conscience accept a peerage from the Queen for life and then keep signing tax returns—as you have to do as a non-dom—stating that he does not intend to stay permanently in this country? That is what non-doms do, and it is a disgrace.

We face the gravest economic crisis since the hungry 1930s. Our fellow citizens deserve moral as well as political leadership from their Parliament, but we are breaking their trust if we sit in this place, vote on their laws, but keep our treasure hidden in some tropical tax haven. Britain is fighting an economic war with its back to the wall. Tax revenues and tax collection will come under terrible strain, so for Peers to wriggle out of paying tax today is like wriggling out of conscription in 1940. My Bill is even more timely and urgent now than when I introduced it with wide-ranging cross-party support in the previous Session. Then, it ran out of time, but I thank all my supporters, many of whom have taken the trouble to be here today to show the flag again. In this Session, the Bill is off to a flying start with the first Second Reading slot for a Private Member's Bill. I thank my noble friend Lord Steel of Aikwood, who was in front of me in the queue, but who is, very sensibly on a grey day like this, cruising off Africa.

I look forward to hearing all noble Lords who speak today, especially my noble friend Lord Goodhart, who is exceptionally learned and helpful and a great expert on these matters and will particularly cover the question of Peers taking up temporary public appointments abroad under subsection (7). I will also be listening equally to noble Lords who were more sceptical in the previous Session, such as the noble Viscount, Lord Astor, and the noble Lord, Lord Selsdon, who always throws an entertaining and original light on any subject that engages his attention in this House. Remembering the Committee stage last year, I point out that the Bill does not change in any way any Peer’s tax status by one iota or even require him to disclose it. All that happens is that Peers will be taxed on the basis that they are fully resident and domiciled in this country for tax purposes, just like the vast majority of our fellow citizens.

Clause 1 is the key clause. It states that Peers are,

“deemed to be resident, ordinarily resident and domiciled in the United Kingdom and in no other country for taxation purposes”.

It is drafted like that because it is possible to be partly resident here and partly resident overseas. I have also avoided any need for Peers to make declarations publicly about their tax status or for Her Majesty’s Revenue and Customs to reveal any details about current Peers’ individual tax affairs to the authorities of the House or anyone else. We have drafted a simple and effective way of getting around that: the list of Peers’ names will be sent to the chairman of HMRC once the Bill becomes law and HMRC will be notified three months later of any Peers who have to be taken off the list under the terms of subsection (5) because they have chosen not to be taxed on that basis and have therefore taken leave of absence for life.

This is a new version of leave of absence, but it is just what it says on the tin: irrevocable. That seemed simpler than disqualifying Peers who do not pay full British tax, but the result is the same, except that they keep their title. In future, the Revenue would make a one-off declaration under subsection (7) that a new Peer is resident and domiciled in the United Kingdom for tax purposes within three months of his appointment. As this represents a change in the law since noble Lords were appointed to this place, it is only fair to give those who are not content to be taxed on that basis a once-and-for-all opportunity to opt out under subsection (2). By taking immediate and irrevocable leave of absence for life, they retain their current status, whatever it may be. What we cannot have is an open-ended rolling opt-out. There is no room for peripatetic parliamentarians who are British life Peers one moment, then Liechtenstein Lords, Monaco millionaires, Cayman Island counts or even Belize barons. Of course, Peers may want to spend time abroad for health or family reasons, but once you have accepted a peerage from the Queen for life and a seat in Parliament for life, you should pay full British taxes on your income for life.

Some Peers have argued that that simple change to clean up our act and our image in the country should wait for the second stage of Lords reform. As the House of Commons Public Administration Select Committee pointed out this week in its excellent response to the White Paper on an elected second Chamber, that moment,

“is some years off even at best”.

The committee, in arguing for a stronger House of Lords Appointments Commission, a view that I very much share, states that,

“change is needed and possible in advance of any legislation on the future shape of the second chamber”.

The logic is just the same for cleaning out the dark corner of Peers’ taxation status. It makes no difference whether you support an appointed or an elected chamber. Anyone who sits in this place and votes on our laws must pay full British tax.

My Lords, I very much welcome the Bill, although it might have been nicer to discuss it on a cruise liner off the coast of Africa—perhaps we could all have been there to hear the noble Lord, Lord Steel, tell us about the merits of his Bill on reform of the House of Lords. I have enough experience of Private Members’ Bills, as we all have, to know that this is a chance to air the principle behind it, which is very timely. Some of us will therefore not be addressing the detail this morning.

The noble Lord, Lord Oakeshott, made an interesting observation at the start of his speech along the lines of, “Here we are now in a recession and we see people in offshore tax havens having a legislative role in the House of Lords”. My noble friend Lord Lipsey and I were on opposite sides of a debate last night about who caused the winter of discontent. During the winter of discontent in 1979, 24 million working days were lost. For each increase in unemployment of 1 million in a year, 365 million days are lost. A 2 per cent increase in unemployment, which we have, means more than 600 million days lost. The crisis we are in at the moment is very relevant to the reputation of the whole financial services sector, those people who live in tax havens, and some of the best brains in the City of London who for years have dedicated themselves to defrauding the British public of the tax that they should be paying.

To complete the analogy, those 24 million days lost in 1979 and all the circumstances that led up to that—there are arguments on both sides—are thought among historians of the intelligentsia to have been the nadir of the trade union movement. I could argue about that but if it is true, a fortiori it is now true a hundredfold about the damage caused by people who are defrauding the country. What are they doing to the economy? These are the greedy people who have looked after their own interests. They have no interest in the rest of society. They have gone from 10 to 20 to 30 to 40 in leverage ratios, in pyramid lending and all the rest of it. It is a scandal that anyone with that status should be legislating in the House of Lords.

In one sense, I am quite happy that things continue as they are, because that will be a clear signal to many other sections of society, such as people in Burton-on-Trent in a few weeks or a few months’ time. Who are they going to blame for what is happening at the moment? They have to blame someone.

Mr Brown.

They are not going to blame Brown, they are going to blame those greedy people in the City of London. That is what the polls are showing and that is what will happen.

My Lords, I thank the noble Lord for giving way. Is it not true that the Prime Minister and the Labour Party started this whole story by blaming the American banks? Now they are blaming the British banks. Next they will blame the people. They will never take responsibility for it themselves.

My Lords, I am very glad that the noble Lord asked that question. The City of London is a big part of the globalisation process, which we are blaming. No one is arguing that globalisation is nothing to do with the City of London. It is the noble Lord’s friends in the City of London—

Oh!

My Lords, that will be the thought going through the minds of people in Burton-on-Trent. I am not talking about the noble Lord, Lord Strathclyde, himself but about all the people around him who are not squeaky clean in the party of which he is a senior member. I look forward to debating this further. It is interesting to ask: what is the political profile of our party versus the Conservative Party? Where did they go to school? Where did they get their money? That will quite rightly rub off on their party. I am very pleased that certain friends in the Conservative Party will try to defend where we are. That will be remembered.

Where are we with international financial reform? The G20 will be held in April in London or hereabouts and it will be attended by President Obama and leading statesmen from around the world. What will be the main item on the agenda? It will be the connection between worldwide regulatory reform of financial institutions on the one hand and what we can do together on fiscal expansion on the other. Regulatory reform has quite a lot to do with tax havens and multinational companies minimising tax—as we know, there are some very important merchant banks in the City of London that do not pay a penny of tax. That scandal will have to be opened up like the proverbial oyster—I believe that it is being opened up. When we met Swiss parliamentarians the other day, albeit in Davos and not off the west coast of Africa, we had very tough talks with them. They are well aware that the Germans, among others, are asking for those items to be put on the agenda. That is why the Swiss want to be invited to the G20 meeting, although they know that they do not have a chance of becoming members.

The bottom line is that this applies to everybody, regardless of whether you live in the Cayman Islands with friends—we may hear more about the benefits of the Cayman Islands. When we look forward to the G20, it is important to ensure that we give fair-dos to people in their taxation and clarify how to deal with the financial services industry, whose abuse of power is 100 times greater than any other in the previous 50 years.

My Lords, I am rather aghast at the moment. I assumed that the noble Lord, Lord Oakeshott, would not change his spots and that he would probably be naming and shaming many Peers. I had planned to do a Conrad Russell and move a Motion that the noble Lord should be no longer heard. I am now rather disappointed.

I notice that many on the Liberal Benches were not here for Prayers, when we set aside prejudice and partial affections. We saw a few prejudices just now from the noble Lord, Lord Lea of Crondall, whom I fully admire. I am happy to say that I am slightly older than him. I have been in the House longer than all four Liberal speakers put together—theirs is the new boys’ Bench.

I wonder why the noble Lord, Lord Oakeshott, has advanced this Bill. When he first mentioned some of the problems, I spoke with him and wrote him a friendly letter and we had a glass of wine together. I recall that he announced that he paid a six-figure sum in tax every year, and I wanted to know what it was. Under the Freedom of Information Act, I thought, having seen this Bill, that I would ask HMRC whether it could provide the information. My friend at HMRC said that of course it could not provide or publish such information.

What are we talking about here? We are talking about the Liberal party wanting to attack the other parties in order to promote themselves.

Shame!

No, my Lords, not “Shame”; that is the normal behaviour of the Liberal Democrat party.

I have the great advantage of never having given a penny to any political party and I have never been allowed to vote because my father died rather young, so I am totally independent. Here I come to the principal issues of the Bill. If it is a bit of fun, it is a good bit of fun. There is someone whom the noble Lord, Lord Oakeshott, mentioned last time whom we can mention under the rules here. The noble Lord said that we might, heaven forbid, even have Lord Mandelson of Mischief here. I think that the noble Lord, Lord Mandelson, would rather like that; that was suggested before anybody had contemplated that he would be a Member of this House.

On a more serious note, I do not want to decimate the Bill, but I thought that the answer was that I should add a whole range of new clauses. The first problem is Clause 1, which just does not work. I have raised that before and put it in writing. It involves the question of residency. Residency in the United Kingdom means that you must now—the law has been changed—be here for no more than 91 nights. However, you can be resident in several countries at the same time; other countries have their own tax regulations. The problem is that that is not a clear-cut issue.

Then we come to ordinary residency. If you have lived and worked abroad for a period and you come back to the United Kingdom, you are immediately resident if you are here for more than a certain period. You do not have to be deemed to be resident; you are effectively resident for tax purposes. Ordinary residency means that if you have been away for a period, it takes four years to become an ordinary resident. You are not an ordinary resident immediately. That causes some concern.

I have raised the question of domicility before and I have looked at it again at some length. I am not an expert on this, but in my life in international banking everybody wants to mitigate tax when there are transactions. The noble Lord, Lord Oakeshott, will have found that in his investment business. You seek to find the best opportunity if you are buying or selling businesses or investing to get tax clawbacks, government grants or capital allowances.

Taxation is a weapon of trade. I remind noble Lords that I am president of the Anglo-Swiss Society. We found in discussions with the Swiss that we wanted to co-operate on taxation. You wish to attract people to a tax-friendly—but not tax-free—environment. Our legal and accountancy systems in the UK are perhaps the most trusted in the world; that is a plus. People would like to be here for that reason, but not necessarily for that reason alone.

Domicility raises an interesting scenario. At birth, you take the domicile of your father. You therefore have that domicile for life or until you wish to change it, which you can do at the age of 16. When you change your domicile of origin, as it is called, you have to do certain things. You must cut off all links with your former country, you must resign from your clubs and sell all your assets, and you must do that, effectively, for life.

In your Lordships’ House and in many parts of this country, there are people who have come in from abroad who had foreign domicility to begin with. Why should they be penalised for such activities? Under the new rules, someone has introduced the horrendous phrase “non-doms”. Some people thought that that meant that we were getting rid of domestic servants. We have to accept that if you have been in the United Kingdom for 17 out of the past 20 years, under the new regulation you will be deemed to be domiciled. However, you have the problem of your domicility in other countries, which can cause concern not just in relation to taxation but in all sorts of human relationships. If you change your domicile and become domiciled here or are forced to be domiciled here, you effectively cut off your ties with your mother country. At any time, you have the right, under current law, to resile that domicility of choice and go back to your original country. I am a Scot and if we split up, I would be domiciled in Scotland, where I have a pretty serious opportunity. If you also have a place to bury yourself, as the noble Lord, Lord Desai, made clear at Second Reading, you are domiciled where that is. In Scotland, that is call a lair certificate—you receive a letter when you reach 50, which is the age at which you are expected to die, saying that the authorities hand that over to you. Normally a Scot has paid for the plot a long time ago and paid a maintenance fee for life, so you cannot be got at by the vicar to pay an extra amount. This means that you have a territory.

Just before this debate I went to the first floor to get advice on your Lordships. If a noble Lord takes a title and becomes an “of”, does he have a territory that could be related to having a grave? He has a designated territory. Let us take the noble Lord, Lord Oakeshott, who is “of Seagrove Bay”. After his title, the record states “of Seagrove Bay, of Seagrove Bay in the County of the Isle of Wight”. The comma is very important. Therefore, he has a territory, which, if I were standing in the European Court of Human Rights, would mean that he is domiciled in Seagrove Bay. It is a question of where the comma comes. Commas are very important. In some countries a comma means a full stop, particularly for money.

This whole domicile business is extremely worrying. I assume that the noble Lord, Lord Oakeshott, is putting this Bill forward purely for political reasons; but within it are some interesting points, which is why I should like to extend it. I believe that anyone in this country who is in Parliament or who is elected, who holds a public appointment or a job for which they are paid, should have that fully disclosed and have it disclosed that tax is paid on that. Over the years, I have asked Questions on whether the Government—not this one—would provide a list of what public appointments are held by Members of Parliament and what is their remuneration. Most people thought that that was a political issue. I wanted to demonstrate that the breadth of knowledge of your Lordships’ House was even greater because of the external appointments that Members held; but people are so concerned about party political sniping that it becomes worrying.

On a previous Bill, when I banged on ad nauseam at Second Reading, which was an unpleasant experience for me because I do not like doing that sort of thing, I drew attention to the problems that would come to the economy when international confidence went. I forecasted that the pound would go down and that foreigners would leave. A significant proportion in the fall in the value of sterling is because of that. People do not have confidence anymore that the United Kingdom is a stable place in which to live and work from a tax and other points of view.

I welcome the noble Lord, Lord Oakeshott, for having shown the clemency and understanding that he would not name and shame people. But also he should know that within your Lordships' House there may be, because of people who have come from the Commonwealth and elsewhere, many more foreign domiciles who would like to remain as such. As Her Majesty is Queen of many Commonwealth countries, we cannot look at this issue in isolation. We may come to the view that if people cannot become Members of this House because they are foreign nationals they may change their nationality. Does that forbid them from being Members? It is a complex issue, which is worthy of debate. I have enjoyed, so far, the prejudice of the noble Lord, Lord Lea, and I am sure that we will have prejudice later.

Perhaps I may point out that my noble friends Lord Trefgarne and Lord Astor, and I, together have more years of service than all those sitting on the Liberal Benches today. My noble friend Lord Trefgarne is younger than me but has been here longer. I hope that the wisdom of my colleagues will prevail and that the Liberal party sitting there with some three-line Whip on “Thank God it’s Friday”—

My Lords—

I might point out, my Lords, that a Private Member’s Bill in your Lordships' House costs £100,000 if the normal charges of lawyers, accountants and others are added up, which is a lot of money. We are spending two hours in this Chamber and, after adding all that up, the cost to the taxpayer of the fees that will be charged by the Liberal party is proportionately greater than they deserve.

My Lords, if the noble Lord looks at the records, he will find that the record of voting by the Liberal Democrats on all days far outstrips that of the Conservative Party.

My Lords, I have great support for the Liberal Democrats, but I do not support this particular issue. I have found them very co-operative and I have many friends among them, particularly from some of the smaller countries.

My Lords, I have resisted with some reluctance the temptation to move a resolution that the noble Lord, Lord Selsdon, be no longer heard. I may come back to that if, when we get to Committee stage, he speaks for as long as he did on the previous occasion. Since the end of 1999, when the House of Lords Act came into force, all Members of your Lordships’ House have been here by choice, either by accepting a life peerage, by standing for election as an elected hereditary Peer or by accepting an appointment, such as that of a Law Lord or a Bishop, which carries with it the right to sit as a Member of your Lordships' House.

Life peerages are no longer awarded, at least in principle, as honours for past services. They are awarded, or should be, in the expectation that the donee of the peerage will play his or her proper part as a Member of your Lordships' House. Membership of the legislature or one of the Houses of the legislature should involve personal commitment to this country. For Members of your Lordships' House, that commitment should include willingness to be liable to pay taxes on the same basis as the great majority of citizens of this country and the great majority of Members of your Lordships' House who are resident, ordinarily resident and domiciled in the United Kingdom. Those who limit their time in the United Kingdom to 90 or 91 days a year to preserve their non-resident status will be insufficiently frequent in attendance and insufficiently in touch with what is happening in this country to justify their membership of your Lordships' House.

As I explained in the Committee stage of the predecessor of this Bill, I was a “non-dom” until 1968. Non-doms are in a very favourable position because, even if they are resident in the United Kingdom, they are taxable only on income from a source in the United Kingdom or that is remitted from abroad to the United Kingdom. There is no tax on capital remittances, so it is easy for someone who is non-domiciled to avoid a great proportion of income tax by ensuring that, even if they are living a high life in this country, they are doing that out of capital remittances. Domicile is a complicated issue. Broadly, you are domiciled in the United Kingdom if that was your domicile of origin and you have not taken up permanent residence in another country or if you have a domicile of origin elsewhere and have taken up permanent residence in the United Kingdom.

The question of whether residence anywhere is to be regarded as permanent is notably subjective because it depends not on the present position but on an individual’s intentions. An individual may be able to say, “Oh, I do not intend to live permanently in the United Kingdom”, knowing perfectly well that in all probability he or she will. Those who have surrendered domicile in the United Kingdom, or who are resident in the UK as non-doms, because they have not committed themselves to personal residence, do not have sufficient commitment to the United Kingdom to justify membership of your Lordships' House. I suspect that very few Members of your Lordships' House are not resident and domiciled in the United Kingdom and that they pay their tax accordingly. But those Members who are non-resident or non-domiciled include some people—I will not name any names—of great wealth who have accepted the prestige of a title, without accepting the liability to pay United Kingdom taxes or any obligation to attend your Lordships' House. They have no intention of taking an active part here when they accept their peerage. They should not be among us.

This is a good Bill, which may benefit from some amendment. In the debates on the predecessor Bill in the last Session I moved an amendment to exempt people who have undertaken temporary public service abroad. That would include the notable cases of my noble friend Lord Ashdown who, so to speak, was the Viceroy of Bosnia-Herzegovina, and the noble Lord, Lord Robertson, when he was Secretary-General of NATO. It seems perfectly fair that people who are non-resident because they are performing an important public service should be exempt from the Bill. But these are only minor improvements that would affect a small number of people.

This is a good Bill, and whether or not it is likely to get through the other place, I hope very much that your Lordships will see fit to give it a passage through this House.

My Lords, trying to correct someone of such eminence is very shaming for me, but I should say that the rule is 91 nights in this country, not 91 days. It is an important point because people reading these proceedings may feel that the noble Lord is misinformed.

My Lords, I am most grateful to the noble Lord for his correction of my mistake.

My Lords, as a non-domicile, I must correct many of the statements the noble Lord, Lord Goodhart, has just made. If you have lived in this country for more than a certain number of years, you are classified as “ordinarily resident” here, but to lose your domicile of origin is far from simple. His comments about the basis for taxation, particularly in terms of income, are quite wrong. The remittance basis was cancelled by the Treasury from April 2008, and now people pay tax on a worldwide income or £30,000, or whichever is greater, whether or not they remit their money.

My Lords, the noble Baroness is broadly right but as I understand it, the £30,000 basis is an option that a non-dom can choose whether or not their actual remittance of income is higher than that.

My Lords, politics, rather like the weather, has seasons; spring, summer, autumn and winter. But politics has another season that usually comes around in August and is known as the silly season. One of the joys of the Lib Dems is that they always get there first. Normally, they get there in March or April when they come up with Private Members’ Bills, but this year they have beaten their own record, because the noble Lord, Lord Oakeshott, has brought forward the first Bill of the silly season in January. That must be a huge record for them and we must congratulate them.

But, really, this is a rubbish Bill. It takes no account of any of the reservations that were expressed during Second Reading or in Committee on the previous Bill. The noble Lord, Lord Goodhart, said that he moved, he thought, Amendment 3 to the previous Bill. But although the noble Lord, Lord Oakeshott, has had a number of months in which to include that amendment, which affects people working abroad for charities, for NATO or whatever, he has not done so—he has made no changes to his Bill. He has not listened to any of the debates, not even to his noble friend Lord Goodhart, because he should have made those changes.

Between the last occasion on which we debated the Bill and this, the Government have published their proposals in a White Paper. The foreword states clearly that there will be no changes to this House until after the next election. They also made some interesting remarks that are worth quoting about nationality requirements and taxation. Page 63 of the White Paper states that:

“The Government proposes that in the absence of any other changes to nationality requirements for membership of the legislature, British citizens and qualifying citizens of the Commonwealth (including citizens of British Overseas Territories) and citizens of the Republic of Ireland would be eligible for membership of a reformed second chamber”.

I presume that the Lib Dems signed up to this; certainly no one has said that they do not agree with it. If that is the case, the Government are saying that there could be Members of this House who are domiciled abroad in, say, the British Overseas Territories.

My Lords, I thank the noble Viscount for giving way. Nothing in this Bill says that such people cannot be Members of the House. There is simply an obligation to pay taxes on the basis that they are resident and domiciled in this country.

My Lords, the noble Lord has again proved that he does not really understand the difference between “resident” and “domiciled”. Although people may easily be able to change their residence and pay tax here, they may not be able to change their domicile—you cannot just go and change it. Indeed, if they are citizens of a British Overseas Territory—

My Lords, I think that the noble Viscount has not understood what I said, although I thought that it was perfectly clear. Someone who is domiciled in, let us say, Ireland, and who becomes a Member of this House, would not be disqualified from being a Member and would not have to change their domicile. It is simply that they will be taxed on the same basis as they would have been taxed if they had in fact been domiciled here.

My Lords, that makes absolutely no sense because you cannot be taxed on a basis that you are not a part of. The Government’s report talks about British Overseas Territories.

My Lords, in all honesty, I can only assume that the noble Viscount is wilfully misunderstanding the point. In my speech, I took the trouble particularly to refer to him and to the noble Lord, Lord Selsdon, because the same misunderstanding arose last time. Of course you can be taxed on that basis if the Bill is passed. It provides that someone will pay tax on the full British basis whatever their status actually is. I should have thought that that was crystal clear.

My Lords, the noble Lord did say in his speech that it was on the basis, but of course his Bill contradicts him. What his Bill says is that it is not on the basis that someone has to be resident and domiciled—it is nothing to do with the basis. The noble Lord cannot have it both ways; it is just not good enough. Indeed, it is the usual Liberal fudge.

Perhaps I may turn to the next page of the White Paper where it states that the Government,

“proposes that the creation of a reformed second chamber would include provision disqualifying from membership anyone who is not resident in the UK for tax purposes”.

That is perfectly fair, but it says absolutely nothing about domicile because that is not in the Government’s proposals. So far as I can see, no other party has made any objection to that. So the noble Lord says that he wants it on the basis, but that is not what his Bill says. It really is not good enough.

No changes have been made to this Bill. The noble Lord, Lord Desai, who sadly is not in his place, wanted an amendment to provide that these proposals should not, for life, be irrevocable, but I can see nothing in the Bill to that effect and the noble Lord, Lord Oakeshott, did not mention it. Moreover, one of the weaknesses of the Bill is that we want everyone who is a Member of the Parliament of this country to pay tax, whether here or in another place. The rules for this House should be exactly the same as those for another place. But if we are going to do that, the same provisions should be brought in for the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly so that they are the same for everyone. To select just this House seems bizarre.

As I say, everyone should pay taxes if they sit in this place. The noble Lord, Lord Goodhart, told us that he is a former non-dom and remarked that no one comes here as a reward for past services. I do not think that that is correct. A number of noble Lords were Members of another place and the reason that they are here is because they were very distinguished Members of Parliament. Yet again, we have heard from the Liberal Benches something that does not make sense.

This is a silly Bill because it is a half-hearted attempt at reform. It does not take account of all that is happening elsewhere and I really hope that this time it will not go any further.

My Lords, no one should be even faintly surprised that noble Lords opposite are trying to get straight to the Committee stage of this Bill by looking at the detail. Even they would blush at defending the present situation in this House so far as people who do not live or pay tax in this country are concerned. I warmly commend the Bill on its Second Reading, although of course more work does need to be done on the detail. But being an awkward guy, I shall begin by addressing a point on which I profoundly disagree with the noble Lord, Lord Oakeshott, and indeed with my noble friend the Minister, which is the nature and composition of this House. They are believers in a democratically elected House of Lords, and they are entitled to their view. When this Bill was last introduced, that was the morning glory in full flower. Today the proposition of an elected second Chamber is for all practical purposes dead, buried, no more, and has fallen off its perch. We need therefore to look at this Bill from the point of view of what is likely to continue to be an appointed Chamber.

My Lords, perhaps I may inform my noble friend that there are still some true believers.

My Lords, my noble friend is right, there are still true believers—there is no faith so absurd as not to still attract true believers—but the truth of the proposition that I have advanced speaks for itself.

In all probability we shall continue to be an appointed House, so why then do we need this Bill? We need it as a matter of legitimacy. I do not have any difficulty in saying that an appointed House can have legitimacy as a second Chamber to an elected House within a balanced Parliament. Precisely how that is achieved—how it is appointed and so on—is an important matter, but I have no difficulty with the proposition.

But the advocates of election have difficulty with that proposition and they try to find examples whereby our legitimacy as a House can be questioned. The fact that people who no longer have, or choose not to have, much or anything to do with this country can pass legislation is indefensible in the way that legislation being effected by people who have expertise and knowledge of this country is defensible. Therefore, by simply buttressing the legitimacy of this House, a Bill such as the one proposed by the noble Lord, Lord Oakeshott, is desirable.

I am disappointed that the Government have not enthusiastically embraced the Bill, put it through both Houses with full ministerial backing, and backed up their own rhetoric, public and private, with action. The reason behind that—I have raised this issue in the House before—lies in the fact that there are people in the Government who grew up when Trotskyism was alive and well in this country and who are in an impossible position on the House of Lords. They want to keep this House, with all its absurdities—of which there are some—in place so that the contradictions in its being are emphasised, thereby advancing the case for electoral reform of the House. That is a position which is both indefensible and immoral.

The simplest answer to the issue came from the Public Administration Committee chaired by Tony Wright—another of those who want to see this House elected—which stated:

“The introduction of a fully or largely elected second chamber would render the changes we propose obsolete. But that moment is some years off even at best”.

If by common consent of both the reformers and the non-reformers it is, at best, some years off, surely we should do everything we can to get rid of some of the problems that exist with this House. This issue is one problem; the status of the Appointments Commission is another; and the issues covered by the Steel Bill are others. Get those out of the way and then we can get on with a true discussion as to what is the best nature of this House. I am not afraid to have that discussion.

But to allow to continue these false obstacles to the way the House is, to defend them or to take no action to get rid of them, is both an immoral and indefensible way in which to proceed. I hope therefore that my noble friend the Minister—although I cannot now hope for his conversion to an appointed House—will announce at least that the Government have been converted to making a good House even better.

My Lords, not being an expert on taxation, I, too, wish to address the principles of the Bill. It has a number of positive aspects: it is short— only two pages—and it is simple. I read the Bill for the first time when I put my name down to speak and I found that it was clear about what it is trying to achieve. The strong point about the Bill is that it is about the straightforward principle that if you have the privilege to engage in the legislative process of this country then, on the other side, you have obligations and responsibilities. In discussions about the Human Rights Act and so on, we often hear people say, “Never mind rights. What about obligations?”. One of the biggest obligations of parliamentarians is to play a full part in civic society, and the most basic obligation is to pay taxation and dues—your membership fee to the nation—for the great privilege of being a part of the legislation process.

That is the fundamental principle of the Bill, against which all of us would find it difficult to argue. More details may emerge in Committee—I did not attend the last Committee stage of the Bill—but what we are discussing today is the principle of the matter, which is quite clear and unarguable. I would be interested to hear any noble Lord argue against the principle that if you have the privilege of being a part of the legislative process, you should pay your taxation as a citizen. We often refer to there being no taxation without representation, but surely you have an obligation to pay taxation if you make legislation. I have been a Member of this House for a short period of time, as the noble Lord, Lord Selsdon, reminded me; it is a great privilege but has great responsibilities. I am happy to pay my taxes and other Members of your Lordships’ House should be as well.

This is a small but important matter in constitutional change which reinforces the dignity of this House and Parliament. I hope that the Government will see it as a significant part of the constitutional reform programme that they wish to implement more generally and use it as a piece of the jigsaw in that process.

My Lords, I agree with some of the principles the noble Lord has outlined, but they should be applied to everyone in the country who makes legislation—county councillors and so on—which is somewhere around 106,322.

My Lords, I agree with the noble Lord. But this House has a responsibility to put its own house in order. I look forward to speaking at the Second Reading of a Bill that does exactly that, should the noble Lord wish to introduce one.

My Lords, the basic principle is one with which many noble Lords will agree. I say to the noble Lord, Lord Oakeshott, that there are respectable arguments in the other direction. I shall not attempt to deploy them because I am not sure that I have them at my fingertips and I am more concerned with a range of difficulties which emerge from the Bill. But they are for consideration at the Committee stage, not today, and I will resist the temptation to recite some of the difficulties which occurred to me the last time the noble Lord introduced this Bill. I may well wish to return to them again in Committee if the Bill receives a Second Reading.

The other principle that has been deployed is that we are reflecting as a Parliament and as a nation upon the future composition and role of this House. As has been mentioned, a White Paper was issued by the Government some months ago anticipating that we should move forward in an agreed manner on the question of House of Lords reform when that agreement can be reached. I fear that it has not yet been reached and certainly the Government are not intending to make further legislative proposals on this matter within this Parliament. If a different Government are in office in the next Parliament, I dare say this issue will not be top of their agenda, so we are not facing an early prospect of Lords reform.

The Bill suffers from the same defect as similar Bills in the past and, for that matter, the Bill that went through Parliament in 1999. They were a piecemeal attempt at reform of your Lordships’ House, and incomprehensive reform at that, that included some of the provisions in this Bill.

It is therefore inappropriate for the Bill to be considered at this moment. It did not find favour when the noble Lord introduced this Bill in the previous Session, and it is now only a few months on from that consideration. I hope that he will not press his Bill through this House if he gets a Second Reading today. If the Bill goes to Committee, I, and, I dare say, others, will want to table amendments to it. I shall certainly do so, as I think will my noble friend Lord Selsdon and other noble Lords—even the noble Lord, Lord Goodhart, who has already identified some of the shortcomings of the Bill, speaking, as he does, with some expertise in these matters and from the Liberal Democrat Benches.

I promise the noble Lord, Lord Oakeshott, that the Committee stage will not be quick. We will need to consider the Bill very carefully. In the mean time, I look forward to seeing what happens to it at Second Reading.

My Lords, this is a serious issue. It concerns the reputation of this House, and of the Conservative Party in particular. I presume that that is why the noble Lord, Lord Strathclyde, is here on a Friday. I welcome him; we have missed him here in recent days, and I hope he has not been ill. I look forward to him expanding on the intervention he made at the beginning of this debate when he said that we needed to talk about taking responsibility. That is what the Bill is about: Members of this House taking responsibility. If I may turn around the phrase from the American revolution, “No taxation without representation”, in the British Parliament there should be no participation in legislation without taxation. We do not want Members of either House of Parliament who are tax evaders.

We have heard, if I may say so, one or two flippant speeches. It is clear that the noble Lord, Lord Selsdon, intends, so far as possible, to wreck the Bill in Committee. I entirely failed to follow much of his argument. He seemed to suggest at one point that the length of time one has served in this House is completely correlated with the degree of wisdom one has. I am not entirely sure that what I have observed in my nearly 14 years’ membership of this House bears out that suggestion. The reason I did not stand up immediately when the noble Lord, Lord Trefgarne, finished his speech is that I was totting up the number of years that I and my noble friends Lord Falkland and Lord McNally have spent here, and although it does not quite approach the total of the noble Lord, Lord Selsdon, it is quite close. That, among many of his arguments, seems to be rather unclear.

I was interested to hear a declaration from someone with a background in international banking who takes the Conservative Whip that they have never given a penny to any political party. I trust that the Conservative Whip will be in touch with them shortly. I assure the noble Lord that on these Benches someone who took the Liberal Democrat Whip who had not given a penny to that party would be in serious trouble very quickly.

On the previous occasion when we debated the Bill, the noble Viscount, Lord Astor, confused Luxembourg with Liechtenstein. This time I think I heard the noble Lord, Lord Selsdon, tell us that Selsdon was in Scotland. Perhaps there is another Selsdon, in Scotland, that I have missed.

My Lords, I have a problem: I am a Scottish Baron with an English barony registered in Scotland and a baronetcy. I might buy the noble Lord a drink later and we could have an exchange.

My Lords, the Bill is about Members of this House taking responsibility as legislators in the UK to pay tax in this county. We have to recognise that the reputation of politicians in the United Kingdom at the moment is low. The mess we had this week over the Government’s attempt to push through the members’ expenses order is the latest example of own goals with regard to our reputation. On Wednesday the noble Lord, Lord Bassam, said he was withdrawing the order in the hope that the Government would manage to re-establish a cross-party consensus. There never was one. There may have been a comfortable two-party consensus between those on the Labour Benches who had something to hide and those on the Conservative Benches who had something to hide, but we were never consulted and certainly never agreed.

As we enter a recession, we recognise the degree of public anger at the denial by the financial elite in Britain, the United States, France, Germany and elsewhere of any responsibility to their wider national societies—certainly not in paying tax. I well remember Leona Helmsley’s dictum in a previous recession that, “Only the little people pay taxes”. That is one of the problems we are up against, and it is something that my party will be campaigning on in the next few months; we need fair taxation, and everyone should pay tax.

There are severe dangers to the Conservative Party, and I am sure the noble Lord, Lord Strathclyde, is aware of them, in allowing itself to be identified with fat cats and tax evaders. We know, without mentioning names, that there are those appointed to the Conservative Benches who made promises on appointment that have not been fulfilled, one or two whose status is in need of clarification and has not been clarified, and we know that some of those people are among the largest donors to the party. So there are issues—and I agree with the noble Lord that we need to take responsibility—of disciplinary measures within the Conservative group.

The issue is about the reputation of this House and, as the noble Lord, Lord Lipsey, said, about interim measures that we need to take, recognising that, whatever the final shape of this House may be, we are going to be stuck with its current composition for some time. Perhaps other measures will come through on an interim basis, but this is one that I suggest needs to be considered seriously. The Conservatives will do themselves great damage if they attempt to treat this flippantly or sarcastically and suggest that the evasion of tax is not a serious problem.

My Lords, the noble Lord has made a number of remarks about the Conservative Party generally. Is he absolutely certain that every single member of the Liberal Democrat Party is above reproach in these matters?

Of course not, my Lords, and we shall do our best to sort that out—as I am sure the noble Lord, Lord Strathclyde, will do.

My Lords, I am glad to hear that the noble Lord, Lord Wallace, takes these matters so seriously. Once again today the Liberal Democrats have raised the salience of Lords reform. I remind noble Lords that this is one of my favourite subjects; I have spoken on this subject probably more than any other Member currently, and I am looking forward to continuing to do so. We have not had an opportunity for quite some time, so it is tremendous to be able to dust down the old files and make another speech on the subject.

When the noble Lord, Lord Oakeshott, started, I thought he was going to make a rather more interesting point about the state of the economy, taxation, debt and trying to make this country a more attractive place for people and businesses to come and base themselves here—an issue that really would have an impact beyond this House. Sadly, I was disappointed. Many will have no quarrel with this Groundhog Day. The noble Lord should be under no illusions that if he starts to legislate to exclude certain Peers from this House, some will question why others should sit here at all.

The noble Lord, Lord Lipsey, talked about the absurdities of this House. The noble Lord was quoted in the Times some years ago saying, “You couldn’t elect better Lords than me”, so perhaps that is an absurdity we should start off with.

My Lords, I was not quoted as saying any such thing in the Times. They put that headline on my piece. If the noble Lord reads the rest of it, he will find that I could stick to every single word of it.

My Lords, I am glad that the noble Lord has put that right and I hope that he will now start to support an elected Senate.

If the noble Lord, Lord Oakeshott, starts to probe into the personal finances of individual noble Lords as he wants, others will no doubt probe how it is that his party has utterly refused to pay back £2.5 million obtained from a convicted fraudster. Only the little people have to pay money back, is that not right? Perhaps we should look for legislation to stop people whose party goes on benefiting from such donations making our laws. Perhaps the noble Lord himself might start drafting it, with the help of his noble friend Lord Wallace of Saltaire. The reputation of his party is at stake. Perhaps he might wish to make a statement as to whether it is planning to repay that money.

The noble Lord, Lord Oakeshott, is getting a reputation for shouting the odds about this House outside it in ways that do not always reflect accurately on it. Last weekend, he was offering a rent-a-quote comment on the voting records of some of his colleagues—the noble Lord, Lord McNally, might be interested in this—so I thought that I would look up that of the noble Lord, Lord Oakeshott. He was equal 51st in the table of Lib Dem voters in the previous Session. That puts him struggling to avoid relegation from the Lib Dem third division to the fourth.

Last year, the noble Lord brought this self same Bill to the House. It did not find favour. It was extensively debated. Suggestions were made, even by its critics, to improve it, but has the noble Lord listened? Has he had any discussions with anybody? Has he made any changes whatever to this legislation? Perhaps he has had private discussions with the Government about the Bill. No, he has not. We have to question why the noble Lord believes that he has the right to bring before the House the same Bill which failed last year and the year before in exactly the same way, rather than listening more considerately to those who have criticised it.

It is a game that the noble Lord and his friends play in debating this issue to pretend that those who oppose the Bill oppose the underlying principles of it. I therefore make it clear, as I did last year, that I and my party believe that if you make UK law in either House—it is a flaw of the Bill that it deals only with one House—you should pay UK tax.

Whether it should be only UK tax is a different matter. I am not a tax expert, nor is the noble Lord, Lord Oakeshott—even the noble Lord, Lord Goodhart, accepted that it is a deeply complex matter. Many technical issues will need to be addressed if the Bill is to be progressed. Some of them were thrown up by my noble friend Lord Selsdon. I am grateful particularly for the interjection of my noble friend Lady Gardner of Parkes. As I asked last year, what about those who do jobs for the United Nations, the EU or other organisations? Can the noble Lord give the House an assurance that Mr Clegg paid full UK tax on all his EU earnings, from which he will draw a pension? What of businesspeople in mid-career who take contracts abroad? What about gifted businesspeople such as the noble Lord, Lord Paul, who is widely respected in this House and who came to this country to create jobs but may not always be domiciled here? And what, indeed, about the old Liberal Democrat ideal that this country and this House should be open to people born in the new Commonwealth or in other countries? We have Members in this House who are not UK citizens. Should they go? The noble Lord, Lord Goodhart, said that Members of this House should be so committed to this country that they should pay all their taxes here, but does he think that they should also revoke any other nationalities and become United Kingdom citizens and, if so, will the noble Lord accept an amendment to that effect?

I also disagree with giving HMRC any authority over Members of this House. This House’s membership and who sits here is a matter for the Committee for Privileges of your Lordships' House. Since when does the Customs man have any say on who sits in a sovereign Parliament? If there is any system, it should be managed by the Clerk of the Parliaments. I totally disagree with the draconian idea of a life ban as proposed by the noble Lord, Lord Oakeshott, in Clause 1(3). I doubt that it is even in conformity with human rights principles. We should perhaps hear from the noble Lord, Lord Lester of Herne Hill, on that subject in Committee. Even murderers get out in seven to 10 years.

These and many other issues will need scrutiny in Committee. But what should happen next? This is the third or fourth occasion on which we have had a very similar Bill before us. I doubt very much that it will pass this House. If it does, I understand that the Government will not support it in the House of Commons. Would it not be better if we left all this for proper, well thought-through government legislation on reform not just of this aspect of the House but of so many others, so that we could carry on dealing with the serious issues that face our nation?

My Lords, I say first to the noble Lord, Lord Oakeshott, that, like the noble Lord, Lord Strathclyde, I have been suffering some withdrawal symptoms, since I think that we have to go back as far as last March to find ourselves last being able to debate a subject of keen interest to a number of us; namely, reform of your Lordships' House. I think that we can now look forward to spending many happy Fridays in your Lordships' House debating these matters, as well as, no doubt, the Bill of the noble Lord, Lord Steel, when he eventually returns from his cruise.

This is not the first time that we have debated this matter. Indeed, this morning we have been treated to a fascinating debate. My noble friend Lord Lea gave a very stirring speech, and the analysis of the noble Lord, Lord Selsdon, of the Liberal Democrats as a collection of new boys was certainly interesting. As I fast approach receipt of my bus pass, I rather enjoyed his description.

When the noble Lord, Lord Oakeshott, introduced a very similar Bill on this matter in March last year, he set out a simple principle, that,

“if you pass laws for British people, you pay taxes like British people”.—[Official Report, 14/3/08; col. 1711.]

That has been summed up very simply as no representation without taxation—the noble Lord, Lord Wallace, repeated that.

The Government cannot and would not wish to argue with that principle. I support what the noble Lord, Lord Goodhart, said about the commitment of Members to your Lordships' House. Paying taxes is an important way in which Members of both Houses of this Parliament demonstrate a commitment to the country that they serve through their parliamentary work.

As is customary, the Government do not seek to impede the progress of a Private Member’s Bill through your Lordships' House, but, equally, it would be useful if I set out some of their reservations about the details of its provisions. The Government are fully entitled to bring to the House those reservations and to ask that the Bill be given extensive scrutiny, without in any way detracting from our support of the no-representation-without-taxation principle. A number of noble Lords kindly mentioned the well ordered White Paper on reform of your Lordships' House which was published last summer. It was informed by the extensive discussion in the cross-party working group and set out clearly how we thought it best to proceed on those matters.

Let me come to some of the details of the Bill. The noble Lords, Lord Goodhart and Lord Selsdon, as well as the noble Baroness, Lady Gardner, illustrated the complexity of matters around domicile status. I remind noble Lords of a commitment that the Government made in last year’s Budget, which undertook not to substantially revise or revisit rules on residence and domicile in this Parliament and the next. We stand by that commitment; the Budget’s measures on residence and domicile strike the right balance between helping to maintain the competitiveness of the UK economy and providing a tax system in which everyone pays their fair share.

A number of noble Lords have commented on the financial challenge facing this country; I should have thought that the stability and balance to which I have referred was ever more important in those circumstances. The stability that we have committed to in rules governing domicile help the UK, and will continue to help the UK, to be an attractive destination for talent and investment in our economy.

A number of technical points were raised, and it is with some trepidation that I provide the House with information, although it is appropriate that I do so. On the £30,000 charge for access to remittance basis, my understanding is that non-domiciles are not forced to access the remittance basis; it is their choice whether to apply for access to that tax status. Non-domiciles who access the remittance basis for more than seven out of the last 10 years must then pay £30,000 to continue to access the remittance basis or move on to the arising basis. These provisions and others in the 2008 Budget statement strike the right balance between asking non-domiciles to pay a fairer share as they stay in the UK for longer and maintaining the UK economy as an attractive place to invest.

My Lords, does the Minister agree that the £30,000 would be chicken feed for some of the very rich people who spend a lot of time in this country but are non-domicile?

My Lords, as I have said, we think that the £30,000 annual charge is a reasonable basis on which to achieve the kind of balance that I have just described. I shall come on to the definition of domicile. I have to say to the noble Lord, Lord Selsdon, that the 17 out of 20 years rule applies only to inheritance tax, because the proposal to extend the rule to all tax categories was rejected after public consultation. I suspect that we will have a very enjoyable canter on taxation rules in Committee.

I come to the question of deeming, which is also a matter of interest and concern. I have referred in brief already to the question of the 17 out of the last 20 years. Clearly in our consultation the Government gave great consideration to that. But in the light of the consultation’s consideration and its rejection, one would have to think very carefully about reopening the question so soon.

In addition, I have to say to the noble Lord, Lord Oakeshott, as I said last time, that we are concerned with the proposal to deem Members of the House to be domiciled tax-resident and ordinary tax-resident in no country other than the UK. Taken together with the Bill’s amendments to the Income and Corporation Taxes Act 1988, the provision would override the double taxation treaties. The Government have made it clear that we cannot override those treaties unilaterally. Amending them by bilateral agreement is unlikely to be a practical suggestion, since this Parliament has no jurisdiction over how other countries define individuals as resident or non-resident for tax purposes. That indicates that, whatever the principle behind the Bill, it is not a simple matter of simply passing it without giving due consideration to all these difficult matters.

On the question of Peers who work abroad, the noble Lord, Lord Goodhart, made a very pertinent point in the last debate and today’s debate as well. I hope that there will always be cases of Members of this House working abroad, sometimes for long periods of time, in high-profile international organisations. Long may that continue and long may they then be able to come back to your Lordships' House. We have seen in our debates on foreign affairs the huge advantage that that brings to your Lordships' House. We would have to be very careful about that.

Aside from the technicalities of all these matters, it is worth bearing in mind two points. First, the House of Lords Appointments Commission has informed the Prime Minister that, as from June 2007, nominees need to be resident in the UK for tax purposes before the commission will consider their nomination. I understand that that policy covers both political and non-political candidates. I also understand that it has been reaffirmed by the noble Lord, Lord Jay of Ewelme, who has taken over the chairmanship of that commission.

As the noble Lord, Lord Teverson, suggested, one needs to place this Bill in the wider context of Lords reform. As I have said, we referred to and dealt with the matter of tax status in the White Paper on Lords reform, proposing that all Members would need to be resident in the UK for tax purposes. The noble Viscount, Lord Astor, quoted from the White Paper, and my noble friend Lord Lipsey felt that the morning glory of that White Paper had gone. I do not know whether the noble Lord, Lord Strathclyde, or I ever felt that it felt like morning glory. The morning may have gone, but there are still elements of glory in that remarkable document.

This matter is much better dealt with in the context of comprehensive reform of your Lordships' House. I very much agree with the noble Lord, Lord Trefgarne, on that matter. We have set out those proposals. I totally disagree with my good and noble friend Lord Lipsey on his analysis that Lords reform might be many years to come. I remain confident that it is entirely possible, based on the consensus reached between the political parties in the White Paper, and following the next general election. That is surely the best way in which to deal with this important matter.

My Lords, I thank all noble Lords who have spoken. I should probably start by apologising to the noble Lord, Lord Selsdon, for shooting his fox. He was obviously deeply disappointed that I was, as my noble friend Lord McNally said, statesmanlike. Indeed, noble Lords may have heard not a breath of partisan comment pass may lips—and I must chide him gently for bringing in a political note.

There is an important point, however—and I was sorry that neither I nor my noble friend Lord Goodhart seemed to manage to get it across to the noble Lord, Lord Selsdon, or the noble Viscount, Lord Astor. Indeed, there were one or two passages in the Minister’s speech where there seemed to be confusion about how the Bill would work. Let me put it even more simply, if I can. We are just saying that noble Lords will be taxed as if they were fully resident and fully domiciled in this country, and no other. It is a very simple point.

My Lords, the noble Lord, Lord Oakeshott, has repeated his mantra, but the problem is that that is not what his Bill actually says. The Bill says:

“No person shall become a member of [this House] who is not resident, ordinarily resident and domiciled in the United Kingdom”.

It has nothing to do with different bases. It is not equivocal or more complex than that. Or is the noble Lord saying that he will change Clause 1(6)?

My Lords, I am sorry, but that would be for the future. No one will become a Member of this House on that basis in the future. That is made quite clear and that is the position of the Appointments Commission. The Bill mainly seeks to deal with the people who are here already. That is why that clause is different. For the people who are here already, it is clearly on that basis.

My Lords, I am sorry to interrupt, but the Appointments Commission, as I understand it, deals with residency and has nothing to do with domicile.

My Lords, the principle is clear and I am sorry if I did not fully get it across.

My Lords, noble Lords may find this helpful. The noble Lord, Lord Jay of Ewelme, gave evidence to a pre-appointment hearing before the Public Administration Select Committee, on 22 July. Speaking about new appointees, he said:

“As I understand, they should pay UK taxes”.

He continued:

“I think anybody who is appointed to the House of Lords should be paying taxes in this country and, in addition, should be playing an active part in the House of Lords”.

That is probably helpful .

My Lords, moving on, I thank the noble Lord, Lord Lea, for his support. He made a very powerful point about the irresponsibility of financial elites. In particular—he did not name anyone but I will—he picked out Merrill Lynch, which has so arranged its affairs to create enormous tax losses and will not be paying tax for many years in this country.

I thank my noble friend Lord Goodhart for his support. We talked a little about the cost of this debate, but when you listen to my noble friend’s speech I have to say that it is worth £100,000 of anyone's money. I also thank the noble Lord, Lord Lipsey. All I can say after that speech is that I wish he were the Minister.

My noble friend Lord Teverson made a powerful speech. I very much liked his view about the tax we pay being a membership fee to the nation. We do not want any country Members in this House.

The noble Lord, Lord Trefgarne, like the noble Lord, Lord Hunt, is against piecemeal reform, but to my regret and that of many of my colleagues, it will be several years before comprehensive reform comes about. Surely, whatever one's views on reform and the right shape of the elected Chamber, this is a problem that could be rectified now. Whether Members are elected or appointed, the principle is just the same.

In her intervention, the noble Baroness, Lady Gardner of Parkes, rightly made the point about a £30,000 limit, but such a limit would be a flea bite for a multimillionaire. Not that he will be a Member of this House, but for Mr Abramovich that would be a round of drinks at Stamford Bridge. A £30,000 limit does not affect the basic point. I imagine for some Members of this House who are non-domiciled, a £30,000 limit would also make little difference.

I thank my noble friend Lord Wallace of Saltaire for his very powerful speech.

My Lords, is the noble Lord not missing something? Although the Mr Abramoviches of this world do not pay income tax, they do pay other taxes such as VAT and make an enormous contribution to the Exchequer. It is hard to see how Chelsea Football Club would survive without Mr Abramovich.

My Lords, we are drifting slightly off the point. I do not know how up to date the noble Lord, Lord Forsyth, is, but Chelsea Football Club is up for sale and Mr Abramovich is trying to get out. He has fallen on rather hard times, I am afraid.

Turning to the speech of the noble Lord, Lord Strathclyde, I am bound to say that from the previous time I introduced the Bill in this form and from the encouragement I received, we have moved to a more sceptical position. He and other noble Lords said that it did not find favour last time round. It is not a question of that; it ran out of time. There was only one vote on it, which we won, so that was not a fair comment. We are now trying to proceed with the Bill and have started much earlier in the Session. The noble Lord teased me about my voting record. I am not at the top of the Liberal Democrat list. He might say that I would be in relegation trouble, but if I were a Conservative Peer, I would be right up in the Premier League with that voting record.

The key words I heard in the speech of the noble Lord, Lord Strathclyde, were that if you were a Peer, you should pay British tax. He did not say you should pay all British taxes; he said that you should pay British tax. That could mean pennies, or a bit of VAT. Whether or not it means all British tax is a very important issue. I invite the noble Lord, if he does not agree, to stand up.

My Lords, if that is going to be the standard of debate that we will have in Committee, then bring it on.

My Lords, I reiterate: would he care to insert the words “full British taxes” into what he just said? No. We shall see; it is a very important issue. “Tax” is quite different from full British taxes on the basis that you are fully resident and domiciled in this country. That is extremely significant.

My Lords, we must look at double taxation agreements.

My Lords, as far as I am concerned, Members of this House should pay full British taxes and that is an end to it.

This is a Second Reading debate, and we have had a good discussion of the principles. I have tried to keep it on principles and not personalities and there is an important issue here. I am disappointed by the Government’s reaction. They may not like the Bill—and I can understand that and that they might want to amend it—but I am disappointed that we are still hearing the argument that, because the Budget two years ago said that there would be no substantial change in the position of non-doms, that somehow stops a long overdue reform of this House, which would be minor in terms of the overall number of non-doms here and is almost a self-regulatory issue. I cannot see that that is a sensible excuse to hide behind, so I am disappointed. If the Government do believe in making these changes, I wish that they would get on with it. I would be happy to work with them, but I am disappointed at the tone, which seems to suggest kicking this into the long grass. I hope that as the Bill progresses we will move forward.

My Lords, the noble Lord said that this was a marginal issue compared with the general principles. However, today’s debate has shown that it is unwise to deal with taxation matters simply in the way that the noble Lord suggests without understanding the wider implications for taxation policy, which has clearly been demonstrated. On the question of kicking the issue into the long grass, does the noble Lord not recognise that the danger of these incremental approaches to Lords reform is that they will inhibit the move towards fundamental reform? I will take the same view about the Bill proposed by the noble Lord, Lord Steel, for the same reason.

My Lords, I do not wish to fall out with the Minister on that because in general terms I agree about the major changes. But the point about the change in this Bill is that it is effective, important and urgent, whatever one's views about the wider issue of Lords reform. With that, I thank the many speakers who have been supportive and ask the House to give my Bill a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.