To ask Her Majesty’s Government what assessment they have made of whether the conflict in Gaza has breached international humanitarian law.

My Lords, I reinforce the comments made by my noble friend Lord Malloch-Brown that we take allegations of breaches of international law very seriously. The UN is investigating a number of specific incidents that occurred in Gaza during the conflict. The Israeli authorities have also said that they are investigating specific incidents raised by the aid agencies. We shall consider very carefully the results of investigations once they are available.

My Lords, I thank the Minister for that response. Will our Government press for the establishment of a prompt, impartial and independent investigation which will make public its findings and provide recommendations as to how the people who are responsible should be held to account?

My Lords, as I indicated in my original Answer, the United Nations is investigating damage to its property and injuries and death to its personnel in Gaza. The Israeli Government, too, have undertaken to examine the conduct of their forces in Gaza. The House will appreciate that Israel is a signatory to the Geneva Convention and therefore has obligations. Those investigations will go on. We will of course monitor the situation carefully and take any action which is necessary as a result of the outcome of those investigations.

My Lords, is my noble friend aware that the Israel Defence Force is currently conducting seven internal investigations into alleged incidents during the Gaza conflict which, if determined to be in breach of humanitarian law, will lead to those responsible being prosecuted? Does he not agree that this demonstrates Israel’s willingness as a vibrant democracy to hold itself accountable for any breaches that may have occurred? What steps are being taken to ensure that similar inquiries are conducted into alleged violations by Hamas?

My Lords, the British Government expect the Israeli authorities to carry out investigations where there are allegations of breaches of humanitarian law in the conduct of conflict, and, as I mentioned earlier, Israel is a signatory to the Geneva Convention. That is not the case with those on the other side, although there is no doubt that, where evidence is available, the United Nations will be very concerned about the matter. We wish to ensure that any breaches are identified and people held to account.

My Lords, now that the International Criminal Court has for the first time issued a warrant against a serving head of state, in the case of Sudan, and that a number of Governments in the Arab world and Africa, including the Saudis, are saying that this is a perfect example of the way in which the West uses international law against the developing world but does not apply standards against its own friends and allies participating in conflict, is it not important that we are all seen to judge actions not only of other Governments but also of our own Government against the standards of international law that we wish to insist on?

My Lords, of course, that is an unimpeachable principle, but the noble Lord will also recognise the fact that these are very different circumstances in which conflict occurs. Of course, there are higher priorities than these issues, important though they are. The world is mostly interested in securing a fair and peaceful arrangement for the development of the relationships between Israel and the people of Palestine and Gaza. Those matters need to be taken into account. It is not always the case that a threatening challenge to those who have been responsible for reprehensible conduct is necessarily the next stage forward in advancing the cause of peace.

My Lords, what is the approximate number of missiles fired by Hamas into southern Israel since the ceasefire? Will the Minister confirm that it is not the case that Israel and Hamas stand on exactly the same ground in international law? Israel is a fully constituted democratic sovereign state, while Hamas is a proscribed terrorist organisation, so labelled by the United States of America, the European Union, Australia and Canada.

My Lords, of course, the noble Lord is right on the latter point. There is a difference between a sovereign state and the Hamas rule in Gaza. That means, therefore, that the expectations, obligations and any sanctions are different in the two cases. That does not alter the fact that, when conflict of this kind has occurred, it is important that as far as possible the truth of the incidence of atrocities is identified. I do not have the figures for the numbers of rockets; I imagine the noble Lord has put it forward as being a lesser force than was wielded by the Israeli armed forces in Gaza, which is certainly so.

My Lords, my noble friend is aware that if any breaches of international humanitarian law are found by the internal Israeli inquiry they will be referred for prosecution to the independent judiciary in Israel. Is he aware of any similar inquiry by Hamas into, for example, allegations of using civilians as human shields or using the opportunity of killing Fatah opponents and firing from civilian houses? Does he have any confidence in the equivalent judicial system in Hamas?

My Lords, as we have just discussed, the exercise of power in the two territories is very different. As my noble friend is aware, Israel is a sovereign state with its obligations. It has signed up to the Geneva Convention and has indicated that it intends to carry out those inquiries consistent with those obligations. That is not the case with regard to Hamas, which does not fit at all into the same category of being an international authority.

My Lords—

My Lords, we are now into the ninth minute.

To ask Her Majesty’s Government what are their projections for future growth in United Kingdom money supply.

My Lords, Her Majesty’s Government do not publish projections for future growth in the United Kingdom money supply.

My Lords, in that case, could the noble Lord kindly tell the House what criteria the Government are using to measure the success or failure of the current calculated gamble by the Bank of England and how much money they expect the Bank to lose when they have to withdraw money out of the wider economy to stop rampant inflation?

My Lords, I take exception to the notion that the Bank of England, of all institutions, is involved in a gamble. The Bank of England is involved in creating a degree of money expansion in order that the crucial functioning parts of our economy have access to resources which alone will get us through the present recession as rapidly as possible. The result of our emergence from that will be that, in the fullness of time, the Bank of England will be able to reap the rewards of the money that it has transferred.

My Lords, will my noble friend confirm that the Government aim to positively increase the supply of money and increase inflation? However, is not the main issue still to get the banks to use that extra money and lend it as the economy needs? Does he accept that there is a danger that the FSA’s statement today about stronger regulation, which I imagine we would all support, could be an opportunity for the banks to say yet again that they would rather sit on the cash than lend it? What will the Government do, and when, to persuade the banks to lend?

My Lords, with his usual unerring accuracy, my noble friend has identified the issue. He is right that the crucial aspect is not only that resources are made available as far as the banks are concerned but that they then spread to the wider economy. He knows that this exercise is not like flicking on an electric switch. It is a complex process. It is one that the Americans are pursuing for the same objectives. They, too, are finding it difficult to guarantee that the resources flow as fast as they would wish and as fast as we as the Government of the United Kingdom would wish.

My Lords, is the Minister aware of concerns that a large proportion of the first tranche of gilts that were bought by the Bank of England under the quantitative easing process were from overseas institutions? Are the Government and the Bank therefore preparing to take any steps to ensure that future purchases will be from UK institutions to ensure that the increased liquidity that this process provides feeds through to the maximum possible extent to the benefit of the UK economy?

My Lords, that is an important point. We will do our best to ensure that, but the noble Lord will recognise that the purchase from foreign institutions can be of great benefit in increasing the demand factor of those economies, which are also in recession. That helps to get world trade flowing again at levels that are absolutely essential to an economy such as ours, which depends so much on it.

My Lords, will my noble friend remind their Lordships that economists have been arguing about the relationship between the money supply and inflation since David Hume in the 18th century? The only trouble is that the economists whom I know, first, cannot agree on what they mean by the money supply, secondly, cannot agree on what they mean by the inflation rate and, thirdly, cannot make up their minds which causes which.

My Lords, my noble friend has many friends who are economists and I am always amazed at that because he misses few opportunities to identify the weaknesses of the profession in its work in certain crucial areas. We all recognise not only that the world was taken financially and economically unaware by the rapid development of the credit crunch and the recession, but that most professionals operating in the area, including economists, have seemed to offer us limited guidance.

My Lords, the Minister did not like the word “gamble”, but I think that he would agree that the Bank of England is undertaking a great experiment with quantitative easing. One of the dangers of this experiment is that it will feed through into growth of the money supply, which will then feed through into unconstrained inflation. Are the Government really saying that they are not monitoring the growth of the money supply? Are they sitting by idly letting this experiment take whatever course it will?

My Lords, I did not say that the Government do not monitor the growth of money supply; I said that we do not publish the statistics, which is somewhat different. If the Opposition are disavowing the Government’s strategy in circumstances where interest rates can scarcely be cut further, one is at a loss to think what on earth they would do to increase demand in the economy.

My Lords, at least we have the advantage of being able to increase the money supply, which we hope is a short-term measure and will be monitored closely. Does the Minister agree that, if we were a member of the euro group of countries, we would not be able to do that?

My Lords, there is an invitation to engage in a debate. Let us take what advantages we have.

To ask Her Majesty’s Government what is the latest quarterly figure for total unemployment in the United Kingdom and the latest month’s total number of claimants of unemployment benefit.

My Lords, in the quarter to January 2009, 2,029,000 people were ILO unemployed. In February 2009, there were 1,391,100 people claiming jobseeker’s allowance.

My Lords, those figures show a very substantial and rapid increase in unemployment. What priority are the Government really giving to reducing unemployment? Are their counter-measures adequate and fully operational? When can we expect more positive results, or must we believe the somewhat dismal reports coming from the IMF and others that there is a prolonged and severe slump ahead?

My Lords, of course, this is a huge priority for the Government. In contrast to the noble Lord’s party, we will not give up on anyone who loses their job and we shall continue to provide real help to people who need it to get back to work as quickly as possible. That is why we have not only taken a raft of measures, some of which were just debated on previous Questions, but we have invested £2 billion through Jobcentre Plus to ensure that support is available, so that Jobcentre Plus can continue to offer all its customers a first-class service. Next month, people who have been claiming for six months will be able to access an enhanced package of support, which we announced in January.

My Lords, has the Minister noticed the chilling redundancy figures announced today? There have been 266,000 over the past quarter, up by a half over the previous quarter and by more than double over a year. The reason is simple: companies are running out of cash. Is not the jobcentre network now suffering chronic overstretch and is not closing down jobcentres over the past year like sacking your mountain rescue teams just before an avalanche?

My Lords, on Jobcentre Plus and its capacity to deal with the current challenges, I can advise the House that we have been taking action and £1.3 billion extra has been made available. Jobcentre Plus is still clearing JSA claims in 10 days, which is ahead of the 11.5 day target; in January 2009, over 75 per cent of customers were seen within three days of making their JSA claims; call volumes are 60 per cent higher than last year but still 87.8 per cent of calls are answered in the first attempt; and every working day Jobcentre Plus records around 5,200 customers moving into work, receives around 10,000 jobs from employers and conducts 45,000 adviser interviews. I think it is up to the task and the challenge.

My Lords, does the Minister accept that the reason unemployment is rising at the fastest rate ever recorded is that businesses are being squeezed from both ends, as the noble Lord, Lord Barnett, pointed out on the previous Question? On the one hand, many firms are finding that bank loans are rarer than hen’s teeth, despite the Government’s unsuccessfully, as yet, pouring billions of taxpayers’ money into the banks; and, on the other hand, very few people are buying their products. Clearly, the reduction in the rate of VAT by the maximum rate allowed under the VAT directives is not doing enough to encourage people to start buying again. Is the time not overdue for the Government to turn their attention, as my party has, to reductions in personal taxation?

My Lords, issues of taxation are always matters for the Chancellor at Budget time. The noble Lord will be aware that, for the banking system, measures have been taken to secure deposits, to give the banks stability through capitalisation and to move through a raft of measures to try to get lending flowing again. It cannot be switched on overnight. On tax measures, there will be increases in household incomes next year, starting in April. That has not yet impacted on the arrangements. Every basic rate taxpayer will get £145 extra from measures already announced. The impact of the VAT reduction is to put something like £12.4 billion into the economy. Again, this will not all come at once. It will, effectively, accrue over a 13-month period. That makes a real difference of, on average, around £145 per household to people’s disposable income.

My Lords, bad as the increase in unemployment is, would it be correct to suggest that the percentage rate of unemployment in the United Kingdom is less than that in the United States, Germany, France and the average throughout the European Union? Should we not get this into context?

My Lords, I am very grateful to the noble Lord for his question. I am bound to agree with him. We need to be careful in some of the comparisons, because the basis is not always consistent. Whatever our challenges here, there are severe challenges elsewhere in the world and we stand well in comparison not only of unemployment rates, but employment rates. We should not lose sight of the fact that employment in the UK is still significantly above 1997 levels. In fact, I think it increased over the last month.

My Lords, in normal times there are around 250,000 people between jobs. Sometimes they are included in the unemployment numbers and sometimes they are not. What is the position? Are these people included in the unemployment figures? Are the figures being distorted in that way?

My Lords, it depends on which figures you look at. The ILO basis and the claimant count measure different things. The claimant count looks at particular points in time. The noble Lord raises an important point. Sometimes we miss the fact that jobs appear through Jobcentre Plus and are taken up very quickly; therefore, they do not feature in the count. We should also recognise the dynamics that are still in the labour market, and not only in the current level of vacancies. Notwithstanding the increase in claimant-count unemployment, in February 250,000 people moved off JSA.

My Lords, what are the Government doing to reduce the costs of employing someone, bearing in mind that when someone loses a job they stop paying tax and normally go on to benefits, so there is a double cost to the Government?

My Lords, the challenge is to help people back to work as quickly as possible. It is not only an issue of making sure that they therefore contribute to government revenue. We talk about statistics, but there are human lives—individuals, their aspirations and families—behind all these data. We also know that being in work is overwhelmingly the best route out of poverty.

To ask Her Majesty’s Government what steps they are taking to introduce a scrappage policy for second-hand vehicles.

My Lords, we continue to consider industry proposals for a scrappage scheme. The proposals are potentially costly for the taxpayer, and we need to consider the costs and evidence on positive and negative impacts. We are also looking at the experiences of other countries that have introduced similar schemes, such as Germany.

My Lords, I thank the Minister for his Answer, which was not unexpected. Do the Government appreciate that the possibility of a scrappage scheme was first discussed in autumn 2008? If further delay takes place, and the Government’s plans are to make a decision when the Budget comes at the end of April, does the Minister accept that there will a lengthy time before any such scheme could be introduced? It could be the autumn before there is any impact on the second-hand car industry, which will have been nearly a year since the proposal was first mooted.

My Lords, the interesting thing about this scheme is that it needs to be carefully evaluated. It is clear that the German scheme has cost the taxpayer €1.5 billion. If we are to introduce a scheme—we have not decided whether this is appropriate—we must ensure that we evaluate the impact on the second-hand car market and on discounts. There are many complex aspects to introducing a scheme. That is why we are taking our time: we need to get it right. We have introduced many schemes over the past few months to stimulate the economy. We have got them right because we have taken time to consider them.

My Lords, does my noble friend agree that, if he is going to pay me £2,000 or so to sell my old car and buy a new one and if I was the owner of a railway train, passenger or freight—I declare an interest as chairman of Rail Freight Group—could I hand in my old trains, of which there are many, and be given a subsidy to buy new ones in the same context?

My Lords, I was going to refer to an economist’s view but, given that the economists have come in for such a battering, I will not. However, any scheme that we introduce needs to ensure that while we are rewarding the individuals bringing their car back and giving them cash, the impact on the industry is not just that of bringing forward sales and causing a crisis in the second-hand car market. On trains, I am afraid that I have to pass.

My Lords, has the Minister seen the figures saying that nearly all—over 80 per cent—of new cars are imports to this country? Our car manufacturing industry is mainly exporting cars. Although I am very much in favour of updating cars, is there not a risk that the scheme will not have the benefits to the economy that we hope?

My Lords, I have been in my role as Minister of Trade for about two months. One thing that I have realised about British industry is that we are expert in advanced engineering, but also hugely competent in the automotive industry. We in the UK produce 3 million engines annually that are exported. An issue is that the scheme would benefit overseas as well as UK manufacturers; we need to consider that carefully.

My Lords, like the noble Lord, Lord Berkeley, I declare an interest. I am chairman of a museum that owns a large number of veteran and vintage vehicles. Can the Minister assure me that his scheme will not adversely affect such people?

My Lords, as this is my first Oral Question, I have been given significant briefing. There was no mention in the briefing of vintage cars. The experience of other countries shows that such schemes have been for cars over a certain age. I would therefore assume, given the value of vintage cars, that they would not be submitted for scrapping.

My Lords, the Minister rightly says that jobs need to be considered. However, if the job situation is to be looked at, it is now urgent to come to a decision one way or the other.

The Minister mentioned old vehicles. The intention would be to recycle them as part of the scheme. There would be environmental benefits to be looked at, in that vehicles replacing the old ones would be environmentally better for the roads. All these issues are to be considered. The cost issue must also be considered, but there are also benefits in terms of fresh sales for the Government as well as the hidden benefits of fewer accidents and a lower impact on the environment. Can we have a quick decision?

My Lords, the noble Lord will have a quick answer. We will evaluate carefully who runs the scheme, who pays for it, how long it might run, the amount of any scrappage payment and the age of eligible vehicles. There are many complex issues here. When we have evaluated the scheme properly and decided yes or no, the noble Lord will be the first to know.

My Lords, is the Minister satisfied that the principal effect of the scheme will not be merely to put up the price of new cars?

That is a very good question, my Lords. One of the challenges with such a scheme is to make sure that the second-hand car market does not collapse. You also have to make sure that you are not just creating a sudden demand for new cars, and a year or 18 months later the whole industry collapses. We need to make sure, in evaluating this, that the discount market for new cars does not suddenly disappear.

That the orders and regulations laid before the House on 20 and 25 February be approved.

Relevant Documents: 7th and 8th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 16 March.

That the draft order laid before the House on 28 January be approved.

Relevant Documents: 5th Report from the Joint Committee on Statutory Instruments, considered in Grand Committee on 16 March.

My Lords, with the leave of the House, I would like to repeat a Statement made by my right honourable friend the Secretary of State in another place.

“With permission, Mr Speaker, I wish to make a Statement about Stafford Hospital, following the Healthcare Commission’s investigation published yesterday. The report details astonishing failures at every level and shows that for patients admitted for emergency care at Stafford there were deficiencies at every stage.

The Healthcare Commission found disorganisation, delays in assessment and pain relief, poor recording of important information, symptoms and requests for help ignored, poor communication with families and patients and severe failings in the way the trust board conducted its business. While the management was obsessed with achieving foundation trust status, the wards were understaffed and patient care seriously compromised.

The report cites incidents where patients were left without food or drink for days because operations were delayed, of nurses who had not been properly trained to use basic, lifesaving equipment and of patients admitted to A&E being triaged by receptionists. It notes that there was a dangerous lack of experienced staff, that observation and monitoring of patients was poor, that essential equipment often was not working and that there were no systems in place to spot where things were going wrong in order to make improvements.

In short, it is a catalogue of individual and systemic failings that have no place in any NHS hospital but which were allowed to happen by a board that steadfastly refused to acknowledge the serious concerns about the poor standard of care raised by patients and staff. I apologise on behalf of the Government and the NHS for the pain and anguish caused to so many patients and their families by the appalling standards of care at Stafford Hospital and for the failures highlighted in this report.

I will set out the actions that we will take in response to this report during my Statement, but I want to begin by summarising the events that lead to the Healthcare Commission’s investigation. The commission became aware of high mortality rates for specific conditions or operations at this trust during the summer of 2007, through its routine analysis and statistics known as hospital standardised mortality ratios, or SMRs, produced by the Dr Foster research unit, based at Imperial College.

Whenever the Healthcare Commission is alerted to unusually high mortality rates, it initially asks the trust to provide further information to explain such anomalies. High standardised mortality ratios are not necessarily an indicator of poor clinical performance, nor do they signify that there have been avoidable deaths, but they do act as a screening tool to identify the need for investigation.

Further analysis showed that there were consistently high mortality rates for patients admitted as emergencies going back several years. The trust repeatedly dismissed the significance of these statistics, saying that they could be explained by the problem that it was having with the recording of data. The accuracy of information coding—that is, the system for cataloguing types of surgical and other interventions—had historically been poor in the trust and the internal group that the trust itself had set up to consider high mortality rates assumed that they could be explained by coding errors. The Healthcare Commission refused to accept this explanation and launched a full-scale investigation in March 2008.

In May of that year, following its first visit, the commission asked to see the chief executive and set out its immediate concerns about poor patient care and inadequate staffing levels. Since then there has been gradual improvement. The Healthcare Commission states that,

‘the Trust deserves credit for progress on infection control and for responding positively to the concerns of the Commission’.

On an unannounced visit in February to the accident and emergency department the Healthcare Commission noted significant improvements. Its visit raised no immediate concerns about the safety of patients admitted to the accident and emergency department. However, the failures are stark and they occurred over a substantial period of time.

Patients will want to be absolutely certain that the quality of care at Stafford Hospital has been radically transformed and in particular that urgent and emergency care is administered safely. I have today, jointly with Monitor, asked Professor Sir George Alberti, the eminent physician and national clinical director for urgent and emergency care, to lead an independent review of the trust’s procedures for emergency admissions and treatment and its progress against the recommendations in the report. He will report in five weeks’ time and his findings will be published to the House.

The Healthcare Commission has told me that it is confident that Stafford Hospital is an isolated case and that, having looked at other trusts with similarly high standardised mortality ratios, it is reassured that a similar succession of serious lapses in care has not occurred elsewhere.

The National Quality Board has been set up to look at how organisations work effectively together in patients’ best interests. It is composed of representatives of the royal colleges, patient groups, regulatory bodies and clinical experts. I have asked the board to look at how we can ensure that any early signs that something is going wrong are picked up immediately, that the right organisations are alerted and that action is taken quickly.

The public and the House will want to know how the problems at Mid Staffordshire could have remained undetected for so long. One of the reasons why the Healthcare Commission began its investigation was that, after having initially been alerted to problems in the trust, it became clear that there had been serious failings for some time. The Healthcare Commission’s report raises serious concerns about why the primary care trusts and the strategic health authority either failed to spot the problems at the trust or, having spotted them, failed to act.

I have asked Dr David Colin-Thomé, the national clinical director for primary care, to review the circumstances surrounding Mid Staffordshire trust prior to the Healthcare Commission’s investigation to learn lessons about how the primary care trusts and the strategic health authority—within the commissioning and performance management system that they operate—failed to expose what was happening in this hospital. His recommendations will focus on what commissioners across England—GPs and PCTs—can learn from this case to be sure that they are advocating effectively on patients’ behalf.

Our principal concern today must be to reassure the families and friends of patients who have died at Stafford Hospital that they will be able to ascertain whether any of the failings detailed in the Healthcare Commission’s report contributed in any way to the death of their loved ones. As the Healthcare Commission has said, it is not possible to determine conclusively from any set of statistics whether there were any avoidable deaths due to poor standards of care. That can be done only through a case notes review. I can confirm that the new leadership of the trust will respond to every request from those relatives and carry out an independent review of their case notes to determine whether or not the care that they or their loved ones received was appropriate.

The failings at Stafford hospital are inexcusable. I hope that we can close this chapter in the hospital’s history by acknowledging and addressing past failings and by ensuring that lessons are learnt by government and the NHS at all levels to make sure that these terrible failures are never allowed to happen again”.

My Lords, the House will be grateful to the Minister for repeating the Statement. The report published by the Healthcare Commission makes truly appalling reading. This is a trust where failure was not sporadic or of short duration, but systemic and long term. The list of failings could not be more damning: chronic understaffing, patients starved and neglected on the wards, a lack of basic staff training, poor record keeping, equipment that did not work, an inexcusable lack of professionalism in A&E and, perhaps most concerning of all, a steadfast refusal to take seriously the complaints and worries of patients and their families. “Quality of care” in these hospitals was a phrase with little substantive meaning.

None of us can feel anything but shame that such a hospital could operate like this in the NHS for so long and, furthermore, that it should be a foundation trust. We need to have confidence now that the right questions will be asked of the right people and that the right lessons will be learnt. The Statement pertinently asks what on earth the strategic health authority and the local PCT think that they have been doing all this time. What kind of performance management has the strategic health authority been engaged in and why does a PCT, if it pretends to be on the ball, continue to commission emergency care services from a trust whose standards of performance, even at an anecdotal level, should have raised serious question marks?

I do not want to personalise this debate, but the chief executive of the strategic health authority, Cynthia Bower, has been appointed as chief executive of the Care Quality Commission, the new health and social care watchdog. Ms Bower allowed herself to be deceived into thinking that the anomalies emerging from the mortality statistics were the results of coding errors, not anything more sinister. How and why did that happen?

Looking forward, is the Minister confident that the process of registering NHS providers by the Care Quality Commission will be sufficiently rigorous, bearing in mind that registration will depend on the quality of care being delivered in a given organisation? Will the new system of quality accounts ensure that failings in basic care, such as those at Stafford, are recognised and dealt with in a timely way?

Those questions remind us that the point of debating a Statement of this kind is not only to talk about a particular NHS trust, but also to look at its implications for public policy more widely. Mid Staffordshire NHS Trust became a foundation trust only last year, yet well before that, in 2007, serious concerns were voiced about mortality rates in the trust. At what point did the Secretary of State become aware of these concerns? Why was the trust allowed to acquire foundation status in the face of an impending investigation by the Healthcare Commission? What questions were asked at that time about the quality of the senior management in the trust? Did Monitor ask those questions before ratifying the trust’s new status?

When the Healthcare Commission wrote to the chief executive at Stafford on 23 May last year requiring urgent action, what did Monitor do about it? The report shows that this was not a case of a corner being turned as soon as the commission flagged up the trust’s shortcomings; as late as September of last year, the commission says that it found,

“unacceptable examples of assessment and management of patients”.

The individuals leading the trust may well have taken some action, but essentially they were in denial. Even when the chief executive resigned a fortnight ago, he said that he was proud of what had been achieved and that it was his decision to leave. Why was it his decision? Did no one ever consider removing and replacing the senior management at an earlier stage? There was no intervention of this kind by anyone. Why not?

Is the Minister prepared to acknowledge that the Government bear some responsibility for this chapter of failures? We have seen in the NHS in the past few years a constant round of organisational change and a dogged obsession with narrow process-related targets. Stoke Mandeville, Maidstone and Tunbridge Wells and now Stafford were all hospitals that were directed towards goals other than good patient care: meeting waiting-time targets, managing organisational change and avoiding overspending their budgets. The Healthcare Commission said, about a year ago:

“A common trend has been trust boards concentrating on some of their activities, such as the delivery of targets or mergers, at the expense of others”.

It also said:

“We have found that the boards of NHS trusts we have investigated are particularly vulnerable to being consumed by the business of healthcare, in the form of mergers, reconfiguration of services, financial deficits, and targets”.

Now that the next-stage review of the noble Lord, Lord Darzi, has ushered in a new era of performance assessment, will the Minister enlist the help of the National Quality Board to look critically at the range and impact of government-imposed targets and ask whether such targets any longer have a place in a system of performance management that should be focused on the overall quality of care delivered by an organisation and the quality of patient outcomes?

The Minister ended by saying that these failures should never happen again. Therefore, what steps will the Government take to avoid the distortion of clinical priorities that process-driven targets too often encourage?

My Lords, the report made me feel sick and ashamed, because I once worked for the National Health Service, an organisation of which I have always been proud. As well as the House sending condolences to the relatives of patients who may have lost their lives as a result of incompetence at Stafford Hospital, I offer my condolences to the Minister, because it cannot be easy to deliver a Statement such as this. However, could she comment on a few points?

The reductions in expenditure that the hospital had to achieve in order to become a foundation trust must have led directly to underqualified staff being employed and corners being cut. Will the Minister comment fully on what the noble Earl, Lord Howe, said about the target culture in the National Health Service? Anyone who still works in the health service will say that this has corrupted the workings of the service. If there is no slack, people cannot work properly in a caring profession; they cannot give patients the time that they need. Targets have brought about this situation.

Will the Minister also tell us how the newly formed Care Quality Commission will function? The Healthcare Commission took a long time to pick up on what was going on at Stafford Hospital, and the new commission must also deal with mental health and social services. Finally, will she reassure the House that the chief executive of Stafford Hospital has not been given a golden handshake and moved off to an equally lucrative post somewhere else in the health service?

My Lords, I agree very much with both the noble Earl and the noble Baroness about the shame that we all feel about this report. I thank the noble Baroness for her sympathy, but it is the people of Stafford who have been failed by this hospital and what has happened.

I will work my way through the points raised by the noble Earl. It is very legitimate to ask what the SHA and PCTs were doing during this period, and why they failed. We know that boards are accountable for ensuring that their PCTs and the regulator hold them to account. In this case, there are undoubtedly lessons to be learnt about why the commissioning process did not adequately draw attention to failures in the care that was being provided. They are also accountable to the regulator, whose alert system will be triggered by the investigation.

There is no doubt that there are lessons to be learnt about why the commissioning process did not adequately draw attention to the failures of care that was provided. That is why we have asked David Colin-Thomé to review the circumstances in Mid-Staffordshire prior to the Healthcare Commission’s investigation, to learn the lessons about how the primary care trust failed to detect and prevent the failures. He has been asked to do this rapidly and he will publish his findings within a month. His recommendations will focus on what the commissioners in England should learn from this.

On a broader level, a substantial World Class Commissioning programme is under way to help commissioners to hold their acute providers to account for the outcomes that they deliver to their patients. The Healthcare Commission acknowledges that the SHA was not aware of the concerns about the quality of services provided by the trust before the Dr Foster Unit published its report in 2007. However, we know that as soon as the SHA became aware of the high HSMRs, it commissioned the University of Birmingham to undertake research into the findings on these in advance of the Healthcare Commission’s investigation. At that stage, the trust was focusing more on the data issues than on the poor quality of care. There will undoubtedly be lessons for the PCT’s performance managers to learn in ensuring that boards are held to account for monitoring the information needed to safeguard the quality of services provided to patients. That is part of the brief for David Colin-Thomé’s review.

The report asked a legitimate question about how the trust was awarded foundation status in the middle of this investigation. Perhaps I may explain the timeline. The Secretary of State supported Mid Staffordshire in proceeding to the Monitor assessment in June 2007, and it was authorised as a foundation trust by Monitor on 1 February 2008. Monitor examined the quality of safety, including the HSMR issues. The concerns at Mid Staffordshire were not known when the trust was authorised as a foundation trust, and Monitor based its judgment on the best information available at the time. I have already said that there had been a trigger in relation to those figures because they were being investigated as part of data collection, rather than as part of a failure of service to patients.

Monitor would not have authorised a trust in the midst of a Healthcare Commission investigation or if it had been aware of, or had serious concerns about, the quality of safety issues. The trust was authorised in the usual way. We have a clear process that works. Ministers approved this in the normal way. Again, we would never have supported an application had there been any indication that there were serious concerns or that a Healthcare Commission investigation was under way.

I repeat that the issues at Mid Staffordshire were not known when the trust was authorised as a foundation trust. Monitor based its judgments on the best available evidence. It would not have authorised foundation status had it known that there were very serious concerns. However, as part of their reaction to this report, Monitor and the Secretary of State have said that they will be reviewing the communication links between the department, which includes the Secretary of State’s office and the Ministers responsible for agreeing that foundation trust status should go ahead, the Healthcare Commission and Monitor to ensure that communications are as good as they can be when considering foundation status.

With regard to what is being done to improve the quality of safety, the noble Earl and the noble Baroness were right to point to the work of my noble friend Lord Darzi and his quality matrix review. Indeed, in the past few weeks we have spent quite some time discussing exactly how the setting of national standards will work at each level and how they will roll down to a local level. If we recall our previous discussions about how those quality standards would work at a local level, there is absolutely no doubt that they would catch this type of issue. They would take on board such things as complaints from patients. It is reprehensible that this trust did not discuss its patients’ complaints; that is disgraceful.

We do not see a trade-off between targets and quality. It is important to remember that the NHS had no targets in the 1980s and 1990s, and hundreds of thousands of people were on waiting lists. People were kept waiting in accident and emergency for 18 hours. But from the centre we have managed to turn that round by setting targets. We must remember that that has been achieved through the remarkable efforts of exceptional people who work on the front line within the NHS. The vast majority of healthcare establishments have met their targets and continue to do so day in and day out.

The next stage review High Quality Care for All, launched by my noble friend Lord Darzi, suggests that there will be no new targets. Until now, every NHS organisation across the country has had targets that have been achieved. We are now turning our attention, rightly, to ensure quality. This report has pointed out to us that there is a great deal more to do.

My Lords, as somebody who has been chair of two district general hospital trusts, I join in with the shame that has been expressed today. It is a shame which undermines and devalues all the good stuff that is going on in the health service. I have read the horrendous report and it is frightening and sickening, which is the word used by my noble friend on the Benches opposite.

I plead, as did my noble friend, that we do not confuse what has gone on in Staffordshire with what happens with targets. This incident is not about targets. I am chair of a big trust and value completely what patient care is about. Targets focus our minds on patients. It is not about having four hours because four hours is a good thing; it is about patients being seen much more quickly and being taken care of through the system. That happens every day in my trust and others. The benefit of all the trusts meeting the targets is that they have better healthcare. It is evident that this trust did not meet its targets; it struggled to do so. I am as astounded as everybody else that it got foundation trust status. My trust is going for that, and the steps that we have to go through are very important and rigorous.

My Lords, I thank my noble friend for her remarks. She is quite right. The process for going for foundation status is rigorous, and we believe that the performance of foundation trusts has thus far been very good. In the previous Healthcare Commission annual health check, 38 out of the 42 organisations rated excellent for both service and financial performance were foundation trusts. I am pleased that my noble friend’s trust is going for foundation status, and I am sure that if her leadership has anything to do with it, it will almost certainly be approved.

My Lords, in the investigation that is to be conducted by my old friend Sir George Alberti, will account be taken of the patently serious failings of management? It is inconceivable that any hospital in this day and age could leave patients without food and fluid for periods as described in the report and that similar failings could possibly have occurred in any hospital in the National Health Service in which I have spent so much of my professional life. May I ask not only that the failings of management, the strategic health authority and local primary care trust be examined by Sir George Alberti, but what on earth was happening to the senior medical and nursing staff in this hospital, who must have been aware of the problems that led to this appalling report?

My Lords, the noble Lord makes a fair point. From reading the report, my understanding is that members of the nursing and clinical staff were making complaints but they never reached the board. That is why the chief executive and the chair of the trust stood down on 3 March. On the good side, in terms of improving the performance of this hospital, this issue was undoubtedly due to a failure of management and understaffing. There is an action plan and increased investment in new staff. For example, there are now 12 matrons instead of three, the number of nurses has been increased significantly, the number of middle-grade doctors has been increased, as has the number of consultants, and 14 more housekeepers have been recruited. It is on the right trajectory, which is our major concern. Can we be confident that the people of Stafford can attend this hospital? I think we can now say that that is the case.

My Lords, is the Minister aware that the Secretary of State’s Statement and her answers to questions seem typical of the way the Government face crises of this sort, with parrot phrases such as “Lessons to be learnt”, “Never again”, “We’re going to set up a review” and “We’re going to have an inquiry”? Surely, the Government ought to have known about this. My noble friend on the Front Bench asked when the Secretary of State was first told about this crisis. We got no answer. That question is crucial because the Government surely should have known and should have had the facilities to find out.

My Lords, the Government would have been alerted to the fact that the Healthcare Commission was investigating, when the investigation started and when it was proceeding, which was last year. I make the point that when the Healthcare Commission visited the accident and emergency department of Stafford Hospital in May last year, it did not wait to write its report but immediately went to the chief executive of that hospital to outline its concerns and start remedial action to improve services to patients. This is not something that we have sat on, nor have we waited around for improvements. Saying that one will learn lessons when things go wrong is exactly the right thing to do. We need to have a rigorous investigation, to be open about its results and to learn the lessons.

My Lords, I am concerned about the apparent lack of a robust complaints system that could be used by patients and their relatives. Can the Minister tell us what has happened in the intervening period since the demise of the local health bodies that used to support patients? What has replaced that external support given to patients when this kind of crisis occurs?

My Lords, as the noble Baroness will be aware, we discussed patients’ complaints at some length in the past year. The system is that a complaint is initially dealt with locally. If the complainer is not satisfied with the response he receives, the complaint then goes up the tree of the health service to be dealt with. That will work, by and large. The problem in this case was that the complaints being dealt with at local level were not being acknowledged and were not being taken as part of the planning process of clinical care within that hospital. That is part of the problem. I understand that the new leadership of the trust will look at the complaints that were made and how they were handled. It will ensure that the board is handling them in a correct manner in the way that we would wish.

My Lords, does my noble friend agree that as well as the major failures in management and clinical practice, about which we have all heard with shame, there were major failures of governance in this hospital? Can she reassure the House about the training that is available to people who sit on the governing boards of foundation hospitals, particularly in relation to listening to patients and the public? When a hospital applies for foundation status, part of the test of whether it should achieve that status should be its communication with patients and the public. If that is not the case, it ought to be.

My Lords, my noble friend makes a very important point. Part of High Quality Care for All is a far greater transparency of the reporting and accountability of the board to its local population. This will be enshrined in the Health Bill which is now going through Parliament. At the moment, a number of trusts are working with Monitor to develop these quality accounts on a pilot basis. This is a part of the overall structures and accountabilities that we need to set up within SHAs to ensure that the boards and PCTs look to their local populations, and that board members are appointed who not only understand that that is a key part of their duty but are given training and support to do it.

My Lords, does my noble friend agree that no one in the House should want to return to the micromanagement of the health service that we are all attempting to escape from? Does she further agree that, despite the criticism of targets, the four-hour target for A&E admissions was widely welcomed by patients and has resulted in a substantial reduction in waiting times? Will she explain what managers are for if it is not to live within budgets? Is not the attempt to blame the focus on budgets and targets the height of irresponsibility on the part of managements at all levels?

My Lords, my noble friend puts his finger exactly on the point. This was a comprehensive failure of management to deal with both the targets and their financial administration. The targets we have set since 1997 have transformed the health service and have given the vast majority of people who use our healthcare enormous confidence in the way that they will be treated in a safe environment.

My Lords, I received a letter from a worried member of the public about that hospital, where a relative had had a bad experience. I wonder how many local Members of Parliament received letters. Can failing hospitals lose foundation status?

My Lords, there are six Members of Parliament—three Conservative and three Labour—in the area of the Mid-Staffordshire Hospital, quite a few of whom took part in the discussion in another place, to which I listened. They have all been concerned about patient care and from time to time have raised issues with the hospital and the department, all of which were dealt with. However, it was not clear until last spring that there was a systemic problem within the hospital that needed attention. I am sorry but I have forgotten the noble Baroness’s second point.

My Lords, it was about failing hospitals losing their foundation status.

My Lords, failing hospitals can lose that status. I have a very long description of how that can happen, and I will happily put that in a letter to the noble Baroness, but it can happen.

My Lords, if all of those MPs knew, what was the board doing? Is not one of the lessons that we learn from this affair that we should stop putting nodding donkeys on boards of trusts if some of them are not competent enough to ask the awkward questions necessary to make sure that trusts function properly?

My Lords, my noble friend is right that we need high quality people serving on our healthcare trusts and boards. By and large, I think that we do but, clearly, there was a problem with the board at North Staffordshire hospital and, as I have said, the chief executive and chairman have gone. The interim chief executive and chair will be looking into the membership of the board, a process that we expect to be robust. They will be looking at the governance of the trust and ensuring that the board is fit for purpose as it moves forward.

My Lords, have the two senior officers who have left that board received golden handshakes or have they been moved to other senior jobs?

My Lords, I beg the pardon of the House as I did not answer that question when it was addressed to me earlier. The chief executive remains suspended on full pay, in line with the standard disciplinary process. The trust is no longer paying the previous chairman and the future of the chief executive, who was suspended, will be determined by the outcome of an investigation.

My Lords, it is clear in the report that, way back in 2003-04, the non-standardised in-hospital mortality rates were high. Has Monitor been asked to look at whether its procedures are assessing the right things? What is being done now to make sure that monitoring of all foundation trusts will be done according to a new set of criteria, given that the criteria clearly failed to pick up problems that were already evident?

My Lords, Monitor considers safety quality, including HSMR, whose importance it recognises as one clinical performance indicator to be looked at when it reviews the clinical governance arrangements for trusts applying to become foundation trusts. To conclude on the clinical guidance governance on applications from trusts, it currently looks at a raft of other areas. Among those are: a discussion with the board, relevant clinical governance sub-committees, a review of the processes, a report of clinical problems, a clinical audit plan and a review of action plans to address issues. It reviews performance data, targets and standards, along with trends, press coverage and complaints covering trend analysis and reporting, including a review of the data from surveys of patient services and staff surveys.

When Monitor took the decision that allowed North Staffordshire to become a foundation trust, it had gone through that process and questions had, indeed, been raised with it on HSMR, but the trust and the board were then concentrating on it being about data collection and coding, not about patient care. I understand that both Monitor and the Healthcare Commission will be looking to make sure that they are more rigorous and that they communicate more obviously to ensure that these things happen in sequence. Better communication might have helped, although the evidence of the report will suggest that it would not necessarily have helped in this case.

My Lords, my noble friend referred in the Statement to the fact that,

“it is not possible to determine conclusively from any set of statistics whether there were any unavoidable deaths due to poor standards of care”,

and that that can be done only through a case notes review. But a lot of figures are being bandied about regarding the potential number of deaths that may have occurred as a result of these poor standards, ranging from 400 to 1,200 and probably any number in between. Does she have any information about what those numbers probably are? In addition, can she confirm that we are talking about Mid-Staffordshire, not North Staffordshire?

My Lords, I confirm that we are talking about Mid-Staffordshire. Sadly, there is no doubt that some patients will have suffered unnecessarily as a result of these shortcomings and failures. Regarding the numbers, the Healthcare Commission said—this was reinforced by Ian Kennedy at the press conference yesterday—that,

“these numbers do not relate to, nor can it relate to people who died. We don’t know that number. We can only know that number if we look at every set of case notes. That number refers to a statistical analysis of mortality rates over and above what you would expect and there are a number of explanations for that”

The new leadership of the trust, however, has promised to respond to every request from relatives and carry out an independent review of case notes to determine whether or not the care of their loved ones, or of themselves, was appropriate.

That the Bill be read a second time.

My Lords, the legislation before us forms part of a long-standing debate on the regulation of UK party funding, and this is the context in which it must be considered. I think it is therefore worth briefly reminding noble Lords of the recent history which has informed the Bill’s objectives and provisions, before turning to the detail of the Bill itself.

In 1998, the Government asked the Committee on Standards in Public Life—the CSPL—chaired by the noble Lord, Lord Neill, who will, I am delighted to say, be speaking in this debate,

“to review issues in relation to the funding of political parties … and make recommendations as to any changes in present arrangements”.

The Committee’s report recommended an overhaul of the system of party funding and expenditure based on tighter controls on spending; restrictions on who could make political donations in the United Kingdom; and greater transparency.

These principles—which I believe all parties continue to support today—formed the basis of the Political Parties, Elections and Referendums Act 2000, which established the Electoral Commission and required parties to record and report to the commission donations above certain thresholds. These reforms were enacted in the spirit of consensus across the political spectrum and support from the public.

Notwithstanding this, and the indisputable fact that the 2000 Act represented a significant step towards a more transparent and better regulated political system, it is now clear that it has not fully addressed all of the concerns which exist about the financing and expenditure of political parties. Where there has been agreement on what change is necessary, the Government have sought to take this forward. It was in this vein that we incorporated provision in the Electoral Administration Act 2006 to subject loans to parties and other donees to the same disclosure and permissibility rules as donations.

In 2006, the Constitutional Affairs Committee recommended further reform to the system; and in 2007 the CSPL recommended changes to the governance and powers of the Electoral Commission. The recommendations of both committees attracted widespread support.

In March 2006, Sir Hayden Phillips was appointed to carry out a general review of political party funding and expenditure in the United Kingdom. His final report, published in March 2007, found that there was significant pressure on parties to raise and to spend large amounts of money, and proposed a package of reforms designed to tackle its effects on the political system. His proposals had three main strands: first, tighter and more comprehensive spending controls; secondly, a cap on donations coupled with increased public funding to mitigate its effect on political parties; and, thirdly, a strengthening of the regulatory capacity of the Electoral Commission. However, subsequent inter-party talks designed to produce an agreement on the way forward were suspended in October 2007 on the basis that there was no prospect of a comprehensive agreement being reached.

The Government are clear that any reforms in the area of party funding must attract broad consensus. Without that, they would lack legitimacy, and we would risk making these matters the focus of partisan dispute, which would be to no one’s advantage. The Government regret that fundamental reform was not possible. We are also clear, however, that the absence of agreement on the model of long-term reform put forward by Sir Hayden should not prevent us taking what steps we can now—that is, where there is broad party political agreement on them—to make improvements to the system and, in the process, help to increase public confidence in politics and politicians.

The Government’s White Paper, Party finance and expenditure in the United Kingdom, published in June last year, therefore proposed some immediate steps in the areas where we believed that consensus existed. These measures formed the basis of the Political Parties and Elections Bill, as introduced last July in another place.

The Bill before us today has evolved significantly from the Bill which had its Second Reading in another place. It has benefited from constructive engagement and scrutiny and, in its amended form, reflects the Government’s commitment to moving forward on the basis of consensus and willingness to listen to representations from all those who place the health of British politics above partisan concerns. This is the spirit in which my right honourable friends guided the Bill through another place; I hope to do the same here.

I turn to the provisions of the Bill. Clause 1 clarifies the Electoral Commission’s regulatory role, in line with a recommendation of the CSPL. Clause 2 strengthens the commission’s powers to compel the disclosure of information. It was the subject of detailed discussion in another place, and has been extensively amended to take account of the concerns expressed there about the extent of the powers in the clause as introduced.

Clause 3 gives the commission access to a flexible range of civil sanctions, again following a CSPL recommendation. The range of sanctions and the safeguards to which they are subject very closely follow the scheme established by the Regulatory Enforcement and Sanctions Act 2008. I should like it to be clear that none of the 93 offences and requirements currently in the 2000 Act will be removed from the criminal sphere by this Bill or by subsequent secondary legislation. This clause was also amended in another place to take account of concerns expressed there about how the commission might apply sanctions.

Clauses 4 to 7 reform the Electoral Commission’s governance arrangements so that it can benefit from commissioners and staff with more recent experience of politics. Here, again, we are implementing recommendations made by the CSPL.

Clauses 4 and 5 will allow the appointment of four commissioners with recent political experience. Each of the three largest parties represented in another place will be entitled to make nominations for appointment as a nominated commissioner. Clause 5 originally required the nomination of two or more people by each party, but was amended at the request of the Speaker’s Committee so that parties may nominate a single person. The remaining nominated commissioner will be selected by the Speaker’s Committee from among the nominees of all other qualifying parties represented at Westminster. The recruitment and selection process for the appointment of electoral commissioners is ultimately a matter for the Speaker’s Committee, and the Government have sought to ensure that the provisions in the Bill provide for a selection process which is acceptable to it.

Clauses 6 and 7 increase the overall number of commissioners to nine or 10 to ensure that the nominated commissioners will be in a minority, and relax the restrictions that apply to political activities for other commissioners and Electoral Commission staff.

Clauses 8 to 15 relate to political donations and expenditure. The House will be relieved that I do not intend to go through each of these in detail, but I shall touch briefly on those which have been amended significantly in another place.

Clause 8 is intended to increase the transparency surrounding the true source of donations. It places a new responsibility on donors giving over £7,500 to political parties and members’ associations, or over £1,500 to party accounting units and holders of elective office, to declare whether they have received money or benefits with a value in excess of these thresholds,

“with a view to, or otherwise in connection with”,

the donation. The intention is to ensure that, when an individual or organisation may be making a donation as an agent for another, is made clear to the recipient of the donation, as the law already requires. The Government amended the thresholds at which donations must be accompanied by declarations in another place in response to concerns about the administrative burden which the new provision might place on parties.

Clause 10 allows MPs and other office holders to appoint compliance officers to help them to fulfil the requirements of the 2000 Act in relation to reporting donations. The Government added this provision to the Bill in another place in response to representations received there. I stress that holders of elective office will remain liable for breaches of the law. Clause 12 was added to the Bill in another place to address concerns that there is less transparency of donations from unincorporated associations than those from other types of donors. It requires unincorporated associations, giving donations to regulated donees in excess of the recordable thresholds in the 2000 Act, and which in total amount to more than £25,000 in a calendar year, to provide information about the source of significant gifts which have been made to them during a three-year period.

Clause 13 increases the threshold in the 2000 Act for recording donations from £200 to £500; the threshold at which individual donees and party accounting units must report donations to the Electoral Commission to £1,500; and the threshold at which national parties must report donations from £5,000 to £7,500.

My Lords, does not the increase from £200 to £500 represent an increase way above the current rate of inflation? Why is that?

My Lords, as I understand it, the Electoral Commission suggested that there should be an above-inflation or large increase in this figure. The problem with keeping it too low is that it adds huge bureaucracy for all the parties in having to deal with donations of those amounts. I agree that there is potentially some controversy about the figure that we suggest it is raised to, but in our view this was the appropriate thing to do at this time.

My Lords, would it not have been possible to have investigated the situation from year to year, rather than come to a figure now, which is very difficult to justify?

My Lords, I do not think that it is difficult to justify, but I am sure that from now on it will be looked at on the basis of year to year. Perhaps we can come back to this issue at a later stage.

My Lords, I am grateful to the Minister. He has cited the commission in support of what the Government propose, but the commission made a clear statement that, in its view,

“an increase of this level has the potential to reduce public confidence in the transparency and integrity of political funding”.

I wonder whether he can reconcile his statement with the view expressed by the commission.

My Lords, as I understand it, the commission suggested that the figure of £200 was too low. Later today I shall come back to the noble Lord and, if I am wrong, I shall withdraw what I said about the commission. As I understand it, that is what it said. It may not approve of the actual figure but it wanted an increase, and it seems to us common sense that there should be an increase.

The Government brought forward these provisions as amendments in another place to address concerns shared across the House that the current thresholds imposed a high burden of compliance that was not proportionate to the benefits. As my right honourable friends made clear in another place, while we are committed to transparency, this must not be achieved at the cost of overburdening political parties; and we have agreed to consider whether the reporting threshold for individual donees and party accounting units should be further raised.

Clause 14 introduces more effective controls on candidate spending in certain parliamentary general elections. The Bill originally proposed a spending limit that would regulate all spending for the purposes of a candidate’s election, including that used before he or she is formally defined as a candidate. Debate on this provision during Public Bill Committee in another place was curtailed: but it was clear that the measure did not enjoy the support of opposition parties. I know that my honourable friends were disappointed that they had not been able to secure agreement to that proposal. Nevertheless, in the spirit of consensus, they listened to the views put forward by honourable Members and tabled the group of amendments which is now Clause 14.

Under current legislation, an individual generally becomes formally regarded as a candidate only at the point of dissolution of Parliament, with the result that expenditure by candidates on their expenses is currently regulated only from dissolution onwards. Having accepted that the earlier triggering proposal did not command consensus, Clause 14 introduces a second regulated period for candidate expenditure. This second limit would regulate candidate election expenditure during the period after 55 months of a Parliament have elapsed and before the date on which an individual formally becomes a candidate. At that point, the new limit would come to an end and the existing candidate expenditure limit would take over to regulate candidate spending from that point onwards. The Government are aware that Clause 14 does not represent an ideal solution—it may well be that no ideal exists. It will not tackle the problem of unregulated, pre-dissolution expenditure for shorter Parliaments. It will, however, improve the current system of regulation and does, we believe, command cross-party support.

The final group of clauses in the Bill, Clauses 16 to 23, relates to elections and electoral registration. With the exception of Clauses 22 and 23, these provisions are relatively straightforward and I will not go into detail now. Clauses 22 and 23 make provision for the piloting of data-matching schemes which will allow electoral registration officers to receive data from public authorities for the purposes of improving the comprehensiveness and accuracy of their registers. The pilots, which will be evaluated by the Electoral Commission, will help us to identify what data and what data-matching techniques are most useful for maintaining electoral registers.

As my right honourable friend Michael Wills made clear when he introduced these clauses in another place, the Government are entirely clear that any data matching must be carefully scrutinised and controlled. The clauses contain a number of safeguards: data must be relevant to electoral registration and can be used only for the purposes specified; public authorities providing data will be consulted on the release of information and proper safeguards will be put in place to ensure compliance with the Data Protection Act; and any order putting in place a data-matching scheme must be debated and approved by this House and another place, and can be made only following consultation with the Electoral Commission and the Information Commissioner. We have sought the views of the Information Commissioner who has indicated that the measures seem proportionate and sensible in view of the strong public interest in ensuring that the register is as comprehensive as possible.

Noble Lords who followed the debate on these clauses in another place will know that they form only one part of a much wider package of reforms. My right honourable friend Michael Wills outlined the significant steps that the Government have already taken, and continue to take, to improve the electoral register; and announced that the Government would be bringing forward amendments in this House to facilitate the move to individual registration in Great Britain on a fixed timetable; but that timetable will have at its heart the twin principles of the comprehensiveness and accuracy of the register. These principles were welcomed and accepted by all sides in another place and I hope that they will be similarly supported here. As they will be a significant feature of the debates on the Bill in this House, I should like to say a little about the Government’s intentions now.

In summary, the Government will bring forward amendments to put in place a statutory timetable for the introduction of individual registration; to begin the rollout of measures to prepare both the public and the electoral system for that change; and to put in place a series of tests that will be independently assessed by the Electoral Commission to ensure that the shift is made only once the system is ready for it. We intend to bring forward amendments which will make provision for electoral registration officers to collect personal identifiers from electors on a voluntary basis alongside the existing process of household registration from August 2010 until August 2015. At this point, and subject to certain tests which I will come on to, the provision of identifiers would become compulsory and household registration would effectively end. The period of overlap between the two systems would allow the Electoral Commission to work with EROs to identify any issues that are likely to arise from the move to individual registration, including what identifiers are most appropriate and which groups may have difficulty providing them.

From autumn 2015, all new registrations would have to provide the identifiers to be put on to the register. Anyone already on the register in autumn 2015 who did not provide their identifiers would be carried forward for two further years, to 2017. From that point, we would have full individual registration; that is, everyone on the register would have provided identifiers. However, we also intend to provide that that shift in 2015 would proceed only if two statutory tests, which would be assessed by the Electoral Commission no earlier than January 2014, were met.

My Lords, can the Minister tell the House at what stage those amendments will surface? Will they surface in Committee or on Report?

My Lords, it is our intention that they will surface in Committee—probably at a later stage in Committee but before Report.

The Commission would have to have a reasonable expectation that the move to compulsory provision of identifiers would, first, not compromise the accuracy or comprehensiveness of the register by the point of full individual registration in 2017; and, secondly, that the electoral register was both as comprehensive and as accurate as was reasonably practicable, and that the effectiveness of the registration system was improving across Great Britain, as supported by performance standards data and other measures.

If the commission concluded that the tests were met, it could recommend that the shift to full individual registration should proceed, subject only to a vote by Parliament on whether to accept its recommendation. If the commission recommended against, or Parliament did not endorse a positive recommendation, the shift to compulsory provision of identifiers would not proceed. I am sure that the House will agree that this represents an historic change, and one which is vital to the health of our democracy. Such a change should be not be undertaken lightly; I hope that I have demonstrated that the Government are committed to ensuring that the move to individual registration will take place at the right pace and subject to a number of safeguards and tests along the way.

Of course, the proof of the commitment will be in the detail of the amendments which we bring forward and, notwithstanding the time it will take to ensure that these necessarily difficult and complex amendments will be technically effective, I hope to be in a position to share and discuss them, and any other government amendments which we judge necessary, with noble Lords before the substantive debates. As in the other place, the Government’s key priority is that this legislation should reflect a broad consensus on the way forward. We are committed to taking this Bill through this House on the basis of agreement and I look forward to working with noble Lords to that end. I beg to move.

My Lords, in speaking to the Bill I place on record my interest as deputy chairman—and, as such, an officer—of the Conservative Party. My starting point is that the party political process in this country is something that we have nothing to be ashamed about. It is a system that has secured the orderly transition of power, determined by the people of this country. Political parties are the glue that holds the political system together. They are the means by which legislators communicate with the electors, and the means by which the electorate is given a choice of competing visions of Britain’s future and alternative teams of political leaders.

Moreover, political parties are made up of hundreds and thousands of dedicated volunteers, who canvass in all weathers, and leaflet and fundraise in all circumstances in, and very much for, their local communities. In many constituencies the political parties are the largest voluntary organisations outside of churches in membership and, certainly, in terms of work in the community. This is a tradition of which we can rightly be proud. It is also a vital part of the social capital of this country, which we wish to retain and develop.

On donors to political parties, we should regard as laudable the fact that organisations and individuals are free to make properly disclosed donations to political parties with which they share aims and aspirations; or in order legitimately to minimise the risk of another party attaining power. People donate to charities and religious organisations and we call it philanthropy, derived from Greek and meaning “love of people”. Yet somehow, when people donate to party political organisations, which are part of the fabric of our society, they are termed “lovers of power”. This cannot be true and is unfair. People who make properly disclosed donations to a party are very much strengthening, not weakening, the fabric of our democracy. We ought to defend them.

Our political system is one to be proud of. All those involved in making the machinery work are rightly deserving of praise. Nevertheless, many of these people are being let down. There is a serious problem and it impacts on the legitimacy of our political process. The Bill is, therefore, of the utmost necessity and we welcome it. We welcome it to this place, on this day and in this form slightly more than we welcomed it in the other place when it was introduced in October. There have certainly been many concessions that we welcome, and which the Minister has outlined to us this afternoon.

We need to remember that this political process has been under way for some time. The Bill is welcome. It is of the utmost necessity and we only want to move it further and faster. It is necessary because of a series of high profile cases, such as the “loans for honours” inquiry, in which, for the first time in history, a serving Prime Minister was interviewed three times by the police. For the record, in this case no prosecution resulted from that. I do not want to be too partisan in making this point because the Liberal Democrats have also had problems, in accepting a donation for £2.4 million from a convicted fraudster, Michael Brown. Again, for the record, the Electoral Commission found that the party had been reasonable in regarding it as a seemingly extremely generous donation, though one that has still not been repaid.

For these purposes, a White Paper was produced and the Lord Chancellor, Jack Straw, used a key phrase in the foreword:

“When political parties are brought into disrepute, the reputation of the entire political process is tarnished. It is therefore important that action is taken to strengthen and sustain the standing of political parties within the political process in the eyes of the British public”.

That is why the Bill is both urgent and necessary. We should not limit the examination of weaknesses in the electoral system to the issue of party political funding alone. Whatever the ambiguities about the rules governing cases of donations, there is no ambiguity about one thing. In the last seven years there have been 42—

My Lords, is the noble Lord not being unduly optimistic about the contribution made by members of all parties? I think it has declined, and we all ought to be worried about that. Does he agree?

My Lords, I share the concern—it is shared on all sides of the House—that participation in all voluntary organisations in communities is declining. Our communities are the weaker for it. We would certainly want to see all measures in this legislation enhance the prospect of people taking part in party political activity up and down the country. I will come to that in a little more detail later on.

Wherever the ambiguities may be about the funding of political parties and party political donations, there is certainly no ambiguity about the fact that, over the past seven years, there have been 42 convictions for electoral fraud in the United Kingdom and only one of the 43 authorities in England and Wales has had no case to investigate. The Council of Europe Parliamentary Assembly's monitoring committee commented that there are,

“vulnerabilities in the system which should urgently be addressed".

The Joseph Rowntree Reform Trust stated in its report of April 2008 that:

“There is widespread, and justifiable, concern about both the comprehensiveness and the accuracy of the UK’s electoral registers—the poor state of the registers potentially compromises the integrity of the ballot”.

We take that extremely seriously. This proves that it is not so much the risk of serious fraud at the ballot box that we are talking about. It is happening, and change is urgently required to tackle this aspect of the legitimacy of the process as soon as possible. Furthermore, this opportunity for fraud was significantly increased by the extension of postal voting, as was again found by the Joseph Rowntree Reform Trust report, which said:

“Public confidence in the electoral process in the UK was the lowest in Western Europe in 1997, and has almost certainly declined further as a result of the extension of postal voting”.

As it stands, the Bill is therefore a missed opportunity. It was going to be a calamitous missed opportunity to tackle this important issue but, on Report, just before Third Reading in the other place, the Government finally conceded that they would bring forward proposals for individual voter registration, as the experts have long been calling for. However, it was rushed through at that stage. Many Members of the other place would have preferred that this concession was given in Committee so that it could have been scrutinised by them. So we will be looking to the Minister to provide some assurances and much more detail than we have so far received about how this will operate in practice. What we have been offered so far by the Government is an incomplete system that will not be introduced in a mandatory way until 2015. It will not exclude people already on the electoral role, and it will therefore be 2017—possibly two general elections’ time—before we can again have confidence in the veracity of the register. As the Minister has told us today, personal identifiers will be introduced, but only on a voluntary basis. Can that deliver the confidence that we seek?

All of this is happening while this system has been successfully introduced as a pilot in Northern Ireland. The Northern Ireland Office published Electoral Registration in Northern Ireland, which said that voter registration had been central to enhancing the accuracy of confidence in the electoral register. That is the case made. We do not resent them for having it, but why can the people of Northern Ireland have it and why can it not be spread much quicker into the rest of the United Kingdom?

Finally, there are places where the Bill should be toughened and uncompromising. However, there are also areas, relating to local associations and committees having responsibility to appoint an effective compliance officer in order to identify the source of donations over £500 on pain of criminal offence, which seem to us to go too strongly in the other direction, to the extent that they could discourage legitimate volunteers from taking on those places, or legitimate donors from making donations to the party. It is important to recognise that at a local level, the association, committee chairman or organisers are not qualified lawyers, they do not have access to the best city regulators and they do not have teams of accountants working for them. They are often working by themselves, late into the night and on a voluntary basis, and trying to follow the rules. It is very difficult for them, particularly when the rules change with such frequency.

Therefore we propose two suggestions: first, that there ought to be a defence of innocent mistake; and secondly, that the threshold required for registration—rather than being reduced from £500 down to £200, as was hinted at early on in this debate—should actually be raised to £1,000, to take in many more donations and potential donations, and to remove lots more bureaucracy from this. I understand that the Minister finds this slightly puzzling, but of course this particular element is all about trying to answer the problem which arose from the David Abrahams donations scandal, when it was alleged that donations of £600,000 had been made to the Labour Party through a series of proxies. We understand that that is unacceptable, and that we need to restore confidence to the system. However, we feel currently that moving that threshold to a higher level would help with that, whilst doing nothing to diminish the prospect of catching the serious abuses, which is what we are looking for.

I have spoken about some of the measures which we hope to see this Bill address as it goes through Committee. We feel that this Bill has been framed in such a way as to provide a missed opportunity for a long-term, sustainable settlement with regard to party donations from trade unions, companies and individuals. However, the Government’s many concessions in another place mean that this Bill is now in a format that for the most part we welcome.

My Lords, I should first indicate a non-pecuniary and past interest as a member of the cross-party informal advisory group to the Electoral Commission. I should also apologise at the outset on behalf of my noble friend Lady Hamwee, who will table some important amendments at a later stage on elections to the London Assembly, but who is unfortunately not able to be with us today.

I have begun to realise that this House takes great notice of experience. I should put it on record that I am the veteran of 12 parliamentary and county elections, and I have perhaps also to recall that I won half of those, which is a better record than some of my colleagues on these Benches. Experience is important, and I note with interest that there are in the House a number of noble Lords who obviously will be able to contribute very substantially from that experience to our discussions on the Bill. The noble Lord, Lord Bates, has had perhaps less experience in that respect and that may explain why he started his speech with tones of comparative complacency about the state of British politics, which I do not share.

It is rare that we are given the opportunity to improve not just one piece of legislation, but the public perception of our whole political system. We are going to have to use this Bill to take up that opportunity, even if the Government at present have failed to do so. After all, Minsters have trumpeted this as a great opportunity—a great vehicle— to take big money out of British politics and to increase the transparency of donations and spending from what remains. The Bill does not do that. It does not return political influence from the cheque book to the ballot box and it still places a cloak of secrecy around many large donations. In short, the Bill has gone through an elephantine period of gestation, but we have ended up with a mouse. It is a failure, and we in this House have a particular responsibility to turn it around and make it into a success.

The public surely are demanding cleaner politics. The incidence of cash for peerages, loans for Lords, bungs for amendments: all these episodes have tarnished the reputation of Parliament, this House as well as the other House. However, these are merely symptoms of a much more insidious disease—the reliance of the party system on big political donations. It is a rotten system. Contrary to popular perception, it places Britain in an even worse position than the United States. American election campaigns are expensive—astonishingly expensive—but they are also reliant on a broader base of funding. Donations are limited to $2,400 per election from individuals to any given candidate. Even the higher limits of $30,400 for donations to national party committees are much lower than the amounts now given to British political parties. Surely we should be aiming for our legislation to be at least as stringent as that in the United States.

There are three ways in which we on these Benches think that politics can and should be purged of narrow special interests brought about by big donations and the sharp focus on a small number of marginal constituencies. The first—no Liberal Democrat could come to a debate of this sort without referring to it—is electoral system reform. We must have reform to ensure that every vote, everywhere, counts. The second is certainty about the timing of general elections, to make it absolutely clear when spending limits will begin. The third is an end to what is currently referred to so regularly as the party-funding arms race. We cannot use this Bill to do the first two but we can make real progress on the third. I trust that this House will take the lead in that respect.

Surely we must adopt an all-embracing cap on the individual donations to political parties. If we do not, we will be in danger of slipping back to the worst, corrupt excesses of the 19th century when the wealthy could buy seats and political influence. Surely we must also give every constituency an equal spending limit regardless of its marginality, by dividing the national spending limit by the number of seats. If we really are to end the arms race in marginal seats, we have a duty to amend this legislation in such a way that it covers not only local spending to promote a candidate but national spending which has been used to promote his or her party in any given constituency.

If billboards saying, “Britain—Forward not back”, or, alternatively, “Mum’s eyes. Dad’s nose. Gordon Brown’s debt”, are plastered all over a specific constituency, it should be attributed to the party’s election expenses in that constituency, not just to the national limit. That principle was accepted at the end of the 19th century and surely it must apply now. I am quite willing to accept that if my right honourable friend Nick Clegg writes to a group of electors in a specific constituency, that expenditure must also be the responsibility of the local agent and recorded against the local limit.

Some Members of your Lordships’ House have great experience in this and have been involved in constituency campaigning for many years. They will be only too well aware of the expenses limit on the specific candidate and his or her agent in that constituency and how important it is to observe those ceilings. However, if we do not make a real change to the Bill as it stands, we will be ripping up all the constraints and safeguards that have been in place ever since the 1883 Act. That would be a terrible retrograde step. We must also look again at the recording and reporting thresholds specified in the Bill.

There is a real danger that the Bill will allow a series of impermissible donations to be made from beyond these shores. The Electoral Commission itself draws attention to a real question mark by saying that the Bill as it stands,

“may encourage impermissible donors to seek to increase their influence on UK political parties, for instance by making regular donations just below £500”.

It would therefore seem to be possible for someone from Belize, for example, to contribute £499 every day of the year without it being necessary to report it. That is absurd. Clause 13, by increasing this limit, is in fact a dangerously retrograde step.

What is most extraordinary is that the Conservative Members in another place sought to increase the reporting limit still further. That is the point at which donations not only have to be verified as permissible but their source declared on the public record. The Conservative Members sought to increase the limit for reporting donations to £3,000. That, surely, would be a backward step. What is more, I am confused by the position of the Conservative Party. I looked at Hansard for December 2007 when Conservative MPs were so exercised by the need to introduce an overall cap on donations that they called a special Opposition Day to debate their call for,

“a comprehensive package of reforms to restore public trust and to support a vibrant local democracy and voluntary activism, which must include an across-the-board cap”.

Yet those same MPs considered the Bill on Report at the end of last year and were unable to support my honourable friend David Howarth’s amendment to introduce such a cap, arguing that it was “for another day”. Why was it so essential to restore public confidence in 2007, but it is too early to do so in 2009?

I and my colleagues in both Houses believe that the Hayden Phillips proposals on party funding were well considered and we endorse them. We were bitterly disappointed when in the autumn of 2007 the other parties pulled the plug on the discussions, apparently in pursuit of their own special interests. However, we have a responsibility now to build on those proposals, not only to deal with the current crisis of confidence in our political system, but to make sure that we deal with it in a way that stands the test of time.

The Phillips proposals to which the Minister referred dealt with, first, caps on donations and loans to national political parties; secondly, the introduction of sensible safeguards for individual union members’ political contributions; thirdly, spending ceilings for the whole Westminster electoral cycle; and fourthly, the suggestion of a broadly based scheme to encourage local campaigning with limited public funding. The Phillips package offers an essential starting point for discussing this Bill.

Sadly, however, the Bill as it stands will certainly not achieve the changes on which all parties were originally agreed. We cannot use this Bill, obviously, to introduce the sanity of a fixed-term Parliament, much though that might be desirable, but we should at least amend the Bill to make sure that there is a level playing field on campaign finance for all elections, not just for the special circumstances of the present time. It is manifestly wrong at any time to legislate only for the existing situation in the full knowledge that this Parliament is likely to last 60-plus months. Very few Parliaments in recent years have gone beyond 48 months; in fact only two elections in the past 12 have gone full term. Imagine the free for all in those other 10 if there were no restrictions at all under this Bill.

I was first elected in February 1974 and the next election was in October 1974. What would happen in those circumstances? We would not have got anywhere near the 55-month trigger point; it would have kicked in 48 months too late. The measures in the Bill will apply only when a tired old Government are desperately hanging on and not daring to face the electorate. That is surely absurd; that is making the rule for the exception rather than the generality. We must investigate ways in which the investment in campaigning for all general elections can be effectively monitored and limited. Ministers must rethink the contortions that they have put themselves in over the issue of a proper fixed-term Parliament.

Some Members of your Lordships’ House may recall that as long ago as 1992 Labour recognised this problem in its election manifesto. It summed up the problem in this way:

“Although an early election will sometimes be necessary, we will introduce as a general rule a fixed parliamentary term”.

I see the noble Baroness, Lady Gould, echoing those words; for all that I know, she may have written them. What has happened to that promise in the intervening period?

Other issues will have to be dealt with. I give notice to the Minister that we will seek to remove Clause 17. This was based on a clause produced by a Conservative Back-Bencher, which managed to produce an extraordinary situation in the other place whereby there was a Division without the new clause being moved. I draw the Minister’s attention to the House of Commons Official Report, 2 March 2009, col. 678.

My Lords, I hope that the noble Lord is not blaming the Government: this was a matter for the Chair in the other place. The noble Lord knows that as well as I do, so I hope that he is not going to leave any kind of false impression.

My Lords, I am grateful to the Minister. I will draw attention also to the fact that his right honourable friend the Secretary of State and the Minister in charge of the Bill both voted against the inclusion. I give notice that we regard that as an improper addition to the Bill.

My Lords, it is our intention that there should be a free vote on that provision in this House, as there was in the other place.

My Lords, it is extraordinary. It is not for us to criticise the way in which the other place does business, but there were other new clauses that had wide support across the parties on all Benches. One was signed by 216 MPs, yet was excluded from debate and denied a vote.

As the Minister knows, I and my noble friends, and my right honourable and honourable friends at the other end of the building, consistently supported the Electoral Commission in its strong recommendation that individual registration is urgently preferable to the current reliance on the head of household. We believe that the integrity of the register is crucial to the reputation of our whole electoral system. We do not believe that registering more people is in itself legitimate if it has to rely on fraudulent additions. I understand that the commission recommended the change in 2003. What has happened since then? The long process to which the noble Lord, Lord Bates, has just referred could have been well under way by now if the Government had listened to their own advisers. As we are threatened with an extraordinarily long transition period to 2017, beyond two elections, surely it is time to get on with it.

In brief, it is extremely important that the Electoral Commission is now given the resources and powers to keep the difficult balance between ensuring the integrity of the political system and avoiding excessive burdens on volunteers. It is far from clear that the Government have recognised the nature of this dilemma. Meanwhile, we in this House should be under no illusion that the Bill offers us a rare opportunity, and therefore we should be absolutely clear that it is important to do it justice in order to make sure that we restore public confidence in our political system. As it stands, the Bill does not meet the clear concerns of the public, and we have a manifest duty to strengthen it.

My Lords, I declare an interest, which the Minister alluded to: I was chairman of the Committee on Standards in Public Life. The noble Lords, Lord Goodhart and Lord MacGregor, were also members. The other representative of a political party was the late lamented Lord Shore—Peter Shore. They were the trio who represented the three parties. We produced the committee’s fifth report, which, as the Minister said, was substantially accepted by the Government, went through and led to the Act of 2000.

I will pick up on certain themes and talk about them briefly. The first is individual registration, which was mentioned by the previous two speakers. As the noble Lord, Lord Tyler, said, in 2003 the Electoral Commission advocated individual registration and said that it was essential. The commission put it on high ground; it said that it was a fundamental democratic right to register your own vote. We could argue about that, but that was the commission’s position and it has been an important element in thinking about politics ever since. It is unfortunate that we in this House cannot, in this Second Reading debate, discuss the clauses that give effect to this idea. The Government said on Report in another place that they were bringing forward the clauses, as the Minister confirmed today. However, the process is very slow and the clauses are very late. I hope that we will not be in the position that I remember when a different Bill came from another place and one-third of it had not been debated there at all. Here we have an important part of the Bill that deserves consideration at Second Reading, but we have no specific clauses on which to focus. Having made that complaint and lament, I move on.

In the literature on this subject, there has been much citation of the Northern Ireland experience, which it seems has been a success. There are two things to note. First, when the system first came in, there was an immediate fall of some 11 per cent in the number of registrations. Secondly, there was a requirement to register annually, which echoes the bit of paper that comes round with the rating list every autumn, giving the householder an opportunity to say who in the house is a voter. However, that was found to be unworkable because people became fed up with having to register annually. They asked, “Why have I got to do this every year?”, and so that was dropped. Therefore, one of the benefits of the household system—the regularity—was lost.

The other point of interest is the general perception of the public. A survey—the BMRB research report—has recently been carried out for the current Committee on Standards in Public Life. I refer, without having it in front of me, to point 6.2 on page 63 of that report. Although quite a big majority of the people who answered the questionnaire—something like 70 or 80 per cent—said that they would favour a system of individual registration, they also said that it was likely that the number of registered voters would decline. That poses a real question, which has to be investigated.

I believe that the effect of introducing the system here and how it would work are matters for evidence. We are not Northern Ireland; we have a different community and a different make-up. Would individual registration work in an acceptable way in all sections of the community in this country? That is a serious question, which needs to be thought about. Would all men and women register their names? Would that be in accordance with custom and ethics and so on? We cannot just take it for granted that the experience in Northern Ireland would apply throughout England.

The other important question on which we require evidence is: what would it cost to set up this system? We have heard talk of bureaucracy. Will it involve a fair amount of bureaucracy and place burdens on local authorities? There was some mention of that at the meeting with the Electoral Commission that I attended the other day in this House; it was considered to need further thought. Therefore, I am saying that this is a serious matter and we need to have a proper debate about it. I suppose that it is impossible to reopen the Second Reading debate, but the clauses need to be considered very seriously in this House.

My next point concerns what I call the insecurity of the postal system. I refer to the 11th report of the Committee on Standards in Public Life, which has nothing to do with me—it was produced years after I left. The report came out at the beginning of 2007 and is called Review of the Electoral Commission. Chapter 5 has the heading, “Integrity of the Electoral Process”. The committee was worried about the effect of the postal voting that had taken place. I shall read out one or two brief excerpts from page 79 of the report:

“The introduction of postal voting on demand without the need to present a reason for the application, has demonstrated the vulnerability of any trust-based electoral process”.

The report goes on:

“While it is clearly imperative for as many eligible individuals as possible to participate in the democratic process, we can no longer base our electoral system on trust alone if we wish to protect the integrity”,

of that system. Paragraph 5.8 states that,

“evidence received by the Committee suggests that since the introduction of postal voting on demand there has been a growing perception that the electoral system is more susceptible to organised electoral fraud”.

A worrying feature that has accompanied postal voting is a change in public perception. In some areas of the country, fewer than 50 per cent of people thought that the system was safe. The report gives examples in table 5.1 on page 81 of some of the offences that have taken place between 2001 and 2006. There is no time to go into them all, but I shall cite some of them. In Hackney, there were hundreds of forged postal and proxy votes. In Havant in 2000, there were 22 forged postal votes. In local elections in 2004, there was a large postal fraud in Oldham and 43 postal votes were tampered with in Stoke-on-Trent. As I said, the report gives various examples.

People who write on this theme are concerned about fraud. I have the executive summary of a report that was commissioned by the Joseph Rowntree Reform Trust and came out last year, which also refers to this worry. It states that,

“cases tried since 2000 underline that the extension of postal voting clearly enhanced the vulnerability of UK elections to large-scale fraud. The likelihood of such fraud occurring could—and should—have been predicted on the basis of evidence of growing proxy vote fraud during the 1990s”.

It goes on to refer to the Birmingham case and to other evidence of rigging and quotes the 2008 Council of Europe report, which has already been mentioned this afternoon. That report states:

“It does not take an experienced election observer, or election fraudster, to see that the combination of the household registration system without personal identifiers and the postal vote on demand arrangements make the election system in Great Britain very vulnerable to electoral fraud”.

That was the pretty pungent criticism of three visitors from the Council of Europe who examined our system and thought that we had opened the way to fraud. It is a pity that no thought has been given to that in the Bill. It is one of its omissions.

On a different point, the Bill provides that there should be four nominated commissioners. The scheme as regards one, two and three is easy to see—each of the three major parties will nominate a commissioner. There is then room for another, as statutory provision says that there should be four commissioners. However, proposed new Section 3A is pretty woolly and hazy on who the fourth individual will be. It looks as if there might be a contest between various small parties that have managed to get two Members of Parliament elected. They might have a tussle on who gets the fourth place.

Is this really worth doing? On the Committee on Standards in Public Life, we had, as I said, a member of each of the three major parties. They acted in an entirely neutral way and not as representatives of their parties in the slightest, but each of the three brought their experience of politics. We always knew that, when somebody started talking nonsense, somebody else would say, for example, “It doesn’t work like that in the House of Commons”. We had the balance of that from three people and I raise the question of whether we need a fourth.

My next point refers to the increase in the figures: £200 going up to £500, £1,000 up to £1,500 and £5,000 up to £7,500. That is not really what the Electoral Commission wanted. It certainly does not like the look of £500, although maybe it was open to an increase in the £200.

My Lords, it is time for a mea culpa, because I was wrong and I want to apologise to the House, so I should do so at this stage. The Electoral Commission did not recommend the increase as I thought it had. The decision to raise the amount was taken by the Government—I can justify it at a later stage if I have to. The Electoral Commission did not suggest it and I was wrong to say that it did.

My Lords, I thank the Minister for putting that right. I was not quite sure whether it would accept some increase, but my position is that I do not think that any of these figures should be increased. There is no justification for it. We talk about this leading to bureaucracy, but I do not see why it causes more bureaucracy to enter a small figure than to enter a large figure, and I do not think that it gives the public the right feeling in days when those with money are regarded with some suspicion.

I shall put down my position on a point that has been touched on today: public funding. In the Committee on Standards in Public Life’s fifth report, we went into public funding. At that stage, the Labour Party put in a written submission opposing it. One of its arguments was that public funding was not something that we ought to be looking at in times of financial stringency. Talk about financial stringency! Turn over a few pages of the scrapbook and get to 2009, and that is exactly what Mr Jack Straw said the other day in another place. He said that the public would not look with a kindly eye on public funding for Members of Parliament. That is completely correct, I think. If the issue comes up, we will probably have a debate about it when an amendment is moved.

The final thing that I want to mention is a hobby-horse of mine. The Bill refers to civil sanctions to be given to the Electoral Commission. In substance, they are not civil at all, but completely criminal. They are fines imposed for committing an offence. They are a fixed monetary penalty, a variable monetary penalty and a non-compliance penalty, as set out on page 37. The standard of proof is the criminal standard—it must be beyond reasonable doubt—and what is being alleged is the commission of an offence. They are really criminal in nature. That is all that I have to say.

My Lords, in welcoming the Bill, I must declare an interest as chair of the HS Chapman Society, an organisation that brings together from all parties high-level experts on election procedures, regulations and practices to examine and make proposals to maintain the integrity of all aspects of our electoral process. I welcome the Bill because it puts right many of the weaknesses and omissions of the 2000 Act. I have suggested the need for an Electoral Commission since 1991, after listening to the views of the Association of Electoral Administrators, which believed that many aspects of the electoral process at that time were insufficiently rigorous and in many cases little more than ad hoc. The establishment of the Electoral Commission was a milestone, but its remit in the 2000 Act was too wide and lacked sufficient regulatory control.

Last year, the HS Chapman Society held a seminar to consider the recommendations on the future role of the Electoral Commission proposed in the Eleventh Report of the Committee on Standards in Public Life and to hear the response of the Electoral Commission. That report stated:

“An effective Electoral Commission is a necessary and vital part of the modern institutional architecture. Its core duties should be as a regulator to ensure integrity and public confidence in the electoral process and in the framework that governs the political party funding and campaign expenditure”.

I believe that the regulatory proposals in Clause 1, based as they are on those principles, will enable the Electoral Commission to be a proactive regulator of party funding with stronger control over electoral administration. However, this has to be accompanied by full implementation of the sanctions outlined in the Bill, which I believe will be adequate when we get the proposed amendments that will recast the current criminal offences into ones based on compliance models and fines.

The 2000 Act placed too great a burden on political parties and particularly on voluntary treasurers. The sanctions proposed will ease that burden by enabling the Electoral Commission to respond to breaches in a more proportionate and flexible way. Offences will be those committed without reasonable excuse, while those who have honestly made a mistake in reporting incomplete donation returns will be treated fairly. The training by the Electoral Commission of treasurers on compliance with the law should also ease that position.

The original writing of the Bill went too far in allowing the Electoral Commission to have powers to search donors’ premises. The provisions finally arrived at will protect both the donor and the commission by making it the decision of a judge, based on a reasoned request from the commission, that any relevant document should be released, and only on further refusal would the police be able to carry out a search. This gives the donor every reasonable opportunity to comply.

I come now to what was previously a controversial subject when we discussed the 2000 Act: allowing some commissioners to have direct political experience, as in Clauses 4 and 5. As noble Lords will recall, in the debate on the 2000 Act all sides of your Lordships’ House felt that it was wrong for there to be no direct political experience on the commission. As the Lord Chancellor said in the other place when introducing the Bill:

“With hindsight … that was an error”.—[Official Report, Commons, 20/10/08; col. 46.]

It will be of immense value to the commission to have four commissioners directly nominated by, but not representative of, the political parties in the Commons. It is important that the Speaker’s Committee, which will confirm the appointments, ensures that there is absolute transparency in the making of those appointments, not least in how the fourth commissioner from the qualifying small parties will be determined.

The reduction of the restriction on involvement in political activity from 10 years to five years for all commissioners will provide a layer of experience that has been missing. The same principle applies in respect of the staff by reducing the current prohibition on employment from 10 years to one year, except for the post of chief executive, which is reduced to five years. In no way am I suggesting that the staff cannot be impartial, but I understand the desire of the commission for some flexibility so that, if necessary, it can apply to the Speaker’s Committee for the five-year ban to be applied also to a small number of other posts, particularly to someone who might be acting on behalf of the chief executive.

I fully appreciate how difficult it has been to arrive at the necessary consensus on candidate spending limits but, without doubt, it was an unintended consequence of the 2000 Act that, in seeking to establish a clear definition of when someone has become a candidate, it seriously weakened controls on candidate spending. This has caused a dramatic increase in targeted spending by candidates. As outlined by my noble friend, Clause 14 removes the original triggering proposals from the Bill and replaces them with new controls on candidate spending at those Westminster parliamentary elections held more than 55 months after a Parliament first met. That is four and a half years, and I have some questions about that period. The proposal has the benefit of clearly defining when time controls will be in place.

I have been advocating since I was a party official that we ought to have fixed-term Parliaments, but this is not the Bill to deal with that position. However, I have some concern about the situation for shorter-term Parliaments. Having looked at the detailed explanation of the candidate spending amendment, I urge that the Electoral Commission, in its guidance to parties, spells it out in simple terms, with clear examples for each of the different outcomes depending on when an election is held. I found it more than a little complicated and felt that I ought to sit down with a pencil and paper and work it out. I am sure that voluntary party members will feel the same. It is important that it is spelt out clearly.

The new average limit of £30,000 per seat seems sensible. When I first became an agent we thought £2,500 was an enormous amount to spend. I therefore find £30,000 difficult to imagine, but I am sure it is right.

As my noble friend said, the increased reporting thresholds for donations should alleviate the compliance burden on political parties, which we also have to take into account. Importantly, the Bill clarifies the position on unincorporated associations and will increase the transparency surrounding large political donations. This will close the loophole which has allowed a breach of the principles of the 2000 Act and which currently allows wealthy donors to make anonymous donations to political parties above the amount which has to be reported. Actions like those also cause concern among the public, while we have to look seriously at the issue of foreign donations; I look forward to seeing whether that comes up in Committee. Having read Clause 10, about the compliance officers, I have one query for my noble friend. Could he clarify a little better exactly who can and should be a compliance officer, and what their particular role would be?

I turn to an important part of the Bill, which others in your Lordships’ House have raised although it is not quite in the Bill yet. It is the question of individual registration. For far too long, there has been a democratic deficit arising from the 3 million eligible people who, because they are not registered, are not able to vote in this country. Ninety-one per cent registration is not acceptable. On polling day we are, all too often, confronted by people who want to vote, then discover that they have not registered and so cannot. It is such a simple thing; “No registration, no vote” should really be the sign that goes on all of our posters.

The Electoral Commission, as has been said, has long argued the case for individual registration to replace household registration, as has my own organisation, the HS Chapman Society. It is good news, then, that the Government are to produce an amendment for this House to discuss bringing in a scheme for individual registration. We will have to consider carefully the points within that amendment and look at it in some detail, but I support the Government in this; it is better to have it later than never. I am really glad that the Government have now come around to that thinking, but I appreciate why they had reservations that individual registration might result in a drop in the registration level, as in Northern Ireland. The process has to be rigorous enough to make sure that does not happen, which is why the timescale of allowing that work to go on until 2015 is absolutely right.

The integrity of the register is paramount and must be comprehensive and accurate, which means that electoral registration officers have to make special and increased efforts but have to be provided with the right tools and resources to make it happen. The Minister, Michael Wills, indicated that he would be coming forward with proposals to provide the extra resources needed. Experience has shown that money, unless ring-fenced for its intended purpose, is likely to be lost in other local government expenditure. The money has to be spent for the purpose for which it was allocated, but account must be taken there of the additional dimension of asking for personal information identifiers—such as date of birth or national insurance number—as well as a signature. The public will almost certainly want reassurance when providing that information. Equally, provision has to be made for reaching people living in multi-occupancy accommodation, those with literacy problems and other hard-to-reach groups. The decision to allow two-tier local government, as well as one-tier, to receive relevant data from other sources will greatly assist, but must clearly be done in compliance with the Data Protection Act 1998.

I appreciate that the Electoral Commission’s monitoring of current standards and expenditure on registration by local authorities will give an assessment of performance variability throughout the country; those details will, I believe, be available shortly. That information should be the basis for starting the planning process towards individual registration. As my noble friend said, equally important will be the judgment of the Electoral Commission in determining whether sufficient time has been given to allow full implementation of the scheme or whether a further period, perhaps two years, is required.

The introduction of individual registration is a major breakthrough and should provide greater protection against electoral fraud while enhancing the legitimacy of the electoral process and the integrity of the ballot. Whether it is in the provision and expenditure of funds or the validity of our election, our electoral procedures—as the noble Lord, Lord Bates, said—need the proposals in this Bill. I will fully support its progress through your Lordships’ House.

My Lords, I support the points that the noble Baroness has just made about the burden on local parties, particularly the treasurers, that was implied in the 2000 Act and was originally going to be increased in the current Act. I welcome the Government’s pull-back with the restriction of investigatory powers, which will be an important aspect in encouraging local people to serve as officers of their local parties. All too often, as many of us know, it is not a question of who is going to carry out these roles but how we will get anybody to do it at all. We want to find ways of encouraging them. In Committee, we will need to explore whether the changes the Government made achieve what it says on the tin.

Since this is a Second Reading debate, I shall step back from the detail and look at two issues which I describe as the elephants in the room. The first is the maintenance of public confidence in how our elections are run; the second is the maintenance of public confidence in the way in which our political parties are financed. If we get those two building blocks right, most other issues fall into place. Several noble Lords have remarked on the evidence of declining electoral confidence on both counts and the consequent dangers to the fabric of our democracy. That will be even more important at a time of considerable economic stress such as we are apparently going to have. People are at work; they are impoverished; it is more than ever important that they feel that their democracy represents their views and aspirations as a means of avoiding other and much less attractive ways of expressing them. Some people have said that this is primarily an issue for the other place, but I do not think it is any more, if it ever was. The waves of cynicism and disbelief are beginning to lap against the foundations of your Lordships' House as well.

On how elections are run, the Government’s response to the decline in electoral turnout was to make it easier to vote, hence the introduction of pretty wholesale postal voting. But any dispassionate observer would have said that that was an experiment doomed to failure. Those of us who have fought general elections will recall travelling up and down streets on election night, asking people to vote. The person says that when they have finished washing the car or mowing the lawn or when their television programme comes to an end, they will go and vote. You say, “For goodness’ sake, go and vote—for me, preferably—but above all, go and vote”. Even so, you have a pretty clear idea that they are not going to.

Postal voting will not change that aspect of behaviour; rather the reverse, in my view, because the easier it becomes to vote the less people value it. There may be some argument for saying that voting should require at least some effort on the part of our fellow citizens in order to participate in our democracy. It happens, after all, only once every four or five years, and of course one should provide safeguards for the old, the infirm and the ill. However, as my noble friend on the Front Bench pointed out, it was worse than this because the cases of electoral fraud undermined confidence in the whole process, and participation decreased rather than increased.

I was extremely disappointed that there was nothing about this in the original Bill, but I welcome the Government’s Damascene conversion on 2 March. God loves a sinner who repenteth. We have a very interesting set of proposals to consider. Of course we shall need to look at them in detail. If I heard him aright, the noble Lord, Lord Neill, set a few torpedoes running about the nature of them, which may well yet take those provisions amidships. I congratulate the Government on the Bill; certainly there is a cheer for having got that first part of the task in hand.

So much for the first elephant. The second is party funding, on which, I am afraid, the Bill is entirely silent. To use a caricature, if you go to the saloon bar of the Dog and Duck and talk about party funding, after a certain amount of unprintable stuff about politicians generally, you will be told that my party is funded by, and responds to, rich people and the Labour Party is funded by, and responds to, the trade unions. I think that the Labour Party has a good many rich people in it as well, but never mind about that. I am not saying that that is a true reflection of the situation, but it is how people think, react and behave. To restore confidence, we need to show that this is not the case. The Bill would have been an ideal opportunity for us to do so, but it would require courage and resolution on the part of both major parties to accept the inevitable consequence: a cap on individual donations. For my party, it would be an opportunity to demonstrate beyond peradventure that rich men cannot influence it; for the Labour Party, it would be an opportunity to introduce transparency to its financial arrangements with the trades unions. There are, of course, risks and dangers, but surely, given the degree of cynicism about our political process, it is a risk that we should all be prepared to run.

Finally on this point, if we really want to be bold and encourage the parties to reach out to a mass membership along the lines referred to by the noble Lord, Lord Clinton-Davis, in his intervention on the Minister’s speech, perhaps some form of matched funding from the taxpayer, whereby, up to a modest level per head, individual donations could be matched, should be considered. This would have the twin benefits of encouraging parties to produce more members and providing them with additional funding. But I am afraid there are no ideas from, nor cheers for, the Government on this topic, because they have ducked it.

I turn briefly to the provisions. Clause 4 proposes the introduction of electoral commissioners from the political parties. I can see the superficial attractiveness—the noble Baroness, Lady Gould, referred to it—of getting people with political experience involved in the commission, but I say to the Government, “Be careful what you wish for”. If one talks to Members of the other place about the way in which their internal disciplinary procedures run, they will say, in a moment of honesty, that they too often become party political matters, and that the process of discipline has therefore become less effective and less commanding of public confidence than might otherwise be the case. There is a danger in introducing party-political electoral commissioners. I understand that they will be extinct volcanoes—that is, people who have had a distinguished career but who are no longer involved in the day-to-day thrust of politics—but members of the Electoral Commission need to be, like Caesar’s wife, above suspicion.

I draw the Minister’s attention to Section 4 of the Political Parties, Elections and Referendums Act 2000, entitled “Parliamentary Parties Panel”, on which, I think, the noble Lord, Lord Tyler, served if I heard him correctly in his opening remarks. Subsection (2) states:

“The function of the panel shall be to submit representations or information to the Commission about such matters affecting political parties as the panel think fit”.

I accept that it is quite narrowly drawn, with financial matters primarily in mind, but it could be built on. We could have the advantage of party political input without running the risk of the Electoral Commission becoming involved in party politics. The Minister should consider whether we cannot get the best of both worlds by slightly reforming something that already exists in the 2000 Act.

Clause 10 relates to the compliance officer. I cannot see clearly what this man or woman will achieve other than duplicate existing functions. Most of the duties laid down seem primarily to be the responsibility of the election agent, and there are considerable dangers of divided responsibility, with neither party being prepared to take primary care. I refer the Minister to Clausewitz’s old saying: “Better a bad general than a divided command”. We have a divided command here.

We should look carefully at Clause 17. I agree with the point made by the noble Lord, Lord Tyler, and I was delighted to hear that the Minister intends to allow a free vote on this issue. Transparency is a key regulatory objective and one of the principles of good regulation. This change was popped into the Bill without any debate a couple of weeks ago. Electors are entitled to know where their candidate lives; for some, local roots are an important aspect of the appeal of a candidate. To those who argue about security, I say that I am not aware of attacks on candidates. There have been some dreadful cases of attacks on Members of Parliament, particularly the one in Cheltenham, but that was about a surgery. I assume, therefore, that a candidate’s address will not remain a confidential matter; otherwise, the contact between the Member of Parliament and his constituents would be greatly reduced.

My Lords, I declare a personal interest as someone who has received protection against terrorism in my day. Is my noble friend contemplating that those who are under such a threat should be required to put their address in the electoral register, or is he prepared to allow them to be protected?

My Lords, if we have a particular security threat, which is a rather specialist case, then the case might be made. However, as a matter of course, if every single parliamentary candidate can avoid giving any detailed information about where he lives, we are shutting off the electorate from the candidate in a way that is undesirable as a matter of course. Clearly, we hope that the issues that particularly affected my noble friend—Northern Ireland and so on—are a thing of the past. The proposal to introduce this without debate or consideration of the various aspects of which this is an important part is something that we should examine again in Committee.

My final point is that the Electoral Commission will have an extraordinarily heavy burden to play in this new world. The noble Baroness, Lady Gould, quoted from the report on the Committee on Standards in Public Life. After her quote, the report went on to say:

“Through a combination of deficiencies in its current mandate, that is too weak in some areas and too broad in others, combined with a lack of courage, competence and leadership in its regulatory and advisory approach, the Commission has not successfully performed these core duties”.

We cannot legislate for courage, competence and leadership; that will be achieved in the hearts of the men and women who serve on the commission, who will need to be well endowed with those characteristics. But we can and should provide the appropriate framework. While welcoming the rather glacial progress that this Bill represents, I am not convinced that the Government have done enough to provide the right architecture to enable the Electoral Commission to execute its heavy responsibilities.

My Lords, I very much welcome the spirit in which the Minister opened this debate, indicating, understandably, that the Government are seeking consensus as a way in which to bring about political reform of the election system. That is an ideal for which we should all strive, although it is not always possible. In those circumstances, Governments are placed in a difficult position, but they have to provide leadership and be transparent about what the best arguments are, so that the public may buy in to the case.

In this House, we should endeavour to see whether we cannot broaden the consensus from that agreed in another place. The process of this Bill has indicated some widening of the Government’s horizons, at least in the discussions in that place, most notably in respect of individual registration, and the welcome development from the original Bill to provide for it, albeit at a rather slow pace. I listened with great attention to what the noble Baroness, Lady Gould, has to say about the timing of this, as she has great experience. No doubt in Committee we will be able to look at this issue in greater detail.

The political reform of this country is a necessary condition for delivering a more successful Britain and a Britain at peace with itself. It is not a secondary consideration at this time of financial crisis. There is currently much evidence of disquiet in this country about our political system. I believe that imports a danger. When the public is under pressure for economic and external reasons and it is not content with the system that we have, it is more likely to listen with greater attention to the voices of populist extremists. That extremely important point was made by the noble Lord, Lord Bates, in opening for the Opposition.

We must therefore ask ourselves whether the Bill has gone far enough to meet the concerns of the public. It is unquestionable that it has gone further and in many respects it is an improvement on the 2000 Act, but I am surprised that the Government have not felt it possible to grasp the nettle of expenditure in elections. They recognised that this was a grave concern and that the fear that votes could be bought has not evaporated since the Government asked Sir Hayden Phillips to consider these matters. It is reasonable, and therefore it should be possible, for the parties to assemble and consider how they would address these issues even now.

I know that an election is in the offing for the Westminster Parliament, but even now we should attempt to remove this anxiety. We should look again openly and particularly at the principles that underlie the report of the Constitutional Affairs Committee and that of Sir Hayden Phillips. Those principles were well enunciated and they are not addressed in the Bill. One principle that Sir Hayden enunciated was that the status quo in which there are no caps on donations is unsustainable and therefore donations to parties should be limited. That is an extremely important principle and it needs to be particularly addressed in our debates.

Another principle was that expenditure on general election campaigns was progressively growing and should be reduced. I do not see anything in this Bill that goes in that direction. That worries me, particularly because we do not have the sort of controls over expenditure in this country that the United States has and which my noble friend Lord Tyler, in his detailed and helpful speech, enunciated. We cannot congratulate ourselves on getting this right if we do not address that general point.

A further related point is that if we were to affect the incomes of political parties, there is a potentiality for inequitable consequences and the loss of stability. I need not remind the House that Sir Hayden Phillips advocated some increase in public funding of political parties. It is important to espouse the view that political parties are an absolutely key part of the working of our democracy. They are responsible for the sophisticated development of policies by parties not in government and the success with which they propound those developed policies will enable the public to have a sense of its involvement in the political process. More than anything, it will have the potential of encouraging people not to take a backseat, not to listen to the cheap points which are being scored by the populists and even to participate directly in seeking to formulate these attitudes. Hayden Phillips drew attention to the fact that, in this country, membership of political parties has dropped from one in 11, 50 years ago, to one person in 88 today. To me, that is retrograde and unfortunate. If parties cease to play a part, what is to take their place? Is it to be individuals? I cannot imagine anything more dangerous.

I hope that in addressing these considerations in Committee, we will consider these wider considerations in putting forward our individual proposals, which I do not propose to touch on today, and I hope that we will not simply consider how they affect one or other political party. All political parties are required to be funded properly—not excessively funded—with sufficient income to enable the serious work of political thinking and political education to be advanced.

My Lords, I declare an interest as a member of the Labour Party for more than 30 years and as the chair of the Labour Party in 2000 when the Political Parties, Elections and Referendums Act came into being. I can still remember the challenges that we faced: on the one hand, quite rightly, we were trying to implement our manifesto commitment to clean up political party funding and, on the other hand, we were struggling with the practical operation of what became a complex and, to my mind, unwieldy piece of legislation. From my perspective, this Bill is a welcome opportunity to iron out some of the unnecessary local burdens, while tightening up on the big funding issues, which continue to threaten the integrity of our political parties and, therefore, the reputation of our democratic system.

I am sure that there will be some robust discussions during the passage of the Bill through the Lords, as is absolutely right, but, as has been said, there have been considerable efforts in the other place to try to reach a cross-party consensus on issues that should transcend individual interests in favour of the more compelling objective of renewing faith in our political party system. I hope that we are able to keep that goal in our sights as the debate progresses.

In that context, I would like to make the following points. My main concern about the 2000 Act was that it placed daunting new accounting burdens and draconian sanctions on the rather scarce and precious local volunteers on whom we all rely to keep our local democracy alive. Those individuals, often elderly, provide an essential presence in local communities and act as the recruiting sergeants of the next generation of political activists. As a number of noble Lords have said, we expect too much of them and often exploit their good will. At the time, I was concerned—it was borne out by some evidence—that the new responsibilities of the Act would prove to be the final straw and they would step down from office. To be honest, it felt like the people drafting the legislation had never run a jumble sale or passed a hat around to get enough money to pay for the hire of the room.

That is why I am pleased that the provisions in the Bill have begun to address that issue by introducing a more proportionate regime for local accounting. It is helpful that the basic level of recordable donation has been increased to a more justifiable figure. More important, the concept of a local compliance officer who could be appointed to make the returns to the Electoral Commission on behalf of other local officers could provide some welcome relief to our overburdened volunteers.

I am also pleased that the thresholds for other recordable and reportable donations have been increased to more sensible levels. More fundamentally, I very much welcome the shift in the nature of sanctions that can be applied to breaches of the law at a local level. If our activists were put off by the bureaucracy of the previous recording procedures, they were terrified of the penalties for default that threatened them with criminal proceedings. Again, it seemed as though there was no real understanding of the slightly chaotic and unstructured nature of local activism. It is absolutely right that, where honest mistakes are made, there should be flexibility in the application of sanctions.

Secondly, I very much welcome the move to extend the size of the commission to enable four commissioners with political experience to be appointed. Clearly it is important that the political appointees are not in the majority, but in its early days the commission felt that it was struggling to understand the real world of political parties on the ground. It was making policies for an idealised concept of super-organised local activists who did not exist and it was less effective for that. There is a role for knowledge and experience in a regulator and I am sure that the new appointments will enhance the status of, and respect for, the commission.

Thirdly, it has to be right that, in the longer term, we move to individual electoral registration. The concept of a head of household taking charge is increasingly an anachronism, which takes no account of the changing nature of households and relationships and subtly downgrades the status of those passively being registered. It is also, as we are painfully aware, more open to fraud. There is a real opportunity now to use an electoral registration campaign to reach out to the next generation of voters and persuade them that their right to vote has significance and value. It should mark their transition into the adult world and bring with it other advantages and benefits.

That is easy to say and more difficult to deliver. It would be a disaster if the result of this initiative was fewer people being registered and fewer individuals voting. That is why we need to proceed carefully. The full and enthusiastic support for the initiative from local electoral registration officers is crucial and they need to be guaranteed the extra resources to roll out this programme. It is also vital that the verification proposals have broad popular support and do not become an excuse for a registration boycott. This is a difficult challenge. We are right to proceed with it, as it is long overdue, but it is also right that we should learn the lessons as we proceed and not put the whole registration process at risk.

Fourthly, I have a couple of comments about the trade union political funds, which some people have suggested should be included in the Bill. Already, the political activities of trade unions are massively regulated by both trade union and electoral law. Already, donations, affiliation fees and donations in kind have to be clearly recorded and made public. Trade unions also have the draconian duty to reballot their members on continuing these activities every 10 years. These funds are then used to affiliate individual members to the party in the form of a membership fee. This is very different from the large-scale individual donations that the Bill attempts to regulate, and the two should not be confused.

Finally, I turn to what are now described as unincorporated associations but which most people would describe as front organisations. Of course, political organisations, like all other parts of our lives, have become more complicated. It is also true that an organisation set up for one purpose can easily become a convenient vehicle for an entirely different purpose. The key to unlocking these complex relationships has to be transparency. This was the spirit and intention of the 2000 Act. It is vital that we take the opportunity in the Bill to close any remaining anomalies that have drawn a cloak of secrecy over millions of pounds in hidden donations. That is why I welcome the measures in the Bill, which will require unincorporated associations that make donations to political parties in excess of £25,000 a year to report the names of individual donors to their funds. It is right that the public should know who funds our parties; people should be reassured that opportunities for foreign nationals to fund our parties via this route are now being blocked.

I am aware that I have touched on only a few aspects of the Bill. I look forward to opportunities to debate the issues as the Bill progresses through this House. There is always a temptation when dealing with issues in which many of us take a close interest to become rather partisan. I hope and believe that we will manage to avoid that trap and to craft a Bill that has at its heart renewed transparency and renewed public faith in our political system.

My Lords, I speak as a former treasurer to the Conservative Party, from 2004 to 2007. I will largely restrict my comments to matters of finance and party funding. Many aspects of the Bill address those issues and issues of disclosure. However, I fear that the Bill does not go far enough. I was co-author, with Andrew Tyrie, of a paper for the leader of the Conservative Party. I also served in the discussion stages with Sir Hayden Phillips. Two things that we tried to demand were a cap on donations and matched funding, to which my noble friend referred earlier.

We live in a world that demands transparency and where the media have become obsessed with political party donors and with what they perceive—I use that word deliberately—as their motives. The Bill, by not imposing a maximum amount per donation, does not address those issues. It cannot be right that there is overdependence on a union or a number of individuals for the annual running costs of a party. It cannot be good for politics and it cannot be good for the parties themselves. Through the passage of the Bill, we must be earnest about changing that.

Neither does the Bill prevent a cash-grab race from taking place, as it does not restrict what political parties may spend in any one year. It cannot be right that, depending on a party’s political fortunes and popularity in the polls, one party should be able unreasonably to exceed another in its ability to raise—and therefore to spend—money. A cap on annual running costs would be welcome.

However, the most acute problem is the raising of money for a general election, which effectively doubles the money that a party is required to raise in one year. Large donations are therefore required and the issues of influence and reporting raise their ugly heads again. If we are to get to a consensus on this, we need to resolve how we support parties in their election fundraising initiatives.

Neither does the Bill promote democracy, because it does not produce a plan for financially supporting new political parties, allowing them to campaign—and thereby permitting the nation to debate broader democratic issues—without being dependent on a rich donor. Nor does the Bill financially incentivise political parties to encourage greater turnouts at the ballot box and greater involvement in political debate. A grant scheme or incentive plan is surely an imperative. Yet again, that opportunity has been missed.

Finally, the Bill does not address the undue influence of trade unions or the amount that they are allowed to give the Labour Party. In the last year we have seen the unions bail out the party from its deeply parlous financial state. What is the price of that bail-out? It is totally unreasonable. The Bill does not permit trade union members to opt out of their union contributions being directed to the Labour Party. This must change.

It may seem odd that I welcome the increase in the threshold for a declaration, but the threshold has not changed since 2000 and therefore has not kept pace with inflation or comparable gift-making to other voluntary organisations. This change helps the significant administrative burden on our local associations, which, after all, are made up largely of volunteers, as was said earlier.

I turn now to policing. During my time as treasurer, the Electoral Commission was the most frustrating and inadequate organisation to deal with. It neither policed nor interpreted the legal implications of the 2000 Act adequately. Despite the Conservative Party having a compliance officer, a finance director and a finance board, who tried to maintain regular contact with the commission, it failed in its guidance and liaison with them. Of course, the moment that trouble started, it ran for cover proclaiming its vast innocence. I think that noble Lords opposite will agree with this.

As we all know, the Electoral Commission also failed to monitor the postal voting system and to rigorously police the election process. It is therefore imperative that the people who run it not only understand the Bill but also its relationship with the parties, to help them with interpretation and to work closely to ensure that parties fulfil their obligations. I welcome the fact that there will be four commissioners, but it is important that they understand the workings of political parties. We should not ban former political party executives from being commissioners; we should encourage them, because those people fundamentally understand the workings of political parties. The commissioners should also understand parties’ financing, because we must deal with what is an acute problem.

I am afraid that the Bill has been fudge. Despite its great rhetoric, and despite the procrastination, it has failed to address the practical issues of fundraising and how to engage with a wider audience in politics.

My Lords, I start by declaring an interest as a donor whose constituency donations exceed the reporting threshold and whose national donations exceed the recording threshold. I speak on the Bill mainly because I was a member of the Committee on Standards in Public Life at the time of its report on the funding of political parties, which laid down the framework for the later legislation. I pay tribute here to the noble Lord, Lord Neill of Bladen, for his effective chairing of that committee.

I was also on the Front Bench for my party during the passage of the Political Parties, Elections and Referendums Act 2000 through this House, and for that of the Electoral Administration Act 2006. In view of the history of that legislation and the gaps that have appeared, I strongly support this Bill.

Two matters are of particular importance: first, the increasing transparency, particularly by requiring unincorporated associations to disclose the source of donations made through them; and, secondly, a provision not yet in the Bill but promised by the Government, as the noble Lord, Lord Bach, has done, to bring about individual registration by electors throughout Great Britain. Electoral fraud is indeed an increasing problem and has undoubtedly affected some results, particularly in local government elections. Individual registration with identifiers would make fraud much more difficult to achieve. It needs to be brought forward more quickly than is now proposed by the Government, although I obviously recognise that it would take some time to achieve.

There are several other useful provisions in the Bill. I welcome, among others, the greater power to obtain relevant information, and the powers to impose civil penalties; on this, I am afraid that I disagree with the noble Lord, Lord Neill. The threat of criminal penalties has deterred many party members from accepting offices in their local parties that would place them in danger of acquiring a criminal record. Criminal penalties should be reserved for deliberate and conscious breaches of the law, and not for breaches caused by ignorance or incompetence, which are better dealt with by civil penalties.

I also welcome the extension of the size of the Electoral Commission by adding four members nominated by political parties. My experience over six years on the Committee for Standards in Public Life persuaded me that having members with front-line knowledge of the workings of the political system was useful to the committee, and it would also be useful to the Electoral Commission. However, we also need to clarify the method of selection of the fourth political member. By an odd coincidence, I have recently been on a mission to Sri Lanka for the International Bar Association, where we discovered that failure to spell out what was, in that case, the method of electing the sixth party nominee to their constitutional commission had stymied the whole operation. We must therefore give some greater indication in the Bill of how the fourth member will be selected.

I support some proposals in the Bill in principle but not in detail. In these, I agree to a considerable extent with the Electoral Commission. The Bill proposes in Clause 13 to increase the permissibility and recording thresholds from £200 to £500. While I accept that some increase may be desirable, that seems to me to be altogether too high. I suggest that the increase should be from £200 to £300. That would tally with the 50 per cent increase in the reporting thresholds provided for by Clause 13.

Clause 14 limits free candidacy expenses for general elections occurring more than 55 months after the previous general election. This is good in principle but, as my noble friend Lord Tyler pointed out, four of the last general elections have taken place only four years after the previous general election. Four years seems to have become the standard length of life of a Parliament if the governing party expects that it is likely to be re-elected. This suggests that a limitation on constituency spending should preferably operate throughout the life of a Parliament and, in any event, should at least come into force at a much earlier date than that proposed by the Bill; I suggest that that should be not later than 42 months after the previous general election, so that it would be there after three and a half years. Then there is the question of the withholding of the home addresses of candidates. I am not persuaded that we need it at all, except in cases of a real security threat, as the noble Lord, Lord Brooke, pointed out.

Finally, there are provisions that should be in the Bill but are not. Of these, much the most important, which has had support from a number of other speakers, is the cap on donations. This was not recommended by the Committee on Standards in Public Life’s fifth report, but developments since then have made it clear that it is necessary. Indeed, it is essential that parties are to be given a reasonably level playing field. The present system enables a party with wealthy supporters to run more expensive campaigns and to be more active outside the campaign periods. More important even than that, some contributions in recent years have been so huge that party policy can be altered by the promise of more money or by the threat of withdrawing financial support in the future.

Wealth can quite legitimately be used to buy fine houses, great works of art or yachts and Rolls-Royces. However, it is contrary to the spirit of democracy to allow wealth to buy political influence, so we need to add a cap on donations to the provisions on the existing cap on spending. That should apply with or without a consensus.

Another provision that should be in the Bill, or perhaps in the forthcoming Finance Bill, is tax relief for small donations. This was proposed in the Committee on Standards of Public Life’s report, but was not adopted. We have in this country for years recognised that donations to charities are a matter of public interest and should have tax relief through gift aid. However, modest donations to political parties are also very much in the public interest and should be encouraged. This has already been recognised in principle, although not many people appreciate this, by exempting bequests to political parties that have two or more members in the House of Commons from inheritance tax liability. The same principle should apply to donations by the living. The simplest method would be to use the gift aid system with some changes. In particular, there would be a cap on the size of the annual donation that could qualify for relief—I would suggest no higher than £1,000—and higher-rate taxpayers could not set off their donations against their higher-rate tax liability as they can in the case of gifts to charities.

This is an important Bill. It has many good features. There are some which could and should be improved, and a few which ought to be here and are not. I wish the Bill well.

My Lords, the real issue of this Bill, as I see it, is how we can galvanise our democratic electoral system so that greater numbers of our people feel that their participation in elections really matters.

We are facing a grave crisis—a crisis that affects all our political parties. We do not have an easy way out of this, but we have to face the situation together. Unfortunately, I do not think this Bill—or any Bill—can really do this. I am not suggesting for one moment that we should not consider what is being proposed. There are certain advantages in this Bill, but it is not a complete answer—or any answer—to the underlying problems that we face. The noble Lord, Lord Bates, was in my view unduly optimistic about the contribution that Members are able to make in the political process. That is an issue which confronts all parties but, as I have said, I do not think that any Bill can answer that problem.

I became involved in politics a long time ago—before the 1945 election. Some Members—very few in this House—will appreciate the significance of that. I became involved at a time when people really cared: the turnout in 1945, 1950 and 1951, and even in 1955, was enthusiastic and energetic in a way that few of us would say has happened since. I have been a member of the Labour Party for a very long time; the decline in voting is an issue that confronts all parties, if you care about the democratic system, as I do. I remember in that time—64 years ago—that people flooded into the election canvassing rooms. They really cared not only about casting their vote, but that other people should cast their vote, too. How can we resuscitate that situation? Is it possible? I repeat, it affects us all.

We are not facing up to the real problems. The real problem is that people want to feel that they can really effect change, something that many people think is impossible to achieve at this time. Despite what I have said, this Bill by and large represents an advance. It is also capable of becoming even more benign, within the limitations that were spelled out by my noble friend Lord Bach. I hope that in his wind-up, he will give the House further and better particulars of what discussions have taken place with the Electoral Commission and others about the proposals in the Bill, and about some of its shortcomings. The essential goals that we should seek to attain, as the Electoral Commission urges, are how we can modernise and strengthen the electoral registration system to make it more meaningful as far as ordinary people are concerned, and how we can introduce individual electoral registration. I would hope that we can see some worthwhile changes in this Bill.

The Electoral Commission is clearly concerned about the effect of the Bill’s proposals about reporting donations and loans. Despite improvements contained in the Bill, the risk remains of a lack of confidence, as expressed by the Electoral Commission,

“in the transparency and integrity of party and election finance”.

Is there validity in this concern? What is the Minister’s response?

The Electoral Commission welcomes the changes devised by the Government to Clause 2 and Schedule 1, establishing that the Government are in listening mode and that this new procedure is a significant improvement on what we have now. I submit that the Electoral Commission is right when it suggests that statutory requests for information and explanations should be dealt with similarly to requests for documents, thereby extending the new court order procedure. As the Electoral Commission argues, such a procedure would enable an investigation to be effective. It strongly recommends—I think that it is absolutely right in this—that a civil court procedure is to be preferred to a criminal prosecution for not complying with a statutory request. What is the Minister’s response to this modest proposal?

I turn to Clauses 4 and 7, concerning electoral commissioners. It was submitted in the House of Commons that the fourth nominated commissioner should provide a voice that would otherwise be unheard, for parties with fewer or no seats in the House of Commons. What is the Minister’s view about this? It is essential that that issue should be faced.

So far as donations are concerned, Clause 13 increases the permissibility and recording threshold from £200 to £500. I share the concern of the noble Lord, Lord Maclennan, about this. Why have we come to that conclusion? There is a need to take account of the inflation that has occurred since 2000—that makes sense—but it is absurd to change the amount to £500. What justification is there to change it from £200 to £500? Although I think that there should occasionally be a review of the situation, we should react adversely to this particular proposal.

I turn to candidates in parliamentary elections. The Electoral Commission considered that voters should be able to have sufficient information to identify a candidate’s links with his or her constituency, and the Minister indicated that there will be certain changes. Will there be any changes as far as that is concerned, and what is the general purpose which the Minister prescribes? It is quite insufficient to enable only candidates, some others closely identified with the candidate and representatives of the Electoral Commission to have access to the candidate’s full address. What is suggested is that the returning officer should identify the candidate’s home address. I think that that represents a demonstrable improvement on what has gone before. However, there needs to be further discussions with the Electoral Commission and the discussions should not be confined to that issue. It would be enormously beneficial to do that and I humbly commend the proposal.

I hope that what I have said is not wholly negative and that the Minister will take some account of it. I await his reply with bated breath.

My Lords, I agree with a great deal of what the noble Lord, Lord Clinton-Davis, said, particularly the first four or five minutes of his contribution, when he was talking about the need to enthuse and involve people in the democratic political process. That is a major problem for all of us who are involved in political activity and who care about active democracy. I very much agree with what he said about that. It has also been said by other noble Lords in this debate.

I should start by declaring some interests. I notice that the noble Baroness, Lady Jones, declared that she has been a member of the Labour Party for 30 years. I am not sure that we should declare that level of interest. However, I worked out when I first joined the Liberal party and regret to say that it is almost 50 years ago. When I heard the noble Baroness’s remark, I thought “What it is to be young like her and some other noble Lords”.

I am an elected member of Pendle Borough Council, which is an electoral registration authority. I have also been an election agent for many hundreds of candidates over the years; indeed, I am an election agent for a candidate in a by-election at this very moment. My noble friend Lord Tyler was bragging, I think, that he has stood in 12 elections and won half of them. If I have my arithmetic right, I have stood in 20 and won 80 per cent of them. However, I defer to my noble friend because he got elected to the House of Commons, which I failed to do on several occasions.

I want to talk about two nitty-gritty issues: individual registration and postal voting. On individual registration, I join those who welcomed the announcement made at Report stage in the House of Commons. We look forward with interest to see what the government amendments actually say. I join those who have urged the Minister to ensure that the amendments are here in time for Committee stage, when they can be thoroughly discussed and properly gone over without the constraints of the more formal procedures on Report.

I, too, join my noble friend Lord Goodhart in expressing concern that it will take eight years before the system comes in if all the hurdles are passed. That seems a very long time. Like him, I understand that there are many interesting and intricate hurdles to be passed before it can be brought in, and indeed that it will cost money. But eight years is a long time. Looking round your Lordships' House, I think that some of us may not be here in eight years. The way things go, projects like this slip—they do not speed up once a timetable has been put in place. The Government say eight years but it might be 10 or 12 years—who knows?—unless someone puts a bit of oomph behind it. I believe that electoral registration is necessary in principle. I think that it is necessary to help stamp out some kinds of electoral fraud that do or can take place.

The noble Lord, Lord Neill of Bladen, talked about the different culture in England, Scotland and Wales as opposed to Northern Ireland. He may be right. If people were asked which part of the United Kingdom would most easily take to such changes, I do not think that most would necessarily choose Northern Ireland first. It has undoubtedly been a success in Northern Ireland and there is no reason at all why it cannot be a success here. If the Government are putting forward a timetable for this, let us have some pilots. Let us pilot individual registration in different parts of the United Kingdom, or in England, Scotland and Wales, and see what the difficulties and results are in practice without trying to overcome possibly very real hurdles or making assessments on the basis of what might happen. I have not always been in favour of the concept of piloting in elections in other areas but it really could happen in electoral registration. Pilots could go ahead in some areas in two or three years. Those could identify, thrash out and resolve the difficulties and that experience could then be used.

I do not believe that individual registration will on its own stamp out fraud through postal voting; I shall explain why in a minute. However, I do believe that it is vital to stamp out possibilities for personation at polling stations. Not a great deal of publicity is given to personation at polling stations, but there is evidence that it exists on an unacceptable scale in some parts of the country. I suppose that one case of someone personating another elector would be an unacceptable scale, but I am referring to a scale at which elections can be changed. For example, I have quite a bit of information from my honourable friend John Hemming MP that personation is a problem in Birmingham. I believe that it is a problem in at least one town in Lancashire, though fortunately not in the areas where I am politically active.

In principle, individual registration is right because people ought to be responsible for their own votes. The noble Baroness, Lady Jones, who brings some youth to the Chamber—compared with some of us, at least; and she can read Hansard to see what that is all about—referred to the “head of household”, a description that has not actually been used, at least since the Electoral Administration Act of two or three years ago, to which my noble friend Lord Goodhart referred. The truth of the matter now is that the electoral registration form for a household is filled in and sent back by whoever bothers to do it—whoever picks it up and decides to fill it in. This is utterly and totally unacceptable, particularly in multi-occupancy housing, where the person filling in the form may be someone whom you do not know much about. That is not an acceptable practice. The idea that there is a male head of household is outmoded in even the most conventional households. Individual registration is right in principle and has benefits in practice.

I do not want to say a lot about postal voting. The first time that I tried to tell your Lordships about some of the problems of postal voting was when we were discussing the European Parliamentary and Local Elections (Pilots) Bill back in 2003, and I recounted some of the utterly unacceptable practices in relation to postal voting and what became known as “warehousing” of voting in the infamous case in Birmingham. At that time, many noble Lords around the Chamber did not really believe me. How could this level of electoral fraud and malpractice in British politics be practised and be quite so prevalent in some areas? We now know, partly from the court cases to which the noble Lord, Lord Neill, referred, that this problem is widespread and totally undermines the democratic process in those areas. There is absolutely no point in beating about the bush; most organised postal vote fraud is in areas where there are large south-Asian communities. There is a cultural problem there and there is no point in pretending that that is not the case, because it is. Unless we tackle the problem at its roots in those communities, we will not sort it out.

Postal voting, by its very nature, is not and never can be secure. My answer would be to start by saying that there should be no postal voting, and then by asking who really needs it. My bottom line, or perhaps my top line, would be to return to the system that existed before 2000, but I would restrict its use to people who needed it for medical reasons or reasons of disability because they physically could not get to the polling station to vote. In this modern day and age there are other ways of providing voting facilities for people who are simply away from home.

In the future, it should be possible to arrange to cast your vote anywhere in this country, given the computer and communications systems that exist nowadays. Obviously, that would have to be organised and thought about carefully, but such a system is possible. Systems of advance voting, were used in America before the presidential election, when many of us discovered to our astonishment that in some areas between 25 and 30 per cent of the electorate had already voted before polling day—but they had voted in a polling station.

I was not in favour of pilots for postal voting because I was not in favour of postal voting on demand, but pilots for advance voting systems could be looked at in this country to provide a means by which people can vote, even if they will be away on polling day.

So there are other ways of doing it. We should look at other ways of voting that are secure. The problem with postal voting is that you can never guarantee whether the person who has had the voting paper sent to them has filled it in and sent it back. Even if identifiers are used and verified, and even if there is individual registration, that problem does not fundamentally change. In particular, you cannot guarantee, even if the correct person is filling in the ballot paper, that there is not someone standing next to them making sure that they are voting the right way. Even if that does not happen, you cannot prevent people doing what someone did to me at the last election—they knocked at my door and said, “Can I give you our postal vote?”. I said, “If it’s sealed up I shall take it back, but I really don’t see why you can’t just post it”. They said, “Oh no. We want to show it to you to make sure that you know that we voted for your man”. That is inherently possible in postal voting and it totally and utterly undermines the secrecy of the ballot box.

Like the noble Lord, Lord Neill, and others, I think that this Bill misses an opportunity to turn back the clock from 2000 and place much greater restrictions and security measures on postal voting.

My Lords, I start by declaring an interest in this Bill in that I am trying to raise money for UKIP, the UK Independence Party. I have only two brief points to make. The first is to support the Electoral Commission, as other noble Lords have done, in its recent briefing paper, which is nervous about increased thresholds for donations that do not need to be declared. As the commission has said, the proposal to increase the declarable threshold to £500 may mean that any cumulative series of donations which are individually worth less than £500 will be legal, regardless of where they come from, and will not need to be reported to the commission for publication.

As a fundraiser, I confess that I find this a rather attractive proposition, but it cannot be right if we wish to identify substantial donors to our political parties. I fear that the commission must be right when it suggests that this proposition may result in large donors making regular donations of just below £500, perhaps even by standing order. I should have thought that that must defeat the object of the present Act and of this Bill. I submit that this may be an area to which we may wish to return in Committee. One could of course require the cumulative totals of small gifts to be declared when they reach £7,500.

My other suggestion is that we should perhaps revisit the requirement for a large donor to be on the electoral roll. I have to tread rather delicately here, which noble Lords may think is not my strongest suit, because my party is in dispute with the commission about this area. However, I welcome the words of the noble Baroness, Lady Jones, when she referred to the burdens placed on amateur activists and donors, who may make technical and sometimes innocent mistakes.

In the report of the noble Lord, Lord Neill of Bladen, which gave rise to the present Act, he suggested that a party should have been able to accept a donation from someone who was on the electoral roll, or who was known to be eligible to be on the roll. A Conservative amendment to include the latter category was lost in your Lordships’ House after the Government argued that:

“It would be no easy matter for a registered party to establish whether a donor whose name did not appear on an electoral register was nevertheless entitled to register”.—[Official Report, 21/11/00; col. 695.]

That might be so, or it might not. People may not want to be on the electoral roll for a perfectly respectable reason, such as not wanting to reveal their address for security reasons, but a party might be satisfied that they were bona fide resident taxpayers in this country. If so, I suggest that the party should be able to accept a donation, perhaps while informing the commission in each case. There will not be many such cases.

I appreciate that the present rule gives certainty and clarity, but the Bill does allow in Clause 17 for candidates to withhold their addresses from general scrutiny, and therefore moves in the direction that I suggest, although I appreciate that the clause is somewhat controversial for some of your Lordships. The object of the exercise is to prevent foreign and anonymous donations; if we can achieve that without penalising even a small number of people, perhaps we should try to do so. I look forward to the Government’s views on my two suggestions.

My Lords, the quality of today’s debate has been assisted by the high proportion of us who have felt the need to declare an interest. Perhaps none of us should be here if we did not have an interest in this subject. I declare my interest formally, as chief executive of the Liberal Democrats and a salaried employee of the party.

Nine years ago, a number of us, including the Minister, the noble Lord, Lord Bach, participated in many debates during the passage of the Political Parties, Elections and Referendums Act 2000. All those of us here today who took part in the debates nine years ago would agree that the Bill we are examining aims to put right some of the things that were not right in the Act. I welcome in particular both a reduced burden on local party treasurers—people who need appreciation and respect for their voluntary work—and the strengthening of the investigatory powers of the Electoral Commission. I am sure that both principles are right.

The noble Baroness, Lady Jones of Whitchurch, and the noble Lord, Lord Hodgson of Astley Abbotts, both spoke with feeling and experience on the need to reduce the burden of bureaucracy on voluntary local party treasurers. The noble Lord, Lord Neill of Bladen, on the other hand, asked how raising the donation threshold so significantly would reduce the level of bureaucracy. It seems clear that, by raising the threshold in this way, many local party treasurers will no longer have to make any returns, which will reduce their paperwork and the stress put upon them. It is not donations of up to £500 that we should be worrying about when considering the Bill.

The noble Lord, Lord Clinton-Davis, and my noble friend Lord Goodhart asked why such large increases were needed. I point out that these are the first increases since 2000, nine years ago, and that we may not have further increases for a significant period of time. I have no doubt that the Minister will refer to the fact that the Electoral Commission, while initially expressing reservations about the large increase, decided that it would not oppose higher thresholds. Above all, we must consider that the burden of bureaucracy on volunteers would be wholly disproportionate to the benefit of any transparency over donations at a level below £500.

Sadly, the debate has reflected the fact that the Bill still fails to address fundamental problems affecting the health of our democracy. My noble friend Lord Tyler drew attention to the failure of the Bill to address the problem that our system allows millions of pounds to count for more than millions of votes. He made the democratic case that the ballot box should be more important than the bank balance. Figures supplied by the Electoral Commission show that almost half of the Conservative Party’s income from donations in 2008—some £10 million out of the £22 million raised—came from donations in excess of £100,000. More than two-thirds of the Labour Party’s income from donations—some £16.5 million out of £23 million—came from donations in excess of £100,000; and half the party’s total income—around £12 million—came from trade unions. For the record, around a fifth of the Liberal Democrats’ income from donations in 2008—just over £600,000 out of £3.2million—came from such large donations.

The donation patterns show three things. First, there continues to be an unhealthy arms race in relation to party spending, which the legislation in 2000 failed to halt. Secondly, those making the largest donations can be seen to have a significant, and possibly even corrupting, influence on the parties, if their proportion of the overall donation level is very high. Thirdly, all the parties have concluded, despite public protestations, that cash counts for a lot in politics, and can have a decisive influence in the outcome of elections. All the parties feel that they need money to compete, otherwise they would not seek these large sums. The case for a cap on very large donations, as was proposed and nearly agreed in the discussions with Sir Hayden Phillips, will be made again. I was delighted this afternoon to hear both noble Lords, Lord Hodgson of Astley Abbotts and Lord Marland, supporting this principle.

There have been a number of references in our debate to the proposed changes to the composition of the Electoral Commission. It is fair to say that the commission had reservations about these changes, but has now accepted the principle of having a minority of commission members with hands-on political experience. Some of us with such experience, including the noble Baroness, Lady Gould of Potternewton, argued in 2000 that the Government were wrong and that the political parties panel was an inadequate way of enabling the commission to have the necessary insight into electoral processes. We feel vindicated now. We would reassure others that the political members of the commission will be in a minority, but will be able to assist fellow commissioners on the basis of being poachers-turned-gamekeepers.

I turn to the issue of the trigger and constituency limits. I expect that in future debates we will return to the controversy surrounding the “trigger mechanisms” for starting the period for which candidates and agents must limit their expenditure. My noble friend Lord Tyler explained the absurdity of making an arrangement in legislation that would apply only to a small number of Parliaments; two out of the past 12.

The old trigger mechanism for starting a candidate’s election expenses was inadvertently abolished during the passage of the Political Parties, Elections and Referendums Act 2000. Suggestions have been made to reintroduce such a mechanism for a period of four months prior to polling day. The proposals, initially from the Electoral Commission, were rejected during the passage of the Electoral Administration Act 2006, when everybody agreed that a four-month rule for counting expenses was impractical, because in the absence of fixed-term Parliaments, no one knows when it is four months before polling day. A cap on expenditure, at national and local level and over the course of a Parliament, would make much more sense than a cap over the period from the 55th month of the Parliament through to polling day. A cap on expenditure should apply every year, not just on national spending in the last 12 months of a Parliament, as at present, nor just on local spending in what looks likely to be the last four months of this Parliament.

The noble Baroness, Lady Gould, agreed that there was a problem. Perhaps I have an answer. Spending caps should apply every year and should start to be applied from the day after each general election, when we all know that the campaign begins for the subsequent general election. A major problem with the current proposals is that they still fail to address the unintended consequence of the change nine years ago that permits any amount of what is deemed to be “national expenditure” to be targeted at particular constituencies. This has exacerbated the potential for multimillionaires to buy influence over the electoral process, by allowing them to concentrate expenditure on marginal seats.

The noble Lord, Lord Ashcroft, is not here today to defend the way in which he could boast of giving well in excess of £10 million to the Conservative Party before the last election and his claim that his money influenced the outcome in 25 of the 33 seats that the Conservatives gained in 2005. I should still like to persuade the Government to cap such donations nationally. However, to have any effect on what is sometimes called “the Ashcroft problem”, we must bring back an effective cap on constituency spending by properly defining what is local and what is national expenditure in particular constituencies during an election campaign.

Having failed to bring back the old trigger, the problem now is that many tens of thousands of pounds—perhaps hundreds of thousands of pounds—can be spent legally in particular constituencies in the immediate run-up to polling day if the expenditure is deemed to be part of a party's national rather than local campaign. This sort of expenditure will not be capped by the proposals in the Bill, and the Bill as drafted completely fails to deal with the problem. It means that millionaire funding allows parties to place advertisements targeted on local newspapers in certain constituencies; it allows them to pay for huge billboard advertising sites that appear only in their targeted seats; and it allows them to bombard target voters in those seats with dozens of national mailshots from the party leader. At the same time, an MP or a candidate from a party without such wealthy backing finds that any personal promotion is subject to a very strict and small local limit. That cannot be right; it is not democratic and must be changed before our next election, which could be corrupted in a way that has not been the case in this country since the era of rotten boroughs in the 19th century.

Finally, I turn briefly to the subject of individual voter registration, which has been raised by many other speakers. Among the mistakes that I believe we made in 2000 was allowing postal voting on demand without proper safeguards being in place. We have made some progress since then, particularly in the Electoral Administration Act a couple of years ago, but more must be done if we are to have proper safeguards against fraud.

At the same time, I recognise that we need to ensure that the electoral register is as accurate and complete as possible, and the belated moves towards individual voter registration are very welcome to many of us. However, I think that the Government’s approach to this whole subject has been reminiscent of the old phrase, “Lord, make me holy but not yet”. Postal voting came in in 2000 but the necessary safeguards produced by individual voter registration may not appear until perhaps 17 years after that or even later, when four general elections may have taken place, along with numerous other elections to other bodies. It is simply not good enough to say that we will have to wait until then.

I look forward to the further stages of the Bill and to the opportunity that it presents for a further attempt to halt the arms race on spending, clean up the reputation of politics and ensure that power lies where it belongs—with the voter and not with the funder.

My Lords, I join other noble Lords in thanking the Minister for his clear exposition of what is in the Bill and I look forward to the Committee and Report stages with the noble Lord answering all the questions that will be put to him in due course. I also look forward to him bringing forward the other parts of the Bill that he has promised. As he will be aware, this Bill is already very different from what was originally introduced in the Commons and it will differ further, we hope, following the Committee stage. As the noble Lord, Lord Neill, put it, it is unfortunate to have Second Reading of the Bill when a rather large part of it is not there. However, I shall come later to the subject of individual voter registration.

I start by declaring an interest, albeit a very small one compared with what my noble friends and others have declared, but I think that it is important. For many years, I have been active, like many others, in the local constituency association where I live and I am a former chairman of that association. Like the noble Baroness, Lady Jones of Whitchurch, and my noble friend Lord Hodgson, I think that the state of our parties is a matter of considerable importance and that we should all do all that we can to encourage greater participation in the voluntary side. In particular, I should like to encourage greater participation in the voluntary side of my own party, but I would hope that the other parties might benefit as well.

That should be borne in mind in all our discussions on the Bill because it is important that, as many noble Lords have put it, we do not impose burdens on individual members of associations—we all think particularly of treasurers—that discourage people from becoming actively involved in those associations. I mention treasurers in particular because I remember that when I was chairman of my own local association, we brought in a new constitution, one of the sensible rules being that no officer should remain in office in the association for longer than three years. However, we suspended that almost immediately when we realised that we were not going to be able to find a new treasurer. I think that many people who have been involved in their local associations will have come across that problem. That needs to be borne in mind, particularly when we come to the question of the levels at which to set the various sums that need to be disclosed.

As I said, the Bill is rather different from what was originally introduced and it will change further. I want to discuss a few points before I hand over to the Minister and allow him to answer properly for the Government. The first relates to Clause 13, which concerns the thresholds and limits for donations. These have not been changed since 2000. For that reason, we think it right that they should go up and we will certainly put forward amendments to allow us to discuss whether they have gone up by the right amount or whether they should go up further. That will be an opportunity to debate these matters nine years on from 2000.

It is also important that we should look at the mechanism for increasing those sums in the future. I can see that simply bringing in a power to increase them in line with the RPI each year would, again, make things very difficult for people on the voluntary side of the parties. The thresholds would go up by odd sums and it would be very difficult to remember them. Therefore, a better approach might be to have some mechanism by which the thresholds could be increased once each Parliament by an appropriate amount that could be looked at by all those concerned. The increase could be broadly in line with inflation or, if necessary, the thresholds could be changed by a greater amount. That could be done by order or it could be included in the Bill. I should certainly welcome the noble Lord’s views on that and on the whole question of what the thresholds in Clause 13 should be.

I move on to Clause 14 and the whole question of triggering. I should like to hear from the noble Lord exactly what the point is of having this triggering mechanism at 55 months. As the noble Lord, Lord Rennard, said, it would have applied in only two of the past 12 Parliaments. It seems a rather pointless thing to have included in the Bill, but the Minister will no doubt give his justification for it in due course and I shall welcome hearing what he has to say.

I turn to the question of penalties—or civil penalties, as I think they were described. The noble Lord, Lord Neill of Bladen, rightly made the point that they might be called civil penalties but they look more like criminal penalties than anything else. That was dealt with by the noble Lord, Lord Goodhart. I underline that these will be very difficult for individual members of an association—again, I think particularly of the treasurer—who might, inadvertently, make mistakes. We are all told that ignorance is no defence in criminal law. However, we are told that these are not criminal but civil penalties, although to me they look like criminal penalties. The point is that it does not make the whole job of compliance very easy for the individual member of an association. Would the Government be prepared to consider whether there might be a defence of inadvertently not knowing what was going on? Again, we will bring forward amendments on that in due course.

I now come to the part of the Bill which is not there and which we are debating without having seen it—that is, the part concerning individual voter registration. We were told—I think in the Minister’s response to a question from his noble friend Lord Campbell-Savours—that an amendment will be tabled before the Committee stage. It would have been more helpful to see something now. I appreciate that the Minister could not amend the Bill before Committee, but even a draft of what was coming might have assisted us in this Second Reading debate. Although we have agreed that the Bill will go into the Moses Room for Grand Committee, I have some questions on that in the light of this new and big subject coming in. I make that point simply for the assistance of the usual channels, who can discuss it and tell us their conclusions; we will no doubt do what they say.

We are told that amendments will be tabled on individual voter registration but that, for some peculiar reason, they cannot be brought into effect for at least eight or nine years from now—2017. That is a suspiciously long time and we wonder why the Government are so keen to ensure that individual voter registration is not operable for at least the next two general elections. We know that there may be an election some time later this year or, at worst, in June of next year and that there will be another in about 2014. I appreciate that it is too early to get anything going for the coming general election, but surely the Government could manage something a little sooner than 2017. After all, this system has been tried and tested in Northern Ireland for some years. We shall be tabling amendments to that effect and I imagine that others will want to question why the Government are being so slow on individual voter registration, which is of considerable importance if we are to stamp out the fairly high degree of postal vote fraud in the past few years.

As is frequently said at the end of the Queen’s Speech, “Other amendments will be put before the House”. Certainly my noble friends and I will make sure that others are brought forward. For example, as suggested by the noble Lords, Lord Neill of Bladen and Lord Rennard, further constraints could be put on postal voting. We will want to give serious consideration to those matters. I wish the Minister well. As I said, we broadly support the Bill as it now looks and we very much support the idea of individual voter registration and what the Minister will introduce, but we will want it a little sooner than he suggested.

My Lords, I think that I should declare an interest—perhaps I should have done so sooner. I am currently chairman of the constituency Labour Party and was for many years treasurer of a constituency Labour Party, but I am glad to say that I gave that up well before 2000.

This has been a lively, interesting and well informed debate. There is fantastic expertise in this House on these subjects and the Government are grateful to noble Lords for their contributions. However, I feel that the Bill is in a rather unusual and unfair position as it has been attacked for not being something that it has never pretended to be. It is not the final answer to what has been described as the democratic deficit in this country. That is not this Bill at all. It has a more modest intention; it represents a significant attempt to make important improvements where we can, by agreement. My noble friend Lord Clinton-Davis said that to him it represents an advance. That is what it is supposed to be. It is not the final answer to all these issues. It is particularly an advance, we hope, towards a system of party funding that is, first, more transparent and, secondly, better regulated.

It is in the interests of all parties for the regulations governing party finance and expenditure to be strengthened and for the public to have faith in the democratic process. We have heard interesting comments on all sides about what noble Lords consider to be the democratic state of the nation. We believe that all this can happen only through a consensual approach. These are not matters that can best be decided by partisan politics. The Government’s commitment to move forward on the basis of broad consensus is reflected in the Bill. That does not mean agreeing about everything but is about not doing something that is so out of tune that it is fundamentally opposed. I repeat that the Government are in listening mode to representations as the Bill proceeds, and I suspect that there will be broad support for many of its aspects.

Noble Lords have raised important matters and I look forward to debating them in Grand Committee. In advance, I shall try to deal with some of them now, but I am setting myself a strict time limit because I know that my noble friend beside me will do it if I do not. I start with the issue of donation caps, which is very attractive to noble Lords on all sides of the Chamber, and I can understand why. It is important to go back to Sir Hayden Phillips on this point. To implement a cap without introducing greater state funding would result in major financial instability for political parties. He is right about that because it would impose significant restrictions on parties’ freedoms to raise their own funds, and an increase in public funding would be needed to offset the effect of a cap on donations. In other words, his view was that without increased state funding, it was not necessarily right to impose a donation cap. As we have made clear, such fundamental reform of the current party funding regime would need to command cross-party consensus and the confidence of the public. Frankly these conditions do not currently exist.

The noble Lord, Lord Rennard, made an interesting point—all his points are very interesting—about spending limits starting each year. We do not believe that it is possible to reach consensus on any more fundamental reforms at present. In its limited way, the Bill represents quite a step forward and has broad cross-party consensus. On raising recordable thresholds, as has been referred to from the start of this Second Reading debate, there are differences of opinion. Some believe that we should not raise the threshold at all; others that we should raise it by a little; one or two may even agree with the Government that moving from £200 to £500 is right; but others think that it should be more than that. Let us see how our debates go. The Government’s view is that we have it right.

The interesting point is what we should do in the future. The noble Lord, Lord Henley, had an interesting idea, which may find some support. It would require the Government to review these thresholds once during the life of each Parliament. We want to consider that proposal and perhaps come back to it at a later stage.

My Lords, would it not be preferable to have a situation where this issue could be looked at in the light of events and proceed by regulation?

My Lords, that may be so. Let us see what comes forward in Committee on this matter.

My Lords, do the Government have anything to say about the Electoral Commission’s fear that raising the threshold from £200 to £500 may increase the temptation for cumulative donations under £500?

My Lords, we of course take note of what the Electoral Commission says and have great respect for its opinion on that matter, but it does not necessarily decide what we want to do in this field. We will come back to these issues in Committee. I have a lot of ground to cover and, for various reasons, I do not want to hold the House up longer than I have to tonight.

I move on to the issue of electoral fraud and shall deal with it as quickly as I can. It was raised by a number of noble Lords. I think we are slightly in danger of falling into a trap. Our political system is not corrupt; it is still the envy of the world. That is not to say that it does not have considerable problems, many of which have been raised today. The Joseph Rowntree Reform Trust report Purity of Elections in the UK: Causes for Concern made clear that,

“there is no hard evidence suggesting a significant increase in electoral malpractice since 2000”,

and the Electoral Commission’s report gave details of prosecutions for electoral malpractice. There were 23 convictions for RPA offences between 2000 and 2006. Convictions do not necessarily occur in the same year as the offence. Published information shows that the number of convictions relating to RPA offences in that period peaked at 11 in 2001, and the number of convictions has since declined. Of course, I am not naive enough to argue that just because there have been no convictions, there have been no cases of fraud. Of course there have been, but we have to put this in perspective.

It is clear that postal voting has proved popular and has helped to boost turnout. In itself, that is a good thing. We have to take very seriously the risk of electoral fraud, and, as one or two noble Lords said, we have put in a range of measures to safeguard the security of postal voting. I could go through them, but I shall not.

Innocent mistakes were raised by the noble Lord, Lord Bates. I do not know whether this is the first time he has spoken from the Front Bench in a Second Reading debate, but I congratulate him on his speech. The noble Lord, Lord Henley, and my noble friend Lady Jones also mentioned them. We are considering a concession. We have undertaken to consider this proposal and will return to it in due course.

I turn to the issue of 55 months. I was surprised by the noble Lord, Lord Henley, on this. I understand that the noble Lord’s colleagues in another place welcomed the proposal that the Government made on 55 months. It is for this Parliament, which may go longer than 55 months. Who knows? It is possible that it may. Let me concede this: these provisions provide for 55 months. I accept that that is a relatively infrequent occurrence. In bringing forward the Bill, we have been clear from the outset that any changes to the regulation of party funding must command a consensus. There is a potential problem of unregulated spending occurring prior to dissolution, and it could still arise in future Parliaments. I regret that we have been unable to find a solution to tackle this that all parties can support. If this House can find a solution, the Government would be extremely grateful. We do not deny that there is a problem, and we are doing something to sort it out for the forthcoming election.

My Lords, is it not bad legislative practice simply to take account of present circumstances, which all noble Lords accept are exceptional, and legislate for them and not take account of general experience, which is that we do not go for five years? Surely, the Minister is not saying that we are going to have to come back to this issue again immediately after the general election and have yet another statute to deal with what is not the normal situation. However, I tell the Minister that we will help him in every way we can to find a better solution.

My Lords, I feel very much better for the noble Lord’s last comment and much relieved.

On the next issue, I pray in aid the noble Lord, Lord Neill of Bladen. His expertise on this is probably greater than that of any other noble Lord. There are matters on which he criticised the Bill. Although he says we should have done this sooner, he praised the Government on the move towards individual registration. He made the important point that this is a serious move towards individual registration and is bound to take some time if it is to be done properly because it affects voters all round this country. It took some time to become successful in Northern Ireland. There was a drop in registration when it was first brought in there. I ask noble Lords not to rush ahead of themselves in asking for some ridiculous timetable for this important step.

I was heard in some parts of the Chamber to say that we would start collecting personal identifiers from August 2010 to August 2015. What I meant to say, and what I think I said, was autumn 2010 and autumn 2015. I make that point if I was wrong.

As far as pilots for individual registration are concerned, the noble Lord, Lord Greaves, would like this to be a pilot case. He may recall better than most of us the provisions for the collection of personal identifiers from electors on a pilot basis that were brought forward in the Electoral Administration Bill 2006. Those provisions were removed and replaced with provisions for the universal collection of postal vote identifiers brought forward by my noble friend Lord Elder in response to a consensus around the House that we should get on with it.

Moving on to the commission itself, there were some issues around the fourth member with some political experience. Nominated commissioners—those with political experience—will not be party representatives just as they were not, I believe, on the noble Lord’s committee. We believe that it is right that there are four nominated commissioners—there was some support around the House for that—allowing the perspective of one smaller party to be heard. This was a recommendation from the CSPL. The noble Lord, Lord Goodhart, also had a view on this. The proposal that there should be some members of the commission with some political experience was supported by all parties during the Commons stages.

My noble friend Lady Gould, who also has huge experience in this field, asked about candidate spending rules. The Electoral Commission said before the Public Bill Committee in the other place that it would aim to publish draft guidance on the Bill’s original proposals in January and then finalise its guidance as soon as possible after the Bill has completed its passage. However, I think it would say that that is an indicative timeframe rather than anything more precise.

I was asked why compliance officers are needed. The background to this is that there have been frequent complaints about the burden of compliance with the 2000 Act, particularly from people with very busy roles. We have heard of some of the difficulties that local parties on all sides have found and those of Members of Parliament. An honourable friend in the other place tabled an amendment seeking to achieve this. Opposition parties did not dissent and thus the proposal was included in the Bill, appeared on Report and has come to this House.

Compliance officers are intended to assist elected office holders with requests of compliance set down by the 2000 Act. However, they do not absolve office holders from responsibility for compliance themselves. I look forward to discussing compliance officers in Committee. Any holder of a relevant elective office—that obviously will be a Member of the other place, a Member of the other Parliaments and Assemblies in the UK, or a member of a local authority in London and elsewhere—will be able to appoint a compliance officer.

My noble friend Lord Clinton-Davis asked what discussions had taken place with the Electoral Commission and others concerning the Bill. We are in regular contact with the Electoral Commission at all levels and we are aware of its views on the Bill, much of which it supports, I am glad to say. It does not support everything in the Bill but we have an honest and open dialogue with it which we hope will continue to be constructive. We believe that the measures in the Bill concerning the Electoral Commission will assist it to do an even better job than it has so far done.

I thank all noble Lords for the part they have played in this Second Reading debate. I anticipate and look forward to the Committee stage.

Bill read a second time and committed to a Grand Committee.

That this House regrets that the Non-Domestic Rating (Collection and Enforcement) (Local Lists) (Amendment) (England) Regulations 2009 (SI 2009/204), laid before the House on 10 February, will not prevent several port companies from becoming insolvent.

Relevant Documents: 8th report from the Merits Committee.

My Lords, I want to make it clear that I am not opposing the principle of the order, which seeks to give more time for certain port occupiers to pay a backdated and retrospective non-domestic rates liability, in order to avoid an immediate collapse of many, certainly in normal times, healthy businesses. The problem is that many businesses will become balance-sheet insolvent as soon as they receive their rate demands. For this reason, some local authorities have delayed issuing rate demands because they are waiting for this SI and its regulations. The situation is unusual. When matters go awry, it is usually due to the errors and omissions of Ministers some time ago. This is not the case today. The problem is that the Ministers are unwilling or unable to put the situation right.

It may be helpful if I explain the background to the problem. In the beginning, at the time of the nationalisation of the ports, it was decided that it would be appropriate for the Secretary of State to prescribe the rateable value of the whole port. The local authorities raised a rate demand on the whole port based upon the prescribed rateable value. When the 55 statutory ports were privatised, prescription continued. The businesses within the port did not pay rates; they occupied premises within the port, under a licence, as part of a commercial contract with the port owner. The terms and conditions of those contracts would vary depending on the nature of the operation of the occupier. For example, it may have been a crane hire company, a stevedoring company, a storage company, a freight-forwarding company or any one of the numerous operations that take place within a port.

However, rates were not an issue as they were covered by the port owner. Quite properly, the Government decided to return all 55 statutory ports to what are termed “normal rating principles”; in other words, the same principle which every business in the United Kingdom works under. This was fine, but in 2000 the then junior Minister at the DETR, Beverley Hughes, had to prolong prescription until 2005, and there were good reasons for that. The Valuation Office Agency has a statutory duty to compile and maintain accurate rating lists, which for the port businesses had to come into force on 1 April 2005. The VOA obviously had to undertake this valuation of the ports before that point. Unfortunately, the VOA woke up to its obligations only in 2006, and while it may have informed the port operators and owners, the port businesses and occupiers were not informed in advance of any change in the system or any increase in rates.

We are not talking about one isolated firm being out of the loop; this affects many different businesses in many different ports. Businesses in ports are now receiving massive retrospective and totally unexpected rate demands. In many cases these are financially devastating. Of course, for some port businesses these increases are modest and they have been able to pay the rate demand without any serious difficulty. I have no doubt the Minister will draw your Lordships’ attention to this.

Let me give a few examples to illustrate the magnitude of the problem. I have been informed that for each of the past four years TTS (Shipping) Limited has paid corporation tax, national insurance contributions and PAYE of between £425,000 and £860,000 a year. In 2007 its retained profit was less than £40,000 and it believes it has a backdated liability for rates of more than £1 million. If your Lordships should uncharitably think that TTS is a small firm which would benefit from improved information acquisition, how about DFDS Tor Line plc, which has a backdated rates demand of £9.9 million and an increased annual liability of £3 million. The MD of DFDS Tor Line has written to me indicating that his main board is considering relocating the business outside the UK. The rates bill of Freshney Cargo Services has gone from £48,000 to over £850,000, far more than its best ever year’s profit, and its retrospective liability is £2.4 million, something it never expected to have.

All these businesses will have had proper plans and a proper cash-flow forecast. They had commercial arrangements with the port owners and their own customers and they thought they knew what their cost of operation was. Without the SI, these retrospective rate demands will have to be paid almost immediately. The effect of the SI to which my Motion refers is to give the companies concerned up to eight years to pay the rate demand. This demonstrates that a very serious problem exists, otherwise why would the Minister have done it? I am not opposing the order, because it will solve the problem for a few, but for many it will only prolong the agony in that on their balance sheet their liability will exceed their assets.

However, if directors of affected businesses reasonably believe that they can trade through the problem, it might be legal to continue trading. Expensive legal advice will have to be taken—and often—because presumably every time they have a setback it will increase their liability on the balance sheet, and being balance-sheet insolvent will mean banking covenants may be breached; it will be even harder to raise finance, which is extremely difficult in any case; and if finance can be raised, it will be very dear. For many, the financial strain will be too much and the business will collapse, with the attendant loss of employment.

Your Lordships will have noticed that the SI experienced a rough passage through this House’s Merits Committee. I will not rehearse the committee’s concerns in detail, but it was extremely disappointed about the amount of information accompanying the order and, therefore, the ability of Parliament to properly consider the regulations. There was also concern about European state aid rules being breached, but I shall not weary your Lordships with that argument.

The situation I have described is serious. The regulations do not solve the problem; the solution is to revert to the old system of prescription and the original rating lists. It is important to understand that it is not as if the ports, and the businesses within them, were exempt from rates; it was just a different system. I am sure that the Minister will not tell us that no rating system was in place prior to 2005, and I hope that she will not suggest that I am proposing to write off the debt; I am not. I am suggesting reverting to the original system. Ministers constantly say that these retrospective rates are due under the law, which is quite right, but the law implemented by the Government is having completely unintended consequences that arise not from ministerial failings but, frankly, from incompetence at the VOA. Ministers need to go for primary legislation, delay implementing normal rating principles until April next year, and continue to use the old rating lists.

I fully appreciate the difficulties that the DCLG and transport Ministers find themselves in. Even in normal times, it is not easy to find a slot for primary legislation. It will be even more difficult now; my noble friend Lord Bates will say a little more on this point from the Front Bench. I am convinced that, at some stage, the Minister will have to return to this House with primary legislation. I urge her to do that sooner rather than later. The Minister will not come to the Dispatch Box unarmed; she will tell your Lordships that many businesses are relisted during the year, and the ratings change. That is right, but the ports are different.

If an ordinary business takes on new or altered business premises inland and is subject to the normal rating principles, any competent surveyor can indicate, reasonably accurately, what their rateable value will be, and hence the rates to be paid. An allowance for those rates can be made in the company’s business plan and cash-flow forecasts. If the local authority, for any reason, delays or omits to issue a rate demand, the business will not be able to organise a party. The estimated rates will have to be shown on the balance sheet as an accrual, and provision will have to be made in the cash-flow forecast. The ports, however, are different. The commercial arrangements between the port owners and port businesses were predicated upon the pre-2005 rating arrangements, so, for those businesses, rates were not an issue. They simply did not need to be considered by a port business, as long as the port was operating under the prescribed rather than normal rating rules.

The Minister will say that to write off debt would be unfair to other ratepayers. First, I have already explained that I am not proposing a write-off. Secondly, to which other ratepayers would it be unfair, since there was always a rating system for the ports? Finally, the favourite phrase at the moment is “in the current economic circumstances”. These circumstances are not good; shipping is already badly affected, as the ports will be. We cannot save every business, but let us avoid making it unnecessarily difficult for those companies to survive our current economic problems. I beg to move.

My Lords, I support the noble Earl, Lord Attlee. I have no interest in ports, apart from being a harbour commissioner in the port of Fowey in Cornwall, which is not significantly affected by this, but from going around the country talking to people in ports I hear the concern that they have about these regulations. I shall not repeat all the excellent examples that the noble Earl, Lord Attlee, gave the House, but I have heard them too.

My worry is that these businesses, which have sometimes been operating in the ports for many years, are in strong competition with each other and with other ports and, as the noble Earl said, they have had no means of assessing what their future rate demands would be because the Valuation Office Agency had not got around to telling them. They have ended up not being able to charge their customers or make provisions, as they do not know how much to charge, but they receive these massive bills three or four years later.

I agree with the noble Earl; I am not suggesting that the rates should be written off, or anything else, but can my noble friend explain why the Government have not followed the recommendations of the House of Commons Treasury Committee? The committee suggested, as the noble Earl has said, that the Government should,

“consider the proposal to maintain the rateable values of premises in statutory docks and harbours at the levels published in the April 2005 rating lists until the new rating list is published in 2010”.

That seems perfectly reasonable; they will still have to pay rates, but at least it will be on the basis that they understood before. This issue happened on the railways five or 10 years ago; I think that has been resolved now, but I agree with the noble Earl about the increased rate demands faced by these companies. Companies will be going into liquidation. They may have eight years to pay, but if they cannot pay anyway it does not help matters much.

We are in a situation of severe economic problems. We have a Department for Business, Enterprise and Regulatory Reform that is trying to help companies survive and prosper. I would hope that this matter could be resolved by some good joined-up government between my noble friend’s department, the Department for Business, Enterprise and Regulatory Reform, and the Treasury. I fear that enough companies will be going into liquidation without those poor people operating at the ports joining them—and it is not just the port companies but the ports themselves. Associated British Ports tells me that its demand has gone up really dramatically because of this revaluation, by 100 per cent to £7 million a year. Now, it is a big company, but I hope that my noble friend will agree that a 100 per cent increase, backdated again, is difficult for companies to suffer. I look forward to what she will say, but at the moment my inclination is to join the noble Earl if he puts the Question to the House.

My Lords, I support the Motion of regret moved by the noble Earl, Lord Attlee. Both noble Lords who have spoken covered how this situation arose, but it is unfortunate that the Government did not take a leaf out of Scotland’s book. There, they saw the problem arising, instituted proper consultation and did something about it. This problem could easily have been got around and, as the noble Earl said, it was only due to the inefficiency of the Valuation Office Agency, which did not complete its statutory obligation to produce new rating valuations by April 2005.

The noble Earl mentioned a number of companies which have been affected. I can add three to that list, in Tilbury, which have already gone bankrupt. Another company on Merseyside, which has a turnover—not profit—of £1.8 million has received a rating bill for £1 million. Some of these companies simply cannot exist under this, despite what the Government are trying to do about it. One might almost say that it is too little, too late.

Our ports industry is one of the best in the world; it is certainly the largest in Europe. It handles something approaching 600 million tonnes of cargo a year and facilitates the transit of some 30 million passengers. It is big business. It employs large numbers of people who work not only in the ports but in the ancillary businesses connected with them. DFDS Tor Line, which was mentioned, has been considering whether it should take some of its business elsewhere. It is a very large operator in the North Sea area. P&O is also looking to change things; no doubt we will hear more about that from the noble Lord, Lord Sterling, a former distinguished chairman of that company.

This is a matter of great regret; it should not have happened. The noble Earl, Lord Attlee, is quite right to bring forward this Motion, and I support it.

My Lords, I want to add a somewhat different dimension to the debate. First, I am totally against anything retrospective in principle, but where the ports are concerned, on a more positive note, I should like to paint a picture of what is happening out there at the moment. We are heavily involved in the trade routes of this country. To declare my interest, I ran P&O for 22 years. We had probably the largest fleet by far in Europe and also controlled many of the ports worldwide, so I am speaking with that experience behind me. I am still life president of P&O and also chairman of Swan Hellenic ships.

I suggest to the Government that this is a great opportunity. The great shipping companies can choose anywhere to land their goods. If you take the far eastern trade, you have the choice of going to our ports, or to Le Havre, Zeebrugge, Rotterdam, Antwerp, Bremen, Hamburg, and so on. But at the moment, the weakness in sterling, which in a strange way might be a strength, gives us an opportunity to offer a service which will entice many of these companies to bring their ships to our ports.

At the moment, many of us are very troubled about what is happening in the City of London and what we might be losing abroad. But it is often not realised that the ports of this country are extremely vibrant. Those ships have the effect of creating massive businesses in the surrounding areas of our great ports. This is a marvellous opportunity to give these companies the chance to bring further business to this country. It is not, therefore, the time to burden them with having to pay extra moneys in this form.

My Lords, the noble Earl, Lord Attlee, does well to bring this Motion to the House, and I support it. He set out very clearly the history and background to this, and there is no point in any of us repeating that. However, I should like to speak about the position of local authorities in some of these ports. They are under a statutory duty to send out these bills and collect the money, yet there are councillors, including my colleagues in Hull and Liverpool, who are extremely unhappy about this because their first interest is the health of their port, its value to the local economy and to the economy of the country.

Our view is that this mess that has been caused by the Government and the Valuation Office Agency for which they are responsible. The Government therefore have to take full responsibility for finding a satisfactory solution to the problem. The Treasury Committee proposed a solution, which the noble Earl recommended, of port ratings being maintained at the levels published in the 2005 lists until the next scheduled revaluation of statutory ports is undertaken in 2010. Whether that is the right way forward is for the Government to decide, but it seems sensible. If they do not adopt this proposal, they have to come up with a solution that is not simply telling companies they have eight years to pay the money back.

The ports industry is vital to the British economy. To penalise this vital industry in a recession is economic madness and will only hinder any recovery. Cancelling back payments does not set a precedent for other business rates, but it will be a powerful reminder to Government and their agencies of the terrible impact mistakes can have on British companies and consumers. We all know that mistakes can be made and in modern organisations, mistakes will be made. The important thing is that when that happens, solutions are found.

We on the Liberal Democrat Benches support this Motion. If the noble Earl puts it to the Vote, I shall advise such of my colleagues who are in the House to vote with him.

My Lords, I, too, support my noble friend Lord Attlee in this Motion. At a time when seldom a week goes by without a Minister coming to the Dispatch Box to announce some initiative to rescue the car industry, the banks or the housing industry, it seems like a classic own goal to allow this measure, which will cost real jobs, to go through. As we have heard from the noble Lord, Lord Greenway, there are some businesses for which it is already too late—they have gone into receivership. Many are clinging on by their fingernails. CAT UK, a company based in Grangetown in the north-east of England is doing good business in very tough times, importing cars from Renault. It has been faced with a tax bill of £500,000. That is a huge sum; even if it is repaid over eight years, it still amounts to something like £40,000 per year.

I do not know whether the Minister is aware of how many of these businesses are at the tipping point, where something like this will tip them over the edge. Is she aware of the difficult relationship that many of these companies have with their banks? The fact that a liability has to be crystallised and recognised on their balance sheet will cause great difficulties with the banks and in accessing appropriate credit. The Government’s Insolvency Service has warned Ministers that the liability will remain even if the debt is repaid by instalments. It wrote to John Healey on 9 February 2009, saying:

“The debt, like any other, would need to have to be booked immediately. Depending on the company’s overall financial strength, it may not have the assets to cover this additional liability. In such circumstances, the company would be balance sheet insolvent”.

These are very serious charges.

If this was due to the recklessness of the companies themselves—some 1,600 in 55 ports are affected by this—of course one could not expect the Government to go round bailing people out left, right and centre. But this was not a result of the recklessness of those 1,600 businesses; this was a result of the recklessness and failure of the Valuation Office Agency, as has been acknowledged.

The fault does not stop at the Valuation Office Agency. It was responsible for not consulting, but under the Treasury’s own guidelines, no impact assessment was made, as stated in Hansard on 7 October 2008 at col. 594W; no consultation was undertaken, again in line with Treasury guidance, as stated in Hansard on 6 October 2008 at col. 351W; no assessment had been made of the effect on the wider economy, a charge which was acknowledged by the Government in Hansard on 14 January 2009 at col. 761W; and the policy contravenes the Treasury’s own guidance on retrospective taxation, as stated in Hansard on 9 October 2008 at col. 802W.

There is an irrefutable case for rethinking this policy before it is too late. It will cost jobs in many business that are really struggling at the present time. It will be a catastrophic own goal. We shall drive business offshore. My noble friend Lord Sterling spoke about the options that shipping companies have. Those apply not only to the companies that were mentioned. I mentioned CAT UK. Renault is talking to it about the possibility of relocating its operations to Zeebrugge and shipping cars across as they are needed to order, rather than storing them port side. On the negative side, this is an own goal. However, on the positive side, it is a marvellous opportunity for the Government to come to the rescue.

My Lords, that is a positive note on which to end. I am very grateful to the noble Earl, Lord Attlee, for giving me an opportunity to set out the Government’s concerns on this issue and the reasons for our having come forward with our propositions. I am grateful, too, to all noble Lords who have spoken in the debate. It has been a measured debate, which the noble Earl, Lord Attlee, introduced extremely clearly. A spread of expertise has been shown around the House which has aided the debate.

I completely understand that the debate has aroused considerable concerns and accept that noble Lords’ anxiety is well placed. The issues were raised in the context of the Non-Domestic Rating (Collection and Enforcement) (Local Lists) (Amendment) (England) Regulations 2009 that were laid before the House on 10 February. Concern is not confined to this House: there have been two Adjournment debates in the other place. Much of what I say will reflect what Ministers in the other place have said, and I shall refer to some of the correspondence between Ministers and the Insolvency Service, to which the noble Lord, Lord Bates, has already referred.

Before I address the arguments put by noble Lords, I should put the regulations and their aim in their policy and regulatory context—I shall perhaps address some of the grievances raised by the Merits Committee in doing so. The noble Earl, Lord Attlee, gave a good summary of the history of why we are in this position.

Although the debate has been largely about ports, the relevant regulations are not aimed exclusively at ports; they apply equally across England to all businesses, sectors, and areas which now find themselves with a significant and unexpected backdated rates liability incurred by their property being separately rated by the VOA—I shall use the short term to save time. Therefore, although the debate is concerned primarily with ports, there is certainly a wider concern, which has obviously been made worse by the current economic situation. The regulations are designed to ease the pain and go beyond ports alone. For example, in the current financial year up to 31 October, 1,666 properties had a backdated adjustment to their rates liability of more than 33 months, including some in ports.

I start by saying that the Government are deeply concerned. Those concerns were set out in a letter from the right honourable Stephen Timms and the right honourable John Healey, from my own department, to the Treasury Sub-Committee on 10 February. They said:

“We have consistently said, in the current economic conditions, the Government is concerned about the impact of backdated rates liability on the trading prospects of businesses and we believe that there is a general case to assist businesses receiving large, unexpected backdated liabilities that have to be paid immediately, as the position for a number of port occupiers has demonstrated”.

We are providing such assistance. That is why the regulations allow businesses in such circumstances the unprecedented scope to schedule payment of backdated business rates over eight years. I shall come to why we have arrived at that position rather than some of the other options put forward by noble Lords.

The current situation in law is that each of our 55 major ports and container terminals in England and Wales is run by a designated port operator which has overall responsibility for business rates, except where any part falls to be separately rated. Properties have been separately rated over the years depending primarily on whether the occupier of that separate part is in “paramount” control; for example, a port chandler’s shop independently controlled of the port operator. There has therefore always been a mixed economy within the ports: it is a rather murky picture economically.

There were 1,600 separate assessments within 45 ports in England, and more than 250 assessments within 10 ports in Wales, on the list at 1 April 2005 before the ports review commenced—I shall come back to that. The situation now facing port occupiers stems from two separate developments which I need to put on the record.

The first issue, as the noble Earl pointed out, was the move away from prescribed rating for the statutory port operators. The larger statutory docks and harbours were, until 31 March 2005, subject to a methodology for valuation—prescription—by which the valuation was determined by reference to a formula set by the Secretary of State. The Government decided in the Local Government Act 2003 to end prescription and replace it with conventional rating. That formed part of the long-term policy to apply conventional rating to ports and other utilities, which meant essentially that we were anxious to ensure that everyone was rated on the same independent basis. As with all other forms of rating, the Valuation Office Agency relies on the provision of accurate information to assess the rateable value of property.

The second issue was the review of ports, which became necessary after a change to the Southampton Container Terminal valuation in 2004 identified some properties which should have been rated separately from the port operator’s assessment. The physical, in situ review of ports by the VOA which commenced in 2006 was able to establish the full nature of the situation in all ports and ensure that all individual businesses within and outside of ports were treated in the same way. It was clear that the same situation could exist elsewhere, so, in May 2006, once the Southampton appeal was settled, which took some time, and the status of some port tenants was clarified, the VOA immediately began its review across all 55 major ports in England and Wales.

Noble Lords might well ask why that physical inspection had not been done previously and why the VOA had been content to take the information unchallenged. The VOA is reliant in all its work on information that it receives to keep the ratings list accurate. It was only when it discovered an inaccuracy that might have been replicated that it was under an obligation to conduct a proper and full review.

The review discovered that there were many properties eligible for separate rating which had never been listed, and the result was to increase from 1,643 to 2,248 the number of properties in ports separately assessed for business rates. They were rated with a rateable value of around £53 million from 1 April 2005. It is those properties that now find themselves with significant and unexpected backdated liabilities. Noble Lords have put on the record the scale of some of those unexpected liabilities.

That is not the whole story, however, because the rating review has not had the same impact on every business in every port; indeed, it has been reported by local authorities that some £1.7 million of backdated liability has been paid. However, I can say to the noble Lord, Lord Bates, in particular, in view of his powerful summing-up, that there is a case to be answered where businesses have been badly affected.

The VOA is not under the control of my department, which is responsible for the collection and distribution of business rates; it is the responsibility of the Treasury and HMRC. The VOA has acknowledged, in response to the Treasury Select Committee, that there were serious failures of communication, particularly with the occupiers, and by implication that too much reliance was placed on information being provided by the port operators. Andrew Hudson, head of the VOA, indicated to the Select Committee:

“With the benefit of hindsight we have learned a lesson and please God this does not come up again: if it were to, we would seek to improve our communications with the occupiers as well as the operators”.

Indeed, Mr Hudson accepted that,

“in practice some of the people who have written in were not aware that this work was going on”.

So the VOA has put its hands up and said that yes, there was a communications failure.

I do not think that apologies are often sufficient. However, there is another explanation of why the review took so long—because it did take a long time. It was a slow process. Part of that explanation is that deciding which operators should be separately rated was not straightforward. It was not just a matter of going out and looking at the properties; it was a matter of trying to establish the exact degree of control exercised by either port operator or port occupier. It was also complicated by the varying nature of ports and continuing changes in operational practice. The VOA said that some operators were more helpful and co-operative in that regard than others. The review would have been completed sooner if operators and occupiers, some of them large businesses with professional advisers, had supplied information more willingly. That point is important, because it was the length of time that the review took that made the bills accumulate.

The VOA recognises that its communications could have been better. The Director of Rating accepted:

“Perhaps with hindsight we should have done more investigative work”.

Yes, I think that it should have done. However, The VOA wrote to all port operators in May 2006 advising that a full review of assessments would need to be undertaken, and followed this up in October 2006 when detailed replies had not been received. The letter explained the background and requested that the operators ensured that their tenants, whose identity would not necessarily be known to the VOA, because of the previous inclusive formula basis of valuation, were alerted. There seems to have been a lack of communication between operators and occupiers as well.

Another issue has been raised in another place, which I should also like to put on record. Many commentators have indicated that it is doubly unfair on the occupiers that these companies have to pay their rates liability as some port occupiers claim they had already paid their rates via their fees to the port operators. It is described as the Cumulo system. Port occupiers have told CLG that, when the designated port operator was regarded as liable to pay business rates, the contractual arrangements between the port operators and port occupiers typically contained explicit or implicit fee elements to cover the business rates incurred by the port operator. The Treasury Select Committee indicated that payments should be taken into account. However, it is not all that simple; nothing in this story is simple.

First, the liable party for business rates is the business in occupation of a property, not the landlord. Secondly, there is a serious absence of evidence that the port occupier’s fees made a specific contribution to rates. We have asked the CLG for that evidence; the only contract that we have seen is ambiguously worded, saying that when the property is separately rated the occupier is liable for rates. Clearly that is a matter between the port operators and the occupiers—between the landlords and tenants. It is part of the background of why the situation is so murky.

I quite understand that the grievance felt by the port occupiers is compounded by the fact that, with independent rating, the rates payable by the port operators themselves have in some cases declined. Although the review has resulted in an increase in the aggregate rateable value from around £201 million to about £211 million, the main issue for the newly assessed port occupiers is backdating the effect of the review. The port operators’ liability has in some cases reduced. I merely raise the question of whether there is not a moral issue here for the port operators themselves.

That is the background. I hope that I can be forgiven for putting that on the record, because it is very important that we understand the complexity of the situation. I turn now to what can be done to ease the situation, and the options that have been put forward. The suggestions put forward, outside this House and by the noble Earl and other noble Lords, include the suggestion to waive liabilities entirely by postponing or changing the alteration and its effect to the ratings list until 2010; to prescribe, as the noble Earl, Lord Attlee, suggested, the value of the separately assessed properties as zero; or to return to prescription of the statutory ports. The noble Earl has not raised the question of a waiver, and it is sensible not to do so, because it would raise some massive issues about the ratings system. It is worth saying that the integrity of the ratings system, to which we all subscribe, is that it has to be fair and equitable and that, therefore, any solution must not confer a disadvantage among other rate payers who have paid rates and were billed on time.

It is also inescapable, as the noble Earl said, that valuation officers are required by law to maintain accurate rating lists. When they become aware that a change is needed, as they did in the ports, they must make the alteration and specify the date when the change should take place. The date of the change is governed by legislation. When the correction is to insert into the rating list property that existed prior to the compilation of the 2005 list, backdating to the beginning of the list is required. Backdating is an integral part of the system of non-domestic rates; it reflects the volatility of the constant changes in the commercial property market.

Furthermore, no discretion is given to either the Valuation Office Agency or Ministers to waive a liability to taxation. I think that that is right, as it would not be in the interests of fair competition or in line with the principles of taxation for such a liability to be waived. It is because of this, and the fact that we cannot now pretend that we do not have the full facts of the case, that we cannot undo what has been done and maintain the list as at 1 April 2005 and hold off until 2010 when the next rating list comes along. That proposition introduces a much bigger issue; it would mean that, unlike all other tenants across England liable for rates, including the separately assessed properties in ports identified from the start of the 2005 list, these newly rated businesses would be given a directly favoured tax advantage over assessed properties. That is where the unfairness would lie in this context.

The second option is that the Government should prescribe the values of the separately assessed properties. I return to the Treasury Select Committee recommendation. In effect, it would be a return to prescription, but maintaining the rateable values of properties as at 1 April 2005 would require these newly assessed properties to be given a zero rating as from 1 April 2005. In effect, it is still tantamount to a waiver. There are other serious problems with doing that, as it would not solve the problem that noble Lords identified.

The Secretary of State still has the power to prescribe rules for ascertaining rateable values and, in theory, she could use those powers to prescribe rateable values for the individual businesses at ports. However, it is very difficult to see how it would assist, because, first, the businesses within ports would still be rated separately from the port as they should be and, in some instances, were prior to 1 April 2005; the power is not retrospective, so she cannot prescribe a value which is to apply for the purposes of ascertaining rateable values for a day before the order prescribing the formula was made; and the businesses within ports would still be faced with three years’ backdated liability, payable immediately on top of the liability for this year and next year; and to deliver some benefit to the businesses, she would need to prescribe a value which generated results below the market rental value.

None of the other 1.7 million properties on the business rating list is valued other than on the basis of market rent and there is no clear rationale for special treatment. In particular, there is no basis on which a low rateable value could be established. If the valuation methodology were challenged in the courts by any other ratepayer whose property is valued conventionally, it would be difficult to defend in rationality and reasonableness terms.

With regard to prescribing the statutory ports by a formula again, even if we were to return to prescription—the old system, as the noble Earl explained it—the properties now separately identified for rates would nevertheless continue to be separately rated, because that is what the legislation requires, and the only effect would be to alter the rating method for the port operator.

I know that this is disappointing in many respects because it would seem that some of these options offer a solution. In fact, we have come to the limits of what the Government can do in what we have done. Following the Chancellor's announcement in the Pre-Budget Report, we have quite exceptionally put in place a scheme to help all businesses, which may include some occupiers of ports, pay significant and unexpected backdated liabilities over eight years. We have never done that before: it is a long period of time. The Government have estimated that that will benefit up to 1,500 properties a year across England both within and outside ports and will help with cash-flow problems faced by some companies.

If we were simply to say that it is all too difficult and let the law take its course, the port occupiers and other businesses would still be liable for a backdated rates liability, but that liability would apply from the end of March and would have to be paid within two weeks. That would be the effect of revoking the regulations as well, which why we were so pleased to hear the noble Earl say that he was in favour of the principle of the regulations. Furthermore, local authorities will, in order to act diligently, have to bill the businesses and take collection and enforcement action. Otherwise, they may be required to fund the required contribution themselves to central government.

What else are we doing? The Valuation Office Agency is playing its part. It has put in place a fast track for appeals so that businesses that face significant bills can challenge their assessments. I understand that 70 have already done so. Local authorities, once they knew that this was likely to come their way, began to gear up immediately and they have been given information by the CLG so that they can prepare schedules of payments. They are very organised.

I can also give some assurances about technical insolvency, which I hope will be of some help. I am aware that many businesses have said that, despite this exceptional arrangement to spread payments, they will have to add this liability to their balance sheets. That will mean that they will become technically insolvent, and as a result, although they may be in a position to continue their businesses, technically they will have to cease trading. That is a serious matter. The department has taken advice from experts in the Insolvency Service and the Department for Business, Enterprise and Regulatory Reform. Clearly, the outcome will depend on the individual circumstance of each business on a case-by-case basis, but it will depend on the level of both the existing assets and liabilities when the backdated rates bill was received and the directors’ reasonable expectations of being able to meet their liabilities as they fall due in the future. The advice that the department has received is clear on the fact that the additional liability is not in and of itself a de facto reason for a company becoming insolvent. We want to ensure that that is widely understood, so that companies can continue trading where there is a reasonable expectation of being able to meet their liabilities in the future.

The substance of that was put in a letter from my right honourable friends John Healey and Stephen Timms to the Treasury Select Committee. I shall put that letter in the Library and I hope that noble Lords will feel that they can make use of it. We will also see whether we can put it on government websites so that it will be accessible. In addition, companies can of course get advice from legal support, qualified accountants, authorised insolvency practitioners and so forth.

I am sorry to have taken the time of the House at such length. Nobody would deny that this is an extremely difficult matter. It is one that we wish had not arisen and certainly not at this time. We do not deny that. We have done what we can do to assist within the current law and system of business rates. I hope that noble Lords who have spoken will accept that and will not press their case to a vote.

My Lords, I am extremely grateful to all noble Lords who have taken part in the debate, particularly the Minister for making herself available at short notice for such an important issue. She has given us a much more detailed explanation of the problem than Parliament has had before from Ministers.

The Minister has skilfully tried to tempt me to withdraw my Motion but I cannot do so because it is accurate. The regulations will not prevent insolvencies from occurring. In the later stages of her response, the Minister touched on the insolvency issue, but I anticipated her response. Businesses will still experience the problems that I described. They will find it extremely difficult to raise finance. She also touched on seeking professional advice. In these circumstances, professional advice would be very expensive. The Minister pointed out that the regulations benefit not only port occupiers but the whole business community. That is just as well, otherwise the regulations would definitely fall foul of EU state aid rules.

The Minister indicated that the problem is largely a commercial problem between the port operator and the port businesses. She is suggesting renegotiating a commercial contract after the supply of the goods and services in question, so that the port operator can pay money to the port business, even though that was not provided in the original contract. I do not know how many commercial negotiations the Minister has taken part in, but I fear that such negotiations might be a bit tricky. Moreover, I wonder how often central government have paid out money which is not due under a contract. I am certain that Ministers will have to do much more than the regulations provide for at some point in the future. The Minister explained how difficult and how complex these arrangements are; I accept it will not be easy but, at some point, more will have to be done. This is not the time to impose a huge, retrospective financial burden on businesses in an already fragile industry. I should like the House to determine this matter. I beg to move.

To ask Her Majesty’s Government what steps they are taking to implement cognitive psychotherapy in the National Health Service.

My Lords, last weekend I was in Syria talking to Hamas leaders. It was very interesting. In the discussions, one of them said, “We love life and happiness as much as any of you do”. I thought that that was fairly profound stuff coming from a group that uses suicide bombers, but I shall save that for another debate. We all love life and happiness and that is what we all want. Sometimes people or events conspire to make us unhappy or sometimes, without any reason, people become depressed. Sir Winston Churchill had his black dog, which was not a bipolar disorder but just good old depression.

I am fortunate never to have suffered. I have been very sad, yes, frustrated, yes, suffered pre-menstrual tension, yes—you should have seen me in those days—but fortunately I have never been depressed. However, I have many patients, friends and relatives who have suffered and I have watched their distress. That distress is often increased when they are prescribed antidepressants, which sometimes unjustly have a reputation with the general public of not doing any good.

Depression and its stablemate anxiety are the most common mental health disorders. One in five people will suffer from them at some stage in their lives, with one in 50 suffering from severe depression. People are often reluctant to go to their GPs because, understandably, no one wants mental illness on their medical record—people are afraid that it will affect job prospects in the future.

As the economic situation worsens, more people are forced to face unemployment, debt and loss of self-respect, which can only make depression more likely. This problem is urgent. The treatments currently available are the talking therapies and drugs. Despite the National Institute for Health and Clinical Excellence asking doctors to use drugs with caution, they cost the NHS £400 million per annum.

I have always been enthusiastic about cognitive behavioural therapy, which from now on I shall call CBT. Long ago, I worked in a centre where it was being used. It seeks to teach people skills to tackle their problems. It needs well trained and experienced therapists, which the NHS does not have in great number. Everyone who needs a therapist should be able to access one, but I understand that in some parts of the country it takes up to 18 months for a suffering person to see a psychotherapist. That is useless and unacceptable. Last May, the King’s Fund found that one-third of people suffering from depression were not getting any treatment. That is a lot of human misery. Even so, the cost of treating depression—also according to the Kings Fund—is £1.7 billion per annum. The cost of lost employment is £7.5 billion per annum. The problem is urgent and escalating.

The Government have taken some important steps in recent years. They aim to make therapy more accessible and announced about two weeks ago that psychotherapy centres, to which patients will be referred directly, would be established in all primary care trusts. This will involve training 3,600 more psychotherapists. However, it takes about four or five years for them to become competent and the problem is more urgent than that; we do not have the time to train that many people.

The rather irritating fact is that the Government have had a partial solution at their disposal for some time in the form of computerised cognitive behavioural therapy. This, I emphasise, is useful for mild to moderate depression. At this juncture, I declare that I have absolutely no financial interest whatever in any company that provides software for these therapies.

In February 2006, NICE recommended that primary care trusts should purchase and use computerised CBT, and a treatment called “Beating the Blues” was recommended. It should have been available 90 days after recommendation; primary care trusts are obliged to provide their patients with what NICE recommends. It would treat 400,000 people each year, producing a cost benefit to the NHS of £126 million a year. Despite this, there has been only about 15 per cent take-up by the primary care trusts. To date, nine primary care trusts have complied with NICE guidance. It is another NHS treatment at the mercy of the postcode lottery.

Many who have used “Beating the Blues” have found it very helpful in dealing with their problems. The Government have failed too many people who are suffering. The problem of depression is immediate and requires treatment now. The Department of Health has been offered a way by NICE, which approved “Beating the Blues”, to treat people as part of its access to psychotherapy programmes, but it has failed to take up the recommendation.

Ministers have given all sorts of assurances over the years. In March 2006, the White Paper Our Care, Our Health, Our Say included a commitment to support primary care trusts in delivering these computerised treatments. In November 2007, the national director for mental health, Louis Appleby, wrote to all primary care trusts reminding them of the obligation to provide computerised CBT by 31 March 2007. On 28 March 2007, Patricia Hewitt, then Secretary of State for Health, told us that patients would have this service provided by their primary care trust. In December 2008, only a few months ago, Health Minister Dawn Primarolo said that primary care trusts were obliged to provide funding for NICE-recommended computerised CBT packages.

So where is it? Why is it not being delivered? We get more and more announcements and commitments to mental health services, but this promise is yet to be delivered three years on. Alan Johnson has tried to be helpful by saying that patients who are dissatisfied with the non-availability of a treatment should take up their concerns through the NHS complaints procedure. In my opinion, an already mildly depressed patient might become very seriously depressed or even suicidal if they had to tackle the NHS complaints procedure. I had plenty of experience of that with my constituents in the other place.

The trouble is that government promises are not being delivered—period, as Tony Blair used to say. I appreciate that, in some sections of the profession, it will be said that a computer program cannot replace a face-to-face session with a trained psychotherapist. Maybe not, but it can replace a non-existent psychotherapist, which is currently the reality for most patients with mild to moderate depression.

This should not be a consideration in clinical treatment, but it is worth remembering that, in 2004, the noble Lord, Lord Layard, in his paper Mental Health: Britain’s Biggest Social Problem?, estimated that the cost then of a course of face-to-face CBT was £750, whereas, according to NICE, the computerised program that that body had approved cost £45. That is a huge difference. Help could be made available to far more patients. We must also remember that many young people who suffer from depression spend an awful lot of time with their computers. My young people certainly do; I sometimes think that Facebook has replaced the pub for some of them. We may sneer, but it is the most natural thing in the world for them to talk to a computer.

In conclusion, we cannot wait any longer for evaluations and reports to see whether greater access to CBT is being achieved for patients with mild to moderate depression. There is a proven treatment, but it is still not available in the vast majority of primary care trusts: computerised cognitive behavioural therapy. In the current economic downturn, more and more people will be affected by depressive illness. It could be any of your Lordships.

My colleague in the other place, Norman Lamb, has tabled an Early Day Motion on computerised CBT, which over 50 MPs have already signed—20 from the Minister’s own party. I look forward to the Minister’s assurance that she will rectify this problem and make the treatment available in all primary care trusts.

My Lords, this debate is extremely timely; I congratulate the noble Baroness on having introduced it. It is timely because of the recession that is now upon us, and which will do so much damage to the mental health of so many citizens of this country.

The goods news is that the Government, well before the recession was even dreamt of, had embarked on the programme to which the noble Baroness refers, which will revolutionise the availability of psychological therapy services in this country. I do not think that any of us are opposed to computerised CBT, as recommended by NICE as part of the stepped-care system; of course, it is one of the rather low steps. It has also required the participation of a living therapist for it to be effective in any of the evidence-based trials. For anybody with a serious condition, the human one-on-one treatment is essential. That is what the Government’s programme concentrates on.

In a debate on the future of CBT in this country we must focus mainly on CBT provided by live therapists to patients in the new way that the Government will make possible in this country. This is the most radical improvement in psychological therapy services ever undertaken. I am impelled by the fact that we are having this debate to say a little about some of the good things about it. I should declare an interest because I am a member of the programme management board. However, I then want to say a bit about its future, which is still not assured, because it depends on the upcoming Comprehensive Spending Review. Then I would like to say something about CBT for children, which is also a very major issue that still needs to be addressed properly.

Let me start with the scale of the problem, which the noble Baroness mentioned. Sixteen per cent of the adult population suffer from clinical depression or a diagnosable anxiety condition. Until now the main support available for these people has been non-specialist support from GPs, mainly in the form of medication. This is despite the NICE guidelines, which say that computerised CBT should certainly be available in the early stages, but also that one-on-one CBT should be available for everybody who suffers from depression or anxiety disorders that are not either very mild or very recent. As has been said, that has not been the case throughout the country, due simply to the fact that the therapists have not been available within the NHS to deliver it.

However that all changed from the announcement that the Secretary of State made in October 2007, when the Government committed themselves to creating a modern psychological therapy service throughout the country that delivered the NICE guidelines to everybody who needed them. This commitment was backed by the full amount of money that had been estimated as necessary and feasible over the CSR period that followed on from that announcement. We now have this programme of improved access to psychological therapy, or IAPS, which is being rolled out throughout the country. It is led by an excellent team in the Department of Health and it is very clearly described on its website. To give the bare bones: in the next three years, as the noble Baroness said, the plan is to train 3,600 new CBT therapists, not through five-year courses—because these will be people who already have experience of working with mentally ill people—but one-year courses involving a combination of off-the-job training and on-the-job supervised cases. All the professionals believe that that is what is needed to enable somebody to be a professional CBT therapist.

The programme of training and rollout started in October and it is running well ahead of schedule. In two years from now over half the people in the country will have access to it, because of the grass roots enthusiasm which the primary care trusts have shown in responding to this challenge. I would just like to put in parenthesis that the pushing of computerised CBT preceded this programme, and was based on the assumption, to some extent, that this money would not be available. The noble Baroness has an important point about computerised CBT, but we have to realise that this programme supervenes the instructions that were given about that, and delivers hope of something much more serious than the computer can deliver.

How do we know that all this rollout is worthwhile? We know from randomised control trials, which show that at least half of those treated will recover from their conditions as a result of treatment. Pilots in the field have confirmed this success rate, and of course that means that not only will we get major humanitarian benefits from this programme, but we will also get—and we can do these calculations—a return to the Exchequer which would fully repay, in savings on benefits and lost taxes, the expenditure that is being made. So it is very important that we proceed with this programme at the centre of our effort to deliver CBT to the British population. We will know whether it is working because every session that a CBT therapist has with a patient will include monitoring the patient’s progress. This will not be money down the drain.

The problem is that the programme is funded for three years but after that there is no commitment. We are just coming up to the spending round in which that will be determined. It is vital that the programme continues until the whole country is covered, not just half of it, by these state-of-the-art services. We have therefore to ensure that in the next spending round the necessary growth in funding continues from 2011-12 onwards. We owe that to the people out there who are suffering.

In the pilots, the typical patient treated had been suffering from their condition for five years—five years of wasted life, when they could have had, with a 50 per cent probability, a complete transformation of their lives. We cannot allow that to continue. So I have a simple question to the Minister. Can she assure the House that when the department compiles its spending bid it will indeed seek the funds necessary to complete this crucial programme?

I should like finally to say a word on children. The programme that I have been discussing relates to adults, but of course many of those who suffer as adults also suffered as children. Child mental illness is even more tragic than for adults. It is also the source of so many of our social problems. Ten per cent of all children would be diagnosed as suffering from mental illness of all kinds, and 5 per cent from anxiety disorders for which the prime treatment is CBT. Of these children only a quarter are currently receiving specialist help or have seen a specialist in the past year. That is just not good enough. Although we have child and adolescent mental health services which in many cases are excellent, their capacity is just too small. There are many children in real need who get turned away or do not get referred because the waiting list is too long, and not all the services are delivered in accordance with the NICE guidelines.

What we now need is a strategy for expanding and upgrading CAMHS as well as adult services. A number of us have suggested a five-year plan which would train 200 extra child therapists every year and be adequately funded to pay local services for providing the on-the-job training within the NICE guidelines. I think that that would be a powerful formula. It would cost no more than £35 million by the final year of the next spending round. I very much hope that the Minister can undertake that these proposals will be seriously considered for very high priority in the department’s spending bid.

To conclude, we have an excellent plan for providing face-to-face CBT—obviously, computerised CBT will be there as well—to all adults who need it, but it still needs to be refinanced for the second half. We need to do something similar for children. I have every hope that the Government will do this because they have shown their willingness to bite this bullet which had been neglected for so many decades. This Government have been outstanding so far in their approach to this, after decades of neglect. I really hope that they will complete the job.

My Lords, I welcome this debate initiated by the noble Baroness, Lady Tonge, but I begin by applauding the Government on the considerable progress that they have made so far in extending the availability of CBT across many parts of the country. Improved Access to Psychological Therapies is bringing CBT and other NICE-recommended treatments to millions of depressed people and people suffering from anxiety, most of whom have never had access to any psychological therapy in the past. That is an important point, because a number of NICE-recommended treatments are included within the programme. As others have commented, this is the most significant development in mental health since the inception of the NHS. It is pretty powerful stuff. The IAPT programme is placing this country in a leadership role internationally in the delivery of psychological therapies.

My noble kinsman Lord Layard, as I think I have to refer to him, spoke about CBT itself, and I want to limit my remarks to the computerised version of that programme. Before doing that, I should briefly mention that I have an interest in this as chair of the East London NHS Foundation Trust. We happen to have one of the two pilots in the CBT programme and it was very moving to listen to a number of users talk about having direct access to this programme. They did not have to wait 18 months; they could walk in, self-refer and have access to CBT. They talked about how much better they felt and the fact that they now had jobs. Things really are happening on the ground which we can be very pleased about.

I want to be clear that when referring to computerised CBT I am referring to all the versions of it. I was a little distressed that the noble Baroness, Lady Tonge, mentioned only one such version, and I fear that she may have been at the receiving end of some pretty effective marketing on behalf of a commercial company, because there are a number of computerised versions. The commercial product is called Beating the Blues, which was recommended by NICE in 2005. More recently other programmes have been reviewed and encouraged by NICE, which regards them as comparable to and as good as Beating the Blues. The dramatic difference between Beating the Blues and the other computerised programmes is that these others are free of charge, whereas the licence fee for Beating the Blues is £30,000—not an inconsiderable sum.

These programmes can be used for primary treatment; alternatively, they can be used to add value to a therapist-delivered programme where the therapist’s work is the core treatment. The research evidence quoted by NICE suggests that the computerised programmes can be helpful in either situation, given a professional therapeutic environment.

The only really important point that I want to make is that computerised CBT can only be effective if it is delivered in a therapeutic environment and is supported by about three sessions of face-to-face CBT. These programmes should not, therefore, be delivered without that support, nor only with the support of a Beating the Blues member of staff, who are not actually trained to Department of Health standards. This is fundamental. The best way to ensure benefit to the user is for the patient to access a computerised CBT programme at a recognised IAPT site where they can be sure that the support therapists are properly and appropriately trained. The only cost per patient using a free programme is between £17 and £36 for two or three hours of a low-intensity worker at band 4 or 5.

The significant impact of input by trained therapists was well illustrated by a recent study of the computerised treatment of social phobia. Only 33 per cent of patients completed a course of stand-alone treatment without any therapist input, whereas 77 per cent of those receiving clinician support as well as the computer programme completed the treatment. The conclusion of the research was that the clinician-supported programme was a success and the non-supported programme was not in any significant way.

Why am I so concerned to ensure the availability of therapeutic support from a properly qualified person if a patient is using computerised CBT? It is common sense. If a patient has a problem with CCBT, they become disillusioned. One should remember that these people are already depressed or perhaps very anxious. As a result, if they are subsequently offered the real thing—CBT face to face with a therapist, or group CBT—they are likely to turn it down, assuming that it will be just as bad as the treatment they have tried. We know that 50 per cent of people with depression can be cured by CBT: that is a very powerful statistic. It would be a tragedy if many of those people, having tried something in the wrong way and with inadequate support, then turned their back on their one hope of a cure.

My Lords, I am extremely interested in, and overwhelmed by, the noble Baroness’s knowledge of this subject. However, I have seen the reverse situation apply, which is why I was so enthusiastic about the computer system. Many patients see a behavioural therapist and do not get on with them: the therapy does no good, or they do not like having to go and see somebody or to take time off work. They are greatly advantaged by the computerised system.

My Lords, one interesting aspect of the two pilots of the new IAPT system was the use of the telephone in the Doncaster pilot. We have all learned a lot from that experience. Some people do not want face-to-face therapy. However, having a professional therapist working with you over the phone is very different from working with a computer, on your own and unsupported, feeling depressed and trying to manage. Having lost my speech on my flipping computer this evening, I say with great feeling that the frustrations caused by a computer can be considerable.

These are complex matters, but the evidence suggests that it is very important to have a well trained professional with you at the beginning of your treatment, so that when you start using your computer, the therapist can check that you are getting along okay, are happy with it and making progress. We do not want people buying a very expensive product and starting the programme without the necessary support. Not all of us are computer-literate. I like to think that I am half-computer-literate, but many people are not even that. Workbooks can be given to people, in which the treatment is the same as the computerised CBT, but the words are on paper instead of on a screen. All the options can be weighed up by a professional therapist who understands the different treatments available, and can judge what will suit each patient.

That is what we need to work towards. What we must be careful about is something that does more harm than good. There is no question that a stand-alone computer programme can do more harm than good to many people, by blocking them from a treatment that could be much more effective.

I look forward to hearing what the Minister has to say. I hope that she will assure the House that, for the treatment of depression, every PCT will be encouraged to make available computerised CBT—ideally the free version, but certainly some sort—along with the face-to-face and group treatments involving CBT techniques.

My Lords, I thank the noble Baroness, Lady Tonge, for asking this very interesting Question. I am sorry that her noble friend Lord Alderdice was not able to stay on the speakers list, because I should have been very interested to hear how he, as a consultant psychotherapist, viewed this subject.

I am also delighted to have heard the double act that we have just experienced. Both noble Baronesses and the noble Lord, Lord Layard, are singing from the same hymn sheet—at least, they are in harmony—but, in comparison, I shall strike a slightly discordant and rather more cautious note. As noble Lords might expect, I shall speak from the perspective of a former GP.

Large numbers of studies testify to the very high proportion of consultations in primary care that are due to psychological problems. Some estimates are that they account for up to 50 per cent of a GP’s work. Although only about 10 to 15 per cent of the population on a GP’s list may have a long-term identifiable psychiatric illness, those people consult much more frequently than the average. At any one time, a similar proportion of the psychologically “normal” members of a GP’s list have transient problems in reaction to a particular life stress: bereavement, relationship breakdown and now, as all noble Lords have said, job loss, possibly repossession of a house or bankruptcy. Often, psychological distress is expressed indirectly in physical symptoms or in consultations for self-limiting afflictions which more robust people would shrug off. Sometimes anxiety about physical symptoms without demonstrable cause can be allayed only by a hospital referral. Thus, many specialist out-patient clinics also contain a high proportion of anxious or depressed patients. Often, a negative X-ray or blood test, for example, is needed before the patient, and sometimes the doctor, can accept that the problem is psychological or emotional rather than physical.

However, part of the reason for the apparent increase in stress-related disorders is that it is now more socially acceptable to speak about them and to seek help. It is also now recognised that more physical symptoms may have a psychological explanation than was previously thought to be the case. However, while some of these symptoms can be relieved by suitable medical drugs, the patients are likely to relapse when the treatment stops if the problem is long term. There are also unpleasant side-effects, and dependence is common, especially with the benzodiazepines.

Medication is of course a tempting option when consultation times are short and psychological treatments are rare, but the benefit is temporary unless psychological or talking therapy is also given by either the doctor or another person. Medication does not touch the root of the problem—it has been described as “sweeping the dirt under the carpet”—but it can often be useful at the beginning of a course of psychological treatment. For example, if a client is too depressed to engage with the therapist, he or she may need a small pharmacological boost to begin with. However, I think that all noble Lords here accept that there is a real need for psychological therapy in both primary and secondary care. As all noble Lords have said, it is good that the Government have recognised the value of psychological treatment through initiating IAPT. I point out that this initiative is not restricted to CBT but includes different modes of psychological treatment, as well as counselling, which in good hands can be effective in many cases and is now frequently what we fall back on.

CBT, as we now always call it, has gained in importance partly because it lends itself to assessment much more readily than other therapies. It is of limited duration and predictable structure. A large number of case control studies have been carried out on CBT which have shown its usefulness and, in some cases, its cost effectiveness compared with medication. The methodology of some of these studies has been criticised. However, NICE, which has a reputation for insisting on sound research, has recommended CBT including CCBT, as other noble Lords have described, in that programme, Beating the Blues for depression in children and for a number of adult conditions. However its effectiveness compared with other forms of psychotherapy is not so well documented—at least according to my rather limited search when preparing this speech.

A comparable and more ambitious form of brief psychotherapy is CAT—cognitive analytic therapy—developed by Dr Anthony Ryle which consists of, rather similarly to CCBT, 16 sessions and aims at reformulation of a person’s relationships with the important people in their life history, thus increasing understanding as well as altering behaviour. Both clients and therapists in that treatment have to work harder than in CBT, which is popular with clients and therapists alike partly because it has a readily understandable structure and does not probe too deeply into uncomfortable areas. It helps clients to devise coping strategies for their symptoms and maladaptive behaviour, but it does not attempt to help them to understand fully the origins of their difficulties.

One problem with behavioural therapy—cognitive or otherwise—is that while it is often very effective in eliminating symptoms or compulsive behaviour, for instance, other problems tend to crop up later because the underlying problems have not been addressed. Psychiatrists have suggested to me that while it can be useful in itself, it is a good non-threatening introductory route into more in-depth psychotherapy for those who need it. Others have been less kind and describe it as a quick fix—possibly pushing the dirt aside rather than, as drugs do, sweeping it under the carpet, but nevertheless not clearing it away. That task is of course sometimes not attainable with any form of therapy. Some, who are even less kind, have let off broadsides against it. Professor David Richards, professor of mental health at New York University and a one-time proponent of CBT, said in a recent paper:

“It is an unproven contention that it is possible to take the results of experiments conducted by charismatic product champions, in highly controlled environments and implement them in the widespread manner suggested by Layard".

Sometimes I am thankful not to be in the stimulating atmosphere of the academic world.

My Lords, there have been field trials, including the two in Doncaster and Newham, that have found exactly the same results as those in the more rarefied clinical trials to which the American professor referred.

My Lords, I thank my noble friend for that explanation. CBT is popular at the moment, but I am sure that my noble friend will agree that the Government should not put all their eggs in one basket. The Royal College of Psychiatrists and Royal College of General Practitioners last year produced an excellent joint report on Psychological Therapies in Psychiatry and Primary Care in which all forms of psychological therapy are considered. One recommendation which I like is that all organisations providing psychological help should “promote psychological mindedness”. This certainly prevailed in the health centre in which I worked to the benefit of both patients and staff. The Government would be well advised, if they have not already done so—it is likely that they have—to take full note of this report and act on its recommendations.

My Lords, from my point of view it is wholly appropriate that this subject should be debated at this time and I am grateful to the noble Baroness, Lady Tonge, for her introduction. I declare my interest as chairman of Forward-ME and as patron of several ME charities.

While I recognise that there are some patients with a variety of conditions apart from mental illness—cancer, for example—who might benefit from cognitive behaviour therapy, or CBT, as it is known, I would like to introduce another note of caution. The noble Lord, Lord Rea, has already introduced his. CBT is not the cure for all ills that it is sometimes held up to be. Indeed, it is not, strictly speaking, a treatment at all, since its purpose is to support patients in recognising and managing their symptoms. However, there is a group of chronic illnesses where overwhelming post-exertional fatigue is a major factor, causation is poorly understood, and for which there is no single or comprehensive treatment—CFS/ME, fibromyalgia and irritable bowel syndrome, for example—that do not respond positively to CBT. Patients expect doctors to provide answers, and doctors are, naturally, reluctant to admit defeat. Current advice to doctors is that, after routine tests have failed to point to causation, there is no need for further investigations. Some doctors take the easy route by concluding that the illness must be psychological and that CBT will provide the answer. However, many clinical tests listed in the Canadian criteria do show disease/disorder dysfunction in many bodily systems.

I will deal only with the 240,000-odd CFS/ME sufferers this evening. This is an illness that, according to some researchers, has had several different names in the past; neurasthenia and hysteria are examples. Other researchers have believed since 1934 that it is caused by viruses, other micro-organisms or toxins. Even more confusing is the incidence and severity of symptoms reported by patients. It is not surprising that almost everyone concerned with this illness, be they patient, carer or medical practitioner, is, to some degree, bewildered.

In the face of this bewilderment, in 2004, the Secretary of State for Health and the Welsh Assembly asked NICE to prepare,

“guidance on the assessment, diagnosis, management of adjustment and coping, symptom management, and the use of rehabilitation strategies geared towards optimising functioning and achieving greater independence for adults and children with CFS/ME”.

In August 2007, the guideline was published amid a barrage of criticism from the ME community. Why was it criticised? It was because the only “treatments” recommended by NICE on the basis of very limited and strongly criticised scientific evidence were CBT and its twin sister, graded exercise therapy or GET. The quick reference guide to the 300-plus pages of the full guidelines described CBT as:

“An evidence-based psychological therapy that is a collaborative treatment approach. When it is used for CFS/ME, the aim of CBT is to reduce symptoms, disability and distress associated with the condition. The use of CBT does not assume that the symptoms are psychological or ‘made up’”.

Unfortunately, in the view of a number of professional organisations and researchers working in this field, the evidence-base is not as clear as NICE would have us believe. A statement from ME Research UK asserts that:

“The evidence base consists of only five trials which have a validity score of less than 10. We note that the most recently published RCT on CBT (O'Dowd 2006) states: ‘there was, however, no evidence that the treatment restored normal levels of function for the majority of patients’”.

The Association for Psychoanalytic Psychotherapy in the NHS states,

“it is highly misleading to state that CBT is the therapy of first choice, since the only relative efficacy RCT quoted in the Guideline (Risdale et al 2001) shows that counselling has better outcomes than CBT”.

It goes on to say that:

“This recommendation seriously conflicts with the recommendation that patient choice and preference need to be uppermost in the collaborative approach to care, and the finding that 45% of patients report either being made worse or not helped at all by CBT and, elsewhere, only 7% of patients surveyed report being helped”.

It asks:

“Why is a misleading recommendation being made?".

There is no mention in the NICE guidance of the analysis report in 2004 by the 25% ME Group for Severe Sufferers that was submitted to the GDG of NICE that reported that 93 per cent of respondents found CBT unhelpful.

I could cite a great many more criticisms of the recommendation by NICE for CBT. The recent judicial review did not test the scientific validity of NICE's recommendation for CBT and GET. The statement issued by Professor Littlejohns, NICE clinical and public health director, that the decision,

“means that the NICE guideline is the gold standard for best practice in managing CFS/ME",

is not entirely accurate.

People with ME already bear a great burden of disbelief about the reality of their illness from their closest relatives, their friends, the medical profession and other care professionals they encounter, as well as the community at large. There has been a preponderance of articles on “yuppie flu” in the press and broadcast media; research funding, other than that provided by the ME charities, has been exclusively weighted in favour of the psychosocial as opposed to the biomedical aspects of the illness; and ME patients seem to have to go through a great many more hoops, including CBT, to obtain and retain social security benefits and social care packets, as well as private health insurance.

I have a quotation from Health Insurance News UK dated 22 February 2009. Under the heading,

“Medical Insurance May Not Cover Chronic Fatigue”,

it gives a condensed description of ME. It then states:

“This sounds like a physical problem, doesn’t it? However, the NICE guidelines suggest that it is a psychiatric condition rather than a physical one.”.

It goes on to say:

“Because of the NICE guidelines private health insurance companies are within their right to refuse cover if an applicant’s policy does not include psychiatric cover”.

I cannot find any confirmation for the extraordinary suggestion that ME is a psychiatric condition in the NICE guidelines. Will the Minister ensure that this misinformation is rapidly withdrawn?

Young people with ME get very little understanding of their predicament from educationalists and social workers. Far too frequently their parents are accused of “perpetuating the child’s illness behaviour”. This often results in the child being put on the at-risk register, forcibly removed from the family and given medical treatment, including CBT and GET, that commonly does not work. The child is then blamed for the failure. It can then take years for the child to regain any semblance of a normal life. Too many children remain isolated and ignored and living in a twilight world.

I have been dealing with ME sufferers for 17 years and I have never encountered a group of patients who are so maligned. The last straw for them is the requirement that they undertake a course of CBT and/or GET in order to qualify for benefits and private insurance payments. I accept that, in some cases, CBT alone may be beneficial. I suspect that in the old days it would have been called “grin and bear it”. However, CBT is rarely offered without GET and ME patients know only too well—and their views are supported by some 4,000 papers on scientific and clinical research—that GET makes their symptoms worse.

The NICE guidelines lay great stress on the importance of shared decision making, working in partnership with the patient and the need for specialist expertise. Unfortunately, because this is a “Cinderella” condition, there are few specialists. Indeed, some of the specialist centres set up following the CMO report in 2002 have had to close because of a lack of funding and expertise. For this reason, “referral out of area” and “choose and book” should be available to all sufferers.

The Department of Health and the World Health Organisation acknowledge that this is not a psychiatric condition. What action is the Minister’s department taking to ensure that people with ME are as respected as people with other medical conditions and that they are not forced to accept, as a condition for receipt of benefits and social care, “treatments” such as CBT and GET that, at best, provide no beneficial effects and, at worst, are positively harmful?

I remind the Minister that NICE guidelines state:

“Healthcare professionals should be aware that—like all people receiving care in the NHS—people with CFS/ME have the right to refuse or withdraw from any component of their care without this affecting other aspects of their care, or future choices about care”.

My Lords, I declare two interests: the first as a patron of a small but fascinating charity in the West Midlands called No Panic; and the other as president of the Howard League for Penal Reform, which deals with and advises many people who suffer from mental illness while in custody. I congratulate my noble friend Lady Tonge on asking this Question and securing this debate on a very important subject.

There is nothing new about CBT, except perhaps the label and considerable sophistication of techniques. Were he still living, my father would now be 104 years old; he was a general practitioner in an industrial Lancashire town. Despite having spent two years of his high school education in Vienna, he generally regarded psychiatrists as a visitation of the devil. However, he spent an awful lot of his time talking to his patients and we, his children, were there because we lived in the surgery; we lived his life with him. He used to say, as advice for our future, “Just remember: people who don’t eat want to eat, people who can’t go to school want to go, people who are completely unable to work because of a mental condition really want to go to work, and those in that terrible category of agoraphobics want to go out and enjoy life. It is just that they can’t”.

The therapies that my father, and many old-fashioned general practitioners, applied in such places when the local economy and culture collapsed—when the cotton industry was destroyed, and people were suddenly putting together gas cookers rather than enjoying the camaraderie of the cotton mill—all contributed to his powerful belief, which he certainly instilled in his children, that talking to people about their problems helps an awful lot, and probably a great deal more than pharmacology. A starting point in any discussion of mental illness is, surely, that it must never be regarded as a second-division form of illness.

The noble Lord, Lord Layard, has made a great contribution to the argument in that mental illness is an illness like any other, and needs to be treated with the same serious attention. We know, because we all have friends and relatives who have suffered from depression and other mental conditions, that it knows no class distinction, belongs to no one political party—it probably belongs to them all—and sees wealth as no barrier. There is no quick fix. We should not wed ourselves to any one solution. The old-fashioned Jungian/Freudian divisions are to be avoided in CBT, as in anything else. We have to make the best of the cocktail of cures that is available—on a subjective basis, of course.

Anyone who has ever been close to a seriously mentally ill person, whether they are suffering from phobia, depression, an eating disorder or anything else, knows how tempting it is to think and sometimes, foolishly, to say, “Oh, just pull yourself together and get on with life.” However, before they reach anything like a “pulling themselves together” situation, people suffering from mental illness, like people with serious physical illness, need something and/or someone else to pull them together sufficiently to progress to full recovery. Between wanting to be better and starting to be better, there is a large space where cognitive behaviour therapy has an important role to play.

We must also not forget the cost of failing to deal early with mental illness. It merits repeating again and again that it has a terribly high mortality rate. The mortality from most illnesses is at the hands of the illness; the mortality from mental illness is usually at the hands of the sufferer. It produces frequent self-harming scars that stay with the sufferer for life, a refuge in dangerous substances, and a reduction in revenue through inability to work. For some, as the Howard League knows only too well, it produces incarceration in prisons and young offender institutions. Shockingly, about half those incarcerated there are suffering from diagnosable mental illnesses, but many are not being treated for them. This is no exaggeration of the morbidity of recognised and easily diagnosable conditions; it is a fact.

What does CBT offer? Not a miracle—it may be completely wrong for some cases—but it at least offers cheap, early intervention. There is plenty of evidence, for example, that early, non-pharmacological intervention in teenage anorexia and depression, which destroy many young lives and hold those people back for years, can result in total recovery and a successful adult life. There is evidence, too, from those GP practices around the country that have very imaginatively taken on talking therapy psychotherapists as part of the apparatus of their practices that the recovery of patients is quicker, less reliant on drugs and less liable to secondary and tertiary referrals. The recent Royal College of Psychiatrists study by Muñoz-Solomando, Kendall and Whittington, provides powerful and peer-reviewed support for the use of CBT in many child and adolescent mental health cases, including cases of OCD, post-traumatic stress disorder and even attention deficit hyperactivity disorder. The evidence from that study is that when people are in groups, when they are able to talk to each other with the guidance of a psychotherapist using CBT techniques, recovery can be hastened dramatically.

NICE was absolutely right in recommending, as the first line in child and adolescent mental health, that there should be non-pharmacological approaches. I respectfully agree with the noble Lord, Lord Layard, that there are great merits in this and that there is evidence of such a programme being rolled out. However, I share the view of my noble friend that it is being done too slowly and that it should reach the outer reaches of this country as quickly as possible. I shall say a word about rurality in a moment.

There is remarkable evidence that a combination of CBT and Fluoxetine, a tried and tested substance, appears to reduce the risk of self-harm for depressed children and adolescents. So the news that CBT sends out is good. It is so good that I offer one plea to the Minister to which I hope she will respond. There should be far more of it in prisons and young offender institutions. Those are places where it can be tried, tested, made available and used on an everyday basis. You are guaranteed the co-operation of the patients: they are captive—they have nothing else to do, they have no choice. What better cohort to cure than people who are already costing us at least £45,000 a year to keep in custody?

This presents the most remarkable value against hospital admission. I went to a hospital a couple of years ago where I was told that a seriously ill adolescent with a mental health problem was costing up to £145,000 a year to keep in hospital. It is probably a good deal more now. Early intervention might avoid some of those cases.

This provision should be made available throughout the United Kingdom. I know that the Minister does not have responsibility for Scotland and Wales. I have an interest in Wales because I used to sit in the other place for a Welsh constituency. The availability in rural parts of England, as in rural Wales, is very limited, particularly when there is a great need for the therapies to be given by people qualified to give those therapies and not others. Occupational therapists are not necessarily very good at psychotherapy, and vice versa. It needs to be accurately targeted and used.

Rural areas are very neglected in mental health provision, but there is plain evidence of need. I have a niece who runs a charity for the Church of England which deals only with depressed and suicidal farmers. They are just an example of a cohort living in the countryside, often very isolated, which needs to have this sort of therapy available. I applaud the computerised version of this therapy; it has a great deal to offer, although I do not think we should spend a huge amount of time on it because it is a small part of a big subject.

My final plea is this: let us keep mental health provision above party politics.

My Lords, I congratulate the noble Baroness on her success in securing this debate on such an important and timely subject as psychological therapies. This is a matter in which my right honourable friend the Health Secretary has taken considerable interest in the last few years.

The Improving Access to Psychological Therapies programme is the focus of major investment by both the Government and the NHS. My right honourable friend Alan Johnson announced annual funding rising to £173 million—that is the first question answered for the noble Baroness, Lady Verma—by 2010-11, to improve the care on offer to people suffering from depression and anxiety disorders. This investment was warmly welcomed by all the major charities representing people who use mental health services, as well as the key professional bodies of psychological therapy practitioners from a wide range of disciplines. I pay tribute to my noble friend Lord Layard for his important work in this area; his remarks were welcome and positive, and we know that he is watching us in this matter. I take his point about funding issues; in many ways, I was rather expecting the noble Baroness, Lady Tonge, to berate me about such matters, too.

The overall aim of this investment is to help the NHS implement guidance from the National Institute for Health and Clinical Excellence—NICE—relating to effective evidence-based treatment for depression and anxiety disorders. The guidance outlines appropriate treatment arranged in a series of steps. Each step relates directly to specific and measurable levels of depression or anxiety disorder. Each step offers clinicians a number of effective treatment options, which a practitioner and a patient will discuss and agree on the most appropriate.

Computerised CBT, specifically Beating the Blues, is one of the indicated treatment options for people with mild depression. However, NICE is currently in the process of reviewing its guidance on the treatment of depression and recently published a consultation document which broadens the range of effective computerised CBT programmes to include many that do not incur a cost to the NHS.

My Lords, could the Minister tell me, before she goes on, why the original computerised CBT approved by NICE had so little take-up when the need out there was so desperate?

My Lords, it might have been the cost. It is vital that people using computerised CBT are supported by trained therapy workers; it could be that it was a question of putting together packages. Evidence shows that it is ineffective if no trained support is given. My noble friend Lord Layard outlined the issue concerning CBT much more eloquently than I did, and was supported by the remarks of his noble kinswoman.

I take issue with the idea that this is a postcode lottery. This representation of how NICE guidelines work is incorrect; the current guidelines mean that PCTs have to make Beating the Blues available if their clinicians prescribe computerised CBT for their patients. If clinicians in consultation with individual patients do not prescribe computerised CBT, clearly there will be no need for the PCT to provide it. So there is no more a postcode lottery here than in any other choice between recommended treatments. There is consultation between the clinician and patient.

To provide the full range of NICE recommended treatment options, the programme will initially train a new workforce of 3,600 therapists. Initially, this training will focus on cognitive behavioural therapy and the routine collection of patient-reported outcomes at every session. In November last year, we published our statement of intent to broaden the programme’s approach, working towards ensuring that all patients have a choice of evidence-based psychological interventions by extending the skills of these new therapists as the services mature.

The programme was initially piloted in Doncaster and Newham, as noble Lords have said. Both areas succeeded in dramatically cutting waiting times and brought half the people they treated to measurable recovery. They also increased the number of patients who were in work by 5 per cent. The pilot sites demonstrated success in reaching and providing effective treatment to previously hard to reach groups.

The NHS has embraced the programme with enthusiasm. The original plan was to establish 20 new services in 2008-09, and in fact 35 services are now up and running. The original plan was to train 700 new therapists in the first year, and in fact, over 800 trainees have joined the new workforce. Later this year, another 81 PCTs will establish services with around 1,700 more trainees. On 8 March, my right honourable friend the Health Secretary announced an additional £13 million for 2009-10 to speed up the availability of psychological therapies for people with mental health problems due to the economic downturn. This extra funding will be used largely to enable employment and psychological therapies services to work closely together to meet the specific needs of individuals who have lost their jobs or are at risk of doing so in these difficult times.

I will now refer to particular points raised by noble Lords and I apologise if I am not able to cover everything, particularly the very long list of questions asked by the noble Baroness, Lady Verma. I was not able to note them all down or find all the answers in my brief, but I promise that I will write to her to answer all her questions.

The review of the independent Child and Adolescent Mental Health Services was raised by my noble friend Lord Layard and other noble Lords. The review was commissioned by Ministers and reported in November 2008. It identified the need to reduce waiting times from referral to treatment. The Government have accepted this recommendation in principle and have already commissioned good practice guidance in this area. Taking work in this area forward will be a priority for the national support programme. It is indeed a priority for us and the proposals of my noble friend Lord Layard are being considered as part of this programme. I believe that he is also a member of that steering group.

The noble Baroness, Lady Meacher, raised the issue of PCTs being encouraged to provide CBT. The Government have already made that clear. We have encouraged PCTs to make CBT available where clinicians prescribe it for patients. We will continue to do so. I have already mentioned that CBT should be presented to patients as a treatment option only by trained therapies as part of an overall treatment package. It is worth noting—there was some discussion about this—that this is a process that empowers patients to make choices about the treatments that are right for them.

My noble friend Lord Rea asked a series of questions about IAPT services being available for people with serious health problems. The service provides treatment for people with common mental health problems from mild to moderate depression. But people with comorbid depression, other anxiety disorders and more severe and enduring mental health problems would be able to access IAPT services for their depression and anxiety disorders. Indeed, people with drug or alcohol problems would not be excluded from receiving evidence-based psychological therapies for their depression. Where PCTs—Liverpool, for example—have identified particular local needs for people with comorbid problems, they have targeted the new IAPT services on that population. The Government are providing significant funding for people with depression and anxiety disorders for access to those therapies.

My noble friend Lord Rea also raised the issue of investment. The noble Lord, Lord Carlile, spoke of the importance of the range of treatments and support that should be available. My noble friend is right that we should be looking for a whole range of therapies. As CBT has the strongest evidence base for a full range of common mental health problems and there is a great shortage of fully trained therapists, we are addressing that shortage first. However, we are extending the programme to other NICE-compliant treatments for those problems. My noble friend was right to point out that other therapy disciplines do not have CBT’s level of evidence. There is quite a lot of discussion about how to deal with other therapy disciplines.

The noble Countess, Lady Mar, made a very interesting and well informed speech about CFS/ME, whose sufferers she has championed for many years. I will be pleased to investigate the issues that she has raised about CFS/ME treatment, recommended by NICE. It is important to restate the value which the Government place on the independence of NICE’s evaluation process, but I undertake to follow up the disturbing point she made and see whether I can provide her with clarification.

The noble Lord, Lord Carlile, spoke with great wisdom about the different applications of CBT in many different settings, particularly for young people. I absolutely agree with him about the need for making CBT more available in young offender units. He is right to point out the need to roll this out in rural areas and across the UK.

Since October 2007, we have invested significantly in improving access to psychological therapies. I have already mentioned the amount to the noble Baroness, Lady Verma. Psychological therapies are expanding across the country and making one of the most significant improvements in our mental health services that we have seen in decades. The Government’s commitment to that is beyond doubt, as their level of investment demonstrates. The NHS’s commitment is similarly convincingly shown by the pace with which it is establishing these much needed services. Once again, I thank the noble Baroness for bringing this important topic to the attention of your Lordships’ House.