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Lords Chamber

Volume 744: debated on Wednesday 24 April 2013

House of Lords

Wednesday, 24 April 2013.

Prayers—read by the Lord Bishop of Exeter.

Retail Prices Index


Asked By

To ask Her Majesty’s Government why the UK Statistics Authority overruled the recommendation and decision of the Office for National Statistics, following public consultation, to keep the Retail Prices Index as an official national statistic and whether they intend to challenge its downgrading.

My Lords, the board of the UK Statistics Authority accepted the recommendations of the National Statistician both to produce a new index, to be known as RPIJ, and to retain the RPI as it is currently constructed. RPIJ is constructed in a way that meets current international standards whereas RPI was judged not to meet those standards. Because of this, the designation of the RPI as a national statistic was removed by the UK Statistics Authority, following a statutory reassessment which confirmed the finding of the National Statistician’s consultation that its formulation failed to meet current international standards.

Is my noble friend aware that this is a UK statistic and that international standards on statistics are, frankly, a little irrelevant? After all, is it not the case that the Office for National Statistics changed its mind from the original proposition, based on strong representations from finance, commerce, industry and savers? In the light of that, will my noble friend make further suggestions to the UK Statistics Authority that it thinks again and puts that badge of quality back on the RPI?

My Lords, I was not aware that either mathematics or statistics differed according to national boundaries. The only statistics course I took was in the United States. I should have thought that international standards—those of Eurostat, the International Labour Organisation and the IMF—are standards that the UK should follow without wishing to bring the defence of national sovereignty or hatred of the European Community into account.

My Lords, does the Minister agree— I am sure he will agree as his background is similar to my own on this matter—that there is no such thing as a perfect price index—far from it? Those of us who taught the subject spent all the time explaining why there is no such thing. Is it not for the Government to explain what they want to use this particular index for? Is it to measure the inflation rate, in which case the RPI is not, in my view, the right index and the GDP deflator is, or is it to measure the cost of living? Even then, they have to answer the question: whose cost of living? Does the Minister agree with that?

My Lords, I have gone back into the area of statistics and I am happy to tell the House that there is a range of different measures of inflation in Britain—the RPI, RPIJ, RPIX, which excludes mortgage costs, and the RPIY, which excludes tax changes. Then there are the CPI, CPIH, CPIY and CPICT. I hesitate to explain all these in detail to the House.

My Lords, what advice does the Minister have for those widespread organisations which have historically used the RPI to alter pensions and salaries? They are unclear as to which of the various measures that the Minister just mentioned they should use for those purposes.

My Lords, they should not be unclear. The decision to maintain the RPI was taken precisely to leave clarity on the various forms in which the RPI is used as a reference point. I am quite clear from what I have read that the RPI as measured has an underlying upward bias of currently about 0.9% a year above CPI. That means that the Government end up paying more for index-linked bonds and elsewhere, which, in the long run, is against the interests of taxpayers although very much in the interests of investors and pensioners.

My Lords, the problem is not whether the Minister agrees with my noble friend Lord Peston. Is not the real problem with all these statistics whether anyone believes any forecast of anything? Is not the problem therefore not which is used but believing them?

My Lords, we could try giving up and steering in the dark if we want to, but trying to assess as well as we can what is happening in our economy and in the economies of our partners is a necessary part of the way we have to operate. We recognise that all measures will be imperfect. The decision to make changes in the RPI was taken to make it a little less imperfect than it was.

My Lords, as the Minister who, a little over 30 years ago introduced RPIX, is not the most important thing to forget about all these indices and just to keep inflation really low? Then the difference between these indices is neither here nor there.

Digging into this, I am told that one of the problems is the way in which the RPI was estimated. They changed the way in which they calculated changes in the pricing of clothing, which got more and more difficult as discount stores were adopted. That is why the gap between CPI and RPI has widened in the past four or five years. That has a substantial knock-on effect for the Government, the Exchequer and for consumer prices.

My Lords, in order to overcome the notion of dodgy statistics, the Minister will be aware that Parliament set up an independent body in the UK Statistics Authority which was first chaired by Sir Michael Scholar. As a result of that, he and others have resisted the massaging of statistics by politicians. Is not the UK Statistics Authority a bulwark to prevent the massaging of statistics by politicians? Therefore, we must commend the work of the UK Statistics Authority and resist any breach of it by politicians or others.

My Lords, one of the best things done in this area by the previous Government was to establish the UK Statistics Authority as an independent body. The decision was criticised on all sides. Some noble Lords will remember the article in the Financial Times by Chris Giles which said that it was appalling not to have abolished the RPI and move all the way towards the CPI.

Did the Minister notice the other day that Sir Mervyn King, the outgoing Governor of the Bank of England, said that one of the main contributors to rising RPI and therefore rising inflation was higher energy taxes? Every time the RPI goes up, it generates a gigantic increase in public expenditure through indexed provisions in the public sector. Could he possibly advise his friends to think again about some of the higher taxes that are being piled onto our energy costs in industry and in the home?

My Lords, the noble Lord is quite right to say that the extent to which tax increases are factored into the calculation of inflation is one of the problems. If you are not careful, when inflation is rising, you get into a positive feedback as mortgage interest rates rise, and that increases the measurement of inflation.

Air Quality


Asked By Lord Dubs

To ask Her Majesty’s Government what action they are taking to improve air quality in London and other cities.

My Lords, since 2010 the Government have invested over £1 billion in measures that will help to improve air quality, including incentives for low-emission vehicles and sustainable transport. In London, the mayor is responsible for working towards national air quality objectives, and we work with him and London boroughs to improve air quality. Nationally, we support local authorities to deliver local measures and work with the devolved Administrations to improve air quality across the United Kingdom.

My Lords, I thank the Minister for that Answer, but the Government are not being very effective. Will the Minister confirm that in the UK as a whole there are estimated to be 30,000 early deaths as a result of poor air quality, that in London the figure is over 4,000, that the number of people who have an early death through poor air quality is second only to the number who die of smoking, and that about 17% of the National Health Service budget is used to deal with the consequences of poor air quality? Are we not dealing with a major national emergency, rather than something that can be dealt with as the Minister suggested?

My Lords, we take this subject extremely seriously. It is fair to say that air quality in the UK has improved significantly over recent decades, but we continue to face severe challenges, particularly from nitrogen dioxide in densely populated towns and cities. As a Government, we are committed to working towards a much better situation and, indeed, towards full compliance with EU air quality standards. There is close working between departments and local authorities to consider air quality in all policy areas. The noble Lord mentioned health, and he is quite right, but transport, energy and planning are also important.

Can the Minister tell me about the health and welfare boards, and is it correct that in London only the City of London Corporation is doing anything at all in that respect? Can he inform me, as I live in central London, whether it is currently Knightsbridge or Marylebone that has the worst air in the whole of the UK?

My Lords, there were quite a lot of questions in there. On the public health outcomes framework, in the financial year 2013-14 local authorities will take on new responsibilities for public health. They will be expected to deliver against 68 measurable outcomes set out in the PHOF. One of these indicators is air quality, but measures implemented as part of a package of transport interventions and street improvements will help to deliver against more than half those indicators.

On London, I cannot agree with my noble friend. The mayor has implemented an ambitious package of measures across the whole of London, including tighter lower emission zone standards, building Europe’s largest hybrid bus fleet and introducing London’s first ever taxi age limits. He has also introduced a number of other measures.

My Lords, would the air quality in London not have been improved had the mayor not abolished the western extension of the congestion charge?

My Lords, can the Minister throw some light on the possibility of the electrification of the railway line between Barking and Gospel Oak? This line would carry not only electric passenger trains but much more importantly the large amount of freight that will emanate from the London Gateway port development, and as a consequence would keep a lot more heavy lorries off the roads of London.

I cannot, my Lords, but I can say that the critical issue for achieving the EU targets is principally in the area of diesel vehicles.

Given that poor air quality and particulate matter during pregnancy and for newborns in particular is known to increase the susceptibility to allergic disease later on in life, what work is being done to plot air quality with the use of health services by those who have severe allergic diseases and to plot the cost to the NHS of that air pollution?

My Lords, I cannot answer the noble Baroness specifically. I will, if I may, write to her. I can confirm that in general terms we agree with her. Air pollution, particularly diesel emissions, as I have just mentioned, can be extremely harmful to health generally. It can aggravate existing heart and lung conditions, and better awareness of the health impacts from air pollution is important for the public so that we all know what we can do to protect ourselves.

My Lords, the noble Lord mentioned compliance with European standards, but can he confirm that the UK is currently not compliant with the targets set by Europe? Can he also inform the House what penalties are likely to come from Europe because of our current position?

Yes, my Lords. First, for particulate matter the United Kingdom meets both the daily and annual limit values. A number of member states face infraction proceedings by the Commission for failing to meet their limit values. The United Kingdom, like many other member states, faces significant challenges in meeting the air quality limit values, specifically for nitrogen dioxide, as I think I mentioned earlier. Significant transport and other measures have been put in place over many years to reduce the emissions of air pollutants. Twenty-two out of 27 member states reported that they exceeded the limits in 2010, and most are unlikely to achieve full compliance by 2015. The United Kingdom has secured time extensions for nine zones, with compliance in London not expected until 2025. This is similar to other major cities, including Paris.

My Lords, the Minister has said that Her Majesty’s Government support a number of measures, both locally and nationally. Apart from measures to reduce the emissions from buses, can he say what some of those measures are?

Yes indeed, my Lords. The Government are investing significantly in initiatives, particularly transport initiatives, that will contribute to further reductions in air pollution. There is a £560 million local sustainable transport fund for local authorities to support sustainable travel. Over £400 million is being spent on measures to promote the uptake of ultra low-carbon vehicle technologies. There is a £76 million green bus fund to enable bus operators and local authorities in England to purchase new low-emission buses. I could go on; it is a substantial list.

Health: Tuberculosis


Asked By

To ask Her Majesty’s Government, in the light of the recent findings reported in The Lancet, why the incidence of multidrug-resistant tuberculosis in the United Kingdom is higher than that in other European countries.

My Lords, the incidence of multidrug-resistant tuberculosis in the United Kingdom is not higher than in the rest of Europe. However, the proportion of TB cases in the UK that are multidrug-resistant has increased from 0.9% to 1.6% over a decade. Ninety-five per cent of multidrug-resistant cases diagnosed in the UK were not born in the UK.

As always, I am grateful to the Minister for his frankness in his response. The reality is that compared with France and Germany, we have probably three times the rate of tuberculosis in the United Kingdom. In comparison with Italy, we have five times the incidence. The Minister made the point about immigration. Given that we are to have an influx of people from Romania, where the rate of tuberculosis is over seven times what it is in the United Kingdom, and is something like 22 times what it is in Germany and 36 times what it is in Italy, is it not important that his department is able to announce some measure that can be applied to ensure that we are not going to face an epidemic of tuberculosis? Is it not true that the cost of dealing with multidrug-resistant TB is about 14 times that of dealing with an ordinary case of TB?

My Lords, as regards the very last point made by the noble Lord, he is absolutely right. To treat a multidrug-resistant case of TB typically costs between £50,000 and £100,000, and sometimes more if it is an even more complicated case, in comparison with about £5,000 for an ordinary case of TB.

In fact, to correct the noble Lord, if I may, the proportion of TB cases that were multidrug-resistant in the UK was not high compared with the rest of Europe. The only countries in western Europe with a lower proportion of cases that were multidrug-resistant in 2011 were Ireland, Iceland and Malta. However, I take his point about migrants from eastern Europe. Port health regulations give some powers at the port of entry but this involves knowing quite a lot about the individual, so we are left with what is open to us once the person is in the UK. Once here, health protection regulations can be used to provide local authorities with wider and more flexible powers to deal with incidents or emergencies where infection or contamination present a significant risk to human health, or could present such a risk. I could elaborate on those powers, if the House wished.

My Lords, I had TB in my teens. I know that it often takes years to develop, but why are people not tested in their own countries before they come here?

My Lords, we are now introducing a system of pre-entry screening. We recognise the contribution that latent TB makes to the overall TB disease burden and that is why we have commissioned NICE to produce a clinical guideline on this. In the countries where TB presents the most significant risk, we shall in future insist that people are screened before they enter the United Kingdom.

My Lords, drug-resistant TB will not subside until the problem is controlled globally. That requires not only intergovernmental co-operation but cross-departmental working. Will the Minister update the House on the Government’s position on the replenishment of the global fund, which will be useful in tackling this problem globally?

My Lords, the Government fully support the need to scale up efforts to deliver universal access to TB prevention and treatment, and care and support services. Our target date for that is 2015. We have made a long-term commitment of £1 billion between 2007 and 2015 to the Global Fund to Fight AIDS, Tuberculosis and Malaria, and a 20-year commitment to the international drugs purchase facility, UNITAID, which is helping to increase access to and the affordability of TB drugs.

My Lords, if one puts together the high level of drug resistance in the Far East and the high level of migration from the Far East to this country, there is no reason why drug-resistance to tuberculosis should not be more evident than it is at present. If one compares the rate of drug-resistant tuberculosis in the United Kingdom with that of other countries in the European Union, it is fairly clear that we need to do something quite seriously, especially in densely populated areas such as London and Cardiff, before people can come and live in this country. What do the Government have in mind to deal with this issue?

My Lords, this has to be dealt with nationally and Public Health England is leading a national oversight group for TB that brings together partners from the department, NHS England, local government, NICE, the British Thoracic Society and TB Alert to develop a strategy to reverse the trend of increasing TB rates in the UK. The group recently held its first meeting and the department will continue to support Public Health England in giving national policy leadership in this area.

My Lords, the Minister will be aware that the problem of multidrug resistance is not confined to TB; there are many other areas where we have every reason to be fearful about the development of drug resistance. Is the noble Earl satisfied that enough is being invested in research into the development of new drugs to be reasonably confident that we are making proper inroads into this problem?

My Lords, the Government are supporting a range of research programmes to promote the development of new diagnostics, drugs and vaccines for TB. These include £6.5 million for the Foundation for Innovative New Diagnostics, £23.3 million for the Global Alliance for TB Drug Development and £10.5 million for the AERAS Global TB Vaccine Foundation. However, I will look into other areas of disease where there is drug resistance, and if I can supply the noble Baroness with further information I will be happy to do so.

Police: Convicted Officers


Asked by

To ask Her Majesty’s Government what discussions they have had with the Metropolitan Police Service regarding the arrangements for assessing the continued suitability of officers convicted of serious criminal offences.

My Lords, the Government have not had any specific discussions with the Metropolitan Police Service regarding the arrangements for assessing the continual suitability of officers convicted of serious criminal offences. The Mayor’s Office for Policing and Crime is responsible for holding the commissioner to account for his decisions in this regard. My noble friend will know, and I have written to him on this matter, that I share his concern that police officers should meet the highest standards of professional behaviour.

My Lords, I am grateful to my noble friend for that reply. Although precise numbers are difficult to come by, as he says, is it not the case that there are several hundred police officers still serving in the Metropolitan Police who have been convicted of serious criminal offences but who continue to serve—including, no doubt, giving evidence on oath in other criminal cases? Is that really satisfactory?

I understand the noble Lord’s concern, particularly as it is based on those figures, but in fact those figures are not accurate. I have been able to obtain some accurate figures. In 2005, a total of 46 officers were serving in the MPS who had a criminal conviction. That went down to 25 in 2010, and in 2012 there was a further decline to a total of 15 officers serving with the MPS with a criminal conviction. Of these 15 officers, the majority of convictions, 10 of them, were for traffic offences including excess alcohol.

My Lords, I kindly put it to the Minister that 45 years ago, as I know for a fact, the police regulations covered all manner of conduct, positive and negative, in relation to police officers. Is there now an equivalent covenant which relates to all police officers in England and Wales, and, if so, does it refer to criminal offences?

The Police (Conduct) Regulations 2012 set out the standards that all police officers are expected to maintain. The standard on discreditable conduct, for example, states that police officers behave in a manner that does not discredit the police or undermine public confidence in them, whether on or off duty, and that police officers report any action taken against them for a criminal offence, any conditions imposed on them by a court, or the receipt of any penalty notice.

My Lords, Home Office guidance states that police forces should reject potential recruits with convictions for serious offences. However, I am not aware that there is any guidance about what forces should do if serving police officers then go on to be convicted of serious offences. Is it not about time that the Government took the lead on this and issued clear guidance to forces about the suitability of officers who have been convicted of serious offences and the fact that they should no longer be allowed to serve in the police force?

My noble friend is right about the vetting procedures. The Government are committed to improving the integrity of the police. As noble Lords will know, on 12 February, the Home Secretary announced a package of measures to improve police integrity, and yesterday, my right honourable friend the Home Secretary and the police Minister Damian Green discussed police integrity with police and crime commissioners, who, as my noble friend will know, are responsible for making sure that these standards are maintained within their force areas.

My Lords, I am grateful to the Minister for his answer to the noble Baroness, Lady Doocey, but he sounds a bit complacent about it. He is absolutely right that the integrity of the police is important not just to the public but to other serving police officers, who are dismayed that so many of their colleagues have convictions for serious offences. He says that he has had discussions; can he tell me what action will follow from them?

I have already talked about the 12 February announcement made by my right honourable friend the Home Secretary. The noble Baroness will know that part of our policy for improving standards within the police lies with the establishment of a College of Policing, which is leading a programme of ways to improve police integrity. It is important that the police generate these standards from within their own experience. It is not necessary for the Home Office to impose a standard on the police service. We are great believers that the integrity of the police force and the capacity for maintaining it lie within the police service itself. The figures that I have given have shown exactly that.

Noble Lords will perhaps not be surprised when I say that I view the emerging picture of misconduct and, sometimes, criminality in police forces with great concern. There are a number of issues in this matter but one of them has to be attracting the right calibre of recruits in the first place, and then accelerating and developing leadership within the service. Can the Minister reassure the House that he, too, sees this as a fundamental priority? Can he reassure your Lordships’ House that when the results of the recently concluded consultation on leadership and fast-tracking have been evaluated in the Home Office, the Government will address this particular issue urgently and with all possible speed?

I can give the noble Lord that assurance. Earlier I referred to the vetting procedure also referred to by my noble friend Lady Doocey. The key thing is to make sure that you get the right people into the police in the first place. The vetting procedure set up by ACPO states that police forces should not recruit people with convictions, cautions and judicial or any other form of disposals which may call into question the applicant or their role in the service. It also states that each case must be judged on its individual merits; I think that the noble Lord will agree with that. Where standards have not been met, decisions about what action to take are for chief constables, based on the circumstances of each case. Other than in London, those decisions are monitored by the police and crime commissioners.

Procedure of the House

Motion to Take Note

Moved by

That the 5th Report from the Select Committee (Private notice questions; tabling oral questions; repeal of Standing Orders; repetition of answers to House of Commons urgent questions) be agreed to (HL Paper 150).

My Lords, I beg to move that the fifth report of the Procedure Committee be agreed to. There are three Motions in my name listed on today’s Order Paper, so I shall begin by outlining briefly the procedure that we will be adopting.

The fifth report, to which I now seek the agreement of the House, contains proposals relating to the tabling of Oral Questions, the repetition of Answers to House of Commons Urgent Questions, and the repeal of three obsolete Standing Orders. I suspect that noble Lords may be more interested in the second Motion in my name, which relates to the Committee’s sixth report, on the establishment of the Back-Bench debates committee.

I think there must be some misunderstanding. According to the document that I received, the fifth report will be taken separately and the sixth report will be taken along with the Motion. Surely it would be better to deal with the fifth report first and then move on to the sixth report.

I thank the noble Lord for that intervention. I am trying to explain the procedure that we will be adopting. I think that in about two sentences’ time I will make it clear that we will deal with the two reports separately. We will have separate debates on the two reports; they are not conflated.

We have not made a recommendation on what would be a major change to the House’s procedures in relation to a Back-Bench debates committee, so I will simply invite the House to take note of the committee’s sixth report at that time. There will be a debate in which all those who either support or oppose the creation of a Back-Bench debates committee will have the opportunity to speak. Since the committee has made no recommendation, my opening remarks will be short and non-controversial, and my position on the Back-Bench debates committee is neutral.

When the debate on the sixth report has run its course, I shall bring it to a close by again inviting the House to agree the take note Motion. I shall then formally move the third Motion standing in my name, which seeks the House’s agreement to the establishment of a Back-Bench debates committee.

I have also misinterpreted what is on the Order Paper. I thought we were going to decide the question. Why are we wasting our time, particularly at this time of year, with a take note Motion? Some of us actually want something to happen. Is the noble Lord going to tell us that nothing will happen as a result of us sitting here and talking? That is not unusual in our House, but sometimes we might actually take a decision.

My Lords, the procedure I am trying to outline is the means by which we get to making a decision. Formally, we have to take note of the report. There will then be a vote on the substantive issue of whether we want a Back-Bench debates committee. I think that is now clear: two debates and a substantive vote on whether we go ahead with a Back-Bench debates committee. Once I have moved that Motion formally, I do not expect further debate at that point, and I hope that we can move straight to a decision.

I shall now briefly outline the recommendations contained in the fifth report. From now on, at this stage, I shall deal entirely and solely with the fifth report. First, on Private Notice Questions, as the report says, we considered a request by the noble Lord, Lord Trefgarne, to introduce a right of appeal against the Lord Speaker’s decision on an application for a Private Notice Question. We unanimously concluded that the current system works well and that it would be inappropriate to introduce such a right of appeal.

The Lord Speaker has a special authority which comes from being the only officeholder who is elected by an open election of all Members of this House. That brings with it a unique authority, and we should think very carefully in trying to abridge that authority by introducing a concept of appeal against the decisions of the Lord Speaker. We have therefore decided to recommend no change. From the amendment that he has tabled to the Motion on the Order Paper, it is clear that the noble Lord, Lord Trefgarne, is not satisfied with our decision. I am aware that he is, in particular, concerned about the level of consultation that takes place prior to the Lord Speaker taking her decision. The fact is that noble Lords applying for a PNQ already routinely supply covering letters setting out their reasons for considering that a particular proposal satisfies the threshold of urgency and importance. Their letters are considered by the Lord Speaker before she makes her decision, along with the views of the usual channels and clerks, which are normally sent to her office by e-mail.

Members of your Lordships’ House who have been involved in PNQs will know that a decision on a PNQ takes place within a very tight timescale. The request is usually put in during early or mid-morning and the decision is announced before the House sits. With that tightness of timescale, it is simply not feasible for the Lord Speaker to clear her diary, possibly at a few minutes’ notice, to meet those who have submitted PNQs. Therefore, I invite the noble Lord, Lord Trefgarne, to consider very carefully whether there is any point referring the matter back to the committee, without any clear instruction, when our views have been so clearly and unanimously expressed.

As for Oral Questions, noble Lords will recall that back in January I sought the House’s agreement to the committee’s proposal to replace the current system for tabling Oral Questions, which is based largely on queuing with a ballot. I think it is fair to say that I was given a pretty hard time from noble Lords around the House and the committee was blamed, in particular for a lack of consultation. The House accordingly agreed an amendment moved by the noble Lord, Lord Grenfell, which referred the issue back to the committee with an instruction that we report again before Easter. I subsequently wrote to members of the Procedure Committee to invite them formally to consult colleagues with a view to bringing forward proposals on which we might be able to build a consensus.

As a result of this consultation, we now have much more evidence which suggests that there is broad if not universal agreement that we should encourage participation by a greater number of Members in Oral Questions; however, there is little consensus on how to achieve this. In the absence of such consensus, our latest recommendation is a modest one. We recommend that with effect from the current year Members should be entitled to table no more than seven Oral Questions in each calendar year. This will affect only the five or six Members who currently table most Questions—up to about 10 a year. I hope this small change will be welcomed across the House.

The committee has also taken this opportunity to remind all noble Lords of the rules on supplementary questions. The recent exchanges on the Oral Question tabled by the noble Lord, Lord Campbell-Savours, showed that there is concern across the House over the length of supplementaries. We should aim for brevity, relevance and genuine questions. Question Time is not for speeches and it appears from some recent contributions that this message has not yet got across to all Members of your Lordships’ House.

I shall touch on the committee’s other recommendations still more briefly. Noble Lords will be aware that we have, since the new year, been operating a trial procedure for the repetition of Answers to House of Commons Urgent Questions, under which only 10 minutes is allowed for questions and answers to the Minister. As our report makes clear, this has led on occasion to Back-Bench time being squeezed and that is not right. We believe that the fault lies with both Front Benches rather than with the procedure itself. We have therefore used this report to remind all noble Lords of the rules on supplementary questions and answers. Again, brief questions, not speeches, are called for. On this basis, we have recommended at this stage making the trial procedure permanent, but we will be keeping a close eye on its operation. If we encounter further problems, we will undertake to look again at the possibility of protecting Back-Bench time more formally, but in the first instance it is a matter of discipline, particularly for the Front Benches. Finally, we recommend the repeal of three ancient and obsolete Standing Orders. The report is self-explanatory. I beg to move.

Amendment to the Motion

Moved by

As an amendment to the above Motion, at end to insert “, with the exception of paragraphs 1 and 2 on Private Notice Questions which should be referred back to the Committee for further consideration”.

My Lords, I will be brief and may no doubt be very easily persuaded to withdraw my amendment. I accept the principal conclusion of the Procedure Committee, which is that there should not be, in present circumstances in any event, an appeal against the decisions of the Lord Speaker. However, it is important that it is understood—I have to confess it was not well understood by me—that representations can be made to the Lord Speaker when permission to ask the Question is sought and should normally be made in writing. It would be nice if the Lord Speaker was willing, in principle if not in detail, to receive verbal representations for this matter because, as the noble Lord the Chairman of Committees has said, time is often very short and it simply might not be possible to write a suitable letter in the short time available. If he was able say that in principle the Lord Speaker would be willing to receive verbal representations, provided her diary was suitably free, that would be of great assistance to me. I beg to move.

My Lords, I hope that this House will not pass this without substantial discussion. It really is quite an outrageous series of suggestions. I go from time to time to schools, under the guidance of the Lord Speaker and her predecessor, as part of the Peers in Schools programme to talk about this House and how effective it is in scrutinising legislation, challenging the Government and in debates. Over the past year in particular, I have begun to doubt whether I am actually telling them the truth when I say that. We are cutting down the time in which we can debate and challenge.

To give one or two examples before I touch on the precise issues of this report, the Leader of the House gave us an extra week of Easter Recess without any consultation, when we were not able to discuss, challenge, raise Questions or take up Statements that were made in the other place. We will be proroguing a lot earlier than ever: tomorrow, as I understand it. Important debates on membership of the European Union and nuclear energy were held the day before yesterday in Grand Committee. In a major debate on nuclear energy, Members were told that they had three minutes to talk. This is ridiculous. We are not debating things properly. Those two debates in the Grand Committee should have been on the Floor of the House and there should have been time to discuss them properly.

My friend the noble Lord, Lord Martin, and I have raised the issue of PNQs on the Floor of the House. There is 10 minutes for supplementary questions when Urgent Questions are repeated here. This is not just a question of the Front Bench. Both the Minister and the Opposition took up minute after minute, but then other Members spoke at length so there was insufficient time to ask questions. All that the committee is suggesting is that we remind Members of what is in the Companion. We can do that until we are blue, or red, in the face; we will still not get the message over to people. Why do we have to limit it to 10 minutes? Do people want to rush home at five o’clock for their tea? I just do not understand. We should be here to ask questions, to challenge, to discuss and debate. That is what we are here for. To limit it to 10 minutes seems totally arbitrary and ridiculous.

The Chairman of Committees said that the committee looked at but rejected giving Oral Questions 40 minutes instead of 30 to allow more time, which would have let more people come in. They say instead that they should limit such Questions to seven per Member in a year. Why limit it arbitrarily to seven? That seems totally gratuitous. Then, in order to persuade us, the Chairman of Committees says that it does not matter very much because it affects only seven Members, and the maximum number of Questions they ask is 10. If that is the number of Members and Questions, it will make no substantial difference. It is an unnecessary restriction.

I am afraid that this is typical of what comes from the Procedure Committee. It does not want debate and discussion. It does not want the Executive and their control challenged. We know that it is controlled by the Leader of the House and the government Chief Whip. It is about time that people admitted this and said so: that they control what is happening. They do not want the Government to be questioned and challenged. After the next election we will be changing sides. We will be the Government. I ask the people opposite to think of that.

My Lords, I support the proposal on PNQs. I have had the privilege of asking two recently, and the procedure followed by the Lord Speaker was entirely appropriate: one was rejected and the other was accepted. There is nothing wrong with it. In my judgment they need a finite length because they happen immediately, and the noble Lord, or Baroness, who has come across that issue is the person best briefed to ask that Question. It is inevitably a Question asked of the Minister of the day. That is the person who should answer the Question, and the best person to ask it is the noble Lord who has raised it.

I will make a couple of observations on Oral Questions, or rather ask for a clarification from the Chairman of Committees. I am mystified as to why Oral Questions should have to be asked in a calendar year. Most things in your Lordships’ House are done on a sessional basis. What is so different about Oral Questions that they now have to be asked within a calendar year? First, it means that the Table Office has to keep two logs, and secondly, noble Members have to keep two logs to know where they are within the calendar year. Within the Session it is so much easier. My question relates to clarity on that point.

Secondly, the words used are:

“to table no more than seven oral questions”.

I ask the Chairman of Committees: is an Oral Question Question 1, 2 or 3, or does it include, or not include, the topical balloted Question? In my judgment, the seven should be confined to Question 1, 2 and 3, and the balloted Question should be quite separate. I do not want to chastise my noble friend the Chairman of Committees, because he has a very difficult job. However, this is the second time that the Procedure Committee has not put in clear terms how this House operates, and it should not be for the Back-Benchers—even though some of us are pretty assiduous in Question Time—to keep correcting the Procedure Committee.

My Lords, I certainly do not agree with the amendment in the name of the noble Lord, Lord Trefgarne, which in effect would lead to appealing against the Lord Speaker’s decision. If that were done on the Floor of the House it would mean that the Private Notice Question was aired, irrespective of whether the Lord Speaker said yes or no. I certainly do not agree with that.

I am in part reassured that the Chairman of Committees says that even if we make permanent the procedure on repeating Urgent Questions from the Commons, it will still be reviewed. I would like to hear, certainly from the Leader of the House, that he endorses that. We are getting ourselves into a bit of a muddle on the relationship between the two Houses. Of course, our procedures are different, but there are areas—and Urgent Questions in the Commons being repeated here is one of them—in which if you get a mismatch it looks peculiar to any neutral observer.

In practice, because we are using the PNQ procedure here for repeating Urgent Questions from the Commons —I am sure the clerks would be able to give us the figures if we needed them—you can have an Urgent Question in the Commons that by definition is important; it would not be agreed as an Urgent Question if it was not immediate and important and needed urgent discussion. The Commons can have up to an hour to debate an Urgent Question, but when it gets to this end of the building the procedures are such that it is locked within 10 minutes.

There have been one or two quite spectacular mismatches like that, even in the relatively small number of Urgent Questions that have been repeated here as PNQs. I suppose it was my fault not to have put down some sort of amendment on this, but I would like to be reassured that the Procedure Committee will look at that kind of area, where there is an obvious mismatch between the scrutiny given to an important issue by the Commons and the scrutiny given by us. It is certainly not satisfactory to have these huge discrepancies.

We all know that the practical application of this procedure of repeating Urgent Questions will have no effect whatever on the behaviour of Members of the House. I am sure that the exhortation to keep Questions short has been made for much longer than I have been in the House, and has been routinely ignored. However, will the Leader of the House give me an assurance that among the reviews or consideration that will still be given to the application of this procedure, this mismatch between the two Houses will be kept under review as well?

My Lords, sometimes the repeating of the Urgent Question can be a bit narrow when it is kept to 10 minutes. It depends on the subject. Some subjects merit a longer period. I want to be as helpful as I can, but I believe that whether it is 10, 15 or 20 minutes, an allocation should be given to the Front Bench within that time. There is a case for saying that Back-Benchers should have one question and one question alone. When noble Lords go on too long, it is sometimes because they put more than one supplementary question to the House. There should be only one.

There is a case for a Front-Bench allocation, especially when it is borne in mind that the Urgent Question in the Commons is a little victory—I think that is the way to put it—for the Opposition. It is their way of being able to put aside the business for an hour or less to put their special case on an urgent matter to the House. It is within the gift of the Speaker to grant the Urgent Question, so even though privately the Executive, through the Chief Whip, might have said that they do not want that Urgent Question, the Speaker has granted it. By the time it comes to the House it might be something that the Opposition have achieved, although it could have been an independent Member in the other place who put down the Urgent Question.

It would be a lot tidier if the opposition Front-Bench spokesperson had a few minutes and the rest were given to the House, with Members bearing in mind that there should be only one supplementary question, rather than several. It is not about abusing the privilege, but it is unfair to those who are waiting to put their case when others are asking two or three supplementary questions instead of one.

On the amendment from the noble Lord, Lord Trefgarne, if I heard him properly I think he said that he had not realised that a written submission could be made to the Lord Speaker, so that is probably what he will do in future. That written support is very helpful. Oral supplication should not be the only way, because there could be more than one application in one day, which would mean the Lord Speaker holding court when several noble Lords wanted to be heard. That would be wrong. There would also be a temptation for those who support the case for the Private Notice Question to go to see the Lord Speaker as well.

As the Chairman rightly said, the Lord Speaker is elected by all of us here and not only has the duties of the Speakership in this House. It is well recognised that the Lord Speaker also has to meet people, delegations and opposite numbers from all over the world here in this House. That is a heavy diary, and I think it would be wrong to burden the Lord Speaker with oral applications when it is clear that we can have written ones. I thank the House for listening to me.

My Lords, I thank the Chairman of Committees for his clear exposition. To my noble friend Lord Foulkes I would say that the Procedure Committee is not just a rubber-stamping committee. We do debate things long and hard, but clearly in the end we reach a consensus and abide by it.

I do agree with him on two points. One relates to recesses and prorogation. The Leader and the Chief Whip know my views extremely well, sadly for them. These decisions are taken unilaterally by the Government, understandably in some cases but not in others. I agree with my noble friend that it would be a good thing to have an opportunity to question the Leader of the House from time to time and perhaps to have points of order as they have in the other place. That is not to say that we should do everything that they do in the other place, but it is important for noble Lords to be able to question decisions from time to time when appropriate.

I also say to my noble friend that it has already been agreed that the Procedure Committee should consider issues pertaining to the amount of time available for noble Lords to speak in debates, especially when they are of the utmost importance. I think that that is already before the Procedure Committee, but if it is not I will certainly ask my colleagues on the committee to look at the issue.

On Oral Questions, it has been a long haul, but we have reached the right outcome. As the Lord Chairman said, the House made clear its views on the issue and he listened. He has now come forward with proposals that I find entirely acceptable. Like him, I commend to the House the paragraph about brevity in Questions. I also hope that we will all make an effort to be more inclusive and accommodating when it comes to noble Lords wishing to ask supplementary questions.

On Private Notice Questions to the Lord Speaker, I have reservations and fear that the House does not have the correct mechanisms for Questions to be asked on issues that fall between the criteria for Urgent Questions and PNQs, especially in recesses when the other place is not sitting. However, that is not the issue before us today. I am entirely content with the proposal from the Procedure Committee and, with respect, I disagree with the noble Lord, Lord Trefgarne.

Finally, on the repetition of Urgent Questions, on behalf of my Front Bench I undertake to keep supplementary questions short and not to abuse our position. My noble friend Lord Grocott was right to point that out in the report. The Lord Chairman has said that we must and will keep that under review, and I will support him in that.

Will the noble Baroness clarify what she means by points of order? Who are they for? Does she not accept that in the other place points of order are a complete abuse and are used to raise a mass of issues on which somebody cannot otherwise make their voice heard?

My Lords, I would think these things through carefully before putting a proposal to the Procedure Committee. I am not looking for points of order in the way they have them in the other place. However, it would be useful from time to time to have a mechanism whereby one can raise issues on the Floor of the House. Sometimes I feel very frustrated because there are issues that I wish to raise, which is my duty as Leader of the Opposition, but unless there is something on the Order Paper that enables me to raise a point, I cannot do so. This is an issue that I wish to look at and I wish the Procedure Committee to look at.

My Lords, as a member of the committee, one thing that has impressed me most from day one is that committee members recognise fully that the House takes very seriously these matters and gives very careful consideration to them. I hope that the noble Lord, Lord Foulkes, might be reassured by the fact that in the time that I have been on the committee, neither the Chief Whip nor the Leader of the House has attempted to intimidate any member of the committee. Indeed, one thing that struck me is the way in which the committee goes into these matters with great seriousness and in great detail. Sometimes the degree of detail rather surprises me. We know that whatever report we bring to the House, it will be very carefully scrutinised.

When the noble Lord, Lord Trefgarne, came before the committee, he had the opportunity to present his concerns. Of course he did it with great expertise, as the Chamber would expect. We considered his concerns very carefully, but we were unanimous that we would be ill advised to change the existing procedures. I hope very much that the noble Lord will not feel the need to press this. The reality is that all these items will, I am sure, be revisited from time to time. I support the committee’s report and its recommendations, and I hope that the House will do so too.

My Lords, perhaps I may briefly detain the House to pick up one point, as it is the most suitable moment to do so. We have heard these encouragements to brevity in Questions ever since I can remember, but the only way of actually doing anything about it is as it happens. There is then a responsibility for both Front Benches, not just the government Front Bench, to bring their own side into compliance with the Standing Orders. That applies to many other procedures as well. If something goes wrong in a debate and there are only relatively inexperienced members on the Front Benches, then it falls to people who have been here for many years to take that responsibility on themselves, so that the House continues in good order. I hope that that is acceptable.

My Lords, perhaps I may briefly raise one very minor point. It has occurred to me that when we deal with supplementary Oral Questions, there might be a difficulty for some Members with mobility issues in getting up quickly enough to actually put a Question. I do not know what the solution is, but perhaps the Chairman of Committees and his colleagues would bear it in mind. It frequently happens that in the area around here it tends to be easier for Members to get up and get called, whereas some Members who have difficulty rising in time may find it more difficult.

My Lords, I think the noble Lord should cast his mind back to what happens on such occasions. I always note just how courteous people are about not interrupting people with mobility issues, and we all listen very intently to them. Actually, they normally obey the rules much better than those of us who are able-bodied.

My Lords, I want to make one brief remark on the limit to the number of Questions we can ask. Rationing is an equitable but inefficient way of doing things. I hope that if the House accepts this we would be allowed a shadow trade in surplus Questions. Since I do not ask any Questions I will gladly trade mine with my noble friend Lord Barnett, who is always asking Questions.

My Lords, I would like very briefly to support the noble Lord, Lord Elton, and to say that he would be assisted in his aims if people were not allowed to read Questions.

Heaven forefend that we get a black market in Questions, my Lords.

I will deal briefly with the many points made in this short debate by noble Lords from all parts of the House. I turn first to the noble Lord, Lord Trefgarne. I hope that on the basis of what he has heard about individual Members of the House who are seeking a PNQ quite properly having the opportunity to make written representations and to put their case to the Lord Speaker, he will feel able to withdraw his amendment. He did ask whether I could give some sort of undertaking in principle. I am always loath to use the words—

My Lords, I apologise but we cannot actually hear what the noble Lord is saying. Could he speak up a bit?

It may have been that I was turning half way. If the noble Lord will forgive me, although I am dealing with his point I will not actually look at him. He asked whether I could give an undertaking in principle that the Lord Speaker would see individual Peers to make oral representations. I am loath to use the words “in principle” because I fear what they sometimes lead to, but I think it is highly likely that if the opportunity arises that might well be possible. But I have to warn noble Lords that the Lord Speaker’s diary is heavily timetabled—it is virtually impossible to find the odd gap in it. Given the very short timescale involved in making these decisions, which are made on the basis of paper representations, it would often be difficult to find such a gap in the short period of time between requesting one and a decision having to be made.

Another question is on what is covered by the Oral Question. It is the Oral Question; the topical Question is not included as part of the cap, so the cap does not cover the topical Question, only the business of other Questions. I was also asked why a calendar year is used and not a sessional year. We have to think back to the last Session, which lasted for two years. If we had had a limit of seven Questions for the Session lasting two years, the noble Lord, Lord Foulkes, would not just be on the Back Bench up there howling abuse at me but would be right down in the front doing it—and rightly so. We have to recognise that a Session can be a bit flexible, and it would be unfair if it became longer and people were penalised and unfairly limited. We recognise that perhaps a calendar year is a better way in which to deal with that.

On how to treat urgent Questions, we have the 10-minute limit because the House initially decided on it. The committee is aware of the concern within the House on the division of time; it is something that we will keep under review. I go back to the comments of the noble Lord, Lord Martin of Springburn. Perhaps noble Lords could realise that the important thing is to get the one question in for their Back-Bench contributions, and not make long, rambling contributions.

I agree 100% with what the Chairman of Committees has just said. On that basis, I will go along with the recommendation, but on the clear understanding that if anyone, including retired generals, asks more than one question and goes on and on and on, I will take a leaf out of the books of the noble Lord, Lord Geddes, and the noble Countess, Lady Mar.

The noble Lord touches on one of the difficulties that we have. We pride ourselves on being a self-regulating House, and that is a discipline that falls on all of us. Once people start acting beyond the boundaries, it is extremely difficult to rein people in. I am afraid that the only way in which to do that at the moment is for the House to make its displeasure clear. It is not a very attractive means forward, but it is the only one available to us, and it ought to be used sparingly but sometimes quite deliberately.

I hope that the noble Lord, Lord Foulkes is now prepared to accept the limit of seven Questions a year. We decided on that because it helps us, a little bit, to work forward to an objective that the committee has of creating a context in which it is more likely that we widen the pool of people who ask questions. That is the right thing to do, and I think that we should try to make progress on that little by little.

I think that that deals with the main issues that have been brought up. At this stage, I ask the noble Lord, Lord Trefgarne, if he feels able to withdraw his amendment.

My Lords, I am obliged to the Chairman of Committees for his response to my amendment. I confess that I continue to be concerned by the difficulty of getting Private Notice Questions agreed. In the time that I have been in your Lordships’ House—a quite considerable time—I have sought to table something like 20 and I have never yet had one agreed. Perhaps I shall be luckier one day. In the mean time, I beg leave to withdraw my amendment.

Amendment withdrawn.

Motion agreed.

Procedure of the House

Motion to Take Note

Moved By

That this House takes note of the 6th Report from the Select Committee (Backbench Debates) (HL Paper 151).

My Lords, as I said when moving the previous Motion, the committee has made no recommendation on the issue of a Back-Bench debates committee, and the House is invited merely to take note of this report. My position on the appointment of a Back-Bench debates committee is therefore neutral. My task is simply to facilitate the debate and, after the debate, the taking of a decision.

The background to these two Motions is summarised in the report itself. Two years ago, the report of the Leader’s Group on working practices, chaired by the noble Lord, Lord Goodlad, was published. Among the group’s recommendations was the establishment of what the group called a Back-Bench business committee—a committee of Backbenchers whose task it would be to schedule certain types of Back-Bench debates. As noble Lords will be aware, there has been a Backbench Business Committee in the House of Commons since 2010, when it was established following the report of the Wright committee.

The report of the Leader’s Group has been extensively debated in this House but until today the House has not had the opportunity to take a formal decision on this particular recommendation. That we have this opportunity today is thanks to eight noble Lords, listed in the report, who put a paper before the Procedure Committee in February. They will speak for themselves in today’s debate, so I shall not summarise their arguments.

Shortly before the meeting of the committee in February, the Leader of the House, the noble Lord, Lord Hill of Oareford, put a further paper before the committee, in which he set out, on the one hand, his wish to improve the opportunities afforded to Back-Benchers to table business and, on the other, his opposition to a Back-Bench debates committee. The committee did not reach a decision at its February meeting but, instead, invited both the supporters of a Back-Bench debates committee and the Leader of the House to reflect further and to bring back further proposals to our March meeting.

That led to a welcome degree of consensus on the desirability of increasing the range of opportunities for Back-Benchers to table debates. Essentially we have identified various portions of time which either already are or could in future be set aside for Back-Bench debates: first, those Thursdays—one a month from the start of the Session to the end of December—that are already set aside for Back-Bench balloted debates; secondly, additional days in Grand Committee—at least one day for every six sitting weeks in the Session, or around six in total over a typical Session; and, thirdly, an additional one-hour slot on Thursdays, which would be allocated from the start of the Session to the end of January to a topical Question for Short Debate.

These slots of time have been agreed. The decision that the House has to take today is how to fill them. Our report briefly outlines the two proposals put to the committee. One involves the appointment of a Back-Bench debates committee; the other, proposed by the Leader, is broadly based on existing processes, such as ballots and first come, first served, with some variations. I shall leave the supporters of these two approaches to describe them in more detail. That is all I wish to say.

The third Motion in my name on the Order Paper has been drawn up to give the House an opportunity to decide on a fundamental issue of principle to do with how business in your Lordships’ House is selected and tabled. The committee has not sought to explore the options presented to it in detail and, as paragraph 19 of the report makes clear, further detailed work will be needed, whatever the House decides today.

This is an open debate, and I do not wish to limit it in any way, but it may be helpful to the House to hear, first, from one proponent for each of the two options set out in the report. I understand that the Leader of the House would like to speak early, which I think is appropriate, so I suggest that he speaks once the Question has been put, and then perhaps we might hear from the noble Lord, Lord Butler of Brockwell, who brought the proposal for a Back-Bench debates committee before the Procedure Committee.

Will the Lord Chairman clarify the position that he has outlined? The Motion implies to me—and I may have misunderstood it—that in order to secure the additional slots for these debates, it is first necessary to approve the new Back-Bench Members committee. If this Motion is rejected, will the new slots still be scheduled but just by a different means?

Yes, I am happy to give that clarification. The new slots have been agreed. What we must decide today is how those slots are filled and who has responsibility, whether they are selected by the traditional method of ballots and first come, first served or by a Back-Bench committee. So even if the Back-Bench committee proposal is rejected, the new, identified slots remain. I hope that that is helpful. In conclusion, I beg to move that this House takes note of the 6th Report from the Procedure Committee.

Would the noble Lord, Lord Butler, like to speak first? It might make more sense and, if he would like to do so, I should be delighted to give way.

My Lords, I think that I should defer to the Leader of the House but if he would like me to speak first, I am very willing.

I support the Motion that the House should establish for the duration of the 2013-14 Session a Back-Bench debates committee but I should first make it clear that I have no particular status in doing so. I was just one of eight Members of the House—who will no doubt speak for themselves—who put this proposal to the Procedure Committee. I also speak as a member of the Leader’s Group on the procedures of the House, chaired by the noble Lord, Lord Goodlad, which originally made this recommendation. I say that because one Member suggested to me that I was taking a lead on this because I wished to be made chairman of the Back-Bench committee. I assure the House that I have no aspiration to do that at all and I hope that the fear that I might be chairman will not deter Members of the House from voting for it.

It is also important to remind your Lordships of what the terms of reference for the Back-Bench debates committee would be. The Chairman of Committees explained it to us but there has been some mis- understanding. The proposal is:

“That the Committee be appointed to schedule debates, to be moved by backbench and Crossbench members, or by Lords Spiritual—

During the time currently set aside for balloted debates;

On at least one day in Grand Committee for every six sitting weeks in the session;

That the Committee schedule a one-hour topical Question for Short Debate each week, from the start of the session until the end of January, to be taken on Thursday between the two time-limited debates”.

I emphasise these limited terms of reference because there has been some impression that existing arrangements for Back-Benchers to put down Questions for Short Debate would be transferred to a Back-Bench debates committee. As the terms of the proposal make clear, that is emphatically not the case.

Speaking as a Back-Bencher, I express my appreciation to the Leader of the House for his proposal to increase the time available for topical debates and Questions for Short Debate. I know that he wants to increase the opportunities for Members of the House to take part in debates, and that is very welcome. The only issue between us is that, as the Chairman of Committees has said, the Leader opposes the proposal by the Goodlad committee that subjects for Thursday two and a half hour debates in time allocated once a month to Back-Benchers and for a new topical short debate should be chosen by a committee of Back-Benchers instead of, as now, by ballot.

I remind the House of the current situation by which subjects are chosen for debate in the two and a half hour slots on Thursday. The choice of subjects for debate on government or opposition Motions on Thursdays is made by the Government or opposition parties, presumably after discussion and presumably for their own party-political reasons. As I know, the choice of subject for debate on Cross-Bench days is discussed in the meeting of the Cross-Benchers. In our group, we often take a vote on the subjects for which we should use that time. However, the choice of subjects on Back-Benchers’ days is made by the random process of a ballot—a lottery. There is no rational process for choosing subjects that may be of general or topical interest and may make best use of the expertise available in the House to debate matters of significant national interest. As a result, subjects that come out of the hat for the use of this precious Back-Bench time may be of only minority interest and may even attract insufficient speakers to make best use of the two and a half hours provided.

The Library kindly listed for me the number of speakers in the balloted Back-Bench debates in the past two Sessions of Parliament. The number has been as low as six and the average has been fewer than 20, and that includes the proposer, the government spokesman and the opposition spokesman. My case is that this procedure neither produces the subjects where this House’s expertise can best be used nor makes sufficient use of this very valuable time.

I turn now to the Leader’s opposition to a Back-Bench debates committee and what I would regard as a rational process of selection of debates. It is that such a committee would introduce a new hurdle, in his words, for Back-Benchers in getting issues debated—namely, that they would have to persuade a committee of their peers of the merits of their chosen subject. The Government and the Opposition go through a rational process for selecting subjects for debate on their days, and so do the Cross-Benchers. The only group that does not is the Back-Benchers. When the Leader talks of the merits of Back-Benchers having access to debates without the intermediation of a committee of their peers, it needs to be remembered that Back-Benchers are required to go through the formidable but irrational intermediation of a lottery. That seems to me a formidable type of intermediation.

I looked at the list of balloted debates for the last Back-Bench day of this Session. There were 29 Motions down for the two slots. Those odds are 15:1 against success. Of course, since this was the last balloted day of the Session, many Back-Benchers may not even have bothered to table Motions.

I submit that the argument for giving Back-Benchers unintermediated access to the Order Paper does not stand up as an objection to a Back-Bench debates committee. So what other reason could there be for the Leader’s opposition to the proposal? I suspect that we might need to look at what has happened in another place. Following the recommendations of the Wright committee, a Back-Bench committee has been set up in another place to select subjects for debate in Back-Benchers’ time. In consequence, there have been timely debates on matters of general interest—for example, the rights of prisoners to vote, compensation for victims of blood contamination and the case for an EU referendum. The Government have not welcomed all those subjects for debate. However, the operations of the Back-Bench committee in the other place have been reviewed by the Procedure Committee there, which concluded that the committee has been,

“widely welcomed as a successful and effective innovation”.

The Back-Bench committee in the other place is, of course, elected and not selected by the usual channels. Can the noble Lord tell us how he sees this committee being selected? My view of it is very dependent on it being elected if it is to be as effective as the noble Lord suggests.

The method of appointment is not specified in the resolution but, for my part, I wholly agree with the noble Lord. It is right that such a committee should be elected and it should, of course, include representatives of all the groups in the House, as indeed happens in another place.

The establishment of the committee has been a success in another place. The Procedure Committee there says that it has been widely welcomed as a successful and effective innovation. The Government have said that they “agree with that conclusion” of the Procedure Committee. I suspect that agreement may be through gritted teeth, on the grounds that what has been done cannot be undone. I also suspect—and I hope that I am not doing the noble Lord the Leader an injustice—that the Government in this House suspect that the subjects chosen for debate by a Back-Bench debates committee might be more interesting and more topical than they would ideally wish. Of course, individual Back-Benchers should, and will, continue to be able to get unintermediated access to the Order Paper through Questions for Short Debate, and the Leader has said that opportunities for such debates will be increased.

Therefore, I urge the House to support the Motion for a trial run of a Back-Bench debates committee, as recommended by the cross-party Leader’s Group chaired by the noble Lord, Lord Goodlad. If we are eager, as we should be, to promote the relevance of debates in this House and the better use of the time and expertise that are available here, we should do so. My message to the House is: Back-Benchers of the House unite—you have nothing to lose but your chains.

My Lords, I am grateful to the Lord Chairman for his introduction and to the noble Lord, Lord Butler of Brockwell, for getting our debate under way. It is extremely good to see a former Cabinet Secretary, who operated at the highest levels within Whitehall for many years, not always in the glare of transparency, openness and accountability, arguing for it so forcefully this afternoon. Like him, and in response to the point made earlier by the noble Lord, Lord Peston, I am very glad that we have this opportunity for the whole House to decide how it wants to move ahead in organising Back-Bench debates. It is good that we have a full House today to discuss it, and it will be good to reach a clear decision later this afternoon as to how we want to proceed.

I am aware that the question the noble Lord, Lord Butler of Brockwell, and other noble Lords have raised about whether to have a Back-Bench debates committee or not has been hanging around for some time. As a new Leader, I am keen that we should answer it then plan accordingly. I do not want to speak for very long because this is above all a Back-Bench occasion, but I would quite like to do three simple things, if I may. First, I will explain the proposals for the new time for debates that I have made. Secondly, I should like to clear up any misunderstandings that there might be about how our current arrangements work. Thirdly, I will set out what I think is the issue of principle on which we all need to decide today.

When I started thinking about this for my first Procedure Committee meeting, I was struck by the arguments that have been made in favour of having more topical debates and, indeed, for creating more opportunities for Back-Bench Members to initiate debates more generally. I thought those arguments were absolutely right and, as I think the noble Lord, Lord Butler, said, I am extremely keen to provide opportunities for as many Peers as possible, especially newer Members or those who are not able to attend the House as frequently as others, so that as a Chamber we are able to make the best possible use of the full range of contributions that we have at our disposal.

Therefore, as fast as I could, I came forward with two proposals. One was to create a new, regular weekly slot for a topical short debate on the Floor of the House, which I have suggested could also provide a route for getting a prompt debate on a Select Committee report. This would increase the number of short debates on the Floor of the House by about half. The second was to make more use of the Moses Room for short debates, thereby doubling the number of opportunities for Members to have debates there. So there would be more time for topical debates, guaranteed time on the Floor of the House and capacity for twice as many short debates in Grand Committee.

These proposals for additional time for Back-Bench debates were welcomed by the Procedure Committee and, to be clear, they are not at issue today; they apply equally to whatever the House decides. I think this was the point raised by the noble Lord, Lord Grocott. The decision before us therefore, as the noble Lord, Lord Butler, said, is how we want this offer of additional time, plus the time that is already set aside for monthly balloted debates, to be used. Do we want it to be allocated in future by a Back-Bench debates committee or do we want it to be allocated broadly along current lines?

Let me say a few words about our current arrangements, as I am not sure that they are always well understood and I think there is a feeling that they are less transparent than perhaps they are. For short debates, Members are free to choose any subject that they want: they simply put their Question down on a waiting list, which is printed in House of Lords Business, and are taken in turn. For balloted debates, Members pick their topic and put the Motion into a ballot which is drawn by the clerks for a particular day. The key feature of these two processes is that neither the identity of the sponsoring Member nor the particular topic that they have chosen has any bearing on their prospects of securing a debate. All entries to the ballot have an equal chance of being drawn. All entries on the waiting list for short debates are offered time in the order in which they were tabled, subject only to a practical constraint that a Minister and shadow Minister must be available to participate and that Members waiting for their first short debate of the Session come before those waiting for their second.

To be crystal clear on this point, there is no selection by the government Chief Whip or the usual channels on merit, personality, party, group or personal profile, or on anything else. This principle—that the views of individual Peers matter and that they should all have an equal chance to pursue subjects they care about and get them debated in our House—is at the heart of how we think of ourselves as a House. It is particularly important for Members who are less well known or who are able to attend less often, who might find it harder to persuade a committee of the merits of the case. Our current approach means that we end up with debates on a wide range of subjects, from the treatment of homosexual men in developing countries to the future of English cathedrals. This allows for the independent-minded, for the quirky and for the whole range of outlooks and experience on which this House is able to draw and which, I believe, is its particular strength.

I agree with the point that the noble Lord, Lord Butler, made—I am sure that other noble Lords will make it later on—in that I do not take the view that everything in our current arrangements is perfect and cannot be improved. I take the point, for instance, that ballots can sometimes produce debates that are undersubscribed. I do not think that our processes are clear enough to the very Members they are intended to serve. However, there are practical steps we could take to mitigate those potential difficulties and which we could discuss in the Procedure Committee. I hope I have made it clear that I am keen to do that if that is what the House would like.

My Lords, can my noble friend go a little further on this very point? At the moment he got to it, I was reading the sentence in his letter which said that,

“there are reforms we could make—for instance, to ensure that debates drawn by ballot command sufficient interest in the House”.

He has now said that this is a matter we can discuss in the committee. We need a little more clarification about what he has in mind on that point, as it really is central to the argument put to us by the noble Lord, Lord Butler.

As the Chairman of Committees made clear earlier, on both proposals some of the precise details of how one can address these points will need to be worked through. For example, it would be possible to have criteria around the amount of support that there was for a particular balloted Motion, such as the number of people. It is also the case—this is why one would need to work this through and come back to the House before going nap on it, because that is also extremely important—that, as the Procedure Committee knows only too well, every suggestion that might address a particular problem can give rise to another set of problems. That is the kind of thing we would need to address.

At the moment I am somewhat neutral and not at all sure which way I would want to vote. One point that is made by the sixth report, and which was put forward by the noble Lord, Lord Butler, concerns dealing with issues that are either topical or of long-term national importance. The difficulty about the ballot is that you cannot get those issues in, perhaps at rather short notice, for an hour’s debate. How would the noble Lord expect that issue to be dealt with?

On the principle of having to set some criteria, for example on identifying topicality, I shall just go back one stage. I am very glad to have been able to come up with this new proposal for guaranteed time, once a week, to deal with a topical issue on the Floor of the House. I very much accept that we need an opportunity to do that. One would need to establish some points around topicality in exactly the same way as a Back-Bench debates committee will have to come up with a set of criteria within which it would operate in choosing those debates. I accept that we would need to do that work; I would need to come back and show the House those processes.

The noble Lord referred earlier to the quirky. How will the quirky meet these new criteria? He prayed in aid the need for the quirky Motion to be tabled. How would that work?

There are a number of different points there. I certainly used the word quirky—I quite like quirky. This goes to the heart of the issue of having a rational process. The noble Lord, Lord Butler, talked persuasively in some ways about wanting a rational process. That could obviously mean a process that can lead, over time, to confirmation around a kind of norm. It could lead to a group of people’s sense of what is rational being superimposed on that of others. On retaining quirkiness, we are more likely to have quirkiness in balloted debates and on QSDs more generally if we do not have a sifting process. The topical slot is a different matter.

I am following my noble friend very closely because I have some sympathy with his point of view and I pay tribute to him for bringing forward some extremely interesting proposals. However, the House does itself no good service by constantly referring to this process as a ballot. It is not a ballot, as the noble Lord, Lord Butler, said. It is a random process. Anyone listening to this debate would think that there was some estimate of support and merit for the proposals that come before the House. Can we please get away from this suggestion that we somehow ballot to see whether there is merit in a particular suggestion? Even on the quirky issues to which the noble Lord refers—I have some sympathy, being a quirky sort of guy—we do not get any opportunity to assess the quirkiness of a Motion because we do not have a ballot.

My Lords, we do have a ballot. I have had this conversation before with my noble friend, who I know takes the view that it is a lottery rather than a ballot. It is a ballot by definition, one in which everyone has an equal chance and does not need to persuade others of the merit of their case or the wisdom of the topic that they want to debate. They have an equal chance among all their peers.

My Lords, I appreciate what the noble Lord the Leader has done in seeking to respond to the pressure for more Back-Bench debates and time. That is utterly commendable. However, he is proposing a mechanism whereby we would still have a lottery in which we chose from topics that were judged to be topical. Who will decide that topicality question? Clearly, from previous discussions, that topicality would have to be decided by the clerks, under whatever guidance the House had given them. That puts them in the invidious position of making a judgment about whether an issue is topical, and it would be much better if such judgments were made by the House itself by the only mechanism that it can—through a properly appointed committee.

My Lords, topical Questions each week are dealt with in precisely that way. As I have said, we would need to agree in the Procedure Committee, in just the same way as we would if we end up with a Back-Bench debates committee, the criteria by which that committee will reach decisions, because the House will want to know on what basis the judgments that the Back-Bench debates committee is making are being determined. At an earlier stage, the proposal for the Back-Bench debates committee was that it would make the consideration and would not have to give reasons, perfectly properly, for why it had reached its decisions. Whichever route we go down, we will have to have a set of criteria within which we operate, so that the House knows what the basis of the decision is.

My point, though, is that I am not proposing new procedures. The proponents of a Back-Bench debates committee are proposing a new procedure. I am effectively saying that we would still have the way in which we have already operated for a long time. There could be some improvements in terms of different criteria, cut-offs and so on, if that is what people want to pursue, but we would fundamentally stick with the current system. It is those who want to change the system who are proposing the innovation.

My Lords, the noble Lord the Leader has referred several times to the establishment by the Procedure Committee of some sort of guidance. To whom is the guidance given in this system if we do not have a Back-Bench committee? I do not follow this. I understand the lottery and I understand the Back-Bench committee but, if I do not like the interpretation of the guidance that leads to a particular result, to whom do I complain?

The guidance would be available to Members of the House in the same way as our guidance is currently available to Members of the House.

To move on, the issue of principle on which we are being asked to decide today is simple: do we want to stand by our current approach or do we want to introduce a new filtering mechanism for this new package of time, whereby a Back-Bench debates committee makes these decisions and decides what will be debated on behalf of us all? That, in essence, is what we are being asked to decide.

I want to make one final point, and then I know that the House would like to hear from Back-Benchers. Those in favour of a Back-Bench debates committee will obviously want to vote in favour of the Motion for resolution before the House. Those who are not in favour will want to vote against when the Lord Chairman moves it. For those who are not sure once they have heard all the arguments, it would be possible to stick with our current overall approach, perhaps refined in some respects, and see how the proposals for a guaranteed regular slot for a topical debate and more debates in the Moses Room bed down. In the light of that experience, it would of course be open to those who still favour a Back-Bench debates committee to bring forward those proposals again.

I hope that I have set out some of the background, explained the proposals and highlighted the essence of the decision that we are being asked to take. I am sure that we will hear some powerful speeches. I look forward to us reaching a decision on this matter of principle, but most of all to being able to crack on in the new Session with the new opportunities for debate that I have identified.

My Lords, I intervene as one of the more naive Members of your Lordships’ House. When I first heard of the proposal to set up a Back-Bench debates committee, particularly given its provenance, notably with the noble Lord, Lord Goodlad, I assumed that it would go through your Lordships’ House on the nod. I am astonished today to find that the Leader of the House, who, I do not have to remind your Lordships, is the Leader of the House and for these purposes not the leader of the Tory Members of the House, has not taken the lead in pressing for this committee.

There is just one thing that I want to make clear. I have been extremely keen to make progress. I think that the noble Lord, Lord Peston, implied that I am seeking to speak on behalf of the views of one party group. I should say to the House, and I should have said it before, that I know that there are a number of people in my party who are in favour of a Back-Bench debates committee. I also know that there are a number of members of his party, on the Cross-Benches and in all groups who have come to me expressing concerns about the idea of a Back-Bench debates committee. All I have sought to do is make sure that they have an opportunity to explore those issues and then the whole House can reach a decision.

It is my dear wish, which I think is that of all noble Lords, that there should not be a party-political element to our debate. That is the point that I was trying to make. What was troubling me is that I did not hear the noble Lord say what he has now said: that that should not be the case. The debate needs to be judged on its merits.

Part of its merits is definitely the provenance of the committee. A committee chaired by the noble Lord, Lord Goodlad, is not some minor committee, not one that would not have deliberated fully, but one that would have come up with the right answer. That is the answer that the noble Lord, Lord Butler, has presented to your Lordships. I know that I do not have to repeat what the noble Lord, Lord Butler, has said. I have no interest in being on this committee. I have better things to do. I have no interest in being chairman of the committee, so I can speak openly.

What matters to me is that your Lordships should be using these slots for important debates. We have been reminded that they are pre-determined; there is no argument about the slots being there. We differ on what we regard as important. I have been waiting for someone to put forward a debate on the present crisis in economics, but my guess is that virtually no one will be interested in debating it. Perhaps that is why it has not come forward. Why do we not trust our own colleagues to be on a committee to which they will be elected by the different groups in the House? Why do we not trust them to come to the right answer in terms of both fundamentals and topicality? I am reminded of that great classic work, Microcosmographica Academica, where it is argued, basically in connection with the universities, that nothing should ever be done for the first time. I heard real echoes of that in the speech of the noble Lord the Leader of the House.

We really ought to make up our minds today, yes or no. We should not do it politically in any way whatever. We certainly should not do it either because we do not want to embarrass the Government, or because, when we are the Government, we do not want to be embarrassed. We want to use this time in a valuable way so that we can make contributions to the subjects and ensure that the subjects are worth making a contribution to.

If we divide, I will vote for setting up the committee. I know that I am an old fogey on this, but I would be much happier if we did not have a vote but just all agreed, as I implied, that we would accept this on the nod, because there are certain things where a vote is not the right thing. This House has a great tradition of sometimes just getting things right. I think that this is the right thing to do, and I very much hope that we do it.

My Lords, with due respect to the committee chaired by the noble Lord, Lord Goodlad, and as someone who does not usually speak on these issues, as a very ordinary Back- Bencher, I should like to make my views known. I fundamentally disagree with the previous speaker, because why should I, as an ordinary Back-Bencher, not be allowed to challenge the report by the committee chaired by the noble Lord, Lord Goodlad, or any other report? I expect to agree or disagree. Why should a group of Members from the Back-Benches select certain topics when we know that we all have our internal prejudices? It would be very difficult for some topics to get through those prejudices. What procedure would the Leader of the House put in place to ensure that, if we had this committee, no Member was open to lobbying by any external group to make sure that Members are free from any prejudice in the list? It is for those reasons that I felt that I had to get up to speak to, very unusually, disagree with my colleagues and very firmly—and this is not usual—agree with the Leader.

My Lords, I support the proposal for a Back-Bench committee. Indeed, I was one of those who put the suggestion to the Procedure Committee. I start by paying tribute to the former Leader of the House for establishing the working group on our working practices. He was sometimes accused of dragging his feet and not getting on, but we have made a number of improvements, although a number remain to be made, of which this is one, and I hope that we can make progress on it today. Secondly, I express appreciation to the present Leader of the House for the extra time that he is proposing we should have for Back-Bench debates, which is very important.

The noble Baroness, Lady Howarth, asked why we should go along with the Goodlad report. The answer is very simple: we should or should not go along with it on the basis of the arguments that were put forward on this issue. The letter that the noble Lord the Leader of the House has circulated strongly stresses that we should look at the situation and read the report of the Procedure Committee. I am sure that we should read the Procedure Committee report, but the report that we should be reading on this issue is the Goodlad report. The recommendations in this regard run to a full page and are supported by a number of paragraphs arguing in favour of such a committee.

The noble Lord, Lord Butler, set forward the case comprehensively. I do not wish to delay the House for long, but I shall refer to one personal experience of these matters. At the height of the first outbreak of the eurozone crisis, I sought to obtain a debate on the Floor of the House. It proved extremely difficult. I tried for week after week on a matter of major importance; meanwhile ballots were taking place on issues of relative unimportance. Eventually I managed to secure a debate in the Moses Room. The Motion was immediately hijacked by the Opposition, who added a second part to it, which was entirely partisan. The debate broke up completely in both directions and the real issue of the eurozone was barely debated. Had we had such a committee at the beginning of the crisis, we could have had what would have been, as always in your Lordships’ House, an expert debate. This is not going to happen with a ballot.

The reality is that the odds on the chance of getting a debate on a major issue as against some particular enthusiasm are not good. A large number of Members may have put in for the ballot and the odds are getting worse because there are more Members. Therefore, the chances of getting relevant, topical, important debates would be improved if we had someone, and a group of the kind suggested, who would be effective in bringing that about.

My noble friend asked a moment ago how the group would be selected. I am strongly in favour of its members being elected. That seems to me the obvious way of proceeding rather than by appointment or any other method. That should ensure that they are appropriately members of the committee and can then act in our interests as far as the overall picture is concerned.

Reference has been made to the situation in the House of Commons. Its Members are enthusiastic about the change that was made to their proceedings. Matters are never on all fours between one House and the other but I had the chance last night of speaking to Mr Bernard Jenkin, who happened to be involved in procedures in the other place and who is wildly enthusiastic about what has happened there. Perhaps that is overstating it; I am not sure that one is ever wildly enthusiastic about such matters. But he has not the slightest doubt that the change has meant that Back-Benchers have a greater influence on the matters that are debated and the priority given to them. That is what we ought to secure by this proposal and I hope very much indeed that we do, because I am frankly rather puzzled by the position that the Leader of the House has taken. I do not think that the present arrangement is working well and we ought to reform it.

My Lords, I will speak briefly, because I am sure that the House wishes to come to a conclusion on this quite rapidly. I was slightly troubled by the last thing that the noble Lord, Lord Higgins, said in his excellent speech, as it is almost guaranteed to ensure that the noble Lord, Lord Jenkin of Roding, will not now vote in support of the Motion. But you cannot have everything, can you?

The points are as follows. If we adopt the proposal on the Order Paper, we are much more likely to be able to have timely debates on issues that the public think are important and we will be seen to be relevant. That is important; it was one of the fundamental issues that the Goodlad report affirmed. Secondly, unlike in the Commons, these issues are not divisible. That is important for our traditions. The Government do not have to fear what they fear in the Commons—that you have a debate on some contentious issue leading to a headline story that the Lords voted X or Y. That would not happen and it is in keeping with our traditions that it should not. That ought to allow the Government and the coalition parties who are signatories to the letter to relax a little bit on this issue. Thirdly, the proposal makes no change to the existing procedure for QSDs. Those who are beloved of ballots will still be able to go in for ballots for a number of QSDs; that is going to continue. Finally, we all know that the Government can ensure that there is a debate on any issue that they judge to be topical and important whenever they wish to do so. Back-Benchers ought to be able to do the same.

I welcome parts of this report, particularly paragraph 6, which gives us extra time for QSDs, but I am not so keen on this idea of a Back-Bench business committee. I know that it was proposed in the Goodlad report, but not everything in the Goodlad report was gospel. I well remember bringing the first half dozen proposals from the Goodlad report to the Floor of the House when I occupied the position of Chairman of Committees; three of them were voted straight out. So I am not certain one should use that as an argument for the goodness of this suggestion.

I make the point, as have other noble Lords, that balloted debates are the only chance that some noble Lords have of getting their subjects debated. Will this new committee have to give reasons for its decisions? Would it deliberate in public? How does it intend to fulfil its remit, in paragraph 10, to “add transparency and accountability”? I assume that the committee would be set up in much the same way as are most of the other committees in this House. Whether it is elected or appointed, it would still have party balance. Like, I am sure, all committees in this House with party balance, it would tend to rotate the debate subjects around the various parties. I am not quite sure why it would operate in a different way from the existing party debate days, which will continue.

I welcome the proposals in the Leader’s section—option 2 in the report. I welcome the idea of not rolling over debates from one to another, so that you hopefully get a slightly lower number of two-and-a-half-hour balloted debates on the Order Paper at any one time. I agree that there should be an element of cross-party support for the particular subject. I make one further suggestion, which is that the present two and a half hours for each balloted debate—five hours in total—should not rigidly be divided at two and a half hours each. If we were to have a situation where there were more speakers in one debate than in the other, the list might have to close slightly earlier but one debate might get, say, three hours and the other only two. I wonder if the Procedure Committee might look at that proposal.

My Lords, my naive noble friend Lord Peston and the Leader of the House may inadvertently have been misleading us in talking about this Back-Bench committee. Like the noble Baroness, I have my doubts about it, but let us be clear that we are talking about experiment here, not an established Select Committee. If anybody reads this report, they will see that we are talking about a temporary committee. I support this strongly, to see how it will work. I am by no means certain. I am as uncertain as I am about economic forecasts; as the Office for Budget Responsibility says, they are usually uncertain.

I am pleased to hear how much the Leader of the House wishes to see more time available for Back-Benchers to hold the Government to account. We still do not know when we are ceasing to sit for Prorogation, or why we had an extra week off for Easter. We could have had a lot of Back-Bench time in that week. We could have more next week. Perhaps the Leader of the House, if he eventually gets up again, might tell us why we were prevented from having some time available then, if he so wishes to hold the Government to account.

If we are talking about the establishment and holding it to account, the noble Lord, Lord Butler, is probably more a member of the old establishment than anybody else in your Lordships’ House. I make it clear that when I was part of that establishment, during my five years as Chief Secretary, I very much welcomed the views of the noble Lord, which were always good to hear even if I did not agree with them. The noble Lord was well worth listening to. Perhaps I should also make it clear, as others have done, that I certainly have no wish to be a member of this special committee, although I do not rule out making representations to it—that is for sure.

I hope that the House will agree to set this committee up on a temporary basis to see how it works. That is all that we are being asked to do. I hope that the House will agree even to take it on the nod. Let us have this settled once and for all. That is all that we are asking.

My Lords, I indicate my appreciation to the Leader of the House for the steps he has proposed to enable Back-Benchers to have greater vocality and greater audience in this place. His proposals have moved us a considerable step forward. The noble Lord, Lord Butler, has made a very strong case, and I do not wish to go over all that again. However, I want to take up an issue—and I say this as a member of the previous Leader’s Group on Working Practices—that was raised by the Leader of the House, the noble Lord, Lord Hill of Oareford, in his letter of 22 April, in which he recognised that our procedures could be improved and that we could make reforms,

“to ensure that debates drawn by ballot command sufficient interest in the House”.

There are a number of other considerations that should properly be taken into account as well as interest in the House. Is the noble Lord really suggesting that that exercise should be conducted by the clerks or not? If not, why does he not look at the five criteria which the committee of the noble Lord, Lord Goodlad, recommended that the Back-Bench committee on debates apply? The five criteria, which were specifically spelt out, were that the subjects for debate should be varied, timely, and address issues which are either topical or of long-term national importance, and that the debates should draw upon the knowledge and experience of Members of the House. These are important criteria, and it would not be appropriate to ask anyone other than the Members of this House to seek to apply them. I therefore support the concept of setting up this committee for a period of time to see how it works.

My Lords, I do not support the proposal for a Back-Bench committee for debates. There will inevitably be a tendency towards safer, more mainstream and more predictable debates and a decrease in the breadth of debate—of issues discussed in this House—something for which this House is known. I say to the noble Lord, Lord Butler, that having only a few people speak in the debate does not necessarily say anything about the quality of that debate, which may be very high. I certainly support staying with the balloting procedure.

My Lords, I always regard things which are commended because they work well in the House of Commons with a certain degree of suspicion. I urge your Lordships to do the same for a very good reason. The pressures that Back-Benchers cope with in the other place are quite different from the pressures that we are coping with here. They do not have tenure, but we do. Their tenure is dependent in part on the power of the Whips to deselect, so the positions of the two Houses in the competition with the Crown for power, which is what this is all about, are quite different. A Back-Bench committee with command of some time in the House of Commons is a very large step forward. A Back-Bench committee here, for the reasons which have just been very adequately voiced by the noble Earl, is a step backwards, and I hope we do not take it.

My Lords, I would like to be very brief. I have just three small points; or rather, they are not small, but I will try to put them briefly. Before I do so, I should say that I found the argument of the noble Lord, Lord Butler of Brockwell, very strong and, certainly for me, very convincing.

First, I want to take up what the noble Earl, Lord Clancarty, just said, which was reflected by the noble Lord, Lord Elton, and a number of other noble Lords. It seems to suggest that a Back-Bench Committee would be devoid of all sympathy for the more esoteric topics that might need to be debated. I think it is rather insulting towards Back-Benchers to suggest that they might not be interested in topics which are rather unusual but personally important to the people proposing them.

The noble Lord the Leader of the House is wedded to the word “balloting”. I am very glad that the noble Lord, Lord Tyler, has once again said—as I have done before—that we should not be using the word ballot in relation to the present system. It is a lucky dip. If you want a ballot then you should be supporting a Back- Bench committee because such a democratically elected committee, working on democratic principles, would be deciding on what debates should take place by balloting within the committee. That is where you get the ballot. So let us not confuse balloting with lucky dips; that is the present system and I find it quite extraordinary.

Finally, I think the case the noble Lord the Leader of the House has made falls flat when we come to paragraph 14 in the report, when he says that all Back-Benchers must,

“have an equal chance of securing time to debate issues of concern to them, without having to secure the approval of their peers”.

Peer approval is one of the cornerstones of a self-regulating House and I strongly believe that there is a case for setting up a committee where democratically elected Back-Benchers can decide and make proposals as to what they think it is in the broad interests of the House as a whole to listen to when debate slots are available. I know we have a topical debate period but it is very important that a Back-Bench committee should be sensitive to both the more specialised issues that some would want to debate—and they would be taken into consideration—and also to the broader interests of the House. This is to make sure that highly important issues do not go by the board because a lucky dip has decided that they have no place in the debating Chamber.

My Lords, the noble Lord, Lord Grenfell, is right in what he says. We are only asking for a very modest proposal to be accepted by the House. We are asking for an experimental period of one parliamentary Session. We are not suggesting that, during that period, the present system should be completely abandoned. So the House will have the opportunity, as a self-regulating House, to look at the two systems working side by side.

In answer to my noble friend Lord Forsyth of Drumlean, of course there should be a form of election for this committee. I would favour the various groups— the Labour group, the Cross-Benchers, the Bishops—nominating members to sit on this committee. That would be a tidy and sensible way of doing it. The committee would then have the opportunity to listen to the proposals put to it.

It is nonsense that we have had grave international situations that have not been debated in this House. We had to wait ages for the Arab spring debate. My noble friend Lord Higgins talked about the euro crisis. If this House, to use the words of the noble Lord, Lord Filkin, is to be truly relevant to our nation and to its problems, it has to have the opportunity, in a timely and opportune manner, to debate the issues that are concerning people. Occasionally, these may be esoteric: I do not believe that a properly constituted Back-Bench committee would choose only grand international events to debate. Of course it should not, and I believe it would not. However, I do think we should give it a chance. We are a self-regulating House; let us regulate ourselves in this way in accordance with the recommendations of the Goodlad committee.

The greatest thing about this House, in my experience, is that it is collegiate in a way that the other place is not. We sit together on the Long Table and talk. We are not talking about debates that will end in votes. Let us discuss where we should focus our attention. Let us see how this group of colleagues works together. If at the end of the year the committee has not produced the goods, we will abandon the experiment. I do not believe that if you start an experiment you have to continue it in perpetuity; of course you do not. An experiment is an experiment, and I beg the House to give this one a chance.

Perhaps I may detain your Lordships for just two minutes. I am in the very unusual position of agreeing with the noble Lord, Lord Cormack. It is not something that happens daily in this House, and it certainly did not happen over reform of your Lordships’ House. However, I am bound to say that I came to this debate in a wholly neutral frame of mind. I was not sure whether I liked the idea or whether I did not. One argument seems to be absolutely critical, and for me conclusive. When I was Leader of the Opposition in this House, when I was Leader of the House and indeed since, it struck me—as I suspect it has struck every other Leader—that the one great gap in our procedures is that one cannot raise an urgent issue. It is almost impossible. If one wants to secure a debate in this House on an issue such as the Arab spring or North Korea’s nuclear policy, unless the Government are prepared to give it time, one cannot get it. That is wrong. A parliamentary assembly ought to have a procedure whereby issues that are clearly urgent and topical are capable of being discussed. That gap is partially—only partially—filled by the proposals for this experiment. For me that is the conclusive argument. It fills a gap in the procedures of our House that has existed for many years, and we would then be in a position, like other parliamentary assemblies, to deal with urgent, topical questions, which at the moment we are not.

I will say a word or two because I was the Leader of the House when the noble Lord was the Leader of the Opposition. I listened to my noble friend putting forward a housemaid’s baby-type argument; we will have a little experiment and it will be all right. I also listened to the noble Lord, Lord Grenfell. I have no doubt that if he was in charge of all this, it would work very well whatever the rules because he is that sort of person and he would make sure that it did. However, I am still worried about the central proposition that a Back-Bench committee should be able to decide which Back-Bench topics should be debated. The committee will come under enormous pressure and a great deal of lobbying. Inevitably it will end up, in order to keep the peace, taking on the big issues and leaving some of the smaller issues to one side. That is what worries me. Of course I accept the argument that we have to have more topical debates, but I am not sure that a Members’ Back-Bench committee is the way to do it. I would prefer it if we found another way. Therefore, I will vote against the experiment.

My Lords, perhaps I may ask the Leader whether any thought has been given to the objective criteria that will be applied to the experiment to determine finally whether it has been successful or not. There is a lot of talk about this being an experiment, but at the outset it is vital to determine how we are going to judge whether it has been successful when we come to re-evaluate it.

My Lords, most of what I wanted to say has been said. However, on behalf of myself and my noble friend Lady Tyler of Enfield, who cannot be here because she is unwell, I must at least put the points on which we agree as two of the signatories to the paper that was referred to. One is the importance of capturing the public mood, which is another way of saying that there are important things that we may miss out on debating in a timely manner. I, for one, do not want to ignore any chance to increase this House’s standing with the public. The other point is Back-Bench ownership of debates which, as she put it to me, is very much in the spirit of self-regulation of the House, as indeed would be the election of the members of such a group.

I will confine myself to one other point, which concerns the criteria. As has been said, this concerns a small number of occasions. Whoever takes the decisions about what is to be debated on these very few occasions, I understand that for balloted Questions the applicant must convince the clerks that the subject of a proposed topical Question is indeed topical. That may be relatively straightforward. However, the other characteristics—which include quirkiness, for which I have great enthusiasm— are much harder to deal with. I am sorry we cannot include the clerks in this debate and hear their views on how they would deal with that. It would not be a ballot; it would indeed be a lottery. To those of us who have been involved in the democratic process, as we all have, a ballot means putting something to the vote. We are talking about the distinction between the procedure going through the proposed, and a lottery or chance. I for one hope that the House will support a trial arrangement.

My Lords, my arguments against the current procedures have been well rehearsed, and the case for change has been well made. I do not intend to repeat any of them now. If this is put to a vote I shall vote in support of the proposal.

As the noble Lord, Lord Cormack, stressed repeatedly, this is an experiment. It seems to me that the success of the experiment depends crucially on the criteria that the committee will apply, and how it will apply them. That is crucial. What exactly are the criteria going to be? What weight will be given to each of them? Will the committee have a remit, for example, to ensure that all the criteria are met over the period of the experiment, or only some of them? How many of the separate criteria will have to be met at any given time? If a topic meets more than one criteria, how will one topic be favoured over another? What weight will be given to each of the criteria? All these issues go towards whether this experiment will be perceived as fair and objective, and as an improvement on the current process. I very much hope that if this moves forward, as I hope it will, these questions will be addressed as we make progress on this issue.

My Lords, as I said when I intervened in the speech of the noble Lord, Lord Butler, for me the crucial thing is that this committee should be elected. If people are standing for election to this committee whom we do not think would take a balanced view on the quirky topic and the large topic, then do not vote for them. Surely within this House we are grown-up enough and experienced enough to realise the importance of maintaining a balance in what we do, and can trust our colleagues. The alternative is a Charlie and the Chocolate Factory situation, where you have to wait to get the golden ticket to have your chance to put forward your debates. It has been said that colleagues are going to be lobbying—of course they are, but we lobby our Front-Benchers all the time. Surely all of us are grown-up enough to be able to survive the experience of a bit of lobbying. I support this proposal because it is about strengthening Parliament, and it is by strengthening Parliament that we will increase the respect and standing of Parliament outside.

I think it was my noble friend Lord Higgins who talked about us having tenure. I do not think we have tenure in this House. This House has to prove itself every day in the eyes of the public; I think it does a brilliant job. This measure is at least worth trying, because it could strengthen Parliament, increase our ability to hold the Executive to account, and be seen to be relevant to the interests of those outside who, after all, pay the bills.

My Lords, I have three points: first, if there is to be a committee it must be elected. There are no doubts about that. Secondly, a major gap has been identified in this debate, and that is the capacity of this House to identify major topics of current concern and debate them urgently. There has to be a way of doing that, whatever comes out of this debate, and I put it to the Leader of the House that he must look at that. Thirdly, we should not vote to have another committee on the basis that this is an experiment. Any committee that I have ever seen that people have tried to kill has been cut in half and then there are two new ones.

In general, I am in favour of progress, modernisation and change, but I am not in favour of a Back-Bench debates committee at this point because it is unnecessary in view of the Leader’s proposal. In the light of that proposal, a Back-Bench debates committee would be a huge sledgehammer to crack a tiny nut. It could easily turn into a bureaucratic and expensive procedure, if full accountability was desired. One just has to think about it. Peers tabling subjects for topical QSDs would have to give reasons in papers or e-mails, and signatures of support would be sought. Minutes of the committee would have to be prepared; all conflicts of interest, not just financial, would have to be declared; and all lobbying, either ignored or debated, would have to be declared. A clerk would be required, plus an assistant to prepare papers. The committee would not be cheap and, if there is capacity for another committee, I would much rather the money was spent on more pre-legislative or post-legislative scrutiny.

As for transparency, the government Whips’ Office has given a very clear and welcome explanation of how debates and QSDs get on to the Order Paper. As for balloted debates, what is more transparent than pure chance, with all Peers having as good a chance as each other of having their subject debated? Do we really want to go down the road of having a group of our fellow Peers deciding which debates are more important than others? Why do we not give the Leader’s proposals a trial and, if there is dissatisfaction after that, come back to the idea of a Back-Bench debates committee?

My Lords, we have had a good and thorough debate, and I believe that all the possible arguments have been aired. At this stage, I beg to move that this House takes note of the sixth report of the Procedure Committee. After that, we get to the substantive Motion on the decision.

Motion agreed.

Procedure of the House

Motion to Resolve

Moved by

To resolve that this House establish, for the duration of the 2013–14 Session of Parliament, a Backbench Debates Committee;

That the Committee be appointed to schedule debates, to be moved by backbench and Crossbench members, or by Lords Spiritual:

During the time currently set aside for balloted debates;

On at least one day in Grand Committee for every six sitting weeks in the session;

That the Committee schedule a one-hour topical Question for Short Debate each week, from the start of the session until the end of January, to be taken on Thursday between the two time-limited debates;

That the Procedure Committee review and report on the work of the Backbench Debates Committee before the end of the 2013–14 session, with a view to recommending whether or not the Backbench Debates Committee should be established as a sessional select committee.

Marine Navigation (No. 2) Bill

Third Reading

Bill passed.

Growth and Infrastructure Bill

Commons Amendments

Lords Amendment 25: Leave out Clause 27

Commons disagreement and reason

The Commons disagree to Lords Amendment No. 25 for the following Reason—

25A: Because the new status of employee shareholder should be made available.

Lords insistence and reason

The Lords insist on their Amendment No. 25 for the following Reason—

25B: Because it is inappropriate for employees to be exempted from statutory employment rights in this manner.

Commons insistence and amendments to words so restored to the Bill

The Commons insist on their disagreement to Lords Amendment No. 25 but propose the following amendments to the words restored to the Bill by that disagreement—

25C: Page 34, line 13, after “£2,000,” insert—

“(ca) the company gives the individual a written statement of the particulars of the status of employee shareholder and of the rights which attach to the shares referred to in paragraph (b) (“the employee shares”) (see subsection (4A)),”

25D: Page 34, line 38, at end insert—

“(4A) The statement referred to in subsection (1)(ca) must—

(a) state that, as an employee shareholder, the individual would not have the rights specified in subsection (2),

(b) specify the notice periods that would apply in the individual’s case as a result of subsections (3) and (4),

(c) state whether any voting rights attach to the employee shares,

(d) state whether the employee shares carry any rights to dividends,

(e) state whether the employee shares would, if the company were wound up, confer any rights to participate in the distribution of any surplus assets,

(f) if the company has more than one class of shares and any of the rights referred to in paragraphs (c) to (e) attach to the employee shares, explain how those rights differ from the equivalent rights that attach to the shares in the largest class (or next largest class if the class which includes the employee shares is the largest),

(g) state whether the employee shares are redeemable and, if they are, at whose option,

(h) state whether there are any restrictions on the transferability of the employee shares and, if there are, what those restrictions are,

(i) state whether any of the requirements of sections 561 and 562 of the Companies Act 2006 are excluded in the case of the employee shares (existing shareholders’ right of pre-emption), and

(j) state whether the employee shares are subject to drag-along rights or tag-along rights and, if they are, explain the effect of the shares being so subject.”

25E: Page 34, line 38, at end insert—

“( ) Where a company makes an offer to an individual for the individual to become an employee shareholder, an acceptance by the individual of the offer is of no effect unless seven days have passed since the day on which the offer was made.”

25F: Page 35, line 23, at end insert—

““drag-along rights”, in relation to shares in a company, means the right of the holders of a majority of the shares, where they are selling their shares, to require the holders of the minority to sell theirs;””

25G Page 35, line 25, at end insert—

““tag-along rights”, in relation to shares in a company, means the right of the holders of a minority of the shares to sell their shares, where the holders of the majority are selling theirs, on the same terms as those on which the holders of the majority are doing so”

Motion A

Moved by

That this House do not insist on its Amendment 25, to which the Commons have disagreed for their Reason 25A, do agree with the Commons in their Amendments 25C, 25D, 25F and 25G to the words restored to the Bill by that disagreement, and do disagree with the Commons in their Amendment 25E to the words so restored but do propose the following Amendments in lieu—

25H: Page 34, line 38, at end insert—

“( ) Agreement between a company and an individual that the individual is to become an employee shareholder is of no effect unless, before the agreement is made—

(a) the individual, having been given the statement referred to in subsection (1)(ca), receives advice from a relevant independent adviser as to the terms and effect of the proposed agreement, and

(b) seven days have passed since the day on which the individual receives the advice.

( ) Any reasonable costs incurred by the individual in obtaining the advice (whether or not the individual becomes an employee shareholder) which would, but for this subsection, have to be met by the individual are instead to be met by the company.”

25J: Page 35, line 25, at end insert—

““relevant independent adviser” has the meaning that it has for the purposes of section 203(3)(c);”

My Lords, after a touch of verbal Houdini in reading out the Motion, I hope that I can offer some clarity to the contents of the clause. Before I discuss the clause in further detail, I am grateful to those noble Lords who met me earlier today. I draw the House’s attention to a further amendment that we tabled this afternoon, which I hope will provide reassurance to the House.

We believe that it should be up to employers to recruit as they see fit, and if a company wants to recruit an employee shareholder, in the same way as an employer may wish to recruit an employee or a worker, it should be able to do so. As has been made clear, no one will be compelled to apply for or accept an employee shareholder job.

I turn to the clause itself. I remind the House of my remarks on 22 April. In that debate, I stated that I had listened to and heard the strength of feeling in the House towards this clause. I also stated that if the House insisted on its amendment to remove the clause, as indeed was the case, I would ensure that the strength of feeling would be conveyed to my ministerial colleagues. I have conveyed the strength of feeling expressed by this House, and I now turn to the amendments laid today and how we believe they improve the clause and address key concerns expressed by the House.

The package of amendments ensures that individuals entering into employee shareholder status are given the opportunity to fully understand the employee shareholder contract, the benefits and the risks involved. The package ensures that the individual will have the space, the time and the means to receive and weigh up the information in order to make an informed decision that is right for them.

First, we propose that the company must give the individual a written statement of particulars setting out the employment rights that are not associated with this status, and detailing the rights, restrictions and other conditions attached to the shares. This will include whether the shares being provided as part of the employee shareholder status have any voting or dividend rights; whether there are rights to have the shares bought back or redeemed; whether an individual may freely sell the shares; and if there are certain other rights and restrictions attached.

This written statement of employee shareholder particulars is separate to that already required by the Employment Rights Act 1996, which sets out the terms and conditions of the job, and which employee shareholders are entitled to receive within two months of starting work with their employer.

Most importantly, once the statement of particulars has been given to the individual, he must then receive legal advice. This advice can be given by a solicitor, a barrister, a fellow of the Institute of Legal Executives employed by a solicitor’s practice, a certified trade union official or a certified adviser in an advice centre. A person employed by the company, such as in-house counsel, cannot give this advice. It must be independent.

Some advice may be free, such as from a trade union official or an advice centre. Where payment must be made for the legal advice, the company must meet the reasonable costs of that advice. This is the case even if the individual does not take up the job offer. Once the legal advice has been received, the individual has seven clear calendar days to consider that advice. Any acceptance by the individual of an employee shareholder contract is of no legal effect until those seven days have elapsed.

This is about giving the individual the space to consider their position. It gives them time.

Will my noble friend assure the House that no advice should be given to an employee by the law firm or firms acting for the company itself or any other law firm connected with the company?

My noble friend makes an excellent point. That is absolutely true. I can confirm that if any legal firms are connected at all with the employer seeking to employ the employee shareholder, they will not be permitted to give legal advice.

Returning to the individuals, as I was saying, it gives them time not to be pressurised into accepting a contract and an opportunity to think about what the contract will mean to them. An individual cannot become an employee shareholder unless this and all the other criteria set out in the clause are met. This package of amendments means that an individual who has chosen to apply for and been offered an employee shareholder job has the information, advice and time that they need to consider whether the job is right for them.

I now turn to the amendment tabled today by the noble Lord, Lord Lea of Crondall. We do not believe that such provision within the clause is necessary. We believe that it should be up to employers to recruit as they see fit, and if companies want to recruit an employee shareholder, as they already do for employees or workers, they should be able to do so.

I take a moment to clarify points that have been raised repeatedly in both Houses. In the debates about this clause, it has been stated that the shares issued to the individual could be worthless. I should like to make it absolutely clear that shares issued as part of the employee shareholder status must be worth at least £2,000. The shares must be fully paid up by the employer and the clause also prevents the individual paying for them.

I understand the concerns raised by my noble friend Lord Forsyth in relation to valuing shares. As I have made clear previously, established practices are in place that cover this. Let me repeat, we recognise that for private companies there is no traded market which enables easy valuation of shares. Private company shares are valued for many different reasons—for example, when someone leaves the company and wants to sell shares, or following the death of a shareholder or if the company is to be sold. Practitioners such as actuaries and accountants undertake this work using standard methods to reach a valuation. They will consider such things as examining the company’s performance and financial status as shown in its accounts for a period up to the date of valuation. They may also consider future plans of the company, by looking at order books and analysing future commitments.

If a private company is considering issuing new shares as part of an employee shareholder scheme, it will probably be taking advice from its accountant, who will be able to advise on how best to value the shares to be issued. In this case, the company will be able to demonstrate how the valuation has been made to the individual. In addition, I reassure the House that we will not allow individuals to use this employment status for tax avoidance.

My first point is that some of the mischiefs that may be causing concern are already prevented by existing tax rules. There are rules that prevent, for example, the manipulation of share value so that it is inflated. They help safeguard against abuse by those who are seeking to obtain disproportionate capital gains.

My second point that I would like to reiterate is that the Finance Bill, published on 28 March and currently progressing through the House, includes a number of stringent anti-avoidance rules. These will prevent those who have a substantial interest in a company from benefiting from any tax advantages, as they may otherwise use the status to secure tax advantages for themselves or family members. There are also rules to safeguard against a person exploiting the tax advantages available through multiple use of the arrangement involving connected companies.

There have been concerns that highly paid employees in companies that are already well established may look to take on the maximum share ownership available in order to reduce their capital gains tax liabilities. However, a highly paid employee would face income tax and national insurance contributions on any share value above the first £2,000. The employer would also face employer national insurance contributions when providing employee shareholders with substantial share value.

I also point out that employee shareholder legislation prevents an employee sacrificing taxable remuneration or employment benefits to take up this status for the purposes of obtaining a tax advantage. That is because an employee shareholder is not permitted to give any consideration—which means forgoing anything—for the shares that they receive. That will prevent the type of salary sacrifice behaviours that my noble friend Lord Forsyth and others have rightly described. If necessary, further provisions to that effect could be considered as part of the Finance Bill.

I reassure the House that the Treasury, HMRC and my department, BIS, are already monitoring and will continue to monitor potential scope for abuses of the employee shareholder status for excessive and unacceptable tax purposes.

When we debated the new employee shareholder status on Monday, I recognised the strength of feeling in the House. I hope that the House recognises that we have now brought forward a package of amendments to the clause that will provide significant further protections to individuals. I therefore hope the House will now feel able to support the inclusion of an amended Clause 27 in the Bill and the greater choice for companies and individuals that it will provide. I beg to move.

I should inform the House that if Amendment A1 is agreed to, I shall not be able to call Amendment A2 by reason of pre-emption.

Motion A1

Moved by

As an amendment to Motion A, leave out from “House” to end and insert “do insist on their Amendment 25 to which the Commons have disagreed and do disagree with the Commons in their Amendments 25C to 25G in lieu thereof”.

My Lords, I am very pleased that the Government have proposed the amendment in lieu in order to impose a requirement for independent advice. I thank the Minister warmly for his efforts in securing this substantial amendment.

For many noble Lords, the absence of a requirement for independent advice was a fundamental defect in Clause 27. Indeed, the absence of such a provision until the 11th hour—in fact, way past the 11th hour—was quite incomprehensible to many noble Lords. As was painfully clear from our debate on Monday night, the Government had no answer, and never have had an answer, to the question of why they are refusing to require independent advice before an employee signs away employment rights when Parliament has required independent advice before a compromise agreement is reached in tribunal proceedings in an individual case concerning the exercise of employment rights. Because this amendment is designed to protect the individual who is being invited to sign away basic employment rights, it is appropriate that the provision should be comprehensive in the protection it confers. For my part, I am satisfied that this amendment is comprehensive.

I should like to draw attention to four aspects of the amendment. First, I note that a Clause 27 agreement will be of no effect unless the employee or prospective employee has received independent advice before the agreement is made. It will not be sufficient that independent advice is available or is offered; it must be received. Unless independent advice is received, the Clause 27 agreement has no effect in removing employment rights.

Secondly, the individual must receive advice as to,

“the terms and effect of the proposed agreement”.

The amendment plainly requires advice on the nature and effect of the employment rights that are lost. It also plainly requires advice on the content of the employment rights that are retained, such as discrimination law rights. However, advice will also be required on the terms and the effect of the shareholding aspect of the agreement. Indeed, the amendment is expressly linked to the statement that the employee must receive by reason of subsection (1)(ca), as set out in Amendments 25C and 25D. That means that the statement must—that is the word used in the subsection—address matters that include,

“whether any voting rights attach to the employee shares … whether the employee shares carry any rights to dividends … whether the employee shares would, if the company were wound up, confer any rights to participate in the distribution of any surplus assets … whether the employee shares are redeemable and, if they are, at whose option … whether there are any restrictions on the transferability of the employee shares and, if there are, what those restrictions are … whether any of the requirements … of the Companies Act 2006 are excluded in the case of employee shares”—

that is, the right of pre-emption—and,

“whether the employee shares are subject”—

the Minister may know what this means; I certainly do not—

“to drag-along rights or tag-along rights and, if they are, explain the effect of the shares being so subject”.

All these matters must be included in the statement and the advice is linked to the statement. It therefore appears very clear indeed that any employee entering into one of these agreements must receive legal advice on each and every one of these technical matters, otherwise the agreement is simply not going to have legal effect. The employer will need to ensure that advice is given on these matters, otherwise the agreement will not be valid.

I am most grateful to the noble Lord, Lord Pannick, particularly for all his efforts in relation to this matter. Regarding the matters that he listed, I wonder whether he has considered one further condition that should be added. The valuation of close company or private company shares is an art, not a science, and the valuer acting for the shareholder—the outgoing shareholder perhaps—and the valuer acting for the company may not reach an agreement on price. Presumably, underlying all this must be a provision for arbitration in case of disagreement on price, through either an independent expert or an arbitrator.

I would anticipate that when the employee is given advice, one of the terms and effects of the agreement in relation to which he will need to be given advice is as to what happens if and when the shares are to be sold or the company goes into liquidation. No doubt some advice will have to be given—I doubt in very great detail—as to what the mechanisms are. In any event, this is, as I say, a very extensive requirement for legal advice. These are very complex matters.

The third point I want to emphasise is that the amendment also specifies the identity and characteristics of the person giving the advice. It does so by incorporating the requirements in Section 203(3A) and (3B) of the Employment Rights Act 1996, which states who is an “independent adviser” for the purposes of Section 203(3). The categories are: “a qualified lawyer”; a person certified by,

“an independent trade union … as competent to give advice”,

in this context; an advice centre worker,

“certified … by the centre as competent to give advice”,

in this context; and a category of,

“a person of a description specified in an order made by the Secretary of State”.

The statutory requirements also state that the adviser must be independent of the employer. Again, I am grateful to the Minister for the assurance that he gave earlier in this debate in relation to the criterion of independence.

I am very doubtful indeed that any trade union or advice centre would wish to certify someone as competent to give advice on all the aspects of the terms and effects of the agreement which I have mentioned. My understanding—I should be grateful if the Minister could confirm this in due course—is that it is entirely a matter for the employee as regards from whom he or she seeks the legal advice. Given the complexity of the matters on which advice must be given, I cannot imagine that any sensible employee would choose to see other than a lawyer and I would be astonished if any trade union or advice centre gave advice to any employee not to go and see a lawyer on these matters.

The fourth point I want to emphasise in relation to this extensive amendment, which I welcome, is that the reasonable costs of the advice otherwise incurred by the individual must be met by the company. What costs are reasonable must of course be determined in the context of the breadth and complexity of the advice which needs to be given. The employer must pay the costs, so the amendment says, even if the employee or prospective employee decides not to take up the job offer on Clause 27 terms. I should also be grateful if the Minister would confirm my understanding that if necessary—it may not be necessary—the Treasury will bring forward legislation to ensure that the benefit of the legal advice is not treated as a taxable benefit in the hands of the employee.

I welcome this amendment, which is undoubtedly broad in its scope and which will confer very substantial protection to individuals. I should add that the addition of this amendment does not alter my opinion of Clause 27 or, I suspect, the opinion of the majority of your Lordships. It remains a deeply unsatisfactory provision, for all the reasons identified by noble Lords across the House at every stage of the Bill. The best that can be said for it—the best—is that it is so half-baked that it will have little, if any, practical effect. I hope that the noble Lords who have expressed that view are correct.

Finally, I suspect that Clause 27 will be remembered by future historians of this coalition Government for one striking feature of it. Many policies which have been pursued by this Government have troubled one or other of the coalition partners but, as the debate on Monday demonstrated and as the Division lists confirmed, the Government have achieved by Clause 27 the quite remarkable feat of persisting with a proposal which is widely opposed in both coalition parties, as well as on all other sides of the House. I therefore regret that the Government wish to persist with Clause 27 but I very much welcome the positive move of this amendment. I will listen with particular care to the debate but, for the moment, I beg to move.

My Lords, I pay tribute to my noble friend Lord Younger and to the Chancellor of the Exchequer. We have had some pretty robust debates around this. We started with the proposition that it was wrong that someone who was sent from a jobcentre to take a job but who declined to accept an employee shareholder contract could be found to be intentionally not taking work and therefore be subject to sanctions on their benefits. That was dealt with. On the fundamental point, I do not wish to repeat the arguments which the noble Lord, Lord Pannick, has made, although I will observe that it is a relief to me to discover that there is something that he does not know about and which I do: the drag-along rights. It strikes me that drag-along rights are quite a good way of describing the process of this Bill in respect of the Government.

However, we have eventually got there, and the most important thing, as the speech of the noble Lord, Lord Pannick, indicated, is that this can be an extremely complex and difficult area and that we are making a fundamental change of principle here in that people can negotiate away certain employment rights. The need for independent advice is therefore crucial, and I am delighted by the amendment which my noble friend has brought before us. I pay tribute to the long-suffering officials in the Treasury and BIS for the way in which they have produced an amendment that covers the ground completely. My first instinct when I heard that the Chancellor had decided to accept our arguments was to rush to the Public Bill Office to get the draft of it, thinking that it would be full of holes or weasel words. Actually, it is comprehensive and the Government have been as good as their word. They deserve credit for that.

The last remaining area of concern was that this would be used by my friends in the British Venture Capital Association and others as a way of limiting their capital gains tax on shares which they would otherwise have got, and on which they would have to pay capital gains tax, by changing their employment status to that of shareholder employee. The loss of statutory redundancy pay would not be a major factor in their minds. I very much welcome what my noble friend said about the determination to look at this.

The noble Lord, Lord Pannick, made the key point that the advice provided to someone who is considering an employee shareholder contract should be paid for by the employer but that the tax liability that would normally arise from that would not apply. I guess that the Finance Bill currently before the other place will need to be amended. It already makes provision for the £2,000 of shares not to be subject to tax and national insurance. I assume that it will be amended to provide for the money that is paid for advice by the employer for the employee not to be a taxable benefit. I hope in the time that remains that in considering the various wheezes that might be used to avoid tax the Finance Bill will be amended to close off any possible loopholes.

I entirely support what my right honourable friend the Chancellor of the Exchequer was trying to do with this clause. He was trying to encourage more people to take stakes in their business and therefore to have an interest in the success of the business and an understanding of the risks being taken by it. He was also trying to encourage new emerging businesses, which may or may not have a future and may or may not have very much cash, to take on employees who share in the risks of that business. That is a noble and good intention. Equally, on the other side, there is a desire to limit the costs that fall on employers because of employment protection legislation, and there is a fair balance to be had there.

The combination of the two in this particular recipe produced a dish that was hard to digest, which is why we have sent the legislation back to the Commons on two occasions. On that latter point, although we may have reservations about the applicability of the clause and whether it is the best way forward, we should recognise that this House has done its job in asking the Commons, the Government, to reconsider. At the end of the day it is for the elected House, the other place, to decide on the general drift of policy that is being pursued by the Government.

I thank my noble friend and will have no difficulty whatever in supporting the passage of this Bill with the clause as amended. I look forward to seeing the measures that will be brought forward to avoid a measure that has good intentions being used for another purpose that might very well damage the credibility not just of this clause but of the Government, who deserve credit for what they have been trying to do even if this House had some difficulties with the practical execution of the proposed policy.

My Lords, I also agree that substantial concessions have been made, which have been spelt out by the noble Lord. On the other hand, the basic problem still exists in my mind. There are already co-partnership schemes through which employees can have shares and can participate in their companies. However, they can do so in many instances without surrendering important employment rights. That is the important thing. Why do you have to surrender employment rights, which have been in existence for many years and have been struggled for by previous generations, to participate in a shareholding scheme? I do not understand that unless this really is, as I originally believed, one of the moves that the Government are making, as they do not like employment rights all that much, to ensure that employment rights are surrendered without appearing to remove them. Employees can be persuaded, under these arrangements, to give up employment rights voluntarily in return for a shareholding scheme.

I still feel very unhappy about this. Unions will not be happy about it either. The basic point here is the surrender of rights in return for shareholding. I still do not think it is appropriate. Shareholding schemes can exist without that and do exist in many places. For those reasons, I express great concern, although I understand that quite substantial concessions have been made. The core problem, as far as I can see, is the surrender of employment rights for something that may be quite worthless when it really comes to it.

I appreciate that the Government have made several concessions in trying their best, as has been explained, to make sure that this is not compulsory and has not been forced on people. It is another option to add to the several share option schemes that already exist. The huge issue, as the noble Baroness has just said, is why it has to be linked to giving up any employment rights. That is the part that is fundamentally unnecessary.

The last time we debated this, before it went to the other place, I asked the Minister two questions, which he did not answer. The first was whether the Government consulted business properly before going ahead with this. The noble Lord, Lord Adonis, said in his closing speech last time, if I remember correctly, that 160 responses were received when the Government consulted and only three of them were in favour of this scheme. I am sorry, but unless I have got something fundamentally wrong, if you get three out of 160 you do not go ahead with something. You either consult further or you bin the idea because it is no good.

We have heard unanimously all round the House that, from a businessman’s point of view, this does not sense. It is absolutely unnecessary to do this, and it is fundamentally wrong for me to ask any of my employees to give up any rights at all. I would want to give them share options because they believe in my business and its future and they will earn the increase in value of their share options.

The next question I asked the Minister was whose idea it was. Why are the Government pursuing this? This House is greatly respected. We defeated this. It went to the other place. It came back, and the last time we voted on it it was defeated by an even bigger majority. To go back and come back again is disrespectful to this House and to what we have done. I appreciate that concessions have been made, but I think that the Government defending it so much is linked to whose idea it is. The press say that it is the Chancellor’s idea. If it is, I really question his priorities in trying to push forward something like this when tomorrow it is quite possible that we will hear that we may be in a triple-dip recession, and if not we might certainly bump along the bottom for ever.

We have huge problems and we are trying to push something like this on to business. I can guarantee that it will not work, that it will not be taken up by business, that it has wasted a lot of parliamentary time and that it will waste a lot of legislation. The Government say that they will reduce red tape. This is going to create huge amounts of red tape. Lawyers will have to be consulted; employers will have to compensate for lawyers being consulted. This is not just a dog’s breakfast; it is a mad dog’s breakfast.

My Lords, I disagree with one of the comments made by the noble Lord, Lord Bilimoria. I think this will be a very popular scheme for employees and employers, but in only one small sector of the economy. This is not about creating employment, business and economic growth. SMEs and new innovative companies are not going to offer these schemes, and employers are not going to be attracted by them. When we last discussed this issue, the noble Lord, Lord Forsyth of Drumlean, said that he was not sure whether this was being looked at by people who plan tax avoidance. I assure him that it is being looked at by those people with alacrity.

When we pass legislation, we should always be alert to the possibilities of unintended consequences, and I nominate this proposal as the single piece of legislation proposed by this Government that is most likely to have unintended consequences. This provision will be implemented broadly across the investment banking sector. In fact, we will find employees in the investment banking sector with multiple contracts, and subsidiaries in new companies formed beneath teams and groups within an investment bank where they contract themselves to a specific desk or function. The tax leakage from this proposal will exceed by enormous multiples any possible benefit to the economy, but presumably at least the Minister feels a little more comfortable today than he did two days ago when he was called on to defend the indefensible. I appreciate that the Government have moved, but I will not be supporting this proposal.

I defer to the noble Lord’s expertise in tax avoidance and the ways of investment bankers and investment management people in the City, but will he not give some credit to my noble friend who said that the Treasury will look at this and consider whether further measures are needed to avoid this? Some of the obvious possibilities, such as multiple contracts or changing contracts for the purposes of gaining the capital gains tax exemption, are matters that could be looked at. Surely the noble Lord should give some credit to my noble friend for taking that on board.

The question is whether we give credit to the noble Lord’s noble friend or to your Lordships’ House. I think it is the latter that deserves credit for the improvement in this provision. We will see the statute book and regulations getting thicker and thicker as the Government try to head off all the strategies that will be developed to seek to take advantage of this provision. We have come up with something that is of infinitesimal consequence to the economy but that will nevertheless lead to huge red tape. I am afraid that the experience of previous Governments, including the Government of which I was a member, and of this Government is that tax avoidance continues to be sharper and more effective than HMRC and others will ever be in stopping it.

I am happy acknowledge that the Government have said that they will seek to address this issue—they need to—but it will be a nigh-on impossible task.

I wonder why, when he was in government, his Government did not introduce a general anti-avoidance rule of the sort now being introduced by the coalition Government. That should aid and assist the very matters to which the Minister has referred.

I welcome the general avoidance rule, which of course is not the matter that we are discussing. Even there, though, while I was not directly responsible for HMRC or Inland Revenue matters when I was a Minister, we all knew that the agility of tax planners should never be underestimated. We need to be slightly careful that a general tax avoidance rule is not going to create a new nirvana and will not suddenly change things. It is a good thing and I welcome the Government’s proposal; indeed, I think that the Opposition have supported it, so I do not think there is a political point here. However, on this subject we need to be realistic about what will be achieved. We are up against mighty forces in tax planning. One has only to look at structured finance unit at Barclays Bank, which appeared to help people avoid billions of pounds of tax. It really is quite a challenge.

This small proposal will create a huge loophole that tax avoiders will, quite correctly in their view, seek to exploit.

My Lords, I was going to leave the issue of tax loopholes until the end of my contribution, but given the preceding debate I remind the House that at an earlier stage I reminded the House of the business expansion schemes that were set up by the then Government in the late 1980s and early 1990s and targeted at new small high-tech companies that were looking for investors and considerable tax benefits to investors and shareholders in those companies. They progressed reasonably well over the subsequent two or three years, but then the accountants and lawyers found the loophole that enabled at the very least the university sector to entirely rebuild its student accommodation using those schemes. I confess, as bursar of a Cambridge college, that my college and all the other colleges used them in exactly the same way.

An interesting point to note, which the Chancellor might want to consider himself, is that the Treasury immediately closed the schemes down. I suspect that if the noble Lord, Lord Myners, is right, the Treasury would have no option but to close this down immediately, and I think that would signal the death knell of this entire clause. I apologise; that was going to be my peroration at the end but, given the debate that we have just had, I have started with it. Given the debate that we have had, the experience of the business expansion schemes is one that I hope this House and indeed the other place will take note of.

To go back to the beginning, I thank the Minister for negotiating the concessions, which have been vital. At all stages of the Bill on all sides of this House we have insisted that employees and prospective employees must have truly independent legal advice. To repeat the comments of the noble Lord, Lord Forsyth of Drumlean, I, too, went through this with a fine-toothed comb to see where the lacunae were but could not find any. It is extremely helpful that the clause echoes the compromise agreement legislation with regard to the necessary independence of the legal advice that the payment for reasonable advice must come from the employer. By the way, I think that will completely put off the Gradgrinds, who we talked about at some length on Monday, who want to use this as a quick and easy route.

There has been some discussion today about the value of shares. I am less concerned about the value of shares when the shares are first purchased, because we keep being told that this is for brand new companies when their shares are virtually at par value. There is a much bigger issue when an employee leaves if they have to sell the shares back, or at a point at which the company might be sold on and an employee may want to disagree with an arrangement that the company directors have come to with a prospective buyer. Unfortunately, I absolutely cannot think of a way of legislating against that. Let us hope that, should that happen, the increasing value of the shares would be such that the employees found it beneficial. However, my experience of working with high-tech companies throughout the 1980s and early 1990s was that the vast majority of small high-tech companies, which we are told this would be useful for, never make the sort of glorious gains where capital gains tax is a real benefit. There may be a very minor benefit, and that is wonderful, but not for most. The Cambridge silicon technology companies are the stellar ones; they account for less than 5% of such companies.

I wonder whether the Minister could assist the House by sending around the revised draft guidance notes for employers, companies, employees and Jobcentre Plus staff, given the concessions that we have seen during the past two or three days. Having reread them before today’s debate, I realise that they are substantially out of date. It would be extremely helpful to those of us who have been following this in detail.

I am in the same position as the noble Lord, Lord Pannick, in that I do not like this clause. I do not think it is workable. Even fewer companies are now likely to take it up because of the safety net of the independent legal advice, for which I am grateful. I have yet to meet an employer who thinks that it is appropriate to reduce employment rights in return for sharing in growth in the future. That remains my fundamental position. Perhaps unwittingly, though, the Government have made it so unpalatable that most employers will just ditch that and go for the traditional route of offering employees a future share through a straightforward shareholding where everyone shares the gain and there is no disbenefit.

I support the noble Lord, Lord Pannick. Although they have moved, with this Bill the Government have solved one problem only to create others. I begin by confirming what my noble friend Lord Myners said. I was campaigning for an anti-avoidance, broad-brush approach for 30 years as an official of the Inland Revenue Staff Federation. I agree with my noble friend Lord Myners that this will not work. Over those 30 years, Chancellor after Chancellor said precisely that in relation to the arguments from the union that there should be such a thing. We will await events to see whether it happens.

The only point on which I disagree a little with the noble Lord, Lord Pannick, is the question of independent advice. The press picked it up and said that people will be entitled to go to a lawyer but if you go back to the Employment Rights Act 1996, which is from where this proposal came, you find a weird list of people who are legitimate to give advice in the context of the Bill that we are discussing. An independent adviser can be a qualified lawyer, which is defined in the terms that you would expect, or an officer or official of a trade union who is qualified to value companies. The trade union movement has swarms of people qualified to do that at the moment.

Then we come to the issue of reasonable costs. If this is to happen, we must define “reasonable costs” as probably something that employers are expecting. If we were talking about going to a lawyer and this were a different forum, I would say that if lawyers were present, those who felt they were qualified to do it should put their hands up. Very few would be qualified. I do not know what it has now but the Inland Revenue used to have a specialist section in Hinchley Wood to deal with the valuation of companies. This morning I asked two company chairmen whether they could tell me what the value of their company was and the answer was no. They would have to pay qualified people to value those companies. While it may be initially a case of shares at par, Lord knows what it would be in two, three, four or five years’ time.

As for the advice that is being given, he or she who gives advice has to confirm that they are adequately insured to ensure that there is compensation payable if the advice turns out to be wrong. Why on earth are we debating this? This is a proposition that, prima facie, employers do not want to lessen on the terms that my noble friend Lord Myners has expressed. It will be a considerable disservice not just to working people, because the potential of this is dreadful. I would not need any arguments at all to vote against it on that basis. It is also a disservice to employers. They will read this as saying that they have to pay only a few hundred pounds for the reasonable costs of advice. It will not be that sort of figure. If I had to do this today, I am not certain where I would go if I went to the City of London. Fees there are not cheap.

This is a little explosion that is set to go off the first time that anybody gets serious advice. My advice to the TUC would be to say to every union that has asked: seek and provide them with a list of people who may be capable of giving advice. We are talking about thousands of pounds an hour.

My Lords, the Minister ended our previous discussions on this matter by saying that, depending on the outcome of the vote and if it went against what he was advising the House at that time, he would make sure that the strength of feeling here was conveyed to his colleagues in the Government. I should like to express my appreciation for his having very precisely discharged that undertaking. As we know in this House, it is unusual for us to have had two occasions on which we have declined to agree with the other place. This has been a difficult exercise for the Minister and at this stage I congratulate him on the extra safeguards that he has managed to introduce. I do not disagree with many Members of this House but my view on this clause is summed up by a phrase that Sir Winston Churchill once used. He said that he could on this matter confine his enthusiasm within the bounds of decorum without any difficulty. I certainly feel that I have made clear my views on this.

The situation is now that we have introduced important safeguards. Additional safeguards do not make it easier for employers and they limit the range of businesses to which they might apply. I think that the clause will have limited application. There is now much protection against the real danger of this being mishandled by irresponsible employers. My noble friend Lady Brinton referred to not having met an employer who is in favour of them. I am not in the least surprised. I do not think that an existing employer could use this provision. If he has existing employees with full employment rights, the idea that he starts introducing a small additional recruitment of people who have fewer rights seems to me an unreal situation. I see this being applied now by genuine start-up businesses where the originator trying to start some new IT company. He might say to his friends and bright colleagues who are going to join him that he just cannot take on the liabilities that he might have to face in difficult unfair dismissal cases and cases of redundancy, and that they should all be in this together. Those are the only applications where I see that this might work.

With this additional safeguard we have reached a stage when we must recognise the primacy of the other place. It is very unusual for us to reject twice in a row. I think that I can remember one occasion earlier in my time here but I cannot remember our going any further than this. I would have had to think very hard about that if we had not had such a comprehensive amendment, which, as my noble friend will recall, is precisely what I asked that we should introduce. It involved a lot of hard work and I pay tribute to the officials. The noble Lord, Lord Pannick, ably spelt out that this is a most comprehensive amendment. It covers a wider range than I expected could be covered. The list of the types of shareholdings is warning enough of the problem that this issue contains. In recognising the way in which the Government have respected the view of this House and responded to the points that we have made, I say genuinely to your Lordships that we have done our job. We have introduced additional safeguards. We have challenged the other place twice. Having limited significantly the damage and introduced very dubious questions as to whether this clause will amount to much, we should now ease its passage.

My Lords, my noble friend Lord King has summed up the position extremely well. It is of interest that this largely appointed House has effectively achieved the democratic changes to Clause 27, for which there was clearly significant support.

The last time that we debated this, my noble friends Lord King and Lord Deben were saying similar things to me about this proposed piece of legislation but from the other side of the fence. As I said from the outset, it is clear that it is applicable only to the sort of situations that my noble friend Lord King described—to entrepreneurial situations, start-ups and groups of bright, young, ambitious people getting together and wanting to keep down the potential costs of their new enterprise. It would not be suitable, nor be taken up by large organisations. It would be strange to have some employees with one sort of equity and others with another sort, and some with one sort of employment contract and some with another. De facto, to the extent that it used, it will be in the territory described.

I may be naive, but I think the noble Lord, Lord Myners, exaggerates the scope for tax avoidance. It seems to me that it will be much smaller-scale, more analogous to the EIS scheme, which has been extremely successful in generating some £10 billion of risk capital for small companies and has more than paid for itself tax-wise. It may be that the noble Lord is a cleverer tax avoider than me—sorry, he is more knowledgeable than I am—but I do not think that the sort of structure to which he referred would work. I would have thought that HMRC would outlaw such things fairly quickly. I do not quite see how it would work to make individuals huge amounts of money that they would not make otherwise. I think the tax avoidance point is overstated.

Will the noble Lord, Lord Flight, at least acknowledge that the OBR has also expressed serious doubts about how this provision, which is not affected in any way by the laudable proposals now made by the Government, will be exploited for tax advantage? I believe that the OBR projected a cost of £1 billion.

I thought that what the OBR was effectively saying was that if capital gains tax on these arrangements were payable, that is the sort of revenue it would generate and the extent of the capital gains tax revenue that will be lost is because capital gains tax will not be payable. I am not clear that the OBR was citing fancy and wrong tax avoidance schemes for which it picked up intentions that they would be used. I stand to be corrected.

With all due respect to my noble friend, the tax provisions within the Bill provide for the taxable gains on up to £50,000 shares not to apply, so if it were possible for people who would in the normal course of their employment receive shares to change their employment status, then £50,000-worth of shares that they received would no longer be subject to capital gains tax, which would apply if they had normal employed status. That is the kind of loophole that I hope my noble friend and the Treasury will deal with and which would cause a loss of revenue. While my noble friend and I may think that capital gains tax is too high, it would clearly discredit the scheme if the only people using it were people who would otherwise have had to pay tax in the normal way and who benefited by changing their employment status. That is the argument that we raised at an earlier stage, and I am content to take my noble friend’s assurances that this will be looked at and will not happen.

I had indeed understood that that was the point, but if an individual chooses to invest in a fairly high-risk new venture via an EIS scheme, he does not pay capital gains tax. If he invests and it does not qualify for that scheme, he does. Self-evidently, new companies will as far as possible qualify for the EIS scheme because it gives that incentive to investors. The position here is not so dramatically different. People may well have equity in new start-ups that does not qualify for this scheme, but in terms of the overall package, as we are well aware, they will have to pay income tax up front, there is a limit to the amount of equity they can have and it is of cash-flow benefit to the company in terms of the potential costs that it removes. I do not see it as a vehicle of fancy tax avoidance. There is a perfectly fair debate about whether it is a good idea, but I do not believe it is useable as a vehicle for the sort of tax avoidance that we are trying to get rid of.

Nearly everything that there is to be said about this has been said in this House.

I shall close by repeating the point made by my noble friend Lord King. It is a great credit to the Minister that he has gone back and got the key concession that this House clearly wished for when we last discussed this Bill. It would be somewhat churlish of this House at this stage to push things to the wire. This scheme is not going to be a huge issue, and its usage will be limited to appropriate circumstances. There is merit in having a new class of employment between self-employed and fully employed, and if this becomes law there may be some interesting lessons in what it generates.

My Lords, I sense the mood of the House, and I will be very brief. One thing needs to be reiterated. My noble friend Lord Forsyth of Drumlean paid tribute to the House for securing these concessions and changes, but I should like to pay tribute to him. I came into the debate at Third Reading on 20 March with a speech in my pocket fully in favour of Clause 27. After it had been effectively demolished by my noble friends Lord Forsyth and Lord King and the noble Lord, Lord Pannick, I followed them into the Lobby and voted against this measure. They have done an immense service because I believed at the time that this should be an opportunity for the strong, not a fait accompli for the weak. The concessions that they have brought about and the way that the Minister has responded in bringing forward these comprehensive announcements reflects very well on those individuals and on the processes in this House. I will have no hesitation in supporting the Government when the vote is called.

My Lords, I shall be very brief, but there is one point on which I should like confirmation from the Minister when he sums up. The provisions that have been introduced into this statute refer to all sorts of guidance and recommendations. They do not include the valuation of shares, yet quite a lot of the discussion has taken place as though they do. An opportunity to correct that would be helpful.

My Lords, I said at the outset of our debates on this shares-for-rights scheme that it makes the back of the envelope look like Magna Carta. As a result of our deliberations, the envelope is somewhat more neatly addressed, and for that at least we should be grateful. I join other noble Lords in paying tribute in particular to the noble Lord, Lord Pannick, who has pursued the Government tirelessly on this scheme and, if I may say so, has become something of the constitutional conscience of the House, with large numbers of Members being dragged along or tagging along with him but none the less getting to the right place in the end.

I also acknowledge the important role played by Conservative and Lib Dem Peers on this issue, notably the noble Lords, Lord Forsyth and Lord King, and the noble Baroness, Lady Brinton, who have been indefatigable in raising the issues that we have had to address and in ensuring that we have secured at least some safeguards in the Bill and made the proposal at least somewhat less objectionable than it was when it was introduced.

There have been some safeguards and the Bill is somewhat less objectionable, but the reality is that this shares-for-rights proposal is still fundamentally flawed and fundamentally wrong. It is not the details that are wrong; like the poll tax, the basic idea is wrong. The idea that fundamental employment rights granted by Parliament to ensure that employees are treated fairly can or should be traded for shares, let alone shares worth as little as £2,000, is fundamentally objectionable. We are talking about basic employment rights which, as the noble Lord, Lord Forsyth, pointed out in our deliberations, have been granted by Governments, including Conservative Governments, over recent decades: the right to redundancy pay; the right not to be dismissed unfairly; the right to request flexible working in order to look after dependants; and the right to request training. These are basic rights and, as the noble Lord, Lord Bilimoria, said, there is a fundamental confusion at the heart of this proposal between employment rights on the one hand and enhancing wider share ownership on the other. We are all in favour of wider share ownership. Indeed, the Government commissioned the Nuttall review, which reported only six months before this proposal came out of the Chancellor’s bath in favour of a whole set of measures to widen share ownership. Not one of them was the proposal before your Lordships this evening and indeed it was not even considered by Nuttall, so absurd would it have been to the Nuttall advisers.

Therefore, we are in a situation now where we have some safeguards, particularly respecting the most vulnerable members of the community who might be faced with signing shares-for-rights contracts without the knowledge of what is in them, and for that we should be grateful. However, we still have fundamental objections to this proposal, and it comes to us as a revising Chamber with the weakest possible mandate: it was in no one’s manifesto; it was not in the coalition agreement; it was not recommended by any independent review of any kind; the majority which came to us from the Commons was below the Government’s normal majority; and it has been opposed by business, and so on. Therefore, as I said, it comes to us with an extremely weak mandate.

Even with the safeguards in the Bill, this proposal is still unacceptable, and not just in principle, as I said a moment ago, but in practice too—in particular, in respect of the tax status of these shares and the huge opportunities which this proposal gives for tax avoidance, as my noble friend Lord Myners stressed. Of course, I understand that discussions have taken place between those who were opposed at an earlier stage and the Government, and that a way forward has now been reached, but the noble Lord, Lord Forsyth, can never contain his real views. He is always commendably frank. His exchange with the noble Lord, Lord Flight, could not have been more telling. We are now just hoping that the Government, after we have enacted this legislation, will deal with the huge potential for tax avoidance which is not just theoretical but which the independent Office for Budget Responsibility stated, as my noble friend Lord Myners noted, is a potentially massive vehicle for efficient tax planning in a way that will lose the Treasury money. The OBR said that,

“the cost is expected to rise towards £1 billion”—

I repeat: £1 billion—

“beyond the end of the forecast horizon … it is hard to predict how quickly the increased scope for tax planning will be exploited; again this could be quantitatively significant”.

We are expected to pass this legislation this evening in the hope that this will be resolved when I had always thought that it was the job of Parliament not to enact legislation until we were clear that the possibly unacceptable effects of that legislation had been addressed. Paul Johnson, the director of the Institute for Fiscal Studies, said:

“Just as government ministers are falling over themselves to condemn”,

tax avoidance,

“that same government is trumpeting a new tax policy which looks like it will foster a whole new avoidance industry”.

And in my discussions with tax lawyers this afternoon, which I assure your Lordships made the last debate that we had in the House look like a bundle of laughs, they pointed out to me a whole string of potential loopholes raised by this provision that will not be easily dealt with at all. Matthew Findley, a partner of the lawyers Pinsent Masons and a member of the Share Plan Lawyers group and the Share Schemes Expert Group, says:

“The Government has … sought to limit the scope for major shareholders to become ‘employee shareholders’ ... It has barred those who own 25% or more of a company from becoming employee shareholders”.


“there remains considerable scope within SMEs and unlisted companies for senior management to be provided with very tax-efficient equity in return for giving up employment rights which they probably don’t value or need”.

Richard Murphy, a chartered accountant and tax expert who is a member of the General Anti-Abuse Rule interim advisory panel that drafted the guidance on anti-abuse for the Treasury, says that the rules in respect of employee shareholders to prevent tax abuse are weak and likely to be open to considerable abuse. For example, while it is suggested that an employee shareholder may not hold more than 25% of the shares in a company and qualify for this scheme, this would be all too easy to manipulate, especially in the case of a new company where any share ownership might be extremely flexible. In addition, given the ingenuity shown by many lawyers in their structuring of share capital, it would be all too easy to attribute value of much more than 25% to shares issued to any employee shareholder if that was desired. Furthermore, when there are no clear rules laid down on how valuations are to be agreed, and when these are exceptionally difficult to determine objectively in the case of small start-up companies whose owners might be tempted to make use of this arrangement, then the scope for tax avoidance exempting large swathes of future profits from the sale of SMEs is all too easy to envisage.

That is just the beginning. I have pages more like that which I am not going to detain the House with, all of which will need to be resolved if we are not to face, as the OBR said, a potential tax leakage of £1 billion or more in respect of a scheme which was entirely designed to promote growth and more entrepreneurial activity and not to give a big handout in terms of capital gains tax to those who are able to organise their tax affairs accordingly. In short, this shares-for-rights scheme is like the Hydra: every time you cut off one head, another two appear. As the noble Lord, Lord Forsyth, put it when we first debated this:

“The scheme is ill thought through, confused and muddled”.—[Official Report, 20/3/2013; col. 597.]

We agree; this scheme is ill thought through, confused and muddled. It will do nothing to promote growth and we will not be supporting it this evening.

Once again, I thank all noble Lords who have spoken. I can only reiterate that the Government would like to give individuals and companies more choice in how they structure their workforce. That is the aim of the employee shareholder employment status—to provide this additional choice. It remains correct that the employee shareholder status will be likely to be taken up largely by new small companies, which my noble friends Lord Flight and Lord King acknowledged. A large number of points were raised during the debate and I would like to address as many as possible.

The first was a very important point raised by the noble Lord, Lord Pannick, and my noble friend Lord Forsyth and concerns the question of the cost of legal advice to the employee shareholder. I just make it clear that the issue is whether they are charged in terms of having a benefit in kind. I can confirm that the Government will introduce an exemption within the benefits-in-kind legislation to ensure that the requirement to provide legal advice will not lead to a tax cost on individuals looking to take up the employee shareholder status, regardless of whether they choose to take up the status. This should be addressed in the Finance Bill.

The second point is a point of clarification and concerns the definition or description of drag-along and tag-along rights. Perhaps at this stage I should defer to the superior knowledge of my noble friend Lord Forsyth. The answer, for the education of the House, is that these rights are sometimes found in a company’s articles of association or shareholder agreements. Drag-along rights refer to the rights of a majority shareholder to require minority shareholders to sell their shares if the majority shareholder sells theirs on the same terms, and tag-along rights, which are more active, are the rights of minority shareholders to procure an offer for their shares on the same terms as the majority shareholders are selling theirs.

The noble Lord, Lord Bilimoria, in a passionate speech, raised the issue of consultation. I should like to clarify that we consulted on how to implement the option, not on whether we should proceed in principle. Therefore, it is not true to say that no one supported the measure, although he did not say exactly that. The consultation responses included some positive responses. As organisations said, businesses of all sizes might be able to benefit because the changes suit the dynamic way that their business operates. Therefore, the Government believe that it is a good additional option for companies and individuals. It adds to the existing status of employee and worker, which has been much covered in previous debates, and it provides those taking it up with the flexibility as well as the opportunity to share the reward and the risk that comes with having an interest in a growing company. As I have said in the past, we recognise that not all companies will wish to take up this new status, and that is fine. What is important is giving those companies that wish to take on people in this different way the opportunity to award share equity.

The noble Baroness, Lady Turner of Camden, raised the issue of withdrawal of employment rights, which I believe she raised in previous debates and which I understand. The argument is that we believe it is wrong to focus on just one aspect. Forgive me if I am repeating myself, but the employee shareholder status must be seen as a package. It is a package of employment rights, mandatory shares and tax incentives. It is the interaction of all three aspects that will motivate staff.

This new status confers a number of benefits for both the employer and the employee shareholder. From an employer’s perspective, the employee shareholder is more likely to generate ideas, as I remember mentioning in the past, for bettering the company, and to have a greater incentive to contribute to the organisation. Indeed, the hope is that they will stay longer than they otherwise might in their particular organisation.

Changing tack, the noble Lord, Lord Myners, raised the issue of multiple use of connected companies. Employee shareholder status is intended to be part of a flexible and efficient labour market in which people can move from job to job if opportunities arise—a point which may not surprise the noble Lord. However, where a person takes up an employee shareholder status in a number of companies which are associated with one another, such as banks and subsidiaries, income tax will be payable on any shares received from whatever company beyond the first £2,000 in value. Likewise, any shares beyond the first £50,000 in value will not enjoy the exemption from capital gains tax. This will prevent multiple use of the scheme for tax advantages, because the relevant limits for the tax exemption will apply to all employee shareholder contracts with connected companies.

I finish on this note. I outlined extensively in my opening remarks the points that have been raised in past debates about the share status. I reiterate that the Finance Bill will be used to sweep up any issues. We will be looking at this extremely carefully.

My noble friend Lady Brinton asked a relevant question as to whether I will be sending around revised guidance to the House. Of course, we will be sending guidance around once we have incorporated all the changes which have come from the various concessions which we have outlined today, made by Parliament and stakeholders. However, consultation continues, and I would not at this stage wish to commit myself to any particular date for passing that on.

The noble Lord, Lord Myners, raised a point about a general anti-avoidance rule. Forgive me if I am repeating myself, but the Finance Bill also introduces a general anti-avoidance rule which will tackle abusive avoidance schemes or contrived arrangements designed to avoid tax. This rather neatly rounds up a quite interesting debate that we have had this afternoon, including from my noble friend Lord Flight and the noble Lord, Lord Myners, on this issue.

The key point about tax abuse which has not been made is that the Finance Bill is an annual process. This issue can therefore be tackled at least on an annual basis if necessary. I confirm, too, that HM Treasury and HMRC will be keeping the scope for tax abuse under constant review.

The noble Lord, Lord Christopher, asked what happens if the legal advice given to putative employee shareholders is erroneous or negligent. Legal advisers are likely, of course, to have professional indemnity insurance which covers negligent advice and its consequences, so there will be safeguards there.

The noble Viscount has been very coy about what “reasonable” means. I sought to demonstrate that it could be much more expensive than it might appear at first sight. I do not know of any trade union lawyer, for example, who would do other than say, “Go to the City for advice”. Equally, it may well be more difficult to be satisfied by a valuation on the sale or disposal of those shares. Will there still be available to workers the opportunity to get advice on that?

I believe that I have spelt out the comprehensive and extensive advice that will be on offer to employees. The noble Lord, Lord Christopher, has brought up the issue of what can be defined as “reasonable costs”. We recognise that the cost of legal advice will depend on individual circumstances. I remind the House that employee shareholder status and its ramifications will entirely depend on the type of company, type of employee and the wishes of the employee shareholder. Those discussions will go on outside any control from government. The costs involved will vary depending on the type of contract or job offered and the level of knowledge of the individual seeking that advice. What is reasonable in one particular instance may not be reasonable in another. Very deliberately, we are not stipulating a minimum or maximum price which would come under the definition of “reasonable costs”. It relates to other areas and sectors in entirely different circumstances. The concept of “reasonable costs”, as I am sure the noble Lord will be aware, is not an unusual matter.

There is deliberately no determining factor. This is a matter which has to be part of a discussion between the employer and the employee shareholder. The issue remains that the employer has to decide whether the costs are reasonable. If, for example, the costs are not reasonable, the employee shareholder has the right to complain and raise an issue. The ultimate sanction, of course, is that he may decide not to take up the job at all. That of course remains a matter for him.

The noble Lord, Lord Christopher, raised the question of valuation, which I earlier covered to some extent. He also raised the expense for companies in terms of valuing the shares. We acknowledge that it is not easy for private companies to value shares, a matter which I covered in some depth earlier. As I said, if the company is issuing new shares as part of an employee shareholder scheme, it is likely to take advice from their accountant, who will use standard methods to value the company. Again, I covered that earlier.

The House will be aware that the other place has now voted to retain this clause three times, a point made by my noble friend Lord King. I acknowledge the important role of this House, too. I believe that we have more than fulfilled that role. This House has carefully considered and improved the clause, which is evident from the package of amendments that we have discussed today. With your Lordships’ assistance, we have ensured that this clause now contains important protections for individuals. It is now for companies and individuals to use it if it is right for them.

My Lords, I thank the Minister for all his considerable efforts in securing the comprehensive amendment on independent advice. I also thank the noble Baroness, Lady Brinton, and the noble Lords, Lord Forsyth of Drumlean and Lord King of Bridgwater, without whose considerable efforts, the House would not have secured this important protection.

The noble Lord, Lord Adonis, exposed the defects in Clause 27 at Second Reading. He has since then, at every stage of the Bill, used his considerable forensic skills to expose each and every defect in this lamentable provision. I entirely agree with the substance of his powerful criticisms of Clause 27. However, the Government are determined to introduce Clause 27. It is impossible to see what further protections this House could usefully add. Therefore, the question, as it seems to me, is whether this House should continue to stand in the way of the Government’s determination to include Clause 27 in the light of the considerable safeguards that this House has introduced.

This House has had its say. It is now time to give way on this issue to the elected House. I therefore do not intend to divide the House further on this matter. I beg leave to withdraw the amendment.

Some Lords objected to the request for leave to withdraw the amendment, so it was not granted.

Motion A2

Moved by

25K: Page 35, line 28, at end insert—

“( ) For the avoidance of doubt, nothing in this section shall create a category of job vacancy which is solely an “employee shareholder job vacancy”.”

My Lords, the reason for this Motion is because there is one point which has been made repeatedly the last four or five times in which this matter has been discussed in the Lords and the Commons. It relates to the category of job vacancy which is solely for employee shareholders.

Those of us who are versed in industrial relations have been very puzzled by this from the word go. What is this category of job vacancy which is offered by employers solely to employee shareholders? The Minister cannot possibly stick to what he has expressed once or twice that there is always an option. There is no option in this Bill unless the guidance is radically rewritten.

On 22 April, the Minister said that the guidance possibly did need rewriting but that that was not too difficult. I would invite him to do so but, given the time, perhaps all he needs to do is to acknowledge that, at the moment, the guidance is not perfect and needs to be rationalised in the light of much of what has been said in both Houses of Parliament.

Of course, it is true that employers may want some of these jobs to be for employee shareholders. However, if they then say that the only jobs available for that warehouse, or that factory, are employee shareholder jobs, that is saying that those prospective employees can either have a job and give up their rights against unfair dismissal or redundancy, or not have a job at all. That is not offering options.

The Minister needs to respond to this Motion in some way tonight but, more importantly, how is Parliament going to scrutinise all the various introductory procedures before this can become operational in Loughborough, for example, and elsewhere?

In conclusion, would the Minister now concede for the first time that there is in the Government’s mind—as is stated in the guidance—a category of job vacancy called an employee shareholder job vacancy? I beg to move.

My Lords, I support the Motion in the name of my noble friend Lord Lea of Crondall. My support is based on two principles which I want to clarify. First, it is important that the intention of Parliament is clear and my noble friend’s Motion does that. Secondly, there is the issue of equality of opportunity in the recruitment process.

Given the extent of the Government’s effort to secure the passage of this Bill, employers at every stage of the recruitment process will assume that having shareholder employees is the preferred option. For the avoidance of doubt, it is therefore imperative that the legislation is clear and that what Parliament means is recorded on the face of the Bill. The Motion does that: it removes any inadvertent preference for shareholder employees.

My second point concerns the avoidance of discrimination at the point of recruitment. Here is a very simple example. A job is advertised by an employer who is currently operating an employee shareholder scheme. It is my view that, without this Motion, there is no duty, no guidance to the employer not to discriminate in favour of a shareholder preferred option. For those reasons, the legislation can be enhanced by clarity of purpose in order to protect the employee and also the employer, who might have to answer questions about the choice that was made at the point of recruitment. There is no protection in respect of recruiting a shareholder employee rather than someone else who is equally or better qualified. I support the Motion.

I thank the noble Lords, Lord Morris and Lord Lea, for their interventions. As I made clear in my opening remarks, we do not believe that the provision in the Motion of the noble Lord, Lord Lea, is necessary. It should be up to employers to recruit as they see fit. If a company wants to recruit an employee shareholder, as companies already do with employees and workers, it should be able to do so in its own way. Taking the argument further, if an employer wishes to post a notice for, or advertise, an employee shareholder position, they should be free to place this as one role, just as they would be able to do in an advertisement for any other role. While the House has raised concerns on behalf of the individual, and particularly given the concessions we have made, we must ensure that we do not tie the hands of employers. The noble Lord’s Motion would do just that. Therefore, I hope that it will not be supported by the House.

I thank the Minister for his reply. Perhaps I should first mention my thanks to my noble friend Lord Morris of Handsworth, who some 15 years ago was the chairman of the TUC working party on rights at work. I recall that this was part of a hugely successful programme of improving the quality of the contract of employment in many ways. This is the first time I have seen legislation that explicitly states that you can have a contract of employment of less satisfactory quality. That should be a source of concern. It would have been a source of concern in Whitehall in the days of the Ministry of Labour. At the moment we have legislation that is like a dog with three legs. There is input from the Treasury, Customs and Excise and BIS, but because there is no ministry of labour, the collective experience of people who know about recruiting and agreements seems to have been totally lost.

I think that our predictions will come true and that the Government—or the Government in power at the time, because we are only two years from a general election—will see this programme staggering on its feet. All the difficulties, from those raised by my noble friend Lord Myners to those raised in our last debate by other noble Lords on all sides of the House, will come to pass. However, in light of the hour and having had a full debate on this question over many days, I beg leave to withdraw the amendment.

Motion A2 withdrawn.

Motion A agreed.

My Lords, after completion of proceedings on the growth Bill, in the Division on the Procedure Committee report regarding a Back-Bench debates committee, there voted not content 245 rather than 243 as announced.

Enterprise and Regulatory Reform Bill

Commons Amendments

Lords Amendment 35: Clause 56, page 54, line 40, leave out paragraph (a)

Commons disagreement and reason

The Commons disagree to Lords Amendment No. 35 for the following Reason—

35A: Because it is appropriate for section 3 of the Equality Act 2006 to be repealed.

Lords insistence and reason

The Lords insist on their Amendment No. 35 for the following Reason—

35B: Because repealing section 3 would undermine the EHRC’s duty to promote social change through its human rights and equality duties; compromise its independence as an accredited national human rights body; and prevent it from complying with its monitoring requirements in that capacity and as Britain’s national equality body.

Lords Amendment 36: Page 55, line 8, leave out subsection (6)

Commons disagreement and reason

The Commons disagree to Lords Amendment No. 36 for the following Reason—

36A: Because it is more appropriate for the Commission for Equality and Human Rights to monitor progress by reference to its duties under sections 8 and 9 of the Equality Act 2006.

Lords insistence and reason

The Lords insist on their Amendment No. 36 for the following Reason—

36B: Because monitoring progress by reference to the EHRC’s duties under sections 8 and 9, rather than section 3, would prevent the Commission from complying with the monitoring requirements relating to equality and human rights bodies, and would jeopardise the EHRC’s accredited status.

Commons insistence, non-insistence and consequential amendments

The Commons insist on their disagreement to Lords Amendment No. 36, do not insist on their disagreement to Lords Amendment No. 35 and propose the following consequential Amendments to the Bill—

36C: Page 54, line 41, leave out “10” and insert “10(1) and (4) to (8)”

36D: Page 55, line 4, leave out from “subsections” to end of line 5 and insert “make further amendments to the Equality Act 2006.”

36E: Page 55, line 17, leave out subsection (10)

Motion A

Moved by

That this House do not insist on its insistence on Lords Amendment 36 and do agree with the Commons in their Amendments 36C to 36E.

My Lords, I will also speak to Motion B. We return to discussion of the equality provisions of the Enterprise and Regulatory Reform Bill. The House debated these issues on Monday and strong views were expressed, on which the Government have reflected very carefully. On Monday, as on other occasions, the noble Baroness, Lady Campbell, spoke eloquently and with passion about the importance of the commission’s general duty. I very much respect the knowledge that she and others contributed during the passage of the Bill.

The Government want the commission to be a strong equality and human rights body: our national expert whose opinion is respected and valued. This is what our legislative proposals, alongside our non-legislative work, are intended to achieve. We recognise that the general duty is important to many people as a symbolic statement of the Equality and Human Rights Commission’s overarching purpose. After the debate and Division in the House on Monday, the Government reflected further and decided to no longer press for its removal from the Equality Act 2006. However, as I argued on Monday, the general duty has a practical effect, as Section 12 of the Equality Act 2006 requires the commission to monitor and report on society’s progress against the aims set out in the general duty. We continue to believe that the commission will be more effective if the monitoring and reporting that it is required to do focuses clearly on its core equality, diversity and human rights duties.

The Motion we are considering today enables the commission’s general duty at Section 3 to remain in the Equality Act 2006. It also proposes that the commission should monitor progress against the duties specified in Sections 8 and 9 of the Equality Act 2006 —equality, diversity and human rights—the very areas where the commission can make a difference in society as our national equality body and national human rights institution. I should make clear that the commission will continue to be required to monitor and report every five years on changes in society in areas that it is uniquely placed to influence and change: in other words, those specified in Sections 8 and 9.

I come now to some technical amendments and beg the patience of noble Lords. Retaining the general duty at Section 3 also requires a consequential amendment to ensure that the word “groups” in the general duty is defined effectively. Amendment 36C, agreed by the other place, reinserts the parts of Section 10 that define “groups” for the purposes of the Act. Amendments 36D and 36E are technical and consequential amendments.

These proposals, which were fully supported yesterday in the other place, address the concerns raised during debates in this House. They build on the good progress already made. The Equality and Human Rights Commission is now well placed to go from strength to strength. I beg to move.

My Lords, I am greatly relieved and so appreciative that the Government have listened and conceded to the opinions of this House on the importance of the general duty. I and countless others who fought for and benefited from the Equality and Human Rights Commission slept a lot more happily last night in the knowledge that the body will continue to give overarching direction on equality and human rights in Britain in all its manifestations.

I am also reassured that the EHRC will continue independently to monitor and report on equality and human rights nationally, as required by EU law and the Paris principles. Such monitoring will not deflect its focus but will enhance its ability to protect and promote equality and human rights in an ever-changing world. The journey of this amendment has been a tough one, but I for one have learnt once again how collegiately and intelligently this House can shine. My thanks go to all those who took part, and of course to the Government for their generous concession.

I briefly follow the noble Baroness, first in thanking my noble friend the Minister for responding as she did to that very powerful vote on Monday, which was not the first powerful vote on this subject. Most of all, I hope and believe that I speak for everyone in this House in congratulating the noble Baroness, Lady Campbell, on her tenacity, her courage and her articulate presentation of a case that has been both powerful and moving. She has not only proved herself to be an invaluable Member of your Lordships’ House, but she has enabled us to demonstrate how important this House can be on issues that are not necessarily enormous in the general scheme of things but that are terribly important.

The Bill will be all the better for the acceptance of the amendment introduced by the noble Baroness, and for the response given by my noble friend the Minister. This is a happy note on which to end these particular deliberations, and we really are all very much in the debt of the two noble Baronesses, particularly the noble Baroness, Lady Campbell.

My Lords, this is a good day for equality. I think we have heard enough from all around the House to explain where this has come from. We are all in considerable debt to the exemplary work done by the noble Baroness, Lady Campbell. We think tremendously of her for doing it, particularly when we reflect that in taking on that task she had no greater foe than the noble Lord, Lord Lester, who has somewhat iconic status in your Lordships’ House as the guardian of all things to do with equality. He was against her. She saw no enemy, and saw him off. As a result, we are where we are today. As the noble Lord, Lord Cormack, has said, this is a good day for the House of Lords. Your Lordships’ House has done well to ensure that its will has prevailed, and we are all the better for that.

My Lords, I am grateful to the noble Baroness, Lady Campbell of Surbiton, for her support and her generous remarks. I echo my noble friend Lord Cormack’s tribute to her, and I am grateful to the noble Lord, Lord Stevenson, for his support this evening for the Government’s Motion. I am glad we are able to conclude the debate on the Equality and Human Rights Commission united in our aims for a fair and equal society.

Motion A agreed.

Motion B

Moved by

Lords Amendment 37: After Clause 56, insert the following new Clause—

“Equality Act 2010: caste discrimination

(1) The Equality Act 2010 is amended as follows.

(2) After section 9(1)(c) (race) insert—

“(d) caste;”.”

Commons disagreement and reason

The Commons disagree to Lords Amendment No. 37 for the following Reason—

37A: Because it is inappropriate to provide for caste to be an aspect of race for the purposes of the Equality Act 2010 without further consultation.

Lords insistence and reason

The Lords insist on their Amendment No. 37 for the following Reason—

37B: Because it is appropriate to provide for caste to be an aspect of race for the purposes of the Equality Act 2010.

Commons insistence and amendments in lieu

The Commons insist on their disagreement to Lords Amendment No. 37 but propose the following Amendments to the Bill in lieu of the Lords Amendment—

37C: Page 73, line 2, at end insert—

“Equality Act 2010: caste as an aspect of race

(1) Section 9(5) of the Equality Act 2010 is amended in accordance with subsections (2) to (4).

(2) Omit “may by order”.

(3) In paragraph (a) (power to provide for caste to be an aspect of race) at the beginning insert “must by order”.

(4) In paragraph (b) (power to provide for exceptions to apply or not to apply to caste) at the beginning insert “may by order”.

(5) A Minister of the Crown—

(a) may carry out a review of the effect of section 9(5) of the Equality Act 2010 (and orders made under it) and whether it remains appropriate, and

(b) must publish a report on the outcome of any such review.

(6) The power under subsection (5)(a) may not be exercised before the end of the period of 5 years beginning with the day on which this Act is passed (but may be exercised on more than one occasion after that).

(7) If a Minister of the Crown considers it appropriate in the light of the outcome of a review under subsection (5), the Minister may by order repeal or otherwise amend section 9(5) of the Equality Act 2010.

(8) The power to make an order under subsection (7) includes power to make incidental, supplementary, consequential, transitional or saving provision, including doing so by amending an Act or subordinate legislation (within the meaning of the Interpretation Act 1978).

(9) An order under subsection (7) must be made by statutory instrument.

(10) A statutory instrument containing an order under subsection (7) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

37D: Page 76, line 2, at end insert—

“( ) section (Equality Act 2010: caste as an aspect of race) extends only to England and Wales and Scotland;”

37E: Page 76, line 8, at end insert—

“( ) section (Equality Act 2010: caste as an aspect of race);”

37F: Title, line 7, after “directors;” insert “to amend section 9(5) of the Equality Act 2010;”

Motion B

Moved by

That this House do not insist on its insistence on Lords Amendment 37 and do agree with the Commons in their Amendments 37C to 37F in lieu.

My Lords, this House has debated caste and caste discrimination at each stage of this Bill since Grand Committee. I pay particular tribute to the noble and right reverend Lord, Lord Harries, and my noble friends Lord Avebury and Lord Deben, for their important, impassioned and at times moving contributions to these debates. I also acknowledge many other noble Lords who spoke in heartfelt and well informed ways, many for but some against the different amendments relating to caste discrimination being incorporated into the Equality Act 2010.

Earlier this week we considered this issue again in some detail, and this House repeated its view that caste should be directly included in the Equality Act 2010 as an aspect of race. The Government have always said that we are against any form of caste prejudice or discrimination. What has been at issue is how best to tackle any such prejudice and discrimination that may occur.

We have listened carefully to what this House has said, and we acknowledge the strength of opinion that has been expressed. While I need to record that we remain unconvinced that the evidence shows that legislation is the right way to resolve problems associated with caste prejudice or discrimination, we none the less accept the need to resolve this matter. We have therefore made the commitment, after full and extensive consultation, to legislate. Noble Lords will recognise that this is the essential difference compared with our earlier proposals.

The amendment that was last debated in this House would have seen caste directly become an aspect of race for the purposes of the Equality Act 2010. Instead, we propose an alternative form, which was originally proposed as an amendment in this House in Grand Committee. Under this amendment in lieu, what is currently a discretionary power in the Equality Act to add caste to the list of race characteristics will become a duty on the Secretary of State. This amendment still gives effect to the need to legislate, while giving us greater flexibility to pick up the key issue of public consultation, which I believe the House recognises to be necessary and useful.

There are important issues on which we need to consult widely. The first concerns the definition of caste in the Act and any associated exceptions. Second is the issue of non-legislative concerns, some of which were highlighted by the Opposition in the other place and raised in this House, for example the guidance needed by business or by courts and tribunals, or the vexed question of caste identification and monitoring. Finally, there are wider issues to do with caste, such as gathering the right evidence that may be needed for the eventual statutory reviews, to which I shall come in more detail in a moment.

The secondary legislative approach, which the Government are proposing today and which I think was supported by a number of speakers, gives us better assurance that we get the legislation right, as well as greater flexibility on its timing. I should add that we intend to continue with our Talk for a Change education programme in relevant communities, which we continue to see as having an important role in effecting cultural change over time. We also wish to involve and work closely with the Equality and Human Rights Commission on broader issues of caste and caste-related discrimination.

Noble Lords will also see that there is a further element in the Motion. We have provided for the possibility of a review of the exercise of the caste power and any order made under it. This safeguard is in response to the various concerns raised by parliamentarians of all parties, here and in the other place. It looks beyond any immediate need for caste legislation, and concerns the importance of ensuring that legislation does not inadvertently embed in British society the concept of caste, together with those aspects of it that are inappropriate to the modern world.

We see no place for caste in today’s Britain, and we want caste distinctions to disappear over time. This power gives us the opportunity to review the ongoing need for such legislation to remain, together with a means for its removal should it no longer be considered appropriate. As I have already said this evening, the Government have listened carefully. We are committing to legislate after we have carried out the consultation which this House has recognised to be necessary, before we exercise the power to make caste an aspect of race in the Equality Act 2010. We are also putting in place the option to review that legislation after it has been enacted. I trust that noble Lords will accept these proposals, one of which mirrors an earlier proposal put forward in this House. The other picks up on a suggestion put forward by the Opposition, among others. I beg to move.

My Lords, I would like to express our deep appreciation to the Government for listening to the concerns of communities that are most affected by caste discrimination, and thank the Minister in particular for the seriousness with which she has taken this issue and the commitment that she has given it. As she said, the vital change has taken place. The word “may” has been changed to the word “must”. This will be part of primary legislation. There is agreement all around the House and in the other place that a period of consultation is necessary, both with those who are firmly in favour of the legislation and those who are against. There is absolutely no disagreement on that, and it is inevitable that there should be a period of time before the Act comes into force. Together with the noble Lord, Lord Avebury, I will seek a meeting with the Minister in the other place to talk with her about this consultation, in particular to get some sort of feel of the timescale before the Bill is enacted. I reiterate the thanks of the communities most affected by caste discrimination for the way in which the Government have listened seriously and responded to their concerns.

I shall add a 15-second contribution to what the noble and right reverend Lord, Lord Harries of Pentregarth, has already said about our gratitude to the Minister, who, as he said, has listened carefully to the representations that have been made. I only wish that she could have seen the joy that the announcement caused among the communities, which was displayed in a demonstration in Parliament Square yesterday afternoon. Hundreds of people were there, welcoming the change of attitude by the Government and saying that this was a moment of tremendous excitement and joy among all the Dalit communities.

I am not so sure about Talk for a Change, because I think that it is probably a waste of money. However, this is not the moment to cavil about the detail but only to welcome the principle that this matter will be dealt with by legislation. I am most grateful to my noble friend and to the Government as a whole for their change of mind, declared at this last moment.

My Lords, we are extremely pleased that the Government have now accepted the need to legislate for legal protection against discrimination on the grounds of caste. Everyone agrees that caste has absolutely no place in our society and that, if there is even one case of such discrimination, proper action must be taken and there must be proper access to redress.

I also join the thanks for the exemplary work done by the noble and right reverend Lord, Lord Harries, and the noble Lord, Lord Avebury, who have taken the main burden of negotiations and discussions about the right way forward. We have arrived at a very elegant solution by changing the legislation to require the duty on the Government to make progress, therefore bridging the not very large but seemingly unbridgeable points that seemed to divide us on this issue. Eventually, with good sense on all sides, they have been removed, and we are very grateful to the Government for that. This is now again a good day for equality, and we will all celebrate this as we go forward.

I thank my noble friend Lady Thornton, who cannot be here this evening, for the considerable work that she took on when she came into this area. She used me as a bit of a listening board from time to time, and I felt that sometimes I had been at some of the meetings, where some rather inelegant things were said that do not bear repeating in your Lordships’ House, because noble Lords would be shocked. We got through it, we are here today and we should celebrate where we are and wish the Government well in their onward work, which will all be very useful.

My Lords, I am grateful to the noble Lord, Lord Stevenson, for welcoming the Government’s Motion this evening. I share with him his tribute to his noble friend Lady Thornton. As much as I am always pleased to see the noble Lord, I am none the less disappointed that the noble Baroness could not be here this evening. I shall make sure that I convey that to her directly outside the Chamber.

I am very grateful to the noble and right reverend Lord, Lord Harries, for his generous remarks and for those of my noble friend Lord Avebury. I note the noble and right reverent Lord’s request for a meeting with my right honourable friend in the other place. I am sure she would want me to agree to that meeting without hesitation, because it would clearly be welcome to hear further from noble Lords before we start on the consultation process.

I am grateful to all noble Lords for the remarks that they have made this evening. Like the noble Lord, Lord Stevenson, I am pleased that we have been able to find a way through that addresses all the concerns that have been made and that will ensure that we find a way through that satisfies those who have been suffering and that does not perpetuate something that we do not want to see as part of our society.

Motion B agreed.

Public Service Pensions Bill

Commons Amendments

Lords Amendment 78: Schedule 1, page 23, line 20, at end insert

“(c) the Defence Fire and Rescue Service”

Commons disagreement and reason

The Commons disagree to Lords Amendment No. 78 for the following Reason—

78A: Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

Lords non-insistence and amendment in lieu

The Lords do not insist on their Amendment 78, but do propose Amendment 78B in lieu.

78B: After Clause 9, insert the following new Clause

“Defence Fire and Rescue Service and Ministry of Defence Police Capability Review

(1) The Secretary of State, in conjunction with the Secretary of State for Defence, will, within six months of this Act coming into force, prepare and lay before both Houses of Parliament a report setting out the Government’s assessment of the impacts of this Act on current and future members of the Defence Fire and Rescue Service and current and future members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987.

(2) A report under subsection (1) will include, but not be limited to, consideration of the following —

the impacts on the health and wellbeing of members of the Defence Fire and Rescue Service and members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987;

the ability of the Defence Fire and Rescue Service and members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987 to meet the Ministry of Defence’s statements of requirement of these personnel;

the number of members of the Defence Fire and Rescue Service and members of the Ministry of Defence Police nominated under section 1 of the Ministry of Defence Police Act 1987 taking early retirement, the consequences of early retirement for those members and the costs to the taxpayer of such members taking early retirement.”

Commons disagreement and amendment in lieu

The Commons disagree to Lords Amendment No. 78B, but do propose Amendment 78C in lieu.

78C: Page 17, line 39, at end insert—

“Defence Fire and Rescue Service and Ministry of Defence Police: review

(1) The Secretary of State must, before the end of the period of six months beginning with the day on which section 9 (pension age) comes into force, prepare and lay before Parliament a report on the likely effect of that section on members or future members of

the Defence Fire and Rescue Service, and

the Ministry of Defence Police.

(2) The report under this section must include a report on —

the likely effect of section 9 on the health and well-being of members of the Defence Fire and Rescue Service and the Ministry of Defence Police,

the likely effect of section 9 on the ability of the Defence Fire and Rescue Service and Ministry of Defence Police to continue to meet operational requirements, and

the extent to which members of the Defence Fire and Rescue Service and Ministry of Defence Police are likely to take early retirement in consequence of section 9 (and on the consequences of taking early retirement for the persons taking it and for the taxpayer).

(3) In this section “Defence Fire and Rescue Service” means the fire service maintained by the Secretary of State for Defence.”

Motion A

Moved by