Financial Services (Banking Reform) Bill

House of Commons, 9 July 2013.

[2nd Allocated Day]

New Clause 8 — Competition and Markets Authority review into competitiveness

Chris Leslie (Labour, Nottingham East)

I beg to move, That the clause be read a Second time.

John Bercow (Speaker, Buckingham)

With this it will be convenient to discuss the following:

New clause 10—Sale of state-owned banking assets—

‘(1) Before the sale of banking assets in the ownership of HM Treasury, the Treasury shall lay before Parliament a report setting out—

(a) the manner in which the best interests of the taxpayer are to be protected in connection with such sale,

(b) the expected impact that any sale might have on competition for the provision of core services, customer choice and the rate of economic growth,

(c) an appraisal of the options for potential structural changes in the bank concerned including—

(i) the separation of the provision of core services from the provision of investment activities,

(ii) the retention of a class of assets in the ownership of HM Treasury,

(iii) the impact of any sale on the creation of a regional banking network.

(2) A copy of the report in subsection (1) shall be laid before Parliament and sufficient time shall be given for the appropriate committees of both Houses of Parliament to consider its findings before any sale decision.’.

Government amendment 5.

New clause 15—Local stakeholder banks—

‘(1) Within three months of Royal Assent of this Act the Secretary of State shall publish for consultation a report setting out proposals for the creation of networks of local stakeholder banks.

(2) This report shall contain an examination of stakeholder banking structures, defined as credit institutions that are not owned by private shareholders, with the with the aim of maximising shareholder returns. The examination should draw on experience in the UK and elsewhere and include—

(a) co-operative banks;

(b) credit unions;

(c) community development finance institutions (CDFIs);

(d) public-interest savings banks.

(3) The report shall examine potential impacts of the creation of networks of local stakeholder banks on—

(a) customer service and product range,

(b) accessibility to banking services for customer underserved by commercial banks,

(c) financial stability,

(d) accountability to local stakeholders.

(4) A copy of this report and the outcome of the full consultation shall be laid before Parliament and sufficient time shall be given for consideration of its findings by members of relevant committees of both Houses before any decisions are taken on the sale of state-owned banking assets.’.

New clause 12—Portable account numbers—

‘(1) Within six months of Royal Assent of this Act, the Treasury shall lay before Parliament a report considering—

(a) the adequacy of voluntary arrangements made by UK ring-fenced bodies to facilitate easier customer switching of bank account services; and

(b) legislative options for the introduction of portable account numbers and sort codes for retail bank accounts provided by UK ring-fenced bodies.

(2) The Chancellor of the Exchequer may, by affirmative order to be approved by both Houses of Parliament, confer powers upon the appropriate regulator to require UK ring-fenced bodies to comply with any specified scheme to establish the use of portable account numbers and sort codes.’.

New clause 14—Portable account numbers (No. 2)—

‘(1) Within 12 months of Royal Assent of this Act, the Treasury shall lay before Parliament a fully independent and comprehensive report detailing the options for introducing portable account numbers for bank accounts within the UK, including a full cost benefit analysis of the available options.

(2) The appropriate regulator may require banks and building societies to comply with any scheme to introduce and facilitate the use of portable account numbers, which is introduced in regulations made by the Treasury.

(3) No regulations may be made by the Treasury under this section unless a draft of the regulations has been laid before Parliament and approved by a resolution of each House.’.

Government new clause 1—Minor amendments.

Government new schedule 1—Minor Amendments.

Chris Leslie (Labour, Nottingham East)

Here we are again—a second bite at the Financial Services (Banking Reform) Bill. Today, we debate a series of amendments and new clauses that have been loosely grouped together under the title “Competition etc.” I shall speak in particular to new clauses 8, 10 and 12 in due course, but I shall start with new clause 8.

We felt it important to discuss the obstacles in the way of better competition in the banking sector. I am sure that it is not true of you, Madam Deputy Speaker, but many hon. Members have probably been with their retail bank since they were very young—not so long ago in your case, Madam Deputy Speaker. Although an aficionado of switching and looking at different services in banking, I must confess that I have been with the same bank since I was 14, and with no real logic other than the inertia that afflicts many customers: we tend to think that it is inconvenient to change bank accounts; we tend to think, “There is not much choice, so what is the difference or the point of shopping around?” It is this sense of a lack of competition and lack of choice that we want to remedy with the new clause, tabled with other amendments in the group.

There are significant obstacles to competition, particularly to new challenger banks coming into the system, breaking into the business and trying to do something to challenge the absolute dominance of the big five banks. The new clause would require the Treasury to publish a review considering the obstacles to those new challenger banks and ways of increasing the number of new banks coming into play.

Under the new clause,

“The Chancellor of the Exchequer shall instruct the Competition and Markets Authority to begin a full market study…into UK financial services institutions involved in the provision of core services”—

in other words, retail banking. The aim is to provide a structure to support better competition, dealing with obstacles in the way of allowing new institutions to break into the market and to consider what actions could be taken to facilitate the new institutions entering into general competition.

Barry Sheerman (Labour, Huddersfield)

Does the Minister accept that help is needed not just for new entrants, but for unusual, smaller players in the present financial system? As a Labour and Co-operative Member of Parliament, I have an interest in the Co-operative bank. When HBOS and RBS got into difficulties, everyone rushed around throwing taxpayers’ money at them, but when the Co-op gets into serious difficulty because of its unique ownership basis and its lack of shareholders, it receives very little help from either the Treasury or the Department for Business, Innovation and Skills.

Chris Leslie (Labour, Nottingham East)

I hope that the Co-operative bank, and all other institutions, will now be in a position to make secure and stable progress. However, I do not think that there is really a parallel between the Co-operative bank and institutions that would have disappeared had it not been for the intervention of the taxpayer in keeping the cash machines operating. We hear Government Members say that the public deficit was somehow created as a result of ministerial choices. It is sometimes forgotten that the state—the taxpayer—had to intervene to rescue the banks. Thank goodness that happened, but it left us with a phenomenal problem with which we are still struggling years later.

Barry Sheerman (Labour, Huddersfield)

Many of my constituents worked for the Halifax mutual building society, and we saw what really caused the ruination of two banks. Wicked, evil,

unethical people took over a bank and ran it into the ground. That was not about the Government; it was about greed, and about particular people.

Chris Leslie (Labour, Nottingham East)

Absolutely. Those are the very issues that should be in the Bill, but it is a pretty thin measure. We are still waiting, apparently endlessly, for the Government to decide to populate it at some point with the recommendations of the hon. Member for Chichester (Mr Tyrie) and the Parliamentary Commission on Banking Standards.

We need support for mutuality and greater diversity in the banking sector, and that is why the new clause refers to competition. We do not just want more plcs to enter the market; we want institutions of many different types, including mutuals, to be given a chance to compete for business. My hon. Friend’s Co-op bank, for example, might wish to have that greater choice were it available. The new clause was largely inspired by the recommendations of the parliamentary commission, whose most recent publication made it very clear that the sector suffers from a lack of serious competition.

Which?—formerly the Consumers Association—reported recently that 55% of people had never switched their main personal current account, and that the larger banks had not earned their market share by dint of innovation or the provision of competitive services but simply through “first mover” advantage, because they had been there for such a long time. It also reported that, sadly, customer surveys had indicated that the big five high street banks—Lloyds, RBS, HSBC, Santander and Barclays—consistently gave less satisfaction than others. Those banks have a very large market share, which has increased over the last few years. They control 85% of the current account market as opposed to 71% before the financial crisis, 67% of mortgage gross lending as opposed to 38% before the crisis, and 61% of the savings account market compared with 47% before the crisis. The inertia of their customers enables those large banks to sit on a fairly stable customer base. It has often been said that people are more likely to divorce than switch current account, although I am sure that that does include those who are in the Chamber today. The lack of dynamism and choice in the market is a significant worry, and it is no wonder that it has been criticised by the Office of Fair Trading.

There are major barriers to entry for new banks, which need to establish an infrastructure to have a fair chance of competing more widely. Recent suggestions include the adoption of utility platform sharing, and an extension of the payments system machinery beyond the big banks. I think that such ideas should be given serious and detailed consideration, but they pose a challenge to institutions that own and control payments systems, and we must think carefully about how they can be tackled.

Some of the big banks were supposed to divest themselves of branches. RBS was supposed to float off a number of its branches to Santander, but that did not get very far. Similarly, as my hon. Friend the Member for Huddersfield (Mr Sheerman pointed out), Lloyds was supposed to divest itself of many of its branches to the Co-op, and we all know what happened in that instance. In all, 1,000 branches were supposed to be out there creating a proper challenger bank, or at least mixing it up a little by increasing the number of players

in the system. That has not happened, and I have to say to the Minister that the Treasury has not exactly covered itself in glory. I am not claiming that it is entirely the Treasury’s fault, but I think that it had a hand in overseeing some of the divestment strategy. I hope that the Minister will update the House, because divestment is very relevant to the issue of proper competition.

John Fingleton, chief executive of the OFT, has said:

“More than a decade on from the Cruickshank report, we still have a banking sector where competition is manifestly not working well for consumers.”

The hon. Member for Chichester, the Chairman of the Parliamentary Commission on Banking Standards, who has left the Chamber—oh, there he is, next to the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso). I apologise to him. He is clearly negotiating away as we speak. He has said:

“The lack of competition in banking has been reinforced by a regulatory regime favouring large incumbents. Customers have lost out as a result. Moves to remove barriers to entry are essential.”

We all agree with that.

We constructed new clause 8 very much along the lines of the commission’s recommendation of

“a market study of the retail and SME banking sector, with a full public consultation on the extent of competition and its impact on consumers. We make this recommendation to ensure that the market study is completed on a timetable consistent with making a market investigation reference, should it so decide, before the end of 2015.”

The timescale issue is very important, because the issue has drifted on year after year.

John Thurso (Liberal Democrat, Caithness, Sutherland and Easter Ross)

The hon. Gentleman has gone to the heart of one of our key recommendations, but what we had in mind was that the Government should just get on and do it. We did not envisage a need for legislation. Am I not right in thinking that, if properly instructed, the relevant authorities could undertake the work themselves?

Chris Leslie (Labour, Nottingham East)

I hoped that legislation would not be necessary, but I think it worthwhile for the House to express its view, particularly in response to the commission’s recommendation. Heaven knows, we have been here before. We have heard plenty of warm words from Ministers. They have said “We will certainly consider this, because there is a strong case in favour of it”. When it comes to the crunch, however, if the House of Commons is to do anything through this Bill—and we shall not be doing a lot, because so much is being left to the other place—I think that it is worth our trying to insert the new clause, just to keep the Minister’s feet to the fire. All that we are asking for is a market study in preparation for the proper market investigation reference before the end of 2015.

When the Vickers report was published in 2011, Labour Members felt that specifying 2013 would allow an appropriate time in which to assess the issue, and, two years on from Vickers, I do not think that anything has changed our minds in that regard. Getting that market study under way is the very least that should be done, and the Minister needs to commit to doing that. This is a critical point. When Members listen to what

the Minister has to say, they must read between the lines. He will make all sorts of warm noises and say, “The OFT has started this process for SME customers”, but it has not done so for retail customers. That is the crucial difference; focusing merely on SMEs is not sufficient.

The Government have already claimed in their response to the commission’s recommendations that they will be fulfilling the commission’s proposal, but that is not the case. They are not putting in place that retail review, and I do not understand why they are so resistant to doing that. The Minister must explicitly set out why they are holding back from having a market study and investigation of the issues in respect of retail banking.

The Government response is full of warm words—they say they are in discussions and they are engaging with the problem—but it is not strong enough. It is too piecemeal and not sufficiently transparent, and they are not giving the commitment consumers, let alone commission members, would like. If the Government can at least acknowledge that they will not accept the commission’s recommendation, that will give us a clear choice when we come to consider what to do in respect of new clause 8.

The hon. Member for Brighton, Pavilion (Caroline Lucas) has tabled new clause 15, which focuses on local stakeholder banks and local banking. I agree that we should look at sub-national financial provision, particularly for customers, who can feel that they have very little choice at all. She will know that in new clause 10 we say that if state-owned banking assets are to be sold, options for a regional banking network ought to be fully considered. That is a very important proposal from the Opposition. There are some very plucky and hard-working institutions across the country—the credit unions, the community development financial institutions and other smaller building societies and mutuals—that do a lot of very worthwhile work at regional and local basis.

Barry Sheerman (Labour, Huddersfield)

Would my hon. Friend add to that list crowd funding and crowd sourcing, which many people think is the basis of a new, democratic capitalism in our country? It allows people to bypass the banks, which have so often failed us, and gives to our communities the power to regenerate businesses and communities.

Chris Leslie (Labour, Nottingham East)

As some have said in the past, the magic of the “interweb” will ensure that customers can avoid that intermediation—that middle-management step—and access finance. That may well develop very rapidly, although we need to make sure the regulators can keep an eye on how it develops.

Barry Sheerman (Labour, Huddersfield)

That must not be too heavy.

Chris Leslie (Labour, Nottingham East)

Well, I think it is important that we make sure the foundations are put in place to allow those new forms of finance to come to fruition in a safe environment.

My hon. Friend makes that point well, and I also want to give a name-check to the Community Investment Coalition: a number of financial institutions at local and regional level have come together to campaign on some of these issues, and in particular to call for greater transparency in the provision of financial services from

community to community on a postcode-level basis, although that is anonymised as we do not need to know which organisations have been lending to which individuals.

We are supposed to have had a commitment from the Government that they would try to get that level of data from the big banks so we could see where there were deserts in terms of financial provision. In some communities access to finance is a real problem, as is access to basic bank account services and other services which people have a right to these days as part of the warp and weft of modern lifestyles. Credit is really a modern utility, and we need to make sure that, as the CIC has campaigned for, the Government press the banks to be more transparent and to come forward with more data so we can decide what further local provision may be required.

Jonathan Edwards (Plaid Cymru, Carmarthen East and Dinefwr)

Does the shadow Minister therefore believe we should follow what the US has done? It has a community reinvestment Act, which ensures that the major banks are investing equitably on an area basis. The major problem in the UK is that investment is directed towards London, of course.

Chris Leslie (Labour, Nottingham East)

And not just towards London, as a lot of the major banks have had their appetites whetted to make big profits by focusing on overseas. That disconnect with locality has been part of the problem. One issue for debate—on another day, perhaps—is the idea of having a regional banking network. The German Sparkassen system has a geographic mandate that requires those banks to do business within a particular locality. That is a dynamic for making sure there is a direct relationship between the banker and the customer, particularly for small businesses, but on a retail basis as well. That is a very good idea whose time has probably come.

Caroline Lucas (Green, Brighton, Pavilion)

May I interpret the hon. Gentleman’s warm words to mean that Labour would support my new clause 15 if there were a vote on it?

Chris Leslie (Labour, Nottingham East)

Well, personally I prefer our new clause 10, but that is a good try by the hon. Lady. She has raised this issue in the spirit of trying to generate consensus on it, but I hope that in the limited time available to us we focus on the principle of making sure we get those commitments from the Government, which we all want in order to help get this transparency about what is happening in localities, as well as making sure we look at the state-owned assets and think about how they might be applicable to a regional banking network.

Government amendment 5 looks at some issues to do with competition, although they are mostly to do with the nature of ring-fencing and changes that might happen to the ownership of ring-fencing. I want to ask the Minister a question about the tensions between some of the objectives in the Bill. Government amendment 5 inserts a new requirement to consider competition issues, which seems to be slightly in tension with the existing provision to make sure there is no significant adverse effect from changing the ring-fencing arrangements. Can he clarify that that tension is resolvable, and confirm that the duty to consider competition will take effect subject to clause 4(3)?

On Government new clause 1 and new schedule 1, can the Minister help us by talking about the practical implications of the amendment to the Companies Act 1985 omitting disclosures to the regulators, done for the purposes of helping them fulfil their functions under part VI of the Financial Services and Markets Act 2000? In particular, this appears to stop such disclosures being exempt from section 449 of the Companies Act, which criminalises disclosure of information obtained in certain circumstances. What is the reasoning behind that change? Also, paragraph 2 of new schedule 1 amends section 376 of FISMA, changing “PRA-authorised” bodies to “PRA-regulated” bodies. Is that a significant change? Are there any bodies that are classed as PRA-regulated but which are not PRA-authorised? If so, which are they?

Our new clause 12 addresses the portability of bank accounts. I know that the hon. Member for South Northamptonshire (Andrea Leadsom) has been very active on this, and that she has tabled similar amendments. She has been vocal in favour of some of these changes, and has tabled a sensible set of proposals. I hope she would agree that we are mirroring each other on this question.

Our new clause 12 would mandate the Chancellor to publish a report on the adequacy of the current account redirection service and on a possible change in the law to compel all ring-fenced banks to introduce a current account redirection service that might include portability. The banks themselves have made proposals for a seven-day switching arrangement from this September. The Minister claimed in the Government’s response that they had secured that commitment, but that might be a little bit of exaggeration and spin; I suspect that the banks were heading in that direction, but I will let him off on this occasion. This all comes down to whether that seven-day switching will radically transform the convenience for the customer. It is all very well saying that there will be a year or so when some transactions from the existing current account will automatically be made into the new account, but I do not understand why that provision has been time-limited. Some people will forget that that provision expires after a certain number of months.

Andrea Leadsom (Conservative, South Northamptonshire)

Interestingly, when we get into the nitty-gritty of how the seven-day switching process will work, we find that it seems to be more string and Sellotape—on top of the string and Sellotape currently holding the legacy systems together—so it is hardly a 21st century technological solution.

Chris Leslie (Labour, Nottingham East)

That is the worry, and we want to see how it is going to work. It is all very well if direct debits and standing orders—the sums leaving someone’s bank account—may be switched in that way, without the aggro and hassle of having to fill in new forms and so forth, but one of my anxieties is about payments into an account. For example, even the little step of someone having to tell their employer that they have a new account number and sort code is an inconvenient step too far. Apparently the banks are saying that they might deal with that as well, but this does not feel adequate and sufficient.

Andrea Leadsom (Conservative, South Northamptonshire)

Is the hon. Gentleman aware that he is more likely to get divorced than to change his bank account?

Chris Leslie (Labour, Nottingham East)

Funnily enough, divorce has already come up a couple of times in our proceedings, and I am sure that Mrs Leslie will be watching them.

Andrew Love (Labour, Edmonton)

The reality is that the seven-day switching service must be matched against increases in the level of switching of current accounts if we are to increase competition. All the evidence from countries like the Netherlands, where such a service has been introduced, shows that it has the trust of customers but does not increase switching levels, although that is the rationale for account portability.

Chris Leslie (Labour, Nottingham East)

Absolutely. Sir John Vickers pointed out in his report that a typical customer is likely to move current accounts every 26 years, on average, and it is estimated that about 6% of personal current accounts will be switched this year. All sorts of statistics prove that this is not a particularly active area, although there is a growing consensus among members of the commission, and even some of the banks, that portability might be an idea whose time has come.

Barry Sheerman (Labour, Huddersfield)

I switched a business account to HBOS, without knowing that anything was going to happen, because I thought that with KPMG as its auditors and with an auditor process in place my investment and my savings would be safe. What are we going to do to ensure that when people switch there is a guarantee that, at last, the accountants in this country and the auditors actually do their job?

Chris Leslie (Labour, Nottingham East)

That broadens things out into a whole new terrain, but suffice it to say, we should be able to trust our banks. We should be able to know that all these issues will be going on safely. To be fair to the banks—I do not say that often—some of their systems are able to cope, and complaints mechanisms are in place to deal with these things.

This is just about the customer being able to grasp and understand what is going on. The grey mist descends on many constituents—and, heaven knows, on many hon. Members, as we can see—at the mention of financial services, and that is without getting into pensions and some of those issues. Basic bank account services are incredibly important and we need the Government to say a little more than warm words in their response on this issue. I commend the hon. Member for South Northamptonshire on her campaign and we are very much behind the spirit of the changes she suggests, hence our new clause 12.

Finally, I wish to deal with new clause 10, which relates to the sale of state-owned bank assets. We feel that before a sale takes place of assets in the ownership of Her Majesty’s Treasury—we are very much focused on the Royal Bank of Scotland and Lloyds at the moment —the Treasury ought to set out clearly a report discussing the manner in which the best interests of the taxpayer will be protected in the sale, and the expected impact that any sale might have on competition for customers and on the rate of economic growth. That should be accompanied by a proper appraisal of the options for potential structural change in the banks concerned, including: whether there should be any changes to the division between retail banking and investment banking in those institutions; whether some asset classes need to

be held back—this is sometimes characterised as a good bank/bad bank split; and, crucially, the impact of the sale on the creation of a regional banking network. We think that is essential.

Pat McFadden (Labour, Wolverhampton South East)

My hon. Friend will know that the banking commission recommended having a proper study of the good bank/bad bank option for RBS. Does he think that in advance of that study it might help if the Government exercised a little more care in their stewardship of RBS, given that their disastrous political meddling of the past month has resulted in a fall in the share price of some 20%, the bank losing a chief executive without a plan being put in place for replacing him, and confidence among investors being lost by the Government’s handling of the bank?

Chris Leslie (Labour, Nottingham East)

My right hon. Friend is completely correct about that. If the British public realised what has happened to the value of that taxpayer stake in RBS, they would be appalled. Today’s figures show that £2 billion-plus has been taken off the value of RBS since the botched handling of the departure of the chief executive, Stephen Hester. That mishandling forced the Chancellor to back down from a foolhardy dash towards a fire sale, which we know was part of the plan from the conversations that Sir Philip Hampton, the chairman of RBS, let slip in comments to journalists around that time. Labour Members, however, are absolutely focused on the need for the taxpayer to get good value for money, to get our money back. That is entirely possible. Stephen Hester revealed the flaw in the Chancellor’s strategy for a hasty sale driven by the electoral timetable when he gave an interview to the BBC last month. When asked whether taxpayers would get back their £45.6 billion, he answered:

“RBS is capable of being worth more than what the government paid for the shares”.

When asked again whether it is possible for us to get our money back, he said:

“RBS is capable of that and I would be disappointed if over the passage of time that that won’t be the case.”

Stewart Hosie (Scottish National Party, Dundee East)

I am very supportive of new clause 10, particularly the notion that the Government describe how the taxpayer will get the money back. However, has the hon. Gentleman given any thought to the timing of such a report and what information may need to be omitted, particularly in relation to asset clauses the Government may continue to hold, because it might be market-sensitive in the run-up to the re-privatisation of the bank?

Chris Leslie (Labour, Nottingham East)

I would have thought that before the Government considered a sale they would decide what they want to sell and what they do not want to sell. I do not think that what the hon. Gentleman suggests should be a particular problem, particularly given the taxpayer interests involved, in terms of having that report before a sale. However, I accept that there could be circumstances in which commercial confidentiality might apply and a line might need to be considered. I would be happy to examine whether some aspects of that need to be built into this concept. There is an opacity about the Government’s strategy, and the fog engulfing the Treasury, perhaps hiding the chaos within, is extremely thick—a real pea-souper. I am amazed that once the Chancellor

of the Exchequer had defenestrated the chief executive of RBS—let us be honest, that is essentially what happened, and although the Chancellor of the Exchequer might have protested, “It’s nothing to do with me, guv,” with his 82% shareholding he clearly had a hand in the decision —the Government were surprised when the markets reacted so adversely. It is amazing that they went down that route without thinking through who would replace Stephen Hester as chief executive of RBS, creating a massive amount of uncertainty about the future of the institution. We are glad that they changed their minds and were forced to back down from the rush to the fire sale, but what on earth are we left with and where is the situation going?

The commission managed to eke out of the Government a vague commitment that they would consider the good bank/bad bank issue, possibly in September. We need the Minister to elaborate on that commitment today, and it is very important we get that. Why have the Government ruled out some of the other considerations needed at this time? The Chancellor, itching as ever to achieve his political ends, has turned his focus on Lloyds and getting that stake out of the door. It might be easier to do that with Lloyds, but we need some reassurance that the taxpayers’ best interests will come first, not the political game playing and political timetable—whether it is about the timing of the general election or something else—that is driving the process. It should be done in the best interests of the economy and of the taxpayer.

Apparently sovereign wealth funds—in other words, other countries—might well buy stakes in Lloyds and British banks. I am told that apparently LIBOR will be run by the New York stock exchange, so there is a theme developing of other countries getting involved in historically British institutions. I will leave that issue to one side, however. I merely want us to have a clear and comprehensive strategy not just on better competition for the banking sector but so that the Chancellor can prove that he is adept at thinking through properly what to do with the Government’s stake—the taxpayers’ stake—in these institutions. They are fundamental to the British economy; they are massive institutions with a great footprint on our economy and worldwide. That is why we feel that new clause 10 is the least we should have—we should have that level of reporting, of availability of information and of options appraisal. We need a comprehensive assessment that is evidence-led and considers all options. That is an important matter of principle as, ultimately, this must be all about getting best value for the taxpayer.

Andrea Leadsom (Conservative, South Northamptonshire)

I am delighted to be able to speak about this Bill on banking reform, which is so crucial to the future success of the British economy. All that time ago, Adam Smith said in “The Wealth of Nations” that for free enterprise to exist one needed both free entry and free exit of market players. Over the past 20 years, we have had neither in banking. Failing banks have certainly not been allowed to exit the market, hence all the problems with “too big to fail” and the massive taxpayer bail-outs. New players have also not been able to enter the market, as there have been enormous barriers to entry, and my new clause is an attempt to establish a real game-changer once and for all for the fate of competition in our banking sector, to enable new entrants to come into the market.

I know that the Government have already done a huge amount of work to change the plight for would-be banks. For example, we already know that the new Prudential Regulation Authority and the Financial Conduct Authority have made it easier for new banks to apply for a banking licence. Previously, there were enormous regulatory hurdles to entering the market for new banks, but now it has become slightly easier because they can get a banking licence that is conditional on their being able to recruit the right people and so on. They do not have to spend millions of pounds up front to evidence the fact that they can be competent as a bank.

The regulatory barriers to entry are gradually coming down, but an incredibly significant point that has not been addressed until now concerns the competition barriers to entry for new players in the market. The Government have made great strides in that regard, not just through the Vickers commission and the recommendations on seven-day switching, which will be a game-changer in enabling individuals and businesses to switch between banks, creating the competition that has been so lacking, but through some of the structural reforms they have announced more recently and the amendments to this Bill.

When I was elected to Parliament in 2010, one of the first things that my colleagues on the Treasury Committee —who are almost all in the Chamber today—and I did was consider the proposal from the Payments Council to get rid of cheques. We discovered in our evidence sessions that the proposal came purely from the banks. It was convenient only for them and absolutely was not convenient for the millions of people in this country who rely on cheques to settle bills, to pay their window cleaner or newsagent or to pay the neighbour who picked up their shopping for them. Millions of people still needed cheques, but it was very clear that the Payments Council planned to get rid of them for the convenience of the banks that owned and ran it. For me, that was the road to Damascus moment; I realised that the banking sector is the last great closed shop. The Payments Council, owned and run by the banks, governs the payments system, the big banks are the clearing banks through which every new challenger bank must go, and the payments infrastructure, VocaLink, is also owned and governed by the big banks.

For decades, the Payments Council has been able to permit or deny innovation in the payments industry. The big banks have been able not to allow challenger banks direct access to the payments system and have required them to go through the clearers, charging them up to 10 times more for accessing the payments system than they have been paying themselves. The first significant decision on which I want to congratulate the Government is that to consult on a new independent payments regulator. That is key to breaking open the banking sector and enabling new competition and transparency. It will be interesting to see just what has changed after the new regulator’s first few months of operation; it will be fundamentally transforming.

Importantly—this is where my new clause comes in—and as the hon. Member for Nottingham East (Chris Leslie)has said, for decades there has been a key barrier to competition in the banking system: the inability to move bank accounts freely and easily. People might be sick and tired of their bank. The Treasury Committee took evidence on opinion polls that suggested that

certain banks had negative values when it came to whether customers would recommend them to a friend. People would say, “No, whatever you do, don’t go to my bank.” It is unusual to have such utterly negative recommendation levels between friends for a supplier. Even the energy sector fails to achieve such low levels of recommendations between friends. Something is clearly desperately lacking in customer service.

The Committee also heard some pretty shocking statistics about the failure of certain key banks to respond to customer service inquiries, to manage their call centres properly and to deal with complaints when they happen. It has taken all these banking scandals—payment protection insurance mis-selling, the bank swaps mis-selling and various other scandals—before the weight of evidence became enough for regulators to take action. Clearly the banks have not been good at policing themselves, and clearly it has been extraordinarily difficult for individuals and businesses to vote with their feet and move.

The difficulty is not only the decision to move bank; the person making that decision also faces having to make arrangements as regards their online shopping, their contract with the milkman and newspaper man, and their standing orders for, say, their television licence or their car insurance. If they change bank account, they have to change all those things, because they change bank account number.

The issue is not just whether a person can be bothered to change and go through all that hassle; very often, because of the consolidation that has taken place over the past 20 years, banks will force that situation on a consumer. A colleague told me in the Lobby the other day that their bank had just notified them that they have to change their bank account number, credit cards, debit cards, and cheque-books—everything—regardless of the fact that they do not want to do that, because the bank decided, off its own bat, to send them to another brand name. Of course, there is no compensation, or any way to get the bank to help the person to make all the notifications that they need to make.

Many people, particularly the elderly, have a real concern that if they change bank account things might just not happen; their regular payments might not be made, and everything might go horribly wrong. That puts them in a very difficult position. Of course, there is plenty of evidence of things having gone wrong. Perhaps the seven-day switching process will solve the problem of switching simply going wrong.

It would be a far better solution if, when a person moved bank, they took all their bank details with them. A similar thing happens in the case of mobile telephones.

Jonathan Edwards (Plaid Cymru, Carmarthen East and Dinefwr)

The hon. Lady alluded to the allegedly competitive market in the energy sector, where there is a right to switch, although it can be difficult to do so, as I found out. Switching in itself does not stop companies from acting as a cartel. How confident is she that switching in banking would lead to greater competition in the market?

Andrea Leadsom (Conservative, South Northamptonshire)

I will come on to that, and that will become clearer in the course of my comments. Certainly, in terms of barriers to entry, the lack of competition and switching—in other words, people’s inertia—has

meant that banks simply have not had to compete on customer service. They have not had to fight to keep their customers. As those of us who have been in business know, there are times when we have lain awake at night, wondering how to stop our customers from leaving us tomorrow; that is the big motivator, whereas in the past it was how to nick a tiny bit of market share from one of the big players. The fundamental point is: “How do I hang on to my customers?” Customer retention is always the biggest challenge for every business, where there is free and open competition. That is what bank account portability would ensure.

If a person was switching between banks, instead of having to change all their bank details and cards, and having to remember the new numbers and notify all their suppliers, they would simply take their bank details with them, just as a person who changes mobile telephone provider takes their telephone number with them. That is what the amendment proposes.

I am delighted that the Government have said the following, in a press release responding to the work of the Parliamentary Commission on Banking Standards:

“On top of introducing 7-day account switching from September this year the government will ask the new payments regulator, once established, to urgently examine account portability and whether the big banks should give up ownership of the payments systems.”

I take that as a warm move towards the idea of bank account number portability.

Bank account number portability is a game-changer, but it is no surprise that the big banks, when asked about this back in 2010, virtually told us that it would cost so much that the entire world would end. That comes as no surprise to us; they would say that. However, if we scratch beneath the surface and talk to the likes of VocaLink, which provides the payments infrastructure, we find that many of the technological requirements of bank number portability already exist.

At the moment, the big banks own a person’s sort code and account number, and give the payments instructions that they hold for that person to VocaLink, so that it can make that payment. Instead of having that two-step process, in which a person instructs their bank, the bank instructs VocaLink, and VocaLink makes the payment, with bank number portability the consumer’s bank account number, sort code and payment instructions would be held within VocaLink. Instead of a two-step process with the bank at the front end, there would be a one-step process, in which the consumer communicated with VocaLink, and the bank instead provided the customer service front end and the customer proposition. That would completely streamline the system.

Andrew Love (Labour, Edmonton)

Is not one of the problems—this was certainly highlighted in our investigations—the ownership of the infrastructure by the banks, and the difficulty in getting them to change? Is not a payments regulator the ideal way to twist their arm, so that they do the right thing?

Andrea Leadsom (Conservative, South Northamptonshire)

Yes. The hon. Gentleman is absolutely right, and he has certainly been a keen supporter of bank number portability, as have many hon. Members in the Chamber today. The payments regulator that the Government are consulting on is the first step to achieving

transparency. The next step is empowering that regulator to do something to enforce bank number portability when it finds, as I am sure that it will, that to date there has been a completely deliberate attempt to restrict competition in the banking system.

The big banks have said that bank account number portability would cost an absolute fortune, yet the technology already exists. Some people have asked whether it would not be an enormous risk to data integrity if the consumer’s bank account number, sort code and payments instructions were held by VocaLink, but in reality, all the consumer’s details are held by the bank, which passes them all on to VocaLink, so there are double risks to data integrity at the moment. Holding those account details in VocaLink would reduce, rather than increase, the risk.

People also say that other banks cannot access VocaLink’s payments infrastructure directly, because all the banks that clear direct have mutually to underwrite each other’s payments. The smaller challenger banks cannot possibly afford to underwrite the payments of the bigger banks. However, we could easily solve that; already, in various exchanges, banks pre-fund payments. If a bank’s balance were too low, and it was running short of cash with which to meet its outgoing payments, it would be called, intra-day, for more cash. That problem is easily solvable, and the reason why it has not been solved is that that is simply not in the big banks’ interests.

It has also been said that the proposal would surely be incredibly complicated from an IT point of view, but VocaLink has already set up bank accounts for the Department for Work and Pensions, because a lot of the Department’s benefits customers do not have bank accounts. VocaLink is already able to manage customer account details for DWP customers, so the technology already exists. I simply do not accept the idea that there would be eye-watering costs. Chief executives of big banks have literally said it would cost trillions—absolutely vast sums—but I challenge them to provide any scrap of evidence that shows that is the case, and that their refusal is not down to their desire to restrict access to new players.

The advantages of bank account number portability are, of course, the elimination of barriers to entry, and increased competition as a result. One of the big problems for new entrants is that it is so difficult to gain customer share, because people will not move bank accounts. With bank account number portability, if I, as a customer, was sick and tired of my bank, I could move tomorrow, the day after, and the day after that, if I was not getting good service, and it would not be any skin off my nose; it would be perfectly easy to do, and it would be the banks’ problem. That would be an enormous change in the competitive environment.

Likewise, there would be far greater consumer choice. Bank account number portability would encourage the likes of Tesco Bank and Marks & Spencer Financial Services—any big, multinational conglomerate—to go into the money business; it would become yet another product line. That in itself would eliminate some of the problems of “too big to fail”, because there would be many more smaller players, which would have many product lines, and therefore would not have all their eggs in one basket.

For small businesses the change would be revolutionary. At present one of the biggest problems for small businesses is that the big banks require that as well as their company

accounts, small business people have their personal accounts and mortgage with the same big bank and do all their foreign exchange, overdraft, loans and other transactions through that bank. It is incredibly difficult for a small business to move accounts because of the complexity of all their suppliers and all the people they are trying to trade with. The barriers to entry for them are perhaps even greater than they are for us as individuals. Again, being able to take their bank account number with them would change the position dramatically.

Another huge advantage that is not often talked about is that since the 1990s, when I was running Barclays bank’s team, an enormous consolidation has taken place. There used to be 44 big banks in the UK; there are now about 22 banks of any size. The consolidation meant that during the 1990s many banks took over other banks, broker- dealers, small fund managers and so on, so they have an enormous number of legacy systems. They have managed to string them together over the years, but bank fraud in this country alone is huge. Changing the payment system would dramatically reduce the incidence of bank fraud. Intellect, the IT trade body, has said that the change could reduce the incidence of bank fraud by up to £30 billion a year.

Finally, another key advantage of bank account number portability is resolution. Andy Haldane, the Deputy Governor of the Bank of England, has gone on record as saying that it would be the solution when the day comes that a big bank fails again. We have, of course, put in as many steps as we can. Basel III will make great strides towards ensuring that banks cannot fail again. We have created our new regulators. We have ensured that banks have proper leverage and proper capital. All those measures are designed to ensure that banks cannot fail again, but we know that banks will always fail. That is the reality in a western developed market economy such as ours. We saw only too recently the problems with Northern Rock, when people were desperate to take their money out. The answer to resolution is for the Bank of England to be able to say, “You have failed. We are now taking all your accounts and putting them with survivor banks.”

There is a huge amount going for bank account number portability, above and beyond the seven-day switching process. My new clause calls for the Government to ensure, within 12 months of Royal Assent, a full cost-benefit analysis of bank account number portability. Should the findings be that this is a good idea, and should it produce the kind of benefits that I have just described, the regulator should be empowered to implement bank account number portability. I welcome the Government’s assurances that they will move in that direction. On that basis I will not press my new clause to a Division, but I urge the Government to keep up the momentum and ensure that before too long we have full account number portability.

Caroline Lucas (Green, Brighton, Pavilion)

Thank you, Madam Deputy Speaker, for the opportunity to speak to my new clause 15. It is a modest proposal for a full Government consultation on the potential for local stakeholder banks to be carried out before we sell off RBS or any other taxpayer-owned banking assets.

I was interested to hear the Minister mention yesterday his trip to Germany and how he saw in the pages of the Handelsblatt a big headline saying, “City of shame”,

referring to the City of London. I agree that this is a stark illustration of the impact of financial mismanagement and of our current banking system on people’s views of the City. However, although I also agree that this highlights the need for improved standards in banking, I think it highlights, too, the need for a radical reappraisal of ownership and accountability structures, if we want to have a banking system that we can be proud of, not ashamed of.

I hope that during the Minister’s trip to Germany he also found time to look at the savings banks, the Sparkassen, that we have spoken about this afternoon and which make up about one third of the German banking system. They are run commercially with dual financial and social objectives, to make a profit and to support the local economy. Professional bankers take responsibility for day-to-day running of the banks and if they make incompetent lending decisions, they are more likely to get sacked than their counterparts in giant commercial banks. Local stakeholders, including local politicians, business leaders, employees and customer representatives, sit on a supervisory board. That is just one example of the sort of local stakeholder bank that my new clause seeks to promote.

The New Economics Foundation analysed data from 65 countries where such alternatives thrive. They include co-operative banks, credit unions, community development finance institutions and public interest saving banks. The common characteristic is the goal of creating value for stakeholders, not just for shareholders, and some exciting and incredibly positive trends emerge. First, a greater focus on the needs of customers, including more competitive products, better service and longer-term lending; secondly, provision for customers who are currently under-served by regular banks; thirdly, a boost to local economic development through lending to small and medium-sized businesses, preventing capital drain from the regions and maintaining branch networks; and finally, a positive impact on financial stability through less volatile returns, high levels of capital, prudent balance sheets and expansion of credit provision after the financial crash.

Jonathan Edwards (Plaid Cymru, Carmarthen East and Dinefwr)

To what extent has the hon. Lady been influenced by the system in the US, where there is a strong network of local credit unions, that provide an economic function for the local business community, not merely banking for the poor?

Caroline Lucas (Green, Brighton, Pavilion)

The hon. Gentleman cites one of the few examples in the United States and its economic system that I would want to emulate. Credit unions set an interesting example that we could learn from.

Although I welcome the findings of the Parliamentary Commission on Banking Standards, I worry that the commission was somewhat seduced by the assumption that RBS should be returned to the private sector in one form or another, without a sufficiently full and proper examination of the merits of publicly-owned alternatives. It is important to underline that “publicly-owned” does not mean state-run. The German public saving banks are managed by bankers, not politicians, but they are run to serve the interests of the local economy and of citizens, rather than those of remote shareholders. Managers

are held much more accountable for incompetent lending than are private sector managers who drove their businesses to bankruptcy while exploiting their customers with mis-sold products.

It is important to understand also that local stakeholder banks are not unprofessional. The banks studied by the New Economics Foundation make a solid profit to ensure their own viability, and their first priority is always to make sure that the loan is repaid. Because they are not trying to make 22% return on equity, which is RBS’s current profitability on UK retail business, they are quite happy with 8%, so they can afford to meet their social purpose. If the Government are serious about becoming a champion of SMEs and regional prosperity, at the very least they need to look into the pros and cons of a network of regional banks.

What if best value for the British taxpayer is the long-term ownership of a successful bank or banks that support the British economy? An obsession with privatisation on either side of the House should not blind us to that possibility. My amendment simply proposes a full examination of various forms of local stakeholder banks to ensure that we take decisions about the future shape of RBS and our banking sector more widely on the basis of practical economics and evidence, not just ideology.

I support new clause 10 that was tabled by the Labour Opposition. Sub-paragraph (iii) refers to

“the impact of any sale on the creation of a regional banking network.”

What I set out in new clause 15 is exactly the kind of positive impacts that we would want to see. Rather than simply guarding against negative impacts on any regional banking network, I would like to see us actively, explicitly and energetically promoting the alternative of greater local and regional banking. I hope very much that there might be some chance that the Minister will look favourably upon my new clause.

Mark Garnier (Conservative, Wyre Forest)

I wish to speak substantially to new clause 14, which stands in the name of my hon. Friend the Member for South Northamptonshire (Andrea Leadsom). She has waged a Boadicea-like war to bring about account portability, and I have been happy to follow that banner—certainly over the past two years—when trying to increase competition. Between the two of us, my hon. Friend has led on account portability, while I have looked closely at barriers to entry and regulation.

I repeat my hon. Friend’s point about how the regulator has given way a bit on regulatory barriers to entry. Although I would not say it has moved substantially, it has made it easier for challenger banks to enter the marketplace. Two or three years ago, any potential challenger coming to the marketplace looked to spend between £300,000 and a potential £25 million just to get to the regulator’s front door and open a formal dialogue to get a banking licence. That is now changing, and the regulator has come up with a new process that makes it a great deal easier. None the less, smaller banks have certain problems due to ongoing expectations that give an advantage to the bigger banks. Those bigger banks have greater granularity with their account holders, and can therefore consider more sophisticated risk-weighting

models for their assets. Smaller banks do not have those IT advantages and the cost of their asset book rises with greater capital requirements, which is still a problem.

Before I get to the substantial points, when considering effective competition within the marketplace we must remember the importance of a well-educated consumer. I am pleased that the Government have already responded on that—yesterday the Secretary of State for Education announced the new curriculum, which includes financial literacy, and I pay tribute to his wisdom in realising that that is one of the greatest engines of social mobility. In any sophisticated society such as ours, it is important that those we are educating can deal with the most basic measure of the economy we live in—looking after their own money. That has been achieved through the hard work of organisations such as the Personal Finance Education Group and the all-party group on financial education for young people, and it is a very good thing.

Financial education, understanding and literacy are core to driving competition. It is no good giving people a multiple choice of banks they can use if they do not understand the products being presented. When considering standards within banks, it is important that the marketplace, as well as the regulator, holds those banks’ feet to the fire to ensure they are performing well, providing a good service and delivering trust, which is crucial to restoring a properly functioning banking market in the UK.

On account number portability, in September this year seven-day switching will start. The banks have come to us proudly and said that they have spent £700 million implementing that system, but in essence it is less a switching service and more a redirection service that lasts a year—more of the chewing gum and Sellotape we heard about earlier. The measure of success for the seven-day switching service is expected to be how many people switch, but I do not think it will pass that test because I do not expect many people to switch their accounts. It comes down to the fundamental problem that there are still barriers to entry for new entrants, which leaves a small number of banks in the marketplace. Most people cannot see the difference between one bank and another, and even if they can, they do not necessarily understand what it is. In their mind, the risk of an uncertain future with a different bank far outweighs the benefits of finding a better service and challenging the bank to be more efficient.

The proposals for account number portability in new clause 14, which the Government have already agreed is a good thing, are important and will make it simple for new banks to enter the marketplace and steal market share from existing banks. The provision has the advantage of being pro-competition—we have already heard strong discussions about that—and there are number of other important issues alongside that. First, in this world where we would like a lot more transparency, the new Financial Policy Committee is considering the state of the financial system. That will help it understand what is going on in terms of transparency, and bring the visible part of the system within the auspices of VocaLink. As a result, the FPC will be able to head off any disasters if it sees anything going on.

We also heard that resolution of failing banks is incredibly important. Part of the Bill’s raison d’être, and indeed that of all the work done by Vickers and

everyone who has worked on this since the crisis of 2007-08, is to try to ensure that people affected by failing banks do not lose their livelihood or face a financial crisis, so a simple resolution of a failing bank is incredibly important. Under the proposals, although an individual might see on television that there has been a run on their bank and that it is collapsing, the next morning they would simply wake up to discover that their bank account had automatically been transferred to another bank. The systems would continue to work, so their pay would be received on their behalf, their standing orders would still be paid and their house would not be repossessed because they had not paid their mortgage. More importantly, if they do not like the new bank they had been sent to, a couple of days later they could move to a better bank that they felt more comfortable with. Resolution is therefore incredibly important.

The other incredibly important point is that some banks have legacy IT systems that have been around for a huge number of years. Parts of these IT systems can date back to the punch cards of the 1950s and 1960s. In a recent conversation with someone who has done a certain amount of work in one of the larger state-owned banks, I happened to make a throwaway comment about the old IT systems. He responded, “Oh yeah, absolutely.” He explained that he had been looking at some of the software surrounding the small and medium-sized enterprise accounts and had noted that one of the software models had a converter sitting alongside it for converting pounds, shillings and pence into decimals. That must be at least 42 years old, as decimalisation was in 1971.

We know for a fact that there are a lot of old and incompatible systems being held together with string and chewing gum. Andy Haldane at the Bank of England has done a study and estimated that 80% of banks’ IT spend is on holding old systems together. If we take into account the fact that it is timely because at some point all the banks will need to update their systems, and if we consider resolution, transparency and competition, we will come up with a pretty convincing set of arguments that now is as good a time as any to introduce what will amount to fairly substantial IT investment, and there are a number of reasons that come together to make it worth while.

VocaLink, which runs a payments system, has already done a great deal of work on that. I have heard from a number of the larger banks that it could cost £10 billion, but they are dead against any sort of account number portability, so I suspect that it would be a lot cheaper. That is why it is incredibly important that the Government come forward as soon as possible to get the cost-benefit analysis on moving to full account number portability and, importantly, not be distracted by looking at the seven-day switching service in a year’s time.

David Ruffley (Conservative, Bury St Edmunds)

I congratulate my hon. Friend, and I congratulate my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) on introducing new clause 14, which I call the Leadsom clause. Before concluding will my hon. Friend share with us the work he has done in speaking over the past two years to potential new entrants, new challenger banks, that have said that they would consider entering the market if bank account number portability came to pass?

Mark Garnier (Conservative, Wyre Forest)

Yes, without a shadow of a doubt. A great many of the smaller banks that are looking to enter the marketplace have to use a piggyback system with the big clearers. For example, C. Hoare & Co., which has been around for 341 years and is still a private bank, uses RBS for its clearing. To that extent, the larger banks are providing a service, but ultimately it is causing a great problem for them. Over the past two years I have met about 20 potential challengers looking to enter the marketplace, and certainly it is largely the regulatory barriers to entry that have caused the problem.

Ultimately, the challenger banks are going to be running current accounts. Some of the larger ones, such as Metro Bank and Virgin Money, are 100% behind having full account number portability and recognise—I think that this is one tribute to them—not only that that will be an opportunity for them to attract accounts from existing banks, but that they will have to work incredibly hard to meet the challenge of a more sophisticated consumer in order to keep those accounts once they have them. That is crucial to one of the key points of the Parliamentary Commission’s report, which is the need to ensure that we drive better standards.

I return to the fundamental point that the best way to drive better standards is to have a very discerning and demanding consumer in order to ensure that those banks provide a service, and for that discerning consumer, once we have taught them how to do it, to hold the banks’ feet to the fire, so they need to be able to move their account very simply and overnight.

Pat McFadden (Labour, Wolverhampton South East)

I want to make a few points about new clauses 10, 12 and 14.

New clause 10 deals with securing the best interests of the taxpayer as regards the state-owned banks and their future. If the best interests of the taxpayer were in the Government’s mind in recent weeks in their stewardship of RBS, that has been shown in a very peculiar way. This story does not begin with the departure of the chief executive. It begins before that with a briefing from the Minister’s Department about the share price in which it said that the previous Government had overpaid for the shares, and the briefing tried to set the scene for a pre-election fire sale of the bank that would have short-changed the taxpayer. I am glad to say that despite that briefing, the Government seem to be edging away from that strategy. If there were holding out hope that the banking commission would have given them comfort on that front, it did not turn out like that, and rightly so, because it would have been wrong to give a running commentary on the share price for an institution. An institution’s share price should be determined by the market, based on its future prospects.

After the briefing, we then had the unseemly departure of the chief executive at the Government’s hands. Most people saw him as doing a good job of reducing the risks on the bank’s grossly overblown balance sheet and trying to get it back into a healthier position, in the best interests of the taxpayer. Not only was he bundled out before he had completed that task, but this was done without any proper succession plan being put in place. Over the period of a month, we have had political briefing about the bank’s share price and the announced departure of the chief executive with no successor in place, and, as a result, a loss of investor confidence in the Government’s future strategy for the bank. That is

no way to exercise stewardship of arguably one of the most important banks in the country. It has undermined the Government’s reputation as regards these state-owned assets and done harm and damage to the bank. I hope that in future the best interests of, and best value for, the taxpayer will be uppermost in the Minister’s mind rather than the politically motivated dabbling that we have seen in recent weeks.

On a happier and more bipartisan note, I turn to the new clause tabled by the hon. Member for South Northamptonshire (Andrea Leadsom) and the very similar new clause tabled by my hon. Friend the Member for Nottingham East (Chris Leslie). At the heart of this is how much banks care about reputational loss; the hon. Lady referred to that. If the banks were in a normal business environment and there were a big IT failure or another failure of conduct such as mis-selling or LIBOR interest rate fixing, they would care because they would worry that their customers would walk, but they are not in a normal business environment. Banks seem to be immune to, and careless about, reputational damage that would really matter in another business environment.

During the banking commission’s deliberations, a parallel was drawn with the car industry. When a fault appears in a model of one of the big-brand car makers, they will very quickly issue a recall notice to ask the customer to come in and have the fault fixed at no expense and at a time that is convenient to them. Car companies do that because they care about their reputation and want that customer to buy a car from them the next time they get one. The same logic does not apply in banking, because the same forces of easy departure do not apply. There are two sides to this story. It is not all about the easy transfer of accounts, although that is important; it is also about what one would be transferring to and from. There is little point in creating a perfect exit system if the choice is merely between three or four offers that are all much the same anyway. There is inertia on both sides. We need more competition among the banks as well as an easier system of transferring accounts.

The seven-day switching process that will come into play in September is an advance, and it should be given a chance to work; we should test it properly. At the same time, the new clauses tabled by the hon. Member for South Northamptonshire and by my hon. Friend the Member for Nottingham East call for proper reports to be produced on full account portability. The hon. Lady set out very well the reasons why we need a proper report, one of which is the issue of cost. The incumbents say, typically, that this will cost a fortune and that it will have to be passed on to the consumer, so let us explore the cost properly and get to the bottom of whether that argument is valid.

There is another reason why we need a study. Ultimately, I do not think that the banks’ argument that this will cost too much carries weight and I think they know that. If I got out my crystal ball and peered into the future, I think I would see that the key argument will be about IT and privacy, not cost.

Andrea Leadsom (Conservative, South Northamptonshire)

The right hon. Gentleman may recall a meeting we had with senior bankers in which they said that, although they were reluctant about bank

account number portability, if it is going to happen let us make sure that we will be the first country in the world to do it and not wait until somebody else does it. That would give us first-mover advantage and it could provide a huge business opportunity for UK plc. What does the right hon. Gentleman think of that idea?

Pat McFadden (Labour, Wolverhampton South East)

The hon. Lady may be right and that is another reason that we should have a proper report to drill into the issue.

On privacy, in addition to the cost argument I think that customers could also be discouraged by the argument that all their account details could be held in a single black box to which all the banks in the country have access.

Mark Garnier (Conservative, Wyre Forest)

The right hon. Gentleman raises an incredibly important point. I think that the vast majority of consumers would be very fearful of a central database holding their bank details. The beauty of the system proposed by VocaLink is that, although the payment system and the central infrastructure will hold the sort code and account number, the identity of the holder of the account number will be held by the bank. Therefore, the customer’s relationship will be with the bank, not with the payment system.

Pat McFadden (Labour, Wolverhampton South East)

I thank the hon. Gentleman for making that important point. If consumers are going to have confidence in a system of speedy switching such as that being advocated by the hon. Members for South Northamptonshire and for Wyre Forest (Mark Garnier), these questions about privacy and security of information will have to be bottomed out to the public’s satisfaction. My view is that that will be a more important argument than the one about the cost to the banks of whatever IT changes will be necessary to put this system in place.

In conclusion, it is important that we give the seven-day switching service a chance to operate, but the report that the hon. Member for South Northamptonshire and my hon. Friend the Member for Nottingham East are asking for is also important, because it would bottom out theses issues and others that I have not mentioned. It is a shame that the hon. Lady does not intend to put her new clause to the vote. After all, it only asks for a report; it does not seek to mandate a change before we have done the work and got the proper evidence. I hope that the Minister will respond positively to her suggestion and that of my hon. Friend. It is really important that there is proper competition between providers in this sector to attract consumers and that the kinds of free choices that enable consumers to walk away and get another product from another provider are available in practice, not just in theory.

John Thurso (Liberal Democrat, Caithness, Sutherland and Easter Ross)

I also rise to support new clause 14 tabled by my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) and to which I have added my name.

The right hon. Member for Wolverhampton South East (Mr McFadden) chaired a panel of the banking commission and one of the first visits we undertook was to Birmingham, where we had a number of sessions, one of which was with representatives from small and medium-sized enterprises who were very vocal about the importance of securing a fair deal from the banks.

Which? organised an evening session that allowed us to visit different tables where individuals talked about their experiences. I had an interesting experience when I asked a table of people of a variety of ages, although mostly younger than me—not that that is difficult—about the ability to switch bank accounts. They were not really that keen and said, “It’s too much hassle. Why bother? It won’t be any different.” I said, “Suppose you could do it in the same way that you change your mobile phone, where you take your SIM card-equivalent and plug it into another machine.” At that point they all said, “Oh, that would be wonderful. What a good idea. Is it possible?” I said, “Not yet, but it is very likely to happen.” They said, “Actually, even that won’t work because it will just be the same old names that I will be going to.” I said, “How would you feel if the chap who has that nice transatlantic airline had a bank?” They said, “Oh yes, that would be jolly good.” That bunch of average customers had no idea that it might be possible to move accounts and no idea of the array of accounts that might be available as a result.

That experience drove home to me that the relationship between banks and their customers has been the reverse of what it should be. We go cap in hand and say, “Will you please take my account?” It ought to be the other way around. The banks should be coming cap in hand to us saying, “Please can I have your business?” New clause 14 goes to the heart of that dilemma. All right hon. and hon. Members who have spoken have made the point that the new clause is not a silver bullet and that many other measures are required, but it would be one of the key enablers of that change in the relationship, along with the payments regulator and other things that might be done. Ultimately, we need banks to be genuinely fearful of losing business—at the moment they are not, because they know that people cannot go anywhere else —and genuinely to want to win business. The commission has made progress on that and new clause 14 is very much a part of that.

I am sorry that my hon. Friend the Member for South Northamptonshire told us early on that she will not press her new clause to a vote. I always find that Ministers go a bit further if one waits until they have said nice things before telling them that. Clearly, she has had a tremendous impact on the Minister ahead of the debate. I look forward to hearing what he has to say.

Andrea Leadsom (Conservative, South Northamptonshire)

I do have great expectations of the Minister’s response.

John Thurso (Liberal Democrat, Caithness, Sutherland and Easter Ross)

I was going to say something about “A Tale of Two Cities”, but I will leave it at my hon. Friend’s great expectations.

David Ruffley (Conservative, Bury St Edmunds)

How about “Hard Times”?

John Thurso (Liberal Democrat, Caithness, Sutherland and Easter Ross)

Yes, something like that.

I am very tempted by new clauses 8 and 10, which were tabled by the Opposition. I will not vote against them, but I will not vote for them at this stage. There is an immense amount in them, but I will wait to hear what the Minister says. There is also a great deal of debate to come in the other place. I do not want to say that I am against the new clauses, but I am not sure that

the wording is exactly what I would like to have seen. I ask for the forgiveness of the hon. Member for Nottingham East (Chris Leslie) on that.

On new clause 10, there was a lot of debate in the commission about the good bank/bad bank split. We ended up with a central point that we all agreed to, but a number of us wanted to go more in one direction. However, whether a good bank/bad bank split is a good idea is a completely different issue from what should be done afterwards. If one takes the view that a good bank/bad bank split is not needed, one can still consider all the points that have been put forward, including the many things the hon. Member for Brighton, Pavilion (Caroline Lucas) said could be done to enhance regional banking and credit unions. All those things are equally possible whether or not one decides that the bad bank is necessary.

To my mind the good bank/bad bank argument is separate to what one does with a bank going forward. I happen to be somebody who believes that a good bank/bad bank split is right for the simple reason that if we take the flakier assets out of the bank and put them in a run-off bank, therefore liberating the capital being used in the balance sheet to support it, capital is then available in the good bank to be lent to SMEs and individuals. It is a simple mechanism for getting more capital flowing through, but I would make the point that it is not inextricably linked.

Following on from the slightly more partisan comments from the right hon. Member for Wolverhampton South East, one thing that comes out of this process, and which I have observed right the way through it, is that United Kingdom Financial Investments Ltd has not been the most successful of bodies. We have seen that there are politics in such situations, and that trying to put a mechanism in between muddies the water. That is one of the reasons why the commission’s report made its suggestions on UKFI.

Finally, the commission very much supports new clause 8. As I said in my intervention, I do not think this matter needs legislation. What I would be looking for from the Minister is a commitment that does not require me to look carefully between the lines, but is, in fact, a further commitment.

Greg Clark (Conservative, Tunbridge Wells)

This has been an interesting debate so far, and it will be a tall order to live up to the great expectations of my hon. Friends the Members for South Northamptonshire (Andrea Leadsom) and for Caithness, Sutherland and Easter Ross (John Thurso).

This set of new clauses has the common denominator of measures that can improve competition in banking. The parliamentary commission has made it clear that competition can, and should, bring about higher standards in the banking sector. It concluded that

“effective market discipline, geared to the needs of consumers, can be a better mechanism for improving standards and preventing consumer detriment than regulation, which risks ever more detailed product prescription.”

The Government completely agree. The British banking industry, at least at the retail level, was too concentrated before the crisis. The forced mergers of the crisis have exacerbated a bad situation. It is imperative that the

regulators do not regard themselves simply as regulating incumbents, but act to promote new entry into the industry.

The commission welcomed the prudential reforms contained in the then Financial Services Authority’s barriers to entry review and commented that

“the concerns of challenger banks in this area appear to have largely been addressed”.

We accept the need to go further. Accordingly, we will be adopting the commission’s recommendation that the Prudential Regulation Authority should be given a secondary competition objective, and we will table amendments to the Bill to that effect in the autumn.

Andrew Tyrie (Conservative, Chichester)

Hear, hear.

Greg Clark (Conservative, Tunbridge Wells)

I am grateful for my hon. Friend’s contribution.

Government amendment 5 delivers on a commitment made in Committee to accept one of the commission’s earlier conclusions that when considering an exemption from ring-fencing the Government must have regard to any adverse effect ring-fencing provisions might have on competition in the market. The amendment ensures that ring-fencing should not be a barrier to greater competition in the market. To reassure the hon. Member for Nottingham East (Chris Leslie), it does require them to override any questions on whether the continuity objective should be breached. It is there to enable them to bear that in mind, not least for the reasons that we discussed—that competition can have systemic benefits that address some of the regulator’s objectives.

Another recommendation of the commission that we accept is the suggestion that there should be a rigorous study conducted on the benefits to consumers, and competition, of account portability. The House will know that from September the seven-day switching service operated by banks covering 99% of personal current accounts in the UK will come into operation. I do not whether hon. Members have noticed, but there is an excellent exhibition to promote the new changes to the service from September in the Upper Waiting Hall next to the Committee Corridor. It should make it easier, quicker and more secure to change bank account, helping competition, but, as my hon. Friends the Members for South Northamptonshire, for Wyre Forest (Mark Garnier) and for Caithness, Sutherland and Easter Ross said, that might not go far enough. In particular, I congratulate my hon. Friend the Member for South Northamptonshire on the consistent and forensic campaign she has waged on this issue through the Treasury Select Committee and beyond. We will therefore ask the new payments systems regulator to conduct a comprehensive review of account portability, including a cost-benefit analysis, as an immediate priority.

The regulator will be created under the Bill, and given that it will be set up following Royal Assent, it is more likely to follow within 12 months, rather than six, as I am sure hon. Members will appreciate. The Government will return with their own amendment in the House of Lords, as part of the proposals to establish the new regulator. As it is consistent with the Government’s intention, I hope that my hon. Friend the Member for

South Northamptonshire will not press her new clause—she has been kind enough to signal that in advance, for which I am grateful to her.

Andrew Love (Labour, Edmonton)

Given that the new payments regulator will take some time to set up, I hope that the Minister will keep a watching brief on seven-day portability, because there is still some controversy over the proportion of fees for the receiving bank as opposed to the bank losing the customer. This was brought to the commission’s attention; we commented on it, and I hope that he will keep it under review.

Greg Clark (Conservative, Tunbridge Wells)

I certainly will keep a close eye on that, as too, I am absolutely certain, will my hon. Friend the Member for South Northamptonshire. The arrangement is that the fees should be shared between the bank of departure and the bank of arrival, which I dare say reflects the different costs. However, we need to keep an eye on its effect on competition.

In response to the parliamentary commission’s report, the Office of Fair Trading has announced that it will bring forward its investigation into small and medium-sized enterprise banking as part of an ongoing programme of work to investigate concerns about competition in banking. The hon. Member for Nottingham East rightly wants this to go further. The OFT is engaged in a programme of work looking at all sections of the banking sector. As I think Members know, it has recently completed an investigation into the personal current account market, and on that narrow point has argued that there should not be an immediate referral pending some of the changes taking place or in the pipeline.

We have asked that that work considers the impact on the new challenger banks created by the divestments from Lloyds and RBS. The hon. Gentleman asked where they stand. My understanding is that in both cases the parent banks are looking to move forward with initial public offerings of the challenger banks and that they intend them to form part of the competitive environment. The OFT aims to conclude its programme of work next year. It will then decide whether a market referral to the Competition Commission is needed. I can tell my hon. Friend the Member for Caithness, Sutherland and Easter Ross that such a referral would not require legislation; the OFT could make one under its existing powers.

Given that commitment, which is more or less of the same time frame as that envisaged in new clause 8, and given the significant measures being implemented to enhance competition, I hope that hon. Members will agree that the new clause, which calls for such a referral in 2014, following Royal Assent, should not be adopted. It is important that the OFT completes its review in 2014, so that it can build up a file of evidence to be submitted to the Competition Commission. That would be consistent with what both the independent commission and the parliamentary commission called for: that the OFT be in a position to make a referral in 2015. The OFT’s work is absolutely in line with that.

Andrew Tyrie (Conservative, Chichester)

Will the Minister confirm that, were there not to be a referral, the Government will ensure a full examination of the case for a market study of the retail side, as well as the SME side?

Greg Clark (Conservative, Tunbridge Wells)

That is happening. The review that the OFT is carrying out is comprehensive—it will keep us informed in that process—and is about building up the evidence to make that judgment in accordance with exactly the time frame that my hon. Friend has set out.

New clause 15, standing in the name of the hon. Member for Brighton, Pavilion (Caroline Lucas), would require the Government to consult formally on the creation of a network of regional banks. I strongly agree that a revival of regional banking in this country is a very good thing. Yesterday in the Chamber my hon. Friend the Member for Hexham (Guy Opperman) reported on a meeting that he organised in Gateshead. I am pleased to tell the hon. Lady that a senior director of the Sparkassen, Dr Thomas Keidel, was at that meeting. He very much commended the Sparkassen model in Germany as something that could be emulated in this country. In fact, when one of the delegates objected that it was very much part of the German system and culture, which might be difficult to transplant to this country, Dr Keidel immediately pointed out that the German system was explicitly modelled on the UK system before it was abandoned in this country. I am therefore optimistic that what is proposed should be possible.

There was certainly great enthusiasm on Tyneside—indeed, momentum was being established—for launching a regional bank for the north-east. The hon. Lady might also be aware that the Cambridge and Counties bank—a joint venture between Cambridge county council and Trinity Hall, the Cambridge college—is already active and is providing lending to local small and medium-sized enterprises. The steps that the Prudential Regulation Authority has taken to license new entrants—

Andrew Love (Labour, Edmonton)

I apologise to the right hon. Gentleman for jumping in rather late, but before he leaves the issue of regional banks I want to mention one of the most promising areas, which is community development institutions. They are working at the regional and local level; however, their sources of funding could be enhanced immeasurably if community interest tax relief was set at a proper rate. I recognise that the Treasury has carried out a consultation. I am not asking the Minister to respond now, but perhaps he will at some stage inform Members of where the Treasury has got with that consultation and whether it will review the incidence of community interest tax relief.

Greg Clark (Conservative, Tunbridge Wells)

I do not know whether the hon. Gentleman will be reassured or alarmed to learn that I had not left the subject of regional banking just yet. Indeed, I want to come to the precise subject he has just raised.

The Prudential Regulation Authority’s changed procedures were referred to—by, I think, my hon. Friend the Member for Wyre Forest. It is now possible to license new entrants, who could require up to 80% less capital up front than previously. That means that the time is now ripe for new banks in the regions to be established. The hon. Member for Brighton, Pavilion, in her new clause 15, and the hon. Member for Edmonton (Mr Love) refer to CDFIs—community development finance institutions. Some £60 million of wholesale funding for CDFIs is available through the regional growth fund. Tax relief up to 25% is already available on investments made by individuals and companies into CDFIs. Of course I will talk to my hon. Friend the

Exchequer Secretary and carry forward the hon. Gentleman’s representation for further changes, but a significant set of advantages is available. Similarly, the more flexible rules for credit unions that have been introduced and the £38 million of funding for this movement have also created greater opportunities.

Caroline Lucas (Green, Brighton, Pavilion)

Does the Minister accept that constraints on the amounts that larger credit unions—such as the East Sussex Credit Union, which I know well—are allowed to accept in deposits or are allowed to lend are stopping them fulfilling their potential? Will he look at that again?

Greg Clark (Conservative, Tunbridge Wells)

I am happy to take that forward. The hon. Lady will be aware that we have liberalised the rules for credit unions, but if problems are being caused, not least in East Sussex, I would be happy if she dropped me a line or came to see me.

We have great enthusiasm for the proposals that the hon. Lady makes, but what is required is not a study, but action. I make this commitment to her, and to any hon. Member who is interested in helping to establish a new regional bank in their area, that I will help them to do so. I hope that they will allow me to do that.

New clause 10 would require the Government to lay a report before Parliament before selling any banking assets. All hon. Members are aware of what the Chancellor said in his Mansion House speech about the next steps for Lloyds and RBS. For Lloyds, the Government are actively considering the options for how its shareholding can be returned to the private sector. Value for money for the taxpayer will be the overriding consideration, and there is no pre-determined time scale. Indeed, the disposal process may involve multiple stages over time, rather than a single moment.

For RBS, share sales are some way off. In line with the recommendation of the Parliamentary Commission on Banking Standards, the Chancellor has announced a review, to conclude in the autumn, into whether a bad bank should be set up for risky assets from RBS. Following the criteria suggested in the commission’s report, the review will assess whether creating a bad bank would accelerate the path back to private ownership, deliver benefits for the wider economy and be in the interest of taxpayers.

As I have mentioned, the OFT is looking specifically at the impact that new challenger banks created by the Lloyds and RBS divestments will have on competition in small business banking. UK Financial Investments has a remit to provide value for money in executing its requirement to devise the means of selling the Government’s shareholdings in the banks, and, in doing so, to pay due regard to maintaining financial stability and to act in a way that promotes competition. In doing so, UKFI and the Treasury must follow the value-for-money principles set out in the Green Book, and they will be accountable, through the Accounting Officer, to the National Audit Office and the Public Accounts Committee, as well as to the House and the Treasury Select Committee.

Chris Leslie (Labour, Nottingham East)

The Minister is talking about the edifice of propriety, in relation to UKFI and so forth, but it is as plain as day that the Chancellor made the decision

that he did not want that particular chief executive of RBS, so out went Stephen Hester. Will the Minister at least put on record what the plan is for settling the future leadership of RBS? When will the new chief executive be appointed?

Greg Clark (Conservative, Tunbridge Wells)

The hon. Gentleman knows full well that that is a matter for the board of RBS, not for the Government.

Returning to new clause 10, it is not clear that a new mandatory reporting requirement would add anything to the arrangements that are already in place. In the previous regulatory regime, promoting competition did not play a prominent enough role in ensuring that the banking industry operated in the interests of consumers. The strengthening of the role of competition through the reforms in the Bill will go a long way towards correcting that. The further recommendations of the PCBS underline the role of competition more prominently still, and I thank the commission for its contribution in that regard.

I should also mention new clause 1, which introduces a new schedule of amendments to correct a series of minor and technical points in connection with the Financial Services Act 2012. I was asked some questions about this earlier. It refers to the complaints scheme covering the Financial Conduct Authority, the Prudential Regulation Authority and the Bank of England. The scope of the complaints scheme in relation to the PRA and the FCA was widened to cover all their functions under any legislation, and the current scope includes functions such as those relating to the Data Protection Act and the Freedom of Information Act, which already have their own complaints mechanisms. The new clause will correct that.

I hope that the House will accept that the Parliamentary Commission on Banking Standards and the Government are as one in their intention of promoting competition. We totally agree that placing a high value on competition in pursuing all our objectives for the banking sector in order to make it more competitive, more responsive to the needs of consumers and more resilient is very much in the interests of the country.

Chris Leslie (Labour, Nottingham East)

We have had a long, well-informed debate, and I pay tribute to Members on both sides of the House, particularly the members of the Parliamentary Commission on Banking Standards, for their contributions. I am disappointed, however, that the Government are still saying simply that they will think about these things and look into them. The Bill will leave this House in the same thin state in which it arrived. In protecting taxpayers’ best interests, it should not be viewed as asking for the moon on a stick to request a proper report and an options appraisal of what to do with state-owned assets. It is very important that, at the very least, we have a thorough appraisal.

The Minister made all sorts of warm noises towards regional and local banking, but as the saying goes, warm words butter no parsnips. The Government have, in fact, ruled out any options appraisal for regional banking in the particular instance of RBS, so I think the proof of the pudding, to mix my metaphors, will be in the eating.

The Government are not doing what is necessary to get the proper competition we need to help the challenger banks and to break open the number of players in the market. The Minister said, “Well, the OFT is doing various amounts of work, and we should wait to see how it can cope with all the other changes in the banking sector”. It is always a case of this Minister kicking the can further down the road yet again. It is never “now”; always “let us wait and see”. It is just not good enough. We need a more competitive banking system, so I shall press new clause 8 to the vote.

New Clause 10 — Sale of state-owned banking assets

New Clause 1 — Minor amendments

Clause 4 — Ring-fencing of certain activities

New Schedule 1 — ‘Minor Amendments

Ring-fencing transfer schemes

Michael Fabricant (Conservative, Lichfield)

On a point of order, Mr Deputy Speaker. In the light of the fact that the International Monetary Fund has upgraded the United Kingdom’s projection for growth, and that the European zone’s projection has been downgraded, I wonder whether you have been given any indication whether the Chancellor of the Exchequer will be making a statement, as I, for one, would like to congratulate him.

Lindsay Hoyle (Labour, Chorley)

On the last part of the hon. Gentleman’s question, I think that he has already achieved what he wants. The answer to the first part of his question is no.

Third Reading

Greg Clark (Conservative, Tunbridge Wells)

I beg to move, That the Bill be now read the Third time.

It is good to start the debate with good news. When one is considering a Bill, one is cut off from the outside world, so that is good to hear.

I said on Second Reading that this is a historic Bill that resets the banking system in this country, so that it can once again enjoy the reputation that it had, and its worldwide renown, not just for technical excellence but for high standards of confidence, built on probity.

The Bill is historic in another important respect. It reflects the extensive deliberations and contributions of not one but two bodies of eminent experts: the Independent Commission on Banking, chaired by Sir John Vickers, and the Parliamentary Commission on Banking Standards, chaired by my hon. Friend the Member for Chichester (Mr Tyrie). Both undertook extensive work, and I am grateful to their members, and to the staff who supported them in their work.

Sir John Vickers’s commission was established immediately after the general election, in June 2010. It took extensive evidence before publishing an issues paper in September 2010; an interim report, on which it

consulted in April 2011; and a final report in September 2011. The Government gave, and consulted on, an initial response in December 2011, before issuing a White Paper for consultation in June 2012. In the light of that consultation, a draft Bill was published last October, and the Parliamentary Commission was asked to give it pre-legislative scrutiny, which it did, and it concluded its report on 21 December last year.

Following Second Reading, the Committee scrutinised the Bill for more than 40 hours. The process has been characterised by an unusually determined effort to build consensus. Having considered all the options, the Vickers commission made a compelling case for a ring fence separating the riskier investment banking side of banks from personal and business lending. Ring-fencing, an ICB argument, will better insulate retail banks against global shocks and make banks easier to resolve in a crisis. It will thus create a more stable banking system, protecting the economy and the taxpayer against future crisis.

The parliamentary commission, in its first report, recommended some changes to the Bill, which we have been able to make, such as emphasising the importance of competition, as we have just debated, in applying the ring-fencing rules. The commission noted that in putting the so-called Haldane principles on the face of the Bill, the Government went further than its own recommendations. The parliamentary commission, in its December report, also called for the power to be available to force the separation of a ring-fenced bank into its component parts if that bank attempted to game the system or to undermine the ring fence. The so-called electrification of the ring fence is designed to ensure that it is respected in practice.

We debated yesterday the Government’s amendment to implement this power. There was some discussion about whether the power to require separation was too cumbersome to be used effectively in practice. As I said yesterday, there is no difference between the Government’s intentions and those of the parliamentary commission. We agree with the specific reserve power and it has to be usable. We included a time limit by which full separation had to be executed. The PCBS did not specify this, but my hon. Friend the Member for Chichester said that it should be informed by the regulator. That seems right to me and I have no difficulty in expecting to be able to arrive at a formulation that meets all the Chairman’s objectives during the further scrutiny of the Bill in this place.

Andrew Tyrie (Conservative, Chichester)

I am very reassured by what I have heard from the Minister. It seems from what he said that it remains the Government’s firm intention to implement the spirit and the letter of electrification for individual banks. It also gives me some reassurance that the commitments that appear to have been made in the paper published yesterday on the recommendations in the fifth report will also be implemented. Can the Minister give some indication when he will produce amendments, so that we have enough time to think about them before they are examined in another place and so that their lordships also have enough time to consider them carefully?

Greg Clark (Conservative, Tunbridge Wells)

I am grateful to my hon. Friend for his remarks. He is right that we are of one mind on the need to implement faithfully the commitments that we have given. The amendments need to be drafted in a way that

is legally watertight, which takes some time. They will be prepared during the summer—the summer holiday will be out of bounds for the officials on the Bill team, sad to say—and they will be introduced in the autumn in the House of Lords.

As well as pre-legislative scrutiny of the Bill, the parliamentary commission’s final report made a series of recommendations concerning standards and culture in banking. As I indicated on Second Reading, in Committee and yesterday, the Government will make use of the Bill and the amendments to give expression to many of the recommendations that require legislation. I gave a commitment to work with the usual channels to ensure that this House has ample opportunity to debate the amendments when they come back for further scrutiny by this House.

Andrew Tyrie (Conservative, Chichester)

I may have misheard. Does that mean that we will get two days to consider Lords amendments?

Greg Clark (Conservative, Tunbridge Wells)

My hon. Friend is nothing if not tenacious as well as ingenious, and his hearing is acute. He will have heard me say that I will work with the usual channels, so the time for consideration will depend on the outcome of those discussions.

The implementation of the commission’s recommendations on culture and standards represents the third pillar of the reforms being made to the banking system. The first pillar was the institutional changes brought about by the Financial Services Act 2012, which received Royal Assent last December. That Act scrapped the failed tripartite system of regulation which, in the words of the parliamentary commission,

“created a largely illusory impression of regulatory control”.

In its place, that Act restored the Bank of England to its rightful place by ensuring, through the Financial Policy Committee and the Prudential Regulation Authority, the stability of the financial system. It established new forward-looking, rather than box-ticking, conduct regulation in the Financial Conduct Authority.

The second pillar of reform is embodied in the ring-fencing provisions advanced by Sir John Vickers and his committee, which are the main focus of the Bill under consideration. The reforms by the Parliamentary Commission on Banking Standards that deal with culture and standards represent the third pillar, and will play a major part in the passage of the Bill.

Having thanked members and staff of the Independent Commission on Banking and the Parliamentary Commission on Banking Standards for their hard work and the exacting standards they set for themselves, I extend my thanks to all those who have participated in the drafting and scrutiny of the Bill so far. First, I thank my Parliamentary Private Secretary, my hon. Friend the Member for Warrington South (David Mowat). Not only has he been assiduous in his more mundane duties of passing notes to and fro, but he has been an invaluable source of wise advice, drawing on a successful career in business. I discovered that he has an ability to see quickly through complexity and get to the heart of the matter—something much needed in matters of financial regulation.

I thank my officials for their efforts and the long hours spent drafting the Bill and Government amendments, as well as briefings for the many clauses we have debated. I hope that the seriousness of this legislation will assuage

the loss of weekends and evenings spent with their nearest and dearest, although I hope they were at least able to see Andy Murray play—and indeed win—on Sunday, notwithstanding the timetabling of Report and Third Reading.

I thank those in my private office for their patience and cheerfulness in marshalling the many demands on their skills and expertise, and I am grateful to members of the Bill Committee, and its Chair and Clerks, for the hours we spent in each other’s company during spring. At one point I worked out that I had spent more time that month with the hon. Member for Nottingham East (Chris Leslie) than with my wife, although I hope he will agree that it was not an altogether unpleasant experience.

We had a lively and unusual Bill Committee in which my hon. Friend the Member for Amber Valley (Nigel Mills) went further than the electrification proposed by the Parliamentary Commission on Banking Standards, and demanded the “electrocution” of miscreant bankers. My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), whom I am delighted to see in his place, was revealed to have a secret life on Twitter, which I hope continues to flourish. I was also able to concede an historic Opposition amendment, given the charming entreaties from the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson), even if it was only a single word. All that was done under the beady eye of the Treasury Whip, my hon. Friend the Member for Chelsea and Fulham (Greg Hands), who kept us rigorously to time—indeed, I think we finished a day earlier than was allowed for in the programme motion. Given that the Bill will return and we will have much to discuss, it is not so much goodbye to the Bill on Third Reading as au revoir—or, as I am sure my hon. Friend the Member for North East Somerset would put it, “Hasta la vista, baby.”

Ours is not the only country in which trust in banking collapsed during the financial crisis, but the fact that scandals and bail-outs happened elsewhere is of no comfort. In a world where trust is in retreat, this country must be a beacon of confidence, security and stability, but that will not happen unless we insist on higher standards than apply elsewhere. The overwhelming and urgent imperative is to rebuild that trust. The reforms enacted so far take us a long way, and further than our competitors. The Bill will take us further forward and make the reform necessary to restore the reputation—and with it the prosperity—of banking in the United Kingdom. I commend the Bill to the House.

Chris Leslie (Labour, Nottingham East)

After that tour of various languages, all of which I am sure were in order as Norman French is the only language to be used in the Chamber other than English, I join the Minister in paying tribute to the Independent Commission on Banking. Sir John Vickers and his team did a phenomenal job, which was only a prelude to the output of the Parliamentary Commission on Banking Standards, chaired by the hon. Member for Chichester (Mr Tyrie). Given that its final report was larger than a ream of A4 paper, which represented months or work, weeks of deliberations and many hours of hearings, I think that it is to its credit, and the hon. Gentleman’s in particular, that it managed to hold together a set of recommendations, which I hope at some point will find their way into the legislation.

After the global financial crisis, when we saw reckless banking require such a vast taxpayer bail-out, the public finances were adversely affected and the economy suffered. It is therefore essential that we do our best to ensure that that situation can never again be repeated. However, all we have in the legislation so far are the ring-fencing provisions. I hope that they will be an adequate protection, but they are only part of the change we need to see in banking.

We were forced to table a series of amendments in Committee and on Report because the Government stepped away from the radical changes needed to make banking reform a reality. We hope that the Minister’s warm words will be manifest in the Bill in the other place, where we will be watching what happens very closely. We will need adequate time to consider Lords amendments when the Bill returns to this House, because to provide for only a few hours for that would show disrespect to the rightful and democratic primacy of this House.

The Treasury’s response to the commission’s report was published only three or four hours before we started considering the Bill on Report. I must say that it left a great deal to be desired. It did not have the strength needed to carry on the work of the commission’s recommendations. If we needed any more evidence that the Government have been soft-pedalling on these issues, we need only look at how bank shares responded immediately after the response was published yesterday. They hardly gave the impression that the banks face strong challenges as a result of the reforms. Despite the Prime Minister’s promise to use the Bill to implement key aspects of the commission’s report, particularly with regard to criminal sanctions, so far nothing has materialised. We must hold our breath and hope that they will eventually find their way into the Bill in the other place.

It is a shame that the Government did not use this time in the House of Commons to take some proper steps forward, because ultimately if we are to have dialogue in Parliament it is necessary to start putting some flesh on the bones and including legislative provisions in the Bill, rather than leaving it to the Government as a matter of trust. That is the only way we ever really improve the quality and calibre of legislation.

There are a number of things that the Government have not agreed to do or have refused to act on so far. They have not risen to the challenge on the leverage ratio to drive the reforms that are needed from a UK perspective. Instead, they want to wait for international and European Union agreement to resolve the issue. They have fallen short of what is required for proper electrification of the ring fence separating retail and investment banking activities. That should have been backed up with a reserve power for full separation of the sector as a whole if ring-fencing proves ineffective. We hope that it will be effective, but the jury is out on that.

We think that the Government should have considered options, particularly in the sale of any state-owned assets in the main banks—RBS, in particular—to look not only at a split between good banks and bad banks, but at whether there is a case for changes in retail and investment banking or in relation to regional banking, but they rejected that. They have not gone for reform of

the governance of the Bank of England to turn the court into a proper board, with the accountability needed to go alongside that when it comes to sounding the alarm on bank lobbying. We hope that the Minister will follow that up when the Bill comes before the House of Lords. There is not yet sufficient clarity on how the banking standards rules will relate to the codes of conduct or culture changes that we need in the sector. As we saw from an earlier Division, the Bill also falls short of the market study of competition in the sector, particularly as regards the retail banking activities that so many of our constituents feel frustrated about.

We tried our best to table as many amendments as we could. The Government should have listened and taken the opportunity to engage in that legislative process more effectively. We now have to find reforms to the banking system that not only focus on safety and the best interests of consumers and taxpayers but do the right thing for the economy. In our discussions on leverage and other aspects, we tried our best to make the case for a number of changes that might have got the banking sector serving the economy, going full steam ahead and giving credit support, particularly to small and medium-sized enterprises.

It is clear that this Bill is still in its infancy despite having completed half its parliamentary stages. It is acceptable as far as it goes, with its baby steps on reform, and we therefore do not seek to oppose its Third Reading. However, the Government now need to get serious. They must bolster the Bill to electrify the ring fence and ensure that it will work; stand up for consumers, with proper changes to promote choice and competition and protect those consumers from being ripped off; secure the best interests of the taxpayer; and ensure that we never again see such a level of damage inflicted on public finances and our economy. Far more is needed. The Government should be listening much more carefully to the parliamentary commission, in particular. They have to do far better than this.

Guy Opperman (Conservative, Hexham)

After the global banking crash, my constituents in Northumberland wanted to see better banking, higher standards, fewer scandals, greater competition and a greater degree of choice and service. In the past three years, this Government have been on a slow but continual journey to reinvigorate British banking and clear up the mess that we inherited.

I believe that over the next couple of years smaller regional banks will spring up throughout this great country, and I want briefly to address the House on that matter. Paragraph 49 of the banking commission’s main summary gives an excellent summation of its views on competition in retail banking. I refer anybody interested in this to the grave and weighty paragraphs 313 to 343 of the larger volume, where they will see, in particular, the evidence of Anthony Thomson, the co-founder of Metro Bank, with whom I have worked at great length over the past two years to try to reinvigorate the regional banking market.

That culminated in a series of efforts that have been made with the various regulatory authorities, starting with meetings that my hon. Friend the Member for Chichester (Mr Tyrie) and I had in February 2012 with

Mr Hector Sants, the then chief executive of the Financial Services Authority. Mr Sants followed that up by writing on 12 March 2012:

“We are conscious of the balance to be struck between ensuring high standards at the gateway, and the importance of allowing innovation and appropriate levels of access for new firms…there has been public debate about the potential advantages of new entrants in the area of small, regional banks focused on servicing the SME sector. In such cases we will be proportionate in our approach and would invite all firms with a viable business model and appropriate levels of resources to a pre-application meeting to help guide them through the application process”.

Those were wise words and a significant step by the then chief exec of the FSA.

Then came the Bill that became the Financial Services Act 2012, which, I am pleased to say, passed its Second Reading in this House on 23 April 2012. To my surprise, the Labour party voted against clause 5, which specifically emphasised

“the ease with which new entrants can enter the market, and…how far competition is encouraging innovation.”

Be that as it may, the banking commission and other parties hugely improved the approach to regional banking. I support the efforts of everyone involved and echo the words of the Minister and the shadow Minister.

Following a huge amount of effort outside this House to encourage regional banking, Mr Thomson and I held a conference in Gateshead on 7 June that was attended by 142 delegates, including the Minister. More important, however—this is of key relevance to the banking commission’s findings—Sam Woods, the director of the domestic UK banks division at the Prudential Regulation Authority, and Victoria Raffe, the director of authorisations at the Financial Conduct Authority, were also in attendance on that day. Those two people are in effect the gatekeepers of regional banking and of the authorisations and regulation that lie ahead. They were welcome and made the case that regional banks are the way ahead.

I for one expect at least three or four banks to spring up in the north-east over the next 12 to 18 months, ranging from asset-backed lenders such as Cambridge & Counties bank—

Lindsay Hoyle (Labour, Chorley)

Order. I know that the hon. Gentleman is going to draw his speech into the Third Reading, because this is the Third Reading debate. The two must come together and it would be helpful if that happened sooner rather than later.

Guy Opperman (Conservative, Hexham)

I will totally draw it into Third Reading, Mr Deputy Speaker. Those particular persons are very much affected and are working hand in glove with the Bill, which I support wholeheartedly.

Pat McFadden (Labour, Wolverhampton South East)

This is an unusual Bill, in that at the same time that it has sought to implement a reform recommended by the Vickers commission two years ago, it has run in parallel with the Parliamentary Commission on Banking Standards, which periodically has produced reports and asked the Government to use the Bill to implement their findings.

I place on record my thanks to colleagues who served on the commission and all its staff. It was an intense effort and I do not think we could have produced our

reports without the able efforts of the many staff who worked for us, led by Colin Lee, who is a great servant of this House.

I want to draw the Minister’s attention back to yesterday’s official response from the Government to the commission’s report of a few weeks ago. We read in yesterday’s newspapers that the Government were going to accept the vast bulk of the recommendations and the Minister opened the debate by saying something very similar. However, I have looked through the Government document in detail and wonder whether the Minister could confirm that the position is not that simple.

Paragraphs 2.32 and 2.33 reject part of our recommendations on pay. Paragraph 4.5 makes no commitment to legislation on access to basic bank accounts. Paragraph 3.24 passes to the regulator only consideration of the changes that we recommended on the corporate governance responsibilities of executives and bank chairmen. Paragraphs 3.34 and 3.35 in effect reject our recommendation for gender reports on operations on the trading floor. Paragraph 5.11 rejects our recommendation to consider splitting RBS into regional banks as part of the Government’s study on RBS. Paragraph 5.28 rejects our recommendations on the governance of the Bank of England. Paragraph 5.31 rejects our recommendations on the chairmanship of the Prudential Regulation Authority.

As my hon. Friend the Member for Nottingham East (Chris Leslie) said, the Government have also rejected recommendations on leveraging and ring-fencing, in particular ring-fencing in respect of the sector as a whole. When it comes to the implementation of recommendations, the chairman of the parliamentary commission yesterday described the attempt to ring-fence one particular group as “virtually useless”.

I stress to the Minister that it is not accurate to say that the Government have accepted the vast majority of the parliamentary commission’s recommendations. The document that was published yesterday is full of excuses and sleights of hand that pass on to the regulator for consideration firm recommendations that we made. I stress to those in another place, who may have a greater opportunity to amend the Bill, that they should read the document that was published yesterday with a careful eye to see what has been accepted and what has not.

Greg Clark (Conservative, Tunbridge Wells)

The right hon. Gentleman is not giving the response a fair reading. First, not all of the recommendations were addressed to the Government. Some of them were addressed to the regulators. Secondly, some of the recommendations that were made to the Government have been taken forward through actions that can be taken by the regulators. When colleagues look at the response, they will see that it is a broad endorsement of what was an excellent report.

Pat McFadden (Labour, Wolverhampton South East)

Perhaps the Minister and I have different interpretations of the word “broad”. He may be able to persuade the hon. Member for Chichester (Mr Tyrie), on the basis of some warm words, that these are great concessions, but I remain to be convinced.

The Government have a great deal more to do to convince Parliament—this House and the other House—that they endorse the vast majority of the recommendations. The more one reads the report that was published yesterday, the less one comes to that conclusion. I hope

that those who are in a position to amend the Bill in future take heed of that and press with greater determination than Members of this House the amendments that would fully and faithfully implement the recommendations of the Parliamentary Commission on Banking Standards.

David Rutley (Conservative, Macclesfield)

I was not able to participate in the Public Bill Committee or the parliamentary commission, but I have followed their work from a distance. We must recognise the important progress that has been made over recent weeks and months.

I praise my hon. Friend the Member for Chichester (Mr Tyrie), Chairman of the Treasury Committee and of the parliamentary commission. He has taught me a lot during my time in Parliament. Tim Knox, the director of the Centre for Policy Studies, has said of my hon. Friend that

“he’s quite prepared to argue half the night over whether a comma should be a semi-colon—which is reflective of the seriousness with which he takes his work.”

My hon. Friend is prepared to do a lot more than that. He is prepared to debate and work tirelessly for months on end with colleagues on both sides of the House and with Ministers to move matters forward.

The huge progress that has been made in recent months on this important subject is also a credit to the Minister and his colleagues on the Front Bench. The Government’s response, which was published yesterday, moved the debate forward. On page 22, it summarises the failure that took place at HBOS. I worked at HBOS from 2005 to 2007 and saw at first hand the problems with the federal structure at the bank. I hasten to add that I worked in the general insurance side of the business, which was performing particularly well. It was clear that there was a problem with managing risk across the entire business. It was also clear from my interactions with the Financial Services Authority that it did not have a grip on the regulation of the smaller parts of the business or the business as a whole. It was clear that my business friends in Yorkshire who worked outside the bank recognised that the bank was involved in very racy deals. They kept asking me how the bank could support them. The FSA clearly was not paying sufficient attention to what was going on.

The Bill is vital. It is critical to bringing about the individual accountability that many of us want to see across our financial services sector, with the tough senior persons regime, reversing the burden of proof and criminal sanctions for reckless misconduct. All those steps are vital, as is the ring fence and the attempts to electrify it. They will bring about a meaningful distinction between what goes on in retail banks, which are vital for individuals and small businesses, and more risky investment banking. In my interaction with other banks, such as HBOS and Barclays, it was clear that they had very different cultures and needed to be brought under control. The ring fence will help to do that.

It is important to bring about enhanced competition. I helped to launch Asda’s introduction to financial services, and other retail brands have moved into financial services too. As my hon. Friend the Member for Hexham (Guy Opperman) said, we need new entrants. That will encourage greater competition and help us in our task

of building trust in our financial services sector. It is good to see, in recommendation 4.22, that the Government will be initiating an independent study into the feasibility of the costs and benefits of full account portability. Bold, radical steps are required to move things forward and build the trust we want to see in our financial services sector. I commend the work of the parliamentary commission and the Government in taking these steps forward.

John Mann (Labour, Bassetlaw)

A vast amount of hard work has been diligently done for such a puny and inadequate set of proposals. Where does it leave us, if we look at the big picture? There is a debate about the Government’s failure to electrify the ring fence, although as I recall, the financial crisis started with Northern Rock and Lehman Brothers, where the ring fence would have made no difference whatever. What are we trying to address?

We have two banks in state ownership that are still in crisis. Clearly, the Government have no idea what to do with RBS, from who is running it and the Government’s cack-handed handling of Mr Hester’s departure, to what its role should be. Should RBS exist? Should it be broken up? How should it be broken up? Can it be broken up? How could competition emanate from breaking it up? We hear the word competition all the time. I was a signatory to the extremely modest bank account portability amendment that, rightly, was tabled. The structure of banking, however, remains pretty much as was. There is significantly less competition than there was 10 years ago. Building societies have been consolidated and about a third have vanished.

Where is the international level? This was not a British crisis, but today, as a consequence of the British LIBOR scandal, we have lost out to New York, which has played its political hand far more astutely than the Government and has grabbed business from this country. Frankfurt and Paris will be lining up to do the same. We are dealing with international banks, and the Government’s insular look at what should be done, presuming that British solutions will add to British competition, is a misnomer. We face problems with transparency in the UK dependencies, which, unlike any other country, we can influence. They remain totally opaque, specifically in relation to banking and subsidiaries—there is nothing there. On international banking agreements, the Government are hiding even from the modest proposals emanating from Brussels, of all places. This is not going to solve our problems. Competition has not moved forward, and there is no evidence that it will. The Government have an aspiration, but no strategy, for competition, so we remain with none. The problem of oligarchies running investment banking worldwide has not changed either; it remains as was—a fundamental weakness in the banking stranglehold over the rest of the economy—and totally unaddressed.

The fundamental issue that some posed at the beginning will remain the Achilles heel of all politicians and whoever is in government in this country from now on: if there is a further banking crisis and individuals—known as voters—are in a panic over their savings, there is no politician in any Government who would not bail out those accounts. No Government, whatever their colour, whatever the economic situation, would survive grabbing the electorate’s savings.

Most fundamentally, we have failed to create a concept of tiered risk for consumers to give them a choice. It has worked before. The classic example is a simple one, but a real one: the premium bond. When the premium bond was introduced, people knew that it was totally guaranteed; they knew it was not the best way of investing, but they bought them because they were absolutely guaranteed. We do not do that with our savings now. We have not created the options that would let our constituents say, “We’ll put X amount in here, knowing we’ll get a lower return than elsewhere, because the Government will give an absolute guarantee. And we can put Y amount in a middle-risk option, where there are some guarantees to certain levels, and we’ll put Z amount into something with great returns, but explicitly no Government guarantee.”

Our failure to create those options has created a fundamental weakness. I would not even describe that as radical; I would call it a rather conservative, with a small c, and moderate proposal, giving choice, creating markets and trusting people. We have not done that. At some stage, a future Government—not this one or the next one, I hope, or one in our lifetime—will face the dilemma again and will be forced to bail out a bank. There is the danger, however, that it might come more suddenly than that.

David Rutley (Conservative, Macclesfield)

Does the hon. Gentleman not recognise that there are options for fully guaranteed savings with National Savings & Investment as well as the £85,000 protection? There are those opportunities for people.

John Mann (Labour, Bassetlaw)

I sit on the Treasury Select Committee; the hon. Gentleman served on it, so we have a modicum more information on these matters, as do other hon. Members, than our constituents. Nothing has changed for them, however. Fundamentally, there has been no segmentation of the market, which is why the new challenger banks are getting no further. Only a tiny, tiny proportion of business is going to them. We have not restructured, even though in RBS and Lloyds TSB we have the perfect opportunity, owing to the crisis, to restructure. Across the world, we see vast numbers of people suffering and Governments of every political persuasion being voted out because of the financial crisis and the decisions they have made. This Government might face the same dilemma. I am not commenting on whether the decisions on the deficit and debt are right or wrong economically, politically or socially—that is a critical debate, but it is a different debate—but the fact that we are in this situation and we are not addressing it for the future in anything but the most micro-management way is part of that weakness.

The Government might want to give themselves plaudits and say, “Well, perhaps we’re doing a little better than the Government of Greece or Spain,” or whichever Government it is. The Americans can slap themselves on the back and say, “Unlike the Brits, we’ve got our act together. We’ve targeted their banks. We’ve portrayed them as the wrongdoers. We’ve managed to shift some of the powers to ourselves,” which is precisely what is going on among the political, banking and business classes in Washington and New York. They are winning that battle.

I will end on this point. This is a world crisis. My research document proves that every one of the top 50 banks in the world, without exception, have been involved in criminality in recent times. That is staggering for any industry. For us to hold that industry together with sticking tape, not even with the most damaged and shattered elements, including those that have had to be nationalised, such as Lloyds TSB—

Lindsay Hoyle (Labour, Chorley)

Order. Mr Mann, your time is up—that is the story of your life at the moment.

Three hours having elapsed since the commencement of proceedings on consideration, the debate was interrupted (Programme Order, 8 July).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the Bill be now read the Third time.

Question agreed to.

Bill accordingly read the Third time and passed.

Northern Ireland (Miscellaneous Provisions) Bill (Programme (No. 2))

Northern Ireland (Miscellaneous Provisions) Bill

Clause 1 — Donations

Naomi Long (Alliance, Belfast East)

I beg to move amendment 7, page 2, line 25, leave out ‘October’ and insert ‘January’.

Lindsay Hoyle (Labour, Chorley)

With this it will be convenient to discuss the following:

Amendment 8, page 2, line 37, leave out ‘October’ and insert ‘January’.

Amendment 2, page 2, line 43, at end insert—

‘(2A) In section 71E of the Political Parties, Elections and Referendums Act 2000 (duty not to disclose contents of donation reports) after subsection (3) insert—

(3A) Such information may be disclosed where a donation received by a Northern Ireland recipient on or after 1 October 2014 exceeds £7,500.

(3B) Such information may be disclosed where the total donations received by a Northern Ireland recipient from a relevant person in a year exceeds £7,500, save that no information on donations received before 1 October 2014 may be published.”.’.

Amendment 6, page 2, line 43, at end insert—

‘(2A) Section 71B of the Political Parties, Elections and Referendums Act 2000 is repealed.’.

Clauses 1 and 2 stand part.

Naomi Long (Alliance, Belfast East)

My amendments 7 and 8 aim to ensure that all donations made to Northern Ireland political parties from January 2014 will eventually be subject to publication. That would not interfere with the Secretary of State’s right to make a decision to extend the period of secrecy and non-publication that currently applies to donations made to political parties. That would remain in the Secretary of State’s gift even if amendments 7 and 8 were accepted. However, they would make it clear to the general public that anything donated after January 2014 will eventually be made public, once the Secretary of State deems the security situation to be appropriate.

I believe that there is a lack of transparency in Northern Ireland politics, which causes significant public concern. That is reflected by the views of the Electoral Commission, which has commissioned a series of surveys on the matter. They show that a significant proportion of the public believe that this is a matter of concern to them. They want to know how their political parties are funded, and whether that funding has an impact on what the parties say and do in office. It is hugely important that we should move towards transparency as we try to normalise the situation in Northern Ireland.

Sylvia Hermon (Independent, North Down)

Will the hon. Lady take this opportunity to confirm that the Electoral Commission for Northern Ireland, which is held in high esteem there, supports her amendments and does not believe that the deadline of 1 January 2014 gives sufficient notice either to political parties or to donors?

Naomi Long (Alliance, Belfast East)

The hon. Lady is correct to say that the Electoral Commission for Northern Ireland supports the amendments and believes that they would be practical in providing adequate support and advice to donors and political parties to make them fully aware of the change by January 2014. No substantive reasons have been given for this move not being able to proceed by 2014. Given all the issues surrounding transparency, and the public concern about the opaque nature of political funding in Northern Ireland, it is important to take this opportunity to make it clear that we want maximum transparency for the public there. We want the kind of transparency that the rest of the United Kingdom already enjoys, but which, for security reasons, we have been unable to enjoy until now.

For me, this is a matter not only of amendments 7 and 8, which I have tabled. I also want to refer to the other amendments in this group. Amendment 2 differs from those amendments, in that it seeks to set in stone the lifting of the veil of secrecy on party political donations in Northern Ireland by October 2014. It would not entirely remove the Government’s ability to extend the period further in an emergency. The Bill could, for example, include an order-making power to ensure that the Government could come back to the House in an emergency and reinstate the existing provisions, but they would need to have a substantive reason for doing so and they would have to bring their argument to the House and gain its support.

I put on record at Second Reading, and I want to do so again today, that this is not about being cavalier or dismissive about the security situation in Northern Ireland. Nor is it about dismissing the potential threat to those who donate to political parties. It is about accepting that that should not automatically, as of right, outweigh the public’s right to scrutinise donations to political parties. If we lift the bar and allow donations over £7,500 to be published, in line with the rest of the United Kingdom, people will factor in that decision when deciding whether to make such donations. Given that all the political parties have said that they get very few donations of that size, the proposal would not impede the normal democratic fundraising capacity of the Northern Ireland parties.

It is also important to confidence and trust that the public should believe that their elected representatives are not available for sale. The only way to convince people of that is to maximise transparency around these issues. No political party can defend itself against that charge while the secrecy continues to exist, because the information will not be in the public domain and available for scrutiny. My own party reveals such information voluntarily, and we encourage other parties to do so, but I believe that as of October 2014, we should be moving towards a more normalised situation for donations. The onus should be on donors to decide whether they wish to donate, knowing that their donation will be made public.

I shall listen carefully to what my colleagues in the Democratic Unionist party say about amendment 6. My understanding is that their intention is to remove entirely the possibility of donations to the Northern Ireland political parties from the Republic of Ireland. I cannot support that, and I want to explain why. Northern Ireland’s unique circumstances are reflected not only in our constitutional arrangements but in the fact that some parties operate on a Northern Ireland-only basis, some on a UK-wide basis and others on an all-Ireland basis. Taking that into account, I believe that it would be unfair completely to close the door to donations from the Republic of Ireland. A situation could be created in which parties that operate on an all-UK basis could receive donations from Dundee, Devon and Derby, while those that operate on a Northern Ireland-only basis would be unable to receive donations from Donegal or Dublin. I think that would be unfair.

I have a degree of sympathy, however, with the concerns expressed by the Democratic Unionist party on Second Reading about the potential for overseas donors to put money through the Republic of Ireland, essentially circumventing the rules on foreign donations. Indeed, I supported the Select Committee recommendation in paragraph 44 where we set out our concerns about that. Although we stopped short of recommending that all donations from the Republic of Ireland be stopped, we did recommend that the Secretary of State should seek to include provisions in the Bill that would close that particular loophole. I would be happy to support measures to do that, but I do not feel that it would be just or right to support measures that would simply put a bar on any donations from the Irish Republic, even if those people are resident and are donating to a party that operates on a Northern Ireland basis. That would not be fair or just.

I encourage all Members to consider amendments 7 and 8. Some might not agree with amendment 2, but I do not believe that the hands of the Secretary of State are in any way tied with respect to security judgments. I believe that amendments 7 and 8 will ensure clarity for donors, who will know that any money above £7,500 donated from January onwards will be subject to publication at whatever point in the future the Secretary of State decides that it is safe to declare the information. Clarity will be provided for members of the public who will know that we are moving in the direction of full transparency, in the same way as any other region of the UK. This draws the line under what has been a very tortured issue for a very long time. I hope that when the opportunity arises, Members will vote in favour of increasing transparency on these matters.

Nigel Mills (Conservative, Amber Valley)

It is a pleasure to see you in the Chair, Mr Hollobone. I rise to speak to amendment 2, which is in the name of the hon. Member for Belfast East (Naomi Long) and myself. It is a pleasure to follow the hon. Lady’s speech, and I am grateful to her for supporting the amendment that I proposed—one that is obviously consistent with the recommendations of the Select Committee on the matter of transparency for larger political donations. This recommendation was not disputed in the Committee and there was no vote or dissenting voice, as can be seen in the report. Looking back over the evidence given to the Committee by every Northern Ireland political party, it becomes clear that there is little evidence that the

parties are receiving many donations above this specified amount, so it is not as if we are talking about a large number of people potentially at a security risk.

A fair number of the parties favoured transparency, and the hon. Member for Belfast East has pointed out that her party already publishes its donations, while the Green party and Sinn Fein said they were in favour in the evidence given to us. It is not quite so easy, however, to find on Sinn Fein’s website all of its donations. Some of us have tried and have asked, but the information does not quite seem to be there.

Steve Pound (Labour, Ealing North)

I am very impressed with the hon. Gentleman’s comments so far. Will he confirm for the record that the Conservative party, which organises in Northern Ireland, is now going to be fully transparent in respect of all the donations received by that august body?

Nigel Mills (Conservative, Amber Valley)

If only that were not so far above my pay grade, I would be happy to answer the hon. Gentleman. It is a matter that he will have to put to party officials. I have never had the pleasure of campaigning for my party in Northern Ireland, so I have not been made aware of those rules. I think that transparency is the right thing and that such matters should be disclosed, but I have no problem saying that the hon. Gentleman would have to ask somebody else about how my party operates in Northern Ireland.

The issue before us today is how to find a balance between transparency and the security threat. It is right that the Committee should have a say on that today. We should be reflecting on the fact that it is 15 years since the Good Friday agreement, and on how much progress has been made. The G8 summit in Northern Ireland was held without a hitch; and we had the Queen’s jubilee tour last year. I had the pleasure of being there to see it, and it was amazing to see that Her Majesty did not need to go around with all the bullet-proof glass of the past. That shows all the progress we have made, yet we seem to be saying that 15 or 16 years on from the agreement, we still do not dare publish the largest donations made to political parties.

The amendment refers to donations of more than £7,500. I think all the parties agree that that is a rare event, but there must come a point at which the level of a donation is such that members of the public begin to suspect that it is buying some kind of influence. There should be a threshold beyond which the public are able to see what donations are being received, so that they can be sure that no influence is being bought.

I have no reason to doubt that all the parties in Northern Ireland are entirely fair, that they are not for sale, and that they do not change their policies to suit donations. I am not sure that all the people in Northern Ireland are quite as confident of that as I am, but it is for them to be cynical. Their view on the subject may not have been greatly enhanced by a BBC programme that was shown in Northern Ireland last Thursday evening, and which I believe has prompted some doubt about the entire propriety of what happens.

It is possible that those who wish to make small donations will not be able to risk the threat to their security, but those who choose to donate more than £7,500 should do so in the knowledge that the fact that they have done so will be published, on the basis that it

may be suspected that they are buying some kind of influence. We want to ensure that it is absolutely clear that they are not doing that, that none of the parties would do that, and there is no suggestion of any wrongdoing.

If it is not robust enough now and will not be robust enough in October 2014, when does the Minister think that the security situation will be robust enough to allow the publication of information about larger donations? What must change between now and the point at which we shall be able to publish that information? What criteria will the Government use under their new power to bring about more transparency? I am not certain that anyone fully understands what the obstacles are now, and what improvements would be necessary for us to provide that increased transparency, which I think every party that gave evidence to the Select Committee agreed was, in theory, desirable.

David Simpson (DUP, Upper Bann)

As the hon. Gentleman knows, the Select Committee has discussed this issue on many occasions. Our party, along with nearly all the others, wants transparency, but the hon. Gentleman must realise that in parts of Northern Ireland today, to be a Unionist is to be an outcast. Subscribing to a political party could still put someone’s life in danger.

Nigel Mills (Conservative, Amber Valley)

I bow to the hon. Gentleman’s expertise, but surely he agrees that such people can choose whether to donate a large amount to a party. If my amendment were passed, they could still donate £7,499 every year without their names being published. Surely he agrees that a donation can reach such a level that the donor must accept that it should be subject to transparency, because of the amount of influence that that donor might be exerting. The amendment provides that, in just over 14 months’ time, any donation that exceeds £7,500 will be made public. That would give an individual 14 months in which to make any large donation to a party that he or she wished to make—without the information being published—which would presumably tide the party over.

Margaret Ritchie (Social Democratic and Labour Party, South Down)

This topic is very important to those of us who are involved in the political process in Northern Ireland. Does the hon. Gentleman agree that it is necessary to balance the security risk against the public good, and that in this instance the public want transparency and accountability in politics?

Nigel Mills (Conservative, Amber Valley)

Yes. I made that point at the outset. The need for absolute security must be balanced against the need for transparency, and I decided that the level at which the balance tilted towards transparency was £7,500. The hon. Lady might choose a different figure, but there must be a point at which donations are seen to buy influence, and the details should therefore be published.

The leader of the hon. Lady’s party gave some of the most compelling evidence to the Select Committee. He said that his big fear was that if a small business man gave £1,000 to his, and her, party, another party might knock on the door and demand £2,000, because that business man was clearly willing to donate. I think that there is a risk at that level. That is why I did not table an

amendment proposing that all donations should be made public, and I think that that is why the Select Committee recommended the £7,500 threshold as well.

Fifteen years after the Good Friday agreement, with all the progress that has been made, can we really justify maintaining the secrecy of all the large political donations to Northern Ireland parties when in the rest of the UK we have the publication of much smaller donations with no trouble? We accept that there is a unique situation in Northern Ireland. The security situation there is clearly different from what those of us representing seats in the mainland face, but for how many more years can we tolerate there not being this transparency in politics in the UK?

Naomi Long (Alliance, Belfast East)

Even if we judge that the risk now is high, the point is that there will never be a point at which we can say there is no risk. This provision is about transitioning and saying that the donor must now take some responsibility for judging whether to take that risk, and that that risk should not always outweigh the public interest.

Nigel Mills (Conservative, Amber Valley)

Absolutely, and if this amendment were passed, a donor would still have 14 months in which to make any donations they wanted to make and have them not made public. I suspect that would get the political parties through the 2015 general election, and that if they planned things carefully, they could get enough funds to get through the 2016 Assembly elections, so there would be no detriment to party funding until perhaps the 2020 elections in terms of the need for very large donations. That would give everyone a large amount of time to adjust to these new transparency rules.

I therefore ask the Minister to set out why the Government are apparently reluctant to go down this route even for the largest donations. I note that in their response to the Select Committee they said they would carefully consider any restrictions on transparency after October 2014. It would be useful to understand what their criteria are for making that decision. I accept, however, that the Minister cannot, and should not, tell us the specific intelligence he has about security threats.

Northern Ireland Members obviously understand Northern Ireland politics better than I do, but it is my understanding that the details of anyone who nominates a candidate or who stands for a council are published. If we have not had any evidence that there is a real security threat to people participating in those aspects of Northern Ireland democracy, why do we have this threat in respect of donations? It is worth asking how credible it is to have those two opposing situations, whereby it is safe to nominate or stand but it is not safe to donate money. I am not sure whether there is a very convincing argument for that.

Sylvia Hermon (Independent, North Down)

Like the hon. Gentleman, I have the privilege of sitting on the Northern Ireland Affairs Committee. When we took evidence on this issue, we took evidence privately and in public session, and we took it in written as well as oral form. Did we ever receive evidence from a donor to any political party or to any independent Member of the Parliament that they felt at risk of being targeted by terrorists or anyone else for donating?

Nigel Mills (Conservative, Amber Valley)

No, of course we did not receive any such evidence. We do not know who the donors are, so we could not go and ask them. That question was raised with some of the parties; they were asked whether they had any evidence from their donors that could be put on an anonymous basis, and I do not recall any evidence along those lines being received.

Jim Shannon (DUP, Strangford)

A few moments ago the hon. Gentleman drew comparisons between elected representatives and donors, but elected representatives chose to put their names forward—in the same way as some of us on this side of the House chose to wear the uniform of the Crown, and served in Northern Ireland. That is a choice we made. The donors do not necessarily make a choice to have their names and addresses and businesses all known. That is the difference. The difference is between those who make these choices and those who donate and do not want to make anybody else aware of that. Derbyshire is not like South Down. Amber Valley is not like Belfast. They are two different places—there are different situations and different circumstances—and, with the greatest respect, I am a wee bit unsure that the hon. Gentleman is aware of all the background in Northern Ireland.

Nigel Mills (Conservative, Amber Valley)

I am grateful to the hon. Gentleman for that intervention. Clearly, people who make donations before October 2014 should not have their details published, as that would not be their understanding of what would happen. My argument is that if they choose to make a large donation after 1 October 2014, they would be doing so on the understanding that they will be named—they would be choosing to be in that situation. I have no desire to force someone into a position that is not what they understood it to be, as it would be entirely wrong to do so.

I do not doubt that my constituency is very different from that of the hon. Gentleman and I do not want to underestimate his understanding of those risks, as they are clearly far greater than those in my constituency will ever be. However, we are all asked, as Members of Parliament in the UK, to vote on this Bill and to make these choices. We need to be in a situation where there is sufficient normality in Northern Ireland to be able to publish details of these donations. I am not convinced that we have not reached that point now and that for large donations it would not be the right way in which to tip that delicate balance, especially when we are not getting credible evidence from anybody that there is a real threat or that any past incidents would give us real cause for concern. Perhaps that evidence exists and just cannot come into the public domain. I have no doubt that the Minister will have information that is far stronger than the Committee could get its hands on or perhaps should get its hands on.

On the current balance of the arguments, I think we should be publishing details of those larger donations. I accept that we are not in a position to do that in respect of smaller donations, but let us make that change. Let us say that we have progressed far enough, 15 or 16 years on from that historic agreement, to think that the situation in Northern Ireland is strong enough for us to be able to publish details of those large donations. Let us go for transparency for the whole political process, and let us show that it is clean and that people cannot

be bought. Let us not continue any longer with this fear or misunderstanding that the process is corrupt. That is where we are, and the events of last week and that television programme have raised again fears that something is happening which should not be happening. We all sincerely hope that it is not.

Nigel Dodds (DUP, Belfast North)

I am pleased to be able to take part in this debate. First, I wish to discuss amendment 6, which stands in my name and that of my colleagues, and then I will comment on the other proposals in the group. The hon. Member for Amber Valley (Nigel Mills) put a legitimate point of view, one that had support in the Select Committee but has not found favour with the Government, so I look forward to hearing the Minister speak on it. It is also worth making the general comment in relation to all these matters that the Bill did go through pre-legislative scrutiny. That is not to say that it cannot be improved or that we cannot debate it and tease out the various issues—that is what we are here to do. The hon. Gentleman referred to recent programmes and, of course, we also have to bear in mind the recent “Panorama” programme and The Sunday Times exposure of issues relating to Back-Benchers here and members of the other place. All these issues are very pertinent and need to be examined, too.

Our amendment 6 would repeal section 71B of the Political Parties, Elections and Referendums Act 2000. Political parties in Northern Ireland currently follow different rules from parties in Great Britain. Many people in the UK—UK taxpayers and voters—might be slightly surprised that a different set of rules applies on donations to people who can be elected to the House of Commons to make laws for the whole of the United Kingdom if they are in political parties in one part of the UK. The 2000 Act was passed to prevent foreign influence through donations being made without transparency, openness and all the rest of it and to ensure that donations were made by legitimate donors—donors who reside in the United Kingdom or who have locus in the UK, because, after all, the political parties to which they are donating are making laws for the UK. By logic, therefore, the same rules should apply across the UK to all the political parties represented in this House. That is what the amendment seeks to achieve.

In Great Britain, donations are permissible only from individuals or bodies in the United Kingdom. Northern Ireland parties, exceptionally, are allowed also to receive donations and loans from the Irish Republic. The amendment would end that exemption and put Northern Ireland on the same footing as the rest of the United Kingdom. One argument that is made over and over by many people, quite validly and properly, is that Northern Ireland should be brought into line with the rest of the United Kingdom. Usually, that argument is applied to the question of transparency and the revelation of the identities of donors—I shall come to that in a short while—but it never seems to be raised in the context of this glaring loophole, which preserves a special position, effectively for the benefit of nationalist parties. Let us be frank: that is why it was brought in originally and why it was lobbied for.

I listened carefully to the hon. Member for Belfast East (Naomi Long) and I understand where she is coming from. I understand the argument she advanced

and the way in which she advanced it. Her concern was more to do with the loophole whereby donations come not so much from citizens or organisations in the Republic but from individuals or companies who are used as a conduit for political donations to parties in Northern Ireland from outside the Irish Republic—from the United States, or wherever. That is the real problem. It was identified by the Select Committee, which recommended that the loophole be closed.

The purpose of our amendment is to highlight that glaring loophole. We cannot have an exception that allows donations to come in from abroad and thereby allows them to come in from even further afield than intended—from America, Australia, Canada, other parts of the European Union or wherever else. That issue must be addressed. It is entirely unacceptable, when we talk about transparency, openness and all the rest of it, that in Northern Ireland parties that are represented or may be represented in this House could be funded by bodies, individuals and organisations in other parts of the world yet we would never be able to find out because of this exception.

I appeal to the Minister to consider the issue, to consider very carefully not just what we have said but what the Select Committee has said and to take the matter away and see how the loophole can be closed. If we are trying to move forward and bring the law on donations gradually and cautiously into line, we must do it across the board, not just on the issue addressed by clause 1 and the other amendments but on the issue we are raising through amendment 6.

Sylvia Hermon (Independent, North Down)

I am grateful to the right hon. Gentleman for giving way. I need some assistance in making up my mind about whether to support the amendment, so I would like him to explain precisely the remit of section 71B of the Political Parties, Elections and Referendums Act, as amended. Does his amendment affect only donations from Irish citizens outside the United Kingdom, or would it apply equally to those who believe themselves to be Irish citizens living in the UK, and who might even wish to donate to the Democratic Unionist party?

Nigel Dodds (DUP, Belfast North)

The hon. Lady asks for clarification; I think the position is pretty clear. The position of those who would see themselves as Irish, or who hold an Irish passport and live in the United Kingdom, would not be affected at all. The exception allowed for in the 2000 Act as amended allows people who do not reside in the United Kingdom, but who do reside and have a residence qualification in the Irish Republic, to donate to Northern Ireland parties. We are saying that that is a back door route; the donations may be from individuals, companies and organisations in the Irish Republic, but that money can come from wherever—there is no regulation whatsoever. That is why we have tabled the amendment.

Naomi Long (Alliance, Belfast East)

I concur with the right hon. Gentleman’s concerns about international donations, but does he not agree that closing down all donations from the Irish Republic for parties that operate on an all-Ireland basis would not be fair, when parties that operate on a Northern Ireland or UK-wide basis can still get donations

from the whole of the UK? Is it not more important that the Minister of State goes away and looks at how we can deal with the international issue in collaboration with the Irish Government, who manage their rules?

Nigel Dodds (DUP, Belfast North)

I have asked the Minister to take the matter away and consider it, but the fundamental point is that we are talking about the United Kingdom. When it comes to laws on donations, the electoral system for this House, and the way in which Members of the House are treated, right across the board, I believe that we are a Parliament of the United Kingdom, and Members of the House should all be equal, regardless of where we come from.

As far as the political set-up in Northern Ireland is concerned, there is absolutely nothing to stop political parties getting donations from any part of the United Kingdom, although I have to say that it is not common for Northern Ireland parties—the hon. Lady can bear this out—to be inundated with donations from other parts of the United Kingdom. I think that parties on this side of the water have that market well and truly cornered, whatever the source of the donations. We certainly do not get donations from the unions in Northern Ireland, either.

This is a point of principle for us, I suppose. The hon. Lady may not agree with it, and she has a perfectly valid perspective, but our view is that we are part of the United Kingdom, and we should all abide equally by the rules of the United Kingdom. The fundamental point is that the situation is not only wrong in principle but wide open to abuse; a coach and horses could be driven through the provisions, in ways that run contrary to the reasons for introducing the measures in the 2000 Act. They were brought in to pander to Sinn Fein in particular. Whatever the reasons may have been for that, years ago, those reasons have long since ceased to apply, and everybody should be on a level playing field.

Nigel Mills (Conservative, Amber Valley)

I have sympathy with what the right hon. Gentleman is saying. One of the concerns of the Northern Ireland Affairs Committee was that his amendment would effectively contravene the provisions of the Good Friday agreement—that freedoms allowed there effectively enable an all-Ireland party to operate, and what he is trying to do would stop that happening—and that is perhaps not the way Parliament ought to go.

Nigel Dodds (DUP, Belfast North)

Nothing in the amendment, or in our proposal, would prevent a party from operating in both Northern Ireland and the Irish Republic. Likewise, there is nothing to stop a party from operating on a UK-wide basis, if it wished to. All the provision does is put Northern Ireland parties in exactly the same position as those in the rest of the United Kingdom, so that we are subject to the same rules and scrutiny. That is a perfectly legitimate point of view, which the Minister needs to consider.

Amendment 2 in the name of the hon. Member for Amber Valley (Nigel Mills) means that after 1 October 2014 all protected information should be published in relation to all donations over £7,500. Protected information is anything that could identify the person or organisation that made a donation during the prescribed period of donor anonymity. The amendment would remove the protection after 1 October 2014 and would remove all

discretion from the Secretary of State so that, as the hon. Gentleman said, after that date all donors and their details would be published.

We discussed the issue generally on Second Reading and the Government set out their position, which was opposed to that of the hon. Gentleman. Generally speaking, we welcomed the Government’s approach, which was one of caution but of cautious progress. We made it clear in the House that we want to see Northern Ireland on all fronts—not just, as some people have it, selectively—moving forward and coming into line with the rest of the United Kingdom. Right across all fronts we wish to see that.

We welcome the fact that amendments 7 and 8, as well as amendment 2, safeguard the anonymity of those who have donated up till now. Some have argued that that should not be accepted, but it is accepted by everybody and rightly so. The question is whether the Government should still have regard to the circumstances in October 2014, or whether we should make a decision now that as of that date, regardless of the situation or circumstances, the discretion is taken away.

Vernon Coaker (Labour, Gedling)

Does the right hon. Gentleman share my concern about clause 1(3)? He said that people who had made a donation up till now have their anonymity guaranteed, yet clause 1(3) seems to suggest that there might be circumstances in which the anonymity of those who gave before the Bill is enacted might be breached.

Nigel Dodds (DUP, Belfast North)

The hon. Gentleman makes a good point. I flagged that up on Second Reading and the Minister may want to look at it. The Bill is a tidying-up exercise, and the matter will have to be addressed in another place or on Report. The question is whether the clause leaves open some kind of discretion. When the Select Committee considered the matter, it recommended that the clause should be tightened so that there was certainty that anonymity would be preserved. There should be no room for doubt.

Mike Penning (Conservative, Hemel Hempstead)

The right hon. Gentleman is right. The protection of people who have given donations to a political party in Northern Ireland cannot be lifted retrospectively unless they give permission. If they are happy for their data to be released, the Electoral Commission may wish to do so. That, I think, is what the right hon. Gentleman is referring to. I will look at the provision again, but there is absolutely no intent whatever to release data on anybody retrospectively unless they agree to that.

Nigel Dodds (DUP, Belfast North)

I very much welcome what the Minister has said. I think that is the intent of everybody. The slight concern is about the drafting and the need for the intention to be explicitly spelled out in those terms. Some commentators have pointed out that the current wording is somewhat loose with regard to the possibility of some discretion. Given the situation with regard to litigation on these matters, it is not beyond the bounds of possibility that somebody will test it in court. The provision needs to be tightened up.

Mike Penning (Conservative, Hemel Hempstead)

If there is that concern, the Government will table an amendment in the other House and close it.

Nigel Dodds (DUP, Belfast North)

I very much welcome that and thank the Minister for his commitment.

Steve Pound (Labour, Ealing North)

This is an important aspect of the Bill that we must thoroughly ventilate. Does the right hon. Gentleman share my concern that although data may not be available for release, they do exist? If data are collated, stored and placed in a silo of information, there is always the fear and concern that they could be released. Examples at the moment from the other side of the Atlantic indicate that point. Does the right hon. Gentleman have any suggestions about how we could address that concern?

Nigel Dodds (DUP, Belfast North)

The hon. Gentleman makes an important point about data that are held and not meant for publication yet somehow find themselves in the public domain, and we can all cite many examples of that happening in recent years. There are, of course, criminal sanctions, but that does not necessarily guarantee anything. The fact of the matter is that it depends on the good will and good faith of those who safeguard such information, and on proper security to ensure that what Parliament intends and enacts is followed through. The hon. Gentleman raises an important point that rightly concerns people, and the Government may wish to comment on what steps they are taking to ensure that information does not enter the public domain when people have been guaranteed that it will not.

Returning to amendment 2, which would remove the discretion, we put on record our concerns that donors to political parties in the rest of the UK do not face the same problems as donors to parties in Northern Ireland. The hon. Member for Amber Valley (Nigel Mills) pointed out the tremendous progress that has been made, which we all recognise, value and celebrate, but there is still a serious threat in terms of terrorism and public safety. Not long ago there was the murder of a prison officer, David Black, and there have been other serious incidents, disruptions and bomb attacks. We operate in a different climate—it is much improved and better than it used to be—but most people accept that we are still in a situation in which caution must be exercised.

As we move forward to a more normalised society, we hope that the threat from dissidents and others will recede and continue to be dealt with. As we put the violent past behind us, it is right and proper that we move towards a system of donations and loans, as employed in the rest of the United Kingdom, and we support the normalisation process for political donations as outlined in the Bill.

Sylvia Hermon (Independent, North Down)

I am extremely grateful to the right hon. Gentleman for taking so many interventions. Will he kindly reflect on a question that I asked on Second Reading? While we all accept and do not query the dreadful times that all of us of a certain age have lived through in Northern Ireland, we are now in more peaceful times. Will the right hon. Gentleman quantify in numbers—this will be helpful for people at home watching the debate—the threats to current donors to the Democratic Unionist party? Is it in half dozens or dozens, and can he quantify that in changed circumstances and—thank the Lord—quieter times in Northern Ireland?

Nigel Dodds (DUP, Belfast North)

A point was made earlier—I do not know whether it came from the hon. Lady or someone else—that the Northern Ireland Affairs Committee did not hear

from a donor saying how afraid they would be if their identity was made public. It is not easy for people in that position, and there will not be lots of people coming forward and making their position clear. By necessity, some of these things will be done with the least publicity and information as possible from the donor’s point of view, because they want to protect their anonymity.

The Select Committee heard from the First Minister—I have already cited his evidence—from David McClarty, an independent MLA, and from representatives of my party, the Social Democratic and Labour party, the UK Independence party, which of course is becoming a major force in the rest of the United Kingdom, although not particularly in Northern Ireland, and the Ulster Unionist party. They all urged the Secretary of State to exercise caution when modifying the current confidentiality arrangements for political loans and donations in Northern Ireland. As the Committee’s report states:

“They argued that the security situation in Northern Ireland presented a barrier to implementing the same transparency regime as Great Britain because donors remained at risk of violence and intimidation”.

On Second Reading I quoted what the hon. Member for Belfast South (Dr McDonnell), the leader of the SDLP, told the Committee. He encapsulated his party’s concern and it is worth putting it on the record again:

‘Our difficulty is that we feel that we were particularly vulnerable in the past, in that some of our donors felt vulnerable and threatened… Sometimes, the threat is not even direct, but people are put under pressure and told, “You gave the SDLP £1,000 this week; we think that we are entitled to £2,000 this week”. The threat is at that level. In a situation in which there are still a handful of people moving about with guns, that threat is there.’

The Committee also heard from Mike Nesbitt MLA, the leader of the Ulster Unionist party, who expressed concerns that commercial donors would face recriminations in the form of boycotts of their businesses or violence. That is something that is very hard to pin down, because it is spread by word of mouth and those individuals might ask, “Why are people not coming in?” His party colleague Tom Elliott MLA, who represents Fermanagh and South Tyrone, told the Committee that “a number of businesses”—he could not quantify it—were being boycotted because of their affiliation to particular political parties. He said that two of the UUP’s commercial donors had recently contacted the party asking it not to send further correspondence to the company’s business premises in case the employee responsible for opening the post made public the fact that the company had donated to the party.

Those are real fears. They are not made up or designed to camouflage or cover up anything. Nevertheless, bearing all that in mind and exercising caution, I think that it is right that we support the provisions of the Bill, which are about moving towards greater transparency and openness when the situation allows.

Laurence Robertson (Conservative, Tewkesbury)

The right hon. Gentleman is making a number of very important points. A number of the Committee’s witnesses where asked why donors would be at greater risk than candidates, for example, or those who support candidates

in other ways, perhaps by delivering leaflets, displaying posters, canvassing or signing the nomination papers. Why does he think that donors would be at greater risk that those participants?

Nigel Dodds (DUP, Belfast North)

It could be argued that donors are at as great a risk as those who put themselves forward as political representatives and stand for political parties. I suppose that one reason why they might choose to be a donor, rather than a candidate, is that they do not want to attract the sort of public attention that being a full or part-time public representative brings in Northern Ireland. They want to be involved in the political process, to support it and to have their political interests advanced and their views reflected, but they do not necessarily want to get involved in politics directly. However, even being a donor can attract problems for those people. There is a difference between being a donor and standing for election as a political representative. Not everybody wants to be a political activist. I think that there is a significant difference in the level of public attention that people want to attract, and that is human nature.

Nigel Mills (Conservative, Amber Valley)

I want to take the right hon. Gentleman back to the quotes he gave about the commercial risk of a boycott if someone is exposed as a political donor. The leader of the UUP and the First Minister both said that it was the security risk that justified the lack of transparency and that the commercial downsides of a boycott alone would not be a sufficient threshold. Does he agree that it is only the security risk that justifies the lack of transparency?

Nigel Dodds (DUP, Belfast North)

I do not accept the hon. Gentleman’s point. I refer him to paragraph 23 of the research paper on this matter produced by the House of Commons Library, which says:

“Mr Robinson, Mr Nesbitt and Mr Elliott all argued that security and commercial risk to donors were intrinsically intertwined”.

The responsibility for setting the timetable for removing anonymity must, in our view, remain with the Secretary of State, as is the current position under the Bill. We would urge caution as to when the decision is considered, as we noted on Second Reading, when the Secretary of State gave us an undertaking that there would be consultation not just with the Electoral Commission but with the security forces and political parties. That is absolutely right and proper.

For those reasons, we support the consensus behind the Bill and urge colleagues to consider carefully the importance and significance of our amendment 6.

Stephen Lloyd (Liberal Democrat, Eastbourne)

It has been a pleasure to listen to the right hon. Member for Belfast North (Mr Dodds), my hon. Friend the Member for Amber Valley (Nigel Mills), and the hon. Member for Belfast East (Naomi Long). They made very thoughtful contributions, and I appreciate being able to listen to them.

I entirely appreciate, from my own family experience, the challenges as to why there had to be anonymity in Northern Ireland for so many years. I entirely support that, for the reasons that others have mentioned. I have a great deal of sympathy for amendment 2, tabled by my hon. Friend the Member for Amber Valley and the hon. Member for Belfast East, which refers to a £7,500

threshold and has a provision giving people 18 months or so to make whatever substantial donations they make. A lot of thought has gone into the amendment, and in many respects I instinctively understand and appreciate it. The right hon. Member for Belfast North argued for allowing the Secretary of State to have flexibility up until October, because, sadly, the reality in Northern Ireland is that even though there have been enormous advances, things can change on a sixpence. The arguments are therefore very finely tuned.

A key part of normalisation is to make everything as equitable as possible between Northern Ireland and the UK. I fully understand the reasons for the length of time that the process has been given. I think that we are being very sensible in drawing to a close on this. If the Government cannot accept amendment 2, will the Minister categorically assure me that come October 2014 they would be absolutely cognisant of the fact that if another inappropriate excuse for a delay were implemented, it would be a very sad day for this House and for Northern Ireland? I suppose that some eagle-eyed observers will recognise that I am struggling slightly with this and reading between the lines. I would welcome our having equalisation come October 2014. That transparency is vital, and it is the next and final stage. I urge the Minister to make it very clear that while we retain the discretion up until 2014, our default position is to move towards normalisation expeditiously.

Mark Durkan (Social Democratic and Labour Party, Foyle)

On amendments 7 and 8, tabled by the hon. Member for Belfast East (Naomi Long), I sympathise with the argument that if we stick unquestioningly to the date of October 2014 there is a danger that the same excuse will be given that the security situation does not permit us to move to more transparent arrangements. It is as if the date has been picked almost as a gesture to pseudo-transparency and the hon. Lady is testing that by proposing that it be brought forward. I sympathise with that, but January 2014 would be cutting it a bit fine, given that I assume the Bill will only get to the Lords this autumn.

I believe, however, that there is a case for bringing the date forward from October 2014. Bills are often enacted at the beginning of the financial year and I see no reason why that should not also be the case with this Bill. Members might point out that there are elections due next year, but I would have thought that a starting date of the beginning of the financial year would adequately and competently address the problem. I certainly do not think that the starting date should be after next year’s two intended elections, because that would make it look as though we were legislating with them in mind and almost allowing last orders for donations.

If January were the only date available before October, I would support amendments 7 and 8. I ask the Minister to consider bringing the date forward, because it looks as though the date of October has been set with next year’s elections in mind. Many people are also concerned that, come October, the can will be kicked down the road yet again.

Amendment 2, tabled by the hon. Member for Amber Valley (Nigel Mills) and the hon. Member for Belfast East, seeks to ensure that the real commencement date for transparency is made absolutely clear and unambiguous. We heard on Second Reading, and the Minister has told us in an intervention today, that there is no intention

retrospectively to reveal donations, even those made in recent years. A signal has to be sent, however, that there will be a date from which a record of all donations can be revealed when the circumstances allow it. That needs to be made clear and explicit. That is what amendment 2 calls for and I support it, because I do not think the public believe political parties when we tell them that transparency, definition and certainty are not possible and that we cannot give them an unambiguous commencement date for transparency. Amendment 2 goes someway to addressing that deficit in public credence.

As I indicated on Second Reading, I am sensitive to the many risks and threats that people may have experienced because of their involvement in Northern Ireland politics, whether as a candidate, the family member of a candidate, an activist, a member or a donor. However, there comes a point when the public feel that the arguments about security are overdone and are an excuse for secrecy. They are not sure whether secrecy is in the interests of the parties or whether it truly ensures the safety of the donors.

There is even blurring as to what the donor sensitivity is. There might be commercial or customer sensitivity if somebody is seen to be giving to a particular party. As my hon. Friend the Member for Belfast South (Dr McDonnell) pointed out in evidence to the Northern Ireland Affairs Committee, when people are known to have given to one party, it makes them susceptible to approaches from other parties. I am not sure that that fully answers the question, if the point is that we will know that somebody gave £1,000 to X party one week and £2,000 to us the next. A lot of that information seems to circulate and get out in Northern Ireland anyway. Many people have impressions, reliable or not, of who are the significant donors to various parties.

People often attend party dinners or events at constituency level and are not particularly sensitive about appearing at such events in various publications. There are people who attend events that are attached to several parties. They have their own reasons, justifications and rationales for doing so. It is therefore not the case that everybody is paralysed about doing anything that shows support for or engagement in political parties. We must weigh carefully how far the genuine arguments about commercial sensitivity and security can be deemed to override the compelling requirements for transparency.

I also said on Second Reading that transparency is not needed just so that people can see who is supporting the election costs of particular parties and might therefore have influence on them; it really matters when parties are in a position to take or influence key decisions. The case for transparency has become more compelling in the context of devolution, because many parties take many different decisions. Indeed, parties not only take decisions, but have the ability to prevent Ministers of other parties from taking decisions. Those powers of veto can be exercised on behalf of vested interests as much as they can in the interests of Ministers’ Executive powers or people’s powers at Assembly or local council level. Of course, the councils will be taking on more powers, including over planning. That makes these matters more sensitive.

Other hon. Members have referred to the recent television programme and the issues that have arisen from it. On Second Reading, I put it on the record that my party colleague, Alex Attwood, took the initiative when he became the Environment Minister for Northern Ireland of saying that he would tell officials if he was aware that the person behind a planning application or the person who made a significant objection to a planning application was a donor to his party, so that the information could be recorded and the officials could handle the matter at a sufficient distance from the Minister. The officials made the point that that had not happened before and that it was not necessarily required, but in his view it was required. When we now hear stories, impressions and accusations ricocheting around in relation to companies and political parties and who may be on donor lists, the public concern is palpable. We cannot in this House ignore that. The parties in Northern Ireland, even those who have defended extending security cover and security sensitivity, cannot ignore that. When there are so many questions, people cannot take as the answer, “Well, there is still a compelling need for secrecy and we cannot afford transparency at any level.”

Jeffrey Donaldson (DUP, Lagan Valley)

I thank the hon. Gentleman for giving way. On his point about the Environment Minister for Northern Ireland notifying officials when a potential SDLP donor is involved in a planning application, does he know whether that information, when lodged with officials, is subject to the Freedom of Information Act 2000, and is it available to a member of the public?

Mark Durkan (Social Democratic and Labour Party, Foyle)

As I understand it, it is not, not least because it is not a compelling point. He informs his officials and the matter is handled in a particular way, but that does not put anybody at any risk. I do not believe that Alex Attwood is inadvertently trying to find a way around the provisions and the whole question of protecting things on a retrospective basis; it is about him as a Minister being honest with his officials and with the responsibility entrusted to him to exercise good, clear, honest and independent judgment. It is also about allowing his officials to do that as well, because many of the issues that have arisen in recent days involve concerns that Ministers are intruding into what officials are doing—that Ministers are being overactive in their Departments in relation to matters being handled at an official level. Questions arise about who meets Ministers and whether they record and declare those meetings fully, and whether they account for those meetings in response to questions in Committees. When those questions are being asked, we need to address transparency requirements.

It will not fall to this House and the Bill to provide all the answers to remedy the situation: the Executive and the Assembly will have to address tightening the ministerial code on ministerial meetings and donations. On Second Reading, I made the point that this issue does not just relate to planning decisions, and recent events relate to significant public contracts and public appointments. There have been a lot of questions on whether public appointments in Northern Ireland always follow the standard they are meant to follow. Many people would anecdotally suggest that there is too much coincidence and pattern in some public appointments.

Those are all reasons why we need more transparency. The fact that Northern Ireland is a small place is often used as a reason why we cannot have too much transparency. When I was a Minister, I would have made it known to a civil servant if a relative of mine was appointed to something. I would not have made the appointment, but it would have been for me to take official note of it. I wanted to disclose that, rather than have somebody else find out later on. Where relatives might have had a perceived interest in a particular project, or even a rival project, I would again have made a point of always declaring it. Of course, I was often told by civil servants, “Look, you can’t do that every time. Northern Ireland is too small a place. You can hardly walk down a street without bumping into people. You couldn’t throw a stone without hitting somebody that you know or are related to.” [Laughter.] That is not particularly good advice and is not the way I would usually want to make contact with people—even I might tweet first before doing that. The smallness of Northern Ireland can become an excuse for not having proper standards of transparency. That smallness is one of the reasons why it is necessary. The danger is that slippage in one area becomes an excuse for slipperiness in another. We should not allow that to happen. I have been definite about my support for making stronger moves on transparency, which is why I support amendment 2.

Vernon Coaker (Labour, Gedling)

On increasing transparency, does my hon. Friend think that the confidence of people in Northern Ireland would be increased if there was a statutory duty in the Bill to consult with the PSNI before arrangements were changed?

Mark Durkan (Social Democratic and Labour Party, Foyle)

That could well be a pertinent point; the shadow Secretary of State makes a very good point. When it comes to security concerns, in many other instances, we treat the Chief Constable almost as an oracle. No doubt, the Minister will tell us that in any decision that he and the Secretary of State take, they reference information from the Chief Constable and other intelligence assessments, but it would be useful if that was in the Bill. Similarly, there is the role of the Electoral Commission; we know of its support for the amendments.

Amendment 6 would remove the right of anybody resident in the south of Ireland to make a donation to a party operating in the north of Ireland. I addressed this issue on Second Reading. I represent a border constituency in a regional city that serves both sides of the border in the north-west and which has strong links with neighbouring towns and areas. As such, the economic interest of the north-west is of cross-border economic interest. The same goes for the social fabric of the north-west: most families have a strong cross-border dimension, with many people living and working on a cross-border basis. Many people who work in the north live in the south, and vice versa, which is reflected in complicated—more so than they should be—arrangements for cross-border workers in respect of tax credits and other things.

When such cross-border life is part of the come-and-go flow of life, it extends to politics as well, because people have a strong interest in what happens in the region and want to offer political support, particularly if they are living temporarily in the south, but are from the north

originally and might live there again or if they live in the south and have strong business interests in the north. It is natural. They do not regard themselves as being abroad when working or living in Donegal or Derry. They do not regard themselves as engaging in daily international travel.

Gregory Campbell (DUP, East Londonderry)

The Member is coming very, very close to asking Donegal to return to the United Kingdom.

Mark Durkan (Social Democratic and Labour Party, Foyle)

No, I’m not. Donegal is well placed where it is, so close to Derry, and Derry is well placed and well favoured where it is, so close to the bounteous beauty of County Donegal.

At a wider level, there are parties in Northern Ireland that see us as being part of the body politic of the island as a whole—it is our natural body politic, just as the population of the UK as a whole is the natural body politic for those of a Unionist identity in Northern Ireland. The idea, therefore, that when it come to our politics—our political agenda, our political offer, our appeal for support—our natural broader political hinterland, our natural political family, should be precluded from giving political donations to us would be wrong and unequal. It would be absolutely wrong if Unionist parties were able to receive donations the length and breadth of the United Kingdom, including the whole of the island of Great Britain, to which they have such affinity, but nationalist parties in Northern Ireland could not receive contributions from people throughout the island of Ireland who want to support them.

There are some parties, such as Sinn Fein currently, that are organised on an all-Ireland basis. They should not be precluded by any new arrangement from being supported in that way. The option is available for other parties as well. My party operates support groups in the south, and always has done. The ability to operate support groups in the south was one of the things that gave many people in the south of Ireland a responsible and effective channel through which to back constitutional nationalism and support the sorts of things that we now have in the Good Friday agreement during the dark years of violence from physical-force republicans and intransigence from “No! Never!” Unionism. It is important that the wider contribution—the literal contribution—of people throughout the island should be respected.

However, I note the Northern Ireland Affairs Committee’s concerns that, in allowing continued donations from the Republic, care must be taken to ensure that only legitimate donations pass muster and that donations cannot be used as any sort of cover for getting round the wider provisions on truly international donations. That can be addressed not just by clearly requiring that donations can come only from those on the register in the Republic, but by adding clearly that anybody making a donation must make a formal declaration, for which they will be liable, that it is their money and has not been given to them by anybody else from anywhere else. Similarly, that declaration should have to be made by those receiving the money.

The system has to be made compelling in that way, because we have had enough of all the pseudo-transparency, where parties say, “Oh, our money comes this way and

that way, and we publish things on the website.” However, as the hon. Member for Amber Valley said, when we go looking for the things that are supposedly published on the website, they are not there. I therefore totally oppose amendment 6.

Naomi Long (Alliance, Belfast East)

Just to clarify, will the hon. Gentleman confirm that he is not referring to my party’s website, where such information is easily found? I understand who he is alluding to, but it is not us.

Mark Durkan (Social Democratic and Labour Party, Foyle)

I assure the hon. Lady and her party colleagues that I certainly did not want any stray fire to land on their reputation in that regard, so I am glad to affirm that point.

However, our opposition to amendment 6 is about putting things on a level playing field for all the parties in Northern Ireland, whether nationalist, Unionist or neither. As political realignment hopefully takes shape over the years to come, there will be all sorts of shifts in how parties present themselves, on either an all-Ireland or a wider-UK basis, and how far their nationalism or Unionism is emphasised. That is why donations should be available for parties from throughout the UK and from throughout the island of Ireland. That seems to me to be fair.

Nigel Dodds (DUP, Belfast North)

I am interested in what the hon. Gentleman is saying about both the donor and the recipient making a declaration. Currently, the rules mean that individuals or companies in the Irish Republic can provide funding to Northern Ireland parties, but that is not permissible when it comes to funding for parties in the Irish Republic, so the position is even worse. How does he think his suggestion can combat that problem?

Mark Durkan (Social Democratic and Labour Party, Foyle)

The right hon. Gentleman raises a point that throws up the conundrum that, although we are trying to legislate for Northern Ireland in broad conformity with UK legislation as it is applied for parties here, because of the circumstances in Northern Ireland, the exception is to allow donations from the south. Then there is the discrepancy in the donations rules for people in the south, whereby they can donate under one set of rules to parties in the south and under another set to parties in the north. Perhaps there is a case for saying that we should try to arrive at some conformity on donations across the island of Ireland, or that donations from the south of Ireland should conform to the southern Irish rules as well. I do not have a problem with trying to finesse some of these issues so that we are not left with too many obvious conundrums. However, the answer to the question that the right hon. Member for Belfast North (Mr Dodds) has asked is not provided by amendment 6. It is not the answer to his very valid, pertinent and relevant question about the different standards for people from the south contributing donations.

I made the point on Second Reading that there were many people in the south who were originally from the north, or perhaps from this island, who had a valid and benevolent interest in the affairs of the north and who continued to make a contribution there, often through membership of public bodies. I also made the point that not all of them had been appointed to such bodies by nationalist Ministers. If such people are seen to have a

valid role and to make a credible input in the best interests of Northern Ireland by way of a public appointment, I do not see why they should be precluded from doing so by way of donations to political parties.

Laurence Robertson (Conservative, Tewkesbury)

It is a pleasure to follow all the right hon. and hon. Members who have spoken so far. I intend to make only a brief contribution to the debate, as many of the points have already been raised. I note that amendment 2, tabled by my hon. Friend the Member for Amber Valley (Nigel Mills), uses the word “may”, rather than “shall”, which is in keeping with the rest of the clause that he is seeking to amend. The Select Committee feels that we should move forward in this respect, and that we should try to normalise politics in Northern Ireland. I know that that was the ambition of the previous Secretary of State and the previous Minister, and it is fair to say that it is also the ambition of the current holders of those positions. It has been our guiding principle. Each and every political party that the Committee spoke to during the course of the inquiry approved of moving towards greater transparency.

Everyone on the Committee, myself included, recognises that there is a different security situation in Northern Ireland. The Committee has had a sufficient number of meetings, and paid a sufficient number of visits to Northern Ireland, to understand that fact. Further to my earlier intervention on the right hon. Member for Belfast North (Mr Dodds), a question that has frequently been asked is: why should the arrangements be different for donors and for those who participate in the elections? The right hon. Gentleman gave an explanation for why people might want to be donors but not candidates, and I understand that, but I am still not clear why a donor should be at greater risk or under a greater threat than someone who is standing for office for a political party. I would have thought that it was the other way round. People who support a candidate, largely by signing nomination papers, would surely expose themselves to the same risk.

It has been pointed out that if a business makes a donation, it could put them at a commercial disadvantage, but it is up to the business to make that decision. There is a Co-operative store close to my office in Tewkesbury. The Co-op has supported the Labour party for many years, and I have to make the decision whether to go and buy a carton of milk and a newspaper from that shop. It happens to be close to my office and very convenient, so I do that. I do not think that businesses should be able to hide behind the argument of a security risk in order to protect their business interests. If they make a donation to a particular party in Northern Ireland or elsewhere in Great Britain, they should take that commercial risk. That should be part of the normal run of politics.

I am somewhat intrigued by the substantive clause inasmuch as it allows the Secretary of State to increase transparency, but does not allow her to reduce it. Having looked very closely at the provisions, I am still slightly confused on this point. If the Secretary of State increases transparency, can she reduce it at some later date? In other words, she cannot reduce transparency from where it stands now, but can she reduce it if she has increased it in the future?

I make that point because if she cannot reduce it, where have we got to? What would be the difference from what my hon. Friend the Member for Amber Valley proposes. Let us say that the Secretary of State increases transparency, but in the year after that, the security situation—heaven forbid—got worse, so that she had to come back to introduce primary legislation to change that position. In those circumstances, I do not really see what would be any different from my hon. Friend’s proposal.

The Select Committee and I would certainly be against the publication of any information retrospectively when donors have made donations in the belief that that would not be the case. I am slightly concerned about the wording in clause 1, however, where it states:

“Such information may be disclosed if the Commission believe, on reasonable grounds, that…the relevant person has consented”.

We tried to strengthen that provision, saying that there had to be evidence that the person had consented. The Government response was that if they adopted our proposal, it would create an absolute offence and a mistake could be made. I am not completely persuaded by that argument. I think that the clause does need strengthening to ensure that a mistake cannot be made in this respect and that there has to be a clear indication from the person or organisation that made the donation that permission has been given for any such disclosure. I thus seek clarification from the Minister on those points.

Jim Shannon (DUP, Strangford)

I would like to say a few quick words on amendment 2, as proposed by the hon. Member for Amber Valley (Nigel Mills), and to put a different perspective on it. First, however, I wish to say that I have had a number of discussions with the hon. Gentleman and that we have served in the Finance Bill Committee together, as we have on delegated legislation Committees. I know that his interest is sincerely held and it is one that I respect. I was nevertheless struck as I read the briefing for this debate by its tone, and I would suggest that there is a reason for caution—anything further being an exaggeration.

My party, the Democratic Unionist party, is very much in favour of openness and transparency. We are also well aware of the security situation in Northern Ireland and of the fact that the dissidents are still very much on operations, which means that we cannot have one-size-fits-all legislation. It cannot happen; it is not like for like. Those who say that the people should stand up to intimidation show only the fact that they do not care or perhaps do not understand that people in Northern Ireland still live a life that carries a degree of anxiety—not just in historical cases, but in issues that are still ongoing today for communities across the whole of Northern Ireland. I accept that it is not to the same extent as in the past, but none the less there are still threats in my constituency and in others across Northern Ireland.

As someone who, like others, works within the community, I understand the real fear that people experience and I do not believe that it can be so easily dismissed as some people have suggested. Our security situation cannot be regulated to a date, as dissidents certainly do not respond to deadlines. Although I fully understand and agree with the necessity for transparency that has been put forward, this cannot be put before the security concerns of people and businesses, which are real and

justified. To suggest otherwise would be to hope naively for the best, which is a good thing in principle, but not when people’s lives are at stake.

I have to say—I hate to say it, as well—that extortion of a sectarian nature is not a thing of the past when it comes to Northern Ireland. It still happens today; incidents are taking place. There is a very real possibility that if a business is seen to be donating to political parties, it might come under pressure to donate to other groups, perhaps those of an unsavoury nature. As my right hon. Friend the Member for Belfast North (Mr Dodds) said to the Committee, businesses can feel that they have been boycotted by customers whom they have had for years. There is a real issue for those people; it is not an exaggeration or a remote ideal. Is this what is intended by the legislation before us tonight? I do not believe so. I do not believe that the Bill is intended to scare off people who wish to contribute to a party. However, that will be a side-effect of it. People will fear that their homes, their businesses or, indeed, their families will be at risk, and that cannot be ignored by any Member in any part of the House.

I do not believe that we have reached a stage at which people can freely publicise their political ideals in any circumstances without fear of reprisal. As I have said before, in this debate and in others, security concerns are paramount for me, and they should be paramount for the House when it legislates. Can I, in all conscience, legislate in a way that would put people at risk because they support a political party, as is their right? I do not believe that I can, and I sincerely ask all other Members whether they can do likewise.

We must be open, but we must also be wise. I believe that wisdom dictates that the status quo should be extended for a further two years, as proposed by the Minister and by earlier speakers, and that it should be judged again at that stage. I do not believe that we will never reach a stage at which publication becomes safe, and I firmly believe that that is the direction in which we should be heading, but the fact that we see a signpost to a destination does not mean that we have arrived, and in this instance “better safe than sorry” definitely applies.

I cannot support amendment 2, but I commend amendment 6, which was tabled by members of my party and presented very eloquently by my right hon. Friend the Member for Belfast North. I believe that it presents us with a way forward in the Province.

Margaret Ritchie (Social Democratic and Labour Party, South Down)

rose—

Philip Hollobone (Conservative, Kettering)

The hon. Lady has been very patient, and now her moment has arrived.

Margaret Ritchie (Social Democratic and Labour Party, South Down)

Thank you, Mr Hollobone. I wish to speak to amendments 7 and 8 and amendment 6.

Given that we are living in a more normal society in Northern Ireland—although the degree of that normality varies, and we have seen it ebb and flow over the last few months—I believe that the anonymity relating to donations could now be lifted, not necessarily next October but perhaps at an earlier date, as suggested by the hon. Members for Belfast East (Naomi Long) and for Amber Valley (Nigel Mills).

I cannot disagree with what I understand to be the intended purpose of the amendments. It is important that, in trying to achieve a greater level of political maturity and in the practice of politics generally, we strive to achieve the highest standards of public life, whether we are serving our constituents or executing our parliamentary duties here at Westminster and in the Northern Ireland Assembly. The public ask us to serve them, and the duty to serve them is in our contract with them when we are elected as members of political parties. The electorate rightly demand from us the highest standards in public office in the execution of that contract, and it is important for the guiding principles of transparency, openness and accountability to constitute not just the pillars on which our fledgling democracy is built, but the rules that govern donations to political parties serving us in public life and wider civic society.

Like my hon. Friend the Member for Foyle (Mark Durkan), I acknowledge that there may be concern about security issues—concern that was expressed by the leader of our party when he gave evidence to the Northern Ireland Affairs Committee. There is a need to protect donors, because some of them—and some parties —fear that they may might be at risk from a terrorist or other threat. However, if we have learned anything over the last few months—and over the last few days, when television programmes have contained revelations about alleged political interference in certain bodies—it is the importance of giving some form of resilience and confidence to the public.

In that respect, I do not have any problem in supporting the amendments of the hon. Member for Belfast East, although it will not come as a surprise to learn that I do not support the amendment in the name of the right hon. Member for Belfast North (Mr Dodds) because like my party colleague, my hon. Friend the Member for Foyle (Mark Durkan), I believe we live in the island of Ireland. I believe that fervently as a democratic Irish nationalist, but notwithstanding that, I represent a border constituency, and many people at the southern end of it daily travel to places of employment in County Louth. They pay taxes sometimes in both the north of Ireland and the Republic of Ireland. They also have their children educated in the north, and they buy goods and services in the south and the north. There is that exchange of ideas and people. They view people in County Louth, albeit it is in the south of Ireland—in the Republic of Ireland, a different jurisdiction—as their neighbours and friends. In those circumstances, with that exchange of people and ideas, I cannot support this amendment. I am sure DUP Members will perfectly understand where the parliamentary party of the SDLP is coming from in that respect.

I also believe that we need to see progress on a whole range of matters, however. Mr Haass has been appointed today to chair the all-party talks on flags and emblems and reconciliation. It is important that we move towards that in the next phase of devolution so we can see the full implementation of the Good Friday agreement, including support from the British Government for a Bill of Rights that is dedicated to the needs and requirements of Northern Ireland.

Sylvia Hermon (Independent, North Down)

May we clarify one little point of conflict between the hon. Lady and her colleague, the hon. Member for Foyle (Mark Durkan)? He supported

the thrust of the amendments in the name of the hon. Member for Belfast East (Naomi Long), but he suggested that January was a bit too soon and perhaps the tax year would be better. However, the hon. Member for South Down (Ms Ritchie) has just said she supports the amendments of the hon. Member for Belfast East, so is it January, or is it March and the tax year, or has the hon. Member for South Down got further ideas?

Margaret Ritchie (Social Democratic and Labour Party, South Down)

It was my very clear understanding that my hon. Friend the Member for Foyle said that if the hon. Member for Belfast East were to press her amendment to a Division, he, like me, would support her—although I think I might be a Teller in such a Division. We in the SDLP believe that there is a need to move towards greater transparency and accountability. That can be balanced against the political progress we are making in the interests of the public good and, above all, the wider needs of society in Northern Ireland, because the experience of the last few weeks tells us that the public want politics to move in that direction. They want us, while serving them, to exercise our job in the right and proper and accountable manner.

Steve Pound (Labour, Ealing North)

We have heard a great deal this evening about the threats and dangers that could possibly be attracted to party political donors. It is perhaps salutary to mention that if such threats exist to those who donate to political parties, credit should be given to those who have the courage to participate fully in the democratic process as candidates and elected representatives, and perhaps we in this House do not give enough credit to those who sit with us in this Chamber and who take the most extraordinary risks in conditions that are frequently beyond the imagining of us on this side of the water. Many right hon. and hon. Members sitting here tonight have had very close personal experiences in that regard, so when we talk about the threat to donors let us also salute the courage of those who participate fully in the democratic process.

May I, in these brief remarks, say that I thought that the right hon. Member for Belfast North (Mr Dodds) showed his fine—I was going to say almost Jesuitical subtlety but he probably would not thank me for that—analysis of the situation when he referred to the need to advance incrementally and organically? It is one thing to legislate, but we cannot legislate for human behaviour; we cannot demand that people’s behaviour and instincts change, and that society and culture change, because a piece of law has been approved in this House. A cultural change, an organic change, has to take place, and that is, of necessity, a slow process; it is an incremental process. None of us disagrees with the desirability of the destination; we all want to be in that place. It is the road map and the route we are talking about today. In the particular circumstances of politics in Northern Ireland, proceeding festina lente—I hope hon. Members will forgive me a spot of Latin—should be our watchword on this occasion. In recognition of that, the proceeding slowly and cautiously option is by far the best one. I look forward to hearing from the Minister, possibly also on the subject of transparency of the Conservative party in Northern Ireland.

Mike Penning (Conservative, Hemel Hempstead)

It is a pleasure to serve on this Committee of the whole House under your chairmanship, Mr Hollobone. As usual, we have had a wide-ranging debate on the provisions. I wish to make two personal comments. First, may I apologise on behalf of the Secretary of State, who would have been here but for the fact that, as Opposition Members know, it is right and proper that she is in the Province this evening as there are important matters to be dealt with there? It is right and proper that I acknowledge that she would have been here and she particularly wanted to deal with clauses 1 and 2. May I also say a personal thank you to right hon. and hon. friends in the House who have sent me notes and stopped me in the corridors following the tragic loss that my family have had in the past couple of days? The comradeship of this House has helped me through, especially as I was giving evidence to the Select Committee when my father-in-law passed away.

This debate has taken place with the perfect tone, and people watching this debate, particularly if they are doing so in Northern Ireland—I hope they are and I hope the BBC covers it properly—will be impressed. We probably all disagree about many of the issues; one of my colleagues came up to me saying, “Who agrees on what here?” We all agree that Northern Ireland has come a huge distance in the past 15 years but still has quite a long way to go. I would love to be able to stand here and say that I can agree with amendments 7, 8 and 2, but I cannot.

The office I hold means that I see things that I had hoped I would never see, and there are things I cannot repeat on the Floor of this House. May I pay tribute, as the shadow Minister did, to those who stand for office in Northern Ireland, whether in this House or any other elected body, because they stick their head about the parapet? As so many in this House, in the Assembly and in local government know, that very often puts them and their families under threat. We heard on Second Reading about the terrible atrocities of the past. Sadly, some of those threats remain today. Of course I add the caveat that we have come an awful long way but, as I said on Second Reading, I have to look daily at protection for people—close protection weapons, home protection and so on. Some of these people are elected but the vast majority are just going about their normal work to protect us. Sometimes they are not even in the public sector. I know we will never be in a perfect situation in which there is no threat to anybody, but while there is a threat I must be very careful to ensure that those who wish to donate and their loved ones are not put at risk by revealing their identities. Clauses 1 and 2 move us forward, slowly but surely, as we have for the past 15 years, and I thank the shadow Minister for supporting me in that regard. As I said, we would all love to be in a completely different position. I know that some hon. Members do not agree with me, and I completely respect them and their view, but the Bill moves us forward, although perhaps not at the speed that some would like.

Naomi Long (Alliance, Belfast East)

I acknowledge that the Bill moves us forward. That is welcome and I welcomed it on Second Reading. Will he clarify exactly how my amendments 7 and 8 would pose any threat to security, given that all they would provide is that from January any donations made would be subject to publication once the Secretary of State deemed it was safe to publish?

Mike Penning (Conservative, Hemel Hempstead)

I completely understand where the hon. Lady is coming from. The whole Bill went through pre-legislative scrutiny, and we are not discussing semantics —it is much more serious than that. We are saying that the Secretary of State will take the powers and that, if we are in a secure position, we will move forward. As mentioned earlier—I think the Chairman of the Select Committee, my hon. Friend the Member for Tewkesbury (Mr Robertson), asked about this—the Secretary of State also has the statutory power to revoke.

Sylvia Hermon (Independent, North Down)

I am extremely grateful to the Minister for taking a second intervention so soon after the first. I was very concerned when the Minister wound up on Second Reading and used an expression that struck me—and, I am sure, other right hon. and hon. Members —at the time:

“If one person is put at risk, that is not right.”—[Official Report, 24 June 2013; Vol. 565, c. 118.]

Although I cannot speak for others, I inferred that if one donor felt he or she was at risk the transparency measures would not be lifted by the Northern Ireland Office. Will the Minister take this opportunity to clarify when it will ever be the right time—when we have no risk at all?

Mike Penning (Conservative, Hemel Hempstead)

That is a good intervention. I read what I said the following day, as all good Ministers should—as all good Members should, to be honest—and I was speaking metaphorically. I was not speaking about an actual physical individual, because of course that would be a crazy situation. We would never, as hon. Members have said, get into a position where there was no threat to anybody. Let me clarify: I was speaking in general terms, rather than individually.

Let me touch on the threat. My job is not only to ensure, along with the Electoral Commission, that the electoral system in Northern Ireland runs properly but to ensure the national security of Northern Ireland. There might be concerns about individual businesses, and I think that this applies to businesses that give donations to any political party in the UK—we have talked about the Co-op—and they suffer any consequences, but that is completely separate from the intimidation and personal threats I see daily.

The shadow Secretary of State asked whether it should be on the face of the Bill that the PSNI should be a consultant. This subject is much more wide ranging than the PSNI; we could do that, but we do not need to. As the hon. Member for Foyle (Mark Durkan) said, it is more wide ranging and involves the other security services that are helping us and that helped us so brilliantly during the G8.

Amendment 6 stands in the name of the right hon. Member for Belfast North (Mr Dodds). I am told that I should not say this, but I have some sympathy with the argument, in that we need to move forward. I will not accept the amendment—he probably understands that—but if we are talking about normalisation, I accept that there need to be discussions between the Government in the south, us, and all the political parties on how we can get to a slightly better position. I very much take on board the point that the Good Friday agreement set out that there is a different situation in Northern Ireland when it comes to donations and political parties. Of course, there is a cross-Ireland political party that has had Members elected to this House, but it is not represented in the Chamber today.

I am committed to ongoing discussions, and to seeing how we can move the issue forward. I cannot accept amendment 6, but as that commitment is, I think, roughly what the right hon. Gentleman asked me to give, hopefully he is happy with that. I ask hon. Members to withdraw amendments 7, 8, 2 and 6, and commend clauses 1 and 2 to the Committee.

Naomi Long (Alliance, Belfast East)

I thank hon. Members for their contributions. When we discuss this issue, it is natural that we focus heavily on the threat to donors from terrorism. I do not dismiss that, and I do not dismiss the point that the threat level is severe. However, no compelling evidence was presented to the Select Committee during our inquiry to show that the threat specifically targeted donors. People remain willing to sign councillors’ nomination papers—people who do not want to lift their head above the parapet and be elected representatives, but who are willing to have that information published.

The Chairman of the Select Committee highlighted clearly that a boycott could happen in any part of the United Kingdom, and that that is not a compelling reason for the current arrangements, so we need to be cautious about conflating those two things. However, although we naturally focus heavily on the security threat, we must also focus heavily on the wider threat to the political process that the lack of transparency is becoming in Northern Ireland. The suspicion that politics operates for the benefit of those with the means to buy influence is utterly corrosive to the democratic process. It taints all of us as politicians, and it puts the institutions under threat, as the public disengage from politics as a result of that perception.

Confidence in Northern Ireland politics is at a low ebb, and only through increased transparency, and increased speed of delivery of transparency, can we meaningfully address that. I have listened carefully to what the Minister said, and while I understand and accept many of his points, I cannot accept that a coherent argument has been made to say that amendments 7 and 8 would pose any threat to the security of any individual.

Mike Penning (Conservative, Hemel Hempstead)

I know that the Select Committee took evidence, but a lot of the evidence that could perhaps have convinced the hon. Lady could not be given to the Select Committee. She cannot see the evidence that we see daily. Nobody in this House is more determined that there should be democracy than I am, but to push something forward without that knowledge is dangerous.

Naomi Long (Alliance, Belfast East)

The evidence that I am seeking is not evidence of the security threat. The evidence that I am referring to is evidence that amendments 7 and 8 would in any way compromise anyone’s security. The amendments leave it to the Secretary of State to decide when that information should be made public—she currently has that power—but make it clear that anyone making a donation after January 2014 will eventually have that fact made public when the Secretary of State and the Minister of State are confident that it is safe to do so, in the light of all the information that they see and we ordinary Members of Parliament do not. There is no compelling argument against amendments 7 and 8; they are supported by the Electoral Commission, and I would like to press them to a vote.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Does the hon. Lady recognise that the events of recent days mean that the concerns that lie behind her amendments are clear and present concerns of the public, and are felt profoundly? It is a bit much for the Minister or anybody else to conduct this debate as though those concerns were not there.

Naomi Long (Alliance, Belfast East)

I agree entirely. There is a serious risk if people no longer trust their politicians and no longer trust their institutions to act in the public interest. The only way we can overcome that is by clearing the matter up. No party can easily defend itself while this information remains secret. I am willing to accept the Secretary of State maintaining the discretion as to when the information will be published, but I see no risk to anyone from a decision being made now that makes donors and parties aware that anything donated after January will be made public, when the Minister of State and the Secretary of State are convinced that it is safe to do so.

Nigel Dodds (DUP, Belfast North)

To be absolutely clear, what the hon. Lady is talking about is bringing forward the date from October to January. That would not have any effect on any donations up to now or any donations before January next year, so in relation to the wider issues and the context in which we are speaking about this, the measure would take effect only from next year. Is that right?

Naomi Long (Alliance, Belfast East)

That is absolutely correct. I made it clear on Second Reading that I would be in favour of any measure that retrospectively exposed donors to publication. I believe that would be unjust while there is a legal question about whether they had the expectation that donations made in the prescribed period would not be made public. At a very personal level, they understood that to be the case. If we are to have honour and integrity in politics, that should extend to people’s understanding of agreements that have been made, so I would not favour retrospective exposure. Only donations made after January would be affected and that would come about only after the Secretary of State had ruled that it was safe to do so. I therefore wish to press the matter to a vote.

Clause 3 — MPs to be disqualified for membership of Assembly

Naomi Long (Alliance, Belfast East)

I beg to move amendment 10, page 4, line 5, after ‘Commons’, insert ‘or House of Lords’.

Philip Hollobone (Conservative, Kettering)

With this it will be convenient to discuss the following:

Amendment 11, page 4, line 7, after ‘Commons’, insert ‘or House of Lords’.

Amendment 12, page 4, line 11, at end insert—

‘(2) A person who becomes a Member of the House of Lords is not disqualified under section 1(1)(za) at any time during the period of 8 days beginning with the day the person becomes a Member of the House of Lords.’.

Amendment 13, page 4, line 30, leave out from ‘members)’ to end of line 31 and insert ‘leave out “either House of Parliament.”.’.

Clause stand part.

Amendment 14, page 4, line 36, after ‘Ireland)’, insert ‘or Seanad Éireann (the Senate of Ireland).’.

Amendment 20, page 4, line 36, at end insert ‘or Seanad Éireann (Senate of Ireland).

(dc) is a member of the House of Lords.’.

Amendment 15, page 4, line 38, after ‘Éireann’, insert ‘or Seanad Éireann’.

Amendment 3, page 4, line 41, at end add—

‘(3) In section 1(1) of the Northern Ireland Assembly Disqualification Act 1975 (disqualification of holders of certain offices and places) before paragraph (a) insert—

“(za) is a member of the European Parliament;”.

(4) After section 1B of that Act (as inserted by section 4(2)) insert—

“1C Members of the European Parliament

A person returned at an election as a member of the Northern Ireland Assembly is not disqualified under section 1(1)(za) at any time in the period of 8 days beginning with the day the person is so returned.”.’.

Clause 4 stand part.

Amendment 16, in clause 5, page 6, line 13, leave out from ‘MPs’ to end and insert

‘, members of the House of Lords or members of the Oireachtas).’.

Amendment 17, page 6, line 28, leave out from ‘MPs’ to end and insert

‘, members of the House of Lords or members of the Oireachtas); and’.

Naomi Long (Alliance, Belfast East)

I intend to keep my remarks on this group of amendments brief. I welcome the fact that the Government have acted on their promise to ensure that double-jobbing between MLAs and MPs will now be brought to an end. I also recognise that, as a result of discussions in the Northern Ireland Affairs Committee, the Government have moved to include within that provision Members of Dail Eireann so that TDs, too, will not be able to hold a seat in the Assembly. I think that it is right that they have done so and welcome that move. [Interruption.]

Philip Hollobone (Conservative, Kettering)

Order. I am trying to enjoy what the hon. Lady is saying, but unfortunately there is a lot of chatter coming from behind the Speaker’s Chair. I am sure that hon. Members would like to hear more clearly the very important points she is making.

Naomi Long (Alliance, Belfast East)

Thank you, Mr Hollobone.

As I was saying, I welcome the fact that the Government are dealing with and resolving the issue of MP-MLA double-jobbing. That is a huge improvement. As a result of the Select Committee’s discussions, the Government have also moved to resolve the issue of TDs, who could also sit as MLAs, and to equalise the situation. That is also important and I welcome it at the outset.

The Government did this for good reason, which is the challenge of being in two legislatures at the same time—

Mike Penning (Conservative, Hemel Hempstead)

On a point of order, Mr Hollobone. I am afraid that even from this position on the Treasury Bench I cannot hear a word that is going on, mostly because of conversations at the other end of the Chamber.

Philip Hollobone (Conservative, Kettering)

That is indeed a point of order, for a change. May I ask hon. Members who are not staying to listen to the debate to leave or to remain quietly?

Naomi Long (Alliance, Belfast East)

Thank you very much, Mr Hollobone. It is unfortunate that the noise blotted out all the praise that I was heaping on the Government, because I am just about to stop and start to highlight areas where they have not been quite so generous. However, I do appreciate that these issues are being addressed. I very much support that, as did the Select Committee.

These provisions are being proposed for a very good reason. Serving in two legislatures involves the physical challenge of being in two places at once. The conflict in sitting times between the House of Commons and the Northern Ireland Assembly means that Members who wished to be here today for this business would have to be absent from the Assembly, where they could be questioning Ministers and holding them to account. There is significant evidence that that creates a democratic deficit either there or here.

The problem is not restricted purely to Members who sit in the House of Commons. I recognise that the House of Lords is not structured in the same way as the Commons. Its Members do not have an electoral mandate and therefore do not have the same demands on their time with regard to constituency business. However, as a revising Chamber with a primary focus on legislation and scrutiny, it is hugely important that its Members are free to dedicate themselves to that task without the interference of a constituency burden and the other legislature that they would have to deal with when they are at the Northern Ireland Assembly.

Nigel Mills (Conservative, Amber Valley)

I agree with the hon. Lady. Does she accept that, as I propose in amendment 3, this must apply even more to the European Parliament, which is even further away and has some kind of elected legitimacy, at least while we are in still in the European Union and it is relevant to us? I cannot see how someone can serve in Brussels and in Belfast at the same time.

Naomi Long (Alliance, Belfast East)

I will come to the hon. Gentleman’s amendment shortly. I understand that European Parliament legislation precludes people from serving in the Assembly at the same time as in the European Parliament. Perhaps the right hon. Member for Belfast North (Mr Dodds) would be able to advise whether that is the case. If not, I would welcome the issue being resolved in the Bill and would support the hon. Gentleman’s amendment if it achieved that.

It is not only about distance but about simply having the time to commit to doing the job that one is supposed to be doing. The House of Lords plays an important role in acting as a revising Chamber for this House. Someone who is a peer and also an MLA will not be able to commit themselves fully to either body, and that is unfortunate. The situation is exacerbated by the direct conflict between the sitting times of the Assembly and the House of Lords, particularly on Mondays and Tuesdays but also extending into the rest of the week, when people would be on committee business in the Assembly. The Assembly committees are extremely powerful instruments, and it is therefore important that Members play a full and active role in them.

I also recognise that remuneration for the work of a peer is different, which reflects the fact that many peers have careers outside Parliament that may on occasion conflict with the sittings of the House of Lords. I made it clear on Second Reading that I was content for this matter to be resolved in the context of wider reform of the House of Lords, and it was initially indicated that that would be the case when we discussed this during and after the Bill’s consultation period. However, given that House of Lords reform has not progressed and looks unlikely to do so in, let us say, the short term, it is important that the Government revisit the possibility of taking action in this Bill in order to ensure that Members of the House of the Lords and those who are elevated to it do not continue to sit in the Northern Ireland Assembly. If membership of this House disqualifies people from serving in the Assembly, I believe that the same should be true of membership of other Parliaments.

I do not believe it is acceptable that someone who sits in the Seanad, the upper House of the Dail at the Oireachtas, is technically allowed to hold a post—although no one does—in the Northern Ireland Assembly. I think that is wrong. I am glad that the Government have addressed the issue of the Dail, but I believe they should address the Oireachtas as a whole, so my amendments also seek to exclude Members of Seanad Eireann from being able to sit in the Northern Ireland Assembly. I believe that that would be consistent with the approach to the House of Lords. Both deal with legislative matters, which the Government gave as their primary reason for excluding MPs and TDs.

I would suggest that all those arguments also apply to Members of the European Parliament. I have been unable to unravel—let us put it that way—precisely whether Members of the Assembly are specifically excluded from being MEPs, but history shows that any Assembly Member who has been elected to the European Parliament has stood down. I therefore support amendment 3, tabled by the hon. Member for Amber Valley (Nigel Mills), which would clarify the issue in domestic legislation and make it clear that it is not the will of this Parliament that people should be able to hold both posts.

The report of the Northern Ireland Affairs Committee acknowledges that those are important issues. We note in paragraph 66 that legislation on dual mandates

“should be applied consistently across both Houses of Parliament”

and ask

“that the Government include a provision in the substantive Bill to this effect.”

Moreover, in paragraph 75 we say that it would be “illogical” to allow

“a position whereby a member of the UK Parliament was excluded from being an MLA but a member of another legislature was not.”

I think that that stands the test of scrutiny and hope that even at this stage the Minister will be able to offer us some comfort on these matters.

Nigel Mills (Conservative, Amber Valley)

It is a pleasure to follow the hon. Lady and I agree with most of what she said. Indeed, when the Northern Ireland Affairs Committee considered the Bill we welcomed the Government’s decision to legislate to abolish double-jobbing between this place and the Northern Ireland Assembly, and we suggested that if the Government were going to go down the route of legislating on one lot of double-jobbing, they should do so for all manner of double-jobbing in order to be consistent. It is welcome that the Government listened to the Committee on the issue of Members of the Irish Parliament. If it is right to block Members of this Parliament from being Members of the Assembly, it would have been iniquitous to not also block Members of the Irish Parliament. That is a welcome change.

We accept the need to legislate to end double-jobbing between the Parliament in London and the Assembly in Belfast, but I find it difficult to understand why the Government think there is no need to end it in the context of the European Parliament in Brussels. I see from the Government response to the Northern Ireland Affairs Committee report that they see no need for that because no concern has been raised.

The Government consider that if that was done, it should apply across the United Kingdom and not just in Northern Ireland. However, the same argument would apply to ending double-jobbing between this place and the Scottish Parliament and Welsh Assembly, but the Government are proposing legislation only for Northern Ireland. I believe that legislation is planned for Wales, but I am not sure of the position on Scotland.

It is therefore hard to see the logic of legislating to stop Members of Parliament sitting in the Assembly, but not to stop Members of the European Parliament sitting there. Surely if we think that that is wrong, we should legislate on it as a matter of principle and say that people can choose whether they sit in the Assembly or another Parliament, but they cannot do both. That is the simple logic behind amendment 3.

I see no reason to detain the Committee. The hon. Member for Belfast East set out all the good reasons for banning double-jobbing. The people of Northern Ireland think that that should happen and all the parties over there have voluntarily agreed that it will happen from the next general election. In my view, that should also apply to the next European Parliament election, which is due to take place in just under a year. I therefore commend amendment 3 to the Committee.

Mark Durkan (Social Democratic and Labour Party, Foyle)

The intention of amendment 20, which appears in my name and that of my hon. Friend the Member for South Down (Ms Ritchie), is to achieve exactly the same effect as that outlined by the hon. Member for Belfast East (Naomi Long) in respect of her amendments. The Clerks said that amendment 20 would be the best way to achieve the principle of one Member, one Chamber. However, I am open to supporting the other versions that would get us to the same point, namely the amendments tabled by the hon. Member for Belfast East. I also note the extension of that principle in the amendment tabled by the hon. Member for Amber Valley (Nigel Mills), which refers to the European Parliament.

Oddly, the provisions on Members of Oireachtas Eireann being Members of the Assembly date back to a situation involving a prominent and senior member of my party, Seamus Mallon, who was deputy leader of the SDLP. In the 1980s, his membership of the Northern Ireland Assembly was challenged on the basis that he was also a Member of Seanad Eireann. Of course, when my party stood in the election to the Assembly in 1982, we made it clear that we would not take our seats and would not sign on for salaries, allowances or anything else. It is therefore not comparable to Members of Sinn Fein not taking their seats here, but taking allowances. When Seamus Mallon was subsequently appointed to the Seanad, a member of the Ulster Unionist party saw fit to make a legal challenge to force a by-election so that a Unionist could take the seat in an Assembly that had no real powers.

On the back of that controversy, Sinn Fein made the case in the early years of the peace process for a gratuitous piece of legislation that was put through this House, which provided that Members of either House of the Oireachtas could be MPs and/or Members of the Northern Ireland Assembly. Sinn Fein was the only party that sought that piece of legislation. That was because, in building the party and selling itself to its supporters, it wanted to use its heavy hitters as abstentionist MPs and as candidates for the Dail. It was entirely a confection to support Sinn Fein’s ambitions and pretentions in building the party and the movement. This House was convinced to legislate on that basis. Of course, Sinn Fein has not activated the change it sought, and rightly so. Whenever its more prominent elected representatives in the north decided to seek election in the south, they did so on the basis of giving up their seats in the north. They too seemed to accept the standard of one Member, one Chamber. We should therefore ensure that when there is an opportunity to legislate, we should take it.

The Government were right to move on the dual mandate between Westminster and the Assembly, not least because they had served notice that if the parties did not move to rectify the situation, they would move to legislate. They have done that and I support them. As I indicated on Second Reading, I took my own decision on the dual mandate and it is right that legislation sets a clear, common standard.

William McCrea (DUP, South Antrim)

Will the hon. Gentleman clarify how that view sits with his party leader, the hon. Member for Belfast South (Dr McDonnell), who sits both here and in the Assembly?

Mark Durkan (Social Democratic and Labour Party, Foyle)

That is permitted under the legislation. In my view, legislation should clearly not allow that; a party leader should not be under pressure to say that,

because they are in one and can be in the other, they should sit in both because the law allows it. There is pressure on people because being able to sit in both helps to protect a second Assembly seat in the constituency, but such tactical considerations should not enter into it. The best way to spare everybody from those sorts of considerations is to have one clear, uniform standard in law.

Of course, the hon. Gentleman’s party has Members who sit in both the Assembly and this Chamber. Indeed, they have one Member who sits in Westminster and the Assembly while serving as a Minister in the Executive. I have always argued—when I was a Minister and subsequently —that any Minister should solely be a Member of one Chamber and be fully accountable to that Chamber. I have consistently argued that one should not be a Minister in one Chamber and a Member of another.

William McCrea (DUP, South Antrim)

I thank the hon. Gentleman for giving way. He talks about consistency. Is it not a fact that when he was a Minister in the Northern Ireland Assembly he was also a Member at Westminster?

Mark Durkan (Social Democratic and Labour Party, Foyle)

No, that is not a fact. When I was a Minister in Northern Ireland I was not an MP. I became a suspended Minister—I was a suspendee, not a suspender —in October 2002, and I was not elected to this House until 2005. I subsequently made appointments when I was a Member of this House; I was the leader of my party and had the power to appoint Ministers. I made it very clear well in advance that I could not appoint myself as a Minister, no matter how many seats we had won and how many Ministers we might have had to appoint in the Assembly. I was an MP and could not be a Minister. That was our party rule, and the party standard has been consistent. Similarly, when my hon. Friend the Member for South Down, who was a very able Minister for Social Development in the Executive, was elected to this House, she resigned as a Minister. That was consistent with that principle: we have consistency and form on this issue.

Regardless of what justification Members or parties might be able to give for having coped with the dual mandate in the past, circumstances are different now. We have an absolutely settled process. It is important to give the public the confidence that we believe it is a settled process by moving on dual mandates. That would indicate that we do not believe that there is any uncertainty surrounding the institutions which might give an excuse for having a foot in two Chambers.

Sylvia Hermon (Independent, North Down)

I am grateful to the hon. Gentleman for taking an intervention, but may I run one suggestion past him? I have never had a dual mandate and I do not particularly favour them. However, in the context of a devolved Administration in Northern Ireland that is sustainable and will continue, is there not an argument to be made for the Finance Minister in that devolved Administration to be present in this House, particularly for the Budget, financial statements and the comprehensive spending review, so that he or she can address the key issues across the Dispatch Box to the Chancellor of the Exchequer on that day and on those issues?

Mark Durkan (Social Democratic and Labour Party, Foyle)

No, having been Minister for Finance and Personnel in Northern Ireland, I do not believe there is such a compelling reason. I would have regarded it as a distraction from my full-time day job if I had been operating in another Chamber as well. The limited opportunities we have here to ask questions on a statement or the Budget do not compare to the effective opportunities a Minister and his or her officials have via the other channels to the Treasury, such as joint ministerial committees that exist for engagement between Governments. Those are adequate for Scotland and Wales, so I do not think we should create an exception in Northern Ireland if someone happens to be the Minister for Finance and Personnel.

Jim Shannon (DUP, Strangford)

What about your party leader?

Mark Durkan (Social Democratic and Labour Party, Foyle)

The hon. Gentleman has obviously missed my point. We want to legislate so that there are no special cases, no special pleading and no tactical pressure on anybody, be they a party leader or anybody else. That is why we should legislate to a standard, not on an ad hominem basis.

Gregory Campbell (DUP, East Londonderry)

I thank the hon. Gentleman for giving way; he is being very generous with his time. He alluded earlier to a direction of travel and the destination we all want to reach: a single mandate for each Member. I think there is unanimity there, but would he agree that Scotland and Wales seem to have got there without the need for legislation?

Mark Durkan (Social Democratic and Labour Party, Foyle)

Perhaps they did, but the fact is that notice was served to the parties in Northern Ireland that, if such a change did not happen, the Government would move to legislate, as they have now correctly done. It would have been wrong for the Government to give the signal, and then not to use the Bill to address the matter. We discussed this on previous Bills, because it came up whenever we considered the question of constituencies and voting systems, as well as House of Lords reform.

Paul Murphy (Labour, Torfaen)

Further to the last intervention, my hon. Friend will be aware that the Bill, if passed, will apply to Northern Ireland. Similar legislation will be passed for Wales, but none will be passed for Scotland.

Mark Durkan (Social Democratic and Labour Party, Foyle)

That would be a discrepancy as well. If the principle is one Member, one Chamber, it should apply all round. Perhaps the right hon. Gentleman is suggesting that those of us who tabled amendments should have included the Welsh Assembly and the Scottish Parliament, so that there was no question of somebody deciding to be in several Chambers.

Naomi Long (Alliance, Belfast East)

That was discussed at length in Select Committee. One reason we did not do it was that, this being the Northern Ireland (Miscellaneous Provisions) Bill, there would have been no argument for including it. I think the Secretary of State for Wales is intending to introduce legislation creating that bar, although whether the Secretary of State for Scotland chooses to do the same is a matter that perhaps he could clarify better than me. Either way, this matter should be resolved.

Mark Durkan (Social Democratic and Labour Party, Foyle)

I fully take the hon. Lady’s point; it was a helpful intervention, but the point that the right hon. Member for Torfaen (Paul Murphy) made was also a good and valid one. If we were using the Bill, in the pedantic sense, to make it truly perfect and to cover all the options, we could have included the Welsh Assembly and the Scottish Parliament, but we did not, for the sorts of reasons she mentioned.

If we are moving, rightly, towards precluding dual mandates in this Chamber and the Northern Ireland Assembly, the same should apply to the other place as well. If it is to be one Member, one Chamber, it would be wrong if somebody could be in another Chamber in this Parliament—a Chamber which, because of the strange rules, procedures and fixations that people have here, seems at times to have more impact on legislation, by way of amendments, than this one.

The argument then arises about why somebody should be allowed to sit in another Chamber simply because they are not elected and have no mandate. The fact that they are there on an unelected basis does not make their dual membership of two different legislative Chambers any more acceptable than it would be for somebody who had been elected to both Chambers. Indeed, we have heard the Democratic Unionist party make the argument that there is more legitimacy if someone is elected to two Chambers, because the public, in electing that person, know that they are in two Chambers and knowingly give them that mandate. In many ways, the least defensible position is to say that someone can be an elected Member of one Chamber and an unelected Member of another at the same time.

The same thing has to apply to the Oireachtas. If people have rightly been precluded from being a Teachta Dala at the same time as being a Member of the Assembly, they should also be precluded from being a Member of the Seanad Eireann at the same time, whether as a Taoiseach’s appointee or as someone elected through the panels by the electoral college system that exists in the south for the Seanad. Again, if people are sitting in one legislative Chamber, that should be their sole place. That is the point of amendment 20 and the amendments tabled by the hon. Member for Belfast East.

I fully take the point made by the hon. Member for Amber Valley, who wants to extend that position to the European Parliament. Some of us had thought that that was already provided for, but I understand that it applies more specifically to membership of this House—to national Parliaments, as opposed to regional or other territorial Assemblies. In practice, when the parties in Northern Ireland have run Members of the Assembly as candidates for the European Parliament in recent times, they have usually done so on the basis of a full declaration that, if elected to the European Parliament, that candidate’s membership of the Assembly would cease. However, in taking a belt-and-braces approach, the hon. Gentleman makes a good point with amendment 3.

I repeat the point that if we want to have one Member, one Chamber, we should apply that to the second Chamber of Parliament and the Oireachtas, as well as to the first Chambers of both.

Jeffrey Donaldson (DUP, Lagan Valley)

We do not have an amendment in this group, but I want to speak to a number of the amendments that have been tabled.

I, along with others here, held a dual mandate for some time, being a Member of Parliament and subsequently being elected to the Northern Ireland Assembly. At times I think it pushes the boundaries a little to suggest that there is huge public opposition to the concept of dual mandates. When I was elected for two terms in the Assembly, I was a Member of Parliament, but I was elected—I do not share this for any reason other than to illustrate my point—with the highest number of first preference votes of any candidate in the Assembly elections on both occasions. No one voted for me on the basis that they did not know that I was already a Member of Parliament, yet they deemed it appropriate to elect me to a second Chamber. The idea that the public were always entirely opposed to dual mandates is therefore spurious, because the facts do not support it.

Because of the development of the peace process in Northern Ireland, we needed people in the Assembly who had the experience of serving as Members of Parliament. That was important. I recognise that we have now moved on and, on the basis of voluntary undertakings given by parties in Northern Ireland, we now have very few Members who hold a dual mandate between this House and the Northern Ireland Assembly, and by the next election there will be none. To say that there is a need for these changes is therefore stretching the point, to say the least. Indeed, this issue would be way down my list of priorities for inclusion in the Northern Ireland (Miscellaneous Provisions) Bill.

Gregory Campbell (DUP, East Londonderry)

The hon. Member for Foyle (Mark Durkan) made the point that the Government said they would legislate on moving to a single-mandate position only if the parties did not move in that direction voluntarily. Is it not the case that the parties have so moved, yet the Government are still proceeding with the measure?

Jeffrey Donaldson (DUP, Lagan Valley)

My hon. Friend makes a valid point. The Government have already legislated—as, I think, the Assembly might have done—to ensure that a Member of this House who is also a Member of the Northern Ireland Assembly receives no pay for holding the office of Assembly Member and has a much reduced office costs allowance. There is already provision to deal with the issue. The reality is, however, that the proposal is also incorporated into this Bill.

I would like to say on behalf of the Democratic Unionist party that we oppose the amendment that would exclude Members of the House of Lords from the opportunity of serving in the Northern Ireland Assembly, and we have valid reasons for doing so. The House of Lords is an appointed second Chamber in the United Kingdom Parliament. In making appointments to it, there is a desire to achieve a degree of regional representation. I happen to think that it is to the benefit of devolution to have a connection between this Parliament and the devolved legislatures. I accept that it is not preferable for that to involve Members of this House, because we are elected and there is the question of the dual mandate and because certain issues can arise at constituency level.

Those matters do not pertain to Members of the House of Lords, however. Even in a reformed House of Lords, there would be value in making provision for some Members of the devolved legislatures also to be

represented, if they so chose, in the House of Lords. That would help to bind the United Kingdom together, and to recognise the special position of the House of Lords. As a body, it is not necessarily representative in geographical terms, but it is widely representative of society. Why should we not have in the House of Lords legislators from the devolved regions of the United Kingdom? We do not accept the need to amend the Bill to exclude Members of the House of Lords from having that dual representation—if not a dual mandate—in the separate Chambers.

Sylvia Hermon (Independent, North Down)

The House of Lords is a key part of the legislature of the United Kingdom and, as someone who is very keen on devolution, I believe that the Assembly is an essential part of the Government in Northern Ireland. Can the right hon. Gentleman honestly say, with his hand on his heart, that a person—or multiple people—sitting in the Assembly and in the House of Lords can do justice to both roles and sit in both places simultaneously?

Jeffrey Donaldson (DUP, Lagan Valley)

I can say, hand on heart, that I believe they can. When I was a Member of the Assembly and of the UK Parliament, my attendance record on Committees in the Assembly was far superior to those of single-mandate Members of the Assembly. When I chaired the Assembly and Executive Review Committee, I had a 100% attendance record—I was the best attendee on the Committee. We have to weigh these things up and strike a balance.

Naomi Long (Alliance, Belfast East)

I certainly do not dispute the fact that the right hon. Gentleman’s Assembly Committee attendance record was good, but we should look at the disparity between the average voting records of those in this House who do not have a dual mandate and those who do. According to “The Public Whip”, the average voting record of those of us who do not hold a dual mandate is 413 to 414, compared with 259 to 260 for those who do have a dual mandate. The Assembly might not suffer, but the attendance of those Members in this House seems to do so. I am not suggesting that that is the only metric we should take into account, but it is an important one.

Jeffrey Donaldson (DUP, Lagan Valley)

I come back again to the issue of mandate. If the people of East Londonderry decided that they wanted someone other than the current Member to be their MP, because the current Member also happens to be a Member of the Assembly, they will have made that choice. The reality is that the choice they made at the last election was to elect someone who was also a Member of the Assembly and who has, by the way, an excellent voting record in this Chamber and participates well in debates. In all those issues, we have to strike a balance. What we are recognising is that we accept the argument that in respect of Members of this House there is a greater weight of opinion that says that it is difficult to do both tasks. In respect of the House of Lords, however, I believe that having a small number of MLAs who also happen to be Members of the House of Lords is something of value to the Assembly and to the people of Northern Ireland.

Gregory Campbell (DUP, East Londonderry)

I know it is probably academic, as I recognise that we are moving in the same direction. The hon. Member for Belfast East (Naomi Long) singled out voting records. That is one and only one element of performance. If we look at oral contributions, written questions and the tabling of motions, we see a very different picture. It is worth looking at theyworkforyou.com which can show us who is performing well and who is not.

Jeffrey Donaldson (DUP, Lagan Valley)

I would also say that a constituent, whether it be in Limavady or Lisburn, is well able to make a judgment about whether the person they elected to a particular chamber better serves the interests of the people by being here to vote on the Mersey Tunnels Bill, which is of no relevance whatever to the people of Limavady or Lisburn, or by dealing with an issue in the Northern Ireland Assembly that is of relevance to them.

We have moved on from the question of dual mandates between the House of Commons and the House of Lords or the House of Commons and the Northern Ireland Assembly, but I do not believe that the same arguments apply in respect of being a Member of the House of Lords and being a Member of the Northern Ireland Assembly. As I have said, I think there is real value to the Assembly in having a small number of Members who are also Members of the United Kingdom Parliament by virtue of their membership of the House of Lords. Equally, I would hope, the House of Lords can see the value of having that sort of representation, albeit on a small scale.

We nevertheless support the amendment tabled by the hon. Member for Amber Valley (Nigel Mills) because the European Parliament is an elected chamber, and we draw a distinction between an elected and an appointed chamber. If the argument is made that it is difficult to be in London and in Belfast, I would say that it is even more difficult to be in Brussels or Strasbourg and in Belfast. None of the Northern Ireland parties pursue the option of having their MPs as an MLA, but if the argument goes that we are legislating to prevent dual mandates for the House of Commons because we want to prevent it happening in the future, I suggest that the same principle should apply to Members of the European Parliament as well. It may not be the practice at the moment, just as I believe the practice of dual mandates in this House is coming to an end, but if preventive measures are called for, we have to be consistent and look at the position of the European Parliament.

We are minded to support amendment 3, tabled by the hon. Member for Amber Valley, but to oppose the amendments that include the House of Lords in the excluding provisions. We believe it is right to include the Irish Parliament within the exclusions, given that it is an elected body, and I think that the hon. Member for Foyle (Mark Durkan) is seeking to extend that to include the Irish Senate.

Mark Durkan (Social Democratic and Labour Party, Foyle)

The right hon. Gentleman will recognise that the Irish Senate is not actually elected in a public sense. Indeed, some of the seats are appointed by the Taoiseach. Those of us who are backing these amendments are being consistent: whether or not a chamber is elected is not what matters; what matters is whether it is a legislative chamber.

Jeffrey Donaldson (DUP, Lagan Valley)

That is a fair point, but my party approaches the matter from a very different perspective. The Parliament of the Irish Republic is in a separate jurisdiction, outwith the United Kingdom, and we have always taken the principled view that a member of a Parliament that is outwith the United Kingdom’s jurisdiction should not be entitled to membership of a devolved legislature or of this Parliament.

Jim Shannon (DUP, Strangford)

My right hon. Friend is making a valid point. Surely it would be ludicrous for a member of the Northern Ireland Assembly also to be a member of Dail Eireann or of a Senate with a different constitution, a different aspiration, and a different way of looking at things from an Assembly that is in the United Kingdom.

Jeffrey Donaldson (DUP, Lagan Valley)

Indeed. I do not know what affirmation new members of the Irish Senate make, but it is surely a contradiction for people to come to either of the Houses of Parliament here and affirm their allegiance to the United Kingdom, and then to go to the legislature of another country and affirm their allegiance to that country. That is why, on principle, we cannot accept the concept that a Member of the Parliament of another country could also be a member of either a devolved legislature in the United Kingdom or, indeed, of this Parliament.

Margaret Ritchie (Social Democratic and Labour Party, South Down)

The hon. Member for Belfast East (Naomi Long), my hon. Friend the Member for Foyle (Mark Durkan) and I firmly believe in one Member, one Chamber. I declare an interest as a former Member of, and Minister in, the Northern Ireland Executive and Assembly, and also as a former district councillor in Northern Ireland. As such, I know very well that Members must serve only one Chamber if they are to do the job properly and adequately.

The proposal to extend this legislation to the upper chambers, the House of Lords and the Seanad in the Irish Parliament, has my full support. I believe that there is a certain amount of hypocrisy in contending that dual mandates must end while ignoring the practice in respect of other legislative bodies. The current approach is inconsistent, and leaves us with an untidy arrangement.

There was a period during the early years of the Assembly—back in 1998—when dual mandates were an important part of the political system, but given the changes in our political system in Northern Ireland and its evolving maturity over the past 15 years, there is clearly a different political climate as well as a different expectation on the part of the body politic. While I am not convinced that this legislative route is the most appropriate, the direction of travel is clear, and my party supports it.

As we move towards the new system, however, we must ask why we are preserving the practice in some arenas but not in others. Why are we creating this imbalance? I accept that the House of Lords operates differently because it has no constituencies, but the important point—emphasised a few minutes ago by my hon. Friend the Member for Foyle—is that it is a legislative Chamber. If we are legislating to prevent people from being members of two different legislatures, that is exactly what we should do.

Naomi Long (Alliance, Belfast East)

Surely part of the rationale for the structure of the House of Lords is the fact that it can serve as a revising Chamber, and scrutinise legislation in a robust way, because its Members are not being lobbied by constituents as we in the House of Commons are when we are dealing with legislation. Could not an electoral mandate expose Members of the House of Lords to that kind of lobbying, and prevent them from acting as we expect a Lord to act?

Margaret Ritchie (Social Democratic and Labour Party, South Down)

That was a useful intervention, because it illustrated the role of Members of the House of Lords. While they have clear legislative responsibilities, they also do very in-depth work. We can cast our minds back to the work done in respect of the Welfare Reform Bill, and its ping-pong nature, with the Bill going back and forth between us. Lords come from many varied backgrounds, but they do their work. The Lords may not be elected, but they do have legislative responsibilities, which naturally would clash with the responsibilities of an elected Chamber such as the Northern Ireland Assembly. That is the very problem that this measure is meant to address. I would not hold my breath about this House finally taking on the much-needed reform of the House of Lords, but if, and hopefully when, it does, would it be desirable that people can run for election and hold office, namely by having a dual mandate between the Assembly and an elected House of Lords?

It is important that this issue is sorted out now within the terms of the current Bill. I note that that position is supported by the Northern Ireland Affairs Committee. In so doing, we come to this issue with the premise of one Member, one Chamber. Having had the experience of serving in other Chambers, and knowing the extent and breadth and depth of work and investigative intelligence that is required of Members in all those Chambers, particularly in terms of legislation, we not only support our own amendment—amendment 20—but we also support those of the hon. Member for Belfast East.

Nigel Dodds (DUP, Belfast North)

On clause 3 and the ending of the dual mandate between Members of this House and Members of the Assembly, our party made it clear some time ago that we would be bringing this matter to the point that by 2015, as was recommended, dual mandates would be ended. We are working towards that, and it needs to be made very clear in this Committee tonight that this Bill does not end dual mandates; the parties in Northern Ireland are ending dual mandates, and they are doing so for the reasons that have been advanced, which are that we have now moved forward to a position where politics is much more stable, and the Assembly and the Executive are up and running. We are therefore in a very different position from the one we were in only a short time ago, when dual mandates were not only preferable, but essential, for the reasons laid out very clearly by my right hon. Friend the Member for Lagan Valley (Mr Donaldson) and because of the leading political figures in this House who were playing the important—the crucial—role of bringing about peace, stability and devolution in Northern Ireland. That would not have worked if there had not been that dual mandate at that time; that is absolutely the case.

There is a tendency sometimes to look at situations from the perspective of today, rather than looking at the context of the time. I want to pay tribute to all Members who held dual mandates at that time. I want

to do so not because I was one of those Members who held a dual mandate, but because they put themselves and their families under enormous stress and strain in terms of the work load, but still carried out an immensely powerful job, as was recognised through the votes of the people, who consistently voted for them. Therefore it is only right and proper to pay tribute to those politicians who did that in very difficult circumstances, and who had their pay cut, we must remember—it was not as if they were doing it for two salaries. It was done for the reasons set out, and also because, to return to an earlier discussion, there were very real threats against politicians, and not too many people were prepared to come forward and put their head above the parapet. Every Member in our party, and Members of other parties as well, including the SDLP and the Alliance, suffered very severe threats at that time, and actual attacks on their person, their offices and on people close to them. That was the reality of the situation we lived in.

Naomi Long (Alliance, Belfast East)

That point was also made by the right hon. Gentleman’s colleagues on Second Reading, and it is important to put on the record that nobody is suggesting that people who served during that period did not have a justification for doing so. Those who seek fast reform make the point that that period is now at an end.

Nigel Dodds (DUP, Belfast North)

Yes, that is the point that I was making and it is important to put it on the record. We are talking about the difficulties of having a double mandate, but I recall that back in the late 1970s and during most of the 1980s the original three MEPs from Northern Ireland, Ian Paisley, John Hume and John Taylor, had three mandates. Nobody is going to say to me that they did not do a very good job for Northern Ireland in Europe. I know that there was a different context and a different set-up then, but they worked very well together. I had some experience of that through working with Ian Paisley in the European Parliament, and I know that the hon. Member for Foyle (Mark Durkan) will know about it from first-hand experience of working with John Hume. That arrangement was necessary and they did an immensely powerful job for Northern Ireland. Indeed, I recall one of those MEPs, not the one from my party, saying that on one occasion he managed to speak in Strasbourg in the morning, in the Belfast Assembly in the afternoon and in the House of Commons in the evening. I asked him whether he used the same speech, but it was not a single transferable speech. Those were different days and we accept that we have moved forward, but it is important to put on the record where we are coming from.

Let me deal with the issue of the House of Lords. The explanatory notes talk about “dual mandates” and people prevented from being a Member of both this House and the Assembly, as is right and proper. What mandate does a Member of the House of Lords have? They do not have any mandate. We have a mandate because we are elected, but a Member of the House of Lords has none because they are appointed. So this legislation does not apply to the House of Lords because it is in a different position. If the House of Lords were elected, there would be a strong argument for saying

that we should be legislating to prevent dual membership there, but it is not elected and it is different. Indeed, that was one of the reasons why people opposed reforming the House of Lords, because to do so would put it on the same level as, or make it equivalent to, this House, and that would threaten the authority of this House. So this matter is summed up in the very phraseology used about ending “dual mandates”. It is right and proper to do that in respect of the House of Commons, but Members of the House of Lords do not have a mandate. They have a legislative role, but they do not have a mandate.

Mark Durkan (Social Democratic and Labour Party, Foyle)

Is the right hon. Gentleman not trying to create a class of Members of the House of Lords who are Members of that House and sit there without a mandate, but who nevertheless have a mandate by virtue of sitting in another Assembly? He is trying to have it both ways; if he making a virtue of their having no mandate, leave them without a mandate.

The rest of the debate is in Hansard.