Insolvency Act 1986 (Disqualification from Parliament) Order 2012

Lord Rennard Excerpts

Tuesday 20th March 2012 Grand Committee

[Lord Shutt of Greetland]

My Lords, the purpose of this order is to bring the law as it applies in Northern Ireland into line with England and Wales in relation to parliamentary disqualification resulting from personal insolvency. The law applying in England and Wales was amended by the Enterprise Act 2002. Someone who is bankrupt is no longer disqualified from sitting or voting in Parliament and, in the case of a Member of the House of Commons, will no longer lose his seat after six months. Someone against whom a bankruptcy order has been made will be disqualified from Parliament only if he becomes subject to a further order, termed a bankruptcy restrictions order, or if he gives a bankruptcy restrictions undertaking.

Bankruptcy restrictions orders are made by the courts and bankruptcy restrictions undertakings are given to the Secretary of State or, in the case of Northern Ireland, to the Department of Enterprise, Trade and Investment. They are a means of placing a bankrupt under continuing restrictions following his discharge on the grounds of being culpable. Discharge from bankruptcy normally takes place after one year.

The 2002 Enterprise Act aimed to provide a modern bankruptcy regime, allowing those who have failed honestly to have a second chance. A second objective behind the provisions of the 2002 Act dealing with personal insolvency was to protect the public from the actions of the culpable. That is why there is provision for a regime of bankruptcy restrictions orders and undertakings. It would not be right to allow a person who has been found to be culpable to continue sitting or voting in Parliament or to be elected as a Member of Parliament.

A system of bankruptcy restrictions orders and undertakings equivalent to the one operating in England and Wales was brought in for Northern Ireland by the Insolvency (Northern Ireland) Order 2005. The necessary preconditions are therefore in place to allow the making of the order that noble Lords are being asked to approve.

The order will have the consequential effect of amending the grounds for disqualification from the Northern Ireland Assembly because, under the Northern Ireland Act 1998, a person is disqualified from being a Member of that Assembly if he is disqualified from membership of the House of Commons, other than under the House of Commons Disqualification Act 1975.

This order will extend the benefits of a more liberal disqualification regime to Members of this House, Members of the other place who are from Northern Ireland and Members of the Northern Ireland Assembly. I beg to move.

[Lord Rennard]

My Lords, I shall be very brief because the principle behind the order is without any significant controversy, and I note that the Explanatory Notes say that no consultation is necessary on this order. I would ask whether any consultation with the Electoral Commission was considered, particularly over the issue of making candidates and potential candidates aware of changes in relation to eligibility and disqualification.

I ask partly because of the controversy in Wales last year when two Assembly candidates were subsequently found to be ineligible for membership of the Welsh Assembly. Out-of-date information was provided to them by the Electoral Commission. Every time we change the rules about eligibility to stand for bodies or on disqualification, we need to make sure that candidates and potential candidates are aware of the up-to-date rules. Perhaps the Electoral Commission should be involved in making sure that people know where they stand in relation to matters such as this.

[Baroness Smith of Basildon]

My Lords, I am grateful to the noble Lord, Lord Shutt, for his detailed explanation of the order. As the noble Lord, Lord Rennard, says, it is not controversial and it is one that we would also support, having introduced the original legislation in 2002 for England and Wales. It was a very sensible piece of legislation, which was then introduced by my noble friend Lord Mandelson. Since the Northern Ireland DETI, of which I am a former Minister, brought its own legislation into line in 2005, it is a bit of a shame that it has taken us so long to bring what happens in England and Wales also into line.

I have only one question for the noble Lord. I, too, noticed that there was no consultation. It is highly unusual for Northern Ireland legislation not to be consulted on, but given that the original 2002 legislation and the 2005 order had been consulted on, there was clearly no need. My comment is not unrelated to the information supplied by the noble Lord, Lord Rennard, on the arrangements for sharing information across jurisdictions.

I notice that the Explanatory Notes make it quite clear that the Department of Enterprise, Trade and Investment has to notify the Speaker of the House of Commons or House of Lords if it accepts a bankruptcy restrictions undertaking from a Member of that House or if there is an order. Again, it responds to candidates. It is clear that if somebody was to be appointed to your Lordships’ House, the Appointments Commission would look into their background and would understand if there was a bankruptcy restrictions order or undertaking. However, if somebody was standing for election, how would the information be shared between jurisdictions so that the bodies for which they were standing for election would know the position? Somebody who is subject to an order or an undertaking in Northern Ireland could well wish to stand for a seat in England or Wales, or someone from England or Wales could wish to stand for a seat in Northern Ireland, although that is probably less usual. Therefore, on the point about sharing information between jurisdictions, those standing for election and electoral registration officers who accept nominations for elections should also be aware of this information.

Subject to the satisfactory answers to those questions that I am sure the noble Lord will be able to give, we are entirely content with the order.

Localism Bill

Lord Rennard Excerpts

Tuesday 28th June 2011 Lords Chamber

[Earl Cathcart]

My Lords, my noble friend Lord True has ably spoken in those amendments where he is the lead name, and he has also talked to some of mine. I will not go over the ground of his amendments again. I would like to discuss those amendments where my name appears as the lead name.

At Second Reading, I, too, questioned whether 5 per cent was too low a threshold. I believe that 5 per cent is far too low, and would give rise to a plethora of referenda. Five per cent for a referendum for a whole district, or a whole London borough, might seem reasonable. With an electorate of somewhere over 100,000 people, 5,000 or 6,000 signatures might seem like quite a lot to get. But look at electoral areas that are smaller than those. The electorate for a market town might be between 15,000 and 20,000, so between 750 and 1,000 signatures would be required. Far more likely, a petition would come from a single ward, within the town, or London borough, requiring signatures from only about 350 electors.

It will not be difficult to get signatures. “Let’s put it to the vote—sign here—it’s democracy at work, and anyway, it’s not going to cost you anything, because the council will pay”. If you go further down the chain to parishes—they are, after all, a single electoral area—many villages in Norfolk have only a few hundred electors, so that a village of 300 electors would require just 15 signatures to request a referendum. Even more ridiculous would be my parish, which has just over 50 electors, so that just three people could request a referendum.

Amendment 123 raises the percentage to 20 per cent. I see that there are amendments in this group that increase the threshold to 10 per cent and 25 per cent, and I will be interested to hear those noble Lords’ arguments. The Government should consider raising the bar; otherwise, there will be a plethora of referenda, at huge cost to local authorities.

Amendment 124 increases the threshold to 20 per cent, but only to 15 per cent where the number of electors is above 10,000. The idea is that we want the Government to consider different thresholds for different numbers of electorate, so that the larger the electorate the lower the threshold needs to be. At Second Reading I gave the example of the recent referendum in West Norfolk, over a proposed incinerator near King’s Lynn. That cost the council £80,000. I believe that referenda will certainly be called on all the contentious issues, and where the size of the electorate is relatively small, on nearly all the other issues—and why not? Let democracy prevail. This will cost councils an arm and a leg, at a time when they can least afford it.

That brings me on to Amendment 129, which allows the local authority to recover the cost of the referenda from the electorate in which they are held. Note that we use the word “may”, which leaves it optional for local authorities. It would be relatively easy for a local authority to recover costs by putting the cost on each parish or ward precept for the following year.

The last two amendments—Amendments 125 and 126—relate to the idea in the Bill that every councillor can request a referendum. This may be unwise without some brake. If you are a councillor in a minority group, this is manna from heaven. Imagine what fun you could have. After all, although you can be heard at council meetings, no one listens to you, you are always outvoted and the local press never report what you say. What better way to raise your profile, ensure that you are reported in the press and irritate the ruling party than to call a referendum? To prevent any abuses and mischief, the amendments say that a councillor can call a referendum provided that the petition is supported by a small percentage of his or her electorate —we have put in 5 per cent.

I do not expect the Government to accept the amendments, but I would like them to consider the arguments. I would like them also to consider my belief that 90 per cent of referenda will be held on planning issues. I note that, later on, amendments to Clause 47 propose that we exclude planning issues. If the Government, having listened to the arguments, agree that we should exclude planning, then 5 per cent may be the right answer. But if they say that they will not exclude it, we must increase the threshold from 5 per cent.

[Lord Rennard]

My Lords, I should declare an interest as a recent vice-president of the Local Government Association. Perhaps I should also say that I am a member of your Lordships’ Select Committee on the Constitution. Therefore, I wish to consider this evening some issues of principle about when referendums are appropriate.

On 12 October last year, we debated the Select Committee’s report on the principle of referendums. I said that,

“the Select Committee was right to see significant drawbacks to the widespread use of referendums”.—[Official Report, 12/10/10; col. 428.]

The House expressed many reservations about holding referendums in a representative democracy.

Many noble Lords who spoke in that debate quoted powerful evidence given to the Select Committee about the problems of referendums. They included: people potentially voting on issues different from those on the ballot paper, or voting for or against a Government rather than on a specific issue; problems with getting sufficient turnout for any result to be legitimate; problems with ensuring that both sides of an argument had sufficient resources to make their case; and problems with undue influence being exerted by dominant media groups or party machines.

The case against widespread use of referendums was made very strongly. My noble friend Lord McNally said that he had not found a committee report that had been so much respected by officials and Ministers. He said:

“This is not a report that has been put on the shelf and forgotten”.

My noble friend drew attention to the fact that in his official response to the report, Mr Mark Harper, on behalf of the Government, agreed that,

“referendums should be exceptional events”.—[Official Report, 12/10/10; col. 471.]

These were seen as being required only for major constitutional changes such as to abolish the monarchy, to leave the European Union, or for any of the nations of the UK to secede and so on.

The question must now be asked whether we should have similar concerns about local referendums. Should they become common or should they be rare? On what sort of issues should they be held, and how easily could they be triggered given all these potential problems? There seems at the very least to be a possibility of an allegation of double standards being made if national government are saying that their policy programme should be subject to a referendum only on major constitutional issues, but that all issues decided by locally elected representatives should potentially be subject to referendums, with all the problems that we know about of conducting referendums fairly.

No national Government have ever suggested, for example, that their powers of taxation be subject to a referendum. Many national controversies have been debated in this House, the other place and across the country without the suggestion that national government should resolve the issue by putting it to a referendum.

Since that debate last October we have also had experience of a national referendum. Many of those on the no side in that referendum campaign argued that a reason for voting no was simply the cost of holding the referendum, even though these costs were minimised by holding it at the same time as many other elections. Those who argued this case on the no side must now argue why local referendums should be conducted at the expense of council tax payers in addition to the cost of electing local councillors.

If such local referendums are to be held, then we should be much clearer about when they are appropriate than is outlined so far in this Bill. There must be substantial proven public demand for them locally. They should not simply be a device that either a local council or the Secretary of State can use to avoid the sort of considered judgment that should be taken by elected representatives and be subject to examination at election times.

There may be problems with some council administrations being unrepresentative of the areas that they serve. Some councils are effectively one-party states. The answer is to make those councils more representative—not to make each of their decisions potentially subject to a referendum.

[Lord Greaves]

My Lords, I am grateful to my noble friend for turning up in time so I did not have to deliver his speech, which he did far better than I would have done. I just want to add one or two things and speak to the specific amendments which my noble friend and I have put forward.

The noble Lord, Lord True, and the noble Earl, Lord Cathcart, spoke about how opposition parties and opposition councillors might well use referendums to promote their own interests. In my own local political career I can think of major issues where I would have had, in the words of the noble Lord, Lord True, a great deal of fun. We would have made useful political points but it would have cost people a lot of money and it would not have been the right way to do it.

What concerns me more than what opposition parties and opposition councillors might do is the way in which parties in control, or mayors or anyone else with the ability, might use referendums to manipulate the political and electoral process by launching referendums on populist issues to entrench their own local power. I am not suggesting that all such local leaders would ever do that but, without naming names, I can think of one or two around the country who might regard this as manna from heaven. You organise a referendum on a good populist issue or a bad populist issue to coincide with the year of your re-election and have it on the same day as your re-election to turn the referendum campaign into your election campaign and—Bob’s your uncle—you are probably back. As I understand the Bill, there will be no limits on referendum expenses so it would blow a huge hole in the rules for local election expenses.

People organising referendums—whether they are organising a petition for it or whether they are persons in power trying to use it for populist purposes—may be goodies. They may be doing it for benign purposes but they might not: they might be malign extremists movements or commercially motivated and commercially biased or politicians seeking re-election, as I just said. Whatever it is, there is a severe risk that they undermine the processes of representative democracy, which rely a great deal on proper procedures, democratic deliberation, debate and compromise and the role of the council as a mediator in the community—which I think the noble Lord, Lord McKenzie, was talking about last week.

You cannot compromise in a referendum. Everything is black and white; everything is yes or no. It polarises the community and, while it might be a lot of fun for people taking part in it, it simplifies what are often quite complex issues and runs the risk of undermining the whole process of liberal democracy in the local community. We are generally sceptical about the value of Chapter 1 of Part 4 of the Bill and if it is to remain, we believe it needs a much stricter tying-up so that the number of referendums which can take place are relatively few and are on appropriate subjects.