Exclusive: Lord Paul responds to official report recommending his suspension

“I am disappointed that I seem to have been treated more harshly than others.”

For journalists, the parliamentary expenses scandal is the gift that never stops giving. Yesterday's Sunday papers – chief among them the Sunday Times and the Sunday Telegraph – led with claims that three peers face suspension from the House of Lords over their expenses claims: Baroness Uddin, Lord Bhatia and Lord Paul.

The report of the House of Lords committee for privileges and conduct to which the Sunday papers referred to has been published today, and it does indeed recommend suspending the three aforementioned peers from "service of the House".

In reference to Lord Paul, the well-known businessman, deputy Lords speaker and Labour Party donor, the committee says:

27. We do not feel justified in finding, on the balance of probabilities, that Lord Paul acted dishonestly or in bad faith. However, his actions were utterly unreasonable, and demonstrated gross irresponsibility and negligence. They therefore render him liable to sanction by the House.

28. In mitigation, Lord Paul has apologised and repaid the money wrongly claimed.

29. We recommend that Lord Paul be suspended from the service of the House for four months, starting on the date on which any suspension motion is agreed by the House.

In the past few minutes, I have been speaking to Lord Paul to get his response to the committee's conclusions. He said:

I welcome the publication of the report from the House of Lords committee for privileges and conduct. First and foremost, my honesty and integrity have been upheld. I have never tried to claim anything which I did not believe I was honestly entitled to claim at the time. I am pleased that the committee for privileges and conduct has come to the same conclusion and has found that my actions throughout the investigation have been transparent and consistent and that the claims were honestly made and not in bad faith.

It is worth remembering that I requested the Clerk of the Parliaments, Michael Pownall, to conduct an investigation into my expenses on 12 October 2009 – the day after the Sunday Times first published its allegations against me. I also voluntarily and immediately repaid the full amounts in question, about £40,000, which I had claimed from January 2005 to June 2006. In fact, I voluntarily repaid a greater sum than the House could have required me to pay, both in respect of night subsistence and in respect of mileage allowance. There is no question about the propriety of any other claim made by me during the 14-year period that I have been a member of the House of Lords. It should also be remembered that, back in March, the Metropolitan Police decided there was no case for me to answer.

But does he deny that he registered an Oxfordshire flat as his main home, despite never spending a single night there, while claiming money in overnight expenses for a London property?

I do not dispute the basic facts. I made claims which, with the benefit of hindsight, I should not have made. I may have been negligent, as the committee has said, and the commitee has accepted my apology. Before this matter was raised by a Sunday newspaper late last year, however, there was no definition in the House of Lords of residence and a large number of peers therefore fell into error when interpreting the meaning of residence in the rules. There was no guidance on the meaning of "main residence" until March 2010, and it was finally clarified in July 2010 – that is, ten months after the allegations first appeared in the press. During the time period in question, 2005/2006, there was no definition of "main residence", nor was there even guidance.

I do not believe that either the subcommittee or the full committee can in effect apply the perspectives and standards of 2010 to actions and rules operating in 2005. I believe that the provisions which applied then on the designation of principal residence were wholly unclear. I believe that the fact that they have been either amplified or modified since then, and finally dispensed with by the House, strongly underlines my position. Given the lack of clarity in the rules which applied at that point, I do not believe that my own conduct in any way merits the decisions which the subcommittee and now the full committee have reached.

He has a point. And guess what? The new rules on allowances, agreed by the Lords authorities earlier this year, and backed by the coalition government and the Labour Party, might make things worse.

As the Sunday Telegraph's Patrick Hennessy noted yesterday:

The new regime will allow all peers to claim a lump payment of £300 a day for "clocking in" at parliament. Critics have claimed it could be open to abuse as it offers no safeguards against peers "signing in and sloping off". Under the new scheme, which is based on proposals made by the Senior Salaries Review Body last November, no receipts, or proof of a second home or hotel stay, will be required to claim the payment.

This is madness. Have officials in the House of Lords lost their minds?

And on what grounds have they gone after Paul, Uddin and Bhatia and ignored or excused the false/inaccurate/dodgy claims of dozens of other peers uncovered in the press? From the Sunday Times, in May 2009:

– Baroness Thornton, a government minister, claimed up to £22,000 a year in expenses by saying that her mother's home in Yorkshire was her main home.

– Lord Ryder, a former acting chairman of the BBC, claimed more than £100,000 by saying that a converted stable on his parents' country estate was his main home.

Then there is Lord Clarke, the Labour peer and former chairman of the party, who admitted that he "fiddled" his expenses to make up for not being paid a salary and claimed for overnight stays in London when, in fact, he drove home. His punishment? From the privileges committee report in March:

Accordingly, having taken into account his repayment of £9,190 to the House, and his full co-operation with the investigation, we recommend that Lord Clarke make a personal statement of apology to the House, before the end of the present session of parliament, to apologise without reservation for his misuse of the scheme.

So Clarke got off with just an apology. Isn't that odd? What about Lord Colywn, the Tory peer who claimed £170,000 by designating a Cotswolds property as his main home? Here is the bizarre verdict of Michael Pownall, the Clerk of the Parliaments (from February):

He has assured me in writing that his claims are an accurate record . . . he has also assured me that he lives predominantly in Gloucestershire when the House is not sitting . . . Given Lord Colwyn's assurances, I consider that his designation meets a test of main residence under the current scheme and accordingly do not uphold the complaint against him.

Great. Fantastic. That's OK, then. He "assured" the Clerk – and got off without a punishment. The whole process seems totally arbitrary and random. Unsurprisingly, perhaps, Lord Paul agrees:

I am disappointed that I seem to have been treated more harshly than others. Some of those peers accused of making incorrect claims were dealt with by the Clerk of the Parliaments, some by the privileges committee. Some have been subject to an inquiry, some have not; some have apologised, some have not; some have voluntarily repaid the sums incorrectly claimed, some have been asked to repay those sums; now, for the first time, three peers have been suspended while others have escaped suspension.

Despite the hurt that this has caused me, I accept the committee's decision in the best traditions of parliamentary democracy.

On a side note, some have suggested to me that part of the reason Paul has been the subject of such a severe sanction is that the five-member subcommittee on Lords interests, which investigated the three peers and recommended suspension, included Derry Irvine, the ardent Blairite. Paul is a prominent Brownite; in his own words, he has been a "steadfast friend and supporter of Gordon Brown whom I believe was a great prime minister".

A source present at Lord Paul's testimony to the House of Lords subcommittee in June tells me that Irvine's face blackened when Paul suggested he was being targeted by that committee because of his links to the former prime minister.

As Blair's Lord Chancellor, Irvine is (in)famous for having spent £650,000 of public funds on redecorating and refurbishing his official apartment in the House of Lords, including £59,000 on wallpaper. He refused to apologise for his acts at the time and described the spending as a "noble cause". That he now sits in judgement on the expenses claims of his fellow peers is, ahem, ironic.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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What is the EU customs union and will Brexit make us leave?

International trade secretary Liam Fox's job makes more sense if we leave the customs union. 

Brexiteers and Remoaners alike have spent the winter months talking of leaving the "customs union", and how this should be weighed up against the benefits of controlling immigration. But what does it actually mean, and how is it different from the EU single market?

Imagine a medieval town, with a busy marketplace where traders are buying and selling wares. Now imagine that the town is also protected by a city wall, with guards ready to slap charges on any outside traders who want to come in. That's how the customs union works.  

In essence, a customs union is an agreement between countries not to impose tariffs on imports from within the club, and at the same time impose common tariffs on goods coming in from outsiders. In other words, the countries decide to trade collectively with each other, and bargain collectively with everyone else. 

The EU isn't the only customs union, or even the first in Europe. In the 19th century, German-speaking states organised the Zollverein, or German Customs Union, which in turn paved the way for the unification of Germany. Other customs unions today include the Eurasian Economic Union of central Asian states and Russia. The EU also has a customs union with Turkey.

What is special about the EU customs union is the level of co-operation, with member states sharing commercial policies, and the size. So how would leaving it affect the UK post-Brexit?

The EU customs union in practice

The EU, acting on behalf of the UK and other member states, has negotiated trade deals with countries around the world which take years to complete. The EU is still mired in talks to try to pull off the controversial Transatlantic Trade and Investment Partnership (TTIP) with the US, and a similar EU-Japan trade deal. These two deals alone would cover a third of all EU trade.

The point of these deals is to make it easier for the EU's exporters to sell abroad, keep imports relatively cheap and at the same time protect the member states' own businesses and consumers as much as possible. 

The rules of the customs union require member states to let the EU negotiate on their behalf, rather than trying to cut their own deals. In theory, if the UK walks away from the customs union, we walk away from all these trade deals, but we also get a chance to strike our own. 

What are the UK's options?

The UK could perhaps come to an agreement with the EU where it continues to remain inside the customs union. But some analysts believe that door has already shut. 

One of Theresa May’s first acts as Prime Minister was to appoint Liam Fox, the Brexiteer, as the secretary of state for international trade. Why would she appoint him, so the logic goes, if there were no international trade deals to talk about? And Fox can only do this if the UK is outside the customs union. 

(Conversely, former Lib Dem leader Nick Clegg argues May will realise the customs union is too valuable and Fox will be gone within two years).

Fox has himself said the UK should leave the customs union but later seemed to backtrack, saying it is "important to have continuity in trade".

If the UK does leave the customs union, it will have the freedom to negotiate, but will it fare better or worse than the EU bloc?

On the one hand, the UK, as a single voice, can make speedy decisions, whereas the EU has a lengthy consultative process (the Belgian region of Wallonia recently blocked the entire EU-Canada trade deal). Incoming US President Donald Trump has already said he will try to come to a deal quickly

On the other, the UK economy is far smaller, and trade negotiators may discover they have far less leverage acting alone. 

Unintended consequences

There is also the question of the UK’s membership of the World Trade Organisation, which is currently governed by its membership of the customs union. According to the Institute for Government: “Many countries will want to be clear about the UK’s membership of the WTO before they open negotiations.”

And then there is the question of policing trade outside of the customs union. For example, if it was significantly cheaper to import goods from China into Ireland, a customs union member, than Northern Ireland, a smuggling network might emerge.

 

Julia Rampen is the editor of The Staggers, The New Statesman's online rolling politics blog. She was previously deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines.