Clause 40 - Payment of inquiry expenses by Minister

Inquiries Bill [Lords] – in a Public Bill Committee at 9:45 am on 24th March 2005.

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Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Home Affairs) 9:45 am, 24th March 2005

I beg to move amendment No. 31, in clause 40, page 20, line 25, leave out subsections (4) and (5).

Throughout the Committee, I have described our concern that the Minister will be entrusted with too much power. Although I will not take up time by running through those arguments again, I do not want my brevity to distract from the importance of the amendment or the particular way in which the Minister’s power may, in this case, risk the independence and effectiveness of the inquiry process.

The amendment would remove the Minister’s ability to withhold the funding of an inquiry that strays outside its terms of reference. The power is unacceptable to us for two reasons. First, it would, in effect, allow the Minister to dictate the path that the inquiry should take. He could at any time claim that the inquiry was outside its terms of reference and so withhold funds, which would, in practice, be tantamount to stopping it in its tracks. That power could be used to the Minister’s advantage to prevent an inquiry from entering an area that could be damaging or embarrassing to the Government. That will clearly affect its credibility.

Secondly, it is for the chairman to interpret and apply the terms of reference once the inquiry is up and running. He is the man on the ground and only he can know the exact path that the inquiry may need to follow. For example, if new evidence arises that opens a new avenue to be explored, only the chairman would have intimate knowledge of its interrelationship with other aspects of the inquiry. As such, only he should be able to decide, in an informed and independent manner, whether to follow up that lead and bring about the related expenditure. The Minister may not be in a position to make that judgment at the outset because uncertainty is inherent in an inquiry. One just cannot know the exact direction that an inquiry will take; if one does, the inquiry may not be necessary. Our amendment removes the ability of the Minister to dictate how the terms of reference are applied, by withholding funds when he argues that those terms of reference have not been respected.

The approach taken in the amendment is supported by the Joint Committee on Human Rights, which stated in paragraph 221 of its fourth report:

“Whilst the terms of reference of an independent inquiry may be open to differing interpretations, their interpretation and application should be a matter for the Chairman of the inquiry, if independence is to be maintained. We are concerned that this provision undermines the role of the Chairman of an inquiry in interpreting and applying his or her terms of reference, and leaves open the possibility of undue ministerial influence on an inquiry”.

Indeed, the Committee wrote to the Lord Chancellor to express this concern and also asked why the clause is considered to be compatible with article 2 of the European Convention on Human Rights. The Lord Chancellor replied that the clause provided a mechanism for ensuring that the inquiry remained on track and argued:

“as the Minister would only be intervening to ensure the inquiry keeps within the remit agreed at the outset in the terms of reference, I do not consider that this clause undermines the role of the chairman or affects compatibility with Article 2”.

The Committee appreciated the need for an inquiry to adhere to its terms of reference, but repeated its view that a characteristic of an independent inquiry is that the terms of reference are interpreted and applied by the chairman and the inquiry panel. The Opposition support this view and argue that that aim cannot be fully achieved while the Minister has the ability to remove funds to ensure that the terms of reference are interpreted and applied in a particular way.

Photo of Mr Paul Tyler Mr Paul Tyler Shadow Leader of the House of Commons 10:00 am, 24th March 2005

I am sympathetic to at least the intentions of the amendment. The Minister may recall that concerns were raised in the other place by my noble Friends and others about subsection (3), which originally used the phrase “reasonably incurred expenses”, and that seems to have been dealt with.

The amendment, which would remove subsections (4) and (5), is useful. I hope that it will at least enable the Minister to explain in more detail exactly how the channel of communication between the chair of an inquiry panel and the appropriate Minister will operate. I hope that there would never be a situation in which a panel was acting outside its terms of reference. I am sure that we all take that view, but in such circumstances it is important that the means of communication are absolutely clear to all concerned and I hope that that can be clarified now. Considering that the Government gave way on the issue of the Minister consulting the chair of the inquiry when setting up and amending the terms of reference, that matter becomes even more important.

The Committee may wish the Minister to explain how the chair of an inquiry could have some come-back on an issue of this sort. If, for example, the Minister notifies the chair that he has been acting outside his terms of reference, does that chair then have a right of appeal, as it were, and an opportunity to explain to the Minister why he acted as he did? We can all imagine circumstances in which an action was totally reasonable, but an explanation may be required. We may need to know precisely why the circumstances have arisen, but in addition we may   need to specify in the Bill how that dialogue is to take place. After all, in other circumstances it would simply require the Minister’s belief that the chairman had acted outside the terms of reference, which would clearly be unsatisfactory. I hope that the Minister will clarify precisely how that relationship is intended to develop so that we can avoid any possible difficulties.

Photo of Chris Leslie Chris Leslie Parliamentary Under-Secretary (Department for Constitutional Affairs)

The Bill, particularly in clause 40, places a welcome new statutory obligation on the Minister to fund an inquiry, which does not exist in current legislation. I know that the Opposition tend to look at the glass as half empty, but it is a positive step forward to enshrine the obligation in the Bill, and I would have thought that they would welcome that. Of course, any obligation must be properly defined and its limits set out. The extent and the shape of those limits are the point of contention here.

It is highly unlikely that the power to withdraw funding would ever be needed, but it has to be included as an emergency safeguard. We would not be doing our job in safeguarding public money if the Bill did not provide some mechanism to prevent expenditure on matters wholly outside the terms of reference of an inquiry. If the amendment were agreed, it could have the effect of giving an inquiry a blank cheque to spend money on anything it wanted to. The Minister would then, in theory, be obliged to fund that. Obviously, ministerial accountability to Parliament, and ultimately to the taxpayer for their money, requires that the Minister has some control over that money. That is one of the reasons why I do not want to see the Committee accept the amendment.

There are strict conditions on the withdrawal of inquiry expenses by a Minister. The withdrawal of funding would be a temporary measure used as a last resort in relation to a particular activity. Funding could never be withdrawn retrospectively. Clause 40 requires the Minister to give the chairman a formal notice. That is the communication process in extremis. Costs arising from the period before the notice is given would have to be met. In practice, a formal notice would be the end of a dialogue between the Minister and the chairman. To answer the point raised by the hon. Member for North Cornwall (Mr. Tyler), that dialogue would be ongoing before the formal notice stage. Once the inquiry returned to performing the task set out in its terms of reference, funding could be reinstated.

Photo of Peter Atkinson Peter Atkinson Whip, Whips

Surely the heart of this is the terms of reference and how they are interpreted. A situation could arise in which the chairman and the Minister disagreed on the minutiae of the terms of reference. In that sort of dispute, who would be the final arbiter?

Photo of Chris Leslie Chris Leslie Parliamentary Under-Secretary (Department for Constitutional Affairs)

Of course, I accept that it is for the inquiry to interpret the terms of reference set out for it. The power would only ever be used if the inquiry were very clearly working outside its terms of reference. The hon. Member for North Cornwall asked what recourse the chairman had in those circumstances. In essence, the powers could not be used to stop an inquiry looking around the terms of reference or at   information that the Government might find embarrassing, because judicial review would inevitably be the result. There is always an obligation on Ministers to act reasonably. Ministers would not want to exercise a power unreasonably, but, if any Minister did and withdrew the funding for an inquiry, judicial review would be a possible consequence.

Without the power to withdraw funding, the Minister’s only option for safeguarding public funds would be to attempt to end the inquiry under clause 13. That would mean that all the money spent on the inquiry so far would have been wasted and whatever problem the inquiry had been set up to investigate would not be resolved. That sort of nuclear option is probably not the only safeguard that should be included in the Bill. The option in this clause is a slight refinement on that. Again, at this stage, I do not envisage circumstances in which it could be used, but we need to have that safeguard in the Bill just in case. For those reasons, I hope that the amendment will be withdrawn.

Photo of Jonathan Djanogly Jonathan Djanogly Shadow Minister (Home Affairs)

The Minister maintained that the measure would be relevant only if the inquiry was acting very clearly outside its terms of reference. To that extent, I accept what he has to say. I just hope that there are not future occasions when someone has to repeat his words because a Government have stymied some inquiry on a technicality. However, on the basis of what he said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40 ordered to stand part of the Bill.

Clause 41 ordered to stand part of the Bill.