The full text of the constitutional affairs secretary's statement on reform of the House of Lords.

"My Lords, with permission I should like to make a statement about further reforms to your Lordships' House, and on the office of Lord Chancellor.

I am today publishing two consultation papers on the next steps on House of Lords reform; and on the functions of the Lord Chancellor. Copies of both statements are available in the Printed Paper Office.

These papers form another significant part of the present phase of constitutional reform on which the Government embarked last summer, with the creation of a Department for Constitutional Affairs to take overall responsibility for these issues.

May I begin by apologising to the House because a report of these proposals appeared in a Sunday newspaper. I can assure the House that no-one in my Department was authorised to speak to the press on this subject. It has always been the Government's intention to ensure that Parliament should hear first about these proposals.

I shall deal first with our proposals for further reform of your Lordships' House.

Last February, this House and the other place voted on the range of options for the composition of our second chamber proposed by the Joint Committee of both Houses. Your Lordships voted three to one in favour of an appointed House. In the other place, there was no majority for any of the options.

The Joint Committee, in its second report published on 9 May, reflected on the outcome of the parliamentary votes and concluded that 'simply to maintain the status quo' in respect of composition was undesirable. The Government agrees.

In those circumstances, we intend to make progress where we can. So the Government is proposing further reforms to ensure that we have a stable and sustainable House of Lords. It was never our intention that the remaining hereditary peers should remain members of the House forever. When this interim arrangement was reached, as well as the immediate benefit of the agreement, we accepted the argument that the presence of the remaining hereditary peers would act as an incentive to further reform. That has not happened: there is clearly no consensus in Parliament on the way forward.

So the context for reform has clearly and significantly changed. The circumstances which gave rise to the original arrangement over the remaining hereditary peers no longer apply. The solution which the remaining hereditary peers were there to help seek is no longer available.

So the Government must act, and act decisively, to bring about stability and sustainability.

It is for the Government to act. But it is for Parliament to decide. It will be for Parliament as a whole to decide on the removal of the right to sit and vote of the remaining hereditary peers

Therefore the next step of our reform programme will be to introduce legislation, when Parliamentary time allows, to remove the right of the remaining 92 hereditary peers to sit and vote in your Lordships' House, thus completing that element of the reform process on which we embarked in 1997.

But in moving on from the current arrangement, I want to pay tribute to the contribution which those 92 peers make to your Lordships' House. Many of them are among our most active and effective members. I hope that we shall continue to benefit from the contribution of at least some of them should they be nominated as life peers in the future.

We shall set up a statutory commission to select and oversee appointments that are made to this House. This will build on the present non-statutory Appointments Commission, which itself represented a significant voluntary relinquishing by the Prime Minister of his powers of patronage.

The statutory Commission will be appointed by Her Majesty the Queen in response to an Address from Parliament. The three major parties in this House and the crossbench peers will be directly represented on it, together with a number of members selected in accordance with the principles of the Commissioner for Public Appointments in an open selection process.

The Government will discuss with the opposition parties how they might best be involved in the selection process. The Commission's funding and accountability arrangements will maximise its independence from the government. The consultation document asks for views on various detailed aspects of these arrangements.

We propose that the functions of the Commission will be threefold. First, it would decide on the number and timing of new appointments to the House. This will be a massive - and voluntary - diminution in the Prime Minister's influence over the membership of the House. In making its decisions in relation to political appointments, the Commission would be subject to two main guidelines.

These are that the Government of the day should not have an overall majority in the House; and that appointments for the parties should have regard to the outcome of the previous general election The Commission will also be expected to provide that appointments to the crossbenches should average 20 per cent of appointments over the lifetime of a Parliament.

The Commission's second function would be to nominate the non-party peers. And thirdly, it would vet the nominations for party peers for propriety.

In the meantime, the existing non-statutory Appointments Commission will continue its work, of which the Prime Minister has already expressed the Government's appreciation. The Prime Minister will invite it to make recommendations for new non-party peers until the new statutory commission is in place.

We also propose to bring the rules for disqualification for membership of this House in respect of detention following conviction for an offence into line with those for the House of Commons. We do not believe that this difference of treatment can any longer be justified.

We therefore propose that in the future, such peers will forfeit their membership of the House exactly as they would if they were MPs. In addition, they will be deprived of their peerage. The provision will have retrospective effect. Parliament is a privilege, not a possession. Such peers will, of course, be free to seek renewed membership of the House, by applying to the Appointments Commission or their party, as relevant, for nomination, just as former MPs can seek re-election.

We propose that life peers, like hereditary peers before them, should in future be able to resign their peerages and membership of the House. This is a fairer and more reasonable arrangement which will allow those who feel they wish to move on and no longer sit in the second chamber the opportunity to do so.

Nothing in these proposals relate to the powers of the House. We are not proposing any extension of the role of the second chamber. For example, the traditional role of this House in relation to Finance Bills is clear and works well, its powers being constrained by the Parliament Act 1911 and Commons financial privilege, established through resolutions in the 17th Century. I am sure your Lordships would not seek to extend its powers, for example in respect of supply. The House of Commons should and must remain pre-eminent in our constitutional arrangements.

On further reform of this House, we will continue to look for a way forward. We will discuss any possible next steps with the current joint committee and how they can contribute.

Taken together, these changes amount to a substantial set of reforms to the House. When added to our previously announced decisions to set up a separate Supreme Court, and to remove the office of Lord Chancellor, thus leading to reform of the office of Speaker, they will create a House that is significantly different from that which presently exists.

My Lords, I am also publishing today a consultation paper on the reform of the office of Lord Chancellor.

Work to bring to an end the multiple roles of the Lord Chancellor is already well advanced.

I am formally inviting views on the Lord Chancellor's ecclesiastical patronage, his Visitatorial responsibilities; and other functions relating to specific charities, schools and other institutions.

My Lords, the proposals I am announcing today are part of the programme of constitutional reform which the Government has been pursuing since 1997. They will contribute to the further strengthening of Parliament.

Alongside our earlier reforms of devolution to Scotland and Wales, the Human Rights Act and freedom of information, they will take their place in the shaping of our nation, to make the institutions of the state fit and responsive to the demands of our citizens in the modern world."