Kishwer Falkner: Shouldn't the honour be enough?

Despite David Lloyd George's sale of peerages – allegedly for too little – there has never really been clarity on what membership of the House of Lords is worth – until today. At midnight last night a little-known clause in the Constitutional Reform and Governance Act took effect which requires MPs and peers to be UK taxpayers in respect of their worldwide income.

It was as a result of this ruling that five peers – the Conservatives Lord Bagri, Baron McAlpine, and Lord Laidlaw, and the crossbenchers Lord Foster and Baroness Dunn – have decided that the price of a peerage – paying UK tax on their income – is too high. Meanwhile another two peers – Lords Paul and Ashcroft – have decided that the millions payable will be worth the retention of their Lords membership, at the cost of their non-dom status.

For those many members who enter the Lords mainly as recognition for past public service and in anticipation of being able to exercise their skills over policy or legislation, last night was a small milestone on the long path to cleaning up politics. In this case the principle behind the change is quite simple: if you wish to pass laws which impact on the people of this country, then you should know of life in this country. The assumption that you can vicariously identify with people here while you live in Monaco, Belize or Hong Kong is admirable, but will not convince anyone that you are affected by the air the rest of us breathe.

This legitimacy test is rightly not applied to the many thousands of non-doms who have chosen to live or work in the UK. It simply covers those who are in a position to pass law, yet spend little time in this country and have declared that their longer-term intention is to return to a foreign land which is their authentic domicile.

The enactment of this small measure is not radical; but what is nevertheless curious is why it has taken so long. Why, one wonders, could those who have been forced by law to do the right thing not see what the right thing was, over all these years of debate about it? My Lib Dem colleague Lord Oakeshott has been a tireless campaigner over the years for this change, and it was not a change which came out of the blue.

Some of those affected have complained that they were not given enough time to re-arrange their political affairs to be fully based here. This is a red herring. I came into the Lords in the class of 2004. We were offered our peerages more than half a year earlier yet had to be held back as a group until one of our number had time to change his status. It subsequently transpired that he did not fulfil his promise to do so, but by then it was too late to do anything as he was in. It is a shame that a system reliant on personal honour is anachronistic in an age where the familial and cultural ties which make honour a virtue to uphold no longer stand.

The caricature of the House of Lords – that we are an exclusive club of toffs, fiddling expenses – is just that: a caricature. This place does a serious job, undertaken on the whole by talented people who grasp the opportunity to serve with relish, so this change undoubtedly leaves the Lords a better place.

In my six years (short by Lords standards) I have yet to meet a peer who laments the rule change. There has been no defence, in the countless debates on accountability or transparency of our system, of the idea that one is somehow a more informed peer through living in Monaco. Leave the tennis and rock stars to their tax havens. Let us have a serious chamber passing serious law. That's what I came here to do.

Baroness Falkner is a Lib Dem Peer and Co-Chairman of the Liberal Democrats' Foreign Affairs Policy Group