house of lords official report - United Kingdom Parliament
house of lords official report - United Kingdom Parliament
house of lords official report - United Kingdom Parliament
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1071 Political Parties and Elections Bill [LORDS] Political Parties and Elections Bill 1072<br />
[LORD TYLER]<br />
was as transparent and democratic as it could be.<br />
Again, I draw attention in the amendment to the final<br />
point made by the Hayden Phillips team:<br />
“Due to the increased transparency and choice for trade union<br />
members the ten-year review ballot on the existence <strong>of</strong> the<br />
political fund is no longer necessary and should be removed”.<br />
In other words, the quid pro quo, if I may put it like<br />
that, was that trade unions, by being more transparent<br />
and more careful in relation to their own members,<br />
and by giving them more transparency and democratic<br />
rights, would not have to suffer as much bureaucracy<br />
as they do at the moment.<br />
I hope that with that fairly brief canter around<br />
this issue—because it has been discussed at<br />
considerable length in the other place, in the<br />
Hayden Phillips discussions and in Grand Committee—<br />
noble Lords will recognise that there is a quid pro<br />
quo in this group. By restricting the millionaires and<br />
the very big donors to political parties but, under the<br />
terms <strong>of</strong> my noble friend’s amendments, with a tax<br />
concession for small donations, we have a deliberate<br />
switch from the big boys to the general public, and<br />
that must be in the best interests <strong>of</strong> British democracy.<br />
I beg to move.<br />
3.45 pm<br />
Lord Goodhart: My Lords, Amendments 64, 65 and<br />
66 would provide tax relief for small donations.<br />
Amendments 64 and 66 are in my name, and Amendment<br />
65, which is an amendment to Amendment 64, is in<br />
the name <strong>of</strong> the noble Lord, Lord Campbell-Savours.<br />
These amendments have been grouped with<br />
Amendments 38 and 39, which, for reasons explained<br />
by my noble friend Lord Tyler, would impose a cap on<br />
large donations. However, these two sub-groups, if I<br />
may call them that, are not dependent on each other.<br />
Tax relief on small donations can be given whether or<br />
not there is a cap on large ones, and a cap on large<br />
donations can be imposed whether or not tax relief is<br />
given for small donations. However, there is an interaction<br />
between these two sub-groups because a cap on large<br />
donations is likely to reduce party funds and, if that<br />
happens, parties will have to do more fundraising from<br />
ordinary members and supporters, as in the outstanding<br />
example <strong>of</strong> the fundraising by President Barack Obama<br />
during his campaign last autumn. Tax relief on small<br />
donations will also help to achieve more fundraising<br />
from ordinary members.<br />
The idea <strong>of</strong> giving tax relief on small or moderate<br />
donations has had considerable support in the <strong>United</strong><br />
<strong>Kingdom</strong> and has been adopted in a number <strong>of</strong> foreign<br />
countries. Tax relief on modest donations was<br />
recommended by the Committee on Standards in Public<br />
Life, <strong>of</strong> which I was then a member, in its <strong>report</strong> on<br />
party-political funding published in 1998. In that <strong>report</strong>,<br />
the committee proposed an upper limit for tax relief <strong>of</strong><br />
£500. I have kept to that figure in this amendment, in<br />
spite <strong>of</strong> the time that has passed. I am glad to say that<br />
two other members <strong>of</strong> that committee are present: the<br />
noble Lord, Lord MacGregor, who was then a member<br />
and certainly, with me, was an active supporter <strong>of</strong> the<br />
proposal to allow tax relief, and the noble Lord, Lord<br />
Neill <strong>of</strong> Bladen, who was the chairman <strong>of</strong> the committee<br />
at that time.<br />
Giving tax relief on modest donations has many<br />
advantages. It is highly undesirable that all funds<br />
should come from the Government, as that greatly<br />
reduces the need to recruit members and discourages<br />
greater contact with voters. However, it is even worse if<br />
party funding comes mainly from a small number <strong>of</strong><br />
rich donors making large donations. That is a travesty<br />
<strong>of</strong> democracy and enables rich donors to have far too<br />
much control over party policy. It is important to<br />
encourage parties by giving tax relief for small or<br />
moderate donations, including membership subscriptions.<br />
We recognise that giving to charities should be encouraged<br />
by tax relief to donors. We believe that tax relief could<br />
be extended to donations to political parties, as those<br />
donations are also very much in the public interest and<br />
deserve tax relief.<br />
Tax relief has been given on inheritance tax in this<br />
context since the Inheritance Tax Act 1984—25 years<br />
ago—which exempted donations by will for the political<br />
parties that won at least two seats at the previous<br />
general election or one seat and at least 150,000 votes<br />
in total. Relief from inheritance tax should surely be<br />
extended to income tax. The obvious method would<br />
be to use a version <strong>of</strong> the Gift Aid system.<br />
I suggest, first, that the eligibility <strong>of</strong> a party to<br />
claim benefit <strong>of</strong> tax relief should be the same as that<br />
now for inheritance tax; that is, two seats at the last<br />
general election or one seat and at least 150,000 votes.<br />
Secondly, tax relief should be limited to the first £500<br />
<strong>of</strong> donations made in any one tax year by any one<br />
donor. Thirdly, whereas a charity donor can rightly<br />
reclaim a higher rate <strong>of</strong> tax relief on the amount <strong>of</strong><br />
Gift Aid donations, donors to political parties should<br />
not be able to do so, to avoid putting the relatively<br />
well-to-do donors in a better position. Fourthly, tax<br />
relief should be given only for gifts by individuals.<br />
All those conditions are set out in Amendment 64.<br />
They produce a simple and workable system, which in<br />
Grand Committee was supported by Members from<br />
all three parties. The Electoral Commission has said in<br />
its briefing for this Report stage:<br />
“In principle the Commission welcomes measures that incentivise<br />
public engagement in politics and help parties to campaign effectively.<br />
Proposals for fiscal incentives are for <strong>Parliament</strong> to consider in<br />
the light <strong>of</strong> other priorities”.<br />
The “other priorities” are the rub now. I recognise that<br />
we are in a difficult tax situation. I was asked in Grand<br />
Committee for an estimate <strong>of</strong> the amount <strong>of</strong> money<br />
that would need to be returned by the Government<br />
every year under the scheme. It is impossible to tell,<br />
but my guess put an upper limit at £5 million. Since<br />
the original version had cut <strong>of</strong>f at £1,000 rather than<br />
£500 and, more importantly perhaps, since recent<br />
events must have decreased the willingness <strong>of</strong> members<br />
<strong>of</strong> the public to contribute to political parties, the<br />
present prospective upper limit is probably something<br />
less than £4 million.<br />
I understand the problem, but if the Government<br />
are not willing to pay that small sum in the near<br />
future, I suggest two alternatives. The first would be to<br />
accept Amendments 64 and 66 but to withhold the<br />
commencement order for that new clause and schedule<br />
until the financial situation makes this easier. The<br />
other would be to accept Amendment 65 from the<br />
noble Lord, Lord Campbell-Savours, which is an