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1079 Political Parties and Elections Bill [LORDS] Political Parties and Elections Bill 1080 [LORD BATES] these Benches are happy to put on the record the fact that this is something we need to move towards in principle, timing is everything in these matters, and now is probably not the time to do this. Whether we should act on the suggestion in the probing amendment tabled by the noble Lord, Lord Campbell-Savours, that it should be bumped into another fiscal year would depend on the circumstances at the time. However, in this case the position of these Benches—certainly of the Front Bench—is to support it in principle but to question the timing. This leads me to the wider issue of the donations cap. The noble Lord, Lord Tyler, was generous in his citations of my remarks on the first day of Report when I referred to the importance of taking big money and the significant influence that it has out of politics. I take the points that have been presented with such clarity by my noble friend Lord Hodgson in this regard. However, whether we are talking about perceived or actual influence, it is how the public perceive the political process that is important. The Liberal Democrats, of course, have their own problems with major donors. Michael Brown, who donated £2.5 million, has turned out to be a convicted fraudster and yet they refuse to repay that money. It is important in debates of this nature to recognise that this is a problem for party politics which needs to be sorted out. It is not only a problem for the two main political parties; it affects all political parties. This was touched upon by Sir Hayden Phillips in his first report, Strengthening Democracy: Fair and Sustainable Funding of Political Parties—The Review of the Funding of Political Parties—March 2007, which was in many ways the forerunner of the Hayden Phillips process. He set out a principle which is worth repeating at this stage. He said that his principle would be that nothing should be agreed until everything is agreed. It is an interesting point. He recognised the complexity of the number of different moving parts necessary to restore confidence in public life. Whether it refers to major donations or to some of the other issues touched on in another place concerning constitutional reform, there is something holistic about the need to tackle the whole issue in the round. Lord Goodhart: My Lords, to say that nothing can be done until everything can be done is, surely, a wholly absurd position to take. A series of steps have been taken, including the 2000 Act, which followed the report of the committee, being amended in the Electoral Administration Act 2006. This is a piecemeal operation. Lord Tyler: A very Conservative one, my Lords. Lord Bates: My Lords, the noble Lord’s concern is not necessarily with me but with Sir Hayden Phillips’s principle number one. If he dissents from that, he is entitled to make the point. I happen to disagree with him. There is an argument that piecemeal reform sometimes lacks overarching principles. However, good legislation has overarching principles that should be followed through in the process of getting everyone to the table in order to reach some agreement. That leads me to a key point on the donations cap. There is a certain unstated element—I shall say no more than that—on which I hope the noble Lord, Lord Tyler, might comment. I should be grateful for some clarity lest I inadvertently cast some aspersion on the motives here. There is an implication of a donations cap, as envisaged by the Hayden Phillips review. To plug the gap, there would be an introduction of public funding. The noble Lord is shaking his head, so I will be happy to take that away. However, the White Paper, Party Finance and Expenditure in the United Kingdom, says: “The public funding schemes he proposed”— that is, Sir Hayden Phillips— “based on a donations cap of £50,000, would have an overall cost of around £20-£25m per year”. Four million pounds here, £20 million to £25 million there—we are beginning to build up to some significant sums of money. That comes on top of a concern that some people may be seeking tactical advantage, rather than a principled point of seeing a decline in income or a concern over future income streams, and hoping to replace it with public funding as a whole. When we talk about party funding, in many ways the arms race has been triggered by a dramatic increase in the amount of funding that is available to Members of Parliament in their constituencies—the incumbency factor. When I was serving in the other place, the office cost allowance, as it was called then, was in the region of £30,000. It was effectively enough to have an assistant, perhaps a part-time caseworker in the constituency, and then to pay for your printing, postage and telephones. Now that figure is up to £90,000 just for staff, and there is an additional element, the incidental expenses provision, which is another £21,000. Lord Campbell-Savours: Communications. Lord Bates: I am coming to that, my Lords. As the noble Lord points out, there is also a communications allowance of £10,000 per year. Over the lifetime of a Parliament, that builds up to £50,000 spent in a particular constituency on promoting the case of the incumbent Member. It is therefore not surprising that the nongoverning party, the non-incumbent, would seek to raise funds to try to match the firepower that has been ranged against it in a democratic process. I wish only to put that point on the record. I am not saying that I have an answer for it, nor am I saying what we ought to do about those allowances. That needs to be addressed as part of the Kelly review that is taking place, along with the questions of whether they are inadvertently funding big money donations and encouraging reliance on those big donations. The interparty talks were an important part of the process and all parties have engaged in them. The argument was that if we were going to have meaningful reform, all the political parties needed to get around the table, have their heads metaphorically banged together and sort this out, realising that there is a problem. The trade unions are perceived to have an influence on the Government. It causes concern from time to time when you see questions in debates about public sector funding cuts, and then you have a party
1081 Political Parties and Elections Bill [17 JUNE 2009] Political Parties and Elections Bill 1082 in government faced with the prospect of a union that represents members in the public sector threatening to withhold a £1 million donation, which was announced this week, unless it gets some movement. The fact that three out of every four pounds that the Labour Party receives is from the trade unions has a disproportionate influence on the process. 4.30 pm I listened carefully to the expertise in the House regarding how trade union membership works. One of our principal disagreements about the proposed amendment on the donation cap, apart from the implications for public funding, is that it says that a member should be afforded an opportunity during the 12 months following the relevant expenditure to be exempted from contributing to the political fund of the union. Our party believes that it needs to go further. There ought to be an opportunity for an individual member to indicate whether they consent to having their fund given to a political party. In most cases such funding goes to the Labour Party, but I believe that the Liberal Democrats also get funding from UNISON. If this is a political levy, individual members of the union should have the right to express their preference regarding which political party it ought to go to. They should be able to do so by opting in to the political fund, rather than having it assumed and having to go through the process of contracting out. The last meeting of the inter-party talks on the funding of political parties, chaired by Sir Hayden Phillips, took place on 31 October 2007. It was suggested that these had somehow broken down and been brought to an undue end because of the Conservative Party’s attitude to funding. That is not the case, as the minutes show. On the second of the three pages of the minutes of the final meeting held on 31 October 2007, Sir Hayden Phillips said: “As far as trade union affiliation fees the Conservative Party argued that the changes on affiliation fees contained in the draft agreement would only take people to where they believed the situation was at the current time regarding individual choice. Their view was that individual trade unionists should be able to make clearly voluntary donations to any party of the individual’s choice. They hoped the Labour Party would be willing to continue the Talks on the basis of further proposals which could be developed” on this point. He continued: “The Conservative Party saw no necessity for further controls on party spending, but would continue to discuss them as part of a package” of reforms. This is Sir Hayden’s concluding point in the final meeting. It is worth getting on the record because the point of breakdown in the inter-party talks is something that has been discussed quite often. On page 3 of the minutes of the same meeting, Sir Hayden said that, “if the other two parties were willing to accept the Conservatives’ proposals made in this meeting as the basis for further work, then it would be worthwhile asking the Secretariat to prepare further papers. Third, if there was no realistic prospect of an agreement at the present time on either basis, then the Talks should be suspended”. That is the final entry in the minutes because talks were suspended. It shows that there was clearly a breakdown in the inter-party talks on this central issue. I return to that principle to say that a holistic approach was absolutely necessary on this. I do not think that the public have the stomach for the significant increases that would be the consequence of the amendment being agreed. On the public funding of political parties, the need is very much for the inter-party talks to be reconvened to reintroduce and put everything on the table, including the developments that occurred before that time. This is a wide-ranging group of amendments and I apologise for taking so long to speak to them. However, they are very significant in terms of people’s future confidence in democracy. The amendment before us does not go nearly far enough; we need to go further. The cross-party talks need to be in place and there needs to be a holistic approach which embraces all these issues and recognises public attitudes and timing as regards current economic conditions. Lord Tunnicliffe: My Lords, this has been a very interesting debate in which many noble Lords have taken part. I hope that they will forgive me if I do not respond in detail to each point, but I shall touch on all the fundamental points that have been raised. However, there will be a couple of exceptions. I shall not respond to the very interesting speech of the noble Lord, Lord MacGregor, about our political life apart from commenting on what he said about donations. I am sure that part of his speech will resonate in many quarters. I hope that that debate continues and reaches a proper conclusion in the interests of the health of our democracy. I hope that the noble Lord, Lord Bates, will forgive me as I cannot possibly touch on all the detail of his speech as I am cognisant of our objective to complete Report stage today. This group of amendments relates to the establishment of a cap on donations, treatment of contributions under that cap and a system of tax relief for donations. Amendment 38 would establish a cap of £50,000 per year on the amount that an individual or organisation could donate to a registered political party. Contributions from trade union political funds would be subject to this cap unless they adhered to the conditions set out in Amendment 39. These conditions seek to create a clear link between the amount paid in individual contributions to a union’s political fund, by way of affiliation fees, and the amount of any subsequent donation made by the union. The Bill is the result of a painstaking search for consensus between the parties. The Government’s overriding priority throughout has been to ensure broad cross-party agreement to the changes that the Bill will make. It simply would not be acceptable to make far-reaching changes to legislation in this area without such agreement. The amendments before us today are identical to amendments that have already been debated both in Grand Committee and the other place. On each occasion they have failed to command support across the House. When Amendment 38 was put to a vote in the other place it did not receive support from either the Conservative Party or the Labour Party. When Amendments 38 and 39 were debated in Grand Committee, they again failed to find cross-party support. And, as we have heard in the debate today,
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