Political Parties, Elections and Referendums Bill

– in the House of Lords at 2:58 pm on 27th November 2000.

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Clause 36 [Assistance by Commission for existing registered parties]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department 3:07 pm, 27th November 2000

moved Amendment No. 1:

Page 30, line 32, leave out ("£500,000") and insert ("£700,000").

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, this amendment fulfils a commitment that the Government gave on Report to increase, from £500,000 to £700,000, the funding available to assist registered parties to meet the start-up costs associated with the Bill. I know that the noble Lord, Lord Beaumont of Whitley, would have liked the funding to be paid over a period of five years, but I hope that he now accepts that it is preferable to distribute the funding available to qualifying political parties as soon as possible. This will enable parties to put in place quickly the necessary internal systems so that they can comply with the accounting requirements and the controls on donations set out in Parts III and IV of the Bill. I beg to move.

Photo of Lord Beaumont of Whitley Lord Beaumont of Whitley Green

My Lords, I am extremely grateful to the noble Lord for small mercies--that is, if one can call an increase of £200,000 a "small mercy". As the noble Lord said, it is not exactly what I sought to achieve. However, as long as the administration and distribution of this money is dealt with both sensitively and fairly, I realise that that will enable the smaller parties not only to do exactly what they need to do to set up these arrangements but also to "squirrel" a little bit by to deal with what happens immediately after, thereby ensuring that they have the necessary mechanisms in place.

I have only one question for the Minister at this point. Can he confirm that there is no terrible little snag somewhere at the back of all this; namely, that, if the money is given in the first year, all of it has to be spent in the first year? Can the noble Lord also confirm that it will be possible for parties which receive this money to spend it over a period of time?

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, my understanding is that it does not have to be spent in the first year. If I am wrong about that, I shall, of course, let the noble Lord know.

On Question, amendment agreed to.

Clause 52 [Payments, services etc. not to be regarded as donations]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 2:

Page 41, line 27, leave out ("less") and insert ("not more").

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, in moving government Amendment No. 2 I wish to speak also to Amendments Nos. 3, 13, 14, 15, 16, 19, 20, 23, 36, 37, 38, 41, 42, 43, 45, 46, 47 and 48.

I remind noble Lords opposite that these comprise the group of government amendments that the Opposition have promised they will not criticise for being brought forward at this stage. They are the balance of those amendments moved last week on Report by the noble Lord, Lord Mackay of Ardbrecknish, amending the terms "not less than £5,000" and "more than £5,000" about which he felt so strongly. The amendments simply complete that process we started at Report stage of converting references to "not less than £5,000", or whatever the sum might be, to references to "more than £5,000". For consistency we also need to change references to, for example, "less than £200" in Clause 76(2) to read "not more than £200". I beg to move.

On Question, amendment agreed to.

Clause 68 [Reporting of multiple small donations]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 3:

Page 54, line 17, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 69 [Register of recordable donations]:

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

moved Amendment No. 4:

Page 54, line 42, at end insert--

("(6) The Secretary of State may by order make provision for exempting from inclusion in the register maintained by the Commission under this section any specified details in respect of donations to parties registered in the Northern Ireland register.

(7) An order under subsection (6) shall be so made as to--

(a) apply to the specified details in respect of donations to every Northern Ireland party, and

(b) make the same provision with respect to every such party.

(8) In this section--

"Northern Ireland party" means a party registered in the Northern Ireland register; "specified" means specified in an order under subsection (6).").

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, this group of amendments concerns the proposed exemption from the whole of Part IV of political parties in Northern Ireland. During the Committee and Report stages we had some enlightening but often, I regret to say, frustrating debates on these matters.

The Neill committee, on whose recommendations the Bill is based, did not recommend a complete exemption from the controls on donations which now comprise Part IV of the Bill. Despite what the noble Lord, Lord Bassam, has said on previous occasions, what the Government propose goes far beyond what the Neill committee thought necessary.

We now have the situation where, certainly until 2005 and possibly beyond, none of the provisions on donations in Part IV will apply to any registered political party in Northern Ireland. I should say, first, that a four-year renewal period is unacceptable. In Committee in another place, the Minister, Mr Tipping, gave some support to the idea of a 12-month renewal. That is what my Amendments Nos. 9 and 10 are intended to achieve. However, the main point is the substance of the exemption from Part IV. During a previous debate the Minister said that politics in Northern Ireland are not yet conducted on the same basis as in the rest of the United Kingdom. I wonder what he meant by that. Surely, he did not refer to the activities of Sinn Fein, for example, now regarded by the Government as legitimate enough to take its place and have Ministers in the Northern Ireland Executive. What are the "special factors" relating to Northern Ireland to which the Minister has repeatedly referred? In what circumstances does the Minister envisage that Part IV will be applied to Northern Ireland only partially? We never had any explanation of what was meant by that.

The situation in the Bill as at present drafted has a number of serious implications. First, there is the question of foreign funding. The Neill committee recommended a very limited exemption to the general ban on foreign funding. One of the central points of the Bill is that political parties in the United Kingdom should no longer be allowed to receive funding from anyone abroad. That is one of the central points of the Bill and of the Neill report.

The Neill committee stated, however, that as regards Northern Ireland there may be a case for exempting citizens of the Republic of Ireland, resident in the Republic and subject to compliance with that country's electoral law; that is, they should be allowed to donate to Northern Ireland parties. My Amendment No. 6 reflects that point. But that is not what the Government intend to allow in the Bill. They intend to allow anyone living anywhere in the world, be it America, Australia or wherever, to give money to political parties in Northern Ireland. The noble Lord, Lord Bassam of Brighton, admitted that on 11th May, after rather an effort on my part to get him to do so. He said,

"The question that has been asked is whether a person in the USA can give money to a Northern Ireland party. Fairly and honestly, I believe that, yes, he probably can".--[Official Report, 11/5/00; col. 1823.]

The Minister could have missed out the word "probably"; the fact is that such a person can do so.

The noble Lord, Lord Molyneaux, said on 18th October that it was believed that the fund-raiser, Mr Galvin, had now transferred his allegiance to the Real IRA and the Continuity IRA and that those organisations intended to field candidates who would be backed by the foreign money that the Government were perfectly content to allow to flow to Northern Ireland parties.

I shall not speak in detail about the anomalies the provision creates. The most obvious example from my point of view is that the Irish diaspora, predominantly that in America, will be allowed to donate to Sinn Fein but the Scottish and Welsh diaspora will not be allowed to donate to the SNP or to Plaid Cymru. In that respect at least, violence has paid.

We also discovered a further issue in debate. Despite the Minister's initially strong assertion that it was not the case he eventually had to admit that Northern Ireland parties can use foreign money to campaign both in Northern Ireland in a referendum on the constitutional status of Northern Ireland and in the United Kingdom on a GB-wide referendum, for example, on the euro or on proportional representation. I have no doubt that even now some are considering the loopholes the Government have created to see how they can be exploited in any future referendum. What really worries me is that a referendum on the constitutional status of Northern Ireland could be seriously affected by foreign money.

On 18th October the noble Lord, Lord Bassam, said:

"I like to be straight with your Lordships' House. The information I have from officials is that Northern Ireland parties can use the fruits of money raised abroad in a UK referendum".--[Official Report, 18/10/00; col. 1038.]

But no one else can, not the Labour Party, not the Conservative Party, not the Liberal Democrats nor the Scottish nationalists. No political party in Great Britain would be allowed to do that. The Minister concluded at col. 1038:

"That may well present difficulties".

Later that day he spoke of the need to ban foreign funding of referendums in the whole of the United Kingdom. Therefore he seemed to be aware of the dangers we had highlighted. However, those difficulties vanished into thin air, along with the need to ban the foreign funding of referendums. By 24th October the Minister said that he was,

"not persuaded of the case for preventing a Northern Ireland party using the proceeds of a foreign donation to meet its own referendum expenses".--[Official Report, 24/10/00, col. 191.].

Not only will Northern Ireland parties be allowed to take foreign money for ordinary elections, they will also, unlike all other UK parties, be allowed to take foreign money for referendums. That seems an amazing exemption.

We have dragged the Minister and his officials, kicking and screaming, to admit that the situation I have described exists. The Bill's ban on foreign participation in referendum campaigns is a sham for a number of other reasons, but here we have the Government explicitly and consciously allowing foreign funding to be used in referendums in Northern Ireland and the rest of the United Kingdom. That is plainly wrong. My Amendment No. 11 would go some way, although, I admit, not all the way, to address the point.

We have tried to approach the Bill in a spirit of compromise. The amendments the Government moved a few moments ago were the result of agreement between us. I have tried to envisage how we can find a way to help the Government obey the recommendations of the Neill committee and yet stop the foreign funding. I have conceded the issue of public reporting of donations over £5,000 on security grounds. As I said on Report, the Government have repeatedly justified all they are doing on the basis of donations needing to be kept confidential for the reason that someone in Northern Ireland who was known to give a large donation to a political party might be in danger from some of the men of violence.

If the Government had really believed that there were serious security considerations, they would have done exactly what I suggested doing. But they have gone much further. I am perfectly content to have donations to Northern Ireland parties kept secure and not made public. I think that that is quite reasonable. Amendment No. 4 does just that: no public disclosure of donors' names; and leaving out Clause 70 would achieve that objective. So the Government cannot complain that I have not taken on board their security argument.

The Minister admitted that Amendment No. 4 was something the Government had considered. He gave the impression that they were still considering it. But he said that it should be in addition to, and not in place of, the wider powers in Clause 70 which would allow them to exempt Northern Ireland parties from other parts of the Bill. He claimed--I thought that it stretched credulity somewhat--that one could not give the list of donations to the electoral commission and not make it public because the electoral commission might leak donors' names. What a condemnation of the Government's view of the electoral commission they are about to set up. What confidence can parties on this side of the Irish Sea have in giving confidential information to an electoral commission that the Government themselves say cannot be made leak-proof?

As I said on Report, the continuation of foreign funding from North America, or any other foreign country, for Sinn Fein/IRA and other republican groups cannot be justified on any grounds whatsoever. The Government cannot logically make the leap from wanting to ensure donors' anonymity to a complex exemption from the ban on foreign funds.

I accepted that the Neill committee suggested that there is a problem with the Republic. Largely at the prompting of the noble Lord, Lord Goodhart, I lifted from the Government of Ireland legislation of 1947 the idea that Ireland was not a foreign country and, therefore, accepted that people who had votes and were resident in the Republic could give money to Northern Ireland parties. Initially I thought that the easy way out would be to allow them to give money to any British political party, but the Government did not like that so I have narrowed the issue further.

The three provisions I put forward are hardly options because one builds on another, but I refer to them as the three options before your Lordships. First--I do not disguise the fact that it is my preferred solution-- Amendment No. 12 on its own would remove entirely any special provision for Northern Ireland parties and make Northern Ireland parties subject to the same rules and regulations as parties in Great Britain. However, I have listened to the Government's case and I know that they will not accept that. I am aware of what the Neil committee said.

The combination of Amendment No. 4 with Amendment No. 12 would stop donors' names being made public. That is what the Government have said they want for security reasons. But it would also mean that there would be no foreign funding. The electoral commission would know where the money was coming from and the parties would have to observe the rule on not accepting impermissible donations.

My third building block, the third option--it is not my preferred one, but it is a good deal better than the provisions in the Bill--brings in Amendments Nos. 6 and 8. It would allow the foreign funding of Northern Ireland parties to come from the Republic of Ireland only. Only Northern Ireland parties could be so funded and foreign donations could come only from the Republic of Ireland which, according to the Government of Ireland measure, is not a foreign country. It would also mean that the names of large donors would not be made public so they would still be secure. That would mean that in Northern Ireland parties would have to observe the rules on donations; the commission would be able to ensure that they were not accepting money from abroad; but they would be able to receive funding from the Republic of Ireland.

As I have indicated, Amendments Nos. 9 to 11 are ancillary to the main question. They are about the renewal period. Amendment No. 11 refers to referendums.

Noble Lords have had before the House over the past few weeks a number of measures which many of us believe amount to a massive concession to the men of terror. As well as the provisions in the Bill which allow for foreign funding, we have had the Police (Northern Ireland) Bill which, as we predicted, has undermined morale in the RUC and risks undermining the fight against terrorism. Over the weekend a senior officer has indicated that he no longer wishes to serve in the RUC. Then we have the sinister Disqualifications Bill which has never been properly justified.

It seems to me that in this Bill there is another huge concession without anything given in return, as usual. We oppose what the Government are doing. We believe that it sends out dangerous signals. I have gone a long way to take on board what the Neil committee recommended. I have gone a long way to take on board the problems the Government put before your Lordships' House in defence of what they sought to do. I believe that my amendments together represent the taking on board of the Neill committee's report and represent a sensible way forward which would bring the Government and Opposition together. However, if not, I shall seek the opinion of the House. I hope that noble Lords will consider the issue in a dispassionate way, will see how far my amendments accommodate the objections and, if necessary, will join me. I remind the Liberal Democrats that in another place they voted against the clause standing part of the Bill. I look forward to their transferring that support to your Lordships' House. I beg to move.

Photo of Lord Molyneaux of Killead Lord Molyneaux of Killead Crossbench

My Lords, I fully support this group of amendments. We have to consider this rather peculiar provision, in particular Clause 70, in the context of what we have been doing in your Lordships' House over past months, and during the past two weeks. The provisions to permit the IRA in various forms to import unlimited funds from abroad were included in this Bill for reasons which were entirely unconnected with the Neill report. Like several other unique Bills in this category, they come into the "most favoured son" group. The obsession so prevalent in both Houses is that of extra-special treatment of terrorist parties: they have to be placated at all costs, even at the costs of integrity and of honesty. The second obsession is that we in your Lordships' House must avoid sending the wrong signal to terrorists just in case they get annoyed. So we grovel and lick boots in the expectation that our taskmasters in the various terrorist groups, from both sides of the community, will observe obligations and keep their part of any bargain. As many noble Lords have said on other occasions, it is a vain hope. But we now have proof positive of their inability and unwillingness to observe any contract into which they may have entered.

So I ask: is it any wonder that they, the terrorists, despise the lot of us? Can Her Majesty's Government justify Clause 70, with its endearing rubric, on grounds other than what I call the "most favoured son" formula which the Parliament of the United Kingdom has been induced to swallow thus far?

On a similar occasion some weeks ago, I asked your Lordships--I apologise for the language--whether there is anything to which we will not stoop. Last week we completed the passage of the Police (Northern Ireland) Bill. The IRA/Sinn Fein grouping has thrown that back in our face in the past 24 hours; and, worse, it has completely wrecked the plans for a new police service consisting of a 50:50 composition. Most, if not all of us, were in favour of a balance representing both sides of the Northern Ireland community in the new force. But Sinn Fein/IRA has this weekend warned Catholics not to join the new service. It has warned those who might volunteer and be suitable to serve on the new police body. Saying that they cannot advise nationalists to serve is code for intimidation--kneecapping and all the rest of it; we have seen it all before. People who serve on the new police board will be putting their lives on the line. There is no doubt about that.

The IRA has gone further and dragged the entire nationalist community into a virtual boycott of all the constructive passages of the Patten report. My comments apply equally to Clause 70, because the terrorist groupings will cheat and cheat again. They will not keep their word.

The noble Lord, Lord Mackay, quoted the Neill report, which says early on:

"Political parties should in principle be banned from receiving foreign donations".

Why are we exempting from that a political party--or rather a terrorist movement masquerading as a political party? The Neill report went on:

"In relation to donations to political parties in Northern Ireland, the definition of a permissible source should also include a citizen of the Republic of Ireland resident in the Republic subject to compliance with the Republic's Electoral Act".

The Neill committee incorporated a Sinn Fein exemption into its fifth report. It will not benefit the Ulster Unionist Party, the Alliance Party, the Democratic Unionist Party or any other properly constituted democratic party except the nationalist parties, and in particular Sinn Fein. Much to my regret, Sinn Fein will dominate the nationalist grouping and the nationalist community in general, as has been proved over the past 48 hours.

I particularly support the point made by the noble Lord, Lord Mackay, about the confidentiality of donors. If names are to be disclosed, Catholics will be limited in their financial contributions to supporting one party only--Sinn Fein/IRA. It does not take much imagination, particularly among those of us who come from Northern Ireland or have served there, to understand that that intimidation will be carried through to the ballot box.

Photo of Lord Fitt Lord Fitt Independent Socialist 3:30 pm, 27th November 2000

My Lords, over the weekend I watched a video cassette that had been sent to me from Northern Ireland. It was a recording of an Ulster Television "Insight" programme. The programme contained a discussion about the relative merits of Sinn Fein and the SDLP and which one better represented the nationalist population in Northern Ireland. When the SDLP representative was asked why his party had refused to condemn many of the murders and atrocities carried out by the Provisional IRA over the past year, I was disheartened to hear him answer that it was in case it made the party sound like unionists. What a very lame excuse. Presumably the fact that I am supporting the Opposition and the noble Lord, Lord Molyneaux, makes me sound like a unionist. I do not believe that I do. I believe that the amendment should have been taken up long ago in the deliberations that have affected this country and its relations with the IRA.

Only this weekend we read in the Northern Ireland newspapers that the relatives of the victims of the Omagh bomb courageously took it upon themselves to come to a public house in the north of London, where, in a room above the bar, representatives of the Continuity IRA--the political arm of the Real IRA, which carried out that atrocious bombing that caused such tragedy in Northern Ireland--were collecting funds from the patrons, be they Irish or English. I take it that they were appealing to the Irish community in London.

How can that be justified? Again I refer to the speech of the noble Lord, Lord Mackay. Eric Anderson, who has just resigned, was one of the most dedicated senior policemen whom I have ever met in Northern Ireland. He carried out all the investigations into that terrible tragedy and the people who brought it about. He has just given notification that he is going to resign because he cannot accept some of the recommendations in the Patten report. He knows the identity of those who carried out the bombing in Omagh, but he cannot bring them before a court because it is very hard to get evidence. Does anyone believe that he can be replaced? Does anyone believe that any other member of the Royal Ulster Constabulary will be able to carry on where he has left off? I do not think that that is possible.

It is a contradiction that the House appears unwilling to ban contributions that come from the United States to reinforce the armed rebellion among the different factions of the IRA. The Government are not expressing the view of the vast majority of the people in the island of Ireland by permitting contributions to be brought from America to support the different factions in the IRA--and making excuses for doing so.

Northern Ireland is allegedly a foreign country, but I know from my experience at the SDLP's yearly functions in the Republic that the amount that we received from people there to help our political objectives would not bankrupt the exchequer. We can push that aside. However, Sinn Fein/IRA receive subscriptions from America. One group in America is ably led by a man called Martin Galvin, who broke away from the Provisional IRA and is now getting funds to support the Real IRA--the group that let off the bomb at MI6 headquarters and has continued a series of minor explosions in this country. Only the financial assistance of some seriously misguided people in the United States of America makes that possible. I hope that any legislation that we pass will do everything possible to stop foreign subscriptions to such organisations.

Photo of Lord Sanderson of Bowden Lord Sanderson of Bowden Conservative

My Lords, I strongly support the amendment tabled by my noble friend Lord Mackay. Having had the difficult honour of being the chairman of a political party north of the Border, I know the strength of the links between Scotland and Canada and the United States of America. I cannot for the life of me see why I, as a previous chairman, should be prevented from asking Scots over there for money to fight elections, when my colleagues in the Ulster Unionists will be able to do so. I hope that my noble friend will press his amendment most strongly.

I wish to raise one other point. Amendment No. 6 seeks to include,

"citizens of the Republic of Ireland resident in the Republic (subject to compliance with the Republic's Electoral Act 1997)".

I do not know the terms of that particular Act. I only hope--my noble friend may be able to enlighten me--that residents in the Republic of Ireland will not be a post box for those further afield who may enter the lists at election time.

Photo of Lord Dubs Lord Dubs Chair of Labour Peers

My Lords, only a few days ago we read in the newspapers that the British and Irish governments had jointly approached the American Government to ask that the Real IRA be declared a terrorist organisation. That was done with the intention of closing up funds from North America to the Real IRA. It was a very clear step.

I believe that there is confusion in the minds of some Members of this House as to the money that goes, I suggest, illegally and completely improperly from North America to fund terrorism in the United Kingdom. It does not require the clauses which the noble Lord, Lord Mackay, wants to amend to enable that flow of money to take place, even though for the past 30 years the British Government have done their best to prevent such a supply of money funding terrorism in Northern Ireland. The money does not have to be processed through a political party. The terrorists have only to raise the money, spend it in eastern Europe and then smuggle arms, weapons, bombs and explosives into Ireland to be used in Northern Ireland or in Britain.

Therefore, I do not believe that the argument that the Government are soft on terrorism--an argument that the noble Lord, Lord Mackay, used in relation to the Police (Northern Ireland) Bill and the Disqualifications Bill--is legitimate. Surely we are talking about money which is used for political purposes. Whatever the closeness of the links between Sinn Fein and the IRA--I do not dispute the closeness of those links--nevertheless, Sinn Fein also happens to be a legitimate political party. We may not like it, but if Sinn Fein seeks to raise money for legitimate democratic purposes, we should recognise that that is what it seeks to do.

The noble Lord, Lord Fitt, said that very little money for the SDLP came from the Republic. I believe that there is sufficient to make it important for the SDLP to raise its money there. The difficulty lies in the fact that there is no neat way out of the dilemma that has been posed. Sinn Fein happens to be a political party, both in Northern Ireland and in the Republic. As such, it can raise money for its political activities in the Republic and it is then not difficult for it to use some of that money for political purposes in Northern Ireland.

There is no neat way out of the dilemma. That is why I believe that the Government are right to include the clauses in the Bill. And that is why I do not believe that the noble Lord, Lord Mackay, is right to suggest that the clauses should be removed. I repeat: it is a very difficult problem. The Government have done their best to find a way through it and I believe that they have succeeded. For that reason, I hope that these amendments will not succeed.

Photo of Lord Monson Lord Monson Crossbench

My Lords, the noble Lords, Lord Mackay of Ardbrecknish, Lord Molyneaux and Lord Fitt, powerfully drew our attention to the extraordinary series of concessions, not least the legislative concessions, made to Sinn Fein/IRA. Having observed them at reasonably close quarters over the past three-and-a-half years, I cannot believe that in their hearts most members of this Government welcome so many concessions to such a group. One can only suppose that they are acting under duress but that, for reasons of maintaining public confidence, that cannot be admitted publicly.

Photo of Lord Rees-Mogg Lord Rees-Mogg Crossbench 3:45 pm, 27th November 2000

My Lords, I support the amendments moved by the noble Lord, Lord Mackay of Ardbrecknish, on somewhat different grounds. I believe that a serious constitutional position arises and I very much hope that the Members on the Liberal Democrat Benches will consider these issues. In recent years we have adopted a strong principle that our constitution rests on equality and that there should not be discrimination in terms of gender, race or, indeed, colour. However, there is an inherent proposal in the Bill that there should be a discrimination in terms of geography.

The European Convention on Human Rights, which we have adopted into our own law, seems to me also to be based on a principle of equality; that is, it is against human rights for a legal provision to be made which has radically different effects on different groups on a purely arbitrary basis. I believe that these amendments would improve the Bill substantially by bringing it nearer to the constitutional equality which it has been a major aim of the present Government to secure in relation to other matters.

Let us look at the experience of other countries. A major issue which has arisen in the United States is whether there should be equality under the constitution. In the 1954 case which resulted in a declaration that there should not be segregation in education, it was determined that "equal but different" means "unequal"; that is, it cannot be claimed that something is all right although it is a discrimination because, in some other sense, it is equal.

In this case, I do not believe that it can even be said that the treatment of the non-Northern Ireland parties and the parties in the rest of the United Kingdom is equal. However, if in some sense that could be held out to be so, the position would remain essentially unequal and essentially a discrimination.

Therefore, the question which arises is: if we pass the Bill as the Government would like in an unamended form and if the Government persist in their view that they will not accept all or any of the amendments in the name of the noble Lord, Lord Mackay, shall we be passing a Bill that meets the tests of law, including the tests of the convention on human rights? That is a matter which may come before your Lordships' House in another way through the ordinary process of litigation.

Photo of Baroness Park of Monmouth Baroness Park of Monmouth Conservative

My Lords, I strongly support the amendment. I believe that on the last occasion that we discussed this matter, I asked the noble and learned Lord, Lord Falconer, whether Sinn Fein/IRA had supported, and had said that it would support, the proposal that Catholics should enter the RUC. I received no answer to that question. Sinn Fein/IRA has given that answer since and it has been no surprise to most of us.

Perhaps I may suggest strongly that, if the House does not accept this amendment, the people of Omagh will lose all faith in the process of justice. I am afraid that it is no good to say that Sinn Fein is a political party struggling to escape from its unwelcome IRA encumbrance. Sinn Fein/IRA consists of the very people who, when the people of Omagh appealed to both Gerry Adams and Martin McGuinness to set the witnesses free and tell them they could testify, said that they would not do so because they did not recognise British justice.

If Sinn Fein is a political party in the United Kingdom which does not recognise British justice, I suggest that it is the last party to which we should give special concessions. The people of Omagh will judge us. They will say, "You passed the terrorism Act; you said how hard you would be on terrorism; and the terrorism Act says that money to these people will be stopped. But when an opportunity comes, instead of stopping it, you actually create a position in this Bill in which they will receive favourable treatment and be able to obtain money". That will be absolutely incomprehensible and I suggest very strongly that it would be utterly wrong to accept it.

I hope that the Government will reflect on the fact that Sinn Fein/IRA has now come out into the open and said that it will not support Catholics in the RUC. At the same time, the best of the RUC are going. One thing which Sinn Fein/IRA has been calling for is the disbanding of the Special Branch. We can expect a good deal of action in the United Kingdom which may not be very agreeable and it will serve us right.

Photo of Lord Peyton of Yeovil Lord Peyton of Yeovil Conservative

My Lords, I strongly support that question which my noble friend Lady Park has addressed to the Government. She is asking what kind of message the Government expect will be received in Northern Ireland. With respect, I do not believe that the emollient efforts of the noble Lord, Lord Dubs, will be of any great assistance to them.

I found the speech of my noble friend Lord Mackay very convincing indeed. It was a real effort to recognise the difficulties which the Government face in relation to this appalling problem. He went a long way to make it easy for them by not pressing for the omission of Clause 70.

As this debate has gone on, it has taken on more and more of the quality of a nightmare. I have begun to wonder more and more whether I am taking part in or listening to a procedure which is real.My noble friend on the Front Bench talked of another huge concession without any return so far, nor expected. It is just another huge concession. I wonder how on earth the noble Lord on the Front Bench, admittedly not a senior member of the Government, will have the gall to answer that challenge. He must reply also to the noble Lord, Lord Molyneaux, who pointed out that this was a concession--I believe I have his words correctly--to our taskmasters in the various terrorist groups. When the noble Lord replies, I hope that he will remember what the noble Lord, Lord Molyneaux said; namely, that this is another huge concession to our taskmasters in the various terrorist groups. We heard too from the noble Lord, Lord Fitt. He never fails to move me because he speaks from terrible experience.

What I find odd--maybe I am wrong; I hope I am--is that in a short time we shall have the spectacle of the noble Lord, Lord Bassam of Brighton, representing the Government of this country, representing all of us in a manner of speaking, in delivering the message that this Government are prepared to facilitate the collection and passage of money by Sinn Fein or its agents from foreign countries for whatever use may be contemplated. It is all very well for the noble Lord to shake his head. I hope he will lend some force to his apparent rejection of what I am saying when he gets to his feet and defends what most of us believe to be totally and absolutely indefensible.

In conclusion, I want to say that the message which the noble Lord will be delivering this afternoon, in the event that he does not, on behalf of the Government, accept the amendment, is one which for all of us now involves unlimited shame and may well, in the future, provoke physical results of which we shall all bear the consequences.

Photo of Lord McNally Lord McNally Liberal Democrat

My Lords, since it was pointedly asked which way noble Lords on these Benches will vote this afternoon, I can tell the House that we shall be supporting the Government.

It is very easy for those on the Conservative Benches to make emotional speeches. It is worth considering--and it is now on the public record--that it is now nearly 20 years since a leading member of the government of the noble Baroness, Lady Thatcher, the late Lord Whitelaw, entered into direct negotiations with the IRA. Sometimes, some of the speeches this afternoon from those Benches have had the whiff of one more push; that, somehow, there is an alternative which is easily available to a government with more backbone militarily to defeat the IRA.

Photo of Baroness Park of Monmouth Baroness Park of Monmouth Conservative

My Lords, I merely wish to ask the noble Lord whether he does not draw a distinction between negotiating with what were then people who might conceivably behave in a civilised way eventually and people whom we now know do not behave in a civilised way. We have had years of experience.

Photo of Lord McNally Lord McNally Liberal Democrat

My Lords, I believe that terrorists behave in an uncivilised way full stop. But politicians have a duty not to support them, as the noble Baroness said from a sedentary position, but to try to find a way forward to peace. Of course, just as Lord Whitelaw must have done 20 years ago, the present Government face that horrific dilemma of negotiating with men of violence. Those are difficult dilemmas. I often think of George Woodcock's description of good trade unionism being shabby compromises. There is a lot in the peace process which is shabby compromise. But the peace process is about giving some kind of breathing space for the normality of politics to return to Northern Ireland.

We know that around that process, there are those who will be determined actively to destroy it. The fact is that to give peace a chance, the Executive and the political process, such as it is, with its defects, must be given a breathing space. We believe that this is part of a package of legislation, as has been pointed out, and it does provide such a breathing space. It will be abused; attempts will be made to undermine it by the men of violence; but it gives the men of peace something to hang on to and to build on as well.

As the Neill committee recognised, we all know that it is possible to dog-leg funds through the Republic of Ireland and for the terrorists to cheat. But, as the noble Lord, Lord Dubs, mentioned, action can be taken. The joint demarches by the British Government and the Government of the Irish Republic are examples of that.

I thought that the noble Lord, Lord Mackay of Ardbrecknish, made an extremely effective speech. On these Benches, we must take a balance of judgment. It is not right on one side. If it were that simple, we should have either defeated the IRA or returned Northern Ireland to some perfect democracy. But neither is on offer at the moment. What is on offer is a peace process which needs help. Because we believe it needs help and because we believe that this Government are trying to make that peace process work, we shall be with them in the Division Lobby today.

Photo of Lord Goodhart Lord Goodhart Liberal Democrat 4:00 pm, 27th November 2000

My Lords, I want to speak personally and not on behalf of my party. I have made my personal position clear to my noble friends, and they have accepted it. Having signed the report of the Neill committee, it would not be honourable for me to vote in a manner inconsistent with the report to which I have put my name. In no way is this a criticism of my party or of the stand being taken by it on this issue. Had I not been a member of the Neill committee I should have been in an entirely different position. Personally, I shall be unable to vote on any Division on these amendments.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, with these amendments we return to the vexed matter of the special provisions for Northern Ireland parties. I readily admit that it is a vexed matter, with strong passions running on both sides of the argument. The House is by now well aware of the case made by the Neill committee for these special provisions, so I shall not detain the House by going over that ground again, but shall confine my remarks to the amendments before us.

The amendments address four different aspects of Clause 70: first, the exemption from disclosure; secondly, the exemption from the ban on foreign funding; thirdly, the time limit on any order made under subsection (1); and, finally, the effect of the exemption in respect of the ban on foreign funding on a referendum campaign. I shall address each of those points in turn.

Amendments Nos. 4, 7 and 8 address the issue of disclosure. They seek to take what some may describe as the middle road between applying the controls in full to Northern Ireland parties and a complete exemption. As I indicated on Report, that is a middle way which the Government have previously closely examined. We have concluded, however, that it is not an approach that we can adopt at this time.

Concern has been expressed that the disclosure of donations to the electoral commission, but not more widely, would not provide the necessary assurance to donors in Northern Ireland. Let me make it perfectly clear that this is not because the Government lack confidence in the ability of the commission to keep information about donors in Northern Ireland parties confidential. The key consideration here is public perception. We know that sections of the community in Northern Ireland do not have full confidence in the public institutions operating in that part of the United Kingdom. Whatever the reality of the situation, there will be a perception that information given in confidence to the electoral commission will somehow leak out.

Consequently, this half-way house will not take the trick. If donors are fearful that their details will be made known, they will stop making donations and it would, as a result, become very difficult for democratic parties in Northern Ireland to operate effectively. Such a result would not advance the peace process. At this time, therefore, I cannot commend this middle way to the House.

Amendment No. 6 seeks to give effect to the letter of the Neill committee's Recommendation 29. Let me remind the House why we think that this particular recommendation is impractical. Under the amendment, a party in Northern Ireland could accept a donation from a citizen of the Republic of Ireland resident in the Republic, subject to that person's compliance with the Republic's Electoral Act 1997.

The first difficulty with that approach is that we do not believe that it would be practical to require that a United Kingdom party satisfy itself that a donor complies with legislation in force in another state, in another jurisdiction.

The second difficulty with this approach is that it would simply serve no useful end. The noble Lord knows very well that the Republic of Ireland's legislation in this area does not ban the foreign funding of political parties. I make no comment about that as it is clearly a matter for the Irish state. But, in the absence of such a ban, any citizen of the Republic could accept a donation from the United States or elsewhere and then simply reroute it to a party in Northern Ireland. The noble Lord has argued that we should at least make an attempt to confine the foreign funding of parties in Northern Ireland to funds emanating from the South of Ireland, but this amendment patently fails to do that. If the amendment has no effect in practice, frankly it should not be made.

Amendments Nos. 9 and 10 relate to the time limit on any order made under subsection (1) of Clause 70. On Report the House accepted a government amendment to limit the life of such an order to four years. It is right and proper that an exemption order should be subject to regular review and we believe that once every four years or so is about right. These two amendments would require an annual review. I put it to the House that that is too frequent. We very much hope that the political climate in Northern Ireland will continue to improve year on year.

I believe that the impassioned plea made by the noble Lord, Lord McNally, is right. This process is not and never will be perfect, but we have to do all that we can to help it. This is not the same as saying that the political situation will have changed sufficiently one year over another to justify an annual review of a Clause 70 order. I invite the House to stick at four years, albeit with the possibility of an interim review should the climate change materially, as we all hope, in which case the order then in force could, if appropriate, be revoked.

Finally, Amendment No. 11 returns to the issue of foreign funds being used by a Northern Ireland party to meet the costs of a referendum campaign. I am aware that the noble Lord, Lord Mackay, continues to be unhappy about such a consequence of a Clause 70 order.

If, as we propose, an order is made under Clause 70 to exempt Northern Ireland parties from the restrictions on the acceptance of donations, that exemption will apply for all purposes. It is not, and never has been, our intention to allow Northern Ireland parties to accept foreign donations to meet their general running costs or to meet the cost of election campaigning, but not to meet the cost of a referendum campaign. On what possible grounds can such a distinction be made? There is simply no case for this amendment.

The noble Lord is perfectly entitled to argue that there should be no special provisions whatsoever for Northern Ireland. It is up to your Lordship's House to decide whether to accept the noble Lord's case or to accept the Government's and the Neill committee's case. If your Lordship's House comes down in favour of Clause 70, the case for Amendment No. 11 simply evaporates. The fact that a Northern Ireland party may use foreign donations to fund a referendum campaign raises no new issues.

At each stage of this Bill we have heard the arguments for and against Clause 70. Sadly, there has been no meeting of minds at least between these Benches and those of the Official Opposition. The time has come to decide once and for all whether this clause should stand part of the Bill. I put it to the House that there are compelling arguments for these special provisions and I therefore invite the House to reject these amendments.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, perhaps I may comment on the Minister's reply in reverse order. On foreign funding for referendums, he seems to be quite happy that that should go ahead and he seems to accept, in fact almost suggests, that the Government deliberately set out to allow that. To take a narrow aspect, if the Scottish National Party ever arrives at the stage--I hope that it will not--of forcing a referendum on an independent Scotland, it seems to me that there would be no justification for saying, "No, you cannot have foreign money"; whereas in a referendum on the future of Northern Ireland, we could say to one side of that argument, "You can have foreign money". The position is totally without logic and--dare I say it?--totally without integrity.

The third point, the limit of four years, is not the most important part of these amendments, but it seems to me that if the Government are to make progress on Northern Ireland and want to sweep away all these exemptions as soon as possible, which I understand is the Minister's position, they would be better reviewing the situation once every year rather than once every four years. However, that is the least important of the four amendments.

On the second point--essentially, of how we can check whether money that has come from a donor in the Republic has not originated in the United States--the same question could be asked in relation to Great Britain. How will we check that? The electoral commission will carry out some checking, as no doubt will political parties. But I fully accept that it would be wrong for the other political parties in Northern Ireland to know about large donors, wherever they are from, for reasons of which we are all aware.

However, I should have thought that, with all the co-operation we have with the Republic's government, it would not be too much to ask them to go a step further and help the electoral commission in any investigation it had to conduct in relation to a large donor in the South. I should have thought that that was a small price for the Republic of Ireland to pay in return for all that it has had from the United Kingdom Government over the past few years. So I do not believe the noble Lord made a case at all in that regard.

On the question of donations and keeping them confidential, perhaps if there had been a fourth stage of the Bill--thank goodness, there is not; that is one thing at least on which the Ministers agree with me--I might have knocked out the fact that we should tell the electoral commission and allow Northern Ireland parties not to report their donations of £5,000 to anyone. But it is an amazing proposition that we cannot trust the electoral commission with confidential information.

This has been a sad debate. I say to the noble Lord, Lord McNally, that I hope that his friends in the other place who voted with us on these issues in the Commons do not read in Hansard what he has said today. I do not believe the exaggerated nature of his speech, which was more or less that this would be a threat to the whole peace process, to be in the least bit justified. I noted what the noble Lord, Lord Dubs, said--that Sinn Fein should be allowed to seek to raise money for legitimate political purposes. I have no problem with that. But why, in reality, should they be the only people who are allowed to raise money for legitimate political purposes outside these islands? The Labour Party is not allowed to and I do not believe for a moment that anything the Labour Party raised would not be used legitimately.

Photo of Lord Dubs Lord Dubs Chair of Labour Peers

My Lords, because it is the only political party which operates both within the United Kingdom and in another country.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, my exemption of the Republic of Ireland electors from the ban addresses the noble Lord's point. That is my original point about this being a series of bricks that builds up the position where I take on board the objections of noble Lords opposite.

With the exception of the two noble Lords I mentioned and the Minister, no noble Lord is in the least happy. I could repeat some of the points made. I shall not do so, apart from to say this. If the noble Lord, Lord Fitt, believes these amendments to be proper and sensible amendments to accept, it might be worth those noble Lords who intend meekly to obey the Government Whip thinking about it before they vote. I commend the amendment to the House.

On Question, Whether the said amendment (No. 4) shall be agreed to?

Their Lordships divided: Contents, 148; Not-Contents, 167.

Division number 1

See full list of votes (From The Public Whip)

Resolved in the negative, and amendment disagreed to accordingly.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords 4:23 pm, 27th November 2000

moved Amendment No. 5:

After Clause 69, insert the following new clause--

:TITLE3:TAX RELIEF ON POLITICAL DONATIONS

(" . After section 379 of the Income and Corporation Taxes Act 1988 (interpretation of sections 369 to 378) there shall be inserted--

"Tax relief on political donations.

379AA.--(1) Tax relief shall be available to an individual ("the donor") in accordance with this section on qualifying political donations made by him of up to £500 in any year of assessment.

(2) A donation is a qualifying political donation for the purposes of this section if it is made to a registered political party (other than a minor party) and--

(a) it takes the form of the payment of a sum of money,

(b) it is not subject to a condition as to repayment,

(c) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the political party, its members or accounting units, otherwise than by way of gift, from the donor or a person connected with him, and

(d) the donor is a registered elector.

(3) For the purposes of this section a political party is an eligible political party if--

(a) it is a registered party within the meaning of section 22 of this Act other than a minor party, and

(b) at the last general election preceding the donation in question--

(i) two members of that party were elected to the House of Commons, or

(ii) one member of that party was elected to the House of Commons and not less than 150,000 votes were given to candidates who were members of that party.

(4) If an individual makes a qualifying donation he shall be entitled, on making the payment, to deduct and retain out of it a sum equal to basic rate tax thereon.

(5) Where a sum is deducted under subsection (4) above, the sum deducted shall be treated as income tax paid by the person to whom the payment is made.

(6) Any person by whom a qualifying donation is received shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (5) above is treated as income tax paid by him; and any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the qualifying political donation to which it relates.

(7) The following provisions of the Taxes Management Act 1970, namely--

(a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act,

(b) section 30 (tax paid in error, etc) apart from subsection (1B),

(c) section 86 (interest), and

(d) section 95 (incorrect return or accounts), shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.

(8) In the application of section 86 of the Taxes Management Act 1970 by virtue of section (7) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment ("the relevant year of assessment") under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date--

(a) is 1st January in the relevant year of assessment in a case where the person falling within subsection (5) above has made a relevant interim claim; and

(b) in any other case is the later of the following dates, that is to say--

(i) 1st January in the relevant year of assessment; or

(ii) the date of the making of the payment by the Board which gives rise to the assessment.

(9) The Board may by regulations make provision--

(a) for the purposes of any provision of this section which relates to any matter or thing to be specified by or done in accordance with regulations;

(b) with respect to the furnishing of information by donors or recipients, including, in the case of recipients, the inspection of books, documents and other records on behalf of the Board; and

(c) generally for giving effect to this section.

(10) In this section--

"financial year" in relation to any person, means a financial year of that person for the purposes of the relevant regulations;

"interim claim" means an interim claim within the meaning of the relevant regulations;

"relevant interim claim" means, in relation to an assessment made for a period coterminous with, or falling wholly within, a person's financial year, an interim claim made for a period falling wholly or partly within that financial year; and

"the relevant regulations" means regulations made under subsection (9) above.

(11) Section 839 of this Act shall apply for the purposes of this section to determine whether one person is connected with another."").

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, this amendment deals with the issue of tax relief, in respect of which the Government have decided to depart from the recommendations of the Neill committee. Chapter 8 of the Neill report deals with the question of allowing tax relief on donations to political parties in the same way that tax relief is given to charities.

I could develop this argument at some length. I could even read out the recommendations of the Neill committee on this matter. If I did so, I believe that your Lordships would be convinced. However, that would take time. In addition, I know that government supporters tend to wear earmuffs so that they are unable to hear good arguments, and that they are allowed to remove the earmuffs only when the Whips think that the arguments are bad. I believe that the arguments are extremely good. I therefore hope that they are listening.

The conclusion to which Neill came, on page 99 of the report, was:

"Tax relief by deduction at source should be introduced, limited to the basic rate, on donations of up to £500 a year to 'eligible', registered political parties".

I shall precis the argument. Having decided that donations of over £500 should be made public, and having decided that donations to British political parties should come only from people on the electoral register in this country, the Neill committee felt that the time had come to encourage small donors. In addition, concern was expressed about the involvement of people in the democratic process, a concern shared by all of us. I have previously said that political parties are about the most important voluntary organisations in the country, bar none, because they form the very basis of the political system. Without political parties, one cannot have democracy. They are, therefore, very important.

We saw in last week's by-elections, with very poor turn-outs, a reduced interest in the political process. I believe that that interest extends to members of political parties. It is not easy to retain members. One way of encouraging people to donate to political parties may be to explain to them that their donations will be treated in the same way as their charitable donations. Interestingly, inheritance tax is already treated in that way, from which political parties doubtless also benefit a little.

I want to make only one other point about the Neill committee. Reference was made in paragraph 6 of the report to evidence presented from Germany. In Germany, where a system of tax relief was introduced in 1974, the pattern of giving to political parties has changed in favour of many small donations and against large donations. I should have thought that the Government and the Opposition could agree on this. Is that not where we want to end up--with many more small donors to political parties? The German experience demonstrated that that was encouraged in relation to tax relief. Political parties know that there is an extra incentive to getting small donors. This is an important point. It would help the funding of political parties. It would perhaps help them to set up the bureaucracy needed by this Bill. A certain amount of money raised by political parties at the moment will be side-stepped into the setting up of procedures to carry out some of the burdens imposed by this Bill on the political parties. That seems to me a sensible way of helping.

I am told that tax relief would cost the Government about £4 million. It would be a good way of filling the gap that the Neil committee contended would be left by donors ceasing to make large donations to political parties. I believe that it would also underline to the public the importance of our political parties and the importance of supporting them, both in terms of canvassing and donating the money that political parties need. I beg to move.

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

My Lords, I have put my name to this amendment and I strongly support it. If a recent article in the House Magazine is correct, this Bill may well prove to be the noble Lord, Lord Mackay's, swan song on the Front Bench of his party. If that is correct, it will be a great loss to his party and, in view of his great skill in debate, to the whole House.

Noble Lords:

Hear, hear!

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

My Lords, everybody agrees that it would be preferable for political parties to have a large number of small donors rather than a small number of large donors. That is the direction that we all want to take. The requirement of disclosure of donations over £5,000, or, in some circumstances, over £1,000, may diminish the number of large donations. Probably within a few months, we shall see whether or not that is so. That requirement can be regarded as a stick but, in order to encourage smaller donations, we need also to provide a carrot. I agree with the Neill committee that the appropriate carrot is tax relief.

We were impressed in particular by the example of Canada, where by coincidence a general election is being held today. It has an excellent system of public support for political parties through both tax relief and the partial funding of campaign expenditure. In Canada, a gift to a federal party qualifies for up to 500 dollars' tax credit on a donation of 1,150 dollars. There are similar reliefs on donations to parties at the provincial level. Those seem to work well and are popular.

Our proposal would achieve the same result but by a different route. The Neill committee proposed a simple system similar to the well known gift aid system for charities, except that no credit would have been available to a taxpayer against the higher rate tax. The use of the gift aid method would have meant that the donation would have had no effect on PAYE and there would have been no need to inform employers or in any way publicise the fact that a gift had been made.

A number of arguments have been made against tax relief. One made at an earlier stage of the Bill was that the money would be better spent on schools and hospitals. That argument was never strong, given that the estimated cost was about £4 million against government expenditure in the region of £400 billion. The tax relief would have been equivalent to £1 in every £100,000 of government spending.

Other arguments put forward the view that it is unfair to those who, by making a donation to their party, cannot pass on the benefit of tax relief because their income is not high enough to bring them into the tax-paying bracket. There will be a few donors in that category; for instance, some students and some non-working partners of people in work. However, I believe that the number of people in those categories who would make donations would be small. In any event, I do not understand why it is a serious argument against tax relief. If people give the same amount to a party and that amount is worth a little less to the party sometimes, that is bad luck for the party but no handicap to the donor.

A more serious argument is that there is an imbalance between parties because some have more supporters who will be willing to give £500. However, there would undoubtedly be a substantial benefit to all parties. The Labour Party, in its evidence to the Neill committee, indicated that it had approximately 400,000 donors who gave an average of £20 each. That would enable it to recover about £2 million by way of tax relief.

The arguments in favour seem to be stronger. I have already spoken about the carrot issue: the proposal is an important incentive to parties to go out and raise more money from smaller donors rather than to concentrate on the large donors. However, there is an argument which goes well beyond that. I believe that it sends an important signal to members of the public that donations to political parties are good. That is already clearly recognised in the case of charities. Tax relief has always been given on charitable donations through the covenant system. In recent years, it has become more widespread because tax relief used to be available on gift-aid gifts of £250 or more and is now available on gift-aid gifts of any amount. That tax relief is given in order to recognise that the state regards the making of charitable donations as good and in the public interest.

Obviously, many people will not think it right to give their own money to political parties because they do not support any particular party. However, the proposal sends a necessary signal to the public that political parties are an essential part of the democratic system--that is clear and everyone agrees with it--and that people who make small donations to political parties in amounts which cannot influence anyone are serving the public interest and strengthening democracy in our country. That is why I believe that giving tax relief on donations of up to £500 is very much in the public interest.

Photo of Lord Neill of Bladen Lord Neill of Bladen Crossbench

My Lords, I support the amendment. I declare an interest as chairman of the Committee on Standards in Public Life, which produced the report underlying this legislation. At Second Reading I made the point I am now about to make. Apart from one other intervention, I have kept out of the debate on the Bill because I believe it to be a matter for your Lordships. The views of the committee have been made plain. However, I feel strongly about this issue.

Allowing tax relief to donors of small sums not exceeding £500 is a signal that public support is encouraged and invited for political parties. We have seen lamentable election turn-outs. In the past week's by-elections we saw turn-outs of between 27 and 29 per cent. Turn-out at elections to the European Parliament has been as low as 15 per cent.

The move, which is modest and will cost the Treasury little, will encourage people of relatively small means to contribute. The proposal is not one in favour of fat cats because the tax relief is on only £500. The arguments against it have appeared to me to be nothing other than arguments of expediency and convenience. The proposal is disliked by the Treasury which does not want to give up the sum. Under the old phrase, "Where there's a will, there's a way", there would not be the slightest difficulty about introducing the exemption and allowing it to operate when the Bill comes into force. I strongly support the amendment.

Photo of Baroness Fookes Baroness Fookes Conservative

My Lords, I rise strongly to support the amendment and the arguments adduced by the noble Lord and others. I want to make only one additional point. A school of thought suggests that parties might be the recipients of straight subsidies from the state. I do not favour that argument; I believe that such a course should be avoided as far as possible. I therefore believe that if we encourage ordinary voters by giving a tax relief, we shall avoid going down that road. I strongly support the amendment on that ground, in addition to the others which have been put forward.

Photo of Baroness Gould of Potternewton Baroness Gould of Potternewton Labour

My Lords, I want to examine the contradictory arguments which have been put forward in relation to the recommendation and the proposal for state funding. There is a clear distinction between the current funding to political parties--for example, the Short money, the Cranborne money or a freepost, which relate to identified, specific purposes--and the proposal before us which is for general state funding and state aid. I believe that that is where the contradiction lies.

The Select Committee on Home Affairs of another place identified the proposal for tax relief for donations as genuine state aid, and I believe that that is what we should debate. If the views of the Select Committee are taken as read--I shall be corrected if I am wrong, but I have not heard anybody yet deny it--the case for state aid must be made out. Such a case was made out by the Liberal Democrats, who have always been open and honest about their support for state aid, only at the very early stages of the debate. That matter has not been addressed by the Conservative Benches; rather, it has been studiously avoided, presumably because it contradicts their view held consistently that direct state funding should be opposed. One of their arguments is that such funding would reduce the dependence of parties on their own activities and the distinction between them and the electorate.

If the case for state funding is not made, I believe that the argument for this amendment has been inaccurately expressed. I look forward to hearing the noble Lord, Lord Mackay of Ardbrecknish, put forward a good argument, which we have not yet heard, in favour of direct state funding. If one is opposed to state funding, one has no option but to oppose the amendment. In making these observations, it is not that I do not believe that we should look for ways to enable smaller donations to be made and give a signal to the public that political parties are respectable and should be viewed as a very important part of our democratic society. That is not the issue. The issue before us is the amendment, the basis of which is state aid in its true form.

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative

My Lords, I had not intended to speak in this debate, but I strongly support the amendment. In view of the speech of the noble Baroness, surely there is a world of distinction between state funding which I have always understood meant subvention by the state to the parties, and what is called "state funding", which is this amendment, which, as I understand the term, is not. I am totally opposed to what I have always understood was state funding--I hope that it will never be introduced--and I entirely support this amendment which, to me, is not state funding at all.

Photo of Lord Peyton of Yeovil Lord Peyton of Yeovil Conservative 4:45 pm, 27th November 2000

My Lords, I support the amendment, although somewhat half-heartedly. During the many years--some may believe too many--that I have been in one or other House of Parliament I have lost affection and admiration for political party machines which have grown in size and power and have gone a long way towards forfeiture of public respect. I have said publicly that I regard political parties as rather sombre examples of nasty things of which there must be more than one.

Having said that, I regard the amendment as a preferable alternative to anything in the way of state subsidies for political parties. If there were subventions I would be very worried that they would become so substantial that it would be very difficult to give a hearing to small and respectable voices in the community. One of the most regrettable features of post-war Parliaments has been the disappearance, save in your Lordships' House, of the independent Cross-Bencher. One of my fears is that reform of your Lordships' House may well have the effect of "ironing out" the Cross Benches. I do not know anyone who is wiser or better when he or she wears a party hat than when the individual is bareheaded.

I regard with suspicion and fear any move to help political parties out of difficulties which are very much of their own making. The amendment that we are now debating at least has the merit that the support is influenced primarily by an individual. It is astonishing that over the years the power and influence of party machines through patronage and the Whips has been allowed to grow to the extent that it has. We should be very careful before we encourage that growth in any way.

Photo of Lord Molyneaux of Killead Lord Molyneaux of Killead Crossbench

My Lords, I support the amendment. I believe that that is also the view of parties in Northern Ireland, with the exception of one which naturally takes the view that with a gun you do not need gift aid. I am not sure that the public are fully aware of the existing state aid to parties in the form of Short money, free postage at elections and so on. As one who was involved in the electoral process at the other end of the building, I believe that the beneficial effect of the amendment is that it would involve a far greater number of people, who would not regard this as state aid but who would believe that they were stakeholders (if I may use that term) in the party to which they have made a contribution.

We all share the concern--our colleagues at the other end of the building feel more strongly about it than we do--about the steady erosion in the turn-out at elections, be they general elections, European elections or by-elections. We all welcome action, such at that proposed in the amendment, to arouse greater interest in democracy.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative

My Lords, at Second Reading the Minister described one of the purposes of this Bill as being to revive involvement in our democracy. As my noble friend said, there has been a diminution in the roots of democracy and an increase in the power of the centre. That process can be reversed in two ways, which are not mutually exclusive: first, one can encourage local political involvement and commitment; secondly, one can encourage local economic involvement and commitment. I believe that we should do both as widely as possible.

The amendment provides only a modest incentive for individuals to take an economic interest in the well-being of whatever political party they seek to support. To meet the needs of transparency, we must limit that support; and this amendment does so. As the noble Lord, Lord Goodhart, said, no one can argue that £500 per head is a sum likely to lead to difficulty in that regard.

On Report, the Minister referred to the dangers of the sum being increased. That argument did not convince me. The amendment will amend primary legislation. Therefore, any change to it will require further primary legislation. No Parliament can seek to bind its successors. The Bill can be no exception. But if a successor Parliament proposed to increase or decrease the sum before us, surely the contrary case would be fully ventilated.

During the lengthy stages of the Bill noble Lords have talked about the value and importance of broadening the base of the funding of our political parties. This modest measure will significantly assist in that. I hope my noble friend will press strongly his amendment.

Photo of Lord Marsh Lord Marsh Crossbench

My Lords, the noble Lord has said that in the future any opportunity for changes in the position will come before both Houses and be duly debated. I believe that that will be so. I believe also that every time it happens the limits will increase. The present situation is that none of the parties is really underfunded. They all mount large campaigns. What has happened is that the party machine is in many cases bigger than the politicians. I do not find that particularly attractive. In terms of principle it is highly undesirable. There is no difficulty in raising large sums of money. The problem--it is always the problem with money--is that every time people get it, they want to spend more than they have.

Photo of Lord McNally Lord McNally Liberal Democrat

My Lords, my noble friend Lord Goodhart spoke from the Neill committee Benches. It is my responsibility to say that on this occasion the Liberal Democrats will be supporting the Opposition in their amendment.

I disagree with the noble Lord, Lord Peyton. Parties in a democracy are thoroughly healthy. It is just nostalgia to go back to some non-existent day when we were all independents. If there was a golden age perhaps it was one when every boy and girl born alive in this world was either a little Conservative or a little Liberal. I have got that one wrong, but noble Lords will know what I mean.

Photo of Lord Peyton of Yeovil Lord Peyton of Yeovil Conservative

My Lords, I have no desire whatever to go back to that distant age, with or without the company of the noble Lord. What I am saying is that the political parties have grown too fat and obese. They need to change. I would not want to go back to anything. I hope the noble Lord will accept that.

Photo of Lord McNally Lord McNally Liberal Democrat

My Lords, I thoroughly accept that. I remember the days when the Conservative agents were seen as the brigade of guards of political agents. That was when there was, perhaps, a disparity in funding between the two parties. I should also put on record that I have always admired the party agents. They are a very important part of the system.

The debate today has echoed with sinners repenting, not least from the Conservative Benches. I hate to tell the noble Baroness, Lady Fookes, but this is state funding of political parties. If one is not willing to grit one's teeth and vote for it as such, then one had better vote with the Government.

As the noble Lord, Lord Neill, and my noble friend Lord Goodhart know, I believe that the Neill committee missed an open goal by not going straight for state funding of political parties. It would have made our politics a great deal healthier. But as a second best this proposal has attractions, especially if it is carried with the other amendment--it is another conversion by the Conservative Party--which suggests an overall cap of £15 million. The real danger arises when parties are set these very large sums which will not be raised by jumble sales and Christmas fetes, but by big donors.

What is attractive to us about the Bill is its pincer movement. On the one hand it caps expenditure so that parties do not have to go cap in hand to big donors. The amendment will bring in the other side of the pincer, a positive incentive to go and find individuals to participate in the political process and get tax relief for the parties. We support the amendment.

To the Conservatives I only say that there is a totally politically incorrect story of a young lady offered first £1 million and then £1 for her services. At the £1 offer she said, "What kind of girl do you think I am?" and the answer is, "Well, we know what you are. We are now haggling about the price". If the Conservatives support this amendment, they are supporting state funding of political parties and we really are just haggling about the sum.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, I have enjoyed this debate more than I thought I would. Not only has it given me a sense of deja vu, it has also been a debate riddled with contradiction. It seems to me that it is true that two opposites can agree.

I have listened to noble Lords from the two parties opposite. Although they disagree on where they come from, they agree on one thing; that is, they want tax relief. It is a question for those noble Lords on the Benches opposite who are concerned about direct state funding as to whether they can live with that and support the position of the noble Lord, Lord Mackay.

The noble Baroness, Lady Fookes, and the noble Lord, Lord Campbell of Alloway, do not like state funding. The noble Lord, Lord Peyton, is only half-heartedly in support of it. He made a coruscating attack on the growth of the central bureaucracy of political parties. I found much to agree with in what the noble Lord said. That was echoed very wisely by the noble Lord, Lord Marsh.

Where is the Conservative Party coming from? This is state funding by the back door, or, perhaps now the cat has been carefully let out of the bag by the noble Lord, Lord McNally, and rather nicely let out of the bag by the noble Lord, Lord Goodhart, it is clear that tax relief is state funding. Tax relief is a state-funded subsidy to political parties. If that is the case, how is it that noble Lords on the Opposition Benches can so enthusiastically support this? It is worth quoting the Conservative Party's evidence to the Neill committee. It said:

"We do not believe that a convincing case has been made for taxpayers' money to be directed towards the campaigning activities of political parties ... Forcing taxpayers to contribute to the cost of Party political activities of which they do not approve would be a very significant step. It could only be justified if it were believed that it would otherwise be impossible for political parties to operate effectively".

So is it the case that members of the Conservative Party have now come to the conclusion that their political life has reached such a strange and unfortunate pass that it is impossible for them to operate effectively as a political party? Is it because they are in a state of penury or is it that they have been converted by the full weight of the argument of the noble Lord, Lord McNally, on the issue? I am intrigued to see whether I am right or wrong.

Several good arguments have been raised in the debate in favour of tax relief. The encouragement of small donors is a very laudable point. But where was the compelling and telling evidence that, as a fruit of this particular move, there was going to be a mad rush of small donors to the Conservative Party, the Liberal Democrat Party, or, for that matter, the Labour Party? There was no compelling evidence given in that case. There was an argument made but no compelling evidence.

We heard too that one of the arguments against the proposal--the schools and hospitals argument--was riddled with falsehood. The noble Lord, Lord Goodhart, made that point. Yes, I take the point, and it is not an argument which I shall deploy against the proposal. But I make the following point because I think it is an interesting one. It is interesting to me that the Conservatives now place a premium on state funding by the back door while deciding as a party that they favour tax cuts. They put tax relief on political donations--the state funding of political parties--above the proper funding of public services, which their programme would commit the country to cutting.

It is no doubt the case that tax relief as a form of gift aid for charities has been most successful in the past. The noble Lord, Lord Goodhart, said--I may be misquoting him here--that it is like the state giving recognition to the important and valuable work of charities. That was certainly the case that was argued for gift aid tax relief by a succession of Conservative Party Chancellors. That is exactly what this is--it is gift aid to political parties. The Labour Party is opposed to that. We have been opposed to it in the past; we are opposed to it now; and we will no doubt be opposed to it in the future. The Tories need to be honest with us today and say that they accept that this is state funding for political parties. If they do not, I cannot understand the logic of their argument. Indeed, I have not understood the logic of their argument throughout our debates on the matter.

Photo of Lord Jacobs Lord Jacobs Liberal Democrat 5:00 pm, 27th November 2000

My Lords, before the Minister sits down, does he accept that there is general disapproval of large donors? For many years I have been a large donor to my political party. But we would welcome government encouragement to small donors. We are not in a privileged position. It is a position that we accept reluctantly. By bringing in support for small donors who give to political parties, the Government now have an opportunity to remove the undesirable effect of having a number of large donors in all our parties.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, I happen to believe in the value of small donors. I have personal knowledge of how the Labour Party has tried to develop its funding base over many years. We encourage members of our party to increase the level of their support through small donations. We have done that reasonably effectively. It is for the political parties to do that. We collect many millions of votes in general and local elections. We have that contact with the electorate. It is for us to go out to sell the benefits of participation in political parties and to secure those extra small donations. I agree with the noble Lord that an over-reliance on a small number of large donors is less desirable in the body politic. No doubt noble Lords on the Opposition Benches will want to reflect carefully on that point.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, before the intervention of the noble Lord, Lord Jacobs, the Minister left us with the thought that he could not understand the logic of the Opposition's position. I must say that for most of the proceedings on the Bill the Opposition have been unable to understand the Minister's logic. Perhaps he joins us just for a moment in being perplexed; we have been perplexed for hours.

I was interested in the Minister's arguments. When he goes back to the office perhaps he might think about sacking his researcher and his speech writer. They did not give him anything with which to address the main points in the amendment. The main points are those made in the Neill committee report. If the Minister wants to find out about state funding and how that relates to tax relief, I suggest that his researcher invites him to read Chapters 7 and 8 of the Neill committee report. The noble Lord might try to address some of the arguments in those chapters. He might try to address some of the arguments put forward by the noble Lords, Lord Neill and Lord Goodhart, both of whom sat on the committee. But the noble Lord simply refused to address those arguments. The noble Lord had his own tiny agenda and he was determined to pursue that.

If the noble Lord's researcher had drawn the noble Lord's attention to the evidence given to the Neill committee by the Conservative Party, he would have seen what is stated on page 241:

"Rather than call for state funding we would welcome the Committee's views about how more individuals could be encouraged to donate. We note that in some countries individuals are offered tax relief for political donations, elsewhere tax credits or matching grants are provided. We believe that the Committee should give serious consideration to the practicalities of these approaches in the context of the United Kingdom's voluntary system".

Half-way through his speech the noble Lord said that we could not point to anywhere in the world where what we propose takes place. I pointed to Canada--not because the point was original to me but because it was made in the Neill committee's report. However, I had forgotten that the noble Lord's researcher had not pointed out to him that he ought to read the Neill committee's report before he talks about these matters. In evidence given on 22nd April my noble friend Lord Parkinson explained where the Conservative Party was coming from.

The idea that what we propose is direct state funding--that was the argument of the noble Baroness, Lady Gould--does not hold water. The noble Baroness quoted evidence given some years ago by the Conservative Party to a House of Commons Select Committee. I quote what the noble Baroness quoted--I wrote it down. She referred to the,

"dependence of parties on their own activities".

That is the whole point. State funding implies that the parties just sit back and the Government give them money. But tax relief implies that the political parties have to go out and persuade people to join and to give those donations of under £500; and on the back of that they will get tax relief on it. It is very dependent on the activities of the political parties. If a political party decides to sit back and do absolutely nothing, it will not get very much help in the way of tax relief. Therefore, I do not think that the noble Baroness's argument is sustainable.

We have had an interesting debate. I thank the noble Lord, Lord Goodhart, for his support and for his kind words. This is a slightly nostalgic day. I now look forward, perhaps for the last time, to leading a defeat of the Government in the Lobbies. I hope that that can be achieved by the Liberal Democrats sticking with what was said by their colleagues in another place. I wish to test the opinion of the House.

On Question, Whether the said amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 199; Not-Contents, 136.

Division number 2

See full list of votes (From The Public Whip)

Resolved in the affirmative, and amendment agreed to accordingly.

Clause 70 [Special provision for Northern Ireland parties]:

[Amendments Nos. 6 to 12 not moved.]

Clause 73 [Notional campaign expenditure]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department 5:19 pm, 27th November 2000

moved Amendment No. 13

Page 58, line 18, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 76 [Restriction on payments in respect of campaign expenditure]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 14:

Page 60, line 15, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 86 [Notional controlled expenditure]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 15:

Page 68, line 26, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 91 [Restriction on payments in respect of controlled expenditure]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 16:

Page 71, line 30, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 101 [Referendums to which this Part applies]:

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative

moved Amendment No. 17:

Page 78, line 37, after ("Parliament") insert ("or pursuant to resolutions of both Houses of Parliament on the advice of the constitutional committee of the House of Lords that certain provisions of the Bill substantially affect the constitution").

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative

My Lords, I beg to move Amendment No. 17, which serves as a paving amendment to Amendment No. 18. With the leave of the House, I should like to speak to both amendments. The leave given on Report to withdraw Amendment No. 17 is acknowledged with gratitude and will not be misused today. The Official Report of 21st November, vol. 619, cols. 790 to 798, should be taken as read. Having explained the nature of the amendments, it is proposed to deal only with the objections raised on Report which went wide of the essential arguments, which did not seem to have been understood, and were not well conceived. Before coming to the objections, the only other matter is to acknowledge the origin of these amendments in Clause 3 of the Bill promoted by my noble friend Lord Cranborne.

Amendment No. 17 eases the restraint in Clause 101(2)(a) which inhibits any referendum triggered by Parliament despite the government. It also asserts the freedom of both Houses, if so advised under extant rules of procedure, to resolve that a pre-legislative referendum be conducted as proposed in Amendment No. 18 on the provisions of a Bill which, according to the advice of the constitutional committee of this House, would substantially affect the constitution.

As the provisions of Part VII of the Bill covering referendums are of generic application to all referendums which have to be held by or under an Act of Parliament, the Bill would have to be amended before enactment to afford a referendum as proposed. As regards the objections, the first was that there was a fundamental and principled objection to referendums. But referendums are already de facto a part of the unwritten constitution, as conceded by my noble friend Lord Mackay of Ardbrecknish.

It was also apparent from the debate on Report on these amendments and from the debate in Committee on the amendments tabled by the noble Lord, Lord Owen, that there is a very substantial body of well-informed opinion in favour of the principle derived from Clause 3 of the Bill promoted by my noble friend Lord Cranborne, as reflected in these amendments, albeit that, as yet, no trigger mechanism has been devised which has been found to be acceptable.

As regards that matter, my noble friend Lord Mackay of Ardbrecknish expressed some sympathy with the search for an acceptable trigger mechanism, as he put it,

"triggered by Parliament despite the government".--[Official Report, 21/11/00; col.796.]

I have now borrowed that concept to adopt as my own. My noble friend also rejected the mechanism proposed in these amendments, but gave no reasoned objection and suggested no alternative. However, he conceded that this was a problem which, "we shall have to address". Perhaps noble Lords may wish to address the problem today as the main justification for my tabling the amendment and taking up the time of the House.

Assuredly, this matter was not addressed by the noble Lord, Lord Bassam of Brighton, who appeared to confirm that it was by design that the referendum provisions of the Bill were of generic application and, by implication, that the advice of the constitutional committee or, indeed, its very existence, were more or less irrelevant to the implementation of the provisions of this Bill. However, with respect, as has happened again today, the noble Lord, Lord Bassam, did not address the essence of the argument.

The second objection took the form of the argument put forward by my noble friend Lord Norton of Louth, that the advice of the constitutional committee should precede the Bill rather than the resolution of both Houses under the amendments which advise either House and which each House would be at liberty to ignore. But that argument, which expresses a preference for pre-scrutiny of a Bill, with which I agree, goes nowhere near the principle of the argument in support of these amendments.

Lastly, there was the argument that these amendments would not be acceptable to another place. But another place would have total freedom as regards whether to entertain these amendments, subject to the resolution of your Lordships' House. It is not understood why, on any reasoned approach, these amendments should not be acceptable, or whether it is for us in this House to pre-empt the question as regards whether they might be acceptable to another place. For this is but an enabling measure, a provision which will act as a safeguard to be put at the disposal of Parliament and at the disposal of another place. It would add a new dimension of comity which could take us a little further along the road of safeguarding the unwritten constitution from unwelcome erosion by statute, and would do so on a case-by-case basis, without derogation from the delaying power under the Parliament Acts.

If another place were to resolve that a referendum should be held, it could impose conditions such as the form of the question to be put and the threshold and conduct of the referendum, which would be held by an independent body appointed by the Secretary of State rather than by the electoral commission. In neither House could the argument for or against a pre-legislative referendum be foreclosed upon, a matter which may well have been overlooked by my noble friend Lord Norton of Louth.

The scope of these amendments excludes Bills on which provision is being made for a referendum as well as interpretation or implementation of the Parliament Acts or any other enactments upon which it would be within the remit of the constitutional committee to advise this House, a remit which noble Lords may think could involve a reference by this House to consider and report on some acceptable trigger mechanism.

Photo of Viscount Cranborne Viscount Cranborne Conservative 5:30 pm, 27th November 2000

My Lords, I should like to thank my noble friend Lord Campbell of Alloway for his persistence in refashioning amendment after amendment at every stage during the passage of the Bill. I thank him for persisting in promoting an idea which he perhaps over-flatteringly ascribes to Clause 3 of my parliamentary government Bill, to which your Lordships kindly gave a Second Reading in the summer of 1999 and which, for understandable reasons, did not proceed to its later stages.

My noble friend has acknowledged that, like it or lump it, referendums are with us. I accept that my noble friends Lord Mackay of Ardbrecknish and Lord Norton of Louth deplore that fact. However, as the old admiral, Lord Charles Beresford, said to my maternal grandfather--I bowdlerise the quotation determinedly for your Lordships--if my aunt had been differently fashioned, she would have been my uncle! We are in a world in which referendums exist. We must address--as the Bill attempts to do, thoroughly unsatisfactorily--the rules for conducting them. Those rules ought to include a means for triggering them. I believe I am correct in saying--particularly if I understand my noble friend's reading of the Bill--that at present a referendum can only be triggered by the Government. The political complexion of a government does not matter, but in most cases in recent as well as ancient history the government of the day have commanded a majority in another place and the other place ultimately does what the government of the day decree; and in the end, thanks to the Parliament Acts, this House has to follow suit.

In an age in which referendums are increasingly held on what are by common consent big issues, if they command a "Yes" vote they give rise to decisions that are irreversible. So it is curious, when the government of the day would not undertake a referendum of that kind unless they thought they could win it--and indeed wanted to win it--that the decision should be entirely at their discretion. If they thought that they could not win the referendum, theoretically they could push an irreversible measure on a big issue through both Houses of Parliament without reference to the electorate, which in practical terms might never be able to get another crack at the decision. It would be taken over the heads of the electorate, often by a government whose supporting political party might be divided as to the outcome.

So we have to worry at this point. That is something that my noble friend has magnificently succeeded in doing during the passage of the Bill. Also, in the redrafted amendments that he has submitted, he has made an extremely interesting attempt--probably a successful one--to address the criticisms that were raised.

At previous stages, the noble Earl, Lord Russell, who is not in his place, and other noble Lords asked how we define a big constitutional question. The noble Earl rightly said that it cannot be defined. However, I suspect that your Lordships would find it difficult to define an elephant, but that when you saw one, you could recognise it. Whether it was an elephant would often depend on the amount of political steam that had been raised behind any issue at a given time.

There was another objection with which I did not wholly agree, but whose force I nevertheless recognise. In the present transitional state of this House, to suggest, as I originally did, that it should be the constitutional committee of this House alone which should decide whether a question should be submitted to a referendum, might be to incur the powerful disagreement of another place. As a result, however sensible the proposal, it would not be practical.

The beauty of my noble friend's Amendments Nos. 17 and 18 is that it is open to the constitutional committee of this House to suggest that a question should be submitted to a referendum and, if another place disagrees, for exactly the same rules to apply as when the two Houses disagree in another context altogether. With his usual ingenuity, my noble friend has found an extremely attractive way round the question.

I shall not detain the House any longer. My noble friend has performed a useful service for us. We have to consider how we can close what is presently an unclosed circle between Parliament and the electorate on the major issues of the day and when there is a big, irreversible question to be decided. In an age when we increasingly deplore the lack of involvement of the electorate as a whole in the great political questions of the day, the amendment seems to me at least sensible. It offers a way of addressing that lacuna, which has constantly been deplored during the passage of the Bill through this House. It would be curious if we did not at least take my noble friend's suggestion seriously. I would go so far as to suggest that your Lordships might consider supporting it. I have certainly not heard of a better suggestion during the course of the past few months.

Photo of Lord Peston Lord Peston Labour

My Lords, I, too, do not care much for referendums. However, I know that I am hopelessly out of date and it would be absurd for me to suggest that it is not a good path to go down. I believe in Parliament as the place to take decisions and convince the country. But that is an old man speaking, and I shall go no further on the point.

If we are to have referendums, there is one point on which I am not clear after listening to the noble Lord, Lord Campbell, and the noble Viscount, Lord Cranborne. Is the problem that the Government want a referendum and perhaps they should not have it; or is it that the Government do not want a referendum and perhaps they should have it? I am not clear as to what drives the argument.

Photo of Viscount Cranborne Viscount Cranborne Conservative

My Lords, I cannot speak for my noble friend; he is more than able to look after himself. My feeling is that it is the latter case, not the former, that presents the difficulty.

Photo of Lord Peston Lord Peston Labour

My Lords, as I understand it, the problem that we are asked to contemplate is that there is the need for a referendum and it is not going to take place. That slightly gets me off board as someone who does not like referendums. I am interested in regard to the question of the symmetry or asymmetry and I hope that my noble friend will reply on that point.

Secondly, as someone who does not fully understand these matters, I am interested to know what would be the role of the constitutional committee of this House were it not to be connected with referendums. In what other way would it be of use? I find it hard to believe that in most Bills that come before this House--whether an elephant or not--major constitutional issues arise. If they do, I never seem to spot them. I am intrigued to know what this body would do. It would certainly help most noble Lords if my noble friend the Minister could clarify what the committee will contribute if it does not contribute in a matter of this kind.

The noble Lord, Lord Campbell, is right to have raised this issue. Although it is his decision, I believe it would be wrong to divide the House on this matter. What is required at this stage is clarification on a very interesting point.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, the noble Lord, Lord Peston, is not alone--as, indeed, he would realise if he had listened to many of these debates--in having a suspicion of referendums. My suspicion is added to when it seems to me that we shall have only those referendums that the Government decide that they want us to have; that is very unfair. It is not symmetrical. If we continue to use referendums, there will at some time in the future be a reasonable and understandable demand for referendums to be held not just on issues on which the Government decide that they want us to have them, but also on issues on which they do not want them to be held. I realise that that is a difficult proposition for government to comprehend, but it is certainly the case. Moreover, I am not sure that that will be limited only to constitutional issues in the future. Therefore, I have some concerns that my noble friend's amendment may not really address the whole of the issue about who decides on referendums.

I believe that we have made some satisfactory progress on the question to be asked in referendums, but we need at some stage to make progress on who actually decides to have referendums. At present, it is entirely a matter for the Government. I know that people will say that it is Parliament; but, in reality, the Government have such a majority in the other place that they could hold referendums every other month on any issue they wish. I believe that to be wrong in principle, so I do not agree with them. I also think that it would be wrong if the Government alone could trigger them. As I say, my noble friend's amendment does not seem to address that wider issue, but it is certainly worthy of debate; indeed, it is as worthy of debate as the other issues raised during the passage of the Bill.

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, the Government also agree that the issue is worthy of debate. We are extremely grateful to the noble Lord, Lord Campbell of Alloway, for raising the issue and for his patience with the House on Tuesday of last week when his amendments were called very late in the evening. The noble Lord was good enough to move them then and, indeed, has been good enough to do so again today. We had a interesting debate last week and, if I may say so, an even more interesting debate this evening.

The opposition put forward last time--not least by the noble Lord, Lord Norton of Louth, in a most interesting speech, to which reference has been made today--referred to noble Lords' distaste for referendums. Of course a number of noble Lords on all sides expressed their distaste for referendums. It is not the same as saying that there should never be any referendums, but it is probably the same as saying that there should not be very many of them. That is one of the issues about which those who say that they are not very keen on referendums must think and talk. The crucial issue is how often referendums will be used, and not just whether they are ever used.

It was unfortunate that on Report these amendments did not receive the full debate that they merit. The Government's position remains approximately that which was set out late at night last Tuesday. We do not believe that these are issues upon which it is appropriate to legislate in the context of this Bill. That may be a view that is shared around the House. These are important issues, but perhaps not issues for this Bill. Why do I say that? The fact is that this legislation has sought, sometimes with more success than at others, to give effect to the recommendations of the Neill committee with regard to how referendums should fairly be conducted. The circumstances in which referendums are held, which, in some ways is the critical question, is an issue of an altogether different order and one that will certainly need to occupy more of your Lordships' time in due course. Indeed, the House will be grateful to the noble Viscount, Lord Cranborne, for, as he said, having raised the issue in the middle of last year.

The noble Lord, Lord Campbell of Alloway, has pleaded the case for arrangements that safeguard our constitution. The idea that matters of profound constitutional importance should be put to a referendum is no longer a novelty. The Royal Commission on the Reform of the House of Lords (the Wakeham commission) recommended the establishment of a sessional committee of this House to scrutinise public Bills in the light of their constitutional implications. We believe that to be a positive step.

My noble friend Lord Peston asked about the nature of the job of the House of Lords' constitutional committee. I can give the House a quotation from the commission. It is a short quotation, but one which sums up what the commission had in mind. The task of such a committee would be to examine the constitutional implications of all public Bills coming before the House and,

"to keep under review the operation of the 'constitution'".

That last point seems to me at least to be fairly wide in scope. I very much doubt that the committee will feel particularly restricted when it comes into being.

The noble Lord's amendment puts two and two together, but we are not convinced that making a statutory provision to the effect that the committee's advice on such matters should trigger Parliament's consideration of whether a referendum should be held would be desirable. We are not sure how far it would help such a committee in its work to know that each time it adjudicated on the implications of a Bill, its deliberations might be a prelude to a charged debate--because it would be charged--about the holding of a referendum.

However, in one important sense, the proposal before the House is correct. The decision on whether a referendum should be held would be one for Parliament as a whole to make. On a case-by-case basis Parliament would decide whether a particular constitutional reform warranted endorsement in a referendum. But, to that extent, it is not clear that this proposal would add very much to the present constitutional position. As matters stand, it is already open to Parliament to decide that a particular Bill should be subject to a referendum and to legislate accordingly. It may be thought that it is better to do so by means of legislation rather than by means of a resolution.

Of course, as the noble Lord, Lord Mackay, pointed out on the previous occasion--and, indeed, as has been said again this evening--the chances of Parliament coming to such a decision other than at the instigation of the government of the day are probably, in practice, slight. But we do not see anything in the noble Lord's proposals to make that chance very much greater, as the support of both Houses of Parliament is needed before a referendum can take place.

I turn now to the other aspects of the proposals--

Photo of Viscount Cranborne Viscount Cranborne Conservative 5:45 pm, 27th November 2000

My Lords, I am most grateful. I do not wish to detain either the noble Lord or the House for very long. However, in the light of what he has just said, will the noble Lord accept that the very fact of incorporating in the statute the opinion of the constitutional committee of this House would provide something of a hurdle for the Government and would, therefore, force them to take such matters more seriously than would otherwise be the case?

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, I would not go as far as that, but it would be something of a hurdle. But how much of a hurdle it would prove to be is a matter of doubt. Perhaps I may refer again to the important speech made by the noble Lord, Lord Norton of Louth, on Report. I, too, like other noble Lords, have had the advantage of reading the Hansard report of the debate. I hope that this will in some way explain why I believe that there is some doubt about how high a hurdle it would turn out to be. The noble Lord said:

"The other problem I mention at this stage and draw to the attention of my noble friend is that the House of Commons is likely to find the provision unacceptable, as it provides that resolutions have to follow advice from a committee of this House. For the reasons that have been advanced I do not doubt that the committee will be highly qualified to comment on the matter. But that is not at issue. It is a committee of one House that would trigger resolutions of both Houses".--[Official Report, 21/11/00; cols. 795-96.]

He mentioned that specifically--

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative

My Lords, I am very much obliged. I wonder whether I can help on this because we are going slightly off track. The question is not how high is the hurdle. It will not be very high when it starts. The whole concept is to develop a new dimension of comity--an enabling provision. Obviously my drafting would not be right; that is clear. I am not competent to draft this sort of provision. It would have to be drafted in consultation and there would need to be a willingness on the part of both Houses to recognise that something had to be done about the constitution. My noble friend did not quite understand what I was getting at.

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, perhaps the noble Lord is right to say that the noble Lord, Lord Norton of Louth, did not understand what he was getting at. However, in my experience the noble Lord, Lord Norton of Louth, is learned in these matters and normally understands these issues rather better than I.

Photo of Lord Norton of Louth Lord Norton of Louth Conservative

My Lords, as my name has been mentioned I had better speak to prove that I am present. My noble friend says that I misstate his position. I point out that that was based on a misstatement of what I said on Report; therefore, it is a misstatement based on a misstatement. I hope that I may help the noble Lord in one respect as I think that there is a point here which relates to what my noble friend Lord Cranborne said, particularly with regard to recognising an elephant when you see one.

Under my noble friend's amendment, the constitutional committee would merely give advice on whether a matter substantially affects the constitution. It would not necessarily give advice on whether a referendum should be held. That, I think, serves not to strengthen but to undermine the position of my noble friend. Merely to say that something substantially affects the constitution could include a number of issues on which no one would feel a referendum was necessary. Therefore, it would be easy for the Government to say that they do not think that this is something on which a referendum is necessary. As there would be several issues on which there would be general agreement that matters of that kind should not be put to a referendum, I do not think that the amendment would create a substantial hurdle.

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, I talk of other aspects of these--

Photo of Lord Peston Lord Peston Labour

My Lords, I know that my noble friend wants to get a move on, as does everyone else, but before he does so I refer to an earlier question that I expressed badly. I merely asked whether the constitutional committee could--this follows the remarks of the noble Lord, Lord Norton of Louth--say that this is an important matter for the constitution and that it thinks that the Government ought to consider holding a referendum. Would it be within the committee's powers to say that, or would it be ultra vires? That was my question. Could the committee at least recommend a referendum? Is the constitutional committee permitted to do that?

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, that is a much more difficult question than the first one that I thought the noble Lord had asked me. I do not know whether that would be beyond the committee's powers but I suspect that the constitutional committee will be a strong committee and will take a strong line. However, I am looking to the future.

I turn briefly to the other aspects of these amendments. We do not understand why the noble Lord considers that an independent body other than the electoral commission should administer a referendum held under these provisions. In the Bill, whatever its faults, we have gone to considerable lengths to secure the independence of the new electoral commission from the government of the day. The noble Lord's amendment appears to intend that the independent body which he has in mind would be appointed by the Secretary of State.

The debate about the proper place of referendums in our constitutional arrangements will run and run and rightly so. However, the Government do not think that matters of this order should be harnessed to proposals set out in the Bill. I do not believe that the noble Lord thinks so either. However, we and the House are grateful to him for having raised in this short debate matters of considerable importance, to which the House will no doubt return in future.

Photo of Lord Campbell of Alloway Lord Campbell of Alloway Conservative

My Lords, I thank all noble Lords for their contributions to this debate. I shall deal with one or two questions. No, it was not the concept that the constitutional committee should have the remit to recommend a referendum; its remit would be merely to advise on whether provisions in a Bill substantially affected the constitution. As to the hurdle, I am afraid that my noble friend Lord Norton of Louth still does not have it right, but I shall not pursue that on this occasion.

I take the point that this Bill, from a government point of view, is not the right vehicle for this amendment. But from anyone else's point of view, when you look at Clause 101 and you see that it is a generic application, and that it inhibits a referendum other than at the behest of government and inhibits Parliament, one is bound to put an amendment such as this down at all events at the very least to draw attention to the situation. That has certainly been done. As my noble friend Lord Cranborne said--I am most grateful to him for his help and support--this is something that we do have to worry about. It is something that we shall have to consider--it will not go away--as it is an important de facto part of our unwritten constitution.

I am not so sure that my attempt is sufficiently successful to be, so to speak, the end of the road and for me to seek to divide your Lordships' House and to take a formal opinion. I should prefer, if I may, again saying how much indebted I am to all noble Lords who have contributed, to ask leave to withdraw the amendment, but I may well wish to come back to this matter on the gracious Speech. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 18 not moved.]

Clause 112 [Notional referendum expenses]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 19:

Page 86, line 5, leave out ("less") and insert ("not more").

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

Clause 114 [Restriction on payments in respect of referendum expenses]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 20:

Page 86, line 43, leave out ("less") and insert ("not more").

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, this amendment has already been spoken to. I beg to move.

On Question, amendment agreed to.

Clause 125 [Restriction on publication etc. of promotional material by central and local government etc.]:

Photo of Lord Willoughby de Broke Lord Willoughby de Broke Conservative

moved Amendment No. 21:

Page 93, line 19, at end insert ("; or

(c) any institution of the European Union").

Photo of Lord Willoughby de Broke Lord Willoughby de Broke Conservative

My Lords, Amendments Nos. 21 and 44 are two modest but, I believe, necessary amendments. If they are put on the face of the Bill, as I hope noble Lords will accept that they should be, they will simply ensure that the EU institutions will not be tempted to interfere in a referendum--whether or not that concerns the euro--during the referendum period. I believe that that is not unreasonable.

Similar amendments were moved in Committee. The noble Lord, Lord Bassam, dismissed the fear that there was any need for this kind of amendment. He said:

"My view and the Government's view is that it would be entirely counter-productive for the commission to become embroiled in a referendum campaign on this issue".--[Official Report, 24/10/00; col. 195.]

He later stated:

"I do not believe that the European Commission wishes in any way, shape or form to become involved in any attempt to slant the debate in this country".--[Official Report, 24/10/00; col. 200.]

The Minister must have been working terribly hard on his brief over the past few years as over the past years and months we have all been subjected to a constant bombardment of lectures from members of the Commission and other Eurocrats on the dangers that we face if we miss the various trains, planes, boats and bicycles that are so dear to EU image-makers.

I give one or two examples that support the need for my amendment. The Commission--it is one of the prime movers--supports the European Movement with money. The European Movement supports Britain in Europe. They are bed fellows and share the same offices. That is a good way to transfer money direct from the Commission to Britain in Europe. Britain in Europe is likely to be one of the major players in any referendum on the euro. I note that the noble Lord, Lord Bassam, is a supporter of Britain in Europe. Perhaps he may care to clarify whether he is still a member of its council. The Commission also supports 24 Euro-info centres in the United Kingdom. These are funded in part by the Commission, in part by the Government and in part by other business interests. One of the activities of these Eurocentres is to distribute literature for the Association for the Monetary Union of Europe, a strongly pro-euro campaigning group.

The EU Trade Union Information Bulletin informs that it is supported by DG X--the trades union division of the Commission. I am afraid that that bulletin is unashamed propaganda. It claims that the euro will,

"reduce interest rates and mortgages and increase competition, reduce prices and create unemployment".

In other words, they are the usual fairy tales.

The contention that we do not need to have any safeguard in the Bill against interference by the European Commission or any other of the European institutions does not hold water. The Minister said in effect, "Don't worry, the Commission will be too clever or too wise to interfere". The Minister and some noble Lords may believe that but does the Commission? In order to be certain that the Commission and other institutions will not interfere, the safest move would be to put the provision on the face of the Bill. I beg to move.

Photo of Viscount Cranborne Viscount Cranborne Conservative 6:00 pm, 27th November 2000

My Lords, I support my noble friend's amendment. It has been the theme of critics of the Bill that the Government, quite rightly, have powerful opinions about which they are endeavouring to persuade the British public. A perception could grow that, despite the Government's natural desire to appear to conduct referendums under rules which are perceived to be and are fair, their opinions are driving them so strongly that they are blind to the fact that that is no longer so. There is more than a suspicion that the conditions under which two previous pre-legislative referendums on devolution in Scotland and Wales were held were rigged by the Government. This Bill is an opportunity to ensure that the Government are seen to make it more difficult to rig referendums.

My noble friend's amendment has a narrow application. But we know that very large sums of taxpayers' money, whatever their opinions, are paid through the EU budget into making propaganda on behalf of the European Union. If there were a universal consensus about the European Union and the desirability of a number of its activities and aspirations that might just be acceptable. But we are talking about probably the most important and most contentious political issue of the day. We know that the institutions of the European Union have a well-financed propaganda campaign, as my noble friend made clear. Large sums of taxpayers' money are poured into various lobbying groups. They may be groups employed directly by the European Union, like Mr Martin's organisation not far from this very building. Alternatively, those funds may be directed into supporting various campaigning groups, particularly in this country, of the kind to which my noble friend referred.

If the Government are to avoid reinforcing the impression that they are not averse to rigging the rules on referendums in their favour, they would be wise to make one little nod in the sceptics' directions--I do not use that term in the European sense but as regards sceptics of the Government's own intentions--by looking favourably on my noble friend's suggestion.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

My Lords, I support the amendment of the noble Lord, Lord Willoughby de Broke, and concur with the previous speaker. It would be in the Government's own interest to consider the amendment favourably. After all, we are being told by the Prime Minister and others that there is no intention of having a European superstate. What could better convince people that we shall not have a European superstate than to make it illegal for what some term to be the European superstate to intervene directly or indirectly in referendums in this country? There is no doubt that the European Commission finances the European Movement in many ways. Indeed, until 1994 our own Government were subsidising and making contributions to the European Movement. That fact was elicited by questions that I asked. It was no small sum--£320,000. Since the Government make it clear that no government agencies in this country should be permitted to intervene unfairly or on one side of any argument, that should surely be extended to what is becoming increasingly the government of Europe in Brussels.

If the Government want to make the European Union more acceptable to the people of this country, it would be in their interest to accept this modest amendment which would do no harm to the Bill.

Photo of Viscount Astor Viscount Astor Conservative

My Lords, in principle we support the amendment. It seems somewhat bizarre that in a referendum campaign no Minister of the Crown, government department, local authority or any body funded mainly from public funds is allowed to take part, whereas the Commission may do so. It would seem sensible to put the issue beyond doubt. Presumably the Government would not want interference in this way. It would be dangerous to tilt the argument.

Amendment No. 44 concerns donations. It seems a sensible amendment. I shall listen to what the Minister says. During the passage of the Bill, we have had debates about donations. We have been accused of seeking to have, for example, different rules for English companies than for foreign companies. Our argument did not prevail. However, this amendment makes the rules the same for everyone. There seems some sense in it.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, we have been round this part of the course several times. As I have said before, this is specifically not a Bill to make provision for the holding of a referendum on the euro. We do not want to add extraneous provisions designed with that referendum alone in mind. If a referendum on a particular issue warrants special rules, they can be provided for in the separate legislation that is needed to enable that referendum to be held.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

My Lords, my noble friend says that this is only about the euro.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, the noble Lord misheard me. I said specifically that the Bill is not about a referendum on the euro.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

My Lords, I was going to say that a government could have a change of heart and there could be a referendum on, for example, the EU charter of fundamental rights. The euro is not the only issue. A number of other issues connected with the European Union or in which the European Union might be interested could also be involved.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

Yes of course, my Lords. Specific measures would have to be taken to deal with such an eventuality. I have developed that point on other occasions--rather successfully, I thought--and I reiterate it this evening.

Amendment No. 21 would apply the restrictions on the publication of promotional material set out in Clause 125 to European Union institutions. As a result, the European Commission would be prevented from publishing promotional material about the euro in the 28 days before the date of the poll.

As I have previously made clear, any decision to join the euro will be for the British people alone. It would be wholly counter-productive for the Commission to become embroiled in a referendum campaign on the issue.

Photo of Lord Wedderburn of Charlton Lord Wedderburn of Charlton Labour

My Lords, my noble friend says that the Bill is not about the euro. All right, let us put the euro aside. If the Government felt that an issue such as whether qualified majority voting should apply to taxation across the board were so important that a referendum should be held on it, such a referendum would come within the Bill. Would it not be right to forbid the institutions of the Union to finance one side?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, clearly that has to be a matter for the Commission. I shall come to that.

The Commission knows that it would be wholly counter-productive for it to promote one side, as does the noble Lord, Lord Willoughby de Broke. In some ways, given his perspective on the issue, he might want the Commission to seek to get involved, because that would strengthen his line of argument, but I do not believe that it would want to do so. The commissioners are rational and sensible people who realise that the decision on such matters is for the people of our country.

Photo of Lord Marsh Lord Marsh Crossbench

My Lords, the European Union has an entire infrastructure in this country specifically designed to intervene--as some would see it--on just such an issue.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, I am aware that the European Union has an infrastructure, but I am sure that most of its work is directed towards explaining the institutions of the European Union. Given that successive governments have ensured that we are party to the European Union and have signed up to participation, it is logical that the Commission should continue its informational role.

The red herring of the Commission being involved in the Danish referendum has been much raised in the debate. In fact, it did not seek to engage in the debate in Denmark. The example of the Danish referendum ought to lay any lingering fears on the subject to rest.

Some realism is required on the Commission's intentions. That should go hand in hand with realism about what such prohibition could achieve. An explicit ban on referendum expenditure or the publication of referendum material by the institutions of the European Union would beg the question of how such a ban could be enforced. The territorial application of the Bill is confined to the United Kingdom. It could not bite on expenditure or the publication of material on the Continent. That argument has been deployed from the Conservative Front Bench on other aspects of the Bill. Given the provisions of the Protocol on the Privileges and Immunities of the European Union, the jurisdiction of our courts in relation to a breach of the provisions of this part of the Bill by an institution of the European Community would be doubtful.

Photo of Viscount Cranborne Viscount Cranborne Conservative 6:15 pm, 27th November 2000

My Lords, I hope that I have misunderstood the Minister. I wonder whether he could confirm what he has said. Is he saying that even if we wanted to stop the institutions of the European Union undertaking propaganda activities within the boundaries of this country, we could not do so because of the immunities that we have given them?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, that is the point that I have been making. I shall happily repeat it, or perhaps the noble Viscount--less happily from his point of view--can read it in Hansard. Those immunities have been given to the European institutions in various protocols in the past. Indeed, the noble Viscount was party to the government that provided those immunities.

The purpose of Amendment No. 44 is to prevent a permitted participant accepting a donation made by or on behalf of an institution of the European Union. The amendment is unnecessary for the simple reason that an institution of the European Union does not constitute a "permissible donor" as defined in Clause 54. The amendments have no place in a generic referendums Bill. I once again urge the noble Lord to withdraw the amendment.

Photo of Lord Willoughby de Broke Lord Willoughby de Broke Conservative

My Lords, before the Minister sits down, will he tell us first on what subject he envisages having a referendum if not on the euro? Secondly will he answer my question about whether he is on the council of the Britain in Europe movement?

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, I cannot predict from the Dispatch Box what issues may be the subject of any future referendum. Any Minister who did so would be very foolish.

I have never attended a meeting of the council of Britain in Europe. I thought that I had resigned from that body. If I have not done so, I shall make sure that I do so pretty sharply.

Photo of Lord Pearson of Rannoch Lord Pearson of Rannoch Conservative

My Lords, before the Minister sits down, in response to my noble friend Lord Cranborne, he said that certain immunities had been conveyed. As that may come as a shock to some of us, will he undertake to put in the Library a memorandum confirming exactly where we have given such immunity to the European Union? I am sure that that would not be very difficult and would help the debate.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, I am not an expert on such matters, but I think that the decision was made on matters relating to the single market.

Photo of Lord Willoughby de Broke Lord Willoughby de Broke Conservative

My Lords, I am grateful to all those who have spoken in this short debate, which has made the Government's position untenable. They have said that the issues do not need to be specified in the Bill but have given no serious argument why not. They have simply said that the European commissioners would behave themselves and would not interfere. That is putting hope over experience.

I am tempted to divide the House, but I know that your Lordships are anxious to get on, so I reluctantly beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Lord Marsh Lord Marsh Crossbench

moved Amendment No. 22:

Page 93, line 29, at end insert--

("(3A) Subject to subsection (3B), no material to which this section applies shall be distributed or displayed to the public free of charge during the referendum period by or on behalf of--

(a) any Minister of the Crown, government department or local authority;

(b) any other person or body whose expenses are defrayed wholly or mainly out of public funds or by any local authority; or

(c) the Post Office; unless such material--

(d) is factual and impartial; and

(e) has been circulated to permitted participants at least seven days before it is published.

(3B) Subsection (3A) does not apply to--

(a) material made available to persons in response to specific requests for information or to persons seeking access to it; or

(b) material published on web-sites.").

Photo of Lord Marsh Lord Marsh Crossbench

My Lords, the amendment is connected with the general issue raised by the previous amendment. I should make it clear that I have been involved with Business for Sterling since its inception and am president of its council. Having said that, one day I should be interested to hear privately why the noble Lord, Lord Bassam, left the council of Britain in Europe. I can think of many reasons why I would have done so, but that is his personal grief.

This amendment clearly has a relationship with the euro and the single currency because they will almost certainly be the subject of the next referendum. I believe, however, that it raises fundamental issues which go much wider than that. We have to recognise that over the years there will be other referendums. I cannot believe that there will not now that we have embarked upon that course. I believe that basically this amendment goes to the guts of the extent to which taxpayers' money and the full machinery of government may properly be used to influence the outcome of a referendum. It does not matter what the subject is; it so happens that the next one is likely to concern the single currency.

The argument is clearly set out in the report of the Committee on Standards in Public Life:

"We believe it is perfectly appropriate for the government of the day to state its views and for members of the Government to campaign vigorously during referendum campaigns, just as they do during general election campaigns. But we also believe that, just as in general election campaigns, neither taxpayers' money nor the permanent government machine--civil servants, official cars, the Government Information Service, and so forth--should be used to promote the interests of the Government side of the argument. In other words, referendum campaigns should be treated for these purposes in every way as though they were general election campaigns".

That is the issue. It is not a case of whether one does or does not join the single currency, or whether one likes or does not like the European Union. It is a question of the use of public moneys on such occasions.

The Government's view, which, as we would expect, the noble Lord spelt out clearly last time this matter was debated, was that that was simply not possible. They believe that the issues are so complicated that no one can tell the difference between party political propaganda and a civil service document. The noble Lord gave as an example the passage through Parliament of a Bill which would make possible provision for the referendum. He suggested that even the Explanatory Notes could be controversial.

With the greatest respect, I suspect that over the years most senior Ministers and senior civil servants have had long discussions and arguments about the dividing line between legitimate public expenditure and political activity which is clearly at the taxpayers' expense. They are two different things and, as the proverbial elephant (which seems to be making its presence felt in this debate) shows, you can always tell it when you see it. The position is similar to that of managers who deal with senior executives' expense claims. It is difficult to describe the exact point at which a claim becomes unacceptable, but the manager always knows when it is and the executive always knows when it is. I believe that the same analogy can apply in this case.

If one says that it cannot be done, that assumes that our Parliament is not sophisticated enough to accept the fact that, whichever party is in power, the Government have a right and a duty to govern whether or not a referendum or a general election is in process. I do not believe that any of the parties would have any sympathy if, having complained about the political activities of the Government, they were then to turn this into a political argy-bargy.

Many of us considered that, if a difficulty arose which appeared to be insuperable, the way round it would be to favour no limits on expenditure. Perhaps I may take as an example the euro. I suspect that the campaigns for both sides of that argument will not be short of money. However, the Government have rejected that and chosen a course which in my view is indefensible.

Briefly, in the six-month run-up to the poll, the political parties will be limited to expenditure of between £0.5 million and £5 million. But the Government will have no limit on the amount of public money that they can spend in support of their party's policy. That is the problem. The Government should not pretend that there is a dividing line between the Government and the Government's political party. They are one and the same, and in my view it is wrong when they use public moneys for a party aim.

Between £0.5 million and £5 million will be available for the parties involved. However, there will be no limit on the amount of public money that the Government can spend in support of their party's policy up to 28 days before the poll. But the parties outside the Government are to be limited to a period of six months. That involves two totally different sets of rules and is based on the argument that we could not conceivably draw a distinction between public expenditure used for party ends and the proper activity of a political party.

Of course, there are strong arguments in favour of what other people will see as the blatant misuse of taxpayers' money for party benefits. President Mugabe would have no problem with that. He would wonder what the debate was about. After all, that is one of the perks of being in office. However, that is not how we have traditionally done things in this country. Senior Minister Lee Kuan Yew, for whom I have great respect, would probably argue that Singapore would never have achieved the success that it has if it had adopted our Westminster traditions. When it comes to public expenditure, there is a rigid distinction between party and government.

As I said at the beginning, I believe that this is an issue of fundamental principle and importance. I do not believe that it is confined to a single party. It has ramifications which go much wider than that. As referendums develop, what is now seen as a disputed process will become accepted and improved upon. In that connection, I am told that Article 10 of the convention on human rights includes,

"the right ... to receive and impart information and ideas without interference by public authority".

It is public knowledge that Business for Sterling has taken legal advice on this issue. The advice that I have seen is that, although the Act permits even-handed regulation of referendums, controls which give an advantage to one side are open to challenge. If a solution exists through the courts, we shall pursue it because I do not believe that the issue should simply be allowed to die.

I can understand why any Opposition may well believe that, when it takes up the reins of government, this may turn out to be a useful piece of legislation. I believe that that would be false and this is a very dangerous precedent which should be resisted. The provisions in the Bill introduce a new and highly undesirable development in the use of public money for political purposes. The Bill as drafted legitimises a gross abuse of the freedom of future governments to access public funds for party political uses. We may be able to test the matter in the courts or discuss it further. I do not believe that it is enough simply to say that this is an argument about the Eurosceptics. It is an argument about the British constitution and how we run public affairs. I beg to move.

Photo of Lord Avebury Lord Avebury Liberal Democrat

My Lords, will the noble Lord explain why he believes that it is legitimate for governments to publish material on websites that is not factual or impartial? The noble Lord did not deal with the proposed subsection (3)(b) in the amendment and I am rather mystified by it.

Photo of Lord Marsh Lord Marsh Crossbench 6:30 pm, 27th November 2000

My Lords, I felt some sympathy for the noble Lord, Lord Bassam, who has undergone very long hours on this subject, as have other Members of the House. Therefore, I tried to keep my speech as simple as possible.

The reason for those exemptions is precisely because we believe that you cannot stop a government carrying out their activities. If they have a website, that gives government information. I give an example. It is not legitimate to send out 800,000 letters to British businessmen, 75 per cent of whom do not trade outside the country in any event, trying to persuade them that they should be supporters of a single currency.

So, yes, Ministers will make speeches which will receive publicity. Ministers will no doubt issue White Papers which will happen to appear in the course of the events. Those things will happen. The idea that Ministers cannot express their governmental views and carry out their governmental jobs is nonsense.

Photo of Viscount Cranborne Viscount Cranborne Conservative

My Lords, I support the amendment tabled by the noble Lord, Lord Marsh. Anyone who has been a Minister anywhere near the centre of government in the run-up to a general election will know how assiduously civil servants very often attempt the impossible: to differentiate between what is a party political point in the way of information and what is legitimate information of the kind which the noble Lord, Lord Marsh, has been trying to define for the noble Lord, Lord Avebury.

We know how difficult that is. Indeed, it has been one of the more difficult tasks which the Government have had to address during the course of the passage of the Bill. My noble friend Lord Mackay of Ardbrecknish in particular has acknowledged that the Government have not only a right but a duty to give factual information.

Equally, I am sure that the Government would acknowledge that in the run-up to a general election campaign, over the years, it has been thought to be self-evidently right that government Ministers should try to wear two hats: the hat of a government Minister and the hat of a party politician. We know how difficult that is, but we know also how the convention has grown up in the run-up to general election campaigns--and there are many noble Lords all round this House who have experienced this, as I have--that that attempt is made and, to a surprising extent, it is successfully made. Difficult judgments are drawn in the run-up to a general election campaign as well as during the campaign itself because it is acknowledged that, by convention, we must be extra careful in the run-up to a general election campaign, even though the rules are not explicit. It is part of belonging to the unwritten constitutional club which still works and to which I know the Government still subscribe, at least in that respect.

If that is true of a general election campaign, should it not be true also of a referendum campaign? In many ways it should be easier in relation to a referendum campaign which, by definition, addresses a much simpler set of questions. If I had my way it would only ever address one question because we should be talking only about post-legislative referendums in which case it should be asked whether the people want the legislation and want it implemented--yes or no. That should overcome all the difficulties of definition which have so bedevilled the passage of this Bill.

But let us not become side-tracked. Here we have a much simpler definition than we should have if we were facing a general election campaign with the whole gamut of policy issues which are raised under those circumstances. So it does not seem to me to be more difficult under those circumstances; it seems to me to be simpler. If it is simpler, I argue also that it is more important because, almost by definition, the very substantial issues on which the country will be asked to decide in referendums are quite likely to be even more important than the issues of a general election campaign. Whether or not we join the euro seems a matter of huge importance whichever view one takes. What makes it all the more important is that whatever may be the theory, if we were to answer "yes" to that question, to all intents and purposes it would be a "yes" which is irreversible.

The same is true of the referendum question in relation to devolution for Scotland and Wales, particularly for Scotland. However much the referendum was rigged at the time, I do not believe that anyone would argue that the people of Scotland would not have voted "yes" under any circumstances. They clearly would have done. Nevertheless, it is irreversible. This is a matter of transcendental importance which will endure beyond the next general election and the election after that.

Therefore, is it not all the more important that referendums of the kind we are discussing should be seen to be conducted fairly, without unfair practices, by a government than it is in relation to general elections for which practices are already in place? It seems to me so obvious that that is right that I am surprised that it even needs discussing, although experience of the passage of this Bill has proved to us that it does.

The noble Lord, Lord Marsh, made the most telling point of all when he referred to bringing the matter into the courts. We know that one of the agreeable aspects of our present electoral practices is that, more or less all the time, they produce a definite and unquestioned result. We do not have to undergo the agonies which the United States is undergoing at present. Why is that? It is because over the years we have developed electoral law and practice which may not be perfect but which is universally accepted as being sensible.

Again, there are many in your Lordships' House who have had to endure their own counts while waiting to see whether or not they have been elected to another place. Those noble Lords will know the practice of scrutinising votes as to whether they are valid or not. We know who has the authority to decide on those matters and we accept that authority.

As soon as it looks as though the rules are being skewed in one direction or another, that certainty and the stability which flows from it are undermined. I earnestly beseech the Government to think again not only in relation to this amendment but also in relation to many other provisions of this Bill. By undermining that confidence, they will be undermining the stability of our system altogether. That is why this amendment, and others like it, which we have endeavoured to draw to the Government's attention during the passage of the Bill, are so important.

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

My Lords, I rise to deal with one serious defect in this amendment. The Neill committee was extremely anxious that umbrella groups should be formed and, to encourage them, recommended that they should be entitled to a free mailshot. That recommendation was accepted by the Government and is now dealt with in Clause 110.

The effect of including the Post Office in the proposed subsection (3)(a) in the amendment moved by the noble Lord, Lord Marsh, would make it impossible to provide a free mailshot for umbrella groups since the material to be distributed would plainly fall within Clause 125(1). That being so, it seems to me that that is a serious defect. I wonder whether it is a matter which the noble Lord has considered.

Photo of Lord Marsh Lord Marsh Crossbench

My Lords, that issue has been raised. The problem regarding the Post Office has received very wide publicity. It is a public body embarking on a propaganda campaign of its own. That is not comparable with a government issuing a free postage system to all the parties which will have different views and circulating those views as a post office. It is the job of the Post Office to deliver letters; it is not the job of the Post Office to campaign for political parties.

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

My Lords, this will stop the Post Office from doing that because the Post Office will be distributing material free of charge, even if it comes from someone else.

Photo of Lord Marsh Lord Marsh Crossbench

My Lords, "to distribute" can be taken as physically pushing material through letterboxes, with which we all agree, or being responsible for other people who push it through letterboxes.

Photo of Viscount Astor Viscount Astor Conservative

My Lords, all participants in a referendum would want a clear result that is accepted by all who have participated so that the issue is not subject to endless further debate or question. The Government have introduced Clause 104 which enables the question to be looked at and it promotes fairness, which we welcome. That will help the conduct of referendums in the future.

In regard to spending, this Bill is slanted in favour of the Government in relation to referendums and it is slanted in favour of outside parties, as we heard earlier, effecting a referendum. The noble Lord, Lord Marsh, has raised an issue of principle which is important. It must be in the Government's interest to remove all doubt about the conduct of referendums so that all sides appreciate and understand the situation.

My noble friend Lord Cranborne talked about elections and how the system works in the Civil Service. In elections the system works well. There is a clear divide between what is political propaganda--the words that the noble Lord, Lord Marsh, used--and what comprise Civil Service documents. Part of the reason that it works is that the Civil Service knows that its political masters may change shortly, so civil servants are on their best behaviour. However, in referendums the situation is rather different as they know that they will have the same political masters afterwards. It is not for me to cast any aspersions on the Civil Service, but looking at what has been produced in the life of this Government, I believe that the only things that have not been political propaganda have been the statistical reports. The only thing that was not propaganda, for example, in the magazine promoted by the Government on women was the date. As far as I am concerned, the whole of that magazine was propaganda.

In looking at the amendment of the noble Lord, Lord Marsh, I was concerned about who would define the words "factual and impartial". I agree with him that when you come across it, you can recognise it. It is the "heffalump" argument: you cannot describe one but when you see one you recognise it. It would be helpful if the noble Lord, Lord Marsh, could say how that phrase would be defined. The amendment raises issues of great importance and we shall listen carefully to the Minister on this subject.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, on this amendment we return to the role of government during a referendum campaign. Having listened carefully to what the noble Lord, Lord Marsh, has said, he is obviously fearful of the scales in a referendum on the euro being weighed against the "No" campaign by a deluge of government misinformation, as he puts it. On Report he referred to the fact that,

"the Government have already spent more than £15 million on 'information', including a direct mailshot to 800,000 businesses".--[Official Report, 22/11/00; col. 895.]

He repeated that this evening. I remind the noble Lord that the Government's communication campaign on the euro is not aimed at promoting the euro, but at ensuring that UK small and medium-sized enterprises are aware of the implications of the single currency and have the information that they need to prepare. No doubt, if we were to revert to the groat we would do exactly the same in the interests of ensuring that small, large and medium-sized enterprises knew what the reintroduction of the groat may involve.

Photo of Lord Marsh Lord Marsh Crossbench

My Lords, before the Minister goes on too much about the euro, I cut what I said as short as I could, but I did test the patience of the House by spending some time saying quite specifically that I thought that this went far wider than simply a campaign on the euro.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office 6:45 pm, 27th November 2000

My Lords, it seemed to me that the primary interest of the noble Lord was in promoting the position of Business for Sterling. It seems that this whole debate is overshadowed by the interest--some may say the obsession--that some Members of your Lordships' House have about a referendum at some future point on the euro.

It is worth putting on the record and pointing out to the noble Lord the longstanding conventions governing the work of the Government Information Service. In presenting government policy and providing publicity and advertising material during a referendum period, these conventions require of the GIS that its activities are relevant to government responsibilities; objective and explanatory, not tendentious or polemical; not open to misrepresentation as being party political; and conducted in an economic and appropriate way, having regard to the need to be able to justify the costs as expenditure of public funds.

No doubt all governments seek to ensure that those fundamental principles and rules are carefully adhered to. No doubt previous Conservative governments adhered precisely to that when explaining the implications of the single European market; no doubt they provided the same level of support so that businesses could well understand what the single market meant to them.

Of course, there will always be debates about whether material can be wholly factual and impartial. That is why the Neill committee recommended that the government of the day in future referendums should, as a government, remain neutral and should not distribute at public expense literature, even purportedly "factual" literature, setting out or otherwise promoting their case. The 28-day purdah period provided for in Clause 125 is our response to that recommendation.

I remind the House of what the Neill committee has made of that response. In its comments on the White Paper and draft Bill, the Committee said:

"We welcome your proposals on the part which should be played by the government in referendum campaigns, and your recognition of the importance of ensuring that there is a period immediately prior to a referendum in which, as you say, 'the government of the day ... stands aside and the campaigning is left to the political parties and other organisations'".

That message was reinforced by one of the members of the Neill committee, John MacGregor, at Second Reading in another place when he said:

"I am glad that the Bill includes the 28-day moratorium, which meets our point".--[Official Report, Commons, 10/1/00; col. 67.]

So, Clause 125, as it stands, fully addresses the recommendation of the Neill committee and as such there is no case for this amendment.

The noble Lord strayed from his amendment to raise the issue of the referendum spending limits. As there were no amendments down on this matter for Third Reading, I had rather hoped that the issue had been settled once and for all, but I see from the press that Business for Sterling, of which the noble Lord, Lord Marsh, is a member, is threatening to challenge this part of the Bill under the Human Rights Act.

The Government are satisfied that the referendum spending limits are entirely compatible with the European Convention on Human Rights. In the context of elections, in the Bowman judgment the European Court of Human Rights accepted that a restriction on the amount that could be spent during a campaign is not in itself a breach of Article 10 of the convention. The court recognised that there may be a conflict between the right to freedom of expression and the need to ensure free expression of the opinion of the people and that it may be necessary in a period preceding a poll to place certain restrictions on freedom of expression.

In support of the spending limits, for which we have previously argued, I refer the noble Lord also to a passage in a judgment by the Canadian Supreme Court in the case of Libman v. Quebec 1997.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, I had not actually noticed an amendment about spending limits. I thought we had resolved that matter. So why is the Minister addressing the issue of spending limits? I thought I had been defeated on that.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, the noble Lord is right, but I was seeking to address the issue of inequity between the "No" and the "Yes" campaigns.

Photo of Lord Marsh Lord Marsh Crossbench

My Lords, I would be grateful if the Minister would take no notice of the noble Lord, Lord Mackay, and continue. He is actually saving us a fortune!

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, I am most grateful for that amusing intervention.

The court noted that:

"In its egalitarian aspect the Act [was] intended to prevent the referendum debate being dominated by the most affluent members of society. At the same time, the Act [promoted] an informed vote by ensuring that some points of view are not buried by others. This highly laudable objective, intended to ensure fairness of the referendum on a question of public interest, [was] of pressing and substantial importance in a democratic society".

Both the European Court and the Canadian Supreme Court acknowledged the need for spending limits.

Photo of Lord Wedderburn of Charlton Lord Wedderburn of Charlton Labour

My Lords, before my noble friend sits down, he is surely aware of the enormous difference between the European Convention on Human Rights and the Canadian charter. He cannot quote cases on the Canadian charter as though they are related to the same wording as the convention.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, of course; I take the point of my noble friend. But there is a bearing on this issue in trying to develop a general point.

The European Court and the Canadian Supreme Court acknowledged the need for spending limits. We believe that the limits set out in the Bill are fair and equitable and will stand up to scrutiny in any court. We do not believe that this amendment is appropriate in the way in which it is argued. Therefore I invite the noble Lord, Lord Marsh, to withdraw Amendment No. 22.

Photo of Lord Marsh Lord Marsh Crossbench

My Lords, first, I thank all those who took part in this debate. The Minister raised some interesting subjects. I could not resist rising because, with the greatest respect to some other Members of his Front Bench, lawyers' fees are colossal and the cases produced by his department are greatly appreciated.

But my basic argument remains; that is, that this is an issue of principle. It is a fundamental issue and, since so many Members of your Lordships' Chamber have stayed behind, we should test the opinion of the House.

On Question, Whether the said amendment (No. 22) shall be agreed to?

Their Lordships divided: Contents, 134; Not-Contents, 184.

Division number 3

See full list of votes (From The Public Whip)

Resolved in the negative, and amendment disagreed to accordingly.

Clause 134 [Meaning of "election expenses"]:

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office 7:02 pm, 27th November 2000

moved Amendment No. 23:

Page 101, line 49, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 162 [Interpretation: exempt trust donations]:

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

moved Amendment No. 24:

Page 125, line 23, leave out (", other than one falling within subsection (5)").

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, this group of amendments deals with the question of trusts. The original drafting of the Bill prohibited donations from all trusts, whether blind trusts or not. The Government recognised that that would be wrong and that the original wording of the Bill did not reflect the views of the Neill committee. These amendments were therefore tabled. However, I believe that there are some serious, and almost certainly unintended, defects in the amendments on exempt trusts, which came into the Bill on Report and are now in Clause 162.

The chosen cut-off date of 27th July 1999 is the date on which the White Paper was published. That date is used for the establishment of exempt trusts which do not need to prove that the property was placed in trust by a permissible donor. However, what would be the position in respect of a trust established between that date and the commencement date of Part IV? Would such a trust, established perfectly legitimately by a permissible donor, fall within the definition in Clause 162(2) or (3)? If not, would a party therefore be prohibited from accepting any donation from such a trust? I cannot believe that this is the intention of the drafting. It is a complicated matter. I have therefore written to the Minister requesting a definitive reply.

The drafting of Clause 162(2)(b) and (c) is also problematic. This prevents a pre-27th July 1999 trust (to which I shall refer as an old trust) to which after that date any property has been added, or which has had its terms varied, from donating to a party. Given that these amendments were tabled only two weeks ago, I do not believe that that is fair or just. Perfectly legitimate open trusts established before July 1999 may well have had their terms varied, or property added to them, after that time.

Paragraph 3.34 of the White Paper makes reference only to prohibiting donations from blind trusts. Therefore, it cannot have been expected by any trustee or person wanting to donate to or establish an open trust after the publication of the White Paper that any variation of terms or further donations that they may have made to any open trust would render that trust unable to make donations to political parties.

In addition, the Government have said that the provisions preventing donations from old trusts to which property has been transferred after 27th July 1999 are necessary to stop such trusts being used to channel impermissible donations in the future. But what is wrong with allowing a permissible donor to continue to put money into an old trust that he may have established either between July 1999 and today or in the future? That is especially true of donations made to old trusts by permissible donors that may have been made between July 1999 and the present. While a permissible donor may now realise that continuing to donate to an old trust would render the trust unable to donate, and could therefore perhaps set up a new trust, this would not have been the case until the Government tabled their amendments two weeks ago. Therefore, things done by permissible donors and trustees before they were aware of the government amendments tabled last week could mean that perfectly legitimate open trusts were nullified.

To remedy the situation, I have tabled a number of amendments to Clause 162(2) to change the cut-off dates in respect of the creation of old trusts, the transfer of property to them and the variation of their terms. They propose that the cut-off dates in each of these cases should be changed either to the date on which the Bill receives Royal Assent, or the date on which the clause comes into force. While the latter would be preferable, our view is that the former is the least that should be done.

Finally, as I indicated at Report stage, it seems preferable that Clause 162(5) should be taken out altogether. It prohibits donations from any trust, whether old or new, where a trustee exercises any discretion in making the donation. I believe that this would have almost exactly the same effect as the original wording of the Bill; it would prohibit donations from any trust. As we have pointed out, trustees may have a discretion as to whether to give capital, rather than interest, to beneficiaries. That would be a discretion. They would not be allowed to donate.

In all trusts a degree of discretion is given to trustees. A trust may have been established in very broad terms for the benefit of the conservative cause, the socialist cause or the liberal cause. Even if trusts were set up to benefit the Conservative Party, the Labour Party or the Liberal Party, the trustees may have a discretion as to whether or not the money should be donated centrally, to local constituencies, or even regionally. Provided trustees comply with the terms of trust deeds and provided the source of donations to the trust is declared, as required under the provisions of the Bill, in the case of all trusts, or the source of permissible donors in the case of new trusts, I do not understand why donations from such discretionary trusts should be prohibited; nor do I believe that that is the intention of the Government or of the Neill committee. However, that is the effect of the drafting.

This is a complex matter. I wrote to the Minister on Friday, outlining my reasons for tabling the amendment. I hope that he and his experts have had an opportunity to consider the matter with a view to ensuring that the Bill represents the intentions of the Neill committee and those of the Government, so that donations from open trusts, which are legitimately set up, will continue to flow to political parties. I beg to move.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, with his customary efficiency, the noble Lord has outlined a number of arguments. I shall try to answer some of the points. If I do not answer them as thoroughly as he would like, I hope that they can be dealt with in later correspondence.

At Report stage, we amended the Bill to allow donations to be received from trusts in certain circumstances, if they were established prior to the date of the publication of the White Paper for this Bill. This concession can be found in Clause 162(2). It was designed to cater for only one circumstance--that of a trust set up so long ago that it would now be difficult, or perhaps impossible, to establish with certainty that the person who had donated money to the trust was a permissible donor. The concession was not designed to allow an old trust to be used as a mere shell for a new set of transactions which would not comply with the regular conditions for donations from trusts as set out in Clause 162(3).

Amendments Nos. 25 and 26 would alter the whole scope of Clause 162(2) so that instead of making special consideration for old trusts it would make special provisions for ones established after Royal Assent or the coming into force of this clause. Old trusts would then have to comply with subsection (3). We doubt whether that was the noble Lord's intention in tabling the amendments. In any event, it would destroy the purpose of subsection (2) and others in the House would clearly be opposed to that.

If the proposed amendments were made, first, it would be possible for a donation to come from a trust established by a person who was not a permissible donor. That is inherent in subsection (2) as it stands. Secondly, it would be possible for the trust to be a discretionary trust; that is, one which allows the trustee to choose who should be the recipient. Thirdly, it would be possible for the trust to have been varied after proposals for legislation in this area were published on 27th July 1999. Fourthly, it would be possible for money to have been transferred to the trust after that date. Again, there would be no requirement that the money must have come from a permissible donor. Nor would there be any limit on how large the transfer might have been compared with the money that was originally put into the trust. The result of Amendment No. 29 would have been to allow additional funds to have been put into an old trust, or to be put into it in the future, without any limit of time, provided that the additional funds came from a permissible donor.

The Government were persuaded to allow a limited exemption for old trusts and we want to be as reasonable as possible about it. We have moved a long way since the draft Bill published with the White Paper, but I cannot commend to the House a set of arrangements which would simply open the door to a wholesale evasion of the requirements which we are now setting for the future. Indeed, if the amendments were made, we would no longer feel able to commend subsection (2) to Parliament.

We do not believe that a case has been adequately made out on this issue and we are not certain of the trusts which the noble Lord has in mind. However, we shall of course pay close attention to the points that the noble Lord raised in his recent correspondence on this technical matter. I hope that he will feel able to withdraw his amendment. I believe that he should do so and that we have the balance about right in regard to trusts.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, I shall not labour the point because I had hoped that we could agree and that would have been that. The other place will have to examine the issue when it sees the amendments that we put into the Bill on Report. I shall read with care the points that the Minister made and any letter he decides to send to me after he has read what he said. The situation could be worrying because some trusts which thought they were acting properly could be faced with the imposition of retrospective legislation as a result of changes made at the Report stage. I shall leave it at that and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 25 to 32 not moved.]

Schedule 1 [The Electoral Commission]:

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords 7:15 pm, 27th November 2000

moved Amendment No. 33:

Page 131, line 32, leave out sub-paragraph (2) and insert--

("(2) A person may not be appointed--

(a) as chief executive of the Commission if he is a person who (by virtue of section 3(4)(a) to (d)) may not be appointed as an Electoral Commissioner; or

(b) as a member of the staff of the Commission if he is a person who (by virtue of section 3(4)(b) to (d)) may not be appointed as an Electoral Commissioner.").

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, during the Committee and Report stages we had many debates about the staff of the electoral commission and how political they could be. The Government and I disagreed on a number of occasions but have now concluded that a chief executive should not be a member of a political party. I still have reservations about any of the staff being members of a political party and wonder whether the Government, having accepted my argument about the chief executive, believe that I am right about all the staff.

My amendment proposes that the chief executive cannot be a member of a political party and the Government's amendment does the same. By the nature of things, I am sure that the noble Lord, Lord Bach, will tell me that my amendment is not properly drafted and that his is. Whichever is the case, I am grateful that my argument has been heard in that regard. I beg to move.

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, the noble Lord's arguments have been heard. His amendment carried forward the debate we had in Committee and on Report about the qualification and disqualification for being a commissioner or a member of the staff of the commission. The effect of the amendment is that a person cannot be appointed as chief executive of the commission if he is a member of a political party.

We had our doubts about that because of the concern that the right to be a member of a party should not be abridged unless absolutely necessary. However, we now all agree because we believe that there is not sufficient reason to refuse the amendment. It seems right that the chief executive of the commission, like the commissioners, should not be associated with any party.

The noble Lord anticipated my reply. We tabled our Amendment No. 34 for simple technical drafting reasons. We believe that it has the same effect as that intended in the Opposition's amendment.

The Government's Amendment No. 35 is a consequential amendment. If it is right to require the chief executive to resign any membership of a party upon appointment, it must also be right to require him or her not to resume or take up membership of a party after appointment. Amendment No. 35 is designed to plug that small gap. We believe that although views on both sides have ebbed and flowed during the long course of the Bill in this House, we have the double advantage of consensus and of getting the Bill right on this small issue. I invite the noble Lord to withdraw his amendment.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, I am grateful to the noble Lord. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendments Nos. 34 and 35:

Page 131, line 32, leave out ("as chief executive or") and insert--

("(a) as chief executive of the Commission if he is a person who (by virtue of section 3(4)(a) to (d)) may not be appointed as an Electoral Commissioner, or

(b) as any").

Page 131, line 40, after ("terminate") insert--

("(a) if he is their chief executive, on the occurrence of such an event as is mentioned in any of paragraphs (a) to (d) of paragraph 3(3), and

(b) in any other case,").

On Question, amendments agreed to.

Schedule 7 [Control of donations to individuals and members associations]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendments Nos. 36 to 38:

Page 159, line 2, leave out ("less") and insert ("not more").

Page 164, line 17, leave out ("not less") and insert ("more").

Page 164, line 45, leave out ("less") and insert ("not more").

On Question, amendments agreed to.

Schedule 9 [Limits on campaign expenditure]:

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative

moved Amendment No. 39:

Page 169, line 17, leave out ("£30,000") and insert ("£20,000").

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative

My Lords, we return to the discussion which we had in extenso during the Committee and Report stages. I am afraid that I and, I believe, other noble Lords did not find the Minister's reply convincing. As a result, I gave notice that I should raise the issue again at Third Reading.

At the heart of the Bill a number of balances are to be struck. There is the important balance between transparency and local democracy. There is the equally important balance between the funding needs of a party nationally and those of a local association. I do not believe that we yet have that aspect of the Bill entirely right.

First, even during "peacetime"--the period between elections--the burden of bureaucracy which we intend to apply to political parties and local associations is huge. I point out to those noble Lords who doubt that, that the Bill and its schedules which we received in Committee ran to 180 pages and it is now 243 pages. We have therefore increased it by one-third. That burden on local associations, some of which are weak, may well be the straw which breaks the camel's back. That in turn will mean that national headquarters must take a much closer interest in the operation of local associations, thus increasing the trend towards centralisation. That will not help to revive local democratic activity--quite the reverse.

Secondly, during election campaigns the trend towards a presidential style of campaigning will accelerate. As part of the reawakening of interest in our democracy, I should like national political parties to be forced to consider how to enthuse, involve and include their local activists, not merely to find further ways to reach past, or bypass, them by focusing on massive spending on the media, posters, direct mail and other forms of communication.

The amendment seeks to give an incentive for the development of local democracy by restricting the level of national spending that can be undertaken during general election campaigns. Under my amendment national spending will be restricted to £20,000 per constituency contested, not £30,000 as presently proposed. If every constituency was contested, total spending centrally would be about £13 million, not £19 million as proposed.

Some may believe that that figure is too restrictive to undertake an effective national election campaign. However, before one reaches that conclusion one should not overlook two additional sources of permissible finance. First, each constituency will in addition be able to spend its normal allowance, which is about £8,500. If every constituency is contested, that will amount to a further £5.6 million. Secondly, there is a further allowance for centralised expenditure under Part I of Schedule 8 which lists exempted items. It is not easy to calculate that amount of expenditure, but included in those items of permitted expenditure are the costs of staff and their accommodation. That expenditure may well amount to a further £3 million or £4 million. Even under my amendment, if a party contests each and every constituency it can spend £13 million, plus £5.6 million at constituency level, plus a further £4 million of exempted expenditure, making £22.6 million in all. Surely, that is enough; and it is a larger figure than Neill recommended.

There is disquiet about the level of expenditure at general elections. The noble Lord, Lord Rennard, has spoken eloquently about this, and I suspect that he will contribute to the debate later. One of the reasons for the whole Bill is the level of expenditure and the funding of general elections. I am concerned about the damage that we are probably doing, almost certainly inadvertently, to local democracy and our democratic institutions. My amendment seeks to revive local democracy by giving it more prominent ranking in the priorities of campaigning and campaign expenditure. Unamended, the Bill will permit a party to spend up to £29.6 million. Of that, only £5.6 million (less than one fifth) can be spent locally. If my amendment is accepted, total expenditure will be limited to £22.6 million, of which £5.6 million (one quarter) can be spent locally. Surely, that proportion which parties must spend locally is not unreasonable. I believe that £22.6 million is a perfectly adequate total for a national party to spend to run an election campaign. One quarter of that amount is the right balance for local expenditure, and by those means we shall significantly enhance local democracy. I beg to move.

Photo of Lord Rennard Lord Rennard Liberal Democrat

My Lords, we consider again tonight one of the most important election rules that we can possibly introduce. For the first time there is to be a limit on spending by national party organisations. I believe that such reform is long overdue and essential if we are to clean up our political system, reduce the power of the millionaire interests and give power back to voters. We need to curb the trend for millions of pounds to count for more than millions of votes. But the question now is: what is the appropriate limit, and how should it be set before the electoral commission may examine the issue?

I believe that consensus is the best approach. In evidence to the Neill committee, the Labour Party said that,

"those who compete for political office should have a fair opportunity of doing so and should not be placed at a disadvantage by inadequate financial resources relative to others".

In its document Transparency, Participation, Equality, the Labour Party argued for a national limit of £15 million. The Liberal Democrats have also consistently argued here and in another place for the same limit. In another place that limit was strongly supported by Mr Martin Linton who is a recognised expert in the field of party funding. He argued that 70 per cent of Members of another place belonged to parties which then supported a limit of £15 million.

In spite of that, in Committee in your Lordships' House the Government said that for the moment they would stand by the £20 million limit set out in the Bill. The noble Lord, Lord Bassam, said that he was,

"in the peculiar position of barking against my own party on this occasion".--[Official Report, 18/10/00; col. 1098.]

More significantly perhaps, he also said at col. 1099:

"If presented with a fresh consensus in favour of a lower figure, we would be prepared to reconsider the matter, but it is not one to be pursued on a unilateral still less a partisan basis".

There is now a fresh consensus on a lower figure and the Government should not pursue the £20 million limit on a purely unilateral basis. During consideration of the Bill we have removed from the calculation of total expenditure some important items, including utility bills, headquarters and staff costs and legal services. In part, that has led to a new Conservative position which has brought the Opposition into line with both the Labour Party and the Liberal Democrats.

At Committee stage the noble Lord, Lord Mackay of Ardbrecknish, proposed a national limit of exactly £15 million, while the noble Lord, Lord Hodgson of Astley Abbotts, argued for a very slightly lower limit. The Government would, therefore, be isolated if they sought to adhere to the limit of £20 million. I remind the Minister that he said that this matter should not be pursued on a unilateral still less a partisan basis. In future the electoral commission can review the limit and increase it if there is a new consensus, but for the moment the limit should be set at a lower level for which there is much greater consensus. It would be open to the Government to increase the limit on constituency spending, if they wished to do so, to make the total available nationally and locally consistent with the figure in the Neill report. That would help to address the imbalance between constituency and national spending. Let us have a national limit of about £15 million on which there is far greater consensus.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, we have been round this particular course before. When I tried to persuade the Minister to accept a limit of £15 million instead of £20 million I failed fairly comprehensively. I am interested that my noble friend now returns to the matter but looks at it from the constituency upwards. I much prefer to look at it from the national limit already set downwards.

I am concerned by what the Government intend to do if there is to be an election in May. When will they tell the world at what level total expenditure is to be set? Obviously, it cannot be the whole £20 million because the period will be far shorter than 365 days. I am concerned that it should not be front-loaded. I seek an assurance from the Government that they will talk to the political parties so that they will know as soon as possible the figure that has been arrived at in conversations, I hope by consensus. It would be wrong if, following the new year, two or three months elapsed before the political parties had any idea of what they might be permitted to spend in an election to be held in May. I do not know how the Government will deal with that without committing themselves to a May election. But, frankly, they will have to do it because it is their Bill and they have wished this ludicrous situation on themselves as well as the other political parties. The people who run the Labour Party will want to know, as will the rest of us, how much they will be allowed to spend between whenever the Bill is enacted and the next election. I hope that the Minister will address that point in his answer.

Photo of Lord McNally Lord McNally Liberal Democrat 7:30 pm, 27th November 2000

My Lords, before the noble Lord sits down, perhaps I may ask him a question. At the moment the Labour Party is festooning towns with this "Thank you" campaign. Will that be in its general election expenditure?

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, in Scotland we have an expression about coming up the Clyde in a banana boat. The noble Lord has been doing that. I am not joining him. I can assure him that that will not be part of the Labour Party's expenditure for the next election. That is probably why the Government are doing it--because the race will not start until the Bill has been enacted and the announcement about the money has been made. So I think they are trying to jump the gun. It perhaps shows that all the pious stuff we have heard from them about funding political parties and controlling general election expenditure is not quite as accurate as they would like us to believe.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, we return again to the level of the limit on campaign expenditure. The noble Lord, Lord Hodgson, said that he was not convinced by what I had said at an earlier stage on this matter. I was not entirely convinced. I was not entirely convinced because as I saw it there was something of a volte face from noble Lords on the Opposition Benches.

I am grateful that the noble Lord, Lord Cope, has joined us because it was the noble Lord who advised us in Committee that we should stick with what was in the Bill. The noble Lords on the Liberal Democrat Benches were suggesting a lower limit. On Report we heard from the noble Lord, Lord Mackay, an argument for reducing the limit by one-quarter. The noble Lord said that the position had changed because the list of qualifying expenses in Schedule 8 had been pared back to make it more manageable for the parties. That is indeed the case. But the noble Lord, Lord Cope, knew that when he spoke so enthusiastically of the £20 million limit. It would be very nice to know exactly where the Opposition now stand and exactly what lies behind their sudden change of heart. I note that the noble Lord, Lord Hodgson, is sitting very comfortably next to the noble Lord, Lord Ashcroft, who I suppose gave some admiring glances during his peroration. I am not sure why that was the case. Perhaps it is because he is the party treasurer and is concerned about the quantum of money that might be available for a forthcoming general election.

The case is this: a responsible government cannot chop and change their policy in the way that has been suggested by some--

Noble Lords:

Oh!

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office

My Lords, I hear mirth from those in a sedentary position, but a responsible government--this is an entirely responsible government--do not chop and change their policy. I do not wish to hide the fact that the Labour Party argued in its evidence to the Neill committee for a £15 million limit. But it falls to the Government, and not to the Labour Party, to respond to and implement the Neill report. That is exactly what we are seeking to do. We have consistently taken the view that once the matter had been carefully considered by an independent advisory body, the proper course was to accept its recommendation. That is exactly what we have done.

The level of the limit should be altered only after full consideration by another independent body; namely, the electoral commission. Before coming to a view, there should be full consultation with other registered parties, not just the big three. We should remember that separate limits apply in each of the four parts of the United Kingdom. I put it to the House that it would be presumptuous of the Labour, Conservative and Liberal Democrat Parties, which are well represented here, to decide such matters without reference to the nationalist parties in Scotland and in Wales and to the nationalist and Unionist parties in Northern Ireland. I wonder how much consultation with those parties noble Lords opposite have undertaken in arriving at the view that they have in preparing for this particular amendment.

Nor can we simply change the figure in paragraph 3(2) of Schedule 9 on its own. The limits in paragraphs 3(3) and (4) of that Schedule and the third party limits in paragraph 3 of Schedule 10 are all linked to the £30,000 "allowance". If one changes that figure, one has to change the others. The Neill committee set the expenditure limits for elections to the European Parliament and devolved legislatures by reference to the £20 million for a parliamentary general election. We need to consider whether there should be a pro rata reduction in those other limits. These are considerations to be carefully made, not made late in the day when a Bill is reaching its concluding stages.

So, whatever the merits of the amendments, we should not be changing course in this way, at this late stage and without full and proper justification, and full consideration of, and consultation over, the other related matters. The right way forward--the only way forward--is to apply the £20 million limit, or an appropriate proportion of it, to the next general election. We should then ask the electoral commission properly to review the matter. If then there is a new consensus in favour of a lower limit, which is endorsed by the commission, it would be open to the Home Secretary to vary all the relevant sums by means of an order under Clause 155.

The noble Lord, Lord Mackay, asked a fair question about the transitional limit. That transitional limit must be in place by 16th February 2001 when Part V comes into force. We shall be very carefully consulting during December with regard to what that limit might be. That is the proper course of action for us to follow. We shall fulfil that responsibility.

We have a late, half-baked and poorly thought-through amendment which does not do the job that it is designed to do. The amendment still puzzles me. Why is it that the Conservatives--some of them at least--seek to change their position on this many months after the Bill has been published and after many debates on these matters when just a matter of 10 days ago they had a clear policy position and statement of intent in this regard? I am puzzled by that. Perhaps it relates to funding within the Conservative Party; I know not. The proper course for the noble Lord to take is to withdraw his amendment and put his case to the electoral commission in due course.

Photo of Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts Conservative

My Lords, the Minister has not taken us much further than on Report. We engaged in some political knockabout on the premise that if one is short of arguments, one should engage in some political banter. That is fair enough. I am not sure that as a very new Member of the House it is in order for me to say this, but I think that it is a little unfair to talk about my noble friend Lord Ashcroft who has not made a maiden speech yet and therefore cannot respond.

The Minister's substantive arguments came down to two. First, he suggested that there should be a review after the general election, which does not answer the point I was trying to make at all. Secondly, consequential amendments would be required if the amendment were accepted. The amendment is nothing to do with the detail he is talking about; it is about restoring a balance. It is not about any individual political party seeking to gain or lose a funding advantage; it is about a vote for decentralisation, for the small battalions and for local democracy. I propose to test the opinion of the House on this matter.

On Question, Whether the said amendment (No. 39) shall be agreed to?

Their Lordships divided: Contents, 64; Not-Contents, 134.

Division number 4

See full list of votes (From The Public Whip)

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 40 not moved.]

Schedule 11 [Control of donations to recognised third parties]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department 7:49 pm, 27th November 2000

moved Amendments Nos. 41 and 42:

Page 185, line 14, leave out ("less") and insert ("not more").

Page 187, line 48, leave out ("not less") and insert ("more").

On Question, amendments agreed to.

Schedule 15 [Control of donations to permitted participants]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 43:

Page 196, line 45, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

[Amendment No. 44 not moved.]

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendments Nos. 45 to 47:

Page 198, line 22, leave out ("not less") and insert ("more").

Page 199, line 20, leave out ("not less") and insert ("more").

Page 199, line 23, leave out ("not less") and insert ("more").

On Question, amendments agreed to.

Schedule 16 [Control of donations to candidates: New Schedule 2A to the Representation of the People Act 1983]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 48:

Page 202, line 50, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Schedule 19 [Control of political donations by companies: new Part XA of Companies Act 1985]:

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

moved Amendment No. 49:

Page 218, line 44, at end insert--

("(8) For the purposes of this Part--

(a) a company does not need to be authorised as mentioned in section 347C(1) or section 347D(2) or (3), and

(b) a subsidiary undertaking does not need to be authorised as mentioned in section 347E(2), in connection with any EU political expenditure in relation to which an exemption is conferred on the company or (as the case may be) subsidiary undertaking by virtue of an order made by the Secretary of State by statutory instrument.

(9) The restrictions imposed by sections 347C(1), 347D(2) and (3) and 347E(2) accordingly have effect subject to subsection (8); and, where a resolution is passed for the purposes of any of those provisions, any amount of EU political expenditure in relation to which, by virtue of subsection (8), no authorisation is needed shall accordingly not count towards the sum specified in the resolution.

(10) An order under subsection (8) may confer an exemption for the purposes of that subsection in relation to--

(a) companies or subsidiary undertakings of any description or category specified in the order, or

(b) expenditure of any description or category so specified (whether framed by reference to goods, services or other matters in respect of which such expenditure is incurred or otherwise), or both.

(11) An order shall not be made under subsection (8) unless a draft of the statutory instrument containing the order has been laid before and approved by each House of Parliament.").

Photo of Lord Bach Lord Bach Parliamentary Secretary, Lord Chancellor's Department

My Lords, on Report the House was told that it was the Government's intention to table an amendment for debate at Third Reading to provide that the definition of "political expenditure" would not apply to business activities such as journalism. The definition of "EU political expenditure", as amended at Report, covers any expenditure incurred by companies in respect of activities which could reasonably be regarded as intended to affect public support for a political party or organisation or to influence voters in a referendum. The definition has been widely drawn to ensure that it cannot easily be evaded. We believe, for example, that companies should be required toseek shareholder authorisation for political expenditure in relation to a national or regional referendum.

As was mentioned on Report, the Government are conscious that some companies carry on business activities which may, by their very nature, involve the publication or dissemination of material which seeks to influence the views of members of the public. Journalism is an obvious example. It is not our intention that carrying on activities such as the publication of newspapers should be considered as incurring "political expenditure" and we wish to exclude such activities from the definition of political expenditure under Part IX of the Bill. We believe, however, that it would be unwise to risk the rigidity which would result from putting such an exemption in primary legislation at a time when the modes of delivery of news and comment are developing and changing fast, and that it is important to maintain a level playing field for all the relevant forms of media. The amendment would therefore confer a power on the Secretary of State by order made by statutory instrument enabling him to exempt certain categories of company or expenditure from the requirements for the obtaining of approval resolutions in relation to the incurring of political expenditure. The order-making power would be subject to affirmative resolution in both Houses.

I should like to emphasise that the power does not extend to donations to political parties and organisations. Companies which may enjoy the benefits of the exemption will therefore remain subject to control in respect of donations. I beg to move.

On Question, amendment agreed to.

Photo of Lord Bassam of Brighton Lord Bassam of Brighton Parliamentary Under-Secretary, Home Office 7:50 pm, 27th November 2000

My Lords, I beg to move that the Bill do now pass. In doing so, I shall say a few words, mostly of thanks and congratulation.

I thank the noble Lord, Lord Mackay of Ardbrecknish, for the constructive part he has played in this legislation. As I understand it, this is his swansong--and a very fine one it is too. He has been witty and amusing, and even more amusing and even more witty in equal measure. He has kept the House greatly entertained through one of the most complex pieces of legislation that I have ever had the pleasure of being a party to. We have gone from zero to total regulation of political parties in one Bill, and the noble Lord, Lord Mackay, mastered the points of opposition to it very well indeed.

I should also like to pay tribute to the noble Lords, Lord Rennard, Lord McNally and Lord Goodhart, for the roles that they have played. I thank my noble friend Lady Gould for her promptings and encouragement, and for her interest in a complicated Bill which has lasted an inordinately long time. The noble Viscount, Lord Astor, ably played his role in support of the noble Lord, Lord Mackay.

The Bill will bring a sea change to the regulation of political parties in our country. It will go a long way to cleaning up the political party act. It brings in the thoroughly new and welcome innovation of the electoral commission--a big change which will improve the quality and the culture of party political work. It will help political parties in the future and go a long way towards restoring the credibility of many of our political institutions.

I shall not detain your Lordships' House further. The Bill has been with us for many months and we have had many long debates, as the noble Lord, Lord Mackay, wittily reminded us at an earlier stage of our deliberations. I am grateful for the support and encouragement I have had, particularly from the noble Lord, Lord Bach, who has been unstinting in his efforts. As ever, his promptings have been very helpful. The officials have played their parts, as has, latterly, the noble Lord, Lord Davies. I would be remiss if I did not mention the noble Lord, Lord Cope of Berkeley, who, on one occasion, stood in famously for the noble Lord, Lord Mackay, to assist the Opposition Front Bench.

I have enjoyed the Bill. It will make a great difference to our politics. For all of those reasons, I wish it well. I commend the Bill to the House.

Moved, That the Bill do now pass.--(Lord Bassam of Brighton.)

Photo of Lord McNally Lord McNally Liberal Democrat

My Lords, it is customary at golf championships to allow the last putt to go to the retiring champion and it is with a real sense of sadness that I say farewell to the noble Lord, Lord Mackay. I make only one point from which others may care to draw conclusions. Since being in the House, I have had two sparring partners. One is now the Attorney-General. The other, the noble Lord, Lord Mackay, goes on to manage Scotland or whatever is his preferment; I have not yet had an opportunity to consult the House Magazine. He will be sadly missed by the Conservative Front Bench.

I am extremely grateful for the support that I have received--100 per cent from my noble friend Lord Rennard and 85 per cent from my noble friend Lord Goodhart. On these Benches we are grateful for both the stamina shown by the noble Lord, Lord Bassam of Brighton, during the passage of a Bill of great length and complexity, and for the help that he has been given by the noble Lord, Lord Bach. Again, he has been rewarded by promotion during the passage of the Bill. I tell you fellows: stick around me and it works.

A final point worth making is that the Bill was in part a response to accusations of sleaze in our political system. However, on whichever side of the House we sit and whatever parties we represent, we know that--whatever misdemeanours have gone before--our political system is carried forward by thousands and thousands of individual volunteers who carry out their work with absolute probity and dedication. My one concern in seeing the Bill go forward is that in some of its detail we may have imposed severe burdens on people at constituency level whose whole commitment to politics has been blameless and exemplary. I hope and trust that they will be able to deal with those rigours.

We wish the Bill well--as we do the noble Lord, Lord Mackay, in whatever new personality he comes before us.

Photo of Lord MacKay of Ardbrecknish Lord MacKay of Ardbrecknish Shadow Deputy Leader of the House of Lords

My Lords, it is a bit like listening to your own obituary but, none the less, I am grateful to noble Lords for what they have said. I wish to thank my noble friend Lord Astor and my noble friend Lord Northesk, who acted as Whip and kept me on the right lines. I also wish to thank my noble friend Lord Cope, who stood in for me on a day when I had to go to Scotland on a sad mission. I shall almost bundle in that I am grateful to the noble Lord, Lord Goodhart, for not taking a vow of silence and for giving us many words of wisdom on what the Neill committee thought.

The Bill contains major issues which were by and large agreed. But it has taken a long time to get to the stage of Bill do now pass. The reason for that has been the detail in the Bill and the fact that a lot of the devil was in the detail. Like the noble Lord, Lord McNally, my regret is that I think we have imposed too many regulations on the constituency parties which are the very bedrock of our democracy and which consist largely of volunteers. I hope that I am wrong about that, but I fear that I am not. I appreciate that the Government have accepted a great many amendments or have taken on board several points that were made and then returned with government amendments. We are all grateful for that.

Noble Lords will see the amount of work that has been done on the Bill when they see the Commons consideration of amendments. I believe that that consideration will form about as large a document as the Bill is today. That is a tribute to the efforts of Members of your Lordships' House in struggling with the Bill, as well as a tribute to the Ministers who, after a little--it has to be said--initial teasing, have listened to the arguments and have addressed themselves to the reality of political activity on the ground.

I shall not embarrass anyone on the Benches opposite by enrolling them into the general acknowledgements, but I believe that when the Labour Party machine came to read the Bill in detail, my arguments suddenly began to hit home.

In conclusion, I am grateful to all noble Lords who have been kind in their thanks. I suspect that I shall miss this kind of debate and deliberation. However, I hope that, at least, this Bill will not prove to be so difficult for constituency parties that they decide to check up on who led the debates on it and allowed it to pass, so that I then join a rogue's gallery.

On Question, Bill passed, and returned to the Commons with amendments.