My Lords, the quality of today's debate has been assisted by the high proportion of us who have felt the need to declare an interest. Perhaps none of us should be here if we did not have an interest in this subject. I declare my interest formally, as chief executive of the Liberal Democrats and a salaried employee of the party.
Nine years ago, a number of us, including the Minister, the noble Lord, Lord Bach, participated in many debates during the passage of the Political Parties, Elections and Referendums Act 2000. All those of us here today who took part in the debates nine years ago would agree that the Bill we are examining aims to put right some of the things that were not right in the Act. I welcome in particular both a reduced burden on local party treasurers—people who need appreciation and respect for their voluntary work—and the strengthening of the investigatory powers of the Electoral Commission. I am sure that both principles are right.
The noble Baroness, Lady Jones of Whitchurch, and the noble Lord, Lord Hodgson of Astley Abbotts, both spoke with feeling and experience on the need to reduce the burden of bureaucracy on voluntary local party treasurers. The noble Lord, Lord Neill of Bladen, on the other hand, asked how raising the donation threshold so significantly would reduce the level of bureaucracy. It seems clear that, by raising the threshold in this way, many local party treasurers will no longer have to make any returns, which will reduce their paperwork and the stress put upon them. It is not donations of up to £500 that we should be worrying about when considering the Bill.
The noble Lord, Lord Clinton-Davis, and my noble friend Lord Goodhart asked why such large increases were needed. I point out that these are the first increases since 2000, nine years ago, and that we may not have further increases for a significant period of time. I have no doubt that the Minister will refer to the fact that the Electoral Commission, while initially expressing reservations about the large increase, decided that it would not oppose higher thresholds. Above all, we must consider that the burden of bureaucracy on volunteers would be wholly disproportionate to the benefit of any transparency over donations at a level below £500.
Sadly, the debate has reflected the fact that the Bill still fails to address fundamental problems affecting the health of our democracy. My noble friend Lord Tyler drew attention to the failure of the Bill to address the problem that our system allows millions of pounds to count for more than millions of votes. He made the democratic case that the ballot box should be more important than the bank balance. Figures supplied by the Electoral Commission show that almost half of the Conservative Party's income from donations in 2008—some £10 million out of the £22 million raised—came from donations in excess of £100,000. More than two-thirds of the Labour Party's income from donations—some £16.5 million out of £23 million—came from donations in excess of £100,000; and half the party's total income—around £12 million—came from trade unions. For the record, around a fifth of the Liberal Democrats' income from donations in 2008—just over £600,000 out of £3.2million—came from such large donations.
The donation patterns show three things. First, there continues to be an unhealthy arms race in relation to party spending, which the legislation in 2000 failed to halt. Secondly, those making the largest donations can be seen to have a significant, and possibly even corrupting, influence on the parties, if their proportion of the overall donation level is very high. Thirdly, all the parties have concluded, despite public protestations, that cash counts for a lot in politics, and can have a decisive influence in the outcome of elections. All the parties feel that they need money to compete, otherwise they would not seek these large sums. The case for a cap on very large donations, as was proposed and nearly agreed in the discussions with Sir Hayden Phillips, will be made again. I was delighted this afternoon to hear both noble Lords, Lord Hodgson of Astley Abbotts and Lord Marland, supporting this principle.
There have been a number of references in our debate to the proposed changes to the composition of the Electoral Commission. It is fair to say that the commission had reservations about these changes, but has now accepted the principle of having a minority of commission members with hands-on political experience. Some of us with such experience, including the noble Baroness, Lady Gould of Potternewton, argued in 2000 that the Government were wrong and that the political parties panel was an inadequate way of enabling the commission to have the necessary insight into electoral processes. We feel vindicated now. We would reassure others that the political members of the commission will be in a minority, but will be able to assist fellow commissioners on the basis of being poachers-turned-gamekeepers.
I turn to the issue of the trigger and constituency limits. I expect that in future debates we will return to the controversy surrounding the "trigger mechanisms" for starting the period for which candidates and agents must limit their expenditure. My noble friend Lord Tyler explained the absurdity of making an arrangement in legislation that would apply only to a small number of Parliaments; two out of the past 12.
The old trigger mechanism for starting a candidate's election expenses was inadvertently abolished during the passage of the Political Parties, Elections and Referendums Act 2000. Suggestions have been made to reintroduce such a mechanism for a period of four months prior to polling day. The proposals, initially from the Electoral Commission, were rejected during the passage of the Electoral Administration Act 2006, when everybody agreed that a four-month rule for counting expenses was impractical, because in the absence of fixed-term Parliaments, no one knows when it is four months before polling day. A cap on expenditure, at national and local level and over the course of a Parliament, would make much more sense than a cap over the period from the 55th month of the Parliament through to polling day. A cap on expenditure should apply every year, not just on national spending in the last 12 months of a Parliament, as at present, nor just on local spending in what looks likely to be the last four months of this Parliament.
The noble Baroness, Lady Gould, agreed that there was a problem. Perhaps I have an answer. Spending caps should apply every year and should start to be applied from the day after each general election, when we all know that the campaign begins for the subsequent general election. A major problem with the current proposals is that they still fail to address the unintended consequence of the change nine years ago that permits any amount of what is deemed to be "national expenditure" to be targeted at particular constituencies. This has exacerbated the potential for multimillionaires to buy influence over the electoral process, by allowing them to concentrate expenditure on marginal seats.
The noble Lord, Lord Ashcroft, is not here today to defend the way in which he could boast of giving well in excess of £10 million to the Conservative Party before the last election and his claim that his money influenced the outcome in 25 of the 33 seats that the Conservatives gained in 2005. I should still like to persuade the Government to cap such donations nationally. However, to have any effect on what is sometimes called "the Ashcroft problem", we must bring back an effective cap on constituency spending by properly defining what is local and what is national expenditure in particular constituencies during an election campaign.
Having failed to bring back the old trigger, the problem now is that many tens of thousands of pounds—perhaps hundreds of thousands of pounds—can be spent legally in particular constituencies in the immediate run-up to polling day if the expenditure is deemed to be part of a party's national rather than local campaign. This sort of expenditure will not be capped by the proposals in the Bill, and the Bill as drafted completely fails to deal with the problem. It means that millionaire funding allows parties to place advertisements targeted on local newspapers in certain constituencies; it allows them to pay for huge billboard advertising sites that appear only in their targeted seats; and it allows them to bombard target voters in those seats with dozens of national mailshots from the party leader. At the same time, an MP or a candidate from a party without such wealthy backing finds that any personal promotion is subject to a very strict and small local limit. That cannot be right; it is not democratic and must be changed before our next election, which could be corrupted in a way that has not been the case in this country since the era of rotten boroughs in the 19th century.
Finally, I turn briefly to the subject of individual voter registration, which has been raised by many other speakers. Among the mistakes that I believe we made in 2000 was allowing postal voting on demand without proper safeguards being in place. We have made some progress since then, particularly in the Electoral Administration Act a couple of years ago, but more must be done if we are to have proper safeguards against fraud.
At the same time, I recognise that we need to ensure that the electoral register is as accurate and complete as possible, and the belated moves towards individual voter registration are very welcome to many of us. However, I think that the Government's approach to this whole subject has been reminiscent of the old phrase, "Lord, make me holy but not yet". Postal voting came in in 2000 but the necessary safeguards produced by individual voter registration may not appear until perhaps 17 years after that or even later, when four general elections may have taken place, along with numerous other elections to other bodies. It is simply not good enough to say that we will have to wait until then.
I look forward to the further stages of the Bill and to the opportunity that it presents for a further attempt to halt the arms race on spending, clean up the reputation of politics and ensure that power lies where it belongs—with the voter and not with the funder.