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Madam Speaker: Order. We must now move to the statement.
Madam Speaker: Order. I call Mr. Secretary Straw.
Political Parties (Funding)
4.21 pm
The Secretary of State for the Home Department (Mr. Jack Straw): With permission, Madam Speaker, I wish to make a statement about the funding of political parties.
We came to office committed to reform. Our three commitments were, first, to require large donations to political parties to be disclosed; secondly, to outlaw foreign funding of political parties; and thirdly, to invite the Committee on Standards in Public Life to look into the wider question of the funding of political parties in the United Kingdom.
The committee, under the chairmanship of Lord Neill of Bladen, was given that remit in November 1997 and reported in October 1998. The committee's review was comprehensive and authoritative. Because of the range of matters covered, it was not practicable to legislate in the current Session of Parliament, but I promised to publish a draft Bill before the summer recess, and I am doing that today.
The draft Bill is contained in a White Paper which provides the Government's overall response to the Neill committee's report. We intend to introduce the necessary legislation as soon as possible, taking full account of comments received from right hon. and hon. Members and from outside organisations by 15 October.
I shall summarise the main points of the White Paper and draft Bill. The Bill takes forward the two specific manifesto commitments to which I referred earlier, and which were endorsed by the Neill committee. Donations to political parties of £5,000 or more at the national level and of £1,000 or more at the local level will have to be made public. Furthermore, it will be unlawful for a political party to receive donations from an individual who is not registered to vote in the United Kingdom, or from companies that are not incorporated in the European Union and also carrying on business in the United Kingdom. Provision is also made for shareholder approval for donations.
There has also long been concern over the amounts that political parties are able, without restriction, to spend nationally at election times. The existing law, developed in the last century, already regulates very closely what can be spent by or on behalf of candidates at elections at constituency or local ward level. However, in the present day a large part of the effort and money devoted to winning elections is spent by parties not at a local or constituency level, but nationally and not on behalf of specific candidates.
The Bill therefore provides for new national spending limits on election expenditure, and agrees with the Neill committee that the limits should be set at a level substantially below the amounts spent by the two main parties in 1997, to avoid what Neill described as an arms race in spending between the parties.
On that basis, Neill recommended and the Bill provides a limit of £20 million for the main parties involved in a United Kingdom general election, with lower limits for parties that do not field full slates of candidates, and for other elections. When the Bill is introduced it will also contain provisions for regulating third-party spending at the national level, as recommended by the Neill committee.
To enforce the restrictions on donations and expenditure, the draft Bill places obligations on the parties at both local and national level to keep and submit accounts. That will apply particularly to the recording of donations. The scheme in the draft Bill, which sets a de minimis level of £50 for internal reporting, follows the Neill committee's recommendations.
All political parties will wish to study these detailed provisions carefully over the forthcoming months, but if the object in view can be served with some simplification or easement, the Government will be open to suggestions.
Annexe 1 of the White Paper contains a detailed chart setting out each of the Neill committee's recommendations, and the Government's proposed response. The one recommendation that we have not pursued is the recommendation that income tax relief should be allowed on donations to political parties. The Government take the view that that would amount to state aid by another route, and would divert expenditure from other priorities.
Some political donations are made not to a party as such, but to groups within a party or to individuals, including Members of Parliament. We agree with the Neill committee that comparable requirements should be imposed in respect of such donations, and the Bill, as introduced, will cover that. We would welcome views on whether the obligation to report such donations should fall on the party in question or on the person who receives them, and on whether donations that are currently recorded in the Register of Members' Interests should be put on a statutory basis.
The Neill committee made a number of suggestions for change relating to referendums. The Government accept them all, as I made clear when the Neill report was published last October. It is important to ensure that the two sides in any referendum campaign have a fair opportunity to put their case. We therefore propose to include state cash support on an equal basis for the two umbrella campaign organisations, with free mailing and access to referendum broadcasts, as the Neill committee suggested.
The committee also made recommendations about the position of the Government of the day in any referendum campaign. As it suggested, a Government are almost bound to be closely engaged in the subject matter of a referendum; but there is a point at which the Government should step back, and leave it to political parties and other campaign groups to make their case to the electorate. The draft Bill therefore provides for a 28-day period running up to the referendum poll in which the Government of the day should not issue material to the public on the subject matter of the referendum. Other rules, similar to those providing for election purdah periods, will also apply.
In one respect, however, the Government have gone further than the Neill committee's recommendations. In our judgment, it would be unfair and inconsistent with everything else that is proposed if referendum campaigns could be skewed by the injection of disproportionately large funds that happen to be at the disposal of a particular party or campaign group. We therefore propose to set limits on all organisations involved in referendum campaigns. In the draft Bill, the limits are £5 million for the two designated umbrella organisations and for
political parties with two or more Members in the House of Commons, and £500,000 for other political parties and campaign organisations. Those restrictions on spending would run from shortly after the date when a Bill providing for a referendum is introduced in Parliament. As Neill recommended, referendum organisations will also be subject to the same requirements as political parties in regard to foreign donations and other related matters.
I have left until last one of the most important provisions of the draft Bill. The Neill committee recommended, as have many others, the establishment of an electoral commission, and the Government agree with that recommendation. The commission's first function will be to oversee observance by political parties and others of the new regulatory regime; but I believe that we ought to go further. The commission will therefore be charged with making recommendations on changes to electoral law. We also envisage its having, in a wider sense, an important role to play in voter education. I want it to encourage people to vote in elections and referendums, and to help to explain the democratic system in a wholly non-partisan way. The draft Bill also provides for the electoral commission to take over, at a later date, the functions of the parliamentary boundary commissions and of the Local Government Commission for England.
It is paramount that the electoral commission should be wholly independent of the Government of the day. The draft Bill therefore provides the strongest safeguards of that kind which our constitution can lay down. The commissioners would be appointed by Her Majesty on an address from the House of Commons. A Speaker's committee would be established to oversee the commission's budget.
The Neill committee's report rightly emphasises the vital contribution, which we should celebrate, that political parties make to this country's democratic life, but for too long, public confidence in the political system has been undermined by the absence of clear, fair and open statutory controls on how political parties are funded. All of us here want to encourage citizens to play a full part in this country's political system, and that must include encouragement of voluntary donations to political parties.
The Neill committee report gives us all the chance to make significant improvements in this vital area of our national life. Today's publication of the draft Bill and White Paper provides the detail of the Government's intentions. By providing greater honesty and openness to our political system, we hope to restore public trust and to promote greater confidence in our democracy.
Miss Ann Widdecombe (Maidstone and The Weald):
I thank the right hon. Gentleman for his statement and for his customary courtesy in giving me early sight of the statement--a novelty that I am still getting used to.
I add my congratulations to the Neill committee on a thorough and detailed work that contains much that will improve our democratic way of life. Having started on that friendly note, may I ask the right hon. Gentleman to comment on some glaring omissions in the draft legislation?
Why, for example, despite yet more assurances and promises today, is there nothing in the draft legislation--which is, after all, all that right hon. and hon. Members and the public have to comment on in the consultation
period--on banning blind trusts, let alone any proposals for the detailed working of such a ban? Is that because five senior members of the Government used such funds: the Prime Minister, the Deputy Prime Minister, the Chancellor of the Exchequer, the Foreign Secretary and the Leader of the House?
Why does the proposed legislation do nothing to end the scandal of cash for policies, or to stop a repeat of the Bernie Ecclestone and Formula One affair? Will the legislation stop organisations such as, say, the International Fund for Animal Welfare, to which this small donor will make no further donations, and the Political Animal Lobby from buying policies at election time? Given that large donors to Labour have been given positions both in and by the Government, why is no effort made to ensure that all donations are not only without strings, but seen to be without strings?
How does the draft legislation propose to ensure that donations do not buy positions in government? [Interruption.] That was an important question, which the House perhaps did not hear. I asked the right hon. Gentleman how he intends to ensure, given that there is nothing in the draft legislation, that donations do not buy positions in government.
Why are trade unions given a privileged position in the legislation? Why does it require a disregard of the fact that they might be affiliated to a political party, a disregard that will not apply to any other organisation?
The right hon. Gentleman has said that he does not agree with the Neill proposal for tax relief on political donations of up to £500--but surely he will concede that the cost of such a measure would be barely more than the Government are spending on their own special advisers?
Will the right hon. Gentleman explain why, although the Government will be subject to restrictions for only 28 days before a referendum is held, other organisations will have such restrictions for up to six months?
Will the right hon. Gentleman tell the House why, according to his draft legislation, no candidate will be allowed to stand as, for example, an independent socialist or a pro-London candidate without first setting himself up as a political party?
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