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Mr. Brazier: I thank my right hon. Friend for allowing me to intervene on his customarily thoughtful speech. I refer to a comment that he made earlier. Regardless of whether the Home Secretary has consulted Blackburn's Labour party treasurer, is there not something faintly ridiculous in the idea that Labour might impose a

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£5 million spending limit on the basis of one side of the argument, given that a recently leaked opinion poll revealed that three quarters of Labour activists were on the other side?

Sir George Young: There would be a lively debate in the Labour party if it decided to spend £5 million in defiance of the view of many Labour party members.

Dr. Julian Lewis: I was intrigued by the Home Secretary's comment that there would be individual spending limits on individual pressure groups. As someone who used to run advocacy pressure groups, I know that, under that regime, I would immediately split my group into two, three or four groups to get around the restriction. Does that not mean that his provisions are completely naive and meaningless?

Sir George Young: The limits apply to each individual third party, so we could have a proliferation of third parties all spending up to the desired cap but spending in total more than anyone could under an overall cap. We will no doubt want to return to that matter in Committee.

The Government have made a further change that did not appear in Neill. At paragraph 12.41, the Neill committee asserted that

Mr. Straw: We can discuss the matter in more detail, but what is the right hon. Gentleman saying on the issue of spending limits? He has criticised the Government, despite the fact that we have moved. Is he saying that there should be an absolute limit on spending by either side in a referendum, as in Quebec?

Sir George Young: Neill recommended no cap at all; if one were to accept Neill's recommendation, there would be no cap. If we are to have a cap, it should be done not by reference to political parties but according to the side of the debate. I note what the Secretary of State said about Quebec. It is worth looking at. It did not sound like a killer argument. I hope that he was genuine when he said that he would look at the matter again and will do so with a view to moving the cap away from political parties and to getting a balance between both sides of the argument in a referendum.

Mr. Field: Is it in the spirit of Neill to say that our aim should be to balance the budgets of either side of the argument? Neill puts great emphasis on the fact that a referendum campaign is different from a general election campaign. In a referendum campaign, it is important for a range of reasons to support one side of the argument to be put forward, not limited by a cap.

The absurdity of the current Government stance is that if Paul Sykes, who has already been mentioned, had bought the Daily Mirror when it was up for sale, there would have been no expenditure limits at all and every day the Daily Mirror could have published a particular view for or against the single currency. My hon. Friend the Member for Rotherham (Mr. MacShane), despite the photograph that has been circulated, is worried about such

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a campaign spending money to circulate leaflets. Is it not bizarre to say that the press should have no restrictions at all, but old-fashioned campaigning groups should?

Sir George Young: The right hon. Gentleman makes a valid point. Neill argued against caps because he thought that they were ineffective. Even under the Bill, it will still be possible for the press to spend as much as they want until the campaigning period begins. The Home Secretary indicated that there is some unease about what is in the Bill and that he has an open mind on the matter.

I go back to the point that I was making. Neill asserted that

On that recommendation on page 66 of the White Paper, the Government have written "Agreed", but that is not the case. Under the Bill, the Government would be able to publish material on the case for a particular result until a period of 28 days leading up to the poll. That could be influential. Those two changes run the risk of creating an uneven playing field, something that Neill was keen to avoid. We will want to return to those subjects in Committee and hope that the Government will have second thoughts.

The second area where Neill was rejected was on tax relief at the basic rate for small donations of up to £500. I notice that the Home Secretary said that he remained unpersuaded. I do not know whether that means that there is a chink of light and we may be able to persuade him. He did not seem to be so dogmatic as to reject it totally. Neill weighed up the pros and cons and came down in favour.

Other recommendations in Neill had resource implications, but the Government have taken them in their stride. They have increased the Short money; they are helping the parties with the changes necessary for registration; they are paying £2.6 million, which is the running cost of the Electoral Commission; and they are paying £2 million, which will be allocated yearly, as policy development grants. The Government are spending a comparable sum on their own special advisers. It is difficult to argue that the £4 million in that particular recommendation would break the bank, and rejecting it exposes the Government--unnecessarily, I think--to the argument about cherry-picking and seeking advantage.

In particular, it is perverse to criticise parties for over-dependence on large donors, but then to reject the very recommendation that would reduce that over- dependence.

In the committee's view, the principal advantage of such a scheme was that it would encourage a different pattern to political donations, so that parties would not rely for their funding needs on a relatively small number of donors each making large donations. The committee said:

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As the Home Secretary knows, the committee wrote a letter in which it said how disappointed it was with the Government's recommendations, and invited the Government to make an estimate of the costs. The committee stated:

    "we strongly urge you to reconsider our proposals on tax relief on political donations in the light of your conclusions as to the administrative cost of their implementation."

On those two issues, we hope that the Government will think again. The Bill will enact many of the recommendations of the Neill committee that the Opposition support. On referendum spending and on small donations, the Government have decided, so far, not to implement Neill.

The Opposition will not divide the House on Second Reading, but we invite the Government to think again on those key issues during proceedings in Committee.

5.27 pm

Mr. Frank Field (Birkenhead): The Bill is immensely important, and the House has been treated to two very serious speeches--by the Home Secretary and by the shadow Leader of the House--that bode well for the ensuing debate. I hope that my hon. Friend the Member for Cannock Chase (Dr. Wright) will forgive me for saying that I take particular pleasure in the Home Secretary's growing stature: each time that he speaks in the House, he seems even more confident in mastering his brief. Although that gives particular pleasure to Labour Members, I should hope that it pleases both sides of the House.

I also hope that the spirit in which the Home Secretary commented on various key issues will be translated into the words on the record. All hon. Members will know only too well that, even with the best intentions, our comments do not always appear in the record as we should wish.

I should like merely to draw the Home Secretary's attention to two aspects of his speech. First, he drew an analogy--I used one also in my intervention--between the National Audit Office and the Electoral Commission, and such a parallel can only strengthen the United Kingdom's political process. Most members of the public may not be aware of the National Audit Office, but--thank goodness--politicians and those who practise politics know only too well what that body is about and the independence that it maintains. It bodes very well for the future that the commission is being modelled on that type of success.

The other immensely important aspect of the Home Secretary's speech was the issue of how questions are phrased not only in referendums generally, but in the referendum that most hon. Members will have in mind when debating the Bill--the one on the single currency. The Home Secretary's approach to the matter is very healthy and wholesome. No one in his right mind thinks for a moment that the Government will allow the matter to be settled by a committee. However, I welcome the Government's openness to receive opinions and their stated wish to ensure that the question is as clear and unambiguous as possible.

We are debating changes to our electoral system at a time when politicians' stock in the country is not very high, to put it mildly. The approach of my right hon. Friend the Home Secretary and the shadow Leader of the

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House can only add to the stature of politicians and political activity. That is good for everybody who is concerned with advancing and nurturing freedom.

For the proposals on the financing of third parties that want to campaign in a referendum to be workable, we shall have to lock some people up. Otherwise, the proposals will be unworkable, resulting in us looking foolish and our stock in the country falling.

To return to the point that I made during the intervention that my right hon. Friend kindly took, let me say that I understand how the rules will operate for outside campaigning bodies once a referendum Bill has been introduced to the House. We shall know that a clock starts ticking. The Bill will set a spending limit for the campaigning organisations that have registered. The worry is how those organisations, with the best will in the world, will remain within the law during the year before a general election. They will not know the date of a general election until the Government call it, but their expenditure in the 12 months before the election will be determined by the date of that election, even though they will have spent most of their 12-month budget before they know the date.

There are two choices. Either all campaigning organisations accept the formula for what they can spend in the year before the election campaign--and spend it every year from now on--or they take a risk in the hope that the courts will find in their favour when they plead that they acted in good faith and spent in the normal way, not knowing when the election would be.

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