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Mr. MacShane: Is there not a third option--that this country joins the other mature democracies and has a fixed term for Parliament?

Mr. Field: There are all sorts of possibilities. Just as it is not sensible to expect the Government to surrender sovereignty over the final phrasing of a referendum question, no Government are likely to give up the considerable power of choosing the date of a general election. It may be desirable for an Opposition, but it is not practical politics.

I look forward to hearing what my hon. Friend the Under-Secretary says when he sums up later. There is much to support in the Bill, but I do not believe that the Government have got the formula right here. It is not workable--or could be made workable only by sending people to prison because they have unknowingly broken the law. In this country, the Government usually lose such cases. As with the poll tax, when the Government start sending people to prison, the rest of the country does not like it. Retrospective legislation will certainly not be popular.

I have one further question that my hon. Friend might be kind enough to answer later, about the funding of political parties in Northern Ireland. The Bill accepts the fiction that, while the Republic of Ireland is a separate country, we regard it differently in respect of overseas donations. Sinn Fein is a party that is spread throughout the Republic of Ireland as well as Northern Ireland, and it will be able to receive contributions from its organisation south of the border. The organisation north of the border will not have to publish details of where those funds have come from, other than the fact that the money has been given to Sinn Fein.

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Will we require Sinn Fein in the Republic of Ireland to publish details of where its donations come from if it transfers money to its operation in Northern Ireland? We all know that considerable numbers of Irish-Americans have a particularly twisted view of this country, and enjoy raising large sums of money to be spent in a way that causes the British Government trouble. We are attempting, quite rightly, to clean up the acts of political parties in this country, but it is wrong to allow funding from overseas donations to come to Sinn Fein in the Republic of Ireland and then be transferred to and spent in Northern Ireland--which is, after all, still part of this country.

I welcome so many of the Bill's proposals, and the spirit in which the Home Secretary introduced the Bill today. However, I make a plea to my right hon. and hon. Friends on the Front Bench. I do not believe that they are proposing workable measures in the Bill to control the expenditure of those outside pressure groups which will necessarily wish to influence the result of a referendum. In this instance, the Neill committee's reasoning holds, and I hope that, before we progress much further, the Government will concede that point.

5.37 pm

Mr. Robert Maclennan (Caithness, Sutherland and Easter Ross): I agree with the underlying purposes of the Bill, and I accept what the right hon. Member for Birkenhead (Mr. Field) said about its importance and seriousness. I do not doubt that we shall wish to return to some of the issues that the right hon. Gentleman raised about the conduct of referendums and ensuring fairness.

I want to express my appreciation to the Neill committee, and to the Government for proposing the Bill. Most of the measures contained within it have my support. My only concern is that the Bill does not go far enough to deal with what people on both sides of the House recognise as the serious public perception that our system of financing political parties is wide open to abuse, has been abused and has discredited the Westminster system, almost to the point at which there has been a switch-off and a withdrawal of public support. It is difficult to link that with the decline in voting on which we have remarked in earlier debates, but there is considerable concern.

The concern was fostered by episodes such as the Polly Peck affair, and the situation was not helped by Mr. Bernie Ecclestone. Allegations have been made from both sides of the House that the honours system has been abused for funding purposes. I doubt whether the Bill by itself can remove all of those concerns but, even if a Bill cannot wipe out all the problems, that is not to say that, in itself, it is not of some value. In so far as the Bill is fostering openness about giving, it must enjoy the support of the House. We shall certainly support it tonight.

Some of the measures are of particular value. I have long advocated, and am delighted about, the establishment of a powerful independent Electoral Commission, which will have a role in respect of referendums and of broadcasting. I dissent somewhat from the Home Secretary's view that everything in broadcasting is perfectly satisfactory. He gave the impression that the usual channels arrangements had worked admirably,

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but that is not my colleagues' view. I am glad that the commission is to be allowed at least to make recommendations to the broadcasters and to engage in dialogue with them. We welcome that important safeguard, which seems not to have flowed from Neill but to be a modification by the Government, for which we are grateful.

The Bill provides that shareholders will have some say before their money is allocated to political causes. That is not merely equitable and in line with the rights of trade union members: it is long overdue. I am happy that the provision now appears to enjoy cross-party support.

Another important issue, which I believe stems from Neill, is that, flowing from the definition of a permissible source, it appears that younger citizens who are not on an electoral register may be debarred from giving money to a political party and perhaps even, per consequence, from joining one. That would not, I think, be the Government's wish, and it is certainly not ours. I hope that the point can be cleared up.

Mr. Straw: People under 18 will be eligible to make donations of up to £200. I do not think that there are all that many under-18s who would want to give more than that. The Bill also contains arrangements to cover multiple donations, of up to £5,000.

Mr. Maclennan: My concerns are partially assuaged by that. We can consider the point in Committee.

In our desire to ensure that money does not come from foreign companies, we have had to recognise the special position of companies operating under European law and carrying on business here. As I understand it, those companies may be permitted to donate. There is an area of uncertainty in my mind about the position of European party organisations campaigning in European elections. Increasingly, as the European Parliament becomes more authoritative and more democratic, it is to be anticipated that parties will be linked. Foreign parties should not be debarred from assisting British parties, and vice versa--although that is obviously not covered by the Bill. I hope that the provisions on foreign funding sources will not unintentionally preclude such assistance.

The Bill appears to depart surprisingly from the Neill recommendations in respect of the sanctions to be applied in the event that a party dishonestly accepts a non-permissible donation. Neill proposed that the treasurer or individual responsible for monitoring such matters might be liable to criminal prosecution and that the party might forfeit a sum of up to 10 times the offending donation.

The Bill retains the risk of criminal prosecution, but it would subject the party only to the risk of forfeiting the original sum. That does not appear to be a particular disincentive to accepting money from unsuitable sources. We can return to the issue, but why did not the Government follow Neill's recommendation on that point?

The right hon. Member for North-West Hampshire (Sir G. Young) mentioned another departure from Neill in respect of the taxation of donations of £500 or less to political parties. I agree with the right hon. Gentleman, because our politics would be healthier if more people were involved in the funding of political parties. If it were more widely recognised that making political donations

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was a virtuous participation in democracy and the public were given every possible encouragement to do so, parties would not be driven to seek the massive funding from rich individuals that has characterised the funding of the two major political parties in the past. That valuable proposal has been dropped without adequate explanation of the Government's thinking.

There are wider considerations concerning the encouraging of private spending initiatives. I was interested to read in The Times this morning of the Chancellor's interest in encouraging charitable spending. He even trailed some expectation that the Budget might offer some inducement to such expenditure by individuals to foster the civic society. If we are to foster the civic society by offering charitable relief, we have now a golden opportunity to restate the case for the involvement of citizens directly in their democracy through participation in the electoral process by donation. I hope that the Government will reconsider the issue.

I am not sure of the answer to my final point of detail. The issue was raised by the Government and has been the subject of some dialogue across the Floor in this debate. I do not argue with the one-year limit on election expenditure, to be computed retrospectively, but the problem is partly a result of the nonsense that allows the Prime Minister, who is a competitor in the race, to fire the starting gun. That is a constitutional anomaly that is rare in other countries. It should be eliminated by providing a terminal date for Parliament so that no party is disadvantaged. It is much clearer to the Government when the clock will start ticking on expenditure than it can be to even the most shrewd and experienced observers of the political scene.

My main concern is another phenomenon that has been developing. Elections in this country are increasingly fought and won in as few as 100 constituencies. Having a cut-off point for expenditure will not deal with that problem. Those constituencies that will determine the next election are identifiable today. The Home Secretary said that expenditure was end-loaded--or some such expression--but, in those constituencies, it could be front-loaded as a means of avoiding the consequences of this provision.

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