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Mr. MacShane: The experience in America is that the sum can be set at any level, because it is always divvied up. For example, if the limit is £5,000, and a person wants to donate £50,000, he can find nine others to give £5,000 each. Ways can always be found to get around any limit that is set.

Mr. Winnick: That is an argument against any restriction being established, but I am not persuaded.

I am also in favour, despite what my hon. Friend has just said, of restricting the amount that any individual, or members of his or her immediate family, can donate. It is unfortunate that one person can donate a very substantial amount of money, even when it is done for the best of reasons. Any such donation to the Labour party would of course be for the best of reasons, but even so I consider it undesirable that the amount is not restricted. Again, that may be a matter for consideration in Committee.

Mr. Peter Bradley: Normally, I follow the arguments of my hon. Friend very closely, but does he not agree, on reflection, that his proposal that donations to political parties ought to be restricted to one or two members of a family is profoundly undemocratic? It is almost like saying that only one or two family members can have the vote.

Mr. Winnick: That is my hon. Friend's view. However, it is obvious that any restriction on how much an individual can donate can be got around very easily, as a person can get his or her spouse or adult children to contribute. The real argument is whether a person should be prevented from giving more than a certain sum. My hon. Friend obviously disagrees--one of the rare instances of disagreement between us. My views are along the lines that I have advocated.

Mr. Andrew Robathan (Blaby): Would the hon. Gentleman include in his proposed restrictions the possibility that family members might make donations to different parties? Not all family members vote the same way, after all. Would the hon. Gentleman ensure that there would be an upper limit on the amount that a husband could give to one party, and on what his wife could give to another? How would he make that work?

Mr. Winnick: That is an interesting point, which could be considered in Committee.

Blind trusts have been the subject of a good deal of criticism. It is right that they should now be outlawed, and I welcome that. I basically believe--this has long been my view as well as that of the Labour party--that all political funding should be known, declared and above board. The proposed Electoral Commission will have a job on its hands and I can well imagine the complaints that will be made to it by the Government, the Opposition and the Liberal Democrats. Like the Committee on Standards in Public Life, it can expect such complaints and there is nothing wrong with that. However, it must have--my right hon. Friend the Home Secretary persuaded me that it will have--the powers to police fully party income and expenditure. It will no doubt issue annual reports and I

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trust that the people appointed to it--I hope that they will not be the subject of any controversy--will stand no nonsense and will not be browbeaten by the Government, the Opposition or anyone else. I want to see an end to the curse of secrecy in party funding. I hope that the Bill will go a long way towards ensuring that.

I may run the risk of being accused of making a party political point even though I said that, in so far as I could, I would try to avoid party controversy. I have already said that I welcome the fact that the Opposition will not vote against the Bill's Second Reading and that we are achieving a degree of unanimity. The Leader of the Opposition has said that Conservatives believe that foreign donations should be outlawed, so it is strange and disturbing that the Conservative party can continue to be bankrolled by a person who may be on the electoral register here but who clearly lives in another country and, moreover, is that country's representative at the United Nations. If that is not sinister, it is undesirable and disturbing, and I can well understand those Conservatives outside the House who have expressed their concerns. They are doing the Conservative party a lot of good by saying that such a state of affairs should not continue.

In a letter to my hon. Friend the Member for The Wrekin (Mr. Bradley) that has been publicised, Lord Neill said that he considered that the manner in which the Conservative party received money through a Belize- based trust was undesirable. He said that it should not receive money from such a source. I hope that the Conservative party will consider the position. From the point of view of Labour Members, there is much to be said for such funding to continue. It provides us with ammunition and, no doubt, the Conservatives would use such ammunition if we were funded in the same way. One cannot take politics out of politics. However, given what I said about funding being above board, it would be in the interests of the public good if the Conservative party discontinued the practice of receiving money from, and being bankrolled by, someone who not only lives abroad, but takes an active role in another country's affairs. We shall see what happens in the months leading up to the next election.

I have long argued that it is right for limits to be placed on individual candidates' expenditure and I notice what will be done about by-election expenditure. However, it makes no sense to place such a limit on the expenditure of individual candidates while allowing parties nationally to spend as much as they like. Common sense demands that things should change.

I understand that it is more than 100 years since a limit was placed on how much could be spent on behalf of candidates. I hope that, when the provision that clearly places a limit on political parties' spending in general elections comes into force, it will be fully honoured. I have no doubt, however, that there will be complaints to the Electoral Commission, but I cannot imagine--I may be wrong, but I hope that I am not--that any future Government will change this aspect of the Bill.

I come to company donations. It should be remembered that Labour Members made the point at the time that no trade union could ever donate money for political purposes unless it had held a ballot. Such donations would be illegal; and that law dates back to before the first world war. When the Conservative party decided that trade unions should hold a series of ballots every 10 years, Labour Members argued that that provision should also

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apply to companies. Our arguments were fair and so successful that one or two trade unions that did not have a political fund decided to create one. We made the fair point that the same rules should apply to trade unions and companies alike. The right hon. Member for North-West Hampshire did not challenge that aspect of the Bill, and I am pleased about that.

I am not altogether persuaded, however, that company and trade unions ballots will take place on an equal footing. As I understand it, company ballots will take place through a resolution at the annual meeting of a company and that there will not be a ballot of individual shareholders, as happens in trade unions. Such balloting may be impractical for companies--I do not know--but the manner in which trade unions and companies are allowed in law to make donations should be on an equal footing. That would end a good deal of controversy.

The Bill is a landmark in the reform of political expenditure and party funding. It is a worthy measure and, even though one or two aspects of it cannot be put into practice until the following election, I am pleased that it will be on the statute book before the next election. I am pleased to support the Government who have introduced the Bill. I hope that much of the sleaze and secrecy of past years will end for good. Although I did not want to mention it, some parties were so determined to hide the way in which they raised money that they used river companies, and so on. I want to strike a non-party note as far as is possible, so I express my welcome for the Bill.

6.17 pm

Mr. John MacGregor (South Norfolk): I was a member of the committee that drew up the Neill report, and I am grateful to the Home Secretary for his kind remarks about the contributions of the members of that committee. I shall not be partisan, except to point out to the hon. Member for Walsall, North (Mr. Winnick) that the Neill committee has had to make recommendations about the practices that other political parties, including the one in government, have adopted in the past year or so and, indeed, before the previous general election.

It was a fascinating experience to be a member, as it was the first time that I had served on such a committee. Because of the thorough way in which we dealt with the issues and considered others, such as the referendum issue, that we realised were becoming important, it was fascinating to see how, over a period, members from different backgrounds came together to reach their conclusions. In that respect, I pay particular tribute to Lord Neill, whose chairmanship was admirable. The committee considered the issues thoroughly and the hearings that we undertook throughout the country and abroad--especially in Canada and the United States--were valuable.

I warmly welcome the Government's substantial acceptance of the committee's report, which I hope will stand the test of time for many years to come. I am aware that the Electoral Commission rightly has the remit to review developments as time goes on and especially after elections, but I hope that the broad framework of the Neill report will stand the test of time. The fact that the Government and all the political parties accept that broad framework means that that is likely to happen.

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I do not want to waste the House's time by simply pointing out where the Government and the Bill agree with our report and nor do I want to go through the rationale for all our recommendations. However, I wish to discuss several issues and the first is the Electoral Commission. That is one of the most important recommendations in the report, and the Government have added to the funding responsibilities of the Electoral Commission new responsibilities such as taking on those of the boundary commissions, review of electoral law and guidance on party political broadcasts. That is absolutely right. It was not within the remit of the Neill committee to make such recommendations, because they are outside the issue of funding, but it makes sense to draw all those aspects of elections into the Electoral Commission's responsibilities.

Part VI refers to the rules relating to third parties in national election campaigns and in referendums. The importance of the recommendations on third parties should be underlined. Our experience in the United States brought that home to all members of the committee. As the House knows, the one recommendation in the committee's report with which I disagreed related to the limit on the expenditure of political parties in election campaigns, but there is obviously a broad consensus that we should go down that route.

What is happening in the United States and, I venture to predict, will become clear in the next presidential election, is that, with the limits on spending in presidential election campaigns, there has been a rip-roaring take-off in the amount of expenditure undertaken by third party campaigners. Many of those are campaigning on specific issues, but some get very close to campaigning for a particular presidential candidate. It is easy to see how that would happen, if there were no restrictions on third parties.

My hon. Friend the Member for New Forest, East (Dr. Lewis) referred to some of the difficulties in relation to a referendum campaign. He is right. Inevitably, when a limit is imposed on the expenditure of a political party, those who want to support that party, perhaps only on particular issues, will find ways of putting their funding into the third party campaign, rather than into the political party. There must therefore be an element of control on third parties, similar to that on political parties.

The leader of Plaid Cymru, the right hon. Member for Caernarfon (Mr. Wigley), raised the matter of by-elections. The Government are right to impose a limit of £100,000 on by-elections. We all know that, in one way or another, the limits have been transgressed in most by-election campaigns, for an obvious reason. It is unrealistic to expect a by-election campaign to be conducted within the same limits as those that apply to an individual constituency during a general election.

The Home Secretary was right to identify the crucial point that by-election campaigns during a Parliament, particularly from mid-term onwards, are effectively mini general election campaigns. All of us who have been involved in by-election campaigns know that the media spend an enormous amount of resources in such campaigns, which are effectively national political campaigns. It is therefore essential for the political parties to respond by sending their Cabinet or shadow Cabinet Ministers to take part in the by-election campaign. In that

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context, the present limits are unrealistic. We have all turned a blind eye to what is going on, and it is right for the Bill to take a realistic approach.

The Government have taken a different view from the Neill committee in relation to clause 46, which sets the de minimis threshold in relation to some donations that will be outside the controls in the Bill. We recommended a de minimis limit, and I was particularly keen on that, but we proposed a figure of £50. The Government took that figure up in the White Paper and invited responses. They have now proposed a limit of £200. As a practising politician--rightly, there were only a few of them on the Neill committee--I strongly support that change, for three reasons.

The first is a rather small reason, but it was mentioned earlier by the right hon. Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan). Writing to the Home Secretary in his response to the White Paper, following discussion with the committee, Lord Neill drew attention to the position of young people under the age of 18. With the definition of permissible donor being restricted to those on the electoral register, young people under 18 seemed to be precluded from making contributions to political parties.

The Home Secretary stated in his response that raising the figure to £200 would cover the point. He stressed that again this afternoon, when he responded to the right hon. Member for Caithness, Sutherland and Easter Ross. He is right to say that most young people under 18 would not want to contribute more than £200 in any one year to a political party.

As we all know, there are endless small ways in which party activists contribute to political parties. Many fund- raising events are held in the constituency. Donations of £10, £20 or £30 are made to a supper, a large proportion of which, after the cost of the food is covered, goes to party funds. Further donations are made through raffles and so on. It would be intolerable for a local organisation to have to track all such donations. That would bring the entire system into disrepute.

The de minimis provision is right, and £200 is a more realistic figure. Having spent not far off £50 on various activities in the constituency in the first seven days of the new year, I recognise that the £50 limit was too low.

There is a wider point, to which my right hon. Friend the Member for North-West Hampshire (Sir G. Young) referred in his opening remarks. We must be careful that the system is not so restrictive that it makes people frightened to take on the job of treasurer in the local party association. That was much in my mind when I argued for a de minimis provision.

That is a practical matter, and an important one. It is not easy to attract people to take on the role of constituency party treasurer. If they thought that they would be responsible for tracking all those small donations, most people would be put off. I warmly support the provision in the Bill. Even in relation to the responsibilities of the national party treasurer, we must be careful not to impose possible criminal liabilities for which the treasurer cannot be fully responsible.

Although I warmly support the move to £200, I believe that two points require further consideration. In raising them, I am not suggesting any change to the £200 limit. First, there could be a loophole in relation to foreign donors. The problem is to track back foreign

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contributions. If a £200 contribution is made on a number of occasions, how can that be checked? It is worth exploring the issue in Committee, but that is not a reason for changing the figure.

Secondly, with regard to UK donors, the individual donor will be responsible for informing the party when his overall donations exceed £200. Many innocent contributors may transgress the limit through ignorance of the fact that they must track their donations themselves. It is important that the donor's responsibility should be publicised.

The point about young persons was one of the issues raised by Lord Neill in his letter to the Home Secretary, following the White Paper. The Home Secretary responded positively, as he did on two other issues. In clause 64 and schedule 6, it is made clear that, where donations of more than £1,000 are made to individuals, whether they are candidates for Parliament or for mayor, it will be the responsibility of that individual to disclose the donation, not the responsibility of the national treasurer.

That is right, and not just for the reason that I do not want impossible burdens to be imposed on the national treasurer. There will be situations in which there will be donations to individuals that the national party may not be able, or may not wish, to track. The election of the mayor of London will provide a classic example of that. The candidate who may go forward for the Labour party will not necessarily be a candidate for whose campaign the party feels complete responsibility for tracking all donations. In other words, there is not necessarily an alignment between who stands for mayor and whether he or she wholly supports party policy. It is therefore right to include that clause in the Bill.

I turn now to fairness in referendums. The key issue here was equal public funding for both umbrella organisations. In our last debate on this matter, I referred to the fact that all members of the committee were absolutely astonished by the unfairness with which the referendum for the Welsh Assembly was carried out. When we took evidence in Cardiff, it was clear that, were it not for the courage of one woman, a Labour party supporter, who took out a large overdraft at her bank, there would not have been a campaign against the Welsh Assembly. That would have meant that, although substantial funds from Government expenditure were available for the yes campaign, there would have been nothing at all for the no campaign.

The element of fairness is best provided, above all, by having an equal public contribution for the umbrella organisation on each side. Achieving fairness by imposing a total cap on expenditure for both sides is extraordinarily difficult, which is why it is so important to keep stressing the element of having an equal public contribution to each side.

As we have already seen from this debate, a number of difficulties will arise with expenditure caps during referendum campaigns. My hon. Friend the Member for New Forest, East referred to the difficulty that I described a moment ago, and he is right to say that there will be all sorts of ways legitimately to get round those caps. It will be impossible to impose equal expenditure caps on each side.

The right hon. Member for Birkenhead (Mr. Field) made a good point when he referred to the possibility of funding through a national newspaper. There is no

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doubt that, when there is an expenditure cap, the role of the media becomes much more important, and they can create a major imbalance if they take differing editorial attitudes to the two sides in a referendum. That is why the Neill committee found that it would be difficult to have a fair, workable system of capping in referendums. I still hold to that view, which is why I took my original view on capping as a whole.

No doubt that matter will have to be discussed further because it is clear that there is unhappiness about it, but we must recognise that we will never have a perfect system of capping that will achieve fairness. Hence the importance of fairness in public contributions.

In debates in the House and exchanges in the Neill committee, we took a different view from that of the Home Secretary about the moratorium on the Government's role during the run-up to a referendum campaign. I am glad that the Bill includes the 28-day moratorium, which meets our point, about which the Home Secretary was initially a little dubious.

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