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9.6 pm

Mr. John Smith (Vale of Glamorgan): I add my welcome and support for the Bill, it has been a delight to hear so much support being expressed from both sides of the House, even with reservations such as those of the hon. Member for Blaby (Mr. Robathan). It is extremely encouraging that there is such widespread support and to hear such comments, although it is sad in many respects that such a Bill has had to be laid before the House. The primary reason for that is that we had reached a crisis point in terms of trust in politics and politicians in this country by the end of the previous Government's term of office.

When I came into politics some years ago as an unpaid lay councillor--I am sure that I do not need to tell you this, Mr. Deputy Speaker--it was a pastime that garnered some respect in the community, even at local councillor level. Our Member of Parliament 25 years ago, who was not of my political persuasion, enjoyed considerable respect, trust and confidence in the community, but there has been a gradual decline over the past 25 years. Unfortunately, over the past 10 years, there has been a dramatic fall in confidence in politics and politicians among the general public and we have to put that right. The Bill puts us well on course to doing just that.

In 1992, not out of choice, I was obliged to leave the House for five years, but not as a result of the wishes of my constituents because the majority of them voted for me to remain their representative for another five years. A small proportion--people living in other lands--who had little association, if any, with my constituency decided to vote for someone else and put me out of office, but I was delighted to be re-elected with the biggest majority in my constituency in 50 years. That was partly a consequence of a lot of people feeling upset because they did not think that their voice--the local voice--counted.

I welcome the Bill with its transparency, which will go down well, and the limitations on expenditure. More than anything else, I welcome the restrictions on foreign donations and donations from foreign nationals. I wish only to draw attention to a couple of matters. The first is tax relief on donations. A number of arguments have been made today, but there is a simple point: if we have not accepted in the Bill the principle of general state support for political parties, we simply cannot accept tax relief on political donations. No matter what spin or gloss is put on it, it is a form of general state support for political parties so we should give that one short shrift.

The second matter, which concerns me greatly, is the danger of evasion of the restrictions on foreign donations. The Bill has had all-party support. Many parties, including the Conservative party, have already begun to embrace the Neill committee's recommendations. That is good, and we are on track and going in the right direction. Before the Bill becomes an Act, I hope that many, if not all, the parties in the House will have adopted many of these proposals.

However, I am concerned about a particular political party. The House may be surprised to hear that it is not the main Opposition party. One of the key

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recommendations in the Neill report, which is implemented in the Bill, is the publication of accounts. That must be the first step towards transparency and openness in public accountability for the funding of political parties. One party in the House still has not published its accounts, and that is Plaid Cymru. Despite giving an undertaking to do so, the Welsh nationalists have failed to publish their accounts and, by that very act, they have undermined confidence in the political system in Wales in particular, and across the country.

It may or may not be a coincidence that Plaid Cymru has a secret dollar account in the United States of America. We do not know the value of that account containing donations made in north America, because the party does not publish its accounts. As far back as January 1996, the Welsh nationalists are on record as saying in the House that they would not accept any donations from foreign sources. Two of the most senior members of that party supported a ten-minute Bill to that effect.

We now discover advertisements in the north American press for donations towards the fighting funds of the so-called party for Wales--which has to go to north America for its funding. It is seeking funds and sources of funds to raise $250,000 for its war chest for the election, having given an assurance in the House and elsewhere that it would not accept donations from foreign nationals. When challenged, the Welsh nationalists say that they adhere to the Neill committee's recommendations and that they do not accept donations from anyone other than people entitled or registered to vote in this country. It does not say that in the adverts that appear in the north American press.

A point that must be raised in relation to the Bill is that we have no way of knowing whether Plaid Cymru has received donations from any source if at a later stage it says that it accepts donations only from people registered to vote in this country, as does its sister party. In fairness to the Scottish National party, its website makes it absolutely clear and states publicly that it will accept donations only from people registered to vote in this country. Plaid Cymru, the so-called party for Wales, does not do that. It has given two undertakings to provide information to prove that it is not receiving money from any foreign nationals based in north America, but it has yet to do so.

Plaid Cymru is making a big mistake. It is damaging politics in Wales, and damaging the reputation of the House. The Minister should reconsider clause 54 to ensure that we can enforce the regulations relating to donations that are not permissible from countries where our jurisdiction is limited. It is all very well for political parties to say one thing, if they are doing another.

Like all hon. Members who have contributed to the debate, I warmly welcome the Bill.

9.15 pm

Dr. Julian Lewis (New Forest, East): It was a pleasure to hear the hon. Member for Vale of Glamorgan (Mr. Smith) pay tribute to his predecessor, the late Sir Raymond Gower. I come from south Wales, and I well remember the respect in which Sir Raymond was held. The hon. Gentleman was right to suggest that such personal regard can have a massive effect on votes at a general election, but I would take that argument further, and draw an analogy with personal regard for the

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behaviour of a party. When such personal regard disappears--as it had undoubtedly disappeared for the Conservative Government by 1997--it, too, can have a massive effect in a general election.

Along with most of my colleagues, I welcome the Bill for the most part, but we should recognise the importance of having faith in the democratic process. It may be a bit rough and ready, and it may take some time to come into effect, but, at the end of the day, if a party behaves badly, it will be punished. I think that we in the House are mistaken if we feel that everything must be tied up in clauses, subsections and schedules, because eventually the British people will have their say. They will make their judgment, and deliver their verdict.

I assure the hon. Member for Vale of Glamorgan, and all hon. Members present, that plenty of Conservative Members are determined, by their examples, to try to restore the standing of Members of Parliament in the public perception, in the same way as the hon. Gentleman and his colleagues. That applies to new Conservative Members, and to those who were here during the last Parliament, and who viewed much of what happened then with dismay.

In the spirit of agreement that has permeated today's debate, I want to raise three issues. Two have been mentioned today; I have mentioned the other in a different context, but I believe that it is relevant to the Bill. My first point relates to the excellent speech made by my right hon. Friend the Member for South Norfolk (Mr. MacGregor). He mentioned the Neill committee's concern about the fact that the referendum for the establishment of the Welsh Assembly was almost even more one-sided than it turned out to be: only by sheer chance was there any financial support for the "no" campaign. That is why I agree with the Bill's provision that public money should be available for umbrella groups--up to £600,000 for each group on each side of the argument.

As I said in an earlier intervention--and as a number of hon. Members seemed to confirm by agreeing with me--we have a major problem with the provision imposing a cap on what individual pressure groups can spend from funds that they manage to raise privately. Naturally, if they are not members of umbrella groups, they will have to raise the funds privately. In my intervention, I explained that I used to run a campaigning pressure group, which, as the hon. Member for Southampton, Test (Dr. Whitehead) was kind enough to remind the House, dealt with nuclear weapons and the importance--as I saw it, and as it was seen by people who shared my beliefs--of retaining the nuclear deterrent in the climactic closing years of the cold war in the early and mid-1980s.

Let us suppose, for example--I believe that examples help to concentrate the mind--that, in 1983 or 1984, a referendum had been held on whether Britain should retain its independent nuclear deterrent. Let us suppose that the various groups campaigning in favour of either side of the argument had been able to raise a certain amount of money. I was running a group with the short and snappy title of the Coalition for Peace Through Security. Lady Olga Maitland, who later became a much respected and doughty Member of Parliament, was running another group with an equally short and snappy title: Women and Families for Defence, later truncated to Families for Defence.

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What would we have done if we had been told that we could spend only a fraction of the money that we were able to raise? Let us say, for example, that we were allowed in that campaign to spend £10,000 per group and could have raised £30,000 each. What would we have done? I can tell hon. Members what I would have done. I would straight away have disbanded the Coalition for Peace Through Security and set up the coalition for peace, the coalition for security and, with all due deference to Lady Olga, the coalition for defence.

What would Lady Olga have done? She would have set up families for peace, families for defence and families for security. Straight away, we would each have trebled our capability to spend money, if we could raise it. It is manifestly obvious that such a restriction is no restriction at all.

No doubt the pro-nuclear disarmament lobby would have adopted similar tactics. It had plenty of groups. There was CND, Teachers for Peace, Women Opposed to the Nuclear Threat, Scientists Against Nuclear Extermination and even, notoriously, Babies Against the Bomb. Those would all have been able to subdivide and to replicate themselves ad nauseam. I do not see the hon. Member for Test disagreeing with that. I suspect that he was a member of at least some of those groups and knows that I am telling the truth. The Government have to deal with that problem because it is a meaningless restriction as it stands.

I turn to the point that was rightly highlighted in the excellent speech by my hon. Friend the Member for Blaby (Mr. Robathan). My calculation slightly differed from his as to what money would have been available to political parties that were campaigning for and against the single currency, but the broad principle applies.

I calculated that, under the Government's original provisions, probably a £20 million limit would have been imposed on parties campaigning in favour of the single currency and only a £5 million limit would have been imposed on parties campaigning against it; that limit could possibly have been £10 million. However, from my calculations, it still appears that the limit for those campaigning in favour will be at least twice that for those campaigning against. That will lead to a disparity in the campaign resources that parties are able to spend.

Let us suppose, however, that the Conservative party and those who campaigned to retain the pound could raise more money than they were allowed to spend. What would happen under those circumstances? Do people honestly believe that that money would just remain in the pockets of potential donors, who had been willing to give it to the Conservative party to campaign to save the pound? I doubt it. They would find other avenues. It would go to other groups, bodies and organisations.

That is why the whole concept of putting caps on what may be spent by parties or groups in a referendum is fundamentally flawed. I am not alone in that opinion. I understand from my right hon. Friend the Member for South Norfolk (Mr. MacGregor) that that is precisely the reason why the Neill committee did not recommend capping the limits in that way.

I was particularly impressed by the point made by my hon. Friend the Member for Blaby--that the whole purpose of having a referendum is to cut across the normal

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party divisions that form in general election campaigns, and that determining how much each party should be able to spend in a referendum by its vote at the previous general election misses the whole point of creating special referendum arrangements.

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