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Mr. Robert Syms (Poole): I am pleased to support new clause 4, which was ably moved by my hon. Friend the Member for North Dorset (Mr. Walter).
The Neill committee report was a job well done. I was very surprised that the Government did not take up the proposals for tax relief. Everyone in the House realises that the days of large donors and, perhaps, of trade unions donating as much as they did in the past are over. If political parties want to thrive, they must get many more people donating reasonable sums of money. I am thinking in terms of hundreds of pounds rather than the £15 or £20 that they receive from ordinary party members. We all realise that that is the future.
The new clause would set a cultural environment in which people would think that it was a good thing to donate to political parties. Tax relief would provide a seal of public acceptance. In our current culture, it is fine to give £20, but if one gives a large donation, people think that there is something wrong or that one is in it for something. New clause 4 would change the culture of our political process.
The hon. Member for Tatton (Mr. Bell) made a good point: most of us regard £20 million as a lot of money. All political parties face a hard task in raising that amount. We all know of the pressure to spend in the run-up to
elections and the campaign itself and to worry about raising the money another day, and all of us in politics will try to take a shortcut if we can, provided that it is legal. Tax relief would make a great difference.
My right hon. Friend the Member for South Norfolk (Mr. MacGregor) eloquently made the case for tax relief. A greater number of donors to all political parties would greatly improve our political process. The new clause is well drafted and contains safeguards, such as a political party having to have two Members and 150,000 votes. That would accommodate Independent Members if they formed, in effect, a political party.
Even if the Government reject the new clause today, I urge them to return to the issue in future legislation. We have heard the case for special advisers, and we could consider other services on which a lot of money is spent. As my right hon. Friend said, this is not public funding, although there would be some cost to the Exchequer. A man or woman will make a personal decision to give money to a political party, and the state will give that decision its seal of approval. That is a good, healthy and honourable action, and it would lead to a much better political process.
Mr. Mike O'Brien:
The hon. Member for North Dorset (Mr. Walter), who opened the debate, said that the new clause is important to him, but is it a priority for the people of this country for us to give tax relief on support for political parties? I suspect that they would rather we spent the money that is available directly on health or education or on tax relief such as allowances for children or lone parents, individual allowances or business allowances.
We have calculated that the proposal would effectively cost the Exchequer about £5 billion. [Hon. Members: "Billion?"] I apologise--I mean £5 million. That is £5 million of taxpayers' money that would go to political parties, but which could be spent in more desirable ways. The people of this country would not support that approach.
Mr. MacGregor:
If that is the hon. Gentleman's argument, and he wants to rest it on the basis of putting the question to the people of this country, does he not think that they would feel exactly the same about the big increases in funding for special advisers?
Mr. O'Brien:
Special advisers are a different issue. That is a question of whether Ministers should have advice from someone who is able to support them through contact with their local party and the people who elected them. A Minister making a decision therefore has not only the civil service view but an independent view from someone who has a different political perspective. That ensures good decision making and is effective expenditure of public money. It enables Ministers to hear more than one point of view and therefore to reach better judgments.
The Government have sought to implement the Neill committee's recommendations as a package, as the committee intended, but we are not persuaded of the case for tax relief on political donations, as the new clause proposes. Last week, the Conservatives sought aid for their candidates' leaflets; earlier, they were seeking further aid for that. This week, they want subsidies for the salaries of Conservative party officials. Public declarations by the Conservative party of opposition to state subsidies are being replaced by constant moves to secure more and more of them.
The Liberal Democrats have always been entirely consistent in favouring state funding of political parties. The Conservative party has always said that it is opposed to such funding, but time and again in recent weeks Conservative Members have demanded in the House that the taxpayer should subsidise their politics. We are not convinced that that would be good expenditure of public money, and there are several reasons why.
The Government acknowledge the desirability of broadening the base of contributors to political parties. In placing a ceiling on political parties' expenditure, the Bill will do much to reduce their need to seek large donations from wealthy individual donors. The Government have also increased the amount of public money made available to opposition parties in order to fulfil their role in Parliament. The Bill will also provide for the disbursement of up to £2 million in policy development grants to political parties. Now, the Conservative party says, "Give us another large amount"--whether it be £5 million or not.
Against that background, we remain unpersuaded of the case for tax relief on donations. As the Government stated in their White Paper, we believe that such a scheme would amount to state aid by another route. Indeed, loss of revenue has been estimated to be between £4 million and £5 million. That must be considered in the light of our other expenditure priorities. I am not convinced that political parties are, in the broader scheme of things, a spending priority. Nor would it be desirable for them to become increasingly dependent on, in effect, public funding of their activities outside Parliament.
I recognise that the new clause would give effect to one of the Neill committee's recommendations--the Government have sought wherever possible to adhere to its recommendations--but this is one issue on which the Government have concluded that we must depart from such recommendations. That is because we do not agree with it; we are unpersuaded of the need for it.
The hon. Member for Hazel Grove (Mr. Stunell) said that the Bill might result in fewer foreign donations, with which he would be pleased, and in fewer company donations, which to some extent he accepts. That might result in less of an arms race on funding. The new clause would fuel that arms race.
The views on these matters of the hon. Member for Tatton (Mr. Bell) carry a great deal of weight because they particularly concern him and were some of the reasons why he stood for Parliament. He wanted to ensure improvement in the funding of political parties and the integrity of the political process. However, such tax relief would simply fuel the funding race that he fears the Bill will not control sufficiently.
The hon. Member for Poole (Mr. Syms) said that he thought that the future lay in getting hundreds of political party members to make contributions of hundreds of pounds. There may be members of his political association who are able to contribute hundreds of pounds a year, but I can think of very few members of my political party who could contribute £100, never mind several hundred pounds, to the Labour party. The way in which--[Interruption.] The hon. Member for West Derbyshire (Mr. McLoughlin), from a sedentary position, is starting to bandy about the names of certain individuals. We could both do that. He should be a little careful about mixing it. We could both mix it, more toughly than he intends.
I shall deal with a more sensible comment from the hon. Member for Poole. There is a difference in wealth between individuals who might comprise particular political associations or parties. There would therefore be a disproportionate advantage to one political party compared with another or, I suspect, most of the others.
I understand why the Conservatives have proposed the measure--they would benefit from it. They would get more public subsidy and probably more donations. However, I fail to see the public interest; indeed, I am not satisfied that there is a public interest. I am not satisfied that this is a purpose for which taxpayers in my constituency would want reliefs to be granted. Neither I nor the Government are prepared to recommend the new clause.
Mr. Walter:
Until we heard the Minister's contribution, I thought that a considerable consensus on our new clause was building up in the House.
I am grateful for the valuable contribution of my right hon. Friend the Member for South Norfolk (Mr. MacGregor), who was a member of the Neill committee, as he pointed out. Like hon. Members in all parts of the House, I regret that my right hon. Friend is not standing at the next election, and that we will not benefit from his contribution after that.
My right hon. Friend summed up exceedingly well the basis of the Neill recommendations. As he said, the new clause is not a charter for those who write out large cheques. It states clearly that donations would be capped at £500 and relief would be granted at the basic rate of income tax. It would answer what my right hon. Friend considered spurious objections from the Labour party. Few donors to any political party are below the tax threshold, so donors to all parties are taxpayers. My right hon. Friend stated that Labour would benefit from the measure.
As my right hon. Friend pointed out, because of the way in which our new clause is phrased, the administrative burden would fall on the political parties. It would not be a requirement on each taxpayer to reclaim the tax. Claims for tax relief would be made by the small number of political parties when they made their returns to the Inland Revenue. The administrative burden would fall not on the various inspectors of taxes, but on the party treasurers. In any case, the amount of tax forgone by the Treasury would be quite small.
I was grateful for the support from the Liberal Democrat Benches. The hon. Member for Hazel Grove (Mr. Stunell) posed the question of where the money would come from to fund the political process in the
future, as several categories of donors to our political parties are excluded by the Bill. He asked who would replace the overseas donors who could no longer contribute, the corporate donors who might in future have difficulty getting shareholder approval for their donations, and the large donors who valued their present state of anonymity but whose names would have to be published if they wrote cheques for more than £5,000. The hon. Gentleman's view was that the parties would have less money at their disposal, so an incentive scheme such as the one proposed would be of value to all political parties.
I am grateful for the support of the hon. Member for Tatton (Mr. Bell). We all applaud his championing of the cause of the little people in politics. The measure is designed to govern the financing of political parties, so as an Independent, the hon. Gentleman unfortunately would not benefit from the provisions of the new clause. The Bill is quite specific in its definition of an "Independent".
My hon. Friend the Member for Poole (Mr. Syms) spoke of the change in the cultural environment that would be brought about by the Bill. He argued that through legislation, we should make people aware that it was socially acceptable to give slightly larger sums to political parties--sums up to £500--in the same way as it is socially acceptable to give larger donations to charities, up to the same level. He thought that that should be encouraged by our political process.
Finally, we heard the contribution from the Minister, who at the beginning had difficulty distinguishing his billions from his millions. I can reassure him that the figure that he was looking for was £5 million, not £5 billion. He later qualified that as £4 million to £5 million. In the context of Government expenditure, £5 million is quite small beer, considering the incentive effect of the new clause. We are discussing the incentive effect for parliamentary democracy, not state subsidies for political parties.
The Minister accepts that we need to broaden the base of support for our political parties, but he believes that capping at just under £20 million the sum that a large political party can spend in a general election would broaden the base of our democracy.
The Minister was entirely wrong about one thing: the new clause may have been tabled in the names of my right hon. and hon. Friends, who are all members of the Conservative party, but it is not a recommendation of the Conservative party alone; it is a recommendation of the Neill committee.
Neill's recommendation 38 states:
Tax relief by deduction at source should be introduced, limited to the basic rate, on donations of up to £500 a year to eligible registered political parties.
Neill's recommendation 39 goes on:
Political parties should be eligible to claim under the tax relief scheme if at the last general election two members of the party were elected to the House of Commons or one member was elected and the party won at least 150,000 votes.
The Government must not cherry-pick the Neill report, which arose from an independent inquiry and is broadly supported in the House and very much supported in the country. The report is designed to bring a new level of financial propriety into our political process, and transparency into our political operations. Underlying the report is the view that we should broaden the base of political support and encourage more people to participate
in the political process, not just by voting at elections but by contributing to our political parties. If the Government do not accept the new clause, we will press the motion to a Division.
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