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'(1A) For the purposes of subsection (1) any system such as is mentioned in paragraph (a) or (b) of that subsection is pending at a time when arrangements for giving effect to it have been made by any enactment but the arrangements are not yet in force.'.--[Mr. Mike Hall.]

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Clause 21

Office-holders to be registered

9 pm

Mr. Stunell: I beg to move amendment No. 177, in page 13, line 12, after "must", insert "either--(a)".

Mr. Deputy Speaker: With this, it will be convenient to discuss the following amendments: No. 178, in page 13, line 16, at end insert--

'; or
(b) where there is an approved federal party structure have overall responsibility for--
(i) the financial affairs of the federal party and for ensuring compliance with the provisions of Parts III to V and VII, and
(ii) notifying the Electoral Commission of the duly authorised treasurer of every other approved constituent part of the party.'.

No. 179, in clause 22, page 14, line 17, at end insert--

'(5A) Where a Party seeks to register an approved federal structure, it must demonstrate to the satisfaction of the Commission that its constitution includes specific provision for two separate bodies with responsibility for the same geographical area, where one of those bodies (the "Federal Party") has powers and duties relating to the whole of one or more of England, Wales, Northern Ireland and Scotland, and where each party has
(i) wholly separate functions, powers and duties, and
(ii) no duty either to approve accounts or submit accounts to the other.'.

No. 181, in schedule 8, page 123, line 43, at end add--

'(6) Where a party has an "approved federal structure" any reference to any national spending limits or accounting limits contained in Part V and Part VII Chapter II shall be deemed to be divided into two equal parts, with one part allocated to the "Federal Party" and the second part allocated to the "other approved parties"; each of the other approved parties shall have as its relevant expenditure and accounting limits that proportion of the second part of such limit as the number of parliamentary constituencies within the geographical area covered by that party bears to the total number of constituencies within the United Kingdom.'.

Mr. Stunell: All the amendments are part of a package that is designed to secure a particular possibility for the Liberal Democrats especially, and perhaps for other parties with a federal structure. We make it absolutely clear that there is no intention in any way to water down or debase the Bill as a whole. It is our strongly held view that the Bill needs to be enforced quickly, and that it needs strong provisions to safeguard the public and to ensure that abuses that have arisen on party political funding are eradicated.

I think that the Minister and other Members recognise that the Liberal Democrats have, throughout progress on the Bill, strongly supported the restrictions, the reporting requirements, the introduction of transparency and other provisions. However, we have a particular problem. At each stage at which it has been raised, the Minister has been sympathetic to our cause. We have had a meeting and an exchange of correspondence. I hope that the debate will advance that argument a little further.

Mr. Tipping: I am grateful for the hon. Gentleman's generous comments. The door is still open. There is a

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need to make further progress on the matter. At the very least, I hope to offer him and his colleagues further discussions on the point.

Mr. Stunell: I welcome what the Minister has said. In all honesty, it is very much of a piece with his approach throughout the Committee stage. It is much appreciated.

I do not want to detain the House for too long, but it is such an important issue for us that I want to get it on the record and to say how we see the way ahead. The Bill makes provisions for parties that are structured in the first place as unitary parties--parties that are homogenous in structure throughout the United Kingdom, or at least throughout the constituent parts of the UK, in many cases excluding Northern Ireland.

Within the unitary party structure, the Bill makes provision for separate accounting units. Those might be local constituency parties, or wider groupings of constituencies, regions or states, but, in essence, there is a pyramid structure, with a reporting line going from the lowest level to the top of the pyramid. In terms of the Bill, that is the party treasurer, who takes the ultimate rap if there is any difficulty or any breach of the Bill at any level within the party. As a result of discussions in Committee, an alternative structure is permitted under the Bill: a confederation of different geographical units, each of which is, in essence, a separate party. There might be a party for Scotland, for Wales, for England and perhaps for Northern Ireland.

Both those models are clearly catered for in the Bill, or in the amendments that the Government have spoken of, but the difficulty is that we have a different structure--a federal structure. That is neither widely admired nor widely understood in the House. I understand that clearly, but I am not inviting the House to convert to federalism. I simply invite it to permit us to continue to practise our minority sport in that regard.

Although federalism is a somewhat unusual concept in the House and in the United Kingdom, it is far from being an unusual concept in democracies generally. The most obvious analogue of a federal structure is that provided in the United States constitution, with which some hon. Members will be familiar, at least in outline. The United States has separate state governments and an overarching federal Government, each of whom have different duties and functions, none of which overlap or interlink.

The government of Texas, for example, are not required to report their budget to Washington, to seek approval of or to validate their actions. The state, in performing its own duties and functions, proceeds as an entirely separate and independent entity.

Mr. Paul Tyler (North Cornwall): Does my hon. Friend agree that a characteristic of good law is that it should be fully operable for the foreseeable future? Is it not beyond a mere possibility that, in the next few years, at least one of the other parties might seek to adopt such a structure? At least one of those parties believes in subsidiarity, which is another feature of a good federal structure, whereas the other has promoted devolution across the United Kingdom and might well move in that direction itself.

Mr. Stunell: I thank my hon. Friend for his comments, which are particularly apposite. When I deployed that

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argument in Committee, the Conservative spokesman, the hon. Member for North Dorset (Mr. Walter), said that the point of view that I was expressing resonated with his Conservative colleagues in Scotland.

To develop the United States analogy a little further--perhaps beyond the point that the House would prefer--the latitude provided to states extends even to whether they should have the death penalty and, if so, how it should be implemented. The United States provides freedom to states to take decisions within the bounds of the powers that they possess. That is the essence of the federal structure. Simultaneously, however, the United States federal Government have duties and powers that apply in every state.

The United States analogy is appropriate in considering the position of the Liberal Democrats. We have a federal party that covers England, Scotland and Wales. Within the federal party, we have state parties for Scotland, for Wales and for England, each of which has an entirely separate range of functions.

Our difficulty with the Bill is that it requires a reporting link from the state parties to the federal party. To fulfil the Bill's requirements as they stand, we would be required to build in reporting links, responsibility links and, ultimately, the power for the central party to overrule an act proposed by a state party. We would have to do that to comply with the Bill, but it would completely undermine the concept of a federal party and of federal government. That is why we have tabled this group of amendments.

When a party's convenience and common practice conflict with a Bill's provisions, it is entirely proper for Liberal Democrats--or our Conservative, Labour or other colleagues--to amend their practice to conform with the legislation. We are not simply seeking an excuse to continue ancient ways that happen to be convenient. When it is necessary to change to secure good practice, we fully accept that we should make that change. I should add that our party federal headquarters has been notifying our constituency and regional parties of precisely what changes they will have to make.

Conversely, however, we ask the House and the Government to give serious consideration to how the Bill might be adapted to permit us to continue our form of federalism. In Committee, I moved amendments designed to achieve that aim. The Minister, and civil servants, quite properly came back to me to say, "That's fine, but it is not guarding against abuse." Perhaps some less scrupulous party might seek to set itself up as a federal party to bypass the sensible provisions for the prevention of abuse.

That brings me to the amendments. Amendments Nos. 177 and 178 outline a process by which a party could register with the Electoral Commission the fact that it intended to have a federal structure and specify the form for that. Amendment No. 179 sets that out in detail. There would be no self-certification. The party would have to establish clearly that it had a bona fide federal structure. The amendment explains the characteristics of that in language that I hope is simple and legally effective.

Perhaps the most important amendment in the group is No. 181, because it defines how we would ensure that there was no advantage in pretending to be a federal party in order to bypass the financial restrictions and limits in the Bill. We have supported all the financial restrictions

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and limits. Later, I shall support amendments tabled by the hon. Member for Battersea (Mr. Linton) which would reduce the limits. We do not have a problem with the existence of the limits.

In discussions outside the Committee, the Minister pointed out the difficulty that our original amendments, at least on the face of it, would have entitled each layer to the full limits applicable to a party. That would effectively double the limits available. We do not want that and neither, understandably, do the Government. That is where amendment No. 181 comes in. It says that if a party has a federal structure approved by the Electoral Commission and in accordance with the other amendments, any applicable national limit should be divided into two equal parts, with one half attributable to the federal party and the other half attributable to the other bodies. In our case, those other bodies do not cover the whole of the United Kingdom, but relate to Scotland and Wales and regions of England. Their share of the second half would be in proportion to the number of constituencies within them.

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