The Short
Money connection?
40. Special advisers assist Ministers at public expense.
Opposition parties represented in the House of Commons receive
financial assistance for the conduct of their parliamentary business.
This money is known as 'Short Money' after the Leader of the House
who introduced it. A connection between special advisers and Short
Money was drawn first by Lord Neill, who said 'one of the things
I had been thinking about myself was whether you could have a
type of Short Money scheme for special advisers'.[67]
Lord Lipsey offered a proposal: 'There is money for the Opposition,
Short Money... what I think is uncomfortable about the present
situation is that special advisers, and here I really refer to
the political breed of special advisers, are paid just like they
were any other civil servant out of the same pocket without any
discrimination. What I would like to see is, as it were, a vote
of Short Money for Government where it is not very much money
but it would be subject to proper parliamentary control and scrutiny
and would send a signal to people that these people are something
really quite different from the normal Civil Service'.[68]
We decided to investigate further the suggested analogy between
expenditure on Short Money and special advisers, the cost of each
now being broadly equivalent since the Government's substantial
increase in Short Money funding for opposition parties which the
House agreed in May 1999. As a matter of courtesy, since the matter
affects the House, we wrote to the Speaker, and the correspondence
is printed as Annex 3 to this Report.
41. We held one evidence session on Short Money.
We took evidence from the Clerk of the House (Mr William McKay)
and the Head of Operations, Fees Office (Mr Archie Cameron), from
the accountants who provide the audit certificates in respect
of Short Money for the three largest parties, and from representatives
of the parties themselves. We included the Labour Party in our
evidence because, although not currently in receipt of Short Money,
they did receive it until 1997 and they and their auditors were
in a position to tell us their impression of the system and how
they had handled it.
42. The representatives of those parties who gave
us evidence on 15th November did not see a parallel between Short
Money and special advisers. Ben Williams, for the Liberal Democrats
said: 'I am not convinced that there is a parallel between the
increase in the number of special advisers and the funding available
to the parties through Short Money'. Margaret McDonagh, for the
Labour Party, said: 'It is not something that we have debated
but I support the position of both special advisers and the allocation
of Short money to opposition parties. However, I do not think
they are in any way linked. Special advisers are there to give
political advice to Cabinet Ministers'. David Prior MP, for the
Conservatives, specifically denying the suggestion that special
advisers and Short Money could be equated, said: 'The purpose
of Short Money is to enable the opposition party to try and level
the playing field against the government so that we have some
real effort to hold them to account, given the tremendous resources
that they have with press officers and the like' and 'Short Money
... is nothing to do with special advisers. Special advisers are
in addition to that.'[69]
43. The evidence we heard about Short Money revealed
some concerns about the method of accounting for it. As the sums
involved are now substantial, we believe these concerns deserve
the attention of the House.
44. The payment of Short Money is governed by Resolution
of the House. The latest Resolution, passed in May 1999, increased
the overall amount payable by 270 per cent, (the cost in 1999-2000
was £4,863,000,[70]
with a maximum for 2000-2001 of £5,012,182[71])
and altered the payment basis. Whereas previously it had been
necessary for the parties to put in a claim, payment is now made
by the Fees Office provided that within nine months after the
end of the financial year a certificate from the firm of accountants
appointed by the party is received stating that 'the financial
assistance received and claimed was expended on expenses incurred
exclusively in connection with the party's parliamentary business'.
If no certificate were received, no more money would be paid.
The National Audit Office scrutinises all certificates as part
of its annual audit of the Members' Salaries etc Vote Appropriation
Account, but does not take its audit beyond this.[72]
The Clerk of the House and the Head of the Fees Office made it
clear that they were bound by the terms of the Resolution of the
House and could not go beyond it.[73]
45. There has been some discussion as to what, exactly,
constitutes 'parliamentary business', which Parliament has identified
as the purpose of Short Money but which none of the Resolutions
have attempted to define. According to Brian Taylor of PricewaterhouseCoopers,
who were appointed to audit Short Money for the Conservative Party
after the 1997 General Election, 'we approached the Fees Office
in the first year that we were asked to sign an opinion of the
use of Short Money. We gathered from that there was no definition,
which is why we then asked the party to form a definition, which
was very open and was made part of our opinion that we gave. What
we recommended to the party was that, rather than having their
own definition being attached to our opinion it would be far better
to have something that had been sanctioned by the Fees Office.
It was the party who approached the Fees Office to discuss whether
that could be achieved'.[74]
46. The Fees Office Memorandum continues the story:
'the auditor for the Official Opposition's Short Money account
expressed difficulty in certifying that Short Money had been spent
on parliamentary business. In response to this, a definition was
drafted by the Fees Office and circulated for comment and final
approval by the Official Opposition, the Accounting Officer and
the National Audit Office. This definition has now been agreed
and included in the "Notes for the Auditor" which form
part of the re-written audit certificate. Parliamentary business
for the purpose of Short Money is now defined as: Research associated
with front bench duties, developing and communicating alternative
policies to those of the Government of the day, and shadowing
the Government's front bench. It does not include political campaigning
and similar partisan activities, political fund raising, membership
campaigns or personal or private business of any kind'.[75]
The Clerk of the House said that he thought that rather than defining
'parliamentary business' the House authorities had attempted to
describe it.[76]
47. There was some disagreement as to whether, and
if so when, the expanded description of 'parliamentary business'
had been conveyed to the other parties. The representatives of
the Labour and Liberal Democrat parties told us in our evidence
of 15th November that they had only just heard of it,[77]
but Mr Cameron told us, in a note subsequent to the meeting that
'all parties had been informed in August 2000 when the new pro-forma
audit certificate and the new Notes for the Auditor were sent
out from the Fees Office'.[78]
48. The current system is open to the criticism that
it places the onus on the political parties rather than on either
House authorities or firms of accountants to say that the money
has been properly spent, although it is not clear that the previous
system was much more transparent. When we suggested to
Mr McKay and Mr Cameron that previously they would have seen detailed
claim forms, they explained that this was not the case.[79]
Mr Cameron explained that even the requirement to produce a contract
of employment would not of itself provide conclusive evidence
that someone was carrying out the work.[80]
They felt that detailed claim forms would help, but were doubtful
how much. The firms of accountants also agreed that demanding
the submission of more detailed claims would probably create a
good deal of work without greatly improving the system. According
to Robert Ward of Silver Altman, auditing for the Liberal Democrats,
'it would involve a lot of administration and it would obviously
make our task easier. Where do you stop? Are you going to insist
that every claim is backed up with an invoice? There has to be
an element of trust at some stage'.[81]
49. Nonetheless, all the witnesses thought there
was room for more guidance. Mr Ward said, and the other two firms
agreed, 'I think probably a more detailed definition of what expenditure
is acceptable and what expenditure is unacceptable would be adequate'.[82]
The Clerk of the House thought the system could be improved, first
by moving the House to clarify the resolution and second, possibly
by getting more details and assurances from the parties.[83]
Furthermore, he would 'welcome from whatever source- whether the
House or the political parties - some more precision, some more
reassurance which ran right through the system, as indeed I see
in the present suggestions in the Political Parties, Elections
and Referendums Bill for policy development. There is an audit
structure there.'[84]
50. We suggested to the political parties that it
might be appropriate to publish the accounts of how they spent
Short Money. All agreed in principle.[85]
We note that the Official Opposition[86]
and its auditors[87]
were unable to give a categorical assurance that its Short Money
funding was used exclusively for parliamentary business. We have
further concerns that, after an approach by the Party to the Fees
Office, a description of parliamentary business was arrived at,
without consideration by the House, which seems to allow more
latitude in how this money is spent. In particular we are not
clear how 'communicating alternative policies to those of the
Government of the day' (which is permitted under the expanded
description) is different from 'political campaigning' (which
is not).
51. We believe that there is an urgent need for stricter
regulation as to what Short money may be spent on and more transparency
as to how it has been spent. We understand that it will be for
the Leader of the House to bring forward an amended Resolution
for adoption by the House. We asked the Clerk of the House to
draw her attention to the evidence we took and he undertook to
do so.[88]
We hope that the Leader of the House will take an early opportunity
to table an amended resolution so that the House can agree more
precisely on what Short Money may be spent and how it is to be
accounted for.
52. Special support for public funding for parties
in government and special support for parties in opposition are
clearly beasts of the same field. Nothing we heard in our evidence
on Short Money dissuaded us from our view that it might be possible
to put advisers and Short Money on a more open and equal footing.
We put to Sir Richard Wilson and also to the FDA witnesses the
suggestion that the time had perhaps come to separate special
advisers from civil servants and to pay them from a separate fund.
Both disagreed. Sir Richard said 'I think the taxpayer benefits
and the Government benefits, because if they are the best person
for the job the public can be satisfied that the resources are
not being used for the benefit of a political party. For the rest,
taking Special Advisers as a whole, I think the disciplines which
we have for the Civil Service are good ones. I think that Parliament
and you as a Select Committee can get some reassurance that the
disciplines as they are defined in the Model Contract and in the
other provisions of the Civil Service Guidance provide you with
some reassurance that the role of Special Advisers is not going
wrong or getting out of hand. I do not know that I would advise
you to dispense with that kind of assurance. If you had a group
of people funded from a pot who were not in any way civil servants,
you would not be able to look to me as Head of the Civil Service
for the kind of assurance you have been looking to me for just
now. You would be basically strengthening the Government of the
day and the political party in power and I am not sure that is
actually the alteration to the checks and balances which this
Select Committee is looking for. But it is not for me to advise
you; I am trying to think my way into it'.[89]
53. These are clearly important considerations. However,
much of the anxiety about the 'political' special advisers turns
on the extent to which partisan activities are paid for by the
taxpayer and strain civil service rules. The advantage of considering
special advisers and Short Money together is that it opens up
a new approach. It would be possible to fund both political support
to Ministers and parliamentary support to opposition parties out
of a common pot , with agreed rules for both. Instead of regarding
the political advisers to Ministers as a special kind of normal
civil servant, with all the attendant difficulties, it might be
more honest to recognise them as a distinct category, paid for
in a particular way and with distinct contracts governing their
activities. We do not think this necessarily means a loss of discipline;
but it would represent a gain in honesty and transparency. We
recommend that consideration be given to the establishment of
a separate fund out of which both those advisers whom it was not
possible to recruit under civil service rules and Short Money
payments to opposition parties could be funded. Such a fund
would be commensurate with the total sum now paid annually to
non-expert special advisers and in Short money. We recognise that
this would necessitate a change in the accounting procedure in
that it would probably no longer be appropriate for the Clerk
of the House to be involved. If money for special advisers were
voted in a block in this way, it would act as a discipline insofar
as governments would have to decide how it might most usefully
be deployed.
45 
