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Mr. Redwood: Of course, we used to run our Conservative associations—I guess that the same is true of Labour associations—properly until the election was called, and then close them down for the election period, so that they could not spend anything that could conceivably be construed as promoting the candidate. We cannot close our associations down for three months beforehand in the belief that there might be an election, so surely a limit must be set that allows an association—be it Conservative, Labour or Liberal Democrat—to spend its money promoting itself and its message in the normal way, and to promote any local government candidates who may be needed for by-elections or local government elections. Otherwise, associations could apparently overspend, even though the money was spent on more general purposes.

Mr. Heald: That is one of the key issues. Of course, it is not necessarily associations that would have spent such money. If a council promoted a particular issue and the councillor taking the lead on it proved later to be the parliamentary candidate, that could give rise to all manner of questions relating to council expenditure. We should also bear in mind the incidental expenditure provision. The Minister is right to say that if money is spent properly and in accordance with House rules, it should not be treated as a pre-election expense. However, it is necessary to examine in detail the commission's view of such matters, which it has a duty to define.

So we need to consult fully on these many complex details if we are to avoid ending up with a provision that is very hard to implement. My initial view was that although there is a problem, in solving it we might create a worse one. I therefore welcome the Minister's commitment to full consultation and to a separate order-making power, which could be implemented at a much later date, once all these issues have been looked into. The Electoral Commission is also concerned about the matter, and it will be worth looking at the study that it is undertaking.

Progress is being made, so I do not want to press amendments Nos. 21 to 23. The Government have listened to the very important points made in Committee by my hon. Friends the Members for Huntingdon (Mr. Djanogly) and for Epping Forest (Mrs. Laing).

Mr. Heath: I agree that several bouquets should be handed to Ministers in respect of this group of amendments and I am grateful for their engagement with the arguments advanced on Second Reading and in Committee. I am pleased that the potential nonsense posed by the imprints has been resolved and welcome new clause 15 in particular. The Minister was right to say that I called for that change on Second Reading, when I made it clear that a duplication existed in the two sets of rules. That was unhelpful in many ways, as the lack of distinction between those rules was causing problems. I shall not steal the thunder of the right hon.
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Member for North-West Hampshire (Sir George Young), because he is Chairman of the Standards and Privileges Committee and I served under him in the previous Parliament, so I know how concerned that Committee was about the matter. I am grateful to Ministers for the resolution that has been achieved.

Amendment No. 3, in my name, is a serious proposal, as it deals with a practice that is becoming widespread in all parties around the country that effectively circumvents the rules on local election expenditure. Literature generated from national parties' central headquarters is sent to individual electors in a way that can be construed only as an attempt to influence a specific election. However, because that literature does not mention the local candidate and is instead signed by the leader of the national party, or someone else, it does not have to be counted against local expenditure limits.

All hon. Members will have seen that happen. The practice is especially prevalent in hotly contested marginal constituencies, but probably unknown in others. All three major parties are guilty of what I consider an abuse: a piece of material put though people's doors that is intended to promote the interests of one party and its candidate in an election, or which is intended to reduce the likely success of another candidate in that election by drawing attention to real or imagined shortcomings in that candidate's performance or policies is election material and should be identified as such.

I would have preferred the Bill to be explicit about that, but I recognise that the Government and the Electoral Commission are genuinely working to identify what should be considered as local election material. I am content to allow that work to go on, but I will not be content if large sums continue to be spent in individual constituencies without being caught by the expenditure limits.

Mr. Andrew Turner (Isle of Wight) (Con): At the last election, I was privileged to receive a letter from the former leader of the Liberal Democrat party, the right hon. Member for Ross, Skye and Lochaber (Mr. Kennedy), inviting me to support that party. The hon. Gentleman will know the effect that that had in my constituency. When he says that such a letter must be identified as election material, does he mean that it should be attributable to the relevant party's local candidate, or that it should be a cost charged to that party's national expenditure allowance?

Mr. Heath: I am very clear. The spending should be counted against the election limits for the specific candidate. I am working on the assumption that central party organisations do not send out vast quantities of material without the local candidate's at least acquiescing, if not with his or her prior knowledge. I accept that that assumption is questionable, but nevertheless we can deal effectively with the mischief only by having proper control. The practice has been growing among all parties. Certainly, a significant number of letters were addressed to individuals in my constituency from the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), and I know that people had letters from my right hon. Friend the Member for Ross, Skye and Lochaber (Mr. Kennedy).
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Let us not be silly about this: we all know it is being done by the national parties in a competitive environment and I think it is an abuse and that we need to deal with it.

Dr. John Pugh (Southport) (LD): Surely the case is overwhelming when the letter contains data that are entirely specific to a particular constituency?

Mr. Heath: I agree, but there is a much easier test. It would be a mistake to get into the situation in which each item of mail has to be scrutinised to see what relevance it has to the local constituency. The only sensible way that I can identify to deal with the abuse is to say in terms that a communication to a specific elector in a specific constituency that has a political content either in supporting a party contesting the election or in opposing one is election material. Most normal people would recognise it as such, and I should like the law to recognise it as well.

I am grateful to the Minister for listening to what was said in all parts of the Committee about the four-month issue. Let us be clear about our common ground: we all accept that there is a potential abuse, which needs to be dealt with, through substantial expenditure prior to an election being called that is not caught by the present limits. I was concerned on a number of grounds by the original proposal put to the Committee. Clearly, it distorted current election limits, which were intended to apply during an election period, but which were to be extended over four months. I was concerned because of the difficulties of identifying such expenditure in the context of an election for which there is no fixed term, and therefore no fixed date. I was particularly concerned by the position in which honorary, non-professional agents would be put. They would have to account for expenditure over which they had no direct control and which, indeed, might have happened before their appointment. As a matter of natural justice, people should not be legally responsible for something over which they had, and could have, no control.

The Minister has made a suggestion to me and the hon. Member for North-East Hertfordshire (Mr. Heald), which we readily accept is a starting point for discussion, of separating out the three-month period before the election from the usual one-month campaign period. That makes sense because it preserves the present system for the campaign period, but the great unanswerable question in my mind is how we deal with the reporting issue for a period that is not defined and in which no one is actually controlling the expenditure, but someone nevertheless has to produce under pain of law an accurate account of the money expended.

We can explore this matter further and I do not want to detain the House today in exploring all the possibilities. I took seriously the point made by the right hon. Member for Wokingham (Mr. Redwood) about the rolling three months and the differentiation between that and the period immediately prior to an election. Things could operate on two levels. It could operate as a general prohibition of political expenditure in support of a particular party or candidate over any three-month period, which would enable someone to challenge the expenditure of large amounts of money in a constituency over that time. That would be more
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difficult without a reporting procedure, but it might provide some check on unnecessary or inappropriate expenditure.

4.45 pm

We could also have a proper reporting procedure over the three-month period preceding the election, but we would need some way of protecting the agent from responsibility for matters over which he or she has no control. Part of the answer might be the responsibilities of the political associations in each constituency through the Political Parties, Elections and Referendums Act 2000 procedure. I receive regular complaints from the honorary treasurer of my constituency association about the onerous duties now placed on treasurers. They now have a very difficult task in reporting terms and the good ones take very seriously how they account for expenditure by their constituency association. Given that returns already have to be made by law, that could provide part of the answer, but it is not the whole answer because of the issue of third-party expenditure.

I look forward to further discussions on this matter. It is right that we do not proceed further with debate on these matters today, but listen to what the Government have to say, contribute to their future considerations and ask those outside the House who are expert on the issue for their views on what is practicable and how we may address the problems. We have made substantial progress on several issues in this group of amendments and I am grateful to the Government for listening in this instance.

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