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Bridget Prentice: I would have hoped that the hon. Gentleman could come to the House in a slightly more conciliatory fashion, given that my statement specifically says that we want all parties to be involved in the discussions.

The hon. Gentleman asks why Sir Hayden Phillips has been asked to conduct the review. The hon. Gentleman, like many Members, knows that Sir Hayden is an extremely well-respected and experienced civil servant, who has dealt with all parties and who will certainly look at the issue with a view to helping all parties to come to a proper conclusion.

The hon. Gentleman asks why the issue had not been included in the Electoral Administration Bill, but when discussions about party funding took place in 2000 no one in the House suggested that loans should be part of the Bill. That Bill is currently going through the House of Lords and we can include amendments to it this very week, so when he asks for urgency in the matter I can tell him that no one is acting with more urgency than the Government.

The hon. Gentleman asks that trade union donations be taken into account. He might want to reflect on the fact that not only trade union donations but donations from all sorts of individuals and institutions should be taken into account. He will remember that the Government prevented donations from people living outside this country ever being part of our party political system.

Finally, the hon. Gentleman asks why the report would be at the end of 2006. If it is possible for that timetable to be brought forward, no doubt it will be. However, I hope that in the spirit of co-operation, which
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he remembered to mention towards the end of his questions, he will make sure—as we want to do—that every political party, the Electoral Commission and all the stakeholders involved have an opportunity to contribute properly, so that we reach a decision that will sit properly and benefit our democracy for the future—[Interruption.]

Several hon. Members rose—

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. The House should recognise that it is probably under very close inspection from the public where this matter is concerned. We do our reputation no good if we trade insults from either side. Before further questions are put, I remind the House that the Minister is here in her departmental responsibility, answering for her Department and not for any political party.

Simon Hughes (North Southwark and Bermondsey) (LD): From the Prime Minister's announcement of a general review of funding of political parties on Thursday to the Government's conversion to disclosure of loans to political parties on Monday is a welcome and, if I may say so, speedy direction of travel—even if Thursday's announcement was extremely late, given all the press that there has been in past years, hesitant, and made in undesirable circumstances.

I have four specific questions for the Minister, representing her Department. Does she and do her colleagues agree that loans are potentially much more significant in terms of influence on the political process than outright gifts, because people can renounce claiming them back or ask for them back, and therefore have much more influence during that process? Obviously, they need to be treated in the same way.

Do Ministers now agree that significant loans made in the past 10 years should all be disclosed? If that is not done, the public will not be able to judge what the link is between fees and funds on the one hand and favours on the other.Do Ministers now accept that in a modern, pluralist democracy, nobody should be able to buy their way into a seat in either of the Houses of Parliament? Do Ministers, from the Prime Minister downwards, agree that it is time that we converted the funding of political parties in Britain back to a system in which ordinary people influence and control political parties according to their interest and their commitment and not according to their wealth?

Bridget Prentice: I welcome the hon. Gentleman to his new position dealing with constitutional affairs.

Some people would ask why loans should be regarded as more significant than donations—after all, a commercial loan has an interest rate attached to it, so some would argue that a donation would be a more influential form of funding. However, Sir Hayden's review will take account of all of those issues.

The hon. Gentleman asked about publicising loans made in the past 10 years. I cannot say at this stage whether there will be retrospectivity—if that is the correct word— in that respect, but I understand that the Labour party is today publicising all those people who have given it loans. I hope that his party and the others in the House will do the same.
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Finally, on the hon. Gentleman's question about anyone being able to buy a seat in this House or any other, we would all deprecate any suggestion of that happening.

Mr. David Winnick (Walsall, North) (Lab): I welcome what my hon. Friend has said today and recognise the   changes in relation to political donations that the Government have brought about—changes that the Tories refused to make prior to 1997. Is it not essential at long last to separate the giving of large donations to political parties and the award of peerages and knighthoods—a practice that we know has been going on for years? I believe that the public want a clear separation between the two, and I hope that our earlier reforms will be consolidated by further changes during this Parliament.

Bridget Prentice: My hon. Friend is absolutely right: it is important that we separate the two and that the two are seen to be separate. In the past few days, we have learned that perception is always key in politics and that it is important to give the public the reassurance that everything done in this House and in the other place is done openly and with transparency. We are introducing amendments to ensure not only that that is the reality, but that that is the perception, as well.

Mr. Nigel Evans (Ribble Valley) (Con): I have great sympathy with the Minister because I assume that, prior to Jack Dromey blowing the whistle last week, she was kept in the dark, as was the treasurer, the Deputy Prime Minister and the chairman of the Labour party. The Minister says that we will have transparency in relation to loans. That is right, but should we not also consider limiting the level of loans and barring any Minister from giving any loans to any political party?

Bridget Prentice: The question of a limit will be discussed during the review, and I hope that all hon. Members and political parties will play an active and constructive part in it. I have had discussions with various colleagues over the past few days about the funding of political parties, and there are almost as many views on the subject as there are Members of Parliament. I welcome the debate, I hope that it will be constructive, and I look forward to hearing from the hon. Gentleman.

Mr. Chris Mullin (Sunderland, South) (Lab): Welcome though today's announcement is, does my hon. Friend agree that we need to go much further if we are to re-establish public confidence in the funding of political parties? Will Sir Hayden Phillips consider, among other things, imposing a far more drastic cap on what can be spent nationally by political parties, and imposing a very drastic cap on what can be donated by individuals? Could he look at whether small donations should be made tax deductible for the political party of one's choice, as that is the one form of funding of political parties that the public might support? I appreciate that some of those matters are for my hon. Friend's many superiors, but will she undertake to pass the word on?

Bridget Prentice: I am grateful for my hon. Friend's remarks. I thought that we were a little more egalitarian
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in this party than to espouse the idea of having superiors but, nevertheless, I accept what he said. It might be helpful if I briefly tell the House that Sir Hayden's review will examine the case for state funding, including whether or not it should be enhanced in return for a cap on the size of donations. He will consider, too, the transparency of funding of political parties, so I hope that that covers some of the questions asked by my hon. Friend.

I remind the House that Sam Younger said in The Times:

It is a question of getting the balance right between state and private funding, and that is part of the debate.

Mr. Eric Forth (Bromley and Chislehurst) (Con): Why did the Minister decide to make her statement today?

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