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Bridget Prentice: Because the Prime Minister and the Government thought that it was important, given that the Electoral Administration Bill is proceeding through the House, to take the opportunity to make a statement at this time.

Mr. Dennis Skinner (Bolsover) (Lab): Is my hon. Friend aware that, contrary to all the talk in the media, the sad fact is that over the past 20 years or more there has been a disinclination among the public either to join parties or to contribute to them? They then complain, wherever the money comes from. Can I suggest to my hon. Friend that the last people we want lectures from are the party of Ashcroft, Aitken and the rest? We do not need any lectures about a Swiss rollover by the Liberal Democrat— but if we did go further we could abolish the House of Lords and the honours lists so that there would not be very much left to buy.

Bridget Prentice: My hon. Friend leads me very temptingly down a path that it is not appropriate for me to take, given the nature of the statement. It deals with the funding of political parties, so he is quite right to refer to other political parties. This is something in which we all have a stake, so we should all work on it together. As for the reform of the House of Lords, he will wish to know that we look forward to proceeding with change there very speedily indeed.

Miss Julie Kirkbride (Bromsgrove) (Con): The Minister just said that perception is important in politics, so does she agree that the public perception of this sorry affair is that the Prime Minister has been caught red handed, selling peerages in return for party funding?

Bridget Prentice: The Prime Minister, in his statement last week, took responsibility as the leader of the Labour party. I think that that was right and proper, and something that I would expect him to do.

Geraldine Smith (Morecambe and Lunesdale) (Lab): I welcome the Minister's statement today. It is quite right
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that all political parties should declare any loans that they receive and it is right to review party political funding, but I would err on the side of caution in going down the road of state funding for political parties, which would go down like a lead balloon with the public. The way forward has been mentioned already—we should make the cap on spending at elections much lower than at present. I am sure that members of the public will not mind if they only receive one DVD instead of three. [Interruption.]

Bridget Prentice: Of course, as my right hon. Friend the Leader of the House says, it might depend on whom those DVDs are from. However, I hear what my hon. Friend says about state funding. She reflects a view that, I suspect, is held quite widely. That is part of the reason why the debate about getting the balance right is important. As I have already said, a reference to the cap on funding is in the review.

Mr. Quentin Davies (Grantham and Stamford) (Con): I am of the view that most party political funding is wasted anyway on embarrassing and probably counter-productive advertising campaigns and dubious spin doctors, on the part of all the major parties. Was the hon. Lady, in her response to my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), seriously trying to tell the House that the occasion of her statement today had nothing whatever to do with the scandal and revelations of the past few days? If so, I fear that she may be unnecessarily damaging her own credibility, as well as setting a very poor example of candour in the House. Does she accept that not to reveal a loan, as a financial relationship, is thoroughly disingenuous and misleading?

Bridget Prentice: Obviously, the discussions that have been taking place over the past few days are ones to which we must all respond. It is not perhaps in the hon. Gentleman's best interest to try to say that this is something that affects only one political party—[Interruption]—or to imply that that is so. I hope that he agrees that it is necessary for us all to work together.

As I said earlier, it is important to re-engage the public in democracy. It is important that they see that we are transparent in the way that we are funded. There is a dichotomy: we do not want political parties to be funded by shady individuals from abroad; nor do people necessarily want to pay for them through their taxes. We must find a way that gets the balance of party political funding right—whether partly through the state or partly through private donations—but whichever way that is done, it must be transparent, and that is what we hope to achieve.

Andrew Mackinlay (Thurrock) (Lab): Has the Minister noticed that Sir Hayden has been honoured? Is there not a case for appointing a real person to conduct the review, rather than a member of the establishment, the glitterati, that magic circle that runs the country, whether it has a Labour or a Tory Government? Will she support an amendment to disqualify from getting a peerage anyone who makes a substantial loan or payment to a political party? That is what is necessary, and on that, with the greatest respect, the Prime Minister—she might find this hard to believe—is wrong.
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Bridget Prentice: I think that all political parties in the House that propose people for appointment as working peers would say that they put forward the names of people who have contributed greatly in public life, so I would not want to go down the road of banning every form of donation. I am sure that Sir Hayden will be more than delighted to hear my hon. Friend's views on what should be in the review.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): The hon. Lady's statement is most welcome today, but it would have been even more welcome if it had been made before last week's revelations. She referred twice in her statement and once in an earlier response to the word "transparency". In the interests of transparency and gaining some ground back on the way in which the public consider politicians in general, can she tell the House whether there will be an investigation of recent events by the Labour party under the Honours (Prevention of Abuses) Act 1925?

Bridget Prentice: There has been no abuse under the 1925 Act.

That was said by the hon. Member for Tatton (Mr. Osborne) on a broadcast made yesterday. The hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) should be aware that the 2000 Act allowed for loans to be made in the way that they have been made. We are tabling an amendment to the Electoral Administration Bill to ensure that there is transparency.

Alan Simpson (Nottingham, South) (Lab): I welcome the Minister's statement and her announcement that the Labour party is opening its books in respect of the loans and gifts made to it. Embarrassing as it may have been to Labour party members to discover that we were in receipt of loans, will my hon. Friend confirm that although Labour Members knew next to nothing about those loans, the House knows absolutely nothing about loans and gifts made to the Tory party during the same period? Will she confirm that the terms of Sir Hayden's inquiry will include a 10-year retrospective on loans as well as gifts, and that it will explore the terms of loans and whether they varied during the period of the loan? Will he make recommendations on the most effective way of severing any connection between financial assistance to political parties and the honours system?

Bridget Prentice: My hon. Friend is right. It might be appropriate to remind the House that it was this Government who brought in the 2000 Act and set up the Electoral Commission. We have said that we want to make the system even more transparent. I know nothing about loans to the Tory party and it is not my place to make any comment on them from the Dispatch Box. Nevertheless, I can assure my hon. Friend that Sir Hayden's review will be able to examine funding right across the board and, if he comes to a conclusion about the retrospective nature of that funding, I am sure that he will bring it to the attention of the House.

John Bercow (Buckingham) (Con): Given that it is vital to dispel any notion that the funding of any
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political party secures access to the legislature, is it not the most important and urgent responsibility of the Government to bring forward proposals for a predominantly elected House of Lords, because that is the only credible and defensible basis upon which to constitute the upper House in the 21st century?

Bridget Prentice: As I mentioned earlier, the reform of the House of Lords is a matter that we are studying closely. I hear what the hon. Gentleman says. I know that there are various views in the House. I may not entirely share his views in that respect. It is relatively new for the Conservative party to believe in a non-elected House—

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