Examination of Witnesses (Questions 20-39)
LORD RAZZALL
CBE, LORD MARLAND
AND LORD
LEVY
22 JUNE 2006
Q20 Barbara Keeley: Can we go back
to the point made about the difficulty of the shortfalls that
you run into in, perhaps, a general election year and ask each
of you about how the parties cope with those potential shortfalls,
with money coming in too late and you need to spend money during
the campaign and there is always a financial crisis in general
election years. How can they be coped with?
Lord Levy: There are only two
ways, I suppose, that one can deal with that: try and persuade
those running the campaign to reduce the expenditure, or putting
pressure on those bringing in the income to try and bring in more.
It is a much tougher task to do the first of those two options
and the pressure tends to come on the second of those two options,
to try and bring in more money.
Lord Razzall: We have dealt with
it in that we have to be very careful because, obviously, we are
the smallest party. Although our routine expenditure on a year-by-year
basis has to be budgeted for and you will not necessarily have
raised the money at the beginning of the year to pay for the full
year routine, regular expenditure, as far as general election
campaigning is concerned we do not spend a pound in the general
election unless we have already raised or had that pound pledged.
If you do not go down that route the party will become bankrupt.
Lord Marland: We are the same.
Lord Razzall: Which is, again,
why I say that quite often the timing goes wrong because you do
not want to spend the money until you have got it and then somebody
gives you a large donation, with only six weeks to go, and you
want to spend it but there are a limited number of ways you can
spend it.
Q21 James Brokenshire: Following
on from that, on an ancillary point, I know, Lord Levy, you said
in your earlier comments that you have nothing to do with expenditure,
but given the tensions that we have just alluded to, perhaps,
in that last line of questioning, what is the relationship between
campaign strategists on the one side and the fundraisers and the
treasurers on the other? Are you in completely different boxes
or is there some inter-relationship between the two?
Lord Levy: I can only talk, if
I may, on the Labour side. Those in the party deciding on how
money should be spent are not involved in the fundraising, and
those involved in the fundraising have no say in how money should
be spent.
Lord Marland: Ours is different.
I have a very active involvement in how they spend money. We produce
a budget every year, as any business does. We discuss what we
think we can and cannot raise and what they can and cannot afford,
we have a priority in spending funds, we have a finance committee,
which I am on, which has to agree the expenditure and income,
and it is a constant battle of trying to persuade my political
colleagues that money does not grow on trees—which I know
you all think it does but we, funnily enough, do not! So it is
a constant battle and it is a pretty hard-fought battleground.
Lord Razzall: I suppose I have
the advantage of having filled the two roles: I was the fundraising
treasurer for 12 years and then for the last six was Chair of
the campaign committee, therefore spending the money rather than
raising it. I think the answer to the question with us is that
certainly the treasurer, in our structure, plays no role in how
the money is spent, so that is the same as Michael was saying
for the Labour Party; the treasurer's role is simply to say and
certify how much money is available to the campaign team to spend.
We are the other way round, of course; I think, with us, inevitably,
the people involved in spending the money are the campaign people,
and certainly as campaign chair I would be involved in some discussions
with donors because, of course, with us, if you are trying to
raise money for an election campaign the donor often wants to
know what his or her money is going to be spent on. So, inevitably,
there was some discussion about that, because some people will
say to you: "I would like you to spend this money in the
north-west region" or "I am perfectly happy to fund
polling". So our campaign people do get involved in talking
to donors but the treasurer, under our structures, does not have
any control over what the money is spent on, he only has control
over how much can be spent.
Lord Marland: I should just qualify—I
am sorry to interrupt you—I do not drill down in a minute
way; it is a global picture which we agree at the beginning of
the year and then it is up to them. If they want to go beyond
that then they have to seek agreement, as any other business would
have to do. I do not want you to think I am second-guessing.
Q22 James Brokenshire: I wanted to
follow up on the point that Lord Razzall moved on to, which is
the relationship between the donors and, obviously, in terms of
the need to raise funds or talk to the donors. To what extent
(I know, Lord Razzall, you have already addressed this point)
do large donors now have more of a say in terms of how the money
that they perhaps are offering is spent? Is there a change in
emphasis? Has that moved on in some way?
Lord Levy: As far as the Labour
Party is concerned, there has not been any conditionality on a
gift. When one seeks a gift and one is offered a gift, if someone
wants to learn more about how the party is spending money I refer
them to the General Secretary of the party, to go into headquarters
and see the operation, talk to him and to see the totality of
the picture of how the party is spending its money, but there
is not: "Well, if you give a gift it is going to be spent
on this aspect of the campaign". No. There is one exception
that comes to my mind from my memory of the last number of years,
and that was several years ago when one of our major supporters,
the late Lord Hamlyn, passed away. His widow wanted to give a
gift for something to be named in the new Labour Party headquarters.
That was agreed to so there would be a lasting memory for the
late Lord Hamlyn. That, from my own memory, is the only example
I can give, if you like, of a gift where something was requested,
but that was a rather unusual circumstance, but, again, not to
do with the actual campaign. The maxim would be refer him to the
General Secretary of the party to have an explanation of how the
party is spending its money, and to look around the Labour Party
headquarters just to get a feel for what is going on.
Q23 Chairman: Lord Marland, your
pitch would be different in that respect?
Lord Marland: No, not really.
We resist the temptation to have money earmarked for certain projects.
Lord Razzall: Any party treasurer
or anybody in charge of spending money would always try and resist,
in the nirvana of party financing. I am not entirely sure my two
colleagues here are not being slightly disingenuous because it
is often quite difficult to resist a donor who says: "I will
give you X provided it is spent on Y", as long as Y is something
you would spend it on anyway. That is really what the argument
is: you do not want somebody giving you money who wants it spent
on something you would not otherwise want to spend it on. Quite
often, in our experience anyway, donors will say: "I want
you to spend this money on target seats in my region of the North
West" or "I think I would like to help the leader travel
in greater style round the country". All those sorts of things
where you need to satisfy that donor that that is the way his
or her money is being spent. Where I agree with the other two
is that in an ideal world you just want people to give you the
money and spend it in the way that you best believe it should
be spent.
Q24 Chairman: Lord Marland, can I
just press you? Is it not the case that you do have donors who
say, or maybe in an exchange or conversation: "Yes, that
is something I would like to give some more money to"—some
aspect of campaigning?
Lord Marland: We have a budget
and if you want to go outside that budget it has to be signed
off. We cannot get into a situation where someone comes in and
says: "I will pay for this, and that is really what I want
to have paid for", because it changes the discipline which
you put in. It is fair to say that we obviously have a shopping
list of spends. For example, it is quite well-documented that
Lord Ashcroft supported our campaign for marginal seats, but he
was not the only one; there were probably 30 or 40 people who
supported that campaign but it was very much within the framework
of what we had budgeted, where we wanted the money to go to, etc.
If, in Lord Ashcroft's case, he felt that he wanted to fight a
political seat, for example and it formed part of our criteria,
then that was acceptable. However, your question was a different
one: your question was do we allow people to come to us and say:
"I want you to spend the money on this"? We do not find
that acceptable.
Q25 Barbara Keeley: Just to follow
up on that point, really, because I think there is almost a strongly
negative perception that has arisen from what is known as the
Ashcroft-funded target seats. It is not a little-known thing.
I think it is a very well-documented and very widely written about
issue, and if anything (certainly for me and for some other people)
it raises the spectre of buying the seat. I think that is the
difficulty of money being associated with a particular campaigning
activity, where it is very strongly documented and reported on
that Lord Ashcroft's money was used in this way on 30 seats and
those seats had greater swings. So I am surprised that you seem
to be playing it down a little, and I have to say I think that
is in contrast to the way it has been played in the past.
Lord Marland: I am not playing
it down at all; I am just stating the facts. It was not just Lord
Ashcroft; Lord Ashcroft contributed a certain amount of money
towards target seats, which was nothing like the totality that
was required by the party to fight those seats. He did not do
it exclusively, he did it in conjunction with ourselves; it was
an area which we needed support in and we would have had it from,
as I say, 20 or 30 donors. I am afraid the press portrayed it
in that way, but it certainly does not give us any form of discomfort;
it was very carefully managed by ourselves, it was very harmonious
and you can make your own judgment as to whether it was successful.
Q26 Barbara Keeley: Do you believe
it has created that perception?
Lord Marland: I think the problem
is that there is perception abroad that anybody who gives money
to a political party is trying to engender some form of advantage
for themselves.
Chairman: I do not think that was the
purpose of the question. The question was much more about—
Q27 Barbara Keeley: The notion of
buying a seat, if you like, if you lavish enough money.
Lord Marland: Let us refer to
that point. I think that it has been portrayed as such in the
press. We certainly have not found it disadvantageous in terms
of any aspect of our operation, fundraising or management. I think,
frankly, we are very lucky to have his support. If it is portrayed
like that, which people choose to do, it is a very narrow portrayal,
as often things are, unfortunately.
Q28 Keith Vaz: Do you believe, as
the Electoral Commission recommended, that the cap on spending
in general elections should be reintroduced, possibly down to
£15 million?
Lord Marland: We volunteered it
before the Electoral Commission came out with the suggestion,
and Andrew Tyrie on the Committee, with the support of David Cameron,
has produced a very fine paper, as you know, which recommends
a reduction. So we did that before the Electoral Commission.
Lord Razzall: We are in favour
of the Electoral Commission recommendation. We have also said
we think that the cap should be £15 million in every year,
not just in an election year.
Q29 Keith Vaz: Lord Levy?
Lord Levy: Yes.
Q30 Keith Vaz: What about raising
the amount of money that individual candidates can spend and,
therefore, making politics much more local? Is there any agreement
on that?
Lord Levy: That has not been my
area of expertise.
Lord Razzall: I think we need
to look at the whole area of what counts as local expenditure.
We are sort of fumbling towards a concern ("fumbling"
is perhaps the wrong word to use for what Barbara Keeley is trying
to express, I think) which is: have we got a funding structure
at the moment under which large amounts of money can be poured
into marginal seats for a lengthy period of time running up to
a general election? Of course, Jonathan is correct that there
are transparency rules about who has given the money but there
are no restrictions on how much money is spent in the run-up to
elections. I think that is an area that really does need to be
looked at. You have got the amount of money issue there as against
the transparency issue.
Q31 Keith Vaz: Lord Marland, increase
the individual limits for candidates?
Lord Marland: I think it is much
easier, to be honest, if the local associations get to grips with
that issue because ours is completely driven by the association.
So it really is not within my remit.
Q32 Keith Vaz: How can the problem
of the incumbent party's automatic advantage in being supported
by the Government Communications system be addressed? Do you all
feel disadvantaged because the Government has its own press office
supporting the work that it does?
Lord Razzall: Yes, I think this
is a bias in the system that favours the sitting government.
Q33 Keith Vaz: You need to spend
more to try and counter that?
Lord Razzall: Yes, correct.
Lord Marland: I agree.
Q34 Keith Vaz: Presumably you do
not think there is a bias, Lord Levy?
Lord Levy: I will take a pass
on that!
Q35 Dr Whitehead: Lord Marland, you
mentioned earlier the difficulty of working within a possible
upcoming period of capped expenditure when it was not easy to
find out when the capped expenditure would arise. The Electoral
Commission has suggested that there should be a regulated period
for candidates' election expenses (and, indeed, for national spending
by parties) which they suggested should be fixed at four months
ending with the date of the poll. Indeed, that was briefly a feature
in legislation before it was withdrawn. Do you think the principle
of regulated periods is workable at all? If it might be workable,
is there any particular reason why it might not be six months
or 12 months or some other period? Obviously, this is a question
for everybody.
Lord Marland: There were two strands
to your question. One was about capped expenditure, which I have
no absolutely no problem with—in fact, indeed, we generally
try and operate on a self-imposed capped expenditure of about
£50,000 per donation for the running costs of the party.
I exclude from that, so there is no misunderstanding, election
and capital expenditure. We have had a slight self-imposed promise
since I took over. I have no problem with that for the running
costs of the party at all. As far as the time period is concerned,
it is totally inoperable if you are in opposition. If there is
a leadership election and Mr Brown wins, as we are all told he
will, and he chooses to hold a snap election, how can we possibly
budget to raise £20 million, or £15 million, or whatever
the figure is, in the 12 months prior to that? It is completely
unworkable. I think you will find that the four months' limitation
will also be unworkable for the very same reason; in opposition
you cannot predict, and it is therefore unfair.
Lord Razzall: I think the system
has only really worked because it has been pretty certain that
there would be an election in 2001 and there would be an election
in 2005. That is why it actually did work. Of course, in 2001,
reminding the Committee, one or two of the other parties got caught
in a bit of wasted expenditure because at the last minute the
Prime Minister was forced into delaying the election because of
the foot-and-mouth scare, so that there were all sorts of sites
and campaigns booked which, I suspect, had to be written off by
the other two. We did not have the resources to do that so it
was less of a problem for us. It will not work if there is not
the same clear certainty as to when an election is likely to be.
The point that Jonathan made is a very valid one: supposing the
Prime Minister retires and is replaced by a new leader and the
new leader decides to go for a snap election? How do the opposition
parties plan their finances in that context?
Q36 Dr Whitehead: Do you think exactly
the same point applies both to parties' national expenditure and
to the regulation of candidates' election expenses, and that is,
perhaps, a distinction that might be made? That is the point at
which, as it were, the candidate incurs expenditure directly related
to the candidacy and is therefore regulated by the maximum limits
that apply at a local level. Are those two different points or
do you think they are aspects of the same essential point about
the working difficulties?
Lord Levy: This is not my area
of expertise at all but, just from listening to the conversation
taking place, logic would seem to dictate that it applies much
more to that local situation and local candidates rather than
on a national level. That would just be an opinion I am putting
forward as this really is an area of expertise that I have not
been involved in at all.
Lord Razzall: Currently, provided
the amount of donations are declared, as Jonathan Marland said,
to a local campaign, the local constituency election limits kick
in very late by comparison with the amount of money that is being
spent in marginal seats. This is a point I was making before:
you can pick your figure, but if you were to have a three-way
marginal seat (and there are not that many of them because they
all tend to be two-way marginals) certainly well into six figures
would be spent by the three political parties, way above the limits,
but the limits really only kick in four weeks or whatever it is
before the actual election date. So Jonathan is right, that if
anybody is given £5,000 nationally or £2,000 and-whatever-it-is
locally, that has to be declared but the actual expenditure does
not have to be declared. We are building up a real problem here,
which is the point that Barbara Keeley was making; that is where
elections are being won and lost in actually a non-transparent
way.
Q37 Dr Whitehead: Would the net effect,
though, perhaps, be that if you had a regulated period of candidate
expenditure, as we have already said, then the period during which
the expenditure might be allocated would simply get earlier and
earlier?
Lord Razzall: How do you know
when the election is going to start? We are back to the original
point you made.
Q38 Dr Whitehead: That was precisely
my next thought. Are there any thoughts that you might be able
to offer concerning the automatic advantage for the governing
party that any system of regulated periods might give in the way
that you have outlined? Are there ways in which there could be
both a regulated period but without this apparent fundamental
issue that the fact that the Prime Minister declares the election—
Lord Razzall: You could go for
a fixed term parliament, which is beyond the brief of this Committee,
which we have often advocated.
Lord Levy: I could not offer any
wisdom on when the Prime Minister chooses to stand down or when
Mr Brown takes over.
Q39 Chairman: He has not told you?
Lord Levy: Correct, Mr Chairman.
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