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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 1060-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE Constitutional Affairs Committee
Tuesday 16 May 2006 SIR HAYDEN PHILLIPS GCB FRANK HINDLE, COLLEEN FLETCHER and DAVID SIMPSON Evidence heard in Public Questions 127 - 261
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Constitutional Affairs Committee on Tuesday 16 May 2006 Members present Mr Alan Beith, in the Chair James Brokenshire Barbara Keeley Mr Piara S Khabra Julie Morgan Mr Andrew Tyrie Keith Vaz Dr Alan Whitehead Jeremy Wright ________________ Witness: Sir Hayden Phillips GCB, gave evidence. Q127 Chairman: Sir Hayden, welcome back. First of all, may I declare on behalf of us all that we all have interests in this matter; one or two people have got specific interests declared in the Register of Members' Interests, but all of us are elected as members of political parties which receive donations and are involved in party fundraising. Secondly, we received, seconds before the start of this Committee, a document which has our name on it, which I have to say we found rather disconcerting. This may be because it was sent to be helpful, but actually we have in front of us a substantial document, much of which is what is going to appear on your website, or may already appear on your website, about the issues around party funding, about which we cannot question you because we have not had the opportunity to read it. What is the status of this? Sir Hayden Phillips: Chairman, I should explain that I had to try and find a moment when it was sensible officially to launch the review I had been asked to conduct, and it seemed to me that the appearance before your Committee, together with the launch of the website, provided such an occasion. The website is a statement of facts as they are generally known on a number of strands that may be involved, a series of questions to try to engage some degree of public interest in this affair. As usual in life, of course, our giving it to you was indeed meant to be helpful; if it turns out not to be the case I know you will want to find time, if you wish to, obviously to question me in more detail about what is in it, but I hope it will be on the whole straightforward and non-controversial. That is what it was intended to be. Q128 Chairman: It contains, as I understand it, various propositions about what the present situation is which might give rise to debate and argument, and as Chairman I have ruled that we cannot do that today because we have not had the opportunity to consider it. We shall ask you the questions that we originally wanted to ask you, fully aware of course that you are at the start of an inquiry and we are not primarily interested in whatever views you might have on the subject because I am sure you are trying to assemble other people's views, but the document may well give rise to things we want to ask you about and we may want to bring you back to clarify issues. Sir Hayden Phillips: I absolutely understand. Chairman: I was about to call Mr Wright, but do you want to come in, Mr Tyrie? Q129 Mr Tyrie: Only to say, Sir Hayden, that when you said you needed to find a moment to launch it, it might have been helpful to find a moment such as 24 hours earlier than you did so the Committee had a chance to absorb what is clearly quite a detailed document, 25 pages. Do you think, on reflection, that that might have been a good idea? Sir Hayden Phillips: It might well have been a good idea. I had to bring together a number of strands to find the right day to do it, including having got the work completed. Q130 Mr Tyrie: When were you appointed? Sir Hayden Phillips: I was appointed on the 16, 17 or 18 March. Q131 Mr Tyrie: What is it now? Sir Hayden Phillips: It is now 16 May. Q132 Chairman: Could I just clarify something else at this point? Are you the honest broker; is the function of your inquiry to deliver unto your new minister, Jack Straw, some kind of done deal between the three main parties? Sir Hayden Phillips: When I was asked to undertake this review, essentially it was in this sense in two parts: one is to obviously collect views from a whole range of quarters, including, I hope, from the public as well as from political parties, and to do my best to bring an analysis of what the options and choices seemed to be. The second part of it was to try, as far as possible, in discussion with the political parties, to produce as much agreement between them as was possible on the way ahead, so in that sense I have been asked to try to find a set of proposals around which a consensus can gather, so it is those two elements taken together which really represent what I have been asked to try to do. Q133 Jeremy Wright: Just following on from that for a moment, does it follow from what you have said then that your report will not be making recommendations which come about as a result of the exercise of your judgment from what you have heard, but simply your job is to try and draw together what you hear from other parties, particularly the political parties, and construct a report based on what is a consensus agreed between them? Sir Hayden Phillips: No, I do not think I am just as it were a receiving device and a person who collects lists of what people tell you. The process itself will, I hope, result in conversation and dialogue with the political parties about a whole series of issues, in which I can hopefully discuss with them my analysis of what the situation is and what might be sensible things to do, and they can react and give me their views over a period of, say, six months, and we can do this very deliberately. It may sound a bit as though I am trying to have it both ways, but in a sense what I want to try to do is bring the analysis that we do together with the views of the parties and try to get the two things to cohere, so that when we come to the end of the day I can produce a report that has an analytical base, which people can read and I hope is persuasive, which will then lead to conclusions which I hope I will be able to say are, as much as possible, agreed between the political parties as to the way ahead. Q134 Jeremy Wright: In that case do you have any concerns about your experience of the subject-matter which this report will cover, and by that I mean you will not be surprised to learn that there are many people who look at your career and say "This is a man who has deliberately, and for the good of his office, absented himself completely from the grubby world of politics; if he has done that and he is being asked to construct a report about the world of party political activity - which is really what this is - is he the best man for that job?" What is your reaction to that? Sir Hayden Phillips: Two reactions. One, whenever you ask somebody to conduct an inquiry there is no doubt going to be both strength in what that person brings to it and potential weakness. It might have been very difficult to say the Prime Minister decided to choose an individual politician from any particular party to conduct it, and I do not think that would have been the right thing to do. As a Permanent Secretary of course you are not engaged in party politics, but in 37 years in government, working both for Labour governments and Conservative governments in that time, you see quite a lot of political activity and you absorb information about the system, not necessarily from personal direct experience. I hope I can manage to bring the independence from party politics, which I genuinely have, as an element into conversations with the leaders of political parties, and that that blend of dialogue can actually result in a report in which those who have been engaged in party politics will recognise the reality that is reflected in it, whereas those who want also to see that there has been an independent analysis, which is not in that sense party pre, will see that there as well. I do not think it is going to be easy, but in that process of dialogue I hope that those who would be critical of me for not being of a party political background would have some confidence. Q135 Jeremy Wright: We can all understand the dilemma and I follow the point entirely that the fact that you are independent gives you an advantage, but in your view is there a way in which you can try and compensate for the fact that although you will have talked to politicians and politics will have entered into the conversation, presumably as soon as the issue of party funding came into the conversation you turned on your heel and left the room because it would have been highly inappropriate for you to be involved in that. Is there a way in which you think you can compensate for that? Sir Hayden Phillips: During the period towards the end of my time as Permanent Secretary at the Department for Constitutional Affairs the responsibilities for party political funding and a whole range of other electoral issues were transferred to my department, so I do not necessarily turn on my heel when someone mentions the word party funding to me; indeed, at the moment I rather listen to what they have to say, and there are quite a lot of people, I have discovered in the relatively short space of time, who have a lot of views and sometimes deeply felt views. At the early stages of the work I am doing it is very important that I sit and listen to what people have to tell me, and that when I am talking to political parties they enable me, in so far as it is possible, to get under the skin and go with the grain of the way they see the issues from their perspective as I may see them from a slightly more detached view. Q136 Chairman: In this process of seeking agreement between leaders of parties do you expect to be going to and fro, going back for a second round and saying I have not been able to find agreement on this, how would you feel about such-and-such? Sir Hayden Phillips: Yes, I probably would, unless on day three as it were I suddenly find there is a clear and overwhelmingly persuasive consensus, which I would not expect to happen immediately. I see the process, Chairman, as one in which I would have initial meetings, not just with the main parties but with all parties represented in Westminster, in Cardiff, Edinburgh and the European Parliament. I will then talk to them initially about their views, the position they come from, where they think the strengths and weaknesses of the proposals they are putting forward are. Then I would see a process of analysis and trying to iron out where I think people are coming from in this and how it relates to your question, to the analysis we are doing at the same time, and then I would see me going back and talking to them and saying, look, let us have a second stage of conversations and hopefully try to get nearer to agreement if we can and, above all, get down to the layer beneath the high level of generality and start to look at the detail, and to also look very carefully and discuss with them how practical proposals are and what the implementation problems might be, whether it is realistic. In that respect I must work particularly closely, I think, with the Electoral Commission as well as with political parties, because we all want to come out with something at the end of the day which does not turn out a couple of years later to be so full of loopholes that people have found their way through them. Q137 Chairman: That gives rise to a situation like the one we are in now you mean? Sir Hayden Phillips: If you look, not just here but in other countries with western democratic traditions, it has been a constant struggle to try to create a system which actually holds for a long period without creating loopholes. That is a very important part of the work and even if you have a consensus about some general proposals, that does not do the job, it is the detail at the end of the day that will make this work, if you can get that consensus in general. Q138 James Brokenshire: How widely will you be canvassing opinion and how do you intend to go about it? Sir Hayden Phillips: There are three sorts of strands to canvassing opinion. Obviously, talking to the political parties is a crucial part of that, and I hope to be writing to all of them today or tomorrow to invite them to talk to me. The second thing I do want to try to do, which is perhaps more difficult - hence the website - is to try and engage public opinion and get members of the public to give me their views and react to the issues as they see them, so that, as it were, I am not seen to be doing an operation of consensus building entirely in private and only in conversations with political parties. Thirdly, I want to build, as I hope the chairman of the Electoral Commission and I have already begun to build, a good and open relationship with them - they are the independent regulators, they have the greatest degree of information about what has been going on in elections - and talk to them and to a number of academics who work in the field so as to draw in that strand of work as well. I hope in that combination of ways - political parties, public opinion, the Electoral Commission and academics as well - that will, at least at the start, be a sufficiently wide brief to carry conviction. That does not mean to say that my mind is closed to thinking of other ways to do it if people have suggestions that are practical. Q139 James Brokenshire: Part of the backdrop to all of this is actually building public confidence in the way that political parties are funded, and I noted the reference that you made to obtaining the public's views, and in the embargoed press release that you handed to us just before we started you said that the point of having a website is to "hear the public's views in addition to the views of the political parties". Do you think that just having a website is sufficient to get the views of the public, given that you want to go into a lot of detail, as you have already said? Sir Hayden Phillips: I do not think it is sufficient, but I hope it will be a good start. We will obviously make the information that we produce in terms of the analysis available to members of the public more generally. I am still undecided, frankly, whether my review should engage in doing its own polls of public opinion or bringing groups of people together, "focus groups", to talk about these issues; I am very conscious that the Electoral Commission, who will be talking to you a bit later, in the ordinary course of their work do a lot of those things, and that therefore I could draw from their work and that of others who are polling public opinion in these fields without creating a whole new apparatus for public consultation. As I say, I think this is something I should continue to think about and listen to what suggestions people have. Q140 James Brokenshire: You have talked about the various different strands that you are adopting, when do you expect to be able to report back publicly, at least on your initial findings? Sir Hayden Phillips: What I have been asked to do is report by the end of the year. I would like to feel that during the course of the process quite a bit of the analysis which the review does can be made publicly available, but if you are engaged in a series of conversations or talks to try to build a consensus, there is an issue where you have to make a judgment as to whether you help that process forward by, at some stage during the course of the review, explaining in public where you have got to or whether you actually hinder the process by doing so. I will not be in a position to make a judgment about that until the early autumn, but that judgment will then have to be made and I do not know what my view will then be. Q141 James Brokenshire: You have emphasised this need for consensus; is that consensus among the public, is it consensus among the political parties? If there is a conflict of the two, which one are you going to be opting for out of that? Sir Hayden Phillips: I am going to plead the Fifth Amendment at this point and say I agree, that may become an issue, but I am not going to make up my mind now as to how that might be resolved. If it does become an issue I hope and believe that actually, if we go about this work in the right way and I have the co-operation, as I am sure I will have, of the political parties in these conversations, we can produce a result which will be both acceptable to them and, I hope, acceptable to public opinion. If there is a divergence I shall have to think about that. Q142 James Brokenshire: Do you accept though - and you have already said that you will be going to and fro between the political parties, almost scurrying back and forth to try and get this consensus - that if there is not that public aspect to it there is a very real risk that it just looks like a political fixer running to and fro without gaining that public support? Sir Hayden Phillips: Potentially I say there is a risk. That is a risk that the political parties also run, possibly in greater measure for the longer term, and that is something which I will need to talk to the political parties about in every case. They will want to ensure, as much as I will, that what they are putting forward is likely to have broad public support. Q143 James Brokenshire: Have you been able to draw any conclusions from the Power report and have you had an opportunity to speak to its authors or any of the academics at all as yet to help you inform the manner in which you might proceed with your inquiries? Sir Hayden Phillips: I have not talked to the authors about it as yet, that will be a part of the process that I described earlier. A lot of people and most political leaders have welcomed the report that was done, but I would not want to comment on any individual particular recommendation at this stage. As I say, I am in the period of gathering views and analysing them rather than trying myself to come to any early conclusions. Q144 James Brokenshire: Just to be clear, you have not got any pre-formed structure as to how you would approach this, because obviously the timing of today's release of these documents gives the impression that almost this session has forced your hand in some way as to whether there is some structure that you have been going about in terms of how you will proceed with this inquiry. Sir Hayden Phillips: The structure that I outlined earlier, which is the three strands of conversations with the parties, working at the same time on analysis and trying to collect the views from public opinion as to the way I will go forward - I am sure at some stage there will be a need for a series of meetings, that I do see clearly. I am not sure at the moment, as I explained, whether it would be wise or sensible to have a period of interim findings report, or whether that would actually get in the way of things. As I was saying to the Chairman earlier, I do not think my hand was forced; as always in life what I tried to do was to make sure that my presence here as it were was timed in such a way that people could see that the review was now formally under way - but I have taken the point that Mr Tyrie made earlier and I understand that. Q145 Mr Khabra: I am sure you are aware of the role of constituency parties in politics such as fundraising for elections and party political activities, but do you have any intention to widen your inquiries to get in touch with constituency parties all over the country, and how would you do it? Sir Hayden Phillips: I think actually at this next stage I should talk about that to the party leaders themselves. It is very important that I have a good understanding with those in the Conservative Party, Labour Party, Liberal Democratic Party in particular about the way in which I will be conducting my review because I want them to have confidence in my independence and in the way I will deal with the information they give me. If in the course of those conversations it is suggested that I should have direct contact with constituency parties and talk to them about, as it were, what life is really like on the ground, then that is something I can think about, but I do not want to make up my mind decisively about that without talking to representatives of political parties themselves. Q146 Keith Vaz: Sir Hayden, I am a little confused following your answers to Mr Brokenshire. You talked about the need to get a consensus as if you are a kind of avuncular figure trying to bring people together on this issue. Surely your terms of reference, which you brought to this Committee at four o'clock today, are very clear: you are an independent person, obliged to take evidence, but come to further views. Is that not what your terms of reference are? Your terms of reference are not to find a consensus that is acceptable to the established political parties. Sir Hayden Phillips: Mr Vaz, it is both of those. The terms of reference of course were published on 20 March and they essentially have two elements within them. One is what I would call the independent analysis, coming back to a question I answered earlier, and the second is - I will repeat what the terms of reference were - "He has been asked to aim to produce recommendations which are as much as possible agreed between the political parties." In other words, I am asked to do my own independent analysis of the situation and to try on the basis of that and my conversations to see if I can build, or help build, a consensus between the particular parties. So I do not see these things in themselves as being a contradiction. Q147 Keith Vaz: Sure, but that is the problem, is it not, of the criticisms that have been made of you being chosen to head this inquiry, that Mr Wright alluded to, the fact that you are - and he was being a bit polite there - an establishment figure, you are an insider. It has been said that you were the template upon which Sir Humphrey Appleby was based; are you not the establishment man who is going to produce an establishment view, because you have not decided if there is a conflict between the establishment and the wider public as stakeholders, you do not even have a view as to which side you should take. Sir Hayden Phillips: The authors of Yes, Minister must have been remarkably prescient since I was a very junior official when those programmes came out, so I do not think you can claim on my behalf the stardom you offer me. Q148 Keith Vaz: Your CV shows what a star you are. Sir Hayden Phillips: I am, I will tell the Committee, as I think the Chairman knows, the only Permanent Secretary ever to have played Sir Humphrey Appleby on stage, before a paying audience, opposite the present Lord Chancellor as Jim Hacker. However, setting that light touch aside --- Q149 Keith Vaz: That explains everything, does it not? Sir Hayden Phillips: I thought you would like that. Q150 Keith Vaz: You grew into the role. Sir Hayden Phillips: I thought you would like that because caricatures of people do occur and I think that would be a caricature. I look at it quite the other way round and say here you have a career working with politicians in government over a long period of time. Q151 Keith Vaz: Sure, yes. Sir Hayden Phillips: You have someone who was, for a period of time, in charge of advising on some of the subjects that I am looking at now, so some background in the case. You have somebody - and this was very important from my point of view - who is acceptable personally to the Prime Minister, to the Leader of the Opposition and to the Leader of the Liberal Democratic Party. Q152 Keith Vaz: They were all consulted before you were appointed? Sir Hayden Phillips: Yes. I said it was very important if I was to do this that I was personally acceptable to those people. As far as I know, that is why I was chosen, that is very important. On that basis then you can look at the career and say here is an establishment figure, you can look at the career and say here is an insider; I would like to try and turn those things in the caricature to a strength in this regard rather than not. Q153 Keith Vaz: Sure, but you cannot, obviously, change your history. What happened to the last report that you completed in July 2004, it was a review of the honours system? That was the last report you did for the Government. Sir Hayden Phillips: Yes. Q154 Keith Vaz: Was it implemented in full? Sir Hayden Phillips: I think pretty well largely so. I would have to check which recommendations were not accepted. Q155 Keith Vaz: And you did not foresee any of the problems that would eventually occur about the honours system that led to your appointment to conduct this inquiry, in the lengthy inquiry that you had into the honours system? Sir Hayden Phillips: I am not aware of any problems that have occurred with the part of the honours system that I was reporting on. If you are referring to recent problems or allegations about peerages, that was not covered in the report I did, that was completely separate. As far as I know, the main honours system, as reformed by the recommendations that I made and the Government accepted, is not a subject of controversy at the present time. Q156 Keith Vaz: Have you met the leaders of all the parties to discuss these issues? Sir Hayden Phillips: I have had an initial conversation with the leaders of the parties, but I have not settled down to start meetings with them properly until we had got ourselves organised and I had worked out what the battle plan was more likely to be. Q157 Keith Vaz: Do you think that the issue of state funding is now agreed in principle between the parties, from the initial discussions you have had? I realise you cannot give us a firm view on this, but in the discussions that you have had so far as part of your inquiry, do you think it is agreed in principle that there should be further state funding? Sir Hayden Phillips: I have not discussed these issues in any detail yet and, indeed, in a sense I have not needed to because the party positions on a number of these issues have been made public by the parties themselves. There is more consensus on the surface about state funding being increased than perhaps there was before, and there is perhaps more consensus than there was before on caps on donations, but that is all in the public domain. What I need now to do is to settle down and talk to them in detail about the arguments that lie behind the public positions they have so far taken and see how we can develop that. Q158 Keith Vaz: You must have a view yourself about the issue of state funding. I realise you have not had detailed discussions with the political parties, but you are heading this inquiry into the funding of political parties and you must have a view, you cannot be a blank canvas, you must have a view on this issue. Sir Hayden Phillips: It is perfectly possible to have a blank canvas as far as coming to a view about what the substance should be. Q159 Keith Vaz: That is a typical civil service answer. What are your views on state funding? Sir Hayden Phillips: I am not going to come to a position where I form --- Q160 Keith Vaz: So you do not have any views. Sir Hayden Phillips: Where I form a view until I have done a great deal more work. Q161 Keith Vaz: So you have no views. Sir Hayden Phillips: I am aware of issues on either side --- Keith Vaz: I understand your process. Q162 Chairman: Let him answer the question. Sir Hayden Phillips: I am aware that there is already state funding in the system, more of it than I imagine most members of the public would recognise. I do not start from a view now, personally, on any of these issues about making any particular change - indeed, if I had I would not have thought that the party politicians I will be talking to would have seen me as someone who was independent but rather as someone who had his own agenda. Q163 Keith Vaz: That is the only answer I sought, which is that you have no views at the start of this inquiry, with a whole understanding of the way in which the political process operated, you had it as part of your brief when you were Permanent Secretary at the then Lord Chancellor's Department; you have no views about state funding of political parties at this moment. Sir Hayden Phillips: That is exactly the position. Q164 Keith Vaz: Will you be seeing parties not represented in the House? Sir Hayden Phillips: I shall be seeing parties represented in Westminster, I shall be seeing ones represented in the Scottish Parliament, the Welsh Assembly, I think I shall talk to parties in Northern Ireland and also parties represented in the European Parliament; that is quite a wide brief. Q165 Keith Vaz: Will you be meeting the British National Party? Sir Hayden Phillips: I am not proposing to talk to parties, simply because it is too complicated, who have representation only at local council level; in the time available that might be too difficult. There are, I am told, 400 registered political parties in the UK, but I shall try and concentrate on Westminster, Edinburgh, Cardiff, Northern Ireland and the European Parliament. Q166 Keith Vaz: Do you consider that the possibility of state funding will perhaps promote extremist views on either race or religion? Sir Hayden Phillips: In what sense do you mean? Q167 Keith Vaz: If parties who are of that persuasion are funded by the state there will be a promotion of their views rather than a representation of political beliefs. Sir Hayden Phillips: There is a general argument that a lot of people who are opposed to the existing state funding of parties would say they do not think taxpayers should pay money towards supporting parties that they do not approve of. Q168 Keith Vaz: And then you can get different degrees of approval or disapproval. Sir Hayden Phillips: That argument and that view has to be heard and we should not just roll over and assume that state funding is a necessary cure for all the ills or necessarily meets all the arguments, but as I say and as the Committee knows, quite a substantial amount of state funding already exists in one form or another so in a practical sense that bridge has already been crossed over. Q169 Keith Vaz: Can I finally ask, so that I do not misquote you or you are not misquoted, you have not resolved in your mind the conflict that might occur between the public as the wider stakeholder and the political parties seeking consensus. You know there is a possibility about conflict, but at the start of this inquiry you have not resolved how you are going to deal with that conflict. Sir Hayden Phillips: No, I have not, it is something I want to talk to the political parties themselves about because it is a potential conflict that I as an independent reviewer and the political parties as the main players share. Q170 Keith Vaz: You have not been asked by the police to delay your inquiry at all. Sir Hayden Phillips: No. Q171 Chairman: You have made clear, and I fully understand this, that you do not take views at this stage on a number of these issues. Have you been given a brief by Government to say, for example, if parties agree on this or that then there is scope for increased state funding, that there are things that you can lay on the table with authority from Government? Sir Hayden Phillips: No, I have my terms of reference and that is all I have. I will go away and then when I have had the various talks there will be a stage, I imagine, either at the very end or before the very end when the test of practicality and acceptability will apply. I do not know at what stage that sort of conversation will necessarily take place, it could take place either after I have reported - and then it will take place as it were between the Government and the political parties directly - or if we are at a sufficiently advanced stage, Chairman, before the end of the period I have been given, a conversation about the degree of the Government's acceptance of an emerging consensus, which I hope there will be, is tested. It is too difficult to say at this stage how that end game will be handled. Q172 Chairman: Can I just clarify, your support staff is presumably provided by the Department for Constitutional Affairs, although the Minister to whom you report, if it is not directly to the Prime Minister, is now Mr Straw, is that right? Sir Hayden Phillips: Yes. Q173 Chairman: You have staff allocated to you from the DCA. Sir Hayden Phillips: Yes, they have been seconded to me from the DCA, but the DCA staff who work on the subjects that were transferred from the Lord Chancellor to the Leader of the House, work directly for the Leader of the House. Q174 Chairman: There are two different lots of people, some who are working for Mr Straw from the DCA and there are another lot, quite separate, who are working for you. Sir Hayden Phillips: As is the normal way with these inquiries. Q175 Mr Tyrie: Beyond the terms of reference how much have you discussed this issue with the Prime Minister? Sir Hayden Phillips: Apart from the one initial conversation that I had with him --- Q176 Mr Tyrie: Which lasted? Sir Hayden Phillips: I had a meeting of 45 minutes to an hour. I have had no other conversation than one conversation. Mr Tyrie: That sounds like a very long meeting to me. Chairman: In the case of the Prime Minister? Q177 Mr Tyrie: Yes. Sir Hayden Phillips: I imagine the meetings I will have with representatives of the Conservative Party may last at least as long, if not longer, similarly with the chairman of the Labour Party and the person nominated by Ming Campbell to lead for the Lib Dems. Q178 Mr Tyrie: Beyond the terms of reference what steer did you get from the Prime Minister? Sir Hayden Phillips: The steer? I do not know, I do not think I got a steer in the sense that you mean. I know what you mean and probably I have been around long enough to know --- Q179 Mr Tyrie: It is a good idea not to answer questions like that perhaps. Sir Hayden Phillips: The central steer is the one I have tried to explain, on the one hand to do my best to be an independent analyst and reviewer of what goes on and, at the same time, to use that position to try to build a consensus between the political parties on the way ahead. That is what the terms of reference say and that is, I am sure, what the Prime Minister would like us all to try and achieve. Q180 Mr Tyrie: You were given no steer on the potential conflict which Keith Vaz has been alluding to between what public opinion may want and what the political parties may agree. Sir Hayden Phillips: No. Q181 Mr Tyrie: Were you given any steer or was there any discussion at all on whether you think it is possible to create a fair system of funding which imposes a cap on donations from individuals or corporations, but which does not impose a cap on trade unions? Sir Hayden Phillips: Mr Tyrie, you are trying to get me to tell you what the Prime Minister's views are in detail on this subject. Q182 Mr Tyrie: Let us put his views to one side and let us have a go at your views. Sir Hayden Phillips: I think he might be asked rather than me. I do not propose to disclose the conversations I will have with the chairman of the Conservative Party and certain others in the public domain, nor should I disclose any other conversations with any other party in the public domain. Q183 Mr Tyrie: Sir Hayden, that is a fair answer, but what about your views? Clearly, you will not give me the Prime Minister's views. Sir Hayden Phillips: Mr Vaz and I have been round that buoy and I have tried to persuade him that even though he may believe otherwise I am quite capable of operating on the basis that on this set of issues I have no decided views of my own. Q184 Mr Tyrie: You think it may be possible to imagine a fair system of party finance which imposes a cap on individual donations, but which does not impose a cap on trade union donations. Sir Hayden Phillips: One of the issues for discussion is caps on donations, whether they are caps on organisations - trade unions or companies or whatever - that is going to be part of the conversation. Mr Tyrie: I just have a couple of other questions, if that is all right. Chairman: Be very quick because we are running short of time. Q185 Mr Tyrie: I realise, but this is an issue of considerable public interest. You said a moment ago that there was consultation about your appointment prior to it; what led you to have that impression? Sir Hayden Phillips: As far as I know, my name was mentioned as the person the Prime Minister had in mind, both to the office of the Leader of the Conservative Party and to the office of the Leader of the Liberal Democratic Party, and I was told that they had no objection to my appointment. That is what I was told. Q186 Mr Tyrie: When were you told that, how soon prior to your appointment? Sir Hayden Phillips: It was either the day before or the morning of the announcement. Q187 Mr Tyrie: Perhaps you would like to come back and clarify that point with the Committee on paper. One other question, we have been discussing earlier today why you appear to have been chosen for this very difficult role and I think it is a very important role. Might not one of the reasons be that you conducted a review of the honours system in 2004? Sir Hayden Phillips: It might be, but I do not know that it was. Mr Tyrie: Do you think in retrospective that that review did not go as well as might be hoped? After all, within two years we are into the biggest honours scandal --- Q188 Chairman: That has been asked. Sir Hayden Phillips: Mr Vaz has kindly helped me round that particular obstacle. The only very short reply is that the problems you refer to were not affected by my review, my review dealt with the whole of the rest of the honours system and as far as I know there has been no controversy about it and those proposals have been implemented. Q189 Mr Tyrie: That is certainly not correct. Part of your review was to abolish the Honours Scrutiny Committee and create another committee to appoint peerages, and it is that committee which has now flagged up a number of very serious problems with a number of proposals, mainly from the Labour Party, for peerages. Sir Hayden Phillips: No, the House of Lords Appointments Commission already existed and was doing that job; the question was whether the Honours Scrutiny Committee had outlived its natural life and its members all felt there was no point in them continuing independently and they should be absorbed. That was a consensus recommendation and I do not think it had any effect at all on what subsequently happened. Q190 Dr Whitehead: Sir Hayden, you could regard this as partly a journey of self-discovery in as much as you will know what you think by the end of the inquiry and will report on that; indeed, I note that Lord Falconer, when recently giving evidence to this Committee, stated that at the end of the inquiry we would have a pretty good reason for not accepting what Sir Hayden Phillips has said - so presumably by then you would know what you think. Sir Hayden Phillips: I hope so. Q191 Dr Whitehead: If a number of political parties in your discussion came to you with a consensus, which was however not what you think, how would you approach that in terms of your eventual report? Sir Hayden Phillips: This reflects some conversations we have had earlier. What I want to aim to achieve is a position in which the analysis of the issues - and I know you are very familiar with many of these issues and indeed have analysed them yourself - and the discussions with political parties about what their views as to the future might be, can be brought together. That, in a sense, I see as the core of the task and I do not know quite how that will yet go, but I hope they can be brought together so that at the end of the day there is analysis that will be able to support a set of recommendations which, as much as possible as the terms of reference say, are agreed between the political parties. Q192 Dr Whitehead: Are you considering international perspectives or looking at other countries in terms of coming to a view about where you stand? Sir Hayden Phillips: Yes, it is a necessary part of the discipline of going through the analysis, trying to see what works and does not work, even though you are looking at different cultural and political contexts which you clearly have to be aware of. That must be a part of the exercise, but I do not think a dominant part of it. Q193 Dr Whitehead: Just to clarify my understanding of how as it were the inquiry will proceed, effectively you will undertake a number of inquiries, including international perspectives, which will collectively inform your view, and during the course of coming to that view you will talk to the political parties who may have a joint view between themselves as to what would be advantageous all round, but those two views may not coincide. If you did find that to be the case, would you seek to persuade the political parties to come towards your view, or would the political parties seek your view to come towards theirs? Sir Hayden Phillips: I do not know the answer to that question. I hope we can conduct a process of conversation and analysis sufficiently in tandem that that gulf does not appear. As we were saying, we might come to some agreement between political parties but I might feel in my bones that public opinion might not find that wholly acceptable. That is one sort of dilemma, another one would be one in which indeed there was a consensus amongst the political parties, but I have come to a view from my analysis and indeed from my talks with them which was not absolutely on all fours with that. I do not know how we would necessarily handle that; I hope we would all strive to avoid that happening because that would not necessarily be in the general public interest. Q194 Dr Whitehead: Do you have, finally, any particular countries and methods of practice in existing state funding or aid for political parties from particular countries that you would find helpful to analyse during your inquiries? Sir Hayden Phillips: I think I should look - and I am interested if I may say so in your own views on this - at as it were Westminster-style democracies, Canada and Australia, and it is worth a look, possibly, at one or two Scandinavian countries. I am already familiar with some of the practices in France and Germany which are different political cultures and will not necessarily be analogous in any sense, and I am sure there are some lessons to be learned from the way the United States does these things, particularly in terms of what I have already said about the fact that you can set up controls, often very tight controls, but evasion of them is a chronic problem that you have to look out for and you have to try and spot what happens if, because if you change the way that political parties are funded then people's behaviours will change and that is very difficult to forecast, it is not something that you can model as you can model the financial effects on a party of a capital donation of £50,000. You can do some work like that, but what is much more difficult is to think forward about how a set of recommendations will change people's behaviours, and I think part of the conversations with the parties should be about what impact they think their proposals will have on the behaviour of political parties. We should look beyond the immediate issue to try to say how would this system change the way people operate in, say, two or three years time and ask those difficult questions, because unless we can satisfy ourselves that we know enough and have thought enough about those things, it is really quite risky just to throw a consensual set of proposals forward and hope for the best. Does that make sense? Dr Whitehead: Thank you. Q195 Barbara Keeley: I want to come back to this question of consensus and just ask you about mechanisms that you might be considering for achieving that, perhaps in the latter part of your work. You have clearly started with bilateral meetings with party leaders so I just wondered what thoughts you have about what mechanism you might use or that might be appropriate for bridging any gap between the parties, because it seems to me that there is a gap between parties at the moment, those considering or currently supporting state funding and those that seem to be against it. How might you achieve that, or do you think you will just carry on meeting parties bilaterally and trying to move them? Sir Hayden Phillips: Clearly, I will, as I was explaining in answer to earlier questions, go on having meetings where those are fruitful and we are coming towards a greater degree of agreement. Equally, however, there is nothing to prevent - indeed it would be a good thing - parties speaking to each other themselves, using me as a helpful agent in that process. In this area there is going to be no substitute, I am afraid, for grinding on through the meetings that are required to see how you get on. Q196 Chairman: Sir Hayden, we have many more witnesses to see this afternoon. Happy grinding, as you describe it. Thank you for giving your evidence this afternoon; I think we will be seeing you again. Sir Hayden Phillips: I expected you to say that, Chairman. I look forward to it . Witnesses: Sam Younger, Chairman and Peter Wardle, Chief Executive, The Electoral Commission, gave evidence. Q197 Chairman: Mr Younger, Mr Wardle, welcome back, we have spoken to you on many other occasions on other matters, but today we are concentrating on the party funding issue, but again we have a statement of yours, which is embargoed until six o'clock today, which we have not had the opportunity to read and will not therefore be asking you about. I am not sure, from a quick glance, that it adds much to what we understand to be your perception of these issues, but if it does and you want to indicate very quickly, perhaps you could. Sam Younger: If I may say, Chairman, I welcome the opportunity. The statement of principles that we have got, which we are putting out along with one or two other things today which I hope we will be able to mention to the Committee, is really a pull together of some of the underlying themes that have been in the work we have done up to now on party funding, so I was not, I have to say, particularly expecting that this would be something you would skim read and question me about today, it is part of the background of the way that we will come at these issues. There are one or two other things I would like just to mention as well, one or two of which I know I have mentioned to you, Chairman, before, in terms of the contribution the Commission would be hoping to make in this debate going forward. That is also focusing particularly on the framework of the Political Parties, Elections and Referendums Act because as the regulator we think one of the things we should look at is how we can make sure that whatever we come up with at the end is practicable, can be implemented and can be policed. That is one area we would look at including, just to pick up something that was said in the previous session, some of the international comparisons in this area. We will also be doing some quantitative but particularly qualitative public opinion work, in other words going out and talking to groups of people in discussion. I would, in mentioning that today, say that I would very much welcome and be open to any association the Committee, in whatever form, would like to have with that process which we are in the process of designing, right through from at one end of the spectrum suggesting some of the questions that might need to be asked to the other end of the spectrum and actually in some form participating in that process. We would welcome any further discussion on that going forward and we will be taking a particular look, knowing that Sir Hayden Phillips was looking particularly at parties represented at Westminster, the devolved legislatures and the European Parliament, in the context of the debate some of the opinions from the plethora of other parties that are registered, as well as some perspectives from independents. Q198 James Brokenshire: One of the interesting aspects of the party funding issue is the benefits of being an incumbent. One part of that is central government and the support that the Government gets through its communication system. How do you think that needs to be addressed in terms of rebalancing any issues on that? Sam Younger: The issue of incumbency is there in all sorts of forms, but my own feeling is that the system - whatever it is - of funding from public sources of political parties should be as it were even-handed and start from the assumption that the rules need to be robust that prevent public money that is not supposed to be being used for party purposes not being used for party purposes. If you went down the track of saying because Government has access to Government information systems, therefore you compensate for that somehow in a party funding system, then you are effectively acknowledging that part of the normal course of events might be abuse of that incumbency advantage that you point to, so I would not think that is probably the right way to go, I think there ought to be something that is even-handed across the piece. Q199 James Brokenshire: Would you accept though that if you are in Government, if you are making a policy statement, that may be a statement of Government but it is also a statement of the party and that that puts you in an advantageous position as compared to Opposition parties who do not have the benefit of that level of funding. Do you think there is any merit in examining ways of redressing it through transferring monies that might be spent on an advertising budget into state funding that then could be applied more even-handedly? Sam Younger: There are issues that, to be honest, go beyond our remit as to what the priorities should be for the spending of public money, and that is a separate debate. Q200 Chairman: Not if they confer an incumbency advantage, then that is an issue. Sam Younger: It is something we would need to take into account, yes, indeed, but the choice as to whether you take it from one particular pot to put into another pot, that is something that goes beyond our particular remit. Clearly, this is an issue, it is one that of course we have come up against, particularly in relation to referendums - the referendum in the North East - and the issue of Government information in the run-up to that, and we would like to see a very clear cut-off. My general response, because it is not something we have gone into in very great depth, certainly up to now, is that in general terms we should seek to make sure that that which is used for government is used for government and that which is used for party purposes is properly segregated from it and then treated even-handedly. Q201 James Brokenshire: Do I take it therefore that this is an issue that you will be examining in more detail as part of your review of political party financing, and would you also examine the role of incumbency on individual Members of Parliament because candidates in individual seats are at a disadvantage to MPs who have the benefit of allowances that allow them to pay for distribution of newsletters and other forms of publicity, and therefore there is, I think, a recognised incumbency factor. Is that something in addition that you will be looking at as part of your work? Sam Younger: I would certainly be happy to consider it. I would need to be careful not to (a) overreach ourselves in terms of what we have got the capacity to do in detail, and (b) not to get in the hair of other elements of the inquiry that are being undertaken, but certainly we would look at that as one possibility. The PPERA review that I mentioned is much more looking, whatever the detail, at the framework of what we are in a position and can be in a position to invigilate and regulate. Q202 James Brokenshire: Would you accept that if you do not take those issues into account you are not getting an even scorecard in terms of the balance between the incumbency side and the opposition side? Sam Younger: Certainly those issues need to be taken into account, yes. Q203 Chairman: The three main parties spent around £40 million contesting the last election and given that parties are allowed free mailings to every voter and they are allowed party election broadcasts, do you have any assessment of the value, significance or otherwise of that scale of expenditure? Sam Younger: I do not think, as it were, the value that the parties get out of that spending is an area that is really for us to look at. Q204 Chairman: Can it bring value to the democratic process, let us say? Sam Younger: It is certainly a point to be made - reference was made to it earlier - that it is not as though the discussion about the possibility of state funding now is a possibility of something that is completely new, there is in effect quite significant state funding now. I would put it into slightly different categories, to be honest. Freepost is a specific cost and a great deal of the quantum when there are calculations about public spending relate actually to party election broadcasts, which is a more notional cost - it is not an actual specific cost to the public purse - therefore one needs to be a little bit careful on that because it tends to come out if you put it in terms of how much it would cost to buy television and radio advertising of that bulk, but it is not actually costing the taxpayer that amount. Certainly, any issue of where we go in the future on this needs to be seen in the context of what the public is already spending and we have made in our 2004 report, as you will know, some recommendations on some modest increase in what effectively would be public funding, but we did not go so far as to say there should be a significant increase in public funding which would have to be related, if it were to happen, to a cap on donations. Q205 Chairman: You have listened to Sir Hayden Phillips giving evidence, what is your take on that process and your own involvement in it? Here is something which might perhaps have been given to you to do - it is slightly surprising perhaps that it was not - given to somebody else who is thought to be both particularly independent and perhaps, by operating as an individual, capable of brokering a deal; where do you fit into that? Sam Younger: I have had one or two discussions with Sir Hayden; clearly it was up to Government to decide how they wished to undertake this inquiry, it was something that was cleared with the other parties and I entirely accept that. What we have been looking at is where can we factor in our expertise, and I think it is above all in the areas that I have mentioned. Because we have now been operating the regulatory framework for five years, in the context of whatever detailed arrangements come out, they should be ones that can be implemented, are practicable and that we are in a position to police and police effectively. That framework is one area that I think we can do effectively, the second is to take on a lot of the areas of public debate and deliberation that we have already begun to do in other contexts and take that forward to get that wider public perspective. Looking back at and taking up this issue that was raised in the earlier session about the possible conflict between consensus among main parties and public opinion, we are very conscious of the fact that there is an under-developed public debate about this. Some of the public views that we have seen in the past have been contradictory and something that is more deliberative and can begin to work through some of those implications is something where we can make a contribution. Equally, in relation to smaller parties we would hope to feed that in, but at the same time I would not want to be in a position to go too much further in saying what our ultimate view is in pre-empting it, I would rather respond to what is coming out of that process. In a sense, that is the context in which we have restated some of the principles that we see as important rather than saying here is an Electoral Commission prescription. Q206 Chairman: Given your responsibility for the integrity of the democratic process, it might follow naturally from that that if there is any excessive emphasis on what the parties want and not what the public might find reasonable, you might be the people to voice that. Can you envisage a situation in which, if you thought it necessary, you would actually say of a deal which appeared to be being done by the narrower group of the parties, Sir Hayden and the Minister, we do not think this is adequate, we do not think this is satisfactory? Do you preserve your right to do that or maybe your duty to do that if you think it is necessary? Sam Younger: Yes, I would say I preserve not only the right but the duty as well. We need to look at this in as broad a context as we can, and what we are hoping to do is to be able to use some of the experience we have got, as well as the capacity we have, to reach out and get those broader views, and then the issue is going to be how well those integrate with the process of discussion at, particularly, the major political party level. Q207 Dr Whitehead: In your report on the funding of political parties which made a number of recommendations at the end of 2004 you suggested that the cap on spending in general elections should be gradually brought down to £15 million per party. Do you still stand by that view? Sam Younger: I do at the moment, subject to any further evidence coming out. It is important to recognise where that ballpark figure was, but of course when we did that report we had not gone through a general election under the PPERA rules completely because of course the 2001 general election was truncated because the rules only came in three months before and the spending covered the year before. Certainly, from all the discussion we had and all of the evidence we had from political parties and others, there was a sense that there was a struggle at that stage to raise the sort of money that would lead to spending £20 million and that actually the parties would be quite comfortable - this is what we got back at the time - to see it coming down, and in terms of avoiding arms races in spending it was something we thought was realistic. Whether that is the right figure I would not necessarily stand by, but linked with that was a sense that if there were to be changes in the balance one of the things that we felt at the time - and it came across strongly from a lot of the evidence - was that if there was to be any such reduction, potentially a re-balancing in favour of spending at the local level as opposed to a national level. Q208 Dr Whitehead: Two thoughts follow from those two linked components, and you did indeed link those two components precisely in adjacent paragraphs in your report; would you now, or did you at the time, consider as far as national spending is concerned whether there might be a cap similarly on what you might call third party spending, that is spending by organisations saying do not vote for these people, as well as by organisations which say please vote for these people? Sam Younger: I cannot remember whether there was anything explicit in there, but we would say that clearly, given that third party rules came in at the same time as PPERA, any changes in the rules for parties need to be reflected in some analysis of what the knock-on should be in terms of third parties, I would not assume that we would leave that as it is. In fact, if one looks at the spending limits on third parties in general elections it is fair to say that none of the relatively small number of third parties that are registered across the last two general elections have actually coming anywhere near that spending cap, so I suspect actually that would not be in any way difficult to reduce, but we need to make sure that there is an alignment between those. Q209 Dr Whitehead: How would you view the mechanism of allowing individual candidates' spending limits to rise? I have in mind, for example, the experience of the United States where what were called PACs raised large amounts of money which were given to local candidates in what were actually national campaigns, and indeed there was considerable evidence of a national campaign effectively providing money for local candidates, effectively as a national effort, which looked like local candidates were therefore increasing their expenditure but it was not actually the case. Do you have a view on how those mechanisms might be reinforced or enforced should there be this changeover in balance? Sam Younger: I have to say I have not got a fixed view on how you get that. I recognise the issue that you are talking about and I think it is a very, very difficult issue, it seems to me, to be able to implement effectively that distinction between what is effectively local spending for a candidate and national spending. That is a particular difficulty and it is something that has been alluded to, of significant amounts of money going into marginal constituencies that is not local spending because it does not name the candidate and does not name the constituency, but could easily be seen as effectively local spending. That is a very difficult area which I do not have a specific answer to. The other linked issue to that, it seems to me, is the issue of the controlled period for candidate spending and the relationship between that and the controlled period for national spending. As you will know, we put forward - it is probably fair to say in the end as the least worst solution - the proposition that because of the worry that there had been coming out of previous elections that there was no control on spending in an individual constituency until very, very close to an election, that therefore that period ought to be extended. We put forward four months and clearly during the Parliamentary debate of the current Electoral Administration Bill there was a sense that actually there are practical difficulties with this. Equally, everybody recognised it as an issue and we would not stick doggedly, in the face of some of the very practical difficulties that have been pointed out, to that four months, but that is a linked issue that we do need to work further through to get it right. Q210 Dr Whitehead: Do you think "getting it right" is a matter simply of perhaps having a different regulated period, perhaps six or twelve months rather than four months, or do you think there may be a fundamental problem in that the Prime Minister can choose the date of the poll and therefore the idea of having a four-month period prior to a non-predictable poll date appears rather an interesting proposition, to say the least? Sam Younger: Clearly not having a fixed date for a general election makes the four months much less easy to implement than it is in relation to, say, the Scottish Parliament or the Assembly of Wales where, in a sense, the four-month period is quite clear. One of the reasons we went for the four-month period was recognising the uncertainty about the date of an election, but in purely practical terms reckoning that by and large general elections when they happen, happen mostly in May, that means as a rule of thumb in general terms you ought to start watching your spending from the beginning of a calendar year. I know that is not wholly adequate, as I said, it was the least worst that we came up with then, but that issue of the four months was one of the real difficulties in terms of the practical difficulties that were raised in the Commons, and I absolutely acknowledge that. There is also the same difficulty in national spending because that is 365 days before which is regulated and it is hard to know when that is triggered, especially when you get the overlap problem that you have got from 2004 to 2005 compounding it because of the European Parliament elections happening less than a year before a general election. Those are practical implementation issues and there were others about the four months, one of the problems being the technical accountability for candidate spending lying with an agent, in that four months before a general election in plenty of cases an agent has not yet been appointed. Q211 Chairman: Or even found in some cases. Sam Younger: Yes. We have said, and I know Government has said in the context of the Administration Bill which I think they did in the Lords yesterday, withdrawing the four months proposition, that they needed to work and we will happily work too to try and pull together some discussions about what might be practicable, recognising that that initial attempt to solve what is acknowledged widely to be an issue had not yet been seen as the answer. Q212 Dr Whitehead: In your view it is an issue that should be resolved, I Imagine. Sam Younger: yes. Q213 Dr Whitehead: And it is an issue that you might find some difficulty resolving in terms of the previous ways of doing it, particularly since, as we know, elections are always in May except when they are not. Sam Younger: Yes, it is very difficult and there is the fact that we had quite a bit of discussion on it in the context of our previous reviews of PPERA and came up with four months as reflecting as near as we could get to something that was a consensus, but once beginning to be picked at it was something that did not in the end pass muster, so I would not underestimate the difficulties of doing that. Q214 Dr Whitehead: Do you think those issues, taken together, might between them effectively solve the problem of party finance, if you did those things, the things that are suggested in the report on funding political parties, that they in themselves would go a considerable way to dealing with the perceived issue of party finances that has been presented to us? Sam Younger: There is a further question that has come up and it is interesting that we were talking about consensus in the context of the earlier discussion. What we felt, as we set out then, was that there was actually in terms of future public confidence a considerable case for putting a cap on donations as part of the equation, but that if you were going to do that it raised the issue of public funding. It may be that that need for public funding to fill the gap could be reduced by various discussions that could reduce the amount of spending required, but probably would not reduce the gap entirely. At that time it was quite clear, both from discussions with the political parties and in the context of public opinion, that there was not a readiness at that stage to go forward, I think that is where the debate is now. I would not say necessarily therefore that what we put forward in 2004 would solve the problem. A lot of it was quite positive, in particular the notion, which is part of the equation of most of those who are putting forward possible solutions on funding now, that there should be something, whether in the form of matched funding or tax relief or something similar for small contributions to parties, which is a way of encouraging the widest possible number of small contributions to parties, but I do not think necessarily, especially if you did go down the road of a cap - and I think our general view is that a cap needs to be low enough to overcome the confidence issues to be effective - that actually those issues of tax relief or similar would actually entirely fill the gap. Chairman: That was a very wide question. I just want to give Ms Keeley an opportunity to raise a brief supplementary before we go back to Dr Whitehead, but also to ask both colleagues and witnesses to bear in mind that we have quite a lot of things to get through today and we might be interrupted by a vote at some point, which would further complicate matters. Ms Keeley. Q215 Barbara Keeley: Thank you, Chairman. It is really to go back in just a little bit more detail on some of the points that we both have in front of us here in the questions you have just been asked by Dr Whitehead. To ask specifically about the issue which we have all become aware of recently, does it concern you at the Electoral Commission that it is now clear that in a number of constituencies, up to around 30 in the last general election, it was the case that there was very concentrated spending of up to, I understand, £90,000 in the near period before the period in which you count election expenditure, so that some candidates and some parties were able to outspend candidates from other parties by a factor of ten or twenty to one, running a very different type of local campaign really. How much is that of concern to you at the Electoral Commission and, given what you have just said about the difficulty of dealing with that, is that an issue that you feel we definitively have to deal with before the next general election? Sam Younger: Yes, I do, and I think that is a very serious issue. Indeed, that was the driver for the four-month proposition, if you like, that said, "We need to take a period significantly longer before an election than is currently there in the law", because you can pour a great deal of resource into a very major campaign right up to a time that is genuinely uncomfortably close to an election. That was the thrust for it and I think that issue is still there. I accept that there are a number of good and practical arguments that mean that four months is not necessarily the right answer but I do think we need to find an answer. Q216 Barbara Keeley: Are you any further on with that? I have to say that in the Electoral Administration Bill we could not come up with anything because the fear was that if you made it four months the spending would run into the three months before the four months or the four months before the six months and we would all be in the situation they are in in the US of having substantial campaigns that run for a year or more. Sam Younger: I very much acknowledge the issue. The Government having withdrawn that part of the Bill now, they are saying that they need to do some work with others to try and reach a solution and we will play a part in that to the extent that we can but I think it is a significant issue. In general terms, apart from anything else, we need to find a way of pushing that date further back so that it is not as close to an election as it is now; that is an absolute minimum. If the four months did not work, I know there was a proposition that said maybe there should be a two-phase approach. As I say, we have not taken that work further. One of the things we can do as part of our contribution is provide the forum where we can get people from various angles together and see if we can come up with something. Q217 Dr Whitehead: On the matter of what we might call non-direct state funding to parties, that is, items which otherwise might cost a party some money but are provided effectively free, I notice that in your report you recommend that free mailing should be extended to local elections. Do you still stand by that and do you think that in addition to that there is an argument for extending the level of political broadcasts (perhaps not a triumphantly popular suggestion in the minds of some members of the public) in order to inform voters of party elections? Sam Younger: On the free post, yes, I would stand by that, but we recognised in that report, and I think there is still some more work to do on it, the potential abuse of it. A commercial organisation registering for £150 as a political party in order to get free mailing is an example and there was evidence that that happened. I think there was one case of it that happened in 2001, and obviously at local elections there would be a potentially greater volume of it so we would have to find a way of getting over that. It seems to me that if we are to say - as I think we should be saying - that local elections are extremely important, it should not be second order to any greater degree than is absolutely necessary and therefore the second order should apply. Q218 Dr Whitehead: I was run close on one election by a candidate who wished everyone to go bowling at the local bowling alley. I am sure you appreciate that issue. Sam Younger: Yes, absolutely. Q219 Dr Whitehead: What about television? Sam Younger: In a report we did on party-political broadcasting, which is now some time ago, and nothing has happened to make this change our view, we thought it was important that there should be the right to party election broadcasts. It is a pretty important medium and there should be the ability for serious political parties, subject to whatever threshold criteria there are, to have direct access to the electorate. We felt there was a case for extending party broadcasts beyond the existing terrestrial broadcasters and finding some way of having a sort of reached threshold beyond which there would be an obligation to carry election broadcasts. That is the proposition as we had it in that report and I do not see any reason at the moment to think that we would change that view. Mr Khabra: During Lloyd George's period people could buy peerages, knighthoods and other honours by making political donations. I call it corruption, bribery, that they could buy their position in the other House particularly, the ones who were appointed as members of the House of Lords. The Commission has got a responsibility for clean politics because people's perception in the modern age is very different. People think that politics should be free of corruption and bribery and that people should not be able to buy political influence by paying money to political parties. It is important for me because I am a member of a constituency party which has got a huge population, and there are businessmen who are keen to buy positions. There are other people who want to make a genuine, honest donation to their political party but businessmen in particular have been trying to corrupt politics. Chairman: We are getting into the area of assertions here. Can we just confine ourselves to a question? Q220 Mr Khabra: Why do you think the large donations from wealthy individuals have become such an important part of party fund-raising? Sam Younger: It is interesting perhaps to look at the work we did around the report that we published in 2004. While it was the case, as we have already mentioned, that the level of debate among the public has not perhaps yet been taken as far as it needs to be to establish whether the public would like party funding principles to emerge, although the public were not terribly comfortable with more state funding they were pretty clear that once individual donations, whether from individual people or individual organisations, got beyond a certain level - no real definition but big donations - they started to lose some faith in the process. Why has it happened? It has happened partly because of the decline in mass membership of political parties. It has happened partly also, I think, because in different parts of the world where there has not been a significant framework of state funding, as membership and membership contributions drop away and the cost of campaigning actually, or in parties' perception (the arms race point), gets more and more expensive, they have to fill the gap. That is my analysis of why we have reached the position we are in at the moment. Mr Khabra: The large charity organisations get money from rich people, those who give money honestly for a purpose. If these people can donate to a charity why can they not do exactly the same by donating money to a political party of their choice? The Committee suspended from 5.29 pm to 5.45 pm for a division in the House Chairman: We will now resume. I know you were in the middle of answering a question from Mr Khabra who is not here at the moment, but I intend to call the next group of witnesses at six o'clock, which means we have to deal with a number of things quite quickly in the remaining 15 minutes and I will ask Mr Brokenshire to proceed. Q221 James Brokenshire: I just want to move on to a linked issue on donations and the potential risk of at least the perception of a conflict of interest if a party donates or loans money to a particular party and that party is then in government and that person or a company connected with him or her is then the beneficiary of a contract from that governing party or makes a bid for a contract. Do you accept that there is this conflict of interest and, if so, is there a need for greater transparency? Peter Wardle: I think transparency is at the heart of this. The basic framework that was introduced by the legislation takes as its starting point maximum transparency about who is giving money to political parties and indeed how political parties are spending the money they get. I think provided the transparency is full and open it is perfectly possible for any issues of conflict to be seen and raised. I do not think the problem is necessarily with the rules on transparency of donations. There may be an issue with the presence or absence of rules around the awarding of contracts or other things that happen in government, but that probably goes outside the scope of the legislation on party financing, though not necessarily. It seems to me that if there is a broken part of the framework it is probably at that end at the moment rather than the basic principle of transparency which is in PPERA about who gives money to whom. Q222 James Brokenshire: So you would not support in essence restrictions on people who have received donations; there is more a need for greater transparency perhaps when contracts are being bid for by persons connected with those companies? Transparency at that end is something you think needs a look at? Peter Wardle: That would complete the circle, if you like. It is impossible to have prospective transparency. You do not know what may happen five years down the track. The fact that the individual or the corporation may have made a donation five years ago may or may not become relevant when something happens later on. Q223 James Brokenshire: But on the basis of what you said is there a need for greater transparency based on the system as it exists at the moment in relation to contracts? Peter Wardle: I cannot claim to be an expert on the current rules. It seems to me that on the whole commentators, the media, do not have too much difficulty, perhaps as a result of freedom of information, in finding out who gets government contracts, for example. I know there are issues around who may have bid and been unsuccessful in government contracts, but in terms of who gets the work there seems to be a reasonable degree of transparency. It seems to me that if there is a problem it is particularly at that end of the process. Q224 James Brokenshire: Do you believe that those who have substantial outstanding loans to political parties should be appointed to ministerial office or is there a need for greater transparency there as well? Peter Wardle: The view we have taken is that our job is to ensure maximum transparency. Political parties, governments, individuals, may want to consider for themselves how, given that transparency, various appointments, actions, behaviours, statements, might be perceived. I do not think it is for the Electoral Commission to get involved in commenting on those particular events. Our job is to make sure that people who may have a view on those events have the full information about any financial links with political parties. Q225 James Brokenshire: I hear what you say about not wanting to tread on the toes of whether someone should be appointed as a minister or not and that that as you see it is not your remit. Is there a need, based on your feelings as to where we are today, for any greater transparency on loans, donations and in the context of ministerial office? Peter Wardle: We have said already that, to the extent that the public feel that there is not full transparency around the financial links between individuals and organisations on the one hand and political parties on the other hand, public confidence is damaged. That in a nutshell is the essence of the debate at the moment. We have striven since we were established to ensure maximum transparency, and to the extent we have not achieved that and the legislation has not achieved that we have, as you know, called for a speedy solution to that and we were pleased that that was put in place by Parliament in the Electoral Administration Bill. Q226 Mr Tyrie: Your role is advisory so you are often on a hiding to nothing, frankly, but there are a number of things it would be very helpful if you could do nonetheless in the debate. The first is to establish some facts. You have done some of that but, for example, I note in Sir Hayden's submission, which we only got minutes before the beginning of this hearing, he appears to be swallowing the suggestion that Labour Party funding comes from the trade unions to the tune of only 22%. Your own figures suggest a range of 50-60%. I have never seen anybody suggest it is less than half. On a range, and I picked up a controversial one the other day, I wonder whether in these controversial areas you could try and put some facts into the public domain in a digestible form to help the debate. Sam Younger: In principle yes, particularly if it is stuff that we have got already. I am very wary of the treading on toes but more of what our own capacity is in terms of generating particular information, but if it is information we have got, particularly if there is a request, for example, coming from this committee for information that is in our possession, we will make every effort to put it together. Q227 Chairman: We may want to put in some more specific request for information of that kind. Sam Younger: Yes, we would be very happy to take that on board. There may be cases where we cannot do it but we would say so. Peter Wardle: It is also fair to say that in the initial discussions we have had with the team working for Sir Hayden we have pointed them to the fact that we hold a lot of factual data about party funding as a result of our remit and we would be more than happy to help them to find their way through that. Q228 Mr Tyrie: The point I was making was that your data on the whole is not put necessarily into its most digestible form; shall I put it like that? Try hunting around on your own website and you will see what I mean. Peter Wardle: I have tried that on a number of occasions. Q229 Mr Tyrie: Another example, although you have put it into a more digestible form here, of research that it would be helpful maybe to follow up, is the fact that although it is true that we are faced with the apparent conundrum that three-quarters of the population do not want state funding and three-quarters of the population also think parties are up to no good in the way they are funded, which is broadly what this research says, it is also true that your same research suggests most people do not distinguish between party funding and public expenditure generally, nor state funding of parties and public expenditure generally, nor are people aware of the qualitative research that you have done which suggests that once people have some very elementary points explained to them in a relatively neutral way they end up by a small majority supporting state funding. Sam Younger: I think that is a very good point. Indeed, that is part of why what we want to emphasise is building on that deliberative and qualitative work and it is part of the reason why also we would very much welcome any involvement members of the committee would like to have in helping us collectively get the most out of that process because I think there is a lot in that qualitative work that can be built on in those terms, but building up the knowledge base before you ask the public, rather than just the knee-jerk question where in a sense I think intuitively simply asking those two questions, to put it as you did, "Are the parties up to no good?", and, "Do you want your taxpayers' money to be used for parties?". In a sense I think we know what answer we are going to get to those as start questions but the issue is trying to get in behind that and see what people say when they understand a little bit more about it. That is certainly one of the elements we want to pursue. Chairman: Thank you very much indeed. There are probably one or two other points we might follow up in correspondence with you and we expect to see you before too long in any case on a number of other matters, including the postal voting issue and the governance issues which are also the subject of other inquiries going on at the moment. Thank you very much for your help this afternoon. Witnesses: Frank Hindle, Deputy Chair, Northern Region Liberal Democrats, Colleen Fletcher, North East Coventry Labour Party, and David Simpson, Conservative Campaign HQ, gave evidence. Q230 Chairman: Colleen Fletcher and David Simpson, we welcome you back because you have been before us before. Frank Hindle, thank you very much for coming. I am sorry you have had a long wait although I hope it has been a reasonably interesting one. You may have noticed us asking some fairly tough questions of the people we have had in already who have responsibility for things. That is really not our purpose in inviting you here today. We wanted to get some local flavour of how these things are seen by people each of whom has recent practical experience at the level of constituency operation, agenting and all of that. Just very briefly, and you understand that because there are three of you the more succinct you can be the more we can get out of you, have you found it increasingly difficult - and I am not trying to put you in any kind of partisan situation here - in general to recruit people into active membership and participation? You do not have to try to say, "We are doing better than the others". We are after the truth. David Simpson: I think all voluntary organisations, Chairman, have found engaging people in community activity at any level more and more difficult over the years and, of course, that truism follows with political parties. All I can say is that we have plateau'd as a party overall and have started to go up a little bit since we had another leadership change recently, and I think that things are moving forward, but it is difficult to engage people overall in community activity, and local politics is still, I think and believe, a community activity. Frank Hindle: I would agree with that. Also, the reputation we as politicians generate for ourselves does not help encourage people to join us. Colleen Fletcher: I would agree with most of those comments. I really do not have anything to add to that. Q231 Chairman: That was very consensual, so from here on in ----- Colleen Fletcher: Oh, no! Chairman: I was going to say that from here on in all you need to do is chip in when you feel you have something to add and we will assume not total agreement but that it is unnecessary to challenge if you do not agree. Q232 Dr Whitehead: What is the financial relationship you find between your local associations and your national parties, both in terms of what comes down to the local party from national financing and also, in terms of fundraising, do you find yourselves as local parties under any sort of pressure to raise money which essentially goes nationally rather than is raised and used locally? Colleen Fletcher: In my party we do not raise money locally that goes nationally anyway. All money that we raise locally we spend locally. The money that we get from the national party is through membership subscriptions which we get a proportion of, and the other proportion goes towards staff, premises, et cetera. David Simpson: From our party's point of view our local associations are very distinct and separate and they do their own fund raising. This is highlighted, if I can give you brief stats, in terms of the number of local accounting units or constituency associations that have to make returns to the Electoral Commission for having a turnover of more than £25,000. If you look back over the three years since that came into force, in each of those last three years the Conservative Party has made a return of something in excess of 300 accounting units. The Liberal Democrats have been between 63 and now 103 this year, I think it is. Q233 Chairman: That is units you have declared with more than £25,000 turnover? David Simpson: That is right, and the Labour Party are now at the figure of 38. That deals with the way they are funded. You have just explained, Colleen, that all your membership money goes nationally. Ours goes locally. Colleen Fletcher: No; I said a proportion of it goes locally. Q234 Chairman: Do you have a quota system? David Simpson: We have a quota system, a sort of campaign subscription, that we encourage our local constituencies to raise towards our central costs, so we do have money coming up from the local fundraising effort. The most important thing as far as I am concerned as a local practitioner as well as being a national party official is that in my local constituency in Wimbledon we are expected to seek to raise enough money to cover our own costs and make some contribution towards the central funds of our party organisation. Q235 Chairman: Frank Hindle? Frank Hindle: We are different again. Most of our subscription goes to the central party. A small amount comes down to the regions and local party but the local parties do their own fundraising and keep their funds and the national party does its fundraising and keeps its funds, although sometimes the national party will provide funds for particular seats. Mr Tyrie: I am thoroughly confused now. Sorry; I really am. Chairman: That is because there are three different parties doing things three different ways. Q236 Dr Whitehead: In the light of what you said about local fundraising and how that works have you found that the public have particular concerns about what is known about the large sums of money that are raised for particular political parties from wealthy donors? How does that resound in terms of what you said about local fundraising efforts? Frank Hindle: It is not an issue which comes up on the doorstep. As I said, first of all in terms of the fundraising, the fundraising by and large is not from members of the public; it is from members, but in terms of, say, canvassing for local elections I do not think anybody has stopped us and said, "What is up?", in commenting on national funding issues which we were talking about at the time. On the other hand I go into work and I get ribbed about "What was the cost of a peerage today?" or whatever, and so clearly it is an issue in people's minds but perhaps they do not bring it to us at the local level. David Simpson: I would not disagree with that. It is not something which I have found recently hitting me on the doorstep when canvassing for my own local elections. Q237 Dr Whitehead: What you could say in terms of the funding that goes to the national campaigns is that in a sense that is where money from large donations largely goes. How do you perceive voters at local level engage with those national campaigns as they roll out? I think it has been said that there are in a sense two worlds of campaigning, are there not? There is the national campaign and the local campaign which is largely funded in the way you have described. David Simpson: National campaigning quite clearly is a separate issue. It is to deal with the projection of a party across the piste. Locally, when it comes to campaigning and the three or four weeks of an election campaign, you are trying to get the views of that individual candidate (or local candidate if it is local elections) across to a very localised community, so life is totally different in that respect, and I think it is important that that differentiation remains. Q238 Chairman: Is there really a differentiation? David Simpson: There is. Q239 Chairman: Is there a genuine differentiation given that a lot of national campaigning now takes the form, for example, of mailings sent to target seats from the centre, not mentioning the name of the local candidate because that would put them into the wrong balance sheet, but obviously intended to give a lot of support to the election of that candidate in that area? Frank Hindle: There is a legal differentiation certainly. We can put posters up that say "Liberal Democrats" or "Conservative" or whatever, and that is national expenditure. The fact that all 10,000 of them are in one constituency is neither here nor there, but there is a practical effect as well. More and more we are noticing a practical effect of major campaign resources being deployed in particular seats. It might be that a party uses a call centre extensively in one particular constituency. It might be literature and target letters. It might be billboards. Those are national things but you cannot separate them from the local and it does have an impact and it is something we have to deal with. Colleen Fletcher: I would agree with that. Q240 Dr Whitehead: How significant though do you think that is in terms of that differentiation? Frank Hindle: I am from the north of England and in most of the seats in the north of England it is not significant but we do not have a lot of marginals. In marginal seats it is more significant because that is where everybody is going to deploy their resources. Q241 Dr Whitehead: Would you say therefore that it is over-significant in a certain number of seats and under-significant in others; is that the general observation that you are making? David Simpson: I think that is probably true. Again, if the party nationally has got income it is going to seek to deploy it where it is going to have the greatest effect and it is going to have the greatest effect on what it determines are the key marginal seats for that particular party. You do then get the greater additional impact both of the local campaigning on the one hand and the national campaigning on the other, but it is wholly differential in the sense that quite clearly if your party is, say, like us in the north east of England to a large degree, we would not be looking to over-resource in most of the north east of England simply because we know that we do not have that degree of marginality on a national basis. You would be looking to deploy your assets elsewhere. Dr Whitehead: So the phrase "We would not be looking to over-resource" is perhaps another way of saying, "The last thing we dream of is sending any national money up there"? Q242 Chairman: Well chosen words. Frank Hindle: I cannot comment on very successful over-resourcing. Q243 Dr Whitehead: As far as the national campaigns are concerned, over the course of an election period, in terms of the party's work and so from your deployment of funding and activities locally, how do you find those national campaigns relate to local issues? Does the dog wag the tail or does the tail wag the dog in as much as do you find yourselves trying to go into step in terms of the election campaign with what is happening nationally or do you hope that the national campaign can chime in with what you are doing and saying and funding locally? Colleen Fletcher: I think we make it do so rather than hope it does so by running local campaigns alongside the national campaigns, so we tailor it in; we try to. David Simpson: Locally we seek to tailor the best part of the national campaign into that which fits our local community. You are bound to. It is a mix and match exercise. Frank Hindle: You asked specifically about the election period, which, if it is not a general election, is a very short period, and it is very easy to get hit by some national bandwagon that nobody saw coming and so the leaflet you had prepared on topic X locally actually looks very uninteresting because all of a sudden is not what people are wanting to know about nationally. Q244 Julie Morgan: Could you tell me if you feel it has become more difficult to raise money locally? Colleen Fletcher: It has always been difficult to raise money locally. I would not say it is more difficult than it ever was, certainly not. David Simpson: That is probably right overall. There are peaks and troughs, obviously, of party popularity which have an enormous effect, clearly. If people locally are out of sympathy with your party at the top it does permeate down and it does hit your local fundraising; there is no doubt about that. Equally, when that turns and the curve starts going up the funding starts to increase again. There are always going to be peaks and troughs, but if you look at it across the piste over a period of years I guess it is not that much more difficult. Q245 Julie Morgan: So you do not think it is more difficult now than it ever has been? Frank Hindle: The comment that it has always been difficult is the point. Q246 Chairman: Am I wrong in assuming that there is no longer such a ready supply of people whose party activity consists of fundraising at the local level, organising jumble sales, coffee mornings and all the rest of it, as opposed to those who join the party because they want to do politics, stand for the council or that sort of thing? Is there a social change there or am I making this up? Colleen Fletcher: There is a change. You can call it a social change if you like, but many years ago I do not recall but people have told me that women did the fundraising in political parties and so it was an ongoing thing. When they realised that, hey, hang on, the big change came around, that changed so that fundraising was probably not on the minds of one part all the time. It happened when it happened. I think fundraising went on behind the scenes all the time in a small way, not raising huge amounts of money but just enough to keep you ticking along, which has not changed, but I think now it is more mixed, so everyone joins in. It is a joint effort really. Q247 Julie Morgan: When new members join do they realise that part of their activities is fundraising? Colleen Fletcher: I think so, yes. I think it comes with the job, as it were. I think they do realise that and lots of new members are made through fundraising activities. David Simpson: If they do not realise that on day one they certainly do on day two. Frank Hindle: Our members get an inordinate number of begging letters from the central party. We warn members about it when they join. Q248 Julie Morgan: What percentage of time is spent on fundraising? You said, Colleen Fletcher, that it is mixed in with everything else. Colleen Fletcher: It is. Q249 Julie Morgan: Could you say how much time members have to spend on fundraising? Colleen Fletcher: If we organise a fundraising dinner or something like that they spend a lot of time up to that dinner organising it and everything that goes with it and then we will leave off it until the next fundraising event. That is how it is. David Simpson: That is exactly right. Colleen Fletcher: It is difficult to say how much time is spent doing it. David Simpson: My own party is organised on a branch basis and then it goes up in a sort of pyramid to the local associations, key activists, and the branches are encouraged to raise funds and to organise activities which will raise those funds. Equally, when it is election time they are there to provide the bread and butter of the organisation that we need to get the literature out and to do the work at that time, so it is a mix and match. Some people obviously will say, "I would rather do the politics bit than the fundraising". Others will say, "Don't ask me to go and knock at doors, for goodness' sake, ever, but let me organise a jumble sale or a party and I will go and do it willingly". Q250 Julie Morgan: Would you agree that those sorts of activities are very valuable? David Simpson: Absolutely. Q251 Julie Morgan: I mean apart from the money they raise, in terms of the politics as well. Frank Hindle: Within the organisation, yes. David Simpson: The key to it is that it involves people. Politics is about people at the end of the day; you cannot get away from it. It is the key that makes this whole operation work. If you do not get people in to take over from other people the whole thing dies on the vine. That is not what any of us are about. We are about continuity and trying to raise the profile of our individual parties. Q252 Chairman: What would be the effect on your campaigning if the parties spent less money centrally? What difference would you notice and what difference would it make to the work you do in Wimbledon or Gateshead or Coventry? Would you have to generate more activity to fill the gap or would you think, "All right. That kind of warfare is not happening in any direction. We will just carry on"? David Simpson: We have a legal maximum locally that we cannot exceed in any election campaign in terms of what we are doing. The fact that the party at the top is spending an awful lot of money on a national advertising campaign or leaflets or whatever it is does not necessarily have that great an effect on the fact that we have a legal maximum beyond which we cannot go and we would be looking to spend that and to create our own literature and our own environment to support our own candidate locally. Frank Hindle: But that legal maximum only applies in very limited regular periods. If the national expenditure was reduced and the party was left with the same resources, it probably would not affect us particularly because we never get near the cap, but I would be concerned therefore if the other parties - to my right here - had resources which they would want to find some way of using usefully to the best effect, which would mean that they would boost their local spending. If we bring down the national cap and do not control local expenditure correspondingly then the gains which are being sought would not be achieved because it would be very easy for some national treasurer to tell local parties, "We have got a million pounds. You have each got to make a £5,000 donation and this is how I have spent it. Here is the receipt and here is the invoice." Q253 Chairman: "And here is the template for what you have got to do" as well? Frank Hindle: Yes. Q254 Mr Tyrie: I think we are very close to the heart of the matter because public confidence has been so dented by the way parties are raising money nationally that we are hoping we can think of some way of affording party finance and state support for it that can revive that confidence. That would principally be by finding ways of encouraging local activity and local funding to increase, but if you are suggesting, Frank Hindle, that one party has a much bigger advantage in its capacity to do that than any other we will have an impasse. Therefore my first question to you particularly is, and you have not got to elaborate on it in detail now, do you think in principle, if we can find a scheme that can revive and stimulate local party funding we will be doing something that will be healthy for the political system? Frank Hindle: Yes, certainly. Some of the ideas which have been canvassed, such as, for example, tax relief on small donations, would first of all make small donations more valuable to us and, secondly, to some extent it would make it more respectable to go and donate and also encourage people. It is like charity. It is always a good incentive to say, "If you put some money in the taxman will put some in as well". Do not take my other comments as being purely negative. I think there are things you can do to encourage things. Q255 Mr Tyrie: It seems to me that therein lies the heart of the matter for all of us. We all want healthy local parties. We all used to have healthier local parties than we have now. If state funding is to be introduced or extended should it be done in a way that can increase or offer an opportunity to increase local party activity? Colleen Fletcher: Yes, I think so. You are talking about tax relief on small donations. I am treasurer of my own constituency and have been for the last eight years. The regulations that came in on donation reporting did not particularly hit me very heard because I do not find it particularly difficult to do. What I do find difficult is to remember to do it, because mainly I am returning those donations with "nil, nil" written on them, and I think, "Oh, it is nothing again". I get heavy reminders from my regional party about this so they do actually go in. Although I can cope with filling the form in because it is pretty easy, in constituencies up and down the country most people who hold office in any political party are not professional. I am the treasurer; I am not a professional accountant, and our secretaries do not sit at word processors all day, or whatever they are called now. They literally do it on a voluntary basis so I think it would be important to have something that did not complicate things for treasurers of political parties. Q256 Mr Tyrie: From memory, David, I think you have spent most of your career in the sticks, or a great deal of it, doing exactly this. David Simpson: Yes, I have indeed. My background is one of being firstly for a goodly number of years a local party agent and then a regional agent of the Conservative Party and I have been at the sharp end of that fundraising, and indeed now do it locally as a volunteer in my own constituency. I am absolutely convinced that we have to find a way of improving the way in which political parties are looked upon and the only way that perhaps we are going to do that is by having some mix and match process. It would be enormously helpful, just as all our charitable works can, if we could get tax relief on those. We should be able to get tax relief on small donations to political parties. I would not necessarily want to put a particular figure on it but I think that would help and I think a lot more people would then involve themselves. They would not necessarily become activists but at least they would feel they were putting something into the pot. Q257 James Brokenshire: I want to come back to the compliance issue of the form filling and the duties and responsibilities that someone may have as an officer of a local association seeking to meet the rules and requirements. Colleen Fletcher, you were saying that in your situation you are lucky that it is not such an onerous obligation but, talking to colleagues of all parties around the country, do you receive complaints that the existing rules on how to register donations and comply with the accounting provisions of the local accounting units are not working, or are people complaining that they are difficult to follow, difficult to understand and people feel a bit anxious about it? Colleen Fletcher: I have not heard personally of people who are particularly anxious about that, so I could not possibly comment. I can only say that I imagine that some people would find it an onerous thing to do. David Simpson: If I can help here, putting my other hat on, I am still working for the Conservative Party as its head of compliance at campaign headquarters and in that I deal with, on behalf of the registered treasurer, making sure that we make our donation returns in accordance with the Act, and it is quite difficult. You have to remember that there is a turnover of voluntary officers. Most Conservative associations, and I am sure Liberal Democrats and the Labour Party too, have a sort of three-year rule where officers change, and so there is a training process if they have got to be involved and people move on and so on. That puts an additional burden on parties and their organisations, and yes, these people are volunteers and the registered treasurer of a local party can face criminal sanctions according to PPERA. I believe that to be wholly wrong in the sense that if there was a civil penalty then the penalties might be enforced. I do not think the Electoral Commission even wants to go down that route of criminal sanctions against people. It is quite an onerous thing to take on, to say to somebody, "Okay, you be the registered treasurer but, by the way, here is what can happen to you if you do not fill the form in correctly". Colleen Fletcher: And most of us have not told them. David Simpson: You may not tell them. Chairman: Most of us have probably had to try and find those people as treasurers at some point and gone through exactly that process. Q258 James Brokenshire: The Chairman raises an interesting point on that. I know, Colleen Fletcher, you were saying that you had been your treasurer for eight years. Not that I would ever wish you any ill at all, but if you were to go under the proverbial bus how easy do you think it would be to find a replacement against this context, because clearly things have changed from when you came into post to where things are now. Colleen Fletcher: I hope it would not be too difficult. It is rather difficult to answer, but then I am coming from my point of view who maybe was a treasurer first and then met with it. We had a lot of information about it and certainly my own party gave training on this, how to get it right and how to do it, so hopefully we would do the same with someone new coming in. It is not the job of doing it and making sure all the rules are correct and the reporting is right that is the problem. It is getting someone to spend their time doing it that is usually the problem. Frank Hindle: A treasurer is always a difficult post to fill anyway, and you always want somebody who can do the figures. Yes, there was some resistance at first because people did not understand it, but training has been put in place and as treasurers or federations change we need to keep the training up to date, but we can also explain to people the good reasons for it, and also in most cases it is a nil return so it is not really that hard to do. People have to be reminded or persuaded sometimes but I would not put it as a major issue. Q259 James Brokenshire: I want to move on to a slightly different point based on your feeling of local members and of the people in your constituencies or your areas in the context of state funding, which obviously has been in many ways the focus of the debate over changes to the way in which parties are funded. Do you think, based on your experience, that an increase in state funding would increase or decrease disengagement with democracy, the democratic process, party politics? In other words would it help or hinder, do you think? Colleen Fletcher: It is very difficult to say whether it would or not. Maybe if people thought there was more state funding going into political parties they would feel as though they wanted a stake in that, so maybe it would increase but it is hard to say. David Simpson: An awful lot of people frankly do not realise just how much state funding of the national political scene there is. Colleen Fletcher: As happens now, yes. David Simpson: As happens now. If they did I think they might be slightly less inclined to give locally, to be perfectly frank. Q260 James Brokenshire: You heard about the Electoral Commission's initial survey. You may have heard some of the initial exchanges about 75% of the public being against state funding. From what you have said or your experiences would you agree with that and would you agree with the corollary that that is based perhaps not on full information? David Simpson: I think it is probably not based on full information but there is a natural instinct in this country that there is enough red tape and enough big brother so we really need state funding? Some people say to me locally, "Do I really want to see any more of my taxes going into political parties, supporting your organisation? Can you not raise your own money locally?". I still believe that if people realised just how much money was going into the pot already they might not feel inclined to get any more engaged; let us put it that way. Frank Hindle: Harking back to the north east referendum a year and a half ago or whenever it was, one of the key cards to the "no" campaign was that this would lead to more politicians, more money going to politicians, more money going to politics and so forth, and the fact that it was going to be tuppence ha'penny per whatever was not the issue. The principle of any increase was really quite unpopular. Against that, if it comes to state funding of the parties, I think the issue will be how will the money be used. If you see it being used for suits and hairdos and so forth it is headlines, but then they disappear. What people do want is a strong democracy but people have not always thought through how you get a strong democracy that needs paying for. We have all got a process there in educating people in some way and being responsible in how we do things. The issue comes up with councillors' expenses or MPs' expenses. It is always misrepresented back but they still want to be represented. Q261 Chairman: One of the ways in which to try to achieve what you have just described is through the facilities that Dr Whitehead mentioned earlier: free post, delivery, that sort of thing. It is perhaps difficult from the party point of view because if you have got a good delivery system in your particular area you may think, "That is an advantage. We will hang on to that. We do not want the others having free delivery because we are better at it at the moment", but in general do you think that more moves in the direction of free delivery for local elections, for example, as was done in the London mayoral election when they all got a copy of the manifestos of each of the candidates, would be a route you could go down without bringing in some of the disadvantages you have described? David Simpson: You could go down that route of wider free post. It depends how long it takes somebody to get to the front door, .pick up the thing and get it into the wastepaper basket, sadly. It is how much attention span it is going to get. I think that the free post system is there to be helpful and I think it is useful for all of the political parties, especially in places that sometimes you cannot reach, particularly in the modern urban communities with blocks of flats. It is much more difficult to canvass people and deliver stuff these days than it used to be simply because you have got entry phones, you have got to get into blocks of flats and so on. It is much more difficult in the urban communities than it was a few years ago, so the free post is in that sense a great addition because it means that something is getting through that letterbox by the postal system. Colleen Fletcher: I agree: the free post is one thing that goes to everybody. As you say, we have all got those entry systems that we cannot get into and stuff like that, but as well as that there are other ways to communicate these days. At one time you only ever posted something. Nowadays there are other ways to communicate. You have got email, you have got all sorts of things that could be considered. Chairman: Thank you very much. You have brought a breath of fresh air into our proceedings from the world we all started in with grass roots campaigning, and I was quite anxious that that should be so. You have all come a distance, indeed two of you have come a long distance, to help us today. We are very grateful indeed for your help. |