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15 Mar 2007 : Column 464

Sir Patrick Cormack (South Staffordshire) (Con): It is possible to be in favour and yet express concern. Is the Secretary of State aware that all those who are concerned about arts and heritage matters, for which she has national responsibility, fear a destructive distortion in her budget over the next five years? They fear that she will go down in history as the most expensive lady since Helen of Troy, whose face launched a thousand ships—and those, at least, were operational.

Tessa Jowell: The hon. Gentleman, who has a proud and distinguished reputation for representing the heritage in this House and beyond, is being a touch apocalyptic. The Government welcome scrutiny of everything that we and our associated partners are doing in relation to the Olympics. We deplore, however, the cynicism that undermines the optimism felt by young people up and down the country.

Ms Sally Keeble (Northampton, North) (Lab): I welcome my right hon. Friend’s statement. Will she ensure real engagement with local communities through the nations and regions group, so that all communities outside London can see the benefits of the games, especially in increased participation in sports, which I believe will be one of the strongest legacies of the games?

Tessa Jowell: My hon. Friend has set an example in her constituency for how enthusiasm for the Olympics can be brought together through local organisations, sports clubs and local sponsorship. I hope that Members from both sides of the House will rise to that challenge. She is absolutely right that sustaining public confidence and support for the Olympics means making clear the benefits that will come to towns, cities and communities across the United Kingdom. That is what we want to achieve.

Philip Davies (Shipley) (Con): The Secretary of State should apologise to the House for presiding over such a shambles, allowing costs to spiral out of control by so much so quickly, and expecting good causes and charities in our constituencies to bail her out. How much confidence can we have in the new budget, given that there are another five years to go until the Olympics? If she has not already been sacked, will she resign if she has to come back and demand more money for the games?

Tessa Jowell: I wonder what young people who may read or watch this debate at home—if they have nothing better to do—must make of the Conservative party’s attitude. [Hon. Members: “Scrutiny.”] Scrutiny is absolutely fine, but cynicism is not. Of course we will continue to be scrutinised, to explain and to justify, but I will never apologise for having had the vision and confidence to bid for the Olympic games and, against all the expectations of the nay-sayers, win it for London.

Mr. Tom Watson (West Bromwich, East) (Lab): With more than 40 major construction contracts likely to employ more than 20,000 people, many of whom will come from the west midlands, does my right hon. Friend agree that framing the contract is now vital?
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What the construction industry needs is certainty about who—preferably, a single organisation or even a named person in that organisation—is making the decision. Does she further agree—

Mr. Deputy Speaker: Order.

Mr. Watson: If there were an Olympic sport for—

Mr. Deputy Speaker: Order. The hon. Gentleman should know to sit down as soon as I rise to my feet. He had a good ration.

Tessa Jowell: To focus for a moment on procurement, my hon. Friend is absolutely right. The Olympic Delivery Authority has already published its principles for good procurement, which laid heavy emphasis on the importance of sustainability for the games. Yes, the governance procedures are clear and robust, precisely as is necessary to ensure that the project is delivered on time and with proper cost control.

Mr. Brian Binley (Northampton, South) (Con): I was delighted to hear the Minister talk of opportunity. I am also delighted that in Northampton my colleague the hon. Member for Northampton, North (Ms Keeble) and I are working together so closely to ensure that we exploit all the opportunities. I pay tribute to her energy and dedication in that regard.

As the Minister will know, the development of Crossrail may take place at the same time as the development of facilities for the Olympic Games. That will involve an enormous amount of resources, which will be focused on London. I am concerned about how the rest of the country will be affected, and I therefore ask whether any assessment—

Mr. Deputy Speaker: Order. That was a good ration as well.

Tessa Jowell: I think that we should hear it for Northampton! My admiration for my hon. Friend the Member for Northampton, North (Ms Keeble) is undimmed on learning of the steps that she has taken. As for Crossrail, decisions will be made in due course,
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but I have always made clear that there is no reliance on Crossrail for the Olympic transport plan, which is very well advanced.

Jim Sheridan (Paisley and Renfrewshire, North) (Lab): Will my right hon. Friend assure us that if lottery money is to be diverted, she will begin with the arty-farty projects? I am thinking, for instance, of the £2 million that we gave the Churchill family for paintings that 95 per cent. of the British public have never seen and have no desire to see. Will my right hon. Friend also assure us that the construction contracts will be given to British companies employing British-registered workers, complying with British employment law and using British products?

Tessa Jowell: I can tell my hon. Friend that the ODA takes what he said in the second part of his question very seriously. As for the first part, without substituting my judgment for that of the distinguished lottery distributors, I remind him of the safeguards that the settlement provides for the voluntary and community sector, which the lottery enables to play a vital part in the life of communities throughout the country.

Mark Pritchard (The Wrekin) (Con): May I make the Secretary of State an offer which I hope she will not refuse, and which may even cheer her up? Would she like to come to the midlands with me this weekend? If she does, she will see that construction there is delivered at about 25 per cent. of the cost of construction in London. If this really were a national rather than a London Olympics event, there would be far more building in the regions, which would solve some of the problems that the Secretary of State faces today.

Tessa Jowell: I can resist the hon. Gentleman’s invitation, because I was in the midlands yesterday or the day before, and while I was there, I was told by the Olympics director of Birmingham city council that the American track and field team would be based in Birmingham in the run-up to the games. There have been some 700 expressions of interest in hosting preparation camps, and the midlands are getting in early to ensure that the benefit of the Olympics will extend to Birmingham.

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Political Parties (Funding)

1.13 pm

The Leader of the House of Commons (Mr. Jack Straw): With permission, I shall make a statement about the report of the review of party funding by Sir Hayden Phillips entitled “Strengthening Democracy: Fair and Sustainable Funding of Political Parties”, published earlier this morning. Copies are available in the Vote Office and the Library of the House.

In a written ministerial statement this morning, my right hon. Friend the Prime Minister thanked Sir Hayden, on behalf of the Government, for his hard work over the past 12 months. In the course of his review, Sir Hayden received submissions and held discussions with representatives of all the major political parties, as well as consulting the public, the Electoral Commission and various academic experts.

Sir Hayden's report identifies important principles that could form the basis of a lasting settlement of the party funding system. However, as Sir Hayden himself concedes, a number of practicalities remain to be worked out and will require further discussion between the parties. We will play a full and constructive part in those talks.

The issue of party political finance and spending is central to the debate about the health of our democracy. There is a keen public interest in securing lasting reform in a way that curbs wasteful spending, does not gratuitously advantage one party at the expense of others, and does not interfere in the internal structures of any political party.

If the various political parties can agree on a reform package that meets those objectives, we will have a funding regime that will increase public confidence in the probity of the democratic process and help stimulate grass-roots renewal of our parties.

The most compelling need identified by Sir Hayden is the need to end the political spending “arms race”, which has seen expenditure spiral upwards even as party memberships have declined. In the 1997 to 2001 Parliament, the Government, with all-party support, sought to tackle the problem of excessive spending with what became the Political Parties, Elections and Referendums Act 2000. The Act reflected key recommendations from the Committee on Standards in Public Life, chaired by Patrick Neill QC. It introduced a national limit on campaign expenditure, created the Electoral Commission, and made the funding system more transparent by requiring that all donations above £5,000 nationally and £1,000 locally be made public.

We all believed that through the introduction of those limits and that transparency, public confidence in the system could be assured; but the recent revelations about unpublicised loans to parties by individuals, resulting from a loophole in the 2000 Act, have clouded that transparency. In addition, the line between local and national spending has become blurred by developments such as political campaigning facilitated by the internet, and other advances in telecommunications. As a consequence, a modest relaxation of spending controls at local level in the 2000 Act has been exploited to an extent far beyond what was intended in the legislation.

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Sir Hayden draws attention to the fact that spending by the two main parties in the 12 months before the last general election—in 2005—rose to £90 million, up nearly 40 per cent. on the £65 million spent during a similar period in 2000-01. He must be right to say that the 2000 Act

The immediate problem of transparency in relation to party loans has been resolved by the Electoral Administration Act 2006, which requires that loans be publicly declared in the same way as donations. However, in his report Sir Hayden advances proposals for further reform. Crucially, he shows support for the principle of continuous spending limits at local and national level. He also proposes tighter controls on third-party expenditure, and a reformed Electoral Commission with the power, capacity and practical experience to perform its role as an effective regulator.

The importance of effective spending limits cannot be overstated. As the Select Committee on Constitutional Affairs observed in its report “Party Funding”, published in December last year, the United States offers an instructive example of what can happen when political spending is left unchecked. The Committee said that in 1976, the total cost of all United States elections was $40 million. By 2004, the cost of federal elections alone had risen to $3.9 billion, 97 times higher.

Sir Hayden also recommends the introduction of caps on donations. All three main parties agree in principle that there should be some form of donation cap. The Constitutional Affairs Committee recommended a voluntary arrangement. We believe that that would work, providing enough flexibility for the different structures and traditions of the various parties to be respected.

Sir Hayden offers welcome backing for the judgment of the Constitutional Affairs Committee that

Finally, Sir Hayden recommends the introduction of a higher level of state funding for political parties. The Constitutional Affairs Committee reached a similar conclusion, but recognised the need for further debate about the values and principles that should govern such funding. As a 1976 report on party funding—by a committee chaired by the then Douglas Houghton—showed, there has long been a degree of state funding in United Kingdom politics. All political parties have the opportunity to claim free television and radio broadcast slots, along with free postage. Since the 1970s, the provision of Short money and Cranborne money has given millions of pounds of state aid to the main Opposition parties. That funding has increased more than threefold since 1997. In 2006, the total amount of Short money was £6.3 million, with more than £4 million being paid to the main Opposition party.

The Neill committee noted in its 1998 report that the arguments for and against state funding were “finely balanced”. Although Neill did not recommend a major extension, his committee concluded:

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Sir Hayden concludes that those circumstances now exist, and he has put forward proposals for increased state funding based on electoral support and the recruitment of members.

Our democracy could not function without the organisation of political parties of all political shades and opinions, and the platforms for debate and the exploration of ideas which the political parties provide. Their work, and in particular the work of party foot soldiers who devote time and energy to their cause, is fundamental to the health of the democratic process.

In order for them to command high levels of public support, the funding arrangements for political parties must be fair and transparent. Through earlier legislation, Parliament has taken significant steps to put such a system in place. Sir Hayden Phillips’ report has identified areas for further reform and some key principles. The task now for the political parties is to work on the practical arrangements of achieving a fairer, more sustainable and more transparent funding regime. The public would expect nothing less.

Mrs. Theresa May (Maidenhead) (Con): I thank the Leader of the House for giving me advance sight of his statement.

We welcome the publication of Sir Hayden Phillips’ report. We accept his main recommendations. We want to have cleaner and cheaper politics, and we want to work with the other parties to achieve that goal. However, if cleaner and cheaper politics is the goal, we start a long way from that point. The cash for peerages scandal has pushed the public’s estimation of politicians to a new low. This issue is not just about our vanity, nor is it just a joke that can be easily written off. Public cynicism about our political process is deeply damaging to our democracy, so will the Leader of the House agree to hold cross-party talks on Sir Hayden’s recommendations as soon as possible?

There is much to welcome in Sir Hayden’s report. We support the moves towards a long-term cap on donations to political parties and a reduction in the general election campaigning cap, and we are happy to discuss spending caps on all year round non-election campaigning and proposals for tighter controls on third-party expenditure, greater transparency on donations, such as those by unincorporated associations, and new powers for the Electoral Commission. Does the Leader of the House share our support for those proposals?

Sir Hayden suggests that it might be desirable to control local campaign spending outside election times, but he rightly notes the difficulties in putting that into practice, such as the variance of constituency boundaries according to the type of election, the practice of targeting marginal constituencies which is inevitable in our electoral system, and the fact that local party officers tend to be volunteers. Despite our scepticism about the need for local limits, in order to secure agreement we are prepared to consider them, but subject to one condition: that any caps imposed at local level do not entrench incumbency. Does the right hon. Gentleman agree to that?

It has long been the position of the Conservative party that in order to restore public trust we must
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remove the dependency of the political parties on all large donors, regardless of whether they are individuals, businesses or trade unions. I am glad that Sir Hayden has reached the same conclusion. Does the Leader of the House agree with Sir Hayden’s proposal that caps on donations should apply across the board—to individuals, businesses and trade unions?

Sir Hayden’s report suggests that, despite the cap on donations, trade union affiliation fees could count as individual donations on the condition that

Does the Leader of the House agree that any such system must be free from abuse? Does he agree that if affiliation fees are to count as individual donations it is imperative that individual trade union members are able each year to opt in to political funds, rather than being left to opt out, as is currently the case? Given that more than half of all union members who pay affiliation fees do not vote Labour, should not members who opt in to political funds be able to choose annually to which party their fees should go?

These are very important questions because it is, of course, Labour’s financial links to the trade unions that have prevented reform until now. [Interruption.] The party’s national executive committee recently pledged to “vigorously oppose plans” for an across-the-board cap on donations, saying that

However, as Sir Hayden says,

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