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“a limit on donations need not...challenge the Party’s constitutional relationship with the trade unions”.
Does the Leader of the House agree with Sir Hayden? Three quarters of Labour’s donations—some £8.5 million per year—come from the unions, and there is another £8 million per year in affiliation fees. Is it not the Labour party’s constitutional relationship with the unions that is threatened by funding reform, and what it is particularly worried about is its financial relationship with the unions?
Sir Hayden is clear that there should be no new state funding of political parties until an agreement is reached on all aspects of reform. We agree. There should not be a single extra penny of state funding until there is a cap on all donations from individuals, companies and trade unions. Does the Leader of the House agree that there should be no more state funding until that is the case? Does he also agree that any new state funding must promote democratic engagement? As the Committee on Standards in Public Life and the Constitutional Affairs Committee have each concluded, that could be done through tax relief on small donations and matched funding for non-taxpayers.
We need to reform party funding if we are to get cleaner and cheaper politics, and we need cross-party consensus if we are to reform party funding. Sir Hayden’s report, published today, is a very good starting point for cross-party talks. The principal block to reform remains the Labour Party’s relationship with the trade unions. This Government came to power promising to reform party funding to end sleaze. I am sure that in new Labour’s old days the Prime Minister and Chancellor would have wanted to be bold by ending the unions’
financial grip on their party. That is the key to achieving consensus on party funding, so will the Leader of the House now accept that challenge?
Mr. Straw: Of course we would like the all-party talks to take place soon, but I must say to the right hon. Lady that they will have to take place on the basis of what is actually in Sir Hayden Phillips’ report, rather than on what she wishes was in his report.
The right hon. Lady talks about state funding. Sir Hayden proposes that that must be linked to other changes, and of course we accept that. There is a big issue, which the Constitutional Affairs Committee raised, to do with ensuring public consent for the idea of extended state funding—it is not that there is no state funding at the moment; it is about extending state funding.
I wondered how quickly the right hon. Lady would try to turn the issues covered in the report to suggesting that the big problem was trade union funding, and it certainly did not take her long. It is simply untrue that Sir Hayden anywhere says that the “principal block”, to use the right hon. Lady’s phrase, to solving the problems is the issue of the trade unions. More to the point, she knows that, in all this public concern about some aspects of trade union funding, there is absolutely no evidence—not a scintilla—of any problem in respect of funding by the trade unions. She also knows that her party went through a series of so-called reforms of the method of the trade union political levy through the 1980s and up to 1992, and that in 1998 the Neill committee reported that there was no evidence that there was a case for any further reform. The Conservative party said in its evidence to the Neill committee:
“The question of trade union funding of parties is not a matter of direct concern to the Conservative party. We recognise the historic ties that bind the trade union movement with the Labour Party.”
It was content to accept the evidence that there was no case for further reform, given the fact that the Conservative Government of Margaret Thatcher had introduced a series of reforms that sought to change and undermine our system of party funding, but—consistent with their usual practice—never touched their own system.
We will have talks, but I cannot think of any one occasion in the past 50 years when the Conservative party has taken the initiative to try to clean up party funding. As recently as 5 March— [Interruption.] It has not done so when it has been in government. Of course, Conservatives will say things in opposition, but they did nothing between 1951 and 1964 or between 1970 and 1974, and the only thing that they did—although it was a big thing—between 1979 and 1997 was to seek to undermine another party’s finances while their own were maintained.
The proof of that comes from Lord McAlpine, who for a long time was the Conservative party’s treasurer. He said in his memoirs “Once a Jolly Bagman”:
“Personally, I do not think that we ever should have shown how we spent our money. The Conservative Central Office is not a charity dedicated to helping the sick and the suffering”.
“There was a black hole in the Party’s finances...The solution was easy: we gave up publishing accounts.”
That is the approach that the Conservative party has always adopted. It has to be dragged kicking and screaming towards any sort of transparency.
Even at the last election, and notwithstanding the Conservatives’ subscription to the principles of the 2000 Act, they were up to it again—using front organisations such as the Midlands Industrial Council and other bodies to evade and avoid the principles to which they had signed up. I am glad that there has been a rapid Pauline conversion today. Only two weeks ago, the right hon. Member for Horsham (Mr. Maude), the chairman of the Conservative party, said in a published interview:
“Let’s be quite clear: the reason party funding needs reform is nothing to do with how much is spent.”
That is the real position of the Conservative party. We will go into these discussions hoping to seek agreement. I just hope that the Conservative party does the same.
Mr. David Heath (Somerton and Frome) (LD): I have to say that the opening exchanges do not immediately instil confidence in consensus being reached.
I thank the Leader of the House for his statement and welcome Sir Hayden’s report. We support the principles that he so clearly sets out, as we also welcomed the report by the Constitutional Affairs Committee, which preceded it. Sir Hayden correctly identifies the lack of public confidence in the party political process, and that is partly fuelled by factors such as the cash for peerages allegations, the loans scandal and the perceived influence of big donors, as well as increasing resentment of the spiralling costs of campaigns. Parties say that they have little cash to spend, but spend more and more on national campaigns.
When Sir Hayden says that nothing should be agreed until everything is agreed, that must be right in the case of the contentious issues, but does the Leader of the House agree that there are several non-contentious matters in the report—such as strengthening the policing role of the Electoral Commission—that can proceed forthwith and do not need consensus to emerge on everything else in the report?
Now is the right time for all parties in the House to engage seriously in a constructive way on the outstanding issues that Sir Hayden identifies. I suggest to the Leader of the House that three issues are outstanding on which it will be difficult, if not impossible, for us to reach agreement. One has already been clearly identified in the opening exchanges: the limits on individual donations. We have always strongly supported the view that there should be a limit on individual donations, but does the Leader of the House agree with Sir Hayden when he says that the principal defence against avoidance will be public opprobrium? Does not experience suggest that public opprobrium is insufficient and that we need statutory support and clear regulation if limits are to be introduced?
The issue of the trade unions is important in terms of public perception and the discussions that we must have. I understand some of the reservations that the Labour party has on the issue, but I do not believe that
it is impossible to reach a solution that takes account of those concerns and, at the same time, produces a binding limit on individual donations.
The second issue is the limit on campaign spending. Is it not outrageous that in individual constituencies, particularly marginal ones, we have a gross, continuing and routine abuse of the spirit of electoral law by the application of massive expenditure from central sources in campaigning in order to affect the result without it appearing on the accounts of individual candidates? Does not that need to be addressed, and as a matter of urgency?
The third issue is perhaps less difficult, but it is the linking of future funding to membership. I strongly support the view that we should encourage local engagement, but I can see serious difficulties in defining membership and avoiding abuse of that process if simple membership of a party leads to the unlocking of state resources. We need to reach consensus on that.
I hope that we can now proceed from the basis of a firm starting point. I wonder whether Sir Hayden will be involved, given the work that he has done so assiduously over the past year, in the cross-party discussions which now need to take place. We need good will and determination on the part of all parties if we are to produce a system that is transparent, fair and restores public trust. No party should have a veto on the grounds of partisan advantage, but nor should any party’s legitimate concerns be ignored. This work is essential and urgent.
Mr. Straw: I thank the hon. Gentleman for his constructive response to this issue. I think that he has answered his own question about whether anything can be agreed until everything is agreed. In the end, this House and the other place have to make decisions, and he described the process appropriately: no party should have a veto on sensible reforms that are likely to carry public support, but at the same time the discussions and any agreement that can be reached have to take account of the legitimate interests of all the parties. That is an important point for the Conservative party to bear in mind.
I say to the Conservatives seriously that they need to reflect on the point that I made earlier, which is that they have never introduced any changes in the financing regime that have adversely affected them. They have sought to change the regime that affects us, and the right hon. Member for Maidenhead (Mrs. May) was at it again today. She was trying to return to the opt-in arrangements in the Trade Disputes and Trade Unions Act 1927. Not even Margaret Thatcher tried that on. Of course there has to be a level playing field, but that requires effective spending and donation limits. I concede that the Liberal Democrats have been consistent about the issue.
It is worth pointing out that when the Liberal Democrats advanced the proposal for donation limits in 2000, I said from this Front Bench that I did not think that they were necessary. So did the Conservative party. Indeed, that remained the official position of the Conservative party until very recently, because in November 2005 the hon. Member for Wealden
(Charles Hendry), who was a Conservative Front-Bench spokesman at the time, said in a debate on the issue that the argument about caps on donations was
“a sideshow in the debate.”—[ Official Report, Westminster Hall, 8 November 2005; Vol. 439, c. 17WH.]
It is worth reflecting on how much the Opposition have had to move, because until recently they thought that donation caps were a sideshow and spending limits were not the issue. We look forward to movement on their part. Discussions must take place on what Sir Hayden says, not on the basis of a partisan interpretation of what he does not say.
My last point on the issue of trade unions is that there may have been a public perception about trade union funding, but it was completely dispersed by changes introduced both in legislation and by us. All opinion poll evidence shows almost zero concern about trade union spending, because it is the most transparent arrangement. Interestingly, the Better Regulation Task Force said that there is too much regulation of trade unions in that respect, not too little, and the assiduous certification officer said that there have been three complaints—only three—about the operation of the levy since 2000. Two of them were withdrawn and one rejected.
Tony Lloyd (Manchester, Central) (Lab): I congratulate my right hon. Friend on his statement. Does he agree that the central issue the electorate expect us to deal with is the question of both national and local spending limits? That is the driver of dodgy practices such as the Midlands Industrial Council, which we have come to know only too well, and the dining clubs in the House of Commons. Does my right hon. Friend also agree that the basic reality is that the role of trade unions in relation to donations has been transparent and open? It is there for people to see. We can always put our record in comparison with that of the Conservative party: ours is one of honour.
Mr. Straw: I accept that. We changed the law on local spending in 2000. I was the Minister responsible—I put my hand up to that. We thought it would make the system as controlled but more transparent. However, it failed to do that. I accept what the right hon. Member for Maidenhead says about the need for regulation that does not deny the reality that elections are principally fought in marginal seats—of course that is true—and which takes some account of the so-called incumbency factor, although it affects different parties at different times and I do not recall its being mentioned often between 1979 and 1997, but there you go—here you go. The reason why those proposals, which emanated from the 1998 report of the Neill committee, have not worked is that there used to be a clear distinction in practice between national and local spending, but because of things such as call centres and personalised mailing the division between national and local spending has become almost non-existent. That is why we need both national and local controls on spending, for which Sir Hayden provides strong support in his report, and they should be pretty continuous.
Mr. Alan Beith (Berwick-upon-Tweed) (LD):
May I welcome Sir Hayden’s report and the fact that it follows
closely the lines of the Select Committee’s report? Does the Leader of the House recognise that the Committee believes unanimously that there should be voluntarily agreed binding limits on all large donations, whether individual, corporate or trade union, and a cap on all party spending, including spending outside the election period, as a precondition for more state funding? Does he realise that all the parties will have to move on from past positions? We found it was possible to do so when we saw how successfully Canadian parties had adapted to quite fundamental change that still enabled them to preserve their trade union links or their ability to engage with the electorate. Surely, the taxpayer cannot be asked to pay the parties more money unless they carry out reforms to remove large paymasters.
Mr. Straw: I accept that we all have to move on, and we are ready to do so in the spirit set out in Sir Hayden’s report. I commend the report and, for the avoidance of doubt, point out that—I think with the acknowledgement of the Constitutional Affairs Committee—I delayed publishing the Government’s formal response to the Select Committee report because we wanted to wait for Sir Hayden’s response. Of course, the right hon. Gentleman accurately quotes the recommendations. The only thing I would say is that they were relatively general; the issue now is to try to pin down those general propositions, which we welcome, into propositions that can be the subject of legislation.
Mr. John Spellar (Warley) (Lab): Does my right hon. Friend accept that Conservative parties all round the world constantly conspire to try to keep trade unions out of politics because they fear working people engaging in the political process to advance their interests? In his talks with the other parties, will he make it clear that the democratic involvement of trade unions in the Labour party is not on the table for discussion?
Mr. Andrew Tyrie (Chichester) (Con): I thought the statement of the Leader of the House was not in the real world when he suggested that there was no longer any public concern about trade unions. The trade unions are about to have a large say in the appointment of the next Prime Minister, and they will almost certainly be the main, if not the only, funder of the Labour party at the next general election. Will the Leader of the House answer a specific question that he did not answer when my right hon. Friend the Member for Maidenhead (Mrs. May) asked if he agreed with Sir Hayden’s conclusion that
“a limit on trade union donations”
“need not...challenge the party’s constitutional relationship with the trade unions”?
Mr. Straw:
It need not, but that requires a certain spirit of consensus from the main Opposition—the spirit that informed the hon. Gentleman when as a member of the Constitutional Affairs Committee he signed up to its report. It is not the trade unions as corporate bodies and their national executives that play a part in the election of the leader and deputy leader of the Labour party; it is 3.5 million levy payers—ordinary people across the
country—who in a secret postal ballot, supervised by an external independent body, will have that right. Is the hon. Gentleman seriously suggesting that those 3.5 million people, who voluntarily pay the political levy, should be denied that right?
Mr. Dennis Skinner (Bolsover) (Lab): Will my right hon. Friend confirm that Hayden Phillips was given that job in the aftermath of cash for peerages, starting with the Tories way back in at least 2001—as far as we know—and then encroached on by us, the Labour party? Will he also confirm that when deciding on Hayden Phillips to do that job there was not reference at any time to examining the trade union movement? Is it not ironic that despite all the big business money, and the Swiss roll-over for the Liberal Democrats, we find ourselves here in the House discussing a report from Hayden Phillips about clean money from the trade union movement that is balloted for every few years, while the Tories and the rest want to imagine that big business has played no role whatever? There should be no cap on the trade unions; the cap should be on the spending. In terms of equality, we should decide on a national spending cap of about £10 million—equivalent to the amount a party would spend in every constituency it contests—
Mr. Deputy Speaker: Order. I think that is plenty.
Mr. Straw: My hon. Friend’s recollection of the history of the establishment of the Hayden Phillips inquiry is entirely right; at the time, there was not a single mention of problems with the trade unions, because there is no problem with the way that trade unions have been making contributions towards the Labour party. The hon. Member for Chichester (Mr. Tyrie) asked me about the matter when I gave evidence to the Select Committee and I invited him to provide even a sheet of evidence that suggested any concern that the current, highly transparent, highly regulated system in respect of trade unions was operating inappropriately. None was forthcoming. The Conservative party has been unable to produce such evidence; nobody has been able to produce it. The Department for Constitutional Affairs cannot and neither—as I confirmed to the Select Committee—has the Electoral Commission. My hon. Friend the Member for Bolsover (Mr. Skinner) is entirely right to say that what the Conservative party are trying to do is on the one hand say, “Yes, we’ll take part in talks,” while on the other trying to shift the issue in a rather blatant and obvious way from the real problem, which is the over-reliance by all three parties on single, large donors—with the inappropriate and completely opaque influence that can bring—to trying to suggest that the trade unions are the bogey. I am afraid that is the old Conservative approach, and they will have to wrest themselves away from it if they want consensus in the talks.
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