Examination of Witnesses (Questions 20-39)
RT HON
LORD FALCONER
OF THOROTON
AND ALEX
ALLAN
19 APRIL 2006
Q20 Chairman: We will come on to
the substance of that in a moment. We are still looking at the
process.
Lord Falconer of Thoroton: Yes.
Q21 Chairman: You are going to have
to give views. You cannot take a vow of Trappist silence on the
grounds that Sir Hayden Phillips is looking at all this, can you?
Lord Falconer of Thoroton: No.
In relation to the loans business, which is the material which
we are proposing amendments to in the Electoral Administration
Bill, obviously not. Indeed, in relation to that I have spoken
to the other political parties, I know the views of the Electoral
Commission and there is a bill going through Parliament where
amendments on this issue were already in contemplation by other
political parties. The right thing to do—there does appear
to be a consensus across the political parties and with the Electoral
Commission that steps should be taken in relation to that—is
we will propose amendments in the next 10 days on that.
Q22 David Howarth: You are drawing
a very strong distinction between the Government's position and
the Labour Party's position.
Lord Falconer of Thoroton: Yes.
Q23 David Howarth: Is that really credible
given the history of the relationship between the Government and,
say, the Party Conference? What process within the Labour Party
will be followed to produce the party's views as opposed to those
of ministers?
Lord Falconer of Thoroton: We
are a Labour Government, so there is a link between the two obviously.
Q24 David Howarth: Exactly. You have
answered the question.
Lord Falconer of Thoroton: That
is a process that has been used on all previous occasions when
you are looking at issues like this where the Government has got
a role which is, to some extent, separate from the party to respond
to both what the political parties say to the independent body
that has been set up and then most significantly when the independent
body—whether it is Sir Hayden Phillips or whether it is
the Committee on Standards in Public Life—reports.
Q25 David Howarth: Ministers will
not take part or will take part in the internal discussions of
the Labour Party over its position?
Lord Falconer of Thoroton: Can
I start from the other end. When the Committee on Standards in
Public Life reported it did not agree with all the conclusions
that the Labour Party had put to it. The Government, nevertheless,
with some exceptions, accepted all of the recommendations. The
Government will not, therefore, in relation to the approach that
it takes be bound by the submissions that the Labour Party puts.
It will be waiting to see what Sir Hayden Phillips says and that
seems to me to be the approach that has always been taken in the
past, and it is the right approach. There is no point in the Government
or the Labour Party putting a view and then sticking to it, the
Government should wait to see what views Sir Hayden Phillips reaches
having seen all the submissions.
Q26 David Howarth: Sounds like you
have a team on the pitch but you are also the referee.
Lord Falconer of Thoroton: No,
the referee I think, ultimately, is Sir Hayden Phillips. That
is why we have got somebody independent. He has to reach a conclusion
and make recommendations to the Government.
Q27 Chairman: Does that mean he is
the final arbiter?
Lord Falconer of Thoroton: We
would have to give a pretty good reason, I think, for not accepting
what Sir Hayden Phillips has said.
Chairman: Personally I am aware I should
have declared an interest. My wife is a member of the Committee
on Standards in Public Life.
Q28 Barbara Keeley: We have travelled
quite a long way from the original question about spending caps.
Just to say, there has been considerable discussion in this Committee.
I do differ with the view that the Commission has about the increased
local spending limits and in that sense I do not think the Electoral
Commission, even though they have expressed a very strong view,
are necessarily the arbiters in this. It is worth noting there
is a very strong level of concern about this and we did not manage
to resolve it at the Committee stage of the Electoral Administration
Bill either. I think it is an issue for us to sort out.
Lord Falconer of Thoroton: This
is the concern about the issue that before the election is called
there is very considerable expenditure focused on a very small
number of constituencies. The heavy expenditure evading, not evading
but not being caught, quite legitimately under the law, the spending
limits that apply in that particular situation, I agree there
is an issue in relation to that. One possible solution which had
been suggested was that you have a four month period before the
election but the difficulty about that is you do not know what
is the four month period before the election.
Q29 Chairman: That is true of the
12 month limit now.
Lord Falconer of Thoroton: Exactly,
that is the great problem in relation to it.
Q30 Barbara Keeley: You talked earlier
in terms of the national spend and the fact that some parties
spend quite a bit on advertising, almost 50% in one case. There
is a question in this expenditure issue about the need for the
value of communications during elections. There is a question
about broadcasting. Do you think there is an argument for increasing
the use of party election broadcasts on the main television channels
to inform voters? Do you think that is the way to go if we are
looking at capping as a mechanism?
Lord Falconer of Thoroton: What
do you mean, providing more party political broadcasts during
the course of an election?
Barbara Keeley: I have to say I am not
personally advocating this.
Chairman: We would have more channels
because of digital.
Q31 Barbara Keeley: It is a suggestion
of some people that there is value in that.
Lord Falconer of Thoroton: On
the question of whether or not there should be more party political
broadcasts, I do not believe that would be particularly popular
with the public. I have seen no evidence at all that would increase
interest in the issues or would increase turnout, I would be very
dubious as to whether it did. On the question of whether you expand
the number of channels that carry election broadcasts, currently
I think the position is the terrestrial broadcasters do—BBC,
ITV, BBC2, Channel 4 and I think Channel 5 as well—but the
vast mass of other channels do not. This has been raised in the
past as an issue and you may be surprised to hear that those who
currently carry party political broadcasts are keen that those
who do not do so. Those who do not carry party political broadcasts
at the moment are very keen that they continue not to carry party
political broadcasts, which I think is an indication of the fact
that nobody likes—except the people who make them—the
party political broadcast. I do not think it is a solution to
the problem of party funding, I do not think it really grapples
with the real issues here.
Q32 Barbara Keeley: And no role to
play? I do not think anybody is suggesting it is a solution.
Lord Falconer of Thoroton: I do
not see it as being a significant part of the solution.
Q33 Keith Vaz: Mr Allan, are you
confident that none of the ministers in the Department for Constitutional
Affairs has any conflicts of interest in regards to this area
of their work in the Department?
Alex Allan: They have all, as
is set out under the various procedures, sent me letters declaring
whatever interests they feel it is right to declare, and I have
looked at those and have discussed it with them. I am satisfied
on that basis, yes, there is no conflict of interest.
Q34 Keith Vaz: When this recent controversy
arose Harriet Harman switched her responsibilities because her
husband was the treasurer of the Labour Party. Presumably that
is a fact that you were aware of when she was first appointed
as a minister?
Alex Allan: I think it was well
known that her husband was the treasurer of the Labour Party.
He was not, in fact, the registered treasurer of the Labour Party
for the purposes of the Political Parties' Elections and Referendums
Act 2000. As you say, when the issue of loans to political parties
came up, and when the issue of whether the Government might wish
to legislate to change the laws came up, Harriet Harman came to
see me, came to discuss this with the Lord Chancellor and the
Lord Chancellor agreed that the right option in the circumstances
was to switch the portfolios in the way you have outlined.
Q35 Keith Vaz: There has been no
conflict of interest and no breaches of any rules, you are very
confident about that?
Alex Allan: I am satisfied that
up until when the issue of loans came up, the legislation that
was going before Parliament was basically about electoral administration
issues. It was not about funding issues. I did not feel in those
circumstances there was any conflict.
Q36 Keith Vaz: Lord Chancellor, why
do you think that donations have become such an important part
of party fundraising?
Lord Falconer of Thoroton: I think
membership has dropped very considerably in relation to political
parties. In the 1960s there were something in the region of 3.5
million members of political parties right across the board, now
the number is very, very considerably below a million. Membership
fees and the base from which you get additional payments have
gone down very dramatically. In the Labour Party's case the amount
of money provided by the trade unions has gone down dramatically.
Approximately 30 years ago 92% of the funding of the Labour Party
came from trade unions, it is now approximately 25-26%. Corporate
donations have gone down, both because of the 2000 Act and because
of the fact that the shareholders of companies do not want their
companies to be involved in politics as they used to. Donations
have become a more significant part of the funding of political
parties for that collection of reasons.
Q37 Keith Vaz: Do you think that
is an acceptable way to proceed as far as party funding is concerned,
that individual donors should be in a position to make such very
large donations to the political parties?
Lord Falconer of Thoroton: It
is something that has increasingly caused very considerable concern
in a number of areas because the obvious worry is that if a few
people contribute a significant amount of money to a political
party, people are worried that could give rise to them having
an undue influence on the policy making of that individual party.
That is a very, very real issue which needs to be addressed but,
as I say, addressed in a measured way and that is why Sir Hayden
Phillips has been appointed.
Q38 James Brokenshire: You talked
about influence on political parties as a consequence of the large
scale funding by key individuals. Do you accept that if a party
is in government and receives a donation or other funding from
a company or an individual closely associated with a company that
there could at least appear to be a conflict of interest if that
company then bids for contracts from the government?
Lord Falconer of Thoroton: There
needs to be, in relation to this, complete transparency. That
is why I think it is very important that the loan issue be dealt
with as quickly as possible. I think everybody in good faith believed
that the 2000 Act meant that any significant source of funding
of the major political parties would become apparent, because
any donation over £5,000 had to be declared. I do not think
that people thought that loans on commercial terms would give
rise to a difficulty, and indeed the Committee on Standards in
Public Life advised the people to whom it reported to exclude
loans on commercial terms. It is perfectly plain, in the light
of what has happened—and this is not a party political point
but right across the political spectrum—that there needs
to be disclosure of those as well. Once there is transparency
then everybody can see the extent to which there is a significant
source of funds being given to a political party. If that political
party forms the Government then everybody can see it.
Q39 James Brokenshire: You talked
about loans but it is also donations as well. Do you think that
if, say, a company is bidding for a government contract there
should be some form of clear disclosure, to put it on record that
there is that connection in order that if it subsequently comes
out that everybody is quite clear that the issue was disclosed
upfront?
Lord Falconer of Thoroton: It
needs to be absolutely clear that that individual or that company
has made the donation if there is a contract. That is what PPERA—the
2000 Act—is designed to deal with and that is what the loans
amendment is designed to deal with. I think what is implicit in
your question is that there needs to be transparency about it.
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