Examination of Witnesses (Questions 40-59)
RT HON
LORD FALCONER
OF THOROTON
AND ALEX
ALLAN
19 APRIL 2006
Q40 James Brokenshire: Yes.
Lord Falconer of Thoroton: And
there does. That is what the 2000 Act is designed to do, that
is what the loans amendment is designed to do as well. Transparency
is the solution.
Q41 James Brokenshire: The transparency
is on the individual, it may not be clear on the face of that
declaration that there is that connection with either the corporate
entity or the other body which is bidding for the contract and,
therefore, to follow your argument on transparency, is there not
a need for a further step?
Lord Falconer of Thoroton: I can
see an argument which says if there is any question about somebody
who has made a loan or a donation being given a contract that
you need in some way or another for it to be drawn to the relevant
department's attention that that person is a donor. Presumably
the way that should be done is that you circulate widely the information
given on what donations have been made to the governing party.
Q42 James Brokenshire: I still go
back to my point that it may not be obvious that somebody is a
director or a shareholder of a particular company and, therefore,
when a bidding process is made surely it should be appropriate
to achieve transparency, that we have talked about, that there
should be some step to draw it to the attention of the Government
body that is considering the contract?
Lord Falconer of Thoroton: Yes,
I can see we need to think about that, yes.
Alex Allan: The great bulk of
such contracts would be awarded on the basis of analysis by civil
servants, their professional advisers, who would not be influenced
by that. I think it would only be very rare cases where ministers
would get involved in decisions about the award of an individual
contract.
Q43 Chairman: You will come back
to us on that point?
Lord Falconer of Thoroton: Yes.
I have never, as a minister, made a decision between which of
a number of contracting parties you choose. It is done by an objective
process. I am responding to Mr Brokenshire's legitimate question
about appearances which seems to me to be an important issue.
Q44 Chairman: Any further thoughts
on that would be useful.
Lord Falconer of Thoroton: Yes.
Q45 James Brokenshire: Can I just
finish up on that: do you find it surprising that there is, as
I understand it, no central list of contracts maintained by at
least some government departments as far as answers to written
questions that I have had? Therefore, at times it is not necessarily
clear who has been awarded the contract if no central list is
being maintained.
Lord Falconer of Thoroton: I do
not find it that surprising that there is not a central list of
contracts, having regard to the diffuse nature of many government
departments. For example, in relation to Her Majesty's Court Service,
it has a whole number of contracts it will make right across the
country to individual courts. It may well be desirable that there
should be such a central list of contracts. I recognise that might
be quite a difficult administrative change to effect. Alex may
know more than me about that.
Alex Allan: I was going to say,
the Office of Government Commerce which has general overall responsibility
for Government procurement certainly takes an interest in some
key sectors. For example, major IT suppliers/contractors. It has
a view, but, I think as the Lord Chancellor said, going right
across government keeping a register of every contract, would
probably be a very significant administrative burden.
Q46 James Brokenshire: It would appear
some departments do that and others do not at the moment.
Alex Allan: It may depend on the
size or the complexity of the department. That is a matter for
the Office of Government Commerce I think.
Q47 James Brokenshire: In terms of
transparency, would you feel that would be an idea if we are to
achieve the transparency issues we sought to address in this line
of questioning?
Lord Falconer of Thoroton: It
would plainly be a very desirable thing to do. The practicality
of it, I do not know because I have not looked into it. If you
want we can try and come back on that.[1]
Q48 Keith Vaz: On donations, Lord Chancellor,
do you understand the concern that some have that a member of
the Government has given the Labour Party a loan of £2 million?
Lord Falconer of Thoroton: I understand
the concern. The relevant minister, Lord Sainsbury, is somebody
who has been a minister for I think seven or eight years. He is
an absolutely excellent minister and I do not think anybody could
doubt but that he has the credibility and the quality and propriety
to be an excellent minister.
Q49 Keith Vaz: You do not think it
raises any ethical questions that members of the Government should
be giving loans of this size?
Lord Falconer of Thoroton: I think
it is so clear that he is obviously there on his merits.
Q50 Chairman: If you take personalities
out of it then clearly there is a possible situation where a minister
lends money to the government and at the time when his position
is under pressure there is an obligation there. This is entirely
abstract, and with no reference to individuals concerned, that
is probably an issue.
Lord Falconer of Thoroton: Every
minister should be made a minister on his or her merits. I believe
that has happened.
Q51 Keith Vaz: What the Chairman
is saying—
Lord Falconer of Thoroton: I understand
what the Chairman is saying.
Q52 Keith Vaz: If you are giving
a loan, if you are sacked you can call in the loan. You could
bankrupt the party.
Lord Falconer of Thoroton: The
implication of the Chairman's question, as I understand it, is
if you are a substantial donor—
Q53 Chairman: Even more a lender.
Lord Falconer of Thoroton: —or
a lender that might put pressure on the prime minister of the
day not to sack you even though you deserve to be sacked. It has
to be clear that is not the position; it is certainly not the
position in this Government.
Q54 Chairman: That is why I posed
the question entirely abstractly. Mr Vaz has raised an issue which
has to be considered, that an obligation is created there.
Lord Falconer of Thoroton: How
do you deal with that? There are two ways that you could deal
with that, you could bar people who have made donations to the
political party from being government ministers or you could rely
upon transparency. I think the more sensible course is to rely
upon transparency rather than a bar.
Q55 Keith Vaz: Will Sir Hayden be
looking at this issue as well since he is looking at other issues?
Lord Falconer of Thoroton: Sir
Hayden will be looking at all of the issues relating to loans
and donations.
Q56 Keith Vaz: Why do you think that
loans have become such an important part of fundraising of political
parties? It is a recent phenomenon, is it not?
Lord Falconer of Thoroton: I cannot
answer that question. I have not been involved at all in the financing
of political parties. Why people give loans, I do not know, presumably
because they want to be paid back.
Q57 Keith Vaz: Lord Chancellor you
said earlier on that you wanted to wait and see, quite rightly,
until the outcome of the Hayden Phillips' report, yet as soon
as the recent controversy arose I think that you announced to
the Today programme that you were introducing amendments
to the legislation going through the Lords to cover the issue
of loans. You were making illegal something that clearly was not
illegal because there is not any illegality about people loaning
money to any political party.
Lord Falconer of Thoroton: There
is not an illegality about people lending money and the effect
of the amendments to the Electoral Administration Bill, once they
become law, is that in relation to a UK person making a loan they
have to disclose it and for a foreign person making a new loan
after the amendment has become law, that will no longer be permissible.
Q58 Keith Vaz: Why have you moved
so quickly on that single issue, yet on all the other issues,
as you said to the Committee, you have not made up your mind?
Lord Falconer of Thoroton: There
was very considerable public concern about the loans issue. I
consulted the other parties, all of whom agreed with the proposition
that we should deal with loans straight away.[2]
The Electoral Commission produced a document saying, in my view
rightly, the detail of loans should be disclosed. There is a Bill
currently going through Parliament in respect of which amendments
could be put down, indeed have already been put down, dealing
with the loans issue. In the light of that broad agreement across
the parties, in the light of the support of the Electoral Commission,
in the light of the broad public concern, it seemed sensible to
the Government to propose amendments to deal with that issue as
quickly as we could.
Q59 Keith Vaz: You do not think that
by doing that you added to the controversy and the aura of crisis
because people had given money in good faith and negotiated on
commercial terms, as they have for the Conservative Party, Liberal
Party and Labour Party?
Lord Falconer of Thoroton: Whether
I have added to the controversy or not, I do not know. I consider
it the right thing to have done to say that we should propose
these amendments because I think the issue is one that needs to
be dealt with.
1 Note by the Rt Hon Jack Straw MP, Leader of the
House of Commons: It is the Government's view that it would
not be practicable to maintain such a list. Significant financial
benefits afforded to political parties are disclosed to the Electoral
Commission under the Political Parties, Elections and Referendums
Act 2000. The Office for Government Commerce also provides extensive
guidance on standard processes for government procurement. It
is the Government's view that these processes provide sufficient
safeguards to ensure both transparency in respect of financial
benefits afforded to political parties and in delivering a rigorous
and fair process of government procurement Back
2
Note by witness: I wrote to all the parties represented
at Westminster on 20 March, and met with representatives of several
on 28 March, where the government's proposed policy on transparency
of loans to political parties was discussed and agreement reached
on the policy principles, though some parties queried the legislative
vehicle Back
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