Examination of Witnesses (Questions 60-79)
RT HON
LORD FALCONER
OF THOROTON
AND ALEX
ALLAN
19 APRIL 2006
Q60 Mr Khabra: Do you consider that
honours should be considered for people who give money for one
reason or the other either by way of a loan or by way of donations,
and is there any mechanism to check their motives before they
are considered for any honours?
Lord Falconer of Thoroton: In
relation to honours below becoming a peer, there is a detailed
process where there is independent consideration of whether or
not people should be given an honour. Until recently the prime
minister of the day—and this covered all prime ministers—could
add people to that list, for example somebody could get on to
the list without having gone through the formal process. Anybody
added to that list was then considered by something called the
political honours scrutiny committee to see whether or not it
was an appropriate honour to give. Lord Wakeham in his report
said about 1% of political honours was challenged under that process.
The House of Lords Appointments Commission was set up by the Prime
Minister in 2000, it has taken over the job of looking at those
political honours, though the Prime Minister said on 16 March
that from now on no additional names will go on to the list of
honours that come forward. That leaves the House of Lords Appointments
Commission as a body which not just recommends crossbenchers for
appointment it also vets all political appointments as well. Any
person nominated as a working peer by any political party has
to be looked at by the House of Lords Appointments Commission
for propriety. Where they have made a donation the House of Lords
Appointments Commission in their annual report say they look to
ensure that those nominations are credible irrespective of the
donations. There is a body that looks at it: the House of Lords
Appointments Commission.
Q61 Mr Khabra: That means that in
your opinion any existing members of the House of Lords, those
who have been donating money, they were not considered for making
donations to one party or the other?
Lord Falconer of Thoroton: They
may well have made donations to the political party, whichever
political party nominated them. Those donations have to be disclosed
to the House of Lords Appointments Commission. The House of Lords
Appointments Commission has considered whether or not they should
go forward to Her Majesty, the Queen for appointment. If they
do not think they should then the House of Lords Appointments
Commission recommends to the Prime Minister that they should not.
Q62 David Howarth: There was a point
a little while ago—to go back to the underlying question
about loans—which was is not another solution to the problem
of ministers' loans, in addition to the two being put forward,
simply the rule that no-one with an outstanding loan to the governing
party should be a minister? That is a third possibility which
would resolve all the doubts. The Chairman is trying to make the
point that the situation of a loan is in a sense even more dangerous
than a donation because it is an existing obligation. Surely that
existing obligation ought to be cleared before a person is appointed
to a ministerial post?
Lord Falconer of Thoroton: That
is a half-way house because it is saying you bar people for loans
but not for donations; again, that needs to be considered. Again,
I do not think that is necessarily a proportionate solution to
the problem. I think although I recognise the potential that could
arise in some circumstances if the position is transparent that
is sufficient.
Q63 Dr Whitehead: Could I return,
Lord Chancellor, to the Hayden Phillips' inquiry, particularly
in the context of state funding of political parties. The terms
of reference of the inquiry I see include the idea of examining
the case for state funding political parties. Would it be possible,
therefore, that the inquiry might come out with the idea there
should be no state funding of political parties?
Lord Falconer of Thoroton: It
would be very difficult to come to the conclusion that there should
be no state funding for political parties because there is already
quite considerable state funding for political parties, both in
terms of things like the party political broadcasts, the free
post, the use of public buildings for meetings as well as the
Short money, the Cranborne money and the policy development grant.
He could, I suppose, come to the conclusion that all that money
should be taken away and all those benefits should be taken away,
that seems to me to be inconceivable as a conclusion.
Q64 Dr Whitehead: According to the
note that the Department very kindly forwarded to this Committee,
Sir Hayden has been asked, it states, " ... to aim to produce
recommendations ... " which I assume are recommendations
on state funding " ... which are as much as possible agreed
between the political parties". How might he achieve that?
Lord Falconer of Thoroton: By
talking to the political parties.
Q65 Dr Whitehead: During the course
of his inquiry?
Lord Falconer of Thoroton: During
the course of his inquiry, yes.
Q66 Dr Whitehead: And then coming
out with an independent report that nevertheless has been agreed
between the political parties.
Lord Falconer of Thoroton: Try
as much as possible to get them to agree. If the political parties
will not agree, or they put forward proposals which Sir Hayden
does not agree with as being sensible or deliverable, then of
course he would not put them forward.
Q67 Dr Whitehead: If Sir Hayden comes
up with a conclusion agreed between the political parties that
there should be an increase in state funding, how would you feel
about that, and what would your views on that be?
Lord Falconer of Thoroton: I would
obviously have to see what the conclusion that he reaches in relation
to that was but if he believed, after talking to the political
parties, and remember talking to the Electoral Commission as well
as any other stakeholders he thought were proper, we would take
that extremely seriously. We have asked Sir Hayden to look at
it because he brings an independent mind to the issue.
Q68 Dr Whitehead: Is it your view
that in addition to, as you have stated, the present level of
state funding for political parties, which by various estimates
is very considerable, particularly in election years, it would
be reasonable to enhance that or would it be your view that is
about right?
Lord Falconer of Thoroton: I do
not know what the right level is. I think that the big public
concern about political parties is the risk or the suspicion of
a few donors having undue influence on the political party. The
question of state funding is in part an issue about how you deal
with the issue of the big donor because I do not think the issue
in relation to political funding is necessarily there is a shortage
of money going to political parties. I do not know what the answer
to what is the right amount for political parties is. I think
one of the critical issues is what is the best source of funding
for political parties in a way which most enhances public confidence.
Q69 Dr Whitehead: If Sir Hayden's
report does indeed come out with perhaps a suggested increase
in state funding for political parties, and all parties have agreed,
perhaps the members of the public at the conclusion of that process
might consider they were somewhat being stitched up.
Lord Falconer of Thoroton: That
is why, it seems to me, there are three other important elements,
firstly this is not something being done by the Government, it
is the recommendations of somebody independent; secondly the views
of the Electoral Commission are absolutely critical in relation
to this and, thirdly, the recommendations that Sir Hayden Phillips
produces have got to be ones which carry public confidence.
Alex Allan: If I could comment.
The evidence on public attitudes is somewhat confused. The Electoral
Commission published its report on the funding of political parties
in December 2004 and commissioned some research from MORI which
revealed 76% of those asked agreed that it was better that parties
should be financed by their own fundraising rather than being
subsidised by taxpayers but 70% also agreed that funding parties
by voluntary donations is unfair because there is a risk that
wealthy individuals, businesses and trade unions can buy influence
over parties. I think that assessing what the public attitude
towards this is is quite tricky.
Q70 Dr Whitehead: I presume the public
might be rather surprised to find that by fairly perhaps not entirely
uncontentious calculations one particular party had been funded
last year by the state for the majority of its total funding.
Lord Falconer of Thoroton: You
are saying the public would be surprised to hear that?
Q71 Dr Whitehead: I think the public
would be, would they not?
Lord Falconer of Thoroton: It
would vary from different members of the public. I think most
people proceed on the basis that political parties have to raise
their own funding in one way or another whereas, as you are rightly
saying, quite a significant amount of funding comes from the state
already.
Q72 Dr Whitehead: Would it be your
view that there should be perhaps a public consultation over and
above the agreement of the political parties and the report of
Sir Hayden's inquiry after that inquiry has come out?
Lord Falconer of Thoroton: It
seems to me almost inconceivable that you could get broad public
support without there being a public consultation at some stage.
It seems to me almost certain that public consultation is going
to have to take place after Sir Hayden has produced his recommendations.
The implication of your questions is that you do not want a situation
where there is a sense that this is a stitch up within the political
bubble and I could not agree more with that.
Q73 Dr Whitehead: Have you given
any consideration, in the context of the possible way the report
might come out, as to how state funding might operate in practice?
The Short money, for example, is allocated on a formula which
combines votes and seats. Would you see that formula as being
the right formula or are there other ways in which you think state
funding might be allocated?
Lord Falconer of Thoroton: I have
given some thought to it. There are problems about practically
every formula you introduce. Most formulas that depend upon the
votes cast in the last or the one before the last general election
will tend to favour established parties, but it is very difficult
to come up with any formula that does not favour to some extent
those who are already established as a party. Again, ultimately
that has got to be an issue for Sir Hayden Phillips to address
and come up with a sensible solution to.
Q74 Dr Whitehead: If there were to
be a continuation of the present level of state funding perhaps
with some additions, would you see that as an advantage or disadvantage
in terms of what one might say is the health of the body politik
or the legitimacy of the process or the legitimacy of political
parties?
Lord Falconer of Thoroton: I do
not think it will remotely be a complete answer to the public's
views about political parties. I do not think one should think
that funding is the only reason that there appears to be a reduction
in support for and confidence in political parties. I think funding
is one of the issues, but I think the public's fear of capture
of political parties by a few donors is a significant issue that
affects public confidence because—and you will know this
much, much better than I—individual Members of Parliament
tend to be held in high regard by those who deal with them on
an individual basis. The vast majority of our politics is utterly
uncorrupt. This worry about funding is something that, unfairly
in many respects, reduces the standing of our politics and that
is why I think we need to address it.
Q75 David Howarth: You mentioned
right at the start the problem of the fall in party membership
and the fact that the party seems to be substituting money for
members. What do you think of the view that would link state funding
to numbers of members as a way of trying to start up more of a
mass party membership across the board? What do you think of Professor
Keith Ewing's view that state funding ought to be linked to a
bill of rights for party members, that the party they join will
be democratic and will listen to their views, so the parties are
not seen just as supporters' clubs but as active participants
in the democracy?
Lord Falconer of Thoroton: One
of the things that have got to be addressed in relation to state
funding is how you engage people more in politics. One aspect
of that is engaging people much, much more in party politics,
making people keen to be a member of a party. How you encourage
people to join is one aspect in relation to that. It might well
be that it is extremely attractive for people to become members
if they feel they have got many more rights than current political
parties give them. I would be worried about arrangements that
the state imposed on individual political parties because ultimately
it is for the individual political party to decide what its own
constitution is. I would strongly support any steps that would
legitimately increase the numbers of people who are prepared to
join political parties.
Q76 David Howarth: Can I put to you
the point which I think Professor Ewing implied in his interview
on the Today programme, which is that the state interferes
in the internal organisation of trade unions and in the 1980s
one of the Government's big policies was to give unions back to
their members. Surely the political parties are far more important
participants in the political process than the unions and therefore
there is even more of a public interest to have some public interference
in the way the parties work.
Lord Falconer of Thoroton: We
give trade unions immunities from various other bits of the law.
We do not give political parties immunities from other bits of
the law. The essence of a political party is what its members
want to achieve and broadly how they organise themselves should
be utterly transparent, but it should be for them to decide.
Q77 Jeremy Wright: You could argue,
could you not, that if you increase the level of state funding
for political parties you can have nothing other than a downward
pressure on the likelihood of people joining political parties
and paying a subscription to them because they will say "I'm
already paying"? Given your earlier comments to Mr Vaz, can
we take it that you would be concerned at any measure which would
put downward pressure on the likely membership of political parties?
Lord Falconer of Thoroton: Yes,
I would. I do not agree with your proposition. I think one of
the reasons that people might be concerned about whether they
should join a political party is if they believe that because
of high amounts of donations that gives undue influence to a few
people in relation to the political party. The more there is a
sense of influence and power being diffuse right among the political
party the more people will be encouraged to join. I think one
of the problems in relation to why membership goes down is because
of the sense of undue influence.
Q78 Mr Khabra: If state funding is
introduced, do you think that the capping of donations will be
necessary? Would you also agree with me that the capping of donations
is one of the most effective ways of addressing the issue of sleaze
and corruption?
Lord Falconer of Thoroton: The
point about state funding would be to ensure that political parties
had sufficient funds to operate effectively and in a way that
meant the political parties were not dependent on a few large
donors. A significant increase in state funding would carry with
it a cap on donations. The cap on donations is the most obvious
way of dealing with the issue of a few people getting an undue
influence on a party, but again that is one of the important issues
that have got to be looked at.
Q79 Chairman: Are you saying that
with state funding should go a formal cap?
Lord Falconer of Thoroton: It
obviously depends precisely on what state funding is being recommended.
For example, if the recommendation was we think you should increase
the policy development grant, the Short money and the Cranborne
money by a bit but with no state funding, that sort of additional
state funding would not justify caps in my view. If what you are
trying to do with state funding is provide a significant amount
of money for the running of the political party and the purpose
of providing that state funding is to avoid dependence on a small
number of donors, then obviously going with that sort of recommendation
must be caps on donors.
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