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That this House notes with concern the corrosion of public trust in democracy following the recent succession of scandals over the funding of the governing political party; regrets that a comprehensive package of proposals to reform electoral law was not achieved by the inter-party talks owing to the refusal of the Secretary of State for Justice and the Labour representative, Mr Peter Watt, to accept a comprehensive cap on donations; observes the unhealthy increase in back-door state funding through the £6 million of funds allocated to special advisers and the funding of over 3,000 press and communications officers across Whitehall and its quangos; asserts that the Communications Allowance is an unhealthy extension of taxpayer funding for party propaganda that advantages the governing party; and calls for a comprehensive package of reforms to restore public trust and to support a vibrant local democracy and voluntary activism, which must include an across-the-board cap and annually a genuine individual choice for union members on whether they wish to donate to their favoured political party.
The second part of the motion refers to the need for comprehensive reform of party funding to restore public trust in the political process. It is important to separate the two parts. The fact that one party admits having broken the law, as it stands, is no reason
Mr. Maude: The fact that one party admits having broken the law is no reason to change the law. The events to which I shall return in a moment provide no reason to reform the lawit should merely be complied with. Let us be clear that we are not talking about oversights or late declarations. We know that such things happenthey probably always willand no system is perfect.
The Secretary of State for Justice will doubtless say that all this is being inquired into. That is meant to be reassuring, but one of the inquiries is being undertaken by a former Labour party general secretaryso we know that it will be totally impartial. Another inquiry is to be carried out by the former Bishop of Oxford. Although he is undoubtedly admirable and intelligent, this situation is the last refuge of the desperate. I doubt
that when he was appointed to the Bench of Bishops he was told that he would need to be qualified in electoral law and forensic accounting.
Mr. Maude: We wish the former Bishop well as he endeavours to peel away the layers of onion skin to disclose whose money this really was and how many people knew that the donations from Labours third largest donor were being illegally declared.
Let us consider Mr. Mendelsohn, who was personally appointed by the Prime Minister to raise money for the election that never happened. We are told that Mr. Mendelsohn sat next to Mr. Abrahams at a dinner in April, and according to Mr. Abrahams he knew at that time that the donations were being hidden. Mr. Mendelsohn admits that he knew, albeit from a later date, that the source of the donations was being hidden, but he maintains that he did not know that that was illegal, although he was uncomfortable
Mr. Maude: I shall give way in a moment. So uncomfortable was Mr. Mendelsohn that a mere two and a half months later he wrote a letternot to the Electoral Commission, as one might have expected, but to Mr. Abrahams. He says that he did so as a prelude to putting matters right. It was doubtless coincidental that the letter was sent on the very day that The Mail on Sunday contacted Labour with evidence of the lawbreaking.
Ian Lucas: I am most grateful to the right hon. Gentleman for giving way. On the question of illegal donations being made to political parties, will he confirm that Lord Ashcroft is domiciled in the UK for tax purposes and can therefore lawfully make donations to the Conservative party?
Mr. Maude: I can confirm unequivocally that any donations made by Lord Ashcroft or any companies associated with him are entirely permissible. I just say to the hon. Gentleman that he should be a little careful where he is going [Interruption.]
Ian Lucas: Let me be clear that I am accusing the right hon. Gentlemans party of lawbreaking, because Lord Ashcroft is not domiciled in the UK for tax purposes and is therefore a foreign donor. Will the right hon. Gentleman confirm whether or not Lord Ashcroft is a foreign donor?
Mr. Maude: Just in case the hon. Gentleman did not hear it, I said I can confirm that any donations made to the Conservative party by Lord Ashcroft or his companies are completely permissible, properly declared and on the record. The leader of the hon. Gentlemans partythe Prime Ministerwho promised that things were going to be cleaned up has admitted that his party broke the law.
Sir Gerald Kaufman (Manchester, Gorton) (Lab): The right hon. Gentleman will no doubt have seen the article in The Daily Telegraph today by Rachel Sylvester in which she says that yesterday she made a telephone call to ask whether Lord Ashcroft is resident in this country and whether he pays tax in this country. Rachel Ashcroft [ Interruption. ]
Sir Gerald Kaufman: Thank you, Mr. Speaker. Rachel Sylvester, a journalist for a Conservative newspaper, says that the public has the right to have precise answers to those two questions. So without dodging or evasion, are the answers yes or no?
Mr. Maude: I could scarcely have been more unequivocal than I was. If the right hon. Gentleman has evidence of any impropriety, he will no doubt provide it. The simple fact is that there is no evidence: our donations have been properly made and properly declared, and all have been made by permissible donors.
Mr. Speaker: Order. We are having a debate, but it is getting far too noisy in the Chamber, and that is unfair to the right hon. Gentleman who is speaking [ Interruption. ] Order. Others will seek my protection if they are shouted down.
Angela Browning (Tiverton and Honiton) (Con): Does my right hon. Friend share my concern about the potential tax liability of people who have, knowingly or unknowingly, received moneys from Mr. Abrahams in a potential partially exempt transfer, or have a matter to report to the Inland Revenue in terms of their own tax affairs? Are they not now in a very vulnerable position as a result?
Mr. Keith Simpson (Mid-Norfolk) (Con): My right hon. Friend should continue with his forensic analysis. It is obvious that the Labour party Chief Whip has got the rough trade out, but they are cocking it up.
Mr. Maude: I do not think that my hon. Friend meant that rough, but he has given great offence to the hon. Member for Ealing, North (Stephen Pound), who is very sorry to be left out. I shall respond to my hon. Friends invitation to continue, although I understand why Labour Members want to distract attention from their current concerns. That is understandable, but they will not get away with it.
The most unbelievable part of the saga is the contention that neither Jon Mendelsohn nor Peter Watt knew that the practice was illegal. I have to say that that is literally incredible. The requirement to disclose the identity of donors was the central feature of the 1999 Bill that became the Political Parties, Elections and Referendum Act 2000, and that is not some arcane technicality, byelaw or obscure rule. The breach of that requirement is a criminal offence, and anyone involved in political fundraising knows that. It is page 1 of the fundraising manual. Labour functionaries know that; after all, they publicly complain about donations made by
The Labour party has publicly complained about donations made by unincorporated associations, such as the Midlands Industrial Council, although those arrangements are signed off by the Electoral Commission and the membership of the MIC has been made fully public. Despite that, Labour made a complaint to the Electoral Commission and received a response. A letter to the then Labour party chairman from the commission cleared donations by the MIC and explicitly referred to the central legal requirement that no one in the Labour party now claims ever to have heard of. The letter was sent in October last year, and states that the Act
requires that where a donor passes a donation to a political party via an agent, the agent must tell the party the original donors details so that the party can, first, establish that the donor is a permissible donor...and second, record the donation with the Electoral Commission as coming not from the agent but from the original donor.
Now, it is possible that the letter went only to the chairman of the Labour party and was not seen by the then general secretary or by anyone involved in fundraising and that they have all been operating in complete ignorance of what I repeat is a central provision of the 1999 Bill.
Stephen Pound: I am grateful to the right hon. Gentleman for giving way. To be described as rough trade is rather a step up for me. He has been speaking about the transparency of donations. Many of us were amazed to hear about the Midlands Industrial Council, from which many Opposition Members receive as much as £20,000 a year. In the spirit of frankness that he is espousing, will he support the release of the names of all the members and donors of the MIC?
Mr. Maude: I am afraid that the hon. Gentleman will have to go back to the drawing board, as we disclosed all the names at least a year ago and they are in the public domain. I give way to my right hon. Friend the Member for Wokingham (Mr. Redwood).
Mr. Redwood: I am grateful to my right hon. Friend. Does he agree that a governing party in these circumstances should not misread the mood of the nation or the House? The nation expects an honest statement of everything that has gone wrong and of what the party will do to put matters right, as well as a little humility.
Mr. Maude: According to Mr. Mendelsohns own account, he knew from September that the donations were illegal. Surely it would have been completely extraordinary for him not to have told the Prime Minister, whose personal appointee he is, that there was a serious problem
Mr. Speaker: Order. I do not know what the right hon. Member for Horsham (Mr. Maude) intends to do about giving way but it seems, Mr. Simon, that he is not going to give way to you. Some quietness would therefore be of help.
Peter Watt, the Labour partys former general secretary, sat with the Justice Secretary in the discussions that we held over recent months with Sir Hayden Phillips. He pressed for greater powers to be given to the Electoral Commission to probe exactly the issue that we are debating todaywhether donations had been paid through proxies. He was Labours registered treasurer as well as its general secretary. Before that, he was the partys legal and compliance officer, and the rules and laws that we are discussing are the stuff of what a compliance officer deals with, day in and day out.
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