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Des Browne: The hon. Gentleman makes a very good point. At the NATO ministerial meeting last week, I encouraged all those countries with assets to make a contribution by deploying them in the south. I am sure the hon. Gentleman will forgive me for reminding the House that large parts of Afghanistan have improved immeasurably, but that we have to be very careful not to abandon and leave those areas as the soft underbelly of country, because if we do that is where the Taliban will go. The German Defence Minister reminded me—he was right to do so—that Germany had suffered some casualties where they are and that retaining the north and west and the area around Kabul, which we may be able to see handed over to the Afghans themselves, is quite important. The Taliban have a habit of going
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where the weakest spot is and I certainly do not want them to see success in places where we have already seen significant improvement.

Sarah McCarthy-Fry (Portsmouth, North) (Lab/Co-op): I thank the Secretary of State for his statement and I welcome the increase in CIMIC—Civil Military Co-operation—personnel, which will help to further civil reconstruction. I also welcome the reference in the statement to an increase in flying hours. Will he join me in paying tribute to the workers of Fleetlands, many of whom live in my constituency, who have delivered real improvements in service and repair techniques, which enabled us to have this increased operational capability?

Des Browne: I have no difficulty in acceding to my hon. Friend’s request. Everybody who has made a contribution to the success we have enjoyed in Afghanistan, the recognised improvement in security there and the creation of the opportunity to which this announcement is designed to respond deserves the utmost credit. That is true whether they do what they do in uniform or out of it. In whatever way they have contributed, we should celebrate the success of these extraordinarily brave, dedicated and professional people.

Adam Price (Carmarthen, East and Dinefwr) (PC): Last week, President Karzai responded to allegations of corruption within his Administration—his response appeared in Der Spiegel magazine—by attacking coalition forces, accusing them of having Afghan warlords on their payroll, of offering other financial inducements in the form of land and, in one case, of using their soldiers for force protection. Will the Secretary of State take this opportunity to confirm that, as far as he is aware, these accusations are entirely baseless? Will he also comment on what this says about President Karzai’s attitude to coalition forces?

Des Browne: I do not think the hon. Gentleman believes these allegations either—at least, I hope he does not. There are often people who advise President Karzai of some quite bizarre allegations in respect of ISAF, and I have personally had to disabuse him on many occasions. I remember that on one occasion, a deeply corrupt individual who had access to the President’s ear advised him that we were, in fact, training the Taliban; I wondered why that was given any consideration at all.

On the other hand, we have to accept that this man works in a very difficult political environment and that the things he says are quite often edited and presented in a way that he does not intend them to be presented. I know him to be a very brave and honourable man who works in a very difficult and challenging political environment. As we can all imagine, to volunteer to do his job and face all sorts of pressures and attacks on personal safety requires a degree of courage. Frankly,
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although I often personally disagree with him in his analysis, I respect the man as the democratically elected leader of the country. In my view, we should support him to move forward as long as he is the democratic leader, and we should give him a little bit of leeway in what he says publicly.

Sir Nicholas Winterton (Macclesfield) (Con): The Secretary of State stressed the importance of security and intelligence, saying that he was not complacent. This has not been mentioned so far, but what role does he see for the spy in the sky—the Nimrod aircraft, particularly the upgraded MRA4? They could provide fantastic information from observation and reconnaissance not only over the Pakistan-Afghan border, but from elsewhere, to give warning about what the Taliban are doing and their movements.

Des Browne: The hon. Gentleman makes a good point. One lesson of deploying the current Nimrod to do exactly that in Afghanistan has been an astonishing level of detailed information. He will forgive me if I do not, in public, go into just how effective it can be. I know that those who fly the aircraft look forward to the updated and further-invested version and the capabilities that it will have. This aircraft not only can be used in a maritime environment, but has proved very important to our capability above Afghanistan, and indeed above Iraq.

Mr. Crispin Blunt (Reigate) (Con): What is the basis of the Defence Secretary’s statement that half the Taliban’s fighters are paid foreigners? Does that include Pashtun speakers from Pakistan and has the break-out of 600 Talib fighters from the prison in Kandahar made any statistical difference to that assessment?

Des Browne: It is probably a bit early to be asking whether people who were sprung from prison on Friday night have made any statistical difference to the people whom we will face. That operation is still ongoing. We are, with others, keeping a careful eye on it and there has been some progress in rearresting some of those who escaped from the prison.

I think I used the phrase the majority of the fighters, so that is more than 50 per cent. What is the basis of that? I will not go into the detail of the figures in the House, but that is our experience from those with whom we are engaged and from the fact that, quite often, we recover people from the battle space because they are injured or identify their bodies later. That information is provided to me by those who are engaged with them.

The particular basis of that assertion arises from the place where there has been the most intense engagement with the Taliban over the last weeks—the southern Helmand area, where the US marine expeditionary unit has been deployed. That is the unit’s overwhelming experience of the people it is having to deal with.

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Political Parties (Funding and Expenditure)

4.32 pm

The Secretary of State for Justice and Lord Chancellor (Mr. Jack Straw): With permission, Mr. Speaker, I would like to make a statement about the funding of political parties. The Government are today publishing a White Paper on party finance and expenditure in the United Kingdom. Copies are available in the Vote Office and on my Department’s website.

How our politics is funded is vital for the health of any democratic system, including ours. Over the last decade, important steps have been taken towards achieving this. In 1998, the Committee on Standards in Public Life, under its then chairman, Lord Neill of Bladen, published a landmark report, which went on to form the basis of the Political Parties, Elections and Referendums Act 2000.

It must also be fundamental to the health of our democracy that the regime for regulating political parties should never be used as a partisan tool by one party against others, and instead that change should be by way of broad cross-party agreement and achieved in a manner that carries wider public support. That spirit led to the passage of the 2000 Act by consensus and continues to be a guiding principle for this—and I hope any—Government’s approach.

The 2000 Act represented the first major overhaul of the regulation of party funding and expenditure for more than 100 years. It has greatly helped to improve transparency and standards, but it has not proved sufficient. In the intervening period, there has been continuing public disquiet about many aspects of how parties and politicians are funded. In March 2006, Sir Hayden Phillips was therefore invited by the then Prime Minister, Tony Blair, to conduct a further review, including as to whether state funding should be enhanced in return for a cap on donations.

Sir Hayden’s final report was published in this House on 15 March last year. It made major recommendations for reform of the Electoral Commission, for tightening the controls on expenditure, for greater transparency and for a gradual move to enhanced state funding linked to a cap on donations. All parties explicitly welcomed Sir Hayden’s report and accepted its main recommendations, including those for cross-party talks chaired by him to take forward the report’s recommendations. Those talks proceeded satisfactorily until last year’s summer recess. Sir Hayden then issued detailed proposals based on what he judged might form the basis for a consensus between the parties. It is a matter of great regret that, in late October, one of the parties decided to walk out of the talks, making agreement impossible.

Against that background, Her Majesty's Government undertook in the Queen’s Speech to bring forward proposals on party finance and expenditure. The White Paper is the result. It proposes measures to improve the regulatory system. It sets out the Government’s aspiration for long-term comprehensive reform, building on the model proposed by Sir Hayden Phillips. In those areas where the Government believe that a broad consensus exists, it outlines plans to bring forward immediate legislation, including reform of the Electoral Commission and more effective controls on candidate spending.

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The excessive spending by parties and candidates gives rise to the wider problems with party finance that we see today. Repeated independent reviews—including those from Sir Hayden Phillips, the Committee on Standards in Public Life and the then Constitutional Affairs Committee—have called the problem a “spending arms race”, although some individuals, I know, still question its existence. But a spending arms race is evident within each electoral cycle. As Sir Hayden’s report said, spending by the two largest parties was £90 million in the 12 months preceding the 2005 election, up from £65 million in the 12 months before the 2001 election. That was despite the campaign limit being set at £20 million for each party. Although the parties did not act unlawfully, their ability to spend well above the campaign limit under the Act reveals a problem with the rules. In the interests of democracy, we need finally to achieve what all parties had sought to do through the 2000 Act, and to stop this damaging arms race.

The White Paper proposes some important steps for immediate action. Strengthening the Electoral Commission will send a clear signal that politics and politicians are effectively scrutinised: never above the law. The Electoral Commission will have robust civil sanctions to deploy, with criminal proceedings as an alternative. The commission will have more effective investigatory powers, enabling it to access information from anybody when it suspects a breach of the rules. Its governance arrangements will be overhauled better to ensure that greater practical experience is available to it.

The Committee on Standards in Public Life, the then Constitutional Affairs Committee and Sir Hayden Phillips all recommended that the commission would benefit from the knowledge and judgment of individuals with political backgrounds. Therefore, we propose, as the Committee on Standards in Public Life recommended, the appointment of four commissioners with recent political experience and fewer restrictions on staff appointments. Far from politicising the Commission, that will enable it better to understand the people it regulates and so help it to do a more effective job.

There has been widespread concern that a loophole in the 2000 Act has allowed certain unincorporated associations to obscure the original source of donations to parties. Therefore, as the Phillips review proposed, those will be better regulated, as will third-party campaigning organisations.

Let me turn to spending by parties. In 2000, when I took through the Political Parties, Elections and Referendums Act, all believed that we were, in the words of Lord Neill’s report, “buttressing” the existing restrictions on spending, including those in the Representation of the People Act 1983 and its predecessors. What we did not foresee at the time was the likelihood of significant increased and unregulated candidate spending as a result of the detailed drafting of the Bill, although the late Lord Mackay of Ardbrecknish, who was on the Conservative Front Bench, sought to alert us to the problem by tabling a clarifying amendment on behalf of his party.

The White Paper proposes a return to the system of “triggering”, which will regulate all candidate spending directed towards electoral success, and which was a key feature of the last Administration’s 1983 Act. A stronger, more focused Electoral Commission will help to avoid
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the previous uncertainty about the rules. In parallel with that, we propose to re-examine the list of activities that are defined as campaign spending.

Let me turn to the question of introducing donation caps in return for enhanced state funding. To do that, we would have to carry with us not only all the main parties, but the public—the taxpayer—as well. That is not happening at present. We are very ready to have the debate, and, indeed, to discuss donation caps at a lower level than Sir Hayden recommended, but that will require us to come together to allow discussion between the parties and the public. I intend to introduce a Bill before the summer recess, but with Second Reading taking place in the early autumn and the other stages being carried over into the next Session. That will provide ample opportunity both for comments to be made to us and for scrutiny to be carried out.

By any international comparison, the standards of our political system have long been high. Nothing more infuriates most Members of Parliament, local councillors and, especially, the thousands of unpaid voluntary activists in all parties than the fact that their work and good faith can be tainted by the failures of a very few. However, perceptions matter hugely. I hope the whole House recognises the imperative in these circumstances of strengthening the probity of British politics and of people’s faith in our democratic process as a whole. That is the principal aim of the White Paper, and we hope that all parties will support us in our endeavour. I commend the statement and the White Paper to the House.

Mr. Francis Maude (Horsham) (Con): I thank the Secretary of State for advance sight of his statement and of the White Paper. I think the whole House will agree that party funding reform is very much needed to restore trust in our politics, and to deal with the perception that large donations, whether from individuals or from organisations such as trade unions, can buy undue influence over policy or patronage.

I entirely agree with the Secretary of State that perceptions matter hugely. That is why we produced radical reform proposals early in 2006, well before Sir Hayden’s appointment. Sir Hayden, incidentally, deserves our huge thanks for the enormous work that he put in. His proposals on Electoral Commission reform are especially welcome. We took part in the discussions enthusiastically, and, as evidence of our commitment to reaching agreement, even accepted that an overall settlement could include an increase in state funding, although we neither seek that nor consider it desirable. We further accepted that there could be overall caps on spending by parties, although it is clearly how money is raised that worries the public, not how much is spent. [Interruption.] It is interesting to note that Sir Hayden’s terms of reference refer only to donations. Spending by parties does not even get a mention.

The Secretary of State will recollect that, in setting up the review, Tony Blair said explicitly that there would be no no-go areas and, in particular, that trade union funding should not be exempt from any donation caps. Was it not always understood that reform must be comprehensive, and that there should be no cherry-picking to serve the governing party’s partisan interests—that
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nothing would be agreed until everything was agreed? Does the Secretary of State accept that a partisan Bill now cannot provide the basis for a long-term and sustainable settlement? Has he read the independent research by Dr. Pinto-Duschinsky, which shows that there is no arms race in party spending? Is this not a myth to give credence to a bankrupt Labour party’s desire to hamstring its opponents?

Will the Justice Secretary agree that the discussions came very close to overall agreement, but foundered on the key issue of whether trade union donations should be subject to donation caps on the same basis as other donations? Will he now place in the Library the minutes and the background papers to the review, which will show that it was Labour’s refusal to allow further work on trade union funding that brought the talks to an end? Does he recall that he and Peter Watt—the then Labour general secretary—refused point blank even to discuss giving trade union members the right to a real choice in whether to pay the political levy? [Interruption.] Well, does the Secretary of State remember the revelation that a Lib Dem MP received a ballot paper for Labour’s leadership contest, having unwittingly become a Labour party member through a trade union? Will he not acknowledge that when trade unions routinely declare that 100 per cent. of their members—and in two cases, more than 100 per cent.—are paying the political levy, the idea that these are voluntary individual donations to Labour are laughable, especially when polling shows that fewer than half of union members even vote Labour, let alone want to support it financially?

Does the Secretary of State accept that his proposal to reintroduce “triggering” was not even part of Sir Hayden’s draft agreement? Is not this change designed to make it more difficult—a caption in the White Paper makes this clear—for candidates to campaign effectively, and thus to benefit sitting Labour MPs? Does the Secretary of State not understand that it would be an atrocious abuse of power for the Government to force through restrictions on what parliamentary candidates can spend from money they have raised privately, while sitting MPs can spend ever-more taxpayers’ money on promoting themselves?

Last year, we came close to an overall comprehensive agreement that could genuinely have started to repair the public’s trust in politics, and I say to the Justice Secretary that we can still achieve this. However, it would require Labour to accept that dependence on a small number of union bosses has to end. Sadly, it is hard to see that happening when 92 per cent. of Labour’s income comes from the unions, which even now are squaring up to demand their payback in the form of a Warwick agreement mark 2. It is precisely Labour’s dependence on these union bosses and the big donor culture that is preventing us from getting the reform that our politics so desperately needs.

Mr. Straw: I greatly regret the tone adopted by the right hon. Gentleman, and his unsuccessful and thin efforts to rewrite the history of what happened in respect of the Hayden Phillips discussions, for as he knows—and as the hon. Member for Somerton and Frome (Mr. Heath), who was present, has stated—the truth is that we, the Conservative party and the Liberal Democrats all said on 15 March that we were ready to negotiate on the basis of the Hayden Phillips
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recommendations, and we did so. Indeed, we continued to negotiate on that basis until there was a sudden change, late in the summer of last year, in the policy and approach of the Conservative party. The hon. Member for Somerton and Frome told the House that

The right hon. Gentleman may, if he wishes, put in a freedom of information request for the minutes, but he has not yet done so. That would deal with this situation, however. An independent individual could judge the issue. We would consider this, but it is a matter for Hayden Phillips, not for me. However, we do not need FOI requests or the minutes of the meeting, because two other Members of this Chamber, as well as the right hon. Gentleman, bear witness to precisely what happened. The truth is that, as we have just witnessed from his partisan approach—which was totally different from the one that he and his party colleagues adopted in the working party—the Conservative party decided to move away from the main recommendations of the Hayden Phillips report. [Interruption.] Did the right hon. Gentleman say, “Yes”? [Interruption.] Indeed, Hayden Phillips did deal with the issue of trade union funding.

We made it clear, before and afterwards, that we were ready to implement what Sir Hayden Phillips proposed, but the Conservative party sought to recommend something very different, breaking not only the spirit of what he had said, but, for example, of what the Constitutional Affairs Select Committee had said. It said, again endorsed by Sir Hayden Phillips, words to the effect that no party had the right by legislation to seek to change the constitution of another party. We have never done so. We could have when we had a very considerable majority in this House back in 1999 and 2000; we still have, and we are not going to do so.

The right hon. Gentleman said that there is no arms race. This defies arithmetic and everything that his representatives said in the working party with Sir Hayden. I will quote, if I may, the then Opposition spokesperson on this issue, the hon. Member for Arundel and South Downs (Nick Herbert):

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