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So far as Dr. Pinto-Duschinsky’s so-called research is concerned—it rather desperately needs some peer reviewing—he very skilfully selects mid-term spending by political parties. He says that there was

How convenient, because what we see and what we know is that spending always rises in the last two years before a Parliament is due to end. Had he addressed himself to the available research—the much better research—by the Joseph Rowntree Foundation, he would have seen, for example, that spending donations received in local Conservative parties and marginal seats averaged £19,600, compared with £6,500 and £7,700 in Labour and Liberal Democrat marginals. What we—and, I believe, the Liberal Democrats—wish to see, and what the Conservative party wished to see until last summer is sensible, non-partisan rules that we can come together and agree on. I hope that, even at this late stage, the Conservative party will think again.

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Several hon. Members rose

Madam Deputy Speaker (Sylvia Heal): Order. A considerable number of Members are hoping to catch my eye. Time is limited and there is a further statement to follow; may I please ask for one brief supplementary question?

Chris Huhne (Eastleigh) (LD): I am also grateful for prior sight of the Justice Secretary’s statement and the White Paper.

We Liberal Democrats welcome new investigatory powers for the Electoral Commission, its proposed new governance arrangements and transparency for unincorporated associations. In general, however, I have to say that this is a woefully inadequate package, and the Secretary of State is getting scant reward for his modesty from the official Opposition. There is nothing in this statement that will stop the arms race between the parties. He was quite right in his remarks about Dr. Pinto-Duschinsky’s paper—which was, by the way, produced and published by a Conservative-leaning think-tank. Nor is there anything that will clean up party funding by capping big contributions. There are no caps on donations or local spending, and is public confidence not at a low because the Labour and Conservative parties are seen to be in the pockets of big business or the trade unions?

Is it not scandalous that there is nothing here that will impede Lord Ashcroft, through his UK company, Bearwood Corporate Services Ltd, in trying to buy any number of parliamentary seats? Lord Ashcroft already accounted for 8 per cent. of Conservative funding last year. The Justice Secretary says that he can legislate only with all-party consensus, but in that case, many abuses would never have been cleared up, including some of the most anti-democratic practices of the trade union movement that were put right in 1984 by the Conservative party against the Labour party’s views at that time. Are we now to give miscreants a right of veto over new offences?

Does the Justice Secretary really think it just a coincidence that the Conservative party broke off cross-party talks in the very quarter when it took record donations of £9.7 million, which was an increase on the previous quarter’s £3.7 million and a record quarter for a non-election year? Was that mere coincidence? Why should the Government not now legislate to remove the stink of big-money politics? Is it not time that millions of votes, not millions of pounds, decided British elections?

Mr. Straw: The hon. Gentleman has had time to read the White Paper because it was sent to him, as it was to the right hon. Member for Horsham (Mr. Maude) earlier today. I hope that the hon. Gentleman does read it carefully. No one is talking about any one party having a right of veto; indeed, I was surprised to hear the right hon. Gentleman appearing to claim that it was wrong now to legislate on strengthening the work of the Electoral Commission and re-introducing the trigger, which formed a central part of the Conservatives’ legislation and which they tried to ensure, for the avoidance of doubt, stayed as part of the 2000 Act. I wish that I, or our Minister in the Lords, had accepted that; the only reason we did not do so was because we were told that it was not necessary. We will proceed on that basis, but I think that the hon. Gentleman will accept that no one
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party should use the party funding regime as a partisan tool, because we must ensure that there is stability in the system that we adopt.

I accept, and share, the hon. Gentleman’s frustration about the fact that we came very close to reaching an agreement last summer. It would have involved many important, significant and difficult changes in my party, as well as in other parties, but we were aborted in that by the events to which a number of us in this House were certain witness.

On the hon. Gentleman’s question about groups such as Bearwood Corporate Services Ltd, we propose that there should be proper regulation of unincorporated associations, so that the source of the original donor becomes clear.

Tony Lloyd (Manchester, Central) (Lab): If my right hon. Friend intends to proceed, as I think that he is right so to do, on the basis that any agreement must be made by consensus across the political parties and if he can persuade the Conservative party back into those talks, will he also seek to persuade it that the donation cap of £50,000 that has been discussed is a long way above what ordinary people understand and that there is an overwhelming case for lowering it to a level that would put politics back in the control of the ordinary people of this country?

Mr. Straw: I agree with my hon. Friend. Our White Paper includes a lot of detail about how it is thought donation caps would impact at different levels on the spending of different parties. The sum of £50,000, which was Sir Hayden Phillips’s recommendation, is a lot of money for the overwhelming majority of families in this country, and we are certainly ready to sit down to talk about a lower spending cap, as my hon. Friend indicates.

Mr. Douglas Hogg (Sleaford and North Hykeham) (Con): I very much regret the omission of any proposals to impose a cap on donations. They would be welcome, although only if they were to extend to trade unions. May I ask the right hon. Gentleman to remind the House how much money the Labour party has received over the past five years from Unite, which is the union maintaining the industrial dispute involving tanker drivers?

Mr. Straw: We are ready to answer that for which I am here to answer. We were ready to negotiate an arrangement with the other parties on the basis of what Sir Hayden Phillips recommended, including in respect of the trade union donations. We continue to be ready to do that.

Mr. George Howarth (Knowsley, North and Sefton, East) (Lab): I welcome the general thrust of my right hon. Friend’s proposals in the White Paper, particularly as regards a spending cap, but may I point out that many in all parts of the House have reservations about linking a spending cap to state funding?

Mr. Straw: I understand that, and we all need to understand that Sir Hayden Phillips estimated that, at £50,000, the enhanced state funding needed to compensate
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parties for the loss of income would run at between £65 million and £90 million over a Parliament. A big issue for us, as the trustees of the public purse, is whether or not now is the appropriate time for that amount of taxpayers’ money to be spent on political parties.

Sir Alan Beith (Berwick-upon-Tweed) (LD): Bearing in mind that Sir Hayden Phillips’s proposals were based on the unanimous views of the Constitutional Affairs Committee, does the Secretary of State recognise that the Government’s moral authority to legislate in this sensitive field is undermined if what they propose is not the full range of Sir Hayden’s proposals, with their different but significant impact on all political parties, including his concern about the potential power of paymasters of whatever kind?

Mr. Straw: First, may I offer my congratulations and, I believe, those of the whole House to the right hon. Gentleman on his knighthood, which was announced in the birthday honours on Saturday?

Secondly, on the question, the Select Committee on Constitutional Affairs produced recommendations that were taken forward by Sir Hayden, who made proposals, which we have previously discussed in the House. However, it is very difficult to move forward, since, among other things, Sir Hayden outlined his proposals but then said that the detail had to be negotiated between the parties. It was very difficult then to take that forward without the kind of constructive negotiation in which representatives of the Liberal Democrats, Labour and the Conservatives were participating perfectly happily until the summer recess last year. That is the problem. If the Conservative party now wishes to go back to where it was last July, we are happy to join it, and I believe that the right hon. Gentleman’s party would also be happy to join it.

Dr. Alan Whitehead (Southampton, Test) (Lab): I welcome the direction of my right hon. Friend’s statement this afternoon and the proposal to introduce the trigger mechanism into spending that is registerable as campaign expenditure. Does he accept, however, that the expenditure arms race is percolating across the whole electoral period and all forms of spending, national and local? Does he consider that a trigger mechanism and, indeed, the White Paper’s contents are a way station towards an overall cap on the expenditure of parties between general elections and during entire Parliaments?

Mr. Straw: Yes, I accept that, and Sir Hayden Phillips and previous reports have recommended that continuous, all-Parliament spending limits should cover what we loosely describe as national and local spending. That is, however, very complicated and requires detailed discussions between the parties and the Electoral Commission.

Mr. Nigel Evans (Ribble Valley) (Con): The Justice Secretary is right in thinking that the great British taxpayer would be horrified at the prospect of yet more of their money being used to fund political parties, but is that not what we have done in a back-door way with the communications allowance, which allows MPs £10,000 a year to tell our electorates how great we are? Therefore, the candidates in our seats may feel that they have to spend more just to keep pace with us. Will the Justice
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Secretary consider the abolition of the communications allowance and the saving of millions of pounds of taxpayers’ money?

Mr. Straw: The recommendation on the communications allowance happened to be a unanimous one from the House of Commons Commission, but I understand the hon. Gentleman’s point. I have said in the House that there should be serious discussions about the communications allowance, or that part of it which I do not think is used for party spending, given the rules, but which might be seen to be. Let us sit down and discuss it. What we and the Liberal Democrat party have been frustrated about is that there have been no constructive discussions on this issue, because the Conservative party walked away.

Mr. Kevan Jones (North Durham) (Lab): I welcome my right hon. Friend’s proposals on unincorporated associations—a mechanism that has been used by the Conservative party to hide the source of millions of pounds of funding not only to party central office but to individual Conservative Members. Will my right hon. Friend consider making the transparency of those unincorporated associations retrospective to the beginning of this Parliament, so that we can find out where a lot of the money that is sloshing around the Conservative party has come from?

Mr. Straw: I am not sorry to tell my hon. Friend that there are clear rules against making provisions that carry sanctions, as these will, retrospective. Therefore, the Bill will not contain proposals of that kind.

Mr. Chris Mullin (Sunderland, South) (Lab): May I put it to my right hon. Friend that in the long term the key is to insert caps on spending rather than on donations, so that we get back to issue-driven rather than money-driven politics? With the benefit of hindsight, does he agree that the £20 million cap on national spending in the 2000 Act was rather too generous and that we should perhaps think about halving it at the next election?

Mr. Straw: I agree with the central burden of what my hon. Friend has said. The £20 million cap would be better than the current situation if it covered all campaign spending, and therefore one of the proposals to which I drew attention in my statement is that we should look again at the definition of campaign spending in schedule 8 to the 2000 Act as well as moving towards comprehensive all-Parliament controls in the future.

Mr. Peter Bone (Wellingborough) (Con): Will not the reintroduction of the trigger give more power to the national party and less to local candidates who want to get their point across locally?

Mr. Straw: I honestly do not think so. That issue was not raised by Neill or during the passage of the 2000 Act or its predecessor, the Representation of the People Act 1983. Neill said that all his proposed controls should be in addition to the 1983 regime—“buttress” was the word that he used. Everybody thought that that was the case except for the noble and acute Lord Mackay of Ardbrecknish. From the Opposition Front Bench in the other place, he moved amendments to clarify what he thought might be a loophole in the law on advice that was turned down as unnecessary by
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Ministers in the Lords. I have regretted that decision of ever since. I do not think that there is any evidence to suggest that the worries expressed by the hon. Gentleman will be substantiated, but I will check and write to him.

Mr. David Heath (Somerton and Frome) (LD): Sir Hayden Phillips did a very good job during the talks, in which I played a part, in establishing near consensus on a wide range of issues concerned with party finance. He also found some of the answers, until the Conservative party decided to change the question rather late in the day and therefore left the talks. Is it not therefore very disappointing that the proposals that the Lord Chancellor has brought forward today fail properly to address the issues of the cap on donations and expenditure and to make the significant changes to the transparency and propriety of trade union funding that we agreed?

Mr. Straw: I share the hon. Gentleman’s disappointment. He was party to the talks, and he represented his party very effectively. The right hon. Member for Horsham also represented his party very well, but his script was changed sometime in the summer of 2007. It is disappointing, but we can make progress, if there is broad agreement across the Chamber on spending controls, which is what we are proposing. Everybody, apart from one or two flat-earthers, recognises that the rise in spending is the driver for all the other problems.

Martin Linton (Battersea) (Lab): I welcome my right hon. Friend’s proposals to close the loopholes on unincorporated associations and candidate spending. I also welcome cross-party consensus on the issue, if it is forthcoming. May I remind my right hon. Friend that to insist on cross-party consensus at all costs is to hand a veto to the Opposition? Some enlightened Members of the Opposition see that their interest lies in closing the loopholes, but others see that their interest lies in keeping them open. Those who want to keep the loopholes open are the ones who benefit from being able to escape controls on party spending by channelling money to local candidates and bypassing the controls on anonymous and foreign donations by channelling money to unincorporated associations.

Mr. Straw: We are not talking about a veto for any one party; we are talking about areas on which it is clear that there is already broad agreement, as there is in respect of the changes to the Electoral Commission—there must be broad agreement on that, given that I am reintroducing Conservative legislation that the Conservatives kept on the statute book from the 1980s right until they lost office in 1997.

We have sought to ensure that we follow through on the broad agreement on cutting spending—something to which all the parties subscribed—in terms of restrictions, but there are remaining issues to do with how we enhance state funding in return for donation caps. Those issues are complicated and—let us be clear about it—an increase in state funding would be involved, at a time when there are big questions about whether the taxpayer would be willing to bear that. There are many other complications, too. However, we were close to an agreement, and I hope that one day we will be close to one again.

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Mr. Andrew Tyrie (Chichester) (Con): I participated in the talks from start to finish, and the Lord Chancellor’s description is a travesty of the truth—the House needs to know that. Frankly, the statement that we just heard was partisan. The return of the triggering rules will restrict candidates in marginal seats but not sitting MPs, who benefit from the communications allowance. As Labour holds all the marginal seats, is there not a blatant act of partisanship hidden under the guise of all-party agreement on the Sir Hayden Phillips talks?

Mr. Straw: That is completely untrue, and the hon. Gentleman knows it. I believe that he was among those who signed up to the unanimously agreed report by the Select Committee on Constitutional Affairs, but what he has subsequently said is completely different—both in spirit and in recommendation—from what was said in the Committee’s reports. He is one of the flat-earthers—he voted against the Climate Change Bill on the basis that it was bad science.

Mr. Jonathan Djanogly (Huntingdon) (Con): What has that got to do with it?

Mr. Straw: It says something about the attitude of mind of the hon. Member for Chichester (Mr. Tyrie). He continues to deny what is palpably true—namely that spending by political parties has increased, and will increase, unless we take control of it.

Dr. Gavin Strang (Edinburgh, East) (Lab): May I congratulate my right hon. Friend on not bringing forward a scheme for the state funding of political parties? Is he concerned that some current forms of candidate and party expenditure fall foul of existing spending limits?

Mr. Straw: Yes, they do; we accept that. I dealt with the issue of the 1983 trigger, to which, I notice, no Conservative politician ever objected—indeed, far from it—in my answer to the hon. Member for Ribble Valley (Mr. Evans).

Jo Swinson (East Dunbartonshire) (LD): Tight caps on individual donations and spending are essential to public support for the proposals, as is a debate on state funding, including existing state funding. As part of that debate, will the Government consider the Power commission proposals, under which state funding would be provided on a pence-per-vote basis only if electors chose to tick a box on the ballot paper? Does the right hon. Gentleman agree that that would focus parties’ attention away from expensive billboard campaigns and back towards more grass-roots campaigning and, dare I say it, engagement with the public?

Mr. Straw: There are a number of imaginative proposals for additional state funding, including the Power commission proposal, to which I was quite attracted. However, there are also problems with the proposals. We have to recognise that each of the proposals involves a transfer of funding from the taxpayer to political parties by some means or other. We would certainly need broad consensus on that, and we would have to carry the public with us.

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