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As finance director and chief executive of the United Kingdom over the past 11 years, the Prime Minister’s promises to abolish boom and bust have ended in the biggest bust in British economic history. Do those strictures
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apply to him, and, if not, what will he do with his severance pay when he finally finds the courage to meet the judgment of the British people?

The Prime Minister: I hope that, on reflection, the hon. Gentleman, who is usually a moderate man, will realise the exaggerations that he has made. We have had the longest period of economic growth as a single Government, we have created 3 million jobs over the past 10 years and the reason we can face a world downturn with confidence that we can come through it, is that we have low debt and low interest rates, companies’ funds outside the financial sector are strong and we are making the right long-term decisions for the future of this country. The decisions that we are making include decisions on transport and infrastructure, nuclear energy and planning. The unfortunate thing is that in all those major long-term decisions we have not had the support of the Conservative party.

Mr. Andrew Robathan (Blaby) (Con): The Prime Minister particularly spoke about insisting on openness and disclosure. He wants off-balance-sheet vehicles brought on to balance sheets. Will he therefore tell the House—he knows the answer—how much, to the nearest billion or so, we as a country and the Government owe in off-balance-sheet debt?

The Prime Minister: If the hon. Gentleman is referring to private finance partnerships, those figures are published regularly by the Treasury and he has access to them. We comply with international standards, and the Conservatives will not get very far with that argument because they followed the exact same practice when they were in government.

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Orders of the Day

Political Parties and Elections Bill

[Relevant documents: The First Report from the Constitutional Affairs Committee, Session 2006-07, on Party Funding, HC 163, and the Government’s response, Cm 7123, and The Committee on Standards in Public Life, Review of the Electoral Commission, Cm 2006.]

Order for Second Reading read.

Mr. Speaker: I inform the House that I have selected the amendment in the name of the Leader of the Opposition.

4.33 pm

The Secretary of State for Justice and Lord Chancellor (Mr. Jack Straw): I beg to move, That the Bill be now read a Second time.

Shortly after Labour’s general election victory in 1997, to implement a key manifesto commitment, our then Prime Minister invited the Committee on Standards in Public Life, under its then chairman, Lord Neill of Bladen, to conduct a major inquiry into the funding of political parties. Lord Neill’s report was published in 1998. It was followed by a White Paper and draft Bill that I published in 1999. The process of consultation on that draft Bill culminated in the passage of what became the Political Parties, Elections and Referendums Act 2000 in autumn that year.

Lord Neill’s report and the subsequent Act were based on some key and agreed principles that are fundamental to the health of any democratic system. They are that there should be clear limits on the amount that can be spent by political parties on election campaigns and that voters have a right to know who is funding those parties. To ensure that those principles were put into practice, PPERA—the 2000 Act—set out a new regulatory regime and established the independent Electoral Commission, to be answerable to the House, and not, I should add, to any Minister. Although there was, quite properly, careful scrutiny of the Government’s proposals, and arguments about some of them in the 1999 Bill that became the 2000 Act, I was determined that there should be cross-party consensus on the new Act if it was at all achievable, and indeed it was. I was, and still am, in no doubt that the need for broad consensus in this area of policy is a third key principle.

By any international standard British politics is fundamentally clean, because of spending limits, transparency and our political culture; but ultimately it is clean because there has been an understanding between the parties that changes made to secure partisan advantage would be impermanent and would serve only to undermine the public’s faith in the democratic process. For a wide range of matters that come before the House, the knowledge of Members is necessarily at one remove. We articulate the experiences of our constituents, of business people, homeowners, the elderly and the young, and only sometimes will they be within the direct experience of individual Members and their families. However, in the area of party funding and control, Members articulate their experiences and, understandably, every Member claims expertise, so I make the following remarks with some trepidation.

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First, the reforms that the House agreed in the 2000 Act were, and are, fundamentally right. The historical system of controls on candidate spending was a necessary response in the days when election campaigns were fought entirely at local level, but those controls were not on their own sufficient for the circumstances in which we now find ourselves, when general election campaigns are co-ordinated at national level and often commence many months, or sometimes years, before the official starting gun is fired.

Secondly, the old system, which was in essence one of self-regulation, had its advantages, as do all systems of self-regulation, especially for those being regulated, but over the past 20 years the House has increasingly insisted that one area of society’s activities after another should be subject to external regulation. That is why a decade ago the House, led by my party, decided that we needed to prescribe for ourselves the remedies that we were prescribing for others.

Thirdly, there is recognition that the new system of transparency and of more comprehensive regulation is what the public expect. However, as is almost inevitable with a new system of regulation, not every aspect of it has worked out as well as was intended, so 10 years on from Lord Neill’s report it is right to take account of those experiences and revisit the 2000 Act framework to ensure that its key features—transparency, sensible control on spending and an effective Electoral Commission—are maintained, strengthened and, where necessary, reformed.

Mr. David Heath (Somerton and Frome) (LD): The Lord Chancellor is speaking as though the Hayden Phillips committee had never existed, yet he and I served on it for many long months and strove mightily to reach consensus until the Conservatives walked out. Having striven mightily to produce consensus, why has the Lord Chancellor brought forth this pathetic little mouse of a Bill, which does not deal properly with the abuses of party funding in terms of either donations or spend? It does not deal with what he acknowledges are absurdities in some aspects of trade union funding and it does not deal properly with third-party funding of parties. Why do we not have the Bill that we deserve?

Mr. Straw: While the hon. Gentleman was indicating that he wanted to intervene, I was indeed debating whether to go on to the next section of my speech, which mentions the Hayden Phillips report. I disagree with the hon. Gentleman’s description of the Bill, and I ask him to reflect on the likely outcome of parliamentary proceedings in which there was a dogfight between the parties and no consensus was achieved. The simple fact is that we do not live in circumstances of exact symmetry between each political party—no democracy should. Each party has a different history and a different demography in terms of its supporters, although that is changing over time. There is another fundamental difference that changes over time and which I have had the privilege of seeing from both sides—he, sadly, has done so only from one side: the perspective of a political party when in office is different from when it is in opposition.

Of course I regret the fact that we were not able to reach agreement in the Hayden Phillips talks, in which the hon. Gentleman and I were broadly on the same side. However, if we get into a party political dogfight on the issue—I am happy to have a party political
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dogfight about virtually anything—any changes that are made will be impermanent and will not be properly enforced. The whole body politic will suffer as a result. That is not to say that we should back away from difficult issues; I do not suggest that for a second. What I was able to achieve in what became the 2000 Act was a broad acceptance of some key principles that I think have stood the test of time.

The Government were aided in reaching the conclusion that we need to re-examine the experience of the 2000 Act by the work of successive independent inquiries, including the report of the Constitutional Affairs Committee, published in December 2006, the review of the Electoral Commission conducted by the Committee on Standards in Public Life, which published its report in January 2007, and the report and draft agreement published by Sir Hayden Phillips in March and October last year. Each of the reports had a particular focus, but some common themes are clear.

Sir Alan Beith (Berwick-upon-Tweed) (LD): The Select Committee report to which the Secretary of State referred was indeed a consensus; it was supported by Members of all parties, and Sir Hayden Phillips’s report was, to a very large extent, based on that. Why could not the Secretary of State use that consensus as the basis for saying that he would put before the House not proposals peculiar to his party, but proposals on which there was already party consensus?

Mr. Straw: The answer is that I have not put forward in the Bill proposals “peculiar” to the Labour party, any more than the proposals in the 1999 Bill were “peculiar” to my party. I want to seek a consensus on the proposals. The right hon. Gentleman was a party to the talks. I greatly regret that no agreement was reached, but he knows that Sir Hayden Phillips entered those talks saying, quite properly, that nothing was agreed until everything was agreed. We can spend time going backwards and forwards on the issue of what happened in those talks, but the simple fact of the matter is that there was not agreement. At the risk of tedious repetition, I repeat that there is little purpose served by the House ramming through changes to the party funding regime that do not command a consensus.

If the right hon. Gentleman does not believe me, he need only consider what happened in another area of electoral law when there was not consensus. He went to the United States; there is no consensus there about boundaries, so what happens, as he will know if he has ever seen a boundary map of congressional districts, is that each side gerrymanders the boundaries, which are subject to one rule only in basic law, which is that the boundaries should connect. It leads to a ridiculous position. I do not want to get into that situation. Nor do I want us to experience what has happened in at least two western European countries, where the electoral system was changed for political advantage. We have to be very careful. In particular, there is a responsibility on the Government, who have a majority, to be careful.

Mr. Charles Walker (Broxbourne) (Con): I am sure that the Secretary of State will appreciate that huge advantages of incumbency are inbuilt in our electoral
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system. Of course Members of Parliament need money to do their job, but over the past five or six years, we have absolutely stuffed ourselves with additional money. Perhaps the least attractive allowance is the communications allowance. Would it not be a good start if the House got together at the earliest opportunity and scrapped that allowance, thereby saving the taxpayer about £6.5 million a year?

Mr. Straw: There could be great debate about whether incumbents benefit. They do when they are winning, and they do not when they are losing; that is the simple truth about incumbents. The hon. Gentleman’s party knows that, and so does mine. There is a great debate, some of which is brought out in the excellent, as ever, Library note, about the alleged benefits or disadvantages of incumbency.

It fell to me when I was Leader of the House to move the proposals for a communications allowance, but they did not come from the Government. They came from the Members Estimate Committee and the House of Commons Commission. I had something to do with those. My aim in introducing the communications allowance was to cap spending by some right hon. and hon. Members on, for example, franked envelopes, which in my judgment was reaching excessive proportions. In any event, although only one or two Opposition Members voted for the communications allowance, I looked up the figures earlier and, from recollection, I think that 574 Members spent the communications allowance last— [Interruption.] That is what I was told in my brief. If it is inaccurate, I am happy to stand corrected, but that was in my official brief.

Sir George Young (North-West Hampshire) (Con): With respect, the right hon. Gentleman must not be allowed to get away with that. If he refers to that debate, he will see that many Members made it clear that they would have to claim the communications allowance for expenditure currently incurred under existing allowances. It therefore does not follow that they have made additional claims on the House following the introduction of the communications allowance.

Mr. Straw: I never suggested that they had, but the right hon. Gentleman makes my point. To my certain knowledge, the House is enforcing the allowance, and it is being used for parliamentary purposes and not for party political purposes.

Several hon. Members rose

Mr. Straw: I have already given way to the hon. Member for Broxbourne (Mr. Walker).

Mr. Walker: Will the Secretary of State give way once more now?

Mr. Straw: No. I may later. I give way to the hon. Member for New Forest, East (Dr. Lewis).

Dr. Julian Lewis (New Forest, East) (Con): I thank the Secretary of State for giving way. I have had to use the communications allowance. I have used about 0.02 per cent., I think, because certain advertisements for surgeries that I used to be able to pay for under the office costs allowance must now be paid for under the communications
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allowance. There is a big difference between that—I suppose I am one of his statistics for using the communications allowance—and Members using £10,000 or whatever the allowance is. I shall stick to my less than 1 per cent. until the communications allowance is abolished, when I can go back to the old system which allowed such minimal expenses under a sensible office cost allowance.

Mr. Straw: Having enjoyed that excursion, I shall move on to one topic on which I think we are—

Bob Spink (Castle Point) (UKIP) rose—

Mr. Straw: Out of affection for the hon. Gentleman, if nothing else, I shall give way to him.

Bob Spink: I am grateful. I shall take the Secretary of State back to the Bill. Does he agree that the political consensus on the Bill has been put at grave risk by the Conservative party continuing to fund, by tens of thousands of pounds, marginal constituencies prior to an election being called? That is against the spirit of what the Bill seeks to achieve. It is against what the British people think is fair play. Does that not show how necessary the Bill is?

Mr. Straw: What has happened is that parties seek to spend within the current rules. The hon. Gentleman makes his own point about his views about some of that spending.

David Howarth (Cambridge) (LD): Before the right hon. Gentleman moves on, will he give way?

Mr. Straw: Well, once.

David Howarth: I thank the Secretary of State for giving way before he moves off the consensus point. Is not the difficulty with his position that effectively he has given a veto to the Conservative party when the Conservative party benefits from the existing situation continuing? Should he not have thought, “Where are the public on this? Where is public opinion?” and proposed what the public wants, and then challenged all Opposition parties to explain why they are not in favour of it?

Mr. Straw: I have my views about the kind of changes that ought to be introduced. I have made my point. Different parties will look at the issue from different perspectives. The parties’ position, demography and social base are asymmetrical and there is always an inherent difference between the party in power and the main party in opposition, as well as the smaller parties, including the Liberal Democrats, in opposition.

I understand what the hon. Gentleman says, but we should not make what we think is the best the enemy of the good. If we use the partisan advantage that Government parties, by definition, have and force through changes that do not command broad consensus—not in every detail, but broad consensus about their principles—all those involved in politics and the reputation of politicians will suffer a further knock.

I should continue. There is one issue, of a number, on which there is already a consensus: the need for comprehensive reform of the Electoral Commission.
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The creation of the Electoral Commission was a recommendation of Lord Neill’s that all parties supported. It was the right decision and an essential development in the context of a stronger regulatory system. However, there was a critical design flaw. Lord Neill recommended, and I accepted, as did the House, that the commission should not have in its membership anyone with recent experience in party politics. With hindsight, I should say that that was an error, for which I take my share of responsibility. The move has exposed the Electoral Commission to criticism, which many will consider well founded, that it has lacked a degree of understanding of the organisations that it regulates, and in particular that it has failed to recognise that political parties are kept going not by unscrupulous people on the make, but by enormously dedicated volunteers who work all hours, usually for no reward, for their values and commitment to their cause and no other reason.

Mr. Denis MacShane (Rotherham) (Lab): My right hon. Friend is absolutely right.

One of the great problems that worry many of us about the Bill relates to schedule 19. Under that schedule, the homes of the literally hundreds and thousands of people who volunteer as agents or as candidates—successful or unsuccessful—for councils or Parliament, or of those who give a little bit of money to a party, can be raided on the orders of the Electoral Commission. A justice of the peace has to give a tick, of course, because there has to be reasonable cause. However, if the commission is to do its job, it has to investigate and it will not know whether there is reasonable cause until it has gone into everybody’s home to take away any papers to do with party funding. I do not want to get into a dogfight with my right hon. Friend, because I know who would lose, but I put it to him that that provision is a worrying threat to the volunteering instinct of the British nation and to its democratic system.

Mr. Straw: I understand my right hon. Friend’s point, which we have discussed outside the House. If he would not mind waiting a little, I shall deal with that issue a little later; I hope to reassure him and the House.

In a highly critical conclusion in its 2007 report, the Committee on Standards in Public Life stated:

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