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Mr. Andrew Tyrie (Chichester) (Con): I will not go through a clause-by-clause dismemberment of the Bill, because my right hon. Friend the Member for Horsham
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(Mr. Maude) has already done that from the Front Bench in one of the best speeches that I have heard on this subject.

I am tempted to take up the remark made by the hon. Member for Battersea (Martin Linton) about the alleged non-existence of the incumbency factor; he is certainly right that it is much smaller than people think.

Martin Linton: It is in a Library note.

Mr. Tyrie: I am trying to agree with the hon. Gentleman; if he can contain himself for a moment, he will get a measure of support. However, he does not fully realise the implications of his own point. If he thinks that local campaigning, which MPs do a good deal of, has little impact, presumably he must conclude that local campaigning by candidates challenging incumbents also has relatively little impact. There is a huge amount of evidence to suggest that, too. In other words, we may all, Don Quixote-like, be tilting at the wrong issue in worrying so much about the effects of local campaigning.

Furthermore, it is worth pointing out that in the UK there is virtually a blanket prohibition on a key use to which money can be put in this context: access to television. Television has driven the huge increases in expenditure in the United States. On grounds of freedom of speech, the Supreme Court has ruled that there can be no limits to the amount spent on television. The prohibition in this country is the key protection against the alleged huge arms race that has been mentioned, which can never be found in the figures—not in aggregate, at least, and certainly not on the scale alleged by a number of Members this evening.

I should like to address two general, big issues: both have been referred to and one was discussed at length by the hon. Member for Cambridge (David Howarth) in his excellent speech about trust.

As politicians, we have two big challenges. First, we need to restore the electorate’s confidence in how we finance our parties, and there is agreement across the House that that is necessary. Secondly, we need to restore their faith in how elections are conducted.

Despite its title, the Bill does little or nothing to address either of those issues. As a number of Members know, I have argued for a decade that there should be fundamental reform of party finances. To his considerable credit, within weeks of becoming Leader of the Opposition in 2005, my right hon. Friend the Member for Witney (Mr. Cameron) came out in strong support of a radical set of proposals, very similar to those put forward by the Liberal Democrats in 2003 and to those put forward by Matt Taylor, then chief strategist for Tony Blair. Equally to his credit, the then Prime Minister, Tony Blair, more or less agreed that that was the way in which we needed to take policy, and he did that in the teeth of yet another huge funding scandal afflicting his party at the time. It was certainly courageous.

Cleaning up this area of politics would require bold and radical steps of that type by both the major parties and by the Liberals. For my party, it would mean completely bringing to an end reliance on big individual donations and ending any hope that big business donations could be restored. For the Labour party, it would require
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ending dependence on big union donations, either directly or indirectly through affiliation fees. Tony Blair and the leader of my party were both prepared to act boldly on those issues. In order to achieve it, they agreed to create the process that led to the Hayden Phillips process. He was asked specifically to make recommendations on donation caps, but his terms of reference make no mention of spending or spending controls.

One of the many proposals that Hayden made during the course of lengthy discussions—I participated in all of them—would have achieved the key objectives set out by the leaders of the major parties. For the first time, each trade union member would have been given a genuine, individual choice on whether to donate to a political party, and if so, which one.

Affiliation fees were the stumbling block. The Justice Secretary, who is now back in his seat, still blocks the publication of that proposal. It is as though admitting to the unions and to the rest of the labour movement that he even held discussions on such an idea might taint him in some way. I can think of no reason why that proposal of Hayden Phillips should not be published. The nub of it and the reason those talks broke down is that the courage that was being exhibited by Tony Blair appeared to evaporate as the discussions went on, as his power waned, and when he was replaced by the current incumbent. That is why the Conservatives eventually concluded that the talks had become pointless.

The Bill is also silent on the second major area where we must act if we are to restore trust in politics. We need to clean up the malpractices and electoral fraud that have come with the Government’s misguided relaxation of postal voter registration, which gave us elections so tainted that a High Court judge was moved to conclude that they

It should be a relatively straightforward matter to clean this up through individual registration and voter identifiers. The Electoral Commission supports that; as far as I know, all political parties support it. Even the Government have said, and said again today, that they do not disagree in principle. Why on earth are the Government dragging their feet? We have had a lot of discussion about consensus. Consensus on individual registration exists right now. The Justice Secretary hid behind the need—I virtually quote him—for the details to be sorted out, but the Electoral Commission has already done most of that work. I very much hope that the Government will help us by amending the Bill to include individual registration as quickly as possible. I can see no possible explanation for their current inaction other than partisanship.

So much for what is missing from the Bill—what about what is in it? As I said, my right hon. Friend the Member for Horsham did a pretty good job on that. The Government said that they want to go ahead on the basis of consensus. However, as regards triggering rules for the purpose of calculating a candidate’s election expenses, they have proposed a major change without any consultation at all. Sir Hayden did not opine on this—he was not even asked to consider it.

What is more, the Government have announced that they want it on the statute book so that it can be operative immediately—in other words, so that it can influence the outcome of the forthcoming general election. In fact, they have said that they even want it to come
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into force before the Electoral Commission’s guidance is published. That would create an extraordinary state of affairs, whereby people would be required to obey a law, on the content and meat of which they would have no information to guide them.

All that sits rather oddly with the high-minded talk about consensus that we have heard from the Justice Secretary. He backtracked a little on that today, but it should not be lost on any of us that he has tried to railroad this proposal through without any consultation. He originally wanted to make implementation retrospective, to the date of Second Reading—in other words to today, before the Bill had even been in Committee.

I have only a few brief remarks left to make, about one or two other issues that require our attention. Clause 2 sets out the Electoral Commission’s investigatory powers. Of course I agree that the commission needs investigatory powers to perform its statutory duties, but the proposals look extremely heavy handed—hon. Members in all parts of the House have made that point in different ways this evening. We cannot possibly implement the proposals in the Bill as drafted, so we must look at them again.

Clause 8 requires political parties to make a written declaration about the original source of any funds over £200. We have had a discussion about that. My right hon. Friend the Member for Horsham has already explained that for practical reasons the Electoral Commission does not support that measure in its current form, and neither do I. I am fully in favour of transparency, but the compliance burden would be huge if the declaration requirement and the verification process were to become meaningful.

That is where the compliance impact assessment is so off beam. It says on page 4 that

Five minutes to verify a donation is no more than a brief phone call or even the time that it would take to find out what number to ring. However, the reputational risk to a political party would be huge if that were not done more thoroughly. That is because—this point has not been explained thoroughly enough this evening—the Bill fundamentally changes the relationship between the Electoral Commission and political parties, by providing civil sanctions and by the increase in investigatory powers.

The real compliance burden on political parties from that £200 trigger would therefore be large. The provisions are not acceptable in their current form. There are a number of solutions, one of which may be to raise the £200 limit. However, we cannot leave any political party as exposed as the Bill currently recommends. I completely agree with the point made earlier that nor can we allow vehicles to be created especially for the purpose of concealment. However, clause 8 is not designed to prevent that.

With respect to the issue of consensus, let me add in passing that neither the Electoral Commission’s proposed investigatory powers nor the verification changes were subject to Green Paper consultation. There has been no serious consultation on those issues, still less the establishment of a consensus.

This is a tiny Bill that is designed to deal with major problems, but it does not address them. Even the relatively small measures in the Bill can be described as partisan and ill conceived. I am confident that it will not survive
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scrutiny in the other place. I hope very much that the Government will have the good sense to withdraw the most controversial measures and to amend the rough edges of a number of the others before they allow it to get there.

8.49 pm

Dr. Tony Wright (Cannock Chase) (Lab): I have learned, over the years, to be extremely suspicious of the word “consensus”. Whenever it is used by party politicians in this country, it usually means that they are about to disagree about something. We learn that it is nice to say that we believe in consensus, but I have never seen it endure when serious matters arise. We had an outburst of it recently over the financial crisis. It lasted for about 48 hours. Some countries do consensus; the Nordic countries do consensus, including on party funding. We do not do consensus, however.

We know that we ought to do consensus, which is why we talk about it so often, but we also know that it will break down at the first touch of party advantage. Notwithstanding what the hon. Member for Chichester (Mr. Tyrie) has just said, when the Conservatives thought that there might be some party advantage in triggering the trade union issue, they collapsed the Hayden Phillips talks. That was a great pity. We ought to pay tribute to Sir Hayden Phillips, who, with the Constitutional Affairs Committee, produced an excellent set of proposals that provided the basis for some progress on the issue.

We do consensus only in the most exceptional circumstances. That was the context of the Political Parties, Elections and Referendums Act 2000. We had a newly elected Government with a huge majority. The Opposition were disoriented, unbalanced and on the back foot. They were rather ashamed of themselves, and knew that they had to come on side. In those circumstances, it was relatively easy to get consensus around the 2000 legislation.

In normal times, we think that consensus is a good idea, but we just do not do it. It is rather like an alcoholic who keeps saying that he is attached to the virtues of sobriety. Yes, he knows what he has to say, but somehow he can never quite do it.

We need to take a step back before we take the step forwards. We need to take a step back and remind ourselves of where we have come from. I remember coming into the House in the early 1990s. There were party funding scandals, and they were all about where the Tories were getting their money from. Private organisations had to go to Companies House to try to find out where those great Tory funders came from. Then they did the matching up of the funders and the people getting peerages, and said, “There you are, this shows that these big funders get their pay-off in the House of Lords.” But it was a completely covert system.

When the new Committee on Standards in Public Life was established, I remember saying, along with other people in the House at that time, that we should ask it to look into party funding, so that it could help us to sort out some of these issues. The Conservative Government of the day refused to give the issue of party funding to the committee. That shows where we have come from, and where we have now got to.

Looking back at those days, it is worth remembering that party funding was entirely unregulated at that time. Parties were seen essentially as voluntary organisations
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that could do as they liked with their money. They could do as they liked in regard to how they got it and how they spent it. It was only when that seemed to be causing difficulties and embarrassment of the kind that I have just described that the Committee on Standards in Public Life produced the comprehensive report on party funding that led to the 2000 Act. The watchword of that Act—which we thought, at the time, would be the piece of legislation that would deal with this issue once and for all—was “transparency”. The problem was identified as one of secrecy, because we did not know where donations came from. We thought that, if we had proper transparency and people could see where donations came from, that would solve the problem. The parties would have to be accountable for what happened after that.

As it turned out, however, that did not solve the problem. There were a number of reasons for that. One was that, when people saw what was happening, they did not like it. Also, the pattern of party funding was changing. Let us look back at what seemed offensive at the time. The Labour party was, on the whole, funded by the trade unions, and the Conservative party was funded by business donations. That looks like an age of lost innocence compared with what we have now, because it was all open and regulated—albeit on its own terms, and if one could find out the information.

Now, of course, it is clear that those sources of donations fell away and we saw the rise of the big individual donor. We reached a position in which parties were increasingly funded by those rich individuals and party effort had to be devoted to going out and finding them. That, of course, raised questions in turn about what those rich individuals were going to get for their money. What would they receive in the way of changes in party or Government policy? What would they get in the way of honours, peerages and rewards? We moved from a position in which it was thought to be enough simply to have transparency to one in which it was thought necessary to address the new funding environment.

As we deal with present circumstances, we should remember at least some of the logic of those former days. The logic was, I believe, this. Let us be sure, it ran, that we identify the problems before we invent the solutions. That may sound trivial, but I hope not. It is possible to get so intricately involved in the nuances of funding regimes that we lose sight of why we are looking into them in the first place. I presume that we are doing it to stop money ruling in politics, to stop politics being driven by financial considerations and to stop certain people being able to buy influence through privileged access and privileged benefits.

Kelvin Hopkins (Luton, North) (Lab): As always, I am listening with great interest to my hon. Friend. He is absolutely right that money must not be able to buy politics or politicians, but his focus on funding avoids what many of us believe is the problem—expenditure. Tight and rigid controls ensuring low expenditure would solve all the problems, provided that those controls were policed. Does he not accept that point?

Dr. Wright: That is consistent with my argument; we do not want our politics to be driven by money, as it would be if we simply had unlimited spending. The
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whole pressure of our politics would be to do with raising and spending money. That is the logic for having overall spending controls. To return to the Bill, the logic of that argument is that because we now have what is often described as a permanent election campaign—we no longer have a campaign confined to the three weeks or so of the formal election—driven from the centre by the party machines, which spend a great deal of money and deliver it locally where they can, we should control spending not just nationally, but locally, because that is what a permanent election campaign means.

We get into some difficulties here and I want to be as honest as I can about them. It is inevitable in a first-past-the-post electoral system that the parties will concentrate their energies on marginal seats. That is what they do, and their financial energies are also focused on those seats. I want to stop Ashcroft as much as anybody else, because I find it offensive that an individual can, as it were, buy parliamentary seats. The research evidence is very clear that it is effective— [Interruption.] The research evidence is absolutely clear on that. I have to tell myself, however, that if Lord Ashcroft and his organisations were not doing this, but a political party was doing the same thing directly, it would of course be entirely logical and rational to spend a large amount of money on a marginal seat. If it is rational for a party to do it, what is the problem with an individual doing it on behalf of a party? That raises difficult issues.

I come back to a point that has surfaced once or twice: this wretched communications allowance. I do not agree with my hon. Friend the Member for Southampton, Test (Dr. Whitehead) on that, and I speak as someone who had grave reservations about the measure when it was proposed. Indeed, I voted against it because I thought that it would come back to haunt us. It is not true to say that the publications we put out are benign and nothing to do with party politics and elections. I am as guilty as anyone else; I am not talking just about other people. We put these things out, paid for by substantial amounts of public money—£40,000 to £50,000 during a Parliament—and we tell people, quite legitimately, that we are working night and day on their behalf, as we probably are. We include a picture with a policeman, a picture with some schoolchildren and a picture with a nurse, and we build up a picture of a person working night and day on our constituents’ behalf. The subliminal message being pumped out from every page is, “Vote for me!” Let us at least be honest in this debate. If we have decided that we would like to spend £40,000 or £50,000 in public money over the course of a Parliament to say, “Vote for me”, all I would say to colleagues with whom I share the desire to stop Ashcroft is that that makes the argument more difficult than it should be.

Sir Alan Beith: The hon. Gentleman has been rather unfair in his criticisms by lumping in such mundane things as advertising the times and locations of surgeries in local newspapers. That is now a very expensive activity, which one is required to fund through the communications allowance.

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