Political Parties and Elections Bill

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Q 1Mr. Djanogly: Thank you Mr. Cook. I look forward to serving under the chairmanship of yourself and Sir Nicholas over the coming weeks.
Secretary of State, would you agree that the purpose of this Bill is to deliver confidence in our electoral system?
Mr. Straw: I hope that that is one of the effects. Within that, the purpose of the Bill is also to improve the operation and effectiveness of the Electoral Commission, not least in the light of the significant criticism of its effectiveness which was made by the Committee on Standards in Public Life.
Q 2Mr. Djanogly: Presumably, that ultimately goes to confidence in the electoral system?
Mr. Straw: Yes, in a nutshell. There is probably another question coming, Mr. Djanogly.
Q 3Mr. Djanogly: There is indeed, Secretary of State. Given that the vast majority of alleged, or real, crimes in relation to elections occur in respect of electoral fraud—I believe that there were some 450 incidents of reported alleged crimes, of which only 40 were prosecuted in the event—why does the Bill not deal with that issue at all?
Mr. Straw: There is already a substantial body of law in the principal Act, as well as in common law and other statutes. You will be aware that the provenance of this Bill goes back to the establishment of the Hayden Phillips inquiry at the beginning of 2006. I may be wrong about this, but I cannot recall any representations by any political party, or other outsiders, that the law in respect of fraudulent practices needs to be changed or improved. However, we are open to further representations, including from your party. I may be wrong and there have been representations, but I do not recall any suggesting that that should be the focus of the Bill, which, as I said, builds on substantial legislation that, ultimately, was passed with all-party agreement in 2000.
Q 4Mr. Djanogly: The Conservative party has maintained that that should be the main focus of the Bill for the past three years. I shall move on to the next question. How many incidents of or investigations into malpractice relating to party funding have there been over the past five years?
Mr. Straw: On your first assertion, that the Conservative party says that the Bill should focus on fraud, I was party to the Hayden Phillips discussions over a long period and to the statement that I made in the House in March 2007. The focus was on different things. We are happy to receive representations from your party and, if your party feels that amendments should be made, obviously we shall look at them, as we always do, on the merits. I have made it clear, ever since I started dealing with this area 10 or 11 years ago, that it is important to work on a consensual basis, and I still think so.
Q 5Mr. Djanogly: I totally accept that the Hayden Phillips discussions were on party funding. What is not the case is that the Bill is anything to do with the Hayden Phillips discussions. In fact, you yourself said on Second Reading that we have moved beyond Hayden Phillips and that you were looking for another way to move forward. Returning to my question, how many incidents have there been of prosecutions, or even investigations, over the past five years?
Mr. Straw: I do not have the figures to hand.
Q 6Mr. Djanogly: Is that not central to the Bill?
Mr. Straw: No. I do not have the figures to hand, but if you want to ask such specific questions—detailed statistical evidence, which I do not know whether my officials have to hand—I would be happy to provide the information.
A matter of correction, Mr. Djanogly, on what I said about the provenance of a significant part of the Bill, although obviously the policy has been developed. Quite a number of clauses relate to improving how the Electoral Commission is constituted and operates. Those parts of the Bill follow from the reports of three, separate, independent investigations, in date order, from the Select Committee on Constitutional Affairs—precursor of the Justice Committee—the Committee on Standards in Public Life and the Hayden Phillips inquiry. All three inquiries addressed the question of how the Electoral Commission could and should be improved.
Q 7Mr. Djanogly: You said that the Bill relates to Hayden Phillips, which is not exactly what you said on Second Reading.
Mr. Straw: What I said was its provenance.
Q 8Mr. Djanogly: We are well post-Hayden Phillips. However, given that, I find your further point rather disturbing. You said that the figures relating to the prosecutions for party funding misdemeanours are not known to you, and I think you said that they were not relevant to our discussions. On the basis of what you said, which was that this should be about party funding rather than electoral fraud, the figures are directly relevant and the core of what the Bill is about. That is what you are seriously maintaining the Bill should be dealing with, yet you cannot provide the figures.
Mr. Straw: You are tilting at a windmill, if I may say so. I have been completely inserted into all the discussions since I became Leader of the House in May 2007. As sure as I am sitting here, the focus has been on how we improve the Electoral Commission and the crucial area of dealing with the arms race. It has been acknowledged on all sides that it is absolutely essential to the operation of good elections in this country that there should be effective limits on the totality of campaign spending—in the generic sense—by political parties, so that we do not get into the position of other countries. Particular concerns have been made by some, though not all, parties, that there is a lacuna in this Act—unintended, I may say—which does not provide for regulation of expenditure by candidates until the election period itself.
Because these were the terms of reference of the Hayden Phillips inquiry, there was extensive discussion within both that inquiry and then the all—party talks, which he chaired, about whether there was scope to introduce donation limits in return for state funding. However, you will be aware that those discussions were aborted when the Conservative party, as it happens, were unable to proceed on the basis of a draft agreement, which had been brokered with those three parties in the early part of 2007.
Q 9David Howarth (Cambridge) (LD): It is again very pleasurable to sit under your chairmanship, Mr. Cook.
Unlike Jonathan Djanogly, I agree with you, Secretary of State, that the heart of this Bill is donations and expenditure. The relationship of the Bill with the Hayden Phillips’ compromise, which itself draws on what the Select Committee did, is at the heart of the matter. Can you talk about the Hayden Phillips proposals? Do you agree with me that it is disappointing that, as far as I can see, you are not in a position to submit anything of the major proposals that Hayden Phillips put forward? Those proposals were: a global cap on spending to cover the entire electoral cycle at national level; a donation cap of £50,000; and a way of dealing with the vexed issue of the union relationship with the Labour party, which would separate out donations on the one hand and affiliations on the other.
Mr. Straw: It is disappointing. All three parties went in good faith into the negotiations following the Hayden Phillips final report in March 2007. Certainly, that was the impression that both your party representatives and mine had of the approach of the Conservative party up until the summer break. A draft heads of agreement was then put together by Sir Hayden’s team, which I understand was brokered with each of the party representatives, and has now been made public. Then the original meeting that was to take place on 3 September was deferred at the request of the Conservatives. There was then a discussion about whether it should take place in early October. We finally had the meeting on 30 October last year when—as David Heath, the then Liberal Democrat representative on the inquiry said—the Conservative party walked away. They did walk away—I was present too.
The Hayden proposals required movement by all three political parties—that is in the nature of an effective compromise. We were ready to move; I believe that the Liberal Democrat party was ready to move. But I am clear about one thing—and I have said it repeatedly. Although there will be some heated discussions about what should go into electoral law, our political system is not served if we end up with legislation which is partisan and not accepted by all parties, however reluctantly I come to that view.
Q 10David Howarth: The question now is what to do, given that the talks broke down then. Notwithstanding what you said about consensus, two things could have been done: to propose at least what Hayden Phillips proposed, and to challenge parties that were against it to explain why they were against it. One point of view is that at that point a different consensus would break out; a consensus backed by where the public is rather than where the parties are.
Secondly, you talked about the political climate. Is it not possible to say now that the political climate has changed again? We have had a new round of scandals, of possible donation scandals and so on. We have also seen the collapse of the financial sector of the economy from where a lot of donations previously came. Would now not be a good time at least to try to reopen the talks, so instead of having a tiny Bill—I shall come on to its proposals in a minute—that will do virtually nothing about such issues, we do something more comprehensive; more what the public want?
Mr. Straw: As for the new round of scandals, it is important to put things into perspective. If it emerges that a leading spokesman for one party or another has been discussing donations, that could conceivably not come within the 2000 Act regime. It would be a story, but there are proper processes for it to be investigated and, as far as I know, such matters have been referred to the Electoral Commission. It is up to each individual to judge whether they amount to a scandal—they certainly amount to a story. The regime for handling, for example, allegations of donations that have been made unlawfully because they are from overseas, subject to proposals in the context of the Bill, is substantial, but perhaps it needs to be improved.
As for the heart of your question, Mr. Howarth, which is whether we can get the talks going, that would only be if there were suddenly indications from all three parties that the time was right, otherwise we would be wasting our time. If we were to go for a scheme of donation limits, it is fundamental and it was accepted that that would have to be paralleled by the introduction of state funding because there would be a loss of income to all three political parties and to the smaller parties if it were to happen. There have been many proposals for how mechanisms would operate, some of which I personally find attractive, but it is the case that, for example, the Leader of the Conservative party for understandable reasons said explicitly last November that
“there can be no justification for more state funding of political parties unless a tough cap”
is applied on donations.
Q 11David Howarth: But the amount of state funding that might be required should be revisited in light of what has happened in the US, with Barack Obama raising hundreds of millions of dollars in small amounts in a place where there is a donation cap. It might be worth going back to the talks with the question of how much state funding there should be and how long it would need to last to get us into a completely different system, where parties supported themselves out of small donations.
Finally, may I come to what is in the Bill with regard to the return of triggering? That is the only proposal that tries to deal with those issues, and to a lot of people it seems an inadequate tool. That is because, first, it deals only with candidate spending and not with the heart of the matter, which is party spending outside elections. Parties can continue to pour money into particular constituencies, and as long as they do not refer to a particular candidate’s campaign, that spending will not be covered and therefore there is no change from the current system.
Secondly, when we had triggering previously, it led to a situation where agents would send threatening letters to one another, no case would ever go to court and no one really knew whose election expenses had started. It did not work and was generally considered unenforceable. Instead of bringing back the triggering mechanism, would it not be better to have something like the Hayden Phillips proposal, but targeted at local party spending? We could have the Hayden Phillips proposal for a national cap and, underneath that, a local cap throughout the electoral cycle. That would catch all this, targeting local spending outside elections.
Mr. Straw: Of course there is a case, which was looked at in some detail by Hayden, for comprehensive and continuous spending limits that essentially include all aspects of political parties’ activities, apart from such things as pension contributions for their staff. It would be assumed that political parties existed principally for the purpose of winning elections and that all their activities, national and local, were covered by a cap.
There are various of ways of doing that. One way would be to have a national limit of x million pounds a year, with an increase for the 12 months prior to a general election, and then—either within or outwith that limit—to set a specific local limit as well. That is certainly a proposition and Hayden Phillips came close to endorsing it, but not completely. He was trying to search for a consensus, as I have been trying to do since May 2006. However, Hayden did say, at page 15 of his March 2007 report:
“The parties will need to consider carefully what level of local control is necessary to realise their commitment to limit campaign spending as a whole.”
That is a supplement to the answer that I gave Mr. Djanogly, indicating that on that issue, too, the provenance of the Bill is what Hayden Phillips said.
We might argue about whether the triggering proposals are adequate or fair. My view is that when they existed before, of course they were not perfect—these things rarely are—but they acted as a dampener on activity. A judgment had to be made about what was covered by the definition, as it then stood, in the Representation of the People Act 1983, as expenses incurred
“in respect of the conduct or management of the election”.
Those terms were altered slightly by the 2000 Act.
The Committee will be familiar with the judgment in the Fiona Jones case, in which the Lord Chief Justice, Lord Bingham, said:
“Election expenses are not incurred where a constituency party carries on its ordinary political activity otherwise than with reference to a specific election which is reasonably imminent, even though such activity has the ultimate aim of winning public support and gaining or retaining power in the constituency; nor are they incurred by a candidate who nurses the constituency. An election expense means expenses incurred, by or on behalf of a particular candidate”.
As long as we have a distinction—some of the parties are keen on maintaining it—between the general activity of political parties and activities that are related to
“the conduct or management of the election”,
as in the old definition, or for the purposes of an election, as in the new definition, we must make a judgment about where the division falls.
That said, I have not suggested that I think the reintroduction of triggering is a perfect answer. The reason I put it forward is that there had been, without any question, a consensus for it. I appreciate that there are different views now, but there was a consensus, including when the 2000 Act was considered, and we had experience of it working. In a more perfect world, you would be right. However, unless we abandon the approach that all political parties have adopted for a long time, certainly post war—which is that while we have fairly spirited arguments about the party funding regime, ultimately it is not used as a partisan tool against other parties—we must proceed by agreement. I do not see any alternative.
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