Political Parties and Elections Bill

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Q 12Mr. Tyrie: A moment ago, you referred to controls over expenditure and the Hayden Phillips process. With your permission, Mr. Cook, I will address only the party funding issues now and come back to triggering after my party spokesperson has contributed, as I think we were originally going to do and if I am able to catch your eye.
The Chairman: Yes.
Q 13Mr. Tyrie: On the party funding issues, is it the case that expenditure caps form part of Hayden Phillips’ terms of reference?
Mr. Straw: They certainly form part of his recommendations, and—
Mr. Tyrie: I would just like an answer to the question.
Mr. Straw: I believe they do, but I can read out the terms of reference for you.
Mr. Tyrie: Perhaps you would like to read them out to us.
Mr. Straw: The terms of reference state:
“To conduct a review of the funding of political parties.
In particular, to:
examine the case for state funding of political parties, including whether it should be enhanced in return for a cap on the size of donations;
consider the transparency of political parties’ funding; and
report... by the end of December”.
The terms go on to state that Sir Hayden Phillips will work with stakeholders and that he has been asked to
“produce recommendations, which are as much as possible agreed between the political parties”.
Now, Mr. Tyrie—
Mr. Tyrie: I do not need any more. All I am really after—
Mr. Straw: My answer is yes; your answer, I know, is no. We will have to disagree about it.
Q 14Mr. Tyrie: I would just like you to have another go at finding the reference to expenditure in Hayden Phillips’ terms of reference. I have them in front of me. I am not going to read them out as you have done, but I would like you to identify the place in the terms of reference where expenditure is referred to.
Mr. Straw: In the first line. If you are reviewing the funding of political parties, I fail to see how you can possibly make judgments about the funding of political parties and not make judgments about expenditure—those are two sides of a balance sheet, or an account. You are from the party of business, Mr. Tyrie, so I would have thought that you would know that.
Q 15Mr. Tyrie: The terms of reference actually say
“to examine the case for state funding of political parties.”
Mr. Straw: First, it says:
“To conduct a review of the funding of political parties.
In particular—”
The “in particular”, however, does not exclude anything else, otherwise it would have said “exclusively to consider”. I do not recall that particular issue, a rather theological issue. Unusually for you, if I may say so, Mr. Tyrie, it is one that I have never thought is a strong argument. I know where this is leading. You say that we should not be bothered about expenditure limits, but that is not the view of your party. Mr. Nick Herbert was quite explicit in saying that—
James Duddridge (Rochford and Southend, East) (Con): On a point of order, Mr. Cook. I seek your guidance on whether we should encourage witnesses to give evidence on things that have already been written, which we could have read before and which are not actually the witness’ own words. We want the people giving evidence to give evidence, not to give other people’s evidence. I seek your advice on what instruction we should give to those called before the Committee.
The Chairman: Thank you for your question. It is fairly plain to me that a question was posed to the Secretary of State and that he is giving an answer. If that means referring to other opinions and statements by other recognised agencies, the questioner must be prepared to accept the explanation being put on offer. The Secretary of State may finish.
Q 16Mr. Tyrie: To clarify matters, Secretary of State, will you go back to where you felt that I was being theological? You seemed to break off into a series of sub-clauses.
Mr. Straw: You were trying to dance on the head of a pin about the terms of reference. You and I have debated the matter before, Mr. Tyrie. Sir Hayden Phillips will give evidence at 12 o’clock today, so it is better to ask him. He chose to interpret his terms of reference in the way that he did, and he produced the report.
Q 17Mr. Tyrie: Were you participating in the talks at the time that the matter was discussed with Hayden Phillips?
Mr. Straw: What happened was—
Q 18Mr. Tyrie: Will you just answer the question: yes or no? It was a very clear question.
Mr. Straw: It depends on what you mean by “talks”. What happened, as you will recall, was that there was a process leading up to the interim report and then to the final report on 15 March last year where Sir Hayden interviewed the different parties. Following that report and its acceptance in general terms by all three parties, there was a detailed process of all-party talks.
Q 19Mr. Tyrie: Were you at the meeting at which the leader of my party and the then Prime Minister discussed the terms of reference?
Mr. Straw: No, I was abroad at the time. I was Foreign Secretary.
Q 20Mr. Tyrie: I was at that meeting. I attended every meeting. Do you think it relevant that the then Prime Minister made it clear that the purpose of the talks was to examine state funding, caps on donations and transparency? If you read the terms of reference, you will find that they exactly match the wishes of the Prime Minister and the Leader of the Opposition in that respect. Do you accept that there has been a change of attitude by the Labour party towards the need for fundamental reform, as a consequence of the change of leader?
Mr. Straw: It is worth bearing it in mind that Sir Hayden produced his report when Mr. Blair was still Prime Minister.
Q 21Mr. Tyrie: He produced his interim report.
Mr. Straw: No, he produced both reports, with great respect. Mr. Blair was—
Q 22Mr. Tyrie: It was the interim report with the first mention of expenditure.
Mr. Straw: No, Mr. Tyrie, there were two reports. There was an interim report in October 2006. There was a final report on 15 March 2007, and then there was the process of negotiations. Tony Blair ceased to be Prime Minister on 28 June 2007.
Q 23Mr. Tyrie: When did the talks break down?
Mr. Straw: That was not a final report. The breakdown of the talks took place—as you will recall, because I think you were there—on 30 October 2007. For the life of me, I do not understand what point you are making. In chapter 4 of the final report, Sir Hayden discussed limits on spending. Your party accepted that report and welcomed it. The shadow Leader of the House said:
“We welcome the publication of Sir Hayden Phillips’ report. We accept his main recommendations...we are happy to discuss spending caps on all year round non-election campaigning and proposals for tighter controls”—[Official Report, 15 March 2007; Vol. 458, c. 469.]
on party spending. In a parallel statement, Francis Maude said:
“We welcome this report. We accept its main recommendations...we also accept Sir Hayden’s call for caps on spending...Sir Hayden’s objectives are ours. We hope that all parties now work together to achieve them”.
I have never understood what point—if I may say so, Mr. Tyrie—that you, in particular, are making. It is completely at odds with the approach that your own party spokespeople were taking at the time that Hayden published his 15 March report and subsequently.
On 11 December, after the breakdown of the talks, Nick Herbert, now the shadow Justice Secretary, said:
“We are much more interested in reducing the cost of politics and that is what David Cameron has made clear”.
Q 24Mr. Tyrie: When we had a meeting with Tony Blair, at which you were not present, it was clear that the difficulty in the whole area would be affiliation fees. It would be the extent to which we could include trade unions and a cap on donations. That was the primary task given to Hayden Phillips subsequently. Do you agree that the talks in fact broke down because it was clear that genuine choice of whether to donate would not be given to affiliated members? It was likely that we would continue with a situation in which a large proportion of affiliated members who do not even vote for the Labour party would none the less be forced, in practice, to continue contributing to it.
Mr. Straw: No. For the record, I was not present, but from talking to those who were I do not accept your interpretation of what took place at that meeting, which was in the early part of 2006, nor do I accept your interpretation of the breakdown of the talks. I have already referred, Mr. Cook, to the welcome given by—
Q 25Mr. Tyrie: You are not accepting my interpretation of a meeting at which you were not present.
Mr. Straw: No, not least because I have seen what followed from that meeting—that is, how Sir Hayden Phillips, a distinguished public servant, operated. How he interpreted his terms of reference was, with respect, rather different from how you have interpreted them. I think that we are entitled to rely on his opinion there. Secondly, as I have already spelt out, your party welcomed Sir Hayden’s recommendations—not with an aberrant back-of-the-envelope remark to a political journalist, but with a statement in the House, reinforced by Francis Maude outside the House. One of those referred—
Q 26Mr. Tyrie: I was asking you about affiliation fees, Secretary of State. I am trying to get at whether you feel that the question of choice on affiliation fees was crucial to the breakdown of the talks.
Mr. Straw: And I am answering, if I may. I listened politely, if I may say so, to your question, so I would be grateful if I could answer it in my own way.
You will recall one of the points of Sir Hayden’s recommendations—page 10 of his March report—in respect of trade union affiliation fees:
“In my view, these payments may be regarded as individual donations for the purpose of the new limit if, and only if, the decisions reached are clearly transparent and it is possible to trace payments back to identifiable individuals.”
Co-operatively, up to the end of July, we worked on how that could be put into effect, notwithstanding the fact that it would lead to some quite significant relationship changes. As I have said, there was then a change of approach by the Conservative party.
I have always regarded David Heath as a reasonably independent witness to what happened in terms of argument between the Conservative and Labour parties. On more than one occasion, but here on 3 January this year, David Heath said:
“Frankly, it is entirely bogus what”
the Conservative party are
“saying about trade union funding. Some of the abuses that undoubtedly are there were dealt with and the Labour party had to move a long way on it.
It was interesting that their”—
the Conservative party’s—
“attitude changed on this subject markedly over the summer at about the same time that a certain Lord Ashcroft moved into Central Office.”
That is a matter for you. I do not know the reason, but it was absolutely palpable that the approach of the Conservative party shifted about 180 between March 2007, when this report came out, and 30 October, when the talks broke down.
Q 27Martin Linton (Battersea) (Lab): The Secretary of State may be relieved to know that I am not going to ask about what is not in the Bill, nor about the history of the talks with Sir Hayden Phillips, which I am sure that we can come back to. I am interested in the issue of party funding, which I have always understood to include both income and expenditure of political parties. I regard the Political Parties and Elections Bill as landmark legislation in the field. I support some wider reform of donations and spending limits, but the Secretary of State was right to go ahead with a limited Bill, which deals with the most urgent loopholes in existing legislation, specifically those that allow unincorporated associations to make, effectively, undisclosed donations and candidates to spend without limit at least up until Dissolution.
My questions are specific, mainly designed to draw out detailed points from the Department. Would clause 8 really close the door on all undeclared donations from unincorporated associations, or oblige all donations over £200 to be disclosed? I have another couple of small points to add at this stage. I should like to know whether clause 8 will also catch donations through British companies that are foreign owned. It seems to me that if it does not catch them, that could be put right in this Bill.
I should also like to know—if the Chairman agrees—a bit more about clause 10 on triggering. There are a lot of questions about when it would come into force and what will happen to people who have already declared themselves candidates on the date this Bill receives Royal Assent. Will they have to stop handing out leaflets, or pull down websites that describe them as candidates? Can we have some of the practical details of how this Bill will work? I do not know whether I am anticipating another section of the discussion in asking that.
Mr. Straw: May I respond to the clause 8 point Mr. Cook? How would you like me to proceed?
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