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The Earl of Onslow: My Lords, perhaps I may ask the Minister a question for clarification. Is that to allow the Northern Ireland parties to receive funding from the United States which would not be applicable to other parties?

Lord Bassam of Brighton: My Lords, I shall attempt to address that point in my concluding comments.

The position of the Official Opposition has been that the ban on foreign funding and the requirements as to disclosure should apply as much to Northern Ireland as to the rest of the United Kingdom. In principle at least I do not disagree. But the fact remains that politics in Northern Ireland are not conducted on the same basis as politics in Great Britain. There is no reason to suppose that the publication of the names of donors to the Conservative or Labour Parties will place those donors at any risk. The same cannot, unfortunately, be said of a person who donates to the Ulster Unionists, the DUP, the SDLP,or Sinn Fein. It is also the case that at least two of these parties receive a significant proportion of their funding from or via

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the Irish Republic. In such circumstances it is simply not realistic to seek to apply the new provisions in full and overnight. The Neill committee recognised all these difficulties and it was the committee that recommended that Northern Ireland parties should be exempt, at least for an initial period, from the controls on donations. Clause 65 gives effect to the relevant recommendations and is as much a part of the Neill package as the other provisions of the Bill.

Returning to the registration scheme in Part II, the second aim of the amendments that we intend to introduce in Committee is to allow a party to confine its registration to one part of Great Britain. The objective is to enable a "sister" party to register in another part of Great Britain. Under the provisions of the 1998 Act, the Scottish Green Party has been unable to register despite the fact that the Green Party (which is a registered party) organises only in England and Wales. That is an anomaly which cannot stand. As I understand it, the Green Party and the Scottish Green Party are two wholly separate organisations with no constitutional links with one another; the registration scheme should be able to cater for such circumstances.

While I am on the subject of ensuring that the Bill fits the circumstances of parties, I should also mention the Liberal Democrats. They have concerns about the impact of the Bill's requirements on their federal party structure. I believe that all the main parties accept that they will have to modify the way they operate, to some degree at least, in order to adapt to the provisions of the Bill. But I can assure the House that we want, if at all possible, to find ways around the concerns that the Liberal Democrats have, and we are in active discussions with them.

I can deal quickly with Part III of the Bill, which is concerned with accounting requirements. The requirements on parties to keep proper accounts and produce an annual statement of accounts are ones which I would expect any members' organisation to follow in any event. The provisions of Part III will help reinforce best practice in this area. We remain open, as we have been in the other place, to representations on the detail.

Part IV gives effect to the ban on foreign funding of political parties and the public disclosure of large donations. I accept that the scheme for implementing these controls, based on the Neill report, is a detailed one. It will have an impact on the administration of political parties. There is no getting away from that. We are, of course, ready to listen to any proposals your Lordships may have for simplifying the scheme as set out in this and other parts of the Bill. But, in considering any such proposals, the test that must be applied is whether the scheme is sufficiently robust to achieve its purpose.

The rules on donations, as recommended by the Neill committee and set out in the Bill, are tight. They extend not merely to cash donations but also to donations in kind and to sponsorship. We felt it right to make amendments in another place to soften the impact of these requirements in one small degree. As it now stands, the Bill would allow a party, or an

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individual or group, to receive travelling and subsistence expenses for the purpose of visiting another country, even if the money comes from an otherwise non-permissible source. For example, the provision would allow the Government of Gibraltar to continue to support visits by Members of Parliament.

There is a further change which we propose to make to the Bill in your Lordships' House, although it follows on from debates in another place. There is a consensus that it would be unduly restrictive to require the cost of exhibition stands at party conferences to be regarded as sponsorship or a donation. We propose to bring forward amendments to make this clear, building on helpful suggestions which the noble Lord, Lord Neill, has made in a letter to my right honourable friend the Home Secretary.

Parts V and VI of the Bill control election expenditure by political parties and third parties respectively. This is one area where our electoral law has failed to keep up with the realities of modern-day election campaigning. The existing law, as set out in the Representation of the People Act 1983, regulates in considerable detail spending by individual candidates and their agents at the constituency level. The spending limits imposed by the 1983 Act are quite modest: about £8,000 for the average parliamentary constituency. In contrast to these tight restrictions on individual candidates, the political parties are free to spend unlimited sums at national level. This has led to what the Neill committee termed the "arms race" in election spending.

At the previous election some 3,700 candidates spent in aggregate just under £13 million. This sum was dwarfed, however, by the £28 million spent by the Conservative Party and the £26 million spent by the Labour Party. If spending by political parties were left unchecked, the sums involved could well exceed £30 million on each side by the time of the next election, with more to follow as time went on. Elections should be a contest between values, policies and ideas, not between purses. An election cannot be said to be fair if the result is determined by which side can outspend the other. There must be some check against the relentless need to seek large donations. The controls on expenditure set out in Parts V and VI are long overdue and will ensure that in future elections there is a level playing field as between the main political parties.

As to Part VII, I come to the one part of the Bill where we have not yet managed to establish the same degree of cross-party consensus as we have with the other nine parts. Part VII is concerned with the conduct of referendums. It is important to record that this part of the Bill is not concerned about the conduct of any particular referendum but about the conduct of referendums generally. That fact was obscured during some of the debates on Part VII in another place. The essential aim of this part of the Bill is to ensure that each side in a referendum campaign has a fair opportunity to put across its case to the electorate. To this end, the Bill provides for the Electoral Commission to designate an umbrella organisation on

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each side of a referendum campaign. Each side will be eligible for a grant of up to £600,000, a free mailing of a referendum address and free air time for referendum broadcasts. These arrangements at least have been generally welcomed.

In addition, Part VII provides for the designated umbrella organisations, and other individuals and bodies campaigning in a referendum, to be subject to spending limits. Your Lordships' House will be aware that the Neill Committee came down against expenditure controls in a referendum, not as a matter of principle but on grounds of practicality. It is the view of the Government that as a matter of principle there should be spending limits in a referendum. The arguments are essentially the same as for an election. Fair play surely demands that there should be some safeguards against the possibility of the whole campaign being skewed by one wealthy individual or organisation.

As to the practicalities, the solution can be found in the Neill committee's own proposals for controlling donations made to referendum campaign organisations. The Neill scheme requires such organisations to be registered with the Electoral Commission for the purpose of applying the ban on foreign funding and the requirements as to disclosure. Once such organisations have been brought within the regulatory remit of the Commission it is then perfectly possible to apply spending controls to them.

How the Bill deals with Recommendation 89 of the Neill committee's report has also attracted much comment. The committee argued in Recommendation 89 that the government of the day should remain neutral in a referendum campaign and not distribute at public expense literature setting out or otherwise promoting its case. We believe that Clause 120 gives effect to that recommendation in a straightforward and unstinting way. There is an absolute prohibition on the government of the day publishing, displaying or distributing promotional material in relation to a referendum in the 28 days prior to the date of the poll.

Suggestions have been made that this 28-day "purdah" period is too short. The period is, however, wholly consistent with the average length of a general election campaign, with which the Neill Committee drew a parallel. Furthermore, in its response to the draft Bill the Neill committee welcomed the way in which the Government had responded to its recommendation on this issue.

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