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Lord Hodgson of Astley Abbotts: I have some difficulty with the arguments being advanced from the Liberal Democrat Benches. I accept that a broad base of funding is entirely desirable. The more that the parties can seek to diversify their sources of income, the better. Indeed, the more that we can persuade people, whatever our political colours may be, to support us, the better. However, the contrary argument--namely, that wealthier people should not be able to support their party to a greater extent--is not a good one. People are free and are entitled to spend their money as they wish. I do not see why political parties should be an exception to that rule.

The noble Lord kept using the word "perception". That word is always being used. Behind this Bill is the real answer to perception: we talk about reality because we are going to discuss disclosure. The answer to the noble Lord's point is this. Where wealthy people make donations, they must be seen to have made them. If they are seen to have made them, the public, the press and the country in general will draw the appropriate conclusions. It is surely much better to leave people free to spend their money as they wish and disclose publicly how they have spent it, rather than to interfere with someone's right to dispose of his income as he sees fit.

Lord Renton: I warmly endorse what my noble friend says. I should like to add one or two further thoughts on the matter. First, I do not see how New Labour could have won the general election if trade unions and some of the rich donors who helped the party had been limited to the sum of £50,000. Indeed, I should not have thought that this would have appealed very much to the Government.

Secondly, £50,000 is a fairly modest sum of money. With inflation, which does take place, it would become of much less value between two general elections spread over five years. Therefore, it is unrealistic to put such a sum on the statute book without any arrangement for its increase in the case of inflation.

Lord Norton of Louth: I rise to reinforce the points just made by both my noble friends. I agree completely with my noble friend Lord Hodgson that transparency ought to be used here rather than imposing limits on an individual's decision on how to dispose of his own money. That is a very valid point and I do not want to continue at great length just to reinforce what my noble friend said. However, there is an important principle involved here. He is right to say that a transparent process is the way to deal with the problem rather than limiting the capacity of the individual to give.

Earlier today I think the noble Lord on the Government Front Bench said that political parties were being equated with charities rather than with

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companies. As far as I am aware, there is no limit on personal giving to charities, so why should there be a limit on giving to political parties?

Lord McNally: That is because charities do not decide the government of this country; political parties do. I refer to the idea that wealthy people should be able to spend their money as they wish. During most of the 19th century and a good part of the 20th century people have attempted to get Eatanswill out of our politics. Perhaps this amendment constitutes part of that process.

Part of the problem stems from the fact that, particularly during the '80s, political parties indulged in increasingly extravagant campaigning. I remember doing a party political broadcast with George Brown which cost the Labour Party precisely nothing. We went to the BBC studios and George did the broadcast face to camera. Now I suspect that the Labour Party spends £50,000 or £100,000 on some commercial quality advertisement, as do the other political parties. There has been inflation in campaigning costs. However, that does not detract from the fact that the idea of people giving £1 million to a political party is nauseating. I recall the time--although the Conservative Party backed off quickly--when an individual offered to bankroll the entire £20 million cost of a campaign. If the Committee does not regard that as a profound undermining of our political system, I despair.

We need to return to a system--we hope this was the whole thrust of the Neill committee's recommendations--under which parties abandon the "quick fix" of big donations and return to raising modest amounts of money from a broad base of support. That is what makes a healthy democracy and it is the principle behind the amendment. Having listened to the comments made on the Conservative Benches, it seems to me that they have learnt nothing from the shame of the big donations scandal that ended their 18 years of rule. The Labour Party still has much to learn about getting the big money out of politics. It is the big money that causes the corruption.

Lord Norton of Louth: Does the noble Lord agree that we are not saying that there should be no change? We disagree on the means of achieving change. We believe that transparency is the route to take. Is the noble Lord saying that pressure groups--some of which are charities and some of which are not, although charities certainly fall within the rubric of pressure groups--do not seek to influence government and that many people do not back pressure groups to promote a particular party? One can think of several groups in this country that probably exert a greater influence on government than those parties which are out of government.

Lord McNally: Pressure groups may influence governments; they do not create governments--political parties do. The noble Lord, Lord Norton, overemphasises the point about openness. I believe that transparency is an important discipline but all the

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transparency in the world will not help if, transparently, big money is going into a political party so that it is awash with money for campaigning. That is what we must guard against. We only have to look back at recent history to see that time and again big donations have aroused public concern and, in my opinion, have diminished the political process in the eyes of the public.

Viscount Astor: I believe the noble Lord, Lord McNally, talked about getting rid of "Eatanswill". I am an old Etonian but I assume that the noble Lord did not refer to me. I presume that he referred to his noble friend Lord Goodhart, who I now understand has another reason--in addition to his membership of the Neill committee--for sitting on the Back Benches this evening. I leave that to the noble Lords, Lord McNally and Lord Goodhart, to sort out. It was an extraordinary attack on one of the noble Lord's colleagues.

The noble Lords, Lord McNally and Lord Rennard, will know that I do not support the amendment. This important issue was debated at some length in another place in Committee and on Report. It is well known that the Liberal Democrats favour a cap on donations. They argued for it in their evidence to the Neill committee and in another place. However, I wonder whether such a cap might fall foul of the Human Rights Act so strongly supported by those noble Lords.

The Neill committee disagreed with the Liberal Democrats. At paragraph 6.7 of its report, it described allowing individuals freely to contribute to political parties as,

    "part of a healthy democracy".

As my honourable friend Dominic Grieve told another place on 13th March, at col. 129 of the Official Report:

    "It is an essential part of our civil liberties that individuals should be allowed to dispose of their money as they see fit. Whatever may happen in other countries, it is wrong to put a fetter on that".

In his evidence to the Neill committee, my noble friend Lord Parkinson said that it was,

    "a very serious invasion of people's rights"

to place a cap on donations. He said that it was an intrusion on people's liberty to say, "You can give your money to the local dogs home but you can't give it to the party of your choice".

Some analogies were made with America which has such a limit. We all know that American election campaigns are funded by increasingly large sums of money and that they have elaborate and careful ways of getting vast amounts of money from large donors for those political parties by using "names" and so on. So such a provision does not work; large donors do financially support parties in America.

The important point is that the system must be open. We want to know who donors are. I do not see the difference. All these people seek to influence government, whether it is Bernie Ecclestone, trade unions or noble Lords on various Back Benches giving money to their own political parties. The League

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against Cruel Sports has given vast amounts of money--it may be £1 million; I do not know the exact figure--to the Labour Party as it seeks to influence the debate on field sports in this country. Some bodies claim to be charities; some are and some are not. The system should be open.

The mischief of the amendment in the name of the noble Lord, Lord Rennard, is that it has nothing to do with sums of money. It is a disguised plea for money from the biggest pot of all--from the Government. It is a plea for government funding. If limits are set, it will be said, "We haven't enough money to fight the next election. Let's have government money". The amendment is a disguised plea. I suggest that the noble Lord buys lottery tickets. He probably has a better chance of gaining lottery money than government funding for his next political campaign.

9.45 p.m.

Lord Bassam of Brighton: I thought for a while we were going to have an outbreak of class warfare on the Benches opposite. I checked on the front of the brief and it definitely says, "Not contentious".

The noble Lord made a well argued case. I was tempted towards it by some of the contributions but, finally, I have to say that I cannot accept the amendment largely because the Government have accepted the Neill committee's conclusion on the matter. It is perhaps worth while rehearsing some of the reasons.

The Neill committee adduced a number of reasons against limits on donations. First, the committee argued that we should fight shy of restricting individual rights--the noble Viscount, Lord Astor, made that point--unless there are compelling reasons for doing so. If individuals have the capacity to make large donations to a political party of their choice, the committee believed that they should be free to do so. Equally, political parties should be free to seek such donations. I agree that it would be unhealthy for a party to be over-reliant on a handful of very wealthy donors. But, as the Neill committee said, that would be a matter for the party concerned. That picks up the point made by the noble Lord, Lord Norton. Provided that the party's dependence on such donations is a matter of public record, people can draw their own conclusions--and no doubt they will, as the two major parties have found, sometimes to their cost.

That brings me to the key argument against a cap on individual donations. Much of the concern about the way in which some parties have been funded in the past arose because of the secrecy surrounding that funding. Secrecy inevitably gives rise to suspicion and strained perceptions, sometimes justified, sometimes unjustified. The disclosure of the source and amount of all donations of £5,000 or more will finally lift the veil on parties' income. The full glare of publicity that will shine on any future large donation will minimise any illegitimate influence or pressure. The Neill committee put its trust fairly and squarely in transparency and we shall seek to do the same.

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The subsidiary argument put forward by the Neill committee was the difficulty of enforcing any donations limit. That is not an overriding argument, but we should certainly not belittle the additional raft of what I have described in the past as bureaucratic and sometimes cumbersome enforcement measures--as I am constantly reminded--to plug all possible methods of evasion.

I suspect that I may not have wholly persuaded the Liberal Democrats of the case against limits on donations, not least because I have a bit of sympathy with the idea, but Neill made some powerful points, which I have rehearsed. On that basis, I hope that the noble Lord, Lord Rennard, will feel able to withdraw the amendment.

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