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Lord Molyneaux of Killead: If the Committee will bear with me, I want to make a comment about the troubles in general. In the interval since the Committee last approached this matter on 12th October, intelligence sources have confirmed recent reports that a notorious terrorist supporter and American fund-raiser by the name of Martin Galvin, who is well known internationally, having originally represented Sinn Fein/IRA, has now announced rather dramatically that he is diverting his support and the large sums of money he has raised in America to an amalgam of Real IRA and Continuity IRA, both of which have pledged themselves to destroy the Belfast agreement.
That ungodly coalition is already preparing to contest the elections next year, thereby placing a very large question mark over Clause 65. In the light of those worrying developments, might it not be prudent to reconsider whether Clause 65 should be set aside, given that, in view of the information that I have disclosed, it is now at worst obsolete and at best a threat to democracy? Surely it would be far better to heed the pleas made from various parts of your Lordships' House to treat the United Kingdom as the one constitutional unit that we all know it to be.
Throughout the United Kingdom there is deep concern over this clause, which exempts Northern Ireland political parties from provisions which will apply in Great Britain to restrict overseas donations. The effect of the Bill's exemptions for Northern Ireland parties will be to enable Sinn Fein and the new amalgam to which I have drawn the Committee's attention to gain access to funds raised in America.
Lord Bassam of Brighton: As ever, I am grateful to the noble Lord for his contribution to these sensitive debates. I certainly understand the view that he has expressed. However, it is not a view which I feel able to accept. I believe that it is important that we proceed as we have determined to do. I believe that to be the right course for all the reasons that we have rehearsed
briefly today and during our earlier discussions and deliberations on the exemption that Northern Ireland parties will enjoy, if "enjoy" is the right word.We need to make progress towards normalisation. We need to have secure political institutions in Northern Ireland. We must all undertake to stand strong against the sort of intimidation which regrettably takes place within part of that political process. We need to monitor carefully the situation which Mr Galvin seeks to exploit and try to use, or perhaps more correctly abuse, politically.
I am content with what we have in our amendments to Clause 65 and I urge the Committee to support the Government in relation to that.
Lord Rogan: In the light of that information, I still have grave reservations about Clause 65.
Clause 65, as amended, agreed to.
Lord Cope of Berkeley moved Amendment No. 182:
The noble Lord said: This amendment seeks to insert a new clause which attempts to implement recommendations 38 and 39 of the Neill committee that small donations to political parties represented in the House of Commons should be eligible for tax relief. That is not a wholly novel principle as donations to political parties are already exempt from inheritance tax. Indeed, the wording of the new clause is based on the existing wording of the tax relief provisions and also on the recommendations of the Neill committee.
The noble Lord, Lord Beaumont of Whitley, who energetically represents the Green Party in this House does not appear to be in his place just at the moment. The wording provides that that benefit would be available only to political parties represented in the House of Commons. The reason for choosing this wording is, as I say, that it follows the explicit recommendation of the Neill committee and we wish to stick to that recommendation.
That recommendation was not an isolated one-off in the Neill committee, a stand-alone recommendation. It was an integral part of what it was trying to achieve. The committee recognised that the base of political funding in this country needed to be broadened. But it also rejected, as do the Opposition, state funding of political campaigning.
At this juncture I should point out that the Neill committee did not regard tax relief along the lines set out in this proposed new clause as state funding any more than I do. No one argues that charities, which benefit from tax relief on the donations that they receive, are funded by the state. The right honourable gentleman the Chancellor of the Exchequer has extended considerably that charitable relief. But for a long time the principle has been that in tax law certain charitable donations, as defined and with the conditions expressed, were regarded as the income of the charity rather than the income of the donor; in effect, that the donor was diverting part of his income to the charity concerned.
In paragraph 8.7 of the Neill committee's report it is argued that tax relief is not only not state funding but that it would be necessary, given the reduction in large donations which the committee envisaged, to allow tax relief on small donations in order to prevent parties coming cap-in-hand to ask for direct state funding.
This amendment was tabled by my colleagues in another place to the Finance Bill in 1999 and also to this Bill when it was before another place.
It may be thought inappropriate to have a tax-relieving provision in a Bill of this character. Indeed, Her Majesty's Treasury would have judged it as such when I was a Treasury Minister because, generally speaking, tax relief has been restricted to Finance Bills. But that is not the view of the Treasury now. Indeed, in Committee on the Finance Bill in another place in June 1999, the Economic Secretary to the Treasury, in the course of rejecting the tax relief proposals along these lines put forward by my honourable friend,s said that this Bill--which was then a gleam in the eye, although the Bill was known to be on its way--would be the Bill in which such a measure should be included. That has the additional advantage of giving your Lordships the opportunity to consider that particular recommendation of the Neill committee.
In another place, this proposal was supported by my right honourable friend John MacGregor, who was a Member of the Neill committee. I hesitate to express the views of that committee in the presence of the noble Lords, Lord Shore and Lord Goodhart, who were both members of that committee and who will obviously speak on this issue if they wish and give more detail. But
As I understand it, the committee wished to deal with that. It saw tax relief on smaller donations as,
The committee recognised that the new restrictions would reduce the political parties' income, perhaps significantly. It was intended that this measure would, in part, address the imbalance which would otherwise be created.
I should say that in another place this proposal was supported also by the Liberal Democrat spokesman and by the independent Member of another place, Mr Martin Bell, who said that it would encourage the little people to get involved in politics which would help our democracy and make it much healthier. The particular circumstances of his membership of another place makes that view of interest.
Of course, that would be of benefit to all the main parties, including the Labour Party. This measure would benefit that party as well as other parties because it would enable it to broaden the base of its finances and to move away from significant large donations to many smaller ones. That is what the Neill committee intended and is the spirit of other parts of the Bill.
There was also the question of cost, and no doubt the Treasury had a view on that aspect too. The estimate was that it could be expected to cost the Exchequer in terms of lost revenue £4 million or £5 million per year. I am sure that everyone would agree that that is not a particularly huge sum of money in the scale of things in the operation of Her Majesty's Treasury. Hundreds of millions have been spent on the Dome and tens of millions have been spent on the national changeover plan for the euro. That £4 million or £5 million, small as it is, would be well spent on the preservation of our democracy--and many of us believe that our political parties are an important matter in relation to that.
I should add that the noble Lord, Lord Neill of Bladen, wrote to the Home Secretary in October of last year to respond to the Government's White Paper. He said:
It is no good the Labour Party or its spin doctors claiming that the Bill implements the Neill committee's recommendations because in this important respect it does not. As I have made clear, this is one of the key recommendations in the report. It is right in principle and in practice and it should be supported. I beg to move.
"a means of ensuring that sufficient funds to serve our democratic purposes were attracted to political parties".
That is why I say that it is an integral party of the other recommendations of the Neill committee and not a stand-alone provision.
"During the Committee's investigation of the funding of political parties we found widespread support for the view that political parties should be funded by a large number of small donations rather than by a small number of large donations. My colleagues and I remain of this view ... We are disappointed that you have decided against our proposals in relation to a tax relief system".
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