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Baroness Gould of Potternewton: I should like to make just one or two points which concern me in respect of the amendments before us and in respect of the Neill committee report.

I understand the sentiment that we want to try and widen the base of donations. That is absolutely right and I am sure nobody would disagree. My problem is that I understood the aim of the Neill committee report--we have been discussing the report for many days and will no doubt continue to discuss it--was to try and arrive at some sort of equity and remove discrimination wherever it lies. We have two forms of discrimination in the amendment before us.

First, we have the point at paragraph 8.10, which the noble Lord, Lord Goodhart, did not quote and is one of the arguments against the scheme, where it says,

That was picked up by Professor Vernon Bogdanor, who said,

    "it would be thought in this country to be inequitable, that people who do not pay tax ... should not get the benefits that taxpayers would".

So there we have an inequity which would be built into this legislation and that cannot be right.

The noble Lord, Lord Goodhart, quoted David Pitt-Watson from the Labour Party. We believe that the amendment would have little value to the Labour Party. However the figures are interpreted, the clear view of the party is that the amendment would be of greater benefit to our opponents. That is a political point which perhaps is not as valid as the other points, but nevertheless it is true.

The noble Lord, Lord Cope, pointed out that the noble Lord, Lord Beaumont, who represents the Green Party, is not in the Committee today. I believe that the amendment is discriminatory against the small parties. The idea that the criteria should be two members of the party elected to the House of Commons or one MP and not less than 150,000 votes discriminates against small parties. We all know that the real force of our democracy is that we do not try to preclude small parties from having equal status to the big ones.

As regards state aid by the back door, when the House of Commons Select Committee reported in 1994 it identified tax incentives as a form of public subsidy; in other words, state funding. At that time, the Conservative Party put in very strong evidence to support that view. It is interesting to note that that view has changed.

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The Neill committee did not believe that the arguments against tax relief by deduction at source are very strong. I believe that the way they have been included in the Neill report and in the amendment is strong because it creates a discriminatory practice.

The Earl of Sandwich: I warmly support the amendment moved by the noble Lord, Lord Cope. I speak as the son of a Member of Parliament who sat on the Conservative Benches and who for a long time was an Independent Conservative. I warmly support what was said by the noble Lord, Lord Shore, about the loss of individual commitment. The noble Baroness, Lady Gould, has poured a great deal of cold water on what has been said and I am sorry that she has made party-political points. The noble Lord has opened up a much bigger debate than we ought to be having on this small part of a large Bill. However, I hope that what the noble Lord, Lord Cope, said will cause the Government to reflect--and although perhaps they will not accept this amendment, I hope that they will come back with one tabled in another form at a later stage. It is time that the Government gave some ground on what is of universal interest.

4.15 p.m.

Lord Shutt of Greetland: I am in the same position as the noble Lord, Lord Hodgson, who spoke last week; neither of us were Members of your Lordships' House when debate on the Bill began earlier in the year. I must first declare an interest as a member and director of the Joseph Rowntree Reform Trust. I have held that position for the past 25 years. Its principal activity is the making of grants, often for political purposes, as it is one of the few organisations able to do so. We deliberately do not have charitable status, thanks to the good thoughts of Joseph Rowntree back in 1904.

Like all other Members of the Committee, except perhaps a handful of Cross-Benchers, I have a vested interest in the party to which I belong, but I want to speak in favour of the amendment in context of the Bill as a whole.

Throughout my adult life I have been involved in a political party at either national, regional, constituency or ward level. Last week, a great deal was said about the national parties and the constituencies but nothing was said about ward organisations or village associations. In the context of the Bill as a whole, I am concerned about who on earth will take on the responsibilities of treasurer and all that that will mean in terms of the regulation of political parties. The more I examine the Bill, the more I wonder who will take on the job of director general of a political party these days, bearing in mind the onerous burdens that the Bill imposes. It seems to me that the Bill introduces more regulation into this voluntary activity in life in Britain than perhaps is the case for any other voluntary activity.

I believe that as regards political parties, the Bill is all downside. Although I am persuaded that that must be so when it comes to cleaning up politics, there is a

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tremendous amount of downside to the Bill. It seems to me that the amendment we are considering is the only piece of upside for the political parties.

Other parts of the Bill relate to political parties straightening up their record keeping. Records must be kept not only so that parties can claim back tax on individual donations but also for other purposes. The other interesting feature of the amendment is that it relates to individuals and not to corporate donations to political parties. Political parties are hardly vibrant at the present time. They may well be keeping up appearances. Perhaps they are doing so because of large donations.

I believe that political parties need something to attract volunteers. I do not know who will wake up tomorrow morning and say, "I think I will join a political party today" and then go and do so. The likelihood is that some people will join political parties at some stage tomorrow but that may be because someone appears on the doorstep with a receipt book and suggests that it is appropriate.

A provision which would encourage a growing involvement in political life in this country would redeem the Bill. People should be given the opportunity to join and those who sign them up should be able to say, "Yes, if you join, from your donation we can get a small sum from the Exchequer to assist the party".

During the past five months as a Member of this House it has been my experience that it is unusual for a Minister to reply, "I accept this amendment with acclaim". However, I trust that on this occasion consideration will be give to the proposal. As was indicated by my noble friend Lord Goodhart, we are talking not only about £500 or £200 donations, but as likely as not about £20 or £10 donations. Provided that the donor is a taxpayer and that proper records are kept, there is no reason why tax relief should not be available on very small sums.

In giving an upside, £500 might be thought of as on the high side--I believe that it is about right--but if the sum were £200 it would, in my view, still provide an incentive and reinvigorate our political parties and, indeed, our democracy. I support the amendment.

Lord Norton of Louth: I, too, support the amendment and rise to reinforce the points made by the noble Lord. I am in complete agreement, although I would go slightly in the opposite direction as regards the amounts involved. For reasons which I shall indicate, I would go further than the recommendations of the Neill committee.

The amendment is extremely attractive for the reasons which have been given. The proposal is not for the benefit of the donors but for the benefit of the parties. Indeed, the noble Baroness, Lady Gould, may find that if the amendment were agreed to, the number of donors to the Labour Party would increase.

The Bill imposes a substantial burden on political parties. That argument has been made in various ways during the passage of the Bill. That burden occurs at a time when the parties are already under tremendous

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pressure. I have also made that point in various debates on the Bill. We must address how to sustain and revitalise political parties. To allow certain donations to be tax deductible may act as an incentive to people to give, or at least to give to a greater extent than before, and the parties will benefit. I do not pursue the matter further given the points powerfully made by other Members of the Committee.

I go further than the amendment and the direction suggested by the noble Lord who has just spoken. Perhaps one should increase the amount that may be allowable against tax. To raise the limit somewhat has the attraction that in all likelihood the amount given to parties will increase. It may also be an attractive means of discouraging non-compliance with the provisions of Clause 63. Under that clause someone who gives a total of £5,000 in small donations is required to report it to the electoral commission. However, there is a problem about ensuring compliance because, apart from the donor, no one may be aware that the aggregate donation is £5,000. Let us say that £5,000, or a proportion of it--but perhaps more than the amount proposed in the amendment--is allowable against tax, subject to the donor providing a certificate from the electoral commission that a report has been submitted. That would ensure more effective reporting.

I appreciate that there may be powerful and compelling arguments against that proposal. With considerable regret, I do not speak as an expert on tax allowances. It would create problems and involve a greater loss to the Treasury than the figure mentioned by my noble friend Lord Cope. However, there is a case for giving thought not only to allowing donations to be tax deductible but perhaps to a proposal along the lines that I have just indicated. I reinforce the points already made. If we accept that political parties are under threat and need to be revitalised--I believe that they do--perhaps this is an amendment worthy of serious consideration.

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