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Lord Blackwell: I am taken by the point made by my noble friend Lord Mackay that it is likely to be difficult to find caps which are both practical and equitable and that it may make more sense to remove caps altogether.

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I particularly want to take up a point raised by the noble Lord, Lord Lamont, and his amendments. If there are to be caps, I question the relevance of expenditure as regards political parties and referendum campaigns. It seems to me that by definition referendums concern single issues which cut across party political lines. It is difficult, but not inconceivable, to imagine a situation where one could have the leadership of all the main political parties aligned on one side of a referendum and the opposition to that point of view drawn from members of all political parties. In that situation, if one were to allocate expenditure based on political parties concerning an issue that cuts across them, it may arise that expenditure would be heavily weighted on one side of the issue simply because of the arithmetic concerning the political parties supporting an election campaign. If we are to have referendums about issues as opposed to those concerning support for parties at a general election, then expenditure based around political parties is both irrelevant and potentially damaging.

Lord Goodhart: This is a very complex issue. I am not sure that I agree either with the Government or with the noble Lord, Lord Mackay of Ardbrecknish, on it. This group of amendments raises three different questions. The first is whether there should be a total limit on the spending of either side in a referendum campaign. The second is, if there should be no total limit, should there nevertheless be a limit on the spending by any particular player in that campaign? Finally, if there should be a limit of that kind, what should it be?

I believe that the noble Lord, Lord Mackay of Ardbrecknish, slightly misrepresented the position of the Neill committee. We said that there should not be an overall total limit on expenditure. We did not consider whether there should be a limit on individual players. I think that the noble Lord, Lord Mackay, rather implied that we had said no to both questions whereas we said no to the first question and did not answer the second question.

On the question of whether there should be a limit on total spending, it seems to me pretty clear that we were right in coming to the conclusion that there should not be. It is fair to say that the Government have not attempted to impose a total limit on the spending of either side. There are certainly a number of objections to imposing a total limit. One is the great difficulty of enforcing and controlling that limit. It can possibly be done with an umbrella organisation if all the players on one side are willing to belong to that organisation. However, there are many referendums in which no umbrella organisation can be formed. The most obvious example--one which was mentioned in the Neill committee report--was the Good Friday referendum in Northern Ireland with on one side the Ulster Unionist Party, the SDLP and Sinn Fein, and, on the other side, the DUP and some republican splinter groups. It is perfectly obvious that neither side would have been willing to come together for the purpose of fighting a joint campaign. It would have

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been out of the question, for example, to have told the Ulster Unionists, "Sorry, you cannot spend any more money on this campaign because your allowance has all been spent by Sinn Fein".

Therefore we felt that it was plainly impracticable to impose an overall limit and, indeed, possibly wrong on grounds of freedom of speech in view of the Bowman decision in the European Court of Human Rights which concerned money spent in a particular constituency election campaign. By analogy that would also apply to a referendum and to the Canadian case which the noble Lord, Lord Lamont, mentioned in which it was held to be a breach of the right of freedom of speech under the Canadian charter of rights to require someone to join an umbrella group if they wished to participate in a campaign. In that case an umbrella group existed but someone said, "I do not want to join that umbrella group because I support the same argument as them but for different reasons and I wish to have my own say on the matter". It was held that that applicant was entitled to do that.

The question of whether there should be a limit on the spending of particular players in a campaign is, I think, much more arguable. The Neill committee did not consider that matter. In retrospect I think that we should have but I am not clear what conclusion we would have reached had we done so. The noble Lord, Lord Shore of Stepney, takes a strong view on that matter. I take a somewhat different view, although it is not so strongly held as that of the noble Lord. I believe that there are arguments for saying that one ought not to allow a particular political party, or rather a particular individual with extremely strong views on a subject, for example, Mr Brian Souter or Mr Paul Sykes, to fund an expensive campaign. I accept that there are difficulties. A number of those difficulties were justifiably pointed out by the noble Lord, Lord Lamont. However, I believe that there is an arguable case for saying that you can do that. If it is to be done, I am not happy with the way the Government propose to do it. Certainly the view of the Neill committee was that the emphasis on political parties in referendums was too great. We felt that in the case of referendum campaigns there were strong advantages in giving incentives to like-minded people to join in a single umbrella campaign. That would simplify the procedure in many ways. For example, it makes the question of broadcasting much easier.

If a political party on its own is entitled to spend as much as a whole umbrella group would be entitled to spend, I certainly feel that that places far too much emphasis on the role of the party. If more than one party is involved, together they may well be in a position to spend far more than the umbrella campaign. I regard the figures for party spending as far too high. I also take the view--I believe that both the noble Lords, Lord Mackay and Lord Lamont, mentioned this--that it is wholly wrong in principle in these cases to determine the amount of money that any political party is entitled to spend on the basis of its share of the vote. That seems to me to be wholly wrong. It is inconsistent with the rule in the case of

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general elections where although parties such as mine are likely to be unable to get close to the limit, nevertheless if we could do that we would be entitled to do it. I believe that the same principle should apply to party spending on referendums.

I am also somewhat concerned at the level of spending by permitted participants. I believe that the noble Lord, Lord Shore, got it somewhat wrong when he said that no individual could spend more than £10,000. If an individual becomes a permitted participant, the limit is not £10,000 but £500,000.

4.45 p.m.

Lord Shore of Stepney: I should make it quite clear that I was referring not to individual but to companies' expenditure which is specifically under the limit of £500,000.

Lord Goodhart: In a sense the division between individual and company spending is somewhat irrelevant because I think that the very large sums of money are not, frankly, likely to come from big commercial companies with large shareholdings but are much more likely to come from the private companies of wealthy individuals who might decide to put their companies' money into a campaign rather than their own. But be that as it may, it is certainly my view that a spending limit of £500,000 is too high. Even if one applies the 5 per cent test which was applied to third party spending for constituency and national campaigns in general elections, the figure would be reduced to £250,000. I believe that £250,000 is a more realistic figure than £500,000.

In principle I am quite happy with the idea of some control on spending by particular players. However, I am not happy with the way in which the Government have set about that. It is a matter which the Government should reconsider.

Lord Stoddart of Swindon: This subject is clearly fraught with enormous difficulties. The more I have listened to the argument, the more problems seem to arise, in particular with the route that the Government have chosen.

I agree very much with my noble friend Lord Shore of Stepney when he says that it is completely intolerable that the European Court of Justice should be able to decide to what extent our political parties might be financed; and that the electoral law that we all want--and the Government want--restricting the amount that companies can provide for political parties is to be decided by the European Court of Justice and not our own Parliament. I should have thought that every parliamentarian would want to agree with my noble friend. I am sorry that my noble friend on the Front Bench, and the Government, did not say to the European Court of Justice and the Commission, "This goes too far and we shall not go along with it, whether or not it is against supposed European law".

The question of expenditure in a referendum is fraught with difficulties. In this country, we do not have long-term experience of running referendums.

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Therefore we do not have too much experience to call upon. But it is absolutely certain that to base the amount which can be spent on the basis of political parties cannot be right; nor can the number of votes cast at the last election be the right basis because trends in opinions change within a period of six months, 12 months, three years or five years. So that is not a good basis on which to decide what each political party should spend.

An alternative basis might be to use current opinion polls. Let us consider the current opinion poll on the euro. The last one was taken on 2nd October by MORI. That indicated that 72 per cent of the electorate were against ditching the pound and going into the euro. It would be as fair a system as any for allocating funds to say that the campaign in favour of retaining the pound should have 72 per cent and the other side only 38 per cent of the expenditure. That is clearly nonsensical but no more so than the proposition put forward by the Government in the Bill.

The Government have to consider the issue again. If they do not, I shall vote for the amendment in the name of the noble Lord, Lord Lamont, because we must have an alternative. However, I hope that the Government will reconsider the matter. How they can do so has already been suggested. One can have a limit on the total expenditure. But I do not know how one could impose that limit. I am the chairman of the anti-Maastricht alliance. We have 21 organisations in the alliance and many more outside it. How one will be able to control the expenditure of all those individual organisations plus the contributions of individuals themselves I do not know. We face a very difficult situation.

Let us think back to 1975. I remember 1975 because I represented Swindon in the House of Commons. I took an active part on the "no" side throughout Wiltshire and the South West in that referendum. The Labour Party was in a difficult position. The Labour Party was in favour of withdrawal from what was then the common market. On the other hand, the Labour government took the view that we should remain in. So there was a difference of opinion between the Labour Party on the one hand and the Labour government on the other. How would we sort out that situation?

The position then was even more difficult. To resolve its internal difficulties--those who were in the Labour Party at that time know this perfectly well--the Labour Party said that all party members could opt for whichever side they liked. How does one distribute the amounts of money available to the party under those circumstances? The whole subject is fraught with enormous difficulties. Those of us who fought in the 1975 referendum believe that one of the reasons that we lost the vote was because of the enormous amount of money that was on one side of the argument. That is why we believe that some control is necessary.

I have also to take into account the referendum which took place in Denmark on 28th September 2000. Despite the assistance that some of us sought to give it, I understand that the "no" campaign on the euro was

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outgunned by about 20 kroner to one. Virtually all the press were in favour of the "yes" campaign as were all the political parties. Big business and the trade unions were in favour of the "yes" campaign. And the Danish people voted 53 to 47 per cent against getting rid of the kroner. What do we do under those circumstances? It seems that money does not always count. Nevertheless it counts in people's minds. People must see fairness in a referendum campaign. This Bill does not give us fairness. It does not make clear to ordinary people that the referendum will be fought fairly. That is why I believe that the Government need to have further consultations, perhaps with the Neill committee and all-party consultation, to try to reach a situation where all people can have confidence--in particular, the voters.

5 p.m.

Lord Pearson of Rannoch: I wonder if I could support the remarks of my noble friend Lord Lamont and those of the noble Lords, Lord Shore of Stepney and Lord Stoddart of Swindon, by bringing to your Lordships' attention the position of the United Kingdom Independence Party, which I do not think is represented in your Lordships' House and therefore has no one to speak about its situation.

I am myself a loyal Conservative Back-Bencher, perhaps on the Euro-realist wing of the party. My lack of knowledge of the UK Independence Party is no doubt confirmed by the fact that I cannot remember whether or not it existed at the last general election--I am told that it did, just, but did not win many votes. We did have Sir James Goldsmith's Referendum Party, which has now metamorphosed into the all-party Democracy Movement, and at the time that party won quite a few votes.

The point I wish to put to the Government is that if there were to be a referendum on the euro before the next general election, under the provisions of this Bill the UK Independence Party would get no money at all. It is a political party and would not qualify for funding under Schedule 13, as I read it, and therefore would get absolutely nothing. That surely cannot make sense when we consider that the last test of public opinion on matters European was last year's elections for the European Parliament. The party then actually won 7 per cent of the vote and three seats in the European Parliament; yet the Bill as drafted would give it only up to half a million pounds. That amount would not be in line with what it achieved at that election, the last test of public opinion.

Also, it would not be in line with the latest test of public opinion so far as UKIP is concerned. That occurred on 2nd October, when 46 per cent of those consulted in a MORI poll on whether, if there were to be a referendum tomorrow, they would wish to stay in the European Union or get out of it, said they would want to get out. As there is no one else here to speak on behalf of UKIP, I feel that I might as well do it,

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from the point of view of showing the Government that the Bill as drafted is completely inequitable, at least to that party.

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