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Lord Bassam of Brighton: This has been a long and very thoughtful debate; it has been a curate's egg of a debate, and I have enjoyed it greatly. My job as a Government Minister is to look at all the points that have been made and see whether we can find some light at the end of this inverted telescope--because that seems to be how the debate has gone. It seems to have been largely overshadowed by one issue: that of a possible referendum over the future participation of this country in the euro.

I welcome the fact that we have had the debate, even though it has been contentious and perhaps even a touch controversial. At one point when the noble Lord, Lord Shore of Stepney, referred to "foreign bodies", I began to feel a little queasy; on the other hand, the passion with which the argument was put was quite right.

The Opposition have argued that the arrangements set out in the Bill are unfair because they do not guarantee a level playing field. The charge is that it would be possible for one side in a referendum campaign grossly to outspend the other side, and Amendments Nos. 238, 235L and 235M seek to rectify this perceived unfairness by providing for the commission to specify an overall limit on the aggregate expenditure that may be incurred by all of those campaigning for a particular outcome. The Government freely concede that their proposals would not ensure that each side in a referendum was subject to the same overall limit on expenditure, and there is no pretence that our proposals are intended to create a level playing field in that sense.

The Neill committee concluded, rightly, that any attempt to do so would be, as has already been said, futile and quite possibly wrong. That was stated in paragraph 12.46. To operate such overall expenditure limits would require that all those campaigning for a particular outcome co-ordinate their expenditure and collectively account for that expenditure. Of course, as the noble Lord, Lord Mackay, and others have said, they may not wish to work together and would have to be compelled to do so. The committee concluded that such arrangements, again to quote an expression which the noble Lord, Lord Mackay, borrowed from the report,

I have to report here that the noble Lords, Lord Lamont and Lord Mackay, have not attempted to draw up the sort of amendments that would be inevitably consequential on their Amendments Nos. 238, 235L and 235M.

It is worth exploring just a little further what would be needed to make those amendments effective. The first requirement would be to prohibit anyone from spending money in a campaign, except as part of an umbrella group or other such combination. You

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would have to have an absolute bar on anyone else spending any money. Having prevented anyone campaigning outside an umbrella group, the next step would be to regulate the affairs of that group, perhaps in the form that we have regulations in the Bill for political parties. Some form of constitution would be needed for deciding, among other things, which organisations to admit to membership; how the views of the group were to be presented; how the overall spending limit was to be apportioned to the various constituent organisations and, finally--this is the important part--how to enforce expenditure limits.

In addressing these points the Bill would need to determine whether all the constituent organisations were to be jointly and severally liable for any overspend or whether the treasurer should be answerable for matters over which he or she may have no practical control. To resolve such issues would be difficult in the extreme, if not impossible. As the Neill committee pointed out, we would not be dealing with an established organisation with its own internal rules on which statutory provisions could be grafted. Referendum campaign groups will be formed on an ad hoc basis, sometimes at short notice, for each referendum. Sometimes the composition will vary from case to case, but we would need a set of statutory rules to cover all eventualities. In some cases, this simply would not work. Clearly, there are cases when two organisations will never join the same group or share a platform with each other, even if they hold the same view on a referendum question. I can well remember that from the 1975 referendum campaign on our continued membership of the Common Market. There were members of the Labour Party who would not share a platform with Enoch Powell under any circumstances, even though he was a member of the same "No" campaign and deployed almost identical arguments. During the 1998 referendum in Northern Ireland, the Ulster Unionists and Sinn Fein were not prepared to campaign together.

In the event of a referendum on Britain's membership of the euro, the amendments would require the Conservative Party to form an umbrella group that included not only the Ulster Unionists, but Business for Sterling, the "No" campaign of the noble Lord, Lord Owen, Paul Sykes' Democracy Movement, the UK Independence Party, whatever the Referendum Party is now called, the Communist Party and perhaps even the National Front. I am sure that there are one or two organisations in that list with which the Conservative Party would not want to be associated, but if they were left out of the umbrella group, they would be denied the ability to campaign in a referendum. The question of who is in and who is out cannot easily be answered by the law.

The Bill recognises and encourages the formation of umbrella groups and sets separate expenditure limits for them. The key difference is that there is no obligation on a party or other organisation to join an umbrella group or to campaign as part of it. That would be overly prescriptive. A party or other organisation can stay away from the group and do its own thing.

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The case against an overall expenditure limit for each side in a referendum is overwhelming. However, the Government have not drawn the conclusion that it would be both impossible and wrong in principle to operate any expenditure limits whatsoever. Placing a limit on what any particular individual or organisation may spend will at least make it possible to prevent a wealthy individual or organisation exercising a disproportionate influence over the outcome of a referendum. Several of those arguing against the Government's position have claimed that that is their perspective. Furthermore, the Neill committee had already recommended that referendum campaign organisations should register with the electoral commission.

Lord Mackay of Ardbrecknish: The Minister is now arguing that it would be unfair if a particular organisation or a rich individual could unbalance the playing field by pouring money into one side. Surely that is an argument against the playing field starting off unbalanced, which will be the result of the Bill. If the political parties are lined up, one group will have £9 million and the other group will have £5 million. What is the difference between that imbalance and the imbalance created in what might be described as a free-for-all, when one wealthy individual might fund one side heavily? Such a wealthy individual might spend his money in favour of the euro.

Lord Bassam of Brighton: We are trying to prevent an outrageous arms race. This is the one mechanism that we can design with some certainty behind it that will begin to achieve that. The requirement to register with the electoral commission provides a large part of the control machinery needed for the imposition of expenditure limits.

The Opposition's position is not persuasive. They object to the Government's proposals on the grounds that one side may spend more than another. However, when challenged to put forward an alternative, they are not able to come up with workable proposals.

Lord Mackay of Ardbrecknish: The Minister cannot get away with that. Removing the clauses from the Bill is an alternative. That would remove any attempt to impose spending limits, because they are impossible whatever way we look at the issue. The Minister must address that argument as well.

5.15 p.m.

Lord Bassam of Brighton: That is interesting, because some of the noble Lord's amendments propose spending limits in some form. He cannot have it both ways either. That is the problem in the arguments that we have heard from the Opposition and from others. When challenged to put forward an alternative, they are not able to come up with workable proposals. The noble Lord has challenged me, but he has not addressed the bureaucratic construction that might be necessary to give effect to another part of his solution--whichever solution it happens to be. The Opposition fall back on the argument that if there can

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be no overall expenditure limits, there should be none at all. That would guarantee the unfairness that they see as inherent in the Government's proposals.

Amendments Nos. 236 and 237 would reduce the expenditure limit for a designated campaign organisation from £5 million to £3 million and would subject all political parties with the support of more than 5 per cent of the electorate to the same expenditure limit of £3 million. In the original draft Bill, we proposed a £5 million expenditure limit for any registered political party, irrespective of its electoral support. However, in its comments on the draft Bill, the Neill committee questioned whether it was right that all political parties, irrespective of the number of their Members in the House of Commons, should be subject to the same £5 million limit. In response, the Government revised their proposals and introduced a sliding scale whereby the level of the expenditure cap was related to the level of electoral support enjoyed by that party. Amendment No. 237 would return us to an arrangement closer to that which the Neill committee found unsatisfactory.

I am not sure whether the proposal for a £3 million upper limit on spending by a designated campaign or by a political party is consequential on Amendment No. 238 or whether it reflects a conversion to the view that the proposed limits on referendum expenditure are generally too high. Conservative Central Office originally observed that the £5 million limits for umbrella organisations and political parties set out in the draft Bill seemed "on the low side".

In the absence of any recommendation on that point, it is simply a matter of judgment as to whether £5 million is preferable to £3 million. On balance, perhaps £5 million is a more realistic figure in the context of a nationwide referendum. In the 1975 referendum, Britain in Europe spent around £1.5 million, which equates to around £7.5 million in today's money. Against that background, a £3 million limit seems unnecessarily low.

The four government amendments address minor drafting points. The first two ensure consistency between the offences in Clause 113 and those in Clause 89. The third removes paragraph (1) from Schedule 13 on the ground that the definition contained there is already supplied by Clause 100(1). The fourth amendment provides that that clause applies to a minor party.

The Opposition should make up their mind on the merits of referendum limits. They have made the case for limiting what each side in a referendum may spend. On the face of it, the case has some merits, but it falls down on the practicalities. If we have to reject that option, as I believe that we do, the controls on expenditure set out in the Bill are the next best thing. I urge your Lordships to support them.

The worst possible course would be to do without limits, which would guarantee gross inequality between the two sides. That being the case, I am afraid

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that I must invite your Lordships to oppose the amendments in the names of the noble Lords, Lord Mackay and Lord Lamont, and to support the clauses.

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