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Lord Norton of Louth: A central part of the Minister's argument seems to be that at least there will be a limit on spending by individuals under Schedule 13. What is to stop a very wealthy individual giving several colleagues £500,000 each and encouraging them to register under Clause 100(1)(b)? That would disperse all that money on one side in a referendum campaign.

Lord Mackay of Ardbrecknish: Would it be possible for a citizen of the European Union to spend £10 million on UK adverts to favour one outcome? They would clearly be breaching the £500,000 limit, but how could they be prosecuted if they lived in another member state?

Lord Bassam of Brighton: The issue goes back to some of the arguments made by the noble Lord, Lord Goodhart. In an interesting contribution, he wrestled with all the vexed questions that we had gone through. He wrestled with total limits, limits on a particular party and what those limits should be. He dealt with the impracticality of the umbrella controls, and he said that limits on the parties were arguable. He said that in the end he was not happy with the Government's position. However, he did not offer a practical alternative, just as Members of the party opposite have not offered practical alternatives. I do not believe that a construct which does exactly that has been offered in the debate today. Finally, we need to accept that there must be a degree of good will in any referendum campaign. We have tried to provide a workable limit to, so to speak, the arms race of expenditure in a referendum campaign where there are clearly strong and entrenched views.

Baroness Park of Monmouth: Will the noble Lord give way? Does he agree that somehow either the solution preferred by my noble friend Lord Lamont or that of my noble friend Lord Mackay of Ardbrecknish must be considered, and, more so, that suggested by the noble Lord, Lord Shore? I do not believe that referendums are any good if people do not trust the result. There is a serious danger that if people who compete in a referendum are able to say, "Ah, well, he has £10 million under the counter from such and such a firm; he has this, and he has that", we are making it possible for the whole process to be discredited. We rarely have referendums, and they are usually held on rather important subjects. Therefore, I believe that it is quite essential that that problem should be solved.

Lord Goodhart: Perhaps I may assist the Minister in response to the question raised by the noble Lord, Lord Norton of Louth. I believe that it is fairly obvious that rich men do not give away £500,000 to a dozen different friends who, all by coincidence, choose to spend that money on a particular referendum

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campaign. I do not believe that the courts would have much difficulty in coming to the conclusion that the various so-called beneficiaries of the gifts were in fact acting merely as agents for the original donor in the spending of the money and that therefore the donor was in breach of the rules.

Lord Lamont of Lerwick: I am very disappointed in the Minister's reply. I also believe that he is dealing with this matter in a rather puzzling way. He said that we have given him two options--either this or that--but that we have not put forward a proposition. However, we gave him a choice--

Lord Bassam of Brighton: Does the noble Lord accept that his two propositions act in contradistinction to each other?

Lord Lamont of Lerwick: Completely. I put them forward in that very spirit.

Lord Bassam of Brighton: In that case, which proposition does the noble Lord support?

Lord Lamont of Lerwick: My first choice would be no limit. However, if the noble Lord is not prepared to accept that, I would go for a cap on both sides. I am prepared to go either way. There are three propositions: the Government's approach, no caps, or a cap or umbrella. I believe that it is unfair and unacceptable to have an approach that guarantees, to use his words, inequality between the two sides. He said that, if there were no caps, that guaranteed that there would be inequality. I suppose that that is the case in the sense that one side would spend more than the other, but I do not believe that one can be certain which side that would be. However, under the noble Lord's proposition the political party that will spend more is guaranteed because it is enshrined in the legislation.

I am extremely disappointed in the Minister's reply because it completely flies against what the Home Secretary said at Second Reading:

    "We remain open to argument ... I have asked the Opposition to come forward with [proposals]".--[Official Report, Commons, 10/1/99; col. 39.]

He said that he was open to argument, and that is why I put forward two absolutely separate and completely contrasting propositions. However, the Minister simply makes a cheap point about how they conflict with each other. The propositions were designed to provide alternatives. As is so often the case in politics, we are choosing the least unsatisfactory solution. However, I suggest that what the Minister has put forward is completely indefensible. He says that it is designed to stop an arms race, but one does not normally stop an arms race by saying that one side can have two-thirds more armaments than the other. That is a very odd way to tackle an armaments race.

I am disappointed in what the Minister said. I do not believe that it made sense. He did not explain why it makes sense to have sub-limits if there are no overall limits. The purpose of that was not at all clear. At this

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stage I do not intend to press my amendments to a Division. However, I certainly hope to return to the issue on Report because I believe that the Minister's reply was most unsatisfactory.

Lord Mackay of Ardbrecknish: This has been an interesting debate. It has certainly been interesting to discover from the Minister that he does not understand that choice can sometimes involve two quite opposing matters. He does not understand that. However, we have given him a choice and--

Lord Bassam of Brighton: Perhaps the noble Lord will give way. Simply, the point that I made was that achieving one of those options would create a bureaucratic nightmare of the kind that the noble Lord, Lord Mackay, would probably not envisage in his most wild and outrageous dreams. He and I agree that it is bureaucratic and of course it is cumbersome, but, I argue, necessarily so. As I explained, it is politically impractical to create a construct to control umbrella expenditure and it is impractical to orchestrate. I believe that the alternative of the more severe cap is overly restrictive. In this exercise we have tried to plough a sensible middle course and I believe that that exactly describes our position.

Lord Mackay of Ardbrecknish: The only wild and outrageous dream that I have is when occasionally I believe that I am asleep on the Front Bench listening to the Minister. However, we shall leave that aside.

The real point is that this is a difficult issue, but I believe that the noble Lord, Lord Goodhart, gave a very fair appreciation of it. He reinforced the point made by the Neill committee in relation to umbrella organisations. I believe that probably the argument in that regard is correct: the difficulty of deciding how the organisations would work inside one umbrella and how the money would be divided is probably impossible to resolve.

I was interested to hear the noble Lord, Lord Goodhart, say that it was not clear what answer the Neill committee would have given if it had considered the alternative now put forward by the Government. I find it odd that the Government, or the Labour Party, did not consider putting forward that proposition to the Neill committee for consideration. Perhaps that is a pity. I have no evidence of that other than reading the Neill report and trying to discover how the committee reached that conclusion. However, I suspect that it may have concluded that the Government's alternative was equally as fraught with difficulty. After all, I notice that the Minister did not answer his noble friend Lord Stoddart of Swindon when he referred to the 1975 referendum about which the Labour Party was severely divided.

Let us assume that we hold a referendum on a subject that divides one of our great parties (let us forget the euro for a moment). In the past, one reason for having a referendum was that it provided the easiest way out when a party was divided. Let us assume that we hold a referendum and one of our great parties is severely divided. Who receives the £5 million

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to spend? It is a very good question but the Minister simply did not answer it. He did not answer my question about the rich individual in Paris or London spending £10 million, way in excess of the £0.5 million which would be allowed if he lived in the UK. Who would prosecute him? How would he be prosecuted? Is there any answer to that question?

However, perhaps above all, the Minister said simply that the Bill is not fair; it introduces an inequality, but it is an inequality from the word go. The Minister said that we should guard against the possibility that fund-raising might end up as an inequality. Two wrongs do not make a right and two inequalities do not make an equality. I believe that my proposal would be better. The noble Lord has not really addressed that.

However, to return to the suggestion of the Neill committee, we cannot cap referendum expenditures because they are so different from general election expenditures. The Government's Bill deals with that on the basis of the results of the last general election. However, since then we have had a European election. One could say that that election was more relevant to the question of Europe than was the general election. Therefore, why not fund on the basis of the last available election? Why return to the general election? So many questions arise here, but I believe--

5.30 p.m.

Lord Bassam of Brighton: I thank the noble Lord for giving way. I am beginning to become confused by his argument. The noble Lord raised the example of a rich individual. He probably knows more about rich individuals than I do. However, in raising this argument about inequality, it seems to me that he is losing sight of the fact that if we move back to a position where there are no limits at all, the rich individuals genuinely can come in and attempt to buy a referendum. The noble Lord has not answered that point.

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