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Lord Bassam of Brighton : Before replying to the issues raised by the noble Lord, Lord Mackay, perhaps I may clarify two points which have some bearing on the matter. First, schedule 14 imposes restrictions on the acceptance by a permitted participant of donations from abroad. The referendum campaigning organisations therefore could not accept money from, for example, a wealthy Frenchman.

Secondly, Amendment No. 239 prevents a permitted participant, other than a designated organisation, from accepting a donation from any registered party. Therefore, a Northern Ireland party cannot transfer a foreign donation it receives to a referendum organisation in Great Britain. I believe that that deals with two issues which were raised by Members opposite.

Viscount Astor: I am grateful to the Minister for giving way. The Minister told us that a Northern Ireland party could not use foreign donations to give to a UK party. However, what happens if in a referendum Sinn Fein or any other Northern Ireland party campaigns in the United Kingdom? We know that there is ring-fencing for general elections, but last week the Minister told us that no such rule related to referendums. Therefore, could Sinn Fein, the SDLP or the Ulster Unionists for that matter use foreign donations to campaign in this country during a referendum?

6 p.m.

Lord Bassam of Brighton: The noble Viscount asks the question again, and I shall provide him with a precise answer.

I should like to return to a matter raised by the noble Viscount last week in Committee in the context of Clause 65, which in a sense is the subject of this debate. That clause provides for the categories of permissible donor to be extended, or alternatively for the controls set out in Part IV to be wholly disapplied, in respect of Northern Ireland parties. It has been suggested that

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the Bill does not appear to prevent Northern Ireland parties passing on funds received from a foreign source to referendum campaigns elsewhere in the United Kingdom. The amendment seeks to address that by placing restrictions on the purpose to which any particular donation to a Northern Ireland party is put. As I understand it, the intention is to prevent any foreign funding received by a Northern Ireland party being used to meet referendum expenses either in Northern Ireland or Great Britain.

As the Committee is aware, in the case of political parties the Bill places restrictions on the acceptance of donations rather than the use to which they are put. It would in practice be very difficult to establish that a certain item of political expenditure was financed by any particular donation. Moreover, if an order is in force under Clause 65 which exempts Northern Ireland parties from the controls in Part IV, it is not clear to me why such a party should be able to use any foreign donations on its headquarters or to fight a general election campaign but not to fight a referendum campaign. That is equally true whether the referendum is confined to Northern Ireland or is being held throughout the United Kingdom.

Although I am not persuaded of the case for preventing a Northern Ireland party using the proceeds of a foreign donation to meet its own referendum expenses, I see the need to ensure that other referendum organisations do not use a Northern Ireland party purely as a front to receive foreign funding. But the Bill already contains safeguards in Part II and Schedule 14 which would prevent a Northern Ireland party simply acting as an agent in passing on a donation from a foreign source intended for a referendum campaign group in the first place.

I accept that this is complex, and I ask the Committee to study carefully what I have said. I also accept the integrity and ferocity of the argument and the concern that has been expressed. We must try to live in the real political world. Although it is very difficult to accept some of these positions, we believe that the overall scheme of things works well. Clearly, in the case of Northern Ireland there are certain difficulties. That fact needs to inform all of our debates on this particular issue.

Lord Mackay of Ardbrecknish: We need to study carefully the response of the Minister. On 18th October, the Minister appeared to say that foreign funding of a referendum campaign would not be allowed. Towards the end of his remarks I believe that he moved away from that when he said that Northern Ireland was different. It is odd that in a referendum held in the United Kingdom, of which Northern Ireland is a part, some funding can come from foreign sources. The Minister said:

    "It is right that the ban should extend to the foreign funding of participants in a referendum campaign here".--[Official Report, 18/10/00; col. 1183.]

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I agree entirely with the noble Lord. However, I understood "here" to mean the United Kingdom. That was also the noble Lord's understanding, because a little earlier the Minister said:

    "The Government are ... committed to banning the foreign funding of political parties in the United Kingdom".

Is the Minister now saying that that does not include Northern Ireland and that he should not have referred to the United Kingdom but only to Great Britain? Do I correctly interpret the Minister as suggesting that in a United Kingdom referendum held in Northern Ireland as well as in Great Britain the funding of that part of it conducted in Northern Ireland could come from a foreign source?

Lord Bassam of Brighton: Amendment No. 180 to Clause 65, which has already been debated, prevents a Great Britain party accepting any donation from a Northern Ireland party as long as an order under that clause is in force. That prevents a Great Britain party in the case of a referendum using foreign funding received via a Northern Ireland party. I hope that that answers the point. I shall study carefully what the noble Lord has said. I do not want there to be any confusion over this matter, and I shall use my best endeavours to try to clarify the position.

Lord Mackay of Ardbrecknish: The Minister answers a question that I have not asked. I had understood from his remarks that money which came into Northern Ireland could not cross the Irish Sea for a referendum campaign, any more than it could for a general election campaign. My question is whether in a referendum in the United Kingdom foreign money will be able to pay for that part of the referendum campaign that takes place in Northern Ireland.

Lord Bassam of Brighton: I believe that the answer is "yes". However, I shall check the matter and write to the noble Lord. I see from the indications from the Box that that is the case.

Lord Mackay of Ardbrecknish: I am not surprised, because I did not ask the question without knowing the answer. The answer is "yes", and that is a disgrace. We shall return to this matter. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 234YHC not moved.]

Clause 109 agreed to.

Clause 110 [Restriction on making claims in respect of referendum expenses]:

Lord Bassam of Brighton moved Amendments Nos. 234YJ to 234YN:

    Page 69, line 31, after ("participant") insert ("during a referendum period").

    Page 69, leave out lines 35 and 36 and insert ("not later than 21 days after the end of the referendum period").

    Page 69, line 37, leave out from ("paid") to end of line 38 and insert ("not later than 42 days after the end of the referendum period").

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    Page 70, line 11, at end insert--

("( ) Subsection (2) is without prejudice to any rights of a creditor of a permitted participant to obtain payment before the end of the period allowed under that subsection.").

    Page 70, line 17, at end insert ("; and

( ) any reference to the treasurer or deputy treasurer of the registered party were a reference to the responsible person in relation to the permitted participant.").

On Question, amendments agreed to.

Clause 110, as amended, agreed to.

Clause 111 [Disputed claims]:

Lord Bassam of Brighton moved Amendments Nos. 234YP to 234YU:

    Page 70, line 20, after ("participant") insert ("as mentioned in section 110(1)").

    Page 70, line 24, leave out ("section 110(1)") and insert ("that provision").

    Page 70, line 33, leave out subsection (3).

    Page 70, line 37, leave out ("Subsections (4) to (7) of section 72") and insert ("For the purposes of this section--

(a) subsections (4) and (5) of section 110").

    Page 70, line 40, after ("claim") insert ("(whether it is disputed or otherwise) which is").

    Page 70, line 40, leave out (" 72(1)") and insert (" 110(1); and

(b) subsections (6) and (7) of section 72 shall apply as if any reference to subsection (4) of that section were a reference to section 110(4) as applied by paragraph (a) above.").

On Question, amendments agreed to.

Clause 111, as amended, agreed to.

Clause 112 [General restriction on referendum expenses]:

Lord Lamont of Lerwick moved Amendment No. 234YV:

    Page 70, line 42, at beginning insert ("Subject to subsection (1A),").

The noble Lord said: I am aware that the Committee is anxious to make progress and I shall speak briefly to the amendments in this group. These are probing amendments which are designed to elicit a response from the Government about how the controls on the financing of propaganda in a referendum on the euro would apply to the institutions of the EU. These two amendments were part of a wider group, the main part of which was debated a couple of weeks ago. I missed that debate. I apologise to the Minister for any discourtesy in not being here on that occasion. None the less, I should be grateful to the noble Lord for some kind of statement about how far the EU, through its institutions and public relations operations, will be subject to the various caps that the Committee has debated.

A large number of the amendments debated this afternoon have been about foreign funding in relation to companies, political parties and referendums in Northern Ireland. Much of the same concern ought also to apply to any referendum on the single currency which is held in this country. It should be for the people and institutions of this country to participate in that. Mr Prodi was very wise to say that the European Union intended to keep out of the Danish referendum, notwithstanding that the result did not go the way that

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he wanted. I believe that any attempt by the EU to intervene would be counter-productive, but it would be helpful to have a statement from the Minister on this matter.

A great deal of money is being spent at the moment by institutions of the EU. For example, organisations like the European Movement were specifically set up to receive funds from the Commission. In the UK there are 24 European information centres funded by the EU which put out views on the single currency. How will this be affected by the various caps during the period of the referendums?

The other day I came across a Commission publication called A Glossary of Euro-Sceptic Beliefs which had a large number of rather contentious pro-European statements. The most amusing of them was a denial that Brussels financed any propaganda in Britain. It did not seem to see the irony of having a publication that denied that there were any publications.

Amendments Nos. 234YV and 234YW deal with Clause 112. That clause makes it an offence for a person to incur expenditure in excess of £10,000 unless those people are permitted participants. The purpose of the amendment is to ensure that no expense can be incurred by or on behalf of any institution of the EU.

Amendment No. 242M deals with Clause 120 which prohibits the Government of the day or any local authority or any other publicly-funded body displaying promotional or distributing promotional material 28 days prior to the poll. I wish to have an assurance that that will apply to the institutions of the EU in this country. These are modest amendments. They were part of a wider group in which larger points were made. I should appreciate the Minister's response to them.

6.15 p.m.

Lord Bassam of Brighton: I have no doubt that the noble Lord tabled the amendments with an eye to a future referendum on joining a single currency. But it is worth reminding the noble Lord that we are talking here of a Bill outlining a scheme for the holding of a referendum on perhaps a multitude of things. The purpose of this part is to put in place generic arrangements for the conduct of any national or regional referendums. These arrangements may be used for a referendum on British membership of the single currency. But equally they could be used for a referendum on proportional representation, on the introduction of elected regional government in England or on any other important issues of the day.

Given that the purpose of the Bill is to establish general rules for all referendums, we do not want to add extraneous provisions which are designed with one referendum, and one referendum only, in mind. If a referendum on a particular issue warrants special rules, they can be provided for in separate legislation. That will be necessary in any event to ensure that that referendum takes place.

I am not persuaded that the noble Lord's amendments add anything to the existing provisions of the Bill. As drafted, Clause 112 provides that an

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individual or organisation cannot incur referendum expenses in excess of £10,000 unless they are a permitted participant. Amendments Nos. 234YV and 234YW are intended additionally to prohibit the incurring of any referendum expenses by institutions of the EU during the referendum period. I say "intended" because as drafted the apparent effect of the amendment would be to prohibit any expenditure whatever by an institution of the EU during a referendum period. No doubt the noble Lord has ambitions for his amendments, but I am not quite sure that that was the real extent of his ambition. I know the noble Lord has a reputation for singing in the bathroom and perhaps generating a lot of atmosphere, but I am not sure whether he was trying to achieve that in the amendments. Perhaps the noble Lord can disabuse me of that.

If the noble Lord looks at the definition of a "permitted participant" in Clause 100, he will see that a permitted participant must be either a registered party, an individual, a company, or an unincorporated association. The European Commission or Parliament is none of those things. The amendment would therefore have no practical effect other than to prevent an institution of the EU spending up to the lower limit of £10,000. I am not persuaded that there is a case for singling out the institutions of the EU for such a marginal tightening of the scheme. As drafted, that is what its effect would be.

Amendment No. 242M would apply the restrictions on the publication of promotional material set out in Clause 120 of the Bill to European Union institutions. The effect would be to prevent the European Commission from publishing promotional material about the euro in the 28 days before the date of the poll. I assume this amendment is an alternative to Amendments Nos. 234YV and 234YW since a restriction of that kind would be unnecessary if the institutions of the EU were unable to incur referendum expenses. Again the amendment seems to miss the target. If, as the noble Lord has made clear, his objective is to prevent any involvement by the European Commission in a referendum on the euro, why place restrictions in its way that apply only in the 28 days prior to the date of the poll?

I am well aware that this debate is driven by acute sensitivities about the involvement of the institutions of the EU in the making of any decision to join the euro. The reality is that the decision to join the euro is a matter for the British people and the British people alone. My view and the Government's view is that it would be entirely counter-productive for the commission to become embroiled in a referendum campaign on this issue. That is probably something on which we could all agree. This simple truth will be far more powerful than any single provision that could be made in the Bill which would, in any event, as I see these amendments today, be of doubtful legal value. If the noble Lord, Lord Lamont, remains to be persuaded of that fact he has only to look at the example of the recent Danish referendum to see that his fears of a "Yes" campaign being funded from Brussels are entirely misplaced.

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There is a need for some realism about the intentions of the Commission. That needs to go hand in hand with some realism about what such a prohibition could achieve. An explicit ban on referendum expenditure or the publication of referendum material by the institutions of the EU would beg the question how such a ban could be enforced. The territorial application of the Bill is confined to the United Kingdom. It could not bite upon expenditure or the publication of material on the Continent. Given the immunities for which the protocol on the privileges and immunities of the European Communities provide, the jurisdiction of our courts in relation to a breach of the provisions of this part by an institution of the Community would be extremely doubtful.

We believe that these amendments are unnecessary. They are not drafted precisely enough. I think--no doubt Members of the Committee will share this view--that any intervention in a UK referendum on an issue as sensitive as the euro would be wholly insensitive and extremely unwise. I hope that the noble Lord will withdraw his amendment.

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