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Lord Bach moved Amendment No. 129:

("( ) Any period specified in an order under subsection (1)(a) or (b) must end not later than four years after the date on which the order comes into force, but this is without prejudice to the making (on one or more occasions) of a further such order which--
(a) extends that period for a period ending not later than four years after the date on which the further order comes into force, or
(b) specifies a fresh such period.").

On Question, amendment agreed to.

[Amendments Nos. 130 and 131 not moved.]

Lord Mackay of Ardbrecknish moved Amendment No. 132:

    Page 51, line 8, at end insert--

("( ) An order under this section shall not be made so as to enable any Northern Ireland party to receive donations during a referendum period (as defined in section 100) from any source other than a permissible donor as specified in section 52(2).").

The noble Lord said: My Lords, in moving Amendment No. 132 I should like to speak also to Amendment No. 187. I apologise in advance for the complexity of the issue which I tried to resolve in correspondence with the Minister rather than bring it before your Lordships. I have failed utterly in my attempt to get the issue addressed. The Government's proposed exemption order to be made next year under Clause 68 will allow the foreign funding of referendums in Northern Ireland. I believe that eventually that was admitted by the Minister in Committee. He told my noble friend Lord Astor:

    "I like to be straight with your Lordships' House. The information I have from officials is that Northern Ireland parties can use the fruits of money raised abroad in a UK referendum. That may well present difficulties. Obviously we need to keep the matter closely under review and I shall give it further consideration".--[Official Report, 18/10/00; col. 1038.]

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It is strange that the Minister talked about this presenting difficulties on 18th October, and yet on 24th October he said that he was,

    "not persuaded of the case for preventing a Northern Ireland party using the proceeds of a foreign donation to meet its own referendum expenses".--[Official Report, 24/10/00; col. 191.]

So in the course of a week's reflection the Minister decided by 24th October that the difficulties of 18th October no longer existed.

I raised two distinct issues in Committee. I have not had answers. Therefore, I have to raise them again. The first is that any Northern Ireland political party could benefit from the exemption on foreign funding, take foreign funding from United States of America or Australia or wherever and could then use that money to participate and campaign in Great Britain as a permitted participant in a UK-wide referendum. I argued that front parties could be set up to exploit this provision and channel foreign funding into Great Britain. That is a major loophole in the supposed ban on foreign funding. It is not the same as the loophole we discussed earlier, which is a loophole in the funding of political parties for their campaigning for elections in Northern Ireland.

Secondly, the exemption order would allow foreign funding to flow into Northern Ireland to affect the result of a referendum campaign on the constitutional status of Northern Ireland itself. That is far more significant politically in the current climate.

The Minister entirely refuted my first point in Committee. He argued that the safeguards in Schedule 15, as it is now, would prevent the situation occurring. I have since written to the noble Lord twice on the matter, pointing out the defects in what he has said. He has replied to my first letter. I should be happy to provide any noble Lord with a copy of the correspondence. But his arguments on this point in Committee were factually incorrect. I want to explain why.

In Committee the noble Lord said:

    "Schedule 14 imposes restrictions on the acceptance by a permitted participant of donations from abroad ... 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".--[Official Report, 24/10/00; col. 190.]

Later he said that there were,

    "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".--[Official Report, 24/10/00; col. 191.]

The schedule cited by the noble Lord provides that no donation may be accepted by a permitted participant from an impermissible donor. However, paragraph 1(1) makes clear that that schedule applies only to,

    "permitted participants that either are not registered parties or are minor parties".

Where the permitted participant is a registered party, as any front party would be, then the donation regime in Part IV would still apply, and, in the case of

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Northern Ireland parties registered as permitted participants, so would any exemption order under Clause 68.

The noble Lord also prayed in aid the Government's Amendment No. 239 in Committee, now paragraph 1(6) of the Schedule, which prevents the transfer of money to permitted participants from registered parties. This argument also fails to address my specific points.

A front Northern Ireland party would not need to transfer money to another party in Great Britain in order to campaign as a permitted participant on Great Britain in a UK-wide referendum. In relation to UK-wide referendums, the Bill makes no distinction between permitted participants in Northern Ireland and those in the rest of the UK. No transfer of funds would be necessary, as the front party, once registered as a permitted participant, could use any foreign donations to campaign both in Northern Ireland and in Great Britain. The Minister's argument was therefore totally irrelevant.

In my letter I gave an example scenario to the Minister: if there were ever to be a UK-wide referendum at some time, say on the abolition of the monarchy, there would be nothing to stop English, Scottish or Welsh anti-monarchists from registering a Scrap the Monarchy Party in Northern Ireland. That party would then benefit from any Clause 68 exemption order and be allowed to take funds from a foreign donor, perhaps from the anti-monarchy movement in Australia. Having registered with the electoral commission as a permitted participant in the UK-wide referendum, it could use that foreign funding to campaign anywhere in the UK using that foreign cash. There is nothing in the Bill to stop that.

I sent my first letter on 25th October. The Minister replied on the 14th November. I think I had to prompt him. By this time he had changed his tune. With characteristic understatement he said:

    "I welcome the opportunity to provide a more complete answer to the points which you put to me". He then wrote:

    "As you suggest, the Bill would not prevent a Northern Ireland party campaigning in its own right in a United Kingdom-wide referendum ... It is quite possible that funds received from overseas while an order under Clause 68 was in force might be used to meet referendum expenses incurred by a Northern Ireland party ... I accept that this means that for as long as an order is in force under Clause 68 a ban on foreign funding in relation to referendum campaigns would not be wholly complete. There does exist the possibility that an organisation wishing to campaign in a United Kingdom referendum might seek to circumvent the restrictions on the acceptance of foreign donations by registering as a Northern Ireland party. The requirements of Part II do not erect a definite barrier against this happening".

I shall be most interested to hear what the Minister says today. On 24th October he said that he saw,

    "the need to ensure that other referendum organisations do not use a Northern Ireland party purely as a front to receive foreign funding".--[Official Report, 24/10/00; col.191.]

That is precisely what the Bill does not ensure at the moment. There is no "definite barrier", to use the noble Lord's own words in his letter. We can be certain that this loophole will be taken advantage of if it is not

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plugged. The Minister recognised this but no amendments have been tabled. Therefore, I hope that he will accept my amendments that plug the loophole.

I have outlined--as the noble Lord has admitted in writing--that the Minister's arguments in Committee were plainly wrong. What worries me is that the Minister and officials seemed unaware of the true position on 23rd October. Surely they understood the implications of the way the Bill was worded.

On the second issue--the foreign funding of a referendum in Northern Ireland itself--the Minister admitted in Committee that the Bill allowed Northern Ireland parties to use foreign money in referendums. It took repeated questioning from my noble friend, Lord Astor, to prise this out of him on 18th October. He then said that this presented difficulties. This state of affairs would clearly benefit the republican movement and especially Sinn Fein/IRA. They will be able to use the foreign money they get from North America--and continue to get--to influence the results of any referendum on the future of Northern Ireland. The Minister admits that that is what is in the Bill. Do the Government consciously intend that to be in the Bill or is it just a by-product of poor thinking?

I asked that question in my letter of 25th October, but the Minister failed to answer in his reply of 14th November. I will be most interested to hear his answer tonight. In his letter the Minister implied that foreign funding could not skew any such referendum result because of the low spending limits in Northern Ireland. I should point out that this entirely depends on the ability of the republican movement to raise funds inside the Province. If it cannot raise up to the limit, then foreign funding will come into play. It will make a difference. Surely, there is a point of principle here about the funding of referendums. It is difficult not to avoid seeing this as yet another concession to a republican movement heaped on the other concessions at which we have been looking in the past few days.

My amendments try to address some of these issues. They reflect the points made repeatedly by the Minister that we cannot regulate the uses to which a particular donation is put. But they do attempt to stop Northern Ireland parties accepting foreign money during the actual period of a referendum campaign. They are not fully watertight but they do meet the Minister's concerns and certainly make for a better Bill. I hope that he can accept at least one of them.

I hope the Minister will comment on what is a truly bizarre anomaly which I have raised with him twice in correspondence but on which he has not commented. Is it not the case that any non-partisan political organisation set up specifically to campaign in a referendum in Northern Ireland would be banned from accepting foreign donations whereas registered Northern Ireland political parties wishing to campaign in the same referendum would still benefit from any exemption order under Clause 68 and be able to accept and use foreign donations? Is that not totally inconsistent? Is it fair? What are the Government going to do about it?

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I am sorry that I have gone on for while, but these are complicated issues where one has to relate one part of the Bill to another and also to correspondence which I have had with the Minister which, I appreciate, other noble Lords have not had the chance to see.

The issues go to the heart of the political process in Northern Ireland. As your Lordships know, I am not happy about the current position whereby it will still be possible to fund political parties in Northern Ireland by foreign donations. I am much less happy, if that is possible, at the thought that the foreign money might help to fund referendums in Northern Ireland. My unhappiness increases even more when I realise that the same foreign money could be used to fund referendum campaigns across the whole of the United Kingdom. If that is not a coach and horses, I am sorry to say that the Minister would not recognise a coach and horses if it ran over him on the road to Brighton this evening. I beg to move.

10.30 p.m.

Lord Bassam of Brighton: My Lords, I pay tribute to the noble Lord for his diligence and wit in pursuing these matters. The noble Lord may not like what I am about to say but I shall certainly study again the paper flow for inconsistencies on my part. If they occurred, they were certainly not intended. Perhaps it is not always the case that Ministers are entirely seamless at the Dispatch Box in the quality of their arguments and ripostes.

We return to the vexed question of the exemptions proposed for Northern Ireland parties. The amendments are concerned with the impact of a Clause 68 order on a referendum campaign. I should like to make one point clear from the start. Any exemption from the controls on donations in Part IV in respect of Northern Ireland parties has to apply across the board. We are not saying--indeed, the Neill committee did not say it--that Northern Ireland parties should be able to accept foreign donations only to help meet the costs of running their headquarters or to meet election campaign expenditure. An exemption from the ban on foreign funding is an exemption for all purposes, including for the purpose of meeting referendum expenses.

To, I suppose, characterise his annoyance and exasperation, the noble Lord is rather making the case that he has latterly discovered this and that it has become something of a revelation. But I think it was always there. I apologise to the noble Lord if it was not made clear on our part or if it was not plain at the outset many months ago of the debates on the Bill. There was no conscious move by the Government to obscure matters or to hide anything. We thought that the situation was plainly understood. Much as the noble Lord likes to construct conspiracy around all of these matters, I can say to the suggestion that the Government are in some way or other seeking to secure aid for the republican cause that that is not the case. That is not the object of our policy in this regard.

I fully accept that the situation as it stands will mean that a Northern Ireland party would be able to use foreign donations in any future referendum on the

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constitutional status of Northern Ireland or, for that matter, in any UK-wide referendum; for example, perhaps even on the euro. Another consequence of a Clause 68 order which I do not seek to hide is that a Northern Ireland party could use foreign funds in a referendum but any other permitted participant could not. I do not pretend that the position is ideal. I have never argued that that is the case--far from it. Exactly the same set of circumstances will arise in relation to an election campaign. Consequently, the fact that the ban on foreign funding in relation to referendum campaigns would not be complete is no more or no less a cause for regret. But these are consequences with which we shall have to learn to live. We do not see any other way of making the system work, particularly for as long as the special provisions are necessary.

The noble Lord is perfectly entitled to his view that there should be no special provisions for Northern Ireland. He has made that case very ably. But I put it to him that if the opposite view prevails there is no basis for these two amendments. I suppose that, so far as concerns Northern Ireland political parties, we are left very much with the status quo; namely, a system of self regulation and regulation by exposure. That is the kind of regulation which on occasion the noble Lord, Lord Norton of Louth, has proposed would be best used across the United Kingdom. I fully recognise that the situation is less than perfect and that the noble Lord is entitled to make his case. But we do not believe that there is another way of dealing with this, nor do we believe that it would work in the way that the noble Lord has suggested--either on the issue of referendums or with certain controls on political parties.

As regards the future for Northern Ireland, it is essential that we keep under careful review all these matters, but I do not believe that we can realistically do more in the current set of circumstances.

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