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As though to prove the shared paternity of the policy, the Government have been able to build on the Conservative Government’s initiative for the public/private financing of academies and, indeed, for such financing in many other areas of public-service provision. Be that as it may, the latest step along the way has been the enactment of the most recent Education and Inspections Bill. This process has now enabled the present Government to offer schools a wider opportunity for far greater independence by opting for foundation or trust status or, indeed, by working in greater co-operation with more successful local schools, including those in the independent sector.

This kind of partnership with the independent sector has been further encouraged—that may be slightly too kind a word—by the Charities Bill, which has toughened the public benefit test for charitable status recognition. Two particular benefits, which I applaud, arise from this process. First, some looked-after children—children in care—are to have the possibility of places at independent boarding schools, where they are likely to gain far better educational opportunities and results than in their present position. Moreover, this improvement can and will be achieved at considerably less cost to the taxpayer than the huge weekly cost of keeping children in care. Secondly, the benefit of this process can be compactly expressed by pointing out that the whole middle way

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philosophy has enabled the Government to escape from their self-imposed straitjacket of commitment to universal comprehensive education.

There is, of course, a sharp distinction to be drawn between the comparative gradualism of that approach and the more dramatic, and, I have to say, more destructive prospect that is foreshadowed in the deceptively euphemistic language of the gracious Speech for the Probation Service:

Those gentle words cannot, and do not, disguise the declared intention of the Government to implement in full the recommendations of the report, Managing Offenders, Reducing Crime, which was produced almost three years ago exactly by the noble Lord, Lord Carter of Coles. It might have been interesting to have heard from that noble Lord today. Indeed, I rather hoped that we might have been able to do so, not least because he appears to be behind many government reforms. Anyway, I am glad to be able to endorse the thrust of one half of his recommendations—the half that deals with the crying need for continuity, cohesion and co-operation in the management and treatment of offenders throughout their sentence. Much of that changed pattern is, I am glad to say, beginning to be implemented. However, I have the greatest possible reservations about the other half—the structural and organisational proposals, not least the near instant imposition almost throughout our penal system of the concept of contestability. It is called privatisation by some, and competition by others, but contestability is the word that the noble Lord uses.

The organisational feature that worries me most is what I call giantism—the up-rooting, almost across the board, of existing structures, when an established pattern of partnerships has so far been working well, and their replacement by a centralised, monolithic, monochrome single structure. One example of giantism worried me greatly, and still does: the structure of Ofcom, an organisation required to take over the regulation of an entire sector, including technical, economic and, in theory at least, content regulation. Content concerns remain, as I expected, pretty invisible in the work of Ofcom.

The most recent example of the unwisdom of giantism has been demonstrated by this House and accepted by the present Home Secretary. It was agreed that the inclusion of the prisons inspectorate in the proposed new super-inspectorate was a giant step too far. Against that background, let me return to what many people see as the principal shortcomings of the Carter proposals for offender management, so swiftly endorsed—and re-endorsed, incidentally—by a sequence of no fewer than three Home Secretaries in two years, none of whom is exactly famous for his patience or caution. Most of the disadvantages have already been clearly and well spelt out by representations from NAPO and the Probation Boards’ Association.

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In summary, they point out that the proposals involve the root-and-branch upheaval of a system which has evolved from practice and experience over many years, and all this at a time when two features are common ground, endorsed and agreed by the Home Office itself. First, it is accepted that they come at a time when our correctional services are under intense and mounting pressure. Secondly, it is equally accepted that they have been meeting the challenge with increasing success. The system, in other words, is working hard and working well. How can it make sense at such a time to be spending time and resources—yet again less than three years after the previous reshuffle—on changing the structures within which probation officers work? One shudders to think of the sums that must have been spent on consultants alone. There are many other far more important causes which are crying out for attention and on which those resources could be far better spent, and we have heard about a number of them from the noble Baroness, Lady Thornton, and the noble Lord, Lord Dholakia. They referred to, among others, the need to reduce reoffending, prison overcrowding, inadequate education opportunities, and mental health and drug treatment facilities.

I have said that the penal system, in the face of mounting challenges, is working. It is worth reminding ourselves of why that is still the case. I have, I think, at least some insight into the answer to that question from my own experience as a one-time remand home governor, parole board member and Inner London Juvenile Court chairman over many years. One feature of that life which I found invaluable was the linkage that the statutory structure provided between magistrates, judges, local authority representatives, voluntary organisations and, of course, probation officers. I know, and indeed NAPO tells us so, that probation officers themselves valued and benefited enormously from those local links. So, too, claims the noble Baroness, Lady Scotland, in her letter of 8 November:

How do the Government propose to set about building on those local roots? Quite simply, by pulling them up. Probation boards are to be replaced by probation trusts in which no longer will there be a statutory place for judges, local magistrates or local authority representatives. It will be the Secretary of State rather than the probation boards or trusts who will have statutory responsibility for offender supervision through the agency of regional managers, themselves appointed by the Secretary of State. Once again, I look at the letter from the noble Baroness where she says that probation trusts will suffer,

I am afraid I have to say: what nonsense, for they will be the direct agents of the centre with all their local roots cut off.

We have heard today that Parliament will soon be debating the Offender Management Bill, so I close by urging the Government—in particular the noble Baroness, Lady Scotland, who we know has huge influence in this area and commands great respect in

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your Lordships’ House—to think again about all this, as they did, to everyone’s relief, about the prisons inspectorate. Rather than destroying agencies and individuals who have served us well, set them free from yet another upheaval and enable them to go on improving their own performance, as they have done so well over recent years.

3.35 pm

Lord Ashcroft: My Lords, I declare an interest in the subject about which I have chosen to speak because for more than 20 years I have been personally, perhaps intimately, involved with it; namely, the funding of political parties.

I am not a professional politician and perhaps that is why I find the whole debate about the funding of parties depressing. I cannot discern any enthusiasm for the rebuilding of political involvement and engagement in Britain. I observe no passion to encourage the young to take an interest in politics. Instead, there appears to be a wish merely to tighten the existing rule on donations and then burden the taxpayer.

The funding of political parties is a big subject—big because it is important and big because it is built from quite separate components. What I am about to say does not address each and every one of those components, but I will address a couple of the elements which I consider to be among the most important.

Let me address the cap on donations and the legal definition of a permissible donor to political parties. We now have a structure for donations which is both pointless and counter-productive, and the debate in respect of which Sir Hayden Phillips is to be the catalyst must take place soon and it must be addressed robustly. If it is not, we will soon hear once again the nonsense which is the convenient refuge for those incapable of logical thought and common sense. We will hear once more the suggestion that there is no alternative and that we should instead move to the state funding of politics. This must be resisted at all costs.

My opposition to substantial state funding does not mean, however, that I take the view that political parties should forever be funded largely by a handful of donors, whether they be individuals or trade unions—I do not. Political parties should strive to broaden their donor base and a sign of failure is a dependence on a few big donors. Political parties must then bear the consequent but inevitable criticisms. It seems to me that those arguing in favour of state funding have been driven to this position by a combination of defeatism about the difficulties of funding a modern political party and dismay at the attitude of the media to anyone who has had the courage to make a major political donation.

The dead hand of the state is no answer; it is entirely unsuited to act as the paymaster of politics. State funding will ossify our parties. The need constantly to refresh support through the financial and membership base is the best possible stimulus to

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the vitality of any party. How else can one hope for efficiency in one’s operations and accountability to one’s supporters?

Once the requirement to raise funds disappears, so will the need to nurture the membership base and to embrace new ideas and new people. That base will inevitably decline, perhaps terminally, leaving behind it a self-perpetuating oligarchy of career politicians, answerable only to themselves and the National Audit Office. Heaven help us all.

We will, of course, have time to debate these points when any Bill to amend the current legislation reaches this House. I would like to consider some of the events that have elevated this subject towards the top of the political agenda. The current loans for peerages debacle is only the current portion of that history.

It could be argued that an early plan of new Labour was that the Tories could be weakened financially. New rules were implemented which seemed intended to cut off donations to the Conservatives. The need was introduced for prior shareholder approval before public companies could donate; so-called foreign donations were banned; and disclosure became compulsory. All of this was coincidentally eroding the traditional core of giving to the Conservative Party. That is exactly what happened. Life became much more difficult for the Tory fundraisers.

The weakness, however, for the Government in their scheme was that rules that hit the Tories also proved to be profoundly damaging to their party’s fund-raising efforts. And so, faced with new, if largely self-imposed, difficulties, the Government now seem to be signalling that they will allow political parties to poke their little fingers further into the public purse. These bleatings must be resisted.

The Conservatives themselves are not without blame. We should have had the courage to resist many of the barmy restrictions on political giving that were introduced following the Neill report. As a party, we were afraid to be seen as standing out against legislation which was presented to the public as part of the battle against sleaze. That was an error. Although the new legislation brought a welcome approach to transparency, it also introduced a ragbag of anomalies and contradictions which are patently absurd, yet which no politician felt able to challenge and which Sir Hayden Phillips does not address.

As is well known, the main prerequisite for permissible giving to a political party is, in the case of an individual, that he or she is registered or entitled to register to vote in the UK and in the case of a company, that it is incorporated in the EU and does business in the UK—whatever that means, and I suspect it will be tested soon at taxpayers’ expense. This means that Canadians who live in Britain are able to donate by virtue of their Commonwealth citizenship. US citizens, however, cannot. As EU citizens living in the UK, Swedes can but Norwegians cannot. Greeks can but Turks cannot. Slovenians can, but Croatians cannot. Even the Swiss, surrounded on all sides by the EU, cannot. A businessman from Mozambique, however, as a member of the

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Commonwealth if residing in Britain can, yet a Briton posted abroad for over 15 years by his UK employer, even if he intends to retire to the UK, cannot unless he is a diplomat for whom, not surprisingly, an exception is made.

There are more anomalies. Citizens of Gibraltar, whatever their ethnic or cultural background, all get lumped, willy-nilly, into the UK’s south-west region for the purposes of European elections. A special exemption for these people makes them permissible donors to UK political parties for the four months preceding a European election. But there are no restrictions on those parties as to the use of, or the timing of the use of, funds received from Gibraltarians, whoever they might be. Yet British citizens from the Channel Islands never have such a window of opportunity.

Northern Ireland’s political parties are exempted entirely, meaning that Sinn Fein, for example, is free to continue to receive moneys raised by NORAID in the United States without restriction.

At the corporate level, a British public company has to have shareholder approval to be able to donate, but a company from elsewhere in the EU which—to use that euphemistic phrase—does business in the UK does not. And what about the 100 per cent foreign-owned but UK-incorporated holding company which has only foreign directors, none of whom has ever been to Britain, let alone speaks English and because it is a holding company is therefore deemed to be doing business in the UK? What about those guys? No problem—it is perfectly permissible.

It is even possible to be British, tax resident and domiciled in the UK, yet unable to donate to a political party as under certain, but unusual, conditions, it is not possible to get on to the electoral register if someone lives in Britain for fewer than six months of the year. On the other hand, a Member of Parliament may have a consultancy with any foreign person, company or Government, yet their party cannot receive donations from the same source. Clearly they have confidence in their own judgment but doubt that of their party bosses. That is an interesting thought.

A brief, tangential thought from the other end of the spectrum of political funding serves to reinforce, if needed, my argument on the illogicality of the current rules and to make the point that concern could just as easily be expressed among the minnows as the giants. Donations which in any one year fall below £200 are not governed by the rules on permissibility and need not be disclosed. Two hundred pounds may be a comparatively small donation but it is well above the membership subscription of our major parties. This means that highly unsuitable, inappropriate and generally not permissible “foreigners” can become members of any one of our parties, perfectly permissibly, and vote upon important matters such as, for instance, the election of a new leader of a political party. The current rules are clearly nonsense. There has to be a better way; I hope that there is.

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In our desire to draw a line between Brits and foreigners, in the misguided belief that foreign money is bad and UK money is good, we have devised a scheme which is patently absurd and achieves no logical purpose. We should dump restrictive regulations and replace them with requirements only of openness and transparency. We should instead allow political parties to accept financial support, cash benefits in kind and credit from whomever they chose and without a cap. We should require them only to make public the identity of the donor and full details of the donation. We should also, unlike the current reporting timetable, require prompt notification, especially of bigger donations, of within, say, seven days.

Political parties would then have to make decisions based not on the legal definition of permissibility but on the common sense interpretation of what would be considered acceptable to those whom they expect to vote them into office as Members of Parliament currently have to do with regard to their sources of income. Columbian drugs barons, triads, porn kings and the mob would, I hope, be considered unacceptable donors or benefactors, but if party treasurers and Members of Parliament decided otherwise let us allow the media, their own supporters and the public to judge. They would be speedier, more effective and much more telling arbiters than the courts.

In future, therefore, we should allow parties to take money from any quarter, the only requirement being that they should be entirely open about all support above a certain level. That would place the onus on parties to act reasonably and to exercise sound judgment. It would place an equal duty on the media to report donations responsibly; but in the end it would be down to Mr and Mrs Joe Public to judge. We should trust them—they usually get it right.

3.46 pm

Lord Goodhart: My Lords, the noble Lord, Lord Ashcroft, made a very strong case for the irrationality of our present laws. It is quite clear, following on from his remarks, that what we need now is a private equity takeover of all the political parties.

I am extremely pleased that earlier today I was appointed by your Lordships' House to the chair of the Select Committee on Delegated Powers and Regulatory Reform. It is an honour in that post to succeed my very distinguished predecessors, the late and very much lamented Lord Alexander of Weedon, and the noble Lord, Lord Dahrendorf. The chairmanship means that I must leave the Front Bench but it does not debar me from speaking from the Back Benches on political issues. I intend to do so from time to time, although I shall be speaking for myself and not on behalf of my party. I am glad to say that most of the time if not always our opinions coincide. I shall of course not speak on matters that come within the scope of the Select Committee’s work, except on behalf of and at the request of the committee.

I agree with the noble Lord, Lord Hunt of Wirral, about the importance of protecting the independence

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of English lawyers. I shall not say anything more on that subject, because the Legal Services Bill will come before your Lordships' House for Second Reading in a very short time, which will give an opportunity for full debate.

I shall speak on two statements in the gracious Speech which caused me concern. The first statement is:

That statement worries me. I believe that what we should put at the heart of the system are not victims as a separate class but the public as a whole. Almost all of us suffer from crime. Anyone feeling a frisson of fear of terrorism when boarding the Tube or an aircraft suffers in a sense from crime. Even those of us who have to pay premiums for insuring our property against theft suffer in a sense from crime. But I do not think that we can be called victims for those reasons, and I doubt whether that is what the Government mean. I suspect that the Government intend to mean the victims of actual criminal offences. I shall be very interested to hear from the Minister whether she thinks too that that is the Government’s view.

So what does putting the victim at the heart of the system mean? If it means taking steps such as ensuring that victims or other prosecution witnesses are segregated from defendants and defence witnesses in court buildings or explaining court procedures to witnesses or victims to reduce the nervous tension of giving evidence, I think it is beneficial, and many steps of that kind have already been taken. What is not acceptable is to override the rights of an accused person to a fair trial. Someone who is prosecuted for a crime that he did not commit is a victim, even if he is acquitted at the trial, and much more so if he is in fact convicted. Which is worse? To be burgled or to be sent to prison for a burglary you did not commit?

So, are the Government talking about involving the victim more in the sentencing process? It is perfectly proper for the judge to be told about the impact of the crime on victims or their families. That, of course, will often be apparent from the evidence given at the trial. But I believe that it is dangerous to go beyond that. The purpose of sentencing is much wider than to provide victims and their families with retribution for their suffering.

Let us look at the purposes of imprisonment: first, retribution for the suffering of the victims; secondly, prevention—keeping a prisoner in jail so that he cannot commit crimes outside; thirdly, deterrence—that is, deterring prisoners from repeating their offences when they are released and deterring others from committing similar crimes; and, fourthly, reformation, where that is possible. Those are all important purposes. To talk of putting victims at the heart of the criminal justice system can be understood as making retribution not only an important element in the sentencing but the primary one. That could take us back to eye-for-eye justice and turn us into a brutal and vindictive society, egged on by the media.

I see real signs of that happening, and I think that over recent years it is partly to blame for the constant ratcheting up of sentences. When the courts impose a

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sentence which 10 or 20 years ago would have been regarded as extremely serious and only to be reserved for the very worst crimes, we find that nowadays the people involved complain about the sentences not being serious enough, and the media back up that cry. Is that really what the Government want? Sentencing should be dispassionate, consistent, fair and proportionate. To talk about putting victims, rather than the public, at the heart of the criminal justice system is either meaningless or dangerous.

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