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So much for the first elephant. The second is party funding, on which, I am afraid, the Bill is entirely silent. To use a caricature, if you go to the saloon bar of the Dog and Duck and talk about party funding, after a certain amount of unprintable stuff about politicians generally, you will be told that my party is funded by, and responds to, rich people and the Labour Party is funded by, and responds to, the trade unions. I think that the Labour Party has a good many rich people in it as well, but never mind about that. I am not saying that that is a true reflection of the situation, but it is how people think, react and behave. To restore confidence, we need to show that this is not the case. The Bill would have been an ideal opportunity for us to do so, but it would require courage and resolution on the part of both major parties to accept the inevitable consequence: a cap on individual donations. For my party, it would be an opportunity to demonstrate beyond peradventure that rich men cannot influence it; for the Labour Party, it would be an opportunity to introduce transparency to its financial arrangements with the trades unions. There are, of course, risks and dangers, but surely, given the degree of cynicism about our political process, it is a risk that we should all be prepared to run.

Finally on this point, if we really want to be bold and encourage the parties to reach out to a mass membership along the lines referred to by the noble Lord, Lord Clinton-Davis, in his intervention on the Minister’s speech, perhaps some form of matched funding from the taxpayer, whereby, up to a modest level per head, individual donations could be matched, should be considered. This would have the twin benefits of encouraging parties to produce more members and providing them with additional funding. But I am afraid there are no ideas from, nor cheers for, the Government on this topic, because they have ducked it.

I turn briefly to the provisions. Clause 4 proposes the introduction of electoral commissioners from the political parties. I can see the superficial attractiveness—the noble Baroness, Lady Gould, referred to it—of getting people with political experience involved in the commission, but I say to the Government, “Be careful what you wish for”. If one talks to Members of the other place about the way in which their internal disciplinary procedures run, they will say, in a moment of honesty, that they too often become party political matters, and that the process of discipline has therefore become less effective and less commanding of public confidence than might otherwise be the case. There is a danger in introducing party-political electoral commissioners. I understand that they will be extinct volcanoes—that is, people who have had a distinguished career but who are no longer involved in the day-to-day thrust of politics—but members of the Electoral Commission need to be, like Caesar’s wife, above suspicion.



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I draw the Minister’s attention to Section 4 of the Political Parties, Elections and Referendums Act 2000, entitled “Parliamentary Parties Panel”, on which, I think, the noble Lord, Lord Tyler, served if I heard him correctly in his opening remarks. Subsection (2) states:

“The function of the panel shall be to submit representations or information to the Commission about such matters affecting political parties as the panel think fit”.

I accept that it is quite narrowly drawn, with financial matters primarily in mind, but it could be built on. We could have the advantage of party political input without running the risk of the Electoral Commission becoming involved in party politics. The Minister should consider whether we cannot get the best of both worlds by slightly reforming something that already exists in the 2000 Act.

Clause 10 relates to the compliance officer. I cannot see clearly what this man or woman will achieve other than duplicate existing functions. Most of the duties laid down seem primarily to be the responsibility of the election agent, and there are considerable dangers of divided responsibility, with neither party being prepared to take primary care. I refer the Minister to Clausewitz’s old saying: “Better a bad general than a divided command”. We have a divided command here.

We should look carefully at Clause 17. I agree with the point made by the noble Lord, Lord Tyler, and I was delighted to hear that the Minister intends to allow a free vote on this issue. Transparency is a key regulatory objective and one of the principles of good regulation. This change was popped into the Bill without any debate a couple of weeks ago. Electors are entitled to know where their candidate lives; for some, local roots are an important aspect of the appeal of a candidate. To those who argue about security, I say that I am not aware of attacks on candidates. There have been some dreadful cases of attacks on Members of Parliament, particularly the one in Cheltenham, but that was about a surgery. I assume, therefore, that a candidate’s address will not remain a confidential matter; otherwise, the contact between the Member of Parliament and his constituents would be greatly reduced.

Lord Brooke of Sutton Mandeville: My Lords, I declare a personal interest as someone who has received protection against terrorism in my day. Is my noble friend contemplating that those who are under such a threat should be required to put their address in the electoral register, or is he prepared to allow them to be protected?

Lord Hodgson of Astley Abbotts: My Lords, if we have a particular security threat, which is a rather specialist case, then the case might be made. However, as a matter of course, if every single parliamentary candidate can avoid giving any detailed information about where he lives, we are shutting off the electorate from the candidate in a way that is undesirable as a matter of course. Clearly, we hope that the issues that particularly affected my noble friend—Northern Ireland and so on—are a thing of the past. The proposal to introduce this without debate or consideration of the various aspects of which this is an important part is something that we should examine again in Committee.



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My final point is that the Electoral Commission will have an extraordinarily heavy burden to play in this new world. The noble Baroness, Lady Gould, quoted from the report on the Committee on Standards in Public Life. After her quote, the report went on to say:

“Through a combination of deficiencies in its current mandate, that is too weak in some areas and too broad in others, combined with a lack of courage, competence and leadership in its regulatory and advisory approach, the Commission has not successfully performed these core duties”.

We cannot legislate for courage, competence and leadership; that will be achieved in the hearts of the men and women who serve on the commission, who will need to be well endowed with those characteristics. But we can and should provide the appropriate framework. While welcoming the rather glacial progress that this Bill represents, I am not convinced that the Government have done enough to provide the right architecture to enable the Electoral Commission to execute its heavy responsibilities.

5.47 pm

Lord Maclennan of Rogart: My Lords, I very much welcome the spirit in which the Minister opened this debate, indicating, understandably, that the Government are seeking consensus as a way in which to bring about political reform of the election system. That is an ideal for which we should all strive, although it is not always possible. In those circumstances, Governments are placed in a difficult position, but they have to provide leadership and be transparent about what the best arguments are, so that the public may buy in to the case.

In this House, we should endeavour to see whether we cannot broaden the consensus from that agreed in another place. The process of this Bill has indicated some widening of the Government’s horizons, at least in the discussions in that place, most notably in respect of individual registration, and the welcome development from the original Bill to provide for it, albeit at a rather slow pace. I listened with great attention to what the noble Baroness, Lady Gould, has to say about the timing of this, as she has great experience. No doubt in Committee we will be able to look at this issue in greater detail.

The political reform of this country is a necessary condition for delivering a more successful Britain and a Britain at peace with itself. It is not a secondary consideration at this time of financial crisis. There is currently much evidence of disquiet in this country about our political system. I believe that imports a danger. When the public is under pressure for economic and external reasons and it is not content with the system that we have, it is more likely to listen with greater attention to the voices of populist extremists. That extremely important point was made by the noble Lord, Lord Bates, in opening for the Opposition.

We must therefore ask ourselves whether the Bill has gone far enough to meet the concerns of the public. It is unquestionable that it has gone further and in many respects it is an improvement on the 2000 Act, but I am surprised that the Government have not felt it possible to grasp the nettle of expenditure in elections. They recognised that this was a grave concern and that the fear that votes could be bought

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has not evaporated since the Government asked Sir Hayden Phillips to consider these matters. It is reasonable, and therefore it should be possible, for the parties to assemble and consider how they would address these issues even now.

I know that an election is in the offing for the Westminster Parliament, but even now we should attempt to remove this anxiety. We should look again openly and particularly at the principles that underlie the report of the Constitutional Affairs Committee and that of Sir Hayden Phillips. Those principles were well enunciated and they are not addressed in the Bill. One principle that Sir Hayden enunciated was that the status quo in which there are no caps on donations is unsustainable and therefore donations to parties should be limited. That is an extremely important principle and it needs to be particularly addressed in our debates.

Another principle was that expenditure on general election campaigns was progressively growing and should be reduced. I do not see anything in this Bill that goes in that direction. That worries me, particularly because we do not have the sort of controls over expenditure in this country that the United States has and which my noble friend Lord Tyler, in his detailed and helpful speech, enunciated. We cannot congratulate ourselves on getting this right if we do not address that general point.

A further related point is that if we were to affect the incomes of political parties, there is a potentiality for inequitable consequences and the loss of stability. I need not remind the House that Sir Hayden Phillips advocated some increase in public funding of political parties. It is important to espouse the view that political parties are an absolutely key part of the working of our democracy. They are responsible for the sophisticated development of policies by parties not in government and the success with which they propound those developed policies will enable the public to have a sense of its involvement in the political process. More than anything, it will have the potential of encouraging people not to take a backseat, not to listen to the cheap points which are being scored by the populists and even to participate directly in seeking to formulate these attitudes. Hayden Phillips drew attention to the fact that, in this country, membership of political parties has dropped from one in 11, 50 years ago, to one person in 88 today. To me, that is retrograde and unfortunate. If parties cease to play a part, what is to take their place? Is it to be individuals? I cannot imagine anything more dangerous.

I hope that in addressing these considerations in Committee, we will consider these wider considerations in putting forward our individual proposals, which I do not propose to touch on today, and I hope that we will not simply consider how they affect one or other political party. All political parties are required to be funded properly—not excessively funded—with sufficient income to enable the serious work of political thinking and political education to be advanced.

5.56 pm

Baroness Jones of Whitchurch: My Lords, I declare an interest as a member of the Labour Party for more than 30 years and as the chair of the Labour Party in

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2000 when the Political Parties, Elections and Referendums Act came into being. I can still remember the challenges that we faced: on the one hand, quite rightly, we were trying to implement our manifesto commitment to clean up political party funding and, on the other hand, we were struggling with the practical operation of what became a complex and, to my mind, unwieldy piece of legislation. From my perspective, this Bill is a welcome opportunity to iron out some of the unnecessary local burdens, while tightening up on the big funding issues, which continue to threaten the integrity of our political parties and, therefore, the reputation of our democratic system.

I am sure that there will be some robust discussions during the passage of the Bill through the Lords, as is absolutely right, but, as has been said, there have been considerable efforts in the other place to try to reach a cross-party consensus on issues that should transcend individual interests in favour of the more compelling objective of renewing faith in our political party system. I hope that we are able to keep that goal in our sights as the debate progresses.

In that context, I would like to make the following points. My main concern about the 2000 Act was that it placed daunting new accounting burdens and draconian sanctions on the rather scarce and precious local volunteers on whom we all rely to keep our local democracy alive. Those individuals, often elderly, provide an essential presence in local communities and act as the recruiting sergeants of the next generation of political activists. As a number of noble Lords have said, we expect too much of them and often exploit their good will. At the time, I was concerned—it was borne out by some evidence—that the new responsibilities of the Act would prove to be the final straw and they would step down from office. To be honest, it felt like the people drafting the legislation had never run a jumble sale or passed a hat around to get enough money to pay for the hire of the room.

That is why I am pleased that the provisions in the Bill have begun to address that issue by introducing a more proportionate regime for local accounting. It is helpful that the basic level of recordable donation has been increased to a more justifiable figure. More important, the concept of a local compliance officer who could be appointed to make the returns to the Electoral Commission on behalf of other local officers could provide some welcome relief to our overburdened volunteers.

I am also pleased that the thresholds for other recordable and reportable donations have been increased to more sensible levels. More fundamentally, I very much welcome the shift in the nature of sanctions that can be applied to breaches of the law at a local level. If our activists were put off by the bureaucracy of the previous recording procedures, they were terrified of the penalties for default that threatened them with criminal proceedings. Again, it seemed as though there was no real understanding of the slightly chaotic and unstructured nature of local activism. It is absolutely right that, where honest mistakes are made, there should be flexibility in the application of sanctions.

Secondly, I very much welcome the move to extend the size of the commission to enable four commissioners with political experience to be appointed. Clearly it is

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important that the political appointees are not in the majority, but in its early days the commission felt that it was struggling to understand the real world of political parties on the ground. It was making policies for an idealised concept of super-organised local activists who did not exist and it was less effective for that. There is a role for knowledge and experience in a regulator and I am sure that the new appointments will enhance the status of, and respect for, the commission.

Thirdly, it has to be right that, in the longer term, we move to individual electoral registration. The concept of a head of household taking charge is increasingly an anachronism, which takes no account of the changing nature of households and relationships and subtly downgrades the status of those passively being registered. It is also, as we are painfully aware, more open to fraud. There is a real opportunity now to use an electoral registration campaign to reach out to the next generation of voters and persuade them that their right to vote has significance and value. It should mark their transition into the adult world and bring with it other advantages and benefits.

That is easy to say and more difficult to deliver. It would be a disaster if the result of this initiative was fewer people being registered and fewer individuals voting. That is why we need to proceed carefully. The full and enthusiastic support for the initiative from local electoral registration officers is crucial and they need to be guaranteed the extra resources to roll out this programme. It is also vital that the verification proposals have broad popular support and do not become an excuse for a registration boycott. This is a difficult challenge. We are right to proceed with it, as it is long overdue, but it is also right that we should learn the lessons as we proceed and not put the whole registration process at risk.

Fourthly, I have a couple of comments about the trade union political funds, which some people have suggested should be included in the Bill. Already, the political activities of trade unions are massively regulated by both trade union and electoral law. Already, donations, affiliation fees and donations in kind have to be clearly recorded and made public. Trade unions also have the draconian duty to reballot their members on continuing these activities every 10 years. These funds are then used to affiliate individual members to the party in the form of a membership fee. This is very different from the large-scale individual donations that the Bill attempts to regulate, and the two should not be confused.

Finally, I turn to what are now described as unincorporated associations but which most people would describe as front organisations. Of course, political organisations, like all other parts of our lives, have become more complicated. It is also true that an organisation set up for one purpose can easily become a convenient vehicle for an entirely different purpose. The key to unlocking these complex relationships has to be transparency. This was the spirit and intention of the 2000 Act. It is vital that we take the opportunity in the Bill to close any remaining anomalies that have drawn a cloak of secrecy over millions of pounds in hidden donations. That is why I welcome the measures in the Bill, which will require unincorporated associations that make donations to political parties in excess of

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£25,000 a year to report the names of individual donors to their funds. It is right that the public should know who funds our parties; people should be reassured that opportunities for foreign nationals to fund our parties via this route are now being blocked.

I am aware that I have touched on only a few aspects of the Bill. I look forward to opportunities to debate the issues as the Bill progresses through this House. There is always a temptation when dealing with issues in which many of us take a close interest to become rather partisan. I hope and believe that we will manage to avoid that trap and to craft a Bill that has at its heart renewed transparency and renewed public faith in our political system.

6.04 pm

Lord Marland: My Lords, I speak as a former treasurer to the Conservative Party, from 2004 to 2007. I will largely restrict my comments to matters of finance and party funding. Many aspects of the Bill address those issues and issues of disclosure. However, I fear that the Bill does not go far enough. I was co-author, with Andrew Tyrie, of a paper for the leader of the Conservative Party. I also served in the discussion stages with Sir Hayden Phillips. Two things that we tried to demand were a cap on donations and matched funding, to which my noble friend referred earlier.

We live in a world that demands transparency and where the media have become obsessed with political party donors and with what they perceive—I use that word deliberately—as their motives. The Bill, by not imposing a maximum amount per donation, does not address those issues. It cannot be right that there is overdependence on a union or a number of individuals for the annual running costs of a party. It cannot be good for politics and it cannot be good for the parties themselves. Through the passage of the Bill, we must be earnest about changing that.

Neither does the Bill prevent a cash-grab race from taking place, as it does not restrict what political parties may spend in any one year. It cannot be right that, depending on a party’s political fortunes and popularity in the polls, one party should be able unreasonably to exceed another in its ability to raise—and therefore to spend—money. A cap on annual running costs would be welcome.

However, the most acute problem is the raising of money for a general election, which effectively doubles the money that a party is required to raise in one year. Large donations are therefore required and the issues of influence and reporting raise their ugly heads again. If we are to get to a consensus on this, we need to resolve how we support parties in their election fundraising initiatives.

Neither does the Bill promote democracy, because it does not produce a plan for financially supporting new political parties, allowing them to campaign—and thereby permitting the nation to debate broader democratic issues—without being dependent on a rich donor. Nor does the Bill financially incentivise political parties to encourage greater turnouts at the ballot box and greater involvement in political debate. A grant scheme or incentive plan is surely an imperative. Yet again, that opportunity has been missed.



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Finally, the Bill does not address the undue influence of trade unions or the amount that they are allowed to give the Labour Party. In the last year we have seen the unions bail out the party from its deeply parlous financial state. What is the price of that bail-out? It is totally unreasonable. The Bill does not permit trade union members to opt out of their union contributions being directed to the Labour Party. This must change.

It may seem odd that I welcome the increase in the threshold for a declaration, but the threshold has not changed since 2000 and therefore has not kept pace with inflation or comparable gift-making to other voluntary organisations. This change helps the significant administrative burden on our local associations, which, after all, are made up largely of volunteers, as was said earlier.

I turn now to policing. During my time as treasurer, the Electoral Commission was the most frustrating and inadequate organisation to deal with. It neither policed nor interpreted the legal implications of the 2000 Act adequately. Despite the Conservative Party having a compliance officer, a finance director and a finance board, who tried to maintain regular contact with the commission, it failed in its guidance and liaison with them. Of course, the moment that trouble started, it ran for cover proclaiming its vast innocence. I think that noble Lords opposite will agree with this.

As we all know, the Electoral Commission also failed to monitor the postal voting system and to rigorously police the election process. It is therefore imperative that the people who run it not only understand the Bill but also its relationship with the parties, to help them with interpretation and to work closely to ensure that parties fulfil their obligations. I welcome the fact that there will be four commissioners, but it is important that they understand the workings of political parties. We should not ban former political party executives from being commissioners; we should encourage them, because those people fundamentally understand the workings of political parties. The commissioners should also understand parties’ financing, because we must deal with what is an acute problem.


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