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119: After Clause 13, insert the following new Clause—

“Qualifying expenditure

In the Representation of the People Act 1983 (c. 2) (“the 1983 Act”), after section 75A there is inserted—

“75B Qualifying expenditure

(1) For the purposes of this Part, “qualifying expenditure” shall include expenditure, whether or not intended to promote the candidacy of a particular person at a particular election, on—

(a) party political and election broadcasts, including agency fees, design costs and any other costs in connection with preparing or producing such broadcasts;

(b) advertising of any nature (whatever the medium used) including agency fees, design costs and any other costs in connection with preparing or producing, distributing or otherwise disseminating such advertising or anything incorporating such advertising and intended to be distributed for the purpose of disseminating it;

(c) unsolicited material sent to electors, whether or not addressed to them by name (including newsletters or similar publications issued by or on behalf of the party with a view to giving electors in a particular electoral area information about the opinions or activities of, or other personal information relating to, their elected representatives or existing or prospective candidates),

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including design costs and any other costs in connection with preparing, producing and distributing such material, including the cost of postage, but not including unsolicited material sent to party members;

(d) any manifesto or other document setting out the party’s policies, including design costs and other costs in connection with preparing or producing or distributing or otherwise disseminating any such document;

(e) market research or canvassing, whether conducted in person or on the telephone or by any other method, for the purpose of ascertaining polling intentions or for the purpose of increasing the support of that party or reducing the support of other parties;

(f) the provision of any services or facilities in connection with press conferences or other dealings with the media;

(g) transport (by any means) of persons to any place or places with a view to obtaining publicity for the party, its policies, its representatives or its views;

(h) rallies and other events, including public meetings (but not annual or other party conferences) organised so as to obtain publicity for the party, its policies, its representatives or its views, including costs incurred in connection with the attendance of persons at such events, the hire of premises for the purposes of such events or the provision of goods, services or facilities at them;

(i) subsidies or grants to other persons or bodies designed to increase support for the party, its representatives or views, or to decrease support for any other party, its representatives or views.

(2) Any expenditure of more than £100 per year by any person to benefit a registered party shall count as qualifying expenditure by that registered party, but time donated on a voluntary basis shall not count as such expenditure.

(3) Expenditure by a registered party on remuneration or allowance of staff, whether permanent or temporary, shall count as qualifying expenditure unless the member of staff concerned works exclusively on matters not connected with the activities mentioned in subsection (1)(a) to (h).

(4) The following shall not count as qualifying expenditure—

(a) any expenses in respect of any property, services or facilities so far as those expenses fall to be met out of public funds;

(b) any expenses incurred in respect of an individual by way of travelling expenses (by any means of transport) or in providing for his accommodation or other personal needs to the extent that the expenses are paid by the individual from his own resources and are not reimbursed to him.””

Lord Tyler: We turn now to an issue with which a great many Members of your Lordships’ House, and certainly a great many Members of the other place, are concerned. I was horrified to recollect that the first time I stood in a parliamentary election was in 1966—I was terribly young, of course. In those good old days, as other Members of the Committee may recall, we were dragooned into recognising that the man or woman who was responsible for our expenditure could go to prison if we did not abide by the rules. The amendment about qualifying expenditure seeks to bring up to date those simple principles of candidature, which, as my noble friend said, go back to the 19th century. They were well expressed in Section 75 of the Representation of the People Act 1983, 100 years after the first legislation on this issue, and we refer to that section in our amendment. Section 75(1) reads as follows:

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“No expenses shall, with a view to promoting or procuring the election of a candidate at an election, be incurred by any person other than the candidate, his election agent and the persons authorised in writing by the election agent on account—

(a) of holding public meetings or organising any public display; or

(b) of issuing advertisements, circulars or publications; or

(c) of otherwise presenting to the electors the candidate or his views or the extent or nature of his backing or disparaging another candidate”.

It all seems very simple, and no doubt it seemed very simple to candidates in the 1980s and even before that, but, as the Minister said in responding to the previous group of amendments, spending by or on behalf of a party has to be distinguished from spending by or on behalf of a candidate, and it is not. That is why we need this group of amendments.

The amendment specifies the type of expenditure that parties can legitimately undertake to fight elections. It is very different from the situation in 1983, let alone in 1966. I particularly draw the Committee’s attention to the proposed subsection (1)(c) in our amendment. It states that,

and then there is the detail of what other costs can be included.

Since the 1983 legislation, and indeed even since the 2000 Act, there has been a huge increase in the amount of unsolicited mail sent to individual electors by name which, if it did not specifically ask the elector to support Mr A or Miss B, has been ruled as not being part of the necessary expenditure limits in that constituency. That is extraordinary. Now it would be seen to be very much part of the political weaponry of all the parties, yet it is clearly intended deliberately to get round the rules that have been in place for 100 years and more. Those of us who have stood in elections—not necessarily as far back as 1966 but more recently—will be only too conscious of how this trend has hugely increased and developed in recent years.

Therefore, our amendment seeks to define all qualifying expenditure, including all party-political spending, whether it be from central headquarters funds, designed to influence a particular constituency, or whether it is intended for wider dissemination. This would apply regardless of whether such spending was promoted by a particular candidate or whether it was based on a decision taken at a national level for other reasons. Again, I make it clear, as we have done frequently in the Committee, that this amendment, together with other of our amendments, is intended to close the loophole by which parties nationally can go outside the limits imposed locally and not take any notice of what is happening in local campaigning, or take notice of the responsibility that the candidate or his or her agent has in terms of the controls that have been in place all that time.

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Frankly, the strict limits on candidates are no longer relevant—they do not work—while this expenditure is considered to be not subject to any sort of limitation. As I have already said, subsection (1)(c) of our proposed new clause is intended to catch all the publications sent to specific constituencies which are paid for from national expenditure. It should clearly be read in conjunction with the new clauses to which we have already referred concerning the local pre-candidacy spending limit and the national spending limit. It is intended to ensure that the entirely proper controls that have been in place for so long are effective.

I also draw attention to subsection (3) of the proposed new clause, under which expenditure on, for example, parliamentary staff should not be included in such calculations for qualifying expenditure, but the expenditure on a campaign manager should clearly be included. This is intended to ensure that expenditure that allows an elected MP to do his or her job as a parliamentarian is quite distinct from expenditure on his or her campaign to be re-elected. We believe that this is a much more workable and relevant assessment of what should and should not be categorised as expenditure in this context. It effectively brings up to date the very limited list from the Representation of the People Act 1983 and, in so doing, we believe that it is much more in the spirit of the controls that have been in place for a century and more to stop people buying parliamentary seats. I beg to move.

Lord Campbell-Savours: One problem for me in this whole business has been the fact that I have spent the past eight years in this House steering very clear of political argument. That may seem strange because when I was in the Commons I was probably a bit of a beast on the Back Benches. But here I have been very careful to avoid getting into party-political point-scoring in debates on the Floor of the House or even in Committee. One of my difficulties with this Bill is that we are just led into that kind of political argument. In the context of what has happened, it is very hard to avoid getting into a party-political debate, and I apologise to the Committee. As I said, I have spent eight years avoiding it in every contribution that I have made.

I want to produce a letter that was sent out by the Cities of London and Westminster Conservative Association because in many ways it represents the debate that we are having now. I wonder whether it fits into the legislation and whether this kind of material should be subject to some kind of control. In constituencies throughout the country, we see letters from David Cameron that have been sent out nationally and which somehow seem to get round all kinds of constraints, whether it is before or during campaigns. This letter was sent to my mother who lives in Whitehall Court, which noble Lords will know is just opposite Downing Street. The letter is headed, “Conservative Fighting Fund Appeal”. It states:

“Dear Mrs Campbell-Savours,

No one can tell when the call to battle for the Conservative Party will come, to respond to the dreadful state into which Gordon Brown has led our country—and without a word of apology for his own part in causing the disaster through his chosen economic and financial policies.

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The Conservative Party will need money to meet whatever further contingencies and challenges arise, and this letter is to appeal to you to put your hand in your pocket now”—

we all know what is coming as many of us have probably sent them out—and the letter is signed by the noble Lord, Lord Brooke of Sutton Mandeville, who is here today. He might not know that it has gone out. My argument is not with him but about whether this kind of material should be sent out. It includes a request to send your money to:

“The Rt. Hon. the Lord Brooke ... London SW1”—

and is followed by the words:

“I/We have pleasure in enclosing ... my/our contribution to the Conservative Fighting Fund”.

A postal vote application is also enclosed with the letter.

The document was sent last week in the middle of a campaign for the European elections. Nothing indicates that it would fall under any of the constraints that we have discussed today. I am pretty sure that it has not. If there is confusion in the Conservative Party about whether it is within campaign territory, it applies equally in the Labour Party. A colleague sought information somewhere in the United Kingdom of a regional office and got a number of different interpretations as to what the law is. It does not apply only to the Conservatives; it probably applies to a number of political parties. If the noble Lord, Lord Rennard, is in control of the Liberal Democrats, he is probably keeping tight control over how these things do in the light of the Michael Brown affair.

It is difficult to understand how that material can go out at this stage. I did not read the whole letter but it is basically an election leaflet. It is asking people for money and encloses a postal vote application form. Within a matter of weeks we will be going to the polls in London. Somewhere along the line it should be included in election expenditure, but it does not because it does not refer to a candidate. That is how it gets out of it. If we were to slip the name of the candidate into the letter, I do not think that it would make much difference. The reality is that it is an election document.

I ask my noble friend to forgive me. I have tried diligently not to be political over all my years in this House. This is wrong and it should be sorted out. If the amendments of the noble Lord, Lord Tyler, deal with this kind of problem, let us look at them before Report and not write them off as we have done with many of the amendments in our deliberations on this Bill.

Lord Brooke of Sutton Mandeville: It may be helpful if I make a brief intervention. The noble Lord, Lord Campbell-Savours, and I have had a most agreeable series of jousts over the past eight years on any matter relating to Westminster. As soon as that word appeared in the document that he was about to read I could see that it was another such example. I do not take offence in the slightest. The only thing that I did not know until he reached the end of his remarks was whether he would say who the signatory was. I was perfectly clear that if he did not do so, I would get up and say that it was in fact me. This is not in the context of a confessional but, in the context of the doubt in the noble Lord’s mind about who might have composed it,

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I will say that I also wrote it. Without seeing it, I have no grounds for supposing that I knew anything about the postal vote application. But the noble Lord may tell me that there is a reference to the postal vote on my part. I do not believe that there was.

6.45 pm

Lord Campbell-Savours: Can I just clarify that the letter says, after the signature,

Lord Brooke of Sutton Mandeville: I am grateful for that elucidation. The only way in which I can verify whether that was an action of mine or an action of someone else is by making direct inquiries. So far as I was concerned, it was not an electoral communication and I cannot believe that I would have included the postal vote in it. However, as I am sure is true of the noble Lord, Lord Campbell-Savours, as well as myself, nothing ever went out of my constituency office other than by my dictation and by my signature. I am not talking about the party-political part; I am talking about the office in which I represented the constituents for 24 years. Of course I therefore take responsibility for the action.

Lord Campbell-Savours: The point is that we all get involved in these sort of things because of how the law is framed. On reflection, does the noble Lord think that the law perhaps should be reviewed in this particular area if there is confusion in all the political parties on these sorts of issues?

Lord Brooke of Sutton Mandeville: I do not want to get the noble Lord, Lord Campbell-Savours, to his feet again, but was he actually asking me a question?

Lord Campbell-Savours: Yes.

Lord Brooke of Sutton Mandeville: I am certainly of the view—and this is one reason why I am taking part in this Grand Committee—that it is important that everybody knows where they are.

Lord Tunnicliffe: I shall be careful not to get into the Campbell-Savours-Brooke debate. I have some notes here. The only thing that I can say with confidence is that election expenditure before European elections is regulated for four months before the election is held. I shall return to the essence of the debate on those details at the end.

Amendment 119 lists the types of expenditure which would be regulated by the spending limits proposed in the earlier Amendments 114, 115 and 116. Sir Hayden Phillips’s proposals sought to regulate the vast majority of a party’s spending with only a few key exceptions, such as interest on debt, legal expenses and intra-party transfers. Amendment 119 instead mirrors the list-based approach taken in current legislation. It largely replicates the list of regulated matters for the existing campaign spending limit, which is set out in Schedule 8 to the 2000 Act. However, the amendment makes several key

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changes and additions to that list and I shall speak to only a couple of these. Expenditure would appear to qualify whether or not it is,

This is a very significant change.

Specifically, expenditure on the remuneration or allowances of staff would be included, provided that those staff work in any way on matters listed elsewhere as qualifying expenditure, although I note the amendment makes no attempt to define who would count as staff. Staff costs are currently specifically excluded from the list of regulated matters in Schedule 8 to the 2000 Act. This is because when that Act was being discussed all parties recognised the difficulties that staff would have in accurately assessing which part of their work can be said to be on campaign issues and which can be said to be on non-campaign duties. That is particularly so where a member of staff works in part on campaign matters and in part on non-campaign matters. Even if staff were able to do so, verification by the Electoral Commission would likely prove very difficult without it proving unduly burdensome for parties—for example, by the keeping of timesheets or something similar. Without that sort of record keeping there would be significant scope for parties to avoid the rules. For example, rules might be circumvented by changing job titles. All of these problems would come to the fore should the noble Lord’s proposed system come into force.

Secondly, any expenditure of more than £100 per year by any person on qualifying expenditure which is intended to benefit a registered party would count against that party’s limit. It would not, apparently, be necessary for the party to have authorised that expenditure. This is not appropriate. Where a party authorises expenditure, it should count against the limit. Where a party does not authorise expenditure, it should be regulated separately by the controls that already exist on third-party expenditure.

We have suggested previously that we are open to considering whether the list of regulated matters in Schedule 8 to the 2000 Act needs amendment. We are, as on many other areas of the Bill and associated policy, open to views on this. However, the amendment goes much further than is desirable. It proposes unworkable and undesirable amendments to the schedule. I hope that the noble Lord will withdraw the amendment.

Lord Tyler: I can respond quite speedily. The noble Lord, Lord Campbell-Savours, is of course quoting just one of a huge number of examples. All parties are as confused as he and I, particularly by this issue of unsolicited mail. It has grown exponentially in recent years. Unless we are prepared to take it in, as the Minister now appears to be saying that he might be able to do with the schedule to the 2000 Act, this will continue to be a vast loophole. In all three major parties, even those responsible for local campaigns in marginal seats quite resent this sort of interference and intervention by party headquarters. It is often peddling a line or spinning a tale which is not much in accord with the local candidate’s campaign. It undermines that relationship between the candidate and his or her electorate in his or her constituency in a way that is

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undesirable anyway, quite apart from the issue of controlling expenditure. Unsolicited mail—indeed, unsolicited e-mail, now—is undoing literally a century and a half of careful pinning of accountability and identification of responsibility for who is going to pay for an election.

The Minister referred to two ways in which our amendments would change the current situation. Neither case is as substantial as he suggests. He says that he is open to views. I hope that he has been listening, not least to the noble Lord, Lord Campbell-Savours. If they were honest, all Members of the Committee would admit that campaigning techniques have moved on in a way which is not thoroughly desirable and is certainly not covered by legislation.

It is therefore extremely important that we identify these things with greater clarity by some means or other. That may be achieved not in the Bill but in secondary legislation. For example, the Minister mentioned that the four months leading up to the European parliamentary elections are a controlled period for the purpose of expenditure. I am not sure that all parties are aware of that given some of the publications to which the noble Lord, Lord Campbell-Savours, has referred. From what the noble Lord, Lord Brooke, said, it sounds as though putting together the package for postal votes clearly relates to an election—I exonerate the noble Lord from doing anything improper—because you do not do that in March simply for the fun of it; you do it because you know that there is an election coming up.

I am hopeful that the Minister, in saying that the Government are open to views, is genuinely listening on this. The points that have been made are formidable and we will not get another opportunity to deal with this problem for some years to come if we miss it now. I therefore hope that, if I now withdraw the amendment, the Government will think carefully about how they might address this formidable problem before Report. In the mean time, however, I beg leave to withdraw the amendment.

Amendment 119 withdrawn.

Amendment 120 not moved.

Amendment 120A

Moved by Lord Goodhart

120A: After Clause 13, insert the following new Clause—

“Tax relief on donations

Tax relief shall be given, subject to Schedule (Tax relief on donations) to individuals who make donations to a registered political party.”

Lord Goodhart: Amendments 120A and 132B would enable donors to obtain tax relief on small or moderate donations to the established political parties. This practice has been successfully adopted in several countries, notably perhaps in Canada.

Tax relief on modest donations was recommended by the Committee on Standards in Public Life in its 1998 report on the funding of political parties, of which I shall read the conclusion in paragraph 8.20:

“We therefore conclude that the balance of argument is in favour of allowing tax relief on donations to political parties by deduction at source. We think that tax relief should be limited to

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donations of up to £500 in any one year (or the first £500 of larger donations). This sum is within reach of a moderately well-off party activist, and not just the rich. We believe that it also represents a balance between setting the level so high that it loses its purpose of encouraging parties to seek large numbers of smaller donations or setting it so low that the benefit of tax relief is not worth pursuing”.

Most of the recommendations in the committee’s report were accepted and incorporated in the 2000 Act, but not this one. I was a member of the Committee on Standards of Public Life at the time, as was the noble Lord, Lord MacGregor of Pulham Market, who I am extremely pleased to see has put his name to this amendment.

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