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Lord Myners: My Lords, the impact of quantitative easing—a policy which is being followed by central banks in other countries, including the United States of America—is very evident in the lower interest rates now being charged on new medium and longer-term fixed interest rate debt. So it is having a very beneficial

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impact on the flow of credit. Whether the gilts and bonds that are acquired under quantitative easing are acquired from domestic owners or foreign owners matters little because if it is a foreign owner the funds have to be repatriated into sterling and are available to provide reserves to the banking system and support lending activity.

The Countess of Mar: My Lords, we have heard an awful lot about lending and borrowing but not very much about repaying. It strikes me that we have a whole generation who have got used to the idea that they can borrow money willy-nilly but they do not have to repay it, and this is why we have got into such financial trouble. Is it not time that we changed the culture and made people realise that you borrow money and then you repay it?

Lord Myners: My Lords, I could not agree more with the noble Countess. That is at the heart of good lending and good borrowing activity and it is a culture that we want to see restored to our banks—to see those banks in the hands of competent, prudent individuals, rather than the reckless and feckless behaviour that we have seen from some of our bankers in recent years.

Baroness Noakes: My Lords, the Government launched the enterprise finance guarantee scheme with a great fanfare in January and told us that it was worth £1.3 billion. But this week in another place the Government said that the loans offered under the scheme totalled only £230 million and we do not know how much has actually been taken up. Does this mean that small firms do not need the finance, or is this another government scheme that has proved to be ineffective?

Lord Myners: My Lords, at the heart of the noble Baroness’s question there is a very interesting point about whether, when studying credit creation and extension, we are looking at issues of inadequate supply or decreased demand. I think that the reduction in demand for credit is consistent with lower economic activity—that is what I would expect from my business background—as businesses harbour their cash resources more carefully, cut back on investment and hold less stock in ratio to sales. So I think that there is a demand feature at work. The noble Baroness, Lady Newby, also asks about the EFG scheme.

Noble Lords: Oh!

Lord Myners: I am sorry, my Lords—the noble Baroness, Lady Noakes. I do apologise. I’ll get back to reading my brief. I do not normally use my notes but on this occasion I think that it is probably right to. The EFG scheme has already extended £445 million to eligible applications from over 4,000 firms that have been granted or are being processed and assessed; 2,855 businesses have been offered loans totalling £271 million. That is real help now for British business to help us get out of this economic crisis that is affecting the globe.

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Prisoners: Voting


3.25 pm

Asked By Lord Ramsbotham

The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bach):My Lords, the Government have noted the remarks of the Committee of Ministers and remain committed to a two-stage consultation process on this issue. The Government launched their second consultation paper in April, outlining their proposals for how the judgment in Hirst (No. 2) might be implemented. The consultation closes on 29 September 2009, after which date the Government will consider the next steps towards implementing the judgment in legislation.

Lord Ramsbotham: My Lords, I thank the Minister for that reply, which is very much what I expected. Is he aware that it is now two years and three months longer than the entire duration of World War II since this issue was raised in the High Court? In view of that time, it is hardly surprising that on Friday the Committee of Ministers in the Council of Europe expressed concern at the significant delay in implementing the judgment of the European Court; condemned the United Kingdom’s delay in organising voting for prisoners; warned that there was now a pressing need for action to be taken; and called on the Government of the United Kingdom swiftly to set in measures that prisoners would be able to vote in the general election predicted for the next spring. In view of that, my question to Her Majesty’s Government is simple: do they have any intention of speeding up the process to ensure that those prisoners whose crimes are not such as to warrant removal of the right to vote as part of their sentence may be able to vote in the next general election?

Lord Bach: My Lords, the Government believe that the issues around prisoner voting remain complex and require full consultation and consideration. The practical issues—and there are some—need to be thought through and decisions taken on what criteria should apply in order to make a fair decision on whether a prisoner should be able to vote. We are currently consulting on the enfranchisement of prisoners. We have set out in the consultation paper a number of questions on the practical aspects of implementation and a range of options for prisoners’ enfranchisement based on sentence length. As I have said, when the second consultation is concluded, we will consider the next steps towards implementing the judgment in legislation.

Earl Ferrers: My Lords, can the Minister say why prisoners should be allowed to vote?

Lord Bach: My Lords, there is a ruling of the European Court of Human Rights on this issue, and as signatories—this would apply whichever Government were in power—we are obliged to follow that ruling.

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Lord Lester of Herne Hill: My Lords—

Viscount Montgomery of Alamein: My Lords—

The Minister of State, Department of Energy and Climate Change (Lord Hunt of Kings Heath): My Lords, shall we hear from the noble Lord, Lord Lester, first?

Lord Lester of Herne Hill: My Lords, the Government have a very good reputation, of which they should be proud, in abiding by judgments of the European Court of Human Rights. This, unfortunately, is a gross exception, which creates a bad example to the rest of Europe. Could the Minister expand on the answer he gave on 20 April to the noble Lord, Lord Ramsbotham, when he said that there were serious practical difficulties for the prison authorities and courts? What I do not understand—perhaps he can help the House—is why Ireland and Cyprus gave postal voting, and South Africa and Canada managed to do the same. Why cannot the Government introduce a remedial order, and get the judgment complied with, as the Committee of Ministers is asking should happen by Christmas?

Lord Bach: My Lords, consultation ends on 29 September and we then have to look at the way forward. Although of course the noble Lord is right that a remedial order would technically be available by virtue of the decision made by the European Court of Human Rights, any legislation would clearly have to deal with a number of complex issues. Those are issues of principle such as where the line should be drawn on partial prisoner enfranchisement, what length of sentence should serve as the cut-off point—I mentioned that earlier—and how to treat classes of prisoner not subject to ordinary periods of detention. This is a matter in which the public have considerable interest anyway. Primary legislation, which Parliament will have proper time to consider, debate and amend, is much the most appropriate vehicle for this issue.

Lord Grocott: My Lords—

Viscount Montgomery of Alamein: My Lords—

Noble Lords: Cross Bench!

Lord Grocott: I think that we have had one Cross-Bencher, have we not, my Lords?

I agree very much with my noble friend’s observations. While we are on the subject of Europe and voting, would he like to comment on the deplorably low turnout in the recent European elections, based as they were on the system of proportional representation? Given that people in prison, as well as the rest of the population, have very little understanding of how I imagine the d’Hondt system works—a lack of understanding which I admit I share—will my noble friend give a brief explanation of it?

Lord Bach: My Lords, last time we debated these interesting issues, my noble friend asked me pretty much the same question. I was not expecting him to intervene again in quite the same way. I had better say what I said last time, with great trepidation, he being my former Chief Whip: I think that what he asks is a little wide of the mark.

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Policing and Crime Bill

Order of Consideration Motion

3.31 pm

Moved By Lord Brett

Motion agreed.

Bank of England (Amendment) Bill [HL]

Bill Main Page
Copy of the Bill

Third Reading

3.32 pm

Bill passed and sent to the Commons.

Saving Gateway Accounts Bill

Bill Main Page
Copy of the Bill
Explanatory Notes

Third Reading

3.32 pm

Bill passed and returned to the Commons with amendments.

Political Parties and Elections Bill

Main Bill Page
Copy of the Bill
Explanatory Notes

Report (2nd Day)

3.33 pm

Amendment 38

Moved by Lord Tyler

38: After Clause 16, insert the following new Clause—

“£50,000 cap on donations

(1) In section 54 of the 2000 Act (permissible donors), after subsection (1) there is inserted—

“(1A) A donation received by a registered party from a permissible donor must not be accepted by the party in so far as the amount of that donation and of any other donations accepted by the party from that donor during the same calendar year exceeds £50,000.

(1B) Subsection (1A) does not apply to donations to which subsections (1) and (2) of section 55 apply, or to monies received from public funds.”

(2) In section 56 of the 2000 Act (acceptance or return of donations: general), after subsection (2) there is inserted—

“(2A) If a registered party receives a donation which it is prohibited from accepting by virtue of section 54(1A), subsection (2) applies to that donation only in so far as the amount of that donation and of any other donations accepted by the party from that donor during the same calendar year exceeds £50,000.”

(3) In section 58(1)(a) of the 2000 Act (forfeiture of donations made by impermissible or unidentifiable donors) after “(b)” there is inserted “or (1A)”.”

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Lord Tyler: My Lords, perhaps I should make clear the rationale of the grouping of this amendment with others. Amendment 38 deals with the possibility of an effective cap on donations in general. Amendment 39, also in my name and that of my noble friend Lord Rennard, deals with contributions from trade union funds. Then there are two extremely important amendments in the name of my noble friend Lord Goodhart—he enjoys the support of Members on all sides of the House—for tax relief on small donations. The rationale for the grouping is simply to make sure that we are able to shift responsibility for funding our politics from a small number of big donors—millionaires—and try to encourage many small contributions, with tax relief, for those who make modest donations. I know from our debate in Grand Committee that there is widespread anxiety to make this shift.

The amendment precisely follows the recommendations of the Hayden Phillips discussions and agreement, to which I shall come back in a moment, but it is absolutely fundamental to all the proposals that have been endorsed by all parties and those from no party to try to take big money out of British politics. Wealthy individuals, organisations and companies should not be able to buy influence in the way that they have in recent years. The inequality of influence generated by massive donations runs entirely counter to the democratic principle and erodes public trust. All of us in your Lordships’ House and, indeed, Members of the other place must be very well aware of the decline in public trust in recent years.

Since I come from something of an ecclesiastical family, I am accustomed to producing or listening to a text. Therefore, I have a few texts to use this afternoon to show the widespread support for the approach represented by these amendments. In the first place, I know that there is widespread support for a reduction in the amount of expenditure by the parties. For example, Mr Gordon Brown asked Mr David Cameron at Prime Minister’s Questions in December 2007 whether he would,

We will come back to that point. At a policy forum in west London on 2 December 2007 Mr Brown said that,

Then the right honourable Francis Maude, speaking on behalf of the Conservatives in the other place, said in an opposition-day debate instigated by the Conservative Party on 4 December 2007:

“We have consistently argued for comprehensive reform that would deal finally with the perception that large donors have undue influence on political parties ... Dealing with that perception requires, above all, a cap on donations”.—[Official Report, Commons, 4/12/07; col. 704.]

Everyone now agrees that a cap of £50,000 would accomplish that. Finally, now that the noble Lord, Lord Bates, is in his place, I should say that he was in

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very good company, not only in his party but in other parties, when he said in the debate on Monday in your Lordships’ House:

“We on this side of the House look forward to the day when big money is genuinely taken out of politics”.—[Official Report, 15/6/09; col. 913.]

The noble Lord, with his voice and his vote this afternoon, can start that process. The day he looks forward to could indeed be today.

It is extremely important that we build on the work of the Hayden Phillips discussions. All parties took a very active role over a long period under his distinguished chairmanship. It was quite clear from his work, which he set out in great detail in his publication of the draft proposals, that he very strongly supported views that had been previously expressed by the Constitutional Affairs Select Committee in the other place in 2006. However, in Grand Committee I am sad to say that the Minister did not seem to be totally persuaded either by the Hayden Phillips discussions or by the Constitutional Affairs Select Committee because, the Minister said, he felt that a cap on donations would so clearly result in a loss of income for the larger parties—I hope that I am paraphrasing reasonably well—that the issue of state funding had to be reopened. That is not the case.

First and foremost, there is excessive expenditure by some of the big parties at election time. I do not absolve even the Liberal Democrats of that; occasionally when they have had money they have used it. However, the noble Viscount, Lord Tenby, who has extensive experience of the advertising industry—I am delighted to see him in his place—pointed out to the Grand Committee that there is huge wastage, particularly on advertising, by the political parties. It does not follow that by restricting large donations to the political parties they would somehow be so inhibited from effective campaigning that they could not do their proper job. It is also why we emphasise the need to link these restrictions on the big donors with the very important initiative taken by my noble friend Lord Goodhart and others on other Benches to try to encourage smaller donations with tax relief.

I emphasise that the experience in other countries—notably, what Barack Obama did in the United States—should encourage this approach in Britain. Barack Obama demonstrated that it was possible to raise very considerable sums of money in the height of the recession in the United States from individuals by way of the encouragement that was given in his campaign. Those who contributed then felt that they had a real connection with his campaign and a sense of ownership. It was not just a few individuals paying the bills; it was spread throughout the states. As a result, more than $750 million was raised. A record-breaking $150 million was raised in September at a time when the country was in recession. That is a very important example.

I remind the House of the specific recommendations of the Hayden Phillips team, which were the result of a cross-party agreement. They were:

“A1 There shall be a cap on donations and loans to all political parties that reach the threshold specified at A2.

A2 The cap shall apply to all parties registered in Great Britain with two or more elected representatives to Parliament, the Scottish Parliament, the National Assembly for Wales and the European Parliament. It shall apply to the party, its accounting units, and regulated donees.

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A3 The final level of the cap will be £50,000”.

That was the specific proposal that the parties agreed to.

I do not propose to go through all of the rationale that has been advanced for this restriction because it is well documented. I do not know of any serious argument against it. The Phillips team also relied on the work of the Constitutional Affairs Committee in the other place. I briefly refer to its recommendation on page 55, paragraph 152, of its 2006 report:

“The UK currently limits expenditure but does not limit donations, while in the U.S.A, donations are capped but spending is not. Both systems lead to significant problems. In Canada, both income and expenditure are comprehensively capped and regulated, and we were convinced by the strengths and benefits of this model”.

Even in the past few days there has been very strong support among the public, demonstrated in public opinion polls, for restrictions on the huge sums of money that are donated to the political parties and, indeed, on the way in which they spend them. In the Phillips proposals the following paragraph is very significant:

“Few would now dissent from the proposition that there should be a limit on how much any one donor may contribute to a party each year. Of the parties consulted by my Review, just one — UKIP — does not favour this approach”.

Everyone else supports this proposal. I hope that that will be evident from the speeches from other Benches this afternoon.

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