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Noble Lords may argue that there is a distinction to be made between state funding and what is proposed in the amendments, in that the money would not come directly from the state, as the allocation and amount of relief would depend on the choice made by individuals. That may be so, but the end result would still be an increase in the money diverted from public funds to support political parties. As I have already set out, at present, when politicians and political parties are held in particularly low esteem by the public, we do not consider that there is any public appetite for increasing the money paid out by the state to support political parties.

We must also consider the cost of any such scheme. Under current legislation, donations below £200 are not recorded, so it cannot be known how many donations would be affected by the measure and what it would cost. However, the Neill report recommended tax relief on donations of up to £500 per year. In their response to that report, the Government estimated that the loss of revenue as a result would be some £4 million to £5 million per year. The Government do not consider that such an increase in the amount of state subsidy of politics is currently justified. Noble Lords may argue that, relative to total government spending, this would still be a small amount. The public perception, however, would be unlikely to take that argument into account, and would instead focus on the principle and the headline figure.

My noble friend Lord Campbell-Savours has proposed in Amendment 65 that the amount of relief available should be set at a very low level, such that the cost to the public purse is low but that the principle of tax relief on political donations would nevertheless be established in legislation. As I set out, the Government do not agree that any increase in state subsidy of politics is acceptable to the public in present circumstances. In any case, any system of tax relief would be expensive for both political parties and HMRC to administer.

17 Jun 2009 : Column 1086

That point was remarked on in the Neill report, in the context of considering a minimum donation which would qualify for relief. The report said:

“The cost of obtaining the signature by donors of the necessary forms, and the cost of keeping the necessary records will impose an administrative burden on political parties which means that, below some level, it will become uneconomic to claim tax relief on a donation”.

Lord Brooke of Sutton Mandeville: My Lords, the Minister has acknowledged on behalf of the Government the desirability of broadening individual support for political parties. He went on to say that there were any number of opportunities available to parties so to broaden their membership. For his position to remain reasonable in rejecting the amendments, can he say what kind of ideas the Government have in mind for broadening membership at this stage?

Lord Tunnicliffe: My Lords, it is not the role of the Government to advise political parties on how to broaden their sources of income. Indeed, if the Government and my party had any particularly bright ideas, we would be keeping them to ourselves for as long as we could.

If we set the level of relief as low as my noble friend suggests, the administrative burden involved could all but cancel out the benefit of the relief. There is a further concern with my noble friend’s suggestion. Once the principle of relief is established in legislation, there would be little to stop future Governments increasing the sums involved, perhaps exponentially. It would be poor legislative practice to allow for such a possibility.

Noble Lords might argue that state funding of politics already exists in the form of Short money, Cranborne money, policy development grants and free postage at elections; so the principle is already well established. However, that money is provided with a specific purpose or political activity in mind. By contrast, tax relief on donations would amount to a broad subsidy on a political party’s general activity. The amendments do not propose any restriction on the purpose for which the relief income could be used. There is a risk that under the amendments a political party would receive income which could be spent for non-political purposes. This danger was acknowledged by the noble Lord, Lord Goodhart, when we first considered these matters in Grand Committee. The amendment before us does nothing to allay these fears, however.

As has been noted, inheritance tax relief is currently provided on bequests to political parties. Noble Lords have argued that this suggests that the principle should be extended to income tax. I can only repeat what I said in Grand Committee. We are not in favour of extending this anomaly any further.

If carried and enacted, these amendments could effectively place political parties on an equal footing with charities. The Government do not agree that the two should be regarded as analogous. Charities can and do undertake campaigning activities, but only in the context of supporting the delivery of their charitable purpose. Guidance for charities is quite clear on the matter. In order to be a charity, an organisation must

17 Jun 2009 : Column 1087

be established only for charitable purposes that are for the public benefit. An organisation will not be charitable if its purposes are political. Campaigning activity can be legitimate but it must not be the continuing and sole activity of the charity. There is thus a clear difference between the campaigning activities of a charity and those of a political party. The provision of gift aid to charities does not imply that it should be provided to political parties. The Government do not support these amendments, and I hope that—

Lord Maclennan of Rogart: My Lords, I deliberately refrained from intervening until the noble Lord was close to the end of his speech. I am bound to say—I ask him to comment—that he appears to be endeavouring to support the view that political parties are unworthy objects of finance by members of the public. He seems to be prepared to accept a specious argument that because of some misbehaviour by a handful of politicians the whole basis of our democratic system—which is political parties—should be penalised. In fact, he seems to be kow-towing to the most prejudiced views about our democracy. If he does not recognise the absolutely essential part of political parties, not only in campaigning but in developing policy for Governments, he is failing to do the task for which the public are paying him.

Lord Tunnicliffe: My Lords, I did not particularly notice a question in that speech. I am drawing a clear distinction. There is a more or less universal consensus in the United Kingdom that charities are special; that they should have a peculiar position in our tax regime; that their activities should be carefully regulated by an Act that was passed relatively recently, after extensive debate in both Houses, which in particular stuck on the point that a charity should not be solely for the purpose of campaigning. I draw a distinction between political parties and charities. That is widely done.

We are kidding ourselves if we think that the public out there are not at this moment asking themselves what political parties do and how they behave. Sadly—I entirely take the point of it being sad—the public do not hold political parties in the same regard and respect as they do the generality of charities. That is the basis on which I hope noble Lords will withdraw their amendments.

Lord Tyler: My Lords, it falls to me to respond on the whole group of amendments, which I shall do as briefly as I possible can. It has been a most useful debate. I am very grateful for the support that has been expressed, not necessarily to the whole package that is represented in this group, but, in differing degrees, to important parts of the package.

The speeches from the Minister and from the Conservative Back Bench reminded me that, whenever I look at the patron saints in the Central Lobby up on those murals, I think that we should replace them all with a mural of St Augustine, who, Members of your Lordships’ House will recall, said, “Lord, make me virtuous—but not yet”. Everybody who has opposed—very few have opposed—the proposals in the amendments seems to be in favour of them, but not yet.

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I am particularly struck by those who think that somehow or other it is perfectly appropriate for the dead to make contributions to political parties through the tax system, but somehow those of us who are alive are not able to do so. That is an extraordinary anomaly, to which my noble friend Lord Goodhart has referred. It is also ridiculous to suggest that those charities that make a virtue of their campaigning in political matters—small “p”; they are not supporting political parties—are given full tax concessions from all donations, and yet political parties are somehow thought to be second rate.

I would resist absolutely the suggestions that somehow or other this is the thin end of the wedge for an increase in state funding. I must say in passing that the Conservative Party is of course the biggest recipient of state funding. The leader of the Conservative Party in the other place, in this place and a number of offices of the Conservative Party receive state funding in a way that no other group does, not even the government party. Let us not fool ourselves that somehow state funding is a problem.

It is, however, absolutely true that this particular set of amendments is not linked to state funding, except in this respect. As my noble friend said, the estimate is that, if there was the tax concession regime that he postulates, something between £3 million and £4 million might be the annual cost. I remind your Lordships’ House that the current advertising budget of this Government is £300 million a year. This small sum, this little concession, is something in the region of 1 per cent or possibly 1.5 per cent. A lot of that funding for advertising is very close to party political persuasion. It comes a long way away from simply advertising what the Government are doing. It very often advertises what the Government wish to do.

There is a point about the trades unions. I entirely understand the concerns expressed by the noble Baroness, Lady Turner. I must direct her attention, however, to what the Prime Minister—not some Minister in some debate, but the Prime Minister—said on 4 December 2007:

“I have told the trades union movement that we have got to make the changes in the political levy so that it is more transparent as well”.

That is why the very careful safeguards set out in the review by Sir Hayden Phillips, which are endorsed in Amendment 39, are very appropriate.

The Minister constantly—at Second Reading, in Grand Committee and again this afternoon—refers to the need for consensus. In Grand Committee, the noble Lord, Lord Campbell-Savours, quite rightly pooh-poohed the need for consensus. Consensus means that you move as slow as the slowest movers, which, in this respect, happen to be some of the most retrograde in the Conservative Party. In that regard, I very much appreciate the support this afternoon from the Conservative Back Benches. Here, I think that they are being realistic, and indeed the Cross-Benchers recognise that something has to be done. I am afraid that a major factor in the reduced respect that the public now have for parliamentary institutions—the noble Lord, Lord MacGregor, made a very passionate reference to this—is that they think that big money buys influence. That thread went right through the cross-party agreement

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in the talks convened by Sir Hayden Phillips, and I believe that it has been the background to all the contributions from all sides of the House this afternoon, with the disappointing exception of the Conservative Front Bench and the Minister.

It is a ludicrous Aunt Sally to say that allowing a small tax concession in the form suggested by my noble friend, with widespread support across the House, would somehow cause even more concern and angst among the public. I do not believe that. In fact, it would give the public the opportunity to put their money where their mouth is—in a small way, admittedly—but it would not increase state funding hugely. If members of the Conservative Party are so anxious about state funding, let them give it up. That is an obvious way in which they can make a contribution to the Exchequer. At present, in the course of a Parliament the Conservative Party receives in the region of £25 million to £30 million of taxpayers’ money, most of which is not available to any other party.

We have had a very useful debate this afternoon and there has been widespread support for the changes that we would make. I remind your Lordships that it is a very simple quid pro quo—a restriction on very large donations and, in return, the encouragement of small donations through the tax system. I believe that that is a very appropriate stand for your Lordships to take, and I wish to test the opinion of the House.

5.01 pm

Division on Amendment 38

Contents 71; Not-Contents 210.

Amendment 38 disagreed.

Division No. 1


Addington, L.
Allenby of Megiddo, V.
Alton of Liverpool, L.
Ashdown of Norton-sub-Hamdon, L.
Avebury, L.
Barker, B.
Bonham-Carter of Yarnbury, B.
Bradshaw, L.
Bridges, L.
Burnett, L.
Chidgey, L.
Clement-Jones, L.
Cotter, L.
Craigavon, V.
Dholakia, L.
D'Souza, B.
Dykes, L.
Falkland, V.
Falkner of Margravine, B.
Garden of Frognal, B.
Glasgow, E.
Goodhart, L.
Greaves, L.
Hamwee, B.
Harries of Pentregarth, L.
Harris of Richmond, B.
Hodgson of Astley Abbotts, L.
Hooson, L.
Howe of Idlicote, B.
Kirkwood of Kirkhope, L.
Lee of Trafford, L.
Lester of Herne Hill, L.
Linklater of Butterstone, B.
Livsey of Talgarth, L.
Mackie of Benshie, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Mar and Kellie, E.
May of Oxford, L.
Methuen, L.
Miller of Chilthorne Domer, B.
Montgomery of Alamein, V.
Neuberger, B.
Newby, L.
Northover, B.
O'Neill of Bengarve, B.
Pannick, L.
Patel, L.
Razzall, L.
Redesdale, L.
Roberts of Llandudno, L. [Teller]

17 Jun 2009 : Column 1090

Rodgers of Quarry Bank, L.
Sandwich, E.
Scott of Needham Market, B.
Sharp of Guildford, B.
Shutt of Greetland, L. [Teller]
Steel of Aikwood, L.
Sutherland of Houndwood, L.
Taverne, L.
Tenby, V.
Thomas of Gresford, L.
Thomas of Winchester, B.
Tonge, B.
Tordoff, L.
Tyler, L.
Walmsley, B.
Walpole, L.
Warnock, B.
Williams of Crosby, B.
Young of Hornsey, B.


Adonis, L.
Ahmed, L.
Amos, B.
Anderson of Swansea, L.
Andrews, B.
Anelay of St Johns, B.
Archer of Sandwell, L.
Arran, E.
Astor of Hever, L.
Attlee, E.
Bach, L.
Baker of Dorking, L.
Barnett, L.
Bassam of Brighton, L. [Teller]
Bates, L.
Berkeley, L.
Bernstein of Craigweil, L.
Billingham, B.
Bilston, L.
Borrie, L.
Boyd of Duncansby, L.
Brett, L.
Brooke of Alverthorpe, L.
Brooke of Sutton Mandeville, L.
Brookman, L.
Buscombe, B.
Carter of Coles, L.
Cathcart, E.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cobbold, L.
Colville of Culross, V.
Colwyn, L.
Condon, L.
Cope of Berkeley, L.
Corbett of Castle Vale, L.
Courtown, E.
Crawley, B.
Crickhowell, L.
Cunningham of Felling, L.
Darzi of Denham, L.
Davidson of Glen Clova, L.
Davies of Abersoch, L.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
De Mauley, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dixon-Smith, L.
Donoughue, L.
Eccles of Moulton, B.
Elder, L.
Elton, L.
Elystan-Morgan, L.
Erroll, E.
Evans of Parkside, L.
Evans of Temple Guiting, L.
Evans of Watford, L.
Falconer of Thoroton, L.
Falkender, B.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Ferrers, E.
Ford, B.
Fowler, L.
Gale, B.
Geddes, L.
Gibson of Market Rasen, B.
Golding, B.
Goudie, B.
Graham of Edmonton, L.
Grantchester, L.
Grocott, L.
Hanham, B.
Hannay of Chiswick, L.
Hanningfield, L.
Harris of Haringey, L.
Haskel, L.
Haskins, L.
Haworth, L.
Henig, B.
Henley, L.
Higgins, L.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howe, E.
Howe of Aberavon, L.
Howie of Troon, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Hurd of Westwell, L.
Inglewood, L.
Irvine of Lairg, L.
James of Blackheath, L.
Jay of Ewelme, L.
Jay of Paddington, B.
Joffe, L.
Jones, L.
Jones of Whitchurch, B.
Jopling, L.
Kimball, L.
King of Bridgwater, L.
King of West Bromwich, L.
Kirkhill, L.
Laird, L.
Lamont of Lerwick, L.
Lea of Crondall, L.
Lipsey, L.
Lofthouse of Pontefract, L.
Luke, L.
Lyell, L.
McColl of Dulwich, L.
McDonagh, B.
Macdonald of Tradeston, L.
MacGregor of Pulham Market, L.
McIntosh of Haringey, L.
McKenzie of Luton, L.
MacLaurin of Knebworth, L.
Malloch-Brown, L.
Mar, C.
Marland, L.
Masham of Ilton, B.
Massey of Darwen, B.
Maxton, L.

17 Jun 2009 : Column 1091

Mayhew of Twysden, L.
Monson, L.
Montrose, D.
Moonie, L.
Morgan, L.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Manchester, L.
Morris of Yardley, B.
Morrow, L.
Moser, L.
Neill of Bladen, L.
Noakes, B.
Norton of Louth, L.
O'Cathain, B.
O'Neill of Clackmannan, L.
Onslow, E.
Palmer, L.
Parekh, L.
Patel of Blackburn, L.
Patten, L.
Pearson of Rannoch, L.
Pendry, L.
Perry of Southwark, B.
Plant of Highfield, L.
Plumb, L.
Prosser, B.
Puttnam, L.
Quin, B.
Ramsay of Cartvale, B.
Reay, L.
Rendell of Babergh, B.
Renton of Mount Harry, L.
Richard, L.
Rogan, L.
Rooker, L.
Rosser, L.
Rowe-Beddoe, L.
Rowlands, L.
Royall of Blaisdon, B.
Ryder of Wensum, L.
Scotland of Asthal, B.
Seccombe, B.
Selborne, E.
Selsdon, L.
Sewel, L.
Sharples, B.
Sheldon, L.
Shephard of Northwold, B.
Shrewsbury, E.
Simon, V.
Skelmersdale, L.
Snape, L.
Soley, L.
Soulsby of Swaffham Prior, L.
Stewartby, L.
Stoddart of Swindon, L.
Strathclyde, L.
Symons of Vernham Dean, B.
Taylor of Bolton, B.
Taylor of Holbeach, L.
Tebbit, L.
Temple-Morris, L.
Thornton, B.
Tomlinson, L.
Trenchard, V.
Trimble, L.
Trumpington, B.
Tugendhat, L.
Tunnicliffe, L.
Turner of Camden, B.
Uddin, B.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
West of Spithead, L.
Whitaker, B.
Whitty, L.
Wilcox, B.
Wilkins, B.
Williams of Elvel, L.
Williamson of Horton, L.
Woolmer of Leeds, L.
Young of Norwood Green, L.
5.14 pm

Amendment 39 not moved.

Schedule 4 : Reports of gifts received by unincorporated associations making donations: Schedule to be inserted into the 2000 Act

Amendments 40 to 63

Moved by Lord Tunnicliffe

40: Schedule 4, page 66, line 20, leave out “donations” and insert “contributions”

41: Schedule 4, page 66, line 21, leave out “donations” and insert “political contributions”

42: Schedule 4, page 66, line 24, leave out “donation” and insert “contribution”

43: Schedule 4, page 66, line 25, leave out “donations” and insert “contributions”

44: Schedule 4, page 66, line 27, leave out “donation” and insert “contribution”

45: Schedule 4, page 66, line 28, leave out “donations” and insert “contributions”

46: Schedule 4, page 66, line 31, leave out “donation” and insert “contribution”

17 Jun 2009 : Column 1092

47: Schedule 4, page 66, leave out lines 32 to 36 and insert—

“(2) An unincorporated association makes a “political contribution” in any of the following cases—

(a) it makes a donation (within the meaning of Part 4) to a registered party;

(b) it makes a loan of money to a registered party, or discharges (to any extent) a liability of a registered party, in pursuance of a regulated transaction (within the meaning of Part 4A);

(c) it makes a donation (within the meaning of Schedule 7) to a regulated donee;

(d) it makes a loan of money to a regulated donee, or discharges (to any extent) a liability of a regulated donee, in pursuance of a controlled transaction (within the meaning of Schedule 7A);

(e) it makes a donation (within the meaning of Schedule 11) to a recognised third party;

(f) it makes a donation (within the meaning of Schedule 15) to a permitted participant.”

48: Schedule 4, page 67, line 1, leave out “donation” and insert “contribution”

49: Schedule 4, page 67, line 2, leave out “donation” and insert “contribution”

50: Schedule 4, page 67, leave out lines 4 to 12

51: Schedule 4, page 67, line 29, at end insert—

“(e) the value of a contribution within sub-paragraph (2)(b) or (d) is the amount of money lent or liability discharged.”

52: Schedule 4, page 67, line 30, after “donation” insert “, or a sum of money lent,”

53: Schedule 4, page 67, line 30, leave out “it” and insert “the donation or loan”

54: Schedule 4, page 67, line 34, leave out “donation” and insert “political contribution”

55: Schedule 4, page 67, line 38, leave out first “donation” and insert “contribution”

56: Schedule 4, page 67, line 38, leave out second “donation” and insert “contribution”

57: Schedule 4, page 67, line 42, leave out “donation” and insert “contribution”

58: Schedule 4, page 68, line 2, leave out “donation” and insert “contribution”

59: Schedule 4, page 68, line 4, leave out “donation” and insert “contribution”

60: Schedule 4, page 68, line 9, leave out “donation” and insert “contribution”

61: Schedule 4, page 68, line 13, leave out “donation” and insert “contribution”

62: Schedule 4, page 68, line 19, leave out “donation” and insert “contribution”

63: Schedule 4, page 72, line 10, at end insert—

“( ) lends money to another otherwise than on commercial terms;”

Amendments 40 to 63 agreed.

Amendment 64

Moved by Lord Goodhart

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