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64: After Schedule 4, insert the following new Schedule—

“SCHEDULETax relief on donations

17 Jun 2009 : Column 1093

1 To obtain tax relief under section (Tax relief on donations), the conditions set out in paragraph 2 must be satisfied.

2 (1) The individual who made the donation is a permissible donor.

(2) The registered political party to which the donation is made is a party which, at the last general election preceding the donation, had at least two members elected to the House of Commons.

(3) Conditions A to F in section 416 of the Income Tax Act 2007 (c. 3) (meaning of “qualifying donation”) would have been met if the donations had been made to a charity.

(4) The donor has given a declaration in the manner specified by regulations made by the Commissioners for Her Majesty’s Revenue and Customs and containing any information and any statements required by regulations.

3 Regulations made under paragraph 2(4) may provide for declarations—

(a) to have effect;

(b) to cease to have effect;

(c) to be treated as never having had effect,

in any circumstances and for any purposes specified by the regulations.

4 Regulations made under paragraph 2(4) are subject to annulment pursuant to a resolution of the House of Commons.

5 Tax relief in relation to donations given by an individual in any fiscal year may be given only on whichever is the lesser of—

(a) the amount of donations given by the individual in that year to which section (Tax relief on donations) applies;

(b) £500.

6 Tax relief shall not be given on higher rate income tax.

7 The amount of tax relief (subject to paragraphs 5 and 6) shall be computed and allocated to the political party to which the donation was given as if that party was a charity to which Chapter 2 of Part 8 of the Income Tax Act 2007 applies.”

Lord Goodhart: My Lords, I wish to test the opinion of the House.

5.15 pm

Division on Amendment 64

Contents 83; Not-Contents 129.

Amendment 64 disagreed.

Division No. 2


Addington, L. [Teller]
Alton of Liverpool, L.
Ashdown of Norton-sub-Hamdon, L.
Avebury, L.
Baker of Dorking, L.
Barker, B.
Bonham-Carter of Yarnbury, B.
Bowness, L.
Bradshaw, L.
Bridges, L.
Brooke of Sutton Mandeville, L.
Burnett, L.
Cathcart, E.
Chidgey, L.
Clement-Jones, L.
Cotter, L.
Dholakia, L.
Dykes, L.
Elliott of Morpeth, 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.
Hurd of Westwell, L.
James of Blackheath, L.
Kirkwood of Kirkhope, L.
Lamont of Lerwick, L.
Lee of Trafford, L.
Lester of Herne Hill, L.

17 Jun 2009 : Column 1094

Linklater of Butterstone, B.
Livsey of Talgarth, L.
MacGregor of Pulham Market, L.
Mackie of Benshie, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Marland, L.
Marlesford, L.
Masham of Ilton, B.
May of Oxford, L.
Methuen, L.
Miller of Chilthorne Domer, B.
Morrow, L.
Neill of Bladen, L.
Neuberger, B.
Newby, L.
Nicholson of Winterbourne, B.
Northover, B.
Norton of Louth, L.
O'Cathain, B.
Pannick, L.
Plumb, L.
Razzall, L.
Redesdale, L.
Roberts of Llandudno, L.
Rodgers of Quarry Bank, L.
Sandwich, E.
Scott of Needham Market, B.
Sharp of Guildford, B.
Shrewsbury, E.
Shutt of Greetland, L. [Teller]
Steel of Aikwood, L.
Stewartby, L.
Stoddart of Swindon, L.
Taverne, L.
Tebbit, L.
Tenby, V.
Thomas of Gresford, L.
Thomas of Winchester, B.
Tonge, B.
Tordoff, L.
Tugendhat, L.
Tyler, L.
Walmsley, B.
Walpole, L.
Williams of Crosby, B.


Amos, B.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Bach, L.
Barnett, L.
Bassam of Brighton, L. [Teller]
Berkeley, L.
Bernstein of Craigweil, L.
Bew, L.
Bilston, L.
Borrie, L.
Boyd of Duncansby, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Carter of Coles, L.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Cobbold, L.
Colville of Culross, V.
Condon, L.
Corbett of Castle Vale, L.
Craigavon, V.
Crawley, B.
Davidson of Glen Clova, L.
Davies of Abersoch, L.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Dean of Thornton-le-Fylde, B.
Desai, L.
D'Souza, B.
Elder, L.
Elystan-Morgan, L.
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.
Ford, B.
Gale, B.
Gibson of Market Rasen, B.
Golding, B.
Goudie, B.
Grantchester, L.
Greenway, L.
Grocott, L.
Hannay of Chiswick, L.
Harris of Haringey, L.
Haskel, L.
Haskins, L.
Haworth, L.
Henig, B.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Newport, L.
Howie of Troon, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Irvine of Lairg, L.
Jay of Ewelme, L.
Jay of Paddington, B.
Joffe, L.
Jones, L.
Jones of Whitchurch, B.
King of West Bromwich, L.
Kirkhill, L.
Laird, L.
Lea of Crondall, L.
Lofthouse of Pontefract, L.
McDonagh, B.
Macdonald of Tradeston, L.
McIntosh of Haringey, L.
McKenzie of Luton, L.
Malloch-Brown, L.
Mar, C.
Massey of Darwen, B.
Maxton, L.
Montgomery of Alamein, V.
Moonie, L.
Morgan, L.
Morgan of Drefelin, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Manchester, L.
Morris of Yardley, B.
O'Neill of Clackmannan, L.
Parekh, L.
Patel, L.
Patel of Blackburn, L.
Pendry, L.
Prosser, B.
Quin, B.
Ramsay of Cartvale, B.
Rea, L.

17 Jun 2009 : Column 1095

Rendell of Babergh, B.
Robertson of Port Ellen, L.
Rogan, L.
Rooker, L.
Rosser, L.
Rowlands, L.
Royall of Blaisdon, B.
St. John of Bletso, L.
Scotland of Asthal, B.
Simon, V.
Snape, L.
Soley, L.
Sutherland of Houndwood, L.
Symons of Vernham Dean, B.
Taylor of Bolton, B.
Temple-Morris, L.
Thornton, B.
Tomlinson, L.
Tunnicliffe, L.
Turner of Camden, B.
Uddin, B.
Vadera, B.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
West of Spithead, L.
Whitaker, B.
Whitty, L.
Wilkins, B.
Williams of Elvel, L.
Woolmer of Leeds, L.
Young of Norwood Green, L.
5.25 pm

Amendment 66 not moved.

Amendment 67

Moved by Lord Tyler

67: After Clause 17, insert the following new Clause—

“National spending limit

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

“75B National spending limit

(1) A registered political party may spend in total, including expenditure by its national, regional, local or other organs, no more than £100 million on qualifying expenditure in the period of 61 months following a general election.

(2) If more than one general election occurs within 61 months following the previous general election, the Secretary of State may by order increase the sums referred to in subsection (1) by any appropriate amount.

(3) Before making an order under subsection (2), the Secretary of State shall consult the Electoral Commission.

(4) An order under subsection (2) must be laid before, and approved by a resolution of, both Houses of Parliament.””

Lord Tyler: My Lords, we now turn to the discussions that have taken place over many years about constraint on spending by political parties at both the national and the local levels. In case the Minister feels that this is not a relevant or topical issue, perhaps I may refer to the fact that today UNISON, Britain’s second largest union, has decided not to make any further contributions to the Labour Party for the time being. Therefore, constraint on expenditure by political parties may be more relevant than it was just a few hours ago. Perhaps I should also remind the Minister that, in the last three months recorded by the Electoral Commission, Labour managed to raise £2.8 million but the Conservatives raised £4 million. The Minister may like to comment on that discrepancy and think again about whether implementation of the agreements arrived at during the cross-party talks under the auspices of Sir Hayden Phillips may be more appropriate.

Amendments 67 to 73 would, in effect, all implement the concerns and proposals discussed at such length by the Hayden Phillips team. Although spending limits were debated in Grand Committee, the Minister will acknowledge that we have responded in these amendments to some of the criticisms made during that process. We have returned to the amendments proposed in the

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other place, which more closely reflect the Hayden Phillips proposals. The amendments differ in only one respect: the spending limit that we suggest over a period is £100 million, rather than the £150 million in the Hayden Phillips discussions. That reflects some of the anxieties that have been expressed—not least in the previous debate by the noble Viscount, Lord Tenby, who spoke from professional experience of the marketing and advertising industry—about how much wastage takes place. We believe that it would be reasonable to think of a more modest target, which would also meet some of the anxieties of the public.

I do not propose going through all the specifics of the Hayden Phillips proposals, which are directly reflected in the amendments before your Lordships’ House. However, I should like briefly to refer to the conclusions of that team, which I again remind the House reflected the anxieties, concerns and intentions of all three parties and for which, at the time, there was explicit support not only in the Hayden Phillips team but also in the House of Commons. Mr Maude, whose comments I referred to in the previous debate and will not repeat now, was absolutely explicit that the recommendations should be incorporated as soon as possible, while in exchanges during Prime Minister’s Questions in December 2007 the Prime Minister and the leader of the Conservative Party also specifically endorsed the proposal that there should be limits on expenditure.

In his summary, Sir Hayden Phillips states:

“I believe there is general agreement that: expenditure on general election campaigns has progressively grown and should now be reduced in line with a new spending control regime to be agreed between the parties; and controls on expenditure by all third parties should be strengthened ... This chapter has described the options available to the parties in crafting new controls on spending. To reach a lasting agreement, there needs to be a focused discussion on four key issues: the period over which spending should be limited; the categories of spending which should be limited; the geographical scope of the limits on spending; and, in the light of the nature of an agreed scheme, the amount by which spending should be reduced. But it is clear to me that progress must be made on this point and that a new approach to curbing expenditure is necessary. A comprehensive agreement on party funding should, at a minimum, include within it measures to return to the overall rise in party spending to the trend line as it was before the spike in spending prior to the 2005 general election”.

5.30 pm

I turn now to a specific issue that again we have modified somewhat from the proposals we put to the Grand Committee; it relates to permissible expenditure. We are clear that at the moment there is a temptation for national parties effectively to interfere with constituency campaigns in a way that is contrary to all the intentions and legislation going right back to the 1883 Act. That temptation relates to specific approaches made to individual electors on behalf of a national campaign and seeks effectively to undermine what is going on in the individual constituency.

Many of us who took part in the Grand Committee proceedings have been candidates at various stages. I added up the number of occasions on which I have been a candidate for a county or general election and it is rather a large number, but on every occasion my agent was able to say to me—others will have had this experience—“If you go over the expenditure limit that

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has been imposed on this constituency, you as the candidate or I as the agent will be in court”. It was laid down absolutely and precisely that those who fought a constituency campaign should bear the full legal responsibility for all the money spent on promoting the candidature.

However, by means of mailshots directed at individuals—let alone all the other material that can come from a national headquarters—a principle that has been in place for more than a century has been effectively undermined. Therefore, we have included a specific requirement in these amendments that, where national expenditure takes place to promote, effectively, a candidate and his or her party within a constituency directly related to an individual elector’s response, that should be taken into account in relation to the limits on expenditure at the local level. We understand that this is difficult where, for example, billboards are used; in Chester, for example, it might be said that billboards apply to the whole of Cheshire, because people go in and out of the city. However, where unsolicited mail is sent to an individual elector, that undermines what is happening at the local level and the responsibility of the candidate and his or her agent to look after very precisely what expenditure is made on behalf of that candidate. That is included in the eligible expenditure categories within this section.

I do not need to say much more at this point. There has been considerable discussion at all stages of the process through your Lordships’ House and some discussion in the other place, but I plead with the Minister to take this seriously. Indeed, perhaps on this occasion he might be permitted a little bit of a partisan approach, as it is his party that is suffering most from this attempt to get around the law on the way in which expenditure is advanced.

It has also been the experience in recent years that expenditure during the three weeks or so of the campaign is but part of the total campaign expenditure. That has been the cause of much concern and controversy, certainly in the analysis undertaken by Mr Peter Bradley, the former Member for the Wrekin, who was the unfortunate victim of a huge amount of money being spent in his constituency on behalf of his opponent before the dissolution of the last Parliament.

This is an important issue. There has been considerable agreement across the parties, with all three leaders agreeing that something needs to be done on this score. I hope that we will not have yet another example of the St Augustine syndrome: let us all be virtuous, but not yet. I beg to move.

Lord Bates: My Lords, these amendments are in the same vein as the previous group that we discussed. I can therefore keep my comments fairly brief, because most of the points have been covered.

The noble Lord, Lord Tyler, referred to being virtuous, but not yet. He might say that to his own party on the question of the donation of £2.4 million. This is a germane point and the people watching this debate or reading it in Hansard need to have it placed in context. It was a significant donation from a foreign national, a fugitive from justice in the UK, which was made to the Liberal Democrats, who refuse to repay it. If the

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Liberal Democrats feel so passionately about being virtuous, why not repay it? If the noble Lord will make that pledge I shall happily give way to him in order that he may do so.

My real point on spending preferences is that in a fair and democratic situation we need to have a level playing field. However, that level playing field—I alluded to this in my previous comments—has been distorted by the amount of public money that has been poured into constituencies. The office costs allowance, which I mentioned, and the communications allowance could amount to something in the region of £100,000 per year, or £500,000 during the lifetime of a Parliament. That money is put in by the incumbent and is in addition to all the benefits and opportunities that he or she has of writing letters and access to the press.

Lord Greaves: My Lords, the noble Lord seems to be repeating what he said in the debate on the previous group. Regardless of what one thinks about the £10,000 a year communications allowance—I would be in favour of scrapping it—does he really believe that there is a proper comparison between the £10,000 per year communications allowance that an MP receives and the much larger amounts of money with which the Conservative Party is swamping some constituencies?

Lord Bates: My Lords, the direct answer to the question is yes, I do think that there is a comparison. That is why I am making the case.

Lord Greaves: My Lords, does the noble Lord, therefore, not think that the Conservatives ought to be matching that £10,000 with £10,000 of their own money and not a penny more?

Lord Bates: My Lords, I was intending to go on to talk about all the additional benefits that the incumbent has in contesting an election. If the noble Lord is so passionate about limiting the amount of money that can fund campaigns, I think, having been around a few campaigns myself, not least by-election campaigns, that the Liberal Democrats could take the lead and show their virtue by imposing a restraint now on the amount of funds that they are going to put into the Norwich North by-election. They could do that if they really wanted to take the big money out of politics.

Lord Tunnicliffe: My Lords, I quote from the Companion:

“A member of the House who is speaking may be interrupted with a brief question for clarification. Giving way accords with the traditions and customary courtesy of the House ... Lengthy or frequent interventions should not be made, even with the consent of the member speaking”.

We are on Report.

Lord Bates: My Lords, I will humbly continue the debate. I recognise the rules of the House and would not want to trespass on them.

I was talking about the amount of money that is going into elections and the need for a spending cap. This is the point that my right honourable friend

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David Cameron has made in his personal pledge: an incoming Conservative Government would abolish the communications allowance as a first step and a gesture in that direction. We would seek to reduce the cost of politics and the size of the House of Commons. He has put his finger on the national mood at the moment, which is not inclined to put one penny more towards the political process in these straitened times but wants to see the system managed much more efficiently. It is up to the political parties, through interparty dialogue, to come up with ways in which that can be achieved.

I would like to make a couple of other points about expenditure limits. There are many other forms of support that political parties receive from the public purse, a point that was raised in the Neill report and was touched on by Sir Hayden Phillips in his review, where he pointed out the value of freepost mailings of manifestos at election time and of political election broadcasts. Significant amounts of funding are there for the incumbent.

We are not saying that there is not a problem; big money—I use the term again with no hesitation—needs to be taken out of politics. “Big money” refers not only to trade unions and major wealthy individuals but to the public purse as well. Some steps have been taken and it is worth putting on the record some of the progress that has been made in relation to national limits. We have just experienced a European election that had a national limit on expenditure. That was a good exercise and a good discipline to impose.

The very Bill that we are talking about came forward with a limitation on pre-candidacy election expenses for certain general elections. It introduces a limit, which is a step in the right direction, as it acknowledges that we have to find ways of reducing the amount of funding that is going into constituencies. Section 18 talks about a system of limiting the amount of money expended, kicking in after the 55th month of a Parliament.

However, there is an important corollary to the point about the limitations on pre-election expenses under the Bill. I would be grateful if the Minister could put some additional remarks on the record about this. The understanding was that that would be matched by a limitation of the communications allowance used during that period by Members in the other place in their constituencies. It seems only right and fair that any limit that applied to donation income should be matched by a gesture from the incumbent Members in limiting the amount that is spent through the communications allowance. Various statements have been made claiming that such a statutory instrument or convention would be in place by the time the Bill received Royal Assent. It would be good to hear that this is still very much the Government’s intention. I recognise the intention behind the amendments but, for the reasons that I have outlined, we do not want to support them at this stage.

5.45 pm

Lord Bach: My Lords, this group of proposed amendments seeks to introduce a radical change in the regulation of political expenditure in this country. I

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pay tribute to the noble Lord, Lord Tyler, and the, alas, not present noble Lord, Lord Rennard—whom we hope is getting better—for their passion and commitment to this particular point about national spend and constituency spend. I am unable to accept the amendments, but I hope that what I have to say will go a little way towards making the noble Lord realise that we want to move forward on this.

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