Company Political Donations (Government Contractors) (Hansard, 23 April 1986)

I beg to move,

That leave be given to bring in a Bill to prohibit companies which contract with the Government, or any department or agency thereof or any local government authority, from making donations, gifts or contributions either directly or in conjunction with any other company, association, or body or otherwise indirectly to any political party or to any candidate for Parliament. The Bill deals with the murky, obscure and rather difficult subject of party finances and political contributions. It is part of a consistent plea by Labour Members and something that we shall implement when we return to power. It is a plea, first, for light, more light and still more light. Let us know what is happening in this area and let us know who is giving what to whom and why. Secondly, it is a plea for more democracy in political donations so that people do not find that companies are giving money on their behalf without their consent, with no power for them to opt out and without any real consultation on their views.

Ideally, political parties—this is a widely-held view—should be financed by the state, but until that happy day comes the very least that we can do is establish these two basic principles to dissipate the air of sleaze and scandal and the possibility of undue and unreasonable influence and of wrong deals which is all too prevalent today.

My Bill is part of that process and it is much the simplest part of the process because it provides, simply and straightforwardly, that public contractors—those working on or bidding for contracts with central Government, local government or public bodies—shall not make political donations to any party and shall not be considered for contracts if they make political donations to any party. That is a simple principle and it is one that is firmly established by law already in that great bastion of free enterprise, the United States, where federal legislation provides accordingly. My Bill is intended to follow that federal legislation in the United States.

I shall not unveil any great scandals, which is perhaps why the Press Gallery has emptied already, but it is wrong that, for example, Sir Horace Cutler, as Conservative leader of the GLC, set up in 1977 and again in 1981 his own political fund—Sir Horace was trying to be a mini-Lloyd George for beginners—which raised £22,000 in 1977 and £20,000 in 1981, and which was apparently mainly financed by builders with contracts with the GLC. Indeed, Wates gave £3,000 to the first of those funds, which was not reported in its accounts through the normal procedures. Some of the firms giving money to that fund—McAlpine, for instance—asked that restrictions be placed on the GLC's direct labour department as a price for those contributions. That is wrong.

It is also wrong that firms such as Trust House Forte, which has cleaning interests and donates £37,500 to the Tory election fund, and Pritchard, which gave £10,000 in 1982, £5,000 in 1983 and £12,000 in 1984, should be giving money to encourage Government to privatise cleaning contracts, particularly for the DHSS, but also for local councils. Indeed, that has often been done with disastrous results.

314 The National Union of Public Employees privatisation fact sheet, which appears regularly, devotes nine pages of the latest issue to faults, failures, inadequacies and lawsuits arising from hospital and local government cleaning contracts undertaken by firms, many of them donors to the Conservative party, as a result of privatisation, which their donations were presumably meant to encourage.

That principle is completely wrong. It is also wrong that defence contractors should make donations, especially because the area for competition in defence contracts is very limited. Even so, Plessey has donated £55,000 and Racal has donated £75,000. Even poor Westland donated £2,000 to the Conservative party. That may be a small donation in view of the company's financial position. Indeed, in view of the way that the company was treated by the Government, I would have expected the Government to give money to Westland rather than the company giving money to the Government.

It is also wrong that the principle of donations should apply in the new area of privatisation as we do not know what rules will govern contracts in that area. It is significant that half of the financial advisers and lead underwriters to the Government's privatisation programme are donors to the Conservative party or to its backing group, the Economic League. Kleinwort, Benson donated £30,000 to those organisations. It will not escape the attention of hon. Members that Kleinwort, Benson did very well out of the flotation of British Telecom, and many of the advisers did well out of that and other flotations.

As long as there are donations of this nature, there will always be the imputation that influence is being used, that favours are being sought and given or that contracts are being influenced. It is significant that construction is the fourth largest donor to the Conservative party. We do not know whether there are scandals in that area. However, there have been major scandals overseas, especially in Canada, over Government contracts for construction firms. It is important that we know what is happening and that justice is not only done but seen to be done. The Bill, plus the publication of company donations, will ensure that that is done.

The bulk of the contributions that we are discussing today will go to the Conservative party. That party has seen the justice of legislating to ensure publication of donations and to ensure full consent for donations made to the Labour party by trade unions. The Conservatives must therefore see the justice of establishing the same principle in the case of the even larger donations made to the Conservative party. There cannot be one law for the poor and one for the rich in this instance.

I do not know why people contribute to the Conservative party. They certainly cannot do that to get the benefits of the Government's economic policies which have brought disaster for so many firms, record rates of bankruptcies and closures and such record under-running in capacity. They cannot be contributing to secure honours because the Government assure us that that is not the case. The Government are honourable and I am sure that they would not lie, especially when they can use a carefully lawyered and cunningly phrased half-truth instead.

The donations must be made in the hope of gain. Donations are being made in the hope of gaining tax cuts for the substantially wealthy, the gain of Government contracts for City firms, cleaning firms and others. It is therefore vital that we establish the principle that these 315 donations should not be made by firms which are bidding for Government contracts as there is a possibility of corruption. We have a responsibility to act against that possibility, and my Bill provides the way to achieve that.