Financing of Political Parties (Hansard, 8 February 1995)

§ Mr. John Spellar (Warley, West)
I beg to move, That leave be given to bring in a Bill to regulate the financing of political parties by requiring disclosure of the source of donations, by the prohibition of donations from overseas, and by the publication of accounts. Let me make it clear at the outset that my Bill does not concern state funding of political parties; it concerns the regulation of donations and accounts. It has three main aims—to prohibit donations from foreign nationals not normally resident in this country, and from overseas companies and Governments; to ensure the recording and publication of donations above a certain limit, not tied to a particular figure but probably about £1,000; and to require political parties to publish income and expenditure accounts in the same way as companies and trade unions.

§ Mr. Jacques Arnold (Gravesham)
Like Maxwell's donations to the Labour party from Liechtenstein?

§ Mr. Spellar
I am pleased to hear that there is all-party support for that last item. In 1949, the House passed a motion requiring parties to publish accounts, but unfortunately it has not yet been activated by the Tory party.
This is the third occasion on which I have presented the Bill. It is fortunate that it falls on a day on which the Tories are having to declare redundancies because of the collapse of their domestic operations. Regrettably, on previous occasions the Bill has been blocked by Government Whips. It is extraordinary that the Conservatives should be so reticent about disclosure; that could, after all, lead people to believe that they have something to hide. Presumably such feelings also led the Prime Minister to state in the House recently that he revealed the existence of donations only when they had resulted in a vote at his party conference. That must have caused people to ask why the Conservatives become so excited about what is essentially a modest proposal, which would be regarded as normal in most democracies.
The prohibition of foreign donations, for example, has been in force for some time in the United States, with no complaints and with general approval. People find it hard to understand why the Tory party seems to be excessively dependent on large donations or loans from people who do not even have a vote in this country. Perhaps we are being unfair, and all the stories have been fabricated by ill-intentioned media; in that case, the Bill would help the Tory party by dispelling unhealthy myths that thrive in an atmosphere of secrecy.
If, for example, the Conservatives had been required to declare donations, they might have had second thoughts about accepting £400,000 or so from Asil Nadir. Think of the embarrassment that that would have saved them. If they had taken the money anyway, the report that they would have filed would have provided them with a record, enabling them to answer the receiver's questions about how much had been improperly donated. Their hapless head of administration, Mr. Judge, would not have had to admit that the records of donations had all been dumped in 1992—which was his explanation of why the Government were unable to accede to a perfectly reasonable request from the receiver.
348 Furthermore, by publishing proper accounts Conservative central office would be able to demonstrate to party members that they had not been funding the £300,000 estimated legal costs run up by the unfortunate Mr. Judge in his ill-advised libel action against The Guardian. That is an important point. When it was revealed that the legal bill of the right hon. Member for Kingston upon Thames (Mr. Lamont) had been paid by Conservative central office, the party lost an estimated £500,000 in donations. Presumably even the dwindling hard core of Tory party members do not think that that is the reason for their wine and cheese parties and jumble sales. The party probably lost some members over that; although it is hard to tell, given the general collapse of Tory party membership—especially in the Young Conservatives, who were once the biggest youth movement in Europe but now have about the same number of members as any Trotskyist sect, and exhibit much the same behaviour. That is increasingly the nub of the problem, and it is presumably why the Conservative party is blocking any attempt to introduce transparency to its accounts.
Even the Prime Minister does not seem to be very well informed about the funding of his party. When I asked him about Tory party finances at Question Time on 19 October 1993, he said: There are a great many secret sources and they are all cheese and wine parties up and down the country."—[Official Report, 19 October 1993; Vol. 230, c. 144.] One would have to be a real dimwit to believe that.
The Tory party has recently admitted receiving more than £400,000 from Asil Nadir; an estimated hundreds of thousands, if not millions of pounds, from John Latsis, a Greek ship owner; money from Hong Kong billionaire Li Ka Shi; and funds from tax-evader and ex-Nissan boss Oktav Botnar.
Mr. Latsis and other ship owners and foreign business men are estimated to benefit from a tax loophole called foreign domicile tax status, estimated to cost the Exchequer £1 billion a year. That sum would have enabled the Chancellor to have been far more generous in imposing VAT on fuel, instead of trying to claw it back from all sorts of other taxpayers. That £1 billion a year is being given to very few people rather than being distributed among the population of the country. This country is one of only four in western Europe to have such an arrangement. The others are the Channel Islands, Luxembourg and Switzerland—all well-known tax havens.
If there were transparency, we would know clearly who was donating, who was benefiting and how much was being given. We would also know how the £15 million overdraft of the Conservative party is being covered. It would be extraordinary if a major bank were offering such a facility without proper security. What assets does the Tory party have and who is underwriting that huge sum? I suspect that many small business men would like the same generosity from their banks. The Royal Bank of Scotland seems to have much to answer for about overdrafts that it has given to business men.
The Bill will also deal with the amazing and increasing dependence of the Tory party on donations from individuals, corporations, foundations and—possibly—even Governments from abroad, none of whom has a vote in this country. There are persistent rumours that many of the deals that have attracted public attention for other 349 reasons—the Pergau darn affair, the Al Yamamah project in Saudi Arabia, the Malaysian arms deal and relationships with the Government of Brunei—all connect to donations to the Tory party.
The fundamental reason for all that is simple: the Tory party is in crisis. As it becomes increasingly unpopular, its membership is falling and aging away; as it is wiped out in local government, its local structure is withering; as it decimates industry, its traditional friends are closing their cheque books; as it loses Members of the European Parliament, its influence at European level is seen as eroding. The Government are now a narrow oligarchy, clinging to central state power, propped up by a few heavy-spending companies mainly from the City and by foreign interests. The Government are kept together only by their monopoly of patronage through honours, quangos and political favours.
The Bill corrects some of the worst abuses and ensures that the public know what is going on. I commend it to the House.