Political Parties (Funding) (Hansard, 22 May 2002)

I beg to move, That leave be given to bring in a Bill to make provision about the funding of political parties.

I hope that I shall be able to generate a little cross-party consensus on this proposal, in contrast, perhaps, to the last half-hour. This subject is very high on the political agenda and the media's agenda at the moment, and a lot of different ideas are flying around.

Towards the end of the American civil war, when the union armies were taking over the south, military governors were appointed in southern towns. In one town, whoever they appointed was bought off by the local crooks—I guess we would call them the mafia nowadays. Lincoln kept sending down better and better people, but they all got bought off. The sums got higher, but they still ended up getting bought off. In the end, Lincoln sent down his childhood friend and trusted law partner, and he thought that that would sort it out. He heard nothing for about six weeks, until he received a cable saying, "Mr. President, please relieve me, they've almost reached my price."

I do not know my price—all I get offered nowadays is lunch, and it is certainly a lot higher than that—but there is a moral in this. Politics needs money, but somehow the money at least gives the appearance of corrupting the politics. That is what is getting the current Government into trouble and what has got us into trouble in the past. It is a problem of all political parties, although it tends to affect the party in government more than the party in opposition, as it is easier for the party in government to raise the money and the party in opposition does not have much to offer in return.

Big donations are the problem. People do not have trouble with smaller donations—even £5,000 or £10,000 donations—but with donations of £100,000 and £200,000. Inevitably, those donations come from wealthy people, who usually have business interests. While they may not have an immediate point to make with the Government of the day, they often have an agenda. In exchange, they probably get some sort of access, which may be accidental, because party treasurers find it much easier to raise large sums of money from a very small number of people than small sums of money from a very large number of people. They therefore tend to offer lunch or dinner with senior Ministers or even with the Prime Minister. The process is pretty unsavoury to those who participate in it, and it leads to the feeling among donors that they have access, as they have met a Cabinet Minister or the Prime Minister. When a matter arises in which they have an interest, with the best intentions in the world— and saying that it is in the national interest—they tend to pursue that access.

That creates an appearance to the public of parties being corruptible by donors. The big donations, and not even the medium-sized ones, are the problem. We must address that. We would all acknowledge that politicians have a pretty low standing at the moment, and this is one of the things that make it worse. The alternatives that have been proposed tend to focus on public funding and using taxpayer's money through the Treasury, either on a matching funding basis or in replacement of private donations and party fundraising. That has met with a lot 298 of resistance from taxpayers and a huge amount of resistance from the press—I do not know whether the whole of the media are resistant to it, but the newspapers certainly seem to be enormously resistant.

We therefore need to find a compromise, middle way, third way or whatever term is fashionable—perhaps we can call it different things on opposing sides. First, we need to acknowledge that parties need to raise money. It costs money to run a political party and an election campaign, and it is in the interests of the democratic process that parties put their points of view over to the electors and that they do so using modern communications and in a way that gets their message across.

Approximately—these are very rough figures—it costs the Conservative party and the Labour party £10 million a year to run their central party organisations and about another £20 million for the general election campaign. That is an average of £15 million a year over a four-year electoral cycle. The Liberals do not spend as much money as the rest of us, but, on the basis of the figures that I have seen, their average is about £4 million a year. We must acknowledge that parties need to raise money of that order. That is why it so much easier for the party treasurers who are charged with this task to try to raise it with a small number of very large donations. If they get a few people to give half a million pounds, that goes a long way towards reaching their annual target.

I propose that there is a way through this that achieves voluntarism on the one hand and gets rid of very large donations on the other. I would create a pot of matching funding by inviting taxpayers, on their tax return forms, to tick a box. If they did not tick that box, £2 would be added to their tax bill—£2 a year, which is the equivalent of 4p a week—and paid into a matching funding pot run by the Electoral Commission. If they did not want to pay, they would tick the box and they would not pay. Of course, if everyone ticked the box and did not pay, the scheme would not work, but that would at least put the solution in the hands of the electorate.

To qualify for such matching funding, a political party would have to do two things. First, it would have to say that it would not accept any donation of more than, let us say, £5,000, although the figure might be £10,000 or £2,000. The figure should be such that no one could believe that undue influence could be bought for that sum. Therefore, political parties would have to forgo large donations on an entirely voluntary basis.

Secondly, a political party would have to raise donations of less than £5,000 from a wider group of supporters, and it would then be entitled to money out of the matching fund for up to 100 per cent, of what it had succeeded in raising privately. That would encourage parties to get lots of small donations from the many supporters that we have out there but who do not pay us much attention. That would obviate the necessity for political parties to raise perhaps half their budgets from very large donations.

My Bill is different from other proposals that have been made for taxpayer finance because the donations would not be compulsory. It would be entirely up to individuals to decide whether to donate, and they would be under no compulsion to do so. It would not be the Chancellor of the Exchequer's decision, but the electorate's decision to decide whether to pay and how much there would be in the pot.

299 There are about 27 million taxpayers in the country. If 30 per cent, of them did not tick the box and gave their £2, that would raise approximately half of what the three major parties spend in the course of the electoral cycle. Matching funding would fund about half a party's current total expenditure and the balance would come from small donations. Most of those donations would be for much less than £5,000—as they are at the moment—but there would have to be more of them. Perhaps people would be more likely to donate if they felt that giving large donations would obviate the necessity for parties to seek very large donations.

There is cross-party consensus for my Bill. I am grateful to the people in my party, those on the Government side and those in the Liberal Democrats who have sponsored the Bill. I hope that my proposal will be taken into account as the debate continues, because I believe that it would achieve several purposes. There would be no more big donations, which are the problem that all parties face when they raise money. They create the problem that we have with our image with the public. It would reduce the pressure on party leaders to make themselves available for fund-raising events and perhaps, even worse, to make themselves and their Cabinet colleagues subsequently available to the people who have given money to the party. That would vastly improve our image collectively as politicians, and we all share an interest in that. Furthermore, there would be no compulsion either on the political party or on individual taxpayers to become involved. It would be an entirely voluntary scheme on both sides. I hope that the House will accept the Bill.

Question put and agreed to.

Bill ordered to be brought in by Mr. John Maples, Mr. David Curry, Mr. Peter Lilley, Mr. Archie Norman, Mr. Andrew Tyrie, Sir George Young, Donald Anderson, Andrew Mackinlay, Mr. Mike O'Brien, Ms Gisela Stuart and Mr. David Chidgey.