HL Deb 27 July 1999 vol 604 cc1431-45

5.35 p.m.

The Minister of State, Home Office (Lord Williams of Mostyn)

My Lords, with the leave of the House, I shall repeat a Statement made in another place by my right honourable friend the Secretary of State for Home. Affairs. The Statement is as follows:

"With permission, Madam Speaker, I wish to make a Statement about the funding of political parties.

"We came into office committed to reform. Our three commitments were: first, to require large donations to political parties to be disclosed; secondly, to outlaw foreign funding of political parties; and, thirdly, to invite the Committee on Standards in Public Life to look into the wider question of the funding of political parties in the United Kingdom.

"The committee, under the chairmanship of Lord Neill of Bladen, was given this remit in November 1997 and reported in October 1998. The committee's review was comprehensive and authoritative.

"Because of the range of matters covered, it was not practicable to legislate in the current Session of Parliament, but I promised to publish a draft Bill before the Summer Recess. I am doing that today. The draft Bill is contained in a White Paper which provides the Government's overall response to the Neill committee's report. We intend to introduce the necessary legislation as soon as possible, taking full account of comments received by 15th October.

"Let me now summarise the main points of the White Paper and draft Bill. The Bill takes forward the two specific manifesto commitments I referred to earlier. These were endorsed by the Neill committee. Donations to political parties of £5,000 or more at the national level, and of £1,000 or more at the local level, will have to be made public; and, it will be unlawful for a political party to receive donations from an individual who is not registered to vote in the United Kingdom, or from companies which are not incorporated in the European Union and carrying on business in the United Kingdom. Provision is also made for shareholder approval for donations.

"There has also long been concern over the amounts political parties are able to spend nationally at election times. The existing law, developed in the last century, already regulates very closely what can be spent by or on behalf of candidates at elections at constituency or ward level. But today a large part of the effort—and money—devoted to winning elections is spent by parties nationally and not on behalf of specific candidates.

"The Bill therefore provides for new national spending limits on election expenditure and agrees with the Neill committee that the limits should he set at a level substantially below the amounts spent by the two main parties in 1997.

"On this basis, Neill recommended a limit of £20 million for the main parties involved in a UK general election, with lower limits for parties which do not field full slates of candidates, and for other elections. The Bill therefore provides for new national spending limits. When the Bill is introduced, it will also contain provisions for regulating 'third-party' spending at the national level, as recommended by the committee.

"To enforce the restrictions on donations and expenditure, the draft Bill puts obligations on the parties at a local and national level to keep and submit accounts. This will apply particularly to the recording of donations. The scheme in the draft Bill which sets a de minimis level of £50 for internal reporting follows the Neill committee's recommendations.

"All political parties will wish to study these detailed provisions carefully over the forthcoming months. If the object in view can be served with some simplification or easement, the Government are open to suggestions.

"The White Paper contains a detailed chart in Annex 1 setting out each of the committee's recommendations and our response. The one recommendation we have not pursued is that income tax relief should be allowed on donations to political parties. The Government take the view that this would amount to state aid by another route, and would divert expenditure from other priorities.

"Some political donations are made not to a party as such but to groups within a party or individuals, including honourable Members of this House. We agree with the Neill committee that comparable requirements should be imposed in respect of such donations and we propose that the Bill as introduced should cover this. We would welcome views on whether the obligation to report such donations should fall on the party in question or on the person who receives them and/or whether such donations which at present are recorded in the Register of Members' Interests should be put on to a statutory basis.

"I turn now to referendums. The Neill committee made a number of suggestions for change in this area. The Government accept them all. It is important to ensure that the two sides in a referendum campaign have a fair opportunity to put their case. We therefore propose to include cash state support on an equal basis for the two umbrella campaign organisations, with free mailing and access to referendum broadcasts, as the committee suggested.

"The committee also made a set of recommendations concerning the position of the government of the day in a referendum campaign. As the committee indicates, a government are almost bound to be closely engaged in the subject matter of a referendum. There is, however, a point where the Government should step back and leave it to the political parties and other campaign groups to make their case to the electorate. The draft Bill therefore provides for a 28-day period running up to the referendum poll in which the government of the day will not issue material to the public on the subject matter of the referendum, and other rules similar to election purdah periods will apply.

"There is, however, one area where the Government have gone further than the Neill committee's recommendations. It would plainly be unfair and inconsistent with everything else proposed if referendum campaigns could be skewed by the injection of disproportionately large funds which happen to be at the disposal of a particular party or campaign group. We are therefore proposing to set limits on all organisations involved in referendum campaigns. In the draft Bill they are £5 million for the two designated 'umbrella' organisations and for political parties with two or more Members in this House, and £500,000 for other political parties and campaign organisations. These restrictions would run from shortly after the date when a Bill providing for a referendum is introduced in Parliament. Referendum organisations will also, as Neill recommended, be subject to the same requirements as political parties on foreign donations and so on.

"I have left until last one of the most important provisions of the draft Bill. The Neill committee recommended, as have many others, the establishment of an electoral commission. The Government agree. The commission's first function will be to oversee observance by political parties and others of the new regulatory regime. But I want to go further.

"The commission will therefore be charged with making recommendations on changes to electoral law and we also see the commission having, in the wider sense, an important role to play in 'voter education'. I want the commission to encourage people to vote in elections and referendums and to help to explain the democratic system in a wholly non-partisan way.

"The draft Bill also provides for the electoral commission to take over, at a later date, the functions of the Parliamentary Boundary Commissions and of the Local Government Commission for England.

"It is of paramount importance that the electoral commission should be wholly independent of the government of the day. The draft Bill provides the strongest safeguards of this kind which our constitution can provide. The commissioners would be appointed by Her Majesty on an address from this House, and a Speaker's Committee would be established to oversee the commission's budget.

"The Neill committee's report rightly emphasises the vital contribution which political parties make to this country's democratic life.

"For too long public confidence in the political system has been undermined by the absence of clear, fair and open statutory controls on how political parties are funded. All of us here want to encourage citizens to play a full part in this country's political system and that must include encouragement of voluntary donations to political parties.

"The report of the Neill committee gives us all the chance to make significant improvements in this vital area of our national life. The publication today of the draft Bill and White Paper provide the detail of the Government's intentions. By providing honesty and openness to our political system, we hope to restore public trust and to promote greater confidence in our democracy".

My Lords, that concludes the Statement.

5.45 p.m.

Viscount Astor

My Lords, I thank the Minister for repeating the Statement. From the outset, perhaps I may say that we support the main thrust of the recommendations of the Neill committee, the White Paper and the proposed Bill.

We support the principle of state funding for referendums. I have had only a brief opportunity to see the White Paper. It was available to my colleagues in another place this morning, but I managed to see it only in the past half-hour. The key is: is the question posed in the referendum fair? I believe that the referendum commission should consider that issue also. Can the Minister say whether the referendum commission will look at the question to be asked in the referendum?

In the light of the proposal in the draft Bill, will the Minister give an undertaking that there will be no more referendums in this country until the Bill is in place? The Government should be neutral. The White Paper recommends that, but limits the requirement for such neutrality to a period of 28 days before a referendum. We feel that that is very short and gives an enormous advantage to the Government. I realise that that 28-day limit is taken from similar limits in elections. However, in the case of referendums, where there is a long build-up, we shall certainly want to consider that point carefully when the Bill comes before your Lordships' House.

We support the proposal of the creation of an electoral commission which will be charged with making recommendations on changes to electoral law. It is interesting that the Government supported all the main recommendations of the Neill report except one; that is, tax relief on donations. It is interesting to speculate on why that was not agreed, particularly when, by the Government's own admission, it would cost less than the amount that the Government currently spend on special advisers. There are twice as many as there have ever been before.

It is somewhat extraordinary that the unions can use money, which is given to them under favourable tax regimes, to fund the Labour Party, but that individuals who want to fund any other party will not he able to obtain tax relief.

I turn to another area of concern; namely, Northern Ireland, which I recognise is addressed in the White Paper. I note that citizens of the Republic will be able to make donations to political parties in Northern Ireland. That is intriguing. That makes them entirely separate from any other citizens. The Government are saying that foreign nationals—citizens of another country—should not be allowed to make donations to political parties, yet citizens of the Republic may be allowed to do so. There may or may not be good reasons for that. However, what worries us is what checks will be made. How will that work? Will Sinn Fein be considered as a political party? How will we know whether money which comes from the Republic is coming from the right place and what it is buying? What special provisions will be put in force?

We welcome the Government's views on blind trusts. I believe that this is a U-turn for the Government. Prior to the election, they used blind trusts in a way in which they had never been used before in this country. I do not seem to be able to find the relevant clause in the draft Bill. I understand that parliamentary counsel ran out of time. I am not sure whether they ran out of time or enthusiasm. Blind trusts were a pretty disgraceful way of giving secret funding to political parties. It would be interesting to know how many Ministers in this House benefited from funding from blind trusts.

As I have said, we support all the recommendations in this report. It is a pity that the Government do not support all the recommendations in the Neill report. We support the premise on which the Neill report is based; that is, that if you can vote in this country, you should be able to donate money to a political party.

We have concerns about whether the £50 limit above which donations have to be registered is too small, but that is a minor point that we shall discuss in the future.

The Conservative Party has been accused in the past about political donations, but there is one major difference between us and the Labour Party. We have never changed our policy or attempted to change government policy because of a £1 million donation from Bernie Ecclestone. We have never brought forward a commitment because of lobbying from the International Fund for Animal Welfare. We have never given positions in government to major donors to our party.

I welcome the Neill report and the fact that the Government have accepted almost all the recommendations. It is a pity that they have not accepted the others, but we look forward to dealing with the Bill carefully.

5.50 p.m.

Lord McNally

My Lords, with those words from repenting sinners echoing in our ears we can look forward. I assure the Minister that we welcome the Government's response to the report of the noble and learned Lord, Lord Neill. We particularly welcome the role given to the electoral commission. Democracy needs democrats to make it work. The Government's response is an active rather than a passive way of revitalising our democracy. After 20 years of slamming stable doors, the proposals allow Parliament, politicians and political parties to get ahead of the game.

Hitherto, state funding has been based on expediency or opportunism. I well remember that when the short money was introduced in 1974, a lot of the debate revolved around how money could be given to political parties without it getting into the hands of Mr Wedgwood Benn, who was then operating an unofficial opposition at Transport House. We have tinkered with allowances, increased expenses and increased Opposition support for parliamentary purposes. All of those measures were good in their way, but they were piecemeal and ad hoc. This response is more coherent and wide ranging, but it still refuses to bite the bullet of state funding for political parties.

Does the Minister agree that the £40 million fund-raising cap for the two main political parties still represents a substantial sum to be raised by voluntary means? Let us not forget that money will have to be raised against a background of limits on company and individual donations. The treatment given to companies and individuals by the media for their donations to political parties in recent months will not make it a popular exercise. If parties are forced to raise funds from private sources, they are forced into temptation Should not the electoral commission be charged in its review with looking at specific proposals for the state funding of political parties? We believe that that is the best way of cleaning up our democracy.

The income tax check-off is only one way of introducing state funding. There are many other systems, including matching funding and cash on the basis of votes in elections. Many countries have state funding and operate it perfectly well. It makes for a healthier democracy.

I should like to raise one or two specific points about the Statement. Clause 52 of the draft Bill refers to political activity by those on the electoral register. Does that imply that donations or political activity by those under 18 will be restricted? It would be a pity if people under 18 were not encouraged to give to political parties. I gave my first donation to a political party at the age of 16. It was not my last donation or my last political party, but that is another story.

Is there sufficient recognition in the structure set out by the Minister of the devolved nature of British politics? A lot of the funding seems to go to the central London-based party machines. Is there a need to look at the nature of control over expenditure by individual candidates at constituency level? I have long believed that the provisions are too nit-picking and too open to genuine mistakes, and that the system could be simplified.

I welcome what the White Paper says about the control of party political broadcasts. It is very important that we retain party political broadcasts and that they remain under party control; otherwise, the door is open to the grotesque expenditure on television broadcasting that we see in other countries.

The activities of the Government's propaganda machine could usefully be referred to the electoral commission. Does the Minister agree that the Government's annual report comes very close to party political propaganda? I wonder whether it would benefit the electoral commission to look at government publications. Do the Government plan to publish an annual report in general election year? That would certainly be an abuse of public funds.

How do the Government intend to reflect the views of policy holders in insurance companies, who may use their vote to influence political donations by public companies in which they hold shares? Insurance companies have a responsibility to policy holders who do not wish their money to go to political parties.

Finally, why is there to be no cap on personal donations? Surely the Minister agrees that there comes a point at which an individual donation ceases to be public-spirited and becomes obscene. We shall be looking for a cap on individual donations.

Overall, it would be churlish not to say that the proposals are an imaginative and forward-looking response to the problem of sleaze that has bedevilled our politics for a decade or more. They will do much to restore public confidence in our political process.

6 p.m.

Lord Williams of Mostyn

My Lords, I am grateful to the noble Viscount, Lord Astor, and the noble Lord, Lord McNally, for their general welcome. The noble Viscount said that his party supported the main thrust of the proposals and the noble Lord, Lord McNally, was very generous in his concluding remarks. He and his party are entitled to a good deal of the credit for the outcome. They have agitated for proposals such as those on electoral commissions for a long time. Being as objective as I can, I think that it is fair to say that we have given full effect to the proposals of the noble and learned Lord, Lord Neill.

The £40 million cap for the two main political parties is substantial, but election expenses are very high and if we want elections in a modern democracy to be educative as well as soliciting people's votes, the cap that we are considering is not out of kilter with what most large parties would recognise as legitimate expenditure for election purposes.

I want to stress again what I said in repeating Jack Straw's Statement. We have put this out with a view to receiving comments by 15th October. I repeat again what was said in the Statement. Any suggestions consistent with the general thrust of the draft Bill we genuinely welcome. But I do not pretend that there may not be room for some improvement on detail.

Under-18s can still be members of political parties and therefore they could contribute. The maximum prohibition on them would be £50. For most under-18s—I say "most" in deference to the noble Lord, Lord McNally—that is a good deal more than they would want to contribute to a political party, even one such as New Labour which I am sure will have many children of 16 wanting to contribute perhaps £75 or more.

The noble and learned Lord, Lord Neill, said, rightly if I may say with respect to the quality of his report, that one has to look differently at Northern Ireland. The circumstances there are different. At the moment people genuinely fear that if they make donations and their identities are known, there may be dangerous consequences. In relation to Northern Ireland—we specifically dealt with this in Clause 63—parties will still need to report donations to the electoral commission, but the details will not be disclosed. That is because of the sad truth which we all recognised in our recent debates that Northern Ireland and its political arrangements are not the same as those that we are fortunate enough to have in England, Wales and Scotland.

The annual report is a reasonable document. For instance, the one produced this week concedes that, despite outward appearance, the Government have not been perfect on every occasion. It says what we have and have not achieved and that is part of the legitimate, educative process in which any government are entitled to indulge, as are any opposition.

The question of policy holders in insurance companies is rather remote. I do not see that, if one is a policy holder with, for instance, Norwich Union which has a portfolio of perhaps 500 different shares, adverse consequences would necessarily follow if one were not able to say to Norwich Union, "By the way, you must examine the accounts of every one of these 500 share companies and see whether or not they are making donations". The way to deal with this is the direct route; namely, shareholder approval of political donations.

I take the noble Lord's point about no cap on overall personal donations. I simply say that to some—I cannot put my finger on a name at the moment—a donation of £3 million is not of great significance, whereas a donation of £3,000 would be of considerably more significance if I were to make it.

Those were the points helpfully raised by the noble Lord, Lord McNally, and I turn to the points raised by the noble Viscount, with which I found it difficult to credit him. He said that blind trusts were always pretty disgraceful. How strange that is. The evidence that the Conservative Party gave to the committee of the noble and learned Lord, Lord Neill, on 27th February 1998 was, We believe there is an argument in favour of a form of blind trust. That should be examined by the committee". Were those words "pretty disgraceful"? Perhaps I misheard. Then the noble Viscount, to my pleasure as well as surprise, raised the question of donations. He said that the Labour Party was given £ 1 million by Mr. Ecclestone. That is true. And it was returned. My noble friend Lord Sawyer wrote to the committee. He received the advice that return would be more suitable, more scrupulous, and the money was returned. I contrast that with the case of Mr Ma. Jack Straw wrote on 2Ist January 1998 to the Leader of the Conservative Party saying, Dear William, you have accepted that the Conservative Party received I million from Mr. C. K. Ma in 1994. Let me ask some questions. Why did Mr. Ma give the money? Who negotiated it? Was he promised that charges against Mr. Ma for drug trafficking would be dropped? Why is he now saying he wants his money back because expectations had not been met? Were you or your party aware of the Ma family's alleged links with drug trafficking? In the light of this information do you think it is appropriate for the Tory Party to keep this money? Would not the best outcome be for the Tory Party to donate the £1 million to anti-drug charities?". It will not surprise anyone in this House that we are still waiting for any sort of substantive reply to those questions. But Jack Straw, being diligent, did not leave it there. He sent a letter which your Lordships will relish. It is dated 20th March 1998 and concludes with these prescient words: The Tory Party will continue to be dogged by the scandals and sleaze that characterised it in government".

It is true that PAL gave the Labour Party £1.1 million, which is public knowledge. It is true also, as I reminded your Lordships, that up until two or three years ago it gave a figure of around £170,000. The question is openness, reportability, accountability and an outside objective body such as the electoral commission. I repeat what Jack Straw said in his Statement: we have built in every possible, copper-bottomed constitutional guarantee of that body's independence. It is fair to say that we have produced an open, candid response to an extremely powerful authoritative report. The next time the noble Viscount raises complaints about the Labour Party—I do not blame him; there was not much to complain about—I shall have a few more bits of correspondence available.

Viscount Astor

My Lords, before the Minister sits down, he did not cover my question in relation to referendums. 1 would be grateful if he could quickly cover that.

Lord Williams of Mostyn

My Lords, the noble Viscount is quite right. It is my error for overlooking that. As always, a referendum Bill will need to be authorised by Parliament, and it is for Parliament to decide on the nature of the question. The noble Viscount asked a further question and I ought to have answered this as well. I apologise to him personally as well as to the House. The question concerned what would happen to referendums before this Bill came into effect. We do not envisage that there will be any referendums to be held before this Bill comes into effect. I can certainly say that if there was to be such a referendum, it would be only right in the discussions on that Bill to give full consideration to the sort of questions we have discussed briefly today and which are more fully discussed in the White Paper.

6.7 p.m.

Baroness Carnegy of Lour

My Lords, before the noble Lord's halo of innocence disappears, which came about during his last few remarks, can he say whether the Government have checked that the differentiation made between what the people in the south of Ireland can do and what other people in the European Union can do is in order according to European legislation and the European Convention on Human Rights?

Lord Williams of Mostyn

My Lords, I believe it is. If I am wrong, I shall write to the noble Baroness and put a copy in the Library. It is well known that the relationships we have electorally with those who come from the Republic of Ireland have always been different from those in the rest of the European Union. That is relevant in response to her question.

Lord Clinton-Davis

My Lords, I congratulate my noble friend not only on repeating the Statement, which he had to do anyway, but also on his responses to the two Front-Benchers.

Perhaps I have this wrong, but is it right that donations which come from Ireland will still be allowed to be uncapped and be regarded purely as personal donations? If so, what justification is there for that situation? Having embarked upon a programme of ensuring that we have much more clarity and openness about the situation which has been hidden for years by the Conservative Party, why have that situation relating to Ireland? Money could still be filtered through rather furtively and to the disadvantage of our political system.

Lord Williams of Mostyn

My Lords, we are dealing with a different relationship, first, between the Republic and the United Kingdom generally and also in particular in the context of Northern Ireland. No donations of any sort will be capped. The question of disclosability in the Northern Ireland context is that donations will have to be reported to the commission but will not then need to be published. At the moment people are genuinely fearful that, if their donations are attributable to them as individuals, they may be under justified fear of physical attack or other reprisals.

Lord Goodhart

My Lords, I speak as a member of the Neill committee, although I do not of course speak on behalf of the committee, except perhaps in one respect—which is to say how much all the members of the committee owe to the personal efforts of the noble and learned Lord, Lord Neill of Bladen, which were crucial in achieving the success that the report has had. He is not here today, but I am very glad to see that two other members of the Committee are present.

The Neill committee will of course consider the draft Bill and submit its comments to the Government. It would therefore be inappropriate for me today to say anything on the specific issues. However, I am delighted that the Government have accepted so much of the committee's report. The committee strongly believed that it was a matter of the greatest importance to encourage participation in politics by as many people as possible, and the Government have accepted that principle. At a time of concern about a small number of individuals giving very large donations, I wonder whether the Government also agree that it is more than ever important to do everything possible to get a larger proportion of funds from more small donations.

Lord Williams of Mostyn

My Lords, I am most grateful to the noble Lord on at least two bases. He has given me the opportunity, which I did not earlier have, to express everyone's gratitude for the work done by the committee. I absolutely agree with him that the noble and learned Lord, Lord Neill of Bladen, if I may say so without appearing patronising, is in a distinguished, long line of public servants—one thinks also of the noble and learned Lord, Lord Nolan, for instance—who have contributed an extraordinary amount to the quality of public life and to public discussion of these issues, which should be taken out of the political, partisan arena.

I very much look forward to the comments that the noble Lord, Lord Goodhart, has indicated will be forthcoming by 15th October, because I am sure that there is a useful continuing dialogue to be had. I agree with his proposition that it is welcome that individuals are personally involved, and that they personally demonstrate that commitment by what might be quite small donations—but which are important to the individual—as that is a significant part of a functioning democracy.

Baroness Gould of Potternewton

My Lords, I very much welcome the White Paper and the Statement, and apologise if some of the points I raise are covered in the White Paper, but I have not had time to look at it. I was interested that the noble Viscount, Lord Astor, did not refer to the question of provision being made for shareholder approval for donations when he said that he supported the recommendations, because in the evidence that the Conservative Party gave to the Neill committee it said that it was opposed to the idea of getting shareholder approval for making political donations. I very much look forward to that debate.

I should like to raise two specific points: one on referendums and one on the electoral commission. On referendums, I assume that the restrictions and criteria laid down in paragraphs 8 and 16, in relation to elections and donations, would also apply to referendums and that they would be overseen by the electoral commission. Little is said about local referendums, which will be on the increase, and I wonder whether the same restrictions would apply pro rata.

I have long been an advocate of an electoral commission and I especially welcome that section. It is crucial that there is an independent election watchdog. At the moment, we seem to have a mish-mash of responsibilities, with too many bodies and too much left to the vagaries of custom and practice, and to the courts if one can afford that. I especially welcome the reference to the Parliamentary Boundary Commission and the Local Government Boundary Commission. There has always been a conflict, with the two things happening at different times and creating confusion. To try to co-ordinate those two functions is very important.

Last week, we had the recommendations of the Howarth committee. How will those proposals, for postal votes, electoral registration and so on, fit into the proposals before us, in relation to timing? Will the commission be responsible for overseeing the conduct of elections, not merely for considering electoral law and finances? At some point, is it envisaged that it will take on the registration of political parties?

Lord Williams of Mostyn

My Lords, I am grateful for my noble friend's welcome. I share her view on shareholder approval. It has always struck me as a nonsense and, indeed, rather insulting to those who have shares in companies that their money could be disposed of without the necessity for shareholder approval.

The answers to my noble friend's central questions are to be found in Part VI of the draft Bill which follows on from page 85 of the White Paper. Clause 77 of the draft Bill describes a referendum as one held in the United Kingdom, in one or more of England, Scotland, Wales and Northern Ireland, or in any region in England specified in Schedule 1 to the Regional Development Agencies Act 1998. The reference to "a referendum" relates to any of that type of referendum.

The electoral commission will take on the function of the registration of political parties. It would be helpful to have submissions by 15th October and then to have a wide-ranging debate about how we see the functions of the electoral commission as it should develop in the future. My noble friend is right about the boundary commissions. Our general approach to that issue has always seemed to lack symmetry.

On the proposals by Mr Howarth's group, I am not in a position to anticipate what might be in the Queen's Speech. I can only repeat that in the context of this draft Bill we intend to treat it as a matter of importance. Jack Straw's Statement says, "We intend to get on with this as quickly as possible".

Lord Clark of Kempston

My Lords, as my noble friend Lord Astor said, we welcome many points in the Statement. As an ex-treasurer of the Conservative Party, I can confirm that under no circumstances was policy affected by any donation.

I ask about the election expenses cap. When will elections expenses start? The annual report of the Labour Government is really an election address. Will that happen every year? The Minister said that the document was educative and that it was available to the Opposition, but it was taxpayers' money that produced it. What will be the position of expatriates of British extraction?

Lord Williams of Mostyn

My Lords, I am grateful again for the noble Lord's general welcome for the Statement. The requirement is that one should be registered to vote for a relevant election. The entitlement for registration—I speak from memory—is extensive and lasts for 20 years. An expatriate who is entitled to vote—who is registered on the appropriate register—is still entitled to contribute.

On election expenses for Westminster general elections, the limit on expenses will apply in the 365 days before the poll and, in terms of control of campaign expenditure, the noble Lord will find some definitions in Clause 64 of the draft Bill.

The point that I was seeking to make about the Government's annual report was that it is the Government's proper duty to hold themselves accountable to those whom they serve; namely, the public. I think that all governments have put out various documents at government—in other words, state—expense. I do not see any qualitative difference in what has been done under this Government from what was done under previous governments. I take the noble Lord's point that an Opposition, in trying to make their case, do not have state funding. I think that has been the case for the past 18 years. Occasionally perhaps one should bear such discrepancies with such fortitude as one can presently muster.

Lord Mackie of Benshie

My Lords, will the noble Lord enlighten me on two points? First, did I understand him to say that the last question in a referendum would be with the Government? If so, that would be bad. I understand that in some of the Quebecois referendums, the question actually put was, "Do you want to be rich and famous and independent in Canada?", which is not a good basis.

My second question concerns American money coming into Northern Ireland. What is the situation when large gifts come in? Are they disclosed, forbidden or welcome?

Lord Williams of Mostyn

My Lords, I did not say that the wording of the referendum question would be a matter for the Government. I said, I believe carefully, that every referendum would still need to be authorised by an Act of Parliament. Therefore the question to be asked in the referendum is a matter for Parliament to decide and not the Government.

I agree that the question put to me by the noble Lord on the lines of, "Do you want to be rich and famous and possibly marry Marilyn Monroe?", is likely to secure a majority rather larger than that in favour of a Welsh Assembly. Perhaps I may write to the noble Lord about the question of Northern Ireland. I do not have the answer immediately to hand. As always, I shall put a copy of my response in the Library. I shall do that tomorrow.

Lord Shore of Stepney

My Lords, I declare an interest in that I am a member of the committee. It gives me great pleasure to welcome my noble friend's Statement. I have not always been able to agree with everything he has said in the past, but I welcome the Government's response to the report.

The referendum procedure, in spite of some of the criticisms that have been made, certainly deserves very close study. However, I am sure my noble friend will agree that a much fairer procedure is now being recommended than that which we had to endure more than 20 years ago in the 1975 referendum. The government then took an active pad, right clown to polling day, but pretended that they were an independent factor in the voting procedure. There was a "Yes" campaign, a "No" campaign and a "Government Yes" campaign. That is now being eliminated, I believe to the benefit of and much greater fairness in future referendums.

I have one minor question. Some of the recommendations will discourage large donations. They will not be as forthcoming because people do not always wish to declare them. Therefore, it is important to encourage small contributors to political parties. Have the Government accepted the recommendation that the first £500 of a donation should be tax free?

Lord Williams of Mostyn

No, my Lords, we did not accept that recommendation because we thought that that would be state funding under another guise. I believe I repeat the phrase accurately when I say that we have other priorities in that context. I do of course appreciate the argument. However, I believe that sometimes it can be taken too far, as in the context of the United States, where the availability of tax relief can quite significantly distort the political process. I say that as a personal observation and not as a governmental criticism of what is done in the United States.

The fact that we have accepted virtually everything in the report is a tribute to the quality of the work done on it. The arguments and the marshalling of them were so compelling that it was only reasonable to accept them. It is also fair to take a modest degree of criticism—not the halo effect. I think that the noble Baroness has left the Chamber. She thought that my halo had diminished. It is still there. It is a tribute to the Government that we said we wanted to improve the quality of political life in this country and that we were not looking at the matter on the basis of party political advantage. That is the theme of the Statement. The referendum procedure needed to be looked at. Recently we have had more referendums of great constitutional importance, and we were extremely grateful for the recommendations which were brought forward and which we have accepted.

Lord Monson

My Lords, further to the point made by the noble Viscount, Lord Astor, which was touched on by the noble Baroness, Lady Carnegy, and the noble Lord, Lord Clinton-Davis, will the Minister assure the House that no individual or group in the Republic of Ireland will be allowed to fund political parties in the north of Ireland if the Republic's territorial claim on the north has not been formally renounced by the time that the proposed Bill becomes law?

Lord Williams of Mostyn

My Lords, that is significantly outside the ambit of the White Paper and draft Bill. However, the noble Lord, Lord Monson, who has a keen interest in these matters, knows what has happened so far in the Republic of Ireland. I do not believe that he and I could have had this discussion 10 years ago about the surrender of the constitutional claim of the Republic. We should all be extremely supportive of those in the Republic who are modernising their constitution and, much more important, modernising their ways of political thought in an extremely flexible way. They deserve every credit and I believe that those in other parts of the United Kingdom might learn the lesson of flexibility and open-mindedness which our colleagues in the Republic sometimes offer us.

Lord Boardman

My Lords, what will be position of large donations coming from within continental Europe where organisations will be keen to support both referendums and elections with regard to one party or another in the European Union?

Lord Williams of Mostyn

My Lords, I appreciate that there was a good deal of detail in the Statement. The position is that if a company is incorporated in the European Union and trading within this jurisdiction, it will be able to make donations. Those are the dual limits. If the noble Viscount or anyone else feels that an earlier sight of the White Paper would be helpful on similar occasions in the future—sometimes it happens and sometimes it does not—they have only to get in touch with my office and I will do my best to meet their requests.