Lords Sitting of 21 November 2000

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Chichester.

Death By Dangerous Driving
Baroness Thomas of Walliswood Baroness Thomas of Walliswood asked Her Majesty's Government:
What is the average penalty applied to a person convicted of accidentally killing another person while in charge of a motor vehicle.
The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, the fact that a death has occurred forms an essential element in three road traffic offences. For both causing death by dangerous driving and causing death by careless driving while under the influence of drink or drugs, the average sentence for males imprisoned in 1998 was 39 months. For aggravated vehicle-taking where a death results, the equivalent figure for 1998 was 23 months.
Baroness Thomas of Walliswood: My Lords, I thank the noble Lord for that reply. Is he aware that there is widespread concern that inappropriate charges are being brought and therefore occasionally inappropriate penalties applied in cases of causing death by dangerous driving? The suggestion has been made that the CPS is using an unnecessarily high standard of proof. Can the Minister say what action, if any, the Government are taking in that regard? Secondly, has the review of the penalties which was supposed to be taking place been completed and, if so, when will the results be published?
Lord Bassam of Brighton: My Lords, the Government are well aware of those concerns. The noble Baroness will know that my right honourable friend the Prime Minister has taken a deep and profound interest in such cases, sparked particularly, perhaps, by the circumstances surrounding the tragic death of PC Tooley.
I can advise the House that since Labour came to government we have been looking carefully at these matters. In 1999 the Transport Research Laboratory was invited to carry out research on behalf of the DETR into the way in which bad driving cases proceeded through the criminal justice system. That report is currently being finalised and we shall need to study it carefully—it is a complex area of law—with a view to publication. We shall then be in a better position to judge whether any changes in this area of law and its operation are necessary.
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I should also advise your Lordships' House that we are in the process of finalising a consultation paper on the outcome of a more general review of penalties for road traffic offences.
Lord Carlile of Berriew: My Lords, does the Minister agree that, in respect of offences of causing death by dangerous driving, it is extremely important to keep the fullest range of judicial discretion in sentencing? Such offences may involve heinous criminality and criminal intent, justifying the maximum sentence of 10 years imprisonment. But they may also involve little or no criminal intent, relying simply on an error of judgment committed in a moment of bad driving which may not justify any sentence of imprisonment at all.
Lord Bassam of Brighton: My Lords, the noble Lord speaks with great wisdom on these matters. That must be so because that is exactly what it says in my brief.
Lord Geddes: My Lords, given that we are now on the 21st day of the eleventh month of the year 2000, can the Minister say why he was only able to give us statistics from 1998?
Lord Bassam of Brighton: My Lords, it is the best that we can produce in the circumstances. I shall of course go away and reprimand those Home Office officials who have been rather laggardly in bringing forward the data.
Lord Berkeley: My Lords, is my noble friend aware of the first ever case of corporate manslaughter, brought against a lorry driver and his company, for causing death by dangerous driving one year ago? I understand that both the company and the driver received suspended sentences. Without commenting on specific cases, does not my noble friend consider that to be a bit of a light sentence?
Lord Bassam of Brighton: My Lords, I am damned if I do and I am damned if I don't. I am in one of those situations where my noble friend is inviting me to comment on a case and also telling me that I should not comment on the case, and that is the course I am going to follow.
Baroness Trumpington: My Lords, what is the situation regarding penalties received by police officers convicted of accidentally killing another person while in charge of a motor vehicle?
Lord Bassam of Brighton: My Lords, police officers would be in exactly the same position as other members of the public. They should be treated equally, without fear or favour.
Viscount Simon: My Lords, when a driver has pleaded guilty to the lesser charge of careless driving, is my noble friend aware that the courts may not be aware that a fatality has occurred and that may well pre-empt a coroner's decision?
Lord Bassam of Brighton: My Lords, I know that concerns have been expressed that courts are

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sometimes unaware of the position. As Ministers, we have received a number of letters on that point, particularly from Members of Parliament. The Crown Prosecution Service guidelines make it clear that that should not happen. If clear evidence exists that courts are unaware of those factors, it would be helpful for us to be informed because we clearly need to act in those circumstances.
Lord Mackenzie of Framwellgate: My Lords, would my noble friend agree that, by way of plea bargaining or otherwise, it is wrong in principle that the Crown Prosecution Service should reduce charges simply for the purpose of improving its statistics in terms of convictions?
Lord Bassam of Brighton: My Lords, I am sure that that sentiment is widely shared in your Lordships' House. Ultimately, it is for the courts to make a determination as regards the severity of a sentence and such matters are best left to the courts. However, there must be clear guidance in those circumstances.

National Audit Office Reports
2.43 p.m.
Lord Dixon-Smith Lord Dixon-Smith asked Her Majesty's Government:
Whether they see and contribute to reports by the National Audit Office before these are made.
Lord McIntosh of Haringey: My Lords, there is a long-standing convention that the Comptroller and Auditor-General's reports to Parliament are agreed with the accounting officer as to the facts. That is to avoid the Public Accounts Committee having to arbitrate between the Comptroller and Auditor-General and the audited body over disputed facts when they take evidence on reports.
Accounting officers may have some reservations about the interpretation of the facts in the report. Where such differences have not proved capable of resolution in discussion, they are explained in the report with the reasons for the differences of opinion clearly stated.
The conclusions and recommendations of the report are, however, for the Comptroller and Auditor-General alone to determine.
Lord Dixon-Smith: My Lords, in the outside world the relationships between client, auditor and regulators are separate, clearly defined and well understood, with the Inland Revenue having a well-known interest in conclusions. In a situation in which the government fill all of those roles, is the Minister confident that they can satisfy the public about the integrity of the arrangements which are necessary to keep the various roles separate?
Lord McIntosh of Haringey: My Lords, the noble Lord, Lord Dixon-Smith, appears to ignore the fact
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that the Comptroller and Auditor-General reports not to the Government but to Parliament. It is the decision of Parliament—and it has been for many years—that the Comptroller and Auditor-General should clear up any issues of fact before the report is issued and considered by the Public Accounts Committee.
Lord Crickhowell: My Lords, does the noble Lord agree that, whether or not Ministers or officials contribute to National Audit Office reports, no rules prevent the prompt debate of such reports in this House? Does he further agree that there is a strong need for an early debate of the report on the Dome?
Lord McIntosh of Haringey: My Lords, there has been a convention for many years not only in this Government but in previous governments that reports from the Comptroller and Auditor-General to Parliament are considered by the Public Accounts Committee before there are further parliamentary procedures. It is our intention to continue with that very proper convention.
Lord Marsh: My Lords, what is to prevent the Comptroller and Auditor-General from clearing up matters of doubt, which one can understand may exist, with the Government before they publish the report?
Lord McIntosh of Haringey: My Lords, that is exactly what he does.
Lord Bruce of Donington: My Lords, will my noble friend consider reviewing the procedures that he has described, because one often finds that in practice the dividing line between fact and opinion is obscure? Will he consider my concept of the matter: that the public are entitled to complete confidence in the National Audit Office and that it is desirable in the public interest, never mind tradition, that nobody, but nobody, should interfere with the report which the Comptroller and Auditor-General seeks to make on his own initiative?
Lord McIntosh of Haringey: My Lords, I agree with my noble friend about the need for complete confidence in the independence of the National Audit Office and the Comptroller and Auditor-General. However, I answered his questions in detail in my first Answer: that the issues agreed with the accounting officer are issues of factual accuracy; and that, if there is a reservation about the interpretation of facts which cannot be resolved, the difference of opinion is explained in the report. I believe that that is the transparency which my noble friend seeks.
Lord Saatchi: My Lords, does the Minister agree that we live in an age of full disclosure? Is not that reflected in the mission statement of the National Audit Office, a vital body which has as one of its seven core values a belief in open communications? Therefore, will the Government authorise the National Audit Office to disclose on what occasions and in what respect its reports have been altered by Ministers?
Lord McIntosh of Haringey: My Lords, the reports which come to Parliament from the National Audit

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Office are factually correct and steps are taken to ensure that they are. If there is an issue of disclosure to Parliament of differences, my first Answer answered the noble Lord's question. Where there are disagreements they are explained in the report, with the reasons for the differences of opinion clearly stated.

Higher Education Spending Plans
2.48 p.m.
Baroness Sharp of Guildford Baroness Sharp of Guildford asked Her Majesty's Government:
When they will announce spending plans for the higher education sector for years 2 and 3 of the 2000 Comprehensive Spending Review.
The Minister of State, Department for Education and Employment (Baroness Blackstone): My Lords, my right honourable friend the Secretary of State announced the Government's spending plans for higher education in England on 16th November. The total additional funding for the sector is £412 million in 2001–02, £268 million in 2002–03 and £298 million in 2003–04. That represents a 10 per cent real terms increase.
Since 1998, the total additional funding for institutions is £1.7 billion, an 18 per cent increase in real terms over the six years. Copies of the press notice have been placed in the Library of the House.
Baroness Sharp of Guildford: My Lords, I am grateful to the Minister for that Answer. It is good that four months after the publication of the Comprehensive Spending Review universities finally have an assurance about what their spending plans can be and can begin planning.
Does the Minister agree that the problem which faces people like your Lordships is the interpretation of the figures? Can the noble Baroness assure the House that the figures quoted in the press release as publicly planned spending increases include moneys which come to the universities from student fees? Am I also right to conclude that the money supposedly available for recruitment and retention of staff, equal opportunities and human resource potential has been double counted in that, if universities are successful in achieving the targets for access set by the Government, they will not have that money available to spend on increased staff salaries?
Baroness Blackstone: My Lords, I believe that all I need say in response to the noble Baroness is that there is no double counting in these figures.
Baroness Young: My Lords, is the Minister willing to expand on the very serious issue of recruitment and retention of staff? As the Minister is well aware, there are areas of university life where it is almost impossible to recruit able people of the right calibre to posts at the
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salaries offered. Can the Minister assure the House that this money includes resources for universities to use for that important purpose?
Baroness Blackstone: My Lords, I can confirm that for 2001–02 there is a figure of £50 million for that purpose, and for the following two years the figures are £110 million and £170 million respectively. I accept that there are difficulties in recruiting and retaining people of very high calibre in certain fields. However, one should not exaggerate the overall position. There are still many good people coming forward who want to work in our universities as academics and in other roles.
Baroness Carnegy of Lour: My Lords, the Minister gave three figures in her first response to the noble Baroness's Question. Can she explain precisely why the figure for the first year is so much higher than those for the following two?
Baroness Blackstone: My Lords, in the first year there is a substantial amount of funding to improve opportunities for young people who come from low income backgrounds. There is substantial extra widening access funding available in the first year. The total additional funding of higher education is way above the amounts that I quoted, which do not include the research figures. The total additional funding will be £3 billion by 2004, taking overall funding to £7.7 billion.
Lord Taylor of Blackburn: My Lords, does my noble friend agree that if there is a scarcity in certain fields the universities, which are independent institutions, can adjust the amount that they wish to pay in the overall financing of that sector?
Baroness Blackstone: My Lords, my noble friend is absolutely right. Pay in universities is a matter for higher education institutions, not the Government. The additional funding that we have been able to make available is considerable when viewed against the background of a 36 per cent cut under the previous government over the period 1998 to 1997. However, this is a matter for universities, which now have additional funding to pay rather better salaries.
Lord Wallace of Saltaire: My Lords, can the Minister assure the House that this means that in future the Government will pay as much attention to the quality of higher education as to access to it, which seems to have been the strong message of the past two to three years? Does the noble Baroness accept that the example of Ireland in particular shows that investment in higher education of the best quality has direct pay-offs in terms of higher economic growth, which is very much what this country needs?
Baroness Blackstone: My Lords, I have just quoted very substantial figures for investment in higher education. The Government accept that that investment will pay off in the knowledge economy. The Government have been committed to improving

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quality over the past three years. Although they want to widen access and make it possible for young people with potential to go into higher education, they have also focused a great deal of attention on quality issues.
Baroness Blatch: My Lords, I believe that the Minister will have to correct the two dates which she quoted in her previous response. The noble Baroness referred to cuts between 1998 and 1997. Can she say what proportion of the sums to which she refers has been pre-announced, what proportion represents inward investment, for example from the Wellcome Trust, and what proportion is as a result of student fees?
Baroness Blackstone: My Lords, I shall correct the slip of the tongue. I meant to refer to the period 1988 to 1997 during which the previous government substantially cut unit funding to higher education. The noble Baroness asks quite detailed questions. I reassure her that all this is new money, a very small amount of which was announced in July at the time of the Comprehensive Spending Review. I shall write to the noble Baroness to provide the details.
The Earl of Listowel: My Lords, is the Minister aware that only one in 300 children from care go into higher education as opposed to one in five for the rest of the population? Will some of the funding for widening access go towards promoting opportunities for these particular young people?
Baroness Blackstone: My Lords, under the Children (Leaving Care) Bill which the Government have introduced a great deal is to be done to support these youngsters. More specifically, my department is providing extra funding to support young people in care who are in higher education but who, for example, do not have a home to go to in long vacations. A great deal more must be done to give these youngsters the opportunity that they have not had in the past to develop their potential.

Long-term Residential Care
2.56 p.m.
Lord Ashley of Stoke Lord Ashley of Stoke asked Her Majesty's Government:
Whether, following recent developments in Scotland, they will reconsider their refusal to pay for personal care for elderly and disabled people in residential homes.
The Parliamentary Under-Secretary of State, Department of Health (Lord Hunt of Kings Heath): My Lords, we announced our policy in our response to the Royal Commission on Long-Term Care of the Elderly. We believe that our proposals to invest in intermediate care and to improve standards of care and fair access to services, together with the changes that we are making
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to the funding of long-term care, will generate important benefits of health and independence for older people.
Lord Ashley of Stoke: My Lords, my noble friend is invariably helpful, but how can he speak about fair access to services when the Government's policy to pay only for nursing care in residential homes and refuse to pay for personal care discriminates against some disabled people? It cannot be right that someone who suffers from, say, Alzheimer's disease is forced to pay for his or her personal care, whereas the different costs of people with other disabilities are fully paid for by the state. The policy to refuse to help with the personal care of people who must be fed, washed, dressed and toileted by others is unacceptable. The wise politicians of Scotland have said that they are to reconsider that matter. Why can we not do so?
Lord Hunt of Kings Heath: My Lords, my understanding is that Scotland has committed itself to a review of existing policies without prejudging the outcome. I have enormous respect for my noble friend; however, the Government believe that their proposals represent a better targeting of resources. Three-quarters of those in residential nursing care already get some or all of their personal care costs from public funds. To make personal care free for everyone would carry high and increasing cost without in itself improving services, and it would consume many of the additional resources that we are making available to people through the NHS Plan, including the important provision of intermediate care.
Lord Astor of Hever: My Lords, as 760 nursing and residential care homes closed last year with the loss of 15,000 beds, does the Minister agree with the chairman of the Nursing Home Association that if the trend continues there will not be any nursing care homes left in three years' time?
Lord Hunt of Kings Heath: My Lords, I do not agree with that assessment. I understand that in some parts of the country a number of nursing homes have come under financial pressure. I also accept that there was a drop in the number of nursing home and residential home care beds between 1998 and 1999, but the picture is very mixed throughout the country. Between 1995 and 1999 there was a net increase in nursing home beds. Laing and Buisson, the consultants who observe the private health care sector, consider that there is still excess capacity in the residential care and nursing home sector in many parts of the country.
Baroness Greengross: My Lords, will the Minister agree that there is enormous anxiety among elderly and disabled people and their families and carers because the Government have not clearly defined what is meant by "personal care"? We know that some care which is delegated, supervised or authorised by nurses will be paid for. But that just increases the anxiety. We must now have clarification.
Lord Hunt of Kings Heath: My Lords, I am sorry if—particularly older—people are anxious about the

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intentions of the Government because I believe that the package of proposals that we have announced will lead to an enhanced package of care and support. The noble Baroness raised the important consideration of the definition of nursing care. The Royal Commission—indeed the dissenting note in the Royal Commission—accepted that it was perfectly possible to define nursing care. I can inform the noble Baroness that we are developing what is called an "assessment framework" in order to ensure that there is a proper definition which will be applied consistently throughout the country. We are consulting with a number of relevant organisations on just such an assessment and definition, including the RCN and the Alzheimer's Disease Society.
Noble Lords: Order!
The Lord Privy Seal (Baroness Jay of Paddington): My Lords, as we have only reached 25 minutes, there is probably enough time for everyone to get in. Perhaps the noble Baroness next, and then my noble friend.
Baroness Knight of Collingtree: My Lords, will the Minister reassure the House that there will not be elderly and disabled people in need of care but unable to get it for reasons of funding or anything else?
Lord Hunt of Kings Heath: My Lords, that is the intent of the policy in relation to long-term care that we announced in the NHS Plan. We want to ensure that people get the right support, not just in nursing residential care homes but also in the community and in rehabilitation programmes. We want to see the development of intermediate care in order to promote independence through active recovery and rehabilitation. We will spend an extra £900 million by 2003 to 2004. We are making strides. I believe we can do more in the future.
Lord Morris of Manchester: My Lords, the House is indebted to my noble friend Lord Ashley for raising this timely and very important question. Can my noble friend the Minister say what work has been done on quantifying and costing to the National Health Service the effects of the inequity of present arrangements? How many NHS beds are now being taken up by people who would be more appropriately cared for in other accommodation if the inequity was removed?
Lord Hunt of Kings Heath: My Lords, it is not possible to answer all those specific questions. The latest statistics show that just under 6,000 people over the age of 75 had their discharge from hospital delayed in the second quarter. Some of that delay was because of issues in relation to social services funding and some was due to people waiting for an appropriate residential care or nursing home place. The sooner we can implement intermediate care to enable people who are unnecessarily awaiting discharge in hospital beds, the better we can provide services to those people through rehabilitation, wherever that is possible, or, if not, in an appropriate nursing home. The quicker we deal with
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delayed discharges the sooner beds in our hospitals will be available for members of the public requiring treatment.
I believe that the package of measures of intermediate care and the decision to pay for nursing care in nursing homes will be an important part of the drive to improve the situation.
Baroness Barker: My Lords, will the Minister confirm that if an older person at home receives a change of dressing for an ulcer from a district nurse, that is free, but that the same person in a residential home receiving the same treatment from someone who is not a nurse will have to pay? Does he agree therefore that when such anomalies exist the Government's claim in the NHS Plan that any contribution people will have to make towards the cost of their care will be fair, predictable and related to their ability to pay is in severe doubt?
Lord Hunt of Kings Heath: My Lords, I do not follow the noble Baroness. My understanding is that, for instance, district nursing services will be available in a residential home provided by the National Health Service. In relation to a registered nursing home, the proposals we are making will ensure that nursing care provided by a registered nurse will be available and paid for by the National Health Service.

Alliance & Leicester Group Treasury plc (Transfer) Bill [H.L.]
The Chairman of Committees (Lord Boston of Faversham): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Commons message of 16th November be now considered; and that the promoters of the Bill have leave to suspend any further proceedings thereon in order to proceed with it, if they think fit, in the next Session of Parliament, provided that notice of their intention to do so is lodged in the Office of the Clerk of the Parliaments not later than 12 noon on Monday 27th November;
That the Bill be deposited in the Office of the Clerk of the Parliaments not later than noon on the second sitting day in the next Session with a declaration annexed, signed by the agent, stating that the Bill is the same in every respect as the Bill at the last stage of the proceedings thereon in this House in the present Session;
That the proceedings on the Bill in the next Session of Parliament be pro forma in regard to every stage through which the Bill has passed in the present Session, and that no new fees be charged to such stages;
That the Private Business Standing Orders apply to the Bill in the next Session only in regard to any stage through which the Bill has not passed in the present Session.—(The Chairman of Committees.)

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On Question, Motion agreed to; and it was ordered that a message be sent to the Commons to acquaint them therewith.

Political Parties, Elections and Referendums Bill
3.7 p.m.
Lord Bassam of Brighton: My Lords, I beg to move that the Bill be now further considered on Report.
Moved, That the Bill be further considered on Report.—(Lord Bassam of Brighton.)
On Question, Motion agreed to.
Clause 24 [Financial structure of registered party: adoption of scheme]:
Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts moved Amendment No. 56A:
Page 19, line 20, at end insert ("whose annual certified income is more than £5,000").
The noble Lord said: My Lords, Amendment No. 56A takes us back to an issue which caused some concern in Committee and on which I am not sure we reached an entirely satisfactory resolution. It arises from the all-encompassing definition of "accounting unit" contained in Clause 24(11)(a) of the Bill. As a result of that, every constituency association in the country, no matter how small or weak, will be swept up into the provisions of the Bill. With that will come a burden of compliance and bureaucracy backed by criminal sanctions.
The strategic objectives of the Bill are twin-track: first, to restore public confidence by achieving a higher degree of financial disclosure and transparency; and, secondly, to reinvigorate the democratic process by encouraging people to become involved in the political process, particularly at local level. Both those objectives are worthy. One has to support them. But I believe that objective one, the financial transparency and disclosure, is triumphing over objective two, the reinvigoration of local democracy. I am sure that the Minister is keen to preserve local democracy. His replies to points raised in the debate indicate that. Therefore, I wonder why we have this imbalance. In part, it is because there has been a degree of regulatory capture and a desire by officials to make sure that the whole Bill is bullet-proof and boiler-plated. They whisper in the Minister's ear words such as "loopholes" and "after effects unforeseen", and they may indicate to the Minister that that will reflect less than favourably on him when the Bill comes into force.
However, that means that at present there is no one—because by their very nature officials are goalkeepers rather than scorers—to whisper with equal force in the Minister's other ear about the other strategic objective which is equally important; that is, the maintenance of local democracy. Therefore, the amendment is designed to provide that whisper or perhaps even a gentle shout in the Minister's other ear.
There is very little evidence of financial abuse at constituency level. The practical reason for that is that most constituencies in most parties are struggling to find people to participate and to find money to make ends meet. There are occasional problems relating to petty cash, but I know of no example of a constituency problem that has had a national impact. The Minister may have examples, in which case I should be grateful to hear them.
I consider it to be of critical importance that the major political parties maintain a comprehensive national network of constituency associations. It is part of the fabric of our democracy. Choice is essential and choice is made the more apparent if each of the major parties is able to preserve associations in this way. That means that parties have to maintain associations in bad—I mean "bad" in political terms and in no other sense—political areas as well as in good ones. In previous debates I have referred to the Cotswolds/Stoke-on-Trent problem; namely, that being a member of the Labour Party in the Cotswolds or a member of the Conservative Party in Stoke-on-Trent Central can be a bed of thorns. It is perhaps an unenviable task to be a member of such an association where the chance of political success is quite low.
The weight of regulation and potential legal sanction contained in the Bill will fall equally heavily on every association—the small ones as well as the large ones. I cannot help thinking that this may well be the straw that breaks the camel's back. My amendment is designed to exempt constituency associations which have an annual certified income of less than £5,000. They will still be part of the national party, and the national party will be responsible for their behaviour. As in the past, they will still have to meet all the provisions of electoral law when they put forward candidates. But the national party can provide for such associations an administrative umbrella under which they can shelter, thus eliminating a burden of bureaucracy and compliance which they will otherwise face.
I have two final points. First, my amendment specifies that the accounts should be certified. Certification is a concept defined by the Institute of Chartered Accountants. It is not as onerous as completing audited accounts but I am convinced that there should be some independent third party verification.
Secondly, why have I put the figure at £5,000? In the Bill, £5,000 is generally accepted as a level at which individuals should undergo a degree of identification as donors and supporters. Therefore, there is a symmetry with local associations, which are treated in the same way. If an individual who donates £5,000 or more has to be identified but does not have to be identified in the same way if the donation is below that figure, why should that not also apply to local associations?
The Minister may be tempted to say that what is proposed in the amendment, if accepted, will be open to abuse. I have to accept that, technically, there could be some abuse. However, even if one takes a

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malevolent view of fellow democrats, the numbers involved will be so tiny—perhaps £1,000 in 150 or 200 constituencies—as to be trivial in the accounts of a national party. If such abuse were to become prevalent, I have no doubt that the electoral commission would publicise the breaches in the spirit of the regulations, if not in the law of them, and the naming and shaming would meet the objective of stopping the practice forthwith.
The Bill is about striking a balance between transparency and regulatory burden. We do not yet have the balance quite right. The amendment is designed to redress that balance. I beg to move.
3.15 p.m.
Lord Mackay of Ardbrecknish: My Lords, I have nothing to add to the remarks of my noble friend Lord Hodgson other than to support them. My noble friend has had a distinguished career on the voluntary wing of the Conservative Party and probably speaks for the volunteers in all the parties in the Chamber. Like my noble friend, I believe that those who struggle in seats where they know they will never have a chance of winning are perhaps the bravest of the foot soldiers in all our parties. At least the people who are struggling in seats which they believe they might win know that one day they may have a chance of victory. Perhaps on other days there will be a chance of defeat, but at least the occasional victory keeps them going. The people who struggle for our parties in the poorest seats deserve special consideration. Like my noble friend, I wonder whether applying to them all the bureaucracy of the Bill is a fair way for Parliament to recognise their efforts on behalf of the democratic process.
Lord Sanderson of Bowden: My Lords, I support the amendment. Having been chairman of the Conservative Party in Scotland, I know something about unwinnable seats, particularly in the Glasgow and Greater Glasgow area. Our biggest problem is that, if we do not do something about a cut-off point, the whole question of democracy in such areas can suffer. That will affect the Labour Party in Glasgow and the Conservative Party in the Cotswolds. It will do nothing for democracy if these constituency associations find it far too difficult and give up the ghost. Volunteers will not come forward and say, "I want to fight in an impossible situation".
Viscount Cranborne: My Lords, I support my noble friend Lord Hodgson, whose experience has already been alluded to during this brief debate. We are all conscious—the noble Lord, Lord Bach, made it clear during the course of our proceedings last night that he was conscious of it—of an inherent danger in the Bill. We are institutionalising and bureaucratising our political processes so much that we may easily kill them off.
The noble Lord was sympathetic in particular to an amendment put forward by one of my noble friends. The amendment suggested that an independent candidate should be able to describe his or her specific policies in up to five additional words on the ballot
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paper. I thought that the noble Lord's response was extremely sympathetic, although he confessed himself to be defeated by the problem. I hope that the noble Lord—if he is to reply, but perhaps his noble friend Lord Bassam will feel the same way—will acknowledge that there are inherent dangers in what we are doing, as has been made clear during our debates on the Bill. The opportunity—if only on the spur of the moment—to participate in politics as a minority is very important to our polity. We destroy that opportunity, whether by an imposition of bureaucracy or whatever, at our peril.
On those grounds alone, my noble friend has done a great service in tabling this amendment. I hope that the Government will be sympathetic to the arguments that he put forward so eloquently. I hope also that the Government may feel that, whereas it is extremely agreeable to be in permanent political dominance in, say, Newcastle, it is equally disagreeable for that party to find itself in the opposite position in, say, Bournemouth. We are all aware of the dangers in terms of complacency and perhaps—dare one say it?—occasionally worse if there is no challenge to a political party which is in a position of almost permanent dominance.
Therefore, anything which encourages small minority groups, whether or not they form part of one of the great parties, to be able to organise themselves in such areas is of enormous benefit not only to the overall body politic but also to local politics. I hope that the Minister will at least acknowledge that my noble friend has a point. Better still, I hope that he will pursue some of his more agreeable instincts and perhaps even agree to the amendment.
Lord Goodhart: My Lords, the Neill committee did not go into a level of detail over whether there should be some minimum amount of constituency income below which the reporting and accounting obligations would be modified or eliminated. However, it seems to me that the Bill imposes a serious burden on small parties. I have to say that the political party to which I belong has rather more such constituencies than either the government party or the Conservative Party.
We are somewhat concerned about the detail involved. For example, a £1,000 donation has to be disclosed to a constituency party and there must be some mechanism for disclosing it. We would therefore have some hesitation about supporting the amendment as it stands, but it would be helpful if the Government could look at the matter again. Steps may need to be taken to close loopholes; for example, to prevent transfers from small parties to large parties as a way of getting around some of the restrictions. Having said that, in principle I would be in favour of anything that reduced what is a serious imposition on small parties. For example, the Bill may make it extremely difficult to get anyone to take on board the office of treasurer. We hope that the Government will be able to look with favour on what may be brought forward to deal with this problem.
Lord Bassam of Brighton: My Lords, the noble Viscount, Lord Cranborne, invites my better instincts

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to come to the fore and other noble Lords have touched those parts of my political past which are perhaps strongly attracted to local democracy and ensuring that local democratic institutions are hail and hearty in all respects.
At first look I can see that the amendment might have its attractions. As I understand it, the noble Lord, Lord Hodgson, is advocating that, where the income of an accounting unit is £5,000 or less, the unit should be completely ignored for the purposes of the Bill. I am all for having a light touch where an accounting unit has a modest income, but I cannot advise your Lordships' House to go quite as far as the noble Lord suggests.
I see two particular difficulties with the noble Lord's approach. First, I think it inherently undesirable that a constituent or affiliated organisation of a party should be treated as part of the party for the purposes of the Bill in one year when its income exceeds £5,000 but not in the next when its income dips below that figure. We could have that strange and anomalous position. Secondly, the Neill committee recommended that donations above £1,000 made at a local level should be disclosable. It may be that an accounting unit has an income below £5,000 but attracts a donation of £1,000 or more from a wealthy local supporter. Under the amendment such a donation would not be disclosed. The noble Lord, Lord Goodhart, drew attention to that difficulty.
I put it to the noble Lord that the proper way to deal with accounting units with modest incomes is, as I have said, to apply a light regulatory touch. Clause 40 enables the commission to set different requirements for an accounting unit's annual statement of accounts according to three income bands, the lowest being incomes below £5,000. In addition, Schedule 5 exempts accounting units with an income below £25,000 from the requirement to submit their annual statement of accounts to the electoral commission. In practice, therefore, there will be few additional burdens on the treasurer of those accounting units with modest incomes.
If the Bill is applied in that sensible way and with that lighter regulatory approach, we will probably go some way to meeting the understandable concerns raised by the noble Lord, Lord Hodgson, during the course of the debate. I took careful note of what the noble Lord, Lord Goodhart, said. If a practical measure could be designed to assist that lighter touch but nevertheless capture, as Neill said, that £1,000 donation—that is an important and significant figure—I would be open to further representations. I do not believe that the noble Lord's amendment goes in that direction and I would therefore need considerable persuasion. For those reasons, I ask the noble Lord to withdraw the amendment.
Lord Hodgson of Astley Abbotts: My Lords, I am grateful to all noble Lords who have spoken in support of the amendment, even if some of them felt that the detail of it needed further brushing up. I found the Minister's response disappointing. He raised two
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objections to the amendment. First, he said that we have no way of disclosing individual donations. As I said in my remarks, the national party would still have responsibility for the local association. The national party would be responsible for ensuring that its individual constituent associations which were below the level would still have a reporting responsibility in respect of individuals who fell within the definitions given by the Minister.
Secondly, the noble Lord objected to the dipping in and out idea, whereby in one year an association had £5,500 and in the next year £4,500. I accept that that is a difficulty, but it is not beyond the wit of man to have a maximum and minimum limit or an average over a period of years which would enable a line to be drawn. That is too superficial, if I may say so with respect. The Minister espouses the cause of local democracy but then says that one of the main reasons for refusing the amendment is that we cannot find a way of defining £5,000. The price of local democracy is greater than that and with a little ingenuity we could find a way around the problem.
I do not propose to push my amendment any further today but I reserve the right to think about the issue and come back later on. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 25 [Financial structure of registered party: accounting units]:
Lord Bach Lord Bach moved Amendment No. 57:
Page 19, line 30, leave out from ("who") to ("so") in line 31 and insert ("shall be responsible for compliance on the part of the unit with the provisions of Parts III and IV").
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendment No. 58:
Page 19, line 32, at end insert (": and
(b) another person who is an officer of the unit registered for the purposes of subsection (3).").
The noble Lord said: My Lords, in moving Amendment No. 58, I should like to speak also to Amendments Nos. 59 66, 67, 70, 72 and 280 and make some passing reference to Amendment No. 60 standing in the name of the noble Lord, Lord Mackay.
The government amendments respond to two telling points made by the noble Lord, Lord Mackay, in Committee on 10th October. The amendments do two things. First, they provide that, where a vacancy arises in the office of treasurer of an accounting unit, another officer of the unit, whose name has been registered with the electoral commission for this purpose, will step into the breach until a permanent replacement can be found. Amendment No. 60, tabled by the noble Lord, Lord Mackay, seeks to achieve the same end. I hope that he will be satisfied with our amendment and will not move his own in due course.
The second effect of these amendments is to provide that any notification under Clause 29 advising the commission of a change to the treasurer of an accounting unit can be signed off by the registered treasurer of the party. It will no longer be necessary for

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such notifications to be countersigned by the registered leader of the party. If no one else remembers it, I certainly remember how the noble Lord, whether or not with the help of his expert researchers, used devastating logic to establish that the door would lead to the office of the Prime Minister, the Leader of the Opposition or the leader of the Liberal Democrat Party every time a local treasurer resigned. We are of course a listening government and we took careful note of the logical point made by the noble Lord, which could not be answered. We have now responded and I hope that the noble Lord will agree that the response is appropriate.
I am grateful to the noble Lord for having raised this matter and I hope that the amendments satisfy the House. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, of course I shall not move the amendment tabled in my name because, as the Minister rightly pointed out, the government amendments achieve the same end. Indeed, they go a good deal further because they address the problem as regards the Prime Minister. I confess that I did not bother to mention the Leader of the Opposition or the leader of the Liberal Democrats because I thought that the matter would be brought home to the Government slightly more firmly if I suggested that every time a constituency treasurer changed, a Minister would have to troop along to Downing Street to get the signature of the Prime Minister. I must say that I have never seen a government retreat quite as rapidly from a position.
Lord Bach: My Lords, we may have retreated rapidly, but I hope that we have shown good grace.
Lord Mackay of Ardbrecknish: My Lords, yes, the Government have shown very good grace. I was about to say that, in all fairness, I, too, would have retreated rapidly if I had been in the same situation.
I welcome the amendments. They improve the Bill and ensure that the provisions are more realistic in their operation in the real world. For that, I am most grateful.
On Question, amendment agreed to.
3.30 p.m.
Lord Bach Lord Bach moved Amendment No. 59:
Page 19,1ine 36, leave out ("person registered as treasurer of the party") and insert ("officer of the unit who is registered for the purposes of this subsection").
On Question, amendment agreed to.
[Amendment No. 60 not moved.]
Clause 26 [Registration of parties]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 61:
Page 21, line 20, at end insert—
("() Where the Commission refuse an application by a party under this section, they shall notify the party of their reasons for refusing the application.").
The noble Lord said: My Lords, in moving Amendment No. 61, I should like to speak also to Amendments Nos. 62 and 65. These amendments address another point raised in Committee. The noble Viscount, Lord Astor, argued that where the electoral commission refused an application or request under Clause 26, it should be required to notify the party concerned of its reasons for the refusal. I thought that that was an extremely sensible suggestion.
I indicated in my response to the noble Viscount that that would be what would happen in practice. That being the case, I agree that, in the interests of clarity, it would be beneficial to place the requirement on the face of the Bill. The same principle extends to Clauses 27 and 28. I believe that we are now all happily agreed on this proposition. I commend the amendments to the noble Viscount and to the House. I beg to move.
Viscount Astor: My Lords, I thank the Minister. When he responded in Committee, he stated that he had no doubt that the commission would set out its reasons in writing. However, he has not thought it necessary to specify such good practice in the Bill. Nevertheless, he has gone some way to meeting the point by tabling a helpful amendment which sets out that the commission should notify its reasons for refusal. I am grateful to the Minister for the amendments.
On Question, amendment agreed to.
Clause 27 [Emblems]:
Lord Bach Lord Bach moved Amendment No. 62:
Page 22, line 2, at end insert—
("() Where the Commission refuse a request made by a party under this section in relation to an emblem, they shall notify the party of their reasons for refusing the request.").
On Question, amendment agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment. No. 63:
Page 22, line 2, at end insert—
("(5) The Secretary of State may by order, made on the recommendation of the Commission, vary the maximum number of emblems that may be included in a request for registration under subsection (1).
(6) An order made under subsection (5) may not provide for the maximum number of registered emblems that may be included in a request for registration under subsection (1) to be less than three.").
The noble Lord said: My Lords, I beg to move Amendment No. 63. Let us see if we can maintain this run of agreement between ourselves and the Government.
Amendment No. 63 deals with the number of emblems that a political party can employ. When, initially, we decided to allow emblems to be reproduced on the ballot paper, I expressed some dismay at the proposal. We were introducing something which to me seemed necessary only in a country with a low standard of literacy. It seemed ludicrous, at this late stage in our history, that we should introduce the use of emblems. However, I regret that my argument did not garner sufficient support on that day and so emblems may be used.
However, I had one point for discussion. Sometimes political parties need to use different emblems in different parts of the country. I was grateful to the noble and learned Lord, Lord Williams of Mostyn, for accepting that argument and agreeing to the use of three emblems under the terms of the 1998 Bill. Since then we have looked again at the situation. In Committee, I suggested that we should increase that number to six. The Government understood the point that I was making but then decided that they did not wish to stipulate that number on the face of the Bill.
However, as we move on towards elections for Westminster, local, district and county elections, possibly regional assembly elections in England and certainly devolved elections in Scotland, Wales and Northern Ireland, as well as mayoral elections and European parliamentary elections, it is possible that more than three emblems may be needed.
I now propose a course that I would not normally choose; namely, as the amendment states, that if the electoral commission suggests that it would be appropriate to increase the permissible number of emblems, power should be given to the Secretary of State to allow for this. Clearly, such a power would not be used lightly. It would be used only if the commission felt that it was justified because a political party had approached it and said that, because of the circumstances, it needed to use more than three emblems. If the commission agreed with the argument, it would then make a recommendation to the Secretary of State. In those circumstances, I would be content to give the Secretary of State power by order to change the allowable number.
This is a modest amendment—so modest that I am almost too modest to propose it. However, I am doing so and I hope that the Government are listening. I beg to move.
Lord Bach: My Lords, I wish that the noble Lord had been a little more modest and had not moved the amendment. I am afraid that we do not feel that we can accept the proposal.
Part II re-enacts the Registration of Political Parties Act 1998 with such modifications as are necessary to establish a new scheme for bringing political parties within the controls on income and expenditure set out in the Bill. We have, however, sought to leave the 1998 scheme set out in the Act intact as far as possible.
One of the purposes of the 1998 Act is to protect a party's exclusive use of its name and its emblems in order to prevent voters being either confused or misled. The original intention had been to restrict political parties to the registration of only one emblem. However, as the noble Lord reminded the House, during the passage of the 1998 Bill it was pointed out that the Conservative Party used different emblems in England, Scotland and Wales. It was therefore conceded that a political party should be able to register up to three different emblems. Indeed, to have deprived a party of the use of an emblem with which
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voters in a particular part of the United Kingdom were already familiar would have run counter to the purpose of the 1998 Act.
We are not convinced, however, of the need to provide for an order-making power—as the amendment seeks to achieve—under which the maximum number of emblems may be increased further. The present arrangements will allow the registration of separate emblems for each part of Great Britain, and a party which also contests elections in Northern Ireland will be able to apply for the inclusion of further distinct emblems in the Northern Ireland register. But, on balance, we do not think that the aim of preventing the confusion of the voter would be well served by permitting any further proliferation of emblems. Although requests for the right to introduce order-making powers often emanate from this side of the House, on this occasion we think that this would be one power too many.
I hope that the noble Lord will feel able to withdraw his amendment.
Lord Mackay of Ardbrecknish: My Lords, having listened with care to the argument I am sorry that the noble Lord takes that view. All I can say is that I am glad that it was the noble and learned Lord, Lord Williams of Mostyn, who faced me when we debated the Registration of Political Parties Bill on the occasion when I managed to persuade him to increase the number of emblems from one to three. As I recollect, I believe that the noble and learned Lord argued firmly in favour of only one emblem until he heard my arguments to the contrary.
However, I shall not trouble the House further with this point. I hope that over the next two or three years we shall not reach a stage where we find that we do need another emblem for one of the parties. We shall then be left to wonder why such a modest change had not been introduced to this Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 28 [Changes to the register]:
Lord Bach Lord Bach moved Amendments Nos. 64 and 65:
Page 22, line 8, after ("emblem,") insert—
("() the addition or removal of a statement that a party is registered as a party with a campaigns officer,").
Page 22, line 39, at end insert—
("() Where the Commission refuse an application by a party under this section, they shall notify the party of their reasons for refusing the application.").
On Question, amendments agreed to.
Clause 29 [Notification of changes in party's officers etc.]:
Lord Bach Lord Bach moved Amendments Nos. 66 and 67:
Page 23, line 7, at end insert ("or of any officer of such a unit registered for the purposes of section 25(3);").
Page 23, line 14, leave out from ("(d)") to end of line 16 and insert—

("(i) specify the name of the officer replacing the person currently registered as holder of the office in question, and

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(ii) (if that person is so registered as an officer of the party) include an application for the registration of the replacement officer which complies with Part III of Schedule 4; and").

On Question, amendments agreed to.
Viscount Astor Viscount Astor moved Amendment No. 68:
Page 23, line 21, leave out ("14") and insert ("21").
The noble Viscount said: My Lords, in moving Amendment No. 68, I shall speak also to Amendment No. 69.
These amendments concern the clause in the Bill which puts a duty on a party to notify the commission of a change of officer under certain circumstances. We have had several lengthy and detailed debates in relation to the notification of officers and to the role of the party leader during previous stages of the Bill. My amendment is not about who would be responsible at the time of a vacancy arising, it seeks to increase the time in which notification of the change of an officer has to be reported to the commission from 14 days to 21 days on death or termination of appointment, and from 28 days to 42 days for any other changes.
During our debates, many noble Lords with experience of the everyday running of political parties, particularly at constituency level, have expressed the view that parties out in the countryside, if one may so describe it, can be rather slower than perhaps they should be. Parties have different structures and different strengths in different areas. Some are quite strong and some are very weak. Some have secretaries; some have agents or shared agents; but, alas, many do not have agents and rely on volunteers. In many constituencies, sadly, the post may be opened only once a week; or perhaps, in August, everyone is on holiday, most offices are shut, and there is no one there. There are many valid reasons why it might be impractical to meet the deadlines set out in the Bill.
The Bill places heavy burdens on parties and constituency associations in many areas and inflicts penalties for non-compliance. We agree with most of the burdens. However, we feel that the requirements should be sensible and that the time allowed should also be sensible. We should ease the pressure and allow a reasonable time frame for reporting these changes. I repeat: my amendments do not seek to change the fundamental principle of the Bill. They seek only to make meeting the reporting requirements easier and, it is hoped, enable them to work more smoothly. I beg to move.
Lord Bassam of Brighton: My Lords, Clause 29 requires that in the event of a party's entry in the register becoming inaccurate it must give the commission a notification by means of which the entry may be brought up to date. Where the notification requirement is triggered by the death or termination of the appointment of a registered officer, it must be submitted within 14 days; in any other circumstances, within 28 days. Amendments Nos. 68 and 69 seek to change these time limits to 21 days and 42 days respectively.
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The noble Viscount expressed concern about the time limits in Committee. I can only stress again that the value of the register would be severely undermined if it were not at all times as up to date as is humanly possible. It is particularly essential that the names of registered officers who are responsible for compliance with the Bill are accurate. If, for example, the appointment of a party's registered treasurer is terminated, the party will have 14 days in which to notify the commission of that fact and to submit an application to have the relevant entry in the register changed. I accept that in that short period the party may not select and appoint a permanent replacement for that officer, but it should be able to name an official who will be able to take on the role in an acting capacity.
I recognise that the time limits proposed by the noble Lord are more stringent than those he suggested in Committee, but the Government believe that the time limits set out in the Bill remain, on balance, the right ones. For those reasons, I urge the noble Lord to withdraw his amendment.
3.45 p.m.
Viscount Astor: My Lords, when one listens to the Minister, one begins to think that the Bill has been devised by those who have had nothing to do with the management of political parties. The noble Lord said that the commission would be "severely undermined"—I think those were his words—if the information was not accurate. That is right—but I do not think that it can be reasonably suggested that an extension from 14 days to 21 days would severely undermine the commission.
If one looks at the reporting requirements for companies, for example, almost all situations are covered by 21 days. One cannot think of many instances in company law—which company secretaries have to obey—that allow only 14 days for them to comply with its requirements. By and large, businesses know what is going to happen and have systems in place to deal with it.
In some areas, political parties are small and haphazard institutions. Noble Lords on all sides of the House will know of areas where their own political party is not strong but very weak. Imposing these requirements on representatives in such areas is going too far.
My amendments would not severely undermine the commission. Although I shall not take the issue further today, I hope that between now and Third Reading the Minister will reconsider the matter. Extending the time limit from 14 days to 21 days would make life much easier for the commission. It would make life easier for everyone if we were to have a sensible time limit. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 69 not moved.]
Lord Bach Lord Bach moved Amendment No. 70:
Page 23, line 36, leave out subsection (8).
On Question, amendment agreed to.
Schedule 4 [Applications under Part II]:
Lord Bach Lord Bach moved Amendments Nos. 71 to 77:
Page 140, line 15, at end insert—
("() If the application is for the party to be registered as a party with a campaigns officer, the application must also give the name and home address of a person to be registered as the party's campaigns officer.").
Page 140, line 28, after ("treasurer") insert ("and of the officer to be registered for the purposes of section 25(3)").
Page 140, line 37, at end insert ("and
() (if the application is for the party to be registered as a party with a campaigns officer) by the proposed registered campaigns officer,").
Page 140, line 42, after ("treasurer") insert ("or as proposed registered campaigns officer").
Page 141, line 4, after ("9") and insert ("and (if applicable) paragraph 9A").
Page 141, line 8, leave out ("paragraph 9") and insert ("paragraphs 9 and 9A").
Page 141, line 22, at end insert—
("Details of campaigns officer
9A. If an application is for the addition of a statement that the party is registered as a party with a campaigns officer, the application must—

(a) give the name and home address of the person who is to be registered as the party's campaigns officer; and

(b) be accompanied by a declaration of acceptance of office signed by that person.").

On Question, amendments agreed to.
Clause 32 [Registration of minor parties]:
Lord Bach Lord Bach moved Amendments Nos. 78 and 79:
Page 24, line 43, after ("treasurer") insert ("or campaigns officer").
Page 24, line 44, at end insert ("or campaigns officer (or any deputy campaigns officer)").
On Question, amendments agreed to.
[Amendment No. 80 not moved.]
Lord Bach Lord Bach moved Amendment No. 81:
Page 25, line 2, leave out ("sections (Financial structure of existing registered party) and") and insert ("section").
On Question, amendment agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 82:
Page 25, line 29, leave out subsections (7) and (8).
The noble Lord said: My Lords, the amendment relates to Clause 32 of the Bill, which deals with the registration of minor parties. The clause was added to the Bill in Committee on 10th October and needs to be read in conjunction with Clause 48(9). Clause 32 concerns the registration of minor parties and Clause 48(9) states that nothing in the donations part of the Bill will apply to minor parties.
In Committee on 10th October, at col. 263 of the Official Report, I raised a possible scenario which I invited the Minister to consider. Amazing as it may be to conceive of such a being, I suggested that there might be an unscrupulous and devious politician
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abroad who would create and register a minor party, pledging with the utmost sincerity to the electoral commission that it would contest only parish elections. But then, using the exemption provided by Clause 48(9) in regard to donations, that party would take large sums of money from abroad and need not report them to the electoral commission. Of course, such sources of funding from abroad would be denied to the main political parties.
Having taken the foreign cash, such an unscrupulous and devious politician could then amend that party's registration to allow it to contest national elections. He would be allowed to do so under subsection (7) of Clause 32. That is the subsection that my amendment seeks to remove. There would be no reason for the commission to refuse such an application—not only because there would be no record of foreign donations, but, even if there were such a record, there would be no grounds under the provisions of the Bill for refusing to alter the registration. So, in a way, this person could drive a coach and horses through the ban on foreign funding.
The noble Lord, Lord Bassam, undertook to consider the point. I hope that he has done so and can reassure me that there is some provision in the Bill that I have not noticed which prevents this scenario. If there is not, I recommend my amendment as a way to close a possible loophole. I beg to move.
Lord Goodhart: My Lords, this is an unlikely but possible scenario. I suggest that the best way of dealing with the point is to take the simple step that I suggested yesterday; namely, to remove from the Bill all references to "minor parties". I have made a little list of the amendments that would be needed; it is not extensive. That would get rid of this difficulty altogether. It is clear that, as a result of the change that was introduced yesterday to allow anyone to contest a parish or community council election without forming a registered party, there is no need whatever to provide for the registration of a minor party.
Lord Bach: My Lords, the provisions that the amendment would remove serve a simple purpose. A party which has previously declared that it intends to contest only parish or community council elections and has therefore been registered—I know that the noble Lord, Lord Goodhart, is unhappy about this—as a minor party may subsequently decide that it wishes to fight, for example, local government elections. In order to do so it would need to comply with the full registration regime and submit details of its registered treasurer and its financial scheme. The subsections that the noble Lord, Lord Mackay, seeks to omit from the Bill make provision in relation to the submission of this additional information and the replacement of the party's existing entry.
The noble Lord has argued that these arrangements offer scope for abuse. An unscrupulous political party—if such a thing should ever exist—might register as a minor party and avoid the requirements of Part IV but then, immediately prior to a general election, change its registration so as to enable it to

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contest that election. I should point out that such scope for abuse would exist even if the Bill did not make provision for registration as a minor party since it is equally possible that a party which is not registered at all might seek to register at the last moment in order to evade the controls on donations.
However, is this likely? Given the requirements of the registration process, is a party determined to field candidates in a general election going to take the chance that registration can be tied up within a few weeks of the election? We doubt that. It is also the case that where a minor party incurred controlled expenditure, within the meaning of Part VI, in the 365 days prior to a general election, it would be subject to the restrictions on donations set out in Schedule 11. So a party that wished to abuse minor party status in order to take delivery of foreign money would need to stay its hand in terms of campaign expenditure for as long as it continued to accept those foreign donations.
It will always be possible to spot ingenious ways in which controls such as those set out in the Bill can be side-stepped. The noble Lord and others, perhaps with some justification, have already complained about the length and complexity of the Bill. We could add considerably to the length, if that is what noble Lords really want, in order to plug every conceivable loophole. In the last analysis the Government, and this House, have to make a judgment about whether a particular abuse is really likely to occur. We do not believe that it is likely in this instance. We have sought to cover the more obvious and likely loopholes—indeed, we debated one such loophole last night. As for the rest, our suggestion would be to see whether there is a genuine problem and then look to the electoral commission to come up with the solution. On that basis, I hope that the noble Lord will consider withdrawing his amendment.
So far as concerns minor parties—and the second plea within a few hours from the noble Lord, Lord Goodhart—we believe that we should keep the provisions in respect of minor parties in the Bill to allow such a party to register in order to protect its name. That was the purpose of the 1998 Act and it is as relevant to minor parties as it is to other parties.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Lord for his response. I wholly agree that my scenario is not entirely likely. It is possible, however, and nothing the noble Lord has said has persuaded me that it is not. I see his point about controlled expenditure within 365 days and I shall reflect on it. It does make the scenario less possible than I thought. The noble Lord's best argument was that the amendment would add to the length of the Bill. As he knows, the length of the Bill already scares me, and to add to it scares me even more.
However, I find the proposition of the noble Lord, Lord Goodhart, extremely attractive. I am absolutely certain that if the noble Lord says that he has a list of amendments in his pocket that would remove minor parties from the Bill, it will be a pretty good list, and will probably be acceptable to the parliamentary
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draftsmen. Perhaps I can tempt him by saying that if he includes it in an amendment at Third Reading, I should be quite keen on reducing the size of the Bill by lending my support to it. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 34 [Assistance by Commission for existing registered parties]:
Lord Beaumont of Whitley Lord Beaumont of Whitley moved Amendment No. 83:
Page 26, line 15, leave out ("initially") and insert (", in the first five years after this Act comes into force,").
The noble Lord said: My Lords, in Committee I put forward a series of amendments to extend the amount of help that can be given to parties to conform with the Bill so that they have some ongoing support after the first year. We believe that that is particularly relevant to parties of the size of the Green Party, which I represent. Indeed, I had experience as treasurer of the Liberal Party in the days when this would have applied to it. Parties of this size have particular needs. I have tabled amendments to limit the amount of time during which such a provision would apply and to spell out more fully how it would work. I do not pretend that my drafting is perfect. If the Government are at all sympathetic, I am sure that they can do better in meeting the point.
The recent chairman of the executive of my party wrote to me to say that, on his reckoning, compliance with the Bill will cost £10,000 in year one, and probably near to £8,000 for one, two or three years thereafter. The Green Party is what might be described as a second-tier party: it is not one of the big three, it is not merely regional and not very local. It is at the top of the second tier and has the longest history. Other parties include the Referendum Party and the UK Independence Party.
It must be assumed that the financial structures of the big three are already fairly sound, but that work will be needed to adapt in terms of processes and staff to cope with the transition. Thereafter, they should be able to cope. They should not have to apply for funding in the second and subsequent year, although under these amendments they may do so if they think it appropriate.
Many smaller parties do not field anything like as many candidates as the Green Party, so the costs that they will accrue are likely to be negligible by comparison. The second-tier parties will be worst hit. That is because we are already working to absolute capacity in relation to income. We find it harder to acquire funding than the larger parties simply by virtue of being smaller. Also, we ethically screen all would-be donors, which narrows the potential still further. We have a turnover slightly in excess of the £250,000 threshold in election years, so we should have to employ a qualified auditor and we should have to implement the system through a large number of local parties.
It is reasonable for us to accept more help, along with the other second-tier parties, than the other two groups. We shall continue to have extra costs after the

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start-up year, but the larger parties will be able to subsume the costs in their other expenditure. Smaller parties will never need to spend as much on compliance. However, it is reasonable to expect the second-tier parties to organise their budgets over time in order to cope with this new financial burden. Therefore, extending the funding for another five years will mean that the Green Party, and other second-tier parties, will have time to organise budgets to cope with the very significant extra costs that compliance with the legislation will create. That is why I have tabled these amendments.
During the previous stage, the noble Viscount, Lord Cranborne, and the noble Lord, Lord Rennard, both spoke rather sympathetically to the amendment that I put forward. Now that I have brought it back in another form, I hope that they will continue to support me. Having had time to reconsider the matter since the Committee stage and having noted the support that I received from other opposition parties, I also hope that the Government will be able to assist my party and other second-tier parties, and thus ensure a rather better working of the democratic system. I beg to move.
4 p.m.
Lord Rennard: My Lords, I have more than sympathy for these amendments. As I said in Committee, this Bill will impose great burdens upon the political parties. We have talked about the damage to democracy in terms of parties not being able spend their resources on promoting their case, but having to act like accountancy firms in administering this bureaucracy. If the Government were to agree to this amendment, it would not be a big concession for them to make.
We should remember that the fundamental principle is to be found in Clause 32—namely, that the start-up costs of implementing this legislation will be covered by the £500,000 fund that all parties have agreed should be available to enable them to set up the mechanisms and administer the Neill proposals. Therefore, to accept the small sum, relatively speaking, of £200,000 over four years would not be a big concession for the Government to make. It would be a boost to our democracy. Parties may lose out in many ways because of what they will have to do under this legislation. This suggested provision would give them some small comfort in facilitating the operation of this legislation.
Viscount Cranborne: My Lords, I rise to support the noble Lord, Lord Beaumont, in his revised amendments. I believe that what the noble Lord is proposing is all of a piece with the objections that many of us have constantly expressed as to the potential effects of what is a highly bureaucratic and complex Bill. I am under no illusions whatever that our body politic should, for reasons of effectiveness and expediency, continue to be dominated by two substantial parties. I say this mainly because we are living in a era when we ought to worry substantially
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about the effects of extremism, especially as we see this becoming increasingly more menacing in our great European home. I refer particularly to Right-wing extremists. Therefore, it is important that the major parties should continue to be broadly-based coalitions and that those coalitions should attract—for reasons, again, of expediency—people who might otherwise be tempted under other electoral systems to support extremists parties, but who could come under the umbrella of the larger parties of either Left or Right.
My support for this proposal in no way undermines my feeling that the present electoral system performs that very sensible role. I am sorry that the Liberals have always failed to understand the essential importance of this at a time when extreme Right-wing parties are increasingly rampant among our European partners. Nevertheless, this practicality has to be tempered with the recognition that everyone who is interested in politics and does not want to support the main parties should not be unduly handicapped in the way that he or she is able to do so. A very large part of this Bill is, I suspect, introducing handicaps that do not already exist and from which we have benefited in our polity for many generations.
Therefore, although I find it difficult to see myself ever voting for the noble Lord's party—not because I disagree with its objectives, but because I fear that its recipes are not those for salvation but for disaster—none the less I very much respect his view that we should encourage anyone who wants to stand for minor parties to do so. State bureaucracy and the incorporation of parties into state bureaucracy should not prevent such people doing so. The noble Lord has done us a service. I hope that the Government will look sympathetically upon his amendments.
Lord Shepherd: My Lords, I hope that the Minister will give very careful consideration to this amendment. It is possible that the drafting may not suit the Government. However, as the noble Viscount, Lord Cranborne, said, we ought to have real regard to the ordinary people who may belong to these strange, but sometimes useful, parties. Public life has become expensive. I have in mind an article that I read in my newspaper today, which really sickened me. A few weeks ago we applauded the Government's announcement of an award to former prisoners of war held by the Japanese during the last war. However, I see that the firm of solicitors representing those former prisoners is charging them some £3.5 million for its services. I am sure that the firm had to meet expenses and costs. But after the Government made this most generous gesture on behalf of the country, it seems strange that those who are, shall we say, in difficulties should have to pay a certain sum of money towards those legal fees.
I know that that example is slightly different from what we are now discussing—indeed, it is considerably different—but it indicates the cost of being in public life in the pursuit of justice. Therefore, if the Minister does not have the right answer today, I hope that he will reconsider the matter between now and Third

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Reading and that he will try to find a solution to a concern that I believe most Members of this House share.
Viscount Astor: My Lords, apart from the noble Lord, Lord Beaumont of Whitley, all the noble Lords who have spoken in this short debate would not vote for the Green Party if they had a vote. However, we are all sympathetic to the point that he made; indeed, that applies to this side of the House, to the Liberal Democrats and to the noble Lord, Lord Shepherd, a former leader of the Labour Party in this House. I trust that the Minister will take note of that fact.
Before the Minister even thinks that he can accuse me of supporting state funding by being sympathetic to this amendment, I should point out that this is nothing to do with state funding. I am sure that the noble Lord realises that this is to do with preventing small parties being bankrupted by the new arrangements. It is as simple as that. Small parties will just go out of business, so to speak, unless something is done. The amendment before us may not be exactly the right way to solve the problem. However, can the Minister say what consultations there have been with small parties about their compliance costs? What will the Government do to ensure that small parties do not go out of existence?
Unless the Government come forward with a reasonable answer to the concerns that have been expressed by noble Lords this afternoon, we shall have to think the worst of the Minister—which, I am sure, is something that we do not want to do. We shall wonder whether the only reason for the Government not supporting the amendment is that they wish to put out of business the Scottish Socialist Party, led by Mr Tommy Sheridan, a thorn in their side in Scotland.
Lord Bassam of Brighton: My Lords, I thought that the noble Viscount was doing quite well until he made his final point. The noble Lord, Lord Beaumont of Whitley, indicated that he would return to the fray with further amendments on the issue. I commend him on his persistence. We have had time to reflect on the matter since the Committee stage. The noble Lord proposes a more generous conception of what might constitute "start-up" costs, with an additional £200,000 to be made available over the course of four years. I appreciate that what is at stake is a small sum of money in relation to the size of the public purse. But I remain unpersuaded that this amendment in its current form should be accepted.
I remind the House that the Neill committee made a specific recommendation in relation to start-up costs. By start-up costs it had in mind, for example, the purchase of IT equipment which might be required to keep track of large numbers of recordable donations. It is perfectly reasonable to suppose that that sort of investment, if it is necessary, will be undertaken at the outset, not three or four years down the line.
That said, the Government wish to ensure that adequate assistance is available to meet initial start-up costs and intend that a figure of £700,000 rather than £500,000 should be made available. We understand
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entirely the points made about smaller parties. At Third Reading we shall bring forward an amendment to give effect to the uplift I have suggested. As now, we envisage the funding being available in one tranche rather than spread over a number of years. The proposed increase is in recognition of the fact that, for a period of about eight months after the commencement of the controls on donations, parties will need to rely on more labour intensive means to check whether an individual donor is on the electoral register pending the introduction of an on-line system. By giving this undertaking to increase by £200,000 the start-up funding available, I hope that I have done enough to persuade the noble Lord, Lord Beaumont, to withdraw his amendment.
The noble Viscount, Lord Astor, asked a specific question about consultation. All parties had an opportunity to comment on the White Paper and draft Bill. Sadly, few chose to do so. However, that was not for the want of trying on the Government's part. We were genuinely interested in stimulating interest. As has been demonstrated during the passage of the Bill, that interest has grown since.
Viscount Slim: My Lords, before the noble Lord sits down, I hope that I may reinforce the earlier remarks of the noble Lord, Lord Shepherd. As the noble Lord may know, over many years I have been somewhat involved in trying to get the Japanese prisoners of war some recompense. This is not entirely in the context of the mini-debate we are having at the moment.
Lord Bach: My Lords, if the noble Viscount will give way for a moment, I hope that he will put his remarks in the form of a question to my noble friend because of the nature of Report stage.
Viscount Slim: My Lords, I was about to do so but I had forgotten it. Will the noble Lord who represents the Government on the Front Bench please look into the matter that the noble Lord, Lord Shepherd, raised? I do not complain about the sum of £10,000 per person. The Prime Minister has been very generous and quite correct. Will the noble Lord please ensure that all that money does not go to the lawyers?
Lord Bassam of Brighton: My Lords, as the noble Viscount well understands, that is wide of the remit of our discussions today. I thought that the noble Lord, Lord Shepherd, made an important point. I do not think that anyone in your Lordships' House would want to see lawyers profit at the expense of those who have suffered as a consequence of war. I say that with a lawyer sitting behind me and in the knowledge that I live with a lawyer. Therefore, perhaps I am entitled to make such remarks. I shall take steps to investigate the current situation but beyond that we shall have to look to the future.
Lord Beaumont of Whitley: My Lords, I am grateful to all noble Lords who have unanimously supported the amendment. We have made a good case. I am also

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extremely grateful to the Minister for having taken the measure away, having thought about it and having come back with some kind of a solution.
I am grateful for the rather small mercy that the noble Lord has produced. I look forward to seeing the amendment that the Government will bring forward at Third Reading. I hope that the Government will allow plenty of time—not that there is a great deal of time available—to enable us to study it and, if necessary, propose alternatives at that stage. However, in the meantime, and with some gratitude, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 84 and 85 not moved.]
4.15 p.m.
Clause 40 [Annual statements of accounts]:
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 86:
Page 29, line 45, at end insert—
("() Any special provision made by regulations under subsection (2)(a) in respect of parties registered in the Northern Ireland register shall, however, only have effect in relation to any financial year of a party so registered during any part of which there is an order in force under section 68(1); and, in the case of any other financial year of a party so registered, any provision made by such regulations in respect of parties registered in the Great Britain register shall have effect in relation to that financial year of the party as if it were registered in that register.").
The noble Lord said: My Lords, we now return to what is clearly one of the more controversial aspects of the Bill; namely, the special provisions for Northern Ireland parties in Clause 68.
Debates on this clause, both here and in another place, have given vent to deep concerns about such provisions. In an ideal world we would not need the clause. However, we must recognise, as the Neill committee recognised, that politics in Northern Ireland are not yet conducted on quite the same basis as they are in Great Britain. Political developments in Northern Ireland have undoubtedly taken an important step forward since the Neill committee report was published, but there remain special factors which cannot be lightly dismissed.
Thankfully, the level of political violence in Northern Ireland has greatly diminished since the onset of the peace process. But, as we see from time to time, it has not been wholly eradicated. The Neill committee heard evidence, including from the Ulster Unionist Party, that, notwithstanding the Good Friday agreement, it would still be unsafe in Northern Ireland to disclose the names of those who had made gifts to a particular political party there. There is a real risk, therefore, that if donations made to parties in Northern Ireland were subject to disclosure in the normal way there would be one of two possible consequences. The first is that donors would suffer discrimination, intimidation, or perhaps worse. The second, and perhaps more likely result, is that people would simply refuse to give to a political party for fear of the consequences to them personally if the fact of the donation was made known.
It was these considerations which led the Neill committee to conclude that there should be a temporary exemption from the reporting requirements for donations made to political parties in Northern Ireland.
The Neill committee separately considered the effect of the ban on foreign funding on parties in Northern Ireland. Here it concluded that the terms of the Good Friday agreement argued for an exception to be made to the definition of a permissible donor in order to allow a citizen of the Republic of Ireland to make a donation to a Northern Ireland political party, provided that the donor complied with the provisions of the Republic of Ireland's Electoral Act 1997. The committee recognised, however, that if such a special exemption were created there would exist the possibility of donations reaching the Republic of Ireland from abroad and then being rerouted to the North. Having identified this very real possibility, the committee was unable to devise anything that would prevent such rerouting other than statutory provisions which would arguably be incompatible with the letter and spirit of the Good Friday agreement. The Government take the view that as a donation from the Republic could have its origins in the United States or elsewhere a provision along the lines recommended by the Neill committee, and reproduced in Amendment No. 127, would have no more than cosmetic effect.
The Government have accepted in relation to both these recommendations that the case has been made for a temporary adjustment to the application of the provisions of Part IV of the Bill to political parties in Northern Ireland.
In Committee, the noble Lord, Lord Goodhart, properly latched on to the temporary nature of any special provisions for Northern Ireland. He proposed then that any order made under Clause 68 should be subject to a four-year time limit. This would ensure that any such order was regularly reviewed. The Government readily accept the noble Lord's proposal. It has always been our intention to make an order under Clause 68 for an initial period of four years and then to review the situation in the light of the prevailing situation in Northern Ireland. I should make it clear, however, that the four-year time limit is without prejudice to one or more further orders being made. Government Amendment No. 129 ensures that the ability to make further orders is not in doubt and I would, therefore, commend it to the House in preference to Amendment No. 131 in the name of the noble Lord, Lord Goodhart. I should add that government Amendment No. 86 makes it clear that any special provisions in respect of the accounts of Northern Ireland parties should be made only when an order under Clause 68 is in force.
I believe that a review at least once every four years is about right. This does not preclude a review after perhaps two or three years if the circumstances are right. But to suggest, as Amendment No. 130 implies, that the situation in Northern Ireland would have altered sufficiently after just one year, I would argue, is unrealistic.
Nor can I support Amendment No. 133, which seeks to build a "sunset" provision into Clause 68. There may come a time when we can repeal this clause but it is premature to be thinking of that at present. Of course, if no order is in force the clause would in effect be dormant and one would hope that it would not have to be reawakened, but we should not burn our boats at this stage.
Amendment No. 125, in the name of the noble Lord, Lord Mackay, offers yet another way forward. On the face of it the amendment has some attractions. Indeed, perhaps I may advise your Lordships' House that it is a solution which the Government have themselves previously considered. The effect of the amendment would be to require Northern Ireland parties to disclose recordable donations to the electoral commission in the normal way but then to exclude the details from the register of donations and therefore keep the information out of the public domain. It may be that this is a halfway house which could be put in place in due course but subsection (2) of Clause 68 already provides sufficient powers to enable us to do that.
We do not, however, see the approach taken in Amendment No. 125 as an acceptable way forward at present. Concerns have been expressed that any external reporting of donations, even if confined to reporting to the electoral commission, would not provide sufficient reassurance to donors that their names will not fall into the wrong hands. I would very much hope that such fears are wholly without foundation but we cannot ignore the fact that perceptions about the risk of information leaking out could have a significant impact on the funding of parties in Northern Ireland regardless of whether such fears have any basis in fact. The political process in Northern Ireland will not be advanced if the main political parties cannot function properly because supporters stop making donations for fear of the consequences. As the situation improves, we shall certainly look again at the option of the disclosure of donations to the electoral commission but not to the wider public. However, such an option should be additional to, and not a substitute for, the wider powers in Clause 68.
Amendments Nos. 132 and 187 are concerned with the impact of a Clause 68 order on a referendum campaign. Let me make one thing clear from the outset—
Lord Mackay of Ardbrecknish: My Lords, if the Minister will give way, perhaps I may say that I have uncoupled the two amendments on referendums. I believe that it is a quite different point. Perhaps the noble Lord will repeat the two amendments he mentioned.
Lord Bassam of Brighton: My Lords, Amendments Nos. 132 and 187.
Lord Mackay of Ardbrecknish: My Lords, I am grateful to the noble Lord. I have uncoupled them. We shall come to them much later, I fear.
Lord Bassam of Brighton: My Lords, I am grateful to the noble Lord for his help.
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We return to a more constrained debate; I accept that point. As I have said on a number of occasions this is a difficult set of circumstances for us to confront and deal with. In those circumstances, we have devised a position which, while it is not wholly desirable, is desirable in those circumstances. It takes account of the political reality in Northern Ireland. It moves a step forward in the direction that the noble Lord, Lord Goodhart, suggested in Committee and it takes us some way forward into the future.
I am interested in the amendment in the name of the noble Lord, Lord Mackay. However, as I have expressed plainly to your Lordships' House, as a halfway house it is not one that we can readily accept at this stage. We do not think that it is realistic. But we are prepared to consider it more closely at some point in the future.
After all that has been said about Clause 68, I hope that the House will accept that it is not a provision that the Government have included in the Bill without giving the matter very careful thought. Our decision to do so was not taken on a whim. The Neill committee looked at the impact of its recommendations on Northern Ireland parties very carefully and took evidence from both the nationalist and unionist communities. It is right to remind the House that in the light of what it heard in Belfast the committee concluded that special provision should be made for Northern Ireland parties. The Government endorse that view. It is right that any such special provision should be regularly reviewed and I commend to the House the government amendments which provide for that. But, subject to those amendments being made, I ask the House to return this Bill to another place with Clause 68 intact. I beg to move.
Lord Mackay of Ardbrecknish: My Lords, in addressing Amendment No. 86, the Minister has also dealt with the other important amendments to Clauses 67 and 68 in this group which stand in my name. I shall not say much on Amendment No. 86 which, frankly, does not seem a terribly important amendment in the grand scheme of things. However, the general issue introduced by Amendment No. 86 is, I believe, one of the most important parts of the Bill.
In Committee we discussed these matters at some length. Indeed, after the amendments made by the Government in Committee, Clause 68 is far more broadly drawn than when it came to your Lordships' House from another place. Paragraph (b) of Clause 68 now allows the Secretary of State to disapply any—I repeat the word "any"—of the provisions of Part IV or to apply them with such modifications as may be specified. Those amendments mean that the Bill goes much further than it did when it came here. It would not just allow Northern Ireland parties to receive foreign funding, and Sinn Fein, the IRA, and the political wings of the Real IRA and the Continuity IRA to receive cash from their supporters in the United States; that is bad enough. It would also allow the Secretary of State to modify or disapply anything

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in Part IV of the Bill. Indeed, the Government have said already that they intend to disapply everything in Part IV for four years in the first instance.
The Minister must spell out in detail—he did not do so in Committee despite our endeavours—the situations in which he believes that both those powers will be exercised. If, as he said, the intention is to exempt all Northern Ireland parties from all of Part IV completely, then why is there the need for the provision which envisages partial application but with modification? What is partial? What are the modifications envisaged?
The Government's intention to allow for a complete exemption from Part IV means that, for example, when Clause 60 is disapplied, Northern Ireland parties will not even have to report to the electoral commission the kind of donations they are receiving. So not even the commission will be in a position to know what is going on. If I may paraphrase the noble Lord's defence of that, it was that the commission could not be trusted to treat the matter in confidence. That does not say much about the confidence of Government in the electoral commission, or in the people they will appoint to it. I should have thought that if the signal being sent out to all our parties is that they cannot treat any information they give in confidence to the electoral commission as likely to be kept in confidence, I think that all our parties will be pretty horrified. That is particularly so in Northern Ireland. If that is the best argument that the Government can come up with, it is an appalling reflection on the commission that they are setting up.
Further to that, the Secretary of State will have the power to increase the £5,000 limit for public disclosure and the criminal offences in Clause 59 relating to the evasion of restrictions on donations will be disapplied.
As in Committee, the Minister has repeatedly referred to the special factors that apply when we consider Northern Ireland. We know that there are some special factors, but many of us are unconvinced that they lead us inexorably towards removing Northern Ireland from the whole of Part IV. In Committee on 10th October, at cols. 246 and 251, the Minister attempted to justify the provisions almost exclusively on the basis of the need to ensure the personal safety of Northern Ireland donors by not making public their names. He repeated those arguments today.
However, the Minister appears not to have understood the clause, which provides for far more than just the exclusion of donors' names from the public register. The clause will allow the Secretary of State to drive a coach and horses through not only the ban on foreign funding, but all the requirements of this part of the Bill, including the requirement to make donations reports and the criminal offences related to the restrictions on donations.
Your Lordships should see through the Minister's argument, clever though it was, that the need for anonymity is sufficient excuse for wholesale exemptions from all the restrictions on donations. In
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theory that may appear to benefit all the political parties in Northern Ireland, but we all know which political party and which so-called politicians it will benefit in practice. Why does the Government's argument that donors in Northern Ireland should not be identified publicly lead them to argue for a complete exemption on foreign donations and their reporting to the commission? On 10th October, the Minister tried to make a great leap from donor anonymity to the wholesale exemption of Part IV. He said:
"The Under-Secretary of State for Northern Ireland, George Howarth, met with representatives of the main Northern Ireland parties earlier this year. Although opinions were divided, there was a strongly held view in some quarters that exemptions from the disclosure requirements of Part IV remain essential".—[Official Report. 10/10/00; col. 247.]
That is fine. However, the Bill will create an exemption from everything in Part IV. That is a problem for many of us.
The Minister was kind enough to admit that if donor anonymity was the Government's only concern, my Amendment No. 125 to Clause 67 and the deletion of Clause 68—or at least of the blanket exemption powers in subsection (1)(b)—would be sufficient. Indeed, I think that he said that the Government had considered similar wording. However, they have made a great leap—I was going to call it a leap of faith, but it is a leap of bad faith—from donor anonymity to all the other aspects of the funding of political parties in Northern Ireland. That principally means a leap to the foreign funding of Sinn Fein/IRA, but the Government cannot bring themselves to be open and honest with the House.
I have accepted the Government's argument about donor anonymity—although I find it very hard to accept that the commission should not be told in confidence—but there is no justification for allowing Sinn Fein/IRA to accept foreign donations when no other political party in the United Kingdom will be allowed to do so. If the Government admitted that they had made a deal to allow Sinn Fein/IRA to continue to receive money from the United States because it is very important for them, at least we would have honesty and transparency—two words that the Government are so keen on—but we do not even have that. It would at least be pleasant to hear that explanation. We may not like it or agree with it, but at least it would be open.
I have agreed in my amendment to the creation of a separate register in Northern Ireland—although I am not happy about it—to allow for anonymity. However, I am bothered by the next leap from donor anonymity to receiving money from abroad. My amendments would prevent that.
Amendment No. 125 is fully consistent with the Neill committee's recommendation. To be fair, the noble Lord, Lord Goodhart, said in Committee that, although he was not entirely happy with the Government's proposals, he was not happy with my amendments either. I am sure that he will give us the benefit of his advice later. I believe that my new amendments go a long way to help him and the Government with the problem of anonymity.

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I accept that, despite my best endeavours to allow contributions from citizens of the Republic of Ireland who are on the electoral register and resident there—that is an attempt to take another step towards the problem that the Neill committee addressed—I am risking a seepage of donations from North America. However, the same seepage of donations could arise for any party. Anyone in the United Kingdom could receive money from a foreign backer of one of our great parties and pass it off as his own donation. What is the difference? I am prepared to take the risk. If donations were reported in confidence to the electoral commission, it would be much more difficult for somebody in the Republic to be used as a conduit for American money. At least we would be seen to be trying to stop foreign donations. The Government are not just not trying to stop foreign donations; they are encouraging their continuation.
In Committee, I asked why a Scottish American who wanted to help the Scottish National Party should not be allowed to donate to it when an Irish American living next door could donate to Sinn Fein/IRA.
4.30 p.m.
Viscount Cranborne: My Lords, my noble friend knows the answer as well as I do. If the Scottish National Party were to indulge in terrorism, donations would be allowed.
Lord Mackay of Ardbrecknish: My Lords, I do know the answer as well as my noble friend, but I want the Government to admit it, because that would show how cowardly they have been. I find it hard to explain to my fellow countrymen, some of whom support the Scottish National Party—I do not understand why, but they do—why they should be deprived of foreign money when Sinn Fein/IRA is not to be deprived.
Amendments Nos. 129, 130, 131 and 133 would limit the duration of orders under Clause 68. The Government and the noble Lord, Lord Goodhart, have suggested four years. That is far too long. A debate every four years is not enough. At the least there should be annual renewal of exemption orders. Amendment No. 133 would require a vote every four years—roughly once per Parliament—on whether the powers should continue. It would be a kind of sunset clause. The amendments would provide for more parliamentary scrutiny and more flexibility.
When the amendments were discussed in Standing Committee in the other place, the Minister, Mr Tipping, was quite supportive and said that he did not discount annual renewal. Can we have the same encouragement from the noble Lord, Lord Bassam?
Like many noble Lords, I consider the Government's amendments unacceptable. In the other place, the Conservatives, the Liberal Democrats and the Ulster Unionists made very clear in debate and in the Division Lobbies their disgust at what the Government were doing. Mr Willie Ross, the Ulster Unionist Member, said:
"The provisions do not defend democracy, they betray them at the behest of those who occupy their current political positions by a policy of murder, mutilation and craven appeasement".—[Official Report, Commons, 14/3/00; col. 193.]
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The Liberal Democrat spokesman, Mr Andrew Stunell, said:
"It is perverse therefore that we should say that there is one part of the United Kingdom where we cannot find a way of getting on top of the problem and that we need clause 63 to run away from it. This clause is based on the wrong underlying philosophy and the wrong legislative theory".—[Official Report, Commons, 14/3/00; col. 196.]
Far from taking on board our views and those of other legitimate parties operating in the other place and in your Lordships' House, the Government have come forward with amendments in Committee which make the situation even more unacceptable.
I am sorry that I have spoken about this for a long time but it is of vital importance to the consistency of this piece of legislation. If this peace process means anything, it means that all the political parties in the North of Ireland come into the same sort of political activity as the parties in Great Britain, which means that they come under the same rules. I believe that my amendments go a long way towards addressing the concerns which the Government expressed in Committee. It would be honourable for the Government to accept the amendments today so that we may move forward in agreement on the question of funding political parties in Northern Ireland.
Lord Goodhart: My Lords, I rise to speak to Amendment No. 131 in this group standing in my name. Because this matter was considered in some detail by the Neill committee, I am speaking in a personal capacity and not on behalf of my party.
The Neill committee was faced with two problems relating to Northern Ireland. The first and easier problem related to disclosure of donations. Most of the evidence that we received, which we found convincing, suggested that there was a serious risk that requiring the disclosure of donations would put at risk the economic well-being and, in some cases, even the lives of the donors. We therefore recognised that in this respect there was a strong case for an exemption. We did not specifically consider whether that exemption should be applied to the details published in the register or whether it should apply at an earlier stage and apply also to remove the requirement of disclosure to the electoral commission. I can certainly sympathise with the feeling that it should be disclosed to the commission. However, I have an uncomfortable feeling that, perhaps not in fact but probably in the perception of those who make the donations, it would be seen as presenting an element of risk. I therefore find myself unable to follow the noble Lord, Lord Mackay of Ardbrecknish, on that issue.
The more difficult question concerned donations from what would otherwise not be permitted sources. For the reasons expressed in the report, the Neill committee came to the view that it would not be possible or desirable to exclude the possibility of donations from the Republic of Ireland to parties operating in the North of Ireland. We would not have wanted donations to be made from outside the Republic of Ireland. The problem was that we recognised that any such exclusion would be

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impossible to enforce because, once the possibility of donations from the Republic of Ireland had been accepted, it would be virtually impossible to trace them and so discover where the donated money had come from.
The position in the United Kingdom is, of course, different. If there is a suspicion that money has been donated by a donor on the electoral register in the UK, but as an agent for a foreign source, that matter can be investigated by the electoral commission and by the police. That, of course, would not be possible in respect of donations from the Republic of Ireland.
The upshot was that we recommended a permanent exemption for donations from the Republic of Ireland. In doing so, we recognised that this provided a loophole that could not be stopped up. The Government, arguably more honestly than in our proposal, recommended that this should be dealt with, not by providing on the face of the Bill a right of donation from the Republic of Ireland but by allowing exemptions from the general rules governing foreign donations in regulations made under Clause 68. That certainly causes me a good deal of concern, and I find it difficult and painful to accept. Nevertheless, I am reluctant to say that it should be rejected altogether. However, it seems plain to me that it should be the subject of review at regular intervals, and that if such exemptions are to be provided, they should be reconsidered from time to time by the Government.
I have tabled an amendment seeking four-year reviews. I have a good deal of sympathy for the proposal of the noble Lord, Lord Mackay of Ardbrecknish, that the renewal should be on an annual basis. I perhaps have even more sympathy for the view that not only the order but the clause itself should be reviewed at four-year intervals. Although it is clearly impracticable at the moment, the provision of a sunset clause, even if it is an infinitely deferrable sunset, is preferable. Because it gives an indication of hope that the situation may return to normal in Northern Ireland, it is preferable to simply allowing this provision to stand on the face of the Bill unless and until it is repealed by further primary legislation.
4.45 p.m.
Viscount Cranborne: My Lords, all the speakers who have so far taken part in this debate have stated the obvious point that this Bill makes special provision in a number of ways for the province of Northern Ireland. All those ways are very remarkable in all sorts of aspects.
The first that seems to me particularly remarkable is the fact that a government who are dedicated to openness and understand clearly the importance of more openness, not only in government but in the way we conduct our electoral affairs, should feel that it would be helpful to the propagation of unarmed politics—the politics of the ballot box rather than the Armalite—for secrecy to continue; more helpful than that it should continue in the rest of the United Kingdom where, up until now, at any rate, Armalite and Semtex have not been in use.
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However, if I were the Scottish National Party and really wanted independence, I suspect that the lessons of the past three years at least, and possibly longer, would lead me to believe that if I really wanted it, that would be the way to achieve it.
For those of us who have had anything to do with terrorism, whether in Northern Ireland or other parts of the world, on whatever side of the fence we have operated—I have operated in various ways on both sides of the fence—it is perfectly clear that the greatest aid to terrorism is secrecy. We all know that anybody who wants to fight terrorism and the culture of the bomb and the Armalite, and to pursue that fight in the interests of the ballot box alone, must show greater courage than any other political practitioner; than any of us who are happily resident in this country which still, on the whole, cleaves to the ballot box rather than the Armalite.
I suspect that those of us who watched with extraordinary admiration the courage of the noble Lord, Lord Fitt, as he fought that fight at the front line will know that it is openness alone, and a realisation of that, which has protected him. If he is to follow the logic of his convictions, he has to show a courage which I suspect I for one, and most others, would not be able to show. The Minister, who has been extremely courteous and understanding, has listened hard to the debate. However, I am sorry to say that here the Government are making it more likely that terrorism will flourish by encouraging a culture of secrecy which has done an enormous amount to encourage terrorism on both sides of the sectoral divide.
Lord Bassam of Brighton: My Lords, I thank the noble Viscount for giving way. Perhaps I may ask him where in this debate we in government—and I in particular—are encouraging a culture of secrecy. The noble Viscount has been kind enough to pay me a compliment. However, I cannot see what it is that I am holding secret to this debate that colours the debate in one way or another.
Viscount Cranborne: My Lords, I thought that if one made a donation to a Northern Ireland party, one was allowed to keep that quiet. That is just one example.
Lord Bassam of Brighton: My Lords, it is the case that the argument for withholding information about the disclosure of donations comes from a range of parties across the political divide in the context of Northern Ireland. That is for very good security reasons which I thought and hoped that the noble Viscount would understand.
Viscount Cranborne: My Lords, I am under no illusion that anybody who is courageous enough to take part in politics in the Province does so under circumstances which are extremely prejudicial to their personal safety. There is no doubt about that. However, my point still stands. If we wish to encourage the ballot box over the Armalite, the argument must apply that greater secrecy under those circumstances than applies over here will make it more

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likely that terrorism will flourish and that openness in our electoral affairs, particularly in the Province, will be an enemy to terrorism rather than the reverse.
It is for that reason that I find the provisions under Clause 68, and subsection(1)(b) in particular, extremely difficult to accept. However, I am the first to admit that any government taking the hard line I advocate will immediately place a number of people in the Province in severe danger. That must be so if we accept the logic of my position. Nevertheless we all know, from examples not only in the Province but elsewhere, that the people who have defeated terrorism are the ones who have shown remarkable moral and physical courage.
The second aspect which seems to me remarkable is the whole question of foreign donations. I thought that the noble Lord, Lord Goodhart, was absolutely right when he said that it would be easier if we forbade donations from the Republic because we would at least be able to have an additional measure of control within our own borders. I hope I paraphrase correctly.
Lord Goodhart: My Lords, I said that in the context of the decision of the Neill committee that donations should be allowed from the Republic of Ireland a loophole was opened up which would not be available within the United Kingdom because there was no possibility in the Republic of Ireland of investigating the sources from which the money came.
Viscount Cranborne: My Lords, that is precisely what I understood the noble Lord to say. In practical terms, it would be easier to be able to have a greater degree of control if we forbade donations from the Republic and merely exerted consistency within the Bill and permitted donations only from within the United Kingdom.
Lord Bassam of Brighton: My Lords, it is the case that noble Lords on the Opposition Benches have accepted that donations may come from the South of Ireland. That being the case, I argue that it would be virtually impossible to put an exclusive ban on foreign donations. Therein lies the weakness of that part of the noble Viscount's argument and of the arguments put by other noble Lords.
Viscount Cranborne: My Lords, with the greatest respect to the noble Lord, he has made my case for me. My case is that on purely practical grounds it would be most unwise to accept donations from the Republic. Indeed, as a subsidiary—
Lord Bassam of Brighton: My Lords, the noble Viscount is part of a party which signed up to the Belfast agreement. Surely the spirit of that agreement would be blown apart by his proposition. We do not have an amendment before us today to give effect to the suggestion made by the noble Viscount.
Viscount Cranborne: My Lords, that is true. Perhaps I should have tabled an amendment to that effect. I am sorry I did not. Having been encouraged by the noble
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Lord, perhaps I should do so at Third Reading However, I am sure that he would discourage me from so doing. I suspect that our highest aspiration as regards the Province, indeed as regards both parts of the island of Ireland and, indeed, this side of the water, is to see an end to terrorism. If we want that to happen, one way is to prevent donations, not only to active terrorist units but also to those political parties on both sides of the sectarian divide which are closely connected with terrorist organisations, whether the so-called loyalist parties or republican parties.
For that reason, I would infinitely prefer to see no foreign donations put forward from the Republic of Ireland. As the noble Lord, Lord Goodhart, stated and, indeed, as the noble Lord, Lord Bassam, admitted, it would make control a great deal easier. It would not be foolproof but easier. That in itself would be intensely desirable.
I cannot help observing that during the course of the Disqualifications Bill, the noble and learned Lord, Lord Falconer, made a great virtue of consistency. He pointed out that, since we had such remarkably good relations with the Republic of Ireland, it should be treated, as regards membership of another place, in exactly the same way as Commonwealth countries. There is an inconsistency here as well, but I shall not pursue that particular matter.
My view is very simple. I believe that the highest aspiration that we can possibly aim for is the defeat of terrorism so that we can conduct our affairs throughout the United Kingdom according to the accepted rules to which all of us in this House cleave. For the reasons I have tried to explain, I regard any additional secrecy in the Province, which the rest of this Bill eschews—that is one of the things about it which I welcome—as an encouragement to terrorism rather than the reverse. I also believe that foreign donations from any quarter, including the Republic of Ireland, are in practical terms also an encouragement to terrorism for the reasons that the noble Lord, Lord Bassam, has given. Rather than improving our prospects of defeating terrorism, the matters which this group of clauses addresses will make it worse rather than better.
5 p.m.
Lord Bassam of Brighton: My Lords, I do not deny that this has been a very difficult debate. One thing that I wish to make patently clear is that I utterly reject the suggestion that the Government are craven in front of terrorism—that is not our approach at all—or that this exemption is in any shape or form a sop to Sinn Fein. It is not that, for reasons which I shall come to in due course.
A number of important questions have been raised. I shall try to work through the points in question that have been put during the course of the debate. The noble Lord, Lord Mackay, asked why there was the need for the power to modify Part IV of the Bill. As I believe I have explained, we may wish to adopt the noble Lord's half-way house; namely, that parties may

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be required to report disclosure of donations to the electoral commission, but for this information not to appear on the register of donations.
The noble Lord also made a point about trusting the commission. That is a fair point. We trust it and that is one of the reasons why we set it up. We also want to see it working effectively. However much trust we place in the commission to be hermetically sealed against leakages, the noble Lord probably knows better than I from his experience in government that it is not impossible for leaks to occur. We have all been the victims of leakages of information. So that is a debating point and no more than that. We trust the commission to do a good job in all the circumstances.
Lord Mackay or Ardbrecknish: My Lords, I am grateful to the noble Lord for answering that point. Will he accept that most of the leaks in government come either from one's colleagues who are trying to torpedo a proposal that they do not like having failed to do so inside government, or the leaks comes from officials who do not like the idea either and equally want to torpedo it? One would hope that the electoral commission would not be in that kind of position.
Lord Bassam of Brighton: My Lords, yes, we hope that the electoral commission will not be in that position. I do not know about leaks in government. They do not appear to have happened in my office as yet, but when they do I shall take a very dim view of them.
I return to the point under discussion. The problem that I have with the position taken by the noble Lord, Lord Mackay, is this. He has readily accepted the argument about disclosure. I believe that we now have a degree of commonality between us on that issue. But if there is not to be disclosure, then the case for exemption is stronger. It is made stronger still by the noble Lord's acceptance of the fact that it is entirely right, proper and realistic for political donations to be made from Southern Ireland into the Northern Ireland political situation for the political parties there. Once one accepts that, I believe the noble Lord's position becomes far less tenable.
I say that for these reasons. How, for instance, does one enforce the regime set out in Clause 68 when one cannot access the other jurisdiction? I think this goes to the heart of the matter. We would need agreement with the government of Southern Ireland if we were to try to give effect to a jurisdiction of that kind. We would need that government's full agreement. We would also need to see a situation develop in Southern Ireland where that country has a ban on foreign funding. In the current situation, and without all those measures, we could not expect to deliver a workable framework comparable with what we are seeking to put in place for the rest of Great Britain. I believe that the noble Lord understands that point.
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That said, we realise that the situation needs to be reviewed regularly. We have said that four years is a realistic time frame—
Lord Mackay of Ardbrecknish: My Lords, will the noble Lord address himself to three points? First, am I not right in believing that funding in the Republic of Ireland already has to be made public? I have seen a report that all major funding over a certain limit, which is not very high, is in the newspapers. Therefore, that will not be a novel thing for the republican government. Secondly, as my noble friend Lord Cranborne said, are we not supposedly in an era of great co-operation with Southern Ireland? Surely, if that is so, it would be no problem for that government to help the electoral commission to check. Thirdly, does not the noble Lord realise that I have gone a long way towards meeting the view of the noble Lord as regards my amendments on the anonymity of donors and my acceptance of the point in relation to the republic? That does not necessarily mean that I prefer that solution. I am trying to address the noble Lord's concerns by bringing forward intelligent amendments which will stop the main problem which is donations from the United States of America.
Lord Bassam of Brighton: My Lords, as I have said from the Dispatch Box, I do not believe we have reached a consensus, but there is agreement on the difficulties in this debate. I congratulate the noble Lord on recognising them. There is good co-operation between our Government and that of Southern Ireland, but it is not for us to dictate to another jurisdiction how its laws should be framed or what measures it should take. As regards the noble Lord's first point, he is right in saying that there is provision concerning disclosure. There is no question on that point.
However, given the situation in Northern Ireland and all the difficulties that I have very carefully explained during the course of these several debates, I believe that we have gone as far as we can. It is for that reason that we believe that, at this stage in the development of the peace process and normalisation of politics in Northern Ireland, the exemption is justified. It is justified for only four years in the first instance. We shall certainly have to review it after that period. If political developments in Northern Ireland move faster than is sometimes indicated, in those beneficial circumstances we may wish to take further steps towards normalisation and see the effect of our legislation there. But there are many difficulties to overcome before achieving that objective, as I believe most Members of this House would agree. For all those reasons I urge the House to accept my amendment and to reject those in the opposition groupings.
On Question, amendment agreed to.
Schedule 5 [Accounting units: application of accounting requirements.]
Lord Mackay or Ardbrecknish Lord Mackay or Ardbrecknish moved Amendment No. 87:
Page 144, line 21, at end insert—
(" . A statement of accounts from an accounting unit which is not received by the Commission by virtue of the fact that the provisions of paragraph 6 do not apply shall be made available on request to any person by the registered treasurer of the accounting unit on payment of a fee which shall be specified in regulations made by the Secretary of State on the recommendation of the Commission.").
The noble Lord said: My Lords, this amendment brings us back to the nitty gritty of the Bill, the bureaucratic and cumbersome parts of it. My honourable friend Dominic Grieve, on 25th January in the other place raised the question of constituency parties whose expenditure was above £25,000 and the fact that their accounts would have to be reported to the commission and be made public. But the other political parties in that constituency, or indeed a political party in another constituency with a turnover of £24,999 would be able to keep its accounts confidential. Therefore, the party with the lower turnover would have access to its rival's accounts and that could be politically useful. But the largest local party in an area with a £25,000 or over account would not be able to see the accounts of its opponents. That cannot be fair.
My noble friend suggested dropping the limit and there followed the most amazing correspondence on this issue. In a letter dated 21st February from Mr Charles Goldie of the Party Funding Unit, the Home Office canvassed my amendment as "a suggestion". It seems to me that if the Government themselves were canvassing my compromise, it is certainly worth while for your Lordships to suggest that the Government take it on board.
It is not the ideal. My ideal position would be that the accounts of all local parties should be open to inspection. But the amendment suggests the much more modest proposal that if a local constituency party with income and expenditure under £25,000 receives a request from any person to see those accounts, then they should be allowed to see them on the payment of a fee which will be set by the Secretary of State and recommended by the electoral commissioner. Political parties with modest turnovers would not be asked to make their accounts public and have to bear the costs themselves; they would be able to recoup some or all of the costs.
Amendment No. 87 is a modest amendment consistent with the proposal put forward by the Home Office on 21st February. The noble Lord, Lord Bach, in that case, said that there was not consensus. But I believe it was the main point of the debate on which there was no consensus; I am not sure that many people addressed the alternative issue.
Earlier this afternoon, when opposing my noble friend's Amendment No. 56A, the Minister said that it would not be right for a party to report in a year when it was over £5,000 and not report in a year when it was
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under £5,000; that we could not move in and out of regulations like that. But the situation here is exactly that. We are talking about a party hovering around the £25,000 limit which would have to report to the commission when it went over that amount—perhaps once every three or four years—and in the other years it would not need to. That too seems to be inconsistent.
I suggest that Amendment No. 87 is a reasonable compromise which I hope the Government will accept. As the officials who wrote this letter are probably the same officials who wrote the Minister's brief, perhaps he will see on it the words, "accept if pressed". I beg to move.
Lord Bassam of Brighton: My Lords, the noble Lord, Lord Mackay of Ardbrecknish, is a better debater than he is a crystal ball gazer.
Schedule 5 of the Bill applies the accounting requirements in Part II to accounting units. Paragraph 6 of the schedule makes equivalent provision to Clause 43 in respect of the submission of annual statements of account to the electoral commission. Whereas the central organisation of a party must always send its annual statements of account to the commission, irrespective of the level of its income or expenditure, an accounting unit is only required to do so where, in a specific year, its income or expenditure exceeds £25,000.
This provision received some attention during the Commons Committee stage, where it was argued by the Opposition Front Bench that the operation of the threshold could lead to unfairness in circumstances where a local association in a given constituency was required to submit its statement of accounts to the commission but rival associations were not. The Government consulted further on that point but did not find any consensus among the main parties for a change in the provisions of the Bill.
That is not entirely surprising since Schedule 5, as it stands, deliberately places a light touch on the smaller local branches. If there is any doubt about a specific small local branch's activities, there is provision under paragraph (6)(2) of Schedule 5 for the commission to require the submission of a statement of accounts. Against that background I am not convinced that it would be right to place all accounting units under a duty to hand over a copy of their statements of account to any person where the commission itself has not requested one. If individual local associations want to make their annual statements of account publicly available, that is entirely a matter for them. But I do not see a pressing need to impose a statutory duty of this kind. For those reasons, I ask the noble Lord to withdraw the amendment.
5.15 p.m.
Lord Mackay of Ardbrecknish: My Lords, I am disappointed with the Minister's reply. I cannot pretend otherwise.
When this Bill is enacted it will become a source of irritation locally where, say, the Labour Party has a good constituency which takes it above the £25,000

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limit and the Conservative and Liberal Democrat Parties—or, even worse, in Scotland the Labour Party and the Scottish National Party—are able to look at the accounts and try to glean whatever political advantage they can from them, yet local Labour Parties will not be able to do so with the accounts of their opponents because they will be below the £25,000 limit.
That will be a source of irritation, and when the second, third or fourth party in a constituency begins to try to make political capital in the local paper at the expense of the Labour Party because of what is in its account, members of the Labour Party will rightly suffer a feeling of indignation. When they do that, I hope that they will realise that we on this side attempted to make the playing field—if I dare use that term—a bit more balanced. I am sorry that the Minister did not accept my suggestion. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 88 not moved.]
Clause 52 [Permissible donors]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 89:
Page 38, line 19, at end insert—
("() an individual registered in the register maintained by the Commission under section (Commission to maintain register of eligible voters for the purpose of donations);").
The noble Lord said: My Lords, this group of amendments deals with two relatively distinct issues and I shall speak to them separately.
Amendments Nos. 89 and 90 return to the issue of individuals who decide not to register on the electoral register for reasons of personal safety. In Committee I cited the example of police officers, those afraid of stalkers, perhaps students who inadvertently failed to register or even some Members of your Lordships' House or the other place who, because of the positions they have held in government, are fearful of attacks from terrorists.
Because the Government ignored the recommendation of the Neill committee and decided to allow people to donate to a political party only if they actually registered on an electoral register rather than if they were simply eligible to be registered, then those people who choose, for legitimate reasons, not to register will be barred from donating to a political party. On 12th January in the other place, the Government recognised that something needed to be done about that. Despite cross-party support and assurances given by the Minister, Mr O'Brien, nothing has been done. In Committee I asked the Minister to comment on progress and he did not do so. The Government should have been able to think up something in the 10 months since this issue was raised in January in the other place. If they had, then my amendments would be unnecessary.
It is important to accept these amendments because they concede, as I have tried to do all day, those parts of the Government's case on which the Government
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are not going to move—not because I particularly want to concede the point, but because I live in the real world. I have conceded therefore that the Government will not do as Neill suggested and make eligibility to register, not just registering, a condition for allowing donations. However, those people who do not go on the register for their own security would be able to register with the commission under my amendment; in other words, their eligibility to register would be established by the commission and they would then be able to donate to political parties.
In Committee (at col. 551), I asked the Minister to comment on the implications of parts of the Bill for the Human Rights Act. The anomaly with which I was concerned was that members of the Armed Forces resident in the UK are not legally required to vote here and do not have to register here anyway. They would therefore not be allowed to make a political donation. One wondered whether under Articles 9, 10 and 11 of the convention, as well as under Article 3 of the First Protocol, all the provisions were consistent. The Minister did not address that matter but I hope that he can give an indication today—and not merely with the blanket assurance that he has signed the Bill.
Amendment No. 100 deals with another issue we discussed on a previous occasion. In Committee, I rehearsed the great problem which will be created when parts of the Bill come into force; namely, that there will be no central electoral register. The problem would hit all political parties at both national and local level, all the electoral registration officers and the commission—I shall not go into detail. I know that the noble Baroness, Lady Gould, and the noble Lords, Lord McNally and Lord Rennard, were equally concerned about the issues.
The Minister said that the Home Office was examining an interim solution—perhaps a CD-ROM regular update—until the central register goes online next October. I tabled my amendment today in order to receive an update from the Minister. It is important to have a central register so that, when donations are received, the political parties will be able to check that the person is on the register. Surely, if the Government, with our support, are to say that political parties must ensure that they take their cash from eligible donors, there must be a way in which the parties can discover who are eligible donors.
The Government might say that political parties can send billets-doux to the electoral registration officer in the area in which they believe the person to be living. Perhaps the electoral registration officers will thank noble Lords for such an extra burden! However, there are time limits, especially during an election period when political parties must report every week. The electoral registration officers will at that time be particularly busy issuing polling cards and so forth, which are of greater importance to the electorate. They will have too much to do to be bothered with going through the registers and answering e-mails, faxes and letters from all the political parties asking whether Joe Bloggs is on the register at a certain address and is therefore a qualified donor.
It is a difficult problem which the Government have attempted to brush to one side. It could hit all the parties on the back of the head next April. If, when we have an election on the first Thursday in May, such a central register is not in place, the task of the political parties will be made difficult and an unnecessary workload will be placed on the electoral registration officers. I look forward to hearing the Minister's response and I beg to move.
Lord Bach: My Lords, Amendments Nos. 89 and 99 address a point which the noble Lord raised in Committee. The concern is that in restricting the definition of a permissible source to persons included on an electoral register the definition would exclude those who may, for reasons of personal security, choose not to register to vote.
Perhaps I may briefly remind the House why on this occasion we have considered it necessary to depart from the recommendation of the Neill committee—it was that those eligible to register should also qualify as a permissible source—and instead restrict the definition of a permissible donor to those individuals who are registered voters.
It is essentially a matter of providing the political parties with a simple workable test as to whether an individual donor qualifies as a permissible donor. It would, by contrast, be no easy matter for a registered party to establish whether a donor whose name did not appear on an electoral register was nevertheless entitled to register. The difficulty would be all the greater where the donor happened to live overseas.
Under the current rules for overseas registration, a party would need to establish that the person was registered to vote on the domestic register anything up to 20 years previously. The amendments seek to address the difficulty by providing that the commission should maintain a register of those who submit to it a notification that they are entitled to vote. Our main reservation is that the proposal merely transfers the difficulty to the commission. The commission will exist to administer and enforce the provisions of the Bill.
Providing it with the potentially difficult and onerous task of establishing whether a particular person is eligible to be registered as a voter in order to enable that person to make a political donation does not fit into that conception of the commission's role. Indeed, one could argue that to confer such a function on the commission would be to create a possible conflict of interest for the commission. It would, in effect, be doing the work of the registered parties for them; namely, establishing whether a particular donation could be legitimately accepted. Moreover, given the sensitivity of information kept in any such register, it seems likely that the commission would need to establish a secure means of consulting it.
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We are sympathetic to the concern that there may be those who for perfectly good reasons choose not to register to vote and will as a consequence be unable to make donations—
Lord Hodgson of Astley Abbotts: My Lords, I am grateful to the Minister for giving way. Members of political parties are not the only ones concerned. A significant proportion of people in the constituency of Hereford are not on the electoral register. That is because they are either serving members of the SAS; are families of such members, are civilian workers in the SAS headquarters; or are in another way involved with the SAS. They do not register for security reasons.
We are talking not about a few people but about many people in such circumstances. I am not sure that the Minister has that in his brief.
Lord Bach: My Lords, I am grateful to the noble Lord for his comments. We understand that it is a real problem and are not pretending otherwise. However, we make no special provision in order to enable people who are not on the register to vote. We are not therefore convinced that it would be right to go down a separate road in order to enable such people to make donations. It seems to us that the real problem is to find a way of getting those who for good reasons are loath to put themselves on an electoral register in a position where they are able to vote. That is the main problem. For that reason, we are not content with the two amendments tabled by the noble Lord, Lord Mackay, on this issue.
Amendment No. 100 relates to a different issue. It would require the electoral commission to maintain a national register of electors and to make the register available to registered parties. We discussed the proposal in Committee. The noble Lord wants an update on it and he is entitled to that. As we acknowledged during that debate, it is desirable that both the political parties and the electoral commission have easy access to electoral registers. In Committee, we pointed out that with the introduction of rolling registers such checks would best be carried on up-to-date registers maintained at local level. But, given the nature of the controls set out in the Bill, it would make sense for there to be a central access point to all 600-plus local registers.
The electoral commission project team is in discussion with the Improvement and Development Agency for local government and with the Association of Electoral Administrators on how online access to all local registers can be arranged not just for the commission but for political parties too. Ensuring the compatibility of locally held registers is likely to assist in making those registers more accessible. However, I have to tell the House that this is no small undertaking and we do not believe that it will be in place before next October.
We have been looking at ways to provide an interim solution which can be in place in time for the commencement of Part IV of the Bill. However, it has not proved possible to find a value for money solution which can be relied upon to be in place for February

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2001. It is for that reason that we intend to increase from £500,000 to £700,000 the total sum of money available to meet parties' start-up costs, including the costs associated with making checks against the electoral register at local level. I would not be surprised if in the long term we returned to the issue of the role of the commission in relation to the registration of electors, but that is not a matter to be resolved now in the context of this Bill.
5.30 p.m.
Lord McNally: My Lords, the Minister has just read out a list of those who are consulting each other on this matter. The Minister did not refer to party professionals. I suggest that they should be consulted because they have the best experience at the sharp end of how to make such a system effective.
Lord Bach: My Lords, that is an extremely helpful point which has been heard by the Government and should be acted upon.
The existing arrangements require local registers to be maintained in a common electronic format, and we amended the Bill in Committee to facilitate that. We do not believe, therefore, that at this stage Amendment No. 100 takes us much further forward. I have explained to the noble Lord what we seek to do and the difference between now and before. I do not claim that it will necessarily satisfy the noble Lord, but I ask him to withdraw his amendment.
Lord Mackay of Ardbrecknish: My Lords, I begin with Amendments Nos. 89 and 90. I understand the noble Lord's difficulty. However, that difficulty would have been resolved by accepting my earlier amendments in Committee and doing what the Neill committee recommended. Certainly, that would have dealt with the problem faced by the military outlined by my noble friend in his intervention. We understand their position entirely. However, I can see that I shall not make much progress on that matter.
I had hoped to be greatly reassured by the response to Amendment No. 100, but the opposite is true. All that has happened is that political parties will get more money to help with start-up costs because of their difficulty in checking the eligibility of donors. It is amazing that we find ourselves in this position after many months' consideration of the Bill, reflecting the fact that the party professionals in the three main parties were not brought into the argument at a sufficiently early stage. That was a matter on which the noble Lord, Lord McNally, touched in his intervention. The position is that in an election next April political parties will be in very grave difficulty when it comes to checking the eligibility of donors. I cannot see a way round it, given the incompetence that has surrounded this issue over the past many months. Government have known for a long time that they will be confronted with a situation in which the political parties will be under an obligation to check weekly on the eligibility of donors. Yet they have not willed a system, let alone the means, to allow for an efficient
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check-up. That can be done where a party has a first-class local organisation, but a party with little or no local organisation may be in very great difficulty, especially when weekly reports are required.
I am very dissatisfied with the Government's position which will sow the seeds of real confusion when the Bill begins to be implemented. One wonders whether the Government should give serious consideration to holding their hand on the implementation of the whole of this matter until they have the means to sort it out. The position is very unsatisfactory. It may be that if the professionals in the parties read this they can come up with a solution which some noble Lords will be content to table as a Third Reading alternative to the predicament in which we find ourselves.
Lord Peston: My Lords, I have listened with enormous interest to this debate. As someone who is totally devoted to everything electronic, I am very sympathetic to the view which has been expressed. But is there no possibility that the donor will himself be aware that he is on the electoral register? Is it not possible to ask him whether he is on the electoral register and, if so, where? Would that not solve the problem?
Lord Mackay of Ardbrecknish: My Lords, he can say that but the point is that the political parties must check it. A donor may send in a donation and give the barest details. The donor may give his London address where he is not registered as opposed to his address in the country where he is; or he may give his address in Scotland or Northern Ireland where he is not registered, for reasons that we have already debated. The observations of the noble Lord, Lord Peston, who intervenes in a very interesting debate, underline his devotion to electronics. This portion of the Bill cannot be implemented until there is a central register; otherwise, this will be a retrograde step.
I return to the point that I reached in my winding up when the noble Lord intervened. The Government must give serious consideration to ways to enable this matter to become a practical proposition for the political parties at the time of elections. In the meantime, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Shore of Stepney Lord Shore of Stepney moved Amendment No. 90:
Page 38, leave out lines 23 and 24.
The noble Lord said: My Lords, I rise to move Amendment No. 90 and speak to the other amendment in my name. I am aware of the wide scope of this Bill. In a measure of such dimensions it is very easy for what appear to be minor matters to be almost overlooked. The devil is often in the detail, and the particular devil to which I speak is an important one. The subject matter of the amendments—it can be described in two words—and the issues which they raise go very deep. The amendments are concerned with foreign funding and the extent to which we are prepared to allow or resist the invasion of foreign

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funds deliberately aimed at influencing or guiding public opinion at the time of elections and referendums.
One is also concerned with foreign money which seeks to influence the political parties themselves and is a source of income for them. Clearly, that is an important issue in itself, but it goes deeper. One is concerned with a constitutional issue of profound importance; namely, the extent to which we are still a parliament that is able to speak for our people and make the laws of our country, or a subordinate legislature over which there preside unelected but superior powers vested in institutions outside this country, in particular in Brussels and the European treaties which give it such power. This is not in any sense a party political argument, except that it is of such importance that, whatever may have been the position in the past, the Labour and Conservative parties, which are the two major political organisations, have over the past two years agreed to oppose foreign funding, whether by rich individuals or rich companies, which probably accounts for the greater part of the wealth of the parties and the problem we are considering here. That is no longer in dispute, and I do not need to pursue it any further.
I am a member of the Neill committee, to which I shall refer in a moment. I am also a life-long member of the Labour Party. For a long time I have been a member of one or other of the two Houses of Parliament. I hold for them the greatest respect. It is wearing all three caps that I address my remarks to the House tonight.
I remind my own party of the following words in the Labour Party manifesto. In the chapter entitled "We will clean up politics", it said:
"Foreign funding will be banned. We will ask the Nolan Committee to consider how the funding of political parties should be regulated and performed".
In his introduction to that 1997 manifesto the Prime Minister used almost the same words. He said:
"We will clean up politics … and put the funding of political parties on a proper and accountable basis".
Therefore, there is no question about the commitment of my own party to the cause of bringing to an end foreign funding in British politics.
I turn to the Neill committee, which was duly asked to consider the matter and ascertain the views of the political parties. A whole chapter of the report—Chapter 5—is given to arguing why it is in the interests of our country to keep out foreign money from the financing and the influencing of politics in this land. Recommendation No. 24 states:
"Political parties should in principle be banned from receiving foreign donations".
That was a unanimous recommendation of the Neill committee and one that has been accepted by both the Labour and Conservative parties.
I turn to my two amendments. Amendment No. 90 seeks to keep foreign money out of the funding of political parties. My second amendment, Amendment No. 173, seeks to keep foreign money out of referendums. Keeping foreign money out of
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referendums is important when one considers that the most likely referendum—I should be careful what I say here—could be about the euro. At least that was the likelihood a year ago. Obviously, it would matter enormously to European interests how the British people voted in a referendum on the euro.
Given the Labour Party's manifesto commitment, the agreement with the Conservative Party and the unanimous recommendation of the Neill committee, what has happened? The Government have accepted the provision for the rest of the world but not for countries, companies and individuals of the European Union. One is bound to ask: how is it that this extraordinary exemption has been made and what is the justification for exempting those categories?
Regarding the referendum matter, I should like to quote from the Neill committee. It sets out our views about the inappropriateness of foreign donations playing a part in the politics of this country. It then states:
"In that chapter we discuss the issue in relation to the funding of political parties, but the same arguments apply with equal if not more force to the funding of referendum campaigns, especially since these are likely to be concerned with major constitutional questions".
I do not think that anyone will seriously dispute that that is the case.
So here we are. How do the Government explain — I will not say justify—the matter? It is difficult to repeat the argument used because it is rather bizarre. They say that somehow or other it would offend Articles 43 and 46 of the European Community treaty which deals with the right of establishment. The right of establishment is about European firms having the right to set up subsidiaries here in Britain and not being discriminated against in the commercial sense. That is absolutely right. Similarly, Britain is able to have subsidiaries established in the 14 other European Union countries.
That should rightly be the end of the matter. But, no. The Government have accepted an interpretation of Articles 43 and 46 which says that it would be contrary to the treaty and discriminate against European companies and European citizens who are not on our own register if we were to include them in the otherwise universal world-wide ban on foreign funding. They have said this. Almost unbelievably the only matter they can quote in their defence, as it were to give the issue authority, because it is fairly remote from the general purpose and wording of Articles 43 and 46, is a judgment against the French Government in 1983. That is not overwhelmingly convincing.
In a letter written and circulated by my noble friend Lord Bassam following our last debate, the Government, in interpreting that judgment, said that under Article 46 of the treaty, legislation departing from the principles of free movement, to be justified,
"would have to presuppose the existence of a genuine and sufficiently serious threat to the requirements of public policy, affecting one of the fundamental interests of the society in question".

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With great emphasis I would say, "Yes, it does affect one of the fundamental interests of this society that we keep our politics honest and free from the distorting effects of foreign money". Therefore, even on the basis of the Government's defence or argument, there is an obvious and powerful case to be made that the judgment cannot apply to us because we have major reasons of public policy why we should, in this area alone, discriminate against not merely European companies and people but against the world. It is discrimination in reverse in favour of the Europeans and against everyone else that adds to the whole bizarre nature of this insertion into the Bill. What the Bill does is literally to say, "Well, they can do it, although no one else can".
I do not know whether it is out of a sense of shame, but in Clause 52(2)(b)(ii)—which I am seeking to change—the Government state,
"a company—incorporated within the United Kingdom or another member State".
We are not told the member state of what. Remember, we had this embarrassment last time. Is it member states of the European Union, the world community, the United Nations or the Commonwealth? Good heavens! I assume that it was the shameful fact that it was the European Union alone which led my noble friend to decide that it would be better to remove those words, although they had appeared in an earlier draft. What can one say?
Perhaps I may lead on to the area of what I consider to be shame and the area of great constitutional significance. There is no doubt that the Government share my view. In a short debate in Committee in the House of Commons on 25th January 2000 the Deputy Leader of the House of Commons, Mr Tipping, spoke for the Government when dealing with amendments that probed this exemption of European companies and so on. Speaking from the Government Front Bench he said:
"We would dearly like to devise a Bill that stopped donations from European companies and limited them to companies that were incorporated in the United Kingdom".
That is what the Minister said. To make absolutely certain that no one misunderstood the import of his words, he went on to say:
"We would like to restrict the Bill to British-based companies. The matter has been thoroughly explored. We are advised that it is not possible to draw the Bill in such a way as to exclude companies that are incorporated in the EU and operate and register here. I wish it were possible".—[Official Report, Commons Standing Committee G, 25/1/00; col. 109.]
Good God! In the history of our Parliament, has any British Minister ever made so shameful a capitulation to foreign powers and influences?
I speak now as a parliamentarian. I hope that those who have shared the privilege and experience that I have had of serving in the House of Commons will understand how utterly unacceptable and deplorable that is. It is not just that the Commission, presumably, or the European Union authorities have made this demand on us; it is the supine surrender of the Government in the face of it that I find so utterly
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deplorable, so difficult, so unbelievable. I cannot understand it. But it illustrates—this is the constitutional point—that the sovereignty of Parliament, if this advice is allowed to stand, has passed from the hands of Westminster to the authorities in Brussels and the European Court of Justice.
We have had many recent debates about whether some of the moves in the European Union affect our sovereignty. I do not ask people to take a view on the generality of those issues. But if my noble friends—beginning with my noblest of friends, I suppose, in No. 10, although he is not with us here—really do believe that they have joined a superpower rather than a superstate, how can they justify this provision? This is not the act of a superpower; it is the act of a superstate exerting and exercising its authority over us. We must say no. I ask the House to support the amendments. I beg to move.
The Deputy Speaker (Lord Ampthill): My Lords, I should remind the House that if Amendment No. 90 is agreed to, I cannot call Amendment No. 91.
Viscount Cranborne: My Lords, noble Lords will remember that one of the most endearing characters of Evelyn Waugh's satirical novels was a Prime Minister who rejoiced in the name of Outrage. Members of your Lordships' House will be as aware as I am that that name was bestowed in the spirit, perhaps, of exasperated irony. Synthetic outrage has long been one of the less effective weapons of professional politicians in every part of the body politic of this country. The noble Lord, Lord Shore, has never been prone to synthetic outrage. I am sure that your Lordships will be aware that the speech to which we have just listened was prompted not only by a typically genuine sense of the sentiments which he expressed but, beyond peradventure, given the arguments the noble Lord deployed, it was a speech that was very difficult to view in terms other than those he used.
We are considering here a genuinely outrageous piece of special pleading by what we are assured is not a superstate, as the noble Lord said, but possibly a superpower. Perhaps the noble Lord can define the difference between those two terms. I find it rather difficult.
I am honoured to be able to add my name to the amendments so ably proposed by the noble Lord. I shall not repeat the arguments that he set before us with such passion and clarity. I agreed with every single word. But I would ask your Lordships to remember that we are constantly assured by the proponents of the development of increasing European unity that we live in some form of association of nation states, that any sovereignty that we have lost has been pooled and, indeed, that were we to feel at any time that we had given away too much, theoretically at least this Parliament remains sovereign.
I certainly do not subscribe to that view because in practical terms, unless we leave the European Union, it will be extremely difficult, if not impossible, for us to

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garner back under the aegis of this Parliament the acquis communautaire that has already gone. In practical terms that is impossible. But let us for a moment suppose that it is possible; that we really are talking about a genuine pooling of sovereignty which has been voluntarily entered into by nation states and which nation states still control; that nation states are able through their parliamentary institutions to withdraw, to alter and to influence and that there is ultimately no superior body. We know that is not true. We know that every directive that is so assiduously debated, both here and in another place, and in relation to which we go through the motions, cannot be changed as to any jot or tittle and that despite that scrutiny there is nothing we can do to stop the application of those directives.
But let us keep to this fiction. We know that if it is true, in the end this Parliament must have the independence and authority to do what we are assured it still can do. If it is going to exert that independence and authority, I would suggest that the means by which we reach either House of Parliament and the rules which apply must be wholly within the control of the authorities which govern such matters. That authority must ultimately remain within the Palace of Westminster and nowhere else.
If that is so, then surely it is very peculiar that in a Bill that purports to do some very necessary things in order to make sure that our electoral system is not only fair and clean but is seen to be fair and clean—I applaud, as I think I have made clear during the passage of the Bill through the House, the objectives of the Bill although I quarrel with some of the means the Government have chosen to use to achieve them—the only two exceptions that are allowed as far as concerns foreign funding are, first, the potential foreign funding of the United Kingdom's parties by potential terrorists or active terrorists and, secondly, funding from other countries within the European Union and not countries within the Commonwealth or any other association of which we are a member. As the noble Lord said, the inconsistency is so glaring as to make the Government's position laughable.
I am so pleased that the noble Lord quoted his honourable friend Mr Tipping whose words are set out as clearly as may be in the Official Report of another place. The Government themselves accept in principle that it is a bad idea, so there is nothing between us here. But what we have is something completely different. The Government accept in principle that it is a bad idea, that it is inconsistent and that it goes against what they promised in their party manifesto and what they intend to put into operation through the Bill, yet they meekly accept the interpretation they have been given of Articles 43 and 46. I find that utterly astonishing.
I may not have been a very forceful Minister. When I first became a Minister I was a very callow one. But I hope noble Lords will accept that if I profoundly disagreed with the effects of a piece of technical advice that I was given I would do my best to ensure that the advice was in effect bomb-proof. From his quotation of that French opinion, the noble Lord, Lord Shore, has made it clear that this is anything but bomb-proof.
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We must therefore conclude from his reasoning that the Government have feebly and meekly accepted the advice they were given. Why? Is it because they have become so used to doing what they are told by the institutions of the European Union that they do not realise that they can resist them?
That may be one interpretation. There is another more sinister one which I could not believe would be possible in respect of someone so honourable kind charming as the noble Lord, Lord Bassam. But one has to ask oneself, cui bono? Who will benefit from the funding that will come pouring in under this loophole from our friends in our great European home? It will be interesting to see who would be prepared to finance the general election in May. People will be interested. I have to make a confession to the House. Some years ago I had a friend—a business associate of mine—who was much interested in the results of some close-fought Greek elections. He suggested to me that because of the Greek electoral regulations, with which I was not familiar and did not wish to be familiar, I should make a personal donation to his party which would change the result of a key constituency on, if I remember correctly, the island of Lesbos. I hope your Lordships would approve of the fact that I rejected the opportunity of having such a splendid influence on the future of one of our European partners, as perhaps at that stage the Republic of Greece had just become.
It is a two-way street. If you are a businessman in one country, it is easy to realise that it is to your advantage to influence the political outcome of what happens in another. If it was true of my Greek friend, it would certainly be true in what is now the fourth biggest economy in the world that it would be to the advantage of people outside to influence what happens here. The problem is even more apparent—in this respect the second of the two amendments is more important—when it comes to the matter of referendums. After all, we know that vast sums of our money are already being spent on trying to ensure that we take a favourable view, rightly or wrongly—I happen to think, wrongly—of what is happening in our great European home. It is clear that that skews the amount of propaganda pouring down on to the British people, just as the funding rules set out in the Bill for the funding limits on referendums skew it further. If the amendments of my noble friend Lord Shore—I must call him my noble friend despite the conventions of the House—are not accepted, we shall find ourselves the subject not only of those first two distortions to the equity of any referendum but we shall find ourselves saddled with a third.
The Government know that they are wrong. Mr Tipping has said so. They know that they have been feeble. I hope that the Minister will be able to give a good example to his colleagues down the corridor of how Ministers should behave in matters of this kind.
6 p.m.
Lord Bruce of Donington: My Lords, I deeply sympathise with the Government's dilemma which is expressed at some length in the Bill before us today. As my noble friend Lord Shore pointed out, both parties

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are in agreement on the principle that there should be limits on foreign funding. In fact, most of us would agree that money itself ought not to be the dominant factor in determining the political future of our country or any other country. If the provisions of the Bill were implemented meticulously—no one has so far had the temerity to suggest that they will not be complied with by the people to whom they are directed—the position would be a good deal better. The trouble is that all of us have split minds on the matter.
Those of us who have spent our lives in politics as such and in party politics as such and in arguing the various political philosophies to the people at large fancy that we can change the destiny of our country. We assume subconsciously that people are persuaded by rational argument put forward under completely fair conditions and that ultimately the people, thinking deeply, make up their own minds as to which course of action they will take and therefore how they will use their ballot papers. We know that that is not true.
The real power in politics is money. Even though it may not buy individual MPs, money has the power to create the climate within which people think. Money is able to buy editors and newspapers. It is able to control the entire climate of opinion in the country except for a few dissenters—like me and some of my colleagues who are occasionally prone to dissent when it suits us. We refuse to acknowledge that money is the problem we have to tackle. No matter what rules are set out in the Bill—I admire the diligent way in which it has been put together—money power can wipe them away in a fortnight. It is money that buys the means by which the public get to know what is really happening.
The public is already subject to considerable constraints. The amount of time for thinking that even dedicated politicians can set aside per day is extremely limited—and then look at what they get. Even democrats like us—what do we get? We are given stories, handed down by those who do not necessarily base their contributions on fact but who give the impression that they are the ones who really know what is happening. We are told of leaked minutes which allege what has taken place in Cabinet meetings. We are given the individual views of spin doctors as regards where certain politicians stand in the esteem of their fellows; what rows are taking place between them; and progress reports on the ebb and flow of power in the upper circles. We do not know whether any of it is true. Generally, it is this kind of information which forms the climate of public opinion.
In the ordinary way, we could wage the battle between democracy and money—it has been waged for many years—very much better than we are without any great personal effort. The first thing we could do would be to limit the powers of the bureaucracy. One of the main sources of power nowadays, suitably supplied by money, is in fact the members of the international bureaucracy. I do not refer to all of them—I am quite prepared to accept that they are honourable men—but it is in their nature to want to rule. Where there is an intellectual vacuum, which I
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regret to say is presently the case, the bureaucrats will certainly step in. Let us not try to pretend that this is anything but a fact.
The Council of Ministers in Europe has been referred to by my noble friend and by the noble Viscount, Lord Cranborne. That body does not rule at all. The Commission rules and it is composed of bureaucrats. Most of the material that comes from the Commission never alights on the desk of any parliamentarian. We pretend that everything is subject to scrutiny, but we all know that that is not the case. Most of the proposals, important or otherwise, pass straight into law under the provisions of Article 2 of the original treaty. We are not even in control of that. Furthermore, these are the people to whom we are to give way again.
Perhaps I may offer a simple illustration. The budget of the European Community, to which, noble Lords will note, we contribute £3.5 billion net every year, is finally determined by the European Parliament. We are given the impression that it is under democratic control, whereas of course it is not. The individual distribution of the European budget is subject to a system of qualified majority voting. The qualified majority system means that the money goes exactly where the Commission wants it to go. As we know well from the Maastricht Treaty, the Commission does not hesitate to play one member state against another as regards its budget allocation. Indeed, Maastricht only went through as a result of heavy bribery. I do not refer to normal, political bribery, but to the bribing of Spain and the Republic of Ireland to ensure that they did exactly what was wanted.
We can easily move away from this situation by ensuring that we, as politicians on whichever side of this House or the other place, begin to take control of our own affairs. We must ensure that our domestic affairs are not constantly led by bureaucrats, who are in fact responsible to us. In other words, it is not possible to get rid of the evils—those which my noble friend and his friends in the Government wish to do away with—or of winning the battle for democracy except by dint of hard resolve. We need to study our own part in it. We need to do our best and to argue as best we can. Furthermore, we should take nothing for granted.
Here, I am afraid, is where we are short on the ground. However much the Bill may seek to achieve—I hope sincerely that it is effective—unless we win the battle against the power of money and the power to buy and sell newspaper editors and journalists, we shall lose.
I have spoken for rather too long. Perhaps I may leave this thought with noble Lords: we have a country, to which we all owe an allegiance and of which we are all members. Unless we are prepared to face down the faceless people, who purport to act in good faith on our behalf, and begin to do our own thinking and then conduct matters exactly as we want—subject to the ordinary intercourse of politics—we shall fail. I pray to God that we shall not fail.
6.15 p.m.
Lord Tebbit: My Lords, by a curious coincidence, a day or so ago I received a letter from Mr Geoffrey Martin, the head of representations at the European Commission in London. I shall read the letter to noble Lords:
"Dear Lord Tebbit, the extract from your column of 16 July was included in Press Watch as an example of the bias, myth and hearsay which characterises coverage of European affairs in the British press.
Your readers ought to be aware that the ability of the UK to take decisions for itself is much more durable than you give credit. There are no 'masters in Brussels'. Ministers from the UK and the other 14 Member States remain the policy masters of the EU".
If Mr Martin is correct, this little problem which has worried so many of us, and which clearly has worried and intimidated Ministers, could be resolved quite quickly. It requires only that one of our Ministers should go to Brussels and assert his right, as has been set out by Mr Martin, to ensure that a policy is established which would enable us to ban overseas companies from funding political parties or referendums in the United Kingdom. I see no problem here. Furthermore, if the amendment is passed tonight—I hope that that will be the case—then a quick trip to Brussels by one of Her Majesty's Ministers will completely resolve this matter to the satisfaction both of Mr Tipping in the House of Commons and of the noble Lord who is to respond to the debate this evening.
However, if we do not win, then we shall see some amusing consequences; or at least, they would be amusing if they were not so extraordinary. Let us consider the argument which must lie behind this arrangement; namely, if a company in Hungary or Poland were to send a donation today to a political party over here, that would be a wicked and monstrous act of interference in our democratic affairs. But as soon as those countries sign the Treaty of Rome, it would become an agreeable, pleasant and proper way for them to behave. I find that incredible.
Indeed, perhaps some Members of this House are looking forward to the accession of Cyprus to the European Union. After all, from then on, Mr Asil Nadir will be free to contribute to political parties in this country—if he so wishes after the somewhat unpleasant experiences he has had in recent years—all by courtesy of the 15 Ministers who take such decisions in Brussels. As Mr Martin points out, they are not our masters in Brussels; they are our very own friends, taking decisions among themselves.
I cannot see what is the problem for Ministers. They should accept the amendment. They should buy a ticket to Brussels—which will not cost them a penny; it is our money—and go over there and sort it out. It should not take more than an afternoon, if Mr Martin is right.
Lord Monson: My Lords, it is difficult to follow the magnificent speech of the noble Lord, Lord Shore, but, for what it is worth, I offer him my wholehearted support—particularly, although not exclusively, in regard to the issue of referendums. I shall be brief because I know that other noble Lords wish to speak.
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Perhaps I may put two questions to the Minister. The first arises from the curious phraseology in Clause 52, to which the noble Lord, Lord Shore, drew attention, "or another member state". What on earth are we talking about? Does it refer to states, for example, which are not members of the EU but which, like ourselves, are in the European Economic Area? It would be odd if a Swedish timber firm with a subsidiary in Hull, let us say, was able to donate money to a British political party but a Norwegian firm with a subsidiary half-a-mile away from the Swedish subsidiary was not allowed to do so—although one would prefer that neither donation took place.
My second question concerns the issue of reciprocity. Will British firms with subsidiaries in France, Germany, Spain, Italy, Belgium, the Netherlands and so on be allowed to donate money to political parties in those countries? If not, then Clause 52 is even worse than it appears at first sight.
Baroness Park of Monmouth: My Lords, if the excellent solution of the noble Lord, Lord Tebbit, is not taken up by the Government, what would happen if we simply did not proceed with this and accepted the amendment? How could any companies complain? How could any party complain? We are a sovereign country; it is difficult to see that they would be likely to take us to the Commission for having broken Articles 43 and 46. If they did, what would be the sanctions? Have the Government discovered what the European Court of Justice or the European Commission might do? Would they fine us? Would they order us to comply? What would they do? Any of those things would not be good politics from the Commission's point of view, nor, I would suggest, from the Government's point of view. It seems to me that people would be outraged.
If the Government are brave—or even sensible—and decide to do what they wish to do, and not to do what they believe they can be forced to do by the Commission, what sanctions could there be; how could anyone apply those sanctions; and what possible grounds could they advance for doing so?
Lord Lamont of Lerwick: My Lords, I support the noble Lord, Lord Shore. I shall be extremely brief because the noble Lord made his points with enormous conviction and persuasiveness. I have noticed that not a single noble Lord—not even one on the Liberal Democrat Benches—has risen to say a word against the amendment. I hope that we will have a contribution from the Liberal Democrats. It is strange how so often when we get a debate going on a good European point the Liberal Democrats are silent—and then they troop into the government Lobby. We should like to hear some justification for what they are about to do—although it would amaze me if they could give any justification for it.
Lord McNally: My Lords, I was so completely in agreement with the noble Lord about millionaire's buying newspapers to peddle lies and propaganda that I did not think anything more needed to be said. The

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sooner we get Murdoch and Black out of the European debate the sooner we shall have a rational European debate.
Lord Lamont of Lerwick: My Lords, that may be an interesting point but it has nothing to do with the amendment. Perhaps, on reflection, the noble Lord will be able to think of a better argument when, as we anticipate, he finally speaks in support of the Government.
The case has been cogently made. I wish to add only one point—I shall be grateful if the Minister will reply to it—and that is this. I strongly support the Government's intention that there should not be foreign donations and foreign interference in both elections and, particularly, in referendums. The case that there should not be interference by foreign companies in referendums speaks for itself. Referendums are largely about constitutional matters; about how we live with ourselves and determine our own future. Such matters are for the British people to determine.
I have always been uncomfortable with foreign donations and I accept what the Government are doing. But if they are going to do this, it seems wholly wrong to make a law that is so partial, that affects only a part of the world and leaves another part unaffected. If a law simply states that a company in one country can intervene in our affairs but a company in another country cannot—if it treats different companies in different countries in a different way—it is a bad law. I support the Government's objective but, given what they are trying to do, this is a bad law.
I suspect that the Minister will say exactly what the Minister in the House of Commons said. He will say that he has every sympathy; he will wring his hands; the tears will flow and he will say, "But, however powerful the case put forward by the noble Lord, Lord Shore, and the noble Viscount, Lord Cranborne, the fact is that we cannot do anything about it and the law can only be applied in this way". I suspect that he will make a persuasive case. We will have lots of notes read out from that folder, the pages of which he is now thumbing, and he will again put a cogent argument explaining why we cannot do what the amendment seeks. I suggest that if we cannot do what the amendment seeks we should drop the idea of restrictions on companies. It is better to have no restrictions than to have a discriminatory law.
Lord Barnett: My Lords, I apologise for not having intervened in the previous debates on the Bill. I have been tempted to do so by the letter I received from my noble friend Lord Shore—I do not think it was confidential—informing me of the debate. He wrote—if I recall his words correctly—that he hoped I would not be as opposed to him on this amendment as I have been on other occasions. As I am, I thought I should intervene and say why.
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I consider my noble friend Lord Shore to be a very good friend. He is a former Cabinet colleague with whom I get on very well indeed—despite the fact that I cut his expenditure as well as others. I listened with enormous interest to what he said about foreign funding and, I think I noted it correctly, how both major parties oppose foreign funding of referendums—particularly the one which may take place in relation to the euro—from whichever side the funding comes.
I do not intend to speak at length—I should like to see the issue come to a vote, if there is to be one—but it seems to me that much of what has been said has overlooked one simple point. We are not members of the European Union by accident; we are there because of treaties and Acts of Parliament which have passed through both Houses. They have been signed, whether willingly or not, by noble Lords who have spoken in the debate. They have been signed by governments of which the noble Lord, Lord Tebbit, the noble Viscount, Lord Cranborne, and my noble friend Lord Shore were members. They are treaties which were approved by both Houses. That did not happen by accident. The fact is we are members of the European Union.
I noted what the noble Viscount, Lord Cranborne, said about "synthetic outrage". I should make it quite clear that I have never accused my noble friend Lord Shore—and never would—of synthetic outrage. He sees the letters "EU" and he is outraged. I understand that. I have seen and heard it often.
I understood the noble Viscount, Lord Cranborne, to say that he wanted all authority to remain here, and for that to happen there was only one way out—for Britain to be out of the European Union. I disagree fundamentally with the many noble Lords who would rather that Britain was not a member. They include my noble friend Lord Shore, although he has never said so in terms. But we are a member of the EU. Both Houses of Parliament put us there. The government of which the noble Viscount, Lord Cranborne, was a senior member put us there.
I recall the debates on the Maastricht Treaty. My noble friend Lord Shore would say that it imposed terrible burdens on us. I do not recall the noble Viscount opposing those measures as a member of the government who introduced them. Now, he tells us that it is all wrong and we must not do this any more. I see the noble Lord, Lord Tebbit, leaning forward in his place. I know his views and I have accused him, perhaps wrongly, of being too nice a man for these matters. But, as Britain is a member of the European Union, it is surely right that those in other member states are no longer "foreign" in that sense of the word.
Lord Shore of Stepney: Game and set!
Lord Barnett: My Lords, I have used a word that offends my noble friend. I give way to him.
6.30 p.m.
Lord Shore of Stepney: My Lords, so far as my noble friends are concerned, they are the same as citizens of the United Kingdom and must therefore have equal rights. That, of course, is the lie at the heart of the whole thing. They are friends and allies; they are not fellow citizens.
Lord Barnett: My Lords, I hesitate to argue with my noble friend on this issue. I disagree fundamentally with him and many other noble Lords on this matter. The plain fact is that if we are members of the same European Union under treaties which he supported—
Lord Shore of Stepney: I did not.
Lord Barnett: My Lords, my noble friend may not have supported them, but his government did, as did the government of the noble Viscount, Lord Cranborne, and the noble Lord, Lord Tebbit—who did not resign on those grounds either. I give way to the noble Lord.
Lord Tebbit: My Lords, I am grateful to the noble Lord. He will remember that, after I had resigned from government, I strongly opposed the Maastricht Treaty. More to the point, when we signed the Treaty of Rome, did the noble Lord anticipate that one of its effects would be to prohibit us from preventing foreign money flowing into this country in support of particular political parties or causes?
Lord Barnett: My Lords, the noble Lord is at it again: he is using the word "foreign" in that context. We are all citizens of the European Union. The noble Lord may not like it, but it is a fact. I knew that I should provoke a number of noble Lords in the brief speech that I wanted to make. I have guests arriving shortly, so I had better make it quickly.
Lord Tebbit: My Lords, perhaps I may impose again on the noble Lord's good nature. If he is right, why are personal donations from his fellow citizens of Europe in foreign countries prohibited under the Bill? Will he seek to introduce an amendment to put the matter right? Or is he being slightly illogical or even incoherent?
Lord Barnett: My Lords, it is possible that I am incoherent, and all kinds of other things, when I disagree with the noble Lord. I do not doubt that that is possible at times. I have often been guilty of all kinds of things. But we are talking about citizens of the European Union. That is the central point. That is what we all are. In that context, therefore, we cannot refuse members of the European Union who want to give funds, perhaps also from a Euro-sceptic point of view. That is presumably why the junior Minister in another place did not do so.
Lord Shore of Stepney: My Lords, perhaps I may interrupt my noble friend once more. If we are citizens of the European Union, surely we are also citizens of the Commonwealth.
Noble Lords: Order!
Lord Bach: My Lords, before my noble friend answers, this is an interesting and distinguished debate; however, this is Report stage, and we ought to get a move on now.
Lord Barnett: My Lords, I apologise for being too polite, but I have always given way, especially to my noble friend, as I have to the noble Lord, Lord Tebbit, and the noble Viscount, Lord Cranborne, and I am happy to do so. Nevertheless, I gather that I am being forbidden to do so now.
In response to my noble friend's question, the Commonwealth countries are not members of the European Union. That is a straight fact. I see him nodding in agreement. It is the European Union that we are talking about—of which we are all citizens. I do not want to waste any more of the House's time. The amendment is a pleasant one, but it is wrong. I hope that the House will reject it.
Lord Peston: My Lords, is my impression that there is not considerable disagreement with the amendment. Therefore, I think that I should add another voice to the debate. I was under the impression that we were dealing with the Political Parties, Elections and Referendums Bill, not the "United Kingdom (Exit from the European Union) Bill". Unfortunately, as we do not have a Speaker in this House, we do not have anyone who can rule speeches out of order. However, I fail to see how most of what was said connects with the amendment or the Bill.
I want to expostulate with your Lordships on two matters. There was a suggestion in one or two speeches that the bona fides of the Government were being called into question. It was also suggested that the Government had a hidden agenda. To doubt the veracity of the Government or their desire to do the right thing is not a satisfactory approach to these matters.
I do not have the credentials that some noble Lords have for taking part in this debate. I have never sat in the other place, or even remotely thought it a worthwhile thing to do. I have never been a Minister. However, it is my understanding that Ministers have a serious role to play in public life, and that that role includes precisely what my noble friend Lord Barnett says; namely, that they act according to the law as it is explained to them. The suggestion is that, having taken the best possible advice on this matter from those who are legally qualified to give it, Ministers will say, "We do not like the consequences of the treaties that we have signed; therefore, we shall not proceed legally as Ministers of the Crown and, in many cases, Privy Counsellors. We are going to defy this and ask, 'What can you do to us, and what are your sanctions'?". That is not even a remotely satisfactory way for Ministers or ex-Ministers to address your Lordships on this or any other matter.
The matter before the House is simple and straightforward. We do not like foreign funding. I am much more extreme than many noble Lords. I detest all funding from businesses. I should very much like us not to go down the line that we see particularly in the United States, of vast business funding and an inability to take part in the democratic system if one does not have a lot of money. But we have not got quite that far.

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The Government have spoken honestly about what they would genuinely like to do, and they have been told by their advisers that there are legal limits to what can be done. There is no doubt that while we are citizens of the European Union there are restraints on what we can do. There was never any doubt about that from the moment the Treaty of Rome was signed by a British government.
I regard outrage, even if it is genuine, as no substitute for rational discourse. These amendments are ridiculous. I hope that my noble friend will press them to a Division because I cannot wait—assuming that it happens early enough—to vote against them.
Baroness O'Neill of Bengarve: My Lords, there is good sense in the amendment. However, I have been sorry to watch its supporters make it less and less supportable by linking it to taking a certain view on the position of the United Kingdom in the European Union. The serious reasons for doubting whether this clause should stand unamended have to do with the variety of accountancy standards in different jurisdictions within the European Union and the prospective European Union. When looking at the substance of the matter, we should ask ourselves whether we cannot set some barrier on contributions from companies in those jurisdictions whose accountancy standards do not achieve the openness and the transparency to which we aspire and which we may not always reach. The problem will only get worse if, as is likely, the European Union is enlarged but legislation in various parts of it does not keep pace with these standards.
Therefore, if the Government are absolutely convinced that it is not possible to draw a distinction between companies registered in various members states of the European Union, I hope that they will explain why they do not consider it possible to set other standards that must be met by companies that seek to donate funds to political parties in the United Kingdom.
Lord McNally: My Lords, the noble Lord, Lord Lamont, invited some comments from these Benches. I know an elephant trap when I see one; indeed, if I did not, the contribution of the noble Lord, Lord Barnett, proved it beyond peradventure. If you begin by stating the facts and putting them into context, all that you provoke is a re-run of the debates that some of us have been engaging in for nearly 40 years. Perhaps I may assure the noble Lord, Lord Lamont, that we on these Benches are very happy to have that debate at the appropriate time—but not tonight; not on this Bill; and not on these amendments.
The contributions of the noble Lords, Lord Barnett and Lord Peston, and that of the noble Baroness, Lady O'Neill, put the matter in its proper context for a decision. Within that proper context, let there be no doubt that we shall support the Government in the Division Lobby tonight. In the meantime, I recommend a reading of the speech made by the noble Lord, Lord Bruce of Donington. Among all the
714
verbiage that we have heard tonight, there was that very striking clarion call to release our media from foreign shackles, foreign influence and foreign distortion of our debates and political decisions. To me, that is a much more important issue in our democracy. I should be much more impressed with some of the speakers tonight if they espoused that as a cause. As I said, I assure Ministers of the support of these Benches.
6.45 p.m.
Viscount Astor: My Lords, I now understand why the noble Lord, Lord McNally, does not have his noble friend Lord Goodhart sitting beside him in his usual place. I make that observation because, of course, the Neill committee was unanimous against foreign donations. Indeed, if the noble Lord, Lord Goodhart, had been sitting in his place, he would, presumably, have had to take the opposite line to the noble Lord, Lord McNally.
The Government's case might have some merit if they were able to say that this Bill had been introduced because of some EU treaty, or some negotiation or agreement, and that, therefore, we were bringing ourselves into line with best practice in Europe, or even with European law. Indeed, that might give this the figleaf of respectability. But they have not done so because they cannot make that claim.
While I was listening to the debate, I looked through Appendix 1 on foreign countries in the report of the Neill committee, which is extremely interesting. If we take Germany, for example, the report points out that,
"a business enterprise whose shares are more than 50 per cent owned by Germans … may contribute".
However, if that is not so, it cannot contribute. In Belgium, the report found that only private individuals are allowed to give to political parties, and that "institutional donations are banned". The position in France is quite clearly and helpfully set out in the report:
"Companies cannot donate funds to political parties".
Finally, as for Spain, the report says:
"Companies wishing to donate to parties must have the approval of their shareholders".
That is the only rule that seems to apply in that country.
So we have a bizarre situation. If a German company is 51 per cent owned by a non-German, it cannot make a donation in that country but it can do so in Britain under the Government's proposals. However, if it is 49 per cent owned by a foreigner it can, of course, do both. In Belgium, a company can donate in this country under these proposals but cannot do so in its own country. The same applies in France: a French company can give money to a political party here, but cannot do so in its own country. In Spain, donations must have the approval of shareholders, but in other EU countries no such approval of shareholders is required under their laws. One has to ask the Government—the Labour Party—this question. If they receive a donation from a company in Europe that does not have the approval of its

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shareholders, will they accept it or send it back to that country, which requires shareholders' approval for political donations?
My noble friend Lord Tebbit pointed out that a company in either Hungary or Poland will not be able to give to a party in this country. I can reassure my noble friend. He need not worry, because such a company can give that same donation in many European Union states. Therefore, one way or another, they can probably get it here. The noble Lord, Lord Monson, asked a question about what British companies can do as regards reciprocity. The answer is yes, they can do so in some countries, but not in others. There are no clear, uniform rules that apply throughout the European Union.
I am afraid that the noble Lord, Lord Barnett, somewhat confused matters in his interesting intervention. He spoke as if this Bill were part of some important treaty obligation. But it is not, and noble Lords are aware of that fact. The noble Lord also made one mistake and perhaps I may respectfully correct him. I believe he said that EU citizens would be able to give money to political parties. But, of course, they cannot do so; they have to be on the electoral register in this country if they wish to do so. Indeed, that provision is to be found in Clause 52 of the Bill. However, that does not apply in the case of Northern Ireland, where, because of the special reasons regarding Sinn Fein, such donations can be accepted. There is a real distinction in the Bill about so-called "foreigners" and so-called "English citizens" on the electoral register. I do not regard the term "foreigner" as being in any way derogatory; indeed, I am sure that they regard us in exactly the same way. We are all part of Europe. We are in Europe, but they are not on our electoral register and we are not on theirs.
The noble Lord, Lord Peston, in his interesting intervention said that we should not doubt the veracity of government. I have always doubted the veracity of government; indeed, even when I was in government. It is extremely important for us always to doubt the veracity of government, whatever it may be.
We have to ask why this extraordinary loophole has been left unamended. The Government have put forward no clear argument as to why this is necessary. Clearly, there are no such rules in other countries in Europe that are similar to this provision. We shall not be bringing ourselves into line with any European country; indeed, if that were so, it might be an argument in support of the clause. We shall be distorting the system and making ourselves more different from almost every other country in the EU.
Lord Bassam of Brighton: My Lords, for long periods of time over the past hour and 11 minutes I thought that I was listening to a different debate from that organised by way of the amendments on the Marshalled List. Indeed, at one point it seemed to me that we were in the middle of a ferocious argument about whether or not we should be in the European Union. That certainly appeared to be the tenor of some of the contributions made by noble Lords.
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However, from time to time we passed by the subject in hand and some undoubtedly very passionate speeches were made. My noble friend Lord Shore started us off in that vein. His views and clear hostility towards aspects of the European Union are both well known and widely respected; and, occasionally, put on one side. He made clear his hostility at an earlier stage to this piece of legislation and in particular to 'Clause 52(2)(b)(ii), as it presently stands. We also heard wide-ranging contributions from the Benches opposite, with protestations about the general loathing of donations coming from foreign parts.
I was especially taken by the contribution made by the noble Lord, Lord Tebbit. As I recall, he was a member of a government who, as I understand it, willingly accepted foreign donations not just from Europe but from a wide range of foreign countries such as Singapore and Hong Kong. The noble Lord referred to Asil Nadir. I am not sure whether it was during the noble Lord's time as chairman of the Conservative Party, but I recall that Asil Nadir made contributions to that party in large measure, if newspaper reports were to be believed.
The noble Lord, Lord Lamont, protested his desire to see us freed from the burden of foreign donations. I have waited a long time to hear that. The noble Lord was a member of a government who willingly accepted donations for a long period of time. The noble Viscount, Lord Cranborne, was not exactly innocent in that regard. I recall that he was a member of a government who willingly accepted donations from all parts of the globe. It was interesting to hear these new, fresh protestations of a desire to free us of the terrible curse of foreign donations.
We in government have taken a clear and, I think, principled position. We have made our position known to the Neill committee. We have argued the case. We in government have to deal with the practicalities of being in government. We have to confront the reality that government presents to us all. It is for that reason that we made our honest declaration to the Neill committee. It was through no failure on our part that the Neil committee came to the view that it did. The Neill committee recommended that the definition of a "permissible source" should include companies which are incorporated in the United Kingdom. There is no difference between all of us on that. There is certainly no shame on our part in saying, as our honourable friend Paddy Tipping said in another place, that the Government are firmly persuaded that it would be best to adhere to that principle but that we have to live in the real world. In the real world there is Community law. It is not craven to bow in the face of Community law; that is the reality within which we live. We must be realistic. No doubt many of those noble Lords who have contributed to this evening's debate will have argued in Cabinet, or perhaps within ministries when they were Ministers, that we needed to comply with international laws and also with the rules, as it were, of the club in Europe of which we are part.

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The argument is, briefly, that companies incorporated elsewhere in the European Union must be allowed to carry on business here on the same terms as any company incorporated within the European Union. If the latter are permitted to make donations on the basis that they are entitled to seek to influence the political process in this country, so must the former.
The effect of Amendment No. 90 would be that, in order to qualify as a permissible donor, a company must merely be registered under the Companies Act 1985 and carry on business here. Beyond the undoubted pleasure given to the noble Lord in excising from the Bill any indication that Parliament has deferred to a point of European Union law, I fail to see what sort of a victory this amendment would represent. It would not prevent an EU-incorporated company making a donation to a political party, provided it was registered in the register of overseas companies. But nor, for that matter, would it prevent a company incorporated in the Cayman Islands doing exactly the same.
I remind the House that the Neill committee, of which the noble Lord is an honourable member, considered just such an approach and found it wanting. It is worth quoting what it had to say on the matter at paragraph 5.25 of the Neill report:
"We have considered whether foreign companies should be brought within the definition of 'permissible source' if they have taken advantage of the provisions of Part XXIII of the Companies Act 1985 by registering in accordance with the requirements there laid down … We do not consider that companies utilising these statutory provisions are in the same category as those which are incorporated here and are subject to the full statutory regime under the Acts. So we would not extend the definition of 'permissible source' to cover them".
The committee took the view that, if they were to qualify as permissible donors, companies should, as a consequence of their incorporation, be subject to the full regime of the Companies Acts which require that many aspects of their affairs are made public. I might point out that all companies incorporated within the European Union have to comply with EU company law directives which impose requirements in respect of accounting and audit.
I turn to Amendment No. 173. The noble Lord has argued that it cannot be right to allow an EU company to participate in a referendum held in this country. I might, however, point out that the effect of his amendment would also be to prevent a company incorporated in the United Kingdom doing the same. Nevertheless, the Bill provides that an EU-incorporated company may qualify as a permitted participant simply because it would be absurd to provide that such a company could make donations to a political party or a permitted participant but could not express its own views during a referendum campaign. As the noble Lord does not agree with the very premise of that argument, I doubt that it will cut much ice with him when I suggest that he should withdraw these amendments.
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A number of noble Lords asked for specific points to be answered in my response. I shall try to cover some of them. I believe that the noble Lord, Lord Monson, referred to particular aspects of the Bill. He asked about the definition of a "member state". I thought that we had discussed that at an earlier stage of the Bill. "Member state" is defined in Schedule 1 to the European Communities Act by reference to the European Union. This applies by virtue of the Interpretation Act 1978. The noble Lord also asked about reciprocity. If other member states have equivalent rules on donations to political parties from companies, Community law would apply to such states. Their law would need to make equal provision for those incorporated in the European Union. But any breach by another member state is no defence to any breach by the United Kingdom.
The noble Baroness, Lady Park, referred to a couple of issues which I shall try to answer. It is worth reminding your Lordships' House that Article 43 has direct effect. The United Kingdom courts would not enforce provisions of UK law which contravened the article. If sanctions were applied in breach of an article, a defendant could plead the article to defeat any penalties, criminal or otherwise. In the case of permissible donors, a party could accept a donation from an EU-company carrying on business without fear of penalty.
The noble Viscount, Lord Astor, asked what happens in other countries. That is a fair point. However, in listening to his remarks I was somewhat puzzled as he did not give a single comparable example. Had he done so, I would have been somewhat less confused. Apart from that of Germany, the examples given by the noble Viscount, Lord Astor, show that there is no discrimination between EU companies. In France no companies can make the donations that we are discussing. That is a matter for French law. In Spain all companies can make such donations provided there is shareholder consent. However, the noble Viscount's examples did not shed any further light than that. It is for those countries to decide how they wish to—
Viscount Astor: My Lords, I am grateful to the Minister for giving way. I gave the example of Germany where a company has to be more than 50 per cent owned by Germans before it can make a contribution.
Lord Bassam of Brighton: My Lords, I thought that I had acknowledged that point.
This has been a wide-ranging debate and noble Lords have spoken passionately, particularly those on the Benches opposite who have now decided that they dislike foreign donations, particularly if they appear to come from Europe. We are trying to deal practically with a difficult situation in creating a regulatory framework that is effective. We believe that the framework we have set out is effective. We also believe

719
that we have to comply with our European obligations and, importantly, with aspects of Community law. That is the Government's case.
Lord Marsh: My Lords, before the noble Lord sits down, he mentioned that he acknowledged the point in regard to Germany. Will he comment on it? I know that he heard it, but I should like to know what he thinks about it.
Lord Bassam of Brighton: My Lords, I am not in a position to comment on it. I shall take some time to study the example carefully. But we have been given clear legal advice on this point. I do not think that it would be right for us to put ourselves on the wrong side of that legal advice. Clearly other countries within the European Union—France and Spain—regulate in a slightly different way. We are trying to regulate in an entirely consistent way so that companies understand precisely where they are with regard to the UK electoral system.
Lord Shore of Stepney: My Lords, I shall be brief because I have spoken at some length. I am grateful to those who have supplemented, added and contradicted. It has made an interesting debate.
One of the most memorable contributions was the speech of the noble Lord, Lord Barnett. He advanced the doctrine of what I would call unlimited European sovereignty based upon common citizenship of the European Union. So it no longer matters whether you enter into a specific agreement, as we do with 101 international treaties which we honour and accept. That no longer applies. You hand over great areas of decision making to institutions, in particular the European Court of Justice, which then make the decisions which were previously made by your own Parliament. That is the real issue here.
To my noble friends I say again that this is a clear, unequivocal commitment of the Labour Party's manifesto and the clear, unanimous recommendation of the Neill committee. The Government do not want it. They would like to do without it but they are fearful of Europe and European rulings. The Government are anxious not to offend. Depending on how the House votes today, and on the outcome of this issue, we shall or shall not continue to proclaim that we have a sovereign Parliament and a sovereign electorate. If this goes, we shall have surrendered the very bulwark of our state, our nation and our society.
I say to those who are thinking of betraying this Parliament that I should not like to be them when looking in the glass when shaving tomorrow. I commend the amendment.
7.3 p.m.
On Question, Whether the said amendment (No. 90) shall be agreed to?
Their Lordships divided: Contents, 96; Not-Contents, 140.

Division No. 1

CONTENTS

Ampthill, L.

McColl of Dulwich, L.

Astor, V.

Mackay of Ardbrecknish, L.

Astor of Hever, L.

Mancroft, L.

Attlee, E.

Mar, C.

Blackwell, L.

Marlesford, L.

Blatch, B.

Marsh, L. [Teller]

Brookeborough, V.

Monro of Langholm, L.

Brougham and Vaux, L.

Monson, L.

Bruce of Donington, L.

Mowbray and Stourton, L.

Burnham, L.

Murton of Lindisfarne, L.

Campbell of Alloway, L.

Noakes, B.

Carnegy of Lour, B.

Northbrook, L.

Carr of Hadley, L.

Northesk, E.

Cavendish of Furness, L.

Norton of Louth, L.

Coe, L.

O'Cathain, B.

Colwyn, L.

O'Neill of Bengarve, B.

Craigavon, V.

Onslow, E.

Cranborne, V.

Oxfuird, V.

Crathorne, L.

Palmer, L.

Dean of Harptree, L.

Park of Monmouth, B.

Denham, L.

Patten, L.

Dixon-Smith, L.

Peel, E.

Elliott of Morpeth, L.

Perry of Southwark, B.

Elton, L.

Phillips of Sudbury, L.

Fookes, B.

Prior, L.

Gardner of Parkes, B.

Rawlings, B.

Geddes, L.

Reay, L.

Glentoran, L.

Rees-Mogg, L.

Greenway, L.

Renton, L.

Hanham, B.

Roberts of Conwy, L.

Hanningfield, L.

Rogan, L.

Henley, L. [Teller]

Sanderson of Bowden, L.

Higgins, L.

Seccombe, B.

Hodgson of Astley Abbotts, L.

Selsdon, L.

Howe, E.

Sharples, B.

Howell of Guildford, L.

Shore of Stepney, L.

Islwyn, L.

Stewartby, L.

Jeger, B.

Stodart of Leaston, L.

Jopling, L.

Stoddart of Swindon, L.

Kimball, L.

Strange, B.

Kingsland, L.

Strathclyde, L.

Kirkham, L.

Taylor of Warwick, L.

Lamont of Lerwick, L.

Tebbit, L.

Lane of Horsell, L.

Thomas of Gwydir, L.

Lang of Monkton, L.

Trefgarne, L.

Liverpool, E.

Wilcox, B.

Lucas, L.

Willoughby de Broke, L.

Lyell, L.

Young, B.

NOT-CONTENTS

Acton, L.

Carter, L. [Teller]

Addington, L.

Chandos, V.

Amos, B.

Clarke of Hampstead, L.

Andrews, B.

Clement-Jones, L.

Archer of Sandwell, L.

Cohen of Pimlico, B.

Bach, L.

Crawley, B.

Barker, B.

Davies of Coity, L.

Barnett, L.

Davies of Oldham, L.

Bassam of Brighton, L.

Dean of Thornton-le-Fylde, B.

Berkeley, L.

Desai, L.

Bernstein of Craigweil, L.

Dixon, L.

Billingham, B.

Donoughue, L.

Blackstone, B.

Dubs, L.

Blease, L.

Evans of Parkside, L.

Borrie, L.

Evans of Watford, L.

Bragg, L.

Falconer of Thoroton, L.

Brennan, L.

Falkland, V.

Brett, L.

Farrington of Ribbleton, B.

Brooke of Alverthorpe, L.

Faulkner of Worcester, L.

Brookman, L.

Filkin, L.

Burlison, L.

Fyfe of Fairfield, L.

721

Gale, B.

Northover, B.

Geraint, L.

Oakeshott of Seagrove Bay, L.

Gibson of Market Rasen, B.

Parekh, L.

Goldsmith, L.

Patel, L.

Goodhart, L.

Peston, L.

Goudie, B.

Plant of Highfield, L.

Gould of Potternewton, B.

Prys-Davies, L.

Graham of Edmonton, L.

Puttnam, L.

Greaves, L.

Ramsay of Cartvale, B.

Hamwee, B.

Rea, L.

Hardy of Wath, L.

Redesdale, L.

Harris of Greenwich, L.

Rennard, L.

Harris of Haringey, L.

Rodgers of Quarry Bank, L.

Harris of Richmond, B.

Russell, E.

Harrison, L.

Sainsbury of Turville, L.

Haskel, L.

St. John of Bletso, L.

Hayman, B.

Scotland of Asthal, B.

Hollis of Heigham, B.

Scott of Needham Market, B.

Howells of St. Davids, B.

Sharman, L.

Howie of Troon, L.

Sharp of Guildford, B.

Hughes of Woodside, L.

Shepherd, L.

Hunt of Kings Heath, L.

Simon, V.

Irvine of Lairg, L. (Lord Chancellor)

Smith of Leigh, L.

Stone of Blackheath, L.

Jacobs, L.

Strabolgi, L.

Jay of Paddington, B. (Lord Privy Seal)

Symons of Vernham Dean, B.

Taylor of Blackburn, L.

King of West Bromwich, L.

Thomas of Walliswood, B.

Kirkhill, L.

Thomson of Monifieth, L.

Layard, L.

Thornton, B.

Lea of Crondall, L.

Tomlinson, L.

Lipsey, L.

Tordoff, L.

Lofthouse of Pontefract, L.

Turnberg, L.

Macdonald of Tradeston, L.

Turner of Camden, B.

McIntosh of Haringey, L. [Teller]

Uddin, B.

Varley, L.

McIntosh of Hudnall, B.

Walker of Doncaster, L.

MacKenzie of Culkein, L.

Wallace of Saltaire, L.

Mackenzie of Framwellgate, L.

Walmsley, B.

McNally, L.

Walpole, L.

Maddock, B.

Warner, L.

Massey of Darwen, B.

Warwick of Undercliffe, B.

Merlyn-Rees, L.

Whitaker, B.

Miller of Chilthorne Domer, B.

Whitty, L.

Mitchell, L.

Wilkins, B.

Molloy, L.

Williams of Crosby, B.

Williams of Mostyn, L.

Morgan, L.

Williamson of Horton, L.

Morris of Castle Morris, L.

Woolmer of Leeds, L.

Newby, L.

Young of Dartington, L.

Nicol, B.

Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.
7.13 p.m.
Lord Wedderburn of Charlton Lord Wedderburn of Charlton moved Amendment No. 91:
Page 38, line 24, leave out ("member").
The noble Lord said: My Lords, I have tabled this amendment and Amendments Nos. 92, 93 and 94 to detain your Lordships slightly further on Clause 52. The amended clause would not breach any community law, in particular Article 43 of the so-called treaty on the common market.
I thank my noble friend the Minister for his great courtesy and kindness in making himself and his advisers available to me. When two or three lawyers are gathered together, they may not end up with agreement, but at least they can clear the ground. That
722
meeting has made it easier for me to see the points that I should address. I have explained them to my noble friend. They come under three headings.
I begin not with a debating point, but with a statement by my right honourable friend the Prime Minister, who described the position under the various treaties as,
"an association of free, independent sovereign nations".
My conclusion comes from that in the sense that putting UK companies and those incorporated in the European Union together in one box may allow for the question of whether that is what Gilbert Ryle used to call a "category mistake".
I agree with those who have said that the problem is the electoral and constitutional system and its relation to money. The best explanation that I have heard was by the noble Baroness, Lady Williams of Crosby, a few days ago in an interview on "Newsnight". I have checked the quotation with her. She said that her worry was that,
"money is beginning to take over the system",
of democratic politics.
That was said in a different context, but it was the concern of the Neill report and it has long been a concern of Labour governments. That is why we introduced a provision in the Companies Act 1967 to disclose in company accounts political expenditure over a threshold of £200. That has been repeated in Schedule 7 to the Companies Act 1985.
The most valuable aspect of the Bill is the Government's determination to introduce further disclosure and control over the diversion into political donations of funds raised for a company's normal activities so as to influence political parties and policies. That is certainly the aim of the Bill—at least until we come to Amendment No. 237, which would apparently withdraw some of the excellent extensions of disclosure and control in Schedule 19.
My noble friends know of many past examples of that philosophy. Trade unions were put under much stricter legal control in 1913 because of the notorious Osborne judgment, the spirit of which, as we saw yesterday, is still not dead. Amendment No. 94 would update that regime at a transnational level for trade unions.
Articles 43 to 48 of the treaty are mainly directed at maintaining and extending an integrated market in the European Union. Article 43.1 prohibits:
"restrictions on the freedom of establishment of nationals of a member state in the territory of another member state".
My noble friend the Minister told me in a letter that Clause 52 was necessary in its simple form because otherwise Article 43 would make it a breach of Community law. It is my contention that that is not correct. I am happy to say that in the face of the advice given by the Government's advisors. Thanks to my noble friend's kindness, I have heard the arguments, but I remain unconvinced.
Article 43 extends to companies and firms what the Court of Justice has understandably held to include covert or even implied restrictions on freedom of

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establishment. The Bill raises a question about donors in the political system. From that, the first of my three submissions is drawn.
With great respect to the noble Viscount, Lord Astor, there exists a harlequin variety of measures throughout the world, particularly in western Europe. The diversity is far greater than he suggested. In France, donations by companies to political parties are banned. A similar rule applies in Belgium. There are scarcely any rules in Austria and Luxembourg. The Swedish constitution forbids government interference with political party funds. In a large number of member states donations from companies must be disclosed primarily by the recipient political parties, though in the Netherlands and Denmark the identity of the donor company may be withheld. In Ireland, candidates receiving donations above £450—the noble Lord, Lord Tebbit is not in his place but that is the answer to his query—or other financial donations above £3,500 to a party must be entered in what is called the statutory declaration of donations. Your Lordships will find an analogous proposal in our Amendment No. 93, where all donor companies would, without any discrimination at all, undertake to disclose donations in a declaration statement entered on a register open to public scrutiny. There is no discrimination in Amendment No. 93.
It is true that in Germany there still appears to be a bizarre discriminatory provision, as Annex 1 of the Neill report reveals, that certain donations are allowed from business enterprises in which more than 50 per cent of the shares are held by German citizens. In Portugal and Italy, no companies with mixed private and public holdings may make a donation for electoral or political purposes; and Italians get a tax rebate. I can tell the noble Viscount that in Spain the law is undoubtedly as he described it, but it is under review.
Since 1968 nine directives on the harmonisation of company law have been adopted in the Community. Five more are proposed but not yet fully adopted. However, not one of them has touched this subject within a mile, nor would it be proper for them to do so, on the basis of what in the trade is called the treaty base of a company harmonisation directive. To my knowledge, no one has ever threatened action in the Court of Justice against any of these states which have such different rules. Nor is there any reason to believe that in European or domestic law the treaty provisions of Article 43 on the freedom and right of establishment must control the status of permissible donors, except, of course, in the case of flagrant discrimination against companies in the EU. I take the law as it is. I understand what the Minister said. By all means, let us face what the European Court of Justice might do. The answer to the noble Baroness who asked what sanctions it could employ is that it could employ the sanction of an order, and if we eventually fail to obey the order, it is quite clear that we could be fined, but only if the clause offends the Article 43 of the Treaty.
The clause as presently drafted contains three requirements: first, that the company must be registered under the Companies Act, which includes both ordinary registration and registration as an
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overseas company, if it has a place or business or a branch here; secondly, that it be incorporated, in the United Kingdom or in another member state; thirdly, that it must carry on business in Britain. I raised in Committee the question of carrying on business in the United Kingdom. I apologise to noble Lords for not having raised these issues at greater length in Committee. I moved one amendment and was struck down, no doubt by some non-party virus, which meant that I could take no further part in the Committee proceedings. But I did raise the question of the "wholly or mainly" test, namely, that if we are to say in Amendment No. 90, as we do, that a company should have a sufficiently close connection with the United Kingdom to be allowed to bankroll any democratic processes, surely the test should not be that of carrying on business in the United Kingdom. I gave the example of a vast multinational which had no other business here except a sweet shop on Brighton pier, which would be very difficult to discover on inspection of all the piers. However, if it were "wholly or mainly" within the United Kingdom, that would not be discriminatory and, in view of the declaration under the other amendment, it would be particularly easy to find by reference to the register.
It has been said to me—and this is a very complex point but I shall try to deal with it briefly—that such a law can impact illogically on different types of multinational company. Some have headquarters here or in Detroit; some have subsidiaries here; some have branches here; some have places of business which they can register as overseas companies. That is absolutely right. However, it is equally true of the Bill as it stands as it could possibly be under our amendments. Had I time, I would want to suggest that our amendments make that problem slightly easier to solve. But for the moment, in a global world of transnational capital, it is quite impossible to accommodate all the prolix structures of every multinational company; otherwise, we would never start on Clause 52.
It is true, of course, that in the House of Commons (Standing Committee G, 25th January, col. 109) the Government spokesmen said that they would like to restrict the Bill to British-based companies. I quote:
"We are advised it is not possible to draw the Bill in such a way as to exclude companies that are incorporated in the EU and operate and register here".
There is no hubris in saying that, in correspondence in which I engaged after consulting practical experts at the Bar, an academic figure of very great consequence and also friends in Italy, France and Germany who were kind enough to answer my quick questionnaire, we have found, if we look at those various types of law, that Article 43 is not in any way infringed, especially if we add Amendment No. 92, which prescribes not merely that a company must carry on business here but that it should carry on business "wholly or mainly" here and can be found through the register.
The Government responded at Committee stage by saying that they did not know what was meant by the phrase "wholly or mainly". I believe I quote my noble friend correctly. But, of course, 15 lines later in the

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same clause we find that unincorporated bodies, which include unincorporated partnerships, which would be subject to Article 43, were it to apply, engage the test of carrying on business,
"wholly or mainly in the United Kingdom"
and, in addition, having a registered office here. If the Government think that Article 43 applies, having a main office here is probably an improper test. But, since it does not, and since there is a second reason for not doing so—and I promise your Lordships that I shall not try to relate the three learned treaties, the three learned articles and the 14 cases, the names and references of which I sent to my noble friend—I now turn to my second submission.
Although the Court of Justice is quick to ban discriminatory, explicit or covert restrictions on freedom of establishment, it has held otherwise in a long line of judgments, commencing with the rather delightful title of the Cassis de Dijon judgment in 1978, which was summarised in the European Court of Justice case of Gebhard in 1994, as follows:
"It follows…from the Court's case-law that national measures liable to hinder or make less attractive the exercise of fundamental freedoms guaranteed by the Treaty must fulfil four conditions:—
that is to say, if they are to avoid liability under Article 43—
"they must be applied in a non-discriminatory manner, they must be justified by imperative requirements in the general interest, they must be suitable for securing the attainment of the objective which they pursue, and they must not go beyond what is necessary…"
Other judgments have followed that test. A case in Ireland discriminated against shareholders if they did not live within three miles of the land, justified under rural land policy, and there were provisions in Belgium and Denmark which might have been thought to be discriminatory but which, in each case, were accepted by the courts because of the demands of the environment. The Keck judgment of 1991 stated that even minimal prices for retail sales might be acceptable and not necessarily an impediment to free circulation of goods in certain circumstances.
Our amendments would strengthen the clause in four ways; precisely the four tests in the Gebhard summary. It would be non-discriminatory on its face; it would be justified by the general interest; suitable to attain a constitutional objective and, I submit, proportional to what is necessary to attain it.
States often fall at the last fence when they go beyond what the court thinks necessary. Without citing it I simply state that this analysis is also supported in a rather different reasoning in a judgment regarding the Daily Mail in 1988. The court upheld the right of a state to prohibit the transfer of the central office of a company registered in its jurisdiction. In that respect, there are many ways in which the application of Articles 43 to 48 is not quite the same with regard to natural persons, as the court puts it, as to companies.
Finally, in the previous debates there was much play about Article 46 which provides an exception in the case of,
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"special treatment for foreign nationals on grounds of public policy, public security or public health".
It is wrong to think that public policy is a wide category. The court has applied it strictly. I mention it because there is no authority to say that it would not apply in this case. I cannot imagine why the Government believe that it cannot possibly apply, without further argument, which is the case. That is my third limb. If I am right—I submit I am—it would not be needed on the Cassis de Dijon line of cases.
I would be less than candid if I did not say that I was alarmed when it appeared from a letter I received from my noble friend that no reference was made to this somewhat refined line of case law of some 30 or 40 cases under the Cassis de Dijon rules. Through no fault of the Minister, I was left with only one small reference to the case against France which is rather irrelevant.
Even if Clause 52 was said to be discriminatory there might still be a defence, and I submit there probably would be, under Article 46. In that state of the law, there is no reason why a government which believes it must obey Community law, which is the premise of my amendments, should refuse to amend Clause 52 so as to make it more transparent, clearer, less discriminatory and obviously valid. It is no good saying that the Government do not believe that there would be a defence under Article 46. I have found no explanation for that, either from the Minister or any other source, as against the opposite.
I have no interest to declare, except perhaps one point, which I do not regret putting on the record. Friends who are scholars in the field would know that it would be improper, in fact dishonourable, for me not to make this view available to the House because I have written about it in the past. Although I am much wiser than I was then, the basic argument is the same. The category mistake of Clause 52 and what we are about sets the Bill off in a wrong direction. Ignoring the Cassis de Dijon principles caused it to go further astray. The available life-belt in Article 46 was not fully explored. In fact, we threw in the towel because we say that that is impossible as a defence.
All three aspects would be assisted by our amendments. They are relevant to the interests of the United Kingdom and are valid under both domestic and Community law. I entreat my noble friend the Minister to look again at Clause 52, and at any source he would like to name upon the matter. I entreat him to come back and say that he has given consideration to at least one or more of Amendments 91 to 93. I beg to move.
7.30 p.m.
Viscount Astor: My Lords, the noble Lord, Lord Wedderburn, made an extremely interesting case. I listened with great care to his detailed argument. He said, rightly, that I had given only a small example of what goes on in Europe. He is absolutely right. I intended to give only a small example. He gave a much wider and clearer example which made my point further and improved it. It showed how absolutely different the rules are in almost every country. However, listening to the noble Lord, I gained the

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impression that a greater number of European Union countries do not now accept donations from companies than ones which do. However, it may be quite close; I did not count.
The arguments used by the noble Lord were extremely interesting. They show how everything is different in Europe. The noble Lord talked about Article 43. He is an expert. I profess that I am an amateur on the matter, so I shall not go into it. However, I believe that it is an issue to which the Government should respond.
Amendment No. 92, which inserts "wholly or mainly" is useful. Subsection (2)(b) refers to a company which carries on business in the United Kingdom. In Committee the noble Lord, Lord Wedderburn, asked how one defined "carrying on business". He gave the example of a sweet shop. Does it mean a company which is registered for VAT or one that is over the threshold? Does it mean that its registered office is here; that it is paying national insurance contributions; that it is a branch, or that it is incorporated in any way? How do the Government define
""carries on business in the United Kingdom"
or "trades in the United Kingdom". When the Minister comes to reply, perhaps he could give an explanation.
The noble Lord, Lord Goodhart, who is in his place, was unable to be present for the previous debate. If he had been, he would have heard the noble Lord, Lord McNally, say how much he supports the Government in their proposal to accept donations from European Union companies. It is a pity that the noble Lord did not speak then, but he has the opportunity to do so now. The unanimous view of the Neill committee, and therefore not the view of his Front Bench, is that such donations should not be accepted. I should be interested to hear the noble Lord if he contributes to the debate.
A question I asked the Minister in the previous debate is perhaps as pertinent to these amendments as it was then; it concerns companies. I think the noble Lord agrees that neither political party would wish to accept donations from companies that did not have the approval of their shareholders. However, under European Union rules, European companies will be able to make donations to political parties in this country without the approval of their shareholders. Do the Government condone that? Will the Labour Party accept those donations? What are we to do about that? I should like to know the Government's view. Is that something which they feel should happen? We have made great play of the fact that companies should gain shareholder approval, but here we have a whole raft of companies which may or may not wish to do so. I am not quite sure why foreign companies would want to give money to political parties, but that is a different matter. I have not noticed many British companies rushing to make political donations in Europe, but we know that European parties readily accept donations from rather bizarre sources and regard that as perfectly normal. The noble Lord, Lord
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Wedderburn, made some extremely important points. We shall listen extremely carefully to what the Minister has to say in response.
Lord Bassam of Brighton: My Lords, the noble Lord, Lord Wedderburn has brought his extensive knowledge of company law to bear on the provisions of Clause 52(2). I am very grateful to him for having taken the time to write to me at length on this issue and also to spend a not inconsiderable period of time on a couple of occasions talking matters through with my officials. While we now have a better understanding of the purpose of his amendments, I hope it will not come as too much of a disappointment to him to learn that I cannot commend them to your Lordships' House.
He has indicated that his first three amendments are intended to be taken as a package. They are concerned with the definition of a permissible donor as it relates to companies. Clause 52(2)(b) presently provides that in order to qualify as a permissible donor a company must be registered in the United Kingdom, be incorporated in this country or in another EU member state and carry on business here. The effect of Amendments Nos. 91 to 93 would be to alter two of these three tests and, as I understand it, add a fourth.
Before I go into the detail of the amendments I hope that it will be possible to establish some common ground. The Neill committee recommended that companies incorporated in the United Kingdom should come within the definition of a permissible source. I believe it is fair to say that few would disagree with that proposal. However, once it is accepted that any company incorporated in the United Kingdom and carrying out some business is entitled to contribute to a political party, the question immediately arises as to the impact of the freedom of establishment provisions of the EC treaty on that decision.
If we had left it at that there would have been little doubt that we would have breached the right of nationals of other EU member states to carry on business in the United Kingdom through the form of establishment of their choice. To compel an EU national to incorporate a company here simply to be able to attract the right to make political contributions would not be permitted under EU law. To deny an EU company carrying on business here through a branch office the same privileges offered to a company incorporated under the law of the United Kingdom would be a breach of the treaty.
The Government have taken the view that as we cannot discriminate against EU incorporated companies, we should so define a permissible company, if I may call it that, to embrace both the UK and EU incorporated companies. If I have correctly understood the noble Lord, Lord Wedderburn, he takes what can be described as a more internationalist approach. He would be content for any company, wheresoever incorporated, to be a permissible source provided that it conducts its business wholly or mainly in the United Kingdom.

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But such an approach would have perverse effects. A possible result of the noble Lord's modified text is that a United Kingdom incorporated subsidiary of a foreign country, such as Ford UK, would be a permissible donor, but a blue chip British multinational such as BP, which carries out most of its business abroad, would not be a permissible donor. Such a possibility may be acceptable to the noble Lord, but it is not a result that the Government can endorse.
Amendment No. 92 introduces a wholly new criterion which a permissible company would need to satisfy. The amendment would require that in order to qualify as a permissible donor a company must also have provided written notice to the Secretary of State undertaking to comply with Part IX of the Bill. I do not see that that provision adds anything given the provisions that Part IX companies will be required to obtain shareholder approval before making a donation. If there was concern to ensure that parties only accepted a donation where that shareholder approval had been given, one might go about it by introducing some kind of arrangement whereby it was certified that shareholder consultation had taken place. But to require parties to check that a company had merely undertaken to comply with the shareholder authorisation requirement simply appears to be an extra burden to no real purpose. In any event, we would regard it as the business of company directors and shareholders to ensure compliance with the provisions of Part IX of the Bill and not the business of the registered parties.
Amendment No. 94 would add to the list of permissible donors international federations or organisations falling within Section 1B of the Trade Union and Labour Relations Consolidation Act 1992 to which an independent British trade union is directly or indirectly affiliated. Such bodies would constitute a permissible source irrespective of where they carried out their activities. It seems to me that this amendment is rather similar in spirit to those previously tabled by the noble Lord, Lord Beaumont of Whitley, which would have allowed donations from political parties elsewhere in Europe.
As I pointed out in respect of those amendments, this Bill will not prevent the maintenance of links which may exist between some parties in this country and related movements and parties overseas. The Government have sought to ensure that the ban on foreign funding of political parties does not prevent members of United Kingdom parties participating in visits and conferences intended to foster such links. However, it would be quite another matter to allow funds raised by a party or a trade union in another country to be brought to bear on elections here. Such a provision would be wholly contrary to the Government's intention to ban foreign donations.
I listened very carefully to what the noble Lord, Lord Wedderburn, had to say. Obviously, I shall need to study Hansard very carefully. We are as clear as any Government can be about our position. I invite the noble Lord to withdraw his amendments.
7.45 p.m.
Viscount Astor: My Lords, before the noble Lord sits down, perhaps I may ask him two questions. First, I am not sure whether he addressed the point made by the noble Lord, Lord Wedderburn, about a potential derogation on the grounds of public policy and EU law. Secondly, if I heard the noble Lord correctly, I believe he said that as regards shareholder approval it would be the responsibility of company directors rather than the political parties. Is the Minister really saying that if a European company suddenly sent a donation to the Labour Party that party would consider that it was entirely the responsibility of the company directors of the donating company to check whether there was shareholder approval, and that the political party should take no action or ask no questions? Is that really what the Minister is saying? One would normally expect a responsible political party to ask questions if it suddenly received a donation from a company registered in Italy, for example, and doing business there, before it popped the money in its back pocket.
Lord Bassam of Brighton: My Lords, I made plain in my comments that that was the situation. The noble Viscount raises a valid point. One would expect a political party to express interest, but it is not for it to check whether the requirement for consent of the shareholders has been complied with. That must be for the company.
As regards European companies donating to political parties without the support of their shareholders, it is for the law of the jurisdiction that incorporates and regulates them to decide how their shareholders should be protected. We have put in place in Schedule 19 of the Bill protection for shareholders in British companies. I hope that that answers that particular point.
The noble Viscount raised a point in relation to Article 46 and public policy. The policy set out in the Bill does not seek to discriminate against EU companies or nationals in the manner in which they do their business. Therefore reliance on the justification for discrimination is not needed. I hope that answers the point.
Viscount Astor: My Lords, I thank the Minister for giving way. The point was that there could be a derogation on the grounds of public policy. That would be allowed under the European Union treaty.
Lord Bassam of Brighton: My Lords, I shall study the noble Viscount's question and correspond with him. It requires a fuller response than I can give him this evening.
Lord Wedderburn of Charlton: My Lords, I hope my noble friend, when he considers the questions of the noble Viscount, Lord Astor, will also consider some of the points I put in the short form of my argument. I wish I had put it in full.

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For example, my noble friend did not address the question of why the term "wholly or mainly" is objectionable in paragraph (b)(ii) of Clause 52(2), but is acceptable in paragraph (h) of that clause. To save the embarrassment of the draftsman, who presumably knew what he meant in paragraph (h), either the Minister must say it is nonsensical and he will not have it for partnerships and other unincorporated types of business, of which there are quite a few, or he must say that if it is good enough for paragraph (h) it is good enough for paragraph (b). He made no mention of that point.
"Wholly or mainly" is a test which is perfectly clear. I appreciate that some clever lawyer may argue in a specific case as to whether it is "wholly" or "mainly". But some clever lawyer will also argue as to whether or not the company has business here. It is a perfectly well-known area of dispute. Under Schedule 21A to D of the Companies Act 1985 the question arises as to whether or not a company has a place of business here and that point is often argued. But one cannot have a statute that says one thing in one paragraph only to have it argued that it is nonsensical to put it in another.
Lord Bassam of Brighton: My Lords, perhaps my noble friend will give way; he may be right. I have not had the opportunity closely to study this section. It may well be that it made perfect sense in one case and not another. That happens from time to time.
Lord Wedderburn of Charlton: My Lords, I must press my noble friend. Can he say why, in this case, it makes sense in one paragraph and not in another? There is no sensible argument here. I have not come across anybody except the Government—I do not personalise that statement to him because I realise it is government policy to do it this way—who took that point. Nor is there anything in the question on the different structures of Ford UK and BP. For one thing, a multinational can always have an agency, place of business or subsidiary here. They are not forced to do so and do not thereby come into conflict with Articles 43 and 48.
As to the declaration or undertaking, if the directors, as my noble friend suggested, are to ensure that the law is obeyed—as we must assume they will—what is wrong with their giving an undertaking to say so? I cannot for the life of me see why publicity on that matter is not an asset to the clause; it is a public register.
I made the mistake in my first draft of the amendment of saying that perhaps the notice should be kept by the company registrar. I was persuaded in the following discussions to take it away from the company registrar because he has many other duties. Therefore it could be done in a variety of ways by the Secretary of State under the amendment.
I cannot believe that when my noble friend reads Hansard and the other documents he has in his possession setting out the argument at perhaps rather greater length than I should have done in a letter he will not look again at the possibility of tying this clause down to the point at which there is no offence against
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Article 43. If he does not do that, if there were a challenge on some aspect, it would be his responsibility. My amendments make it impossible to challenge the clause and I hope that my noble friend will look again at the matter. However, I can do nothing more this evening than to say I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 92 to 94 not moved.]
Lord Davies of Oldham: My Lords, I beg to move that the House do now adjourn during pleasure until 8.40 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.55 p.m. to 8.40 p.m.]
[Amendment No. 95 not moved.]
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 96:
Page 38, line 45, after ("at") insert ("any time within the period of five years ending with the date of").
The noble Lord said: My Lords, this is a large group of amendments but they are all on the same theme; that is, relaxing the provisions which the Bill makes in respect of donations from trusts and bequests, subject to proper conditions and any necessary restrictions. The matter was raised in Committee by way of amendments tabled by the Liberal Democrats and the Official Opposition. I then indicated that the Government were in listening and reflective mode and now the House has a response.
I shall explain as briefly as possible what the government amendments seek to do and the way in which they operate. Amendment No. 96 is concerned with an issue which was not raised in Committee although it was raised in another place at an earlier stage. It is linked to other points. The amendment would relax and limit the rules on the receipt of donations by way of bequests. It would no longer be necessary for the deceased to have been on the electoral register at the time of death—I am sure that the deceased will be most pleased to hear that! Instead, it would be sufficient if he had been on the register within five years of his death. This takes account of the possibility that a person who is nearing the end of his life and who moves residence might not get around to ensuring that he is still on the register. It is a concession that we can make without injury to the main thrust of the Bill and I imagine that it will be welcome.
I turn to the next item with trepidation because of the complexity of the subject; it is the larger group of government amendments concerned with trusts. They include trusts established by bequests. The main thrust is that we are persuaded that it would be right to make special provision for trusts which were set up in the past. It is a serious act to nullify a trust and we accept that establishing whether the person who was head of the trust was a permissible donor a century ago may be

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difficult, even impossible. I cannot imagine being able to reach back into the graves to discover what was the case.
Amendments Nos. 101 and 277—the latter is where the real meat is to be found—allow a donation from a trustee if the trust was created before a certain date. We have opted for 27th July 1999, which was when the White Paper for the Bill was published. The object behind that limitation is to ensure that we are not removing the requirements of the Bill from trusts set up after the issue fully entered the public domain conceivably as a device for getting round the funding restrictions in prospect. In any event, where a trust was set up after the qualifying date, there will be no difficulty about establishing whether or not the person who set it up was a permissible donor.
Further conditions which we believe to be proper and necessary are, first, that the trust should not have been varied since 27th July 1999 so as to benefit a party; and, secondly, that no property should have been transferred to it after that date. That is to prevent an old trust from being used as a shell for what is a new funding scheme. Amendment No. 277 also stipulates that the trustee must give the party the full name of the person who established the trust and of any people who have contributed to it. Even if we cannot insist that such people should have been permissible donors, we can ensure transparency. Without that requirement, the Government would be open to the charge, of which they are emphatically not guilty, of wanting to perpetuate blind trusts.
Before leaving the issue of old trusts, I should mention one further condition which the amendments set for the receipt of donations from trusts. It is to be found in subsection (5) of the new clause which would be inserted by Amendment No. 277. The purpose of subsection (5) is to exclude property received from a discretionary trust. Trustees inevitably enjoy discretion under a trust as to the circumstances in which payments are made. However, in order to be an exempt trust, there shall be no discretion as to the party which enjoys the benefits of the trust.
I turn to the other issues dealt with in the government amendments. The new subsection (6)(b) of Clause 53, which would be inserted into the Bill by Amendment No. 101, is to much the same effect as the existing subsection (5) and has been made clearer. However, subsection (4) of the new clause inserted by Amendment No. 277 is a substantively new provision. It allows donations to be received from new trusts as well as old ones provided it can be shown that the people who put the money in were permissible donors at that time. Again, however, the trust must be of the non-discretionary type. We have persuaded ourselves that this provision can safely be made without undermining the effect of the Bill.
I shall deal briefly with the remaining government amendments, luminous as they are, because they are all on one simple theme; that is, to adapt the reporting requirements in the Bill to take account of the kind of information which will have to be given and which can be reasonably required in respect of trusts.
The new clause stipulates that the trustees must tell the party the names of the people who contributed to the trust and so forth. The amendments to Schedule 6 follow that through by requiring the recipient party to give the relevant information to the electoral commission.
The amendments to Schedules 7, 11, 15 and 16 are to the same effect. The new rules on trusts and bequests will apply to the other provisions of the Bill on donations to individual and member associations, third parties, participants in referendum campaigns and candidates, as well as donations to parties. The amendments to the latter schedules amend the reporting requirements in respect of those recipients in the same way as do the amendments to Schedule 6 in respect of donations to parties to take account of the new provisions on trusts and bequests.
Having explained the Government's amendments, I must also address the new clause tabled by the noble Lords, Lord McNally and Lord Rennard, in Amendment No. 102. My hope is to persuade those noble Lords and your Lordships' House that we have made a decent job in putting forward our amendments and that it is not necessary to press the alternative amendments. The Liberal Democrats' new clause is in some ways more generous and in some ways more restrictive than ours. It deals only with old trusts. It is broader in form and contains no conditions matching those which we seek to impose as to discretionary trusts or variations of an old trust. It does not explicitly require the original founders of the trust to be named. It requires the settler, if an individual, to have been domiciled in the United Kingdom. My impression is that the new clause is framed to fit the exact circumstances of particular trusts with which the Liberal Democrat Party is concerned. That is understandable but we must look at the wider picture. Therefore, I trust that noble Lords will be persuaded that the government amendments are satisfactory and accommodate their concerns.
On that assumption, this substantial group of amendments will make a significant improvement to the Bill on a consensus basis and I commend our glorious amendments to your Lordships' House. I beg to move.
Lord Hodgson of Astley Abbotts: My Lords, perhaps I may ask the Minister a couple of questions related to trusts. I suspect that if I studied the Bill in great detail I could work it out for myself, but I have some difficulty in that regard. A number of constituency associations have access to and use of properties which are owned by trusts. Some of those trusts are old and obscure and the original documentation has long since disappeared. The trusts operate on an extraordinarily unconnected basis, but the trustees continue to reappoint themselves and keep them going. Some of those buildings have outlived their usefulness and may be in a poor state of repair and require substantial expenditure to bring them up to date; or, because they were built 100 years ago, they may be in the wrong part of town in relation to where people now live.

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Some of these trusts will be wound up, the property realised and the proceeds made available to the local association or the party nationally. It is not clear to me whether in those circumstances that is a permissible donation to an association or the party nationally, given that the original purposes of the trust may be unclear because the documentation has been lost. I should be grateful for the Minister's comments.
Lord Rennard: My Lords, I thank the Minister for his careful consideration of the issues connected with trusts which I raised in Committee. In particular, I welcome Amendment No. 101 and subsequent amendments which allow donations to be made by trusts. Perhaps some of these trusts were created a long time ago when people wanted to give money either during their lives or as bequests to political parties. I argued in Committee that their intentions should be respected, and I thank the Government for doing so. However, all trust deeds are not the same, and often they are legally very complicated. Clearly, trusts made in the early part of the century were not written with the Political Parties, Elections and Referendums Bill 2000 in mind, and I ask the Government to consider further these points. I shall not move Amendment No. 102.
Viscount Astor: My Lords, I generally welcome the amendments spoken to by the Minister. I believe that the most important one is Amendment No. 277 which concerns trusts. Quite rightly, he pointed out that subsection (5) provides that a donation received from a trustee in pursuance of any discretion is not exempt. That appears to be a strong power. Discretion can arise at various levels. One can easily have a trust which says that the income must be paid to the Labour Party, the Fabian Society or whatever, but the trustees have the power to pay capital if they wish. Surely, in those circumstances the trustees would have a degree of discretion, but the provision is written in such a way that not only would they be unable to exercise that discretion but they would not be able to use the money for the purposes of the trust. This is perhaps quite a severe restriction.
It is probable that when a trust is drawn up the trustees need discretion. The trust may have been drawn up somewhere by the Conservative and Unionist Party, and the trustees must interpret what it means. Parties change their names, and the Liberal Party changes its name more than most. I believe that a provision which absolutely disbars any trust donation where the trustee has any discretion goes too far. Provided that the trustee exercises the discretion in a reasonable manner under the trust deed, surely it should be an acceptable donation.
Lord Bassam of Brighton: My Lords, I deal first with the point raised by the noble Viscount, Lord Astor. The noble Viscount makes a reasonable point. I suggest that he studies carefully my speech in Hansard. The limits on the discretion relate to the beneficiary. All trust deeds necessarily have discretion as to the amount and date of payment. The language used in the
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Bill is that used in finance legislation to identify discretionary trusts. If that does not fit the circumstances which the noble Viscount has in mind, clearly we need to give the matter further thought and perhaps advise him further. However, the noble Viscount needs to study Hansard to see our thinking on this matter. There has already been a good deal of discussion between party officials and Home Office officials. We thought that we had come up with a workable scheme, and that was why we designed it in this way. We do not want confrontation but seek to be helpful.
In reply to the noble Lord, Lord Hodgson, I am sure the noble Lord appreciates that it is difficult to answer his point without knowing the full details. This is not a lawyers' consultation; if it was, the noble Lord would be talking to the wrong person. I suggest that the noble Lord studies Hansard. If the trust is for the benefit of members of an unincorporated association—the local constituency party—they can make a gift if that unincorporated association is a permissible donor. That seems to be a first principle, but we need to look at it in more detail. I ask the noble Lord to think carefully about what I said in moving the amendment.
In response to the noble Lord, Lord Rennard, I repeat that we seek to work with the noble Lord's party to solve a common problem, and we believe that in most instances we have achieved that. If the noble Lord wants to make further representations to the Government's lawyers, he should do so. We believe that we have provided something that would work for the Liberal Democrats, noble Lords opposite and my own party. I do not believe that my party would be particularly affected by trusts in the same way as the Liberal Democrats and the Conservatives. The amendments are before the House and I hope that noble Lords will give them their blessing.
On Question, amendment agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 97:
Page 39, line 7, leave out ("not less") and insert ("more").
The noble Lord said: My Lords, in moving Amendment No. 97 I should like to speak to a fairly formidable list of related amendments that go to the same point which, if it is not addressed, will cause continuing irritation to all political parties and donors. Essentially, I argued in Committee that it would be far easier and more sensible if the limits were set at more than £200 and more than £5,000. That would, I believe, be hassle-free and better than the current provision which contains limits of less than £200 and less than £5,000. The point raised in Committee—it has not changed since—was that one would get into the annoying situation found in supermarkets where items are marked at £9.99, £99.99 and so on. Someone who wants to write a cheque to the Labour Party but does not want to be asked to disclose it will make it out for £4,999.99. I believe that he or she will find that irritating. It is much simpler to take the nice round figure of £5,000 and provide that anything above that sum is declarable; similarly, with the limit of £200.
The noble Lord, Lord Bach, said that he could not promise anything but he would take the matter away and look at it again. I trust that he has done so. If I were a government Minister I would be saying at this point that these were minor consequential and drafting amendments. I suggest that your Lordships accept these amendments. I beg to move.
Lord Goodhart: My Lords, I rise to support the noble Lord, Lord Mackay of Ardbrecknish. The amendment seems to me to be a matter of common sense. It is ridiculous to have £4,999—what I might call the Marks & Spencer kind of figure. The amendment is entirely in line with the Neill committee's thinking. We did not actually consider this point, but had it been drawn to our attention I am sure that we would have said, "Yes, let us draw the line at £5,000. Anything more than £5,000 is reportable. If it is exactly £5,000 then it is not".
9 p.m.
Lord Hodgson of Astley Abbotts: My Lords, I rise to support my noble friend's amendment. I speak as someone who has been a volunteer political activist. Those people will struggle with the weight of the regulations that will hit them with the Bill.
We should be striving for two things: first, intelligibility and clarity; and, secondly, to use wherever possible everyday speech. People do not say "not less than", they say "more". The noble Lord, Lord Bassam, has consistently argued that he is trying to have a light touch wherever possible. This is a good place to have a light touch.
Lord Bach: My Lords, of all the serious matters that have concerned the House on the Bill, this is the one—I am lifting the veil slightly on the workings of government—that has caused us the most problems. I come to the Despatch Box some weeks after our earlier debate—I am glad of the interval that have had between-times—in order to tell your Lordships that, while we are not entirely persuaded by the arguments that have been so well made on this issue, both on the previous occasion and tonight, it appears that the noble Lord, Lord Mackay, on this issue at least, has some support from other Members of the House and perhaps even outside it. Therefore, as an act of unparalleled generosity, the Government are prepared to accept the amendments in the noble Lord's name wherever they appear in the Bill.
However, there is something which concerns us. Our researches show that there are 16 other occasions in the Bill where the noble Lord has not, as yet, moved an amendment to this effect. So far as concerns this issue, there are possibly two interpretations: first, that there is some subtle difference between the amendments here and the amendments that have not so far been tabled; or, secondly—which is much more unlikely—that the noble Lord and his researchers have missed them. In any event, I can tell him that not only will we accept these amendments but we shall, as government, table the other 16 or so before the House at Third Reading.
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But we shall only do so as part of a deal. That deal is that the noble Lord does not complain about further government amendments at Third Reading.
Lord McNally: My Lords, before the noble Lord sits down, there is something that has crept into this debate that worries me. Hitherto, we have had the noble Lord, Lord Neill's committee claimed in aid when a proposer agrees with it. We now seem to have another doctrine, which is that if the noble Lord's committee had thought of it we must agree with it. I hope that the Minister does not go along with that.
Lord Bach: My Lords, I entirely agree with the noble Lord.
Lord Mackay of Ardbrecknish: My Lords, I thought for one horrible moment that the Minister was going to say that he would accept the amendment "conditional on me finding the remaining 16" instances. I am grateful to him. I fully accept that there will be other occasions. It is perhaps me being rather a particular mathematician. I do not think that all the pennies that the political parties will get will make—as we Scots would say—a muckle that will make much difference. But it will make the issue easier. I am grateful to the noble Lord for taking on board what is a small but useful simplification.
On Question, amendment agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 98:
Page 39, line 23, leave out ("not less") and insert ("more").
On Question, amendment agreed to.
[Amendments Nos. 99 to 100 not moved.]
Clause 53 [Payments etc. which are (or are not) to be treated as donations by permissible donors]:
Lord Bach Lord Bach moved Amendment No. 101:
Page 40, line 9, leave out subsection (5) and insert—
("(5) Any exempt trust donation received by a registered party shall be regarded as a donation received by the party from a permissible donor.
(6) But any donation received by a registered party from a trustee of any property (in his capacity as such) which is not—

(a) an exempt trust donation, or

(b) a donation transmitted by the trustee to the party on behalf of beneficiaries under the trust who are—

(i) persons who at the time of its receipt by the party are permissible donors, or

(ii) the members of an unincorporated association which at that time is a permissible donor,

shall be regarded as a donation received by the party from a person who is not a permissible donor.").
On Question, amendment agreed to.
[Amendment No. 102 not moved.]
Clause 60 [Quarterly donation reports]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendments Nos. 103 to 107:
Page 44, line 6, leave out ("not less") and insert ("more").
Page 44, line 8, leave out ("not less") and insert ("more").
Page 44, line 15, leave out ("not less) and ("more").
Page 44, line 25, leave out ("not less") and insert ("more").
Page 44, line 33, leave out ("not less") and insert ("more").
On Question, amendments agreed to.
Clause 61 [Weekly donation reports during general election periods]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 108:
Page 45, line 44, leave out ("not less") and insert ("more").
On Question, amendment agreed to.
Lord Norton of Louth Lord Norton of Louth moved Amendment No. 108A:
Page 45, line 44, leave out ("£5,000") and insert ("£50,000").
The noble Lord said: In moving Amendment No. 108A, I shall speak to Amendment No. 110A standing in my name with this group of amendments. We debated Clause 61 in some detail in Committee. Various noble Lords raised problems with the clause as it was drafted. The noble Lord, Lord Bassam, indicated that he would reflect on the points that were made. But he said that the Government had been content up to that point and he thought they would remain content with what had been set out in the Neill report on the issue. Given the absence of government amendments to the clause, they are obviously content with the provisions.
I am not content with the provisions. My amendment seeks to make a bad clause less bad. If the Government are not prepared to accept the amendment or to bring forward some amendment of their own, then we should take the clause out of the Bill.
As I said in Committee, the clause has to be read in conjunction with the other provisions of the Bill. The Bill imposes a tremendous burden on political parties. Political parties are losing members as citizens increasingly channel their energies through interest groups. The parties have difficulty—a matter that has already been touched upon—in maintaining an effective infrastructure. In some constituencies parties exist in name only.
If we accept that vibrant political parties are essential to a healthy parliamentary democracy, then we must be wary of taking action that undermines them. The Bill places a great burden on them. I am not sure that it is a justifiable burden. I argued in Committee for a simpler system of regulation with transparency ensuring effective regulation. I would still like to see that, but I realise that I shall not make much headway in advancing that case.
Therefore, I focus on the specific provisions of the Bill. Given what I have said about the burdens on political parties, I believe that a clear case needs to be made for any provision that imposes an additional burden. In Committee, I suggested that we apply a "compelling case" test, not a balancing test of the kind that the noble and learned Lord, Lord Falconer, was so keen to demonstrate in our discussions on the Freedom of Information Bill. In other words, is there a compelling case for imposing the burden? If not, it
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should not be in the Bill. At the Committee stage the amendments attracted the support of the noble Lord, Lord McNally.
Is there a compelling case for this clause? The arguments advanced for it are twofold. One is in terms of its genesis; it was recommended by the Neill committee. However, that is not a compelling argument, as the noble Lord, Lord Bassam, conceded in Committee. The Minister said on 10th October when discussing Clause 12 that,
"we do not … have to buy into everything that is said in the report".—[Official Report, 10/10/00; co1.207.]
Therefore, inclusion in the report is not in itself sufficient.
The other argument is that of transparency. As the Minister noted in our discussions in Committee, I have stressed the need for transparency. I have certainly done that. But I do not think that this clause is essential for the purposes of transparency.
My reason for saying that is that transparency is achieved by the other provisions of the Bill. Under Clause 60 political parties will have to reveal each donation of £5,000 or more. I have no problem with that. I would have no problem with the amount being a much lower one. These donations will be revealed not in annual reports but in quarterly returns. I should have thought that that, in itself, imposes a considerable burden on the parties. As I read the Bill, the donations will be known.
The clause is principally concerned with the point at which the information is placed in the public domain. As the Minister emphasised at Committee stage, the argument for it is that electors have a right to know who is giving large sums of money to parties during the course of an election.
I understand the argument. However, I am not certain that it meets the compelling justification test. The information will come out in the quarterly returns. Under the Bill, money may only be accepted from permissible donors. Money accepted during an election campaign will come only from those listed under Clause 52. Do we really need to impose an additional and substantial burden on political parties during an election campaign just so we know which permissible donors have given money in each week during the campaign?
Therefore, I am not certain that there is a compelling case for retaining this clause. If it is thought that there is a case for electors knowing who the big donors are during an election, then my amendment to the clause is offered as a compromise. It requires the parties only to return, during each seven-day period, details of donations of £50,000 or more.
I would suggest that this has a dual benefit. First, and most importantly, it reduces the burden on parties. The number of donations of £50,000 or more presumably will be considerably fewer than those giving £5,000 or more. In terms of public interest, I argue that this captures those making the big donations. I doubt that the press or public has any great interest in who gives £5,000 or so to a party.
The second advantage is that it may go some way to addressing the potential mischief that I identified at Committee stage as being possible. During election campaigns parties have to record donations received in the accounting period even if they have not been accepted. It is always possible that someone who is out to cause trouble may arrange for money to be sent from some impermissible source—though not an obviously impermissible source—during a campaign, knowing that that donation will have to be included in the return and then for the person to tell the press that it was from a dubious source. As it was from an impermissible source the money would eventually have to be returned. The damage to the party will have been done and at no financial costs to the mischief-maker.
Raising the limit would not solve this problem but it would make it more difficult for mischief-makers. They would have to raise a considerable sum of money. I appreciate that this is hypothetical. Such mischief may be unlikely and, in any event, is not the principal reason for my amendment. Reducing the chance of mischief-making is an incidental benefit. My main argument relates to the burden that the clause imposes on political parties. I do not believe that a compelling case has been made for the provisions of this clause. I can see the argument for it. I do not think it is compelling in relation to the burden placed on parties. It imposes a considerable and, I believe, unnecessary burden on political parties.
The burden should either be reduced, hence the amendment, or, failing that, removed altogether. If the Government are not minded to accept the amendment, then I suggest that the clause be left out. I beg to move.
Baroness Gould of Potternewton: My Lords, perhaps I may ask the noble Lord some questions on points that puzzle me. First, why the figure of £50,000? Why not £25,000 or £40,000? Is there some criterion on which the figure of £50,000 is based? Secondly, if one has quarterly reports and there is a general election at the beginning of the quarter, it will be some considerable time after the election before those donations are made public. That seems to me to reduce the whole point of the new report and the question of transparency. I am a little worried about the timing. I should like to know how the noble Lord sees quarterly reports fitting into a general election period.
I am also a little concerned about the idea that there should be no reports at all during the period of a general election. I cannot believe that that would be right.
Perhaps I may make one other point about the figure of £50,000. In their evidence to the Neill committee, the Conservative Party and the Labour Party both agreed that the amount should be £5,000 and, as far as I am aware, have been disclosing that ever since. If we were then to move to £50,000, would it not look as if some kind of fiddle was going on?
9.15 p.m.
Lord Mackay of Ardbrecknish: My Lords, I have two amendments in this group. However, I should like to speak first to my noble friend's amendment. The real point here, if I may say so to the noble Baroness, Lady Gould, is not the point she has just made. The real point is that, with the lack of a register for the whole of the United Kingdom, as we exposed earlier on today, the system will not be easy to operate during the rather frantic weeks leading up to a general election.
We have discussed this issue before. I fully accept that the whole clause would knock out one of the Neill recommendations. I have to say to my noble friend that I am trying to be consistent. As I shall be calling later on this evening for Neill recommendations to be implemented, I do not think that I can support my noble friend in going against the recommendation. My noble friend can answer for himself. I suspect that £50,000 is something of a "guesstimate" of the level at which the number of donations may become manageable. To be honest, I have a good deal of sympathy regarding the complexity of the organisation that will be required. We shall have to look in rather more depth at how to get round that problem. It will certainly not be helped if there is not a register to which the political parties can refer.
My noble friend mentioned as one of the spin-offs of his amendment that we would get round the point of someone trying to stitch up a political party. I raised the issue in Committee but I did not receive a very satisfactory answer. The issue will not go away. During normal times—like just now if the Bill were enacted—the political parties would have to report quarterly and they would report on the donations they had received and accepted. Therefore, they would have checked them out, established that they had come from eligible donors and then reported them. However, during an election campaign they have to report the donations they have received. If they report at the end of the week the donations they receive on Monday, with a little luck and as long as the electoral returning officer is not snowed under, they may well establish whether they are from eligible donors. For donations received on Tuesday the position might be slightly more difficult. But, by Thursday, it would be almost impossible to have checked the position. Therefore, some donations from ineligible donors will be reported and made public.
Political parties will have no intention of accepting those donations once they check that. The great danger is that that will then be used by the opponents of that political party. I cannot see political parties resisting the temptation. I should like to think that they might, but I cannot see them doing it. Those facts will be used by the opponents of the political party to make a fuss in Monday's and Tuesday's newspapers. It would be nice if I could have confidence that all the political parties would agree that what they have had reported publicly to the commission were the donations received and that they might or might not be accepted. But I tend to live in the real world. We have watched what happens with Mrs Filkin, who receives

743
tit-for-tat reports from our colleagues down the corridor in a way that has hugely damaged the operations at the other end. I fear that that might be a consequence of what is proposed in the Bill.
I have tabled two amendments. I am not sure that they are effective amendments. There may well be defects in them. I am not necessarily bothered about my wording but I do think that there is a problem. I should like the Government to be able to convince me either that I am totally wrong or that there is a way to prevent the problem happening. It bothers me. Perhaps the reporting could be done by the political parties weekly, on the basis of "received and accepted the following" and then "the following received but not yet checked". Perhaps the commission could publish just the first and hold the second to itself and ensure that it was checked in the following week. That may be a way around the problem.
I accept that my amendments do not do that. The point occurred to me when I was listening to the debate. We should all try to find some way to prevent what has happened in the Commons with regard to Mrs Filkin and the tit-for-tat that goes on there.
Lord Rennard: My Lords, we have discussed at length the burdens facing political parties. However, I have to say that the burden of receiving cheques of between £5,000 and £50,000 is not one that personally I find all that arduous to bear. Indeed, I wish that I could face such a burden rather more frequently than I do within my party. I doubt whether there will be huge numbers of donations of that size made to any of the parties. For that reason, against the great mass of legislation with which we are faced, I do not think that this is a particularly difficult problem.
Since the Neill committee made the suggestion that donations of £5,000 or more should be transparent, it is even more important that such donations are readily declared during an election campaign, when the begging bowl may be brought out rather more frequently than at any other point. It is likely that someone seeking improperly to influence future public policy might be more inclined to give money to a party or to a politician at election time. That should be made known rapidly. Giving notice within one week is not an unreasonable period of time.
As regards the suggestion made about the use of the word "accepted" rather than "received", I believe that there is a possibility that an abuse could occur, but that such a possibility would be fairly remote. The greater danger would be that sizeable donations might be received and the party could say, "OK, if the definition is now 'accepted' rather than 'received', we shall simply put all these cheques in a pile and leave them alone until after the election. We can spend the money now because we will not have to pay the bills for a few weeks. No one will know where that money came from until after the election". For that reason, I believe that the word "received" is more appropriate on this occasion.
Lord Bassam of Brighton: My Lords, I believe that we have a common understanding of what Clause 61
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provides for in terms of weekly reporting during the period of a general election. However, in contrast to quarterly reports, this reporting requirement applies to donations received rather than accepted by a registered party. This reflects the fact that during the shorter time period, the recipient will not necessarily have sufficient time to determine whether a particular donation may or may not be accepted. Rather ironically, in view of some of the comments made by the noble Lord, Lord Norton of Louth, this provision is intended to ease the administrative burden on political parties in complying with the weekly reporting criteria.
I listened carefully to the argument as regards mischief making put forward by the noble Lord, Lord Mackay, when we debated this in Committee. I take the point that it might be possible for those hostile to a party to arrange for the transmission of a donation from an embarrassing source. They would know that the party in question would be required to disclose it, even though it had no intention of accepting the money. However, as the noble Lord, Lord Rennard, pointed out, that is only a remote possibility. I accept that perhaps someone seeking cheap publicity from such a stunt might try this, but if the money came from one of the other parties involved in the general election campaign, quite frankly, the stunt would be seen for what it was and would have more damaging consequences for the party attempting to pull it off as a scam. All donors will need to make clear their identity because that is a requirement of the Bill. If a party is unable to identify the source in order to return the donation, it simply needs to forward the money to the commission. In short, the principle of transparency probably makes the potential for a successful ruse of that kind less rather than more likely.
In any event, changing the term "received" to "accepted" would undermine the purpose of the provision; namely, to put information about donors quickly into the public domain during an election campaign. Parties will have up to 30 days to decide whether to accept a donation. If they were to wait until the end of the 30-day period, they could in effect delay disclosure until after the election has passed.
That brings me on neatly to Amendment No. 108A. The argument put forward by the Neill committee in support of a weekly reporting requirement during a general election campaign was that the need for up-to-date information is all the more pressing during such a campaign. I do not think that the point can be argued. The Government accept that there are certain constraints on what it is practicable for a party to deliver within such a timeframe. Clause 61 is not concerned with donations to accounting units or even donations which, in aggregate, exceed £5,000.
Having said that, I do not believe that Amendment No. 108A, which seeks to apply the weekly reporting requirement only to donations of more than £50,000, is at all in the spirit of the Neill committee recommendations. I am urged from time to time to be flexible about the Neill committee and not to stick absolutely to its recommendations at all times. While

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it is true to say that we have not stuck absolutely to them at all times, we have attempted wherever possible to use them as the main framework for the Bill.
Within the constraints of the best available information, there is no reason why political parties should not provide the same information as they would normally provide on a quarterly basis during this most critical period when the whole question of funding is surely at its most important.
The committee clearly did not intend that a donation of £49,000 should only come to light two months after a general election had taken place. As a Government we support that concern. I know that the noble Lord believes that transparency is the best way to regulate political parties. I do not accept that. The history of political parties in the United Kingdom during the past few years—not least that of the noble Lord's party—suggests that transparency of itself is not enough. That is why we have been obliged to regulate and legislate in this way.
Lord Norton of Louth: My Lords, I tend to be consistent. When noble Lords on all sides of the House agree with me, I think I am right; when noble Lords on all sides of the House disagree with me, I still think I am right.
The noble Baroness, Lady Gould, asked one or two questions. She asked why I took a figure of £50,000. I am inclined to put the question back and ask why £5,000? Or, indeed, why £4,999? There has to be an arbitrary figure. If the noble Baroness prefers £25,000, I should be quite happy to support that.
As to the second point about quarterly reports, if an election took place at the beginning of the period, yes, the report would come out 12 weeks after the event. I take that point. My argument, essentially, was that the report would come out eventually, and the knowledge that it would come out would have a deterrent effect. The important point is that the report will come out. I take the point about delay; I addressed that in my earlier comments.
Amendment No. 108A seeks to make what I regard as a bad Bill less bad. I start from the point that this is, as the Minister conceded, a complex and bureaucratic Bill. It creates regulation where I am not sure regulation to such an extent is now necessary. The Bill addresses a problem which the parties have addressed already; they have got their acts together. I am extremely sceptical about the Bill. That is where I was coming from with the amendment, which, as I said, seeks to make a bad Bill less bad.
However, having said that, I have an inkling that were I to press the amendment I would not get the overwhelming support of the House. In the light of that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 109 to 110A not moved.]
Schedule 6 [Details to be given in donation reports]:
Lord Bach Lord Bach moved Amendments Nos. 111 to 113:
Page 145, line 16, leave out ("and (12)") and insert (", (12) and (13)").
Page 145, line 27, leave out sub-paragraph (3) and insert—
("(3) Sub-paragraph (2) does not apply in the case of a donation in the form of a bequest, and in such a case the report must state that the donation was received in pursuance of a bequest and give—

(a) the full name of the person who made the bequest; and

(b) his address at the time of his death or, if he was not then registered in an electoral register (within the meaning of section 52) at that address, the last address at which he was so registered during the period of five years ending with the date of his death.").

Page 146, line 16, at end insert—

("(13) In the case of a donation to which section 53(5) applies, the report must state that the donation was received from a trustee, and—

(a) in the case of a donation falling within section (Interpretation: exempt trust donations)(2), give—

(i) the date on which the trust was created, and

(ii) the full name of the person who created the trust and of every other person by whom, or under whose will, property was transferred to the trust before 27th July 1999, and

(b) in the case of a donation falling within section (Interpretation: exempt trust donations)(3), give in respect of—

(i) the person who created the trust and,

(ii) every other person by whom, or under whose will, property has been transferred to the trust,

the information which is required by any of sub-paragraphs (2) to (10) to be given in respect of the donor of a recordable donation.

(14) In this Act or the Representation of the People Act 1983 any reference (however expressed) to information about the donor of a donation which is framed by reference to this paragraph is, in relation to such a donation as is mentioned in paragraph (a) or (b) of sub-paragraph (13), a reference to information about every person specified in paragraph (a) or (b) of that sub-paragraph.")
On Question, amendments agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 114:
Page 147, line 1, leave out ("not less") and insert ("more").
On Question, amendment agreed to.
Clause 65 [Weekly donation reports in connection with elections other than general elections]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 115:
Page 49, line 2, after ("Commission") insert ("and all registered parties").
The noble Lord said: My Lords, in moving Amendment No. 115, I shall speak also to Amendment No. 116.
The amendment refers to Clause 65, which gives the Secretary of State power to extend the weekly donation reports in connection with elections other than general elections. The current wording states:
"The Secretary of State may, after consulting the Commission, by order make provision".
I am suggesting that the Secretary of State should also consult all registered political parties.
I should be happy if the Minister will accept that, but I have gone a step further with Amendment No. 116 which seeks to tie the Secretary of State to,
"having regard to the Commission's views".
I am really saying that if the commission does not think the weekly donation reports should be extended, the Secretary of State should not extend them.
They are two simple amendments. I shall be interested to hear the Minister's reply. I should be grateful if the Government accepted the amendments, especially Amendment No. 115. I beg to move.
9.30 p.m.
Lord Bach: My Lords, we can accept the first but not the second amendment. I do not think that the noble Lord will be surprised by that. Amendment No. 115 would require the Secretary of State also to consult the registered political parties. It seems reasonable to provide that the political parties should have some input into the extension of these provisions to other elections, particularly as any consultation is likely to be held in the light of their experiences in complying with these provisions during the next general election.
Amendment No. 116 requires the Secretary of State, having consulted the commission, to have regard to its views. The amendment is unnecessary as that is implicit in the requirement to consult the commission. If any such views are simply put to one side and ignored, there is always the remedy of judicial review. So we are happy to accept Amendment No. 115; I ask the noble Lord not to move Amendment No. 116.
Lord Wedderburn of Charlton: My Lords, before my noble friend sits down, does he understand the amendment to mean "all relevant registered parties"? There might be a registered party that has nothing to do with a particular election.
Lord Mackay of Ardbrecknish: My Lords, the noble Lord makes an interesting point. I can see, for example, that in regard to a Welsh election the Secretary of State might not want to consult the Scottish National Party. If, on consideration, the Government think the point reasonable, they can come forward with a tidying-up amendment at Third Reading.
I am grateful to the noble Lord for accepting Amendment No. 115. I think it is sensible. I was not too surprised, as he had perhaps worked out, about Amendment No. 116. I have been in his position, with members of his party asking for similar words to be included, and my answer bore a striking resemblance to what I have just heard.
Lord Bach: My Lords, perhaps I may take this opportunity to tell my noble friend Lord Wedderburn that "all registered parties" means all of them—in other words, all 130 or so.
Lord Wedderburn of Charlton: My Lords, I am grateful to my noble friend.
On Question, amendment agreed to.
[Amendment No. 116 not moved.]
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 117:
After Clause 65, insert the following new clause—
("Deliberate evasion of reporting requirements

DELIBERATE EVASION OF REPORTING REQUIREMENTS BY MAKING OF MULTIPLE SMALL DONATIONS
. Where any person, knowingly and with the intent of evading the reporting requirements in this Part, makes multiple donations of not less than £200 to a registered party whose aggregate value is not less than £5,000 in any one year, that person is guilty of an offence.").
The noble Lord said: My Lords, in moving this amendment, I shall speak also to the other amendments in the group. The amendments seek to further the debate in Committee on 12th October about the clause imposing an obligation on donors. On that occasion, the noble Lord, Lord Bassam, said that a provision for sanctions against donors was essential. I shall not read out what the Neill committee says; all noble Lords present know that the committee's recommendations were quite the opposite. The committee said that there should be no comeback on the donor, and that it should be entirely the responsibility of political parties.
I was rather amused at the weekend to see that some of the Government's spin doctors were saying that the House of Lords was being naughty on this Bill and that we were going against the recommendations of the Neill committee. I do not think that the House of Lords has yet done that. The Government are inviting your Lordships to go against the committee's recommendations by including this clause.
We shall no doubt hear from the noble Lord, Lord Goodhart, shortly. He, too, had concerns but was unable to support my amendment. The Government are concerned that there is a danger that a donor might split up his donations and give £200 to every constituency party. That would be considerably more than ought properly to have been reported. The noble Lord, Lord Goodhart, suggested that it could be made an offence to split up donations in that way in order to evade the reporting restrictions. My amendment has been drafted with that in mind. It would change the criteria to include deliberate, knowing, intentional evasion, rather than an accidental failure to report. It is possible that such an offence might be difficult to prove in practice. However, if someone were giving £200 to every constituency party, it would not be terribly difficult to prove. Indeed, it would not be impossible.
At present on the face of the Bill, people who give donations to a political party could be viewed as committing a criminal act just because they either forgot to report or did not realise that this clause was in the Bill. I do not expect this clause to receive widespread publicity. Therefore, it seems to me that many people may find themselves in this position. Indeed, their monthly standing order may bring them

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into conflict with the Bill and turn them into criminals. That is the situation that the amendment of my noble friend Lord Norton seeks to address.
I shall not continue with this point, but I feel most strongly about it as far as concerns donors. I believe that we all want people to be active in the political process; we want them to give donations. We are not talking about big donations here, nor, indeed, about small donations; we are talking about modest donations. I suggest that we do not want to criminalise donors. Neill was also very clear that he did not want to criminalise them. Therefore, the Government should listen to their own spin-doctors and abide by Neill. They should not tempt your Lordships' House by refusing these amendments or by saying that they will come forward with others on Third Reading. I am not vain enough to think that every amendment that I draft is absolutely perfect. But we should not be tempted into going against the Neill committee and receiving the ire of the Government's spin-doctors in next weekend's press reports. I beg to move.
Lord Goodhart: My Lords, I support the noble Lord, Lord Mackay of Ardbrecknish. In paragraph 4.63 the Neill report says:
"It should be made a criminal offence to attempt to evade or to render nugatory the statutory reporting requirements relating to disclosable donations. An obvious ruse for the purpose of evading the statute would be for a wealthy individual to give (say) £24,000 to a political party by procuring six friends or relatives to give £4,000 each (this sum in each case being furnished by the wealthy individual)".
Of course, we could now raise that figure to £30,000 because it should be £5,000 each, according to the Bill. In such a situation where this is done deliberately, it is perfectly clear that there should be a burden on the donor. However, where there is an accidental failure to report, there should be no criminal liability on the part of the donor. That would be a fault of the administration of the party receiving the donation. Where there is a deliberate and conscious attempt to evade the reporting requirements, it is quite right that that should be a criminal offence on the part of the donor.
Lord Norton of Louth: My Lords, I rise to speak to Amendment No. 119A, which has been included in this group. I suspect that the Minister will have no difficulty in recognising why I tabled this amendment. I trust that he will find it helpful. It is also complementary to the amendment moved by my noble friend. As my noble friend explained, this clause imposes a requirement on those individuals who give £5,000 or more each year in small donations to make a return to the commission.
In Committee, I raised the question of how individuals were to be made aware of this requirement. It is one thing to impose a statutory requirement on registered political parties to make returns, but it is entirely another matter to impose such requirements on ordinary citizens. How are we to ensure that
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citizens are aware of the provisions in this clause? In Committee, the noble Lord, Lord Bassam, acknowledged that this was, as he put it,
"a reasonable and intelligent point".
He went on to say:
"Clearly we shall have to give considerable publicity to the effects of the legislation. We might do so through the local authority. We might hope that that approach would be supported by the local political parties. It would be open to the electoral commission to advertise its existence—I am sure that it will want to do so—and to promote some of the factors in the scheme which require compliance by the parties and, on this occasion, by a donor".—[Official Report, 12/10/00; col. 614.]
My amendment seeks to ensure that people who make donations to political parties are aware of the provisions of this clause. Rather than leaving it to some later action which may not materialise, I think it is important to make some statutory provision for publicity. I believe that my amendment has two benefits. The first is that it goes some way to ensuring that citizens are informed of their obligations under this measure and that that information is in a standard and printed form. It reduces the chances of citizens ending up in court because they gave many small donations totalling £5,000 or more to local parties and failed to inform the commission.
The second benefit is that it ensures greater awareness of the provisions of the clause without imposing a considerable burden on the political parties. It would be intolerable if the parties themselves had to shoulder the responsibility for preparing and disseminating information to donors about their legal responsibilities. As I have mentioned already, parties are under tremendous pressure and there is no case for adding to it. Under my amendment the forms for distribution to donors would be made available to the political parties free of charge.
I have considerable doubts about the clause. I am not sure that it is enforceable and I do not believe in law that is unenforceable. That brings the law in to disrepute. If the provision is to appear on the face of the Bill, we have to take steps to ensure that it is as far as possible enforceable. My amendment is a modest, but I believe important, one that goes some way to alleviating what I see as a major problem of the clause.
Lord Hodgson of Astley Abbotts: My Lords, I support my noble friend's amendment solely on the condition that he replaces the words "not less" with "more".
Lord Wedderburn of Charlton: My Lords, I make two short points. The £200 comes from the Companies Act schedule first instituted in 1967. I remember discussing with those expert in practice whether the phrase in the schedule to that Act referred to the money given exceeding £200 in aggregate. I was told that those who practised in that area had never known of such a thing. Whether that means it is a good idea to leave this loophole open, I do not pretend to know. I say to the Government that their Amendment No.

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237 has a cut-off point for rather parallel purposes. No doubt they will deal with that point at the appropriate time.
Lord Bassam of Brighton: My Lords, Amendment No. 117 would insert a new clause by way of replacement to Clause 66 that would make it an offence to make multiple donations of £200 or more which in aggregate amounted to £5,000 or more with the clear intention of evading the reporting requirements set out in Part IV. I do not regard this new clause as an improvement on Clause 66. They are both directed at much the same end; that is, evasion of the reporting requirements by making multiple small donations. But the advantage of the existing provisions is that a person who chooses to make a series of small donations can do so legitimately provided he or she makes the necessary return to the electoral commission. Under the noble Lord's alternative clause, multiple small donations will not be disclosed whatever the circumstances, as there will be absolutely no requirement for them to be disclosed. I do not think that the wording helps. I cannot see how they would ever be disclosed. That is a problem. If there is to be any enforcement here, there needs to be some form of disclosure. Nothing that the noble Lord proposes would oblige that disclosure.
The new clause also appears to misunderstand the provisions of Part IV. Under this part the duty to report and disclose all donations rests with the recipient of donations; namely, the registered parties. Except in the case of Clause 66, no reporting requirement is placed on a donor. That is the only occasion where that occurs. Without Clause 66, a donor cannot be said to be evading the reporting requirements as there are no such requirements on the donor for him to evade.
As I think a number of noble Lords have identified, the potential problem lies with multiple donations of less than £200. As parties are not required to treat such payments as donations at all, donations of this order offer scope for abuse. Clause 66 as it presently stands addresses that problem. Amendment No. 117, by contrast, addresses a problem that in our view does not exist.
I turn to Amendments No. 120 to 122. These amendments would alter the nature of the offences in subsection (5) of Clause 66. If the amendments were made, the prosecution would need to show that a person knowingly delivered a report which did not comply with the requirements of Clause 66(2), knowingly failed to deliver such a report on time, or had intentionally failed to include the requisite declaration. The noble Lord is concerned that such donors may not be fully aware of the requirements of the Bill and may unwittingly fall foul of them. I can understand that. I hope that this will not be the case and that the electoral commission and the political parties which accept such contributions will do what is necessary to ensure that multiple donors are aware of the relevant rules.
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I do not agree that failure to be aware of these requirements should constitute a defence. It would be a very convenient one and would effectively wholly undermine the provision. I remind the House that in order to engage the requirements of this clause a donor would need to make at least 50 payments each of less than £200 but which in aggregate would exceed £5,000. That is not a normal pattern of giving in any form. It seems reasonable to expect that a donor who goes down that road should be aware of the relevant provision of the Bill.
On the point raised on Amendment No. 119A, I am sure the commission will prepare the relevant form and provide appropriate advice on the provisions of Clause 66. I do not think that we need to write them on the face of the Bill. Clause 9 already provides adequate powers to provide advice to parties and donors. While I am always grateful to the noble Lord, Lord Norton of Louth, for his help and advice, on this occasion I do not think that we require it.
9.45 p.m.
Lord Norton of Louth: My Lords, before the noble Lord sits down, will he confirm that what is made available to the political parties would be free of charge? In other words, the cost would be met by the commission.
Lord Bassam of Brighton: My Lords, the noble Lord will appreciate that I cannot speak for the commission. I would hope that if there were any cost it would be minimal, but clearly this is one of those areas where we need to ensure that the commission is as helpful as possible.
Lord Mackay of Ardbrecknish: My Lords, I cannot pretend that I am other than somewhat disappointed with the response. The noble Lord made no attempt to explain to your Lordships' House why the Government have gone against the recommendation of the Neill committee and placed these obligations on donors. We have had a good run today, largely on the basis of trying to make the Bill as easy to operate as possible, and easy for donors to operate, because we have all agreed that political parties need donors.
Lord Bassam of Brighton: My Lords, I am grateful to the noble Lord for giving way. I apologise if I did not address that problem as thoroughly as I should have done. On reflection, I take the noble Lord's point. We are trying to make it easier for the political parties to operate in this arena. That is the reason why in this instance we have placed the obligation on the donor. It is the only occasion in the Bill where we have done that. Because of the size of the donation and the fact that the donor knows that he is making it we believe that the obligation should rest with him.
Lord Mackay of Ardbrecknish: My Lords, I understand what the Minister says. I am not sure that it justifies going against the recommendation of the Neil committee. The provision says to donors, "Be careful. If you are a donor to a political party, you may

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be breaking the law". I am not sure that that is a nice message we want to get across. We all want to encourage people to give donations to political parties. It is not much of an excuse that the donor is responsible only with regard to this type of donation. Unless the donor has been present in your Lordships' House, or reads Hansard— I am not sure that too many donors will do that—I suspect that most people who are likely to donate to political parties will not be aware of their obligations.
I am unhappy that the Minister has been so negative. I understand that it is not easy. My amendment may not be well worded, although the noble Lord, Lord Goodhart, who is a greater expert on these matters than I am, did not seem to be too concerned about the wording. However, in the spirit of the recent co-operation from Ministers, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 66 [Control of donations to individuals and members associations]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 118:
Page 49, line 21, leave out ("not less") and insert ("more").
On Question, amendment agreed to.
Lord Bassam of Brighton Lord Bassam of Brighton moved Amendment No. 119:
Page 49, line 29, leave out ("(4) to (10)").
On Question, amendment agreed to.
[Amendments Nos. 119A to 123 not moved.]
Clause 67 [Register of recordable donations]:
Lord Bach Lord Bach moved Amendment No. 124:
Page 50, line 15, after ("2,") insert ("3,").
On Question, amendment agreed to.
[Amendment No. 125 not moved.]
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 126:
After Clause 67, insert the following new clause—

TAX RELIEF ON POLITICAL DONATIONS
(" . After section 379 of the Income and Corporation Taxes Act 1988 (interpretation of sections 369 to 378) there shall be inserted—
"Tax relief on political donations.
379AA.—(1) Tax relief shall be available to an individual ("the donor") in accordance with this section on qualifying political donations made by him of up to £500 in any year of assessment.
(2) A donation is a qualifying political donation for the purposes of this section if it is made to a registered political party (other than a minor party) and—

(a) it takes the form of the payment of a sum of money,

(b) it is not subject to a condition as to repayment,

(c) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the political party, its members or accounting units, otherwise than by way of gift, from the donor or a person connected with him, and

(d) the donor is a registered elector.

(3) For the purposes of this section a political party is an eligible political party if—

(a) it is a registered party within the meaning of section 22 of this Act other than a minor party, and

(b) at the last general election preceding the donation in question—

(i) two members of that party were elected to the House of Commons, or

(ii) one member of that party was elected to the House of Commons and not less than 150,000 votes were given to candidates who were members of that party.

(4) If an individual makes a qualifying donation he shall be entitled, on making the payment, to deduct and retain out of it a sum equal to basic rate tax thereon.
(5) Where a sum is deducted under subsection (4) above, the sum deducted shall be treated as income tax paid by the person to whom the payment is made.
(6) Any person by whom a qualifying donation is received shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (5) above is treated as income tax paid by him; and any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the qualifying political donation to which it relates.
(7) The following provisions of the Taxes Management Act 1970, namely—

(a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act,

(b) section 30 (tax repaid in error, etc) apart from subsection (1B),

(c) section 86 (interest), and

(d) section 95 (incorrect return or accounts),

shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.
(8) In the application of section 86 of the Taxes Management Act 1970 by virtue of subsection (7) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment ("the relevant year of assessment") under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date—

(a) is 1st January in the relevant year of assessment in a case where the person falling within subsection (5) above has made a relevant interim claim; and

(b) in any other case is the later of the following dates, that is to say—

(i) 1st January in the relevant year of assessment; or

(ii) the date of the making of the payment by the Board which gives rise to the assessment.

(9) The Board may by regulations make provision—

(a) for the purposes of any provision of this section which relates to any matter or thing to be specified by or done in accordance with regulations;

(b) with respect to the furnishing of information by donors or recipients, including, in the case of recipients, the inspection of books, documents and other records on behalf of the Board; and

(c) generally for giving effect to this section.

(10) In this section—

"financial year" in relation to any person, means a financial year of that person for the purposes of the relevant regulations;

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"interim claim" means an interim claim within the meaning of the relevant regulations;

"relevant interim claim" means, in relation to an assessment made for a period coterminous with, or falling wholly within, a person's financial year, an interim claim made for a period falling wholly or partly within that financial year; and

"the relevant regulations" means regulations made under subsection (9) above.

(11) Section 839 of this Act shall apply for the purposes of this section to determine whether one person is connected with another."").
The noble Lord said: My Lords, I shall not resist the temptation of saying that this is another amendment that the spin doctors should have been told about before they did the spinning. Once again, the Government are asking us to insert a provision that is contrary to the Neill report. Last weekend the spinner said, more or less, that it was a disgrace for the House of Lords to try to vary what the Neill committee said, so one must suppose that he also thinks that it is a disgrace for the Government to try to do so.
The Government have rejected the Neill committee's proposal that tax relief should be provided on small donations—those under £500 in any year. That is part and parcel of the problem of trying to encourage donors to political parties, which we considered on the previous amendment. The Neill committee's proposals are supported by the Liberal Democrats and even by some Labour Back Benchers. The Government should think carefully before rejecting them. I remind the Minister of the powerful speeches of the noble Lord, Lord Shore—he is probably glad that I have not brought the noble Lord in again to argue this point—and the noble Lord, Lord Goodhart. In the other place, my right honourable friend John MacGregor also spoke powerfully on the issue. Three members of the Neill committee have backed the recommendations in Parliament. The Government cannot dismiss those speeches out of hand.
Further, the noble Lord, Lord Neill of Bladen, wrote to the Home Secretary in October in response to the White Paper, saying:
"During the committee's investigation into the funding of political parties we found widespread support for the view that political parties should be funded by a large number of small donations rather than by a small number of large donations. My colleagues and I remain of this view. We are disappointed that you have decided against our proposals in relation to a tax relief system".
The Government have criticised the amendment on the ground that it provides for the state funding of political parties. No doubt the Minister will repeat that criticism in a minute. But that would not be its effect. The Neill committee did not regard it as state funding. No one argues that charities that benefit from tax relief on donations are funded by the state. The provisions envisaged by the Neill committee would prevent the need for state aid of the kind proposed by the Liberal Democrats yesterday. The report argued not only that tax relief on small donations was not state funding, but, in paragraph 8.7, that it would be necessary, given the envisaged reduction in large donations, to prevent parties coming cap in hand to the Government to ask
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for state funding. The Neill committee clearly recognised that the new restrictions on donations would be likely to reduce the income of political parties, perhaps significantly. It proposed this measure in part to redress the imbalance that would be created. It is short-sighted and wrong of the Government to reject that approach.
My right honourable friend John MacGregor encapsulated the committee's views in the other place when he made the point that, because of the new restriction on donations and the reporting and disclosure requirements, large donations to political parties would be less forthcoming. He said that, because of this, the Neill committee saw tax relief on small donations as a means of ensuring that sufficient funds to serve our democratic purposes were attracted to political parties. The independent Member in another place—it is very unusual for there to be an independent Member in the other place—Mr Martin Bell, said that this new clause would encourage the "little people" to get involved in politics, which would help our democracy and make it much healthier. I do not know whether I would quite use the words that Mr Martin Bell used. However, I believe that we all know what he means, and I think he is right.
I hope that the Government will reconsider their decision to reject the Neill committee in this regard and will accept my amendment. I fully accept that an amendment of this length may well contain some technical defects. If that is so, they can be resolved at Third Reading. In a spirit of consensus, I strongly commend this amendment to the House. I beg to move.
Lord Goodhart: My Lords, I rise to support with some enthusiasm the amendment moved by the noble Lord, Lord MacKay of Ardbrecknish. The Neill committee regarded this as a matter of some importance. It does not involve a large amount of money. The Government estimate that it will cost about £4 million. As I said at Committee stage, even if one treats it as government spending, that will amount to £1 out of every £100,000 of government spending. It is, therefore, a negligible amount. In view of the enormous increases in public spending recently announced by the Government, it is absurd to use what I might call the schools and hospitals argument.
I turn briefly to the merits of the amendment. The Neill committee saw it as a considerable evil and very undesirable for parties to depend, to the extent that I believe both the Conservative and Labour parties now do, on donations of six or seven figures from very wealthy individuals—an opinion that is widely shared by the public. However, parties do need political funds. If they cannot get them from rich, individual donors—and, of course, one gets them much less nowadays from corporations than in the past—they will have to look to a large extent at numbers. We believe that it is important, by a carrot of this kind, to encourage more contributions from ordinary members and to make up whatever shortfall there may be from the falling off of large donations, which is one of the probable results of the new transparency regime.

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This sort of carrot provides a real incentive to parties to take what we believe is the right route in the shift from large individual funders to a much greater number of smaller donors.
We also believe that there is a wider advantage: namely, that it sends a message to the public that giving to political parties is not a duty, but something to be praised as a genuine contribution to the democratic system of this country. We note that in Canada there is a system to encourage small donors which is rather more generous than the proposal tabled by this amendment. The details are set out in one of the appendices at the back of this book. It is a system that works very well.
We believe that, in the same way as tax relief on charitable donations recognises that giving to charities is part of good citizenship, the tax system should also recognise that giving to political parties is good citizenship. It is not exactly the same as for charities. One could say that in a sense it is a duty for people to make charitable giving. It is obviously not a duty, and never would be, to give to a political party. For those who feel inclined to do so, it should be signalled that that is something which helps the democratic process. That, together with the practical reasons in this case, is why I believe that the amendment should be strongly supported. I have great pleasure in following the speech of the noble Lord, Lord Mackay.
10 p.m.
Baroness Gould of Potternewton: My Lords, I rise to oppose the amendment, as I did in committee. Perhaps I may pray in aid the point made earlier, that Neill is not a compelling reason for accepting any clause or amendment within the Bill.
As the noble Lord, Lord Goodhart, said, the Neill committee discussed this proposal at great length and came to the conclusion that the arguments against it were not strong. A problem I found within the report is that the committee does not identify why the arguments are not strong; it just states that they are not. That is the conclusion, which I do not find satisfactory.
I oppose the amendment for a number of reasons. That does not mean that I am opposed to the idea of small donations as opposed to the large ones we have now. However, I do not think that that is genuinely the answer. There are serious defects in the proposal, not in the wording but in principle.
The amendment provides two specific areas of discrimination. The unfairness of the system is that it will cost a non-taxpayer more to provide the same benefit to the party than it would a taxpayer. That is not terribly fair to the "little people" to whom the noble Lord, Lord Mackay referred. That position was highlighted to the Neill committee by Professor Vernon Bogdanor when he said:
"It would be thought in this country to be inequitable that people who do not pay tax should not get the benefit that taxpayers would".
I do not think that can be accepted. It is a form of social exclusion.
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The noble Lord, Lord Goodhart, also said in committee—perhaps he will correct me if I am wrong—that few donors, except perhaps students, would be people who are not themselves taxpayers, at least at the basic rate. I cannot quite accept that. My understanding is that of the 47 million adults in Britain, only 26 million pay tax. It might therefore be interpreted that this clause and these proposals encourage parties to court taxpayers at the expense of other members of the community, such as perhaps the poorer pensioners, students and non-working partners. Many women are involved in the nonworking partner element, and I certainly hope political parties will be courting them.
A further factor of importance in respect of taxpayers is that only some 8 million—that is, 30 per cent—file their own tax returns. That means that tax returns are filed for employees by their employers. In some cases, they would not want to disclose that they are giving a donation to a political party and would therefore not choose that route.
Lord Goodhart: My Lords, I am grateful to the noble Baroness for giving way. Perhaps I may say that the system which is proposed by the Neill committee would not involve any disclosure to an employer of the fact that an employee was making a payment. The employee is not getting the money back. A taxpayer simply signs a piece of paper which goes to the political party along with the donation and the party which receives the money. It would never go through the PAYE system and it would never need to be mentioned to the employer.
Baroness Gould of Potternewton: My Lords, I am very grateful to the noble Lord for that explanation because that is certainly not the interpretation that the Labour Party puts on the clause. I shall make sure that it is aware of that particular interpretation and then we can perhaps discuss the matter further.
The second area of discrimination is the restriction on small parties. I raised that matter in Committee, but since then I have given more thought to the question. While I believe that the provision discriminates against small parties, there is a particular problem in the sense that if we included small parties that might give support to extremist parties. Therefore, we have a dilemma and the only way out of it is not to follow this route at all. I would like to see parties such as the Green Party benefit from this measure, but I would not like to see the National Front benefit. We have quite serious problems there.
The other point concerns state funding. I accept that the Neill committee may not have identified tax relief for state funding, but the House of Commons Select Committee report of 1994 identified tax incentives as a form of public subsidy, that is to say, state funding. That view was fully supported by the Conservative Party in its evidence to the Select Committee. I would like to know what has changed its mind. If the party thought it was state funding then, why does the Conservative Party not believe that that is the case now? I am sure that we shall be told, as we have been

759
in the past, that we have Short money, Cranborne money, free postage and so forth, at elections. But all those fundings are specific; we are now suggesting something that is general state funding with no specific strings attached. I accept that sometimes the strings are difficult to identify. General state funding has been consistently opposed by the party opposite.
The aim of the Neill committee has been to clean up politics and to provide absolute transparency and clarity. I believe that the additional subsidy to political parties from the state would not assist that process. If there is no case for direct grants through state aid, I do not believe that there is a case for tax relief.
Perhaps I may make a couple of small points. It has been suggested that if we follow this particular road it will help increase the membership of political parties. It is a mistaken motivation to gain membership through an essentially economic activity rather than through political motivation.
I would like advice on the next point because I may be misinterpreting it. The qualifying donation at the moment is £500. What safeguards are there in this clause, or in Neill, that at some future point it may not be increased to £5,000 or £50,000 so that big donations receive tax relief? I cannot see any assurance anywhere that that does not happen. There are too many flaws in the amendment. I do not believe that the clause as it stands is transparent enough in the way in which the procedure would work.
Lord Hodgson of Astley Abbotts: My Lords, before the noble Baroness sits down, perhaps she can enlighten me on one matter. For example, if a charity such as the Royal National Lifeboat Institution recovers tax, does she regard that as being state subsidy or funding for the RNLI?
Baroness Gould of Potternewton: My Lords, it is and I have no objection to it.
Lord Wedderburn of Charlton: My Lords, I agree entirely with what my noble friend has just said. Perhaps I may put a question to the noble Lord, Lord Mackay of Ardbrecknish, or to anyone else who would like to take it on. If this clause were passed, whatever the actual machinery and the recipient of the advantage, there would be tax advantages for gifts to charities and gifts to registered political parties. Would not that be bound to open up the position of think tanks?
Some think tanks are charities and some are not. It is a sensitive area, as I know well from being indirectly involved in an application for charitable status by a body that thought it was like a think tank. Does the noble Lord, Lord Mackay, agree that if charities and registered parties receive tax advantages, the position of think tanks and tax relief on donations to those that are not yet charities—of which there are many—would also logically be opened up?
Lord Bassam of Brighton: My Lords, I shall not say a great deal. My speech has already been made by my noble friend Lady Gould, much more effectively than I could have made it.
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The Government and the Official Opposition are agreed, have agreed and were certainly agreed at the time of the Neill committee, that any general system of state aid to political parties is undesirable. The noble Lord, Lord Mackay, actually repeated that yesterday when he said,
"I am opposed to the direct funding of political parties".—[Official Report, 20/11/00; col. 602.]
No doubt when the noble Lord responds to this point he will say that we are talking about "direct" funding of political parties. But I see no difference in tax relief on donations and direct funding of political parties. Of course it is direct. That is the intention of the tax relief. If I think back to the Budgets under the last Chancellor, Kenneth Clarke, and perhaps even his predecessor, it was often the case that when Conservative Chancellors wanted to make the point that they believed in charitable giving, they loudly trumpeted the fact that it was a form of state aid to charities.
If somebody can advise me that that was not the case when they are arguing the point, I should like to hear from them. My view is that tax relief amounts to a direct subsidy to political parties in this instance if this amendment is carried.
It was argued that the sums of money are small. They may well seem so. But, as my noble friend Lady Gould said, once set upon this rocky road, what is to stop governments in the future from increasing the sum of money exponentially, as it were, so that it becomes increasingly large and the benefit therefore increasingly large in terms of direct government subsidy in the form of tax relief?
We have heard the arguments about Short money, Cranborne money, free mail shots, policy development grants, start-up funding and so forth being direct state aid. The point in that regard, which was well made, is that that money relates to specific purposes; this money does not. It is a direct form of tax relief into a political party and it needs to be understood as such.
At the weekend it was revealed with some concern in some quarters of the press that when it came to matters such as Short money, the Conservative Party itself was not entirely sure whether it was using that money properly. David Prior, the chief executive of the Conservative Party, acknowledged that the money had been used for the war room at Central Office. If we cannot trust the Conservatives—if the report is right—to understand the proper use of Short money, how can we expect them to make proper use of such a direct subsidy as set out in the amendment? The Conservative Party's friends on this issue, the Liberal Democrats, need to think carefully before tying themselves so closely to this amendment which they gleefully welcomed.
Lord Hodgson of Astley Abbotts: My Lords, the Minister mentioned Conservative Party funding. He quoted from the comments of David Prior. What he did not say was that the party took advice from PricewaterhouseCoopers, who said that the purpose

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for which the money was being used was not in conflict with the Short money provisions. That was the basis on which the expenditure was undertaken.
Lord Bassam of Brighton: My Lords, as a matter of record that is undoubtedly the case. But what appears to have happened is that a change of definition in the Fees Office was not communicated to other political parties. The chairman of the Public Administration Committee said that the Fees Office appeared to have "unilaterally redefined the rules". I know that there is considerable anxiety over that matter. No doubt it will be a matter for disputation.
Whatever the merits of the proposal, few members of the public will identify the needs of political parties as a priority in terms of public expenditure. The sum may be small but the principle is most important. I hesitate to make the point that the political party comprising noble Lords opposite is concerned about taxation and is offering us tax cuts but here it is after a slice of public expenditure for its own political purposes. That is a strange order of priorities and no doubt the public will view it similarly. I suggest to noble Lords opposite that they ought to withdraw their amendment.
10.15 p.m.
Lord Norton of Louth: My Lords, before the Minister sits down, perhaps I may point to a matter which he did not address regarding state funding. It is not a case of the state giving out money willy-nilly; it is related to electors. Short money is related to a formula based on the number of votes a party gained at the previous election and, in the context of tax relief, it is triggered by individuals. It does not come from the state as such and there is a crucial distinction to be drawn in any discussion. The Minister's comments did not address that point.
Lord Bassam of Brighton: My Lords, my comments may not have addressed that point but the principle is the important point. Public perception is important—indeed, much of our debate on the issue has been about public perceptions. On several occasions I have been reminded that public perceptions of what happens in the process of politics are the most important. The noble Lord probably understands that better than most.
Lord Mackay of Ardbrecknish: My Lords, the fact that the Minister was on weak ground was clearly illustrated by the fact that for the first time today he indulged in some political bashing of the Conservative Party. That told me that he did not want to address the argument. He had better consult his right honourable friend the Chancellor on when a tax credit is expenditure and when it is not. The family tax credit has been shifted from the expenditure column to the negative income column in order to be able to say that it is not a state subsidy or an expenditure of state money. Perhaps he should examine that before advancing his argument further. However, I suggest
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that when the Minister travels home tonight in his car he looks at pages 94 to 99 of the Neill report. There he will find many powerful arguments which torpedo many of his arguments.
I presume that in logic the Government will deal with the fact that United Kingdom donations to political parties are already exempt from inheritance tax. If the Government believe that it is so terrible, where is the amendment to stop it? It is nowhere.
As the noble Baroness, Lady Gould, is seldom confused, those briefing her must have been confused about charitable giving via a payroll, about which the employer would know, and charitable giving—in which I am sure many noble Lords participate—when one fills in a form which goes to the charity together with one's cheque, which then go to the Inland Revenue and about which the employer would know nothing. I am not an expert but I believe that the Chancellor is making changes which will make the process a good deal simpler.
It has been argued that it is unfair on non-taxpayers because if a charity receives £100 from a non-taxpayer it will receive only £100 but if the money comes from a taxpayer it will receive, say, £125 after adding the tax relief. If that argument is good for political parties it must be good also for charities. Is it not unfair that non-taxpayers must give more from their own pockets than taxpayers in order to give the charity of their choice the same amount of money? The noble Baroness attacked the whole system of charitable donations and the tax regime, and I do not believe that there are many who agree with her. The noble Baroness is the first person I have ever heard advance the argument that it is a little unfair to non-taxpayers that charities can get some tax back.
Baroness Gould of Potternewton: My Lords, with great respect I quoted from the evidence given to the Neill committee by Vernon Bogdanor, who made exactly that point. If the noble Lord has read the Neill report it is not the first time that he will have heard the argument.
Lord Mackay of Ardbrecknish: My Lords, Vernon Bogdanor may be a very great man but he is not the last authority on every single issue on earth, and I beg to disagree with him on this matter. The one or two charities in which I am involved are extremely grateful to the people who give donations via deeds of covenant—they are no longer required—or forms which allow them to claim back tax. I suspect that we shall not see a proposal to abolish those tax advantages for charities in the Labour Party manifesto. I shall not pursue the point.
I also point out to the noble Baroness that subsection (3) of the new clause provides:

"(i) two members of that party were elected to the House of Commons, or

(ii) one member of that party was elected to the House of Commons and not less than 150,000 votes were given to candidates who were members of that party".

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Given the way our system works, that is a fairly high hurdle. Not very many Members who represent tiny parties reach the other place. Mr Martin Bell is the only example who comes to mind. By and large, that hurdle would catch almost every party that could not get two Members elected to the House of Commons. As far as concerns tax relief for think tanks, I shall pass. We have some later amendments which deal with think tanks. I have every sympathy for think tanks which serve a useful purpose. Certainly, it is not my intention to cause them any damage by this amendment. I simply ask the Government why they abandon, with such venom, an important part of Neill. After all, Neill is a package which recognises that political parties will probably experience a drop in larger donations and this is a way to try to fill that gap. I would have thought that that was a perfectly reasonable proposal. However, I know that I shall not succeed in persuading the Government. For the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 68 [Special provision for Northern Ireland parties]:
[Amendments Nos. 127 and 128 not moved.]
Lord Bach Lord Bach moved Amendment No. 129:
Page 51, line 1, at end insert—
("() Any period specified in an order under subsection (1)(a) or (b) must end not later than four years after the date on which the order comes into force, but this is without prejudice to the making (on one or more occasions) of a further such order which—

(a) extends that period for a period ending not later than four years after the date on which the further order comes into force, or

(b) specifies a fresh such period.").

On Question, amendment agreed to.
[Amendments Nos. 130 and 131 not moved.]
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 132:
Page 51, line 8, at end insert—
("() An order under this section shall not be made so as to enable any Northern Ireland party to receive donations during a referendum period (as defined in section 100) from any source other than a permissible donor as specified in section 52(2).").
The noble Lord said: My Lords, in moving Amendment No. 132 I should like to speak also to Amendment No. 187. I apologise in advance for the complexity of the issue which I tried to resolve in correspondence with the Minister rather than bring it before your Lordships. I have failed utterly in my attempt to get the issue addressed. The Government's proposed exemption order to be made next year under Clause 68 will allow the foreign funding of referendums in Northern Ireland. I believe that eventually that was admitted by the Minister in Committee. He told my noble friend Lord Astor:
"I like to be straight with your Lordships' House. The information I have from officials is that Northern Ireland parties can use the fruits of money raised abroad in a UK referendum. That may well present difficulties. Obviously we need to keep the matter closely under review and I shall give it further consideration".—[Official Report, 18/10/00; col. 1038.]
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It is strange that the Minister talked about this presenting difficulties on 18th October, and yet on 24th October he said that he was,
"not persuaded of the case for preventing a Northern Ireland party using the proceeds of a foreign donation to meet its own referendum expenses".—[Official Report, 24/10/00; col. 191]
So in the course of a week's reflection the Minister decided by 24th October that the difficulties of 18th October no longer existed.
I raised two distinct issues in Committee. I have not had answers. Therefore, I have to raise them again. The first is that any Northern Ireland political party could benefit from the exemption on foreign funding, take foreign funding from United States of America or Australia or wherever and could then use that money to participate and campaign in Great Britain as a permitted participant in a UK-wide referendum. I argued that front parties could be set up to exploit this provision and channel foreign funding into Great Britain. That is a major loophole in the supposed ban on foreign funding. It is not the same as the loophole we discussed earlier, which is a loophole in the funding of political parties for their campaigning for elections in Northern Ireland.
Secondly, the exemption order would allow foreign funding to flow into Northern Ireland to affect the result of a referendum campaign on the constitutional status of Northern Ireland itself. That is far more significant politically in the current climate.
The Minister entirely refuted my first point in Committee. He argued that the safeguards in Schedule 15, as it is now, would prevent the situation occurring. I have since written to the noble Lord twice on the matter, pointing out the defects in what he has said. He has replied to my first letter. I should be happy to provide any noble Lord with a copy of the correspondence. But his arguments on this point in Committee were factually incorrect. I want to explain why.
In Committee the noble Lord said:
"Schedule 14 imposes restrictions on the acceptance by a permitted participant of donations from abroad … Amendment No. 239 prevents a permitted participant, other than a designated organisation, from accepting a donation from any registered party. Therefore, a Northern Ireland party cannot transfer a foreign donation it receives to a referendum organisation in Great Britain".—[Official Report, 24/10/00; col. 190.]
Later he said that there were,
"safeguards in Part II and Schedule 14 which would prevent a Northern Ireland party simply acting as an agent in passing on a donation from a foreign source intended for a referendum campaign group".—[Official Report, 24/10/00; col. 191.]
The schedule cited by the noble Lord provides that no donation may be accepted by a permitted participant from an impermissible donor. However, paragraph 1(1) makes clear that that schedule applies only to,
"permitted participants that either are not registered parties or are minor parties".
Where the permitted participant is a registered party, as any front party would be, then the donation regime in Part IV would still apply, and, in the case of

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Northern Ireland parties registered as permitted participants, so would any exemption order under Clause 68.
The noble Lord also prayed in aid the Government's Amendment No. 239 in Committee, now paragraph 1(6) of the Schedule, which prevents the transfer of money to permitted participants from registered parties. This argument also fails to address my specific points.
A front Northern Ireland party would not need to transfer money to another party in Great Britain in order to campaign as a permitted participant on Great Britain in a UK-wide referendum. In relation to UK-wide referendums, the Bill makes no distinction between permitted participants in Northern Ireland and those in the rest of the UK. No transfer of funds would be necessary, as the front party, once registered as a permitted participant, could use any foreign donations to campaign both in Northern Ireland and in Great Britain. The Minister's argument was therefore totally irrelevant.
In my letter I gave an example scenario to the Minister: if there were ever to be a UK-wide referendum at some time, say on the abolition of the monarchy, there would be nothing to stop English, Scottish or Welsh anti-monarchists from registering a Scrap the Monarchy Party in Northern Ireland. That party would then benefit from any Clause 68 exemption order and be allowed to take funds from a foreign donor, perhaps from the anti-monarchy movement in Australia. Having registered with the electoral commission as a permitted participant in the UK-wide referendum, it could use that foreign funding to campaign anywhere in the UK using that foreign cash. There is nothing in the Bill to stop that.
I sent my first letter on 25th October. The Minister replied on the 14th November. I think I had to prompt him. By this time he had changed his tune. With characteristic understatement he said:
"I welcome the opportunity to provide a more complete answer to the points which you put to me". He then wrote:
"As you suggest, the Bill would not prevent a Northern Ireland party campaigning in its own right in a United Kingdom-wide referendum … It is quite possible that funds received from overseas while an order under Clause 68 was in force might be used to meet referendum expenses incurred by a Northern Ireland party … I accept that this means that for as long as an order is in force under Clause 68 a ban on foreign funding in relation to referendum campaigns would not be wholly complete. There does exist the possibility that an organisation wishing to campaign in a United Kingdom referendum might seek to circumvent the restrictions on the acceptance of foreign donations by registering as a Northern Ireland party. The requirements of Part II do not erect a definite barrier against this happening".
I shall be most interested to hear what the Minister says today. On 24th October he said that he saw,
"the need to ensure that other referendum organisations do not use a Northern Ireland party purely as a front to receive foreign funding".—[Official Report, 24/10/00; co1.191.]
That is precisely what the Bill does not ensure at the moment. There is no "definite barrier", to use the noble Lord's own words in his letter. We can be certain that this loophole will be taken advantage of if it is not
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plugged. The Minister recognised this but no amendments have been tabled. Therefore, I hope that he will accept my amendments that plug the loophole.
I have outlined—as the noble Lord has admitted in writing—that the Minister's arguments in Committee were plainly wrong. What worries me is that the Minister and officials seemed unaware of the true position on 23rd October. Surely they understood the implications of the way the Bill was worded.
On the second issue—the foreign funding of a referendum in Northern Ireland itself—the Minister admitted in Committee that the Bill allowed Northern Ireland parties to use foreign money in referendums. It took repeated questioning from my noble friend, Lord Astor, to prise this out of him on 18th October. He then said that this presented difficulties. This state of affairs would clearly benefit the republican movement and especially Sinn Fein/IRA. They will be able to use the foreign money they get from North America—and continue to get—to influence the results of any referendum on the future of Northern Ireland. The Minister admits that that is what is in the Bill. Do the Government consciously intend that to be in the Bill or is it just a by-product of poor thinking?
I asked that question in my letter of 25th October, but the Minister failed to answer in his reply of 14th November. I will be most interested to hear his answer tonight. In his letter the Minister implied that foreign funding could not skew any such referendum result because of the low spending limits in Northern Ireland. I should point out that this entirely depends on the ability of the republican movement to raise funds inside the Province. If it cannot raise up to the limit, then foreign funding will come into play. It will make a difference. Surely, there is a point of principle here about the funding of referendums. It is difficult not to avoid seeing this as yet another concession to a republican movement heaped on the other concessions at which we have been looking in the past few days.
My amendments try to address some of these issues. They reflect the points made repeatedly by the Minister that we cannot regulate the uses to which a particular donation is put. But they do attempt to stop Northern Ireland parties accepting foreign money during the actual period of a referendum campaign. They are not fully watertight but they do meet the Minister's concerns and certainly make for a better Bill. I hope that he can accept at least one of them.
I hope the Minister will comment on what is a truly bizarre anomaly which I have raised with him twice in correspondence but on which he has not commented. Is it not the case that any non-partisan political organisation set up specifically to campaign in a referendum in Northern Ireland would be banned from accepting foreign donations whereas registered Northern Ireland political parties wishing to campaign in the same referendum would still benefit from any exemption order under Clause 68 and be able to accept and use foreign donations? Is that not totally inconsistent? Is it fair? What are the Government going to do about it?
I am sorry that I have gone on for while, but these are complicated issues where one has to relate one part of the Bill to another and also to correspondence which I have had with the Minister which, I appreciate, other noble Lords have not had the chance to see.
The issues go to the heart of the political process in Northern Ireland. As your Lordships know, I am not happy about the current position whereby it will still be possible to fund political parties in Northern Ireland by foreign donations. I am much less happy, if that is possible, at the thought that the foreign money might help to fund referendums in Northern Ireland. My unhappiness increases even more when I realise that the same foreign money could be used to fund referendum campaigns across the whole of the United Kingdom. If that is not a coach and horses, I am sorry to say that the Minister would not recognise a coach and horses if it ran over him on the road to Brighton this evening. I beg to move.
10.30 p.m.
Lord Bassam of Brighton: My Lords, I pay tribute to the noble Lord for his diligence and wit in pursuing these matters. The noble Lord may not like what I am about to say but I shall certainly study again the paper flow for inconsistencies on my part. If they occurred, they were certainly not intended. Perhaps it is not always the case that Ministers are entirely seamless at the Dispatch Box in the quality of their arguments and ripostes.
We return to the vexed question of the exemptions proposed for Northern Ireland parties. The amendments are concerned with the impact of a Clause 68 order on a referendum campaign. I should like to make one point clear from the start. Any exemption from the controls on donations in Part IV in respect of Northern Ireland parties has to apply across the board. We are not saying—indeed, the Neill committee did not say it—that Northern Ireland parties should be able to accept foreign donations only to help meet the costs of running their headquarters or to meet election campaign expenditure. An exemption from the ban on foreign funding is an exemption for all purposes, including for the purpose of meeting referendum expenses.
To, I suppose, characterise his annoyance and exasperation, the noble Lord is rather making the case that he has latterly discovered this and that it has become something of a revelation. But I think it was always there. I apologise to the noble Lord if it was not made clear on our part or if it was not plain at the outset many months ago of the debates on the Bill. There was no conscious move by the Government to obscure matters or to hide anything. We thought that the situation was plainly understood. Much as the noble Lord likes to construct conspiracy around all of these matters, I can say to the suggestion that the Government are in some way or other seeking to secure aid for the republican cause that that is not the case. That is not the object of our policy in this regard.
I fully accept that the situation as it stands will mean that a Northern Ireland party would be able to use foreign donations in any future referendum on the
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constitutional status of Northern Ireland or, for that matter, in any UK-wide referendum; for example, perhaps even on the euro. Another consequence of a Clause 68 order which I do not seek to hide is that a Northern Ireland party could use foreign funds in a referendum but any other permitted participant could not. I do not pretend that the position is ideal. I have never argued that that is the case—far from it. Exactly the same set of circumstances will arise in relation to an election campaign. Consequently, the fact that the ban on foreign funding in relation to referendum campaigns would not be complete is no more or no less a cause for regret. But these are consequences with which we shall have to learn to live. We do not see any other way of making the system work, particularly for as long as the special provisions are necessary.
The noble Lord is perfectly entitled to his view that there should be no special provisions for Northern Ireland. He has made that case very ably. But I put it to him that if the opposite view prevails there is no basis for these two amendments. I suppose that, so far as concerns Northern Ireland political parties, we are left very much with the status quo; namely, a system of self regulation and regulation by exposure. That is the kind of regulation which on occasion the noble Lord, Lord Norton of Louth, has proposed would be best used across the United Kingdom. I fully recognise that the situation is less than perfect and that the noble Lord is entitled to make his case. But we do not believe that there is another way of dealing with this, nor do we believe that it would work in the way that the noble Lord has suggested—either on the issue of referendums or with certain controls on political parties.
As regards the future for Northern Ireland, it is essential that we keep under careful review all these matters, but I do not believe that we can realistically do more in the current set of circumstances.
Lord Mackay of Ardbrecknish: My Lords, I am disappointed that the noble Lord thinks that there is nothing he can do. However, at least I have managed to extract from him a clear statement that he accepts that Northern Ireland parties could use foreign donations even in the United Kingdom on a referendum on the euro. I did not mention the euro earlier, but the noble Lord has done so. That seems to be the most amazing breach of the general principle that there should be no foreign donations when it comes to referendums.
This is as ridiculous as the previous situation on political parties, where the SNP will not be able to receive money from America, but Sinn Fein/IRA will be able to do so. Representatives of Northern Ireland parties holding referendums in Northern Ireland will be able to receive donations from abroad in order to influence a referendum. However, should a referendum be held in Scotland, I presume that the two sides in Scotland will not be able to accept funding from abroad to assist in such a referendum. As my noble friend Lord Cranborne pointed out earlier in our deliberations, the reason is simple: in this case, terrorism has paid. Because Scotland is a peaceful

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country and those trying to secure Scottish independence are doing so peacefully, they cannot receive money from abroad for a referendum—even if they do manage to force a referendum at some stage in the future. I know how I would vote in such a referendum—I would not be on their side—but that does not mean that I am not aware of the unfairness of the situation.
The notion that money can be received from foreign sources through Northern Ireland to support a referendum held in this country is going to cause serious concern, should we ever reach such a referendum. I am not entirely certain whether I should test the opinion of the House at this time of night. I suspect that the noble Lord may have a great many troops in the House who have not listened to the argument. I cannot believe that anyone who had listened to the debate would be in any way happy with the situation that the Government declare will be in place once the Bill has been passed. I do not believe that anyone in your Lordships' House would be happy with the notion that foreign funding can come in via Northern Ireland in order to influence UK-wide referendums; in other words, through the back door. Such funding cannot come in through the front door. I think that this is an unsatisfactory position.
However, after a great deal of effort, I have at least secured a straightforward and simple confession from the Minister as regards what the Bill will do. I shall study what he has said about my amendments. I cannot promise not to return to this issue at Third Reading once I have had an opportunity to read through the correspondence and the latest contribution from the Minister. For the moment, however, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 133 and 134 not moved.]
Schedule 7 [Control of donations to individuals and members associations]:
Lord Bach Lord Bach moved Amendments Nos. 135 and 136:
Page 149, line 32, leave out ("(2)(d)") and insert ("(1)(d)").
Page 149, line 34, leave out ("(2)(e)") and insert ("(1)(e)").
On Question, amendments agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendments Nos. 137 and 138:
Page 152, line 3, leave out ("not less") and insert ("more").
Page 152, line 19, leave out ("not less") and insert ("more").
On Question, amendments agreed to.
Lord Bach Lord Bach moved Amendment No. 139:
Page 153, line 1, leave out sub-paragraph (5) and insert—
("(5) Any controlled donation received by a regulated donee which is an exempt trust donation shall be regarded as a controlled donation received by the donee from a permissible donor.
(6) But any controlled donation received by a regulated donee from a trustee of any property (in his capacity as such) which is not

(a) an exempt trust donation, or

(b) a controlled donation transmitted by the trustee to the donee on behalf of beneficiaries under the trust who are—

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(i) persons who at the time of its receipt by the donee are permissible donors falling within section 52(2), or

(ii) the members of an unincorporated association which at that time is a permissible donor,

shall be regarded as a controlled donation received by the donee from a person who is not a permissible donor.").
On Question, amendment agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendments Nos. 140 and 141:
Page 153, line 38, leave out ("not less") and insert ("more").
Page 153, line 46, leave out ("not less") and insert ("more").
On Question, amendments agreed to.
Lord Bach Lord Bach moved Amendment No. 142:
Page 156, line 25, leave out ("(4) to (10)").
On Question, amendment agreed to.
Clause 70 [Campaign Expenditure]:
10.45 p.m.
Viscount Astor Viscount Astor moved Amendment No. 143:
Page 52, line 24, leave out subsection (9).
The noble Viscount said: My Lords, on page 52 of the Bill, Clause 70(9) states:
"In this section 'candidates' includes future candidates, whether identifiable or not".
I asked in Committee how a party can promote the electoral success of future, unidentifiable candidates. I did not get a satisfactory answer. The Minister said he would reflect on the matter. I should like to know the result of his reflections. I beg to move.
Lord Bach: My Lords, subsection (9) of Clause 70, which the amendment seeks to delete, was added to the Bill in Committee. At that stage it did not appear to cause concern. We are a little surprised that exception should now be taken to it, although I understand that this is almost certainly a probing amendment to ascertain the Government's thinking on this issue.
Subsection (9) was one of a number of changes made to the Bill in Committee to strengthen the definition of "campaign expenditure". If the £20 million limitation on election spending in the 365 days before an election is to be effective, it is important to ensure that the definition of "campaign expenditure" is a robust definition. The previous definition referred to expenses incurred by and on behalf of a party with a view to promoting or procuring the election "of existing or future candidates" standing in the name of the party.
Of particular concern to the Government with that approach was that the reference to a party's candidates might attract the narrow meaning of a candidate under the Representation of the People Act 1983. In broad terms, a person becomes a candidate under that Act only when he or she is nominated as a candidate, or is declared by himself or by herself or by others to be a candidate. Under the 1983 Act, nominations are normally only submitted some two to three weeks before the date of the poll. If such a narrow

771
construction were to be put on the reference to candidates in Clause 70, it could be open for a party to argue that a particular campaign conducted 10 months before the date of the election was not directed to promoting the return of the party's candidates at that election. Such an argument would rely on the fact that the party's candidate had either not been selected or, where they had been selected, had not been formally adopted.
Subsection (9) is there to counteract any such construction. It is clear from this subsection that the term "candidates" includes any candidates who stand in the name of the party at the next election, whether or not they have been selected or formally adopted at the relevant point in time.
I hope that, on reflection, the noble Viscount will accept that that subsection provides necessary reassurance and thus becomes an important element of the clause.
Viscount Astor: My Lords, I am grateful to the Minister for that response. I am sure that he is aware that I raised this issue in Committee on 18th October, when the Government moved their earlier amendment. I think I have understood what the Minister said; however, it is late in the evening. I listened as carefully as I could, but I shall have to read his answer tomorrow to be entirely clear on the matter. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 72 [Officers of registered party with responsibility for campaign expenditure]:
Lord Bach Lord Bach moved Amendment No. 144:
Page 54, line 37, leave out ("(1)") and insert ("(2)").
On Question, amendment agreed to.
Clause 74 [Restriction on payments in respect of campaign expenditure]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 145:
Page 55, line 36, leave out ("and") and insert ("or").
The noble Lord said: My Lords, in moving Amendment No. 145, I shall speak also to Amendments Nos. 152, 153, 168, 175 and 198. I shall not have to make a speech of any great length because your Lordships will have noticed that, in addition to my noble friend Lord Astor and myself, the noble Lords, Lord McNally, Lord Rennard, and Lord Bassam of Brighton himself, have added their names to the amendment. I am therefore assuming that the Government will accept the amendment.
The amendment relates to the requirement to produce both an invoice and a receipt for the auditing of a party's expenditure. Replacing the word "and" with the word "or" would mean that one or the other would do. In the anticipation that the noble Lord, Lord Bassam of Brighton, really meant to add his name and that his noble friend Lord Bach will not do something contrary, I beg to move.
Lord Bach: My Lords, perhaps I may speak to this group of amendments generally. I shall be brief.
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In Committee, the noble Lord, Lord Lucas, questioned whether it was necessary for political parties to produce both an invoice and a receipt as evidence of the payment of campaign expenditure. He described such a requirement as something "out of the dark ages". We hope that our electoral law has moved on somewhat since those times. Nonetheless, we are happy to concede, on reflection, that it would be sufficient to require the production of either an invoice or a receipt. The amendments make the appropriate changes to the relevant provisions of the Bill and to the Representation of the People Act 1983.
We have gone for the formula of "an invoice or a receipt" rather than simply an invoice because, for some relatively small transactions—for example, goods purchased over the counter—no invoice may be generated; all that will be available is a standard till receipt. We are grateful to noble Lords for raising the matter and for the tabling of these amendments. The amendments will ease the administrative burden on political parties. We support them and commend them to the House.
Lord Mackay of Ardbrecknish: My Lords, I am hugely grateful and commend this amendment to the House.
On Question, amendment agreed to.
Viscount Astor Viscount Astor moved Amendment No. 146:
Page 55, line 36, leave out ("£100") and insert ("£200").
The noble Viscount said: My Lords, this is one of a simple group of amendments that seeks to raise from £100 to £200 the sum above which the production of bills from suppliers of goods would be required. In Committee, we debated what the figure should be. I believe the Minister said that the £100 requirement was based on the Representation of the People Act 1983. On reflection, we think it sensible to raise the figure to that above which a donation must be declared; namely, £200.
A figure of £100 will place a large burden not only on parties but on the electoral commission. Such a requirement will be very time-consuming because there will be a large number of small invoices. The noble Lord, Lord Rennard, supported this amendment at an earlier stage and I hope that he will do so this evening, given his experience of running political parties. I beg to move.
Lord McNally: My Lords, it is not my experienced noble friend Lord Rennard who will give support to the amendment, but the inexperienced me! I merely want to add a point which applies not only to this amendment but to the previous one also. It is one that Ministers could well bear in mind before we reach Third Reading.
The Bill could still do with a good comb-through to make sure that, wherever possible, the responsibilities written into it reflect some of the reality of running a political party at the sharp end. During the passage of the Bill we have already heard the worrying idea that it has been written by skilled parliamentary draftsmen,

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helped by equally skilled bureaucrats, who may never have been inside a party committee room at election time and who have no idea how much parties have to operate on a wing and a prayer and a great deal of amateur goodwill. Therefore, any amendments that lift the burden, as it were, will help in that respect. We believe that this is one such small amendment which will make this less of a burden for those amateur—in the real sense of the word—unpaid party officers who have to try to make this Bill work at the sharp end.
Lord Bach: My Lords, I am grateful for the remarks just made by the noble Lord, Lord McNally. He is quite right in what he says. This Bill has been the work of skilled draftsmen and bureaucrats. It has also been subject to the work of skilled politicians, both in this House and in the other place, whether of the experienced kind represented by the noble Lord, Lord Rennard, or of the comparatively inexperienced kind such as the noble Lord who has just spoken. It is that mixture of the three skilled professions that will make this Bill a better one than it was originally. This is one of those examples where we believe that we have improved the Bill by accepting these amendments.
We went round this course in Committee, both in this House and in another place. We have argued that, for sound accounting practice, £100 would be an appropriate figure in respect of which an invoice or a receipt may be required. We believe that that may be right. However, within reasonable bounds, there is no right or wrong figure. There appears to be a consensus on the Benches opposite that a higher threshold is appropriate. We are content and happy to accept the amendments on that basis. Of course, if the figure proves to be too high, it will be open to the electoral commission to endorse our original proposals. As I said, we are happy and content to accept Amendment No. 146.
Viscount Astor: My Lords, I knew that the noble Lord, Lord McNally, was eloquent, but this proves that he is eloquent beyond even the heights that I had imagined. With his support we have managed to persuade the Government. I am duly grateful.
On Question, amendment agreed to.
Lord Bach Lord Bach moved Amendments Nos. 147 and 148:
Page 55, line 41, at end insert ("or receipt").
Page 55, line 42, leave out from ("payment") to end of line 2 on page 56.
On Question, amendments agreed to.
Clause 75 [Restriction on making claims in respect of campaign expenditure]:
Lord Bach Lord Bach moved Amendment No. 149:
Page 56, line 9, leave out (", together with the relevant invoice,").
On Question, amendment agreed to.
Schedule 9 [Limits on campaign expenditure]:
Lord Mackay of Ardbrecknish: My Lords, before my noble friend moves his amendment, perhaps I may
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intervene. I wonder whether it would be convenient for the House if we were to shift certain amendments a little. I have given the Government Front Bench notice of this request. When we deal with Amendment No. 149A, perhaps we could speak also to Amendment No. 150. We could then take Amendments Nos. 151 and 160 with Amendment No. 159, because they hang together somewhat better than suggested by the current grouping. I am sorry to make this request so late in the evening.
Lord Bach: My Lords, the noble Lord gave us advance notice of this request. We are content to follow that course.
Lord Hodgson of Astley Abbotts Lord Hodgson of Astley Abbotts moved Amendment No. 149A:
Page 161, line 13, leave out ("£30,000") and insert ("£20,000").
The noble Lord said: My Lords, my amendment relates to the maximum expenditure at a parliamentary general election, as covered by Schedule 9. It seeks to reduce the maximum amount expendable by a party in a general election to £20,000 per parliamentary seat contested, thereby reducing the maximum from approximately £19 million to about £13 million.
This Bill is about creating a balance. We referred earlier to the balance between the need for disclosure and the need for local democracy. However, there is at least one other balance to be struck; namely, that between the needs and wishes of a political party at the centre and the needs and wishes of local associations. I believe it is commonly agreed that politics is becoming more presidential and centralised. That tendency is, perhaps, emphasised by press reports and by radio and television programmes. Therefore there is a danger that parties nationally could become divorced from their roots.
I do not wish to divert too much, but that is why I, and I think some other noble Lords, were disappointed that the noble Lord, Lord Bach, could not accept the proposal with regard to independents and the five additional words that we discussed last night. The presence of some local independents constitutes a means of keeping national political parties politically honest, so to speak.
Large election spending reinforces the emphasis placed on the centre and the importance accorded to that. Large spending means poster campaigns, mass mailings and the "big picture" approach. It certainly lessens, perhaps removes, the need for parties centrally to galvanise local support and build up their local activist base. If you do not have the money, you have to use ingenuity. That ingenuity will consist primarily of persuading volunteers to work for the party at a local level to fill the gap which is otherwise made good by major spending. It is a critical part of our democracy to encourage that process as a general development. If restrictions were imposed on the amount of money they could spend centrally, parties would encourage volunteers locally to undertake the

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hard and often unglamorous work of persuading their fellow citizens of the rightness of their cause, as they say in the trade, "on the knocker".
If that is accepted, where do we set the right balance between the centre and local parties? Before the noble Baroness, Lady Gould, asks me how we arrived at the figure, I set out the following rough calculation. The allowable election expenses in a constituency at a parliamentary election consist of a lump sum. I think that that is just under £5,000. I am sure that the noble Baroness, Lady Gould, will put me right if I am wrong, but I think that it is £4,965, plus a sum per elector varying between 4.2p per elector in a borough constituency and 5.6p per elector in a county constituency. Based on an electorate of, say, 70,000, that would result in an additional £3,000 to £4,000 which could be spent locally. Under current regulations that would allow a party to spend between £8,000 and £9,000 locally. We have fought parliamentary elections at constituency level perfectly satisfactorily.
Of course there are legitimate funding needs for a party to fight an election effectively at the centre. I believe that it would be appropriate for the party nationally to be able to spend as much centrally as it is permitted to spend at constituency level, perhaps with a little more added on. Therefore, the £8,000 or £9,000 which is what a party would spend at local constituency level would, with a small addition, arrive at a nice round £20,000 per constituency contested, with some £ 10,000 or £11,000 available to the party to spend centrally.
This measure represents an attempt to strike a balance between these two important needs and to get away from the massive spending of both my party and, indeed, the Government at the previous two elections, much of which I consider did nothing to improve the quality of our democratic process. I beg to move.
11 p.m.
Lord Rennard: My Lords, I support Amendment No. 149A. However, Amendment No. 150 is remarkably similar. In Committee I and my noble friend Lord McNally proposed that the limit per constituency be around £22,500. That would mean a total election expense limit for the parties nationally of around £15 million. We should try to agree within that ballpark area.
In Committee, the Minister said that if there were a consensus between the parties, the Government would have to fix the limit according to the party consensus. The Bill provides at present for a limit of approximately £20 million. The figure of £19.76 million for a party fighting every seat in Great Britain was put forward initially by the Neill committee. However, it was a compromise figure. There was no specific argument for £20 million; it was the best stab at a figure.
In Committee, the Minister said that if the parties were to come to some consensus the Government would have to act accordingly. Amendment No. 149A suggests a limit of nearly £15 million—perhaps £14
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million. Amendment No. 150 provides a limit of £15 million. The Conservative Party now says that £14 million or £15 million is the appropriate limit for national expenditure.
I remind noble Lords on the Government Benches that in evidence to the Neill committee in a document entitled, Transparency, Participation, Equality, the Labour Party argued powerfully for a limit of precisely £15 million. In another place Mr Martin Linton argued strongly that £15 million was the correct limit. The figure of Liberal Democrats and Labour Party members in another place who supported the £15 million limit was 70 per cent.
Amendments from the Conservative Benches in this House provide for a limit nationally of £14 million or £15 million. Over 90 per cent of the Members of another place now support a limit of £14 million or £15 million. Therefore there is a new consensus between the parties: on the Conservative Benches, in the Labour Party's evidence, and among the Liberal Democrats. It is a compelling argument: the Government should act upon that new consensus.
Lord Mackay of Ardbrecknish: My Lords, I speak to Amendment No. 150. I have no problem with the amendment of my noble friend Lord Hodgson of Astley Abbotts. It arrives at largely the same total figure.
If I explain why I have arrived at the figure of £15 million, noble Lords may understand that the Government are in some difficulty over their own internal logic. When the Bill arrived at your Lordships' House the total limit was £20 million. In Schedule 8, the list of qualifying expenses making up the £20 million was quite long; the exclusions list was somewhat shorter. In Committee, the Government took out a number of qualifying items and put them in the exclusions. I hope that I am right; I speak from memory. I think that they were largely expenses falling on the property, services and facilities of the headquarters of the national parties and on the party's ordinary remuneration allowances, payments to staff, and some other points. That must be worth some money. If it were £20 million when all those items were included, logic tells me that it should be a tinge—
Lord Bassam of Brighton: My Lords, I cannot resist asking how the noble Lord comes up with this figure. How has he managed to reduce his original figure from £20 million to £15 million? I have heard the explanation. How has he managed to cost it so precisely?
Lord Mackay of Ardbrecknish: My Lords, it is not precise. That is the point. It was not my £20 million to begin with. I remind the noble Lord that it was the Government's £20 million. When that £20 million was supposed to cover a large number of items, I was content to leave it at that. However, the Government have taken out a number of expensive items, but have left the figure at £20 million. I fully accept that my figure is a rough estimate. The accurate figure might be £14 million, £16 million or perhaps even more.

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However, the Government know why they have made the changes, so they must have some idea of how much those other items are worth. They are certainly not worthless—they are worth a considerable amount. My guesstimate is that they might be worth around £5 million to the major parties. That is why I have suggested that the limit should be £15 million rather than the £20 million that we started with.
That is my logic. If it is faulty, no doubt the Government will tell me. They are usually quick to do so. However, if it is just the numbers that are wrong, we still have Third Reading to come. If the Government do not like my approach, perhaps they prefer that of my noble friend Lord Hodgson. Even at this late hour, we should turn our minds to the consequences of the amendments that the Government tabled in Committee and how they impinge on the £20 million that we began with. Like the noble Lord, Lord Rennard, and my noble friend Lord Hodgson, I look forward to hearing the Government's explanation.
Lord McNally: My Lords, I am attracted to the American saying that when you are up to your armpits in alligators, it is sometimes difficult to remember that the idea was to drain the swamp. That certainly applies here.
I urge Ministers not to leap up with a glib rejection. This is one of those moments—they sometimes happen late at night—when the Government should grab hold of an opportunity that would have a massive impact on the Bill. As the noble Lord, Lord Hodgson, said, a large part of the motivation behind the Bill has been to drive the big money and the big donations out of our politics. As my noble friend Lord Rennard said, we now have a remarkable consensus, based on the earlier recommendations of the Labour Party and the new declared policy of the Conservative Party. We should not let that slip.
I know that the Labour Party is a lot more flush than it was in my day, but the big upper limit of £20 million, combined with a Bill that will make it very difficult to get anybody to donate large sums to political parties, could leave us in trouble. The lower we can get the cap, the healthier our politics will be and the better it will be for all political parties. I urge Ministers to grab this opportunity to strengthen the Bill immeasurably.
Lord Bassam of Brighton: My Lords, the amendments relate to limits on campaign and controlled expenditure. I shall run through the arguments and pose a few questions at the end.
The Neill committee recommended a £20 million limit on the campaign expenditure that may be incurred by a party in connection with a general election. The committee further recommended that the limit for particular parties should be based on a formula calculated on the basis of the number of seats contested by that party. That is simple and straightforward. Schedule 9, paragraph 3, contains such a formula. It provides for an allowance of £30,000 for each constituency that the party contests. That is
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a realistic sum in modern electioneering. A party that fights all 659 constituencies in the United Kingdom will have an overall limit of £19,770,000.
The noble Lords, Lords Hodgson and Mackay, now wish to reduce the £20 million limit, in round terms, by a third and a quarter respectively. I am absolutely gobsmacked. I am really taken aback by this sudden conversion to the limit lower than that proposed by the Neil committee. In Committee, the noble Lord, Lord Cope, in response to an amendment tabled very honourably by the Liberal Democrats, who throughout this debate have been entirely consistent, said:
"It will come as no surprise to the noble Lord, Lord Rennard, that we do not support these amendments … The Government are sensible"—
this is a Conservative spokesman saying that the Government are sensible—
"to stick to the Neil committee's recommendations in this respect".—[Official Report, 18/10/00; col. 1098.]
I believe that the House ought to be told why there has been a sudden change of heart. I suggest to your Lordships that it is rather late in the day to change course on such an important feature of this Bill. I do not suggest that the figure of £20 million is set in stone. Far from it. But it is, after all, the product of very careful deliberation by—
11.15 p.m.
Lord Mackay of Ardbrecknish: My Lords, I am interested in listening to the noble Lord, but will he address the point that certain quite large items have been taken out of one column and put into the other since my noble friend Lord Cope made his point? I would happily have stuck with £20 million if it had not been for that. That is my point. Perhaps the noble Lord will address that.
Lord Bassam of Brighton: My Lords, I shall address that point. However, let us not forget that this was an independent advisory committee. In my view, we should not try to change its recommendations without seeking further independent advice. That is an important point, particularly in view of the last remark of the noble Lord. I suggest that it would be most appropriate to take independent advice from the electoral commission, without wide consultation with the main political parties. I suggest to the House that the proper course is for us to run with the figure of £20 million for the next election and then perhaps look at the matter in the light of that experience. If there is then a new consensus in favour a lower limit, the Home Secretary can, of course, exercise his powers in Clause 152 to reduce the sum of £30,000 per constituency in order to achieve the desired result.
In view of what the noble Lord said, it is perhaps worth reminding ourselves that the amendments to Schedule 8, to which he referred, were made before the noble Lord, Lord Cope, spoke to the amendment to Schedule 9, tabled by the noble Lord, Lord Rennard. I think the noble Lord has rather gathered the point that I am about to make.

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I am not by nature a deeply suspicious person. I am not a cynic in politics. However, I am very puzzled by this late conversion to the lower figure. If the best that the noble Lords opposite can do is make the point that £15 million is the sum that we put to Neill, I am afraid that that is not terribly good. I cannot help thinking that perhaps this amendment has something to do with the fact that the Conservative Party is experiencing extreme difficulty raising funds towards the cost of the next general election. If that is not so, perhaps it has something to do with the fact that it fears handing back money, otherwise described as Short money, because it has been misused. I am very puzzled. These arguments have never been put in the past. We are running up to a general election, some months, maybe a little more than a year, away, and it is most strange that this argument to bring down the level of expenditure for the next general election should be now advanced. Is it the case that the Conservative Party fears losing the next general election and, therefore, perhaps wants to tuck away a little more for later general elections, without wasting it on William's great campaign next year or the year after? It is a very strange conversion indeed.
My earlier question to the noble Lord, Lord MacKay, about how he managed to cost so precisely the amendments to Schedule 8 is a very real question. How has he arrived at a figure of approximately £5 million? It is a very interesting figure, particularly as it appears to come so close to reducing the level to that which he obviously wants to argue in terms of our original submission to the Neil committee. I am deeply suspicious. I am not a little amused by this. However, I intend to stick to the argument of consistency. The position we have come to, properly reached, advised by Neill, is the position which we in Government wish to stick to because that is the consistent position.
The noble Lord has been arguing consistently all evening. He has made that a virtue of many of his arguments. If that is the case, I am sure that he, and the noble Lord, Lord Hodgson, will feel more than comfortable in withdrawing these very strange amendments.
Lord Rennard: My Lords, before the Minister sits down, he has just referred to consistency in arguments. I would have thought that he should have welcomed the conversion and change of heart, based in part upon new information, on the Conservative Benches. He should perhaps have taken the attitude of more joy in Heaven for one sinner that repenteth, as perhaps the Conservative Party's position has now moved to the Labour Party position.
The Minister did not address my question. Indeed, when I moved the amendment in Committee suggesting that £22,500 was the appropriate constituency limit aggregated nationally, he said that if there was consensus between the parties the Government would have to shift to recognise that consensus. I ask the Minister to be consistent, as he has just urged all Members of your Lordships' House to be consistent. We have on record the Labour Party's position. We now have the Conservative Party's
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position and the Liberal Democrats' position. I ask the Minister what more consensus there could be on this issue to produce the shift for which we ask in official government policy.
Lord Bassam of Brighton: My Lords, arguments about consistency cut several ways. I argue for consistency in terms of the position which was adopted and recommended to your Lordships' House by virtue of the Neill committee. That is where we intend to be consistent. I consistently intend to stick to that point.
Lord Hodgson of Astley Abbots: My Lords, I am grateful to the noble Lords, Lord Rennard and McNally, for their support for the amendment. I was extremely disappointed by the Minister's comments, which consisted of two parts: first, a series of political slurs, trying to say that this concerned funding difficulties in the Conservative Party and difficulties over the Short money. When the Minister kindly gave way earlier, I pointed out that he quoted only part of the information and evidence given by David Prior. The remarks I made in moving the amendment were not concerned with funding but with the balance between the centre and local parties. I made clear consistently in a number of interventions during Report that I am concerned about the balance we are seeking to strike in many ways in the Bill. That is what it is all about. The Minister has been kind and thoughtful. He may be irritated because it is now 11.25 pm, but I thought that his irritation showed in a way which was not worthy of him.
Secondly, his substantive political point was to say, "Let's run with the £20 million and then consider". That is like the advice of St Augustine, to the effect, "Lord give me chastity but don't give it yet". The Minister knows very well that if we reach the next general election on this basis the chances of the matter being readdressed and reconsidered after the general election are next to negligible.
We are seeking to strike an important balance. Given the support from the Liberal Democrat Benches and the evidence that his own party has given in the past, I ask the Minister to go away and think carefully about this. I give notice that I may wish to raise this matter again at Third Reading. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 150 not moved.]
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 151:
Page 161, line 33, leave out from ("(b))") to end of line 34 and insert ("any period of one year").
The noble Lord said: My Lords, this amendment is now grouped with Amendment No. 159 in the name of my noble friend Lord Willoughby de Broke and also Amendment No. 160. I shall be fairly brief about this. The amendment is concerned with the interesting question of the expenditure of £20 million, which we have discussed, being accounted for over a 365-day period before a general election. I could understand

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that in relation to a Scottish election because, although I cannot quite remember it, everyone who is interested and involved knows the date of the next Scottish general election because those elections occur at fixed periods. I believe I am right in saying that we know the date of the next European election, give a day or two. The Europeans sometimes manage to change the date, but not significantly.
Unless the noble Lord is going to tell us this evening—I am sure that he will not because I have tried to trap him on a number of occasions—one thing that we do not know is the date of the next general election. I do not know whether we are in one of the 12 months for which the noble Lord, Lord Rennard, has to keep careful accounts. I do not know whether we have been in it for two or three months now. It is an unknown period.
What we are concerned about here is a double unknown; namely, the question of whether we have more than one election in a year. Instead of the period of 365 days ending with the date of the poll for the election, my amendment specifies "any period of one year". While I am not certain that that is the happiest of solutions, it certainly seems to provide a good deal more certainty than is provided by the Government in the Bill. At the moment we do not know whether we are in the important year or not. My amendment would suggest that we would be in that important year all the time.
My noble friend Lord Willoughby de Broke will deal with his amendment. I have some sympathy with it as regards third parties, although I predict that the Minister will expose some technical difficulties which could mean that, if third parties were so minded, they would be able to use the leniency of my noble friend's amendment in a way that I am sure he does not intend. A third party would use it in order to abuse the special position which his amendment would provide. I believe that uncertainty about the 365-day period is unfortunate for our political parties. The Government should have addressed this issue long ago. I put forward my amendment as my modest contribution to try to firm up these matters and to make the issue a good deal more certain than it is. I beg to move.
11.30 p.m.
Lord Willoughby de Broke: My Lords, my Amendment No. 159 deals with paragraph 3 of Schedule 10, which imposes restrictions and controls on third parties campaigning in a general election for a year before polling day. My amendment deals specifically with paragraph 3(3). Its purpose is to redefine the controls so that they apply only from the date when the election is called.
I assume that it is generally accepted that, as the Bill limits spending by political parties, it is also reasonable to limit spending by third party organisations if they affect elections, otherwise controls on political parties could easily be circumvented by front organisations. My amendment seeks to deal with the form which
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these controls take. I am suggesting that they should refer to Clause 61(6) on page 46 of the Bill, which states that the,
"'general election period' means the period—

(a) beginning with the date on which Her Majesty's intention to dissolve Parliament is announced in connection with a forthcoming parliamentary general election, and

(b) ending with the date of the poll".

The provisions in Schedule 10 are not aimed at political parties, which, by definition, work to parliamentary and political timetables. Here we are dealing with campaign groups, private organisations and even charities which until now have been largely free to campaign at any time provided that at an election they did not spend money in support of political candidates. As Schedule 10 stands at the moment, the spending limits will apply for a year before the election. Since Parliament is not for a fixed term, as my noble friend Lord Mackay pointed out, campaign groups will not be certain when these controls will apply.
The Government's response so far—the only one I have managed to find—comes in a letter dated 2nd February from the Home Office Minister, Mike O'Brien, to the right honourable Frank Field, which says that,
"recognised third parties can avoid the offence of exceeding the limits on controlled expenditure imposed by Schedule 10 by, in effect, operating to the expenditure limits for any 365 days period".
That seems somewhat draconian. The effect is to impose the most sweeping controls on third parties, including restrictions on spending and requirements relating to the disclosure and permissible source of donations, at all times. Such an arbitrary restraint risks being struck down by the courts, I should have thought, as a breach of the guarantee of free speech under Article 10 of the European Convention on Human Rights. At the very least it will result in protracted legal disputes over whether or not specific materials were intended to influence the election.
This provision should be of concern to any organisation, including charities, whose activities touch the political arena, particularly where politicians take exception to that group's views. Even if its aim is not to influence the election of parties or candidates, its leaflets or advertisements could be held to fall foul of the law if it is judged that the material,
"can reasonably be regarded as intended",
to enhance the standing or election of parties or candidates.
Anyone who doubts that should look at a letter from the noble Lord, Lord Bach, dated 1st November, to my noble friend Lord Cope. I understand that a copy was placed in the Library. Paragraph 2 reads,
"Your particular concern was, I think, that an organisation might conduct a campaign on an issue which is outside, or at the margins of, the main lines of party political debate … It is likely therefore that, to take your example, an animal welfare organisation running a campaign in the run up to an election which advocated a ban on fur farming would be caught by provisions of Part IV".

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I wonder whether the Minister, when he replies to the amendment, can confirm that it is the Government's intention that any charitable organisation such as the RSPCA, to take one example, should be caught by these provisions and indeed whether it is their intention that any cross-party organisation—for example, one campaigning against the euro—would also be caught by the provisions, even though the Government have said that no decision on the euro will be taken until after the election.
While a few campaign groups might try to influence the election of candidates, most simply want to influence policy, not elections. That is a fundamental distinction. All such groups know that they should take care at election time. Now, under the provisions of Schedule 10 as they stand, they run the risk of prosecution at any time.
Concern was expressed in another place during debates on this Bill about these provisions and an attempt was made in an amendment tabled by the right honourable Frank Field MP to restrict the control period so that it began only when a general election was called. The Government rejected the amendment but were not very convincing in their response. The Home Office Minister, Mr Tipping, said at col. 226 of Hansard of 14th March this year that the Government would,
"look at [the] debate and take account of the comments made down the road"—
that is us. The fact that there is no certainty about the date of the election until the end of the Parliament is no reason to subject campaign organisations to controls all year round. Nor is it good enough to say that such organisations need only register and then there will be nothing to worry about. They will still be subject to the Bill's stringent controls on the source of funds and to spending limits.
That adds up to a gross infringement of their freedom. The controls should relate to when the election is actually called. That is the effect of my amendment. If the Minister thinks that the period is too short, perhaps he will come up with an alternative suggestion. But government controls on campaign groups that apply every day of every year simply because those groups take a contentious position on a specific issue, are controls that have gone a bridge too far.
Lord Bassam of Brighton: My Lords, I shall deal with all the amendments which have been regrouped. Amendments Nos. 151 and 160 are familiar to your Lordships' House, the noble Lord having spoken to them previously. They relate to the period during which the spending limits are to apply.
The noble Lord, Lord Mackay, expressed concern that in the absence of a fixed-term Parliament registered parties will not know when the 365-day period when spending limits are to apply will commence. I should not give him the date of the next general election, even if I knew it. It is a matter of considerable speculation, so let us leave it there. As I indicated previously, parties can comply with the law
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by working to the spending limit in each 365-day period. The noble Lord has taken me at my word in putting forward amendments which give effect to that.
It is one thing for parties to work to a rolling 365-day period on a voluntary basis but quite another to require that of parties. If the £20 million limit is to apply to any period of one year, it would have to be enforced for any such period. That would mean that a registered party would have to submit a return to the electoral commission on a daily basis, covering the most recent rolling 365-day period. We have heard a great deal about intolerable burdens and I submit that that would place a most intolerable burden on parties to no good purpose.
We are concerned with the 365-day period ending with the date of an election. Only in respect of that period do we need to require a return from each party. I therefore commend to the noble Lord the existing formula in the Bill and invite him to withdraw his amendment.
I turn to Amendment No. 159 tabled by the noble Lord, Lord Willoughby de Broke. As he said, it would reduce the period during which the controls on controlled expenditure would apply in relation to a parliamentary general election. As paragraph 3 of Schedule 10 stands, the relevant period is 365 days prior to the date of the poll. That mirrors the position for registered parties under Schedule 9. The amendment cuts the relevant period to one or just under 30 days beginning on the day an election is called. However, the noble Lord thought that we might want to bring forward some other number of days.
If adopted, the amendment would allow third parties to incur controlled expenditure in the weeks and months leading up to an election. Instead of being limited to a budget of £1 million in the year before an election, a third party would be free to spend up to that amount in the final six weeks of the campaign and on top of that spend a further £5 million, £10 million or more in the weeks and months which preceded a formal announcement of the date of poll.
The noble Lord suggested that because we do not have fixed-term Parliaments, a third party cannot know when the 365-day period will start, thus a third party may unwittingly be caught out by the provisions of Part VI. However, the fact that the precise date of a general election is not known well enough in advance is no hindrance to the operation of the scheme set out in the Bill. I believe that there is common agreement to that.
A third party can avoid committing any offence as a consequence of incurring expenditure above the lower limit on controlled expenditure by making the required notification to the electoral commission and by renewing it on an annual basis. In practice, a third party can ensure that its campaign expenditure remains within the prescribed upper limits on third-party expenditure by adhering to those limits during any 365-day period. In most cases, we are dealing with sophisticated organisations which can take an educated guess at the timing of an election and consequently tailor their expenditure accordingly.

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Most expenditure aimed at an election will in any event take place in the immediate run-up to the poll. While I recognise that there may be a theoretical concern about the possibility of incurring controlled expenditure in breach of the requirements of Part VI, I am not convinced that there is a real danger in practice. Applying restrictions over a 365-day period is, however, essential to the aim of bearing down on election expenditure. The noble Lord, Lord Willoughby de Broke, referred to campaign groups. Whether or not Business for Sterling or any other group falls within Clause 83(3) in Part VI of the Bill depends very much on the facts of the case.
As the debates have proceeded noble Lords opposite now appear to argue for a lower cap for general election campaigns. They also argue strenuously that that should apply for a shorter period. Do noble Lords opposite want a larger sum of money in a shorter period of time, with the ability to spend much more outside the period of control, or do they believe that there should be a proper system of regulation as set out in the Bill? Some of the important issues have been drawn out as the debate has proceeded. I shall be interested to hear from noble Lords opposite why they have decided to try to dismantle a system of control which I understood commanded a degree of consensus.
Lord Willoughby de Broke: My Lords, while I thank the Minister for that reply I do not believe that he has answered my concerns. The Minister simply repeated what he said at Second Reading and what was said in the other place. He left it to third parties to operate their expenditure limits for any 365-day period and invited them to take what he called an educated guess. The Minister has given noble Lords one or two hints but no more. If the Minister will not tell us when the election will take place, how can third parties possibly guess and operate accordingly? It is grossly unfair that they should have to operate on a rolling 365-day basis; otherwise, they will fall foul of the Bill as it stands. Having made that point, I should like to revisit the matter at Third Reading.
Lord Mackay of Ardbrecknish: My Lords, I have listened to the Minister, who does not convince me. The Minister is supposed to convince noble Lords of the merits of the Government's cause, not the other way round. I remind the Minister that when we debated the problem of the 365 days both his noble friend Lady Gould and I doubted its good sense and believed that it would be difficult to operate. That is especially so in parliaments with narrower majorities than the present where one can assume that it will run four years, if not longer. It can be very difficult to predict the position in parliaments with tighter majorities and each month must be assumed to be month one of the 12-month period, which adds to the problem. I would control the two or three months running up to the election, because that is the key period. Political parties which wanted to spend outside that period would be off their heads. The political climate can change. I remind noble Lords that that happened in September in connection with the price
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of petrol. I do not believe that the Minister would want an election within a week or two of that event. The world changes quite quickly. However, I shall not make any progress. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 78 [Returns as to campaign expenditure]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 152:
Page 59, line 21, leave out ("and") and insert ("or").
On Question, amendment agreed to.
Clause 89 [Restriction on payments in respect of controlled expenditure]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendments Nos. 153 and 154:
Page 67, line 14, leave out ("and") and insert ("or").
Page 67, line 14, leave out ("£100") and insert ("£200").
On Question, amendments agreed to.
11.45 p.m.
Lord Bach Lord Bach moved Amendments Nos. 155 and 156:
Page 67, line 19, at end insert ("or receipt").
Page 67, line 20, leave out from ("payment") to end of line 22.
On Question, amendments agreed to.
Clause 90 [Restriction on making claims in respect of controlled expenditure]:
Lord Bach Lord Bach moved Amendment No. 157:
Page 67, line 29, leave out (", together with the relevant invoice,").
On Question, amendment agreed to.
Clause 92 [Limits on controlled expenditure by third parties]:
Lord Bach Lord Bach moved Amendment No. 158:
Page 69, line 37, at end insert—
("(5A) Where—

(a) during a regulated period any controlled expenditure is incurred in a particular part of the United Kingdom by or on behalf of a third party, and

(b) the expenditure is so incurred in pursuance of a plan or other arrangement whereby controlled expenditure is to be incurred by or on behalf of—

(i) that third party, and

(ii) one or more other third parties,

respectively in connection with the production or publication of election material which can reasonably be regarded as intended to achieve a common purpose falling within section 83(3),

the expenditure mentioned in paragraph (a) shall be treated for the purposes of this section and Schedule 10 as having also been incurred, during the period and in the part of the United Kingdom concerned, by or on behalf of the other third party (or, as the case may be, each of the other third parties) mentioned in paragraph (b)(ii).
(5B) Subsection (5A) applies whether or not any of the third parties in question is a recognised third party.").
The noble Lord said: The amendment responds to the concern expressed in Committee by the noble Lord, Lord Rennard, about third parties ganging up in order—as he put it—to hijack the agenda during an election campaign.
The noble Lord will be aware that under Section 75 of the Representation of the People Act 1983 it is an offence for a third party in a constituency contest to incur expenditure in concert with others. We do not want to add to the list of offences created by the Bill. But I hope the noble Lord will agree that this amendment should have the same deterrent effect. The amendment provides that where a third party incurs control of expenditure in pursuance of a plan or other arrangement with one or more other third parties, the expenditure is deemed to have been incurred by each of the third parties concerned.
As a result, where, for example, four third parties were acting in concert in mounting a campaign throughout the United Kingdom, the buying power of their aggregate spending limit would be in round terms £1 million and not four times that amount. In short, third parties could not pool their resources in order to secure a bigger impact for their campaign. I beg to move.
Lord Rennard: My Lords, I thank the Minister for closing what I think is a serious loophole in the legislation.
On Question, amendment agreed to.
Schedule 10 [Limits on controlled expenditure]:
[Amendments Nos. 159 and 160 not moved.]
Schedule 11 [Control of donations to recognised third parties]:
Lord Bach Lord Bach moved Amendments Nos. 161 to 163:
Page 175, line 48, leave out ("(2)(d)") and insert ("(1)(d)").
Page 176, line 1, leave out ("(2)(e)") and insert ("(1)(e)").
Page 178, line 12, leave out sub-paragraph (2) and insert—
("(2) For the purposes of this Schedule, any relevant donation received by a recognised third party which is an exempt trust donation shall be regarded as a relevant donation received by the recognised third party from a permissible donor.
(2A) But, for the purposes of this Schedule, any relevant donation received by a recognised third party from a trustee of any property (in his capacity as such) which is not—

(a) an exempt trust donation, or

(b) a relevant donation transmitted by the trustee to the recognised third party on behalf of beneficiaries under the trust who are—

(i) persons who at the time of its receipt by the recognised third party are permissible donors falling within section 52(2), or

(ii) the members of an unincorporated association which at that time is such a permissible donor,

shall be regarded as a relevant donation received by the recognised third party from a person who is not such a permissible donor.").
On Question., amendments agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendments Nos. 164 to 165:
Page 178,1ine 27, leave out ("not less") and insert ("more").
Page 178, line 42, leave out ("not less") and insert ("more").
On Question, amendments agreed to.
Lord Bach Lord Bach moved Amendment No. 166:
Page 179, line 41, leave out ("(2) to (10)").
On Question, amendment agreed to.
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 167:
Page 179, line 43, leave out ("not less") and insert ("more").
On Question, amendment agreed to.
Clause 94 [Returns as to controlled expenditure]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No. 168:
Page 71, line 4, leave out ("and") and insert ("or").
On Question, amendment agreed to.
Clause 99 [Referendums to which this Part applies]:
Lord Campbell of Alloway: My Lords, I beg to move that the House do now adjourn. We now reach the referendum part of the Bill, which is Part VII. This is the first amendment. I have been to see the Leader of the House to discuss the amendment. The noble Baroness agreed that it is a matter which is not of party political importance. It is concerned with constitutional matters. It is concerned with the body politic. She agreed with me that this should not in any circumstances be taken at this sort of hour in the House.
I happen to know—I shall not mention the noble Lord's name—that a distinguished Member of the Benches opposite would have been speaking on this issue. I happen to know that the issue had the support—I can say this—of my noble friend Lord Cranborne. I informed the Leader of the House that this was the position. It is no use the noble Lord, Lord Carter, shaking his head. I appeal to the noble Lord not to shake his head. I have never said anything in this House which was not true.
This was a perfectly clear discussion in amity across the political divide. Here we are now, at ten minutes to midnight, seeking to deal with a constitutional matter of great importance. We all know we are in the hands of our Front Benches, but the Back Benches are the backbone of this House. Some consideration should be given to us. Some consideration should be given to an understanding made between a very insignificant Back Bencher such as myself and the Leader of the House. I do not mind what my own Front Bench thinks. What I mind is that there should be some sort of orderly and civilised conduct of debate on a constitutional issue such as this. I do not know if anyone wishes to speak; I will not pre-empt them if they wish to do so.
Moved, That the House do now adjourn.—(Lord Campbell of Alloway.)
Lord Chalfont: My Lords, perhaps I may—
The Chairman of Committees: My Lords, I apologise to the noble Lord, Lord Chalfont, for intervening and I do not do so in any way to usurp the authority of the House to maintain order in your Lordships' House. I should point out that if an amendment is not to be moved and an amendment is not to be considered, the

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Motion that can come before the House is not that the House do now adjourn but that further consideration on Report be now adjourned.
Lord Carter: My Lords, I was shaking my head because it was news to me that the noble Lord had discussed this matter with the Leader of the House. That is why I was showing my surprise.
We are at something of a disadvantage. There was an agreement between the two Front Benches that we should reach a certain point tonight which, I think, is Amendment No. 174. That is a normal agreement. I see that the Opposition Chief Whip is agreeing with me. This is an agreement that we reach every night. If the noble Lord wished to press his Motion that the House be now adjourned, that would be unusual. It is almost unique for anyone other than the Government to move that the House be now adjourned. I can understand the noble Lord's feelings. This situation is news to all of us. I should like to suggest, because I know that the noble Lord always thinks of the House, that we have the debate on his amendment—it is an important one, but I am not sure of its terms—and hear the views of the Front Benches. If he wishes to return to it at Third Reading he is perfectly entitled to do so.
Lord Campbell of Alloway: My Lords, if it is in order, I say to the noble Lord that he is quite right. I did not tell him. I had a discussion with the Leader of the House. Perhaps I was in error. It seems to me that the arrangement that was made was an arrangement made in honour and one which I would wish to be observed. Talking about honour, my own Front Bench did not tell me. I have been trying to find out all day what the agreement was and how far it was intended to go. Perhaps the noble Lord, Lord Carter, will accept that I have discovered that information from him only now, having sought it from my own Front Bench all day. This is not a very satisfactory position.
Lord Carter: My Lords, I know that the noble Lord will be aware that it is normally as the evening wears on that we reach an agreement about how far we may go. We can never tell how long a debate will last as the House is self-regulating. Certain groups of amendments may, surprisingly, take an hour instead of 15 minutes. We can never tell until late on in the evening how far we might go. There was a genuine agreement between us that we would go to Amendment No. 174. We are taking the time of the House. I am in the hands of the noble Lord, for whom I have respect. We have always discussed these matters with great amity. I think that the best thing to do is to discuss his amendment and hear the Front Bench views. Then, in the usual way, if the noble Lord wishes to come back at Third Reading, he is perfectly entitled to do so.
Lord Henley: My Lords, I rise with some diffidence to support the noble Lord the Government Chief Whip and to persuade my noble friend that what he is suggesting is not necessary on this occasion. As the noble Lord the Government Chief Whip suggested, we
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come to certain agreements over the course of an evening as to how we should get on in terms of the business in front of the House. It is always very difficult to do so. We always proceed in this House by means of agreement between the usual channels. If we do not proceed by agreement, the procedures of the House break down completely. On this occasion we have agreed to finish the Bill in three days. Tomorrow we have other business—we have the Freedom of Information Bill—and we will then return to this Bill. We therefore have to do a certain amount tonight. The noble Lord the Government Chief Whip and I agree that we had to get so far on this occasion. For that reason, I think it is right that we should go on. I therefore hope that my noble friend will feel that he can withdraw the suggestion that he put before the House.
Lord Campbell of Alloway: My Lords, I am not at all sure that I will. It would have been very much appreciated if the courtesy of what had been agreed could have been passed on to me. No one let me know. It is a most unsatisfactory situation. But there comes a point of time when one has to stop protesting. I suppose that the only sensible thing to do, under great protest, is to move my amendment.
Lord Carter: My Lords, I am extremely grateful to the noble Lord.
Lord Campbell of Alloway: But I protest that I have to do it.
Lord Carter: My Lords, I understand the noble Lord's feelings. He has behaved with his usual respect for the courtesies of the House. There has been a misunderstanding. It happens from time to time in the best conducted organisations. There was a genuine misunderstanding between us all. I suggest that we have the discussion now on this important amendment. I suspect that the noble Lord may wish to withdraw it and then return to the matter at a later stage.
Lord Campbell of Alloway: Very well, my Lords. I apologise for being so cross but it was true anger. I beg leave to withdraw my Motion to adjourn the House.
Motion, by leave, withdrawn.
Clause 99 [Referendums to which this Part applies]:
Lord Campbell of Alloway Lord Campbell of Alloway moved Amendment No. 169:
Page 73, line 43, after ("Parliament") insert ("or pursuant to resolutions of both Houses of Parliament on the advice of the constitutional committee of the House of Lords that certain provisions of the Bill substantially effect the constitution").
The noble Lord said: My Lords, I shall get on with this as quickly as I can. The amendment eases the restraint of Clause 99(2)(a) to assert the freedom of both Houses, if so advised under extant rules of procedure, to resolve that a pre-legislative referendum be conducted as proposed in Amendment No. 170 on provisions of a Bill which on the advice of the constitutional committee substantially affect the constitution.
The purpose, without derogation from the exercise of your Lordships' guardianship function under the Parliament Acts, is to delay enactment of a Bill until the result of a referendum is known and so, in the interests of the body politic and not of any particular party, to seek to safeguard the unwritten constitution from unwelcome erosion by statute. Irrespective of the result of the referendum, the legislative powers of government are preserved. Albeit that the remit of the constitutional committee, which is about to be setup, is indeed wide, as affirmed by the noble Baroness the Leader of the House on 14th November—at cols. 124 and 125 of the Official Report—the scope of the amendment is concerned with Bills in which no provision is made for a referendum, and not with the interpretation or implementation of the Parliament Acts or with any other enactment upon which it would be within the remit of the constitutional committee to advise this House.
This is an enabling provision, a measure of safeguard at the disposal of both Houses, but not at the disposal of one House. It is to be implemented only if so advised under the freedom of each House, a freedom which cannot be exercised under this Bill unless this measure were to be amended before enactment, as proposed. Part VII of the Bill on referendums is of generic application to all referendums and provides that all referendums shall be conducted by the electoral commission, as all referendums have to be held by or under an Act of Parliament.
The concept of a pre-legislative referendum on the provisions of a Bill which substantially affect the constitution derives from Clause 3 of the Parliamentary Government Bill of my noble friend Lord Cranborne, read a second time on 25th June 1999. As I have said already, my noble friend would have wished to address the House tonight on this matter. This concept, as proposed to be implemented by the amendment tabled by the noble Lord, Lord Owen, in Committee, could not have been supported for reasons given by my noble friend Lord Cranborne and other noble Lords. Implementation of the concept as proposed by these amendments is dependent on a factor which may well not have been taken into account when instructions to draft this Bill were prepared; that is, the advice of a constitutional committee to be set up on the recommendations of the Royal Commission to be tendered to this House on the provisions of a Bill which substantially affect the constitution. Such advice will be reasoned, objective and wholly devoid of party political consideration. The crucial consideration is whether both Houses resolve to accept such advice and that a referendum should be held in which event the referendum would be held by an independent body appointed by the Secretary of State rather than by the electoral commission.
These amendments acknowledge the sovereignty of another place, asserting the procedural freedom of both Houses to resolve that a referendum should be held and, if so advised, to impose conditions such as the form of the question to be put, as well as the threshold. In neither House could argument for or against a pre-legislative referendum he foreclosed upon. I mention that in deference to my noble friend Lord Norton of Louth,
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who is present in the House. He takes one view and I take another. Voting entitlement would be provided under Clause 102 of the Bill. Indeed, the provisions of the Bill would stand save as requisite to accommodate these amendments which, if acceptable in principle, would require expert attention to the Bill by a draftsman before enactment of Part VII.
Much has been said about modernising Parliament, but little has been said about safeguarding our largely unwritten constitution. The cumbersome and complex machinery of the Bill may well be appropriate to govern elections, albeit that serious reservations have been expressed. But it is not appropriate that the electoral commission should have the conduct of a referendum such as that proposed by these amendments on matters concerning the constitution.
It is assumed that the constitutional committee will report on Bills, either on its own initiative or at the instigation of the leader of any party or the Convenor of the Cross Benches, and will have access to academia. It is envisaged that a new dimension of amity as between the two Houses could evolve.
Having to talk at this hour of night about a new dimension of amity which could conceivably take us a little further forward towards safeguarding the constitution shows the ridicule of the position in which I have been put, against which I firmly protest and shall continue to do so. Neither my party nor the party opposite is the slightest bit interested or concerned about anything that I am saying tonight. I hope that when the House is assembled on Third Reading, it will be interested. I accept that the Front Benches are not.
This new dimension is to be achieved on a case by case basis without derogation from the delaying power under the Parliament Acts. The advice of the constitutional committee—of which no account has been taken—would enter the public domain after it had been tendered to your Lordships' House. Is there any reason to suppose that the quality and objectivity of its advice should not receive in another place the general acclaim and respect accorded to the advice of all other Select Committees of your Lordships' House? It is to be hoped that the Committee of Selection will favour the inclusion of Law Lords—or retired Law Lords if they are willing to serve—as the efficacy of the amendments is dependent upon the authority, advice and status of the committee, which would be greatly enhanced by their inclusion.
We cannot know when or on what instructions Part VII of the Bill, which deals with referendums, was drafted. Was it by accident or design that provisions to accommodate the freedom of both Houses were omitted? If by accident, perhaps the Government will take on board the principle of these amendments at Third Reading. If by design, then why so? As I said, under protest, I beg to move.
The Chairman of Committees: My Lords, it may be for the convenience of your Lordships, in order to place the

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matter beyond doubt, if I say that any attempt to move the adjournment of the House may be taken as having been, by leave, withdrawn.
Lord Chalfont: My Lords, I support the amendment of the noble Lord, Lord Campbell of Alloway. I have put my name to the second amendment in this group.
As a simple Back Bencher, perhaps I may express the view that this is the most bizarre way of conducting the affairs of a serious legislative body. We are sitting after midnight, with fewer than a dozen noble Lords present, and with the two major parties of the House trading genial insults with each other when dealing with an amendment which has serious constitutional implications. I find it most odd that those who put their names to the amendment should have had no idea whatever of any arrangement between the usual channels as to which clause should have been reached by the time the proceedings of the House were to be concluded. Whatever those arrangements may be and whatever may be the views of the House on this or any other amendment, I find this a most extraordinary and bizarre way of conducting the affairs of a serious upper House.
I support the amendment. It is of great constitutional significance. We have had much discussion recently about constitutional change and the weakening of the powers of Parliament. There has been much concern about constitutional changes such as those that have taken place in the House of Lords, in terms of devolution, and in attitudes towards Europe and the European Community.
"Constitutionalism" is, I suppose, the expression for the beliefs of those of us who believe in the importance of the constitution, albeit unwritten. I have always believed that the constitution assumes that all state and civic institutions derive from a Constitution—in capital letters—and that that constitution is to be obeyed and not departed from at the whim of the government of the day, of whatever complexion it may be.
Although the constitution should mean a government of law and not of men—of either political persuasion—we must accept that constitutional law, like any other law, can be changed. Parliament is fully sovereign. There is no field in which Parliament is forbidden to legislate. However, it seems to me that the amendment is a microcosm of a much broader concern. I apologise to noble Lords for developing this argument at this time of night. I should have liked to develop it at a more civilised time in front of a House with some people listening. It is arguable that, if it is agreed that the proceedings of this House are an integral part of the constitution—which I believe them to be—Clause 99 represents a change in the constitution.
Are we in this House fully aware of the fundamental and important changes that are being imposed on our constitution, against the whole ethic of a constitution—namely, that it is there to be obeyed and not to be changed at the whim of a single political party in a single parliament? Are we fully aware of what is happening? That is my main reason for supporting the amendment. I
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shall be interested to hear the Minister's response. Quite apart from the importance of the amendment, which I strongly support, we are paddling in waters the depth of which I do not think anyone has fully appreciated. Do we really know what we are doing to the powers of this House and the other place, and to what is after all, however unwritten it may be, the constitution of this country?
12.15 a.m.
Lord Dean of Harptree: My Lords, the hour is late and the Benches in the Chamber are not exactly crowded, but Hansard will record this important debate tomorrow. I am grateful to my noble friend Lord Campbell of Alloway for his skilful drafting. I am also grateful to my noble friend Lord Cranborne because the amendment is in fact modelled on Clause 3 of his Parliamentary Government Bill.
I am not necessarily wedded to the details, but I wish to concentrate on the principle; namely, that we need better parliamentary and outside safeguards for Bills of major constitutional importance. I am not enthusiastic about referendums. It seems to me that they fit ill with our concept of parliamentary sovereignty and the representative character of Members of Parliament and your Lordships. We are sent to Parliament to exercise our judgment, having due regard to public opinion. But the reality is that we are making increasing use in recent years of referendums, and it looks to me as if they have come to stay. If that is so, I can think of no better subject for an appeal to the people than proposals to change the constitution of our country.
I am delighted that your Lordships' House has agreed to set up a constitutional committee and that the terms of reference, as my noble friend Lord Campbell of Alloway said, have been agreed:
"To examine the constitutional implications of all public Bills coming before the House; and to keep under review the operation of the constitution".
This should provide for your Lordships' House a valuable safeguard—an early warning system to alert this House to major constitutional matters and allow it to recommend how they should be dealt with.
It may well be argued that we should see how the constitutional committee works in practice before proceeding further. Indeed, I shall not be at all surprised to hear the Minister using that argument. There is force in that argument; but, none the less, I believe that the matter is too urgent to be left there. One of the reasons why I say that is to look at the procedure of another place, not in any way in criticism but to consider what the position is there.
There was a long-standing convention in another place that constitutional Bills should not be timetabled or guillotined and that the Committee stage of these Bills should be taken on the Floor of the House, so that all Members of Parliament could take part. That convention has been over-ridden in this Parliament. There are now no more safeguards for major constitutional Bills than for minor technical Bills. I understand that the other place has now decided to go further next Session. It is intended that all Bills should be

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tabled or guillotined from the start. It is not for me to comment on the procedures of another place; they are masters of their procedure, just as we are masters of our procedure. However, the two Houses are complementary: we both have a duty to sustain the government of the day and to call them to account. I suggest, therefore, that we need to take note of the procedures of another place in determining our own procedures.
All governments—I stress "all governments"—no matter what their political colour, are authoritarian by nature if they can get away with it. They need discipline from two Houses of a strong Parliament. Very regrettably, we now have the tendency of government, all governments, to make statements first to the media, thus bypassing and devaluing Parliament.
The power of government has increased and is increasing. The power of Parliament has diminished and is still diminishing. The time has come to redress the balance, especially with Bills of major constitutional importance. I believe that this amendment would go some way to achieve that objective.
Lord Norton of Louth: My Lords, I shall speak briefly, not because of the lateness of the hour but simply because I shall return to some of the issues shortly when we discuss one of my amendments. As my noble friend Lord Campbell of Alloway has already mentioned, I come at this matter from a somewhat different position. As I have made clear before, I have a fundamental and principled objection to referendums and therefore I do not wish to encourage them in any way.
The noble Lord, Lord Chalfont, asked whether we were aware of all the significant constitutional changes that are taking place. One of those significant constitutional changes is the use of referendums. We certainly have a constitution. Contrary to the popular perception, it is not unwritten. What we have is a constitution that is part written but uncodified. I do not think that we protect the constitution by installing a procedure that I argue serves to undermine it. For reasons that I shall mention later in connection with my amendment, I think that this device runs contrary to, rather than reinforces, parliamentary government.
I come to the specifics of the amendment. I wish to make just two points at this stage. For reasons that will be clear from what we heard earlier, I suspect that we shall return to it. Therefore I shall keep my comments short. Given that my objection is to referendums on principle, I have an objection to the amendment because it makes the triggering of referendums rather too easy. Under the amendment, both Houses would be able to ignore the advice of the constitutional committee. Therefore the constitutional committee of this House could not trigger automatically the holding of a referendum. Both Houses could still reject the advice. But I argue that the advice should precede a Bill rather than simple resolutions of the two Houses. I think that there needs to be a far lengthier reflective process before Parliament approves the use of the mechanism.
The other problem I mention at this stage and draw to the attention of my noble friend is that the House of Commons is likely to find the provision unacceptable, as
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it provides that resolutions have to follow advice from a committee of this House. For the reasons that have been advanced I do not doubt that the committee will be highly qualified to comment on the matter. But that is not at issue. It is a committee of one House that would trigger resolutions of both Houses. I think that there are problems with the amendment as drafted but because of my stance on referendums I reject the amendment.
As my noble friend Lord Dean indicated, if the amendment springs from a belief that Parliament is weak, how on earth—if that is the case—will one achieve passage of this provision? If Parliament is weak, you strengthen Parliament; you do not look for devices outside the institution to achieve that result.
Lord Mackay of Ardbrecknish: My Lords, I consider that virtually all of the Bill constitutes important constitutional provisions. Perhaps with the exception of the noble Lord, Lord McIntosh of Haringey, who has just entered the Chamber, I think I can safely say that among those present in the Chamber this evening am the only holder of the campaign medal for all the constitutional Bills we have had since 1997, starting with the Referendums (Scotland and Wales) Bill. I believe that that was its title.
One of the difficulties we experience in this House is that often we have to address important legislative issues late at night. However, in my view that is one of the virtues of our not having a guillotine system and having to do things by agreement. I am content to deal with these matters late at night, even though I should have liked to discuss some of the matters I have dealt with this evening before a larger audience at prime time. But that is the way of the world. We treat these matters as seriously at this time of the night as at any other time.
Like my noble friend Lord Norton of Louth, I have a principled dislike of referendums. In an ideal world I should not have started having them. I realise that they are a de facto part of the constitution, if not written into it. On a number of occasions we have discussed trigger mechanisms other than Her Majesty's Government triggering a referendum. So I have some sympathy with the search for a different trigger mechanism.
I am not entirely convinced that my noble friend Lord Campbell of Alloway has alighted on the right one, any more than I was convinced that the noble Lord, Lord Owen, and others had done so. Nor was I convinced when I proposed my earlier amendments that I had alighted on the right mechanism. But, undoubtedly, if we are to have many referendums we shall have to address how they are triggered other than by government. Theoretically they can be triggered by Parliament despite the government. But I have been long enough in politics to know that that may be theoretical; the chances of it happening are slight. It occurred on the Scotland legislation in the 1970s but it was an unusual occurrence due to the government's lack of a majority in the House of Commons and a rebellion on their own side.

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These are important issues. I look forward to hearing from the noble Lord, Lord Bassam.
Lord Bassam of Brighton: My Lords, late though the hour is I join with the noble Lord, Lord Mackay, in recognising that this is an important debate. It continues the discussion that began in Committee. I am grateful to the noble Lord, Lord Campbell, and others who have enlivened the debate.
As no doubt Members of your Lordships' House will recall, the noble Lord, Lord Owen, moved an amendment which would have had the effect of binding Parliament not to proceed with a certain class of legislation unless it had been approved in a referendum. Many who spoke in the debate were profoundly concerned at the constitutional implications of the proposal. Of particular concern was the fact that the decision whether or not to hold a referendum on a given constitutional issue would be placed in the hands of the Speaker rather than left to Parliament as a whole. With the amendments now before us, the proposal once again is that in specific cases a Bill may not pass into law unless and until a referendum is held.
However, it is less obvious that this proposal comes squarely up against the principle of parliamentary supremacy since such a referendum would be held pursuant to a resolution of both Houses of Parliament. To that extent it might be argued that the procedure envisaged is no more than an alternative to Parliament choosing to legislate to the same effect. If that is so, it might also be argued that it would be better that Parliament provided for a referendum to be held through the normal legislative process rather than by means of a resolution.
If I understand it correctly, the proposal is that Parliament would consider making such a resolution if the constitutional committee of the House of Lords were to advise that provisions of a particular Bill would substantially affect the constitution. The Royal Commission on the reform of the House of Lords recommended that a sessional constitutional committee be established. The Wakeham Commission further proposed that this committee should have the function of scrutinising all public Bills and preparing a report on their constitutional implications.
The picture would be radically different if the consequence of the committee's advice might be to prompt Parliament to consider the holding of a referendum. Such an arrangement would draw the work of such a committee into the thick of political controversy. It would beg more questions about whether the work of such a committee should be the preserve of a committee of this House alone.
I do not intend to dwell any further on the constitutional implications of these proposals. However, I am bemused by the proposal of Amendment No. 170: that in the case of a referendum held as a result of these provisions the chief counting officer should not be chairman of the electoral commission or a person appointed by him, as provided by Clause 125(2). It is instead suggested that the appointment of the chief
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counting officer should be farmed out to some unspecified independent body. We have gone to some lengths to ensure that the electoral commission is such an independent body. I do not understand the concerns that lie behind that aspect of the amendment. If there is a genuine concern, why should the alternative arrangements apply only to constitutional referendums?
I can only repeat that the purpose of the provision is to enable the application of the relevant provisions of the Representation of the People Acts, with any necessary modifications, to the holding of a referendum without the need to enact such provisions in primary legislation.
To conclude, the Neill committee did not address these issues and the Government do not believe that it is appropriate to legislate on them in this Bill. We have sought to give effect to the Neill committee's recommendations on the fair conduct of referendums. The circumstances in which referendums are held are an issue of an altogether different order. As a student of the British constitution, I fully respect and understand the points that have been made about the constitution, its organic development, the way in which we should treat it, how it changes over time and how it should properly be considered. However, for the reasons that I have given, I urge the noble Lord to withdraw the amendment.
12.30 a.m.
Lord Campbell of Alloway: My Lords, I thank all those who have spoken. I shall not enter into a riposte argument on the way in which they have commended or criticised the amendment. I did not expect any amendment of mine to have the support of my Front Bench, so I am not the slightest bit disappointed. I had hoped to be able to canvass a wider discussion among Back-Benchers throughout the House. On the undertaking to read with care everything that has been said, I beg leave to withdraw the amendment so that I may return to it at Third Reading.
Amendment, by leave, withdrawn.
The Chairman of Committees: Does the noble Lord, Lord Campbell of Alloway, intend not to move Amendment No. 170?
Lord Campbell of Alloway: I have to move it, do I not?
Noble Lords: No.
Lord Campbell of Alloway: All right, my Lords. If I do not have to move it, I am obliged. Can I move it at Third Reading?
The Chairman of Committees: My Lords, strictly speaking it is not for me to say, because it is within the scope and function of your Lordships' House to determine these matters, but informally—and, I take it, with the approval of your Lordships—the answer is that the noble Lord may return to it at Third Reading if he chooses.
[Amendment No. 170 not moved.]
Lord Bach Lord Bach moved Amendment No. 171:
After Clause 101, insert the following new clause—

REFERENDUM QUESTIONS
(" .—(1) Subsection (2) applies where a Bill is introduced into Parliament which—

(a) provides for the holding of a poll that would be a referendum to which this Part applies, and

(b) specifies the wording of the referendum question.

(2) The Commission shall consider the wording of the referendum question, and shall publish a statement of any views of the Commission as to the intelligibility of that question—

(a) as soon as reasonably practicable after the Bill is introduced, and

(b) in such manner as they may determine.

(3) Subsections (4) and (5) apply where the wording of the referendum question in the case of any poll that would be a referendum to which this Part applies falls to be specified in subordinate legislation within the meaning of the Interpretation Act 1978.
(4) If a draft of the instrument in question is to be laid before Parliament for approval by each House, the Secretary of State—

(a) shall consult the Commission on the wording of the referendum question before any such draft is so laid, and

(b) shall, at the time when any such draft is so laid, lay before each House a report stating any views as to the intelligibility of that question which the Commission have expressed in response to that consultation.

(5) If the instrument in question is to be subject to annulment in pursuance of a resolution of either House of Parliament, the Secretary of State—

(a) shall consult the Commission on the wording of the referendum question before making the instrument; and

(b) shall, at the time when the instrument is laid before Parliament, lay before each House a report stating any views as to the intelligibility of that question which the Commission have expressed in response to that consultation.

(6) Where any Bill, draft instrument or instrument to which subsection (2), (4) or (5) applies specifies not only the referendum question but also any statement which is to precede that question on the ballot paper at the referendum, any reference in that subsection to the referendum question shall be read as a reference to that question and that statement taken together.
(7) In this section "the referendum question" means the question or questions to be included in the ballot paper at the referendum.").
On Question, amendment agreed to.
Lord Norton of Louth Lord Norton of Louth moved Amendment No. 171 A:
After Clause 101, insert the following new clause—

VALIDITY OF REFERENDUM: THRESHOLD OF VOTES CAST
(" . Any proposition contained in a referendum to which section 99(1) applies shall be considered to have been carried only if—

(a) an absolute majority of those voting cast their ballots in favour of the proposition; and

(b) those voting in favour of the proposition constitute at least 40 per cent. of those eligible to vote.").

The noble Lord said: My Lords, we discussed the issue rather late at night in Committee and we are now discussing it even later at night on Report. For that reason, I do not propose to go into great detail on the arguments for a threshold requirement for referendums.
The basic argument is fairly straightforward. In parliamentary elections, we elect candidates for a set period. In referendums we have often been asked to approve something that is intended to be in place permanently. We know that we can turn candidates out of office, but there is no mechanism for triggering a referendum to overturn the result of an earlier referendum.
Referendums are qualitatively distinctive. They are not on a par with elections to public office. Imposing a threshold would ensure that a substantial proportion of the population was required to turn out and support a proposition. It would prevent an active minority determining the outcome.
In Committee, the Minister argued against a threshold. He said:
"Our parliamentary democracy operates on the principle that a simple majority of those voting is enough".—[Official Report, 18/10/00; col. 1179.]
Indeed it does. However, referendums are not an intrinsic part of our parliamentary democracy. It is because of a profound attachment to parliamentary democracy that I am opposed to referendums. As I mentioned a few moments ago, I would prefer that we did not have them. I regard them as a threat to, rather than a reinforcement of, parliamentary democracy. If we are to have referendums, a threshold is desirable, for the reason that I mentioned.
Furthermore, we have had referendums in which thresholds have been imposed. There have been two referendums in which thresholds have been imposed and five in which they have not. There is, therefore, no consistent practice. It undermines the credibility of the political system if we have referendums in which different hurdles are imposed. I have no particular objection if the credibility of the use of the referendum is undermined, but I have no wish to see support for the political system itself undermined. I therefore favour consistency, which means having no threshold or a designated threshold. For the reason that I have advanced, I believe that a threshold is preferable to no threshold.
The other argument advanced by the Minister against a threshold being included in the Bill was that Parliament should decide whether one was appropriate on a case-by-case basis. He said:
"That is a matter that should be addressed, if at all, in the specific legislation providing for the referendum in question. But it is not a principle to be conceded in the context of these generic provisions".—[Official Report, 18/10/00; col. 1180.]
I have advanced the contrary proposition. In my view, there should be a generic provision. We need to ensure that the provisions applied to the holding of referendums are consistent. Such an approach is perfectly compatible with this Bill, which is all about introducing generic provisions. This Bill tries to ensure evenness and consistency for those engaged in referendum campaigns. My amendment is part and parcel of that.
Leaving the decision to be taken on an ad hoc basis can serve only to undermine the legitimacy of the process. We should therefore opt for either a simple majority to

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determine the outcome or a simple majority and a specified percentage of the electorate voting in favour. For the reasons that I advanced in Committee, which I shall not repeat this evening, I favour a threshold of 40 per cent of those eligible to vote. As noble Lords will be aware, there is, of course, a precedent for that.
As I have said more than once, my favoured position would be to have no referendums at all. If we are to have them, the rules relating to them need to be consistent. For the reasons that I have advanced, I believe that a threshold is desirable. A 40 per cent threshold is a modest one and one for which there is a precedent. I therefore commend my amendment to the House. I beg to move.
Lord Mackay of Ardbrecknish: I shall speak briefly to this amendment, without repeating all the previous speeches that I have made on the subject of thresholds and referendums. There are many references in the Scotland referendums Bill to which noble Lords can refer, if they wish. I firmly believe that if we are to have referendums, we should have thresholds. I do not agree at all with the Minister's view that it should be decided on a case-by-case basis. That would make it susceptible to variation due to the referendums, so that if the Government think that they will not get a very big turnout, they will drop the turnout; if they think they will get a big turnout, they will raise it. I believe that thresholds should be laid down in a generic referendums Bill. I would not impose high thresholds, and I fully accept all the arguments about that, but I believe that there should be some.
Noble Lords are always keen to look at other countries. I have previously mentioned that Italy has a threshold. In fact, the last two referendums failed, but not because huge majorities did not pile in on the side of the proposition, which was that the Italians should move to a first-past-the-post electoral system—I could not resist getting that in. The proposition was passed with a huge majority but the turnout did not meet their 50 per cent rule and the referendum was deemed a failure. I think that is right. I am almost agnostic on the level of thresholds; I am just keen to see them.
If government use referendums too much and too often and the turnout begins to fall, they will have to address the issue of thresholds. As my noble friend said, if these referendums are used for major changes, frankly, politics will be brought into disrepute if major changes come about when only a small proportion of the electorate have turned out. I know all the arguments about, "Well, if they did not bother", and so forth. However, I do not think that is right.
I know all the objections concerning the threshold of 40 per cent. We had them in Scotland in 1979 and I have gone over them. I had an ingenious mathematical proposition which said that with a high turnout, a simple majority would do. If the turnout began to go down, a qualified majority was necessary. A Government Minister, who has since departed from the Government, turned down even consideration of that proposal. Perhaps I may urge caution on the noble Lord, Lord Bassam of Brighton. He should be careful
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that he does not follow the route of his predecessor by being too rude about the proposition from this side that we should perhaps consider thresholds in referendums.
Lord Bassam of Brighton: My Lords, if the noble Lord, Lord Mackay, has not already written a book, he has one in him perhaps entitled, "Great Constitutional Debates in which I have been involved". I shall not offer to be his publisher. I am not sure that it is a book which would sell widely. However, I am sure it would be interesting to read. Perhaps when I have a few idle moments I shall go back to those great debates on the Scotland Bill and read what the noble Lord had to say about constitutions, referendums, and so forth.
As noble Lords know, we have debated this matter before, certainly in Committee. At that point I set out our case against having a threshold. I made the point that on some occasions thresholds may be appropriate, and on others, they might not. Noble Lords reminded your Lordships' House that we have had two referendums in relatively recent political history in which such a threshold was, indeed, imposed. In one case that led to frustration of the will of those who had involved themselves in referendums. In the other the outcome was perhaps more satisfactory and proper.
However, the Government's position is clear and simple. It is that we should consider matters on a case-by-case basis. Both noble Lords who have spoken in this short debate have said that they do not approve of referendums. Given that they come from that starting point, it is to their great credit that they have decided that we should, at least in their view and from their perspective, seek to improve the way in which referendums work. I congratulate them on that.
However, the argument we put in Committee is the one which we believe we should sustain throughout these debates; that is, that we should leave things much as they are. For those reasons, I urge noble Lords to withdraw their amendments. Parliament can make a decision on matters relating to thresholds when it decides to make use of the referendum route to resolve an important constitutional issue. I believe that is the way in which we should proceed. It is the way we have proceeded in the past and I suspect that it is the way we shall proceed in future.
Lord Norton of Louth: My Lords, some people are morning people and some are night people. I suspect that the bad news for your Lordships is that I am both. However, I recognise that not everyone is in that position. I recognise the lateness of the hour, so I shall not respond at great length.
I suspect that it will come as no surprise to the Minister to hear that I am not persuaded by the response to the argument. I had already anticipated his points and put them forward in what I said. However, I acknowledge the lateness of the hour and that this is not perhaps the best time or environment in which to push the matter at this stage. However, like my noble friend Lord Campbell of Alloway, I may wish to return to it at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
12.45 a.m.
Clause 102 [Permitted participants]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendment No.172:
Page 75, line 3, leave out ("resident in the United Kingdom or").
The noble Lord said: My Lords, this amendment and Amendment No. 183 are quite simple. They are probes arising from the rather unsatisfactory position in which we left the Bill in Committee. Amendment No. 172 refers to Clause 102, and any resident in the United Kingdom who is a permitted partcipant in a referendum.
We do not disagree with what is said in the Bill, but we are saying that only people on the electoral register can donate to political parties. Yet in this clause the Government say that any person resident in the United Kingdom will be able to campaign in a referendum. Presumably, that includes foreign nationals. So we could have foreign nationals, not on the electoral register and therefore not eligible to give donations, still campaigning in a referendum on any of the number of issues that might be run in such a referendum. If they are not on the electoral register, they are presumably not permanently resident in the UK anyway because it is remark ably easy to get onto if they come from certain parts of the world. I believe that at the last count there were over 80 countries involved. If they come here they can get onto our register.
I wonder how "resident" is to be defined. Does it mean "ordinarily resident" which is a precise test well-known in law and a higher test, or does it just mean someone who has popped over and rented an hotel room? I do not believe it would be right if someone could just pop over to this country, rent an hotel room and them become a permitted participant in a referendum. I believe that the Government need some internal consistency in the Bill about these matters.
I fully accept that there are probably technical deficencies in Amendment No. 183 so that could cut the Minister's speech somewhat. What I am trying to do here is to address what I might call the Paris and Berlin situation. What is there to stop an individual resident in a foreign country spending millions of pounds in, say, UK newspaper advertisements in favour of one side in a referendum campaign? The Minister did not answer this point, but a person could not be caught by the rules. Would not that make a mockery of the spending controls? Can we have a provision in the Bill which will stop that or would that contravene the ECHR and the free movement of capital?
Frankly, if we cannot, and if I am right in saying that someone could do what I have suggested, then does it not make a mockery of the spending restrictions and referendums? Not only could they spend money on advertising and campaigning, but an individual or organisation could mail into the UK from abroad, as Sir James Goldsmith did in the 1997 campaign with his referendum video. What is there to stop that? Not only could a foreigner do that, but a UK citizen going abroad could exploit that loophole.
If there is nothing to stop them, then tomorrow the Minister will be in some difficulty arguing that the caps on referendum spending are anything other than just a total waste of time because anyone wishing to get round them will be able to do so in the way I have outlined. I hope that the noble Lord can persuade me that the propositions I am putting to him are wrong and that the Bill would prevent them. I beg to move.
Lord Bassam of Brighton: My Lords, the case for Amendment No. 172 is that it ought not to be possible for a person to be a permitted participant if he cannot be a donor. In the Government's view there need not and should not be an exact parallel.
First, it should be open to a foreigner resident in the UK, whether or not he is registered to vote, to participate in a referendum campaign. In human rights language, there is no sufficient justification for preventing him from doing so. Secondly, a British person resident here who, for whatever reason, dropped off the electoral register ought nevertheless to be able to participate in a referendum campaign. The person may have lost interest in party politics but nevertheless wants to make a mark on a special issue about which he or she feels passionately.
One might say that everyone eligible to register ought to do so, if only to keep up their right to participate in a referendum that might come along. Or it might be said that rolling registration would allow such a person t o get on to the register in time to be accepted as a permitted participant. But we feel that that is pushing logic too far.
Clause 102 does a good job. Amendment No. 172 complicates the picture without adding anything of value and therefore the amendment should not be accepted.
Lord Mackay of Ardbrecknish: My Lords, I believe the noble Lord is about to leave that amendment. Is he saying that, if we have a referendum on any issue, somebody from abroad could deliberately come over here to take part in the referendum and that would be sufficient to describe him or her as a "resident"? Is that what the Minister is saying?
Lord Bassam of Brighton: My Lords, I suspect that may well end up being the case. I can see a situation in which an American resident might live here with no registration to vote in place but nevertheless participate in a campaign. But the answer is that "residence" means "residence", not a visit. That may not entirely satisfy the noble Lord, Lord Mackay. He may feel that "residence" could be easily attained. Nevertheless, that issue is worth thinking about.
Lord Mackay of Ardbrecknish: My Lords, I am sorry to intervene again. The Minister was moderately helpful with the aid of people about whom we had better not speak. But what does that mean? If somebody comes from the United States at the beginning of a referendum and lives in a hotel room, will he or she be considered resident? If they took a flat for the duration, would they be considered resident?

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If I can give the noble Lord some advice, he would be on firmer ground if he redefined it as, "the normal legal description of 'ordinarily resident"'. But he may need to take advice on that. Without trying terribly hard, I am afraid I have exposed quite a problem here.
Lord Bassam of Brighton: My Lords, the noble Lord is good at exposing problems. I congratulate him on that. I was going to go on to say with regard to Amendment No. 183 that the noble Lord is in danger of becoming an ace loophole spotter, a sort of green ink merchant of the loophole territory.
Our view on Amendment No. 183 is that we are not persuaded that the issue raised by the noble Lord is one to become excited about or that it is practical to do much about it. If the scenario has any reality—the example I have been given is that the Conservative Party might want to encourage participation in a referendum on the euro by British people who have lived abroad too long to keep up registration—we can live with that. In any event, it is not practicable for the electoral commission to crawl about the country looking for people who are spending less than £10,000. The purpose of limits on referendum expenditure is to prevent people from exerting undue influence simply by reason of their great wealth. The purpose of the cut-off point is to point up the people whose contribution to a campaign is really noticeable.
To summarise, on both amendments the noble Lord may have a point of sorts. But we do not believe that the abuse will be that great a problem in the way the noble Lord envisages.
I shall take away his point about reflecting on the meaning of the word "residence" and no doubt someone will come forward with a more satisfactory definition for the purposes of the Bill. I am grateful to the noble Lord for his interest in the matter but he would be wise to withdraw the amendment.
Lord Mackay of Ardbrecknish: My Lords, I shall withdraw the amendment but I am less than convinced by the Minister's argument. Such an important piece of legislation ought to be consistent. Frankly, as I have clearly demonstrated, the Bill is not consistent about who is allowed to be a permitted participant and who is allowed to be a permitted donor. They ought to be the same.
The Government ought to consider the point about residence but I am more concerned about the second amendment. I fully understand that a rich person who
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wants to influence a referendum and lives in this country will be caught by the rules and spending limits. However, my point is that the rich individual goes abroad and uses modern methods. I mentioned advertisements paid for from abroad; television advertisements originating abroad from, say, satellite television; and material posted from Holland, which has an efficient system, delivered to the United Kingdom. Is there any way such a person's spending will be controlled?
One of the problems the Government have about referendums is that they are worried about rich people spending fortunes on one side or the other. If I can spot the fact that the rich person needs merely to move abroad and he can then spend his fortune as he likes on sending propaganda back into the UK, anyone intent on doing so will already have spotted it. Therefore, the Government ought to do some quick thinking between now and Monday. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 173 not moved.]
Schedule 12 [Assistance available to designated organizations]:
[Amendment No. 174 not moved.]
Clause 111 [Restriction on payments in respect of referendum expenses]:
Lord Mackay of Ardbrecknish Lord Mackay of Ardbrecknish moved Amendments Nos. 175 and 176:
Page 81, line 9, leave out ("and") and insert ("or").
Page 81, line 10, leave out ("£100") and insert ("£200").
On Question, amendments agreed to.
Lord Bach Lord Bach moved Amendments Nos. 177 and 178:
Page 81, line 15, at end insert ("or receipt").
Page 81, line 16, leave out from ("payment") to end of line 18.
On Question, amendments agreed to.
Clause 112 [Restriction on making claims in respect of referendum expenses]:
Lord Bach Lord Bach moved Amendment No. 179:
Page 81, line 24, leave out (", together with the relevant invoice,").
On Question, amendment agreed to.
Lord Davies of Oldham: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at two minutes before one o'clock.