Political Parties, Elections and Referendums Bill

HL Deb 22 November 2000 vol 619 cc867-936

6.8 p.m.

The Parliamentary Under-Secretary of State, Home Office (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 114 [General restriction on referendum expenses]:

[Amendments Nos. 180 and 181 not moved.]

Clause 115 [Special restrictions on referendum expenses by permitted participants]:

Lord Mackay of Ardbrecknish moved Amendment No. 182: Leave out Clause 115.

The noble Lord said: My Lords, in moving Amendment No. 182, I shall speak also to Amendment No. 186. Amendment No. 182 seeks to leave out Clause 115 and Amendment No. 186 seeks to leave out Schedule 14.

We return to the question of referendum spending limits. It is no secret that, from the beginning, we have been very doubtful about—indeed we have opposed—the attempt to place spending limits on referendums. We feel that, whatever the referendum may be about, the attempt by the Government to impose these limits is an attempt to rig the expenditure on referendums. I suspect that their principal objective—they never look a year ahead when a month will do—is probably the referendum on the euro. But other referendums are likely. If the Liberal Democrats manage to persuade them, the Government may well hold a referendum on proportional representation.

The Government have chosen to attempt to impose spending limits by focusing on the political parties. That is not sensible. Some parties will be split on issues. Let us take, for example, a referendum on PR. I have no doubt that the Labour Party would be divided on PR, although I am not sure how even or uneven the division would be. I suspect that there are one or two members of the Conservative Party whose view might differ from that of the majority; however, I do not think the split would be anything like that in the Labour Party.

I have asked this question a number of times and I never receive an answer. Nevertheless, it is always worth asking again. On whose side of the argument would the Labour Party's £5 million fall—or would it be divided in some kind of proportion, perhaps based on the views of Members of another place or members of the National Executive Committee? I do not know. But what I do know is, whichever way the £5 million comes down in the Labour Party, many of its members will be very unhappy about their party spending £5 million on a campaign with which they do not agree.

Why should the level of the limit be decided in relation to the votes cast at the previous general election when, by definition, the referendum issue was not decided at the general election? Many of those who vote for a particular party at a general election—because they agree in general terms with its policies on health, home affairs or whatever—may not agree on the issue that the party takes up in a referendum. Yet their votes would count in determining spending on the opposite side to their opinions. That is not a very happy prospect. The point was raised by my noble friend Lord Lamont; and the noble Lord, Lord Goodhart, said that it was wholly wrong in principle to base the spending limits on votes cast at the previous general election.

My noble friend Lord Pearson, who is no longer in his place, raised the issue of why the spending limits in a referendum should not be determined by the votes in the most recent European parliamentary elections. Why not? There would seem to be some sense in that if the referendum was not on the euro. I can see that in relation to proportional representation the division of expenditure would be based on the proportion of votes in the previous British general election, but on the euro or any other issue relating to Europe that need not be the case. Let us assume that the Government decide to hold a referendum on matters that emerge from the Nice summit. In that case it is much more logical to base the expenditure on the European elections. The interesting point about the debates that we have had on this issue is that not a single Member of this House has spoken in favour of the Government's proposals—except the rather beleaguered noble Lord the Minister.

We could take as an example on a more limited scale the referendums that we have held. But let us take a referendum on the euro. The main pro-euro parties could spend £9 million to scrap the pound; the Conservative Party could spend only £5 million to save it. What would the Minister have said had he been at the wrong end of that stick all those years ago in the famous "village green" referendum which brought him into politics in the first place? What would his mother have said if she had been on the wrong end of the red rose? That is a jokey way to put it, but it is a serious point. Even the noble Lord admitted, on 24th October, that the Government freely conceded that their proposals would not ensure that each side in a referendum was subject to the same overall limit on expenditure, and that there was no pretence that their proposals were intended to create a level playing fiend in that sense.

If there is any argument about deciding expenditure on a referendum, it ought to be about creating a level playing field. In the Scottish referendum, a level playing field would certainly not have been created, because three of the parties were on one side and only one was on the other. I am sure that my noble and learned friend Lord Fraser, who was involved in that campaign, will agree with me when I say that, frankly, even if there had been a level financial playing field, I doubt whether the result would have been significantly different. However, no one can be in any doubt that if there had been a level playing field in expenditure in the referendum on Wales, the result would have been entirely different. The Government would have lost.

I should be happier if we were attempting to create an equality of arms when it comes to a referendum. However, I understand why the Government do not believe that that can be done. I have examined the issue carefully and I do not think it can be done either. Various groups who may agree on nothing else but the referendum will find it impossible to agree on how much of the cake they will individually spend. It would be almost impossible to keep the "Yes" side inside some global sum and the "No" side inside some global sum. The individual components would be very hard to discipline.

The Neill committee considered this whole question and decided that the task was impossible; it would be very difficult to agree. Any attempt to agree the two global expenditures would probably mean that the various organisations would be fighting like ferrets in a sack. My right honourable friend Sir George Young came to exactly the same conclusion in another place. So I do not think it is possible to look at a theoretically ideal solution: for example, £20 million for the "Yes" side and £20 million for the "No" side; that is the cap; and everyone taking part on one side or the other has to play inside that cap. That is not realistic. Therefore, at this stage I am not coming forward with an amendment to that effect. Our choice is either the option proposed by the Government, or that of the Neill committee—which is that if you cannot succeed in doing something you should not really try, because in the trying you will probably create more anomalies and difficulties.

Late last night, the Minister and I discussed a small amendment of mine. Out of it came the clear conclusion that, in any referendum campaign, if a rich person wants to go abroad, base himself in Brussels, Paris or wherever, and spend his money trying to influence one side or the other, there is absolutely nothing that can be done about it under the provisions of the Bill. At one time that may not have been a productive thing for people to do. But today they could buy advertising space in British newspapers—the noble Lord may tell me that I am wrong about this—and a run a campaign for the "Yes" side or the "No" side. They could most assuredly gain access to the e-world, set up websites and pour their messages in from outside Britain. They could certainly go to a Dutch post office and post papers to us all so that we received papers for one side or the other.

I do not think I am being unfair to the Minister when I say that he had no escape from the logic that I pursued last night, and I do not think that he has received any help from his officials today. On that assumption, I think that my proposition is right. We can forget about limits. I know that the Government are terrified about a Mr Sykes, whom I have never met. Frankly, Mr Sykes can simply move from Yorkshire to Brussels and get on with spending all the money that the Government fear he might spend in a campaign on the euro on what they see to be the wrong side. So all their efforts to put limits on campaigning will be totally set aside—they will be just nonsense.

The Neill committee unanimously considered that there should not be spending limits in referendum campaigns. The committee said that it would be futile, and possibly wrong. I think it would be futile. As I have explained, it would be fine if we could have globals on each side, but it would be wrong to do this in the way the Government intend, especially as we have exposed the fact that not just one coach and a set of horses could be driven through this provision, but coaches and horses. If spending limits cannot be imposed, why try?

I commend to the Government acceptance of my two amendments, which would at least mean that everything would be up front when we had a referendum and the different sides would be spending whatever they could spend and whatever they could find to spend. That is what will actually happen. Otherwise, we in Parliament will be made to look ridiculous because we will have passed a law which was incapable of being enforced. That is a very serious matter. I beg to move.

Viscount Cranborne

My Lords, I support my noble friend. I shall not repeat his arguments and propose to make one point. We are all aware that there is a powerful danger that the reputation for rectitude of our electoral arrangements is increasingly susceptible to attack. My noble friend Lord Mackay gave the example of the referendums on the Scottish and Welsh devolution proposals. I shall not venture into the arguments for and against pre-legislative and post-legislative referendums because they will not add to my point. However, in themselves they certainly open up any government who indulge in them to accusations of a kind that must undermine the reputation for neutrality of the administration of elections and referendums in this country.

As my noble friend made perfectly clear, the arrangements that the government propose in this Bill for the financing of referendums and the control of the way that they are financed will further undermine the reputation for fairness upon which consensus as to those rules must depend. When he responds, I earnestly beseech the Minister to consider whether what is now proposed will deliver yet another hammer blow to what is already a very dangerous tendency.

Because of their actions, those of us who believe that the Government effectively rigged the Welsh referendum—whether intentionally or not—are given an enormous amount of credibility when we make such an accusation. There is no doubt at all that those of us who will be fighting in referendums conducted under the rules proposed by the Government, if they are passed, will be able to say with absolute truth that the rules enabled one side to be given a huge financial advantage. For the reasons that my noble friend explained, that would apply especially in a referendum on the euro.

As the noble Lord, Lord Barnett, pointed out to the Minister in another context only yesterday, the results of elections are increasingly influenced by money. This is not a negligible affair. We are talking about the perceived probity and fairness of referendums, which, like it or lump it—I know that my noble friend Lord Mackay does not like it—are with us in some form or another for the foreseeable future. It would be doing an enormous service to the political life of this country if the Government were able to look us in the eye and say with reason, demonstrably with reason, that they are not passing a law which suggests that they are rigging the conduct of the most likely referendums within the next few years in their favour. If they do so, those of us on the receiving end of that action will be able to cry "Foul!". As we have seen from events in the United States, that does no one any good.

Lord Fraser of Carmyllie

My Lords, there was a time when I was young and slim and eager to advance in the law. There was no one's feet at which I would rather sit than those of the noble Lord, Lord Wedderburn. I note with interest that the noble Lord is present in the Chamber this evening. I am sure that he has been considering the argument advanced by my noble friend Lord Mackay. I shall have to determine which side of the argument to follow. However, if the noble Lord, Lord Wedderburn, were to say that my noble friend's argument did not meet with his approval, I suppose that I would retreat. But my deep suspicion is that he understands very well that what my noble friend has said is a serious and important aspect of the issue now under consideration.

If the noble Lord, Lord Wedderburn, wishes to rise to dispute what I say, I should be very much minded to depart from the position taken by my noble friend. However, I have been watching the noble Lord as this argument has developed and my deep suspicion is that the intellectual integrity for which he is famed is such that he will not find it easy to dispute the argument that my noble friend Lord Mackay has advanced.

Lord Wedderburn of Charlton

My Lords, the noble and learned Lord was once a devoted student at some of my lectures. However, he will have to do without one tonight.

Lord Bassam of Brighton

My Lords, that is a very good response.

We have long known that the Official Opposition were ill at ease with the provision that the Bill makes for spending limits in referendum campaigns, although I still do not fully understand the real reasons behind their objection. However, noble Lords opposite have clearly been in two minds up until now as to what to do about the situation, just as their colleagues were in another place: should they seek to remove spending limits altogether or should they seek to ensure that the limits are aggregate limits biting on each side as a whole in a referendum campaign?

The amendments now before the House answer that question in a curious way. They clearly appear to have come down in favour of removing the spending limits for "permitted participants". I am pleased that the noble Lord has now at least agreed that it would be impossible to impose a global limit on each side in a referendum. That seems to me to be a realistic point of view to have reached. When we debated the matter on earlier occasions there seemed to be a schizophrenia in the mind of the noble Lord and one that he appeared to share, in part, with the noble Lord, Lord Lamont. However, as I understand it, the amendments of the noble Lord, Lord Lamont, will not be discussed.

I suppose that the case I have to meet in respect of these amendments is as follows. If we cannot control what each side as a whole spends, what is the point of controlling what anyone spends? That is the essence of the argument behind these amendments. In a nutshell, we believe that it is just as useful—and we would say necessary—to control what each participant can spend in a referendum campaign as it is to control what each party can spend in an election campaign. The object served in both cases is to ensure that an organisation, or an individual, does not gain a preponderant voice simply by reason of the money at its, or his, disposal; that is to say, the amount of money in the war chest. That is a useful object and I cannot see why anyone should oppose it—

Viscount Cranborne

My Lords, I am extremely grateful to the noble Lord for giving way. He is always most courteous at Report stage.

Let us take, for example, the euro referendum. If, let us say, the Liberal Democrats supported a "Yes" vote in such a referendum—which I suppose is at least possible—and the Government did the same, their combined funding would, therefore, be greater than that of the only party that opposed the euro; namely, my party. To use the noble Lord's argument, would that not mean that there would be a disproportionate amount of support for a "Yes" vote compared to that for a "No" vote?

6.30 p.m.

Lord Bassam of Brighton

My Lords, certainly that scenario is a possibility; I do not deny that. I am saying that it is better to have some control and some ability to contain the level of expenditure in a referendum of the nature that the noble Viscount, Lord Cranborne, mentioned rather than none at all. Part of the problem is that the noble Lord's assertion has been predicated on the assumption that the only referendum that is ever likely to see the light of day is a referendum on the euro. That is not necessarily the case. Although the spending limit—

Lord Mackay of Ardbrecknish

My Lords, whatever the subject of the referendum, there are three major parties in this country. Unless one of them splits its money—I refer to the sums of £5 million and £5 million—to one of those fives will be attached the Liberal Democrats' £3 million. That makes £8 million as opposed to £5 million. That is not a level playing field; it is unbalanced. If the noble Lord wants it to be balanced, he is simply falling at the first fence.

Lord Bach

My Lords, I intervene briefly before we progress too far. Questions for elucidation should be asked at Report stage. Noble Lords know well how to do that. As has already been acknowledged, my noble friend is generous in giving way. However, we all have to adhere to the rules for Report stage.

Lord Bassam of Brighton

My Lords, I have not argued that we are trying to create a level playing field. What I am trying to argue is that we should try to keep a sense of balance and proportion in the way in which we view referendum campaigns. I do not argue that we can create a perfect balance. I have made that point.

Moreover, as I said, the spending limits in the Bill cannot ensure that each side spends the same amount. As I have argued, they will help to do so. They will ensure that the governing factor is the number of organisations ranged on each side and not the amount of money which any one of them, or some of them, have available.

Having put the case positively in that way, I now feel entitled to put the negative case too. What is wrong with the spending limits in the Bill? Why are the Official Opposition so opposed to them? How would the Bill be improved if they were left out? I have not heard exactly how the Official Opposition envisage that that would improve the Bill. Here I draw, with due acknowledgement, on points made by the Liberal Democrat spokesman in another place, Mr Stunell. If it is a mischief that there is no overall control of aggregate spending on each side as a whole, one would make the position worse, not better, by removing the limits that the Bill provides.

Official Opposition spokesmen seem to talk as if the limits set by the Bill are in the nature of financial allowances, or perhaps even mandatory spending targets. As we have just heard, they then count up the organisations which they imagine will be ranged on one side and conclude that one side will necessarily have the edge. They may be right or wrong about that; no one can tell. However, the alternative is to allow a single individual or organisation on one side to outspend the totality of individuals or organisations on the other simply because they happen to have more money. We say that that cannot be right. That seems to be the dividing line between the Government and the Official Opposition on this issue.

I have no hesitation in advising the House that Clause 115 and Schedule 14 should stand part of the Bill and that Amendments Nos. 182 and 186 should be rejected. That is where the argument rests. That is the difference between the two sides in the argument. It appears to me that noble Lords opposite want to give up any system of control. I do not believe that that is right. I believe that we should have a system of control. We argue that that system should be the best that we can possibly achieve in the circumstances. That is the Government's case.

Lord Mackay of Ardbrecknish

My Lords, dear, dear, dear! I suppose there is one thing we must be grateful for; namely, that the noble Lord, Lord Bach, managed to prevent the Minister having to answer the question of whether £8 million is more than £5 million. That was a most unconvincing reply. The noble Lord accused me of being schizophrenic when I said that there were two options at earlier stages of the Bill and that we wanted to consider which might be preferable to governments. To base his case on that argument is weak indeed.

I am not schizophrenic. Is the Neill committee schizophrenic? Before we finally leave the issue I remind the noble Lord of what the Neill committee stated at paragraph 12.46 of its report. It stated: It appears to us that under these circumstances it would be impracticable to try to control campaign spending. The number of individuals and organisations involved would often be too large. The time-scale would often be too short … The administrative apparatus required would resemble one of Heath Robinson's most outlandish contraptions—and would almost certainly not work". That is fine. Last night I think that I persuaded the Minister—because he did not answer me—that money would be spent from abroad over which the Government had absolutely no control. Here we have an attempt to impose limits which is, in my view, flawed—the Minister does not think that it is flawed — because it would not be equal. If the object is to achieve equality of arms, and the Government's proposals do not achieve that, surely the Government have failed in that regard. The Minister's answer seemed to be that the Government had failed to do that but wanted to place some controls on individual participants. The fact that—this is beginning to resemble the language used on the previous Bill we discussed—the balance may be heavily in favour of one side and not in favour of the other side at all is something that the Government will leave to one side.

Lord Bassam of Brighton

My Lords, I am not saying that we can achieve equality of arms. I have not argued that this evening. I am saying that we need to have some controls on the arms race. I accept that there is a difference there, but I argue that we need to have at least some controls. That is the Government's position.

Lord Mackay of Ardbrecknish

My Lords, but the other side of the argument on election spending is that we should have equality of arms between the two main parties. The Conservative Party and the Labour Party should have the same limits. It seems to me that equality of arms involves having the same limits. However, I leave that point because clearly the Minister has not even begun to address it. It is rather like sailing on the ocean in the fog in that one does not see the ship that passes five miles away, let alone worry about it. The Minister seems to take that view.

The point is that these limits could not be implemented. The Minister has not addressed the point that he made last night. It appears that, for the Minister, last night's proceedings did not take place. However, they did take place. I know that because I was present until a late hour. I have read the proceedings in Hansard. The Minister said rather amusingly that I was in danger of becoming an ace loophole spotter, a sort of green ink merchant of the loophole territory. That suggested to me that I had found a fairly large loophole in the Bill. He did not deny that for a minute.

Here we have a situation where the Minister is saying, "This is the best we can do and we think that you should accept it". If it cannot be implemented in reality, we should not pass legislation. This matter is important. I shall not attempt to argue my case further because I shall not engage the Minister in any discussion. He will simply stick by his brief. I am tempted to try what I used to call the "Hollis trick" which is to lean over and say to the Minister involved, "You are the Minister. They are the officials. Forget that the brief states 'Reject' and change that to 'Accept' if you think that the argument is worth it". I do not even think that that will work with the Minister. Therefore I seek the opinion of the House.

6.39 p.m.

On Question, Whether the said amendment (No. 182) shall be agreed to?

Their Lordships divided: Contents, 80; Not-Contents, 154.

Division No. 1
CONTENTS
Astor of Hever, L.	Lucas, L.
Attlee, E.	Lyell, L.
Beaumont of Whitley, L.	McColl of Dulwich, L.
Blackwell, L.	Mackay of Ardbrecknish, L.
Blatch, B.	Mancroft, L.
Boardman, L.	Marlesford, L.
Brougham and Vaux, L.	Marsh, L.
Byford, B.	Monro of Langholm, L.
Campbell of Cray, L.	Monson, L.
Carnegy of Lour, B.	Mowbray and Stourton, L.
Coe, L.	Moynihan, L.
Colwyn, L.	Naseby, L.
Courtown, E.	Noakes, B.
Cranborne, V.	Northesk, E. [Teller]
Crathorne, L.	Norton of Louth, L.
Crickhowell, L.	O'Cathain, B.
Dean of Harptree, L.	Onslow, E.
Dixon-Smith, L.	Palmer, L.
Eccles of Moulton, B.	Park of Monmouth, B.
Elliott of Morpeth, L.	Pearson of Rannoch, L.
Elton, L.	Peel, E.
Ferrers, E.	Platt of Writtle, B.
Forsyth of Drumlean, L.	Plummer of St. Marylebone, L
Fraser of Carmyllie, L.	Rawlings, B.
Gardner of Parkes, B.	Reay, L.
Glentoran, L.	Renton, L.
Goschen, V.	Roberts of Conwy, L.
Gray of Contin, L.	Rogan, L.
Greenway, L.	Sandwich, E.
Hanham, B.	Seccombe, B. [Teller]
Harris of High Cross, L.	Selsdon, L.
Henley, L.	Stewartby, L.
Hodgson of Astley Abbotts, L.	Strathclyde, L.
Hooper, B.	Taylor of Warwick, L.
Howe, E.	Thomas of Gwydir, L.
Howell of Guildford, L.	Trefgarne, L.
Kingsland, L.	Trumpington, B.
Knight of Collingtree, B.	Vivian, L.
Laird, L.	Wilcox, B.
Lawson of Blaby, L.	L. Young, B.
NOT-CONTENTS
Acton, L.	Brooks of Tremorfa, L.
Addington, L.	Burlison, L.
Ahmed, L.	Carter, L.[Teller]
Alderdice, L.	Clarke of Hampstead, L.
Amos, B.	Clement-Jones, L.
Andrews, B.	Clinton-Davis, L.
Archer of Sandwell, L.	Cocks of Hartcliffe, L.
Bach, L.	Cohen of Pimlico, B.
Barker, B.	Crawley, B.
Barnett, L.	David, B.
Bassam of Brighton, L.	Davies of Coity, L.
Berkeley, L.	Davies of Oldham, L.
Bernstein of Craigweil, L.	Dean of Thornton-le-Fylde, B.
Billingham, B.	Desai, L.
Blackstone, B.	Dixon, L.
Blease, L.	Donoughue, L.
Bradshaw, L.	Dubs, L.
Bragg, L.	Elder, L.
Brennan, L.	Elis-Thomas, L.
Brett, L.	Evans of Parkside, L.
Brooke of Alverthorpe, L.	Evans of Watford, L.

Ezra, L.	Mar and Kellie, E.
Falconer of Thoroton, L.	Mason of Barnsley, L.
Falkland, V.	Massey of Darwen, B.
Farrington of Ribbleton, B.	Merlyn-Rees, L.
Faulkner of Worcester, L.	Miller of Chilthorne Domer, B
Filkin, L.	Mitchell, L.
Fyfe of Fairfield, L.	Molloy, L.
Gale, B.	Morgan, L.
Gibson of Market Rasen, B.	Morris of Castle Morris, L.
Gladwin of Clee, L.	Morris of Manchester, L.
Goldsmith, L.	Newby, L.
Gordon of Strathblane, L.	Nicol, B.
Goudie, B.	Northover, B.
Gould of Potternewton, B.	Oakeshott of Seagrove Bay, L.
Grabiner, L.	Phillips of Sudbury, L.
Graham of Edmonton, L.	Prys-Davies, L.
Greaves, L.	Ramsay of Cartvale, B.
Greengross, B.	Rea, L.
Grenfell, L.	Redesdale, L.
Hamwee, B.	Rennard, L.
Hardy of Wath, L.	Renwick of Clifton, L.
Harris of Greenwich, L.	Richard, L.
Harris of Haringey, L.	Rodgers of Quarry Bank, L.
Harrison, L.	Roper, L.
Hayman, B.	Russell, E.
Hilton of Eggardon, B.	Russell-Johnston, L.
Hollis of Heigham, B.	Sainsbury of Turville, L.
Howells of St. Davids, B.	Sandberg, L.
Howie of Troon, L.	Scotland of Asthal, B.
Hoyle, L.	Scott of Needham Market, B.
Hughes of Woodside, L.	Sharp of Guildford, B.
Hunt of Kings Heath, L.	Shore of Stepney, L.
Islwyn, L.	Shutt of Greetland, L.
Jacobs, L.	Simon, V.
Janner of Braunstone, L.	Smith of Clifton, L.
Jay of Paddington, B. (Lord Privy Seat)	Smith of Leigh, L.
	Strabolgi, L.
Jeger, B.	Symons of Vernham Dean, B.
Jenkins of Putney, L.	Taverne, L.
Kennedy of The Shaws, B.	Taylor of Blackburn, L.
King of West Bromwich, L.	Thomas of Walliswood, B.
Kirkhill, L.	Tomlinson, L.
Layard, L.	Tordoff, L.
Lea of Crondall, L.	Turnberg, L.
Lester of Herne Hill, L.	Uddin, B.
Lipsey, L.	Varley, L.
Lockwood, B.	Walker of Doncaster, L.
Lofthouse of Pontefract, L.	Wallace of Saltaire, L.
Macdonald of Tradeston, L.	Walmsley, B.
McIntosh of Haringey, L. [Teller]	Warner, L.
	Wedderburn of Charlton, L.
McIntosh of Hudnall, B.	Whitaker, B.
MacKenzie of Culkein, L.	Whitty, L.
Mackenzie of Framwellgate, L.	Wilkins, B.
Mackie of Benshie, L.	Williams of Crosby, B.
McNally, L.	Williams of Mostyn, L.
Maddock, B.	Young of Old Scone, B.

Resolved in the negative, and amendment disagreed to accordingly.

6.48 p.m.

[Amendment No. 183 not moved.]

Schedule 14 [Limits on referendum expenses by permitted participants]:

[Amendments Nos. 184 to 186 not moved.]

Clause 116 [Control of donations to permitted participants]:

[Amendment No. 187 not moved.]

Lord Mackay of Ardbrecknish moved Amendment No. 188: Page 84, line 33, at end insert — ("() Notwithstanding anything in Schedule 15 or Part IV, a permitted participant shall be prohibited fromaccepting during a referendum period any donation from a permissible donor of the type specified in section 52(2)(c).").

The noble Lord said: My Lords, I have to take cognisance of the last Division and the fact that we now have the rigged expenditure provision in the Bill and are unlikely to be able to take it out. I now want to consider how that works and to tease from the Minister that some twists in it are perhaps less than fair and honest.

In another place at the Second Reading of the Bill the Home Secretary said: The Liberal Democrats are offered generous spending limits in the Bill, but it is a racing certainty that the party will not be able to raise money to the level of the spending limit. So to argue that spending by the Labour and Liberal Democrat parties will be nearly equal because both parties will be able to spend up to a maximum amount fails to take into account the capacity of parties to raise money up to the maximum".—[Official Report, Commons, 10/1/00; col. 38.] I remind the Liberal Democrats what their friend the Home Secretary thinks about their ability to raise £3 million.

Let us assume that after the next election the Liberal Democrats still have a £3 million limit. Clause 52(2)(c), which I have already tried to delete, allows one political party to donate to another. I assume that the Labour Party would have more than £5 million available to spend on any referendum on the euro. To maximise the pro-euro spending, Labour would be able to give some of its surplus to its Liberal Democrat allies. We all know from Mr Ashdown's diaries about the close relationship between the two parties. The Minister admitted as much on 24th October, when he said: The noble Lord"— I think that that means me — clearly had in his sights the possibility that in a referendum on the euro the Labour Party, having set aside £5 million for its own campaign, might contribute to the campaign of the Liberal Democrats. I entirely accept that that is a theoretical possibility. … Such a move would not necessarily be contrary to the letter of the provisions in Part VII".—[Official Report, 24/10/00; col. 185.]

In Committee, I proposed a ban on parties donating to other parties to stop them acting in concert to take advantage of the limits—I was going to call them rigged limits but I shall say that they are slightly out of balance. The Minister had concerns about that, pointing out to me that the Labour and Co-operative parties might want to donate to each other. As we all know, they are pretty well one party. I do not know why money should go from one party to another, but I have conceded that point to the Minister. He has got one up there.

Later on in Committee I proposed a ban on parties using money given by other parties to fund referendum campaigns. The Minister told me that it was difficult, if not impossible, to control the uses to which particular money was put. I therefore concede that point for the purposes of today's debate. The amendment would allow the Labour Party to receive as much money as it could from the Co-operative Party—or, indeed, to give as much money to the Liberal Democrats, such is my generosity. It would not even stop them using that money for a referendum campaign. To that extent the amendment is not nearly as watertight as I would like. However, it would stop parties donating to other parties during the period of a referendum. That would be the time when a political party might find that it was going to underspend because it could not raise enough money and would then go cap in hand to its wealthier cousin—in this case the Labour Party—and say, "Help. We thought that we would get enough money to fund the campaign but we are not going to get near our maximum. Can you top us up?" The amendment would stop that.

The amendment meets all the concerns that the Minister raised in earlier debates. He can hardly plead in his defence that it is not watertight because on the previous amendment he said that it did not matter that the Bill was not watertight. He cannot change sides on the issue of watertight provisions.

As the amount of money that a party is allowed to spend is related to its vote at the previous election, it is a bit odd that parties should be able to pool their money when they spend it, as if their separate votes did not matter.

The euro is not the only issue. The problem could arise during a referendum on any issue. If we are to have limits—the Minister has clearly got his way on that—they should be as fair in their operation as possible. The scenario that I have outlined would not be fair. I accept that the amendment would not entirely prevent unfairness, but it would go a long way to prevent it during a referendum campaign. I beg to move.

Lord Richard

My Lords, before the noble Lord sits down—I know that he has, but let us assume that metaphorically he is still on his feet—I should like to put one point to him. I listened to him with great interest. His complaint is not that the Labour Party might donate money to the Liberal Party but that the Liberal Party would not accept money from his party if he wanted to give some. The noble Lord seems to assume that there is a permanent alliance between the Liberals over there and the Labour Party over here and that we should be treated as one party. On the voting record of the past Session, that is not axiomatic.

Lord Mackay of Ardbrecknish

My Lords, I think that I probably now have to interrupt the noble Lord's speech before he sits down. If the Liberal Party and the Conservative Party were on the same side in a referendum and the Labour Party were on the opposite side, the Bill would allow the same scenario. Even in those circumstances, it would not be fair.

Lord McNally

My Lords, when I attended school dances, I used to look enviously at the prettiest girl in the room, who sat there smugly knowing full well that all the boys wanted to dance with her. I am beginning to feel like that girl this evening.

Lord Monson

My Lords, will the Minister confirm that, as the Bill stands, the Labour Party could give money to parties with which it is normally at loggerheads, such as the Scottish nationalists and the Welsh nationalists, for the specific purpose of winning a referendum vote on the euro?

Lord Bassam of Brighton

My Lords, the noble Lord, Lord Mackay, has described his amendment perfectly, so I shall not repeat its intent. His particular concern is that, in addition to spending up to its own limit, the Labour Party might contribute to another political party's campaign. I have been in the Labour Party for 20 years or so. I do not have the longest membership of the Labour Party, but 20 years is not a short time. I have been involved in some pretty hairy debates in that time. I remember the ghastly years when we had the militant tendency in our midst I also remember some rather more halcyon years. I cannot remember any Labour Party general management committee or branch meeting debating the merest possibility that we mightwant to make a donation to another political party. I have heard some pretty weird debates in the Labour Party during that time, as well as some interesting and exciting ones, but I have never heard anyone argue that we might want to give money to the Liberals. That would have been a very strange argument. I am puzzled by the noble Lord's attempt to tie us in with our friends on the Liberal Democrat Benches at this stage in our development as a political party. Technically the noble Lord, Lord Monson, is right, but practically what he suggests is a non-runner.

I do not like to say so, but the noble Lord, Lord Mackay, seems to be having some good fun with his amendment and making a slightly mischievous point. The amendment emerged because he did not seem to understand earlier in our debates that some of us in the Labour Party could also be members of the Co-operative Party. I have two party cards. One tells me that I am a member of the Co-operative Party and the other tells me that I am a member of the Labour Party. That is the eventuality that the Bill permits. It is not about trying to top up another party with extra resources in the event of a referendum on the euro. The noble Lord needs to be disabused of that.

We have had the argument before. I am not convinced that the noble Lord is being entirely serious. Technicallyhe is right that there is a possibility, but in reality it will not happen.

7 p.m.

Lord Mackay of Ardbrecknish

My Lords, I was interested to see the Minister brandish membership cards for the Labour Party and the Co-operative Party. This is the Minister who, about 30 minutes ago, accused me of being schizophrenic.

Lord Bassam of Brighton

My Lords, the two are entirely compatible.

Lord Mackay of Ardbrecknish

My Lords, I am glad about that.

This has been an interesting debate. The noble Lord has often said at the end of debates that the point that I have made is right but that it is so theoretical that it would not happen. In my view, to say, "Yes, there is a loophole; yes, there is a way round it; yes, there is a way through it. But don't worry, it is only theoretical", is an extraordinarily unsatisfactory way to leave legislation. Perhaps I may suggest to the noble Lord that he talks to some of his colleagues on the Treasury team. They will tell him that they spend most of their waking hours trying to ensure that even the most theoretical loophole in finance legislation has been closed; otherwise, a whole army of accountants will lead a whole army of people through that loophole. That is true in relation to finance legislation and it is also true in relation to all other legislation.

This is not a satisfactory position. However, I shall not divide the House on this amendment. I say simply that I shall take it as a statement on behalf of the Labour Party that there is no circumstance under which it would pass money to the Liberal Democrat Party. That is what the Minister has just said. I shall rest my case on that if at any time in the future an attempt is made to do what I have theoretically suggested is possible. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 189 not moved.]

Schedule 15 [Control of donations to permitted participants]:

Lord Bach moved Amendments Nos. 190 and 191: Page 187, line 25, leave out ("(2)(d)") and insert ("(1)(d)"). Page 187, line 27, leave out ("(2)(e)") and insert ("(1)(e)").

On Question, amendments agreed to.

[Amendment No. 192 not moved.]

Lord Bach moved Amendments Nos. 193 and 194: Page 189, leave out lines 38 to 47. Page 189, line 47, at end insert — ("(2A) For the purposes of this Schedule, any relevant donation received by a permitted participant which is an exempt trust donation shall be regarded as a relevant donation received by the permitted participant from a permissible donor. (2B) But, for the purposes of this Schedule, any relevant donation received by a permitted participant from a trustee of any property (in his capacity as such) which is not —

1. (a) an exempt trust donation, or
882
2. (b) a relevant donation transmitted by the trustee to the permitted participant on behalf of beneficiaries under the trust who are —
1. (i) persons who at the time of its receipt by the permitted participant are permissible donors falling within section 52(2), or
2. (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 permitted participant from a person who is not such a permissible donor.").

On Question, amendments agreed to.

Lord Mackay of Ardbrecknish moved Amendment No. 195: Page 190, line 6, leave out ("not less") and insert ("more").

On Question, amendment agreed to.

Lord Bach moved Amendment No. 196: Page 191, line 16, leave out ("(2) to (10)").

On Question, amendment agreed to.

[Amendment No. 197 not moved.]

Clause 117 [Returns as to referendum expenses]:

Lord Mackay of Ardbrecknish moved Amendment No. 198: Page 85, line 16, leave out ("and") and insert ("or").

On Question, amendment agreed to.

Clause 122 [Restriction on publication etc. of promotional material by central and local government etc.]:

Lord Mackay of Ardbrecknish moved Amendment No. 199: Page 87, line 30, leave out ("relevant") and insert ("referendum").

The noble Lord said: My Lords, in moving Amendment No. 199, I wish to speak also to Amendments Nos. 204 and 205. I tabled this amendment in Committee. I and my noble friends want to return to it simply because we did not leave it in a happy position. Amendment No. 204 is consequential on Amendment No. 199, and Amendment No. 205 is an attempt at some form of compromise.

I keep trying to find a form of compromise with the Government but I keep getting knocked back by the noble Lord, Lord Bassam. I cannot really complain because two or three of my amendments have been accepted. However, I put forward a compromise in the Bill that we dealt with earlier today and the noble and learned Lord, Lord Falconer, accepted it. Perhaps the noble Lord might follow his noble and learned friend's example.

This group of amendments deals with the "purdah period" which will apply to most, but not all, campaigning activity by the government of the day during the last 28 days of a referendum campaign. We had an interesting debate about this in Committee and there were also some good and interesting debates in the other place.

Essentially, the question is this: is it right and fair for the government of the day to be allowed to use unlimited amounts of public money to campaign for one side of the argument in a referendum, especially in the context of the spending restrictions that we have just agreed which will apply to everyone else who campaigns in that referendum?

In its report, the Neill committee took a very dim view of government participation in referendum campaigns. It cited the Scottish, Welsh and Northern Irish referendums held by this Government as having been influenced by partisan propaganda issued at the taxpayers' expense. It rejected that approach completely and said at paragraph 12.41 of the report: We believe it is perfectly appropriate for the government of the day to state its views and for members of the Government to campaign vigorously during referendum campaigns, just as in general election campaigns. But we also believe that, just as in general election campaigns, neither taxpayers' money nor the permanent government machine—civil servants, official cars, the Government Information Service, and so forth—should be used to promote the interests of the Government side of the argument".

At paragraph 12.44, the committee concluded: We believe that it is extraordinarily difficult, if not impossible, for the government of the day to offer purely objective and factual information in the course of a referendum campaign. We believe governments should not participate in referendum campaigns in this manner … The government of the day in future referendums should, as a government, remain neutral and should not distribute at public expense literature, even purportedly factual literature, setting out or otherwise promoting its case". That is pretty clear. However, I believe that it probably set alarm bells ringing in Millbank, the Home Office and even Downing Street. Therefore, we have a Bill which does not reflect those sentiments at all. In fact, it allows for the situation that the Neill committee said should be prohibited; namely, government propaganda issued at public expense during referendum campaigns.

I admit that the Government have provided for the 28-day purdah period in the Bill, although to what extent it is a real purdah we shall examine in the next group of amendments. However, the referendum campaign can last for up to six months. The political parties and other campaign organisations will be subject to strict rules on expenditure for the whole of that period, whereas the government of the day can spend what it likes for up to five out of a possible six months.

I know that the Neill committee welcomed the 28-day period. I know that it was welcomed by my right honourable friend John MacGregor in another place. It is possible that the committee did not imagine that, given what they did in the devolution referendums, the Government would ever have agreed to any purdah period at all. Perhaps the committee was pleasantly surprised. I am not sure whether the noble Lord, Lord Goodhart, is intending to intervene in this debate and to give us his views.

However, what the Government have done clearly deviates from the spirit and the letter of the Neill recommendations. I also consider it to be grossly unfair and yet another attempt to rig future referendums. For five months, when other organisations, including the political parties, are subject to spending restrictions, the government of the day can issue unlimited amounts of partisan material at public expense, use the government press machine and take out adverts in newspapers, all with taxpayers' money and all designed to influence the outcome of the referendum.

I believe that purdah should apply during the whole referendum period. I consider that to be fair and equitable. That is what Amendments Nos. 199 and 204 seek to achieve. In Committee, the Minister argued that we could not apply the purdah during the whole referendum period because that could also cover the passage of the Bill through Parliament. I do not believe that it is beyond the wit of the Government's draftsmen and the Minister's officials to devise wording to meet that point. It was a fig leaf provided for the Minister to cover his embarrassment.

In a spirit of generosity, I have tried to meet the point with Amendment No. 205. It is not my preferred option but it would at least limit the scope for abuse. The purdah period would be either 28 days or half the referendum period, whichever was longer. That would at least mean that for half the referendum period the Government could not distribute propaganda, but it would not affect the passage of the Bill through Parliament. In any event, I believe that proposal to be better than what is in the Bill.

I remind the noble Lords, Lord McNally, Lord Rennard and Lord Goodhart, that in another place the Liberal Democrat Front Bench spokesman, Mr Stunell, whom I have quoted before, supported our call for the purdah period to be increased. He said: I would not be averse to an extension of the 28 days … I come part way with the hon. Member for Beaconsfield on bringing forward the 28-day deadline. I am sympathetic to that view". — [Official Report, Commons, 16/2/00; col. 1054]. However, I believe that Mr Stunell completely misunderstood the effect of the amendments, which are the same as those before your Lordships today because he thought, mistakenly, that they would remove the purdah period entirely rather than extend it to the whole referendum period which would he their actual effect. I know that noble Lords on the Liberal Benches, if they speak, will not make that mistake with regard to the amendments before us today.

This is an important issue. We are trying to ensure that future referendums are not rigged. The Government are going against the spirit and letter of the Neill report in that respect. The amendment in the name of my noble friend Lord Willoughby de Broke is thoroughly sensible. If it is not acceptable to the Government and to your Lordships, I commend my compromise Amendment No. 205 to the House. I beg to move.

Viscount Cranborne

My Lords, I rise to support my noble friend in what he said. I have only one question for the Government. Referring back to earlier remarks I made today, when the Minister replies, perhaps he will address himself to what is perceived on many sides of the House to be a real and growing danger; namely, that the equity with which referendums will be conducted in the future will be as liable to challenge as the Welsh and Scottish referendums were liable to challenge.

If that is a growing worry, which I assure him it is—not only within this House but elsewhere—and if it is a worry which has been acknowledged by the noble Lord, Lord Neill, and his committee, do the Government also acknowledge that and are they prepared to answer it in detail? If not, why not?

Lord Bassam of Brighton

My Lords, the Official Opposition have put their names to two proposals which are alternatives to each other as well as to what is in the Bill. Amendments Nos. 199 and 204 would remove the idea of a "relevant period" from Clause 122. On the other hand, Amendment No. 205 would retain the expression but redefine it.

The effect of the first two amendments would be that the period during which the government of the day cannot spend money on promotional material would not be the 28 days prior to the poll but a longer period, beginning, in most cases, when an order is made. The order would normally be made around the time of the introduction or Second Reading of a Bill for a referendum. I acknowledge that it is at that earlier point that spending controls on referendum participants will begin to bite.

The alternative amendment, Amendment No. 205, would have the effect of taking back the commencement of the embargo to a point half way between when the order is made and when the poll is held. I wish to persuade the House that neither of the amendments is necessary or desirable and that the right course is to stick at 28 days.

The mischief with which the Bill seeks to deal here, if "mischief' is not too strong a word, is of a government putting round partisan material at the public's expense at the time when the electorate is thinking about the issue and making up its mind how to vote. The Neill committee thought that the distinction between factual and promotional material, which had been relied on in some cases, was unsound. We do not necessarily accept that that was so in the cases referred to, but we came to the conclusion that the right response was "no contest".

The Neill committee did not itself propose a precise time-limit. But we concluded that what was needed was a simple, straightforward rule; and in another place a member of the Neill committee, Mr MacGregor, acknowledged, as the noble Lord, Lord Mackay, said, that the Government's proposal met the committee's point.

One important thing to recognise about the proposal in the Bill—and I dare say we will come back to this on the next group of amendments—is how far-reaching it is. It is not simply an embargo on partisan or overtly promotional material. The prohibition applies equally to general information and to material which deals in any way with issues raised by the referendum question.

That being so, it would simply be unreasonable to apply the embargo to the period in which the Bill for the referendum is actually going through Parliament. During that time, the government of the day are not acting as a campaign group but as a government. They are putting a proposal to Parliament which they must explain and back up in the usual way. One might as well say that a government cannot issue material in connection with any Bill during the period running up to a dissolution of Parliament and a general election, because in due course they will want to take credit for the legislation that they have carried through and stand on policies which it contains.

For those reasons, we are opposed to both of the alternative schemes now put forward. Amendment No. 205 is, obviously, milder in its effects than Amendments Nos. 199 and 204. But it is scarcely less objectionable, because it still involves the risk of preventing the government of the day from acting as a government at the time when they have every right— and some would say a duty—to do exactly that govern.

The point has been made, in favour of the amendments, that spending limits for referendum campaign groups will be effective from the beginning of the "referendum period" so why should the government not be subject to similar restrictions? I shall leave aside the obvious and perhaps rather crude point that, if the Official Opposition had their way, there would be no spending limits. But I will make two other points. First, although the "referendum period" will begin quite early on—as it has to if the electoral commission is to designate umbrella organisations and so on—the actual political campaign will not really get under way until some time later. Whichever party then forms the Opposition, for example, will no doubt be concentrating its energies at the earlier stage on opposing the Bill in Parliament.

Secondly, there is no real equivalence between a spending limit and an absolute embargo. The embargo is not a spending restriction but a statement of what is or is not the proper role of a government during a referendum campaign. And by referendum campaign we mean, as the Neill committee did, the campaign in the country and not the process of a government taking a Bill through Parliament.

We have put a strong, perhaps even generous, self-denying ordinance into the Bill in response to the Neill report. The thought has crossed my mind, not for the first time on this Bill, that perhaps the Opposition cannot believe their luck. They are clearly, by putting forward alternative amendments, testing how far the House is prepared to go. The Government's clear view is that the Bill is perfectly satisfactory on this point and that no amendment needs to be made.

The noble Viscount, Lord Cranborne, asked whether we are worried about inequities which might occur in referendum campaigns. In a sense, what I have said addresses that issue. Of course, we recognise that it is an issue of concern and it was an issue of concern for the Neill committee. For those reasons, we have constructed the framework which we have placed on the face of the Bill. That is the Government's view.

7.15 p.m.

Lord Mackay of Ardbrecknish

My Lords, I noted that the Minister said that those restrictions on government were neither necessary nor desirable. They may not be desirable from the Government's point of view but I believe that they are extremely necessary from the point of view of having fair referendums. That is what we are supposed to be achieving.

I understand the point about Amendments Nos. 199 and 204: that during that period, it is possible that the legislation might still be going through Parliament. But I do not believe that that criticism can be levelled at Amendment No. 205, which is my compromise attempt to find a way to get round the Government's problem. Therefore, I am much more in favour of the compromise in Amendment No. 205. Whatever the noble Lord says, it remains a fact that everybody bar the Government will have some limit placed on their expenditure. For a fair amount of time, the Government will have unlimited expenditure; and it is expenditure which they do not have to raise from the people who want to vote "yes" or "no". They will raise that money from the taxpayers—from those who want to vote "yes" and those who want to vote "no". That is what is unfair about it.

While I shall withdraw Amendment No. 199 and not move Amendment No. 204, when we come to Amendment No. 205, I shall test the opinion of the House.

Amendment, by leave, withdrawn.

[Amendment No. 200 not moved.]

The Deputy Speaker (Lord Ampthill)

My Lords, the noble Lord, Lord Mackay, will be aware that, if this amendment is agreed to, he cannot move Amendment No. 202. He has pre-empted himself.

Lord Mackay of Ardbrecknish moved Amendment No. 201: Page 87, line 42, leave out paragraph (d).

The noble Lord said: My Lords, we shall see how we get on. If the success of this amendment pre-empts the other amendment, I shall be more than happy for the Government to accept this in order to stop me dividing later on.

Amendment No. 201 is in the same vein and it is grouped with Amendment No. 202. We have just discussed the purdah period. This amendment is a variation inside the purdah period. There are things that the Government will be able to do throughout the referendum campaign, including the 28-day purdah period. The first three of these exceptions have attracted little comment. Indeed, they seem for the most part to be unexceptionable exceptions, though I am a little concerned about whether the Government may prompt people to seek information in order to be able to issue more propaganda under Clause 122(3)(a).

The fourth and final exception to the issuing of referendum propaganda at public expense is the issue of press notices. The drafting of Clause 122(1) allows such exempt press notices to contain anything that is listed in that subsection, including putting arguments for or against answers to the referendum questions. That has sparked some debate in your Lordships' House and in another place. Government Ministers will be able to issue government press releases and presumably use the government information service and government press officers to campaign, right up to polling day, for or against a particular referendum option.

In Committee on 24th October, I specifically asked the Minister whether the government of the day would be allowed, on the basis of such press notices, to use the government information service, civil servants and government press officers to brief the press during the purdah period. He failed to respond. I would like him to do so today.

There is also an issue about whether these documents will be made available to the public at large, perhaps via the Internet. The Minister will know that his own press releases, those of other Home Office Ministers and those of all government Ministers are placed on the Internet for all to see. To that extent, they are not press notices. They are in fact public notices. In Committee, the Minister said: A 'press notice' is a notice to the press, not to the general public".—[Official Report, 24/10/00; col. 208.] I will remind him of that again, because I think it is very important. He said: A 'press notice' is a notice to the press, not to the general public".—[Official Report, 24/10/00; col. 208.] That is not quite true. The definition has been overtaken by events in the intervening period. I have little doubt that the Minister and his officials will have read in detail the recent judgments of the noble and learned Lords, Lord Bingham of Cornhill and Lord Steyn, in the case of Turkington and Others v. Times Newspapers Limited (Northern Ireland), which were delivered in this House on 2nd November, a week after the Minister made his statement.

From the look on the Minister's face, I suspect that he has not had his attention drawn to that case. The noble and learned Lords clearly stated in those judgments that a meeting which was described by its organisers as a "press conference" fell within the definition of a "public meeting" in the Northern Ireland Defamation Act 1955. In his judgment, the noble and learned Lord, Lord Bingham of Cornhill, said: A press conference, attended by members of the press and perhaps other members of the public, has become an important vehicle for promoting the discussion and furtherance of matters of public concern, and there is nothing in the nature of such a conference which takes it outside the ordinary meaning of 'public meeting'". If, as the noble and learned Lords and the Judicial Committee of this House have said in their judgments, a "press conference" falls within the ordinary meaning of a "public meeting", cannot a "press notice" also be a "public notice", especially if it is put on the Internet for all to see? I am sure that the Minister's brief has been revised in the light of that judgment. I hope that he will address the point.

I am extremely suspicious of this provision in the Bill and how it will be used. I would prefer to delete press notices from the exception. However, I recognise that the Minister may well deploy some argument against that. As usual, therefore, I have a compromise amendment in reserve. If the Minister believes that there are circumstances in which press notices may be issued entirely innocently during the purdah period, Amendment No. 202 would stop the issue of openly partisan press notices which attempt to influence the referendum result.

In this group of amendments, I have not only met the Minister's concerns but I have anticipated that he may raise new concerns and have tried to cover them. However, my concerns remain. I believe that my case has been hugely advanced by the judgments delivered in your Lordships' House. I look forward to what the Minister has to say about them. I believe that this point is as serious as the point relating to extending the purdah period. In fact, it may be more serious. I am aware that, via the Internet, government departments daily issue many press notices which could be openly reported. Anybody can access these websites—that is what they are there for. It seems to me that, in those circumstances, the Government will be communicating directly with the public. I believe that stopping this during the purdah period may be even more important than extending the purdah period. I beg to move.

Lord Marsh

My Lords, I recognise that much of the argument that I propose to advance in relation to Amendment No. 203— Is this the amendment that we are on?

Lord Bach

My Lords, I thought the noble Lord wanted to speak to this group of amendments.

Lord Marsh

No, my Lords.

Lord Bach

My Lords, I apologise to him.

Lord Marsh

My Lords, then it would probably be sensible if I did not pursue Amendment No. 203. I am deeply disappointed with the reaction of the Government. Nonetheless, on second thoughts, I think I will pursue it—I am taken rather by surprise by this turn of events—because I believe that this is a major and fundamental issue.

Lord Bach

My Lords, Clause 122 is designed simply to deal with the point raised by the Neill committee that the government of the day should not circulate material at the public expense in the run up to an election. As we understand it, it is not designed to prevent the government of the day from operating as such or from expressing views. The clause clearly contemplates the possibility of the government of the day responding to inquiries about their views and policies. As I understand it, no one challenges that. If an issue arises on which the Government, and not merely the party of government, are challenged, they ought to be able to respond. The press notice provides one means of doing so. It would be absurd if, in those circumstances, all the Government could say was "No comment".

The Official Opposition have tabled two alternative proposals, and the noble Lord has spoken with that in mind. The effect of his Amendment No. 201 would be to remove the protection that paragraph (d) gives to press notices as against the general prohibition on the issue of material which Clause 122 sets up. His Amendment No. 202 would make it possible for some sorts of press notices to be issued, but not others. We believe that he is wrong in both amendments.

By Clause 122, we attempt to prevent a government from seeking to push, at the public's expense, material which relates in any way to a referendum campaign. We do not seek to prevent the government of the day from operating as governments do. Governments deal with issues as they come up. They express opinions, just like oppositions and other parties. For example, the clause does not prevent a government from responding to inquiries, including inquiries about policy. No one seems unhappy about that. If a government simply issue a succession of press notices which do nothing except repeat their view on the referendum question, two things will happen. First, they will be in breach of the internal government rules, because they will be using the government machine to promote a political object. Secondly, they will make themselves quite absurd, and the press will have a great deal of fun with it. There could be circumstances in which issuing a press notice might be reasonable and right for a government to do, but in which either of the amendments before the House, if passed, would prevent them from doing.

Let us suppose, for example, that in the run-up to a referendum on the single currency some violent movement occurs in the international value of the euro; or perhaps a statesman abroad makes a statement about the issue which seems to put a different light on the matter from what the Government had been saying. The question arises whether it still makes sense for the United Kingdom to join the single currency. The Opposition would gleefully seize on the point and capitalise on it, and there would be nothing to prevent them from so doing. But the government of the day, if either of the amendments is carried, would be unable to address the issue. They would be required to refer the matter to their party to deal with, notwithstanding that the issue may be a matter on which only the Government have the necessary information.

We think that that is a recipe for evasion and subterfuge. Let us suppose that a journalist rings up to ask if there will be a press notice commenting on what has occurred. If either of the amendments is carried, there are two possible answers. The first is, "You must ask my party, and of course I will be in touch with them straightaway to supply them with the answer". The other is, "We can't issue a notice, but if you ask for our answer, we can give it, and if any of your colleagues ask for it, we can give it to them too. Please spread the word around. We will increase the number of press officers to answer their calls".

Amendment No. 202, the milder amendment to which the noble Lord spoke, is not an answer to that problem. It simply would not make sense in some cases for the government of the day to give out information and fail to respond to the obvious question of whether the new event changes its view. If we attempted to put such a limitation in place, we would be recreating precisely the kind of distinction between factual and promotional material which the committee chaired by the noble and learned Lord thought unsound.

I end by repeating that Clause 122 is meant to serve a specific purpose in a specific way: to prevent a government of any colour from putting material through people's post-boxes. It is not meant to prevent them from answering as a government for their policies and views, and I do not believe that any realistic party would want such a restriction. We believe that both Amendments Nos. 201 and 202 should be withdrawn.

7.30 p.m.

Lord Mackay of Ardbrecknish

My Lords, I notice a total and utter failure to address the question I posed about press conferences and press notices in the light of the judgment of your Lordships' House, just as if that did not matter or exist. I am staggered.

Lord Bach

My Lords, I thank the noble Lord for giving way. We heard exactly what was said by the noble Lord about the important decision made by the Judicial Committee of this House. However, I do not believe that anything I have said goes against the principle or spirit of that judgment. We understand the view taken by that court in relation to press notices. Nothing I have said goes against the principle in that case.

Lord Mackay of Ardbrecknish

My Lords, I believe that the noble Lord does not read the press notices issued by the Government. If he did, he would see that most of them have the spin which the Government want them to have. Few are entirely factual; they all have a spin. Frankly, if they did not have a spin I would be amazed. It is not just this Government which do that; all governments do it.

As to the fact that during the purdah period the Government will not be able to put notices into post-boxes, perhaps I may say that they will. The new post-boxes are e-mail addresses and the website. People will be able to access the website and receive notices just as if such notices had come through their front door.

Lord Bach

My Lords, I apologise to the noble Lord. I know that this is Report stage; I am the one who mentioned that earlier. However, I should have dealt with this point. As I am advised, press notices on the Internet would, in any event, be covered by Clause 122 (3)(a), which I invite noble Lords to look at. It states that subsection (2) does not apply to: material made available to persons in response to specific requests for information or to persons specifically seeking access to it". A person specifically needs to seek access to a website. Perhaps I may point out to the noble Lord that he has never said that he is not content with that provision.

Lord Mackay of Ardbrecknish

My Lords, I now wonder what purdah is about. To say that, if I open up a website to look at information contained on it, I am somehow seeking the information and that it is not coming to me is, frankly, splitting hairs in the modern world. I think that many companies would not view that as the way in which people use their websites. People browse at information which then comes to them. In any case, that does not address the problem of a press conference.

However, much more worrying was the example given by the noble Lord. To carry on with the referendum theme, if a foreign government, perhaps the Government of Denmark where the people have said "no", were to issue a press release stating, "We very much hope that the British people will also say 'no' for these reasons", the Government during the purdah period would feel free to put out a press notice, call a press conference and all the paraphernalia that happens, in order to counter the statement made by a Minister in Denmark.

I do not see any problem with the Government simply saying, "We are in purdah on this. This is a 28-day period. You will have to go down the road to talk to Millbank", or talk to the Liberals, the "yes" campaign or whatever. I see no problem with that. The press are not daft. They would understand what was happening and that some fair rules were being played.

The example given by the noble Lord makes me feel that purdah will be a farce. The Government will use all the machinery of their press office to carry on as they did before the purdah started. I believe that this is a serious matter, to such an extent that I shall test the opinion of the House, not on my compromise—clearly, that is brushed aside—but on the main amendment.

Lord Monson

My Lords, before the noble Lord, Lord Mackay, tries to put his amendment, perhaps I may suggest that it would be better to concentrate upon Amendment No. 203, which is not open to the same challenge as the previous two amendments, and therefore has more chance of success.

Lord Mackay of Ardbrecknish

My Lords, as the noble Lord has intervened, perhaps I may simply say that I can count and I noticed the last Division. I do not think his argument holds a great deal of weight. I am more appalled at what I have just heard about this item on press releases than I am about the purdah issue, and I was pretty appalled at that. I beg to move.

7.38 p.m.

On Question, Whether the said amendment (No. 201) shall be agreed to?

Their Lordships divided: Contents, 42; Not-Contents, 124.

Division No. 2
CONTENTS
Ampthill, L.	Lyell, L.
Astor of Hever, L.	McColl of Dulwich, L.
Blackwell, L.	Mackay of Ardbrecknish, L.
Blatch, B.	Mar, C.
Byford, B.	Marsh, L.
Carnegy of Low, B.	Moynihan, L.
Colwyn, L.	Noakes, B.
Courtown, E.	Norton of Louth, L.
Cranborne, V.	Onslow, E.
Dean of Harptree, L.	Peyton of Yeovil, L.
Elton, L.	Renton, L.
Fraser of Carmyllie, L.	Roberts of Conwy, L.
Geddes, L.	Rogan, L.
Glentoran, L.	Seccombe, B. [Teller]
Gray of Contin, L.	Selsdon, L.
Harris of Peckham, L.	Stewartby, L.
Henley, L.[Teller]	Strathclyde, L.
Hodgson of Astley Abbotts, L.	Thomas of Gwydir, L.
Hunt of Wirral, L.	Waddington, L.
Laird, L.	Willoughby de Broke, L.
Lucas, L.	Windlesham, L.
NOT-CONTENTS
Acton, L.	Gordon of Strathblane, L.
Addington, L.	Goudie, B.
Ahmed, L.	Gould of Potternewton, B.
Alderdice, L.	Grabiner, L.
Amos, B.	Graham of Edmonton, L.
Andrews, B.	Greaves, L.
Archer of Sandwell, L.	Gregson, L.
Bach, L.	Grenfell, L.
Barker, B.	Hamwee, B.
Bassam of Brighton, L.	Harris of Greenwich, L.
Beaumont of Whitley, L.	Harris of Haringey, L.
Bernstein of Craigweil, L.	Harrison, L.
Billingham, B.	Hayman, B.
Blackstone, B.	Hilton of Eggardon, B.
Blease, L.	Hollis of Heigham, B.
Bradshaw, L.	Holme of Cheltenham, L.
Bragg, L.	Hoyle, L.
Brennan, L.	Hughes of Woodside, L.
Brett, L.	Hunt of Kings Heath, L.
Brooke of Alverthorpe, L.	Islwyn, L.
Burlison, L.	Janner of Braunstone, L.
Carter, L.[Teller]	Jay of Paddington, B. (Lord Privy Seal)
Chandos, V.
Clarke of Hampstead, L.	Jenkins of Putney, L.
Clement-Jones, L.	Kennedy of The Shaws, B.
Clinton-Davis, L.	Kirkhill, L.
Cocks of Hartclifie, L.	Layard, L.
Cohen of Pimlico, B.	Lea of Crondall, L.
Crawley, B.	Lipsey, L.
David, B.	Lockwood, B.
Davies of Coity, L.	Lofthouse of Pontefract, L.
Davies of Oldham, L.	Macdonald of Tradeston, L.
Desai, L.	McIntosh of Haringey, L. [Teller]
Dubs, L.
Elder, L.	McIntosh of Hudnall, B.
Evans of Watford, L.	MacKenzie of Culkein, L.
Falkland, V.	Mackenzie of Framwellgate, L.
Farrington of Ribbleton, B.	Mackie of Benshie, L.
Faulkner of Worcester, L.	McNally, L.
Fyfe of Fairfield, L.	Maddock, B.
Gale, B.	Mar and Kellie, E.
Gibson of Market Rasen, B.	Massey of Darwen, B.
Gladwin of Clee, L.	Miller of Chilthorne Domer, B.
Goodhart, L.	Mitchell, L.

Molloy, L.	Simon, V.
Morgan, L.	Smith of Clifton, L.
Morris of Castle Morris, L.	Smith of Leigh, L.
Nicol, B.	Stoddart of Swindon, L.
Northover, B.	Thomas of Walliswood, B.
Oakeshott of Seagrove Bay, L.	Tomlinson, L.
Ramsay of Cartvale, B.	Tope, L.
Rea, L.	Tordoff, L.
Redesdale, L.	Turnberg, L.
Renwick of Clifton, L.	Uddin, B.
Rodgers of Quarry Bank, L.	Varley, L.
Roper, L.	Walker of Doncaster, L.
Russell, E.	Warner, L.
Sainsbury of Turville, L.	Wedderburn of Charlton, L
Sandberg, L.	Whitaker, B.
Scotland of Asthal, B.	Whitty, L.
Scott of Needham Market, B.	Wilkins, B.
Sharp of Guildford, B.	Williams of Mostyn, L.
Shutt of Greetland, L.	Winston, L.

Resolved in the negative, and amendment disagreed to accordingly.

7.48 p.m.

[Amendment No. 202 not moved.]

Lord Marsh moved Amendment No. 203: Page 87, line 44, at end insert— ("(3A) Subject to subsection (3B), no material to which this section applies shall be distributed or displayed to the public free of charge during the referendum period by or on behalf of—

1. (a) any Minister of the Crown, government department or local authority;
2. (b) any other person or body whose expenses are defrayed wholly or mainly out of public funds or by any local authority; or
3. (c) the Post Office;

unless such material—

1. (d) is factual and impartial; and
2. (e) has been circulated to permitted participants at least seven days before it is published.

(3B) Subsection (3A) does not apply to—

1. (a) material made available to persons in response to specific requests for information or to persons seeking access to it; or
2. (b) material published on web-sites.").

The noble Lord said: My Lords, I rise—encouraged by the narrowness of the last vote—to pursue Amendment No. 203. Briefly, it is an issue of fundamental principle.

I start by saying that, having heard some of the comments in the previous debate, I do not believe that any circumstance of national consequence could arise in which the parties involved in a referendum would manage or even wish to stop the government of the country getting their message across. I do not believe that would happen and Amendment No. 203 specifically recognises that government have to continue in the course of elections and referendums; and they have a right and duty so to do.

One of the fundamental differences between democracies such as ours and those with a shorter history of stability and trust is the extent to which governments intervene in elections and referendums. This amendment seeks merely to find another formula which the noble Lord, Lord Bassam, although he holds a brief which probably makes minor changes, might find acceptable.

I was a founder member of Business for Sterling and I am president of the council of that admirable organisation. In the light of some of last night's debates, I believe that the amendment goes wider than arguments about the European Union, the euro and so forth. The issue is simple, fundamental, non-partisan and was clearly described in the report of the Committee on Standards in Public Life, which I shall not quote again. It is that all governments will be tempted—they always have been—to take advantage of any situation and if they are able to mobilise at taxpayers' expense an argument which suits them politically they will take the opportunity to do so.

I have been accused of many things but never of being a political romantic. Governments have always sought to use their position to influence the results of elections and referendums. Luckily, we in this country can afford to live with it, despite complaining when it happens. But the problem is the blatant potential imbalance which arises regularly with each referendum and is beginning to endanger the credibility of referendums in a democratic society.

An example is the European referendum. The "no" campaign will be restricted to £5 million for the referendum period but the Government have already spent more than £15 million on "information", including a direct mailshot to 800,000 businesses. I give that example because 75 per cent of British business has no trade with Europe. By definition, the 15 per cent which trades with Europe does not require advice on how to trade in foreign currencies, whether they be deutschmarks, French francs, Burmese kyats or euros. It is a totally false argument which is thinly disguised as crucial to the Government's position. The position is indefensible and if it remains unchecked it will worsen.

It is not a party issue. When I became a Minister many years ago I received a wondrous letter from the late Douglas Houghton congratulating me on becoming a Minister. He concluded by stating (those who remember him will hear his voice): You will enjoy being a Minister enormously. It will almost certainly be the most interesting thing you ever do. But one thing, dear boy, never forget, it will not last". I warn noble Lords on the Government Benches that when the two parties change sides, as will happen at some stage, Chancellor Mackay of Ardbrecknish will stand at the Dispatch Box and with all his usual eloquence will argue that any restrictions upon the Government's freedom of action would be a constitutional outrage and undoubtedly a breach of human rights legislation.

The trend will continue and if it continues on the present scale it can only get worse. It is highly undesirable. The amendment gives the government of the day plenty of opportunity to circulate any factual and impartial material, subject to the participants having an opportunity to comment within seven days. All the materials published on websites will also be unrestricted. Like others, we seek to halt a situation in which a government can wage two campaigns at the same time: one through their party office, like all the other parties, and the other at the taxpayers' expense out of Number 10.

It is a highly undesirable situation. I put the amendment to the House and hope that the noble Lord, Lord Bassam, will absorb it in addition to all the others. It is a pity that all the similar amendments were not in the same group. I hope that the noble Lord will accept that such a change would benefit everyone. We seek a position in which no one will view the legislation as giving anyone the authority to prevent a government governing during an election or referendum campaign.

Lord Willoughby de Broke

My Lords, I rise briefly to support the amendment tabled by the noble Lord, Lord Marsh. It is important that during a referendum campaign the Government and other public bodies should be prohibited from sending contentious and slanted propaganda through the post, by e-mail and so forth.

There was a recent example of that when the Post Office sent about 170,000 leaflets through the post to small and medium-sized businesses extolling the virtues of the euro in terms which could not be described, even by the warmest admirer of the euro, as impartial. Such incidents make the amendment essential.

Furthermore, it would be unfortunate if under the guise of information the Government brought forward another discussion paper or introduced an annual review of the national changeover plan during a referendum period. Amendment No. 203 covers those matters and I hope that the Government will take on board the points which have been made and act accordingly.

Lord Bassam of Brighton

My Lords, Clause 122 is the Government's discharge of the recommendation in the Neill report that at a certain point before a referendum is held the government of the day, as a government, should stand back—should stand aloof—and leave the campaigning to the political parties and other campaign organisations.

The Neill committee was particularly sceptical about material which in previous cases was circulated to the electorate very close to the date of the poll. It questioned the distinction between factual and persuasive material. Clause 122 implements the committee's recommendation by providing for a 28-day embargo on the issue to the public of government publications. This arrangement is equivalent to restrictions on the role of the Government in the run-up to a general election.

Amendment No. 203 would additionally require that material circulated by the Government during the referendum period as a whole must be factual and impartial and must have been circulated to permitted participants at least seven days prior to publication. In other words, it is proposed that, in addition to the complete ban which applies in the 28 days prior to the poll, it should also be incumbent upon the Government to prepare neutral material during the remainder of the referendum period.

That would not work. Perhaps I may remind the House precisely why the Neill committee considered a ban on government material to be necessary. The Neill committee said in paragraph 12.44 of its report: We believe that it is extraordinarily difficult, if not impossible, for the government of the day to offer purely objective and factual information in the course of a referendum campaign, especially when, as is usually the case, it is itself a party to the campaign"; in other words, it was the very impossibility of regarding even purported factual material as impartial that led the committee to conclude that the kind of ban for which this clause provides was necessary. There is an argument over whether the ban should apply throughout the entire referendum period. The reason for not doing so is that that period is likely to cover the passage through Parliament of a Bill which makes provision for the referendum.

8 p.m.

Lord Bach

My Lords, the noble Lord, Lord Phillips, rises to speak. I take it that the noble Lord intends to put a question to elucidate an answer from the Minister.

Lord Phillips of Sudbury

My Lords, I thank the noble Lord for anticipating my purpose. Is it not the case that, in the context of the difficulty of adjudicating between pure information and tendentious information, under Clause 142 the commission has "the general function of monitoring compliance"? Therefore, is not the commission the obvious and natural body to undertake that task?

Lord Bassam of Brighton

My Lords, one can argue that the commission is the natural body to do it. However, one would be charging the commission with an extraordinarily difficult task. Recently, we had a debate on the question whether a referendum question should be viewed as fair or biased. The amendment in question proposed that that matter should be put to the commission for consideration. I believe it was concluded that it was a very difficult job for any body to carry out, and it ran the risk that the commission would be placed in a highly political position. I believe that that could well be the result in this context.

During the course of a Bill passing through Parliament government would want to argue their case. It is not possible to conceive that factual material produced by government in relation to such a Bill would be universally regarded as impartial. I do not see the case for providing permitted participants with advance sight of any such "factual and impartial" material. Why should campaign organisations see such material!before the electorate? Is it being suggested that, for example, the explanatory notes to a Bill should be circulated to permitted participants before being published?

The proposal seems to be predicated on the assumption that such material will not be impartial at all and that permitted participants should be given advance notice so that they can have their riposte prepared in time for publication. In short, the proposal is aimed at the wrong target. The real point is that, as the Neill committee recommended, there should come a point at which the government of the day stand back from the fray altogether, and the clause as it stands provides precisely for that. I believe that the noble Lord's amendment, well intentioned though it is, places far too great a responsibility on those who would be asked to judge whether something was impartial and fair. For those reasons, I ask the noble Lord to withdraw his amendment.

Lord Phillips of Sudbury

My Lords, before the noble Lord sits down, does he agree that the clause as it now stands, bereft of this amendment or something like it, allows the government of the day, who after all are the only ones who will know when a referendum is to be held, to shower the public with highly tendentious and persuasive literature five weeks before a referendum, and in a manner which would be grossly unfair and unbalanced vis-à-vis other parties to the referendum?

Lord Bassam of Brighton

My Lords, the noble Lord asks a loaded question, and I believe that his proposition is an unreasonable one. Government who are in the serious business of governing will act entirely responsibly throughout the introduction of the Bill, and the debates upon it, in Parliament. I cannot see government wanting to try to load the issue because it would be counter-productive, particularly in the United Kingdom, which has a free press.

Lord Phillips of Sudbury

My Lords, is it not a negation of the purpose of this clause, and the amendment to it, to say that government will be responsible? Surely, we are talking here of the possibility of government being irresponsible.

Lord Bassam of Brighton

My Lords, I just cannot agree with the noble Lord.

Lord Marsh

My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 204 and 205 not moved.]

Clause 126 [Orders regulating conduct of referendums]:

Lord Mackay of Ardbrecknish moved Amendment No. 206: Leave out Clause 126.

The noble Lord said: My Lords, Amendment No. 206 would simply remove Clause 126. The clause gives the Secretary of State very wide-ranging order-making powers. During Second Reading in the other place, Mr Mike O'Brien said: We intend to table amendments that will … make the legislation a truly generic referendums Bill".—[Official Report, Commons, 10/1/00; col. 113.] Clause 126 was a government amendment tabled in Committee in another place. However, the clause does not turn this Bill into a truly generic referendums Bill; it is a Henry VIII provision. The clause gives the Secretary of State the power, after consulting the electoral commission, but not on that body's recommendation, to make rules for referendums. Further, he will have power to create criminal offences. Can the Minister tell us what kind of criminal offences and penalties the Government intend to create under Clause 126?

In another place the clause was condemned by opposition members as a charter for gerrymandering referendums. The Government promised a generic referendums Bill, but this clause does not provide one; it is a Henry VIII provision. Having called for a general referendums Bill since 1997 when the first measure concerned with referendums appeared, I am deeply disappointed that a clause like this appears in the Bill. I beg to move.

Lord Hodgson of Astley Abbotts

My Lords, I speak in support of my noble friend's amendment. At Report stage we have talked at great length about the strategic purpose of the Bill which is to rebuild confidence in the democratic process. This is one of the issues to which we have turned all our efforts. The Minister has spoken of the importance of the electoral commission being in a position which is above reproach so that it carries the confidence of all sections of the community. Suddenly, one sees Clause 126, which covers referendums that are by any stretch of the imagination contentious. The Government must be aware of the degree of disquiet in different corners of the House tonight about the issue of referendums and the various provisions of the Bill which are complicated and difficult to understand. The Secretary of State is to take unto himself powers that are wide ranging. To do that in a contentious area is likely to undermine not only the purpose of the Bill but confidence in the electoral commission and its role in the future structure of government.

Lord Monson

My Lords, I too support the amendment. I confess that I began to examine Clause 126 only about 15 minutes ago. The very words used by the noble Lord, Lord Mackay, immediately spring metaphorically to my lips. This is a Henry VIII clause which creates new and undefined criminal offences, presumably with potentially very severe penalties. I am interested to hear the Government's response.

Lord Bach

My Lords, this clause enables the Secretary of State to make detailed provision for the conduct of referendums by order. I make it quite clear that the Bill will not replace the need for specific legislation to authorise the holding of a referendum on a particular issue. But the consideration of such legislation should focus on the key questions; namely, whether it is right to hold a referendum on the particular issue; and, if so, when it should be held and what the question should be. The simple purpose of Clause 126 is to obviate the need to make detailed provision on the face of each Bill providing, for a referendum to be held as to the arrangements for the conduct of the poll. For example, by far the larger part of the Referendums (Scotland and Wales) Act 1997 was taken up by a schedule setting out necessary modifications to the Representation of the People Act 1983 and to other statutes and regulations for the purposes of those referendums. We cannot see any reason why that kind of matter should not be left to subordinate legislation.

Clause 126 would therefore enable the Secretary of State, after consulting the electoral commission, to make detailed provision for the conduct of a particular referendum by order. In practice, that will mean applying with appropriate modifications the relevant provisions of the Representation of the People Acts and regulations. Therefore, Clause 126(2)(b) specifies that such an order may apply, with or without modification, any provision of any enactment and make different provision in relation to different parts of the United Kingdom. That latter point simply reflects the fact that some aspects of electoral law differ in Northern Ireland and, indeed, Scotland, as compared with the rest of the United Kingdom.

Turning to the creation of offences to which the noble Lord referred, he rightly says that Clause 26(2)(a) specifies that such an order may provide for the creation of offences. There is no sinister purpose behind the provision. Its purpose is simply to apply to referendums those offences that already exist in relation to elections or equivalent offences where the existing offences are inappropriate. The Representation of the People Act creates various offences. Personation is one of them. There are other related offences. Any order under Clause 126 would apply these for the purposes of a referendum.

I should remind the House that there are a number of precedents for this kind of order-making power. For example, the arrangements for the conduct of the elections to the Scottish Parliament and Welsh Assembly rely on similar order-making powers in Section 12 of the Scotland Act 1998 —an Act with which the noble Lord is familiar—and Section 11 of the Government of Wales Act 1998.

A process very like Clause 126 was included in a Northern Ireland (Border Poll) Act 1972. When considering the matter, that is perhaps not an Act that comes immediately to noble Lords' minds. That was an Act passed under a different government, albeit many years ago.

Finally, it is worth recording, because if the opposite were true we should have heard much about it, that the Select Committee on Delegated Powers and Deregulation made no recommendation about this or—in passing—any other of the delegated powers in the Bill. If that committee had no difficulty with the power to create offences or to apply other enactments, we do not see any reason for the House to take a different view.

Lord Mackay of Ardbrecknish

My Lords, I am very dissatisfied with that answer because the Minister has really failed to address the point. Yes, we had to have schedules to the Referendums (Scotland and Wales) Act, but they were cut-and-paste jobs because there was not a generic referendums Act on the statute book. Yes, we had to have the same cut-and-paste jobs for the Scottish parliamentary elections. But we do not need to have cut-and-paste jobs for general elections because laid down in statute we have the rules governing them. Ministers do not need to come up with elaborate regulations every time we have a general election. They are all laid down. Occasionally we make changes, but we make these changes sensibly in between times.

The Representation of the People Act is on the statute book. It is ready. One presses a button and off one goes. The point about a proper generic referendum Bill is that it would take the cut-and-paste job we had to do for the Scottish referendum, ensure it was general in its application to any referendum, and incorporate that as schedules to the Bill. Perhaps I should have gone to the trouble of so doing. I helped the Government out in July 1997 when they got into a total shambles over the schedules which allowed the referendum to take place. I helped them to set out the details. I rather hoped that they had learned the lesson. It would lengthen the Bill, but I really would not have complained in this case because the rules for referendums would have been set out clearly in a principal Act, just as the rules for general elections are.

I am sorry that the Minister does not see this as an important point. But if we are going to use referendums, one day the Government will have to do that because it is a cumbersome procedure to do cut-and-paste jobs based on general election procedures and make them fit referendum procedures. That is all I was really after in a generic referendums Act. Clearly I did not explain myself well enough. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.15 p.m.

Schedule 16 [Control of donations to candidates: New Schedule 2A to the Representation of the People Act 1983]:

Lord Bach moved Amendments Nos. 207 to 210: Page 193, line 18, leave out ("(2)(d)") and insert ("(1)(d)"). Page 193, line 21, leave out ("(2)(e)") and insert ("(1)(e)"). Page 193, line 43, leave out ("bequest") and insert ("a bequest or any other form of testamentary disposition"). Page 195, line 36, leave out sub-paragraph (2) and insert— ("(2) For the purposes of this Schedule any relevant donation received by a candidate or his election agent which is an exempt trust donation shall be regarded as a relevant donation received by the candidate or his election agent from a permissible donor; and section (Interpretation: exempt trust donations) of the 2000 Act (Interpretation: exempt trust donations) shall apply for the purposes of this Schedule as it applies for the purposes of that Act. (2A) But, for the purposes of this Schedule, any relevant donation received by a candidate or his election agent from a trustee of any property (in his capacity as such) which is not—

1. (a) an exempt trust donation, or
902
2. (b) a relevant donation transmitted by the trustee to the candidate or his election agent on behalf of beneficiaries under the trust who are—
1. (i) persons who at the time of its receipt by the candidate or his election agent are permissible donors falling within section 52(2) of the 2000 Act, or
2. (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 candidate or his election agent from a person who is not such a permissible donor.").

On Question, amendments agreed to.

Lord Mackay of Ardbrecknish moved Amendments Nos. 211 and 212: Page 196, line 3, leave out ("not less") and insert ("more"). Page 196, line 17, leave out ("not less") and insert ("more").

On Question, amendments agreed to.

Lord Bach moved Amendments Nos. 213 and 214: Page 196, line 24, leave out second ("(7)") and insert ("(6)"). Page 198, line 43, leave out ("(2) to (10)").

On Question, amendments agreed to.

Clause 129 [Financial limits applying to candidates' election expenses]:

Lord Mackay of Ardbrecknish moved Amendment No. 215: Page 93, line 5, leave out ("at") and insert ("whether before, during or after an election on account of, or in respect of, the conduct or management of").

The noble Lord said: In moving Amendment No. 215, I shall speak to Amendment No. 216. Noble Lords will be pleased to hear that these amendments get us away from referendums. They are probing amendments because something has been drawn to my attention about the way the Bill changes the Representation of the People Act 1983.

These amendments deal with candidates' election expenses. It is an important matter but it has been dwarfed by party funding, donation disclosure, Northern Ireland and all the referendum funding questions.

Prior to the Bill being brought before the House, election expenditure was mainly linked to candidate's election expenditure under the requirements set out in the Representation of the People Act 1983. Clause 129 of the Bill seeks to amend Section 76(1) of the existing Representation of the People Act 1983. It removes from existing legislation the statement that: No sum shall be paid and no expense shall be incurred by a candidate at an election or his election agent, whether before, during or after an election, on account of or in respect of the conduct or management of the election, in excess of the maximum amount specified in this section, and a candidate or election agent knowingly acting in contravention of this subsection shall be guilty of an illegal practice". Nowhere in the proposed legislation is there so clear an indication that any expenses incurred by a candidate prior to the dissolution of Parliament, or in the case of a by-election the occurrence of the vacancy, will count towards their election campaign expenses.

This might be an oversight, or the Minister may wish to argue that the intention remains the same. However, the proposed Clause 132 of the Bill introduces a new Section 118A for the Representation of the People Act 1983 which in its subsection 2(b) envisages that a candidate can be declared, by himself or by others, as a candidate earlier than at the dissolution of Parliament. However, this section does not make clear the position on election expenditure.

We are told by the Government that the aim of the Bill is to produce a level laying field in the area of national political campaign expenditure. We can argue whether that may or may not be achieved, but I contend that it muddies the water around candidates' constituency campaign expenditure and it is a disservice to election law.

Election law contains many grey areas. I fear that if we are not careful an opportunity will be lost to introduce real clarity in respect of candidates' election expenses.

At every election there are questions raised by one or other candidate that an opponent is taking unfair advantage of existing law or, more often, bending it. Nothing undermines the integrity of a poll more than questionable or illegal acts like those we are seeing at the moment in the American presidential election. I believe that the missing elements of Section 76 of the RPA could he reintroduced into Clauses 129 and 131 of the PPER Bill in subsection (5)(a) of the proposed new Section 90A. That seems like a huge amount of letters—almost an alphabet soup. But I am sure that the Minister has been well advised about what my amendment seeks to do.

The key to when a candidate's election commences is that it should start from the first moment that he or she, or anyone on their behalf—I stress "on their behalf"—takes any action to promote their candidature for an election at which they are subsequently nominated. It could not be simpler. The expenses to be covered would be those for the promotion of the candidature and the conduct or management of the campaign.

I have not cooked this point up out of thin air. People who for many years have operated election law at constituency level are concerned about the change the Bill makes to the 1983 Act and they feel that there may be a serious problem of which the Government have perhaps not thought. I beg to move.

Lord Bach

My Lords, I was about to congratulate the noble Lord on having spotted without help from anyone else the difficulty that he sees. However, as he was gracious enough to admit, the point has come to him from another source.

Lord Mackay of Ardbrecknish

My Lords, my honesty was greatly impelled by the fact that I thought that the noble Baroness, Lady Gould, might well be aware of the source it came from.

Lord Bach

My Lords, what my noble friend says to me or does not say to me is no business of the noble Lord.

I shall be as brief as I can. The amendments concern the definition of a candidate's election expenses. Clause 131 introduces new Sections 90A to 90D of the 1983 Act which set out a revised definition of election expenses. That revised definition is carried over to Section 76 of the 1983 Act, as amended by Clause 129 of the Bill, which sets limits on candidates' election expenses. The combined effect of Clauses 129 and 131 is that Section 76 of the 1983 Act no longer refers to election expenses incurred, on account of, or in respect of, the conduct of management of the election". Instead, the limits on election expenses will apply to such expenses as defined in Sections 90A to 90D of the 1983 Act; that is, expenses incurred with, a view to, or otherwise in connection with, promoting or procuring the candidate's election at the election". In the Government's view, this new formulation represents a considerable improvement on the existing rather ambiguous provisions of the 1983 Act.

The noble Lord seeks to retain the "conduct or management" formula. He is not satisfied with the old formula on its own as he wants to graft it on to the new definition in new Sections 90A to 90D of the 1983 Act. We think that there may be some confusion if that is done. We have received no representations until now about the demise of the formula. As I think is now generally accepted, to refer to election campaigning as the "management" of an election is somewhat quaint, if not archaic. In the language of today we suspect that most candidates would regard the returning officer as the person who actually manages the election.

My next point deals more closely with the point made by the noble Lord in moving the amendment. Nor is it necessary to retain the words, whether before, during or after an election", since Section 90A(2) has the same effect. That is my answer to the problem raised by the noble Lord. We think that the formula used in the 1983 Act has had its day and is in need of updating. That is why we have changed it.

Before I sit down, perhaps I may say that this is a complicated and detailed point. Although we think that we have the answer to it, I would be happy to go away with the point, talk to the officials and perhaps talk to the noble Lord again to see whether those who advise him are right or whether we are right, because we do not want to get it wrong.

Lord Mackay of Ardbrecknish

My Lords, I am grateful to the noble Lord. Such is the complexity of the matter that perhaps it would have been better if I had sent the noble Lord a letter at an earlier stage. I shall certainly ensure that the people who brought this point to my attention are made aware tomorrow of what the Minister has said. If we have to develop the point further, I am sure we can. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 131 [Meaning of 'election expenses']:

[Amendment No. 216 not moved.]

Clause 133 [Corrupt and illegal practices: consequences for persons convicted of such practices]:

Lord Bach moved Amendment No. 217: Page 98, line 38, at beginning insert ("Subject to subsection (1A) below,").

The noble Lord said: My Lords, in moving this amendment, perhaps I may speak also to Amendments Nos. 218 and 220. These four amendments relate to the incapacities that result following a person's conviction for a corrupt or illegal practice. Under the Representation of the People Act 1983 a candidate convicted of a corrupt or illegal practice is not only debarred for a period from holding elective office but also disqualified as a voter. Having examined these provisions, as amended by Clause 133 of and Schedule 17 to the Bill, more closely, we feel that this dual sanction is difficult to justify. It is entirely proper that where a person is found guilty of an offence as a candidate one of the consequences should be a period of disqualification from holding elective office. But the sanction of disfranchisement more appropriately fits offences committed by a voter; for example, personation. These amendments make the appropriate adjustment to the 1983 Act to this end. I beg to move.

On Question, amendment agreed to.

Lord Bach moved Amendment No. 218: Page 99, line 7, at end insert— ("(1A) The incapacity imposed by subsection (1)(a)(i) above applies only to a person convicted of a corrupt practice under section 60 above or of an illegal practice under section 61 above.").

On Question, amendment agreed to.

Schedule 17 [Amendments relating to election petitions]:

Lord Bach moved Amendments Nos. 219 and 220: Page 200, line 31, after ("of") insert ("subsection (4A) and")). Page 200, line 43, at end insert— ("(4A) The incapacity imposed by subsection (4)(a)(i) above applies only to a candidate or other person reported personally guilty of a corrupt practice under section 60 above or of an illegal practice under section 61 above.").

On Question, amendments agreed to.

Schedule 18 [Election campaigns and proceedings: miscellaneous amendments]:

Lord Bach moved Amendments Nos. 221 to 225: Page 201, line 35, at end insert— ("() In subsection (2), for "and by a receipt" there shall be substituted "or by a receipt"."). Page 203, line 15, leave out ("and") and insert ("or"). Page 207, line 1, after ("3,") insert ("the form of return and"). Page 207, line 5, at end insert— (" . In Schedule 4 (election expenses in connection with certain local elections), in paragraph 3, for "and receipts" there shall be substituted "or by receipts".").

On Question, amendments agreed to.

Clause 136 [Control of political opinion by companies]:

Lord Wedderburn of Charlton moved Amendment No. 226: Page 101, line 12, at end insert—("(1A) The purpose of Schedule 19 is to limit donations by companies to political parties and expenditure by companies for political purposes by way of disclosure both to shareholders and to employees as partners in the enterprise and to secure necessary and proportionate control over such expenditure in order that it should not unduly distort the democratic process and its exercise by the sovereign electorate. (1B) Nothing in subsection (1A) creates an offence or any liability, but the terms of the subsection shall be taken into account by the court.").

The noble Lord said: My Lords, in considering how I should approach this amendment, I wondered whether I should follow a famous precedent on amendments on rights for employees and their representatives. On 3rd August 1906, at what Lord Robert Cecil complained was a late hour, on a Friday afternoon at the fag end of the Session", Sir Charles Dilke, that great Liberal statesman, moved a critical amendment to the Trade Disputes Bill for what were then called the "labouring classes". Although he moved the amendment, Dilke made no speech on it. It was left to the House, led by the Attorney-General, to debate it and he relied on the fact of the great Liberal majority that had been returned in the general election to see him through. It was made rather easier by the fact that Mr Balfour, as Hansard records, led most of the Conservative and Unionist Members out of the Chamber in protest against a breach of an alleged government guarantee that debate would end at 11 p.m. on that Friday—a guarantee that was denied by the Government.

I decided that it would be wrong and discourteous to take that course and not to say something about Amendment No. 226. I should say that I wish to speak also to Amendment No. 252. Amendment No. 226 offers a skeleton. Amendment No. 252 puts sufficient flesh on the skeleton to make it a real debate. When directors decide to make political donations from the funds of the company, it has been true at least since 1967 that they should disclose what they are doing. Indeed, disclosure has gone beyond the protection of shareholders, as any student of company law will know. Today, disclosure would include the purposes for which my party fought the election in regard to industrial relations, which my right honourable friend the Prime Minister described in his foreword to Fairness at Work as: Already modern and successful companies draw their success from the existence and development of partnership at work".

In some ways this is not a new idea. Extensive literature has been published both here and on the continent concerning what many writers call "conflictual partnership", in the sense that sometimes the interests of workers, shareholders and managers are common, while on other occasions they conflict. In recognising that conflict, one has to take account of the fact that shareholders in a large public company can change their position much more easily than most of the employees simply by selling their shares and changing their investment. The conflicts of interest that do occur form the basic reason why autonomous trade unions exist in all democratic countries.

Because of the decision reached by your Lordships' Judicial Committee in the Osborne case in 1910, we have long had in place extremely strict legislation concerning the political funds of trade unions. Some have suggested that there should be an equal form of legislation for companies, with an opt-out for shareholders as regards political expenditure. I am glad that the Government have not adopted that proposal here because it is not all that practicable. Instead, the new mechanisms for the control of political expenditure in this Bill include disclosure to the shareholders and, in a new residual mechanism of control, a procedure whereby shareholders may eventually challenge the directors' donations for political purposes in the courts. In particular, they will be able to challenge a donation if it lacks the required resolution of approval in a company meeting, to which I shall return when we reach later amendments.

The amendments seek to put in place a parallel obligation on the company to disclose in good time proposed political expenditure to the employees' representatives, to consider any representations they may make and to respond to them if they so wish. The definition of employees' representatives has been taken from three of the mechanisms already known to our law; namely, representatives of a trade union recognised by the company; representatives of a trade union legally entitled to recognition of the status of bargaining agent under the new schedule to the Employment Relations Act 1999; or representatives elected by the workforce in a manner parallel to the methods permitted by the amended provisions of what are now Sections 188 and 188A of the Trade Union and Labour Relations (Consolidation) Act 1992.

These amendments do not give to employee representatives precisely equal status to the shareholders in their competence to apply to the courts for control of political expenditure. However, they leave it open to the Minister, once the system has been running for two years or more, to use powers to introduce regulations—which probably I should have drafted as affirmative orders—which would enshrine similar rights for employee representatives. However, that is a power for the future, if it is needed, as in paragraph 347K of Schedule 19 to the unamended Bill.

There is special provision for cases where the company objects to disclosure of information on the ground that it is confidential—which noble Lords will see builds on the important and most welcome innovation by the Government; namely, in the transposition of the European Works Council Directive in Regulation 24 of the trans-national information instrument, SI 3323 of 1999. In brief, this transfers jurisdiction over disputes about confidentiality to the Central Arbitration Committee, which, since 1975, under its chairman Sir John Wood, has a long history of reaching informal and sensible solutions to industrial disputes. On confidentiality, it would judge as it does in the regulations; namely, not by subjective considerations but by determination, using objective tests relating to whether the release of information would be harmful to the enterprise on objective grounds.

The central obligation of management here would be to transmit to the employee representatives within the two weeks before the relevant meeting of the shareholders the terms of the resolution proposed and any other information that it wished to give. Representatives would then have the right to ascertain the opinions of relevant workers, although there would be no power to associate any particular opinion to individuals. This is not a proposal for co-determination in the German style; it is not even a requirement of the kind one finds in Sweden and other countries for a disclosure provision which forms part of the right to bargain. It is a moderate requirement of disclosure and minimum consultation in a tradition which is peculiarly apt for our own jurisdiction, with a long tradition of consultation stemming from the Whitley Committees proposals in 1917.

I believe that modern management agrees with the concept of partnership at the place of work, albeit that most people might precisely define it as they like. Nevertheless, there is a common core of agreement. Partnership in industrial relations must produce more than the aspirational semantics of co-operation; it must result in concrete measures.

I ask my noble friend to show some favour to this proposal. It is something which is attractive in trade union circles and, indeed, in progressive management circles as well. I hope that my noble friend will be able to give an indication that the Government will consider this as a matter that they might like to introduce themselves. I beg to move.

8.30 p.m.

Lord Davies of Coity

My Lords, I rise to support my noble friend Lord Wedderburn of Charlton in moving Amendment No. 226 and speaking to Amendment No. 252. I do this in the belief that these amendments will complement the Bill and will help to establish a fairer and more balanced situation.

For 30 years I was a trade union officer. Over those years a great deal of my time was spent attempting to establish a greater degree of co-operation within industry, and putting that into place, rather than widespread conflict. No one was more pleased than I when, in the mid-1990s, the trade union movement widely embraced the concept of partnership within industry. However, the question of partnership is a mechanism with a two-way flow. It offers rights to and demands responsibilities from the two sides of industry, traditionally described as capital and labour. Capital was reflected in the investment made by shareholders, while labour was reflected by employees contributing to the prosperity of the company.

It seems to me that, if it is to be worth while, consultation must take place with both sides of industry. That has been demonstrated in the Bill so far as concerns shareholders, but I think it should also reflect that consultation, information and notification to employees should take place. If we want partnership to be established and to work fully, that should be reflected in the legislation that we pass. We must recognise that both capital in the form of shareholders and labour in the form of employees create the prosperity that any company achieves. When it has to take decisions with regard to political donations, it is only right and proper that both sides of industry should be treated fairly; otherwise workers will think that they are not really equal partners with shareholders.

Lord Lea of Crondall

My Lords, I add my support to the amendment moved by my noble friend Lord Wedderburn of Charlton. It is perhaps a marker for the future. It is a modest proposal to add to the legitimacy of our system. The system has gained in legitimacy over recent years.

I should like to refer briefly to what happened in the mid-1980s. At that time, the Conservative government introduced a mandatory requirement for all trade unions that wished to have political funds to hold a ballot every so often to ascertain whether they wanted to continue having these funds. The expectation was that there would be some nibbling away at the degree of support and therefore at the number of trade unions that would have political funds. Let me remind the House of what actually happened: 100 per cent of unions with political funds endorsed by large majorities the principle of having political funds. If I remember correctly, some 15 trade unions which had never had political funds decided to have them. This was not specifically to do with affiliation to the Labour Party.

I do not know what the Liberal Democrats think about it, but there is a degree of argument that the Liberal Democrats, as well as the Conservative Party, would like to see more cross-fertilisation of political funding. That is a separate argument. But certainly the net result of the reforms of the mid-1980s was rather different to the intention. That added to the legitimacy of the system.

In that sense, there is less cynicism now than there was then about the political system so far as concerns financing. However, a number of questions remain, as the Neill committee discussed. The trade unions gave evidence to that committee as well as the Labour Party; the matter has been looked at quite thoroughly and the Bill is a step forward.

My noble friend's amendment does not seek to stop people making donations. I shall explain why that is not just a phrase. It is very important that the industrial interest in its broadest sense should be involved in the political arena. On all sides of the House there is now a greater balance of industrial experience than was the case 20, 30 and 40 years ago. That balance is necessary; it reflects the fact that there is nothing wrong with political donations. But when people in industry talk about a company being one big happy family and so on, anything which enables people to have a say in the political donations that are made is a step forward. It adds to the richness of our democracy. It gives me great pleasure to support the amendment.

Lord Bassam of Brighton

My Lords, in the view of the Government, the amendment seeks to extend the power of employees to participate in decisions of the company beyond those areas where they have a legitimate interest in so participating. I understand, of course, the enthusiasm and the loquacious elegance with which the points have been made, but that is the Government's view.

The purpose of these provisions is to ensure that, in a sensitive area of corporate governance, there are formal arrangements in effect for enabling shareholders to constrain and influence the decisions of the directors. It is the manner in which the directors dispose of the resources of the company which is in issue here. It is the shareholders who will bear the primary burden if the funds of the company are dissipated by directors on political ventures of no benefit to the company. The provisions aim to support the important monitoring role of the shareholders in this regard.

Where the shareholders exercise this control, the company and its employees will benefit. We do not think that by building in an element of what could be described as "worker participation" into these arrangements, this control on the directors' activities will be enhanced. Indeed, it may well be a case of too many cooks spoiling the broth, with another layer of monitors brought into the picture. That would seem to be the effect of the amendment.

We consider that the interests of the company, including those of its employees, are best advanced by the arrangements contained in the Bill as drafted. I urge your Lordships to reject these amendments, which would impose a further and unnecessary layer of control on the making of decisions in regard to political donations by companies.

The noble Lord, Lord Wedderburn, made the point that some of these measures would be welcomed by what he described as "progressive management". That may well be the case. If so, it is entirely a matter for companies to determine. If they wish themselves to extend the principle of participation in the making of these decisions, all well and good. We do not think that we should legislate for it; that is a matter for the companies.

`slightly regret the reaction of my noble friend, especially his phraseology. This is not a plan for "worker participation" in any sense that literature knows of the phrase. If I did not know him so well and value his friendship so much, I would say that his answer to the propositions reeked a little of the 1980s rather than 1997.

My noble friend rightly said that this is an issue of corporate governance. His brother or sister department, the Department of Trade of Industry, is in the middle of a huge debate and review of the company law duties of directors. At the middle of the enormous document it produced recently is the question of how far directors' duties in law should reflect duties to persons other than shareholders—to employees and to others, and, indeed, to creditors in certain situations. I regret to say that the DTI inquiry is a bit ahead of my noble friend. However, having heard what he said, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.45 p.m.

Schedule 19 [Control of political donations by companies: new Part XA of Companies Act 1985]:

Lord Wedderburn of Charlton had given notice of his intention to move Amendment No. 227: Page 208, line 23, leave out ("EU").

The noble Lord said: My Lords, I have taken advice and I understand that I am allowed two sentences in relation to the course that my noble friend Lord Evans of Parkside and I wish to take in regard to Amendment No. 227 and its family, if I may so refer to the groupings—other than Amendment No. 259, which again, mea culpa, should have been grouped with Amendment No. 253.

Having thought long about the matter, we believe that, because of decisions already taken in the House in regard to the Bill and because of the new government Amendments Nos. 236 and 237, it would be quite wrong to move this family of amendments—minus Amendment No. 259. We would be asking the House to contradict a number of previous tendencies and to pre-judge the debate, in certain respects, on Amendment No. 236. I seek the leave of the House not to move this family of amendments, other than Amendment No. 259.

[Amendment No. 227 not moved.]

[Amendment No. 228 not moved.]

Lord Bassam of Brighton moved Amendment No. 229: Page 208, line 25, leave out ("Chapter") and insert ("Part, but subsections (4) and (6A) have effect subject to section 347AA").

The noble Lord said: My Lords, the main purpose of this group of amendments is to amend the definition of an "EU political organisation" in relation to political donations by companies, in respect of both shareholder authorisation and disclosure. I shall try not to detain the House for too long, but there are some points of explanation which are important for the official record. I shall have to take a little time in moving through the group of amendments.

The drafting of the definition has raised difficult issues. The Government certainly accept that the definition must provide reasonable clarity, but, equally, we believe that it is important that there is no compromise on the issues of transparency and accountability, which lie at the heart of the Neill committee's work. We do not, for example, believe that it would be appropriate for the definition to be drafted in such a way that companies could make a donation without prior shareholder authorisation in circumstances where they would not want the definition to be disclosed. If the directors of a company are in reasonable doubt as to whether an organisation is "political", they should, we believe, seek shareholder authorisation for and disclose donations to that organisation.

The government amendments would make the main test in relation to the definition the intent of the organisation to affect public support for a political party or to influence voters in a referendum. This test, we believe, strikes the right balance between safeguarding the position of independent organisations which seek only to promote public debate while ensuring that the requirement cannot easily be circumvented by front organisations.

The amendment tabled by the noble Lord, Lord Blackwell, would amend the definition so that it applied to an organisation which carried on, or proposed to carry on, activities which are capable of being reasonably regarded as primarily intended to affect public support for a political party. There are two main reasons why the Government cannot support the noble Lord's amendment. In the first place, it would increase uncertainty about the interpretation of the definition. The second reason is a simple one. I believe that the test proposed by the Government is the right one. The test, based on intent to affect public support for a political party or to influence voters in a referendum, seems to us to be fair, proportionate and understandable.

The Government's amendment would also, in the interests of clarity, specifically exempt donations to all-party parliamentary groups and subscriptions to trade associations. We accept the arguments that have been put to us that all-party parliamentary groups are, by their nature, non-partisan, and that it would be harmful to the competitiveness of UK businesses to create uncertainty about the position under the Bill of subscriptions to trade associations.

I am grateful to the noble Baroness, Lady Hooper, and to the noble Lord, Lord Mackenzie of Framwellgate, for tabling an amendment which appears to signify their consent to the Government's proposal. I apologise to them if I have misconstrued their purpose.

Amendment No. 234 seeks to amend the definition of "EU political expenditure" so that it covers any expenditure incurred by companies in respect of activities which could reasonably be regarded as intended to affect public support for a political party or organisation or to influence voters in a referendum. The amendment would bring the definition of political expenditure into line with the amended definition of a political organisation; in particular, it would ensure that companies would be required to seek shareholder authorisation for political expenditure in relation to a national or regional referendum.

The Government are conscious, however, that some companies carry on business activities which may, by their very nature, involve the publication or dissemination of material which seeks to influence the views of members of the public: journalism is an obvious example. It is, therefore, our intention to table an amendment for debate at Third Reading providing that these controls will not apply to these forms of business activities.

The other main purpose of this group of amendments is to introduce a £5,000 de minimis threshold in relation to shareholder authorisation. The Government accept that, on practical grounds, there is a strong case for an annual de minimis threshold of £5,000 in relation to authorisation. It is possible, for example, that a company may wish to make a very small sponsorship payment in the course of a financial year which it had not anticipated at the time of its annual general meeting. This proposal would provide some flexibility in this regard. I beg to move.

On Question, amendment agreed to.

Lord Bassam of Brighton moved Amendments Nos. 230 and 231: Page 208, line 29, after (" 48") insert (", 49"). Page 208, line 32, leave out (", (6) and") and insert ("to").

On Question, amendments agreed to.

[Amendments Nos. 232 and 233 not moved.]

Lord Bassam of Brighton moved Amendment No. 234: Page 208, line 45, at end insert (", or in respect of any activities on the part of the company such as are mentioned in subsection (6A)(b) or (c)").

On Question, amendment agreed to.

[Amendment No. 235 not moved.]

Lord Bassam of Brighton moved Amendment No. 236: Page 209, leave out lines 1 and 2 and insert— ("(b) any other organisation to which subsection (6A) applies. (6A) This subsection applies to an organisation if—

1. (a) it is a political party which carries on, or proposes to carry on, activities for the purpose of or in connection with the participation of the party in any election or elections to public office held in a member State other than the United Kingdom;
2. (b) it carries on, or proposes to carry on, activities which are capable of being reasonably regarded as intended to affect public support for—
1. (i) any registered party,
2. (ii) any other political party within paragraph (a), or
3. (iii) independent candidates at any election or elections of the kind mentioned in that paragraph; or
3. (c) it carries on, or proposes to carry on, activities which are capable of being reasonably regarded as intended to influence voters in relation to any national or regional referendum held under the law of any member State.

(6B) "Organisation" includes any body corporate and any combination of persons or other unincorporated association.

(6C) "Registered party" means a party registered under Part II of the Political Parties, Elections and Referendums Act 2000.").

The noble Lord said: My Lords, I have spoken to this amendment. I beg to move.

Lord Blackwell moved, as an amendment to Amendment No. 236, Amendment No. 236A: Line 9, after ("as") insert ("primarily").

The noble Lord said: My Lords, I welcome Amendment No. 236 as a step forward from where we were at the previous stage of the Bill. Once again, I declare an interest as the chairman of the Centre for Policy Studies, which is an independent think-tank.

The difficulty that I have with the wording of Amendment No. 236 as it stands is that it leaves a grey area in regard to what is or is not a political organisation. I refer in particular to paragraph (6A)(b), which refers to a political organisation as one which, carries on, or proposes to carry on, activities which are capable of being … regarded as intended to affect public support for … any registered party".

Any publication of a policy document might be regarded as having, as one of its consequences, an effect on public support for a registered political party. Let us suppose that an organisation publishes a critique on an aspect of public policy, part of which is critical of current government policy in that area. That might be regarded as "intended to affect public support" for that policy and, therefore, for the party advancing it. However, it seems to me that publishing a reasoned view on a policy area is not intended to be captured under the Government's amendment as a party-political activity or that donors to that group should be regarded as giving money to a party-political group.

My amendment therefore seeks to insert the word "primarily" into sub-paragraph (b) of the amendment. That would make it clear that, in publishing a policy critique setting out views that were different from those of the government or alternative groups, so long as the prime intent was to advance argument about the policy, it would not be captured by this provision; whereas if the intent and the wording were reasonably regarded as "primarily" intended to affect political support for the party, that would place it in a different category. My amendment is simply intended to move the line slightly out of the grey area and make it clearer that the Government are after organisations that are primarily about canvassing support for political parties or a political point of view.

I believe the Minister said that he was not very keen on my amendment. However, in the light of my remarks perhaps he will take a different view and will reconsider the matter before the next stage of the Bill. I beg to move.

Lord McNally

My Lords, my noble friend Lord Newby has added his name to this amendment. He is the chairman of the Centre for Reform, another think-tank. I do not want to add much to what the noble Lord, Lord Blackwell, has said. He set out very clearly the case that is made by the think-tanks. Frankly, like the noble Lord, I was slightly surprised that the Minister "got in quick" with his rejection of a "one-word amendment" which would give a little more elbow-room. Quite honestly, I think that the Minister is straining at gnats not to accept this amendment. I ask him to reconsider what the noble Lord, Lord Blackwell, said and ponder on the matter. This is a concession that the Government could very easily make.

My noble friend Lord Newby, who, unfortunately, cannot be here this evening, asked me to say how much the approach that the Government have taken on the matter is appreciated. In terms of general welcomes, perhaps I may also say that I was lobbied by the North West Pharmaceutical Group to support the amendment of the noble Baroness, Lady Hooper, just in case the government amendment failed. Obviously, the group does not have as much confidence in the Government Whips as I have. The lobbying brief says that if the government amendment succeeded, those concerned would be content.

Lord Wedderburn of Charlton

My Lords, the amendment raises an important issue. It goes to what is intended by those who are carrying on such activities. First, there is no more difficult problem than to decide what is intended by people, although it can be done. But various areas of the law show that determination of the "primary" intention—or, perhaps, in some cases, the "dominant" intention—causes an enormous amount of work for lawyers. Therefore, I would be against the amendment on that ground.

Lord Dubs

My Lords, I listened most carefully to the introductory remarks of the noble Lord, Lord Blackwell, and, indeed, to the subsequent comments. I should declare an interest at this point because I serve on the executive of the Fabian Society. I should have thought that the word "primarily" would help organisations that publish documents or pamphlets dealing with political issues, or put forward options for the sake of consideration by political parties, and by others. I have in mind organisations like the Fabian Society that organise workshops and seminars, all of which are intended to highlight political issues and lead to more informed debate.

Those activities might indirectly be construed as affecting political support for a registered party, but, in practice, we know that that is not what they are really about; they are about informed, sensible political discussion. As I say, I believe that the addition of the word "primarily" would help. It would clarify matters and make the understanding of them much easier. Therefore, I hope that my noble friend the Minister will think again. As has been said, it is a very small amendment but one which would help organisations like the Fabian Society, and others.

Lord Bassam of Brighton

My Lords, my answer to the noble Lord, Lord McNally, is that one word can make a lot of difference. Unfortunately, that is the case with the amendment now before us. I am extraordinarily sympathetic in this respect. Before I continue, perhaps I should declare that I am a member of the Fabian Society. In fact, I ought to have declared that interest before. It was just an oversight on my part. I must make that point clear.

The problem here is, first, that the amendment tends to muddy the waters. I believe that it would make the definition less clear. Secondly, as I said earlier, a test based on intent to affect the way in which people vote appears from the Government's point of view to be only fair and proportionate. Those are the two reasons why we cannot be as helpful as the noble Lord, Lord Blackwell, would wish. I shall, of course, study what the noble Lord said with care. I shall also take careful cognisance of the Hansard report. But no more than that can I promise. We have probably been as helpful as we possibly can.

I well respect the work that all these valuable and valid organisations undertake, as do the Government. I am sorry that I cannot be more helpful. As I said, I shall read the Hansard report and study it most carefully to ascertain what further assistance we can render. However, as I said, I can promise nothing more.

Lord Blackwell

My Lords, I am most grateful to the Minister for his response. This is not an issue that I wish to press at this stage. However, I welcome the noble Lord's offer to reconsider the matter. Perhaps between now and the final stage of the Bill we can discuss the matter further. I beg leave to withdraw the amendment.

Amendment No. 236A, as an amendment to Amendment No. 236, by leave, withdrawn.

On Question, Amendment No. 236 agreed to.

Lord Bassam of Brighton moved Amendment No. 237: Page 209, line 9, at end insert—

("Exemptions.

347AA.—(1) Section 347A(4) does not extend to a subscription paid to an EU trade association for membership of the association, and accordingly such a payment is not a donation to the association for the purposes of this Part.

(2) In subsection (1)— EU trade association" means any organisation formed for the purpose of furthering the trade interests—

1. (a) of its members, or
2. (b) of persons represented by its members,

which carries on its activities wholly or mainly in one or more of the member States; subscription", in relation to a trade association, does not include any payment to the association to the extent that it is made for the purpose of financing any particular activity of the association.

(3) Section 347A(6A) does not apply to any all-party parliamentary group composed of members of one or both of the Houses of Parliament (or of such members and other persons), and accordingly any such group is not an EU political organisation for the purposes of this Part.

(4) For the purposes of this Part—

1. (a) a company does not need to be authorised as mentioned in section 347B(1) or section 347C(2) or (3), and
917
2. (b) a subsidiary undertaking does not need to be authorised as mentioned in section 347D(2),.

in connection with any donation or donations to any EU political organisation or organisations made in a particular qualifying period, except to the extent (if any) that the amount or aggregate amount of any such donation or donations made in that period exceeds £5,000.

(5) The restrictions imposed by sections 347B(1), 347C(2) and (3) and 347D(2) accordingly have effect subject to subsection (4); and, where a resolution is passed for the purposes of any of those provisions, any amount of donations in relation to which, by virtue of subsection (4), no authorisation is needed shall accordingly not count towards the sum specified in the resolution.

(6) In subsection (4) "qualifying period" means—

1. (a) the period of 12 months beginning with the relevant date for the company or (in the case of a subsidiary undertaking) the parent company; and
2. (b) each succeeding period of twelve months.

(7) For the purposes of subsection (6) the relevant date for a company is—

1. (a) if an annual general meeting of the company is held within the period of 12 months beginning with the date of the coming into force of this section, the date of that meeting; and
2. (b) otherwise, the date immediately following the end of that period.").

The noble Lord said: My Lords, I beg to move formally.

Lord Wedderburn of Charlton moved, as an amendment to Amendment No. 237, Amendment No. 237A: Line 26, leave out ("does not need to") and insert ("must").

The noble Lord said: My Lords, in moving this amendment, I shall speak also to Amendments Nos. 237B to 237D. I apprehend that I have done my case no good, despite the hour of the night, by going too fast. Therefore, I should like the House to pause and consider what is involved in this the latest of the Government's amendments. If I am not mistaken, it was tabled last Wednesday. It would reverse a central part of what has been the jewel in the crown of this Bill. Indeed, I referred to it when I argued that employees should have, not participation—I insist, again—but merely a voice in respect of these matters regarding political donations.

Where are we at present? We have reached the point where directors have decided that they want to propose to use part of the company's funds, which have probably been raised for commercial and similar purposes, for political donations. They will have been wise enough to have that capability put in the memorandum of association, and everywhere else that is necessary; for example, in the articles, and so on. But this is a step that the Government's Bill has surrounded with some 10 or 15 pages of print in Schedule 19.

Those pages in Schedule 19 contain checks and balances, to which I referred previously. They are, first, that the procedure must be entered into and completed and put to the shareholders at a general meeting for approval. Specific sections are added to ensure that that is done properly where there is a holding company and a subsidiary company. Moreover, as one goes through the pages, a procedure is invented whereby the shareholders can go to court and obtain a court order against the directors to replace the money if they have not gone through the proper process. Even I thought that that was a bit harsh. But then I came across the various defences that the schedule provides for such directors, which are probably quite reasonable.

However, as I said, this amendment was tabled only last week, after the Government had had nearly two years to consider the matter. It was put down without explanation; indeed, the only explanation that we shall have about it will be what my noble friend said tonight in his introduction. If I may say so, he did not speak at length to Amendment No. 236. This central mechanism, which is new to our law and which was so much the Government's prize in the schedule, is to be removed. Previous amendments allow for a donation to a party in this country or in the European Union. I spoke to that matter once before in these proceedings and pointed out that it would allow donations to M le Pen's party and all the other parties I rather dislike, such as Mr Haider's party in Austria. But I object just as much if a company is able to give money to the French socialist party without—as the schedule would have demanded—putting that to the shareholders at a general meeting. I appreciate, of course, that as regards a large public company, the shareholders are, in effect, the financial institutions. I do not mind that. The whole point is that those procedures would give publicity to the matter. I apprehend that if we had discussed companies making payments to defend apartheid some five or 10 years ago, there would have been solid approval of the need to put that to a shareholders' meeting.

This measure constitutes a major change in government policy. The sum of £4,999 every year is not a small amount of money. I recall that my noble friend Lady Gould talked of the difficulty that local parties have in raising small sums. We all know that that is true.

I do not understand how my noble friend can ask us to approve Amendment No. 237, which introduces a whole new section 347AA. I suggest leaving out the provision about not needing to get approval and introducing the word "must" in relation to getting approval. I am grateful to officials in the Public Bill Office for their help but I suspect that the amendment I am discussing is a wrecking amendment and that I should vote against it. However, it is on the Marshalled List and therefore I am home and dry.

There should be shareholders' approval for the measure we are discussing. The Government have always believed that there should be shareholders' approval. That leads me to ask how my noble friend can put this measure to us now. On what grounds does he do that? Who thought of the idea? Who put it to the Government that one should remove this major mechanism for greater publicity, which is the whole point of shareholders' meetings? Who thought it up? Was it thought up by the Government? Amendment No. 237D would reduce the amount that could be used in this way by the directors at their whim, without it being subject to any control whatever, down to £50 as opposed to £5,000.

I stop there although there is much more to say about this venture of the Government's. Why was it not tabled in another place? What was wrong with the idea then? The matter was carefully considered in another place. This is not a case of this House not having the opportunity to consider the most careful debates that took place in Standing Committee G. There was not a murmur of this proposal. Indeed, in those debates the Government were proud—as well they should have been—to introduce the new mechanism. I do not understand—and many members of our party will not understand—why the Government have suddenly decided to remove this mechanism (which has gained some publicity and support for the party) and impose a cut-off point of £5,000. I wonder why they chose the sum of £5,000. Are shareholders not interested in anything less or more? Of course, that is absurd. I am amazed at this proposal, which was tabled only last week. I ask my noble friend the direct question: who thought it up and what are the grounds for it? I beg to move.

Lord Bassam of Brighton

My Lords, I refer to one of the important principles and approaches that we have attempted to embrace during the course of the development of the Bill. I think that one has to accept that the Bill has developed. That charge has been levelled rather more sharply against the Government on occasion, and from time to time by the noble Lord, Lord Mackay. One of the important ways we should approach the Bill is to try to be as consensual as we can because we need a system of regulation that we can in the main all sign up to.

The £5,000 de minimis limit is a response to representations that we have received from both sides of the House. The limit is an aggregate figure covering all political donations made in any year. The de minimis limit reflects the fact that companies may make innocent donations, for example, to think tanks. We do not want these provisions inadvertently to affect adversely such activities. The noble Lord, Lord Mackay, tabled a similar amendment in Committee.

We believe that our amendment provides a small measure of flexibility so that companies do not have to call extraordinary general meetings for what one might describe as fairly modest donations. My suspicion is that most donations will probably be larger than £5,000 and attract some attendant publicity. There is an organisation which regularly monitors party political or similar donations. The Labour Research Department produces an excellent publication which does exactly that. I do not think that political donations will be without publicity, interest or disclosure.

We have approached the issue on a consensual basis. I am sorry that the noble Lord was not aware of earlier similar amendments. Yes, we have had representations from a range of organisations and political parties. That is the cause underlying the amendment. We do not seek to undermine the general principle behind disclosure; far from it. We have been frank about that. It is a matter of practicality. If we were to go down to the level of the £50 suggested by the noble Lord in one of his amendments it would be the sledgehammer to crack a nut syndrome.

I understand the logic of the noble Lord's argument. However, I respectfully ask him to withdraw the amendment.

9.15 p.m.

Lord Goodhart

My Lords, before the Minister sits down, the £5,000 figure is the same as the figure which has to be disclosed for donations to a national political party. I assume that that is no coincidence. But there is also a requirement that donations of more than £1,000 in relation to a single constituency organisation should be disclosed. Therefore would not it he appropriate to reduce the £5,000 level to £1,000 to make sure that anything which has to be disclosed under this Bill also has to be approved by the shareholders?

Lord Bassam of Brighton

My Lords, I do not entirely follow the noble Lord's logic though I can see where he is coming from. Shareholders are entitled to be told about all except the very smallest of donations; and there is no reason to amend the current disclosure threshold of £200. If a company donates £1,000 to a constituency association it would still be able to be disclosed under Part IV of the Bill. So there is already provision in place for that eventuality.

Lord Wedderburn of Charlton

My Lords, I, and many others, will read very carefully my noble friend's remarks in Hansard. The noble Lord is right to say that a report must appear in the director's report of all political donations over £200. The argument of the noble Lord, Lord Goodhart, that there are grounds for choosing £1,000 seems to have some strength.

The figure of £5,000 apparently comes from some anonymous representations from political parties As I was unable to attend the House, I read the Official Report in bed. I do not remember this precise point being made in Committee. If the Minister writes to me with a reference—he has kindly done so previously—I shall be interested to read it.

Of course I shall beg leave to withdraw the amendment. However, if what I think was said appears in Hansard there will be a considerable amount of dislike within his own party. It is true that if one is a subscriber one can gain these figures from the research undertaken by the Labour Party research department. I suspect that few people here read such publications. I congratulate the noble Lord, Lord Goodhart, on being an avid reader of the Labour Research Department's publications. My noble friend must understand that the provision removes any shareholder control in relation to the figure of f5.000 a year, every year. The figure will appear in the report of the directors, but no more. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 237B to 237D, as amendments to Amendment No. 237, not moved.]

On Question, Amendment No. 237 agreed to.

[Amendments Nos. 237E to 241 not moved.]

Lord Wedderburn of Charlton moved Amendment No. 242: Page 209, line 25, leave out from ("means") to end of line 29 and insert ("a special resolution").

The noble Lord said: My Lords, I shall speak also to Amendments Nos. 243, 244, 247 and 250. The amendments can be dealt with quickly. They relate to two points of company law.

The first is the procedure when a matter comes before a shareholders' meeting. As the Bill stands, approval can be given by an ordinary resolution, a special resolution, any other means allowed by the articles of association or—this is what I object to—a mechanism determined by the directors. The issue is whether the shareholders will approve of the donations proposed by the directors. It is therefore improper for the directors to be in charge of the way in which the shareholders' meeting must give that approval. I would have thought that that was elementary.

Since the turn of the century, important decisions relating to a company, such as a change of the articles, have had to be made by a special resolution that must be passed by a three-quarters majority with 21 days' notice. That is set down in the Companies Act 1985. Under Amendment No. 242, that would be the only way of approving of a donation.

The other amendments cover a technical point. I congratulate the Government that the Bill prevents the method of ratification by shareholders from curing a breach of their duties if the directors are in breach. There is also a line of authority, particularly in the court's decision in Re Duomatic, whereby many decisions have accepted informal unanimous acquiescence of shareholders as equivalent, although not identical, to ratification. That is why Amendment No. 244 would include: any formal or informal unanimous acquiescence or agreement". I beg to move.

Lord Bassam of Brighton

My Lords, the Government do not accept the amendments. In the first place, they would require companies wishing to make political donations to table a special resolution. We do not believe that that would be appropriate, given that a special resolution is required under the Companies Act 1985 only when fundamental changes, such as the alteration of the articles of association, are proposed. The Bill allows companies to require a higher voting majority for such resolutions by modifying their articles or by directors' determination.

Another aim of the amendments is to ensure that retrospective unanimous consent by shareholders to a donation made without their approval, however expressed, would not relieve the directors of the consequences of contravention. We believe that the amendment is unnecessary, as the wording that the noble Lord seeks to amend is sufficiently wide to include all forms of approval, formal or informal, given by shareholders to prior director action. Indeed, specifying a particular means of approval may cast doubt on the width of the words, no ratification or other approval made or given by the company or its members". Having heard that explanation and the assurances on the construction of the relevant provision, I hope that the noble Lord will feel able to withdraw the amendment.

Lord Wedderburn of Charlton

My Lords, I am sorry about my noble friend's first point, but I shall leave it. As to the second point—that approval or ratification must include unanimous acquiescence—I do not know what to do. I can only refer him to the judgment in Multinational Gas v. Multinational Gas Services in 1983 in the first volume of Chancery 258 in the Court of Appeal. He will see that, unless one deliberately inserts the words "informal acquiescence" as well as "formal ratification or approval", one is very much at risk of a court accepting the argument that informal acquiescence is sufficient. I can say no more than that and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 243 to 250 not moved.]

Lord Bach moved Amendment No. 251: Page 213, line 19, leave out ("otherwise than as mentioned in section 347F(1)") and insert ("without having been authorised as mentioned in section 347D(2)").

On Question, amendment agreed to.

[Amendment No. 252 not moved.]

Clause 137 [Disclosure of political donations and expenditure in directors' report]:

Lord Wedderburn of Charlton moved Amendment No. 253: Page 101, line 27, leave out ("registered party") and insert ("political party, wherever situated.").

The noble Lord said: My Lords, there will probably be some mysterious reason why this amendment is not acceptable, but I shall set out what it seeks to achieve. As the law stands at present, there is one system of entering into the directors' report donations made by the company for political or charitable purposes. I expected that the Government would leave, but amend and bring up to date, that method, which is set out in Schedule 7 to the Companies Act 1985. However, the Government have not done so. Indeed, it was pointed out in a research paper for another place that Clause 129 proposes, two new disclosure regimes for political donations and expenditure within the UK/EU area and for political contributions in the rest of the world".

I appreciate that some noble Lords may become confused and believe that I am repeating a point made in relation to permissible donors. I am not. This has nothing whatever to do with the previous debates about the European Union. The question raised by my amendment is: what ground is there for changing the system of reporting political donations into a dual system, which is brought about by Clause 137? They are similar systems. It is simply that one is drafted for the UK and EU and is slightly more regulatory but scarcely more so than the one which is drafted for new paragraph (4) of the Companies Act schedule for political contributions in the rest of the world.

Would it not be better to have less red tape and to leave one system for disclosure in the directors' report? We have chosen to amend the first system that the Government propose so that everything is covered. It seems to us rather better drafted than the second one because the second one refers to "contributions" rather than "payments" and has problems in that respect. I simply ask the Minister whether we could have rather less of the Bill in this case and have one system for reporting in directors' reports that covers every donation, whomever they are to and in whatever manner the directors propose to make them.

Lord Bassam of Brighton

My Lords, the Government have adopted the same pragmatic response to disclosure as they have to shareholder authorisation. In the light of the responses to their consultation, the Government have decided to apply the full disclosure regime only in respect of donations to EU political organisations or EU political expenditure. However, the Bill would require companies which made political donations outside the European Union to disclose a single aggregate figure in respect of monetary donations to overseas political parties. We feel that that would best provide for the situation which I believe is envisaged by my noble friend and provide a warning flag to investors if companies were making substantial overseas donations.

The other points which my noble friend made were covered in some of our earlier debates. Therefore, I do not need to respond to those. But if there is something that I have missed, I shall certainly pick that up at a later stage, having noted carefully what my noble friend said.

9.30 p.m.

Lord Wedderburn of Charlton

My Lords, I am grateful to my noble friend for saying that he will look again at some of the matters concerned. It has nothing whatever to do with any of the previous debates. It is a question of what the Bill says about what directors should put into their reports about donations.

The Government have invented an extremely regulatory system for donations relating to the United Kingdom or Europe and a rather less clear and less regulatory system for donations made anywhere else. Donations to Sweden will go in one director's report; for donations to Norway, something rather different is in place. I cannot understand why that is so.

My noble friend seemed to say that the Government have had consultations but we are not told with whom and in regard to what propositions. He concluded by saying, "We think this is the best way of doing things". I asked why and my noble friend, with great respect to him—and I value his friendship very greatly—did not give me any reason at all for the division of paragraphs 3 and 4 of Schedule 7 into two different methods. I hope that he will think again. It would be easier for directors to operate if they knew which system they had to follow if, for example, they are giving one donation in respect of Australia and another in respect of Austria or France. But, obviously, I must beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 254 to 256 not moved.]

The Deputy Speaker (Lord Lyell)

My Lords, I must advise your Lordships that, if Amendment No. 257 is agreed to, I would not be able to call Amendment No. 258.

Lord Bach moved Amendment No. 257: Page 102, leave out lines 18 and 19 and insert ("Part XA of this Act has the same meaning as in that Part").

On Question, amendment agreed to.

[Amendments Nos. 258 and 259 not moved.]

Lord Bach moved Amendment No. 260: Page 102, line 49, leave out ("European Union") and insert ("member States").

On Question, amendment agreed to.

[Amendment No. 261 not moved.]

Clause 138 [Reduction of qualifying period for overseas electors]:

Lord Bassam of Brighton moved Amendment No. 262: Page 103, line 41, leave out ("10") and insert ("15").

The noble Lord said: My Lords, as Members of your Lordships' House will recall, when we were discussing this part of the Bill at an earlier stage a wide range of views were expressed. It was difficult to see exactly what sort of consensus we would reach. Obviously, in government we have tried to proceed on the basis of reasonable consensus. We face a difficulty in that we must match some of the aspirations of another place, through the Home Affairs Select Committee and its report and findings on these matters, and a desire to reduce the number of years for which people may continue to claim a vote when they are living overseas.

On the other hand, we must respect the fact t hat many people who live overseas working for government, industry, business and commerce generally wish to play a full and active part in political life here and certainly wish to retain the right to vote.

So, having initially reduced the period to 10 years in our provisions, we took the view that we might be able to satisfy some of the understandable concerns which were being expressed, not least by the new friend of Socialist International, the noble Lord, Lord Mackay of Ardbrecknish, who was extremely persuasive on this matter. We thought that we should move somewhat in his direction and the direction of other Members of your Lordships' House by offering 15 years as a form of compromise. That is our amendment. I hope that the House will feel able to support it. It will not satisfy everybody in every respect. I realise that it represents a broad brush approach. However, we think that it is probably the most equitable approach that we can adopt. We hope that it finds favour this evening. I beg to move.

Lord Goodhart

My Lords, my Amendment No. 263 is grouped with this amendment. I spoke to it in Committee. It seemed that there was a strong case for treating those in the service of international organisations of which the UK is a member—not only the institutions of the European Union but also organisations such as United Nations, the World Trade Organisation, the World Bank and the IMF—as equivalent to being in the public service of the Crown. I have again tabled the amendment on Report because, as a result of the debate in Committee, it seemed that there was a possibility of the Government accepting a package deal which would include the use-it-or-lose-it amendment of the noble Lord, Lord Mackay, and our own amendment on public service in EU institutions and other international bodies.

However, it appears that this amendment has not found favour with the Government. It is not an amendment that we could force against the wishes of a reluctant Government. Third Reading already looks like being very long. Therefore, with regret, if the Government are not willing to be more helpful than they have so far been, I am afraid that we shall have to say goodbye to this amendment.

Lord Hodgson of Astley Abbots

My Lords, I shall be brief. As midnight approached last night, somewhat to my shame I described the Minister's reaction to an amendment that I had moved as "ungenerous". He may now feel that what I am about to say is ungenerous to him, and I accept that.

Naturally, I welcome the move that he has made. It is a step in the right direction. He has described his wish to find something that is clean and neat. I believe that this is clean and neat. However, it is still artificial. It is artificial against a background of increasing labour mobility. People will spend more and more of their time working outside this country, particularly as the single market in the European Union develops. Companies which hitherto would have seen their operations as entirely confined to the United Kingdom will increasingly have at least a European, and sometimes a world, dimension to them. Members of their staff may work overseas for very long periods. Some of them, of course, will enjoy working overseas. The relative freedom of working in smaller subsidiaries is attractive. In addition, they may wish to take into account the climate, though I am not clear as to why anyone should prefer the sunshine of southern Spain to a British winter! Both categories are made up of people who see themselves as British and intend eventually to return to the UK.

In the meantime, many of them will be paying tax and, therefore, contributing to our economy and to the welfare of this country. I therefore believe that they are entitled to representation here. Confusion has existed between residence and domicile. Residence can easily be changed, domicile cannot. Domicile requires a conscious effort on the part of people to demonstrate that they intend to live out their lives abroad. Without this, the Inland Revenue, in its inimitable fashion, can obtain estate duty on assets held in the United Kingdom. The purpose of this is to show that there is no neat and clean solution.

I accept the Minister's amendment. I am grateful to him for the move that he has made. However, I feel that people who pay UK tax and work overseas should have representation and be able to vote in our elections.

Lord Wedderburn of Charlton

My Lords, I know of somebody who is in exactly the same position as that described by the noble Lord, Lord Goodhart. I support the amendment.

Lord Mackay of Ardbrecknish

My Lords, perhaps I may say, briefly, that I am rather cynically bagging the noble Lord's compromise. I have listened to the debate. I shall reflect overnight on whether a more wide-ranging amendment should be considered on Monday. However, I am grateful to the Minister for looking for a compromise, as I have been trying to do for most of today.

Lord Bassam of Brighton

My Lords, the noble Lord, Lord Mackay, as a great compromiser is a good notion. Briefly, perhaps I may refer to a problem with the amendment tabled by the noble Lord, Lord Goodhart. We could include public servants working abroad but, if we do that, what about people who work for BP, AMOCO, or some other corporation, multinational or other part of public service? Where do we start and where do we stop? The list could go on. We think that our amendment is broad-brushed, clean, neat and simple. It almost goes back to what was there before. We feel that that is the best approach.

I am grateful to the noble Lord, Lord Hodgson, for his kind comments: I think they were kind. We think that this is probably as good as we shall get. One must have a sense of proportion about this matter. The noble Lord is right; the labour market will be more flexible and mobile. At the last count, some 14,000 people abroad exercised their right to register and vote in UK elections. We shall try to help all those people with this approach. I am glad that it seems to be finding broader favour in your Lordships' House.

On Question, amendment agreed to.

[Amendment No. 263 not moved.]

Lord Graham of Edmonton moved Amendment No. 264: After Clause 138, insert the following new clause—

("Parish polls

cc926-34
1. PARISH POLLS: THRESHOLD 3,692 words
cc934-6
2. INTERPRETATION: EXEMPT TRUST DONATIONS 547 words