HL Deb 27 November 2000 vol 619 cc1131-88

379AA.—(1) Tax relief shall be available to an individual ("the donor") in accordance with this section on qualifying political donations made by him of up to £500 in any year of assessment.

(2) A donation is a qualifying political donation for the purposes of this section if it is made to a registered political party (other than a minor party) and—

  1. (a) it takes the form of the payment of a sum of money,
  2. (b) it is not subject to a condition as to repayment,
  3. (c) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the political party, its members or accounting units, otherwise than by way of gift, from the donor or a person connected with him, and
  4. (d) the donor is a registered elector.

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

  1. (a) it is a registered party within the meaning of section 22 of this Act other than a minor party, and
  2. (b) at the last general election preceding the donation in question—
    1. (i) two members of that party were elected to the House of Commons, or
    2. (ii) one member of that party was elected to the House of Commons and not less than 150,000 votes were given to candidates who were members of that party.

(4) If an individual makes a qualifying donation he shall be entitled, on making the payment, to deduct and retain out of it a sum equal to basic rate tax thereon.

(5) Where a sum is deducted under subsection (4) above, the sum deducted shall be treated as income tax paid by the person to whom the payment is made.

(6) Any person by whom a qualifying donation is received shall be entitled to recover from the Board, in accordance with regulations, an amount which by virtue of subsection (5) above is treated as income tax paid by him; and any amount so recovered shall be treated for the purposes of the Tax Acts in like manner as the qualifying political donation to which it relates.

(7) The following provisions of the Taxes Management Act 1970, namely—

  1. (a) section 29(1)(c) (excessive relief) as it has effect apart from section 29(2) to (10) of that Act.
  2. (b) section 30 (tax paid in error, etc) apart from subsection (1B),
  3. (c) section 86 (interest), and
  4. (d) section 95 (incorrect return or accounts),
shall apply in relation to an amount which is paid to any person by the Board as an amount recoverable in accordance with regulations made by virtue of subsection (6) above but to which that person is not entitled as if it were income tax which ought not to have been repaid and, where that amount was claimed by that person, as if it had been repaid as respects a chargeable period as a relief which was not due.

(8) In the application of section 86 of the Taxes Management Act 1970 by virtue of section (7) above in relation to sums due and payable by virtue of an assessment made for the whole or part of a year of assessment ("the relevant year of assessment") under section 29(1)(c) or 30 of that Act, as applied by that subsection, the relevant date—

  1. (a)is 1st January in the relevant year of assessment in a case where the person falling within subsection (5) above has made a relevant interim claim; and
  2. (b) in any other case is the later of the following dates, that is to say—
    1. (i) 1st January in the relevant year of assessment; or
    2. (ii) the date of the making of the payment by the Board which gives rise to the assessment.

(9) The Board may by regulations make provision—

  1. (a) for the purposes of any provision of this section which relates to any matter or thing to be specified by or done in accordance with regulations;
  2. (b) with respect to the furnishing of information by donors or recipients, including, in the case of recipients, the inspection of books, documents and other records on behalf of the Board; and
  3. (c) generally for giving effect to this section.

(10) In this section—

(11) Section 839 of this Act shall apply for the purposes of this section to determine whether one person is connected with another."").

The noble Lord said: My Lords, this amendment deals with the issue of tax relief, in respect of which the Government have decided to depart from the recommendations of the Neill committee. Chapter 8 of the Neill report deals with the question of allowing tax relief on donations to political parties in the same way that tax relief is given to charities.

I could develop this argument at some length. I could even read out the recommendations of the Neill committee on this matter. If I did so, I believe that your Lordships would be convinced. However, that would take time. In addition, I know that government supporters tend to wear earmuffs so that they are unable to hear good arguments, and that they are allowed to remove the earmuffs only when the Whips think that the arguments are bad. I believe that the arguments are extremely good. I therefore hope that they are listening.

The conclusion to which Neill came, on page 99 of the report, was: Tax relief by deduction at source should be introduced, limited to the basic rate, on donations of up to £500 a year to 'eligible', registered political parties". I shall précis the argument. Having decided that donations of over £500 should be made public, and having decided that donations to British political parties should come only from people on the electoral register in this country, the Neill committee felt that the time had come to encourage small donors. In addition, concern was expressed about the involvement of people in the democratic process, a concern shared by all of us. I have previously said that political parties are about the most important voluntary organisations in the country, bar none, because they form the very basis of the political system. Without political parties, one cannot have democracy. They are, therefore, very important.

We saw in last week's by-elections, with very poor turn-outs, a reduced interest in the political process. I believe that that interest extends to members of political parties. It is not easy to retain members. One way of encouraging people to donate to political parties may be to explain to them that their donations will be treated in the same way as their charitable donations. Interestingly, inheritance tax is already treated in that way, from which political parties doubtless also benefit a little.

I want to make only one other point about the Neill committee. Reference was made in paragraph 6 of the report to evidence presented from Germany. In Germany, where a system of tax relief was introduced in 1974, the pattern of giving to political parties has changed in favour of many small donations and against large donations. I should have thought that the Government and the Opposition could agree on this. Is that not where we want to end up—with many more small donors to political parties? The German experience demonstrated that that was encouraged in relation to tax relief. Political parties know that there is an extra incentive to getting small donors. This is an important point. It would help the funding of political parties. It would perhaps help them to set up the bureaucracy needed by this Bill. A certain amount of money raised by political parties at the moment will be side-stepped into the setting up of procedures to carry out some of the burdens imposed by this Bill on the political parties. That seems to me a sensible way of helping.

I am told that tax relief would cost the Government about £4 million. It would be a good way of filling the gap that the Neil committee contended would be left by donors ceasing to make large donations to political parties. I believe that it would also underline to the public the importance of our political parties and the importance of supporting them, both in terms of canvassing and donating the money that political parties need. I beg to move.

Lord Goodhart

My Lords, I have put my name to this amendment and I strongly support it. If a recent article in the House Magazine is correct, this Bill may well prove to be the noble Lord, Lord Mackay's, swan song on the Front Bench of his party. If that is correct, it will be a great loss to his party and, in view of his great skill in debate, to the whole House.

Noble Lords

Hear, hear!

Lord Goodhart

My Lords, everybody agrees that it would be preferable for political parties to have a large number of small donors rather than a small number of large donors. That is the direction that we all want to take. The requirement of disclosure of donations over £5,000, or, in some circumstances, over £1,000, may diminish the number of large donations. Probably within a few months, we shall see whether or not that is so. That requirement can be regarded as a stick but, in order to encourage smaller donations, we need also to provide a carrot. I agree with the Neill committee that the appropriate carrot is tax relief.

We were impressed in particular by the example of Canada, where by coincidence a general election is being held today. It has an excellent system of public support for political parties through both tax relief and the partial funding of campaign expenditure. In Canada, a gift to a federal party qualifies for up to 500 dollars' tax credit on a donation of 1,150 dollars. There are similar reliefs on donations to parties at the provincial level. Those seem to work well and are popular.

Our proposal would achieve the same result but by a different route. The Neill committee proposed a simple system similar to the well known gift aid system for charities, except that no credit would have been available to a taxpayer against the higher rate tax. The use of the gift aid method would have meant that the donation would have had no effect on PAYE and there would have been no need to inform employers or in any way publicise the fact that a gift had been made.

A number of arguments have been made against tax relief. One made at an earlier stage of the Bill was that the money would be better spent on schools and hospitals. That argument was never strong, given that the estimated cost was about £4 million against government expenditure in the region of £400 billion. The tax relief would have been equivalent to £ 1 in every £100,000 of government spending.

Other arguments put forward the view that it is unfair to those who, by making a donation to their party, cannot pass on the benefit of tax relief because their income is not high enough to bring them into the tax-paying bracket. There will be a few donors in that category; for instance, some students and some nonworking partners of people in work. However, I believe that the number of people in those categories who would make donations would be small. In any event, I do not understand why it is a serious argument against tax relief. If people give the same amount to a party and that amount is worth a little less to the party sometimes, that is bad luck for the party but no handicap to the donor.

A more serious argument is that there is an imbalance between parties because some have more supporters who will be willing to give £500. However, there would undoubtedly be a substantial benefit to all parties. The Labour Party, in its evidence to the Neill committee, indicated that it had approximately 400,000 donors who gave an average of £20 each. That would enable it to recover about £2 million by way of tax relief.

The arguments in favour seem to be stronger. I have already spoken about the carrot issue: the proposal is an important incentive to parties to go out and raise more money from smaller donors rather than to concentrate on the large donors. However, there is an argument which goes well beyond that. I believe that it sends an important signal to members of the public that donations to political parties are good. That is already clearly recognised in the case of charities. Tax relief has always been given on charitable donations through the covenant system. In recent years, it has become more widespread because tax relief used to be available on gift-aid gifts of £250 or more and is now available on gift-aid gifts of any amount. That tax relief is given in order to recognise that the state regards the making of charitable donations as good and in the public interest.

Obviously, many people will not think it right to give their own money to political parties because they do not support any particular party. However, the proposal sends a necessary signal to the public that political parties are an essential part of the democratic system—that is clear and everyone agrees with it—and that people who make small donations to political parties in amounts which cannot influence anyone are serving the public interest and strengthening democracy in our country. That is why I believe that giving tax relief on donations of up to £500 is very much in the public interest.

Lord Neill of Bladen

My Lords, I support the amendment. I declare an interest as chairman of the Committee on Standards in Public Life, which produced the report underlying this legislation. At Second Reading I made the point I am now about to make. Apart from one other intervention, I have kept out of the debate on the Bill because I believe it to be a matter for your Lordships. The views of the committee have been made plain. However, I feel strongly about this issue.

Allowing tax relief to donors of small sums not exceeding £500 is a signal that public support is encouraged and invited for political parties. We have seen lamentable election turn-outs. In the past week's by-elections we saw turn-outs of between 27 and 29 per cent. Turn-out at elections to the European Parliament has been as low as 15 per cent.

The move, which is modest and will cost the Treasury little, will encourage people of relatively small means to contribute. The proposal is not one in favour of fat cats because the tax relief is on only £500. The arguments against it have appeared to me to be nothing other than arguments of expediency and convenience. The proposal is disliked by the Treasury which does not want to give up the sum. Under the old phrase, "Where there's a will, there's a way", there would not be the slightest difficulty about introducing the exemption and allowing it to operate when the Bill comes into force. I strongly support the amendment.

Baroness Fookes

My Lords, I rise strongly to support the amendment and the arguments adduced by the noble Lord and others. I want to make only one additional point. A school of thought suggests that parties might be the recipients of straight subsidies from the state. I do not favour that argument; I believe that such a course should be avoided as far as possible. I therefore believe that if we encourage ordinary voters by giving a tax relief, we shall avoid going down that road. I strongly support the amendment on that ground, in addition to the others which have been put forward.

Baroness Gould of Potternewton

My Lords, I want to examine the contradictory arguments which have been put forward in relation to the recommendation and the proposal for state funding. There is a clear distinction between the current funding to political parties—for example, the Short money, the Cranborne money or a freepost, which relate to identified, specific purposes—and the proposal before us which is for general state funding and state aid. I believe that that is where the contradiction lies.

The Select Committee on Home Affairs of another place identified the proposal for tax relief for donations as genuine state aid, and I believe that that is what we should debate. If the views of the Select Committee are taken as read—I shall be corrected if I am wrong, but I have not heard anybody yet deny it—the case for state aid must be made out. Such a case was made out by the Liberal Democrats, who have always been open and honest about their support for state aid, only at the very early stages of the debate. That matter has not been addressed by the Conservative Benches; rather, it has been studiously avoided, presumably because it contradicts their view held consistently that direct state funding should be opposed. One of their arguments is that such funding would reduce the dependence of parties on their own activities and the distinction between them and the electorate.

If the case for state funding is not made, I believe that the argument for this amendment has been inaccurately expressed. I look forward to hearing the noble Lord, Lord Mackay of Ardbrecknish, put forward a good argument, which we have not yet heard, in favour of direct state funding. If one is opposed to state funding, one has no option but to oppose the amendment. In making these observations, it is not that I do not believe that we should look for ways to enable smaller donations to be made and give a signal to the public that political parties are respectable and should be viewed as a very important part of our democratic society. That is not the issue. The issue before us is the amendment, the basis of which is state aid in its true form.

Lord Campbell of Alloway

My Lords, I had not intended to speak in this debate, but I strongly support the amendment. In view of the speech of the noble Baroness, surely there is a world of distinction between state funding which I have always understood meant subvention by the state to the parties, and what is called "state funding", which is this amendment, which, as I understand the term, is not. I am totally opposed to what I have always understood was state funding—I hope that it will never be introduced—and I entirely support this amendment which, to me, is not state funding at all.

4.45 p.m.

Lord Peyton of Yeovil

My Lords, I support the amendment, although somewhat half-heartedly. During the many years—some may believe too many—that I have been in one or other House of Parliament I have lost affection and admiration for political party machines which have grown in size and power and have gone a long way towards forfeiture of public respect. I have said publicly that I regard political parties as rather sombre examples of nasty things of which there must be more than one.

Having said that, I regard the amendment as a preferable alternative to anything in the way of state subsidies for political parties. If there were subventions I would be very worried that they would become so substantial that it would be very difficult to give a hearing to small and respectable voices in the community. One of the most regrettable features of post-war Parliaments has been the disappearance, save in your Lordships' House, of the independent Cross-Bencher. One of my fears is that reform of your Lordships' House may well have the effect of "ironing out" the Cross Benches. I do not know anyone who is wiser or better when he or she wears a party hat than when the individual is bareheaded.

I regard with suspicion and fear any move to help political parties out of difficulties which are very much of their own making. The amendment that we are now debating at least has the merit that the support is influenced primarily by an individual. It is astonishing that over the years the power and influence of party machines through patronage and the Whips has been allowed to grow to the extent that it has. We should be very careful before we encourage that growth in any way.

Lord Molyneaux of Killead

My Lords, I support the amendment. I believe that that is also the view of parties in Northern Ireland, with the exception of one which naturally takes the view that with a gun you do not need gift aid. I am not sure that the public are fully aware of the existing state aid to parties in the form of Short money, free postage at elections and so on. As one who was involved in the electoral process at the other end of the building, I believe that the beneficial effect of the amendment is that it would involve a far greater number of people, who would not regard this as state aid but who would believe that they were stakeholders (if I may use that term) in the party to which they have made a contribution.

We all share the concern—our colleagues at the other end of the building feel more strongly about it than we do—about the steady erosion in the turn-out at elections, be they general elections, European elections or by-elections. We all welcome action, such at that proposed in the amendment, to arouse greater interest in democracy.

Lord Hodgson of Astley Abbotts

My Lords, at Second Reading the Minister described one of the purposes of this Bill as being to revive involvement in our democracy. As my noble friend said, there has been a diminution in the roots of democracy and an increase in the power of the centre. That process can be reversed in two ways, which are not mutually exclusive: first, one can encourage local political involvement and commitment; secondly, one can encourage local economic involvement and commitment. I believe that we should do both as widely as possible.

The amendment provides only a modest incentive for individuals to take an economic interest in the wellbeing of whatever political party they seek to support. To meet the needs of transparency, we must limit that support; and this amendment does so. As the noble Lord, Lord Goodhart, said, no one can argue that £500 per head is a sum likely to lead to difficulty in that regard.

On Report, the Minister referred to the dangers of the sum being increased. That argument did not convince me. The amendment will amend primary legislation. Therefore, any change to it will require further primary legislation. No Parliament can seek to bind its successors. The Bill can be no exception. But if a successor Parliament proposed to increase or decrease the sum before us, surely the contrary case would be fully ventilated.

During the lengthy stages of the Bill noble Lords have talked about the value and importance of broadening the base of the funding of our political parties. This modest measure will significantly assist in that. I hope my noble friend will press strongly his amendment.

Lord Marsh

My Lords, the noble Lord has said that in the future any opportunity for changes in the position will come before both Houses and be duly debated. I believe that that will be so. I believe also that every time it happens the limits will increase. The present situation is that none of the parties is really underfunded. They all mount large campaigns. What has happened is that the party machine is in many cases bigger than the politicians. I do not find that particularly attractive. In terms of principle it is highly undesirable. There is no difficulty in raising large sums of money. The problem—it is always the problem with money—is that every time people get it, they want to spend more than they have.

Lord McNally

My Lords, my noble friend Lord Goodhart spoke from the Neill committee Benches. It is my responsibility to say that on this occasion the Liberal Democrats will be supporting the Opposition in their amendment.

I disagree with the noble Lord, Lord Peyton. Parties in a democracy are thoroughly healthy. It is just nostalgia to go back to some non-existent day when we were all independents. If there was a golden age perhaps it was one when every boy and girl born alive in this world was either a little Conservative or a little Liberal. I have got that one wrong, but noble Lords will know what I mean.

Lord Peyton of Yeovil

My Lords, I have no desire whatever to go back to that distant age, with or without the company of the noble Lord. What I am saying is that the political parties have grown too fat and obese. They need to change. I would not want to go back to anything. I hope the noble Lord will accept that.

Lord McNally

My Lords, I thoroughly accept that. I remember the days when the Conservative agents were seen as the brigade of guards of political agents. That was when there was, perhaps, a disparity in funding between the two parties. I should also put on record that I have always admired the party agents. They are a very important part of the system.

The debate today has echoed with sinners repenting, not least from the Conservative Benches. I hate to tell the noble Baroness, Lady Fookes, but this is state funding of political parties. If one is not willing to grit one's teeth and vote for it as such, then one had better vote with the Government.

As the noble Lord, Lord Neill, and my noble friend Lord Goodhart know, I believe that the Neill committee missed an open goal by not going straight for state funding of political parties. It would have made our politics a great deal healthier. But as a second best this proposal has attractions, especially if it is carried with the other amendment—it is another conversion by the Conservative Party—which suggests an overall cap of £15 million. The real danger arises when parties are set these very large sums which will not be raised by jumble sales and Christmas fetes, but by big donors.

What is attractive to us about the Bill is its pincer movement. On the one hand it caps expenditure so that parties do not have to go cap in hand to big donors. The amendment will bring in the other side of the pincer, a positive incentive to go and find individuals to participate in the political process and get tax relief for the parties. We support the amendment.

To the Conservatives I only say that there is a totally politically incorrect story of a young lady offered first £1 million and then £1 for her services. At the £1 offer she said, "What kind of girl do you think I am?" and the answer is, "Well, we know what you are. We are now haggling about the price". If the Conservatives support this amendment, they are supporting state funding of political parties and we really are just haggling about the sum.

Lord Bassam of Brighton

My Lords. I have enjoyed this debate more than I thought I would. Not only has it given me a sense of déjà vu, it has also been a debate riddled with contradiction. It seems to me that it is true that two opposites can agree.

I have listened to noble Lords from the two parties opposite. Although they disagree on where they come from, they agree on one thing; that is, they want tax relief. It is a question for those noble Lords on the Benches opposite who are concerned about direct state funding as to whether they can live with that and support the position of the noble Lord, Lord Mackay.

The noble Baroness, Lady Fookes, and the noble Lord, Lord Campbell of Alloway, do not like state funding. The noble Lord, Lord Peyton, is only halfheartedly in support of it. He made a coruscating attack on the growth of the central bureaucracy of political parties. I found much to agree with in what the noble Lord said. That was echoed very wisely by the noble Lord, Lord Marsh.

Where is the Conservative Party coming from? This is state funding by the back door, or, perhaps now the cat has been carefully let out of the bag by the noble Lord, Lord McNally, and rather nicely let out of the bag by the noble Lord, Lord Goodhart, it is clear that tax relief is state funding. Tax relief is a state-funded subsidy to political parties. If that is the case, how is it that noble Lords on the Opposition Benches can so enthusiastically support this? It is worth quoting the Conservative Party's evidence to the Neill committee. It said: We do not believe that a convincing case has been made for taxpayers' money to be directed towards the campaigning activities of political parties … Forcing taxpayers to contribute to the cost of Party political activities of which they do not approve would he a very significant step. It could only be justified if it were believed that it would otherwise be impossible for political parties to operate effectively". So is it the case that members of the Conservative Party have now come to the conclusion that their political life has reached such a strange and unfortunate pass that it is impossible for them to operate effectively as a political party? Is it because they are in a state of penury or is it that they have been converted by the full weight of the argument of the noble Lord, Lord McNally, on the issue? I am intrigued to see whether I am right or wrong.

Several good arguments have been raised in the debate in favour of tax relief. The encouragement of small donors is a very laudable point. But where was the compelling and telling evidence that, as a fruit of this particular move, there was going to be a mad rush of small donors to the Conservative Party, the Liberal Democrat Party, or, for that matter, the Labour Party? There was no compelling evidence given in that case. There was an argument made but no compelling evidence.

We heard too that one of the arguments against the proposal—the schools and hospitals argument—was riddled with falsehood. The noble Lord, Lord Goodhart, made that point. Yes, I take the point, and it is not an argument which I shall deploy against the proposal. But I make the following point because I think it is an interesting one. It is interesting to me that the Conservatives now place a premium on state funding by the back door while deciding as a party that they favour tax cuts. They put tax relief on political donations—the state funding of political parties—above the proper funding of public services, which their programme would commit the country to cutting.

It is no doubt the case that tax relief as a form of gift aid for charities has been most successful in the past. The noble Lord, Lord Goodhart, said—I may be misquoting him here—that it is like the state giving recognition to the important and valuable work of charities. That was certainly the case that was argued for gift aid tax relief by a succession of Conservative Party Chancellors. That is exactly what this is—it is gift aid to political parties. The Labour Party is opposed to that. We have been opposed to it in the past; we are opposed to it now; and we will no doubt be opposed to it in the future. The Tories need to be honest with us today and say that they accept that this is state funding for political parties. If they do not, I cannot understand the logic of their argument. Indeed, I have not understood the logic of their argument throughout our debates on the matter.

5 p.m.

Lord Jacobs

My Lords, before the Minister sits down, does he accept that there is general disapproval of large donors? For many years I have been a large donor to my political party. But we would welcome government encouragement to small donors. We are not in a privileged position. It is a position that we accept reluctantly. By bringing in support for small donors who give to political parties, the Government now have an opportunity to remove the undesirable effect of having a number of large donors in all our parties.

Lord Bassam of Brighton

My Lords, I happen to believe in the value of small donors. I have personal knowledge of how the Labour Party has tried to develop its funding base over many years. We encourage members of our party to increase the level of their support through small donations. We have done that reasonably effectively. It is for the political parties to do that. We collect many millions of votes in general and local elections. We have that contact with the electorate. It is for us to go out to sell the benefits of participation in political parties and to secure those extra small donations. I agree with the noble Lord that an over-reliance on a small number of large donors is less desirable in the body politic. No doubt noble Lords on the Opposition Benches will want to reflect carefully on that point.

Lord Mackay of Ardbrecknish

My Lords, before the intervention of the noble Lord, Lord Jacobs, the Minister left us with the thought that he could not understand the logic of the Opposition's position. I must say that for most of the proceedings on the Bill the Opposition have been unable to understand the Minister's logic. Perhaps he joins us just for a moment in being perplexed; we have been perplexed for hours.

I was interested in the Minister's arguments. When he goes back to the office perhaps he might think about sacking his researcher and his speech writer. They did not give him anything with which to address the main points in the amendment. The main points arc those made in the Neill committee report. If the Minister wants to find out about state funding and how that relates to tax relief, I suggest that his researcher invites him to read Chapters 7 and 8 of the Neill committee report. The noble Lord might try to address some of the arguments in those chapters. He might try to address some of the arguments put forward by the noble Lords, Lord Neill and Lord Goodhart, both of whom sat on the committee. But the noble Lord simply refused to address those arguments. The noble Lord had his own tiny agenda and he was determined to pursue that.

If the noble Lord's researcher had drawn the noble Lord's attention to the evidence given to the Neill committee by the Conservative Party, he would have seen what is stated on page 241: Rather than call for state funding we would welcome the Committee's views about how more individuals could be encouraged to donate. We note that in some countries individuals are offered tax relief for political donations, elsewhere tax credits or matching grants are provided. We believe that the Committee should give serious consideration to the practicalities of these approaches in the context of the United Kingdom's voluntary system". Half-way through his speech the noble Lord said that we could not point to anywhere in the world where what we propose takes place. I pointed to Canada—not because the point was original to me but because it was made in the Neill committee's report. However, I had forgotten that the noble Lord's researcher had not pointed out to him that he ought to read the Neill committee's report before he talks about these matters. In evidence given on 22nd April my noble friend Lord Parkinson explained where the Conservative Party was coming from.

The idea that what we propose is direct state funding—that was the argument of the noble Baroness, Lady Gould—does not hold water. The noble Baroness quoted evidence given some years ago by the Conservative Party to a House of Commons Select Committee. I quote what the noble Baroness quoted—I wrote it down. She referred to the, dependence of parties on their own activities". That is the whole point. State funding implies that the parties just sit back and the Government give them money. But tax relief implies that the political parties have to go out and persuade people to join and to give those donations of under £500; and on the back of that they will get tax relief on it. It is very dependent on the activities of the political parties. If a political party decides to sit back and do absolutely nothing, it will not get very much help in the way of tax relief. Therefore, I do not think that the noble Baroness's argument is sustainable.

We have had an interesting debate. I thank the noble Lord, Lord Goodhart, for his support and for his kind words. This is a slightly nostalgic day. I now look forward, perhaps for the last time, to leading a defeat of the Government in the Lobbies. I hope that that can be achieved by the Liberal Democrats sticking with what was said by their colleagues in another place. I wish to test the opinion of the House.

5.7 p.m.

On Question, Whether the said amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 199; Not-Contents, 136.

Division No. 3
Aberdare, L. Eccles of Moulton, B.
Alexander of Weedon, L. Eden of Winton, L.
Ampthill, L. Elles, B.
Anelay of St Johns, B. Elliott of Morpeth, L.
Arran, E. Elton. L.
Ashcroft, L. Erroll, E.
Astor, V. Ferrers, E.
Astor of Hever, L. Fookes, B.
Attlee, E. Gardner of Parkes, B.
Barber, L. Geddes, L.
Bell, L. Gilmour of Craigmillar, L.
Belstead, L. Glentoran, L.
Blatch, B. Greenway, L.
Brabazon of Tara, L. Griffiths of Fforestfach, L.
Bridgeman, V. Hanham, B.
Brougham and Vaux, L. Hanson, L.
Burnham, L. Hayhoe, L.
Buscombe, B. Henley, L.
Butterworth, L. Hodgson of Astley Abbotts, L.
Byford, B. Hogg, B.
Campbell of Alloway, L. Hooper, B.
Campbell of Croy, L. Howe, E.
Carlisle of Bucklow, L. Howell of Guildford, L.
Carnegy of Lour, B. Hunt of Wirral, L.
Carr of Hadley, L. James of Holland Park, B.
Chadlington, L. Jopling, L.
Chalker of Wallasey, B. Kimball, L.
Chilver, L. Kingsland, L.
Colwyn, L. Lamont of Lerwick, L.
Cope of Berkeley, L. Lane of Horsell, L.
Craig of Radley, L. Lang of Monkton, L.
Craigavon, V. Liverpool, E.
Cranborne, V. Lucas, L.
Crathorne, L. Luke, L.
Crickhowell, L. Lyell, L.
Darcy de Knayth, B. McColl of Dulwich, L.
Denham, L. Macfarlane of Bearsden, L.
Dixon-Smith, L. Mackay of Ardbrecknish, L.
Mackay of Clashfern, L. Rawlings, B.
Marlesford, L. Rawlinson of Ewell, L.
Marsh, L. Reay, L.
Mayhew of Twysden, L. Rees, L.
Miller of Hendon.B. Rees-Mogg, L.
Molyneaux of Killead, L. Renton, L.
Monro of Langholm, L. Roberts of Conwy, L.
Monson, L. [Teller] Rotherwick, L.
Montrose, D. St. John of Bletso, L.
Moore of Lower Marsh, L. St John of Fawsley, L.
Mowbray and Stourton, L. Sanderson of Bowden, L.
Murton of Lindisfarne, L. Seccombe, B.
Naseby, L. Sharples, B.
Newton of Braintree, L. Shaw of Northstead, L.
Northbrook, L. Soulsby of Swaffham Prior, L.
Northesk, E. Sterling of Plaistow, L.
Norton of Louth, L. Taylor of Warwick, L.
O'Cathain, B. Tebbit, L.
Onslow of Woking, L. Thatcher, B.
Oppenheim-Barnes, B. Trefgarne, L.
Park of Monmouth, B. Trumpington, B.
Perry of Southwark, B. Vivian, L.
Peyton of Yeovil, L. Waddington, L.
Pilkington of Oxenford, L. Wade of Chorlton, L.
Platt of Writtle, B. Walker of Worcester, L.
Plummer of St. Marylebone, L. Warnock, B.
Powell of Bayswater, L. Willoughby de Broke, L. [Teller]
Prentice, L. Wolfson, L.
Quinton, L. Young, B.
Acton, L. Eatwell, L.
Addington, L. Elder, L.
Ahmed, L. Evans of Parkside, L.
Alli, L. Ezra, L.
Amos, B. Falconer of Thoroton, L.
Andrews, B. Falkland, V.
Archer of Sandwell, L. Farrington of Ribbleton, B.
Ashley of Stoke, L. Faulkner of Worcester, L.
Ashton of Upholland, B. Filkin, L.
Avebury, L. Fyfe of Fairfield, L.
Bach, L. Gale, B.
Barker, B. Gibson of Market Rasen, B.
Barnett, L. Gladwin of Clee, L.
Bassam of Brighton, L. Goldsmith, L.
Berkeley, L. Goodhart, L.
Bernstein of Craigweil, L. Gordon of Strathblane, L.
Billingham, B. Goudie, B.
Blackstone, B. Gould of Potternewton, B.
Blease, L. Grabiner, L.
Borrie, L. Graham of Edmonton, L.
Bradshaw, L. Greaves, L.
Bragg, L. Gregson, L.
Brennan, L. Grenfell, L.
Brett, L. Hamwee, B.
Brooke of Alverthorpe, L. Hardy of Wath, L.
Burlison, L. Harris of Greenwich, L.
Carlile of Berriew, L. Harris of Haringey, L.
Carter, L. [Teller] Harris of Richmond, B.
Chandos, V. Harrison, L.
Clarke of Hampstead, L. Haskel, L.
Clement-Jones, L. Hayman, B.
Clinton-Davis, L. Hilton of Eggardon, B.
Cocks of Hartcliffe, L. Hogg of Cumbernauld, L.
Cohen of Pimlico, B. Hollis of Heigham, B.
Crawley, B. Hooson, L.
David, B. Howells of St. Davids, B.
Davies of Coity, L. Hoyle, L.
Davies of Oldham, L. Hughes of Woodside, L.
Dean of Thornton-le-Fylde, B. Hunt of Chesterton, L.
Desai, L. Hunt of Kings Heath, L.
Dholakia, L. Hutchinson of Lullington, L.
Dixon, L. Irvine of Lairg, L. (Lord Chancellor)
Donoughue, L.
Dubs, L. Jacobs, L.
Janner ot Braunstone, L. Renwick of Clifton, L.
Jay of Paddington, B. (Lord Privy Seal) Richard, L.
Richardson of Callow, B.
Jeger, B. Rodgers of Quarry Bank, L.
Jenkins of Putney, L. Roper, L.
Jordan, L. Russell, E.
King of West Bromwich, L. Sainsbury of Turville, L.
Kirkhill, L. Sawyer, L.
Layard, L. Scotland of Asthal, B.
Lea of Crondall, L. Scott of Needham Market, B.
Linklater of Butterstone, B. Sewel, L.
Lipsey, L. Sharman, L.
Lockwood, B. Sharp of Guildford, B.
Lofthouse of Pontefract, L. Shepherd, L.
McCarthy, L. Sheppard of Liverpool, L.
Macdonald of Tradeston, L. Shutt of Greetland, L.
McIntosh of Haringey, L. [Teller] Simon, V.
Simon of Highbury, L.
McIntosh of Hudnall, B. Smith of Clifton, L.
MacKenzie of Culkein, L. Smith of Leigh, L.
Mackenzie of Framwellgate, L. Stone of Blackheath, L.
McNally, L. Strabolgi, L.
Maddock, B. Symons of Vernham Dean, B.
Mallalieu, B. Taverne, L.
Mar and Kellie, E. Taylor of Blackburn, L.
Massey of Darwen, B. Taylor of Gryfe, L.
Merlyn-Rees, L. Thomas of Gresford, L.
Methuen, L. Thomas of Walliswood, B.
Miller of Chilthorne Domer, B. Thomson of Monifieth, L.
Mitchell, L. Thornton, B.
Molloy, L. Tomlinson, L.
Morgan, L. Tope, L.
Morris of Castle Morris, L. Tordoff, L.
Morris of Manchester, L. Turnberg, L.
Newby, L. Uddin, B.
Varley, L.
Nicol, B. Walker of Doncaster, L.
Northover, B. Wallace of Saltaire, L.
Oakeshott of Seagrove Bay, L. Walmsley, B.
Peston, L. Warner, L.
Plant of Highfield, L. Watson of Richmond, L.
Ponsonby of Shulbrede, L. Whitaker, B.
Prys-Davies, L. Whitty, L.
Puttnam, L. Wigoder, L.
Ramsay of Cartvale, B. Wilkins, B.
Randall of St. Budeaux, L. Williams of Crosby, B.
Rea, L. Williams of Mostyn, L.
Redesdale, L. Winston, L.
Rendell of Babergh, B. Woolmer of Leeds, L.
Rennard, L. Young of Dartington, L.

On Question, amendments agreed to.

Resolved in the affirmative, and amendment agreed to accordingly.

5.19 p.m.

Clause 70 [Special provision for Northern Ireland parties]:

[Amendments Nos. 6 to 12 not moved.]

Clause 73 [Notional campaign expenditure]:

Lord Bach moved Amendment No. 13 Page 58, line 18, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 76 [Restriction on payments in respect of campaign expenditure]:

Lord Bach moved Amendment No. 14: Page 60, line 15, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 86 [Notional controlled expenditure]:

Lord Bach moved Amendment No. 15: Page 68, line 26, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 91 [Restriction on payments in respect of controlled expenditure]:

Lord Bach moved Amendment No. 16: Page 71, line 30, leave out ("less") and insert ("not more").

On Question, amendment agreed to.

Clause 101 [Referendums to which this Part applies]:

Lord Campbell of Alloway moved Amendment No. 17: Page 78, line 37, after ("Parliament") insert ("or pursuant to resolutions of both Houses of Parliament on the advice of the constitutional committee of the House of Lords that certain provisions of the Bill substantially affect the constitution").

The noble Lord said: My Lords, I beg to move Amendment No. 17, which serves as a paving amendment to Amendment No. 18. With the leave of the House, I should like to speak to both amendments. The leave given on Report to withdraw Amendment No. 17 is acknowledged with gratitude and will not be misused today. The Official Report of 21st November, vol. 619, cols. 790 to 798, should be taken as read. Having explained the nature of the amendments, it is proposed to deal only with the objections raised on Report which went wide of the essential arguments, which did not seem to have been understood, and were not well conceived. Before coming to the objections, the only other matter is to acknowledge the origin of these amendments in Clause 3 of the Bill promoted by my noble friend Lord Cranborne.

Amendment No. 17 eases the restraint in Clause 101(2)(a) which inhibits any referendum triggered by Parliament despite the government. It also asserts the freedom of both Houses, if so advised under extant rules of procedure, to resolve that a pre-legislative referendum be conducted as proposed in Amendment No. 18 on the provisions of a Bill which, according to the advice of the constitutional committee of this House, would substantially affect the constitution.

As the provisions of Part VII of the Bill covering referendums are of generic application to all referendums which have to be held by or under an Act of Parliament, the Bill would have to be amended before enactment to afford a referendum as proposed. As regards the objections, the first was that there was a fundamental and principled objection to referendums. But referendums are already de facto a part of the unwritten constitution, as conceded by my noble friend Lord Mackay of Ardbrecknish.

It was also apparent from the debate on Report on these amendments and from the debate in Committee on the amendments tabled by the noble Lord, Lord Owen, that there is a very substantial body of well-informed opinion in favour of the principle derived from Clause 3 of the Bill promoted by my noble friend Lord Cranborne, as reflected in these amendments, albeit that, as yet, no trigger mechanism has been devised which has been found to be acceptable.

As regards that matter, my noble friend Lord Mackay of Ardbrecknish expressed some sympathy with the search for an acceptable trigger mechanism, as he put it, triggered by Parliament despite the government".—[Official Report, 21/11/00; co1.796.] I have now borrowed that concept to adopt as my own. My noble friend also rejected the mechanism proposed in these amendments, but gave no reasoned objection and suggested no alternative. However, he conceded that this was a problem which, "we shall have to address". Perhaps noble Lords may wish to address the problem today as the main justification for my tabling the amendment and taking up the time of the House.

Assuredly, this matter was not addressed by the noble Lord, Lord Bassam of Brighton, who appeared to confirm that it was by design that the referendum provisions of the Bill were of generic application and, by implication, that the advice of the constitutional committee or, indeed, its very existence, were more or less irrelevant to the implementation of the provisions of this Bill. However, with respect, as has happened again today, the noble Lord, Lord Bassam, did not address the essence of the argument.

The second objection took the form of the argument put forward by my noble friend Lord Norton of Louth, that the advice of the constitutional committee should precede the Bill rather than the resolution of both Houses under the amendments which advise either House and which each House would be at liberty to ignore. But that argument, which expresses a preference for pre-scrutiny of a Bill, with which I agree, goes nowhere near the principle of the argument in support of these amendments.

Lastly, there was the argument that these amendments would not be acceptable to another place. But another place would have total freedom as regards whether to entertain these amendments, subject to the resolution of your Lordships' House. It is not understood why, on any reasoned approach, these amendments should not be acceptable, or whether it is for us in this House to pre-empt the question as regards whether they might be acceptable to another place. For this is but an enabling measure, a provision which will act as a safeguard to be put at the disposal of Parliament and at the disposal of another place. It would add a new dimension of comity which could take us a little further along the road of safeguarding the unwritten constitution from unwelcome erosion by statute, and would do so on a case-by-case basis, without derogation from the delaying power under the Parliament Acts.

If another place were to resolve that a referendum should be held, it could impose conditions such as the form of the question to be put and the threshold and conduct of the referendum, which would be held by an independent body appointed by the Secretary of State rather than by the electoral commission. In neither House could the argument for or against a pre-legislative referendum be foreclosed upon, a matter which may well have been overlooked by my noble friend Lord Norton of Louth.

The scope of these amendments excludes Bills on which provision is being made for a referendum as well as interpretation or implementation of the Parliament Acts or any other enactments upon which it would be within the remit of the constitutional committee to advise this House, a remit which noble Lords may think could involve a reference by this House to consider and report on some acceptable trigger mechanism.

5.30 p.m.

Viscount Cranborne

My Lords, I should like to thank my noble friend Lord Campbell of Alloway for his persistence in refashioning amendment after amendment at every stage during the passage of the Bill. I thank him for persisting in promoting an idea which he perhaps over-flatteringly ascribes to Clause 3 of my parliamentary government Bill, to which your Lordships kindly gave a Second Reading in the summer of 1999 and which, for understandable reasons, did not proceed to its later stages.

My noble friend has acknowledged that, like it or lump it, referendums are with us. I accept that my noble friends Lord Mackay of Ardbrecknish and Lord Norton of Louth deplore that fact. However, as the old admiral, Lord Charles Beresford, said to my maternal grandfather—I bowdlerise the quotation determinedly for your Lordships—if my aunt had been differently fashioned, she would have been my uncle! We are in a world in which referendums exist. We must address—as the Bill attempts to do, thoroughly unsatisfactorily—the rules for conducting them. Those rules ought to include a means for triggering them. I believe I am correct in saying—particularly if I understand my noble friend's reading of the Bill—that at present a referendum can only be triggered by the Government. The political complexion of a government does not matter, but in most cases in recent as well as ancient history the government of the day have commanded a majority in another place and the other place ultimately does what the government of the day decree; and in the end, thanks to the Parliament Acts, this House has to follow suit.

In an age in which referendums are increasingly held on what are by common consent big issues, if they command a "Yes" vote they give rise to decisions that are irreversible. So it is curious, when the government of the day would not undertake a referendum of that kind unless they thought they could win it—and indeed wanted to win it—that the decision should be entirely at their discretion. If they thought that they could not win the referendum, theoretically they could push an irreversible measure on a big issue through both Houses of Parliament without reference to the electorate, which in practical terms might never be able to get another crack at the decision. It would be taken over the heads of the electorate, often by a government whose supporting political party might be divided as to the outcome.

So we have to worry at this point. That is something that my noble friend has magnificently succeeded in doing during the passage of the Bill. Also, in the redrafted amendments that he has submitted, he has made an extremely interesting attempt—probably a successful one—to address the criticisms that were raised.

At previous stages, the noble Earl, Lord Russell, who is not in his place, and other noble Lords asked how we define a big constitutional question. The noble Earl rightly said that it cannot be defined. However, I suspect that your Lordships would find it difficult to define an elephant, but that when you saw one, you could recognise it. Whether it was an elephant would often depend on the amount of political steam that had been raised behind any issue at a given time.

There was another objection with which I did not wholly agree, but whose force I nevertheless recognise. In the present transitional state of this House, to suggest, as I originally did, that it should be the constitutional committee of this House alone which should decide whether a question should be submitted to a referendum, might be to incur the powerful disagreement of another place. As a result, however sensible the proposal, it would not be practical.

The beauty of my noble friend's Amendments Nos. 17 and 18 is that it is open to the constitutional committee of this House to suggest that a question should be submitted to a referendum and, if another place disagrees, for exactly the same rules to apply as when the two Houses disagree in another context altogether. With his usual ingenuity, my noble friend has found an extremely attractive way round the question.

I shall not detain the House any longer. My noble friend has performed a useful service for us. We have to consider how we can close what is presently an unclosed circle between Parliament and the electorate on the major issues of the day and when there is a big, irreversible question to be decided. In an age when we increasingly deplore the lack of involvement of the electorate as a whole in the great political questions of the day, the amendment seems to me at least sensible. It offers a way of addressing that lacuna, which has constantly been deplored during the passage of the Bill through this House. It would be curious if we did not at least take my noble friend's suggestion seriously. I would go so far as to suggest that your Lordships might consider supporting it. I have certainly not heard of a better suggestion during the course of the past few months.

Lord Peston

My Lords, I, too, do not care much for referendums. However, I know that I am hopelessly out of date and it would be absurd for me to suggest that it is not a good path to go down. I believe in Parliament as the place to take decisions and convince the country. But that is an old man speaking, and I shall go no further on the point.

If we are to have referendums, there is one point on which I am not clear after listening to the noble Lord, Lord Campbell, and the noble Viscount, Lord Cranborne. Is the problem that the Government want a referendum and perhaps they should not have it; or is it that the Government do not want a referendum and perhaps they should have it? I am not clear as to what drives the argument.

Viscount Cranborne

My Lords, I cannot speak for my noble friend; he is more than able to look after himself. My feeling is that it is the latter case, not the former, that presents the difficulty.

Lord Peston

My Lords, as I understand it, the problem that we are asked to contemplate is that there is the need for a referendum and it is not going to take place. That slightly gets me off board as someone who does not like referendums. I am interested in regard to the question of the symmetry or asymmetry and I hope that my noble friend will reply on that point.

Secondly, as someone who does not fully understand these matters, I am interested to know what would be the role of the constitutional committee of this House were it not to be connected with referendums. In what other way would it he of use? I find it hard to believe that in most Bills that come before this House—whether an elephant or not—major constitutional issues arise. If they do, I never seem to spot them. I am intrigued to know what this body would do. It would certainly help most noble Lords if my noble friend the Minister could clarify what the committee will contribute if it does not contribute in a matter of this kind.

The noble Lord, Lord Campbell, is right to have raised this issue. Although it is his decision, I believe it would be wrong to divide the House on this matter. What is required at this stage is clarification on a very interesting point.

Lord Mackay of Ardbrecknish

My Lords, the noble Lord, Lord Peston, is not alone—as, indeed, he would realise if he had listened to many of these debates—in having a suspicion of referendums. My suspicion is added to when it seems to me that we shall have only those referendums that the Government decide that they want us to have; that is very unfair. It is not symmetrical. If we continue to use referendums, there will at some time in the future be a reasonable and understandable demand for referendums to be held not just on issues on which the Government decide that they want us to have them, but also on issues on which they do not want them to be held. I realise that that is a difficult proposition for government to comprehend, but it is certainly the case. Moreover, I am not sure that that will be limited only to constitutional issues in the future. Therefore, I have some concerns that my noble friend's amendment may not really address the whole of the issue about who decides on referendums.

I believe that we have made some satisfactory progress on the question to be asked in referendums, but we need at some stage to make progress on who actually decides to have referendums. At present, it is entirely a matter for the Government. I know that people will say that it is Parliament; but, in reality, the Government have such a majority in the other place that they could hold referendums every other month on any issue they wish. I believe that to be wrong in principle, so I do not agree with them. I also think that it would be wrong if the Government alone could trigger them. As I say, my noble friend's amendment does not seem to address that wider issue, but it is certainly worthy of debate; indeed, it is as worthy of debate as the other issues raised during the passage of the Bill.

Lord Bach

My Lords, the Government also agree that the issue is worthy of debate. We are extremely grateful to the noble Lord, Lord Campbell of Alloway, for raising the issue and for his patience with the House on Tuesday of last week when his amendments were called very late in the evening. The noble Lord was good enough to move them then and, indeed, has been good enough to do so again today. We had a interesting debate last week and, if I may say so, an even more interesting debate this evening.

The opposition put forward last time—not least by the noble Lord, Lord Norton of Louth, in a most interesting speech, to which reference has been made today—referred to noble Lords' distaste for referendums. Of course a number of noble Lords on all sides expressed their distaste for referendums. It is not the same as saying that there should never be any referendums, but it is probably the same as saying that there should not be very many of them. That is one of the issues about which those who say that they are not very keen on referendums must think and talk. The crucial issue is how often referendums will be used, and not just whether they are ever used.

It was unfortunate that on Report these amendments did not receive the full debate that they merit. The Government's position remains approximately that which was set out late at night last Tuesday. We do not believe that these are issues upon which it is appropriate to legislate in the context of this Bill. That may be a view that is shared around the House. These are important issues, but perhaps not issues for this Bill. Why do I say that? The fact is that this legislation has sought, sometimes with more success than at others, to give effect to the recommendations of the Neill committee with regard to how referendums should fairly be conducted. The circumstances in which referendums are held, which, in some ways is the critical question, is an issue of an altogether different order and one that will certainly need to occupy more of your Lordships' time in due course. Indeed, the House will be grateful to the noble Viscount, Lord Cranborne, for, as he said, having raised the issue in the middle of last year.

The noble Lord, Lord Campbell of Alloway, has pleaded the case for arrangements that safeguard our constitution. The idea that matters of profound constitutional importance should be put to a referendum is no longer a novelty. The Royal Commission on the Reform of the House of Lords (the Wakeham commission) recommended the establishment of a sessional committee of this House to scrutinise public Bills in the light of their constitutional implications. We believe that to be a positive step.

My noble friend Lord Peston asked about the nature of the job of the House of Lords' constitutional committee. I can give the House a quotation from the commission. It is a short quotation, but one which sums up what the commission had in mind. The task of such a committee would be to examine the constitutional implications of all public Bills coming before the House and, to keep under review the operation of the 'constitution'". That last point seems to me at least to be fairly wide in scope. I very much doubt that the committee will feel particularly restricted when it comes into being.

The noble Lord's amendment puts two and two together, but we are not convinced that making a statutory provision to the effect that the committee's advice on such matters should trigger Parliament's consideration of whether a referendum should be held would be desirable. We are not sure how far it would help such a committee in its work to know that each time it adjudicated on the implications of a Bill, its deliberations might be a prelude to a charged debate—because it would be charged—about the holding of a referendum.

However, in one important sense, the proposal before the House is correct. The decision on whether a referendum should be held would be one for Parliament as a whole to make. On a case-by-case basis Parliament would decide whether a particular constitutional reform warranted endorsement in a referendum. But, to that extent, it is not clear that this proposal would add very much to the present constitutional position. As matters stand, it is already open to Parliament to decide that a particular Bill should be subject to a referendum and to legislate accordingly. It may be thought that it is better to do so by means of legislation rather than by means of a resolution.

Of course, as the noble Lord, Lord Mackay, pointed out on the previous occasion—and, indeed, as has been said again this evening—the chances of Parliament coming to such a decision other than at the instigation of the government of the day are probably, in practice, slight. But we do not see anything in the noble Lord's proposals to make that chance very much greater, as the support of both Houses of Parliament is needed before a referendum can take place.

I turn now to the other aspects of the proposals—

5.45 p.m.

Viscount Cranborne

My Lords, I am most grateful. I do not wish to detain either the noble Lord or the House for very long. However, in the light of what he has just said, will the noble Lord accept that the very fact of incorporating in the statute the opinion of the constitutional committee of this House would provide something of a hurdle for the Government and would, therefore, force them to take such matters more seriously than would otherwise be the case?

Lord Bach

My Lords, I would not go as far as that, but it would be something of a hurdle. But how much of a hurdle it would prove to be is a matter of doubt. Perhaps I may refer again to the important speech made by the noble Lord, Lord Norton of Louth, on Report. I, too, like other noble Lords, have had the advantage of reading the Hansard report of the debate. I hope that this will in some way explain why I believe that there is some doubt about how high a hurdle it would turn out to be. The noble Lord said: The other problem I mention at this stage and draw to the attention of my noble friend is that the House of Commons is likely to find the provision unacceptable, as it provides that resolutions have to follow advice from a committee of this House. For the reasons that have been advanced I do not doubt that the committee will be highly qualified to comment on the matter. But that is not at issue. It is a committee of one House that would trigger resolutions of both Houses".—[Official Report, 21/11/00; cols. 795–96.] He mentioned that specifically—

Lord Campbell of Alloway

My Lords, I am very much obliged. I wonder whether I can help on this because we are going slightly off track. The question is not bow high is the hurdle. It will not be very high when it starts. The whole concept is to develop a new dimension of comity—an enabling provision. Obviously my drafting would not be right; that is clear. I am not competent to draft this sort of provision. It would have to be drafted in consultation and there would need to be a willingness on the part of both Houses to recognise that something had to be done about the constitution. My noble friend did not quite understand what I was getting at.

Lord Bach

My Lords, perhaps the noble Lord is right to say that the noble Lord, Lord Norton of Louth, did not understand what he was getting at. However, in my experience the noble Lord, Lord Norton of Louth, is learned in these matters and normally understands these issues rather better than I.

Lord Norton of Louth

My Lords, as my name has been mentioned I had better speak to prove that I am present. My noble friend says that I misstate his position. I point out that that was based on a misstatement of what I said on Report; therefore, it is a misstatement based on a misstatement. I hope that I may help the noble Lord in one respect as I think that there is a point here which relates to what my noble friend Lord Cranborne said, particularly with regard to recognising an elephant when you see one.

Under my noble friend's amendment, the constitutional committee would merely give advice on whether a matter substantially affects the constitution. It would not necessarily give advice on whether a referendum should be held. That, I think, serves not to strengthen but to undermine the position of my noble friend. Merely to say that something substantially affects the constitution could include a number of issues on which no one would feel a referendum was necessary. Therefore, it would be easy for the Government to say that they do not think that this is something on which a referendum is necessary. As there would be several issues on which there would be general agreement that matters of that kind should not be put to a referendum, I do not think that the amendment would create a substantial hurdle.

Lord Bach

My Lords, I talk of other aspects of these—

Lord Peston

My Lords, I know that my noble friend wants to get a move on, as does everyone else, but before he does so I refer to an earlier question that I expressed badly. I merely asked whether the constitutional committee could—this follows the remarks of the noble Lord, Lord Norton of Louth—say that this is an important matter for the constitution and that it thinks that the Government ought to consider holding a referendum. Would it be within the committee's powers to say that, or would it be ultra vires? That was my question. Could the committee at least recommend a referendum? Is the constitutional committee permitted to do that?

Lord Bach

My Lords, that is a much more difficult question than the first one that I thought the noble Lord had asked me. I do not know whether that would be beyond the committee's powers but I suspect that the constitutional committee will be a strong committee and will take a strong line. However, I am looking to the future.

I turn briefly to the other aspects of these amendments. We do not understand why the noble Lord considers that an independent body other than the electoral commission should administer a referendum held under these provisions. In the Bill, whatever its faults, we have gone to considerable lengths to secure the independence of the new electoral commission from the government of the day. The noble Lord's amendment appears to intend that the independent body which he has in mind would be appointed by the Secretary of State.

The debate about the proper place of referendums in our constitutional arrangements will run and run and rightly so. However, the Government do not think that matters of this order should be harnessed to proposals set out in the Bill. I do not believe that the noble Lord thinks so either. However, we and the House are grateful to him for having raised in this short debate matters of considerable importance, to which the House will no doubt return in future.

Lord Campbell of Alloway

My Lords, I thank all noble Lords for their contributions to this debate. I shall deal with one or two questions. No, it was not the concept that the constitutional committee should have the remit to recommend a referendum; its remit would be merely to advise on whether provisions in a Bill substantially affected the constitution. As to the hurdle, I am afraid that my noble friend Lord Norton of Louth still does not have it right, but I shall not pursue that on this occasion.

I take the point that this Bill, from a government point of view, is not the right vehicle for this amendment. But from anyone else's point of view, when you look at Clause 101 and you see that it is a generic application, and that it inhibits a referendum other than at the behest of government and inhibits Parliament, one is bound to put an amendment such as this down at all events at the very least to draw attention to the situation. That has certainly been done. As my noble friend Lord Cranborne said—I am most grateful to him for his help and support—this is something that we do have to worry about. It is something that we shall have to consider—it will not go away—as it is an important de facto part of our unwritten constitution.

I am not so sure that my attempt is sufficiently successful to be, so to speak, the end of the road and for me to seek to divide your Lordships' House and to take a formal opinion. I should prefer, if I may, again saying how much indebted I am to all noble Lords who have contributed, to ask leave to withdraw the amendment, but I may well wish to come back to this matter on the gracious Speech. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 18 not moved.]

Clause 112 [Notional referendum expenses]:

Lord Bach moved Amendment No. 19: Page 86, line 5, leave out ("less") and insert ("not more").

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

On Question, amendment agreed to.

Clause 114 [Restriction on payments in respect of referendum expenses]:

Lord Bach moved Amendment No. 20: Page 86, line 43, leave out ("less") and insert ("not more").

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

On Question, amendment agreed to.

Clause 125 [Restriction on publication etc. of promotional material by central and local government etc.]:

Lord Willoughby de Broke moved Amendment No. 21: Page 93, line 19, at end insert ("; or (c) any institution of the European Union").

The noble Lord said: My Lords, Amendments Nos. 21 and 44 are two modest but, I believe, necessary amendments. If they are put on the face of the Bill, as I hope noble Lords will accept that they should be, they will simply ensure that the EU institutions will not be tempted to interfere in a referendum—whether or not that concerns the euro—during the referendum period. I believe that that is not unreasonable.

Similar amendments were moved in Committee. The noble Lord, Lord Bassam, dismissed the fear that there was any need for this kind of amendment. He said: My view and the Government's view is that it would be entirely counter-productive for the commission to become embroiled in a referendum campaign on this issue".—[Official Report, 24/10/00; col. 195.] He later stated: I do not believe that the European Commission wishes in any way, shape or form to become involved in any attempt to slant the debate in this country".—[Official Report, 24/10/00; col. 200.] The Minister must have been working terribly hard on his brief over the past few years as over the past years and months we have all been subjected to a constant bombardment of lectures from members of the Commission and other Eurocrats on the dangers that we face if we miss the various trains, planes, boats and bicycles that are so dear to EU image-makers.

I give one or two examples that support the need for my amendment. The Commission—it is one of the prime movers—supports the European Movement with money. The European Movement supports Britain in Europe. They are bed fellows and share the same offices. That is a good way to transfer money direct from the Commission to Britain in Europe. Britain in Europe is likely to be one of the major players in any referendum on the euro. I note that the noble Lord, Lord Bassam, is a supporter of Britain in Europe. Perhaps he may care to clarify whether he is still a member of its council. The Commission also supports 24 Euro-info centres in the United Kingdom. These are funded in part by the Commission, in part by the Government and in part by other business interests. One of the activities of these Eurocentres is to distribute literature for the Association for the Monetary Union of Europe, a strongly pro-euro campaigning group.

The EU Trade Union Information Bulletin informs that it is supported by DG X—the trades union division of the Commission. I am afraid that that bulletin is unashamed propaganda. It claims that the euro will, reduce interest rates and mortgages and increase competition, reduce prices and create unemployment". In other words, they are the usual fairy tales.

The contention that we do not need to have any safeguard in the Bill against interference by the European Commission or any other of the European institutions does not hold water. The Minister said in effect, "Don't worry, the Commission will be too clever or too wise to interfere". The Minister and some noble Lords may believe that but does the Commission? In order to be certain that the Commission and other institutions will not interfere, the safest move would be to put the provision on the face of the Bill. I beg to move.

6 p.m.

Viscount Cranborne

My Lords, I support my noble friend's amendment. It has been the theme of critics of the Bill that the Government, quite rightly, have powerful opinions about which they are endeavouring to persuade the British public. A perception could grow that, despite the Government's natural desire to appear to conduct referendums under rules which are perceived to be and are fair, their opinions are driving them so strongly that they are blind to the fact that that is no longer so. There is more than a suspicion that the conditions under which two previous pre-legislative referendums on devolution in Scotland and Wales were held were rigged by the Government. This Bill is an opportunity to ensure that the Government are seen to make it more difficult to rig referendums.

My noble friend's amendment has a narrow application. But we know that very large sums of taxpayers' money, whatever their opinions, are paid through the EU budget into making propaganda on behalf of the European Union. If there were a universal consensus about the European Union and the desirability of a number of its activities and aspirations that might just be acceptable. But we are talking about probably the most important and most contentious political issue of the day. We know that the institutions of the European Union have a well-financed propaganda campaign, as my noble friend made clear. Large sums of taxpayers' money are poured into various lobbying groups. They may be groups employed directly by the European Union, like Mr Martin's organisation not far from this very building. Alternatively, those funds may be directed into supporting various campaigning groups, particularly in this country, of the kind to which my noble friend referred.

If the Government are to avoid reinforcing the impression that they are not averse to rigging the rules on referendums in their favour, they would be wise to make one little nod in the sceptics' directions—I do not use that term in the European sense but as regards sceptics of the Government's own intentions—by looking favourably on my noble friend's suggestion.

Lord Stoddart of Swindon

My Lords, I support the amendment of the noble Lord, Lord Willoughby de Broke, and concur with the previous speaker. It would be in the Government's own interest to consider the amendment favourably. After all, we are being told by the Prime Minister and others that there is no intention of having a European superstate. What could better convince people that we shall not have a European superstate than to make it illegal for what some term to be the European superstate to intervene directly or indirectly in referendums in this country? There is no doubt that the European Commission finances the European Movement in many ways. Indeed, until 1994 our own Government were subsidising and making contributions to the European Movement. That fact was elicited by questions that I asked. It was no small sum—£320,000. Since the Government make it clear that no government agencies in this country should be permitted to intervene unfairly or on one side of any argument, that should surely be extended to what is becoming increasingly the government of Europe in Brussels.

If the Government want to make the European Union more acceptable to the people of this country, it would be in their interest to accept this modest amendment which would do no harm to the Bill.

Viscount Astor

My Lords, in principle we support the amendment. It seems somewhat bizarre that in a referendum campaign no Minister of the Crown, government department, local authority or any body funded mainly from public funds is allowed to take part, whereas the Commission may do so. It would seem sensible to put the issue beyond doubt. Presumably the Government would not want interference in this way. It would be dangerous to tilt the argument.

Amendment No. 44 concerns donations. It seems a sensible amendment. I shall listen to what the Minister says. During the passage of the Bill, we have had debates about donations. We have been accused of seeking to have, for example, different rules for English companies than for foreign companies. Our argument did not prevail. However, this amendment makes the rules the same for everyone. There seems some sense in it.

Lord Bassam of Brighton

My Lords, we have been round this part of the course several times. As I have said before, this is specifically not a Bill to make provision for the holding of a referendum on the euro. We do not want to add extraneous provisions designed with that referendum alone in mind. If a referendum on a particular issue warrants special rules, they can be provided for in the separate legislation that is needed to enable that referendum to be held.

Lord Stoddart of Swindon

My Lords, my noble friend says that this is only about the euro.

Lord Bassam of Brighton

My Lords, the noble Lord misheard me. I said specifically that the Bill is not about a referendum on the euro.

Lord Stoddart of Swindon

My Lords, I was going to say that a government could have a change of heart and there could be a referendum on, for example, the EU charter of fundamental rights. The euro is not the only issue. A number of other issues connected with the European Union or in which the European Union might be interested could also be involved.

Lord Bassam of Brighton

Yes of course, my Lords. Specific measures would have to be taken to deal with such an eventuality. I have developed that point on other occasions—rather successfully, I thought—arid I reiterate it this evening.

Amendment No. 21 would apply the restrictions on the publication of promotional material set out in Clause 125 to European Union institutions. As a result, the European Commission would be prevented from publishing promotional material about the euro in the 28 days before the date of the poll.

As I have previously made clear, any decision to join the euro will be for the British people alone. It would be wholly counter-productive for the Commission to become embroiled in a referendum campaign on the issue.

Lord Wedderburn of Charlton

My Lords, my noble friend says that the Bill is not about the euro. All right, let us put the euro aside. If the Government felt that an issue such as whether qualified majority voting should apply to taxation across the board were so important that a referendum should be held on it, such a referendum would come within the Bill. Would it not be right to forbid the institutions of the Union to finance one side?

Lord Bassam of Brighton

My Lords, clearly that has to be a matter for the Commission. I shall come to that.

The Commission knows that it would be wholly counter-productive for it to promote one side, as does the noble Lord, Lord Willoughby de Broke. In some ways, given his perspective on the issue, he might want the Commission to seek to get involved, because that would strengthen his line of argument, but I do not believe that it would want to do so. The commissioners are rational and sensible people who realise that the decision on such matters is for the people of our country.

Lord Marsh

My Lords, the European Union has an entire infrastructure in this country specifically designed to intervene—as some would see it—on just such an issue.

Lord Bassam of Brighton

My Lords, I am aware that the European Union has an infrastructure, but I am sure that most of its work is directed towards explaining the institutions of the European Union. Given that successive governments have ensured that we are party to the European Union and have signed up to participation, it is logical that the Commission should continue its informational role.

The red herring of the Commission being involved in the Danish referendum has been much raised in the debate. In fact, it did not seek to engage in the debate in Denmark. The example of the Danish referendum ought to lay any lingering fears on the subject to rest.

Some realism is required on the Commission's intentions. That should go hand in hand with realism about what such prohibition could achieve. An explicit ban on referendum expenditure or the publication of referendum material by the institutions of the European Union would beg the question of how such a ban could be enforced. The territorial application of the Bill is confined to the United Kingdom. It could not bite on expenditure or the publication of material on the Continent. That argument has been deployed from the Conservative Front Bench on other aspects of the Bill. Given the provisions of the Protocol on the Privileges and Immunities of the European Union, the jurisdiction of our courts in relation to a breach of the provisions of this part of the Bill by an institution of the European Community would be doubtful.

6.15 p.m.

Viscount Cranborne

My Lords, I hope that I have misunderstood the Minister. I wonder whether he could confirm what he has said. Is he saying that even if we wanted to stop the institutions of the European Union undertaking propaganda activities within the boundaries of this country, we could not do so because of the immunities that we have given them?

Lord Bassam of Brighton

My Lords, that is the point that I have been making. I shall happily repeat it, or perhaps the noble Viscount—less happily from his point of view—can read it in Hansard. Those immunities have been given to the European institutions in various protocols in the past. Indeed, the noble Viscount was party to the government that provided those immunities.

The purpose of Amendment No. 44 is to prevent a permitted participant accepting a donation made by or on behalf of an institution of the European Union. The amendment is unnecessary for the simple reason that an institution of the European Union does not constitute a "permissible donor" as defined in Clause 54. The amendments have no place in a generic referendums Bill. I once again urge the noble Lord to withdraw the amendment.

Lord Willoughby de Broke

My Lords, before the Minister sits down, will he tell us first on what subject he envisages having a referendum if not on the euro? Secondly will he answer my question about whether he is on the council of the Britain in Europe movement?

Lord Bassam of Brighton

My Lords, I cannot predict from the Dispatch Box what issues may be the subject of any future referendum. Any Minister who did so would be very foolish.

I have never attended a meeting of the council of Britain in Europe. I thought that I had resigned from that body. If I have not done so, I shall make sure that I do so pretty sharply.

Lord Pearson of Rannoch

My Lords, before the Minister sits down, in response to my noble friend Lord Cranborne, he said that certain immunities had been conveyed. As that may come as a shock to some of us, will he undertake to put in the Library a memorandum confirming exactly where we have given such immunity to the European Union? I am sure that that would not be very difficult and would help the debate.

Lord Bassam of Brighton

My Lords, I am not an expert on such matters, but I think that the decision was made on matters relating to the single market.

Lord Willoughby de Broke

My Lords, I am grateful to all those who have spoken in this short debate, which has made the Government's position untenable. They have said that the issues do not need to be specified in the Bill but have given no serious argument why not. They have simply said that the European commissioners would behave themselves and would not interfere. That is putting hope over experience.

I am tempted to divide the House, but I know that your Lordships are anxious to get on, so I reluctantly beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Marsh moved Amendment No. 22: Page 93, line 29, at end insert—

  1. ("(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.
  2. (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, the amendment is connected with the general issue raised by the previous amendment. I should make it clear that I have been involved with Business for Sterling since its inception and am president of its council. Having said that, one day I should be interested to hear privately why the noble Lord, Lord Bassam, left the council of Britain in Europe. I can think of many reasons why I would have done so, but that is his personal grief.

This amendment clearly has a relationship with the euro and the single currency because they will almost certainly be the subject of the next referendum. I believe, however, that it raises fundamental issues which go much wider than that. We have to recognise that over the years there will be other referendums. I cannot believe that there will not now that we have embarked upon that course. I believe that basically this amendment goes to the guts of the extent to which taxpayers' money and the full machinery of government may properly be used to influence the outcome of a referendum. It does not matter what the subject is; it so happens that the next one is likely to concern the single currency.

The argument is clearly set out in the report of the Committee on Standards in Public Life: 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 they do during 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. In other words, referendum campaigns should be treated for these purposes in every way as though they were general election campaigns". That is the issue. It is not a case of whether one does or does not join the single currency, or whether one likes or does not like the European Union. It is a question of the use of public moneys on such occasions.

The Government's view, which, as we would expect, the noble Lord spelt out clearly last time this matter was debated, was that that was simply not possible. They believe that the issues are so complicated that no one can tell the difference between party political propaganda and a civil service document. The noble Lord gave as an example the passage through Parliament of a Bill which would make possible provision for the referendum. He suggested that even the Explanatory Notes could be controversial.

With the greatest respect, I suspect that over the years most senior Ministers and senior civil servants have had long discussions and arguments about the dividing line between legitimate public expenditure and political activity which is clearly at the taxpayers' expense. They are two different things and, as the proverbial elephant (which seems to be making its presence felt in this debate) shows, you can always tell it when you see it. The position is similar to that of managers who deal with senior executives' expense claims. It is difficult to describe the exact point at which a claim becomes unacceptable, but the manager always knows when it is and the executive always knows when it is. I believe that the same analogy can apply in this case.

If one says that it cannot be done, that assumes that our Parliament is not sophisticated enough to accept the fact that, whichever party is in power, the Government have a right and a duty to govern whether or not a referendum or a general election is in process. I do not believe that any of the parties would have any sympathy if, having complained about the political activities of the Government, they were then to turn this into a political argy-bargy.

Many of us considered that, if a difficulty arose which appeared to be insuperable, the way round it would be to favour no limits on expenditure. Perhaps I may take as an example the euro. I suspect that the campaigns for both sides of that argument will not be short of money. However, the Government have rejected that and chosen a course which in my view is indefensible.

Briefly, in the six-month run-up to the poll, the political parties will be limited to expenditure of between £0.5 million and £5 million. But the Government will have no limit on the amount of public money that they can spend in support of their party's policy. That is the problem. The Government should not pretend that there is a dividing line between the Government and the Government's political party. They are one and the same, and in my view it is wrong when they use public moneys for a party aim.

Between £0.5 million and £5 million will be available for the parties involved. However, there will be no limit on the amount of public money that the Government can spend in support of their party's policy up to 28 days before the poll. But the parties outside the Government are to be limited to a period of six months. That involves two totally different sets of rules and is based on the argument that we could not conceivably draw a distinction between public expenditure used for party ends and the proper activity of a political party.

Of course, there are strong arguments in favour of what other people will see as the blatant misuse of taxpayers' money for party benefits. President Mugabe would have no problem with that. He would wonder what the debate was about. After all, that is one of the perks of being in office. However, that is not how we have traditionally done things in this country. Senior Minister Lee Kuan Yew, for whom I have great respect, would probably argue that Singapore would never have achieved the success that it has if it had adopted our Westminster traditions. When it comes to public expenditure, there is a rigid distinction between party and government.

As I said at the beginning, I believe that this is an issue of fundamental principle and importance. I do not believe that it is confined to a single party. It has ramifications which go much wider than that. As referendums develop, what is now seen as a disputed process will become accepted and improved upon. In that connection, I am told that Article 10 of the convention on human rights includes, the right … to receive and impart information and ideas without interference by public authority".

It is public knowledge that Business for Sterling has taken legal advice on this issue. The advice that I have seen is that, although the Act permits even-handed regulation of referendums, controls which give an advantage to one side are open to challenge. If a solution exists through the courts, we shall pursue it because I do not believe that the issue should simply be allowed to die.

I can understand why any Opposition may well believe that, when it takes up the reins of government, this may turn out to be a useful piece of legislation. I believe that that would be false and this is a very dangerous precedent which should be resisted. The provisions in the Bill introduce a new and highly undesirable development in the use of public money for political purposes. The Bill as drafted legitimises a gross abuse of the freedom of future governments to access public funds for party political uses. We may be able to test the matter in the courts or discuss it further. I do not believe that it is enough simply to say that this is an argument about the Eurosceptics. It is an argument about the British constitution and how we run public affairs. I beg to move.

Lord Avebury

My Lords, will the noble Lord explain why he believes that it is legitimate for governments to publish material on websites that is not factual or impartial? The noble Lord did not deal with the proposed subsection (3)(b) in the amendment and I am rather mystified by it.

6.30 p.m.

Lord Marsh

My Lords, I felt some sympathy for the noble Lord, Lord Bassam, who has undergone very long hours on this subject, as have other Members of the House. Therefore, I tried to keep my speech as simple as possible.

The reason for those exemptions is precisely because we believe that you cannot stop a government carrying out their activities. If they have a website, that gives government information. I give an example. It is not legitimate to send out 800,000 letters to British businessmen, 75 per cent of whom do not trade outside the country in any event, trying to persuade them that they should be supporters of a single currency.

So, yes, Ministers will make speeches which will receive publicity. Ministers will no doubt issue White Papers which will happen to appear in the course of the events. Those things will happen. The idea that Ministers cannot express their governmental views and carry out their governmental jobs is nonsense.

Viscount Cranborne

My Lords, I support the amendment tabled by the noble Lord, Lord Marsh. Anyone who has been a Minister anywhere near the centre of government in the run-up to a general election will know how assiduously civil servants very often attempt the impossible: to differentiate between what is a party political point in the way of information and what is legitimate information of the kind which the noble Lord, Lord Marsh, has been trying to define for the noble Lord, Lord Avebury.

We know how difficult that is. Indeed, it has been one of the more difficult tasks which the Government have had to address during the course of the passage of the Bill. My noble friend Lord Mackay of Ardbrecknish in particular has acknowledged that the Government have not only a right but a duty to give factual information.

Equally, I am sure that the Government would acknowledge that in the run-up to a general election campaign, over the years, it has been thought to be self-evidently right that government Ministers should try to wear two hats: the hat of a government Minister and the hat of a party politician. We know how difficult that is, but we know also how the convention has grown up in the run-up to general election campaigns—and there are many noble Lords all round this House who have experienced this, as I have—that that attempt is made and, to a surprising extent, it is successfully made. Difficult judgments are drawn in the run-up to a general election campaign as well as during the campaign itself because it is acknowledged that, by convention, we must be extra careful in the run-up to a general election campaign, even though the rules are not explicit. It is part of belonging to the unwritten constitutional club which still works and to which I know the Government still subscribe, at least in that respect.

If that is true of a general election campaign, should it not be true also of a referendum campaign? In many ways it should be easier in relation to a referendum campaign which, by definition, addresses a much simpler set of questions. If I had my way it would only ever address one question because we should be talking only about post-legislative referendums in which case it should be asked whether the people want the legislation and want it implemented—yes or no. That should overcome all the difficulties of definition which have so bedevilled the passage of this Bill.

But let us not become side-tracked. Here we have a much simpler definition than we should have if we were facing a general election campaign with the whole gamut of policy issues which are raised under those circumstances. So it does not seem to me to be more difficult under those circumstances; it seems to me to be simpler. If it is simpler, I argue also that it is more important because, almost by definition, the very substantial issues on which the country will be asked to decide in referendums are quite likely to be even more important than the issues of a general election campaign. Whether or not we join the euro seems a matter of huge importance whichever view one takes. What makes it all the more important is that whatever may be the theory, if we were to answer "yes" to that question, to all intents and purposes it would be a "yes" which is irreversible.

The same is true of the referendum question in relation to devolution for Scotland and Wales, particularly for Scotland. However much the referendum was rigged at the time, I do not believe that anyone would argue that the people of Scotland would not have voted "yes" under any circumstances. They clearly would have done. Nevertheless, it is irreversible. This is a matter of transcendental importance which will endure beyond the next general election and the election after that.

Therefore, is it not all the more important that referendums of the kind we are discussing should be seen to be conducted fairly, without unfair practices, by a government than it is in relation to general elections for which practices are already in place? It seems to me so obvious that that is right that I am surprised that it even needs discussing, although experience of the passage of this Bill has proved to us that it does.

The noble Lord, Lord Marsh, made the most telling point of all when he referred to bringing the matter into the courts. We know that one of the agreeable aspects of our present electoral practices is that, more or less all the time, they produce a definite and unquestioned result. We do not have to undergo the agonies which the United States is undergoing at present. Why is that? It is because over the years we have developed electoral law and practice which may not be perfect but which is universally accepted as being sensible.

Again, there are many in your Lordships' House who have had to endure their own counts while waiting to see whether or not they have been elected to another place. Those noble Lords will know the practice of scrutinising votes as to whether they are valid or not. We know who has the authority to decide on those matters and we accept that authority.

As soon as it looks as though the rules are being skewed in one direction or another, that certainty and the stability which flows from it are undermined. I earnestly beseech the Government to think again not only in relation to this amendment but also in relation to many other provisions of this Bill. By undermining that confidence, they will be undermining the stability of our system altogether. That is why this amendment, and others like it, which we have endeavoured to draw to the Government's attention during the passage of the Bill, are so important.

Lord Goodhart

My Lords, I rise to deal with one serious defect in this amendment. The Neill commit tee was extremely anxious that umbrella groups should be formed and, to encourage them, recommended that they should be entitled to a free mailshot. That recommendation was accepted by the Government and is now dealt with in Clause 110.

The effect of including the Post Office in the proposed subsection (3)(a) in the amendment moved by the noble Lord, Lord Marsh, would make it impossible to provide a free mailshot for umbrella groups since the material to be distributed would plainly fall within Clause 125(1). That being so, it seems to me that that is a serious defect. I wonder whether it is a matter which the noble Lord has considered.

Lord Marsh

My Lords, that issue has been raised. The problem regarding the Post Office has received very wide publicity. It is a public body embarking on a propaganda campaign of its own. That is not comparable with a government issuing a free postage system to all the parties which will have different views and circulating those views as a post office. It is the job of the Post Office to deliver letters; it is not the job of the Post Office to campaign for political parties.

Lord Goodhart

My Lords, this will stop the Post Office from doing that because the Post Office will be distributing material free of charge, even if it comes from someone else.

Lord Marsh

My Lords, "to distribute" can be taken as physically pushing material through letterboxes, with which we all agree, or being responsible for other people who push it through letterboxes.

Viscount Astor

My Lords, all participants in a referendum would want a clear result that is accepted by all who have participated so that the issue is not subject to endless further debate or question. The Government have introduced Clause 104 which enables the question to be looked at and it promotes fairness, which we welcome. That will help the conduct of referendums in the future.

In regard to spending, this Bill is slanted in favour of the Government in relation to referendums and it is slanted in favour of outside parties, as we heard earlier, effecting a referendum. The noble Lord, Lord Marsh, has raised an issue of principle which is important. It must be in the Government's interest to remove all doubt about the conduct of referendums so that all sides appreciate and understand the situation.

My noble friend Lord Cranborne talked about elections and how the system works in the Civil Service. In elections the system works well. There is a clear divide between what is political propaganda—the words that the noble Lord, Lord Marsh, used—and what comprise Civil Service documents. Part of the reason that it works is that the Civil Service knows that its political masters may change shortly, so civil servants are on their best behaviour. However, in referendums the situation is rather different as they know that they will have the same political masters afterwards. It is not for me to cast any aspersions on the Civil Service, but looking at what has been produced in the life of this Government, I believe that the only things that have not been political propaganda have been the statistical reports. The only thing that was not propaganda, for example, in the magazine promoted by the Government on women was the date. As far as I am concerned, the whole of that magazine was propaganda.

In looking at the amendment of the noble Lord, Lord Marsh, I was concerned about who would define the words "factual and impartial". I agree with him that when you come across it, you can recognise it. It is the "heffalump" argument: you cannot describe one but when you see one you recognise it. It would be helpful if the noble Lord, Lord Marsh, could say how that phrase would be defined. The amendment raises issues of great importance and we shall listen carefully to the Minister on this subject.

Lord Bassam of Brighton

My Lords, on this amendment we return to the role of government during a referendum campaign. Having listened carefully to what the noble Lord, Lord Marsh, has said, he is obviously fearful of the scales in a referendum on the euro being weighed against the "No" campaign by a deluge of government misinformation, as he puts it. On Report he referred to the fact that, the Government have already spent more than £15 million on 'information', including a direct mailshot to 800,000 businesses".—[Official Report, 22/11/00; col. 895.] He repeated that this evening. I remind the noble Lord that the Government's communication campaign on the euro is not aimed at promoting the euro, but at ensuring that UK small and medium-sized enterprises are aware of the implications of the single currency and have the information that they need to prepare. No doubt, if we were to revert to the groat we would do exactly the same in the interests of ensuring that small, large and medium-sized enterprises knew what the reintroduction of the groat may involve.

Lord Marsh

My Lords, before the Minister goes on too much about the euro, I cut what I said as short as I could, but I did test the patience of the House by spending some time saying quite specifically that I thought that this went far wider than simply a campaign on the euro.

6.45 p.m.

Lord Bassam of Brighton

My Lords, it seemed to me that the primary interest of the noble Lord was in promoting the position of Business for Sterling. It seems that this whole debate is overshadowed by the interest—some may say the obsession—that some Members of your Lordships' House have about a referendum at some future point on the euro.

It is worth putting on the record and pointing out to the noble Lord the longstanding conventions governing the work of the Government Information Service. In presenting government policy and providing publicity and advertising material during a referendum period, these conventions require of the GIS that its activities are relevant to government responsibilities; objective and explanatory, not tendentious or polemical; not open to misrepresentation as being party political; and conducted in an economic and appropriate way, having regard to the need to be able to justify the costs as expenditure of public funds.

No doubt all governments seek to ensure that those fundamental principles and rules are carefully adhered to. No doubt previous Conservative governments adhered precisely to that when explaining the implications of the single European market; no doubt they provided the same level of support so that businesses could well understand what the single market meant to them.

Of course, there will always be debates about whether material can be wholly factual and impartial. That is why the Neill committee recommended that 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 their case. The 28-day purdah period provided for in Clause 125 is our response to that recommendation.

I remind the House of what the Neill committee has made of that response. In its comments on the White Paper and draft Bill, the Committee said: We welcome your proposals on the part which should be played by the government in referendum campaigns, and your recognition of the importance of ensuring that there is a period immediately prior to a referendum in which, as you say, 'the government of the day … stands aside and the campaigning is left to the political parties and other organisations'". That message was reinforced by one of the members of the Neill committee, John MacGregor, at Second Reading in another place when he said: I am glad that the Bill includes the 28-day moratorium, which meets our point".—[Official Report. Commons, 10/1/00: col. 67.] So, Clause 125, as it stands, fully addresses the recommendation of the Neil] committee and as such there is no case for this amendment.

The noble Lord strayed from his amendment to raise the issue of the referendum spending limits. As there were no amendments down on this matter for Third Reading, I had rather hoped that the issue had been settled once and for all, but I see from the press that Business for Sterling, of which the noble Lord, Lord Marsh, is a member, is threatening to challenge this part of the Bill under the Human Rights Act.

The Government are satisfied that the referendum spending limits are entirely compatible with the European Convention on Human Rights. In the context of elections, in the Bowman judgment the European Court of Human Rights accepted that a restriction on the amount that could be spent during a campaign is not in itself a breach of Article 10 of the convention. The court recognised that there may be a conflict between the right to freedom of expression and the need to ensure free expression of the opinion of the people and that it may be necessary in a period preceding a poll to place certain restrictions on freedom of expression.

In support of the spending limits, for which we have previously argued, I refer the noble Lord also to a passage in a judgment by the Canadian Supreme Court in the case of Libman v. Quebec 1997.

Lord Mackay of Ardbrecknish

My Lords, I had not actually noticed an amendment about spending limits. I thought we had resolved that matter. So why is the Minister addressing the issue of spending limits? I thought I had been defeated on that.

Lord Bassam of Brighton

My Lords, the noble Lord is right, but I was seeking to address the issue of inequity between the "No" and the "Yes" campaigns.

Lord Marsh

My Lords, I would be grateful if the Minister would take no notice of the noble Lord, Lord Mackay, and continue. He is actually saving us a fortune!

Lord Bassam of Brighton

My Lords, I am most grateful for that amusing intervention.

The court noted that: In its egalitarian aspect the Act [was] intended to prevent the referendum debate being dominated by the most affluent members of society. At the same time, the Act [promoted] an informed vote by ensuring that some points of view are not buried by others. This highly laudable objective, intended to ensure fairness of the referendum on a question of public interest, [was] of pressing and substantial importance in a democratic society". Both the European Court and the Canadian Supreme Court acknowledged the need for spending limits.

Lord Wedderburn of Charlton

My Lords, before my noble friend sits down, he is surely aware of the enormous difference between the European Convention on Human Rights and the Canadian charter. He cannot quote cases on the Canadian charter as though they are related to the same wording as the convention.

Lord Bassam of Brighton

My Lords, of course; I take the point of my noble friend. But there is a bearing on this issue in trying to develop a general point.

The European Court and the Canadian Supreme Court acknowledged the need for spending limits. We believe that the limits set out in the Bill are fair and equitable and will stand up to scrutiny in any court. We do not believe that this amendment is appropriate in the way in which it is argued. Therefore I invite the noble Lord, Lord Marsh, to withdraw Amendment No. 22.

Lord Marsh

My Lords, first, I thank all those who took part in this debate. The Minister raised some interesting subjects. I could not resist rising because, with the greatest respect to some other Members of his Front Bench, lawyers' fees are colossal and the cases produced by his department are greatly appreciated.

But my basic argument remains; that is, that this is an issue of principle. It is a fundamental issue and, since so many Members of your Lordships' Chamber have stayed behind, we should test the opinion of the House.

6.51 p.m.

On Question, Whether the said amendment (No. 22) shall be agreed to?

Their Lordships divided: Contents, 134; Not-Con tents, 184.

7.2 p.m.

Clause 134 [Meaning of "election expenses"]:

Lord Bassam of Brighton moved Amendment No. 23: Page 101, line 49, leave out ("less") and insert ("not more").

Clause 162 [Interpretation: exempt trust donations]:

Lord Mackay of Ardbrecknish moved Amendment No. 24: Page 125, line 23, leave out (", other than one falling within subsection (5)").

The noble Lord said: My Lords, this group of amendments deals with the question of trusts. The original drafting of the Bill prohibited donations from all trusts, whether blind trusts or not. The Government recognised that that would be wrong and that the original wording of the Bill did not reflect the views of the Neill committee. These amendments were therefore tabled. However, I believe that there are some serious, and almost certainly unintended, defects in the amendments on exempt trusts, which came into the Bill on Report and are now in Clause 162.

The chosen cut-off date of 27th July 1999 is the date on which the White Paper was published. That date is used for the establishment of exempt trusts which do not need to prove that the property was placed in trust by a permissible donor. However, what would be the position in respect of a trust established between that date and the commencement date of Part IV? Would such a trust, established perfectly legitimately by a permissible donor, fall within the definition in Clause 162(2) or (3)? If not, would a party therefore be prohibited from accepting any donation from such a trust? I cannot believe that this is the intention of the drafting. It is a complicated matter. I have therefore written to the Minister requesting a definitive reply.

The drafting of Clause 162(2)(b) and (c) is also problematic. This prevents a pre-27th July 1999 trust (to which I shall refer as an old trust) to which after that date any property has been added, or which has had its terms varied, from donating to a party. Given that these amendments were tabled only two weeks ago, I do not believe that that is fair or just. Perfectly legitimate open trusts established before July 1999 may well have had their terms varied, or property added to them, after that time.

Paragraph 3.34 of the White Paper makes reference only to prohibiting donations from blind trusts. Therefore, it cannot have been expected by any trustee or person wanting to donate to or establish an open trust after the publication of the White Paper that any variation of terms or further donations that they may have made to any open trust would render that trust unable to make donations to political parties.

In addition, the Government have said that the provisions preventing donations from old trusts to which property has been transferred after 27th July 1999 are necessary to stop such trusts being used to channel impermissible donations in the future. But what is wrong with allowing a permissible donor to continue to put money into an old trust that he may have established either between July 1999 and today or in the future? That is especially true of donations made to old trusts by permissible donors that may have been made between July 1999 and the present. While a permissible donor may now realise that continuing to donate to an old trust would render the trust unable to donate, and could therefore perhaps set up a new trust, this would not have been the case until the Government tabled their amendments two weeks ago. Therefore, things done by permissible donors and trustees before they were aware of the government amendments tabled last week could mean that perfectly legitimate open trusts were nullified.

To remedy the situation, I have tabled a number of amendments to Clause 162(2) to change the cut-off dates in respect of the creation of old trusts, the transfer of property to them and the variation of their terms. They propose that the cut-off dates in each of these cases should be changed either to the date on which the Bill receives Royal Assent, or the date on which the clause comes into force. While the latter would be preferable, our view is that the former is the least that should be done.

Finally, as I indicated at Report stage, it seems preferable that Clause 162(5) should be taken out altogether. It prohibits donations from any trust, whether old or new, where a trustee exercises any discretion in making the donation. I believe that this would have almost exactly the same effect as the original wording of the Bill; it would prohibit donations from any trust. As we have pointed out, trustees may have a discretion as to whether to give capital, rather than interest, to beneficiaries. That would be a discretion. They would not be allowed to donate.

In all trusts a degree of discretion is given to trustees. A trust may have been established in very broad terms for the benefit of the conservative cause, the socialist cause or the liberal cause. Even if trusts were set up to benefit the Conservative Party, the Labour Party or the Liberal Party, the trustees may have a discretion as to whether or not the money should be donated centrally, to local constituencies, or even regionally. Provided trustees comply with the terms of trust deeds and provided the source of donations to the trust is declared, as required under the provisions of the Bill, in the case of all trusts, or the source of permissible donors in the case of new trusts, I do not understand why donations from such discretionary trusts should be prohibited; nor do I believe that that is the intention of the Government or of the Neill committee. However, that is the effect of the drafting.

This is a complex matter. I wrote to the Minister on Friday, outlining my reasons for tabling the amendment. I hope that he and his experts have had an opportunity to consider the matter with a view to ensuring that the Bill represents the intentions of the Neill committee and those of the Government, so that donations from open trusts, which are legitimately set up, will continue to flow to political parties. I beg to move.

Lord Bassam of Brighton

My Lords, with his customary efficiency, the noble Lord has outlined a number of arguments. I shall try to answer some of the points. If I do not answer them as thoroughly as he would like, I hope that they can be dealt with in later correspondence.

At Report stage, we amended the Bill to allow donations to be received from trusts in certain circumstances, if they were established prior to the date of the publication of the White Paper for this Bill. This concession can be found in Clause 162(2). It was designed to cater for only one circumstance—that of a trust set up so long ago that it would now be difficult, or perhaps impossible, to establish with certainty that the person who had donated money to the trust was a permissible donor. The concession was not designed to allow an old trust to be used as a mere shell for a new set of transactions which would not comply with the regular conditions for donations from trusts as set out in Clause 162(3).

Amendments Nos. 25 and 26 would alter the whole scope of Clause 162(2) so that instead of making special consideration for old trusts it would make special provisions for ones established after Royal Assent or the coming into force of this clause. Old trusts would then have to comply with subsection (3). We doubt whether that was the noble Lord's intention in tabling the amendments. In any event, it would destroy the purpose of subsection (2) and others in the House would clearly be opposed to that.

If the proposed amendments were made, first, it would be possible for a donation to come from a trust established by a person who was not a permissible donor. That is inherent in subsection (2) as it stands. Secondly, it would be possible for the trust to be a discretionary trust; that is, one which allows the trustee to choose who should be the recipient. Thirdly, it would be possible for the trust to have been varied after proposals for legislation in this area were published on 27th July 1999. Fourthly, it would be possible for money to have been transferred to the trust after that date. Again, there would be no requirement that the money must have come from a permissible donor. Nor would there be any limit on how large the transfer might have been compared with the money that was originally put into the trust. The result of Amendment No. 29 would have been to allow additional funds to have been put into an old trust, or to be put into it in the future, without any limit of time, provided that the additional funds came from a permissible donor.

The Government were persuaded to allow a limited exemption for old trusts and we want to be as reasonable as possible about it. We have moved a long way since the draft Bill published with the White Paper, but I cannot commend to the House a set of arrangements which would simply open the door to a wholesale evasion of the requirements which we are now setting for the future. Indeed, if the amendments were made, we would no longer feel able to commend subsection (2) to Parliament.

We do not believe that a case has been adequately made out on this issue and we are not certain of the trusts which the noble Lord has in mind. However, we shall of course pay close attention to the points that the noble Lord raised in his recent correspondence on this technical matter. I hope that he will feel able to withdraw his amendment. I believe that he should do so and that we have the balance about right in regard to trusts.

Lord Mackay of Ardbrecknish

My Lords, I shall not labour the point because I had hoped that we could agree and that would have been that. The other place will have to examine the issue when it sees the amendments that we put into the Bill on Report. I shall read with care the points that the Minister made and any letter he decides to send to me after he has read what he said. The situation could be worrying because some trusts which thought they were acting properly could be faced with the imposition of retrospective legislation as a result of changes made at the Report stage. I shall leave it at that and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 25 to 32 not moved.]

7.15 p.m.

Schedule 1 [The Electoral Commission]:

Lord Mackay of Ardbrecknish moved Amendment No. 33: Page 131, line 32, leave out sub-paragraph (2) and insert— ("(2) A person may not be appointed—

  1. (a) as chief executive of the Commission if he is a person who (by virtue of section 3(4)(a) to (d)) may not be appointed as an Electoral Commissioner; or
  2. (b) as a member of the staff of the Commission if he is a person who (by virtue of section 3(4)(b) to (d)) may not be appointed as an Electoral Commissioner.").

The noble Lord said: My Lords, during the Committee and Report stages we had many debates about the staff of the electoral commission and how political they could be. The Government and I disagreed on a number of occasions but have now concluded that a chief executive should not be a member of a political party. I still have reservations about any of the staff being members of a political party and wonder whether the Government, having accepted my argument about the chief executive, believe that I am right about all the staff.

My amendment proposes that the chief executive cannot be a member of a political party and the Government's amendment does the same. By the nature of things, I am sure that the noble Lord, Lord Bach, will tell me that my amendment is not properly drafted and that his is. Whichever is the case, I am grateful that my argument has been heard in that regard. I beg to move.

Lord Bach

My Lords, the noble Lord's arguments have been heard. His amendment carried forward the debate we had in Committee and on Report about the qualification and disqualification for being a commissioner or a member of the staff of the commission. The effect of the amendment is that a person cannot be appointed as chief executive of the commission if he is a member of a political party.

We had our doubts about that because of the concern that the right to be a member of a party should not be abridged unless absolutely necessary. However, we now all agree because we believe that there is not sufficient reason to refuse the amendment. It seems right that the chief executive of the commission, like the commissioners, should not be associated with any party.

The noble Lord anticipated my reply. We tabled our Amendment No. 34 for simple technical drafting reasons. We believe that it has the same effect as that intended in the Opposition's amendment.

The Government's Amendment No. 35 is a consequential amendment. If it is right to require the chief executive to resign any membership of a party upon appointment, it must also be right to require him or her not to resume or take up membership of a party after appointment. Amendment No. 35 is designed to plug that small gap. We believe that although views on both sides have ebbed and flowed during the long course of the Bill in this House, we have the double advantage of consensus and of getting the Bill right on this small issue. I invite the noble Lord to withdraw his amendment.

Lord Mackay of Ardbrecknish

My Lords, I am grateful to the noble Lord. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Lord Bach moved Amendments Nos. 34 and 35: Page 131, line 32, leave out ("as chief executive or") and insert—

  1. ("(a) as chief executive of the Commission if he is a person who (by virtue of section 3(4)(a) to (d)) may not be appointed as an Electoral Commissioner, or
  2. (b) as any").
Page 131, line 40, after ("terminate") insert—
  1. ("(a) if he is their chief executive, on the occurrence of such an event as is mentioned in any of paragraphs (a) to (d) of paragraph 3(3), and
  2. (b) in any other case.").

Schedule 7 [Control of donations to individuals and members associations]:

Lord Bach moved Amendments Nos. 36 to 38:

Schedule 9 [Limits on campaign expenditure]:

Lord Hodgson of Astley Abbots moved Amendment No. 39: Page 169, line 17, leave out ("£30,000") and insert ("£20,000").

The noble Lord said: My Lords, we return to the discussion which we had in extenso during the Committee and Report stages. I am afraid that I and, I believe, other noble Lords did not find the Minister's reply convincing. As a result, I gave notice that I should raise the issue again at Third Reading.

At the heart of the Bill a number of balances are to be struck. There is the important balance between transparency and local democracy. There is the equally important balance between the funding needs of a party nationally and those of a local association. I do not believe that we yet have that aspect of the Bill entirely right.

First, even during "peacetime"—the period between elections—the burden of bureaucracy which we intend to apply to political parties and local associations is huge. I point out to those noble Lords who doubt that, that the Bill and its schedules which we received in Committee ran to 180 pages and it is now 243 pages. We have therefore increased it by one-third. That burden on local associations, some of which are weak, may well be the straw which breaks the camel's back. That in turn will mean that national headquarters must take a much closer interest in the operation of local associations, thus increasing the trend towards centralisation. That will not help to revive local democratic activity—quite the reverse.

Secondly, during election campaigns the trend towards a presidential style of campaigning will accelerate. As part of the reawakening of interest in our democracy, I should like national political parties to be forced to consider how to enthuse, involve and include their local activists, not merely to find further ways to reach past, or bypass, them by focusing on massive spending on the media, posters, direct mail and other forms of communication.

The amendment seeks to give an incentive for the development of local democracy by restricting the level of national spending that can be undertaken during general election campaigns. Under my amendment national spending will be restricted to £20,000 per constituency contested, not £30,000 as presently proposed. If every constituency was contested, total spending centrally would be about £13 million, not £19 million as proposed.

Some may believe that that figure is too restrictive to undertake an effective national election campaign. However, before one reaches that conclusion one should not overlook two additional sources of permissible finance. First, each constituency will in addition be able to spend its normal allowance, which is about £8,500. If every constituency is contested, that will amount to a further £5.6 million. Secondly, there is a further allowance for centralised expenditure under Part I of Schedule 8 which lists exempted items. It is not easy to calculate that amount of expenditure, but included in those items of permitted expenditure are the costs of staff and their accommodation. That expenditure may well amount to a further £3 million or £4 million. Even under my amendment, if a party contests each and every constituency it can spend £13 million, plus £5.6 million at constituency level, plus a further £4 million of exempted expenditure, making £22.6 million in all. Surely, that is enough; and it is a larger figure than Neill recommended.

There is disquiet about the level of expenditure at general elections. The noble Lord, Lord Rennard, has spoken eloquently about this, and I suspect that he will contribute to the debate later. One of the reasons for the whole Bill is the level of expenditure and the funding of general elections. I am concerned about the damage that we are probably doing, almost certainly inadvertently, to local democracy and our democratic institutions. My amendment seeks to revive local democracy by giving it more prominent ranking in the priorities of campaigning and campaign expenditure. Unamended, the Bill will permit a party to spend up to £29.6 million. Of that, only £5.6 million (less than one fifth) can be spent locally. If my amendment is accepted, total expenditure will be limited to £22.6 million, of which £5.6 million (one quarter) can be spent locally. Surely, that proportion which parties must spend locally is not unreasonable. I believe that £22.6 million is a perfectly adequate total for a national party to spend to run an election campaign. One quarter of that amount is the right balance for local expenditure, and by those means we shall significantly enhance local democracy. I beg to move.

Lord Rennard

My Lords, we consider again tonight one of the most important election rules that we can possibly introduce. For the first time there is to be a limit on spending by national party organisations. I believe that such reform is long overdue and essential if we are to clean up our political system, reduce the power of the millionaire interests and give power back to voters. We need to curb the trend for millions of pounds to count for more than millions of votes. But the question now is: what is the appropriate limit, and how should it be set before the electoral commission may examine the issue?

I believe that consensus is the best approach. In evidence to the Neill committee, the Labour Party said that, those who compete for political office should have a fair opportunity of doing so and should not be placed at a disadvantage by inadequate financial resources relative to others". In its document Transparency, Participation, Equality, the Labour Party argued for a national limit of £15 million. The Liberal Democrats have also consistently argued here and in another place for the same limit. In another place that limit was strongly supported by Mr Martin Linton who is a recognised expert in the field of party funding. He argued that 70 per cent of Members of another place belonged to parties which then supported a limit of £15 million.

In spite of that, in Committee in your Lordships' House the Government said that for the moment they would stand by the £20 million limit set out in the Bill. The noble Lord, Lord Bassam, said that he was, in the peculiar position of barking against my own party on this occasion".—[Official Report, 18/10/00; col. 1098.] More significantly perhaps, he also said at col. 1099: If presented with a fresh consensus in favour of a lower figure, we would be prepared to reconsider the matter, but it is not one to be pursued on a unilateral still less a partisan basis". There is now a fresh consensus on a lower figure and the Government should not pursue the £20 million limit on a purely unilateral basis. During consideration of the Bill we have removed from the calculation of total expenditure some important items, including utility bills, headquarters and staff costs and legal services. In part, that has led to a new Conservative position which has brought the Opposition into line with both the Labour Party and the Liberal Democrats.

At Committee stage the noble Lord, Lord Mackay of Ardbrecknish, proposed a national limit of exactly £15 million, while the noble Lord, Lord Hodgson of Astley Abbotts, argued for a very slightly lower limit. The Government would, therefore, be isolated if they sought to adhere to the limit of £20 million. I remind the Minister that he said that this matter should not be pursued on a unilateral still less a partisan basis. In future the electoral commission can review the limit and increase it if there is a new consensus, but for the moment the limit should be set at a lower level for which there is much greater consensus. It would be open to the Government to increase the limit on constituency spending, if they wished to do so, to make the total available nationally and locally consistent with the figure in the Neill report. That would help to address the imbalance between constituency and national spending. Let us have a national limit of about £15 million on which there is far greater consensus.

Lord Mackay of Ardbrecknish

My Lords, we have been round this particular course before. When I tried to persuade the Minister to accept a limit of £15 million instead of £20 million I failed fairly comprehensively. I am interested that my noble friend now returns to the matter but looks at it from the constituency upwards. I much prefer to look at it from the national limit already set downwards.

I am concerned by what the Government intend to do if there is to be an election in May. When will they tell the world at what level total expenditure is to be set? Obviously, it cannot be the whole £20 million because the period will be far shorter than 365 days. I am concerned that it should not be front-loaded. I seek an assurance from the Government that they will talk to the political parties so that they will know as soon as possible the figure that has been arrived at in conversations, I hope by consensus. It would be wrong if, following the new year, two or three months elapsed before the political parties had any idea of what they might be permitted to spend in an election to be held in May. I do not know how the Government will deal with that without committing themselves to a May election. But, frankly, they will have to do it because it is their Bill and they have wished this ludicrous situation on themselves as well as the other political parties. The people who run the Labour Party will want to know, as will the rest of us, how much they will be allowed to spend between whenever the Bill is enacted and the next election. I hope that the Minister will address that point in his answer.

7.30 p.m.

Lord McNally

My Lords, before the noble Lord sits down, perhaps I may ask him a question. At the moment the Labour Party is festooning towns with this "Thank you" campaign. Will that be in its general election expenditure?

Lord Mackay of Ardbrecknish

My Lords, in Scotland we have an expression about coming up the Clyde in a banana boat. The noble Lord has been doing that. I am not joining him. I can assure him that that will not be part of the Labour Party's expenditure for the next election. That is probably why the Government are doing it—because the race will not start until the Bill has been enacted and the announcement about the money has been made. So I think they are trying to jump the gun. It perhaps shows that all the pious stuff we have heard from them about funding political parties and controlling general election expenditure is not quite as accurate as they would like us to believe.

Lord Bassam of Brighton

My Lords, we return again to the level of the limit on campaign expenditure. The noble Lord, Lord Hodgson, said that he was not convinced by what I had said at an earlier stage on this matter. I was not entirely convinced. I was not entirely convinced because as I saw it there was something of a volte face from noble Lords on the Opposition Benches.

I am grateful that the noble Lord, Lord Cope, has joined us because it was the noble Lord who advised us in Committee that we should stick with what was in the Bill. The noble Lords on the Liberal Democrat Benches were suggesting a lower limit. On Report we heard from the noble Lord, Lord Mackay, an argument for reducing the limit by one-quarter. The noble Lord said that the position had changed because the list of qualifying expenses in Schedule 8 had been pared back to make it more manageable for the parties. That is indeed the case. But the noble Lord, Lord Cope, knew that when he spoke so enthusiastically of the £20 million limit. It would be very nice to know exactly where the Opposition now stand and exactly what lies behind their sudden change of heart. I note that the noble Lord, Lord Hodgson, is sitting very comfortably next to the noble Lord, Lord Ashcroft, who I suppose gave some admiring glances during his peroration. I am not sure why that was the case. Perhaps it is because he is the party treasurer and is concerned about the quantum of money that might be available for a forthcoming general election.

The case is this: a responsible government cannot chop and change their policy in the way that has been suggested by some—

Noble Lords


Lord Bassam of Brighton

My Lords, I hear mirth from those in a sedentary position, but a responsible government—this is an entirely responsible government—do not chop and change their policy. I do not wish to hide the fact that the Labour Party argued in its evidence to the Neill committee for a £15 million limit. But it falls to the Government, and not to the Labour Party, to respond to and implement the Neill report. That is exactly what we are seeking to do. We have consistently taken the view that once the matter had been carefully considered by an independent advisory body, the proper course was to accept its recommendation. That is exactly what we have done.

The level of the limit should be altered only after full consideration by another independent body; namely, the electoral commission. Before coming to a view, there should be full consultation with other registered parties, not just the big three. We should remember that separate limits apply in each of the four parts of the United Kingdom. I put it to the House that it would be presumptuous of the Labour, Conservative and Liberal Democrat Parties, which are well represented here, to decide such matters without reference to the nationalist parties in Scotland and in Wales and to the nationalist and Unionist parties in Northern Ireland. I wonder how much consultation with those parties noble Lords opposite have undertaken in arriving at the view that they have in preparing for this particular amendment.

Nor can we simply change the figure in paragraph 3(2) of Schedule 9 on its own. The limits in paragraphs 3(3) and (4) of that Schedule and the third party limits in paragraph 3 of Schedule 10 are all linked to the £30,000 "allowance". If one changes that figure, one has to change the others. The Neill committee set the expenditure limits for elections to the European Parliament and devolved legislatures by reference to the £20 million for a parliamentary general election. We need to consider whether there should be a pro rata reduction in those other limits. These are considerations to be carefully made, not made late in the day when a Bill is reaching its concluding stages.

So, whatever the merits of the amendments, we should not be changing course in this way, at this late stage and without full and proper justification, and full consideration of, and consultation over, the other related matters. The right way forward—the only way forward—is to apply the £20 million limit, or an appropriate proportion of it, to the next general election. We should then ask the electoral commission properly to review the matter. If then there is a new consensus in favour of a lower limit, which is endorsed by the commission, it would be open to the Home Secretary to vary all the relevant sums by means of an order under Clause 155.

The noble Lord, Lord Mackay, asked a fair question about the transitional limit. That transitional limit must be in place by 16th February 2001 when Part V comes into force. We shall be very carefully consulting during December with regard to what that limit might be. That is the proper course of action for us to follow. We shall fulfil that responsibility.

We have a late, half-baked and poorly thought-through amendment which does not do the job that it is designed to do. The amendment still puzzles me. Why is it that the Conservatives—some of them at least—seek to change their position on this many months after the Bill has been published and after many debates on these matters when just a matter of 10 days ago they had a clear policy position and statement of intent in this regard? I am puzzled by that. Perhaps it relates to funding within the Conservative Party; I know not. The proper course for the noble Lord to take is to withdraw his amendment and put his case to the electoral commission in due course.

Lord Hodgson of Astley Abbotts

My Lords, the Minister has not taken us much further than on Report. We engaged in some political knockabout on the premise that if one is short of arguments, one should engage in some political banter. That is fair enough. I am not sure that as a very new Member of the House it is in order for me to say this, but I think that it is a little unfair to talk about my noble friend Lord Ashcroft who has not made a maiden speech yet and therefore cannot respond.

The Minister's substantive arguments came down to two. First, he suggested that there should be a review after the general election, which does not answer the point I was trying to make at all. Secondly, consequential amendments would be required if the amendment were accepted. The amendment is nothing to do with the detail he is talking about; it is about restoring a balance. It is not about any individual political party seeking to gain or lose a funding advantage; it is about a vote for decentralisation, for the small battalions and for local democracy. I propose to test the opinion of the House on this matter.

7.38 p.m.

On Question, Whether the said amendment (No. 39) shall be agreed to?

Their Lordships divided: Contents, 64; Not-Contents, 134.

Division No. 4
Addington, L. Montrose, D.
Ashcroft, L. Newby, L.
Avebury, L. Northover, B.
Barker, B. Norton of Louth, L.
Bell, L. Oakeshott of Seagrove Bay, L.
Blatch, B. Perry of Southwark, B.
Bradshaw, L. Phillips of Sudbury, L.
Campbell of Alloway, L. Redesdale, L.
Carlile of Berriew, L. Rees-Mogg, L.
Clement-Jones, L. Rennard, L. [Teller]
Dholakia, L. Renton of Mount Harry, L.
Elton, L. Rodgers of Quarry Bank, L.
Ezra, L. Roper, L.
Falkland, V. Russell, E.
Goodhart, L. St John of Fawsley, L.
Greaves, L. Sandberg, L.
Hamwee, B. Scott of Needham Market, B.
Harris of Greenwich, L. Sharman, L.
Harris of Richmond, B. Sharp of Guildford, B.
Hodgson of Astley Abbotts, L. [Teller] Shutt of Greetland, L.
Smith of Clifton, L.
Hooson, L. Taverne, L.
Hutchinson of Lullington, L. Taylor of Warwick, L.
Thomas of Gresford, L.
Jacobs, L. Thomas of Walliswood, B.
Kingsland, L. Thomson of Monifieth, L.
Linklater of Butterstone, B. Tope, L.
McNally, L. Tordoff, L.
Maddock, B. Walmsley, B.
Mar and Kellie, E. Warnock, B.
Methuen, L. Watson of Richmond, L.
Miller of Chilthorne Domer, B. Wigoder, L.
Miller of Hendon, B. Williams of Crosby, B.
Acton, L. Ashton of Upholland, B.
Ahmed, L. Bach, L.
Alli, L. Barnett, L.
Amos, B. Bassam of Brighton, L.
Andrews, B. Berkeley, L.
Archer of Sandwell, L. Bernstein of Craigweil, L.
Ashley of Stoke, L. Billingham, B.
Blackstone, B. Jeger, B.
Blease, L. Jenkins of Putney, L.
Borrie, L. Jordan, L.
Bragg, L. King of West Bromwich, L.
Brennan, L. Kirkhill, L.
Brett, L. Layard, L.
Brooke of Alverthorpe, L. Lea of Crondall, L.
Burlison, L. Lipsey, L.
Carter, L. [Teller] Lockwood, B.
Chandos, V. Lofthouse of Pontefract, L.
Clarke of Hampstead, L. McCarthy, L.
Clinton-Davis, L. Macdonald of Tradeston, L.
Cocks of Hartcliffe, L. McIntosh of Haringey, L. [Teller]
Cohen of Pimlico, B.
Colville of Culross, V. McIntosh of Hudnall, B.
Craig of Radley, L. MacKenzie of Culkein, L.
Crawley, B. Mackenzie of Framwellgate, L.
David, B. Mallalieu, B.
Davies of Coity, L. Marsh, L.
Davies of Oldham, L. Massey of Darwen, B.
Dean of Thornton-le-Fylde, B. Mitchell, L.
Desai, L. Molloy, L.
Dixon, L. Morgan, L.
Donoughue, L. Morris of Manchester, L.
Dubs, L. Nicol, B.
Eatwell, L. Peston, L.
Elder, L. Plant of Highfield, L.
Evans of Parkside, L. Ponsonby of Shulbrede, L.
Falconer of Thoroton, L. Prys-Davies, L.
Farrington of Ribbleton, B. Puttnam, L.
Fanlkner of Worcester, L. Ramsay of Cartvale, B.
Filkin, L. Randall of St. Budeaux, L.
Fyfe of Fairfield, L. Randall of Babergh, B.
Richard, L.
Gale, B. Richardson of Calow, B.
Gibson of Market Rasen, B. Sainsbury of Turville, L.
Gladwin of Clee, L. Sawyer, L.
Goldsmith, L. Scotland of Asthal, B.
Gordon of Strathblane, L. Sewel, L.
Goudie, B. Shepherd, L.
Gould of Potternewton, B. Sheppard of Liverpool, L.
Grabiner, L. Simon, V.
Graham of Edmonton, L. Smith of Leigh, L.
Gregson, L. Stoddart of Swindon, L.
Grenfell, L. Stone of Blackheath, L.
Hardy of Wath, L. Strabolgi, L.
Harris of Haringey, L. Symons of Vernham Dean, B.
Harrison, L. Taylor of Gryfe, L.
Haskel, L. Thornton, B.
Hayman, B. Tomlinson, L.
Hilton of Eggardon, B. Turnberg, L.
Hogg of Cumbernauld, L. Varley, L.
Hollis of Heigham, B. Walker of Doncaster, L.
Howells of St. Davids, B. Warner, L.
Hoyle, L. Warwick of Undercliffe, B.
Hunt of Chesterton, L. Whitaker, B.
Hunt of Kings Heath, L. Whitty, L.
Irvine of Lairg, L. (Lord Chancellor) Wilkins, B.
Williams of Mostyn, L.
Janner of Braunstone, L. Winston, L.
Jay of Paddington, B. (Lord Privy Seal) Woolmer of Leeds, L.
Young of Dartington, L.

On Question, Motion agreed to.

7.49 p.m.

[Amendment No. 40 not moved.]

Schedule 11 [Control of donations to recognised third parties]:

Lord Bach moved Amendments Nos. 41 and 42: Page 185, line 14, leave out ("less") and insert ("not more") Page 187, line 48, leave out ("not less") and insert ("more").

Schedule 15 [Control of donations to permitted participants]:

Lord Bach moved Amendment No. 43: Page 196, line 45, leave out ("less") and insert ("not more").

[Amendment No. 44 not moved.]

Lord Bach moved Amendments Nos. 45 to 47:

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

Lord Bach moved Amendment No. 48: Page 202, line 50, leave out ("less") and insert ("not more").

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

Lord Bach moved Amendment No. 49: Page 218, line 44, at end insert—

  1. ("(8) For the purposes of this Part—
    1. (a) a company does not need to be authorised as mentioned in section 347C(1) or section 347D(2) or (3), and
    2. (b) a subsidiary undertaking does not need to be authorised as mentioned in section 347E(2),
    in connection with any EU political expenditure in relation to which an exemption is conferred on the company or (as the case may be) subsidiary undertaking by virtue of an order made by the Secretary of State by statutory instrument.
  2. (9) The restrictions imposed by sections 347C(1), 347D(2) and (3) and 347E(2) accordingly have effect subject to subsection (8); and, where a resolution is passed for the purposes of any of those provisions, any amount of EU political expenditure in relation to which, by virtue of subsection (8), no authorisation is needed shall accordingly not count towards the sum specified in the resolution.
  3. (10) An order under subsection (8) may confer an exemption for the purposes of that subsection in relation to—
    1. (a) companies or subsidiary undertakings of any description or category specified in the order, or
    2. (b) expenditure of any description or category so specified (whether framed by reference to goods, services or other matters in respect of which such expenditure is incurred or otherwise),
    or both
  4. (11) An order shall not be made under subsection (8) unless a draft of the statutory instrument containing the order has been laid before and approved by each House of Parliament.").

The noble Lord said: My Lords, on Report the House was told that it was the Government's intention to table an amendment for debate at Third Reading to provide that the definition of "political expenditure" would not apply to business activities such as journalism. The definition of "EU political expenditure", as amended at Report, 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 definition has been widely drawn to ensure that it cannot easily be evaded. We believe, for example, that companies should be required toseek shareholder authorisation for political expenditure in relation to a national or regional referendum.

As was mentioned on Report, the Government are conscious 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 not our intention that carrying on activities such as the publication of newspapers should be considered as incurring "political expenditure" and we wish to exclude such activities from the definition of political expenditure under Part IX of the Bill. We believe, however, that it would be unwise to risk the rigidity which would result from putting such an exemption in primary legislation at a time when the modes of delivery of news and comment are developing and changing fast, and that it is important to maintain a level playing field for all the relevant forms of media. The amendment would therefore confer a power on the Secretary of State by order made by statutory instrument enabling him to exempt certain categories of company or expenditure from the requirements for the obtaining of approval resolutions in relation to the incurring of political expenditure. The order-making power would be subject to affirmative resolution in both Houses.

I should like to emphasise that the power does not extend to donations to political parties and organisations. Companies which may enjoy the benefits of the exemption will therefore remain subject to control in respect of donations. I beg to move.

7.50 p.m.

Lord Bassam of Brighton

My Lords, I beg to move that the Bill do now pass. In doing so, I shall say a few words, mostly of thanks and congratulation.

I thank the noble Lord, Lord Mackay of Ardbrecknish, for the constructive part he has played in this legislation. As I understand it, this is his swansong—and a very fine one it is too. He has been witty and amusing, and even more amusing and even more witty in equal measure. He has kept the House greatly entertained through one of the most complex pieces of legislation that I have ever had the pleasure of being a party to. We have gone from zero to total regulation of political parties in one Bill, and the noble Lord, Lord Mackay, mastered the points of opposition to it very well indeed.

I should also like to pay tribute to the noble Lords, Lord Rennard, Lord McNally and Lord Goodhart, for the roles that they have played. I thank my noble friend Lady Gould for her promptings and encouragement, and for her interest in a complicated Bill which has lasted an inordinately long time. The noble Viscount, Lord Astor, ably played his role in support of the noble Lord, Lord Mackay.

The Bill will bring a sea change to the regulation of political parties in our country. It will go a long way to cleaning up the political party act. It brings in the thoroughly new and welcome innovation of the electoral commission—a big change which will improve the quality and the culture of party political work. It will help political parties in the future and go a long way towards restoring the credibility of many of our political institutions.

I shall not detain your Lordships' House further. The Bill has been with us for many months and we have had many long debates, as the noble Lord, Lord Mackay, wittily reminded us at an earlier stage of our deliberations. I am grateful for the support and encouragement I have had, particularly from the noble Lord, Lord Bach, who has been unstinting in his efforts. As ever, his promptings have been very helpful. The officials have played their parts, as has, latterly, the noble Lord, Lord Davies. I would be remiss if I did not mention the noble Lord, Lord Cope of Berkeley, who, on one occasion, stood in famously for the noble Lord, Lord Mackay, to assist the Opposition Front Bench.

I have enjoyed the Bill. It will make a great difference to our politics. For all of those reasons, I wish it well. I commend the Bill to the House.

Moved, That the Bill do now pass.—(Lord Bassam of Brighton.)

Lord McNally

My Lords, it is customary at golf championships to allow the last putt to go to the retiring champion and it is with a real sense of sadness that I say farewell to the noble Lord, Lord Mackay. I make only one point from which others may care to draw conclusions. Since being in the House, I have had two sparring partners. One is now the Attorney-General. The other, the noble Lord, Lord Mackay, goes on to manage Scotland or whatever is his preferment; I have not yet had an opportunity to consult the House Magazine. He will be sadly missed by the Conservative Front Bench.

I am extremely grateful for the support that I have received— 100 per cent from my noble friend Lord Rennard and 85 per cent from my noble friend Lord Goodhart. On these Benches we are grateful for both the stamina shown by the noble Lord, Lord Bassam of Brighton, during the passage of a Bill of great length and complexity, and for the help that he has been given by the noble Lord, Lord Bach. Again, he has been rewarded by promotion during the passage of the Bill. I tell you fellows: stick around me and it works.

A final point worth making is that the Bill was in part a response to accusations of sleaze in our political system. However, on whichever side of the House we sit and whatever parties we represent, we know that— whatever misdemeanours have gone before—our political system is carried forward by thousands and thousands of individual volunteers who carry out their work with absolute probity and dedication. My one concern in seeing the Bill go forward is that in some of its detail we may have imposed severe burdens on people at constituency level whose whole commitment to politics has been blameless and exemplary. I hope and trust that they will be able to deal with those rigours.

We wish the Bill well—as we do the noble Lord, Lord Mackay, in whatever new personality he comes before us.

Lord Mackay of Ardbrecknish

My Lords, it is a bit like listening to your own obituary but, none the less, I am grateful to noble Lords for what they have said. I wish to thank my noble friend Lord Astor and my noble friend Lord Northesk, who acted as Whip and kept me on the right lines. I also wish to thank my noble friend Lord Cope, who stood in for me on a day when I had to go to Scotland on a sad mission. I shall almost bundle in that I am grateful to the noble Lord, Lord Goodhart, for not taking a vow of silence and for giving us many words of wisdom on what the Neill committee thought.

The Bill contains major issues which were by and large agreed. But it has taken a long time to get to the stage of Bill do now pass. The reason for that has been the detail in the Bill and the fact that a lot of the devil was in the detail. Like the noble Lord, Lord McNally, my regret is that I think we have imposed too many regulations on the constituency parties which are the very bedrock of our democracy and which consist largely of volunteers. I hope that I am wrong about that, but I fear that I am not. I appreciate that the Government have accepted a great many amendments or have taken on board several points that were made and then returned with government amendments. We are all grateful for that.

Noble Lords will see the amount of work that has been done on the Bill when they see the Commons consideration of amendments. I believe that that consideration will form about as large a document as the Bill is today. That is a tribute to the efforts of Members of your Lordships' House in struggling with the Bill, as well as a tribute to the Ministers who, after a little—it has to be said—initial teasing, have listened to the arguments and have addressed themselves to the reality of political activity on the ground.

I shall not embarrass anyone on the Benches opposite by enrolling them into the general acknowledgements, but I believe that when the Labour Party machine came to read the Bill in detail, my arguments suddenly began to hit home.

In conclusion, I am grateful to all noble Lords who have been kind in their thanks. I suspect that I shall miss this kind of debate and deliberation. However, I hope that, at least, this Bill will not prove to be so difficult for constituency parties that they decide to check up on who led the debates on it and allowed it to pass, so that I then join a rogue's gallery.

On Question, Bill passed, and returned to the Commons with amendments.